Industry Trends

The health of the banking system continues to improve in the United States. The number of banks experiencing problems has dropped. In addition, asset quality in general maintains a positive trend, with the NPA ratio falling for the ninth quarter in a row to 5.05%, the lowest figure since the fourth quarter of 2008. Asset quality has therefore become a favorable aspect for a growing majority of banks which, generally speaking, have returned to normal levels of provisions and reduced their NPA ratios.

As regards lending, business and industrial sector and car finance continue to post better results than other segments. The residential mortgage portfolio has also seen significant growth, as it has benefited from refinancing associated with government aid. However, as a whole, growth in lending has been modest in the third quarter of 2012, as it has been negatively affected by pressures on prices.

Finally, liquidity and capital levels are at record levels in the country’s financial industry, with capital allocation improved.

As a result, and according to data for the first half of 2012, the banking sector in the United States posted better earnings than in previous periods, although interest rates are expected to remain low and exert pressures on net interest income in the short term. Income from fees and commissions will also be lower as a result of regulatory changes. Against this background, banks have once again focused their attention on cost management. Streamlining of branches and investment in technology have received special attention.

Income statement

(Million euros)

					Units:
	The United States				BBVA Compass
	Jan.-Sep. 12	Δ%	Δ% (1)	Jan.-Sep. 11	Jan.-Sep. 12	Δ%	Δ% (1)	Jan.-Sep. 11
Net interest income	1,285	5.7	(3.6)	1,216	1,112	5.9	(3.0)	1,044
Net fees and commissions	463	(3.6)	(11.6)	480	388	(1.8)	(10.7)	396
Net trading income	121	10.2	1.3	109	97	30.5	22.0	72
Other income/expenses	(43)	(28.9)	(35.2)	(60)	(39)	(30.1)	(39.3)	(58)
Gross income	1,826	4.6	(4.4)	1,745	1,558	6.5	(2.4)	1,454
Operating costs	(1,191)	8.3	(1.1)	(1,100)	(1,042)	7.6	(1.2)	(960)
Personnel expenses	(672)	12.6	2.9	(597)	(590)	11.1	2.3	(525)
General and administrative expenses	(386)	2.3	(6.5)	(377)	(322)	2.8	(6.1)	(313)
Deprecation and amortization	(134)	6.0	(3.4)	(126)	(130)	5.4	(3.5)	(122)
Operating income	634	(1.7)	(10.0)	645	517	4.1	(4.7)	494
Impairment on financial assets (net)	(92)	(67.5)	(70.4)	(285)	(64)	(68.8)	(78.5)	(273)
Provisions (net) and other gains (losses)	(46)	99.8	88.4	(23)	(39)	n.m.	n.m.	(5)
Income before tax	496	46.8	34.8	338	413	81.8	73.9	216
Income tax	(155)	61.9	48.8	(96)	(129)	112.4	104.8	(57)
Net income	341	40.9	29.3	242	284	70.8	62.7	159
Non-controlling interests	-	-	-	-	-	-	-	-
Net attributable profit	341	40.9	29.3	242	284	70.8	62.7	159

(1) At constant exchange rate.

Balance sheet

(Million euros)

					Units:
	The United States				BBVA Compass
	30-09-12	Δ%	Δ% (1)	30-09-11	30-09-12	Δ%	Δ% (1)	30-09-11
Cash and balances with central banks	4,514	58.5	51.8	2,847	3,538	89.1	90.6	1,778
Financial assets	7,905	(2.3)	(6.5)	8,096	7,821	7.8	4.1	7,196
Loans and receivables	39,731	(2.1)	(6.2)	40,564	35,375	11.2	7.7	31,445
Loans and advances to customers	37,525	(3.9)	(8.0)	39,054	33,532	8.7	5.0	30,588
Loans and advances to credit institutions and other	2,206	46.1	39.9	1,510	1,842	103.4	105.8	857
Inter-area positions	-	-	-	29	414	n.m.	n.m.	2
Tangible assets	776	(0.8)	(5.0)	782	762	1.9	(2.2)	746
Other assets	5,993	165.3	154.0	2,259	1,820	(9.1)	(13.9)	2,024
Total assets/Liabilities and equity	58,919	8.0	3.4	54,577	49,729	13.6	10.3	43,190
Deposits from central banks and credit institutions	7,716	(15.8)	(19.4)	9,161	4,602	7.1	3.3	4,265
Deposits from customers	38,435	4.6	0.1	36,753	37,590	14.4	11.1	32,411
Debt certificates	-	-	-	348	-	-	-	-
Subordinated liabilities	892	(22.8)	(26.1)	1,156	831	(9.7)	(14.6)	932
Inter-area positions	621	n.m.	n.m.	-	-	-	-	-
Financial liabilities held for trading	444	1.2	(3.1)	439	434	2.0	(2.1)	424
Other liabilities	7,811	120.3	110.9	3,546	3,814	37.0	35.1	2,703
Economic capital allocated	3,001	(5.5)	(9.5)	3,174	2,458	0.1	(4.1)	2,455

(1) At constant exchange rate.

Significant ratios

(Percentage)

	The United States
	30-09-12	30-06-12	30-09-11
Efficiency ratio	65.2	63.8	63.0
NPA ratio	2.4	2.8	3.8
NPA coverage ratio	94	82	69
Risk premium	0.30	0.26	0.99

The United States. Operating income

(Million euros at constant exchange rate)

(1) At current exchange rate: –1.7%.

The United States. Net attributable profit (adjusted)

(Million euros at constant exchange rate)

(1) At current exchange rate: +40.9%.