The most notable feature of earnings in the area in the first nine months of 2012 is excellent price management, which explains the increase in net interest income, the strict control of expenses and a significant increase in loan-loss provisions to cover the deterioration of assets related to the real-estate sector in Spain and thus comply with the requirements of Royal Decree-Laws 02/2012 and 18/2012.
In an environment of lower volumes, BBVA continues to improve its net interest income, which in the January-September period amounted to €3,571m, 8.0% more than in the same period in 2011. As mentioned earlier, good price management through repricing of loans, as well as the greater contribution of mortgage floors, have also led to an improvement of profitability, as measured by the net interest income over average total assets, to 1.63% at the end of September (1.39% in September 2011). Other revenue also performed well. However, the heading other revenue decreases due to the higher contribution to the Deposit Guarantee Fund. As a result of the above, gross income increased to €5,038m, with a year-on-year growth of 3.2%. This trend is very important given the economic context in which it has taken place.
Operating expenses fell by 0.7% on the figure for the first nine months of 2011. This has led to an improvement in efficiency compared with the figure 12 months earlier, and has maintained the efficiency ratio practically the same as in the first half of 2012 (41.0%). As a result, operating income amounted to €2,972m, up 6.2% in year-on-year terms.
The strength of operating income mentioned above has made it possible to absorb the increase in loan-loss provisions. In the third quarter of 2012 there was further significant provisioning against impairment losses on financial assets and provisions to offset the deterioration in assets related to the real estate sector in Spain, thus complying with the requirements of Royal Decree-Laws 02/2012 and 18/2012. At the close of September, the area had already met two thirds of the obligations derived from Royal Decree-Laws 02/2012 and 18/2012. These increased provisions have resulted in an improvement of the coverage ratio in the area, as commented above, and have impacted the net attributable profit, which was a negative €532m (a positive €848m not taking into account the higher provisions resulting from the perimeter of Royal Decree-Laws 02/2012 and 18/2012).