Contents 2 BBVAGroupHighlights
3 Groupinformation Relevantevents........................................................................................................................................................................................................................................................... 3
Earnings................................................................................................................................................................................................................................................................................6
Balancesheetandbusinessactivity................................................................................................................................................................................................. 13
Capitalbase.....................................................................................................................................................................................................................................................................17
Riskmanagement...................................................................................................................................................................................................................................................19
TheBBVAshare........................................................................................................................................................................................................................................................ 22
Corporateresponsibility................................................................................................................................................................................................................................. 23
24 Businessareas Spain..................................................................................................................................................................................................................................................................................... 26
Eurasia.................................................................................................................................................................................................................................................................................. 31
Mexico..................................................................................................................................................................................................................................................................................35
SouthAmerica...........................................................................................................................................................................................................................................................39
TheUnitedStates...................................................................................................................................................................................................................................................43
CorporateActivities..............................................................................................................................................................................................................................................47
Otherinformation:Corporate&InvestmentBanking...............................................................................................................................................50
January-September2012
QUARTERLYREPORT
2 BBVAGroupHighlights
BBVAGroupHighlights
BBVA Group Highlights (Consolidatedfigures)
30-09-12 ∆% 30-09-11 31-12-11
Balance sheet (million euros)
Totalassets 645,447 10.4 584,438 597,688
Customerlending(gross) 377,383 7.0 352,633 361,310
Depositsfromcustomers 288,709 2.4 282,050 282,173
Othercustomerfunds 160,113 16.7 137,252 144,291
Totalcustomerfunds 448,823 7.0 419,302 426,464
Totalequity 43,750 9.7 39,868 40,058
Income statement (million euros)
Netinterestincome 11,220 16.0 9,676 13,160
Grossincome 17,103 13.6 15,052 20,566
Operatingincome 9,000 16.1 7,753 10,615
Incomebeforetax 2,173 (47.6) 4,145 3,770
Netattributableprofit 1,656 (47.3) 3,143 3,004
Netattributableprofitadjusted(1) 3,345 (3.8) 3,478 4,505
Data per share and share performance ratios
Shareprice(euros) 6.11 (1.1) 6.18 6.68
Marketcapitalization(millioneuros) 32,901 10.3 29,817 32,753
Netattributableprofitpershare(euros) 0.32 (50.3) 0.64 0.62
Netattributableprofitpershareadjusted(euros)(1) 0.63 (11.4) 0.71 0.93
Bookvaluepershare(euros) 8.13 (5.6) 8.61 8.35
P/BV(Price/bookvalue;times) 0.8 0.7 0.8
Significant Ratios (%)
ROE(Netattributableprofit/Averageequity) 5.3 11.3 8.0
ROEadjusted(1) 10.7 12.5 11.9
ROTE(Netattributableprofit/Averagetangibleequity) 6.7 15.2 10.7
ROTEadjusted(1) 13.5 16.8 16.0
ROA(Netincome/Averagetotalassets) 0.46 0.83 0.61
ROAadjusted(1) 0.83 0.91 0.88
RORWA(Netincome/Averagerisk-weightedassets) 0.85 1.46 1.08
RORWAadjusted(1) 1.53 1.60 1.55
Efficiencyratio 47.4 48.5 48.4
Riskpremium 1.92 1.10 1.20
NPAratio 4.8 4.1 4.0
NPAcoverageratio 69 60 61
Capital adequacy ratios (%)
Corecapital 10.8 9.1 10.3
TierI 10.8 9.8 10.3
BISRatio 13.3 12.6 12.9
Other information
Numberofshares(millions) 5,382 11.6 4,825 4,903
Numberofshareholders 1,007,410 2.7 981,348 987,277
Numberofemployees(2) 117,475 6.2 110,625 110,645
Numberofbranches(2) 8,072 8.6 7,436 7,457
NumberofATMs(2) 20,181 10.9 18,192 18,794
General note: These quarterly statements have not been audited. The consolidated accounts of the BBVA Group have been drawn up according to the International Financial Reporting Standards (IFRS) adopted by the European Union and in conformity with Bank of Spain Circular 4/2004, together with the changes introduced therein.
(1)In2011,duringthefourthquarter,USgoodwillimparmentcharge.In2011and2012,impairmentchargerelatedtothedeteriorationoftherealestatesectorinSpain.Andinthethirdquarterof2012,impactofUnnimbadwill.
(2)ExcludingGaranti.
3Relevantevents
ThefollowingarethemostimportantfeaturesoftheBBVAGroup’
earningsinthethird quarter of 2012:
1. Intermsofsolvency, BBVAcomfortablypassedOliver
Wyman’sstresstestandcontinuestocomplywiththecapital
recommendationsoftheEuropeanBankingAuthority(EBA).
2. Positiveperformanceofrecurring revenue inallgeographical
regions.
3. ThishasenabledtheGrouptoabsorbagainasignificant
increaseinitsloan-loss provisionsinSpain,inordertocoverthe
ongoingimpairmentofitsrealestateportfoliosandassets.
4. TheGroupcontinuestostrengthenitsliquiditypositionthrough
comprehensivemanagementineachofthegeographicalareas
whereitoperates,whileimprovingitsfinancingstructure.
5. TheUnnimconsolidationonJuly27.
6. Maintenanceofthecurrentdividendpolicy.
Thesepointsarediscussedbelowinmoredetail.
1. BBVAcomfortablypassedOliverWyman’sstress test.
• Theresultsofthestress testconductedbyOliverWymanon
14Spanishbankinggroups(90%ofthebankingsystem)were
publishedonSeptember28th.Itfocusedonananalysisofthe
portfolioofloanstothedomesticprivatesector(including
foreclosedrealestateassets).Thisworkhasbeenadecisive
stepinrestoringmarketconfidenceinthesector.
• Thestudyenjoysahighlevelofcredibility,sincethe
Europeanauthoritieshavemonitoredtheprocessvery
closelyandagreedonthemethodologyused.Inaddition,the
dataprovidedbythebanksandtheBankofSpainhasbeen
reviewedbyexternalauditorsandindependentrealestate
appraisers.
• Thetheoreticalexerciseconsidersastress scenariothat
ismorenegativethantheoneusedinothercountries
(Portugal,IrelandandGreece),andevenmoreseverethan
theoneconductedinJunebytheInternationalMonetary
Fund(IMF)forSpain.
• Themainresults and conclusions are:
– Aggregatecapitalneedsforthefinancialindustryunder
averyadversescenarioamountto€53,700m(including
thetaxeffectandconsideringthemergerprocesses
underway).Therefore,ingeneraltermstherehavebeen
nomajorsurpriseswithrespecttotheresultsofthe
top-downexerciseconductedlastJune(between
€51,000mand€62,000m).Inaddition,theamountiswell
belowthe€100,000mthattheEuropeanUnionhasmade
availabletothesector.
– Eveninthemostadverseandhighlyunlikelyeconomic
scenario,sevenbankinggroups,whichaccountformore
than62%oftheloanportfolioanalyzed,havenocapital
needs.Inshort,thestudyoncemoreshowedthegreat
disparitywithintheSpanishfinancialsystem,withahard
coreofstrongbanksandvulnerabilitylimitedtoaspecific
partoftheindustry.Thiscleardistinctionwillmakeit
easiertospeeduptherestructuringofthesector.
– Asexpected,BBVAisoneofthebanksincludedinthe
groupwithnocapitalneeds.Itcomfortablypassedthe
stresstest,thankstoitsrecurringrevenueandsoundness
ofitsbusinessmodel.
• Infact,fromapracticalpointofview,attheendofthe
thirdquartertheBankcontinuestocomplywiththeEBA’s
recommendations.Asof30-Sep-2012BBVAmaintainedthe
coreratiopostedatthecloseofthefirsthalfoftheyearof
10.8%underBaselII.
2. Recurring revenuecontinuestoincrease,asshownbythe2.6%
growthingrossincomeinthequarter,excludingnettrading
income(NTI)anddividends.Theaverageannualgrowthrateis
14.0%.Themainreasonsforthiscontinuetobe:
• Strongactivityinemergingmarkets.
• Goodmanagementofspreadsinallregions.
• Positiveperformanceoftheinsurancebusiness.
3. TheabovehasenabledtheBanktoabsorbagainasignificant
increaseinloan-loss provisionsaimedatreflectingthe
impairmentofassetsrelatedtotheSpanishrealestatesector.So
farthisyear,theGrouphassetasideprovisionsof€2.9billion(€1.6
billioninthethirdquarter),includingbothloan-lossprovisions
andprovisionsforforeclosedandacquiredassetswithinthe
scopeofRoyalDecree-Laws02/2012and18/2012,thuscomplying
withtwo-thirdsoftheprovisionsrequiredintotalbybothRDL’s.
Aftermakingtheseprovisions,BBVApostedacumulativenet
attributableprofitof€1,656m(€146minthethirdquarter).
4. Comprehensiveliquiditymanagement,whichenablesthe
Grouptomaintainacomfortableposition.Thefollowingisworth
mentioninginthisregard:
• BBVAhassuccessfullycompletedseveralissuesofsenior
debtinEuropeandotherplacementsintheAmericas
(MexicoandPeru,amongothercountries)withasignificant
levelofdemand.
Groupinformation
Relevantevents
4 Groupinformation
• Mexicomaintainsitssustainedgrowthinactivity,aboveallin
theretailportfolio.Commercialcampaignshavebeenlaunched
thatareboostingconsumerfinance,financeforsmallbusinesses
andthegatheringoflower-costliabilities,suchascurrentand
savingsaccounts.Asaresult,netinterestincomecontinuesto
performwell,andincreased8.5%overthelastyearatconstant
exchangerates.This,combinedwiththepositiveperformance
oftheinsurancebusiness,theyear-on-yearincreaseinoperating
expenses(atlevelssimilartothoseseeninpreviousquarters),
andthestabilityoftheriskpremium,ledtoacumulativenet
attributableprofitof€1,300m(up4.0%year-on-year,alsoat
constantexchangerates).
• South America enjoyedonceagainoutstandingperformance
inactivity,customerspreadsandassetquality.Asaresult,
theregionwasabletomaintainitsexpansionandgrowth
planswhilepostinga24.1%year-on-yearincrease(atconstant
exchangerates)incumulativenetattributableprofitto€1,014m.
• The United Statesmaintainsafavorabletrendinactivity,asset
quality,earningsandsolvency,verymuchsupportedonthe
localbusiness.TheloanbookofBBVACompassgrew4.5%
year-on-yearthankstothepositiveperformanceofthetarget
portfolios(residentialmortgagesup20.3%andcommercial
loansup25.5%),whilecustomerfundsincreased9.5%dueto
thegoodperformanceoflow-costfunds.Thedecreaseon
impairmentlossesonfinancialassetshashadaverypositive
impactonearningsandoffsettheflatperformanceofnet
interestincomeinthecurrentenvironmentoflowinterestrates
andarelativelyflatcurve.Asaresult,theareagenerateda
cumulativenetattributableprofitof€341m(up29.3%atconstant
exchangerates).
The economic background
Inthethirdquarterof2012,theworld economycontinuedto
runoutofsteam.Thiswastheresultofweaknessthathasbeen
particularlyclearintheeurozone.Butithasalsobeenapparent
thattheemergingeconomiesinAsiaandLatinAmericaare
notimmunetotheeffectsofthecontinuedfinancialtensionsin
theEuropeandebtmarketsandhavealsobegunamoderate
slowdown.However,theauthoritieshavereactedwiththeadoption
ofnewmonetarypolicymeasures(andinthecaseoftheeuro
zone,institutionalmeasures),whichshouldhelprestoremarket
confidenceintheeurozone.
ThemostrelevantactionshavetakenplaceinEurope. Following
theagreementsreachedattheEuropeansummitlastJune,major
stepshavebeentakentostrengthenthegovernanceofthe
EconomicandMonetaryUnion.Themeasuresadoptedinclude
theimplementationoftheEuropeanStabilityMechanism(ESM)
andprogressintheprocessthatwillleadtothecreationofasingle
Europeanbankingsupervisor.Butthemostdecisivemeasure
hasbeentheannouncementbytheECBofanewprogramfor
unlimitedpurchasesofsovereigndebtofthosecountriesthatopt
toaccessthesefunds,understrictconditionality.Thisinitiative
hascontributedtoeaseconcernsontheriskpremiumsofthe
peripheralcountriesandreducetailrisk.Overall,themeasures
explainedabove,inadditiontothosealreadyadoptedinJune,
representawindowofopportunityforresolvingthefinancialcrisis
• Growthincustomer deposits.Theincreasedproportionof
retaildepositsontheliabilitysideofthebalancesheetin
allthegeographicalareascontinuestoallowtheGroupto
improveitsfinancingstructure.
• ReductionintheCorporate & Investment Banking (CIB)
portfoliosinalldevelopedcountries.
• Improvementinavailablecollateral.
5.Theacquisitionof100%ofthecapitalstockofUnnimBanc,
S.A.wascompletedonJuly27,withaverylimitedimpact
onsolvencyandoncreditandliquidityrisks.Themain
effectsofitsincorporationintotheGroup’sfinancialstatements
are:
• Inclusionofanetworkwith556branchesand3,028
employeesthatmanage€18billionincustomerloansand
€11billionincustomerdeposits(dataasofthecloseof
September2012).
• Noimpactonliquidity,sinceahighpercentageofitsloan
bookiscollateralizableandithasabroadbaseofretail
deposits.
• CreditriskisstrictlylimitedbytheAssetProtectionScheme
(EPA)thatcoversitsmoreproblematicportfolios,andby
itshighNPAcoverageratio.However,itshighNPAratio
significantlyaffectsthatoftheGroup,adding53basispoints
tothefigureforthecloseofthefirsthalfof2012.
• Withrespecttosolvency,theimpactoftheincorporationof
Unnimispracticallyneutralintermsofcorecapital,asthe
increaseinrisk-weightedassetsisoffsetbythegenerationof
badwillfor€320m,andtheexchangeofhybridinstruments
heldbyUnnimretailcustomersforBBVAshares(thelatter
willimpactinOctober).
6. ThelevelofrecurringearningsenablestheGrouptocontinue
withthedividendpolicyapprovedatthelastGeneral
ShareholdersMeeting(AGM).InOctober2012,theamountof
€0.10persharewaspaidunderthe“dividend-option”scheme.
Around80%ofshareholdersoptedtoreceivenewlyissued
BBVAshares,whichoncemoreconfirmsthesuccessofthis
remunerationsystem.
Thefollowingisworthmentioningwithrespecttothebusiness
areas:
• Spain generatedacumulativeoperatingincomeof€2,972m,
6.2%uponthefigure12monthsearlier.Theincreaseininterest
incomeisoutstandingthankstogoodpricemanagement,
andthecontroloveroperatingexpenses.Loan-lossprovisions
haveincreasedsignificantlytooffsetthegradualimpairmentof
realestateportfoliosandassets.Asregardsactivity,themost
relevantaspectcontinuestobethefavorableperformanceof
on-balance-sheetcustomerfunds.
• Eurasia generatedacumulativeprofitof€813m(up13.0%
year-on-year)thankstothegoodperformanceofGarantiand
thegrowingcontributionofthestakeinChinaCiticBank(CNCB).
5Relevantevents
Interest rates (Quarterlyaverages)
2012 2011
3Q 2Q 1Q 4Q 3Q 2Q 1Q
OfficialECBrate 0.76 1.00 1.00 1.28 1.50 1.25 1.00
Euribor3months 0.36 0.69 1.04 1.49 1.54 1.44 1.10
Euribor1year 0.90 1.28 1.67 2.05 2.00 2.13 1.74
USAFederalrates 0.25 0.25 0.25 0.25 0.25 0.25 0.25
TIIE(Mexico) 4.79 4.76 4.78 4.80 4.81 4.85 4.85
TheavailabledatasuggestthattheslowdowninChinathroughout
thisyearisbecomingmoreintense,dueparticularlytolower
foreigndemand.Theauthoritieshaveannouncedafiscalstimulus
packagebasedoninfrastructuresandhousingconstruction.
Despitenotbeingasambitiousasthatimplementedin2008-2009,
itdoesguaranteethatgrowthwillcontinueatanotablepacethatis
consistentwithofficialtargets.
Finally,Turkeycontinuestobeimmersedinaprocessaimed
atcorrectingitsimbalances.Theauthoritieshaveimplemented
reformsinanattempttoaddresstheaccumulatedimbalancesin
thecountry,especiallythoserelatedtohighenergydependence
andhighinflation.Althougheconomicactivityhasslowed,ithas
donesopartlyduetoeconomicpolicy,particularlymonetarypolicy.
Inconclusion,thegrowthrateoftheTurkisheconomyisexpected
tospeedupslightlyintheremainingmonthsofthisyearandin
2013.
Withrespecttoexchange ratestherewasageneralappreciation,
bothyear-on-yearandoverthequarter,intheaverageratesofmost
oftheforeigncurrenciesthatarerelevanttotheBank.Intermsof
finalexchangerates,therewasasignificantgeneralappreciation,
butoverthequarterthiswaslimitedtotheMexicanandChilean
pesos.Asaresult,theimpactofforeigncurrenciesontheGroup’s
balancesheet,activityandearningsispositiveinbothquarterlyand
year-on-yearterms.
inEurope,althoughtherewillcontinuetoberealrisksoverthe
comingquartersregardingtheireffectiveimplementation.
IntheUnited States,thelatestdataconfirmfearsofamore
pronouncedslowdown.Althoughsomesectorshavepickedup
theirgrowth(forexample,theresidentialsector),thishasnotbeen
enoughtooffsettheweaknessofdomesticdemandasawhole,
whichissubjecttouncertaintyontheextentofthedebtcrisis
inEuropeandtheimplementationofautomaticspendingcuts.
Consequently,GDPinthesecondquarterhasgrownamere0.3%
overthepreviousquarterandtheunemploymentrateremains
slightlyabove8%.Asaresult,theFederalReservehaspledgedto
keepinterestrateslow,atleastuntil2015,andhasadoptedanew
quantitativeexpansionprogramthatwillremaininplaceuntilthe
labormarketprospectsimprove.
GrowthinSouth Americacontinuestobestrong,althoughthe
globalslowdownhasbeenfelt,particularlyineconomiesgeared
moretowardexports.Evenso,theyaresupportedbystrong
domesticdemand,partlyduetohighcommodityprices.
ActivityinMexicoremainsrobust,withGDPgrowthinthesecond
quarterof0.9%,supportedbystrongprivatedomesticdemand.
AccordingtoBBVAResearch,theMexicaneconomycouldclose
2012withanaveragegrowthofaround3.7%thankstodomestic
stabilityandexternalcompetiveness.
Exchange rates (Expressedincurrency/euro)
Year-end exchange rates Average exchange rates
30-09-12 ∆% on
30-09-11∆% on
30-06-12 ∆% on31-12-11 Jan.-Sep. 12
∆% on Jan.-Sep. 11
Mexicanpeso 16.6085 12.0 1.6 8.7 16.9431 (0.1)
U.S.dollar 1.2930 4.4 (2.6) 0.1 1.2810 9.8
Argentineanpeso 6.0661 (6.4) (6.2) (8.2) 5.7164 0.6
Chileanpeso 608.27 14.3 5.5 10.9 626.96 6.3
Colombianpeso 2,325.58 11.1 (2.3) 8.0 2,298.85 11.5
Peruviannewsol 3.3575 11.5 (0.1) 3.9 3.4020 14.4
Venezuelanbolivarfuerte 5.5530 4.4 (2.6) 0.1 5.5012 9.8
Turkishlira 2.3203 8.2 (1.6) 5.3 2.3092 (0.7)
Chineseyuan 8.1261 6.1 (1.5) 0.4 8.1065 12.7
6 Groupinformation
TheBBVAGroup’sincomestatementfor
thethird quarter of 2012continuesto
showahighlevelofrecurringrevenue,
whichhasenabledittoabsorbthe
impairmentonassetsrelatedtothereal
estatesectorinSpain.Inaddition,the
incorporationofUnnimhasgenerated
badwillof€320m.
TheGroup’squarterlyprofitstandsat
€146m,whichbringsthecumulative
figurethroughSeptember30,2012to
€1,656m.Excludingthechargeforthe
aforementionedimpairmentofassets
relatedtotherealestatesectorinSpain
andUnnim’sbadwill,theadjustednet
attributableprofitamountsto€971mover
Earnings
Consolidated income statement: quarterly evolution (Millioneuros)
2012 2011
3Q 2Q 1Q 4Q 3Q 2Q 1Q
Net interest income 3,880 3,744 3,597 3,485 3,286 3,215 3,175
Netfeesandcommissions 1,259 1,215 1,216 1,136 1,143 1,167 1,114
Nettradingincome 337 462 367 416 (25) 336 752
Dividendincome 35 311 27 230 50 259 23
Incomebytheequitymethod 172 178 193 207 150 123 121
Otheroperatingincomeandexpenses 13 51 47 42 22 62 79
Gross income 5,697 5,960 5,447 5,515 4,627 5,162 5,263
Operatingcosts (2,831) (2,688) (2,585) (2,652) (2,461) (2,479) (2,359)
Personnelexpenses (1,483) (1,429) (1,379) (1,404) (1,325) (1,306) (1,276)
Generalandadministrativeexpenses (1,086) (1,021) (974) (1,021) (920) (964) (887)
Depreciationandamortization (262) (238) (232) (227) (216) (208) (196)
Operating income 2,866 3,272 2,862 2,863 2,166 2,683 2,904
Impairmentonfinancialassets(net) (2,038) (2,182) (1,085) (1,337) (904) (962) (1,023)
Provisions(net) (197) (99) (131) (182) (94) (83) (150)
Othergains(losses) (561) (311) (222) (1,718) (166) (154) (71)
Income before tax 69 680 1,423 (375) 1,002 1,484 1,659
Incometax 236 (21) (250) 368 (95) (189) (369)
Net income 305 659 1,173 (7) 907 1,295 1,290
Non-controllinginterests (159) (154) (168) (132) (103) (106) (141)
Net attributable profit 146 505 1,005 (139) 804 1,189 1,150
Adjusted(1) (825) (742) (122) (1,166) (173) (82) (80)
Net attributable profit (adjusted) (1) 971 1,247 1,127 1,026 978 1,271 1,229
Basic earnings per share (euros) 0.03 0.10 0.19 (0.03) 0.16 0.24 0.24
Basic earnings per share adjusted (euros) (1) 0.18 0.23 0.22 0.21 0.20 0.26 0.25
(1)In2011,duringthefourthquarter,USgoodwillimparmentcharge.In2011and2012,impairmentchargerelatedtothedeteriorationoftherealestatesectorinSpain.Andinthethirdquarterof2012,impactofUnnimbadwill.
Net attributable profit (1)
(Million euros)
(1) Adjusted.(2) At constant exchange rates: –6.1%.
971971
12471127
1026978
12711229
0
200
400
600
800
1,000
1,200
1,400
1Q 2Q 3Q 4Q 2Q
–3.8% (2)
2011 20121Q
3,478 3,345
971
1,1271,229 1,271
978 1,026
1,247
3Q
7Earnings
throughtherepricingofloansandgreater
contributionfrommortgagefloors.Allthis
againstabackdropoflowervolumes,asa
resultofthenecessarydeleveragingtaking
placeinthecountryandfallinginterestrates.
Overall,thisareageneratedcumulativenet
interestincomeof€3,571m,withariseof
8.0%comparedwiththefigureforthesame
periodin2011.
• Eurasiahaspostedstronggrowthinnet
interestincomeduetotheincorporationof
GarantionMarch22,2011.Likeforlike,this
headinggrew23%atGarantiBankthanks
tostrongactivitywithretailcustomersand
verygoodfiguresfromcustomerspreads,
particularlyduetothereducedcostof
liabilities.However,theCIBbusinessinthe
areashowsa28.3%dropinthislineowingto
fallingvolumes.AsofSeptember2012,the
netinterestincomecontributedbyEurasia
was16.0%higherthaninthesameperiodlast
year,totaling€603m.
thequarter,withacumulativefigurethrough
Septemberof€3,345m.
