Despite the continued strength of the crisis, in the
second quarter of 2009 BBVA generated net attributable
profit of €1,561m, its best quarter ever. This confirms
the effectiveness and validity of its business model,
which is focused on customers and based on creating
long-term relationships of mutual trust. These record
earnings were supported by the growth of net interest
income and by a reduction in costs, leading to new
improvements in the already exemplary levels of
efficiency and profitability. Furthermore BBVA
maintains appropriate capital adequacy ratios thanks to
the considerable amount of capital generated from
organic sources and to its excellent and comfortable
liquidity. This is what makes its business model truly
sustainable.
The most significant aspects of the performance of the
Group and its business areas in the second quarter are
summarised below:
BBVA demonstrated its ability to generate recurrent
and sustainable earnings, supported by higher
revenues and cost controls.
As customary in recent years, the main driver of
revenue was net interest income. This grew faster in
the first half of 2009, at 23.5% year-on-year, thanks
to the sustained growth and quality of business, to
the work done to maintain spreads and to expert
management of the balance sheet. This strong
performance boosted gross income 7.8% compared
to the first half last year (up 9.5% at constant
exchange rates).
Transformation plans, deployed well in advance of
the current economic situation, paved the way for a
1.6% reduction in operating costs. This helped
operating income in the first half to rise 15.0%
year-on-year to €6,293m (up 18.0% at constant
exchange rates).
The above improvements meant that efficiency
(measured by the cost/income ratio) improved to
39.4%, a new record level that confirms BBVA as
one of the most efficient banks in the financial
system.
Group information
Relevant events
In the second quarter impairment losses on financial
assets were slightly higher than the previous quarter
due to higher non-performing assets and to BBVA’s
maximum prudence policies: an stable percentage of
operating profit is allocated to provisions.
As a result net attributable profit in the first half
came to €2,799m. All business areas contributed to
Group’s earnings in the first half. Earnings per share
came to €0.76, ROE stands at 21.5%, and ROA is
1.12%. This means BBVA remains one of the most
profitable large European financial groups.
Despite the slowdown in banking business, BBVA
was able to maintain the sustained growth and
quality of lending and customer funds, which at
30-Jun-09 stand at €336 billion and €499 billion,
respectively. In particular, customer deposits grew
7.0% year-on-year with a positive effect on liquid
resources.
BBVA’s level of asset quality is good. Additions to
non-performing assets (NPA) fell 19.2%
quarter-on-quarter because recoveries have
improved. In fact, the ratio of recoveries to NPA
additions in the second quarter was 44.4%. At
30-Jun-09 the non-performing assets ratio was
3.2%, which compares favourably with the financial
system average. At the end of June the coverage
ratio stood at 68% and cumulative coverage funds
came to €8,023m. This is a comfortable situation as
€4,546m of this amount are generic and
substandard funds. Additionally, there is the value of
the collateral associated with secured
non-performing assets.
BBVA’s capital base is sound. Despite the complex
economic situation it maintains intact its capacity to
generate capital in an organic and recurrent manner.
It is the only one of the 28 big European and
American banks that had no need of government aid
or capital increases since the beginning of the crisis.
At 30-Jun-09 the core capital ratio improved
substantially to 6.9% (or 7.1% with homogeneous
Basel II criteria), compared to 6.4% at 31-Mar-09
and thus almost achieving in 6 months the generation
2Q09
3
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