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January-September2011
QUARTERLY REPORT
Q
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Contents
2 BBVAGrouphighlights
3 Groupinformation Relevantevents...........................................................................................................................................................................................................................................................3
Earnings................................................................................................................................................................................................................................................................................6
Balancesheetandbusinessactivity.................................................................................................................................................................................................13
Capitalbase.....................................................................................................................................................................................................................................................................17
Riskmanagement...................................................................................................................................................................................................................................................19
TheBBVAshare......................................................................................................................................................................................................................................................... 21
Corporateresponsibility.................................................................................................................................................................................................................................22
23 Businessareas Spain......................................................................................................................................................................................................................................................................................25
Eurasia.................................................................................................................................................................................................................................................................................. 31
Mexico..................................................................................................................................................................................................................................................................................34
SouthAmerica...........................................................................................................................................................................................................................................................38
TheUnitedStates...................................................................................................................................................................................................................................................42
CorporateActivities.............................................................................................................................................................................................................................................46
Otherinformation:WholesaleBanking&AssetManagement.......................................................................................................................49
January-September2011
QUARTERLYREPORT
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2 BBVAGrouphighlights
BBVAGrouphighlights
BBVA Group highlights
(Consolidatedigures)
30-09-11 ∆% 30-09-10 31-12-10
Balance sheet (million euros)
Totalassets 584,438 4.8 557,761 552,738
Customerlending(gross) 352,633 2.8 343,084 348,253
Customerfundsonbalancesheet 282,050 10.3 255,798 275,789
Othercustomerfunds 136,588 (4.4) 142,902 146,188
Totalcustomerfunds 418,638 5.0 398,700 421,977
Totalequity 39,868 21.1 32,909 37,475
Shareholders’funds 41,552 31.5 31,610 36,689
Income statement (million euros)
Netinterestincome 9,676 (5.0) 10,182 13,320
Grossincome 15,052 (5.7) 15,964 20,910
Operatingincome 7,753 (16.8) 9,322 11,942
Incomebeforetax 4,145 (21.2) 5,260 6,422
Netattributableproit 3,143 (14.3) 3,668 4,606
Data per share and share performance ratios
Shareprice(euros) 6.18 (37.6) 9.91 7.56
Marketcapitalization(millioneuros) 29,817 (19.7) 37,124 33,951
Netattributableproitpershare(euros) 0.66 (26.9) 0.90 1.16
Bookvaluepershare(euros) 8.61 2.1 8.43 8.17
P/BV(Price/Bookvalue;times) 0.7 1.2 0.9
Signiicant ratios (%)
ROE(Netattributableproit/Averageequity) 11.3 17.2 15.8
ROA(Netincome/Averagetotalassets) 0.83 0.95 0.89
RORWA(Netincome/Averagerisk-weightedassets) 1.46 1.75 1.64
Eiciencyratio 48.5 41.6 42.9
Riskpremium 1.10 1.38 1.33
NPAratio 4.1 4.1 4.1
NPAcoverageratio 60 62 62
Capital adequacy ratios (%)
BISRatio 12.6 12.8 13.7
Corecapital 9.1 8.2 9.6
TierI 9.8 9.2 10.5
Other information
Numberofshares(millions) 4,825 28.7 3,748 4,491
Numberofshareholders 981,348 10.4 889,104 952,618
Numberofemployees(1) 110,625 5.1 105,265 106,976
Numberofbranches(1) 7,436 1.0 7,362 7,361
NumberofATMs(1)
18,192 9.5 16,619 17,055
General note: These quarterly statements have not been audited. The consolidated accounts of the BBVA Group have been drawn up according to the International Financial
Reporting Standards (IFRS) adopted by the European Union and in conformity with Bank of Spain Circular 4/2004, together with the changes introduced therein.
(1)ExcludingGaranti.
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3Relevantevents
Stresslevelsinliquidityandsovereignriskreachedahighinthe
third quarter of 2011,particularlyintheeuroarea.Asaresult,
mostoftheEuropeanbankingsectorhasseensomemajor
sourcesoffundingreduced.Thisinturnhasincreasedtheuse
oftheliquidityfacilitiesprovidedbythecentralbanks.This
situationhasgivenrisetodoubtsinthemarketsaboutcertain
businessmodelswithahighlevelofleverage.Otherfactorsworth
highlightinghavebeenthelossofvalueinnumerousassetsasa
resultofincreasedfundingcostsandtheprevailinguncertainty.Inparticular,thereweresigniicantfallsintheequityandpublicand
privatedebtmarketsandalowlevelofbusinessactivity,above
allthatmostcloselyrelatedtothewholesalebusiness.Against
thisbackgroundoflossofconidence,theGrouphasoncemore
demonstratedoverthequarterthatitsbusinessmodelissound,
particularlyintermsofitsliquidity position andgeneration of
earnings.
Intermsof liquidity,BBVAhasaprivilegedpositionwithrespect
tomostofitscompetitors,inthefollowingaspects:
• Thesmallestbalancesheetwithinitspeergroup,at€584
billion.
• Ahighlycustomer-centricretailmodel,withaverysolid
depositbase,asshownbythefactthatBBVAisthebankwith
thebiggestcustomerdeposit/totalassetratiowithinthepeer
group,at48.3%atthecloseofSeptember2011.
• Awholesalebankingbusinessbasedonastrongrelationship
withitscustomersandcharacterizedbylowleveragelevels.
BBVAisrecoveringcompetitivenessinanenvironmentin
whichotherbankshaveannouncedsigniicantdeleveraging
plans.
• Inaddition,theGrouphasalwaysbeenproactiveinits
managementoflong-termwholesaleinance,andused
conservativelythe“windowsofopportunity”oferedbythe
markets.Infact,inJuneBBVAalreadyhaditsinancingneeds
fullycoveredfor2011;andthecomingyearsithasthelowest
leveloflong-termfundingmaturitiesofanybankinitspeer
group.Itshouldalsobepointedoutthatthesematuritiesare
notconcentratedinanyspeciicperiod.
• ItisworthnotingthatundertheBBVAmanagementmodel
eachbankingsubsidiaryorgroupmustbeself-suicientinits
sourcesoffundingwithinitsrespectivegeographicalarea.
• Finally,itmustbepointedoutthatBBVAdoesnotdependon
theUSmarketforshort-termmarketfunding(oneofthekey
subjectsthisquarter),andithasonlyuseditinthepastwhen
appropriateasacheapsource.
Themostimportantpointwithrespectto generation of earnings
overtheperiodisthecontinuedgrowthofthemostrecurring
income,i.e.grossincomeexcludingdividendsorNTI:
• Therewasnocontributionfromnet trading income (NTI)over
thequarter,whichcharacterizestheproileoftheaccount.TheslightlynegativeNTI(–€25m)canbeexplainedbythelowlevel
ofactivityinWholesaleBankingandthefallinassetpricesover
theperiod.
• Gross incomeforthequarterwas€4,627m.Thefallcompared
with€5,162minthepreviousquarteristheresultofthe
performanceofNTImentionedaboveandthedividendpaidin
MayfromthestakeinTelefónica.ExcludingdividendsandNTI,
thegrossrecurringincomegeneratedbyBBVAbetweenJuly
andSeptemberwas€4,602m,up0.8%quarter-on-quarter.This
givesaigureof€15,052myeartodateand€13,656m(about
91%)excludingNTIordividends.
• Operatingexpensesamountedto€2,461mforthequarter,
slightlybelowtheigureforthesecondquarter.Theeiciency
ratiowas48.5%atthecloseofSeptember,oneofthebest
amongtheBank’sEuropeanpeers.
• Impairment losses on inancial assets,togetherwithallocation
toprovisionsandothergains(losses),remainatasimilarlevel
tothepreviousquarter.
• BetweenJulyandSeptember2011,theGroupobtainedanet
attributable proit of€804m.Thisiguredoesnotincludethe
dividendsfromTelefónica(whicharepaidinthesecondandfourthquarterofeachyear)andhasbeenafectedbythezero
contributionfromNTI.
TheGrouphasmaintaineditsmainrisk indicatorsstableforyet
anotherquarter(theseventhsinceDecember2009).TheNPA
ratioclosed30Sep-2011at4.1%andthecoverageratioat60%.
Withrespecttosolvency,BBVAcontinuestohaveanexcellent
capitalposition.AtthecloseofSeptemberthecoreratiowas9.1%,
supportedbythegenerationofearningsandtheimplementation
ofthe“DividendOption.”
Allthebusiness areashavecontributedpositivelytotheGroup’s
results.Themostsigniicantaspectsforeachofthemaredetailed
below:
Groupinformation
Relevantevents
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4 Groupinformation
customerfundsup27.4%)andearnings.Grossincomeis
up19.0%overthelast12months.Thisfact,combinedwith
outstandingmanagementofassetquality,hasenabledthe
banktocontinuetoinanceexpansionprojectsandtoshow
highratesofgrowthinnetattributableproitwhichreached
€754myeartodate,up11.2%.
• TheUnited States iscontinuingwithitsprocessofchanging
itsloan-bookmix.Inthethirdquarterof2011,thefavorableoutcomeinthenewproductionoftargetportfoliosoflending
hasofsetthereductioninloanstothedevelopersector.
Thisexplainsthequarter-on-quartergrowthof1.6%ingross
customerlendinginthearea.Thefocusincustomerfunds
continuestobeonthoseoflowercost.Themostimportant
aspectinearningscontinuestobetheimprovementinthe
costofrisk.Thenetattributableproitintheareayeartodateis
€218m(up1.5%year-on-year).
Finally,itisimportanttomentionthatadividendof€0.10per
sharewaspaidoutinOctober2011underthe Dividend Option
scheme.ThepercentageofshareholderswhohaveoptedtoreceivenewBBVAshareswasover91%,thusoncemore
conirmingthepopularityofthisnewremunerationprogram.
Economic environment
Globaleconomicgrowthcontinuedinthe third quarter of
2011, thankstotheemergingcountries(EAGLES),anddespite
theslowdownindevelopedeconomies,asshownbythelatest
economicdatapublished.Thishasbeentheresultoftwofactors:
irst,theeortsmadeatthestartofthesummerbyEuropean
authoritieshavenotmanagedtodissipatedoubtsabouttheir
capacitytomanagethedebtcrisis;andsecond,theinancial
turmoilinthedebtmarketshashadaneectontheperception
ofsomesegmentsoftheEuropeaninancialsystem,whereitis
extremelyexposedtothedebtofcountriesindiiculties.
IntheUnited States,growthhasslowedduetothesluggish
recoveryinemploymentandwages,aresidentialconstruction
sectorstilldeepintheprocessofcorrection,andthecontinued
householddeleveragingprocess.Despitepressureatthestartof
thequartertoimplementacredibleprocessofiscalconsolidation,
doubtsaboutthestrengthofeconomicactivityhaveledto
thesearchforabalancebetweenlong-termconsolidationand
theneedtosustaintheeconomyintheshortterm,resultingin
• ThebusinessesinSpain showweaklendingactivityasaresult
ofthe(necessaryandpositive)deleveragingprocessbeing
undertakenintheeconomy.Itisimportanttohighlightthat
theliquiditygapintheareaiscontinuingtoimprove:onthe
onehand,throughtherestrictiononlending;andontheother
hand,duetothepositiveperformanceofdeposits,ascanbe
seenfromthehighrateofcustomerrenewalsoftermdeposits
writtenayearago,despitetheirbeingatasigniicantlylower
interestrate.Asaresult,thequarterlynetinterestincomestillshowsstrongresilience(€1,096mcomparedwiththe
€1,102minthesecondquarter).Thequarterlyfallof13.6%in
grossincome(€4,900myeartodate)canbeexplainedby
theeconomicsituation,thelowlevelofactivityinWholesale
Banking,andthedeclineinassetpricesingeneral,witha
majorimpactonNTI.Thearea’snetattributableproityearto
datestandsat€1,162m.TheNPAandcoverageratiosremain
stable,at4.9%and42%respectivelyasof30Sep-2011.The
IPOsinJulybyCaixaBank,BankiaandBancaCívica,combined
withrecentinterventionsinsomesavingsbanks,havebegun
toclearupuncertaintyintermsoftherestructuringofthe
bankingsector.
• OfparticularnoteinEurasiaisthecontributionofthe
ChinesebankCNCBandthepaymentmadebyBBVAforits
capitalincrease.Twofactorshaveinluencedthedecision
toundertakethisoperation:ontheonehand,theneedfor
it,duetothegreatstrengthofbankingactivity;andonthe
otherhand,thewishesoftheChinesesupervisortomaintain
ahighlysolventpartnersuchasBBVAwiththesamestakeas
beforetheoperation.Thenetattributableproitforthequarter
is€257m,upontheigureof€251mthepreviousquarter.The
yeartodateigureis€705m.
• Mexico continuestopostsustainedqualitygrowthinbusiness
activity,aboveallinconsumerinance,creditcardsand
customerfunds,withinahighlycompetitiveinancialsystem
andinterestratesatall-timelows.Netinterestincomehas
improveditsyear-on-yearrateofgrowth(up6.0%atconstant
exchangerates),whileloan-lossprovisionsremainstableand
thenetattributableproityeartodateis€1,275m(up2.9%at
constantexchangerates).ItisimportanttohighlightthatBBVA
Bancomeristhemostproitablebankwithinitspeergroup,
witharatioofnetinterestincomeoverATAof5.9%.
• South Americacontinuestoperformwell,inbothbusiness
activity(lendingup30.7%year-on-yearandon-balance-sheet
Interest rates
(Quarterlyaverages)
2011 2010
3Q 2Q 1Q 4Q 3Q 2Q 1Q
OicialECBrate 1.50 1.25 1.00 1.00 1.00 1.00 1.00
Euribor3months 1.54 1.44 1.10 1.02 0.87 0.69 0.66
Euribor1year 2.00 2.13 1.74 1.52 1.40 1.25 1.22
USAFederalrates 0.25 0.25 0.25 0.25 0.25 0.25 0.25
TIIE(Mexico) 4.81 4.85 4.85 4.87 4.91 4.94 4.92
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5Relevantevents
biasedtowardsadropinthelendingrateattheendof2011ifthe
economicenvironmentworsens.
Growthcontinuestobeverystrongin South America,whereit
issustainedbydomesticdemandandsupportfromwhatisstill
alaxiscalpolicy.Despitetheslowdowninadvancedeconomies,
commoditypricesremainhigh,whichexplainsthestrengthof
income.
TheChinese economystillappearssound.Althoughtheregionis
alreadynotingtheeectsoftheslowdowncausedbythegreater
weaknessofforeigndemand,mostrecenteconomicdatahave
remainedsolid.Strongunderlyingdomesticdemandandwhatis
stillahighinlationratewillprobablypreventtheapplicationofa
policyofmonetaryeasing,althoughtheauthoritiesareprepared
toact(intheiscalareaaswell)iftheglobalweaknesspersists.
Finally,theTurkisheconomyisgrowingatastrongrate,although
inlationisstillrelativelyhighduetothemajordropinvalueof
theTurkishlirainanenvironmentofhighglobalriskaversion,
whichhasingeneralaectedtheTurkishinancialmarkets.Inanyevent,theCentralBank’stoneshowsitisclearlycommittedtoan
accommodativemonetarypolicy.
Intermsofexchange rates evolution,theinalratesofthe
Mexicanpesohavedepreciatednotably,inbothyear-on-yearand
particularlyquarter-on-quarterterms.Thisisthecurrencywith
thebiggestinluenceontheGroup’sinancialstatements.The
ChileanandColombianpesohavefollowedsuit,althoughtoa
lesserextent.Incontrast,theinalrateoftheUSdollarappreciated
inyear-on-year,andparticularlyquarter-on-quarterterms.This
isthesecondmostimportantcurrencyfortheGroup’sresults.
TherestoftheotherimportantcurrenciesinLatinAmericahave
alsogained.Theexceptionistheyear-on-yeardepreciationof
theArgentineanpeso.Overall,theimpactonboththebalance
sheetandbusinessactivityoverthelastyearandinthequarteris
negative.Thesameistrueforearningsinquarterlyand
year-on-yearterms.
theproposalofmeasuresparticularlygearedtojobcreation.
Meanwhile,theFedhasgivensignsofaccompanyingwithan
accommodativemonetarypolicy.
Theslowdownanddoubtsaboutgrowthhavealsobecome
consolidatedinEurope.Thistimeround,theyalsoaectthe
coreeurozoneareas,whichhaveshownsomeweaknessin
domesticdemand,thoughsofarthishasbeenosetbystrength
intheforeignsector.ThecountriessubjecttoEuropeanUnionandInternationalMonetaryFundprogramscontinuewithmajor
adjustments(exceptinthecaseofIreland,wherethemostrecent
iguressuggestarecovery).Nevertheless,thefocusofattention
isstilltheresolutionofthedebtcrisis,speciicallythemeasures
totaketore-channeltheGreekdebttomoresustainablelevels.
Doubtsinthisrespectareaectingtheinancialsystemofthe
eurozoneandleadingtofundingdiicultiesinthewholesale
markets.Theresurgenceoftensionhasledtoachangeinthe
prospectsofagradualtougheningofmonetarypolicybythe
EuropeanCentralBank(ECB).Infact,theECBhasinterruptedits
cycleofinterest-ratehikesandappearspreparedtocontinuewith
measuresthatsupportliquidity.
InSpain,theadjustmentprocesscontinuesandtheeconomy
hasslowedslightly.Evenso,thestrengthoftheforeignsector
hasosettheweaknessofdomesticdemand.Atthesametime,
thepublicadministrationcontinuestobeimmersedinamajor
processofiscalconsolidation.
Despitetheslowdowninadvancedeconomies,emerging
economiescontinuetogrowsolidlytowardsmoresustainable
levels.InMexico,themostimportantindicators(industrialactivity,
formalemployment,retailsales)remainpositive,sotherateof
growthcouldhavecontinuedinthethirdquarteratlevelsthat
areevenslightlyhigherthanthepreviousquarter.Inlationisnot
aconcern,giventhedomesticenvironmentofcontainedactivity
andmoderateprospectsofglobalgrowth.Monetarypolicyis
thereforerespondingbyalongerpause,andthelendingrate
willremainat4.5%beyond2012.Theuncertaintyisifanything
Exchange rates
(Expressedincurrency/euro)
Yearend exchange rates Average exchange rates
30-09-11 ∆% on
30-09-10 ∆% on
30-06-11∆% on
31-12-10 JanuarySep. 11∆% on
JanuarySep. 10
Mexicanpeso 18.5936 (7.9) (8.7) (11.0) 16.9273 (1.3)
U.S.dollar 1.3503 1.1 7.0 (1.0) 1.4065 (6.5)
Argentineanpeso 5.6773 (3.2) 4.6 (3.4) 5.7510 (9.7)
Chileanpeso 695.41 (4.8) (2.1) (10.1) 666.67 2.5
Colombianpeso 2,583.98 (4.9) (0.5) (1.0) 2,564.10 (2.0)
Peruviannewsol 3.7451 1.6 6.1 0.2 3.8930 (4.4)
Venezuelanbolivarfuerte 5.7991 1.1 7.0 (1.0) 6.0403 (8.1)
Turkishlira 2.5100 (21.1) (6.4) (17.6) 2.2920 (12.8)
Chineseyuan 8.6207 5.9 8.4 2.3 9.1378 (2.1)
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6 Groupinformation
BBVAgeneratedanet attributable proitforthe
thirdquarterof2011of€804m.Therearetwo
mainfactorsthatcharacterizetheaccountsfor
thisperiod:ontheonehand,thezerocontribution
fromNTI;andontheotherhand,thegrowthofthe
mostrecurrentearningsintheGroup,i.e.thegross
incomeexcludingNTIordividends.Thefollowing
shouldbehighlightedinthisrespect:
• Thepositiveperformanceofnet interest
income,whichwasup2.2%inthequarter.This
isduetothepositivecontributionofemerging
marketsandtheresilienceofnetinterest
incomeindevelopedcountries.
• Thegreatercontributionfromnet income
by the equity method,thankstothepositive
performanceofCNCB.
• Asaresult,thequarterlygross income
excludingNTIordividendswas€4,602m,
continuingwiththeupwardtrendsincethe
startoftheyear.
• Finally,bothoperating expenses and
impairment on inancial assetswereatsimilar
levelstothepreviousquarter.
