Banco Bilbao Vizcaya Argentaria, S.A. (BBVA) Earnings Call Transcript & Summary

Hello. Good morning, and thank you for joining us. I'm delighted to have Mr. Onur Genç, CEO of BBVA with us for today's discussion. Mr. Genç, thank you for spending the time to speak with us. I'm sure plenty of M&A bankers are trying to monopolize your time at the moment, so I'm particularly grateful. Before we start, I would like to remind our audience, there's an option to submit questions for BBVA's management. You'll find the details on your screen. Please, Mr. Genç, the floor is yours.

Thank you very much, Marta, and good morning to everyone. I want to thank, first of all, Bank of America for the invitation to participate in this annual conference this year. First of all, I really hope that you and your families and friends, they are all healthy and safe. And I also want to express my support to those affected by the pandemic and my deepest condolences to the relatives and friends of those who passed away. So let me jump into it. I'm going to try to run you through by highlighting the slide numbers as I go through. So let me start with Slide #2, by updating you on how BBVA is facing current challenges from a position of strength. I would like to highlight what makes BBVA a strong and powerful bank. I will elaborate these points with clear facts as we go through the presentation, but the strengths, if I list them very quickly, the 4 of them: number one, BBVA has a resilient operating income, our operating income performance, in my view, has been standing out; second point, sound capital position and proven capacity to generate capital, organic capital generation; number three, comfortable liquidity position; and number four, we have been investing in this for so long, but we do think, and I will show you some numbers on that one as well, our digital edge, our investments on digital, is proving to be quite fruitful, and it continues to be, in our view, a competitive advantage for us. Having laid down these 4 points, maybe I go through the slides to illustrate with some facts on why we think as such, what are the underlying reasons behind those beliefs. So moving to Slide #3, and elaborating on a few things. Again, we show a proven track record of earnings resilience and lower volatility in those earnings. I think it's very important. Very high and also low volatile -- low volatility in terms of operating earning. So on the left-hand side of the page, what you see is we have generated a strong pre-provision profit over RWAs of 3.4% on average since 2008, 3.4%. One on the top as you can see in the ranking among all the European banks. European bank average is 2.2%, 2.2% versus 3.4%. Additionally, it has remained, as I said, relatively stable in this period. Standard deviation of those numbers, if you take this relatively long time frame, our standard deviation is 0.4% versus 0.8% in the case of our peer group, the largest European banks, as you can see in the footnote, who the banks are. And this happens even under very stressed scenarios, as shown in the graph on the right-hand side of the page, under the [ EBA ], the stress test, undertaken in 2018, we have proven to be the second most resilient bank in the adverse scenario. Even more, BBVA was among the 2 peers that showed capacity to score a positive net income result between 2018 and 2020 under this very stressed scenario. In my view, this goes back to our diversified business model. I mean we got these questions lately on the fact that well, you are now facing a crisis, which covers the whole globe. So your diversification might mean less in this context. But even in this current context of a global, very homogeneous crisis, practically all the countries are facing a similar tough context, we are experiencing a quite heterogeneous impact in our business in different countries. So diversification, even in this context, helps. And diversification, even in this context, as we will be showing you in the numbers, is affecting different countries and different markets and different businesses, in a very heterogeneous way. And they you, again, goes back to statistics, when you pull down different buckets, you diversify away the risk. And I do think that is one of the core reasons why we have this low volatility. Moving to Slide #4. Slide #4, here, we are showing, in our view, again, a distinctive growth and profitability profile versus our peers. And growth and profitability ideally, should drive the valuation of the companies. So regarding profitability, as you can see in the graph, it's a relatively simple matrix. But on the y-axis, you see the ROEs, BBVA remains at the forefront of the European banking industry in terms of profitability. Return on equity standing at 8.8%, you cannot probably see from the scale clearly, but 8.8% is our number versus the 2.4% average of our European peer group. So that's the profitability dimension. What about growth? In terms of revenue growth, BBVA, and this is current euros, current euros. I mean, obviously, we are in emerging economies. So we have to look into it in current euros. We had an annual growth rate in our gross revenues of 2.2%, 2.2%, versus the average of the European peer group is 1.1%. So we do think, again, it is a good position to be in this matrix, and we do think that our growth and profitability profile is a relatively unique one. So moving on to Slide #5. I'm still on the first point of resilient operating income. If you can track from the bottom of the page. So Slide #5, the thing that we just