Banco Bilbao Vizcaya Argentaria, S.A. (BBVA) Q4 2024 Earnings Report, Transcript and Summary

Good morning. Welcome everyone and thank you for joining BBVA's Fourth Quarter Results Presentation. I'm joined today by our CEO, Onur Genç; and Luisa Gómez Bravo, the Group CFO. As in previous quarters, Onur will start discussing the group figures and then Luisa will go through the business areas. Finally, we will open the line to receive your questions. Thank you very much for participating. And now I turn the call it over to Onur. Onur Genç: Thank you, Patricia. Good morning to everyone. Welcome and thank you for joining BBVA's 2024 full year results audio webcast. We have a relatively long presentation today because it's the annual presentation, but we do have a commitment to all of you that we will start the Q&A, which is the most interesting part of this session. So I'm going to do some of the pages very quick, but I'll start directly with Page 3. This is the summary for the coming pages. I'll spend a little bit more time on this one, but last year basically our focus was on accelerating profitable growth and I'm very happy to say that in 2024 we continued delivering on this on profitable growth, obtaining the best figures over the last decade in growth, in profitability, in strategic metrics and also in the shareholders distribution. Following the page first at the top, I want to highlight the outstanding value creation and profitability metrics achieved. 17.2% growth of tangible book value per share plus dividends, even in a context of market headwinds, as you all know, and return on tangible equity at 19.7%. We have also continued with a very positive trend in net attributable profit, passing for the first time, obviously the €10 billion threshold and growing our earnings per share by 28% in the last year. Secondly, one of the best ways that we can continue to contribute to our stakeholders and the society is through our activity, our activity of lending and beyond, and basically through growing our business in a way that is profitable. That's why you see the first block that we are delivering on the profitability metrics, but also creating value in this process. In that sense, we have increased our loan portfolio by an exceptional 14.3% and we have acquired a record of 11.4 million new customers, enlarging our client franchise. Third, the financial results we see today derive from the progress in the execution of our strategy on the strategic metrics. 2024 was also an exceptional year. 75% of our clients interacted with us through our award winning mobile app and we also continue benefiting from being pioneers in sustainability. In 2024, we channeled almost €100 billion in sustainable business. And last but not least, all of this is allowing us to significantly increase distributions to our shareholders for a total amount of €5 billion, while at the same time, our CET1 ratio remains comfortably above our target. The payout of €5 billion is equivalent to €0.87 per share, divided into two parts. First, the total cash dividend will be €0.70 per share, and the rest amounting to €993 million. It will be executed in a new share buyback program. And we have some positive news to share here that the CNMV, the Markets Authority of Spain, they have lifted the restriction on our share buybacks going forward as they see no impediment in the context of the several transactions. So we will get going on this program as soon as we can. Page number 4, our tangible details now that I have already highlighted to you in the cover page, but important details. So on Page number 4, our tangible book value per share plus dividends, it continues showing an outstanding evolution. Again, despite relatively high currency depreciation, especially in Mexican pesos, this year we delivered 17.2% growth in tangible book value. Beyond that I want to remind you – beyond the annual figure, I want to remind you of the long-term trend in value creation. Since 2021, our tangible book value per share plus dividends every single year has increased quite nicely with an average compounded annual growth rate of 18.1% in this period of four years. And regarding profitability, we continue to improve our excellent profitability metrics, reaching again 19.7% in return on tangible equity and 18.9% in return on equity. Again, best figures over the past decade. Going to Slide number 5, as I always say, the best measure of our performance is the one where we compare ourselves to competitors. In all the key financial metrics we have done better than our competitors, as you see on the page. One more year, we remain clearly one of the most value creating, most profitable and most efficient European banks out there. Then Slide number 6, same theme. But I love the cosmetics of this page at least. As in the beginning of the last year, we wanted to put our profile into the picture. So you see here basically on Chart 6, on the X axis you see the return on tangible equity as a profitability metric and on the Y axis you saw the 2024 loan growth rate in current euros and you do see our unique profile as the page displays. We stand out in terms of growth, we stand out in terms of profitability and our clear intention is to continue on this path. Slide number 7, you can see the very positive trend in our net attributable profit surpassing the €10 billion threshold, which means doubling our results in three years and growing 25% from the previous year. These results, they bring our earnings per share up to €1.68, an increase of 28% year-over-year higher than the growth of the net attributable profit. Thanks to the share buyback program that we executed in 2024. Slide number 8, the growth of our business through which we create a positive impact on the society. We have increased our loan book significantly by 14.3% in the last year. Again, it sounds like a very high level number, but when you deep dive into it, this implies, this growth implies that during 2024 we helped more than 160,000 families buy their homes. We supported more than 715,000 SMEs and self-employed individuals and around 70,000 larger corporates in financing their own growth and establishing new businesses in the process, some of them were establishing new businesses. As we grow our activity, we believe we promote investment, employment and welfare in the society. Moving to Page number 9, talking a little bit about our strategic metrics, new customer acquisition. As we keep reiterating every single call, expanding our customer base, it will allow us to continue growing our business in a healthy and profitable way, in a healthy way, that's the only way that you create growth without creating too much cost of risk. And in 2024 we have set a new all time record of new customer acquisition with 11.4 million gross new customers. It is impressive to maintain this velocity in our view because year after year because given the fact that we are already one of the largest banks in the countries that we are in and the pool is lower and lower every year, but we keep maintaining this momentum. It is important also to follow the depth of the relationship with these new customers with a clear focus on cross selling, especially to this new group of customers. We have now grown to more than 77 million active customers as of end of 2024, compared to 52.6 million customers at the end of 2018. So we increased our customer franchise by 47% in this period and this is across the segments. You only see here the full numbers for the whole bank, but across segments you see a very similar profile. And maybe one more thing to highlight in this page, this accomplishment was only possible because of the digital strategy. I mean you see it in the line in the chart. The share of digital customer acquisition it increased from 21% in 2019 to 66% in 2024. That is our – in our view one of our key differences versus most of our competitors out there. On Slide number 10 continuing with our strategic pillars, our digital strategy complementing our people capacity, it proved to be essential and differential in serving our customer base. On the left hand side of the slide, our mobile penetration rate, that is the share of clients that use their phones consistently in the relationship with BBVA it has increased from 51% to a record high 75% penetration rate. And at the same time our clients are much more active digitally. As you can see also in the bottom left corner of the page, since 2020 we have doubled the amount of logins per month and multiplied by 2.5 times the amount of transactions in our global mobile app. And I say global mobile app because as practically all of our countries they now share the same app, reutilize, design and certain software components hence enabling efficiency. Investing in our people coupled with our industry leading digital capabilities, it translated into obviously higher client satisfaction. As you can see in the right hand side of the slide, the customer satisfaction measured by the net promoter score it improved by 10 percentage points in the last five years. Clear leadership positions in our core countries and clear leadership positions across the board. Turning to Slide Number 11, sustainability, another cornerstone of our strategy, as I’ve said many times in the past, sustainability is an incredible business opportunity and we are trendsetters in this area. As you can see in this page, we accelerated in mobilizing sustainable business with more than €99 billion channeled only in 2024. This has allowed us to beat our cumulative 2018-2025 goal of €300 billion one year earlier than expected. And on the right hand side of the page we also continue advancing in our portfolio alignment commitments, having reduced by 27% the emissions in our committed portfolios advancing faster than our target, as you can see in the page. And this is the result of our efforts to walk the decarbonization path together with our clients and obviously offering the required advisory in the process. Slide 12, from this slide on I’m going to walk you very quickly through the financials, but very quickly. So let’s not spend too much time on this page as it’s a summary of the pages to follow, but I will talk to you about revenue, costs, asset quality and capital. So moving to Slide 13, the annual P&L, I would just like to highlight the excellent evolution of gross and operating income, growing 20% and 24% in current euros respectively. Slide 14, the P&L for the fourth quarter, I will not again stop long here either, but just to remark on the strong quarterly performance with the net attributable profit above the €2.4 billion mark driven by the good performance in core revenues which is very important to us. Great NII performance, even stronger fee income evolution, fees growing 27% in constant year-over-year. The quarter-over-quarter comparison explained as you can see also in the page, but lower results in NTI, net trading income, and the increase in the expenses explained by the higher variable compensation to our