Banco Bilbao Vizcaya Argentaria S.A.

Good morning and welcome everyone to BBVA's first quarter results presentation. Following yesterday's massive power shortage in Spain, the situation in Madrid is now almost fully restored, so we expect to be able to conduct today's earnings call normally. As usual, I am joined today by our CEO, Honor Gens, and Luisa Gómez Bravo, the group's CFO. After today's review of the quarterly figures, we will open the line to receive your questions. Let me remind you that, in addition to asking questions live through the conference call operator, you also have the option to submit your questions in writing via the Ask a Question section located just below the video you are watching. This option is available in case you experience any issues with the phone line. Any questions submitted through this channel will be read during the Q&A session and answered accordingly. We apologize for any inconvenience caused by this situation and sincerely thank you very much for your understanding and cooperation. Now I will turn the call over to Anul.

Thank you, Patricia. Good morning to everyone and welcome and thank you for joining BBVA's first quarter 2025 earnings webcast. The ones who are connecting from Spain or the ones who have friends and family in Spain, I hope everyone is safe and sound after yesterday's blackouts. And let's just jump into it, starting with slide number three. In line with our strategic priorities of value creation and profitable growth, I would like to start the presentation today by highlighting the two financial metrics that best reflect these priorities, tangible book value growth and profitability. On the left-hand side of the slide, you can see the strong evolution of tangible book value per share plus dividends, which increased by 14.1% year over year and 3.3% in the quarter, In our view, very good figures despite the relatively high currency depreciations that we have experienced in the quarter. On the right-hand side, our profitability continues to improve. In the first quarter of 2025, we reached an outstanding return on tangible equity of 20.2% and a return on equity of 19.3%. These profitable metrics would most likely place us, others have not announced yet, but would most likely place us once again as the most profitable European bank among the 15 largest banks of the continent. Page number four, on the left-hand side, you can see our net attributable profit in the quarter, reaching €2,698,000,000, another very strong quarter. This represents, as you can see also on the page, a 23% increase compared to the same quarter last year, and also 10.9% higher, this number, versus the previous quarter. These results are due to the repeated excellent performance in our view of our core business, as can be seen in the growth of our core revenues that I will be explaining in a second. This profit figure translates into earnings per share of 45 euro cents, a 24% increase year over year. And finally, and very importantly, regarding our CET1 fully loaded capital ratio on the right-hand side of the page, it's improved by an exceptional 21 basis points during the quarter, reaching 1309, obviously well above our target range and regulatory requirements. Moving to page number five, this page is a summary of the pages to follow, so I will not dwell too much on the page, but just a quick introduction to different highlights of the quarter. First, net interest income grew by 8.5% year-over-year, driven by very strong business activity, up a superb, in our view, 15.1% growth in activity. Second, net fees and commissions showed an excellent evolution, increasing by 19%. Third, our industry-leading efficiency ratio, it continues to improve, reaching 38.2% this quarter. Fourth, asset quality, it remains solid and is performing better than expected, with a cost of risk at 130 basis points. Fifth, our robust capital position, as I just mentioned. And sixth, continued outstanding growth of our underlying business franchise, attracting a record 2.9 million new customers and reaching 29 billion euros in sustainable business in the quarter. Slide number six, as always, the summarized P&L of the quarter. You can find the year-over-year quarterly evolution in the second column from the left, in constant, and right next to it, in current terms, the third column from the left. Basically, the P&L continues its impressive evolution thanks to the strong core revenue growth with a year-over-year increase in gross income of 28% in constant and 13% in current euros and maintaining positive jobs. On this one, regarding the banking tax in Spain, Please note that last year, net attributable profit in the first quarter of 2024 had a 285 million euros annual impact recorded in other income and expenses heading. This year, in the first quarter of 2025, we have booked an 85 million euro charge in the income tax heading for the quarterly accrual of the new banking tax because the structure of the tax has changed. So it's only for the three months, 85 million under the income tax line versus the 285 