Financials

Report by Galliano's Financials Research

Digital strategy is being successfully rolled out to all its geographies - current valuation does not reflect BBVA's competitive attributes and strengths. Forecast dividend yield is over 7%. BBVA's premium returns engine is Mexico, where it is well positioned to counter the threat from FinTechs, as well as exploit the Citibanamex sale process to selectively poach disillusioned clients. This is supported by improving returns in Spain where BBVA remains a digital transformation leader. In addition, Turkey offers exciting growth potential and with the latest offer BBVA should be buying out the Garanti minorities at an attractive price.

Financials

Report by Galliano's Financials Research

Garanti acquisition a shrewd move despite negative market reaction - BBVA’s offer to buy out the Garanti minorities values the Turkish bank at a PTBV ratio of 0.7x and prospective PE of 3.6x and is expected to be earnings accretive. The Spanish lender has plenty of experience in delivering premium returns from its operations in challenging neighbourhoods and by taking greater control will be able to further implement the group’s digital strategy and consolidate its risk management. BBVA shares are also supported by the prospect of share buybacks equivalent to ~10% of its market value.