Good morning, everyone. [Non-English content] Here with me today are Onur Genç, Chief Executive Officer of the Group, and Rafael Salinas, BBVA CFO. As in previous quarters, Onur will start with the presentation of group results, and then Rafael will review the business areas. We will move straight to the live Q&A session. Now, I will turn it over to Onur to begin with his presentation.
Thank you. Thank you, Patricia. Good morning to everyone. Welcome, and thank you for joining our 2021 results audio webcast. I will start, as always, directly with the pages. Page three: I will highlight some of the key achievements of 2021. First, the first line, we have made, in our view, significant progress in the execution of our strategy, focused on profitable growth, at the same time, leading the digital and the sustainability space. We have ended the year having acquired close to nine million gross new clients, an all-time record. 73% of our unit sales have been done digitally, another all-time high. We are also at the front line of the industry in terms of sustainability. In 2021, we channeled more than EUR 35 billion in sustainable finance.
Second, today we are reporting the highest recurrent results of the past 10 years. Net attributable profit, excluding some non-recurring items, is above the EUR 5 billion mark. Excellent results at operating level as well, with operating income growing at double- digit (10.8%) in constant euros versus 2020. Third, we continue delivering on our commitment to profitable growth and value creation for our shareholders; ROTCE at 12% and a strong 10.1% increase of tangible book value per share plus dividends. All of this is allowing us to significantly increase distributions to our shareholders, including a proposed distribution of a cash dividend amount of EUR 0.31 per share, the highest cash dividend in the last 10 years. We are on track executing one of the largest share buyback programs in Europe.
Last, we are on the right path to achieve the ambitious long-term targets that we announced in our Investor Day in November. These highlights are what I will be expanding upon in the incoming pages. Page number four, new customer acquisition. As always, I love this page. Our relentless focus on growing our franchise has allowed us to acquire 8.7 million gross new clients in 2021; as I mentioned, an all-time record. The share of those acquired through digital channels is also consistently increasing. As you can see in the graph, we have increased digital acquisition from 4% in 2016 to an impressive 40% in 2021. That is more than 3.5 million new clients in the year acquired through digital channels; 47% increase versus 2020.
Moving to slide number five, our leadership in digital has also proven to be essential and differential in our view. Let me put some figures to that. On the left-hand side of the slide, we have almost 40 million mobile customers, a figure 3x higher than 2016, and a record high with a 66% penetration rate. Our digital sales, I mentioned this, but it has reached 73% in terms of units and 56% in terms of value, again, record. On digital advice, we have been designing different digital journeys, financial tools in the app to improve our clients' financial health. A direct impact on our business. The users of financial health advisory tools through our app in Spain, it has an NPS customer satisfaction 90 percentage points higher than non-users. These tools— they also drive digital sales.
27% of new mortgages and also 27% of new investment funds in Spain sold; they were sold with the help of these digital advisory tools. On the right-hand side of the page, we are also investing in innovation and disruption as enablers for our growth, entering in new and attractive markets. Firstly, through selective digital bank investments like the digital bank Atom in the U.K., our own BBVA app in Italy, Solaris in Europe, and Neon in Brazil. Secondly, through venture capital vehicles, we are investing in other fintechs, Propel. They have invested in 40 companies, six of the 40, they are currently unicorns in the portfolio. Propel, I would like to highlight this once again, it has contributed EUR 328 million pre-tax income to BBVA in 2021.
Moving to slide six, we are also trendsetters in sustainability. We are at the forefront of the industry in sustainable finance commitment, and we have made great strides in this front, in my view. This year, we doubled our target of sustainable finance, granted between 2018 and 2025, our pledge from EUR 100 billion to EUR 200 billion. Now we are even outpacing this new pledge path, as you can see in the chart. In 2021, we have channeled EUR 35 billion to sustainable finance, an increase of 72% versus 2020. In addition, we are one of the very first banks to announce decarbonization targets in selected CO₂ intensive industries, as you see on the right-hand side of the page.
Lastly, I'm very happy to announce that we have scaled up one position, and we now rank first worldwide in the Dow Jones Sustainability Index. Slide number seven. From this slide on, I'm gonna walk you through the financials. In 2021, as I mentioned, we delivered the highest recurrent profits in the past 10 years. On the left-hand side of the slide, you can see the quarterly evolution of our net attributable profits, reaching EUR 1,341 million and EUR 0.19 in terms of earnings per share. This figure implies doubling the results of the same quarter of last year, but for a better comparison, is also well above pre-COVID levels, with a 30% increase versus the fourth quarter of 2019.
On the right-hand side of the slide, you can see the evolution of our annual results. 2021, outstanding year as I mentioned: profits surpassing EUR 5 billion after the long, long while, even though we generate these results from a smaller geographic scope. This figure is almost 2x higher than 2020, but again, for a better comparison, an increase of 18.7% versus 2019. These results bring our earnings per share up to EUR 0.71, again, one of the highest ever.
Lastly, let me note that for comparison purposes in all these numbers that you would be seeing, all these figures, they exclude non-recurring impacts, more specifically the discontinued operations, including the U.S. goodwill impairment that we did in 2020, and the results from our U.S. business sold to PNC, and the one-off from the restructuring costs of the collective layoff process in Spain in the coming pages. Including all these concepts, the final reported profits for 2021; it amounts to EUR 4.653 billion. Slide eight, very quickly, our tangible book value per share plus dividends closed at EUR 6.66, a strong increase of 0.1% year-over-year increase. Very positive in our view. Also noteworthy, the continuous improvement in the profitability metrics. You will see it in a second. We are growing, but we are growing profitably.
Our double-digit ROTE (return on tangible equity) and return on equity stands out. 12% ROTE, 11.4% ROE, very positive figures on the profitability side as well. Slide nine, what stands out in terms of 2021? Let me just give you the headlines here. First, the strong activity growth gaining momentum throughout the year, especially in the fourth quarter. We're gonna talk about it in a second. Second, the strong core revenues, NII and fees. I'm very happy with the evolution in these lines. Third, our further improving and leading efficiency ratio. Fourth, excellent performance of operating income, double-digit growth. We love this double-digit in operating income. Fifth, cost of risk evolving better than expectations. Lastly, our strong capital position, which we will discuss again in a second.
Slide number 10, looking at the summarized P&L of the year. The highlight, in my view, is the excellent evolution of gross income and operating income. Gross income growing 9.7%, operating income growing 10.8% respectively, driven by strong core revenues, NII and fees. Obviously, net trading income was also delivered very good numbers. Also in this page, it's important to note the positive evolution of impairments and provisions below pre-COVID levels, and largely explained not by a release and this and that, but explained by the positive evolution of the underlying risk performance of our portfolios. Very positive dynamics there. All in all, as I said, net attributable profit of EUR 5.1 billion, excluding non-recurring impacts— including all EUR 4.7 billion.
