Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

Equity Bottom-Up

Banco Bilbao Vizcaya Argentari / Equity Bottom-Up

<ul>
<li>Mexico continues to be the key contributor to BBVA group, with the offer for Garanti minorities set to increase BBVA’s share of higher risk higher reward returns from emerging markets</li>
<li>The revised offer to Garanti minorities is still 10%+ cheaper in Euro terms than at the time of its 4Q21 announcement, with a modest hit of 34bps to CET1 ratio</li>
<li>We see BBVA as an attractive value play in select emerging markets and Spain, with its well-established digital offerings as a driver for sustained premium returns and premium capital distribution</li>
</ul>


Mexico continues to be the key contributor to BBVA group, with the offer for Garanti minorities set to increase BBVA’s share of higher risk higher reward returns from emerging markets
The revised offer to Garanti minorities is still 10%+ cheaper in Euro terms than at the time of its 4Q21 announcement, with a modest hit of 34bps to CET1 ratio
We see BBVA as an attractive value play in select emerging markets and Spain, with its well-established digital offerings as a driver for sustained premium returns and premium capital distribution


BBVA – Mexico Is the Motor for Further Capital Distribution

European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

Turkiye Garanti Bankasi As / Event-Driven

<ul>
<li>BBVA sweetness the offer price for Garanti by 23% due to very low acceptances so far (the share price of Garanti has increased by 64% over the last six months).</li>
<li>The increased offer price should placate disgruntled shareholders, while at the same time saving BBVA €264 million (c. 12% less than originally forecasted) due to Turkish lira depreciation.</li>
<li>Gross spread is 0.2%, and the annualized return is 3.05% (assuming settlement on 19 May). Long GARAN IT.</li>
</ul>


BBVA sweetness the offer price for Garanti by 23% due to very low acceptances so far (the share price of Garanti has increased by 64% over the last six months).
The increased offer price should placate disgruntled shareholders, while at the same time saving BBVA €264 million (c. 12% less than originally forecasted) due to Turkish lira depreciation.
Gross spread is 0.2%, and the annualized return is 3.05% (assuming settlement on 19 May). Long GARAN IT.


BBVA/Garanti: Looking to Secure Acceptances with a 23% Increase

<ul>
<li>The deal for 50.15% of Garanti has received the relevant authorizations and approval from the market regulator. The  offer memorandum has been published. The offer period started on 4 April.</li>
<li>BBVA should pay €1,605 million (as of 11 April), €644 million less than upon announcement due to Turkish lira depreciation. Some fund managers have voiced their intention of not tendering.</li>
<li>The shares trade roughly in line with peers and are likely to continue their bull run in the short term. It is increasingly difficult the offer succeeds without a sweetening.</li>
</ul>


The deal for 50.15% of Garanti has received the relevant authorizations and approval from the market regulator. The  offer memorandum has been published. The offer period started on 4 April.
BBVA should pay €1,605 million (as of 11 April), €644 million less than upon announcement due to Turkish lira depreciation. Some fund managers have voiced their intention of not tendering.
The shares trade roughly in line with peers and are likely to continue their bull run in the short term. It is increasingly difficult the offer succeeds without a sweetening.


BBVA/Garanti: Offer Period, Shares at a 9% Premium to Offer Price

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>Indexes and Sectors remain extremely mixed which we believe is likely to remain the case moving forward.</li>
<li>Attractive Sectors include Energy and Financials, (and to a lesser extent Staples and Utilities) and these areas remain our primary focus.</li>
<li>Financials (XLF) and Energy (XLE) are hitting new RS highs amid rising rates and new highs in WTI crude oil -- Remain overweight/add exposure on pullbacks.</li>
</ul>


Indexes and Sectors remain extremely mixed which we believe is likely to remain the case moving forward.
Attractive Sectors include Energy and Financials, (and to a lesser extent Staples and Utilities) and these areas remain our primary focus.
Financials (XLF) and Energy (XLE) are hitting new RS highs amid rising rates and new highs in WTI crude oil -- Remain overweight/add exposure on pullbacks.


<ul>
<li>BBVA Mexico expanded its premium return on equity of the big nine Mexican banks to 23% to December, and through opex control, it “works” its healthy core capital ratio hard</li>
<li>The bank system trends remain healthy, with additional improvements to NPL ratios and healthy coverage; Banorte and BanBajio screen better than peers on combined credit quality metrics to December</li>
<li>We believe that mid-cap bank BanBajio is good value, and are positive on BBVA for its Mexican exposure; on balance, we remain cautious on Banorte, due largely to valuation</li>
</ul>


BBVA Mexico expanded its premium return on equity of the big nine Mexican banks to 23% to December, and through opex control, it “works” its healthy core capital ratio hard
The bank system trends remain healthy, with additional improvements to NPL ratios and healthy coverage; Banorte and BanBajio screen better than peers on combined credit quality metrics to December
We believe that mid-cap bank BanBajio is good value, and are positive on BBVA for its Mexican exposure; on balance, we remain cautious on Banorte, due largely to valuation


Mexican Banks’ December Data Adds to Positive Trend on Credit Quality, but Lending Spread Eroding

Spain

Banco Bilbao Vizcaya Argentaria, S.A. attracts deposits and offers retail, wholesale, and investment banking services.  The Bank offers consumer and mortgage loans, private banking, asset management, insurance, mutual funds, and securities brokerage services.  It operates in Europe, Latin America, United States, China and Turkey.

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Banco Bilbao Vizcaya Argentari (BBVA SM)

BBVA – Mexico Is the Motor for Further Capital Distribution

BBVA's premium returns engine is Mexico, supported by improving Spanish returns and the growth potential of Turkey, where it is buying the...

Victor Galliano

BBVA/Garanti: Looking to Secure Acceptances with a 23% Increase

BBVA sweetens its bid for Garanti to secure acceptances. If and when BBVA crosses the 50% threshold, it will be able to buy shares in the market...

Jesus Rodriguez Aguilar

BBVA/Garanti: Offer Period, Shares at a 9% Premium to Offer Price

Due to the Turkish lira depreciation BBVA could get a sweet deal, but minority shareholders have said they won't tender without an increase in the...

Jesus Rodriguez Aguilar

Stick With Energy and Financials

Indexes and Sectors remain extremely mixed which we believe is likely to remain the case moving forward. Attractive Sectors include Energy and...

Vermilion Research

Mexican Banks’ December Data Adds to Positive Trend on Credit Quality, but Lending Spread Eroding

Credit quality ends the year strong, with evidence of marginal spread erosion in December; we like mid-cap bank BanBajio and BBVA for BBVA Mexico;...

Victor Galliano

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