BBVA - BBVA - Flush With Cash And Seeing Core Market Improvements

• With improving credit quality and underlying business metrics, and the sale of Compass to PNC, BBVA is flush with capital (CET1 of 12.9%) even including the anticipated 10% buyback.
• Management is taking another crack at significant cost reductions in Spain, but some of that surplus capital may go toward consolidating the market, with Sabadell still a likely target.
• Mexico's economy seems to be on the rebound, and past efforts to improve fee-generating businesses seem to be paying off.
• Mid-single-digit core earnings growth and double-digit ROTE in 2023/24 can support a double-digit return from here.

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