QUARTERLY REPORT January-September 2012 · Contents 2 BBVA Group Highlights 3 Group information...

January-September 2012

QUARTERLY REPORT

3Q12 3Q

12

Contents 2 BBVAGroupHighlights

3 Groupinformation Relevantevents........................................................................................................................................................................................................................................................... 3

Earnings................................................................................................................................................................................................................................................................................6

Balancesheetandbusinessactivity................................................................................................................................................................................................. 13

Capitalbase.....................................................................................................................................................................................................................................................................17

Riskmanagement...................................................................................................................................................................................................................................................19

TheBBVAshare........................................................................................................................................................................................................................................................ 22

Corporateresponsibility................................................................................................................................................................................................................................. 23

24 Businessareas Spain..................................................................................................................................................................................................................................................................................... 26

Eurasia.................................................................................................................................................................................................................................................................................. 31

Mexico..................................................................................................................................................................................................................................................................................35

SouthAmerica...........................................................................................................................................................................................................................................................39

TheUnitedStates...................................................................................................................................................................................................................................................43

CorporateActivities..............................................................................................................................................................................................................................................47

Otherinformation:Corporate&InvestmentBanking...............................................................................................................................................50

January-September2012

QUARTERLYREPORT

2 BBVAGroupHighlights

BBVAGroupHighlights

BBVA Group Highlights (Consolidatedfigures)

30-09-12 ∆% 30-09-11 31-12-11

Balance sheet (million euros)

Totalassets 645,447 10.4 584,438 597,688

Customerlending(gross) 377,383 7.0 352,633 361,310

Depositsfromcustomers 288,709 2.4 282,050 282,173

Othercustomerfunds 160,113 16.7 137,252 144,291

Totalcustomerfunds 448,823 7.0 419,302 426,464

Totalequity 43,750 9.7 39,868 40,058

Income statement (million euros)

Netinterestincome 11,220 16.0 9,676 13,160

Grossincome 17,103 13.6 15,052 20,566

Operatingincome 9,000 16.1 7,753 10,615

Incomebeforetax 2,173 (47.6) 4,145 3,770

Netattributableprofit 1,656 (47.3) 3,143 3,004

Netattributableprofitadjusted(1) 3,345 (3.8) 3,478 4,505

Data per share and share performance ratios

Shareprice(euros) 6.11 (1.1) 6.18 6.68

Marketcapitalization(millioneuros) 32,901 10.3 29,817 32,753

Netattributableprofitpershare(euros) 0.32 (50.3) 0.64 0.62

Netattributableprofitpershareadjusted(euros)(1) 0.63 (11.4) 0.71 0.93

Bookvaluepershare(euros) 8.13 (5.6) 8.61 8.35

P/BV(Price/bookvalue;times) 0.8 0.7 0.8

Significant Ratios (%)

ROE(Netattributableprofit/Averageequity) 5.3 11.3 8.0

ROEadjusted(1) 10.7 12.5 11.9

ROTE(Netattributableprofit/Averagetangibleequity) 6.7 15.2 10.7

ROTEadjusted(1) 13.5 16.8 16.0

ROA(Netincome/Averagetotalassets) 0.46 0.83 0.61

ROAadjusted(1) 0.83 0.91 0.88

RORWA(Netincome/Averagerisk-weightedassets) 0.85 1.46 1.08

RORWAadjusted(1) 1.53 1.60 1.55

Efficiencyratio 47.4 48.5 48.4

Riskpremium 1.92 1.10 1.20

NPAratio 4.8 4.1 4.0

NPAcoverageratio 69 60 61

Capital adequacy ratios (%)

Corecapital 10.8 9.1 10.3

TierI 10.8 9.8 10.3

BISRatio 13.3 12.6 12.9

Other information

Numberofshares(millions) 5,382 11.6 4,825 4,903

Numberofshareholders 1,007,410 2.7 981,348 987,277

Numberofemployees(2) 117,475 6.2 110,625 110,645

Numberofbranches(2) 8,072 8.6 7,436 7,457

NumberofATMs(2) 20,181 10.9 18,192 18,794

General note: These quarterly statements have not been audited. The consolidated accounts of the BBVA Group have been drawn up according to the International Financial Reporting Standards (IFRS) adopted by the European Union and in conformity with Bank of Spain Circular 4/2004, together with the changes introduced therein.

(1)In2011,duringthefourthquarter,USgoodwillimparmentcharge.In2011and2012,impairmentchargerelatedtothedeteriorationoftherealestatesectorinSpain.Andinthethirdquarterof2012,impactofUnnimbadwill.

(2)ExcludingGaranti.

3Relevantevents

ThefollowingarethemostimportantfeaturesoftheBBVAGroup’

earningsinthethird quarter of 2012:

1. Intermsofsolvency, BBVAcomfortablypassedOliver

Wyman’sstresstestandcontinuestocomplywiththecapital

recommendationsoftheEuropeanBankingAuthority(EBA).

2. Positiveperformanceofrecurring revenue inallgeographical

regions.

3. ThishasenabledtheGrouptoabsorbagainasignificant

increaseinitsloan-loss provisionsinSpain,inordertocoverthe

ongoingimpairmentofitsrealestateportfoliosandassets.

4. TheGroupcontinuestostrengthenitsliquiditypositionthrough

comprehensivemanagementineachofthegeographicalareas

whereitoperates,whileimprovingitsfinancingstructure.

5. TheUnnimconsolidationonJuly27.

6. Maintenanceofthecurrentdividendpolicy.

Thesepointsarediscussedbelowinmoredetail.

1. BBVAcomfortablypassedOliverWyman’sstress test.

• Theresultsofthestress testconductedbyOliverWymanon

14Spanishbankinggroups(90%ofthebankingsystem)were

publishedonSeptember28th.Itfocusedonananalysisofthe

portfolioofloanstothedomesticprivatesector(including

foreclosedrealestateassets).Thisworkhasbeenadecisive

stepinrestoringmarketconfidenceinthesector.

• Thestudyenjoysahighlevelofcredibility,sincethe

Europeanauthoritieshavemonitoredtheprocessvery

closelyandagreedonthemethodologyused.Inaddition,the

dataprovidedbythebanksandtheBankofSpainhasbeen

reviewedbyexternalauditorsandindependentrealestate

appraisers.

• Thetheoreticalexerciseconsidersastress scenariothat

ismorenegativethantheoneusedinothercountries

(Portugal,IrelandandGreece),andevenmoreseverethan

theoneconductedinJunebytheInternationalMonetary

Fund(IMF)forSpain.

• Themainresults and conclusions are:

– Aggregatecapitalneedsforthefinancialindustryunder

averyadversescenarioamountto€53,700m(including

thetaxeffectandconsideringthemergerprocesses

underway).Therefore,ingeneraltermstherehavebeen

nomajorsurpriseswithrespecttotheresultsofthe

top-downexerciseconductedlastJune(between

€51,000mand€62,000m).Inaddition,theamountiswell

belowthe€100,000mthattheEuropeanUnionhasmade

availabletothesector.

– Eveninthemostadverseandhighlyunlikelyeconomic

scenario,sevenbankinggroups,whichaccountformore

than62%oftheloanportfolioanalyzed,havenocapital

needs.Inshort,thestudyoncemoreshowedthegreat

disparitywithintheSpanishfinancialsystem,withahard

coreofstrongbanksandvulnerabilitylimitedtoaspecific

partoftheindustry.Thiscleardistinctionwillmakeit

easiertospeeduptherestructuringofthesector.

– Asexpected,BBVAisoneofthebanksincludedinthe

groupwithnocapitalneeds.Itcomfortablypassedthe

stresstest,thankstoitsrecurringrevenueandsoundness

ofitsbusinessmodel.

• Infact,fromapracticalpointofview,attheendofthe

thirdquartertheBankcontinuestocomplywiththeEBA’s

recommendations.Asof30-Sep-2012BBVAmaintainedthe

coreratiopostedatthecloseofthefirsthalfoftheyearof

10.8%underBaselII.

2. Recurring revenuecontinuestoincrease,asshownbythe2.6%

growthingrossincomeinthequarter,excludingnettrading

income(NTI)anddividends.Theaverageannualgrowthrateis

14.0%.Themainreasonsforthiscontinuetobe:

• Strongactivityinemergingmarkets.

• Goodmanagementofspreadsinallregions.

• Positiveperformanceoftheinsurancebusiness.

3. TheabovehasenabledtheBanktoabsorbagainasignificant

increaseinloan-loss provisionsaimedatreflectingthe

impairmentofassetsrelatedtotheSpanishrealestatesector.So

farthisyear,theGrouphassetasideprovisionsof€2.9billion(€1.6

billioninthethirdquarter),includingbothloan-lossprovisions

andprovisionsforforeclosedandacquiredassetswithinthe

scopeofRoyalDecree-Laws02/2012and18/2012,thuscomplying

withtwo-thirdsoftheprovisionsrequiredintotalbybothRDL’s.

Aftermakingtheseprovisions,BBVApostedacumulativenet

attributableprofitof€1,656m(€146minthethirdquarter).

4. Comprehensiveliquiditymanagement,whichenablesthe

Grouptomaintainacomfortableposition.Thefollowingisworth

mentioninginthisregard:

• BBVAhassuccessfullycompletedseveralissuesofsenior

debtinEuropeandotherplacementsintheAmericas

(MexicoandPeru,amongothercountries)withasignificant

levelofdemand.

Groupinformation

Relevantevents

4 Groupinformation

• Mexicomaintainsitssustainedgrowthinactivity,aboveallin

theretailportfolio.Commercialcampaignshavebeenlaunched

thatareboostingconsumerfinance,financeforsmallbusinesses

andthegatheringoflower-costliabilities,suchascurrentand

savingsaccounts.Asaresult,netinterestincomecontinuesto

performwell,andincreased8.5%overthelastyearatconstant

exchangerates.This,combinedwiththepositiveperformance

oftheinsurancebusiness,theyear-on-yearincreaseinoperating

expenses(atlevelssimilartothoseseeninpreviousquarters),

andthestabilityoftheriskpremium,ledtoacumulativenet

attributableprofitof€1,300m(up4.0%year-on-year,alsoat

constantexchangerates).

• South America enjoyedonceagainoutstandingperformance

inactivity,customerspreadsandassetquality.Asaresult,

theregionwasabletomaintainitsexpansionandgrowth

planswhilepostinga24.1%year-on-yearincrease(atconstant

exchangerates)incumulativenetattributableprofitto€1,014m.

• The United Statesmaintainsafavorabletrendinactivity,asset

quality,earningsandsolvency,verymuchsupportedonthe

localbusiness.TheloanbookofBBVACompassgrew4.5%

year-on-yearthankstothepositiveperformanceofthetarget

portfolios(residentialmortgagesup20.3%andcommercial

loansup25.5%),whilecustomerfundsincreased9.5%dueto

thegoodperformanceoflow-costfunds.Thedecreaseon

impairmentlossesonfinancialassetshashadaverypositive

impactonearningsandoffsettheflatperformanceofnet

interestincomeinthecurrentenvironmentoflowinterestrates

andarelativelyflatcurve.Asaresult,theareagenerateda

cumulativenetattributableprofitof€341m(up29.3%atconstant

exchangerates).

The economic background

Inthethirdquarterof2012,theworld economycontinuedto

runoutofsteam.Thiswastheresultofweaknessthathasbeen

particularlyclearintheeurozone.Butithasalsobeenapparent

thattheemergingeconomiesinAsiaandLatinAmericaare

notimmunetotheeffectsofthecontinuedfinancialtensionsin

theEuropeandebtmarketsandhavealsobegunamoderate

slowdown.However,theauthoritieshavereactedwiththeadoption

ofnewmonetarypolicymeasures(andinthecaseoftheeuro

zone,institutionalmeasures),whichshouldhelprestoremarket

confidenceintheeurozone.

ThemostrelevantactionshavetakenplaceinEurope. Following

theagreementsreachedattheEuropeansummitlastJune,major

stepshavebeentakentostrengthenthegovernanceofthe

EconomicandMonetaryUnion.Themeasuresadoptedinclude

theimplementationoftheEuropeanStabilityMechanism(ESM)

andprogressintheprocessthatwillleadtothecreationofasingle

Europeanbankingsupervisor.Butthemostdecisivemeasure

hasbeentheannouncementbytheECBofanewprogramfor

unlimitedpurchasesofsovereigndebtofthosecountriesthatopt

toaccessthesefunds,understrictconditionality.Thisinitiative

hascontributedtoeaseconcernsontheriskpremiumsofthe

peripheralcountriesandreducetailrisk.Overall,themeasures

explainedabove,inadditiontothosealreadyadoptedinJune,

representawindowofopportunityforresolvingthefinancialcrisis

• Growthincustomer deposits.Theincreasedproportionof

retaildepositsontheliabilitysideofthebalancesheetin

allthegeographicalareascontinuestoallowtheGroupto

improveitsfinancingstructure.

