Banco Bilbao Vizcaya Argentaria S.A.

Good morning, everyone, and welcome to BBVA first quarter 20 results presentation. I hope all of you are healthy and safe. I'm Gloria Cauceiro, Head of Investor Relations, and we have also Onur Ghent, Chief Executive Officer of the group, and Jaime Sánchez-Tejada, BBVA Group CFO, participating in this webcast. This time we're doing it remotely. As in previous quarters, Onur will begin with a presentation of groups' results and then Jaime will review the business areas. We will move straight to the live Q&A session after that. And now I will turn it over to Onur to start with the presentation.

Thank you, Gloria. Gracias. Good morning to everyone. Welcome and thank you for joining BBVA's First Quarter 2020 results. We are doing this through the webcast, obviously, so thank you for your flexibility and availability. I really hope also that you and your families and friends are all healthy and safe. Let me also express my condolences to the relatives and friends of those who passed away during these hard days. So moving to our presentation on slide number three, let me start with the BVA's response to this exceptional environment. I have to say that I'm very proud of our organization. We are rising up to the challenge, in my view. Our purpose, creating opportunities, has become more important than ever, in my view, in this environment, and we have established very clear priorities in our response to the crisis. And you can see that on the left-hand side of the page, to protect the health and the safety of our employees, clients, and the community in general, from the very beginning, before the official government measures were put in place, we implemented plans for our employees to work from home. As of today, more than 86,000 employees of BBVA, 95% of our central services, and 71% of our network are working remotely. We have a strong commitment to save lives. BBVA, we have donated 35 million euros globally for the fighting against COVID. And we have also launched internally several initiatives for our employees to directly contribute to the effort. So more than 1 million in terms of contributions from our employees, which is matched one-to-one by BBVA, is also another pool that we have put in place to fight against COVID. Lastly, a clear commitment was also shown by our 300 members of our BBVA top management team globally. We have all given up our bonuses voluntarily for this year. Second priority at the middle of the page, we need to make sure that we continue to provide an essential service to the economies that we operate in. So a continuity of service is very important, obviously, as a bank. So more than half of our physical network is open and all of our critical functions, the call centers, treasury desks. operational centers, they're all fully operational. In this sense, we have also more than leveraged our competitive advantage in the digital front, facilitating the access to the bank through digital channels. Our digital and mobile customers, they reach their maximum of 59% and 54% penetration rates respectively. And again, another obviously a record 63% of our units sold in March 20 were sold digitally. Third priority on the right-hand side of the page, it has been to provide financial support to our long-standing clients. In this time of crisis, we stayed very close to our clients, helping them navigate through the crisis. We believe we banks, we are a powerful part of the solution to this crisis, and we will continue to finance the economy. In this sense, the BBVA's total loans have increased by 17 billion in constant euros in the first quarter, and we have put in place many programs to help and support our clients. Moving to slide number four. As highlighted in the previous slide, I would like to remark very quickly that our leadership in digital has been a huge advantage in this context. We kept talking about it for many quarters tirelessly in all these calls as well, but our focus on technology and the effort BBVA has been doing over the past many years in building end-to-end digital products and processes, it has helped us tremendously at this period. Some examples, in Spain, the weekly average of digital transactions, it has increased 32% weekly averages of pre-COVID and post-COVID. In the middle of the page, you also can see that the number of visits to my conversation, Mis Conversaciones en Español, our app functionality to chat with your relationship manager increased by 35%. So we are using digital to also enable the physical interaction remotely with our people. So that's also a very good news to note. And finally, as I mentioned, it's important to note that the digital sales in the group in March, it has reached 63.4%. Moving to slide number five. Slide number five. I would like to emphasize on the slide that in this unprecedented environment, we are delivering a very strong, in our view, pre-provision profit. If you look into the left-hand side of the page, operating income has increased 14.1% versus the same quarter of last year, supported by robust core revenue growth, coupled with an increase in net trading income and the reduction in expenses, which I will talk to you in a second. From a pure bottom line perspective though, in the middle of the page you can see the reported net attributable profit has dropped this quarter to minus 1.792 million euros. It has been negatively affected by two very large extraordinary effects. The BBVA USA goodwill impairment of minus 2.1 billion euros. As you know, the key goodwill amount we have in our books is registered