BBVA

Good morning, thank you all for joining BBVA's first quarter earnings call. As in previous quarters, I'm joined today by our CEO, Onur Genç, and the Group CFO, Luisa Gómez Bravo. First, they will walk you through quarterly figures, after which we will open the line for the live Q&A session. With that, I hand it over to Onur.

Thank you, Patricia, and good morning to everyone. Welcome, and thank you for joining BBVA's first quarter 2026 earnings webcast. Starting with slide number three, and as always, beginning with value creation. On the left-hand side of the page, you can see the strong evolution of tangible book value per share plus dividends, growing 5% in the quarter and 14.7% year-on-year, driven by our excellent results, as we will see in the following slides. It's also worth highlighting here that excluding the impact of the share buyback programs, the year-on-year growth would have been 18.1%. On this one, as you know, in the fourth quarter of 2025, we executed a EUR 993 million share buyback program.

At the moment, we are currently executing the nearly EUR 4 billion program announced in December 2025, of which EUR 2.5 billion has already been completed across two tranches. As you all know, as these buybacks have been carried out at a premium to book value, they clearly create value for our shareholders, but they have a negative impact on tangible book value per share. On the right-hand side of the slide, our profitability ratios have further improved, reaching an industry-leading return on tangible equity of 21.7% and return on equity of 20.7%. On Page four, on the left-hand side, we delivered another very strong quarter in terms of net attributable profit, reaching almost EUR 3 billion, as you can see.

This represents a 10.8% increase year-on-year and 18% growth versus the previous quarter. These results at the bottom of the left-hand side, it brings our earnings per share up to EUR 0.51, an increase of 12.5% year-over-year, higher than the growth of the net attributable profit, thanks to the share buyback programs. On the right-hand side of the page, our CET1 capital ratio, it improved by 13 basis points during the quarter, reaching 12.83 basis points. A strong quarter in capital generation, placing our capital ratio well above our target range and obviously regulatory requirements. Moving to page number five, as an introduction to the following pages, the key drivers of our performance this quarter.

First, at the top, net interest income, it grew by 20.2% year-over-year, driven by very strong business activity, loan growth at 17%. Second, net fees and commissions also showed an excellent evolution, increasing by 15.5%. Third in the page, our industry-leading efficiency ratio, it continued to improve, reaching 38%. Fourth in the page, sound asset quality metrics with a cost of risk at 154 basis points, showing relative stability in the current geopolitical context. Finally, at the bottom of the page, as mentioned, we maintain a solid capital position, showing further improvement in the quarter. Slide number six, as always, the summarized P&L of the quarter. You can see the year-over-year quarterly evolution in the second column from the left in constant, and next to it in the third column in current terms.

If I highlight something, I would highlight the strong performance of core revenues with excellent growth in net interest income, excellent growth in fees, leading to a gross income growth of 18.3% in constant EUR and 14.2% in current EUR. Moving to slide number seven and talking more about the gross income growth with more details on the quarterly progress in the last five quarters. As you can see, net interest income growth remains very strong, increasing 20% year-over-year and 2.9% quarter-over-quarter, supported by, again, robust activity growth, increase in lending. Worth mentioning, there is always a seasonality to take into account here in the first quarter, also due to the day count.

Net fees and commissions continued their excellent trajectory, as I mentioned, up 15.5% versus the same quarter last year, driven by payments, asset management, and we increasingly see a higher contribution from insurance and especially from CIB. Despite the seasonality also here, it has grown 0.9% compared to the previous quarter. Finally, net trading income delivered a very good performance, supported by positive momentum in our global markets business. All of the above leads to excellent gross income growth, 18.3% as mentioned year-on-year and 4.3% quarter-on-quarter. Moving to slide number eight, we wanted to share some perspectives on the evolution of our net interest income, the critical part of our revenues in our core geographies you would see in the page, Spain and Mexico.

On the left side of the page, loan growth, it remains very strong in both Spain and Mexico, with growth rates of 6.3% and 8.4% respectively. In the center of the page, customer spreads. As we mentioned in the past, our results are positively correlated to interest rates in both countries. As a result, customer spreads have declined in the last years in both countries. As you can see on the page, at a much slower pace than the reduction observed in the interest rates due to effective price management.

On the right side of the page, as a result of both activity and spreads, NII has grown by 3.6% in Spain and 8.3% in Mexico year-over-year. On a quarter-over-quarter basis, although not shown on the page, NII shows a slight decline, mainly due to aforementioned seasonality effects. Looking forward, it's important to mention that we are already seeing the bottom of the rate cycle in both countries. We have discussed it multiple times in the previous calls. If the rates have reached their bottom more or less in both countries, this implies continued NII growth, obviously with sustained activity levels. In conclusion, in short, despite rate compression, our strong loan growth and proactive price management continued to support net interest income growth, and with stabilizing rates, we are very positive for the future.

Moving to slide number nine, on the left-hand side of the slide, we continue to deliver positive jaws at the group level, supported by the strong performance of gross income, which grew, as I mentioned, 18.3% year-over-year, while operating expenses increased by 17.5%, reflecting continued investment in organic growth according to our strategic plan. It is important to note that expenses growth rate is impacted by the voluntary redundancies implemented in the first quarter, with a one-off restructuring charge of approximately EUR 125 million, mainly impacting Spain and corporate centers. Excluding this effect, cost growth would have been 13.9%. On the right-hand side, our efficiency ratio stands at 38%, improving 24 basis points versus last year.

Excluding the voluntary redundancy program, the ratio would have been 36.8%, clearly better than our guidance for the year. Turning to slide number 10, this page shows the evolution of our sound asset quality metrics in a context of strong activity growth, again, especially in the most profitable segments. On the left-hand side, at the bottom of the page, we see the evolution of cost of risk shown on a quarterly basis to allow for direct comparison between quarters. As you can see, cost of risk stands at 154 basis points in the first quarter, broadly in line with the previous quarter.

It's worth highlighting here that due to the current macroeconomic uncertainty and aligned with our prudent risk management approach, we have included a post-model adjustment of around EUR 100 million in our results this first quarter, of which the majority affects our impairment figures primarily in Spain and in Turkey. Excluding this impact, cost of risk would have been 147 basis points. On the bottom right-hand side, both our non-performing loan ratio and coverage ratio, they continue to improve year-over-year and also quarter-over-quarter. Slide 11 on capital and shareholder remuneration. Starting on the left-hand side of the slide, you can see the quarter-on-quarter evolution on our CET1 ratio, which increased by 13 basis points-12.83 basis points. This is comfortably above our target range of 11.5 basis points-12 basis points.

If you focus on the waterfall, our strong results, that contributes 75 basis points to the ratio. Second, the accrual of the dividend and the AT1 coupon payments, deducting 40 basis points. Third, on the page, 34 basis points due to the RWAs growth. This figure once again reflects our ability to reinvest part of our capital generation into profitable growth, while we also benefited this quarter, and as in previous quarters, from several risk transfer transactions, SRTs, which contributed 12 basis points to the ratio in the quarter. Lastly on the page, a bucket of others of 12 basis points, which comprises, as in other quarters, the market-related impacts and the credit in OCI, that accounting-wise neutralizes the deduction in the P&L due to hyperinflationary accounting.

Moving to the right side of the page on the nearly EUR 4 billion share buyback program that started in late December. As mentioned, we have completed the first and the second tranches, and we still have nearly EUR 1.5 billion spending on which we plan to start the execution early next week, and the date is May 6th. Needless to say, again, we remain beyond the share buyback programs. We still have excess capital, and we remain fully committed to distributing our excess capital above the upper end of our CET1 target range. Moving to Page 12, we continue to make strong progress in the execution of our transformation strategy. Today, we wanted to particularly update you on AI, one of our priorities in the strategic plan, as you know.

I mean, BBVA has always harnessed innovation as a critical lever to differentiate itself from competitors. We have proven it, in our view, through digitalization in the last decade. We are committed to do it again through AI. AI, a disruptive technology in our view, that has the potential to transform banking even faster and even deeper than previous technological disruptions. As you can see on the left-hand side, we are pursuing this across eight very tangible initiatives from the personal advisor for every client, which we call Blue in the bank, and the AI for the banker to other areas, to risk, to operations, software development, embedding intelligence across the entire organization.

Beyond the eight, which are again, very tangible initiatives, we are evolving towards a truly AI-driven bank, revamping our operating system by industrializing the creation, the governance, and the operation of AI agents at scale across the bank. This transformation is already reshaping how we serve clients, run our processes, and it also empowers our people. We are seeing some very early but very promising results to that end, and we will keep updating you as outcomes grow and consolidate in terms of what this means. Beyond these early results, once again, what truly will differentiate BBVA, is our ability to scale AI across the group, similar to what we did in digital transformation.

Moving to page number 13 before handing it over to Luisa regarding our ambitious financial goals for the 2025/2028 period that we announced last year in June. I will not read each of them, but I can very clearly confirm to you that we are performing in line or better than our original expectations in all of the metrics that you see on the page. Now for the business areas, I'll turn it to Luisa.

Thank you very much, Onur, and good morning, everyone. On Slide 15, let me start with Spain, which has delivered an excellent first quarter, with net profit once again exceeding the EUR 1 billion mark. This strong performance was supported by solid revenue dynamics, with gross income growing by 5.4% year-over-year and 4.3% quarter-over-quarter. Strong loan growth continues to support NII, up 3.6% year-on-year, with customer spread broadly stable in the quarter. On a quarterly basis, NII is affected by a day count effect. Adjusting for this, it would have remained largely stable. On fees, as is typical in the first quarter, they are impacted by the seasonality of asset management success fees booked in the fourth quarter.

Excluding this, fees grew 5.5% quarter-on-quarter, showing healthy underlying momentum supported by strong CIB performance and an increasing contribution from insurance. As Onur mentioned, costs are impacted by the voluntary redundancies implemented early in the year. Excluding the one-off restructuring charge, cost growth remains well under control at 4.8% year-on-year. The expected savings will be largely realized in 2026 and are already reflected in our guidance. On asset quality, trends remain very sound. As previously mentioned, and following a prudent approach in a highly uncertain macroeconomic context, we applied a PMA, a post-model adjustment, in the quarter, which led to a higher reported cost of risk. On an underlying basis, however, the cost of risk stands in line with our low 30s guidance, which we reiterate.

Overall, Spain has delivered a very strong start to the year, giving us confidence in our ability to deliver on our full-year guidance. Turning to Mexico on Slide 16. BBVA Mexico once again has delivered outstanding results, with net profit reaching EUR 1.45 billion in the quarter, up 4.5% year-on-year in constant euros. This performance is driven by strong top-line dynamics, with gross income increasing by 10.3% year-over-year, supported by strength across all revenue lines. Net interest income increased by 8.3% year-on-year, supported by strong loan growth, over 10% excluding FX, and resilient margins despite a declining rate environment. As shown on the slide, customer spreads show strong resilience even as the reference rate has declined by 225 basis points since March of last year.

We expect rates to bottom out this year at 6.5% from 6.75% currently. As in Spain, NII is also impacted by a typical first quarter seasonality. In this case, also affecting the credit card activity, which is very strong and typically is in the fourth quarter, and also the calendar day effect. Excluding the latter, NII would have grown above 1% quarter on quarter. Fees remain solid despite seasonality, again, on the credit card and payment fees following the commercial campaigns of the fourth quarter. Revenues are also underpinned by strong net trading income and good performance from the insurance business reported on the other income line. Overall, strong gross revenues performance continued to drive positive jaws, while we continue to invest in future growth and maintain best-in-class efficiency with a cost-to-income ratio of 30.8%.

Asset quality remains solid with stable underlying trends across portfolios. Cost of risk stood at 345 basis points flat quarter-on-quarter and in line with guidance. Looking ahead, we maintain our guidance for the year, now with an upward bias to loan growth supported by the strong momentum in activity across both retail and wholesale segments. Now moving to Turkey. Garanti BBVA delivered a strong profit of EUR 263 million, mainly driven by net interest income growth and overall robust revenue dynamics. Let me just highlight a few key points. Net interest income remains strong, supported by selective loan growth and wider TL customer spread as lower TL deposit costs more than offset declining loan yields in a falling rate environment. Fees also showed good momentum supported by payments, asset management, and CIB fees, while net trading income also contributed positively.

Hyperinflation adjustment, however, was somewhat higher this quarter due to higher inflation metrics. Finally, on asset quality, cost of risk stood at 253 basis points, broadly stable quarter-on-quarter, reflecting elevated but manageable provisioning needs in retail portfolios. The quarter includes a PMA for macro uncertainty. Excluding this, cost of risk would have been 238 basis points, above full-year guidance as anticipated in the first half, but expected to converge over the year. Overall, Turkey delivered a strong quarter. However, given the uncertain environment, we now see a downward bias to our guidance. The Central Bank is expected to remain tight until conditions allow for a gradual resumption of the easing cycle, presumably in the second half of the year. NIM improvement could be more gradual than previously anticipated.

Recall that Garanti BBVA has positive sensitivity to lower rates. Let's turn now to South America. On Slide 18, the region delivered a very strong performance quarter, with net profit close to EUR 250 million, up 16% year-on-year in current euros. These strong results were driven by solid core revenue growth across all geographies. Net interest income grew by close to 14% quarter-on-quarter, supported by healthy loan growth and customer spread expansion, particularly in Argentina and Peru. Fees also performed strongly, reflecting our continued focus on strengthening this revenue line. Solid gross income growth supports positive jaws and efficiency gains, with cost-to-income ratio improving to 41.6%.

On asset quality, cost of risk stood at 276 basis points, somewhat elevated due to still high provisioning needs in Argentina's retail portfolios, where we expect a gradual improvement only towards the second half of 2026. Trends remain supported both in Peru and Colombia. Overall, we confirm our full year guidance for cost of risk in the region below 250 basis points. The strong start to the year reinforces our confidence to deliver on our full-year guidance also, both for activity and revenue growth. Finally, let's move to rest of business. As you know, rest of businesses houses, just a reminder, houses the CIB business carried out by the branches and the digital banks activity. In the quarter, net profit reached EUR 236 million, driven by solid revenue growth, supported by strong activity momentum.

Loan growth remained robust and well-balanced across geographies, mainly driven by corporate lending, which represents 77% of the total book and grew by 10% quarter-over-quarter. Activity growth translated into solid revenue growth with solid NII, remarkable evolution of fees across the board, and higher net trading income supported by client activity. On cost, expense evolution continues to reflect the rollout of our strategic plan to support future growth and is in line with our guidance. Risk metrics remain very solid. Cost of risk rose to 30 basis points in the quarter, driven by higher provisioning linked to some specific exposures. Finally, given the strong performance in the quarter, we are upgrading our 2026 guidance, loan and gross revenue growth now above 30% year-on-year, while maintaining cost of risk guidance at around 20 basis points. Now back to Onur for the takeaways.

