Dear shareholders,

A year ago, in this annual letter, I shared with you our conviction that the year would bring us greater opportunities than the challenges that remained. 2023 was indeed a year of significant growth and attractive profitability for BBVA thanks to leading franchises in our main markets, the commitment of the team and our leadership in strategic pillars like innovation and sustainability. By growing profitably, we were able to expand the positive impact we have on society in all countries where we operate, creating opportunities for all of our stakeholders: approximately 72 million customers, over 121,000 employees and all of you, our nearly 800,000 shareholders.

Our loan portfolio grew 7.6 percent from the previous year. This made it possible for 140,000 families to purchase their homes, and 550,000 SMEs and the self-employed, and over 70,000 large companies to boost their businesses, thus contributing to job creation and fostering investment and social well-being. Furthermore, throughout the year we channeled over €15 billion in financing to projects that foster inclusive growth, such as financing for sustainable infrastructure, support for entrepreneurship, financial inclusion and social mortgages.

In 2023, we increased our customer base, adding more than 11 million new customers around the world, a pace that more than doubles the rate from five years ago. This enormous progression is the result of our pioneering, firm commitment to digitization, making it possible for 65 percent of new customers to join the bank on digital channels. Today, over two thirds of our customers interact with us on smartphones and we sell practically 80 percent of all units on digital channels. And even more importantly for us, our customers are more and more satisfied with the service we provide - a service that is essential for them. This is demonstrated by our Net Promoter Score (NPS), which has increased 11 percentage points in the past five years.

From a financial standpoint, 2023 was a very good year for BBVA. We posted our best results ever: €8.02 billion, a 26 percent increase over the net attributable profit in 2022. This progress is even more positive in terms of earnings per share, which rose 32 percent thanks to the share buyback programs that took place during the year. Yet another year, we are one of the top European banks in terms of profitability, with a return on tangible equity (ROTE) of 17 percent. Our ability to combine high profitability with significant growth in business and results is one of the aspects institutional investors found most remarkable following the 2023 earnings presentation. It clearly sets us apart from our European competitors in both aspects.

These excellent results lead us to propose to the Annual General Meeting the approval of a €0.39 cash dividend per share against 2023 earnings. Along with the €0.16 paid in October, it adds up to a total gross dividend per share of €0.55, 28 percent higher than in 2022. Furthermore, we will launch a new share buyback program in the amount of €781 million.

Taking these figures into account, we will have distributed nearly €13.2 billion to our shareholders since 2021. Once the new share buyback program has been executed, we will have redeemed 14 percent of our shares, with the corresponding positive impact on share prices.

Strong business performance also translated into significant value creation for our shareholders in 2023, with a net tangible book value per share plus paid dividends surpassing 20 percent for the year, a truly exceptional figure. Our share performance in 2023 was also very remarkable, with an appreciation in our share price of 57 percent (including dividends received throughout the year) - a figure that more than doubles the average of our competitors in Spain and Europe.

As I mentioned above, our profitable growth has also translated into greater contributions to society, beyond the positive impact on customers and shareholders. This is clearly reflected in the way our income is distributed. We use nearly 60 percent of our yearly income to pay the salaries of the over 121,000 employees that make up BBVA; pay suppliers, boosting the local economy; and for credit provisions to cover possible defaults. Of the remaining 40 percent, which represents the pre- tax profit, we allocate one third (€4 billion) to corporate taxes - a direct contribution by the bank to social well-being; another third (€4 billion) goes to shareholder distributions; and the final third (another €4 billion) is reinvested to boost future growth by lending to our customers.

Finally, in 2023 we also continued to make steady progress in our Community Commitment. This entails allocating €550 million between 2021 and 2025 to social initiatives to reduce inequality, create opportunities through education and support research and culture, together with our foundations. At the end of 2023, we had allocated over €410 million to this program - nearly 75 percent of our total commitment.