for USA and goes back to 2004-2009 period where we acquired multiple banks that make up today's BBVA USA. Given the new situation in the USA due to COVID, with a future forecast of lower interest rates, you have seen the Fed actions in the past few weeks, lower GDP growth expectations. We did an impairment test leading to this non-cash, no impact on capital provisioning. So 2.1 billion, one of the extraordinary items is coming from this PVA USA goodwill impairment. The second extraordinary item relates to the front-loaded provisions to cover the expected impact from COVID-19 for a gross amount of 1 billion 460 million euros for taxes and non-controlling interests. So after you do the controlling interests and also the taxes, this leads to an impact post-tax of close to 1 billion euros in net attributable profit. As you will see in the remainder of the document, we have chosen to be relatively conservative on the front-loading of these provisions. Despite the high uncertainty, so we have to see how it comes out, but we believe the provisioning effort for the rest of the quarters will be significantly lower. And again, we will talk about it in a second. We have chosen to be conservative in front-loading the COVID-related provisions. So if we exclude the BBVA USA Goodwill impairment, The net attributable profit, including this extraordinary provisioning impact for the first quarter was 292 million. And last on the right-hand side of the page, if you exclude both impacts, the net attributable profit of 1,258,000,000, it represents a strong underlying performance with an increase of 6.4% versus the same quarter in 2019. Turning to slide number six. In slide number six, I would like to highlight here in this page that we have a very powerful and strong bank to navigate through this crisis. First, on the left-hand side of the page, you see the strong operating income with very low volatility. This has proven, our operating income has proven its resilience thanks to our diversified business model. As you can see, we have a very strong pre-provision profit over our WAs of 3.4% on average since 2008. well above the 2.2% average of our European peer group. Additionally, it's worth to mention that it has remained very stable in that period. Our standard deviation of 0.4% versus the 0.9% in the case of our peer group, it gives a clear indication of our operating profits being much less volatile. And as you have seen just in the previous page, our operating income performance for 2020, it has started even better than these numbers. So our operating income performance in the first quarter, and if you look into the check record of the past few years, has been extraordinary. Second, at the middle of the page, you see our proven ability to generate capital. As you can see in the chart, since 2008, we have more than doubled our capital base, generating 23 billion of capital in CET1, even considering the significant effort done due to Basel III implementation. CET fully loaded ratio, as you can see on the page, has increased from 6.2 in 2008, the previous crisis, to 10.84, the latest number that we have as of March 20. And with this latest number, we stand 225 bps above the minimum required. And third, on the right-hand side of the page, you see the liquidity position. We maintain a very comfortable liquidity position in all of our geographies. Our liquidity ratios are well above 100%, which is the minimum required at the group level, and in all the subsidiaries. And for the group, the LCR is at 134%. actually 156% considering the excess liquidity in our subsidiaries. And our NFRS ratio is at 120%. Also our funding structure, it's as you know, we are a retail and commercial bank. So the funding structure is very robust. The LTD ratio remains at approximately 100% in all the subsidiaries with retail and long-term funding. Moving to slide number seven. We consolidated all the numbers in this page. I'm not gonna go through the numbers in this page, but in the coming pages, but still it's a consolidated view of all the critical figures. I should highlight on this page that first of all, the year over year variations, the comparisons, they exclude BBVA USA goodwill impairment in this slide and in the rest of the presentation for apples to apples comparison. But the main highlights for the quarters, again, I'm going to elaborate in the next slides, but main highlights first are core revenue year-over-year growth on the top left. Very robust core revenue growth driven by net interest income and strong fee income generation. It is also remarkable the activity dynamism in the first quarter with the total gross loan book growing 4.5%, 4.5% growth in activity versus December 2019 in constant euros. very profitable new production has arrived in the first quarters into our books. Second, on the top right, you see that we report an outstanding operating income. I'm going to talk to it again and an amazing cost income ratio. Third, risk indicators at the bottom. Risk indicators, they have been very much affected by the COVID-19 conservative front-loaded provisions. And I'm going to talk to you about them. Finally, this quarter, some of our metrics at the bottom right, capital, shareholder value creation, profitability, the key numbers that we keep reporting to you every quarter, they have been obviously negatively affected due to these additional impairments of COVID and the market impacts that I will again explain in the coming weeks. But one thing to note, excluding the front-loaded COVID-19 provisions, we have reported an outstanding return on tangible equity of 12.1%, which is an improvement of 24 bps versus 2019. Moving to slide number eight. Again, you see the details of the accounts here. I'm going to go very quick on this one because I'm going to talk to you about the details of it in the coming slides. You can clearly see the positive evolution of the core business drivers, very positive evolution in net interest income, in fees, in net trading income, commissions, gross income and operating income together with expenses. So every line item above the impairments line has posted very strong, very strong figures in our view. At the bottom line, it has been negatively affected by COVID-19, front-loaded provisions. So I mentioned 1,460,000,000. 