Letter from the Group Executive Chairman
In 2019 we achieved excellent financial results on a recurring basis, the best of the last ten years, and we also made major progress in our transformation journey.
Net attributable profit excluding non-recurring impacts reached €4,830 million in 2019, thanks to record-high core revenues and strict cost management. Book value per share rose 11.5 percent and the return on tangible equity (ROTE) was 11.9 percent, which placed us ahead of the financial industry in terms of profitability. The Group’s fully-loaded CET1 capital ratio ended the year at 11.74 percent, 40 basis points higher than in 2018.
All of this in a year marked by a highly complex economic environment, with deceleration in the global economy due to geopolitical conflicts, trade tensions and a low interest-rate environment. This led to global growth of 3.1 percent in 2019, the lowest since 2009.
These results are clear evidence of the success of our transformation and of our commitment to digitization. A commitment that has made us the unquestionable leaders of the financial sector’s digital transformation in recent years.
Proof of this is the fact that since 2015, the number of customers banking with us on digital channels has doubled, and the number of customers doing it through their mobile phones has tripled. Mobile customers now represent more than 50 percent of our customer base. Digital sales in both units and value now represent 59 percent and 45 percent of sales, respectively.
Not only have we seen the number of mobile and digital customers evolve in recent years, our total base of active customers has increased by nearly nine million. And what is even more important, our customers are more loyal and more satisfied, as shown by our leading position in the net promoter score (NPS) in most places where we operate.
All of this is the result of a unique value proposition across all channels, especially digital channels. The consulting firm Forrester Research recognized BBVA Spain’s mobile banking app as the best in the world for the third consecutive year, followed by BBVA’s app in Turkey in the second place.
Furthermore, in 2019, we adopted a single brand and new logo globally. This change underscores our goal of offering a unique value proposition and uniform user experience, characteristic of a global digital company.
Without a doubt, one of the most remarkable aspects of 2019 is the rising awareness and social mobilization with regards to climate change and the sustainability challenges facing humankind. The fight against climate change represents one of the biggest disruptions in history, with very significant economic consequences to which we all (governments, regulators, companies, consumers, society as a whole) need to adapt immediately.
The climate transition will require significant investment in the short term in many industries. At BBVA, we are aware of the important role banks may play in this transition providing financings and advice to our customers. We firmly believe that the future of banking is financing the Future, with a capital F.
For this reason, two years ago, we defined our Pledge 2025 in order to achieve the United Nations Sustainable Development Goals and aligned with the Paris Climate Agreement. We set the goal of mobilizing €100 billion by 2025, and in just two years we have already allocated over €30 billion, which represents a significant progress.
In addition, at BBVA, we have made the commitment to be neutral in direct CO₂ emissions from our activities starting this year, 2020. Also, as we announced at the United Nations Climate Change Conference COP 25 in Madrid, we have set an internal price for CO₂ emissions. This encourages all of BBVA’s areas and businesses to reduce their emissions. We hope that in the near future, a global CO₂ market will be established to also incentivize all economic actors to make the necessary reductions.
But it is important to highlight that for us, sustainability goes beyond climate change. For this reason, at BBVA we support global initiatives, such as the United Nations Global Compact, which help join efforts in the pursuit of sustainable development. For us, it is essential that this sustainable development be inclusive for each and every person in society. With this goal in mind, in 2019, BBVA allocated over €100 million to social initiatives and support for education, culture and science as well as entrepreneurship, benefitting over 11 million people.
In particular, at BBVA, we feel especially proud of the great work of our foundations through numerous initiatives, such as the BBVA Foundation Frontiers of Knowledge Awards, which recognize fundamental contributions to the development of knowledge and research. BBVA Microfinance Foundation’s financing for development is also noteworthy, particularly through microloans to low-income entrepreneurs and programs for environmental sustainability and the economic empowerment of women. An endeavor for which it was recognized by the Organization for Economic Cooperation and Development (OECD), as the second largest philanthropic initiative on a global level, and the largest in Latin America.
