Banco Bilbao Vizcaya Argentaria S.A.

Good morning, everyone. Buenos dias a todos y bienvenidos. Here with me today are Onur Gens, Chief Executive Officer of the group, and Rafael Salinas, BBVA CFO. As in previous quarters, Onur will start with the presentation of group results, and then Rafa will review the business areas. Then we will move straight to the live Q&A session. And now I will turn it over to Onur to begin with his presentation.

Thank you. Thank you, Patricia. Good morning to everyone. Welcome and thank you for joining our 2021 results audio webcast. I will start, as always, directly with the pages. Page number three, I will highlight some of the key achievements of 2021. First, the first line we have made in our view significant progress in the execution of our strategy focused on profitable growth, At the same time, leading the digital and the sustainability space. We have ended the year having acquired close to 9 million gross new clients, an all-time record. 73% of our unit sales have been done digitally, another all-time high. And we are also at the frontline of the industry in terms of sustainability. In 2021, we channeled more than 35 billion in sustainable finance. Second, today we are reporting the highest recurrent results of the past 10 years. Net attributable profit, excluding some non-recurring items, is above the 5 billion mark. Excellent results at the operating level as well, with operating income growing at double-digit, 10.8% in constant euros versus 2020. Third, we continue delivering on our commitment to profitable growth and value creation for our shareholders, ROTE at 12%, and a strong 10.1% increase of tangible book value per share plus dividends. All of this is allowing us to significantly increase distributions to our shareholders, including a proposed distribution of a cash dividend amount of 31 euro cents per share, the highest cash dividend in the last 10 years. And we are on track executing one of the largest share buyback programs in Europe. And last, we are on the right path to achieve the ambitious long-term targets that we announced in our investor day in November. These highlights are what I will be expanding upon in the coming pages. So page number four, New customer acquisition. As always, I love this page. Our relentless focus on growing our franchise has allowed us to acquire 8.7 million gross new clients in 2021. And as I mentioned, an all-time record. The share of those acquired through digital channels is also consistently increasing. As you can see in the graph, we have increased digital acquisition from 4% in 2016 to to an impressive 40% in 2021. That is more than 3.5 million new clients in the year acquired through digital channels, 47% increase versus 2020. Moving to slide number five, our leadership in digital has also proven to be essential and differential in our view. Let me put some figures to this on the left-hand side of the slide. We have almost 40 million mobile customers, a figure three times higher than 2016, and the record high with a 66% penetration rate. Our digital sales, I mentioned this, but it has reached 73% in terms of units and 56% in terms of value, again, record. And on digital advice, we have been designing different digital journeys, financial tools in the app to improve our clients' financial health and with direct impact, direct impact on our business. The users of financial health advisory tools through our app in Spain It has an NPS, customer satisfaction, 90 percentage points higher than non-users. These tools, they also drive digital sales. 27% of new mortgages and also 27% of new investment funds in Spain sold. They were sold with the help of these digital advisor tools. And on the right-hand side of the page, we are also investing in innovation and disruption as enablers for our growth, entering in new and attractive markets. Firstly, through Selective, Selective digital bank investments, like the digital bank Atom in the UK, our own BBVA app in Italy, Solaris in Europe, and Neon in Brazil. And secondly, through venture capital vehicles, we are investing in other fintechs, Propel. They have invested 40 companies, and 40 companies, six of the 40, they are currently unicorns in the portfolio. So Propel, I would like to highlight this once again, it has contributed 328 million pre-tax income to UVA in 2021. Moving to slide number six, we are also trendsetters in sustainability. We are at the forefront of the industry in sustainable finance commitment, and we have made great strides in this front, in my view. This year, we doubled our target of sustainable finance, granted between 2018 and 2025, our pledge from 100 billion to 200 billion. And now we are even outpacing this new pledge path, as you can see in the chart. In 2021, we have channeled 35 billion to sustainable finance, an increase of 72% versus 2020. In addition, we are one of the very first banks to announce decarbonization targets in selected CO2-intensive industries, as you see on the right-hand side