“On paper, we see New Mexico and Albuquerque particularly as very high-growth areas with high-worth potential,” Sánchez said in a Journal interview. He was visiting Albuquerque from his Houston headquarters to meet with employees Tuesday.
BBVA Compass operates 716 branches in Alabama, Arizona, California, Colorado, Florida, New Mexico and Texas.
“You have the demographics, the competitive concentration and the diversification of the economy that makes this a very attractive market going forward,” Sánchez said. “We would rank Albuquerque probably in the top 10 (metropolitan statistical areas) in the nation in terms of attractiveness.”
Sánchez acknowledged that Albuquerque’s economy has been troubled “really because of public-sector spending slowing down,” but that over a five-year period BBVA Compass expects growth.
“We believe it has the ingredients to be a top growth market,” he said. “It’s a virtuous combination of private sector and public research that we believe is critical. You have the educational infrastructure that supports it. Then there is the demographics” which suggest population growth will accelerate.
BBVA Compass also expects growth in southern New Mexico, thanks to an improving Mexican economy. The bank’s Spanish parent company, BBVA, a global financial institution, has committed $3.5 billion to expand in Mexico through its Bancomer unit.
“We see very strong potential on the Mexican side” of the border near El Paso, Sánchez said. “Every day it is becoming a more tangible alternative to some Asian destinations where some American companies have taken their manufacturing plants. Mexico is making a strong comeback. The whole region is going to benefit greatly from that.”
Expansion in New Mexico may not come in the form of new buildings, branches and drive-up windows, he said. “The industry is at a crossroads when it comes to brick-and-mortar systems. We believe the infrastructure we’d deploy will not be what it used to look like.” Sánchez said BBVA Compass is experimenting with “new customer-relationship models. When we figure out how it works, we’ll come to see this market as a top priority.”
While there are exceptions, Sánchez said, much of the nation’s private sector sees too much uncertainty to launch new projects that require bank financing.
“We’re seeing a lot of companies and businesses having second thoughts about growth projects,” he said. “We think that that’s for the most part because of the uncertainty they see in general around public policy.”
BBVA Compass made about $16 billion worth of commercial loans last year, a 30 percent increase over the year before, though a lot of those loans were made to refinance existing debt, he said.