Company: BBVXF
Filing Date: 2025-10-30
Form Type: 6-K
Source: 0001628280-25-047437
Chunk: 81

Company: BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
Filing Date: 2025-10-30
Form: 6-K
Chunk 81
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 Group decided to transition to the new IFRS 9 accounting framework for micro hedge accounting.

Given the lack of a specific regulatory framework for macro hedges in IFRS 9, the Group continues to apply the current framework established under IAS 39 for macro hedge accounting. Thus, from January 1, 2025, the Group will apply simultaneously two standards with common characteristics (IAS 39 for macro hedges and IFRS 9 for micro hedges) until the IASB completes the project to develop a specific framework for macro hedge accounting, known as the Dynamic Risk Management (DRM) Project.

The adoption of the accounting policy for accounting for micro-hedges in accordance with the requirements set out in IFRS 9 has not had any significant impact on the Group's Consolidated Financial Statements.

“Derivatives – Hedge Accounting” and “Fair Value Changes of the Hedged Items in Portfolio Hedges of Interest Rate Risk”

With the aim of improving the alignment between risk management and its presentation in the financial statements, the Group has decided to apply, replacing the requirements established in IAS 39, those of IFRS 9 for micro hedge accounting from January 1, 2025. Thus, until the transition date, the Group was applying IAS 39 for micro hedge accounting.

The Group uses hedging derivatives as a tool to manage financial risks, primarily interest rate risk and exchange rate risk.

To cover these risks, the Group uses, among others, the following hedging instruments:

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– Interest rate derivatives to convert interest rate exposures into fixed or variable rates.

– Foreign exchange derivatives to convert foreign currency exposures into the entity's currency and net investment exposure into the local currency.

In some hedging relationships, the Group additionally designates inflation risk as a contractually specified component of a debt instrument (e.g., inflation-linked bonds).

For these economic hedges to be recognized as hedge accounting, they must meet certain requirements established under both IAS 39 and IFRS 9. These requirements include clear identification of the hedged items and hedging instruments, an assessment of the hedge's effectiveness over time, and adequate documentation supporting the Group's intention to manage its risk through these instruments. Only when these criteria are met can financial derivatives be accounted for as hedge accounting, allowing for an accounting treatment that more accurately reflects the Group's risk management strategy.

Hedge accounting maintains a similar accounting scheme under both IAS 39 and IFRS