Banco Bilbao Vizcaya Argentaria S A : 3Q19 Results Press Release

Press Release

10.31.2019

BBVA earns €1.23 billion in third quarter, €3.67 billion in first nine months of 2019

BBVA earned €1.23 billion in the third quarter, +6.1 percent yoy, excluding capital gains from the sale of BBVA Chile and this franchise's earnings in 2018. The net attributable profit for the first nine months of 2019 reached €3.67 billion, +1.2 percent yoy (+0.5 percent in constant euros), on a comparable basis. The result was driven mainly by growth in recurring revenues and containment in operating expenses.

The bank reaffirmed its position in efficiency and profitability, as well as its strength in risk indicators and capital position. BBVA remains at the forefront of digital transformation, with positive impact on growth, efficiency and customer engagement..

EARNINGS 9M19: €3.67 BN

TRANSFORMATION & SUSTAINABILITY

At the forefront in efficiency and profitability
Efficiency ratio 48.7%, ROTE 12.2%, ROE 10.1%	Digital	58.9%
sales
		(% of total)
Outstanding shareholder value	Strong capital position	49.7%	55.7%
creation	within the target range
TBV/Share+dividends	CET1 fully-loaded	Mobile	Digital
+14.2% YoY	11.56%	customers	customers
Stability in risk indicators	2025	€100 bn
NPL ratio 3.9%,	Coverage ratio 75%,	Pledge
Cost of risk 1.01%	As of June	€22 bn
		2019

"We continue to see positive dynamics in our business, with operating income growing at 10 percent yoy in the third quarter, driven by recurring revenues and the continuous improvement in efficiency. Despite a complex macroeconomic environment, our diversified model also allowed us to maintain sound risk indicators and a solid capital position."

Onur Genç, BBVA CEO.

To better understand the yoy comparison, all figures below exclude BBVA Chile's earnings through July 2018, date on which BBVA sold this franchise.

BBVA Group's net interest income reached €13.48 billion from January through September 2019, +6.3 percent yoy at current rates (+7.1 percent in constant terms, i.e. excluding exchange rate fluctuations). Mexico, South America and Turkey all showed a positive performance. Income on net fees and commissions reached €3.74 billion, +3.4 percent at current exchange rates (+3.8 percent at constant exchange rates).In 3Q19 this item reached €1.29 billion (+6.4 percent in constant euros), the highest figure in the past 10 quarters. Both lines combined, considered the recurring revenue items of the banking business, increased

6.3 percent at constant rates, to €17.22 billion for the January-September period.

The Group's net trading income stood at €893 million through September (+2.6 percent at current exchange rates, +3.9 percent at constant rates), mostly thanks to capital gains on the sale of Prisma in Argentina during 1Q19 and positive contributions from the U.S. and Mexico. Gross income reached €18.12 billion, a 4.8 percent

growth at current terms (+5.5 percent in constant euros).

The income statement confirms the solid trend in containing operating expenses, which grew 2.9 percent yoy through September (+3.2 percent at constant rates), significantly below the average inflation rate across BBVA's footprint (6.0 percent). A positive performance in operating expenses and growth in recurring revenues

10.31.2019

allowed the Group to deliver positive jaws, improving the efficiency ratio, which stood at

48.7 percent at the end of September, 75 basis points below the 2018 year-end figure at constant exchange rates). This ratio remains well below the average of its European peer group (63.5 percent as of June 2019).

Operating income reached €9.3 billion during the first nine months of the year, +6.6 percent yoy (+7.9 percent at constant exchange rates).

BBVA Group's attributable profitreached €3.67 billion through September, +1.2 percent (+0.5 percent at constant rates) excluding capital gains on the sale of BBVA Chile in July 2018. In 3Q19, the Group's net attributable profit reached €1.23 billion, up 6.1 percent from the same quarter of the previous year (again, excluding corporate transactions). The net attributable profit between January and September was 15.2 percent lower yoy, if BBVA Chile is included in the comparison.

Net attributable profit BBVA Group

Breakdown 9M 20191

		Spain
Rest of Eurasia	1,064
	103€M
South		23.4%
America		2.3%	USA
569€M
12.5%	478€M

8.3% 10.5%

Turkey

380€M

43.1%

Mexico

1,965 €M

(1) Figures exclude corporate center.