Slide 11, the quarterly evolution, so focusing on the fourth quarter and maybe the year-over-year comparisons on the page of the second column from the left. What stands out again is the impressive 31.1% increase in operating income. If you couple this with the lower impairments in the quarter, it leads to an excellent net attributable profit, a growth of 84% in that. Moving to slide 12, an important page for us in this quarter. As we have been anticipating in the previous results presentations, we are focused on growth, we are focused on profitable growth. You see on this page, the continued new loan production recovery in the year, and especially again in the fourth quarter, has been translated into loan balance growth in both segments, in both retail and wholesale, by the way.
You can clearly identify the charts, but as you can see in the page, we have grown 6.3% year-over-year in loans in the year. Obviously, very positive indications in the NII and in the fee income, and this also gives us great hopes for the coming quarter and quarters. Slide number 13, some light into the quarter, the revenues breakdown and evolution. Again, one of the clear highlights in my view of the quarter, our net interest income increased strongly versus last year and last quarter, especially boosted by the strong activity growth, as we just discussed, and also some spread improvements in countries and higher CPI linkers contribution in Turkey.
As mentioned, the NII recovery has accelerated quarter-over-quarter, leading to a significant increase of 10.5% versus the previous quarter and 16.5% year-over-year. Next on the page, extraordinary. In my view, extraordinary evolution of net fees and commissions growing 22.2% year-over-year. We see this positive evolution across the board in such a way that this is once again the highest quarterly figure reported over the past years. Net trading income on the page at the bottom continues with an outstanding performance again, year-over-year and quarter-over-quarter; all in strong growth in gross income of 22.9% versus the same period last year. Slide number 14.
I would first highlight the fact that we end the year with positive jaws, thanks to our strong gross income, and despite the costs growing at 8.5%, slightly higher than the blended inflation rate in our footprint. You know us, we typically deliver lower cost growth than blended inflation. In this year, in these quarterly numbers, the increase of expenses is largely affected by the normalization in variable compensation. You would remember this, which was especially low and even non-existent for certain roles in 2020 due to COVID. There's a clear base effect here. Then the results of 2021 obviously was very good. In fact, if we exclude the variable compensation effect, so if we neutralize that line, expenses would have increased 3.6%. Again, much below inflation, our typical trend.
As we expect also that trend to continue in the coming year. In the middle of the page, you see the improvement in the efficiency ratio, the best compared with our European peers, and we continue to improve on this best position. We have improved our efficiency ratio to 45.2%, improving 53 basis points in the year. Slide number 15 on risk indicators, solid performance. Good performance of total impairments in the quarters, more aligned and even better than the pre-COVID levels in absolute terms. This is again mainly explained by the positive evolution of the underlying risk performance of our portfolios in most of our geographies. We have done some prudential provisioning in the FX commercial portfolio in Turkey in the fourth quarter. In terms of the underlying risk parameters, we see a very positive picture.
The numbers that you see does not include any release or buffers and this and that. No, these are underlying risk parameters showing resilience and strength. Year to date, the cost of risk closes at 93 basis points, significantly better than initial expectations, versus the 155 in 2020, and also comparing very positively with 2019 levels of 104 basis points. Regarding the rest of the asset quality indicators, we see a slight increase in the NPL ratio in the quarter to 4.1%, while our coverage ratio decreases to 75%. This is explained by the implementation of the New Definition of Default guidelines of the supervisors. We have made this decision for financial books in order to be aligned with the solvency and prudential rules of the supervisors.
As you know, it is more conservative in comparison with IFRS 9 approach when classifying the loans to stage 3. As a result, the numbers are showing a slight increase in the NPL. In fact, if we exclude this New Definition of Default impact in accounting, NPL and coverage ratios would be standing at 3.8% NPL, a decrease, and 80% coverage ratio. Slide 16. As we have repeatedly stated, we have a clear focus on value creation for our shareholders, which guides all of our decisions. In this regard, we have recently made some important announcements, as you all know.
On the one hand, we raised our policy regarding distributions to shareholders to a payout ratio of between 40%-50% of our profit; as you remember, an increase in the payout ratio. As you can see in the left-hand side of the slide, I'm very happy to announce that the proposal to be sent to the next AGM foresees the distribution in cash of EUR 0.31 per share from 2021 results, of which EUR 0.23 per share will be payable in April, complementing the EUR 0.08 we already paid in October 2021. This is the highest dividend per share in cash in the past 10 years.
The total amount to be distributed, it corresponds to a payout of 44% of the net attributable profit, including the BBVA USA results and the net impact from the restructuring process in Spain. Additionally, as you all know, we announced one of the largest share buybacks in Europe for a maximum amount of EUR 3.5 billion. We have already executed 60% of the first tranche of EUR 1.5 billion, and we will start the second tranche of EUR 2 billion as soon as the first is fully executed, estimated to be in March. We will start immediately the second billion in March. We expect that to last another four months or so. We will be closing at the end of second quarter, third quarter, beginning of the third quarter.
In sum, we have increased significantly our shareholders distribution, EUR 5.5 billion in total, considering the EUR 2 billion of dividends and the EUR 3.5 billion of share buyback, which if you combine them both, it represents roughly 15% yield over BBVA's market cap. Slide 17, our capital position. Our CET1 fully loaded as of December 2021 stands at 12.75%. This level is 415 basis points above our recently received— it was actually two days ago or yesterday— SREP requirement of 8.60% for 2020, which remains stable. On the evolution in the quarter, let me first highlight that December 2021 ratio, it includes the deduction of the EUR 3.5 billion share buyback program, which has an impact of 130 basis points. The results add 44 basis points to the ratio.
The dividend accrual and the AT1 coupon payments, it is attracting 26 basis points. This reflects the higher final payout of 44% versus the 40% that we have been accruing through during the year. An additional six basis points impact here because we wanted to pay higher dividends to our shareholders. Additional six basis points impact coming from here. Besides that, this quarter, the capital evolution is mainly explained by the RWAs increase, detracting 49 basis points. The most relevant RWA impact, around 60% of it or 29 basis points, is explained, in my view, by a very good reason, the strong credit activity growth across the board. We have discussed it; aligned with the 4%, close to 4% loan increase only in the quarter, only in the fourth quarter.
Growing, but as I mentioned, growing profitably. As demonstrated also by the improvement in our profitability metrics in the quarter. 29 basis points goes to credit RWAs. Additionally, the strong gross income evolution in the year has had a direct implication in the operational risk capital consumption, whose calculation is, you might know, is updated once a year in December, and as you know, is positively correlated with the revenue performance. Better gross income has led to higher operational risk RWAs. This explains nine basis points. Finally, RWAs have also been affected by market risk related RWAs, which explains 11 basis points impacted mainly by Turkey and the CDS levels in Turkey and so on at the end of December. A good part of this is already reverted or will be reverted in the first quarter.