Earnings
Consolidated income statement: quarterly evolution
(Millioneuros)
2011 2010
3Q 2Q 1Q 4Q 3Q 2Q 1Q
Net interest income 3,286 3,215 3,175 3,138 3,245 3,551 3,386
Netfeesandcommissions 1,143 1,167 1,114 1,135 1,130 1,166 1,106
Nettradingincome (25) 336 752 252 519 490 633
Dividendincome 50 259 23 227 45 231 25
Incomebytheequitymethod 150 123 121 124 60 94 57
Otheroperatingincomeandexpenses 22 62 79 70 85 47 93
Gross income 4,627 5,162 5,263 4,946 5,084 5,579 5,301
Operatingcosts (2,461) (2,479) (2,359) (2,325) (2,262) (2,262) (2,118)
Personnelexpenses (1,325) (1,306) (1,276) (1,240) (1,211) (1,215) (1,149)
Generalandadministrativeexpenses (920) (964) (887) (887) (855) (855) (796)
Depreciationandamortization (216) (208) (196) (199) (197) (192) (174)
Operating income 2,166 2,683 2,904 2,621 2,821 3,317 3,183
Impairmentoninancialassets(net) (904) (962) (1,023) (1,112) (1,187) (1,341) (1,078)
Provisions(net) (94) (83) (150) (75) (138) (99) (170)
Othergains(losses) (166) (154) (71) (273) 113 (88) (72)
Income before tax 1,002 1,484 1,659 1,162 1,609 1,789 1,862
Incometax (95) (189) (369) (127) (359) (431) ( 510)
Net income 907 1,295 1,290 1,034 1,250 1,358 1,352
Non-controllinginterests (103) (106) (141) (96) (110) (70) (113)
Net attributable proit 804 1,189 1,150 939 1,140 1,287 1,240
Basic earnings per share (euros) 0.17 0.25 0.25 0.22 0.28 0.32 0.31
Net attributable profit
(Million euros)
(1) At constant exchange rate: –13.3%.
1,240
1Q
1,287
2Q
1,140
3Q
939
4Q
1,189
1Q
–14.3% (1)
2010 2011
1,150
2Q
3,668 3,143
804
3Q
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7Earnings
ofincreasedbusinessinemergingmarkets,as
wellastheappropriatemanagementofspreads
indevelopedcountriesasvolumesofbusiness
fall.Theigureyeartodateis€9,676m.
Inbusinesswithcustomersinthedomestic
sectoroftheeuro area,yieldonloanswasup
Net interest income
TheGroup’squarterlynet interest income
continuestoshowgreatresilience.BetweenJuly
andSeptember2011,ittotaled€3,286m,1.3%up
onthesameperiodlastyearand2.2%abovethe
igureforthepreviousquarter.Thisistheresult
Consolidated income statement
(Millioneuros)
JanuarySep. 11 ∆%∆% at constantexchange rates JanuarySep. 10
Net interest income 9,676 (5.0) (3.0) 10,182
Netfeesandcommissions 3,424 0.7 2.5 3,402
Nettradingincome 1,063 (35.3) (34.0) 1,642
Dividendincome 332 10.2 10.7 302
Incomebytheequitymethod 394 86.6 86.6 211
Otheroperatingincomeandexpenses 163 (27.5) (32.3) 225
Gross income 15,052 (5.7) (4.0) 15,964
Operatingcosts (7,299) 9.9 12.3 (6,642)
Personnelexpenses (3,907) 9.3 11.5 ( 3,575)
Generalandadministrativeexpenses (2,771) 10.6 13.2 (2,506)
Depreciationandamortization (620) 10.4 13.6 (562)
Operating income 7,753 (16.8) (15.6) 9,322
Impairmentoninancialassets(net) (2,890) (19.9) (18.4) (3,606)
Provisions(net) (328) (19.7) (19.2) (408)
Othergains(losses) (391) n.m. n.m. (47)
Income before tax 4,145 (21.2) (20.1) 5,260
Incometax (652) (49.8) (49.0) (1,300)
Net income 3,492 (11.8) (10.6) 3,960
Non-controllinginterests (349) 19.3 24.5 (293)
Net attributable proit 3,143 (14.3) (13.3) 3,668
Basic earnings per share (euros) 0.66 (26.9) n.m. 0.90
Net interest income
(Million euros)
(1) At constant exchange rate: –3.0%.
3,386
1Q
3,551
2Q
3,245
3Q
3,138
4Q
3,215
1Q
–5.0% (1)
2010 2011
3,175
2Q
10,182 9,676
3,286
3Q
Customer spread. Euros domestic sector
(Percentage)
3Q 4Q 1Q 2Q
2010 2011
Customerspread
Cost ofdeposits
Yield on totalnet lending
3Q
3.223.31
3.483.60
1.70
1.53
1.76 1.81
1.52
1.77
1.73 1.80
3.85
2.10
1.75
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8 Groupinformation
Competitivepressureremainshighin South
America.However,buoyantbusinessactivity
meansthatthenetinterestincomeyearto
dateintheareawasup28.4%year-on-yearat
constantexchangerates.
againinthethirdquarterof2011by19basis
pointsto3.50%,whilethecostoffundsslowed
itsrisesigniicantly,andincreasedbyonly8
basispointsto1.72%.Asaresult,thecustomer
spreadwasup11basispointsontheigure
forthesecondquarterof2011to1.78%.This
improvementpracticallyosetstheeectsof
lowerlendingandmoreexpensivewholesale
funding.
InMexico,interbankratesarestilllowand
practicallyatthesamelevelsasatthecloseof
thesecondquarterof2011.Theyieldonloans
hasrisenby14basispointsontheigureatthe
closeofthepreviousquarter,to13.10%,thanks
tothegoodnewproductionigures,aboveall
inconsumerinanceandcreditcards.Deposit
costsincreasedbybarely5basispointsinthe
quarterto1.96%.Thusthecustomerspread
stoodat11.14%atthecloseofthequarter(11.05%
intheirstquarterof2011)andthenetinterest
incomeyeartodateintheareaisup6.0%year-on-yearatconstantexchangerates.
Breakdown of yields and costs
3Q11 2Q 11 1Q11 4Q10 3Q10
% of
ATA
% yield/
Cost
% of
ATA
% yield/
Cost
% of
ATA
% yield/
Cost
% of
ATA
% yield/
Cost
% of
ATA
% yield/
Cost
Cashandbalanceswithcentralbanks 3.8 1.19 3.6 1.25 3.7 1.30 4.0 1.17 4.2 0.99
Financialassetsandderivatives 25.4 2.87 24.3 2.98 24.4 3.03 25.2 2.75 26.0 2.61
Loansandadvancestocreditinstitutions 4.4 2.88 5.3 2.35 4.5 2.23 4.7 1.97 4.2 2.14
Loansandadvancestocustomers 59.7 5.62 60.3 5.42 61.2 5.24 59.9 4.89 59.5 4.86
Euros 38.4 3.50 39.2 3.31 40.0 3.25 39.5 3.12 39.0 3.12
Domestic 33.1 3.85 34.0 3.60 35.4 3.48 35.6 3.31 35.4 3.22
Other 5.2 1.31 5.2 1.41 4.6 1.43 3.9 1.48 3.6 2.10
Foreigncurrencies 21.3 9.44 21.1 9.33 21.3 8.98 20.4 8.31 20.5 8.19
Otherassets 6.7 0.45 6.4 0.37 6.1 0.44 6.2 0.46 6.1 0.43
Total assets 100.0 4.29 100.0 4.19 100.0 4.12 100.0 3.79 100.0 3.73
Depositsfromcentralbanksandcreditinstitutions 14.3 2.73 13.7 2.52 11.3 2.68 12.9 2.15 15.1 1.82
Depositsfromcustomers 48.3 2.17 48.6 2.06 50.6 1.77 48.1 1.63 45.6 1.51Euros 27.3 1.72 26.6 1.64 28.1 1.35 24.6 1.40 22.5 1.23
Domestic 16.6 1.75 17.7 1.80 17.7 1.73 17.3 1.77 16.6 1.52
Other 10.7 1.67 8.9 1.31 10.5 0.72 7.3 0.51 5.8 0.41
Foreigncurrencies 21.0 2.75 22.1 2.57 22.4 2.28 23.4 1.87 23.2 1.78
Debtcertiicatesandsubordinatedliabilities 18.9 2.47 20.3 2.27 20.1 2.15 20.4 2.15 20.6 1.95
Otherliabilities 11.7 0.99 10.7 1.02 11.1 1.29 12.3 0.64 12.8 0.64
Equity 6.8 - 6.7 - 6.9 - 6.3 - 5.9 -
Total liabilities and equity 100.0 2.02 100.0 1.92 100.0 1.77 100.0 1.58 100.0 1.45
Net interest income/Average total assets (ATA) 2.27 2.27 2.35 2.21 2.28
Net interest income/ATABBVA Group (Percentage)
3Q 4Q 1Q 3Q
2010 2011
2.28 2.21 2.272.35
2Q
2.27
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9Earnings
fallinassetvalues,reducedcustomeractivity
andthelackofearningsfromportfoliosales.As
aresult,thisitemamountedtoanaccumulated
igureof€1,063mtoSeptember(€1,642mayear
ago).
Dividendincome,whichbasicallyincludes
incomefromBBVA’sholdinginTelefónica,
amountedto€332m,10.2%uponthesameperiodin2010.However,itisimportanttonote
thattheTelefónicaremunerationispaidinthe
secondandfourthquartersof2011.
Income by the equity methodcontinueswithits
positivetrend,withyear-on-yeargrowthof86.6%
to€394m,thanksbasicallytothesigniicant
contributionfromCNCB.
Finally,theitemofother operating income and
expensesamountedto€163m,down27.5%
comparedwiththesameperiodlastyear.Thisfallistheresultofboth,thehyperinlationin
Venezuelaandtheincreasedallocationtothe
depositguaranteefund(up21.8%year-on-year),
whichhavenotbeenosetbythepositive
performanceofincomefromtheinsurance
business(up13.9%).
Tosumup,thestrongresilienceoftheGroup’s
recurringearnings,togetherwiththenegative
iguresfromNTI,combinetoexplainwhythe
gross incomeyeartodateis5.7%downon
theigure12monthspreviously,at€15,052m.
However,itisimportanttopointoutBBVA’s
highcapacitytogeneraterecurringrevenues
quarterafterquarter.Thequarterlygross
incomenetofNTIanddividendsamountedto
€4,602m,ayear-on-yearincreaseof1.8%anda
quarterlyincreaseof0.8%.Intheyeartodate
igures,therecurringgrossincomeexcluding
NTIanddividendsamountedto€13,656m,2.6%
downonthesameperiodin2010.Thisisdue
toacustomer-centricretailmodelthatuses
technologyasleverageandishighlydiversiied
geographically,withtheemergingcountries
gainingincreasingweight.
Operating income
Operating expensesamountedto€7,299myear
todate,slowingtheirrateofyear-on-yeargrowth
to9.9%.Thisitemcontinuestobeinluencedby
theGroup’sinvestmentsinemergingcountries,
ininfrastructure,initsnewtechnological
platformandbrandimage.
Finally,intheUnited Statesnetinterestincome
betweenJulyandSeptember2011remained
atsimilarlevelstothoseoftheprevioustwo
quartersatconstantexchangerates,despitethe
continuedincreaseintheproportionoflower
riskloans,andthusloweryield.Theaboveisthe
resultofcontinuinggoodpricemanagementby
BBVACompass.
Gross income
Fees and commissionsamountto€3,424myear
todate,practicallythesame(up0.7%)asfor
thesameperiodin2010.Therewasapositive
contributionfromtheTurkishbankGaranti,
andgoodiguresfromthebankingbusiness
fees,whichwereup1.4%year-on-year.However,
feesfromthefundmanagementbusinesswere
down1.1%duetotheadversemarketconditions.
Thenegativeperformanceof NTIoverthe
quartercanbeexplainedbyvariousfactors:a
Gross income
(Million euros)
(1) At constant exchange rate: –4.0%.
5,301
1Q
5,579
2Q
5,084
3Q
4,946
4Q
5,162
1Q
–5.7% (1)
2010 2011
5,263
2Q
15,964 15,052
4,627
3Q
Gross income net of NTI and dividends
(Million euros)
(1) At constant exchange rate: –0.8%.
4,643
1Q
4,858
2Q
4,520
3Q
4,467
4Q
4,566
1Q
–2.6% (1)
2010 2011
4,488
2Q
14,020 13,656
4,601
3Q
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10 Groupinformation
Asof30Sep-2011therewere18,192units,9.5%up
year-on-yearand1.9%upquarter-on-quarter.
Tosumup,thistrendinincomeandcosts
hasresultedinanoperating incomeyearto
date(30-Sep-2011)of€7,753m(€9,322min
January-September2010).Excludingtheleast
recurringincome,NTIanddividends,this
figureis€6,358m,13.8%downonthatayear
ago.
AtthecloseofSeptember,theBankemployed
110,625people,ayear-on-yearincreaseof5.1%
andaquarter-on-quarterincreaseof0.9%.The
branch networknumbered7,436unitsasof
30Sep-2011,9morethanatthecloseofJune
and74morethantheigurefor30Sep-2010.
Theincreaseistheresultoftheexpansion
processundertakeninemergingcountries
(basicallyMexicoandSouthAmerica).Finally,
thereistheongoingincreasein ATMnumbers.
Breakdown of operating costs and eiciency calculation
(Millioneuros)
JanuarySep. 11 ∆% JanuarySep. 10 2010
Personnel expenses 3,907 9.3 3,575 4,814
Wagesandsalaries 3,003 8.7 2,763 3,740
Employeewelfareexpenses 567 10.3 514 689
Trainingexpensesandother 337 13.0 298 386
General and administrative expenses 2,771 10.6 2,506 3,392
Premises 633 12.7 562 750
IT 462 8.9 424 563
Communications 223 6.4 209 284
Advertisingandpublicity 271 8.2 250 345
Corporateexpenses 77 19.1 65 89
Otherexpenses 829 8.1 767 1,040
Leviesandtaxes 276 20.8 228 322
Administration costs 6,678 9.8 6,080 8,207
Depreciation and amortization 620 10.4 562 761
Operating costs 7,299 9.9 6,642 8,967
Gross income 15,052 (5.7) 15,964 20,910
Eiciency ratio (Operating costs/Gross income, in %) 48.5 16.5 41.6 42.9
Operating costs
(Million euros)
(1) At constant exchange rate: +12.3%.
2,118
1Q
2,262
2Q
2,262
3Q
2,325
4Q
2,359
1Q
+9.9% (1)
2010 2011
2Q
6,642 7,299
2,479
3Q
2,461
January-Sep.2010
January-Sep.2011
2010
15,964
20,910
15,052
6,6428,967
7,299
January-Sep.2010
January-Sep.2011
2010
41.642.9
48.5
Efficiency
Grossincome
Operatingcost
(Million euros) (Percentage)
Efficiency ratio
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11Earnings
to€2,890m,ayear-on-yearreductionof19.9%.
Asaresult,theGroup’sriskpremiumhas
improvedby8basispointsoverthequarterto
1.01%,andthecoveragerationowstandsat60%.
Provisionsamountto€328m,19.7%downon
lastyear.Theybasicallyincludeprovisionsfor
earlyretirements,othercontributionstopension
fundsandcontingentliabilitiesprovisions.
Other gains (losses)standatanegative€391m,
comparedwithlossesof€47mlastyear.These
lossesaremainlyrelatedtoprovisionsonreal
estateandforeclosedassetswiththeaimof
maintainingcoverageatlevelsofover30%.
Finally,therewasalsoalowtaxchargethis
quarter,mainlyduetothelowerNTI,revenues
withloworzerotaxrates(basicallydividends
andequityaccountedearnings),andthe
higherproportionofresultscomingfrom
TheAmericasandGaranti,whichcarryalow
effectivetaxrate.
Provisions and others
Impairment losses on inancial assetscontinue
toshowaslightdecreaseontheprevious
quarter.UpuntilSeptember2011theyamounted
Operating income
(Million euros)
(1) At constant exchange rate: –15.6%.
3,183
1Q
3,317
2Q
2,821
3Q
2,621
4Q
2,904
1Q
–16.8% (1)
2010 2011
2Q
9,322 7,753
2,683
3Q
2,166
, ,, ,
, ,
, ,, ,
, ,
, , , ,, ,
, , , , , ,
18,192
September2011
5,258
7,293
4,540
1,101
16,619
September2010
5,061
6,558
3,910
1,090
17,055
December2010
5,138
6,760
4,079
1,078
Number of ATMs (1)
Spain
Mexico
South America
The United States
(1) Excluding Garanti.
105,265
September2010
, , , ,, ,
, , , ,, ,
, , , , , ,
, , , , , ,
, , , , , ,
106,976
December2010
110,625
September2011
28,629 28,41629,132
33,169 34,082 35,538
28,886 29,608 30,690
12,609 12,863 12,991
Number of employees (1)
Spain
Mexico
South America
The United States
Rest of the world
(1) Excluding Garanti.
7,362
September2010
7,361
December2010
7,436
September2011
3,024 3,024 3,018
1,985 1,985 1,999
1,457 1,456 1,545
752 752 745
Number of branches (1)
Spain
Mexico
South America
The United States
Rest of the world
(1) Excluding Garanti.
Impairment losses on financial assets
(Million euros)
(1) At constant exchange rate: –18.4%.
1,078
1Q
1,341
2Q
1,187
3Q
1,112
4Q
962
1Q
–19.9% (1)
2010 2011
1,023
2Q
3,606 2,890
904
3Q
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12 Groupinformation
intheGroup’sshareholders’fundshasledtoa
2.1%year-on-yearincreaseinthebookvalueper
shareto€8.61.Finally,ROEwas11.3%andreturn
onaverageassets( ROA)0.83%,makingBBVA
oneofthemostproitablebanksinitspeer
group.
Net attributable proit
Inconclusion,thepositiveperformanceof
recurringrevenuesandloan-lossprovisions
hasallowedtheBBVAGrouptocontinue
withitsexpansionplansdesignedtolaythe
foundationsforfuturegrowthwhilegenerating
anetattributableproitof€804minthe
secondquarterand€3,143myeartodate.
Thisperformanceisinanadversemarket
environment,despitewhichallthebusiness
areasaregeneratingpositiveresults.Inthis
regard,Spaingenerated€1,162myeartodate,
Eurasia€705m,Mexico€1,275m,SouthAmerica
€754m,andtheUnitedStates€218m.
Earnings per share(EPS)yeartodate
(30Sep-2011)stoodat€0.66compared
with€0.90inthesameperiodin2010,after
correctingfortheeectsofthecapitalincreases
inNovember2010andApril2011.Theincrease
Earnings per share
(Euros)
0.31
1Q
0.32
2Q
0.28
3Q
0.22
4Q
0.25
1Q
–26.9%
2010 2011
0.25
2Q
0.90 0.66
0.17
3Q
ROE
(Percentage)
January-September2010
2010 January-September2011
17.215.8
11.3
ROA
(Percentage)
0.950.89
0.83
January-September2010
2010 January-September2011
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13Balancesheetandbusinessactivity
Atthecloseofthe third quarter of 2011,BBVA’s
balancesheetcontinuestoshowgreatstability,at€584billion.ThemainfeaturesoftheGroup’s
balancesheetandbusinessactivityinthis
periodcanbesummedupasfollows:
• Giventhecurrenteconomicandinancial
situation,itisimportanttostressthatBBVAhasasoundbalance sheetwithlittleleverageand
its2011fundingrequirementscovered.For2012
theserequirementsarethelowestamongits
Balancesheetandbusinessactivity
Consolidated balance sheet
(Millioneuros)
30-09-11 ∆% 30-09-10 30-06-11 31-12-10
Cashandbalanceswithcentralbanks 24,637 18.2 20,836 21,369 19,981
Financialassetsheldfortrading 74,859 8.0 69,306 63,421 63,283
Otherinancialassetsdesignatedatfairvaluethroughproitorloss 2,825 4.4 2,706 2,912 2,774
Available-for-saleinancialassets 58,768 2.1 57,558 60,599 56,457
Loansandreceivables 369,919 2.5 360,762 371,314 364,707
Loansandadvancestocreditinstitutions 23,756 (4.4) 24,846 22,890 23,636
Loansandadvancestocustomers 343,416 2.9 333,741 346,222 338,857
Other 2,747 26.3 2,175 2,202 2,213
Held-to-maturityinvestments 11,049 11.9 9,877 9,334 9,946
Investmentsinentitiesaccountedforusingtheequitymethod 5,352 25.9 4,250 4,518 4,547
Tangibleassets 7,026 6.6 6,593 6,965 6,701
Intangibleassets 10,068 29.3 7,785 9,722 8,007
Otherassets 19,935 10.2 18,087 18,551 16,336
Total assets 584,438 4.8 557,761 568,705 552,738
Financialliabilitiesheldfortrading 50,616 6.1 47,706 34,686 37,212
Otherinancialliabilitiesatfairvaluethroughproitorloss 1,716 9.7 1,565 1,815 1,607
Financialliabilitiesatamortizedcost 468,494 3.9 450,843 471,248 453,164
Depositsfromcentralbanksandcreditinstitutions 80,072 6.4 75,225 80,545 68,180
Depositsfromcustomers 282,050 10.3 255,798 278,496 275,789
Debtcertiicates 83,107 (12.0) 94,394 86,669 85,180
Mortgagebondsandcoveredbonds 44,263 15.2 38,436 44,784 40,246
Otherdebtcertiicates 38,844 (30.6) 55,957 41,885 44,933
Subordinatedliabilities 16,067 (13.4) 18,553 17,586 17,420
Otherinancialliabilities 7,198 4.7 6,873 7,948 6,596
Liabilitiesunderinsurancecontracts 7,478 (6.1) 7,961 7,607 8,033
Otherliabilities 16,265 (3.1) 16,777 15,705 15,246
Total liabilities 544,569 3.8 524,852 531,062 515,262
Non-controllinginterests 1,730 21.3 1,426 1,562 1,556
Valuationadjustments (3,414) n.m. (128) (2,596) (770)
Shareholders’funds 41,552 31.5 31,610 38,677 36,689
Total equity 39,868 21.1 32,909 37,643 37,475
Total equity and liabilities 584,438 4.8 557,761 568,705 552,738
Memorandum item:
Contingentliabilities 38,530 13.9 33,819 36,360 36,441
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15Balancesheetandbusinessactivity
Customer lending (gross)
(Billion euros)
343
September2010
331
September2009
352
September2011
(1) At constant exchange rate: +5.3%.
