All the above resulted in operating income of
€3,034m in the quarter and €12,308m for the full
year. The latter figure was up 17.0% compared to
€10,523m in 2008 (up 22.3% excluding the effect
of exchange rates).
All business areas contributed to operating income
as follows: €4,533m in Spain & Portugal, €1,386m
in Wholesale Banking & Asset Management
(WB&AM), €3,319m in Mexico, €875m in the
United States and €2,202m in South America.
Provisions and others
During the year impairment losses on financial
assets came to €5,473m, an increase of 86.1%
compared to 2008. This demonstrates the substantial
efforts made in loan-loss provisioning. This was
particularly high in the last quarter owing to a
detailed analysis of the Group’s more problematic
portfolios which allowed for the anticipation of the
possible effects of the current outlook for the year
2010:
The Spain & Portugal Area provided for
non-performing assets in the consumer finance
unit above the requirements of the legal calendar,
following maximum prudence criteria. This
required €164m in the quarter (€377m for the
entire year) apart from €830m of additional
provisions made in the third quarter.
In Mexico higher provisions in the fourth quarter
(up €73m compared to previous quarters) were
mainly due to new expected-loss criteria following
recalibration of internal models for the credit card
portfolio.
In the United States provisions in the fourth
quarter were €715m higher than those of the
third quarter. The Group first revised appraisal
values of the collateral associated with the
commercial real estate portfolio and wrote off any
differences. It then made additional provisions
that increased the coverage ratio.
If one-off loan-loss provisions of €1,363m (before
tax) are excluded (€830 in Spain & Portugal and
€533m in the United States) the Group’s risk
premium at 31-Dec-09 was 1.15%. It should be
noted that the operating income generated by BBVA
in the year is sufficient to cover provisioning that is
double the amount recorded, even including the two
one-off provisions mentioned above.
4Q09 GROUP INFORMATION
Earnings
13
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