Net interest income
TheBBVAGroup’snet interest income
maintainedthegrowthpathstartedinthe
lastquarterof2010.Ittotaled€3,880minthe
thirdquarterof2012and€11,220mbetween
JanuaryandSeptember,up16.0%
year-on-year.Theincreaseisduetothe
defenseofcustomerspreadsinpractically
allthegeographicalareaswheretheBank
operates,strongactivityinemergingmarkets
andpositivemanagementofstructural
interest-rateriskinanenvironmentmarkedby
lowinterestrates.Bygeographicalarea,the
followingresultsareworthnoting:
• Spainhasrecordedasteadyincreasein
quarterlynetinterestincomesincetheendof
lastyear,thankstogoodpricemanagement
Consolidated income statement (Millioneuros)
January-Sep. 12 ∆%∆% at constant exchange rates January-Sep. 11
Net interest income 11,220 16.0 12.3 9,676
Netfeesandcommissions 3,690 7.8 4.5 3,424
Nettradingincome 1,167 9.8 5.9 1,063
Dividendincome 373 12.2 11.6 332
Incomebytheequitymethod 543 37.9 37.8 394
Otheroperatingincomeandexpenses 112 (31.6) (14.1) 163
Gross income 17,103 13.6 10.5 15,052
Operatingcosts (8,103) 11.0 7.9 (7,299)
Personnelexpenses (4,290) 9.8 6.8 (3,907)
Generalandadministrativeexpenses (3,081) 11.2 8.0 (2,771)
Depreciationandamortization (732) 17.9 13.8 (620)
Operating income 9,000 16.1 13.0 7,753
Impairmentonfinancialassets(net) (5,305) 83.6 80.0 (2,890)
Provisions(net) (427) 30.4 28.1 (328)
Othergains(losses) (1,095) 180.0 179.9 (391)
Income before tax 2,173 (47.6) (49.4) 4,145
Incometax (36) (94.5) (94.8) (652)
Net income 2,137 (38.8) (40.8) 3,492
Non-controllinginterests (481) 37.6 25.4 (349)
Net attributable profit 1,656 (47.3) (48.7) 3,143
Adjusted(1) (1,688) - - (335)
Net attributable profit (adjusted) (1) 3,345 (3.8) (6.1) 3,478
Basic earnings per share (euros) 0.32 0.64
Basic earnings per share adjusted (euros) (1) 0.63 0.71
(1)In2011,duringthefourthquarter,USgoodwillimparmentcharge.In2011and2012,impairmentchargerelatedtothedeteriorationoftherealestatesectorinSpain.Andinthethirdquarterof2012,impactofUnnimbadwill.
8 Groupinformation
Net interest income/ATA BBVA Group(Percentage)
3Q 4Q 3Q2011 2012
2.27
2.372.42
2.47
2.38
2
3
2.27
2.422.37
1Q
2.38
2Q
2.47
• Onceagain,netinterestincomeinSouth
Americaperformedverywell. Strong
businessactivity,combinedwiththedefense
ofspreadsthroughgoodpricemanagement,
explainthisexcellentperformance.The
cumulativefigureasofSeptember2012was
€3,087m,up25.6%onthesameperiodlast
year(excludingtheimpactoftheexchange
rate).
• CumulativenetinterestincomeinMexico
amountedto€3,079m,anincreaseof8.5%
year-on-yearatconstantexchangerates,
despitethecurrentlowinterestratesinthe
country.Thisisbasicallyduetosustained
growthinactivity,especiallyfromtheretail
portfolio.
Breakdown of yields and costs
3Q12 2Q12 1Q12 4Q11 3Q11
% of ATA
% yield/Cost
% of ATA
% yield/Cost
% of ATA
% yield/Cost
% of ATA
% yield/Cost
% of ATA
% yield/Cost
Cashandbalanceswithcentralbanks 4.2 0.82 3.7 0.98 4.0 0.94 3.9 0.99 3.8 1.19
Financialassetsandderivatives 26.8 2.85 27.1 2.75 26.3 2.99 25.6 3.08 25.4 2.87
Loansandadvancestocreditinstitutions 4.4 1.80 4.4 1.90 4.2 2.01 4.3 2.24 4.4 2.88
Loansandadvancestocustomers 57.1 5.60 57.9 5.75 58.6 5.72 59.3 5.76 59.7 5.62
Euros 34.4 3.23 34.8 3.43 36.0 3.52 37.2 3.54 38.4 3.50
Domestic 28.2 3.78 29.0 3.84 29.9 3.85 32.5 3.86 33.1 3.85
Other 6.3 0.77 5.8 1.35 6.1 1.91 4.8 1.39 5.2 1.31
Foreigncurrencies 22.6 9.20 23.1 9.24 22.6 9.23 22.1 9.48 21.3 9.44
Otherassets 7.5 0.33 6.9 0.47 6.9 0.39 6.9 1.00 6.7 0.45
Total assets 100.0 4.10 100.0 4.23 100.0 4.29 100.0 4.41 100.0 4.29
Depositsfromcentralbanksandcreditinstitutions 19.6 1.90 17.5 2.26 14.8 2.50 15.0 2.60 14.3 2.73
Depositsfromcustomers 43.9 1.82 45.2 1.80 47.5 1.85 47.3 2.16 48.3 2.17
Euros 22.4 1.25 23.1 1.31 25.6 1.39 26.1 1.60 27.3 1.72
Domestic 14.7 1.47 15.3 1.57 15.8 1.68 15.9 1.75 16.6 1.75
Other 7.6 0.83 7.8 0.81 9.8 0.92 10.2 1.36 10.7 1.67
Foreigncurrencies 21.6 2.41 22.1 2.31 22.0 2.39 21.2 2.86 21.0 2.75
Debtcertificatesandsubordinatedliabilities 15.8 2.69 16.6 2.68 17.6 2.76 18.1 2.63 18.9 2.47
Otherliabilities 13.8 0.89 13.8 0.70 13.3 1.03 12.8 1.14 11.7 0.99
Equity 6.8 - 6.9 - 6.9 - 6.8 - 6.8 -
Total liabilities and equity 100.0 1.72 100.0 1.75 100.0 1.87 100.0 2.04 100.0 2.02
Net interest income/Average total assets (ATA) 2.38 2.47 2.42 2.37 2.27
Net interest income(Million euros)
38803880374435973485328632153175
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
(1) At constant exchange rates: +12.3%.
1Q 2Q 3Q 4Q 2Q
+16.0% (1)
2011 20121Q
9,676 11,220
3,8803,597
3,175 3,215 3,2863,485
3,744
3Q
9Earnings
€1,167m.NTIwassignificantlyaffectedbya
particularlyweakthirdquarterof2011,when
amidaworseningdebtcrisistherewasan
exceptionallossofassetvalues,inaddition
toreducedbusinessactivityandthelackof
earningsfromportfoliosales.
Revenuefromdividendsamountedto€373m,
12.2%uponthefigure12monthsearlier.This
headingbasicallyincludestheremuneration
fromtheGroup’sstakeinTelefónicaand,toa
lesserextent,thedividendscollectedinthe
GlobalMarketsunit.
Income by the equity method totaled
€543m,up37.9%year-on-year.Practically
allofthisamountcomesfromthestakein
CNCB.
Finally,theother operating income and expenses headingfellby31.6%to€112m.
Thepositiveperformanceoftheinsurance
businessfailedtooffsettheincreased
allocationstothevariousdeposit
guaranteefundsinthecountrieswhereBBVA
operates.
Overall,inthefirstninemonthsof2012the
Groupgeneratedgross incomeof€17,103m,
up13.6%year-on-year,boostedmainlyby
recurringrevenue.Grossincomeexcluding
NTIanddividendsreached€15,564m,up
14.0%overtheprevious12months.This
increaseisparticularlysignificantgiven
thecontextinwhichitwasgenerated.
ItissupportedbytheGroup’sbalanced
geographicaldiversificationbetween
emerginganddevelopedmarkets,andonits
customer-centricbusinessmodel.
• IntheUnited States,netinterestincome
continuedtobenegativelyaffectedbythe
Guarantyrun-off,lowerbusinessvolumein
CIB,write-downsinsecuritiesportfoliosand
thecurrentenvironmentoflowinterestrates
withapracticallyflatcurve.Ontheotherhand,
theincreaseinloanvolumesandthe
year-on-yearreductioninthecostofdeposits
hadapositiveimpact.Asaresult,overthe
quarterthisheadingremainedatthelevelof
previousquarters,totaling€1,285mforthe
year,down3.6%year-on-yearatconstant
exchangerates.
Gross income
TheGroup’sincome from fees and commissionsfortheperiodJanuary-
September2012totaled€3,690m,picking
uptheiryear-on-yeargrowthrateto7.8%
(comparedwith6.6%inthefirsthalfof2012).
Strongactivityinemergingmarketsandthe
greatercontributionofGarantithisyearamply
offsetthenegativeimpactsfromsluggish
activityinSpainandtheregulatorychanges
implementedinsomeoftheareaswherethe
Bankoperates.Bybusinessarea,thisheading
remainedstableintheeurozone.InMexico,
revenuefromcreditcardsandthepensions
businessincreased.InTurkey,strongactivity
practicallyoffsetsnegativeregulatoryeffects.
IntheUnitedStatestheyfell,basicallyas
aresultofregulatorypressures.InSouth
Americatheygrew,inlinewiththestrong
activitymentionedabove.
NTIgeneratedinthefirstninemonthsof
2012increasedby9.8%year-on-yearto
Gross income net of NTI and dividends(Million euros)
53245324518850534869460245664488
0
1,000
2,000
3,000
4,000
5,000
6,000
(1) At constant exchange rates: +12.5%.
1Q 2Q 3Q 4Q 2Q
+14.0% (1)
2011 20121Q
13,657 15,564
5,3245,053
4,488 4,566 4,6024,869
5,188
3Q
Gross income(Million euros)
569756975960
54475515
462751625263
0
1,000
2,000
3,000
4,000
5,000
6,000
(1) At constant exchange rates: +10.5%.
1Q 2Q 3Q 4Q 2Q
+13.6% (1)
2011 20121Q
15,052 17,103
5,6975,4475,263 5,1624,627
5,5155,960
3Q
10 Groupinformation
Operating income
Themostsignificantaspectofoperating
expensescontinuestobetheirstrictcontrol
indevelopedcountriesandtheirgrowth
inemergingareas,inlinewiththefigures
mentionedinpreviousquarters.Inthe
cumulativefigurethroughSeptember2012,
thisheadingtotaled€8,103m,11.0%up
year-on-year,wellbelowtheincreasein
revenue.Asaresult:
• Therewasanimprovementoftheefficiency
ratioonthefigureforthesameperiodin2011
to47.4%attheendofSeptember.
Breakdown of operating costs and efficiency calculation (Millioneuros)
January-Sep. 12 ∆% January-Sep. 11 2011
Personnel expenses 4,290 9.8 3,907 5,311
Wagesandsalaries 3,302 9.9 3,003 4,122
Employeewelfareexpenses 632 11.5 567 758
Trainingexpensesandother 356 5.7 337 431
General and administrative expenses 3,081 11.2 2,771 3,793
Premises 693 9.4 633 849
IT 557 20.4 462 662
Communications 253 13.9 223 299
Advertisingandpublicity 282 4.1 271 378
Corporateexpenses 73 (5.8) 77 106
Otherexpenses 909 9.6 829 1,140
Leviesandtaxes 314 14.1 276 359
Administration costs 7,372 10.4 6,678 9,104
Depreciation and amortization 732 17.9 620 847
Operating costs 8,103 11.0 7,299 9,951
Gross income 17,103 13.6 15,052 20,566
Efficiency ratio (Operating costs/Gross income, in %) 47.4 48.5 48.4
48,5 48,4 47,4
10
15
20
25
30
35
40
45
50
17103
-8103
20566
-9951
15052
-7299-10,000
-5,000
0
5,000
10,000
15,000
20,000
25,000
15,052
20,56617,103
7,2999,951
8,103
Jan.-Sep.2011
Jan.-Sep.2012
2011
48.5 48.4 47.4
Jan.-Sep.2011
Jan.-Sep.2012
2011
Efficiency
Grossincome
Operatingcost
(Percentage)
Efficiency ratio
(Million euros)
Operating income(Million euros)
28662866
3272
28622863
2166
26832904
0
500
1,000
1,500
2,000
2,500
3,000
3,500
(1) At constant exchange rates: +13.0%.
1Q 2Q 3Q 4Q 2Q
+16.1% (1)
2011 20121Q
7,753 9,000
2,8662,8622,9042,683
2,166
2,863
3,272
3Q
Operating costs(Million euros)
28312831268825852652
246124792359
0
500
1,000
1,500
2,000
2,500
3,000
(1) At constant exchange rates: +7.9%.
1Q 2Q 3Q 4Q 2Q
+11.0% (1)
2011 20121Q
7,299 8,103
2,8312,585
2,359 2,479 2,4612,652 2,688
3Q
11Earnings
Provisions and others
Thestronggenerationofoperatingincome
hasenabledtheGrouptoabsorbasignificant
increaseinitsloan-lossprovisionsinSpainin
ordertocovertheongoingimpairmentofits
realestateportfoliosandassets.Impairment losses on financial assetstoSeptember
totaled€5,305m,up83.6%onthefigure
recorded12monthsearlier.
Provisionsinthesameperiodamountedto
–€427m(–€328m12monthsearlier).They
basicallycoverearlyretirementcostsand,
toalesserextent,transferstoprovisionsfor
contingentliabilities,allocationstopension
fundsandothercommitmentswiththestaff.
Theother gains (losses)headingnearly
tripledbetweenJanuaryandSeptember2012
comparedwiththeamountreportedforthe
sameperiodin2011,atanegative€1,095m.This
headingincludesprovisionsmadeforrealestate
andforeclosedandacquiredassetsinSpainand
thebadwillgeneratedbytheUnnimdeal.
Number of employees (1)
29132 28934
32042
35538 3595039383
30690 30724 31277
12991 12798 12543
2274 2239 2230
sep 2011 dic 2011 sep 20120
20,000
40,000
60,000
80,000
100,000
120,000110,625
September2011
29,132
35,538
30,690
12,991
110,645
December2011
28,934
35,950
30,724
12,798
(1) Excluding Garanti.(2) Including Unnim Group.
117,475
September2012
32,042
39,383
31,277
12,543
Spain (2)
Mexico
South America
The United States
Rest of the world
Impairment losses on financial assets(Million euros)
203820382182
1085
1337
9049621023
0
500
1,000
1,500
2,000
2,500
(1) At constant exchange rates: +80.0%.
1Q 2Q 3Q 4Q 2Q
+83.6% (1)
2011 20121Q
2,890 5,305
2,038
1,0851,023 962 904
1,337
2,182
3Q
Number of branches (1)
3,018,0 3,016,0
3,572,0
1,999,0 1,999,0 2,014,0
1,545,0 1,567,0 1,621,0
745,0 746,0 745,0
129,0 129,0 121,0
sep-11 dic-11 sep-120
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
7,436
September2011
3,018
1,999
1,545
745
7,457
December2011
3,016
1,999
1,567
746
8,072
September2012
3,572
2,014
1,621
744
(1) Excluding Garanti.(2) Including Unnim Group.
Spain (2)
Mexico
South America
The United States
Rest of the world
Number of ATMs (1)
5,258,05,283,0
6,023,0
7,293,07,710,0
7,831,0
4,540,0 4,682,0 5,210,0
1,101,0 1,119,0 1,118,0
sep-11 dic-11 sep-120
5,000
10,000
15,000
20,000
25,00020,181
September2012
6,023
7,831
5,210
1,117
18,192
September2011
5,258
7,293
4,540
1,101
18,794
December2011
5,283
7,710
4,682
1,119
(1) Excluding Garanti.(2) Including Unnim Group.
Spain (2)
Mexico
South America
The United States
• TheBankmaintaineditsleadershippositionin
efficiencyamongitspeergroup.
• Cumulativeoperating incomeamountedto
€9,000m,16.1%uponthefigureforthefirst
ninemonthsof2011.
BBVAclosedSeptemberwith117,475
employees,3,028oftheminUnnim.
ExcludingtheincorporationofUnnim,
thefigureincreasedlastyearby3,822,
mainlyinMexicoandtoalesserextent
inSouthAmerica,andfellintheUnited
StatesandSpain.Thenumberofbranches,
whichstoodat8,072asof30-Sep-2012,
includes556Unnimbranches.Excluding
these,theincreaseisalsoconcentratedin
SouthAmericaandMexico.Finally,ATMs amountedto 20,181,andreflectedthesame
trendasthenumberforemployeesand
branches.Thefigureincludes715Unnim
ATMs,andtheincreasecontinuedtobe
concentratedbasicallyinthecountriesof
LatinAmerica.
12 Groupinformation
Finally,earningspershare(EPS)between
JanuaryandSeptember2012were€0.32
(€0.63adjustedEPS);returnontotalaverage
assets(ROA)0.46%(0.83%adjusted);return
onequity(ROE)5.3%(10.7%adjusted);and
returnonequityexcludinggoodwill(ROTE)
6.7%(13.5%adjusted).
Inconclusion,addingtheprovisionsmadeto
covertheimpairmentoftheassetsrelated
totherealestatesectorinSpain(accounted
bothasimpairmentlossesonfinancialassets
andothergains(losses)),thetotalamount
chargedbyBBVAyeartodatetotals€2.9
billion(€1.6billioninthethirdquarter).
Finally,asinthelastquarter,thelevelof
income taxwaslowforthesamereasons
mentionedthen:revenuewithlowornotax
rate(mainlydividendsandincomebythe
equitymethod)andthegrowingweightof
theearningsfromMexico,SouthAmericaand
Turkey,whereeffectivetaxratesarelow.
Net attributable profit
Thenetattributableprofitforthequarter
was€146m,whilethecumulativefigure
throughSeptemberstandsat€1,656m.
Excludingthechargefortheimpairmenton
theassetsrelatedtotherealestatesector
inSpainandthebadwillgeneratedbythe
incorporationofUnnim,theadjustednet
attributableprofitamountsto€971moverthe
quarter,withayeartodatefigureof€3,345m.
Tosumup,theBBVAGroupcontinuesto
generatesoundearningsdespitethedifficult
environment.
Bybusiness areas,Spainposteda€532m
loss.Excludingthechargefortheimpairment
ofrealestateassets,theareagenerated
cumulativeadjustedearningsthrough
Septemberof€848m.Eurasiagenerated
€813m,Mexico€1,300m,SouthAmerica
€1,014mandtheUnitedStates€341m.
Earnings per share (1)
(Euros)
0.180.18
0.230.220.210.20
0.260.25
0.00
0.05
0.10
0.15
0.20
0.25
0.30
(1) Adjusted.
1Q 2Q 3Q 4Q 2Q
–11.4%
2011 20121Q
0.71 0.63
0.18
0.22
0.25 0.26
0.20 0.210.23
3Q
Loan-loss and real estate provisions (1)
(Million euros)
(1) Includes total loan-loss provisions, and foreclosed and/or asset purchases in Spain.(2) Includes loan-loss provisions and provisions related to foreclosed and asset purchases within the scope of the
Royal Decree-Laws 02/2012 and 18/2012 (RD).
10431136
1404
1276
175 174
1060
1635
0
500
1000
1500
2000
2500
3000
Otherloan-loss
provisions
Provisionswithin thescope ofthe RD (2)
Quarterly average2011
2Q2012
1Q 3Q
1,297
1,123
174
1,236
1,061
175
2,394
1,334
1,060
2,888
1,253
1,635
ROA (1)
(Percentage)
0.91 0.880.83
0.0
1.5
0.91 0.880.83
(1) Adjusted.
January-Sep.2011
2011 January-Sep.2012
ROE (1) and ROTE (1)
(Percentage)
January-Sep.2011
2011 January-Sep.2012
16.816.0
13.512.5
11.910.7
0
10
20
12.511.9
10.7
(1) Adjusted.
ROE
ROTE
16.816.0
13.5
13Balancesheetandbusinessactivity
BBVAclosedthethird quarter of 2012
withitsbalancesheetandbusinessactivity
maintainingthetrendseeninprevious
quarters,ontopoftheincorporationofthe
balancesofUnnim.Thehighlightsforthe
quarterareasfollows:
• IncorporationofthebalancesofUnnim,
whichatthecloseofSeptembercontributed
aloanbookof€18billionandcustomer
depositsof€11billion.Thisexplainsmostof
the3.7%growthintheGroup’sbalancesheet
overthequarterto€645billion.
• Growthingross customer lendingoverthe
quarterduetotheconsolidationofUnnim.
Thestrongactivityinemergingmarketspartly
offsetsthedeleveragingprocesstakingplace
inSpainandinthewholesalebusinessesin
developedeconomies.
Balancesheetandbusinessactivity
Consolidated balance sheet (Millioneuros)
30-09-12 ∆% 30-09-11 30-06-12 31-12-11
Cashandbalanceswithcentralbanks 28,207 14.5 24,637 24,011 30,939
Financialassetsheldfortrading 83,449 11.5 74,859 78,792 70,602
Otherfinancialassetsdesignatedatfairvaluethroughprofitorloss 3,499 23.9 2,825 3,371 2,977
Available-for-salefinancialassets 71,329 21.4 58,768 65,834 58,143
Loansandreceivables 394,223 6.6 369,919 390,654 381,077
Loansandadvancestocreditinstitutions 26,777 12.7 23,756 28,764 26,107
Loansandadvancestocustomers 363,818 5.9 343,416 358,332 351,900
Other 3,629 32.1 2,747 3,559 3,069
Held-to-maturityinvestments 10,118 (8.4) 11,049 10,157 10,955
Investmentsinentitiesaccountedforusingtheequitymethod 6,681 24.8 5,352 6,604 5,843
Tangibleassets 8,396 19.5 7,026 7,477 7,330
Intangibleassets 8,849 (12.1) 10,068 8,927 8,677
Otherassets 30,696 54.0 19,935 26,533 21,145
Total assets 645,447 10.4 584,438 622,359 597,688
Financialliabilitiesheldfortrading 58,740 16.1 50,616 56,296 51,303
Otherfinancialliabilitiesatfairvaluethroughprofitorloss 2,491 45.1 1,716 2,105 1,825
Financialliabilitiesatamortizedcost 507,764 8.4 468,494 491,717 479,904
Depositsfromcentralbanksandcreditinstitutions 112,738 40.8 80,072 119,709 92,503
Depositsfromcustomers 288,709 2.4 282,050 274,285 282,173
Debtcertificates 85,053 2.3 83,107 78,277 81,930
Subordinatedliabilities 13,636 (15.1) 16,067 11,801 15,419
Otherfinancialliabilities 7,626 5.9 7,198 7,645 7,879
Liabilitiesunderinsurancecontracts 8,994 20.3 7,478 8,054 7,737
Otherliabilities 23,709 45.8 16,265 21,138 16,861
Total liabilities 601,697 10.5 544,569 579,309 557,630
Non-controllinginterests 2,260 30.6 1,730 2,100 1,893
Valuationadjustments (2,300) (32.6) (3,414) (2,835) (2,787)
Shareholders’funds 43,789 5.4 41,552 43,785 40,952
Total equity 43,750 9.7 39,868 43,050 40,058
Total equity and liabilities 645,447 10.4 584,438 622,359 597,688
Memorandum item:
Contingentliabilities 40,062 4.0 38,530 40,897 39,904
14 Groupinformation
Customer lending (gross)(Billion euros)
353
September2011
343
September2010
377
September2012
(1) At constant exchange rates: +4.3%.
+7.0% (1)
377
353343
200
250
300
350
400
• Growthinon-balance-sheet customer
funds(customerdepositspluspromissory
notes)mainlyintheretailsegmentinallthe
geographicalareasinwhichBBVAoperates.
• Asaresult,theGroup’sliquidityposition
andfundingstructureimproved.Intheeuro
balancesheet,thecommercialgapwas
reducedby€9.6billionoverthequarter.
Loans and advances to customers
Atthecloseof30-Sep-2012,gross customer lending amountedto€377billion,up7.0%
year-on-yearand2.3%quarter-on-quarter.
ExcludingthebalancesfromUnnim,this
headinggrewmoderatelyovertheyearby
1.8%,butfellby2.6%overthequarter.
