Credit risk in 2013

At the end of 2013, the Group’s main asset quality indicators have evolved as forecast:

• Uptick in the NPA ratio in Spain to 10.3% (6.4% excluding real-estate activity) due, on the one hand, to the classification of refinanced loans in the third quarter of 2013 and, on the other, to the decline in the loan book. The coverage ratio stands at 50% (41% without taking into account real-estate activity).
• In the rest of the geographical areas, improvement in the asset quality indicators in the United States and Mexico, slight deterioration in Eurasia (due to the deleveraging process in Europe and the exchange-rate effect in Turkey) and stability in South America.

As a result, the Group ended 2013 with its main risk indicators as expected and comparing positively with those of most of its peers. As of 31-Dec-2013, the NPA ratio stood at 6.8% (4.6 % excluding the real-estate activity in Spain), the coverage ratio at 60% (59% excluding the real-estate activity in Spain) and the cumulative risk premium at 1.59% (1.50% excluding the real-estate activity in Spain).

BBVA’s exposure to credit risk stood at €627,273m at the close of December 2013, with a year-on-year decrease of 3.2%. Customer credit risks (including contingent liabilities), which account for 61.6% of total credit risk, decreased by 5.1% over the same time period. This decrease was due to the aforementioned decline in the loan book in Spain and in the wholesale portfolios in Europe, which has been partly offset by the growth in lending activity in the emerging economies and in the United States. Potential exposure to credit risk in market activities (23.9% overall), including potential exposure to derivatives (once netting and collateral agreements are considered), declined by 3.1%, while undrawn facilities (14.5% of the total) increased by 5.5%.

BBVA Group. Exposure to credit risk

(Million euros)

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	31-12-13								31-12-12	31-12-11
	Banking activity in Spain	Real-estate activity in Spain	The United States	Eurasia(1)	Mexico	South America	Corporate Center	Total Group	Total Group	Total Group
Gross credit risk (drawn)	194,099	16,684	41,166	39,529	40,963	53,493	467	386,401	407,126	400,709
Customer lending (gross)	178,335	16,085	38,173	28,117	40,610	48,466	431	350,218	367,719	361,310
Contingent liabilities	15,764	599	2,992	11,412	353	5,027	36	36,183	39,407	39,398
Market activity	91,837	234	8,762	5,795	27,275	14,576	1,457	149,935	154,689	134,937
Credit entities	14,376	232	1,179	1,763	2,407	2,229	2,016	24,203	26,522	26,107
Fixed income	64,870	2	7,282	4,031	24,094	10,193	(559)	109,913	110,505	88,621
Derivatives	12,591	0	301	0	774	2,153	0	15,820	17,662	20,209
Undrawn facilities	31,043	4,746	24,568	15,272	15,933	6,290	(6,915)	90,937	86,223	88,978
Maximum exposure to credit risk	316,978	21,664	74,496	60,595	84,172	74,359	(4,991)	627,273	648,039	624,624

(1) Data with Garanti Group accounted for by the proportional consolidation method.

BBVA Group. Exposure to credit risk. Breakdown by type of risk (31-12-2013. Percentage)	BBVA Group. Exposure to credit risk. Breakdown by business area (31-12-2013. Percentage)

BBVA Group. Loan book exposure. Breakdown by portfolio

(31-12-2013. Percentage)

The exposure breakdown by rating of the parent company and subsidiaries in Spain (including real-estate activity), which comprises corporations, financial institutions, and sovereign institutions and customers, shows 52.6% of A or better ratings. Also shown is the breakdown by rating of the business and developer segments in Spain, and of the loan book with corporates and financial institutions in Mexico.

Breakdown by rating in Spain⁽¹⁾

(Exposure as of 31-12-2013)

(1) Include companies, financial institutions, public institutions and sovereign risks.

Breakdown by rating. Corporate and developers in Spain⁽¹⁾

(Exposure as of 31-12-2013)

(1) Includes only the banking book.

Breakdown by rating in Mexico

(Exposure as of 31-12-2013)