48 slides from Banco Bilbao Vizcaya Argentaria's debt investor presentation, May 1, 2018
Slide 1: Fixed Income Presentation 1Q18
Fixed Income Presentation 1Q18
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 About BBVA 04 Asset Quality 07 Liquidity & Funding BBVA’s Strengths & 02 05 Capital 08 Ratings 3M18 Financial Highlights 03 Diversified Footprint 06 MREL 09 Transformation Strategy APPENDIX BBVA Group 3M18 Profit & Loss Debt Issuances – 2017/2018YTD Risk Indica
Slide 4: About BBVA
Fixed Income Presentation / 4 01 About BBVA
Slide 5: About BBVA
Fixed Income Presentation / 5 About BBVA BBVA’s global presence Well diversified & self-sufficient subsidiaries Mar.18 Total Assets(1) Gross Income(1) Mar.18 3M18 Developed € 685 bn 73 mn 24 mn Emerging Markets Markets 64% Emerging Markets Developed Markets assets customers digital customers 36% 61%
Slide 6: BBVA's Strengths & 3M18 Financial Highlights
Fixed Income Presentation / 6 02 BBVA’s Strengths & 3M18 Financial Highlights
Slide 7: BBVA's Strengths
Fixed Income Presentation / 7 BBVA’s Strengths Diversified footprint Resilience and Low Earnings Volatility (€ bn, current, %) 4.2% Pre-provision 3.7% 3.8% 3.7% 3.2% 3.3% 3.0% 2.8% 3.0% 3.5% 3.5%(2) profit / RWAs 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 an
Slide 8: 3M18 Highlights
Fixed Income Presentation / 8 3M18 Highlights Core revenues growth Cost control Increasing results +9.4% Gross Operating +22.3% Net Gross Income Expenses interest 5.5 Group Net 1,340 5.1 income 1,095 Attributable income and fees vs. Op. Expenses +4.2% +3.2% Profit (€ m, constant) (€ bn, (YtD, %, vs.
Slide 9: Diversified Footprint
Fixed Income Presentation / 9 03 Diversified Footprint
Slide 10: Well diversified footprint with high growth prospects
Fixed Income Presentation / 10 Well diversified footprint with high growth prospects Breakdown by Business Area Higher Growth Prospects 2018e GDP growth (YoY, %) Total Assets Mar.18 Rest of Corporate Eurasia Center USA(4) SPAIN TURKEY South 2.4% 3.6% +3.8% +2.9% +4.0% America 10.5% (1) MEXICO Turkey
Slide 11: Business areas in 3M18: Developed Markets
Fixed Income Presentation / 11 Business areas in 3M18 40% Developed Markets €650Mn, +55% YoY 3M18 Net attributable profit(2) (constant €) SPAIN Banking activity MAIN MESSAGES NET ATTRIBUTABLE PROFIT (3M18) NPL RATIO(1) Mar.18 Decrease in activity YoY (-2.4%) as growth in consumer and SMEs loans is o
Slide 12: Business areas in 3M18: Emerging Markets
Fixed Income Presentation / 12 Business areas in 3M18 60% Emerging Markets €986Mn, +24% YoY 3M18 Net attributable profit(1) (constant €) MEXICO constant € MAIN MESSAGES NET ATTRIBUTABLE PROFIT (3M18) NPL RATIO Mar.18 Loans +4.8% yoy, with sound growth of retail portfolios and slowdown in the commerc
Slide 13: Asset Quality
Fixed Income Presentation / 13 04 Asset Quality
Slide 14: Asset Quality: continued improvement after the crisis
Fixed Income Presentation / 14 Asset Quality: continued improvement after the crisis NPL Ratio 6.8 5.8 4.3 4.1 4.0 5.1 5.4 4.9 Risk Framework (%) 2.3 4.6 4.4 Risk Framework A Risk Management Model based A Risk on prudence andManagement proactivity Model based on prudence and proactivity 92 Coverage
Slide 15: A prudent risk profile
Fixed Income Presentation / 15 A prudent risk profile 6.0 5.4 3.2 2.2 2.5 2.2 2.4 NPL 1.2 1.1 2.1 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 (1) USA (2) MEXICO TURKEY S. AMERI
Slide 16: Capital
Fixed Income Presentation / 16 05 Capital
Slide 17: Sound capital position and a proven ability to generate capital
Fixed Income Presentation / 17 Sound capital position and a proven ability to generate capital CET1 FL Ratio – BBVA Group FL Capital Ratios (%) BBVA Group 11.6% 11.1% 11.5% CET1 FL Proforma (2) Mar.18 (%) 9.6% 10.3% 10.8% 10.3% 10.9% 9.7% (1) 8.0% 15.10% 6.2% 10.9% Basel II Tier 2 2.55% Basel III FL
Slide 18: Low earnings volatility and ability to generate capital