Bybusiness areas,thedisparitybetween
emerginganddevelopedcountriesseenin
previousquarterscontinued:
• InSpain, excludingUnnim,theloanbook
shrank(down6.1%year-on-yearanddown
5.5%quarter-on-quarter)inlinewiththe
necessaryprocessofdeleveraginginthe
economy.Includingthebalancesfromthe
Catalanbank,therewasariseof3.2%over
thelast12monthsand3.9%overthequarter.
• InEurasiathisheadingfellby7.7%onthe
figureatthecloseofSeptember2011and
4.6%onthecloseofJune2012,duetothe
reductionofthewholesalecustomer’sloan
portfolio.Retailloansgrewby4.9%overthe
last12monthsandremainatverysimilar
levelsto30-Jun-2012.Notableagainthis
quarterwasthepositiveperformance
ofbalancesfromTurkey,whichwereup
22.8%onthefigureforthesamedatelast
year.
• AttheendofSeptember2012,lendingin
Mexicowasupyear-on-yearby11.5%(up2.2%
Customer lending (Millioneuros)
30-09-12 ∆% 30-09-11 30-06-12 31-12-11
Domestic sector 198,583 3.8 191,330 193,358 192,442
Publicsector 27,614 5.8 26,096 27,501 25,509
Otherdomesticsectors 170,969 3.5 165,234 165,856 166,933
Securedloans 107,100 5.5 101,552 96,546 99,175
Commercialloans 5,176 (12.5) 5,918 5,671 6,620
Financialleases 4,413 (14.3) 5,151 4,542 4,955
Othertermloans 39,074 (7.1) 42,043 39,080 41,863
Creditcarddebtors 1,584 2.7 1,542 1,564 1,616
Otherdemandandmiscellaneousdebtors 2,497 (8.0) 2,713 4,178 2,939
Otherfinancialassets 11,125 76.2 6,314 14,276 9,766
Non-domestic sector 159,167 9.3 145,614 159,385 153,222
Securedloans 63,118 8.4 58,202 63,032 60,655
Otherloans 96,049 9.9 87,413 96,353 92,567
Non-performing loans 19,834 26.4 15,689 16,243 15,647
Domesticsector 15,137 35.7 11,156 11,531 11,042
Non-domesticsector 4,697 3.6 4,533 4,713 4,604
Customer lending (gross) 377,383 7.0 352,633 368,844 361,310
Loan-lossprovisions (13,565) 47.2 (9,217) (10,513) (9,410)
Customer lending (net) 363,818 5.9 343,416 358,332 351,900
15Balancesheetandbusinessactivity
overthequarter),stronglysupportedbythe
retailsegment.
• TherewasalsoasignificantriseinSouth America (up19%year-on-yearand3.9%
quarter-on-quarter).Onceagain,this
growthhasbeenleveragedontheprivate
individualssegment,thankstothepositive
performanceofconsumerlendingand
creditcards.
• Finally,intheUnited States,BBVACompass
isstillpostingsteadygrowthinlending,with
ayear-on-yeargrowthof4.5%(up10.5%
excludingnonperformingloans).Itisworth
notingthatloanstothecommercialand
residentialrealestatesegmentcontinueto
drivegrowthinthebank’slendingactivity.
Tosumup,thedomestic sector continues
tobeimmersedinadeleveragingprocess
andhasgrownasaconsequenceofthe
incorporationoftheUnnimbalances,while
thenon-domestic sectorhasincreasedby
9.3%sincethecloseofSeptember2011.
Non-performing loanstotaled€20billion
asof30-Sep-2012,ariseof26.4%inyear-on-
yeartermsand22.1%sinceJun-30-2012.As
canbeseenintheaccompanyingtablefor
customerlending,thisupwardtrendderives
fromthedomesticsectorandislargelydue
totheincorporationofUnnim,andtoalesser
extenttotheworseningNPAratiosinSpain,in
linewithexistingforecasts.Itisimportantto
highlightthefactthatUnnim’snon-performing
balanceshaveahighcoverageratioand
thattheconstructionrealestateportfolio,
foreclosedassetsandassetspurchasedby
theCatalanbankareguaranteedbyanasset
protectionscheme(EPA)covering80%ofreal
lossesintheseassets.
Customer funds
Total customer fundsamountedto€449
billionasof30-Sep-2012,ayear-on-year
increaseof7.0%(up4.8%since30-Jun-2012).
Withrespecttoon-balance-sheet customer funds,BBVAmanagedavolumeofcustomer
Customer funds (Millioneuros)
30-09-12 ∆% 30-09-11 30-06-12 31-12-11
Deposits from customers 288,709 2.4 282,050 274,285 282,173
Domestic sector 142,561 (2.5) 146,284 127,356 136,519
Publicsector 27,800 (9.4) 30,672 21,448 28,302
Otherdomesticsectors 114,761 (0.7) 115,612 105,908 108,217
Currentandsavingsaccounts 47,188 11.8 42,215 46,190 44,215
Timedeposits 57,236 11.8 51,182 48,278 49,105
Assetssoldunderrepurchaseagreementandother 10,337 (53.5) 22,215 11,440 14,897
Non-domestic sector 146,148 7.6 135,766 146,929 145,655
Currentandsavingsaccounts 91,413 17.0 78,127 91,706 85,204
Timedeposits 50,016 (9.0) 54,958 50,021 53,399
Assetssoldunderrepurchaseagreementandother 4,719 76.0 2,681 5,203 7,051
Other customer funds 160,113 16.7 137,252 153,889 144,291
Mutualfunds 41,404 6.5 38,874 40,807 39,294
Pensionfunds 91,081 22.9 74,118 86,761 78,648
Customerportfolios 27,629 13.9 24,261 26,322 26,349
Total customer funds 448,823 7.0 419,302 428,175 426,464
September2011
September2010
September2012
(1) At constant exchange rates: +1.9%.
143135
157
256
282 289
050100150200250300350400450
Customer funds(Billion euros)
Othercustomer
funds
Depositsfrom
customers
419399
449+7.0% (1)
137143
160
282256289
16 Groupinformation
deposits,excludingpromissorynotes,of
€289billionasof30-Sep-2012,up2.4%since
September2011and5.3%on
30-Jun-2012.Ascanbeseeninthe
accompanyingtableshowingcustomerfunds,
therehasbeenasignificantgrowthoverthe
quarterinthedomestic sectorasaresultof
theincorporationofUnnimandthegrowth
incustomerfunds(includingpromissory
notes)overthequarter.Inthenon-domestic sector,volumeshavebeenmaintainedatvery
similarlevelstothecloseofJune2012.The
fallindepositslinkedtowholesalecustomers
hasthusbeenoffsetbythepositivetrendin
balancesfromtheretailsegmentinpractically
allthegeographicalareas,asshownonthe
followingsectionsdedicatedtoeachofthe
Group’sbusinessareas.
Allinall,BBVAmaintainsintactitshigh
capacitytogatherdepositsandthe
capillarityofitscommercialnetwork,asretail
deposits(includingpromissorynotes)grew
inboththedomesticandnon-domestic
sectors.
Off-balance-sheetcustomerfundsclosed
Septemberat€160billion,up16.7%
year-on-yearand4.0%quarter-on-quarter.
Incontrastwithotherquarters,therewasa
slightyear-on-yearincreaseinSpain,dueto
thepositiveperformanceofpensionfunds
andcustomerportfolios.BBVAisthebiggest
pensionfundmanagerinSpainandtheonly
oneofthetopfivetoincreaseitsmarketshare
betweenJune2011andJune2012.Asof
30-Jun-2012,itsmarketsharewas19.1%,81
basispointshigherthanthefigureforthe
previousyear.
Inthenon-domesticsector,assetsunder
managementinmutualfundsandpensions
funds,aswellascustomerportfolios,have
continuedtogrow.
Equity
BBVA’sequityasof30-Sep-2012was
€43,750m,up1.6%quarter-on-quarterand
9.7%year-on-year.Thisismanlyexplained
bythepartialconversionofthemandatory
subordinatedconvertiblebonds,theretained
earningsoftheperiodandtheexchangerate
differences.
Other customer funds (Millioneuros)
30-09-12 ∆% 30-09-11 30-06-12 31-12-11
Spain 50,492 0.5 50,225 48,709 50,399
Mutualfunds 18,987 (6.1) 20,220 18,694 19,598
Pensionfunds 17,695 5.7 16,741 17,192 17,224
Individualpensionplans 10,075 5.0 9,600 9,729 9,930
Corporatepensionfunds 7,620 6.7 7,141 7,463 7,294
Customerportfolios 13,810 4.1 13,265 12,823 13,578
Rest of the world 109,622 26.0 87,027 105,180 93,892
Mutualfundsandinvestmentcompanies 22,417 20.2 18,654 22,113 19,697
Pensionfunds 73,386 27.9 57,377 69,569 61,424
Customerportfolios 13,819 25.7 10,996 13,499 12,771
Other customer funds 160,113 16.7 137,252 153,889 144,291
96.9
December2011
44.2
93.7
September2011
42.2
97.3
March2012
43.6
99.7
June2012
46.2
112.0
September2012
47.2
49.151.2 49.3 48.357.2
7.65.24.4
+19.5%
3.6
42.244.2 43.6 46.2
47.2
51.2 49.1 49.3 48.3
57.2
0.33.6 4.4 5.2 7.6
0
20
40
60
80
100
120
–x.x% (2)
On-balance sheet customer funds. Other domestic sectors (1)
(Billion euros)
(1) Including promissory notes sold by the retail network and excluding repos and other.
Timedeposits
Promissorynotes
Currentand savings
accounts
17Capitalbase
Themostsignificanteventsthatinfluencethe
Group’scapitalbaseinthethird quarter of
2012aresummarizedbelow:
• Asof30-Sep-2012theGroupcontinues
tocomplywiththeEBA’scapital
recommendations.
• Thegenerationofoperatingincome
hasenabledBBVAtoabsorbtheimpact
ofloan-lossprovisionstocoverthe
impairmentofassetsrelatedtothereal
estatesectorinSpain.
• Theincreaseinrisk-weightedassets(RWA),
derivedfromtheincorporationofUnnim
andthegrowthinLatinAmerica,hasbeen
compensatedtoagreatextentbythefall
oflendinginSpainandintheCIBportfolios
ofdevelopedcountries.
• TheimpactoftheincorporationofUnnim
ispracticallyneutralintermsofcorecapital.
Thenegativeeffectinthequarter(10basis
points)willbeoffsetbytheexchangeoffer
forthehybridinstrumentsheldbyUnnim
retailcustomersinthemonthofOctober.
• BBVAcomfortablypassedthestresstest
exerciseconductedbyOliverWyman.
Thisconfirmsonceagainitscapacityto
generatecapitaleveninveryadverse
economicscenarios.
AccordingtoBaselIIcriteria,theGroup’s
capital basestoodat€44,467mattheclose
ofSeptember,up3.8%onthefigurereported
attheendofJune2012,largelyduetothe
increaseinTierIIeligiblecapital.RWAtotaled
€335,203m.Theirincreaseoverthequarteris
basicallyduetotheincorporationofUnnim.
Withrespecttothecomponentsofthecapital
base,theevolutionofthecore capitalwas
veryflat,withaslightincreaseof€150msince
30-Jun-2012to€36,075m.Asaresult,thecore
andTierIratiosasof30-Sep-2012stoodat
10.8%,thesamelevelpostedattheendofthe
firsthalfof2012.
Inthesameperiod,othereligiblecapital
amountedto€1,552m,primarilyduetoBBVA
Bancomer’ssubordinateddebtissue.Asa
Capitalbase
Capital base (BIS II Regulation) (Millioneuros)
30-09-12 30-06-12 31-03-12 31-12-11 30-09-11
Core capital 36,075 35,924 35,290 34,161 29,628
Capital (Tier I) 36,075 35,924 35,290 34,161 32,053
Other eligible capital (Tier II) 8,393 6,841 8,241 8,609 9,067
Capital base 44,467 42,765 43,531 42,770 41,120
Risk-weighted assets 335,203 332,036 329,557 330,771 325,458
BIS ratio (%) 13.3 12.9 13.2 12.9 12.6
Core capital (%) 10.8 10.8 10.7 10.3 9.1
Tier I (%) 10.8 10.8 10.7 10.3 9.8
Tier II (%) 2.5 2.1 2.5 2.6 2.8
18737.0
23355.024929.0
29628.0
36075.0
0
5000
10000
15000
20000
25000
30000
35000
40000
Sep.2008
18,737
Sep.2009
Sep.2010
24,969
Sep.2011
29,628
Sep.2012
36,075
01234567891011121314151617181920
6.48.0 8.2
9.110.8
23,355
+21.8%
Core capital evolution (BIS IIRegulation) (Million euros and percentage)
Corecapital
Corecapital
(%)
18 Groupinformation
Ratings
Long term Short term Financial strength Outlook
Moody’s Baa3 P-3 D+ Negative
Fitch BBB+ F-2 bbb+ Negative
Standard&Poor’s BBB– A-3 - Negative
DBRS A R-1 - Negative
result,theTier IIratioclosedthequarterat
2.5%,comparedwith2.1%on30-Jun-2012.
Insummary,theGrouphasincreasedthe
BIS II ratioto13.3%asof30-Sep-2012,and
continuestoexceedthe9%minimumcore
capitalratiorequiredbytheEBA.
Ratings
BBVAhasbeenpenalizedoverthelast12
monthsbythesuccessivedowngradesof
Spanishsovereignrating.Althoughtherating
agenciesrecognizetheGroup’sstrengths
anditsgeographicaldiversification,inthe
opinionofsomeofthemBBVA’sratingcannot
beabovethatofthesovereign.Onceagain,
thishasbeentheonlyreasonfortherecent
downgradefromBBB+toBBB–byStandard
&Poor’s.DBRShasdowngradedBBVA’srating
fromA(high)toA,placingBBVA’sratinginthis
caseonenotchabovethesovereign.Atthe
endofOctober,Moody’sconfirmedBBVA’s
Baa3rating.
19Riskmanagement
Credit risk
Atthecloseofthethird quarter of 2012,theGroup’sprimary
assetqualityindicatorscontinuedstableandstillcompare
favorablywiththoseofmostofitspeers.
BBVAclosedSeptember2012withavolumeoftotal riskswith
customers(includingcontingentliabilities)of€417,405m,2.0%
uponthefigureasof30-Jun-2012.Themainreasonforthisis
theincorporationofUnnim,andtoalesserextentthegrowth
inlendinginemergingcountries.Nottakingintoaccountthe
balancesoftheCatalanbank,thetotalamountofrisksfellby
2.6%sincethecloseofJune2012,duetothedeleveraging
processbeingundertakeninEurope.
Non-performing assetsclosedasof30-Sep-2012at€20,114m,
ariseofover€3,600moverthequarter.Ofthistotal,84%is
basicallyduetotheintegrationofUnnimbalances.Attheclose
ofSeptemberUnnim’sNPAstoodat€3,038m,butwithahigh
coverageratio.Therestoftheincreasecanbeexplainedby
theworseningNPAratioinSpain,inlinewithexistingforecasts.
IntermsofvariationsinNPA,apartfromtheincorporation
ofUnnimandtheriseoftheNPAratioinSpain,therewasa
lowerlevelofbothadditionstoNPAandrecoveries.Thelatter,
Riskmanagement
Variations in non-performing assets (Millioneuros)
3Q12 2Q12 1Q12 4Q11 3Q11
Beginning balance 16,481 16,096 15,866 15,970 15,790
Entries 3,674 3,717 3,092 3,610 2,918
Recoveries (1,919) (2,090) (1,882) (2,752) (1,874)
Net variation 1,755 1,627 1,210 858 1,044
Write-offs (1,096) (1,121) (1,006) (1,138) (876)
Exchangeratedifferencesandother 2,974 (121) 26 176 12
Period-end balance 20,114 16,481 16,096 15,866 15,970
Memorandum item:
Non-performingloans 19,834 16,243 15,880 15,647 15,689
Non-performingcontingentliabilities 280 238 216 219 281
Credit risk management (1) (Millioneuros)
30-09-12 30-06-12 31-03-12 31-12-11 30-09-11
Non-performingassets 20,114 16,481 16,096 15,866 15,970
Totalrisks 417,405 409,145 400,553 400,709 390,723
Provisions 13,877 10,822 9,726 9,688 9,503
Specific 9,687 7,744 6,666 6,471 6,584
Genericandcountry-risk 4,190 3,078 3,061 3,218 2,919
NPAratio(%) 4.8 4.0 4.0 4.0 4.1
NPAcoverageratio(%) 69 66 60 61 60
(1)Includingcontingentliabilities.
Non-performing assets(Million euros)
20,114
September2012
December2011
15,866
March2012
16,096
September2011
15,970+22.0%
16,481
June2012
(1) Including balances from Unnim.
3,038 (1)
17,076
20 Groupinformation
Asaresult,theGroup’scoverageratiohasimprovedby3.3
percentagepointsto69%.Bybusinessarea,Spain,theUnited
StatesandSouthAmericaincreasedtheirratiosto59%,94%
and142%,respectively,whileMexicoclosedthequarterat107%
andEurasiaat114%.
Exposure to the real estate sector in Spain
Themostimportantpointwithrespecttoexposuretothe
realestatesectorinSpaininthe third quarter of 2012is,as
mentionedearlier,theincreaseinprovisionstocoverthe
additionalimpairmentinthevalueofassetsassociatedwith
therealestateindustryowingtothecountry’sworsening
macroeconomicsituation.Followingtheincreaseinprovisions
forloan-losses,andforforeclosuresandassetspurchases,at
thecloseofthefirstninemonthsof2012theGroupmeets
two-thirdsoftherequirementsimposedbyRoyalDecree-Laws
02/2012and18/2012.
IncludingthefiguresfromUnnim,theGroup’sexposuretothis
sectorincreasesby€2,652m,butwithahighcoverageratio
(48%ofnon-performingplussubstandardloans).Foreclosures
andassetpurchasesamounttoanadditional€3,267m,
althoughtheyalsohaveahighcoverageratio(65%).
however,haveslowedinresponsetoseasonalfactorsaffecting
thisquarter,aboveallinSpain.Theratioofrecoveriesto
additionstoNPAstoodat52.2%.
Asaresult,theGroup’sNPA ratioattheendofSeptember2012
stoodat4.8%,up79basispointsoverthequarter.Ofthisrise,
53basispointsaretheresultoftheaforementionedintegration
ofUnnim.ExcludingtheCatalanbank,theratiowouldbe4.3%,
26pointsmorethanon30-Jun-2012,basicallyasaresultof
thedeteriorationoftheeconomicsituationinSpain,combined
withthefinancialdeleveragingprocessunderwayinthe
country.InMexico,theNPAratioremainsstable(4.1%atthe
endofSeptember),whileithasincreasedinEurasia,although
itcontinuesatverylowlevels(1.7%comparedwith1.4%inthe
previousquarter).IntheUnitedStates,itfellsignificantlyto
2.4%(2.8%asof30-Jun-2012).Finally,theratioinSouthAmerica
droppedslightlyfrom2.3%attheendofJune2012to2.2%at
thecloseofSeptember.
Coverage provisionsforcustomerriskincreasedoverthe
quarterby28.2%to€13,877m,mainlyduetoasignificant
increaseinprovisionsinSpainandtheincorporationofUnnim.
NPA ratio
Coverageratio
NPA and coverage ratios(Percentage)
September2012
December2011
March2012
June2012
September2011
60 61 60
66
4.1 4.0 4.0 4.0
69
4.8
(1) Excluding Unnim.
4.3 (1)
68 (1)
Recoveries over entries to NPA(Percentage)
64.2
76.2
60.956.2
52.2
3Q 4Q 3Q2011 2012
1Q 2Q
26,029,0 30,0
39,0
44,0 43,0
0
20
40
60
Coverage of NPLs and substandar real estatedeveloper’s exposure(Percentage)
September2012
December2011
March2012
June2012
September2011
2629 30
39
44
43 (1)
(1) Excluding Unnim.
Coverage of foreclosures and asset purchases(Percentage)
September2012
December2011
March2012
June2012
September2011
33 34 3436
50
33,0 34,0 34,036,0
50,0
44,0
0
20
40
60
Cobertura de adjudicados y compras (1)
(Porcentaje)
(1) Excluding Unnim.
44 (1)
21Riskmanagement
ItshouldbestressedthattheUnnimdealincludesanasset
protectionscheme(EPA)bywhichtheDepositGuarantee
Fund(FGD)willtakeon80%ofanylossesofapredetermined
assetportfolioforaperiodof10years,aftermakinguseof
existingprovisions.TheriskofincorporatingUnnimportfolios
totheBBVAGroupisthereforeextremelylimited,notonlydue
totheirhighcoverageratio,butalsobecauseoftheexistence
oftheEPA.
Asaresultoftheabove,therehasbeenanincreaseoverthe
quarterofthecoverageofnon-performingandsubstandard
loansoftheBBVAGroupof5percentagepointsto44%,and
thatofforeclosuresandassetpurchaseshasincreasedby14
percentagepointsto50%.
Economic capital
Attributable economic risk capital(ERC)consumption
amountedto€36,181masofthecloseofSeptember,an
increaseof9.2%onthefigurefor30-Jun-2012.
AsistobeexpectedfromBBVA’sprofile,thelargestallocation
toERC(56.8%)relatestocreditriskonportfoliosoriginatedin
theGroup’sbranchnetworkfromitsowncustomerbase.This
amountincreasedoverthequarterby9.6%,basicallydueto
theinclusionofUnnim.
Equityrisk,whichrefersbasicallytotheportfolioofholdings
inindustrialandfinancialcompanies,thestakeinCNCB,
andconsumptionofeconomiccapitalfromgoodwill,has
maintaineditsproportionstableinrelationtototalrisks
(20.0%).
Structuralbalance-sheet risk,originatedfromthe
managementofstructuralinterest-rateriskand
exchange-raterisk,accountsfor7.4%ofERC,andwasup13.3%
overthequarter.
Operational riskincreasedby5.0%inabsoluteterms,although
itreduceditsrelativeweightto5.6%;whilefixed-asset
riskincreasedby7.8%andaccountsfor6.4%oftotalERC
consumption.
Finally,therelativeweightofmarket risk,whichisofless
importancegiventhenatureofthebusinessandBBVA’spolicy
ofminimalproprietarytrading,stoodat2.8%atthecloseof
September.
Coverage of real estate exposure in Spain (Millionofeurosasof30-Sep-12)
Risk amount Provision % Coverage over risk
NPL+Substandard 8,746 3,826 44
NPL 6,842 3,196 47
Substandard 1,904 630 33
Foreclosedrealestateandotherassets 11,679 5,818 50
Fromrealestatedevelopers 8,650 4,648 54
Fromdwellings 2,406 917 38
Other 623 253 41
Subtotal 20,425 9,644 47
Performing 7,473 647 9
Withcollateral 6,850
Finishedproperties 4,082
Constructioninprogress 1,268
Land 1,500
Withoutcollateralandother 623
Real estate exposure 27,898 10,291 37
Memorandum item: BBVA Group excluding Unnim
NPL+Substandard 6,912 2,949 43
Foreclosedrealestateandotherassets 8,412 3,694 44
Subtotal 15,324 6,643 43
Performing 6,655 400 6
Real estate exposure 21,979 7,043 32
22 Groupinformation
TherewasastrongrecoveryintheEuropeanfinancialsectorover
thethird quarter of 2012. Therobustperformanceofperipheral
countrybanksintheequitymarketswasparticularlyoutstanding.
Therewereanumberoffactorsbehindthischange.Themost
importantoftheseincludetheannouncementsofasinglebank
supervisionmechanismintheeurozoneandanewprogramof
ECBsecondarymarketpurchases(OMT),subjecttoaprevious
request.RegardingSpain,aconditionalityagreementhasbeen
establishedtoaidthebankingsectorlinkedtothepublicationof
the“bottom-upstresstest”byOliverWyman.
ThesefactorsresultedinarevaluationoftheEuropean banking sector.TheStoxxBanksindexwentup11.2%inthequarter,
outperformingthegeneralStoxx50equitymarketindex(+5.8%).