Thank you, Luisa. Lastly, for the main takeaways on Page 20, let me not take time by repeating all of the key messages, but in short, excellent results in the quarter, driven by the strength in core revenue evolution, further reinforcing our industry-leading growth, profitability, and efficiency ratios. Given our positive momentum at the bottom of the page, you can also see that we have upgraded our 2026 outlook for group return on tangible equity and the rest of business, reflecting improved expectations, basically. In terms of bias, we are also more optimistic about Mexico, activity in Mexico, while remaining due to macro parameters, prudent in Turkey in a highly uncertain macroeconomic context. Very well. We can move on to Q&A. We typically finish at the hour, let's do a positive surprise to the ones who join at the hour.

Let's start right away. Patricia?

Yes. Thank you very much. We are ready now to start with the Q&A session. Operator, please.

Of course if you would like to ask a question please press star followed by one telephone keypad. If you would like to move your question please press star followed by two. When it's your turn to ask your question please ensure your line is unmute. We ask you please to unmute to one question. If you wish to follow-up please re-join the queue. The first question goes to Francisco Riquel of Alantra. Francisco, please go ahead.

Thank you for taking my questions. I want to start with Mexico. Santander warned yesterday about asset quality in credit cards. I wonder if you can please comment on asset quality trends in your credit cards business in particular and overall in Mexico, and update on your cost of risk guidance for the year. You also mentioned upside risk to loan growth forecasts. I wonder if you can update on your revenue guidance as well. NII is growing in line with loan growth in Q1, I wonder what shall we expect for the rest of the year. In particular, the cost of deposits is picking up in a lower interest rate environment, if you can comment on that. Thank you.

The second question was also for Mexico, no?

Yes.

Okay.

Yes. Yes, sorry. Everything for Mexico.

Very good. Paco, on the cost of risk, we feel quite confident on our guidance. We gave 340. You see in the documentation that this quarter it's 345, which is exactly the same amount of the last quarter on a quarterly basis. As we did mention, in this quarter, we took EUR 98 million, close to EUR 100 million of a post-model adjustment in all the geographies, affecting mainly Spain and Turkey, but also slightly Mexico. The number would have been actually even better if that post-model adjustment wasn't there. As you know, Mexico is least affected from all what's going on geopolitically in the world these days. They are actually, in certain cases, positively affected from it. Underlying dynamics, and you asked specifically credit cards, we don't see any deterioration whatsoever.

On the second topic, on the overall, the upside on the overall NII and loans, as you can see again on the page that we shared regarding Mexico, in the 1st quarter, year-over-year growth in lending is 8.4%. 8.4%. More importantly, what we have seen, especially in March, you can see also the market figures because they publish, the regulator in Mexico publish all the figures of all the banks, but with a one month delay. The latest that you have publicly is February, but March was even better. When we look into the pipelines, especially on the corporate side, we are seeing some positive momentum there in the pipelines as well.

The first quarter macroeconomically, in terms of GDP growth, will come a bit soft in Mexico. In that environment, if we have delivered what we have delivered, which is 8.4% year-over-year, but let me focus on the quarter. Quarterly growth in the lending balances is 2.6% in Mexico for the quarter only. If you analyze it is actually even better than the year-over-year growth. In a relatively soft macro context, if we delivered 2.6%, if we see very positive momentum in March, if we see very positive momentum in the pipelines, and that topic of the pipelines is important because what we are seeing after a long while, actually, in Mexico, is that also the long-term funding needs are picking up a bit.

USMCA negotiations, it's going to be marking the second quarter, but we are seeing some momentum in the country, mainly driven by this Plan Mexico of the government. There is a lot of infrastructure and energy-related build being promoted by the government in the country, and we are seeing it in some of the projects that are coming in line, and we are seeing it in the pipelines. In short, the first quarter, even in a relatively soft macroeconomic context, was very good. In the new context that we would be seeing, triggered partially by Plan Mexico, we are quite confident that we will be delivering what we have guided you and the positive bias on the activity, which then would be reflected in the NII.

The spread component of NII, you see a slight decline in the quarter, but it's 19 basis points decline in customer spread. 7 basis point of that was driven purely by mix because we have grown in the quarter more in the enterprise side versus retail. That will normalize. It's pure seasonality. Credit cards do not grow as much in the first quarters after a very strong fourth quarter, typically. It's purely driven by mix. In the context of rates not coming down much more, again, as Luisa mentioned, our expectation for the year is 6.5 basis point. It's going to get to 6.5 basis point, the central bank rates, and will stay there. In that context, again, the spreads will be supportive. All combined, we are quite positive on Mexico, in short.

Thank you very much, Paco. Next question, please.

The next question goes to Maksym Mishyn of JB Capital. Max, please go ahead.

Hi, good morning. Thank you very much for the presentation and taking our questions. Two from my side. The first one is on Spain. Loan growth has slowed down slightly, seems mainly due to fewer corporate loans. Was just wondering what you expect in terms of growth for 2026 and how you see demand evolving per segment. The second one is on Turkey. You are now slightly more negative for 2026. How do you see the 2028 targets in the current macro context, please? Thank you.

Luisa, you wanna take the Spain?

Yes, sure. I mean, what we've been seeing in the market as you've mentioned, is resilient and improving dynamics in growth. The market was growing around 4%, last data, Bank of Spain of February. We think that that could be accelerating somewhat throughout the year. We stick to our mid-single-digit guidance of activity growth in the year. We have been focusing, as you know, consistently in growing the areas where we feel that there's more value. We've been focusing and growth has been structured, as you see, especially in consumer and credit cards, but also across the different segments in mid-sized companies and corporates and public sector as well.

I think that there's seasonality in terms of the corporate growth quarter-on-quarter on the CIB because the fourth quarter was quite strong. I think it has been offset with a good strong growth in the mid-sized company sector. In general, we're seeing a good dynamics. New loan production is also positive year-on-year with growth of 5%, especially on the consumer side, 11%, and the CIB sector, 12%. New loan production is in line to achieve the guidance that we've given. Just to mention that on the mortgage side, however, we have been, you know, losing market share in the quarter and in the year. It's down 27 basis points in the year. We do believe that the market continues to be priced, you know, inadequately.

We have been able to see more rationality in the last few months, still, our new loan production share of the market is below our natural share. As it, for the time being, we will continue to be selective in the mortgage in the mortgage growth. This is what is reflected in the 6.3% growth and the quarter-on-quarter dynamics as well.

Well, Maks, very quick add-on to this. Quarter-over-quarter, again, the loan book in Spain has grown 1.2%. In the mid-sized company segment, it grew 2.7%. You see the annual numbers in the presentation, if you go to the quarterly, you can deduce the quarterly figures, they're quite strong. 1.2% quarter-over-quarter growth, if you annualize it, again, it's quite nice. Coming back to your second question on Turkey, first of all, what I should say is that given all what's happening in the world geopolitically and all the conflicts that we see, the war in Iran and everything, Turkey is, in our view, withstanding quite well. The number is not because of anything else but what we already told you.

We were very clear in the fourth quarter's results presentation basically telling you that we are expecting EUR 1 billion with clear assumptions behind that on the macro parameters. You might remember this, but we told you that that number, around EUR 1 billion guidance, was driven by two very important macro parameters, 25% inflation, 32% December 2026 interest rate, and 19% depreciation of the Turkish lira versus EUR. Based on those assumptions was the guidance. We even, at the time, I remember it very clearly, that we have even provided you some sensitivities around this. Every single percentage interest rate point implies EUR 40 million. Every single inflation, which there are correlations in between, but every single inflation by itself independently is EUR 15 million-EUR 20 million negative impact, and every single depreciation is around, again, EUR 20 million.

Given the macro parameters have changed, you might have seen it, we recently increased our inflation expectation in Turkey from 25%-28.5%. Given the change in the macro parameters, it's a reflection of that basically, nothing more. In the context that we are in, that's why we are saying it's a negative bias rather than a pure very clear downgrade. In the context that we are seeing, what we see is that Turkey is withstanding quite nicely. The economy, management is also doing the right things in our view. In the context that we are in, we are relatively positive, but we have to reflect those macro parameter changes into our guidance. That's the reason for the negative bias.

Very good. Thank you, Maks. Next question, please.

The next question goes to Antonio Reale of Bank of America. Antonio, please go ahead.

Morning. It's Antonio from Bank of America. Just two questions from me, please. The first one on Turkey. The macro outlook for the region has changed now with inflation going the other way and rate expectations suggesting we might have a higher for longer rate environment. My question is how should we think about your net interest margins and cost of risk going forward? I heard your guidance. I've heard your color. But if you can give us a little bit more context as to how we should think about particularly these two line items in Turkey. Maybe related to that, your costs in Turkey have been running somewhat higher than peers.

I'm wondering if you have any initiatives that we should keep in mind when it comes to sort of targeting further efficiency gains in the region. The second one is just really an update on capital distribution. You're about to launch the third tranche of your buyback program for EUR 1.5 billion. That's the EUR 4 billion total that you already accrued. If I look at your CET1 ratio, you're still running well ahead of your target range, 1.5%, 12%. If you could give us an update as to what's coming next when it comes to distribution. Thank you.

Very good. Thank you, Antonio. Let me start with the second one, which is an easy one. As we mentioned many times, and I also mentioned it today during the presentation, we will start the third tranche of the EUR 4 billion, which is around EUR 1.5 billion, next Wednesday. Is it Luisa?

Yeah.

On the May 6th. That will last until the end of June, July period. At that point, we will continue on our commitment, which is to deliver excess capital above the end, above the top end of our range of 12%. Above the 12%, we will return it back to the shareholders. Very simple, very clear. On Turkey, our guidance, you asked different components around this, but our guidance on Turkey, if you remember in the fourth quarter call, was around 200 basis points. At the time, if you remember it very well, I think it's also registered in the document that it's gonna be higher in the first half, and then it's gonna be converging to 200 basis points for the year. In the first half, it's gonna be higher.

Luisa has given you the numbers already. In the first quarter 2026, the cost of risk. How much was it?

2.

EUR 2.53.

53.

If you isolate for the PMA that we did, if you take out the PMA impact, it's EUR 238?

Yes.

2, 238, which is completely in line with what we have guided you. Higher in first half and converging in the, for the year to 200 with improvements in the second half. Antonio, we have to be cautious on what we say on what's gonna happen with the war. We are quite cautious in terms of the impact because we don't know. It's a different story every day. Turkey, together with Spain maybe a bit, but much more in Turkey, will be the ones who would be affected more from the war than anyone else. As I mentioned, as a response to the previous question, what we have seen so far, we are in the war since February 28.

What we've seen so far in Turkey is that the country is withstanding quite nicely to what's happening, again, relatively speaking. The government has taken the right reactions. They increased the interest rates. As you know, there's kind of a ban in Turkey. They raised interest rates effectively from 37%-40%. They are supporting also some of the sectors. They are supporting the inflation through a fuel price management mechanism and so on. They are doing the right things, and it seems like they are less affected than they could have been. In that context, we are, again, as compared to an otherwise scenario, we are relatively positive on what we have seen. We have to see how the world evolves in the next few weeks and months.

If the war continues for a long duration, which we don't discard as a scenario, but which we feel is a less likely scenario because we do think also given the political situation in the U.S. and the midterm elections in November and so on, it's not to the benefit of anyone to continue the war. It can happen. It can continue. In that scenario, let's assume that the scenario that we don't discard, but we see less likely, which is an extended duration of the war. In that scenario, Turkey will be affected and cost of risk might go up. At the moment, we stick to our guidance, and that's why we have given you the numbers that we have given for the first quarter, and we are again maintaining our guidance.

We have to be cautious, and we have to see how the whole situation evolves in the coming quarters, in the coming months. You asked about the NII dynamics as well. When interest rates go up, it's a negative on the margin, as also Luisa mentioned. The 3 percentage point hike in the effective interest rate is going to be affecting in the second quarter the NII negatively. Again, it's a relatively small hit that we can absorb, and we are activating other levers. You mentioned one of them, cost. We are activating other levers to basically tell you that we have a negative bias on Turkey because we don't know how the situation will evolve in Iran.

Overall, we have been quite resilient in absorbing all the shocks that is coming as a bank in Turkey.

Thank you very much. Next question, please.

The next question goes to Cecilia Romero of Barclays. Cecilia, please go ahead.

Thank you very much for taking my question. My first one is on the USMCA you touched on before very lightly. There is obviously uncertainty around renegotiation. What is your current expectation on timing and likely outcomes? Is this potential increase in volatility already reflected in your business plan assumptions for Mexico? Are your targets still based on a relatively benign macro and trade backdrop? Amid higher geopolitical uncertainty, do you see any early signs of credit pressure anywhere? Is there any segment where you are becoming more cautious relatively to what you had assumed for the beginning of the year? You mentioned about the worsening macro scenario and that you have done some PMA updates. Could you discuss how have your macro assumptions that you had in your business plan changed in this update?

Thank you.

Very good. Maybe I take the USMCA, Luisa, you take the overall war-related risk appetite question more broadly. On USMCA, Cecilia, thank you for the question. On USMCA, for the context of everyone, as you all know, it was signed in 2000, this agreement. It's a 16-year agreement. Every six years, it's 2000, in 2026, there will be a revision of the situation, the parties will decide whether to keep the original 16 years arrangement, which takes the agreement to 2042. That's the context. This year, until July, there will be a decision on whether they extend it another six years, overall, a 16-year contract to 2042.

If the parties do not agree on the full terms and this and that, what happens is that there's going to be an annual periodic review without the extension of additional 6 years. Okay? That's also a possibility without the full extension. Every year, you continue with the contract, you continue with the agreement, an annual review is then the base case in that second scenario. There's the third scenario where the contract is basically discarded. They cancel the contract. We don't think that the third scenario of canceling the agreement is on the table at all. We do think either the first or the second one would happen, most likely the second one. Even on the second one, what we do see is that it's the continuation of what we have at the moment.

What do we have at the moment? We have basically an effective tariff of 7.2% from all the goods exported from Mexico to U.S. 7.2%. This compares very well with 18% for the rest of the world. Again, exports to U.S., rest of the world, the blended tariff is 18%. It compares very well to China, which is 45%. As a result of all of this, what we have seen is that the exports of Mexico is actually up 6% in 2025, and it continues to trend in the first two months of the year. Exports are up, and Mexico is gaining market share.

If you take the exports to U.S. or imports to U.S. from a U.S. perspective, as a market, Mexico has gained market share while Canada and China, which are the two other large competitors in that market, let's say, they are losing market share. Mexico has been gaining position in that positioning. Why did I say all of this? What I said all of this because in the second scenario that I mentioned, which is an annual review scenario, we do think it's the continuation of what we have. There might be certain different dimensions added to what we have currently, but that scenario is not a bad scenario at all in our view. Why is that the case that there is the intention if either the first or the second scenario would happen?

I think the key important thing, I'm not sure that you have seen it, some of you might have read it, the U.S. businesses, Mexican businesses for sure, the businesses of U.S., companies of USA, they basically predominantly in a very strong way, they have indicated their support for this agreement. They said, "If this agreement is not there, as the U.S. businesses, we cannot compete." Very strong words. In the reports of the trade commissioners. In short, we expect either an extension of the contract or continuation of the status quo. There might be some changes here and there, doesn't fundamentally change the underlying dynamics because of a vehement support with a very strong support coming from the U.S. businesses on the contract.