million in the other income line of last year. The broader messages do not change, but as you compare the figures, the columns, please take into account this set of one-off impacts. Slide number seven, as usual, let's look into the revenue breakdown. First, net interest income growth remains at very strong levels despite declining rates in our core geographies, and AI growing by 8.5% year-over-year and 1.7% quarter-over-quarter, again, supported by very robust activity growth. Second, net fees and commissions continued their excellent trajectory, 19% up versus the same quarter last year. This growth was mainly driven by our payments and asset management businesses. Compared to the previous quarter, there was a 2.7% decline, but this is completely explained by the seasonal success fees that we record in the fourth quarter in Spain for asset management activity in Spain. Third, we have had another very strong quarter in net trading income, driven by solid performance in global markets units, as many other banks have experienced. And also, as a result of all of this, gross income growing by an excellent 28% year-over-year and 3.9% quarter-over-quarter. Moving to slide number eight, let me now focus on activity and loan growth, which increased, again, a very strong 15.1% year over year at the group level. This is very encouraging for the coming quarters, especially, as I always say, this growth is delivered profitably. I mean, we measure this loan by loan on a marginal basis through our return on capital framework. So the profitable growth and the increase in the activity will be helping us in the coming quarters. But in Spain, on the right-hand side of the page, you see the breakdown by the countries. Long growth in Spain has continued to accelerate, reaching 6.6 year-over-year growth, a growth level unforeseen for quite a long time, actually. And within that, our key segments are performing really well. Consumer and credit cards, they grew by 7.5%. And aligned with our new strategic priority, lending to enterprises, it grew better than average by 8.5%. In Mexico also, loan growth accelerated significantly, reaching 17.2% year-over-year growth. If you isolate for the FX effect, the tipo de cambio, the currency impact, the growth is still a very strong 14% for Mexico. Consumer and credit cards, they grew by 15.3%, while lending to enterprises, again, a strategic priority for us, better than average, remarkable 25%. Page number nine, looking forward, obviously we live in some uncertain times, clearly uncertain times, but given the relatively low leverage levels in our footprint countries, we do believe in the potential of further credit growth without creating too much cost of risk in our core geographies. In the page you see that, but for example in Spain, after so many years of deleveraging, we are now less than the EU average in leverage. And given all the relatively positive macro factors for Spain, we expect the strong long-growth trend to continue. And in the case of Mexico, we discussed it from time to time, we see one of the lowest levels of leverage, even in the emerging markets landscape. And with increased bankerization, we do believe that the Mexican financial system is bound to grow healthily, in our view, going forward. Slide number 10, you can see all that positive trend in activity in Spain and Mexico, how it translates into solid core revenue growth in the P&L, even in a declining rate environment. So looking at the charts in the middle, in Spain, NAI, it grew by 1.2% year-over-year, despite a decline in the ECB depot rate from March 2024 to March 2025 of 150 basis points. In Mexico, NAI, it rose by a strong 7.6% year over year, once again driven by the robust activity. Again, despite a decline in the central bank, Mexican central bank rate of 200 basis points in the last year. As you know, over the last two years, we have actively managed our balance sheet sensitivity to rates, both in Spain and Mexico, in the context of higher rates. We increased the size of our ALCO portfolio, and we extended the duration, and we are seeing the benefits of this. We sacrificed some margin, by the way, in the short term, in that time, and we did that, but we were trying to protect our margin in the future, and again, you are seeing that in the figures. This strategy, combined with the solid growth in the business activity, makes us confident in the future and AI evolution. Turning to fee evolution on the page, right-hand side, 6.8% year-over-year increase in Spain, 5.8% year-over-year increase in Mexico, mainly driven by asset management, so very good numbers there as well. Slide number 11, left-hand side of the page, we have widened our positive jaws at the group level, driven by a strong performance in gross income. As we said, 28% increase year-over-year. Slower pace of growth in costs, 14%. It is also below the group's average inflation rate. As a result, on the right-hand side of the page, you can see our leading efficiency ratio, which has further improved to 38.2%, an improvement of 469 basis points