Earnings

The keys to earnings in the fourth quarter of 2013 for the BBVA Group are summed up below:

1. A quarterly increase of recurring revenue as a result of the upturn in net interest income and a new rise in income from fees and commissions.

2. Favorable performance of net trading income (NTI), confirming its positive trend shown over the year.

3. Receipt of the Telefónica dividend, after being suspended temporarily since July 2012.

Consolidated income statement: quarterly evolution ⁽¹⁾

(Million euros)

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	2013				2012
	4Q	3Q	2Q	1Q	4Q	3Q	2Q	1Q
Net interest income	3,760	3,551	3,679	3,623	3,910	3,877	3,741	3,594
Net fees and commissions	1,139	1,114	1,126	1,052	1,126	1,104	1,061	1,062
Net trading income	609	569	630	719	646	319	461	340
Dividend income	114	56	176	19	17	35	447	27
Income by the equity method	53	9	11	(1)	22	(3)	7	15
Other operating income and expenses	(353)	(113)	(153)	7	(32)	6	57	51
Gross income	5,321	5,186	5,470	5,419	5,690	5,340	5,774	5,089
Operating expenses	(2,852)	(2,777)	(2,814)	(2,758)	(2,855)	(2,771)	(2,633)	(2,528)
Personnel expenses	(1,423)	(1,452)	(1,454)	(1,458)	(1,472)	(1,447)	(1,396)	(1,347)
General and administrative expenses	(1,134)	(1,042)	(1,080)	(1,025)	(1,089)	(1,064)	(1,001)	(951)
Depreciation and amortization	(295)	(283)	(279)	(276)	(294)	(259)	(236)	(230)
Operating income	2,469	2,410	2,656	2,661	2,835	2,569	3,141	2,562
Impairment on financial assets (net)	(1,210)	(1,854)	(1,336)	(1,376)	(2,675)	(2,038)	(2,182)	(1,085)
Provisions (net)	(196)	(137)	(130)	(167)	(228)	(195)	(98)	(130)
Other gains (losses)	(382)	(198)	(172)	(287)	(310)	(881)	(311)	(223)
Income before tax	682	221	1,017	831	(378)	(546)	549	1,123
Income tax	(114)	(13)	(261)	(205)	220	275	3	(223)
Net income from ongoing operations	568	208	756	626	(158)	(270)	552	901
Results from corporate operations	(1,245)	160	593	1,315	348	575	108	272
Net income	(677)	368	1,349	1,941	190	305	659	1,173
Non-controlling interests	(172)	(172)	(202)	(206)	(170)	(159)	(154)	(168)
Net attributable profit	(849)	195	1,147	1,734	20	146	505	1,005
Adjusted (2)	(1,633)	(479)	223	921	(1,001)	(728)	(1,034)	(51)
Net attributable profit (adjusted) (2)	783	674	924	813	1,021	875	1,540	1,055
Basic earnings per share (euros)	(0.15)	0.03	0.20	0.30	0.01	0.03	0.09	0.19
Basic earnings per share diluted (euros) (3)	(0.14)	0.03	0.20	0.30	0.01	0.03	0.09	0.19
Adjusted earnings per share diluted (euros) (2-3)	0.13	0.11	0.16	0.14	0.18	0.15	0.27	0.19

(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 excluding the results from corporate operations, the result of real-estate activity in Spain and the classification of refinanced loans. (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 ⁽¹⁾

(Million euros)

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	2013	∆%	Δ % at constant exchange rates	2012
Net interest income	14,613	(3.4)	2.7	15,122
Net fees and commissions	4,431	1.8	6.4	4,353
Net trading income	2,527	43.0	49.3	1,767
Dividend income	365	(30.7)	(30.4)	527
Income by the equity method	72	75.8	83.1	41
Other operating income and expenses	(612)	n.m.	n.m.	82
Gross income	21,397	(2.3)	2.6	21,892
Operating expenses	(11,201)	3.8	8.4	(10,786)
Personnel expenses	(5,788)	2.2	6.3	(5,662)
General and administrative expenses	(4,280)	4.3	9.3	(4,106)
Depreciation and amortization	(1,133)	11.3	16.3	(1,018)
Operating income	10,196	(8.2)	(3.0)	11,106
Impairment on financial assets (net)	(5,776)	(27.6)	(26.6)	(7,980)
Provisions (net)	(630)	(3.2)	6.8	(651)
Other gains (losses)	(1,040)	(39.7)	(39.6)	(1,726)
Income before tax	2,750	267.3	n.m.	749
Income tax	(593)	n.m.	n.m.	276
Net income from ongoing operations	2,158	110.6	214.9	1,024
Results from corporate operations	823	(36.8)	(36.2)	1,303
Net income	2,981	28.1	51.0	2,327
Non-controlling interests	(753)	15.6	39.8	(651)
Net attributable profit	2,228	32.9	55.1	1,676
Adjusted (2)	(967)	(65.6)	(65.6)	(2,814)
Net attributable profit (adjusted) (2)	3,195	(28.9)	(24.8)	4,490
Basic earnings per share (euros)	0.40			0.31
Basic earnings per share diluted (euros) (3)	0.39			0.31
Adjusted earnings per share diluted (euros) (2-3)	0.56			0.80

(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 excluding the results from corporate operations, the result of real-estate activity in Spain and the classification of refinanced loans. (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. Reduction in the other operating income and expenses heading, due to a more negative impact than in previous quarters of the adjustment for hyperinflation in Venezuela and the accounting for the exceptional payment to the Deposit Guarantee Fund (DGF) in Spain in compliance with Royal Decree-Law 6/2013.

5. Operating expenses for the quarter were practically the same as for the same period the previous year.

6. The level of provisions was below that of previous quarters.

7. Closing of several corporate operations: the sales of AFP Provida and BBVA Panama and the signing of a new agreement with CITIC Limited that includes the sale of 5.1% in CNCB, which has involved valuing all of BBVA’s stake in CNCB marked to market. With the aim of guaranteeing a homogenous comparison of the accounts, all the effects derived from these Group decisions (and of similar decisions from previous periods) have been transferred to a new heading, called “results from corporate operations”, and the historical series have been reconstructed.

8. Significant negative impact in the quarter from exchange rates.

9. As a result of the above, the net attributable profit generated in the quarter was a negative €849m.