January - September 2012

Exposure to the real estate sector in Spain

The most important point with respect to exposure to the real estate sector in Spain in the third quarter of 2012 is, as mentioned earlier, the increase in provisions to cover the additional impairment in the value of assets associated with the real estate industry owing to the country’s worsening macroeconomic situation. Following the increase in provisions for loan-losses, and for foreclosures and assets purchases, at the close of the first nine months of 2012 the Group meets two-thirds of the requirements imposed by Royal Decree-Laws 02/2012 and 18/2012.

Including the figures from Unnim, the Group’s exposure to this sector increases by €2,652m, but with a high coverage ratio (48% of non-performing plus substandard loans). Foreclosures and asset purchases amount to an additional €3,267m, although they also have a high coverage ratio (65%).

It should be stressed that the Unnim deal includes an asset protection scheme (EPA) by which the Deposit Guarantee Fund (FGD) will take on 80% of any losses of a predetermined asset portfolio for a period of 10 years, after making use of existing provisions. The risk of incorporating Unnim portfolios to the BBVA Group is therefore extremely limited, not only due to their high coverage ratio, but also because of the existence of the EPA.

As a result of the above, there has been an increase over the quarter of the coverage of non-performing and substandard loans of the BBVA Group of 5 percentage points to 44%, and that of foreclosures and asset purchases has increased by 14 percentage points to 50%.

Coverage of real estate exposure in Spain

(Million of euros as of 30-Sep-12)

  Risk amount Provision % Coverage over risk
NPL + Substandard 8,746 3,826 44
NPL 6,842 3,196 47
Substandard 1,904 630 33
Foreclosed real estate and other assets 11,679 5,818 50
From real estate developers 8,650 4,648 54
From Dwellings 2,406 917 38
Other 623 253 41
Subtotal 20,425 9,644 47
Performing 7,473 647 9
With collateral 6,850

Finished properties 4,082

Construction in progress 1,268

Land 1,500

Without collateral and other 623

Real estate exposure 27,898 10,291 37
Memorandum item: BBVA Group excluding Unnim

NPL + Substandard 6,912 2,949 43
Foreclosed real estate and other assets 8,412 3,694 44
Subtotal 15,324 6,643 43
Performing 6,655 400 6
Real estate exposure 21,979 7,043 32

Coverage of NPLs and substandar real estate developer’s exposure

(1) Excluding Unnim.

Coverage of foreclosures and asset purchases


(1) Excluding Unnim.