Rest of Business
Highlights
- Balanced growth in lending activity and in customer funds in the first half of 2022
- Strong net interest income
- The cost of risk remains at low levels
- Year-on-year growth in the net attributable profit of the European businesses
Business activity (1)
(VARIATION AT CONSTANT EXCHANGE RATES COMPARED TO
31-12-21)
(1) Excluding repos.
Net interest income / AVERAGE TOTAL ASSETS
(Percentage. Constant exchange rates)
Operating income
(Millions of euros at constant exchange rates)
(1) At current exchange rates: -22.8%.
Net attributable profit (LOSS)
(Millions of euros at constant exchange rates)
(1) At current exchange rates: -19.8%.
Financial statements and relevant business indicators (Millions of euros and percentage)
| Income statement | 1H22 | ∆% | ∆% (1) | 1H21 (2) |
|---|---|---|---|---|
| Net interest income | 155 | 10.0 | 6.4 | 141 |
| Net fees and commissions | 122 | (8.0) | (12.8) | 132 |
| Net trading income | 103 | (22.2) | (25.9) | 133 |
| Other operating income and expenses | 4 | (77.1) | (78.8) | 16 |
| Gross income | 384 | (9.1) | (13.3) | 422 |
| Operating expenses | (234) | 2.5 | (2.6) | (228) |
| Personnel expenses | (119) | 4.2 | (1.3) | (114) |
| Other administrative expenses | (104) | (0.3) | (5.0) | (104) |
| Depreciation | (11) | 12.0 | 8.8 | (10) |
| Operating income | 150 | (22.8) | (25.9) | 194 |
| Impaiment on financial assets not measured at fair value through profit or loss | - | n.s. | n.s. | 15 |
| Provisions or reversal of provisions and other results | 12 | n.s. | n.s. | (4) |
| Profit (loss) before tax | 162 | (20.9) | (25.1) | 205 |
| Income tax | (34) | (24.9) | (28.7) | (46) |
| Profit (loss) for the period | 128 | (19.8) | (24.0) | 159 |
| Non-controlling interests | - | - | - | - |
| Net attributable profit (loss) | 128 | (19.8) | (24.0) | 159 |
- (1) At constant exchange rates.
- (2) Restated balances. For more information, please refer to the “Business Areas” section.
| Balance sheets | 30-06-22 | ∆% | ∆% (1) | 31-12-21 |
|---|---|---|---|---|
| Cash, cash balances at central banks and other demand deposits | 5,108 | 28.7 | 18.5 | 3,970 |
| Financial assets designated at fair value | 5,715 | 0.6 | (7.1) | 5,682 |
| Of which: Loans and advances | 4,570 | (2.6) | (10.7) | 4,691 |
| Financial assets at amortized cost | 34,950 | 15.3 | 12.9 | 30,315 |
| Of which: Loans and advances to customers | 32,142 | 19.2 | 16.6 | 26,965 |
| Inter-area positions | - | - | - | - |
| Tangible assets | 77 | 10.0 | 8.7 | 70 |
| Other assets | 326 | 12.0 | 8.3 | 291 |
| Total assets/liabilities and equity | 46,176 | 14.5 | 10.5 | 40,328 |
| Financial liabilities held for trading and designated at fair value through profit or loss | 5,024 | (0.7) | (8.9) | 5,060 |
| Deposits from central banks and credit institutions | 1,839 | 7.6 | 2.4 | 1,709 |
| Deposits from customers | 7,735 | 23.4 | 19.4 | 6,266 |
| Debt certificates | 1,414 | 21.3 | 18.2 | 1,166 |
| Inter-area positions | 25,141 | 13.8 | 11.0 | 22,085 |
| Other liabilities | 964 | 27.7 | 23.7 | 755 |
| Economic capital allocated | 4,058 | 23.4 | 20.2 | 3,287 |
| Relevant business indicators | 30-06-22 | ∆% | ∆% (1) | 31-12-21 |
|---|---|---|---|---|
| Performing loans and advances to customers under management (2) | 32,188 | 19.2 | 16.7 | 27,000 |
| Non-performing loans | 251 | (3.9) | (3.9) | 261 |
| Customer deposits under management (2) | 7,735 | 23.4 | 19.4 | 6,266 |
| Off-balance sheet funds (3) | 523 | (12.5) | (12.5) | 597 |
| Risk-weighted assets | 34,389 | 17.4 | 14.5 | 29,280 |
| Efficiency ratio (%) | 60.9 | 58.4 | ||
| NPL ratio (%) | 0.5 | 0.7 | ||
| NPL coverage ratio (%) | 120 | 116 | ||
| Cost of risk (%) | 0.00 | (0.11) |
(1) At constant exchange rates.
(2) Excluding repos.
(3) Includes pension funds.
Unless expressly stated otherwise, all the comments below on rates of change, for both activity and results, will be given at constant exchange rates. These rates, together with the changes at current exchange rates, can be found in the attached tables of the financial statements and relevant business indicators. Comments that refer to Europe exclude Spain.
Activity
The most relevant aspects of the activity of Rest of Business of BBVA Group between January and June 2022 were:
- Lending activity (performing loans under management) registered an increase (+16.7%), due to a favorable performance, mainly from BBVA's branches located in Europe, Asia and, to a lesser extent, in New York.
- Customer funds under management increased by 16.7% in the semester, with growth in time deposits, mainly from the New York branch, which more than offset the decline in demand deposits and off-balance sheet funds.
The most relevant of the evolution of the area's activity in the second quarter of 2022 has been:
- Lending activity remained stable between April and June 2022 (+0.4%) compared to the previous quarter due to the growth in the business segment that offset the deleveraging in the retail segment.
- Regarding credit risk indicators, the NPL ratio stood at 0.5%, 2 basis points below the previous quarter, mainly due to an increase in activity. The NPL coverage ratio improved by 418 basis points to 120%.
- Total customer funds grew in the quarter (+11.0%) thanks to the increase in time deposits (+21.4%), originating mainly in the New York branch, which benefited from the increase in interest rates.
Results
The most significant aspects of the year-on-year evolution in the area's income statement at the end of June 2022 are the following:
- The net interest income increased +6.4% compared to the same period of the previous year, with a positive performance in the New York branch and especially in Europe.
- Net fees and commissions decreased by 12.8% compared to the end of June 2021, due to the lower fees and commissions recorded by BBVA Securities, despite the good performance of investment banking, especially in Europe, and guarantees in the New York branch.
- The NTI line registered a year-on-year decrease of -25.9% mainly driven by the lower results of Global Markets in the United States, affected by the instability of the current context.
- Decrease in the contribution of the other operating income and expenses line, as a result of the lower contribution from BBVA Securities.
- Year-on-year decrease in operating expenses of 2.6% due to the lower expenses recorded by BBVA Securities.
- The impairment on financial assets line closed June 2022 with a slight provision compared to the release of the previous year, originated in the New York branch.
- Favorable performance of the provisions or reversal of provisions line and other results focused on lower provisions in Europe.
- As a result, the area's cumulative net attributable profit between January and June 2022 was €128m (-24.0% year-on- year).
In the second quarter of 2022 and excluding the effect of the variation in exchange rates, the Group's Rest of Businesses as a whole generated a net attributable profit of €45m (-46.3% compared to the previous quarter) mainly affected by the lower NTI generated between April and June.