Rest of Business

Highlights

  • Growth in lending activity and in customer funds in 2022
  • Strong net interest income, which grows at double-digit
  • Risk indicators improvement in the year
  • Cost of risk at very 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: -14.6%.

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


(1) At current exchange rates: -13.3%.

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

Income statement 2022 ∆% ∆% (1) 2021 (2)
Net interest income 332 17.4 15.5 283
Net fees and commissions 243 0.3 (4.1) 242
Net trading income 208 (11.7) (13.9) 236
Other operating income and expenses 7 (57.7) (59.2) 16
Gross income 790 1.7 (1.1) 776
Operating expenses (513) 13.4 9.4 (453)
Personnel expenses (262) 11.9 7.5 (234)
Other administrative expenses (228) 15.1 11.6 (198)
Depreciation (23) 12.6 9.9 (20)
Operating income 276 (14.6) (16.2) 323
Impaiment on financial assets not measured at fair value through profit or loss (13) n.s. n.s. 27
Provisions or reversal of provisions and other results 14 n.s. n.s. (4)
Profit (loss) before tax 277 (20.0) (21.6) 346
Income tax (37) (46.6) (47.3) (70)
Profit (loss) for the period 240 (13.3) (15.1) 276
Non-controlling interests - - - -
Net attributable profit (loss) 240 (13.3) (15.1) 276
  • (1) At constant exchange rates.

  • (2) Restated balances. For more information, please refer to the “Business Areas” section.
Balance sheets 31-12-22 ∆% ∆% (1) 31-12-21
Cash, cash balances at central banks and other demand deposits 4,015 1.1 (4.5) 3,970
Financial assets designated at fair value 5,090 (10.4) (15.2) 5,682
Of which: Loans and advances 4,230 (9.8) (15.1) 4,691
Financial assets at amortized cost 40,425 33.4 31.4 30,315
Of which: Loans and advances to customers 37,375 38.6 36.5 26,965
Inter-area positions - - - -
Tangible assets 78 12.0 11.0 70
Other assets 343 17.9 15.1 291
Total assets/liabilities and equity 49,952 23.9 20.8 40,328
Financial liabilities held for trading and designated at fair value through profit or loss 4,397 (13.1) (18.1) 5,060
Deposits from central banks and credit institutions 2,745 60.6 55.1 1,709
Deposits from customers 9,827 56.8 52.8 6,266
Debt certificates 1,561 33.9 31.5 1,166
Inter-area positions 26,061 18.0 16.0 22,085
Other liabilities 1,013 34.2 31.2 755
Economic capital allocated 4,348 32.3 29.9 3,287
Relevant business indicators 31-12-22 ∆% ∆% (1) 31-12-21
Performing loans and advances to customers under management (2) 37,431 38.6 36.5 27,000
Non-performing loans 192 (26.2) (26.2) 261
Customer deposits under management (2) 9,827 56.8 52.8 6,266
Off-balance sheet funds (3) 520 (12.9) (12.9) 597
Risk-weighted assets 35,064 19.8 17.6 29,280
Efficiency ratio (%) 65.0 58.4
NPL ratio (%) 0.4 0.7
NPL coverage ratio (%) 131 116
Cost of risk (%) 0.04 (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 evolution of BBVA Group's Rest of Business activity between January and December 2022 were:

  • Lending activity (performing loans under management) registered an increase (+36.5%), 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 47.2%, with growth in time deposits, mainly from Europe and the New York branch, 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 fourth quarter of 2022 has been:

  • Lending activity increased by 8.3%, 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%, quite stable during the quarter (1 basis point below the previous quarter), and showing a reduction of 31 basis points during the year, mainly due to the wholesale clients recoveries. The NPL coverage ratio increased in the year to 131%.
  • Total customer funds grew 15.7%, supported by the increase in time deposits (+29.4%), originating mainly from the branches in Europe.

Results

The good performance of the net interest income was offset by lower commissions and NTI. Together with the expenses increase in an environment of higher inflation and loan-loss provisions on normal level, represents a lower contribution of the unit to the Group results in 2022.

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

  • The net interest income increased by 15.5%, with a positive performance in Europe and the New York branch.
  • Net fees and commissions decreased by 4.1%, due to the lower fees and commissions recorded by BBVA Securities, which offset the good performance in Europe, and especially in New York.
  • The NTI line recorded a decrease of 13.9%, 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 9.4%, mainly due to higher personnel expenses in Europe and the New York branch, partially offset by the lower expenses recorded by BBVA Securities.
  • The impairment on financial assets line closed December 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 mainly focused on lower provisions in New York.
  • As a result, the area's cumulative net attributable profit between January and December 2022 was €240m (-15.1% year-on- year).

In the fourth 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 €62m, which represents an increase of 21.3% compared to the previous quarter, mainly due to the net interest income increase, linked to the good results of CIB in Europe and NTI evolution in the United States, which offset the higher loan-loss provisions made in the quarter and the higher operating expenses, in particular, IT- related costs.