financial statements 2012

5. Business performance: earnings and activity by business area

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The BBVA Group’s activity is geographically diversified in Spain, Mexico, South America and the United States, with an active presence in Europe and Asia, especially Turkey and China. As mentioned in Note 6 of the accompanying consolidated financial statements, the business areas used by the BBVA Group as a basic management tool are: Spain, Eurasia, Mexico, South America and the United States.

In 2012 the main change in the BBVA Group’s business areas has been the transfer to the United States of the assets and liabilities of a branch located in Houston that previously belonged to Mexico (BBVA Bancomer). This was done to reflect the geographical nature of the Group’s reporting structure. Insignificant changes have also been carried out affecting other areas, but given their limited relevance, they require no comment here.

Thus the composition of the business areas in 2012 is very similar to last year’s.

The breakdown of “Net income attributed to parent company” in 2012 and 2011 by business area in the Group is as follows:

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Net Income by Business Areas Millions of Euros
2012 2011 % Change
Spain (1,267) 1,352 n.s.
Eurasia 950 1,031 (7.8)
Mexico 1,821 1,711 6.4
South America 1,347 1,007 33.8
The United States 475 (691) n.s.
Corporate Activities (1,649) (1,405) 17.3
Total 1,676 3,004 (44.2)

Spain’s income statement for 2012 reflects the significant loan-loss provisions made to offset the steady impairment of real estate portfolios.

In Eurasia, the excellent performance of Garanti in Turkey and the positive contribution from the Group’s stake in CNCB (China) are worth mentioning. The trend in Portugal is negative due to the greater provisions made during the year.

South America continued to increase its relative weight in the Group’s earnings, with the franchises in Colombia, Peru and Venezuela standing out thanks to strong activity and good management of risk and interest rate spreads.

In the United States, the significant reduction of impairment losses in the loan portfolio has had a very positive impact on earnings and offsets the flat performance of net interest income in the current environment of low interest rates and a relatively flat curve.

The explanations for the changes in the income statement and the main figures on the balance sheet for each of the business areas are given below.