Company: BBVXF
Filing Date: 2025-01-30
Form Type: 6-K
Source: 0000842180-25-000002
Chunk: 40

Company: BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
Filing Date: 2025-01-30
Form: 6-K
Chunk 40
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Since the general election in May 2023, there have been increasing signs of normalization of economic policy in general and monetary policy in particular, pointing to a gradual correction of the current macroeconomic shocks. In this regard, benchmark interest rates have been raised from 8.5% at the beginning of 2023 to 50% in September 2024 and other countercyclical measures have been announced, supporting a slowdown in domestic demand, relative exchange rate stability and a moderation of annual inflation to 44.4% in December. In response to these developments, most recently, in December 2024, the central bank cut interest rates by 250 basis points to 47.5%. As inflation continues to moderate, as expected by BBVA Research, which forecasts a further slowdown to around 26% by the end of 2025, interest rates could be cut further, to around 31% by the end of this year. This reduction in inflation and interest rates is likely to be supported by relatively limited economic growth of around 3.2% in 2024 (unchanged from the previous forecast) and 2.5% in 2025 (20 basis points below the previous forecast). Despite the uncertainty, a less favorable global environment and some fiscal consolidation will help growth to remain below levels considered potential this year.

As for the Turkish banking system, the impact of inflation continues to prevail. The total volume of credit in the system increased by 36.6% year-on-year at the end of November 2024, at similar levels to the previous months. The stock of credit continued to be driven by consumer credit and credit card portfolios (46% year-on-year) and by credit to companies (+34.6% year-on-year). Total deposits maintained the strength of the last few months and grew 29.8% year-on-year at the end of November 2024. Turkish lira deposits continued to grow strongly in the same month (+42.3%) while US dollar deposits grew more slowly (+11.3%). Dollarization decreased to 34.6% in November 2024 from 40.3% a year earlier. The NPL ratio of the system remains well under control and stood at 1.96% in November 2024. With respect to the capital indicators, they remain at more than comfortable levels as of the same date.

Unless expressly stated otherwise, all comments below on rates of changes for both activity and results, will be presented at constant exchange rates. These