Non Core Real Estate


  • Data related to the Spanish real-estate sector continues their positive trend.
  • Boost to the area's strategy, focused on accelerating sales and reducing stock, while aiming to preserve the economic value of assets.
  • Further decline in net exposure and NPLs.

Industry trends

The real-estate sector remains on an upward path, although the pace of growth continues to be unequal across different autonomous regions, highlighting the uneven recovery in the Spanish residential market.

According to the latest available information from the General Council of Spanish Notaries (CIEN), over the first eight months 342,500 homes were sold in Spain in the first eight months of 2017, a year-on-year increase of 15.3%. This increase continues to be underpinned by the positive performance of the economy, although the latest Social Security registration data for August show a slowdown in the pace of job creation, which will have to be monitored carefully in the coming months. Households, meanwhile, remain relatively upbeat regarding the economic outlook.

Demand momentum once again fed through to price The price of homes rose 5.6% year-on-year according to the latest figures from the National Institute for Statistics (INE). This rate of increase is slightly higher than at the close of the previous quarter (up 5.3%).

The expansive monetary policy stance continues to impact the cost of finance, which remains at record lows, and is mortgage market. The 12-month Euribor reached a new record low in September (-0.168%). New residential mortgage lending, without stripping out refinancing, increased by 16.8% year-on-year in the first eight months of the year, according to data from the Bank of Spain. Taking into account refinancing, new lending fell by just 0.3% year-on-year in the same period.

Construction activity is still responding to the positive impetus from demand. According to data from the Ministry of Public Works, 49,238 new housing construction permits were approved in the first seven months of the year, up 24.4% on the 39,578 permits which were approved during the same period last year.

Evolution of Net exposure to real-estate
(Million euros)

  • (1) Compared to Bank of Spain’s Transparency scope (Circular 5/2011 dated November 30), real-estate developer loans do not include €1.2 Bn (September 2017) mainly related to developer performing loans transferred to the Banking activity in Spain unit.
  • (2) Other real-estate assets not originated from foreclosures.


Coverage of real-estate exposure (Million of euros as of 30-09-17)

Gross Value Provisions Net exposure % Coverage
Real-estate developer loans (1) 4,791 2,011 2,780 42
Performing 1,434 31 1,403 2
Finished properties 1,041 23 1,018 2
Construction in progress 232 3 229 1
Land 108 4 104 4
Without collateral and other 52 1 51 2
NPL 3,357 1,980 1,377 59
Finished properties 1,270 568 702 45
Construction in progress 150 68 82 46
Land 1,482 966 515 65
Without collateral and other 455 377 78 83
Foreclosed assets 11,937 7,418 4,519 62
Finished properties 7,333 4,049 3,284 55
Construction in progress 599 398 201 66
Land 4,005 2,971 1,034 74
Other real-estate assets (2) 1,047 517 529 49
Real-estate exposure 17,774 9,947 7,828 56
  • (1) Spain’s Transparency scope (Circular 5/2011 dated November 30) real-estate developer loans do not include €1.2 Bn (September 2017) mainly related to developer performing loans transferred to the Banking activity in Spain unit.
  • (2) Other real-estate assets not originated from foreclosures.


BBVA continues with its strategy of reducing its exposure to the real-estate sector in Spain, both in the developer segment (lending to real-estate developers and real-estate assets on the balance sheet of this area) as well as in other real-estate assets. As of 30-Sep-2017, the net exposure stood at €7,828m, a fall of 23.3% since December 2016, driven primarily by wholesale transactions during the first nine months of the year.

While wholesale sales played a key role in the first half of 2017, in the third quarter BBVA took another important step in its real-estate strategy with the agreement reached with Metrovacesa Suelo y Promoción. As part of this arrangement, the Bank participated in a non-monetary share capital increase, transferring €431m worth of land for construction of homes. In addition, BBVA sold a non-performing loan portfolio. This portfolio had a gross value of around €600m

Overall, 21,041 units have been sold so far this year at a total sale price of €1,823m. This represents a significant increase on the same period last year, both in the number of units and sales price. The policies and commercial plans established for each asset type will continue in place in 2017 with the aim of accelerating sales and reducing the stock, with specific actions targeted at the product that has spent the longest time on the balance sheet.

In terms of total real-estate exposure, including outstanding loans to developers, foreclosed assets and other assets, the coverage ratio was 56% at the close of September 2017. The coverage ratio of foreclosed assets rose to 62%, a relatively high percentage given the proportion of these assets on the balance sheet.

Non-performing loans have fallen again, thanks to a low volume of net additions to NPL over the period and the previously mentioned sale of a non-performing loan portfolio. The NPL coverage ratio ended 30-Sep-2017 at 61%.


This business area posted a cumulative loss in the first nine months of 2017 of €281m, compared with a loss of €315m in the same period last year. This illustrates a decline in losses together with a significant reduction in real estate exposure.

Financial statements (Million euros)

Income statement Jan.-Sep. 17 ∆% Jan.-Sep. 16
Net interest income 48 10.5 44
Net fees and commissions 3 (37.8) 5
Net trading income (0) (98.8) (1)
Other income/expenses (69) (9.2) (76)
Gross income (18) (37.5) (29)
Operating expenses (84) (7.6) (91)
Personnel expenses (47) (4.1) (49)
Other administrative expenses (24) 5.2 (23)
Depreciation (14) (30.8) (20)
Operating income (103) (14.8) (120)
Impairment on financial assets (net) (126) 0.5 (125)
Provisions (net) and other gains (losses) (131) (33.7) (198)
Profit/(loss) before tax (360) (18.9) (443)
Income tax 78 (39.4) 129
Profit/(loss) for the year (282) (10.6) (315)
Non-controlling interests 1 n.s. (0)
Net attributable profit (281) (10.9) (315)
Balance sheet 30-09-17 ∆% 31-12-16
Cash, cash balances at central banks and other demand deposits 12 33.5 9
Financial assets 1,203 109.3 575
Loans and receivables 4,886 (17.8) 5,946
of which Loans and advances to customers 4,886 (17.8) 5,946
Inter-area positions - - -
Tangible assets 353 (24.0) 464
Other assets 5,129 (23.7) 6,719
Total assets/liabilities and equity 11,583 (15.5) 13,713
Financial liabilities held for trading and designated at fair value through profit or loss - - -
Deposits from central banks and credit institutions - - -
Deposits from customers 17 (27.9) 24
Debt certificates 794 (4.7) 834
Inter-area positions 7,595 (20.2) 9,520
Other liabilities 0 n.s. (0)
Economic capital allocated 3,176 (4.7) 3,335
Memorandum item:
Risk-weighted assets 9,905 (8.9) 10,870