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

Management highlights

### Overall Group Performance - Delivered record Q2 2026 earnings, industry-leading profitability, strong loan growth, and solid capital generation, reinforcing competitive position across all geographies. - Tangible book value per share plus dividends grew 17.3% year-over-year (21.8% excluding share buyback impacts); return on tangible equity reached 22.2%, return on equity 21.1% for the first half, ranking BBVA among the most profitable large European banks. - Loan book has grown 62% since December 2020, compared to 10% for European peers, while widening the profitability gap vs peers, delivering consistent profitable growth. - Core revenues drove profit growth: net interest income up 17.8% year-over-year, net fees up 16.2% year-over-year, net trading income up 13% year-over-year; gross income up 15.7% year-over-year. - Strict loan-level profitability discipline is applied across all geographies, with growth concentrated in high-return consumer, credit card, and private enterprise segments. - BBVA has gained market share consistently in core high-margin segments in both Spain and Mexico, outpacing industry growth despite aggressive competition from fintech newcomers. - Excluding non-recurring items (voluntary redundancies in Spain/holding, extraordinary VAT regularization), first half cost growth was 14.5%, with an efficiency ratio of 37.8%, outperforming full-year guidance. - Asset quality remains sound overall: first half cost of risk improved to 143 basis points, from 154 basis points last quarter; NPL and coverage ratios remained broadly stable. - The 4 billion euro share buyback program approved in December 2025 will be completed on August 3, 2026; a new 2 billion euro extraordinary share buyback was announced, with the first 1 billion euro tranche launching August 5. ### AI Transformation Progress - Over 100,000 BBVA employees now actively use bank-governed AI tools in daily work. - The bank is launching a common framework to create, deploy, and manage AI agents at scale, with unified governance, architecture, security, and performance measurement to accelerate implementation while controlling risk and cost. - A dedicated centralized AI Transformation unit at the executive level has been formed to consolidate AI capabilities; full details on AI strategy will be shared at the October 6, 2026 BBVA Strategic Talks. ### Strategic Plan Execution - After 18 months of execution of the 2025-2028 strategic plan launched in January 2025, BBVA is outperforming original expectations for all key metrics.

Guidance

- Group: Upgraded full-year 2026 group return on tangible equity guidance to around 21%, maintaining overall positive outlook. - Spain: Confirms full-year 2026 net interest income guidance of low-to-mid single-digit growth, maintains expense growth guidance of mid-to-high single-digit, and expects efficiency to remain below 35%; cost of risk guidance of low 30s basis points remains unchanged. - Mexico: Upgraded full-year 2026 guidance to around 10% loan growth, high single-digit net interest income growth, and cost of risk below 335 basis points (down from previous guidance, outperforming initial expectations). - Turkey: Upgraded full-year 2026 cost of risk guidance to around 220 basis points, up from previous guidance of 200 basis points, as retail portfolio normalization is taking longer than expected due to the macro environment. No formal net interest income guidance is provided due to high forecast uncertainty; first half 2026 net income of €532 million implies a lower second half outcome, though first half performance was better than expected. Exit from hyperinflation accounting remains targeted by 2028 in line with prior plans, with results aligned to the group's 48 billion euro strategic net income target regardless of accounting status. - South America: Upgraded full-year gross revenue growth guidance to high teens, as the region is outperforming original expectations. - Capital: Expects annual organic capital generation of 30-40 basis points after loan growth and SRT transactions, and is on track to hit the higher end of this range in 2026. The policy of distributing all capital above the 12% CET1 target remains in place.