+2.8% (1)
andresidentialrealestatehavemorethanoset
thefallinloanstothedevelopersector.This
indicatesthattheshiftinthemixtowardsamoresustainablebalancesheetisbeingcompleted.In
Eurasiatheloanbookgrewby45.4%
year-on-year,duepartlytotheincorporation
oftheTurkishbankGarantianditspositive
performanceinlending,andalsototheslight
riseinCorporateandInvestmentBanking(up
3.0%inthequarter).Finally,inSpain(andinline
withtherestofthesystem)therewasafallof
2.4%comparedwithSeptemberlastyear,dueto
thedeleveragingprocessmentionedabove.
Withinthedomesticsector,thegeneraltoneis
weaknessinnewproduction,aboveallinthose
itemsthataremostcloselyrelatedtocorporate
andbusinessactivity(corporatelending,
inancialleasingandothertermloans).Secured
loans,whicharethosewiththebiggestrelative
weightandlowestassociatedrisk,showeda
notablestabilitycomparedwiththecloseof
30Jun-2011,atatotalof€102billionasof
30Sep-2011.
Inthenondomestic sector,theannualincrease
of13.9%isduetothestrengthofbusiness
activity,particularlyinSouthAmerica,andthe
additionofGaranti.Theeectofexchangerates
wasnegative.
Finally,NPAhaveremainedstablesince
December2009.
Customer funds
Thebalanceofcustomerfundsasof30Sep-2011
was€419billion,ayear-on-yearincreaseof5.0%.
O-balance-sheetfundsperformedworst,witha
fallof4.4%.Theywerestronglyhitbythecurrent
turmoilinthemarkets.
Onbalancesheet customer fundstotaled
€282billionasof30Sep-2011(up10.3%
year-on-year).Ofnoteherewasthegood
performanceoftimedepositsinthedomestic
sectorthankstothehighratioofrenewalsover
thequarterofthetimedepositsgatheredayear
ago.Asaresult,thislineitemgrewby7.5%
Customer funds
(Millioneuros)
30-09-11 ∆% 30-09-10 30-06-11 31-12-10
Deposits from customers 282,050 10.3 255,798 278,496 275,789
Domestic sector 146,284 33.2 109,848 135,420 133,629
Publicsector 30,672 n.m. 7,409 24,905 17,412
Otherdomesticsectors 115,612 12.9 102,438 110,515 116,217
Currentandsavingsaccounts 42,215 (7.7) 45,740 44,061 43,225
Timedeposits 51,182 7.5 47,599 52,188 49,160
Assetssoldunderrepurchaseagreementandother 22,215 144.1 9,100 14,266 23,832
Nondomestic sector 135,766 (7.0) 145,951 143,076 142,159
Currentandsavingsaccounts 78,127 15.0 67,930 75,002 74,681
Timedeposits 54,958 (25.4) 73,697 63,320 61,626
Assetssoldunderrepurchaseagreementandother 2,681 (38.0) 4,324 4,754 5,852
Other customer funds 136,588 (4.4) 142,902 144,175 146,188
Mutualfunds 38,361 (9.6) 42,422 40,527 41,991
Pensionfunds 73,870 (2.2) 75,567 77,051 78,763
Customerportfolios 24,357 (2.2) 24,913 26,596 25,434
Total customer funds 418,638 5.0 398,700 422,672 421,977
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16 Groupinformation
year-on-year.Combinedwiththefallinthe
loan-bookinSpain,ithascontributedtothe
steadynarrowingoftheliquiditygapinBBVA’sbalancesheet.Inaddition,customerdeposits
inthenon-domesticsectorhavefallenby7.0%
year-on-year,basicallyduetothenegative
impactofexchangerates.
Obalance sheet customerfundsclosedthe
thirdquarterat€137billion,4.4%downonthe
igureforthesamedatelastyear,and5.3%down
onthecloseofthepreviousquarter.Ofthese
funds,36.8%(€50billion)arelocatedinSpain,a
year-on-yeardropof8.4%andadeclineof3.9%
overthequarter.Thiscanbeexplainedlargely
duetothereductioninthevalueoftheassets
undermanagement,mainlyinmutualfunds
(down16.4%year-on-yearand3.6%
quarter-on-quarter).Itisworthpointingout
thataccordingtothelatestdatafromAugust
2011theeectofthisfallinBBVAismuchless
signiicantthanintherestofthesystem,given
themoreconservativeproileofitsmutual
funds.Inthethirdquarterof2011,thereal-estate
fundBBVAPropiedadchangeditslegalstatus
andbecameapubliccorporation( sociedad
anónima),whichmeansthatitisnolonger
accountedforasamutualfund.Becauseofthis,
thepreviousdatahavebeenrestatedtoensure
thattheyarecomparable.Pensionfundstotaled
€17billion(down1.6%year-on-yearand1.4%
quarter-on-quarter).BBVAhasmaintainedits
positionastheleadingpensionfundmanager
inSpain,withamarketshareof18.3%(June2011
data,thelatestavailable).
Intherestoftheworld,o-balance-sheetfunds
totaled€86billion,withayear-on-yearfallof2.0%atcurrentexchangerates.Thesefunds
werealsoaectedbythefallinthevalueof
assetsundermanagement.
Statement of changes in equity
Asof30Sep-2011,BBVA’s equitytotaled
€39,868m,ariseoverthequarterof5.9%,despite
thenegativeeectoftheexchangerate.Thiswas
thecombinedresultoftheearningsgenerated
inthequarter,thenewimplementationofthe
dividendoptionschemeandtheconversionof
theconvertiblebondintosharesinJuly2011.
Other customer funds
(Millioneuros)
30-09-11 ∆% 30-09-10 30-06-11 31-12-10
Spain 50,225 (8.4) 54,802 52,254 52,482
Mutualfunds 20,220 (16.4) 24,179 20,966 22,316
Pensionfunds 16,741 (1.6) 17,019 16,986 16,811
Individualpensionplans 9,600 (2.6) 9,856 9,799 9,647
Corporatepensionfunds 7,141 (0.3) 7,162 7,186 7,164
Customerportfolios 13,265 (2.5) 13,604 14,302 13,355
Rest of the world 86,363 (2.0) 88,100 91,922 93,707
Mutualfundsandinvestmentcompanies 18,141 (0.6) 18,243 19,562 19,675
Pensionfunds 57,129 (2.4) 58,548 60,066 61,952
Customerportfolios 11,092 (1.9) 11,309 12,294 12,080
Other customer funds 136,588 (4.4) 142,902 144,175 146,188
398
September2010
382
September2009
418
September2011
+5.0% (1)
142133
136
255249282
Customer funds
(Billion euros)
(1) At constant exchange rate: +5.4%.
Other
customerfunds
Customer
funds on
balance
sheet
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17Capitalbase
Asof30Sep-2011,theBBVAGroup’scapital base,
calculatedaccordingtotheBISIIregulation,totaled
€41,120m,averysimilarigureto30June-2011
(down0.3%).Themostsigniicantdierencesin
thequarterinclude:anincreaseincorecapitalof
€855m,explainedbythegenerationofearnings
intheperiod,andthehigherdeductionfromthe
investmentmadeinCNCB.Inaddition,therewas
signiicantmovementincurrenciesinthequarter,
speciicallythedepreciationoftheMexicanpeso,
whichhashadanegativeimpactonthecapital
base.
Riskweighted assets(RWAs)wereup1.3%
inthequarterto€325,458m.Thisgrowth
isfundamentallyexplainedbythestrong
performanceofactivityinLatinAmerica
andbytheappreciationofthedollarand
othercurrenciesinSouthAmerica.Another
dierentiatingkeyqualityaspectofBBVAversus
itsEuropeanpeersisthehighRWAdensityand
itsstabilitythroughtime.
Theminimum capital requirements(8%of
RWA)totaled€26,037m,makingthecapital
basesurplusatthecloseofSeptemberreach
€15,083m,thatis,57.9%abovetheminimum
requiredlevels.
Asof30Sep-2011,core capitalwasup3.0%with
respecttotheJune2011igureandamountedto
Capitalbase
Capital base (BIS II Regulation)
(Millioneuros)
30-09-11 30-06-11 31-03-11 31-12-10 30-09-10
Shareholders'funds 41,552 38,677 38,107 36,689 31,610
Adjustmentsanddeductions (11,923) (11,904) (11,654) (8,592) (8,642)
Mandatoryconvertiblebonds - 2,000 2,000 2,000 2,000
Core capital 29,628 28,773 28,452 30,097 24,969
Preferenceshares 5,157 5,114 5,128 5,164 5,165
Deductions (2,733) (2,452) (2,367) (2,239) (1,900)
Capital (Tier I) 32,053 31,435 31,214 33,023 28,234
Subordinateddebtandother 11,800 12,266 12,613 12,140 12,955
Deductions (2,733) (2,452) (2,367) (2,239) (1,900)
Other eligible capital (Tier II) 9,067 9,814 10,246 9,901 11,055
Capital base 41,120 41,249 41,460 42,924 39,289
Minimumcapitalrequirement(BISIIRegulation) 26,037 25,703 25,523 25,066 24,506
Capital surplus 15,083 15,547 15,937 17,858 14,783
Riskweighted assets 325,458 321,282 319,044 313,327 306,319
BIS ratio (%) 12.6 12.8 13.0 13.7 12.8
Core capital (%) 9.1 9.0 8.9 9.6 8.2
Tier I (%) 9.8 9.8 9.8 10.5 9.2
Tier II (%) 2.8 3.1 3.2 3.2 3.6
RWA’s / Total assets
(Percentage)
September2008
September2009
September2010
December2007
September2011
53.5 53.3 54.1 54.9 55.7
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18 Groupinformation
andinsuranceentities,standsat€9,067m.This
representsa7.6%decreaseinthequarterdue
totheinvestmentinCNCBandtothefallin
unrealizedcapitalgains.
Tosumup,theBISratioasof30September-2011
was12.6%withaclearpositiveevolutioninthe
qualityofitscomponentssincethestartofthe
crisis.
Ratings
Severalactionsweretakenontheratingsin
EuropeinOctober.InSpain,Fitchdowngraded
thesovereign(KingdomofSpain)bytwo
notches,fromAAtoAA–withanegativeoutlook,
whichresultedinactionsfortheSpanish
bankingsystem.BBVA’sratingdecreasedtoA+
fromAA–.Likewise,Standard&Poor’suniversally
downgradeditsratingsfortheSpanishbankingsystem.BBVA’sratingfelltoAA–fromAA,with
anegativeoutlook.Thesovereignratingwas
alsodowngradedtothesamelevelasthatof
BBVA.Inlinewiththeothertworatingagencies,
Moody’scompletedinOctoberitsSpanish
sovereignratingrevision,whichimpliedatwo
notchdowngradetoA1(negativeoutlook).This
actionhasalsohadadirectimpactonSpanish
banks’ratings.BBVA’sratingwasdowngraded
onenotchtoAa3(negativeoutlook).Thisrating
isonenotchaheadofthesovereignone.
€29,628m,andacoreratioof9.1%.Theorganic
generationofcapitalinthequarterwas15
basispoints,netoftheimpactofthecurrency
evolutionandotherfactors.
TheTier Iratio,9.8%,fellwithrespectto
30Jun-2011by6basispoints.Thelevelof
preferencesharesissimilartothatinthe
previousquarter,at€5,157m,or16.0%oftotalbankcapital.
Therestoftheeligiblecapital, Tier II,which
mainlyconsistsofsubordinateddebt,surplus
genericprovisions,eligibleunrealizedcapital
gainsandthedeductionforholdingsininancial
Ratings
Long term Short term Financial strength Outlook
Moody’s Aa3 P1 B– Negative
Fitch A+ F1+ B Negative
Standard&Poor’s AA– A1+ – Negative
Capital base: BIS II ratio
(Percentage)
Tier II
Core capital
Tier I
December2007
13.0
5.8
7.3
5.7
September2008
12.3
6.4
7.8
4.5
September2009
13.4
8.0
9.4
4.1
September2010
12.8
8.2
9.2
3.6
September2011
12.6
9.1
9.8
2.8
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19Riskmanagement
Credit risk
The third quarter of 2011oncemorefeatured
stabilityinthemainindicatorsofcreditquality
withrespecttothecloseof2010.TheNPAratio
closedat4.1%,thecoverageratioat60%andthe
riskpremiumforthequarterstoodat1.01%.
AsofSeptember30,2011,thevolumeoftotal
riskswithcustomers(includingcontingent
liabilities)totaled€390,723m,whichisvery
similartotheigurefromthepreviousquarter
(€391,380m).Thislatdevelopmentisexplained
inpartbythedepreciationofthemaincurrencies
againsttheeuro(atconstantexchangerates,
lendingfell0.1%inthequarter)andalsobythe
deleveragingprocessobservedinSpain.This
trendmightincreaseinthecomingmonths,
thoughBBVAwillbeaectedtoalesserdegree
thanthesystemaverage.
Nonperforming loans haveremainedstable
sinceDecember2009andreached€15,970m.
Therehasbeenadecreaseinnew
Riskmanagement
Variations in nonperforming assets
(Millioneuros)
3Q11 2Q11 1Q11 4Q10 3Q10
Beginning balace 15,790 15,528 15,685 15,560 16,137
Entries 2,918 3,713 2,804 3,852 3,051
Recoveries (1,874) (2,484) (1,882) (2,479) (2,116)
Net variation 1,044 1,229 922 1,373 935
Write-os (876) (939) (1,140) (1,269) (1,119)
Exchangeratedierencesandother 12 (28) 61 21 (393)
Periodend balance 15,970 15,790 15,528 15,685 15,560
Memorandum item:
Non-performingloans 15,689 15,515 15,210 15,361 15,218
Non-performingcontingentliabilities 281 275 319 324 342
Credit risk management (1)
(Millioneuros)
30-09-11 30-06-11 31-03-11 31-12-10 30-09-10
Non-performingassets 15,970 15,790 15,528 15,685 15,560
Totalrisks 390,723 391,380 383,043 384,069 376,421
Provisions 9,503 9,576 9,490 9,655 9,641
Speciic 6,584 6,485 6,516 6,823 6,552
Genericandcountry-risk 2,919 3,090 2,974 2,832 3,089
NPAratio(%) 4.1 4.0 4 .1 4.1 4.1
NPAcoverageratio(%) 60 61 61 62 62
(1)Includingcontingentliabilities.
Non-performing assets
(Million euros)
15,970
September2011
December2010
15,685
March2011
15,528
September2010
15,560
+1.1%15,790
June2011
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20 Groupinformation
improvedto140%inSouthAmerica(138%asof
30Jun-2011).Inturn,itfellinEurasiato118%(144%
asof30Jun-2011)andto128%inMexico(134%as
of30Jun-2011).Additionally,itisworthnotingthat
58.9%oftheGroup’srisksarecollateralized.
Economic capital
Attributableeconomicriskcapital(ERC)
consumptionamountedto€28,946masof
30Sep-2011,7.2%upontheigureasof
30Jun-2011.Thisincreaseisduetothe
recalibrationofthecreditriskmodelsinSpainin
themonthofAugust.
AsistobeexpectedfromBBVA’sproile,most
ofthisigure(64.3%)iscreditriskonportfolios
originatedintheGroup’sbranchnetworkfromits
owncustomerbase.
Marketriskcontinuestobetheleastrelevant
item(1.8%),giventhenatureofBBVA’sbusiness
anditspolicyofminimalproprietarytrading.It
remainsatasimilarleveltothepreviousquarter.
Equityrisk(10.1%)basicallyrelectstheportfolio
ofHoldingsinIndustrial&FinancialCompanies
andthestakeinCNCB.Itslevelisalsosimilar
tothatatthecloseofthepreviousquarter.Thestructuralbalance-sheetrisk,originatingfromthe
managementoftheGroup’sstructuralinterest-rate
riskandexchange-raterisk,stoodat7.7%.Finally,
operationalriskstoodat6.9%oftotalERC.
non-performingassetswithrespecttothe
previousquarter,aswellasinrecoveries.The
latter,however,isdueprimarilytotheseasonal
natureofthisperiod,especiallyconsideringthe
summervacationperiodinSpain.Nevertheless,
therateofrecoveriesovernewNPAremainsata
solidlevel(64.2%).
TheNPA ratio oftheGroupstoodat4.1%and
remainedinastablerangewithrespectto
recentquarters.Brokendownbybusinessarea,
theNPAratioroseslightlyinSpain,Mexicoand
Eurasia.ThisvariationinSpainisduetothe
aforementioneddecreaseinlending,astheNPA
asof30Sep-2011remainedstableascompared
totheigureasof30Jun-2011.TheUnitedStates
maintaineditsdownwardtrendintheNPAratio,
andSouthAmericaclosedanotherquarterwith
animprovementof9basispointswithrespectto
theigureforJune2011.
Coverage provisionsforriskswithcustomers
amountedto€9,503m,averysimilarigureto
thatfromthesecondquarteroftheyear.Ofthis
total,genericprovisionsreached2,886mand
represented30.4%.
Finally,theNPA coverage ratio stoodat60%,whichissimilartothatofthepreviousquarter.By
businessarea,itstoodat42%inSpain(43%atthe
endofthepreviousquarter),itincreasedto69%
intheUnitedStates(67%asof30Jun-2011)and
September2011
December2010
March2011
June2011
September2010
62 62 61 61 60
4.1 4.1 4.1 4.0 4.1
NPA and coverage ratios
(Percentage)
NPA ratio
Coverageratio
Recoveries over entries to NPA
(Percentage)
4Q 1Q 2Q
2010
3Q 3Q
2011
69.4
64.467.1 66.9
64.2
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21TheBBVAshare
Therewasrenewedturmoilintheixed-incomeandequity
marketsinthethirdquarterof2011,mainlyduetothedeepening
sovereigndebtcrisisandworseningexpectationsofeconomic
growth,bothinEuropeandglobally.Thishasledtoriskaversion,
mainlyfocusedontheeurozone,andasigniicantfallinthemain
stock market indices. TheIbex35wasdownby17.5%,inlinewith
thedropintheStoxx50,whichlost15.7%.Theperformanceofthe
U.S.marketwassimilar,withtheS&P500indexlosing14.3%.
TheEuropean banking sectorwasaectedbothbythe
perceptionofsovereignriskandbyinancialpressuredueto
uncertaintyregardingthescopeandpossiblesolutionofthe
Europeancrisis.Inthisenvironment,thebankswithlower
exposuretoperipheralcountriesdebtandbettermanagement
oftheirliquidityandbalancesheethaveperformedbetteronthe
equitymarkets.Thekeystockmarketindicatorforthesector,the
StoxxBanksindexofEuropeanbanks,wasdown27.9%.
BBVA’s resultsforthesecondquarterof2011werebetterthanthe
consensusestimatesandwerefavorablyreceived.Analystsvalue
thefactorsthatsetBBVAapart,aboveallintermsofcreditquality,
thepotentialofitsinternationalbusinessanditssolidcapitalbase.
TheyalsocontinuetovaluethestrengthofitsearningsinMexico
andSouthAmerica.Elsewhere,theyhavealsovaluedpositively
theimprovedmarginsintheUnitedStatesfranchise,aswellas
BBVA’sstableNPAratiosinSpain,whereithasperformedbetter
thanitsdomesticcompetitors.
TheBBVA sharewasdown23.6%inthequarter,closingat
€6.18pershare,resultinginamarketcapitalizationof€29,817
million.Thisputstheprice/bookvalueratioat0.7,theP/Eratio
(calculatedonestimatedmedianearningsfor2011according
totheconsensusamongBloomberganalysts)at6.5,andthe
dividendyield(alsocalculatedonthemediandividendsper
shareestimatedbyanalystsfor2011ascomparedtothequoted
priceasofSeptember30)at6.8%.ThefallintheBBVAshare
pricewasgreaterthanthatregisteredbytheIbex,butbelowthe
performanceofthesectorinEurope(StoxxBankswasdown
27.9%)andtheeurozone(EuroStoxxBanksdown34.3%).In
thecurrentenvironmentofmacroeconomicweaknessandthe
diicultaccesstoinance,themarkethasvaluedtheproileof
BBVA’sresults,itsdiversiicationviaemergingmarketsandthe
advantagesofaretailcustomer-centricbusiness.
Inthethirdquarteroftheyear,theaveragedaily trading volume
was70millionshares,withanaveragevalueof€475million.
Intermsofshareholder remuneration,onSeptember15a
dividendpayoutwasannouncedof€0.10pershare(up11.0%
comparedwiththeequivalentdividendpaymentlastyear)as
partofthe“dividendoption”systemofflexibleremuneration
agreedattheGeneralShareholdersMeetingon11-Mar-2011.
Thisplanoffersshareholdersthechancetoreceiveanamount
equivalenttooneofthetraditionalinterimdividendsfor2011
ineithernewordinarysharesorincash.ThepercentageofshareholderswhohaveoptedtoreceivenewBBVAshareswas
over91%,whichoncemoreconfirmsthepopularityofthisnew
remunerationprogram.
