Alternative Performance Measures (APMs)
BBVA presents its results in accordance with the International Financial Reporting Standards (EU-IFRS). However, it also considers that some Alternative Performance Measures (hereinafter APMs) provide useful additional financial information that should be taken into account when evaluating performance. These APMs are also used when making financial, operational and planning decisions within the Entity. The Group firmly believes that they give a true and fair view of its financial information. These APMs are generally used in the financial sector as indicators for monitoring the assets, liabilities and economic and financial situation of entities.
BBVA Group's APMs are given below. They are presented in accordance with the European Securities and Markets Authority (ESMA) guidelines, published on October 5, 2015 (ESMA/2015/1415en) as well as the statement published by the ESMA on May 20, 2020 (ESMA 32-63-972), about implications of the COVID-19 outbreak on the half-yearly financial reports. The first guideline mentioned before are aimed at promoting the usefulness and transparency of APMs included in prospectuses or regulated information in order to protect investors in the European Union. In accordance with the indications given in the aforementioned guideline, BBVA Group's APMs:
- Include clear and readable definitions of the APMs.
- Disclose the reconciliations to the most directly reconcilable line item, subtotal or total presented in the financial statements of the corresponding period, separately identifying and explaining the material reconciling items.
- Are standard measures generally used in the financial industry, so their use provides comparability in the analysis of performance between issuer.
- Do not have greater preponderance than measures directly stemming from financial statements.
- Are accompanied by comparatives for previous periods.
- Are consistent over time.
Constant exchange rates
When comparing two dates or periods in this management 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. This is done for the amounts in the income statement by using the average exchange rate against the euro8 in the most recent period for each currency of the geographical areas in which the Group operates, and applying it to both periods; for amounts in the balance sheet and activity, the closing exchange rates in the most recent period are used.
Reconciliation of the Financial Statements of the BBVA Group
Below is the reconciliation between the income statements of the Consolidated Financial Statements and the consolidated management income statement, for the years 2022, 2021 and 2020.
In 2022, the main difference between the two accounts is in the treatment of the impact of the purchase from Merlin of 100% of the shares of Tree, which in turn owns 662 offices in Spain. For management purposes, this impact is included in a single line, net of taxes, of the income statement called "Discontinued operations and Other", compared to the treatment in the Consolidated Financial Statements, which record the gross impact and its tax effect under the corresponding headings that are applicable to them.
In 2021, the main difference between them is the treatment of the cost related to the restructuring process carried out by the Group in 2021 which, for management purposes, are included in a single line, net of taxes, of the income statement called "Discontinued operations and Other", compared to the treatment in the consolidated Financial Statements, which record the gross impacts and their tax effect in the corresponding headings.
In 2020, the main difference between the two of them derives from the capital gains from the materialization of the agreement with Allianz in that year which, for management purposes, are included in a single line, net of taxes, of the income statement called "Discontinued operations and Other", compared to the treatment in the consolidated Financial Statements, which record the gross impacts and their tax effect in the corresponding headings that are applicable to them.
In addition, in both 2021 and 2020, there is a difference in the positioning of the results generated in 2021 and 2020 by BBVA USA and the rest of the companies sold to PNC on June 1, 2021. In the Consolidated Financial Statements, these results are included in the line "Profit (loss) after tax from discontinued operations" and are taken into account both for the calculation of the "Profit (loss) for the period" and for the profit (loss) "Attributable to the owners of the parent" whereas, for management purposes, they are not included in the "Profit (loss) for the period", as they are included below it, in the line "Discontinued operations and others", together with the aforementioned net restructuring costs for the year 2021 and the net capital gains from the agreement with Allianz for the year 2020, as can be seen in the reconciliation table for the years 2021 and 2020.
CONCILIATION OF THE BBVA GROUP'S INCOME STATEMENTS (MILLIONS OF EUROS)
| CONSOLIDATED INCOME STATEMENT | ADJUSTMENTS | MANAGEMENT INCOME STATEMENT | ||
|---|---|---|---|---|
| 2022 | 2022 | |||
| NET INTEREST INCOME | 19,153 | - | 19,153 | Net interest income |
| Dividend income | 123 | (*) | ||
| Share of profit or loss of entities accounted for using the equity method | 21 | (*) | ||
| Fee and commission income | 8,261 | 8,261 | Fees and commissions income | |
| Fee and commission expense | (2,907) | (2,907) | Fees and commissions expenses | |
| 5,353 | - | 5,353 | Net fees and commissions | |
| Gains (losses) on derecognition of financial assets and liabilities not measured at fair value through profit or loss, net | 64 | |||
| Gains (losses) on financial assets and liabilities held for trading, net | 562 | |||
| Gains (losses) on non-trading financial assets mandatorily at fair value through profit or loss, net | (67) | |||
| Gains (losses) on financial assets and liabilities designated at fair value through profit or loss, net | 150 | |||
| Gains (losses) from hedge accounting, net | (45) | |||
| Exchange differences, net | 1,275 | |||
| 1,938 | - | 1,938 | Net trading income | |
| Other operating income | 528 | |||