talked about, the distinctive growth and profitability profile, in our view, is the result of our unique footprint. And our -- more importantly, in my view, our respective position in those different markets. So you might be saying that, yes, this is a good profile, but it's because of the footprint. So let's isolate for the footprint. So here in this chart, you see by country, our position, by country, our position. So regarding market positioning, we rank among the top 3 banks in terms of the lending market share in basically most countries of our footprint. And typically, our market share is double digit. It wasn't easy to put it here, but because we had to have the apples-and-apples in terms of comparison basis, but in terms of in the respective markets, given this position that we have, our profitability is also better than the average of the industry in practically all of the countries. So our ROE versus the ROE of the industry, when you look into that, we typically have a very nice positive differential gap. So our position is good, and that position is leading to a better profitability profile in the respective markets that we are in. So it's not the mix that creates a wonderful picture, it's the mix, for sure, but it is also the fact that we have these great banks in different countries, which is creating this result in our view. Moving on to Slide #6. Here, I talk about our second point. So I move to the second strength that I mentioned right up front, the capital. So it's the first message, I want to highlight our proven ability to organically generate capital. You see it on the left-hand side of the page, we have multiplied our CET1 2.3x since the last crisis, since 2008. So this organic capital generation is something that we have achieved, and we see it in the multiples. Then the number might show some fluctuations from one quarter to another. I remember the first quarter of this year, we have explained to you that we have lost 90 bps in CET1. So from 1 quarter to another, we do see some fluctuations, given our footprint and the associated market developments because the market has been impacting us in 1 quarter or another quarter. But our CET1 ratio volatility, if you take a 12-month period, 12-month period to smooth out the quarterly variations, our CET1 ratio volatility is one of the lowest, again in the industry. So if you look into the debt volatility, our standard deviation is 0.7% versus 1.2% of our peers. Obviously, we have to look into it with a grain of salt because we might have a very good volatility by improving your ratio every year. But when you look into the detailed numbers, there are years where most banks lost in CET1 and so on. So they even isolate for those impacts, what you see is our volatility is a very good one, is a very good one. And going back to the stress tests, again, on the right-hand side of the page, our capital generation has superior resilience under stress. So we show here the results all there by exercise again in 2018. BBVA was one of the banks with the lowest depletion of its capital ratio under the adverse scenario. This happened, by the way, in each and every stress exercise, not only in the supervisory driven ones, but also in the internal ones, obviously, again, supervised, those that we run in our internal capital adequacy assessment process, we reached the same conclusion. Our capital has a superior resilience under stress. So I would like to once again, reiterate this point that our earnings profile, our operating income profile, our distinctive growth and profitability profile is helping us on capital, in terms of creating organic capital and in terms of the volatility of that ratio. Moving on to Slide #7 and talking about the goals and the requirements and so on. So on Slide 7, on the left-hand side of the page, you see the CET1 requirement for us. The CET1 requirement, it's interesting to see that everyone focuses on the absolute level. But the regulatory supervision is that you have a requirement and you have to compare where you are with that requirement. And our requirement is one of the lowest. Sometimes, it's very frustrating to see, being compared on the absolute level without any concern for the requirement. Our requirement, again, is one of the lowest in Europe. And as you can see in the center of the page, we also have fully end out our AT1 and Tier 2 buckets, proving that we manage our capital stack in our view, in a very efficient and orderly manner. As a consequence of those 2 facts, if you take the requirement as the benchmark, and if you look into distance to MDA, and as you know, distance to MDA is calculated on a phased-in basis, we are at the middle of the pack, 304 basis points in terms of buffer, in terms of distance to MDA. If you look into the CET1 ratio requirement versus the -- CET1 ratio versus the requirement, which is the buffer, it is 263 bps. And that 263 bps or the 304 on a phased-in basis distance to MDA, is a relatively comfortable level in our view. To close the chapter on the CET1, we discussed it very quickly in July as well. But moving to Slide #8, we expect our CET1 ratio to be above our capital target range of 225 to 275 bps by year-end. So this is an upgrade to our previous guidance. We were going to be in the range, as we were saying before, and now what we are saying today is we are going to be above the capital target range of 225% to 275%, CET1 buffer that we are talking about. There are some regulatory help coming here, the software treatment, we discussed it in July as well, but