Banco Bilbao Vizcaya Argentaria, S.a. · BME:BBVA
Banco Bilbao Vizcaya Argentaria — Debt Investor Presentation (March 2018)
44 slides from Banco Bilbao Vizcaya Argentaria's debt investor presentation, March 2018
Slide 1: Fixed Income Presentation 2017
Fixed Income Presentation / 1 Fixed Income Presentation 2017
Slide 2: Disclaimer
Fixed Income Presentation / 2 Disclaimer This document is only provided for information purposes and does not constitute, nor should it be interpreted as, an offer to sell or exchange or acquire, or an invitation for offers to buy securities issued by any of the aforementioned companies. Any decisio
Slide 3: Index
Fixed Income Presentation / 3 Index 01 BBVA’s Strengths & 05 MREL 2017 Financial Highlights 06 Liquidity & Funding 02 Diversified Footprint 07 Transformation Strategy 03 Asset Quality APPENDIX BBVA Group 2017 Profit & Loss 04 Capital Capital Base: BBVA Group & BBVA S.A. BBVA, S.A.: 2017 SREP Require
Slide 4: BBVA's Strengths & 2017 Financial Highlights
Fixed Income Presentation / 4 01 BBVA’s Strengths & 2017 Financial Highlights
Slide 5: BBVA's Strengths
Fixed Income Presentation / 5 BBVA’s Strengths Resilience and Low Earnings Volatility Diversified footprint (€ bn, %) 4.2% Pre-provision 3.7% 3.8% 3.7% 3.5% 3.2% 3.3% 3.0% 3.0% profit / RWAs 2.8% Prudent risk profile 12.3 11.9 12.8 11.1 11.4 11.9 10.5 10.6 10.4 10.2 Sound capital and Pre-provision l
Slide 6: 2017 Highlights
Fixed Income Presentation / 6 2017 Highlights Core revenues growth Cost control Increasing results +10.3% Gross Operating Ex-mortg. Net +19.7% Gross Income Expenses floor interest 20.6 22.7 Group Net clauses income 4,642 Attributable 3,879 income and fees vs. Op. Expenses +7.9% +2.2% Profit (€ m, co
Slide 7: Diversified Footprint
Fixed Income Presentation / 7 02 Diversified Footprint
Slide 8: Well diversified footprint with high growth prospects
Fixed Income Presentation / 8 Well diversified footprint with high growth prospects Breakdown by Business Area Higher Growth Prospects GDP growth (YoY, %) Total Assets 4.4 3.9 3.6 Dec.17 Rest of Corporate 3.1 2.7 2.7 BBVA’s 2.3 2.6 2.5 Eurasia Center 1.7 1.9 footprint (4) South 2.5% 3.0% America 2.2
Slide 9: Business areas in 2017: Spain and Non Core Real Estate
Fixed Income Presentation / 9 Business areas in 2017 SPAIN Banking activity MAIN MESSAGES NET ATTRIBUTABLE PROFIT (12M17) NPL RATIO Dec.17 Slight decrease in activity YoY (-1.1%) as growth in consumer and commercial loans offset by deleverage in mortgages and public sector 1,381 €m 5.2% vs. 5.8% Dec
Slide 10: Business areas in 2017: Mexico and Turkey
Fixed Income Presentation / 10 Business areas in 2017 MEXICO constant € MAIN MESSAGES NET ATTRIBUTABLE PROFIT (12M17) NPL RATIO Dec.17 +5.5% YoY loan growth, slowdown explained by FX impact on USD book and prepayments in the commercial portfolio in 4Q17 2,162 €m 2.3% vs. 2.3% Dec.16 Sustained growth
Slide 11: Asset Quality
Fixed Income Presentation / 11 03 Asset Quality
Slide 12: Asset Quality: continued improvement after the crisis
Fixed Income Presentation / 12 Asset Quality: continued improvement after the crisis NPL Ratio 5.1 6.8 5.8 5.4 (%) 4.3 4.1 4.0 4.9 4.4 Risk Framework Risk Framework 2.3 A Risk Management A Risk Management Model based Model on prudence based on and proactivity prudence and proactivity 92 Coverage rat
