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January - June 2012

Earnings

Earnings in South America continue to perform very well quarter-on-quarter. This explains the region’s steadily increasing contribution to BBVA’s profits. In the first half of 2012 it already accounted for 33.0% of the Group’s adjusted profits.

Also impressive were the excellent revenue figures. Net interest income to June amounted to €1,977m, a year-on-year rise of 28.0%. This positive performance is the result of the strong activity mentioned above and the defense of customer spreads through excellent price management in both asset and liability products.

Income from fees increased 16.2% year-on-year, in line with strong activity, and ended the first half of the year at €636m.

Despite performing well over the six months to June 30, NTI fell 19.5% compared with the same period in 2011, which included the revaluation of US dollar positions at BBVA Provincial.

Thus it is the excellent figures from net interest income and fees and commissions, jointly with the positive performance of the insurance business, that explain the 21.9% year-on-year increase in gross income to €2,779m.

The plans for expansion and technological transformation carried out in countries in the region were key to the increase in expenses running to €1,158m over the first half of the year. These investments were designed to improve the levels of customer service in line with the Group’s “customer-centric” approach. Despite this, the efficiency ratio remains at a good level of 41.7%, thanks to revenue performance.

As a result, operating income amounted to €1,622m, a year-on-year increase of 27.8%.

Impairment losses on financial assets rose slightly to €235m, up 3.5% year-on-year. Despite this, the cumulative risk premium improved 20 basis points in the last twelve months to 1.12%.

In conclusion, strong business activity, favorable price management and good risk quality in the loan portfolio allowed for the ongoing investment and thus develop and expand the franchise and generate good earnings figures. Total earnings year to date amounted to €703m, up 24.8% on the same period in 2011.


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