employees due to our outstanding results for which we always do the adjustment in the fourth quarter as you all know. Moving to Slide Number 15 also to highlight some positive signals for the future I want to highlight very positive activity dynamics in our two largest markets: Spain and Mexico. On the left hand side of the slide you can see the strong loan growth in both Spain and especially in Mexico. In the case of Spain we have wonderful news to share, because loan growth has improved compared to last year to an excellent 4.1% and within our most profitable segments, consumer and credit cards, growing at 6.8%, mid-sized companies growing at 6.3%. It’s good news because after so many years of deleveraging we are finally seeing good loan growth in Spain. In Mexico loan growth has also accelerated versus last year to 15.8% year-over-year with high margin consumer and credit cards again growing 15.6%; SMEs growing 19.8%. Excellent figures in my view. And then on the right hand side, looking at customer funds, in both Spain and Mexico, again a positive picture. Strong growth figures in both countries in particular as last quarter, I would like to draw your attention to off balance sheet funds which is on the most right-hand side of the page. We are growing even better here. In the long-term, as you all know these funds provide higher customer satisfaction, are much more sticky, they grow faster leading to strong postings in our fee income line. Again, this page in my view is very good news for the coming quarters as the positive dynamics in activity that you see on the page will provide future strength for BBVA. Moving to Slide Number 16, again regarding our activity growth, it’s always good to compare with competitors. So, it’s not the growth of the industry per se, but it’s also the fact that we are outperforming our competitors in activity which we think is important. And as you see in the bubble the numbers in the page we have gained market share in loans in practically all of our markets in 2024 and all with quite nice gains. And even more remarkable in my view is the trend. When you look into the trend we have followed in the last few years, again we have leading franchises and we keep improving on the strength of our franchises. Slide 17, on costs, I would like to highlight the fact once again that this is part of our DNA. We always look into jaws, we end the year with positive jaws. Gross income growing 25% clearly more than costs. Then on the right hand side of the slide, our efficiency ratio it remains one of the best among our European peers, improving again this year’s 226 basis points to 40%. Slide 18, the evolution of our asset quality they remain in line with our expectations in the context of the activity growth in the most profitable segments, clearly within our expectations. But on the maybe on the cost of risk on the left hand side of the slide at the bottom, cost of risk again stable at 143 basis. Then NPL and coverage ratio, at the right bottom of the slide, they improved underpinned by activity growth. NPL entries decelerating in most geographies like Spain, Spain mortgages with the help of declining rates, higher recoveries and we also did some NPL portfolio sales. And the coverage ratio as you see there, it increases to 80%. Slide 19 on capital we have generated four basis points CET1 ratio in the quarter, leading to a CET1 ratio of 12.88%. This is a quarter where we have had significant market impacts and we had exceptional growth of our loan book. But despite that growth in the CET1 ratio, but if you follow the waterfall, first our results, they contribute 64 basis points, then the dividend accrual on AT1, coupons detracting 35 basis points. Then third in the waterfall you see minus 18 basis points due to RWAs’ growth. This figure embeds again for yet another quarter our ability to grow. We grew 5.2% growth in loan book quarter after quarter. In the fourth quarter, a strong quarterly growth. But on top of that, this result is the outcome of several management actions undertaken to optimize our capital. Actions that we have been working on during these past few months. And now we have started implementing in the last quarter, including significant risk transfers, other balance sheet rotation measures. In total, the contribution from these management measures has been close to 20 basis points in the quarter. And half of this was related to SRTs and securitizations. And lastly in the waterfall you have the bucket of others minus seven basis points, which mainly comprises the market related impacts which have been again relatively high this quarter mainly related to dollar, the dollar appreciation and the mark-to-market of the Held To Collect and Sell portfolios and this is partially compensated by the credit and OC that accounting wise, as you know, neutralizes the deduction in the P&L of the hyperinflationary countries. Lastly, it’s not in the page, but we achieved 21 basis points year-over-year increase in the CET1 ratio. This was accomplished in a challenging currency environment, as you all know, and in the context of extraordinary growth in our lending book. I repeat this because it’s important that you – it’s in the footnote, I think, but you do see that RWA growth in constant euros it consumed 156 basis points in 2024, while that same consumption was 132 basis points last year and 101 basis points in 2022. It is actually wonderful to have this growth because we make sure that this is profitable growth, which then implies that we are hatching future capital returns already with such use of capital. And finally on the page there is a bubble at the top. You see that one more positive news. It’s important to note that the final details of Basel IV basically came out and we now expect no negative CET1 ratio impact from Basel IV in 2025. Slide 20, shareholders distributions, in line with our payout policy, I am very happy to announce once again that the proposal to be sent to the governing bodies contemplates the distribution of a total amount of €5 billion for 2024, equivalent to 50% payout at the maximum end of our distribution policy. This is a 25% more payout as compared to last year. This payout is equivalent to a total shareholder remuneration of €0.87 per share, as I mentioned at the beginning, a total cash dividend of €0.70 which is 27% higher than last year, which implies that €0.41 per share to be paid in April 2025, complementing the €0.29 per share interim cash dividend we did back in October 2024. In addition to the cash dividend, we will be proposing once again a new share buyback program of €993 million, equivalent to 1.6% of BBVA's latest market cap. And I repeat again, the positive news here that CNMV, the markets authority of Spain, has lifted the restriction on our share buybacks. As such, after the required authorizations from the governing bodies and from ECB, which presumably should not take too long given the fact that this is part of our regular payout, we will be able to start executing this share buyback in the coming weeks. Slide 21 and I need to pick up some time. So very quickly going beyond the annual results, I would like to report back on the final numbers around our long-term 2021-2024 strategic goals. In short, again, let me not go into details, but I'm very proud of our teams. I'm very happy to say that we clearly outperformed every single one of the originally established goals of the last Investor Day, and as you can see with quite sizable positive beats in every single one of them. Slide 22, for this same period of 2021-2024, I would like to explain the generation and use of capital to you. This page is very important to us. As you know very well, we always have tangible book value, capital creation, value creation in our presentations. But more importantly, at the core of our management discipline, because this metric, not just pure profit, this metric shows the real value added to our shareholders. So in that sense, we put this page to show you that in this period of 2021-2024, we have generated a cumulative total of €35.6 billion of capital. And as you can see in this slide, what did we do with this capital generation? First, we have continued investing in the future capital generation capacity of the group, mainly by growing our business, our loan book, in a profitable way, and I underscore profitable once again here, which consumed €13.2 billion of capital. Second, we have been accumulating excess capital, as shown in the increase of our CET1 ratio since 2021, in the amount of €4.2 billion. And third, in total, the shareholder distribution would be €18.3 billion cumulative since 2021, €11.9 billion of that in cash dividends and the rest €6.4 billion in share buybacks. It's a wonderful page in my view, and I remind you that we have actually delivered more capital in four years than the market capitalization of the bank at the beginning of this period. In short, I mean, combining it with the previous page, the last strategic cycle for us has been a clear case of successful implementation in our view. And now comes the new strategic cycle covering the 2025-2029 period. In that context, I do one final page, and I give it to Luisa. The final page is our new strategic plan. We wanted to give you a first glimpse on the work that we have just finalized regarding our strategic priorities covering the next five years. We based our new strategic priorities, obviously, on the key opportunities presented by the secular trends surrounding our sector, but also some key areas that we want to upgrade our delivery even more, even more. In that sense, starting from the left-hand side, we want to elevate our aspiration to incorporate the client perspective in everything that any team member of BBVA does, define an industry-leading customer service and satisfaction standard and deliver every day, in and out, against this golden standard. I mean, you have seen that we have improved our customer satisfaction levels significantly in the past five years, but we believe we can do more. And beyond concepts, very tangible, we have defined clear action areas through which we believe we can deliver more and exceptional client service, so we will work on this. Moving to the center of the page, we will continue to drive profitable growth, first, through leveraging sustainability as a business opportunity. Second, we will invest more and increase more the value contribution coming from the enterprise segments. And finally, at the center block, I would highlight this new theme around value and capital creation mindset. Big or small, in our daily decisions, I mean, we should further acknowledge that capital is our scarce resource, and we are here to deliver above the cost of that capital. For example, I mean, in every single loan that we give, the acknowledgment at all levels that we are parking aside a certain amount of capital which should then yield a certain level of return, is critical. And we are going to elevate the importance of this throughout