Rest of Business
Highlights
- Good performance of lending activity and significant growth in customers funds
- Favorable evolution in recurring revenues and NTI in the quarter
- Positive dynamics in risk metrics
- Significant improvement of the efficiency ratio and the quarterly result
BUSINESS ACTIVITY (1)
(VARIATION AT CONSTANT EXCHANGE RATES COMPARED TO 31-12-23)
(1) Excluding repos.
NET INTEREST INCOME / AVERAGE TOTAL ASSETS
(PERCENTAGE AT CONSTANT EXCHANGE RATES)
OPERATING INCOME
(MILLIONS OF EUROS AT CONSTANT EXCHANGE RATES)
(1) At current exchange rates: +27.5%.
NET ATTRIBUTABLE PROFIT (LOSS)
(MILLIONS OF EUROS AT CONSTANT EXCHANGE RATES)
(1) At current exchange rates: +22.9%.
| FINANCIAL STATEMENTS AND RELEVANT BUSINESS INDICATORS (MILLIONS OF EUROS AND PERCENTAGE) | ||||
|---|---|---|---|---|
| Income statement | Jan.-Sep.24 | ∆ % | ∆ % (2) | Jan.-Sep.23 (1) |
| Net interest income | 523 | 29.1 | 30.9 | 405 |
| Net fees and commissions | 219 | 14.1 | 15.6 | 192 |
| Net trading income | 304 | 21.3 | 23.7 | 251 |
| Other operating income and expenses | 1 | (64.7) | (59.0) | 4 |
| Gross income | 1,048 | 23.0 | 24.9 | 852 |
| Operating expenses | (498) | 18.4 | 19.7 | (421) |
| Personnel expenses | (262) | 24.1 | 25.6 | (211) |
| Other administrative expenses | (214) | 12.2 | 13.3 | (191) |
| Depreciation | (22) | 16.8 | 17.3 | (19) |
| Operating income | 550 | 27.5 | 30.1 | 431 |
| Impairment on financial assets not measured at fair value through profit or loss | (36) | 48.2 | 50.1 | (25) |
| Provisions or reversal of provisions and other results | (3) | n.s. | n.s. | 10 |
| Profit (loss) before tax | 511 | 22.5 | 25.0 | 417 |
| Income tax | (109) | 20.9 | 23.4 | (90) |
| Profit (loss) for the period | 402 | 22.9 | 25.4 | 327 |
| Non-controlling interests | — | — | — | — |
| Net attributable profit (loss) | 402 | 22.9 | 25.4 | 327 |
Balance sheets | 30-09-24 | ∆ % | ∆ % (2) | 31-12-23 |
| Cash, cash balances at central banks and other demand deposits | 6,274 | 32.1 | 33.8 | 4,748 |
| Financial assets designated at fair value | 1,796 | (88.4) | (88.2) | 15,475 |
| Of which: Loans and advances | 1,163 | (92.1) | (92.0) | 14,783 |
| Financial assets at amortized cost | 49,236 | 13.5 | 14.1 | 43,363 |
| Of which: Loans and advances to customers | 44,224 | 12.5 | 13.0 | 39,322 |
| Inter-area positions | — | — | — | — |
| Tangible assets | 161 | 6.5 | 7.3 | 151 |
| Other assets | 546 | 1.6 | 2.6 | 537 |
| Total assets/liabilities and equity | 58,013 | (9.7) | (9.1) | 64,274 |
| Financial liabilities held for trading and designated at fair value through profit or loss | 924 | (93.8) | (93.7) | 14,831 |
| Deposits from central banks and credit institutions | 2,319 | (24.8) | (24.3) | 3,085 |
| Deposits from customers | 24,189 | 85.3 | 85.9 | 13,056 |
| Debt certificates | 1,663 | 17.7 | 18.2 | 1,413 |
| Inter-area positions | 22,500 | (15.0) | (14.5) | 26,466 |
| Other liabilities | 1,554 | 26.1 | 27.3 | 1,232 |
| Regulatory capital allocated | 4,864 | 16.0 | 16.6 | 4,191 |
Relevant business indicators | 30-09-24 | ∆ % | ∆ % (2) | 31-12-23 |
| Performing loans and advances to customers under management ⁽³⁾ | 44,110 | 12.5 | 13.0 | 39,202 |
| Non-performing loans | 373 | 1.4 | 1.4 | 368 |
| Customer deposits under management ⁽³⁾ | 24,189 | 85.3 | 85.9 | 13,056 |
| Off-balance sheet funds ⁽⁴⁾ | 613 | 8.3 | 8.3 | 566 |
| Risk-weighted assets | 40,969 | 12.5 | 13.1 | 36,410 |
| Efficiency ratio (%) | 47.5 | 53.1 | ||
| NPL ratio (%) | 0.6 | 0.7 | ||
| NPL coverage ratio (%) | 70 | 69 | ||
| Cost of risk (%) | 0.12 | 0.08 | ||
(1) Revised balances. For more information, please refer to the “Business Areas” section.
