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Finances

Finances

Davos will be held in Switzerland from January 15th - 19th with the theme ‘Rebuilding trust’. The event organized by the World Economic Forum will bring together over 100 governments, major international organizations and around 1,000 companies, as well as civil society leaders, renowned experts, young agents of change, social entrepreneurs and the media. Davos 2024 is an opportunity to reflect on the key challenges facing the world, marked by the geopolitical tensions of recent years, but also by the trends that will define the future, such as the decarbonization of the economy and artificial intelligence.

BBVA has updated the Group's Tax Strategy, last published in 2015. The bank thereby addresses rising interest among analysts, investors and wider society in corporate decisions with an impact on environmental, social and good governance issues. The new strategy strengthens the governance, oversight and control structure by creating a specific tax compliance body and integrating ESG criteria in tax decision-making.

BBVA has stood out in the 2023 stress test of the European Banking Authority (EBA).  The exercise is carried out every two years and examines the banks’ capacity to maintain minimum capital levels and own resource requirements under two scenarios: a baseline and an adverse one. In the baseline scenario BBVA would generate 326 basis points, to a maximum fully-loaded CET1 of 15.87 percent as of December 2025. In the adverse scenario, BBVA would see a capital depletion of 295 basis points, to a fully-loaded CET1 of 9.66 percent. This impact is significantly lower than the average of the European banks surveyed (459 bps). BBVA is the third bank with lowest impact among its comparable group¹.

BBVA’s Turkish unit is launching the ‘Women who know their accounts’ program as part of its strategy for inclusive growth. The aim of the program is to support women who are not familiar with banking services, to help them discover their potential and ensure a more active participation in economic life. The program will support them by providing training in basic financial matters and in managing their personal finances.

Celia Mosquera has had to reinvent herself three times after being forcibly displaced by violence in Colombia. Her story is one example of the remarkable resilience of micro entrepreneurs supported by the BBVA Microfinance Foundation (BBVAMF): 60 percent of them managed to overcome poverty after five years of assistance and finance from the entities within the foundation.

BBVA has given a new boost to its Wealth Management unit within the Private Banking area in Spain to enhance its range of services for individuals with a net worth of over €2 million. With a view to more personalized support for customers, BBVA Private Banking has recruited 28 new bankers (an increase of 38%), bringing the total team to 101 professionals. Of these new entrants, 13 will focus on the Ultra High Net Worth segment (net worth of more than €10 million).

BBVA has announced the MREL regulatory requirement for 2024 -a buffer to absorb losses- which the bank is already in compliance with. Starting next year, the bank needs to have a 22.11 percent volume of its own funds and eligible liabilities, or 25.42 percent including the combined requirement for capital buffers based on its risk-weighted assets (RWAs). As of March 31, 2023, the bank already meets this requirement, reaching 26.89 percent, as well as the subordination requirement.

BBVA reported a total tax payment in 2022 of €10,948 million (+33 percent vs. 2021) across all the countries in which it operates, of which €5,023 million (+65 percent) were its own taxes and €5,925 million (+14 percent) were third-party taxes. This was the highest tax payment ever recorded by the Group, in line with its earnings performance during the past year. In Spain, BBVA generated a total tax contribution of €2,759 million, of which €1,326 million consisted of its own taxes (+42 percent).

After a 2022 shaped by the developments in the Basel III framework, post-COVID regulation or the first European banking climate stress tests, 2023 is looking set to be a key year in terms of digital regulation. Thus, the regulatory framework for cryptoassets and the digital euro will be two of the major issues on the agenda in the coming months. There are also expectations that the Basel III regulation will be finalized, that progress will continue to be made in sustainability and that proposals will be presented in Europe to improve the crisis management framework.

Many would agree that the sustainable finance regulatory agenda has been increasingly growing in both intensity and complexity over the last few years. We hope that 2023 will be the year in which this regulatory framework is consolidated, all the pieces fit together, and the inconsistencies found are corrected.

The finalization of Basel III, post-COVID regulation, artificial intelligence and the crypto world, or international coordination in the supervision of sustainable finance are some of the trends that will mark the regulatory agenda in 2022. Santiago Fernández de Lis, Head of Regulation at BBVA, reviews the keys to financial regulation in the year that has just begun.

The BBVA Group is debuting fully digital retail banking in Italy, with a unique value proposition and customer experience. BBVA is entering the Italian market with free digital banking; one of the most secure cards in the world - as there are no printed numbers on the card, and a dynamic CVV - unmatched in Italy; and financing products at competitive prices.

