In the fourth quarter of 2012 the main trends remarked in previous quarters were confirmed. Thus, BBVA has completed a hugely difficult and demanding year with:

1. High generation of recurrent revenue and a large contribution from net trading income (NTI).
2. This has enabled BBVA to absorb a significant increase in provisions in Spain to cover the gradual impairment in portfolios and real estate assets. As a result, the Group quarterly net attributable profit amounts to €20m.
3. In terms of solvency, the Bank has maintained the Basel II core capital ratio it had at the close of the preceding quarter (10.8%), and continues to comply with the recommendations of the European Banking Authority (EBA).
4. Very good news from the standpoint of liquidity in the quarter, with the positive performance in customer deposits in Spain particularly noteworthy.
5. In activity , key points are once again the buoyant lending in emerging economies and the necessary deleveraging of the Spanish economy. By segments, BBVA continues to grow mainly in retail portfolios and deposits.
6. Significant progress has been made during the quarter in the signing of agreements for the sale of the pension business in Latin America. Moreover on December 16, the sale of BBVA Puerto Rico was finalized in the United States.
7. As regards shareholder remuneration, BBVA is maintaining the current dividend policy.

These points are discussed below in more detail.

Strong recurrent revenue, that is to say, gross margin excluding NTI and dividends, in line with preceding quarters. This item has grown once more over the last three months, amounting to a total of €20,284m in the 2012 year, with an annual growth rate of 12.8%. The main reasons for this performance are still the buoyant activity in emerging markets, good management of spreads in each geographical area and the positive performance in the insurance business.

There has been a significant contribution from NTI, with positive performance in general terms in all areas. In the fourth quarter, it also includes €194m from the buyback of subordinate bonds (a transaction which was announced to the market in October).

The strong revenue figures enabled the Bank to continue absorbing the increase in provisions arising from the impairment of real estate sector assets in Spain. During 2012, the Group has set aside €4.4 billion for both loan-loss provisions and provisions for foreclosed and acquired assets within the scope of Royal Decree-Laws 02/2012 and 18/2012, thus complying with the requirements of these two laws. The higher allocations to provisions have improved the Group’s coverage ratio by 3 percentage points over the quarter and 11 points over the year, to 72%.

As a result of the above, the Group reported a net attributable profit of €20m for the quarter and €1,676m in 2012 (€3,004m the previous year). The adjusted net attributable profit (excluding the charge for the impairment of real estate sector assets in Spain, and the badwill of Unnim) amounts to €1,061m (€4,406m in 2011).

Solvency has improved over the course of the year. As of 31-Dec-2012, the Group closed with a Basel II core capital ratio similar to that at the end of the third quarter of the year (10.8%). This means an increase of 45 basis points on the December 2011 figure, reflecting the Group’s capacity to generate capital in the present adverse environment while maintaining its dividend policy.

The news on liquidity during the quarter was very positive. The following is worth mentioning in this regard:

• BBVA has successfully carried out several issues in Europe and in America in 2012, with a very significant level of demand. Specifically, in the fourth quarter two senior debt issues were placed in Europe, amounting to €2,500m; one in the United States, amounting to USD 2,000m; and a covered bond for €2,000m.
• Growth in customer deposits. The increased proportion of retail deposits on the liability side of the balance sheet in all geographical areas has allowed the Group to continue improving its financing structure and reduce its liquidity gap.
• The deleveraging process in Spain and the reduction in Corporate & Investment Banking (CIB) portfolios in developed countries continue.

With respect to activity, the strength of lending in emerging economies is outstanding. Gross customer lending rose 18.6% year-on-year in South America and by 8.6% in Mexico. BBVA Compass also reported a positive performance (up 4.1% year-on-year) thanks to the favorable evolution of new production in the loan portfolios that are strategic for the Group. In contrast, in Spain the drop in lending activity was heightened, with a fall of 3.9% over the quarter, due to the deleveraging process in the Spanish economy mentioned above. In Eurasia, loans were down 13.0% caused by the reduction in CIB portfolios, as there was positive contribution from Garanti (up 15.1% year-on-year). The most important factor in customer funds is the growth in customer deposits in the retail segment across all geographical areas.

In the second quarter of 2012 BBVA announced it was starting a process to study strategic alternatives for its pension business in Latin America. BBVA signed, on December 24, 2012, a sale agreement for the stake in its subsidiary in Colombia, and on January 9, 2013, BBVA closed the sale of the Afore in Mexico. Thus, earnings from this business in the region are classified as discontinued operations. The historical series have also been reconstructed to ensure they are comparable.

The level of recurrent earnings enables the Group to continue with its dividend payment policy approved at the last General Shareholders’ Meeting (AGM). On January 10, 2013, a gross amount of €0.10 per share was paid in cash.

The most important aspects of the business areas can be summarized as follows:

• In Spain, revenue is proving resilient despite very feeble economic activity and strong competition for customer funds. It is important to stress the positive performance in on-balance-sheet customer funds in the quarter, with a steady increase in market share in this item. The income statement is impacted by loan-loss provisions, which have risen significantly to cover the steady impairment in real estate portfolios, leading to a net attributable profit of –€735 over the quarter and –€1,267m for the year overall.
• Eurasia generated a cumulative net attributable profit of €950m. Particularly positive aspects have been the excellent performance of Garanti and the positive contribution from the stake in China Citic Bank (CNCB). Negative aspects are the one-off higher provisions which had to be made in Portugal in the fourth quarter of 2012. In activity, retail portfolios have performed positively (largely from the stake in Garanti), while the loan book from CIB has been reduced.
• In Mexico, 2012 has been a year of change for BBVA Bancomer, a year in which investments have been made to take advantage of opportunities in the Mexican market. Mexico maintains its sustained growth in activity, above all in the retail portfolio. Earnings were boosted by the good performance in net interest income, due to the trend in activity (as mentioned above) and good price management, the positive performance in the insurance business, the year-on-year increase in operating expenses at levels similar to those seen in previous quarters and the stability of the risk premium. These factors have led to a net attributable profit of €1,821m in 2012 (up 4.0% year-on-year at constant exchange rates).
• South America enjoyed again outstanding performance in activity, earnings and asset quality, across practically all the countries in the area. In 2012, the area generated a net attributable profit of €1,347m, up 23.6% year-on-year at constant exchange rates. This result is mainly backed by strong lending growth, a positive performance in customer deposits, and excellent spread and risk management.
• The United States maintains a favorable trend in activity, asset quality, earnings and solvency, very much supported on the local business. The upward trend in the BBVA Compass loan book continues, thanks to the positive performance of the target portfolios (residential mortgages and commercial loans), while customer funds continue to perform well in non-interest bearing deposits. The decrease on impairment losses on financial assets has had a very positive impact on earnings and offsets the flat performance of net interest income in the current environment of low interest rates and a relatively flat curve. As a result, the area has generated a cumulative net attributable profit of €475m.