Lastly, the bucket of others of 12 basis points, you see it in the details in the footnote, but many other components come in there. Finally, slide number 18. On our long-term targets announced in the Investor Day, let me just save time, I will not go into each one of them, but what I can say clearly, that we are very well-positioned to achieve them all, and you will see the trends in the page, so we are very confident on the path that we are on to achieve our goals in the middle and long term. Now for the business areas update, I turn it to Rafa. Rafa?
Thank you very much, Onur, and good morning, everyone. Let me begin with Spain, slide 20. Positive loan growth close to 2% year-on-year in 2021, driven by a continued growth in the most profitable segments, consumer lending and SMEs, an improvement in mortgage portfolio delinquency rate, and a progressive recovery in the commercial segments, accelerating in the last quarter of the year. For 2022, we expect a slight growth in performing loans in Spain, with consumer loans to continue growing at high single digits. Going to the profit and loss account, in 2021, pre-provisioning income grew 14.5%, thanks to core revenue growth and higher contribution from the net trading income.
Core revenue growth was delivered by the strong performance of fees, growing above 20% in the year, with growth in all headings, mainly in those coming from asset management, banking services and insurance after the JV with Allianz. Expenses decreased slightly in 2021, reflecting our continued cost control effort that have offset the increase in the variable compensation as activity and result continued to recover. In any case, we should keep in mind that expenses, compared with our normally low 2020 and when compared to 2019, they have declined by 7%. All in, we can see a very positive growth in Spain this year that lead to an improvement in the efficiency ratio of 3.4% to 51.1% ratio in 2021. Sound asset quality ratios with cost of risk down to 30 basis points in 2021, in line with expectations.
All in all, very good results with net attributable profit in Spain above pre-COVID, (pre-COVID) levels. For 2022, in terms of the P&L guidance we expect in Spain, NII excluding TLTRO, flat to slight growth. Net fees and commission flat, consolidating 2021 outstanding levels. Expenses to decrease in mid-single digits and efficiency improving, and cost of risk around 30 basis points. Slide number 21, moving to Mexico. In the loan portfolio, growth accelerate gradually, ending the year at 6.5%, in line with expectations. Retail segment drove loan growth with an outstanding performance in mortgages, credit cards and SMEs, while commercial segment performance improved in the last quarter, reaching a 3% growth quarter-on-quarter. For 2022, we expect the loan portfolio in Mexico to grow at mid-single digit.
In terms of the P&L, net attributable profit increased 43% compared with 2020, thanks to the good performance of core revenues. Net interest income evolution was favored by the loan growth mentioned and by the improvement of the customer spreads, thanks to our effort to reduce deposit costs and the improvement in deposit mix. For 2022, we could see NII growing at high single digit. Also on the core revenues, a strong fee growth driven by the recovery of activity and higher transactionality. On the other hand, expenses grew 10.9%, mainly explained by variable compensation normalization linked to the recovery of activity and results. In fact, excluding the increase in the variable compensation in 2021, expenses in Mexico would have increased by 5.9% year on year, in line with the aggregate inflation of 5.7%.
All in, the efficiency remains at very sound levels at 35% in 2021. For 2022, we expect expenses to grow at mid-single digit with positive jaws, resulting in improvement of efficiency ratio aligned with our long-term 2024 target. In terms of asset quality, we see a slight increase of the NPL ratio and a reduction of the coverage ratio explained by the fact that we have already implemented EBA's New Definition of Default for accounting purposes. With no significant impact in terms of cost of risk. In fact, there is a continued improvement of the cost of risk throughout the year, supported by good underlying trends on the loan portfolios, ending at 267 basis points in 2021. For 2022, we expect cost of risk at the end of the year below 300 basis points, in line with our long-term target.
Slide 22, Turkey. Starting with activity, TL loans have grown significantly in 2021, with double-digit growth in both retail and commercial segments. While foreign currency loans declined year-on-year, in line with our strategy to reduce foreign currency loan exposure. For 2022, we expect TL loan growth of above 25%, and foreign currency loans to continue declining. In terms of P&L, gross income grew 25% in 2021, with a strong performance across the board. Continued improvement of the NII in the year, accelerating in 4Q, thanks to the TL loan growth and improvement on the TL customer spread, and a higher contribution for the CPI-linked loans. For 2022, we expect NII to grow above the growth of the TL loan portfolio.
Excellent performance in fees, mainly driven by payment systems and the higher activity when compared with 2020. A strong net trading income in the year, mainly due to a higher contribution from global markets and a better foreign currency results, favored by market volatility. On the other hand, expenses growth is impacted by high inflation and the Turkish lira depreciation. All in, efficiency remains strong at 29.5%, and we expect efficiency ratio to improve in 2022. Impairments significantly declined in 2021, impacted by the front-loaded provision booked mainly in the first quarter of 2020, and the very good underlying performance trend of the different portfolios. In the fourth quarter, we have booked higher impairments versus the previous quarter, mainly driven by our prudent risk assessment of foreign currency sensitivity wholesale clients, increasing their coverage.
All in, cost of risk stands at 133 basis points in 2021. For 2022, we expect the cost of risk to be around 150 basis points, although macro uncertainty remains high. Finally, slide 23, moving to South America, we provide some color on the main countries. In Colombia, the loan portfolio grew, thanks to a good performance of both retail and commercial segments. On the profit and loss account, the net attributable profit increased 45.4% compared with 2020, driven by core revenues growth and lower impairment figure. In Peru, the loan portfolio benefited from improving economic conditions, which reflected mainly in the retail portfolio that grew above 8% in 2021. The strong core revenue growth, the positive jaws, and the lower impairments explain the increase of 28% in net attributable profits.
Lastly, Argentina shows a positive net attributable profit contribution to the group of EUR 63 million, despite a higher inflation adjustment, thanks to the net interest income growth favored by the higher securities portfolio contribution, and fees growth favored by higher transactionality. For 2022, and for the region, we expect loan growth in line with 2021, an improvement in efficiency aligned with our long-term goal, and cost of risk below 200 basis points. All in, very good solid results in all our franchises, levered on core revenues growth and higher activity levels, together with very positive trends on the asset quality side, leading to a significant reduction of the cost of risk across the board. Now back to Onur to highlight the main takeaways on 2021 and outlook for 2022 results.
Perfect. Thank you, Rafa. We have this goal of finishing our presentation by 10:00 AM, so I will skip page 25 and jump into page 26, which is the outlook for 2022. At the group level, really simple. Core revenues, we are expecting them to grow around double digits, maintaining our strategic focus towards the most profitable segments, as you would also see in the growth that we have been showing this year in different portfolios. On costs, we expect the growth to be less than inflation and efficiency to improve across the board in all the countries. Cost of risk is expected to be around 100 basis points, slightly better than pre-COVID levels. Lastly, sizable distributions to our shareholders will continue in 2022, with the full execution of the EUR 3.5 billion maximum share buyback, before October.