| Other operating expense | (3,438) | |||
| Income from insurance and reinsurance contracts | 3,103 | |||
| Expense from insurance and reinsurance contracts | (1,892) | |||
| (1,555) | - | (1,555) | Other operating income and expenses | |
| GROSS INCOME | 24,890 | - | 24,890 | Gross income |
| Administration costs | (9,432) | (10,760) | Operating expenses (**) | |
| Personnel expense | (5,612) | - | (5,612) | Personnel expenses |
| Other administrative expense | (3,820) | - | (3,820) | Other administrative expenses |
| Depreciation and amortization | (1,328) | - | (1,328) | Depreciation |
| 14,130 | - | 14,130 | Operating income | |
| Provisions or reversal of provisions | (291) | - | (291) | Provisions or reversal of provisions |
| Impairment or reversal of impairment on financial assets not measured at fair value through profit or loss or net gains by modification | (3,379) | - | (3,379) | Impairment on financial assets not measured at fair value through profit or loss |
| NET OPERATING INCOME | 10,460 | - | 10,460 | |
| Impairment or reversal of impairment of investments in joint ventures and associates | 42 | |||
| Impairment or reversal of impairment on non-financial assets | (27) | |||
| Gains (losses) on derecognition of non - financial assets and subsidiaries, net | (11) | |||
| Gains (losses) from non-current assets and disposal groups classified as held for sale not qualifying as discontinued operations | (108) | |||
| (104) | 134 | 30 | Other gains (losses) | |
| PROFIT (LOSS) BEFORE TAX FROM CONTINUING OPERATIONS | 10,356 | 134 | 10,490 | Profit (loss) before tax |
| Tax expense or income related to profit or loss from continuing operations | (3,529) | 67 | (3,462) | Income tax |
| PROFIT (LOSS) AFTER TAX FROM CONTINUING OPERATIONS | 6,827 | 201 | 7,028 | Profit (loss) for the period |
| Profit (loss) after tax from discontinued operations | - | - | ||
| PROFIT (LOSS) FOR THE PERIOD | 6,827 | 201 | 7,028 | Profit (loss) for the period |
| ATTRIBUTABLE TO MINORITY INTEREST (NON-CONTROLLING INTERESTS) | (407) | - | (407) | Non-controlling interests |
| ATTRIBUTABLE TO OWNERS OF THE PARENT | 6,420 | 201 | 6,621 | Net attributable profit (loss) excluding non-recurring impacts |
| (201) | (201) | Net impact arisen from the purchase of offices in Spain | ||
| ATTRIBUTABLE TO OWNERS OF THE PARENT | 6,420 | - | 6,420 | Net attributable profit (loss) |
(*) Included within the Other operating income and expenses of the Management Income Statements.
(**) Depreciations included.
CONCILIATION OF THE BBVA GROUP'S INCOME STATEMENTS (MILLIONS OF EUROS)
| CONSOLIDATED INCOME STATEMENT | ADJUSTMENTS | MANAGEMENT INCOME STATEMENT | ||
|---|---|---|---|---|
| 2021 | 2021 | |||
| NET INTEREST INCOME | 14,686 | - | 14,686 | Net interest income |
| Dividend income | 176 | (*) | ||
| Share of profit or loss of entities accounted for using the equity method | 1 | (*) | ||
| Fee and commission income | 6,997 | 6,997 | Fees and commissions income | |
| Fee and commission expense | (2,232) | (2,232) | Fees and commissions expenses | |
| 4,765 | - | 4,765 | Net fees and commissions | |
| Gains (losses) on derecognition of financial assets and liabilities not measured at fair value through profit or loss, net | 134 | |||
| Gains (losses) on financial assets and liabilities held for trading, net | 341 | |||
| Gains (losses) on non-trading financial assets mandatorily at fair value through profit or loss, net | 432 | |||
| Gains (losses) on financial assets and liabilities designated at fair value through profit or loss, net | 335 | |||
| Gains (losses) from hedge accounting, net | (214) | |||
| Exchange differences, net | 883 | |||
| 1,910 | - | 1,910 | Net trading income | |
| Other operating income | 661 | |||
| Other operating expense | (2,041) | |||
| Income from insurance and reinsurance contracts | 2,593 | |||
| Expense from insurance and reinsurance contracts | (1,685) | |||
| (295) | - | (295) | Other operating income and expenses | |
| GROSS INCOME | 21,066 | - | 21,066 | Gross income |
| Administration costs | (8,296) | (9,530) | Operating expenses (**) | |
| Personnel expense | (5,046) | - | (5,046) | Personnel expenses |
| Other administrative expense | (3,249) | - | (3,249) | Other administrative expenses |
| Depreciation and amortization | (1,234) | - | (1,234) | Depreciation |
| 11,536 | - | 11,536 | Operating income | |
| Provisions or reversal of provisions | (1,018) | 754 | (264) | Provisions or reversal of provisions |
| Impairment or reversal of impairment on financial assets not measured at fair value through profit or loss or net gains by modification | (3,034) | - | (3,034) | Impairment on financial assets not measured at fair value through profit or loss |
| NET OPERATING INCOME | 7,484 | 754 | 8,238 | |
| Impairment or reversal of impairment of investments in joint ventures and associates | - | |||
| Impairment or reversal of impairment on non-financial assets | (221) | |||
| Gains (losses) on derecognition of non - financial assets and subsidiaries, net | 24 | |||
| Gains (losses) from non-current assets and disposal groups classified as held for sale not qualifying as discontinued operations | (40) | |||
| (237) | 240 | 2 | Other gains (losses) | |
| PROFIT (LOSS) BEFORE TAX FROM CONTINUING OPERATIONS | 7,247 | 994 | 8,240 | Profit (loss) before tax |
| Tax expense or income related to profit or loss from continuing operations | (1,909) | (298) | (2,207) | Income tax |
| PROFIT (LOSS) AFTER TAX FROM CONTINUING OPERATIONS | 5,338 | 696 | 6,034 | Profit (loss) for the period |
| Profit (loss) after tax from discontinued operations | 280 | (280) | ||
| PROFIT (LOSS) FOR THE PERIOD | 5,618 | 416 | 6,034 | Profit (loss) for the period |
| ATTRIBUTABLE TO MINORITY INTEREST (NON-CONTROLLING INTERESTS) | (965) | - | (965) | Non-controlling interests |
| ATTRIBUTABLE TO OWNERS OF THE PARENT | 4,653 | 416 | 5,069 | Net attributable profit (loss) excluding non-recurring impacts |
| (416) | (416) | Net impact arisen from the purchase of offices in Spain | ||
| ATTRIBUTABLE TO OWNERS OF THE PARENT | 4,653 | - | 4,653 | Net attributable profit (loss) |
(*) Included within the Other operating income and expenses of the Management Income Statements.
