BBVA (BME:BBVA), in its third quarter 2023 earnings call, reported a net attributable profit of €2.83 billion, representing a record for the quarter. The bank's earnings per share stood at €0.33, marking an 18% year-over-year growth. BBVA also highlighted its robust profitability metrics, with a return on tangible equity (ROTE) of over 17% and a return on investment (ROI) of 16.3%, the highest in the past decade.Key takeaways from the call include:- BBVA's capital ratio increased to 12.73%, and its operating income showed consistent growth.- Tangible book value per share plus dividends increased by 18% year-over-year.- Gross income grew by 29.1% year-on-year, driven by strong growth in net interest income, net fees and commissions, and net trading income.- The bank has seen growth in all customer segments, particularly enterprises and retail segments.- BBVA channeled €16 billion in sustainable business in the quarter and remains committed to its target of €300 billion in cumulative sustainability by 2025.BBVA cited strong loan growth and customer spread improvements in Spain and Mexico as key growth drivers and expects continued revenue growth in these markets. However, the bank faced challenges in Turkey due to high inflation and increased corporate tax rates, resulting in a quarterly loss of €158 million. Despite this, BBVA's long-term targets are on track, surpassing its original goals.In the first nine months of 2023, 65% of acquisitions were made through digital channels, a record for the company. BBVA has granted over 100,000 mortgages, supported over 400,000 SMEs and self-employed individuals, and assisted over 70,000 larger corporates. The bank is well on track to realize its upgraded expectations.During the Q&A session, BBVA addressed questions about customer spreads and loan volumes in Spain, cost of risk and cost growth, and capital returns. The bank expects the deposit beta to be around 20% by year-end and lending yields to increase until the second quarter of 2024. The year-to-date cost of risk is 111 basis points, slightly above the previous guidance of 100 basis points, due to geographical and segment mix effects and the macro situation in some South American countries.The bank also discussed its performance in Mexico and Turkey. BBVA expects the customer spread in Mexico to remain stable, and the cost of risk in Turkey to increase from the current 26 basis points. BBVA plans to gradually return excess capital, taking into account share price performance and maintaining a capital buffer.BBVA also addressed its commitment to sustainability, having channeled €16 billion into sustainable business this quarter, totaling €185 billion since 2018. The bank remains committed to channeling €300 billion to sustainability by 2025.
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