Slide 13: A prudent risk profile
Fixed Income Presentation / 13 A prudent risk profile 5.8 5.2 2.6 3.2 2.6 2.2 2.6 NPL 2.2 1.2 1.1 ratio (%) BBVA Banking Peers BBVA Peers BBVA Peers Garanti Peers BBVA Peers Activity in Average Compass Average Bancomer Average Average S. America Average Spain SPAIN USA (1) MEXICO TURKEY S. AMERICA 3
Slide 14: Capital
Fixed Income Presentation / 14 04 Capital
Slide 15: Sound capital position and proven ability to generate capital
Fixed Income Presentation / 15 Sound capital position and proven FL Capital Ratios BBVA Group ability to generate capital Dec.17 (%) CET1 FL Ratio – BBVA Group 15.26% (1) (%) 10.3% 10.8% 11.6% 10.9% 11.1% 9.6% 9.7% 10.3% Tier 2 2.46% 8.0% Basel II 6.2% AT 1 1.73% Basel III – Fully Loaded 2008 2009 2
Slide 16: Low earnings volatility and ability to generate capital allow for lower capital needs
Fixed Income Presentation / 16 Low earnings volatility and ability to generate capital allow for lower capital needs Pre-provision profit(1) / Net Loans Pre-provision profit(1) / RWAs 9M17 European peers /12M17 BBVA 9M17 European peers /12M17 BBVA BBVA 3.3% Peer 1 4.4% Peer 1 3.0% Peer 2 4.1% Peer 2
Slide 17: High quality capital
Fixed Income Presentation / 17 High quality capital RWAs/ Total Assets Fully-Loaded Leverage Ratio Sep.17 European peers / Dec.17 BBVA , % Sep.17 European peers / Dec.17 BBVA , % BBVA 52 BBVA #1 6.5 #1 Peer 1 42 Peer 1 6.1 Peer 2 42 Peer 2 5.7 Peer 3 37 Peer 3 5.4 Peer 4 36 Peer 4 5.3 Peer 5 35 Peer
Slide 18: Risk-Weighted Assets distribution
Fixed Income Presentation / 18 Risk-Weighted Assets distribution TOTAL RWAs Dec.17 (€m) 361,670 €m Optimizing Capital Allocation is one of BBVA’s Strategic 34% 32% IRB Models Priorities 2% CVA (2) 0.5% 4% FX Risk 1.7% Trading Act. Risk ~ 80% of the RWAs 2.7% 15% 16% Operational Risk 9.1% located in
Slide 19: Capital ratios well above requirements
Fixed Income Presentation / 19 Capital ratios well above requirements 2017 SREP Requirement and distance to MDA(1) at Group level Dec.17 Well above 2017 DISTANCE TO MDA(5) Total Capital and CET1 386 bps 15.52% SREP requirements: T2: 2.53% Significant buffer 11.125%(4) €14.0 Bn to MDA: 386 bps AT1: 1
Slide 20: High level of Available Distributable Items (ADIs)
Fixed Income Presentation / 20 High level of Available Distributable Items (ADIs) BBVA, S.A. (Parent Company) Dec.17, € bn Significant payment capacity € 8.8 bn from distributable BBVA, S.A. items despite ADIs: conservative calculation c. 30x (Share Premium not included) 2017 AT1 coupons Supported b
Slide 21: FX Hedging policy
Fixed Income Presentation / 21 FX Hedging policy Capital P&L POLICY BBVA hedges c.70% of the excess POLICY BBVA hedges on average between capital (what is not naturally hedged 30%-50% of foreign subsidiaries by the ratio) expected net attributable income GOAL Reduce Consolidated CET1 ratio GOAL Redu
Slide 22: ALCO & Equity AfS Portfolio
Fixed Income Presentation / 22 ALCO & Equity AfS Portfolio ALCO Portfolio breakdown by region (Dec.17, € bn) 2.9 South America € 54.9 bn 4.5 Mexico o.w. HTM Portfolio breakdown (Dec.17, € bn) 10.9 USA 10.5 Turkey € 13.8 bn Diversified portfolio Spain Turkey 44% across BBVA’s footprint 39% Spain 17.8
Slide 23: MREL
Fixed Income Presentation / 23 05 MREL