• ReductionintheCorporate & Investment Banking (CIB)

portfoliosinalldevelopedcountries.

• Improvementinavailablecollateral.

5.Theacquisitionof100%ofthecapitalstockofUnnimBanc,

S.A.wascompletedonJuly27,withaverylimitedimpact

onsolvencyandoncreditandliquidityrisks.Themain

effectsofitsincorporationintotheGroup’sfinancialstatements

are:

• Inclusionofanetworkwith556branchesand3,028

employeesthatmanage€18billionincustomerloansand

€11billionincustomerdeposits(dataasofthecloseof

September2012).

• Noimpactonliquidity,sinceahighpercentageofitsloan

bookiscollateralizableandithasabroadbaseofretail

deposits.

• CreditriskisstrictlylimitedbytheAssetProtectionScheme

(EPA)thatcoversitsmoreproblematicportfolios,andby

itshighNPAcoverageratio.However,itshighNPAratio

significantlyaffectsthatoftheGroup,adding53basispoints

tothefigureforthecloseofthefirsthalfof2012.

• Withrespecttosolvency,theimpactoftheincorporationof

Unnimispracticallyneutralintermsofcorecapital,asthe

increaseinrisk-weightedassetsisoffsetbythegenerationof

badwillfor€320m,andtheexchangeofhybridinstruments

heldbyUnnimretailcustomersforBBVAshares(thelatter

willimpactinOctober).

6. ThelevelofrecurringearningsenablestheGrouptocontinue

withthedividendpolicyapprovedatthelastGeneral

ShareholdersMeeting(AGM).InOctober2012,theamountof

€0.10persharewaspaidunderthe“dividend-option”scheme.

Around80%ofshareholdersoptedtoreceivenewlyissued

BBVAshares,whichoncemoreconfirmsthesuccessofthis

remunerationsystem.

Thefollowingisworthmentioningwithrespecttothebusiness

areas:

• Spain generatedacumulativeoperatingincomeof€2,972m,

6.2%uponthefigure12monthsearlier.Theincreaseininterest

incomeisoutstandingthankstogoodpricemanagement,

andthecontroloveroperatingexpenses.Loan-lossprovisions

haveincreasedsignificantlytooffsetthegradualimpairmentof

realestateportfoliosandassets.Asregardsactivity,themost

relevantaspectcontinuestobethefavorableperformanceof

on-balance-sheetcustomerfunds.

• Eurasia generatedacumulativeprofitof€813m(up13.0%

year-on-year)thankstothegoodperformanceofGarantiand

thegrowingcontributionofthestakeinChinaCiticBank(CNCB).

5Relevantevents

Interest rates (Quarterlyaverages)

2012 2011

3Q 2Q 1Q 4Q 3Q 2Q 1Q

OfficialECBrate 0.76 1.00 1.00 1.28 1.50 1.25 1.00

Euribor3months 0.36 0.69 1.04 1.49 1.54 1.44 1.10

Euribor1year 0.90 1.28 1.67 2.05 2.00 2.13 1.74

USAFederalrates 0.25 0.25 0.25 0.25 0.25 0.25 0.25

TIIE(Mexico) 4.79 4.76 4.78 4.80 4.81 4.85 4.85

TheavailabledatasuggestthattheslowdowninChinathroughout

thisyearisbecomingmoreintense,dueparticularlytolower

foreigndemand.Theauthoritieshaveannouncedafiscalstimulus

packagebasedoninfrastructuresandhousingconstruction.

Despitenotbeingasambitiousasthatimplementedin2008-2009,

itdoesguaranteethatgrowthwillcontinueatanotablepacethatis

consistentwithofficialtargets.

Finally,Turkeycontinuestobeimmersedinaprocessaimed

atcorrectingitsimbalances.Theauthoritieshaveimplemented

reformsinanattempttoaddresstheaccumulatedimbalancesin

thecountry,especiallythoserelatedtohighenergydependence

andhighinflation.Althougheconomicactivityhasslowed,ithas

donesopartlyduetoeconomicpolicy,particularlymonetarypolicy.

Inconclusion,thegrowthrateoftheTurkisheconomyisexpected

tospeedupslightlyintheremainingmonthsofthisyearandin

2013.

Withrespecttoexchange ratestherewasageneralappreciation,

bothyear-on-yearandoverthequarter,intheaverageratesofmost

oftheforeigncurrenciesthatarerelevanttotheBank.Intermsof

finalexchangerates,therewasasignificantgeneralappreciation,

butoverthequarterthiswaslimitedtotheMexicanandChilean

pesos.Asaresult,theimpactofforeigncurrenciesontheGroup’s

balancesheet,activityandearningsispositiveinbothquarterlyand

year-on-yearterms.

inEurope,althoughtherewillcontinuetoberealrisksoverthe

comingquartersregardingtheireffectiveimplementation.

IntheUnited States,thelatestdataconfirmfearsofamore

pronouncedslowdown.Althoughsomesectorshavepickedup

theirgrowth(forexample,theresidentialsector),thishasnotbeen

enoughtooffsettheweaknessofdomesticdemandasawhole,

whichissubjecttouncertaintyontheextentofthedebtcrisis

inEuropeandtheimplementationofautomaticspendingcuts.

Consequently,GDPinthesecondquarterhasgrownamere0.3%

overthepreviousquarterandtheunemploymentrateremains

slightlyabove8%.Asaresult,theFederalReservehaspledgedto

keepinterestrateslow,atleastuntil2015,andhasadoptedanew

quantitativeexpansionprogramthatwillremaininplaceuntilthe

labormarketprospectsimprove.

GrowthinSouth Americacontinuestobestrong,althoughthe

globalslowdownhasbeenfelt,particularlyineconomiesgeared

moretowardexports.Evenso,theyaresupportedbystrong

domesticdemand,partlyduetohighcommodityprices.

ActivityinMexicoremainsrobust,withGDPgrowthinthesecond

quarterof0.9%,supportedbystrongprivatedomesticdemand.

AccordingtoBBVAResearch,theMexicaneconomycouldclose

2012withanaveragegrowthofaround3.7%thankstodomestic

stabilityandexternalcompetiveness.

Exchange rates (Expressedincurrency/euro)

Year-end exchange rates Average exchange rates

30-09-12 ∆% on

30-09-11∆% on

30-06-12 ∆% on31-12-11 Jan.-Sep. 12

∆% on Jan.-Sep. 11

Mexicanpeso 16.6085 12.0 1.6 8.7 16.9431 (0.1)

U.S.dollar 1.2930 4.4 (2.6) 0.1 1.2810 9.8

Argentineanpeso 6.0661 (6.4) (6.2) (8.2) 5.7164 0.6

Chileanpeso 608.27 14.3 5.5 10.9 626.96 6.3

Colombianpeso 2,325.58 11.1 (2.3) 8.0 2,298.85 11.5

Peruviannewsol 3.3575 11.5 (0.1) 3.9 3.4020 14.4

Venezuelanbolivarfuerte 5.5530 4.4 (2.6) 0.1 5.5012 9.8

Turkishlira 2.3203 8.2 (1.6) 5.3 2.3092 (0.7)

Chineseyuan 8.1261 6.1 (1.5) 0.4 8.1065 12.7

6 Groupinformation

TheBBVAGroup’sincomestatementfor

thethird quarter of 2012continuesto

showahighlevelofrecurringrevenue,

whichhasenabledittoabsorbthe

impairmentonassetsrelatedtothereal

estatesectorinSpain.Inaddition,the

incorporationofUnnimhasgenerated

badwillof€320m.

TheGroup’squarterlyprofitstandsat

€146m,whichbringsthecumulative

figurethroughSeptember30,2012to

€1,656m.Excludingthechargeforthe

aforementionedimpairmentofassets

relatedtotherealestatesectorinSpain

andUnnim’sbadwill,theadjustednet

attributableprofitamountsto€971mover

Earnings

Consolidated income statement: quarterly evolution (Millioneuros)

2012 2011

3Q 2Q 1Q 4Q 3Q 2Q 1Q

Net interest income 3,880 3,744 3,597 3,485 3,286 3,215 3,175

Netfeesandcommissions 1,259 1,215 1,216 1,136 1,143 1,167 1,114

Nettradingincome 337 462 367 416 (25) 336 752

Dividendincome 35 311 27 230 50 259 23

Incomebytheequitymethod 172 178 193 207 150 123 121

Otheroperatingincomeandexpenses 13 51 47 42 22 62 79

Gross income 5,697 5,960 5,447 5,515 4,627 5,162 5,263

Operatingcosts (2,831) (2,688) (2,585) (2,652) (2,461) (2,479) (2,359)

Personnelexpenses (1,483) (1,429) (1,379) (1,404) (1,325) (1,306) (1,276)

Generalandadministrativeexpenses (1,086) (1,021) (974) (1,021) (920) (964) (887)

Depreciationandamortization (262) (238) (232) (227) (216) (208) (196)

Operating income 2,866 3,272 2,862 2,863 2,166 2,683 2,904

Impairmentonfinancialassets(net) (2,038) (2,182) (1,085) (1,337) (904) (962) (1,023)

Provisions(net) (197) (99) (131) (182) (94) (83) (150)

Othergains(losses) (561) (311) (222) (1,718) (166) (154) (71)

Income before tax 69 680 1,423 (375) 1,002 1,484 1,659

Incometax 236 (21) (250) 368 (95) (189) (369)

Net income 305 659 1,173 (7) 907 1,295 1,290

Non-controllinginterests (159) (154) (168) (132) (103) (106) (141)

Net attributable profit 146 505 1,005 (139) 804 1,189 1,150

Adjusted(1) (825) (742) (122) (1,166) (173) (82) (80)

Net attributable profit (adjusted) (1) 971 1,247 1,127 1,026 978 1,271 1,229

Basic earnings per share (euros) 0.03 0.10 0.19 (0.03) 0.16 0.24 0.24

Basic earnings per share adjusted (euros) (1) 0.18 0.23 0.22 0.21 0.20 0.26 0.25


Net attributable profit (1)

(Million euros)

(1) Adjusted.(2) At constant exchange rates: –6.1%.

971971

12471127

1026978

12711229

0

200

400

600

800

1,000

1,200

1,400

1Q 2Q 3Q 4Q 2Q

–3.8% (2)

2011 20121Q

3,478 3,345

971

1,1271,229 1,271

978 1,026

1,247

3Q

7Earnings

throughtherepricingofloansandgreater

contributionfrommortgagefloors.Allthis

againstabackdropoflowervolumes,asa

resultofthenecessarydeleveragingtaking

placeinthecountryandfallinginterestrates.

Overall,thisareageneratedcumulativenet

interestincomeof€3,571m,withariseof

8.0%comparedwiththefigureforthesame

periodin2011.

• Eurasiahaspostedstronggrowthinnet

interestincomeduetotheincorporationof

GarantionMarch22,2011.Likeforlike,this

headinggrew23%atGarantiBankthanks

tostrongactivitywithretailcustomersand

verygoodfiguresfromcustomerspreads,

particularlyduetothereducedcostof

liabilities.However,theCIBbusinessinthe

areashowsa28.3%dropinthislineowingto

fallingvolumes.AsofSeptember2012,the

netinterestincomecontributedbyEurasia

was16.0%higherthaninthesameperiodlast

year,totaling€603m.

thequarter,withacumulativefigurethrough

Septemberof€3,345m.

