In the explanations of the changes in the main headings of the summarized consolidated income statements, it has to be considered the following issues:
- Average exchange rates used in the conversion of the financial statements of our foreign subsidiaries have had a significant impact in some lines of the income statement of the Group. The appreciation of the euro and the strong depreciation of the Venezuelan Bolivar and the Argentine Peso explain, in most cases, the negative year-on-year comparison of both income and expenditure, offsetting each other to a large degree. Excluding the exchange rate effect, most of the lines of both income and expenditure have grown as a result of the increased business volumes and activity in emerging economies.
- Following the adoption of IFRIC 21 on levies by the IFRS interpretations Committee, in 2014 there was a change in accounting policy with respect to contributions made to the Deposit Guarantee Fund. According to the International Accounting Standards (denominated IAS 8), IFRIC 21 has been applied retroactively restating certain amounts presented for comparative purposes from prior years. The main effect of this change is that:
- With respect to the income statements from previous years, the balances for the following line items have been modified: "Other Income and Expenses" and consequently the line items of "Gross Margin", "Operating income", "Operating Profit & Loss before tax" and "Profit attributable to parent company". Therefore, the "profit attributable to parent company" for the year 2013 becomes €2,084 million compared to €2,228 million registered under the previous regulation.
- With respect to the balance sheet from 2013 and 2012, this change affects in a material manner the balances for the following line items: “Deferred tax assets”, “Financial liabilities at amortized cost – Other financial liabilities”, “Reserves” and consequently the line items “Total assets”, “Total liabilities”, “Stockholders’ funds” and “Total equity”.
- The heading “Income from discontinued transactions (net)” in 2013 included the earnings from the agreements for the sale of the pension business in Latin America concluded in 2013 (see Note 3 to the accompanying consolidated financial statements),
The Group’s summarized consolidated income statements for 2014 and 2013 are given below (including the mentioned restatement):
Download Excel
|
|
Millions of Euros | ||
|---|---|---|---|
| BBVA Group Interim Consolidated Income Statements | 2014 | 2013 | 2012 |
| NET INTEREST INCOME | 14,382 | 13,900 | 3.5 |
| Dividend income | 531 | 235 | 126.0 |
| Share of profit or loss of entities accounted for using the equity method | 343 | 694 | (50.6) |
| Net fees and commissions | 4,174 | 4,250 | (1.8) |
| Net gains (losses) on financial assets and liabilities and net exchange differences | 2,134 | 2,511 | (15.0) |
| Other operating income and expenses | (839) | (838) | 0.1 |
| GROSS INCOME | 20,725 | 20,752 | (0.1) |
| Operating expenses | (10,559) | (10,796) | (2.2) |
| Administration costs | (9,414) | (9,701) | (3.0) |
| Personnel expenses | (5,410) | (5,588) | (3.2) |
| General and administrative expenses | (4,004) | (4,113) | (2.7) |
| Depreciation and amortization | (1,145) | (1,095) | 4.6 |
| OPERATING INCOME | 10,166 | 9,956 | 2.1 |
| Impairment losses on financial assets (net) | (4,340) | (5,612) | (22.7) |
| Provisions (net) | (1,142) | (609) | 87.5 |
| NET OPERATING INCOME | 4,684 | 3,735 | 25.4 |
| Other gains (losses) | (704) | (2,781) | (74.7) |
| INCOME BEFORE TAX | 3,980 | 954 | 317.2 |
| Income tax | (898) | 16 | n.m. |
| INCOME FROM CONTINUING TRANSACTIONS | 3,082 | 970 | 217.7 |
| Income from discontinued transactions (net) | - | 1,866 | n.m. |
| NET INCOME | 3,082 | 2,836 | 8.7 |
| Net income attributed to non-controlling interests | 464 | 753 | (38.4) |
| NET INCOME ATTRIBUTED TO PARENT COMPANY | 2,618 | 2,084 | 25.6 |
The explanations of the changes in the main headings of the summarized consolidated income statements are as follows:
"Net Interest Income” for the year ended December 31, 2014 amounted to €14,382 million, a 3.5% increase compared with the €13,900 million recorded for the 2013, mainly as a result of the strong activity in emerging markets partially offset by the impact of the average exchange rate depreciation of main currencies against the euro, especially of the Venezuelan bolivar fuerte and the Argentine peso. Excluding this impact, at constant exchange rates, net interest income would have increased by 15.5%.
The following information should be noted in the geographical areas:
- In Spain, remains stable, because of the impact of the elimination of "floor clauses” in residential mortgage loans is practically offset by the moderate improvement of ''Net interest income'' in the prevailing low interest rates environment.
