Company: BBVXF
Filing Date: 2025-03-21
Form Type: 6-K
Source: 0000842180-25-000016
Chunk: 160

Company: BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
Filing Date: 2025-03-21
Form: 6-K
Chunk 160
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 loaded (CET1 fully loaded) consolidated ratio, as well as the maximum deviation in the Group's attributable profit. The probabilistic metrics make it possible to estimate the joint impact of exposure to different currencies taking into account the different variability in exchange rates and their correlations. These metrics are supplemented with additional assessment indicators.

The suitability of these risk assessment metrics is reviewed on a regular basis through backtesting exercises. The final element of structural exchange-rate risk control is the stress and scenario analysis aimed to assess the vulnerabilities of foreign currency structural exposure not contemplated by the risk metrics and to serve as an additional tool when making management decisions. The scenarios are based both on historical situations simulated by the risk model and on the risk scenarios provided by BBVA Research.

The purpose of the exchange rate risk management of BBVA's long term investments, which arises mainly from its foreign franchises, is to preserve the capital ratios of the Group and to maintain the stability of the profits. The year 2024 was characterized by the strength of the dollar against the euro (+6.4%), reflecting the strength of the U.S. economy and the expectation that the new administration's policies will generate greater growth and inflation. Among the emerging currencies, the Mexican peso depreciated strongly (-13.1% against the euro) affected by the election results in Mexico and the new administration in the United States. The Turkish lira was again penalized in 2024 (-11.1%), but to a much lesser extent than in 2023. As for the performance of South American currencies, the Peruvian sol appreciated against the euro (+5.2%), the Colombian peso weakened (-7.8%), while the Chilean peso depreciated by -5.6%. Finally, the Argentine peso experienced a significant depreciation (-16.8%) but it did so in an environment of stabilization of the country's macroeconomic variables, which are expected to lay the foundations for future economic recovery.

BBVA maintains management policies for the main investments in emerging countries with the objective of reaching a coverage level, in average terms, between 40% and 50% of the aggregate attributable profit in non-euro currencies expected to be generated by the group in the next twelve months and around 70% of the aggregate excess capital in non-euro currencies in CET1. In relation to the CET1 capital ratio, the estimated sensitivities at the end of 2024 of a 10% depreciation in the relevant currency was as follows: Mexican peso (-9 basis points); Turkish lira (-4 basis points) and