Furthermore, paying taxes is a fundamental part of BBVA’s commitment to society. For this reason, BBVA voluntarily publishes its global tax contribution report, an example of good governance and transparency. In 2019, BBVA contributed a total of €9.29 billion in taxes derived from our activities in all of our markets, including both our own taxes and third-party taxes paid by the Group. These taxes make it possible to foster development in these countries by investing in infrastructure or healthcare, but especially by helping to promote equal opportunities through better education.
The year 2019 also served to carry out a strategic reflection process, based on the enormous accomplishments that we have achieved over the past five years, and with the goal of continuing to work to attain our Purpose: to bring the age of opportunity to everyone.
Looking forward we want to help our customers make better financial decisions and to support them in their transition to a more sustainable world. This aspect is crucial for all of us, taking into account the important social and environmental challenges we are facing.
To this end, we have evolved our strategy and defined six new strategic priorities that seek to broaden the impact of our transformation journey on our clients and society, with the team, data and technology playing a key role to achieve our Purpose.
The first four priorities are directed towards:
- 1. Improving our clients financial health, helping them in their decision-making and daily management of their finances through personalized advice.
- 2. Helping our clients transition toward a sustainable future, not just from an environmental standpoint, but also striving for inclusive economic development.
- 3. Reaching more clients, leveraging digital channels to achieve profitable and sustainable growth in the most attractive segments.
- 4. Driving operational excellence, with simple, automated processes. We will also continue to focus on risk management, an optimal capital allocation and promoting a culture of ethics and compliance.
- 5. The best and most engaged team, promoting the commitment and performance of each of us who are part of BBVA in order to achieve our purpose.
- 6. Data and technology, which increasingly are key ingredients for any aspect of our activity, and which will help us accelerate the achievement of the rest of priorities.
To achieve these objectives we will leverage the two remaining priorities, the true foundation upon which we are building the BBVA of the future:
I am convinced that these six new strategic priorities will help us to address the challenges we must face and will determine our success in the coming years as we continue leading the Future of banking.
Finally, I would like to thank each and every one of the more than 126,000 people that are part of BBVA for their excellent work and commitment, and encourage them to continue working to fulfill our Purpose, and to always do so according to our values, “The customer comes first”, “We think big” and “We are one team.”
And to you, our esteemed shareholders, thank you once again for your confidence and your constant support, which drives us to continue giving our best every day.
Letter from the Chief Executive Officer
In 2019, we witnessed a slowdown in global growth resulting from geopolitical risks and trade tensions, which in turn led to weaker international trade, less investment, and reduced industrial activity. In addition, the major central banks continued to support measures in favor of low interest rates. Despite this challenging environment, BBVA has proven once again the strength of its diversified business model and its ability to generate strong results with double-digit returns.
The world economy grew 3.1 percent in 2019, representing the lowest growth rate since 2009. At the national level, economic performance varied by country across the BBVA footprint. On one hand, Spain achieved 2 percent growth, jumping ahead of the eurozone. And, in the United States, despite a slight downturn, growth stood at 2.3 percent, bolstered by expansive fiscal policies. Even so, growth across the Sunbelt region, where BBVA mainly operates, outpaced the national average, standing at 3.2 percent. Colombia and Peru also posted solid growth at 3.2 percent and 2.1 percent, respectively. Mexico experienced sluggish growth in 2019 owing to, among other factors, the delayed ratification of the new trade deal with the United States and Canada and a slowdown in employment and private consumption. In Turkey, economic policies adopted over the course of the year contributed to putting growth on the path to recovery. By contrast, in Argentina we are facing a situation of real uncertainty.
Despite this challenging environment, BBVA Group’s 2019 net attributable profit, excluding non-recurring impacts, was €4,830 million, representing a 2.7 percent year-on-year increase. This equates to the Bank’s highest net attributable profit, without non-recurring impacts, since 2009. Including the goodwill impairment related to our unit in the United States, the net attributable profit totals €3,512 million. The goodwill accounting impact, generated in 2009 as a consequence of the acquisition of our main assets in the U.S., is due to the descending interest rate trends and economic slowdown in the country. The goodwill impairment has no effect on the tangible net equity, capital, liquidity nor BBVA Group’s ability to pay out dividends.
