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Shareholders' meeting 20 Apr 2021

BBVA commits to net zero emissions by 2050

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Carlos Torres Vila, Group Chairman

  • Sustainability: Banks have a key role in “analyzing investment opportunities and managing the risks associated” to climate change
  • Sale of the U.S. subsidiary: “We have an extraordinary position of strength, which gives us tremendous strategic optionality to continue creating value for shareholders”
  • Dividend: “We propose to the AGM the approval of the agreements required to implement a share buyback plan of up to 10 percent of the Group’s shares once the sale of our U.S. subsidiary is closed”

Onur Genç, Chief executive officer

  • Digitization: “Our focus on creating end-to-end digital solutions and processes has been key to reaching new clients, which is one of our strategic priorities”
  • Capital: Following the sale of the U.S. subsidiary, BBVA will be “one of Europe’s best capitalized banks, with the largest margin between our capital position and the minimum requirement”
  • Team: “We continue fostering inclusion and diversity, because we are convinced that it makes us better, as a company and as a society”

BBVA hosts its Annual General Meeting, which will be exclusively held remotely due to the pandemic. After a “difficult year for everyone," BBVA Group Chairman Carlos Torres Vila has reviewed the challenges that lie ahead related to digitization and, particularly, to climate change. In this sense, he recalled that BBVA is carbon-neutral in direct emissions since 2020 and, it is now announcing its commitment to zero net indirect emissions by 2050, “taking into account those related to our clients.” This milestone “represents aligning with the most ambitious scenario from the Paris Agreement - limiting the temperature increase to 1.5ºC from the levels prior to the Industrial Revolution. With this, we move forward by 20 years the base scenario of the Paris Agreement ,of 2ºC,” he said.

The bank decided to hold this meeting remotely in order to protect the health and safety of its shareholders, employees, and all others participating in it. “It has been a difficult year for everyone, marked by the COVID pandemic. A very complex situation that required us to give our best. I’m very proud of how everyone in the organization has responded, stepping up to the challenge right from the beginning. I believe this was our greatest achievement in 2020,” said Carlos Torres Vila.

During the first part of his speech, the Group Chairman went over BBVA’s strategy for the pandemic. “First, we prioritized, protecting everyone’s health and well-being. We donated over €35 million to the fight against COVID.” “We also raised an additional €11 million in donations from employees and clients, as well as from many of you,” he said referring to the shareholders, and thanking them for their generosity and collaboration.

"Second, we continue to provide a service that is essential to the economy. At the time, technology became pivotal, as it allowed our clients and customers to manage their finances from home.” And, “third, we worked to provide financial support to our clients and customers, alleviating the financial burden on families and businesses, especially the self-employed and SMEs.” The BBVA Group last year provided a total of €63 billion in deferrals, giving financing to more than three million customers.

In his opinion, BBVA’s response to the pandemic “is further proof of our ongoing commitment to society.” In this sense, he mentioned the “amazing work of our foundations,” including the BBVA Foundation, bestowing its Frontiers of Knowledge Awards each year to recognize key contributions in the areas of scientific research and cultural creation. But this year, he especially underscored the work of the BBVA Microfinance Foundation - the top philanthropic contributor to development and gender equality in Latin America, and second in the world, according to the OECD.

Following the pandemic’s heavy toll on the economy, in 2021, BBVA’s Group Chairman expects a "sharp rebound, fundamentally in the second half of the year.” He also spoke of the positive impact the unprecedented U.S. economic stimulus package will have. In Spain, he noted that the European recovery plan “should help us to emerge stronger from the crisis.”

Next, Carlos Torres Vila underscored the “solid results” posted in 2020, “despite the environment of elevated uncertainty.” “Apart from our social response and good results, the third achievement of 2020 was that we made progress in several key aspects of our strategy, which has been reinforced thanks to the anticipation in some key trends,” he added.