versus last year. Slide number 12, this page shows the positive evolution of our asset quality, asset quality metrics. They are performing ahead of expectations, better than expectations. At the bottom left, you see the cost of risk. It stands at 130 basis points. This improvement is due to better than expected performance in most of the business units, but notable improvements in Mexico and Spain. And on the bottom right, both our NPL and coverage ratios are at their best levels for quite some time, standing at 2.9% for NPL and 82% for coverage. Slide number 13, on capital, we have generated an exceptional 21 basis points CT1 in the quarters, bringing our CT1 ratio to 1309. And in the waterfall, you see it from left to right, our results, 68 basis points, then dividend accrual and 81, deducting minus 37 basis points. Third, minus 30 basis points due to the RWA's growth, This figure reflects for yet another quarter our ability to reinvest part of our capital generation into profitable growth. It also includes the result of several risk transfer transactions that we did, which positively contributed 13 basis points to the ratio. So in line with our new strategic framework, which puts even more focus on value and capital creation, with potential uses of risk transfers. Our RWAs in the quarter, they are growing much less than our activity. And you have in the page also a bucket of others, 20 basis points, which comprises, among others, the market-related impacts, which was relatively muted in the quarter, and the credit in OC that accounting-wise, it neutralizes the deduction in the P&L bucket due to hyperinflationary accounting. Page 14, to show you how we continue growing our franchises through new customer acquisition. And I said it many times before, but we believe that the most healthy way to grow the balance sheet is by expanding our client franchise across all segments. In the first three months of 2025, we acquired a record 2.9 million new customers. 66% of them joined us through pure digital channels. I mean, populations and the company count in our markets. They don't grow at this pace. So maintaining such a strong rate of new customer acquisition, it requires a significant and ongoing effort. And thanks to that effort, our active customer base, it has grown from 56 million at the end of March 2020 to more than 78 million as of March 2025, an outstanding increase in our view over the past five years. Turning to slide number 15, sustainability, another strategic priority for us, a key driver of our differential growth. We have set an ambitious goal to channel 700 million euros between 2025 and 2029. more than double the previous target of 300 billion set for the 2018 and 2025 period, which we achieved one year ahead of schedule, as you know. And this higher, more ambitious objective will be targeted over a shorter timeframe, five years instead of eight. So we are determined to push our business through sustainability as well, and we are creating very good numbers. The results are quite self-explanatory. Record sustainable finance figure in the first quarter. And now, for the business areas update, I turn it to Luisa. Luisa?

Thank you very much, Anur. And good morning, everyone. On slide 17, starting with Spain, Spain delivered yet another impressive set of results, surpassing €1 billion net profit in this first quarter of the year, thanks to a strong gross income increasing by more than 6% quarter over quarter. NII has performed remarkably well, growing by 1% quarter over quarter, despite the lower interest rate environment. This performance is driven by very sound loan growth, particularly in the most profitable segments, as owners said, consumer and enterprise lending, and a higher contribution also from ALCO portfolios. Loan growth accelerated during the quarter, reaching 6.6% year-over-year, driven by a nearly 20% increase in new loan origination compared to the same period last year. It was also a strong quarter for fees, which grew by 5% on a like-for-like basis with solid growth across all lines. The quarter-on-quarter decline was mainly due to the recognition of asset management success fees in the fourth quarter of last year. All in, all strong gross income growth both in the quarter and year-on-year. This, along with well-contained costs, has brought the efficiency ratio to an exceptional 32%. For its part, risk metrics continue to improve during the quarter, with a further decline in the NPL ratio and an increase in the coverage level, driven by the positive evolution of NPLs. Cost of risk declined to 30 basis points, better than expected. Looking ahead, and despite the more uncertain environment, we are maintaining or slightly improving our full-year guidance for Spain. In this regard, we are expecting low to mid-single-digit loan growth for the year with a positive bias, considering the strong start of the year. We reaffirm our guidance for a slight decline in I.I., even in a context of lower-than-anticipated rates. We remain confident in achieving low single-digit growth in