Business Context and Reporting Period
This Form 6-K filing by Banco Bilbao Vizcaya Argentaria, S.A. (BBVA) reports consolidated financial results for the fiscal year ended December 31, 2024. The report, originally issued in Spanish, covers the Group's performance across its primary business areas: Spain, Mexico, Turkey, South America, and Rest of Business, alongside the Corporate Center. The filing highlights a year of strong profitability driven by recurring banking revenues, despite a challenging macroeconomic environment characterized by high inflation in certain regions and currency fluctuations.
Key Financial Metrics
| Metric | 2024 (€ Millions) | 2023 (€ Millions) | YoY Change |
|---|---|---|---|
| Net Attributable Profit | 10,054 | 8,019 | +25.4% |
| Gross Income | 35,481 | 29,542 | +20.1% |
| Net Interest Income | 25,267 | 23,089 | +9.4% |
| Operating Expenses | (14,193) | (12,308) | +15.3% |
| Impairment on Financial Assets | (5,745) | (4,428) | +29.7% |
| Total Assets | 772,402 | 775,558 | -0.4% |
| Total Equity | 60,014 | 55,265 | +8.6% |
Key Ratios and Liquidity
- Return on Equity (ROE): 18.9% (vs. 16.2% in 2023).
- Return on Tangible Equity (ROTE): 19.7% (vs. 17.0% in 2023).
- Efficiency Ratio: 40.0% (improved from 41.7% in 2023).
- Cost of Risk: 1.43% (vs. 1.15% in 2023).
- Non-Performing Loan (NPL) Ratio: 3.0% (vs. 3.4% in 2023).
- CET1 Capital Ratio (Fully Loaded): 12.88% (vs. 12.67% in 2023).
- Liquidity Coverage Ratio (LCR): 134% (consolidated).
- Earnings Per Share (EPS): €1.68 (vs. €1.29 in 2023).
Material Changes vs. Prior Period
- Profitability Surge: Net attributable profit increased by 25.4% (32.9% at constant exchange rates), driven by a 13.2% growth in recurring revenues (Net Interest Income and Net Fees & Commissions).
- Expense Growth: Operating expenses rose 18.3% at constant exchange rates, primarily due to inflation, workforce expansion, and technology investments. However, gross income growth outpaced expense growth, improving the efficiency ratio by 226 basis points.
- Provisions Increase: Impairment on financial assets increased by 32.4% at constant exchange rates, reflecting high lending growth and economic cycle timing, particularly in Mexico and Turkey.
- Balance Sheet Expansion: Loans and advances to customers grew 9.0% (driven by corporate loans +14.7%), while customer funds increased 10.8%.
- Unusual Items: Results include a €285 million charge for the temporary levy on credit institutions in Spain. Net Trading Income (NTI) surged 79.2%, largely due to hedging results on foreign currency positions (specifically the Mexican peso) recorded in the Corporate Center.
Guidance, Outlook, and Risks
Management Commentary and Outlook
Management emphasizes the Group's leadership in efficiency among Europe's largest banks, having comfortably met the 42% efficiency target. The outlook for 2025 anticipates moderate global GDP growth (3.1%) with potential headwinds from US protectionist policies and geopolitical tensions. BBVA Research forecasts Eurozone GDP growth of 1.0% in 2025 and expects further interest rate cuts by the ECB.
Shareholder Remuneration
- Final Dividend: Proposed cash gross distribution of €0.41 per share (to be paid in April 2025).
- Share Buyback: A new program of €993 million is proposed.
- Total Distribution: Expected to reach €5,027 million for 2024, representing 50% of net attributable profit.
Risks and Contingencies
- Banco Sabadell Acquisition: BBVA launched a voluntary tender offer for Banco Sabadell. The offer is subject to regulatory approvals (CNMV, Spanish antitrust authorities) and shareholder approval for capital increase. The consideration was adjusted to 1 BBVA share + €0.29 cash for every 5.0196 Sabadell shares.
- Macroeconomic Volatility: Risks include inflation remaining higher than expected, lower GDP growth, and currency fluctuations (notably the depreciation of the Mexican peso and Turkish lira).
- Hyperinflation: Continued impact in Argentina and Turkey on financial statements and monetary positions.
Investor Verification Checklist
- Acquisition Status: Verify the progress of regulatory approvals for the Banco Sabadell tender offer and the final terms of the capital increase.
- Constant Exchange Rate Impact: Review the difference between reported growth and growth at constant exchange rates, particularly for Mexico and Turkey, to understand organic performance vs. currency effects.
- Cost of Risk Trajectory: Monitor the 1.43% cost of risk, which increased due to lending growth; verify if this trend stabilizes in 2025 as economic cycles normalize.
- Efficiency Ratio Sustainability: Confirm if the 40.0% efficiency ratio can be maintained given the high inflation environment affecting operating expenses.
- Capital Buffer: Assess the CET1 ratio of 12.88% against the new SREP requirements effective January 1, 2025 (9.13% CET1 requirement).