One of these is digitization: “Our pioneering digital leadership has given us a competitive edge in this environment.” Another trend that has been gaining traction in recent months is sustainability, and more specifically, climate change. “Here, we were also pioneers and in 2020, we continued making progress in our commitment." From 2018 BBVA has already mobilized more than €50 billion to fight climate change and promote inclusive growth. Thanks to this and other initiatives, BBVA is currently the most sustainable bank in Europe, and the second most sustainable bank in the world, according to the Dow Jones Sustainability Index.

Carlos Torres Vila emphasized that “another milestone for the year was the sale of our U.S. business, a historic transaction.” The capital resulting from this transaction (€8.5 billion), puts BBVA in “an extraordinary position of strength”, which gives us tremendous strategic optionality to continue creating value for shareholders.” First, to “grow profitably, allowing us to invest in greater cost reductions, and be more efficient in the markets where we operate," and second, to "increase our shareholder distribution - including extraordinary forms of distribution.”

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“Today we propose to the AGM the approval of the agreements required to implement a share buyback plan of up to 10 percent of the Group’s shares¹” once the U.S. sale is closed. Regarding the dividend in 2020, on April 29th, BBVA will pay a gross dividend of 5.9 euro cents per share - the maximum amount allowed by the supervisor. “For 2021, we intend to resume our dividend policy of a 35-40 percent cash payout, once ECB restrictions have been lifted,” he added.

Carlos Torres Vila also explained that “BBVA has been the Spanish bank with the best return for shareholders over the past two years, from the beginning of 2019 until now” with a positive return close to 8 percent.

BBVA’s “position of extraordinary strength" will also allow the bank to move forward “on a strategy to build the bank of the future, and to handle the challenges facing the financial sector.” One of these challenges will be climate change. An enormous challenge, without a doubt, but also a huge opportunity. Carlos Torres Vila stressed banks’ role in “analyzing investment opportunities and managing the associated risks.” This is the reason BBVA wants to support its clients "in their transition toward a sustainable future,” which is one of its strategic priorities.

To conclude, Carlos Torres Vila underscored that: “At BBVA, we look to 2021 with the same commitment to society that we showed in 2020. Thanks to our strength, we will continue to provide our support to overcome this crisis and foster the recovery.”

Digitization, a great competitive advantage in the new environment

After Carlos Torres Vila finished his presentation, BBVA’s CEO took the floor. In his speech, Onur Genç underscored the strength of BBVA’s 2020 results in a complex environment. He also stressed that: “We rank among the top three of Europe’s fifteen largest banks in terms of return on equity and return on assets.” A position that has been consistent throughout the years.

Onur Genç indicated that: “These results were driven by our digital leadership,” which became even more evident in 2020. “In this year of pandemic, we were able to respond to our customers’ new needs, being closer to them.” In fact, more than 34 million customers do their banking with BBVA on a smartphone - 59 percent of the total customer base, “a record figure.”

“Our focus on creating end-to-end digital solutions and processes has been key to reaching new clients, which is one of our strategic priorities,” he said. In fact, in 2020 BBVA added one third of its 7.3 million new customers on digital channels - 56 percent more than in 2019.

Onur Genç explained that this competitive advantage in digitization “leads to efficiency gains and takes us toward operational excellence,” another one of the Group’s strategic priorities. “Our efficiency ratio stands at 47 percent, compared to our competitors’ ratio of 65 percent, making us the undisputable leaders in Europe,” he emphasized. Furthermore, after the sale of the U.S. subsidiary, BBVA will be “one of Europe’s best capitalized banks, with the largest margin between our capital position and the minimum requirement.”

BBVA’s CEO discussed the results by business area, where the net attributable profit was affected by front-loaded provisions for the COVID crisis. However, “nearly all countries performed well in income and cost management, resulting in a higher operating income.”

Finally, Onur Genç took time to thank everyone who is part of BBVA for their contribution, adding that they are “the key to our achievements.” “Our bank is as good as the people who make it up,” he said, adding that “we will continue fostering inclusion and diversity, because we are convinced that it makes us better, as a company and as a society.”

¹ This potential share buyback would not take place before the closing of the sale of the U.S. subsidiary, which is expected for mid-2021, and is subject to share prices, among other factors, and to the necessary authorizations from supervisors.

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