30
BUSINESS AREAS 1Q09
Spain and Portugal
offset the slowdown in those segments with higher risk
exposure and the lower demand by customers in certain
business lines. The latter includes consumer finance,
which fell 12.3%.
The non-performing assets ratio stands at 3.2% (2.6%
at 31-Dec-08) and this continues to be lower than the
market average in both households and companies
lending. The coverage ratio is 60%, down by only
seven percentage points compared to 31-Dec-08 (67%).
At 31-Mar-09 customer funds came to €141,153m
(€148,831m a year earlier). The reduction in the period
is basically due to the poor performance of
off-balance-sheet funds, stemming from the negative
price effect derived from turbulences in the markets
along the past year. Of this amount deposits and other
types included on the balance sheet accounted for
€94,381m and mutual funds, pension funds and other
product distributed through the branches account for
€46,772m. We should point out that BBVA continues to
develop products adapted for the specific savings and
liquidity needs of households and companies. The
performance of savings and current accounts was
exceptional, bringing the balance to €39,324m and
gaining 20 basis points of market share in the household
and companies segments. In addition the Group
strengthened its leadership in mutual funds, extending its
market share to 20.2% (19.8% at 31-Dec-08 and 18.1%
at 31-Mar-08). It maintained the volume of subscriptions
in the more conservative funds and its redemption rate is
lower than the average. Furthermore the market effect
was less negative than its competitors. The assets under
management stand at €31,010m, down 23.0%
year-on-year (the decline for the system as a whole was
26.1%). Time deposits rose 11.9%; subscriptions to
pension funds came to €81m and the distribution of
other customer-fund products increased 19.3%.
Despite the rapidly deteriorating sentiment in the
domestic market, the area achieved positive results in
recurrent earnings owing to the profitable growth of
business. These increases were higher compared to the
overall economic activity and the banking sector in
particular.
Net interest income rose 5.6% to €1,210m on a
further improvement in the customer spread, which
widened to 3.36% (3.09% a year earlier). The ratio of
net interest income to total assets under management
came to 2.22% (2.08% for the first quarter last year).
Net fees and commissions came to €378m, falling 7.3%
year-on-year, although those linked to banking services
declined less than those from mutual funds. Net trading
income was €52m in the quarter, dropping 17.9%. As a
result, gross income rose 1.0% to €1,747m (up 1.8%
excluding net trading income).
The Transformation and Innovation Plan launched in
2006 again helped to reduce operating expenses by
6.5%. Therefore operating income grew 5.6% to
€1,135m. The good performance of recurrent income
and cost controls boosted efficiency (measured by the
cost/income ratio), which improved 2.8 percentage
points year-on-year to 35.0% and 1.8 points compared
to the fourth quarter of 2008.
Impairment losses on financial assets increased 77.7%
year-on-year to €190m. However this is less than the
amount for the third and fourth quarters last year
(€255m and €202m, respectively). Consequently net
attributable profit came to €657m, declining slightly, by
2.4%, compared to a year earlier and bringing return
on equity (ROE) to 37.0%.
Spanish Retail Network
This unit services the financial and non-financial needs
of households, professional practices, retailers and small
businesses, and it also manages the high-net-worth
segment of individual customers with products adapted
to each of these segments. Demand for lending by
families and companies continued to slacken owing to
the decline in economic expectations. In spite of this
scenario BBVA is meeting its commitments to society
and has adopted a series of solutions to facilitate
payments by customers whose financial situation has
weakened. Moreover it launched an institutional
commitment campaign for SMEs, retailers and the
self-employed making available more than €5,500m in
pre-approved loans.
At 31-Mar-09 the loan portfolio on the unit’s balance
sheet came to €102,721m and customer funds were
€110,241m. The efforts to maintain business volume,
together with an increase in spreads and cost controls,
resulted in operating income of €643m (up 0.3%) and
net attributable profit came to €415m (up 5.9%).
Despite the slowdown in the housing market, the unit
invoiced €2,186m in the private individual segment
during the quarter. A campaign to attract mortgages away
from the competition (Ven a casa-200) accounted for 21%
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