Banco Bilbao Vizcaya Argentaria, S.A. ($BBVA)

Good morning, and thank you all for joining BBVA's First Quarter earnings call. As in previous quarters, I'm joined today by our CEO, Onur Genc, and the Group CFO, Luisa Gomez Bravo. First, they will walk you through quarterly figures, after which we will open the line for the live Q&A session. With that, I hand it over to Onur.

Thank you, Patricia. Good morning to everyone. Welcome, and thank you for joining BBVA's First Quarter 2026 Earnings Webcast. Starting with Slide #3. And as always, beginning with value creation. On the left-hand side of the page, you can see the strong evolution of tangible book value per share plus dividends, growing 5% in the quarter and 14.7% year-on-year driven by our excellent results as we will see in the following slides. It's also worth highlighting here that excluding the impact of the share buyback program, the year-on-year growth would have been 18.1%, and on this one, as you know, in the fourth quarter of 2025, we executed EUR 993 million share buyback program. And at the moment, we are currently executing the nearly EUR 4 billion program announced in December 2025, of which EUR 2.5 billion has already been completed across 2 tranches. As you all know, and these buybacks have been carried out at a premium to book value, they clearly create value for our shareholders, but they have a negative impact on tangible book value per share. On the right-hand side of the slide, our profitability ratios have further improved, reaching an industry-leading return on tangible equity of 21.7% and return on equity of 20.7%. On Page 4, on the left-hand side, we delivered another very strong quarter in terms of net attributable profit, reaching almost EUR 3 billion, as you can see. This represents a 10.8% increase year-on-year and 18% growth versus the previous quarter. These results at the bottom of the right -- left-hand side, it brings our earnings per share up to EUR 0.51, an increase of 12.5% year-over-year higher than the growth of the net attributable profit, thanks to the share buyback programs. On the right-hand side of the page, our CET1 capital ratio, it improved by 13 basis points during the quarter, reaching 12.83%. A strong quarter in capital generation, placing our capital ratio well above our target range and obviously, regulatory requirements. Moving to Page #5. And as an introduction to the following pages, the key drivers of our performance this quarter. First, at the top, net interest income, it grew by 20.2% year-over-year, driven by very strong business activity, loan growth at 17%. Second, net fees and commissions also showed an excellent evolution, increasing by 15.5%. Third, in the page, our industry-leading efficiency ratio has continued to improve, reaching 38%. Fourth, in the page, sound asset quality metrics with a cost of risk at 154 basis points, showing relative stability in the current geopolitical context. And finally, at the bottom of the page, as mentioned, we maintain a solid capital position, showing further improvement in the quarter. Slide #6, as always, the summarized P&L of the quarter. You can see the year-over-year quarterly evolution in the second column from the left in constant. And next to it, in the third column in current terms, if I highlight something I would highlight the strong performance of core revenues with excellent growth in net interest income, excellent growth in fees, leading to a gross income growth of 18.3% in constant euros, and 14.2% in current euros. Moving to Slide #7 and talking more about the gross income growth with more details on the quarterly progress in the last 5 quarters. As you can see, net interest income growth remains very strong, increasing 20% year-over-year and 2.9% quarter-over-quarter, supported by, again, robust activity growth, increase in lending. Worth mentioning, there is always a seasonality to take into account here in the first quarter, also due to the day count. Net fees and commissions continued their excellent trajectory. As I mentioned, up 15.5% versus the same quarter last year, driven by Payments, Asset Management and we increasingly see a higher contribution from Insurance and especially from CIB. And despite the seasonality also here, it has grown 0.9% compared to the previous quarter. Finally, net trading income delivered a very good performance, supported by positive momentum in our Global Markets business. All of the above leads to excellent gross income growth, 18.3% as mentioned year-on-year and 4.3% on quarter-on-quarter. Moving to Slide #8. We want to share some perspectives on the evolution of our net interest income, the critical part of our revenues in our core geographies you would see in the page, Spain and Mexico. On the left side of the page, loan growth, it remains very strong in both Spain and Mexico, with growth rates of 6.3% and 8.4%, respectively. In the center of the page, customer spreads. As we mentioned in the past, our results are positively correlated to interest rates in both countries. And as a result, customer spreads have declined in the last years in both countries. But as you can see on the page, at a much lower pace than the reduction observed in the interest rates due to effective price management. And on the right side of the page, as a result of both activity and spreads NII has grown by 3.6% in Spain and 8.3% in Mexico year-over-year. On a quarter-over-quarter basis, although not shown on the page, NII shows a slight decline, mainly due to aforementioned seasonality effects. And looking forward, it's important to mention that we are already seeing the bottom of the rate cycle in both countries. We have discussed it multiple times in the previous calls. But if the rates have reached their bottom more or less in both countries, this implies continued NII growth, obviously, with sustained activity levels. In conclusion, in short, despite rate compression, our strong loan growth and proactive price management continued to support net interest income growth and with stabilizing rates, we are very positive for the future. Moving to Slide #9. On the left-hand side of the slide, we continue to deliver positive jaws at the group level, supported by the strong performance of income which grew, as I mentioned, 18.3% year-over-year. While operating expenses increased by 17.5%, reflecting continued investment in organic growth according to our strategic plan. It is important to note that expenses growth rate is impacted by the voluntary redundancies implemented in the first quarter with a one-off restructuring charge of approximately EUR 125 million, mainly impacting Spain and Corporate Center. Excluding this fact, cost growth would have been 13.9%. On the right-hand side, our efficiency ratio, it stands at 38%, improving 24 basis points versus last year, excluding the voluntary redundancy program, the ratio would have been 36.8%, clearly better than our guidance for the year. Turning to Slide #10. This page shows the evolution of our sound asset quality metrics in the context of strong activity growth, again, especially in the most profitable segments. On the left-hand side at the bottom of the page, we see the evolution of cost of risk, shown on a quarterly basis to allow for comparison between quarters. As you can see, cost of risk stands at 154 basis points in the first quarter, broadly in line with the previous quarters. It's worth highlighting here that due to the current macroeconomic uncertainty and aligned with our prudent risk management approach, we have included a post model adjustment of around EUR 100 million in our results this quarter, of which the majority affects our impairment figures primarily in Spain and in Turkey. Excluding this impact, cost of risk would have been 147 basis points. And on the bottom right-hand side, both our nonperforming loan ratio and coverage ratio, they continue to improve year-over-year and also quarter-over-quarter. Slide 11 on capital and shareholder remuneration. Starting on the left-hand side of the slide, you can see the quarter-on-quarter evolution on our CET1 ratio, which increased by 13 basis points to 12.83 basis points. This is comfortably above our target range of 11.5% to 12%. But if you focus on the waterfall, our strong results that contributes 75 basis points to the ratio. Second, the accrual of the dividend and AT1 coupon payments deducting 40 basis points. Third, on the page, 34 basis points due to the RWAs growth, and this figure once again reflects our ability to reinvest part of our capital generation into profitable growth, while we also benefited this quarter and as in previous quarters, from several risk transfer transactions, SRTs, which contributed 12 basis points to the ratio in the quarter. And lastly, on the page, [indiscernible] Others of 12 basis points, which comprises as in other quarters, the market-related impacts and the credit in [indiscernible] that accounting-wise, neutralizes the deduction in the P&L due to hyperinflationary account. Then moving to the right side of the page, on the nearly EUR 4 billion share buyback program that started in late December. As mentioned, we have completed the first and the second tranches, and we still have nearly EUR 1.5 billion spending on which we plan to start the execution early next week, and the date is the 6th of May. Needless to say, again, we remain beyond the share buyback programs. We still have excess capital, and we remain fully committed to distributing our excess capital above the upper end of our CET1 target range. Moving to Page 12. We continue to make strong progress in the execution of our transformation strategy. Today, we wanted to particularly update you on AI, one of our priorities in the strategic plan, as you know. And then BBVA has always harnessed innovation as a critical lever to differentiate itself from competitors. We have proven it in our view, through digitalization in the last decade, and we are committed to do it again through AI. AI, disruptive technology, in our view, that has the potential to transform banking even faster and even deeper than previous technological disruptions. As you can see on the left-hand side, we are pursuing this across 8 very tangible initiatives from the personal adviser for every client, which we call Blue in the bank, and the AI for the banker to other areas to risk, to operations, software development, embedding intelligence across the entire organization. And beyond the 8, which are again very tangible initiatives, we are evolving towards a truly AI-driven bank revamping our operating system by industrializing the creation, the governance and the operation of AI agents at scale across the bank. This transformation is already reshaping how we serve our clients, run our processes, and it also empowers our people. We are seeing some very early but very promising results to that end. And we will keep updating you as outcomes grow and consolidate in terms of what this means. But beyond these early results, once again, what truly will differentiate BBVA is our ability to scale AI across the group, similar to what we did in digital transformation. And moving to Page #13, before handing it over to Luisa, regarding our ambitious financial goals for the 2025-2028 period that we announced last year in June, I will not read each of them, but we are performing. I can very clearly confirm to you that we are performing in line or better than our original expectations in all of the metrics that you see on the page. And now for the business areas, I'll turn it to Luisa.