Net interest income

TheBBVAGroup’snet interest income

maintainedthegrowthpathstartedinthe

lastquarterof2010.Ittotaled€3,880minthe

thirdquarterof2012and€11,220mbetween

JanuaryandSeptember,up16.0%

year-on-year.Theincreaseisduetothe

defenseofcustomerspreadsinpractically

allthegeographicalareaswheretheBank

operates,strongactivityinemergingmarkets

andpositivemanagementofstructural

interest-rateriskinanenvironmentmarkedby

lowinterestrates.Bygeographicalarea,the

followingresultsareworthnoting:

• Spainhasrecordedasteadyincreasein

quarterlynetinterestincomesincetheendof

lastyear,thankstogoodpricemanagement

Consolidated income statement (Millioneuros)

January-Sep. 12 ∆%∆% at constant exchange rates January-Sep. 11

Net interest income 11,220 16.0 12.3 9,676

Netfeesandcommissions 3,690 7.8 4.5 3,424

Nettradingincome 1,167 9.8 5.9 1,063

Dividendincome 373 12.2 11.6 332

Incomebytheequitymethod 543 37.9 37.8 394

Otheroperatingincomeandexpenses 112 (31.6) (14.1) 163

Gross income 17,103 13.6 10.5 15,052

Operatingcosts (8,103) 11.0 7.9 (7,299)

Personnelexpenses (4,290) 9.8 6.8 (3,907)

Generalandadministrativeexpenses (3,081) 11.2 8.0 (2,771)

Depreciationandamortization (732) 17.9 13.8 (620)

Operating income 9,000 16.1 13.0 7,753

Impairmentonfinancialassets(net) (5,305) 83.6 80.0 (2,890)

Provisions(net) (427) 30.4 28.1 (328)

Othergains(losses) (1,095) 180.0 179.9 (391)

Income before tax 2,173 (47.6) (49.4) 4,145

Incometax (36) (94.5) (94.8) (652)

Net income 2,137 (38.8) (40.8) 3,492

Non-controllinginterests (481) 37.6 25.4 (349)

Net attributable profit 1,656 (47.3) (48.7) 3,143

Adjusted(1) (1,688) - - (335)

Net attributable profit (adjusted) (1) 3,345 (3.8) (6.1) 3,478

Basic earnings per share (euros) 0.32 0.64

Basic earnings per share adjusted (euros) (1) 0.63 0.71


8 Groupinformation

Net interest income/ATA BBVA Group(Percentage)

3Q 4Q 3Q2011 2012

2.27

2.372.42

2.47

2.38

2

3

2.27

2.422.37

1Q

2.38

2Q

2.47

• Onceagain,netinterestincomeinSouth

Americaperformedverywell. Strong

businessactivity,combinedwiththedefense

ofspreadsthroughgoodpricemanagement,

explainthisexcellentperformance.The

cumulativefigureasofSeptember2012was

€3,087m,up25.6%onthesameperiodlast

year(excludingtheimpactoftheexchange

rate).

• CumulativenetinterestincomeinMexico

amountedto€3,079m,anincreaseof8.5%

year-on-yearatconstantexchangerates,

despitethecurrentlowinterestratesinthe

country.Thisisbasicallyduetosustained

growthinactivity,especiallyfromtheretail

portfolio.

Breakdown of yields and costs

3Q12 2Q12 1Q12 4Q11 3Q11

% of ATA

% yield/Cost

% of ATA

% yield/Cost

% of ATA

% yield/Cost

% of ATA

% yield/Cost

% of ATA

% yield/Cost

Cashandbalanceswithcentralbanks 4.2 0.82 3.7 0.98 4.0 0.94 3.9 0.99 3.8 1.19

Financialassetsandderivatives 26.8 2.85 27.1 2.75 26.3 2.99 25.6 3.08 25.4 2.87

Loansandadvancestocreditinstitutions 4.4 1.80 4.4 1.90 4.2 2.01 4.3 2.24 4.4 2.88

Loansandadvancestocustomers 57.1 5.60 57.9 5.75 58.6 5.72 59.3 5.76 59.7 5.62

Euros 34.4 3.23 34.8 3.43 36.0 3.52 37.2 3.54 38.4 3.50

Domestic 28.2 3.78 29.0 3.84 29.9 3.85 32.5 3.86 33.1 3.85

Other 6.3 0.77 5.8 1.35 6.1 1.91 4.8 1.39 5.2 1.31

Foreigncurrencies 22.6 9.20 23.1 9.24 22.6 9.23 22.1 9.48 21.3 9.44

Otherassets 7.5 0.33 6.9 0.47 6.9 0.39 6.9 1.00 6.7 0.45

Total assets 100.0 4.10 100.0 4.23 100.0 4.29 100.0 4.41 100.0 4.29

Depositsfromcentralbanksandcreditinstitutions 19.6 1.90 17.5 2.26 14.8 2.50 15.0 2.60 14.3 2.73

Depositsfromcustomers 43.9 1.82 45.2 1.80 47.5 1.85 47.3 2.16 48.3 2.17

Euros 22.4 1.25 23.1 1.31 25.6 1.39 26.1 1.60 27.3 1.72

Domestic 14.7 1.47 15.3 1.57 15.8 1.68 15.9 1.75 16.6 1.75

Other 7.6 0.83 7.8 0.81 9.8 0.92 10.2 1.36 10.7 1.67

Foreigncurrencies 21.6 2.41 22.1 2.31 22.0 2.39 21.2 2.86 21.0 2.75

Debtcertificatesandsubordinatedliabilities 15.8 2.69 16.6 2.68 17.6 2.76 18.1 2.63 18.9 2.47

Otherliabilities 13.8 0.89 13.8 0.70 13.3 1.03 12.8 1.14 11.7 0.99

Equity 6.8 - 6.9 - 6.9 - 6.8 - 6.8 -

Total liabilities and equity 100.0 1.72 100.0 1.75 100.0 1.87 100.0 2.04 100.0 2.02

Net interest income/Average total assets (ATA) 2.38 2.47 2.42 2.37 2.27

Net interest income(Million euros)

38803880374435973485328632153175

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

(1) At constant exchange rates: +12.3%.

1Q 2Q 3Q 4Q 2Q

+16.0% (1)

2011 20121Q

9,676 11,220

3,8803,597

3,175 3,215 3,2863,485

3,744

3Q

9Earnings

€1,167m.NTIwassignificantlyaffectedbya

particularlyweakthirdquarterof2011,when

amidaworseningdebtcrisistherewasan

exceptionallossofassetvalues,inaddition

toreducedbusinessactivityandthelackof

earningsfromportfoliosales.

Revenuefromdividendsamountedto€373m,

12.2%uponthefigure12monthsearlier.This

headingbasicallyincludestheremuneration

fromtheGroup’sstakeinTelefónicaand,toa

lesserextent,thedividendscollectedinthe

GlobalMarketsunit.

Income by the equity method totaled

€543m,up37.9%year-on-year.Practically

allofthisamountcomesfromthestakein

CNCB.

Finally,theother operating income and expenses headingfellby31.6%to€112m.

Thepositiveperformanceoftheinsurance

businessfailedtooffsettheincreased

allocationstothevariousdeposit

guaranteefundsinthecountrieswhereBBVA

operates.

Overall,inthefirstninemonthsof2012the

Groupgeneratedgross incomeof€17,103m,

up13.6%year-on-year,boostedmainlyby

recurringrevenue.Grossincomeexcluding

NTIanddividendsreached€15,564m,up

14.0%overtheprevious12months.This

increaseisparticularlysignificantgiven

thecontextinwhichitwasgenerated.

ItissupportedbytheGroup’sbalanced

geographicaldiversificationbetween

emerginganddevelopedmarkets,andonits

customer-centricbusinessmodel.

• IntheUnited States,netinterestincome

continuedtobenegativelyaffectedbythe

Guarantyrun-off,lowerbusinessvolumein

CIB,write-downsinsecuritiesportfoliosand

thecurrentenvironmentoflowinterestrates

withapracticallyflatcurve.Ontheotherhand,

theincreaseinloanvolumesandthe

year-on-yearreductioninthecostofdeposits

hadapositiveimpact.Asaresult,overthe

quarterthisheadingremainedatthelevelof

previousquarters,totaling€1,285mforthe

year,down3.6%year-on-yearatconstant

exchangerates.

Gross income

TheGroup’sincome from fees and commissionsfortheperiodJanuary-

September2012totaled€3,690m,picking

uptheiryear-on-yeargrowthrateto7.8%

(comparedwith6.6%inthefirsthalfof2012).

Strongactivityinemergingmarketsandthe

greatercontributionofGarantithisyearamply

offsetthenegativeimpactsfromsluggish

activityinSpainandtheregulatorychanges

implementedinsomeoftheareaswherethe

Bankoperates.Bybusinessarea,thisheading

remainedstableintheeurozone.InMexico,

revenuefromcreditcardsandthepensions

businessincreased.InTurkey,strongactivity

practicallyoffsetsnegativeregulatoryeffects.

IntheUnitedStatestheyfell,basicallyas

aresultofregulatorypressures.InSouth

Americatheygrew,inlinewiththestrong

activitymentionedabove.

NTIgeneratedinthefirstninemonthsof

2012increasedby9.8%year-on-yearto

Gross income net of NTI and dividends(Million euros)

53245324518850534869460245664488

0

1,000

2,000

3,000

4,000

5,000

6,000


1Q 2Q 3Q 4Q 2Q

+14.0% (1)

2011 20121Q

13,657 15,564

5,3245,053

4,488 4,566 4,6024,869

5,188

3Q

Gross income(Million euros)

569756975960

54475515

462751625263

0

1,000

2,000

3,000

4,000

5,000

6,000


1Q 2Q 3Q 4Q 2Q

+13.6% (1)

2011 20121Q

15,052 17,103

5,6975,4475,263 5,1624,627

5,5155,960

3Q

10 Groupinformation

Operating income

Themostsignificantaspectofoperating

expensescontinuestobetheirstrictcontrol

indevelopedcountriesandtheirgrowth

inemergingareas,inlinewiththefigures

mentionedinpreviousquarters.Inthe

cumulativefigurethroughSeptember2012,

thisheadingtotaled€8,103m,11.0%up

year-on-year,wellbelowtheincreasein

revenue.Asaresult:

• Therewasanimprovementoftheefficiency

ratioonthefigureforthesameperiodin2011

to47.4%attheendofSeptember.

Breakdown of operating costs and efficiency calculation (Millioneuros)

January-Sep. 12 ∆% January-Sep. 11 2011

Personnel expenses 4,290 9.8 3,907 5,311

Wagesandsalaries 3,302 9.9 3,003 4,122

Employeewelfareexpenses 632 11.5 567 758

Trainingexpensesandother 356 5.7 337 431

General and administrative expenses 3,081 11.2 2,771 3,793

Premises 693 9.4 633 849

IT 557 20.4 462 662

Communications 253 13.9 223 299

Advertisingandpublicity 282 4.1 271 378

Corporateexpenses 73 (5.8) 77 106

Otherexpenses 909 9.6 829 1,140

Leviesandtaxes 314 14.1 276 359

Administration costs 7,372 10.4 6,678 9,104

Depreciation and amortization 732 17.9 620 847

Operating costs 8,103 11.0 7,299 9,951

Gross income 17,103 13.6 15,052 20,566

Efficiency ratio (Operating costs/Gross income, in %) 47.4 48.5 48.4

48,5 48,4 47,4

10

15

20

25

30

35

40

45

50

17103

-8103

20566

-9951

15052

-7299-10,000

-5,000

0

5,000

10,000

15,000

20,000

25,000

15,052

20,56617,103

7,2999,951

8,103

Jan.-Sep.2011

Jan.-Sep.2012

2011

48.5 48.4 47.4

Jan.-Sep.2011

Jan.-Sep.2012

2011

Efficiency

Grossincome

Operatingcost

(Percentage)

Efficiency ratio

(Million euros)

Operating income(Million euros)

28662866

3272

28622863

2166

26832904

0

500

1,000

1,500

2,000

2,500

3,000

3,500


1Q 2Q 3Q 4Q 2Q

+16.1% (1)

2011 20121Q

7,753 9,000

2,8662,8622,9042,683

2,166

2,863

3,272

3Q

Operating costs(Million euros)

28312831268825852652

246124792359

0

500

1,000

1,500

2,000

2,500

3,000


1Q 2Q 3Q 4Q 2Q

+11.0% (1)

2011 20121Q

7,299 8,103

2,8312,585

2,359 2,479 2,4612,652 2,688

3Q

11Earnings

Provisions and others

Thestronggenerationofoperatingincome

hasenabledtheGrouptoabsorbasignificant

increaseinitsloan-lossprovisionsinSpainin

ordertocovertheongoingimpairmentofits

realestateportfoliosandassets.Impairment losses on financial assetstoSeptember

totaled€5,305m,up83.6%onthefigure

recorded12monthsearlier.

Provisionsinthesameperiodamountedto

–€427m(–€328m12monthsearlier).They

basicallycoverearlyretirementcostsand,

toalesserextent,transferstoprovisionsfor

contingentliabilities,allocationstopension

fundsandothercommitmentswiththestaff.

