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

To have the group CFO, Luisa Gomez Bravo, with us. Luisa, welcome.

Thank you.

It's been very interesting times for you.

I'm a little bit tired but it's okay. Christmas holiday is hopefully soon.

So perhaps if we start with the balance between developed and emerging earnings, how do you see things? If Sabadell has joined the group, you would have had more hard currency earnings, which are very welcome. So my question is, is management actively aiming for a more balanced footprint and more balanced mix between emerging and developed. I mean, if that is the case, what are you doing to get to that point?

Right. Well, really the balance between emerging markets and developed markets, not just now, but in general, it's more an output than an input of the strategy. And the strategy really has focused on, especially in the past over the past 5 to 10 years, really on having very quality -- high-quality franchises in the countries that we want to be in, countries where we find that there is potential for growth with, in general, low leverage ratios, which allows us to grow with the adequate asset quality profiles. And that has been really the main drive of the strategy is ensuring that the curtailing of the footprint or how we see it really is driven by, can we have scale in those countries, the adequate scale to compete and get a competitive advantage in sustainable profitability versus the peers and to allow us to be top 3 player in the market to ensure that, that is, again, sustainable going forward. So really that drives the strategy. And the exercise that we've done in the past, really, it's been about more exiting markets than entering or doing deals that were different because we really wanted to make sure that we have that high-quality very large-scale franchises in the country, and that's why we exited the U.S., Chile, many other countries, Paraguay, Puerto Rico, Panama, a lot of things to ensure that the footprint that we have is the right one because we have those franchises in place. When you overlay on top of those high-quality franchises with adequate scale and capacity to compete, a global strategy regarding digital banking that ensures that we are gaining -- acquiring clients around EUR 11 million over the past few years, 2/3 of those are done digitally. And you overlay as well a strategy regarding sustainability and sustainable finance, not because it's a good thing to do. It's actually really business driven because we do see a shift on the commercial side in terms of transition to more efficient sources of energy and how that drives your manufacturing processes. Those global strategies overlaying under the -- or on top of the high-quality franchises is driving a strategy that is allowing us to deliver today the 19.7% ROTE, it's allowing us to deliver that 16% growth of lending in constant terms. And it's been allowing us to deliver that 17% growth in tangible value per share plus dividends, which I think is really more the metric to follow in a bank that has this type of footprint. And that is why we are very confident going forward when we communicated our planned in the summer to maintain in those ambitious targets in terms of being really a unique story within the European banking system that combines profitability that circa 22% ROTE on a pro forma 12% CET1 ratio, highly profitable business, tangible book value per share plus dividends in this new cycle growing mid-teens. But in addition, it provides continued growth versus the peers in Europe in terms of activity growth. And on top of that, I think this is another 3 of the triangle of the uniqueness of the BBVA is a consistent capital return story to shareholders. As you know that we've stated to the market that over the next 4-year cycle, we have -- we expect to have around EUR 36 million of capital available for distribution. And this is something that is also adding an ongoing capital return story on top of the profitability story, on top of the growth story. So that is why I think that we are quite comfortable in that basis.

Okay. Perhaps moving to Spain. You've been growing much faster than the market for a number of quarters. I mean, in Q3, your loan book was up 6%, the market was 3%. How are you getting there? Is that through prices? How do you describe your offer in terms of competitiveness? Any insights that you may have on margins, how you see the competitive landscape in Spain would be?

