BBVA stock holds firm as capital and profitability metrics support valuation

Banco Bilbao Vizcaya Argentaria (ISIN ES0113211835) reported a net attributable profit of EUR 8.02 billion for fiscal 2023, up around 22 percent from the EUR 6.62 billion achieved in 2022, according to the bank's published annual figures. This profitability backdrop continues to frame how BBVA stock is evaluated by investors in 2024.

Net profit up around 22 percent

In its 2023 reporting, BBVA stated that net interest income reached approximately EUR 21.0 billion, compared with about EUR 18.0 billion in 2022, reflecting the benefit of higher interest rates on its core lending franchise. The year on year expansion of roughly EUR 3.0 billion in net interest income helped lift the group's return on equity and absorb higher operating costs.

The Spanish banking group also highlighted that its net attributable profit of EUR 8.02 billion in 2023 compared with EUR 6.62 billion a year earlier, an increase of about EUR 1.4 billion. On a per share basis this translated into a rise in earnings, which in turn supported the bank's capacity to pay dividends and run share buyback programs, while maintaining capital ratios above its stated targets.

CET1 capital ratio above 12 percent

For investors looking at balance sheet strength, BBVA reported a fully loaded common equity tier 1 (CET1) capital ratio of approximately 12.7 percent at the end of 2023, compared with around 12.4 percent at the end of 2022. The improvement of about 0.3 percentage points came even after distributions to shareholders, indicating that internal capital generation remained strong.

The group also noted that its non performing loan (NPL) ratio remained contained, around the mid 3 percent area at the end of 2023, only slightly higher than the previous year, while coverage ratios stayed comfortably above 70 percent. These asset quality metrics are important for BBVA stock because they influence how resilient future earnings may be in the face of macroeconomic uncertainty in key markets such as Spain, Mexico and Turkey.

Retail banking and digital offer

BBVA generates a large portion of its revenue from retail and commercial banking services, including current accounts, savings, mortgages, credit cards and small business lending. Over recent years the group has invested heavily in its mobile and online banking platforms, aiming to increase the share of digital customers and digital sales across its footprint.

The bank reports that digital customers now represent well over half of its total customer base, while digital sales as a percentage of total units sold have risen substantially compared with levels a few years ago. Management sees this digital transformation as a way to improve cost efficiency, deepen customer relationships and offer personalized financial products at scale, which could support profitability beyond 2024.

BBVA stock and market metrics

BBVA stock is listed on the Spanish stock exchange, and the group is a constituent of the IBEX 35 index, which tracks some of the largest and most liquid companies in Spain. The bank's market capitalization has been in the tens of billions of euros range recently, reflecting its role as one of the major European banking groups with significant exposure to high growth markets such as Mexico.

For investors analyzing BBVA stock, the combination of 2023 net profit of EUR 8.02 billion, a fully loaded CET1 ratio around 12.7 percent and contained NPL ratios provides a framework to compare the bank with peers on earnings power and capital strength. The comparison with the previous year, when net profit stood at EUR 6.62 billion and the CET1 ratio at about 12.4 percent, underlines the progression BBVA has made on key financial indicators.