The outcome of the US elections has led to a significant volatility in the financial markets, and in particular in emerging markets’ currencies. Such volatility has impacted BBVA’s share price, mainly due to its exposure to the Mexican peso. Amid the current circumstances BBVA would like to remind its previously disclosed hedging policy. BBVA’s foreign-exchange risk hedging policy aims to preserve the Group’s capital ratios and ensure the stability of its earnings. BBVA hedges, on average, between 30% and 50% of the expected net attributable profit of the following year and around 70% of the excess CET1 ratio (what is not naturally hedged by the ratio itself).
Regarding the Mexican peso, and in line with the policy stated above, we are currently hedging 40% of 2017 expected net attributable profit from its franchise in Mexico and, on capital, our current hedging position allows for a very low sensitivity of the CET1 ratio to a 10% depreciation of the Mexican peso (around -1 bp), as stated during the presentation of the third-quarter results.