The most significant aspects of the fourth quarter of 2012, from the standpoint of earnings, are:
- Strong performance in gross income, underpinned, on the one hand, by high generation of recurring revenue, and, on the other, by the large contribution of net trading income (NTI).
- A further significant increase in provisions in Spain to cover the steady impairment in real estate portfolios and assets.
- As a result, net attributable profit for the quarter amounts to €20m.
In 2012, the BBVA Group reported a net attributable profit of €1,676m. The main feature of this result is the high quality of revenue, despite the hugely difficult and demanding background in which it has been generated. The Group has thus demonstrated for yet another year its high capacity to generate recurrent earnings, which have increased quarter-on-quarter, with an accumulated growth of 12.8% over the year. This standout performance is due to BBVA’s approach to banking based on four pillars:
1. A portfolio model shaped by:
- A well balanced diversification in terms of geographical areas, businesses and segments, which is essential for ensuring resilience in any environment. This diversification has become increasingly important in 2012, when emerging economies contributed 56% of the gross income of the business areas.
-
Franchises with leading positions in all markets in which the Group operates and with important stakes and strategic alliances in Turkey and China.
2. A business model based on three elements:
- A retail banking model focused on long-lasting relationships (customer-centric approach) with a very broad customer base. This ensures highly recurrent earnings and very stable funding in the form of customer deposits.
- A distribution network with a high level of capillarity: The number of branches and ATMs has continued to increase over the year.
-
Technology is a pillar that has been strongly supported by BBVA in recent years to improve efficiency. A good example of this is the implementation of the technological platform in the United States.
3. A management model based on:
-
Prudence with respect to the decisions made, largely in the field of risks. In this respect it is important to note the increase in subjective nonperforming assets and in the provisions booked in Portugal in the fourth quarter of 2012.
-
Proactiveness in terms of the need to anticipate events and to have the flexibility to adapt easily to them. In this respect, BBVA has been particularly active in the wholesale funding market.
- A global approach, which consists of using the whole potential of the businesses, customers and BBVA’s current footprint. In 2012 insurance activity performed outstandingly well.
4. A governance model founded on the principles of integrity, prudence and transparency, whose primary objective is to create value for its shareholders.
Consolidated income statement: quarterly evolution
(Million euros)
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|
2012 |
2011 |
|
4Q |
3Q |
2Q |
1Q |
4Q |
3Q |
2Q |
1Q |
Net interest income |
3,910 |
3,877 |
3,741 |
3,594 |
3,482 |
3,284 |
3,213 |
3,173 |
Net fees and commissions |
1,126 |
1,104 |
1,061 |
1,062 |
1,004 |
1,007 |
1,035 |
985 |
Net trading income |
646 |
319 |
461 |
340 |
403 |
(5) |
331 |
751 |
Dividend income |
17 |
35 |
311 |
27 |
230 |
50 |
259 |
23 |
Income by the equity method |
191 |
169 |
175 |
191 |
205 |
149 |
122 |
119 |
Other operating income and expenses |
(32) |
6 |
57 |
51 |
42 |
23 |
62 |
79 |
Gross income |
5,858 |
5,512 |
5,806 |
5,265 |
5,368 |
4,508 |
5,022 |
5,130 |
Operating Costs |
(2,855) |
(2,771) |
(2,633) |
(2,528) |
(2,597) |
(2,408) |
(2,426) |
(2,307) |
Personnel expenses |
(1,472) |
