10
| 1Q10 | BBVA Group highlights | Group information | Risk and economic capital management | Business areas | Corporate responsibility |
Management of structural interest and liquidity risk
continues to be characterized by anticipation and
strict criteria of prudence, which make way for the
generation of a solid balance sheet with low
leveraging and a reduced risk profile. In the different
countries, the balances and duration of debt
portfolios that enable the evolution of the net interest
income and economic value of the balance sheet
continue to be adjusted. Furthermore, growth of
lending in previous years was financed by liabilities
that were suitably structured in terms of maturity,
type of instrument and diversification. In this regard,
in the first part of 2010, there have been numerous
issues at very competitive rates in the wholesale
market which cover a large part of the Group’s
estimated financing needs for the entire year.
In the business with customers in the euro zone in
the first quarter, the decrease in the yield on loans
(down 10 basis points to 3.31%) continues to be
higher than the fall observed in the cost of funds
(down 3 basis points to 0.58%). As a result,
customer spread fell to 2.73%. If only domestic
balances are considered, the spread only declined by
one point. Likewise, risk and use of economic capital
continue to fall as consumer finance decreases on the
assets side and liquid funds increase on the liabilities
side. The net interest income accumulated as of
March in Spain and Portugal and for the Wholesale
Banking & Asset Management units operating in the
euro zone grew 2.6% year-on-year. Another relevant
measure is net interest income over average total
assets (ATA), which continued to increase in the past
year in all domestic units (retail businesses and CBB).
In Mexico, interbank interest rates have remained at
the same levels as at the close of the fourth quarter of
Relevant events
Earnings
Business activity
Capital base
The BBVA share
2009 (average TIIE at 4.9%). Thus, the cost of
deposits barely changed, down 5 basis points from
December 31, 2009. Furthermore, yield on loans
dropped 85 basis points, primarily due to the
continued fall in the weight of consumer finance and
credit card products and increased weight of lower-risk
loans. Thus, customer spread stands at 10.54%, as
compared to the 11.35% of the fourth quarter of
2009, and the area’s net interest income decreased
0.6% year-on-year at a constant exchange rate.
South America once again reported strong growth of
net interest income (up 12.7% year-on-year at
constant exchange rates), which is supported by the
recovery of the loan-book, an increase of customer
funds and by keeping spreads.
In the United States net interest income accumulated
in the first three months of the quarter rose 9.7%
year-on-year in US dollars, sustained mainly by an
increase in business volume as compared to the
previous year following the incorporation of
Guaranty and the repricing effort that continues to be
carried out.
GROSS INCOME
In the first quarter of 2010, fees and commissions,
after several quarters at negative rates, exceeded the
level recorded twelve months prior: €1,106m, as
compared to the €1,079m for the same quarter the
previous year (up 2.5% year-on-year). This is the
result of the contribution of both fees and
commissions for funds, which stabilized due to
greater fund gathering and the solid trajectory of the
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