Mexico
Highlights
- The strong momentum in lending activity continues
- Outstanding development of gross income and good performance of the efficiency in the year
- Risk indicators finish the year in line with expectations
- Quarterly attributable profit remains at high levels and in cumulative terms above 2023
BUSINESS ACTIVITY (1)
(VARIATION AT CONSTANT EXCHANGE RATE COMPARED TO 31-12-23)
(1) Excluding repos.
NET INTEREST INCOME / AVERAGE TOTAL ASSETS
(PERCENTAGE AT CONSTANT EXCHANGE RATE)
OPERATING INCOME
(MILLIONS OF EUROS AT CONSTANT EXCHANGE RATE)
(1) At current exchange rate: +8.5%.
NET ATTRIBUTABLE PROFIT (LOSS)
(MILLIONS OF EUROS AT CONSTANT EXCHANGE RATE)
(1) At current exchange rate: +2.4%.
| FINANCIAL STATEMENTS AND RELEVANT BUSINESS INDICATORS (MILLIONS OF EUROS AND PERCENTAGE) | ||||
|---|---|---|---|---|
| Income statement | 2024 | ∆ % | ∆ % (2) | 2023 (1) |
| Net interest income | 11,556 | 4.5 | 8.0 | 11,054 |
| Net fees and commissions | 2,443 | 9.7 | 13.4 | 2,226 |
| Net trading income | 767 | 34.0 | 38.5 | 572 |
| Other operating income and expenses | 571 | 37.4 | 42.0 | 415 |
| Gross income | 15,337 | 7.5 | 11.1 | 14,267 |
| Operating expenses | (4,648) | 5.3 | 8.8 | (4,415) |
| Personnel expenses | (2,264) | 7.8 | 11.4 | (2,100) |
| Other administrative expenses | (1,906) | 3.3 | 6.7 | (1,846) |
| Depreciation | (477) | 1.8 | 5.2 | (469) |
| Operating income | 10,689 | 8.5 | 12.1 | 9,853 |
| Impairment on financial assets not measured at fair value through profit or loss | (3,098) | 24.0 | 28.1 | (2,499) |
| Provisions or reversal of provisions and other results | (69) | 175.0 | 184.1 | (25) |
| Profit (loss) before tax | 7,522 | 2.6 | 6.0 | 7,329 |
| Income tax | (2,074) | 3.2 | 6.6 | (2,009) |
| Profit (loss) for the period | 5,448 | 2.4 | 5.8 | 5,320 |
| Non-controlling interests | (1) | 2.0 | 5.3 | (1) |
| Net attributable profit (loss) | 5,447 | 2.4 | 5.8 | 5,319 |
Balance sheets | 31-12-24 | ∆ % | ∆ % (2) | 31-12-23 |
| Cash, cash balances at central banks and other demand deposits | 12,564 | 24.5 | 43.3 | 10,089 |
| Financial assets designated at fair value | 54,547 | (9.7) | 4.0 | 60,379 |
| Of which: Loans and advances | 2,088 | (59.7) | (53.6) | 5,180 |
| Financial assets at amortized cost | 94,595 | (1.8) | 13.0 | 96,342 |
| Of which: Loans and advances to customers | 88,725 | 0.7 | 15.9 | 88,112 |
| Tangible assets | 2,038 | (14.6) | (1.7) | 2,387 |
| Other assets | 4,726 | 10.1 | 26.7 | 4,293 |
| Total assets/liabilities and equity | 168,470 | (2.9) | 11.8 | 173,489 |
| Financial liabilities held for trading and designated at fair value through profit or loss | 30,885 | 8.4 | 24.8 | 28,492 |
| Deposits from central banks and credit institutions | 9,149 | 4.7 | 20.5 | 8,739 |
| Deposits from customers | 84,949 | (8.2) | 5.6 | 92,564 |
| Debt certificates | 10,717 | 10.3 | 26.9 | 9,719 |
| Other liabilities | 21,043 | (7.5) | 6.4 | 22,756 |
| Regulatory capital allocated | 11,727 | 4.5 | 20.3 | 11,218 |
Relevant business indicators | 31-12-24 | ∆ % | ∆ % (2) | 31-12-23 |
| Performing loans and advances to customers under management (3) | 89,044 | 0.4 | 15.6 | 88,688 |
| Non-performing loans | 2,517 | 1.8 | 17.2 | 2,472 |
| Customer deposits under management (3) | 83,962 | (7.7) | 6.3 | 90,926 |
| Off-balance sheet funds (4) | 57,253 | 7.5 | 23.7 | 53,254 |
| Risk-weighted assets | 92,925 | 1.2 | 16.4 | 91,865 |
| Efficiency ratio (%) | 30.3 | 30.9 | ||
| NPL ratio (%) | 2.7 | 2.6 | ||
| NPL coverage ratio (%) | 121 | 123 | ||
| Cost of risk (%) | 3.39 | 2.96 | ||
(1) Revised balances. For more information, please refer to the “Business Areas” section.
(2) At constant exchange rate.
(3) Excluding repos.
