BBVA Bank of America Merrill Lynch 21st Annual Financials CEO Conference. Jaime Sáenz de Tejada, Chief Financial Officer London, September 29 th 2016

Transcription

1 BBVA Bank of America Merrill Lynch 2st Annual Financials CEO Conference Jaime Sáenz de Tejada, Chief Financial Officer London, September 29 th 206

2 Disclaimer This document is only provided for information purposes and does not constitute, nor should it be interpreted as, an offer to sell or exchange or acquire, or an invitation for offers to buy securities issued by any of the aforementioned companies. Any decision to buy or invest in securities in relation to a specific issue must be made solely and exclusively on the basis of the information set out in the pertinent prospectus filed by the company in relation to such specific issue. No one who becomes aware of the information contained in this report should regard it as definitive, because it is subject to changes and modifications. This document contains or may contain forward looking statements (in the usual meaning and within the meaning of the US Private Securities Litigation Reform Act of 995) regarding intentions, expectations or projections of BBVA or of its management on the date thereof, that refer to or incorporate various assumptions and projections, including projections about the future earnings of the business. The statements contained herein are based on our current projections, but the actual results may be substantially modified in the future by various risks and other factors that may cause the results or final decisions to differ from such intentions, projections or estimates. These factors include, without limitation, () the market situation, macroeconomic factors, regulatory, political or government guidelines, (2) domestic and international stock market movements, exchange rates and interest rates, (3) competitive pressures, (4) technological changes, (5) alterations in the financial situation, creditworthiness or solvency of our customers, debtors or counterparts. These factors could cause or result in actual events differing from the information and intentions stated, projected or forecast in this document or in other past or future documents. BBVA does not undertake to publicly revise the contents of this or any other document, either if the events are not as described herein, or if such events lead to changes in the information contained in this document. This document may contain summarised information or information that has not been audited, and its recipients are invited to consult the documentation and public information filed by BBVA with stock market supervisory bodies, in particular, the prospectuses and periodical information filed with the Spanish Securities Exchange Commission (CNMV) and the Annual Report on Form 20-F and information on Form 6-K that are filed with the US Securities and Exchange Commission. Distribution of this document in other jurisdictions may be prohibited, and recipients into whose possession this document comes shall be solely responsible for informing themselves about, and observing any such restrictions. By accepting this document you agree to be bound by the foregoing restrictions. 2

3 Resilience in a Challenging Environment Lower interest rates for longer in Europe Slowdown in macro and loan growth in developed markets Complex political environment Peer Banks ROE Evolution (%) 5.8% 5.6% 7.0% 2.7%.5%.7% 5.3% 4.0% 4.4% BBVA Strengths 2 Diversified retail banking business model Strong solvency position Regulation Transformation of the banking industry % H6 Peers included: BBVA, BA RCL, BNPP, BOA, Citi, CASA, CMZ, CS, DB, HSBC, ISP, J PM, LBG, RBS, SAN, SG, UBS, UCI and WFC. 3 Leading transformation strategy 33

4 High growth footprint Diversified retail banking business model Geographically diversified business offering higher growth prospects Gross Income breakdown H6 (%) () GDP growth estimates (%) BBVA s footprint in South America Rest of Eurasia 6% 2% 27% Mexico Developed Markets e 207e Turkey 7% Emerging Markets 2.8 USA % 27% Spain 206e 207e BBVA s Footprint (2) Eurozone + UK (3) e 207e Contained exposure to NIRP: <30% of Group s Gross Income () Excluding the Corporate Center. (2) GDP estimates according to BBVA Research. Weighting based on the countries contribution to H206 BBVA s Gross Income. Developed Markets include mainly Spain and USA. Emerging Markets include Mexico, Turkey, Argentina, Bolivia, Chile, Colombia, Peru, Paraguay, Uruguay and Venezuela. (3) Eurozone countries and UK weighted by their GDP size and Purchasing Power Parity. 4

5 High quality franchises in core markets Diversified retail banking business model Leadership positioning Market share and ranking by loans () (%) and ranking Spain Strategic Positioning and Management Focus Strong well-balanced footprint with a focus on spread management and cost control Mexico # 23.8% US (Sunbelt) #4 6.3% South America # 0.4% Spain #2 4.4% Turkey #2.8% Mexico South America Turkey Leadership in market share and profitability, levered by a USD 3.5bn investment plan A diversified country mix with solid risk management, which has offered an ongoing contribution to the Group s results Leading franchise in a high-growth market despite the volatile environment US Growth focused on profitability leveraging on the Group s digital transformation () Spain: Market data based on Bank of Spain other domestic sector and public sector loans (Jun 6), ranking based on AEB and CECA; Mexico data as of Jul 6; South America data as of Jun 6 and ranking considering only our main peers in each country; USA: SNL data as of Jun 5 market share and ranking by deposits considering only Texas and Alabama; Turkey: BRSA performing loans data for commercial banks as of Jun 6; ranking only considers private banks. 5

