Good morning, and welcome everyone. We are very pleased to have all of you with us here in Madrid, and we truly appreciate you taking the time to join us. As you know, last July, we shared with the market our midterm financial goals, and today we would like to build on that by providing a qualitative perspective on our strategic plan. On the screen, you can see today's agenda. We will start by discussing one of our strategic priorities, scaling up our enterprise segments. To do so, we will be joined by Jaime Sáenz de Tejada, Global Head of Commercial and Institutional Client Solutions, and by Javier Rodríguez Soler, Global Head of Sustainability and Corporate & Investment Banking. Then we will turn to Mexico, where Eduardo Osuna, BBVA México Country Manager, will explain us the rollout of our strategy in one of our key markets.
Each session will be divided into two parts. First, a presentation by the speakers, and then a live Q&A session. With that, I will now hand it over to Onur for a brief introduction. I hope you find today's event both interesting and insightful. Thank you very much for joining us.
Thank you, Patricia, and thank you all for coming in today. This is our first-ever, as we call it, Strategic Talks session, and we would love to give you as much as we can on these two topics that we have selected for today, and we would like to continue with these sessions going forward as well. A few very quick highlights. I do not want to take too much of your time. These sessions, they are intended to basically give you a glimpse of why we think BBVA is a great bank and why we think we have certain structural advantages, why we think we have certain strategic plans in place to continue to deliver results as we have been doing, in our view, in the past decade, in the past five years. That focus on delivery and execution is just absolute, is maximum.
As a result of that focus, we do think in the last, again, decade, in the last five years, we have been delivering results. We have been delivering results quantitatively and very objectively speaking, in our humble view, better than our competitors. We are here today through these sessions to claim, once again, that we will continue to deliver. In a quarter like this, where so many things are happening in the world and the whole world seems to be upside down, you will see it in two months when we announce our results, but we continue to deliver, and we continue to do really well. We do think it is for a few reasons. It is for a few reasons, among others, two core reasons, I would say. The first reason is that we do have some structural strengths.
We do discuss them with you from time to time, but we do have some not easy to replicate advantages in our humble view. We list them, but the three most important structural strength I would put on the table is that, number one, we are diversified, but more importantly, we are diversified in geographies where we have room to grow, where there is room in leverage. We are, in general, in under-leveraged economies, even as compared to their comparable countries. In Spain versus Europe, in Mexico versus emerging economies, in South America versus emerging economies, in Turkey versus emerging economies. So diversified and being in under-leveraged countries helps. Then we do claim that we have the leading franchises, one of the leading franchises in the countries that we are in. It's an important part of our equity story. Very important part of our equity story, actually.
We have the leading scaled franchises in whichever country that you pick. We are either number one, number two, or a very scaled franchise. Finally, we do think we have a structural strength around our drive and our culture around innovation and the capabilities that we built up in digital. So one core reason why we think our performance is here to continue is because we do have some structural strengths. The second reason I would put on the table is that we are very purposeful on our strategy. We are very purposeful on our focus and on where we put our money, more resources, to grow and to grow profitably. On that strategic plan, I will tell you that we look into this notion of right to compete. It's a concept, but it is important, and we are going to discuss it today.
In enterprises, for example, we always look areas that we can have an edge. We don't jump into opportunities just because they are there. We always look into this notion of right to compete, and once we have right to compete, then we go after areas of potential where there is a market opportunity or where areas we do think we can do better, that we have a potential ourselves that we have not tapped before in that sense. With that, we create our strategic plan, and we are very purposeful, again, on where we put our focus and where we put our money and resources. In that, we have last year, at the beginning of 2025, we have developed our strategic plan, and we shared that also with the whole market participants and with all of you.
The plan was a very simple one in my view, but again, it was purposeful. It started with radical client perspective. It's basically assuming the perspective of a client in every single thing that we do, very conceptual thing, but we believe we have tangibilized it with some clear actions, and we have claims. Basically saying that we will do everything that we can to beat the competition in terms of customer experience, the traditional competition and the emerging competition from fintech. In some countries, they are very visible, as you all know. We are going to basically beat competition in customer and digital experience. That's chapter number one, which is at the core of everything that we do. Then we have three next, around growth, profitable growth. The first one is around sustainability.
We see it as a responsibility, but we also see it even more as a business opportunity, especially in Europe, but we do think it is going to come back, even in other geographies where the administrations of those geographies are not taking it in a way that they should be taking it, in our humble view. But we do think we can advise our clients through this, and we can grow using that as a differentiation engine. Then we have enterprise segments that we are going to talk about today. Then we have a value and capital creation mindset, which has multiple things underneath, but it starts with everyone in the organization injecting the mindset into the organization, such that any capital decision, giving a loan is a capital decision, that capital decision returns above the cost of that capital.
Return on capital is higher than the cost of capital for every single decision that we take in the bank. It includes that mindset. It includes being much more aggressive in this capital rotation, SRTs topic, which we do think we have an opportunity. It includes growth in low capital consumption, high- return businesses like payments, like wealth management, like insurance. All of that will be bundled under this very important lever of value and capital creation mindset. Then there is AI and innovation, and there is team and talent. As always, we always put that in the strategic plan of ours. On AI, we captured it when we launched the plan a year ago. A year and a half later, or a year and three months later, it became even more important in our humble view.
It is going to be a very important lever to restructure our processes and to provide a better customer experience to our clients. As we have done in digital, we are determined that we also lead that transformation, the AI transformation in banking. Actually, we are seeing a lot of concerns out there around this transformation. We are quite positive about it. We do think it is going to help the banking sector in general, and especially to the banks who take this as a lever for growth, as a lever to restructure processes and cut costs. That is AI and innovation. Having said all of this, again, today we are going to talk about the enterprises. We will link it back to right to compete, areas that we do think we can create an edge versus competition, and we are going to talk about Mexico, a very important franchise to us.
In short, we are here today to talk about the structural strengths that we have. We are here to talk about our strategic plan, especially on enterprises, and we are here to keep telling you and hopefully convince you on the fact that we will continue to deliver better than competition going forward as well, again, as we are doing in the first quarter of this year. Having said all of this, I give it back to Patricia to start the sessions. Thank you.
Thank you very much, Onur, for the introduction. As I mentioned earlier, we will begin our first session dedicated to enterprises. Today, companies operate in an increasingly complex environment. Our clients are looking for trusted partners that truly understand their needs and can support them in the long term. In this context, at BBVA, we are reinforcing our commitment to businesses with a clear ambition: to become the partner of choice across all enterprise segments. I am delighted to be joined today by Jaime, Javier, and Luisa, our CFO, who will lead the session. Now, I invite the three of you to join me at the stage. Thank you.
Great. Good. Well, thank you all for being here, and let us get straight to it. We will begin talking about Commercial Banking with Jaime Sáenz de Tejada, who is the Global Head of the Commercial Banking segment. Perhaps, Jaime, we can start having a discussion with you about what is commercial banking in the group. How would you define it, characterize it? How would you give numbers to it? And to tell us a little bit about the core pillars behind the strategic ambition that you have.
Perfect. Thank you. Well, first of all, good morning, everybody. As I have discussed with some of you, very happy to be in front of you guys again after five years, but now with a different role. Let us just start by characterizing a little bit the vertical. Commercial sits between the small businesses taken care of by retail and the large and complex and global corporations that Javier takes care of. By definition, this tends to be quite a heterogeneous set of clients with a different degree of complexity and definitely size also. We tend to take care of clients that sell above EUR 3 million in Latin America and EUR 5 million in the largest countries, Turkey and Spain. In order to make this a reality, we have implemented a significant resegmentation in the latter part of 2025.