we're going to generate 12 bps from the software treatment. And then also, there are 2 pending corporate transactions, one is the sale of BBVA Paraguay and the joint venture with Allianz that we have announced back in April. So those 2 would bring 13 bps. Those 2 would help, obviously, to take us above the goal, above the 2.75% upper end of the range. But still, even though some of those might not come through, we do feel confident that we would be above this range. And finally, on this one, our dividend payment capacity remains solid. Our intention is clearly to resume payments once the existing supervisory recommendation is eliminated and the COVID uncertainties dissipate. And once we are there, hopefully, we will be there in 2021, we will assess the best way to remunerate our shareholders, including not only dividends, by the way, but also potential buybacks. We discussed it before, but we are very keen to explore also potential buybacks because it's a very efficient way to remunerate our shareholders in the current context. So a combination of both might be coming in line once again, these uncertainties dissipate, and once the supervisory recommendation is eliminated. My third point, when I started the presentation was on liquidity. This is a very, very strong point for BBVA all along, and still, we maintain a very comfortable liquidity position in all of our geographies at the group level, but also at all the geographies. Our liquidity ratio is well above the 100% minimum required, as you can see on the page. One other thing that I should highlight is, unlike many other international banks, obviously, we are a multiple point of entry bank, meaning that all our subsidiaries, they are self-sufficient in terms of liquidity and funding. And if there is any problem in any geography, it is contained to that geography. Finally, Slide #10. Slide #10, I'm watching my time as well. So okay, Slide #10, digital topic. And the fourth point that I mentioned upfront, we have invested a lot in this. When we were doing all these investments, we were being tagged as they are overdoing it, maybe. And what we are saying is we are benefiting tremendously from what we have been doing because we do think that our business is changing. We do think that our business has to be served more digitally, our customer service model is changing. We have to change our usual habits in addressing the customer concerns. I mean we talk about it every time, but on average, on average, in typical BBVA geography, a customer goes to a branch. The ones who go, 45 days, once in 45 days, once in 45 days. That's the frequency that your customer interfaces with you through a traditional channel, which is the branch. In digital, a typical digital customer checks with you through the app or through the web bank that we have, 15 times a month. So every 2 days. Every 2 days, once in 45 days. It's a very different frequency that you have to manage. You have to manage that interaction in a completely different way. You have to serve your customers in such a way that you also sell to them through digital and so on. So this requires a complete shift of mind, and we have invested in this shift of mind. And again, I think we are benefiting tremendously from this as proven in this COVID context. So you see here some numbers. Very important, in my view, the number of visits to BBVA app globally increased by 30% after COVID versus pre-COVID, if you compare the pre-COVID scenario. In Spain, for example, the middle side of the page, the visits to My conversation, which is also a digital way to interface, a digital and more efficient way to interface with your banker, even that functionality, it's a combination, it's a hybrid of both models, which requires, again, a lot of digital capabilities. It has increased by 70%, 70% since COVID, since the March time frame. And more importantly, I mean, many banks, including ourselves, we use digital as a way to optimize costs, as a way to optimize servicing costs. But the challenge is also to make sure that you use your channels, you use your capabilities to sell, to improve relationships with customers, to acquire new customers and so on. And on that one, you see on the right-hand side of the page, our digital sales 55%, not long ago, 55% has now become 66%. So 2/3 of the sales that are being done in BBVA are now done through digital means, which we think is a huge, huge value, value add. And related to this, on Page #11, I also would like to say that given our positioning in the digital field, given all the investments that we have been doing. So big techs, some of the big techs, the techs they choose BBVA as their preferred partner. One example on the left-hand side of the page is Google. We have recently partnered with them in the U.S. to offer consumers a digital bank account through Google Pay. And this collaboration is there for other reasons also, but again, made possible thanks to our open banking initiative, the open platform as we call it, one of the first in the century -- in the industry. So we create APIs and we open those APIs to the software community. And if you have those APIs, which is not an easy task to do, it is much easier for you to connect to other players, in this case, with Google. The second example on the left hand -- on the right-hand side of the page is Uber. So in Uber, we have a co-branded card, it's an account and a debit card, actually, in Mexico. And this is the first partnership that Uber is doing with any financial player outside U.S. So the investments that