Carlos Torres links the possible cessation of Francisco González as honorary president of BBVA and its foundation to the results of the internal investigation being carried out on the illegal eavesdropping that the excomisario José Manuel Villarejo made for the entity supposedly by order of the former president of the group. "The bank will act with absolute rigor and diligence, and in this sense it is very important that we let the investigation do its job," said the new president of BBVA and González's successor.
In June last year, BBVA launched an internal investigation into the works of the Villarejo company, Cenyt, for the bank between 2004 and 2005, supposedly in order to neutralize Sacyr's attempt to remove González from the presidency. In this context, 15,000 phone calls were made, including those of high-ranking government officials, the CNMV and businessmen. That investigation was reinforced with an external investigation carried out by Pwc and the law firms Garrigues and Uría Menéndez.
The European Central Bank (ECB) and the Bank of Spain have been publicly asking the entity to accelerate this investigation and clarify what happened as soon as possible. However, the board of directors held yesterday avoided taking additional measures, such as the possible termination of Gonzalez, and limited itself to approving the annual accounts for 2018, whose presentation is tarnished by this point.
BBVA last year earned 5,324 million euros, 51.3% more than in 2017, despite the negative impact on the results of the depreciation of the currencies of some countries in which it operates, mainly Turkey. To this must be added an impairment of 266 million for hyperinflation in Argentina. The entity chaired by Torres was able to offset both impacts thanks to the capital gain of 633 million generated by the sale of its subsidiary in Chile; without it, the profits of the group would have grown equally strongly, 33.3%, to 4,691 million.
This unfavorable evolution of exchange rates has a negative impact on the entire income statement as regards the evolution of revenues and margins. In spite of the good commercial behavior, the devaluation of the currencies causes the group's interest margin to fall by 0.9%, to 17,591 million; 0.8% commission billing, to 4,879 million, and 6% total revenue, 23,747 million, also weighed down by a sharp decline in results from financial operations and dividend income. Without the effect of the exchange rate, the intermediation margin grew by almost 11%, commissions by 9% and gross margin by 4.3%.
The great burden in this regard was the bank's business in Turkey, where it operates through Garanti. The depreciation of the Turkish lira placed all the lines of income in negative, even though the commercial activity was good and without the currency effect the recurring income increased more than 30%. However, the results reflect a fall in profits in that country from 31% to 569 million euros. The engine of BBVA's results remains Mexico, its main market with 41% of the profits: there it won 2.384 million, 9% more. And in U.S, which already represents 12.6% of the results, obtained 735 million, 51.3% more.
BBVA's business in Spain regains weight on the group's total benefits, and now accounts for 24.8% of the results. However, low interest rates and weak demand still weigh down the bank's recurring business, so that both the interest margin (-1.8%) and total revenues (-3.8%) fall and they are compensated by higher fee income (+ 7.7%), reduced expenses (-3.8%) and a sharp fall in provisions and write-downs thanks to the clean-up of the balance already made. This allows the bank to present an improvement in profits in Spain of 10.8% to 1,522 million euros.