Retail and Commercial Banking

This unit includes the Retail Network, with the household customers, private banking, small companies and retailer segments in the Spanish market; Corporate and Business Banking (CBB), which handles the needs of the SMEs, corporations, the public sector and developers; and other businesses, including the insurance arm BBVA Seguros.

Within the Retail Network, lending closed 2011 with a balance of €102,158m (down 4.0% year-on-year). Customer deposits (including promissory notes) stood at €77,114m (up 4.0%). Thus there is a clear improvement in the unit’s liquidity gap.

In 2011 BBVA met with its financial commitments to individual customers, businesses and the self-employed by increasing its share of residential mortgage lending by 8 basis points over the year, according to the latest available figures, in a market where new production fell back significantly by 45% year-on-year. The unit had a new production of €4,763m in mortgages over the year, 13.3% of the sector. The personalized and special features of the Bank’s mortgage products have allowed it to respond to demand quickly and flexibly. At the same time the spread has increased by 35 basis points, even in the last 12 months, thanks to an adequate policy of prices and costs and good control of the risk parameters.

With respect to consumer finance, the accumulated new production for the year stood at €1,361m, and BBVA’s market share was consolidated at 10.5% in the stock.

In terms of customer funds, the available profitable products, as well as the efficient management of the maturities of time deposits issued in 2010 have enabled BBVA to reach for the second year in a row a market share of 8.3% in current and savings accounts, plus time deposits for the household segment, 11 basis points up on the close of 2010.

Within customer deposits, in current and savings accounts during the fourth quarter, there was the launch of a new Quincena de Cuentas Abiertas account campaign in November, as well as the capture of 16,141 new payroll accounts and 19,686 new pension-linked accounts (both, figures to November). In payroll accounts, the market share increased by 29 basis points to 9.5%, and in pension linked accounts by 40 basis points to 9.6%. Time deposits remained profitable for customers, according to their loyalty level. As a result, the year ended with a renewal of 78% of the products sold in 2010, but with a notable reduction in costs. In addition, since September the retail segment has gathered €2,381m in promissory notes.

Assets under management in pension plans in Spain increased by 2.9% over the quarter to a cumulative new production in the quarter of €415m. This was the result of the launch of a competitive offer of guaranteed fixed-income plans and support from two campaigns: Bonificación de aportación y traspasos a planes de campaña del 2%-4%” (giving a bonus for people transferring their pension plans) and Quincena de Cuentas Abiertas (Open Accounts Fortnight). Finally, it is worth pointing to the launch at the end of November 2011 of a new life insurance savings plan: Plan de Previsión Asegurado Acumulación (PPA Acumulación) (the Cumulative Guaranteed Pension Plan), which completes the range of retirement pension products. It offers a set return at maturity and the same tax advantages as pension plans.

In the self-employed segment, the launch of the campaign to attract new customers and to build the loyalty of existing ones, called Plan + Profesional led to an increase of €1,000m in customer funds and 2,000 new customers at the end of the year.

In the retail trade segment, the new campaigns both to attract new customers and maintain the loyalty of existing ones have focused on the “Bono TPV” and “Transactional” offers with excellent results in turnover of POS. Among the most notable commercial actions are the renewal of agreements with the following: the National Association of the Self-Employed (ATA), with 450,000 members; the National Federation of Lottery Associations (ANAPAL) with more than 5,000 members; the Spanish Modern Hotel and Catering Association (FEHRCAREM) with more than 3,000 franchises; the Spanish Retail Confederation (CEC) with 450,000 members; IAC Automoción, with 1,500 members; and the Union of Tobacconists (UAEE), with 11,000 members.

CBB manages lending of €88,173m and customer deposits including promissory notes totaling €21,602m.

Support to Spanish companies was a priority in 2011. BBVA has done so mainly through two vehicles: commercialization of ICO lines, as well as collaboration with the Official Credit Institute (ICO) in the dissemination and development of ICO Directo; and with the European Investment Bank (EIB), through a new Public Sector line. BBVA has, for another year, played a key role as one of the most active banks in the distribution of various ICO credit facilities, with the conclusion of 31,745 transactions for a total of €2,393m, a market share of 12.7%.

In terms of working capital financing, BBVA granted factoring transactions for €12,920m and accounts payable advances and deferments for €14,109m, thus consolidating its leading position in this business.

In the corporate segment BBVA also maintains a leading position with large companies, with a penetration share of 67.5% and a 27% market share as the leading financial supplier (according to the FRS-Inmark-2011 report). Within SMEs (corporate entities with a turnover of under €50m and more than 10 employees), the penetration share is 34% and share as leading financial provider 12.1%, according to the same source.

In corporations, BBVA is the absolute market leader, with 96.7% of penetration share. It is the primary or reference bank for most customers thanks to its outstanding service and the customer-relationship model that defines this group.

BBVA Private Banking serves customers with more than €300,000 in liquid assets and also encompasses the wealth management unit (Patrimonios) for customers/family groups with more than €2m available. Positive aspects in the year include the increase of 1% in the number of customers and the recognition for the second year in a row as the best private bank in Spain in the 2011 Global Private Banking Awards, held annually by The Banker, the prestigious Financial Times Group magazine specializing in international banking. BBVA Private Banking remains the sector leader in terms of assets under management, at more than €2,700m (11.2% market share) at the close of 2011, pertaining to 290 SICAVs.

Finally, in the insurance unit, covered savings continue to perform well (up 178% year-on-year), particularly the company insurance schemes, with €464m of written premiums (up 152%), making it a clear reference in this market. As a result, the volume of funds under management in insurance savings policies amounted to €8,792m (up 8% year-on-year). BBVA Seguros is still the market leader in individual life and accident insurance policies, with a market share of 10.5% as of September (latest data available). The level of activity in the non-life business has been maintained. The unit has also brokered premiums for other companies for €161m.