Following the European Central Bank (ECB) decision to lift its recommendation limiting shareholders’ distributions, BBVA’s Board of Directors has resolved the payment of a cash interim dividend of €0.08 (gross) per share on account of the 2021 dividend, to be paid on 12 October 2021. The net dividend per share would stand at €0.0648. The bank will make this payment to its shareholders on October 12, 2021.

To measure and understand a banking entity's credit quality, several metrics must be considered as an interrelated whole. One indicator in isolation cannot give a full picture of credit risk. The three most widely used metrics are the NPL ratio, the coverage ratio and the cost of risk. These metrics enable us to analyze the volume of non-performing assets in relation to the size of an entity's loan portfolio, the provisions recognized to cover future default losses and the annual cost of generating this buffer of provisions.

Digital identity enables people, businesses and governments to interact in the digital world. It also facilitates remote transactions - e-commerce, payments or taxes - and access to sensitive services, such as healthcare, accelerated by the pandemic. Therefore, citizens and businesses should be able to use a digital ID, valid within and between countries. Banks, with extensive experience in creating digital identification processes for their customers in a highly regulated environment, could be key players in future internationally accepted and reliable digital identification systems.

BBVA has been involved in the creation of Pinakes, the Interbank Cooperation Center (ICC) platform that simplifies the provider evaluation process in areas relating to cybersecurity. The aim of this platform is to offer the 124 financial institutions associated with the ICC and the more than 400 providers that provide products and services to the financial sector a new efficient mechanism for ensuring their reliability and ensuring compliance with the demanding banking sector regulations when it comes to managing technological risks.

Just as every year since 2012, BBVA has voluntarily released its Global Tax Contribution report. In 2020, the Group carried out an additional exercise of transparency including, for the first time ever, non-financial public information in standard GRI 207. This standard allows entities to disclose comparable information regarding their fiscal strategy, governance model and tax risk management, as well as their contribution on a per country basis. Overall, BBVA Group’s worldwide tax contribution in 2020 amounted to €8.33 billion.

EduFin Summit, the annual benchmark event on financial education organized by BBVA's Center for Financial Education and Capability, is back after a year of absence due to the pandemic. This year's online edition will begin on May 12 for five days during a three-week-period. Edufin Summit 2021 will address the state of financial education in the post-COVID era and the value of financial knowledge for contributing to inclusive growth, among other topics.

The many manifestations of COVID-19 have made us susceptible to associating any of its wide-ranging symptoms to the virus and we forget that other conditions still exist and need to be tended to. More worrisome is the fact that globally, public health measures to control the pandemic, including mobility restrictions and prioritization of COVID-19 treatment, coupled with the economic crisis that is producing an increase in poverty, has made it even more challenging for low-income patients to access treatment in a timely manner. In Latin America, according to Pfizer, the number of medical consultations  and oncological visits nearly halved. Moreover, in the region, having medical coverage and access to basic health care is limited to very few people.

For yet another year, the Organization for Economic Cooperation and Development (OECD) has published the data reported by nearly 40 of the largest foundations in member countries of the Development Assistance Committee (DAC), to showcase the impact of private philanthropy. For second year running, the BBVA Microfinance Foundation (BBVAMF) ranks as the leading contributor to development in Latin America, and the world's second, next to the Bill and Melinda Gates Foundation.

45 minutes by motorcycle, half an hour by boat and 15 minutes on foot. That is how Sergio Pacheco and Victor Madera, loan officers of the BBVA Microfinance Foundation in Colombia, manage to bring financial services where no one else does. This journey is just one example among the numerous cases that can be found in the countries where the Foundation works. These are the lengths to which they go to reach those who live outside the financial system, which is another barrier to their progress. In 2020, BBVAMF has banked nearly 300,000 people in Colombia and Peru, and its two institutions combined have reached more than 2.1 million clients.

Among the novelties in BBVA´s 2020 results presentation is its objective of repurchasing 10 percent of the shares once the sale of the subsidiary in the United States is completed with the capital generated by this operation. At the press conference, Carlos Torres Vila, BBVA Group´s Executive Chairman, stated that "we are saying loud and clear that we consider BBVA´s share the best investment we can make." In addition, he reviewed different strategic options that the bank was considering for investing that capital.

How do you know if a banking product is sustainable and contributes to the protection of the environment? In 2020, 26 banks including BBVA, tested how the European Union's taxonomy on sustainable activities could be applied to core banking products. Common criteria for determining which products are sustainable could allow banks to drive sustainable financing for the entire economy.