Solvency
Capital base
The Group's CET1 fully-loaded ratio stood at 12.70%2 as of March 31, 2022, which allows to maintain a large management buffer over the Group's CET1 requirement (8.60%), also standing above the Group's target management range established at 11.5-12% of CET1.
This ratio includes the negative impact of 10 basis points from the agreement reached with the company "Neon Payments Limited". Isolating this effect, the CET1 ratio increased by 5 basis points, driven by the recurrent generation of profit net of dividends and remuneration of AT1 instruments, which contributed +23 basis points and which has made it possible to neutralize the negative evolution of the portfolio valuation due to the uncertainty in market variables, as well as the growth of risk-weighted assets (RWA) characterized, mainly, by the increase in lending activity.
The consolidated fully-loaded additional Tier 1 capital (AT1) stood at 1.84% as of March 31, 2022, resulting in a 3 basis points decrease from the previous quarter. On April 6, 2022, the Group announced its intention to prepay the issue of preferred shares eventually convertible into ordinary shares (CoCos) of BBVA, carried out on May 24, 2017, for a joint nominal amount of €500m at the first review date, next May 24, 2022. The impact of this amortization will be recorded in the following quarter, and is estimated at -16 basis points of the fully loaded AT1 ratio.
The consolidated fully-loaded Tier 2 ratio as of March 31, 2022 stood at 2.16%, a decrease of 21 basis points in the quarter. The total fully-loaded capital adequacy ratio stands at 16.71%.
Following the latest SREP (Supervisory Review and Evaluation Process) decision, received in February 2022 and with entry into force as from March 1, 2022, the ECB has informed the Group that the Pillar 2 requirement remains unchanged at 1.5% (of which at least 0.84% must be fulfilled with CET1). Therefore, BBVA must maintain a CET1 capital ratio of 8.60% and a total capital ratio of 12.76% at consolidated level.
The phased-in CET1 ratio at consolidated level stood at 12.81% as of March 31, 2022, considering the transitory effect of the IFRS 9 standard. AT1 reached 1.84% and Tier 2 reached 2.16%, resulting in a total capital adequacy ratio of 16.82%.
FULLY-LOADED CAPITAL RATIOS (PERCENTAGE)
CAPITAL BASE (MILLIONS OF EUROS)
| CRD IV phased-in | CRD IV fully-loaded | |||||
|---|---|---|---|---|---|---|
| 31-03-22 (1) (2) | 31-12-21 | 31-03-21 | 31-03-22 (1) (2) | 31-12-21 | 31-03-21 | |
| Common Equity Tier 1 (CET 1) | 40,537 | 39,949 | 43,234 | 40,154 | 39,184 | 42,092 |
| Tier 1 | 46,364 | 45,687 | 48,955 | 45,982 | 44,922 | 47,818 |
| Tier 2 | 6,838 | 7,383 | 8,294 | 6,837 | 7,283 | 7,959 |
| Total Capital (Tier 1 + Tier 2) | 53,203 | 53,069 | 57,249 | 52,819 | 52,205 | 55,778 |
| Risk-weighted assets | 316,325 | 307,795 | 354,342 | 316,095 | 307,335 | 354,433 |
| CET1 (%) | 12.81 | 12.98 | 12.20 | 12.70 | 12.75 | 11.88 |
| Tier 1 (%) | 14.66 | 14.84 | 13.82 | 14.55 | 14.62 | 13.49 |
| Tier 2 (%) | 2.16 | 2.40 | 2.34 | 2.16 | 2.37 | 2.25 |
| Total capital ratio (%) | 16.82 | 17.24 | 16.16 | 16.71 | 16.99 | 15.74 |
- (1) As of March 31, 2022, the difference between the phased-in and fully-loaded ratios arises from the temporary treatment of certain capital items, mainly of the impact of IFRS 9, to which the BBVA Group has adhered voluntarily (in accordance with article 473bis of the CRR and the subsequent amendments introduced by the Regulation (EU) 2020/873).
- (2) Preliminary data.
Regarding shareholder remuneration, on April 8, 2022, a cash payment of €0.23 gross against voluntary reserves was made for each outstanding share of BBVA entitled to receive this amount as additional shareholder remuneration for the year 2021, approved by the Annual General Meeting held on March 18, 2022. Thus, the total amount of cash distributions for the year 2021 was €0.31 gross per share, the largest distribution in 10 years.
The total shareholder remuneration includes, in addition to the aforementioned cash payments, the extraordinary remuneration resulting from the execution of the program scheme announced on October 29, 2021 for the buyback of own shares up to a maximum amount of 3,500 million euros. Regarding the first tranche of the share buyback program, BBVA announced on March 3, 2022 the completion of the program, having reached the maximum monetary amount of €1,500m disclosed in the inside information of November 19, 2021. The total number of own shares acquired was 281,218,710 shares. Additionally, the Bank announced on March 16, 2022 the execution of the First Segment of the Second Tranche up to a maximum amount of 1,000 million euros or a maximum number of shares of 356,551,306. This First Segment is being externally executed by Goldman Sachs International thorough Kepler Cheuvreux, S.A. as broker. Upon full execution of the First Segment, a second segment will be executed up to the remaining amount or remaining number of shares for the complete execution of the program scheme. From March 16 to March 31, 2022 and from April 1 to April 21, 2022, Goldman Sachs International, acting as lead manager for the First Segment through the broker Kepler Cheuvreux, S.A., has acquired 8,540,302 and 60,285,015 BBVA shares respectively.