In terms of value creation for the shareholder, tangible book value per share plus dividends was €6.51in the first nine months of the year, a figure that represents a 14.2 percent increase compared to the same period a year earlier. BBVA also continued to post double-digitprofitability metrics, with ROTE of 12.2 percent, well above the average of European peers (8.3 percent, as of June 2019) and ROE of 10.1 percent (compared to a 7.0 percent average for European peers, also as of June 2019). The Group maintains its shareholder remuneration policy, which envisages a pay ratio in cash of 35 to 40 percent of profit. In this sense, on October 15, BBVA paid a gross interim cash dividend of €0.10 per share.

The fully loaded CET1 capital ratio stood at

11.56 percent in September, within the Group's 11.5-12 percent range, thanks to its organic capital generation capacity (22 basis points ytd, after absorbing 24 basis points on the back of regulatory impacts).

Asset quality indicators remained solid during 3Q19, in line with previous quarters. Coverage ratio stood at 75 percent at the end of September, the NPL ratio at 3.9 percent and the cost of risk at 1.01 percent.

As for lending activity, customer loans and advances grew 1.3 percent compared to December 2018, to €378.78 billion, with growth in Mexico, and, to a lesser extent, in South America and Rest of Eurasia business areas. Customer funds grew 0.9 percent between January and September to €379.33 billion, and off-balance sheet resources increased 7.8 percent, driven by the performance of both mutual and pension funds.

The world's best app

10.31.2019

BBVA continues to lead the digital transformation. Consulting firm Forrester Research named BBVA's banking app in Spain the world's best for the third year running.

The number of digital customers increased 17 percent over the past 12 months to 31 million, accounting for 55.7 percent of the customer base. Within this group, mobile customers grew 26 percent to 27.6 million, or 49.7 percent of the total customer base, inching closer to the 50 percent target set for the year. Finally, digital sales accounted for 58.9 percent of total unit sales and 44.8 percent in terms of economic value (PRV), in line with the target to surpass the 50-percent threshold in 2020.

Customer penetration rate

42.3%		49.8%		55.7%

Customer penetration rate

32.1%41.6%49.7%

Thanks to its transformation, BBVA hasgrown its customer baseas wellas its sales.For instance,in Mexico, from September 2017throughthe same month of 2019, thenumber of activecustomers increased by more than two million.Consequently, total sales throughSeptember grew 14 percent compared to thesameperiod of 2017, drivenby digital sales (which grew 131 percent over thesame period). Also,thetransformation processis driving customer satisfactionand retention rates.BBVA obtained thehighestNet Promoter Score(NPS)of the Mexicanbankingindustry.Thecustomer attrition rate is 54 percentlower amongthose who interact with thebank viadigital channels. Theuse of digital channelsalsodrivesefficiency,lowering operatingexpenses.

Sustainability

In September 2019,BBVA signed thePrinciplesfor ResponsibleBanking, promotedby the United Nations EnvironmentProgrammeFinanceInitiative (UNEP FI) duringtheGeneralAssembly of the United Nations.Additionally,thebank joined the CollectiveCommitmentto ClimateActionlaunched by 31 international financial institutions.

BBVA is also includedin the Dow Jones Sustainability Index (DJSI),themarket's leading benchmark index, which measures thefinancial, environmental and socialperformanceof the world's most valuablecompanies.In the2019 edition, BBVA achieved the highestpossiblescore in financial inclusion andoccupational health and safety, and highscoresin other areassuch as climate strategy,environmentalreportingand corporate citizenshipand philanthropy.

Business Areas

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The main highlights of each business areaare detailedbelow.

In Spain, lending remainedrelativelystable(-0.8 percent yoy, with significant growth in themost profitable retailsegments,i.e. consumer loans and cards, +15.6 percent). Growth in thesesegments helped to offsetdeleveragingin mortgages(-3.9 percent) and institutions loans(-8.0 percent). Customer resources grew 1.8 percent in thelast12 months, driven by demand deposits(+7.2 percent). Off-balancesheetfunds had a positive performance,in both pension and mutual funds (+3.5 percent since December).At €1.06 billion, Spain's netattributableprofit from January to September 2019 declined 2.5 percent yoy.This drop is mostly due to a lower NTI contribution(-

62.5 percent)amidstmarket behavior in 2019.Net interest incomereached €2.72 billion(-1.9 percent),in linewith expectations.Netfeesand commissions increased 1.3 percent.Positivetrends in operating expenses continued (-3.0 percent yoy), thanksto cost-reductionefforts. Thesharp decline in NPL balances(-63.0 percent yoy)was mainly driven by thesaleof non-performingand bad mortgageloan portfoliosduring 2Q19.Since June, thecoverageratioincreased to59 percent and the NPL ratioimproved to 4.6 percent, the lowest level of the past ten years.

