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BBVA in 2013

Earnings

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The keys to earnings in 2013 for the BBVA Group are basically the strength of revenue and the impact of the corporate operations. The strength of earnings is underpinned by the good performance of the more recurring items, i.e. net interest income plus income from fees and commissions, which have moved favorably over the year, despite the complex environment. The other keys to earnings in the year are summed up below:

1. Net interest income affected by the elimination of the so-called “floor clauses”.

2. Significant contribution from net trading income (NTI).

3. Receipt, in November 2013, of the Telefónica dividend, which had been suspended temporarily since July 2012.

4. Reduction in the other operating income and expenses heading, due to a more negative impact than in 2012 of the adjustment for hyperinflation in Venezuela and the accounting for the exceptional payment to the Deposit Guarantee Fund (DGF) in Spain in compliance with Royal Decree-Law 6/2013.

5. In operating expenses BBVA has continued to apply a cost control policy and maintained the investment effort in emerging regions.

6. The level of provisions was below that of 2012.

7. Closing of several corporate operations: the sale of the various pension businesses in Latin America (Mexico in the first quarter, Colombia and Peru in the second and Chile in the fourth); the sale of BBVA Panama (fourth quarter); the reinsurance operation on the individual life and accident insurance portfolio in Spain (first quarter); and the signing of a new agreement with CITIC Limited (fourth quarter) that included the sale of 5.1% in CNCB. As a result, all of BBVA’s stake in CNCB was marked to market. With the aim of guaranteeing a homogenous comparison of the accounts, all the effects derived from these Group’s decisions (and of similar decisions from previous periods) have been transferred to a new heading, called “results from corporate operations”, and the historical series have been reconstructed.

8. Negative effect of exchange rates.

As a result of the above, the net attributable profit generated in the year totaled €2,228m, up 32.9% on the figure reported in 2012.

Consolidated income statement (1)

(Million euros)

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2013 ∆% ∆% at constant
exchange rates
2012 2011
Net interest income 14,613 (3.4) 2.7 15,122 13,152
Net fees and commissions 4,431 1.8 6.4 4,353 4,031
Net trading income 2,527 43.0 49.3 1,767 1,481
Dividend income 365 (30.7) (30.4) 527 601
Income by the equity method 72 75.8 83.1 41 57
Other operating income and expenses (612) n.m. n.m. 82 206
Operating income 21,397 (2.3) 2.6 21,892 19,528
Operating expenses (11,201) 3.8 8.4 (10,786) (9,737)
Personnel expenses (5,788) 2.2 6.3 (5,662) (5,191)
General and administrative expenses (4,280) 4.3 9.3 (4,106) (3,707)
Depreciation and amortization (1,133) 11.3 16.3 (1,018) (839)
Operating income 10,196 (8.2) (3.0) 11,106 9,791
Impairment on financial assets (net) (5,776) (27.6) (26.6) (7,980) (4,226)
Provisions (net) (630) (3.2) 6.8 (651) (509)
Other gains (losses) (1,040) (39.7) (39.6) (1,726) (2,110)
Income before tax 2,750 267.3 n.m. 749 2,946
Income tax (593) n.m. n.m. 276 (206)
Net income from ongoing operations 2,158 110.6 214.9 1,024 2,740
Results from corporate operations 823 (36.8) (36.2) 1,303 745
Net income 2,981 28.1 51.0 2,327 3,485
Non-controlling interests (753) 15.6 39.8 (651) (481)
Net attributable profit 2,228 32.9 55.1 1,676 3,004
Adjusted (2) (967) (65.6) (65.6) (2,814) (1,123)
Net attributable profit (adjusted) (2) 3,195 (28.9) (24.8) 4,490 4,127
Basic earnings per share (euros) 0.40 0.31 0.60
Basic earnings per share diluted (euros) (3) 0.39 0.31 0.60
Adjusted earnings per share diluted (euros) (2-3) 0.56 0.80 0.81
(1) Pro forma financial statements with Garanti Group accounted for by the proportional consolidation method, without early application of the IFRS 10, 11 and 12. (2) Adjusted excluding the results from corporate operations (2013, 2012 and 2011), the classification of refinanced loans (2013), the result of real-estate activity in Spain (2013, 2012 and 2011) and the United States goodwill impairment (2011). (3) Basic earnings per share which includes the eventual dilution of the contingent convertible securities into shares, issued in the second quarter of 2013.
Consolidated income statement: quarterly evolution (1)

(Million euros)