Likewise,Spain’sIbex35rose8.5%betweenJuneandSeptember
2012,comparedtoan11.3%fallinthepreviousquarter.
BBVA’s results in the second quarter of 2012werefavorably
receivedbyanalysts.TheyparticularlyvaluedtheBank’sstrong
solvencylevels,assubsequentlyratifiedinOliverWyman’s
“bottom-upstresstest”,whichhighlightedthestrengthofthe
Bank’scapitalpositioneveninanextremelyadversescenario.By
businessarea,theperformanceofrevenueingeneral,andnet
interestincomeinparticular,wasalsowellreceived.InSpain,BBVA
wassetapartbyitssuperiorassetqualitycomparedtoitspeers.
DespiteconsideringthattheSpanishmacroeconomicconditions
willcontinuetoputpressureonthearea’searnings,analysts
consideredthatthestrengthandfavorableperformanceofthe
Group’sbusinessesinothergeographicareaswouldbesufficient
tooffsetthiseffectoverthecomingquarters.EarningsinSouth
Americasurprisedpositively,thankstoitshighrevenuegeneration
capacity.TheUSA,Turkey,Asiaand,toalesserextent,Mexicoalso
producedbetterthanexpectedresults.
Againstthisbackdrop,theBBVA sharegained8.6%overthe
quarterto€6.11pershare,resultinginamarketcapitalization
of€32,901m.Thisrepresentsaprice/bookvalueof0.8,aP/E
of15.6(calculatedontheaverageprofitfor2012estimatedby
theconsensusofBloomberganalysts)andadividendyieldof
6.9%(alsocalculatedaccordingtotheaveragedividendper
shareestimatedbyanalystsfor2012andthesharepriceasof
September30,2012).TheimprovementintheBBVAshareis
inlinewiththatoftheIbex35(+8.5%),butslightlybelowthe
performanceoftheEuropeansectorasawhole(StoxxBanks
+11.2%,andEuroStoxxBanks+12.8%).
Asregardsshareholder remuneration,BBVAmaintainedits
dividendpolicy.OnSeptember14itannouncedthedistributionof
€0.10pershareunderthe“dividendoption”flexibleremuneration
systemagreedattheAGMonMarch16,2012.Thisprogramoffers
shareholderstheoptiontoreceivethedividendinnewlyissued
BBVAsharesorincash.Around80%ofshareholdersoptedto
receivenewlyissuedBBVAshares,whichoncemoreconfirmsthe
sucessofthisnewremunerationsystem.
TheBBVAshare
The BBVA share and share performance ratios
30-09-12 30-06-12
Numberofshareholders 1,007,410 1,044,129
Numberofsharesissued 5,382,108,140 5,382,108,140
Dailyaveragenumberofsharestraded 90,201,068 71,780,925
Dailyaveragetrading(millioneuros) 516 371
Maximumprice(euros) 6.75 5.89
Minimumprice(euros) 4.31 4.52
Closingprice(euros) 6.11 5.63
Bookvaluepershare(euros) 8.13 8.00
Marketcapitalization(millioneuros) 32,901 30,296
Price/Bookvalue(times) 0.8 0.7
PER(Price/Earnings;times) 15.6 8.9
Yield(Dividend/Price;%) 6.9 7.5
Share price index(30-09-11=100)
31-12-11 31-03-1230-09-11 30-06-12 30-09-12
Stoxx 50
BBVA
Europe StoxxBanks
50
60
70
80
90
100
110
120
130
140
50
60
70
80
90
100
110
120
130
140
23Corporateresponsibility
ByrenewingitslistingontheDowJonesSustainability
Index(DJSI),BBVAhasmaintaineditspositionamongthe
leadingcompaniesintermsofsustainabilityatinternational
level.InclusionontheDJSIreflectsthesteadyintegrationof
theenvironmental,socialandcorporategovernance(ESG)
variablesintotheday-to-daymanagementoftheBank.
BBVAhasworkedtointegratetheseaspectsacrossitsvalue
chainforyears,fromproductdesign,advertisingandsales
toriskmanagement.BBVA’sfullratingintheanalysiscarried
outbytheSAMagencyforDJSIisavailableontheGroup’s
CorporateResponsibilitywebsite,www.bancaparatodos.com.
Belowarethecorporateresponsibilitymilestonesforthe
third quarter of 2012:
Financial InclusionBBVABancomerwillpromoteaccesstobankingfor1.5
millionusersthroughthe Dinero móvil(Mobilemoney)
initiative,whichenablespeopletosendmoneytoothers
inanypartofthecountrythroughtheelectronicbanking
channeloftheirchoice.Theaimoftheprojectistomake
iteasierforcustomerstoaccesslow-costbankingservices
thataresecure,approachable,accessible,time-savingand
convenient.
Financial LiteracyFiguresforthethirdValores de futuro(Futurevalues)
campaignwerepublishedinJuly.Itclosedattheendofthe
schoolyearwitharound800,000participantsinSpain.In
Mexico,BBVABancomerhasreachedanagreementwiththe
NationalAdultEducationInstitute(INEA)tofosterfinancial
literacyinthecountry,andhasincludedworkshopsdealing
withsavingandcreditintotheINEAfamilyfinancemodule
aspartofadulteducation.Ithasalsoincludedtwonew
workshopstosupporttheMexicanSMEsector.
Responsible BankingCustomer-Centric Approach. Throughits“Blue
BBVA”program,BBVAhasgivenyounguniversitystudents
anumberofexclusiveadvantagesandservicestofinance
theirstudies.Thisprogramisspecificallytargetedatyoung
adultsandreflectstheBank’sstrategyofofferinginnovative
productsthatmeetthespecificneedsofdifferentcustomer
segments.
Environment. BBVAColombiahasjoinedthe“Green
Protocol”,anagreementunderwrittenbythefinancialsector
topromotesustainabledevelopmentinthecountry.Through
thisagreementtheBankcommitsvoluntarilytoimplement
policiesandpracticesthatcanberecognizedasamodelin
termsofenvironmentalresponsibility.Inadditiontothis,the
BBVAFoundationhasawardedits“BiodiversityConservation”
prizetoWWFSpainforitskeyinnovativeactionsinvarious
areasofconservation.
Community InvolvementThewinnerofBBVA’s4thINTEGRAAwardwastheCatalan
cooperativeLaFageda.Theawardisworth200,000euros.
Theawardrecognizestheworkofnon-profitorganizations
orself-employedpeoplewhocarryoutprojectsthatbring
peopleintothelabormarketandboostnewinitiativesand
goodpracticesinthisfield.Inaddition,SpainandPortugalhave
launchedthe2ndTerritorios Solidarios(SolidarityTerritories)
program,whichmakes1.8millioneurosavailableforemployees
inSpaintodevelopsupportiveprojectsledbynon-profit
organizations.Finally,theMomentumProject,BBVA’sinitiative
supportingsocialentrepreneurship,waslaunchedinMexico
forthefirsttime.TheaimistoboostSMEsthroughastrategic
alliancewithprestigiousinstitutionssuchastheEGADE
BusinessSchoolandNewVenturesMexico,inpartnershipwith
theInter-AmericanDevelopmentBank(IDB).
BBVA in the Sustainability IndicesBBVAhasaprominentpositioninthemaininternational
sustainabilityindices,withthefollowingweightingattheclose
ofSeptember:
Corporateresponsibility
Formoreinformationandcontactdetails,pleasevisit
www.bancaparatodos.com
Main sustainability indices in which BBVA participates
Weighting (%)
DJSIWorld 0.52
DJSIEurope 1.25
DJSIEurozone 2.66
ASPIEurozoneIndex 2.00
EthibelSustainabilityIndexExcellenceEurope 1.32
EthibelSustainabilityIndexExcellenceGlobal 0.90
MSCIWorldESGIndex 0.36
MSCIWorldexUSAESGIndex 0.75
MSCIEuropeESGIndex 1.31
MSCIEAFEESGIndex 0.85
FTSE4GoodGlobal 0.31
FTSE4GoodGlobal100 0.50
FTSE4GoodEurope 0.74
FTSE4GoodEurope50 1.23
24 Businessareas
Inthissectionwediscussthemoresignificantaspectsofthe
activitiesandearningsoftheGroup’sdifferentbusinessareas,
alongwiththoseofthemainunitswithineach,plusCorporate
Activities.Specifically,wedealwiththeincomestatement,the
balancesheetandthemainratios:efficiency,NPAratio,NPA
coverageratioandriskpremium.
In2012themainchangeinthereporting structureofthe
businessareasoftheBBVAGrouphasbeenthetransfer
totheUnitedStatesoftheassetsandliabilitiesofabranch
inHouston,whichpreviouslybelongedtoMexico(BBVA
Bancomer).Thishasbeendonetakingintoaccountthe
geographicalnatureoftheGroup’sreportingstructure.In
addition,changeshavebeenmadethataffectotherareasand
whichowingtotheirirrelevantnatureneednocomment.
Thus,thecompositionofthebusiness areasin2012isvery
similartothatexistinginthepreviousyear:
• Spain,whichincludes:Theretailnetwork,withthe
segmentsofindividualcustomers,privatebanking,and
smallbusinessesinthedomesticmarket;Corporateand
BusinessBanking(CBB),whichhandlestheneedsofSMEs,
corporations,governmentanddevelopersinthecountry;
Corporate&InvestmentBanking(CIB),whichincludes
activitywithlargecorporationsandmultinationalgroups;
GlobalMarkets(GM),withthetradingflooranddistribution
businessinthedomesticmarket;andotherunits,among
themBBVASegurosandAssetManagement(management
ofmutualandpensionfundsinSpain).
• Eurasia,whichincludesbusinessintherestofEuropeand
Asia.EuropeincludesBBVAPortugal,ConsumerFinance
ItaliaandPortugal,theretailbusinessofthebranchesin
Paris,LondonandBrussels,thewholesaleactivitycarried
outintheregion(excludingSpain)andTurkey(includingthe
stakeinGaranti).Asiaincludesalltheretailandwholesale
businessinthatcontinentandthestakeinCNCBandCIFH.
• Mexico:includesthebanking,pensionsandinsurance
businessesinthecountry.
• United States:encompassestheGroup’sbusinessinthe
UnitedStates.
• South America:includesthebanking,pensionsand
insurancebusinessesinSouthAmerica.
Aswellastheunitsindicated,alltheareasalsohaveallocations
ofotherbusinessesthatalsoincludeeliminationsandother
itemsnotassignedtotheunits.
Finally,theCorporate Activitiesareaincludestherestofitems
thatarenotallocatedtothebusinessareas,asinprevious
years.Thesebasicallyincludethecostsofheadquarterswith
astrictlycorporatefunction,certainallocationstoprovisions
suchasearlyretirementsandothersalsoofacorporatenature.
CorporateActivitiesalsoperformsfinancialmanagement
functionsfortheGroupasawhole;essentiallymanagementof
assetandliabilitypositionsforinterestratesinthe
euro-denominatedbalancesheetandforexchangerates,
aswellasliquidityandcapitalmanagementfunctions.
Themanagementofassetandliabilityinterest-raterisk
incurrenciesotherthantheeuroisrecordedinthe
correspondingbusinessareas.Lastly,itincludescertain
portfoliosandassetsnotlinkedtocustomers,withits
correspondingrevenuesandcosts,suchastheindustrialand
financialholdingsandtheGroup’srealestateassetsinSpain
assignedtoheadquarterservicesandforeclosedorpurchased
assets.
Inaddition,supplementary informationisprovidedofthe
globalbusiness(formerlycalledWholesaleBanking&Asset
Management–WB&AM–andnowCorporate&Investment
Banking)carriedoutbytheBBVAGroup.Thisaggregatedoes
notincludetheassetmanagementbusiness.Thisaggregate
ofbusinessesisconsideredrelevanttobetterunderstandthe
BBVAGroupbecauseofthecustomersserved,thetypeof
productsofferedandtherisksundertaken.
Furthermore,asusualinthecaseofTheAmericas,both
constantandcurrentexchange rateshavebeenappliedwhen
calculatingyear-on-yearvariations.
TheGroupcompilesreportinginformation by areasona
levelasdisaggregatedaspossible,andalldatarelatingto
thebusinessestheseunitsmanageisrecordedinfull.These
basicunitsarethenaggregatedinaccordancewiththe
organizationalstructureestablishedbytheGroupat
higher-levelunitsand,finally,thebusinessareasthemselves.
Similarly,allthecompaniesmakinguptheGrouparealso
assignedtothedifferentunitsaccordingtothegeographical
areaoftheiractivity.
Oncethecompositionofeachbusinessareahasbeendefined,
certainmanagement criteriaareapplied,ofwhichthe
followingareparticularlyimportant:
• Capital:Capitalisallocatedtoeachbusinessaccording
toeconomicriskcapital(ERC)criteria.Thisisbasedon
theconceptofunexpectedlossataspecificconfidence
level,dependingontheGroup’scapitaladequacytargets.
Thesetargetshavetwolevels:thefirstiscoreequity,which
determinesthecapitalallocated.Thisamountisusedasa
basisforcalculatingtheprofitabilityofeachbusiness.The
secondlevelistotalcapital,whichdeterminestheadditional
allocationintermsofsubordinatedebtandpreferred
securities.ThecalculationoftheERCcombinescreditrisk,
Businessareas
25Businessareas
marketrisk,structuralbalance-sheetrisk,equitypositions,
operationalriskandfixedassetandtechnicalrisksinthe
caseofinsurancecompanies.Thesecalculationsarecarried
outusinginternalmodelsthathavebeendefinedfollowing
theguidelinesandrequirementsestablishedunderthe
BaselIIcapitalaccord,witheconomiccriteriaprevailingover
regulatoryones.
ERCisrisk-sensitiveandthuslinkedtothemanagement
policiesofthebusinessesthemselves.Itstandardizescapital
allocationbetweentheminaccordancewiththerisksincurred
andmakesiteasiertocompareprofitabilityacrossunits.In
otherwords,itiscalculatedinawaythatisstandardand
integratedforallkindsofrisksandforeachoperation,balance
orriskposition,allowingitsrisk-adjustedreturntobeassessed
andanaggregatetobecalculatedfortheprofitabilitybyclient,
product,segment,unitorbusinessarea.
• Internal transfer prices:Internaltransferratesareapplied
tocalculatethenetinterestincomeofeachbusiness,on
boththeassetsandliabilities.Theseratesarecomposed
ofamarketratethatdependsontherevisionperiodof
theoperation,andaliquiditypremiumthatreflectsthe
conditionsandprospectsofthefinancialmarketsinthis
area.Earningsaredistributedacrossrevenue-generating
anddistributionunits(e.g.,inassetmanagementproducts)
atmarketprices.
• Assignment of operating expenses:Bothdirectand
indirectcostsareassignedtothebusinessareas,except
wherethereisnoclearlydefinedrelationshipwiththe
businesses,i.e.whentheyareofaclearlycorporateor
institutionalnaturefortheGroupasawhole.
• Cross selling:insomecases,consolidationadjustments
arerequiredtoeliminateshadowaccountingentriesin
theresultsoftwoormoreunitsasaresultofcross-selling
incentives.
Recurrent economic profit by business area (January-September2012.Millioneuros)
Adjusted net attributable
profitEconomic profit (EP)
Spain 1,365 467
Eurasia 766 317
Mexico 1,314 862
SouthAmerica 811 520
TheUnitedStates 208 (36)
CorporateActivities (693) (706)
BBVA Group 3,770 1,424
Mayor income statement items by business area(Millioneuros)
Business areas
BBVA Group Spain Eurasia MexicoSouth
AmericaThe United
StatesCorporate Activities
January-September 12
Netinterestincome 11,220 3,571 603 3,079 3,087 1,285 (404)
Grossincome 17,103 5,038 1,624 4,418 4,278 1,826 (79)
Operatingincome 9,000 2,972 1,048 2,750 2,463 634 (868)
Incomebeforetax 2,173 (782) 890 1,741 1,926 496 (2,098)
Net attributable profit 1,656 (532) 813 1,300 1,014 341 (1,279)
Net attributable profit (adjusted) (1) 3,345 848 813 1,300 1,014 341 (971)
January-September 11
Netinterestincome 9,676 3,305 519 2,840 2,255 1,216 (460)
Grossincome 15,052 4,879 1,329 4,174 3,214 1,745 (290)
Operatingincome 7,753 2,799 893 2,655 1,751 645 (991)
Incomebeforetax 4,145 1,615 844 1,691 1,385 338 (1,727)
Net attributable profit 3,143 1,149 719 1,252 753 242 (972)
Net attributable profit (adjusted) (1) 3,478 1,249 719 1,252 753 242 (737)
(1)In2011,duringthefourthquarter,USgoodwillimparmentcharge.In2011and2012,impairmentchargerelatedtothedeteriorationoftherealestatesectorinSpain.Andinthethirdquarterof2012,impactofUnnimbadwill.
26 Businessareas
Spain
Income statement (Millioneuros)
Spain
January-Sep. 12 ∆% January-Sep. 11
Net interest income 3,571 8.0 3,305
Netfeesandcommissions 1,199 6.0 1,131
Nettradingincome (16) n.m. 84
Otherincome/expenses 284 (21.0) 359
Gross income 5,038 3.2 4,879
Operatingcosts (2,065) (0.7) (2,081)
Personnelexpenses (1,239) (2.2) (1,267)
Generalandadministrativeexpenses (747) 0.9 (740)
Depreciationandamortization (79) 7.8 (74)
Operating income 2,972 6.2 2,799
Impairmentonfinancialassets(net) (3,705) 195.2 (1,255)
Provisions(net)andothergains(losses) (49) n.m. 71
Income before tax (782) n.m. 1,615
Incometax 250 n.m. (466)
Net income (532) n.m. 1,149
Non-controllinginterests (1) n.m. 0
Net attributable profit (532) n.m. 1,149
Adjusted(1) (1,380) - (100)
Net attributable profit (adjusted) (1) 848 (32.1) 1,249
(1)In2011and2012,impairmentchargerelatedtothedeteriorationoftherealestatesector.
Balance sheet (Millioneuros)
Spain
30-09-12 ∆% 30-09-11
Cashandbalanceswithcentralbanks 7,602 (17.0) 9,154
Financialassets 77,946 6.8 72,960
Loansandreceivables 231,171 3.0 224,501
Loansandadvancestocustomers 210,543 1.2 208,039
Loansandadvancestocreditinstitutionsandother 20,628 25.3 16,462
Inter-areapositions - - -
Tangibleassets 856 (6.3) 913
Otherassets 4,051 25.1 3,237
Total assets/Liabilities and equity 321,626 3.5 310,765
Depositsfromcentralbanksandcreditinstitutions 54,290 34.1 40,490
Depositsfromcustomers 122,058 1.5 120,281
Debtcertificates 7,755 n.m. 346
Subordinatedliabilities 3,010 (48.7) 5,864
Inter-areapositions 48,375 (30.1) 69,169
Financialliabilitiesheldfortrading 54,896 20.9 45,400
Otherliabilities 19,308 4.0 18,561
Economiccapitalallocated 11,934 12.0 10,656
27Spain
Industry Trends
Inthethirdquarterof2012,thecommercial
activity ofSpanishcreditinstitutionstook
placeinaverydifficultenvironmentmarked
by:
• Greateruncertaintyandweakeconomic
growth.
• ThedebtcrisisinEuropeanddifficulties
inaccessingtheinternationalwholesale
financemarkets.Financialtensionthat
keptthemarketspracticallyclosedand
increaseddependenceonfinancefromthe
ECB,whichattheendofSeptemberhad
reachedthefigureof€378billion.
• Highvolatilityonthefinancialmarkets.
WithrespecttotheSpanish financial
system,macroeconomicweaknessandthe
necessarydebtdeleveragingprocessinthe
Spanisheconomyhasledtoasignificant
stagnationincreditdemand.Thisislimiting
growthinvolumesandhadanegativeeffect
ontheNPAratio,whichattheendofAugust
stoodat10.5%forSpain’sfinancialsystem
asawhole.Againstthisbackdrop,savings
becomeakeyelementinthemanagement
ofthebusiness.
Thethirdquarterwasakeymomentinterms
ofprogressintheprocessofrestructuringin
theindustry.InSeptembertheconclusions
ofthebottom-upexercisecarriedoutby
OliverWymanweremadepublic.Theresults
ofthestresstestsoncemoreshowedthe
disparitywithintheSpanishfinancialsystem,
withacoreofstrongbanksandvulnerability
limitedtoaspecificpartoftheindustry.
Thiscleardistinctionbetweenbankswill
makerestructuringeasier.Theworkby
OliverWymanrepresentsadecisivestepin
recoveringmarketconfidenceintheSpanish
financialsystem,andeasesdoubtsaboutthe
transparencyandvaluationofbankassets.It
markstheendofoneofthefinalphasesof
restructuringwhich,oncecompleted,willlead
toafinancialsystemwithfewerbutsounder
banks.Aswasalreadymentionedatthetime
thetop-downanalysiswaspublishedinJune,
thisnewOliverWymanexerciseconfirmsthat
BBVAwillnotneedadditionalcapital,evenin
themostadversemacroeconomicscenario,
thankstotherecurrenceandsoundnessofits
businessmodel.Itclearlyshowsthestrength
oftheGroup’smodelinsituationsofextreme
difficulty.
Finally,withrespecttoBBVA inSpain,the
acquisitionof100%ofthecapitalstockof
UnnimBanc,S.A.wascompletedinthe
quarter.Asaresult,theGroup’sfinancial
statementsasof30-Sep-2012alreadyinclude
theUnnimaccountsfromJuly27.The
commentsbelowincludethefiguresforthe
Catalanbank,unlessotherwiseindicated.The
integrationofUnnimbarelyhasanimpacton
theearningsinthearea.Itcontributesaloan
bookof€18billion,25%ofwhichisregulated
byanassetprotectionscheme(EPA),and
includescustomerfundsofaround€11billion.
However,itdoesnegativelyaffecttheGroup’s
NPAratio.
Activity
ThemostimportantaspectofBBVA’sactivity
inSpainoverthequarteristhefavorabletrend
incustomerdepositsandpromissorynotes
andtheongoingprocessofdeleveraging.As
aresult,thecommercialgapandtheliquidity
positionintheareahaveimprovedasofthe
closeofthethirdquarterof2012.
Asof30-Sep-2012,BBVAmanagedavolume
of€163,425mincustomer funds,including
customerdeposits,promissorynotesand
off-balance-sheetfunds,up9.1%year-on-year
and9.2%quarter-on-quarter.Ofthisfigure,
Significant ratios (Percentage)
Spain
30-09-12 30-06-12 30-09-11
Efficiencyratio 41.0 40.8 42.6
NPAratio 6.5 5.1 4.9
NPAcoverageratio 59 50 42
Riskpremium 2.31 2.14 0.77
Spain highlights in the third quarter
• ConsolidationofUnnim.
• Positiveperformanceofcustomerdeposits.
• Goodpricemanagementandstrictcost
controlboostoperatingincome.
• TheincreaseinprovisionsenablesBBVAto
meet2/3oftheRDL02/2012and18/2012
requirements.
28 Businessareas
previousquartershascontinued,duetothe
difficultmacroeconomicsituationandthe
reducedvolumesoflendingactivity.Despite
this,theratioisstillfarbelowthatreported
inthesectoroverall,andclosedSeptember
at5.7%(6.5%includingtheUnnimfigures).
Thesignificantprovisionsmadeexplainthe
improvedcoverageratio,whichincreased
from50%asof30-Jun-2012to56%asof
30-Sep-2012(59%includingUnnim).
Earnings
Themostnotablefeatureofearningsin
theareainthefirst nine months of 2012is
excellentpricemanagement,whichexplains
theincreaseinnetinterestincome,the
strictcontrolofexpensesandasignificant
increaseinloan-lossprovisionstocover
thedeteriorationofassetsrelatedtothe
real-estatesectorinSpainandthuscomply
withtherequirementsofRoyalDecree-Laws
02/2012and18/2012.
