Bull Case:
Strong Profitability & Growth Momentum
BBVA reported record net attributable profit of €10.05 billion in 2024, a 25.4% YoY increase, driven by higher net interest income (NII) and strong fee growth​.
Loan book expanded by 9.2%, fueled by corporate lending (+14.7%)​.
The CET1 capital ratio improved to 12.88%, exceeding regulatory requirements and signaling financial strength​.
Consistent Digital & International Expansion
Digital adoption is accelerating, with 77.2 million active digital customers, and 66% of new clients acquired digitally, improving cost efficiency​.
BBVA’s Mexican and Turkish markets are key profit drivers, offering high-yield retail and corporate lending opportunities​.
Sustainability Leadership & ESG Outperformance
BBVA reached its €300B sustainable financing goal one year ahead of schedule, demonstrating leadership in green finance​.
The bank is well-positioned to capitalize on ESG investments and green lending, a growing sector in European banking​.
Operational Efficiency & Shareholder Returns
The efficiency ratio is at 40.0%, outperforming most European peers​.
Share buybacks and debt reduction strategies indicate a shareholder-friendly approach, supporting long-term stock price appreciation​.
Potential Upside from M&A Activity
If BBVA successfully acquires Banco Sabadell, it would add €250 billion in assets, expanding its Spanish footprint and increasing market dominance​.
Attractive Valuation vs. Peers
DCF-based fair value estimate is $5.26 per share, but market-based valuation suggests a range of $19.41 to $21.52 per share, indicating potential upside​.
Price-to-Book (P/B) ratio declined to 1.92x, suggesting the stock is currently undervalued relative to assets​

Bear Case: Bear Case (Risks & Concerns for BBVA)
Regulatory & Legal Uncertainty

The Banco Sabadell acquisition faces regulatory hurdles, with no clear approval timeline from the ECB and Bank of Spain​
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Spain’s temporary banking tax (€285M) continues to drag on profits​
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Potential stricter capital requirements from European regulators could limit future growth and returns​
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Rising Costs & Profit Margin Pressures

Operating expenses surged 18.3% YoY, outpacing revenue growth, driven by inflation and workforce expansion​
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Efficiency ratio worsened to 40.0% in Q4, reflecting increased cost pressures​
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Higher loan loss provisions (+32.4% YoY) suggest growing credit risk exposure​
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Macroeconomic & Interest Rate Risks

BBVA’s net interest margin (NIM) could decline if the ECB or Federal Reserve cuts rates, impacting profitability​
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Exposure to volatile economies like Turkey presents risks, given its history of currency devaluation and high inflation​
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A potential global economic slowdown could weaken loan demand and increase non-performing loans (NPLs)​
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Competitive & Technological Disruption

Fintechs and challenger banks are intensifying competition, forcing BBVA to increase spending on digital transformation​
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Increased reliance on digital banking raises cybersecurity risks, which could erode customer trust in case of breaches​
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Cash Flow & Liquidity Concerns

BBVA’s operating cash flow turned negative in 2022, signaling potential liquidity risks​
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Free cash flow (FCF) plummeted by -937.6% in 2022, indicating the need for stronger cash management​
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Rising credit loss provisions suggest a possible deterioration in asset quality​