So as to start January 1st of 2026, with each client assigned to the right relationship model, the one that we feel is better suited to take care of their needs, and of course, maximize also value to the bank. We take care of roughly 225,000 clients. We manage EUR 110 billion in loans, EUR 85 billion in resources. And these figures have grown by roughly 10% over 2025. I do not want to throw too many data points at the beginning, but we generate a gross margin of roughly EUR 6 billion, and a net attributable profit of EUR 3 billion, to give you a sense of the size of the operations. What is our mission? I think it is important. We aim to become, as Onur mentioned, the strategic partner of our clients. In order to do that, we need to leverage data and AI.
That is going to be increasingly key to anticipate client needs. It is key to embed a radical client perspective in everything we do. Maybe this is too conceptual, but the objective that we are translating to the networks is that we want to become the primary bank. We want to be the primary relationship of each of our clients, which in practice means that we need to be present in all their major strategic decisions, but also be there on the day-to-day of their operations. Why? Because in practice, commercial is becoming an increasingly transactional business. It is key to be in those transactional flows to be perceived as a primary relationship and of course, is where you tend to maximize value. To embed a radical customer perspective, what does it mean? Because sometimes it might be perceived to be also too high level.
But at the end of the day, I think it is very easy. You need to understand where our clients operate, what challenges they face, and be able to anticipate their needs. In our business model, the RM, the relationship manager, is at the core of that interaction. He is the one that needs to have a structured view of the client ecosystem. It is the only way that that person can provide proactive advice and offer a relevant solution. But again, that is not enough. We are also redesigning the experience. In all the major interactions, in all the most relevant, we call them key moments. In all the major key moments, mainly cash management flows or credit flows is key to embed a completely different experience, reducing friction, and making sure as much as possible that we can automate and be faster in decisioning.
In order to scale, it is key to embed AI. We have a huge amount of data of our clients that can now be turned into a competitive advantage if you truly can use it to provide new insights and to provide new solutions. This is, as time goes by, becoming even more of a reality. Maybe some examples. We started with smart assistances in our channels. So whenever our clients contract or service their accounts with us, we are there to answer any query that they might have on a real-time, with much more contextual knowledge of where the client has been, what type of servicing has done, and where that same client might have experienced a problem. Another very relevant area is the capabilities that we are now being able to provide to our RMs.
Particularly after the resegmentation, we have RMs with fairly large, by our traditional standards, number of clients. They can have 40 or 50. So by definition, we need tools to provide better insights to be able to manage those portfolios and advise in a much more consistent basis our clients. Lastly, AI is key for the credit process. It may be surprising, but still credit remains one of the biggest elements of friction, particularly for midsize. So reducing the time to cash, automating credit decision, establishing fast tracks, simplify financial programs are elements that guarantee a much more predictable relationship with our clients, together with much more consistent credit decisioning, more aligned with our risk appetite. By definition, becoming a primary bank means generating value. According to our internal numbers, when you are the primary bank of our relationship, you earn double the amount of gross margin.
Versus the comparable group, which in turn means more cross-selling, more resiliency of those revenue, more stickiness, less attrition, and of course, switching cost increase. We are already a fairly profitable franchise. Our return on risk-weighted assets is 4.36%, which translates into our return on risk on regulatory capital of slightly above 36%. If we exclude Argentina and Turkey, where we have inflation and where we do not have inflation accounting in the line of businesses, this goes down to 3.8%, and the return on regulatory capital is slightly above 31%. So the challenge, of course, is to continue to grow in terms of profitability, but mainly to make larger this business. To me, is the major goal. And of course, protecting asset quality, not because of my previous role, but we have very good risk metrics.
Our cost of risk for 2025 was 28 basis points, and our NPL ratio was only 1.18%. So fairly low numbers by any standards.
I think Onur mentioned before, what does it mean to have the right to win in this space and in all the geographies where we are present, we obviously have very strong competitors. Commercial banking is a very attractive area of business. It creates a lot of synergies with retail banking in a universal bank. Can you elaborate a little bit on what these structural competitive advantages are that we have in the different geographies where we compete?
Yeah. I think Onur mentioned some of them. As we highlight in the slide, and we have always shared, we have a very strong local presence in every market in which we operate. But we also have significant global capabilities. Those two things combined are very difficult to match. And these capabilities have been built over time and have generated significant client trust. We combine this, and as you have been able to see in the previous slide, with a very highly talented team. We have 400 specialized branches, where we have 2,000 RMs that have very strong local knowledge, product expertise, sector capabilities. And now after the creation of the vertical, they are connected together, with the different tools that we are developing to the rest of their colleagues, which is very important for providing sustainability advice, but also managing global relationship and international flows.
To me, that definitely will be one of our key competitive advantages. Second, the universal model. I always like to talk this one plus three plus one, meaning one client, three line of businesses, but one bank. Javier, David, and myself have the challenge to guarantee that we coordinate our value offerings so that every single client has the full value proposition of the bank available. Commercial is the bridge which provides the traditional, for the whole bank, the traditional enterprises products. I do not know, commercial cards, leasing, factoring, confirming. We also are in charge of embedding finance capabilities for the whole group. We also developed the digital channels for the whole group, not only the app, but also the web. Of course, CIB, Javier takes care of the more complex products, investment banking and finance, structured finance, GTB, global markets.
I always tell Javier that we are his biggest clients. Only last year, we generated EUR 473 million for Javier. What I think is more important is not so much the number, but the fact that it grew by over 24%, and we have very important plans for that to continue to grow in years ahead. Retail is also key for our value offer. Not only because the payroll business is super important and probably Lalo is going to talk about that. Only in México, we manage 7.3 million payroll accounts from our commercial clients. It is a very significant business. But retail also provides wealth management services, asset management, insurance products, and provides also something that remains very important, the physical infrastructure. It makes those branches and ATMs available for the ecosystems of our clients, their suppliers, their clients, even their employees.
That is a very relevant part of our value proposition. So we have talked about local and global. We have talked about universal banking. Sustainability. As you know, sustainability has been a key element of our strategic plan and now for a number of years. This has allowed us to build a very credible offer. It is embedded in our value proposition. We are able to provide advice on risk transition, on decarbonization pathway, sustainability reporting, and translate that into a very tangible value proposition. As you know, one of the KPIs that we follow is how much sustainable financing do we mobilize? Only in Commercial last year, we mobilized EUR 50 billion. Remember that our total assets are EUR 110 billion. Again, what I think is more relevant is that it grew by 49% versus the year before.
As Onur mentioned, this remains a very significant growth driver, and we will discuss about this later on. Lastly, innovation. I think this is part of our culture, that I think is very tangible, because it is embedded in our value proposition. We innovate at the core of BBVA. So we led the digital transformation, and our clients benefited. Now we think that we also have the possibility of leading the AI transformation. This is something that we are trying to make sure that we embed in every workflow to make better decisions, faster decisions, and improve customer experience. So that is the way that I would characterize it.
So it's very clear that this, obviously, segment is a very relevant growth opportunity for us. We've been working very hard over the past years and especially obviously this year since it's been defined as a strategic priority for the group at this level. But we've been gaining market share in this segment for some time, and some investors, analysts, when we talk about it, they are quite surprised that we're able to keep on gaining market share. And the question is, what are we doing differently? Because many may think it's just about price, but when you're consistently gaining market share, there must be a secret sauce. What is the secret sauce?
Yeah. Okay, let's paraphrase a phrase that. You know my boss already, right? Focus guarantees execution. I think that what's happened in 2025. It is true, we grew, in terms of target clients, we grew in terms of activity, we gained market share, and we also increased profitability. So it is true that this is a trend that not only started in 2024, in 2025, it started before that. I think it's only accelerating. What are we doing differently? On advice. To me, and you're going to hear a lot about this from Javier, strategic advice begins with a sector-focused approach. In 2025, we've implemented this model on three selected sectors. We started with commercial real estate, with public sector, and with the agribusiness sector.
