22
4Q09
In the fourth quarter of 2009 equity markets
continued the upward trend that started in March.
Factors such as the improved outlook for the macro
level and for 2010 earnings supported the positive
sentiment. Nonetheless in recent quarters market
optimism regarding the banking sector appears to have
somewhat evaporated, resulting in negative pressures.
Investors have been underweighting bank stocks and
this tendency increased significantly towards the end of
the year. One factor that may be behind the relatively
poor performance is the uncertainty surrounding the
latest BIS rules, which might have a negative effect on
short-term investor sentiment. The proposed stiffer
capital requirements could possibly impair the capital
adequacy and liquidity of some banks in the future
and this made investors cautious.
The main indices closed the quarter with slight gains,
continuing the improvement that commenced in the
second quarter in Europe and the United States. In
Europe the Stoxx50 rose 5.4% during the fourth
quarter and the UK’s FTSE gained 4.8%. In the US
the S&P 500 increased 5.5%. In Spain the IBEX 35
failed to match other European indices, advancing
only 1.6%. However thanks to better performance in
earlier quarters, the IBEX outperformed European
and American indices for the full year. The IBEX 35
was up 29.8% in the year compared to 24.1% for
Stoxx 50 and 23.5% for the S&P 500.
The BBVA share
However in the fourth quarter bank indices failed to
keep up with general markets. The European Stoxx
Banks fell 6.1% and the FTSE Banks closed down
9.2%. The S&P Financials Index declined 3.7% and
the US regional bank index (S&P Regional Banks)
retreated 5.2%. This relative weakness can be at least
partially explained as a correction following the
record recovery that took place in earlier quarters.
However, despite the declines bank stocks close up in
the year. The Stoxx Banks in Europe was up 46.9%
compared to the beginning of the year, the FTSE
Banks gained 23.8% and the S&P Financials closed
up 14.8%.
Analysts viewed BBVA’s third quarter results as
generally positive. On the whole they beat expectations
and this increased confidence in the strength and
sustainability of the bank’s future earnings. The
analysts considered the level of capital appropriate and
valued BBVA’s proven ability to generate additional
capital organically. Earnings in Spain held up well and
there were signs of stabilisation in Mexico. In Asia,
BBVA announced during the fourth quarter that it will
increase its interest in China CITIC Bank to 15% and
this was favourably received by the market, which
believes it will strengthen long-term growth in the
region. And all these factors appear to have had an
effect on the share price. In the final quarter of 2009
the BBVA share rose 4.9% whereas Europe Stoxx
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