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Shareholders' meeting 18 Mar 2022

"The invasion of Ukraine will have structural consequences on the global economy"

Carlos Torres Vila, Chair

  • Ukraine: ”The Russian invasion of Ukraine represents an enormous human tragedy.”  “There is no doubt that the war will increase inflation and will negatively impact growth”
  • Strength: BBVA has great capacity to continue growing and to take advantage of the opportunities provided by the two major trends that are defining the future: innovation and sustainability
  • Shareholders distributions: The total amount could reach up to €5.5 billion, taking into account the highest cash dividend per share of the past ten years, €0.31 per share, and the €3.5 billion share buyback program underway.

Onur Genç, CEO

  • Results: We have posted “the highest recurring profit of the past 10 years.” The Group’s excellent earnings “are the result of a superb performance in all of our countries.”
  • Goals: “We have set some very ambitious goals that show our commitment to profitable growth and value creation for shareholders”
  • Team: “None of this would be possible without the best team. Everything we have achieved and our future successes are and will be thanks to the people that make up BBVA”

On Friday, BBVA is holding its Annual General Meeting at Bilbao’s Euskalduna Conference Center. Before going over the figures from 2021, Chair Carlos Torres Vila spoke of the invasion of Ukraine, which above all, represents an “enormous human tragedy.” In that regard, he said that beyond its immediate impact, this war “will have structural consequences on the global economy,” conditioning international relationships in all areas. “We are facing a new world order,” he added. 

At BBVA, “we are helplessly watching the situation, with great sadness and concern, hoping that this will end as soon as possible,” Carlos Torres Vila said. He also said there was a moral obligation for everyone to help alleviate the repercussions of this war. “It is our duty and responsibility to keep helping in everything we can.”

In this sense, the bank has contributed to the response to the humanitarian emergency in Ukraine, with a donation of €1 million, and a campaign among customers and employees that has already raised €1.7 million. The Chair also said that “from BBVA, we are collaborating with the authorities, making available a series of facilities to help shelter the refugees.”
From an economic standpoint, “although we expect the recovery to continue in 2022, the invasion significantly increases the uncertainty around the evolution of the global economy,” the BBVA Chair assessed. Following an initial negative impact on the financial markets and commodity prices, Carlos Torres Vila expects the armed conflict to reduce growth and increase inflation.

The BBVA Chair feels that: “Europe is providing an immediate and coordinated response to the crisis. With it, it is sending a clear sign of commitment to greater European integration to tackle the enormous challenges - both humanitarian and strategic.” From an energy perspective, Carlos Torres Vila is anticipating that “Europe must move toward a greater energy independence, which should serve to mobilize the economy toward renewable energies with greater speed, if possible.”

In this context, the BBVA Chair underscored that BBVA faces this environment of uncertainty from a position of strength. In 2021, “BBVA posted the highest recurring profit of the past decade, €5.07 billion,” he recalled. Carlos Torres Vila also underlined the strength of BBVA’s capital ratio, which stood at 12.75 percent at the end of the year.

Thanks to these metrics, “we were able to significantly increase shareholders’ distributions,” he underscored. “This year we are proposing the highest cash dividend per share of the past ten years: €0.31 per share.” Likewise, in 2021, “we announced one of the largest share buyback programs in Europe, for an amount of up to €3.5 billion.”

“In total, distributions to our shareholders could reach up to €5.5 billion, taking into account the dividend and the buyback program,” he said. In 2021 BBVA increased its dividend policy, raising the payout to a range between 40 and 50 percent of profit.

Carlos Torres Vila explained that BBVA’s strength also offers great capacity to continue growing and take advantage of the opportunities provided by the two major trends that are defining the future: innovation and sustainability.

Likewise, the BBVA Chair stressed that BBVA’s digitization strategy represents a competitive advantage, which “allows us to offer more convenient, simple and accessible channels to our customers.” At the same time, “branches continue to be a fundamental channel for advisory services.” “We must ensure that the benefits of digitization reach everyone. That’s why we have put in place initiatives to facilitate the adaptation of the elderly or those with special needs, and we will continue to work to leave no one behind,” he added.

Digitization increases the growth of business activity and “allows us to enter new markets,” as demonstrated by the investments in Atom in the U.K., Solarisbank in Europe, Neon in Brazil, and the launch of a digital bank in Italy.