(**) Depreciations included.
CONCILIATION OF THE BBVA GROUP'S INCOME STATEMENTS (MILLIONS OF EUROS)
| CONSOLIDATED INCOME STATEMENT | ADJUSTMENTS | MANAGEMENT INCOME STATEMENT | ||
|---|---|---|---|---|
| 2020 | 2020 | |||
| NET INTEREST INCOME | 14,592 | - | 14,592 | Net interest income |
| Dividend income | 137 | (*) | ||
| Share of profit or loss of entities accounted for using the equity method | (39) | (*) | ||
| Fee and commission income | 5,980 | 5,980 | Ingresos por comisiones | |
| Fee and commission expense | (1,857) | (1,857) | Gastos por comisiones | |
| 4,123 | - | 4,123 | Net fees and commissions | |
| Gains (losses) on derecognition of financial assets and liabilities not measured at fair value through profit or loss, net | 139 | |||
| Gains (losses) on financial assets and liabilities held for trading, net | 777 | |||
| Gains (losses) on non-trading financial assets mandatorily at fair value through profit or loss, net | 208 | |||
| Gains (losses) on financial assets and liabilities designated at fair value through profit or loss, net | 56 | |||
| Gains (losses) from hedge accounting, net | 7 | |||
| Exchange differences, net | 359 | |||
| 1,546 | - | 1,546 | Net trading income | |
| Other operating income | 492 | |||
| Other operating expense | (1,662) | |||
| Income from insurance and reinsurance contracts | 2,497 | |||
| Expense from insurance and reinsurance contracts | (1,520) | |||
| (95) | - | (95) | Other operating income and expenses | |
| GROSS INCOME | 20,166 | - | 20,166 | Gross income |
| Administration costs | (7,799) | (9,088) | Operating expenses (**) | |
| Personnel expense | (4,695) | - | (4,695) | Personnel expenses |
| Other administrative expense | (3,105) | - | (3,105) | Other administrative expenses |
| Depreciation and amortization | (1,288) | - | (1,288) | Depreciation |
| 11,079 | - | 11,079 | Operating income | |
| Provisions or reversal of provisions | (746) | - | (746) | Provisions or reversal of provisions |
| Impairment or reversal of impairment on financial assets not measured at fair value through profit or loss or net gains by modification | (5,179) | - | (5,179) | Impairment on financial assets not measured at fair value through profit or loss |
| NET OPERATING INCOME | 5,153 | - | 5,153 | |
| Impairment or reversal of impairment of investments in joint ventures and associates | (190) | |||
| Impairment or reversal of impairment on non-financial assets | (153) | |||
| Gains (losses) on derecognition of non - financial assets and subsidiaries, net | (7) | |||
| Gains (losses) from non-current assets and disposal groups classified as held for sale not qualifying as discontinued operations | 444 | |||
| 94 | (435) | (341) | Other gains (losses) | |
| PROFIT (LOSS) BEFORE TAX FROM CONTINUING OPERATIONS | 5,248 | (435) | 4,813 | Profit (loss) before tax |
| Tax expense or income related to profit or loss from continuing operations | (1,459) | 130 | (1,328) | Income tax |
| PROFIT (LOSS) AFTER TAX FROM CONTINUING OPERATIONS | 3,789 | (304) | 3,485 | Profit (loss) for the period |
| Profit (loss) after tax from discontinued operations | (1,729) | 1,729 | ||
| PROFIT (LOSS) FOR THE PERIOD | 2,060 | 1,424 | 3,485 | Profit (loss) for the period |
| ATTRIBUTABLE TO MINORITY INTEREST (NON-CONTROLLING INTERESTS) | (756) | - | (756) | Non-controlling interests |
| ATTRIBUTABLE TO OWNERS OF THE PARENT | 1,305 | 1,424 | 2,729 | Net attributable profit (loss) excluding non-recurring impacts |
| (1,424) | (1,424) | Discontinued operations and Others | ||
| ATTRIBUTABLE TO OWNERS OF THE PARENT | 1,305 | - | 1,305 | Net attributable profit (loss) |
(*) Included within the Other operating income and expenses of the Management Income Statements.
(**) Depreciations included.
Profit (loss) for the period
Explanation of the formula: the profit (loss) for the period is the profit (loss) for the period from the Group’s consolidated income statement, which comprises the profit (loss) after tax from continued operations and the profit (loss) after tax from discontinued operations which, for the periods of 2021 and 2020, includes the results generated by BBVA USA and the rest of the companies in the United States sold to PNC on June 1, 2021. If the described metric is presented on a date prior to the end of the year, it will be presented on an annualized basis.
Relevance of its use: this measure is commonly used, not only in the banking sectors, for homogeneous comparison purposes.