we are doing is also opening up ways for us to interface and to partner with players who do have that customer access, which is very important, obviously, in our business. Now this is -- these are the 4 points and some clear facts around why we think those 4 points hold for us. Very quickly on the business update, 2 countries. So let me just immediately jump to Page #13 and talk about Spain. I would like to highlight the strong performance of BBVA Spain in this challenging environment. Net interest income and expenses management has been the main profitability levers for us in Spain this year. We had beaten our peers in the first half of the year in net interest income, posting a 1.7% increase in NII versus a year ago. And that 1.7% when you look into our peers, it's minus 5.9%. So a very positive performance, differentiating ourselves, very much driven by price management, excellent price management, in my view, our teams have done an amazing job. And given that, we expect NII in Spain to increase slightly this year, and mainly because of the fact that there are these eco lines and eco loans, which have helped in the volumes. The increased contribution from TLTRO 3 and also, again, supported by excellent price management. Moving to expenses on the -- at the middle of the page, as you can see, we continue to build on our outstanding track record. Our cost base in Spain has been reduced by 16% in the past 4 years, 16%. Our peers' average at the same time frame is 9%. So cost control will continue to be a key management priority for us in Spain in the coming weeks and months. We expect expenses to decrease by more than 5% in 2020. So this year, we are expecting a more than 5% decrease, better than competition. Again, we hope you'll see, but I think it's going to be much better than competition. And I remain confident that we might even beat that 5%, so we will continue to deliver positive surprises on this -- in the cost management. And finally, in terms of asset quality, on the right-hand side of the page, you see 2 advantages that we have. First of all, our portfolio. You can say that it's less risky than peers because as you can see, our collateralized loans, for example, in mortgages in that document on that side, 42% of our loan book is mortgage versus 36% on average for the Spanish peers, and we have the highest coverage ratio. Our 66% is almost 12 percentage points higher than the Spanish peer average. So as we shared with you in July, we expect cost of risk to be significantly below the first half levels. As you know, we have done a lot of front-loading in the first half. So in the second half, we are expecting a very sizable improvement in the numbers. The Slide #14, U.S.A., updates on U.S.A., very low rates, as you know, a very challenging environment, but the operating performance is doing better than expected, in my view. In terms of NII, I think it's worth mentioning the excellent management, again, our cost of deposits. Price management, cost of deposits in the case of U.S., is very relevant for us. And as you can see, after a long while, if you take this curve to 2015, you would see a very large gap with our peers in terms of cost of funding, and this is the time that we have leveraged, that we have used to reduce that gap with the peers in terms of cost of funding. And then expenses control. Again, at the middle of the page, what you see is we have positive jaws. So our growth in expenses is much better, growth in expenses versus growth in revenues is much better than competition. So our jaws is 3.3 percentage points. And the same number for the peers is negative 0.8%. So we continue to do well in creating jaws, in creating operating leverage. And in terms of cost of risk, again, as you can see on the right-hand side of the page, we already improved on this number in the second quarter. And for 2020, for the full year, again, we are expecting very similar story. We are going to be significantly below the first half levels. Again, front loading, obviously, is very important. But also what we are seeing is that the environment is proving to be a good one. Mexico. This was one of the key questions that we had back in July. We were discussing the cost of risk implications. And we were very genuine. Very genuine, as always, with all of you saying that we have some question marks, because we have done a big deferral portfolio, and we need to see how that deferral portfolio behaves. And on that one, what I would say is we have a very positive picture to share with you. But before cost of risk, very quickly, on Page #15, we are seeing clearly improving trends on core revenues, which is very important for us, obviously. Second half of the year is going to be better than the first half. Three main drivers for that one. The first one on the left-hand side of the page, regarding net interest income, we had a negative one-off in the second quarter, which was, again, the deferral portfolio. We were not charging credit cards in the SME. So that will correct itself in the third quarter. It has already corrected itself. So that's going to be a positive help. Second, retail loan growth. You see it on the middle line -- middle part of the page, retail loan growth continues to recover from the bottom. So in March and April, we had a very tough period, as you might see from the page, but we see a clear recovery from that. Despite the health numbers not being as great as it can be, obviously, but we have learned to live with it in many countries, and Mexico is one of them. And you see the