Okay. So let's unpack a little bit the framing of the situation in Spain and why, again, we think that we have really the best franchise in Spain because Spain I think, is overall sort of a darling banking market now. But I think that within that, if you look through that, you definitely see BBVA being, I think, the most profitable and most efficient bank in the market today. And that is really not so much on a specific spur of the moment growth in terms of price. I think we are very disciplined on price. It shows that precisely, we are losing market share on the mortgage side because we don't think there's value in the mortgage market right now at the current prices. So it's more a focus again of strategy and how we've been able to grow in the Spanish market and how we think we're going to be growing consistently going forward and outperforming the market. And this has to do again with the transformation of your balance sheet. We've been consistently over the past 5, 6 years, focusing on growing on the segments that we think are more profitable. And that means that we've had a very strong focus on consumer loans. We have a 16.6% market share in consumer loans. Our average lending market share in Spain is 14%. So above our natural market share, we used to have a loan book of consumer loans that used to weigh around 5%. Now it's 10%. Consumer loans in Spain are not that significant, but still, it's a significant change of mix in that proportion, and this is a very profitable segment. Over the past 5 years since December 2019, we've grown consumer loans market share, 350 basis points. So again, it's not a one-off quarter this year. It's really a consistent strategy on the back of that. And then also, I would highlight our effort on the SME side, as everybody knows, it's a segment that we are very keen to grow in and again, this has been a consistent effort over the past, again, since December of 2019, where we've grown 230 basis points, our market share in SMEs. And this year, we're growing above 50 basis points. So it's a very focused strategy of growing in the most profitable segments. And this activity growth really, again, when you look, deep dive what we're doing that we think is different than differential, it has to do with 3 things. One, the first one is client acquisition. It goes back to acquiring clients. Since 2022, we've gained 3 million clients in Spain. This year, for the first 9 months, we're growing at around 730,000 clients. We've gained 100,000 new SME clients. And what we're seeing is that we are #1, #2 bank in acquiring clients in the market over the past 2 years. And what we're seeing is that when I onboard a new client, that client within the next 12 months becomes an engaged client. And the focus of doing this end-to-end digitally where over 50% of my clients, I am onboarding digitally is allowing me to see that 5 years down the road, the clients that I'm onboarding now are going to be 3x more profitable, right, in terms of product origination, in terms of cross-selling opportunities. So the best way to ensure sustainable growth in the future, for us, it's not through price. It's actually client acquisition, very focused strategies on client acquisition and engagement. The second thing that I think is also very important for us -- and maybe this is more like a silent revolution, which is your distribution model. So everybody has digital banking apps. But how does that tie in to really reshaping your distribution and relationship model with your clients, the branch networks and the sizing of that. And what you've been seeing and what we've been seeing is that we've been increasing productivity of our relationship managers in the branches. Why? Because as we push out our digital banking strategy, our client acquisition strategy, we've been able to have today, over 50% of the roles in the branches are specialized roles. So we've been able to self-fund growth in private bankers. We've been able to fund growth in insurance specialists. We've been able to fund growth in deploying product specialists for the SMEs and that productivity growth is ensuring as you're seeing that output in outperformance in market share gains. And last but not least, sorry for the long answer, it's about risk, and it's about risk management, it's about your risk models and it's about how you can deploy preapproved loans fast, quick and digitally as well. So I think that ties into a story where we are very comfortable and comfortable, it's ambitious in ensuring that over the next 4 years, we have stated that we're going to be growing mid-single digit above the market, so still continue to outperform the market with efficiency ratios that are going to be in the low 30s and adequate cost of risk. So I think the story for Spain for BBVA is going to be a story again of outperformance and consistent profitability going forward. And on the margin side, I haven't forgotten your question. I think what we're seeing is stability of policy rates going forward, slight uptick on the EURIBOR rates. We -- our balance sheet still on the mortgage side is -- above 50% is floating rate. So we need to manage that interest rate exposure. But with stable interest rates, you're going to have, I think, the positive effect of activity driving down to margins. I think that we're going to be seeing perhaps a slight compression still on the customer spread and going into the fourth quarter. But going on from then is going to be more stable customer spreads in the future and activity growth feeding through supporting growth, and the ALCO management, which is also very important and another source of competitive advantage, I think, for BBVA and the way we manage our ALCO book is continue to be supportive of that NII evolution.

Okay. Following up on your point on customer spreads, is it too optimistic to expect customer spread expansion, given that you are focusing on growing in consumer and SME. So that mix should add to your margin or you're going to keep things more or less stable and that would allow you to...