As for shareholder value creation, the tangible book value per share plus dividends reached €6.53 at the close of the year, representing an 11.5 percent increase from the year before. And for another year, our profitability metrics place us ahead of our peers. Excluding the goodwill impairment, return on equity stood at 9.9% and the return on tangible assets at 11.9%.
I would also like to highlight that our strong capital position once again came to the fore in 2019. The fully-loaded CET1 ratio stands within our target range and closed the year at 11.74 percent, representing an increase of 40 basis points in the year, despite negative impacts related to accounting standards and other regulatory adjustments.
The recurring revenues trend is also worth noting: despite low interest-rate environments in some of our major markets, recurring revenues grew more than 5 percent at constant exchange rates — meaning without factoring in exchange rate impacts — thus reaching a record high in absolute terms. Cost containment is also worth mentioning, with expenses growing around 2.2 percent, well below the average rate of inflation across our footprint. As a result, the efficiency ratio improved by 92 basis points reaching 48.5 percent, which once again positions us well ahead of our peer group.
And we have achieved all this while maintaining strong risk indicators, with a significant improvement in the NPL ratio, which stood at 3.8 percent, 15 basis points better than the 2018 figure. The NPL coverage ratio improved 349 basis points in the year, ending up at 77 percent. The results for both indicators are the best they have been in the last ten years. The Group’s cost of risk also remained low, near 1 percent.
With respect to our primary business units, I would like to especially point out the following:
- In Spain, the net attributable profit stood at €1,386 million, 1 percent less compared to the previous year, weighed down from the drop in net interest income, which was as expected, and by the results from net trading income, which was partially countered by the positive performance of commissions, a significant reduction in costs, and lower impairments from the sale of NPL portfolios throughout the year. From a risk perspective, we saw a positive trend with the NPL ratio dropping to 4.4 percent and the cost of risk to 0.12 percent.
- In The United States, the net attributable profit for 2019 reached €590 million, 23.9 percent less than in 2018 in constant exchange rates. This was fundamentally due to the drop of interest rates and the increase in impairment losses on financial assets as a consequence of greater one-time provisions in the commercial and consumer portfolio and the adjustment in the macroeconomic scenario.
- In Mexico, the net attributable profit for the unit was €2,699 million, representing a year-on-year increase of 8.2 percent at constant exchange rates, driven by the net interest income and improved efficiency. It is also worth pointing out the unit’s solid risk indicators.
- In Turkey, the net attributable profit reached €506 million. Without taking into account the depreciation of the lira throughout the year — meaning in constant terms — this result is similar to the previous year, with a slight decline of 0.5 percent. I would like to emphasize the positive performance in net interest income, as a result of an outstanding price management, which compensated for the drop in contribution from inflation-linked bonds.
- In South America positive trends stand out in leading markets: Argentina, Colombia, and Peru. The net attributable profit for the area rose to €721 million in 2019, which represents year-on-year growth of 64 percent (excluding the BBVA Chile business from the annual comparison) in constant terms.
Finally, I don’t want to miss this opportunity to thank the more than 126,000 Group employees for their ongoing effort, their commitment, and for their contribution to our outstanding results, each day demonstrating the real value that comes from working together as one team. And, of course, thank you to all of you, our shareholders, for your constant support which inspires us to realize our purpose: to bring the age of opportunity to everyone.
History of BBVA
The history of BBVA is the history of the many different people who have been a part of the more than one hundred financial institutions that have joined our corporate endeavor since it originated in the mid-19th Century. Today at BBVA, we work to create a better future for people, seeking to build long-lasting relationships with our customers that change our way of looking at the business. As a result, BBVA has become a global leader and one of the world’s most renowned and award-winning banks.
BBVA is firmly committed to the future and is a pioneer in adapting to the needs of an increasingly global market and especially, to the banking industry of the 21st Century.
More than 160 years of experience support this commitment.