- In Eurasia, the increase is as a result of lower cost of funding due to the gradual recovery of the customer spread partially.
- In Mexico, the increase is due to increased activity volume while customer spreads remained stable year-on-year.
- In South America, the increase is mainly as a result of increased activity, practically offset by the adverse exchange rate impact and, to a lesser extent, hyperinflation in Venezuela.
- In the United States, the increase is as a result of the increased activity, which offset narrowing customer spreads in the prevailing low interest rates environment.
“Dividend Income” for the year ended December 31, 2014 amounted to €531 million, a 126% increase compared with the €235 million recorded for the 2013 as a result of the collection of dividend payments by the Telefónica group (which did not pay dividends during the nine months ended September 30, 2013) and CNCB which was accounted for under the equity method until September 30, 2013 as it is outlined in Note 12 of the accompanying Financial Statements.
“Share Of Profit Or Loss Of Entities Accounted For Using The Equity Method” for the year ended December 31, 2014 amounted to €343 million, a 50.6% decrease compared with the €694 million recorded for the 2013, mainly due, as mentioned before, to the reclassification of our interest in CNCB to “Available-for-sale financial assets” on October 2013 (see Note 12 to the Interim Consolidated Financial Statements), as a result of which CNCB ceased to be accounted for under this line item.
“Net Fees And Commissions” for the year ended December 31, 2014 amounted to €4,174 million, a 1.8% decrease compared with the €4,250 million recorded for the 2013, mainly due to the impact of exchange rates of emerging countries. Excluding this impact, at constant rates, commissions would increase by 5.5% because the activity increased in certain emerging countries.
“Net Gains (Losses) On Financial Assets And Liabilities And Net Exchange Differences” for the year ended December 31, 2014 amounted to €2,134 million, a 15% decrease compared with the €2,511 million recorded for the 2013, when we recorded high capital gains derived from the sale of some securities.
“Other Operating Income And Expenses” for the year ended December 31, 2014 was a loss of €839 million, a 0.1% increase compared with the €838 million loss recorded for the 2013.
“Gross Income” for the year ended December 31, 2014 amounted to €20,725 million, a 0.1% decrease compared with the €20,752 million recorded for the 2013.
“Administration Costs” for the year ended December 31, 2014 was a loss of €9,414 million, a 3% decrease compared with the €9,701 million loss recorded for the 2013, mainly due to the above mentioned effect of the exchange rates and the policy of cost optimization in developed countries.
"Operating Income” for the year ended December 31, 2014 amounted to €10,166 million, a 2.11% increase compared with the €9,956 million recorded for the 2013.
“Impairment Losses On Financial Assets (Net)” for the year ended December 31, 2014 amounted to €4,340 million, a 22.7% decrease compared with the €5,612 million loss recorded for the 2013, due mainly to decreased impaired assets as a result of lower additions to non-performing assets and higher recoveries in Spain.
“Provisions (Net)” for the year ended December 31, 2014 was a loss of €1,142 million, a 87.5% increase compared with the €609 million loss recorded for the 2013, mainly due to the costs related to the transformation processes undertaken by the Group.
“Other Gains (Losses)” for the year ended December 31, 2014 was a loss of €704 million, a 74.7% decrease compared with the €2,781 million loss recorded for the 2013. The decrease is mainly due to the losses made by a change in the accounting criteria in the investment in CNCB from “Investments in entities accounted for using the equity method” to “Available-for-sale financial assets” after reaching a new agreement with Citic Group in October 2013 that included among other aspect the sale of its 5.1% stake in CNCB to Citic Limited (see Note 3 to the accompanying consolidated financial statements). The aforementioned amount was collected under this heading in 2013.
“Income Before Tax” for the year ended December 31, 2014 amounted to €3,980 million, compared with the €954 million recorded for the 2013.
“Income Tax” for the year ended December 31, 2014 was a loss of €898 million, compared with the €16 million recorded for the 2013.
“Profit from discontinued operations” for the year ended December 31, 2014 was zero, compared with €1,866 million for year ended December 31, 2014 as a result of the income from the pension business in Latin America (including capital gains from the sale of Afore Bancomer in Mexico and the pension fund managers in Colombia, Peru and Chile), which was sold in 2013.
“Net Income Attributed To Non-Controlling Interests” for the year ended December 31, 2014 amounted to €464 million, a 38.4% decrease compared with the €753 million recorded for the 2013. This decrease is primarily due to the Exchange rate in countries with minority interests, especially Venezuela and Argentina and the lower existence of minority interests from pension businesses sold in 2013.
“Net Income Attributed To Parent Company” for the year ended December 31, 2014 amounted to €2,618 million, a 25.6% increase compared with the €2,084 million recorded for the 2013.