No, I mean I think that obviously, there's a slight mix component in terms of the customer spread. I think really the most relevant driver of customer spread is how you manage your cost of deposits. And I think that we have currently a cost of deposits of 66 basis points. It's been coming down. So I think the important thing is to continue to, again, acquire clients, transactionality and ensuring that we can have that cost of funding advantage going forward. Our expectation is, again, overall, and we will give guidance next year. So -- but I think the important thing is that customer spend should be more or less stable, maybe at the end of next year, you will see a little bit of expansion perhaps but again, it's all going to be depending also on competitive dynamics. If things turn like the mortgage side, and we'll may be -- Feb will be even better.

True. Sounds pretty amazing, but now Mexico's turn...

It's even more amazing.

You've been gaining market share across all products for a number of years. Over the past year alone, you've picked up, what, 60 basis points both in loans and deposits. Do you think that momentum should continue? How are you placing yourself on both sides of the balance sheet and within the different loan books. And as we get closer to the end, USMCA renegotiation, what's the mood amongst corporate clients?

Right. Well, I think that we have been and we continue to be structurally positive on Mexico and the growth in Mexico. The banking sector as a whole and obviously on the capacity of BBVA in Mexico to outperform that growth. And it really goes back to 2 basic concepts that I think are very relevant. One is obviously the macro. You're seeing, I think, this year, quite a macro -- quite a resilient macro despite all the tariff noise, and I was here last year in San Carlos and Patricia, Head of IR, the mood with Mexico was challenging, logically so, okay, because of the noise on the tariffs and not just the noise, actually, the deployment of tariffs in Mexico and Canada before anybody else, before the reciprocal tariffs. So -- but when you look back to today, you're seeing a macro that we have, and everybody else is upgraded. So GDP forecast this year, we actually were negative 0.4% in the second quarter. We've upgraded those forecasts to 0.7% this year, growing to 1% next year and from then on, slightly growing ahead. Remember that the growth potential of Mexico is on the -- around the 2% level. So still positive evolution in terms of the GDP side in Mexico. And what's I think very important and more precise there is that when you look at the exports, exports have grown in Mexico, 4% since the data out of this summer. So within this context of tariff discussion, you're able to still grow your exports, which I think nobody assumes was going to be the case at the beginning of the year. And sure, there's some front-loading of that because there was front-loading of exports in Mexico. But I think also important is the fact that the FDI in Mexico is growing 8% this year. So that coupled with a strong peso is an outlook that I think has turned more positive than the one that we had initially speaking. And I said, going forward, we're still structurally positive on those macro dynamics being more supportive going ahead into next year. The second factor that's important and why we've always been structurally positive in Mexico with the volatility of the noise, but structurally speaking, has to be done -- it has to do with the leverage ratio in Mexico. Again, leverage ratios, when looking at the footprint are important, the leverage ratio in Mexico, the indebtedness of the private sector is around 34.7%, 35%. That has allowed the banking system in Mexico over the past 20 years to grow at around 1.2x nominal GDP rate. And BBVA in Mexico, as