Thank you very much, Onur, and good morning, everyone. On Slide 15, let me start with Spain, which has delivered an excellent first quarter, with net profit once again exceeding the EUR 1 billion mark. This strong performance was supported by solid revenue dynamics with gross income growing by 5.4% year-over-year and 4.3% quarter-over-quarter. Strong loan growth continues to support NII, up 3.6% year-on-year with customer spread broadly stable in the quarter. On a quarterly basis, NII is affected by a day count effect adjusted for this, it would have remained largely stable. Fees, as is typical in the first quarter, they are impacted by the seasonality of Asset Management success fees booked in the fourth quarter. Excluding this, fees grew 5.5% quarter-on-quarter, showing healthy underlying momentum, supported by strong CIB performance and an increasing contribution from insurance. As Onur mentioned, costs are impacted by the voluntary redundancies implemented early in the year. Excluding the one-off restructuring charge, cost growth remains well under control at 4.8% year-on-year. The expected savings will be largely realized in 2026 and are already reflected in our guidance. On asset quality, trends remain very sound. As previously mentioned and following a prudent approach in a highly uncertain macroeconomic context, we applied a PMA, a plus model adjustment in the quarter, which led to a higher reported cost of risk. On an underlying basis, however, the cost of risk stands in line with our low 30 guidance, which we reiterate. Overall, Spain has delivered a very strong start to the year, giving us confidence in our ability to deliver on our full year guidance. Turning to Mexico on Slide 16. BBVA Mexico once again, has delivered outstanding results, with net profit reaching EUR 1.45 billion in the quarter, up 4.5% year-on-year in constant euros. This performance is driven by strong top line dynamics with gross income increasing by 10.3% year-over-year, supported by strength across all revenue lines. Net interest income increased by 8.3% year-on-year, supported by a strong loan growth, over 10% excluding FX and resilient margins despite a decline rate environment. As shown on this slide, customer spreads show strong resilience even as the reference rate has declined by 225 basis points since March of last year. We expect rates to bottom out this year at 6.5% from 6.75% currently. As in Spain, NII is also impacted by a typical first quarter seasonality. In this case, also affecting the credit card activity, which was very strong, typically is in the fourth quarter and also the calendar day effect. Excluding the latter, NII would have grown above 1% quarter-on-quarter. Fees remain solid despite seasonality again on the credit card and payment fees following the commercial campaigns for the fourth quarter. Revenues are also underpinned by strong net trading income and good performance from the insurance business reported on the other income line. Overall, strong gross revenues performance continued to drive positive jobs while we continue to invest in future growth and maintain best-in-class efficiency with a cost-to-income ratio of 30.8%. Asset quality remains solid with stable underlying trends across portfolios. Cost of risk stood at 345 basis points, flat quarter-on-quarter and in line with guidance. Looking ahead, we maintain our guidance for the year now with an upward bias to loan growth, supported by the strong momentum in activity across both retail and wholesale segments. Now moving to Turkey. BBVA Turkey delivered a strong net profit of EUR 263 million, mainly driven by net interest income growth and overall robust revenue dynamics. Let me just highlight a few key points. Net interest income remained strong, supported by selected loan growth and wider TL customer spread as lower TL deposit costs more than offset declining loan yields in a falling rate environment. Fees also showed good momentum supported by payments, Asset Management and CIB fees, while net trading income also contributed positively. Hyperinflation adjustment, however, was somewhat higher this quarter due to higher inflation metrics. And finally, on asset quality, cost of risk stood at 253 basis points, broadly stable quarter-on-quarter, reflecting elevated but manageable provisioning in needs and retail portfolios. The quarter includes a PMA for macro uncertainty. Excluding this, cost of risk would have been 238 basis points, above full year guidance as anticipated in the first half, but expected to converge over the year. Overall, Turkey delivered a strong quarter. However, given the uncertain environment, we now see a downward bias to our guidance. The Central Bank is expected to remain tight until conditions allow for a gradual resumption of the easing cycle, presumably in the second half of the year. As a result, NIM improvement could be more gradual than previously anticipated. Recall the guarantee EVA has positive sensitivity to lower rates. Let's turn now to South America. On Slide 18, the region delivered a very strong performance quarter with net profit close to EUR 250 million, up 16% year-on-year in current euros. These strong results were driven by solid core revenue growth across all geographies. Net interest income grew by close to 14% quarter-on-quarter, supported by healthy loan growth and customer spread expansion, particularly in Argentina and Peru. Fees also performed strongly reflecting a continued focus on strengthening this revenue line. Solid gross income growth supports positive jaws and efficiency gains with cost-to-income ratio improving to 41.6%. On asset quality, costs of risk stood at 276 basis points, somewhat elevated due to still high provisioning needs in Argentine's retail portfolios where we expect a gradual improvement only towards the second half of 2026. Trends remain supported both in Peru and Colombia. Overall, we confirm our full year guidance for cost of risk in the region below 250 basis points. The strong start to the year reinforces our confidence to deliver on our full year guidance also both for activity and revenue growth. Finally, let's move to rest of business. As you know, rest of businesses houses, just a reminder, how is the CIB business carried out by the branches and the digital activity. In the quarter, net profit reached EUR 236 million, driven by solid revenue growth, supported by strong activity momentum. Loan growth remained robust and well balanced across geographies, mainly driven by corporate lending, which represents 77% of the total book and grew by 10% quarter-over-quarter. Activity growth translated into solid revenue growth with solid NII, remarkable evolution of fees across the board and higher net trading income supported by client activity. On cost, expand evolution continues to reflect the rollout of our strategic plan to support future growth and is in line with our guidance. Risk metrics remain very solid. Cost of risk rose to 30 basis points in the quarter, driven by higher provisioning linked to some specific exposures. Finally, given the strong performance in the quarter, we are upgrading our 2026 guidance. Loan and gross revenue growth now above 30% year-on-year, while maintaining cost of risk guidance at around 20 basis points. And now back to Onur for the takeaways.

