This area comprises the Group’s holdings in large industrial corporations and financial institutions; the activities and earnings of the corporate support units such as the Assets and Liabilities Committee; and other activities that, due to their nature, cannot be assigned to a particular business area. The latter include country-risk provisioning and amortisation of goodwill (except that related to business projects within the Wholesale Banking Area). As previously explained, the results of Group companies registered in Argentina are now included in the Americas Area rather than in this area and the 2003 figures have been adjusted to make them comparable Group-wide.

A comparison of this area’s quarterly income statement against the same quarter last year highlights first of all, the improvement in the net interest income (from ?76 million euros to ?17 million euros in this quarter), mainly due to management of interest-rate risk, liquidity and higher dividends, and secondly, an increase in income from companies carried by the equity method due to higher contributions from stakes held in other companies and the absence of negative corrections to their profit statements of the previous year; these were significant amounts in 2003. All this resulted in attributable net profit for the area of -9 million euros, compared to -91 million euros in the first quarter of 2003.

The large industrial corporations unit basically manages the holdings in Telefónica, Repsol and Iberdrola, which make up 94% of total holdings. Attributable net profit this quarter was 85 million euros, against a loss of 57 million euros in the comparable period a year before. The switch from loss to profit was mainly due to the negative adjustments in 2003 brought about by the restatement of 2002 earnings (-96 million euros). It was also due to these companies’ greater earnings in this quarter and to the increase in net trading income which contributed with 19 million euros.

The financial holdings unit recorded the income from the sale of Banco Atlántico (218 million euros) in the first quarter of the year. In the first quarter of last year, 216 million euros were recorded under this item as the capital gain corresponding to the cash amount received during the Crédit Agricole take-over of Crédit Lyonnais. At present, the most significant holdings managed by the unit are BNL and Bradesco.

The Assets and Liabilities Committee manages the Group’s interest rate and exchange rate risks, Group’s liquidity and shareholders’ equity. Net interest income and net trading income together amount to 146 million euros, compared to 92 million in the first quarter of 2003. The increase is driven by hedging and active management of the portfolio covering structural interest rate risk, which amounts to 23.5 billion euros at the end of March (16,650 million at 31-3-03).

Furthermore, exchange-rate hedging transactions now protect more than 80% of book-value in the Americas and 83% of BBVA Bancomer’s book-value after the acquisition of minority holdings. 

The Corporate Activities Area includes personnel and administrative costs, depreciation and other operating costs generated by central corporate units. It also absorbed other costs of an institutional nature that cannot be assigned to a particular area (corporate IT costs, severance payments, etc). The total for these items (156 million euros this quarter) is similar to the previous year.

Amortisation of goodwill arising from the Group’s investments and holdings in Latin-American affiliates came to 131 million euros (similar to the same quarter of 2003). However, its composition has changed as Bancomer’s amortisation increased while that of industrial corporations declined as a result of the divestment programme. 

Lastly, it should be pointed out that the business volume figures for the Retail, Wholesale and the Americas areas record intergroup transactions as an integral part of their activities and business management.  All intergroup transactions eliminated during consolidation are assigned to the Corporate Activities Area and therefore some items on its balance sheet may contain negative amounts.