BBVA BBVA Bilbao Vizcaya Argentaria SA

In 2023, the Group generated significant organic growth thanks to its strategy based on innovation, digitization and sustainability. The bank added more than 11 million new customers, 65 percent of them through digital channels. Digital sales, in units, now account for 79 percent of the total.

Furthermore, between January and December 2023, BBVA channeled €70 billion in sustainable business, up 39 percent from a year earlier. Since 2018, the Group has channeled €206 billion, exceeding the pace required to meet the goal set for 2025.

Greater banking activity, with lending increasing nearly 8 percent in 2023, had a positive impact on society throughout our footprint. Thanks to financing provided by the bank, 140,000 families purchased their home, 550,000 SMEs and self-employed increased their business, and 70,000 larger companies had access to financing to invest in growth. Likewise, BBVA channeled €15 billion in inclusive growth projects,

such as the construction of hospitals and schools.

Except where otherwise stated, the evolution of each of the main headings, and changes in the income statement described below refer to constant exchange rates. In other words, they do not take currency fluctuations into account.

At the top of the P&L account, lending growth in all business areas -with the exception of Spain, where it saw a slight drop- and improved customer spreads pushed net interest income (NII) to €23.09 billion, up 29 percent. The good performance of Spain, Mexico and South America stood out.

Greater activity also reflected positively in net fees and commissions, reaching €6.29 billion in 2023, up 21 percent vs a year earlier. The contribution from Turkey and Mexico is particularly relevant in this heading. In total, NII and net fees and commissions, the bank’s core revenues, saw a 27 percent increase yoy, to

€29.38 billion. Moreover, NTI grew 32 percent vs 2022, to €2.18 billion, while the line for ‘other operating income and expenses’ posted a result of €-2.02 billion.

As a result of all the above, gross income reached €29.54 billion, up 30 percent yoy.

Operating expenses in 2023 were affected by high inflation rates in the Group’s footprint. This heading stood at €12.31 billion, up 20 percent yoy. Nevertheless, the strength of gross income secured positive jaws and an improvement in the efficiency ratio of 370 bps in 2023, to 41.7 percent, which is significantly better than the average figure for comparable European peers.

The good business performance in 2023 prompted operating income to record levels, with an increase yoy of 39 percent, to €17.23 billion.

Amid a context of higher interest rates and growth in the most profitable segments, the provisions for impairments on financial assets rose 34 percent, to €4.43 billion, mainly due to higher provisioning needs in Mexico and South America. As a result, the accumulated cost of risk increased to 1.15 percent, in line with expectations. The NPL ratio remained stable at 3.4 percent, while the coverage ratio slipped to 77 percent.

The BBVA Group posted a net attributable profit of €8.02 billion in 2023, up 40 percent yoy (+26 percent including the impact of exchange rates). In the fourth quarter alone, net attributable profit topped €2.06 billion. The bank expects net attributable profit to continue to grow in 2024.

The annual profit increased by 35 percent when excluding the non-recurring impact of the acquisition of offices from Merlin in 2022 for €-201 million. In current euros, the increase was 22 percent, while earnings per share grew even

more, about 27 percent, thanks to the share buyback programs executed throughout the year.

On the back of these results, profitability indicators improved significantly: ROTE stood at 17 percent, with ROE at 16.2 percent, prompting BBVA to remain among the most profitable banks in Europe. Furthermore, in 2023 the Group continued to create value for its shareholders. The tangible book value per share plus dividends rose 20 percent yoy.

BBVA is to distribute more than €4 billion against 2023 earnings to shareholders, equivalent to a 50 percent payout. The bank is proposing to increase the annual gross cash dividend to €0.55 per share (compared to €0.43 in 2022, 28 percent more). Of this figure, a dividend of €0.16 per share was paid in October as an interim dividend. The final dividend of €0.39 per share will be submitted to the Annual General Meeting for approval, and is expected to be paid in April. Furthermore, the bank will launch a new share buyback program of €781 million³.

The fully-loaded CET 1 capital ratio ended the year at 12.67 percent, well above the bank’s target range of 11.5 to 12 percent.

Business areas

In Spain, lending growth in the most profitable segments offset the drop in mortgages and large corporations. Customer resources improved 2 percent thanks to off-balance sheet funds and time deposits. The area posted a record net attributable profit of €2.76 billion in 2023 (+65 percent yoy⁴), driven by NII performance (+49 percent). The increase of gross income (+29 percent vs 2022) offset the rise of operating expenses (+8 percent). The efficiency ratio improved to 39.9 percent (-760 bps in the past 12 months). Regarding risk indicators, as of Dec 31, 2023, the NPL ratio stood at 4.1 percent, with coverage ratio at 55 percent. The cost of risk was 0.37 percent, in line with expectations.

The strong lending activity stood out in Mexico, posting a yoy increase of 11 percent with growth in all business segments. Customer resources also showed a solid performance, with a 13 percent increase thanks to deposits and mutual funds. Net attributable profit reached a record €5.34 billion, up 17 percent from a year earlier, driven mostly by NII growth (+20 percent), which was boosted by greater activity and improved customer spreads. Double-digit growth prevailed in all income statement figures. As for asset quality indicators, the accumulated cost of risk stood at 2.96 percent, in line with expectations. The NPL ratio ended the year at 2.6 percent, with coverage ratio standing at 123 percent.

In Turkey, lending increased mostly due to growth in loans in Turkish lira (+55 percent, below the inflation rate). Customer deposits also grew, backed by time deposits in local currency (+122 percent yoy). Turkey posted a net attributable profit of €528 million in 2023, up 5 percent from a year earlier (in current euros). This result was driven by growth in net fees and commissions and NTI, which helped offset the pressure on NII, as well as lower provisions. Both the cost of risk and the NPL ratio showed a favorable evolution, standing at 0.25 percent and 3.8 percent, respectively. The coverage ratio stood at high levels (97 percent).

In South America, lending activity increased by 8.1 percent through December 2023, boosted by the retail portfolio, which was favored by the positive performance of consumer loans and credit cards. As for customer resources, growth in time deposits stood out in Colombia and Peru, as well as demand deposits, and to a lesser extent, mutual funds in Argentina. The net attributable profit stood at €613 million. Despite the increase in lending in Colombia, the attributable profit was impacted by higher costs of customer resources and impairments in retail portfolios. In Peru, growth in provisions, as a result of the macroeconomic environment, was offset by the positive evolution of core revenues. Argentina, despite a strong depreciation of its currency, contributed €132 million to the Group’s results. The NPL ratio ended the year at 4.8 percent, with coverage ratio standing at 88 percent. The cost of risk was 2.51 percent.