Inanenvironmentoflowervolumes,BBVA
continuestoimproveitsnetinterestincome,
whichintheJanuary-Septemberperiod
amountedto€3,571m,8.0%morethan
inthesameperiodin2011.Asmentioned
earlier,goodpricemanagementthrough
repricingofloans,aswellasthegreater
contributionofmortgagefloors,havealso
ledtoanimprovementofprofitability,as
measuredbythenetinterestincomeover
averagetotalassets,to1.63%attheendof
September(1.39%inSeptember2011).Other
revenuealsoperformedwell.However,the
headingotherrevenuedecreasesduetothe
highercontributiontotheDepositGuarantee
Fund.Asaresultoftheabove,gross income
increasedto€5,038m,withayear-on-year
growthof3.2%.Thistrendisveryimportant
€129,813mwereon-balance-sheet customer
funds and promissory notes,whichincreased
by7.6%overthelast12monthsand12.8%
onthecloseofthefirsthalfof2012.Not
includingtheUnnimfigures,therewasalso
ariseoverthelast12months(6.1%)andover
thequarter(3.1%),confirmingtheoutstanding
managementoffundgatheringandrenewals
arrangedbythecommercialnetworkandwith
wholesalecustomers(inthelattercase,the
amountofthisheadinginCIBwentup5.5%
onthefigurefor30-Jun-2012).
BBVAmanagedinSpainoff-balance-sheet
funds of€50,492m,anincreaseof3.7%
onthefigureforthepreviousquarterand
0.5%onthesamedatelastyear.Ofthese,
€18,987maremutualfundsthataccountfor
17.3%ofthemarket(latestavailablefigure
forAugust),withaslightincreaseoverthe
quarterof1.6%.Therestaredistributed
amongotheroff-balance-sheetfundsand
pensionfunds,whichasof30-Sep-2012
amountedto€17,695m,ariseof2.9%since
30-Jun-2012(up5.7%year-on-year)thanksto
thepositivemanagementofrenewalsand
attractionofnewaccounts.Asaresultofthe
above,BBVAismaintainingitspositionas
thebiggestpensionfundmanagerinSpain,
withamarketshareof19.1%(latestavailable
figuresasofJune).
Gross lending to customersclosedSeptember
at€219,469m,withrisesof3.2%year-on-year
and3.9%quarter-on-quarterduetothe
incorporationoftheUnnimbalances.Excluding
these,theloanbookintheareahascontinued
toshrink(by6.1%year-on-yearand5.5%
quarter-on-quarter),inlinewiththenecessary
processofdeleveragingintheeconomy.
Withrespecttoasset quality,theslight
upwardmovementintheNPAratioover
281255313
230300
413
536
10081018946
742756
9791064
0
200
400
600
800
1,000
1,200
1Q 2Q 3Q 4Q 3Q
+6.2%
2011 20121Q
2,799 2,972
1,008946
1,064979
756 742
2Q
1,018
1Q 2Q 3Q 4Q 3Q
–32.1%
2011 20121Q
1,249 848
281313
536
413300
230
2Q
255
Spain. Net attributable profit (adjusted)(Million euros)
Spain. Operating income(Million euros)
29Spain
andgreatflexibility,whichhavegathered
over€1,000mintimedepositsoverthe
quarter.
• Thestartofthe“InternationalSynergies”
project,whichoffersCBBcustomersin
Spainaglobalrangeofservicesfrom
allthecountrieswhereBBVAoperates.
Inaddition,the“Growingabroad”cycle,
organizedbytheinternationaldepartment,
continuestoholdseminarstosupport
Spanishcompaniesintheirprocess
ofinternationalexpansion.Thisfirm
commitmentbyBBVAtoaccompanyits
customersintheirexpansionabroadhas
resultedinanincreasingnumberof
cross-bordertransactionsincountries
suchasMexico,Chile,Canada,Turkeyand
Italy,wheretransnationalteamsoperate,
anddemonstratestheglobalreachofthe
BBVAGroup.
• Intheinstitutionalsegment,workis
beingcarriedouttoadvisetheMinistry
ofEconomyandCompetitivenessand
theMinistryofFinanceandPublic
Administrationsincreatinganddeveloping
theRegionalLiquidityFund(FLA).The
Spanishbankingsystemwillcontribute
€8,000mtothisinitiative,andBBVA’s
contributionwillbe€1,600m.
Corporate & Investment Banking
Thisunitisresponsibleforglobalbusinesses
withinSpain.Itmanagesavolume of
business asof30-Sep-2012ofaround
€28,000m,withaloanbookof€21,293m
andon-balance-sheetcustomerdepositsof
€7,084m.Grosscustomerlendingcontinues
tofallduetothedeleveragingprocess
mentionedearlierandBBVA’spolicyoffocusing
oncustomerswithhighloyalty,profitabilityand
assetquality.Thisheadingfellby20.0%over
thequarter.Theincreaseonthebalanceonthe
samedatein2011istheresultofatemporary
increaseinbalancesfromrepoagreements
andguaranteesrelatedtoGlobalMarkets
transactions.On-balance-sheetcustomerfunds
increasedby5.5%overthequarter,compared
withafallof39.9%inthepreviousquarter,
thankstothefund-gatheringeffortsundertaken
overthequarter.
Thefollowingareworthhighlightingas
regardsearnings:
• Aresilientgrossincome,whichinthe
cumulativefigurethroughSeptember2012
giventheeconomiccontextinwhichithas
takenplace.
Operatingexpensesfellby0.7%onthefigure
forthefirstninemonthsof2011.Thishasled
toanimprovementinefficiencycompared
withthefigure12monthsearlier,andhas
maintainedtheefficiencyratiopractically
thesameasinthefirsthalfof2012(41.0%).
Asaresult,operating incomeamountedto
€2,972m,up6.2%inyear-on-yearterms.
Thestrengthofoperatingincomementioned
abovehasmadeitpossibletoabsorbthe
increaseinloan-loss provisions.Inthethird
quarterof2012therewasfurthersignificant
provisioningagainstimpairmentlosseson
financialassetsandprovisionstooffsetthe
deteriorationinassetsrelatedtothereal
estatesectorinSpain,thuscomplyingwiththe
requirementsofRoyalDecree-Laws
02/2012and18/2012.Atthecloseof
September,theareahadalreadymettwo
thirdsoftheobligationsderivedfromRoyal
Decree-Laws02/2012and18/2012.These
increasedprovisionshaveresultedinan
improvementofthecoverageratiointhearea,
ascommentedabove,andhaveimpactedthe
net attributable profit,whichwasanegative
€532m(apositive€848mnottakinginto
accountthehigherprovisionsresultingfrom
theperimeterofRoyalDecree-Laws02/2012
and18/2012).
Retail and Commercial Banking
RetailandCommercialBankingmanages
90%oftheloanbookintheareaand96%of
customerfunds.
BBVAisworkingtosupportitscustomersand
offerthemincreasinglypersonalizedsolutions
withinthedifficultcurrenteconomicsituation.
Therangeofproductsavailabletothe
differentsegmentsinthisunitisexpanding
steadily,andtheBankcontinuestoreward
customerloyalty.Thefollowingexamplesare
worthmentioning:
• Anewconsumerfinanceschemefor
privateindividualsthatreturns10%of
interestpaymentseachyearforthe
durationoftheloan.
• TheCorporateandBusinessBanking(CBB)
networkhasfocusedonretentionand
attractionofcustomerfundsasawayof
consolidatingandincreasingcustomer
loyalty.Todoso,ithasofferedafullrange
ofproductswithcompetitiveremuneration
30 Businessareas
advantagestoallcustomerswhomaintaina
flowofcollectionsandpaymentswithBBVA.
Itisoneofthemostcompetitiveinitiatives
inthemarketandoneoftheBank’smain
leversforgrowingitscustomerbaseinSpain.
Thesuccessoftheplanhasbeenreflected
intheriseofcustomershareforthesecond
yearinarowreachingaFRSmarketshareof
10.6%asmainsupplier,accordingtothelatest
informationavailable(September2012).
Intheinsurance business,anewcar
insurancewaslaunchedinSeptemberwith
theaimofincreasingcross-sellingthrough
highadded-valueproductsandincreasing
theloyaltyofinsurancepolicyholders.Ithas
averycompetitivepriceandattributesthat
setsitapartfromthecompetition(including
afreedoor-to-doorserviceforthevehicle
roadworthinesstest(ITV)andforrepairs,the
BBVAcommitmenttoquality,freechoiceof
garage,andanadditional5%discountfor
asecondvehicleinsuredinthefamily).In
thisway,BBVAhasnotonlyconsolidatedits
positionasaglobalproviderofinsurance
solutionsforitscustomers,butalsotakena
furtherstepindiversifyingitslinesofbusiness.
TheCalidadX3programwaslaunchedto
boostbestbankingpracticesandtheculture
of excellence.Itisbasedonthe
customer-centricphilosophyandaimsto
raisetheBank’sdifferentiationby:1)beingthe
mostrecommendedbankinthemarketand
2)improvinglevelsofcustomersatisfaction.
TheLiga Calidad BBVA(BBVAQualityLeague)
waslaunchedduringthequartertoboostthis
ambitiousplan.Thisisacompetitionbetween
BBVAbranchesforexcellenceincustomer
service.
Finally,BBVAcontinuestomakeprogress
indevelopingits multichanneldistribution
model.Thenumberofcustomerschoosing
BBVA Contigoastheirmainchannelfor
relationswithBBVAcontinuestoincrease.
Atotalof290,000customersarealready
remotelymanagedbyapproximately300
specializedadvisers.
amountedto€705m,up2.6%onthesame
periodin2011.Itwasboostedmainlyby
thegoodperformanceofrevenuefrom
customersand,inparticular,revenue
generatedbytheGlobalTransactional
Bankingunit.
• Operatingexpensescontinuetheiryear
onyeardownwardtrendasinprevious
quarters.FromJanuarytoSeptember2012
theyamountto€240m,adeclineof4.8%
thanthesameperiodin2011.
• Riseinoperatingincome,whichamounted
to€465minJanuarythroughSeptember,
6.9%uponthefigureforthesameperiod
in2011.
• Generationofacumulativenetattributable
profitof€268m,ayear-on-yearfallof8.7%
(down39.1%inJanuary-June2012).
Themostsignificanttransactionsand
highlightsfortheperiodaredetailedinthe
CIBsectionattheendofthisreport.
Highlights
Thehighlightofthequarterwasthe
completionofthepurchaseofUnnim
Banc,S.A.onJuly27,2012,afterreceiving
authorizationfromtheEuropean
Commission’sDirectorateGeneralfor
CompetitionandtheSpanishNational
CommissionforCompetition.Thisacquisition
strengthensBBVA’scommitmentinCatalonia
anddoublesitsmarketshareinoneofthe
mostattractivemarketsandwithbigger
growthpotentialinSpain.
Onthecommercial side,thisquartersaw
thelaunchofAdiós Comisiones,theplan
thateliminatesaccountfeesandfees
chargedfordebitorcreditcards,andoffers
additionalbenefitstocustomersinother
financialproductsfortheirloyaltytotheBank.
ThecampaignispartofBBVA’srangeof
transactionalproducts,whichofferssignificant
31Eurasia
Eurasia
Income statement (Millioneuros)
Eurasia
January-Sep. 12 ∆% January-Sep. 11
Net interest income 603 16.0 519
Netfeesandcommissions 336 17.2 287
Nettradingincome 91 0.8 90
Otherincome/expenses 595 37.4 433
Gross income 1,624 22.2 1,329
Operatingcosts (576) 32.2 (436)
Personnelexpenses (299) 21.4 (246)
Generalandadministrativeexpenses (232) 46.3 (159)
Depreciationandamortization (45) 45.7 (31)
Operating income 1,048 17.3 893
Impairmentonfinancialassets(net) (138) 105.5 (67)
Provisions(net)andothergains(losses) (20) n.m. 17
Income before tax 890 5.5 844
Incometax (77) (37.8) (124)
Net income 813 13.0 719
Non-controllinginterests - - -
Net attributable profit 813 13.0 719
Balance sheet (Millioneuros)
Eurasia
30-09-12 ∆% 30-09-11
Cashandbalanceswithcentralbanks 2,097 9.9 1,908
Financialassets 12,268 10.8 11,070
Loansandreceivables 34,593 (10.1) 38,492
Loansandadvancestocustomers 31,457 (8.0) 34,188
Loansandadvancestocreditinstitutionsandother 3,136 (27.1) 4,304
Inter-areapositions - - -
Tangibleassets 587 1.9 576
Otherassets 1,179 0.9 1,169
Total assets/Liabilities and equity 50,724 (4.7) 53,214
Depositsfromcentralbanksandcreditinstitutions 15,523 (8.2) 16,908
Depositsfromcustomers 18,383 (18.3) 22,504
Debtcertificates 1,015 29.8 782
Subordinatedliabilities 907 (54.7) 2,003
Inter-areapositions 5,530 71.6 3,224
Financialliabilitiesheldfortrading 412 28.9 319
Otherliabilities 4,235 60.9 2,632
Economiccapitalallocated 4,720 (2.5) 4,843
32 Businessareas
Industry Trends
Theeconomicbackdropinthethirdquarter
of2012forEuropewasdifficult,withhighly
volatilemarkets.However,progresswas
clearlyachievedintheEuropeanproject
followingthesummitheldattheendofJune,
layingthefoundationsforfuturebanking
unioninthearea.
InTurkey,themostimportantfeatureoverthe
quarterwasthatthelessrestrictivemonetary
policyappliedbytheTurkishcentralbank.
Thisshouldhelpboosteconomicgrowth.
BaselIIregulationsbegantobeappliedin
July.Theimpacthasbeenslightlynegativeon
thecapitalratioofthesectorasawhole,but
positiveinthecaseofGaranti.
Finally,inChina thetwoconsecutiveinterest
ratecuts(inJuneandJuly),thereductions
of150basispointsinthereserveratio
announcedinDecemberandtheincreased
regulatoryflexibility,haveboostedbank
lending.Atthesametime,thefallinrealestate
priceshasstabilizedandanupturninlending
throughthebankingsystemishelpingto
moderatecreditgrowthintheinformal
financialindustry.
Activity
Atthecloseofthethirdquarterof2012,gross
lending to customersintheareaamounted
to€32,284m,ayear-on-yearfallof7.7%anda
quarterlyfallof4.6%,duetotheshrinkingof
thewholesalecustomerloanportfolio.Retail
loansgrewat4.9%inthelast12monthsand
remainsatverysimilarlevelsto30-Jun-2012.
Oncemore,oneofthestrongpointswasthe
positivetrendinbalancesfromTurkey,which
accountfor34%ofgrosscustomerlending
intheareaand56%oftheretailbusiness
inEurope(excludingSpain).Balanceswere
22.8%higherthanthefigureforthesamedate
in2011.
Withrespecttotherisk indicators,the
NPAratioclosed30-Sep-2012at1.7%,which
compareswiththefigureof1.4%attheend
ofthepreviousquarter.Thisslightincreaseis
mainlyduetolowerlending,asthevolume
ofNPAhasremainedfairlystable.The
coverageratioclosedthequarterat114%and
theriskpremiumat0.52%(119%and0.45%,
respectively,asof30-Jun-2012).
Significant ratios (Percentage)
Eurasia
30-09-12 30-06-12 30-09-11
Efficiencyratio 35.5 33.7 32.8
NPAratio 1.7 1.4 1.5
NPAcoverageratio 114 119 118
Riskpremium 0.52 0.45 0.28
237277
299312273
249
197
321
366362
420
331317
245
0
50
100
150
200
250
300
350
400
450
1Q 2Q 3Q 4Q 3Q
+17.3%
2011 20121Q
893 1,048
321362
245
317 331
420
2Q
366
1Q 2Q 3Q 4Q 3Q
+13.0%
2011 20121Q
719 813
237
299
197
249273
312
2Q
277
Eurasia. Operating income(Million euros)
Eurasia. Net attributable profit(Million euros)
Eurasia highlights in the third quarter
• Favorabletrendinretailcustomeractivity.
• Positiveperformanceofthemorerecurrent
revenue.
• CNCBannounces28.9%year-on-yeargrowth
ofearnings.
• Strongsolvencyandliquiditypositionin
Garanti.
• Garantisuccessfullycompletesthelargest
EurobondissueevermadebyaTurkish
bank.
33Eurasia
Customer funds(includingreposandoff-balance-sheetfunds)
closedat€19,355m,averysimilarlevelto30-Jun-2012and
ayear-on-yearfallof18.2%.Thisisalsobasicallyduetothe
dropinwholesaledeposits.Turkey’scontributionoverthe
last12monthscontinuestobeverypositive.Customerfunds
consolidatedintheGroupincreased17.9%onthesamefigure
in2011.
Earnings
BothGarantiandCNCBcontinuedtoperformwellfrom
JanuarythroughSeptember2012.Asaresult,Eurasiahad
gross incomeof€1,624m,up22.2%overthelast12months,
despitethedropinNTIoverthequarter.
Operatingexpensesincreasedby32.2%inthesameperiod
duetotheinvestmentprojectsundertaken,mainlyinemerging
countries.However,theirgrowthrateslowedcomparedwith
previousquarters.Thus,operating incomeincreasedby17.3%
onthefigureforthesamedatein2011.Impairmentlosseson
financialassetsamounted€138m,andthenet attributable
profitintheareawas€813m,13.0%uponthefigurefor
January-September2011.
Europe generated42.4%ofthenetattributableprofitinthe
area,at€345m(up1.4%year-on-year).Ofparticularnoteinthe
areaisthecontinuedexcellentperformanceofTurkey,whose
cumulativeearningsof€233mwereovertwicethefigurefor
thefirstninemonthsofthepreviousyear(partlybecause
Garantihascontributedfortheninemonthsin2012,whilein
2011itbegantocontributeattheendofMarch).Intherest
ofEurope,thereducedactivityandmarketturbulenceofthe
previousquarterscontinued.Thishadanegativeimpacton
thenetattributableprofit,withacumulativefigureof€112m.
ThefollowingareworthhighlightingwithrespecttoGaranti
Bank:
• Lending hascontinuedthetrendseeninpreviousquarters
androseby9.6%onSeptember2011.Ofparticularnote
istheselectivegrowthinhigheryieldportfolios,basically
inlocalcurrency,withtheemphasisonprofitabilityrather
thanvolume.Thus,Garanticontinueditssuperiorincrease
inmortgagelending(up13%year-on-yearcomparedwith
thefigureof9.5%forthesectorasawhole),auto-finance
(up15.2%comparedwiththesectorfigureof10.7%)and
personalloans(up17.2%comparedwith16.9%forthe
sector).
• Adequatemixofwelldiversifiedandactivelymanaged
liabilities,withcustomerdepositsup10.6%overthelast
12months.Theincreasedgrowthcontinuestobefocused
onlower-costproducts,suchaslocal-currencycustomer
deposits,inwhichGarantihasperformednotablybetter
thanthesector.
• Inthethirdquarter,therewasalsoasignificantreductionin
thecost of liabilities,bothindepositsandrepos.Asaresult,
thespreadbetweentheyieldonassetsandthecostof
liabilitieshasincreased.
• Withrespecttoliquidity,Garantihasaloan-to-depositratio
ofunder100%.
• Intermsofsolvency,theGarantiGroupmaintainsits
positionasoneofthesoundestinthecountry,withacapital
ratioof16.4%accordingtoBaselIIcriteria.Inthetransition
Eurasia: Lendingbreakdown by geography(30-09-2012)
Eurasia: On-balance sheetcustomer funds breakdownby geography(30-09-2012)
Eurasia: Gross incomebreakdown by geography(30-09-2012)
Eurasia: Net attributableprofit breakdown bygeography(30-09-2012)
Rest of Europe 56%
Turkey34%
Asia10%
Rest of Europe43%
Turkey56%
Asia1%
Rest of Europe28%
Turkey41%
Asia31%
Rest of Europe14%
Turkey29%
Asia57%
Garanti. Significant data (30-09-12) (1)
30-09-12
Financial statements (million euros)
Attributableprofit 1,002
Totalassets 66,608
Loanstocustomers 38,336
Depositsfromcustomers 37,286
Relevant ratios (%)
Efficiencyratio 45.9
NPAratio 2.0
Other information
Numberofemployees 17,118
Numberofbranches 932
NumberofATMs 3,441
(1)BRSAdatafortheGarantiBank.
34 Businessareas
toBaselII,Garantihasincreaseditscapital
ratio,whileitfellintheindustryasawhole.
• Intermsofproductivityperemployeeand
branch,Garantileadstherankingforthe
sectorinTurkey.
• Inearnings,ithasoutstandinglysound
recurringrevenue.Netinterestincome
grewatayear-on-yearrateof23%thanks
toexcellentpricemanagementand
growthinactivity.Incomefromfeesand
commissions,appropriatelydiversified
betweendifferentproductsandsegments,
fellby1%duelargelytothecominginto
forceofanewregulationthatstipulates
newloansmustberecognizedonan
accrualbasis.Theabove,togetherwith
ahighlevelofdisciplineinexpenses,
highassetqualityandthelackofone-off
earnings,ledtoa€1,129mprofitofthe
GarantiGroupforthefirstninemonths
of2012,ayear-on-yearriseof5.6%.Thus,
Garantiremainsasthebiggestbankin
Turkeybyearnings.
Finally,Asia recordedacumulativenet
attributableprofitof€468m,23.3%upon
thefigure12monthsearlierthankstothe
excellentperformanceofCNCB.According
todataforthefirsthalfof2012,thebank
inChinaearned28.9%morethaninthe
sameperiodin2011.Thisisduetoincreased
recurringrevenue(netinterestincomeplus
feesandcommissions)asaresultofstrong
activity,andthepositiveperformanceofthe
intermediationbusiness.Operatingexpenses
roselessthangrossincome,andasaresult
efficiencyimproved.Loan-lossprovisions
increasedwiththeaimofraisingthecoverage
ratio.Amongthehighlightsofactivitywasthe
increaseindeposits,whichgrewmorethan
theloanbook(17%and13%inyear-on-year
terms,respectively).Finally,CNCBimproved
itssolvencyratio,whichstoodat13.4%atthe
closeofJune2012,usinglocalcriteria.
Highlights
• Garantisuccessfullycompletedthebiggest
Eurobondissue(USD1,350m)withthe
lowestcouponbyaTurkishbank.While
Europeanfinancialmarketsaregoing
throughanextraordinarilydifficultperiod,
internationalinvestorsarelookingtocredit
marketsinemergingcountriesandhave
placedagreatdealofconfidenceinthe
bankandtheTurkishfinancialsector.
• GarantiwasoneofthefirstTurkish
companiestoreceiveanInvestorsin
People(IIP)certification,risingfrom“silver”
in2009to“gold”statusin2012.Thismakes
itoneofthe615companieswiththis
statusoutofasampleofover24,000.The
awardrecognizesthevaluesthatitshares
withBBVA:superiorcustomer-centric
management,ahighlyqualifiedteam,and
efficientmanagementoftheorganization.
• Garantiwasnamed“BestTurkishBank,”
“BestCentralEuropeanandEastern
EuropeanBank”and“BestTurkishTrade
FinanceBank”byGlobal Finance.Itwas
alsorecognizedas“BestTurkishBank”by
EuromoneyandistheonlybankinTurkey
toreceiveawardsinfivedifferentcategories.
Garanti. Composition of assets and lending portfolio (1)
(September 2012)
Garanti. Composition of liabilities (1)
(September 2012)
Cash and banks 14.6%
Consumer 20.1%
Securities 24.1%
Commercial 38.3%
Corporate 15.9%
Credit cards 13.0%
SME 12.8%
Other 4.0% Loans to customers57.3%
Shareholders’ equity 13.0%
Deposits from customers56.0%
Bonds issued 3.9%
Fund borrowed 14.2%
Repo obligations 4.9%
Deposits from banks 2.1%
Other 5.9%
(1) Garanti Bank only. (1) Garanti Bank only.
