Letter from the Group Executive Chairman

Dear Shareholder,

The global economy grew by 3.2% in 2015, in a context marked by the slowdown in China, the fall in oil prices, the strong currency depreciation in some emerging countries and geopolitical tension in the Middle East, which caused high volatility in the international financial markets. Emerging economies, as a whole, registered lower growth than in 2014, while developed economies continued to recover, thanks in part to the monetary policies of Central Banks and the low prices of oil and other commodities. Spain grew 3.2% in 2015, more than twice as fast as the Eurozone. Some of the best news last year was the good performance of the labor market, where 525 thousand jobs were created according to the Labor Force Survey (EPA, by its acronym in Spanish) and the unemployment rate fell to 20.9%. Spain needs to continue along these lines.  

In a difficult context, BBVA posted a very strong set of results in 2015, thanks to income growth throughout our footprint, smart cost management and lower loan-loss provisions, particularly in Spain. BBVA's net attributable profit amounted to €2,642m, which is a year-on-year increase of 0.9% in current euros and 4.4% in constant euros, i.e. not including exchange rate variations. 

In 2015 we completed several corporate operations that strengthened the Group's growth potential and had an extraordinary accounting impact on the year's earnings. First, we increased our stake in Garanti from 25% to 39.9%, becoming the largest shareholder of the best bank in Turkey. In addition, the acquisition of Catalunya Banc enabled us to increase our market share sharply in Catalonia. Lastly, we sold part of our investment in China. Excluding the one-off impacts of these corporate operations, BBVA's net attributable profit in 2015 stood at €3,752m, a year-on-year increase of 43.3% in current euros and 48.2% in constant euros.

Last year, the Group's main risk indicators also improved, with an increase in the coverage ratio to 74%, a reduction in the NPL ratio to 5.4%, and a year-on-year decrease in loan-loss and real-estate provisions of 6.4%.

At the same time, BBVA maintained a very sound capital position and ended the year with a phased-in capital ratio of 12.1%, well above the regulatory requirements, and a fully-loaded ratio of 10.3%. Lastly, our fully-loaded leverage ratio at the end of the year increased to 6%, enabling us to become leaders in our peer group.

​In addition to working hard on new products, processes and channels, in 2015 we incorporated new talent and, in particular, we made significant progress in changing our culture, implementing new ways of working that are more agile and proactive. As part of this cultural change, we inaugurated new headquarters in Madrid and Mexico City, which come on top of those we already opened in Houston and London and the ones that have been completed or are being completed in Santiago de Chile, Buenos Aires and Lima. In all these places we are deploying new ways of working that are more collaborative and focused on teamwork.

In addition to working hard on new products, processes and channels, in 2015 we brought on board a great deal of new talent and, in particular, we made significant progress in our cultural change