of the page. And lastly, I'm very happy to announce that we have scaled up one position, and we now rank first, first worldwide in the Dow Jones Sustainability Index. Slide number seven. From this slide on, I'm going to walk you through the financials. In 2021, as I mentioned, we delivered the highest recurrent profits in the past 10 years. On the left-hand side of the slide, you can see the quarterly evolution of our net attributable profits, reaching 1,341,000,000 euros and 19 euro cents in terms of earnings per share. This figure implies doubling the results of the same quarter of last year, but for a better comparison, is also well above pre-COVID levels with a 30% increase versus the fourth quarter of 2019. On the right-hand side of the slide, you can see the evolution of our annual results. 2021, outstanding year, as I mentioned, profits surpassing 5 billion after a long, long while, even though we generate these results from a smaller geographic scope. This figure is almost, again, two times higher than 2020. But again, for a better comparison, an increase of 18.7% versus 2019. These results bring our earnings per share up to 71 euro cents. Again, one of the highest ever. Lastly, let me note that for comparison purposes, in all these numbers that you would be seeing, all these figures, they exclude non-recurring impacts, more specifically the discontinued operations, including the U.S. goodwill impairment that we did in 2020, and the results from our U.S. business sold to PNC and the one-off from the restructuring costs of the collective layoff process in Spain in the coming pages. Including all these concepts, the final reported profits for 2021, it amounts to 4,653,000,000 euros. Slide number eight, very quickly, our tangible book value per share plus dividends closed at 666, a strong increase of 0.1% year-over-year increase, very positive in our view, also noteworthy, the continuous improvement in the profitability metrics. You will see it in a second. We are growing, but we are growing profitably. And our double-digit return on tangible equity and return on equity stands out. So 12% growth, 11.4% ROE, very positive figures on the profitability side as well. Slide number nine, what stands out in terms of 2021? Let me just give you the headlines here. First, the strong activity growth, gaining momentum throughout the year, especially in the fourth quarter. We're going to talk about it in a second. Second, the strong core revenues, NAI and fees. I'm very happy with the evolution in these lines. Third, our further improving and leading efficiency ratio as a result of this fourth excellent performance of operating income, double digit growth. We love this double digit in operating income. And fifth, cost of risk evolving better than expectations. And lastly, our strong capital position, which we will discuss again in a second. Slide number 10, looking at the summarized P&L of the year, the highlight in my view is the excellent evolution of gross income and operating income. Gross income growing 9.7%, operating income growing 10.8% respectively, driven by strong core revenues, NAI and fees. And obviously, net trading income was also delivered very good numbers. Also in this page, it's important to note the positive evolution of impairments and provisions below pre-COVID levels and largely explained, not by a release and this and that, but explained by the positive evolution of the underlying risk performance of our portfolios. Very, very positive dynamics there. All in all, as I said, net attributable profit of 5.1 billion, excluding non-recurring impacts, including all 4.7 billion euros. Slide number 11, the quarterly evolution. So focusing on the fourth quarter and maybe the year-over-year comparisons on the page, the second column from the left, what stands out again is the impressive 31.1% increase in operating income. And if you couple this with the lower impairments in the quarter, it leads to an excellent net attributable profit, a growth of 84% in that. Moving to slide number Twelve, an important page for us in this quarter. As we have been anticipating in the previous results presentations, we are focused on growth. We are focused on profitable growth. And you see in this page how the continued new loan production recovery in the year, and especially, again, in the fourth quarter, has been translated into loan balance growth in both segments, in both retail and wholesale, by the way. You can clearly identify the charts, but as you can see in the page, we have grown 6.3% year-over-year in loans in the year. Obviously, very positive implications in the NII and in the fee income, and this also gives us great hopes for the coming quarter and quarters. Slide number 13, some light into the quarterly revenues breakdown and evolution. Again, one of the clear highlights in my view of the quarters. Our net interest income increased strongly versus last year and last quarter, especially boosted by the strong activity growth, as we just discussed, and