BBVA closed the 2021 financial year with a net profit of 4,394 million euros, according to the consensus forecasts of Bloomberg analysts. It will expose two risks: lower income and its positions in Turkey.
If these figures are fulfilled, this would imply 42.5 percent more than the 3,084 million euros harvested the previous year.
Although, this benefit would prevent the entity of Basque origin from recovering the same benefit that it used to record before the pandemic, since in 2019 it reaped a net profit of 4,830 million euros.
In fact, you have to go back to 2016 to find a lower profit (with the exception of 2021), when 3,475 million euros were recorded.
Regarding income, the consensus of analysts estimates that it will rise up to 20,575 million euros for the whole of 2021, which implies a drop of 10 percent compared to the previous period.
Beyond that, the market is optimistic about the results that BBVA will present on February 3 (relative to the fourth quarter of 2021 and the whole of 2021).
Especially, given the precedent set by the competition that, so far, has published quite decent numbers.
“What the market wants is for BBVA to get results like the rest, which, in general, have been quite good. Above all, in the commission leg and knowing that the interest margin is weak and will remain weak for at least another quarter and that, probably, the provisions for the last quarter will be lower than the consensus. Because they have all followed that line”, explains banking analyst Nagore Díez, from Norbolsa.
The joy of commissions
For this reason, the evolution of commissions is going to be one of the points on which the market is going to focus the most, according to this source, since it is one of the potential joys that can be found in bank accounts right now.
In that sense, a disappointment in this chapter could choke investors, especially if the recent good performance of the stock is taken into account.
For this reason, bad news could be chosen as an excuse to pay for taking profits, according to Díez: “The share price has run a lot, as has also happened in the rest of the sector and, if the results disappoint, it is clear that it will correct , because there has been a rise of 7.5 so far this year”.
Although this is not Díez’s main bet, he believes that BBVA’s accounts will be in line with the rest of the sector, which have been good (Bankinter, Banco Sabadell and Caixabank have already published. Banco Santander will do so on Wednesday).
The question of the Turkish subsidiary of BBVA
The other question mark in these accounts is, in his opinion, the situation in Turkey, a market marked by the correction experienced by the currency, the Turkish lira.
“The biggest risks are Turkey and that the commissions in Spain are not as high as the rest,” says this expert.
A similar view is held by Nuria Álvarez, a banking specialist at Renta 4, who believes that commissions will rise 10 percent in the fourth quarter to reach 1,148 million euros and who cites Turkey as one of the points of concern.
“We expect the bank to close the year in line with the objectives set in its different geographical areas, paying more attention to the cost of risk in Turkey, which could not be met as a result of the depreciation of the Turkish lira and a more negative macro scenario. In homogeneous terms, net profit would grow by close to 35 percent year-on-year in the fourth quarter of 2021”, writes Álvarez in his report prior to the presentation of the results.
A more benign scenario for banks and for BBVA
In any case, Nagore Díez, from Norbolsa, explains that, beyond the results, there are other factors that are weighing heavily on the price of the banks and also of BBVA.
It is about the economic recovery (since they are very cyclical values) and the expectations of change in monetary policy, which has done so much damage to their income statements.
In fact, the Euribor (the index to which most mortgages are referenced) has started the year on the rise due to this change in central banks, making this type of loan more expensive and increasing the potential profits of financial institutions.
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