These three sectors were chosen because of their growth capabilities and the synergy capacity that we have among the three line of businesses, and they represent 40% of exposure at default of our vertical. We made already significant decisions. We opened branches to better take care of the agricultural sector in certain areas of Argentina. We've hired RMs and specialized RMs in sector-specific portfolios that we've built and created. We have adapted our value prop, and we're also much better now of taking advantage of the sector expertise that Javier and also the risk management area provides. That would be probably number one. Second, we are rolling out a new operating and service model. This is particularly relevant for the mid-size segment. Following the Experiencias Únicas model that was so successful in Mexico. Together with this, we've been changing the incentive system.
We started in the second half of 2025, fine-tuning the incentive model. Now, since January 1st, this is the same all across the group, and it's much better aligned with the strategic priorities of generating long-term value, profitability, and risk-adjusted returns. That would be the second thing. Then we invested a lot in channels. We are developing best-in-class channels, more relational, more secure in next-gen technology. We've been able to move almost 100% of our clients. I say almost because in Peru, we still have some clients left to be migrated in the next couple of months. So now all enterprise clients in the group operate under the same app and under the same way. This is just the first step. Now we need to increase functionalities, particularly in countries in South America.
But this is going to be done in a much faster way now with the new coding tools that we have at our disposal. Then credit. We've simplified significantly the credit experience and the time to cash. Without doing anything particularly new, we are implementing in the mid-size segment tools that were previously only available for small companies. So now we have pre-approve offers, we have automatic renewals, we have fast-track processes that reduce significantly the friction, that reduce significantly the time to cash, and allows for a much more predictable relationship between the client and the bank. These tools guarantee consistency and allow risk management, the ERM area, through the joystick, to adjust underwriting standards to whatever macro environment we might be experiencing. To me, it's also very important. Then embedded finance. This is increasingly becoming a relevant growth area.
Companies increasingly expect financial products to be available in their own platforms, where they take care of their clients, suppliers, and employees. So you need to be able to provide payments, collections, and even financing in these client ecosystems. In our mind, this is only going to grow with autonomous agents, so it's very important to continue to be present here. These are probably the things that we've done differently in 2025, and I think it justified the accelerated trend that we are experiencing. The most important growth plans are, and I'll go a little bit faster, are mainly in mid-size. Mid-size represent 60% of our clients. After the re-segmentation, this is becoming by far the most relevant segment in terms of clients.
We are industrializing the operating model, reduce administrative tasks, provide new tools to these RMs to be able to provide a completely different advice in a much more consistent fashion all across the footprint, together with the changes that I've mentioned before around the incentive system. Time to cash credit, key. Particularly key for this segment. Second, public sector. Public sector represents 10% of our clients, 16% of our gross margin. It's a relevant source of funding all across the group. In public sector, we take care of government entities, regional governments, municipalities, but also the educational and health system, which is a combination of public and private operators, depending on the country. Here, synergies with Javier and David are super important. We need to provide a specialized advice, specialized products. Contracting legally is very different when you do it with the public sector, and that's a very focused expertise.
Even the product offering, the value prop is very different. We need public-private partnerships. We need risk transfer. We need sustainability frameworks to guarantee investment programs for public entities. As you can imagine, payroll, payments, collections capabilities are also super important for this segment. Lastly, sustainability. Sustainability remains a super important growth plan. Something that started for large corporations, we've been able to industrialize it in a way that is now able to reach the mid-size companies, which is where I think the biggest growth will take place. For example, we provided 16,000 pitches last year, and these were generated, as Javier knows, in an automatic fashion with a lot of artificial intelligence. But still the opportunity is huge. Only 6% of our mid-size clients did close a sustainable financing last year, so the growth is huge.
Here, advice around certifications, physical risk, and as I mentioned before, transition risk, decarb pathway, et cetera, are combined with supply chain finance loans, with transition financing, with KPI-linked loans which I think tangibilize in an extremely precise way what we mean.
Great. I think it's very clear that we have a very focused strategy, very clear targets and objectives, and a very clear ambition to grow. Jaime. Turning now perhaps to Javier and CIB, which has been a business of ours for many years now. It's not that we're starting new. We've been slowly growing the business over the past years as well. But now we want CIB also, and we think CIB can be a growth engine for the whole group in this strategic cycle. Could you elaborate a little bit on what the core pillars are? What do we do in CIB? Because CIB, everybody does CIB. What is our CIB? And what are the plans that we have for the segment going forward?
Yes, Luisa. Thank you very much. CIB is a natural extension of what Jaime just explained to all of us. In commercial segment, we are attending 225,000 clients, and 1,365 of them are very big, and we attend them in the Corporate & Investment Banking business. When you have a universal bank in Spain, Mexico, Turkey, Argentina, Colombia, Peru or Venezuela, you also serve the biggest clients of those markets. And to serve those clients, you need sophisticated products. As also Jaime mentioned earlier, you need cash management for cash pooling, international transfers. You need trade finance services. You need project finance, where we are particularly strong. You need FX, you need rates, you need derivatives.
We serve with those products to the clients of commercial segment that Jaime mentioned earlier that they need those products, but also obviously to these almost 1,400 clients, which are the biggest in our footprint. And when you are serving those clients in those markets, you need to have a presence in the biggest financial centers in the world. Many years ago, we started with a presence to serve those clients better in New York, London, Frankfurt, Milan, Paris. Started also some operations in the biggest financial centers in Asia, like Hong Kong and Singapore, to serve those clients that are our biggest contributors to profits. And very importantly, when you are in Mexico, Spain, Turkey, when you serve those clients at the top, obviously that reinforces your value proposition to Commercial, as Jaime commented, and to Retail.
So obviously you get the payroll business, the corporate card of those clients. You help them with anything they need. Now, particularly a good example is in Venezuela, where it is starting to become relevant. We are helping the big corporates in Venezuela serving their employees, for instance. So this universal banking proposition is one of our strengths, and we serve them in what we call cross-border business. So basically, in order to understand properly the Corporate & Investment Banking business of BBVA, you need to understand when you serve a client that maybe their headquarters are in Spain or CDMX in Mexico, maybe they operate in 20, 30 countries, and we try to serve them out there. Just to put it in perspective, now 40%, a bit more than 40% of our gross margin that we generate in CIB, total gross margin is around EUR 6.6 billion.
It is cross-border business. This comes from, in 2021, at 31%. So we have been growing 24% annually, this cross-border business, moving from a relatively to gross margin 31% to more than 40%. So cross-border is our first competitive advantage versus other banks that do not have these universal banks worldwide, particularly with very strong presence in emerging markets. Then as also Jaime has been explaining, we have been creating in the last few years a very strong competitive advantage that is becoming stronger by the day because some of our competitors are lagging behind for some understanding of maybe some political situations in some places in the world, which is sustainability. There you have this big number of EUR 700 billion, which is what we plan to generate in sustainable business in this strategic cycle. But let me put this number in perspective.
When we started, actually, when Luisa started realizing that sustainability was a big business opportunity, we set up a target of EUR 100 billion to be generated in eight years. Very soon, we realized that it was a very small target because that was growing much faster. We increased it to EUR 200 billion, then to EUR 300 billion for a period of eight years. One year before the target, we generated EUR 304 billion. Now in this strategic cycle, we have decided to put EUR 700 billion instead of in eight years, in five years. Sorry, it is too many numbers. But just to put it in perspective, the relevance of this business as an engine of growth. This last year, we generated EUR 134 billion of this EUR 700 billion. If you do the math, obviously, we are faster on track to deliver.