Profit (loss) for the period
| Jan.-Dec. 2022 | Jan.-Dec. 2021 | Jan.-Dec. 2020 | |||
|---|---|---|---|---|---|
| (Millions of euros) | + | Profit (loss) after tax from continued operations | 6,827 | 5,338 | 3,789 |
| (Millions of euros) | + | Profit (loss) after tax from discontinued operations (1) | - | 280 | (1,729) |
| = | Profit (loss) for the period | 6,827 | 5,618 | 2,060 |
(1) The periods of 2021 include the results generated by BBVA USA and the rest of the companies in the United States included in the agreement until its sale to PNC as of June 1, 2021.
Adjusted profit (loss) for the period (excluding non-recurring impacts)
Explanation of the formula: the adjusted profit (loss) for the period is the profit (loss) from continued operations for the period from the Group’s consolidated income statement, excluding those non-recurring impacts that, for management purposes, are defined at any given moment. If the described metric is presented on a date prior to the end of the year, it will be presented on an annualized basis.
Relevance of its use: this measure is commonly used, not only in the banking sector, for homogeneous comparison purposes.
Adjusted profit (loss) for the period
| Jan.-Dec. 2022 | Jan.-Dec. 2021 | Jan.-Dec. 2020 | |||
|---|---|---|---|---|---|
| (Millions of euros) | + | Profit (loss) after tax from continued operations | 6,827 | 5,338 | 3,789 |
| (Millions of euros) | - | Net capital gains from the bancassurance transaction | - | - | 304 |
| (Millions of euros) | - | Net cost related to the restructuring process | - | (696) | - |
| (Millions of euros) | - | Net impact arised from the purchase of offices in Spain | (201) | - | - |
| = | Adjusted profit (loss) for the period | 7,028 | 6,034 | 3,485 |
Net attributable profit (loss)
Explanation of the formula: the net attributable profit (loss) is the net attributable profit (loss) of the Group’s consolidated income statement from continued operations and the profit (loss) after tax from discontinued operations which, for the periods of 2021, includes the results generated by BBVA USA and the rest of the companies in the United States sold to PNC on June 1, 2021. If the described metric is presented on a date prior to the end of the year, it will be presented on an annualized basis.
Relevance of its use: this measure is commonly used, not only in the banking sector, for homogeneous comparison purposes.
Net attributable profit (loss)
| Jan.-Dec. 2022 | Jan.-Dec. 2021 | Jan.-Dec. 2020 | |||
|---|---|---|---|---|---|
| (Millions of euros) | + | Net attributable profit (loss) from continued operations | 6,420 | 4,373 | 3,033 |
| (Millions of euros) | + | Net attributable profit (loss) from discontinued operations (1) | - | 280 | (1.729) |
| = | Net attributable profit (loss) | 6,420 | 4,653 | 1,305 |
(1) January-December 2021 only includes the results generated by BBVA USA and the rest of the companies in the United States included in the agreement until its sale to PNC as of June 1, 2021.
Adjusted net attributable profit (loss) (excluding non-recurring impacts)
Explanation of the formula: the adjusted net attributable profit (loss) is the net attributable profit (loss) of the Group’s consolidated income statement from continued operations excluding those non-recurring impacts that, for management purposes are defined at any given moment. If the described metric is presented on a date prior to the end of the year, it will be presented on an annualized basis.
Relevance of its use: this measure is commonly used, not only in the banking sector, for comparison purposes.
Adjusted net attributable profit (loss)
| Jan.-Dec. 2022 | Jan.-Dec. 2021 | Jan.-Dec. 2020 | |||
|---|---|---|---|---|---|
| (Millions of euros) | + | Net attributable profit (loss) from continued operations | 6,420 | 4,373 | 3,033 |
| (Millones de euros) | - | Net capital gains from the bancassurance transaction | - | - | 304 |
| (Millions of euros) | - | Net cost related to the restructuring process | - | (696) | - |
| (Millions of euros) | - | Net impact arised from the purchase of offices in Spain | (201) | - | - |
| = | Adjusted net attributable profit (loss) | 6,621 | 5,069 | 2,729 |
ROE
The ROE (return on equity) ratio measures the return obtained on an entity's shareholders' funds plus accumulated other comprehensive income. It is calculated as follows:
| Net attributable profit (loss) |
| Average shareholders' funds + Average accumulated other comprehensive income |
Explanation of the formula: the numerator is the net attributable profit (loss) previously defined in these alternative performance measures, If the metric is presented on a date before the close of the fiscal year, the numerator will be annualized.
Average shareholders' funds are the weighted moving average of the shareholders' funds at the end of each month of the period analyzed, adjusted to take into account the execution of the "dividend-option" at the closing dates on which it was agreed to deliver this type of dividend prior to the publication of the Group ́s results.
Average accumulated other comprehensive income is the moving weighted average of "Accumulated other comprehensive income", which is part of the equity on the Entity's balance sheet and is calculated in the same way as average shareholders’ funds (above).
Relevance of its use: this ratio is very commonly used not only in the banking sector but also in other sectors to measure the return obtained on shareholders' funds.
ROE
| Jan.-Dec. 2022 | Jan.-Dec. 2021 | Jan.-Dec. 2020 | ||
|---|---|---|---|---|
| Numerator (Millions of euros) | = Net attributable profit (loss) | 6,420 | 4,653 | 1,305 |
| Denominator (Millions of euros) | + Average shareholder's funds | 61,370 | 60,030 | 57,626 |
| + Average accumulated other comprehensive income | (15.928) | (15.396) | (12.858) | |
| = ROE | 14.1% | 10.4% | 2.9% |
Adjusted ROE
The adjusted ROE (return on equity) ratio measures the return obtained on an entity's shareholders' funds plus accumulated other comprehensive income. It is calculated as follows:
| Adjusted net attributable profit (loss) |
| Average shareholders' funds + Average accumulated other comprehensive income |
Explanation of the formula: the numerator is the adjusted net attributable profit (loss) previously defined in these alternative performance measures. If the metric is presented on a date before the close of the fiscal year, the numerator will be annualized. The denominator items "Average shareholders' funds" and "Average accumulated other comprehensive income" are the same and they are calculated in the same way as that explained for ROE.