the organization. And lastly, on the right side of the page, the enablers to get it done. We will unlock the strong potential of AI and innovation through improving the availability of data and next-gen technologies, and we will continue to invest in our teams, as always, who are, obviously, the real actors to achieve anything, anything in our business. Now, to be able to explain better the reasons of why we selected these priorities, the details of what they actually mean and our action plans, together, obviously, with the associated financial and strategic goals, we are planning to hold our Investor Day during 2025, and given the Sabadell transaction, we thought it would be better to hold that session later in the year. So we will be updating you about the dates in due time. The only thing I will leave you with, as I close this chapter, is that we continue to see positive numbers in our long-term planning. And our favorite metric of tangible book value per share plus dividends under our baseline FX scenarios, it continues to show strong figures around mid-teens. So we are also quite positive about the long-term. And now for the business areas update, I turn it to Luisa. Luisa Gómez Bravo: Thank you very much, Onur, and good morning, everyone. And we start with Spain on Slide 24. And I'm very happy to say that we've seen Spain deliver quarter-on-quarter. We've seen Spain improving guidance throughout the year. And we're actually seeing Spain delivering yet another amazing quarter and closing an outstanding performance for the year, achieving €3.8 billion of net profit. As Onur mentioned before, activity levels remain robust with strong momentum across all portfolios, driving solid loan growth for the quarter, increasing by that 4.1% in the last year. And I would also like to highlight the very sound loan evolution in the quarter itself with that growth of 2.3% quarter-on-quarter. In 2025, the positive momentum in lending is expected to continue, supported by sound economic growth and lower rates. In such a context, we do expect to continue outperforming the market, growing our loan book by low to mid single-digit. Turning to the P&L. As you see, quarterly results stand at €918 million, one more quarter beating the market expectations. Despite the lower rates, NII in the quarter has proven to be resilient, falling roughly by 1% quarter-on-quarter, supported by robust activity growth, especially in the most profitable segments, effective price management, which I think is very relevant, and higher contribution from the ALCO portfolios. We have also seen a strong quarter in terms of fees with significant contributions from CIB and asset management. In this area, we have benefited from increasing net inflows and the recognition in the quarter of the success fees linked to the fund’s performance in the year. On the expense side, costs were well contained throughout 2024, evolving in line with our guidance and leading to a significant improvement in our efficiency ratio, which stands at an impressive and remarkable 35.3%. Finally, asset quality metrics remained benign, supported by solid underlying trends. The NPL ratio declined, while the coverage level increased to close to 60% and the cost of risk is held steady at 38 basis points. Now let me share our guidance for Spain in 2025, which reflects a continuation of the positive momentum we have built. As I mentioned before, we expect loan growth at low to mid-single digit for 2025, outperforming the market. In a lower rate environment, we anticipate a slight decline in NII supported by continued activity growth and higher contribution from the ALCO portfolio. For fees, we foresee low-single digit growth following an exceptional 2024 performance. We expect expenses to slightly grow below average inflation, maintaining our efficiency ratio at around 36%. Finally, we anticipate the cost of risk to remain stable at or slightly below 38 basis points. In conclusion, this has been an excellent year for BBVA in Spain. Congratulations to all the teams. Looking ahead, the strength of our franchise and our solid delivery track record make us confident in our ability to maintain attractive profitability levels in Spain going forward. Now let’s move to Mexico as shown on Slide 26. Once again, Mexico has delivered exceptional results, and I would like to highlight that in the context of, I think, a very challenging environment throughout the year. And these results have been driven by robust core revenues growth, highlighting our leadership in these key market. Earnings reached €5.4 billion in 2024, growing by close to 6% year-over-year in constant euros. In terms of activity, lending growth accelerated in the fourth quarter, thanks to stronger growth in wholesale and the continued expansion of retail lending at a solid pace. Total loans increased by an outstanding 16%, leading to notable market share gains across the Board, reinforcing our leadership position. As of November, our loan market share stands at 25.4%, increasing by 87 basis points in the year. In terms of results, net profits approached €1.4 billion in the fourth quarter on the back of core revenues growing about 3% on a quarterly basis. Net interest income grew steadily, increasing by 2.7% quarter-on-quarter, supported by solid loan growth and disciplined pricing strategies. On deposits, we continue to effectively manage the cost, which decreased by 12 basis points in the quarter. We maintain our competitive advantage – our competitive edge on deposit costs, remaining more than 2 percentage points below our peers. Total fees have also performed strongly, driven by solid growth in credit cards and asset management fees, outstanding efficiency keeping the cost to income ratio at 30% on the back of high revenue growth and finally, asset quality trends remained fully aligned with expectations and our profitable growth strategy. All in, very positive dynamics that make us very confident also looking forward at our Mexican business. And again, congratulations to the Mexican team as well. More specifically, our guidance for 2025 is as follows. We expect solid lending momentum to continue, leading to high single-digit loan growth next year or this year, sorry, 2025. Based on the sound loan growth and our proven capacity to preserve spreads, we expect NII to grow slightly below activity growth, expenses to grow slightly below 2024, maintaining the efficiency ratio at the current levels of 30%. On asset quality, we expect a moderate increase of cost of risk to around 300 basis points in 2025 on the back of higher growth in the Retail segment as has been our strategy in the past year. Moving now to Turkey on Slide 27. Garanti BBVA achieved a net profit of €611 million, a 16% increase compared to the previous year, also within a very challenging macro potential year. As expected, the bottom line improved in the fourth quarter with the Turkish lira customer spread starting to recover and turning positive levels in the Q4. This was supported by the ongoing dedollarization trend and the start of the easing cycle. Recall that we have positive NII sensitivity to lower rates in Turkey, so we will benefit from a faster downward repricing of customer deposits. The improvement in inflation trends throughout 2024 also had a positive impact. The cost of risk increased to 127 basis points after what was an abnormally lower level in 2023, and this is mainly due to higher provisional needs in retail consistent with the cycle. Our franchise has a proven track record of delivering results, outperforming its peers in all key financial metrics with across the Board market share gains in TL lending in 2020 4. It delivered the highest ROE among private peers in the first nine months of the year, driven by a material better NIM that is explained by a higher share of customer driven assets. Looking ahead, we are confident about the performance of the franchise and a growing contribution from Garanti BBVA. Based on our expectations of inflation, interest rates and currency evolution, we anticipate a net profit close to €1 billion in 2025 with a better second half of the year. This positive outlook is on the back of a gradual improvement in the customer spread for Turkish lira in the context of declining rates, a lower hyperinflation adjustment compared to 2024 as the disinflation trend persists, partially offset by a higher cost of risk to stand at around 180 basis points in 2025 with a better second half of the year. In summary, as Turkey continues on its path towards economic normalization, our franchise is already showing encouraging signs of recovery and is best positioned to increase its contribution to the group. And finally, let’s move to South America on Slide 28. The region delivered more than €600 million net profit in 2024, a substantial figure that underscores the strength and resilience of our franchise across the region, even in challenging environments. Solid earnings in the year supported by revenues growth, sound and NII performance in the context of loan growth across most profitable segments and improving customer spreads across countries, strong performance of fees and higher NTI. However, this is weighed down by a higher hyperinflation adjustment in Argentina and increasing costs as inflation continues to exert some pressure on expenses in the region. Asset quality trends improved along the year, I would highlight particularly in Peru and incipiently in Colombia, driven by a more favorable macroeconomic environment and some adjustments to our risk appetite and retail portfolio starting to show through. Looking ahead to 2025, we are optimistic about the region. We expect loan growth above 2024 with continued market share gains in our main markets and lower cost of risk below 270 basis points in the year, supported by improving underlying trends in Peru and Colombia. Overall, the outlook for South America is turning more positive, and we anticipate a higher contribution to the group’s results in the coming years. And back to you, Onur. Onur Genç: So we are 4 minutes late. Allow me to basically not cover fully the last two pages. The takeaway page, we have already gone through them. The only thing I would say to you is that, it's a bit tough for us. When we are doing these presentations, we use all these adjectives which are like amazing adjectives this and that really. I think in 2024, we had an exceptional year. That's the summary of takeaways. And on 2025, Luisa has already given you all the details by country, which then makes up the overall group. But the only thing I would highlight here is that, for the group overall, based again on all the guidance that we are giving to you, we are positive. We are quite positive actually. And we expect to maintain our return on tangible equity at high teens, similar to 2024 levels, as we said before. And on efficiency, we expect to be around 40%, again, repeating the impressive figure that we have had in 2024. Let me now take more time and let's just jump into Q&A.

