Spain

Highlights

  • Favorable trend of activity, especially in high profitable segments. 
  • Net Interest income affected by lower ALCO contribution and the impact of IFRS 16.
  • The positive trend in operating expenses continues.
  • Positive impact of the sale of NPL and write-off portfolios on loan loss provisions and risk indicators.

Business activity (1)
(Year-on-year change. Data as of 30-06-19)

(1) Excluding repos.

Net interest income/ATAs
(Percentage)

Operating income (Millions of euros)

Net attributable profit (Millions of euros)

Financial statements and relevant business indicators (Millions of euros and percentage)

Income statement 1H19 ∆% 1H18
Net interest income 1,808 (2.4) 1,852
Net fees and commissions 846 (0.6) 851
Net trading income 92 (67.4) 282
Other operating income and expenses 72 91.7 38
Of which insurance activities (1) 258 9.4 235
Gross income 2.818 (6.8) 3.023
Operating expenses (1,628) (3.5) (1,687)
Personnel expenses (942) (0.8) (950)
Other administrative expenses (447) (23.5) (584)
Depreciation (239) 56.5 (152)
Operating income 1.190 (10.9) 1.336
Impairment on financial assets not measured at fair value through profit or loss 25 n.s. (213)
Provisions or reversal of provisions and other results (188) 181.9 (67)
Profit/(loss) before tax 1.027 (2.8) 1.056
Income tax (292) (5.5) (309)
Profit/(loss) for the year 735 (1.7) 748
Non-controlling interests (1) (17.0) (2)
Net attributable profit 734 (1.7) 746
  • (1) Includes premiums received net of estimated technical insurance reserves.
Balance sheets 30-06-19 ∆% 31-12-18
Cash, cash balances at central banks and other demand deposits 12,157 (57.4) 28,545
Financial assets designated at fair value 127,397 18.7 107,320
Of which: Loans and advances 37,564 24.3 30,222
Financial assets at amortized cost 200,008 2.3 195,467
Of which: Loans and advances to customers 171,081 0.4 170,438
Inter-area positions 18,794 34.0 14,026
Tangible assets 3,484 169.3 1,294
Other assets 7,142 (13.4) 8,249
Total assets/liabilities and equity 368,982 4.0 354,901
Financial liabilities held for trading and designated at fair value through profit or loss 80,487 13.3 71,033
Deposits from central banks and credit institutions 47,280 3.0 45,914
Deposits from customers 180,434 (1.6) 183,414
Debt certificates 32,861 4.8 31,352
Inter-area positions - - -
Other liabilities 19,099 31.5 14,519
Economic capital allocated 8,822 1.8 8,670
Relevant business indicators 30-06-19 ∆% 31-12-18
Performing loans and advances to customers under management (1) 167,541 0.7 166,396
Non-performing loans 9,096 (9.7) 10,073
Customer deposits under management (1) 180,434 (1.4) 182,984
Off-balance sheet funds (2) 64,370 2.9 62,559
Risk-weighted assets 107,486 3.2 104,113
Efficiency ratio (%) 57.8 55.9
NPL ratio (%) 4.6 5.1
NPL coverage ratio (%) 58 57
Cost of risk (%) (0.03) 0.21
  • (1) Excluding repos.
  • (2) Includes mutual funds, pension funds and other off-balance-sheet funds.

Activity

The most relevant aspects related to the area's activity during the first half of 2019 were: 

  • As of June 30, 2019 lending (performing loans under management) increased 0.7% compared to the end of 2018 (up 0.8% year-on-year), supported by the positive performance of consumer loans and credit cards (up 9.2% in the first half of 2019, and up 18.2% year-on-year) as well as retail and medium-sized enterprises (up 3.5% in the first half of the year, and up 6.0% year-on-year), which more than offset the reduction in mortgage loans (down 1.6% in the first half of the year, and down 3.4% year-on-year).
  • In terms of asset quality, NPL balances decreased in the quarter, with a positive impact on the NPL ratio which stood at 4.6% as of June 30, 2019 (5.1% as of December 31, 2018), mainly explained  by the sale of non-performing real estate developer loans in the second quarter and, in general, due to a lower level of non-performing mortgage loans. The coverage ratio stood at 58%, above the closing of 2018.
  • Customer deposits under management registered a slight reduction compared to December 2018, with growth in demand deposits of 3.6% in the first half of the year (up 9.2% year-on-year) and a reduction in time deposits (down 19.2% in the first half of the year, and down 19.4% year-on-year). However, total deposits remained stable over the first six months of 2019, and increased by 2.7% in the last twelve months. Demand deposits now account for more than 80% of total customer deposits.
  • Off-balance sheet funds performed well (up 2.9% since December 31, 2018 and up 0.8% year-on-year), especially in mutual funds, supported by the positive evolution of the market in the first half of the year.

Results

Net attributable profit of BBVA in Spain stood at €734m, in the first half of 2019 slightly below the figure registered in the  same period of the previous year (down 1.7%).

The main highlights of the area's income statement are: 

  • Net interest income decreased by 2.4% year-on-year, affected by the lower contribution from the ALCO portfolios and the effect of IFRS 16 implementation.
  • Net fees and commissions remained virtually flat year-on-year (down 0.6%).
  • Lower contribution from NTI (down 67.4% compared to the first half of 2018), due to uneven market performance in the first six months of the year and lower portfolio sales.
  • Other operating income and expenses showed a year-on-year growth (up 91.7%) driven by the strong performance of net earnings from the insurance business, although the quarter-on-quarter comparison is negatively affected by the contribution to the SRF in the second quarter of 2019.
  • The favorable performance of impairment losses on financial assets continues as a result of the positive impact of the aforementioned sale of non-performing and write-offs from real estate developer loans, and the lower reserve requirements, primarily in real estate developer loan portfolios.
  • Finally, provisions (net) and other gains (losses) showed a year-on-year increase due to the positive valuation of assets in the former Non Core Real Estate area in the first half of last year.