Slide 24: MREL framework: uncertainty remains but closer to the final outcome
Fixed Income Presentation / 24 MREL framework: uncertainty remains but closer to the final outcome Key themes to manage Hypothesis for BBVA BBVA follows a MPE resolution strategy Perimeter for quantification of MREL MREL perimeter: BBVA Euro subconsolidated level BBVA is an O-SII entity: subject to
Slide 25: BBVA's MREL Strategy: 2018 Plan
Fixed Income Presentation / 25 BBVA’s MREL Strategy: 2018 Plan Maturity profile BBVA has already filled its AT1 and T2 buckets Wholesale debt maturity profile offers flexibility to BBVA expects to maintain the 1.5% AT1 and 2% T2 refinance current instruments into new SNP, if required: regulatory buc
Slide 26: BBVA Eur 1.5 bn 5-year FRN Senior Non-Preferred
Fixed Income Presentation / 26 BBVA Eur 1.5 bn 5-year FRN Senior Non-Preferred Following up with BBVA´s issuance plan of € 2.5-3.5 bn of SNP for 2018, in anticipation of upcoming Rationale MREL requirements, that have yet to be communicated by the resolution authorities This issuance is the first pu
Slide 27: Liquidity & Funding
Fixed Income Presentation / 27 06 Liquidity & Funding
Slide 28: Liquidity & Funding
Fixed Income Presentation / 28 Liquidity & Funding Self-sufficient Retail profile of Parent and Ample high quality subsidiaries from BBVA Group subsidiaries proven collateral available, a liquidity point of balance sheet ability to access the compliant with view, with robust with limited wholesale f
Slide 29: Principles of BBVA Group's self-sufficient business model
Fixed Income Presentation / 29 Principles of BBVA Group’s self-sufficient business model Subsidiaries Advantages Self-sufficient balance-sheet Market discipline and proper management incentives / sustainable credit growth Own capital and liquidity management Market access with its own credit, name a
Slide 30: Financial soundness based on the funding of lending activity
Fixed Income Presentation / 30 Financial soundness based on the funding of lending activity BBVA Group Liquidity balance sheet(1) BBVA Group Liquidity metrics (Dec.17) (Dec.17) Deposits Euroz.(2) USA Mexico Turkey S. Amer 64% 62% ECB Net Loans to LTD 107% 89% 91% 115% 106% Customers Funding M&L/T Fi
Slide 31: Broaden geographical diversification of access to market
Fixed Income Presentation / 31 Broaden geographical diversification of access to market Medium & long-term wholesale funding maturities (Dec.17; € bn) EURO USA MEXICO 20.3 € 41.4 bn € 2.0 bn € 5.6 bn 5.6 2.7 4.8 5.9 1.3 4.8 1.4 1.1 0.5 0.2 0.2 0.2 2018 2019 2020 2021 >2021 2018 2019 2020 2021 >2021
Slide 32: BBVA Group Ratings by Agency
Fixed Income Presentation / 32 BBVA Group Ratings by Agency Latest Rating Actions BBVA Ratings(1) Three major agencies – Long Term Issuer / Moody’s S&P Fitch DBRS Scope Senior Unsecured Ratings Outlook Issuer/Senior Stable Positive Stable Stable Stable Investment Aaa AAA AAA AAA CB AAA CB Moody’s gr
Slide 33: Transformation Strategy
Fixed Income Presentation / 33 07 Transformation Strategy
Slide 34: Digital Customers – BBVA Group
Fixed Income Presentation / 34 Digital Customers – BBVA Group Digital Customers (Mn, %penetration) +25% 21.1 22.6 18.1 Dec 16 Sep 17 Dec 17 50% tipping point PENETRATION 36% 40% 42% in digital customers achieved Mobile Customers (Mn, %penetration) +44% 15.8 17.7 TURKEY SPAIN 12.3 USA ARGENTINA Dec 1
