BBVA to launch share buyback and resume dividend

Spanish bank BBVA intends to buy back 10 per cent of its shares and return to paying 35-40 per cent of its profits in dividends, the lender with a market capitalisation of €26bn said as it announced fourth-quarter profits of €1.32bn.

The buyback would take place after the completion of BBVA’s $11.6bn deal to sell its US operations to Pittsburgh-based PNC, which is expected mid-year.

The lender’s announcement followed the failure of exploratory talks for BBVA to acquire midsize Spanish rival Sabadell and guidance from the European Central Bank to allow banks to resume paying dividends after a coronavirus crisis-induced halt.

Carlos Torres, BBVA’s executive chairman, said the “historic” sale of the bank’s assets “puts us in an unparalleled position of strength in the sector, which allows us to increase shareholder distributions”.

For 2020, BBVA reported net profits of €1.3bn, a figure that reflected a €2.08bn goodwill impairment in the US for the first quarter as well as the €304m sale of its Spanish non-life insurance business to Allianz.

Excluding those factors, the bank, which took €5.9bn of loan loss provisions throughout the year, reported 2020 net profits of €3.04bn, 36 per cent below its 2019 figure.

CaixaBank, BBVA’s Spanish rival, which is proceeding with its own merger with Bankia, another domestic bank, reported full-year profits of €1.38bn, a 19 per cent decrease on the previous year. It took €1.25bn in provisions related to the pandemic’s economic impact.