Thank you. Thank you very much, Onur. We are ready now to start with the Q&A session. So the first question, please.

Thank you. The Q&A session starts now. [Operator Instructions] Our first question comes from Benjamin Toms of RBC. Your line is now open.

Morning, everyone. Thank you for taking my question. A good set of results. I'm just wrestling with BBVA's CET1 ratio. It's 12.88% versus a soft target of 12%. The Sabadell transactions worth about 30 basis points, I think. And you generate more than enough capital to fund RWA growth. Why are you holding on to 60 basis points or €2 billion of excess capital? And what do you plan to use this for? I note that you've already ruled out using it to boost your offer for Sabadell. Thank you. Onur Genç: Very good. To the point question, Benjamin. We said it multiple times in all the calls before that we are committed to profitable growth. We want to grow our business in a very profitable way. And whatever the excess is, we will distribute it back. And as you say, we do have the excess, but again, as you have followed the previous quarterly calls, we were restricted since May to do share buybacks and CNMV has just recently lifted that restriction. So we are starting as part of our regular payout to do the share buybacks. So we will do the share buybacks. It will take some time to complete this one. Then the Sabadell transaction is there and we are still committed to go back to that 12%. That's our target. And we will go back to the upper end of that range, 12% in due time. So we can do more share buybacks in the future, obviously. But at the moment, we are already launching one. As I told you today, the restriction on the share buybacks are lifted by CNMV. That's why we're going to be starting this €993 million worth of share buyback as soon as possible. And then we will follow our commitment is there. It's your money. It's the money of the shareholders.

Thank you very much, Benjamin. Next question, please.

Thank you. The next question is from Francisco Riquel from Alantra. Please go ahead.

