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BBVA in 2012

Earnings

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In 2012, BBVA Group reported a net attributable profit of €1,676m. The main feature of this result is the high quality of revenue, despite the hugely difficult and demanding background in which it has been generated. The Group has thus demonstrated for yet another year its high capacity to generate recurrent earnings, which have increased quarter-on-quarter, with an accumulated growth of 12.8% over the year. This standout performance is due to BBVA’s approach to banking, as described in the “Environment and positioning” section of this report.

The most significant aspects of 2012, from the standpoint of earnings, are:

  • Sound recurrent revenue. Net interest income is above the level of 2011, while net fees and commissions are also up on the previous year, despite the regulatory restrictions that came into force in some geographical areas and lower activity in Spain.
  • Significant contribution from NTI, particularly in the last two quarters of the year.
1 BBVA Group. Income evolution

(Million euros)

A significant increase in provisions in Spain to cover the gradual impairment in real-estate portfolios and assets.

2 BBVA Group. Loan-loss and real-estate provisioning (1)

(Million euros)

(1) Includes total loan-loss provisions and foreclosed and/or asset purchase I Spain.
(2) Includes loan-loss provisions and provisions related to foreclosed and asset purchases within the scope
of the royal Decree-Laws 02/2012 and 18/2012 (RD)
Consolidated income statement

(Million euros)

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2012 Δ% Δ% at constant exchange rates 2011 2010
Net interest income 15,122 15.0 11.0 13,152 13,316
Net fees and commissions 4,353 8.0 4.9 4,031 4,034
Net trading income 1,767 19.3 15.3 1,481 1,827
Dividend income 390 (30.6) (30.9) 562 529
Income by the equity method 727 22.1 22.1 595 331
Other operating income and expenses 82 (60.3) (53.1) 206 297
Gross income 22,441 12.1 8.7 20,028 20,333
Operating costs (10,786) 10.8 7.6 (9,737) (8,761)
Personnel expenses (5,662) 9.1 6.2 (5,191) (4,698)
General and administrative expenses (4,106) 10.8 7.4 (3,707) (3,309)
Depreciation and amortization (1,018) 21.4 17.2 (839) (754)
Operating income 11,655 13.3 9.8 10,290 11,573
Impairment on financial assets (net) (7,980) 88.8 84.6 (4,226) (4,718)
Provisions (net) (651) 28.2 25.6 (509) (475)
Other gains (losses) (1,365) (35.3) (38.8) (2,110) (320)
Income before tax 1,659 (51.9) (53.2) 3,446 6,059
Income tax 275 n.m. n.m. (206) (1,345)
Net income from ongoing operations 1,934 (40.3) (41.9) 3,240 4,714
Net income from discontinued operations 393 59.8 50.3 245 281
Net income 2,327 (33.2) (35.1) 3,485 4,995
Non-controlling interests (651) 35.3 24.2 (481) (389)
Net attributable profit 1,676 (44.2) (45.3) 3,004 4,606
Adjusted (1) (2,730) - - (1,501) (266)
Net attributable profit (adjusted) (1) 4,406 (2.2) (5.2) 4,505 4,872
Basic earnings per share (euros) 0.32

0.62 1.10
Basic earnings per share adjusted (euros) (1) 0.82

0.92 1.16
(1) In 2011, during the fourth quarter, US goodwill imparment charge. In 2010, 2011 and 2012, impairment charge related to the deterioration of the real-estate sector in Spain. And in 2012, impact of Unnim badwill.
Consolidated income statement: quarterly evolution

(Million euros)

