BBVA obtained a record net attributable profit of 8,019 million euros between January and December 2023, 22% more in current euros compared to the previous year, excluding from the comparison the net impact of the purchase of offices from Merlin in Spain in 2022. as reported today to the National Securities Market Commission (CNMV). In constant euros, the growth is 35%.

Including extraordinary items, profits grow by 40%, 26% if the impact of currencies is taken into account. In the fourth quarter of the year alone, BBVA obtained a reported profit of 2,058 million euros, 32% more in current euros and 57% in constant euros. The entity expects attributable profit to continue growing in 2024.

It should also be noted that these results include the charge of 215 million euros for the temporary lien of credit institutions and credit financial establishments, an amount that has already been fully accounted for in the results of the first quarter of 2023.

Likewise, BBVA highlights that recurring earnings per share grew by close to 27%, driven by share repurchases carried out during the year.

On the other hand, the bank reports credit growth in all business areas - with the exception of Spain, where it fell slightly - and an improvement in the customer spread, which boosted the interest margin by 29 %, up to 23,089 million euros. The good evolution of Spain, Mexico and South America stands out.

As for commissions, they reached 6,288 million euros, 21% more than the previous year. The contribution of Türkiye and Mexico in this line stands out.

Overall, the interest margin and commissions, which represent the recurring income of the banking business, registered a year-on-year increase of 27%, to 29,377 million euros.

In this way, the result of financial operations (ROF) grew by 32% compared to 2022, up to 2,183 million euros, while the line of other operating income and charges decreased 2,018 million.

Thus, the gross margin registered a year-on-year increase of 30% to reach 29,542 million euros, while the net margin rose to record levels of 17,233 million euros, with an increase of 39%.

During the 2023 financial year, operating expenses were affected by the "high inflation rates" in the countries in which the group is present, so that this item reached 12,308 million euros, increasing by 20%.

However, the bank highlights that thanks to the positive trend in the gross margin, the efficiency ratio has been reduced by 370 basis points during the year, reaching 41.7%, a figure "significantly better" than the average for comparable European banks.

On the other hand, BBVA points out that, in a context of higher interest rates and growth in the most profitable segments, the impairment of financial assets rose by 34%, to 4,428 million euros, mainly due to greater provision needs in Mexico and South America.

As a result of the latter, the accumulated cost of risk increased to 1.15%, in line with expectations. The default rate remained stable at 3.4%, while the coverage rate fell to 77%.

Thus, BBVA highlights that, thanks to these results, the profitability indicators improved "significantly": the return on tangible equity (RoTE) stood at 17.0% while the return on equity (ROE) stood at 17.0%. closing of 2023 at 16.2%. Additionally, tangible book value per share plus dividends grew 20% year-over-year.

Likewise, the 'fully-loaded' CET1 capital ratio closed the year at 12.67%, significantly above the target range, located between 11.5% and 12%.

"2023 has been a very positive year for BBVA and these excellent results allow us to expand the positive impact we have in the countries in which we are present and create value for all our stakeholders: our 71.5 million customers, almost 800,000 shareholders, more than 121,000 employees and society as a whole," said the president of BBVA, Carlos Torres Vila.

Likewise, the entity highlights that between January and December it added more than 11 million new customers, of which 65% signed up through digital channels. In this sense, digital sales, measured in units, already represent 79% of the total.

Furthermore, in 2023, BBVA channeled around 70,000 million euros into sustainable business, 39% more than the previous year. Since 2018, the banking group has mobilized close to 206 billion euros, at a rate higher than expected to reach the goal until 2025.

BUSINESS AREAS

By business areas, the bank indicates that Spain generated an attributable profit of 2,755 million euros in 2023, 65.3% above the result achieved in the previous year, which included the impact of the purchase of offices from Merlin. In 2023, the favorable evolution of the interest margin stands out, which continued to drive the growth of the gross margin, and despite including the total annual amount disbursed by the banking tax.

However, the geography that generated 55.5% of the profits was Mexico, which achieved profits of 5,340 million euros, 17.1% more than in 2022, thanks to the significant increase in interest margin, boosted by a "strong boost" in credit activity and in the improvement of the customer differential.

Turkey generated an attributable profit of €528 million, 5% more than in 2022 (in current euros), a result that was possible thanks to the growth in commissions and the result of financial operations, which helped offset margin pressures of interest, as well as lower provisions.

South America generated an accumulated attributable result of 613 million euros at the end of 2023, which represents a year-on-year variation of 43.2%, driven by the good performance of recurring revenues (41.4%) and the result of financial operations of the area.

SHAREHOLDER REMUNERATION

In addition, BBVA has reported the payment of a dividend of 0.39 euros gross per share in April as a complementary dividend for the year 2023, subject to approval at the next shareholders meeting.

In this way, the bank will distribute to its shareholders a total of 0.55 euros per share from the 2023 results, after already giving 0.16 euros in October, which implies raising the dividend by 28% compared to the 0.43 euros that it distributed in total charged to the 2022 results.

In addition, the bank intends to launch a new share repurchase plan worth 781 million euros, pending approval by the corporate bodies and obtaining the required regulatory authorization.

Thus, BBVA will dedicate more than 4,000 million euros of the 2023 results to the remuneration of its shareholders, which is equivalent to a 'pay out' of 50%.