Yes, thank you. The first question is on Mexico. I have seen a growth in demand deposits slowing down from 10% in Q3 to 4% in Q4. I'm looking at year-on-year to leave seasonality aside. So I wonder if you have seen more competition there from the likes of no bank or open bank this Q4. And how do you see the cost of deposits in 2025, which you think youcan maintain this hedge versus the peers. And also connected with this – with a rising loan to deposit ratio north of 100% in Mexico, you see an implication in 2025 in terms of limiting either loan growth or the migration of customer funds off the balance sheet, which AUMs are growing faster above 20%. I'm going to have a second question for Spain. You are guiding for a slight decline in NII in 2025 or only a slight decline. So I understand NII is supported by your active hedging strategy. So you can give more color on these hedges, duration, fixed rate loans, assets. So I'm trying to assess if there could be a cliff in NII at some point in 2026 or 2027 when those hedges roll off. Thank you. Onur Genç: Very good. Luisa, do you want to start the first one on Mexico cost of deposits? Maybe you start and I can complement a bit more and then your hedges. Luisa Gómez Bravo: Yes. Well, thank you, Paco. I think that we've seen the quarter-on-quarter evolution of deposits in Mexico improve the mix. Actually, it's been – it typically is a good quarter in Mexico at the end of the year, because of the extra pays at the end of the year benefiting. And then we benefit especially because we have over a 40% payroll market share in the country. So demand deposits actually accelerated in the quarter-on-quarter numbers to that 5.5% and time deposits growth actually decelerated compared to other quarters. So I think we've been managing cost of deposits quite well in the fourth quarter with the cost of deposit declining also. I think what's the – overall, I think the broader picture here is what we've been saying consistently about the way we manage our cost of deposits and we've always been very – I think very transparent in saying that this is a key competitive advantage for us. We want to be and we are in the transactional of our clients. We have, as I mentioned, a very high market share in payrolls. We have very high market share in transactionality of our enterprise clients and we want to protect those competitive advantages that you see through the cost of deposits, that competitive advantage versus the peers where we have 2.9% of cost of deposits versus the peers at 5.3%. So the strategy going forward is to maintain that competitive advantage. We believe that in a declining interest rate environment, this is also going to be supportive for decreasing cost of deposits going into next year – into this year. And in addition, I would also add that we have seen a very strong performance of our customer funds growth as you've seen growing in the year 11.6%, which is something that overall when you look at total customer funds in the year were growing 3.3% the quarter as well. So what I would lastly say, with regards to loan to deposit question is that we ended the year at around 104% very consistent I think throughout the year. And this is the level that we see also going into 2025. We see that level at around 105% being there and that will still allow us to fulfill our guidance and continue to have a very profitable franchise in Mexico. Onur Genç: Very good. I will add on top on this question on the LTV part, Paco, the loan to deposit ratio in Mexico at the moment is 104%, as you said. And you implied that it might be getting squeezed and so on. In 2019, five, six years ago, that same ratio was 107%. 107. And we are watching this number very, very closely, obviously. At that time and today, when you look into the breakdown of that deposit base, you do see that roughly one-third – slightly more than actually, one-third of that deposit base is amounts less than €30,000, very small ticket amount of deposits. And that’s the power of our Mexican franchise. I keep talking to you about this in every single call. More than 40% market share that we have in payroll. The reason that I’m giving you this number is that the reason that loan to deposit ratio 104% is not preoccupying us, because some of you have raised this question to us also in the past is because that marginal deposit that comes at a very high rate, we can do it either through deposits or through wholesale funding. It doesn’t matter to us. What really matters to us is that small ticket deposit base, the transactional deposit base, the percentage of that is it coming down or not? And what I’m telling you is that even in the period of 2019 when we have had 107% and today that percentage is not coming down at all, we are growing that base as well. We acquired 5 million new customers in Mexico in 2024. With new customers, new payroll accounts, we are maintaining the hardcore, really advantageous part of the deposit base. That is why we have 2 percentage points – more than 2 percentage points difference in cost of deposits versus the rest of the competition. To cut the long story short, I’m telling you that this 104%, if we like, we can make that number 100%. It doesn’t matter because that’s the marginal deposit that we are putting on top. We have to keep growing that very sticky, very low ticket deposit base to be able to fund our growth. In that sense, we are very confident that loan to deposit ratio is not going to create a major issue on BBVA. Some of you are writing this in your reports and saying that this will be lowering the margins. No, no, we have been living through this for the last decade. It’s more the strength of the franchise and the strength of the deposit base that makes this difference. Regarding the hedges, you already have the ALCO figures in the details of the presentation. You already see the details of duration and everything else. On top of that, which is not reported in those pages, we made it public before. We also have mortgage hedges, as we call them, very short-term hedges on top of the ALCO that also helps us in 2025. For the year of 2025 we have an average €15 billion mortgage hedge also which is covering more than one-third of our floating rate mortgages. So you should add that additional hedging position that we have on top of the ALCO. When you sum them all up, it is protecting our NII in 2025 in Spain.

Thank you very much, Francisco. Next question please.

Thank you. The next question is from Antonio Reale from Bank of America. Your line is now open.

Hi, good morning. Thanks for taking my questions. It’s Antonio from Bank of America. I have two, if I may. The first one is on Mexico and you’ve guided to further cost control the group level. Can you maybe give us a bit more of a sense of flexibility that you retain when it comes to managing the cost base in Mexico, particularly should revenues disappoint? Last year you’ve been investing in IT and SME bankers. Can you provide us a little bit more color around what percentage of your cost base in Mexico is fixed and where you have the flexibility to defend operating jobs in the region? And then if I may, very quickly onto Turkey, which is becoming, I think a lot more than just optionality at this point. Inflation is coming down nicely. Policy rates have started to follow, which seems to be a great setup for your net interest margin to grow in 2025. Can you just help us better understand the duration mismatch between assets and liabilities and the trajectory of that net interest margin over the next few quarters? Thank you. Onur Genç: Do you want to take the Mexican cost question? Luisa Gómez Bravo: Yes. Thank you. Well, in terms of expenses, expenses in the year have grown 8.8% and we continue to invest in the franchise as we’ve been seeing positive jaws throughout the year. I think what is relevant is that we want to continue to invest the country and we have been laying the foundations with these investments for profitable growth in the future. When you look at the breakdown of expenses, personal expenses have grown and this is linked very much to activity momentum. Obviously we have sales force incentives, we have salary reviews and we have had headcount increase as well, primarily in IT profiles throughout the year, but also some branch headcount increases as well, supporting growth, especially on our commercial business. And the admin expenses have increased less than the personal expenses and these have been driven primarily by IT expenses, especially data processing expenses. I think throughout the year Mexico has been doing a very solid exercise of efficiency gains throughout the year and this will also continue into 2025. And of course as mentioned, we have the levers that if we don’t see the activity growth coming, obviously we have the different levers regarding headcount, personnel and investments to tackle. So I feel very comfortable that those levers are there. Onur Genç: Just to add two things. I mean, if you look into our cost base, Mexican cost base is one of the most variable compensation or variable structure that we have because a good part of our salespeople, a good part of their compensation is variable. So if the results are not there, that will be automatically adjusting. And as you said, IT project, software development, we do have a large percentage of external FTE usage in there. So we can also adjust that as well. But that’s not our base case scenario at all, Antonio. I mean, beyond what we are sharing with you today, I see the pipelines in Mexico every single day. And the pipelines are very strong, very strong. And so our base case is a very nice growth and nice year in Mexico. On the Turkish case, you caught it very clearly. Beyond the inflation and currency, obviously the key driver of the Turkish P&L this year will be interest rates. If interest rates come down, we will be delivering a very nice value and profit in Turkey. Our duration gap at the beginning of last year 2024, it was around two months. And throughout the year we increased this duration gap to around five months. So we have a duration gap of five months. We extended the duration hoping that the interest rates will come down. And they started coming down. So as you know, 2x or 250 basis points decline they have done. Our expectation for end of 2025 is 30% interest rate, 30%, 31% and today it’s 45%. If that happens, the number that Luisa guided you with is a relatively easy number to get.

Thank you very much, Antonio. Next question please.

Thank you. The next question is from Maksym Mishyn from JB Capital. Your line is now open.