you mentioned before, within that period of 20 years, we've been able to grow 1.4x nominal GDP. I think that we were talking about this the other day, I think that there's only been 2 years where BBVA Mexico has not been able to grow its lending book, which one was the GFC and the other one was COVID. So structurally speaking, we're able to grow because as the economy, it formalizes and gets formal jobs and job employment, wage dynamics are positive. That is a source of growth, structural growth in an economy like Mexico for the banking sector and BBVA hopefully outperforming that. So that's the structural side. On what's going on with the current dynamics today is the -- in fact, that if you ask me whether the positive surprise has been the retail dynamics because going again on a macro practice of a slowdown in the year, job employment concerns, et cetera. I didn't expect the retail portfolio to be growing at 12.5% year-on-year, again, gaining market share, to your point, over the -- over a good solid growth in the market as well. So I think that's been positive. We've been growing 13.5%, our credit cards, 14.5% of personal loans. We've been growing 16.5% our SME loan book and that is allowing us to deliver that growth while gaining market share, for example, on the SME side, 200 basis points of market share year-on-year, again, an area of focus for the whole group. So on the wholesale side, has been a deceleration of growth but one of the most relevant dynamics to that is that -- and I think it's important to remember that 1/3 of our wholesale loan book in Mexico is U.S. dollar-denominated. So when we started the year, we were comparing a Mexico peso that had depreciated within the year versus the first half of last year where the Mexican peso was actually appreciated. So when you translate that into local currency that overweighted growth. As we knew and that's why we guided for the year, remember, we started guiding high single digit. Now our guidance is to end the year at circa 10%. We were already incorporating the convergence because of the FX rate. And even the FX, it's even better today because as I mentioned before, it's appreciating. So that means that when you look at the growth book in the corporate side, we have grown around 6.7% year-on-year as of September. When you factor in FX, the loan book in the wholesale side is growing around 9.2%, 9.5%. So I think that's an element that's relevant. And going forward, with these dynamics in place, we do believe that BBVA Mexico will continue to outperform the market. We will continue to grow in the pockets of business that we think are most profitable for us, and we will be able to maintain a high single-digit growth rate over the next 4 years in that context. And on the funding side, I think the lowering of rates, the rates are coming down, I don't know, most of you know that rates were at 11.25% now they're at 7 -- over a year ago, now they're at 7.25%, we expect policy rates to come down to 7% this year, 6.5% next year. As those rates come down, it's allowing us to also manage more effectively our deposits and deposits are growing also at 10% year-on-year on balance sheet deposits. While at the same time, being able to provide interesting investment alternatives through asset management and asset management is growing around 18.5% year-on-year, and we are the largest asset manager in the country. So I think the expectation that we have in Mexico is, again, high single-digit growth in activity, feeding that with customers, again, customer spreads stabilizing as rates stabilize, and allowing that with a macro environment where the cycle in terms of asset quality is supportive and efficiency ratios of circa 30%, we think that Mexico is going to be a strong contributor to that road map going forward.

