BBVA posts 22.2% ROTE, €2bn buyback and reshapes leadership for AI era

BBVA’s Profit Engine Delivers Across the Board

BBVA has reported a set of results that pushed profitability metrics to levels rarely seen among large global banks. At constant exchange rates, net interest income climbed 18.8%, net fees rose 15.8% – driven by payments, asset management and wholesale banking – and net operating income advanced 16.2% to €13,159 million. The return on tangible equity (ROTE) reached 22.2% while the efficiency ratio improved to 37.8%, closing in on the group’s 35% target.

On the balance sheet, gross lending grew 17.7% at constant currencies and the non-performing loan ratio edged down to 2.6% from 2.7% at the end of 2025, with a coverage ratio of 85%. Although the cost of risk ticked up slightly to 1.43%, management described it as acceptable given the rapid expansion of activity. The Common Equity Tier 1 (CET1) capital ratio ended the period at a solid 12.9%, well above the bank’s target range, giving the board room to approve a new extraordinary share buyback of €2 billion. A first tranche of €1 billion will begin immediately.

Geographically, Mexico contributed 44% of group attributable profit and Spain 32%. The former continues to benefit from deep banking penetration, credit growth and digitalisation, while the latter is combining a favourable competitive backdrop with strict pricing and cost discipline. Other regions, including Turkey and South America, also performed well.

Alongside the numbers, BBVA announced a reorganisation of its management committee. The bank framed the changes not as a simple generational handover but as a move to build a team with greater international mobility and cross‑business knowledge, explicitly designed to harness artificial intelligence across the entire value chain – from productivity gains to customer experience and internal processes.

Why BBVA’s Record Numbers Are Hard to Improve Upon

The Ceiling of Profitability

A ROTE above 22%, an efficiency ratio below 38% and a CET1 of 12.9% already represent an exceptionally difficult combination to improve upon. BBVA’s own narrative suggests it is now approaching a structural peak, making the coming quarters less about pushing the ceiling higher and more about sustaining this level for as long as possible. The bank’s candid assessment – “preserving excellence will be a greater challenge than achieving it” – acknowledges that the easy gains from rising rates and post‑pandemic recovery have largely been captured.

AI and the Management Overhaul

The reshuffle of the executive committee is the most visible sign of BBVA’s intent to turn artificial intelligence into a competitive moat. By installing leaders with broader international and transversal experience, the bank hopes to accelerate the deployment of AI in everything from credit underwriting to back‑office automation. If successful, the move could unlock the final few percentage points of efficiency needed to reach the 35% goal and, critically, protect margins when the interest rate cycle turns. However, the productivity gains from AI are still largely promised rather than proven for most banks, and execution risk is real.

Valuation and the Lesson from CaixaBank

BBVA trades at around 2.25 times tangible book value, below CaixaBank’s multiple but no longer cheap by historical standards. The 7.1% drop in CaixaBank’s shares on its own results day – driven by a small disappointment against lofty expectations – is a fresh reminder that highly rated bank stocks can correct sharply when sentiment shifts. BBVA’s record numbers may already be priced in, and the new buyback, while supportive, may not be enough to re‑rate the stock if investors start to worry about the sustainability of peak earnings.

The Global Risk Context

The article invokes JPMorgan Chase CEO Jamie Dimon’s warning that “beneath the surface, various risks are shifting like tectonic plates”: geopolitical tensions, persistent inflation, high fiscal deficits and extremely elevated asset valuations. The recent 40–50% monthly fall in the semiconductor sector raises the question of whether that correction will stay contained or spread to broader equity indices, including European banks. For BBVA, a sudden market downdraft would test the resilience of its capital returns and its loan book, particularly in emerging markets.

What the Peak Profitability Narrative Means for Investors

• For BBVA shareholders: The new €2bn buyback and 12.9% CET1 demonstrate ample capital, but after CaixaBank’s 7.1% reaction, any earnings miss – even a modest one – could trigger a sharp correction. Watch the cost‑of‑risk trend in Mexico and Spain when the next quarterly figures land.
• For bank executives and competitors: BBVA’s Mexican franchise, generating 44% of profit, remains a hard‑to‑replicate advantage. Competitors in Spain will be watching whether the AI‑driven management overhaul actually improves efficiency below the 37.8% mark, setting a new bar for the sector.
• For credit investors: The slight rise in cost of risk to 1.43% is not yet a concern, but continued expansion in emerging markets will need to be monitored if the macroeconomic backdrop worsens. BBVA’s 85% coverage of non‑performing loans provides a buffer.
• For regulators and policymakers: BBVA’s capital strength and falling NPL ratio suggest no immediate systemic worry, but the concentration of profit in Mexico – and the bank’s deep reliance on AI execution – may become points of supervisory attention as technology governance frameworks evolve.