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| Statement |
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| The only thing I would say is that one more quarter, we have reported very strong results |
| All in all, another very positive quarter for BBVA Spain with net attributable profit reaching €2.1 billion, 62% above the 9-month figure last year |
| In Page 21, the region continues showing positive activity trends, mainly in the retail segments with growth in the profitable portfolios aligned with our strategic focus |
| But we do think that it was a great deal, and we do think that it will, again, ensure great future earnings in Mexico going forward |
| We don’t have a clear guidance or clear target that we communicated to the market on cost to income, but it will be clearly positive jobs |
| We have sound pre-provision profit and improving efficiency supported by core revenues, growth and higher costs in the context of still above target inflation levels in the region |
| Moving to Page #4 showing the consistent growth in our operating income with a very robust upward trend, in our view, that serves as an indication of our potential going forward |
| It underscores also the strength of our franchises and the success of our profitable growth strategy |
| It continues the outstanding evolution of previous quarters, 18% increase year-over-year and an exceptional 5.5% quarterly growth in the quarter – in the third quarter |
| And regarding profitability, on the right-hand side, we continue to improve our excellent profitability metrics, reaching 17%, actually surpassing 17% in ROTE and 16.3% in ROI, these numbers being the highest figures over the last 10 years |
| Since the elections we have seen the start of the normalization of monetary policy and continued changes in the regulatory frameworks, which are positive and in line to showing the first steps in what’s going to be a long course of action to return to a North doc’s policy set |
| In the second column from the left, what stands out is the impressive 29.1% year-on-year growth in gross income, 32% growth in operating income, which then explains the year-on-year net attributable profit growth of 29.6% in constant euros and 13.4% in current euros |
| Once again, I would highlight very positive gross income evolution, increasing 31.8% in constant euros, led by the increase in NII of 36.5% and also the great fee income performance in our view, growing 17.5% |
| All in, the strong gross income growth, coupled with the positive jaws and the sound performance of the risk metrics in the current cycle led to an outstanding recurrent net attributable profit of almost €6 billion, implying 32% growth in constant euros and 19% in current euros, excluding nonrecurring impact, as you see, the second line from the bottom in the table |
| Efficiency ratio continues to improve to 39.4% as of September, given the highly positive jaws in the geography |
| As we improve our revenue capacity quarter after quarter, quarter after quarter, our net interest income increasing 36% versus last year and 13.4% compared to last quarter, driven by the solid activity growth and the customer spread improvements |
| Second, on the page, the positive evolution of net fees and commissions at the top on the right, increasing an outstanding 28% year-on-year and 13.6% versus last quarter |
| Jaws evolution remains very positive as revenues continue to grow well above expenses, resulting in a continued improvement in the cost-to-income ratio, which stands at a very low 30.3% in September |
| Third, the strong quarterly performance of net trading income, driven by the evolution, especially in Global Markets |
| All in all, excellent growth in gross income, 29% year-over-year and 9.5% quarter-over-quarter |
| And in this page, it basically highlights our clear conviction of continued revenue growth for the bank, for the group in the coming quarters |
| On the left side of the slide, you can see the strong loan growth in the most profitable segments in both Spain and especially in Mexico |
| Even if you look into through the cycle, so you can look into the current losses, but if you double those losses, if you increase those losses toward stress levels, the return on capital for that book is better than the – some other books that you can have in terms of growth |
| And for Mexico, customer spread is at 11.94% maintaining the high level of last quarter with a strong year-over-year increase |
| On the right-hand side of the slide, as a result of both activity growth and customer spread improvements, you can see the strong core revenue growth year-over-year in both countries 39% growth in Spain and 19% growth in Mexico in constant and also on a quarterly basis, above 5% quarter-over-quarter growth in both countries |
| You have been asking about the peak, the time the peak will be reached, when is the peak, when is the peak? As we have been commenting in the past and in our view, as this page also shows due to the continued spread improvement in Spain and the strong lending momentum, the volume growth in Mexico, we believe we will continue to post healthy core revenue growth in the coming quarters |
| On top of NII, we have also seen outstanding growth across the boarding fees, highlighting credit cards and payments, but also increasing contribution from asset management and our insurance businesses |
| On the left-hand side of the slide, we continue showing positive jaws at the group level, thanks to the good performance of gross income, as I mentioned before, growing 31.8% in the first 9 months of the year, while the costs are growing at 22.3%, mainly due to the impact of high inflation countries |
| So, with the situation in Turkey, with the regulation, the access to dollars, volatility, guarantee, BBVA has an outstanding team in global markets that monetizes this volatility and generates quite sound recurring FX NTI quarter-on-quarter, and that is what you see in this quarter as well |
| Very robust trends that make us confident on NII evolution, which we are expecting to be growing close to 20% this year |
| Statement |
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| So the macro situation has deteriorated in some of these geographies, which has led to a real deterioration as compared to what we were expecting |
| I would remind you once again also that there is also this concern that when the rates come down, in Mexico, the Central Bank rates, there will be a big decline in this number |
| And second, the reason for the increase, a gradual deterioration of the macro financial environment in South America with downward divisions, as you know, the economic growth, tight funding conditions and other idiosyncratic risks, especially in Peru |
| We have been taking some negative carry to fix some of our revenues going forward |
| And this has relevantly impacted our results this quarter, which we report a quarterly loss of €158 million |
| However, early repayments, despite starting to show a declining trend, continue to weigh down on the loan stock in the year-on-year numbers |
| Number one, the key problem that we have seen for many years in Mexico has been the lack of investments |
| Now, that the rates are going up, there will be some negative impact |
| And then there is real deterioration more than what we expected in South America |
| Why? Because the core geographies that we are in, in the case of Peru, I mean, the expected GDP growth this year is 0.4% with a negative bias |
| I acknowledge your guidance for the full year is below 300 basis points |
| So, the reason that the Mexican overall profit and Mexican NTI, if you look into the details, has come down in the quarter is because of the swap |
| Also on the side of fees, the results as you see our mix in the quarter, we have a decline in fees primarily due to seasonality, also driven by lower CIB fees in the quarter |
| So there is some real deterioration |
| The deposit EBITDA is still low relative to peers and the longest is flattening out despite the improving mix |
| So, the average that you see in the documentation is composed of very negative numbers in July |
| On the 2024 deposit guarantee fund and the single resolution fund in 2024, the single resolution is expected to disappear and DGF is expected to come down significantly |
| So there will be some deterioration for sure once things normalize |
| And also throughout the year, we have a lower current account fees that are weighing down on the performance |
| It’s going to be slightly worse than 111 basis points is the guidance for the cost of risk |
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