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BBVA: 2Q’21 RESULTS (ANÁLISIS BANCO SABADELL)

2Q'21 vs. 2Q'20 Results
N.I.I.: € 3.504 Bn (-14.5% vs. -12.6% BS(e) and -14.3% consensus);
Total Revenues: € 5.104 Bn (-8.2% vs. -7.4% BS(e) and -10.3% consensus);
Operating Profit: € 2.81 Bn (-5.3% vs. -4.0% BS(e) and -8.2% consensus);
Net Profit: € 701.0 M (+10.0% vs. -26.2% BS(e) and -40.5% consensus);
2Q'21 vs. 1Q'21 Results
N.I.I.: € 3.504 Bn (+1.5% vs. +3.8% BS(e) and +1.8% consensus);
Total Revenues: € 5.104 Bn (-1.0% vs. -0.1% BS(e) and -3.2% consensus);
Operating Profit: € 2.81 Bn (-1.4% vs. -0.1% BS(e) and -4.4% consensus);
Net Profit: € 701.0 M (-42.1% in 1Q'21 vs. -61.2% BS(e) and -68.7% consensus);
The company has obtained € 1.29 Bn of recurring Net Profit (vs. €-516 M in 2Q’20 and € 1.03 Bn in 1Q’21), +47% vs. our estimate and +65% vs. the consensus, thanks to higher fee revenues (+26%; +10% vs. expectations) and lower provisions, which fell by -53% vs. 2Q’20 and vs. around -30% expected. With respect to the consensus, the improvement is also due to higher trading revenues (in line BS(e)). Reported Net Profit, € 701 M, includes restructuring costs in Spain (€~-700 M) and the capital gains from the sale of the US subsidiary (€+103 M).
NII fell by -0.9% vs. 2Q’20 (+1.5% vs. 1Q’21), around -2% below our estimate although in line with the consensus, with strong recovery in Mexico and weakness in Spain and Turkey. Fee revenues improved +26%, very positive performance considering the difficult comparison with 2Q’20. Costs increased by 5.1% vs. 2Q’20, also as a result of a demanding comparable basis, although they stand in line with the previous quarter and meet expectations (+5.3% BS(E) and +3.7% consensus).
The quarter continues to be affected by currency depreciation: adjusted for exchange rates, core revenues would have increased by +9.7% vs. 2Q’20 and Operating Income improved 11% vs. last year (and vs. ~5.3% reported).
In credit quality, the ~80bps CoR came in below expectations (125-130bps BS(E) and consensus and 117bps in 1Q’21). As expected, the company has set a CoR’21 guidance of ~110bps (vs.