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Carlos Torres Vila: “In the last 40 years, credit granted by banks in Spain has raised GDP per capita by 20 percentage points”

The BBVA Chair gave the opening presentation this Monday at the 40th edition of the APIE Seminar in Santander. Carlos Torres Vila stressed the contribution of the banking sector to Spain’s social and economic progress over the four decades commemorated by the course. He specifically indicated that: “Over the last 40 years, and despite the great economic crisis from a decade ago, credit granted by banks in Spain as part of their main business activity, in other words, channeling deposits toward loans, has added 20 percentage points to GDP per capita,” according to an estimate by BBVA Research. This activity has also had a very positive impact on productivity per hour of work (+31 percent), investment (+27 percent), and private consumption (+11 percent).

BBVA has supported this summer course since it first began - organized by the ‘Asociación de Periodistas de Información Económica’ (the Association of Finance Journalists or APIE) at the Menéndez Pelayo International University in Santander.

In his opening presentation, Carlos Torres Vila joined Nadia Calviño, First Vice President of Spain and Minister of Economic Affairs and Digital Transformation. The BBVA Chair discussed how the Spanish economy has transformed in the forty years of the seminar. “Many things have changed during this time. The Spanish economy and society have undergone a profound transformation,” he said.

In Carlos Torres Vila’s view, the process of change primarily began with Spain joining the European Economic Community in the mid 1980s and the consolidation of the opening of the economy to the world as a result, which was already in progress and continued into the following decade with the international expansion of Spanish companies.

The BBVA Chair analyzed the social and economic changes in Spain over these four decades. Carlos Torres Vila discussed indicators such as exports, which have doubled in 40 years and represent more than 40 percent of the current GDP. He also mentioned the increase in GDP per capita during this period of time, which nearly doubled in real terms since 1983 to the current level of €25,000; the increase in life expectancy from 76 to 83 years; and the growth in active workers, which went from 12 million to over 20 million, of which women currently make up 47 percent compared to 29 percent four decades ago.

Progress has also been notable when it comes to education. Currently, one third of the population has attended university compared to just seven percent forty years ago. “Education remains one of the major pending challenges in our country,” Carlos Torres Vila noted. In his opinion, “Education is also a key factor in reducing unemployment and inequality.”

In this context, the BBVA Chair maintained that: “Combined action of public policies and private initiatives has been fundamental to progress.” And he emphasized that private investment is key to multiplying the effect of the policies and public funds. Therefore, “The more companies invest in productive capital, the more societies prosper and jobs are created. And the more that companies benefit society and satisfy its interests, the better they do.”

A 10 percent increase in the private investment rate over GDP corresponds to a 3.1 point increase  in long-term growth of income per capita. “The financial system plays a fundamental role in making this symbiotic relationship between company and society a success because we amplify this investment through financing.”

Carlos Torres Vila considers the Spanish banking system “competitive, productive and efficient, with banks that are global leaders.” In his perspective, this financial strength of Spanish banks is good news for the entire economy. And this solid position allows banks to carry out their central role of providing credit to the economy. “With banking activity, we provide security, confidence and support to companies and families in their life endeavors. We accompany them in the critical moments of their lives.”

“At BBVA, we are aware of how important our role is to society as a whole,” he stated. Throughout these 40 years, “we have been a very significant actor in the social and economic development of Spain thanks to our vision and position of leadership,” Carlos Torres Vila said. Furthermore, he underscored that a large part of this credit is especially dedicated to finance initiatives that specifically promote inclusive growth so that this growth reaches society as a whole.

Uncertainty in the short-term and two trends for the future

“Beyond the short-term uncertainties, two major trends will continue to transform the economy and our societies: innovation and decarbonization, which are the foundation of our strategy,” the BBVA Chair added.

First, “We have the DNA of pioneers at BBVA.” BBVA was the first bank to introduce credit cards in Spain in the 1970s. In 1986 it also created the figure of the customer ombudsman, and decades later, bet on the digitization of the financial sector. “Digitization allows us to provide our customers more convenient, straightforward and accessible channels, a better service” he said. Proof of the success of this strategy is the fact that BBVA continues to break customer acquisition records, with over 11 million new customers in 2022; 55 percent through digital channels.

Beyond digitization, he stressed that “we are experiencing an unprecedented wave of innovation and disruption,” with technologies like the use of data and artificial intelligence - especially ChatGPT and language generation models. In this regard, he mentioned that: “BBVA has been working on integrating big data and artificial intelligence into all areas of our business. We are committed to innovation, as a driver of opportunities in all sectors. And we support this innovation with investments through top-ranking venture capital funds.”

Carlos Torres Vila also spoke of the decarbonization of the economy. “It is the greatest disruption in history - not only because of the magnitude of the challenge, which requires colossal investments, but also due to the urgency with which it must take place,” he said. The BBVA Chair pointed to the programs launched in the U.S. and Europe to create incentives for climate investments to scale. From his perspective, a significant portion of the investment needed to decarbonize the economy is already economically viable, but this is not the case for most of the investments needed, which require innovation and finding solutions to complex problems, like emission-free manufacturing of steel or cement, for example.

The BBVA Chair concluded his speech by recalling that: “At BBVA, we are, and always have been there - throughout these years, also during times of uncertainty - financing the real economy and the long-term challenges.” When it comes to the future, he stressed the bank’s firm commitment to “work each and every day to contribute to economic growth in order to have a positive impact on society, reach more people and businesses, improve our service, increase credit and propel innovation and decarbonization, which are an enormous opportunity for our country.”