Thank you, Luisa. And lastly, for the mean takeaways on Page 20, let me not take time by repeating all of the key messages. But in short, excellent results in the quarter, driven by the strength in core revenue evolution, further reinforcing our industry-leading growth, profitability and efficiency ratios. Given our positive momentum at the bottom of the page, you can also see that we have upgraded our 2026 outlook for group return on tangible equity and the rest of business, reflecting improved expectations basically. And in terms of bias, we are also more optimistic about Mexico activity in Mexico, while remaining due to macro parameters prudent in Turkey in a highly uncertain macroeconomic context. Very well. We can move on to Q&A. We typically finish at the hour, but let's do a positive surprise to the ones who joined on the hour. So let's start right away. Patricia?

Yes. Thank you very much. So we are ready now to start with the Q&A session. Operator, please.

[Operator Instructions] The first question go to Francisco Riquel of Alantra.

I want to start with Mexico. Santander warned yesterday about asset quality and credit cards. So I wonder if you can please comment on asset quality, the trends in your credit cards business, in particular, and overall in Mexico and update on your cost of risk guidance for the year. And then you also mentioned upside risk to loan growth forecasts. I wonder if you can update on your revenue guidance as well? NII is growing in line with loan growth in Q1. So I wonder what shall we expect for the rest of the year? And in particular, the cost of deposits is picking up in a lower interest rate environment, if you can comment on that.

The second question was also for Mexico, no?

Yes.

Yes. Yes. Sorry, everything for Mexico.

Good. So, on the cost of risk, we are quite confident on our guidance because we gave [ 340 ]. You see in the documentation that this quarter, it's [ 345 ], which is exactly the same amount of last quarter on a quarterly basis. And as we did mention in this quarter, we took EUR 98 million, close to EUR 100 million of a post model adjustment in all the geographies, affecting mainly Spain and Turkey, but also slightly Mexico. So the number would have been actually even if that post model adjustment wasn't there. And as you know, Mexico is least affected from all what's going on geopolitically in world these days. So they are actually, in certain cases, positively affected from it. So -- but the underlying dynamics and you asked specifically credit cards, we don't see any deterioration whatsoever. On the second topic on the overall -- the upside on the overall NII and loans, as you can see again, on the page that we shared regarding Mexico, in the first quarter, year-over-year growth in lending is 8.4%. And more importantly, what we have seen, especially in March, you can see also the market figures because they publish the regulator in Mexico, publish all the figures of all the banks, but with a month delay. So the latest that you have publicly is February, but March was even better. And when we look into the pipeline, especially on the corporate side, we are seeing some positive momentum there in the pipeline as well. The first quarter, macroeconomically in terms of GDP growth, will come a bit soft in Mexico. In that environment, if we have delivered what we have delivered, which is 8.4% year-over-year, but let me focus on the quarter, quarterly growth in the lending balances is 2.6% in Mexico for the quarter only. If you analyze it, it's actually even better than the year-over-year growth. In a relatively soft macro context, fee delivered 2.6%. If we see very positive momentum in March, if we see very positive momentum in the pipelines, and that topic of the pipeline is important because what we are seeing after a long while, actually, in Mexico, is that also the long-term funding needs are picking up a bit. So USMCA negotiations, it's going to be marking the second quarter, but we are seeing some momentum in the country, mainly driven by this Plan Mexico of the government. So the result of infrastructure and energy-related build being promoted by the government in the country. And we are seeing it in some of the projects that are coming in line, and we are seeing it in the pipeline. In short, the first quarter, even in a relatively soft macroeconomic context was very good. In due context that we would be seeing triggered partially by Mexico, we are quite confident that we will be delivering what we have guided you and the positive bias on the equity, which then would be reflected in the NII. The spread component of NII, you see a slight decline in the quarter, but it's 19 basis points decline in customer spread. 7 basis points of that was driven purely by mix, because we have grown in the quarter more in the enterprise side versus retail. That will normalize. It's pure seasonality. Credit cards do not grow as much in the first quarter after a very strong fourth quarter, typically. So it's purely driven by mix. In the context of rates not coming down much more, again, as Luisa mentioned, our expectation for the year is 6.5%. It's going to get 6.5%, the Central Bank rates and will stay there. In that context, Again, the spreads would be supportive. All combined, we are quite positive on Mexico in short.

The next question goes to Max Mishyn of JB Capital.

Two from my side. The first one is on Spain. Loan growth has slowed down slightly. It seems mainly due to fewer corporate loans. I was just wondering what you expect in terms of growth for 2026 and how you see demand evolving per segment? And the second one is in Turkey. You are now slightly more negative for 2026. How do you see the 2028 targets in the current macro context, please?

Luisa, you want to take the Spain?