6 providing resilience and low volatility of earnings Profit generation all through the crisis Diversified retail banking business model BBVA Pre-Provision Profit vs. Provisions ( bn, %) 4.2% 4.5% 3.8% 2.5% 3.2% 3.7% 3.3% 3.0% 2.8% 3.0% Pre-Provision Profit / RWA () Pre-Provision Profit Provisions and impairment of non-financial assets H6 BBVA has generated positive results and paid dividends all through the crisis () H6 annualized for comparative purposes. 6

7 as evidenced by 206 EBA stress test BBVA in the Adverse Scenario: The only bank generating positive results Profit generation in the adverse scenario Cumulative ( mn) -8,522-5,93-4,542-4,723-4,98-5,67-2,779-3,032 -, BBVA Peer Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Peer 0 Peer Peer 2 Resilient capital position Diversified retail banking business model CET Fully Loaded ratio evolution in the adverse scenario (bps) -99 Peer BBVA -226 Peer -236 Peer 5-29 Peer 2-32 Peer 8-39 Peer Peer Peer 6-34 Peer Peer -47 Peer Peer 2 Source: BBVA based on 206 EBA stress test. Note: Peers included: BARC, BNPP, CASA, CMZ, DB, HSBC, ISP, LBG, RBS, SAN, SG and UCI. 7

8 BBVA Spain P&L drivers in a challenging revenue environment Stable Customer Spread: Active price management Diversified retail banking business model Focus on non-interest related revenues 3,304Mn H6 Gross Income Spain Banking activity (%) Lending yield Customer spread Total cost of deposits 4Q5 Q6 2Q6 Small Euribor repricing pending Still room for improvement (Time deposits front book at 4bps) Net Fees & Commissions and Insurance Results (excl. CX, mn),645,728 +0%,83 H6: 884 mn, 29% of Gross Income H6-4% -7% Efficiency: an on-going management priority Spain Banking activity () (%) Branches Total expenses 436 branches already closed in 206 (i.e. 2% of branch network) 200 mn cost synergies from CX, achievable in 207 (i.e. 6% of current cost base) () For comparison purposes, expenses exclude CX and the reallocation of expenses from the Corporate Centre to Spain Banking Activity in 205. The reduction in provisions will remain a P&L driver Cumulative Cost of Risk Spain Banking Activity + Real Estate (bps) e e < 60 bps 8

9 Mexico (BBVA Bancomer) Solid growth, profitability & leadership Diversified retail banking business model 3,309Mn H6 Gross Income Strong activity dynamism and profitable balance sheet structure Gross loans growth (YoY, %) % % Jun 6 206e Deposits Mix (Jun 6, %) () Data based on local criteria. Source: CNBV. Double digit growth, slower in 2H vs. H Demand Deposits Time Deposits CoR evolution in line with 206 guidance Cumulative Cost of Risk (bps) : Growth accelerating in consumer & SME e around 350 bps H6 206e ROE ROA NIM Efficiency Best profitability in the system Bancomer vs. system () (Jul 6, %) 206 Net attributable profit expected to grow around double digit in local currency Exchange rate evolution as the main headwind BBVA Bancomer System ex Bancomer

10 BBVA South America Sound and sustainable growth Diversified retail banking business model,999mn H6 Gross Income A well-diversified footprint Net attributable profit breakdown (H6, %) Banco Continental (Peru) BBVA Chile 20% Banco Provincial (Venezuela) & Other () 4% 2% 3% 33% BBVA Colombia Banco Francés (Argentina) Favorable evolution of CoR in a slowing macro Annual GDP growth BBVA s footprint in South America (%) (2) e Cumulative Cost of Risk (bps) e in line with H6 206e Better asset quality than peers BBVA South America vs. System (3) (Jun 6).8 NPL ratio (%) Coverage ratio (%) Cost of Risk (bps) BBVA S.Am System ex BBVA S.Am. Net attributable profit, expected to fall around 0% in 206 vs. 205 in current () Other includes Paraguay, Uruguay and Bolivia. Additionally, it includes eliminations and other charges. (2) Source: BBVA Research. Weighting based on the countries contribution to H206 BBVA s Gross Income. (3) Data based on local criteria. Source: Local Superintendencies. 0

11 Turkey (Garanti) Robust profitability & best-in-class player in a volatile environment Diversified retail banking business model 2,54Mn H6 Gross Income Excellent price management, highest NIM among peers Sound asset quality maintained Sustainable competitive advantage Cumulative NIM () NPL and Coverage ratios and CoR evolution Garanti vs. system (3) (%) (Jun 6, %) Coverage Ratio (%) ROE NPL Ratio (%) ROA Garanti 205 H6 Cumulative Cost of Risk (bps) e in line with 205 Efficiency System Garanti Peers Average (2) H6 206e CAR e Net Attributable Profit at a Group level fully hedged, very low sensitivity of the Group s CET to TRY (4) Around -5bps estimated impact on Group s CET from Moody s downgrade on Turkey () Local Bank-Only data. (2) Peers: Akbank, Halkbank, Isbank, Vakifbank and Yapi Kredi. (3) Local bank-only data. Commercial banks only. (4) Turkish Lira.