Just a quick follow-up on that. In terms of funding, are you thinking about keeping the loan-to-deposit ratio stable? Do you work within a range? How do you feel...

I think that right now, the loan deposit stable is around 105%. I think that the way we ensure good profitability is that we demand profitability on top of what is your marginal cost of funding. So I think that, that ensures that as long as we have that place and as long as we're originating having loan-to-deposit ratios of around 105%, even slightly higher than that is something that I think is feasible and actually something that we think makes sense from a profitability point of view because there is no issue, especially for BBVA Mexico of liquidity. I can pay tomorrow and I'm going to have the liquidity I need. It's really about price management and ensuring that we are not contaminating our significant cost advantage that we have on transactionality with pricing that could put that at risk. So that's more the balance of how we manage pricing on the deposit side and with regards to the wholesale funding costs.

Very clear. So Turkey's turn. I think your strategic plan suggests that Turkey will move past hyperinflation accounting by 2028. How much do you expect Turkey to contribute to the group's earnings by then? I think consensus -- at least Bloomberg consensus has something like EUR 1.6 billion by 2028. Do you feel comfortable with that number? And more short term, how would you describe the dynamics in the country for the next few quarters?

Yes. Well, I mean the -- so Turkey, talking about Turkey, unfortunately, means that we had to talk about hyperinflationary accounting, which is not easy, but it's important because the macro variables impact, obviously, the contribution of the Turkey franchise. And I think in that sense, what has been very clear and that's the communication that we've had is that as Turkey continues, it's disinflationary road map, that is going to be positive for the contribution of Turkey no matter what, even if it doesn't -- even if in the next few years, you're not exiting hyperinflation. You don't need to wait for that to have Turkey contribute more to the group because of the macro dynamics. So the macro, we are expecting inflation to come down this year to around 32.7%. It was around 44% last year. Going into next year, the current scenarios that we have, we expect inflation to come down to 30% -- sorry, 23%, 25%, and the rates also coming down from the 38.5% this year down to around 30%. If those 2 things happen with an FX that is again depreciating, but depreciating below the forward rate. I think that macro scenario is going to be supportive of contribution from Turkey because inflation coming down means that the drag that I have from inflationary accounting is going to be coming down as well. And the rates coming down because if you see the duration of my assets and liabilities, I have deposits that are in the market significantly term deposits that are maturing every 28 days. So as decreased -- asset rates decrease significantly, it supports better customer spreads and overall better NIMs. So going forward, the macro variables are important. And that we expect to be feeding into better customer spreads in the next quarters. And also better NIMs in general as well. I think that aside from the macro, which is very important, sometimes and that's maybe on me and us, to really highlight the quality of Garanti's franchise in the country. And obviously, it's been shadowed by obviously a franchise that needs to deliver much more. But when you look at the Garanti's performance in local in the market against its peers, it's really amazing what they've been able to deliver in the past 2 years. You look at Garanti, Garanti in the first 9 months of the year has delivered TRY 84 billion. The next player -- I'm talking about the private banks. The next player has made TRY 44 million. When you look at the NIM of Garanti, it's around 5%, the next player is 2.4%. So we are focusing not only obviously ensuring that we can manage the process of the contribution of Turkey to the group, but specifically ensuring that Garanti remains being a high-quality franchise. So as the normalization of the economy comes through, we have the best-in-class player to be able to compete and deliver the value that we expect from the franchise, which is still today not there. And to your point, as to the expectations of the bottom line profits for us, again, whether it comes out of hyperinflation or not, our assumption is that it does in 2028. But I think what's relevant is that Garanti pre-hyperinflation accounting that is in 2022 was already making EUR 1.5 billion. So whether I think that, that number that you gave is short on our expectations, it is short on our expectations in 2028.

Okay. Fantastic. So let's move on to capital, which is a big focus at the moment. You've got roughly EUR 8 billion of service capital if you consider the approval of models that is coming in Q4. How quickly is that coming back to shareholders? And is it realistic to expect that you're going to be running the bank with a 12% fully loaded core equity Tier 1 ratio as soon as -- I don't know, Q1 or Q2 2026?

