So, the capital of today and the capital after Basel, they will be two different numbers because the baseline would change or the calculation or the approach would change. In that context of, there will be this Basel impact also, I cannot square the fact that there will be further requirements and big requirements, I don’t see that. But again, we are dependent on our supervisor, on our regulator on these decisions, and let’s see what happens. The thing that on the capital returns, I would reiterate one thing which might not be that clear. We are again very committed, as we have been telling you from the first day, that we will return back to our capital target range, the upper end of our range, which is 12%, and we will time it properly, but we will continue to do share buybacks or extraordinary payments to our shareholders because we do have this excess capital.
And more importantly, we do create organically. We do create capital in every single quarter. So, the 12% to avoid the cliff effect, then let’s again be very specific on this, the expected Basel impact for BBVA is less than 40 basis points. But less than 30 of this will come in, in 2025, in January. So there will be some phasing and so on. We always will look into fully loaded, but the impact in January 2025 will be less than 30. To avoid the cliff effect, we would not be immediately going below 12% because of the Basel impact and so on. Incorporating the 2025 Basel impact, we are still very committed to return the excess capital to our shareholders.
Patricia Bueno: Thank you, Britta. Next question, please.
Operator: The next question comes from Andrea Filtri from Mediobanca. Please go ahead.
Andrea Filtri: Yes, thank you for taking my questions. More specific question on NII sensitivity, please. What would be the NII sensitivity with forward rates and flat beta? And the second question is on payout. Do you stand by the 50% regular payout split between 40% in cash and 10% in share buyback? Thank you.
Onur Genc: On the first one, do you have an answer? No, [Ignacio] (ph), why don’t we get back to you on that one? We don’t have the models in front of us, but we can get back to you.
Luisa Gomez Bravo: This is the assumption that we have is the current basis of what we’ve been managing. So the other assumptions are not what we are managing. Let’s call it that way.
Onur Genc: Yes. But deposit beta, with deposit beta being flat, what would be the sensitivity? We can come back to you on that one. Then on the regular — on the payout of 50, 40 plus 10, we did talk to you in the past that we do have this tendency of having a significant part of our payout for cash dividends, which is the 40% that you have seen. Then, the rest as long — it depends obviously on the share price, on the value that we create for our shareholders. But our threshold there, or our level, where we would then say, no, we won’t do any more share buybacks is the fair, in our view, a fair value of the share price, which is not the tangible book value of the share, because the fair value in our view is much higher. So, there’s still a lot of room to get to that level where we would not consider anymore the share buybacks and we would only do the cash dividends.
So I would say that 40, 10, or in that range will be obviously, it’s the decision of the Board, and it’s the decision of the General Assembly, but our suggestion would be in these ranges going forward.
Patricia Bueno: Thank you. Thank you, Andrea. Next question, please.
Operator: The next question is from Ignacio Cerezo from UBS. Please go ahead.
Ignacio Cerezo: Yes. Hi, good morning, and thank you for taking my questions. I’ve got two, if I may. The first one is your best approximation of Argentina’s profits in ’24, or how much are you budgeting versus the ’23 number? And the second one is qualitative, open-ended question, but how long do you think it’s going to take Turkey to go back to a normalized profit contribution? I’m not going to ask you exactly what that contribution is going to be, but from a timing point of view, actually, is it like a two, three year period, or do you think it can take longer than that, based on what you have today in terms of macroeconomic assumptions and measures being taken in the last six months? Thank you.
Onur Genc: On Argentina, you did become the expert on Argentina, Luisa.
Luisa Gomez Bravo: Well, I think that the first thing that’s — what’s important under our assumptions is the macro scenario, especially on the devaluation front. So, obviously, as you know, we saw a 54% devaluation in the last quarter at the Argentine peso, and we think there will be a further devaluation. And our research teams are expecting the depreciation or the currency to go to 15.42. So that obviously affects the environment or obviously the P&L development. And also the inflation, because, as you know, with hyperinflation, we also need to consider inflation. We see a context of inflation increasing in 2024. We will have an end of — an average inflation growing. Obviously, end of the period inflation will come down.
We had 211% at the end of 2023, and we’re expecting end-of-period inflation of 175% in 2024. However, when you look that on average basis, the average inflation will go significantly up in 2024. So that obviously impacts how we see the hyperinflation accounting and the net profit — net monetary loss. And obviously, these are moving pieces. But within those contexts of further strong depreciation of the currency, higher average inflation in the year, we are expecting Argentina to be around perhaps 20% to 30% below the numbers that we have in the year. But again, these are very much moving pieces, and this is in current terms.
Onur Genc: Yes. It doesn’t change the overall big picture, but slightly lower is what we are — in the planning cycle, that’s what we have. Regarding the Turkish situation, I just remembered that I forgot to answer Britta’s question in full. The expectation of inflation in our numbers, in the expectation for 2024, the inflation for the country is at 45% at the end of the year, 45% inflation in 2024. Obviously, the government is expecting less, but our forecast is 45% at the moment. Then the question Ignacio on when do we expect Turkey to normalize? Is that two, three-year period or a five, six-year period? Our expectation is two to three-year period. What we have seen in the last six months in Turkey is even better than our positive expectations that we could have had.
This return to orthodoxy is proving to be working. You are seeing it in multiple dimensions, you are seeing it in the CDS spreads. It went down below 300, like half of what it was some months ago, and then now it’s a bit back up above 300. But the CDS spreads the money flow, and there are something — they are going on the right path in our view. There is a new economic team, as you all know in Turkey, and the economic team is doing what they need to do. And they are also keeping a very close focus on fiscal deficit, they are keeping a very close focus on inflation, and so on. If the path continues, which is our base case expectation, then Turkey will come back to normal in two, three years. This is what also the government has in the plan I mean, they are expecting, if I’m not mistaken, 33% 2024 inflation.
In 2025, they are expecting around 15% inflation, which basically says that they will normalize. Turkey will normalize in two years. So there might be some margin around these expectations — around these forecasts of the government, but if they continue on the path that they are on, then it’s a two, three-year time frame that we are talking about. And when that happens, there is this option value that we talk about Turkey. Turkey is a very large country, more than $800 billion of GDP and so on. If that happens, if that path continues, we have an amazing option value in Turkey. If there was no hyperinflation in Turkey, or hyperinflationary accounting in Turkey, we would have posted not EUR500 million, EUR2 billion of profits this year in local currency, it’s in that range, know, EUR2 billion.
