There was renewed turmoil in the fixed-income and equity markets in the third quarter of 2011, mainly due to the deepening sovereign debt crisis and worsening expectations of economic growth, both in Europe and globally. This has led to risk aversion, mainly focused on the euro zone, and a significant fall in the main stock market indices. The Ibex 35 was down by 17.5%, in line with the drop in the Stoxx 50, which lost 15.7%. The performance of the U.S. market was similar, with the S&P 500 index losing 14.3%.
The European banking sector was affected both by the perception of sovereign risk and by financial pressure due to uncertainty regarding the scope and possible solution of the European crisis. In this environment, the banks with lower exposure to peripheral countries debt and better management of their liquidity and balance sheet have performed better on the equity markets. The key stock market indicator for the sector, the Stoxx Banks index of European banks, was down 27.9%.
BBVA’s results for the second quarter of 2011 were better than the consensus estimates and were favorably received. Analysts value the factors that set BBVA apart, above all in terms of credit quality, the potential of its international business and its solid capital base. They also continue to value the strength of its earnings in Mexico and South America. Elsewhere, they have also valued positively the improved margins in the United States franchise, as well as BBVA’s stable NPA ratios in Spain, where it has performed better than its domestic competitors.
| The BBVA share and share performance ratios |
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|---|---|---|
|
|
30-09-11 | 30-06-11 |
| Number of shareholders | 981,348 | 921,650 |
| Number of shares issued | 4,824,793,497 | 4,551,602,570 |
| Daily average number of shares traded | 69,688,609 | 47,764,365 |
| Daily average trading (million euros) | 475 | 387 |
| Maximum price (euros) | 8.38 | 8.95 |
| Minimum price (euros) | 5.03 | 7.34 |
| Closing price (euros) | 6.18 | 8.09 |
| Book value per share (euros) | 8.61 | 8.50 |
| Market capitalization (million euros) | 29,817 | 36,822 |
| Price/Book value (times) | 0.7 | 1.0 |
| PER (Price/Earnings; times) | 6.5 | 7.7 |
| Yield (Dividend/Price; %) | 6.8 | 5.2 |
The BBVA share was down 23.6% in the quarter, closing at €6.18 per share, resulting in a market capitalization of €29,817 million. This puts the price/book value ratio at 0.7, the P/E ratio (calculated on estimated median earnings for 2011 according to the consensus among Bloomberg analysts) at 6.5, and the dividend yield (also calculated on the median dividends per share estimated by analysts for 2011 as compared to the quoted price as of September 30) at 6.8%. The fall in the BBVA share price was greater than that registered by the Ibex, but below the performance of the sector in Europe (Stoxx Banks was down 27.9%) and the euro zone (Euro Stoxx Banks down 34.3%). In the current environment of macroeconomic weakness and the difficult access to finance, the market has valued the profile of BBVA’s results, its diversification via emerging markets and the advantages of a retail customer-centric business.
In the third quarter of the year, the average daily trading volume was 70 million shares, with an average value of €475 million.
In terms of shareholder remuneration, on September 15 a dividend payout was announced of €0.10 per share (up 11.0% compared with the equivalent dividend payment last year) as part of the “dividend option” system of flexible remuneration agreed at the General Shareholders Meeting on 11-Mar-2011. This plan offers shareholders the chance to receive an amount equivalent to one of the traditional interim dividends for 2011 in either new ordinary shares or in cash. The percentage of shareholders who have opted to receive new BBVA shares was over 91%, which once more confirms the popularity of this new remuneration program.