Fixed Income Presentation / 18 Low earnings volatility and ability to generate capital allow for lower capital needs Pre-provision profit(1) / Net Loans Pre-provision profit(1) / RWAs 12M17 European peers / 3M18 BBVA 12M17 European peers / 3M18 BBVA BBVA 3.4% Peer 1 4.4% Peer 1 3.0% Peer 2 4.2% Peer
Slide 19: High quality capital
Fixed Income Presentation / 19 High quality capital RWAs/ Total Assets Fully-Loaded Leverage Ratio Dec.17 European peers / Mar.18 BBVA , % Dec.17 European peers / Mar.18 BBVA , % BBVA 52 #1 BBVA 6.4 #1 Peer 1 43 Peer 1 6.1 Peer 2 42 Peer 2 5.6 Peer 3 38 Peer 3 5.6 Peer 4 35 Peer 4 5.3 Peer 5 35 Peer
Slide 20: Risk-Weighted Assets distribution
Fixed Income Presentation / 20 Risk-Weighted Assets distribution TOTAL RWAs Fully Loaded Mar.18 (€m) 356,847 €m Optimizing Capital Allocation is one of BBVA’s Strategic 32% 33% IRB Models Priorities 2% CVA (2) 0.4% 4% FX Risk 1.3% Trading Act. Risk ~ 80% of the RWAs 3.2% 16% 16% located in Investmen
Slide 21: Capital ratios well above requirements
Fixed Income Presentation / 21 Capital ratios well above requirements 2018 SREP Requirement and distance to MDA(1) at Group level Mar.18 DISTANCE TO MDA(5) 269 bps 15.36% Well above 2018 Total Capital and CET1 T2: 2.52% (4) €9.6 Bn SREP requirements: 11.938% AT1: 1.71% Significant buffer 8.438% T2:
Slide 22: BBVA has the lowest SREP requirement among peers
Fixed Income Presentation / 22 BBVA has the lowest SREP requirement among peers CET1 SREP Requirement - FL Distance to MDA vs Fully Loaded SREP requirement (based on 2018 requirement) Dec.17 European peers / Mar.18 BBVA 11.77% CET1 FL Mar.18: 11.47% 10.75% 10.07% 9.75% 437 pro-forma including Corp.
Slide 23: High level of Available Distributable Items (ADIs)
Fixed Income Presentation / 23 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 24: FX Hedging policy
Fixed Income Presentation / 24 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 profit GOAL Reduce Consolidated CET1 ratio GOAL Redu
Slide 25: ALCO and Equity HTC&S Portfolio
Fixed Income Presentation / 25 ALCO and Equity HTC&S(1) Portfolio ALCO Portfolio breakdown by region (Mar.18, € bn) 3.5 South America € 53.9 bn 4.6 Mexico o.w. HTC(2) Portfolio breakdown (Mar.18, € bn) 9.3 Turkey USA Others 1% 5% Diversified portfolio € 17.0 bn 10.6 USA Spain across BBVA’s footprint
Slide 26: MREL
Fixed Income Presentation / 26 06 MREL
Slide 27: MREL framework: uncertainty remains but closer to the final outcome
Fixed Income Presentation / 27 MREL framework: uncertainty remains but closer to the final outcome Key themes to manage… Hypothesis for BBVA (still under discussion) Treatment of intragroup investments for MREL calculation SRB Policy for MPE institutions Subsidiaries are self-sufficient both in term
Slide 28: BBVA's 2018 Funding plan
Fixed Income Presentation / 28 BBVA’s 2018 Funding plan Maturity profile BBVA has already filled its AT1 and T2 layers Wholesale debt maturity profile offers flexibility to refinance current instruments into new SNP, if required: BBVA expects to maintain the 1.5% AT1 and 2% T2 Capital regulatory buc
Slide 29: BBVA Eur 1.5 bn 5-year FRN Senior Non-Preferred
Fixed Income Presentation / 29 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 30: Liquidity & Funding
Fixed Income Presentation / 30 07 Liquidity & Funding
Slide 31: Liquidity & Funding
Fixed Income Presentation / 31 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 32: Decentralized model
Fixed Income Presentation / 32 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 33: Financial soundness based on the funding of lending activity
Fixed Income Presentation / 33 Financial soundness based on the funding of lending activity BBVA Group Liquidity balance sheet(1) BBVA Group Liquidity metrics (Mar.18) (Mar.18) Euroz.(2) USA Mexico Turkey S. Amer. 63% 61% LTD (3) 106% 90% 99% 115% 107% Net Loans to Customers Deposits Fixed Assets &
Slide 34: Broaden geographical diversification of access to market