Relevance of its use: this ratio is very commonly used not only in the banking sector but also in other sectors to measure the return obtained on shareholders' funds.
Adjusted ROE
| Jan.-Dec. 2022 | Jan.-Dec. 2021 | Jan.-Dec. 2020 | ||
|---|---|---|---|---|
| Numerator (Millions of euros) | = Adjusted net attributable profit (loss) | 6,621 | 5,069 | 2,729 |
| Denominator (Millions of euros) | + Average shareholder's funds | 61,370 | 60,030 | 57,626 |
| + Average accumulated other comprehensive income | (15,928) | (15,396) | (12,858) | |
| = Adjusted ROE | 14.6% | 11.4% | 6.15 |
ROTE
The ROTE (return on tangible equity) ratio measures the return on an entity's shareholders' funds, plus accumulated other comprehensive income, and excluding intangible assets. It is calculated as follows:
| Net attributable profit (loss) |
| Average shareholders' funds + Average accumulated other comprehensive income - Average intangible assets |
Explanation of the formula: the numerator "Net attributable profit (loss)" and the items in the denominator "Average intangible assets" and "Average accumulated other comprehensive income" are the same items and are calculated in the same way as explained for ROE.
Average intangible assets are the intangible assets on the balance sheet, including goodwill and other intangible assets. The average balance is calculated in the same way as explained for shareholders funds in ROE.
Relevance of its use: this metric is generally used not only in the banking sector but also in other sectors to measure the return obtained on shareholders' funds, not including intangible assets.
ROTE
| Jan.-Dec. 2022 | Jan.-Dec. 2021 | Jan.-Dec. 2020 | ||
|---|---|---|---|---|
| Numerator (Millions of euros) | = Net attributable profit (loss) | 6,420 | 4,653 | 1,305 |
| Denominator (Millions of euros) | + Average shareholder's funds | 61,370 | 60,030 | 57,626 |
| + Average accumulated other comprehensive income | (15,928) | (15,396) | (12,858) | |
| - Average intangible assets | 2,119 | 2,265 | 2,480 | |
| - Average intangible assets from BBVA USA and BBVA Paraguay (1) | - | 897 | 2,528 | |
| = ROTE | 14.8% | 11.2% | 3.3% |
(1) BBVA Paraguay includes 4 millions of euros as of January-December 2020.
Adjusted ROTE
The adjusted ROTE (return on tangible equity) ratio measures the return on an entity's shareholders' funds, plus accumulated other comprehensive income, and excluding intangible assets. It is calculated as follows:
| Adjusted net attributable profit (loss) |
| Average shareholders' funds + Average accumulated other comprehensive income - Average intangible assets |
Explanation of the formula: the numerator [adjusted net attributable profit (loss)] and the items of the denominator "Average shareholders' funds" and " Average accumulated other comprehensive income" are the same and calculated in the same way as explained for adjusted ROE.
Average intangible assets are the intangible assets on the balance sheet, excluding for the periods of 2021 the assets from BBVA USA and the rest of the companies in the United States included in the sale agreement signed with PNC, whose sale took place on June 1 of that same year. The average balance is calculated in the same way as explained for shareholders' funds in the adjusted ROE.
Relevance of its use: this metric is generally used not only in the banking sector but also in other sectors to measure the return obtained on shareholders' funds, not including intangible assets.
Adjusted ROTE
| Jan.-Dec. 2022 | Jan.-Dec. 2021 | Jan.-Dec. 2020 | ||
|---|---|---|---|---|
| Numerator (Millions of euros) | = Adjusted net attributable profit (loss) | 6,621 | 5,069 | 2,729 |
| Denominator (Millions of euros) | + Average shareholder's funds | 61,370 | 60,030 | 57,626 |
| + Average accumulated other comprehensive income | (15,928) | (15,396) | (12,858) | |
| - Average intangible assets | 2,119 | 2,265 | 2,480 | |
| - Average intangible assets from BBVA Paraguay | - | - | 4 | |
| = Adjusted ROTE | 15.3% | 12.0% | 6.5% |
ROA
The ROA (return on assets) ratio measures the return obtained on an entity's assets. It is calculated as follows:
| Profit (loss) for the period |
| Average total assets |
Explanation of the formula: the numerator is the profit (loss) for the period, previously defined in these alternative performance measures. If the metric is presented on a date before the close of the fiscal year, the numerator must be annualized.
Average total assets are taken from the Group’s consolidated balance sheet. The average balance is calculated as explained for average shareholders' funds in the ROE.
Relevance of its use: this ratio is generally used not only in the banking sector but also in other sectors to measure the return obtained on assets.
ROA
| Jan.-Dec. 2022 | Jan.-Dec. 2021 | Jan.-Dec. 2020 | |||
|---|---|---|---|---|---|
| Numerator (Millions of euros) | Profit (loss) for the period | 6,827 | 5,618 | 2,060 | |
| Denominator (Millions of euros) | Average total assets | 701,710 | 678,563 | 727,014 | |
| = | ROA | 0.97% | 0.83% | 0.28% |
Adjusted ROA
The adjusted ROA (return on assets) ratio measures the return obtained on an entity's assets. It is calculated as follows:
| Adjusted profit (loss) for the period |
| Average total assets |
Explanation of the formula: the numerator is the adjusted profit (loss) for the period previously defined in these alternative performance measures. If the metric is presented on a date before the close of the fiscal year, the numerator will be annualized.
