Banco Bilbao Vizcaya Argentaria S.A.

The stable outlook reflects our belief that over the next 18-24 months BBVA will remain resilient and benefit from robust profitability. We forecast that the bank's ROE will average 14% over 2024-2026. Despite asset expansion and increased distributions to shareholders, we expect BBVA's capitalization to strengthen further, so that its RAC reaches 8.5% by 2026, up from 8.1% as of end-2023. Asset quality could deteriorate moderately, particularly among small companies and in unsecured consumer loans, as well as in weaker geographies, like Turkiye. Finally, we do not expect the cushion of subordinated bail-inable instruments to change. The ratings could come under pressure if we lowered our sovereign rating on Spain, as we consider BBVA likely to default in the context

...Banco Bilbao Vizcaya Argentaria S.A. (BBVA) reports outstanding profitability. This is despite the still lackluster performance of its Turkish operations. Favorable interest rate dynamics, sound volume growth, and contained credit provisions support BBVA's strong performance in its two key geographies, Spain and Mexico. The group's return on equity (ROE) climbed to 19.1% in the first six months of 2024 and we anticipate BBVA will benefit from wider margins in Spain and Mexico through 2024 as it manages to contain deposits repricing. However, we think that it will be difficult to sustain this level of returns because of the slowdown in the economy in Mexico and the declining rates in most of the geography where it operates. We expect that BBVA's results will be solid and forecast ROE of about 14%...

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