You would see the numbers high-single-digit in the coming year. Regarding fees, the second question, overall the business is doing so well, especially in the payment systems. A good part of Mexican fee situation is payment systems, 59% of the fee income comes from what we call payment services. 50% of the 59% is actually cards and POS, the acquiring business. And that has grown 20% in the year, 20% year-over-year, 12 month ’23 versus 12 month ’22, so — and we are gaining market share in credit cards as you know well. Asset management is also important. It has grown 17%. So overall, when I look into all the line items, I see very robust growth. So, we are quite positive on the fee income evolution in Mexico as well.
Antonio Reale: Thank you.
Patricia Bueno: Thank you. Thank you, Antonio. Next question, please.
Operator: The next question is from Benjamin Toms at RBC Capital Markets. Please go ahead.
Benjamin Toms: Good morning, both, and thank you for taking my questions. As a management team, you’ve historically spoken about your excess capital, but spoken less about timing and cadence of buybacks. I was hoping you could remind us of how you define your excess capital? And at what point do you expect to have returned the majority of that back to shareholders? And then secondly, on cost of risk in Mexico, that’s up 25 basis points the guidance year-on-year, I mean, presumably, that’s at least partially driven by mix. Your consumer and credit cards are about 25% of your Mexican loan book. Where do you see that number ultimately going to? And will that come ultimately with a cost of risk that is higher than 325 basis points? Thank you.
Onur Genc: Thank you, Benjamin. The second one, Luisa, maybe you take that one on the first one, on the excess capital. We have been saying it all along, and we will reiterate it once again today. We don’t want to operate — we don’t like to operate with excess capital. And we have a clear commitment to return the excess capital, as we have been doing, in my view, over the years back to our shareholders. So, you remember that the upper end of our capital targets range is 12%. That 12% is still our goal, our management’s reference. In that sense, we will time it properly, obviously, but we will continue on the path that we have been having. The commitment is clearly there. There is this regulatory impact topic, I mean, organic capital generation is very robust.
We have guided you in the past that around 60 basis points we will organically, beyond the regular payout that we have, we will continue to generate around 60 basis points of organic capital. That is still our plan and our expectation. If you put that into the excess capital that we have, I do think that there will be more share buybacks to come along the way, but again, we will time it properly. Luisa, on the cost of risk in Mexico.
Luisa Gomez Bravo: Yes. Well, I think that, as you mentioned, the increase to 325 basis points is primarily driven also, again, by the continued growth in the retail portfolios that yield more. So there is definitely a mix effect there. I think the underlying trends as well this year have been supported also by positive impacts on the recalibration of our models, and we believe that the underlying trends as we grow in the retail portfolios continue to grow there will be more aligned with the 325 basis points cost of risk while maintaining the profitable growth in the portfolios, as mentioned in terms of returns. So, that’s primarily what drives the increase in the cost of risk. And we also think that the start of the easing cycle expected in the first quarter of this year will help progressively improve the trends going into the year.
And we have also been working in the fourth quarter in fine-tuning our admission policies, specifically in the consumer segment, especially in the open market. So that’s obviously has implied a better, I think, admissions, quality admissions of the vintages that are new. But we still have to also see how the vintages, the older vintages progress. So that’s why we have that 325 basis points going into the year again, more biased towards the beginning of the year than towards the end and supported on the continued growth in the retail side.
Onur Genc: In Mexico, I would once again highlight something that we talk about all the time. The banking debt over GDP in Mexico is 36%, one of the lowest, lowest in all the emerging markets landscape. It’s half of Brazil, it’s one-third of Chile. It’s again, we keep saying about it, but it’s lower than Nicaragua. So, the banking debt — it goes back to the Tequila crisis many years ago and so on. So, Benjamin, the lending book, that’s why we are guiding a double-digit loan growth. The banking book will grow in a healthy way because the leverage in the system is very high. In credit cards, we have a much higher than average market share in credit cards. We are very well positioned. Our scale is very positive on that one. You asked about the 25% weight of the loan book.
In general, the loan book will grow. That’s the key story in Mexico. And within that, given our strength, I would expect that 25% to go higher, but you would not expect a dramatically different number going forward because the overall lending book will also increase in a very healthy way.
Patricia Bueno: Thank you, Benjamin. Next question?
Benjamin Toms: Thank you.
Operator: Our next question is from Sofie Peterzens from J.P. Morgan. Please go ahead.
Sofie Peterzens: Yes. Hi. This is Sofie from J.P. Morgan. So my first question would be how you view inorganic growth opportunities, especially in South America and also in Spain? And then my second question would be in Mexico, Nubank is becoming quite aggressive. They’ve had a huge success story in Brazil. But how do you see kind of competition in the Mexican banking market? And does it make any impact on BBVA? And then just a final follow up question. How should we think about the regulatory capital headwinds or any capital headwinds in ’24? I guess you will see the share buyback deducted, but if you could just comment on that. Thank you.
Onur Genc: Thank you, Sofie, for all the three questions. Maybe on the regulatory topic, Luisa, you help me out. On the inorganic growth there is nothing new. We are focused on organic growth, our complete focus is on organic growth. It doesn’t mean that we don’t look into opportunities, but we are focused on organic growth, and nothing more to say on that one. On the Mexico question, I have this chart. I wish I could project it to all of you now and you can see that, which is the neo-banks market share in the new cards that is printed in Mexico. So, forget the base, forget the stock. The new cards that are emitted in a single month, what percent of that is BBVA, and what percent of that — it’s an estimation, it goes back to our own data.
But what percent of that newly emitted cards and the spending from those cards come from neo-banks in general. And some of the names that, or one of the names that you mentioned, we respect them a lot. They are very successful, very nimble, very agile players, and we always respect our competitors and we appreciate them. But I also see the trend in this curve, and when I look into this trend, it’s a very nice trend. In the last seven quarters the peak, the neo-banks market share in these new cards emitted, it peaked in the first quarter, 2022. And since then, every single quarter, it’s coming down. This is a clear strategic program for BBVA. We are defending our turf. We are getting closer to our customers. We will do our best to make sure that we compete in the best possible manner.