(4) Includes mutual funds, customer portfolios and other off-balance sheet funds.
Macro and industry trends
GDP growth decelerated in 2024 and will remain relatively limited in 2025, in a context marked by uncertainty around the impact of the recently approved constitutional reforms and the policies of the new United States Administration, as well as by an expected process of fiscal consolidation after the increase in the public deficit in 2024. In particular, BBVA Research forecasts that GDP growth will reach 1.2% in 2024 and 1.0% in 2025, unchanged from previous forecasts. Annual inflation reached 4.5% at the end of 2024 and is expected to moderate to between 3.0% and 4.0% in 2025. In this context, policy rates, which were cut to 10.0% in December, are expected to decline further, converging to around 8.0% by the end of 2025.
Regarding the banking system, with data at the end of November 2024, the volume of credit to the non-financial private sector increased by 13.2% year-on-year, with growth in all the main portfolios: consumer credit (+18.0%), credit for home purchases (+7.6%) and credit to companies (+13.4%). Growth in total deposits (demand and time deposits) remained slightly below the growth in lending (+10.5% year-on-year in November), with greater dynamism in time deposits (+13.8%) than in demand deposits (+8.7%). The system's NPL ratio improved slightly to 2.26% in November 2024 and capital indicators are healthy.
Unless expressly stated otherwise, all the comments below on rates of variation, for both activity and results, will be given at constant exchange rate. These rates, together with variations at current exchange rates, can be found in the attached tables of financial statements and relevant business indicators.
Activity
The most relevant aspects related to the area's activity14 in 2024 were:
- Lending activity (performing loans under management) showed a very strong growth, which stood at 15.6% between January and the end of December 2024, with a more dynamic performance of the wholesale portfolio, which grew by 18.1%. Within this portfolio, which includes companies and public administrations, the evolution of the corporate banking segment was outstanding. In the retail portfolio, which grew at a rate of 13.8%, consumer loans increased by 17.0%, mortgages by 9.2%, credit cards by 13.7% and loans to SMEs by 19.8%.
- Customer funds under management increased 12.7% in 2024, with growths of 6.3% in customer deposits and 23.7% in off-balance sheet funds thanks to the sales boost.
The most relevant aspects related to the area's activity in the fourth quarter of 2024 were:
- Lending activity (performing loans under management) grew by 5.7% in the fourth quarter of 2024, with similar dynamics to those mentioned in the annual evolution of 2024: greater dynamism of the wholesale portfolio, which grew more than the retail portfolio of (+8.7 versus +3.3%).
- With regard to the asset quality indicators, the NPL ratio stood at 2.7% at the end of December 2024, which represents an increase of 5 basis points compared to the previous quarter, mainly due to the performance of the portfolio and the reduction of non-performing balances in the wholesale portfolio. On the other hand, the NPL coverage ratio was 121% at the end of December 2024, stable compared to the previous quarter.
- Customer deposits under management were 3.9%,higher than at the end of September 2024 due to the evolution of demand deposits, the lowest cost deposits for BBVA Mexico, which grew 6.7% in the quarter, helped by the seasonal increase at the end of the year.
Results
BBVA Mexico achieved a cumulative net attributable profit of €5,447m at the end of December 2024, representing a growth of 5.8% compared to the end of the previous year, mainly due to the evolution of the recurring income from the banking business and with all lines that contribute to the gross income showing high dynamism.
The most relevant aspects of the year-on-year changes in the income statement as of the end of December 2024 are summarized below:
- Net interest income increased by 8.0%, as a result of the growth in lending activity and the profitability of the securities portfolio.
- Net fees and commissions continued to grow at double digit (+13.4%), favored by higher transaction volumes and driven by almost all types of fees, particularly those associated with credit cards, mutual fund management and wholesale activity.
- The contribution from NTI increased (+38.5%) mainly as a result of the performance of Global Markets and the foreign exchange trading.
- Other operating income and expenses grew by 42.0%, driven by the favorable evolution of the insurance business which benefited from cross-selling due to a higher volume of lending activity and partially offset by an increase in the contribution to the DGF.
- Operating expenses grew (+8.8%), mainly due to higher personnel expenses associated with the increase in the headcount over the course of 2023, and, to a lesser extent, the increase of general expenses, where investments in technology stand out.
- Loan-loss provisions increased (+28.1%), affected by the higher provisioning needs in the retail portfolio, mainly in consumer and credit cards, due to the growth of these profitable segments and the worsening of the macroeconomic scenario compared to the one initially forecast at the beginning of 2024. For its part, the cumulative cost of risk at the end of December 2024 stood at 3.39%, which represents a decrease of 4 basis points compared to the one registered at the end of September and in line with expectations for the year as a whole.
In the quarter, and excluding the effect of exchange rate fluctuations, BBVA Mexico generated a net attributable profit of €1,368m, -3.0% less than in the previous quarter, mainly due to higher operating expenses, principally associated with the increase in variable remuneration to the employees, in line with the area's better annual performance and higher general expenses associated with the growth in business.
14 Breakdown of activity data by portfolio based on local accounting criteria.