Rest of Business
Highlights
- Slight increase in lending and decrease in customers funds in the quarter.
- NPL ratio contained.
- Good performance of the Net interest income from the branches in Asia.
- Year-on-year increase of the Net attributable profit, compared with the first half of 2020, which was strongly affected by the COVID-19 pandemic in relation to the impairment of financial assets.
Business activity (1)
(Year-to-date change, at constant exchange rates)
(1) Excluding repos.
Net interest income/ATAs
(Percentage. Constant exchange rates)
Operating income
(Millions of euros at constant exchange rate)
(1) At current exchange rate: +21.4%.
Net attributable profit
(Millions of euros at constant exchange rate)
(1) At current exchange rate: -32.9%.
Financial statements and relevant business indicators (Millions of euros and percentage)
| Income statement | 1H21 | ∆% | ∆% (1) | 1H20 |
|---|---|---|---|---|
| Net interest income | 140 | (3.5) | (1.8) | 145 |
| Net fees and commissions | 135 | (25.1) | (21.5) | 180 |
| Net trading income | 109 | 5.4 | 7.0 | 104 |
| Other operating income and expenses | 16 | (26.0) | (21.3) | 22 |
| Gross income | 400 | (11.2) | (8.4) | 451 |
| Operating expenses | (227) | (1.5) | 1.9 | (230) |
| Personnel expenses | (114) | (11.9) | (8.0) | (129) |
| Other administrative expenses | (104) | 14.0 | 16.7 | (91) |
| Depreciation | (10) | (8.0) | (6.5) | (11) |
| Operating income | 173 | (21.4) | (19.2) | 221 |
| Impaiment on financial assets not measured at fair value through profit or loss | 15 | n.s. | n.s. | (74) |
| Provisions or reversal of provisions and other results | (4) | (25.1) | (26.2) | (6) |
| Profit/(loss) before tax | 184 | 31.3 | 35.0 | 140 |
| Income tax | (39) | 25.8 | 29.2 | (31) |
| Profit/(loss) for the period | 145 | 32.9 | 36.7 | 109 |
| Non-controlling interests | - | - | - | - |
| Net attributable profit/(loss) | 145 | 32.9 | 36.7 | 109 |
| Balance sheets | 30-06-21 | ∆% | ∆% (1) | 31-12-20 |
|---|---|---|---|---|
| Cash, cash balances at central banks and other demand deposits | 4,013 | (34.4) | (36.4) | 6,121 |
| Financial assets designated at fair value | 2,428 | 65.2 | 61.7 | 1,470 |
| Of which: Loans and advances | 1,442 | n.s. | n.s. | 153 |
| Financial assets at amortized cost | 27,436 | 0.8 | 0.2 | 27,213 |
| Of which: Loans and advances to customers | 24,241 | 0.9 | 0.3 | 24,015 |
| Inter-area positions | - | - | - | - |
| Tangible assets | 68 | (8.9) | (9.3) | 75 |
| Other assets | 419 | 43.0 | 41.6 | 293 |
| Total assets/liabilities and equity | 34,364 | (2.3) | (3.4) | 35,172 |
| Financial liabilities held for trading and designated at fair value through profit or loss | 1,804 | 112.5 | 106.2 | 849 |
| Deposits from central banks and credit institutions | 1,478 | (13.0) | (14.4) | 1,700 |
| Deposits from customers | 6,873 | (26.4) | (27.4) | 9,333 |
| Debt certificates | 1,325 | (12.3) | (12.8) | 1,511 |
| Inter-area positions | 18.590 | 2.5 | 1.7 | 18,132 |
| Other liabilities | 845 | 38.9 | 37.6 | 608 |
| Economic capital allocated | 3,449 | 13.5 | 12.4 | 3,039 |
| Relevant business indicators | 30-06-21 | ∆% | ∆% (1) | 31-12-20 |
|---|---|---|---|---|
| Performing loans and advances to customers under management (2) | 24,216 | 0.7 | 0.1 | 24,038 |
| Non-performing loans | 334 | 2.9 | 2.6 | 324 |
| Customer deposits under management (2) | 6,873 | (26.4) | (27.4) | 9,333 |
| Off-balance sheet funds (3) | 550 | (3.5) | (3.5) | 569 |
| Risk-weighted assets | 28,883 | 18.7 | 17.8 | 24,331 |
| Efficiency ratio (%) | 56.7 | 55.6 | ||
| NPL ratio (%) | 1.0 | 1.0 | ||
| NPL coverage ratio (%) | 95 | 109 | ||
| Cost of risk (%) | (0.13) | 0.30 |
(1) Figures at constant exchange rates.
(2) Excluding repos.
(3) Includes pension funds.
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 the changes at current exchange rates, can be found in the attached tables of the financial statements and relevant business indicators.
Activity and results
The most relevant aspects of the activity and results of the Rest of Business of BBVA Group during the first half of 2021 were:
- Lending activity (performing loans under management) increased slightly during the first half of the year (up 0.1%).
- Regarding credit risk indicators, the NPL ratio stood at 1.0%, remaining stable with respect to December 2020, whereas the NPL coverage ratio decreased to 95%.
- Customer deposits under management decreased by -27.4%, mainly due to a decrease in deposits from wholesale customers in the New York branch.
- In terms of results, the net interest income registered a variation of -1.8% compared to the same period last year mainly due to the negative evolution of Europe -excluding Spain- and the New York branch, partially compensated by the good results of the branches located in Asia.
- Net commissions fell by 21.5% compared with the first half of 2020, caused by a lower contribution from BBVA Securities, the Group's broker-dealer in the United States.
- The NTI line increased (up 7.0% year-on-year) on the back of a better performance of the branches in Asia and BBVA Securities.
- Increase of operating expenses (up 1.9% year-on-year) where the active management has allowed a reduction of personnel costs year-on-year. However this effect has been offset by the increase in general expenses and depreciation.
- The impairment on financial assets line closed with a release of €15m, which compares positively against the €-74m recorded twelve months earlier, mainly explained by the positive evolution of impaired clients of the New York branch and the retail portfolio in Europe, excluding Spain.
- As a result, the area's cumulative net attributable profit at the end the first half of 2021 was €145m (up 36.7% year-on- year).