BBVA: 2024 STRATEGIC PLAN (ANÁLISIS BANCO SABADELL)
Strategic Plan’24: Strong value potential if the plan is met, but we think it is overly ambitious. SELLIn 2024 the bank hopes to reach 14% RoTE (vs. the current ~12% and 9-10% BS(e) and consensus in 2023), leveraging growth in clients and higher-margin businesses, sustainability and efficiency through digitalisation. BBVA has set intermediate targets in Spain, Turkey and Mexico, which we see as attainable/beatable in revenues, slightly ambitious in costs and optimistic in CoR in emerging markets. With all this in mind, a RoTE of 14% means €~6.3 Bn of Net Profit’24 BS(e) (+30% vs. consensus’23), with a yield’24 of 9%, according to the new payout policy announced yesterday (40-50%). With these numbers the company would also accumulate € 5.0-6.5 Bn of excess capital (13-17% of market cap) through 2024, which would allow it to continue with the share buyback and undertake M&A moves. Summing up, the plan is ambitious regarding profitability, and we think will be difficult (due to the currency risk as well) for the market to price it in immediately. In the short term we think the stock will continue to be exposed to the volatility from the emerging market risk, as was the case yesterday when the stock shed -5.51% after the announcement of the -100bps cut to interest rates in Turkey.
Banco Bilbao Vizcaya Argentaria is an international financial group, engaged primarily on providing banking services and consumer finance to private individuals and businesses in Spain and Portugal; providing real estate activity in Spain; providing services to international companies and investment banking, capital markets and treasury management services to clients; and providing the banking, insurance and pension businesses in Mexico and the U.S., as well as in South America.
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