Group
Unless expressly indicated otherwise, for a better understanding of the changes under the main headings of the Group's income statement, the 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.
Quarterly evolution of results
The result achieved by the BBVA Group in the fourth quarter of 2023 was €2,058m, 26.1% above the previous quarter with the following trends standing out:
- In the recurring income, stability of net interest income (-0.1%) and good evolution of net fees and commissions (+10.8%).
- Favorable evolution of NTI (+45.0%), with Mexico and South America standing out.
- The results under the "Other operating income and expenses" line improved compared to the previous quarter, despite the contribution to the Deposit Guarantee Fund (FGD, for its acronym in Spanish) in Spain, mainly thanks to the lower hyperinflation adjustment in Turkey, whose quarterly inflation rate decreased considerably.
CONSOLIDATED INCOME STATEMENT: QUARTERLY EVOLUTION (MILLIONS OF EUROS)
| 2023 | 2022 | |||||||
|---|---|---|---|---|---|---|---|---|
| 4Q | 3Q | 2Q | 1Q | 4Q | 3Q | 2Q | 1Q | |
| Net interest income | 5,246 | 6,434 | 5,768 | 5,642 | 5,334 | 5,252 | 4,595 | 3,943 |
| Net fees and commissions | 1,694 | 1,685 | 1,470 | 1,439 | 1,328 | 1,385 | 1,413 | 1,247 |
| Net trading income | 753 | 658 | 334 | 438 | 269 | 573 | 516 | 580 |
| Other operating income and expenses | (255) | (820) | (383) | (561) | (443) | (372) | (501) | (374) |
| Gross income | 7,438 | 7,956 | 7,189 | 6,958 | 6,489 | 6,838 | 6,022 | 5,395 |
| Operating expenses | (3,068) | (3,303) | (2,922) | (3,016) | (2,875) | (2,803) | (2,618) | (2,406) |
| Personnel expenses | (1,693) | (1,756) | (1,530) | (1,551) | (1,547) | (1,471) | (1,344) | (1,238) |
| Other administrative expenses | (1,025) | (1,169) | (1,054) | (1,127) | (990) | (993) | (935) | (855) |
| Depreciation | (349) | (378) | (337) | (339) | (338) | (338) | (340) | (313) |
| Operating income | 4,370 | 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 | (1,225) | (1,210) | (1,025) | (968) | (998) | (940) | (704) | (737) |
| Provisions or reversal of provisions | (163) | (81) | (115) | (14) | (50) | (129) | (64) | (48) |
| Other gains (losses) | (49) | 2 | 50 | (16) | (6) | 19 | (3) | 20 |
| Profit (loss) before tax | 2,932 | 3,365 | 3,178 | 2,944 | 2,559 | 2,985 | 2,634 | 2,225 |
| Income tax | (799) | (1,226) | (1,028) | (950) | (850) | (1,005) | (680) | (903) |
| Profit (loss) for the period | 2,133 | 2,139 | 2,150 | 1,994 | 1,709 | 1,980 | 1,954 | 1,321 |
| Non-controlling interests | (75) | (56) | (118) | (148) | (146) | (143) | (120) | 3 |
| Net attributable profit (loss) excluding non-recurring impacts | 2,058 | 2,083 | 2,032 | 1,846 | 1,563 | 1,838 | 1,834 | 1,325 |
| Discontinued operations and Other (1) | — | — | — | — | — | — | (201) | — |
| Net attributable profit (loss) | 2,058 | 2,083 | 2,032 | 1,846 | 1,563 | 1,838 | 1,633 | 1,325 |
| Adjusted earning (loss) per share (euros) (2) | 0.34 | 0.34 | 0.34 | 0.30 | 0.25 | 0.29 | 0.29 | 0.21 |
| Earning (loss) per share (euros) (2) | 0.33 | 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 €8,019m between January and December of 2023, boosted by the performance of recurring income of the banking business, mainly the net interest income, which grew at a rate of 28.6%. This result means an increase of 35.4% compared to the previous year, excluding the net impact arisen from the purchase of offices in Spain in 2022 from the comparison.
It should to be noted that 2023 results include the recording for the total annual amount paid for the temporary tax on credit institutions and financial credit institutions2 for €215m, included in the other operating income and expenses line of the income statement. The estimated impact corresponding to the year 2024 is €285 million and will be recorded on the first quarter of 2024 in such caption of the consolidated income statement.
