30
BUSINESS AREAS 2Q09
Spain and Portugal
BBVA was very active in placing the ICO credit lines and
at 22-Jun-09 its market share of such placements was
12.9% (11.8% at 31-Mar-09). Lending to private
individuals entailed products such as Ven a casa 200 and
Hipoteca Solución, whose aim is to adjust the cost of loans
to customers’ ability to pay. Thanks to these at 31-May-09
the area had increased its market share of such lending 30
basis points compared to a year earlier. Furthermore BBVA
continues to lead the market in big operations in the public
sector with a 9.4% rise in lending to this segment.
Total customer funds under management stand at
€145,045m (€141,153 at 31-Mar-09). The proportion of
liquid deposits and mutual funds increased 49 basis points
to the detriment of time deposits and foreign wholesale
balances. And BBVA successfully managed the change in
customers’ preferences during the recent sharp decline in
interest rates, which caused the return on time deposits to
drop significantly. The demand for liquid deposits and
conservative products with greater yields increased
compared to previous quarters. As a result savings and
current accounts came to €41,770m and according to the
latest available figures the area increased its market share
12 basis points in business with households and SMEs. In
the second quarter a new savings promotion joined other
campaigns that had started at the beginning of the year to
encourage direct payment of salaries through a BBVA
account and to promote the area’s pension plans. BBVA
also strengthened its leadership in mutual funds with a new
increase in market share, which now stands at 20.4%
based on the latest available figures. Assets under
management by the area amount to €31,227m, up 0.7%
compared to the previous quarter thanks to a rise in lower
risk assets. During the quarter pension funds increased
2.6% to €9,758m, supported by positive management of
the price effect and pension funds captured from the
competition.
In the first half net interest income rose 5.4%
year-on-year to €2,458m. The latter figure represents
2.23% of managed assets (2.09% in the first half last year)
and this is evidence of the area’s growing profitability. Net
fees and commissions declined 8.4% to €756m owing to
the drop in mutual funds, pension funds and other
products linked to the stock market (down 36.7% year on
year). Other fees and commissions on banking services (up
4.4% compared to the first half last year) and income from
the insurance business (up 8.6%) helped to lift gross
income 1.3% to €3,558m. This increase would be 2.1% if
net trading income were excluded.
The growth of recurrent retail revenues, a new
improvement in efficiency that cut costs 6.5% year-on-year
and a rise in loan-loss provisions to €504m resulted in net
attributable profit of €1,270m (down 1.7%) in the first
half. Therefore return on equity (ROE) stands at 36.0%,
which is considerably better than the banking sector
average.
Lastly we must point out that despite the increase in
impairment losses on financial assets associated with the
current economic situation, the area’s operating income is
big enough to absorb 4.6 times the present level of
impairment loss. Provisioning rose more slowly than
non-performing assets partly because of the slowdown in
lending. Consequently the coverage ratio was 55% at
30-Jun-09 (61% at 31-Mar-09).
Spanish Retail Network
This unit services the financial and non-financial needs of
households, professional practices, retailers and small
businesses with products adapted to each of these
segments. It demonstrated its commitment to families,
SMEs and the self-employed by launching a new range of
financial solutions that helps them implement their
investment plans in the present complicated economic
environment.
At 30-Jun-09 the unit’s loan portfolio stood at €102,819m
and customer funds came to €111,850m. Net attributable
profit rose 6.5% year-on-year to €826m thanks to efforts
to sustain the level of business and to cost controls.
In the private individual segment invoicing of new
mortgage loans came to €2,992m despite the sharp
contraction in the real estate market. This positive trend is
the result of new products customised to suit customers’
current needs. They include promotions to attract
mortgages away from the competition, such as the Ven a
casa-200 campaign, which accounted for 22% of branch
sales, and a new type of mortgage (Nueva Hipoteca Blue
Protegida) that targets the young-customer segment. The
residential mortgage loan portfolio now stands at
€69,084m (up 1.4% year-on-year). Other financial
solutions adapted to customers include new versions of a
loan associated with salaries (Crédito Nómina) that carries
zero interest in the first year and Préstamo Inmediato
PIDE 2009, which brought the balance of consumer
finance to €7,844m at 30-Jun-09.
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