BBVA’s Spain Leadership Outlook and Economic Context for 2024
Since joining BBVA in 1997, the Spain team has grown under the leadership of a long-time executive who has steered the bank’s operations across the country since 2019. An avid football fan with deep ties to Athletic Club, he comes from a family with a storied history of success in football, dating back to the early 20th century. He notes that while variable mortgage payments are forecast to ease this year, deposit yields are not expected to rise sharply due to the robust liquidity within financial institutions. He emphasizes that Spain’s economy has shown resilience amid swift and substantial interest-rate moves, standing out in the euro area for its relative strength.
In a conversation about the year ahead, the following questions and insights emerged from the dialogue with BBVA’s leadership and research teams:
After an above-forecast 2023, what are the expectations for 2024?
Last year Spain expanded by about 2.5% and Catalonia by roughly 2.7%. The projections for 2024 point to around 1.5% for Spain and 1.4% for Catalonia, with Spain anticipated to grow about twice the European average. By 2025, forecasts rise to around 2.4% for Spain and 2.7% for Catalonia.
What about the engine behind growth?
Tourism remains a key driver, explaining some regional differences, particularly in Catalonia in 2023. Looking ahead to 2025, greater environmental improvements within Europe, a major trading partner, should bolster the outlook.
How will a slowdown in 2024 affect the bank?
2023 saw the impact of higher interest rates on the system, prompting deleveraging as monetary policy tightened to curb inflation. Mortgage volumes dipped by about 3.2% across the market and by around 2.2% at BBVA. Corporate lending contracted about 4.8% overall, with BBVA down roughly 1.5%. The lone bright spot was consumer lending, which rose about 2.6% system-wide and 5.9% at BBVA. This shift altered the bank’s mix among mortgages, consumer credit, and business lending.
“Interest-rate easing suggests a gentler path for mortgage payments.”
What about 2024 specifically?
Expect ongoing deleveraging in both mortgages and corporate loans, but at much slower rates than in 2023. Peak rates are anticipated within 2024.
When will mortgage payments begin to fall?
The timing depends on individual circumstances. The decline in variable rates should unfold gradually through 2024, with installment reductions aligning to the easing of the Euribor reference index. The economy has demonstrated solid performance despite a rapid period of higher rates.
Finance executives emphasize stability in liquidity as a driver of recovery potential.
Liquidity remains comfortable across Spanish financial institutions, a factor that largely shapes their ability to meet liabilities and support credit growth.
Is this the only factor affecting loan pricing and availability?
No. Employment trends continued to improve, supported by sustained contributions from SSI-related savings and a pattern of business investment that fostered growth and job creation. Savings accumulated during the Covid period also supports resilience.
Are there other contributing elements?
Salary adjustments in line with inflation, plus loans that were fixed-rate contracts issued in the years before the rate surge, lessen immediate pressure on households and businesses.
There is criticism that banks lend more than they deposit.
Spain’s financial institutions maintain healthy liquidity, a key determinant of debt management and funding strategies.
In other words, there are no strong incentives to delay improvement.
Looking ahead, the mood is toward easing rates and, consequently, easing mortgage payments more than other loan categories.
BBVA has always prioritized technology.
The goal is to deliver the best possible experience and service, accessible around the clock through multiple channels. Technology serves as the enabler for more convenient and varied financial interactions, allowing customers to access the full range of banking services on their mobile devices while maintaining strong personal and remote channels, including phone support.
Do they work primarily with internal resources or do they collaborate with startups?
Spain hosts about 3,000 software professionals, a core strategic priority for the bank. Across the group there are more than 20,000 employees. Collaborations with global suppliers are common, and BBVA Spark, a dedicated unit launched recently, operates in Spain, Mexico, Colombia, and Argentina. It focuses on delivering financial services to companies by leveraging technology rather than acting as a traditional startup accelerator.
What about artificial intelligence?
Approximately 3,300 colleagues work in data science, with 800 dedicated to AI-driven features and improvements. AI is still a developing tool that adds capability to existing services, expanding what the bank can offer customers.
The sector claims to finance sustainability efforts as part of its core mission.
The aim is to guide customers, individuals and businesses alike, as energy transformation remains central. Financial institutions play a meaningful role in enabling this transition, contributing to a growing share of global revenue.
What about the new government tax affecting the sector?
The financial sector remains competitive and efficient, delivering fair contributions to public revenue without needing extra taxes on existing activity. Businesses must be profitable to support growth, job creation, and social progress. About 60 percent of BBVA’s income, roughly 29.5 billion, comes from three main channels: salaries for 121,000 employees, payments to suppliers, and loans to customers. The remaining 40 percent funds taxes, shareholder remuneration, and capital strengthening to protect solvency.