Banco Bilbao Vizcaya Argentaria S.A.

The stable outlook over a two-year horizon assumes that in a likely more supportive global economic environment, BBVA will gradually restore its profitability and keep asset-quality deterioration under control. We forecast return on equity (ROE) will improve to 8%-9% in 2021-2023, thanks to cost savings, primarily in Spain, and lower credit provisions, with earnings growth remaining more modest. In addition, in the absence of acquisitions, and despite the bank's plans to buy back 10% of its shares between this year and next, its capital is likely to remain above target levels, with risk-adjusted capital (RAC) hovering at about 9%. However, by 2023, a capital distribution to shareholders cannot be ruled out if the bank finds no alternative options to reinvest

...BBVA showed resilience through a very difficult 2020 and its geographic diversification continued to prove valuable amid a global downturn. Inevitably, BBVA's profits were hard hit in 2020, more than halving compared with the prior year, but the bank managed to remain in profit despite the recognition of extraordinary goodwill impairments on top of higher credit provisions, lower revenue, and significant depreciation of foreign currencies. Capital was preserved and liquidity strengthened. Certainly, governments' extensive support to the private sector helped the bank, as well as others, to cushion the shock. But the different regional impact of the pandemic and different government responses also cushioned the impact, giving evidence of the value of geographic diversity. The sale of the U.S. operations completed in July 2021 left BBVA with excess capital resources to deploy. While the bank slightly increased its regulatory fully loaded common equity tier 1 (CET 1) target, to 11.5%-12%,...

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