BBVA has a attractive growth profile, high geographic diversification and solid capital generation capacity which supports significant shareholder return in the coming years, according to a JP Morgan report on Monday. The US bank restarts—and transfers the entity’s coverage to Marta Sánchez Romero—with an ‘overweight’ recommendation and a target price of 23.5 euros by December 2027. JP Morgan highlights that, despite the 16% revaluation registered by the share since the Sabadell operation concluded, BBVA continues trading at contained multipleswith a forward P/E of 9.3 times, and offers an earnings per share growth profile of 12% per year until 2028.
PROFIT GROWTH AND GEOGRAPHICAL DIVERSIFICATION
JP Morgan forecasts that BBVA’s net profit, once the coupons on the AT1 hybrid instruments are paid, grow at a CAGR of 9% between 2025 and 2028until reaching the 13.2 billion euros in 2028. Spain will continue to be a key pillar of hard currency growthsupported by stable interest rates, sustained economic expansion and the process of re-leveraging of households and companies.
Spain will continue to be a key pillar of growth in hard currency
Mexico will continue contributing close to 50% of the group result. Although the bank warns of short-term uncertainty due to the macroeconomic environment and the renegotiation of the USMCA treaty (agreement between the United States, Mexico and Canada), it emphasizes that the country’s low banking use and the resilience of the US economy offer a solid foundation for future growth. Added to this is the expectation of a strong weightwhich would support the contribution in euros. In Türkiye and Argentinathe normalization of economic policies would allow reducing inflation and ending hyperinflationary accounting in 2028, which, according to the report, would unlock new profit momentum. In parallel, South America and the global corporate and investment banking business They add additional optionality to the group as a whole.
STRONG CAPITAL GENERATION AND RETURN TO THE SHAREHOLDER
The report highlights that BBVA has an organic capital generation capacity of about 180 basis points annually before dividends and buybacks. This strength would allow the bank raise its return on tangible equity (ROTE) from around 20% in 2025 to 26% in 2028with share buybacks as one of the main catalysts for this improvement.
JP Morgan estimates that BBVA could return close to 30,000 million to shareholders in the next three years
JP Morgan estimates that BBVA could return nearly 30,000 million euros to shareholders in the next three yearscombining an ordinary ‘pay-out’ of 50% – equivalent to about 22,000 million in dividends – and around 9,000 million in share buybacks, of which approximately 4,000 million have already been announced.
VALUATION AND POTENTIAL
The American bank places the upside potential of the stock around 13%to which is added an attractive dividend yield, which raises the expected total return to 18% twelve months ahead. The valuation is based on a sum of the parts approach and the expectation that BBVA maintains capital flexibility above a ‘fully loaded’ CET1 ratio of 12%. In this context, JP Morgan concludes that the bank offers a balanced combination of growth, optionality and attractive shareholder remunerationwhich justifies its positive recommendation on the entity.