activity pick up in the middle of the page. And then regarding fees and commissions, as you can see on the right-hand side of the page, we have seen a clear recovery on credit card spending and credit card-related fees, we have seen a very good performance on mutual funds, given the lower interest rate environment in Mexico. So lower interest rates, they hurt us on one side, but they also help us on others, and this one was one of the ones. So in the evolving interest rate environment, we see more demand on mutual funds. So these 2 fee categories, credit cards and mutual funds, they are 60% of total fees in Mexico. And we see a clear pickup from the levels that we have seen in the second half. Bottom line. In the second half of the year, we see a better trend as compared to the first half for revenues. Then going to the topic on the cost of risk that I mentioned before, which was very, very important for us. These numbers, we have watched like our babies throughout summer, throughout vacation and so on. But on Slide #16, a quick update on the deferrals. On the -- first of all, let me start with the right-hand side of the page. So 92% of the retail deferrals that we have given in the March, April time frame has expired. And that retail portfolio was our core concern. Was the portfolio that we were not so sure about, we had question marks, again, as we were discussing with you back in July. And 92% expired, so we have a clear picture of what's going on, on that portfolio. For the wholesale, which we have less concerns, to be fair, less concern because we know them one by one, they are big clients, 87% will expire in the fourth quarter. But the key portfolio question mark that we had, the retail portfolio, most of it has expired. We were, again, very honest and obviously genuine in sharing with you our concerns back in July. But we were also saying that we have some optimism. And the optimism was going back to the quality of the portfolio that we have in Mexico. So before I give you the results of the deferrals, I very quickly highlight you the portfolio point that I was making back then. So this is a very good portfolio for 3 reasons. If you look into the retail, deferred mortgages, they have an average loan-to-value of 44%. So given the collateralization, given the very strong loan-to-value, yes, our potential future losses, in our view, is going to be managed here. Consumer, for consumer, 67% of the clients have their payroll with BBVA in Mexico. Which means that we have good information on their payment capacity, and it also implies that our consumer loans are given to salaried employees, typically in the formal sector, so which is also a very, very important factoid to keep in mind. And SMEs, 68% of them have state guarantees, and 52% is guaranteed by the state for those loans. So we have also some collateralization help, some guarantees on that side as well. Moving on to Page #17, I show you the results of what happened to those deferrals. Basically, it is much better than what we have expected, much better than what we have expected. In this case, again, 92% of deferrals have expired as of September 14. And on that one, what you see is approximately 90% of the files, and we were expecting that 90% to be 70%, 75%. 90% of the cases, we are seeing resumed payment behavior. So they started paying. They paid cash to us. They can only be in this category if they pay cash. If they paid the installment back or the money back. In that sense, mortgage is 95%; consumer 88%; credit cards, 83%; SME is 90%. So all good. I'm not going to go into the details on the right-hand side, but this did require a lot of management, segmenting, different approaches, tailoring our approach and so on. So it was a very good exercise. Our Mexican team had done an amazing job. And we are seeing the results in the numbers. As a result, we are upgrading our expectation -- cost of risk expectation for the year, for 2020, it's going to be clearly below the first half levels in the second half. Turkey. Page #18, and I'm going to pick up speed and close in 3 minutes as I was supposed to. Guarantee BBVA, basically, we do believe and numbers clearly show it, that we have the best bank in the country. We have shown our earnings resiliency. In all the environments and even in 2020, as you can see on the left-hand side of the page, our pre-provision profit, 6% versus the 4.3% of the private bank's average, only the private bank's average. I mean if you include state banks, it's even better. We have a very sound balance sheet. The vulnerability in Turkey is around foreign currency. We do have $9.3 billion foreign currency liquidity buffer. We have managed our FX vulnerability or the FX vulnerability of the country should not be affecting the strength of our bank. As a result, we have been taking a lot of actions in the past years. If you look into the time that BBVA both guarantee, our market share in foreign currency loans was 21.6% market share in foreign currency loans back in 2015, not long ago. Today, it's 13.4%. Every year, we came down on market share. So we are managing our vulnerability, and I think we are in good shape. In terms of cost of risk, similar story, significantly below the first half of the year is our expectation. South America, Page #19. Colombia, so let me go very quickly, 3.8% of our net attributable profit. Excellent deposit cost management. We have focused too much on deposit costs in this environment, increasing the rate of transaction deposits by close to 3 percentage points, which was one of the things that we were watching very closely. Now 60% of our deposits in Colombia is demand deposits, which is very good. And our efficiency ratio, again, focused on costs, it's now 42.7%, 95 bps better than the local peers. Argentina, 3.4% of our profits, as you have seen, there has been positive news for the country with the agreement on the debt restructuring, which might translate into some provision releases for us in the securities portfolio. On top, as in other places, we have done very good in costs, so much better cost numbers than what we would have expected. Finally, Peru, 2.6% of our profits severely affected by COVID. Severely, it's one of the countries that has been affected the most, to be fair in terms of economic activity. 