Results
Quarterly evolution of results
The result achieved by the BBVA Group in the third quarter of 2022 stood at €1,841m, or what is the same, 9.9% above the previous quarter, which included -201 million euros of non-recurring impact for the purchase of offices in Spain. Excluding this impact, the Group's attributable profit was 1.9% below the 1,877 million euros achieved in the previous quarter. In addition to the above, the following trends stand out:
- In recurring income, notable evolution of net interest income, supported by the higher interest rates environment and lower commissions, affected by the usual seasonality in certain geographical areas.
- The increase in operating expenses continues in an inflationary environment.
- Higher provisions for impairment on financial assets, mainly in Spain and Mexico.
CONSOLIDATED INCOME STATEMENT: QUARTERLY EVOLUTION (MILLIONS OF EUROS)
| 2022 | 2021 | ||||||
|---|---|---|---|---|---|---|---|
| 3Q | 2Q | 1Q | 4Q | 3Q | 2Q | 1Q | |
| Net interest income | 5,261 | 4,602 | 3,949 | 3,978 | 3,753 | 3,504 | 3,451 |
| Net fees and commissions | 1,380 | 1,409 | 1,242 | 1,247 | 1,203 | 1,182 | 1,133 |
| Net trading income | 573 | 516 | 580 | 438 | 387 | 503 | 581 |
| Other operating income and expenses | (358) | (432) | (355) | (187) | (13) | (85) | (11) |
| Gross income | 6,857 | 6,094 | 5,416 | 5,477 | 5,330 | 5,104 | 5,155 |
| Operating expenses | (2,818) | (2,630) | (2,424) | (2,554) | (2,378) | (2,294) | (2,304) |
| Personnel expenses | (1,475) | (1,346) | (1,241) | (1,399) | (1,276) | (1,187) | (1,184) |
| Other administrative expenses | (1.005) | (944) | (870) | (850) | (788) | (800) | (812) |
| Depreciation | (338) | (340) | (313) | (305) | (314) | (307) | (309) |
| Operating income | 4,038 | 3,464 | 2,992 | 2,923 | 2,953 | 2,810 | 2,850 |
| Impairment on financial assets not measured at fair value through profit or loss | (940) | (704) | (737) | (832) | (622) | (656) | (923) |
| Provisions or reversal of provisions | (129) | (64) | (48) | (40) | (50) | (23) | (151) |
| Other gains (losses) | 19 | (3) | 20 | 7 | 19 | (7) | (17) |
| Profit (loss) before tax | 2,988 | 2,694 | 2,227 | 2,058 | 2,299 | 2,124 | 1,759 |
| Income tax | (1,004) | (697) | (904) | (487) | (640) | (591) | (489) |
| Profit (loss) for the period | 1,984 | 1,997 | 1,324 | 1,571 | 1,659 | 1,533 | 1,270 |
| Non-controlling interests | (143) | (120) | 3 | (230) | (259) | (239) | (237) |
| Net attributable profit (loss) excluding non-recurring impacts | 1,841 | 1,877 | 1,326 | 1,341 | 1,400 | 1,294 | 1,033 |
| Discontinued operations and Other (1) | - | (201) | - | - | - | (593) | 177 |
| Net attributable profit (loss) | 1,841 | 1,675 | 1,326 | 1,341 | 1,400 | 701 | 1,210 |
| Adjusted earning per share (euros) (2) | 0.29 | 0.30 | 0.21 | 0.19 | 0.20 | 0.18 | 0.14 |
| Earning per share (euros) (2)(3) | 0,28 | 0.25 | 0.19 | 0.20 | 0.20 | 0.09 | 0.17 |
- (1) Include: (I) the net impact arisen from the purchase of offices in Spain in 2022 for €-201m; (II) the net costs related to the restructuring process in 2021 for €-696m; and (III) the profit (loss) generated by BBVA USA and the rest of the companies in the United States sold to PNC on June 1, 2021 for +280 million euros.
- (2) Adjusted by additional Tier 1 instrument remuneration. EPS calculated considering the average number of shares, taking into account the treasury shares and the shares acquired under the share buyback program. Adjusted EPS calculated considering the number of shares, taking into account the treasury shares. For more information, see Alternative Performance Measures at the end of this report.
Year-on-year performance of results
The BBVA Group generated a net attributable profit excluding non-recurring impacts of €5,044m in the first nine months of 2022, representing a year-on-year variation of +35.3%. Including those non-recurring impacts, i.e. €-201m from the purchase of offices in Spain from Merlin in June 2022 and €-416m from the results of discontinued operations corresponding to BBVA USA and the companies sold to PNC on June 1, 2021, together with the net cost related to the restructuring process of the same year, the Group's net attributable profit increased by 46.2% year-on-year.