CONSOLIDATED INCOME STATEMENT (MILLIONS OF EUROS)
2023 |
∆% |
∆% at constant exchange rates |
2022 |
|
|---|---|---|---|---|
| Net interest income | 23,089 | 20.7 | 28.6 | 19,124 |
| Net fees and commissions | 6,288 | 17.0 | 21.3 | 5,372 |
| Net trading income | 2,183 | 12.6 | 31.8 | 1,938 |
| Other operating income and expenses | (2,018) | 19.4 | (4.9) | (1,691) |
| Gross income | 29,542 | 19.4 | 30.3 | 24,743 |
| Operating expenses | (12,308) | 15.0 | 19.7 | (10,701) |
| Personnel expenses | (6,530) | 16.6 | 22.2 | (5,601) |
| Other administrative expenses | (4,375) | 16.0 | 21.3 | (3,773) |
| Depreciation | (1,403) | 5.6 | 5.1 | (1,328) |
| Operating income | 17,233 | 22.7 | 39.1 | 14,042 |
| Impairment on financial assets not measured at fair value through profit or loss | (4,428) | 31.1 | 33.8 | (3,379) |
| Provisions or reversal of provisions | (373) | 28.3 | 64.8 | (291) |
| Other gains (losses) | (13) | n.s. | n.s. | 30 |
| Profit (loss) before tax | 12,419 | 19.4 | 40.0 | 10,402 |
| Income tax | (4,003) | 16.4 | 33.0 | (3,438) |
| Profit (loss) for the period | 8,416 | 20.8 | 43.6 | 6,965 |
| Non-controlling interests | (397) | (2.1) | n.s. | (405) |
| Net attributable profit (loss) excluding non-recurring impacts | 8,019 | 22.3 | 35.4 | 6,559 |
| Discontinued operations and Other (1) | — | — | — | (201) |
| Net attributable profit (loss) | 8,019 | 26.1 | 40.1 | 6,358 |
| Adjusted earning (loss) per share (euros) (2) | 1.32 | 1.04 | ||
| Earning (loss) per share (euros) (2) | 1.29 | 0.98 |
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.
The accumulated net interest income as of December 31, 2023 was higher than in the same period of the previous year (+28.6%), with increases in all business areas, with a customer spread improvement in the main areas and higher performing loan volumes. The good evolution in Spain, Mexico and South America is noteworthy.
Positive evolution in the net fees and commissions line, which increased by 21.3% year-on-year due to favorable performance in payment systems and, to a lesser extent, asset management. By business areas, Turkey ́s and Mexico ́s contribution stands out.
NET INTEREST INCOME / AVERAGE TOTAL ASSETS
(PERCENTAGE AT CONSTANT EXCHANGE RATES)
NET INTEREST INCOME PLUS NET FEES AND COMMISSIONS
(MILLIONS OF EUROS AT CONSTANT EXCHANGE RATES)
(1) At current exchange rates: +19.9%.
At the end of December 2023, NTI grew by 31.8%, with a positive performance of this line in all business areas, favored by the results of the Global Markets unit, which offset the negative results recorded on the Corporate Center.
The other operating income and expenses line accumulated as of December 31, 2023, a result that compares negatively with last year, mainly due to the higher negative adjustment for hyperinflation in Argentina. This line also includes the contribution to the public protection schemes for bank deposits in Spain, which in 2023 was lower than the previous year's contribution, and the recording 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: +19.4%.
On a year-on-year basis, operating expenses increased by 19.7% 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.
Thanks to the remarkable growth in gross income (+30.3%), the efficiency ratio stood at 41.7% as of December 31, 2023, with an improvement of 370 basis points compared to the ratio recorded 12 months earlier, highlighting the evolution in Rest of Business and Spain.
OPERATING EXPENSES (MILLIONS OF EUROS AT CONSTANT EXCHANGE RATES)
(1) At current exchange rates: +15.0%.
EFFICIENCY RATIO (PERCENTAGE)
The impairment on financial assets not measured at fair value through profit or loss (impairment on financial assets) at the end of December 2023 was 33.8% higher than in the same period of the previous year, with lower requirements in Turkey, which were offset by higher provisioning needs, mainly in Mexico and South America, 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: +22.7%.
IMPAIRMENT ON FINANCIAL ASSESTS
(MILLIONS OF EUROS AT CONSTANT EXCHANGE RATES)
(1) At current exchange rates: +31.1%.
The provisions or reversal of provisions line (hereinafter, provisions) registered at the end of December 2023 higher provisions compared to the same period of the previous year, mainly originated from Spain and Turkey.
On the other hand, the other gains (losses) line closed December 2023 with a balance of €-13m, which compares unfavorably with the positive result of the previous year.
As a result of the above, the BBVA Group generated a net attributable profit of €8,019m between January and December of the year 2023, which compares very positively with the result for the previous year (+35.4%, excluding the net impact arisen from the purchase of offices in Spain in 2022). These solid results are supported by the favorable evolution of the banking business recurring income, 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 December 2023 for the business areas that compose the Group were as follows: €2,755m in Spain, €5,340m in Mexico, €528m in Turkey, €613m in South America and €389m in Rest of Business.
NET ATTRIBUTABLE PROFIT (LOSS)
(MILLIONS OF EUROS AT CONSTANT EXCHANGE RATES)
(1) At current exchange rates: +26.1%
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: +22.3%.
The Group's excellent performance has also allowed to accelerate value creation, as reflected in the growth of the tangible book value per share and dividends, which at the end of December 2023 was 20.2% 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 €0.98 and €1.29 in 2022 and 2023, respectively.
Lastly, the Group’s profitability indicators improved in year-on-year terms supported by the favorable performance of results.
ROE (1) AND ROTE (1) (PERCENTAGE)
ROA (1) AND RORWA (1) (PERCENTAGE)
(1) The ratio of 2021 excludes the results generated by BBVA USA and the rest of the companies in the United States until its sale to PNC on June 1, 2021 and the net cost related to the restructuring process. The ratio of 2022 excludes the net impact arisen from the purchase of offices in Spain.
2 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.