market, and those fees and commissions associated
with banking services, which increased with respect
to the first quarter of 2009, up 4.2% year-on-year.
This was due to the fees and commissions stemming
from account administration and maintenance,
contingent liabilities and availability of lines of credit
and securities.
Net income from financial operations amounted to
€633m as a result of the solid course of markets
activity, a positive result due to the effect of the
devaluation of the bolivar in certain positions and,
finally, the correct execution of the adjustment of
ALCO portfolio durations. Furthermore, the high price
volatility in sovereign markets was taken advantage of
to rotate the durations of the ALCO portfolios, which
generated income without consuming the unrealized
capital gains present in December 2009.
Dividend income came to €25m in the first quarter
(€41m for the same time in 2009). Its lower value is
due to the advance to the month of December of
some dividends traditionally paid in January by some
Spanish companies.
Equity-accounted income, €57m, is much higher
than the €4m recorded in the first quarter of 2009.
This can be explained primarily by the consideration
of CNCB as one of the Group’s subsidiaries since the
fourth quarter of 2009. Thus, its profits are now
recorded as equity-accounted income. Furthermore,
the purchase option to extend its holding of CNCB
by 5% became effective on April 1, 2010, and the
effects of its impact will begin to be felt in the
earnings from the second quarter of this year.
In this quarter, the heading other operating income
and expenses totaled €93m (€128m in the same
time the previous year). Its evolution has been
affected by:
The insurance business suffering from the fall in
banking volumes, which meant lower earnings
from bancassurance products.
A greater contribution to deposit guarantee funds
of the different countries, which increased 10.9%
year-on-year at a rate much higher than that of
the growth of the banking business.
As a result gross income in the first quarter came to
€5,301m, representing an 8.4% year-on-year growth
and an improvement on the fourth quarter of 2009.
This last comparison is especially positive given that
the fourth quarter includes dividends from the
investment in Telefónica of €118m and a higher
value for the equity-accounted income of CNCB.
OPERATING INCOME
Operating expenses remain contained, with a
year-on-year increase of 2.3% to €2,118m, due
primarily to the sale and leaseback of certain
properties in Spain in the third quarter of 2009. This
transaction involved increased expenses for rental.
However, the increase of costs is much lower than the
average level of inflation observed in countries where
BBVA operates as well as that of revenues. The above
has allowed the cost/income ratio to stand at 40.0%,
marking a slight improvement of the value published
for the year 2009 (40.4%). This figure once again
situates BBVA as the most efficient Bank of the group
| 1Q10 |
11
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