Hi, good morning. Thank you very much for the presentation and taking our questions. My first question is on loan book in Spain. Your guidance is to outperform the market. Could you just remind us the reason why you are outperforming your peers and which segments you see more attractive for 2025? And then a small follow up on capital. Thanks for the details on RWA consumption. I was wondering if we should expect more management actions in the coming quarters to reduce consumption of RWAs. Thank you. Onur Genç: Very good. Thank you, Max. On which segments in Spain, basically across the board, but by definition mortgages will grow less than others. But why are we growing more than others? Because in certain segments we have a very strong appetite to growth. And in certain segments that grow better than the market, like consumer. Consumer is growing in general better than the market average. We have a better position. I mean if you look into our transactionality market share in Spain, like credit cards or debit cards, spending through cards, we have 16% market share. Our retail bank relatively speaking is much more stronger in Spain. And being retail focused a bit more than other segments, it helps us, because that segment is growing very nicely. If you look into the labor market, if you look into the – by the decrease of inflation, the capacity of people to do, to borrow and to do stuff, the retail segment is quite positive. So we are going to be, because of our mix of business we will be positively affected. And then the second you see it in the page, I love in that page of Spain that we grew 6.3% in midsized companies in the year, 7% in corporate and CIB. We are putting a lot of focus on the enterprise segments. We are relatively underrepresented in that area and it's a focus and push kind of a thing. When you sum them up, we are going to continue to increase our market share. I mean in consumer in the last, since 2021, we have gained 280 basis points market share. In companies segment, we have gained 180 basis points market share. If you have been doing it in the last four years, we have the intention to do it this year as well. Regarding the capital and the more management actions. Exactly. That's our plan. As I mentioned throughout the presentation, in the fourth quarter of this year there was an impact 20 basis points positive coming from the management actions. Half of that, roughly half of that was what we call significant risk transfers, mainly synthetic securitizations. We do think it's a good tool to leverage and we started engaging in this more again in the fourth quarter. Our intention is to keep doing it throughout 2025.

Thank you very much, Max. Next question please.

Thank you. The next question is from Alvaro Serrano from Morgan Stanley. Your line is now open.

Hi, thanks. Can I squeeze two questions? One is on Mexico. Obviously, there's some uncertainties there. So maybe on/or I can press you to, you've guided to high single-digit loan growth. Can you maybe walk us through a range? What do you have in mind in terms of policies from the U.S. and general environment? If things don't go as well as forecasted, what would it look like? And similarly if nothing happens over the weekend, then we move on and it's much more normalized the relationship. What could we look forward to on the upside? And the second question is on capital. You mentioned no Basel IV impact in 2025. The question is what's left? And again here with in mind that it looks like we're in a deregulation trend and Basel endgame, the U.S, has been pushed out. Is there elements of FRTB that can be that you think could be cancelled or pushed out or what are the impacts that are remaining and could we look forward to a scenario where those impacts don't happen? Thank you. Onur Genç: Thank you, Alvaro, as always, very good questions. What happens on the weekend and something happens on the weekend and so on, Alvaro, we have been going through this in the last, I don't know, eight months. One day there is zero tariffs. The second day 10%, the third day, 25% universal tariffs, certain sectors gradual this is happening, this has been the case. And whatever happens this weekend or next weekend, it just doesn't change the power of Mexico. Obviously, there will be impacts, there will be impacts in currency and this and that, but we discussed this before in the previous quarterly calls. Mexico has certain structural advantages, structural advantages that will help Mexico going forward. And we mentioned it before, I repeat it once again. We read it that analysis, the unit manufacturing cost in Mexico versus USA and we took a relatively low-cost state within USA on average and it changes sector by sector. But on average the latest number is one-seventh. So seven times larger manufacturing cost in the U.S. versus Mexico. Okay? If you on top of that you add the internal dynamics, internal macro dynamics of Mexico. We again talk about this in these calls, but it is important, this point about leverage is very important. If I learned one thing in my career in banking, is you should pay attention to leverage, which is the banking debt over GDP. It is 33% in Mexico as compared to 72% in Brazil, 110% in Chile, 200% in developed economies. It's lower than Colombia, lower than Peru. It is a very lowly leveraged country. You have room in leverage to push the growth, internal growth over time, over time, in a proper way without creating too much risk in the society in the macro environment. If you put some of these structural factors, and I can go on and on, there are clear structural factors in our view that would help Mexico. And beyond that, you're asking a very short-term question though this year about the growth. I mean we told high single-digit, we stick by it. And what I can tell you is, what I just told in the previous answer. We are seeing very positive dynamics at the moment. We are already seeing, already seeing the next three months in terms of production of loans. And we are seeing a very positive pipeline. We are seeing a very dynamic also consumer environment. So the retail lending is also going to behave quite well in our view. In short, we are quite positive. The only way that we can show this to you is in the next quarterly call you will see it. But don't push me to tell you a specific number. The only thing I can give you is a very high confidence that as it stands now, again, there are many uncertainties. We all know about that. But as it stands now, I can give you a very high confidence that loan growth will be delivered. Then the Basel impact. We don't expect also no impact from Basel in 2026 and 2027. Also the only thing that we are now looking into, which is not finalized, so the final technical standards and the final judgment on this is there might be a bit more, not much, but a bit more in 2028 coming from operational risk. But it turned out that given the fact that we don't face an output floor topic, because as you all know, we keep saying this to you all the time, our RWA density is 51%. The average RWA density of the European banking system is 28%. As such, we are not affected from output floor. And the impact on Basel for BBVA is going to be marginal this year and in the coming years to come.

Thank you very much, Alvaro. Next question, please.

Thank you. The next question is from Ignacio Ulargui from BNP Paribas. Please go ahead.

Thanks very much for the presentation and for taking my question. I’m going to stick to one. Looking a bit to the outlook for growth in Spain, when did you see bigger competition? Which segments you think are going to be the most competitive ones overall? Thank you. Onur Genç: Thank you, Ignacio. I mean the key competition which is affected mainly by price is mortgages, obviously. As always, it’s a very price sensitive product because typically consumers buy a mortgage once, twice, maybe maximum three times a year, but that’s it. So they shop around and so on. And on that one, we are quite cautious. You might have seen us very aggressive in mortgages in 2020 – late 2023, beginning of 2024, but you might see us less – having less appetite given where the prices are at the moment. So that’s the only piece that might be affecting our loan growth expectations. But beyond that, again, in the case of consumer, we have grown once again 280 basis points in the last four years in market share because we are growing our customer count. This year we are again adding 1 million new customers to the Spanish client franchise. Again, a big part of this one third in six months bring their payroll to us. All of that is creating a larger retail franchise. So consumer is going to be very good for us, I believe. Enterprises, as I said, this is the segment that we want to go for. We are relatively underrepresented in our market shares. So that’s also going to be really robust. And also the pipelines in Spain for that book is also very good. I’m very happy to see the start of the year has been very strong. So the only competitive and might miss part might be in mortgages versus our plan. And it depends on pricing. If you give the price, you can also have very good market share gains and everything else in mortgage. That’s what I would say, Ignacio. Thank you.

Thank you, Ignacio. Next question, please.

Thank you. The next question is from Carlos Peixoto from CaixaBank. Your line is now open.

