BBVA in 2012

Exposure to the real-estate sector in Spain

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BBVA’s exposure to the real-estate sector in Spain is limited, and amounts to €27,417m (out of which 56% are developer loans and 44% buildings). The year-on-year increase of €5,501m is basically the result of the incorporation of Unnim, which as of 31-Dec-2012 had an exposure to this sector of €5,791m, or 21% of BBVA Group’s total exposure. It should be pointed out that the Unnim deal includes an asset protection scheme (APS) by which the Deposit Guarantee Fund (DGF) will take on 80% of any losses of a predetermined asset portfolio for a period of 10 years, after making use of existing provisions. The risk of incorporating Unnim portfolios into BBVA Group is therefore extremely limited, not only due to their high coverage ratio, but also because of the existence of the APS.

By status of the assets, 76% are classified as problematic (32.5% NPA, 10.0% substandard and 57.5% foreclosed assets) and 24% are performing risk.

The breakdown of the developer loans by type of assets is: 53.2% finished housing, 11.2% housing under development, 26.3% land and 9.4% other assets, including those with personal guarantee.

The most relevant aspect in 2012 is the increase in funds used to cover the additional impairment in the value of assets associated with the real-estate industry owing to the country’s worsening macroeconomic situation. As a result, additional funds have been set aside, resulting in an increase over the year of coverage for non-performing and substandard assets, together with assets from foreclosures and purchases, to 43%. Following the effort made in provisions, at the close of 2012 the Group has met the requirements imposed by Royal Decree-Laws 02/2012 and 18/2012.

Coverage of real-estate exposure in Spain

(Millions of euros as of 31-12-12)

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Risk amount Provision % Coverage over risk
NPL + Substandard 8,906 3,854 43
NPL 6,814 3,123 46
Substandard 2,092 731 35
Foreclosed real-estate and other assets 12,059 6,186 51
From real-estate developers 8,894 4,893 55
From Dwellings 2,512 1,020 41
Other 653 273 42
Subtotal 20,965 10,040 48
Performing 6,452 1,788 28
With collateral 5,839

Finished properties 3,573

Construction in progress 854

Land 1,412

Without collateral and other 613

Real-estate exposure 27,417 11,828 43
22 Real-estate exposure and coverage in Spain

(Million euros)