BBVA Brings Raised Profit Targets Into A Report The Market Has Grown Wary Of

BBVA heads into its third-quarter report with an odd mismatch. Management spent the last call raising targets almost everywhere it could, yet the stock has slid 6.6% since then while the S&P 500 gained 4.5%. That 11-point gap says the market either doubts the momentum can last or is bracing for the one region that keeps disappointing. The October 29 release, due before the open, is a test of which view is right.

The Street expects earnings of $0.59 per share on revenue of about $12.58 billion. Those figures imply growth of roughly 20% in profit and 18% in revenue from a year ago, which is strong for a bank of this size. The sequential picture is more nuanced. Consensus revenue sits above last quarter's $12.21 billion, but projected earnings fall short of the record $0.63 BBVA just delivered. In other words, analysts are modeling a slightly softer bottom line even as the top line keeps climbing. That leaves room for an upside surprise if costs and provisions behave, but it also signals that some caution is already built in.

That caution centers on Turkey. Management lifted its cost of risk guidance there to around 220 basis points, said retail loan normalization was taking longer than hoped, and warned that second-half profit would come in below the first half. It was the second straight quarter of a downward bias, and Turkish net interest income also slipped on tighter lira spreads. If third-quarter provisions run hotter than the new guidance, or margins keep compressing, investors may start to wonder whether the 220 basis point figure is another stop on the way to something higher. A quarter where Turkish credit costs stabilize would go a long way toward removing the main blemish on the story.

Elsewhere, the bar is about confirming upgrades rather than earning new ones. In Spain, the customer spread turned up by three basis points last quarter after a long stretch of compression, and management said it expects improvement every quarter from here. A second consecutive uptick, alongside loan growth holding near the 7% pace seen in the second quarter, would validate that inflection. Mexico is the other pillar. Guidance now calls for about 10% loan growth, high-single-digit net interest income growth and cost of risk below 335 basis points; data tracking toward those marks would reinforce the case. South America, where revenue guidance was raised to high-teens growth, needs to show the first-half pace was not a one-off. Trading income is a smaller swing factor, having fallen last quarter on calmer markets and hedge losses tied to a stronger peso.

Capital matters too. CET1 stood at 12.90% with a stated commitment to return anything above 12%, and a fresh €2 billion buyback began in August after a completed €4 billion program. The first Mexican risk transfer deal, executed in July, should begin to show up in capital figures. The group target of roughly 21% return on tangible equity for 2026 sits below the 22.2% posted in the first half, so a reaffirmation, or a nudge higher, would tell investors management still sees cushion. Any comment on the AI strategy update and the CFO handover will also be read for signs of continuity.

Sentiment has turned modestly bearish, a reversal from the mildly bullish tone heading into the last report, and the stock now trades near the bottom of its post-earnings range, just above its 200-day moving average. That setup lowers the hurdle somewhat. The real question is whether Turkey's problems stay contained while Spain and Mexico keep compounding. If they do, the recent selloff looks more like an overreaction than a warning.

This earnings preview was originally published on Earnings Whispers.

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