CONSOLIDATED INCOME STATEMENT (MILLIONS OF EUROS)
| Jan.-Sep. 22 |
∆% |
∆% at constant exchange rates |
Jan.-Sep. 21 |
|
|---|---|---|---|---|
| Net interest income | 13,811 | 29.0 | 32.6 | 10,708 |
| Net fees and commissions | 4,030 | 14.6 | 17.4 | 3,518 |
| Net trading income | 1,669 | 13.4 | 17.4 | 1,472 |
| Other operating income and expenses | (1,145) | n.s. | n.s. | (108) |
| Gross income | 18,366 | 17.8 | 21.2 | 15,589 |
| Operating expenses | (7,872) | 12.8 | 14.5 | (6,976) |
| Personnel expenses | (4,062) | 11.4 | 14.1 | (3,647) |
| Other administrative expenses | (2,819) | 17.5 | 17.7 | (2,400) |
| Depreciation | (990) | 6.6 | 7.8 | (929) |
| Operating income | 10,494 | 21.8 | 26.7 | 8,613 |
| Impairment on financial assets not measured at fair value through profit or loss | (2.380) | 8.1 | 6.4 | (2,202) |
| Provisions or reversal of provisions | (241) | 7.4 | (2.2) | (224) |
| Other gains (losses) | 37 | n.s. | n.s. | (5) |
| Profit (loss) before tax | 7,909 | 27.9 | 36.6 | 6,182 |
| Income tax | (2,605) | 51.5 | 57.3 | (1,720) |
| Profit (loss) for the period | 5,304 | 18.9 | 28.3 | 4,462 |
| Non-controlling interests | (260) | (64.6) | (42.7) | (735) |
| Net attributable profit (loss) excluding non-recurring impacts | 5,044 | 35.3 | 37.1 | 3,727 |
| Discontinued operations and Other (1) | (201) | (51.6) | (47.7) | (416) |
| Net attributable profit (loss) | 4,842 | 46.2 | 47.0 | 3,311 |
| Adjusted earning per share (euros)(2) | 0.80 | 0.52 | ||
| Earning (loss) per share (euros) (2) | 0.74 | 0.46 |
- (1) Include: (I) the net impact arisen from the purchase of offices in Spain in 2022 for €-201m; (II) the net costs related to the restructuring process in 2021 for €-696m; and (III) the profit (loss) generated by BBVA USA and the rest of the companies in the United States sold to PNC on June 1, 2021 for +280 million euros.
- (2) Adjusted by additional Tier 1 instrument remuneration. EPS calculated considering the average number of shares, taking into account the treasury shares and the shares acquired under the share buyback program. Adjusted EPS calculated considering the number of shares, taking into account the treasury shares. For more information, see Alternative Performance Measures at the end of this report.
The result attributed to the Group for the first nine months of 2022 includes the application to the Group's entities in Turkey of IAS 29, "Financial Reporting in Hyperinflationary Economies"2.
Unless expressly indicated otherwise, to better understand the changes under the main headings of the Group's income statement, the year-on-year rates of change provided below refer to constant exchange rates. When comparing two dates or periods in this report, the impact of changes in the exchange rates against the euro of the currencies of the countries in which BBVA operates is sometimes excluded, assuming that exchange rates remain constant. For this purpose, the average exchange rate of the currency of each geographical area of the most recent period is used for both periods, except for those countries whose economies have been considered hyperinflationary, for which the closing exchange rate of the most recent period is used.
The accumulated net interest income as of September 30, 2022 was higher than in the same period of the previous year (+32.6%), with increases in all geographical areas due to the improvement in customer spread and higher managed loan portfolio volumes. Mexico, Turkey and South America performed well.
All areas, with the exception of Rest of Business, showed a positive performance in the net fees and commissions line compared to the accumulated amount reported at the end of September 2021 (+17.4% at Group level), which is partly explained by the increase in activity and higher fees from payment systems and deposits in the first nine months of 2022.
2 IAS 29 has not been applied to operations outside Turkey, in particular to the financial statements of Garanti Bank in Romania and Garanti Bank International N.V. in the Netherlands.
NET INTEREST INCOME/AVERAGE TOTAL ASSETS(1) (PERCENTAGE)
(1) Excluding BBVA USA and the rest of the companies in the United States sold to PNC on June 1, 2021 for the 2021 figures.
NET INTEREST INCOME PLUS NET FEES AND COMMISSIONS
(MILLIONS OF EUROS AT CONSTANT EXCHANGE RATES)
(1) At current exchange rates: +20.8%
NTI showed a year-on-year variation of +17.4% at the end of September 2022, with a positive trend in Turkey, South America, Mexico and Spain, which offset the lower outcome of rest of Business and the lower results recorded in the Corporate Center.
The other operating income and expenses line accumulated a result of €-1,145m as of September 30, 2022, compared to €-108m in the same period last year, mainly due to the more negative adjustment for inflation in Argentina, the recording of this adjustment in the Group's entities in Turkey in 2022 and the higher contribution to the Single Resolution Fund ("SRF") in Spain.