Theother gains (losses)headingnearly

tripledbetweenJanuaryandSeptember2012

comparedwiththeamountreportedforthe

sameperiodin2011,atanegative€1,095m.This

headingincludesprovisionsmadeforrealestate

andforeclosedandacquiredassetsinSpainand

thebadwillgeneratedbytheUnnimdeal.

Number of employees (1)

29132 28934

32042

35538 3595039383

30690 30724 31277

12991 12798 12543

2274 2239 2230

sep 2011 dic 2011 sep 20120

20,000

40,000

60,000

80,000

100,000

120,000110,625

September2011

29,132

35,538

30,690

12,991

110,645

December2011

28,934

35,950

30,724

12,798

(1) Excluding Garanti.(2) Including Unnim Group.

117,475

September2012

32,042

39,383

31,277

12,543

Spain (2)

Mexico

South America

The United States

Rest of the world

Impairment losses on financial assets(Million euros)

203820382182

1085

1337

9049621023

0

500

1,000

1,500

2,000

2,500


1Q 2Q 3Q 4Q 2Q

+83.6% (1)

2011 20121Q

2,890 5,305

2,038

1,0851,023 962 904

1,337

2,182

3Q

Number of branches (1)

3,018,0 3,016,0

3,572,0

1,999,0 1,999,0 2,014,0

1,545,0 1,567,0 1,621,0

745,0 746,0 745,0

129,0 129,0 121,0

sep-11 dic-11 sep-120

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

7,436

September2011

3,018

1,999

1,545

745

7,457

December2011

3,016

1,999

1,567

746

8,072

September2012

3,572

2,014

1,621

744


Spain (2)

Mexico

South America

The United States

Rest of the world

Number of ATMs (1)

5,258,05,283,0

6,023,0

7,293,07,710,0

7,831,0

4,540,0 4,682,0 5,210,0

1,101,0 1,119,0 1,118,0

sep-11 dic-11 sep-120

5,000

10,000

15,000

20,000

25,00020,181

September2012

6,023

7,831

5,210

1,117

18,192

September2011

5,258

7,293

4,540

1,101

18,794

December2011

5,283

7,710

4,682

1,119


Spain (2)

Mexico

South America

The United States

• TheBankmaintaineditsleadershippositionin

efficiencyamongitspeergroup.

• Cumulativeoperating incomeamountedto

€9,000m,16.1%uponthefigureforthefirst

ninemonthsof2011.

BBVAclosedSeptemberwith117,475

employees,3,028oftheminUnnim.

ExcludingtheincorporationofUnnim,

thefigureincreasedlastyearby3,822,

mainlyinMexicoandtoalesserextent

inSouthAmerica,andfellintheUnited

StatesandSpain.Thenumberofbranches,

whichstoodat8,072asof30-Sep-2012,

includes556Unnimbranches.Excluding

these,theincreaseisalsoconcentratedin

SouthAmericaandMexico.Finally,ATMs amountedto 20,181,andreflectedthesame

trendasthenumberforemployeesand

branches.Thefigureincludes715Unnim

ATMs,andtheincreasecontinuedtobe

concentratedbasicallyinthecountriesof

LatinAmerica.

12 Groupinformation

Finally,earningspershare(EPS)between

JanuaryandSeptember2012were€0.32

(€0.63adjustedEPS);returnontotalaverage

assets(ROA)0.46%(0.83%adjusted);return

onequity(ROE)5.3%(10.7%adjusted);and

returnonequityexcludinggoodwill(ROTE)

6.7%(13.5%adjusted).

Inconclusion,addingtheprovisionsmadeto

covertheimpairmentoftheassetsrelated

totherealestatesectorinSpain(accounted

bothasimpairmentlossesonfinancialassets

andothergains(losses)),thetotalamount

chargedbyBBVAyeartodatetotals€2.9

billion(€1.6billioninthethirdquarter).

Finally,asinthelastquarter,thelevelof

income taxwaslowforthesamereasons

mentionedthen:revenuewithlowornotax

rate(mainlydividendsandincomebythe

equitymethod)andthegrowingweightof

theearningsfromMexico,SouthAmericaand

Turkey,whereeffectivetaxratesarelow.

Net attributable profit

Thenetattributableprofitforthequarter

was€146m,whilethecumulativefigure

throughSeptemberstandsat€1,656m.

Excludingthechargefortheimpairmenton

theassetsrelatedtotherealestatesector

inSpainandthebadwillgeneratedbythe

incorporationofUnnim,theadjustednet

attributableprofitamountsto€971moverthe

quarter,withayeartodatefigureof€3,345m.

Tosumup,theBBVAGroupcontinuesto

generatesoundearningsdespitethedifficult

environment.

Bybusiness areas,Spainposteda€532m

loss.Excludingthechargefortheimpairment

ofrealestateassets,theareagenerated

cumulativeadjustedearningsthrough

Septemberof€848m.Eurasiagenerated

€813m,Mexico€1,300m,SouthAmerica

€1,014mandtheUnitedStates€341m.

Earnings per share (1)

(Euros)

0.180.18

0.230.220.210.20

0.260.25

0.00

0.05

0.10

0.15

0.20

0.25

0.30

(1) Adjusted.

1Q 2Q 3Q 4Q 2Q

–11.4%

2011 20121Q

0.71 0.63

0.18

0.22

0.25 0.26

0.20 0.210.23

3Q

Loan-loss and real estate provisions (1)

(Million euros)

(1) Includes total loan-loss provisions, and foreclosed and/or asset purchases in Spain.(2) Includes loan-loss provisions and provisions related to foreclosed and asset purchases within the scope of the

Royal Decree-Laws 02/2012 and 18/2012 (RD).

10431136

1404

1276

175 174

1060

1635

0

500

1000

1500

2000

2500

3000

Otherloan-loss

provisions

Provisionswithin thescope ofthe RD (2)

Quarterly average2011

2Q2012

1Q 3Q

1,297

1,123

174

1,236

1,061

175

2,394

1,334

1,060

2,888

1,253

1,635

ROA (1)

(Percentage)

0.91 0.880.83

0.0

1.5

0.91 0.880.83

(1) Adjusted.

January-Sep.2011

2011 January-Sep.2012

ROE (1) and ROTE (1)

(Percentage)

January-Sep.2011

2011 January-Sep.2012

16.816.0

13.512.5

11.910.7

0

10

20

12.511.9

10.7

(1) Adjusted.

ROE

ROTE

16.816.0

13.5

13Balancesheetandbusinessactivity

BBVAclosedthethird quarter of 2012

withitsbalancesheetandbusinessactivity

maintainingthetrendseeninprevious

quarters,ontopoftheincorporationofthe

balancesofUnnim.Thehighlightsforthe

quarterareasfollows:

• IncorporationofthebalancesofUnnim,

whichatthecloseofSeptembercontributed

aloanbookof€18billionandcustomer

depositsof€11billion.Thisexplainsmostof

the3.7%growthintheGroup’sbalancesheet

overthequarterto€645billion.

• Growthingross customer lendingoverthe

quarterduetotheconsolidationofUnnim.

Thestrongactivityinemergingmarketspartly

offsetsthedeleveragingprocesstakingplace

inSpainandinthewholesalebusinessesin

developedeconomies.

Balancesheetandbusinessactivity

Consolidated balance sheet (Millioneuros)

30-09-12 ∆% 30-09-11 30-06-12 31-12-11

Cashandbalanceswithcentralbanks 28,207 14.5 24,637 24,011 30,939

Financialassetsheldfortrading 83,449 11.5 74,859 78,792 70,602

Otherfinancialassetsdesignatedatfairvaluethroughprofitorloss 3,499 23.9 2,825 3,371 2,977

Available-for-salefinancialassets 71,329 21.4 58,768 65,834 58,143

Loansandreceivables 394,223 6.6 369,919 390,654 381,077

Loansandadvancestocreditinstitutions 26,777 12.7 23,756 28,764 26,107

Loansandadvancestocustomers 363,818 5.9 343,416 358,332 351,900

Other 3,629 32.1 2,747 3,559 3,069

Held-to-maturityinvestments 10,118 (8.4) 11,049 10,157 10,955

Investmentsinentitiesaccountedforusingtheequitymethod 6,681 24.8 5,352 6,604 5,843

Tangibleassets 8,396 19.5 7,026 7,477 7,330

Intangibleassets 8,849 (12.1) 10,068 8,927 8,677

Otherassets 30,696 54.0 19,935 26,533 21,145

Total assets 645,447 10.4 584,438 622,359 597,688

Financialliabilitiesheldfortrading 58,740 16.1 50,616 56,296 51,303

Otherfinancialliabilitiesatfairvaluethroughprofitorloss 2,491 45.1 1,716 2,105 1,825

Financialliabilitiesatamortizedcost 507,764 8.4 468,494 491,717 479,904

Depositsfromcentralbanksandcreditinstitutions 112,738 40.8 80,072 119,709 92,503

Depositsfromcustomers 288,709 2.4 282,050 274,285 282,173

Debtcertificates 85,053 2.3 83,107 78,277 81,930

Subordinatedliabilities 13,636 (15.1) 16,067 11,801 15,419

Otherfinancialliabilities 7,626 5.9 7,198 7,645 7,879

Liabilitiesunderinsurancecontracts 8,994 20.3 7,478 8,054 7,737

Otherliabilities 23,709 45.8 16,265 21,138 16,861

Total liabilities 601,697 10.5 544,569 579,309 557,630

Non-controllinginterests 2,260 30.6 1,730 2,100 1,893

Valuationadjustments (2,300) (32.6) (3,414) (2,835) (2,787)

Shareholders’funds 43,789 5.4 41,552 43,785 40,952

Total equity 43,750 9.7 39,868 43,050 40,058

Total equity and liabilities 645,447 10.4 584,438 622,359 597,688

Memorandum item:

Contingentliabilities 40,062 4.0 38,530 40,897 39,904

14 Groupinformation

Customer lending (gross)(Billion euros)

353

September2011

343

September2010

377

September2012


+7.0% (1)

377

353343

200

250

300

350

400

• Growthinon-balance-sheet customer

funds(customerdepositspluspromissory

notes)mainlyintheretailsegmentinallthe

geographicalareasinwhichBBVAoperates.

• Asaresult,theGroup’sliquidityposition

andfundingstructureimproved.Intheeuro

balancesheet,thecommercialgapwas

reducedby€9.6billionoverthequarter.

Loans and advances to customers

Atthecloseof30-Sep-2012,gross customer lending amountedto€377billion,up7.0%

year-on-yearand2.3%quarter-on-quarter.

ExcludingthebalancesfromUnnim,this

headinggrewmoderatelyovertheyearby

1.8%,butfellby2.6%overthequarter.

Bybusiness areas,thedisparitybetween

emerginganddevelopedcountriesseenin

previousquarterscontinued:

• InSpain, excludingUnnim,theloanbook

shrank(down6.1%year-on-yearanddown

5.5%quarter-on-quarter)inlinewiththe

necessaryprocessofdeleveraginginthe

economy.Includingthebalancesfromthe

Catalanbank,therewasariseof3.2%over

thelast12monthsand3.9%overthequarter.

• InEurasiathisheadingfellby7.7%onthe

figureatthecloseofSeptember2011and

4.6%onthecloseofJune2012,duetothe

reductionofthewholesalecustomer’sloan

portfolio.Retailloansgrewby4.9%overthe

last12monthsandremainatverysimilar

levelsto30-Jun-2012.Notableagainthis

quarterwasthepositiveperformance

ofbalancesfromTurkey,whichwereup

22.8%onthefigureforthesamedatelast

year.