EUR 50 billion in the Commercial segment, EUR 68 billion in the CIB business, which is where it all started, obviously, with the most sophisticated clients worldwide, and the rest in Retail. Very importantly, Luisa, as Onur always says, what is our right to compete is what I just said, is cross-border, is with the sustainability value differentiation, and always with very disciplined capital allocation. Obviously, in our CIB activities, where we have created the most sophisticated tools in order to deploy capital smartly to our clients. So we have been developing in the last five, six years very strongly the capabilities in order to lend to our clients, to help them in the global markets business, to help them in the transaction business, but always with a capital allocation mindset.
When we talk about CIB, which is clearly, as you have described it, a very client-driven business for us. Client comes first, and we see the opportunities of accompanying the clients and obviously providing the products that will make us competitive in order to capture the value from the capital that we allocate to the clients. Where do you see the biggest opportunities to continue scaling CIB, whether it is products, geographies, the cross-border opportunities that you have mentioned? What are going to be the most relevant ones for us going forward?
Yes. In order to serve those clients better, what we put a particular focus in the last few years is to make sure that we serve them with a sector specialization. Basically, both for corporates and for institution, we have created sector experts. In the corporate sector, we have created a specialization in TMT, which is becoming particularly relevant nowadays with the advent of AI and all the technological developments. Consumer and retail, very important in some of our geographies. Energy and utility, so that includes electric companies as well as oil and gas. Industrial and transportation, and then the infra and construction sector. Then for the business institutional, that we have been growing substantially in the last two years because we are catching up with some other banks which have a higher presence there. We have banks.
We serve other banks, obviously, from neobanks to competitors that we have in our markets. We have wealth and asset management. Financial sponsors are a very relevant sector nowadays that interacts very much with the corporate sector that I mentioned earlier. Public sector, which is where we are growing the most. Insurers as well, that it is a sector in which we traditionally had a smaller presence, but that we are growing substantially, particularly in some centers like the U.K. or some European cities. In order to do that, as I commented earlier, we have to deploy our capital in a very disciplined way. CIB clients are particularly sophisticated. Their CFOs, their treasurers know very well the business, and they know how to negotiate with banks when we do business with them.
Obviously, we have to help them with financial support, with their RCF, their lending, participate in their syndicates. But in order to do so, we also want to give them coverage with derivatives, with rates, with FX if needed. Then we agree in up-tiering our position in order to serve them also in capital markets, which is particularly profitable from a capital perspective. Basically, it is about creating the products, the sector expertise, and the capital allocation discipline in order to serve those clients well. As Jaime commented earlier, very relevant that this product, this capital discipline, when needed, we also help the commercial clients that require these products and these services worldwide.
You mentioned, obviously, all of you can see we've been reporting CIB for many years now, already as a pro forma in the annex of our management information reports. Everybody's been able to see the evolution of the business. It's been growing, and I would say in a relevant fashion over the past couple of years. Clearly, growth in itself is not the goal. It's about profitability, and it's about discipline. How are we ensuring that in CIB, both from a capital perspective, but also from a risk perspective?
Yes. As I mentioned earlier, the way we started doing Corporate & Investment Banking was starting from the franchises, the universal banks where we have leading positions that Onur commented earlier, Spain, Mexico, Turkey, South America. Most of our CIB presence is in those markets. Those markets are relatively small in the big picture of the Corporate & Investment Banking perspective. As we've been helping those clients in those markets and growing with them cross-border and with this sustainability growth engine, we've been growing in the 10%-15% in those core markets. We've been growing even more rapidly in the biggest developed markets like the U.K., U.S., France, Germany, even in Asia. There we've been growing more in the 30s percent in the last few years.
Very importantly, in those markets where we are growing more because we come from a relatively smaller base, the risk profile is better than that average of the emerging markets where we operated. Just to put it in perspective, 80% of our presence in the last few years of the presence that we have in Corporate & Investment Banking is with investment-grade names, and the remaining 20% is very solid. The remaining 20%, half of it is in trade finance, where we are one of the best banks in the world, I can proudly say, worldwide. It's trade finance, and by definition, trade finance is non-investment grade because it doesn't have the corporate guarantees. It has the guarantee of the asset. Trade finance is considered non-investment grade.
When we do business in Latin America, but we book it in New York, it's also for regulation purposes, considered a non-investment grade. The rest, which is in this 20% non-investment grade, which is not trade finance or Latin exposure in mature markets, is basically with clients with whom we have a very strong relationship. Very importantly, as I commented, as we've been growing more in those mature markets, we've managed to maintain a stable rating, average rating with our clients. We feel very comfortable that this growth, it's where we have this right to win and with a very safe value proposition.
And perhaps maybe we can touch base on one of the slides that we had about profitability of the footprint. In CIB, sometimes it is difficult, and I understand it may be difficult for you because of the information that is provided. We have, as you know, an information structure that hinges on geographies. So sometimes it is difficult to understand the vertical businesses in themselves, and we have the CIB pro forma. But how those intertwine and the cross-border businesses, how the profitability is managed, can you give us a little bit of a flavor of how do you see profitability when you book a loan in the U.S. and the expected return that you want to see from that?
Yeah. This is my favorite. So please pay attention to this one. Basically, to understand Corporate & Investment Banking business in BBVA, as I explained, it is about the cross-border business and the relationship. When we have a Mexican corporate that needs to issue debt credit in the U.S., we help this Mexican corporate. When we have a Turkish company that want to invest in Europe, we want to serve them well. When we have a U.S. company that wants to invest in Mexico, we have this cross-border business. So basically, as you see there, we have a profitability measured locally when a business is booked in each geography. But much more importantly, as some geographies help others for those clients, you see in the right-hand side, the profitabilities on regulated capital as we measure it, that we have in each of the geographies in CIB.
As you see, all of them, a single one of them has profitability way above our cost of equity, which obviously for Corporate & Investment Banking has even lower cost of equities. 27.6% for our business in Spain, which is a net exporter or businesses Europe, including U.K. ex-Spain, almost 15%. Asia, very successful in the last few years, almost 16%. U.S., our biggest growth of cross-border business for obvious reasons, particularly with the corridor with Mexico, 23.5%. And then Mexico and our Latin American franchises get this help from this, what we call Red Exterior, this external network in New York, London, Hong Kong, et cetera, and they have 20.4% for Mexico and 23.3% for Latin America. Latin America, excluding Argentina and the whole 19.3% that you see there, we excluded Turkey for the reason that Jaime explained earlier.
We don't do the hyperinflation correction in Turkey and Argentina per business line, so that is why we decided for the proper calculations not to include those two geographies. If we included the geographies of Argentina and Turkey, the number would be in the high 20s in the overall profitability of the business. So very important to see, as Luisa mentioned, the cross-border business correction in order to understand profitability per region.
I just want to add regarding this slide, because it may be a little bit confusing because the number of the RORC is 19.3%. This is for the CIB business, so this is not a group RORC. This is for CIB, the way we see the CIB business from a reporting angle, from the booking angle, let's say. But how you actually are looking at the business from a profitability perspective, how much we're generating from a client that works with us globally, and if I allocate the capital in one geography, what am I receiving in the different geographies to pay back that capital? That's what Javier looks at more, the right column.
But we wanted just to give you the highlights of how we're looking at the profitability when we're allocating capital in the CIB business, and this is a very relevant metric that also analyst is following.
That's why we use the return on regulated capital, which is the most precise on risk-weighted asset, per asset and per risk that we perceive in each of the markets.