Looking ahead, we expect 2024 to be another year of growth for the global economy despite the heightened uncertainty. Tensions in the Middle East and Ukraine persist; it is an election year in several countries; and inflation remains high. In the financial sector, the normalization of interest rates will help banking activity to continue to grow, although it is predicted to do so at a slower rate than last year. In addition, we have confidence in the strength of the markets where BBVA operates. In Spain, we expect GDP to grow close to 2 percent. In Mexico, we are expecting a slightly greater growth, about 2.5 percent, benefiting from its strategic position in the integrated market with the U.S. and Canada (positive impact of nearshoring). The long-term potential of Turkey stands out due to its young population and geopolitical situation, as well as South America for its demographic trends and increased opportunities in access to banking services.

In this context, BBVA is in a strong position to take advantage of the opportunities related to innovation and sustainability - two key pillars of our strategy.

Our focus on innovation, which has been a hallmark of the bank for many years now, allows us to continue to identify the trends that are transforming the financial industry. We were pioneers in our commitment to the digitization of our business, thus setting the benchmark in the sector for using new technologies and data to offer better service to our customers. Our outstanding ability to anticipate will continue to be an advantage in fields such as artificial intelligence, which we already use in internal processes (reading documents, contracts and writing code). In 2024, we expect to also use it to advise our customers, including the use of generative artificial intelligence on the bank’s app. In line with this commitment, we created BBVA Technology in 2023, with the aim of further accelerating the Group’s capacity for transformation. We also added 3,800 new professionals to our team in the fields of data and engineering.

The other main pillar of our strategy is sustainability, which is becoming increasingly important. Decarbonization poses the greatest challenge that humanity has ever faced - a challenge that transcends borders and affects all sectors. All companies need to have emission reduction transition plans, so our priority is to support our clients in this transition with advice and financing. This transition will gain momentum with the innovation in cleantech technologies, which also explains why decarbonization is a unique opportunity for innovation and entrepreneurship. Just as we pioneered investments in fintechs to accelerate our digital transformation, we are now investing in cutting-edge cleantech funds to provide better advice to our clients and generate more growth.

Sustainability is proving to be a greater business opportunity than we imagined, and currently represents a fundamental pillar of growth for the Group. In fact, last year we channeled over €70 billion in sustainable business - double the amount from two years ago and over five times the amount from five years ago. Since 2018, we have mobilized nearly €206 billion in sustainable business, exceeding the pace required to reach the target of €300 billion by 2025.

As a founding member of the Net Zero Banking Alliance, the bank also has its own roadmap toward decarbonization with the commitment to be carbon neutral in emissions by 2050, including the emissions financed for our clients. Therefore, we established intermediate decarbonization targets by 2030 for the sectors with the greatest emissions: oil & gas, power generation, the automotive sector, steel, cement and coal and in 2023, we added two more: aviation and shipping.

For the fourth consecutive year, BBVA received the best score in the category of European banks in the Dow Jones Sustainability Index.

As you can see, our winning strategy focused on innovation and sustainability has made our major accomplishments in 2023 possible, and it will ensure that 2024 is another great year for BBVA - a year in which we expect to continue growing with high profitability, and contributing to social and economic development.

All of this was and continues to be possible thanks to the commitment and dedication of our team. I would like to thank them for their hard work day in and day out, and of course, all of you, our shareholders. Your trust and constant support drive us to continue working to make our purpose a reality: “To bring the age of opportunity to everyone”.

Dear shareholders,

In an environment of uncertainty and gradual normalization of inflation, BBVA was able to produce its best results in history, once again demonstrating the strength of its diversified business model and the success of its strategy.

In 2023, BBVA’s net attributable profit rose to €8.02 billion thanks to the excellent performance of recurring revenue. Gross income, or the sum of the main sources of income from the banking business, ended the year with a year-on-year increase of 30 percent at constant exchange rates, i.e. without taking the impact of exchange rates into account.