• AttheendofSeptember2012,lendingin

Mexicowasupyear-on-yearby11.5%(up2.2%

Customer lending (Millioneuros)

30-09-12 ∆% 30-09-11 30-06-12 31-12-11

Domestic sector 198,583 3.8 191,330 193,358 192,442

Publicsector 27,614 5.8 26,096 27,501 25,509

Otherdomesticsectors 170,969 3.5 165,234 165,856 166,933

Securedloans 107,100 5.5 101,552 96,546 99,175

Commercialloans 5,176 (12.5) 5,918 5,671 6,620

Financialleases 4,413 (14.3) 5,151 4,542 4,955

Othertermloans 39,074 (7.1) 42,043 39,080 41,863

Creditcarddebtors 1,584 2.7 1,542 1,564 1,616

Otherdemandandmiscellaneousdebtors 2,497 (8.0) 2,713 4,178 2,939

Otherfinancialassets 11,125 76.2 6,314 14,276 9,766

Non-domestic sector 159,167 9.3 145,614 159,385 153,222

Securedloans 63,118 8.4 58,202 63,032 60,655

Otherloans 96,049 9.9 87,413 96,353 92,567

Non-performing loans 19,834 26.4 15,689 16,243 15,647

Domesticsector 15,137 35.7 11,156 11,531 11,042

Non-domesticsector 4,697 3.6 4,533 4,713 4,604

Customer lending (gross) 377,383 7.0 352,633 368,844 361,310

Loan-lossprovisions (13,565) 47.2 (9,217) (10,513) (9,410)

Customer lending (net) 363,818 5.9 343,416 358,332 351,900

15Balancesheetandbusinessactivity

overthequarter),stronglysupportedbythe

retailsegment.

• TherewasalsoasignificantriseinSouth America (up19%year-on-yearand3.9%

quarter-on-quarter).Onceagain,this

growthhasbeenleveragedontheprivate

individualssegment,thankstothepositive

performanceofconsumerlendingand

creditcards.

• Finally,intheUnited States,BBVACompass

isstillpostingsteadygrowthinlending,with

ayear-on-yeargrowthof4.5%(up10.5%

excludingnonperformingloans).Itisworth

notingthatloanstothecommercialand

residentialrealestatesegmentcontinueto

drivegrowthinthebank’slendingactivity.

Tosumup,thedomestic sector continues

tobeimmersedinadeleveragingprocess

andhasgrownasaconsequenceofthe

incorporationoftheUnnimbalances,while

thenon-domestic sectorhasincreasedby

9.3%sincethecloseofSeptember2011.

Non-performing loanstotaled€20billion

asof30-Sep-2012,ariseof26.4%inyear-on-

yeartermsand22.1%sinceJun-30-2012.As

canbeseenintheaccompanyingtablefor

customerlending,thisupwardtrendderives

fromthedomesticsectorandislargelydue

totheincorporationofUnnim,andtoalesser

extenttotheworseningNPAratiosinSpain,in

linewithexistingforecasts.Itisimportantto

highlightthefactthatUnnim’snon-performing

balanceshaveahighcoverageratioand

thattheconstructionrealestateportfolio,

foreclosedassetsandassetspurchasedby

theCatalanbankareguaranteedbyanasset

protectionscheme(EPA)covering80%ofreal

lossesintheseassets.

Customer funds

Total customer fundsamountedto€449

billionasof30-Sep-2012,ayear-on-year

increaseof7.0%(up4.8%since30-Jun-2012).

Withrespecttoon-balance-sheet customer funds,BBVAmanagedavolumeofcustomer

Customer funds (Millioneuros)

30-09-12 ∆% 30-09-11 30-06-12 31-12-11

Deposits from customers 288,709 2.4 282,050 274,285 282,173

Domestic sector 142,561 (2.5) 146,284 127,356 136,519

Publicsector 27,800 (9.4) 30,672 21,448 28,302

Otherdomesticsectors 114,761 (0.7) 115,612 105,908 108,217

Currentandsavingsaccounts 47,188 11.8 42,215 46,190 44,215

Timedeposits 57,236 11.8 51,182 48,278 49,105

Assetssoldunderrepurchaseagreementandother 10,337 (53.5) 22,215 11,440 14,897

Non-domestic sector 146,148 7.6 135,766 146,929 145,655

Currentandsavingsaccounts 91,413 17.0 78,127 91,706 85,204

Timedeposits 50,016 (9.0) 54,958 50,021 53,399

Assetssoldunderrepurchaseagreementandother 4,719 76.0 2,681 5,203 7,051

Other customer funds 160,113 16.7 137,252 153,889 144,291

Mutualfunds 41,404 6.5 38,874 40,807 39,294

Pensionfunds 91,081 22.9 74,118 86,761 78,648

Customerportfolios 27,629 13.9 24,261 26,322 26,349

Total customer funds 448,823 7.0 419,302 428,175 426,464

September2011

September2010

September2012


143135

157

256

282 289

050100150200250300350400450

Customer funds(Billion euros)

Othercustomer

funds

Depositsfrom

customers

419399

449+7.0% (1)

137143

160

282256289

16 Groupinformation

deposits,excludingpromissorynotes,of

€289billionasof30-Sep-2012,up2.4%since

September2011and5.3%on

30-Jun-2012.Ascanbeseeninthe

accompanyingtableshowingcustomerfunds,

therehasbeenasignificantgrowthoverthe

quarterinthedomestic sectorasaresultof

theincorporationofUnnimandthegrowth

incustomerfunds(includingpromissory

notes)overthequarter.Inthenon-domestic sector,volumeshavebeenmaintainedatvery

similarlevelstothecloseofJune2012.The

fallindepositslinkedtowholesalecustomers

hasthusbeenoffsetbythepositivetrendin

balancesfromtheretailsegmentinpractically

allthegeographicalareas,asshownonthe

followingsectionsdedicatedtoeachofthe

Group’sbusinessareas.

Allinall,BBVAmaintainsintactitshigh

capacitytogatherdepositsandthe

capillarityofitscommercialnetwork,asretail

deposits(includingpromissorynotes)grew

inboththedomesticandnon-domestic

sectors.

Off-balance-sheetcustomerfundsclosed

Septemberat€160billion,up16.7%

year-on-yearand4.0%quarter-on-quarter.

Incontrastwithotherquarters,therewasa

slightyear-on-yearincreaseinSpain,dueto

thepositiveperformanceofpensionfunds

andcustomerportfolios.BBVAisthebiggest

pensionfundmanagerinSpainandtheonly

oneofthetopfivetoincreaseitsmarketshare

betweenJune2011andJune2012.Asof

30-Jun-2012,itsmarketsharewas19.1%,81

basispointshigherthanthefigureforthe

previousyear.

Inthenon-domesticsector,assetsunder

managementinmutualfundsandpensions

funds,aswellascustomerportfolios,have

continuedtogrow.

Equity

BBVA’sequityasof30-Sep-2012was

€43,750m,up1.6%quarter-on-quarterand

9.7%year-on-year.Thisismanlyexplained

bythepartialconversionofthemandatory

subordinatedconvertiblebonds,theretained

earningsoftheperiodandtheexchangerate

differences.

Other customer funds (Millioneuros)

30-09-12 ∆% 30-09-11 30-06-12 31-12-11

Spain 50,492 0.5 50,225 48,709 50,399

Mutualfunds 18,987 (6.1) 20,220 18,694 19,598

Pensionfunds 17,695 5.7 16,741 17,192 17,224

Individualpensionplans 10,075 5.0 9,600 9,729 9,930

Corporatepensionfunds 7,620 6.7 7,141 7,463 7,294


Rest of the world 109,622 26.0 87,027 105,180 93,892

Mutualfundsandinvestmentcompanies 22,417 20.2 18,654 22,113 19,697

Pensionfunds 73,386 27.9 57,377 69,569 61,424


Other customer funds 160,113 16.7 137,252 153,889 144,291

96.9

December2011

44.2

93.7

September2011

42.2

97.3

March2012

43.6

99.7

June2012

46.2

112.0

September2012

47.2

49.151.2 49.3 48.357.2

7.65.24.4

+19.5%

3.6

42.244.2 43.6 46.2

47.2

51.2 49.1 49.3 48.3

57.2

0.33.6 4.4 5.2 7.6

0

20

40

60

80

100

120

–x.x% (2)

On-balance sheet customer funds. Other domestic sectors (1)

(Billion euros)

(1) Including promissory notes sold by the retail network and excluding repos and other.

Timedeposits

Promissorynotes

Currentand savings

accounts

17Capitalbase

Themostsignificanteventsthatinfluencethe

Group’scapitalbaseinthethird quarter of

2012aresummarizedbelow:

• Asof30-Sep-2012theGroupcontinues

tocomplywiththeEBA’scapital

recommendations.

• Thegenerationofoperatingincome

hasenabledBBVAtoabsorbtheimpact

ofloan-lossprovisionstocoverthe

impairmentofassetsrelatedtothereal

estatesectorinSpain.

• Theincreaseinrisk-weightedassets(RWA),

derivedfromtheincorporationofUnnim

andthegrowthinLatinAmerica,hasbeen

compensatedtoagreatextentbythefall

oflendinginSpainandintheCIBportfolios

ofdevelopedcountries.

• TheimpactoftheincorporationofUnnim

ispracticallyneutralintermsofcorecapital.

Thenegativeeffectinthequarter(10basis

points)willbeoffsetbytheexchangeoffer

forthehybridinstrumentsheldbyUnnim

retailcustomersinthemonthofOctober.

• BBVAcomfortablypassedthestresstest

exerciseconductedbyOliverWyman.

Thisconfirmsonceagainitscapacityto

generatecapitaleveninveryadverse

economicscenarios.

AccordingtoBaselIIcriteria,theGroup’s

capital basestoodat€44,467mattheclose

ofSeptember,up3.8%onthefigurereported

attheendofJune2012,largelyduetothe

increaseinTierIIeligiblecapital.RWAtotaled

€335,203m.Theirincreaseoverthequarteris

basicallyduetotheincorporationofUnnim.

Withrespecttothecomponentsofthecapital

base,theevolutionofthecore capitalwas

veryflat,withaslightincreaseof€150msince

30-Jun-2012to€36,075m.Asaresult,thecore

andTierIratiosasof30-Sep-2012stoodat

10.8%,thesamelevelpostedattheendofthe

firsthalfof2012.

Inthesameperiod,othereligiblecapital

amountedto€1,552m,primarilyduetoBBVA

Bancomer’ssubordinateddebtissue.Asa

Capitalbase

Capital base (BIS II Regulation) (Millioneuros)

30-09-12 30-06-12 31-03-12 31-12-11 30-09-11

Core capital 36,075 35,924 35,290 34,161 29,628

Capital (Tier I) 36,075 35,924 35,290 34,161 32,053

Other eligible capital (Tier II) 8,393 6,841 8,241 8,609 9,067

Capital base 44,467 42,765 43,531 42,770 41,120

Risk-weighted assets 335,203 332,036 329,557 330,771 325,458

BIS ratio (%) 13.3 12.9 13.2 12.9 12.6

Core capital (%) 10.8 10.8 10.7 10.3 9.1

Tier I (%) 10.8 10.8 10.7 10.3 9.8

Tier II (%) 2.5 2.1 2.5 2.6 2.8

18737.0

23355.024929.0

29628.0

36075.0

0

5000

10000

15000

20000

25000

30000

35000

40000

Sep.2008

18,737

Sep.2009

Sep.2010

24,969

Sep.2011

29,628

Sep.2012

36,075

01234567891011121314151617181920

6.48.0 8.2

9.110.8

23,355

+21.8%

Core capital evolution (BIS IIRegulation) (Million euros and percentage)

Corecapital

Corecapital

(%)

18 Groupinformation

Ratings

Long term Short term Financial strength Outlook

Moody’s Baa3 P-3 D+ Negative

Fitch BBB+ F-2 bbb+ Negative

Standard&Poor’s BBB– A-3 - Negative

DBRS A R-1 - Negative

result,theTier IIratioclosedthequarterat

2.5%,comparedwith2.1%on30-Jun-2012.

Insummary,theGrouphasincreasedthe

BIS II ratioto13.3%asof30-Sep-2012,and

continuestoexceedthe9%minimumcore

capitalratiorequiredbytheEBA.

Ratings

BBVAhasbeenpenalizedoverthelast12

monthsbythesuccessivedowngradesof

Spanishsovereignrating.Althoughtherating

agenciesrecognizetheGroup’sstrengths

anditsgeographicaldiversification,inthe

opinionofsomeofthemBBVA’sratingcannot

beabovethatofthesovereign.Onceagain,

thishasbeentheonlyreasonfortherecent

downgradefromBBB+toBBB–byStandard

&Poor’s.DBRShasdowngradedBBVA’srating

fromA(high)toA,placingBBVA’sratinginthis

caseonenotchabovethesovereign.Atthe

endofOctober,Moody’sconfirmedBBVA’s

Baa3rating.

19Riskmanagement

Credit risk

Atthecloseofthethird quarter of 2012,theGroup’sprimary

assetqualityindicatorscontinuedstableandstillcompare

favorablywiththoseofmostofitspeers.