As a result, we are not changing or putting a negative tune to what we see already in the first quarter, and we expect the situation to continue as such. The macro or the war impact.

Yes. Well, we haven't seen in the cost of risk numbers that we've provided any signs of distress or pressure in terms of the outstanding credit. The PMA that we've done of around EUR 100 million is more on the cautionary side. We have very limited exposure to direct exposure to Middle East. The exposure more would be to potential second-round effects derived from the conflict. There are some sectors that we're monitoring closely. We've identified 12 subsectors that are most exposed, electric power supply, transportation, steel, cement, your typical sectors that would be more exposed to the context of elevated energy costs and weaker demand and higher rates.

We have conducted a detailed analysis of these clients in these sectors, and we have already started to strengthen risk analysis and new origination, assessing the potential impact of the conflict on relevant new transactions and limit renewals with particular focus on anything related to the interest rate sensitivity analysis and energy shocks. We've developed enhanced monitoring of what we call vulnerable clients that are, you know, with more leverage in some of these sectors. We are doing forward-looking risk assessments, stress testing ratings, in negatively could be affected subsectors. I think that we're doing the right thing in terms of being cautious and being, you know, disciplined in terms of risk, but we haven't seen anything specifically yet.

That's why we maintain our cost of risk guidance across the footprint, and we don't currently anticipate any downturn in the asset quality cycle so far with the news that we have on the table.

Thank you very much, Cecilia. Next question, please.

The next question goes to Alvaro Serrano of Morgan Stanley. Alvaro, please go ahead.

Good morning. Thanks for taking my questions. One on Mexico and the deposit yield. It's up 3 basis points in the quarter from what I can see in your slide, despite rates, the average rates are down, Central Bank rates are down in Q1. I know there's a bit of a change in mix in time deposits are up, but it seems like it's even so it's more of an increase than I would have guessed. Can you talk us through what's update us to what might be going on and if you've had any campaign outstanding remuneration savings, if savings is a term, any color would be much appreciated. The second question is around the redundancy plan, the voluntary redundancy plan.

Can you give us a bit more color how many employees have left the firm and do you expect in more of these further down the line? I'm conscious that you're automating a lot of processes, so there might be more down the line. Just to confirm, this restructuring chart is included in your full year guidance, of course, in Spain. Thank you.

Very well. Thank you, Alvaro, as always. Regarding cost of deposits in Mexico, if you see the page that we have provided as part of the presentation, the answer is hidden in the increase in time deposits. If you also look on the right-hand side of that page, you see that the time deposits have grown by 26% year-over-year, and also in the quarter it has gone up. We have been basically pulling in some deposits, especially from the corporate side.

We said it before, I think we were very clear on this in the previous calls, saying that we would rather, when interest rates are quite high, we would rather fund ourselves from wholesale funding from the market rather than pure deposits because we don't want to be triggering too much of deposit price competition in the market. When rates come down, which is the case at the moment, as you know, in two years, nearly two years, the interest rates in Mexico have come down from 11.25%, the central bank rate, to 6.75% at the moment. We do think the bottom of that curve is gonna be 6.50% or something around that. We are already close to the very bottom.

When we are in this environment of relatively low interest rates in Mexican standards, we told you before that we would be a bit more competitive and get more deposits because we can afford the increase of prices in the market in that sense. In the last six months, in the last three months, a bit more, we wanted to get more deposits, and we were very selective, especially on the corporate side, corporate or midsize companies side. We pulled in some time deposits, which then reflected in the cost of funding to 2.12% versus 2.09% of the previous quarter. In the same time, you would see that our market funding, wholesale funding, is much less than what it would have been otherwise. That's the reason for the deposit in cost in Mexico. Restructuring topic, Luisa?

Yes. On the restructuring topic, the restructuring has affected around 750 employees group wide. The restructuring charges have been mainly booked in corporate center and Spain, where the payback is around three years. It's a very attractive investment. All the charges and the savings were already accounted in the guidance that we gave at the beginning of the year. That's one of the reasons why the guidance in Spain was high to, sorry, mid to high single digit growth in expenses. We were already including in the guidance this voluntary redundancy charge.

Thank you very much, Alvaro. Next question, please.

The next question goes to Benjamin Toms of RBC. Benjamin, please go ahead.

Hi, both. Thank you for taking my questions. The first one, on Slide nine, you show group costs growth in Q1 was 14% year-on-year, ex redundancies. That's above the weighted average inflation footprint of 9%. Are you comfortable in operating with that gap over an extended period as long as you have the positive jaws? Secondly, you upgraded your ROT guidance this morning for 2026. Your 2025-2028 guidance is for an average ROT of 22%. Can you just remind us of the expected shape of your ROT through 2026-2028? Should we expect improvement in each year of the plan? It's just interesting to know where the exit rate might be. Thank you.

Very good. Thank you, Benjamin. Very quickly, just to pick up some speed on the second question. 22% is the average over four years. As we said it before, we don't foresee a hockey shape there, we do see a continuous, relatively continuous improvement with higher return on tangible equity every year. Again, we don't have many more years to count on that, on that period. Last year it was 19.3%. This quarter we did really well. 2026, in our view, would be better than 2025 as we are guiding. 2027 and 2028 would be even better. Not a hockey shape, not like coming at the last quarter or last quarters. It's gonna be continuous improvement.

We said it before many times that the key driver of the numbers and the strategic plan is the fact that we do expect rates will be bottoming out in Europe and Mexico in the four-year period. Once rates bottom out, as we were expecting at the end of 2025, in early 2026 for Mexico, then spreads will not be declining anymore. Activity growth will be directly flowing to the bottom line, helping us on profitability. That's the key driver of the strategic plan. Given that, we see a continuous improvement every year. On the cost, our key focus has always been, the jaws.

If you exclude the restructuring charges, Luisa has mentioned it, EUR 125 million in total, EUR 100 million of that is basically in the Spain geography, EUR 60 million roughly in the holding corporate center and EUR 40 million in Spain. If you exclude those, practically all the areas have positive jaws, even the smaller countries. We do have this jaw notion as a management discipline in BBVA. If you grow, you have to deliver that growth. You might be increasing your costs, you have to deliver that cost increase by having more revenues. We are not very short-term oriented. We can wait, that has to happen. Every growth should lead to capital, organic capital generation. That's the mindset that we have.

As you can see, again, the jaws, we have this page every single quarter in I don't know how many years. That's the clear management discipline. Comparison with the revenue growth is very clear to us. Comparison with inflation obviously is less relevant as long as you, again, drive that growth with the organic capital generation that comes with it.

Thank you very much, Benjamin. Next question, please.

The next question goes to Marta Sánchez Romero of JPMorgan. Marta, please go ahead.

Good morning. Thank you very much. My first question is on capital allocation. We've read headlines about potential disposal of Atom Bank. You've recently announced the disposal of Garanti Romania. Does this all mean that you are taking a harder look at the footprint? Have you identified how much capital you could release from the disposal of non-core assets? I got a second question on NII Spain. Your deposit growth on an annual basis is quite impressive, 8% year-over-year, so you are gaining market share. Can you explain what is driving that? Is that corporate deposits, or is it more evenly split between retail, corporate, public sector? With that, what is the balance of risk of NII in Spain?

It looks like with a steeper yield curve where, with rates are today, I think we, you probably, your current guidance is a bit short of what we could see. Thank you.

Very good. On deposit growth, maybe Luisa can take it. On the capital allocation, you mentioned names, Marta, the ones that are not public or already happened. We don't comment on any of those, as you know well. We can comment on Romania. You said it's the harder look. It's a new exercise. To us, it's an ongoing exercise. We keep doing it all the time. If you don't feel that we have the competitive power to be able to deliver above our cost of equity in any market, we always look into it. It's not a one-off exercise to us, but it's an ongoing exercise.

In that sense, Romania, it's very consistent with what we have been saying to you all along. We do believe local scale in the traditional business model that we have, which is we have all the segments, we have all the channels, branches, and so on. In that traditional business model, we do think scale is important, local scale is important. In Romania, we do have 2% market share. It's subscale, and as a result, it doesn't deliver the cost of equity for us. We actually tried a process, it was public at the time, so I can mention it, back in 2020, and now we tried again. When the situation arises, when the market allows for it, we go for it. Otherwise, we are not also very.

We also take our time, and we are patient in these decisions. In short, it's an ongoing exercise for us, and we always deploy capital where we do have a competitive edge to deliver above cost of equity returns, and if not, we always look into alternatives. On the deposits?

Yes, indeed we've been growing quite strongly on deposits year-on-year. That 7.9 number is driven by demand deposits growing 5.6%. This is supported really by customer growth. You know that we always talk about these numbers. Last year, we grew close to 1 million clients. This year, we've, in the first quarter, grown around 250,000 clients. What we see is that when we onboard clients, 30% of the onboarded clients after six months bring either a payroll or pension product. These clients become active clients, what we, you know, more valued clients, you know, 70% of them after six months.

Really this goes back to our bread and butter of customer acquisition, where we are number two bank in Spain in client acquisition, also this year and last year. Strong growth on the back of customer acquisition. On the time deposits, where we have also grown significantly year-on-year, this has been more driven by our wholesale segment, both commercial banking, corporate banking, CIB, where you know that we've been also very active, and that has spurred the growth on the time deposit side.

Very good. I think there's also this question on NII guidance at the end for Spain.

Yeah.

Marta, that page is very important to us. That page we put at the end typically in the fourth quarters, which is the guidance page, and then if we do an update on it, whatever that page that we put. We discussed a lot whether in the guidance upgrade page we should include something also related to Spain NII. We decided at the end not for a reason. Because at the moment that upside would come from rates, from customer spreads. We do see at the moment that there is that upside, but that upside is completely driven by what's going on in the world. In the case of Mexico, we put it there as a clear upside for a reason, because it's more activity driven, which is within our control. We can manage that.

We do see very clear signals again in our pipeline and in the activity in March and so on. We felt comfortable, and we put it there. Given the fact that whatever we put there, we feel obliged, more or less to deliver. Obviously, we will always do the right thing, but we will deliver those numbers. Given the situation that the situation in Spain is dependent on the market developments and whether the situation changes or not, we felt uncomfortable to do it at the moment. We do have that obviously relatively positive outlook. If rates stay as such, if EURIBOR levels stay as such, we do have the upside. We don't know whether that's gonna be the case, and we don't know whether the EURIBOR levels will be sustained or improved.

Given that dependency, we decided not to put anything into the page.

Thank you very much, Marta. Next question, please.

The next question goes to Ignacio Ulargui of BNP Paribas. Ignacio, please go ahead.

Thanks very much for the presentation. I just have two questions, one on capital. Just wanted to get a bit of your thoughts on how much SRT or risk transfer usage you think you can do into the year, and whether the performance of the quarter can be extrapolated for the next three quarters. The second question is on rest of businesses. I mean, I've seen a very strong loan growth accelerating a lot in the first quarter, 50% year-on-year. I just wanted to see whether you will prioritize the NII or fees on that. I mean, I have seen NII is growing slightly below that level.

Just wanted to see how should we think about revenue growth in that 30% growth that you have given, above 30% growth that you have given, how should we think between NII and fees? Thank you.

Very good. SRTs, you wanna take, Luisa?

Yes. Well, I think that you've seen that we've done 12 basis points of SRTs this quarter. Last quarter, the first quarter of last year, we did around 13 basis points. We are not changing the guidance that we gave to the market, which is to do between 30 basis points and 40 basis points this year, and that's what we are on track to do. We're seeing the deals being very well received by the market. We've done, you know, we've closed very good deals in the quarter with improved levels on the levels that we saw last year. We will move forward with our SRT and asset mobilization plan throughout the year and in line with the guidance that we've given to the market.

[Foreign language]. On rest of business, I would give you a very conceptual response, and apologies for that, Nacho, would we prioritize NII or fees? Really, we would prioritize the client, whatever the client needs are. In some cases, it's like debt issuances, which we are very active in many of the geographies. It's very much fee driven. We also bank with the client in many other ways, NII is also gonna be very strong. The numbers that you see in the page, it's very obvious that fees are growing much higher than NII. It is not because of the rest of business or the CIB business that is underneath. As you know, rest of business, that page covers two main areas, CIB, beyond the footprint plus the digital banks. Digital banks affects the NII evolution in a negative way.

In that sense, NII is not growing as much as fees because of the digital bank impact. We should acknowledge that fact to you first. Beyond that, we are expecting. We have a clear fee bias in as much as possible. We would like to increase the fee percentage of that business, but it's gonna be across the board. In the pure CIB business, it's gonna be coming in AI and in fees, both of them.

Thank you very much, Nacho. Next question, please.

The next question goes to Sofie Peterzens of Goldman Sachs. Sofie, please go ahead.

Hi, here is Sofie from Goldman Sachs. Thanks a lot for taking my question. My first question would be if you could, it's going back a little bit to the previous question, but if you could elaborate a little bit on your performance in Italy and Germany, would you consider kind of expanding into any other European countries? My second question would be, could you just remind us how much of your net income and capital is hedged in Mexico and Turkey? Thank you.

Very good. Hedges, we know the numbers by heart, but Luisa, why don't you take that one. On performance of Italy and Germany, Sofie, we only provide at the moment the customer numbers. In Italy, we are at 900,000 customers. We launched it in 2021, practically. 900,000 customers in this period, in our view, is very good, much better than our business plan. In Germany, we launched in June, July 2025, nine months ago, and we are already above 100,000 customers. Again, much better than our business plan. I did mention this to you before. These digital bank proposition, it's going much better than what we originally thought. It's better than business plan in both countries. These are relatively long-term plays.

Typically, digital banks in a certain market, not only us, but others, it takes them nine, 10 years to break even. In our case, it's gonna be much earlier than that. In the countries that we are in, we are seeing so positive numbers that it's gonna be earlier than that. At the moment, they are still obviously posting losses. Once we have some maturity in these businesses, we will start also making it transparent to all of you on what the underlying numbers are. On the second question, Luisa?

Yes. Sofie, well, starting with Turkey, we maintain at the capital level hedges of around 43%, which is flattish quarter-on-quarter. We maintain a sensitivity of around 2 basis points negative to a 10% depreciation of the Turkish lira. And here, just to remind you, the cost of hedging is around 0.5 basis points per month. On the P&L side, we usually in Turkey have a level of coverage of around 33%. In Mexico, the capital excess capital that we are hedging is around 44%. It is slightly lower than the number that we had at December of 2025. We had a 57%, 55%, 57% number. The sensitivity to a 10% depreciation remains the same. Why?