Fixed Income Presentation / 34 Broaden geographical diversification of access to market Medium & long-term wholesale funding maturities (Mar.18; € bn) EURO 21.8 USA MEXICO € 40.7 bn € 1.9 bn € 6.2 bn 3.5 4.8 5.8 1.2 3.5 4.8 1.4 1.1 0.5 0.2 0.2 2018 2019 2020 2021 >2021 2018 2019 2020 2021 >2021 2018
Slide 35: Ratings
Fixed Income Presentation / 35 08 Ratings
Slide 36: BBVA Group Ratings by Agency
Fixed Income Presentation / 36 BBVA Group Ratings by Agency Latest Rating Actions (1Q18) BBVA Ratings(1) Long Term Issuer / Senior Unsecured Ratings Moody’s S&P Fitch DBRS Scope Outlook Issuer/Senior Positive Stable Stable Stable Stable Investment Aaa AAA AAA AAA CB AAA CB S&P grade Aa1 CB AA+ AA+ A
Slide 37: Transformation Strategy
Fixed Income Presentation / 37 09 Transformation Strategy
Slide 38: Digital Customers – BBVA Group
Fixed Income Presentation / 38 Digital Customers – BBVA Group Digital Customers (Mn, % penetration) +25% 24.0 19.1 Mar-17 Mar-18 Goal: 50% tipping PENETRATION 38% 45% point of digital customers in 2018 Mobile Customers and mobile (Mn, % penetration) +43% customers in 2019 19.3 13.5 Mar-17 Mar-18 PEN
Slide 39: Digital Sales
Fixed Income Presentation / 39 Digital Sales (% of total sales YtD, # of transactions) GROUP SPAIN USA1 36.7 41.8 19.8 21.5 24.1 16.1 Mar.17 Mar.18 Mar.17 Mar.18 Mar.17 Mar.18 Strong growth MEXICO TURKEY SOUTH AMERICA across markets 31.1 38.7 46.2 31.0 13.7 22.4 Mar.17 Mar.18 Mar.17 Mar.18 Mar.17 Ma
Slide 40: APPENDIX
Fixed Income Presentation / 40 APPENDIX BBVA Group 3M18 Profit & Loss Debt Issuances – 2017/2018YTD Risk Indicators by Areas Amortized notes – 2017/2018YTD Capital Base: BBVA Group & BBVA S.A. MREL framework: creation of SNP layer in Spain BBVA, S.A.: 2018 SREP Requirement and distance to MDA
Slide 41: BBVA Group 3M18 Profit & Loss
Fixed Income Presentation / 41 BBVA Group 3M18 Profit & Loss Change 1Q18/1Q17 BBVA Group (€m) 1Q18 % % constant Net Attributable Profit breakdown (3M18) Net Interest Income 4,288 -0.8 9.3 Net Fees and Commissions 1,236 1.1 9.8 Net Trading Income 410 -40.6 -38.5 Other Income & Expenses 162 11.2 19.1
Slide 42: Risk Indicators by Areas
Fixed Income Presentation / 42 Risk Indicators by Areas NPL ratio(1) NPL coverage ratio(1) (%) (%) Mar.17 Dec.17 Mar.18 Mar.17 Dec.17 Mar.18 BBVA Group 4.91 4.55 4.41 BBVA Group 71 65 73 (2) 6.00 5.52 5.36 Banking activity in Spain 53 50 57 Banking activity in Spain The United States 1.34 1.22 1.17
Slide 43: Capital Base: BBVA Group & BBVA, S.A.
Fixed Income Presentation / 43 Capital Base: BBVA Group & BBVA, S.A. Phased-in capital ratios Fully-loaded capital ratios Mar.18 (%) Mar.18 (%) 22.48 2.04 22.12 2.78 2.15 Tier 2 15.36 Tier 2 15.10 2.72 2.52 Additional Tier 1 Additional Tier 1 2.55 1.71 1.65 17.66 17.25 11.13 10.90 CET1 CET1 (1) (1)
Slide 44: Capital ratios well above requirements
Fixed Income Presentation / 44 Capital ratios well above requirements 2018 SREP Requirement and distance to MDA(1) at a Parent Company level (BBVA, S.A.) Mar.18 DISTANCE TO MDA 22.48% (4) 979 bps T2: 2.04% 11.375 %(3) €19.1 Bn Well above 2018 AT1: 2.78% T2: 2.0% Total Capital and CET1 7.875% SREP re
Slide 45: Debt Issuances – 2017 - 2018YTD
Fixed Income Presentation / 45 Debt Issuances – 2017 - 2018YTD Nominal Product Issue Date Call Date Maturity Coupon Isin currency SNP Mar-18 - Mar-23 € 1,500 M 3ME+ 0.60% XS1788584321 SNP Nov-17 - Nov-23 € 150 M 3ME+0.67% XS1724512097 AT1 Nov-17 Nov-27 Perp $ 1,000 M 6.13% US05946KAF84 SNP Nov-17 -
Slide 46: Amortized notes – 2017 - 2018YTD
Fixed Income Presentation / 46 Amortized notes – 2017 - 2018YTD Issue Outstanding Outstanding Product Redemption Coupon Date currency (M) € (M) AT1 May-13 May-18 $ 1,500 M 1248 9.00% BBVA, S.A. Tier 2 Feb-07 Feb-18 € 257 257 3ME+0.80% BBVA Subordinated Tier 2 Oct-05 Jan-18 € 99 99 3ME+0.80% Capital
Slide 47: MREL framework: creation of SNP layer in Spain
Fixed Income Presentation / 47 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 48: Fixed Income Presentation 1Q18
Fixed Income Presentation 1Q18