1,433,000,000 of that has come on the impairments line. And at 27, a much lower figure, 27,000,000 on the provisions and other gains and losses line. But combined is again 1,460,000,000. And then if we add the negative impact from BVA USA Goodwill impairment of minus 2.1 billion, the final reported net attributable profit was 1,792,000,000. But let's go into the details. So if you go to page, slide number nine, once again, we had an excellent quarter in our review in net interest income. 7.5% growth versus first quarter of last year. It is important to note, again, that this growth has been achieved despite the lower interest rate environment in some of our core markets. Also, as you see on the top right of the chart, there has been a strong net fees and commissions growth up 6.3% versus the same quarter last year. It is worth mentioning under this line item, the excellent performance of Spain and USA in both countries. As you know, two of our mature markets, we grew double digit in fees. Net trading income in the quarter increased 54.6% versus a year ago, positively impacted by the FX hedges that we have in place, cover for the FX depreciations of emerging economies. All in all, the total revenues grew at double digit, 11.4% versus the first quarter of 2019, supported again by core revenues and also NTI. If you move to slide number 10, One more quarter, we continue to show positive operating jaws with our expenses growing 2.2%, well below the growth rate in the core revenues of 7.2%, and well below the blended inflation in our footprint, which was 5.2%. This JAWS notion is a huge management discipline at BBVA. We pay a lot of attention to this in all of our meetings and discussions with the different business units. And we continue to perform even in this very complex environment. So in the middle of the page, you see that the operating income at double digit growth of 20.3% in constant euros. By the way, I didn't mention it, but this operating income is the highest in the past 10 years, quarterly operating income. Finally, on the right hand side of the slide, you see again this JAWS and efficiency ratio concept. We improved 401 bps. So our cost of income, the latest number is 45%. Obviously much better than the European peer groups as before. If you go to slide number 11 now, We wanted to spend a little bit time in these pages because I think it would be important for you to understand the provisioning methodology that we have used. But first on the numbers of the risk, total loan loss provisions for the quarter, 2.6 billion. We have front loaded 1.43. As I said, a little bit also came in the provisions line. So this is the impairments line, 1.43 billion related to COVID-19. So there are two impacts here in this additional extraordinary provisioning. First of all, update of the IFRS 9 macro impact expected from COVID. So we took the latest BBVA research estimates on the macro growth. And then, as you know, we typically do this in the second quarter, but we took it to March. And we run our IFRS 9 modeling on the macro, which gave us around 1.1 billion of macro provisioning. And to a lesser extent, we have also did a management adjustment because the macro modeling captures all the systemic risks and the overall growth related figures. But there are certain portfolios and there are certain clients even not factored in in the macro adjustment. So we also did another set of management adjustment of 325 million, making the total 1 billion for 43 billion, 1.43 billion of additional provisioning for COVID. Excluding COVID, it's important to note the impairments would have remained almost in line with the previous quarter. You see the total figures excluding COVID. It's relatively a flat line, which I will explain more in a second. top right you can see the mpl's evolution so which decreased significantly by 1.3 billion versus the same quarter of last year uh seven zero point seven billion actually versus last quarter mainly explained by some specific mpl portfolios but the underlying cost of risk and underlying fundamentals is still robust it's still too early obviously but still we are not seeing a major jump to mpls at the underlying level at the core business level Regarding the rest of the asset quality indicators, the cost of risk ratio increases because of the extraordinary provisioning that we did to 257 BIPs. Excluding this impact, excluding this extraordinary provisioning, cost of risk would have stood at 116 BIPs. Again, fully aligned with expectations and more or less in line with our business as usual. The MPL ratio at the group, 3.6%, significant decrease versus the 3.8% reported last quarter. Again, due to the decrease of the MPLs plus the activity growth that I mentioned to you in this quarter. Finally, the coverage ratio obviously shows a significant improvement, close at 86%. Let's talk about this provisioning