Annual Report 2014 BBVA Group Business areas Primary stakeholders

BBVA Group

BBVA Group obtained good earnings in 2015, strongly influenced by the corporate operations carried out during the year: incorporation of Catalunya Banc (CX), purchase of an additional 14.89% stake in Garanti and partial sale of the stake in China Citic Bank (CNCB). The net attributable profit generated was €2,642m, a year-on-year rise of 0.9% (up 4.4% at constant exchange rates). The net attributable profit from ongoing operations in 2015, which corresponds to the Group's net attributable profit excluding results from corporate operations, amounts to €3,752m, 43.3% higher than in 2014 (up 48.2% excluding the exchange-rate impact).

The balance sheet and activity figures have also been affected by the aforementioned corporate operations. Taking Turkey on an on-going basis. i.e. not considering the impact of this operation, there has been growth in gross customer lending, with a positive performance in loan production and customer funds in all the geographical areas. The Group's non-performing loans have maintained the downward trend.

In terms of solvency, BBVA maintains a comfortable capital position (phased-in CET1 ratio of 12.1% and fully-loaded ratio of 10.3% as of the close of December 2015), above regulatory requirements and with good quality (the fully-loaded leverage ratio is 6.0%).

From the point of view of risks, the Group's risk management function aims to preserve the Bank's solvency by supporting the definition of its strategy and ensuring sustainable business development. To do so, it has a risk management and control model in place that is applied comprehensively in the Group. As regards credit risk management, the highlight in 2015 has been the favorable performance of the main asset quality indicators: lower NPL ratio, increased coverage ratio and reduced cost of risk. The Group's market risk remains at low levels. This is due to the nature of the business and the Group’s policy of minimal proprietary trading. In liquidity and funding risk, BBVA continues to maintain an adequate funding structure in the short, medium and long term, diversified by products. Lastly, in the risk analysis and decision-making processes, BBVA assesses and takes into consideration not only financial aspects, but also social, environmental and reputational factors.

BBVA's digital transformation has a strong innovation and technology component, but what is also very important is the development of new competencies in the Organization.

Lastly, BBVA's commitment to the environment is reflected in its environmental policy and in its adherence to the main international agreements in this area. In 2015, BBVA satisfactorily concluded its second Global Eco-efficiency Plan, far exceeding the goals set.