Wholesale Banking & Asset Management

The Wholesale Banking & Asset Management (WB&AM) area handles the Group’s wholesale businesses and asset management in all the geographical areas where it operates. For the purposes of this financial report, the business and revenues of the units in the Americas are recorded in their respective areas (Mexico, South America and the United States). WB&AM is organized in three main business units:

Corporate and Investment Banking (C&IB), Global Markets (GM) and Asset Management (AM). It also includes the Industrial and Real Estate Holdings unit and the Group’s holdings in the CITIC financial group.

The area once more showed a clear customer focus and a high level of recurrence and quality in its revenues in 2010, despite the economic upheaval in the markets. Accumulated gross income amounted to €1,758m, 3.4% up on 2009, supported by recurring revenue (net interest income and net fees) from C&IB and the increased contribution from the CITIC group. Operating costs ended the year 3.3% up on the figure for 2009, mainly the result of systems investments and the various growth plans implemented in all the geographical areas. Operating income increased by 3.5% on 2009 to €1,257m.

WB&AM continues with an excellent level of asset quality, with a low non-performing asset attributable profit for the year was €950m (€852m in 2009).

In terms of business activity, the area’s gross lending as of 31-Dec-2010 was up 16.5% to €36,197m. This is the result of a greater volume of temporary asset acquisitions in Global Markets, as in C&IB the trend continues to be contained, with a year-on-year fall in gross customer lending of 2.7%. This is because improving asset quality means focusing on customers with a greater loyalty, profitability and credit quality. Customer funds (deposits, mutual funds and pension funds) closed the year at €31,903m, 12.3% below the figure for 2009.

The business and earnings of WB&AM units in the Americas are recorded in the United States, Mexico and South America. Adding these to the above results, the area’s combined contributions to the Group are those shown in the table below.

Income statement

(Million euros)

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	Wholesale Banking & Asset Management				Units:
					Corporate and Investment Banking			Global Markets
	2010	D%	2009	2008	2010	D%	2009	2010	D%	2009
NET INTEREST INCOME	831	(15.4)	982	618	507	12.1	452	382	(34.0)	579
Net fees and commissions	492	6.8	461	375	351	15.7	304	39	(15.8)	47
Net trading income	(66)	13.1	(59)	114	58	25.8	46	(162)	(2.1)	(165)
Other income/expenses	500	59.2	314	406	-	-	-	156	17.5	133
GROSS INCOME	1,758	3.4	1,699	1,513	916	14.2	802	415	(30.0)	593
Operating costs	(501)	3.3	(485)	(457)	(151)	10.4	(137)	(213)	(0.4)	(214)
Personnel expenses	(330)	3.3	(319)	(279)	(90)	11.2	(81)	(116)	(3.0)	(119)
General and administrative expenses	(162)	3.8	(156)	(171)	(59)	9.7	(54)	(96)	2.9	(93)
Depreciation and amortization	(9)	(7.6)	(10)	(8)	(1)	(6.8)	(1)	(1)	(6.2)	(2)
OPERATING INCOME	1,257	3.5	1,214	1,055	765	15.0	665	202	(46.6)	379
Impairment on financial assets (net)	(116)	92.9	(60)	(171)	(49)	(28.5)	(69)	(31)	n.m.	3
Provisions (net) and other gains (losses)	2	n.m.	(4)	4	2	n.m.	(2)	-	-	-
INCOME BEFORE TAX	1,143	(0.6)	1,150	888	718	20.8	595	171	(55.2)	382
Income tax	(192)	(34.8)	(294)	(160)	(212)	21.9	(174)	(29)	(69.7)	(97)
NET INCOME	951	11.2	856	728	506	20.4	421	142	(50.3)	285
Non-controlling interests	(2)	(53.2)	(3)	(6)	-	-	-	-	n.m.	(2)
NET ATTRIBUTABLE PROFIT	950	11.4	852	722	506	20.4	421	142	(50.0)	283

Balance sheet

(Million euros)

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	31-12-10	D%	31-12-09	31-12-08	31-12-10	D%	31-12-09	31-12-10	D%	31-12-09
Cash and balances with central banks	1,768	189.9	610	1,488	153	124.7	68	1,607	200.4	535
Financial assets	55,729	(8.7)	61,024	64,113	405	(3.2)	418	52,041	(10.9)	58,441
Loans and receivables	48,346	13.2	42,695	56,871	30,607	(0.7)	30,808	16,700	57.6	10,598
. Loans and advances to customers	35,754	16.5	30,684	39,846	28,490	(2.8)	29,323	7,026	n.m.	1,222
. Loans and advances to credit institutions and other	12,591	4.8	12,011	17,024	2,118	42.6	1,485	9,674	3.2	9,376
Inter-area positions	12,644	n.m.	-	-	-	-	-	28,676	53.2	18,714
Tangible assets	35	8.9	32	39	1	47.3	1	3	(9.0)	3
Other assets	3,000	36.3	2,202	1,548	25	(13.2)	29	1,208	3.7	1,165
TOTAL ASSETS / LIABILITIES AND EQUITY	121,522	14.0	106,563	124,058	31,191	(0.4)	31,324	100,235	12.1	89,455
Deposits from central banks and credit institutions	31,575	0.6	31,399	22,292	3,512	n.m.	573	27,815	(9.1)	30,615
Deposits from customers	43,819	25.7	34,864	36,089	10,608	3.7	10,233	33,210	34.8	24,630
Debt certificates	1	n.m.	-	191	1	n.m.	-	-	-	-
Subordinated liabilities	2,322	18.0	1,967	2,150	837	0.1	836	565	19.2	475
Inter-area positions	-	n.m.	183	16,918	13,321	(20.7)	16,790	-	-	-
Financial liabilities held for trading	34,812	13.0	30,799	38,303	-	-	-	34,811	13.0	30,799
Other liabilities	5,113	36.8	3,738	4,534	1,664	18.4	1,405	2,833	35.0	2,099
Economic capital allocated	3,879	7.4	3,613	3,581	1,247	(16.0)	1,486	999	19.3	838

Relevant business indicators

(Million euros and percentages)

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	Wholesale Banking & Asset Management
	31-12-10	D%	31-12-09	31-12-08
Total lending to customers (gross)	36,197	16.5	31,058	40,695
Customer deposits	27,632	(15.7)	32,788	37,356
. Deposits	21,118	(16.3)	25,220	27,520
. Assets sold under repurchase agreements	6,515	(13.9)	7,568	9,837
Off-balance sheet funds	10,785	(3.2)	11,139	10,824
. Mutual funds	3,576	(8.6)	3,914	4,014
. Pension funds	7,209	(0.2)	7,224	6,810
Efficiency ratio (%)	28.5		28.6	30.2
NPA ratio (%)	1.2		1.2	0.2
Coverage ratio (%)	71		70	797