Composition of assets Lending portfolio
35Mexico
Mexico
Income statement (Millioneuros)
Units:
Mexico Banking Business Pensions and Insurance
Jan.-Sep. 12 ∆% ∆%(1) Jan.-Sep. 11 Jan.-Sep. 12 ∆% ∆%(1) Jan.-Sep. 11 Jan.-Sep. 12 ∆% ∆%(1) Jan.-Sep. 11
Net interest income 3,079 8.4 8.5 2,840 3,021 8.6 8.7 2,780 56 3.2 3.3 54
Netfeesandcommissions 938 3.6 3.7 906 886 4.6 4.7 847 52 (2.3) (2.2) 53
Nettradingincome 188 (28.6) (28.5) 264 136 (33.0) (33.0) 204 51 (15.2) (15.2) 60
Otherincome/expenses 212 29.1 29.2 164 (93) 9.4 9.5 (85) 345 16.5 16.6 296
Gross income 4,418 5.8 5.9 4,174 3,950 5.4 5.5 3,746 503 8.7 8.8 463
Operatingcosts (1,668) 9.8 9.9 (1,519) (1,584) 10.9 11.0 (1,428) (115) (4.5) (4.4) (121)
Personnelexpenses (715) 7.8 7.9 (663) (661) 8.8 8.9 (607) (54) (3.6) (3.5) (56)
Generalandadministrativeexpenses (856) 10.1 10.2 (778) (828) 11.2 11.3 (744) (60) (4.4) (4.3) (63)
Depreciationandamortization (97) 23.8 23.9 (78) (96) 25.3 25.4 (76) (1) (32.2) (32.1) (2)
Operating income 2,750 3.6 3.7 2,655 2,366 2.1 2.2 2,318 388 13.3 13.4 342
Impairmentonfinancialassets(net) (970) 6.0 6.1 (915) (970) 6.0 6.1 (915) - - - -
Provisions(net)andothergains(losses) (39) (20.9) (20.8) (50) (38) (20.2) (20.1) (47) (2) (34.3) (34.2) (3)
Income before tax 1,741 3.0 3.1 1,691 1,358 0.2 0.3 1,356 386 13.6 13.7 340
Incometax (439) 0.4 0.5 (437) (327) (3.3) (3.2) (338) (113) 13.3 13.4 (100)
Net income 1,302 3.9 4.0 1,254 1,032 1.3 1.4 1,018 273 13.8 13.9 240
Non-controllinginterests (2) 16.9 17.0 (2) (0) 1.6 1.7 (0) (2) 12.1 12.2 (2)
Net attributable profit 1,300 3.9 4.0 1,252 1,031 1.3 1.4 1,018 271 13.8 13.9 238
(1)Atconstantexchangerate.
Balance sheet (Millioneuros)
Units:
Mexico Banking Business Pensions and Insurance
30-09-12 ∆% ∆% (1) 30-09-11 30-09-12 ∆% ∆% (1) 30-09-11 30-09-12 ∆% ∆% (1) 30-09-11
Cashandbalanceswithcentralbanks 5,149 2.0 (8.9) 5,047 5,149 2.0 (8.9) 5,047 - - - -
Financialassets 32,480 31.8 17.7 24,640 26,261 31.2 17.2 20,013 6,490 33.6 19.3 4,860
Loansandreceivables 42,362 28.1 14.5 33,057 41,701 27.3 13.7 32,754 731 108.1 85.8 352
Loansandadvancestocustomers 37,941 25.3 11.9 30,275 37,745 25.3 11.9 30,123 227 24.7 11.4 182
Loansandadvancestocreditinstitutionsandother 4,421 58.9 41.9 2,782 3,956 50.4 34.3 2,631 504 197.7 165.9 169
Tangibleassets 1,167 29.5 15.7 901 1,161 29.8 15.9 894 6 (3.0) (13.4) 6
Otherassets 3,266 75.2 56.5 1,864 3,134 6.4 (4.9) 2,944 156 40.7 25.7 111
Total assets/Liabilities and equity 84,424 28.9 15.1 65,509 77,405 25.5 12.1 61,653 7,384 38.6 23.8 5,329
Depositsfromcentralbanksandcreditinstitutions 14,913 85.0 65.2 8,062 14,913 85.0 65.2 8,062 - - - -
Depositsfromcustomers 36,131 15.9 3.5 31,170 36,174 16.0 3.6 31,189 - - - -
Debtcertificates 4,362 12.2 0.2 3,887 4,362 12.2 0.2 3,887 - - - -
Subordinatedliabilities 4,327 95.8 74.9 2,210 4,327 28.3 14.6 3,373 - - - -
Financialliabilitiesheldfortrading 6,667 8.4 (3.2) 6,153 6,667 8.4 (3.2) 6,153 - - - -
Otherliabilities 12,827 24.0 10.7 10,348 6,134 7.5 (4.0) 5,707 7,072 42.1 26.9 4,977
Economiccapitalallocated 5,198 41.2 26.2 3,680 4,829 47.1 31.4 3,283 312 (11.3) (20.7) 352
(1)Atconstantexchangerate.
36 Businessareas
Industry Trends
Mexico’sfinancial system remainsstableand
sound.Thisisreflectedinitsadequateliquidity
position,anditshighsolvency,whichisfar
abovetheregulatoryminimum.
Commercialbanklendingtotheprivate
sectorcontinuestoexpandsteadily.At
thecloseofAugustitregisteredthe19th
successivemonthofdouble-digitgrowth
rates.Thebestperformingportfoliosare
consumerfinance(payrollaccountsand
personalloans)andcorporatelending.
Incustomer deposits,theretailsegmentalso
performedwell,whiletimedepositsgrew
ataslowerpaceastheywerereplacedby
investmentcompanies(SIDs).
Boththefixingandaveragepeso/euro
exchange rates appreciatedoverthe
quarterandthelast12months.Thishas
hadapositiveimpactonthebalancesheet
andactivityforthelast12monthsand
thequarter,andtoalesserextentonthe
Group’sincomestatement.Unlessotherwise
indicated,allcommentsbelowonpercentage
changesrefertoconstantexchange
rates,withtheaimofprovidingabetter
understandingoftheperformanceofthe
businessinMexico.
Activity
AtthecloseofSeptember2012,the loan book
inMexicoamountedto€39,719m,ayear-on-year
growthof11.5%.
Retail lendingcontinuestobeparticularly
strong,withgrowthoverthesameperiodof
12.6%to€20,831m.Withinthisportfolio,there
wasoutstandinggrowthinloanstosmall
businesses,whichwentup31.4%year-on-year.
Consumerfinancewasalsoverystrong,with
ariseof18.3%.Residentialmortgagesgrowth
wasstablecomparedwithpreviousquarters
(up4.2%year-on-year).Itisworthnotingthat
duringthethirdquarter,theMexicoarea
grantedthelargestnumberofnewmortgage
loansyeartodate.
Significant ratios (Percentage)
Mexico
30-09-12 30-06-12 30-09-11
Efficiencyratio 37.8 37.9 36.4
NPAratio 4.1 4.0 3.7
NPAcoverageratio 107 111 128
Riskpremium 3.46 3.40 3.59
423446432496
394440416
939910901917866
905881
0
100
200
300
400
500
600
700
800
900
1.000
Mexico. Operating income(Million euros at constant exchange rate)
Mexico. Net attributable profit(Million euros at constant exchange rate)
(1) At current exchange rate: +3.6%. (1) At current exchange rate: +3.9%.
1Q 2Q 3Q 4Q 3Q
+3.7% (1)
2011 20121Q
2,653 2,750
939901881 905 866917
2Q
910
1Q 2Q 3Q 4Q 3Q
+4.0% (1)
2011 20121Q
1,250 1,300
423432416 440394
496
2Q
446
Mexico highlights in the third quarter
• Strongperformanceoftheretailportfolio,
especiallyconsumerandSME.
• Double-digitgrowthofretailcustomer
demanddeposits.
• Positiveperformanceoftheinsurance
business.
• Sustainedrecurringrevenue.
• Successfulissuanceofcapitalnoteson
internationalmarkets.
37Mexico
quarters,withariseof9.9%to€1,668m.This
increasecanbeexplainedbythesteady
riseininvestmentstotakeadvantageofthe
opportunitiesofferedbythelocalmarket.The
numberofemployeesincreasedby3,845in
thelast12months,and538newATMswere
installed.Despitetheabove,theMexicoarea
stillhasoneofthebestefficiency ratiosinthe
localmarket,at37.8%attheendofthethird
quarterof2012.
Theserevenueandexpensesfiguresresulted
inanoperating incomeof€2,750m,a
year-on-yearriseof3.7%.ExcludingNTI,which
isamorevolatilecomponent,theincrease
was7.2%.
Impairmentlossesonfinancialassets
increasedataslowerratethancommercial
activity,withanaccumulatedtotalthrough
Septemberof€970m,ariseof6.1%on
thefigureforthesameperiodin2011.
Riskmanagementintheareacontinues
tobeadequate,ascanbeseeninthelow
cumulativeriskpremiumatthecloseof
Septemberof3.46%.TheNPAratioclosedas
of30-Sep-2012at4.1%andthecoverageratio
at107%.
Finally,Mexicogeneratedanet attributable
profitinthefirstninemonthsof2012of
€1,300m,4.0%abovetheresultinthesame
periodin2011.
Pensions and Insurance
Inthefirstninemonthsof2012,thePensions
andInsuranceunitinMexicogeneratedanet
attributableprofitof€271m,ariseof13.9%on
thesameperiodin2011.
Thepension businesssawyear-on-year
growthinitsearningsof27.2%,thankstothe
stronggrowthincommercialactivity.
Theinsurancebusinessgeneratedanet
attributableprofitof€201m,anincrease
of9.9%overtheprevious12months.This
resulthasbeenboostedbytheoutstanding
earningsfromtheILP,Creditón Nómina,
VidaSegura,HogarSeguroandTransacción
Seguraproducts,aswellasthelowerlevelsof
claimsreportedduetosomeimprovements
implementedbytheinsurancecompany.
Highlights
• TheDinero Móvil BBVA Bancomerplan
launchedinSeptember2012willboost
Lendingto Wholesale customershasalso
continuedtogrow,withayear-on-yearriseof
10.6%to€16,128m.Corporateand
public-sectorlendingperformedparticularly
well,withdouble-digitgrowthsincetheclose
of2011.Lendingtolargecorporationshas
alsocontinuedtobeboostedthroughthe
placementofbondsonthecapitalmarkets.
Inthethirdquarter,Mexicomaintainedits
leadingpositioninthisrespectbyplacingUSD
2,631m.
Customer funds(on-balancesheetdeposits,
repos,mutualfundsandinvestment
companies,andpensionfunds)grew7.2%
year-on-yearto€76,314matthecloseof
September2012.
Demanddeposits(currentandsavings
accounts)grew6.8%,withaparticularly
notableincreaseincustomerfundsgathered
bythecommercialnetwork,withariseof
12.9%onthesamedatein2011.Mexicois
maintainingitsstrategyofincreasingthe
profitabilityofliabilities.Timedepositshave
fallenby17.9%year-on-year.Theywerepartly
offsetbytheincreaseinmutualfunds(up
8.6%).Asaresultoftheabove,attheclose
ofSeptember,themixofcustomerdeposits
maintainedaprofitablestructurewith78%
beinglow-costdeposits,andtheremaining
22%timedeposits.
Earnings
Inthefirstninemonthsoftheyear,theMexico
areacontinuedtogeneraterecurringrevenue
atagoodlevel.Netinterestincomeamounted
to€3,079m,anincreaseof8.5%year-on-year,
despitethecurrentlowinterestratesin
Mexico.
Incomefromfeesandcommissions
amountedto€938m,ayear-on-yearriseof
3.7%.Thislineofbusinesswasboostedby
theuseofcreditanddebitcardsandmutual
funds.
NTIrecordeditsbiggestquarterlygrowth
sofarthisyear,nearlydoublingthefigure
forthesecondquarterin2012.However,in
cumulativetermsitcontinuestopost
year-on-yearfalls,duetothehighlevels
achievedinthesameperiodin2011.There
wasariseof29.2%inotherrevenue.Once
more,itisimportanttonotethepositive
performanceoftheinsurancebusiness.
Operatingexpensesgrewatpractically
thesameyear-on-yearrateasinprevious
38 Businessareas
accesstobankingfornewusers,andthus
contributetoincreasefinancialinclusion
andthelevelofbankingpenetrationinthe
country.Theinnovationintroducedbythe
serviceistheabilitytosendmoneytoany
partofMexicoviatheInternet,ATMsor
cellphones.Therecipientofthedeposit
receivesamessagewithapasswordgiving
accesstothecashthroughATMsinthe
BBVABancomernetwork,withouttheneed
foradebitcardorabankaccount.
• InJuly2012,BBVABancomersuccessfully
issued10-yearadditionalcapitalnotesfor
USD1billionontheinternationalmarkets.
Theissuewas3.5timesoversubscribed,
thusdemonstratingthehighlevelof
investorconfidenceinthebankandinthe
country.InSeptember2012theissuewas
renewedforanotherUSD500m,alsoon
theinternationalmarkets.Onthisoccasion
theissuewas3timesoversubscribed,
oncemoreconfirmingtheconfidence
ofinvestorsinthegrowthprospectsand
positiveperformanceoftheBBVAfranchise
andthecountryoverall.
• TheMexicanCenterforPhilanthropy
(Cemefi),AllianceforSocialResponsibility
inMexico(AliaRSE)andForumEmpresa
havegrantedBBVABancomerthe“Best
CorporateSocialResponsibilityPractice”
awardinthe“Communityengagement”
categoryforthemutualfundB+Educa,
thefirstofitskindcreatedbyMexico
tosupportthePor los que se quedan
(Forthoseleftbehind)socialintegration
scholarshipprogram.
• Finally,theGroup’sbusinesswithSMEs
inMexicohasbeenveryintense,and
ledtoitreceivingthe“SME2012”award
asthebankgrantingmostloansto
SMEsandentrepreneurs.Newsolutions
andvalue-addedserviceshavebeen
launchedforthissegmentwiththeaimof
increasingtheirbusinessefficiencyand
competitiveness.
39SouthAmerica
SouthAmerica
Income statement (Millioneuros)
Units:
South America Banking business Pensions and Insurance
Jan.-Sep. 12 ∆% ∆%(1) Jan.-Sep. 11 Jan.-Sep. 12 ∆% ∆%(1) Jan.-Sep. 11 Jan.-Sep. 12 ∆% ∆%(1) Jan.-Sep. 11
Net interest income 3,087 36.9 25.6 2,255 3,042 37.6 26.3 2,211 45 4.9 (3.0) 43
Netfeesandcommissions 982 25.8 16.2 780 704 25.5 16.6 561 283 27.1 15.7 223
Nettradingincome 367 3.4 (4.6) 355 325 (2.8) (10.9) 335 42 101.2 106.5 21
Otherincome/expenses (158) (10.4) (21.4) (176) (292) 1.5 (7.7) (288) 141 17.6 13.3 120
Gross income 4,278 33.1 22.7 3,214 3,779 34.1 23.5 2,818 511 25.7 17.2 406
Operatingcosts (1,814) 24.0 15.2 (1,463) (1,611) 27.8 18.4 (1,261) (180) 1.3 (5.6) (178)
Personnelexpenses (921) 23.4 15.0 (747) (812) 26.9 18.0 (640) (90) 2.9 (4.4) (87)
Generalandadministrativeexpenses (762) 26.2 17.2 (604) (675) 31.4 21.6 (514) (83) (2.3) (8.7) (85)
Depreciationandamortization (131) 16.3 6.6 (113) (124) 15.5 5.8 (107) (7) 32.2 22.4 (6)
Operating income 2,463 40.7 29.0 1,751 2,168 39.2 27.5 1,558 330 44.7 35.0 228
Impairmentonfinancialassets(net) (409) 26.9 15.7 (322) (409) 26.8 15.6 (322) - - - -
Provisions(net)andothergains(losses) (128) 194.0 166.3 (44) (124) 165.4 138.4 (47) (3) n.m. n.m. 2
Income before tax 1,926 39.1 27.7 1,385 1,635 37.6 26.3 1,188 327 42.2 32.7 230
Incometax (433) 53.4 40.6 (282) (363) 47.6 35.9 (246) (81) 67.3 53.5 (48)
Net income 1,493 35.4 24.3 1,103 1,273 35.0 23.8 943 246 35.5 27.0 181
Non-controllinginterests (479) 37.0 25.0 (349) (419) 36.2 23.8 (308) (59) 39.7 30.6 (42)
Net attributable profit 1,014 34.7 24.1 753 853 34.4 23.8 635 187 34.3 25.9 139
(1)Atconstantexchangerates.
Balance sheet (Millioneuros)
Units:
South America Banking business Pensions and Insurance
30-09-12 ∆% ∆% (1) 30-09-11 30-09-12 ∆% ∆% (1) 30-09-11 30-09-12 ∆% ∆% (1) 30-09-11
Cashandbalanceswithcentralbanks 9,261 18.2 12.1 7,833 9,261 18.2 12.1 7,833 - - - -
Financialassets 11,584 17.1 7.2 9,891 10,052 19.1 9.4 8,441 1,518 9.0 (1.6) 1,393
Loansandreceivables 50,245 29.3 19.7 38,853 49,821 30.3 20.6 38,238 306 (20.2) (22.7) 383
Loansandadvancestocustomers 45,417 29.3 19.3 35,135 45,358 29.4 19.3 35,062 60 (30.1) (32.3) 85
Loansandadvancestocreditinstitutionsandother 4,828 29.9 24.0 3,718 4,463 40.5 35.2 3,176 246 (17.4) (20.0) 298
Tangibleassets 880 20.8 13.3 728 826 22.1 14.9 677 53 4.1 (7.7) 51
Otherassets 2,107 (14.7) (21.5) 2,469 2,044 1.8 (8.0) 2,008 165 8.6 0.5 151
Total assets/Liabilities and equity 74,077 23.9 14.8 59,774 72,005 25.9 16.7 57,196 2,042 3.2 (5.5) 1,979
Depositsfromcentralbanksandcreditinstitutions 6,307 12.2 0.5 5,623 6,307 12.2 0.5 5,622 1 (79.9) (79.1) 5
Depositsfromcustomers 49,434 27.2 18.9 38,866 49,591 27.2 19.0 38,983 - - - -
Debtcertificates 3,459 61.4 44.4 2,144 3,459 61.4 44.4 2,144 - - - -
Subordinatedliabilities 1,223 (19.4) (26.1) 1,518 1,223 12.4 (0.2) 1,088 - - - -
Financialliabilitiesheldfortrading 1,127 (18.0) (27.9) 1,373 1,127 (18.0) (27.9) 1,373 - - - -
Otherliabilities 9,421 24.3 15.3 7,582 7,350 30.9 22.4 5,616 1,887 12.0 2.6 1,685
Economiccapitalallocated 3,106 16.4 8.0 2,668 2,948 24.4 15.6 2,370 154 (46.6) (51.4) 289
(1)Atconstantexchangerates.
40 Businessareas
Industry Trends
Inthethird quarter of 2012thefinancial
systeminSouthAmericaremainedsound.
Lendinghascontinuedtogrow,boostedby
monetarypoliciesfocusedonsupporting
economicactivity.Lendingcontinuedto
growatafastpaceinallthecountriesinthe
region,particularlyinVenezuela,Uruguayand
Argentina,andalsoinColombia,Chileand
Peru,althoughatlowerrates.Risingdeposits
havealsoreflectedstrongeconomicactivity,
withratessimilartothoseforlending.Peru
hasannouncedmeasuresaimedatincreasing
itsreserverequirements.InArgentina,the
CentralBankhasestablishedtheobligation
forbankstokeepaminimumcreditlinefor
SMEsbasedontheirdeposits.Perutogether
withArgentinahavemadechangestothe
methodusedforcalculatingtheirreserve
requirements,whichwillresultinanincrease
inthelevelofreserves.
Withrespecttoexchange ratemovements,
thereweregeneralappreciationsinthe
averageratesforcurrenciesintheregion,
bothinthequarterandoverthelast12
months.Intermsoffinalexchangerates,there
wasanotablegeneralappreciationoverthe
year,butoverthequarterthiswaslimited
totheChileanpeso.Theabovehashada
positiveimpactontheyear-on-yearfigures
infinancialstatementsandbusinessactivity
intheareaandonthequarterlyfiguresin
theincomestatement.However,theeffect
ofexchangeratesonthebalancesheetand
activityinthequarterisnegative.Unless
indicatedotherwise,allcommentsbelow
onpercentagechangesrefertoconstant
exchangerates,withtheaimofprovidinga
betterunderstandingoftheperformanceof
thebusinessinSouthAmerica.
Activity
Thepositiveperformanceofbusinessactivity
inSouthAmericacontinuedinthethird
quarter of 2012,inbothlendingandcustomer
deposits.
Gross customer lendingclosedSeptember
withabalanceof€46,961m,ayear-on-year
growthof19.0%.Thisgrowthhasbeen
leveragedinthesegmentofprivateindividuals
(up32.0%),thankstothepositiveperformance
ofconsumerfinanceandcreditcards.
303333378
275247273297
822811831
716
625603682
0
100
200
300
400
500
600
700
800
900
South America. Operating income(Million euros at constant exchange rates)
South America. Net attributable profit(Million euros at constant exchange rates)
(1) At current exchange rates: +40.7%. (1) At current exchange rates: +34.7%.
1Q 2Q 3Q 4Q 3Q
+29.0% (1)
2011 20121Q
1,910 2,463
822831
682603 625
716
2Q
811
1Q 2Q 3Q 4Q 3Q
+24.1% (1)
2011 20121Q
818 1,014
303378
297 273 247 275
2Q
333
Significant ratios (Percentage)
South America
30-09-12 30-06-12 30-09-11
Efficiencyratio 42.4 41.6 45.5
NPAratio 2.2 2.3 2.3
NPAcoverageratio 142 139 140
Riskpremium 1.26 1.12 1.31
South America highlights in the third quarter
• Favorableperformanceoflendingactivity,
highlyleveragedonloanstoindividuals.
• Positiveperformanceofcustomerdeposits,
especiallythosewithlower-cost.
• Excellentpricemanagement.
• Goodassetquality.
• Successfulissuanceofcapitaloninternational
markets.
41SouthAmerica
premiumthroughSeptemberclosedat1.26%(1.12%attheend
ofthefirsthalfof2012).
Banking business
Thebankingbusinessgeneratedanetattributableprofitof
€853moverthefirstninemonthsof2012,ayear-on-year
increaseof23.8%.Followingpreviousquarters,themost
significantaspectsinthequarterforeachofthebanksare
detailedbelow.
InArgentinatherewasoutstandinggrowthinallrevenuelines,
aboveallnetinterestincome,whichwasup48.9%thanksto
strongbusinessactivitythroughouttheyear,andthefavorable
performanceofcustomerspreads.Netfeesandcommissions
andNTIhaveincreasedatagoodpace,offsettinghigher
expensesandloan-lossprovisions,thelatterlinkedtoincreased
businessactivity.Asaresult,thenetattributableprofitin
Septemberwas€152m,ayear-on-yearincreaseof39.7%.
BBVAFrancéscontinuestobeextremelyactivefromthe
commercialpointofview.Worthnotingoverthequarterwas
thelaunchofnewcorporatecreditcardslinkedtoLANPASS,
VisaCorporateandVisaBusiness.Theyofferspecialbenefits
suchascash-back,throughwhichcompaniesgetback5%
oftheirLANticketpurchasesandaccumulateLANPASS
kilometers.
LendingactivitycontinuesstronginBBVAChile,witharise
of15.8%inyear-on-yearterms,whichisabovethefigurefor
thebankingsystemasawhole.Asaresult,themarketshare
initsloanbookhasincreasedby29basispointsoverthelast
year(latestavailabledatatoJuly).Therewasaparticularly
significantincreaseinthemarketshareinconsumerfinance
(up66basispoints)andtradefinance(up37points).Customer
deposits,excludingrepos,wereup10.4%inthesameperiod,
andgained36basispointsofmarketsharethankstothegood
performanceofsavingsaccounts(up35points)andtime
deposits(up53points).Theperformanceofthemarketsinthe
firstninemonthsof2012,togetherwithnarrowingspreads,
haveledtoafallof1.9%innetinterestincomeonthesame
periodthepreviousyear.Theabovefactors,combinedwith
reducedfeeincomeandNTIandhigherexpensesand
loan-lossprovisions(thelattercloselylinkedtoincreased
businessactivity),resultedinthenetattributableprofit
dropping15.7%year-on-yearto€81m.Theincreasedexpenses
canbeexplainedbytheinvestmentsthebankisundertaking
intechnologytomakelifeeasierforitscustomers.Amongthe
plansbeingundertakenarethefollowing:launchofvarious
mobilebankingapplications;openingofthefirst“Easy”branch
inLatinAmerica,withextendedopeninghoursandtheuseof
advancedtechnology;andanewcustomerservicephoneline
forpreferredcustomers.
