MADRID / LONDON (IT BOLTWISE) – Major Spanish bank BBVA posted a decline in profits in the third quarter, although revenues increased. The failed takeover attempt by competitor Sabadell met analysts’ expectations, but did not convince investors. The stock lost value while the bank’s market capitalization still reached a new high.
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The major Spanish bank BBVA recorded a profit decline of four percent in the third quarter, which corresponds to a profit of 2.53 billion euros. This development came about despite an increase in sales of a good four percent to 9.1 billion euros. Analysts had already expected this decline, but the stock market reacted negatively, which led to a temporary decline in the BBVA share price of over three percent.
A key factor in the decline in profits was unfavorable currency exchange rates, as BBVA is heavily exposed to emerging markets such as Mexico and Turkey. While revenues increased in these regions, the additional revenue was offset by higher operating costs, depreciation and taxes. If exchange rates had remained constant, profits would have increased slightly, which illustrates the bank’s dependence on these markets.
The failed takeover attempt by domestic rival Sabadell has also contributed to the current situation. Only a quarter of Sabadell shareholders accepted BBVA’s purchase offer, which offered one share each for 4.8376 Sabadell shares. This acquisition would have significantly strengthened BBVA’s business in Spain and reduced its dependence on emerging markets.
Interestingly, the failure of the takeover pushed BBVA’s market capitalization to a new high of around 100 billion euros. This shows that investors have confidence in the bank’s long-term strategy despite the decline in profits. The majority of third-quarter profit came from Mexico and Spain, underscoring the importance of these markets for BBVA.
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