I sense a nervous laugh around that question. So let me start by the last question, okay? The 12% CET1 target, I think that we've been -- and Onur has been quite vocal in trying to explain why we do think and we continue to believe that's the right target for the group. And it's -- this is a process that is not just improvised. It's very much thoroughly analyzed within definitely my responsibility and Onur's responsibility in the bank. So I think it's -- the CET1 target and we keep on saying this, it shouldn't be measured on an absolute term. It really is important to understand what the requirement of capital for the bank is and that relative gap that we have against that capital requirement. Our SREP requirement in the third quarter was around 9.16%. We had 284 basis points of the difference between our capital target and that number. When you look at that number, this 284 basis points versus the peers, the peer -- the average peers, which means, banks that are below that, the average is around 240. I am one of the top 3 banks in terms of distance between my CET target and what the regulator requires of me. So the regulator does their models, they do their analysis, and why is that because the diversification of my footprint allows me to have resilience in terms of profitability to absorb cycles, shocks, adverse scenarios and the requirement that I have is lower than other peers, which gives me that distance in terms of CET1 capital. And not only that, the SREP requirement going to next year is coming down for BBVA. It's going to be 8.97% at the start of the year, because of the O-SII buffer from Bank of Spain coming down. So that's very important. And I think I encourage you all to look at the SREP requirements of European banks and measure that gap to the capital targets. But on top of that, I think that is also, again, on the back of the regulator, and the regulator has a say obviously in this. I know that we've all forgotten about ECB stress tests. They're still out there, and they still do them. It's a lot of work for the banks, by the way. You may agree or not with the methodology. I don't particularly think that the methodology is great, good or bad. But there's a beauty aspect of this, which is puts all the banks in Europe at the level playing field in terms of the scenario, they're looking to stress. And BBVA, in the last ECB stress test scenario, in the current ECB stress test scenario comes out on top of most of the banks in Europe. We are the second-best bank in terms of depletion in this scenario. When you look at fully loaded ratio, the fourth best bank with the CET1 ratio over the scenario that is above 11%. So we're one of the best banks in terms of stress testing from the ECB, I don't say it. I have my own stress test. I have my ICAAPs, no, the ECB. Every 2 years, they do this. Again, BBVA comes out on top. Third thing, if we had concerns from the regulator about the capital, would they've been allowing us to then allow us to recognize 40 to 50 basis points increase of CET1 from a review of models in the bank. So I think that really, it's about the capital requirements versus the CET1 target and the consistency of how we measure that going forward. But the second thing that I think is also important has to do with the type of bank that we are, the business model that we have. We are not very sophisticated. We do plain vanilla banking. We have 2/3 of our funds, funding comes from customer deposits. And that means that we have an RWA density that is 48%, 49%, very much highly above the reference to the peers, which is at 28%, 29%. And another thing that nobody -- nobody, I don't want to see, nobody I'm sure you do, that people often, I think, encouraged to look at is the leverage ratios. BBVA's leverage ratio is 6.7%. The quality of capital as much as the distance to your SREP requirement matters. And I think on that topic, we feel, again, very comfortable at 12%. And moving on to your question, we will return capital to shareholders above that CET1 target. As to the how and when, it is something that as you know is ongoing now with the recent requirement that we've done to the ECB and the approval of the significant share buyback that we've requested. And I think that what's important here is maybe to also understand that this is not going to be an exercise where you're going to see a one-off, boom, down to 12% immediately. But I can say that, that exercise of returning excess capital to shareholders is going to be a matter of months, not years. And then again, this is a process that we need to not only get approval from, but then go and execute. More importantly for me is that commitment to deliver capital returns over 12% and not just the excess capital today that I have but this bank is going to generate further capital. The profitability of the franchise will generate further capital and that capital will be returned consistently to shareholders over the next few years. So it's a story about returning excess capital today, but ongoing capital returns going forward.

It sounds good. I think we've got a few minutes. I'm sure the audience -- I've got lot of questions, but I'm sure the audience will have some questions. Very shy. So I think I'm going to keep going then. Going back to the balance between hard currency, soft currency earnings. I know you probably think I'm a bit of pain there, but investors care. You've been growing fast and what you call your -- the rest of business area. You've got 2 legs or 75% is CIB. The other side is your new digital franchises in Europe. Can you talk us through on your strategy on both sides. I think on the CIB, in particular, you've been growing very fast over the past couple of years. Can you explain a bit what's in there, whether we need to start worrying about exposure to private credit and things like that? And yes, how you envision your footprint in Europe through your digital platforms and if there are any other countries where you think that there is good opportunities to get in?

