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BBVA: RAISES GUIDANCE (ANÁLISIS BANCO SABADELL)

At BBVA’s Investor Conference being held today, the bank raised its CoR’20 guidance slightly, now forecasting between 150-160bps (vs. 160-190bps previously and vs. ~190bps BS(e) and consensus). BBVA also expects to beat the top end of its capital range’20 (10.84-11.34% and vs. 11.22% in 1H’20), which we already assumed in our estimates (CET1’20 BS(e) 11.4%).
From the presentation we stress better revenue and CoR estimates in Mexico in the 2H’20, where expired loans in moratorium performed better than expected, with a positive performance in the US thanks to cost control and a better competitive environment in deposit pricing. The bank did not mention any data on Turkey’s performance.
MARKET IMPACT
These are positive messages, although some of them (especially regarding Core Capital performance) were already announced. One new aspect is the improvement to CoR, which could lead the consensus to raise its estimates if BBVA is convincing in conveying a message of resilience in its loan stock. In this regard, and according to our estimates, every -10bps drop in CoR means an improvement of €~200 M in Net Profit (and vs. € 630 M of Net Profit’20e consensus and €~2.6 Bn of Net Profit’20e adjusted for one-offs).
The stock is having a positive reaction today (around +4% vs. around +1% peers) in a movement we see more as trading, given the lack of messages on 2021-22, with this lack of visibility being the main uncertainty currently weighing on the sector.