(1,447) |
(1,396) |
(1,347) |
(1,372) |
(1,294) |
(1,277) |
(1,247) |
General and administrative expenses |
(1,089) |
(1,064) |
(1,001) |
(951) |
(1,000) |
(899) |
(943) |
(865) |
Depreciation and amortization |
(294) |
(259) |
(236) |
(230) |
(225) |
(214) |
(206) |
(194) |
Operating income |
3,003 |
2,741 |
3,173 |
2,738 |
2,770 |
2,100 |
2,596 |
2,824 |
Impairment on financial assets (net) |
(2,676) |
(2,038) |
(2,182) |
(1,085) |
(1,337) |
(904) |
(962) |
(1,023) |
Provisions (net) |
(227) |
(195) |
(98) |
(130) |
(182) |
(93) |
(83) |
(150) |
Other gains (losses) |
(269) |
(561) |
(311) |
(223) |
(1,719) |
(166) |
(155) |
(71) |
Income before tax |
(168) |
(53) |
582 |
1,299 |
(466) |
937 |
1,397 |
1,579 |
Income tax |
220 |
275 |
3 |
(223) |
385 |
(77) |
(167) |
(347) |
Net income from ongoing operations |
52 |
222 |
584 |
1,076 |
(81) |
860 |
1,229 |
1,232 |
Net income from discontinued operations |
138 |
83 |
75 |
96 |
74 |
48 |
66 |
58 |
Net income |
190 |
305 |
659 |
1,173 |
(7) |
907 |
1,295 |
1,290 |
Non-controlling interests |
(170) |
(159) |
(154) |
(168) |
(132) |
(103) |
(106) |
(141) |
Net attributable profit |
20 |
146 |
505 |
1,005 |
(139) |
804 |
1,189 |
1,150 |
Adjusted (1) |
(1,042) |
(825) |
(742) |
(122) |
(1,166) |
(173) |
(82) |
(80) |
Net attributable profit (adjusted) (1) |
1,061 |
971 |
1,247 |
1,127 |
1,026 |
978 |
1,271 |
1,229 |
Basic earnings per share (euros) |
0.01 |
0.03 |
0.10 |
0.19 |
(0.03) |
0.16 |
0.24 |
0.23 |
Basic earnings per share adjusted (euros) (1) |
0.19 |
0.18 |
0.23 |
0.21 |
0.20 |
0.20 |
0.26 |
0.25 |
(1) In 2011 during the fourth quarter, US goodwill impairment charge. In 2011 and 2012, impairment charge related to the deterioration of the real estate sector in Spain. And in the third quarter of 2012, impact of Unnim badwill.
Consolidated income statement
(Million euros)
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|
2012 |
Δ % |
Δ % at constant Exchange rates |
2011 |
Net interest income |
15,122 |
15.0 |
11.0 |
13,152 |
Net fees and commissions |
4,353 |
8.0 |
4.9 |
4,031 |
Net trading income |
1,767 |
19.3 |
15.3 |
1,481 |
Dividend income |
390 |
(30.6) |
(30.9) |
562 |
Income by the equity method |
727 |
22.1 |
22.1 |
595 |
Other operating income and expenses |
82 |
(60.3) |
(53.1) |
206 |
Gross income |
22,441 |
12.1 |
8.7 |
20,028 |
Operating Costs |
(10,786) |
10.8 |
7.6 |
(9,737) |
Personnel expenses |
(5,662) |
9.1 |
6.2 |
(5,191) |
General and administrative expenses |
(4,106) |
10.8 |
7.4 |
(3,707) |
Depreciation and amortization |
(1,018) |
21.4 |
17.2 |
(839) |
Operating income |
11,655 |
13.3 |
9.8 |
10,290 |
Impairment on financial assets (net) |
(7,981) |
88.9 |
84.7 |
(4,226) |
Provisions (net) |
(650) |
28.0 |
25.4 |
(508) |
Other gains (losses) |
(1,365) |
(35.3) |
(38.8) |
(2,110) |
Income before tax |
1,659 |
(51.9) |
(53.2) |
3,446 |
Income tax |
276 |
n.s. |
n.s. |
(206) |
Net income from ongoing operations |
1,935 |
(40.3) |
(41.9) |
3,240 |
Net income from discontinued operations |
393 |
59.8 |
50.3 |
246 |
Net income |
2,327 |
(33.2) |
(35.1) |
3,485 |
Non-controlling interests |
(651) |
35.3 |
24.2 |
(481) |
Net attributable profit |
1,676 |
(44.2) |
(45.3) |
3,004 |
Adjusted (1) |
(2,730) |
- |
- |
(1,501) |
Net attributable profit (adjusted) (1) |
4,406 |
(2.2) |
(5.2) |
4,505 |
Basic earnings per share (euros) |
0.32 |
|
|
0.62 |
Basic earnings per share adjusted (euros) (1) |
0.82 |
|
|
0.92 |
(1) In 2011 during the fourth quarter, US goodwill impairment charge in 2011 and 2012, impairment charge related to the deterioration of the real estate sector in Spain. And in the third quarter of 2012, impact of Unnim badwill.
Income evolution
(Million euros)