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2012 2011

4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q
Net interest income 3,910 3,877 3,741 3,594 3,482 3,284 3,213 3,173
Net fees and commissions 1,126 1,104 1,061 1,062 1,004 1,007 1,035 985
Net trading income 646 319 461 340 403 (5) 331 751
Dividend income 17 35 311 27 230 50 259 23
Income by the equity method 191 169 175 191 205 149 122 119
Other operating income and expenses (32) 6 57 51 42 23 62 79
Gross income 5,858 5,512 5,806 5,265 5,368 4,508 5,022 5,130
Operating costs (2,855) (2,771) (2,633) (2,528) (2,597) (2,408) (2,426) (2,307)
Personnel expenses (1,472) (1,447) (1,396) (1,347) (1,372) (1,294) (1,277) (1,247)
General and administrative expenses (1,089) (1,064) (1,001) (951) (1,000) (899) (943) (865)
Depreciation and amortization (294) (259) (236) (230) (225) (214) (206) (194)
Operating income 3,003 2,741 3,173 2,738 2,770 2,100 2,596 2,824
Impairment on financial assets (net) (2,676) (2,038) (2,182) (1,085) (1,337) (904) (962) (1,023)
Provisions (net) (227) (195) (98) (130) (182) (93) (83) (150)
Other gains (losses) (269) (561) (311) (223) (1,719) (166) (155) (71)
Income before tax (168) (53) 582 1,299 (466) 937 1,397 1,579
Income tax 220 275 3 (223) 385 (77) (167) (347)
Net income from ongoing operations 52 222 584 1,076 (81) 860 1,229 1,232
Net income from discontinued operations 138 83 75 96 74 48 66 58
Net income 190 305 659 1,173 (7) 907 1,295 1,290
Non-controlling interests (170) (159) (154) (168) (132) (103) (106) (141)
Net attributable profit 20 146 505 1,005 (139) 804 1,189 1,150
Adjusted (1) (1,042) (825) (742) (122) (1,166) (173) (82) (80)
Net attributable profit (adjusted) (1) 1,061 971 1,247 1,127 1,026 978 1,271 1,229
Basic earnings per share (euros) 0.01 0.03 0.10 0.19 (0.03) 0.16 0.24 0.23
Basic earnings per share adjusted (euros) (1) 0.19 0.18 0.23 0.21 0.20 0.20 0.26 0.25
(1) In 2011, during the fourth quarter, US goodwill impairment charge. In 2011 and 2012, impairment charge related to the deterioration of the real-estate sector in Spain. And in 2012, impact of Unnim badwill.

BBVA’s profitability improves in terms of gross income over average total assets (ATA) from 3.52% in 2011 to 3.60% in 2012. This is due to the aforementioned strength and high quality of revenue. Compared to the previous year, net interest income and NTI increase their contribution while fees and commissions and other income reduce it.

Costs over ATA slightly increase due to a greater weight of emerging countries. However, the growth is lower than the trend shown in the revenues. This produces operating income over ATA improves 6 basis points in the last twelve months reaching 1.87%.

This positive performance has enabled the Group to absorb the significant increase in provisions made to cover the impairment of assets related to the real-estate sector in Spain, which in turn resulted in a decline of ROA to 0.37%. Excluding these provisions and the badwill from Unnim, ROA stands at 0.81%, i.e. 7 basis points less than in 2011 (excluding the goodwill impairment charge in the United States posted in the fourth quarter of 2011).

Consolidated income statements (% over ATA)
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2012 2011 2010
Net interest income 2.42 2.31 2.38
Net fees and commissions 0.70 0.71 0.72
Net trading income 0.28 0.26 0.33
Other operating income and expenses 0.19 0.24 0.21
Gross income 3.60 3.52 3.63
Operating costs (1.73) (1.71) (1.57)
Personnel expenses (0.91) (0.91) (0.84)
General and administrative expenses (0.66) (0.65) (0.59)
Depreciation and amortization (0.16) (0.15) (0.13)
Operating income 1.87 1.81 2.07
Impairment on financial assets (net) (1.28) (0.74) (0.84)
Provisions (net) and other gains (losses) (0.32) (0.46) (0.14)
Income before tax 0.27 0.61 1.08
Income tax 0.04 (0.04) (0.24)
Net income from ongoing operations 0.31 0.57 0.84
Net income from discontinued operations 0.06 0.04 0.05
Net income (ROA) 0.37 0.61 0.89
Net income adjusted (ROA adjusted) 0.81 0.88 0.94
Non-controlling interests (0.10) (0.08) (0.07)
Net attributable profit 0.27 0.53 0.82
Net attributable profit (adjusted) 0.71 0.79 0.87
Memorandum item:


Average total assets (million euros) 623,894 568,579 559,558
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