During the first quarter of 2009, a period in which the
financial and economic crisis continued to gather force,
the BBVA Group once again demonstrated the recurrent
nature and strength of its revenues with net interest
income as the main driver. The containment of
operating expenses helped to maintain the high levels of
efficiency and profitability, and to reinforce the Group’s
capital base. It should be noted that these achievements
were completely compatible with appropriate levels of
risk quality and solid liquidity.
The most relevant aspects of the BBVA Group’s
performance in its main business areas during the
quarter are summarised below:
The Group’s net interest income was strong, rising
20.1% compared to the same quarter last year (up
22.6% at constant exchange rates) thanks to a greater
volume of business, action to maintain customer
spreads and active management of the balance sheet.
This increase more than offset the lower levels of
other sources of revenue and thus gross income rose
2.5% (up 4.6% at constant exchange rates) despite
the less favourable economic situation.
Operating expenses (down 0.7% year-on-year) were
contained mainly because the Group anticipated the
present economic situation and implemented
transformation and restructuring plans in advance.
As a result operating income for the quarter
increased 4.9% year-on-year to €2,819m (up 8.3%
without the effect of exchange rates).
The above variations in income and costs resulted in
a new improvement in efficiency (measured by the
cost/income ratio). This now stands at 42.3%,
compared to 43.7% a year earlier.
Impairment losses on financial assets in the quarter
came to €916m, which is much in line with the
€917m and €859m booked in the third and fourth
quarters of 2008. BBVA continues to work with
highly prudent standards.
Consequently net attributable profit in the first
quarter of 2009 came to €1,238m, which is of
Group information
Relevant events
particular relevance if the adverse economic
environment is taken into account. This result brings
earnings per share to €0.34, ROE is 19.4% and
ROA 1.00%.
Despite the slowdown in banking activity, which
especially affects Spain, the United States and
Mexico, BBVA was able to increase business volume.
At 31-Mar-09 gross lending to customers rose 5.5%
year-on-year although it was slightly lower
compared to the end of 2008 (down 0.7%). This
shows how lending declined gradually last year.
Customer funds rose 1.3% year-on-year, with
growth centred on funds included on the balance
sheet (up 8.8%).
The non-performing asset ratio at 31-Mar-09 was
2.8% and it continues to grow more slowly than the
sector average. In Spain & Portugal it is 3.2%, which
compares very favourably with the system and other
banks. In February (the latest figures available) the
average for the entire banking system was 4.2% and
3.5% for banks alone. The coverage ratio at
31-Mar-09 was 76% and coverage reserves
amounted to €8,000m of which more than half is in
the form of generic provisions. The cost of risk ended
the quarter at 1.06% and the increase compared the
fourth quarter last year is mainly due to coverage of
the country risk for Brazil.
Despite disinvestments and falls on major stock
markets during the quarter, the Group’s holdings
latent capital gains at 31-Mar-09 stand at €1,281m.
In terms of BBVA’s capital base and in accordance
with Basel II standards, the core ratio at 31-Mar-09
improved to 6.4%, compared to 6.2% in December.
This reflects the Group’s ability to generate capital in
a recurrent manner in the present economic
conditions. On the other hand, both Tier I (7.7%)
and Tier II (3.8%) fell compared to the end of 2008
owing to the classification in January of China CITIC
Bank (CNCB) as a financial holding after BBVA’s
holding rose from 9.93% to 10.07%. Following this,
the BIS Ratio at 31-Mar-09 stands at 11.5%,
compared to 12.2% at 31-Dec-08.
1Q09
3
To view a Ceros magazine you need to have JavaScript enabled in your browser and have the flash player 8 or higher installed. To install the latest flash player, click the icon above, install the flash plugin and then click here to refresh this page.