Yes. Hi, good morning. A couple of questions from my side as well. The first one would be on capital. So I was wondering, well, I believe you mentioned the 20 basis points positive impact from management actions in the fourth quarter, half of which meaning 10 basis points from SRTs. Do you have any expectation on how much capital could you free up either from SRTs or other management actions during 2025? Or what extent could help to curtail RWA growth? Then still on capital. If you could detail the impacts or break down the impact from FX mark-to-market in the net monetary position, hyperinflation impacts on – in the first Q on CET1, it would be helpful? And then on the Spanish bank’s tax, just wondering if you have already an estimate on how much it will be the levy to be paid over 2024 exercise. And also if you have an estimate on how much do you see as the bump up or the increase in the levy that results – that would result from the acquisition of Sabadell, given that the levy has a progressive nature? So the total amount should be – would be higher than it would be for Sabadell and BBVA standalone. And whether that could somewhat limit it or change your views regarding the offer? Thank you very much. Onur Genç: Very good. Thank you, Carlos. Maybe I start with the last one very quickly with a second question and then maybe on the first one. You are the architect, Luisa, why don’t you talk about the SRTs. But on the Sabadell thing, that tax topic is, it changes nothing about the strategic and also financial rationale of the topic. So it doesn’t affect our thinking about the transaction. So on the SRTs, what is the expectation for 2025… Luisa Gómez Bravo: Well, we generated all in in the year close to 15 basis points through SRTs and we expect to have a higher number for 2025. I think that’s what we can say. We are obviously very active here and we expect to generate more capital this year than what we did last year from the SRT dynamics. Onur Genç: Very good. Then you ask about the hyperinflation impacts, the full impact, it’s Turkey and Argentina basically. The sum was 11 basis points in the fourth quarter. And for the year 2024 in total, it was 76 basis points. As inflation comes down, obviously that impact gets minimized which is then improves the P&L. But for capital, as you know, this is neutral. And there was a third question, did I miss anyone?

You did Spanish – the… Luisa Gómez Bravo: The banking tax. Onur Genç: The banking tax. Okay. We did it, okay? Perfect. Luisa Gómez Bravo: Thank you, Carlos. Onur Genç: Thank you, Carlos.

Yes, next question, please.

Thank you. The next question is from Britta Schmidt from Autonomous Research. Your line is now open.

Yes, morning. Thanks for taking my questions. Just a couple of follow ups. Just on the Mexican loan growth debate, I mean your numbers already imply a very strong loan growth deceleration from 16% to say 8%. Is that congruent with the current GDP outlook? Or is this already a relatively cautious number? And then secondly, am I right in assuming that if I put the numbers together, you’re guiding to around low-to-mid single digit constant currency net profit growth in Mexico? And just lastly a clarification on capital. With your loan growth profit forecast and capital management measures, what sort of capital generation and basis points would you expect for 2025? Thank you. Onur Genç: Very good questions as always, Britta again. The – our numbers are based on a macro scenario of one percentage point growth in GDP in Mexico in 2025. So completely aligned with a relatively pessimistic macro scenario that we are still because of the uncertainties that we are seeing. But despite that, we are seeing high single digit growth in loans because that has always been the case. You should take the nominal GDP growth in Mexico times typically the correlation is such that you go 1.4x for BBVA. And based on that – or let me ask you the other way around, this year in Mexico we grew 15.8%. Okay? If you take out completely the FX impact out of this is 12.6%, so 13%. Would you have said that whatever we have lived in Mexico in 2024, we would have produced isolating for the FX impact. We would have produced 13% growth. I go back to the same topic Britta of the leverage, it’s such an underleveraged economy. It goes back to again, Tequila crisis. It’s such an underleveraged economy that we can grow comfortably without creating too much cost of risk. Because of that fact, you should know that, I mean we have a wonderful, for example, credit card franchise in Mexico, wonderful franchise. It’s like a dream portfolio that you can have. You know how many credit cards we have in Mexico? 8 million. Mexico is hundred and – millions of people, why we only have 8 million? Because it’s an underleveraged economy. So do we – in this context of 1% macro growth? Do we still expect high single digit? For sure, and as I said, the signals in the beginning of the year, they are very positive. So we are quite confident with that guidance, I actually would hypothesize, and Luisa is looking into me not to say this, but I would hypothesize that we would upgrade that number in the Q1. Then on capital growth for 2025, this is also something that we obviously plan for, and this is the key number that we go after. On this one, Britta, I mentioned it very quickly as I was going through the pages. It depends a bit on the growth. We did tell you. We give you numbers and we deliver. I hope you see our credibility in whatever we tell you in the guidance. In this – in every single call that I do, I tell you that we delivered the guidance, we delivered the guidance. It wasn't the guidance, but we were telling you that we would create on top of the regular payout; we would be creating around 50 basis points, maybe 60 basis points of capital on top. And it didn't happen this year. It was 21 basis points. For a very good reason, for a very good reason we have put 156 basis points to growth – organic growth; that 156 basis points it was 132 basis points in 2023, a year ago. So, if you take out that additional growth, we are growing our lending book 14% constant, 9% – 9.4% current. We are growing very nicely and profitably, and that takes more capital. Again, that same number, 156 basis points was 132 basis points in 2023, 101 basis points or 102 basis points in 2022. So it's 50 basis points more in 2024 versus two years ago because we are growing very nicely, very nicely. So when you ask me what is the capital addition that you would have? It depends on growth, and we prioritize that growth because we do that profitably. That's the future capital generation capacity of the bank. So this 50 basis points, 60 basis points that we told you, we were not expecting that we would have grown this much. And it's wonderful news that we are growing this much because, again, it's profitable. So we would hesitate to tell you that from now on, this is the number because you would see it in the figures in any case, depending on growth, the market impact obviously is important. This year, we also had a very large – relatively large market impact. The market impact in 2024 was 47 basis points. In 2023, it was 31 basis points. It depends on the market, it depends on the growth. The only thing that I will tell you is that the tangible book value growth that you see, 17% in this year, average 18% in the last four years that number, based on our planning, based on what we see at the moment is going to be there. Then depending on the growth, we can give that back to the shareholders or we put that into growth.

Thank you very much, Britta. Next question please.

Thank you. The next question is from Andrea Filtri from Mediobanca. Your line is now open.

Thank you for taking my question. Just detailed questions on your assumptions behind your guidance, please. Can you please share your assumptions on the NII guidance with regards to interest rates, the shape of the yield curve, deposit beta, volume growth and ALCO contribution? The same for Turkey on interest rates, inflation, loan growth and the linkers contribution. And what is Argentina's net profit contribution in your 2025 guidance? Thank you. Onur Genç: Do you want guidance, Luisa? Luisa Gómez Bravo: Well, I think that... Onur Genç: It's a very tough day. Luisa is very sick. I'm very sick. We have Patricia in between, which is going to be definitely sick after today. But although you are sick, you are the expert. Do you want to take the guidance? Luisa Gómez Bravo: I would just highlight, I mean, I think that's very detailed guidance and questions that we shouldn't be providing in this call. We can give you some feedback afterwards with the teams. But I would just say that with regards to the view that we have in NII, our rate scenario in Spain is one that has terminal rates at 2% in by June. So that's the main assumption, I think, that that underscores the guidance that we have with that NII sensitivity that we're managing towards that CIRCA 5% number that we've already mentioned. So I would say that that's the point. With regards to the positivitation of the curves, we need to see, but I think the main relevant guidance is that 5% NII sensitivity that we manage through our ALCO portfolio. The questions regarding hyperinflation economies, I would just say that here, what we're having a view is that Turkey, as we expect, will be finalizing inflation around 26% is the guidance that we have, 26.5%, with rates coming down by the end of the period at 31%. So those are the main assumptions. And with regards to the currency, I would just say that typically, when we're looking at the year, we tend to use forward rates for our guidance numbers and for our outlooks. So – and that's across the board, I would say, except Argentina, where what we're using is our own internal research estimates of the currency. And there we're estimating a currency devaluation this year of around 28%. So I think that's the main – most of the main topics that you were asking for. Onur Genç: You asked about the CPI linkers. For you to know, Andrea, the CPI linker portfolio at the moment is €3.4 billion. It is a natural hedge, as you know, against the net monetary position for the P&L purposes. The net monetary position was €4.9 billion. Again, repeating, €4.9 billion is the net monetary position, €3.4 billion is the CPI linkers. So whatever CPI percentage that you take, you apply that to the €3.4 billion to get that natural hedge in place. You asked about Argentina's contribution in bottom line and so on, we don't break it down. But the Argentina, as you can see from the presentation, the profit for 2024 was €182 million relatively marginal in the context of the grander – the bigger BBVA. It's going to be around that range, so it's not going to be. We have to see this year passing in Argentina to be able to see better figures in the future. But for this year, we are not planning a major hike or anything in the Argentinian figures. We are quite positive, by the way on Argentina, quite positive. I think it is an option value. We have had two relatively important in our view, option values. Obviously, one of them was much larger, the Turkish option, and that situation we see very positive signals there. We see also positive signals in Argentina, although a smaller option, and maybe will be become valuable maybe a bit longer time frame. But in both countries, we are seeing very positive dynamics. But at the moment, they are marginal in the context of the bigger BBVA.