topic, which is an important topic. So first, on page number 12, you see the macro provisioning. uh is based on the bva research growth scenarios and it assumes a smooth out version of those scenarios you see the scenarios on the page so let me not go into the detail but they have been severely reduced due to the current crisis obviously in all countries and obviously needless to say but it's important to highlight that it has a high degree of uncertainty All the countries, like the rest of the globe, 2020 will be very negatively affected by the drop in activity, especially in the first half. And GDP hopefully will start rebounding in the second half and continue to recover in 2021. Obviously, the recovery in 2021 is likely to be driven by a base effect that will be sizable, not enough to reach the previously forecast levels so even though you would see a very positive figure for 2021 in terms of percentage growth the it's going to be based on a much lower base so the total growth in the cumulative two years would be much less than otherwise so all in all we call this the recovery the the form the form of the recovery it's an incomplete v it's a v shape but it's an incomplete one because the second leg is shorter than the first one For example, in Spain, we forecast a fall of a point estimate of minus 8% in 2020 GDP growth, but the range is minus 5.5% to 10.5%. Then in 2021, a recovery in the range of 4.2% to 7.2%, as you see in the page and as you see for the rest of the geographies. We took these scenarios. In general, towards the mid-range of the range and smooth out the quarterly spikes as recommended by ECB. So we did the smoothing out. And then if you go to page number, slide number 13, you can see on the slide the breakdown of the impairments and cost of risk by country, differentiating the COVID-related, this front-loaded impairments and the recurrent underlying impairments. Out of the 2.6 billion of total impairments, as I mentioned, 1.43 billion corresponds to COVID-19 front-loaded provisions. As I explained before, the COVID-19 front-loaded provisions They do not only include the updated IFRS 9 macro adjustment, but also some individual idiosyncratic management adjustments due to, again, the specific nature of certain portfolios. For example, in the USA, we took a specific provision for oil and gas portfolio, and we have done similar things for other countries in Mexico, in Turkey, in Argentina. in these numbers. So the total of these management adjustments once again is around 350 million of the 1.43 and the rest 1.1 billion is due to the macro adjustments. On the right hand side of the page, this is very important, you see the cost of risk implications. The total impairments imply a total cost of risk of 257 bps. an exceptionally high figure based on the front loading that we just done. And as mentioned before, excluding the COVID impairments, cost of risk would have been 116 bps. And that 116 bps, it's fully aligned with expectations, slightly worse than last year, but very much in line. And it's still very low because we don't see a major deterioration in the underlying fundamentals yet. We don't see insolvent clients or a boom in 90 days past due, which would have increased MPL in any case, which is very good news, but obviously it's still too early. So the economic impact is huge. So we wanted to be conservative in our provisioning for these figures. Going forward though, I think it's important to mention going forward, although uncertainty remains very high, we believe 2020 full year cost of risk will be significantly below the first quarter levels as the provision front loading made in the first quarter should not be extrapolated based on the messaging that I did. We have done the full macro and specific provisioning. So we are estimating for the year the cost of risk to be in the range of 150 to 180 bps. Again, this is best estimate, a lot of uncertainty around it, but this 2.57, which is the annualized cost of risk for the first quarter should not be extrapolated. And our expectation, our best estimate is 150 to 180 bps. Moving to slide number 14 on capital. Regarding the capital evolution, the capital generation in the first quarter has been impacted by three core effects. First, the front loading of provisions that we just talked about, it has drained 26 pips. This is obviously in terms of impact, the size of the provisioning versus our relative size of the bank. And compared to other banks that we are seeing out there, we are again more on the conservative side and it has drained 26 pips in the quarter. Second, a significant increase in RWAs, draining 50 bps of capital. If you look into that 50 bps, two thirds roughly are related to the increase in credit risk RWAs. I mentioned the high dynamism of activity in this regard. The loan book has increased, as I mentioned, 4.5% quarter on quarter in constant euros. But it's, again, very important to note that we have grown in profitable segments. It's confirmed by our underlying return on tangible equity. Our return on tangible equity has increased 24 bps in the quarter at the underlying level. So we are growing in profitable segments. And as a result, the credit risk RWAs, two thirds of that 50 bps. And then one third related to the increase of the market RWAs due to the very pronounced rise in volatility in March. And in this regard, the strong spike in market RWAs, in our view, should be reversed in the coming quarters, as long as, obviously, the volatility tensions ease. And third, third impact in the capital evolution is the market related impact