This weekend, BBVA announced the launch of an ambitious share buyback program, for a maximum amount of 3,960 million euros. He will be the mayor of its history and will start next month, on December 22, after obtaining all the necessary authorizations. Even if the entity planned to repurchase its own securities, an operation which increases the value of its shares by reducing the number of shares in circulation, the amount is higher than what was expected by analysts, around 3,500 million euros,
This program is part of the 36 billion euros that BBVA hopes to be able to distribute to its shareholders between 2025 and 2028, both in the form of ordinary remuneration and in the form of additional distributions. The bank announced this ambitious program at the same time as it revealed the failure of its takeover bid (oops) for Banco Sabadell, indicating that it would resume a “significant share buyback”.
This new program is in addition to the dividend distributions made during the last quarter. In particular, BBVA shareholders received 1.842 million euros on November 7, the highest dividend in the history of the entity. The entity paid 32 cents per added share as of April 4; a total of 73 which imply a profitability, at current prices, of 3.7%. The bank has also just concluded, on December 10, the buyback program of 993 million euros corresponding to the 2024 financial year.
The operation is equivalent to 3.5% of the market value of the entity and will take place over several months and will be carried out in installments. The shares acquired under this program will be intended to reduce the share capital by amortization, as is customary. The first part of the repurchase will amount to 1,500 million euros and its execution will begin next month, on December 22, as was announced today in a communication to the CNMV, market supervisor. It will last until April 7, until the program is completed: the bank undertakes to acquire half a million shares each trading day.
Since the launch of its first program in 2021, and taking into account this new buyback which is currently being launched, BBVA has allocated more than 10 billion euros to the buyback of shares, thus reducing the number of shares in circulation of the entity. In total, the Spanish bank has allocated 21 billion euros to this type of operations over the last five years. Buybacks are a common way to remunerate the shareholder and, in the case of the bank, to repay excess capital by exercising skyrocketing benefits, as is currently the case.
The bank chaired by Carlos Torres found that share buybacks had a positive impact on BBVA’s stock profits. Thus, while attributed profit increased by 31% in 2022, 21% in 2023 and 25% in 2024, earnings per share increased beyond these amounts, with increases of 48%, 26% and 27% respectively, as indicated in the press release.
In total, five share buyback plans have currently been carried out by BBVA, two of them extraordinary (3,160 million euros between 2021 and 2022 and 1,000 million in 2023) and three as part of the ordinary remuneration of its shareholders (422 million euros allocated to 2022, 781 million with position in 2023 and 993 million with position in 2024).
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