Great. That was very clear. We could talk a lot about this, but I would suggest perhaps, Patricia, that we open for Q&A.
Yeah, sure. Thank you, the three of you for the explanation and for leading this discussion. Now, we will open the floor for the Q&A. If you would like to ask a question, please raise your hand and I will call on you in turn. Before asking the question, please state your name and your company name as well. Thank you. Here you have Sofie. Please go ahead.
Yeah, thank you. Sofie from Goldman Sachs. Quick question. One of your competitors is talking a lot about having a one platform for all their businesses. How does it work with BBVA? Can you perhaps see all the exposures on the CIB clients across on one platform, or do you have it [inaudible]
Yeah. Thanks for the question, Sofie. Well, obviously, we operate with one theoretical global platform, I would say, but obviously the historical IT system in each of our geographies have some historical idiosyncrasies. For instance, we acquired a bank in Turkey a few years ago. We started investing in Latin America a couple of decades ago. They have their legacy system that we've been updating. Technically speaking, we have one platform. When we book one client in Argentina, we book it in New York. Obviously, we could consider that like a single platform, but we continue investing permanently in order to make it like a single IT platform. I would say from a business perspective, the answer is yes. From a technological perspective, it's an ongoing process.
To be more specific also on that answer, we don't have a single platform in the bank. What we're doing is we have our core banking systems in the different geographies. Our mainframes are separate. What we have been building our capabilities that are next gen, taking especially data to the cloud, and we do have that in a single data lake. We will continue to see how we ensure that the processing capabilities that we have are on the cloud more. You saw also in the past when we said that we have been able to generate significant efficiencies from migrating processing to cloud. Right now, it's about 60%-70% of what the processing that we do is migrated to the cloud. The banking platforms are in place, and that has allowed us to capture a lot of efficiencies. That's what's relevant.
Having said that, I think also in CIB, there are some platforms that are global by nature. For example, Murex in global markets.
Global markets, yes.
Global markets tend to have global platforms, and they operate in single instances. I think that's a specific proposition. But when we look about transactional banking, for example, transactional banking is we have local platforms in cash management, which is the product side is managed by Jaime. And we have a global layer so that the global clients can access from a single point of contact and single point of entry cash management globally, and they can operate through the group seamlessly. But the underlying technology, as Javier was saying, is still very much linked to the core banking because that's where the operational processing data takes place.
Yeah. To me, the concept of globality is much wider than just technology. Of course, as I've mentioned before, we have global digital channels. They are designed and built once, but of course, they need to be connected to the local payment systems, and that last mile is by definition local. But this not only extends to channels. The operating model, t he operating model is the same. Of course, this is true for Javier, but it is also true for Commercial Banking. The risk models are exactly the same. Also, as Luisa said, this increasingly transactional business is becoming global by the day, and that value prop is designed globally and implemented locally. It is, to me, a much wider concept than only technology.
Thank you. Paco, please go ahead. Please, turn on the mic.
Francisco Riquel from Alantra. CIB business, you have reported profitability in your home markets, Spain, Mexico, South America, which is much higher than in those countries where you do not have a presence, like Europe, ex-Spain or Asia. If you can please comment on the business model and the competitive advantages that you have outside your home regions, and how do you plan to close the profitability gap? Then I am also surprised to see the high profitability in your U.S. business. If you can comment, how can you reassure us that you are not taking risks at the expense of this profitability? If you can comment on the risk on your EUR 25 billion of loan book in the U.S. Thank you.
Thanks very much, Francisco. If we can go back to the profitability metrics per region, I think it is useful to look at the local profitability of those businesses and also at the global calculation. Thinking, for instance, the U.S. local profitability, so what is just booked in the U.S. is 18.6%. That compares with the cost of equity for the region of below 11%. More importantly, as I commented, the biggest net exporter of cross-border business in our franchises is precisely the U.S., where we are growing very substantially, and that takes us to 23.5% profitability. That is not the case. We do not have such a good number for Asia, which is still a growing business, so we are still below 16% in that market.
In the case of Europe including U.K., it is 14.9%, true that it is below the average of 19.3% for the whole footprint, including Turkey and Argentina. It is below in part because we have had a few names in Europe, more than in the U.S., Europe and the U.K., where we have had a higher cost of risk than our average. As you know, our cost of risk in our business this year has been negative. So we have created something which is not a cost of risk, but a revenue of risk. It is a new accounting concept because we have been liberating provisions in some of our businesses. It has been a 6 basis points cost of risk as we exclude Turkey and Argentina. Particularly in Turkey, we have liberated a lot of provisions last year. But basically 6 basis points cost of risk, so it is a pristine business in terms of risk perception.
In Europe and the U.K., we have had some names where we have got provisions, and that is why this takes profitability down to 14.9%, but still substantially above the cost of equity. So in general, I would say that the fact that we do the business in the U.S. and in the biggest European, Paris, Frankfurt, Milan, London, in these cities, serving those clients in Mexico, Turkey, Spain, Latin America, that creates this extremely profitable business because we are very selective in the type of business with those clients. A lot of this business is global markets, that by definition has a much better return on equity. So in general, as you see there in the right-hand side, we cannot claim that we have a lower profitability in the developed market where we are growing the most.
Just to add on what Javier is saying, I think when we look at the U.S. business and the loan book, you will see, or we see that two-thirds of that is corporate clients. Okay? So two-thirds of the book in the U.S. is corporate clients. I think this goes back to what Javier is saying, and what type of corporate clients do we aim to have? You saw before that slide where we have 80% are investment grade. It has been like that for many years since we operate in the branches. But I would also add that Javier's team does a specific analysis of how we onboard clients. So there are specific targets. You know in the U.S. when you work with corporate clients, you are not the only bank. You are typically one of syndicates. It is a very tiered system. You want to up- tier.
There is a very conscious decision from a risk perspective and from a business perspective when we decide to up- tier a client, meaning that we are willing to allocate more capital. There is a very deep analysis of how much we can cross-sell and how much we can cross-border into that client to see if it makes sense to onboard it or not. So there is an ex ante selection of clients before we decide to allocate more capital, and sometimes we are just tier three. We cannot upgrade because we do not have the product scope or capabilities to compete. I think that is—
I would prefer to stay tier three or tier two, absolutely. Yep.
Yes. Marta, please go ahead.
Thank you. Marta Sánchez Romero from JP Morgan. My first question is on reporting. Have you considered changing your reporting? Because from the outside, it's very difficult to judge how you are allocating funding and how you are distributing costs within or between Retail and CIB. By the look of it, when you give us the CIB subdivision, you're leaving a lot of costs within the retail franchise, which is counterintuitive when you're thinking about Retail margins in Mexico. Also, how can we be reassured that you're not lowering your threshold in underwriting because you've got a competitive advantage on your euro deposits? How can we be sure that you are not lowering your standards because you've got that funding competitiveness, that you're allocating differently because you are pursuing growth, because it's strategic. My second question is on financial sponsors and insurers.
You know what's going on in the market. Everybody's panicking. How can we be sure that your underwriting is bulletproof and that because of the pursuit of growth, you have not been lowering your standards and we are about to be in a car crash or something? Thank you.
Do you take the first one?
Should I start the first one?
Yeah.
Yeah, and then you can go on the second one. Reporting views. We have not made a decision about the reporting views. We've been reporting this way. We obviously consistently decided to maintain the reporting system that we have. It is something that we will consider going forward in terms of how we can provide more insights as we develop these vertical businesses. They're managed, by the way, by global heads. There is a global theme to the management, as Jaime was saying. We will take the decision going forward. We also obviously would love to have your views because it's always something that excites sell-side analysts when we change reporting windows. For now, I think that it has been useful to see the geographies and the businesses. Obviously, each bank has those verticals integrated into them.