Slide 35: Digital Sales
Fixed Income Presentation / 35 Digital Sales (% of total sales YtD, # of transactions) GROUP SPAIN USA 28.0 28.6 22.8 19.4 16.8 17.1 Exponential growth Dec-16 Dec-17 Dec-16 Dec-17 Dec-16 Dec-17 MEXICO TURKEY SOUTH AMERICA 21.7 32.8 36.9 5 million 25.2 units sold 11.9 15.4 via mobile in 2017 Dec-16 D
Slide 36: Focused on customer satisfaction
Fixed Income Presentation / 36 Focused on customer satisfaction BBVA NPS (Dec.17) Increase in NPS by channel (footprint average(1) ) Rnk Online Banking Branches Spain #1 Mexico #1 +6.4 p.p. +5.8 p.p Turkey #1 Dec-17 vs Dec-16 Dec-17 vs Dec-16 Argentina #1 Colombia #1 Industry Recognition Paraguay #1
Slide 37: APPENDIX
Fixed Income Presentation / 37 APPENDIX BBVA Group 2017 Profit & Loss Capital Base: BBVA Group & BBVA, S.A. BBVA, S.A.: 2017 SREP Requirement and distance to MDA Debt Issuances – 2017 Amortized notes – 2017 MREL framework: creation of SNP layer in Spain
Slide 38: BBVA Group 2017 Profit & Loss
Fixed Income Presentation / 38 BBVA Group 2017 Profit & Loss Change 2017/2016 BBVA Group (€m) 2017 % % constant Net Interest Income 17,758 4.1 10.6 Net Fees and Commissions 4,921 4.3 9.4 Net Attributable Profit breakdown Net Trading Income 1,968 -7.7 -6.0 (2017) Other Income & Expenses 622 -16.3 -19
Slide 39: Capital Base: BBVA Group & BBVA, S.A.
Fixed Income Presentation / 39 Capital Base: BBVA Group & BBVA, S.A. Phased-in capital ratios Fully-loaded capital ratios Dec.17 (%) Dec.17 (%) 22.54 1.97 22.29 2.90 1.95 Tier 2 15.52 Tier 2 15.26 2.91 2.53 Additional Tier 1 Additional Tier 1 2.46 1.28 1.73 17.67 17.42 11.71 11.08 CET1 CET1 (1),(2)
Slide 40: Capital ratios well above requirements
Fixed Income Presentation / 40 Capital ratios well above requirements 2017 SREP Requirement and distance to MDA(1) at Parent Company level (BBVA, S.A.) Dec.17 DISTANCE TO MDA(4) 22.54% 1,042 bps T2: 1.97% AT1: 2.90%(5) Well above 2017 10.75%(3) €20.6 Bn Total Capital and CET1 T2: 2.0% SREP requireme
Slide 41: Debt Issuances – 2017
Fixed Income Presentation / 41 Debt Issuances – 2017(1) Nominal Product Issue Date Call Date Maturity Coupon Isin currency SNP Nov-17 - Nov-23 € 150 M 3M+0.67% XS1724512097 AT1 Nov-17 Nov-27 Perp $ 1,000 M 6.13% US05946KAF84 SNP Nov-17 - May-28 € 140 M 1.72% XS1712061032 SNP Sep-17 - Sep-22 € 1,500
Slide 42: Amortized notes – 2017
Fixed Income Presentation / 42 Amortized notes – 2017(1) Issue Outstanding Outstanding Product Redemption Coupon Date currency (M) € (M) Preferred Apr-07 Apr-17 $ 600 508 5.919% BBVA International Preferred, S.A. Preferred Sep-06 Mar-17 € 164 164 3ME+1.95% Unipersonal Preferred Sep-05 Mar-17 € 86 86
Slide 43: MREL framework: creation of SNP layer in Spain
Fixed Income Presentation / 43 MREL framework: creation of SNP layer in Spain Spanish legal framework creating the Senior Non Insolvency Hierarchy Preferred layer (RDL 11/17) was approved in June Previous Insolvency Law Approved New Spanish Clear identification and prioritization of debt securities
Slide 44: Fixed Income Presentation 2017
Fixed Income Presentation / 44 Fixed Income Presentation 2017
Banco Bilbao Vizcaya Argentaria, S.A. (BBVA) — Debt Investor Presentation (March 2018) on 6ix