Banco Bilbao Vizcaya Argentaria, S.a. · BME:BBVA
Banco Bilbao Vizcaya Argentaria — Debt Investor Presentation (September 2018)
50 slides from Banco Bilbao Vizcaya Argentaria's debt investor presentation, September 2018
Slide 1: Fixed Income Presentation 2Q18
Fixed Income Presentation 2Q18
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 1H18 Financial Highlights 03 Diversified Footprint 06 MREL 09 Transformation Strategy APPENDIX BBVA Group 1H18 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 Jun.18 Total Assets(1) Gross Income(1) Jun.18 1H18 Developed € 690 Bn 75 mn 25 mn Emerging Markets Markets 64% Emerging Markets Developed Markets assets customers digital customers 36% 62%
Slide 6: BBVA's Strengths & 1H18 Financial Highlights
Fixed Income Presentation / 6 02 BBVA’s Strengths & 1H18 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% 3.4%(1) 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 6.1 Sound capita
Slide 8: 1H18 Highlights
Fixed Income Presentation / 8 1H18 Highlights Core revenues growth Cost control Increasing results Core Core Operating +9.8% +29.5% Net revenues revenues Expenses 11.1 Group Net +9.8% +2.9% 2,649 interest 10.1 vs. Op. 2,046 income Attributable Expenses vs. 1H17 vs. 1H17 Profit and fees (YtD, € const
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 Jun.18 Rest of Corporate Eurasia Center USA(4) SPAIN TURKEY South 2.7% 3.2% +3.7% +2.9% +3.8% America 10.2% MEXICO Turkey (1)
Slide 11: Business areas in 1H18 Developed Markets
Fixed Income Presentation / 11 Business areas in 1H18 Developed Markets 37% €1,196Mn, +47.5% YoY 1H18 Net attributable profit (2) (constant €) SPAIN Banking Activity MAIN MESSAGES NET ATTRIBUTABLE PROFIT (1H18) NPL RATIO(1) Jun.18 Loans: Improving trend (+1.6% qoq) Continued growth in most profitabl
Slide 12: Business areas in 1H18 Emerging Markets
Fixed Income Presentation / 12 Business areas in 1H18 Emerging Markets 63% €2,039Mn, +24.5% YoY 1H18 Net attributable profit (1) (constant €) MEXICO constant € MAIN MESSAGES NET ATTRIBUTABLE PROFIT (1H18) NPL RATIO Jun.18 NII growth at high single digit, in line with expectations 1,208 €Mn 2.0% vs.
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 5.2 5.7 2.5 3.0 2.7 2.7 2.1 2.2 NPL 1.1 1.0 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% 11.4% CET1 FL Proforma (1) Jun.18 (%) 9.6% 10.3% 10.8% 10.3% 10.9% 9.7% 8.0% 15.11% 6.2% 10.9% Basel II Tier 2 2.59% Basel III FL AT
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 1H18 European peers / BBVA 1H18 European peers / BBVA BBVA 3.3% Peer 1 4.5% Peer 1 2.9% Peer 2 4.3% Peer 2 2.7% BBVA
Slide 19: High quality capital
Fixed Income Presentation / 19 High quality capital RWAs/ Total Assets Fully-Loaded Leverage Ratio Jun.18 European peers / BBVA, % Jun.18 European peers / BBVA, % BBVA 52 #1 BBVA 6.4 #1 Peer 1 44 Peer 1 6.2 Peer 2 41 Peer 2 5.9 Peer 3 36 Peer 3 5.3 Peer 4 36 Peer 4 5.2 Peer 5 35 Peer 5 5.2 Peer 6 33
Slide 20: Risk-Weighted Assets distribution
Fixed Income Presentation / 20 Risk-Weighted Assets distribution TOTAL RWAs Fully Loaded Jun.18 (€Mn) 357,107 €Mn Optimizing Capital 31% 32% IRB Models Allocation is one of 2% CVA (2) 0.4% BBVA’s Strategic 4% FX Risk 1.3% Priorities Trading Act. Risk 3.1% 17% 15% Operational Risk 9.9% Credit Risk Li