TheBBVAshare
The BBVA share and share performance ratios
30-09-11 30-06-11
Numberofshareholders 981,348 921,650
Numb er ofshares issued 4 ,824,793,497 4 ,551,602 ,570
Dailyaveragenumberofsharestraded 69,688,609 47,764,365
Dailyaveragetrading(millioneuros) 475 387
Maximumprice(euros) 8.38 8.95
Minimumprice(euros) 5.03 7.34
Closingprice(euros) 6.18 8.09
Bookvaluepershare(euros) 8.61 8.50
Marketcapitalization(millioneuros) 29,817 36,822
Price/Bookvalue(times) 0.7 1.0
PER(Price/Earnings;times) 6.5 7.7
Yield(Dividend/Price;%) 6.8 5.2
Share price index
(30-09-10=100)
3 1-1 2-10 3 1- 03 -1130-09-10 30-06-11 30-09-11
Stoxx 50
BBVA
Europe Stoxx
Banks
50
60
70
80
90
100
110
120
130
140
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22 Groupinformation
AtBBVAweareconcernednotonlyabouthowwespendthe
moneyweearn,butaboveallhowweearnit.Thatiswhywe
areworkingtointegratecorporateresponsibility(CR)across
thevaluechain,fromthedesignoftheproduct,itsadvertising
andmarketing,tothemanagementofitsrisks.Asaresult,
BBVAremainsoneoftheleadingglobalcompaniesinterms
ofsustainabilityandrepeatsitslistingontheDowJones
SustainabilityIndex(DJSI).BBVAhasalsobecomeamodelat
theEuropeanlevelinCRcommunication.Itwasdistinguishedat
theDigitalCommunicationAwards2011foritscommunication
strategybasedonitsongoingdirect,transparentandsimple
conversationwithallitsstakeholders.Thisperiodhasalsoseen
thepublicationoftheCR2010reportsforBBVACompassand
BBVAChile.Belowisasummaryofthemostoutstandingactivityrelatedtocorporateresponsibilityduringthequarter.
Financial Literacy
BBVABancomerhasincludedapersonalinanceworkshopdealing
withlifeinsuranceinits‘ Adelante con tu futuro ’(Forwardwithyour
future),ainancialeducationprogram.Theaimistogivepeople
theknowledgeandskillstheyneedtomakethebestlifeinsurance
choicesandbettermanagetheirpolicy.In2011BBVACompass
hasalsobeguntheCrédito Inteligente(Smartcredit)scheme,in
whichthebank’semployeesvolunteertheirtimeinschoolsinthe
communitieswheretheyworkinordertoshareinformationwith
youngpeopleabouttheresponsibleuseofcredit.
Responsible Banking
Human Resources.Themagazine Actualidad Económica
haschosenBBVAas‘thebestcompanytoworkfor.’Theaward
recognizestheeortandcommitmentmadebytheGroupto
the110,000employeesontheBBVAteam.Criteriasuchastalent
management,remunerationpolicy,theworkingenvironment,
employeetrainingandtheirownopinionswerekeyfactorsin
decidingthattheGroupisthebestplacetowork.BBVAChilehasalsobeenrecognizedasbeingamongthemostsociallyresponsible
companiesinthecountry,accordingtothenationalrankingof
CorporateSocialResponsibility2011drawnupbythemagazineQué
PasaandtheProhumanaFoundation.InSpain,BBVAhasreached
anagreementwiththetradeunionstoregulateandimprovethe
conditionsunderwhichteleworkschemesareimplemented.
The Environment. BBVAhasreinforceditscommitmentand
strategyonquestionsrelatingtoclimatechange,ascanbeseenin
thelatesteditionoftheGlobal500Report2011publishedbythe
CarbonDisclosureProject(CDP).TheGrouphasimprovedits
ratingby10pointsinthisanalysis,whichassessesclimatechange-relatedstrategyandmanagementatthe500biggest
companiesbymarketcapitalization.
Customer focus. BBVABancomerhasworkedwithNacional
FinancieratolaunchtheMicronegocios(micro-enterprise)card,
whichisdesignedtocovertheinancingneedsofmicro-enterprises
andthussupportthecountry’sproductivesector.
Community Involvement
FranciscoGonzálezpresentedthethirdBBVAINTEGRAAwardto
theirmLantegiBatuakfromVizcaya,whichhasbeengenerating
innovativeandqualityjobopportunitiesforpeoplewithdisabilities
overthelast25years.TheBBVAINTEGRAAwardcarrieswithit
prizemoneyof200,000euros.Itsaimistofosterexcellenceand
innovationintheintegrationofpeoplewithdisabilitiesintotheworkforceandtopromoteequalopportunitiesandabetterqualityof
lifeforthisgroup.BBVAEspañaandFundosa,thebusinessdivision
oftheFundaciónONCE,havealsosignedainancialagreement
throughwhichtheBankmakesavailable10millioneurostothe
companytosupportthedevelopmentofSpecialEmployment
Centersandpromotethehiringofpeoplewithdisabilities.
BBVA and Sustainability Indices
Asoftheendofthequarter,BBVA’sweightingsinthemain
sustainabilityindiceswereasfollows:
Formoreinformationandcontactdetails,pleasevisit
www.bancaparatodos.com
Corporateresponsibility
Main sustainability indices in which BBVA
participates
Weighting (%)
DJSIWorld 0.52
DJSIEurope 1.18
DJSIEurozone 2.48
ASPIEurozoneIndex 2.13
EthibelSustainabilityIndexExcellenceEurope 1.47
EthibelSustainabilityIndexExcellenceGlobal 0.85
MSCIWorldESGIndex 0.36
MSCIWorldex U SAE SGIndex 0.69
MSCIEuropeESGIndex 1.24
MSCIEAFEESGIndex 0.78
FTSE4GoodGlobal 0.35
FTSE4GoodGlobal100 0.58
FTSE4GoodEurope 0.81
FTSE4GoodEurope50 1.31
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23Businessareas
Inthissectionwediscussthemoresigniicantaspectsofthe
activitiesandearningsoftheGroup’sdierentbusinessareas,along
withthoseofthemainunitswithineach,plusCorporateActivities.
Speciically,wedealwiththeincomestatement,thebalancesheet
andthemainratios:eiciency,NPAratio,NPAcoverageratioand
theriskpremium.
Followingtheacquisitionof24.9%oftheTurkishbankGaranti
anditsincorporationintotheinancialstatementsoftheGroup
startinginMarch2011,BBVAbegantohaveasigniicantpresence
inEuropeandAsiaintermsofitsbalancesheetandearnings.
Inaddition,sincethestartofthecrisis,theimportanceofthe
geographicallocationofbusinesshasbeenclearforproviding
aproperperceptionofrisksandanimprovedestimateofthecapacityforfuturegrowth.Finally,thenewregulationsfavoralocal
managementofstructuralrisksthatavoidspossiblecontagion
betweeninancialsystems.Forthesemotives,thebusinesses
includedinSpainandPortugalandWB&AMduring2010havebeen
regroupedintothefollowingareas:
• Spain:includesBBVAbusinessesinallsegments,withinthe
country.
• Eurasia:coversallBBVAactivityintherestofEuropeandAsia,
includingtheGroup’sstakeinGaranti.
Thisrespondstotheincreaseddemandforgeography-speciic
informationfromdierentusers,includingtheregulators.
Inaddition,itisworthnotingthatin2010liquidityconditionson
theinancialmarketshavemadeaccesstoinancemoreexpensive
forSpanishcreditinstitutions.BBVAhasbeennoexceptiontothis,
andthussinceJanuary2011,andwithretroactiveeectfor2010
data,theliquiditypremiumimputedtobusinessareasthroughthe
systemofinternalreferencerateshasbeenincreased.Theaimisto
adapttothenewrealityoftheinancialmarkets.
Thebusiness areasarenoworganizedasfollows:
• Spain,whichincludes:Theretailnetwork,withthesegmentsof
individualcustomers,privatebanking,andsmallbusinessand
retailbankinginthedomesticmarket;CorporateandBusiness
Banking(CBB),whichhandlestheneedsofSMEs,corporations,
governmentanddevelopersinthecountry;Corporateand
InvestmentBanking(C&IB),whichincludesactivitywithlarge
corporationsandmultinationalgroups;GlobalMarkets(GM),
withthetradinglooranddistributionbusinessinthedomestic
market;andotherunits,amongthemBBVASegurosandAsset
Management(managementofmutualandpensionfundsin
Spain).
• Eurasia,whichincludesbusinessintherestofEuropeandAsia.In
2010itwasreportedeitherinSpainandPortugal(BBVAPortugal,
ConsumerFinanceItalyandPortugal,andtheretailbusinessof
branchesinParis,LondonandBrussels),orinWB&AM(Corporate
andInvestmentBanking,Markets,CNCBandCIFH).Additionally,it
alsoincludestheinformationonGaranti.
• Mexico:includesthebanking,pensionsandinsurance
businessesinthecountry.
• United States:encompassestheGroup’sbusinessintheUnited
StatesandintheCommonwealthofPuertoRico.
• South America:includesthebanking,pensionsandinsurance
businessesinSouthAmerica.
Aswellastheunitsindicated,alltheareasalsohaveallocationsofotherbusinessesthatincludeeliminationsandotheritemsnot
assignedtotheunits.
Finally,theaggregateof Corporate Activitiesincludestherest
ofitemsthatarenotallocatedtothebusinessareas.These
basicallyincludethecostsofheadoiceswithastrictlycorporate
function,certainallocationstoprovisionssuchasearlyretirements
andothersalsoofacorporatenature.CorporateActivitiesalso
performsinancialmanagementfunctionsfortheGroupasawhole;
essentiallymanagementofassetandliabilitypositionsforinterest
ratesintheeuro-denominatedbalancesheetandforexchange
rates,aswellasliquidityandcapitalmanagementfunctions.The
managementofassetandliabilityinterest-rateriskincurrencies
otherthantheeuroisrecordedinthecorrespondingbusiness
areas.ItalsoincludestheIndustrialandFinancialHoldingsunitand
theGroup’snon-internationalrealestatebusinesses.
Inaddition,supplementary informationisprovidedoftheglobal
business(WB&AM)carriedoutbytheBBVAGroup.Homogeneous
productsandrisks,andcommoncharacteristicsofthecustomers
served,makethisaggregateofbusinessesrelevanttobetter
understandtheBBVAGroup.
Furthermore,asusualinthecaseofTheAmericas,bothconstant
andcurrentexchange rateshavebeenappliedwhencalculatingyear-on-yearvariations.
TheGroupcompilesreportinginformationonalevelas
disaggregatedaspossible,andalldatarelatingtothebusinesses
theseunitsmanageisrecordedinfull.Thesebasicunitsare
thenaggregatedinaccordancewiththeorganizationalstructure
establishedbytheGroupathigher-levelunitsand,inally,the
businessareasthemselves.Similarly,allthecompaniesmakingup
theGrouparealsoassignedtothedierentunitsaccordingtothe
geographicalareaoftheiractivity.
Oncethecompositionofeachbusinessareahasbeendeined,certainmanagement criteriaareapplied,ofwhichthefollowingare
particularlyimportant:
Businessareas
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24 Businessareas
• Capital:Capitalisallocatedtoeachbusinessaccordingto
economicriskcapital(ERC)criteria.Thisisbasedontheconcept
ofunexpectedlossataspeciicconidencelevel,depending
ontheGroup’scapitaladequacytargets.Thesetargetshave
twolevels:theirstiscoreequity,whichdeterminesthecapital
allocated.Thisamountisusedasabasisforcalculating
theproitabilityofeachbusiness.Thesecondlevelistotal
capital,whichdeterminestheadditionalallocationintermsof
subordinatedebtandpreferredsecurities.ThecalculationoftheERCcombinescreditrisk,marketrisk,structural
balance-sheetrisk,equitypositions,operationalriskandixed
assetandtechnicalrisksinthecaseofinsurancecompanies.
Thesecalculationsarecarriedoutusinginternalmodelsthat
havebeendeinedfollowingtheguidelinesandrequirements
establishedundertheBaselIIcapitalaccord,witheconomic
criteriaprevailingoverregulatoryones.
ERCisrisk-sensitiveandthuslinkedtothemanagementpolicies
ofthebusinessesthemselves.Itstandardizescapitalallocation
betweentheminaccordancewiththerisksincurredandmakes
iteasiertocompareproitabilityacrossunits.Inotherwords,itiscalculatedinawaythatisstandardandintegratedforallkinds
ofrisksandforeachoperation,balanceorriskposition,allowing
itsrisk-adjustedreturntobeassessedandanaggregatetobe
calculatedfortheproitabilitybyclient,product,segment,unitor
businessarea.
• Internal transfer prices:Internaltransferratesareappliedto
calculatethenetinterestincomeofeachbusiness,onboththe
assetsandliabilities.Theseratesarecomposedofamarket
ratethatdependsontherevisionperiodoftheoperation,
andaliquiditypremiumthathasbeenrevisedasindicated
above.Earningsaredistributedacrossrevenue-generatingand
distributionunits(e.g.,inassetmanagementproducts)atmarket
prices.
• Assignment of operating expenses:Bothdirectandindirect
costsareassignedtothebusinessareas,exceptwherethereis
noclearlydeinedrelationshipwiththebusinesses,i.e.whentheyareofaclearlycorporateorinstitutionalnaturefortheGroupas
awhole.
• Cross selling:insomecases,consolidationadjustmentsare
requiredtoeliminateshadowaccountingentriesintheresultsof
twoormoreunitsasaresultofcross-sellingincentives.
Recurrent economic proit by business area
(January-September2011.Millioneuros)
Adjusted net
attributable proit
Economic proit
(EP)
Spain 1,339 571
Eurasia 654 265
Mexico 1,316 955
SouthAmerica 577 323
TheUnitedStates 222 12
CorporateActivities (553) (549)
BBVA Group 3,555 1,576
Mayor income statement items by business area and presence in emerging and developed countries
(Millioneuros)
Business areas Geography
BBVAGroup Spain Eurasia Mexico
SouthAmerica
The UnitedStates
CorporateActivities Emerging (1) Developed
JanuarySeptember 11
Netinterestincome 9,676 3,308 516 2,874 2,255 1,182 (460) 5,398 4,738
Grossincome 15,052 4,900 1,319 4,208 3,214 1,711 (300) 8,228 7,124
Operatingincome 7,753 2,806 887 2,686 1,751 613 (991) 5,001 3,742
Incomebeforetax 4,145 1,633 837 1,722 1,385 305 (1,737) 3,620 2,262
Net attributable proit 3,143 1,162 705 1,275 754 218 (970) 2,508 1,605
JanuarySeptember 10
Netinterestincome 10,182 3,734 247 2,748 1,843 1,384 226 4,614 5,343
Grossincome 15,964 5,461 743 4,126 2,814 1,963 857 7,205 7,901
Operatingincome 9,322 3,389 528 2,717 1,599 828 260 4,540 4,522
Incomebeforetax 5,260 2,653 495 1,716 1,277 308 (1,188) 3,211 3,236
Net attributable proit 3,668 1,881 418 1,254 698 223 (808) 2,172 2,304
(1)Mexico,SouthAmerica,TurkeyandAsia.
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25Spain
Spain
Income statement
(Millioneuros)
Spain
JanuarySep. 11 ∆% JanuarySep. 10
Net interest income 3,308 (11.4) 3,734
Netfeesandcommissions 1,135 (10.8) 1,273
Nettradingincome 91 (4.6) 95
Otherincome/expenses 365 1.9 358
Gross income 4,900 (10.3) 5,461
Operatingcosts (2,093) 1.0 (2,072)
Personnelexpenses (1,274) 1.2 (1,259)
Generalandadministrativeexpenses (745) 0.6 (741)
Depreciationandamortization (74) 2.5 (72)
Operating income 2,806 (17.2) 3,389
Impairmentoninancialassets(net) (1,246) 36.1 (916)
Provisions(net)andothergains(losses) 73 (59.3) 179
Income before tax 1,633 (38.4) 2,653
Incometax (472) (38.8) (770)
Net income 1,162 (38.3) 1,883
Non-controllinginterests - n.m. (2)
Net attributable proit 1,162 (38.2) 1,881
Balance sheet
(Millioneuros)
Spain
30-09-11 ∆% 30-09-10
Cashandbalanceswithcentralbanks 9,142 74.2 5,249
Financialassets 73,128 5.6 69,232
Loansandreceivables 222,449 (2.1) 227,204
Loansandadvancestocustomers 207,980 (2.2) 212,693
Loansandadvancestocreditinstitutionsandother 14,469 (0.3) 14,512
Tangibleassets 932 (4.8) 979
Otherassets 3,310 12.8 2,933
Total assets/Liabilities and equity 308,960 3.4 305,597
Depositsfromcentralbanksandcreditinstitutions 37,664 14.0 33,047
Depositsfromcustomers 120,530 7.1 112,564
Debtcertiicates - n.m. 1
Subordinatedliabilities 5,880 2.7 5,727
Inter-areapositions 71,376 (13.6) 82,645
Financialliabilitiesheldfortrading 45,442 3.4 43,929
Otherliabilities 17,626 1.7 17,336
Economiccapitalallocated 10,443 0.9 10,349
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26 Businessareas
TheareaofSpainincludesallthesegmentsof
BBVA’sbankingandnon-bankingbusinessinthe
country.
Inthethird quarter of 2011,Spanishcredit
institutionshaveoperatedunderasetofspecialcircumstancesaectingthesector:abank
restructuringprocess,gradualdeleveraging,
growingdiicultiesininternationalwholesale
fundingmarkets,moderateeconomicgrowth,
andnegativedevelopmentsintheinancial
markets.Amongthehighlightsofthebank
restructuringprocesshavebeentheIPOs
ofBankia,CaixaBankandBancaCívica,the
announcementofmergersbetween
medium-sizedbanks(suchasPopularand
Pastor),recentinterventionsinsomesavings
banks,morebranchclosuresinthesectorsince
theonsetofthecrisis(1,768fewerintheirsthalf
oftheyear,thelatestavailabledata),andthe
trendtowardsareturntonormalintheasset
andliabilitypricesinthesystem.Therewillbe
opportunitiesforbanksthatarewellpositioned
inthisenvironment.
Thegradualdeleveragingprocess,whichis
necessaryandpositivefortheSpanisheconomy,
hasledtoayear-on-yearfallof3.5%incorporate
andhouseholdlending(latestavailableigures
forAugust).Individualshavecontinuedto
reducetheirconsumerspending,whilenewhomemortgageshavefallenby46%inthe
sametimeframe(alsoAugustigures);atthe
sametime,companieshavesteadilyreduced
theirhighlevelsofcreditleverage.Asaresult,
thestockofcreditonthebalancesheetsofthe
commercialnetworkshasfallenby€56,100m
sincethestartoftheyear.Thecostofnew
inancehasincreasedby75basispointsinthis
period,duetothemoreexpensiveinterbank
marketconditions.However,thevolumeofnew
depositsandotheron-balance-sheetfundsis
upby€12,264msinceSeptember2010,thus
reducingdependenceonwholesalemarkets
overthelast12months.Therateofrenewalof
themostconservativedepositproductsunder
betterconditionsthanlastyearhasbeenhigh,
thusincreasingcustomerspreadsinthesector.
BBVAhasconsolidateditsleadingposition
inbothlendingandcustomerfundsinthehouseholdandcorporatesegments.Ithasalso
increasedproitability,measuredasthenet
interestincomeoverATA,fromtheminimum
levelsofthefourthquarterof2010.Thisis
largelytheresultofincreasingmarketsharein
theproductsinvolvingthebiggestcustomer
loyalty,adaptingcommercialproductand
servicestothespeciicneedsofeachcustomer,
andadequateriskcontrolprocedures.
Gross lending to customersintheareaasof
30Sep-2011amountedto€212,639m,afallof
2.4%year-on-year;however,yieldonloanswas
upby46basispointsonthefourthquarterof
2010.
Customer fundsundermanagement(deposits,
mutualfundsandpensionfunds)amountedto
€150,182m.BBVAmadeasigniicantgainof16
basispointsinmarketshareinhouseholdand
corporatecurrentandsavingsaccountstoreach
9.6%(latestavailabledatatoAugust).Inaddition,
theareahasimproveditspositioningintime
depositsandmutualfundsby76basispoints
sincethestartoftheyear.Morethan73%offundscorrespondtohouseholdcustomers,who
haveincreasedtheirloyaltytotheBank.
Inobalancesheet fundstheGrouphas
maintaineditsmarketshareinmutualfunds
at16.8%(Septemberdata),withassetsunder
managementinSpainof€20,220m.Theamount
fellby3.6%inthethirdquarterasthevalueof
assetsundermanagementdeteriorateddue
tothemarketturmoil.Itisworthpointingout
that,accordingtothelatestdatafromAugust
2011,theeectofthisfallinBBVAismuchless
signiicantthanintherestofthesystem,given
themoreconservativeproileofitsmutual
Signiicant ratios
(Percentage)
Spain
30-09-11 30-06-11 30-09-10
Eiciencyratio 42.7 40.7 37.9
NPAratio 4.9 4.7 4.8
NPAcoverageratio 42 43 47
Riskpremium 0.77 0.79 0.40
Spain highlights in the third quarter
• Improvedmarketsharesandspreads.
