The first quarter of 2012 was successful in the United States, with an increase of net attributable profit of 15.6% compared with March 2011. Continued improvement in credit quality was the main driver behind the positive earnings figures, with impairment losses on financial assets falling 66.0% to €36m, €26m down on the fourth quarter of 2011.

Net interest income keeps showing strength due to the excellent price management, with a quarter-on-quarter fall of 1.7% despite the continuing unfavorable interest rate situation. Fee income was stable, despite the coming into effect of regulatory limitations in 2011, and was down 1.3% year-on-year. BBVA Compass has managed to mitigate the effects of regulatory changes by increasing service fees (up 21% year-on-year). Thus, the more recurrent revenues were resilient.

Other revenue fell year-on-year by 61.3%, due mainly to the greater contribution by BBVA Compass to the FDIC and the disposal of bond portfolios in the first quarter of 2011. As a result, gross income in the area ended the quarter at €599m (down 7.1% year-on-year).

Regarding costs, overall expenses decreased by 2.3% as a result of good management and cost control. The area posted operating income for the quarter of €216m (down 14.5% year-on-year). Together with the excellent trend in loan-loss provisions, these figures explain the significant progress in net attributable profit.

As well as the reduction in provisions, several other key risk indicators confirm the improvement in the area’s credit quality. The NPA ratio once more fell by 28 basis points over the quarter, with an accumulated fall of 108 points in the last 12 months to 3.2%. The coverage ratio rose by 2.4% over the same period (up 11.7 percentage points since 31-Mar-2011) and closed March at 75%. The accumulated risk premium was 0.35% (0.89% at the close of 2011 and 1.02% in the first quarter of the previous year).

Finally, the capital ratios of BBVA Compass remained solid, according to local criteria: with a Tier 1 ratio of 11.5% and a Tier 1 Common ratio of 11.1% as of March 2012. It is also worth noting that the bank has not received any objections to its capital plans presented to the Fed following the announcement of the results of its CCAR process.

Developer loans over BBVA Compass total loan portfolio