15% contraction we are expecting for Peru this year in economic, in GDP. So very tough situation. But again, we focused on cost control. We focused on asset quality management, and the government is also helping a lot in Peru to manage asset quality. So we do, again, have better expectations for the second half of the year for cost of risk. In general, for South America, again, the highlight is that cost of risk in the second half will be better than first. Then the last page, and then I will be right on time. So last page is around the 4 final messages about how we have been managing the crisis and 4 messages, all looking forward. So looking forward, I will start with the core revenues. We expect core revenue to increase in the second half versus the first half. Driven by the recovery, especially in the retail new loan production, you have seen the Mexican curve, but it's the same curve in every single geography, and we will continue to have a very strong focus on price management, spread management as we have been doing in all the countries. Second, I think one of the clear highlights of 2020 for us is how we, as a team, responded to the challenge by attacking our cost base. And on that one, excellent job on cost control, I would say, and we have the confidence to beat the already very aggressive expectations that we have set with you. Then cost of risk, the most important thing for the year. You did remember that we had this band of 150 to 180, as a guidance of cost of risk. And we were saying in July that depending on Mexico, but we would be probably towards the upper end of that change. And what we are now doing is upgrading that -- improving that guidance, too. We will be towards the lower end of that number and 150 to 160 bps, that range is going to be our range as we see it at this point going forward. And then the last one, CET1, as I mentioned, at year-end, we are going to be above our buffer target. So 225-275 bps was our buffer target, and we expect to be above this range. With this, obviously, there are so many disclaimers that we can put on these guidances, it's an extraordinary year. But then as it stands, this is how we see it. With this, I conclude the presentation. And Marta, I'll come back to you for the questions.

Thanks very much, Onur. So the first one, our audience worries about Turkey. The Turkish lira is reaching new historical lows. The rating agency sounds very nervous about the risk of big ForEx and debt crisis in Turkey. How would you deal with that? And what is your equity and debt exposure in Turkey?

Very good. Well, we do see those vulnerabilities, first of all, the things that you mentioned, the vulnerability for FX, the rating agencies. Last Friday, you have seen the downgrade. So we do see those vulnerabilities. We do think that those vulnerabilities do exist, so we have to be cautious. You have seen the Central Bank reserves, the balance of payment is the key topic to look into in Turkey. But it goes back to why we invested at the original juncture to Turkey, no? I mean, the long-term fundamentals of the country, in our view, are still there. Are still there. I mean, if you look into -- and demographics is an important driver of economies. The average age of Turkey is like 30. 55% of the Turkish population is less than 35. There is a big advantage of being close to Europe. It is, and it will be even more, in our view, after COVID, a manufacturing hub for Europe. So those fundamentals are still there. And as I mentioned and as I have shared some numbers with you even today, we have the best bank in the country. We have the best bank in the country. So in this context, what we have been doing is manage the exposure to vulnerability. Again, it's mostly FX driven because FX in Turkey drives a lot of consumer sentiment, it is driving the capability of large corporates to pay back their debts because corporate debt over GDP is not very high, but the share of FX in that corporate debt over GDP is quite high. So we have to be careful on that one. So what we have been doing is, as I also shared with you today, is to manage our FX exposure and is to manage the vulnerability that might be arising from FX. In the long term, we do think that the investment case is that it was before. And if you have the best bank in the country, you will continue to deliver good returns. That's probably -- even in current euro terms, you will deliver good returns. So for the long term, we are positive; for the short term, what we need to do was to manage the FX exposure, and that's what we are doing.

Another recurring concern is your subpar profitability in the U.S. M&A has been always considered as an option forward to improve that. What is your latest message, particularly given the prospect of 0 interest rates for a while in the U.S.?

