Group
Quarterly evolution of results
The result achieved by the BBVA Group in the third quarter of 2023 stood at €2,083m, 2.5% above the previous quarter with the following trends standing out:
- The good performance of recurring income continues, that is, the sum of net interest income and net fees and commissions, which accelerate its quarterly growth to 13.4 % (at constant exchange rates).
- Favorable evolution of NTI (+79.9% at constant exchange rates) supported by the good performance of Global Markets in Turkey in the quarter and the better performance of the Corporate Center.
- Higher negative adjustment for hyperinflation in Turkey during the quarter, recorded in the "Other operating income and expenses" line.
- Operating expenses increase, mainly in the emerging geographical areas.
CONSOLIDATED INCOME STATEMENT: QUARTERLY EVOLUTION (MILLIONS OF EUROS)
| 2023 | 2022 | ||||||
|---|---|---|---|---|---|---|---|
| 3Q | 2Q | 1Q | 4Q | 3Q | 2Q | 1Q | |
| Net interest income | 6,434 | 5,768 | 5,642 | 5,334 | 5,252 | 4,595 | 3,943 |
| Net fees and commissions | 1,685 | 1,470 | 1,439 | 1,328 | 1,385 | 1,413 | 1,247 |
| Net trading income | 658 | 334 | 438 | 269 | 573 | 516 | 580 |
| Other operating income and expenses | (820) | (383) | (561) | (443) | (372) | (501) | (374) |
| Gross income | 7,956 | 7,189 | 6,958 | 6,489 | 6,838 | 6,022 | 5,395 |
| Operating expenses | (3.303) | (2,922) | (3,016) | (2,875) | (2,803) | (2,618) | (2,406) |
| Personnel expenses | (1.756) | (1,530) | (1,551) | (1,547) | (1,471) | (1,344) | (1,238) |
| Other administrative expenses | (1.169) | (1,054) | (1,127) | (990) | (993) | (935) | (855) |
| Depreciation | (378) | (337) | (339) | (338) | (338) | (340) | (313) |
| Operating income | 4,654 | 4,267 | 3,942 | 3,614 | 4,035 | 3,404 | 2,989 |
| Impairment on financial assets not measured at fair value through profit or loss | (1,210) | (1,025) | (968) | (998) | (940) | (704) | (737) |
| Provisions or reversal of provisions | (81) | (115) | (14) | (50) | (129) | (64) | (48) |
| Other gains (losses) | 2 | 50 | (16) | (6) | 19 | (3) | 20 |
| Profit (loss) before tax | 3,365 | 3,178 | 2,944 | 2,559 | 2,985 | 2,634 | 2,225 |
| Income tax | (1,226) | (1,028) | (950) | (850) | (1,005) | (680) | (903) |
| Profit (loss) for the period | 2,139 | 2,150 | 1,994 | 1,709 | 1,980 | 1,954 | 1,321 |
| Non-controlling interests | (56) | (118) | (148) | (146) | (143) | (120) | 3 |
| Net attributable profit (loss) excluding non-recurring impacts | 2.083 | 2,032 | 1,846 | 1,563 | 1,838 | 1,834 | 1,325 |
| Discontinued operations and Other (1) | - | - | - | - | - | (201) | - |
| Net attributable profit (loss) | 2.083 | 2,032 | 1,846 | 1,563 | 1,838 | 1,633 | 1,325 |
| Adjusted earning (loss) per share (euros) (2) | 0.33 | 0.33 | 0.30 | 0.25 | 0.29 | 0.29 | 0.21 |
| Earning (loss) per share (euros) (2) | 0.33 | 0.33 | 0.29 | 0.24 | 0.28 | 0.24 | 0.19 |
General note: 2022 figures have been restated according to IFRS 17 - Insurance contracts.
(1) Includes the net impact arisen from the purchase of offices in Spain in the second quarter of 2022 for €-201m.
(2) Adjusted by additional Tier 1 instrument remuneration. For more information, see Alternative Performance Measures at the end of this report.
Year-on-year performance of results
The BBVA Group generated a net attributable profit of €5,961m between January and September of 2023, which represents an increase of 24.3% compared to the same period of the previous year, driven by the performance of recurring income from the banking business, mainly the net interest income, which grew at a rate of 29.4%.
These results include the recording for the total annual amount paid for the temporary tax on credit institutions and financial credit institutions3 for €215m, included in the other operating income and expenses line of the income statement.
