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January-March 2014

Earnings

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The BBVA Group’s earnings in the first quarter of 2014 were characterized by the following:

1. Significant negative impact over the year of the changes in exchange rates against the euro of the main currencies that influence the Group’s financial statements. The effect was more moderate over the quarter and has mainly affected the Argentinean peso, which has suffered a significant depreciation, and the Venezuelan bolivar, due to the application in the consolidated financial statements of the currency purchase-sale system called SICAD I (in place of the Cadivi system).

2. The good performance of recurring revenue (net interest income plus fee income), which have increased year-on-year by 6.7%, excluding the exchange-rate effect.

3. Significant contribution from net trading income (NTI), as a result of good management of the structural risks on the balance sheet and a favorable performance by the Global Markets unit.

4. Good management of operating expenses, adapted to the needs of each franchise.

5. A decline in impairment losses on financial assets, which are at levels clearly below those of the quarterly average in the previous year.

6. Lack of corporate operations.

Consolidated income statement: quarterly evolution (1)

(Million euros)

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2014 2013

1Q 4Q 3Q 2Q 1Q
Net interest income 3,391 3,760 3,551 3,679 3,623
Net fees and commissions 985 1,139 1,114 1,126 1,052
Net trading income 751 609 569 630 719
Dividend income 29 114 56 176 19
Income by the equity method (14) 53 9 11 (1)
Other operating income and expenses (90) (353) (113) (153) 7
Gross income 5,051 5,321 5,186 5,470 5,419
Operating expenses (2,613) (2,852) (2,777) (2,814) (2,758)
Personnel expenses (1,375) (1,423) (1,452) (1,454) (1,458)
General and administrative expenses (959) (1,134) (1,042) (1,080) (1,025)
Depreciation and amortization (279) (295) (283) (279) (276)
Operating income 2,438 2,469 2,410 2,656 2,661
Impairment on financial assets (net) (1,103) (1,210) (1,854) (1,336) (1,376)
Provisions (net) (144) (196) (137) (130) (167)
Other gains (losses) (173) (382) (198) (172) (287)
Income before tax 1,017 682 221 1,017 831
Income tax (273) (114) (13) (261) (205)
Net income from ongoing operations 744 568 208 756 626
Results from corporate operations – (1,245) 160 593 1,315
Net income 744 (677) 368 1,349 1,941
Non-controlling interests (120) (172) (172) (202) (206)
Net attributable profit 624 (849) 195 1,147 1,734
Net attributable profit (excluding results from corporate operations) (2) 624 396 35 554 420
Basic earnings per share (euros) 0.11 (0.15) 0.03 0.20 0.30
Basic earnings per share diluted (euros) (3) 0.10 (0.14) 0.03 0.20 0.30
Basic earnings per share diluted (excluding results from corporate operations) (euros) (2-3) 0.10 0.07 0.01 0.09 0.08
(1) Pro forma financial statements with the revenues and expenses of the Garanti Group consolidated in proportion to the percentage of the Group’s stake. (2) In 2013 it includes the results from the pension business in Latin America, including the capital gains from their sale; the capital gains from the sale of BBVA Panama; the capital gains generated by the reinsurance operation on the individual life and accident insurance portfolio in Spain; the equity-accounted earnings from CNCB (excluding dividends), together with the effect of the mark-to-market valuation of BBVA’s stake in CNCB following the new agreement concluded with the CITIC Group, which included the sale of 5.1% of CNCB. (3) Basic earnings per share which includes the eventual dilution of the contingent convertible securities into shares, issued in the second quarter of 2013 and in the first quarter of 2014.
Consolidated income statement (1)

(Million euros)

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1Q14 Δ % Δ % at constant exchange rates 1Q13
Net interest income 3,391 (6.4) 7.8 3,623
Net fees and commissions 985 (6.4) 3.3 1,052
Net trading income 751 4.4 17.8 719
Dividend income 29 48.7 57.3 19
Income by the equity method (14) n.m. n.m. (1)
Other operating income and expenses (90) n.m. n.m. 7
Gross income 5,051 (6.8) 5.0 5,419
Operating expenses (2,613) (5.3) 4.0 (2,758)
Personnel expenses (1,375) (5.7) 2.7 (1,458)
General and administrative expenses (959) (6.4) 4.6 (1,025)
Depreciation and amortization (279) 1.1 9.1 (276)
Operating income 2,438 (8.4) 6.0 2,661
Impairment on financial assets (net) (1,103) (19.8) (15.3) (1,376)
Provisions (net) (144) (13.5) (2.3) (167)
Other gains (losses) (173) (39.7) (38.9) (287)
Income before tax 1,017 22.3 79.4 831
Income tax (273) 33.4 89.3 (205)
Net income from ongoing operations 744 18.7 76.1 626
Results from corporate operations - - - 1,315
Net income 744 (61.7) (57.0) 1,941
Non-controlling interests (120) (42.2) (20.2) (206)
Net attributable profit 624 (64.0) (60.5) 1,734
Net attributable profit (excluding results from corporate operations) (2) 624 48.6 129.0 420
Basic earnings per share (euros) 0.11

0.30
Basic earnings per share diluted (euros) (3) 0.10

0.30
Basic earnings per share diluted (excluding results from corporate operations) (euros) (2-3) 0.10

0.08
(1) Pro forma financial statements with the revenues and expenses of the Garanti Group consolidated in proportion to the percentage of the Group’s stake. (2) In 2013 it includes the results from the pension business in Latin America, including the capital gains from their sale; the capital gains from the sale of BBVA Panama; the capital gains generated by the reinsurance operation on the individual life and accident insurance portfolio in Spain; the equity-accounted earnings from CNCB (excluding dividends), together with the effect of the mark-to-market valuation of BBVA’s stake in CNCB following the new agreement concluded with the CITIC Group, which included the sale of 5.1% of CNCB. (3) Basic earnings per share which includes the eventual dilution of the contingent convertible securities into shares, issued in the second quarter of 2013 and in the first quarter of 2014.
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