12 USA Selective growth, monitoring asset quality evolution Diversified retail banking business model,330mn H6 Gross Income Well positioned to benefit from interest rate hikes Customer spread evolution (%) Evolution in line with 206 Cost of Risk guidance Cumulative Cost of Risk (bps) Managing Oil & Gas exposure BBVA Compass Oil & Gas funded credit exposure Dec 5 FED +25bps 3.% 3.0% 3.0% 3.9% 3.2% e around 55 bps 3.6 bn 6.% of credit risk 2Q5 3Q5 4Q5 Q6 2Q H6 206e QoQ exposure reduction (-8% vs Q6) No 2 nd round effects so far Management focus on capital allocation and cost control, key drivers to improve profitability 2

13 BBVA, well-positioned to face upcoming regulatory developments (/2) 2 Strong solvency position Solid Capital Ratios BBVA Group s fully-loaded capital ratios Jun 6 5.3% 3.0% Tier II Ability to generate Capital BBVA Group 206 CET fully-loaded ratio evolution 0.46% 0.09% -0.7% CET phased-in: 2.03% vs. 9.75% 206 SREP requirement.5% 0.7% AT %CET FL 0.33% 0.7% AT and T2 buckets already covered % CET FL (Dec.5) Net Earnings Dividends Others % CET FL (Jun.6) Around -5bps estimated impact on Group s CET FL from Moody s downgrade of Turkey On track to achieve CET fully-loaded % target in 207 3

14 BBVA, well-positioned to face upcoming regulatory developments (2/2) High quality capital Less dependent on internal models than peers 2 Strong solvency position RWAs / Total Assets Jun 6 53% Leverage ratio Jun 6 BBVA # 6.4% 3% European Peer Group Average 4.5% () Credit Risk RWAs: breakdow n by Model (2) 66% Standardized Models Peers avg.: 34% 34% Internal Models Peers avg.: 66% BBVA # European Peer Group Average () () European Peer Group: BARC, BNPP, CASA, CMZ, CS, DB, HSBC, ISP, LBG, RBS, SAN, SG, UBS and UCI. (2) Data as of Dec 5. Based on EBA s 206 EU-wide Stress Test. 4

15 BBVA s transformation journey is embedded in the Group s strategic priorities 2 3 New standard in customer experience Optimize capital allocation Drive digital sales Unrivaled efficiency 3 New business models A first class workforce Leading transformation strategy 5

16 . New standard in customer experience Focus on providing the best Customer Experience 3 Leading transformation strategy 2. Drive digital sales Increasing business done digitally NPS (Net Promoter Score) Jun 6 2% 47% 3% 28% 2% 33% 22% 68% Digital Customers Mobile Customers BBVA Group (mn) 6.7 BBVA Group (mn) % +45% Dec Jul 5 Jul Dec Jul 5 Jul 6 st st 6 th st 3 rd st 2 nd st Peers included: Spain: Santander, CaixaBank, Bankia, Sabadell, Popular. // USA: Bank of America, Bank of the West, Comerica, Frost, Chase, Regions, US Bank, Wells Fargo. // Mexico: Banamex, Santander, Banorte, HSBC. // Peru: BCP, Interbank, Scotiabank. // Argentina: Banco Galicia, HSBC, Santander Rio. // Colombia: Bancolombia, Davivienda, Banco de Bogotá. // Chile: BCI, Banco de Chile, Santander. // Venezuela: Banesco, Mercantil, Banco de Venezuela. // USA and Peru: Data as of Dec 5. Digital Sales growth % of total sales YtD, # of transactions Spain Dec 5 Jun 6 Mexico Dec 5 Jun 6 South America Dec 5 Jun 6 6

17 3. New business models 3 Leading transformation strategy Leveraging on Fintech ecosystem to develop our value proposition Internal incubation Strategic partnerships Open Platform Enable new developments combining BBVA s APIs, client s technology and other building blocks Acquisitions Investments (venture capital) API Client API Client API Client 3rd party API BBVA Open API s 3rd party API 29.5% stake 7

18 Conclusions BBVA has a well-diversified footprint with leading franchises that provides resilience and low volatile earnings High quality capital and its generation capacity places BBVA in a good position to face upcoming regulatory developments BBVA's leading transformation strategy, embedded in the Group's Strategic Priorities, is key to succeed in the new financial industry 8

19 BBVA Bank of America Merrill Lynch 2st Annual Financials CEO Conference Jaime Sáenz de Tejada, Chief Financial Officer London, September 29 th 206 9