“Digitalization allows us to penetrate new markets”

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– Q: One of your biggest divestments was the sale of your US unit to PNC. Do you think this has been positive for the bank?

-A: This was a historic operation for BBVA, which allowed the enormous value of this franchise to emerge. In figures, the total amount of cash received, which reached approximately 11.5 billion dollars (approximately 9.6 billion euros), represented twenty times the results obtained by the unit in 2019 and more than 50% of our market capitalization when we announced the transaction, for a company that contributed less than ten percent of net income Group share in 2019. It was therefore more than 2.5 times the value that analysts attributed to the unit (3.8 billion euros). For this reason, it is an operation that demonstrates BBVA’s total commitment to creating value for shareholders. The capital generated by this transaction (approximately 8.5 billion euros) gave us many strategic options to invest in our markets profitably and to increase the remuneration of our shareholders. Operationally, we negotiated and executed the transaction in 2020 with all travel restrictions due to the pandemic. It was the first deal the teams made 100% remotely.

– Q: You have refocused your activity by divesting from your units in Paraguay and Chile in order to concentrate on more strategic regions…

-A: One of our priorities is profitable growth in the markets where we operate, such as Spain, Mexico, Turkey and Latin America. We currently have leading franchises with double-digit market shares in all the countries where we operate.

In most of them, these market shares are around 20% or more. And we are not only leaders in size, the profitability of our franchises is superior to that of our competitors. We certainly have amazing banks where we are and we want them to continue to grow. At a time, this strategy is accompanied by digital growth in new markets with potential.

We added 225,000 customers through digital channels in the first quarter, and another 90,000 in March alone, which is a new record.

– Q: At the end of 2020, you announced negotiations for a possible Sabadell merger, which did not materialize. Is a new banking concentration process needed in Spain? Does BBVA want to direct it?

– A: We focus on organic growth, although we are always analyzing the opportunities that may arise in the markets where we are present. This also applies to Spain. Regarding size, one of our priorities is to grow through customer acquisition. In the Spanish market, we added 225,000 customers through digital channels in the first quarter, and another 90,000 in March alone, which is a new record. Our prediction is that we will add approximately one million new customers in 2022. Regarding the concentration process in Spain, in the current environment, consolidation is a driver that the financial sector can use to increase profitability in a sector where scale and globality are increasingly important.

– Q: You have also launched one of the largest bancassurance partnerships in Spain with Allianz. Does it allow the group to enhance its insurance activity?

-A: This partnership in non-life insurance gave us the opportunity to strengthen our value proposition. Improving an insurance offer is essential to improve the financial health of our customers. And we believe this is the right strategy. Without going any further, this joint venture between Allianz and BBVA was one of the first insurance companies in Spain with the highest volume of home insurance premiums in its first year of existence.

The sale of our US unit was a historic transaction for BBVA. The amount of cash received (approximately €9.6 billion) represented twenty times the results obtained by this division in 2019 and more than 50% of our market capitalization.

– Q: BBVA was one of the pioneers of Corporate Venture Capital. You’re now working through the North American fund, Propel Venture Partners, right?

-A: Exactly, BBVA strengthened its fintech investment activities in 2011 by creating BBVA Ventures. This unit has allowed us to obtain very valuable market intelligence for the development of our digital strategy, promote innovation in payments, finance, technology and financial inclusion and have early visibility in new spaces like blockchain/crypto. Several years later, we created Propel Venture Partners from BBVA Ventures, looking for greater autonomy and flexibility to have a broader and more diversified investment portfolio. We also aimed to give Propel better alignment of incentives with entrepreneurs, as co-investors in those companies with a clear focus on creating long-term value. Propel has had great success investing in disruptive financial services startups. Since its launch in 2016, it has invested in more than 40 companies in five countries (United States, Mexico, United Kingdom, India and Brazil). Some of them have reached unicorn status, like Personal Capital, Coinbase, Hippo, SumUp, Groww; and others are worth more than $500 million. Finally, we are expanding our areas of investment to other areas, such as green technologies to decarbonize the planet and technological transformation in different industries. An example of this are recent investments in Lowercarbon and Leadwind. With them, we seek not only an attractive financial return, but learn new technologies and new business models and create synergies that position BBVA as the corporate bank of the future.

– Q: How was the start of 2022 for you? What were your first quarter numbers?

-A: Despite the complex environment, with the Ukrainian conflict mainly affecting the economy in Europe, we achieved magnificent results in the first quarter with good momentum in all business units, thanks to revenue growth and improved indicators of risk. Therefore, the group posted the highest recurring quarterly profit in its history: 1.65 billion euros. We have also significantly improved our profitability and efficiency, putting us ahead of our European competitors: ROTE and ROE have reached 15.9% and 15.1 respectively, and the efficiency rate has increased to 40, 7%. In terms of progress in executing our strategy, this quarter, we set a new customer acquisition record, with over 2.4 million – 57% via digital channels. This is an 81% increase in digital customer acquisition compared to the same quarter last year. The channeling of sustainable finance was also a record: 11 billion euros between January and Marchreaching a total of €97 billion of our commitment to channel €200 billion between 2018 and 2025.

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