BBVAclosedSeptember2012withavolumeoftotal riskswith

customers(includingcontingentliabilities)of€417,405m,2.0%

uponthefigureasof30-Jun-2012.Themainreasonforthisis

theincorporationofUnnim,andtoalesserextentthegrowth

inlendinginemergingcountries.Nottakingintoaccountthe

balancesoftheCatalanbank,thetotalamountofrisksfellby

2.6%sincethecloseofJune2012,duetothedeleveraging

processbeingundertakeninEurope.

Non-performing assetsclosedasof30-Sep-2012at€20,114m,

ariseofover€3,600moverthequarter.Ofthistotal,84%is

basicallyduetotheintegrationofUnnimbalances.Attheclose

ofSeptemberUnnim’sNPAstoodat€3,038m,butwithahigh

coverageratio.Therestoftheincreasecanbeexplainedby

theworseningNPAratioinSpain,inlinewithexistingforecasts.

IntermsofvariationsinNPA,apartfromtheincorporation

ofUnnimandtheriseoftheNPAratioinSpain,therewasa

lowerlevelofbothadditionstoNPAandrecoveries.Thelatter,

Riskmanagement

Variations in non-performing assets (Millioneuros)

3Q12 2Q12 1Q12 4Q11 3Q11

Beginning balance 16,481 16,096 15,866 15,970 15,790

Entries 3,674 3,717 3,092 3,610 2,918

Recoveries (1,919) (2,090) (1,882) (2,752) (1,874)

Net variation 1,755 1,627 1,210 858 1,044

Write-offs (1,096) (1,121) (1,006) (1,138) (876)

Exchangeratedifferencesandother 2,974 (121) 26 176 12

Period-end balance 20,114 16,481 16,096 15,866 15,970

Memorandum item:

Non-performingloans 19,834 16,243 15,880 15,647 15,689

Non-performingcontingentliabilities 280 238 216 219 281

Credit risk management (1) (Millioneuros)

30-09-12 30-06-12 31-03-12 31-12-11 30-09-11

Non-performingassets 20,114 16,481 16,096 15,866 15,970

Totalrisks 417,405 409,145 400,553 400,709 390,723

Provisions 13,877 10,822 9,726 9,688 9,503

Specific 9,687 7,744 6,666 6,471 6,584

Genericandcountry-risk 4,190 3,078 3,061 3,218 2,919

NPAratio(%) 4.8 4.0 4.0 4.0 4.1

NPAcoverageratio(%) 69 66 60 61 60

(1)Includingcontingentliabilities.

Non-performing assets(Million euros)

20,114

September2012

December2011

15,866

March2012

16,096

September2011

15,970+22.0%

16,481

June2012

(1) Including balances from Unnim.

3,038 (1)

17,076

20 Groupinformation

Asaresult,theGroup’scoverageratiohasimprovedby3.3

percentagepointsto69%.Bybusinessarea,Spain,theUnited

StatesandSouthAmericaincreasedtheirratiosto59%,94%

and142%,respectively,whileMexicoclosedthequarterat107%

andEurasiaat114%.

Exposure to the real estate sector in Spain

Themostimportantpointwithrespecttoexposuretothe

realestatesectorinSpaininthe third quarter of 2012is,as

mentionedearlier,theincreaseinprovisionstocoverthe

additionalimpairmentinthevalueofassetsassociatedwith

therealestateindustryowingtothecountry’sworsening

macroeconomicsituation.Followingtheincreaseinprovisions

forloan-losses,andforforeclosuresandassetspurchases,at

thecloseofthefirstninemonthsof2012theGroupmeets

two-thirdsoftherequirementsimposedbyRoyalDecree-Laws

02/2012and18/2012.

IncludingthefiguresfromUnnim,theGroup’sexposuretothis

sectorincreasesby€2,652m,butwithahighcoverageratio

(48%ofnon-performingplussubstandardloans).Foreclosures

andassetpurchasesamounttoanadditional€3,267m,

althoughtheyalsohaveahighcoverageratio(65%).

however,haveslowedinresponsetoseasonalfactorsaffecting

thisquarter,aboveallinSpain.Theratioofrecoveriesto

additionstoNPAstoodat52.2%.

Asaresult,theGroup’sNPA ratioattheendofSeptember2012

stoodat4.8%,up79basispointsoverthequarter.Ofthisrise,

53basispointsaretheresultoftheaforementionedintegration

ofUnnim.ExcludingtheCatalanbank,theratiowouldbe4.3%,

26pointsmorethanon30-Jun-2012,basicallyasaresultof

thedeteriorationoftheeconomicsituationinSpain,combined

withthefinancialdeleveragingprocessunderwayinthe

country.InMexico,theNPAratioremainsstable(4.1%atthe

endofSeptember),whileithasincreasedinEurasia,although

itcontinuesatverylowlevels(1.7%comparedwith1.4%inthe

previousquarter).IntheUnitedStates,itfellsignificantlyto

2.4%(2.8%asof30-Jun-2012).Finally,theratioinSouthAmerica

droppedslightlyfrom2.3%attheendofJune2012to2.2%at

thecloseofSeptember.

Coverage provisionsforcustomerriskincreasedoverthe

quarterby28.2%to€13,877m,mainlyduetoasignificant

increaseinprovisionsinSpainandtheincorporationofUnnim.

NPA ratio

Coverageratio

NPA and coverage ratios(Percentage)

September2012

December2011

March2012

June2012

September2011

60 61 60

66

4.1 4.0 4.0 4.0

69

4.8

(1) Excluding Unnim.

4.3 (1)

68 (1)

Recoveries over entries to NPA(Percentage)

64.2

76.2

60.956.2

52.2

3Q 4Q 3Q2011 2012

1Q 2Q

26,029,0 30,0

39,0

44,0 43,0

0

20

40

60

Coverage of NPLs and substandar real estatedeveloper’s exposure(Percentage)

September2012

December2011

March2012

June2012

September2011

2629 30

39

44

43 (1)


Coverage of foreclosures and asset purchases(Percentage)

September2012

December2011

March2012

June2012

September2011

33 34 3436

50

33,0 34,0 34,036,0

50,0

44,0

0

20

40

60

Cobertura de adjudicados y compras (1)

(Porcentaje)


44 (1)

21Riskmanagement

ItshouldbestressedthattheUnnimdealincludesanasset

protectionscheme(EPA)bywhichtheDepositGuarantee

Fund(FGD)willtakeon80%ofanylossesofapredetermined

assetportfolioforaperiodof10years,aftermakinguseof

existingprovisions.TheriskofincorporatingUnnimportfolios

totheBBVAGroupisthereforeextremelylimited,notonlydue

totheirhighcoverageratio,butalsobecauseoftheexistence

oftheEPA.

Asaresultoftheabove,therehasbeenanincreaseoverthe

quarterofthecoverageofnon-performingandsubstandard

loansoftheBBVAGroupof5percentagepointsto44%,and

thatofforeclosuresandassetpurchaseshasincreasedby14

percentagepointsto50%.

Economic capital

Attributable economic risk capital(ERC)consumption

amountedto€36,181masofthecloseofSeptember,an

increaseof9.2%onthefigurefor30-Jun-2012.

AsistobeexpectedfromBBVA’sprofile,thelargestallocation

toERC(56.8%)relatestocreditriskonportfoliosoriginatedin

theGroup’sbranchnetworkfromitsowncustomerbase.This

amountincreasedoverthequarterby9.6%,basicallydueto

theinclusionofUnnim.

Equityrisk,whichrefersbasicallytotheportfolioofholdings

inindustrialandfinancialcompanies,thestakeinCNCB,

andconsumptionofeconomiccapitalfromgoodwill,has

maintaineditsproportionstableinrelationtototalrisks

(20.0%).

Structuralbalance-sheet risk,originatedfromthe

managementofstructuralinterest-rateriskand

exchange-raterisk,accountsfor7.4%ofERC,andwasup13.3%

overthequarter.

Operational riskincreasedby5.0%inabsoluteterms,although

itreduceditsrelativeweightto5.6%;whilefixed-asset

riskincreasedby7.8%andaccountsfor6.4%oftotalERC

consumption.

Finally,therelativeweightofmarket risk,whichisofless

importancegiventhenatureofthebusinessandBBVA’spolicy

ofminimalproprietarytrading,stoodat2.8%atthecloseof

September.

Coverage of real estate exposure in Spain (Millionofeurosasof30-Sep-12)

Risk amount Provision % Coverage over risk

NPL+Substandard 8,746 3,826 44

NPL 6,842 3,196 47

Substandard 1,904 630 33

Foreclosedrealestateandotherassets 11,679 5,818 50

Fromrealestatedevelopers 8,650 4,648 54

Fromdwellings 2,406 917 38

Other 623 253 41

Subtotal 20,425 9,644 47

Performing 7,473 647 9

Withcollateral 6,850

Finishedproperties 4,082

Constructioninprogress 1,268

Land 1,500

Withoutcollateralandother 623

Real estate exposure 27,898 10,291 37

Memorandum item: BBVA Group excluding Unnim

NPL+Substandard 6,912 2,949 43

Foreclosedrealestateandotherassets 8,412 3,694 44

Subtotal 15,324 6,643 43

Performing 6,655 400 6

Real estate exposure 21,979 7,043 32

22 Groupinformation

TherewasastrongrecoveryintheEuropeanfinancialsectorover

thethird quarter of 2012. Therobustperformanceofperipheral

countrybanksintheequitymarketswasparticularlyoutstanding.

Therewereanumberoffactorsbehindthischange.Themost

importantoftheseincludetheannouncementsofasinglebank

supervisionmechanismintheeurozoneandanewprogramof

ECBsecondarymarketpurchases(OMT),subjecttoaprevious

request.RegardingSpain,aconditionalityagreementhasbeen

establishedtoaidthebankingsectorlinkedtothepublicationof

the“bottom-upstresstest”byOliverWyman.

ThesefactorsresultedinarevaluationoftheEuropean banking sector.TheStoxxBanksindexwentup11.2%inthequarter,

outperformingthegeneralStoxx50equitymarketindex(+5.8%).

Likewise,Spain’sIbex35rose8.5%betweenJuneandSeptember

2012,comparedtoan11.3%fallinthepreviousquarter.

BBVA’s results in the second quarter of 2012werefavorably

receivedbyanalysts.TheyparticularlyvaluedtheBank’sstrong

solvencylevels,assubsequentlyratifiedinOliverWyman’s

“bottom-upstresstest”,whichhighlightedthestrengthofthe

Bank’scapitalpositioneveninanextremelyadversescenario.By

businessarea,theperformanceofrevenueingeneral,andnet

interestincomeinparticular,wasalsowellreceived.InSpain,BBVA

wassetapartbyitssuperiorassetqualitycomparedtoitspeers.

DespiteconsideringthattheSpanishmacroeconomicconditions

willcontinuetoputpressureonthearea’searnings,analysts

consideredthatthestrengthandfavorableperformanceofthe

Group’sbusinessesinothergeographicareaswouldbesufficient

tooffsetthiseffectoverthecomingquarters.EarningsinSouth

Americasurprisedpositively,thankstoitshighrevenuegeneration

capacity.TheUSA,Turkey,Asiaand,toalesserextent,Mexicoalso

producedbetterthanexpectedresults.

Againstthisbackdrop,theBBVA sharegained8.6%overthe

quarterto€6.11pershare,resultinginamarketcapitalization

of€32,901m.Thisrepresentsaprice/bookvalueof0.8,aP/E

of15.6(calculatedontheaverageprofitfor2012estimatedby

theconsensusofBloomberganalysts)andadividendyieldof

6.9%(alsocalculatedaccordingtotheaveragedividendper

shareestimatedbyanalystsfor2012andthesharepriceasof

September30,2012).TheimprovementintheBBVAshareis

inlinewiththatoftheIbex35(+8.5%),butslightlybelowthe

performanceoftheEuropeansectorasawhole(StoxxBanks

+11.2%,andEuroStoxxBanks+12.8%).

Asregardsshareholder remuneration,BBVAmaintainedits

dividendpolicy.OnSeptember14itannouncedthedistributionof

€0.10pershareunderthe“dividendoption”flexibleremuneration

systemagreedattheAGMonMarch16,2012.Thisprogramoffers

shareholderstheoptiontoreceivethedividendinnewlyissued

BBVAsharesorincash.Around80%ofshareholdersoptedto

receivenewlyissuedBBVAshares,whichoncemoreconfirmsthe

sucessofthisnewremunerationsystem.

