Solvency
Capital base
The BBVA Group's strength during the quarter contributed the consolidated CET1 fully-loaded ratio to reach 12.61% as of December 31, 2022, maintaining a large management buffer over the Group's CET1 requirement (8.60%), and also above the Group's established target management range of 11.5-12.0% of CET1.
During the fourth quarter of the year, the CET1 ratio increased 16 basis points. The generation of profit, net of dividends and remuneration of AT1 instruments, contributed 27 basis points to the CET1 ratio. For its part, the risk-weighted assets (RWA) growth deducted 25 basis points of CET1, which are partially offset by the hyperinflation effect on equity, the positive evolution of market effect in CET1 and lower regulatory deductions.
Fully-loaded RWA reduced by approximately €4,500m in the quarter, mainly as a result of the currency effect mainly due to the depreciation of the U.S. dollar and the Mexican peso against the euro. Excluding the currency effect, the RWA increased by approximately €12,000m.
The consolidated fully-loaded additional Tier 1 capital (AT1) stood at 1.54% as of December 31, 2022, resulting in a 4 basis point decrease from the previous quarter, mainly due to the currency effect related to the issued instruments in U.S. dollar.
The consolidated fully-loaded Tier 2 ratio at the end of December stood at 1.79%, with a decrease of 15 basis points in the quarter. The total fully-loaded capital adequacy ratio stands at 15.94%.
Following the latest SREP (Supervisory Review and Evaluation Process) decision, with entry into force as from January 1, 2023, the ECB has informed the Group that it must maintain a total capital ratio of 12.97% and a CET1 capital ratio of 8.72% at the consolidated level, which include the consolidated Pillar 2 requirement of 1.71% (of which at least 0.96% shall be met with CET1), of which 0.21% (0.12% shall be met with CET1) is determined on the basis of the ECB's prudential provisioning expectation which, as of January 1, 2023, will no longer be treated as a deduction from CET11, with a 19 basis points positive effect on CET1 of December 2022 to place it at 12.80% proforma.
The phased-in CET1 ratio at the consolidated level stood at 12.68% as of December 31, 2022, considering the transitory effect of the IFRS 9 standard. AT1 reached 1.54% and Tier 2 reached 1.76%, resulting in a total capital adequacy ratio of 15.98%.
FULLY-LOADED CAPITAL RATIOS (PERCENTAGE)
CAPITAL BASE (MILLIONS OF EUROS)
| CRD IV phased-in | CRD IV fully-loaded | |||||
|---|---|---|---|---|---|---|
| 31-12-22 (1) (2) | 30-09-22 | 31-12-21 | 31-12-22 (1) (2) | 30-09-22 | 31-12-21 | |
| Common Equity Tier 1 (CET 1) | 42,740 | 42,876 | 39,949 | 42,486 | 42,494 | 39,184 |
| Tier 1 | 47,933 | 48,281 | 45,686 | 47,678 | 47,899 | 44,922 |
| Tier 2 | 5,930 | 6,614 | 7,383 | 6,023 | 6,613 | 7,283 |
| Total Capital (Tier 1 + Tier 2) | 53,863 | 54,895 | 53,069 | 53,701 | 54,512 | 52,205 |
| Risk-weighted assets | 337,102 | 341,678 | 307,795 | 336,920 | 341,448 | 307,335 |
| CET1 (%) | 12.68 | 12.55 | 12.98 | 12.61 | 12.45 | 12.75 |
| Tier 1 (%) | 14.22 | 14.13 | 14.84 | 14.15 | 14.03 | 14.62 |
| Tier 2 (%) | 1.76 | 1.94 | 2.40 | 1.79 | 1.94 | 2.37 |
| Total capital ratio (%) | 15.98 | 16.07 | 17.24 | 15.94 | 15.96 | 16.99 |
- (1) As of December 31, 2022, the difference between the phased-in and fully-loaded ratios arises from the temporary treatment of certain capital items, mainly of the impact of IFRS 9, to which the BBVA Group has adhered voluntarily (in accordance with article 473bis of the CRR and the subsequent amendments introduced by the Regulation (EU) 2020/873).
- (2) Preliminary data.
Regarding shareholder remuneration, a cash gross distribution in the amount of €0.31 per share on April as final dividend of 2022 and the execution of a Share Buyback Program of BBVA for an amount of €422m, subject to the corresponding regulatory authorizations and the communication with the program specific terms and conditions before its effective start, are expected to be submitted to the relevant governing bodies for consideration. Thus, the total distribution for the year 2022 will reach €3,015m, 47% of the net attributable profit, which represents €0.50 per share, and also includes the payment in cash of €0.12 per share paid on October 2022 as interim dividend of the year.