Again, we will see how we can provide more details going forward. From a cost perspective, from a funding perspective, we're very disciplined about that. We've explained many times our holding numbers, which are still holding, but the rest of the business areas have their own costs allocated to them. We have our cost allocation dynamics, and I think full costs are allocated to the businesses. The same way for RWAs, are allocated to the businesses. So very disciplined on cost allocation. From a funding perspective as well, we price or we provide FTPs or fund transfer pricing that is on a marginal level at a wholesale level so that we make sure that there's no transfer or no subsidies from one business to the other, and that is also part of our policies and procedures within how we provide liquidity to the growth of businesses.
Yes. The other question about our capital discipline when we serve financial sponsors and insurers. It is true that these two sectors, as you commented, they are intertwined eventually too much, we will see. At least private markets, private capital, and private debt. We work with the sponsors in a very selective and strategic way. Let me explain. Again, it goes back to what Onur commented initially, which is our right to compete. What are we doing when we do business with KKR, Blackstone, Apollo, EQT? Basically, why do they want to work with BBVA? For the reasons that we stated earlier. If they want to invest in Mexico, if they want to understand what is going on in Turkey, they want to have a presence in Europe or in Latin America, we are a player for them to be interacting with.
Basically, our service complement that of others like your bank, which works with them intensively, and basically, we complement the service that Wall Street or the other banks provide to these type of clients. What we do, as Luisa also commented earlier, we do it in a very disciplined way. We take each of these clients, we have a relationship with them in hedging, in global markets, in transaction, in lending, and we see in which tier of the relationship we are with them, serving those clients, those financial sponsors for the investments we can have a differentiated competitive advantage, a value proposition which is differentiated than that of a French or a U.S. bank.
In that, every time we deal with them in a capital call, in a lending, in an RCF, we look very carefully at the profitability of this transaction and the profitability that we are having with this client. In general, financial sponsors in particular for us in the last couple of years has been one of the most profitable business for the reasons I stated, because we are helping them where we have a competitive advantage in our presence cross-border and in our sustainability value proposition. It has been very encouraging to see how in the last three, four years, these financial sponsors have considered us a relevant player, advising them and helping them in their sustainability investments in the different sectors, in energy, in infrastructure, in construction.
We have been helping them with this cross-border presence, with this sustainability expertise, and much more importantly, with this disciplined capital allocation in every transaction we do with them. It is about being careful, being obsessed, I would say, with profitability and serving them where we can add something differential.
In this context, I would also like to add to Javier's point that this financial sponsors activity that we do represents today less than 0.5% of the total group's exposure. It is not relevant at all in the context of the group that we are.
Yeah. Thank you. Álvaro, please go ahead.
Hi. Álvaro Serrano from Morgan Stanley. Two questions, please. Maybe one on the investments. This one I suspect is for Javier on the mature market strategy. Can you maybe help us through? I guess a lot of that is issuing for your clients in Turkey or Mexico in euros. I guess it is something similar to that. Can you help us think through the size of the addressable market there and a sense of your market share, where you want to be further down the line? Is that business going to double? I am not going to hold you to next year. It is more five years down the line. The second question is even more long-term, maybe or maybe not, is on when we think a lot of your business, and maybe this is for both of you, is cross-border, you have flagged it.
In a world of stablecoin tokenization, when you see a lot of these use cases, Latin America, emerging markets more broadly are used as case studies, given some of the friction and the margins. How do you see that affecting your business? How are you preparing for it, and how do you see things evolve? How are you thinking about that further down the line?
I think I can take both, Álvaro. First of all, in terms of our market share, let's say if you will look at market share that we have or share of wallet, as we tend to say, thinking about each client. For these big corporations, these big financial sponsors, big banks worldwide, it's a small market share. It's 1.5% overall. But much more importantly, where we pay attention is in the market share or the share of wallet in the areas where we can serve them particularly well. So for instance, when you have a Blackstone or a KKR, which is investing in Mexico, their market share, obviously we cannot disclose, but it's way bigger. So in the grand scheme of things or the presence, we are small, and we plan to continue being small, because again, for this obsession and the right to compete.
But in where we can help them, when they invest in Spain. So let's say if one of these financial sponsors invests in Spain or in Mexico, and we are not in the deal, either in the sell side or the buy side, we feel frustrated, and we call each other, "What's going on?" If they are investing in the U.S., we're not even aware of that. So market share, relatively speaking, in our core value proposition, very high. In the grand scheme of things, tiny. In terms of stablecoins and tokenization of assets, well, basically the short answer is we are exploring and investing carefully because we are aware that this technology can be hugely disruptive. So that's the short answer. We don't know how this is going to be evolving.
We are aware that this technology can provide some advantages versus traditional Swift or other technologies that can be very disruptive, and we are, I would say, excited about the possibilities that it can give to our clients in terms of their cash pooling international transfers. So exploring with a huge interest, because if we are able to help our clients in their money movement in Mexican pesos to dollars to euros in a coordinated way without the need of so many steps that we've been taking when we do international transfer and international money movements in the last few years would be amazing. So investing, studying very carefully, and hoping that these technologies can help our clients better, and we continue being one of their banks when these technologies come.
Yeah, we'll say the same thing. I've talked about our culture. We are a culture that embrace change. This is what we're pursuing, with these stablecoins, tokenization of assets, but also AI in general. I think this is going to transform the way we take care of our clients. It's going to significantly transform the value proposition, and we need to be ready to lead the process. That would be my answer.
Ignacio, please go ahead.
Ignacio Ulargui from BNP. Just have one question. Looking to breakdown of revenues and the outlook of that revenue growth, the speed of the fee income-related activities and the cross-selling capacity that you have on insurance, and also on the lending side. Just kind of getting a bit of a sense of where the growth is going to come on that future plans that you have. It is more a fee-driven business or a more balance sheet- intensive business?
Yeah. We generated last year EUR 1.2 billion in fees. They grew by 21%, double the amount that the NII grew. Clearly, cross-selling is mainly related to transactionality, and also maximizing synergies between the different banks, the different line of businesses, sorry. I have already mentioned the 24% of CIB products. In insurance, we only made EUR 250 million last year, but they also grew almost 20%, and we have plans too, particularly strong in México and also in Peru to grow insurance business. Last year, we grew in payrolls by 620,000. That is a huge growth, and we expect that growth to be even further in 2026. Cross-border flows, they grew by 17%. Those are the type of elements in our value prop that I think give us an edge and are the ones that we feel that with the new technology, we can grow much faster.
Yeah, just to complement what Jaime said. First of all, Ignacio, nice to see you. Long time no see. I hope you are doing well. Yeah, basically—
You are only happy to see Ignacio, not me?
Well, because this is an old colleague. That is what I am telling you. I am very happy to see all of you. A lot of you worked at BBVA. Not all you were so fortunate of having worked at BBVA. Ignacio, absolutely right what Jaime said, much more focus on growing in fee business. It is by definition better return on capital. But it is also true, as Luisa said, that we are up-tiering our relationship with some clients. The banking business with sophisticated clients is very noble on one hand, but it is very sophisticated on the other. When you up-tier relationship with some of those clients, at some point in time, you have to put some balance sheet to play, and your banks know that very well. You have to participate in RCF for a syndicated loan.
For some time, this is not completely capital efficient, but obviously it is in order to gain this fee business. These clients understand very well this type of dynamics, and when you are up-tiering a client, maybe this year you decrease the profitability with that client, but structurally we are growing substantially more in fees and in more profitable business.
