subscriptions to money market and short-term
fixed-income funds increased 8.2%, and BBVA placed
€2,000m of its own bonds during the year. The
improvements reflect the capture of salary payments
and pension funds, and BBVA’s leadership in the SME
segment.
In a year when GDP fell, net interest income in the
fourth quarter came to €1,241m, up 0.5% compared
to the previous quarter. The figure for the full year rose
2.7% to €4,934m. In terms of average total assets the
area’s profitability at 31-Dec-09 was 2.25% (2.16% in
2008). These improvements were the result of
appropriate pricing and gains in market share based on
the latest available figures (November 2009). BBVA
gained 37 basis points of market share in household
mortgages (bringing the total to 12.8%), and 121 basis
points in public sector finance (34.0%). At the end of
2009 BBVA was also the leader (according to an FRS
report) in the SME and large-company segment and in
assets under management in mutual and pension funds
(19.3% and 19.0% respectively). Net fee income for
the year was €1,482m, down 9.4% on lower fee
revenues from mutual funds and despite a 1.4% rise in
banking services fees. Insurance business also made a
notable contribution with net income rising 9.3% in
the year.
The area achieved an excellent reduction in operating
costs, which fell 4.2% during the year thanks to a
transformation plan launched in 2006. Since 2007 the
plan has reduced costs by 5.4%, lowered the number of
branches by 540 and employees by 3,170. In the same
period the rest of the Spanish banking sector added
2,158 branches and 21,531 employees according to the
latest available figures (September 2009 and December
2008, respectively).
The improvements in income and costs lifted operating
income 1.0% to €4,533m for the year. Such
improvements were achieved despite the complex
macroeconomic environment and a drop in revenues
associated with financial markets (net trading income
was down 18.8%). Spain & Portugal closed the year
with a new improvement in efficiency (cost/income
ratio), which stands at 35.6% (36.8% in 2008).
As previously mentioned, one priority of the area in the
fourth quarter was to strengthen its balance sheet,
increasing its ability to tackle the complex conditions
expected in 2010. It therefore made an important effort
in terms of provisioning that resulted in accumulated
impairment losses on financial assets of €1,931m
(€809m in 2008). Consequently net attributable profit
fell 7.5% in the year to €2,373m.
The strict risk controls raised the non-performing asset
ratio to 5.1% after an extraordinary downgrade
affecting €1,817m of such assets. The aim is to
anticipate those situations that might deteriorate in the
coming months by applying extremely prudent criteria.
Excluding this effect, gross additions to NPA status
continue to fall (down 1.6% in the quarter) and debt
recovery was up 62.4% in the year (up 31.3%
quarter-on-quarter). The coverage ratio stands at 48%.
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 segment. In
2009 the unit consolidated its marketing policy, which
is focused on customers, by creating solutions suitable
for their finance and savings needs.
The loan portfolio at 31-Dec-09 was €101,909m, a fall
of 2.0% compared to €103,969m a year earlier.
Customer funds fell 1.2% year-on-year from
€112,528m to €111,212m. The stability of net interest
income and the further reduction in costs are the main
features of the unit’s results. These compensate to a
large extent for the increase in provisions so that profits
showed a slight decline of 2.2% year on year.
In the private individual segment residential mortgages
and savings and current accounts performed well. In
residential mortgages the unit raised its market share
272 basis points during the year to 13.8% (based on the
latest available figures at 30-Nov-09). The Ven a Casa
200 campaign is still relevant and contributes 17% to
branch network sales. In addition the unit launched a
new on-line service to study the viability of mortgage
proposals in 24 hours, which has generated leads
through various real estate sites. As a result the
portfolio of residential mortgages rose 2.1% during the
year to €69,786m. In the fourth quarter consumer
finance launched a campaign that offers a free television
4Q09 BUSINESS AREAS
Spain and Portugal
33
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