• Stabilizationofthenetinterestincome.
• Expensesremainlat.
• Riskindicatorskeptincheck.
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27Spain
resultedingross incomefortheninemonths
ended30-Sep-2011of€4,900m.
Operatingcostsinthearearemaincloselyin
check.Intheninemonthsended30Sep-2011
theytotaled€2,093m,ayear-on-yearincreaseof
1.0%,belowtherateofinlation(3.1%).Asaresult,
theoperating incomefortheninemonths
ended30Sep-2011was€2,806m(€3,389mfor
thesameperiodof2010).
Themainasset qualityindicatorsshowaslight
increaseintheNPAratio,to4.9%(4.7%asof
30Jun-2011).Thisisbasicallybecauseofthe
reductioninlendingmentionedabove,since
thebalanceofNPAasof30Sep-2011isstable
comparedwiththeigurefor30Jun-2011.The
igureforBBVAcompareswithanincreasingNPA
ratiointhemarketthatstandsat7.2%according
tothelatestavailableigures(August).The42%
coverageratioremainsatsimilarlevelstothepreviousquarter(43%asof30Jun-2011).Finally,
thelevelofnewNPAhasfallensigniicantly
andtheratioofrecoveriesovernewNPAhas
alsoimproved,closingthequarterat72%(64%
betweenAprilandJune2011).
Inshort,themostrecurringrevenueremained
steady,thanksamongotherfactorstoadequate
managementofspreads,increasedloyaltyand
gainsinmarketshareinthemainsegments.At
thesametime,therewasalowerpercentage
ofnon-recurringearnings,costrestraintand
stabilityinassetquality.Asaresult,thenet
attributable proit intheareawas€1,162m
(€1,881minthesameperiodin2010).
Exposureinthedeveloper sectorinSpainasof
30Sep-2011stoodat€15,256m,asteadyfalland
€1,352mbelowtheigureatthecloseof2010.
Ofthistotal,€6,024mareNPAorsubstandard,
asimilariguretoninemonthsearlier(€5,924m)
funds.Lastly,thepensionfundsmanagedby
BBVAinSpainamountto€16,741m,inlinewith
theigureasof30Jun-2011.Thishasallowed
BBVAtomaintainitspositionasthebiggest
pensionfundmanagerinSpain,withamarket
shareof18.3%(latestavailabledataasofJune).
Themostimportantaspectsofearningsinthe
areaovertheninemonthsended30Sep-2011aregivenbelow.
BBVAhasstabilizeditsquarterlynetinterest
incomeataround€1,100m,inaquarterwith
growingfundingcostsandlowercontribution
fromglobalbusiness.Thisispartlydueto
theturmoilonthefinancialmarketsthathas
ledtoalossintheassetvalues,andpartly
toreducedactivity.Theresilientnetinterest
incomehasbeenaresultoftherepricingof
loans,theincreasedvolumeoflower-cost
currentandsavingsaccountdeposits,andthehighproportionoftimedepositsrenewed
atsignificantlylowerratesthanthoseinitially
takenout12monthspreviously.Overthenine
monthsended30-Sep-2011,netinterestincome
stoodat€3,308m.Feesandcommissions
forthequarter,at€336m,werebelowthe
averagefortheyear,foranumberofreasons:
theseasonalfactorofthesummermonths;
thenegativeimpactofthemarketsonfees
linkedtomutualfunds;thelowervolumeof
M&Aoperationsinthecorporatesegment;
andfeereductionsassociatedwithgreater
customerloyalty.Thegoodperformanceof
theinsurancebusinessdoesnotcompensate
theadverseperformanceofNTIinthequarter,
whichwerehitbytheeconomicsituation,the
lowlevelofactivityinWholesaleBankingand
thefallinassetprices.Overall,thesteadynet
interestincomeandpositiveperformanceof
theinsurancebusiness,balancedagainstthe
negativeperformanceofotherincome,have
Spain. Net attributable profit
(Million euros)
Spain. Operating income
(Million euros)
1,238
1Q
1,162
2Q
989
3Q
851
4Q
1,062
1Q
–17.2%
2010 2011
2Q
3,389 2,806
982
3Q
763
714
1Q
651
2Q
515
3Q
374
4Q
477
1Q
–38.2%
2010 2011
2Q
1,881 1,162
419
3Q
265
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28 Businessareas
Retail and CommercialBanking
ThisunitincludestheRetailNetwork,with
thehouseholdcustomers,privatebanking,
smallcompaniesandretailersegmentsinthedomesticmarket;CorporateandBusiness
Banking(CBB),whichhandlestheneedsofthe
SMEs,corporations,governmentanddevelopers
inthedomesticmarket;andotherbusinesses,
amongwhichisBBVASeguros.
Asof30Sep-2011thisunithada loan bookof
€192,274m,afallof2.5%ontheigurefor
30Sep-2010.Thisisinlinewiththedeleveraging
processacrossthemarketasawhole,but
withasmallerfallthanaverageinthesector
(down3.5%accordingtothelatestiguresto
August).ThishasenabledBBVAtopreserve
andconsolidateitspositioninhousehold
butbelowthatforthepreviousquarter(6,183m).
Itisalsoworthhighlightingthegreatstabilityin
theNPAcoverageratio,whichisupfrom25%at
thecloseofDecember2010andJune2011,to
26%asof30Sep-2011.Thevalueofthe
collateralcoveringdeveloperrisk,basedonup-to-dateappraisals,is€21,471m,which
maintainstheaverageLTVof71%andeasily
coverstheportfoliovalue.Inaddition,speciic
andgenericprovisionscover26%ofthemost
substandardimpairedassetsand61%ofthe
amounttobeprovisioned(thevalueinexcess
ofthecollateralafterapplyingtheregulatory
criteriathatenteredintoforcewithBankof
SpainCircular3/2010).BBVAalsomaintainsa
totalof€4,300minrealestateassetsatgross
bookvaluefromlendingtocompanies.These
assetshaveanaveragecoverageratioof33%
(abovetheigureof32%inJune2011and31%in
March2011).
Detail of real estate developers lending
(Millioneuros)
30-09-11 % Weighting 31-12-10 % Weighting Absolute variation
Withcollateral 14,118 92.5 15,249 91.8 (1,131)
Finishedproperties 7,344 48.1 7,403 44.6 (59)
Constructioninprogress 2,794 18.3 3,531 21.3 (737)
Land 3,980 26.1 4,315 26.0 (335)
Withoutcollateralandother 1,138 7.5 1,359 8.2 (221)
Total 15,256 100.0 16,608 100.0 (1,352)
Coverage of real estate developers exposure
(Millioneurosat300911)
Risk amountShortfall over
collateral (1) Provision% Coverage
over shortfall% Coverage
over risk
NPL 3,676 1,482 972 66 26
Substandar 2,348 1,048 304 29 13
Genericprovision 263
Total 6,024 2,530 1,539 61 26
(1)ShortfalloverupdatedcollateralvaluesandadditionalhaircutestablishedbytheBankofSpainregulation.
Foreclosures and asset purchases
(Millioneurosat300911)
Gross amount Provision % Coverage Net amount
Fromrealestatedevelopers 4,300 1,407 33 2,893
FromDwellings 1,306 333 25 973
Other 1,026 416 41 610
Total 6,632 2,156 33 4,476
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29Spain
ontheigureforthepreviousquarter.Ininancingofworking
capital,€11,452mweregrantedinnationalandinternational
factoringtransactions,and€10,631minaccountspayable
inancingto31Aug-2011(datafromtheSpanishAccounts
PayableAssociation).TheseresultsconsolidateBBVA’sleading
positioninbothproducts.
Total funds under management increasedtheirmarketshare
year-on-yearasof30Sep-2011asaresultoftheimplementationofaproitablecommercialproducts,combinedwiththecapable
managementofthematuritiesoftimedepositstakenout12
monthspreviously.Asof31Aug-2011,thelatestavailableigures,
themarketshareforhouseholdswas8.4%andforcompanies
8.9%(8.0%and8.6%asof31Aug-2010),withanimprovementin
thespreadof57basispointswithrespecttothefourthquarter
of2010.Thetotalamountwas€138,826m(€144,959masof
30Sep-2010).Oncemoreitisimportanttohighlightthegood
performanceoverthequarterofcustomerdeposits,andthusthe
improvementintheliquiditygapinthearea.
Current and savings accountsinthehouseholdsegmentwereparticularlybuoyant.Thispositivenotewasbasicallyduetothe
promotionslaunchedinpay-rollandpension-linkedaccounts,which
haveattracted36,461newpay-rolldepositsand19,070pension
depositsoverthequarter.Inall,themarketshareis9.3%inpay-roll
accountsand9.6%inpensionaccounts,withdataasof31Aug-2011.
Theoerofadditionaladvantagesaccordingtoloyaltyhasbeen
maintainedin timedepositsaspartofthecustomer-centric
strategy.Thisquarterhasbeenmarkedbyasigniicantnumber
ofmaturitiesoftimedepositstakenoutinthethirdquarterof
2010.Appropriatemanagementofthesematuritieshasledto
amaintenancerateofover80%,withreductionsinthecostof
operationsofaround100basispoints.The“ Depósito BBVA UNO”
hasalsobeenmaintainedasthemainloyalty-buildingproduct,
withanaccumulatednewproductionto30Sep-2011of€1,475m.
Anumberofdierentoershavebeenmaintainedtoattractnew
customers,includingtheDepósito BBVA 11.Asaresultofallthe
above,thebalanceoftimedepositsincreasedby€9,275mover
thelastyearandtheiraveragecostis88basispointsbelowthe
marketaverage(latestavailableigurestoAugust).
Inpension savingsthe Ahorro Asegurado(GuaranteedSavings)
campaignlaunchedinthesecondquarteriscontinuing
successfully.Newproductioninthethirdquarterof2011
was€185m,9%uponthepreviousquarter.Inaddition,thecontributionstoindividualpensionplansbetweenJulyand
September2011amountedto€66m,5%uponthesecondquarter,
withthemostpopularproductsbeingguaranteedpension
savings(around70%).
BBVA Private Banking endedthethirdquarterof2011withfunds
undermanagementinSpainof€38,471m,6.4%uponthesame
datelastyear,andwithagrowthinitscustomerbaseof0.7%.The
unitremainsmarketleaderinassetsundermanagementinSICAV
(€2,666m),withamarketshareof10.5%inSeptember2011,and
291companies.
Coveredsavingscontinuetoperformwellintheinsurance
business,particularlythecompanyinsuranceschemes,whichhave
andcorporatelending,withgainsinmarketshareinresidential
mortgagesandthelowest-riskcorporatecategories.
• Infact,BBVAcontinuestogainmarketshareinresidential
mortgage lending(up8basispointsin2011and17basispoints
overthe12months,accordingtothelatestAugustigures)ina
marketinwhichnewproductiontoAugustisdown46%
year-on-yearto€23,965m.Inthisenvironment,BBVA’snew
productionwas€3,935mintheninemonthsended30Sep-2011,accountingfor13.6%ofthenewtransactionsin
thesector,accordingtoAugustigures.Thepersonalizedand
specialfeaturesoftheBank’smortgageproductsrespondto
demandquicklyandlexibly,whileincreasingthespreadof
newtransactionsby86basispointsfromDecember2010to
thecloseofAugust.Inall,themanagedstockofmortgages
toindividualswasverystableat€77,825masof30Sep-2011
(78,071mon30Sep-2010).
• Withrespecttoconsumer inance,inthethirdquarterof2011
therewassigniicantgrowthinthePIDE Préstamo Inmediato
instantloanfacilitydesignedtohelphouseholdsaccessinance,whichincreaseditsbalanceby15.0%onthethird
quarterof2010.Thepositiveresultsofthecampaign,launched
thepreviousquarter,haveledtoanextensiontilltheendof
November.Ithasalsohelpedincreasethemarketshareof
newproductionby16basispointssinceDecember2010.At
thesametime,anexclusivelyonlinecampaignwaslaunched
inSeptemberaimedathelpingtoinancethepurchaseof
usedcars,giventhatusedcarsaleshaveincreasedby14.3%
intheirsthalfof2011andareexpectedtocontinuegrowing.
Inall,newproductioninthisitemreached€1,055minthenine
monthsended30Sep-2011.
• BBVAcontinuestobeoneofthemostactivebanksinloan
allocationunderthe ICO credit facility scheme,withan
accumulatedbalanceintheirstthreequartersoftheyearof
€1,808m.Ithasincreaseditsmarketshareto12.7%asof
30Sep-2011.Anewlocal-authoritycreditprogramwassigned
thisquarter,withtheaimofprovidingtheliquidityneededby
localgovernmenttopaydebtspendingwithcompaniesand
theself-employed.
• BBVAcontinuestosupportinanceforthesegment of the
selfemployed, retail trade, farming communities and small
businesses tomakeiteasierforthemtoaccessinance.Within
theframeworkofthe Plan Comercios(RetailerPlan),aimedatincreasingcustomerloyalty,priorityhasbeengiventoactions
relatedtopoint-of-saleterminalsasakeyelementforbuilding
upretailerloyalty.Intheninemonthsended30Sep-2011,the
turnoverofpoint-of-saleterminalsamountedto€3,668m,an
increaseof8.7%onthesameperiodlastyear.Efortscontinue
tobemadetowinandmaintainnewcustomergroups,suchas
educationalcentersandprivateacademies.Anotherexample
isthenewagreementwiththeoicialIACAutomoción
associationofrepairshops.
• ThebalanceoftheinancegrantedtoSMEs, corporations
and public and private institutionsatthecloseofSeptember
wasdown1.7%year-on-yearto€89,192m.However,itisworth
notingthattheyieldonloanshasincreased28basispoints
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30 Businessareas
nowbecomeamodelinthemarket,with€340m
inwrittenpremiums(up182%year-on-year).
Individualfundpremiumsarealsoperforming
well,at€724m(up225%).Asaresult,thevolume
ofmanagedfundsis€8,655m,anincreaseof
6.3%intheninemonthsended30Sep-2011.The
levelofbusinessinnon-lifeinsurancehasbeen
maintained,withpremiumsof€181m(up4%
year-on-year).Particularlynotableisthegrowthinthecarbusiness,with7millionpremiums(up
25%).Overall,thetotalpremiumswrittenbyBBVA
Segurosintheninemonthsended30Sep-2011
amountedto€1,462m(up85%year-on-year).
Thecompanymaintainsitsleadingpositionin
individuallifeinsurance,withamarketshare
of11.0%ofpremiumsattheendofJune(latest
availableigures).
Tosumup,theadequatemanagementof
volumesand,aboveall,assetandliability
prices,haveboostedthenetinterestincometo€2,817m.Gross incomeasof30Sep-2011
amountedto€4,118m(4,696masof
30Sep-2010).Withoperatingexpenses
remainingatpracticallythesamelevelsasin
January-September2010,the operating income
was€2,333m(2,906mayearago).Aftermaking
increasedallocationsofgenericprovisions,the
net attributable proit amountedto€842m.
Wholesale Banking
Thisunitmanagesthebusinesswithlarge
corporationsandmultinationalgroupsin
thedomesticmarketthroughCorporateand
InvestmentBanking(C&IB),andtheactivityof
GlobalMarketsinthesamegeographicalarea,
withtheirtradingloorbusinessanddistribution.
Itisacustomerbasewithdiversiiedbusiness
andhighcashlowsfromothercountries.BBVAis
abletooerafullrangeofproductsand
services,supportedbyitsextensiveinternational
presence.
InSpain,WholesaleBankingmanageda loan
bookof€20,366masof30Sep-2011,and
customer fundsof€17,637m.Bothiguresshow
greatstabilitywithrespecttothoseforthesamedatelastyear(€20,667mand€17,443m
respectively,asof30Sep-2010).Theunit
continuestofocusstronglyoncustomerswith
thehighestlevelsofloyalty,proitabilityand
creditquality.
Themostsigniicantaspectsofearningsinthe
unitareasfollows:
• Resi lientrecurring revenuesintheunit(net
interestincomeplusfees):theigureforthe
ninemonthsended30Sep-2011isverysimilartothesameperiodin2010,at€723m.
• NegativecontributionfromNTIinthequarter.
Thisisexplainedbytheeconomicsituation
inthisperiod,thelowlevelofbusinessand
fallingassetpricesingeneral.
• Asaresult,thegross incomestandsat
€782m,2.2%abovetheigurefor
January-September2010.Year-on-year
growthinexpensesof9.4%,sustainedby
theinvestmentprojectexplainedinprevious
quarters;asaresult,theoperating income
was€474m(down1.9%year-on-year).
• Stabilityinimpairmentlossesoninancial
assets,withanet attributable income inthe
ninemonthsended30Sep-2011of€320m
(€346masof30Sep-2010).
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31Eurasia
Eurasia
Income statement
(Millioneuros)
Eurasia
JanuarySep. 11 ∆% JanuarySep. 10
Net interest income 516 108.7 247
Netfeesandcommissions 287 71.9 167
Nettradingincome 83 (8.1) 90
Otherincome/expenses 433 81.8 238
Gross income 1,319 77.6 743
Operatingcosts (432) 101.5 (215)
Personnelexpenses (237) 81.4 (130)
Generalandadministrativeexpenses (164) 129.4 (71)
Depreciationandamortization (32) 151.0 (13)
Operating income 887 67.9 528
Impairmentoninancialassets(net) (67) 214.9 (21)
Provisions(net)andothergains(losses) 17 n.m. (12)
Income before tax 837 69.1 495
Incometax (132) 70.0 (77)
Net income 705 68.9 418
Non-controllinginterests - n.m. 1
Net attributable proit 705 68.6 418
Balance sheet
(Millioneuros)
Eurasia
30-09-11 ∆% 30-09-10
Cashandbalanceswithcentralbanks 1,908 n.m. 290
Financialassets 11,110 74.5 6,367
Loansandreceivables 38,492 46.9 26,211
Loansandadvancestocustomers 34,188 44.7 23,622
Loansandadvancestocreditinstitutionsandother 4,304 66.3 2,589
Inter-areapositions - n.m. 15,879
Tangibleassets 576 61.0 358
Otherassets 1,169 190.6 402
Total assets/Liabilities and equity 53,254 7.6 49,507
Depositsfromcentralbanksandcreditinstitutions 16,908 (13.7) 19,591
Depositsfromcustomers 22,504 (8.7) 24,657
Debtcertiicates 864 n.m. -
Subordinatedliabilities 2,010 49.4 1,345
Inter-areapositions 3,146 n.m. -
Financialliabilitiesheldfortrading 319 (25.3) 427
Otherliabilities 2,650 151.1 1,055
Economiccapitalallocated 4,854 99.6 2,432
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32 Businessareas
ThisareacoversBBVA’sactivityinEurope
(excludingSpain)andAsia.Inotherwords,it
includesBBVAPortugal,ConsumerFinanceItaly
andPortugal,theretailbusinessofbranches
inParis,LondonandBrussels(in2010these
werereportedinSpainandPortugal),and
WB&AMactivity(CorporateandInvestmentBanking,GlobalMarketsandCNCB)withinthis
geographicalarea.ItalsocoverstheGroup’s
stakeinGaranti.
Theeconomic situationinEurasiaisoneof
greatdisparity.InEurope,thesituationinthe
thirdquarterwascharacterizedbyuncertainty
andafocusonresolvingthedebtcrisis.These
doubtshavebeenaectingtheinancialsystem
oftheeurozoneandareleadingtofunding
diicultiesinthewholesalemarkets.InTurkey,
however,agoodrateofbusinessactivityhasbeensustained,thoughinlationremains
relativelyhigh.Finally,theChineseeconomy
stillappearssound,despitetheeectsofthe
slowdowncausedbytheheightenedweakness
offoreigndemand.
Theareaisofincreasingimportancebothin
termsofearningsandthebalancesheet,and
hasincreasedtheGroup’sdiversiicationand
growthcapacity.FromJanuarytoSeptember
2011,Eurasiagenerateda net attributable proit
of€705m.Thisigurerepresents17.2%ofthe
earningsgeneratedbytheGroup’sbusiness
areasor22.4%,iftheaggregateofCorporate
Activitiesisincluded.
Inthethird quarter of 2011theincreased
contributionofCNCBwasremarkableasit
maintainedsigniicantgrowthinitsbanking
business.Itsloan-bookwasup7.2%intheirst
halfof2011comparedtothecloseof2010;
customerdepositsgrew8.2%forthesame
period;andthenetattributableproitforthe
semesterwasup40.6%year-on-year.The
successofCNCB’ssharecapitalincreasedone
throughJulyandAugustof2011,inwhichBBVA
tookpartinordertomaintainits15%holding,
alsomeritsmention.Twofactorshaveinluencedthedecisiontoundertakethisoperation:on
theonehand,theneedforit,duetothegreat
strengthofbankingactivity;andontheother
hand,thewishesoftheChinesesupervisorto
maintainahighlysolventpartnersuchasBBVA
withthesamestakeasbeforetheoperation.The
restoftheunits,ingeneral,presentedstability
withrespecttopreviousquarters.
