BBVA’s digital customers are increasing in number, are more satisfied and interact more with the bank. In fact, the bank has reached its digital tipping point, at which more than 50 percent of its customers are using the bank’s digital channels in six countries (Spain, the United States, Turkey, Argentina, Chile and Venezuela). It’s a milestone that foreseeably will be reached this year by more of the countries where BBVA operates. Indeed in Davos last week, BBVA Group Executive Chairman Francisco González predicted the Group’s customer base as a whole will pass the 50 percent tipping point in 2018.
“During 2017, we have taken great strides in the execution of our digital strategy, moving full speed ahead,” said BBVA Chairman, during the presentation of the bank’s 2017 results. The bank is now fully into the execution stage of a transformation that began more than 10 years ago, “and the customers are recognizing that,” Francisco Gonzalez said. “That’s why BBVA has reached number one in the NPS (Net Promoter Score) in eight countries.” *
Exponential growth in digital sales
At the close of 2017, BBVA reported that it had 22.6 million digital customers and 17.7 million mobile customers, with an annual growth of 25 percent and 44 percent, respectively. The bank also explained how these digital customers interact more with the bank. “Two years ago, one out of every 10 sales were digital. And in December of 2017, that figure was one out of every three.” Looking ahead, Francisco González predicted that “this exponential growth is going to continue.”
We are launching a multitude of user applications and functionalities, at a dizzying pace. Thanks to the use of artificial intelligence, the user can make better financial decisions"
More importantly, the Chairman said, “we are launching a multitude of user applications and functionalities, at a dizzying pace. Thanks to the use of artificial intelligence, the user can make better financial decisions.”
BBVA CEO Carlos Torres Vila explained the impact these new products and services are having on the bank’s commercial activity. For example, in the case of Spain, the digitization of customers is boosting sales. Total sales rose 31 percent in 2017, driven by a 120 percent increase in sales over digital channels.
BBVA CEO Carlos Torres Vila during the results presentation. - BBVA
A good year for BBVA
Francisco González extolled the results BBVA obtained in 2017, in an increasingly complex geopolitical and macroeconomic environment. The bank not only posted a higher profit, with a record revenue figure; it also improved its risk profile and maintained a solid capital position (a fully-loaded CET1 ratio of 11.1 percent at the close of 2017). On the latter point, Francisco González underscored “the high quality of the capital” of BBVA, saying, “it's important to see the large number of risk-weighted assets.”
Likewise, the BBVA Chairman stressed that the focus on cost control is also bearing fruit. Efficiency has improved to 49.5 percent, enabling BBVA to join the group of European banks of reference that lead the ranking.
We´re interested in winning customers and our focus is on transformation"
Asked about BBVA’s interest in possible mergers or acquisitions inside and outside Spain, the Chairman was clear: “We´re interested in winning customers and our focus is on transformation.”
A clear and sustainable dividend policy
The BBVA Chairman also referred to the bank's shareholder dividend policy. He announced that he will propose to the bank’s governing bodies, a gross cash payment of €0.15 per share in April. The dividends, charged against 2017 results represent a payout in cash of 38 percent, in line with the bank´s remuneration policy. “This is a clear, sustainable and predictable dividend policy, aligned with market practices,” Francisco González said.
BBVA CEO Carlos Torres Vila and BBVA Group Executive Chairman Francisco González. - BBVA
Adapting regulation to the new challenges
BBVA is focused on competing against the large Internet companies and the startups, Francisco González stated. He explained that, up to now, regulation has prevented the internet giants from entering the banking business. However, with the new European payment regulation, PSD2, it opens the doors to this new competition. “PSD2 is a great opportunity for us, because we believe we are better prepared than our colleagues,” Francisco González said.
PSD2 is a great opportunity for us, because we believe we are better prepared than our colleagues"
In this context, he called for global digital regulation that responds to the new challenges and which could be taken on by an institutional organization such as the G20 or the Financial Stability Board,” not by a central bank.
Finally, when asked about his succession, the BBVA Chairman reiterated that the bank has no plans to modify the age limit, as stated in the bank’s bylaws. “We have a fabulous team and there will be no surprises.”
*Spain, Turkey, Mexico, Argentina, Venezuela, Colombia, Paraguay and Peru.
In 2017, the BBVA Group generated a net attributable profit of €3.52 billion (+1.3%). Without taking into account the impairment losses from Telefónica, net profit for 2017 stood at €4.64 billion, up 19.7% compared to 2016 results, excluding the provisions related to ‘floor clauses’ in Spain. Record revenue and cost containment efforts in operating expenses were the main drivers of this result.
More than half of BBVA customers in Turkey, Spain, USA, Argentina, Chile and Venezuela are already digital. As a whole, the digital customer base grew 25% in the year (to 22.6 million), while mobile customers grew 44% (to 17.7 million)
Income reached record highs in 2017. Recurring revenue grew 4.1% y-o-y, (+10.3% excluding currency impact), and expenses dropped 2.3% in the year (+2.2% at constant exchange rates), boosting operating income to €12.77 billion
The NPL ratio continued to improve, reaching 4.4% (vs. 4.9% in December 2016), its lowest level since June 2012. Coverage at year-end stood at 65%
The fully-loaded CET1 ratio stood at 11.1% at the end of December, above BBVA’s target
A cash payment in the gross amount of €0.15 per share, to be paid in April as final dividend for 2017, is expected to be proposed for the consideration of the competent governing bodies