Company: BBVXF
Filing Date: 2025-02-21
Form Type: 20-F
Source: 0000842180-25-000010
Chunk: 116

Company: BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
Filing Date: 2025-02-21
Form: 20-F
Item: Item 4
Chunk 116
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 the CBRT reduced the policy rate from 50.0% to 47.5%. The CBRT also adjusted the monetary policy operational framework by setting the CBRT overnight borrowing and lending rates 150 basis points below and above the one-week repo auction rate, respectively.
In 2024, the CBRT continued to simplify the macroprudential policy framework to enhance the functionality of market mechanisms, strengthen macro-financial stability and support monetary transmission mechanisms. This trend is expected to continue in 2025, including through the simplification of the securities maintenance requirement, based on evaluations regarding the effects of the current macroprudential framework on inflation, interest rates, exchange rates, reserves, expectations, and financial conditions. Inflation is expected to decrease in 2025, which would support demand for Turkish lira assets. For information on other measures adopted by the CBRT, see “―Business Overview―Supervision and Regulation—Principal Markets—Turkey”.
Policies were implemented in 2024 to strengthen the monetary policy transmission mechanism and balance domestic demand. In order to enhance the effectiveness of loan growth limits, a reserve requirement based on loan growth was introduced. At the same time, the monthly growth limit was reduced from 2.5% to 2.0% for Turkish lira commercial loans. The limit was also revised from 3.0% to 2.0% for general purpose loans. Moreover, with the aim of ensuring a level of loan growth consistent with the target decrease in inflation and the maintenance of the share of Turkish lira loans, a monthly growth limit of 1% was introduced for foreign exchange loans.
Regarding banks’ balance sheets, despite a decline in the profitability of the banking sector throughout 2024 due to high funding costs, the sector's internal capital generation capacity remained sufficient to support capital adequacy. The tight monetary policy and the macroprudential policy framework have been weighing on the net interest margin, whereas strong income generation from fees and commissions coupled with the moderate growth of the cost of risk have supported profitability in 2024. However, with the expected decline in funding costs, banks’ net interest margins and return on equity levels are expected to improve in 2025.
G. Other Relevant Information
Offer to exchange 100% of the shares of Banco de Sabadell, S.A. for shares of Banco Bilbao Vizcaya Argentaria, S.A.
On April 17, 2024, the Chair of BBVA and the Chairman of Banco