Earnings

In the second quarter of 2013, the BBVA Group’s net attributable profit stood at €1,147m, with an accumulated figure of €2,882m in the first half of the year. The most relevant items in the quarter are:

1. Strong net interest income in an environment marked by high pressure on customer spreads in several geographical regions where the Group operates.

2. Fees and commissions have also performed well and compare favorably with the figures posted both in the first quarter and in the same period last year.

3. Strong generation of NTI in the first half of the year as a whole, in a situation of high volatility on the markets.

Net attributable profit ⁽¹⁾

(Million euros)

(1) Adjusted (2) At constant exchange rates: -34.6%

Consolidated income statement: quarterly evolution  ⁽¹⁾

(Million euros)

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	2013		2012
	2Q	1Q	4Q	3Q	2Q	1Q
Net interest income	3,679	3,623	3,910	3,877	3,741	3,594
Net fees and commissions	1,126	1,052	1,126	1,104	1,061	1,062
Net trading income	630	719	646	319	461	340
Dividend income	47	19	17	35	311	27
Income by the equity method	164	51	191	169	175	191
Other operating income and expenses	(153)	7	(32)	6	57	51
Gross income	5,493	5,471	5,858	5,512	5,806	5,265
Operating costs	(2,814)	(2,758)	(2,855)	(2,771)	(2,633)	(2,528)
Personnel expenses	(1,454)	(1,458)	(1,472)	(1,447)	(1,396)	(1,347)
General and administrative expenses	(1,080)	(1,025)	(1,089)	(1,064)	(1,001)	(951)
Depreciation and amortization	(279)	(276)	(294)	(259)	(236)	(230)
Operating income	2,679	2,712	3,003	2,741	3,173	2,738
Impairment on financial assets (net)	(1,336)	(1,376)	(2,675)	(2,038)	(2,182)	(1,085)
Provisions (net)	(130)	(167)	(228)	(195)	(98)	(130)
Other gains (losses)	(172)	343	(269)	(561)	(311)	(223)
Income before tax	1,040	1,512	(168)	(53)	582	1,299
Income tax	(261)	(395)	220	275	3	(223)
Net income from on-going operations	779	1,118	52	222	584	1,076
Net income from discontinued operations	570	823	138	83	75	96
Net income	1,349	1,941	190	305	659	1,173
Non-controlling interests	(202)	(207)	(170)	(159)	(154)	(168)
Net attributable profit	1,147	1,734	20	146	505	1,005
Adjusted (2)	200	870	(1,155)	(901)	(1,067)	(226)
Net attributable profit (adjusted) (2)	947	865	1,175	1,047	1,572	1,231
Basic earnings per share (euros)	0.20	0.31	0.01	0.03	0.09	0.19
Basic earnings per share diluted (euros) (3)	0.20	0.31	0.01	0.03	0.09	0.20
Adjusted earnings per share diluted (euros) (2-3)	0.16	0.15	0.21	0.19	0.29	0.23

(1) Pro forma financial statements with Garanti Group accounted for by the proportional consolidation method, without early application of the IFRS 10, 11 and 12. (2) Adjusted based on the result of real-estate activity in Spain, the profit from the pension business in Latin America, the badwill from Unnim and the reinsurance operation on the individual life-risk insurance portfolio in Spain. (3) Basic earnings per share which includes the eventual dilution of the contingent convertible securities into shares, issued in the second quarter of 2013.

Consolidated income statement: quarterly evolution ⁽¹⁾

(Million euros)

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	1H13	∆%	Δ % at constant exchange rates	1H12	Δ %	Δ % at constant exchange rates	2H12
Net interest income	7,302	(0.5)	2.0	7,335	(6.2)	(1.7)	7,787
Net fees and commissions	2,178	2.6	4.1	2,123	(2.4)	0.7	2,230
Net trading income	1,349	68.4	73.4	801	39.7	42.6	966
Dividend income	66	(80.4)	(80.4)	338	25.4	27.4	53
Income by the equity method	214	(41.5)	(41.4)	366	(40.5)	(40.4)	360
Other operating income and expenses	(146)	n.m.	n.m.	107	n.m.	n.m.	(25)
Gross income	10,964	(1.0)	0.7	11,071	(3.6)	(0.2)	11,370
Operating costs	(5,572)	8.0	9.6	(5,161)	(0.9)	2.0	(5,625)
Personnel expenses	(2,912)	6.2	7.7	(2,743)	(0.2)	2.4	(2,919)
General and administrative expenses	(2,105)	7.8	9.4	(1,952)	(2.2)	1.0	(2,153)
Depreciation and amortization	(555)	19.3	21.8	(465)	0.4	3.8	(553)
Operating income	5,392	(8.8)	(7.1)	5,911	(6.1)	(2.5)	5,745
Impairment on financial assets (net)	(2,712)	(17.0)	(17.0)	(3,267)	(42.5)	(42.0)	(4,713)
Provisions (net)	(297)	30.2	42.1	(228)	(29.7)	(23.9)	(423)
Other gains (losses)	170	n.m.	n.m.	(535)	n.m.	n.m.	(830)
Income before tax	2,553	35.7	42.4	1,881	n.m.	n.m.	(222)
Income tax	(656)	198.1	219.2	(220)	n.m.	n.m.	496
Net income from on-going operations	1,897	14.2	19.5	1,661	n.m.	n.m.	274
Net income from discontinued operations	1,393	n.m.	n.m.	172	n.m.	n.m.	221
Net income	3,290	79.5	86.7	1,832	n.m.	n.m.	495
Non-controlling interests	(408)	26.7	43.7	(322)	24.1	44.7	(329)
Net attributable profit	2,882	90.8	94.9	1,510	n.m.	n.m.	166
Adjusted (2)	1,070	n.m.	n.m.	(1,293)	n.m.	n.m.	(2,056)
Net attributable profit (adjusted) (2)	1,812	(35.4)	(34.6)	2,803	(18.4)	(15.7)	2,222
Basic earnings per share (euros)	0.51			0.28			0.03
Basic earnings per share diluted (euros) (3)	0.51			0.28			0.03
Adjusted earnings per share diluted (euros) (2-3)	0.32			0.50			0.40

(1) Pro forma financial statements with Garanti Group accounted for by the proportional consolidation method, without early application of the IFRS 10, 11 and 12. (2) Adjusted based on the result of real-estate activity in Spain, the profit from the pension business in Latin America, the badwill from Unnim and the reinsurance operation on the individual life-risk insurance portfolio in Spain. (3) Basic earnings per share which includes the eventual dilution of the contingent convertible securities into shares, issued in the second quarter of 2013.

4. Increase in expenses, highly concentrated in emerging economies, and kept in check in the rest of geographical regions.

5. Stable impairments and provisions at the same levels as in the previous quarter.

6. Capital gains from the closing of the sale of the pension business in Colombia and Peru.

To sum up, another quarter with high earnings, with revenue from one-off transactions combined with notable stability of the most recurring earnings.