BBVA’s revenues rise in all geographic regions and exceed €22 billion in 2012
BBVA earned €1.68 billion in 2012, down 44.2% compared to the previous year, after completing all real estate related provisions in Spain. Excluding such charges and the badwill generated by Unnim’s incorporation, the adjusted profit was €4.41 billion (down 2.2% year-over-year). All the Group’s business areas contributed to income growth in 2012.
BBVA Chairman and CEO Francisco González said, “I believe these results confirm BBVA’s strength, generated by its diversification and business model in a very complex year. We overcame the difficulties and presented positive results quarter after quarter."
Net interest income continued its upward trend, rising 15.0% to €15.12 billion; gross income increased 12.1% to €22.44 billion while operating income rose 13.3% to €11.66 billion.
These results place BBVA in a leading position in terms of year over year growth and profitability. Emerging markets, with their considerable potential for economic expansion and growth in banking services, continue to provide most of the business areas’ gross income (56%).
Costs are still growing slower than income and the increases are mainly confined to important investments in expansion plans for emerging markets. Costs in developed countries remain contained. As a result of the sharp growth in income and appropriate cost management BBVA continues to be a leading bank in terms of efficiency. Consequently recurring operating income –excluding NTI and dividends– is rising fast (up 15.2% to €9.50 billion).
In a particularly complicated year BBVA had no trouble providing all the necessary loan-loss and real-estate provisions.
Risk indicators are in line with expectations. The BBVA Group’s non-performing asset ratio was 5.1%, which was less than average for its competitors (6%), and the coverage ratio rose 11 percentage points during the year to 72%.
In terms of solvency BBVA demonstrated its solid position and ability to improve its capital ratios. The core capital ratio according to Basel II criteria improved from 10.3% to 10.8%. Moreover the Group met all the supervisors’ recommendations without selling strategic assets.
Although the environment remained complex BBVA was able to manage the balance sheet in an exceptional manner, improving the liquidity gap by €23 billion. It issued some €14 billion in debt and it was the first to tap the capital markets in 2013.
A review of the individual business areas shows that BBVA's unit in Spain gained market share in lending and deposits, and improved its customer spread. Net interest income rose 10.1% to €4.84 billion and gross income increased 7.2% to €6.78 billion. Cost constraints strengthened operating income, which grew 12.0% year-over-year to €3.97 billion, and improved efficiency. Furthermore non-performing assets in Spain (6.9%) outperformed the financial sector average and coverage increased to 67%. The net attributable result in the area was negative (€ -1.27 billion) after absorbing provisions related to impairment of real estate assets. Excluding these provisions, Spain’s net attributable profit was €1.21 billion.
In Eurasia net interest income came to €847 million (up 5.5%) and its contribution to the Group’s gross income continued to grow (up 12.7% to €2.21 billion) thanks to Garanti (Turkey) and CNCB (China). The area earned €950 million in 2012.
The Group’s franchise in Mexico is the leading bank in that country and it reported a solid performance in business activity as well as revenues. Lending grew 6.7% at constant exchange rates and customer funds increased 4.8%. Net interest income was up 7.8% (at constant rates) to €4.16 billion and gross income rose 5.8% to €5.76 billion. Risk indicators remained stable (the non-performing asset ratio stood at 3.8% and the coverage ratio at 114%). Net attributable profit came to €1.82 billion, an increase of 4% in constant euros.
The buoyant business activity in South America was once again reflected by the area’s earnings. Lending increased 17.7% in constant euros and customer funds on the balance sheet rose 23%. In fact all margins increased by more than 20% in constant euros. Net interest income came to €4.29 billion (up 25.6%), gross income was €5.36 billion (up 21.6%) and operating income was €3.04 billion (up 26.8%). These advances were accompanied by improvements in efficiency and risk control. This area’s net attributable profit came to €1.35 billion, an increase of 23.6% at constant exchange rates.
BBVA Compass reflected a selective increase in its loan portfolio (up 7.2%). Customer deposits also increased (up 12.9%). The franchise in the U. S., which includes BBVA Compass and BBVA’s office in New York, reported good levels of credit quality with a non-performing asset ratio of 2.4% and a coverage ratio of 90%. The area focused on controlling costs, on its technology platform and on maintaining a solid liquidity position. Net interest income came to €1.68 billion (up 2.8% at current exchange rates, down 4.7% at constant rates) and gross income was €2.40 billion (up 3.1% at current exchange rates, down 4.2% at constant rates). Net attributable profit came to €475 million.
The wholesale and investment banking activities, CIB, reported a similar profit to the previous year, namely, €1.05 billion (down 0.1% at constant rates). It was aided by its solid customer franchise and balanced diversification across geographic regions. Gross lending declined 16.2% owing to deleveraging in developed countries and CIB’s strategy of selective growth limited to certain customers and portfolios.