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2013 2012

4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q
Net interest income 3,760 3,551 3,679 3,623 3,910 3,877 3,741 3,594
Net fees and commissions 1,139 1,114 1,126 1,052 1,126 1,104 1,061 1,062
Net trading income 609 569 630 719 646 319 461 340
Dividend income 114 56 176 19 17 35 447 27
Income by the equity method 53 9 11 (1) 22 (3) 7 15
Other operating income and expenses (353) (113) (153) 7 (32) 6 57 51
Operating income 5,321 5,186 5,470 5,419 5,690 5,340 5,774 5,089
Operating expenses (2,852) (2,777) (2,814) (2,758) (2,855) (2,771) (2,633) (2,528)
Personnel expenses (1,423) (1,452) (1,454) (1,458) (1,472) (1,447) (1,396) (1,347)
General and administrative expenses (1,134) (1,042) (1,080) (1,025) (1,089) (1,064) (1,001) (951)
Depreciation and amortization (295) (283) (279) (276) (294) (259) (236) (230)
Operating income 2,469 2,410 2,656 2,661 2,835 2,569 3,141 2,562
Impairment on financial assets (net) (1,210) (1,854) (1,336) (1,376) (2,675) (2,038) (2,182) (1,085)
Provisions (net) (196) (137) (130) (167) (228) (195) (98) (130)
Other gains (losses) (382) (198) (172) (287) (310) (881) (311) (223)
Income before tax 682 221 1,017 831 (378) (546) 549 1,123
Income tax (114) (13) (261) (205) 220 275 3 (223)
Net income from ongoing operations 568 208 756 626 (158) (270) 552 901
Results from corporate operations (1,245) 160 593 1,315 348 575 108 272
Net income (677) 368 1,349 1,941 190 305 659 1,173
Non-controlling interests (172) (172) (202) (206) (170) (159) (154) (168)
Net attributable profit (849) 195 1,147 1,734 20 146 505 1,005
Adjusted (2) (1,633) (479) 223 921 (1,001) (728) (1,034) (51)
Net attributable profit (adjusted) (2) 783 674 924 813 1,021 875 1,540 1,055
Basic earnings per share (euros) (0.15) 0.03 0.20 0.30 0.01 0.03 0.09 0.19
Basic earnings per share diluted (euros) (3) (0.14) 0.03 0.20 0.30 0.01 0.03 0.09 0.19
Adjusted earnings per share diluted (euros) (2-3) 0.13 0.11 0.16 0.14 0.18 0.15 0.27 0.19
(1) Pro forma financial statements with Garanti Group accounted for by the proportional consolidation method, without early application of the IFRS 10, 11 and 12. (2) Adjusted excluding the results from corporate operations (2013, 2012 and 2011), the classification of refinanced loans (2013), the result of real-estate activity in Spain (2013, 2012 and 2011) and the United States goodwill impairment (2011). (3) Basic earnings per share which includes the eventual dilution of the contingent convertible securities into shares, issued in the second quarter of 2013.

As regards profitability, measured in terms of average total assets (ATA) over the main items of the income statement, the messages remain the same:

  • Resilient gross income, which as a percentage over ATA has remained practically stable in recent years, with a decline of 4 basis points on the figure for 2012 (a rise of 3 basis points compared to the figure for 2011).
  • Operating expenses over ATA increased 9 basis points as a result of the investment effort made in emerging economies. Consequently, operating income over ATA stands at 1.65% (1.78% in 2012).
  • However, the decline in impairment losses on financial assets compared with the figure for 2012 has pushed ROA up to 0.48% (0.37% the previous year).
Consolidated income statement: percentage of ATA (1)
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2013 2012 2011
Net interest income 2.37 2.42 2.31
Net fees and commissions 0.72 0.70 0.71
Net trading income 0.41 0.28 0.26
Other operating income and expenses (0.03) 0.10 0.15
Gross Income 3.47 3.51 3.43
Operating expenses (1.82) (1.73) (1.71)
Personnel expenses (0.94) (0.91) (0.91)
General and administrative expenses (0.69) (0.66) (0.65)
Depreciation and amortization (0.18) (0.16) (0.15)
Operating Income 1.65 1.78 1.72
Impairment on financial assets (net) (0.94) (1.28) (0.74)
Provisions (net) and other gains (losses) (0.27) (0.38) (0.46)
Income before tax 0.45 0.12 0.52
Income tax (0.10) 0.04 (0.04)
Net income from ongoing operations 0.35 0.16 0.48
Results from corporate operations 0.13 0.21 0.13
Net income (ROA) 0.48 0.37 0.61
Net income adjusted (ROA adjusted) 0.32 0.72 0.73
Non-controlling interests (0.12) (0.10) (0.08)
Net attributable profit 0.36 0.27 0.53
Net attributable profit (adjusted) (2) 0.52 0.72 0.73
Memorandum item:


Average total assets (million euros) 617,122 623,895 568,579
(1) Pro forma financial statements with Garanti Group accounted for by the proportional consolidation method, without early application of the IFRS 10, 11 and 12. (2) Adjusted excluding the results from corporate operations (2013, 2012 and 2011), the classification of refinanced loans (2013), the result of real-estate activity in Spain (2013, 2012 and 2011) and the United States goodwill impairment (2011).
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