TheBBVAshare

The BBVA share and share performance ratios

30-09-12 30-06-12

Numberofshareholders 1,007,410 1,044,129

Numberofsharesissued 5,382,108,140 5,382,108,140

Dailyaveragenumberofsharestraded 90,201,068 71,780,925

Dailyaveragetrading(millioneuros) 516 371

Maximumprice(euros) 6.75 5.89

Minimumprice(euros) 4.31 4.52

Closingprice(euros) 6.11 5.63

Bookvaluepershare(euros) 8.13 8.00

Marketcapitalization(millioneuros) 32,901 30,296

Price/Bookvalue(times) 0.8 0.7

PER(Price/Earnings;times) 15.6 8.9

Yield(Dividend/Price;%) 6.9 7.5

Share price index(30-09-11=100)

31-12-11 31-03-1230-09-11 30-06-12 30-09-12

Stoxx 50

BBVA

Europe StoxxBanks

50

60

70

80

90

100

110

120

130

140

50

60

70

80

90

100

110

120

130

140

23Corporateresponsibility

ByrenewingitslistingontheDowJonesSustainability

Index(DJSI),BBVAhasmaintaineditspositionamongthe

leadingcompaniesintermsofsustainabilityatinternational

level.InclusionontheDJSIreflectsthesteadyintegrationof

theenvironmental,socialandcorporategovernance(ESG)

variablesintotheday-to-daymanagementoftheBank.

BBVAhasworkedtointegratetheseaspectsacrossitsvalue

chainforyears,fromproductdesign,advertisingandsales

toriskmanagement.BBVA’sfullratingintheanalysiscarried

outbytheSAMagencyforDJSIisavailableontheGroup’s

CorporateResponsibilitywebsite,www.bancaparatodos.com.

Belowarethecorporateresponsibilitymilestonesforthe

third quarter of 2012:

Financial InclusionBBVABancomerwillpromoteaccesstobankingfor1.5

millionusersthroughthe Dinero móvil(Mobilemoney)

initiative,whichenablespeopletosendmoneytoothers

inanypartofthecountrythroughtheelectronicbanking

channeloftheirchoice.Theaimoftheprojectistomake

iteasierforcustomerstoaccesslow-costbankingservices

thataresecure,approachable,accessible,time-savingand

convenient.

Financial LiteracyFiguresforthethirdValores de futuro(Futurevalues)

campaignwerepublishedinJuly.Itclosedattheendofthe

schoolyearwitharound800,000participantsinSpain.In

Mexico,BBVABancomerhasreachedanagreementwiththe

NationalAdultEducationInstitute(INEA)tofosterfinancial

literacyinthecountry,andhasincludedworkshopsdealing

withsavingandcreditintotheINEAfamilyfinancemodule

aspartofadulteducation.Ithasalsoincludedtwonew

workshopstosupporttheMexicanSMEsector.

Responsible BankingCustomer-Centric Approach. Throughits“Blue

BBVA”program,BBVAhasgivenyounguniversitystudents

anumberofexclusiveadvantagesandservicestofinance

theirstudies.Thisprogramisspecificallytargetedatyoung

adultsandreflectstheBank’sstrategyofofferinginnovative

productsthatmeetthespecificneedsofdifferentcustomer

segments.

Environment. BBVAColombiahasjoinedthe“Green

Protocol”,anagreementunderwrittenbythefinancialsector

topromotesustainabledevelopmentinthecountry.Through

thisagreementtheBankcommitsvoluntarilytoimplement

policiesandpracticesthatcanberecognizedasamodelin

termsofenvironmentalresponsibility.Inadditiontothis,the

BBVAFoundationhasawardedits“BiodiversityConservation”

prizetoWWFSpainforitskeyinnovativeactionsinvarious

areasofconservation.

Community InvolvementThewinnerofBBVA’s4thINTEGRAAwardwastheCatalan

cooperativeLaFageda.Theawardisworth200,000euros.

Theawardrecognizestheworkofnon-profitorganizations

orself-employedpeoplewhocarryoutprojectsthatbring

peopleintothelabormarketandboostnewinitiativesand

goodpracticesinthisfield.Inaddition,SpainandPortugalhave

launchedthe2ndTerritorios Solidarios(SolidarityTerritories)

program,whichmakes1.8millioneurosavailableforemployees

inSpaintodevelopsupportiveprojectsledbynon-profit

organizations.Finally,theMomentumProject,BBVA’sinitiative

supportingsocialentrepreneurship,waslaunchedinMexico

forthefirsttime.TheaimistoboostSMEsthroughastrategic

alliancewithprestigiousinstitutionssuchastheEGADE

BusinessSchoolandNewVenturesMexico,inpartnershipwith

theInter-AmericanDevelopmentBank(IDB).

BBVA in the Sustainability IndicesBBVAhasaprominentpositioninthemaininternational

sustainabilityindices,withthefollowingweightingattheclose

ofSeptember:

Corporateresponsibility

Formoreinformationandcontactdetails,pleasevisit

www.bancaparatodos.com

Main sustainability indices in which BBVA participates

Weighting (%)

DJSIWorld 0.52

DJSIEurope 1.25

DJSIEurozone 2.66

ASPIEurozoneIndex 2.00

EthibelSustainabilityIndexExcellenceEurope 1.32

EthibelSustainabilityIndexExcellenceGlobal 0.90

MSCIWorldESGIndex 0.36

MSCIWorldexUSAESGIndex 0.75

MSCIEuropeESGIndex 1.31

MSCIEAFEESGIndex 0.85

FTSE4GoodGlobal 0.31

FTSE4GoodGlobal100 0.50

FTSE4GoodEurope 0.74

FTSE4GoodEurope50 1.23

24 Businessareas

Inthissectionwediscussthemoresignificantaspectsofthe

activitiesandearningsoftheGroup’sdifferentbusinessareas,

alongwiththoseofthemainunitswithineach,plusCorporate

Activities.Specifically,wedealwiththeincomestatement,the

balancesheetandthemainratios:efficiency,NPAratio,NPA

coverageratioandriskpremium.

In2012themainchangeinthereporting structureofthe

businessareasoftheBBVAGrouphasbeenthetransfer

totheUnitedStatesoftheassetsandliabilitiesofabranch

inHouston,whichpreviouslybelongedtoMexico(BBVA

Bancomer).Thishasbeendonetakingintoaccountthe

geographicalnatureoftheGroup’sreportingstructure.In

addition,changeshavebeenmadethataffectotherareasand

whichowingtotheirirrelevantnatureneednocomment.

Thus,thecompositionofthebusiness areasin2012isvery

similartothatexistinginthepreviousyear:

• Spain,whichincludes:Theretailnetwork,withthe

segmentsofindividualcustomers,privatebanking,and

smallbusinessesinthedomesticmarket;Corporateand

BusinessBanking(CBB),whichhandlestheneedsofSMEs,

corporations,governmentanddevelopersinthecountry;

Corporate&InvestmentBanking(CIB),whichincludes

activitywithlargecorporationsandmultinationalgroups;

GlobalMarkets(GM),withthetradingflooranddistribution

businessinthedomesticmarket;andotherunits,among

themBBVASegurosandAssetManagement(management

ofmutualandpensionfundsinSpain).

• Eurasia,whichincludesbusinessintherestofEuropeand

Asia.EuropeincludesBBVAPortugal,ConsumerFinance

ItaliaandPortugal,theretailbusinessofthebranchesin

Paris,LondonandBrussels,thewholesaleactivitycarried

outintheregion(excludingSpain)andTurkey(includingthe

stakeinGaranti).Asiaincludesalltheretailandwholesale

businessinthatcontinentandthestakeinCNCBandCIFH.

• Mexico:includesthebanking,pensionsandinsurance

businessesinthecountry.

• United States:encompassestheGroup’sbusinessinthe

UnitedStates.

• South America:includesthebanking,pensionsand

insurancebusinessesinSouthAmerica.

Aswellastheunitsindicated,alltheareasalsohaveallocations

ofotherbusinessesthatalsoincludeeliminationsandother

itemsnotassignedtotheunits.

Finally,theCorporate Activitiesareaincludestherestofitems

thatarenotallocatedtothebusinessareas,asinprevious

years.Thesebasicallyincludethecostsofheadquarterswith

astrictlycorporatefunction,certainallocationstoprovisions

suchasearlyretirementsandothersalsoofacorporatenature.

CorporateActivitiesalsoperformsfinancialmanagement

functionsfortheGroupasawhole;essentiallymanagementof

assetandliabilitypositionsforinterestratesinthe

euro-denominatedbalancesheetandforexchangerates,

aswellasliquidityandcapitalmanagementfunctions.

Themanagementofassetandliabilityinterest-raterisk

incurrenciesotherthantheeuroisrecordedinthe

correspondingbusinessareas.Lastly,itincludescertain

portfoliosandassetsnotlinkedtocustomers,withits

correspondingrevenuesandcosts,suchastheindustrialand

financialholdingsandtheGroup’srealestateassetsinSpain

assignedtoheadquarterservicesandforeclosedorpurchased

assets.

Inaddition,supplementary informationisprovidedofthe

globalbusiness(formerlycalledWholesaleBanking&Asset

Management–WB&AM–andnowCorporate&Investment

Banking)carriedoutbytheBBVAGroup.Thisaggregatedoes

notincludetheassetmanagementbusiness.Thisaggregate

ofbusinessesisconsideredrelevanttobetterunderstandthe

BBVAGroupbecauseofthecustomersserved,thetypeof

productsofferedandtherisksundertaken.

Furthermore,asusualinthecaseofTheAmericas,both

constantandcurrentexchange rateshavebeenappliedwhen

calculatingyear-on-yearvariations.

TheGroupcompilesreportinginformation by areasona

levelasdisaggregatedaspossible,andalldatarelatingto

thebusinessestheseunitsmanageisrecordedinfull.These

basicunitsarethenaggregatedinaccordancewiththe

organizationalstructureestablishedbytheGroupat

higher-levelunitsand,finally,thebusinessareasthemselves.

Similarly,allthecompaniesmakinguptheGrouparealso

assignedtothedifferentunitsaccordingtothegeographical

areaoftheiractivity.

Oncethecompositionofeachbusinessareahasbeendefined,

certainmanagement criteriaareapplied,ofwhichthe

followingareparticularlyimportant:

• Capital:Capitalisallocatedtoeachbusinessaccording

toeconomicriskcapital(ERC)criteria.Thisisbasedon

theconceptofunexpectedlossataspecificconfidence

level,dependingontheGroup’scapitaladequacytargets.

Thesetargetshavetwolevels:thefirstiscoreequity,which

determinesthecapitalallocated.Thisamountisusedasa

basisforcalculatingtheprofitabilityofeachbusiness.The

secondlevelistotalcapital,whichdeterminestheadditional

allocationintermsofsubordinatedebtandpreferred

securities.ThecalculationoftheERCcombinescreditrisk,

Businessareas

25Businessareas

marketrisk,structuralbalance-sheetrisk,equitypositions,

operationalriskandfixedassetandtechnicalrisksinthe

caseofinsurancecompanies.Thesecalculationsarecarried

outusinginternalmodelsthathavebeendefinedfollowing

theguidelinesandrequirementsestablishedunderthe

BaselIIcapitalaccord,witheconomiccriteriaprevailingover

regulatoryones.

ERCisrisk-sensitiveandthuslinkedtothemanagement

policiesofthebusinessesthemselves.Itstandardizescapital

allocationbetweentheminaccordancewiththerisksincurred

andmakesiteasiertocompareprofitabilityacrossunits.In

otherwords,itiscalculatedinawaythatisstandardand

integratedforallkindsofrisksandforeachoperation,balance

orriskposition,allowingitsrisk-adjustedreturntobeassessed

andanaggregatetobecalculatedfortheprofitabilitybyclient,

product,segment,unitorbusinessarea.

• Internal transfer prices:Internaltransferratesareapplied

tocalculatethenetinterestincomeofeachbusiness,on

boththeassetsandliabilities.Theseratesarecomposed

ofamarketratethatdependsontherevisionperiodof

theoperation,andaliquiditypremiumthatreflectsthe

conditionsandprospectsofthefinancialmarketsinthis

area.Earningsaredistributedacrossrevenue-generating

anddistributionunits(e.g.,inassetmanagementproducts)

atmarketprices.

• Assignment of operating expenses:Bothdirectand

indirectcostsareassignedtothebusinessareas,except

wherethereisnoclearlydefinedrelationshipwiththe

businesses,i.e.whentheyareofaclearlycorporateor

institutionalnaturefortheGroupasawhole.