of 47 bps due to FX depreciation, mainly the Mexican peso and Turkish lira, as you know, which were down 19% and 7% respectively in the quarter. also the mark to market of our equity and fixed income portfolios. All in all, our CET1 fully loaded ratio stands at 1084 at the end of March and stays 225 bps above our regulatory requirement of 856, which I will talk in a second a bit more. Having said this and taking into account the positive impact of some of the agreements that we closed, that we announced in the case of Allianz, as you know, two days ago, we announced this non-life insurance partnership with Allianz. It will have a seven BIPs impact on capital. The sale of Paraguay, which we have not finally closed yet, but it has been announced last year, as you remember, six BIPs. Also the EBA flexibility for some metrics like the prudent valuation adjustment, three BIPs. So on a pro forma basis, We are already at 11%. With the second quarter already in mind, we will also foreseeably release some capital due to the recently announced European Commission measures, the software deductions, the supporting factor on SMEs. It will all help in the capital relief. On this page, at the bottom of the page, it's also worth to mention two things. The high quality of our capital ratio. I think it's very important. Our leverage ratio stands at 6.2% on a fully loaded basis. Clearly one of the highest in Europe. Finally, it's important to note on the bottom right of the page, which is a bit different than other European banks, we legally had to carry on with the 16 cents dividend payment in April this year. So we paid the last remaining piece of our 2000 results related dividends in April 2020. It creates the 29 bps of CET1 in an otherwise no payment scenario. So this clearly makes a difference versus other European banks. Because unlike the general trend of the European industry, our CET1, first quarter CET1 ratio has not capitalized the positive impact of any dividend cancellation. And for 2020, on the dividends, we are not planning dividend payments until the uncertainty disappears, like the other European banks following the ECB recommendation. Moving to slide number 15. And thinking about going forward and consistently, again, with the recently announced supervisory measures, specifically the one that allows to partially recover P2R, not only with CET1, but also with AT1 and Tier 2s, the group has decided to adapt its CET1 target and targeting methodology. So as you know, our CET1 target was 11.50 to 12%. And it was based on a 225 to 275 bps buffer on top of the CET1 requirement, which was 9.27 at the time. So if you look at the top left of that page, you see that our requirement was 9.27. We were adding 225 to 275 bps buffer on top of it, which was creating our CET1 goal of 11.50 to 12%. taking into account the reduction of the ct1 requirement due to this p2r methodology that i just mentioned our requirement has come down from 927 to 859 so the new requirement is 859 and we are basically adopting a new targeting methodology of cet1 which is around the cet1 management buffer so we maintain And we change our target to 225 to 275 CET1 management buffer. Given the reduction in the requirement, it obviously helps in the total figure. But our focus is on this management buffer number. So we want to maintain this 225 to 275 BIPS buffer. And there we are at 1084 at the end of March. So we are already in the range, 225, at the bottom of the range. in these numbers. Also, at the bottom of the page, you should see that the new P2R tiering maintains the total capital requirements stable, thereby the CET1 reduction is fully offset by higher AT1 and tier 2 requirements. Accordingly, the AT1 requirement has increased by 28 pips to 178 and tier 2 by 38 pips to 238, but we mostly compensate it with our pre-existing buffers in these respective areas. So our CET1 management buffer is the new targeting methodology that we would use. We maintain the old one, 225 to 275. Given the new requirement, the implication is 1084 to 1134, as you see in the page. Finally, to conclude this section, I would like to highlight a deal we just announced two days ago. It's important in my view because in this environment, unprecedented environment, the fact that our teams completed such a complex deal, in my view, is worth to mention. So the non-life insurance business, it's very strategic for BBVA. It is directly linked to our banking business. As you know, the insurance sector is exposed to significant disruption, and the pace of disruption, in our view, will be even greater in the future. Like in banking, all this will require to have the capability to invest and develop innovative products and services for our customers. Therefore, we have found a sound strategic fit in this deal. It combines the experience and the capability of an innovative leading industrial player like Alliant, together with the client relationship and the distribution network of BBVA. Very sound economics, fixed price of 277 million euros, a variable compensation on top of that of 100 million euros. Additionally, it allows us to maintain the exposure to a very profitable business. I mean, we are maintaining 83% of the profits if you take into account the dividends of the new company and the distribution fees. So a very positive deal for BVA. We estimate that it will have a positive impact on P&L of around 300 million euros in the second quarter when we close, apologies, and an improvement of about seven basis points on capital. Now I turn it over to Jaime for the business areas. Jaime.

