Banco Bilbao Vizcaya Argentaria, S.A. (BBVA) — 2023 Form 20-F
Reporting period: Fiscal year ended December 31, 2023. This is an annual report, not a standalone fourth-quarter filing; the source does not provide a separate Q4 income statement. Consolidated financial statements are prepared under IFRS as issued by the IASB and EU-IFRS.
Business context and key financial metrics
BBVA is a diversified banking and financial services group operating principally in Spain, Mexico, Turkey and South America. Results reflect higher interest rates, inflation and currency movements, as well as the application of hyperinflation accounting in Turkey, Argentina and Venezuela.
| Metric | FY2023 | FY2022 |
|---|---|---|
| Gross income | €29.5bn | €24.7bn |
| Net interest income | €23.1bn | €19.1bn |
| Net fees and commissions | €6.3bn | €5.4bn |
| Operating profit before tax | €12.4bn | €10.3bn |
| Profit | €8.4bn | €6.8bn |
| Profit attributable to parent | €8.0bn | €6.4bn |
| Net interest margin | 3.08% | 2.73% |
| Return on average shareholders’ funds | 16.2% | 14.0% |
| Total assets | €775.6bn | €712.1bn |
| Total equity | €55.3bn | €50.5bn |
| Cash and cash equivalents at year-end | €75.4bn | €79.8bn |
| Net cash flows from operating activities | (€0.7bn) | €23.7bn |
| Customer deposits | €437.4bn | €406.4bn |
| Debt certificates issued | €68.7bn | €55.4bn |
Liquidity ratios remained above regulatory minima: the consolidated liquidity coverage ratio (LCR) was 149% and the net stable funding ratio (NSFR) was 131% at year-end 2023, versus 159% and 135%, respectively, in 2022. BBVA repaid approximately €35bn of TLTRO III funding since December 2022; €3.66bn remained outstanding at year-end 2023. The filing states working capital is sufficient for present requirements and planned strategies.
Material changes versus the prior comparable period
- Profit attributable to the parent rose 26.1%; net interest income increased 20.7% and gross income increased 19.4%.
- Interest expense rose 101.2%, partly offsetting higher interest income. Administration costs increased 16.3%, and impairment charges on financial assets increased 31.1% to €4.4bn.
- Net loan charge-offs rose to 0.89% of average loans at amortized cost from 0.65%. Impaired loans were €14.4bn, up 7.1%; the impaired-loan ratio was 3.49%, broadly flat versus 3.47% in 2022.
- Results varied by region: parent-attributable profit grew in Spain (65.3%) and Mexico (29.3%), was nearly flat in Turkey (up 4.6%), and declined in South America (16.9%). These comparisons are affected by exchange rates and, in Turkey and Argentina, hyperinflation accounting.
- Customer deposits increased 7.6% in reported euros. Loans and advances to customers were €403.4bn gross, versus €384.0bn in 2022. Reported operating cash flow swung from €23.7bn inflow to a €0.7bn outflow, with material movements in operating assets and liabilities.
Outlook, management commentary, risks and unusual items
- Outlook: BBVA Research forecast global GDP growth of about 3.0% in 2024; Spain 1.5%, Mexico 2.9%, Turkey 3.5%, Argentina a contraction of about 4.0%, Colombia 1.5% and Peru 2.0%. These are research forecasts, not earnings guidance. Management expected high interest rates to persist in the near term and discussed potential gradual easing around mid-2024 in the U.S. and euro area.
- Hyperinflation and currency effects: IAS 29 and IAS 21 produced 2023 losses of €2.610bn in Turkey (€2.242bn attributable to owners of the parent) and €2.314bn in Argentina (€1.574bn attributable to owners of the parent). The Turkish lira depreciated 38.9% against the euro at year-end; the Argentine peso depreciated 78.9%. Reported results are therefore sensitive to inflation accounting and currency translation.
- Unusual charges: BBVA recorded a €215m Spanish temporary bank tax in 2023 and estimated a further €285m impact for 2024. Turkey earthquake-related provisions included €25m of credit impairment on exposures moved to Stage 2. The 2022 comparison includes a €201m after-tax loss related to the Tree Inversiones property acquisition.
- Capital and distributions: The phased-in CET1 ratio was 12.67% and total capital ratio 16.58% at year-end. The Group’s CET1 target range is 11.5%–12.0%. BBVA reported compliance with its MREL requirements. The 2023 dividend paid included €0.16 per share interim; a €0.39 final dividend was proposed for shareholder approval, and a €781m share buyback was announced after year-end and authorized by the ECB.
- Key risks: Exposure is concentrated in Spain, Mexico and Turkey; risks include credit deterioration from high rates, real-estate collateral declines, funding and deposit competition, sovereign and currency volatility, regulatory and tax changes, geopolitical shocks, climate risks, cyber and operational incidents, and legal proceedings. The filing cites €696m of provisions for legal and tax contingencies at year-end, while warning that ultimate losses may exceed provisions.
- Legal matters: The Spanish criminal investigation concerning services by Cenyt remained unresolved; no formal accusation against BBVA had been made, and the pre-trial phase ended January 29, 2024. Separately, a U.S. case concerning alleged Mexican government-bond collusion was remanded for further proceedings in February 2024.
- Accounting and audit: IFRS 17 was applied from 2023 and 2022 comparatives were restated; the reported transition impact on equity was not significant. The auditor issued an unqualified opinion on the financial statements and internal control over financial reporting. Expected credit losses and fair-value measurement of certain instruments were identified as critical audit matters.
Important facts for investors to verify
- Reconcile annual reported earnings and cash flows with the complete audited statements; do not treat these FY figures as Q4-only results.
- Review credit quality by geography, especially rising charge-offs and impairment in Mexico and South America and the Spanish mortgage portfolio; assess coverage and collateral assumptions.
- Assess sensitivity of net interest income, deposit costs, funding and asset valuations to changing interest rates, including the Group’s fixed/floating-rate mix.
- Examine the effects of Turkish and Argentine inflation accounting, exchange-rate translation and the related monetary-position losses on reported earnings and equity.
- Track capital headroom, MREL compliance, proposed dividends and buybacks, and any regulatory limits on distributions or subsidiary dividend repatriation.
- Monitor the Cenyt investigation, the remanded U.S. litigation and other legal or tax contingencies, including whether provisions remain adequate.
- Confirm the final approval and payment of the proposed €0.39 dividend and the execution and amount of the €781m buyback.