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Capital base

As of 30-Sep-2011, the BBVA Group’s capital base, calculated according to the BIS II regulation, totaled €41,120m, a very similar figure to 30-June-2011 (down 0.3%). The most significant differences in the quarter include: an increase in core capital of €855m, explained by the generation of earnings in the period, and the higher deduction from the investment made in CNCB. In addition, there was significant movement in currencies in the quarter, specifically the depreciation of the Mexican peso, which has had a negative impact on the capital base.

Risk-weighted assets (RWAs) were up 1.3% in the quarter to €325,458m. This growth is fundamentally explained by the strong performance of activity in Latin America and by the appreciation of the dollar and other currencies in South America. Another differentiating key quality aspect of BBVA versus its European peers is the high RWA density and its stability through time.

RWA’s / Total assets (1)

(Percentage)

The minimum capital requirements (8% of RWA) totaled €26,037m, making the capital base surplus at the close of September reach €15,083m, that is, 57.9% above the minimum required levels.

As of 30-Sep-2011, core capital was up 3.0% with respect to the June 2011 figure and amounted to €29,628m, and a core ratio of 9.1%. The organic generation of capital in the quarter was 15 basis points, net of the impact of the currency evolution and other factors.

Capital base (BIS II Regulation)
(Million euros)






30-09-11 30-06-11 31-03-11 31-12-10 30-09-10
Shareholders' funds 41,552 38,677 38,107 36,689 31,610
Adjustments and deductions (11,923) (11,904) (11,654) (8,592) (8,642)
Mandatory convertible bonds - 2,000 2,000 2,000 2,000
Core capital 29,628 28,773 28,452 30,097 24,969
Preference shares 5,157 5,114 5,128 5,164 5,165
Deductions (2,733) (2,452) (2,367) (2,239) (1,900)
Capital (Tier I) 32,053 31,435 31,214 33,023 28,234
Subordinated debt and other 11,800 12,266 12,613 12,140 12,955
Deductions (2,733) (2,452) (2,367) (2,239) (1,900)
Other eligible capital (Tier II) 9,067 9,814 10,246 9,901 11,055
Capital base 41,120 41,249 41,460 42,924 39,289
Minimum capital requirement (BIS II Regulation) 26,037 25,703 25,523 25,066 24,506
Capital surplus 15,083 15,547 15,937 17,858 14,783
Risk-weighted assets 325,458 321,282 319,044 313,327 306,319
BIS ratio (%) 12.6 12.8 13.0 13.7 12.8
Core capital (%) 9.1 9.0 8.9 9.6 8.2
Tier I (%) 9.8 9.8 9.8 10.5 9.2
Tier II (%) 2.8 3.1 3.2 3.2 3.6

The Tier I ratio, 9.8%, fell with respect to 30-Jun-2011 by 6 basis points. The level of preference shares is similar to that in the previous quarter, at €5,157m, or 16.0% of total bank capital.

The rest of the eligible capital, Tier II, which mainly consists of subordinated debt, surplus generic provisions, eligible unrealized capital gains and the deduction for holdings in financial and insurance entities, stands at €9,067m. This represents a 7.6% decrease in the quarter due to the investment in CNCB and to the fall in unrealized capital gains.

Capital base: BIS II ratio

(Percentage)

To sum up, the BIS ratio as of 30-September-2011 was 12.6% with a clear positive evolution in the quality of its components since the start of the crisis.

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