Thank you very much, Honor, and good morning, everybody. I hope you are all well, as also your family and friends. Let me start with Spain. As Honor has already mentioned, expectations have been severely reduced due to a current health crisis and the lockdown of the economy. BVA research is expecting now a GDP contraction of around minus 5.5 and 10.5 percent in 2020. and a V-shaped recovery to a range of between 4.2 and 7.2 for 2021. In terms of activity, loans have increased by 1% over the quarter, driven by corporate and CIB, up by 7% in this Q1, due to a number of short-term operations and credit lines being drawn down at the end of the quarter. In Q1, BBA Spain showed a very strong pre-provision profit by 10.3% year on year, thanks to the good performance of core revenues and the higher than expected reduction in operating expenses. We have achieved this strong operating income growth despite the significant decrease in net trading income, which is down by 44%. Overall, co-revenues are up by over 5% year-on-year, driven by strong growth in fees, over 13%, thanks to the higher asset management and banking services costs. NII is up by 1.7% year-on-year, mainly due to the lower cost of excess liquidity at the ECB, the higher contribution from the ALCO portfolio. The contribution from the commercial activity remained broke last year. Operating expenses went down by minus 4.4% and exceeding expectations. This trend should continue going forward. For 2020, expenses will decrease more than we previously expected. This strong performance of operating income has been more than offset by the higher impairments as we have front-loaded 517 millions of provisions related to COVID. including, as Honor mentioned, an updated IFRS macro adjustment and calculated accordingly to the current GDPS scenario, and taking also into account the mitigating effects coming from the Spanish government guarantee scheme, but also by increasing the specific provisions for the sectors most affected by the current environment based on an individual assessment. Cost of risk ended the quarter at 154 basis points, increasing the coverage ratio to 66%. That is six percentage points more than at the end of the year. Excluding COVID-19 related provisions, cost of risk would have remained at 33 basis points. For 2020, we expect cost of risk to be significantly below Q1 levels. Let's now turn to the US. Macro prospects for the Sand Belt have also deteriorated as a consequence of COVID. We are now expecting a contraction of around 4.8% in 2020, followed by a gradual recovery in 2021, something around 3.5%. GDP growth expectations for the Sand Belt are very much aligned with what we expect for the US as a whole. Growth has accelerated this quarter in the U.S. to 8%, mainly explained by companies drawing down credit lines. New long production in retail segments has not been affected by the outbreak. The impact will surely be more noticeable in Q2. As regards to P&L, the operating income is improving significantly versus the previous quarter, up over 16%, mainly driven by a very good performance of net trading income, really across the board, both in ALCO and global markets. Fees going up by 13.5% with an overall low behavior, especially those related to CIB. and also by a 3.5% decline in OPEX. NII has decreased by 6% quarter-on-quarter or 13% year-on-year. Remember that Q1 last year was the highest in quarterly number in 2019. The fall is mainly explained by the lower contribution from the ALCO portfolio and also the decrease in the customer spread. as you can imagine, negatively impacted by the 225 basis points decline in Fed rates. Going forward, the impact from lower rates should be partially offset by contributions from the new Paycheck Protection Program. The positive evolution of the pre-provision profit has been more than offset by a significant increase in impairments, as we have booked 280 million related to COVID, that's equivalent to 170 basis points of cost risk, to reach a coverage level of 142%, that is 41 percentage points more. This front-loading not only includes the IFRS updated macro impact, but also a higher provision for the oil and gas portfolio based on an individual assessment assuming an oil price scenario of between 20 and 30 US dollars per barrel for the next two years. Excluding these, front-loading underlying cost of risk would have stayed around 90 basis points. For 2020, we expect cost of rates to be significantly below Q1 levels, as the public provisions for unloading should not be extrapolated. Moreover, in the other provisions line, we've also charged 23 million euros for unfunded commitments in the oil and gas segments. That has been almost fully offset by provisions released in other portfolios. Let's now move to Mexico. In Mexico, GDP growth estimates for 2020 have been revised significantly backwards by BBVA research to a range between minus six and minus 12%. We can expect a recovery in 2021, but within a range of plus two and plus four. In terms of activity, loans increased by 8% at the end of the year. or 4% including the FX impact, mainly driven again by corporate clients. BBVA in Mexico has proven again its resiliency, showing a