I would also like to add to what Javier is saying, that maybe this is counterintuitive because when we talk about CIB, we always think about investment banking revenues. But of the total gross revenues of CIB, almost 40% is driven by global transactional banking. That is a higher pool of revenues than global markets and investment banking, which is only, I would say, around 30% of this.
Yeah.
Really, it is obviously fees, but let us not think about fees driven by M&A or just taking somebody out to DCM. It is really about transactionality also with our largest clients, and that is what feeds that cross-border into Mexico, that cross-border into Spain, and that is what really is differential, I think, about our model and what we are trying to do as well.
Yes. This is hugely relevant. Among our comparables, we are the bank with highest proportion on global transactional banking business versus investment banking and finance and global markets, and this is the most profitable business, as you all know well. Let me tell you, we have EUR 108 billion in loans, including Turkey and Argentina. It would be EUR 101 billion, excluding them. EUR 108 billion in loans, EUR 110 billion in risk-weighted assets because it is these loans weighted and then all the global markets business. But importantly, EUR 97 billion in deposits. I repeat, EUR 97 billion in deposits compared with EUR 108 billion in loans. So it is obviously commercial and investment banking is more heavy on assets than on liabilities, but still, we have a very sticky transactional business with our clients worldwide and in our core markets, obviously, and that makes it a pretty balanced business.
Obviously, our transaction banking is the most profitable line of all.
We make more money on the liability side of the balance sheet than on the asset side in terms of NII, not including fees.
Okay. Thank you. Hugo, please.
All right. Thank you. A couple of questions. You gave some exposure on financial sponsors. I wonder if you could give a bit of exposure on private credit as well, CRE and data centers, because they have been very topical. Second, I think private banking can be a very important segment, especially linking Commercial to CIB. Just wondering if you could give a bit more color how that business works at BBVA and how meaningful it can be, private banking and wealth management. Thank you.
Okay. Let me start maybe by the last one, and then you guys can take the data center question. There are a lot of synergies, as you mentioned, between the product factories on the CIB side with wealth management and private banking. The highlight of this case, and I am glad that Lalo is here because I think it is a showcase of how we have been able to obtain synergies, for example, in Mexico, very relevant synergies, dedicating specific teams from CIB to cater to wealth management to the ultra-high net worth individuals. These are enterprise owners, where we work in multiple ways with the owner of the business as an owner of the business, but also from his family perspective. We work on succession plans and M&A-driven deals in that side. I think that for Mexico is relevant. But also we have seen progress in that front in Spain.
In the core geographies, I would say, primarily Spain and Mexico, that has been the case. The teams of CIB are more and more focused, not just catering to Commercial Banking, but within the Retail side, I would say primarily catering to the private management business. Again, we do have, I think, very good success stories on that front that, again, since Lalo is here, maybe he can also touch base on that.
Yeah. Wealth management is a very relevant synergy. Actually, we've launched a family office plan for Spain with Javier's team in Spain to cater the owners of the companies that we take care of in Commercial, and it's already very promising.
Yeah. The presence in commercial real estate in the big markets, let's be quite clear. We've started to do some relevant business, very relevant business in the data center space. It all started with the fact that we are a relevant player in markets like the U.S. and Europe in the energy sector. We specialize because of our sustainability strength, particularly in the renewable space. So we, as a private finance expert and as sustainability and renewables technical experts as well, we created this presence in energy market. In the last couple of years, it's been just two years, there's been a huge construction on commercial real estate, so-called data centers. Just to give you a number, yeah, it is true that our presence in 2023 was a bit more than EUR 300 million in real estate, and I will specify which are the tenants.
Now it's EUR 5.2 billion. This information is public. EUR 5.2 billion. So it's a huge growth. Data centers, where it's a big construction push in particular in some markets like the U.S. Of this specialized lending, which is like a private finance type of business, is EUR 3.3 billion, and there are six, seven tenants. I cannot tell you the names, but you could guess which are the tenants of these data centers, and I can tell you the ratings, AA- , A A+ , BB B, A A, A A+ . So basically, the usual suspects that are building these data centers with a contracted capacity in those centers. So it's a pristine type of risk.
Yes, we are specializing in this business, which is being very profitable, in order to work with the developers, which were our clients already, and now with the tenants, which are these hyperscaler, which are developing the AI investments worldwide, and we are definitely participating very successfully.
Yes. Fernando, please.
Okay. Thank you very much. Fernando Gil de Santivañes from Intesa Sanpaolo. Two quick questions, one regarding the public sector exposures and growth to Jaime, and the other one for CIB. On public sector, can you provide some color on what is going on in Venezuela, what opportunities are there in terms of infrastructure, energy investing, and what is changing in these two months that we have seen these changes in the country? The second question is related to CIB. How much of the ALCO portfolio is allocated to the NII looking forward, just to help us model on the earlier part of the business? The second one is, how much of the capital sensitivity is related to the CIB rather than into the Retail?
Finally, if you can provide some more color on what the RWAs of the Rest of Business unit would be looking forward into, let us say, 2026, 2027, and 2028, please. Thank you.
Okay. I think Javier is much better suited than me to answer the first question because he is the one that is doing road showing to the oil majors in Texas.
Yes.
I think he's better.
For Venezuela, let me take that one, and the public sector, Jaime can comment. Basically, Venezuela, a year ago, was not in our business plan for growth in CIB, let's be honest. Obviously, as you know, we are the only private bank which de facto operates in Venezuela. We've been there for many decades, and we've been very proud of what we've been doing in the country for our basically retail and SME business and for our colleagues there. It's been something which has not been, as you know very well, profitable for the group, but has been something that with our radical plan perspective, we put our reality where we put our mouth, basically. We've been successfully operating in Venezuela as much as success can be defined in the country.
A few months ago, we all realized that situation could change, hopefully for the better in the country. As the only private bank which operates there, I would say literally all companies, U.S. companies or from wherever they are, or Spanish companies that are planning to reinvest in the country are talking to us. Yeah. As an anecdote or as a relevant example, we were last week road showing with the major oil companies and energy companies and energy services in Houston, and they are, I would say, excited. Maybe it's a bit of overstatement, but they are interested in the possibilities of investing there, and we are going to go with them carefully as soon as they feel comfortable to invest in the country.
We could be creating in the next few years, we'll see how long it takes, profitable business for our clients in the region and more importantly, for the citizens of Venezuela.
Yeah. In terms of public sector, I think in general, debt levels all across different government entities have tended to increase over the last 10 years. This is part of the consequences of the global financial crisis. It was probably accelerated after COVID. Investments are only growing, and we are starting to see significant bottlenecks in energy infrastructure, which in many countries, it is public home. Which means that government entities need increasingly sophisticated products in order to take care of the investments that they need to do. That is why I mentioned during the Q&A that public-private partnerships are becoming a very relevant tool. For example, in México, and probably Lalo will talk about that, helping the government to execute the Plan México is one of our biggest opportunities in this sexenio. So this is the type of financing structures that we can develop.
We are being extremely innovative in the way that disbursement of funds through the public sector can be delivered to the final recipient. We have also very good examples in Mexico of these dispersión capabilities, and distributing those public funds are also a very relevant source of business.
So—
Fernando, there were some questions that I guess—
Yes.
—Luisa and Patricia have a. Yeah, I do not know this [crosstalk]
So the—
And the [inaudible]
Yeah, I can give you some numbers, which are the same numbers that we always give. There's nothing specific, I would say, regarding CIB in terms of sensitivity to rates on our balance sheet, because those are mainly driven by deposits and specifically deposits on the retail side. But perhaps when we look at capital, just a few reminders. We do have, obviously from an FX perspective, we have a 12 basis point sensitivity. So that's to a 10% appreciation of the dollar. So we will have a negative impact from an appreciation of the dollar. 10% appreciation of the dollar, 12 basis points CET1 sensitivity. Okay, so a lot of activity comes from the dollar, but we have dollar businesses everywhere.