also some spread improvements in countries and higher CPI-linked risk contribution in Turkey. As mentioned, the NAI recovery has accelerated quarter over quarter, leading to a significant increase of 10.5% versus the previous quarter and 16.5% year over year. Next on the page, Extraordinary, in my view, extraordinary evolution of net fees and commissions, growing 22.2% year over year. We see this positive evolution across the board in such a way that this is once again the highest quarterly figure reported over the past years. Net trading income on the page at the bottom continues with an outstanding performance again year over year and quarter over quarter, all in strong growth in gross income of 22.9% versus the same period last year. Slide number 14. I would first highlight the fact that we end the year with positive jobs, thanks to our strong gross income. And despite the costs growing at 8.5%, slightly higher than the blended inflation rate in our footprint. You know us. We typically deliver lower cost growth than blended inflation. In this year, in these quarterly numbers, the increase of expenses is largely affected by the normalization in variable compensation. You would remember this, which was especially low and even non-existent. for certain roles in 2020 due to COVID. So there's a clear base effect here. And then the results of 2021 obviously was very good. In fact, if we exclude the variable compensation effect, so if we neutralize that line, expenses would have increased 3.6%. Again, much below inflation, our typical trend. And as we expect also that trend to continue in the coming year. In the middle of the page, you see the improvement in the efficiency ratio, the best compared with our European peers, and we continue to improve on this best position. We have improved our efficiency ratio to 45.2%, improving 53 basis points in the year. Slide number 15 on risk indicators, solid performance, very solid performance, good performance of total impairments in the quarters, more aligned and even better than the pre-COVID levels in absolute terms. This is, again, mainly explained by the positive evolution of the underlying risk performance of our portfolios in most of our geographies. We have done some prudential provisioning in the FX commercial portfolio in Turkey in the fourth quarter. But in terms of the underlying risk parameters, we see a very positive picture. And the numbers that you see does not include any release of buffers and this and that. No, these are underlying risk parameters showing resilience and strength. Year-to-date, the cost of risk closes at 93 basis points, significantly better than initial expectations, versus the 155 in 2020, and also comparing very positively with 2019 levels of 104 basis points. Regarding the rest of the asset quality indicators, we see a slight increase in the MPL ratio in the quarter to 4.1%, while our coverage ratio decreases to 75%. This is explained by the implementation of the new definition of default guidelines of the supervisors. We have made this decision for financial books in order to be aligned with the solvency slash prudential rules of the supervisor. And as you know, it is more conservative in comparison with IFRS 9 approach when classifying the loans to stage number three. As a result, the numbers are showing a slight increase in the MPLs. In fact, if we exclude this new definition of default impact in accounting, if we exclude this effect, MPL and coverage ratios, they would be standing at 3.8% MPL, a decrease, and 80% coverage ratio. Slide number 16, as we have repeatedly stated, we have a clear focus on value creation for our shareholders, which guides all of our decisions. In this regard, we have recently made some important announcements, as you all know. On the one hand, we raised our policy regarding distributions to shareholders. to a payout ratio of between 40 to 50% of our profit, as you remember, an increase in the payout ratio. And as you can see in the left-hand side of the slide, I'm very happy to announce that the proposal to be sent to the next AGM, it foresees the distribution in cash, cash of 31 Euro cents per share from 2021 results, of which 23 Euro cents per share will be payable in April, complementing the eight Euro cents we already paid in October 21. This is the highest dividend per share in cash in the past 10 years. The total amount to be distributed, it corresponds to a payout of 44% of the net attributable profit, including the BVA USA results and the net impact from the destruction process in Spain. Additionally, as you all know, we announced one of the largest share buybacks in Europe for a maximum amount of 3.5 billion. We have already executed 60% of the first tranche of 1.5 billion, and we will start The second tranche of $2 billion, as soon as the first is fully executed, estimated to be in March. So we will start immediately the second billion in March. And we expect that to last another four months or so. So we will be closing at the end