BBVA CEO Sees Sustainable Growth and Returns as Mexico Powers Ahead

BBVA CEO Onur Genç said the bank expects its combination of profitability, loan growth and shareholder distributions to remain sustainable, pointing to its presence in relatively low-leverage markets, leading local franchises, technology investments and capital discipline. Genç said BBVA generated a 22.2% return on tangible equity in the first half of the year and has grown its lending book 62% since the beginning of 2021. By comparison, he said the average growth rate among the other 15 largest European banks was 13% over that period. “Our perspective is yes, and a clear yes,” Genç said when asked whether the performance could be sustained. He said BBVA’s operating markets offer room for further credit growth, citing banking debt equal to 35% of GDP in Mexico and Spain’s prolonged deleveraging following the financial crisis. Genç also rejected the idea that profitable growth conflicts with returns of capital to shareholders. He said that, if newly deployed capital earns returns above the cost of equity, growth can generate additional capital for shareholder distributions. BBVA paid a dividend of €0.31 from its 2021 results and €0.92 last year, he said. Mexico remains BBVA’s largest profit contributor, and Genç said the bank sees the country as a beneficiary of its trade relationship with the United States despite uncertainty surrounding tariffs and the U.S.-Mexico-Canada Agreement, or USMCA. He said Mexican exports to the U.S. rose 16% in the first seven months of the year from the comparable prior-year period, while Mexico’s share of U.S. imports increased to 17.2% from 15.6%. Genç also said the average tariff on Mexican products entering the U.S. was about 4%. He cited Mexico’s labor-cost advantage and integrated supply chains with the U.S. as reasons the country remains strategically important. BBVA also sees potential support from President Claudia Sheinbaum’s Plan Mexico, which Genç described as envisioning $70 billion to $80 billion in annual investment over the next five years in infrastructure and energy. He said 37 energy-sector tenders worth $9 billion had been finalized in the second quarter as part of the plan. On competition, Genç said fintech companies have become more active in Mexico but that BBVA has continued to gain share, including in credit cards. He said BBVA has a 26% market share in the country, more than 40% share in payroll and 35% in acquiring. BBVA added 4.7 million customers in Mexico last year, according to Genç, with 84% acquired through purely digital channels. He said the bank closely tracks clients that also use fintech credit cards and responds to signs that customer spending is moving away from BBVA. In Spain, Genç said BBVA expects the economy to grow 2.4% this year, with a possible upward r...