Solvency
Capital base
The BBVA Group's strong results during the quarter contributed to the consolidated CET1 fully-loaded ratio to reach 13.13% as of March 31, 2023, maintaining a large management buffer over the Group's CET1 requirement (8.75%)4 , and also above the Group's established target management range of 11.5-12.0% of CET1.
During the first quarter of the year, the CET1 ratio increased 52 basis points. Profit generation, net of dividends and the remuneration of AT1 instruments, resulted in a contribution of 25 basis points to the CET1 ratio. Growth in risk-weighted assets (RWA) deducted 23 basis points from the CET1, which was partially offset by the effect of hyperinflation on equity, the positive evolution of market effect in CET1 and lower regulatory deductions. Additionally, it includes the reversal of the CET1 deduction for prudential provisioning of non- performing exposures, once it has been incorporated into the Group's capital requirement, the impact of which was +19 basis points.
Fully-loaded risk-weighted assets (RWA) increased by approximately €11,700m in the quarter, mainly as a result of increased activity including also the expected regulatory and supervisory impacts.
The consolidated fully-loaded additional Tier 1 capital (AT1) stood at 1.49% as of March 31, 2023, resulting in a 5 basis point decrease from the previous quarter, mainly due to the increase in risk-weighted assets.
For its part, the consolidated fully-loaded Tier 2 ratio at the end of December stood at 1.68%, with a decrease of 11 basis points in the quarter. The total fully-loaded capital ratio stands at 16.30%.
It is worth mentioning that, with effect from January 1, 2023, the application of part of the transitional effects applied by the Group in the determination of the phased-in ratio has ended, so that as of March 31, 2023, this ratio coincides with the fully-loaded ratio.
FULLY-LOADED CAPITAL RATIOS (PERCENTAGE)
CAPITAL BASE (MILLIONS OF EUROS)
| CRD IV phased-in | CRD IV fully-loaded | |||||
|---|---|---|---|---|---|---|
| 31-03-23 (1) (2) | 31-12-22 | 31-03-22 | 31-03-23 (1) (2) | 31-12-22 | 31-03-22 | |
| Common Equity Tier 1 (CET 1) | 45,761 | 42,738 | 40,537 | 45,761 | 42,484 | 40,154 |
| Tier 1 | 50,948 | 47,931 | 46,364 | 50,948 | 47,677 | 45,982 |
| Tier 2 | 5,865 | 5,930 | 6,839 | 5,865 | 6,023 | 6,838 |
| Total capital (Tier 1 + Tier 2) | 56,813 | 53,861 | 53,203 | 56,813 | 53,699 | 52,819 |
| Risk-weighted assets | 348,598 | 337,066 | 316,361 | 348,598 | 336,884 | 316,131 |
| CET1 (%) | 13.13 | 12.68 | 12.81 | 13.13 | 12.61 | 12.70 |
| Tier 1 (%) | 14.62 | 14.22 | 14.66 | 14.62 | 14.15 | 14.55 |
| Tier 2 (%) | 1.68 | 1.76 | 2.16 | 1.68 | 1.79 | 2.16 |
| Total capital ratio (%) | 16.30 | 15.98 | 16.82 | 16.30 | 15.94 | 16.71 |
(1) 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). As of March 31, 2023, there are no differences between phased-in and fully-loaded ratios due to the aforementioned temporary treatment.
(2) Preliminary data.
Regarding shareholder remuneration, as approved by the General Shareholders' Meeting on March 17, 2023, in its first item on the agenda, on April 5, 2023, a cash payment of €0.31 gross per each outstanding BBVA share entitled to receive such amount was made against the 2022 results, as an additional shareholder remuneration for the financial year 2022. Thus, the total amount of cash distributions for 2022, taking into account the €0.12 gross per share that was distributed in October 2022, amounted to €0.43 gross per share.
Total shareholder remuneration includes, in addition to the cash payments mentioned above, the extraordinary remuneration resulting from the execution of BBVA's buyback program for the repurchase of own shares announced on February 1, 2023 for a maximum amount of €422m.
As of March 31, 2023, BBVA's share capital stood at €2,954,757,116.36, divided into 6,030,116,564 shares, at €0.49 par value each, although, on March 20, 2023, after receiving the required authorization from the ECB, the Group began the execution of the aforementioned buyback program for the repurchase of own shares aimed at reducing BBVA's share capital through the redemption of the shares acquired. On April 21, 2023, BBVA announced the completion of this share buyback program, having acquired 64,643,559 BBVA shares between March 20 and April 20, 2023, representing approximately 1.1% of BBVA's share capital as of said date.
SHAREHOLDER STRUCTURE (31-03-23)
| Shareholders | Shares issued | |||
|---|---|---|---|---|
| Number of shares | Number | % | Number | % |
| Up to 500 | 326,256 | 41.5 | 61,193,570 | 1.0 |
| 501 to 5,000 | 359,832 | 45.8 | 639,344,983 | 10.6 |
| 5,001 to 10,000 | 53,578 | 6.8 | 376,518,484 | 6.2 |
| 10,001 to 50,000 | 41,760 | 5.3 | 797,609,653 | 13.2 |
| 50,001 to 100,000 | 2,973 | 0.4 | 202,817,212 | 3.4 |
| 100,001 to 500,000 | 1,359 | 0.2 | 245,800,790 | 4.1 |
| More than 500,001 | 273 | 0.03 | 3,706,831,872 | 61.5 |
| Total | 786,031 | 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 sub-consolidated5 level (hereinafter, the "MREL in RWAs"). This MREL in RWAs does not include the combined capital buffer requirement which, according to applicable regulations and supervisory criteria, would currently be 3.30%. Given the structure of own funds and eligible liabilities of the resolution group, as of March 31, 2023, the MREL in RWAs ratio stands at 26.89%6,7, complying with the aforementioned requirement.
With the aim of reinforcing compliance with these requirements, BBVA has made a debt issue during the first quarter of 2023. For more information on this and other issues, see "Structural risks" section within the "Risk management"- chapter.
Lastly, as of March 31, 2023, the Group's fully-loaded leverage ratio stood at 6.6% (6.6% phased-in)8.
Ratings
During the first quarter of 2023, BBVA’s rating has continued to show its strength and all agencies have maintained their rating in the A category. In March, DBRS communicated the result of its annual review of BBVA, affirming the rating at A (high) with a stable outlook. S&P, Moody's and Fitch maintained BBVA's ratings unchanged in the quarter at A, A3 and A-, respectively, all three 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 Includes the update of the countercyclical capital buffer calculated on the basis of exposure at end-December 2022.
5 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 March 31, 2023, the total RWAs of the resolution group amounted to €206,655m and the total exposure considered for the purpose of calculating the leverage ratio amounted to €508,210m.
6 Own resources and eligible liabilities to meet, both, MREL and the combined capital buffer requirement applicable.
7 As of March 31, 2023, the MREL ratio in terms of Leverage Ratio Exposure stands at 10.93% and the subordination ratios in terms of RWAs and in terms of exposure of Leverage Ratio Exposure, stand at 23.59% and 9.02%, respectively, being preliminary data.
8 The Group’s leverage ratio is provisional at the date of release of this report.