Banco Bilbao Vizcaya Argentaria, S.a. · BME:BBVA
Banco Bilbao Vizcaya Argentaria — Debt Investor Presentation (August 2017)
42 slides from Banco Bilbao Vizcaya Argentaria's debt investor presentation, Aug 1, 2017
Slide 1: Fixed Income Investors Presentation 2Q17
Fixed Income Presentation / 1 Fixed Income Investors Presentation 2Q17
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 1H17 Financial Highlights 06 Liquidity & Funding 02 Diversified Footprint 07 Transformation Strategy 03 Asset Quality APPENDIX BBVA Group 1H17 Profit & Loss 04 Capital Capital Base: BBVA Group & BBVA S.A. EBA’s Stress Test Debt Issuan
Slide 4: BBVA's Strengths & 1H17 Financial Highlights
Fixed Income Presentation / 4 01 BBVA’s Strengths & 1H17 Financial Highlights
Slide 5: BBVA's Strengths
Fixed Income Presentation / 5 BBVA’s Strengths Resilience and Low Earnings Volatility Diversified footprint (€ bn, %) 4.2% 3.7% 3.8% 3.7% (1) 3.2% 3.3% 3.4% 3.0% 3.0% 2.8% Pre-provision Prudent risk profile profit / RWAs 12.3 11.9 11.9 10.5 10.6 11.1 11.4 10.2 10.4 6.4 Sound capital and Pre-provisio
Slide 6: 1H17 Financial Highlights
Fixed Income Presentation / 6 1H17 Financial Highlights 2Q17 NET ATTRIB. PROFIT Core revenues growth Cost control Decreasing impairments Net interest income and fees (€m constant) Gross income vs. Op. Expenses (YoY, %, constant) Total Impairments (Financial Assets and RE) 1,107 € m (€m constant) +1.
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(1) Higher Growth Prospects (% GDP growth, BBVA Research) Total Assets (Jun.17) 2.9 2.8 Developed Markets Rest of 1.9 1.6 South Eurasia America 2.8% BBVA’s Footprint(3) Positive macro outloo
Slide 9: Business areas in 1H17: Spain
Fixed Income Presentation / 9 Business areas in 1H17 SPAIN Banking activity MAIN MESSAGES NET ATTRIBUTABLE PROFIT NPL RATIO Jun.17 Slight loan growth QoQ (+0.7%) thanks to SMEs and Consumer, 1H17 offsetting deleverage in mortgages 5.7% vs. 5.8% Dec.16 670 € m COST OF RISK Jun.17 (YtD) NII excluding
Slide 10: Business areas in 1H17: Mexico and Turkey
Fixed Income Presentation / 10 Business areas in 1H17 MEXICO constant € MAIN MESSAGES NET ATTRIBUTABLE PROFIT NPL RATIO Jun.17 1H17 +8.8% YoY loan growth, in line with expectations. Focus on profitable growth 2.3% vs. 2.3% Dec.16 Excellent top line growth thanks to core revenues (NII and fees) 1,080
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 4.8 4.8 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
Slide 13: A prudent risk profile
Fixed Income Presentation / 13 A prudent risk profile 6.4 5.8 2.6 3.2 2.2 2.2 2.1 2.4 NPL 1.4 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 (1) USA (2) MEXICO TURKEY S. AMERI
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 ability to generate capital FL Capital Ratios BBVA Group Jun.17 (%) CET1 FL Ratio – BBVA Group (%) 15.23% 11.6% 10.9% 11.0% 11.1% Tier 2 2.44% 10.3% 10.8% 9.7%(1) 10.3% 8.0% 9.6% Basel II AT1 1.69% 6.2% Basel III – Fully Loaded 2008 20
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 (BBVA and European Peer Group(2), 1H17) (BBVA and European Peer Group(2), 1H17) BBVA 3.1% Peer 1 4.4% Peer 1 3.0% Pe
Slide 17: High quality capital
Fixed Income Presentation / 17 High quality capital RWAs/ Total Assets Fully-Loaded Leverage Ratio Jun.17, % Jun.17, % BBVA 53 #1 BBVA 6.8 #1 Peer 1 44 Peer 1 6.4 Peer 2 43 Peer 2 5.7 Peer 3 38 Peer 3 5.2 Peer 4 37 Peer 4 5.1 Peer 5 35 Peer 5 5.1 Peer 6 33 Peer 6 5.1 Peers Av. 31 Peers Av. 4.9 Peer
Slide 18: Risk-Weighted Assets distribution
Fixed Income Presentation / 18 Risk-Weighted Assets distribution TOTAL RWAs Jun.17 Optimizing Capital 373,265 €m Allocation is one of BBVA’s Strategic 32% 32% IRB Models Priorities 3% CVA 0.6% 4% FX Risk 1.3% ~ 80% of the RWAs Trading Act. Risk 3.1% located in Investment 16% 14% Operational Risk 8.8
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 Jun.17 DISTANCE TO MDA (4) 387 bps 15.49% T2: 2.51% 11.125% Well above 2017 AT1: 1.23% On a phased-in Total Capital and CET1 7.625% T2: 2.0% basis , there is SREP require
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) December 2016, € bn € 9.2 bn Significant payment capacity BBVA S.A. from distributable items ADIs: despite conservative calculation c. 35x (Share Premium not included) 2016 AT1 coupons Suppo
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 (Jun.17, € bn) 3.3 South America € 55.6 bn 5.6 Mexico o.w. HTM Portfolio breakdown (Jun.17, € bn) 10.9 USA Diversified portfolio € 14.5 bn 10.3 Turkey Turkey Spain across BBVA’s footprint 39% 44% Spain 16.6