Signiicant ratios
(Percentage)
Eurasia
30-09-11 30-06-11 30-09-10
Eiciencyratio 32.8 31.2 28.9
NPAratio 1.5 1.3 0.9
NPAcoverageratio 117 143 139
Riskpremium 0.28 0.33 0.12
Eurasia. Operating income(Million euros)
Eurasia. Net attributable profit(Million euros)
159
1Q
199
2Q
170
3Q
257
4Q
249
1Q
+67.9%
2010 20112Q
528 887
317
3Q
321
124
1Q
147
2Q
147
3Q
169
4Q
198
1Q
+68.6%
2010 20112Q
418 705
251
3Q
257
Eurasia highlights in the third quarter
• StrongbusinessactivityinTurkey.
• HighgrowthofthecontributionfromAsia.
• ResilienceofglobalbusinessesinEurope.
• PaymentoftheCNCBsharecapital
increase.
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33Eurasia
Gross lending to customersamountedto
€34,960masof30Sep-2011,a5.0%increasein
thequarter.Thiswasexplainedbythepositive
contributionofpracticallyallofthebusiness
units.Brokendownbysegment,loanstoglobal
businessesrose,whilethebalanceforlocal
businessremainedstable.
Customer funds decreased17.2%inthequarterto€22,069m.Thisisdueprimarilytothe
decreaseofbalancesinEurope.
ThemostnotableaspectsofGarantiinthethird
quarterof2011areasfollows:
• EventhoughtheTurkishCentralBankis
takingactionstopreventtheoverheatingof
theeconomy,thelending activitymaintains
solidgrowth,whichisparticularlynoticeablein
personalloans.
• Favorableperformanceofthecustomer
spreadthankstotherepricingeforts.
• Positiveperformanceofcustomer deposits,
whichprogressedbetterthanthesector
average.Thiswasduetothesuccessful
customerattractioncampaignscarriedoutby
theSMEandindividualcustomersegments.
• Asset qualityremainsexcellent,withanNPA
ratiomuchlowerthanthatofthesector.
Garanti. Signiicant data (30-06-2011) (1)
30-06-11
Financial statements (million euros)
Attributableproit 874
Totalassets 65,620
Loanstocustomers 34,576
Depositsfromcustomers 35,970
Relevant ratios (%)
Eiciencyratio 42.3
NPAratio 2.2
Other information
Numberofemployees 19,784
Numberofbranches 894
NumberofATMs 3,144
(1)BRSAdataforthegroup.
Garanti. Composition of assets and lending portfolio (1)
(September 2011)
Garanti. Composition of liabilities (1)
(September 2011)
Cash and banks 16.4%
Credit cards 11.6%
Securities 25.0%
Corporate 18.5%
Consumer 18.1%
SME 12.8%
Commercial 39.0%
Composition of assets Lending portfolio
Other 4.2% Loan to customers54.4%
Shareholders’ equity 11.6%
Deposits from customers52.7%
Bonds issued 2.4%
Fund borrowed 15.1%
Repo obligations 10.1%
Deposits from banks 1.5%
Other 6.6%
(1) Garanti Bank data.. (1) Garanti Bank data..
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34 Businessareas
Mexico
Income statement
(Millioneuros)
Units:
Mexico Banking Business Pensions and Insurance
Jan.-Sep. 11 ∆% ∆%(1) Jan.-Sep. 10 Jan.-Sep. 11 ∆% ∆%(1) Jan.-Sep. 10 Jan.-Sep. 11 ∆% ∆%(1) Jan.-Sep. 10
Net interest income 2,874 4.6 6.0 2,748 2,814 4.5 5.9 2,693 54 6.6 8.0 51
Netfeesandcommissions 906 (0.8) 0.5 913 848 (1.4) (0.1) 860 53 3.7 5.1 51
Nettradingincome 264 (20.4) (19.4) 331 204 (10.6) (9.4) 228 60 (42.2) (41.4) 104
Otherincome/expenses 164 23.3 24.9 133 (85) (25.4) (24.4) (114) 296 16.1 17.7 255
Gross income 4,208 2.0 3.3 4,126 3,780 3.1 4.5 3,666 463 0.6 1.9 460
Operatingcosts (1,522) 8.1 9.5 (1,408) (1,431) 10.4 11.8 (1,297) (121) 8.3 9.7 (112)
Personnelexpenses (663) 2.6 4.0 (646) (607) 2.5 3.8 (592) (56) 5.0 6.4 (53)
Generalandadministrativeexpenses (781) 11.5 13.0 (700) (748) 16.1 17.6 (644) (63) 11.6 13.0 (57)
Depreciationandamortization (78) 26.1 27.7 (62) (76) 27.0 28.6 (60) (2) (0.0) 1.3 (2)
Operating income 2,686 (1.2) 0.1 2,717 2,349 (0.9) 0.4 2,369 342 (1.9) (0.6) 349
Impairmentoninancialassets(net) (915) (4.1) (2.8) (953) (915) (4.1) (2.8) (953) - - - -
Provisions(net)andothergains(losses) (50) 2.9 4.2 (48) (47) (2.5) ( 1.3) (49) (3) n.m. n.m. 1
Income before tax 1,722 0.3 1.7 1,716 1,387 1.4 2.8 1,367 340 (2.8) (1.5) 349
Incometax (445) (2.9) (1.6) (458) (345) (3.0) (1.7) (356) (100) (1.4) (0.1) (101)
Net income 1,277 1.5 2.9 1,257 1,041 3.0 4.3 1,011 240 (3.3) (2.1) 248
Non-controllinginterests (2) (34.7) (33.8) (3) - - - - (2) (5.9) (4.7) (2)
Net attributable proit 1,275 1.6 2.9 1,254 1,041 3.0 4.4 1,011 238 (3.3) (2.0) 246
(1)Atconstantexchangerate.
Balance sheet
(Millioneuros)
Units:
Mexico Banking Business Pensions and Insurance
30-09-11 ∆% ∆% (1) 30-09-10 30-09-11 ∆% ∆% (1) 30-09-10 30-09-11 ∆% ∆% (1) 30-09-10
Cashandbalanceswithcentralbanks 5,771 1.4 10.0 5,693 5,771 1.4 10.0 5,693 - - - -
Financialassets 24,682 (3.0) 5.3 25,440 20,055 (3.4) 4.9 20,757 4,860 (1.7) 5.3 4,944
Loansandreceivables 35,024 (7.7) 0.3 37,927 34,721 (7.9) 0.0 37,686 352 24.9 35.6 281
Loansandadvancestocustomers 32,242 (0.7) 7.8 32,458 32,090 (0.7) 7.8 32,325 182 16.4 26.4 157
Loansandadvancestocreditinstitutionsandother 2,782 (49.1) (44.8) 5,469 2,631 (50.9) (46.7) 5,361 169 35.5 47.1 125
Tangibleassets 901 9.7 19.1 821 895 9.9 19.3 814 6 (7.6) 0.4 7
Otherassets 1,654 2.8 11.6 1,610 2,700 23.2 33.7 2,193 111 (11.4) (3.8) 125
Total assets/Liabilities and equity 68,032 (4.8) 3.3 71,492 64,142 (4.5) 3.7 67,143 5,329 (0.5) 8.0 5,358
Depositsfromcentralbanksandcreditinstitutions 9,788 (19.3) (12.4) 12,128 9,788 (19.3) (12.4) 12,128 - - - -
Depositsfromcustomers 31,703 (4.4) 3.8 33,157 31,722 (4.4) 3.8 33,175 - - - -
Debtcertiicates 3,887 (5.9) 2.1 4,132 3,887 (5.9) 2.1 4,132 - - - -
Subordinatedliabilities 2,244 24.6 35.3 1,800 3,373 35.0 46.6 2,497 - - - -
Financialliabilitiesheldfortrading 6,153 0.7 9.3 6,110 6,153 0.7 9.3 6,110 - - - -
Otherliabilities 10,376 (3.8) 4.5 10,783 5,735 (4.3) 3.9 5,995 4,972 (3.0) 5.3 5,127
Economiccapitalallocated 3,883 14.8 24.7 3,381 3,485 12.3 21.9 3,104 352 52.6 65.7 231
(1)Atconstantexchangerate.
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35Mexico
Thisareacomprisesthebanking,pensionsand
insurancebusinessconductedinMexicobythe
BBVABancomerFinancialGroup(hereinafter,
BBVABancomer).
Despitetheslowdowninadvancedeconomies,
emergingeconomiesstillcontinuetogrow
solidlytowardsmoresustainablelevels.
InMexico,themostimportant indicators(industrialactivity,formalemployment,retail
sales)remainpositive,sothegrowthratecould
havecontinuedinthethirdquarteratlevels
thataresimilartothoseofthepreviousquarter.
Inlationisnotaconcern,giventhedomestic
environmentofcontaineddemand,which
limitsthepowerofthetransferofcostsfrom
companiestoconsumers.Againstthisbackdrop,
withinlationinBanxico’stargetrange,the
CentralBankcouldanalyzeinterestratelowering
scenarios.Theovernightratecouldalsobe
maintainedatsimilarlevelstocurrentonesbeyond2012iftheglobaleconomicscenario
weretodeteriorate.
Asregardstotheexchange rate,theMexican
peso/euroratehasdepreciatedbothin
year-on-yearterms(down7.9%)andin
quarter-on-quarterterms(down8.7%).Thusthe
impactofthecurrencyonthebalancesheet
andbusinessvolumeintheareaisnegative.The
averageexchangeratealsodeclined,thoughin
thiscasetoalesserextent(down1.3%
year-on-yearanddown1.4%quarter-on-quarter).
Thustheeectofthecurrencyontheincome
statementwasslightlynegative.Unlessotherwise
indicated,allcommentsbelowrefertochangesat
aconstantexchangerate.
Inthethirdquarterof2011,Mexicocontinuedto
presentpositivegrowthinrecurringrevenues.
Therefore,betweenJanuaryandSeptember
2011,thenetinterestincomegrew6.0%
year-on-yearrate,mainlyboostedbyincreased
lendinganddepositgatheringvolumesandby
positivepricemanagement.Thishasenabled
toosettheeectsofthelowinterestrate
situationandthelowercontributiontoincome
byglobalbusinesses.Thesewereaected,in
part,bytheconvulsedsituationoftheinancial
marketsthatledtoalossofassetvaluesand
alsotodecreasedactivity.Nevertheless,fromthe
pointofviewofproitability,measuredoverATA,
boththenetinterestincomeandimpairment
lossesoninancialassetsdemonstratedgreat
stabilityinthepastyear.Feesandcommissions
remainatthesamelevelasthepreviousyear.
Theperformanceofassetmanagementfees
(investmentcompaniesandpensionfunds)
Signiicant ratios
(Percentage)
Mexico
30-09-11 30-06-11 30-09-10
Eiciencyratio 36.2 35.9 34.1
NPAratio 3.5 3.4 3.4
NPAcoverageratio 128 134 150
Riskpremium 3.39 3.38 3.86
Mexico highlights in the third quarter
• Strengthofbankingactivity,especiallyinthe
retailportfolio.
• Stabilityintheriskpremium.
• BBVABancomer,themostproitableentityin
thesector.
• Goodperformanceofpensionsandinsurance
activity.
Mexico. Operating income(Million euros at constant exchange rate) Mexico. Net attributable profit(Million euros at constant exchange rate)
(1) At current exchange rate: +1.6%.(1) At current exchange rate: –1.2%.
876
1Q
907
2Q
899
3Q
874
4Q
893
1Q
+0.1% (1)
2010 2011
2Q
2,682 2,686
916
3Q
877
362
1Q
431
2Q
445
3Q
449
4Q
425
1Q
+2.9% (1)
2010 2011
2Q
1,238 1,275
448
3Q
402
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36 Businessareas
AsofSeptember30,2011,the net attributable
proitstoodat€1,275m.BBVABancomeristhe
entitywiththehighestproitability,asitachieved
anROEof20.2%(accordingtolocalaccounting
criteria)andsurpassedtheaverageofitsmain
competitorsby6percentagepoints.
Banking Business
Adequatemanagementofthebankingbusiness
contributedtothegrowthofthecommercial
activity.Asof30Sep-2011,the loanbook,
excludingtheoldmortgageportfolio,posted
ayear-on-yeargrowthof8.0%.Itsworth
mentioningthatlendingtocorporateclientshas
beenslowedbyamorecomfortableliquidity
positionincompaniesandthepublicsector,
whichledtoanincreaseinearlyprepaymentof
bankloans.Ifthiseectisexcluded,grossloans
andadvancestocustomerswereup14.2%inthelast12months.
Thegrowthofloansintheretailsegmenthas
beenoutstanding.Theconsumerportfolio,
includingcreditcards,presented23.4%
year-on-yeargrowthandreached€7,296m.The
solidperformanceofcar,personalandpayroll
loanshasbeenespeciallyimportant;together,
theygrew23.0%comparedtoSeptember2010.
LendingtoSMEsandmicro-businesseshas
likewisebeenveryfavorable,up16.8%
year-on-year.Thebalanceofmortgagelending,
excludingtheoldmortgageportfolio,reached
€7,870matthecloseofSeptember2011,a
6.4%increasecomparedtothesamedatethe
previousyear.BBVABancomermaintainsits
leadershippositionandcontinuestoinnovate
withprogramssuchas“HipotecaSelecta”,
jointlycreatedwithINFONAVIT(Instituteofthe
NationalHousingFundforWorkers)forprivate
sectoremployeeswhoareoeredpreferential
fundingconditions.
Customer funds,includingbankdeposits,
repos,mutualfundsandinvestmentcompanies,grewby13.1%year-on-yearto€52,075m.Italso
continuestomaintainaproitablemix.Demand
deposits,whicharelower-cost,represent41.8%
ofthetotalandincreasedatayear-on-yearrate
of15.1%,whiletimedepositsincreased11.7%
inthesameperiod.Inthethirdquarter,“Meta
Ahorro”waslaunched;thisproduct,withan
attractiveyield,allowscustomerstochooseboth
theamountoftheirinvestmentsandtheperiod
oftimetheywishtokeepthem.In
o-balance-sheetfunds,theassetsunder
managementbyinvestmentcompanies
wasabletoosetthelessfavorableevolution
ofbankingfees,aectedbyregulatorychanges.
Theaforementionedsituationoftheinancial
markets,especiallyinthelastpartofthequarter,hasledtolowerbrokeragerevenues.
Thus,asofSeptember30,2011,NTIstoodat
€264m.Insuranceactivityhasmaintainedits
positivetrajectory,whichexplainswhyother
incomegrewatayear-on-yearrateof24.9%
Consequently,theaccumulated gross income
reached€4,208m,marking3.3%year-on-year
growth.
Operatingexpensesat€1,522mwereup9.5%
withrespecttothesameperiodof2010.
Personnelcostsgrewattherateofinlation,so
theincreasecanbeexplainedbytheinvestment
ininfrastructureandbankingexpansion
(bankingpenetration).Inthelast12months,the
branchnetworkgrewby14branches,whilethe
numberofATMstotaled7,293(735morethan
oneyearprior).Consequently,BBVABancomer
retainsitsleadingpositioninthecountryby
numberofbranchesandATMswithamarket
shareof15.8%and20.4%,respectively,according
toinformationfromthe Comisión Nacional
Bancaria y de Valores(CNBV)inAugust2011.
Asaresultoftheserevenuesandexpenses,the
accumulatedoperating incomeasof30Sep-2011remainedlatascomparedtothe
sameperiodlastyearandstoodat€2,686m.
Lendinggrowthhasbeenaccompaniedby
properriskmanagement.Thishasenabledthe
impairmentlossesoninancialassetstoremain
atpracticallythesamelevelsasintheprevious
yearandtheaccumulated risk premium to
improveby47basispoints(standingat3.39%)
inthelasttwelvemonths.Furthermore,the
NPAandcoverageratiosclosedthemonthof
Septemberat3.5%and128%respectively.
BBVA Bancomer. Net interest income/Impairment
losses on financial assets
(Percentage)
3Q 4Q 1Q
2010 2011
2Q 3Q
. ..
. .
. .. . .
Impairmentlosses onfinancial
assets/ATA
Net interestincome/ATA
5.9 5.9 6.0 5.9 5.9
3.1 3.4 3.1 3.1 3.0
1.9 1.8 2.0 1.9 1.9
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38 Businessareas
SouthAmerica
Income statement
(Millioneuros)
Units:
South America Banking business Pensions and Insurance
Jan.-Sep. 11 ∆% ∆% (1) Jan.-Sep. 10 Jan.-Sep. 11 ∆% ∆% (1) Jan.-Sep. 10 Jan.-Sep. 11 ∆% ∆% (1) Jan.-Sep. 10
Net interest income 2,255 22.4 28.4 1,843 2,211 22.1 28.1 1,811 45 29.4 32.6 35
Netfeesandcommissions 780 10.0 13.4 709 561 11.2 16.8 505 222 3.3 2.0 215
Nettradingincome 355 (11.8) (7.0) 402 335 9.2 15.4 306 21 (78.1) (77.2) 96
Otherincome/expenses (176) 25.5 3 9.2 (141) (288) 24.6 35.7 (231) 120 22.8 29.5 97
Gross income 3,214 14.2 19.0 2,814 2,818 17.9 23.4 2,391 408 (8.1) (6.5) 443
Operatingcosts (1,463) 20.5 26.1 (1,215) (1,261) 20.7 26.9 (1,044) (179) 3.0 6.1 (173)
Personnelexpenses (747) 19.3 24.7 (626) (640) 19.6 25.5 (535) (87) (0.5) 2.4 (88)
Generalandadministrativeexpenses (604) 22.9 28.8 (491) (514) 23.0 29.4 (417) (86) 7.2 10.5 (80)
Depreciationandamortization (113) 15.6 21.6 (98) (107) 16.6 23.0 (92) (6) (0.7) 0.6 (6)
Operating income 1,751 9.5 13.7 1,599 1,558 15.6 20.7 1,347 229 (15.2) (14.5) 270
Impairmentoninancialassets(net) (322) 7.0 1 1.2 (301) (322) 7.0 11.2 (301) - - - -
Provisions(net)andothergains(losses) (44) 105.5 114.3 (21) (47) 211.0 225.8 (15) 3 n.m. n.m. (6)
Income before tax 1,385 8.5 12.6 1,277 1,188 15.3 20.5 1,030 226 (14.2) (13.6) 264
Incometax (282) (0.1) 5.1 (282) (246) 14.0 20.6 (215) (47) (25.0) (23.1) (63)
Net income 1,103 10.9 14.7 994 943 15.7 20.5 815 179 (10.9) (10.7) 201
Non-controllinginterests (349) 18.0 23.0 (296) (308) 26.8 33.7 (242) (42) (21.9) (22.4) (53)
Net attributable proit 754 7.9 11.2 698 635 11.0 15.0 573 137 (6.8) (6.4) 148
(1)Atconstantexchangerate.
Balance sheet
(Millioneuros)
Units:
South America Banking business Pensions and Insurance
30-09-11 ∆% ∆% (1) 30-09-10 30-09-11 ∆% ∆% (1) 30-09-10 30-09-11 ∆% ∆% (1) 30-09-10
Cashandbalanceswithcentralbanks 7,833 44.3 44.9 5,429 7,833 44.3 44.9 5,429 - - - -
Financialassets 9,891 13.2 15.7 8,736 8,441 18.3 (0.6) 7,136 1,396 (13.1) 7.8 1,605
Loansandreceivables 38,853 24.7 26.8 31,152 38,238 25.1 27.2 30,563 404 (42.8) (40.6) 706
Loansandadvancestocustomers 35,135 28.6 30.8 27,324 35,062 29.1 31.3 27,159 85 (51.1) (49.3) 174
Loansandadvancestocreditinstitutions
andother 3,718 (2.9) (1.6) 3,828 3,176 (6.7) (5.7) 3,405 319 (40.1) (37.7) 532
Tangibleassets 728 14.9 16.5 634 677 17.0 18.3 578 51 (7.3) (3.2) 55
Otherassets 2,403 14.6 17.4 2,097 2,008 13.3 16.5 1,773 152 (14.2) (11.0) 177
Total assets/Liabilities and equity 59,707 24.3 26.4 48,048 57,196 25.8 27.7 45,480 2,033 (21.3) (18.1) 2,544
Depositsfromcentralbanksandcreditinstitutions 5,623 30.3 33.2 4,314 5,622 30.5 33.3 4,309 5 7.2 8.7 5
Depositsfromcustomers 38,866 28.9 30.5 30,145 38,983 28.8 30.4 30,255 - - - -
Debtcertiicates 2,144 0.2 3.4 2,139 2,144 0.2 3.4 2,139 - - - -
Subordinatedliabilities 1,451 14.1 17.0 1,272 1,088 10.2 13.9 987 - - - -
Financialliabilitiesheldfortrading 1,373 50.9 57.8 910 1,373 50.9 57.8 910 - - - -
Otherliabilities 7,582 10.0 12.4 6,893 5,616 13.6 15.2 4,944 1,708 (18.6) (15.4) 2,100
Economiccapitalallocated 2,668 12.4 15.1 2,374 2,370 22.5 24.8 1,935 290 (34.1) (31.4) 440
(1)Atconstantexchangerate.