Yes. Our message is the same one as before, which is we do think that we have a game to play in the U.S. We are in the most attractive geography within the U.S. So if you take the areas that we are in, as we mentioned before, we are mainly a Texas bank, 52% of our deposits they are in Texas. If you look into Texas, it's a $1.8 trillion, $1.9 trillion economy. It's 25% more than Spain. And it has been growing 4% on average until 2020 before COVID. 4% growth, close to $2 trillion economy, and it's a developed economy, is a market that you would love. So we do have this sweet spot. We do have this great geography to be in to make a market. That's very good. So you can be in a great market, but are you the natural owner of that asset? That's a question that we always keep asking to ourselves. And on that one, we do believe that I did mention -- I gave some factoids today. Our investments in digital globally and also in the U.S., in our view, has prepared us to attack that attractive market in a differential way than others. We see it, for example, in the new customer acquisition that we do versus the new customer acquisition of other banks. So we are growing in number of customers, which is the first step to grow the balance sheet, to grow the lending and so on. So we do have a differential play, in our view, through digital, to tap into an attractive market. That's the overall positioning. But we also have this clear conviction that in every market that we are in, we have to deliver above cost of equity for that respective market. And in the U.S., U.S. is the only exception where we are not delivering above our cost of equity. But we came up with a plan. Given the strategic things that I mentioned to you, which is the market, which is our positioning and which is our financial play, he came up with a plan, a 3 to 5-year plan, to be able to get to double-digit profitability, double-digit return on tangible equity and earn above our cost of capital. Now that 5-year time frame is a long time frame. We do have very intermediate short-term gates to see whether we are progressing on that plan. We are progressing with plan. And so far, what we are seeing is we are progressing on that plan. As long as we continue on that plan, which will take us to double-digit return on tangible equity in 3 to 5 years, as long as we are progressing on that plan, we are very much committed to that market, and we will continue. But again, I tell you, it's a very strategic asset for BBVA. And we do have this conviction that we will get to above our cost of equity in due time. And if that conviction disappears, only then we will consider other options.

Okay. What would you say to those investors that worry that BBVA's earnings are dependent on Mexico? And let me link this to the M&A topic that, of course, we cannot avoid M&A in Spain after the CaixaBank, Bankia tie up. What is your position?

Okay. You have 42% of our gross -- of operating income come from Mexico. So yes, we are dependent. But we do have a big asset there. I mean, we do have 23%, 24% of the market. So for an economy like Mexico, having 24% and having a bank as powerful, as great as BBVA Mexico, okay, of course, you will generate earnings from that. But are we too dependent? The question is are we to dependent? Well, it's 42%. We have other geographies. Other geographies have other drivers to catch up. I mean Spain, for example, it's 50% -- more than 50%, 52% of our assets. And it's only 25% of our profit. So in Spain, yes, it is extended a bit more, but we have been improving on our positioning, and we have been improving in our profitability. So it will catch up, not maybe right away. Not in the next 2 years, but maybe afterwards. So we do have these assets, some other assets we would do the catch-up, and it's a portfolio. And I think 42%, if you take it as too much dependency on 1 country, I would encourage you to look into all the other European banks. They are all typically in 1 country. And as I said, diversification is who we are and 42% is relatively high, but it is -- there is another thing, 58% that we generate our profits from. Then going back to Spain, Marta, there is nothing new to report as compared to what we were saying some months ago. We always analyze opportunities, always analyze opportunities. Because we are for value creation. We have a management team whose motto is we create value. We create value for our stakeholders. In that context, if there's value to be gained, to be harnessed, we will then look into the opportunities. That's what we looking, what we are doing in Spain and also in other geographies. In that context, in Spain, there might be opportunities. There might be synergies that we have to keep in mind. But again, we have to look into value creation. Are we creating value for our stakeholders, the value from the synergies, how do you share those values with the counterparty, what is the cost of financing to do that, would you need to raise capital, and what is the cost of debt financing. And as a result of all of these considerations, are you creating value for that stakeholder? That's the lens that we have. And that lens has been there all along and then not only for Spain, for all the other geographies as well. If we can find a sweet spot where we create that value, we will do a deal. If we cannot find that sweet spot, we are extremely comfortable on where we are. We have a clear organic growth strategy. I have shown you some numbers today, which I hope is showing you that we do have this potential to grow. That's what we are doing, using digital. That's our focus. And if we can find opportunities to create value, we will look into them. And this position is not different what I said to you 3 months ago, and it is, again, the same for every single geography. So I didn't give you a headline because there is no headline.