Operating income

In the second quarter, operating expenses stood at €2,814m, totaling €5,572m for the first half of the year, up 8.0% on the first six months of 2012. In line with previous years, this increase is primarily the result of the investment plans undertaken in the emerging geographical regions, while the Group continues to apply a cost control policy in developed countries. Examples of this in the quarter include the work being carried out in the business plan for Latin America to promote value generation in the region, the technological progress being made in customer service in Chile and the investment in new corporate headquarters in Mexico City and Houston. Lastly, BBVA and the Professional Soccer League (LFP) recently announced the extension of their strategic agreement for the next three years.

Operating costs

(Millones de euors)

(1) At constant exchange rates: +9.6%.

Breakdown of operating costs and efficiency calculation

(Million euros)

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	1H13	Δ %	1H12	2012
Personnel expenses	2,912	6.2	2,743	5,662
Wages and salaries	2,203	4.6	2,107	4,348
Employee welfare expenses	454	11.5	408	819
Training expenses and other	254	11.5	228	495
General and administrative expenses	2,105	7.8	1,952	4,106
Premises	471	4.8	449	916
IT	405	18.0	343	745
Communications	154	(5.5)	163	330
Advertising and publicity	204	12.2	181	378
Corporate expenses	52	7.5	48	102
Other expenses	602	7.1	562	1,201
Levies and taxes	218	6.3	205	433
Administration costs	5,017	6.9	4,695	9,768
Depreciation and amortization	555	19.3	465	1,018
Operating costs	5,572	8.0	5,161	10,786
Gross income	10,964	(1.0)	11,071	22,441
Efficiency ratio (Operating costs/Gross income, in %)	50.8		46.6	48.1

Efficiency

The following is worth mentioning as regards the number of employees, branches and ATMs:

New workforce reduction in the quarter to a new total of 112,786 employees, basically as a result of the sale of the pension business in Colombia and Peru and the integration of Unnim.
There was also a reduction in the total number of Group branches, which stood at 7,662 units as of the close of June (7,895 as of 31-Mar-2013). By geographical area, the number of branches increased in the banking business in Latin America as a result of the expansion plans underway, while the number remained stable in Mexico and is down in the United States and in Spain, in the latter case as a result of the Unnim integration plan.
As of 30-Jun-2013, the number of ATMs was 20,153 units. The increases continue to be concentrated in South America.

As a result, operating income of €2,679m was generated in the second quarter, slightly lower than the figure posted in the first quarter. The cumulative figure as of June stands at €5,392m, down 8.8% on the previous year. The efficiency ratio in the first half of 2013 closed at 50.8%.