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(Sharecast News) - BBVA shares fell more than 6% in Madrid on Thursday after the bank reported record annual profits but flagged higher-than-expected provisions and rising costs in key emerging markets, tempering investor enthusiasm.
The Spanish lender posted a profit of 10.5bn in 2025, up 4.5% year on year, driven by strong core revenues, solid loan growth and resilient performances in Spain and Mexico, while return on tangible equity reached 19.3%.
It said the fully loaded CET1 capital ratio stood at 12.7% at year-end.
Despite the market reaction, BBVA underlined its capacity to generate capital and return cash to shareholders.
The bank announced a record cash dividend of 92 euro cents per share, up 31% from 2024, amounting to 5.25bn, alongside a previously-announced share buyback of nearly 4bn.
Combined distributions exceeded 9.2bn, reflecting a renewed focus on shareholder returns after abandoning a proposed takeover of Banco Sabadell last October.
Fourth-quarter net profit rose 4.1% from a year earlier to 2.53bn, broadly in line with analysts' expectations, supported by stronger net interest income in Spain and Mexico.
Net interest income increased 9.8% year on year in the quarter to 7.03bn, while revenue of 9.8bn came in ahead of forecasts.
In Spain, quarterly net profit climbed 13.7%, while in Mexico profit rose 10.8%.
The results were weighed down by a sharp increase in provisions and higher costs, particularly in emerging markets.
Loan-loss provisions rose 19% year on year in the fourth quarter to 1.75bn, exceeding expectations, with Mexico and Turkey the main contributors.
The weaker performance in these regions offset otherwise solid operating trends and prompted the sell-off in the shares.
Looking ahead, BBVA said rising lending income in Spain and Mexico should support growth in 2026 and guided for a return on tangible equity of around 20%.
It forecast low- to mid-single-digit growth in Spanish net interest income and mid- to high-single-digit growth in Mexico, while cautioning that performance in markets such as Turkey and Argentina remains exposed to credit restrictions, inflation dynamics and currency volatility.
At 1128 CET (1028 GMT), shares in Banco Bilbao Vizcaya Argentaria were down 6.39% in Madrid at 20.51.
Reporting by Josh White for Sharecast.com.