BBVA continued the process of improving and revising its risk model corresponding to real-estate activities, by taking the portfolios and economic context into consideration, although maintaining economic capital as a common metric.
Risk is estimated by simulating variations in the price of housing while taking into account the main drivers identified (volatility, project delays, liquidity, etc.) for the defined time horizon. The model has a portfolio focus, making the maximum possible use of information from each project and asset.
The economic capital of the real-estate business is integrated into BBVA Group’s capital model.