of the second quarter, third quarter, beginning of the third quarter. In sum, we have increased significantly our shareholders' distribution, $5.5 billion in total, considering the $2 billion of dividends and the $3.5 billion of share buyback. which if you combine them both, it represents roughly 15% yield over BBVA's market cap. Slide number 17, our capital position, our CET1 fully loaded as of December 2021 stands at 1275. This level is 415 basis points above our recently received, it was actually two days ago or yesterday, SREP requirement of 8.60 for 2020, which remains stable. On the evolution in the quarter, let me first highlight that December 21 ratio, it includes deduction of the 3.5 billion share buyback program, which has an impact of 130 basis points. The results, the results add 44 basis points to the ratio. Then the dividend accrual and the 81 coupon payments, it is attracting 26 basis points. This reflects the higher final payout of 44%. versus the 40% that we have been accruing during the year. So an additional six basis points impact here because we wanted to pay higher dividends to our shareholders. So additional six basis points impact coming from here. Besides that, this quarter, the capital evolution is mainly explained by the RWAs increase, detracting 49 basis points. The most relevant RWA impact, around 60% of it, or 29 basis points, is explained in my view by a very good reason, the strong credit activity growth across the board. And we have discussed it aligned with the 4%, close to 4% loan increase only in the quarter, only in the fourth quarter. Growing, but as I mentioned, growing profitably as demonstrated also by the improvement in our profitability metrics in the quarter. So 29 BIPs goes to credit RWAs. The strong gross income evolution in the year has a direct implication in the operational risk capital consumption, whose calculation, as you might know, is updated once a year in December and, as you know, is positively correlated with the revenue performance. So better gross income has led to higher operational risk RWAs. This explains nine basis points. And finally, RWAs have also been affected by market risk-related RWAs, which explains 11 basis points, impacted mainly by Turkey and the CDS levels in Turkey and so on at the end of December. But a good part of this is already reverted or will be reverted in the first quarter. And lastly, the bucket of others of 12 basis points, you see it in the details in the footnote, but many other components come in there. And finally, slide number 18. on our long-term targets announced in the investor day. Let me just save time. I will not go into each one of them, but I can say clearly that we are very well positioned to achieve them all. And you will see the trends in the page. So we are very confident on the path that we are on to achieve our goals in the middle and long term. Now for the business areas update, I turn it to Rafa. Rafa.

Thank you very much, Onur. Good morning, everyone. Let me begin with Spain, slide number 20. Positive loan growth, close to 2% year-on-year in 2021, driven by a continued growth in the most profitable segments, consumer lending and SMEs, an improvement in mortgage portfolio devaluation rate, and a progressive recovery in the commercial segments, accelerating in the last quarter of the year. For 2022, We expect a slight growth in performing loans in Spain, with consumer loans to continue growing at a high single digit. Going to the profit and loss account, in 2021, pre-provisioning income grew 14.5% thanks to core revenue growth and higher contribution from the net trading income. Core revenue growth was elevated by the strong performance of fees growing above 20% in the year, with growth in all headings, mainly in those coming from asset management, banking services, and insurance after the JV with Allianz. Expenses decreased slightly in 2021, reflecting our continued cost control effort that have offset the increase in the variable compensation as activity and result continue to recover. In any case, We should keep in mind that the expenses compared with a normally low 2020, and when compared to 2019, they have declined by 7%. All in, we can see a very positive growth in Spain this year that lead to an improvement in the efficiency ratio of 3.4% to 51.1% ratio in 2021. Sound asset quality ratios with cost of risk down to 30 basis points in 2021, in line with expectations. All in all, very good results with net attributable profit in Spain above pre-COVID levels. For 2022, in terms of the P&L guidance, we expect in Spain NII excluding TLTRO flat to slight growth, net fees and commission flat consolidating 2021 outstanding levels, expenses to decrease in mid-single-digit and efficiency improving, and cost of risk around 30 basis points. Slide number 21, moving to Mexico. The loan portfolio growth accelerated gradually, ending the year at 6.5% in line with expectations. Retail segment drove loan growth with an outstanding performance in mortgages, credit