What we've been doing is basically putting on more option structure into the hedges in order to achieve more optimization on the cost side. Which means that the sensitivity to a 10% depreciation of the Mexican peso would still be around 15 basis points, the same as last quarter. The cost of the hedges now, instead of being 0.5 basis points, is around 0.2 basis points per month. We think it's a better strategy in terms of cost optimization of the hedges while protecting the capital in the same level. As for the P&L in Mexico, we are hedging around 37% of expected next 12 month results in Mexico.

Thank you very much, Sofie. Next question please.

The next question goes to Britta Schmidt of Autonomous Research. Britta, please go ahead.

Yeah, thanks for taking my question. two questions on Mexico, please. With the positive bias on the loan growth outlook, should we also read that across to the net interest income were previously guided to NII growth slightly below loan growth? Also considering that you're still growing quite strongly in consumer finance. Secondly, on Mexico, the jaws here are flat. They were flat this quarter, year-on-year, partly thanks to stronger trading income, but the cost growth still remains very high. Maybe you can comment a little bit on the cost drivers here, what the outlook is, and whether you expect flat jaws for the year as well, or whether that could deteriorate a little bit. Thank you.

Very good. Thank you, Britta, for the questions. On NII, slightly below loan growth still holds because as you can imagine, the average customer spreads last year versus this year would be a slight decline in any case. It's gonna be lower than the activity growth. Given the fact that we are positive on activity growth, that's gonna be reflected obviously into the NII as well. We don't have a now more negative view on the spread at all. The only thing is last year versus this year, as we were guiding in the previous quarter, it's gonna be a bit lower. That's why it's gonna be lower than the activity growth. On the Jaws, you said it's slightly positive, it's very important to us. It's a dialogue that I have with all of my country managers all the time.

It is positive. It might be small positive, but it is positive, and we will keep that discipline of management discipline of jaws in that geography, as well.

Very good. Thank you very much, Britta. Next question, please.

The next question goes to Andrea Filtri of Mediobanca. Andrea, please go ahead.

Hello?

Andrea, please check your lines unmuted.

Oh, sorry. Can you hear me now?

Yeah, Andrea. Yes, please go ahead.

Thank you. Could you please provide a recap of the breakdown in each unit in this quarter for the PMAs you have taken and the restructuring charges that you have booked? The second question is, do you foresee any improvement in the EU regulation for banks, given the ongoing revisions and reassessments? When do you expect the approval of the Danish compromise from ECB for BBVA? Thank you.

Very good. Thank you, Andrea, for the questions. On the PMA, we don't provide the full detailed breakdown, but what we have already said is more than half is basically two countries, Turkey and Spain. The two of them. Spain because of the size, Turkey because of the sensitivity to the crisis much more than other geographies. The second question, the Danish compromise, as you might have seen, EBA, European Banking Authority, has published the list, and we already have the financial conglomerate. It has to be reflected into Danish compromise by an authorization from the ECB. That process is ongoing. It is ongoing as part of a normal procedure. We expect in the second quarter to have the full qualification.

Thank you very much, Andrea. Next question, please.

The next question goes to Borja Ramírez of Citi. Borja, please go ahead.

Hello, good morning. Thank you very much for taking my questions. I have two. Firstly, on LatAm macro, yesterday one of your competitors indicated that LatAm economies should be relatively better shielded as they are oil producing and, around 50% of your net profit last year came from LatAm. I would like to ask if you could provide more details. Into this, I think the Mexican peso has performed better than your business plan expectations. Maybe there could be some upside to your ROIC target for this year. Secondly, on Spain NII, following up on the point on the deposits, where I think there was actually a decline in cost of deposits in the quarter despite your market share gains.

I saw that your ALCO also increased in Spain. I think your NII sensitivity to higher rates in Spain is higher than your peers at 4%-5% of NII for every 100 basis points rates. Maybe you're better positioned in case of higher rates in Europe.

Very good. Thank you, Borja, for the questions. The first one, you are 100% right. I mean, we keep saying it all the time, so sometimes I feel like I'm repeating myself, and some of you have been in this job for so long. Sorry for the repetition, but there are two strengths of BBVA that is not very easy to replicate. Actually, we call them the three of them, but let me count all three of them. Number one is the diversification. Diversification, being in different countries and being in countries where the leverage ratios are relatively low, which means there is room for growth in lending, in banking, in those geographies that we are present.

The second thing that we always say, which is very different from other banks in our view, and which makes a big difference in banking, which is we are very large wherever we are. We have the best ROEs in the countries that we are in. Having the best bank, having the largest bank in the countries that you are in always is the best thing that you can have in banking. The third one is we think we are great in embracing innovation. We have done it in digitalization, and as a result of that, our customer acquisition engines, our sales engines work much better because we are, in our humble view, better than competitors in digital. You touched upon the first point of this, which is the diversification. The macro situation, there is a lot of uncertainty still out there.

Again, every day is a new day. When we look into the potential impact of an extended duration crisis in the Middle East, what we see is that in terms of different geographies, Latin American geographies are either neutral or positive. Argentina and Colombia would be positively affected because they are, in general, oil exporters. Obviously there are gonna be other transmission mechanisms that might be hurting them. Inflation might go up, consumer sentiment might go down, and so on. We still think they would be relatively well-protected and even positively maybe if impacted from this. Mexico and Peru also. Latin American geographies are relatively isolated from this, and they might benefit in terms of tourism flows. They might benefit from supply chain redirections. They might benefit from the fact that, again, they are exporters in general of commodities.

In short, LatAm, we have a relatively positive perspective from the impact of the crisis on those geographies, which is again talking to the strength of our diversification. You asked related to this, whether Mexican peso will stay at these appreciated levels. We don't know, obviously. In our plan, we still see some more depreciation to come along, but if it continues at these levels, that's an additional upside that you can put into your models. Then the second topic about interest, NII, and interest rate sensitivity, Luisa, do you want to comment?

Yes. Well, first, on the NII, on the customer spread topic and the evolution of yields and costs, I would say that, and I think Onur has mentioned this as well, that we expect, you know, quarter-on-quarter spreads to remain stable in the year, perhaps picking up at the end of the year. This is because, primarily, most of the mortgage book has already repriced. As you know, we, different to other players in Spain, we tend to reprice quite quickly our mortgage book. 2/3s of it is reprices every 6 months. That yield compression is on the floating rate part of our mortgages, which is around 46%, is already mostly achieved.

On the NII, customer spread side, more or less stable unless 200 points interest rates change. That's more or less what we have in the guidance contemplated. With regards to the ALCO portfolio, the ALCO portfolio is contributing positively on the quarter with the NII. We have increased the ALCO book in the quarter by EUR 1.7 billion. We were actually able to purchase bonds at yields above 3.2%. I think it was a very successful strategy. Nevertheless, I think that we're maintaining our interest rate sensitivity within the same levels that we had at the end of the year, between 4%-5%.

As you know, typically our balance sheet, if we don't do anything, generates through time a higher sensitivity because of the weight of our site deposits. What we're doing now basically is maintaining this sensitivity of 4%-5%. We will see, depending on what the, you know, policy rate environment and the EURIBOR does, whether we decide or when we decide, if we decide to increase the rate sensitivity of the book, at the, you know, or not.

As compared to our Spanish peers, we have a better higher sensitivity, and it might help us if rates continue to go up, for example. Very good. ?

Yes. Next question, please.

Final question. Perfect.

Final one.

The final question goes to Ignacio Cerezo of UBS. Ignacio, please go ahead.

Yeah. Hi, good morning, and thank you for taking my questions. The first one is on trading. I know it's probably a difficult one to answer, but if you can give us a bit of a breakdown basically of why the figure has been so strong across most geographies, where that strength is coming from, and kind of any comment you can make around recurrence and sustainability, seasonality. I mean, just a bit of color basically on how recurring that number might be. The second one, follow-up actually to what Britta was asking about the cost growth in Mexico and the jaws. I mean, do you think there is part of the cost growth today which is based on kind of frontloading investments and the jaws actually can start improving over time?

Do you think there's the cost growth you need to incur to generate the revenue in Mexico? Thank you.

Jaws in Mexico and trading income. I take the trading income, you take the jaws, Luisa, if that's okay. Trading income, it's mainly global markets, Ignacio. Mainly global markets. We have been mentioning this. We do think we can create value by increasing our size in the CIB business in a very cautious way, in a risk-conscious way, but also in the way that we do it, which is cross-border-focused, sustainability-focused, banking on our clients in their business outside our core geographies. We mentioned it in the strategic talks that we did with most of you a few months ago. 40% of our business in the CIB business now, 40% is coming from cross-border. Basically deals, things that we do for our clients beyond their own geography, but they're our clients in their core geography.

40% of our business in CIB is global transaction banking, as we call it, which is transaction banking focused. Our CIB growth is basically focused on corporate banking rather than pure investment banking, and that is helping us. That is also helping us in the net trading income. Because in this first quarter, our clients, not only it's the leverage, but it is the topic of our clients trading, and that is helping us as we grow that business. One number there in the trading number, 40% of the global markets revenue that we have in, roughly, I'm giving you the rough numbers, 40% of the global markets revenue that is booked under NTI is basically the FX business. Given the volatility in the market, our clients have traded, especially on the FX side. We are in many geographies.

We are an emerging markets bank as well, and that has helped big time on the global markets business. There is also one other component, which is a smaller component, but an important one. Given the steepening of the curves in some geographies, especially Spain and Mexico, we have extended the duration. You can see it also in the presentation in the appendix that in the ALCO book, we have extended the duration a bit, which meant we sold short end of the curve, which was NTI, and we bought long end of the curve. NII would not be affected that much because of the steepening of the curve, but that also brought some NTI. The core driver was the global markets business. On the jaws in Mexico, Luisa?

What I would say is that, I mean, we always invest at different horizon periods. There's some investments that we do now that, you know, we expect the payback will be, you know, this year, next year, or even sometimes two or three years. I think that, more than specifically how much is front-loading or not, I would just say that our commitment is to that efficiency level in Mexico that we have at low 30s. Efficiency is 30.8%, that's the guidance that we've given also for our midterm, long-term goals, and I think that's what we're committed to delivering.

Yes. Thank you very much, Ignacio. Thank you all of you for participating in today's call. As always, the investor relation team remains at your disposal for any additional question or clarifications. Have a great day. Thank you.

Thank you to all of you.

Thanks.

Good morning, and thank you for joining us for BBVA's fourth quarter results presentation. As every quarter, I'm pleased to be joined by our CEO, Onur Genc; and the Group CFO, Luisa Gomez Bravo. We will begin with Onur reviewing the group's performance and key strategic developments during the year, followed by Luisa, who will walk you through business unit results. After their remarks, we will open the call to take your questions. With that, I now turn the call over to Onur.