Average total assets are taken from the Group's consolidated balance sheet, excluding for the periods of 2021 and 2020 the assets from BBVA USA and the rest of the companies in the United States sold to PNC on June 1, 2021. The average balance is calculated in the same way as explained for average equity in the ROE.
Relevance of its use: this ratio is generally used not only in the banking sector but also in other sectors to measure the return obtained on assets.
Adjusted ROA
| Jan.-Dec. 2022 | Jan.-Dec. 2021 | Jan.-Dec. 2020 | |||
|---|---|---|---|---|---|
| Numerator (Millions of euros) | Adjusted profit (loss) for the period | 7,028 | 6,034 | 3,485 | |
| Denominator (Millions of euros) | Average total assets | 701,710 | 640,142 | 639,943 | |
| = | Adjusted ROA | 1.00% | 0.94% | 0.54% |
RORWA
The RORWA (return on risk-weighted assets) ratio measures the accounting return obtained on average risk-weighted assets. It is calculated as follows:
| Profit (loss) for the period |
| Average risk-weighted assets |
Explanation of the formula: the numerator [profit (loss) for the period] is the same and is calculated in the same way as explained for ROA.
Average risk-weighted assets (RWA) are the moving weighted average of the risk-weighted assets at the end of each month of the period under analysis.
Relevance of its use: this ratio is generally used in the banking sector to measure the return obtained on RWA.
RORWA
| Jan.-Dec. 2022 | Jan.-Dec. 2021 | Jan.-Dec. 2020 | |||
|---|---|---|---|---|---|
| Numerator (Millions of euros) | Profit (loss) for the period | 6,827 | 5,618 | 2,060 | |
| Denominator (Millions of euros) | Average RWA | 327,999 | 324,819 | 358,675 | |
| = RORWA | 2.08% | 1.73% | 0.57% |
Adjusted RORWA
The adjusted RORWA (return on risk-weighted assets) ratio measures the return obtained on an entity's assets. It is calculated as follows:
| Adjusted profit (loss) for the period |
| Average risk-weighted assets |
Explanation of the formula: the numerator [adjusted profit (loss) for the period] is the same and is calculated in the same way as explained for adjusted ROA.
Average risk-weighted assets (RWA) are the moving weighted average of the risk-weighted assets at the end of each month of the period under analysis, excluding for the periods of 2021 and 2020 those from BBVA USA and the rest of the companies in the United States sold to PNC on June 1, 2021.
Relevance of its use: this ratio is generally used not only in the banking sector but also in other sectors to measure the return obtained on assets.
Adjusted RORWA
| Jan.-Dec. 2022 | Jan.-Dec. 2021 | Jan.-Dec. 2020 | |||
|---|---|---|---|---|---|
| Numerator (Millions of euros) | Adjusted profit (loss) for the period | 7.028 | 6,034 | 3,485 | |
| Denominator (Millions of euros) | Average RWA | 327,999 | 300,276 | 300,518 | |
| = | Adjusted RORWA | 2.14% | 2.01% | 1.16% |
Earning (loss) per share
The earning (loss) per share is calculated in accordance to the criteria established in the IAS 33 “Earnings per share”.
Earnings (loss) per share
| Jan.-Dec. 2022 | Jan.-Dec. 2021 | Jan.-Dec. 2020 | ||
|---|---|---|---|---|
| (Millions of euros) | + Net attributable profit (loss) | 6,420 | 4,653 | 1,305 |
| (Millions of euros) | + Remuneration related to the Additional Tier 1 securities (CoCos) | 313 | 359 | 387 |
| Numerator (millions of euros) | = Net attributable profit (loss) ex.CoCos remuneration | 6,107 | 4,293 | 917 |
| Denominator (millions) | + Average number of shares issued | 6,424 | 6,668 | 6,668 |
| - Average treasury shares of the period | 9 | 12 | 13 | |
| - Share buyback program (average) (1) | 225 | 255 | - | |
| = Earning (loss) per share (euros) | 0.99 | 0.67 | 0.14 |
- (1) The period January-December 2021 includes 112 million shares acquired from the start of the share buyback program to December 31, 2021 and the estimated number of shares pending from buyback as of December 31, 2021 of the first tranche, in process at the end of that period.
Additionally, for management purposes, earning (loss) per share is presented excluding: (I) the profit (loss) after tax from discontinued operations, that is, the results generated by BBVA USA and the rest of the companies in the United States sold to PNC on June 1, 2021, for the periods of 2021 and 2020; (II) the capital gain net of taxes from the bancassurance operation with Allianz recorded in the fourth quarter of 2020; (III) the net cost related to the restructuring process recorded in the second quarter of 2021; and (IV) the net impact from the purchase of offices in Spain in the second quarter of 2022.