In the United States,lendinggrew1.4 percentyoy (at constantexchangerates). Customer deposits increased 4.0 percentyoy and are progressively benefitting froma changein their composition: demand deposits grew 6.6 percentyoy and already represent77 percent of total deposits, offsetting the decline in timedepositsover thesameperiod(-

3.4 percent). Thenetattributableprofit in theU.S. for the first nine months of 2019 stood at€478 million, down 11.8 percent froma year earlier at current exchange rates (-17percent at constant rates),as a resultof higher impairmentsin financial assets,mainly linked toprovisionsfor specific customers in thecommercial portfolio and write-

offs in the consumer portfolio in 1Q19.Operating income grew 21.9 percentyoy (+14.7percentat constant exchangerates),thanksto theincreasein revenuelinesand stability in operatingexpenses. Risk indicators performed favorably,with an increase of thecoverageratio from 91 percentin June to 102 percent in September,while theNPL ratio improved from 1.3to 1.1 percent.

Lending in Mexico grew5.4 percentyoy, thanks to the increasein mortgages (+10.3 percent)and consumer lending(+14.2 percent). In acomplex environment, withlow economic growth, BBVA managed toretain itsleadingposition, with a market shareof 22.5 percentin performingloans. Customer resources also grew by 6.9 percent yoy, with special emphasison time deposits(+18.4 percent) and mutual funds(+6.6 percent). Thenet attributableprofit betweenJanuary and September reached €1.97 billion,a 6.9 percentincreaseyoy at current exchange rates (+1.7 percent in constant euros), withnetinterest incomeactingas themain driver (+11.9 atcurrent exchangerates,+6.5 percent at constantrates).Grossincome grew 10.7 percent on a yoy basis(+5.3in constant euros)and operatingincome11 percent (+5.6 percentin constant euros).As for risk indicators,thecoverage ratio stood at 136 percent and theNPL ratio increased slightly,from 2.2 percent to 2.4 percent during the quarter.

In Turkey, lira-denominated loans fell 1.9 percent compared to September 2018, while lending in foreign currency dropped 22.0 percent. Deposits in both lira and foreign currencies declined in the 12-month period (-1.4 percent and -1.0 percent, respectively). However, demand deposits in both currencies grew significantly over the same period (+15.5 percent and +22.8 percent yoy). Turkey's net attributable profit was €380 million, down 21.8 percent from the same period of 2018 (-10.0 percent in constant euros). The net interest income performance was particularly solid, growing 6 percent yoy (in constant euros),

10.31.2019

thanks to a good price management and the contribution of inflation-linked bonds, although it fell 7.9 percent at current terms, due to the Turkish lira's depreciation during this period. Fees and commissions grew by 6.2 percent (+22.3 percent in constant euros), thanks to the good performance of those linked to payments. The solid behavior in recurring revenues together with cost containment efforts -with growth significantly below the average inflation rate for this period (+11.3 percent vs. +18.3 percent)-, helped operating income to grow 1.5 percent at constant exchange rates (-11.8 percent including currency evolution). As for risk indicators, the coverage ratio remained stable at 75 percent in the last quarter, while the NPL ratio grew from 6.3 percent to 7.2 percent.

In South America, excluding BBVA Chile from the comparison, customer lending grew 7.7 percent compared to September 2018, thanks to solid results in Colombia (+5.6 percent), Peru (+7.9 percent) and Argentina (+19.7 percent). Customer funds also grew 7.1 percent in yoy terms. The area's net attributable profit for the first nine months of the year reached €569 million, up 45 percent yoy (+62 percent in constant euros), thanks to positive trends in recurring revenues (net interest income plus fees and commissions, which grew a combined 15.4 percent in current euros, 22.3 percent in constant euros) and the higher contribution of NTI. Regarding risk indicators, the region's coverage ratio stood at 97 percent, while the NPL ratio reached 4.4 percent.

BBVA Corporate Communications

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