InColombia,lendinghascontinuedtogrowatafastpace(up
14.3%year-on-year),leveragedmainlyontheportfolioofprivate
individuals(up26.0%).Thishasledtoasignificantgainin
marketshareoverthelastyearinallbusinesslines(consumer
financeup105basispoints,creditcardsup123basispoints
andmortgageloansup17basispoints).Riskmanagement
Therewasanotableyear-on-yeargaininmarketshareinthe
individualssegmentof29basispoints,accordingtothelatest
informationavailableforJuly.
Theabovementionedincreasedmarketshareoftheloan
bookhasnotbeenattheexpenseofquality,asshownby
theimprovementintheNPA ratio,whichfellto2.2%asof
30-Sep-2012(2.3%asof30-Jun-2012),andinthecoverage
ratio,whichincreasedto142%overthesameperiod(139%
atthecloseofthefirsthalfof2012).Itisworthnotingthat
thispositiveperformanceisoncemoreduetorigorousrisk
admissionpoliciesandoutstandingmanagementofrecoveries.
On-balance-sheet customer deposits(excludingrepos)have
maintainedtheirrateofgrowth,withayear-on-yearincreaseof
20.1%asof30-Sep-2012,closingSeptemberat€52,626m.This
increaseismainlytheresultofariseinlower-costtransactional
deposits(up22.6%),whichhavegained16basispointsin
marketshareoverthelast12months(alsoaccordingtodata
asofJuly2012).Includingtheassetsundermanagementby
mutual fundsandrepos,customerfundsmanagedbythe
banksinSouthAmericaamountedto€56,158m,up19.0%on
thesamedatein2011.
Earnings
EarningsinSouthAmericahavecontinuedtoperformvery
welleachquarter.Thisexplainstheregion’ssteadilyincreasing
contributiontoBBVA’sprofits.Inthefirstninemonthsof2012
thenetattributableprofitintheregionwas€1,014m(up24.1%
year-on-year).
Theoutstandingperformanceofrevenuesisexplained
bysustainedgrowthinactivity,combinedwithadefense
ofspreadsthroughgoodpricemanagement.Cumulative
netinterestincomethroughSeptember2012amountedto
€3,087m,25.6%uponthesameperiodthepreviousyear.
Netfeesandcommissionsincreasedby16.2%overthesame
periodto€982m.NTIfell4.6%onthefirstninemonthsof
2011,whichincludedtherevaluationofBBVAProvincial’sUS
dollarpositions.Inadditiontothis,theinsurancebusinessalso
performedwell.Asaresult,thecumulativegrossincomefor
theareaincreasedby22.7%year-on-yearto€4,278m.
SouthAmericahascontinuedtodevelopandimplement
itsexpansionandtechnologicaltransformationplans
designedtotakeadvantageofthegrowthopportunities
intheregionresultingfromstrongeconomicactivityand
increasedbankingpenetration.Thesefactors,combinedwith
theinflationinthearea,explainwhyoperatingexpenses
haveremainedhigh,withayear-on-yearincreaseof15.2%
to€1,814m.Specifically,workisbeingcarriedouttoimprove
thequalityofcustomerservice,basedonthecorporate
customer-centricpolicy.However,higherrevenuesmean
thattheefficiency ratioremainsat42.4%,asimilarlevelto
previousquarters,andoperating incomeat€2,463m,a
year-on-yearincreaseof29.0%.
Finally,impairment losses on financial assets increased15.7%
to€409m,inlinewithbusinessactivity.Thecumulativerisk
42 Businessareas
periodin2011.Theresultsfromthepensions businesswere
particularlystrong,withanetattributableprofitof€121m(up
53.7%year-on-year),basicallythankstostrongincomefrom
feesandcommissionsandtightcontrolofexpenses.
Theinsurance business contributedanetattributableprofit
of€67m,withahighlevelofwrittenpremiums.Thisreflects
itscommercialstrengthandoffsetslowerfinancialearnings.
Bycompanies,Seguros Argentinahadanetattributableprofit
of€5.4mfollowingthesaleofARTandRetiro,thankstoits
goodcommercialperformanceandmoderatelevelofclaims.
Chilehadanetattributableprofitof€33m,Colombiaposted
anotablegrowthinprofitto€22mandSegurosProvincialin
Venezuelaclosedat€6.5m.
Highlights
• BBVAContinentalhasraisedUSD500millionina
successful10-yearbondissueatoneofthelowestyields
inthePeruvianmarket.Thisdemonstratesitssoundness
andtheconfidenceofinternationalmarketsinthePeruvian
franchise.Thefundsobtainedwillbeusedtomeetdemand
forcreditinthecountry.
• Forthethirdyearinarow,BBVAChilehasbeenranked
asoneofthemostsociallyresponsiblecompaniesin
thecountry,accordingtothe2012NationalBusiness
ResponsibilityRankingpublishedbyFundaciónProhumana
andthemagazineQué Pasa.Themainfactorscontributing
totheawardhavebeen:theNiños Adelante (Forward,
children)program;theworkoftheCorporateVolunteer
scheme;theapplicationofstrictprinciplesandethical
standardsinitsactivity;theglobalEco-efficiencyplan;
continuousimprovementinprofessionalstandards;andthe
creationofanequalityplananddiversitycommittee.
• BBVAChilehasforthefirsttimebeenlistedintheBusiness
CorporateReputationMonitor(Merco)asoneoftheleading
andmostrespectedcompaniesinthecountry.
continuestobeadifferentiatingfactorinthelocalmarket,
withaNPAratiothatisfarbelowthatofthebankingsectoras
awhole.Therehavebeensignificantincreasesincustomer
fundsinyear-on-yearterms(demanddepositsandsavings
accountsup13.5%andtimedepositsup54.2%).Asinthe
caseoflending,therehasbeenasignificantgaininmarket
shareoverthesameperiod(demanddeposits24basispoints,
savingsdeposits164basispointsandtimedeposits139basis
points).Themostsignificantfactorinearningshasbeen
thehighgrowthofnetinterestincome,andthusofgross
income(up14.1%and17.9%respectively).Thishasboostednet
attributableprofitto€203m,ariseof17.7%onthefigureforthe
sameperiodin2011.
InPeru,increasedactivityhasbeenreflectedinrisesinall
revenuelines.Lendingincreasedby11.6%onthecloseof
September2011,customerfundsby9.7%andgrossincomeby
14.8%.Asaresultoftheincreasedrevenue,combinedwiththat
ofexpensesandloan-lossprovisions,thenetattributableprofit
was€123m,ayear-on-yeargrowthof7.6%.
Venezuelacontinuestoshowsignsofstrongbusinessactivity.
Lendingincreasedby46.9%since30-Sep-2011,andcustomer
fundsby49.3%.Asaresult,netinterestincomeroseby46.4%
inyear-on-yearterms,andnetfeesandcommissionsby40.4%.
NTIfell,asthefiguresforfirstquarterof2011reflectedthe
effectoftherevaluationofUSdollarpositions.Withincreased
expensesandlowerloan-lossprovisions,thenetattributable
profittotaled€240m,ariseof65.2%onthesameperiodin
2011.
Amongtheotherbanks,BBVA Panamareportedearningsof
€23m,BBVA Paraguay€10mandBBVA Uruguay€21m.
Pensions and Insurance
ThePensionsandInsurancebusinessinSouthAmerica
continuedtoperformwellinthefirstninemonthsof2012,with
anetattributableprofitof€187m,ariseof25.9%onthesame
South America. Data per country (banking business, pensions and insurance) (Millioneuros)
Operating income Net attributable profit
Country Jan.Sep. 12 ∆% ∆% at constant exchange rates Jan.-Sep. 11 Jan.-Sep. 12 ∆%
∆% at constant exchange rates Jan.-Sep. 11
Argentina 342 40.1 39.3 244 156 19.5 18.8 131
Chile 379 10.6 4.0 343 190 10.9 4.3 171
Colombia 429 48.4 33.0 289 250 36.1 22.0 184
Peru 502 36.9 19.6 367 142 34.6 17.6 105
Venezuela 764 64.8 50.1 464 246 77.7 61.8 139
Othercountries(1) 47 5.8 (3.9) 44 30 26.9 13.3 23
Total 2,463 40.7 29.0 1,751 1,014 34.7 24.1 753
(1)Panama,Paraguay,Uruguay,BoliviaandEcuador.Additionally,itincludeseliminationsandothercharges.
43TheUnitedStates
Income statement (Millioneuros)
Units:
The United States BBVA Compass
Jan.-Sep. 12 ∆% ∆% (1) Jan.-Sep. 11 Jan.-Sep. 12 ∆% ∆% (1) Jan.-Sep. 11
Net interest income 1,285 5.7 (3.6) 1,216 1,112 5.9 (3.0) 1,044
Netfeesandcommissions 463 (3.6) (11.6) 480 388 (1.8) (10.7) 396
Nettradingincome 121 10.2 1.3 109 97 30.5 22.0 72
Otherincome/expenses (43) (28.9) (35.2) (60) (39) (30.1) (39.3) (58)
Gross income 1,826 4.6 (4.4) 1,745 1,558 6.5 (2.4) 1,454
Operatingcosts (1,191) 8.3 (1.1) (1,100) (1,042) 7.6 (1.2) (960)
Personnelexpenses (672) 12.6 2.9 (597) (590) 11.1 2.3 (525)
Generalandadministrativeexpenses (386) 2.3 (6.5) (377) (322) 2.8 (6.1) (313)
Depreciationandamortization (134) 6.0 (3.4) (126) (130) 5.4 (3.5) (122)
Operating income 634 (1.7) (10.0) 645 517 4.1 (4.7) 494
Impairmentonfinancialassets(net) (92) (67.5) (70.4) (285) (64) (68.8) (78.5) (273)
Provisions(net)andothergains(losses) (46) 99.8 88.4 (23) (39) n.m. n.m. (5)
Income before taxes 496 46.8 34.8 338 413 81.8 73.9 216
Incometaxes (155) 61.9 48.8 (96) (129) 112.4 104.8 (57)
Net incomes 341 40.9 29.3 242 284 70.8 62.7 159
Non-controllinginterests - - - - - - - -
Net attributable profit 341 40.9 29.3 242 284 70.8 62.7 159
(1)Atconstantexchangerate.
TheUnitedStates
Balance sheet (Millioneuros)
Units:
The United States BBVA Compass
30-09-12 ∆% ∆% (1) 30-09-11 30-09-12 ∆% ∆% (1) 30-09-11
Cashandbalanceswithcentralbanks 4,514 58.5 51.8 2,847 3,538 89.1 90.6 1,778
Financialassets 7,905 (2.3) (6.5) 8,096 7,821 7.8 4.1 7,196
Loansandreceivables 39,731 (2.1) (6.2) 40,564 35,375 11.2 7.7 31,445
Loansandadvancestocustomers 37,525 (3.9) (8.0) 39,054 33,532 8.7 5.0 30,588
Loansandadvancestocreditinstitutionsandother 2,206 46.1 39.9 1,510 1,842 103.4 105.8 857
Inter-areapositions - - - 29 414 n.m. n.m. 2
Tangibleassets 776 (0.8) (5.0) 782 762 1.9 (2.2) 746
Otherassets 5,993 165.3 154.0 2,259 1,820 (9.1) (13.9) 2,024
Total assets/Liabilities and equity 58,919 8.0 3.4 54,577 49,729 13.6 10.3 43,190
Depositsfromcentralbanksandcreditinstitutions 7,716 (15.8) (19.4) 9,161 4,602 7.1 3.3 4,265
Depositsfromcustomers 38,435 4.6 0.1 36,753 37,590 14.4 11.1 32,411
Debtcertificates - - - 348 - - - -
Subordinatedliabilities 892 (22.8) (26.1) 1,156 831 (9.7) (14.6) 932
Inter-areapositions 621 n.m. n.m. - - - - -
Financialliabilitiesheldfortrading 444 1.2 (3.1) 439 434 2.0 (2.1) 424
Otherliabilities 7,811 120.3 110.9 3,546 3,814 37.0 35.1 2,703
Economiccapitalallocated 3,001 (5.5) (9.5) 3,174 2,458 0.1 (4.1) 2,455
(1)Atconstantexchangerate.
44 Businessareas
Industry Trends
Thehealthofthebanking systemcontinues
toimproveintheUnitedStates.Thenumber
ofbanksexperiencingproblemshas
dropped.Inaddition,asset qualityingeneral
maintainsapositivetrend,withtheNPAratio
fallingfortheninthquarterinarowto5.05%,
thelowestfiguresincethefourthquarterof
2008.Assetqualityhasthereforebecome
afavorableaspectforagrowingmajority
ofbankswhich,generallyspeaking,have
returnedtonormallevelsofprovisionsand
reducedtheirNPAratios.
Asregardslending,businessandindustrial
sectorandcarfinancecontinuetopost
betterresultsthanothersegments.The
residentialmortgageportfoliohasalsoseen
significantgrowth,asithasbenefitedfrom
refinancingassociatedwithgovernmentaid.
However,asawhole,growthinlendinghas
beenmodestinthethirdquarterof2012,as
ithasbeennegativelyaffectedbypressures
onprices.
Finally,liquidity and capital levelsareat
recordlevelsinthecountry’sfinancialindustry,
withcapitalallocationimproved.
Asaresult,andaccordingtodataforthe
firsthalfof2012,thebankingsectorin
theUnitedStatespostedbetterearnings
thaninpreviousperiods,althoughinterest
ratesareexpectedtoremainlowandexert
pressuresonnetinterestincomeintheshort
term.Incomefromfeesandcommissions
willalsobelowerasaresultofregulatory
changes.Againstthisbackground,banks
haveonceagainfocusedtheirattentionon
costmanagement.Streamliningofbranches
andinvestmentintechnologyhavereceived
specialattention.
Activity
Followingtheagreementreachedwith
OrientalFinancialGrouptosellthePuerto
Ricobusiness,theassetsofthisunithave
beenclassifiedasnon-currentassetsheldfor
sale.Practicallyalltheinformationmentioned
below,unlessotherwiseindicated(andasin
thepreviousquarter)thereforereferstoBBVA
Compasswhich,asofSeptember30,2012
accountedfor94%ofthebusinessvolumein
thearea(meaningthesumofgrosslending
Significant ratios (Percentage)
The United States
30-09-12 30-06-12 30-09-11
Efficiencyratio 65.2 63.8 63.0
NPAratio 2.4 2.8 3.8
NPAcoverageratio 94 82 69
Riskpremium 0.30 0.26 0.99
The United States. Operating income(Million euros at constant exchange rate)
The United States. Net attributable profit (adjusted)(Million euros at constant exchange rate)
93
130117
7966
96102
187
227221
187212
235258
0
100
200
300
(1) At current exchange rate: +40.9%.(1) At current exchange rate: –1.7%.
1Q 2Q 3Q 4Q 3Q
–10.0% (1)
2011 20121Q
705 634
187
221
258235
212187
2Q
227
1Q 2Q 3Q 4Q 3Q
+29.3% (1)
2011 20121Q
264 341
93117
102 96
6679
2Q
130
The United States highlights in the third quarter
• Sustainedgrowthoftheloanbook.
• Increaseincustomerdeposits.
• Soundcapitalratios.
• Significantincreaseinearningsthanksto
favorableevolutionofprovisions,costdiscipline
andrevenueresilience.
45TheUnitedStates
andisgraduallyincreasingitscontributionto
theGroup’searnings.
Withrespecttorevenue,netinterestincome
intheareacontinuedtobenegativelyaffected
bytheGuarantyrun-off,thewrite-down
ofsecuritiesportfoliosandthecurrent
environmentmarkedbylowinterestrates
andapracticallyflatcurve.Howeverthere
wasalsoapositiveimpactfromincreased
lendingvolumeandayear-on-yearreduction
inthecostofdeposits.Inaddition,newloans
showedatrendtowardsimprovedyields.
Asaresult,thisheadingremainedatthe
levelsseeninpreviousquartersandstoodat
€1,285m,down3.6%ontheamountposted
forthesameperiodin2011.Incomefrom
feesandcommissionsbetweenJanuaryand
Septemberalsofell11.6%to€463masaresult
ofregulatorypressures.Excludingthesetwo
items,BBVACompasswouldhaveshowna
slightyear-on-yearincreasethankspartlyto
theriseinservicefees,whichwentup9%year
todate.Theotherincome/expensesheading
tocustomersplustotalcustomerfunds)and
83%ofthenetattributableprofit.
BBVACompasscontinuedtoseesustained
growthinitsloanbookoverthequarter,with
gross lending to customers of€34,383mas
of30-Sep-2012,up4.5%year-on-yearand0.8%
overthequarter.Loanstothecommercialand
residentialrealestatesegmentcontinueto
drivegrowthinthebank’slendingactivity,with
year-on-yearincreasesof25.5%and20.3%,
respectively.Specifically,commercialloans
arebenefitingfromthegoodperformanceof
lendingtothehealthcaresector,public-sector
financeandasset-basedlending.Thestrategic
planofBBVACompassincludesareduction
inlendingtotheconstructionrealestate
industry,withafallof41.3%year-on-yearand
8.7%quarter-on-quarter.
Withrespectto asset quality indicatorsin
thearea,theNPAratiodroppedto2.4%atthe
closeofSeptember2012,whilethecoverage
ratioroseto94%.Attheendofthefirsthalfof
2012,theNPAratiowas2.8%andthecoverage
ratiowas82%.
Customer deposits inBBVACompassalso
grewby4.6%inthequarter(up9.5%over
thelasttwelvemonths)thankstorecent
campaignstowinnewcustomers.Both
demandandtimedepositsgrew,although
mostofthisincreasewasduetothe
continuedriseinlower-costliabilities(current
andsavingsaccounts).
Earnings
TheUnitedStatesgeneratedanet
attributable profitof€341minthefirstnine
monthsof2012,ariseof29.3%year-on-year,
Consumer13.2
Interest bearing accounts 48.5
Commercialreal estate
18.1
Residentialreal estate23.8
Commercial33.4
BBVA Compass. Loan mix(Percentage)
BBVA Compass. Deposit mix(Percentage)
Construction real estate 9.5
Consumer14.9
Commercial real estate 18.3
September 2011 September 2012
Residential real estate25.9
Commercial 38.0
Constructionreal estate 4.9
Time deposits22.1
Non interest bearing accounts 29.4
Interest bearing accounts48.6
September 2011 September 2012
Time deposits 21.1
Non interestbearing
accounts30.5
Averagecost of
deposits0.42
Averagecost of
deposits0.38
4.95.4
7.48.1
9.5
10.411.2
0
2
4
6
8
10
12
Developer loans over BBVA Compasstotal loan portfolio(Percentage)
1Q 2Q 3Q 4Q 3Q2011 2012
1Q
4.95.4
11.210.4
9.5
8.1
2Q
7.4
Créditos a promotores sobre el total de la carteracrediticia de BBVA Compass (Porcentaje)
1er Trim. 2o Trim. 3er Trim. 4o Trim. 3er Trim.
–56.3%
2011 20121er Trim.
4.95.4
11.210.4
9.5
8.1
2o Trim.
7.4
46 Businessareas
accordingtotheoriginallyplanned
timeline,andhasreceivedverypositive
feedbackfromusersandcustomers.
Benefitsincludeanenhancedcustomer
experiencethroughdifferentiated,efficient,
fasterandcustomer-centricprocesses.
• BBVACompassopeneditsfirstofficein
Miamiinordertoexpanditscommercial
andwealthmanagementactivitiesinSouth
Florida.Thenewoffice,locatedinthe
financialcenterofthecity,bringsthetotal
numberofBBVACompassofficesinFlorida
to47.
• American Bankermagazinehasrecognized
BBVACompassforitsconsumer-friendly,
web-basedcollectionsapproach.The
awardcameastheorganizationhas
reduceddramaticallyitsnon-performing
loansoverthepasttwoyears.
• BBVACompassjoinedtheranksofApple,
Coca-Colaandsomeofthecountry’smost
prestigiouscompaniesasa“DaleCarnegie
LeadershipAward”recipient.Thisimportant
awardrecognizesthosecompanieswhich
placeanemphasisonhumanresources,
innovationandorganizationalcreativityin
ordertoachievetheirbusinessobjectives.
Specifically,ithighlightedthebank’s
commitmenttoprovidingexcellentservice
andqualityproductstoitscustomers,its
constantdedicationtotheprofessional
developmentofitsemployeesandthe
senseofresponsibilitythatdrivesahigh
levelofcommunityinvolvement.
• BBVACompasscontinuestobenefitfrom
thehighprofileofitsbrand.Specifically,
theinaugurationoftheBBVACompass
stadiuminHoustonwasmentionedmore
than1,800timesinthemediainthe
monthsfollowingitsopeningceremony,
equivalenttonearly29milliondollarsof
advertisingvalue.
amountedtoanegative€43minthearea,
comparedwith–€66minthefirstninemonths
of2011(atconstantexchangerates).Finally,
NTIroseslightlyby1.3%to€121m.Asaresult,
thearea’sgrossincomeintheyearthrough
Septembertotaled€1,826m(down4.4%
year-on-year)andshowshighresilienceifthe
situationinwhichitwasgeneratedistaken
intoaccount:lowinterestrates,turmoilinthe
marketsandstrongregulatorypressures.
Goodmanagementofoperatingexpenses
enabledcoststofallby1.1%inthelast12
monthsto€1,191m.Specifically,certain
expensesrelatedtopremiseswerebrought
downbymorethanhalfinCompass
comparedwiththeaccumulatedfigureas
ofSeptember2011.Impairmentlosseson
financialassetswereinlinewiththetrend
seeninpreviousquarters,leadingtoa
year-on-yeardecreaseof70.4%to€92m.
Finally,itisworthhighlightingthesound
capital ratios publishedbyBBVACompass
asofSeptember30,2012:11.5%forTierIand
11.3%forTierICommon,bothusinglocal
criteria.
Inshort,therehasbeenasignificantincrease
inthearea’searnings,verymuchsupported
onthelocalbusiness,thankstoreduced
impairmentsonfinancialassets,costdiscipline
andtheresilientrevenues.
Highlights
Belowisasummaryofthemaininitiatives
undertakeninthearea,aswellasthemost
relevanthighlightsforthequarter:
• Implementationofthenewbanking
platformwascompletedinallthebranches
thatBBVACompasshasinthe7states
whereitoperates.Thiscomplexconversion
processwasexecutedseamlesslyand
47CorporateActivities
CorporateActivities
Income statement (Millioneuros)
Corporate Activities
January-Sep. 12 ∆% January-Sep. 11
Net interest income (404) (12.2) (460)
Netfeesandcommissions (228) 42.8 (160)
Nettradingincome 415 158.8 161
Otherincome/expenses 138 (18.7) 169
Gross income (79) (72.7) (290)
Operatingcosts (789) 12.5 (701)
Personnelexpenses (444) 14.6 (387)
Generalandadministrativeexpenses (99) (13.6) (115)
Depreciationandamortization (246) 23.6 (199)
Operating income (868) (12.4) (991)
Impairmentonfinancialassets(net) 9 n.m. (46)
Provisions(net)andothergains(losses) (1,238) 79.4 (690)
Income before tax (2,098) 21.5 (1,727)
Incometax 818 8.6 753
Net income (1,280) 31.4 (974)
Non-controllinginterests 1 (39.3) 2
Net attributable profit (1,279) 31.6 (972)
Adjusted(1) (308) - (235)
Net attributable profit (adjusted) (1) (971) 31.8 (737)
In2011and2012,impairmentchargerelatedtothedeteriorationoftherealestatesectorinSpain.Andinthethirdquarterof2012,impactofUnnimbadwill.