Yes, sure. I mean what we've been seeing in the market as as you've mentioned, is resilient and improving dynamics in growth. The market was growing around 4% last data, Bank of Spain of February. And we think that, that could be accelerating somewhat throughout the year. And so we stick to our mid-single-digit guidance of activity growth in the year. And we have been focusing, as you know, consistently in growing the areas where we feel that there's more value. We've been focusing and growth has been structured as you see, especially in consumer and credit cards. But also across the different segments in midsized companies, in corporates and public sector as well. I think that there's seasonality in terms of the corporate growth quarter-on-quarter on the CIB because the fourth quarter was quite strong. But I think it has been offset with a good strong growth in the midsized company sector. So, in general, we're seeing good dynamics. New loan production is also positive year-on-year, with growth of 5%, especially on the consumer side 11% and the CIB sector, 12%. So new loan production is in line to achieve the guidance that we've given. Just to mention that on the mortgage side, however, we have been losing market share in the quarter and in the year, it's been -- it's down 27 basis points in the year. We do believe that the market continues to be priced inadequately we have been able to see more rationality in the last few months. But still, our new loan production share of the market is below our natural share. And as for the time being, we will continue to be selective in the mortgage growth. So this is what is reflected in the 6.3% growth and the quarter-on-quarter dynamics as well.

Max, very quick add on to this on quarter-over-quarter. Again, the loan book in Spain has grown 1.2%. And in the midsized company second, it grew 2.7%. You see the annual numbers in the presentation. But if you go to the quarterly, you can deduce the quarterly figures, but they're quite strong, at 1.2% quarter-over-quarter growth, if you annualize it, again, it's quite nice. Coming back to your second question on Turkey. First of all, what I should say is that given all that's happening in the world geopolitically and all the conflicts that we see, the war in Iran and everything, Turkey is, in our view, it's standing quite well. But the number is not because of anything else, but what we already told you, we were very clear in the fourth quarter results presentation. Basically telling you that we are expecting EUR 1 billion with clear assumptions behind that on the macro parameters. You might remember this, but we told you that, that number, around EUR 1 billion guidance was driven by 2 very important macro parameters, 25% inflation, 32% December 2026 interest rate and 19% depreciation of the Turkish lira versus euro. Based on those assumptions was the guidance. And even at that time, I remember it very clearly that we have even provided you some sensitivities around this, every single percentage interest rate point implies EUR 40 million. Every single inflation, there are correlations in between, but every single inflation by itself independently is EUR 15 million to EUR 20 million negative impact and every single depreciation is around, again, EUR 20 million. Given the macro parameters has changed, and you might have seen that we recently increased our inflation expectation in Turkey from 25% to 28.5%, given the change in the macro parameters, it's a reflection of that, basically, nothing more. But in the context that we are in, that's why we are seeing it's a negative base rather than a pure, very clear downgrade. In the context that we are seeing, what we see is that Turkey is standing quite nicely. The economy management is also doing the right things in our view. So in the context that we are in, we are relatively positive, but we have to reflect those mark parameter changes into our guidance. That's the reason for the negative bias.

The next question goes to Antonio Reale of Bank of America.

It's Antonio Reale from Bank of America. Just two questions for me, please. The first one on Turkey. The macro outlook for the region has changed now with inflation going the other way and expectations suggesting we might have a higher for longer rate environment. So my question is how should we think about your net interest margins and cost of risk going forward? I heard your guidance. I heard your color. But if you can give us a little bit more context as to how we should think about particularly these two line items in Turkey. And maybe related to that, your costs in Turkey been running somewhat higher than peers. And so I'm wondering if you have any initiatives that we should keep in mind when it comes to sort of targeting further efficiency gains in the region. And the second one is just really an update on capital distribution. You're about to launch the third tranche of your buyback program, for EUR 1.5 billion, that's the EUR 4 billion total that you already accrued. But if I look at your CET1 ratio, you're still running well ahead of your target range, 12%. So if you could give us an update as to what's coming next, when it comes to distribution.

Thank you, Antonio. Let me start with the second one, which is an easy one. As we mentioned many times, and I also mentioned it today during the presentation. We will start the third tranche of the EUR 4 billion, which is around EUR 1.5 billion next Wednesday, it Luisa?

Yes.

On the 6th of May that will last until the end of June, June, July period. And at that point, we will continue on our commitment, which is to deliver excess capital above the above the top end of our range of 12%, above the 12%, we will return it back to the shareholders. Very simple, very clear. On Turkey, our guidance, you asked it from components around this, but our guidance on Turkey, if you remember in the fourth quarter call, was around 200 basis points. But at that time, if you remember it very well, I think it's also registered in the document that it's going to be higher in the first half and then it's going to be converging to 200 basis points for the year. But in the first half, it's going to be higher. And Luisa has given you the numbers already. So in the first quarter 2026, the cost of risk is -- how much was it? [ 2.53 ] But if you isolate for the PMA that we did, if you take out the PMA impact, it's [ 238 , no ]? Yes, [ 238 ], which is completely in line with what we have guided to you higher in first half and converging in -- for the year to [ 200 ] improvements in the second half. So Antonio, you going to be cautious on what we say on what's going to happen with the war. We are cautious in terms of the impact because we don't know it's a different story every day. And Turkey, together with Spain, maybe a bit, but much more in Turkey, we are the ones who would be affected more from the war than anyone else. As I mentioned, as a response to the previous question, what we have seen so far, we are in the war since February 28. What we've seen so far in Turkey is that the country is withstanding quite nicely to what's happening, again, relatively speaking. The government has taken the right reactions. They increased the interest rates. As you know, there are -- there's kind of a band in Turkey. They raised interest rates effectively from 37% to 40%. They are supporting also some of the sectors, they are supporting the inflation through fuel price management mechanism and so on. So they're doing the right things, and it seems like they are less affected than they could have been. In that context, we are, again, as compared to an otherwise scenario, we are relatively positive on what we have seen, but we have to see how the world evolves in the next few weeks and months. If the war continues for a long duration, which we don't discard as a scenario, but which we feel is a less likely scenario because we do think also given the political situation in the U.S. and the midterm elections in November and so on. It's not to the benefit of anyone to continue the war, but it can happen. It can continue. In that scenario, let's assume that the scenario that we don't discard but we see less likely, which is an extended drain of the war. In that scenario, Turkey will be affected and cost of risk might go up. At the moment, we stick to our guidance, and that's why we have given you the numbers that we have given for the first quarter, and we are, again, maintaining our guidance. But we have to be cautious and we have to see how the whole situation evolves in the coming in the coming quarters, in the coming months. You asked about the NII dynamics as well when interest rates go up, it's a negative on the margin, as also Luisa mentioned. So the 3 percentage point hike in the effective interest rate is going to be affecting in the second quarter, the NII negatively. But again, it's a relatively small hit that we can absorb, and we are activating other levers. You mentioned one of them, cost. We are activating other levers to basically tell you that we have a negative bias on Turkey because we don't know how the situation will evolve in Iran. But overall, they have been quite resilient in absorbing all the shocks that's coming as a bank in Turkey.

The next question goes to Cecilia Romero of Barclays.