Segment performance

1. Spain: Q2 2026 net profit reached €1.1 billion, bringing first half net profit to €2.2 billion, up 2.3% year-over-year. Net interest income grew 4.1% year-over-year, fees and commissions increased 2.2% year-over-year. The efficiency ratio was 33.6% (best-in-class), NPL ratio fell to a historical low of 2.86%, and first half cost of risk was 31 basis points. Revenue contribution: ~36.6% of group first half net attributable profit. 2. Mexico: First half 2026 net attributable profit reached €3 billion, up 8.2% year-over-year and 3.4% quarter-over-quarter in constant euros. Net interest income grew 2.7% quarter-over-quarter, with broadly stable NIM. Fee income grew driven by asset management, credit cards, and CIB. The efficiency ratio was 30.8%, first half cost of risk improved to 326 basis points. Revenue contribution: ~50% of group first half net attributable profit. 3. Turkey: Q2 2026 net profit was €269 million, bringing first half earnings to €532 million. Net interest income declined quarter-over-quarter due to tighter TL customer spreads and elevated funding costs, offset by strong growth in fees and commissions. First half cost of risk was 236 basis points, reflecting elevated retail portfolio provisioning needs. Revenue contribution: ~8.9% of group first half net attributable profit. 4. South America: Q2 2026 net attributable profit was €308 million, first half totaled €556 million, up 33.6% year-over-year in current euros. Gross revenue grew 21.6% year-over-year, driving the efficiency ratio down to 41.5% for the first half. Revenue contribution: ~9.3% of group first half net attributable profit. 5. Rest of Business (mainly CIB): Q2 2026 net attributable profit was €271 million, up 14.5% quarter-over-quarter, first half earnings totaled €508 million. Costs reflect ongoing investment for growth, with positive year-over-year jaws. First half cost of risk declined to 14 basis points. Revenue contribution: ~8.5% of group first half net attributable profit. Group aggregate: Q2 2026 net attributable profit was €3.062 billion, first half 2026 totaled €6.051 billion. CET1 capital ratio improved 7 basis points to 12.90%.

Risks & headwinds

- Macroeconomic uncertainty persists, with elevated provisioning needs in Turkish retail portfolios due to the higher-for-longer interest rate environment, and continued elevated but stable provisioning in Argentine retail portfolios. - AI-driven industry disruption creates transition risk for some corporate clients; BBVA has developed an AI transition risk framework to monitor client vulnerability, but unforeseen disruptions could impact asset quality. - ALCO portfolio duration extension carries interest rate risk: unexpected future changes in inflation or interest rates could negatively impact the value of long-duration fixed income holdings, as seen in recent bank failures in other regions. - Intensified competition from fintech and new full-service bank entrants in core markets like Mexico could pressure spreads and market share over time. - Regulatory changes in the European Union remain uncertain, though recent proposals include positive signs for simplification. - Hyperinflation accounting in Turkey creates earnings volatility directly tied to inflation levels, complicates forecasting.

Analyst Q&A

• Q: Why has Spain's deposit cost stayed flat despite faster term account growth, and why is cost of risk virtually zero in Rest of Business despite higher NPLs? /

  A: For Spain, BBVA's focus on acquiring new retail and SME customers, with 70% of new customers becoming highly engaged within 6 months and one third becoming payroll clients, creates low-cost transactional deposit bases. Higher market share in payroll, cash management, and merchant acquiring further supports low deposit costs. For Rest of Business, the higher NPLs come from a small number of specific already-provisioned clients, so the aggregate impact on cost of risk is negligible.

• Q: Does the CFO transition signal any change to strategy or capital return policy, what is the sustainable earnings run rate for the fast-growing Rest of Business (CIB), and what is AI-related credit risk? /

  A: The CFO transition is a purely organizational natural handover, with no changes to existing strategic, financial, or capital return priorities. BBVA's CIB is a client-focused, cross-border corporate banking business serving existing clients, with a 24% RORAC (excluding Turkey/Argentina) that is comfortably above cost of equity, making current growth and profit levels sustainable. Direct AI-related lending exposure is very small: 700-800 million euros to top quality software/IT names, with BBVA using a proprietary AI transition risk framework to monitor client vulnerability, with no material risk to the overall portfolio.

• Q: Is the commitment to distribute all capital above the 12% CET1 target still in place, and what is the driver behind the growing ALCO bond portfolio in Mexico? /

  A: The 12% CET1 target remains in place, and all excess capital above this level will continue to be returned to shareholders via buybacks; the newly announced 2 billion euro buyback follows this long-standing policy. The growing ALCO portfolio in Mexico is intended to lock in current rates and manage interest rate sensitivity as maturities approach, not to replace client lending. ALCO duration is held to ~3 years to limit interest rate risk, and the strategy is not related to slower deposit cost declines in Mexico.

• Q: What is driving SME and corporate share gains in Spain, will there be upside to Spain's NII guidance, and does Nubank's new full bank license change Mexico's competitive outlook? /

  A: Spanish SME share gains are driven by BBVA being the leading new SME account opener, with heavy investment in transaction banking tools (POS acquiring, cash management platforms) that drive deeper customer penetration. Customer spread in Spain has bottomed and is expected to improve each quarter for the rest of the year, creating some upside potential for full-year NII growth. For Mexico, BBVA has continued gaining market share in core segments like credit cards even as fintech entrants have grown, so BBVA is not concerned about the new competitor entry and expects to maintain its strong competitive position.