Rest of Business

Highlights

  • Growth in lending activity in the New York branch and in customer funds
  • Recurring income dynamism
  • NPL ratio and cost of risk remain at low levels
  • Improved efficiency

Business activity (1)
(VARIATION AT CONSTANT EXCHANGE RATES COMPARED TO 31-12-22)

(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: +39.5%.

Net attributable profit (LOSS)
(Millions of euros at constant exchange rates)


(1) At current exchange rates: +12.4%.

Financial statements and relevant business indicators (Millions of euros and percentage)

Income statement 1Q23 ∆% ∆% (1) 1Q22
Net interest income 113 50.3 49.4 75
Net fees and commissions 69 22.3 20.3 56
Net trading income 77 12.9 12.1 68
Other operating income and expenses 1 (65.8) (65.4) 3
Gross income 260 28.5 27.3 202
Operating expenses (138) 20.1 18.7 (115)
Personnel expenses (70) 13.8 12.3 (61)
Other administrative expenses (62) 28.9 27.7 (48)
Depreciation (6) 12.6 11.6 (5)
Operating income 122 39.5 38.7 87
Impairment on financial assets not measured at fair value through profit or loss (18) n.s. n.s. 7
Provisions or reversal of provisions and other results 7 (24.5) (26.0) 10
Profit (loss) before tax 111 6.0 5.2 105
Income tax (19) (16.7) (17.2) (23)
Profit (loss) for the period 92 12.4 11.6 81
Non-controlling interests
Net attributable profit (loss) 92 12.4 11.6 81
Balance sheets 31-03-23 ∆% ∆% (1) 31-12-22
Cash, cash balances at central banks and other demand deposits 4,135 3.0 4.9 4,015
Financial assets designated at fair value 6,652 30.7 33.0 5,090
Of which: Loans and advances 5,877 38.9 41.6 4,230
Financial assets at amortized cost 39,167 (3.1) (2.6) 40,425
Of which: Loans and advances to customers 35,946 (3.8) (3.3) 37,375
Inter-area positions — — — —
Tangible assets 75 (4.3) (4.0) 78
Other assets 379 10.3 11.6 343
Total assets/liabilities and equity 50,407 0.9 1.7 49,952
Financial liabilities held for trading and designated at fair value through profit or loss 5,942 35.1 37.8 4,397
Deposits from central banks and credit institutions 1,777 (35.3) (34.7) 2,745
Deposits from customers 10,070 2.5 3.2 9,827
Debt certificates 1,453 (6.9) (6.3) 1,561
Inter-area positions 25,945 (0.4) 0.2 26,060
Other liabilities 1,039 2.5 3.6 1,014
Regulatory capital allocated 4,182 (3.8) (3.2) 4,348
Relevant business indicators 31-03-23 ∆% ∆% (1) 31-12-22
Performing loans and advances to customers under management (2) 35,946 (4.0) (3.4) 37,431
Non-performing loans 252 31.0 31.0 192
Customer deposits under management (2) 10,070 2.5 3.2 9,827
Off-balance sheet funds (3) 510 (1.9) (1.9) 520
Risk-weighted assets 33,725 (3.8) (3.2) 35,064
Efficiency ratio (%) 53.1 65.0
NPL ratio (%) 0.5 0.4
NPL coverage ratio (%) 101 131
Cost of risk (%) 0.21 0.04

(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 evolution of BBVA Group's Rest of Business activity between January and March 2023 were:

  • Lending activity (performing loans under management) registered a decrease (-3.4%), due to the performance of the branches in Asia and Europe which was offset by the favorable performance of the New York branch.
  • Regarding credit risk indicators, the NPL ratio stood at 0.5%, higher than at the end of the previous year (+13 basis points), mainly due to the entry of a one-off customer.
  • Customer funds under management grew by 2.9%, thanks to the growth in time deposits in the New York branch and in Asia, more than offsetting the decline in demand deposits and off-balance sheet funds.

Results

Rest of Business achieved a net attributable profit of €92m accumulated at the end of the first quarter of 2023, 11.6% higher than in the same period of the previous year, thanks to a favorable performance of recurring income and NTI, which offset the increase in expenses in a context of higher inflation and a normalization of loan-loss provisions.

The year-on-year evolution of the main lines of the area's income statement at the end of March 2023 was particularly noteworthy:

  • The net interest income improved 49.4%, as a result of generalized interest rate hikes by central banks in the geographic areas included in this aggregate, as well as the higher volume of loans under management. Particularly noteworthy was the performance in Europe and the New York branch.
  • Net fees and commissions increased (+20.3%), with a good performance especially in the New York office, BBVA Securities and, to a lesser extent, the CIB business in Asia, which offset lower fees and commissions recorded in Europe.
  • The NTI line grew by 12.1%, supported by the results of BBVA Securities and, to a lesser extent, Global Markets in Asia and Europe.
  • Increase in operating expenses of 18.7%, mainly due to higher general and personnel expenses, mainly in Europe and the New York branch.
  • The impairment on financial assets line closed March 2023 with a slight provision compared to the release of the previous year, mainly originated in Europe.
  • The provisions or reversal of provisions line and other results decreased by 26.0% due to lower releases compared to the same period of the previous year.
  • As a result, the area's cumulative net attributable profit between January and March 2023 was €92m (+11.6% year-on- year).