Adjusted earnings (losses) per share
| Jan.-Dec. 2022 | Jan.-Dec. 2021 | Jan.-Dec. 2020 | ||
|---|---|---|---|---|
| (Millions of euros) | + Net attributable profit (loss) ex. CoCos remuneration | 6,107 | 4,293 | 917 |
| (Millions of euros) | - Discontinued operations | - | 280 | (1,729) |
| (Millions of euros) | - Net capital gains from the bancassurance transaction | - | - | 304 |
| (Millions of euros) | - Net cost related to the restructuring process | - | (696) | - |
| (Millions of euros) | - Net impact arisen from the purchase of offices in Spain | (201) | - | - |
| Numerator (millions of euros) | = Net Attributable profit (loss) ex.CoCos and non-recurring impacts | 6,308 | 4,709 | 2,342 |
| Denominator (millions) | + Average number of shares issued (1) | 6,030 | 6,668 | 6,668 |
| - Average treasury shares of the period (2) | 9 | 12 | 13 | |
| = Adjusted earning (loss) per share (euros) | 1.05 | 0.71 | 0.35 |
(1) In the period January-December 2022, the number of shares issued takes into account the total redemption of the share buyback program.
Efficiency ratio
This measures the percentage of gross income consumed by an entity's operating expenses. It is calculated as follows:
| Operating expenses |
| Gross income |
Explanation of the formula: both "Operating expenses" and "Gross income" are taken from the Group’s consolidated income statement. Operating expenses are the sum of the administration costs (personnel expenses plus other administrative expenses) plus depreciation. Gross income is the sum of net interest income, net fees and commissions, net trading income dividend income, share of profit or loss of entities accounted for using the equity method, and other operating income and expenses. For a more detailed calculation of this ratio, the graphs on "Results" section of this report should be consulted, one of them with calculations with figures at current exchange rates and another with the data at constant exchange rates.
Relevance of its use: this ratio is generally used in the banking sector. In addition, it is the metric for one of the six Strategic Priorities of the Group.
Efficiency ratio
| Jan.-Dec. 2022 | Jan.-Dec. 2021 | Jan.-Dec. 2020 | ||
|---|---|---|---|---|
| Numerator (Millions of euros) | Operating expenses | 10,760 | 9,530 | 9,088 |
| Denominator (Millions of euros) | Gross income | 24,890 | 21,066 | 20,166 |
| = Efficiency ratio | 43.2% | 45.2% | 45.1% |
Dividend yield
This is the remuneration given to the shareholders in the last twelve calendar months, divided by the closing price for the period. It is calculated as follows:
| ∑ Dividend per share over the last twelve months |
| Closing price |
Explanation of the formula: the remuneration per share takes into account the gross amounts per share paid out over the last twelve months, both in cash and through the flexible remuneration system called "dividend option".
Relevance of its use: this ratio is generally used by analysts, shareholders and investors for companies that are traded on the stock market. It compares the dividend paid out by a company every year with its market price at a specific date.
Dividend yield
| 31-12-22 | 31-12-21 | 31-12-20 | ||
|---|---|---|---|---|
| Numerator (Euros) | ∑ Dividends | 0.35 | 0.14 | 0.16 |
| Denominator (Euros) | Closing price | 5.63 | 5.25 | 4.04 |
| = Dividend yield | 6.2% | 2.6% | 4.0% |
Book value per share
The book value per share determines the value of a company on its books for each share held. It is calculated as follows:
| Shareholders' funds + Accumulated other comprehensive income |
| Number of shares outstanding - Treasury shares |
Explanation of the formula: the figures for both "Shareholders' funds" and "Accumulated other comprehensive income" are taken from the balance sheet. Shareholders' funds are adjusted to take into account the execution of the "dividend-option" at the closing dates on which it was agreed to deliver this type of dividend prior to the publication of the Group ́s results. The denominator includes the final number of outstanding shares excluding own shares (treasury shares) and also excluding the shares corresponding to the first tranche of the first share buyback program and the first and second segment of the second tranche of the share buyback program, as appropriate for each period breakdown. The denominator is also adjusted to include the capital increase resulting from the execution of the dividend options explained above. Both the numerator and the denominator take into account period-end balances.
Relevance of its use: it shows the company's book value for each share issued. It is a generally used ratio, not only in the banking sector but also in others.
Book value per share
| 31-12-22 | 31-12-21 | 31-12-20 | ||
|---|---|---|---|---|
| Numerator (Millions of euros) | + Shareholders' funds | 64,422 | 60,383 | 58,904 |
| + Accumulated other comprehensive income | (17,432) | (16,476) | (14,356) | |
| Denominator (Millions of shares) | + Number of shares issued | 6,030 | 6,668 | 6,668 |
| - Treasury shares | 5 | 15 | 14 | |
| - Share buyback program (1) | - | 255 | - | |
| = Book value per share (euros / share) | 7.80 | 6.86 | 6.70 |
(1) As of 31-12-21, 112 million shares acquired from the start of the share buyback program to the end of the period and the estimated number of shares pending from buyback as of December 31, 2021 of the first tranche, in process at the end of that date, were included.
Tangible book value per share
The tangible book value per share determines the value of the company on its books for each share held by shareholders in the event of liquidation. It is calculated as follows:
| Shareholders' funds + Accumulated other comprehensive income - Intangible assets |
| Number of shares outstanding - Treasury shares |
Explanation of the formula: the figures for "Shareholders' funds", "Accumulated other comprehensive income" and "Intangible assets" are all taken from the balance sheet. Shareholders' funds are adjusted to take into account the execution of the "Dividend-option" at the closing dates on which it was agreed to deliver this type of dividend prior to the publication of the Group ́s results. The denominator includes the final number of shares outstanding excluding own shares (treasury shares). In addition, the denominator is also adjusted to include the result of the capital increase resulting from the execution of the dividend options explained above. Both the numerator and the denominator take into account period-end balances.
Relevance of its use: it shows the company's book value for each share issued, after deducting intangible assets. It is a generally used ratio, not only in the banking sector but also in others.
