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| 1Q10 | BBVA Group highlights | Group information | Risk and economic capital management | Business areas | Corporate responsibility |
CREDIT RISK
Despite the crisis scenario forming the backdrop to
economic activity, the business model, geographical
and portfolio diversification and the prudential policy
applied by the Group’s risk management have
stabilized the main indicators of asset quality in the
first quarter of 2010. In this difficult
environment, BBVA has outperformed the industry
average in terms of risk premium, NPA and coverage
ratios.
As of March 31, 2010, the volume of total risks with
customers (including contingent liabilities) stood at
€370,699m, an increase of 1.6% on the €364,776m
recorded at 31-Dec-2009, due to the appreciation of
the main currencies against the euro. Higher-risk
lending (e.g. developer, consumer and credit-card
lending) has continued to lose ground as a percentage
of the total against residential mortgages and
corporate and institutional lending.
Non-performing assets as of 31-Mar-10 stood at
€15,870m, only €268m higher than at the close of
2009. All of this increase is explained by foreign
Risk management
Economic profit and risk-adjusted return on economic capital
RISK AND ECONOMIC CAPITAL MANAGEMENT
RISK MANAGEMENT
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.
currency movements. The net additions to NPA have
continued the downward trend started in 2009 as a
result of a reduction in gross additions to NPA and
the active policy of recoveries. The recoveries rate as
a percentage of additions to NPA was 73.2%
compared with 54.6% in the previous quarter (not
including the one-off reclassifications in the fourth
quarter of 2009) and 45.1% in the third quarter of
2009.
As a result, the NPA ratio of the Group at the end of
the first quarter of 2010 was 4.3%, the same level as
at the close of 2009. In the Spain and Portugal
business area this ratio was 5.1%, the same as at
31-Dec-09, with a slight reduction in the balance of
NPA. In Mexico, the ratio improves to 4.1%. In the
United States it is 4.4% and in South America 2.8%.
Finally, the rate in Wholesale Banking & Asset
Management is 1.3%.
Coverage provisions for risks with customers were
€9,308m at 31-Mar-10, an increase of 4.1%
compared with the figure for December 2009. Of this
total, €2,872m correspond to generic funds and
country risk, 30.8% of the total. Collaterals were
31-03-10 31-12-09
30-09-09
30-06-09
31-03-09
15,870 15,602 12,500 11,774 10,543
370,699 364,776 363,812 369,313 374,962
9,308 8,943 8,459 8,023 8,000
6,437 5,969 4,422 4,132 3,679
2,872 2,975 4,037 3,891 4,321
4.3 4.3 3.4 3.2 2.8
59 57 68 68 76
1,149 861 698 546 461
269 208 151 123 108
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