Again, we expect it to be lasting four months, and we expect to start the second wave in March. With this, I conclude the presentation. I go back to Patricia for the Q&A. Patricia.
Thank you, Onur. We are ready now to begin with the live Q&A session. The first question, please.
If you wish to ask a question, please dial star one on your telephone keypad. Please be informed that in order to assure audio quality, we recommend that all questions are asked from a landline. Thank you. The first question comes from Maksym Mishyn at JB Capital Markets . Máximo, your line is open.
Hi. Good morning. Thank you for the presentation and an opportunity to ask questions. I have two, if I may. The first one is on Turkey. I was wondering if you could update us on the approval process for the Garanti bid, and what acceptance rates from minorities would you consider as a success? On Mexico, I was just wondering to hear your view on sector consolidation. Would you favor domestic consolidation or a new entrant in the case of potential acquisition of Banamex? Do you think that it is possible BBVA could become one of the bidders? What timeline for the process do you expect? Thank you.
Perfect. Thank you, Maksym. Very quickly, Turkey approval process, it's in its path. It continues. We guided when we announced it back in November, that it will be in the first quarter of 2022. That's still the expectation, so the regular approval processes continue. You asked about the acceptance success, what do we expect and so on. As again, we mentioned back in November, we are happy with any outcome on that one. We would be happy to get it all. Or, as you know, we own 49.85% of shares in Garanti BBVA today, and then we pass the 50%.
If you get another 0.15% of the shares, we pass this important threshold of 50%, which gives us flexibility, a big optionality for the future of getting shares without the full tender. We respect the market. We do think that our offer is an attractive one. Whatever the outcome, we will be fine. We will be happy with any of the outcomes that might be coming out. You asked about the consolidation process in Mexico. Obviously, we don't comment on potential transactions and who might buy, who might not buy, and so on. The only thing I can tell you is when you look into our results in the last few years and even today, for sure today, Mexico is so important for BBVA as a country, as a business, as a franchise. We will continue.
Whatever happens, whoever buys, whatever happens, we will continue to invest, and we will continue to grow in the country. We do have the best franchise in the country, in my view. By far, I'm a very quantitative, numbers-focused person, and I look into ROEs and I look into NPS, customer satisfaction, I mean, efficiency. Whatever number that I look into, I see an amazing franchise of BBVA in Mexico. Our goal would be whatever the outcome of this process is, we will continue on that path.
Thank you, Maksym. Next question, please.
The next question comes from Benjamin Toms at RBC. Benjamin, your line is open.
Good morning. Thank you for taking my questions. The first one's on Turkey. Inflation data is out today, and the official estimates of inflation is running around about 49%. People keep track of this number due to its potential implications for hyperinflationary accounting, which would be unhelpful for the valuation of the Turkish franchise. When you talk to your accountants, I'm just interested, when you talk to them about Turkish inflation, do they focus on the official estimates or do they also take into account unofficial estimates which tend to be higher? And then secondly, can you just give us an update on your digital push into Italy? Thank you.
Very good. Thank you, Benjamin, for both questions. On the hyperinflation in Turkey, first of all, it's a decision of the accounting board. The accounting board decide on this. It's not like us. They look into multiple metrics, so it's a decision of an external party. As you know, the decision-making on this is that the three-year cumulative inflation, if it exceeds 100%, then it gets into a pool of discussion and decision. It's not an automatic decision. Many other factors are accounted. If you look into the details, for example, the evolution, the trend of the inflation, and so on. I mean, whether the population keeps their wealth in non-monetary assets.
It's a long list of different criteria, but for that criteria to be discussed, as far as I understand, the board first considers whether the three-year cumulative inflation is above 100%. There's one good news on this one, which came three days ago, I think. For 2022, the accounting board decided that hyperinflationary accounting will not be applied in Turkey, so 2022 is clear. For 2023, let's see. This 49% that was announced today, this morning, actually, was expected. It's not a surprise, actually. Our BBVA Research team, they expect this to continue for the next few months and quarter, actually quarters. They see a tempering in inflation in the third and the fourth quarter and so on.
To cut a long story short, 2022 is safe. 2023, it's not an automatic decision. It's the decision of the accounting board to look into this. As far as we understand, beyond the cumulative 100%, which might be broken in this case, the trend is an important parameter here. If we see a declining trend in the quarterly, monthly inflation in the coming quarters and months, it might still be the case that 2023 and beyond, there will not be hyperinflationary accounting. The Italy venture, we did quote a number back in the Investor Day. Around EUR 25,000 was the expectation for the two months that we were in Italy.
What I can confirm to you is that 25,000 customers is reached. As I mentioned when we first discussed this all together, our focus in Italy at the moment, my clear guidance to the team who's working on BBVA Italy, is not the pure customer numbers. It's very easy to boost those numbers, trust me. What matters is whether those customers see us as a different bank, as a quality bank, and gives us that higher NPS, higher customer satisfaction scores. That's what we will be focusing on. The trend that we have seen, which is a very good trend, much better than our expectations, as I said in the last quarter of the year after we launched in November, that trend continues in the month of January.
We are very happy with the customer acquisition trend, but I would reiterate once again that our focus, especially for the first year or two, is gonna be on the quality and on the customer satisfaction.
Thank you, Benjamin. Next question, please.
The next question comes from Alvaro Serrano at Morgan Stanley. Alvaro, your line is open.
Good morning, everyone. Thanks for taking my questions. I've got one on capital and another one on costs in Spain. On capital, I'm just trying to get my head around, because I remember in Q1 2020, capital also dipped and then it bounced back. Obviously, the market element, those 11 basis points that you've called out, presumably we can hope, and that's the kind of question, we can hope that comes back. But I want to focus on the 29 basis points. Onur, you mentioned that it was strong activity in credit growth, kind of a good problem to have. But the reality, or at least my perception is a lot of it is a very strong growth in Turkey, obviously related to the inflationary situation.
Ultimately, that's despite the returns are high, they're high for a reason, and the PE multiple the market's paying very, very low. Can you sort of confirm that that's the case? If you are deploying more capital, you know, de facto in Turkey organically, wouldn't it be more sensible to cut back on lending at this point? That was on capital. Sorry. Very quickly on costs. In Spain, I think Rafa said mid-single-digit% growth in costs in Spain, and that's despite the EUR 250 million cost savings that you achieved with the restructuring. I just wanna understand what's going on because salary inflation is not that high in Spain, and my understanding is the collective bargaining agreement reached until 2023. I get your point about variable pay, but just a bit more explanation around that figure if I've got it correct. Thank you.