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 Jun.18 DISTANCE TO MDA(5) Well above 2018 264 bps 15.40% Total Capital and CET1 T2: 2.59% SREP requirements. 11.938% (4) €9.4 Bn AT1: 1.73% Significant buffer T2: 2.0% 31
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) Mar.18 European peers / Jun.18 BBVA 407 CET1 FL Jun.18: 11.40% 11.77% pro-forma including Corp. 10.75% 299 Transacti
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 & Equity HTC&S Portfolio
Fixed Income Presentation / 25 ALCO & Equity HTC&S(1) Portfolio ALCO Portfolio breakdown by region (Jun.18, € Bn) 3.5 South America € 56.8 Bn 5.1 Mexico o.w. HTC(3) Portfolio breakdown 8.6 Turkey (Jun.18, € Bn) USA Others 7% 2% Diversified portfolio 11.2 USA € 17.9 Bn Turkey Spain across BBVA’s foot
Slide 26: MREL
Fixed Income Presentation / 26 06 MREL
Slide 27: MREL requirement
Fixed Income Presentation / 27 MREL requirement It translates into 15.08% 28.04% Total Requirement Total requirement of European of liabilities and own funds Resolution of European resolution Group in terms of Group (1) RWA (2) These requirements will be binding on 1st January 2020 BBVA complies w
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: Liquidity & Funding
Fixed Income Presentation / 29 07 Liquidity & Funding
Slide 30: Liquidity & Funding
Fixed Income Presentation / 30 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 31: Decentralized model
Fixed Income Presentation / 31 Principles of BBVA Group’s self-sufficient business model: Multiple Point of Entry Advantages Subsidiaries Medium term orientation / consistent with retail banking Self-sufficient balance-sheet Improves risk assessment: management imposes market discipline and proper i
Slide 32: Financial soundness based on the funding of lending activity
Fixed Income Presentation / 32 Financial soundness based on the funding of lending activity BBVA Group Liquidity balance sheet (1) BBVA Group Liquidity metrics (Jun.18) (Jun.18) Euroz.(2) USA Mexico Turkey S. Amer 62% 61% LTD(3) 104% 94% 100% 112% (5) 107% Deposits Net Loans to Customers 4% ECB Fixe
Slide 33: Broaden geographical diversification of access to market
Fixed Income Presentation / 33 Broaden geographical diversification of access to market Medium & long-term wholesale funding maturities (Jun.18; € bn, except Turkey in bn USD) EURO 23.1 USA MEXICO € 40.3 bn € 3.0 bn € 6.4 bn 3.7 4.9 4.9 5.8 1.3 1.0 1.4 1.1 1.6 0.5 0.2 0.2 2018 2019 2020 2021 >2021 2
Slide 34: Turkey – Liquidity & Funding Sources
Fixed Income Presentation / 34 Turkey – Liquidity & Funding Sources LTD ratio of 112%, 3.2 pp improvement YTD, mainly due to Foreign Currency LTD, improving 2.3 pp YTD to 70%. Stable deposit base: 77% of TRY deposits in Retail and SMEs. Liquidity Coverage Ratio (EBA): 133% vs. 100% required for 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 (1H18) BBVA Ratings(1) Long Term Issuer / Senior Unsecured Ratings Moody’s S&P Fitch DBRS Scope Outlook Issuer/Senior Stable Negative Stable Stable Stable Moody’s Investment grade Aaa AAA AAA AAA CB AAA CB Aa1 CB 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 +26% Digital Customers +21% (Mn, % penetration) 25.1 19.9 16.5 Goal: 50% tipping Jun-16 Jun-17 Jun-18 point of digital PENETRATION 33% 39% 46% customers in 2018 and mobile +43% customers in 2019 Mobile Customers +40% (Mn, % penetration) 2
