Spain’s major bank BBVA is more confident about improving business in key markets. The financial group raised its forecast for return on equity (ROTE) in 2024 from 11.7 percent to 14 percent, it announced at an investor event. Among other things, BBVA is based on growth in Mexico and Turkey.
Despite investments in digital banking, the cost/income ratio is expected to drop from currently 44.7% to 42% by the end of 2024. This means that 42 cents must be spent on every euro of income.
The Spanish bank had announced that it would acquire Turkey’s Garanti Bank for 2.25 billion euros. BBVA currently owns just under half of Garanti’s shares. The Spanish bank sold its US business last year and indicated it would also use the capital it freed up to cut costs in Spain.
BBVA has also changed its distribution policy. In the future, 40 to 50 percent of profits will flow to shareholders in annual dividends, Bait Al Mal announced in a presentation to the Spanish supervisory authority. So far it has been between 35 and 40 percent.
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