Slide 23: MREL
Fixed Income Presentation / 23 05 MREL
Slide 24: MREL framework: creation of SNP layer in Spain
Fixed Income Presentation / 24 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 25: MREL framework: uncertainty remains but closer to the final outcome
Inaugural Senior NonIncome Fixed Preferred Issuance // 25 Presentation 25 MREL framework: uncertainty remains but closer to the final outcome MREL requirements and calendar are yet to be Key themes to manage communicated (still under discussion) “As a first step, the SRB intends to set binding MREL
Slide 26: BBVA's MREL Strategy: 2017-2018 Plan
Fixed Income Presentation / 26 BBVA’s MREL Strategy: 2017-2018 Plan Maturity profile BBVA has already filled its AT1 and T2 layers Wholesale debt maturity profile offers flexibility to Capital BBVA expects to maintain the 1.5% AT1 and refinance current instruments into new SNP, if required: 2% T2 re
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: Decentralized 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 (Jun.17) (Jun.17) Euroz.(2) USA Mexico Turkey S. Amer Net Loans to Customers 64% Deposits LTD 108% 95% 92% 118% 102% 67% ECB Fixed Assets &
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 (Jun.17; € bn) EURO USA MEXICO 17.5 € 41.2 bn € 2.8 bn € 6.0 bn 3.0 5.8 1.4 4.8 4.5 4.9 3.6 1.5 1.1 0.7 0.5 0.2 0.2 0.2 2017 2018 2019 2020 2021 >2021 2017 2018 201
Slide 32: BBVA Group Ratings by Agency
Fixed Income Presentation / 32 BBVA Group Ratings by Agency Latest Rating Actions BBVA’s Ratings(1) (2) 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 Mood
Slide 33: Transformation Strategy
Fixed Income Presentation / 33 07 Transformation Strategy
Slide 34: Digital Customers – BBVA Group
Fixed Income Presentation / 34 2Q 2017 Results July 27th 2017 / 34 Digital Customers – BBVA Group Digital Customers Mobile Customers (Million, % penetration) (Million, % penetration) +22% +42% 16.3 18.1 19.9 10.2 12.3 14.5 #1 Mobile banking app in the world (1) Jun.16 Dec.16 Jun.17 Jun.16 Dec.16 Jun
Slide 35: Digital Sales
Fixed Income Presentation / 35 2Q 2017 Results July 27th 2017 / 35 Digital Sales (% of total sales YtD, # of transactions) GROUP SPAIN USA 22.2 24.7 17.1 22.2 16.8 19.4 Exponential Dec.16 Jun.17 growth in all Dec.16 Jun.17 Dec.16 Jun.17 franchises MEXICO TURKEY SOUTH AMERICA 16.0 31.0 22.5 11.9 15.4
Slide 36: APPENDIX
Fixed Income Presentation / 36 APPENDIX BBVA Group 1H17 Profit & Loss Capital Base: BBVA Group & BBVA, S.A. EBA’s Stress Test Debt Issuances – 1H17 Amortized notes – 1H17
Slide 37: BBVA Group 1H17 Profit & Loss
Fixed Income Presentation / 37 BBVA Group 1H17 Profit & Loss Change 1H17/1H16 BBVA Group (€m) 1H17 % % constant Net attributable profit (1) Net Interest Income 8,803 5.2 9.6 (%, 1H17) Net Fees and Commissions 2,456 4.5 8.0 Net Trading Income 1,069 -9.1 -2.4 Other Income & Expenses 390 13.7 -1.7 14.9
Slide 38: Capital Base: BBVA Group & BBVA S.A.
Fixed Income Presentation / 38 Capital Base: BBVA Group & BBVA S.A. Phased-in capital ratios Fully-loaded capital ratios Jun.17 (%) 22.56 Jun.17 (%) 22.22 2.01 1.99 15.49 2.93 15.23 2.94 2.51 Tier 2 Tier 2 2.44 1.23 1.69 Additional Tier 1 17.62 Additional Tier 1 17.28 11.76 11.10 CET1 CET1 BBVA Grou
Slide 39: EBA's Stress Test
Fixed Income Presentation / 39 EBA’s Stress Test Profit generation in the adverse scenario CET1 Fully Loaded ratio evolution in the adverse scenario Cumulative 2016-2018 (€ m) 2015-2018 (bps) 183 BBVA -199 Peer 1 The only bank -445 Peer 1 -208 BBVA generating -750 Peer 2 -226 Peer 2 Resilient positi
Slide 40: Debt Issuances – 1H17
Fixed Income Presentation / 40 Debt Issuances – 1H17 Nominal Product Issue Date Call Date Maturity Coupon Isin currency (M) AT1 May-17 May-22 Perp € 500 M 5.875% XS1619422865 Tier 2 May-17 - May-27 CHF 20 M 1.60% XS1615673701 Tier 2 May-17 - May-27 € 150 M 2.541% XS1615674261 Tier 2 Mar-17 Mar-27 Ma
Slide 41: Amortized notes – 1H17
Fixed Income Presentation / 41 Amortized notes – 1H17 Outstanding Product Issue Date Redemption Outstanding € (M) Coupon currency (M) Preferred Apr-07 Apr-17 $ 600 M 536 5.919% BBVA International Preferred Sep-06 Mar-17 € 164 M 164 3ME+1.95% Preferred SA Unipersonal Preferred Sep-05 Mar-17 € 86 M 86
Slide 42: Fixed Income Investors Presentation 2Q17
Fixed Income Presentation / 42 Fixed Income Investors Presentation 2Q17
Banco Bilbao Vizcaya Argentaria — Debt Investor Presentation (August 2017) on 6ix