After the redemption of the shares acquired in the execution of the First and Second Tranche within the executed Program Scheme during 2021 and 2022 (281,218,710 and 356,551,306 own shares of BBVA, respectively, BBVA's share capital as of December 31, 2022, has been set at 2,954,757,116.36 euros, represented by 6,030,116,564 shares with a nominal value of €0.49 each.
SHAREHOLDER STRUCTURE (31-12-22)
| Shareholders | Shares issued | |||
|---|---|---|---|---|
| Number of shares | Number | % | Number | % |
| Up to 500 | 330,991 | 41.3 | 61,765,540 | 1.0 |
| 501 to 5,000 | 367,730 | 45.9 | 653,765,057 | 10.8 |
| 5,001 to 10,000 | 55,066 | 6.9 | 387,127,400 | 6.4 |
| 10,001 to 50,000 | 42,731 | 5.3 | 815,962,950 | 13.5 |
| 50,001 to 100,000 | 3,014 | 0.4 | 205,137,227 | 3.4 |
| 100,001 to 500,000 | 1,401 | 0.2 | 251,980,588 | 4.2 |
| More than 500,001 | 283 | 0.04 | 3,654,802,802 | 60.6 |
| Total | 801,216 | 100 | 6,030,116,564 | 100 |
With regard to MREL (Minimum Requirement for own funds and Eligible Liabilities) requirements, BBVA must maintain, from January 1, 2022, an amount of own funds and eligible liabilities equal to 21.46% of the total RWAs of its resolution group, at a subconsolidated4 level (hereinafter, the "MREL in RWAs"). This MREL in RWA does not include the combined capital buffer requirement which, according to applicable regulations and supervisory criteria, would currently be 3.26%. Given the structure of own funds and admissible liabilities of the resolution group, as of December 31, 2022, the MREL ratio in RWAs stands at 26.45%5,6, complying with the aforementioned requirement.
With the aim of reinforcing compliance with these requirements, BBVA has made some debt issues during 2022. For more information about these issues, see "Structural risks" section within the "Risk management"- chapter.
Lastly, as of December 31, 2022, the Group's fully-loaded leverage ratio stood at 6.5% (6,5% phased-in)7.
Ratings
During the year 2022, BBVA’s rating has continued to show its strength and all agencies have maintained their rating in the A category. In March, S&P changed the outlook of BBVA's rating from negative to stable (affirming the rating at A), after taking a similar action in the Spanish sovereign rating. Following the periodic reviews of BBVA, Fitch and DBRS Morningstar affirmed their ratings at A- (May and December) and A (high) (March), respectively, both with a stable outlook. For its part, Moody's has kept BBVA's rating unchanged in the period at A3 (with a stable outlook). The following table shows the credit ratings and outlook assigned by the agencies:
Ratings
| Rating agency | Long term (1) | Short term | Outlook |
|---|---|---|---|
| DBRS | A (high) | R-1 (middle) | Stable |
| Fitch | A- | F-2 | Stable |
| Moody’s | A3 | P-2 | Stable |
| Standard & Poor’s | A | A-1 | Stable |
(1) Ratings assigned to long term senior preferred debt. Additionally, Moody’s and Fitch assign A2 and A- rating, respectively, to BBVA’s long term deposit
4 In accordance with the resolution strategy MPE (“Multiple Point of Entry”) of the BBVA Group, established by the SRB,
the resolution group is made up of Banco Bilbao Vizcaya Argentaria, S.A. and subsidiaries that belong to the same
European resolution group. As of June 30, 2021, the total RWAs of the resolution group amounted to €190,377m and the
total exposure considered for the purpose of calculating the leverage ratio amounted to €452,275m.
5 Own resources and eligible liabilities to meet, both, MREL and the combined capital buffer requirement applicable.
6 As of December 31, 2022, the MREL ratio in Leverage Ratio stands at 11.14% and the subordination ratios in terms of RWAs and
in terms of exposure of the leverage ratio, stand at 21.74% and 9.16%, respectively, being preliminary data.
7 The Group’s leverage ratio is provisional at the date of release of this report. On April, 1st 2022 ended the period of
temporary exclusion of certain positions with central banks.