Thank you. Thank you, Patricia. Good morning to everyone. Welcome, and thank you for joining BBVA's 2025 Full Year Results Audio Webcast. I will start with Page 3 right away. So I'm happy to say that in 2025, we achieved outstanding results across critical dimensions, value creation, as you see on the page, growth, profitability, strategic execution and shareholder remuneration. First, I would like to highlight the excellent value creation achieved during the year, which is rooted in our outstanding profit evolution. Despite falling interest rates in our core markets, we still managed to increase our net attributable profit, which reached a record EUR 10.5 billion, 4.5% higher than last year in current euros. Secondly, as we have emphasized in previous results presentations, BBVA offers a unique combination of profitability and growth, which was further reinforced in 2025. Our loan portfolio increased by an exceptional 16.2% at constant euros and 11.7% in current euros, an exceptional figure, while our return on tangible equity remained at industry-leading 19.3%. Third, in the page, we are advancing consistently in the execution of our strategy. First of all, we are transforming the bank with a radical customer perspective, leveraging the power of AI and innovation and also growing the bank, especially in areas where we believe we have an opportunity of superior return. And finally, all of this is enabling us to significantly increase distributions to our shareholders with a regular payout of EUR 5.2 billion from 2025 results, while at the same time, our CET1 ratio remains comfortably above our target. As you can see on the page, the regular payout against 2025 results will be paid entirely in cash through a total cash dividend of EUR 0.92 per share, being the highest cash dividend ever by BBVA. And additionally, we continue with the execution of the first EUR 1.5 billion tranche of the extraordinary share buyback program amounting to EUR 4 billion. These are the key highlights that I will expand in the following pages. But as you see, in my humble view, 2025 has been a remarkable year for BBVA, and we are on track to achieve our ambitious 2025-2028 long-term goals. Moving to Slide #4. On the left-hand side, our tangible book value per share plus dividends continued to show an excellent performance with a growth rate of 12.8% at face value. But it is worth highlighting, however, here the number, excluding the impact of share buybacks, that is 15.2%. As you all know, through the share buyback programs launched in 2025, the EUR 993 million already executed and the existing tranche of EUR 1.5 billion currently in execution, we have been buying our shares at higher value than the book value, which then leads to some negative impact on tangible book value per share creation. On the right-hand side of the page, you can see the very positive evolution of our net attributable profit, which continues its upward trend, reaching a new record, as we discussed, exceeding EUR 10.5 billion, again, despite the negative impact of falling interest rates in our core markets, especially in Spain and Mexico. At the same time, our earnings per share, it reached EUR 1.78, representing a 5.8% year-over-year increase. And if you look into a larger time frame, a compounded annual growth rate of 26% in the last 5 years. Slide #5, I want to underscore the truly unique positioning of BBVA within the European banking sectors, combining growth and profitability at the same time. You have seen this page before in other presentations of ours, but the situation has improved even further in our view in 2025. But the page -- just to explain the page, on the x-axis, we show the return on tangible equity as a profitability metric. While on the y-axis, we present loan growth in current euros for equal footing of all large European players. And as an indicator of future value creation, in our view, because growth and profitability, those are the 2 core dimensions of future value, BBVA clearly stands out, positioned in the top right quadrant, by far the highest loan growth in current euros and best profitability metrics among our peers. On return on tangible equity, as the measure of profitability, we should also underscore the fact that this number is partially negatively influenced by the excess capital that we have held throughout the year because at the denominator of this ratio, as you all know, it's the average equity throughout the year. Moving to Page #6, new customer acquisition. As we have reiterated consistently, again, we put this page also in every single analyst presentation, expanding our customer base is a key driver of healthy and profitable growth. In 2025, we reached a new record in customer acquisitions with 11.5 million gross new customers. Maintaining this space year after year is particularly remarkable in our view because we are already one of the largest banks in the markets in which we operate, and it's always a smaller pool to look for new clients. But despite that, a record number in 2025. And the value of this growth -- on the right-hand side of the page, there are 2 factoids there, but they're very important in our view. The value of this growth becomes clear when we look at the monetization of new clients over time. For example, in Spain, revenue per customer increases by 3.7x between the first and the fifth year of that relationship. And in Mexico, it's very important this number, 75% of the new credit cards sold in 2025 are to the customers acquired in the last 5 years. With such focus on cross-sell in place, we believe our future business in the coming years is already hatched with the customer acquisition activity over the past few years. Moving to Page #7. All the great results of the past few pages are due to our relentless focus on executing our strategy. You all know our new strategic plan. Our new strategic plan announced in 2025 has outlined a few critical priorities to sustain and improve our delivery. The plan foresees the continued need for the transformation of our business. That transformation, in our view, has to start with the customer, which we call radical customer perspective. Putting ourselves in the shoes of our customers, we are adopting a radical approach to understand and analyze every single customer interaction with the bank so that we act on these insights to improve customer service and eliminate frictions, eliminate frictions with agility and empathy. And this is reinforcing our NPS leading positions in most of our geographies and is leading to a significant reduction of negative experiences with our customers related to events like fraud, claims or service waiting times, improving, obviously, quality of service across geographies, as you see on the left-hand side of the page. As part of this new wave of transformation, we also have started to maximize the potential of AI and innovation within BBVA. We will pursue this across 8 initiatives listed there in the page, including our digital adviser, the Blue, the AI assistant for bankers and injecting efficiency and effectiveness in different processes across the bank in different areas like the software development. In addition, AI is increasingly being embedded across our organization. Our 127,000 employees all around the world, they have now access to OpenAI and Gemini. We are still at the early innings on this, but we are already starting to see the positive impact from all of our AI work, and we will update you on this further in the coming quarters. On Page 8, as part of our strategic plan also, you see certain businesses that we have prioritized to grow faster than average. We have achieved that superior growth in 2025 in all selected areas, enterprises, sustainability and capital-light businesses. On the left-hand side of the page, you see the levers through which we grow our enterprise business, cross-border, a natural lever for a global bank like us to serve our multinational enterprise clients beyond their home geography and sustainability also mainly on the enterprise side, a strategic priority for us to accompany our clients in their transition, all yielding excellent results in 2025, again, as you see in the growth rates. And if you can compare those growth rates with the rest of the bank, which is on the right-hand side. But in the middle and the right-hand side of the page also, you see the prioritized capital-light fee-generating businesses, again, displaying excellent growth performance in insurance, in payments, in wealth management, where again, we grew much better than the average of the bank in all of those areas. Slide #9. From this slide on, I'm going to walk you through the financials, but let me not -- and also to save time, let me not spend too much time on this page as it is a summary of the following pages. So let's jump into Page #10. In the annual P&L, a similar story as in the recent years, but I would like to highlight the very strong performance of core revenues, which drove gross income growth to 16.3% year-over-year in constant euros with 13.9% in NII growth and 14.6% in fee income. I mean this solid growth in gross income, together with positive jaws, as you see on the page, contained impairment charges, it resulted again in the record net attributable profit of EUR 10.5 billion. Slide 11, the P&L for the fourth quarter. Again, I will not stop long here, but just to remark on the strong quarterly performance with a net attributable profit above EUR 2.5 billion once again, despite some negative one-offs like a tax code change in Turkey at the final days of the year. You might have seen it on Christmas Day actually. The continued and accelerating delivery at the core revenue lines, net interest income and fee income is worth highlighting again on this page. Core revenue, especially in Spain, in Mexico, is behaving exceptionally well. Then talking about that maybe on Page #12, talking about Spain and Mexico, our 2 core geographies. First of all, before the countries at the group level, on the left-hand side of the page, one of the clear highlights of the quarter was the growth in activity. Loan growth maintained an excellent pace, increasing 16.2% year-over-year, which is translating into that strong net interest income performance. And then talking about the countries within that, in Spain, loan growth further accelerated to 8% year-over-year, while Mexico maintained a solid 7.5% year-over-year growth. In the case of Mexico, excluding the impact of the U.S. dollar affecting the value of our U.S. dollar-denominated loan book in Mexico, if you isolate for that impact, loan growth would have reached 9.9%, fully in line with our 2025 guidance. And on the right-hand side of the page also, you see how all of this is supported by strong loan growth and proactive price management in a declining rate environment, how we translated this into growth in core revenues in both Spain and Mexico year-over-year, but also look into the quarterly evolution with an acceleration in the last quarter if you annualize those quarterly figures. Moving now to Slide #13, again, talking about growth. Our strong activity growth is not only due to the overall industry growth, but also due to our clear outperformance versus competitors. As shown on the page, we have been gaining loan market share in all of our markets in the past few years. And in 2025, specifically, we continued that trend in practically all of our markets, again, with meaningful gains across the board. We have to be careful here. Market share by itself is not an isolated goal for the bank as the underlying growth has to be profitable. We are not here for the sake of growth. But as we monitor and manage the profitability of any granted loan in any country of the bank, we take pride in the consistent track record of market share gains across the board. Moving to Slide #14 on costs. I would first highlight that once again and in line with our DNA, we closed the year with positive jaws with gross income growing by 16%, clearly outpacing the growth in costs. And as a result, on the right-hand side of the page, our efficiency ratio continues to be one of the best among the European peers, and it improved to 38.8%. Again, picking up some speed. Slide #15, the evolution of our asset quality. It remains in line with our expectations, even in a context of strong activity growth in our most profitable segments. And starting on the left-hand side, at the bottom of the page, our cost of risk stands at 139 basis points year-to-date, improving versus 2024 and delivering a better performance versus guidance in most of the countries. At the same time, on the bottom right-hand side, both our nonperforming loan ratio and coverage ratio, they continue to improve year-over-year and quarter-over-quarter. Slide #16 on capital. Quarter-over-quarter evolution clearly illustrates both the underlying growth dynamics of the business that I just talked to you about and the one-off timing effects at year-end. First, results remain at the core driver of capital generation. Strong earnings contributed 64 basis points to CET1, then with the accrual of the dividends and AT1 coupons deducting 34 basis points. Then RWAs, turning to RWAs, activity-driven growth implied an impact of around 57 basis points. Overall, we saw a higher pace of RWA consumption compared with previous quarters. Again, this reflects very strong and exceptional business dynamics across all geographies with an acceleration in the loan portfolio growth, explaining the majority of the increase in RWAs. In addition, the thing that I mentioned about the fourth quarter exceptional number, the quarter includes also the year-end operational risk calculation which in the context of higher revenues and higher activity also came slightly higher than usual. Importantly, this capital consumption for the right reason, as it is driven by profitable growth, we would like to underscore this. I mean it's 57 basis points, much higher than usual because we have grown much higher than usual, and that's good as long as the growth is a profitable growth. And on that one, again, we remain highly disciplined in the use of capital as it is a scarce resource. I shared with you before, we have developed this concept of micro capital management framework, which ensures that at the most granular level, at the level of every single loan, again, I'm repeating, but it's important, granted at any part of the world, capital is deployed profitably above the respective cost of equity in that respective market. In the page, other impacts, marginally positive, adding around 4 basis points as negative market-related impacts were more than offset by the positive credit in OCI from hyperinflationary countries and higher minority interests. Regulatory impacts, we have basically advanced this a few -- I think, 2 quarters ago, but we added 56 basis points, somewhat above the original expectations that we shared with you during the -- again, July presentation, I think it was. These effects are technical in nature and mainly reflect the reversion of some portfolios to standard and to foundation in Spain and in Mexico. As a result, CET1 reached 13.75% in December 2025 before capital distributions. Then you deduct the EUR 4 billion of extraordinary share buyback program, a clear demonstration of our commitment to shareholder returns and to get back to our capital target, but this reduced the CET1 by 105 basis points, taking us to 12.70%. Slide 17 on shareholder distributions. In line with our payout policy, I'm very pleased to announce that the proposal to be submitted to the governing bodies contemplates a total regular distribution of EUR 5.2 billion for 2025, equivalent to a 50% payout, the upper end of our distribution policy. The distribution will be fully paid in cash, amounting to EUR 0.92 per share, which represents a 31% increase versus the 2024 cash dividend, and this implies a final dividend of EUR 0.60 per share to be paid in April 2026, complementing the EUR 0.32 per share that we have distributed back in November. In short, I mean, by far, the highest dividend of our history. And in addition, we continue to execute the extraordinary share buyback program, EUR 4 billion announced last December, of which the first tranche of EUR 1.5 billion is already being executed, again, as a share buyback program. Then Page #19. As you know, in the second quarter of 2025 in July, we set our ambitious financial goals for the 2025-2028 period. We are completely in track of those numbers. We are still in the first year of the program, but as compared to the numbers we had in the plan for 2025, we are performing in line with our original expectations and some better, but overall in line with our original expectations in all of the metrics that you see on the page. And with this, I pass over to Luisa for the business areas.

Thank you very much, Onur, and good morning, everyone. Let's start with Spain, which has delivered outstanding results in 2025. Net profit grew at a double-digit number, reaching EUR 4.1 billion for the year, driven by strong business dynamics with loans up 8% year-on-year, more than offsetting some margin pressure in a declining rate environment. This was further supported by robust fees, contained costs and improving asset quality trends. The fourth quarter was particularly solid with net profit exceeding the EUR 1 billion mark. Looking to quarterly dynamics, net interest income remained highly resilient, supported by continued commercial momentum. Loan growth remained very solid, supported by strong new production, up 9% quarter-on-quarter. Loan balances evolved positively across the board, with particularly strength in consumer and across the enterprise segments. This translated into further market share gains in the most profitable segments. To highlight the evolution in the enterprise segment, where we have successfully closed the gap with the overall loan market share, gaining 60 basis points of market share in the year. Robust fee income driven by sustained growth in asset management and insurance fees, along with the recognition in the quarter of asset management success fees. On costs, expenses remained well contained, growing by 1.9% if we exclude the positive one-off related to VAT calculations recorded in the second quarter. The quarterly increase mainly reflects year-end adjustments of variable compensation accrual according to the strong performance in the year. Overall, efficiency remained best-in-class with cost-to-income ratio at 33.1%. Finally, we continue to see positive trends in asset quality. The NPL ratio declined, coverage increased and the cost of risk improved to 34 basis points, in line with guidance. Turning to Mexico. 2025 was a remarkable year for Mexico with a very strong performance despite a challenging macro environment. On a full year basis, earnings were supported by robust core revenue growth, up by 8% year-over-year, driven by strong activity momentum outpacing peers, leading to continued market share gains. Total market share reached 25.6%, increasing by close to 30 basis points over the year, while total deposit market share also increased by close to 70 basis points. Looking into the fourth quarter, net profit reached EUR 1.4 billion, up close to 5% quarter-on-quarter, supported by very solid activity dynamics. Loan book growth accelerated in the final quarter, increasing by 4%, excluding the FX impact, with sound performance both in the Retail and Enterprise segments. Total deposits grew by 5.4% quarter-on-quarter, outpacing loan growth, driven by strong inflows in retail deposits, particularly the band deposits. Cost of deposits declined further in the quarter, supported by lower interest rates and an improved deposit mix. All in, this translated into strong gross income growth of close to 6% quarter-on-quarter. Turning to costs. The increase in expenses during the quarter as in Spain and by the way, in the other geographies as well, mainly reflects year-end adjustments in the variable compensation accrual. Efficiency levels remain outstanding with a cost-to-income ratio stable at 30% in the year and in line with guidance. Finally, asset quality remains solid with a flattish NPL ratio in the year, higher coverage levels and broadly stable cost of risk. Moving now to Turkey. The franchise delivered a net profit of EUR 805 million in the year, representing a significant improvement compared to 2024. The improvement in earnings is mainly supported by a strong increase in net interest income, underpinned by higher activity levels and a significant recovery in the TL customer spread in Turkish lira in the context of declining interest rates. Fee income remained robust, supported by growing activity. In addition, the negative impact from hyperinflation adjustment continued to decline, reflecting the ongoing disinflation process in the country. Cost of risk stood at 194 basis points in 2025, reflecting still elevated provisioning needs in the retail portfolios following a long period of negative real interest rates. Finally, the effective tax rate increased significantly in the fourth quarter by the full year impact of the recently announced tax code change, which Onur already mentioned and weighed on guaranteed BBVA earnings at the end of the year. Let's turn now to South America. The region delivered a strong performance in 2025. Net profit reached EUR 726 million, growing by 14.3% year-on-year, mainly supported by earnings improvement in both Peru and Colombia as well as lower negative impact of hyperinflation adjustment in Argentina as this inflation process continues. Core revenues dynamics were very positive in Peru and Colombia, growing at mid-single digit year-on-year in current euros, supported by solid loan growth and wider spreads. Net interest income in the year is affected by Argentina, reflecting a lower contribution from the securities portfolio and some compression in customer spread over the year despite the recovery observed in the fourth quarter. Robust fee income across the region, supported by the rollout of new initiatives aimed at reinforcing fee generation and improving efficiency, the cost-to-income ratio improved to 43.9% in 2025. Turning to asset quality. Trends continue to improve in Peru and Colombia, while in Argentina, provisioning requirements in the retail portfolio remained high, leading to adjustments in the risk appetite for this segment. Overall, risk indicators improved across the region with the NPL ratio declining to 4%, coverage increasing to above 90% and the cost of risk improving to 250 basis points. All in all, South America continues to show increasingly positive dynamics, reinforcing our confidence in the region's outlook going forward. Going now to rest of business. In 2025, rest of business delivered strong net profit of EUR 627 million compared to EUR 485 million in 2024. The strong performance was driven by solid activity across geographies. Loan growth remained healthy with important contributions in corporate lending, transactional banking, project finance. Funding dynamics were also positive across the board. The strong momentum translated into robust revenue growth. Net interest income increased by 15.9% year-over-year, supported by higher volumes and disciplined price management. Fee income also showed remarkable growth with positive trends across countries, driven by both investment banking and global transactional banking. On cost, expense evolution reflects the rollout of our strategic growth plans, including continued investments to reinforce our capabilities and growth plans going forward. Risk metrics remain very solid. Cost of risk stood at 16 basis points in 2025, broadly stable year-on-year. Overall, rest of the business continues to show very positive momentum. Back to you, Onur.

Thank you. Thank you, Luisa. Let me finish with the takeaways and the outlook and the guidance, but we have a commitment to you that we always finish by the hour. So on the takeaways, let me not go through all the bullet points that we have on Page #26. In short, I do think we have had one of our best years ever in 2025. Then guidance, Page #27, completely aligned with the midterm goals of our strategic plan. We are expecting strong business momentum to continue, solid loan growth across the board, supporting net interest income and overall revenue growth. On expenses, we maintain our clear commitment to cost discipline. The expected evolution in Spain and Corporate Center is impacted by some -- as you remember, in the second quarter, there were some VAT-related topics there, some base effects. But if you exclude the base effects, completely in line with our also original plan. Cost of risk is expected to remain broadly aligned with the 2025 levels. And overall, as a result of all of this, our expectation across the different business units, it translates into a group return on tangible equity goal of around 20%, better than 2025 is our expectation and the cost-to-income ratio of below 40%. And finally, on Page 28, to deliver on our ambitious long-term objectives and the 2026 guidance that I just talked to you about, we will continue to focus and execute on our strategic priorities. We again announced them at the beginning of 2025. We will devote time in 2026 to further discussing these strategic priorities with you through a series of what we call BBVA strategic talks and obviously, with the involvement of our senior management. These sessions would include country and certain business deep dives, and we are going to start them in March 10 with Mexico and the Enterprises segment. With this, I conclude the presentation. Now I give the floor to Patricia for the Q&A. We are at 9:58 in Spain, so 2 minutes. Perfect. We are right on time.

