BBVA

2022

Dear shareholders,

2022 was a year of significant geopolitical and economic challenges, but the strength of BBVA and all of its franchises, the effort and dedication of our team, together with our leadership in strategic areas such as innovation and sustainability, have allowed us to grow in a profitable and sustainable manner, contributing to the economic and social growth of the communities where we have a presence.

We added over 11 million new customers worldwide. Our rate of growth increases every year. The pace at which we acquire new customers has more than doubled from five years ago. This enormous progression is due to the fact that we were pioneers, and made a decisive commitment to digitization. Currently, 55 percent of new customers join the bank through digital channels.

Furthermore, we are increasingly using new technologies and data so our customers can make better decisions, and thus improve their financial health. Our clients are increasingly satisfied with our service, as evidenced by the net promoter score (NPS), which grew five percentage points over the past year, placing us as a leader in our footprint.

Today we serve almost 70 million customers, contributing with our main activity, granting credit, to meet their personal, family and business needs, while supporting their economic growth and the development of more prosperous and inclusive communities.

In 2022, we increased the amount of credit granted by 13 percent, helping more than 100,000 families to purchase their home and financing the growth of almost half a million SMEs and the self-employed, and more than 70,000 larger companies, thereby promoting job creation. Moreover, we mobilized over €9 billion to finance inclusive growth initiatives, including infrastructure, social mortgages and insurance policies. We have also supported vulnerable entrepreneurs with microcredits through programs like those of the BBVA Microfinance Foundation.

We amplify the impact with our Community Commitment, which we announced in 2021, by which we will devote €550 million to social initiatives by 2025, together with our foundations. By the end of 2022, we had already surpassed €230 million, 43 percent of the total, benefiting more than 62 million people.

In addition to these achievements and the positive impact on the communities where we develop our business, our pioneering strategy is also generating good financial results: We posted a net attributable profit of €6.42 billion, mainly driven by Mexico, the country that contributes the most to the bank’s results. It is also important to note that Spain is starting to return to 2010 levels, thanks to the normalization of interest rates and activity growth, following years of deleveraging, as well as the improvement in efficiency and credit quality.

We continued to create value for our shareholders. The return on tangible equity (ROTE) stood at 15.3 percent, and growth in tangible book value per share plus dividends paid was nearly 20 percent for the year.

These solid results allow us to distribute more than €3 billion, almost half of the profit, to our 800,000 shareholders, most of them small savers. We are proposing to the Annual General Meeting the distribution of a cash dividend of 31 euro cents per share, in addition to the 12 euros cents paid last October, as well as a new €422 million share buyback program.

Thanks to these results, we can also reinvest in the business, so we can continue to grow our customer franchise, reaching more people and businesses, improving service, extending credit and fostering decarbonization.

At BBVA, we are convinced that there are many opportunities in the current environment, despite the challenges that remain in 2023. The context of uncertainty will continue, both from a geopolitical standpoint as a result of the invasion of Ukraine, and from a financial standpoint due to inflation and the second-round effects, which could lead to additional interest rate hikes. Nevertheless, recent data, better than expected, seems to indicate that the economic outlook and growth will improve in 2023, as some of the uncertainties start to dissipate, with growth in practically all countries where we have a presence.

Beyond the more immediate context, major trends like innovation and sustainability will continue to transform the economy and our societies. For this reason, BBVA’s anticipation and vision, and our strategic priorities give us a significant competitive advantage.

Innovation is a key factor in BBVA’s profitable growth strategy. One example of this is the bank’s firm commitment to digital banking solutions to grow in new and attractive markets, like the digital neobanks. At the end of 2021, we launched BBVA Italy, which already has 160,000 customers, exceeding our initial expectations. The creation of BBVA Spark in 2022 also stands out, offering a comprehensive package of financial services to accompany the innovative companies that are shaping the future throughout their different stages of growth. Furthermore, investment in venture capital allows us to know firsthand about new technologies and generate business for the future.

Just as we were leaders in taking advantage of the huge transformation brought about by digitization and innovation, we have another enormous opportunity before us: sustainability, the other pillar of our strategy.

As I have mentioned on previous occasions, the decarbonization of the economy represents the greatest disruption in history, not only due to the magnitude of the challenge, which requires colossal investments through 2050, but due to how urgently it must be addressed.

It is an enormous challenge that will bring change to practically all of our habits and behaviors, affecting all companies and industries, which will be profoundly transformed by the process.

Therefore, at BBVA, we have been taking steps in this direction for some time now. As a founding member of the Net Zero Banking Alliance, we made the commitment to be neutral in carbon emissions by 2050. We have been carbon neutral in terms of our own emissions for two years now, and we aspire to also be carbon neutral including the emissions of our customers and suppliers.

Our priority is to help our clients in their decarbonization transition, supporting them with advice and financing.

Sustainability is already translating into business, and is currently a key pillar of growth for the Group. In 2022, we channeled €50 billion of sustainable financing. This new business is growing so quickly that we tripled our initial sustainable finance goal to €300 billion for the period 2018-2025. All of this has made us the top ranked European bank in the Dow Jones Sustainability Index for the third consecutive year.

It has definitely been a great year for BBVA. One that has allowed us to make decisive progress in our strategy and to get closer to meeting the 2024 objectives we announced at the Investor Day.

Without a doubt, all of this was made possible thanks to the people who make up BBVA, with their professionalism, effort, dedication and commitment to our values: ‘the customer comes first,’ ‘we think big’ and ‘we are one team.’

I would especially like to recognize the team for stepping up to help those affected by the earthquakes in Turkey, and those of you who are helping to alleviate this terrible situation with your contributions.

In conclusion, I cannot end this letter without thanking you once again for your trust over the past year. With your support, we will continue to accompany families and businesses in 2023, boosting growth to create a more sustainable and inclusive society.

Carlos Torres Vila Chair