Just to give you a highlight on that, and you know the rest of the sensitivities that we have, but maybe to remind them, for all of you, we have 15 basis points sensitivity to 10% depreciation of the Mexican peso. And we have around 3 basis points sensitivity to a 10% depreciation of the Turkish lira. So that's on the effect side. Also, I would say that from a liquidity side, everything is also performing well. Then also relevant for capital is RWA growth. Obviously, when we have large or significant growth coming from the CIB business or the Commercial Banking business, but I'm mentioning CIB businesses because usually they're large deals, large tickets. When they come, it obviously generates RWA growth. So you will see that obviously coming through the CET1, as you know.
But I think that what's more relevant as well is that we've been mobilizing capital significantly last year. We generated 35 basis points of capital on the back of SRTs. Most of these SRTs, or I would say 100% of the SRTs that we do, are done on the back of our developed markets exposure. I can say that of around the EUR 11 billion RWAs that we freed up last year in terms of from our SRT activity, around 33% of that is done from just specifically the CIB portfolios. Last year, we were SRT-ing or mobilizing around 50% of the origination that we did in CIB. This number we expect to grow as we try to develop and industrialize our capabilities from a capital mobilization standpoint, and hopefully also working with Turkey and Mexico to be able to mobilize capital further.
So we do expect, and we do see growth in CIB and RWAs. But I would say that there is a lever in CIB, as well in corporate lending also in the high mass world, that is basically concentrating the activity that we do in trying to optimize capital efficiently.
Thank you. We have Borja and Britta then, please.
Yes. Hello. It's Borja Ramírez from Citi. I have one question on LATAM. So we've seen, in the past, increased investor appetite for LATAM, for example, beginning of this year. So I'd like to ask, how can your CIB platform monetize and take opportunity of these flows, for example, from your debt capital markets or FX businesses?
Borja, you said that you perceive what? I didn't hear the word at the beginning.
For example, when there's a market risk on environment, for example, we noticed at beginning of this year increased investor interest into LATAM.
Okay. Increasing interest. Okay. Yeah, definitely. Well, we've been learning the hard way that the world is a complex place, with a lot of geopolitics. And yeah, it's true that Latin America, from Mexico to Argentina and Chile, it's one of the most peaceful, relatively speaking, regions in the world. And it's true that we've seen an interest of big international investors in investing more than in the last decade in the region. By the way, the region is a theoretical construct, so it's very different, the situation in each of the countries. And we know that very well because we have such relevant presence in Latin America. This is precisely what we've tried to convey today, which is the fact that we have biggest foreign banking in Peru. We have biggest international bank in Colombia.
We have the leading bank by a huge margin in Mexico, as you know well, and Lalo will elaborate later. One of the two biggest private bank in Argentina, the only private bank in Venezuela, Uruguay, and so on and so forth. We are a player in the region, no doubt. And what we are seeing is that each of these markets is different. The political situation, the macroeconomics, and the possibilities are different. And this is a great example of what I mentioned, that one of these big financial investor wants to go to the region or is already present in the region. They normally use their traditional advisors in their home market to start with, and then they call us in order to complement the service and help them.
It is very typical for us to be participating in the investments of those clients in these regions, complementing the service that all the banks or international banks provide, and it is a huge value add. We advise them in order to do the right thing at the right moment. We help them with derivative, with hedge. It is normally weaker currencies that they need to hedge. In Mexico, as Lalo again will explain, it looks that there will be good opportunities to invest in infrastructure and energy. Obviously all those clients call us in order to provide them advice and service.
Britta, please.
Yeah. Hi. It is Britta from Autonomous. I have got two questions. I think Luisa already answered part of one of my questions. I think you mentioned that you mobilized 50% of the new business. Can you maybe talk a little bit about what sort of structure that is? Is that mainly for capital management purposes, or are you also, for example, syndicating business in areas where you are particularly strong, such as Mexico, for example? My second question would be, how do you think about the regulatory challenges of competing, for example, versus U.S. banks, in the CIB business with large clients, given that there are still disadvantages, potentially disadvantages, for European banks versus U.S. banks?
Also, on the first question, we are basically doing synthetic securitizations. It is your very standard deals with relevant players. We are very conservative in the way that we structure the deals. There is no mismanagement in terms of the underlying flows or the maturities of the businesses and the way we structure the deal. Very transparent in that sense. We are not syndicating any specific activity. In Mexico, what we are trying to do is work through the SRT from a capital management perspective. That is our primary focus, capital efficiency and mobilizing the capital. We have had approaches from players interested in syndicating deals.
But for the time being, I think that we want to make sure that we have the capabilities and the industrialization capabilities to do this, and make sure that at the end of the day, when we do SRTs, the players that we are approaching and that are approaching us are basically buying our underwriting capabilities, and we want to make sure that is the case. So we are quite comfortable for the time being on what we're doing, and we'll see how we can do things further if the market develops in that way.
Second question was about a competitive disadvantage of European banks doing business out there. Is it—
Regulatory framework.
Regulatory framework, if there's any disadvantage or otherwise, that was sort of the question. I would say to us, it's not necessarily. So we are basically European headquarter bank and regulated by Europe obviously, that operate in 25 markets and almost 10 of them with a universal bank. I would say that European supervisors, you know better, Luisa, but it's one of the most sophisticated, and I think that structurally is a competitive advantage, being regulated by such a sophisticated supervisor and operate in all those markets. And actually, I would say that also we learn from each jurisdiction in terms of what the supervisors or regulators ask us. So no, I would say that in general, multinational banks manage it properly. I wouldn't say it's more of a partial advantage, I would say.
I think that to that point, there is just sort of a nuance to the answer and the question. I think it is a very different story when you look about perhaps European banks that are very relevant in investment banking business, that have very relevant teams competing in the U.S. and here. Things like output floors have not affected BBVA. They have affected other players. Regulation definitely is different in Europe and from our U.S. players. There has been obviously a lot of conversations also within European banks with the ECB regarding the level playing field and regulatory landscape. There is, I think, a substance to that. FRTB is something that is also on the agenda. How that plays out is also going to be important for certain players.
I can say that FRTB for us is going to be very limited in terms of impact because we are not a large player in the global markets arena in that sense as compared to other European players. I would say yes, there is, I think, a situation where deregulation in the U.S., regulation in Europe, semi-regulation in the U.K., generates all these challenges for competitive purposes. But I would say that BBVA and BBVA's business is not relevantly affected by this and what Javier wants to do with his strategy going forward.
Unfortunately, well, last question not so because we are running out of time.
Sorry, I will be quick. First one, actually, pretty simple. If you can give us the geographical lending breakdown of both Commercial and CIB. The second one is if you can comment on your software TMT exposure, and if you are more concerned now following recent developments, AI disruption, et cetera. Thank you.
So I—
Maybe we can give you the numbers maybe later.
The numbers of your geographical breakdown, probably Patricia can provide that later.
Yeah, later. Yeah.
Jaime?
I can give a very fast answer. 80% of our portfolio is in Spain and México. We have a loan portfolio of EUR 60 billion in Spain and EUR 27.5 billion in México.
That is Commercial.
That is Commercial.
For all rest and CIB, Patricia can provide.
Right.
In terms of exposure to software, we are pure software players, EUR 600 million. I do not know which point something percent. 0.0- something, I think. It is not relevant. IT services is another EUR 2 billion.
Okay, thank you very much for all your questions. Thank you, Javier and Jaime, for your presentation. It was really insightful. Thank you.