The history of BBVA dates back to 1857 in the city of Bilbao, in northern Spain, where the Board of Commerce promoted the founding of the Banco de Bilbao as an issuance and discount bank. This was a pioneering initiative that was driven by the economic growth in the region. Until the end of the 19th Century, it was the city’s only bank.
In the second half of the 19th Century, Banco de Bilbao financed several important infrastructure and steel industry projects. In 1878, it lost the right to issue its own banknotes and was restructured as a loan and discount bank. Banco de Vizcaya was founded in 1901; it carried out its first transactions in Bilbao and little by little, began to expand throughout the country. Apart from its activity as a commercial and depositary bank, Banco de Vizcaya took part in the creation and development of a large part of Spanish industry. In 1902, Banco de Bilbao and the Banco de Comercio merged, although both institutions maintained their status as legal entities.
In 1909, Caja Postal was created as a public-law entity and in 1916, it began to issue and administer savings account passbooks..
A consortium of bankers and industrialists founded the Banco de Crédito Industrial (BCI) in 1920, for the express purpose of promoting the installation and consolidation of industry by granting long-term credits. Banco de Bilbao and Banco de Vizcaya were part of that consortium.
In 1923, the National Agricultural Credit Service was created. A dependency of the Agriculture Ministry, it granted credits to agricultural and livestock associations, under the joint and several responsibility of its associates.
During the economic development of the 1960s, Banco de Bilbao expanded, acquiring other banks and starting to create a financial group. Meanwhile, Banco de Vizcaya continued to grow and establish itself as a modern, universal bank and an important financial group. More flexible rules on opening offices allowed it to expand its commercial network.
Caja Postal added more customer services, including checking accounts, stock purchases/sales, and lending in certain areas. The 1962 Banking Law nationalized BCI, BHE and BCL and transformed the National Agricultural Credit Service into the Banco de Crédito Agrícola (BCA). All four banks became entities governed by public law. But in 1971, they became official credit institutions (under the Law Regulating Official Credit) as limited companies.
In the 1980s, Banco de Bilbao based its strategy on reaching a size that would allow it to access the financial business that was then emerging from the technological advances, deregulation, securitization and the interplay between national and international markets. Banco de Vizcaya contributed to the rescue of banks that were affected by the economic crisis and developed a policy of strong growth through acquisitions, which led it to create a large banking group. Its most significant operation was its purchase of Banca Catalana in 1984.
Meanwhile, the official credit institutions continue to expand their business with market operations. In 1982, BEX lost its exclusivity of export credit, redirecting its business to universal banking, and formed a financial group. It acquired Banco de Alicante (1983) during this process. In 1988, Banco de Bilbao and Banco de Vizcaya agreed to a merger to create BBV.
Corporación Bancaria de España was established in 1991 as a state-owned enterprise and credit institution with the status of a bank. Its history began with a federated banking model, but in 1988 Corporación Bancaria de España (now privatized through public offerings), BEX (merged with BCI), BHE and Caja Postal merged into a single bank under the brand Argentaria.
BBVA unified its network of offices in Catalonia in May 2013 after the acquisition of Unnim Banc was complete.
The merger of BBV and Argentaria
BBVA and Argentaria announced their merger on October 19, 1999 in an effort to continue adding value, creating the new bank (BBVA). It was of a substantial size, with strong solvency, a large financial structure, ample geographic diversification of business and risks, and as a result, greater potential for growing its profits.
Customers now had access to an extensive distribution network, a wider range of products, new channels and a strong international presence. Employees, meanwhile, had greater opportunities for professional development.
The integration of the two banks was exemplary because:
- Strategic decisions were made quickly. The organizational structure was defined immediately and a framework agreement was established with workers.
- Working groups were formed and plans for the different areas of activity were defined quickly.
- Ambitious deadlines were met, sometimes ahead of schedule.
- The effort benefitted from the excitement, participation and team spirit shown by everyone in BBVA.
The integration process received a major boost when a single BBVA brand was adopted in January 2000. This allowed the bank to create, in very little time, an image based on its own unique identity. BBVA’s integration process took place quickly and efficiently and concluded in February 2001.