Perfect. Thank you, Alvaro. Rafa, maybe you take the second one. On the first one on capital, Alvaro, very good question. Your deduction of a good part of this is coming from Turkey is wrong because the Turkish loan book increase, you see it also in the presentation. When you look into different countries and so on, this is in Turkish lira. The page number 12 of the presentation that we have seen, the number that you see for Turkey is actually declining in the fourth quarter. This capital evolution, 29 basis points, is the fourth quarter number, the fourth quarter evolution that we are looking into. Not at all, because this is in Turkish lira, and then it depreciated in current euros. The capital consumption is not coming, not at all from Turkey.
It is coming from, if you go to the country pages that again you have in the presentation and that Rafa explained, in Spain, we have grown our, what we call BEC, mid-size companies segment. We grew our loans in mid cap 10%. Stock growth of 10% in Spain, in my view, is an amazing number. The other portfolio that you see in Spain that has grown is 9% consumer business, consumer lending. You know the yields there. Our average yield is around, customer yield is, lending yield is 6%. These are very high return portfolios. The other key portfolio that has grown in the quarter is if you go to Mexico.
You see credit cards, 13.4% year-over-year growth, and you can compare that with the previous quarter to deduct also very quickly the quarterly figures. SMEs, 15% growth. Our growth is coming from areas that, where we wanted to put capital. I'm very clear on this. We only grow. We have this, I mentioned this to some of you or all of you, I guess, in one of the results presentation. We have this micro capital planning process. You have to show as a business unit, even as an RM, if you are a corporate or mid commercial RM, you have to show that the lending that you do to a business, to a client, to a customer, or at the portfolio level, if it's retail, it has to deliver a certain return.
We adjust that certain return to the realities of where we are, in which country we are, in which portfolio we are, and so on. That's a micro capital planning process that we have in the bank. You cannot grow in areas where the capital return is not above the cost of equity of putting that capital in there. As a result, basically, you see it in the figures, the growth and this 29 basis points, I am very happy with that 29 basis points because it came from areas where there is a local capital return. On the Spain question, Rafa.
In Spain, Alvaro, I think the guidance for 2022 is just a decrease on the expenses at mid-single digit. The fact is that, as you mentioned, clearly, the restructuring program is going to provide a saving of EUR 225 million on a 12-month basis in Spain and an additional EUR 25 million at the corporate center. At the end of the day, these EUR 250 million are going to allow us just to decrease the expenses in Spain in 2022. Regarding 2021 number, in fact, I think some savings were already included. I think it was EUR 66 million in 2021, and around EUR 16 million, I think, EUR 9 million in the corporate center. That compensates the increase on the variable remuneration, given the good results. For 2022, as I said, the guidance is a reduction of mid-single-digit %.
Thank you, Alvaro.
Maybe Alvaro, maybe it's also important to confirm that when we did the collective savings, the restructuring program in Spain, the ERE, we committed EUR 250 million savings a year for the program. We can confirm to you that the EUR 250 million still holds.
Thank you, Alvaro. Next question, please.
The next question comes from Sofie Peterzens at J.P. Morgan. Sophie, your line is open.
Yeah, hi. Here is Sophie from J.P. Morgan. So I was wondering if you could update us on your hedging policy, especially for Turkey. Could you kind of give an update on how much of the profits on capital in Turkey has been hedged? How much you have paid for these hedges? And similarly, could you also update us on the hedging policy for Mexico? And then the second question would be on Turkey again. Net interest income is very, very strong in the fourth quarter. And I know you said NII will grow higher than TL loans in 2022. But kind of what are your underlying assumptions, like, kind of for Turkey, and how do you see things evolving from here? Thank you.
Perfect. Maybe, Rafa, again, you can take the guidance for 2022 on Turkey. On the first question, the hedging policy for Turkey and Mexico. As you all know, we do have this 30%-50% of our incoming year profits to be hedged in the P&L level. As you also know, we also hedge the capital. 60%-70% every year, we hedge the excess capital of respective subsidiaries that we have. This P&L hedging, it's a flow hedging, obviously 30%-50%. We have done much more than that in the previous years because we wanted to be a little more cautious, and the markets were also helpful and friendly on that one. We have done more, but the 30%-50% is our policy.
What we typically do is that we start hedging for the incoming year in the fourth quarter of the previous year, and we typically complete get to those levels, again, depending on the market situation, in the first quarter of the respective year. Having said this, given this whole policy, as it stands today, the 65% of the results of Mexico is hedged, 65%, and 20% of results in Turkey is hedged. Also for Peru and Colombia, basically it's all hedged, 100%. The reason that it's 65% in Mexico, 20% in Turkey as it stands now, again, we are every day dynamically evaluating and increasing and decreasing if we need it. It depends on the market conditions.
The key thing here is the cost of the carry, the cost of the hedge, the cost of the carry. We have to look into the market conditions, we have to lay our perspective on what might be happening with the costs, and we adjust accordingly. That's the policy, and that's where we are as of today. On the Turkey NII, Rafa?
On Turkey, I mean the guidance, as you say, you have seen is that, the book, the loan growth is going to be around 25%. Clearly, bias in favor of the TL book growing around 39% on retail and 16% on commercial. On the other hand, we, I mean, keeping our strategy to continue the reducing or declining the foreign currency loan portfolio, we are expecting that book, the U.S. dollar-denominated loan book, to decrease around 13%.
Thank you, Sofie. Next question, please.
The next question comes from Ignacio Ulargui at BNP Paribas. Ignacio, your line is open.
Thanks very much. Thanks for taking my questions. I have two questions. One is on capital. I think Onur, during the Investor Day, you flagged that you were expecting the bank to generate around EUR 1.2-EUR 1.5 billion of capital every year. Wanted just to see whether that is pre or after RWA growth, and what kind of RWA growth we should expect into 2022, just to get a bit of sense of the organic capital generation of the bank. Second question is on Mexico. We have seen a strong growth in SMEs and cards in 2021. I w as wondering, in the mid-single-digit growth guidance, which are the segments that you are just sort of like expecting to grow faster, and also whether you are taking into consideration current market expectations of rate hikes in Mexico.
Perfect. Thank you, Ignacio. On the capital, yes, EUR 1 billion-EUR 1.5 billion organic capital generation. This does include, for sure, the RWA growth because it's a bit driven by us, and we know how the markets will evolve, so it's more estimable and calculatable. It does not include the regulatory and supervisory impacts and also M&A, because they are one-off things, and you cannot judge sometimes. It's a bit unexpected and this and that. The regulatory supervisory impacts and M&A is not included, but everything else is included in our capital planning with those RWA estimates that we have increased, estimates that we have. We do create EUR 1 billion-EUR 1.5 billion average, depending on the payout in the coming years.
