Other information: Corporate & Investment Banking
Highlights
- Good performance of activity with customers.
- Leadership position in green and sustainable loans.
- Positive evolution of net interest income, linked to the activity.
- Net attributable profit impacted by lower net trading income and higher impairments on financial assets.
Business activity (1)
(Year-on-year change at constant exchange rates. Data as of 30-09-19)
(1) Excluding repos.
Gross income/ATAs
(Percentage. Constant exchange rates)
Operating income
(Millions of euros at constant exchange rates)
(1) At current exchange rate: -4.7%.
Net attributable profit
(Millions of euros at constant exchange rates)
(1) At current exchange rate: -14.0%.
Financial statements and relevant business indicators (Millions of euros and percentage)
| Income statement | Jan.-Sep. 19 | ∆% | ∆% (1) | Jan.-Sep. 18 |
|---|---|---|---|---|
| Net interest income | 1,139 | 6.6 | 9.8 | 1,068 |
| Net fees and commissions | 536 | (0.4) | 0.3 | 539 |
| Net trading income | 569 | (16.6) | (14.6) | 682 |
| Other operating income and expenses | (42) | 37.6 | 27.5 | (30) |
| Gross income | 2,203 | (2.4) | (0.1) | 2,258 |
| Operating expenses | (790) | 1.8 | 1.8 | (776) |
| Personnel expenses | (354) | 3.8 | 3.4 | (341) |
| Other administrative expenses | (341) | (3.5) | (2.9) | (353) |
| Depreciation | (95) | 16.3 | 15.6 | (82) |
| Operating income | 1,413 | (4.7) | (1.2) | 1,482 |
| Impairment on financial assets not measured at fair value through profit or loss | (154) | 193.6 | n.s. | (52) |
| Provisions or reversal of provisions and other results | 24 | n.s. | n.s. | (27) |
| Profit/(loss) before tax | 1,283 | (8.5) | (6.2) | 1,403 |
| Income tax | (329) | (0.2) | 2.3 | (330) |
| Profit/(loss) for the year | 954 | (11.1) | (8.9) | 1,073 |
| Non-controlling interests | (220) | 0.4 | 10.8 | (219) |
| Net attributable profit | 734 | (14.0) | (13.5) | 853 |
- (1) Figures at constant exchange rates.
| Balance sheets | 30-09-19 | ∆% | ∆% (1) | 31-12-18 |
|---|---|---|---|---|
| Cash. cash balances at central banks and other demand deposits | 4,683 | (7.9) | (10.9) | 5,087 |
| Financial assets designated at fair value | 112,594 | 21.9 | 21.1 | 92,391 |
| Of which Loans and advances | 35,714 | 23.9 | 23.9 | 28,826 |
| Financial assets at amortized cost | 74,834 | 14.8 | 13.6 | 65,167 |
| Of which loans and advances to customers | 62,398 | 6.3 | 5.0 | 58,720 |
| Inter-area positions | - | - | - | - |
| Tangible assets | 80 | 178.0 | 172.2 | 29 |
| Other assets | 13,904 | n.s. | n.s. | 2,179 |
| Total assets/liabilities and equity | 206,095 | 25.0 | 23.9 | 164,852 |
| Financial liabilities held for trading and designated at fair value through profit or loss | 94,136 | 28.7 | 28.5 | 73,163 |
| Deposits from central banks and credit institutions | 16,917 | (13.1) | (14.2) | 19,464 |
| Deposits from customers | 37,268 | (13.5) | (14.8) | 43,069 |
| Debt certificates | 2,431 | 25.9 | 23.5 | 1,931 |
| Inter-area positions | 46,989 | 138.0 | 133.6 | 19,742 |
| Other liabilities | 4,277 | (1.6) | (2.5) | 4,348 |
| Economic capital allocated | 4,077 | 30.0 | 28.8 | 3,136 |
- (1) Figures at constant exchange rates.
| Relevant business indicators | 30-09-19 | ∆% | ∆% (1) | 31-12-18 |
|---|---|---|---|---|
| Performing loans and advances to customers under management (2) | 61,732 | 5.0 | 3.8 | 58,796 |
| Non-performing loans | 1,181 | 55.1 | 54.2 | 762 |
| Customer deposits under management (2) | 37,220 | (6.1) | (7.3) | 39,642 |
| Off-balance sheet funds (3) | 1,124 | 13.2 | 17.6 | 993 |
| Efficiency ratio (%) | 35.9 | 34.5 |
- (1) Figures at constant exchange rates.
- (2) Excluding repos.
- (3) Includes mutual funds. pension funds and other off-balance sheet funds.
Activity
Unless expressly stated otherwise, all the comments below on rates of change, for both activity and results, will be given at constant exchange rates. These rates, together with changes at current exchange rates, can be found in the attached tables of financial statements and relevant business indicators. In addition, the quarterly variations are from the quarter ending with respect to the previous quarter.
The most relevant aspects related to the area's activity as of September 30, 2019 were:
- Despite the existence of pressure on margins and excess liquidity in the market, lending activity (performing loans under management) increased by 3.8% compared to the figure at the end of December 2018 (up 7.2 year-on-year). By geographic area, the comparison in Spain, Mexico, South America and Rest of Eurasia was more favorable.
- Customer funds fell 6.7% compared to the end of period balance as of December 31, 2018 (down 5.3% year-on-year), although there was a good performance of demand deposits and mutual funds (up 5.5% and 17.6%, respectively), it did not offset the decrease in time deposits (down 26.0%).
- BBVA was one of the most active financial institutions in sustainability and digitalization, two processes that the Bank wants to continue to promote together with its customers.
- During the first nine months of 2019, BBVA was one of the most active institutions in the area of sustainable financing, having participated in 30 transactions classified as green and/or linked to sustainability criteria (ESG score, environmental and social KPIs) certified by reputable independent consultants. Of these 30 transactions, 20 were led by BBVA as a sustainability coordinator.
- This BBVA leadership was registered with relevant operations in different countries, Spain, the United Kingdom, France, Portugal, Belgium, Mexico and China, in various sectors including hotelier, energy (gas and electricity), recycling and automotive components, among others. The 30 operations as of September compared positively with the 23 operations for the whole of 2018.
- In terms of innovation, following the recognition of financing via blockchain in 2018, BBVA was a pioneer in linking a company's degree of digitization to its bank financing with the so-called Digital Loan or D-loan. The syndicated loan, placed in Asia and led by BBVA, is the first of its kind worldwide, and demonstrates that the Bank remains at the forefront of innovative solutions for its customers.
Results
CIB generated a net attributable profit of €734m in the first nine months of 2019, down 13.5% year-on-year (down 3.2% in the quarter). The most relevant aspects of the year-on-year changes in the income statement for Corporate & Investment Banking are summarized below:
- Good performance of net interest income (up 9.8%) linked to the activity, in a complex environment of interest rate cuts.
- Slight increase of net fees and commissions (up 0.3%), supported by the transactional business and bond origination in Global Markets. By geographic area, the increases in Spain and Mexico stand out.
- NTI decreased year-on-year (down 14.6%) resulting from a scenario of relevant cuts in interest rates during the year, which has offset the good performance of activity with customers and the increasing levels of leverage in all products, especially foreign exchange.
- Despite the complex market environment, gross income remained stable on year-on-year terms (down 0.1%).
- Efficient management of operating expenses, with increased investment in technological projects and containment of discretionary expenses.
- Impairment on financial assets increased, mainly due to higher loan-loss provisions of one-off customers in Turkey, Argentina and the United States.