BBVA

Structural: BBVA is a European-listed bank with an emerging-market earnings engine. Mexico contributes roughly 55% of group net attributable profit, Turkey ~15-20%, South America ~10-15%, Spain ~15-20%. Net interest margins in Mexico (~12-13%) and Turkey (post-hyperinflation accounting reset) structurally dwarf Spanish and core-European NIMs (~2-3%), giving BBVA a return-on-tangible-equity profile (~18-20%) that prints closer to a US regional than a Eurozone universal bank. The Sabadell tender offer (announced May 2024) would create Spain's #2 domestic bank and is the swing variable on the European leg. Bull: - Mexico franchise is the crown jewel: #1 bank by assets, ~25% market share in deposits, structural NIM tailwind from formal-economy banking penetration - Garanti BBVA Turkey: post-2022 mandatory tender, BBVA owns ~86%; Turkish lira-hedged earnings + post-disinflation rate-cut cycle drives 2026-27 EPS - Capital return: ~70% payout via dividends + buybacks; CET1 ~12.7% gives buffer for Sabadell deal and ongoing buybacks - Digital franchise: BBVA Mexico mobile app penetration leads LatAm peers, lowering cost-to-serve - Sabadell synergies (if deal closes): EUR ~850M cost synergies, ~20% EPS accretion by year 3 per management guidance Bear: - Mexico concentration cuts both ways: peso devaluation (Sheinbaum government fiscal slippage, USMCA renegotiation risk under Trump 2.0) flows directly into group EPS - Turkey political/FX risk: lira remains unstable, hyperinflation accounting (IAS 29) noise distorts reported numbers vs cash earnings - Sabadell deal hostile + Spanish-government-opposed: CNMV/government conditions could force divestitures or block the merger entirely, leaving BBVA with sunk costs - European banking is structurally low-growth: Spain ~15% of profit but ~30% of regulatory cost - Argentina/Venezuela: small but unpredictable; periodic FX-translation hits and hyperinflation adjustments

• •**2024-05** — Hostile tender offer for Banco Sabadell announced after Sabadell board rejected friendly merger; would create Spain's #2 bank; deal subject to CNMV + Spanish government conditions; government has signaled opposition
• •**2022-05** — Mandatory tender offer for remaining Garanti BBVA shares closed at TRY 12.20/share; BBVA stake increased from ~49.85% to ~85.97% in Turkey's #2 private bank
• •**2020-11** — Sold BBVA USA (Compass Bancshares Sunbelt franchise) to $PNC PNC Financial Services for $11.6B cash; capital redeployed to buybacks + Garanti tender + Sabadell bid
• •**2023-present** — Multi-year ECB/Bank of Spain capital return authorizations: ~70% payout policy via cash dividends + share buyback programs
• •**2024-2025** — Garanti BBVA hyperinflation accounting (IAS 29) ongoing as Turkey remains a hyperinflationary economy under IFRS
• •**Ongoing** — BBVA Mexico is the #1 commercial bank by assets, deposits, and loans; structural anchor of group earnings