The Mexico question, the growth is still gonna be biased towards retail. Retail has been the driver for many years, and also last year, 9% growth in retail balance is very high return books. We do have amazing competitive advantages, let's say, in that segment. I mean, I did mention it before. We do measure the success or the strength of our franchise with the relationship on the cash management side, on the daily banking side that we have with our clients. On retail, it's about payroll, it's about credit cards, and so on. In the case of companies, it's about cash management and so on. Using technology tools to be able to provide those services to the clients.
In the case of retail, we have close to 40%, four zero, in terms of salaries paid, volume of salaries paid, 40% market share in Mexico. We do think that that's a great competitive advantage, and that helps us in gaining further market share in retail credit cards. We have gained a huge amount of credit card market share this year, and we will continue on the retail growth. Biased towards retail. We will see how the investment demand will be on the enterprise side, on the company side. We are in, at least in the plan that we have, we are putting more focus on the retail side.
Thank you very much, Ignacio. Next question, please.
The next question comes from Marta Sanchez Romero of Bank of America. Marta, your line is open.
Thank you very much. I've got a couple of follow-ups in Mexico. Can you be more explicit on what are you expecting for interest rates this year, CPI and GDP growth? Then if you can give us more color following Nacho's question, how do you see the year starting for SME and corporate demand? Do you expect growth, any growth this year in that book? Just quickly, sorry, on fees in Spain, if I understand correctly, you're guiding for just flat, which seems a bit weak relative to the guidance given by other banks in Spain. What is driving that? Could you split banking fees versus asset management fees? Thank you.
Perfect. Maybe Spain you can take, Rafa. Very quickly on Mexico, the interest rate, 5.50% was the end of the year, as you know very well, Marta. We are expecting that 5.50% end of year to go up to 7%, so 150 basis points. That's what BBVA Research is estimating on what might be happening driven by inflation. So 150 basis points increase in the rates. As you very well know, we are asset sensitive in basically all of our geographies, including Mexico. Our NII is positively correlated with the rate rises, so we will hopefully get some help from this as well.
Regarding the other macro parameters that you ask, the GDP growth that BBVA Research is expecting for Mexico for the coming year is 2.2%, lower than obviously this year, lower than potential in our view, but this is. Let's see. I mean, it's a bit, the supply chain bottlenecks and all of that will feed into this, but 2.2% is the current expectation. Inflation expectation that we have for Mexico for 2022 is 4.1% average. This year, we expect it to be 7.4%, the final number, and next year, 4.1%. Regarding the loan growth, do we expect loan growth to happen in SMEs and commercial? The answer is yes. You were asking whether it can be negative. Our clear expectation is it will be positive.
You see, I mean, even this year, the SME book has increased by 15%, not purely because of the market. We are gaining market share. The reason is that SMEs is a segment that we like across the board. We do have a clear program on it globally. We did create what we call Banco de Barrio, a very strategic program in Mexico, and we are getting benefits from that program. That program is gonna continue to give us positive growth in lending balances for both SMEs and I would say what we call the back, mid, corporate, mid-companies segment as well. Rafa, on Spain?
On the fees in Spain, I think this conservative guidance that we are providing for 2022 is based on, first of all, in the outstanding performance with the fees in 2021, clearly with a very high levels. Second, we want to be conservative on the contribution of the asset management related fees, given the very good performance of the markets in 2021 and the uncertainties clearly in 2022 in terms of markets. Underlying, I think we continue seeing very solid dynamics in terms of activity, especially on those fields related with rationality and activity.
Thank you, Marta. Next question, please.
The next question comes from Andrea Filtri at Mediobanca. Andrea, your line is open.
Thank you. First question on fees, if you could give us the contribution of upfront and performance fees in fee income in 2021 and in Q4. The second question is on the NII and cost of risk guidance. Could you disclose what a bsolute contribution from ALCO portfolio, you are assuming in 2022 versus 2021. In the cost of risk guidance, if you could detail if you have any assumptions of write-backs from COVID overlay provisions. Finally, if you can just remind us of the TLTRO maturities. Thank you.
Perfect. On the fees question, Rafa, if you have it, please state, otherwise, we can come back to you, Andrea. On the NII and ALCO portfolio contribution to NII, the ALCO contribution, we didn't increase the contribution of ALCO yet. We wanted to see the markets before we can decide on anything. We kept basically our ALCO book in the planning cycle, at least. It is changing. We might change that decision in the coming months, depending on how the yields evolve. We kept the ALCO portfolio size relatively flat and replacing the ones that are expiring, but not doing much beyond. You might have seen that our HQLA portfolio, it's in the backup of the presentation as well. Our HQLA portfolio have come down. We had a very short-term HQLA portfolio to manage the liquidity, basically.
We have been holding on the decision to increase our ALCO book until we see the yields tick up a bit, let me say it that way. We are seeing some of that, but again, in the planning cycle and in the forecasts, in the guidance that we have received, we have not put an additional incremental, materially incremental contribution from ALCO books. On the cost of risk guidance that you are seeing, we will see how it evolves, Andrea, but we do have these. I don't wanna call them buffers because they are there for a reason, but we have built up some COVID-related, let me call them buffers, it's fine, it's the easy word to use. A big chunk of that was for Spain.
We wanted to see how what we call the ICO loans, the government-guaranteed loans behave, because some of those loans were given two years ago. They are gonna be coming online starting in the second quarter of this year, especially starting April, May period. EUR 2 billion expiration, for example, in April. We see very positive signals in that portfolio, so no problems whatsoever. Very positive signals helped by the overall development of Spain, overall, contribution maybe coming also in the Next Generation EU would help in the coming year. Given the economic situation, we see very positive signals in that portfolio.
We did create some what we call post-model adjustments or management adjustments for that portfolio, for that ICO portfolio, and we will only release those once we are comfortable with what we see after the expiration of these loans. The carencia period, as we call it in Spain, which is the you don't pay for the principal, there's a non-payment period. Until we see that non-payment periods expire and we see the loans behave in the way that we like them to behave, then we can consider releases. The guidance that we have given does not include any positivity from that discussion yet. We have to see the second quarter before we can comment on this. The guidance is the business as usual that you would be seeing. On the TLTRO, we have EUR 38 billion in total.
Rafa, maybe you have the details. Maybe, Rafa, you are the best to answer this in terms of the maturities of the TLTRO.
Sorry, Onur, I didn't follow you because I was-
The TLTRO, the TLTRO maturities, the 38. The EUR 11 billion is expiring this year, and in the next year and a half, all of that will be expiring, the EUR 38 billion, basically. I answered it very quickly. On the fees, on the performance and success part of it. Do you have any details on that, Rafa?
