BBVA's Record Quarter Comes With a Deposit Bill Attached
A 22% RoTE and EUR 9.07bn of nine-month profit — but Spain's wholesale deposits repriced, trading income went negative, the loan-to-deposit ratio touched 100%, and the fastest-growing loan book sits in the one trade the tape just sold.
BBVA.MC · Earnings Call · 2026-10-29
Numbers that don't need defending
BBVA did not report a good quarter so much as a demonstration. Nine-month net attributable profit of EUR 9.07bn, up 13.6% year-on-year, on a quarterly figure north of EUR 3bn that grew 19.1%. Earnings per share grew faster still at 23.9%, helped by the buybacks. A 22% return on tangible equity and 20.8% return on equity put it, in Onur Genç's words, as “the most profitable large bank in Europe” — Onur Genç, Chief Executive Officer (CEO) · 2026-10-29 — against a European peer average he cites at 15.6%. Tangible book plus dividends rose 14.3%, or nearly 20% excluding buybacks. The engine was core revenue: net interest income up 16.5% year-on-year and 5.7% quarter-on-quarter in constant euros, fees up 12.4%, gross income up 15.7%. The efficiency ratio improved 9bp to 37.9%. Cost of risk held at 144bp, NPLs at 2.6%, coverage at 84%. Lending growth exceeded 20% in current euros group-wide, with Spain at 7.3%, Mexico at 12% and the CIB franchise compounding far faster. Nothing in the P&L needs an excuse. Which is precisely why the two things that do need explaining are worth the reader's time.The deposit bill, and a brand-new phrase: interest rate curves
BBVA's own keyword slate for the quarter contains a phrase that has not appeared in any of its prior twelve quarters: Interest rate curves. It arrived third on the list, and it arrived as a P&L item, not a macro aside. Spain's cost of deposits rose 13bp in the quarter. Ten of those basis points came from non-retail — corporate and wholesale deposit balances that reprice almost instantly. CFO Gonzalo Rodríguez, on his first webcast in the seat, was blunt about the duration: “the duration is very short term, very short term” — Gonzalo Rodriguez, Chief Financial Officer (CFO) · 2026-10-29. Strip that out and the core retail franchise — EUR 150bn of the roughly EUR 200bn in Spanish demand deposits — repriced by about 4bp, or 2bp excluding one small automatically-repriced segment. That is the defence, and it is a good one. But it explains why net trading income was the one red line in Spain: “the only negative -- core negative of the Spain P&L this quarter was trading income” — Onur Genç, Chief Executive Officer (CEO) · 2026-10-29, Genç said, attributing it to primary-dealer inventories marked against a steepening curve. This is not a BBVA quirk. The market's own curated keyword list for the quarter is wall-to-wall deposit and rate vocabulary — core deposits at the very top, total deposits, cost of deposits, and most tellingly deposits in Spain cracking the market-wide top-75 with the thematic neighbour "wholesale deposits in Spain." BBVA is not leading a wave here; it is standing in the middle of one. The same conversation showed up across this week's bank reporters, from Shinhan's funding-versus-lending rate spread to Akbank's elevated funding cost. The second-order effect is the one analysts kept circling: a loan to deposit ratio that has travelled from "around 98%" in July to 100% on the BBVA S.A. euro book. Genç's answer was that the Spain business unit sits at 80%, the Spanish system below 90%, and that the 100% is a CIB funding artefact: “because of the growth on the lending, we are then now pressuring the cost of deposits. That's not the case.” — Onur Genç, Chief Executive Officer (CEO) · 2026-10-29 Fair — but note the direction of travel. Two quarters ago that number was 87%.The fastest-growing loan book meets a de-rating trade
Rest of business — essentially the CIB franchise — grew loans 15% quarter-on-quarter and 69% year-on-year, and delivered EUR 800m of nine-month profit. Genç's framing is that 90% of CIB revenue is client-driven and 40% cross-border, with a 23% return on capital excluding Argentina and Turkey. Francisco Riquel of Alantra asked the question everyone wanted to ask: BBVA appears as a lender in an AI build-out the market is nervous about.That is a stronger answer than the one given three months ago, when Marta Sánchez Romero of JPMorgan said “the market is getting twitchy about how AI capabilities are being underwritten” — Marta Sánchez Romero · 2026-07-30 and the reply rested on exposure sizing — data centers at 0.7% of EAD, technology at 0.5%. Now the argument is structural: hyperscaler-backed, post-origination sales, hedged. The evolution from "it's small" to "it's safe" is itself the tell that the scrutiny has not gone away; it has simply been answered better. And the tape is no longer helping. The AI data center cluster is up 53.6% over 360 days — but down 5.3% over the last 30, with seven advancers against forty-nine decliners. High-bandwidth memory, co-packaged optics, data center capacity, high-performance compute: all negative on the month. BBVA is compounding its project finance book into a theme that the market has, for the moment, stopped paying for. That is a timing mismatch, not a credit event — but it is why the 69% growth number reads differently today than it would have in June.When you look into those transactions, 95% of those project financings, they are backed by an investment-grade hyperscaler. And the construction risk that you are looking into, a majority of them are in the middle of their construction period... We see very little risk in that.