Thank you very much, Andrea. Next question please.

Thank you. The next question is from Hugo Cruz from KBW. Your line is now open.

Hi, thank you very much. I just had a question around the cost of risk guidance for Mexico. I think you imply some deterioration versus the second half 2024? Is that mix or is that you're actually being cautious and seeing some deterioration because of Trump? Thank you. Onur Genç: It's mainly mix, Hugo. Very good catch. And it's mainly mix because we are growing more in retail than otherwise.

Thank you, Hugo. Next question please.

Thank you. The next question is from Cecilia Romero from Barclays. Your line is now open.

Thank you very much for taking my questions. I have two. My first one is, could you remind us of your latest FX hedging strategy? Any updates on how you're managing your currency is pusher. And my second one is there has been rumors in the press that HSBC may be looking to exit Mexico, which could give one of your competitors the opportunity to engage in M&A and grow meaningfully in a scale. How do you think this could impact the competitive environment? Thank you. Onur Genç: Do you want to take the FX hedging, Luisa? Luisa Gómez Bravo: Yes. Well, with the current FX hedging strategy, I remind you that we have in place hedges both for capital and for P&L. With regards to the capital hedging strategy, it hasn't really changed that much. We are still hedging around 62% of the excess capital in Mexico that means that we have a sensitivity to a 10% depreciation, which is 9 basis points and the cost of hedge is around 1 basis points per month. In Turkey we're also actively managing the hedging strategy. Here we are reducing our excess capital hedge. We see again we are constructive in the currency with regards to the forward at least at the beginning of the year. So, we are having around 5 basis points sensitivity to a 10% Turkish Lira depreciation with around a cost of hedge of around 0.5 basis points per month. I would also like to say that the Argentinian sensitivity is as was in the past 2 basis points per 10% depreciation. With regards to the P&L, I would like to say that in general our policy is to hedge around 40% to 50% of 12-month forward-looking results. In the case of Mexico, we are currently hedging 60% the expected 12-month forward. And here we do have an option strategy that in the case of a tail risk evaluation would increase our hedges up to 80%. And with regards to the rest of the geographies, Peru, Colombia, we are hedging around 30% of the 12-month forward. And in Turkey, around 20% of the 12-month forward. Onur Genç: And regarding the HSBC's potential exit, you said of Mexico, we obviously don't comment on rumors and obviously on others around these topics. So I will not comment on anything obviously on that one. The only thing I would say is that, I mean really, I've seen many banks in my career and we have wonderful banks with BBVA in within BBVA, really wonderful banks. But what we have in Mexico is really unique and we will continue to compete whatever happens. Whatever happens, we will continue to compete. I mean in general, the NPS in banking sector in different countries is around 30s, 40s. NPS is the customer satisfaction score. 30s, 40s in some other geographies like in Spain, the industry is even lower and so on. In Mexico, our bank has a customer satisfaction score of 70, 70. The second best from the traditional banks is like half of that and so on. So we have an amazing franchise in Mexico. We have 25% market share. I hope you have seen that in the presentation. We have gained 87 basis points market share in the year. By the way, this is November numbers because the December numbers are not published yet. Our expectation is, we will be doing even better for the full year. So it's going to be around 100 basis points. We have 25.4% market share at the end of November. This is wonderful. This is a wonderful franchise. The client franchise that we have. The fact that we are in the transactionality of the clients, we will compete. In short, let me not take more time. We will compete whatever happens.

Thank you very much, Cecilia. Next question please.

Thank you. The next question is from Ignacio Cerezo from UBS. Your line is now open.

Yes. Hi, good morning. Thank you for taking my question around customer spread in Mexico, we have seen more than 30 basis points reduction through the year on 20 basis points only in the fourth quarter, assuming that rates go down from the current 10 to levels of around 8%. If you can give us a view basically, where do you think the spread is going to land under the rate environment? Thank you. Onur Genç: We don't guide the quarterly spreads natural, but we have the NII sensitivity. As you know, we gave the NII sensitivity 2.4%, 1.3% of that is to Mexican peso. We give the combined ratio. So we assume 100 basis points decline in the curve both in Mexican peso and U.S. dollar because a part of the balance sheet in Mexico is in U.S. dollar. 2.4% is the impact of both. If 2.4% again the breakdown is 1.3% plus $1.14 curve. If the curve comes down 100 basis points in Mexico. Again, the sensitivity that you should keep in mind is 1.3%. Anything else? I think we are done. No, maybe the only final thing I would add, because it wasn't asked, but I think it was you look into it at the beginning of the year. Even more on why are we so different from the analysts? I mean, why are we, are we subjectively positive and so on. The only thing I would say to you is that when we look into the numbers and I've seen every single one of them and the team analyzes them day-in and day-out to Patricia and the team, what we see is that in Spain, in general, in general, the analyst community, you are undervaluing what we would be doing in our view in 2025. There's a clear difference in Spain depending on the market, obviously. And we have given you our assumptions, which is 26.5% inflation, 30% interest rate at the end of the period and the forward in terms of the currency with those assumptions, we are clearly seeing a higher potential in Turkey versus what you are thinking. And then there is one important concept, given the uncertainty in Mexico, the currency obviously is important and there will be, as I said, long term and in terms of activity, in terms of – in the banking business, it's not going to change too much in my view. But the current uncertainty with the U.S. and this and that, it might have an effect on currency. Depending on what currency that you take. You are either undervaluing what Mexico would do or what the corporate center would do, because we are hedging some of those results. If there is a huge devaluation in Mexico, the corporate center will be delivering positive results. So when I look into your numbers, the corporate center or Mexico, one of them is wrong. When you sum those three things up, Spain, Turkey and Mexico and or corporate center, that's the gap that we see. And our job is to deliver and to tell you that our numbers are the right ones. But it requires a lot of delivery, a lot of focus and we'll keep doing it. So we close here. The only other thing I will tell you is that again, Luisa you were very sick, but you end up being here. So, thank you for being here and see you next time. See you next time.

Yes, thank you everyone, everyone for participating. And let me remind you that the entire IR team is available for any further questions you may have. Thank you very much.