Slide 39: Digital Sales
Fixed Income Presentation / 39 Digital Sales (% of total sales YtD, # of transactions and PRV*) GROUP SPAIN USA 42.4 UNITS 38.6 UNITS 23.0 PRV 18.7 17.9 22.4 24.9 21.7 PRV 14.6 29.1 PRV 32.7 UNITS 14.0 10.8 17.2 14.7 17.4 11.6 8.9 Jun-16 Jun-17 Jun-18 Jun-16 Jun-17 Jun-18 Jun-16 Jun-17 Jun-18 MEXICO
Slide 40: APPENDIX
Fixed Income Presentation / 40 APPENDIX BBVA Group 1H18 Profit & Loss Debt Issuances – 2017/2018YTD Risk Indicators by Areas Amortized notes – 2017/2018YTD Capital Base: BBVA Group & BBVA S.A. BBVA, S.A.: 2018 Issuances BBVA, S.A.: 2018 SREP Requirement MREL framework and distance to MDA
Slide 41: BBVA Group 1H18 Profit & Loss
Fixed Income Presentation / 41 BBVA Group 1H18 Profit & Loss Change Net Attributable Profit breakdown 1H18/1H17 (%, 1H18) BBVA Group (€m) 1H18 % % constant Net Interest Income 8,643 -1.8 9.4 Net Fees and Commissions 2,492 1.5 11.3 Net Trading Income 708 -33.8 -30.4 1.8% 23.4% Spain Other Income & Ex
Slide 42: Risk Indicators by Areas
Fixed Income Presentation / 42 Risk Indicators by Areas NPL ratio (1) NPL coverage ratio (1) (%) (%) Dec.17 Mar.18 Jun.18 Dec.17 Mar.18 Jun.18 BBVA Group 4.6 4.4 4.4 BBVA Group 65 73 71 (2) Banking activity in Spain 5.5 5.4 5.2 Banking activity in Spain 50 57 57 The United States 1.2 1.2 1.2 The Uni
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 Jun.18 (%) Jun.18 (%) 22.18 2.05 21.82 2.80 2.15 Tier 2 15.40 Tier 2 15.11 2.73 2.59 Additional Tier 1 Additional Tier 1 2.59 1.73 1.66 17.33 16.94 11.08 10.85 CET1 CET1 BBVA Gro
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.) Jun.18 DISTANCE TO MDA 22.18% (4) 946 bps T2: 2.05% €18.6 Bn (3) 11.375 % AT1: 2.80% Well above 2018 T2: 2.0% Total Capital and CET1 7.875% SREP r
Slide 45: Debt Issuances – 2017 - 2018YTD
Fixed Income Presentation / 45 Debt Issuances – 2017 - 2018YTD Nominal Product Issue Date Call Date Maturity Coupon Isin currency Tier 2 May-18 - May-33 $ 300 M 5.25% XS1824263260 SNP May-18 - May-25 € 1,000 M 1.375% XS1820037270 SNP Mar-18 - Mar-23 € 1,500 M 3ME+ 0.60% XS1788584321 SNP Nov-17 - Nov
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: 2018 Issuances: BBVA Eur 1.5 bn 5-year FRN SNP
Fixed Income Presentation / 47 2018 Issuances: BBVA Eur 1.5 bn 5-year FRN SNP Following up with BBVA’s issuance plan of € 2.5-3.5 bn of SNP for 2018, in anticipation of upcoming Highlights MREL requirements This issuance was the first public transaction in 2018 for BBVA SA, the second one in SNP for
Slide 48: 2018 Issuances: BBVA Inaugural Eur 1 bn 7-year Green Bond SNP
Fixed Income Presentation / 48 2018 Issuances: BBVA Inaugural Eur 1 bn 7-year Green Bond SNP Following up with BBVA’s issuance plan of € 2.5-3.5 bn of SNP for 2018, in anticipation of upcoming Highlights MREL requirements. This issuance was the second public transaction in 2018 for BBVA SA, the thir
Slide 49: MREL framework: creation of SNP layer in Spain
Fixed Income Presentation / 49 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 50: Fixed Income Presentation 2Q18
Fixed Income Presentation 2Q18
Banco Bilbao Vizcaya Argentaria, S.A. (BBVA) — Debt Investor Presentation (September 2018) on 6ix