The Group’s main geographic areas, Spain and Mexico, contributed to this growth with an improvement in customer spreads, benefiting from the high interest rate environment and a strict management of costs, and an increase in lending in Mexico, concentrated in the most profitable segments.

This increase in income, well above the increase in expenses, has made it possible to improve the efficiency ratio by 370 basis points in constant terms from the previous year, reaching 41.7 percent. Therefore, yet another year, BBVA continues to be one of the top banks in efficiency in our group of European peers.

Operating income, or the difference between revenue generated and costs incurred, stood at €17.23 billion, up 39 percent compared to the previous year, not taking currency fluctuations into account.

The NPL ratio remained stable at 3.4 percent while the coverage ratio slipped slightly to 77 percent. Impairment on financial assets rose 34 percent, mainly due to greater provision needs in Mexico and South America, particularly in retail segments. As a result of the latter, the cumulative cost of risk increased to 1.15 percent, in line with our expectations.

Yet another year, BBVA’s profitability metrics are well above the average of our European peers. In 2023, return on tangible equity (ROTE) reached 17 percent, compared to 15.2 percent in 2022, and return on equity was 16.2 percent in 2023, up from 14.4 percent the previous year. Value creation for our shareholders is also reflected in the tangible book value per share plus dividends, which reached €8.93, an increase of 20.2 percent from the previous year. This once again puts us ahead of our competitors.

These strong results helped the bank to reach an excellent capital position, with a fully loaded CET1 ratio of 12.67 percent, above supervisor requirements and the Group’s target range (11.5 percent to 12 percent).
In 2023, we made significant progress toward achieving the objectives established for 2024 at our Investor Day, and we expect to beat them by the end of this year. We will continue to focus on profitable growth and on being a unique bank for our customers, rooted in a value proposition that sets us apart.

Regarding the main business areas, I would like to underscore the following:

- Spain has benefited from GDP growth of 2.5 percent. This has made it possible to grow our loan portfolio in the most profitable segments: private companies and consumer loans. Profit for the area rose to €2.76 billion, up 47.5 percent from the previous year, excluding non-recurring impacts from 2022, thanks to a strong performance of revenue from the banking business.

- The situation in Mexico, with GDP growth of 3.2 percent for the year, helped to boost activity in all business segments, with total loan portfolio growth reaching 10.9 percent, not taking currency fluctuations into account. This greater momentum in business translated into very significant growth in recurring revenue, which more than offsets the increase in costs in a high inflation environment. BBVA obtained a net attributable profit of €5.34 billion in Mexico, 17 percent more than the previous year, not taking currency fluctuations into account.

- Turkey posted a net attributable profit of €528 million in 2023, 5 percent more than the previous year. This result was possible thanks to growth in commissions and fees and NTI, which helped to compensate for pressure on net interest income, as well as lower provisions. This result demonstrates the strength of our franchise in the country in a macroenvironment that continues to be complex despite the start of monetary policy normalization.

- In South America, lending rose 8.1 percent over the year, boosted by the retail portfolio, mainly due to the positive evolution of consumer loans and cards. The net attributable profit for the area was €613 million, 16.9 percent less than the previous year, impacted by the devaluation of the Argentine peso at the end of the year and the macroeconomic decline in Colombia and Peru.

In conclusion, BBVA’s significant strengths have allowed us to produce excellent results. First, our franchises are leaders in their respective countries, with market shares that position them among the largest banks in each case. Second, our results reap the benefits of our successful strategy. In fact, digitization has allowed us to grow in customers and to provide them with a better service. And being pioneers in sustainability has given us a great business opportunity, which we are already starting to benefit from. Furthermore, it is very important to stress that these achievements are only possible thanks to the best team, BBVA’s team. I would like to thank them for their hard work, dedication and commitment.

Finally, I would like to reiterate again this year my appreciation for all of you, our shareholders. Your support is fundamental for us to continue to lead the banking sector, and it encourages us to do our best each and every day.