CONSOLIDATED INCOME STATEMENT (MILLIONS OF EUROS)
Jan.-Sep. 23 |
∆% |
∆% at constant exchange rates |
Jan.-Sep. 22 |
|
|---|---|---|---|---|
| Net interest income | 17,843 | 29.4 | 36.5 | 13,790 |
| Net fees and commissions | 4,594 | 13.6 | 17.5 | 4,044 |
| Net trading income | 1,430 | (14.3) | (0.8) | 1,669 |
| Other operating income and expenses | (1,763) | 41.3 | 6.4 | (1,248) |
| Gross income | 22,104 | 21.1 | 31.8 | 18,255 |
| Operating expenses | (9,241) | 18.1 | 22.3 | (7,826) |
| Personnel expenses | (4,837) | 19.3 | 24.8 | (4,053) |
| Other administrative expenses | (3,350) | 20.4 | 24.8 | (2,783) |
| Depreciation | (1,054) | 6.4 | 5.6 | (990) |
| Operating income | 12,863 | 23.3 | 39.7 | 10,428 |
| Impairment on financial assets not measured at fair value through profit or loss | (3,203) | 34.6 | 35.5 | (2,380) |
| Provisions or reversal of provisions | (210) | (12.8) | 0.5 | (241) |
| Other gains (losses) | 37 | - | 29.7 | 37 |
| Profit (loss) before tax | 9,487 | 20.9 | 42.4 | 7,844 |
| Income tax | (3,204) | 23.8 | 41.7 | (2,588) |
| Profit (loss) for the period | 6,283 | 19.5 | 42.7 | 5,256 |
| Non-controlling interests | (322) | 24.1 | n.s. | (259) |
| Net attributable profit (loss) excluding non-recurring impacts | 5,961 | 19.3 | 31.8 | 4,997 |
| Discontinued operations and Other (1) | - | - | - | (201) |
| Net attributable profit (loss) | 5,961 | 24.3 | 37.9 | 4,795 |
| Adjusted earning (loss) per share (euros) (2) | 0.96 | 0.79 | ||
| Earning (loss) per share (euros) (2) | 0.96 | 0.73 |
General note: 2022 figures have been restated according to IFRS 17 - Insurance contracts.
(1) Includes the net impact arisen from the purchase of offices in Spain in the second quarter of 2022 for €-201m.
(2) Adjusted by additional Tier 1 instrument remuneration. For more information, see Alternative Performance Measures at the end of this report.
Unless expressly indicated otherwise, to better understand the changes under the main headings of the Group's income statement, the year-on-year rates of change provided below refer to constant exchange rates. When comparing two dates or periods in this report, the impact of changes in the exchange rates against the euro of the currencies of the countries in which BBVA operates is sometimes excluded, assuming that exchange rates remain constant. For this purpose, the average exchange rate of the currency of each geographical area of the most recent period is used for both periods, except for those countries whose economies have been considered hyperinflationary, for which the closing exchange rate of the most recent period is used.
The accumulated net interest income as of September 30, 2023 was higher than the same period of the previous year (+36.5%), with increases in all business areas due to the customer spread improvement in the main geographical areas and higher performing loan volumes. The good evolution in Mexico, South America and Spain is noteworthy.
Positive evolution in the net fees and commissions line, which increased by 17.5% year-on-year due to favorable performance in payment systems and demand deposits. By business areas, All geographical areas, except Spain, showed a favorable evolution.
NET INTEREST INCOME / AVERAGE TOTAL ASSETS
(PERCENTAGE)
NET INTEREST INCOME PLUS NET FEES AND COMMISSIONS
(MILLIONS OF EUROS AT CONSTANT EXCHANGE RATES)
(1) At current exchange rates: +25.8%.
NTI recorded a flat evolution (-0.8%) at the end of September 2023, due to the negative results recorded in the Corporate Center, partially offset by the favorable evolution of this line in all business areas except Spain.
The other operating income and expenses line accumulated a result of €-1,763m as of September 30, 2023, compared to €-1,248m in the same period of the previous year, mainly due to the higher negative adjustment for hyperinflation in Argentina. This line also includes the contribution to the Single Resolution Fund (SRF) in Spain, which in 2023 was lower than the previous year's contribution, and the recognition, in the first nine months of 2023, of €215m, corresponding to the total annual amount paid for the temporary tax on credit institutions and financial credit establishments, also in Spain.
