The higher level of business and the earnings of the Markets
Unit helped the area’s gross income (€1,022m) to regain the
same level as a year earlier (€1,020m). This achievement was
supported by the excellent performance of income in
Corporate and Investment Banking and in Global Markets,
which rose 26.4% and 19.6%, respectively, year on year.
These positive developments offset lower sales from the
industrial holdings portfolio and the decline in net fees &
commissions in Asset Management.
Moreover the increase in operating costs in the first half was
5.7% and this helped to hold the cost/income ratio at
practically the same level as the first quarter: 25.8% compared
to 25.4% in the first quarter. As a result the area’s operating
income fell 1.6% year-on-year to €758m.
WB&AM continues to outperform in terms of asset quality.
The non-performing asset ratio, 0.7%, is low and the coverage
ratio is 133%. In the first half, loan-loss provisions dropped
82.8% year-on-year to €14m.
As usual the business and earnings of WB&AM units in
Latin America are recorded under the Mexico and South
America areas. After incorporating these contributions
(except Asset Management in South America), the combined
WB&AM area contributed the amounts shown in the
attached table:
Wholesale Banking & Asset
Management including the Americas
(Million euros)
Gross income
Operating income
Income before tax
Net attributable profit
Customer lending
Deposits
Corporate and Investment Banking
This unit co-ordinates origination, distribution and
management of a complete catalogue of corporate &
investment banking products (corporate finance, structured
finance, equity and debt capital markets), global trade finance
and global transaction services. Coverage of large corporate
customers is specialised by sector (industry bankers).
30-06-09
Δ% 30-06-08
1,682 20.0 1,402
1,324 25.4 1,056
1,283 29.0 994
844 17.3 719
55,545 0.5 55,286
64,557 20.0 53,797
2Q09 BUSINESS AREAS
Wholesale Banking & Asset Management
In the first half of 2009 the unit’s activity was characterised by
a focus on customers with a high business potential, which has
a positive effect on fee income. The loan portfolio stands at
€42,768m, which is similar to a year earlier but 6.9% lower
than the previous quarter and 8.8% lower than the end of
2008. However, the unit increased net interest income thanks
to excellent price management and to the increase in
transactional business with customers.
Once again recurrent income (net interest income and net fees
& commissions) supported the excellent performance of gross
income, which rose 26.4% year-on-year to €466m.
Furthermore operating income for the first half increased
30.7% to €382m. After impairment on financial assets and
provisions (practically zero in the figures for the first half) and
income tax, net attributable profit came to €265m, compared
to €149m a year earlier.
The Debt Capital Markets unit consists of the syndicated loans
and fixed income origination units. Debt Capital Markets
climbed from fifth position in Spain in 2008 to the first,
according to the most recent information published by
Dealogic. The syndicated loan unit participated in important
operations in the European market: Nokia (€1,500m) and
Edison (€600m). In the Spanish market the unit handled an
important operation for Ferrovial (€3,300m) in which BBVA
acted as co-ordinator and as the documentation and payment
agent. Other operations included the Roca Group (€480m) and
FCC (€400m). In the second quarter Fixed Income Origination,
which is very active, handled more than 40 operations. They
included the ICO issue (€2,000m), Volkswagen (two tranches
of €1,750m and €1,250m) and Imperial Tobacco (€1,250m).
Structured finance continued to be buoyant in Europe. In
London the unit signed a finance operation for the Greater
Manchester Waste Project (580 million British pounds). BBVA
also participated in the A2 project in Poland with a volume of
€1,600m.
In Equity Capital Markets, BBVA participated in various
capital increases that were well subscribed. They included
ENEL (€8,000m) and Rio Tinto (7,300 million British
pounds).
Lastly, BBVA played a particularly active role in Corporate
Finance during the quarter, closing appointments as advisor to
Cintra (a €451m operation subject to approval by the EU
competition authority), El Arbol Group and the Alfonso
Gallardo Group. According to the ranking prepared by
Thomson Reuters, BBVA has reached the third position by
number of operations in this segment of business, a notable
improvement over a year ago.
35
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