Beyond digitization, “We are facing an unprecedented wave of disruption,” with technologies such as artificial intelligence, cloud computing, blockchain, the internet of things and robotics, he said. BBVA wants to take advantage of the opportunities provided by all this innovation and “become the bank of the companies that are defining the future.” “We are going to increase our investments beyond the fintech sector, in the blockchain ecosystem and in innovative greentech companies,” he announced.

Carlos Torres Vila then spoke of decarbonization - “maybe the most relevant disruption in history” that requires a huge investment. “BBVA is at the forefront of the banks that can take advantage of this gigantic opportunity, offering advice to our clients and financing those investments,” he indicated.

In 2021, BBVA made progress in its sustainability strategy, setting intermediate reduction targets for CO2 intensive industries by 2030, such as electricity, automotive, steel, cement and coal industries. In the case of the latter, the bank will stop financing coal completely by 2030 in developed countries, and by 2040 in all other countries. the rest of the countries. Likewise, last year the bank doubled its 2025 Pledge to channel up to €200 billion in sustainable finance. Since 2018 BBVA has channeled €86 billion in sustainable finance, with €35.4 billion in 2021 alone. For the first time, BBVA is at the top of Dow Jones Sustainability Index’s global ranking of banks.

To promote inclusive growth, BBVA launched a social plan in 2021 with the goal of allocating €550 million to social initiatives through 2025, in conjunction with the Group’s Foundations, and granting more than €7 billion in microcredits. In this regard, Carlos Torres Vila made special mention of the work of BBVA Microfinance Foundation and its support in favor of entrepreneurs, and the role of the BBVA Foundation in fields like science, education and culture.

Carlos Torres Vila ended his presentation by referring to the team that makes up BBVA. “We have the best, most committed team without a doubt.” The BBVA Chair recalled that “in 2021 we had to carry out a workforce adjustment in Spain to ensure employment sustainability and the bank’s competitiveness, in a context of profound transformation of the banking industry.”

The bank also progressed in terms of diversity. BBVA increased the percentage of women on the Board, which will reach 40 percent following the appointment of Connie Hedegaard. Carlos Torres Vila was particularly proud of the fact that BBVA is presiding over REDI, the corporate network for LGBTI diversity and inclusion in Spain. “We will continue working to ensure that BBVA is the most open, inclusive workplace possible,” he said.

BBVA’s strengths, the keys to facing future challenges

After Carlos Torres Vila finished his presentation, the CEO took the floor. In his speech, Onur Genç stressed the strength of the 2021 results, with “the highest recurring profit of the past ten years,” putting BBVA “at the top of the European sector in terms of efficiency and profitability.” In this regard, he emphasized that “these excellent results on a Group level are the result of superb performance from all of our countries.”

Onur Genç went over BBVA’s strengths. First, its leading franchises, with a double-digit market share in all countries, and profitability above its competitors. Second, the digitization process, which he summarized in four steps: first, the servicing and simple transactions phase; then, the acceleration of digital sales; growing the customer base in the third phase; and fourth, digital advice. “At BBVA we are using data and technology to improve the financial health of our customers.”

The third strength is being at the cutting-edge in sustainability, as a key driver of growth. Currently, 12 percent of new loan production at BBVA comes from sustainable finance, compared to nearly zero three years ago. This growth is due to the fact that BBVA is a pioneer in helping customers in their transition toward a more sustainable world, with advice and new products and services.

Fourth is BBVA’s capital position (with a fully loaded CET1 ratio of 12.75 percent at the end of the year), clearly exceeding the regulatory requirement and the bank’s target range. The CEO underlined “the capital’s resilience thanks to our unique business model.”

The fifth strength is the team. Onur Genç is “very proud of our employees’ commitment.” “None of this would be possible without the best team. Everything we have achieved and our future successes are and will be thanks to the people that make up BBVA,” he stressed.

“All these strengths are the key to the excellent results we have achieved, and they ensure the recurrence of future results,” the CEO said. Onur Genç also recalled the goals set by BBVA at its Investor Day. In his words, “ambitious goals that demonstrate our commitment to sustainable growth and value creation for shareholders.”

To conclude, he assured shareholders that “we will continue working to be the best bank, inspired by our purpose of bringing the age of opportunity to everyone.”