cards, and SMEs, while commercial segment performance improved in the last quarter, reaching a 3% growth quarter-on-quarter. For 2022, we expect the loan portfolio in Mexico to grow at mid-single-digit. In terms of the P&L, net attributable profit increased 43% compared with 2020, thanks to the good performance of core revenues. Net interest income evolution was favored by the loan growth mentioned and by the improvement of the customer spreads thanks to our effort to reduce deposit costs and the improvement in deposit mix. For 2022, we could see NII growing at high single digits. Also on the core revenues, strong free growth driven by the recovery of activity and higher transactionality. On the other hand, expenses grew 10.9%, mainly explained by variable compensation normalization linked to the recovery of activity and result. In fact, excluding the increase in the variable compensation in 2021, expenses in Mexico will have increased by 5.9% year-on-year, in line with the aggregate inflation of 5.7%. All in, the efficiency remains at very sound levels at 35% in 2021. For 2022, we expect expenses to grow at mid-single digit with positive jaws, resulting in an improvement of efficiency ratio aligned with our long-term 24 target. In terms of assets quality, we see a slight increase of the NPL ratio and a reduction of the coverage ratio, explained by the fact that we have already implemented EBA's new designation of default for accounting purposes. with no significant impact in terms of cost of risk. In fact, there is a continued improvement of the cost of risk along the year, supported by good underlying trends on the loan portfolios, ending at 267 basis points in 2021. For 2022, we expect cost of risk at the end of the year below 300 basis points, in line with our long-term targets. Slide 22, Turkey. Starting with activity, TL loans have grown significantly in 2021 with double-digit growth in both retail and commercial segments, while foreign currency loans declined year-on-year in line with our strategy to reduce foreign currency loan exposure. For 2022, we expect TL loan growth at above 25%. and foreign currency loans to continue declining. In terms of P&L, gross income grew 25% in 2021, with a strong performance across the board. Continued improvement of the NII in the year, accelerating in 4Q, thanks to the TL loan growth, an improvement on the TL customer respect, and a higher contribution for the CPI linkers bond. For 2022, we expect NII to grow above the growth of the TL loan portfolio. Excellent performance in fees, mainly driven by payment systems and the higher activity when compared with 2020, and strong net trading income in the year, mainly due to a higher contribution from global markets and better foreign currency results, favored by market volatility. On the other hand, expenses growth is impacted by high inflation and the Turkish lira depreciation. All in, efficiency remains strong at 29.5% and we expect efficiency ratio to improve in 2022. Impairment significantly declined in 2021, impacted by the front-loaded provision book mainly in the first quarter of 2020, and the very good underlying performance trend of the different portfolios. In the fourth quarter, we have both higher impairment versus the previous quarter, mainly driven by our prudent risk assessment of foreign currency sensitivity wholesale clients, increasing their coverage. All in, cost of risk stands at 133 basis points in 2021, and for 2022, we expect the cost of risk to be around 150 basis points, although macro uncertainty remains high. And finally, slide 23, moving to South America, we provide some color on the main countries. In Colombia, the loan portfolio grew significantly. thanks to a good performance of both retail and commercial segments. On the profit and loss account, the net attributable profit increased 45.4% compared with 2020, driven by core revenues growth and lower impairment figure. In Peru, the loan portfolio benefited from improving economic conditions, reflecting mainly in the retail portfolio that grew above 8% in 2021. The strong core revenue growth, the positive jobs, and the lower impairments explain the increase of 28% in net attributable profits. Lastly, Argentina shows a positive net attributable profit contribution to the group of 63 million euros, despite a higher inflation adjustment, thanks to the net interest income growth favored by the higher securities portfolio contribution and fixed growth favored by higher transactionality. For 2022 and for the region, we expect long growth in line with 2021 and improvement in efficiency aligned with our long-term goal and cost of risk below 200 basis points. All in, very solid results in all our franchises, levered on core revenue growth and higher activity levels together with very positive trends on the asset quality side, leading to a significant reduction of the cost of risk across the board. And now, back to Onur to highlight the main taker weights on 21 and outlook for 22 results.