Okay. On the TLTRO, I mean, the relevant maturity is in June 2023, with EUR 21 billion, but way before that, we have EUR 7 billion by the end of the year, and another-
EUR 7 billion
...[audio distortion] billion at the end of the first quarter of 2023. In terms of the composition of the fees in Spain, I mean, Andrea will provide you with more detail, but just what I have in mind is just the fees for asset management is around EUR 900 million in 2021. Around EUR 70 million or EUR 73 million out of those EUR 900 million are performance fees related with the behavior of the markets below the funds.
Thank you very much. Next question, please.
The next question comes from Carlos Peixoto from CaixaBank. Carlos, your line is open.
Hello, good morning. Thank you for taking my question. First question would actually be a follow-up on one of the early questions, which is regarding Banamex. I was just wondering, because it didn't came out clear to me whether you see yourselves as a potential bidder for this unit, or whether you think that given your size in the country, it wouldn't make sense to acquire it. If you see yourself as a bidder, how would you think this, the deal could be structured? I'm asking here whether you could have to finance it through a capital increase. Secondly, in terms of outlook, I was— Well, fees in Mexico in the fourth quarter have a non-exciting performance, so let's call it that way. I was wondering how do you see the trends going forward, and what type of restrictions you see in fee income evolution in Mexico? Thank you.
Very good. Carlos, on Banamex, we don't comment on potential transactions. We don't. I mean, we don't know even how the transaction will be structured, in what way, form, or so on. So we don't comment on the potential transactions. On the outlook for Mexico, on the fee income, the fee income for the fourth quarter was partially a bit affected by the CIB situation, and that might, as you know, that's a very volatile or quarter-to-quarter different performance. We are very positive on the fee income evolution in the coming quarter. As you know, a large part, the majority actually, of the fee income in Mexico is driven by what we call payment systems. Overall, the credit cards and POS and so on, and we see very positive dynamics there. Very positive dynamics. Hence, the numbers will be strong, might be even in 2022.
Thank you, Carlos. Next question, please.
The next question comes from Carlos Cobo from Societe Generale . Carlos, your line is open.
Hi. Thank you very much for the presentation. Can I please ask you to clarify the TLTRO3 impact in NII in Spain? We have the total TLTRO3 number, but if you could just clarify how much of that is Spain and what is the step down? Just to follow up on that previous question, which I think it was the focus. For me, one on tangible book value per share, if you don't mind explaining the performance in the quarter. I was expecting some drops driven by the Turkish lira depreciation, but it actually went the other way around. I was wondering if the capital was hedged in excess of the capital surplus, or how did you manage to offset that currency impact in TNAV?
Also, if you could guide us to what is the total expected hedging cost to be booked against capital in 2022, what's gonna be the size and how that compares with 2021 due to the higher cost in Turkey. Thank you.
Very good. Maybe the last one we can get, Rafa. On the first one, on TLTRO, Carlos, EUR 97 million is the expected hit for the expiration of TLTRO minus 100 basis points impact. It's gonna be 97 basis points, to be precise, million impact in net interest income. As you all know, there is this discussion of increasing the tiering multiplier, which we will, I presume, know in the March meeting, so we will see in March whether that tiering multiplier is increased. That might have a positive impact. Independent of that decision, though, the expiration of the program in June 2022 has an impact of EUR 97 million for the year in net interest income. Tangible book value per share. We actually have increased 1.6% in the quarter.
You should know that 0.3% of that was due to accretive impact of the share buyback program. At the end of December, a certain part of the shares were obviously purchased. We started in November, as you know, November to end of December, we acquired some shares. As you know, we are acquiring shares at lower than tangible book value. As a result, you create some accretive impact in tangible book value per share. That's only 0.3%. The other 1.3% or the 1.6% is basically helped by the profits. I mean, we have more than EUR 1.3 billion profit in the quarter, and that's the key core positive impact for the numbers. What's the third question, Rafa?
In terms of the planning, what we do is just to take into consideration the interest rate differential between the different currencies. At the end of the day, we are just including on our planning process the current, all the hedges, all the P&L go against P&L, and all the hedges against capital go against the capital base.
Thank you, Carlos. Next question, please.
The next question comes from Ignacio Cerezo at UBS. Ignacio, your line is open.
Hi, good morning. Thank you for taking my questions. I've got two. If you can give us your best approximation of how much RWAs are gonna grow in the year, if a mid-single digit number is a reasonable ballpark for you. The second one is on the capital return. Do we need to work with the 50% payout ratio, or do you think there is a space for extra dividend or another buyback actually on the back of 2022 earnings? Thank you.
Okay. Let me start with the second one. When we sold the U.S., it was all triggered by that. It was a big decision, obviously. In that time, we said we will do a few things to be able to create value for the shareholder. I underline this, create value for the shareholder. We said we will be investing in profitable growth in the markets that we are in. That's what we are doing, as you see in the figures, and we will be increasing the distribution to our shareholders. The EUR 3.5 billion, it's one of the largest share buyback programs that has been announced in Europe, and we increased our payout from 35%-40% to 40%-50%.
Depending on the different opportunities that would be coming, and all of those opportunities will be connected under this umbrella theme of we will create value for the shareholder, and whichever is the better return-generating alternative, we will invest in that, in that alternative. That's our guidance on this one, Ignacio. I will not comment to you, we will do this or that until we see how the situation evolves. We are in the process of some of the largest buyback programs and increases. We are paying the largest cash dividend that BBVA has seen in the last 10 years. We will continue on our path, see how different opportunities come around, and depending on that, obviously we will continue to create value for shareholders.
I'm giving you a very high level answer, but it's very important that you understand, everyone understands that our key driver in any of the decisions that we take is that value creation. If we cannot find great value creation opportunities, obviously we always return it back to the shareholder as we have been doing. Regarding RWAs growth, mid-single digit, you are saying that's the activity. The RWA growth, it depends a bit on the portfolio on where we grow. Given the fact, it's gonna be less than that in my calculations. I would revert back to the number that we said in the previous questions.
In the next 3 years-4 years, on average, after RWAs, after the growth, you would see that we would be delivering EUR 1 billion-EUR 1.5 billion in capital, organic capital generation in the coming years on average. The RWA growth, the 29 basis points that we discussed today, we would expect some of that to revert back also in the first quarter, because some of that was end of year. There were some factoring deals, very short term, obviously end of the year. Given end of the year, many other banks did not show interest in them, but they were very high return deals. They were with our good clients, so we wanted to get engaged in them. Those factoring short-term deals have expired, so you would also see some of that returning back.
You would also, as I mentioned in the presentation, the market risk related RWAs, it was mainly related to the CDS levels of Turkey being very high at the end of the year. Those numbers have already reverted back. In the first quarter of 2022, you would see up to 15 basis points reverted from the RWA inflation that you have seen at the end of 2021.
Thank you, Ignacio. Next question, please.