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39SouthAmerica
TheSouthAmericanareamanagestheBBVA
Group’sbanking,pensionandinsurance
businessesintheregion.Theirsthalfof2011
sawtheincorporationofCréditUruguay
(purchasedattheendof2010andmerged
withBBVAUruguayinMay2011)andthesaleof
theGroup’sholdingintheinsurancecompany
ConsolidarRetiroofArgentina.Anadditional
24.5%holdinginthecompanyForumChilewasalsopurchasedinSeptember2011.
Economic growthcontinuesverystrongin
SouthAmerica,sustainedbydomesticdemand
andalsothesupportfromwhatisstillalax
iscalpolicy.Growthratesintheconsumption
ofdurablegoodsandbanklendinginmost
countriesareveryhigh.Employmentigures
alsocontinuetobeverypositiveandare
providingsigniicantsupportfordomestic
demand.Commoditypricesremainhigh,which
explainsthebuoyancyofincome..
Withrespecttothemaincurrenciesinthe
region,theinalexchange ratesofthe
Argentinean,ChileanandColombianpesohave
fallenoverthelast12monthsand,exceptinthe
caseofArgentina,overthequarter.Incontrast,
thePeruviannuevosolandVenezuelanbolivar
gainedovertheyear,andparticularlyover
thequarter.Theoverallimpactonbusiness
activityandthebalancesheetintheareais
slightlynegativecomparedwiththeiguresfor
thesamedatelastyear.Intermsofaverage
exchangerates,allthecurrenciesexceptthe
Chileanpesolostinyear-on-yearterms,sothe
eectontheincomestatementisalsonegative
andmoresigniicantthaninthebalancesheet
andbusinessactivityigures.Unlessotherwise
indicated,allcommentsbelowrefertochanges
atconstantexchangerates.
Thepersistentpositiveeconomicclimate
continuestofavorgrowthinactivityinthe
region.Theloan bookintheareaattheendof
Septemberamountedto€36,403m,a
year-on-yearincreaseof30.7%andagainof
29basispointsinmarketshareoverthelast
12months(Augustigures,thelatestavailable).
Theiguresforcustomer fundsarealsovery
positive,particularlyinthecaseoflower-cost
fundssuchascurrentandsavingsaccounts,
whichgrewby31.0%overthe12months.
South America. Operating income
(Million euros at constant exchange rate)
South America. Net attributable profit
(Million euros at constant exchange rate)
(1) At current exchange rate: +7.9%.(1) At current exchange rate: +9.5%.
568
1Q
464
2Q
507
3Q
516
4Q
628
1Q
+13.7% (1)
2010 2011
2Q
1,540 1,751
553
3Q
570235
1Q
210
2Q
233
3Q
187
4Q
276
1Q
+11.2% (1)
2010 2011
2Q
678 754
252
3Q
225
Signiicant ratios
(Percentage)
South America
30-09-11 30-06-11 30-09-10
Eiciencyratio 45.5 44.5 43.2
NPAratio 2.3 2.4 2.4
NPAcoverageratio 140 138 139
Riskpremium 1.31 1.33 1.51
South America highlights in the third
quarter
• Positiveactivityinallthegeographicalareas.
• Newgainsinmarketsharehighlyfocusedon
theindividualsegment.
• Strongrevenues.
• Improvementinriskindicators.
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40 Businessareas
signiicantaspectsforeachofthebanksare
detailedbelow.
InBanco FrancesinArgentina,thepositive
netinterestincomefiguresstandout,with
year-on-yeargrowthof16.7%thankstothe
excellentperformanceoftheloanbook,which
wasboostedbyalmostallthelinesofbusiness.
Therewasagain44basispointsinmarketshareoverthelast12months,accordingto
dataforAugust2011.Particularlyoutstanding
wastheincreasedmarketshareinconsumer
finance(up99basispoints)andcorporate
lending(up66basispoints).Thehighrateof
growthinfeeshasbeenboostedbycredit
cardsandincomefromtransactionalservices
whichtogetherwithNTIalsoincreasingdueto
thesaleofassets,grossincomeyear-on-year
roseby23.9%.Operatingexpenseswereup
by24.1%,duetoinflationandexpansionplans
implementedbythebank.Atthesametime,highassetqualityhasrequiredonlymoderate
loan-lossprovisions.Inall,thesefactorshave
ledtonetattributableprofitof€109m,a
year-on-yearriseof38.5%.
InChile,BBVA andForumhavepostedgood
netinterestincomeigures,whichwereup
28.4%thankstoasigniicantincreaseinlending
toprivateindividuals,particularlyinconsumer
inance(withayear-on-yeargainof115basis
pointsinmarketshare)andmortgagelending
(up27basispoints).ThedownturninNTIisthe
resultofthehighcapitalgainsfromthesaleof
assetportfoliosin2010.Asaresultofallthese
factors,grossincomewasup17.0%.Including
theexpensesundertheexpansionplanscarried
outin2011,togetherwiththefavorablelevelof
loan-lossprovisions,thenetattributableproit
amountedto€91m.
BBVA Colombiacontinuesitsstrongpaceof
year-on-yeargrowthinlendingactivity(up
29.2%),particularlyincreditcards(up56.1%)
andconsumerfinance(up47.5%).Thebank
hasgainedsignificantlyinmarketshareinthesetwoitems(up116and126basispoints,
respectively).Netinterestincomewasup6.9%
andgrossincomeby2.8%,affectedbylower
NTIthistheyearcomparedwith2010.The
increasedexpensesarelargelytheresultofthe
impactofthetaxonfinancialtransactionsand
thewealthtax(whichdidnotapplytoBBVAin
2010).Loan-lossprovisionsandriskindicators
continuetobepositive.Asaresultofthese
factors,thenetattributableprofitinthenine
monthsended30-Sep-2011was€154m(up4.6%
year-on-year).
Includingtheassetsundermanagementin
mutualfunds,customerfundsmanagedbythe
banksamountedto€43,926masof
30Sep-2011,25.4%uponthesamedatein
2010.Inthepensionbusiness,thehighlevelof
volatilityintheinancialmarketshasimpacted
theproitabilityofthemanagedportfolios,and
ledgrowthoftheassetsundermanagementto
slowoverthelasttwelvemonthstoonly1.9%,amountingto€44,708asof30Sep-2011.
Thislevelofgrowthinbusinessactivityhas
beenrelectedinthenetinterestincomeinthe
area,whichtotaled€2,255myeartodate
(30Sep-2011),28.4%uponthesameperiodlast
year.Therewasalsogrowthof13.4%
year-on-yearinnetfeesandcommissionsto
€780m.NTI,at€355m,wasinluencedstrongly
bythevalueofUSdollarpositionsinBanco
Provincialandbytheturmoilonthemarkets.As
aresultoftheabove,combinedwiththeotherincome/expensesitem,the gross incomeyear
todatewas€3,214m,19.0%uponthesame
periodlastyear.
Expensesintheareawereup26.1%to€1,463m,
duetotheexpansionandpositioningprojects
undertakenbymostoftheunits.However,
thankstothepositiverevenueigures,the
eiciency ratioremainsatareasonablelevelof
45.5%.Theoperating incometoSeptemberwas
€1,751m,up13.7%.
Itisofparticularnotethatthemajorgrowth
inbusinessactivityhasbeenaccompaniedby
maintenanceofassetquality.Thisisreflectedin
thereductionintheNPA ratio,whichasof
30-Sep-2011stoodat2.3%(2.4%asof
30-Jun-2011).Impairmentlossesonfinancial
assetswereup11.2%to€322masaresultof
increasedlendingactivity,whilethecoverage
ratiohasimprovedoverthequarterbymore
than2percentagepointsto140%.
Tosumup,therehasbeenasigniicantgrowth
inactivityrelectedintheboostprovidedbyrevenues.This,togetherwiththeperformance
ofexpensesandloan-lossprovisionshaveledto
agrowthof11.2%inthenet attributable proitto
€754mintheninemonthsended30Sep-2011.
Banking Business
Intheirstninemonthsof2011,thearea’s
bankingbusinesshasgeneratedanet
attributableproitof€635m,15.0%uponthe
igureforthesameperiodlastyear.Themost
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41SouthAmerica
Pensions and Insurance
ThePensionsandInsuranceunitinSouth
Americaisaleaderinthepensionbusinessin
LatinAmerica.Ithadanetattributableproitin
theninemonthsended30Sep-2011of€137m,
6.4%downontheigurefor2010.Thisfallisdue
tothepension businesscontributing30.4%less,
at€71m.Whilethecommercialperformancehasbeengood,thebusinesshasbeenbadlyhit
bythehighvolatilityoftheinancialmarkets.In
contrast,theinsurance businesshadaproitof
€67m,ayear-on-yeargrowthof47.5%,thanks
tothesteadygrowthinbusinessactivity,as
relectedinthe28.7%riseinwrittenpremiums.
AFP ProvidainChilehadanetattributable
proitof€54m,despitethenegativeeectofthe
markets.Thefavorableperformanceofreceipts
wasparticularlynotable.Theyposteda
year-on-yeargrowthof5.1%andboostedincomefromfees(up3.0%). AFP Horizonte de Colombia
generatedanetattributableproitof€13mand
AFP Horizonte de Peru,of€6m.
Theinsurancecompaniesinthe Grupo
Consolidar hadanetattributableproitinthe
ninemonthsended30Sep-2011of€25m,51.6%
abovetheigureforthesameperiodin2010.
Thisgrowthistheresultofincreasedactivity,
withpremiumsupby25%,andthelimitedrise
inclaims.Intherestoftheregion,theinsurance
businessinChilegenerated€24m,withagrowth
inpremiumsof44%;Colombia,€11m;and
Venezuela,€6m.
InPeru,Banco Continentalalsoperformedwell
duringthequarter,asrelectedinthe
year-on-yeargainsinmarketshareinlending
(up118basispoints,thankstothegrowthin
creditcardsandmortgages)andincustomer
funds(up201basispoints).Thisgrowthin
activityisrelectedintheriseof13.4%innet
interestincome,whichcombinedwitha7.0%
growthinfeesandcommissionshasresultedinanincreaseof5.4%ingrossincome.Therise
inexpensescanbeexplainedbythebank’s
expansionprojects(28newbrancheshavebeen
openedinthelast12months).Finally,withstable
loan-lossprovisions,thenetattributableproit
amountsto€100m(up4.1%).
Thenetattributableproitof Banco Provincial
was€132m,66.1%uponthepreviousyear.The
resultisgreatlyinluencedbytherevaluingof
USdollarpositionsheldbythebank,asrelected
inthelineitemofNTI(in2010therewasasimilareectfollowingthedevaluationofthe
Venezuelanbolivar).Netinterestincomewas
up57.7%asaresultofthegrowthinbusiness
activity,particularlyconsumerinance(up57.3%)
andcreditcards(up63.3%),whichincreased
theirmarketshareby173and443basispoints,
respectively.Operatingexpensesaregrowing
inlinewithinlationandloan-lossprovisions
includeincreasedgenericpreventiveprovisions.
Amongtheotherbanks, Panamahadaproit
fortheninemonthsended30Sep-2011of
€19m,Paraguay of €23m,andUruguayof€8m
(includingthecontributionofCréditUruguay).
South America. Data per country (banking business, pensions and insurance)
(Millioneuros)
Operating income Net attributable proit
Country Jan.Sep. 11 ∆%∆% at constantexchange rate Jan.Sep. 10 Jan.Sep. 11 ∆%
∆% at constantexchange rate Jan.Sep. 10
Argentina 244 9.7 21.6 222 131 30.6 44.6 101Chile 343 3.2 0.7 332 171 (4.4) (6.8) 179
Colombia 289 (13.0) (11.2) 333 184 1.8 3.9 180
Peru 367 (5.5) (1.2) 388 105 (6.0) (1.7) 112
Venezuela 464 67.4 82.2 277 139 49.8 63.1 92
Othercountries(1) 44 (6.2) (6.2) 47 23 (30.7) (31.4) 34
Total 1,751 9.5 13.7 1,599 754 7.9 11.2 698
(1)Panama,Paraguay,Uruguay,BoliviaandEcuador.Additionally,itincludeseliminationsandothercharges.
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42 Businessareas
Income statement
(Millioneuros)
Units:
The United States BBVA Compass
Jan.Sep. 11 ∆% ∆% (1) Jan.Sep. 10 Jan.Sep. 11 ∆% ∆% (1) Jan.Sep. 10
Net interest income 1,182 (14.6) (9.1) 1,384 1,044 (12.3) (7.6) 1,209
Netfeesandcommissions 480 (3.7) 2.3 498 396 (5.4) 0.6 421
Nettradingincome 109 (5.7) (0.8) 116 72 (1.7) 5.0 74
Otherincome/expenses (60) 71.9 84.0 (35) (58) 79.2 101.2 (31)
Gross income 1,711 (12.8) (7.3) 1,963 1,454 (11.8) (7.0) 1,672
Operatingcosts (1,097) (3.3) 3.1 (1,135) (960) (5.0) 1.0 (1,017)
Personnelexpenses (599) 5.2 12.1 (570) (525) 3.2 10.8 (507)
Generalandadministrativeexpenses (372) (10.3) (4.4) (415) (313) (12.7) (8.1) (364)
Depreciationandamortization (126) (16.2) (10.4) (151) (122) (14.8) (10.6) (146)
Operating income 613 (25.9) (21.5) 828 494 (22.2) (19.4) 655
Impairmentoninancialassets(net) (285) (42.9) (38.8) (498) (273) (36.1) (36.0) (456)
Provisions(net)andothergains(losses) (23) 7.3 14.9 (22) (5) (70.2) (76.4) (21)
Income before tax 305 (0.8) 3.2 308 216 19.4 30.1 178
Incometax (88) 3.7 7.7 (84) (57) 24.6 36.3 (45)
Net income 218 (2.5) 1.5 223 159 17.6 28.0 133
Non-controllinginterests - - - - - - - -
Net attributable proit 218 (2.5) 1.5 223 159 17.6 28.0 133
(1)Atconstantexchangerate.
Balance sheet
(Millioneuros)
Units:
The United States BBVA Compass
30-09-11 ∆% ∆% (1) 30-09-10 30-09-11 ∆% ∆% (1) 30-09-10
Cashandbalanceswithcentralbanks 2,124 (26.5) (27.3) 2,890 1,778 (2.1) ( 3.3) 1,819
Financialassets 8,054 8.9 7.7 7,396 7,196 8.7 10.9 6,561
Loansandreceivables 38,841 (2.3) (3.4) 39,762 31,445 1.8 0.9 30,836
Loansandadvancestocustomers 37,331 (2.6) (3.6) 38,317 30,588 1.6 0.7 30,064
Loansandadvancestocreditinstitutionsandother 1,510 4.5 3.4 1,445 857 9.9 9.8 772
Inter-areapositions 27 (99.8) (99.8) 11,990 2 (88.5) (98.3) 127
Tangibleassets 782 (3.0) (4.0) 806 746 (2.7) (4.0) 768
Otherassets 2,259 (8.8) (9.8) 2,476 2,024 (8.6) (10.5) 2,237
Total assets/Liabilities and equity 52,086 (20.3) (21.1) 65,320 43,190 1.8 0.9 42,349
Depositsfromcentralbanksandcreditinstitutions 7,436 29.2 27.8 5,756 4,265 17.8 18.5 3,562
Depositsfromcustomers 36,220 (28.8) (29.6) 50,892 32,411 (0.0) (1.1) 32,422
Debtcertiicates 348 (29.0) (29.8) 490 - - - -
Subordinatedliabilities 1,156 (1.7) (2.8) 1,176 932 2.7 1.9 905
Inter-areapositions - - - - - - - -
Financialliabilitiesheldfortrading 439 24.3 22.9 353 424 27.2 28.8 326
Otherliabilities 3,516 (1.5) (2.6) 3,571 2,703 (0.1) (1.2) 2,707
Economiccapitalallocated 2,972 (3.5) (4.6) 3,081 2,455 1.0 0.1 2,427
(1)Atconstantexchangerate.
TheUnitedStates
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43TheUnitedStates
ThisareaencompassestheGroup’sbusinessin
theUnitedStatesandintheCommonwealthof
PuertoRico.BBVACompassaccountsforaround
83%oftheassetsand85%oftheearnings
generatedinthecountry.Mostofthecomments
belowarethereforefocusedonthisbank.
Inthethirdquarterof2011,thecountry’s
economic growth slowed,althoughthechanceofareturntorecessionisstilllow
andanupturnintheeconomyisexpected
overthesecondhalfoftheyear.However,the
sluggishrecoveryinemploymentandwages,a
residentialconstructionsectorstilldeepinthe
processofadjustment,thecontinuedhousehold
deleveragingprocess,andthevolatilityof
inancialmarketsmayallcontinuetoholdthe
recoveryincheck.
Withrespecttothe labor market,thelatest
availableiguresplacetheunemploymentrateat9.1%,withlayosinthepublicsectorandthe
weaknessoftherealestatemarketbeingthe
factorsthatcontributemosttotherise.Labor
marketgrowthisexpectedtoremainlow,inline
withaslowerthanexpectedeconomicrecovery.
Acombinationofaweakeconomicactivityand
stablecommoditypricesarehelpingcontain
inlationarypressures.Delationaryriskshave
alsodeclined,withthelatestconsumerprice
indexhigherthanexpected.
TheFEDisexplicitlycommittedtokeeping
interest rateslowthroughmid-2013and
recentlyannouncedthatitplanstolengthen
theaveragematurityofitsbalancesheet
bysellingUSD400billionofshorter-term
Treasuryholdingsandpurchasingthesame
amountoflonger-termsecurities.Moreover,it
couldimplementfurtherstimulusmeasuresif
downsidegrowthrisksincrease.
TheexchangerateoftheUS currencyagainst
theeurohasgainedyear-on-year(1.1%),and
inparticularquarter-on-quarter(7.0%),sothe
impactofthecurrencyonthebalancesheet
andvolumeofbusinessintheareaispositive.
However,intermsofaverageexchangerates
thedollarisdown6.5%overthelast12months,
thoughpracticallyunchangedontheigure
forthepreviousquarter.Thustheeectofthe
year-on-yearchangesintheincomestatement
isnegativeandpracticallynilbetweenJuneand
Signiicant ratios
(Percentage)
The United States
30-09-11 30-06-11 30-09-10
Eiciencyratio 64.2 63.2 57.8
NPAratio 3.9 4.2 4.6
NPAcoverageratio 69 67 58
Riskpremium 1.04 1.16 1.58
The United States. Operating income
(Million euros at constant exchange rate)
The United States. Net attributable profit
(Million euros at constant exchange rate)
(1) At current exchange rate: – 2.5%.(1) At current exchange rate: –25.9%.
251
1Q
272
2Q
259
3Q
199
4Q
225
1Q
–21.5% (1)
2010 2011
2Q
782 613
205
3Q
184
55
1Q
80
2Q
79
3Q
15
4Q
80
1Q
+1.5% (1)
2010 2011
2Q
215 218
73
3Q
65
The United States highlights in the
third quarter
• Thefavorablenewproductioniguresfor
targetportfolioshaveofsetfallingloanstothe
developersector.
• Thepositivetrendinthecustomerspread
continues.
• Newimprovementsinassetquality.
• BBVACompasshasthebestnetinterest
income/ATAratiowithinitspeergroup.
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44 Businessareas
increased3%onthepreviousquarter.Residentialrealestateis
alsoup,inlinewiththebank’snewmanagementpriorities,witha
quarter-on-quarterriseof4.4%andayear-on-yearriseof29.9%.In
contrast,loanstothedevelopersectorcontinuetofall,bothover
thequarter(down5.6%)andovertheyear(down31.4%),inline
withthestrategyofreducingriskinthesetypeofportfoliosandto
improvepositionsinthecommercial,industrialandresidentialreal
estatesegments.
Incustomer funds BBVACompasshasalsomanagedtoreduce
highcostdepositsandincreasethoseoflowercost.Infact,the
percentageofnon-interestbearingdepositsoutofthetotalrose
from25.8%at30Sep-2010to29.4%asof30Sep-2011.
Theaboveexplainsthefavorabletrendindepositcostigures,
whichhavefallenoverthelastyearby20basispointsfrom
0.62%to0.42%.Yieldonloansfell,buttoalesserextent,by12
basispointsoverthesametimeperiod.ThusBBVACompassis
continuingtoimproveits customer spread,whichasof
30Sep-2011stoodat3.94%(up8basispointsfromthesame
datethepreviousyearand2basispointsfromthecloseofthepreviousquarter).Asaresult,thebankhasmanagedtomaintain
itsquarterlynet interest incomeatpracticallythesamelevelas
inthepreviousquarter.Infact,BBVACompasshasthebestnet
interestincome/ATAratiowithinitspeergroup.Accordingto
datafromthesecondquarterof2011,thisratiowasabove3.96%
(followinglocalcriteria)fortheprevioussixquarters,whilethe
medianfortherestofthesectorwas3.52%.
RegulatorypressureshavenotpreventedBBVACompassfrom
makingconstantimprovementstoits feestructure.Retaillending
andinsurancepremiumshavemorethanosetthenegative
impactonservicechargesduringtheyearresultingfrom
regulatorychanges.Infact,BBVACompassactuallyincreased
servicechargesinthisquarter,provingthebank’sswiftresponse
andabilitytocompensateforlostincome.