Balance sheet (Millioneuros)
Corporate Activities
30-09-12 ∆% 30-09-11
Cashandbalanceswithcentralbanks (415) (80.7) (2,153)
Financialassets 32,893 25.6 26,197
Loansandreceivables (3,880) (30.1) (5,548)
Loansandadvancestocustomers 934 n.m. (3,274)
Loansandadvancestocreditinstitutionsandother (4,814) 111.7 (2,274)
Inter-areapositions (365) 21.2 (301)
Tangibleassets 4,130 32.1 3,125
Otherassets 23,314 20.9 19,278
Total assets/liabilities and equity 55,676 37.1 40,598
Depositsfromcentralbanksandcreditinstitutions 13,990 n.m. (172)
Depositsfromcustomers 24,269 (25.3) 32,476
Debtcertificates 68,462 (9.4) 75,600
Subordinatedliabilities 3,277 (1.2) 3,317
Inter-areapositions (54,552) (24.6) (72,394)
Financialliabilitiesheldfortrading (4,805) 56.6 (3,068)
Otherliabilities (7,509) 31.2 (5,721)
Valuationadjustments (2,300) (32.6) (3,414)
Shareholders'funds 42,802 9.8 38,995
Economiccapitalallocated (27,958) 11.7 (25,021)
48 Businessareas
Themostrelevantaspectsofearningsinthisareainthefirst nine months of 2012aresummarizedbelow:
• Netinterestincomewaslessnegativethaninthesameperiod
of2011,with–€404masofSeptember2012,comparedwith
–€460m12monthsearlier.Thisheadinghascontinuedto
improveasaresultofpositivemanagementofthestructural
interest-rateriskagainstthebackdropoffallinginterestrates.
• FavorableperformanceofNTI,basicallyasaresultofthe
capitalgainsrecordedontherepurchaseofsecuritization
bondsinthesecondquarterof2012.Asaresult,therewas
significantgrowthof158.8%inNTIoverthelast12monthsto
€415m.
• Gross incomewasanegative€79m,whichcompares
favorablywiththefigurepostedinthesameperiodin2011(a
negative€290m).
• OperatingexpensescontinuetoreflecttheGroup’sinvestment
effortinstafftraining,technology,brandandinfrastructure.
Theyincreasedby12.5%year-on-yearto€789m
• Therewasasignificantadditionalincreaseinprovisionsto
absorbtheimpairmentontherealestateandforeclosedassets
inSpain,andtheUnnimoperationgeneratedbadwill.
• Asaresult,net attributable profitintheareabetweenJanuary
andSeptember2012wasanegative€971m,comparedwith
anegative€737m12monthsearlier.Thismorenegative
performancethaninthesameperiodofthepreviousyear
isduetotheprovisioningeffortmentionedabove,since
operatingincomeperformedbetterthaninthefirstnine
monthsof2011.
Asset/Liability Management
TheAssetsandLiabilitiesManagementunitisresponsiblefor
managingstructuralinterest-rateandforeign-exchangepositions,
aswellastheGroup’soverallliquidityandshareholders’funds.
Liquidity managementhelpstofinancetherecurringgrowthof
thebankingbusinessatsuitablematuritiesandcosts,usingawide
rangeofinstrumentsthatprovideaccesstoalargenumberof
alternativesourcesoffinance.AcoreprincipleintheBBVAGroup’s
liquiditymanagementcontinuestobetoencouragethefinancial
independenceofitssubsidiariesinAmerica.Thisaimstoensure
thatthecostofliquidityiscorrectlyreflectedinpriceformation
andthatthereissustainablegrowthinthelendingbusiness.
Inthethirdquarterof2012,long-termwholesalefinancialmarkets
inEuropewereoncemoreaffectedbytheextremevolatilityof
thesovereignriskpremium,althoughtherewasasignificant
improvementinSeptember.ThemeasuresadoptedbytheECBat
itsmeetingonSeptember6haveledtoasignificantreductionin
riskpremiumsinEuropeandthustheopeningofthe
medium-termfinancialmarkets.Inthisenvironment,BBVAhas
successfullycompletedseveralseniordebtdealswithavery
significantdemand,demonstratingitsaccesstothemarketat
verysuccessfulconditionsintermsofpriceandamount.
Short-termfinanceinEuropehasalsoperformedverywell,with
greatstabilityintheamountsgathered.
TheenvironmentoutsideEuropehasalsobeenveryconstructive.
BBVAhassuccessfullycompletedissuesinMexicoandPeru,
amongothermarkets.Thissituationofgreaterinternational
stabilityhasalsoenabledtheGrouptostrengthenitsretail
liquiditypositionthankstoitscustomer-centricapproach.
Tosumup,BBVA’sproactivepolicyinitsliquiditymanagement,
itsprovenabilitytoaccessthemarketindifficultenvironments,
itsretailbusinessmodel,itslowervolumeofdebtredemptions
comparedtoitspeersanditsrelativelysmallvolumeofassets
giveitacomparativeadvantageagainstitsEuropeancompetitors.
Moreover,theincreasedproportionofretaildepositsonthe
liabilitysideofthebalancesheetinallthegeographicalareas
continuestostrengthentheGroup’sliquiditypositionandto
improveitsfinancingstructure.
TheBank’scapital managementhasatwofoldaim:tomaintain
levelsofcapitalizationappropriatetothebusinesstargetsinallthe
countriesinwhichitoperatesand,atthesametime,tomaximize
returnonshareholders’fundsthroughtheefficientallocationof
capitaltothevariousunits,goodmanagementofthebalance
sheetandproportionateuseofthevariousinstrumentsthat
comprisetheGroup’sequity:commonstock,preferredsharesand
subordinateddebt.
InJulythisyearBBVApaidincashthefirstinterimdividend
against2012earnings,foranamountof€0.10pershare.In
Septemberitonceagainannouncedpaymentofitstraditional
seconddividendthroughtheremunerationschemeknownas
the“DividendOption”,whichoffersshareholdersawiderrange
ofremunerationalternativesfortheirshares.Thismechanism
alsoallowstheGrouptoaccumulatecapitalthroughahigher
proportionofretainedearningsinthecurrentyear.
Inaddition,theacquisitionofUnnimwascompletedinthethird
quarterof2012.Thedealconsumedaround10basispointsof
corecapital.Therewasalsotheannouncementofatenderoffer
torepurchase15issuesofpreferredsecuritiesandsubordinated
bondsdistributedthroughUnnim’sretailnetwork(T1,UT2and
LT2)at95%oftheirnominalvaluefor€490m,inexchangefor
theBank’streasuryshares.Thus,BBVAoffersasolutiontoUnnim
customersandprovidesthemwithliquidityandprofitability
(someoftheseinstrumentspaidnocoupon).Inaddition,thedeal
protectstheinterestsofBBVAshareholders,sincethisexchange
isnotdilutive,anditwillhaveapositiveimpactontheGroup’s
generationofcorecapitalinthefourthquarterof2012.Thus,the
Unnimacquisitionwillbepracticallyneutralintermsofcapital
consumption.
Inthethirdquarter,BBVABancomerissuedUSD1.5billionin
subordinateddebt,thusstrengtheningtheGroup’sTierIIcapital.
Inconclusion,thecurrentsolvencylevelsenabletheBanktofulfill
allofitscapitalobjectives.Alsoofnoteistheanalysisconducted
byOliverWyman,whichconfirmedBBVA’ssoundcapitalposition
thatplacesitinGroup0(bankswithnocapitalrequirements).The
GroupestimatesthatunderthenewBaselIIIregulationsitwill
reachafully-loadedcoreratioofover9%attheendof2013,taking
49CorporateActivities
Inthefirstninemonthsof2012,theresultsofthismanagement
havebeenverysatisfactory,withextremelylimitedriskstrategies
inEurope,theUnitedStatesandMexico.Thesestrategiesare
managedbothwithhedgingderivatives(caps,floors,swaps,FRAs)
andwithbalance-sheetinstruments(mainlygovernmentbonds
withthehighestcreditandliquidityratings).
Holdings in Industrial and Financial Companies
Thisunitmanagestheportfolioofindustrialandfinancial
investmentsincompaniesoperatinginthetelecommunications,
media,electricity,oil,gasandfinancialsectors.LikeAsset/Liability
Management,itlieswithintheGroup’sFinanceDivision.
BBVAappliesstrictrequirementstothisportfolioregarding
risk-controlprocedures,economiccapitalconsumptionandreturn
oninvestment,diversifyinginvestmentsacrossdifferentsectors.
Italsoappliesdynamichedgingandmonetizationmanagement
strategiestoitsholdings.Inthefirstninemonthsof2012it
invested€460manddivested€230m.
AsofSeptember30,2012,themarketvalueoftheholdingsin
Industrial&FinancialCompaniesportfoliowas€2,816m.
intoaccountorganicgenerationandothercapitalaccumulation
operationsalreadyannounced.
Foreign-exchange riskmanagementofBBVA’slong-term
investments,basicallystemmingfromitsfranchisesinthe
Americas,aimstopreservetheGroup’scapitaladequacyratios
andensurethestabilityofitsincomestatement.
Inthethirdquarteroftheyear,BBVAmaintainedapolicyof
activelyhedgingitsinvestmentsinMexico,Chile,Peruandthe
dollararea,withaggregatehedgingofcloseto50%.Inaddition
tothiscorporate-levelhedging,dollarpositionsareheldatalocal
levelbysomeofthesubsidiarybanks.Theforeign-exchange
riskoftheearningsexpectedintheAmericasfor2012isalso
strictlymanaged.Inthethirdquarter,theimpactofvariationsin
exchangerateshasbeenpositive,bothontheincomestatement
andoncapitaladequacyratios.For2012asawhole,thesame
prudentandproactivepolicywillbepursuedinmanagingthe
Group’sforeign-exchangeriskfromthestandpointofitseffecton
capitaladequacyratiosandontheincomestatement.
Theunitalsoactivelymanagesthestructural interest-rate exposureontheGroup’sbalancesheet.Thisaimstomaintaina
steadygrowthinnetinterestincomeintheshortandmedium
term,regardlessofinterest-ratefluctuations.
50 Businessareas
Otherinformation:Corporate&InvestmentBanking
Income statement (Millioneuros)
Corporate & Investment Banking
January-Sep. 12 ∆% ∆% (1) January-Sep. 11
Net interest income 1,289 12.2 9.8 1,149
Netfeesandcommissions 529 8.7 6.6 486
Nettradingincome 183 (10.6) (15.7) 205
Otherincome/expenses 66 3.4 7.0 63
Gross income 2,067 8.6 6.0 1,904
Operatingcosts (659) 5.5 3.3 (625)
Personnelexpenses (370) 0.5 (1.0) (368)
Generalandadministrativeexpenses (279) 10.5 7.3 (253)
Depreciationandamortization (11) 119.5 113.0 (5)
Operating income 1,408 10.0 7.4 1,279
Impairmentonfinancialassets(net) (109) 82.3 78.8 (60)
Provisions(net)andothergains(losses) (11) 50.4 38.6 (7)
Income before tax 1,288 6.2 3.7 1,212
Incometax (379) 9.3 6.7 (346)
Net income 909 5.0 2.5 866
Non-controllinginterests (90) 52.0 38.1 (59)
Net attributable profit 819 1.5 (0.4) 806
(1)Atconstantexchangerates.
Balance sheet (Millioneuros)
Corporate & Investment Banking
30-09-12 ∆% ∆% (1) 30-09-11
Cashandbalanceswithcentralbanks 8,131 (4.7) (6.1) 8,528
Financialassets 87,474 10.3 7.8 79,298
Loansandreceivables 65,161 (12.6) (14.4) 74,547
Loansandadvancestocustomers 53,712 (2.3) (5.0) 54,997
Loansandadvancestocreditinstitutionsandother 11,449 (41.4) (41.5) 19,549
Inter-areapositions 16,534 n.m. n.m. 2,903
Tangibleassets 35 42.0 39.0 25
Otherassets 3,004 27.0 23.7 2,365
Total assets/liabilities and equity 180,340 7.6 5.2 167,666
Depositsfromcentralbanksandcreditinstitutions 73,093 32.2 28.7 55,302
Depositsfromcustomers 36,274 (25.6) (27.8) 48,769
Debtcertificates (106) (46.9) (46.9) (199)
Subordinatedliabilities 1,623 (17.7) (20.7) 1,973
Inter-areapositions - - - -
Financialliabilitiesheldfortrading 58,509 19.9 19.5 48,779
Otherliabilities 5,395 (41.9) (43.9) 9,283
Economiccapitalallocated 5,550 47.7 43.2 3,758
(1)Atconstantexchangerates.
51Corporate&InvestmentBanking
Industry Trends
Theeconomicenvironmentinthethird quarter of 2012was
verycomplex,withextremelyhighvolatilityinthefinancial
marketsatthestartoftheperiod.Half-waythroughthequarter,
thetrendchanged,mainlyduetothealreadymentioned
announcementbytheECBofpossiblesovereigndebt
purchasesincaseswhereeconomieswithintheeurozone
neededstabilization.Thisnewenvironmenthashelpedreduce
volatilityandpushed-upthefixed-incomeandequitymarkets
globally.Theseeffectsarepositiveforbankswithexposure
totheglobalmarketsbusiness.Againstthisbackdrop,
transactionalandlendingactivityremainswellbelow
pre-2009levels.Tradefinanceisalsodownasaresultofa
slightslowdowninsomeofthemostdynamiceconomies
(suchasChinaandBrazil).
Inthisturbulentsituation,Corporate & Investment Banking
hasmanagedtoimproveitsearningscomparedwiththosefor
thefirstninemonthsof2011,byleveragingitsrelationshipwith
keyclientsanditsgeographicaldiversification.
Unlessindicatedotherwise,allcommentsbelowonpercentage
changesrefertoconstantexchange rates.
Activity
WithrespecttothebalancesofCIBactivity,therearetwo
clearlydifferentiatedscenarios.
Atgloballevel,gross customer lendingasof30-Sep-2012was
€54,432m,4.9%downonthefigureforthesamedatein2011.
Thisismainlyduetothedeleveragingprocessunderwayinthe
EuropeanandU.S.economies.Aspartofthisprocess,CIBhas
reduceditslendingexposureinSpain,EurasiaandtheUnited
States,whileinMexicoandSouthAmericaithasrisenby3.2%
and5.5%respectivelyinyear-on-yearterms.
Customer funds(bothonandoff-balancesheet)closed
Septemberat€38,883m,afallof26.3%onthefigurefor
30-Sep-2011,explainedbytheratingdowngradesoftheSpanish
sovereignandBBVA.Asinthecaseoflendingexposure,
performanceinLatinAmericahasbeenpositive.Customer
fundshavecontinuedtogrowatagoodpace(7.2%inMexico
and6.4%inSouthAmerica,bothinyear-on-yearterms).Itis
worthpointingoutthatwhilethelevelofcustomerfundsfell
fromMaytoAugust,inSeptembertherewasanupturn,withan
increaseof13.7%onthebalanceattheendofAugust.
EarningsInthisdifficultenvironmentCIBhasmanagedtoposthighly
recurringandresilientearnings.Inthefirstninemonthsof
2012itgeneratedgross incomeof€2,067m,ariseof6.0%on
thefigureforthesameperiodlastyear.Bygeographicalareas,
revenuegrewinSouthAmerica,MexicoandSpain(up30.8%,
38.0%and2.6%,respectively)andfellinEurasiaandtheUnited
States(down26.2%and10.0%,respectively).ProgressinSouth
AmericaandMexicocanbeexplainedbybuoyantactivity.
ThegrowthinSpainisduetoincreasedincomefromfeesand
commissions.ThedecreaseinEurasiaandtheUnitedStatesis
theresultofreducedbankingactivity.
CumulativeoperatingexpensesthroughSeptembercontinued
atasimilaryear-on-yearpacetothefirsthalfof2012(up3.3%).
Thetightcostcontrolofthepreviousquarterisstillinplace.
Thisevolutionofrevenueandexpensesresultinanoperating
incomeforJanuarytoSeptember2012was€1,408m,a
year-on-yeargrowthof7.4%.
Impairmentlossesonfinancialassetsstoodat€109m.These
accountfor7.7%ofoperatingincome.Thus,thecumulativenet
CIB. Operating income(Million euros at constant exchange rates)
CIB. Net attributable profit(Million euros at constant exchange rates)
263274281230
178
300344
445457505
367344
424
543
0
100
200
300
400
500
600
(1) At current exchange rates: +10.0%. (1) At current exchange rates: +1.5%.
1Q 2Q 3Q 4Q 3Q
+7.4% (1)
2011 20121Q
1,311 1,408
445505
543
424
344 367
2Q
457
1Q 2Q 3Q 4Q 3Q
–0.4% (1)
2011 20121Q
822 819
263281
344300
178230
2Q
274
CIB highlights in the third quarter
• PositiveperformanceoflendingactivityinLatinAmericaand
reductioninEuropeandtheUnitedStates.
• FavorableperformanceofcustomerfundsinSeptember,which
representsaturningpoint.
• Resilienceandrecurrenceofearningsinaverycomplex
environment.
52 Businessareas
creditlineforTelefónica-HuaweiwithChinaDevelopmentBank
andIndustrial&CommercialBankofChina.
InGlobal Transactional Bankingthefundgatheringoperations
andcustomerdepositsareworthmentioning.InSpain,tax
managementforover€300mandadepositofUSD300mwas
arrangedwiththeleadingoilcompany.InMexicoanexclusive
agreementwasclosedtoofferservicesforcard-payment
terminals,payrollsandcommercialallianceswithoneofthe
mostimportantgroupsinthecountry.Threerequestsfor
proposals(RFPs)wereawardedinPortugalandMexico.These
aregeneratingnewtransactionalbusiness,inparticularpayment
managementandinternationalcollection,withtheleading
telecommunicationscompanyinPortugal.Finally,“BBVAnet
cash”receivedthe“BestWebDesigninLatinAmerica”award
fromGlobal Finance.The“BBVAglobalnetcash”on-linebanking
systemwasalsolaunched,givingmultinationalcompaniesa
globalconnectionwiththecapacitytooperateatlocallevel.
Global Markets hascontinuedtogrowinanenvironment
affectedbyeconomicandfinancialtensionlinkedtoinstabilityin
EuropeandpoliticalchangeintheUnitedStates.Grossincome
amountedto€867m,anincreaseof9.3%onthefirstninemonths
of2011.Thisgrowthwasboostedbythecontinuedparticipation
ofGlobalMarketsinsolutionsforitsclients,thusprovidingstable
franchiserevenuefortheunit.
InSpainGlobalMarketsachievedgoodearningsfigures:total
mark-to-marketrevenueincreasedbyover20%year-on-year.
SMEs,andtheretailandcorporatecustomersegmentsposted
thebiggestgrowth.Byproducttype,interestrates,exchange
ratesandlendinghaveincreasedatdouble-digitratesinyear-
on-yearterms.BBVAcontinuestobethemarketleaderinequity
brokerage,withamarketshareof16.4%inSeptember2012,nearly
9percentagepointsaboveitsnearestcompetitor.BBVAResearch
obtainedanawardasbeststock-marketanalystfromThomson
Reutersforthequalityofitsforecastingandrecommendations.
InEurasia,revenuefromSMEsandretailcustomershasgrown
above40%comparedwiththecumulativetotalthrough
September2011.Therewasanotableincreaseintotalfranchise
revenuefromtheMilan(up60%)andTaiwantradingfloors,the
latterpracticallytriplingitsearningscomparedwiththesame
periodin2011.
InMexico,GlobalMarketsisstillwellpositionedtotakeadvantage
ofthecountry’spositiveeconomicsituation.Thisenvironment
hashelpedcustomerrevenuetoperformwell,asalltheproducts
postedpositiveresults.Asaresultoftheabove,GlobalMarkets
grossincomegrew80.4%year-on-year.
BBVAinSouth Americacontinuestoboostitslocaldistribution
capacity.GlobalMarketsrevenueintheareaincreasedby25.9%
year-on-year.
IntheUnited Statesrevenuefrominterestrateswasparticularly
good,withariseof47%onthefirstninemonthsof2011.BBVA
iscontinuingtomakeprogressinitsstrategytointegratethe
business,focusingonitscompetitiveadvantages:theCompass
distributionnetwork,itsknow-howinderivativesanditsLatin
Americanproductsasadifferentiatingfactorforinvestors.
attributable profitwas€819m,verysimilartothefigureposted
12monthspreviously(down0.4%year-on-year).
Theasset quality ofthevariousunitsinthisarearemainsstable.
TheNPAratiocontinuesat0.6%,thesamefigureasthecloseof
June2012,whilethecoverageratioimprovedoverthequarter
to151%.
Highlights
ThemostimportantdealscarriedoutbythedifferentCIB
departmentsonthethirdquarterof2012aresummarizedbelow:
InCorporate Finance,BBVAisleaderinSpainasadvisorin
transactions.AccordingtoThomsonReuters,theGrouphas
advisedin49dealssince2009.RecentlyitworkedwithCementos
PortlandinaprivateplacementunderwrittenbytheU.S.
BlackstoneGroup,andwithEnagásontheacquisitionof90%of
NaturgasEnergíaTransporte.InAmerica,BBVAhascontinuedto
strengthenitsfranchise,particularlyinMexico,whereitiscurrently
veryactive.
InEquity Capital Markets,theBankhasbeenjointbookrunner
inthedomesticinitialpublicoffering(IPO)ofSantanderMexico,
worth€3,179m.Thiswasthethirdbiggestdealthisyearatglobal
levelandthesecondbiggesteverinLatinAmerica.
Corporate LendinghasmaintaineditsleadingpositioninSpain
inbilateralandsyndicatedloans(includingFCC,Abertisand
CementosPortland).IntheUntiedStates,BBVAcontinuesto
strengthentheCompassfranchisewithnumeroussyndicated
deals(includingAvon,BestBuyandH&RBlock).InLatinAmerica,
ithasmaintaineditsleadingpositionthankstothepromotionof
bothbilateralandsyndicatedloansinMexico(includingComex,
Frisa,Kaluz)andColombia(UNE).
Project Finance continuestobeleaderinEurope,withthe
completionofdealsincludingstructuredfinanceforhospitalsin
Tuscany(Italy)andtheCarringtoncombined-cycleplantinthe
UnitedKingdom.InLatinAmericatheBankhasledoperations
inrenewableenergy(loanandprojectbondsinOaxaca,Mexico),
conventionalenergy(hydropowerplantinCerrodelÁguila,
Peru,andcombined-cycleplantinSalamanca,Mexico)and
infrastructures(projectbondforReddeCarreterasdeOccidente
inMexico).IntheUnitedStatesitwasmandatedleadarrangerin
thefinanceofSabinePassandinfinancingparkinglotsinOhio
andinParkwayprison.
Leveraged Financehasalsoconfirmeditsleadingposition
inSpain.Ithasstructuredandcollaboratedonfourleveraged
acquisitionsinvarioussectors.InEuropeitwasmandatedlead
arrangerinthefinanceofaleveragedbuy-out(LBO)inItalyfor
oneofthebiggestglobalfinancialinvestors.
Structured Trade FinanceincreaseditsCESCE-backedguarantee
activityinSpain,andacreditlineforFCCstands-out.Intherestof
EuropeBBVAhasamajorpositionfinancingexports,particularly
toLatinAmericancountries,TurkeyandAsia,andparticipating
innewprogramsdevelopedbyEuropeanexportcreditagencies
(ECAs).InAsiaBBVAhasclosedthesecondtrancheofthebuyer’s
BBVA INVESTOR RELATIONS
Headquarters
PaseodelaCastellana,81–17thfloor
28046Madrid
SPAIN
Telephone:+34913746201
E-mail:[email protected]
New York Office
1345AvenueoftheAmericas,45thFloor
10105NewYork,NY
Telephones:+12127282416/+12127281660
London Office
108CannonStreet,LondonEC4N6EU
Telephone:+442076487671
Hong Kong Office
43/F,twoInternationalFinanceCentre;
8FinanceStreet
CentralHongKong
Telephone:+85225823229
Moreinformationat:
http://shareholdersandinvestors.bbva.com
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