The integration of the group’s retail businesses in Spain (BBV, Argentaria, Banca Catalana, Banco del Comercio and Banco de Alicante) allowed the bank to take advantage of the potential offered by an extensive network of branches with the BBVA image.
Prestigious financial publications recognized the efficiency of BBVA’s integration, naming it the best bank in the world (Forbes) and in Spain (The Banker) and in the year 2000, the best bank in Latin America (Forbes) and the best bank in Europe (Lafferty) in 2001.
The international group
BBVA in the world
BBVA is a customer-centric global financial services group founded in 1857. The Group has a strong leadership position in the Spanish market, is the largest financial institution in Mexico, it has leading franchises in South America and the Sunbelt Region of the United States. It is also the leading shareholder in Turkey’s Garanti BBVA. Its purpose is to bring the age of opportunities to everyone, based on our customers’ real needs: provide the best solutions, helping them make the best financial decisions, through an easy and convenient experience. The institution rests in solid values: Customer comes first, we think big and we are one team. Its responsible banking model aspires to achieve a more inclusive and sustainable society.
Data at the end Dec 2019. Those countries in which BBVA has no legal entity or the volume of activity is not significant, are not included
Relevant data of the BBVA Group (consolidated figures) at 30-09-2019. This section contains all the updated quarterly figures on the balance sheet and income statement, and other relevant data.
More financial information is available on the Shareholders and Investors website.
Business Units Business Units
Global Functions Global Functions
Legal and Control Legal and Control
At the end of 2018, the Board of Directors of BBVA approved a new organizational structure, aimed at fostering the Group’s transformation and businesses, while further specifying responsibilities for executive functions.
The main aspects of the new organizational structure are as follows:
The Group Executive Chairman is responsible for the management and well-functioning of the Board of Directors, the supervision of the management of the Group, the institutional representation, and leading and boosting the Group’s strategy and its transformation process.
The areas reporting directly to the executive chairman are those related to the transformation’s key levers: Engineering & Organization, Talent & Culture and Data; those related to the Group’s strategy: Global Economics & Public Affairs, Strategy & M&A, Communications & Responsible Business and the new figure Senior Advisor to the Chairman; and the Legal-related and Board-related areas: Legal and General Secretary.
The Chief Executive Officer (CEO) is in charge of the daily management of the Group’s businesses, reporting directly to BBVA’s Board of Directors.
The areas reporting to the CEO are the Business Units in the different countries and Corporate & Investment Banking, as well as the following global functions: Client Solutions, Finance&Accounting, that integrates the functions of accounting and tax, and Global Risk Management.
Additionally, certain control areas strengthen their independence, establishing a direct reporting of their heads to the Board of Directors through the corresponding committees. These control areas are Internal Audit and the new Regulation & Internal Control, area that is in charge of the relationship with regulators and supervisors, the monitoring and analysis of regulatory trends and the development of the Group’s regulatory agenda, and the management of compliance-related risks.
In 2019, BBVA carried out a strategic review process to continue going in depth into its transformation and adapting itself to the major trends that are reshaping the world and the financial services industry:
- A challenging macroeconomic outlook, characterized by a rising uncertainty at a global level, lower economic growth, low interest rates, increasing regulatory requirements, geopolitical tensions and the emergence of new risks (cybersecurity, etc.).
- An evolution in clients’ behaviors and expectations. Clients demand more digital, simple and personalized value propositions, based on greater advice to make the best decisions.
- A strong competitive environment, where digitization is already a common priority for banks and the role of BigTech companies and ecosystems is rising as they are offering financial services within their global solutions with an excellent customer experience.
- The general concern in society is to achieve a sustainable and inclusive world.Climate change is a reality and all the stakeholders (consumers, companies, investors, regulators and public institutions) have set achieving a more sustainable world as a priority. The transition towards that sustainable world has major economic implications and the financial sector must play a very active role to ensure success of this evolution.
- Data has become a key differentiation factor and data management generates solid competitive advantages as it enables offering a customized value proposition, improves processes’ automation to enhance efficiency and reduces operational risks. Data also entails the management of new risks with relevant implications (privacy, security, ethics, etc.).