(2) At constant exchange rate.
(3) Excluding repos.
(4) Includes pension funds.
Unless expressly stated otherwise, all the comments below on rates of change, for both activity and results, will be given at constant exchange rates. These rates, together with the changes at current exchange rates, can be found in the attached tables of the financial statements and relevant business indicators. Comments that refer to Europe exclude Spain.
Activity
The most relevant aspects of the evolution of BBVA Group's Rest of Business activity between January and September 2024 were:
- Lending activity (performing loans under management) grew 13.0%, thanks to the favorable evolution of project finance as well as corporate lending, both in the New York branch and in Europe. Also noteworthy is the transactional business, which offers integral and personalized financial solutions for clients and collaborates with them to optimize their finances, in both geographical areas through increased participation in factoring programs.
- Customer funds under management grew by 82.7%, favored by the evolution of deposits, mainly in Europe, and to a lesser extent, in the New York branch.
The most relevant aspects of the evolution of BBVA Group's Rest of Business activity during the second quarter of 2024 were:
- Lending activity (performing loans under management) grew at a rate of 7.3%, mainly due to the evolution of corporate loans (+6.1%). In respect of the geographical areas that compose this area, Europe and the New York branch stood out.
- On the other hand, compared to the end of 2023, the NPL ratio slightly reduced to 0.6%, thanks to the growth in activity and the reduction of the doubtful balance, without relevant movements in the quarter. The coverage ratio declined to 70% due to the review of coverage for individual costumers.
- Customer funds under management increased by 14.1% mainly due to deposits in the European branches.
Results
Rest of Business achieved an accumulated net attributable profit of €402m during the first nine months of 2024, 25.4% higher than in the same period of the previous year, favored by the performance of the recurrent revenues and the NTI, which offset the increase in operating expenses and loan-loss provisions.
In the year-on-year evolution of the main lines of the area's income statement at the end of September 2024, the following was particularly noteworthy:
- Net interest income increased by 30.9% as a result of increased volume in activity and price management. This growth was observed both in the New York branch and in Europe, mainly in Investment Banking & Finance (IB&F).
- Net fees and commissions increased by 15.6%, mainly as a result of IB&F's one-off operations and transaction banking fees.
- The NTI grew by 23.7% supported by the strong performance of Global Markets in Europe, especially in credit and in the Group's equity trading business in the United States.
- Increase in operating expenses of 19.7%, with growth in the United States (mainly in the New York branch) and in Europe due to the increase in headcount and the execution of strategic plans.
- The impairment on financial assets line at the end of September 2024 recorded a balance of €-36m, mainly originating from provisions made in Europe.
In the third quarter of 2024, and excluding the effect of the exchange rates fluctuations, the Group's Rest of Businesses as a whole generated a net attributable profit of €171m, that is 52.5% with respect to the previous quarter due to the good performance of recurring revenues (in the New York branch, thanks to the increase in lending activity and commercial activity in Global Markets) together with the release of provisions for impairment of financial assets, mainly in the New York branch.