BBVA Q2 2026: strong earnings but 2.45x book signals limited upside

What happened

BBVA posted robust Q2 2026 results, with net interest income surging 23% year-over-year and net profit reaching €3 billion, driven by solid loan growth in Spain and Mexico. However, rising operating expenses tempered operating leverage, keeping cost-to-income from improving despite the revenue strength. The stock now trades at 2.45 times book value, a premium that leaves little room for disappointment. This reinforces our view that while the franchise is performing well, the market has already priced in much of the 2025–28 plan’s upside. We see no reason to alter our WAIT rating; the ask is simply too high relative to the risks.

Implication

Investors should recognize that despite excellent operating results, the current premium valuation already prices in the bank’s ambitious targets. Rising expenses hint that margin expansion may stall, and with the stock well above our $27 trim level, the risk/reward is unfavorable. We maintain our WAIT rating; initiating or adding on pullbacks toward $20–23 offers a far better entry. The quarter’s results do not alter our thesis that patience is warranted until the stock corrects or the company demonstrates sustained delivery into 2027.

Thesis delta

The strong Q2 2026 performance does not change our WAIT rating. However, the further multiple expansion to 2.45x P/BV and signs of rising operating expenses reinforce our caution that the stock has limited upside from current levels. We see no reason to chase the rally; our base-case fair value of $26 and trim above $27 remain appropriate.