As a result, the Group’s pay-out at the end of the 2021 financial year amounted to 43% of the same year’s ordinary profit3, thus the Group complies with what is indicated in its shareholder remuneration policy, which establishes the annual distribution of between 40% and 50% of the consolidated ordinary profit for each financial year.
SHAREHOLDER STRUCTURE (31-03-22)
| Shareholders | Shares issued | |||
|---|---|---|---|---|
| Number of shares | Number | % | Number | % |
| Up to 500 | 336,503 | 41.3 | 63,002,367 | 0.9 |
| 501 to 5,000 | 375,689 | 46.1 | 663,481,382 | 10.0 |
| 5,001 to 10,000 | 55,273 | 6.8 | 388,853,888 | 5.8 |
| 10,001 to 50,000 | 42,990 | 5.3 | 822,168,494 | 12.3 |
| 50,001 to 100,000 | 3,068 | 0.4 | 209,065,809 | 3.1 |
| 100,001 to 500,000 | 1,432 | 0.2 | 259,986,825 | 3.9 |
| More than 500,001 | 278 | 0.0 | 4,261,327,815 | 63.9 |
| Total | 815,233 | 100.0 | 6,667,886,580 | 100.0 |
With regard to MREL (Minimum Requirement for own funds and Eligible Liabilities) requirements, BBVA must reach, by January 1, 2022, an amount of own funds and eligible liabilities equal to 21.46% of the total RWAs of its resolution group, at a sub-consolidated4 level (hereinafter, the "MREL in RWAs"). This MREL in RWA does not include the combined capital buffer requirement which, according to applicable regulations and supervisory criteria, would currently be 3.26%, and it is currently the most restrictive requirement for BBVA. Given the structure of own funds and admissible liabilities of the resolution group, as of March 31, 2022, the MREL ratio in RWAs stands at 27.61%5,6, complying with the aforementioned requirement. The impact of the aforementioned early amortization of the CoCos from May 2017 will be recorded in the next quarter.
With the aim of reinforcing compliance with these requirements, in January 2022, BBVA, S.A. issued a €1 billion senior non-preferred bond, with a maturity of 7 years and the option for early redemption in the sixth year, with a coupon of 0.875%.
Lastly, the Group's leverage ratio stood at 6.7% fully-loaded (6.7% phased-in)7 as of March 31, 2022. These figures include the effect of the temporary exclusion of certain positions with the central banks of the different geographical areas where the Group operates, as foreseen in the “CRR-Quick fix”.
Ratings
During the first quarter of 2022, BBVA’s rating has continued to show its strength and all agencies have maintained their rating in the A category. After upgrading BBVA’s rating one notch to A from A- in December 2021, S&P changed the outlook from negative to stable in March 2022, after taking a similar action in the Spanish sovereign rating (also A, with stable outlook). Also in March 2022, DBRS reported the result of its annual review of BBVA, affirming the rating at A (high) with a stable outlook. Moody’s and Fitch have maintained BBVA’s rating unchanged in the quarter at A3 and A-, respectively, both with a stable outlook. The following table shows the credit ratings and outlook assigned by the agencies:
Ratings
| Rating agency | Long term (1) | Short term | Outlook |
|---|---|---|---|
| DBRS | A (high) | R-1 (middle) | Stable |
| Fitch | A- | F-2 | Stable |
| Moody’s | A3 | P-2 | Stable |
| Standard & Poor’s | A | A-1 | Stable |
(1) Ratings assigned to long term senior preferred debt. Additionally, Moody’s and Fitch assign A2 and A- rating respectively, to BBVA’s long term deposits.
2 This level of CET1 includes the deduction of the total amount of the share buyback program authorized by the supervisor for a maximum amount of €3,500m that were already registered as of December 2021.
3 Excluding amounts and items of an extraordinary nature included in the consolidated income statement.
4 In accordance with the resolution strategy MPE (“Multiple Point of Entry”) of the BBVA Group, established by the SRB, the resolution group is made up of Banco Bilbao Vizcaya
Argentaria, S.A. and subsidiaries that belong to the same European resolution group. As of June 30, 2021, the total RWAs of the resolution group amounted to €190,377m and the total exposure considered for the purpose of calculating the leverage ratio amounted to €452,275m.
5 Own resources and eligible liabilities to meet, both, MREL and the combined capital buffer requirement applicable.
6 As of March 31, 2022, the MREL ratio in Leverage Ratio stands at 11.08% and the subordination ratios in terms of RWAs and in terms of exposure of the leverage ratio, stand at 24.07% and 9.66%, respectively, being preliminary data.
7 The Group’s leverage ratio is provisional at the date of release of this report.