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 |
Consolidated income statement: quarterly evolution (1)
(Million euros)
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2013 | 2012 | ||||||
|---|---|---|---|---|---|---|---|---|
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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 |
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: |
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| Average total assets (million euros) | 617,122 | 623,895 | 568,579 |
