The Corporate and Business Banking unit (CBB) handles SMEs, large companies, institutions and developers with specialized branch networks for each segment. It also contains the product management unit that designs and markets specific products for aforementioned market segments.
In 2009 it consolidated its profitable growth model by putting various plans into action in the fourth quarter designed to increase loyalty, cross-selling and the customer base. We have made marketing new ICO finance, such as the new FutureE, Liquidez (Liquidity) and Renove Turismo (Car Trade-In) lines, as well as risk management and recoveries, a priority in 2009. Moreover, the unit has expanded its range of products with the development of new value proposals in investment banking; new types of leasing plans (trucks, technology for integral IT solutions and second-hand cars); new non-financial services for businesses; and the implementation of new forms of customer relationships (Destructores de Paro-Unemployment Destroyers), Empresas Sobresalientes-Outstanding Companies, and the Newsletter Empresas-Enterprise Newsletter).
The Groups support of SME financing has been strategic in 2009. In this regard, we should note the €11,428 million in Factoring assignments and €11,668 in confirming advances and extensions, which consolidate BBVA´s leadership position, with market shares at 31-12-09 of 21.6% and 24.0%, respectively. On an international level, BBVA was also the leader in forfaiting, international factoring, euroconfirming and confirming in currency (accounts payable financing) with a 50.0% share at 31-12-09 (according to the Spanish Factoring Association) and a total volume of assignments and advances of 5,291 million. BBVA is the leader in the real estate modality with a market share of 19.3% and maintains a solid position in real estate leasing, with a market share of 13.5% (according to information from the Spanish Renting Association as at 30-9-09). As regards medium and long-term financing, BBVA has, once again, played a key role as one of the most active entities in the distribution of various ICO lines, with the signing of 51,592 transactions (including the Local Entities advances line) for a total of €2,450 million.
Therefore, in an unfavorable economic setting for the business segment, loan book for the unit as at 31-12-09 progressed to €89,989 million (+2.7% year-on-year). In turn, customer funds came to €25,970m (€31,292m in 2008).
The income statement shows operating income is growing at 2.3% per year, reflecting an increase in net interest income (up 4.7%), in fee and commissions income (up 0.3%) and a reduction in costs (down 9.4%). Consequently, net attributable profit, €889 million, rose 1.2% as compared to the same time in 2008.
The unit has more than 60,000 customers in the SME segment with a loan portfolio of €30,131m and €7,301m in customer funds. Operating income in 2009 is at €851 million, due to less growth of fees and commissions and the net trading income. Together with a new reduction in expenses and an increase in provisions, the attributable profit came to €487 million (€555 million in 2008).
BBVA maintains a leadership position in this segment, with a penetration share of 35.2% (according to the most recent FRS report). On the one hand, the use of new communications channels like newsletters and exclusive websites (www.fyibbva.es) has allowed us to extend our line of products and services to clients in an innovative manner. On the other, adaptation to the economic environment has required a differential approach to risk analysis and credit quality, while preserving the relationship with customers and the global vision in the long term.
In the large company segment the loan portfolio at year-end was up 4.7% year-on-year to €16,568m and customer funds maintained the same balance than at 31-Dec-08 (€5,237m). Operating income also performed well, and rose 14.6% year-on-year to €293m. After higher provisions, the attributable profit was €117m.
In this segment, BBVA leads the market with a 96.7% market share (according to the most recent report from the Inmark group), with a business model based on a comprehensive client vision. This boosts daily management of the treasury accounts and incorporates a high degree of advisory while contributing tailor-made solutions and innovative products. Efficiency in customer management is also the result of a vision centered on risk-adjusted profitability.
BBVA continuous as a reference in the institutions segment. Lending and customer funds under management stand at €25,380 million and €13,402 million, respectively. Operating income in 2009 is up 14.2% at €325 million, due to profitable management of the business volume and control of expenses. Together with an increase in provisions, the attributable profit came to €220 million.
BBVA’s leadership position in this segment is due to specialization, relationship banking and global management of the clients´ needs. Therefore, BBVA is the number one financing institution for the autonomous communities, provincial councils and local corporations, as well as their subsidiaries. Significant loans were granted to AENA (€300 million), the Government of the Canary Islands (€193 million) and the city council of Madrid (€236 million). It has also led high speed projects driven by the Ministerio de Fomento (Ministry of Public Works), with financing for transactions, such as: Zaragoza A.V. (€70 million) and Barcelona Sagrera A.V. (€70 million). It also leads in placement and trading in the primary market with the Autonomous Communities of Madrid, Catalonia, Valencia, the Balearic Islands, Andalusia and the Basque Country. Finally, the unit has been awarded the tender for the comprehensive management of the treasury accounts for the Ministerio de Defensa (Ministry of Defense), Presidencia (Prime Minister cabinet) and Administracion Territorial (Territorial Politics).
In the real estate developer segment the fall in the housing activity led to a 3.5% decline in lending in 2009. In addition, new projects are mainly in the government-regulated category and these now account for more than 50% of the total, versus the 15% and 32% in 2007 and 2008.