GROSS INCOME (MILLIONS OF EUROS AT CONSTANT EXCHANGE RATES)
(1) At current exchange rates: +21.1%.
Year-on-year basis, operating expenses increased by 22.3% at the Group level. This increase is largely impacted by the inflation rates observed in the countries in which the Group operates, which, on the one hand, have been affected by the measures implemented by the Group in 2023 to compensate the loss of purchasing power of the workforce and, on the other hand, have had an effect in general expenses.
Notwithstanding the above, thanks to the remarkable growth in gross income (+31.8%), the efficiency ratio stood at 41.8% as of September 30, 2023, with an improvement of 328 basis points compared to the ratio recorded 12 months earlier. All business areas had a favorable performance in terms of efficiency.
OPERATING EXPENSES (MILLIONS OF EUROS AT CONSTANT EXCHANGE RATES)
(1) At current exchange rates: +18.1%.
EFFICIENCY RATIO (PERCENTAGE)
Impairment on financial assets not measured at fair value through profit or loss (impairment on financial assets) at the end of September 2023 was 35.5% higher than in the same period of the previous year, with lower requirements in Turkey, which were offset by higher provisioning needs, mainly in South America and Mexico, in a context of rising interest rates and growth in the most profitable segments, in line with the Group's strategy.
OPERATING INCOME
(MILLIONS OF EUROS AT CONSTANT EXCHANGE RATES)
(1) At current exchange rates: +23.3%.
IMPAIRMENT ON FINANCIAL ASSESTS
(MILLIONS OF EUROS AT CONSTANT EXCHANGE RATES)
(1) At current exchange rates: +34.6%.
The provisions or reversal of provisions line (hereinafter, provisions) remained stable compared to the same period of the previous year, with lower provisions in Mexico and South America, offset by higher provisions in the rest of areas and the Corporate center.
For its part, the other gains (losses) line closed September 2023 with a balance of €37m, which compares favorably with the also positive result of the same period of the previous year.
As a result of the above, the BBVA Group generated a net attributable profit of €5,961m between January and September of the year 2023, which compares very positively with the result for the same period of the previous year (+37.9%). These solid results are supported by the favorable evolution of net interest income and, to a lesser extent, net fees and commissions, which offset higher operating expenses and the increase in provisions for impairment losses on financial assets.
The cumulative net attributable profits, in millions of euros, at the end of September 2023 for the business areas that compose the Group were as follows: €2,110m in Spain, €3,987m in Mexico, €367m in Turkey, €496m in South America and €322m in Rest of Business.
NET ATTRIBUTABLE PROFIT (LOSS)
(MILLIONS OF EUROS AT CONSTANT EXCHANGE RATES)
(1) At current exchange rates: +24.3%.
NET ATTRIBUTABLE PROFIT (LOSS) EXCLUDING NON-RECURRING IMPACTS
(MILLIONS OF EUROS AT CONSTANT EXCHANGE RATES)
General note: non-recurring impacts include the net impact arisen from the purchase of offices in Spain in 2Q22.
(1) At current exchange rates: +19.3%.
The Group's excellent performance has also allowed it accelerate value creation, as reflected in the growth of the tangible book value per share and dividends, which at the end of September 2023 was 17.7% higher than in the same period of the previous year.
TANGIBLE BOOK VALUE PER SHARE AND DIVIDENDS (EUROS)
General note: replenishing dividends paid in the period. For more information, see Alternative Performance Measures at the end of this report.
EARNING (LOSS) PER SHARE (1) (EUROS)
General note: adjusted by additional Tier 1 instrument remuneration. Adjusted EPS excludes, in addition, the net impact arisen from the purchase of offices in Spain in 2Q22. For more information, see Alternative Performance Measures at the end of this report.
(1) The accumulated EPS stands at €0.73 and €0.96 in 9M22 and 9M23, respectively.
The Group’s profitability indicators improved not only in year-on-year terms but also compared to the end of December, supported by the favorable performance of results.
ROE AND ROTE (1) (PERCENTAGE)
ROA AND RORWA (1) (PERCENTAGE)
(1) The ratio of January-September 2022 and 2022 excludes the net impact arisen from the purchase of offices in Spain.
3 In compliance with Law 38/2022, of December 27, which establishes the obligation to pay a patrimonial benefit of a public and non-taxable nature during the years 2023 and 2024 for credit institutions that operate in Spanish territory whose sum of total interest income and fee and commission income corresponding to the year 2019 is equal to or greater than €800m.