pre-provision profit over 6.3% year-on-year in constant euros, thanks to 6% growth in revenues and by again being able to maintain a positive cost. Revenue growth has been driven first by NII, growing 4.4% in constant euros, true below long growth due to the decrease in customer spread, explained mainly by the lower rate levels and growth bias to lower yielding commercial portfolio. Revenues was also supported by high net trading income, due mainly to FX gains, but also by the other income line that grew over 80%, favored by higher results in the insurance As I said before, positive jobs are maintained with expenses up by 5.5%. But for 2020, we expect OPEX to perform better than initially expected, and they should be growing below inflation. This solid operating income growth has allowed us to absorb a significant increase in impairments that almost doubled versus last year due to the front loading of 320 million related to COVID. That includes the updated IFRS 9 macro impact, but also specific provisions of those sectors most affected by the crisis. Cost of risk reached 530 basis points and coverage levels 155%. That is 19 percentage points more. Excluding these front-loading, Q1 cost of risk would have been 311 basis points and aligned with our previous expectations. Again, for 2020, we expect cost of risk to be significantly below Q1 numbers. Let's now focus on Turkey. In Turkey, we've adjusted our GDP expectations for 2020 to a range of between minus 3 and plus 2, with recovery expected in 2021 to a range of between plus 3 and plus 7. Guaranteed BBVA showed high growth in TL loans. over 4.7 percent quarter on quarter, mainly explained, again, by corporate drawings, down short on credit lines, but also by a sound growth in the consumer portfolio, including mortgages. Additionally, foreign currency loans slightly increased in the quarter, 2.2 percent, especially due to short-term export loans. Moving to the P&L, Q1 results continue to prove guaranteed BBVA-based earnings resilience. The strong pre-provision profit was able to absorb a significant provision from loading due to COVID. Pre-provision profit grew by 48% year-on-year, that is in constant terms, explained by robust revenue growth, and they continued to focus on efficiency. NII was up significantly, over 30%, mainly explained by excellent commercial dynamics, thanks to the increase in TL loans, but also by a significant improvement in customer experience, both in TL and in foreign currency, but also by a very good net traded income due to FX results and gains from security sales. Expenses grew slightly above 9%, but that is significantly below the 12-month inflation that stood at 13.5% last year, bringing the efficiency ratio to 28.9%. This growth in operating income minimized the impact of firm quality provisions. Impairments were up by 120% versus last year in constant euros due to the 169 million euros related to COVID, including, again, both The IFRS 9 macro adjustment, but also additional specific provisions for those companies more affected by the current crisis. In the case of Turkey, mainly those negatively impacted by the currency depreciation. Coverage levels improved significantly to 86%. Cost of risk jumped to 380 basis points in the quarter, but excluding provisions related to COVID, cost of risk would have been 219 basis points. For 2020, again, we expect cost of risk to be significantly below Q1 levels. Other provisions also increased versus last year due to higher provisions for contingency risks. And let me finally look at South America. In Colombia and Peru, we've downgraded our GDP growth expectations for 2020 to a range of between minus one to minus six, in the case of Colombia, and of minus five to minus eight for Peru, followed by a V-shaped recovery in 2021. In Argentina, news on debt restructuring still underway is needed to have a better picture on the growth outlook. Long growth accelerates across the board in the parts of the two companies running down credit lines. Let me give you now some colors on the main countries. In Colombia, two main highlights. NII grows at high single digits year on year, again in constant terms, supported by very strong activity growth. But also, we also did a strong front-loading of COVID-19 provisions that increased cost of risk about 400 basis points. Excluding this effect, cost of risk would have been in Colombia at around 200 basis points. In Peru, net achievable profit decreased to 30 million. That is a 30% reduction compared to Q1 last year, again, in constant euros, affected by the front-loading of 42 million euros of provisions. for the COVID outbreak. Again, excluding this effect, cost of risk in Peru would have set to that 137 basis points and below last year levels. And finally, Argentina, net attributable profit of 8 million. That is a 70% reduction compared to the first quarter of 2019. May be explained by two effects. First of all, a base effect. As you remember, Q1 last year included a significant capital gain from the sale of Prisma, but also by the increasing impairments related to the sovereign debt portfolio that we've done this quarter ahead of the debt restructuring in the country. And now back to Honor.