€743m in the first half of 2009, with a year-on-year growth
of 2.1%. However, lower fee income (down 9.7%), lower
net trading income (down 18.0%) and higher endowments
to the deposit guarantee fund, with the one-off contribution
of $28m to the Federal Deposit Insurance Corporation
(FDIC) made in the second quarter, meant that the gross
income, at €1,072m, was 6.4% down year on year.
However, integration and rationalisation of structures
pushed operating costs down 11.3%. This meant further
improvement in operating income, which rose to €425m,
with a year-on-year increase of 2.3%. Growth is speeding
up, as the operating income figure for the second quarter is
13.3% higher than in the first. Allocations to loan-loss
provisions brought impairment losses on financial assets up
to €277m, 95.5% higher than in the first half of 2008.
Against this complicated macro-economic backdrop, in
which many banking businesses throughout the country have
collapsed, BBVA USA, without requiring any public aid, has
generated positive half-year earnings of €85m. This earnings
figure is €125m without depreciation of intangibles.
BBVA Compass banking group
BBVA Compass represents around 90% of the area. This
quarter it has shown recurrent revenues, the capacity to
reduce costs and the stabilization of profit.
At 30-Jun-2009, loans to BBVA Compass customers reached
€27,003m, up 2.9% from 30-Jun-2008. Customer deposits
were €23,657m, flat to both a year ago and prior quarter.
At current exchange rates, they grew 11.5% year on year.
These business volumes boosted half-year net interest
income up to €677m, 2.7% higher year on year. Operating
costs went down 11.4% below the previous year’s figure,
mainly stemming from lower depreciation of intangibles and
the successful integration process completed during 2008
which is allowing for important cost synergies. The volumes
and the magnificent cost performance brought the operating
income up 3.5% against the first half of 2008, to €383m,
growing quarter on quarter by 15.1%. The cost-income
ratio improved, reaching 60.8% on 30-Jun-09, as compared
with 63.1% the previous quarter. After booking €243m to
impairment losses on financial assets during this half year,
the unit showed a net attributable profit of €80m. This
figure is €120m without the depreciation of intangibles.
The SBA (the Federal Agency for Small Business
Administration) named BBVA Compass the best bank for
loans to small businesses in the country, in
acknowledgement of its management during 2008.
The Corporate Bank and Community Bank have combined
to form the Corporate & Commercial Group (CCG). This
services the following business lines: Corporate Banking,
Commercial Banking, Commercial Real Estate Lending and
Residential Construction Lending. At 30-Jun-2009, CCG
managed a loan portfolio of €15,483m, a 13.9% increase
from a year ago. Customer deposits were €7,879m, having
grown 8.9% since June 2008. The deposit growth has been
driven mainly by non-interest bearing deposits that have
experienced exceptional growth. CCG has been actively
engaged in leveraging the BBVA brand in referring business
to and from other countries in the worldwide footprint.
CCG has also begun working actively on a transformation
plan and implementing the BBVA model.
Retail Banking ended the half year with a loan portfolio of
€8,992m, flat to June 2008 reflecting the impact of the
decision to exit the Indirect Auto Dealer and Student
Lending businesses. Excluding these businesses, Retail’s loan
portfolio increased 28.3% from June 2008. The unit
generated €166m of new residential mortgages,
significantly higher than 1Q09 and in line with 2Q08. New
equity loans also increased, though demand has slowed due
to the current economic downturn. Customer deposits were
€12,833m, down €395m as compared with June 2008.
This unit received The Banker’s award for innovation in
banking technology, for its “Virtual Banker” project.
Finally, the Wealth Management unit manages a €1,990m
loan portfolio, having grown 25.2% since June 2008.
Additionally, deposits have grown to €2,917m, nearly
double where they stood twelve months earlier. BBVA
Compass continued to see benefit from Wealth
Management’s collaboration with BBVA Madrid’s Equity
Derivatives & Structured Products group. The equity-linked
Power CD, launched in March, has generated $49m in new
deposits for the quarter and $71m since inception. At
30-Jun-2009, assets under management were €9,153, down
20.5% from a year ago reflecting the economic downturn.
Other units
At 30-6-09, BBVA Puerto Rico managed a loan portfolio of
€3,155m, 2.2% up from what it reported twelve months
earlier. Customer deposits were €1,365m, growing 6.3% on
the previous year. Operating income, at €36m, went down
17.4% year on year, while attributable profit, after €34m in
impairment losses on financial assets, stood at €2m.
BTS obtained an attributable profit of €7m in the first half
of 2009. This represented annual growth of 35.3%.
2Q09 BUSINESS AREAS
The United States
43
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