Tangible book value per share
| 31-12-22 | 31-12-21 | 31-12-20 | ||
|---|---|---|---|---|
| Numerator (Millions of euros) | + Shareholders' funds | 64,422 | 60,383 | 58,904 |
| + Accumulated other comprehensive income | (17,432) | (16,476) | (14,356) | |
| - Intangible assets | 2,156 | 2,197 | 2,345 | |
| - Intangible assets of BBVA USA and BBVA Paraguay (1) | - | - | 1,952 | |
| Denominator (Millions of shares) | + Number of shares issued | 6,030 | 6,668 | 6,668 |
| - Treasury shares | 5 | 15 | 14 | |
| - Share buyback program (2) | - | 255 | - | |
| = Tangible book value per share (euros / share) | 7.44 | 6.52 | 6.05 |
(1) BBVA Paraguay includes 3 millions of euros as of 31-12-20.
(2) As of 31-12-21, 112 million shares acquired from the start of the share buyback program to the end of the period and the estimated number of shares pending from buyback as of December 31, 2021 of the first tranche, in process at the end of that date, were included.
Non-performing loan (NPL) ratio
It is the ratio between the risks classified for accounting purposes as non-performing loans and the total credit risk balance. It is calculated as follows:
| Non-performing loans |
| Total credit risk |
Explanation of the formula: non-performing loans and the credit risk balance are gross, meaning they are not adjusted by associated accounting provisions.
Non-performing loans are calculated as the sum of “loans and advances at amortized cost” and the “contingent risk” in stage 39 and the following counterparties:
- other financial entities
- public sector
- non-financial institutions
- households
The credit risk balance is calculated as the sum of "Loans and advances at amortized cost" and "Contingent risk" in stage 1 + stage 2 + stage 3 of the previous counterparts.
This indicator is shown, as others, at a business area level.
Relevance of its use: This is one of the main indicators used in the banking sector to monitor the current situation and changes in credit risk quality, and specifically the relationship between risks classified in the accounts as non-performing loans and the total balance of credit risk, with respect to customers and contingent liabilities.
Non-Performing Loans (NPLs) ratio
| 31-12-22 | 31-12-21 | 31-12-20 | ||
|---|---|---|---|---|
| Numerator (Millions of euros) | NPLs | 14,463 | 15,443 | 15,451 |
| Denominator (Millions of euros) | Credit Risk | 424,341 | 376,011 | 366,883 |
| = Non-Performing Loans (NPLs) ratio | 3.4% | 4.1% | 4.2% |
General note: excludes BBVA USA and the rest of the companies in the United States sold to PNC on June 1, 2021.
NPL coverage ratio
This ratio reflects the degree to which the impairment of non-performing loans has been covered in the accounts via allowances. It is calculated as follows:
| Provisions |
| Non-performing loans |
Explanation of the formula: It is calculated as "Provisions" from stage 1 + stage 2 + stage 3, divided by non-performing loans, formed by “credit risk” from stage 3.
This indicator is shown, as others, at a business area level.
Relevance of its use: this is one of the main indicators used in the banking sector to monitor the situation and changes in the quality of credit risk, reflecting the degree to which the impairment of non-performing loans has been covered in the accounts via value adjustments.
NPL coverage ratio
| 31-12-22 | 31-12-21 | 31-12-20 | ||
|---|---|---|---|---|
| Numerator (Millions of euros) | Provisions | 11,764 | 11,536 | 12,595 |
| Denominator (Millions of euros) | NPLs | 14,463 | 15,443 | 15,451 |
| = NPL coverage ratio | 81% | 75% | 82% |
General note: excludes BBVA USA and the rest of the companies in the United States sold to PNC on June 1, 2021.
Cost of risk
This ratio indicates the current situation and changes in credit-risk quality through the annual cost in terms of impairment losses (accounting loan-loss provisions) of each unit of loans and advances to customers (gross). It is calculated as follows:
| Loan-loss provisions |
| Average loans and advances to customers (gross) |
Explanation of the formula: "Loans to customers (gross)" refers to the "Loans and advances at amortized cost" portfolios with the following counterparts:
- other financial entities
- public sector
- non-financial institutions
- households, excluding central banks and other credit institutions.
Average loans to customers (gross) is calculated by using the average of the period-end balances of each month of the period analyzed plus the previous month. "Annualized loan-loss provisions" are calculated by accumulating and annualizing the loan-loss provisions of each month of the period under analysis.
Loan-loss provisions refer to the aforementioned loans and advances at amortized cost portfolios.
This indicator is shown, as others, at a business area level.
Relevance of its use: this is one of the main indicators used in the banking sector to monitor the situation and changes in the quality of credit risk through the cost over the year.
Cost of risk
| Jan.-Dec. 2022 | Jan.-Dec. 2021 | Jan.-Dec. 2020 | ||
|---|---|---|---|---|
| Numerator (Millions of euros) | Loan-loss provisions | 3,252 | 3,026 | 5,160 |
| Denominator (Millions of euros) | Average loans to customers (gross) | 356,597 | 325,013 | 332,096 |
| = Cost of risk | 0.91% | 0.93% | 1.55% |
General note: excludes BBVA USA and the rest of the companies in the United States sold to PNC on June 1, 2021.
8 With the exception of those countries whose economies have been considered hyperinflationary, for which the closing exchange rate of the most recent period will be used.
9 IFRS 9 classifies financial instruments into three stages, which depend on the evolution of their credit risk from the moment of initial recognition. The stage 1 includes operations when they are initially recognized, stage 2 comprises operations for which a significant increase in credit risk has been identified since their initial recognition and,stage 3, impaired operations.