Withrespecttootherrevenues,ofparticularnoteistheincreasein
theallocationtotheFederalDepositInsuranceCorporation(FDIC).
Inall,theBank’s gross incomeYTDstandsat€1,454m(down7.0%
year-on-year).
September2011.Unlessotherwisenoted,theiguresreferredto
belowaregivenatconstantexchangerates.
Overtheirstninemonthsoftheyear,thisareageneratedanet
attributable proitof€218m,ayear-on-yearincreaseof1.5%.The
mostimportantpartoftheincomestatementcontinuestobe
riskcontainment.Thisisrelectedintheiguresforimpairment
lossesoninancialassets,whichweredownovertheyearby
38.8%.Thishasinturnhadapositiveimpactontheriskpremiuminthearea,whichwas1.04%atthecloseofSeptember(1.16%as
of30Jun-2011).Itisalsoworthhighlightingthatthesefavorable
iguresforloan-lossprovisioningarenothavinganegativeimpact
oncoverageintheUnitedStates,whichincreasedbyovertwo
percentagepointsoverthequarterto69%.TheNPAratioalso
improved,closingon30Sep-2011at3.9%(4.2%asof30Jun-2011).
Intermsofbusiness activity,theareaiscontinuingwithits
processofalteringtheloan-bookmix.Inthethirdquarterof2011,
thefavorablenewproductioniguresfortargetlendingportfolios
haveosetfallingloanstothedevelopersector.Thisexplainsthe
quarter-on-quartergrowthof1.6%ingrosslendingtocustomersintheareato€38,456masof30Sep-2011.Customerfundsstood
at€35,335masof30Sep-2011,withthefocusstillonthosewith
lowercosts.
BBVA Compass banking group
TheBBVACompassbankinggroup(hereinafter,BBVACompass)
basicallyincludestheretailandcorporatebankingbusinessinthe
UnitedStates,excludingPuertoRico.Thisunithastakenseveral
keystepsin2011toimproveitspositionwithrespecttooperations
inthecurrenteconomicenvironmentandthusmaintain
proitability.
Gross customer lendingclosed30Sep-2011at€31,503m,
practicallythesameamountasinSeptember2010and2.7%
abovethatfor30Jun-2011.TheC&Iportfolio(notincluding
developerloansnorsecuredloans)showedthebiggestrisein
thequarter,at12.7%.Recentindustrydatareportforthesector
releasedbytheFederalReserveshowedthatcorporatelending
Interest bearing accounts48.6
Commercialreal estate
18.3
Residentialreal estate18.7
Commercial28.4
BBVA Compass. Loan mix
(Percentage)
BBVA Compass. Deposit mix
(Percentage)
Construction real estate 14.2
Consumer 16.8Commercial real estate 21.8
September 2010 September 2011
Residential real estate 23.8
Commercial 33.4
Construction realestate 9.5
Consumer 14.9
Time deposits27.4
Non interest bearing accounts25.8
Interest bearing accounts46.8
September 2010 September 2011
Time deposits 22.1
Non interestbearing
accounts29.4
Averagecost of
deposits0.60
Averagecost of
deposits0.42
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45TheUnitedStates
to€13,889m,whiledepositswereupatayear-on-yearrateof6.6%
(down1.9%overthequarter)to€8,985m.
BBVACompasscontinuestostandoutfromthecompetitionby customer service.Thankstomorethan50schemesbeing
implemented,newcustomerretentionandcross-sellratioshave
increasedsteadilyoverthelastthreequarters.Moreover,the
Bankcontinuestolaunchnew productsandinnovateinorder
tomaintainitscompetitiveedgedespitethechangingregulatory
environment.AprimeexampleistheintroductionoftheBusiness
Rewardscreditcardthisquarter,whichoersexclusivediscounts
ofupto30%onQuickBookspurchasesandbusinesssavings
throughtheVisaSavingsEdgescheme.Thecardhasnoannual
feeattached.OthernewproductsincludeaSafeSpendCardand
aChargeCard,bothofwhichoerseveralattractivefeatures.
Distribution networksarebeingimprovedthroughongoing
technologicalupdatesinbranchesandbetteraccessviabothcell
phonesandtheInternet.Thiscanbeseenbythe75%increase
sofarthisyearinthenumberofcustomerswhoaccessthebank
throughtheircellphones.
Finally,employeescontinuetobeveryactiveintheirrespective
communities,wheretheyparticipateinbothlocalandnational
initiatives.Onenotableprojectisvolunteerparticipationtorebuild
schoolswithinthebank’sfootprint,towhichover715employees
havecontributedtheirtimeandeortsofarthisyear.The
“CompassForYourCause”program,whichbeneitsnon-proit
organizations,hasmorethantripledinthelastyearwitharecord
11,000peopletakingpart.
Operatingexpensescontinuetobeheldincheck,despitethe
investmentinbothpeopleandtechnology.Theyincreasedby
only1.0%withrespecttotheigureforthesameperiodlastyear.
Overall,theoperating incomefellby19.4%to€494m.However,theimprovementincredit quality continuestobeakeyfactor
intheproitabilityofBBVACompass.Inthethirdquarterof2011
allthemainbusinessunitsofBBVACompassimprovedtheir
creditqualityonthepreviousquarter.NPAweredown€78million
(aquarter-on-quarterdropof5.7%),andimpairmentlosseson
inancialassetsyeartodatetoSeptemberweredown36.0%
year-on-year.Thishasnotaectedthebank’scoverageratio,
whichwas7.3percentagepointsbetterasof30Sep-2011thanon
thesamedatelastyearand1.9percentagepointsbetterthanthe
closeofJune2011.Thusthecostofriskinannualizedtermshas
falleninthelast12monthsfrom1.89%to1.23%,withareduction
overthequarterof10basispoints.Asaresult,the net attributable
proitamountedto€159m(up28.0%year-on-year).
ThismeansthatBBVACompasshasachievedorganic capital
growthandmaintainsconsistentlystrongcorecapitalratios.
Accordingtolocalcriteria,thebankhasacorecapital(TierI)ratio
of11.7%andleverageratioof9.5%.
BBVACompassisdividedintothreemain business units:Retail,
Commercialbanking,andWealthManagement.Retaillending
increased12.4%overtheyear(up3.1%overthequarter)to
€13,500m,whiledepositsfellby3.7%year-on-year(–2.8%
quarter-on-quarter)to€21,918m.Incommercialbanking,loans
wereupby8.2%fromSeptember2010and4.5%fromJune2011
Developer loans over BBVA Compass total loan
portfolio
(Percentage)
14.2
September2010
22.3
September2009
9.5
September2011
BBVA Compass. Net interest income/Impairment
losses on financial assets
(Percentage)
3Q 4Q 1Q
2010 2011
2Q 3Q
3.7
3.33.5 3.5
3.3
2.82.6
3.8 3.4 4.4
1.3 1.3
0.9 1.00.8
Impairmentlosses onfinancial
assets/ATA
Net interestincome/ATA
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47CorporateActivities
Thisareaincludesallthoseactivitiesnot
includedinthebusinessareas.Theseare
basicallythecostsoftheheadquarterswith
strictlycorporatefunctions,certainallocations
toprovisionssuchasearlyretirementsand
othersalsoofacorporatenature.Theareaalso
includestheassetsandliabilitiesderivedfrom
themanagementofstructuralliquidity,
interest-rateandexchange-raterisksbytheAssetsandLiabilitiesManagementunit,as
wellastheirimpactonearningsthatarenot
recognizedinthebusinessareasviatransfer
pricing.Finally,itincludescertainportfoliosand
assets,andtheirresults,whosemanagement
isnotlinkedtocustomerrelations,suchas
HoldingsinIndustrialandFinancialCompanies
andRealEstateManagement.
BetweenJanuaryandSeptember2011,net
interestincomeamountedtoanegative€460m,
ascomparedtothepositive€226mforthesameperiodin2010.Ascommentedinprevious
quarters,thisvariationisduetotheinalization
ofthemortgageloanrepricingafterthe2009
fallininterestratesandthesubsequentriseof
theinterestratecurveintheeurozone.The
above,togetherwithNTIbelowthatofthelast
twelvemonths,duetothelackofearningsfrom
portfoliosalesandthelossofassetvaluecaused
bytheturbidmarketsituation,resultedin gross
incomeof–€300m(+€857minthesame
periodin2010).Operatingexpensesamounted
to€690m,asaresultofinvestmentsmadeat
corporatelevel,mainlyintechnology,brandand
infrastructures.Asaresult,theoperatingincome
was–€991m(+€260m12monthsago).
Impairmentlossesoninancialassetstotaled
€54m,ascomparedtothe€916mtheprevious
year,inwhichadditionalprovisionswere
allocatedtotakeadvantageofthehighlevel
ofNTI.Furthermore,theincreaseinprovisions
(net)andothergains/lossesstoodat–€692m,
whichisdueprimarilytogreaterprovisionson
realestateandforeclosedassets.Asaresult,
theaccumulatednet attributable proitasofSeptember2011was–€970m(–€808minthe
sameperiodof2010).
Assets/Liability Management
TheAssetsandLiabilitiesManagementunitis
responsibleforactivelymanagingstructural
interest-rateandforeignexchangepositions,
aswellastheGroup’soverallliquidityand
shareholders’funds.
Liquidity managementhelpstoinancethe
recurrentgrowthofthebankingbusinessat
suitablematuritiesandcosts,usingawide
rangeofinstrumentsthatprovideaccesstoa
largenumberofalternativesourcesofinance.
AcoreprincipleintheBBVAGroup’sliquidity
managementcontinuestobetoencourage
theinancialindependenceofitssubsidiaries
intheAmericas.Thisaimstoensurethatthe
costofliquidityiscorrectlyrelectedinprice
formationandthatthereissustainablegrowthin
thelendingbusiness.Short-termandlong-termwholesaleinancialmarketswereaectedby
heighteneduncertaintyalongthethirdquarter
of2011.Thelong-termmarketshaveremained
practicallyclosedtotheEuropeaninancial
sector,withtheexceptionoftheissueofseveral
coveredbondsinthelastweekofAugust.
Moreover,theshort-termmarketshavebeen
aectedbythelackofappetiteofAmerican
investorsduetotheuncertaintiesregarding
thepossibleeectsoftheGreekdefaultonthe
Frenchbankingsystemandthesustainability
ofItalianinances.Againstthisbackdrop,BBVA’sproactivepolicyinitsliquiditymanagement,
itsretailbusinessmodelandasmallervolume
ofassetsgiveitacomparativeadvantage
againstitsEuropeanpeers.BBVAhasalready
covereditsmedium-andlong-terminancing
needsfor2011thankstothetotalissuedinthe
year(approximately€10,000m),aswellasthe
liquiditycontributedbyitsmainbusinessesin
Spain.Inaddition,thedebtmaturityproilefor
thecomingyears,withanaverageof€10,000m
peryear,canbeaddressedcomfortablyina
scenarioofverylowlendingactivityinSpain
andnaturalgrowthofcustomerdeposits.
Thefavorabletrendintheproportionofretail
depositsinthestructureofthebalancesheetin
allthegeographicalareascontinuestoallowthe
Grouptostrengthenitsliquiditypositionandto
improveitsinancingstructure.
TheGroup’scapital managementhasatwofold
aim:tomaintainthelevelsofcapitalization
appropriatetothebusinesstargetsinallthe
countriesinwhichitoperates;and,atthesame
time,tomaximizethereturnonshareholders’
fundsthroughtheeicientallocationofcapitaltodierentunits,goodmanagement
ofthebalancesheetandproportionateuse
ofthevariousinstrumentsthatcomprisethe
Group’sequity:shares,preferredsharesand
subordinateddebt.Intheirstninemonthsof
2011,BBVA’sAnnualGeneralMeetingapproved
theintroductionofa“DividendOption”
program,tooershareholdersawiderrangeof
remunerationontheircapital.Inaddition,inJuly
2011theBoardofDirectorshasapprovedthe
totalconversionofthemandatoryconvertible
subordinatedbondsissuedinSeptember2009
(worth€2,000m)intonewlyissuedBBVA
ordinaryshares.Inconclusion,thecurrentlevels
ofcapitalizationensuretheBank’scompliance
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48 Businessareas
managementhavebeenverysatisfactory,with
extremelylimitedriskstrategiesinEurope,the
UnitedStatesandMexico.Thesestrategiesare
managedbothwithhedgingderivatives(caps,
loors,swaps,FRAs)andwithbalance-sheet
instruments(mainlygovernmentbondswiththe
highestcreditandliquidityratings).
Holdings in Industrial andFinancial Companies
Thisunitmanagestheportfolioofindustrialand
inancialinvestmentsincompaniesoperating
inthetelecommunications,media,electricity,
oil,gasandinancialsectors.LikeAsset/Liability
Management,thisunitlieswithintheGroup’s
FinanceDivision.
BBVAappliesstrictrequirementstothisportfolio
regardingrisk-controlprocedures,economiccapitalconsumptionandreturnoninvestment,
diversifyinginvestmentsacrossdierent
sectors.Italsoappliesdynamichedgingand
monetizationmanagementstrategiestoits
holdings.Intheirstninemonthsof2011,it
invested€440manddivested€180m.
Asof30Sep-2011,themarketvalueofthe
HoldingsinIndustrial&FinancialCompanies
portfoliowas€3,954m,withunrealizedcapital
gainsof€428m.
withallofitscapitalobjectives,ashasbeen
recognizedintheEBAstresstestspublishedin
July2011.
Foreignexchange riskmanagementofBBVA’s
long-terminvestments,basicallystemmingfrom
itsfranchisesintheAmericas,aimstopreserve
theGroup’scapitalratiosandensurethestability
ofitsincomestatement.InthesixmonthsendedJune30,2011,BBVAhasmaintainedapolicyof
activelyhedgingitsinvestmentsinMexico,Chile,
Peruandthedollararea,withaggregatehedging
ofcloseto50%.Inadditiontothis
corporate-levelhedging,dollarpositionsareheldat
alocallevelbysomeofthesubsidiarybanks.The
foreign-exchangeriskoftheearningsexpected
intheAmericasfor2011isalsostrictlymanaged.
Intheirstninemonthsoftheyear,hedginghas
mitigatedthenegativeimpactofexchangerates
onthecapitalandtheGroup’sincomestatement.
Fortherestof2011,and2012asawhole,thesameprudentandproactivepolicywillbepursuedin
managingtheGroup’sforeign-exchangeriskfrom
thestandpointofitseectoncapitalratiosandon
theincomestatement.
Theunitalsoactivelymanagesthe structural
interestrate exposureontheGroup’sbalance
sheet.Thisaimstomaintainasteadygrowthin
netinterestincomeintheshortandmedium
termregardlessofinterest-rateluctuations.In
theirstninemonthsof2011,theresultsofthis
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49Otherinformation:WholesaleBanking&AssetManagement
Otherinformation:WholesaleBanking&AssetManagement
Income statement
(Millioneuros)Wholesale Banking & Asset Management
JanuarySep. 11 ∆% ∆% (1) JanuarySep. 10
Net interest income 1,153 0.8 2.3 1,144
Netfeesandcommissions 632 2.6 3.7 616
Nettradingincome 222 (30.8) (28.7) 320
Otherincome/expenses 70 (1.7) (3.7) 71
Gross income 2,077 (3.5) (2.1) 2,151
Operatingcosts (705) 14.5 15.5 (615)
Personnelexpenses (419) 11.3 12.1 (376)
Generalandadministrativeexpenses (276) 19.4 20.9 (231)
Depreciationandamortization (10) 19.5 20.0 (9)
Operating income 1,372 (10.6) (9.2) 1,535
Impairmentoninancialassets(net) (61) 5.7 7.4 (58)
Provisions(net)andothergains(losses) (7) n.m. n.m. 5
Income before tax 1,304 (12.1) (10.6) 1,483
Incometax (382) (8.7) ( 6.9) (419)
Net income 922 (13.4) (12.1) 1,064
Non-controllinginterests (60) (20.2) (16.1) (75)
Net attributable proit 862 (12.9) (11.8) 989
(1)Atconstantexchangerate.
Balance sheet
(Millioneuros)
Wholesale Banking & Asset Management
30-09-11 ∆% ∆% (1) 30-09-10
Cashandbalanceswithcentralbanks 8,531 66.1 67.4 5,136
Financialassets 79,683 9.5 (9.3) 72,759
Loansandreceivables 74,713 13.5 14.5 65,838
Loansandadvancestocustomers 55,016 6.9 8.1 51,466
Loansandadvancestocreditinstitutionsandother19,696 37.0 36.9 14,372
Inter-areapositions - n.m. n.m. 25,955
Tangibleassets 47 3.1 3.5 45
Otherassets 2,527 13.0 13.4 2,237
Total assets/liabilities and equity 165,500 (3.8) (3.2) 171,970
Depositsfromcentralbanksandcreditinstitutions 53,728 1.2 2.5 53,075
Depositsfromcustomers 48,972 (21.6) (21.3) 62,481
Debtcertiicates (117) n.m. n.m. 0
Subordinatedliabilities 1,462 (21.3) (21.4) 1,857
Inter-areapositions 2,449 n.m. n.m. -
Financialliabilitiesheldfortrading 48,819 8.9 9.0 44,825
Otherliabilities 6,352 (0.1) 1.2 6,358
Economiccapitalallocated 3,836 13.7 13.6 3,374
(1)Atconstantexchangerate.
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50 Businessareas
TheWholesaleBanking&AssetManagement
(WB&AM)areahandlestheGroup’swholesale
businessesandassetmanagementinallthe
geographicalareaswhereitoperates.Itis
organizedinthreemainbusinessunits:Corporate
andInvestmentBanking(C&IB),GlobalMarkets
(GM)andAssetManagement(AM).
Despitethecomplicatedeconomicbackdrop
andthenegativeevolutionoftheinancial
markets,especiallyinthesecondandthird
quartersof2011,theBBVAGroup’sWB&AMhas
maintainedaclearfocusontheclientandhigh
recurrenceandqualityinits revenues.This
wasduetotheGroup’soutstandingbusiness
model,whichisstronglybasedonasolid
relationshipwithitscustomersandlowleverage
levels.Thisbusinessmodelinthecurrent
economicsituationallowsBBVAtorecover
competitivenessagainstabackdropthathas
forcedotherbankstoannouncesigniicant
deleveragingplans.
Theaccumulated gross incomeasof
Septemberstoodat€2,077m,down2.1%at
constantexchangeratescomparedtothesame
periodof2010.Brokendownbygeographical
area,Asiahaspostedanexcellent29.3%
year-on-yeargrowthsupportedbyitsGlobal
Marketsunit.Europe,excludingSpain,recorded
a2.7%increase.
Investmentinsystemsandthevariousgrowth
plansunderwayinallthegeographicalareas
haveledtoa15.5%year-on-yearincrease
inoperatingexpenses,andresultedinanoperating incomeamountingto€1,372masof
30Sep-2011,a9.2%decreasecomparedtothe
sameperiodof2010.
Theunitsinthisareacontinuetoshowhigh
assetquality,withalowNPAratio,ahigh
coverageratioandloan-lossprovisionsthat
represent5.1%oftheoperatingincome.Asa
resultofthesefactors,thenet attributable proit
intheninemonthsended30Sep-2011was
€862m(down11.8%ascomparedtoSeptember
2010).
AsofSeptember30,2011,thisaggregate
recordedgross lending to customersof
€55,683mandmanaged€50,140min customer
funds.Itsyear-on-yearevolutionvariesby
geographicalarea.Activitywasdownor
remainedstableinthedevelopedmarkets
(SpainandtheUnitedStates,primarily),whileit
wasupinemergingregions(EurasiaandLatin
America).
ThemaintransactionsintheGroup’swholesale
businessinthethirdquarterof2011are
summarizedbelow:
Inequity capital marketsinSpain,BBVA
participatedasco-leadmanagerinthe
institutionaltrancheofBankia’sIPO(€3,092m).
InAsia,itactedasjointlead-managerinthe
internationaltrancheofCITICSecuritiesgoing
WB&AM. Operating income
(Million euros at constant exchange rate)
WB&AM. Net attributable profit
(Million euros at constant exchange rate)
(1) At current exchange rate: –12.9%.(1) At current exchange rate: – 10.6%.
630
1Q
455
2Q
426
3Q
470
4Q
558
1Q
–9.2% (1)
2010 2011
2Q
1,511 1,372
440
3Q
374
413
1Q
295
2Q
270
3Q
229
4Q
349
1Q
–11.8% (1)
2010 2011
2Q
978 862
313
3Q
200
WB&AM highlights in the third
quarter
• Resilienceofcustomerrevenuesinan
especiallycomplicatedquarterforthe
markets.
• Leadershipinseveralofthewholesalebanking
operationsinEuropeandLatinAmerica.
• Highassetquality.
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INVESTOR RELATIONS
PaseodelaCastellana.81–22ndloor
E28046Madrid-Spain
Tel,:+34913746201
Fax:+34915378512
Email:inversoresbbva@grupobbva,com
1345Av,oftheAmericas.45thloor
NewYork.NY10105-USA
Tel,:(+1212)7281660
Fax:(+1212)3332905
Email:ricardo,marine@bbvany,com
http://inversores,bbva,com
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3 Q1 1