Thank you. Thank you very much, Onur and Luisa. We are ready to start the Q&A session. So operator, please, the first question.

[Operator Instructions] And the first question is from Maks Mishyn with JB Capital.

Two questions from me, please. The first is on Spain. You target mid- to high single-digit growth in -- above mid-single-digit growth in loans, and you grew 8% in 2025, but the NII guidance is low to mid-single digit. Can you walk us through the key assumptions there on rates? And then the second is on Mexico. Looking at sector data, and please correct me if I'm wrong, but it looks like the gap in deposit costs you had historically is reducing. You also seem to be growing faster in term deposits. Can you please discuss competition in deposits? And how do you see your customer spread evolving in the coming quarters?

Thank you, Maks. On Spain, our Euribor expectation that we have, for example, Euribor 12 months is basically flat, but the average spreads that we would be having average 2025, average 2026 shows a slight decline. As a result, you see a different guidance between the activity growth and also the overall NII and revenue growth. That's the core reason. But the Euribor levels, we do think today, we are at 2.22%, 12-month Euribor. It's going to be around these levels. The average that we expect for the year is at 2.25%. On Mexico, the deposit pricing, we discuss this every quarter. I mean our Mexican peso funding is at 2.5% at the end of November for comparison reasons. In the backup, you also see the end of December. But comparison, the markets authority announces these numbers. When our competitors, they are at 4.11% -- 2.5% for us, 4.11% for the industry. We maintain that very positive gap with the rest in terms of cost of funding and deposits, going back to the same dynamics that we repeat every quarter here, but they are important. We are in transactional deposits. I did mention this to you before, but I would repeat it, given our very high market share in payrolls, 1/3 of our deposits, 1/3 is in this bucket of EUR 0 to EUR 30,000, the lowest bucket. And the average of that bucket, 1/3 is in that bucket, EUR 0 to EUR 30,000. And the average of that bucket is EUR 790. So we have millions of customers and their transactional relationship is with BBVA. That's the best insurance policy against any cost of funding challenges or deposit challenges. You have seen that our loan-to-deposit ratio is basically flat throughout the year also in Mexico. I did mention to you in the last call that we would be a bit more aggressive in deposits now that the prices are lower. We didn't want to be very aggressive in deposits, and we have chosen to do wholesale funding when interest rates were very high because we didn't want to trigger that market too much. But now that the interest rates are at relatively low levels, we are also gaining market share in the last quarter, and it's mainly coming from the Enterprise segment, which is then leading to those dynamics. But overall, we feel very comfortable with our deposit positioning and cost of funding positioning in Mexico.

Just to add on to Onur's comment also on the rate side in Mexico. We do expect Banxico to continue to lower rates this year. So we're expecting Banxico rates to be at around 6.5% around mid of the year. So that is also implying somewhat compression of spreads in 2026 in Mexico on average versus also 2025, just as in Spain.

And when we announced our long-term strategic plan, we said that the core driver of the strategic plan numbers that we announced again in July was the fact that the rates would stabilize. And once rates stabilize, the activity growth will translate into bottom line, right away into profits. And that stabilization has already happened in Spain and is very close to be happening, finalizing in Mexico.

Next question please.

Next question is from Francisco Riquel from Alantra.

I have two questions. First one is, Spain customer spread fell 50 basis points in '25. Local peers are reporting falls of just 20, 30 bps. You're growing faster in loans, 8%, however. So how can you reassure that market share gains are not coming at the expense of profitability? And if you can comment on customer spread dynamics that we should expect in '26 and '27. And my second question is on capital generation. Net profit, well, results in '25 and '26 guidance is in line with expectations, but you are getting there more capital intensive that I thought in view of the negative organic generation in Q4. So I wonder if you can update on the strategic -- on the goals of the '28 plans in terms of the -- do you feel that the EUR 45 billion of CET1 generation is still achievable? How much through SRTs? And the mix, how much do you plan to devote between growth and distributions that you guided at the time?

Thank you, Paco. Luisa, do you want to take the first one, customer spread dynamics?

Yes. I think the customer spread dynamics have been quite positive in the quarter, to be honest. I think that -- first of all, I think that we need to also remember that the repricing of our mortgage loan portfolio is faster than our peers. We repriced 2/3 of our mortgage book every 6 months and 1/3 every year. So this pricing dynamics, obviously, you see it feeding into the loan yields quarter-on-quarter. And in the cost of deposits, this quarter, we had a slight uptick of 2 basis points of cost of funds, and this was driven primarily by a mix effect because in the quarter, we gained market share in transactional banking deposits in the corporate side, and that's what affected a little bit the cost of deposits. Going forward, as we mentioned, we think that we will see quarter-on-quarter pretty stable customer spreads in the first half of the year and perhaps slightly picking up at the end of the year depending on that Euribor rate performance that Onur mentioned. So all in all, I think that we are quite comfortable with the evolution of the spreads going forward. And going to profitability, I think that our profitability, as you can see by the dynamics of core revenues in BBVA this year in Spain, which have been quite positive with over 3% year-on-year in NII and over 3% year-on-year in fees compared to our peers, I think, showcase the profitability outlook of our growth.

Just to add on this one, Paco. On Page 38, you see the customer spreads, average customer spreads by geography in the appendix. The average spread has declined by 41 basis points, just to be very precise on the figure. And that 41 basis points, as you mentioned, is slightly higher than the competition. For a good reason, if you look into the growth of our lending book, you would see that we are growing very profitably, to be fair, but still at a different margin or a different spread level versus retail in the Enterprise segment. We are growing very nicely in the Enterprise segment. That has an implication. Obviously, the mix effect comes into that play. But that 41 basis points, again, is excellent in our view. And finally, I would say that the final spread that you see in Spain at the end of the -- in the fourth quarter, but at the end of the quarter as well, 280, we expect that number to remain -- we have touched bottom basically in short. We expect that number not to go any further down. Slight maybe changes, but not too much. From here on, if the rate policy evolves as we are expecting, it's going to be going up. Then the second question, the broader question on the growth being capital intensive and the implications of that. You were asking implications of that in terms of goals. We do have our, again, midterm strategic plan and the associated figures. There are 2 numbers there that are very important to us and that are very easy to remember. EUR 48 billion profits and EUR 36 billion capital distribution back to our shareholders, okay? Those 2 numbers. And then there are many others underneath, but I am giving you the 2 figures that is like -- I put them into a post note and I put them next to my bed so that I look into them when I wake up in the morning. They are important numbers. I mean we have a very solid competent team. If things happen that are beyond our control and if it doesn't happen, fine. But at the moment, we are completely on track to reach those figures. The thing that you mentioned, be growing in capital-intensive areas, as long as it's above your cost of equity, that growth, we love it. We want to do more of it because we are going to be creating capital more than our cost of equity. The thing that you mentioned might create a bit more different dynamics in terms of some of the buckets underneath the capital flow. But at the moment, it's completely in line with our plan. But if it continues like this, meaning we grow a lot in, as you say, capital-heavy areas, then we have an opportunity to do more SRTs, for example. I'll give you the growth dynamics here because you mentioned it's capital intensive. If you look into the quarter-over-quarter growth, you see that in Spain in the quarter, we grew 2.5% in loans when the average annual growth was 8%. So if you annualize the quarterly growth, we have grown much more in the fourth quarter versus the rest of the year. If you look into Mexico, the fourth quarter number growth is 3.7%, then the overall annual growth was 7.5%. Again, if you annualize Mexico, 3.7%, it was a much stronger quarterly growth than the previous quarters. And rest of business -- as also Luisa explained, rest of business is basically CIB business. We also delivered amazing growth in that area. All of this growth, again, is happening above cost of equity. If we grow like this, again, we will have a higher pool, for example, to do more SRTs. There will be different dimensions. But in short, coming back to your simple question, we are fully committed, and we are completely on track of our midterm goals.

Next question, please.

Next question is from Benjamin Toms from RBC.

The first one is on costs. At a group level, costs grew 10.5% in 2025, above weighted average inflation of 9.6%. I roughly calculate the weighted average inflation is expected to be 7% in 2026. Is that 7% roughly in line with your expectations? And is 7% the right way to think about group cost growth for this year? I appreciate you have a cost-to-income ratio. And secondly, one of the reasons that Mexico is a great geography to operate in is because the population is young and underbanked. From a strategic point of view, I'm interested that when we're talking about new entrants coming to the market, and coming to a market like Mexico and disturbing the status quo, does that young and underbanked population actually represent a disadvantage? I imagine younger customers are less sticky. And if your parents never had a bank account, you'll have no brand aspiration or allegiance. Basically, conceptually, do you think that it's easier for a new entrant to come to a market like Mexico relative to a market like Spain?

Perfect. On costs, Luisa, do you want to take?

Yes. Well, I think on costs, what we see is that this year, the performance on cost has been basically affected as well by the VAT one-offs in Spain and Corporate Center, in line in Mexico, and Turkey affected by inflation and rest of business in line with our expectations according to our investment plan. So all in all, I think, as I mentioned, very much with what we expected. Going forward, I think the guidance is very clear that we continue and remain investing in our footprint. Spain and -- guidance for Spain and the Corporate Center is affected by the one-offs on the base case. I think that in both cases, if you strip out the one-offs, we will be growing in Spain around circa between 3% and 4% on the average of the both years, which is in line with the growth that we see for Spain. And in Mexico, again, very consistent growth in Mexico, a market where we continue to believe that investment gives a lot of return going forward. So I think that the group costs this year are going to be, in that sense, higher than inflation because of these one-off trends and the continued investments in the growth franchises that we see in the group. As you mentioned, profitability is very relevant for us. And as long as we see cost-to-income trends performing the way that we expect below 40% for the group in 2026 and with our midterm goals going into the 35% aim, which is what we still stand by, I think we're perfectly fine investing in our footprint at these return levels.

And on your second question, Benjamin, which is a very good question. Our experience in banking, Benjamin, is that different segments of the society and population, young, mid-age, old or different segments, whatever metric and whatever dimension that you pick as a segmentation dimension, they really don't care whether it's the neobank or the incumbent bank and so on. What they care about is the service. They want to get the best from their bank. Very simple concept, but very important. Different segments prioritize different areas of service. As you say, the young segment, for example, the digital experience has to be really good because that's the piece that they care about. But if that digital experience is being provided by an incumbent bank versus a neobank, they don't care about that tag, about that label. They go for the service. In that context, our claim, and there are many numbers that we can take offline and feed you with, but there are many numbers that tell us that our digital experience in Mexico is amazing because as compared to those neobanks as well, we do this constant. I'm personally involved in those exercises. We look into what do they have in digital experiences, what do we have? Do we have a gap? If it's positive, perfect. We further build on that. If it's negative, we close that gap right away. If we do that, why would the young segment prefer a certain bank versus another? In that context, I mean, again, the numbers speak for themselves. Those neobanks that you are mentioning, and some of them have been there for many years now. There are newcomers, but there are also very entrenched now players in Mexico on the neobank side. They have been there for quite a long time. But despite that, we have 4.7 million new customer acquisition in Mexico in 2025, 4.7 million. A good part of them are very young customers. 81% of this acquisition are done through pure digital channels. So they don't go to a branch, they don't go anywhere, and they basically become a customer through pure end-to-end digital channels, which is one of our core competitive advantages in Mexico and beyond. That's why we are providing that service to them. That's why we are getting those numbers. On top, we have certain things that, in our view, neobanks cannot replicate that easily. We can do what they do because of the digital channel. We are really focused on that. But the things that we have, our infrastructure in the country. Mexico is still a very cash-heavy country. More than 90% of the population says they deal with cash on a daily basis. We have, by far, the largest ATM infrastructure. We have the branch network, if the customer needs it for a problem -- for the young segment, it's only for problem areas, but it does happen. They care about that infrastructure as well. And also, even if you are young, if you are working in a place, we do have a relationship with your company so that your payroll comes to BBVA, which is not very easy for, again, neobanks to replicate. In short, I think the numbers are very clear that we see that challenge, but we are matching that challenge, and we are going to compete really hard.

Next question please.

Next question is from Cecilia Romero with Barclays.

The first one is on Spain. Spain volumes are strong and you're gaining market share in SME and corporates while deliberately giving up share in mortgages. Is this pushing the cost of deposits up as you compete for clients, clients that you're not gaining through mortgages? You mentioned before on risk-weighted asset growth was larger than expected in this quarter. Can you clarify whether any large SRT transactions have slipped into Q1 and how we should think about risk-weighted asset growth and further SRT benefits for next year? My final question, the final dividend was entirely in cash. Is this structural going forward? Or are you planning to keep flexibility to do a final dividend in 2026 with a share buyback component?

Perfect. SRTs, the architect and the leader of SRTs is Luisa, so I'll leave it to you on the second one. On the first one, the cost of deposits may be going up, if I understood you correctly, Cecilia, because we are less aggressive on mortgages, does it have an implication on deposits? Was that the question? But the deposit, you would see it in the numbers as well. Again, in the appendix, you will see it. Our loan-to-deposit ratio in Spain is now 87%, 87%. So we do have so much liquidity and so much deposits that the tension that you might be implying that would be coming from not having that mortgage relationship with customer and hence, lower deposits is not there at all because we do have, again, abundant deposit space. SRTs, Luisa?

Yes. So on the SRTs, we generated 35 basis points of capital this year. In 2025, it was around EUR 11 billion of RWA release. We did front-load the deals in the year where they were more biased. We did like 23 basis points in the first half. We do see that the trend in the market is for deals to concentrate at the end of the year. And so we planned our SRTs in a different way. We expect this year to be able to deliver more or less in line with the guidance that we gave last year of around 30 to 40 basis points and pretty much in a similar fashion. We are also expecting to start doing some deals in some of our other core geographies such as Mexico and also potentially Turkey. We're working on those type of deals as well in order to try and mobilize the balance sheet further. So in that context, we do expect RWA growth to be below the loan growth as we complete our SRT planning going ahead.

Okay. On the first answer that I gave on deposits in Spain, Patricia here is alerting me that I didn't give a proper answer. But I do think what I said was critical, which is the 87% is the number to look into. But she's also highlighting a very good number, which is one of the clear reasons of our deposits are growing in Spain is also the retail franchise that we are building. Last year, we continued to acquire, I go back to the same topic, but it's very important, 1 million new customers in Spain, 1 million new customers. Excluding the neobanks, we are #1 among incumbent banks in terms of customer acquisition. That brings a lot of deposits as well. Patricia, I added your point as well. So I think you should be happy. Then the dividend topic, you said, I think, Cecilia, that 2026, can there be share buyback instead of cash. Of course. Of course, as we have done in the past, I mean, this year, it's 50% full in cash because we are running a share buyback program already. There is an ongoing extraordinary share buyback program running in parallel. That's why we said, okay, let's go with cash on the other side. You might remember, 2024, 2023, we did a piece of the payout -- regular payout in share buyback, EUR 40 million last year in cash and EUR 10 million in share buyback, if you remember. So we have that flexibility in our payout policy as we have announced to the market. We typically tend to pay a good part of the regular payout in cash because we do think it's important the cash dividends continue for our shareholders in a nice way. So a good part of that will always be coming in cash dividends, but there is the possibility and the flexibility, obviously, to do the 2026 regular payout, also some of it in share buyback.