In this context, BBVA’s strategy has evolved with six strategic priorities which aim to accelerate and deepen the Group’s transformation and the achievement of its purpose.
Our purpose and strategic priorities
In this context, BBVA’s strategy has evolved with six strategic priorities which aim to accelerate and deepen the Group’s transformation and the achievement of its purpose.‘To bring the age of opportunities to everyone.’
1. Improving our clients’ financial health
Help our clients, through personalized advice, make better decisions and manage their finances to achieve their life and business goals.
2. Helping our clients transition toward a sustainable future
Progressively align our activity with the Paris Agreement and use our role to help our clients transition toward a more sustainable future inspired by selected Sustainable Development Goals.
3. Reaching more clients
Accelerate profitable growth by being where clients are, leveraging our digital channels and those of third parties.
4. Driving operational excellence
Provide the best customer experience with simple, automated processes and a continuous focus on risk management and optimal capital allocation
5. The best and most engaged team
A diverse and empowered team guided by our Purpose, Values, and Behaviors, propelled by a talent development model that creates growth opportunities for all team members.
6. Data and technology
Advanced data analytics coupled with secure and reliable technologies to build distinctive high-quality solutions and deliver on our strategy.
BBVA Group has developed new people management models and new ways of working which have enabled the Bank to keep transforming its operational model, but have also promoted cultural transformation and have favored the ability to become a purpose-driven company, or, in other words, a company where staff guide their actions according to the Values, and are genuinely inspired and motivated by the same Purpose.
BBVA is engaged in an open process to identify the Group’s Values, which took on board the opinion of employees from across the global footprint and units of the Group. These Values define our identity and are the pillars for making our Purpose a reality:
Customer comes first
BBVA has always been customer-focused, but the customer now comes first before everything else. The Bank aspires to take a holistic customer vision, not just financial. This means working in a way which is empathetic, agile and with integrity, among other things.
- We are empathetic: we take the customer’s viewpoint into account from the outset, putting ourselves in their shoes to better understand their needs.
- We have integrity: everything we do is legal, publishable and morally acceptable to society. We always put customer interests’ first.
- We meet their needs: We are swift, agile and responsive in resolving the problems and needs of our customers, overcoming any difficulties we encounter.
We think big
It is not about innovating for its own sake but instead to have a significant impact on the lives of people, enhancing their opportunities. BBVA Group is ambitious, constantly seeking to improve, not settling for doing things reasonably well, but instead seeking excellence as standard.
- We are ambitious: we set ourselves ambitious and aspirational challenges to have a real impact on people’s lives.
- We break the mold: we question everything we do to discover new ways of doing things, innovating and testing new ideas which enables us to learn.
- We amaze our customers: we seek excellence in everything we do in order to amaze our customers, creating unique experiences and solutions which exceed their expectations.
We are one team
People are what matters most to the Group. All employees are owners and share responsibility in this endeavor. We tear down silos and trust in others as we do ourselves. We are BBVA.
- I am committed: I am committed to my role and my objectives and I feel empowered and fully responsible for delivering them, working with passion and enthusiasm.
- I trust others: I trust others from the outset and work generously, collaborating and breaking down silos between areas and hierarchical barriers.
- I am BBVA: I feel ownership of BBVA. The Bank’s objectives are my own and I do everything in my power to achieve them and make our Purpose a reality.
Responsible banking model
At BBVA we have a differential banking model that we refer to as responsible banking, based on seeking out a return adjusted to principles, strict legal compliance, best practices and the creation of long-term value for all stakeholders.
It is reflected in the Bank’s Corporate Social Responsibility or Responsible Banking Policy. The Policy’s mission is to manage the responsibility for the Bank’s impact on people and society, which is key to the delivery of BBVA’s Purpose.
All the Group’s business and support areas integrate this policy into their operational models. The Responsible Business Unit coordinates the implementation and basically operates as a second line for defining standards and offering support.
The responsible banking model is supervised by the Board of Directors and its committees, as well as by the Bank’s senior management.
