Rest of Business

Highlights

  • Growth in lending activity and in customer funds in the first nine months of 2022
  • Strong net interest income, which grows at double-digit
  • Increase in operating expenses
  • The cost of risk remains at low levels

Business activity (1)
(VARIATION AT CONSTANT EXCHANGE RATES COMPARED TO 31-12-21)

(1) Excluding repos.

Net interest income / AVERAGE TOTAL ASSETS
(Percentage. Constant exchange rates)

Operating income
(Millions of euros at constant exchange rates)


(1) At current exchange rates: -21.7%.

Net attributable profit (LOSS)
(Millions of euros at constant exchange rates)


(1) At current exchange rates: -20.2%.

Financial statements and relevant business indicators (Millions of euros and percentage)

Income statement Jan.-Sep. 22 ∆% ∆% (1) Jan.-Sep. 21 (2)
Net interest income 244 15.6 10.7 211
Net fees and commissions 186 0.8 (5.3) 184
Net trading income 151 (23.1) (28.0) 196
Other operating income and expenses 5 (64.1) (67.7) 14
Gross income 585 (3.3) (8.7) 605
Operating expenses (367) 12.3 5.8 (327)
Personnel expenses (189) 14.3 7.2 (165)
Other administrative expenses (161) 10.1 4.0 (146)
Depreciation (17) 11.5 7.2 (16)
Operating income 217 (21.7) (25.9) 278
Impaiment on financial assets not measured at fair value through profit or loss (4) n.s. n.s. 20
Provisions or reversal of provisions and other results 15 n.s. n.s. (4)
Profit (loss) before tax 229 (22.0) (26.4) 294
Income tax (46) (28.2) (32.2) (65)
Profit (loss) for the period 183 (20.2) (24.8) 229
Non-controlling interests - - - -
Net attributable profit (loss) 183 (20.2) (24.8) 229
  • (1) At constant exchange rates.

  • (2) Restated balances. For more information, please refer to the “Business Areas” section.
Balance sheets 30-09-22 ∆% ∆% (1) 31-12-21
Cash, cash balances at central banks and other demand deposits 4,918 23.9 7.3 3,970
Financial assets designated at fair value 3,967 (30.2) (39.2) 5,682
Of which: Loans and advances 2,631 (43.9) (51.7) 4,691
Financial assets at amortized cost 38,112 25.7 21.1 30,315
Of which: Loans and advances to customers 35,319 31.0 26.0 26,965
Inter-area positions - - - -
Tangible assets 80 14.9 12.4 70
Other assets 455 56.2 47.1 291
Total assets/liabilities and equity 47,532 17.9 10.7 40,328
Financial liabilities held for trading and designated at fair value through profit or loss 3,274 (35.3) (44.2) 5,060
Deposits from central banks and credit institutions 1,891 10.6 1.4 1,709
Deposits from customers 8,751 39.7 31.4 6,266
Debt certificates 1,459 25.1 19.5 1,166
Inter-area positions 26,776 21.2 16.0 22,085
Other liabilities 1,081 43.2 35.2 755
Economic capital allocated 4,300 30.8 24.8 3,287
Relevant business indicators 30-09-22 ∆% ∆% (1) 31-12-21
Performing loans and advances to customers under management (2) 35,426 31.2 26.2 27,000
Non-performing loans 191 (26.6) (26.6) 261
Customer deposits under management (2) 8,751 39.7 31.4 6,266
Off-balance sheet funds (3) 524 (12.3) (12.3) 597
Risk-weighted assets 35,559 21.4 16.0 29,280
Efficiency ratio (%) 62.8 58.4
NPL ratio (%) 0.4 0.7
NPL coverage ratio (%) 158 116
Cost of risk (%) 0.02 (0.11)

(1) At constant exchange rates.

(2) Excluding repos.

(3) 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 activity of Rest of Business of BBVA Group between January and September 2022 were:

  • Lending activity (performing loans under management) registered an increase (+26.2%), with a favorable performance, mainly from the New York branch and, to a lesser extent, from the branches in Europe and Asia.
  • Customer funds under management increased by 27.8% during the first nine months of the year 2022, with growth in time deposits, mainly from the New York branch and Europe, which more than offset the decline in demand deposits and off- balance sheet funds.

The most relevant of the evolution of the area's activity in the third quarter of 2022 has been:

  • Lending activity increased by 8.2% between July and September 2022, due to the growth in the business segment that offset the deleveraging in the retail segment.
  • Regarding credit risk indicators, the NPL ratio stood at 0.4%, 17 basis points below the previous quarter, mainly due to the recovery of a wholesale client. The NPL coverage ratio increased notably to stand at 158%.
  • Total customer funds grew in the quarter (+9.0%) supported by the increase in time deposits (+24.6%), originating mainly from the branches in Europe.

Results

Regarding the year-on-year evolution of the area's income statement at the end of September 2022:

  • The net interest income increased +10.7% compared to the same period of the previous year, with a positive performance in Europe and the New York branch and, to a lesser extent, in BBVA Securities.
  • Net fees and commissions decreased by 5.3% compared to the end of September 2021, due to the lower fees and commissions recorded by BBVA Securities, despite the good performances of the branches in New York and Europe.
  • The NTI line recorded a year-on-year variation of -28.0% mainly due to the lower results of the business in the United States.
  • Decrease in the contribution of the other operating income and expenses line, as a result of the evolution of BBVA Securities.
  • Increase in operating expenses of 5.8% due to higher personnel expenses in Europe, partially offset by the lower expenses recorded by BBVA Securities.
  • The impairment on financial assets line closed September 2022 with a slight provision compared to the release of the previous year, originated in the New York branch.
  • Favorable performance of the provisions or reversal of provisions line and other results focused on lower provisions in New York.
  • As a result, the area's cumulative net attributable profit between January and September 2022 was €183m (-24.8% year- on-year).

In the third quarter of 2022 and excluding the effect of the variation in exchange rates, the Group's Rest of Businesses as a whole generated a net attributable profit of €52m, which represents an increase of 15.5% compared to the previous quarter, mainly due to the favorable evolution of net interest income and NTI together with a lower level of provisions.