My first one is on the U.S. MCA you touched on before very lightly, but there is obviously uncertainty around renegotiation. What is your current expectation on timing and likely outcomes? Is this potential increase in volatility already reflected in your business plan assumptions for Mexico? Or are your targets still based and a relatively benign macro and trade backdrop? And then also, I mean heightening geopolitical uncertainty. Do you see any early signs of credit pressure anywhere? Is there any segment where you are becoming more cautious relatively to what you have assumed for the beginning of the year? And you mentioned about the worsening market scenario and that you have done some PMA updates. You discussed how have your macro assumptions that you have in your business plan change in this update.

Very good. Maybe I take the USMCA and Luisa, take the overall Board related risk appetite question more broadly. So on USMCA, I thank you for the question. On USMCA for the context of everyone, as you all know, it was signed in 2000, this agreement. It's a 16-year agreement. And every 6 years, it's 2000-2026 there will be a revision of the situation and the parties will decide whether to keep the original 16-year arrangement, which takes the agreement to 2042. That's the context. So this year, Until July, there will be a decision on whether they extended another 6 years, but overall 16-year contract to 2042. If the parties do not agree on the full terms and this and that. What happens is that there is going to be an annual periodic review without the extension of additional 6 years, okay? That's also a possibility without a full extension every year. You continue with the contract, you continue with the agreement, but an annual review is then the base case in that second scenario. And then there's a third scenario where the contract is basically discarded. They cancel the contract. We don't think that the third scenario of canceling the agreement is on the table at all. We do think either the first or the second 1 would happen, most likely the second one. And even on the second one, what we do see is that it's the continuation of what we have at the moment. And what do we have at the moment. We have basically an effective tariff of 7.2% from all the goods exported from Mexico to U.S., 7.2%. This compares very well with 18% for the rest of the world. Again, exports to U.S., rest of the world, the blended tariff is 18%, and it compares very well to China, which is 45%. And as a result of all of this, what we have seen is that the exports of Mexico is actually up 6% in 2025, and it continues to trend in the first two months of the year. Exports are up. And Mexico is gaining market share. If you take the exports to U.S. or imports to U.S. from a U.S. perspective as a market, Mexico has gained market share, while Canada and China, which are the two other large competitors in that market, let's say, they are losing market share. So Mexico has been gaining position in that positioning. Why did I say all of this? I said all of this, because in the second scenario that I mentioned, which is an annual review scenario, we do think it's the continuation of what we have might be certain different dimensions added to what we have currently, but that scenario is not a bad scenario at all in our view. Why is that the case that there is the intention either the first or the second scenario would happen? I think the key important thing -- I'm not sure that you have seen it, some of you might have read it, -- but the U.S. businesses, Mexican business is for sure, but the businesses of U.S., companies of U.S.A., they basically predominantly in a very strong way, they have indicated their support for this agreement. And they said if this agreement is not there, as the U.S. businesses, we cannot compete, very strong words in the reports of the trade commissioners. In short, we expect either an extension of the contract or continuation of the status quo. There might be some changes here and there, but doesn't fundamentally change the underlying dynamics because of a vehement support with a very strong support coming from the U.S. businesses on the contract. And as a result, we are not changing -- putting a negative tune to what we see already in the first quarter, and we expect the situation to continue as such. Then the macro or the war impact.

Yes. Well, we haven't seen in the cost of risk numbers that we provided, any signs of distress or pressure in terms of the outstanding credit. The PMA that we've done of around EUR 100 million is more on the cautionary side. We have very limited exposure to direct exposure to Middle East. So the exposure more would be to potential second round effects derived from the conflict. And there are some sectors that we're monitoring closely. We've identified 12 subsectors that are most exposed, electric power supply, transportation, steel, cement, typical sectors that would be more exposed to the context of elevated energy costs and weaker demand and higher rates. And we have conducted a detailed analysis of these clients in these sectors. And we have already started to strengthen risk analysis in new origination, assessing the potential impact of the conflict on relevant transactions and limit renewals with particular focus on anything related to the interest rate sensitivity analysis and energy shocks. We've developed enhanced monitoring of what we call venerable clients, clients that are with more leverage in some of these sectors. And we are doing forward-looking risk assessments, stress testing ratings in negatively could be affected subsectors. So I think that we're doing the right thing in terms of being cautious and being disciplined in terms of risk, but we haven't seen anything specifically yet. That's why we maintain our corporate guidance across the footprint, and we don't currently anticipate any downturn in the asset quality cycle so far with the news that we have on the table.

The next question goes to Alvaro Serrano of Morgan Stanley.

One on Mexico and the deposit yield. It's up 3 bps in the quarter from -- or I can see your slide, despite rates -- the average rates down, Central Bank rates are down in Q1. I note there's bit of a change in mix in tonne deposits are up, but it seems like it's even so it's more of an increase than I would have guessed. Can you talk us through what's -- update us to what might be going on? And if you've had any campaign outstanding remuneration savings is a term -- any color would be much appreciated. And the second question is around the redundancy plan, the voluntary redundancy plan. Could you give u's a bit more color how many employees have left the firm? And do you expect more of these for the underlying -- I'm conscious that you're automating a lot of processes, so they might be more down the line. And just to confirm, this restructuring charge is included in your full year guidance of cost in Spain?

Well. Thank you, Alvaro, as always. So regarding cost of deposits in Mexico, if you see the page that we have provided as part of the presentation, the answer is hidden in the increase in time deposits. If you also look on the right-hand side of that page, you see that the time deposits have grown by 26% year-over-year and also in the quarter, it has gone up. We have been basically pulling in some deposits, especially from the corporate side. We said it before, I think we were very clear on this in the previous calls saying that we would rather -- when interest rates are quite high, we would rather fund ourselves from wholesale funding from the market rather than pure deposits because we don't want to be triggering too much of deposit price competition in the market. But when rates come down, which is the case at the moment, as you know, in two years, nearly two years, the interest rates in Mexico have come down from [ 11.25 ] the Central Bank rate to [ 6.75 ] at the moment. And we do think the bottom of that curve is going to be [ 650 or ] something around that. So we are already close to the very bottom. When we are in this environment of relatively low interest rates in Mexican standards, we told you before that we would be a bit more competitive and get more deposits. because we can afford the increase of prices in the market in that sense. As such, in the last 6 months, in the last 3 months, a bit more, we wanted to get more deposits, and we were very selective, especially on the corporate side, corridor mid-sized companies side and we pulled in some term deposits, which then reflected in the cost of funding to [ 12 ] versus [ 209 ] of the previous quarter. But at the same time, you would see that our market in wholesale funding is much less than what it would have been otherwise. So that's the reason for the deposit in cost in Mexico. Restructuring topic, Luisa?

