4
GROUP INFORMATION 1Q09
Relevant events
On 20-Apr-09 the bank paid the final remuneration
against 2008 earnings in the form of shares. Based on
the share price on 17th April, this dividend was
equivalent to €0.13 per share. As a result total
shareholder remuneration from 2008 earnings came
to €0.63 per share and the dividend yield in 2008
was 7.8%, compared to 4.4% in 2007.
On 04-Mar-09 Standard & Poor’s confirmed BBVA’s
AA rating. It is one of only five banks worldwide to
maintain this rating despite the crisis. Nonetheless, the
outlook was revised downwards from stable to negative
owing to lower expectations for economic growth.
Once again the main source of revenues in the Spain
& Portugal Area was net interest income, which
increased 5.6% year-on-year, supported by the
continuing high volume of business and an
improvement in spreads. This positive result, together
with a 6.5% reduction in operating expenses, helped
to improve efficiency and to increase operating income
5.6% year-on-year, the same increase achieved by net
interest income. After deducting higher provisions than
the first quarter of 2008, but lower than those of the
third and fourth quarters, net attributable profit came
to €657m (down 2.4% year on year).
Despite the complex economic and financial
conditions, the recurrent earnings of the Wholesale
Banking & Asset Management Area were very
favourable thanks to the level of business and active
management of prices. Aided by cost controls, these
factors enabled operating income to grow 7.6% year
on year. Net attributable profit was €268m, much in
line with the first quarter of 2008.
Business increased in Mexico, mainly in low-cost
customer funds, in lending to SMEs and large
companies, and in mortgages. Together with
appropriate management of the balance sheet, this
helped net interest income to rise 6.0% at constant
exchange rates. However, profits from the VISA IPO
in the first quarter of 2008 limits the relative
improvement of net trading income and therefore
gross income grew only 1.0% year-on-year (up 9.1%
excluding revenue from the Visa IPO in Jan-Mar
2008). Provisioning in the period increased and
therefore net attributable profit for this area fell
16.1% at constant exchange rates to €363m (–2.4%
excluding the Visa operation).
In the United States Area business volumes continued
to rise and net interest income in the first quarter
increased 3.6% year on year at constant exchange
rates. However the slowdown in net fees and
commissions, and in net trading income, reduced gross
income 5.3% year-on-year at constant exchange rates.
This was partially offset by an improvement in
operating expenses, so operating income fell 3.0%.
After provisioning that was in line with the third and
fourth quarters of 2008, net attributable profit came to
€42m (€63m excluding amortization of intangibles).
In the South America Area operating income and net
attributable profit in the quarter increased 23.4%
and 19.5%, respectively, at constant rates, bringing
net attributable profit to €225m. The quarter was
positive for the area’s three business lines: banking,
pensions and insurance. The good performance of
income and moderation in expenses were the most
relevant features of the quarter.
Economic environment
During the first quarter of 2009 persistent financial
uncertainty and the weakening macro economy had a
widespread negative impact on all sectors of business
and world trade. Financial stress and risk aversion
remained high although short-term liquidity improved
following injections by central banks. Nonetheless
spreads remain higher than those in the first half of
2008 and medium-term finance is highly dependent on
government guarantees.
In view of these problems the responses of economic
policy are speeding up and central banks are keeping
interest rates low, given the economic weakness and the
downward pressure on inflation. Fiscal stimulus
packages are becoming commonplace and the amounts
entailed are quite significant.
Globalisation of finance and trade has contributed to
the rapid expansion of the crisis to all corners of the
world, causing economic cycles to synchronise in an
extraordinary manner.
In Europe the latest economic data points to a deeper
recession that will extend throughout 2009 despite the
expansive monetary policy of the European Central Bank.
In a meeting on 2nd April the ECB cut interest rates by a
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