Rest of Business
Highlights
- Growth in lending activity during the year, favored by the recovery during the quarter
- Dynamism in net interest income and NTI in the year
- The cost of risk remains at low levels
- Significant improvement of the efficiency ratio
Business activity (1)
(VARIATION AT CONSTANT EXCHANGE RATES COMPARED TO
31-12-22)
(1) Excluding repos.
Net interest income / AVERAGE TOTAL ASSETS
(PERCENTAGE AT CONSTANT EXCHANGE RATES)
Operating income
(Millions of euros at constant exchange rates)
(1) At current exchange rates: +83.8%.
Net attributable profit (LOSS)
(Millions of euros at constant exchange rates)
(1) At current exchange rates: +62.6%.
Financial statements and relevant business indicators (Millions of euros and percentage)
| Income statement | 2023 | ∆% | ∆% (1) | 2022 |
|---|---|---|---|---|
| Net interest income | 539 | 62.3 | 63.6 | 332 |
| Net fees and commissions | 244 | 0.7 | 1.3 | 243 |
| Net trading income | 316 | 51.9 | 53.2 | 208 |
| Other operating income and expenses | 3 | (50.1) | (48.9) | 7 |
| Gross income | 1,103 | 39.7 | 40.7 | 790 |
| Operating expenses | (596) | 16.0 | 17.0 | (513) |
| Personnel expenses | (303) | 13.5 | 14.5 | (267) |
| Other administrative expenses | (267) | 19.1 | 20.1 | (224) |
| Depreciation | (26) | 15.1 | 15.1 | (23) |
| Operating income | 507 | 83.8 | 84.9 | 276 |
| Impairment on financial assets not measured at fair value through profit or loss | (28) | 107.4 | 113.1 | (13) |
| Provisions or reversal of provisions and other results | (1) | n.s. | n.s. | 14 |
| Profit (loss) before tax | 479 | 73.0 | 74.1 | 277 |
| Income tax | (90) | 140.0 | 140.8 | (37) |
| Profit (loss) for the period | 389 | 62.6 | 63.7 | 240 |
| Non-controlling interests | — | — | — | — |
| Net attributable profit (loss) | 389 | 62.6 | 63.7 | 240 |
| Balance sheets | 31-12-23 | ∆% | ∆% (1) | 31-12-22 |
|---|---|---|---|---|
| Cash, cash balances at central banks and other demand deposits | 4,748 | 18.3 | 22.1 | 4,015 |
| Financial assets designated at fair value | 15,475 | 204.0 | 213.7 | 5,090 |
| Of which: Loans and advances | 14,783 | 249.5 | 261.8 | 4,230 |
| Financial assets at amortized cost | 43,363 | 7.3 | 8.2 | 40,425 |
| Of which: Loans and advances to customers | 39,332 | 5.2 | 6.2 | 37,375 |
| Inter-area positions | — | — | — | — |
| Tangible assets | 151 | 93.1 | 92.9 | 78 |
| Other assets | 537 | 56.3 | 58.9 | 343 |
| Total assets/liabilities and equity | 64,274 | 28.7 | 30.3 | 49,952 |
| Financial liabilities held for trading and designated at fair value through profit or loss | 14,831 | 237.3 | 249.3 | 4,397 |
| Deposits from central banks and credit institutions | 3,085 | 12.4 | 13.7 | 2,745 |
| Deposits from customers | 13,056 | 32.9 | 33.8 | 9,827 |
| Debt certificates | 1,413 | (9.4) | (8.5) | 1,561 |
| Inter-area positions | 26,476 | 1.6 | 2.8 | 26,060 |
| Other liabilities | 1,223 | 20.5 | 22.5 | 1,014 |
| Regulatory capital allocated | 4,191 | (3.6) | (2.6) | 4,348 |
| Relevant business indicators | 31-12-23 | ∆% | ∆% (1) | 31-12-22 |
|---|---|---|---|---|
| Performing loans and advances to customers under management (2) | 39,202 | 4.7 | 5.7 | 37,431 |
| Non-performing loans | 368 | 91.0 | 91.0 | 192 |
| Customer deposits under management (2) | 13,056 | 32.9 | 33.8 | 9,827 |
| Off-balance sheet funds (3) | 566 | 8.8 | 8.8 | 520 |
| Risk-weighted assets | 36,410 | 3.8 | 4.9 | 35,064 |
| Efficiency ratio (%) | 54.0 | 65.0 | ||
| NPL ratio (%) | 0.7 | 0.4 | ||
| NPL coverage ratio (%) | 69 | 131 | ||
| Cost of risk (%) | 0.08 | 0.04 |
(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 2023 were:
- Lending activity (performing loans under management) grew at a 5.7%, due to the favorable performance of the New York branch and, to a lesser extent, the business in Europe, which have offset the deleveraging of the wholesale business in Asia.
- Customer funds under management grew by 32.5%, with a growth in both the demand and time deposits, and the off-balance-sheet funds.
The most relevant aspects of the evolution of BBVA Group's Rest of Business activity during the fourth quarter of 2023 were:
- Lending activity (performing loans under management) grew at a rate of 5.0%, highlighting the good performance in New York and Europe.
- Regarding credit risk indicators, the NPL ratio increased to 0.7% due to an NPL inflow from a particular customer, with an impact on the coverage ratio, which has decreased to 69%.
- Customer funds under management increased by 28.9% due to the performance of deposits in the European branches. On the other hand, off-balance-sheet customer funds registered a growth of 17.9%, originating from Europe as well.
Results
Rest of Business achieved an accumulated net attributable profit of €389m during 2023, 63.7% higher than in the previous year, thanks to a favorable performance of the net interest income, and the NTI, which offset the increase in expenses in a context of higher inflation and normalization of loan-loss provisions.
In the year-on-year evolution of the main lines of the area's income statement at the end of December 2023, the following was particularly noteworthy:
- Net interest income increased by 63.6% as a result of the improvement in customer spread. The performance in Europe and, to a lesser extent, of the New York branch, are particularly worthy of mention.
- Net fees and commissions increased (+1.3%), with a good performance especially from the Group's businesses in the United States.
- The NTI grew by 53.2% supported by the results of the businesses that the Group maintains in the United States, with the New York branch standing out, and, to a lesser extent, by the results in Europe and Asia.
- Increase in operating expenses of 17.0%, mainly in Europe and the New York branch.
- The impairment on financial assets line at the end of December 2023 registered a provision of €28m, mainly originated in Europe.
- The provisions or reversal of provisions line and other results as a whole showed at the end of December 2023 a figure of €-1m, in contrast with the €14m reached 12 months ago due to releases for risks and contingent commitments in the New York branch.
In the fourth quarter of 2023 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 €72m (-31.9% compared to the previous quarter) mainly due to the growth in personnel expenses in the last quarter of the year, as a result of the variable remuneration improvement to employees, in line with the area ́s 2023 performance.