The four pillars of BBVA’s responsible banking model are as follows:
- Balanced relations with its customers, based on transparency, clarity and responsibility.
- Sustainable finance to combat climate change, respect human rights and achieve the UN Sustainable Development Goals (SDGs).
- Responsible practices with employees, suppliers and other stakeholders.
- Community investment to promote social change and create opportunities for all.
Banks play a crucial role in the fight against climate change and in achieving the United Nations Sustainable Development Goals thanks to their unique position in mobilizing capital through investments, loans, issuance and advisory functions. They have effective measures in place to help tackle these challenges: firstly, providing innovative solutions to help customers transition to a low-carbon economy and driving sustainable finance; and, secondly, systematically incorporating social and environmental risk into their decision-making processes.
BBVA’s commitment to sustainable development is reflected in its global-reach Environmental Commitment. In 2018, BBVA announced its strategy on climate change and sustainable development to help the Bank meet the United Nations Sustainable Development Goals and achieve the objectives of the Paris Agreement on climate change. 2025 Pledge will help the Bank progressively align its activity with the Paris Agreement on climate change and achieve a balance between sustainable energy and investments in fossil fuels. The strategy is based on a threefold commitment:
- To finance: BBVA is pledging to mobilize € 100 billion in green finance, sustainable infrastructure and agribusiness, entrepreneurship and financial inclusion.
- To manage the environmental and social risk associated with the Bank’s activity, to minimize potentially negative direct and indirect impacts.
- To engage all stakeholders to increase the financial sector’s collective contribution to sustainable development.
BBVA’s environmental Commitment and strategy on climate change and sustainable development are both approved by the Chief Executive Officer and backed by senior management.
Investment in social programs
Through its social programs, BBVA acts as an engine of opportunity for people, seeks to generate a positive impact on their lives, and delivers its aim of making the opportunities of this new era available to those who face the most difficulty, the vulnerable. In 2019, the BBVA Group allocated €113.8m to social initiatives that benefited 11.5 million people. This figure represents 2.4% of net attributable profit.
BBVA channeled its investment through its local banks and corporate foundations. We contributed to the development of society in the countries in which we are present. The Foundations play a fundamental role in channeling a vital part of the group’s social investment initiatives.
The BBVA Foundation focuses on the promotion of knowledge, culture, the dissemination of science and art, and the recognition of talent and innovation. Its activity is grouped into five strategic areas: Environment, Biomedicine and Health, Economy and Society, Basic Sciences and Technology, and Culture. In each one of these, it designs, develops and finances research projects, either individually or in teams; facilitates advanced and specialized training through scholarships, courses, seminars and workshops; awards prizes to researchers and professionals who have contributed significantly to the advancement of knowledge; and communicates and disseminates this knowledge through publications and conferences.
The BBVA Microfinance Foundation is a non-profit organization formed in 2007 by BBVA within the framework of its corporate social responsibility to support vulnerable people and provide them with access to productive activities, with a budget of 300 million dollars and its experience of more than 150 years. Its objective is to create opportunities for people in vulnerable situations, expanding and facilitating access to financial services. For this, it uses a proprietary methodology called “Productive Finance”, which seeks the development of the customer and offers personalized attention to the entrepreneurs to whom it provides. That is, it provides not only financial products and services, but also advice and training for the administration and financial management of their small businesses.
Its global objective is to promote a concept of financial education in a broad sense through the Global Financial Education Plan, which is based on three lines of action:
- Financial education for society: Promote the acquisition of knowledge, skills and attitudes in all countries in which BBVA has a presence, through its own programs and in collaboration with third parties, with the aim of achieving greater knowledge of financial concepts and a change in behavior in financial decision-making, enabling the improvement of people’s financial health. In 2019, a total of 1.9 million children and young people, adults and SMEs benefited from local initiatives.
- Financial education in customer solutions: Integrate financial capabilities in the customer’s experience in order to facilitate informed decision-making, which will result in an improvement in their financial well-being and allow them to access greater opportunities.