Yes. On the restructuring topic, the restructuring has affected around 750 employees group-wide. The restructuring charges have been mainly both in Corporate Center and Spain, where the payback is around 3 years. So it's a very attractive investment. And all the charges and the savings were already accounted in the guidance that we gave at the beginning of the year. That's one of the reasons why the guidance in Spain was high to -- sorry, mid- to high single-digit growth in expenses. We were already, including in the guidance, this voluntary redundancy charge.

The next question goes to Benjamin Toms of RBC.

The first one on Slide 9, you showed group cost growth in Q1 was 14% year-on-year ex-redundancies. That's above the weighted average inflation footprint of 9%. Are you comfortable in operating with that gap over an extended period as long as you have the positive jaws? And then secondly, you upgraded your RoTE guidance this morning for '26. Your '25 to '28 guidance is for an average RoTE of 22%. Can you just remind us of the expected shape of your RoTE through '26 to 2028? Should we expect improvement in each year of the plan just interesting to know where the exit rate might be?

Very good. Thank you, Benjamin, very quickly, just to pick up some speed. On the second question, 22% is the average of the 4 years. As we said before, we don't foresee hockey shape there, but we do see a continued -- relatively continuous improvement with higher return on tangible equity every year. Again, we don't have many more years to count on that period. So last year, it was 19.3%, this quarter, we did really well, 2026 in our view would be better than 2025 as we are guiding. 2027 and '28 would be even better. But not a hockey shape, not like coming at the last quarter or last quarter, it's going to be continuous improvement. And we said it before many times that the key driver of the numbers and the strategic plan is the fact that we do expect rates will be bottoming out in Europe and Mexico in the 4-year period and once rates to bottom out as we were expecting at the end of 2025, in early 2026 were for Mexico -- then spreads will not be declining anymore. Activity growth will be directly flowing to the bottom line, helping us on profitability. That's the key driver of the strategic plan. And given that, we see a continuous improvement every year. Then on the cost, our key focus has always been the jobs. If you exclude the restructuring charges, Luisa has mentioned it, but EUR 125 million in total, EUR 100 million of that is basically in the Spain geography, EUR 60 million roughly in the holding Corporate Center and EUR 40 million in Spain. If you exclude those, there is practically all the areas have positive jaws even the smaller countries. We do have this jaw notion as a management discipline in BBVA, if you grow, you have to deliver that growth, you might be increasing your costs, but you could deliver that cost increase by having more revenues. And we are not really short-term oriented. We can wait, but that has to happen. And every growth should lead to capital, organic capital generation. That's the mindset that we have. And as you can see, again, the jaws, we have this page every single quarter, I don't know how many years. That's the clear management discipline. So in comparison with the revenue growth is very clear to us. comparison with inflation, obviously, is less relevant as long as you, again, drive that growth with the organic capital generation that comes with it.

The next question goes to Marta Sanchez Romero of JPMorgan.

My first question is on capital allocation. We've read headlines about patrol disposal of Atom Bank. You've recently announced the disposal of guarantee of Romania. So that does it all mean that you are taking a harder look at the footprint? And have you identified how much capital you could release on the disposal of noncore assets? And then I got a second question on NII, Spain. Your deposit growth on an annual basis is quite impressive, 8% year-on-year. So you are gaining market share. Can you explain what is driving that? Is just -- is that corporate deposits? Or is it more evenly split between retail, corporate, valid sector? And with that, what is the the balance of risk of NII in Spain because it looks like with a steeper yield curve with rates are today, I think you probably -- your current guidance is a bit short of what we could see.

Very good on deposit growth. Maybe, Luisa, you can take it on the capital allocation. You mentioned names Marta, the ones that are not public or already happened. We don't comment on any of those as you know well. We can comment on Romania. It's -- you said it's the harder look. It's a new exercise. To us, it's an ongoing exercise. We keep doing it all the time. If you don't feel that we have the competitive power to be able to deliver above our cost of equity in any market, we always look into it. It's not a one-off exercise to us, but it's an ongoing exercise. In that sense, in Romania, it's very consistent with what we have been saying to you all along, we do believe local scale in the traditional business model that we have, which is we have all the segments, we have all the channels, branches and so on in that traditional business model, we do think scale is important. Local scale is important. In Romania, we do have 2% market share. It's upscale. And as a result, it doesn't deliver the cost of equity for us. We actually tried a process. It was public at the time, so I can mention it back in 2020. And now we tried again. When the situation arises, when the market lasts for it, you go for it. Otherwise, we are not also very -- we also take our time, and we are patient in these decisions. But in short, it's an ongoing exercise for us. And we always deploy capital where we do have a competitive edge to deliver above cost of equity returns. And if not, we always look into alternatives. On the deposits?

Yes. Indeed, we've been growing quite strongly on deposits year-on-year, that [ 7.9% ] number is driven by demand deposits growing 5.6%. And this is supported really by customer growth. You know that we always talk about these numbers. Last year, we grew close to 1 million clients. This year we've, in the first quarter, grown around 250,000 clients. What we see is that when we onboard clients, 30% of the onboarded clients after 6 months, bring either a payroll or pension product. These clients become active clients, more valued clients, 70% of them after 6 months. So really, this goes back to our bread and butter customer acquisition, where we are #2 bank in Spain in client acquisition also this year and last year. So strong growth on the back of customer acquisition and the time deposits, where we have also grown significantly year-on-year. This has been more driven by our Wholesale segment, both commercial banking, corporate banking, CIB, where you know that we've been also very active, and that has spurred the growth on the time deposit side.

Very good. I think there's also this question on NII guidance at the end for Spain. Marta, that page is very important to us. That page we put at the end typically in the fourth quarter, which is the guidance page. And then if you do an update on it, whatever the page that you put. We discussed a lot whether in the guidance upgrade page, we should include something also related to Spain NII. We decided at the end not for a reason because at the moment, that upside would come from rates from customer spreads. And we do see at the moment that there is that upside, but that upside is completely driven by what's going on in the world. In the case of Mexico, we put it there as a clear upside for a reason because more activity driven, which is within our control. we can manage that. And we do see very clear signals again in our pipeline and in the activity in March and so on. So we felt comfortable and we put it there. But given the fact that whatever we put there, we feel obliged more or less to deliver. Obviously, we will always do the right thing, but we will deliver those numbers. Depending -- given the situation that the situation in Spain is dependent on the market developments and whether the situation changes or not, we felt uncomfortable to do it at the moment. But we do have that, obviously, a relatively positive outlook. If rates stay as such, if EURIBOR levels stay as such, we do have the upside. We don't know how -- whether that's going to be the case, and we don't know whether the EURIBOR levels will be sustained or improved. So given that dependency, we decided not to put anything into the page.

The next question goes to Ignacio Ullargui of BNP Paribas.