fees, subject to market volatility. And finally, we are improving our guidance on cost of risk to around 35 basis points, supported by the solid start of the year. Now turning to Mexico, once again, Mexico delivered exceptional results, with net profit growing by nearly 8% year over year, driven by strong core revenue growth of 7.3% year over year. Net interest income continued to grow robustly, supported by increased lending activity growth. Credit demand remains remarkably strong with solid growth across both retail, mainly driven by consumer and SME lending, and commercial, where we continue to see healthy dynamics following a very strong fourth quarter, particularly in short-term lending. In addition, we are seeing an increasing contribution from our ALCA portfolio, which we expect to continue in the coming quarters as rates continue to decline. Fees continue to grow at a healthy pace, increasing by nearly 6% year over year. In addition to strong credit card and payment fees, which represent over 50% of total fees in Mexico, we are seeing an increasing contribution from asset management and CAB-related fees. Overall, strong revenue growth has allowed us to maintain our efficiency ratio at an impressive 30%, despite higher expenses mainly reflecting the carryover effect from salary reviews and headcount increases, particularly related to internalizations and IT profiles during 2024. We expect cost growth to gradually slow down over the course of the year, in line with our high single-digit growth for the year guidance. Finally, asset quality metrics are performing ahead of expectations. Impairments declined driven by improved performance in retail portfolios, and the cost of risk decreased to 305 basis points in the quarter. All in all, after a very strong start of the year, we remain confident in our ability to continue delivering on our guidance for Mexico throughout the rest of the year. We reaffirm our guidance for loans growth at high single digit and for NII to also grow at high single digit, although below that of activity. Despite the expected economic slowdown and the potential impact of provisions from the IFRS 9 macro adjustments, we are maintaining our cost of risk guidance at 350 basis points, supported by the positive evolution of risk metrics at the start of the year. Going to slide 19, Turkey reported a net profit of 158 million euros for the first quarter, representing a 10% increase compared to the previous year. Higher revenues and a lower impact from the hyperinflation adjustment more than offset the increase in impairments. As expected, net interest income increased, driven by a significant expansion in the Turkish lira customer spread, up 91 basis points during the quarter. This improvement was largely driven by a decline in Turkish lira deposit costs in a context of declining interest rates. Our positive sensitivity to lower rates in Turkey enables us to benefit from a faster downward repricing of our customer deposits. In addition, loan growth continued across both Turkish lira and foreign currency portfolios. We also see strong performance in fees, supported by payment services and higher contributions from asset management and insurance. On the asset quality front, the cost of risk continued to normalize, standing at 189 basis points in the first quarter, in line with our full-year guidance. This reflects higher provisioning needs in the retail segment, consistent with the elevated interest rate environment. Looking ahead, in a context of temporary monetary tightening to anchor inflation expectations, we expect a progressive but more gradual improvement in the Turkish lira customer spread through 2025. As such, given slightly higher than initially anticipated inflation and interest rates by the year end, we now expect guaranteed BBVA's net profit to close somewhat below €1 billion in 2025. And finally, let's turn to South America. South America continues to deliver a solid earnings contribution to the group, with net profit exceeding 200 million euros in the first quarter. Solid results this quarter were supported by revenue growth, lower impairments, and a reduced impact from the hyperinflation adjustment in Argentina as the disinflation trend continues. Net interest income performed well, driven by loan growth across the most profitable segments and improving customer spreads in Peru and Argentina. Beyond NII, we also saw a positive contribution from fees and stronger net trading income. Additionally, this quarter we recorded significantly lower impairments in Peru and Colombia, reflecting the improving asset quality trends that we had anticipated, supported by a more favorable economic environment, including lower interest rates and some adjustments to our risk appetite in the most vulnerable portfolios. Overall, the cost of risk for the region stood at 230 basis points below our full-year guidance. All in all, the outlook for the region is becoming more positive, supported by an improving economic environment. Now back to Onur for the final remarks on the quarterly results.