Next question please.

Next question is from Alvaro Serrano from Morgan Stanley.

Can I ask a couple of questions around the guidance in -- first of all, in Mexico and then I have got one on cost in Spain. In Mexico, the mid- to high single-digit NII growth, if I look at the momentum you had in 2025, it was very good. And sort of in the second half of the year, you had 3% sequential growth in NII in pesos and the mid-single-digit -- sort of mid- to high single-digit NII growth implies very modest sequential growth over the fourth quarter base. And you're not going to get -- Luisa, you mentioned 50 basis points rate cut that you're putting in. Can you -- are you being conservative? Is there anything to -- I don't want to go to the cliche of the deposit competition, but is there anything we're missing? Are you being conservative? Just if you could qualify that guidance a bit, that would be very helpful. And then on Spain, even -- the cost income is 33%, which is obviously very good. That goes without saying. But if I think about the 2026, you're discussing low to mid-single-digit sort of NII fees and expenses underlying around 4%, I think, Luisa, you said. Is that -- I'm just thinking that doesn't imply -- potentially implies negative jaws or stable jaws. How are you thinking about costs from here on given this good starting point in cost income? Should we expect a bit more investment, maybe some negative jaws at some point? Is this the best you can do, which is very good. I don't mean in a bad way, 33% is obviously best-in-class.

Okay. So maybe take the second one, Luisa. On the first one, Alvaro, congratulations because in that chart of outlook and guidance, there are many bullet points on the page. The one that we discussed extensively and we said, are we being too conservative on this number or on this line was the one that you picked. But I mean you know our style. That page, again, is very important to us. When we say a number that we want to deliver, we deliver. And maybe a bit on the conservative side, that number, we are very positive in Mexico, very positive. I mean, if we have delivered what we delivered in 2005 (sic) [ 2025 ], despite all the complexities of the year in Mexico, in 2026, based on what we also see at the beginning of the year, we are quite positive. But we put a number and we always deliver and maybe that's one of the reasons why you have that guidance in there. Luisa, on the cost?

Yes. Well, on the cost side, I think that with the current guidance and in this year, we do expect some slight negative jaws in Spain if factoring for that circa 4% on average for the last 2 years. But that would still leave us with a very positive cost-to-income ratio for the year in Spain as we guided for. And again, we continue to, by the way, invest a lot in efficiency and productivity by no means are we standing still, where actually part of the investments and the growth in investments and expenses are to achieve further productivity gains throughout the year in '27 and '28 primarily. So we are very committed to ensuring that we have a very good solid cost discipline in Spain and the rest of the geographies, but Spain is, I think, a poster child of cost discipline in the past, and we will continue to do so throughout the year and going forward. So yes, slightly negative jaws this year, but again, very positive growth for Spain going forward in results, I mean...

And Luisa, maybe we also quantify EBIT. I mean in terms of the number that you see on the page for 2025, Alvaro, you see that the costs in Spain have decreased by 0.7%, decreased. It was because of that one-off that Luisa also mentioned in previous calls and also today, this VAT one-off. If you exclude that one-off, the growth in 2025 would have been around 3% and the guidance for next year would have been around that as well. So it's not any different. It's the base effect mainly affecting that figure. And we are going to be in the first quarter running an efficiency initiative, a voluntary efficiency initiative in Spain, and that might have a little impact on that number also, especially in the first quarter. But the guidance is there in that sense, mainly because of the base effect.

Next question, please.

Next question is from Marta Sanchez Romero with JPMorgan.

My first question is a follow-up on cost. We've seen some slippage in the Corporate Center. Is there space to do something more ambitious in terms of restructurings? It's been a number of years since you did anything meaningful in terms of early retirements. Could we see some capital allocated there? My second question is also on capital allocation. Some may say that your buyback, your current extraordinary buyback was somewhat stingy. And at the current execution pace, you will be done and dusted by July. Is there a chance that you reload that buyback? Or we are not going to see anything in terms of capital returns beyond the interim dividend this year in 2026? And just a quick question on the rest of business. So your loan book there is growing like a weed, EUR 16 billion this year, almost EUR 30 billion over the past 2 years. We're seeing market investors a bit jittery about underwriting generally, private markets, et cetera. Can you give us some sense of the quality of your underwriting, what you're doing?

Perfect. Maybe last one, you take Luisa, if you like. On the first question, Marta, thank you for the questions. On the Corporate Center, as I just mentioned to Alvaro's question, in Spain and in Corporate Center, we don't want to -- it's not a restructuring program at all. It's something that we do in an ongoing basis. But in the first quarter of this year, we will have an efficiency initiative, as we call it, which is a voluntary initiative for some of our colleagues to benefit from if they want. It's a targeted voluntary initiative that we would be doing. But I would highlight to you that if you go back to the Corporate Center expenses in the last 5 years, 5 years, you would see that those expenses are always growing less than inflation, always. And except the one-offs, and we can talk about the one-offs, but it has been a commitment that we have had -- even in these calls, we have voiced those commitments, and we are on track with those commitments. The buyback strategy, and you're saying we wouldn't -- should we expect something more or less or nothing? We have been very clear, very vocal and I do think we have built the credibility around this fully. We do have this commitment that we have a capital target of 11.5% to 12%, that we will distribute all the excess capital above 12%. Our commitment on that is full. If you look into our capital number and the evolution of the capital, you would see that we would have excess capital. So obviously, you should expect something more, when the time comes we will announce it, additional extraordinary distribution back to our shareholders. Then rest of the business, Luisa?

Yes. No, I think that the growth that we are seeing is a strong growth, but this is on the back of plans that have been developed over quite a number of years already and that have gained momentum now. So these are very thought-out plans that basically are trying to gear and leverage the global footprint that we have. We put our clients in connection to our emerging markets, and we're doing business with large corporates that are growing the strategy in traditional corporate banking with that growth of 21% that we saw in the year-end cross-border business. I think that in terms of underwriting criteria, we are quite conservative as in the rest of the group. And 40% of our business is booked in the U.S., and we are, I think, overall very focused in growth in corporates. That's where we're seeing the main growth, Marta, we're not seeing growth in other types of -- I mean, we're seeing growth, but not as relevant growth as in the corporate book. Again, corporate banking, transactional banking, regional banking model across the footprint is what we are focusing on developing.

I would double down on this comment, and I'm glad that Luisa has picked up on that dimension. It's on Page 8 of the presentation on the left-hand side at the top, it says enterprise cross-border. Our growth in rest of the business in general, but our growth in CIB is based on a model that we want to accompany our clients wherever they are. We have this global footprint. Many of our clients do exist in our footprint with different subsidiaries and so on. It's more trade finance, multinational client, corporate banking focused growth that we are after. And in that one, you see the evolution in that page on Page 8 that the growth is coming from there, from those clients. It's basically a cross-sell to our clients that we have in Spain. For example, we have a business in Mexico, we go after that. Our big clients in Spain who have a business in the U.S., we go after that. That's the focus of our growth in CIB.

And the capital allocation that we do in these clients in the rest of business and -- we see that profitability going into our subsidiaries in Mexico, in Latin America, in Spain. So that capital that gets allocated there have the profitability driven by the growth that you're seeing in our business in fees and margins across the group.

Next question, please.

Next question is from Carlos Peixoto from CaixaBank.

So the first one would be a bit on the medium-term targets. So basically, the 42% -- sorry, 22% return on tangible equity average that you had guided to for 2025-'28, considering that 2025 was slightly below 20%. This year, you're guiding towards 20%. So this basically means that over the coming years, the average ROTE would actually have to be around 22% or more, whether you stick to that or you see some downside? And the same rationale more or less would apply to net profit or areas to -- looking at what is implied in the guidance this year, it seems as though in 2027 and in 2028, you need to have post a net profit above EUR 13 million to fulfill those goals. What will be the drivers for the improvement in the net profit? Then the second question would actually be on Mexico. Just the cost of risk guidance of 340 basis points implies a small deterioration vis-a-vis 2025. Are you just being cautious on this? Or do you see here any kind of concern? Is it related with loan mix? Just trying to understand a bit there, the rationale.

Very good. Thank you, Carlos. Maybe on the cost of risk, Luisa, you help me out. On the first one, the long-term -- midterm goals, Carlos, what I can confirm to you or let me say it first in a very clear way. We are fully committed, and we are still on track, as we have highlighted on Page 18 of the presentation to those goals. But you are asking a very fair and a very good question, saying that you did 19.3% in 2025, how come you can get to 22%. You have to look into the plan. And in the plan, the only thing I can guarantee you or I can tell you is the year for 2025, what we had in the plan, we delivered above that. The 2026, our guidance that we are giving to you, we are going to -- if we deliver the guidance, we are going to be delivering above what we have in the plan. So in the third and fourth year, it's obviously a bit better years than the first 2. And you're asking this is related to profits as well. What is the driver of that? I do think we talked about this in the past, but it's a very important -- relatively simple, but very important dynamic as we have talked to you about. We are growing very nicely in our core geographies, especially in Spain, everywhere, but in Spain and Mexico as well. That activity growth -- in 2025 and at the beginning of 2026 also, that activity growth is being consumed by the decline in the customer spreads. Why? Because in those 2 geographies, we are very rate sensitive. When rates come down, we lose in customer spread. So we grew very nicely in 2025, and this compensated the negative coming from the customer spread decline. Starting from 2026, our expectation, again, it's based on a macro assumption that the rates will not go down any further in Europe and in Spain and Mexico, it's going to go down to 6.5%. Today, we are at 7%, but then stay at 6.5%. If those assumptions are correct, if that those macro assumptions are delivered, the driver of the better profits in the coming years is the fact that the activity growth will not be anymore consuming the decline in the customer spreads and will be flowing directly to the bottom line. With those assumptions, again, our midterm goals we are on track, and we feel very comfortable with the numbers that we have put forward some time ago. On the Mexico cost of risk, Luisa?

Yes. Well, I think as you mentioned, it's more driven by a mix effect. As you know, we have been growing in the past years, our retail portfolios faster than our wholesale portfolios. This year, our retail portfolio has grown close to 12%. Our wholesale portfolio is growing at 3% at the end of the year, factored by the U.S. dollar also depreciation. But in general, that mix effect is driving that guidance in terms of cost of risk. Remember that we're growing 14% credit cards, 14% consumer loans, 14% SMEs. So it's a mix effect. The underlying quality trends are supportive, and we don't see any issues other than the mix effect feeding into that cost of risk guidance for Mexico this year.

Next question please.

The next question is from Sofie Peterzens from Goldman Sachs.

Sofie from Goldman Sachs. So my first question would be on AI and tech. You guided for below 40% cost-to-income ratio in '26 and around 35% in 2028. But how do you think about kind of AI and the kind of cost-to-income ratio in the longer term? How much cost reduction do you expect AI potentially could help BBVA? And then my second question would be on Turkey. Revenues are strong, but net income was a little bit lower than expected. Also guidance for 2026 is slightly lower than expected by consensus. How should we think about the kind of upside risk to Turkey, but also Argentina from potentially exiting hyperinflation in 2028 and what that could mean for BBVA?

Very good. Thank you, Sofie. In the AI, we are still at the early innings. So we don't know exactly how the efficiency savings that we see, and they are really promising. And we are quite positive on what we have been seeing in the areas that we are applying it at the moment. But we need time. We need time to measure and see the direct impact and so on. But in the plan, we have given you this 35% in 2028 with the idea that in 2027, 2028, there will be some efficiency savings coming from AI that will be reflected into the figures. But exactly AI or other things, we haven't disclosed it. We haven't broken it down. And I think it is too early to quantify it at the moment. But we do have that intention to have some efficiency savings in those 2 years due to the programs that we are executing at the moment. On Turkey, how should we evaluate the upside risk, as you say? First of all, on the 2025 figure also you asked about -- you said that it came a bit lower than planned than the consensus. Actually, that's the miss consensus versus the group numbers in Turkey for 2 reasons. Number one, and as I mentioned, there was a change in the tax code. I'm not sure whether you all have followed it, but there was a change in the tax code in the final days of December, which has created around EUR 50 million, EUR 42 million to be precise, impact in the tax number that has created a bit of a dent in again, final days. And then the impairments are coming a bit higher in Turkey. Because in Turkey, the minimum wage increase happens only once in a year at the beginning of the year. And towards the end of the year, basically, the minimum wage is not adjusted, but inflation is there. And you see a bit higher inflows in retail, in credit cards and the consumer lending books. That's what we have seen. I mean the vintages, when we look into the vintages, we see nothing extraordinary, nothing different than what we expect. By the way, what we have seen in 2025 is more or less in line with the guidance that we have given to you. So given the vintages are already stabilizing, are already improving actually, maybe in the first quarter or so, similar to fourth quarter numbers, you would see some provisioning. But beyond that, we are not worried about the provisioning levels. You were asking in general about the upside, both Argentina and Turkey as well. On that one, what we can tell you, as you also look into the guidance, I need to highlight that thing in the guidance page, there's a footnote to the Turkish guidance, which is based on inflation, interest rates and depreciation of the currency. Those 3 things drive the guidance. We do think we have some fair assumptions in the footnote. As a result, we are guiding accordingly. But Sofie, your question of, do we have upside in those 2 countries? In our view, yes. But it depends on whether the countries improve on inflation and interest rates come down or not. If in Turkey, for example, inflation improves and interest rates come down, we do have a very high upside. If that happens, we have -- at some point, we have raised it in these calls as well. I mean, the fair value that we should have in Turkey is more than EUR 2 billion in profits. Today, we are less than EUR 1 billion. That upside is there, but it depends on the macro evolution of the country. Finally, you asked about also hyperinflation. As you know, the rule there is relatively clear. It's not the only rule. It's not sufficient. But if the last 3-year inflation cumulative number is less than 100, you get out of hyperinflation. That's why in our strategic plan, we put in 2028 for 2 countries get out of hyperinflation. But again, it depends on the macro evolution of those geographies.

Next question please.

Next question is from Andrea Filtri with Mediobanca.

And sorry for drilling down on capital and its implications, but they are just one number answers. First, how much capital generation can you absorb if you push volume growth further? How much was the op risk revision in Q4 impacting your risk-weighted assets? And you refer repeatedly to internal cost of equity reference your Northern Star for new loan generation. Can you share with us the cost of equity you're applying to your networks in Spain and Mexico for the different loan categories, please? Finally, digital euro. Given the geopolitical evolutions, do you agree that the digital euro is likely to be a reality at this point? And how are you preparing to deal with this and turn it to your advantage?

