bbva financial results & digital transformation€¦ · digital disruption fraud rationale •...

BBVA Financial Results

& Digital Transformation

June 2019

Index


Digital Transformation

Sustainable Pledge 2025

01

02

03

Data Sharing & Cybersecurity 04


01

4 BBVA Financial Results & Digital Transformation

BBVA offers a global presence

FINANCIAL HIGHLIGHTS (MARCH 2019)

Total assets

691,200 €m

Loans

393,321 €m

Deposits

378,527 €m

NAP 1Q19

1,164 €m

NPL ratio

3.9% Coverage ratio

74%

CET 1 FL

11.35%

TBV per share + Shareholders remuneration

6.10 € +11% vs Mar-18

ROE

9.9% ROTE

11.9%

SUSTAINABLE DEVELOPMENT AND DIRECT CONTRIBUTION TO SOCIETY

ALLOCATED TO SOCIAL PROGRAMS BBVA’S PLEDGE 2025

€100 billion MOBILIZED between 2018 and 2025

€104.5 million

CUSTOMERS & DIGITAL SALES (MARCH 2019)

countries branches employees

>30 7,844 125,749

CUSTOMERS

75.7 m

Digital customers

28.4 m

Mobile customers

24.4 m

DIGITAL SALES

PRV

42.6% Units

56.8%


With high growth prospects and leadership positioning

LEADERSHIP POSITIONING MARKET SHARE (IN %) AND RANKING

13.2% #3

SPAIN

6.2% #4

USA (SUNBELT)

22.3% #1

MEXICO

18.3% #2

TURKEY

8.5% #3

ARGENTINA COLOMBIA PERU

10.3% #4 20.0% #2

HIGHER GROWTH PROSPECTS THAN PEERS GDP GROWTH (YOY, %)

BREAKDOWN BY BUSINESS AREA TOTAL ASSETS Mar.19

GROSS INCOME 1Q19

BBVA Footprint

Eurozone + UK

67% Developed Markets

39% Developed Markets


Resilient capital position

CET1 FULLY-LOADED (%) HIGH QUALITY CAPITAL - LEVERAGE RATIO FULLY-LOADED (%)

European Peers Group: BARC, BNPP, CASA, CS, CMZ, DB, HSBC, ISP, LBG, RBS, SAN, SG, UBS, UCG. European Peer Group figures as of Dec-18. BBVA figures as of Mar-19

Absorbing -11 bps of IFRS16

impact

11,34% 11,35%

dic-18 mar-19

6,4%

5,0%

BBVA European Peer GroupAverage

#1


Principles of BBVA Group’s self-sufficient business model: Multiple Point of Entry

No liquidity transfers between the parent and subsidiaries or among subsidiaries

Guidelines for capital and liquidity / ALCO supervision

Common risk culture

Subsidiaries

Corporate Center

Self-sufficient balance-sheet management

Own capital and liquidity management

Market access with its own credit, name and rating

Responsible for doing business locally

Advantages

Medium term orientation / consistent with retail banking

Improves risk assessment: imposes market discipline and proper incentives to reach sustainable credit growth

Absence of cross-funding or cross-subsidies

Helps development of local capital markets

It curtails the risk of contagion: natural firewalls / limited contagion

Safeguards financial stability / proven resilience during the crisis

Liquidity and capital buffers in different balance sheets

Decentralized model


BBVA Group Ratings by Agency

All Rating Agencies assign BBVA a rating on the single A space

BBVA LONG TERM ISSUER/SENIOR UNSECURED RATINGS

Stable outlook (Aug. 29th, 2018)

Moody’s

A3

Negative outlook

(Aug. 20th, 2018)

S&P

A-

Negative outlook

(Dec. 5th, 2018)

Fitch

A-

Stable outlook (Mar. 29th, 2019)

DBRS

A (High)

Stable outlook (Oct. 26th. 2017)

Scope

A+

Digital Transformation

02


Reshaping of the financial industry

REGULATORY PRESSURE AND THE IMPACT IN PROFITABILITY

NEW PLAYERS ARE ENTERING THE VALUE CHAIN

TRANSFORMING TECHNOLOGIES AND USE OF DATA

BANKS ROE EVOLUTION1 (%)

13,0

-11,6

4,9

8,1

2,4

0,9

1,9

4,2 4,2

2,2

4,6

7,5

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

Big Data

Biometrics

Cloud

I.A. 2

Blockchain

Data processing

(1) Source: BBVA; Banks in peer group: Santander, Deutsche, Commerzbank, BNPP, SocGen, CASA, Intesa, Unicredit, HSBC, Barclays, Royal Bank of Scotland, Lloyds, UBS y Credit Suisse, Citigroup, Bank of America, JP Morgan y Wells Fargo

(2) Artificial Intelligence


BBVA’s transformation journey

The past… …tomorrow… …today… …the future

DIY SMART

INTERACTIONS DLT / Blockchain

/ Dapps/…?

