This area covers BBVA’s activity in Europe (excluding Spain) and Asia. In other words, it includes BBVA Portugal, Consumer Finance Italy and Portugal, the retail business of branches in Paris, London and Brussels (in 2010 these have been reported in Spain and Portugal), and Wholesale Banking & Assets Management activity (Corporate and Investment Banking, Global Markets and CNCB) within this geographical area. It also covers the Group's holding in Garanti.
The importance of this area is increasing both in terms of earnings and the balance sheet and, as is the case with the rest of the franchises, it has evolved positively and increased the Group’s diversification and growth capacity. The positive contribution of Garanti starting in March 2011 and the increase in earnings from CNCB are worth mentioning in this regard.
In 2011, Eurasia has generated 25.6% of the BBVA Group’s attributable profit, excluding one-offs.
| Eurasia | Millions of Euros | ||
|---|---|---|---|
| 2011 | 2010 | % Change 2011-2010 |
|
| NET INTEREST INCOME | 801 | 345 | 132.1 |
| Net fees and commissions | 391 | 236 | 66.1 |
| Net gains (losses) on financial assets and liabilities and net exchange differences | 105 | 132 | (20.8) |
| Other operating income and expenses | 655 | 367 | 78.4 |
| GROSS INCOME | 1,952 | 1,080 | 80.7 |
| Operating expenses | (645) | (295) | 118.6 |
| Administration costs | (599) | (278) | 115.8 |
| Personnel expenses | (355) | (179) | 98.2 |
| General and administrative expenses | (245) | (99) | 147.6 |
| Depreciation and amortization | (45) | (17) | 165.1 |
| OPERATING INCOME | 1,307 | 785 | 66.5 |
| Impairment losses on financial assets (net) | (149) | (89) | 66.3 |
| Provisions (net) and other gains (losses) | 11 | (20) | n.a |
| INCOME BEFORE TAX | 1,170 | 675 | 73.3 |
| Income tax | (143) | (88) | 61.7 |
| NET INCOME | 1,027 | 587 | 75.0 |
| Net income attributed to non-controlling interests | - | 1 | n.s. |
| NET INCOME ATTRIBUTED TO PARENT COMPANY | 1,027 | 588 | 74.8 |
The changes in the main items of the income statement in this business are influenced by the integration of 25.01% of Garanti in March 2011. These changes are:
The “Net interest income” generated by the area in 2011 is €801 million, an increase of 132.1% on the €345 million recorded in 2010.
The balance of “Net fees and commissions” in 2011 totaled €391 million, with an increase of 66.1% on the €236 million posted in 2010.
The balance of the “Net gains (losses) on financial assets and liabilities” and “Exchange differences (net)" headings for 2011 has been €105 million, compared with €132 million in 2010.
The “Other operating income and expenses” balance for 2011 totaled €655 million, compared with €367 million in 2010, due to the growing contribution of CNCB.
Based on the above, “Gross income” for 2011 stood at €1,952 million, 80.7% up on the €1,080 million in 2010.
The balance of “Operating expenses” in 2011 totaled €645 million, with an increase of 118.6% on the €295 million posted in 2010.
As a result of the above, “Operating income” for 2011 stood at €1,307 million, an increase of 66.5% on the €785 million in 2010.
The balance of “Impairment losses on financial assets (net)” in 2011 amounted to €149 million, up 66.3% on the €89 million recorded in 2010.
The balance of “Provisions (net)” and “Other gains (losses)” in 2011 has been €11 million in income, which compares with expenses of €20 million in the previous year.
As a result of the above, “Income before tax” for 2011 stood at €1,170 million, an increase of 73.3% on the €675 million in 2010.
The balance of “Income tax” in 2011 is €143 million, compared with €88 million in 2010, a year-on-year change of 61.7%.
As a result of the above, "Net income" for 2011 totaled €1,027 million, up 75% on the €587 million in 2010.
By business units, Europe accounts for 45% of accumulated earnings for the year. Its positive growth can mainly be explained by the incorporation of Garanti, and to a lesser extent by the good performance of the rest of the local businesses. Worth noting is the positive performance of gross income, which totaled €1,283m, 95.1% up in 2011. Not counting Garanti, growth has been 6.9%, despite the unfavorable situation of the financial markets. As a result, the net attributable profit rose by 86.1% to €271 million, or 8.7% not including Garanti.
As for Garanti, the appropriate mix in the loan book and customer funds, positive price management, and the favorable trend in business activity have resulted in the bank’s gross income performing well. It continues to be a benchmark in the Turkish banking sector in terms of efficiency, with operating expenses rising below inflation and excellent asset quality.
Asia accounts for 55% of earnings in the area. The net attributable profit has grown here by 66.4%, mainly due to the contribution of CNCB, whose activity and earnings continue to increase every quarter. According to the latest available figures as of September 2011, the loan book increased by 9.4% on the figure for the close of 2010, customer deposits grew by 8.0% and the accumulated net attributable profit for the year increased by 40.9% year-on-year. Overall, Asia generated gross income of €669 million (up 68.3% year-on-year) and a net attributable profit of €563 million.
| Eurasia | Millions of Euros | ||
|---|---|---|---|
| 2011 | 2010 | % Change 2011-2010 |
|
| Total Assets | 53,398 | 45,975 | 16.1 |
| Loans and advances to customers | 34,740 | 24,281 | 43.1 |
| Of which: |
|
|
|
| Residential mortgages | 2,688 | 2,652 | 1.3 |
| Consumer finance | 3,420 | 913 | 274.7 |
| Loans | 2,400 | 903 | 165.8 |
| Credit cards | 1,020 | 10 | n.a. |
| Loans to enterprises | 11,998 | 4,956 | 142.1 |
| Loans to public sector | 107 | 113 | (5.4) |
| Total customer funds | 20,987 | 20,078 | 4.5 |
| Current and savings accounts | 2,688 | 836 | 221.3 |
| Time deposits | 9,778 | 2,191 | n.a. |
| Other custumer funds | 8,521 | 17,050 | (50.0) |
| Off-balance-sheet funds | 1,036 | 590 | 75.5 |
| Mutual funds | 562 | 194 | 189.9 |
| Pension funds | 474 | 397 | 19.6 |
| Economic capital allocated | 4,254 | 2,546 | 67.1 |
| Efficiency ratio (%) | 33.0 | 27.3 | |
| NPA Ratio (%) | 1.5 | 0.9 | |
| NPA Coverage Ratio (%) | 123 | 154 | |
| Risk premium (%) | 0.45 | 0.38 | |
The changes in the principal headings of activity in this area of the business are as follows:
As of December 31, 2011, the loans and advances to customers (gross) balance stood at €34,740 million, up 43.1% on the €24,281 million as of December 31, 2010, mainly as a result of the incorporation of Garanti. Excluding the amounts from the Turkish bank, the loan book is very stable, with an increase of 3.2%. As for Garanti’s performance, it posted a solid year-on-year increase of +29.6%, although at a lower rate than in previous periods, due to the Central Bank’s policies aimed at preventing overheating of the country’s economy.
As of December 31, 2011, on-balance customer funds amounted to €20,987 million, up 4.5% on the €20,078 million posted as of December 31, 2010, due mainly to the aforementioned contribution from Garanti. In 2011 it grew by 12.5%, while global businesses in Europe fell.