Company: BBVXF
Filing Date: 2025-02-21
Form Type: 20-F
Source: 0000842180-25-000010
Chunk: 6

Company: BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
Filing Date: 2025-02-21
Form: 20-F
Item: Item 3
Chunk 6
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ated Financial Statements) as of December 31, 2024 was €972,990 million (€904,889 million and €815,533 million as of December 31, 2023 and 2022, respectively). The Group has exposures to many different products and counterparties, and the credit quality of its exposures can have a significant effect on the Group’s earnings. Adverse changes in the credit quality of the Group’s counterparties (including borrowers), or any adverse changes in the value of collateral they may have provided, may reduce the value of the Group’s assets, and materially increase the Group’s write-downs and loss allowances. Credit risk can be affected by a range of factors, including an adverse economic environment, a decrease in consumption or corporate or government spending, changes in the credit sovereign rating or in the rating of individual contractual counterparties, their debt levels and the environment in which they operate, increased unemployment, higher commodity prices (especially of energy commodities), reduced asset values (including as a result of natural disasters), increased retail or corporate insolvency levels, changes in interest rates (as well as the timing, magnitude and pace of these changes), litigation and legal and regulatory developments.
In recent years, the Group’s non-performing loan (“NPL”) ratio (3.0%, 3.4% and 3.4% as of December 31, 2024, 2023 and 2022, respectively) has remained relatively stable. Improvements in the Group’s NPL ratio in 2024 were driven to a significant extent by (i) the increase in lending activity, in particular, loans to enterprises and, to a lesser extent, consumer and credit card loans (which are loans that generally entail greater profitability but also carry a greater default risk), (ii) the sale of portfolios of non-performing mortgage loans and certain unsecured retail portfolios and (iii) lower net entries of non-performing loans in the mortgage portfolio, particularly in Spain, and higher recoveries globally. While interest rates have begun to decrease in certain countries, they remain relatively high, and the persistence of high interest rates or any increase in interest rates in the future may lead to a deterioration of the Group’s NPL ratio and an increase in the Group’s risk-weighted assets (“RWAs”). See “—The Group’s business is particularly vulnerable to interest rates”. 
Furthermore, a deterioration of economic conditions typically results in a decrease in the price of real estate assets. The Group remains significantly exposed to the real estate