Thank you, Andrea. Very specific questions. I appreciate all the questions. And I'm going to be very specific to you, too. In the volume growth and capital generation, the thing I can guide you or tell you is that we still expect in the coming years that every year, this year, we created 31 basis points pure organic capital generation even after growth, after regulation, after growth, after any other extraordinary thing, we created 31 basis points. In the capital plan, we expect every year to create 30 to 40 basis points. The operational risk. In the fourth quarter, operational risk consumption was 16 basis points. Typically, it's 4 to 5 basis points in a quarter. We do this calculation, as you know, at the end of the year. So fourth quarter always has an adjustment that the number was 16 basis points for operational risk in the final quarter of the year. Cost of equity of the bank for different franchises, we never disclose it. Thank you for asking the question. Digital euro, it has pros and cons. It has to be done in a proper way in our view. I do think for the sovereignty topic that many people talk about, it can be helpful. There is a pro there. We see that angle. We see that point and appreciate it, but it has to be done in the proper way, in our view. And there are certain dimensions that we hope that we can continue to dialogue with the regulators and the politicians on this topic, given the fact that we are pushing private solutions as the banking sector in Europe, you might have seen this, the solution of [indiscernible], the Spain, Italy and Portugal, we are now in the same umbrella. We just concluded an agreement with EPI, which is basically Netherlands, Belgium, Germany and so on. So all of these countries, we will have already a private solution developed. We hope that in the digital euro discussions that politicians and supervisors and regulators understand the complexity, the costs and everything else required for the payment solution to be developed. In that context, we hope that the existing private solutions are integrated into that dialogue and discussion.

Next question, please.

Next question is from Ignacio Cerezo from UBS.

I've got three. The first one is on distribution and capital. If you can confirm that this is the year where the CET1 goes much closer to the 12% threshold or that's going to be a multiyear process? The second one is in Mexico, we're seeing a significant slowdown of remittances in the country. Does that have any impact in terms of deposit growth and asset quality, you think? And then third, if you can give us a few numbers in terms of balance sheet and P&L for the 2 digital banks in Italy and Germany, how have they been evolving basically in 2025?

Very good. I'll do it very quick, if that's okay, Luisa. This Is -- I mean, I mentioned multiple times, but our commitment to go back to the upper end of our capital target is absolute. In that sense, you should expect this year also that we get close to 12% as well, exactly, which implies that extraordinary distributions in the year. In the remittances question, Ignacio. We have also reported this back to authorities also in Mexico because there are channels that are not fully captured in our view in that number. So there's a 5% decline in remittances, but you don't see that in many other geographies where there is a remittance flow between U.S. and Honduras and Guatemala and so on. You don't see that in other countries and only in Mexico because we do think it doesn't fully capture the figure. So the reliability of that number, we have some doubts. But we do think that including those informal channels that are not included in the figure, the number has not come down actually. But in any case, we are quite positive for the Mexican franchise and Mexican economy better than 2025, we do think next year, and the remittances is an important part of this. Even in the official numbers that are being published, you will see a pickup in RV in 2026. The balance sheet and P&L of digital banks. We started reporting this to you as if you can see in the rest of business line item. Rest of business is basically CIB beyond the geographies that we report a geographical account, so U.S., U.K. and so on, all in there, plus the digital banks. You do see that in that page of 24 customer funds, the digital bank deposits is EUR 12.2 billion at the moment. It's basically roughly a bit more than half coming from Italy and the other part coming from Germany. We will continue to report on the balance sheet numbers. As you would see in this page, you will keep seeing the update in the figure. The P&L numbers will be published when we see the maturity of those businesses. At the moment, we are not publishing them separately.

Next question, please.

Next question is from Borja Ramirez with Citi.

I have two. Firstly, on Mexico, I understand that recent macro indicators show improving GDP growth trends. So I would like to ask if you could provide some details. And then also you're gearing to the appreciation in the Mexican peso versus the euro in recent weeks. I think it's around 4% appreciation. And then my second question would be on Spain NII. If I take your Q4 NII for Spain and I analyze and I add a bit of growth, I get towards the upper end of your guidance for NII. So it seems your guidance is conservative for Spain. And also, I saw that you had a very strong deposit growth in Spain, which -- so it seems you're gaining market share there. So I think it's also thanks to your stronger digital capabilities. So if you could kindly provide some details, please?

Thank you, Borja, for the questions. Maybe Spain question, you take Luisa. On the Mexican side, again, I mentioned the overall positivity that we have for 2026 for Mexico, but you're asking about the depreciation effect. In the plan that we have and in the guidance that we have, we are basically expecting a depreciation of Mexican peso versus euro, depreciation. In the first days of the year, it's the other way around, which is amazing news for us, which is very good news, which is a positive upside potential. But we live with this currency topic day in and day out everywhere. We wouldn't jump into conclusions too quickly. If it turns out to be as such, perfect. But again, our plan basically foresees a depreciation of the Mexican currency versus euro. On the Spain NII number, we have to pick up some speed as well.

Yes. I mean, I think on the Spain NII number, as we mentioned before, we expect activity growth to feed into NII with average customer spreads slightly lower than last year, but stable from quarter-on-quarter numbers, and with a positive contribution -- continued positive contribution from the ALCO portfolios because we did increase ALCO portfolios in the end of the quarter by EUR 3 billion, and that should be also supportive to NII dynamics, which are all embedded into our guidance. And with deposit growth, I think it's primarily a strong growth in the fourth quarter, driven by demand deposits. Obviously, seasonal effects go into play in the retail side with Christmas salary bonus and so on and so forth, public sector, but also a strong growth, again, as I mentioned before, in Global Transactional banking with specific clients that have supported that growth in the quarter. And we hope to see that going into next year as well on the back of, again, that growth of almost 1 million clients retail, that also will help support deposit dynamics going forward. Deposit dynamics in the market overall are going to be also quite supportive as well.

Next question, please.

The next question is from Britta Schmidt with Autonomous Research.

I've got three fairly quick ones. Could you remind us what the cost-income ratio in 2025 would have been excluding the one-offs? And maybe comment on how much of the expected cost growth this year above inflation is, let's say, upfront investment versus ongoing cost drivers? The second one would be on macro assumptions in Turkey. The rate and inflation assumptions do look a little bit of conservative. Maybe you can expand on why that is and perhaps also give us a bit of a sensitivity of the fee income to lower rates? And then thirdly, just on capital, your SREP benefits from the fact that there's no countercyclical or systemic buffer in Mexico primarily. How do you think about the simplification suggestions that the ECB has put forward with changing potentially how they think about releasable buffers? I mean is that a potential risk to your SREP requirements in the long term?

Very good. The cost-to-income number, Luisa?

In the group, it would have been 39.3%, excluding the VAT topic from the 38.8% published in 2025.

And the Spain number would be rather than 33%, 34%.

34%.

Yes. On Turkey, I didn't get the full question. Turkey, are we conservative?

On the macro assumptions.

On the macro assumptions, we have to see -- maybe we are taking it a bit with a grain of salt, Britta really, because in 2025, if you go back to our first quarter 2025 presentation, we were expecting better macro in Turkey in 2025, but the rates didn't come down as much and inflation didn't come down as much. And you have seen the number in January. The inflation came 4.84%, monthly inflation. So we want to be a bit on the safe side to be fair. But the macro assumption that we put into the guidance is in the footnote of that page. If you believe those macro assumptions would be better, perfect, you will have a better number in Turkey. If you believe it's going to be worse, it's going to be a slightly worse number. The sensitivity is also more or less clear. Every 1% inflation has a EUR 15 million to EUR 20 million impact on net attributable profit. Every 1% interest rate has a EUR 40 million impact on the P&L. And every 1% additional depreciation has, again, another EUR 20 million impact on the number. That sensitivity is relatively clear. There are some overlaps. So you have to -- it's not directly, but not that far away from what I just talked to you about. If you have other macro assumptions, then the number would change. Then the simplification topic, Britta, it will take 2 hours to discuss this really because we spent a lot of time thinking about this. At the moment, I think the proposals are still not clear or not finalized, we wouldn't want to comment on them until we see something more certain and more clear on the page.

Next question please.

Next question is from Hugo Cruz with KBW.

So two questions. One on Mexico, perhaps you already gave the detail, but if you could remind us what guidance you expect for loan spreads and deposit spreads to evolve during the year? And I think you gave a comment of ALCO should support the NII in Mexico. So what are the assumptions there? It's more like the size of ALCO? Or is it repricing? So if you could give a bit more detail. And then the second question is, you said that buybacks are starting to slow down your tangible book value per share growth. So related to that, I was curious if you think buybacks still have a return above your cost of equity. And basically, I was wondering if it makes sense at some point to stop the buybacks because organic growth or M&A could have a better return.

Very good, Hugo. Mexico question, Luisa.

Yes. On Mexico, well, we don't give guidance on specific customer spreads. What we've mentioned is that our guidance for NII is going to be mid- to high single digits. And we mentioned that we expect a compression of average spreads in the market this year versus last year, reflecting the strong decrease in rates in 2025, which is around 300 basis points in the reference rate and also in the slide as well. So that's what we mentioned in Mexico. With regards to the ALCO book in Mexico, what we have primarily been doing is extending durations. We did some exchanges of short-term bonds for long-term bonds in the quarter. And we have extended that duration. The book is right now at EUR 16.8 billion. It's grown around EUR 1.2 billion, pretty stable in the year. And again, the most relevant effect has been that extension of durations with yields at around 8.6%.

Very good. On the share buyback question, Hugo, maybe it's a repetition of some of the things that I always say and I also partially said today. But in terms of principles, very clear, we are value focused. Any capital action that we do, it looks into the return of that capital deployment for our shareholders and compare that also to other alternative uses of that capital. So you mentioned, for example, the negative impact on tangible book value per share number. So because of that, maybe no, that's not how we look into it. We look into it from a value perspective. If we create value for our shareholders, then it's still a good investment of that capital. That is why we always look into the intrinsic value of the share, not the tangible book value per share. So it might have a negative impact on the tangible book value per share, but that's not a criteria for the bank to decide on these. You have to look into the intrinsic value. It is true that given the appreciation of the share price, the attractiveness of share buyback has come down. But in our view, as compared to the intrinsic value, still there's value. That's why the program continues. And then also, I would once again highlight that our commitment to returning the excess capital above 12% is full. So when the time comes, when the capital distribution decisions are due, we will look into the situation, compare that with the intrinsic value, get the feedback of investors in general and decide. Then we have to wrap up, no. We have to leave in 5 minutes, okay?

So we have to leave it here. No, we can continue. So next question, please.

Next question is from [indiscernible].

I have just three questions, please, all on Turkey. Can I just clarify one thing? The EUR 40 million you mentioned on the sensitivity to lower rates, is that excluding the hyperinflation adjustment? Or is that including the hyperinflation adjustment? I just want to make sure I understand, so is the impact 4% or 2% in general. Second question, clearly, we're running positive real rates now in the region, and we will get an uptick in NPLs. But I just want to try and understand the relative effect of both in your PBT. So I suppose the NII impact is obviously much more sensitive given the fact the country is delivered -- delevered by 50 points of GDP over the last 5 years and household loans are only 9% of GDP. So I just want to try and understand, like obviously, a lot of it is credit cards, just in terms of the relative effect of both, that real rate policy. And lastly, kind of more a strategic question. Can you chat about what you would need to see to buy out the minorities in Garanti as soon as you can? I mean, surely, it's a perfect opportunity now to buy the balance given an enormous return on invested capital that would be delivered to BBVA shareholders, assuming that the Turkish real rate policy persists, which obviously you do expect in your presentation. And so I just want to try and understand how you're thinking about the buyout of the minorities.

Very good, very quickly because we don't have time. The number that I gave is including the hyperinflation adjustment, meaning it's the perspective of BBVA looking into it from here, consolidated in a hyperinflationary accounting included way. The cost of risk, again, just to pick up some time. [indiscernible], it's in the guidance. We are expecting around 200 basis points of cost of risk in 2026, which is more or less in line with 2025. No more deterioration, not much deterioration in the first quarter. In the first half, what we have seen in the fourth quarter might continue a bit, but vintages have improved. That's why you have the guidance of around 200 basis points. About the minority shares, we are happy with what we have. We have no plans at the moment. We have no plans to change that shareholding structure that we have there. So we will -- again, we continue with what we have.

Next question please.

Next question is from [indiscernible] from Jefferies.

I just had a follow-up regarding some of your previous comments about the fact that in 2025, you delivered better than what you had budgeted for at H1 '25 in the strategic plan. And I just wanted to make sure that I get that right, and that is a comment regarding profits rather than the return on tangible equity. I think at that point, you were guiding for '25 ROTE to be around 20%. That came in slightly lower. Is the reason behind that slight miss the excess of equity that you've been operating on versus what you were expecting back then? And then also, if '25 profits came in better, '26 is expected to come in better as well. Why shouldn't we see some upside to your previous EUR 48 billion guidance for profits cumulatively? And then if I just can ask a more thematic one as well. Just a few days ago, you joined the banking consortium to develop an euro-backed stablecoin. Could you please tell us what are your intentions and ambitions there and how you think about tokenized money more broadly in the coming years?

Very good. Thank you, [indiscernible]. Again, we are too late, so I'm going to go very quickly, apologies. And if you want to follow up with us, we are always open to the follow-up. But on the 2025 plan versus reality, as you exactly said, we delivered above plan in profits, but the average equity in the denominator of the return on tangible equity has been relatively high because we only started the share buyback programs because we have our commitment to go back to 12% all the time when we have excess. We started those share buybacks later in the year due to the Sabadell transaction and the fact that we weren't doing share buybacks throughout that process. But you're right, it was a beat on the profits. Then 2026, given what you see, shouldn't we update EUR 48 billion, [indiscernible], we are too early in the game. We are only in the first year. I do think EUR 48 billion is a very good number, and we are on track to deliver that figure. Then the stablecoin consortium. We do think it's a technological topic that needs to be watched very closely. There are certain use cases in our view that would benefit from those developments. And we are an innovation-focused bank. We always led the drive in digitalization now in AI and stablecoins is part of that dynamic as well. That's why we wanted to be part of a consortium to work through this and to basically stay up to date on all the developments around that. And then the final question we can take.

This is the final question. Next question, please.

Next question is from Fernando Gil de Santivanes from Intesa Sanpaolo.

Very quick one. What has changed over the FX hedges in the Mexican peso? Because I'm seeing higher volatility expected in this presentation versus the previous one?

The RWA is -- very quickly Fernando. The RWAs has come down because, as you know, again, we have done this regulatory -- you have seen it in the capital chart. We went to standard in some portfolios, and we went to foundation in some other portfolios, which has led us into the -- and then the equity, the sensitivity.

Yes, on hedges. Sensitivity to currency as we have reduced the capital, the sensitivity to hedges.

Very good. So you have the answer from Patricia. And if you want to follow up with her, she is always available for all of you. Apologies for this because we have an immediate program right after this in the same room with the press. Thank you so much for the questions. For any follow-ups, the team is happy to help you out.

Absolutely. We are at your disposal for any further questions or clarifications. Thank you very much.

Bye-bye.

Thank you.