- Financial education in customer solutions: Integrate financial capabilities into the customer experience. In order to facilitate informed decision-making and improve their financial well-being, financial education content was integrated into customer solutions in 2019. In 2019, 20,110 users accessed financial education content published on bbva.com and 288 people attended events held by the Center for Education and Financial Capabilities. In 2019, €7.7m were spent on financial education.
BBVA’s commitment to financial education is long-term, with €89m invested and 15.5 million people benefiting from different programs since 2008.
In 2019, BBVA allocated €9.8m to entrepreneurship initiatives that benefited 2.2 million people. The following are among the global initiatives related to entrepreneurship:
BBVA Momentum is a global program that helps social entrepreneurs grow and broaden their impact. It includes training, strategic accompaniment, networking and access to funding. 167 entrepreneurs from Colombia, the United States, Mexico and Turkey participated in 2019.
BBVA Open Talent is a fintech startups competition that aims to foster innovative technological solutions and raise awareness of emerging projects capable of transforming the financial sector. In 2019, 770 startups from 95 countries participated, with 290 professionals involved.
Knowledge, education and culture
Regarding the knowledge, education and culture activities, €77.6m were invested, benefiting 7.2 million people in 2019. BBVA contributes to the dissemination of knowledge through BBVA Research, the BBVA Foundation and BBVA Open Mind.
Code of Conduct
The Code of Conduct was approved by BBVA’s Board of Directors on May 28, 2015.
BBVA’s tax strategy
BBVA’s corporate principles for tax issues and fiscal strategy, approved by the Board of Directors on July 1, 2015
U.S. Patriot Act
The USA Patriot Act is a U.S. law approved in 2001 following the September 11th terrorist attacks. Its main purpose is to increase government control to fight terrorism and improve different U.S. security agencies’ capacities through coordination and granting the agencies greater monitoring power.
One of the ways in which the USA Patriot Act combats terrorism is by the monitoring banks in order to prevent money laundering, a source of funding for terrorist groups.
In accordance to the requirements of the USA Patriot Act, all banks located outside the U.S. that wish to engage in or maintain international relations with a U.S. bank or broker/dealer are required to provide certain information about the nature of their business and their supervision.
That’s how the USA Patriot Act applies to BBVA.
Global USA PATRIOT ACT Certificate – PDF Document / (2745 KB)
Global USA PATRIOT ACT Certificate for use by any financial institution that provides, or could provide services to any institution in the BBVA Group or the entire BBVA Group.
The Foreign Account Tax Compliance Act (FATCA) is a law introduced by the U.S. Department of Treasury and Internal Revenue Service (IRS) to encourage enhanced tax compliance and transparency with respect to U.S. citizens or residents. FATCA requires financial institutions around the world to identify U.S. persons that have foreign bank accounts, among others, and report them to the U.S. tax authorities. To ensure compliance, a 30% withholding tax will be imposed on certain payments to non-compliant institutions and individuals.
BBVA, along with its subsidiaries and branches, is committed to help ensure international tax compliance while maintaining high standards of customer data security. BBVA is therefore proactively implementing changes in its current business practices to ensure compliance with FATCA.
BBVA institutions affected by FATCA have already been registered with the IRS and will appeal in the next official IRS list of participating financial institutions.
FATCA requires financial institutions across the globe to fulfill certain requirements:
- Identify the following customers with a BBVA account:
- U.S. citizens or residents
- U.S. corporations
- Certain legal institutions, mainly private equity entities owned by U.S. citizens
- Report information on account holders listed above to the IRS or local tax authorities. This information includes:
- Personal information: name, address and U.S. Tax Identification Number (US TIN)
- Account information: account number, account balance and payments made or received in the account
- Withhold 30% from account holders on certain payments from the U.S. (mainly interest and dividends) that fail to comply with FATCA .
However, It is not expected that FATCA will affect most of BBVA’s customers. FATCA entered into force on July 1, 2014. Reporting began in 2015.
Please note that BBVA does not provide tax advice. If required, we recommend our customers seek independent advice on FATCA from a professional tax advisor. BBVA and its subsidiaries are not liable for any errors, omissions or opinions contained within this document.
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