January-March 2013

Relevant events

The highlights for the BBVA Group in the first quarter of 2013 are as follows:

1. As regards earnings, the net attributable profit was €1,734m. The most relevant aspects of this heading are summarized below:

  • Resilient revenue, despite the pressure on margins, with gross income up 3.9% on the first quarter of the previous year. This performance is due to several reasons:
    • Recurrent net interest income plus fees and commissions, which stand €18m above the figure posted in the first quarter of 2012.
    • Significant contribution from net trading income (NTI), as a result of positive market activity and management of the structural risks on the balance sheet.
  • Expenses in line with previous quarters. The 9.1% year-on-year increase is due to the execution of the investment plans in emerging economies. In contrast, cost containment continues in developed countries.
  • Increased provisions, focused primarily on commercial loans in Spain, as expected.
  • Lastly, generation of capital gains from:
    • The signing by BBVA Seguros of a reinsurance agreement with Scor Global Life for 90% of its individual life-risk insurance portfolio in Spain.
    • The closing of the Afore Bancomer sale in January 2013.

2. In terms of solvency, the Bank has improved its core capital ratio under Basel II at the end of 2012 from 10.8% to 11.2%, due to the high earnings generated over the period.

3. Very good news also from the standpoint of liquidity in the quarter, with another positive performance of customer deposits in Spain.

  • As regards issuances, the Group completed three transactions on the international markets, two senior unsecured debt issues in Europe at 3 and 5-years tenor for a total of €3,000m, and a 10-year mortgage-covered bond totaling €1,000m, all with a very significant level of demand.
  • Positive performance of the BBVA retail franchise in Spain. Gathering of customer deposits was above budget forecasts, as a result of its focus on customers and the Bank’s financial soundness.
  • BBVA has returned a significant part of the long-term refinancing operation (LTRO), using the first available windows during the period.

4. From the point of view of risks, performance is in line with expectations: slight uptick in the NPA ratio in Spain and stable or improved asset quality in the rest of geographical areas.

5. In business activity, it is important to highlight again the buoyant lending in emerging economies and the deleveraging of the Spanish economy. By segments, BBVA continues to grow mainly in retail portfolios and retail customer deposits.

6. BBVA’s Annual General Meeting of Shareholders (AGM) was held on March 15, 2013 with a historically high quorum of 66.5%. It achieved a high voting percentage and massive support from both institutional and minority shareholders. The Annual Financial Statements were backed by nearly 99% of the votes cast, which represents a very solid support for BBVA’s management during such a difficult year. In addition, Francisco González was re-elected Chairman and CEO with 91% of the votes. The meeting also approved the implementation in 2013 of the shareholder remuneration system known as “dividend option” through two share capital increases.

7. In respect to the information by business areas, a more comprehensive view of Spain is provided in this report, which includes the portfolios, finance and structural euro balance-sheet positions managed by the Assets and Liabilities Committee (ALCO) that were previously reported in Corporate Activities. In addition, a breakdown of the real-estate activity in Spain is provided. It manages separate and independently the residential and real-estate developer’s assets in this country.