I just have two questions. One, Capital. I just wanted to get a bit of your thoughts on how much STLs you think you can do into the year and whether the performance of the quarter can be extrapolated for the next 3 quarters? And the second question is on rest of businesses. I mean I've seen a very strong loan growth growing -- accelerating a lot in the first quarter, 50% year-on-year. I just wanted to see whether you will prioritize the NII fees on that? I mean I have seen in NII is growing slightly below that level. Just wanted to see how should we think about revenue growth in that 30% growth that you have given above 30% growth, you have given how should we think between NII and please?

Very good, SRTs, you want to take you Luisa?

Yes. Well, I think that you've seen that we've done 30 basis -- 12 basis points of SRTs this quarter. Last quarter -- the first quarter of last year, we did around 13 basis points. We are not changing the guidance that we gave to the market, which is to do between 30 and 40 basis points this year, and that's what we are on track to do. We're seeing the deals being very well received by the market. We've done -- we've closed very good deals in the quarter with improved levels on the levels that we saw last year. So, we will move forward with our SRT and asset mobilization plan throughout the year and in line with the guidance that we've given to the market.

And on the rest of business, I would give you a bit conceptual response and apologies for that matter, but would we prioritize NII or fees? Really we would prioritize the client. And whatever the client needs are, in some cases, it's like that issuances which are very active in many of the geographies. It's very much fee-driven. But we also bank with the client in many other ways. So NII is also going to be very strong. The numbers that you see in the page, it's very obvious that the fees are growing much higher than NII. It is not because of the rest of our business or the CIB business that is underneath. As you know, rest of our business, the page covers two main areas: CIB beyond the footprint plus the digital banks. And digital banks affects the NII evolution in a negative way. In that sense, NII is not growing as much as fees because of the digital bank impact. You should be -- we should acknowledge that fact to you first. But beyond that, we are expecting -- we have a clear fee bias as much as possible. We would like to increase the fee percentage of that business. but it's going to be across the board. In the pure CIB business, it's going to be coming in AI and fees, both of them.

The next question goes to Sophie Peterzens of Goldman Sachs.

Sofie, from Golman Sachs. So my first question would be if you can it's going back a little bit to the previous question, but if you could elaborate a little bit on your performance in Italy and Germany, would you consider kind of expanding into any other European countries? And then my second question would be, could you just remind us how much of your net income and capital is hedged in Mexico and Turkey?

Very good hedges. We know the numbers by heart, but Luisa, why don't you take that one on performance of Italy and Germany, Sofie. We only provide at the moment the customer numbers -- in Italy, we are at 900,000 customers. We launched it in 2021, practically. So 900,000 customers in this period, in our view, is very good, much better than our business plan. And then in Germany, we launched in July -- June, July 2025, 9 months ago, and we are already above 100,000 customers, again, much better than our business plan. I did mention this to you before, this digital bank proposition. It's going much better than what we originally thought. It's better than business plan in both countries, but these are relatively long-term place. Typically, digitally banks in a certain market, not only us, but others, it takes them 9, 10 years to break even. In our case, it's going to be much earlier than that in the countries that we are in. We are seeing so positive numbers that it's going to be earlier than that. But at the moment, there are still obviously posting losses. And once we have some maturity in these businesses, we will start also making it transparent to all of you on what the underlying numbers are. On the second question, Luisa?

Yes. Sofie well, with regards to Turkey, starting with Turkey, we maintain at the capital level hedges of around 43%, which is flattish quarter-on-quarter. We maintain the sensitivity of around 2 basis points negative to a 10% depreciation of the Turkish lira. And here, just to remind you, the cost of hedging is around 0.5 basis points per month. And on the P&L side, we usually in Turkey have a level of coverage of around 33%. In Mexico, the capital -- excess capital that we are hedging is around 44%. It's slightly lower than the number that we had at December of '25. We had a 57 -- 55%, 57% number. But the sensitivity to a 10% depreciation remains the same. Why? Because what we've been doing is basically putting on more option structure into the hedges. in order to achieve more optimization on the cost side, which means that the sensitivity to a 10% depreciation of the Mexican peso would still be around 15 basis points, the same as last quarter. But the cost of the hedges now instead of being 0.5 is around 0.2 basis points per month. So we think it's a better strategy in terms of cost optimization of the hedges while protecting the capital in the same level. And as for the P&L, in Mexico, we are hedging around 37% of expected next 12-month results in Mexico.

The next question goes to Britta Schmidt of Autonomous Research.

Two questions on Mexico, please. With the positive bias on the loan growth outlook, should we also read that across to the net interest income where previously guided to NII growth slightly below loan growth, also considering that you're still growing quite strongly in consumer finance? And then secondly, on Mexico, the jaws here are flat. They were flat this quarter year-on-year, partly thanks to stronger trading income, but the cost growth still remains very high. Maybe you can comment a little bit on the cost drivers here, what the outlook is and whether you expect flat jaws for the year as well or whether that could deteriorate a little bit?

Very good. On the -- thank you, Britta, for the questions. On NII, slightly below loan growth still holds because as you can imagine, the average customer spreads last year versus this year would be a slight decline in any case. So it's going to be lower than the activity growth. But given the fact that we are positive on activity growth, that's going to be reflected obviously into the NII as well. We don't have a now more negative view on the spread at all. The only thing is last year versus this year, as we were guiding in the previous quarter, it's going to be a bit lower. That's why it's going to be lower than the activity growth. On the jaws, you said it's slightly positive, but it's very important to us. It's a dialogue that I have with all of my country managers all the time. It is positive. It is positive. It might be a small positive, but it is positive, and we will keep that discipline of management discipline of jaws in that geography as well.

The next question goes to Andrea Filtri of Mediobanca.

Could you please provide a recap of the breakdown in each unit in this quarter for the PMAs you have taken and the restructuring charges that you have booked? And the second question is, do you foresee any improvement in the EU regulation for banks given the ongoing revisions and reassessments? And when do you expect the approval of the Danish compromise from ECB for BBVA?

Very good. Thank you, Andrea, for the questions. On the PMA, we don't provide the full detailed breakdown, but what we have already said is more than half is basically 2 countries, Turkey and Spain, the 2 of them. Spain because of the size, Turkey because of the sensitivity to the crisis much more than other geographies. And then the second question, the Danish Compromise, as you might have seen, EBA, European Banking Authority has published the list, and we already have the financial conglomerate. Now it has to be reflected into Danish compromise by an authorization from the ECB. That process is ongoing, and we expect -- it's ongoing as part of a normal procedure. We expect in the second quarter to have the full qualification.

The next question goes to Borja Ramirez of Citi.