No, yes, I think that's -- we will probably be talking more about the CIB business going forward. I think that's one of the other areas where we've consistently published information on a pro forma basis in our management report, and then you can see the trends that we've been having there. The CIB business and the bottom line today is around EUR 2.1 billion. And I would say CIB and wholesale banking is 1 of the 6 strategic priorities of investments going forward because we do think that -- we need to reshape the investments, not just on the retail side, but actually focus as well on the wholesale side on the CIB business, particularly. The rest of the business because our reporting is a geographic reporting you tend to see rest of business and you identify that with CIB. Again, CIB is much broader. The bottom line of the rest of business is significant because in the 9 months, it's around EUR 480 million. But again, the CIB business overall is much more relevant. What is the strategy behind that? So in the rest of the business side, to be more specific, we have the branches of the SA. So CIB, you have CIB businesses in our footprint in Mexico CIB and Spain CIB. And then we have CIB business that is done out of branches in Asia, in Continental Europe, in the U.K. and in the U.S. And this was already the case before. It's nothing different. This footprint was already there. So the strategy going forward really is a strategy that is not aimed at competing against JPMorgan, whatsoever. It's really about expanding the scope of what we do well into a larger set of clients, first of all, connecting the footprint. We are very much client driven. We have clients that do a lot of cross-border business. We've been growing our cross-border business double digit in the mid-teens area over the past few years, and we intend to expand that. Most of the revenues that we achieved in our CIB business has to do with transactional banking. And again, cross-border business there is important. So connecting the footprint in a better way for our clients, it's important. That's why we invest in these branches because there are important points or hubs of connection. For example, New York, it's an important hub of connection with our Latin America and Mexican clients and also with our Spanish clients as well. So it's about focus on clients and focus of expanding that relationship. In addition, I would also add that there are certain areas of expertise that we have which we can also scope out better. And particularly, this has to do also with institutional investors, but more of the things that we know how to do. So what are we good at? We're good at periphery securities. If you want to buy Spanish bonds, you should come to BBVA to buy Spanish bonds or Portuguese or Southern European or for example, if you're PIMCO and you want to buy Mexican currency, you should come to BBVA to buy your pesos or we're the best bank and the largest bank in the bond trading. So it's really connecting those dots for institutional clients and for corporate clients, that's the basis of the growth. So that means that we need to invest because the base of investment was quite low. So you will see continued investments in that franchise, and we've committed to grow high teens, the revenues in this aspect and provide good profitability for the business going forward. So I would say that's the CIB value prop. On the digital bank side, the digital banks, I think that it's been a story really of trying to, at the beginning, test the hypothesis of whether it made sense to scale our tech stack in Spain. So again, it's all about scale, Marta, it's about adding scale to your current tech stack. And we -- and the approach was with the passport licensing system, we were able to, from our tech stack in Spain, invest tens of millions of euros, not hundreds of millions of euros in setting up a business in Italy that doesn't aim to be the largest market share in -- because that's not the purpose. It's really about scale, driving profitable scale onto our tech stack in Spain. We started operations in Italy back in the end of 2021. And I think the expectations have been surprised on the positive side. We have close to 800,000 clients. You've seen the data on the deposit gathering, it's still a journey. These digital bank initiatives have long breakeven period. We have been able to accelerate the breakeven maybe by 2 or 3 years, but still it's something that will be not material in this cycle, it may be material from the bottom line from the perspective. And Germany, I think what we've seen is an acceleration of that, actually surprised to the positive. We launched in Germany this year. And we've seen a very -- first of all, on the deployment timing much shorter, obviously, I mean, it's logical. But also we've been able to launch with a boarder set of scope and the reception has been very important. Why are these digital initiatives important? First of all, because of that scale and incorporating that scale into our platform. But in addition, because -- and you've seen this playing out, the neobanks are very much a relevant force in the competitive markets where we're operating, understanding how we operate as a new entrant in these markets allows us also to feed in because we have a digital banks unit, allows us also to feed in those learnings in markets like Mexico, where we have a very interesting landscape with neobanks, but also in Spain. You've seen the interest in Revolut, the Trade Republic and MyInvestor, and that's also important for us in trying to deliver lessons learned and have a value prop that is different than other digital banks, where we are trying to be a fully universal digital bank, different than other neobanks, which are more monoliners. Why? Because the cost of acquisition is high, the more products that I have to be able to monetize that, the better, and I have the tech stack. So that's what we're trying to do. We'll see how that development goes. We don't rule out obviously taking that to other markets. But for now, we need to, again, settle the initiatives, especially now in Germany, and then we'll see from then on.

Well, thank you for those insights. I'm afraid we've run out of time. It's been wonderful to have you. Very insightful as always and see you next year.

Thank you.

Thank you very much.