January-September 2013


Relevant events

The results of the BBVA Group in the third quarter of 2013 have largely been shaped by the same factors as in previous quarters: recurrence in revenues, improvement in liquidity, and sound solvency ratios. The following are the most important points in this respect:

1. The Group’s earnings have once again been underpinned by the resilience of the recurring income, despite the negative impact of exchange rates during the quarter. It is also important to note the slowdown of growth in expenses and the impact the different European supervisors’ recommendations on the classification of refinanced loans have had on loan-loss provisions and the balance of non-performing loans.

  • The gross income for the quarter amounted to €5,339m, slightly below the preceding quarter, largely due to the effect of eliminating floor clauses in mortgage loans (which in this quarter has an impact over the entire quarter) and the influence of exchange rates, as mentioned above. The lower volume of net trading income (NTI) is largely offset by the positive impact from the reduced cost of wholesale and retail funding of the euro balance sheet, and a less negative impact from the adjustment due to hyperinflation in Venezuela. As a result, cumulative gross income through September stands at €16,303m, a year-on-year decline of 1.7%, but a 1.9% increase excluding the exchange-rate impact. It should be noted that in 2012 this heading included the Telefónica dividend, which has now been suspended temporarily.
  • Operating expenses slightly below the figure for the previous quarter, benefiting from the cost control policy applied in developed economies, which partly offsets the effect of the expansion projects in emerging countries. As a result of the above, operating income for the first nine months of 2013 stands at €7,954m, slightly slowing its year-on-year rate of decline to –8.1%.
  • Impairment losses on financial assets amounted to €1,854m in the quarter. The figure is affected by the impact on loan-loss provisions for the loan portfolio in Spain of applying the different European supervisors’ recommendations on the classification of refinanced loans.
  • As a result of the above, the net attributable profit for the quarter amounted to €195m, and the cumulative figure through September totals €3,077m.

2. In business activity, lending once again performed well in emerging countries, while the new production figures for the target portfolios of BBVA Compass in the United States continue to be very positive. In Spain, the volume of loans continues to decline, in line with the deleveraging process that began in previous years. Customer funds have performed very favorably in all geographical regions, particularly those from retail customers and transactional nature.

3. This positive performance of customer deposits has resulted in a further improvement in the Group’s liquidity levels and the commercial gap, especially in the euro balance sheet.

4. The Group’s solvency ratios also continue to perform very favorably, thanks to the organic generation of capital and despite the aforementioned negative impact of the exchange rate over the quarter. Thus, the core capital ratio under Basel II closed on 30-Sep-2013 at 11.4%, up on the 11.3% registered at the close of the first half of 2013.

5. The quality of the loan portfolio continues in line with expectations, with a drop in the NPA ratio in the United States and stability in Mexico, Eurasia and South America. In Spain, the NPA ratio is impacted by the fall in the volume of the loan book, and the increase in non-performing loans arising from applying the different European supervisors’ recommendations on refinanced loans. The impact of these recommendations has been felt particularly strongly in the retail mortgage portfolio, even though, at the present date, a high percentage of that portfolio is held by customers who are up to date with their payments.

6. During October 2013, the Group concluded the sale of Provida S.A. in Chile and an agreement was reached with CITIC Limited to sell it 5.1% of the capital of China CITIC Bank (CNCB). The effects of these corporate operations will be recorded in the fourth quarter’s accounts.

7. Lastly, as regards shareholder remuneration, the second paid-up capital increase was carried out to implement the “dividend option”. The holders of 88.3% of the free allocation rights opted to receive new shares, which once more confirms the success of this system of remuneration.