Risk and economic capital management
Credit risk
The Group has continued to conserve high asset quality,
based on its policies of prudent management for its
most relevant risks and an in-depth knowledge of its
lending portfolios (practically all of which have been
generated through the Group’s own networks). Thus,
once more, this quarter brought good news on risk
management. The main highlights were the following:
For the third quarter running, net entries into NPAs
decreased, indicating a trend due both to fewer gross
entries and to the high volume of recoveries. This
improvement has dampened growth in the NPA
ratio. The trend is even more significant given that it
has occurred in a context of very selective real-estate
purchases.
It was decided to employ 100% of the capital gains
from the sale and lease-back of properties in Spain,
ie, €830m, to endow generic provisions, thus
boosting the coverage ratio.
Credit risk management
(Million euros)
TOTAL RISK EXPOSURE (1)
Non-performing assets
Total risks
Provisions
•Specific
•Generic and country-risk
NPA ratio (%)
NPA coverage ratio (%)
MEMORANDUM ITEM:
Foreclosed assets
Foreclosed asset provisions
Coverage (%)
(1) Including contingent liabilities.
Risk management
30-09-09
Moreover, there is still ample coverage from
provisions and collaterals.
The Group has managed to consistently outperform the
system as a whole, with better cost of risk and better
NPA and coverage ratios. Additionally, with the latest
endowment to provisions in Spain, the Group has
helped to maintain the recurrent nature of its earnings
for the next few quarters, despite current uncertainty
regarding economic recovery.
The third-quarter data show that to 30th September
2009, BBVA has:
A volume of total risk with customers (including
contingent risks), at €363,812m, which is just 1.5%
lower than the €369,313m reported on 30-Jun-09,
and in line with the overall slowdown in lending
activity. It is impacted by the depreciation of the
main currencies in which the Group operates, that
are consolidated to its balance sheet in euros.
Moreover, this quarter, the percentage of the lending
segments bearing lower risk continued to increase,
30-06-09
31-03-09 31-12-08 30-09-08
12,500 11,774 10,543 8,568 6,544
363,812 369,313 374,962 378,635 382,635
8,459 8,023 8,000 7,841 8,328
4,422 4,132 3,679 3,282 2,524
4,037 3,891 4,321 4,558 5,804
3.4 3.2 2.8 2.3 1.7
68 68 76 92 127
698 546 461 391 383
151 123 108 98 100
22 22 23 25 26
3Q09
23
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