The next question comes from Fernando Gil de Santivañes at Barclays. Fernando, your line is open.
Thank you very much. Two questions please from my side. First one is, if you can refresh the capital impact on Turkey acquisition if we are assuming 100% take up and today's currency levels. This is one. The other one is on CPI linkers in Turkey, and the link to this higher inflation that we are seeing. What should we expect for this line in 2022? Thank you very much.
Very good. On the first question, Fernando, the December 31 impact that we have from the OPA, if 100% is taken, is 32 basis points. As we mentioned, we don't know the take up. It can be much less than that. It can be in the middle, 100%. The total impact we are talking about, the latest number is 32 basis points. The CPI linkers, what do we expect? We will see. We did our budget with a much lower figure, but after also today's figure, this morning's figure of 49%, we will see. You should know that our CPI book in Turkey is EUR 2.3 billion. Every 1 percentage point in inflation has an impact, as you can see, EUR 23 million. There is that sensitivity that you can look into.
Thank you, Fernando. Next question, please.
The next question comes from Britta Schmidt at Autonomous Research. Britta, your line is open.
Yeah, hi there. I've got three questions, please. Firstly, could you just update us on regulatory impacts in capital that are still outstanding? What do you expect in 2022? The second one would be on the cost outlook. What is the blended inflation rate that you assume in your guidance? And could you perhaps quantify a little bit the basis, the COVID-related base effect? What sort of EUR million numbers are we talking here? And then lastly, on Mexico, there is obviously a macro worsening, but loan growth is still strong and the cost of risk guidance still looks okay. How do you explain that, the sort of disconnect? Thanks.
Britta, can you repeat the second question? I couldn't get the second question.
The second question was on the cost outlook. Could you tell us what the blended inflation rate is that you assume for the group when you say you want to grow below inflation? Can you also give us some help quantifying in Euro million terms what the COVID-related base effect is? Obviously, there were some COVID-related savings, T&E expenses, et cetera. What sort of Euro million number are we talking about?
Okay. Rafa, maybe you can take the cost question. On the regulatory impacts outstanding, as we have told you before, the main regulatory piece, supervisory piece remaining is this, it is EBA guidelines. You would notice that we talked to you about EBA has guidelines on multiple pieces of the models. Those are the PD, probability of default, LGDs, and margin of conservatism, MoC, as we call them. This PD impact on the EBA guidelines has already been incorporated in 2021. In the last quarterly calls, we told you that we are expecting EBA guidelines on LGDs to come online in 2022. We were expecting 15 basis points-20 basis points on that one, and that is there to be taken into account in 2022.
The EBA guidelines on what we call MoC, the margin of conservatism, it might also be coming and impacting us. The EBA guidelines have put some new strict, actually, rules on that one. The total that you would be expecting for this year, including the LGD, is around 35 basis points. On the Mexican, maybe you take the cost question. I go back to Mexico, Rafa.
The blended inflation for our footprint that we are assuming for 2022 is 11.3%.
On the Mexican cost of risk question, well, this year was not easy either, and we have delivered, as we have seen in the documentation in the discussion, 267 basis points. Our typical, before COVID, our cost of risk was around 300 basis points, if you remember. Our 10-year average for cost of risk in Mexico was around 340 basis points. When we look into how or why that improvement has happened, and when you isolate for the mix effect, so different portfolios and maybe it's a different mix of portfolios and so on, isolated for the portfolio level, when you go into credit cards Mexico, consumer in Mexico, we are seeing very good numbers. When you go into it's also our performance improving. We have better information, better data, better modeling, better processes.
We have invested, for example, a lot on collection infrastructure and collection processes in Mexico in the last 3 years, even during COVID. As a result of all of this, some of the improvement that we have seen from 340 basis points in the last 10 years to 300 basis points just before COVID and 267 basis points this year, we do think that it's structural improvements that we have done internally in our bank, and some of that is there to stay. That's why we are guiding less than 300 basis points. Independent of the market and the macro, we do think that we are confident that we'll be realizing those numbers. The start of the year it's confirming this view.
Thank you very much. Next question, please.
The final question comes from Pamela Zuluaga at Credit Suisse. Pamela, your line is open.
Hello, good morning. Thank you for taking my question. I have one regarding the NGEU funds that you were mentioning before, possibly translating into higher loan growth in Spain. Do you have a clearer idea of the role banks will play in the deployment of these funds? If so, can you give some details on the evolution of the loans and NGEU fund support? Would there be some margin compression if there is a collaboration between the banks and the government? If alternatively, most of the activity we expect in Spain will come from continuing growth in the consumer segment. Do you see some margin pressures from quite high competition there? As a follow-up on something that you were saying before in the ICO loans, other peers have granted extensions to the grace period on these loans.
Do you anticipate granting further extensions and potentially delaying even further any write backs related to that COVID overlay? Thank you.
Very good. Thank you, Pamela. On the Next Generation EU, obviously we are very open to operating with the government in channeling and distributing these funds to the economy. There are different products that we have even launched, we call them NGEU Advance Loan Factoring, to be able to complement the subsidized part of this project. The subsidy you can get from the government, and then you can get the complementary financing subsidized funding from the bank. We do have specific products, and we are in constant cooperation with the government on this. In terms of the impact, you are more asking for the impact, I guess.
For the GDP, first of all, this Next Generation EU, our BBVA Research team, they do expect a 1 percentage point impact in the GDP growth because of Next Generation EU in 2022, and 1.5 percentage point increase in GDP growth in Spain due to Next Generation EU funds. Overall economic situation will be helped from this. We have also deep dived into which sectors are gonna be receiving this, which types of companies, what is the subsidy level, how much financing, additional financing those clients might be needing, and so on. We do expect annually an 8% increase in the, what we call, new loan production in the commercial segment, SME and commercial segment due to these programs.
In the stock, though, this will be corresponding to 1%-1.5% increase, more than otherwise, more than if you isolate for this impact, only 1%-1.5% more higher increase in loan balances in commercial and SME segments. Positive for us. Regarding the further extensions on ICO, there might be another 6 months, maybe, because most of them will be expiring in terms of this non-payment period in the second quarter this year and the third quarter. There might be a slight extension on this, but I don't think there is much need on the topic. I wouldn't expect that to be the base case. I would expect that everything to normalize as already is in the plans, which is the second quarter, third quarter expirations.
If also it is extended to the end of the year, a slight increase or three months, six months, I wouldn't rule out that either. Beyond that, I don't think there will be anything else needed in terms of extensions and new durations and new non-payment periods. I don't think it's needed because the portfolio is behaving quite nicely.
Thank you. Thank you for all your questions, and let me remind you that the entire IR team will be available to answer any questions you might have. Thank you very much for attending this call.
Bye-bye, everyone. Bye-bye.