GROSS INCOME (MILLIONS OF EUROS AT CONSTANT EXCHANGE RATES)
(1) At constant exchange rates: +17.8%.
In year-on-year terms, operating expenses increased at the Group level (+14.5%), in an environment of high inflation in all countries in which BBVA operates. By areas, there was a year-on-year decrease in Spain, due to the lower headcount, and to a lesser extent, in the Corporate Center.
Notwithstanding the above, thanks to the remarkable growth in gross income (+21.2%), the efficiency ratio stood at 42.9% as of September 30, 2022, with an improvement of 249 basis points compared to the ratio recorded 12 months earlier. By geographical areas, Spain, Mexico and, to a lesser extent, South America recorded a favorable performance in terms of efficiency.
OPERATING EXPENSES (MILLIONS OF EUROS AT CONSTANT EXCHANGE RATES)
(1) At current exchange rates: +12.8%
EFFICIENCY RATIO (PERCENTAGE)
Impairment on financial assets not measured at fair value through profit or loss (impairment on financial assets) closed September 2022 6,4% above the previous year, with higher credit impairments in Turkey and Mexico.
OPERATING INCOME (MILLIONS OF EUROS AT CONSTANT EXCHANGE RATES)
(1) At current exchange rates: +21.8%.
IMPAIRMENT ON FINANCIAL ASSESTS (MILLIONS OF EUROS AT CONSTANT EXCHANGE RATES)
(1) At current exchange rates: +8.1%.
The provisions or reversal of provisions line (hereinafter "provisions") accumulated a negative balance of €241m as of September 30, 2022, mainly due to provisions for legal contingencies in Spain and was 2.2% below the accumulated figure in the same period of the last year.
For its part, the other gains (losses) line closed September 2022 with a positive balance of €37m, which compares positively to the figure reached the previous year (€-5m).
As a result of the above, the BBVA Group generated a net attributable profit, excluding non-recurring impacts, of €5,044m in the first nine months of 2022, representing a year-on-year increase of +37.1%. Taking into account the non-recurring impacts, registered within the line "Discontinued operations and Other," that is: (I) €-201m recorded in the second quarter of 2022 for the purchase of offices in Spain; (II) €+280m for the results generated by BBVA USA and the rest of the companies sold to PNC on June 1, 2021; and (III) €-696m of the net costs associated with the restructuring process, the cumulative net attributable profit of the Group at the end of September 2022 stood at €4,842m, 47.0% higher than that achieved in the first nine months of 2021.
The cumulative net attributable profits, in millions of euros, at the end of September 2022 for the business areas that compose the Group were as follows: €1,514m in Spain (excluding the impact from the purchase of offices), €2,964m in Mexico, €336m in Turkey, €614m in South America and €183m in Rest of Business.
NET ATTRIBUTABLE PROFIT (LOSS) (MILLIONS OF EUROS AT CONSTANT EXCHANGE RATES)
(1) At current exchange rates: +46.2%.
NET ATTRIBUTABLE PROFIT (LOSS) EXCLUDING NON-RECURRING IMPACTS (MILLIONS OF EUROS AT CONSTANT EXCHANGE RATES)
General note: non-recurring impacts include the net impact arisen from the purchase of offices in Spain in 2Q22, BBVA USA and the rest of the companies in the United States sold to PNC on June 1, 2021 for the periods 1Q21 and 2Q21 and the net cost related to the restructuring process in 2Q21.
(1) At current exchange rates: +35.3%.
TANGIBLE BOOK VALUE PER SHARE(1) AND DIVIDENDS (EUROS)
General note: replenishing dividends paid in the period.
ADJUSTED EARNING PER SHARE (2) AND EARNING PER SHARE (2) (EUROS)
General note: adjusted earning per share excludes: (I) the net impact arisen from the purchase of offices in Spain in 2Q22;
(II) the net cost related to the restructuring process for the
period 2Q21; and (III) the profit (loss) after tax from
discontinued operations derived from the sale of BBVA USA and
the rest of the companies in the United States to PNC on June 1,
2021 for the periods 1Q21 and 2Q21.
(1) Calculated considering the number of shares, taking into account the treasury shares and the shares acquired under the buyback program.
(2) Adjusted by additional Tier 1 instrument remuneration. EPS calculated considering the average number of shares, taking into account the treasury shares and the shares acquired under the share buyback program. Adjusted EPS calculated considering the number of shares, taking into account the treasury shares. For more information, see Alternative Performance Measures at the end of this report.
The Group’s profitability indicators improved in year on year terms, supported by the favorable performance of results.
ROE AND ROTE (1) (PERCENTAGE)
ROA AND RORWA (1) (PERCENTAGE)
(1) Excludes the net impact arisen from the purchase of offices in Spain in Jan.-Sep.22. Excludes BBVA USA and the rest of the companies in the United States sold to PNC on June 1, 2021 and the net cost related to the restructuring process for the periods Ene.-Sep.21 and 2021.