During the third quarter of 2009 stock markets
continued the upward trend that started in March.
Macroeconomic conditions are still bad but signs of
stabilisation have emerged, allowing the market to
reflect greater positive sentiment. However, while
central banks await clearer signs of economic
recovery, official interest rates remain unchanged at
minimum levels in Europe and the United States.
During the quarter the banking sector was favoured
by a significant improvement in market sentiment.
Earnings in the first half were a positive factor
supporting this. The need for banks to maintain
higher levels of capital continued to be debated in
international forums such as the G20 meeting where
participants called for co-ordinated measures by
governments and regulators. Such measures, whether
they entail capital or liquidity requirements or tighter
supervision, could determine the future of some
banks. Nonetheless the gradual improvement in
market liquidity has provided banks with more
options when it comes to obtaining finance.
In the above environment the main stock markets
closed the quarter with substantial gains, extending the
rally that started in the second quarter. In general,
European indices out performed American ones. The
Stoxx50 rose 16.9% and the UK’s FTSE climbed
21.3%, both beating the S&P 500, which increased
15.0%. In Spain the Ibex35 gained 20.1% in the
Share price index
(30-09-08 = 100)
BBVA
Stoxx 50
Europe
Stoxx Banks
120
110
100
90
80
70
60
50
40
30
20
The BBVA share
quarter, outperforming the Stoxx50 and S&P 500. The
relative performance for the first nine months was
even better: the Ibex increased 27.8%, compared to
17.8% for the Stoxx50 and 17.0% for the S&P 500.
During the third quarter the main banking sector
indices also outpaced the broader market. Based on
the general indices, European markets –especially
Britain– rose faster than those in America. The
European Stoxx Banks improved 32.2%, which was
slightly less than the FTSE Banks (up 39.2%) but
significantly higher than the S&P Financials Index (up
25.1%) and US regional bank index (up 30.3%).
The superior performance of the banking sector in the
third quarter can be explained, at least partially, by the
earnings in the first half. In previous quarters investors
and analysts paid greater attention to capital adequacy
and balance sheets. However their interests now
appear to turn once again to the potential generation
of revenues and profit.
In BBVA’s case, earnings in the first half were higher
than analysts’ expectations. In particular they took a
positive view of revenues and net interest income as
well as the cost reductions. The Group’s proven ability
to generate capital in an organic manner was especially
noted owing to concerns regarding the capital
adequacy of the financial system.
30-9-08 31-12-08 31-3-09
30-6-09
30-9-09
3Q09
21
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