BBVA Q1 profit up 10.8% on Mexico strength

What happened

BBVA reported a 10.8% rise in Q1 2026 net profit year-over-year, driven by a solid performance in Mexico, according to Reuters. The result aligns with the bank's strong underlying momentum but does not alter the cautious stance from the latest DeepValue report, which rates BBVA a WAIT with a conviction of 3.5 at a $23.72 price. The report highlights that the 137% share price run has compressed valuation upside, with execution risk from Mexico FX, credit quality, and Spanish bank taxes needing to be discounted more. While the profit beat is positive, it does not resolve the key concerns around MXN volatility and the ambitious 2025-28 profit and distribution targets. The market reaction will likely be muted as the news was within expectations, and the core thesis remains that a better entry point exists after a pullback or further delivery.

Implication

The Q1 beat provides short-term comfort but does not alter the risk/reward. BBVA's 137% run leaves limited upside from valuation expansion. Investors should wait for a pullback toward $20 or for clearer progress on the €48B profit plan before increasing exposure.

Thesis delta

The Q1 profit rise confirms near-term operational strength, especially in Mexico, but does not shift the thesis: BBVA remains a WAIT given full valuation and reliance on macro stability in Mexico. The news slightly reduces the probability of a near-term downside surprise, as Mexico's performance is robust, but the core risk of FX and tax headwinds persists. The delta is minimal; the report's base case still holds, and the attractive entry remains around $20.