Bank Digital Bank Digital Company (ecosystem)

Decentralized Economy


Our transformation is truly client centric…

Digital Customers (Mn, % growth)

Mobile Customers (Mn, % growth)

Digital Sales (% of total sales YtD, # of transactions and PRV*)


The impact of transformation

GROWTH Digital driving growth

ACTIVE CLIENTS GROWTH (# OF CLIENTS, BBVA GROUP)

+4.6 million

in the last 2 years

HIGHER ENGAGEMENT AND CROSS SELL (# MULTIPRODUCT CUSTOMERS, 3 MONTHS AFTER ONBOARDING, PERU)

2.4x

With new digital tools

NETWORK PRODUCTIVITY

Devoting more time to advice and sales

BRANCH PRODUCTIVITY (PRODUCTS SOLD PER BRANCH PER MONTH, USA)

+42%

in the last 2 years

PROCESSING COST PER TRANSACTION (€/Tx, BBVA GROUP)

ENGAGEMENT AND TRANSACTIONALITY Being in the cash flow of our clients

-31%

in the last 2 years

EFFICIENCY Reducing transaction costs


… and having a huge positive impact

Reference group: Spain: Santander, CaixaBank, Bankia, Sabadell// Mexico: Banamex, Santander, Banorte , HSBC // Turkey: Akbank, Isbank , YKB, Deniz, Finans / / Peru: Interbank, BCP, Scotiabank // Uruguay: ITAU, Santander, Scotiabank // Paraguay: Continental, Itau, Regional.

BBVA NPS DEC-18

Spain

Mexico

Turkey

Peru

Uruguay

Paraguay

#1

#1

#1

#1

#1

#1

ATTRITION RATE - DIGITAL VS NON DIGITAL CLIENTS

Non digital clients Digital clients

-47%

#1

Sustainable Pledge 2025

03


70% RENEWABLE ENERGY

68% CO2

EMISSIONS REDUCTION

Pledge 2025

Our purpose: to bring the age of opportunity to everyone

BBVA strategy on climate change and sustainable development

To finance To manage To engage We will help to create the scale of capital mobilization to halt global climate change & attain the UN Sustainable Development Goals

We will manage our environmental & social risks to minimize potential negative direct & indirect impacts

We will engage with all our stakeholders to collectively promote the contribution of financial industry to sustainable development

Transparency in carbon-related exposure

Activity progressively aligned with the Paris Agreement

Sector norms in mining, energy, agribusiness & infrastructure

TCFD recommendations implementation on 2020

Financial education

Promotion of Responsible Banking standards within the industry

Green finance

Sustainable infrastructure and agribusiness

Financial inclusion & entrepreneurship

€100 Billion MOBILIZED

ACTIVE COLLABORATION


Green lending to companies & institutions

Green bonds intermediated as bookrunner

Energy efficiency, water & waste management & solutions for SMEs & individuals

Green investment funds & equity

Project & corporate lending in education, health & affordable housing

Social bonds intermediated as bookrunner

Social investment funds & equity

Agribusiness lending under sustainability criteria

Lending to underserved

Lending to vulnerable microentrepreneurs

Lending to women entrepreneurs

New digital business

Impact investment

A €100 Billion mobilization between 2018 and 2025

Transition to a low carbon economy

Infrastructures & agribusiness

Financial inclusion & entrepreneurship

€ 70 BILLION

€ 12 BILLION

€ 18 BILLION

To finance To manage To engage

Data Sharing & Cybersecurity

04


Data Sharing - What are we calling for?

A NEW EU REGULATION PROVIDING A COMPREHENSIVE USER DATA SHARING FRAMEWORK

Principle User control (“consent”) regarding what data to share and with whom

What data? All large firms, all provided + observed electronic data regarding the user

How Use of APIs: real-time, standardised, secure data transfers (as in PSD2)


KEY RISKS

Data loss (reputation)

Digital disruption

Fraud

RATIONALE

• Workplace environment as a common target of attacks

• Malware / APT taking advantage of vulnerabilities

• Uneven control in third parties accessing information

• Big amounts of information accessible in big data environments

• Exposed cloud environments prone to admin errors

• DDoS with growing bandwidth and attacking the application layer

• Cloud perimeter exponentially increasing

• Ransomware taking advantage of vulnerabilities

• Technology/processes failures in complex/distributed environments

• Resources stolen for cryptocurrencies mining

• Increase in card not present & e-commerce fraud

• Internet banking fraud using social engineering and malware

• Spear attacks to SWIFT environments

• Growing severity of ATM attacks like jackpotting

High level priorities


& Digital Transformation

June 2019

bbva financial results & digital transformation€¦ · digital disruption fraud rationale •...

Documents