I have 2. Firstly, on LatAm macro, yesterday, one of your competitors indicated that LatAm economies should be relatively better shielded as they are oil producing and around 50% of your net profit last year came from LatAm. So I would like to ask if you could provide more details. And linked to this, I think the Mexican peso has performed better than your business plan expectations. So maybe there could be some upside to your ROTE target for this year? And then secondly, on Spain NII, -- following up on the point on the deposits, where I think there was actually a decline in cost of deposits in the quarter despite your market share gains. I saw that the ECO also increased in Spain. And your -- I think your NII sensitivity to higher rates in Spain is higher than your peers at 4% to 5% of NII for every 100 bps rate. So maybe you're better positioned in case of higher rates in Europe?

Very good. Thank you, Borja, for the questions. The first one, you are 100% right. I mean we keep saying it all the time. So sometimes I feel like I'm repeating myself and some of you have been in this job for so long. So sorry for the repetition, but there are 2 strengths of BBVA that is not very easy to replicate. Actually, we call them the 3 of them. But let me count all 3 of them. Number one is the diversification, diversification being in different countries and being in countries where the leverage ratios are relatively low, which means there is room for growth in lending, in banking in those geographies that we are present. The second thing that we always say, which is very different from other banks in our view and which makes a big difference in banking, which is we are very large wherever we are. We have the best ROEs in the countries that we are in. Having the best bank, having the largest bank in the countries that you are in always, always is the best thing that you can have in banking. And then the third one is we think we are great in embracing innovation. We have done it in digitalization. And as a result of that, our customer acquisition engines, our sales engines work much better because we are, in our humble view, better than competitors in digital. And you touched upon the first point of this, which is the diversification. So the macro situation, there is a lot of uncertainty still out there. Again, every day is a new day. But when we look into the potential impact of an extended duration crisis in the Middle East, what we see is that in terms of different geographies, Latin American geographies are either neutral or positive. Argentina and Colombia would be positively affected because they are, in general, oil exporters. Obviously, there are going to be other transmission mechanisms that might be hurting them. Inflation might go up, consumer sentiment might go down and so on. But we still think they would be relatively well protected and even positively may be impacted from this. And Mexico and Peru also. So Latin American geographies are relatively isolated from this. And they might benefit in terms of tourism flows. They might benefit from supply chain redirections. They might benefit from the fact that, again, they are exporters in general of commodities. In short, LatAm, we have a relatively positive perspective from the impact of the crisis on those geographies, which is again talking to the strength of our diversification. You asked similarly related to this, whether the Mexican peso will stay at these appreciated levels. We don't know. Obviously, we have had -- in our plan, we still see some more depreciation to come along. But if it continues at these levels, that's an additional upside that you can put into your models. And then the second topic about interest NII and interest rate sensitivity, Luisa, do you want to comment?

Yes. Well, first, on the NII, on the customer spread topic and the evolution of yields and costs, I would say that -- and I think Onur has mentioned this as well that we expect quarter-on-quarter spreads to remain stable in the year, perhaps picking up at the end of the year. And this is because primarily most of the mortgage book has already repriced. As you know, we -- different to other players in Spain, we tend to reprice quite quickly our mortgage book and 2/3 of it reprices every 6 months. So that yield compression is on the floating rate part of our mortgages, which is around 46% is already mostly achieved. So on the NII, customer spread side, more or less stable unless to owners' point, interest rates change. That's more or less what we have in the guidance contemplated. Now with regards to the ALCO portfolio, the ALCO portfolio is contributing positively on the quarter with the NII. We have increased the ALCO book in the quarter by EUR 1.7 billion. We were actually able to purchase bonds at yields above 3.2%. I think it was a very successful strategy. But nevertheless, I think that we're maintaining our interest rate sensitivity within the same levels that we had at the end of the year between 4% and 5%. As you know, typically, our balance sheet, if we don't do anything, generates through time, a higher sensitivity because of the weight of our site deposits. So what we're doing now basically is maintaining this sensitivity of 4 to 5 -- and we will see, depending on what the policy rate environment and the EURIBOR does, whether we decide or when we decide, if we decide to increase the rate sensitivity of the book or not.

But as compared to our Spanish peers, we have a better higher sensitivity, and it might help us if rates continue to go up, for example. Very good.

The final question goes to Ignacio Cerezo of UBS.

The first one is on trading. I know it's probably a difficult one to answer, but if you can give us a bit of a breakdown basically of why the figure has been so strong across most geographies, where that strength is coming from? And kind of any comment you can make around recurrence and sustainability seasonality. I mean just a bit of color basically on how recurring that number might be? And then the second one, a follow-up actually to what Britta was asking about the cost growth in Mexico and the Jaws, do you think there is part of the cost growth today, which is based on kind of loading investments and the jaws actually can start improving over time? Or do you think this is the cost growth you need to incur to generate the revenue in Mexico?

In Mexico, trading income. I take trading income, you take the jaws, Luisa, if that's okay. Trading income, it's mainly global markets, natural, mainly global markets. We have been mentioning this. We do think we can create value by increasing our size in the CIB business in a very cautious way, in a risk-conscious way but also in the way that we do it, which is cross-border focused, sustainability focused, banking on our clients in their business outside our core geographies. We mentioned that in the strategic talks that we did with most of you a few months ago, 40% of our business in the CIB business now, 40% is coming from cross-border basically deals, things that we do for our clients beyond their own geography, but they are our clients in their core geography. And 40% of our business in CIB is global transaction banking, as we call it, which is transaction banking focus. So our CIB growth is basically focused on on corporate banking rather than pure investment banking, and that is helping us. And that is also helping us in the net trading income because in this third quarter, our clients, not only the leverage, but it is the topic of our clients trading, and that is helping us as we grow that business. And one number there in the trading number, 40% of the global markets revenue that we have in -- roughly, I'm giving you the rough numbers, 40% of the global markets revenue that is booked under NTI, is basically the FX business. Given the volatility in the market, our clients have traded, especially on the FX side. We are in many geographies. We are an emerging markets bank as well, and that has helped big time on the Global Markets business. There's also one other component, which is a smaller component, but an important one, given the steepening of curves in some geographies, especially Spain and Mexico, we have extended the duration. You can see it also in the presentation in the appendix that in the ALCO book, we have extended the duration EBIT, which meant we sold short end of the curve, which was I going to be bought long end of the curve. And NII would not be affected that much because of the steepening of the curve, but that also brought some NTI. But the core driver was the Global Markets business. On the jaws in Mexico, Luisa?

Well, what I would say is that, I mean, there's -- we always invest a different horizon period. So there are some investments that we do now that we expect the payback will be this year, next year or even sometimes 2 or 3 years. So I think that more than specifically how much is front loading or not, I would just say that our commitment is to that efficiency level in Mexico that we have at low 30s, efficiency is 30.8%. And that's the guidance that we've given also for our midterm long-term goals, and I think that's what we're committed to delivering.

Yes. Thank you, all of you for participating in today's call. As always, the Investor Relations team remains at your disposal for any additional questions or clarifications. Have a great day. Thank you.

Thank you to all of you.

Thanks.