• Cross selling:insomecases,consolidationadjustments

arerequiredtoeliminateshadowaccountingentriesin

theresultsoftwoormoreunitsasaresultofcross-selling

incentives.

Recurrent economic profit by business area (January-September2012.Millioneuros)

Adjusted net attributable

profitEconomic profit (EP)

Spain 1,365 467

Eurasia 766 317

Mexico 1,314 862

SouthAmerica 811 520

TheUnitedStates 208 (36)

CorporateActivities (693) (706)

BBVA Group 3,770 1,424

Mayor income statement items by business area(Millioneuros)

Business areas

BBVA Group Spain Eurasia MexicoSouth

AmericaThe United

StatesCorporate Activities


Netinterestincome 11,220 3,571 603 3,079 3,087 1,285 (404)

Grossincome 17,103 5,038 1,624 4,418 4,278 1,826 (79)

Operatingincome 9,000 2,972 1,048 2,750 2,463 634 (868)

Incomebeforetax 2,173 (782) 890 1,741 1,926 496 (2,098)

Net attributable profit 1,656 (532) 813 1,300 1,014 341 (1,279)

Net attributable profit (adjusted) (1) 3,345 848 813 1,300 1,014 341 (971)


Netinterestincome 9,676 3,305 519 2,840 2,255 1,216 (460)

Grossincome 15,052 4,879 1,329 4,174 3,214 1,745 (290)

Operatingincome 7,753 2,799 893 2,655 1,751 645 (991)

Incomebeforetax 4,145 1,615 844 1,691 1,385 338 (1,727)

Net attributable profit 3,143 1,149 719 1,252 753 242 (972)

Net attributable profit (adjusted) (1) 3,478 1,249 719 1,252 753 242 (737)


26 Businessareas

Spain

Income statement (Millioneuros)

Spain

January-Sep. 12 ∆% January-Sep. 11

Net interest income 3,571 8.0 3,305

Netfeesandcommissions 1,199 6.0 1,131

Nettradingincome (16) n.m. 84

Otherincome/expenses 284 (21.0) 359

Gross income 5,038 3.2 4,879

Operatingcosts (2,065) (0.7) (2,081)

Personnelexpenses (1,239) (2.2) (1,267)

Generalandadministrativeexpenses (747) 0.9 (740)

Depreciationandamortization (79) 7.8 (74)

Operating income 2,972 6.2 2,799

Impairmentonfinancialassets(net) (3,705) 195.2 (1,255)

Provisions(net)andothergains(losses) (49) n.m. 71

Income before tax (782) n.m. 1,615

Incometax 250 n.m. (466)

Net income (532) n.m. 1,149

Non-controllinginterests (1) n.m. 0

Net attributable profit (532) n.m. 1,149

Adjusted(1) (1,380) - (100)

Net attributable profit (adjusted) (1) 848 (32.1) 1,249

(1)In2011and2012,impairmentchargerelatedtothedeteriorationoftherealestatesector.

Balance sheet (Millioneuros)

Spain

30-09-12 ∆% 30-09-11

Cashandbalanceswithcentralbanks 7,602 (17.0) 9,154

Financialassets 77,946 6.8 72,960

Loansandreceivables 231,171 3.0 224,501

Loansandadvancestocustomers 210,543 1.2 208,039

Loansandadvancestocreditinstitutionsandother 20,628 25.3 16,462

Inter-areapositions - - -

Tangibleassets 856 (6.3) 913

Otherassets 4,051 25.1 3,237

Total assets/Liabilities and equity 321,626 3.5 310,765

Depositsfromcentralbanksandcreditinstitutions 54,290 34.1 40,490

Depositsfromcustomers 122,058 1.5 120,281

Debtcertificates 7,755 n.m. 346

Subordinatedliabilities 3,010 (48.7) 5,864

Inter-areapositions 48,375 (30.1) 69,169

Financialliabilitiesheldfortrading 54,896 20.9 45,400

Otherliabilities 19,308 4.0 18,561

Economiccapitalallocated 11,934 12.0 10,656

27Spain

Industry Trends

Inthethirdquarterof2012,thecommercial

activity ofSpanishcreditinstitutionstook

placeinaverydifficultenvironmentmarked

by:

• Greateruncertaintyandweakeconomic

growth.

• ThedebtcrisisinEuropeanddifficulties

inaccessingtheinternationalwholesale

financemarkets.Financialtensionthat

keptthemarketspracticallyclosedand

increaseddependenceonfinancefromthe

ECB,whichattheendofSeptemberhad

reachedthefigureof€378billion.

• Highvolatilityonthefinancialmarkets.

WithrespecttotheSpanish financial

system,macroeconomicweaknessandthe

necessarydebtdeleveragingprocessinthe

Spanisheconomyhasledtoasignificant

stagnationincreditdemand.Thisislimiting

growthinvolumesandhadanegativeeffect

ontheNPAratio,whichattheendofAugust

stoodat10.5%forSpain’sfinancialsystem

asawhole.Againstthisbackdrop,savings

becomeakeyelementinthemanagement

ofthebusiness.

Thethirdquarterwasakeymomentinterms

ofprogressintheprocessofrestructuringin

theindustry.InSeptembertheconclusions

ofthebottom-upexercisecarriedoutby

OliverWymanweremadepublic.Theresults

ofthestresstestsoncemoreshowedthe

disparitywithintheSpanishfinancialsystem,

withacoreofstrongbanksandvulnerability

limitedtoaspecificpartoftheindustry.

Thiscleardistinctionbetweenbankswill

makerestructuringeasier.Theworkby

OliverWymanrepresentsadecisivestepin

recoveringmarketconfidenceintheSpanish

financialsystem,andeasesdoubtsaboutthe

transparencyandvaluationofbankassets.It

markstheendofoneofthefinalphasesof

restructuringwhich,oncecompleted,willlead

toafinancialsystemwithfewerbutsounder

banks.Aswasalreadymentionedatthetime

thetop-downanalysiswaspublishedinJune,

thisnewOliverWymanexerciseconfirmsthat

BBVAwillnotneedadditionalcapital,evenin

themostadversemacroeconomicscenario,

thankstotherecurrenceandsoundnessofits

businessmodel.Itclearlyshowsthestrength

oftheGroup’smodelinsituationsofextreme

difficulty.

Finally,withrespecttoBBVA inSpain,the

acquisitionof100%ofthecapitalstockof

UnnimBanc,S.A.wascompletedinthe

quarter.Asaresult,theGroup’sfinancial

statementsasof30-Sep-2012alreadyinclude

theUnnimaccountsfromJuly27.The

commentsbelowincludethefiguresforthe

Catalanbank,unlessotherwiseindicated.The

integrationofUnnimbarelyhasanimpacton

theearningsinthearea.Itcontributesaloan

bookof€18billion,25%ofwhichisregulated

byanassetprotectionscheme(EPA),and

includescustomerfundsofaround€11billion.

However,itdoesnegativelyaffecttheGroup’s

NPAratio.

Activity

ThemostimportantaspectofBBVA’sactivity

inSpainoverthequarteristhefavorabletrend

incustomerdepositsandpromissorynotes

andtheongoingprocessofdeleveraging.As

aresult,thecommercialgapandtheliquidity

positionintheareahaveimprovedasofthe

closeofthethirdquarterof2012.

Asof30-Sep-2012,BBVAmanagedavolume

of€163,425mincustomer funds,including

customerdeposits,promissorynotesand

off-balance-sheetfunds,up9.1%year-on-year

and9.2%quarter-on-quarter.Ofthisfigure,

Significant ratios (Percentage)

Spain

30-09-12 30-06-12 30-09-11





Spain highlights in the third quarter

• ConsolidationofUnnim.

• Positiveperformanceofcustomerdeposits.

• Goodpricemanagementandstrictcost

controlboostoperatingincome.

• TheincreaseinprovisionsenablesBBVAto

meet2/3oftheRDL02/2012and18/2012

requirements.

28 Businessareas

previousquartershascontinued,duetothe

difficultmacroeconomicsituationandthe

reducedvolumesoflendingactivity.Despite

this,theratioisstillfarbelowthatreported

inthesectoroverall,andclosedSeptember

at5.7%(6.5%includingtheUnnimfigures).

Thesignificantprovisionsmadeexplainthe

improvedcoverageratio,whichincreased

from50%asof30-Jun-2012to56%asof

30-Sep-2012(59%includingUnnim).

Earnings

Themostnotablefeatureofearningsin

theareainthefirst nine months of 2012is

excellentpricemanagement,whichexplains

theincreaseinnetinterestincome,the

strictcontrolofexpensesandasignificant

increaseinloan-lossprovisionstocover

thedeteriorationofassetsrelatedtothe

real-estatesectorinSpainandthuscomply

withtherequirementsofRoyalDecree-Laws

02/2012and18/2012.

Inanenvironmentoflowervolumes,BBVA

continuestoimproveitsnetinterestincome,

whichintheJanuary-Septemberperiod

amountedto€3,571m,8.0%morethan

inthesameperiodin2011.Asmentioned

earlier,goodpricemanagementthrough

repricingofloans,aswellasthegreater

contributionofmortgagefloors,havealso

ledtoanimprovementofprofitability,as

measuredbythenetinterestincomeover

averagetotalassets,to1.63%attheendof

September(1.39%inSeptember2011).Other

revenuealsoperformedwell.However,the

headingotherrevenuedecreasesduetothe

highercontributiontotheDepositGuarantee

Fund.Asaresultoftheabove,gross income

increasedto€5,038m,withayear-on-year

growthof3.2%.Thistrendisveryimportant

€129,813mwereon-balance-sheet customer

funds and promissory notes,whichincreased

by7.6%overthelast12monthsand12.8%

onthecloseofthefirsthalfof2012.Not

includingtheUnnimfigures,therewasalso

ariseoverthelast12months(6.1%)andover

thequarter(3.1%),confirmingtheoutstanding

managementoffundgatheringandrenewals

arrangedbythecommercialnetworkandwith

wholesalecustomers(inthelattercase,the

amountofthisheadinginCIBwentup5.5%

onthefigurefor30-Jun-2012).

BBVAmanagedinSpainoff-balance-sheet

funds of€50,492m,anincreaseof3.7%

onthefigureforthepreviousquarterand

0.5%onthesamedatelastyear.Ofthese,

€18,987maremutualfundsthataccountfor

17.3%ofthemarket(latestavailablefigure

forAugust),withaslightincreaseoverthe

quarterof1.6%.Therestaredistributed

amongotheroff-balance-sheetfundsand

pensionfunds,whichasof30-Sep-2012

amountedto€17,695m,ariseof2.9%since

30-Jun-2012(up5.7%year-on-year)thanksto

thepositivemanagementofrenewalsand

attractionofnewaccounts.Asaresultofthe

above,BBVAismaintainingitspositionas

thebiggestpensionfundmanagerinSpain,

withamarketshareof19.1%(latestavailable

figuresasofJune).

Gross lending to customersclosedSeptember

at€219,469m,withrisesof3.2%year-on-year

and3.9%quarter-on-quarterduetothe

incorporationoftheUnnimbalances.Excluding

these,theloanbookintheareahascontinued

toshrink(by6.1%year-on-yearand5.5%

quarter-on-quarter),inlinewiththenecessary

processofdeleveragingintheeconomy.

Withrespecttoasset quality,theslight

upwardmovementintheNPAratioover

281255313

230300

413

536

10081018946

742756

9791064

0

200

400

600

800

1,000

1,200

1Q 2Q 3Q 4Q 3Q

+6.2%

2011 20121Q

2,799 2,972

1,008946

1,064979

756 742

2Q

1,018

1Q 2Q 3Q 4Q 3Q

–32.1%

2011 20121Q

1,249 848

281313

536

413300

230

2Q

255

Spain. Net attributable profit (adjusted)(Million euros)

Spain. Operating income(Million euros)

29Spain

andgreatflexibility,whichhavegathered

over€1,000mintimedepositsoverthe

quarter.

• Thestartofthe“InternationalSynergies”

project,whichoffersCBBcustomersin

Spainaglobalrangeofservicesfrom

allthecountrieswhereBBVAoperates.

Inaddition,the“Growingabroad”cycle,

organizedbytheinternationaldepartment,

continuestoholdseminarstosupport

Spanishcompaniesintheirprocess

ofinternationalexpansion.Thisfirm

commitmentbyBBVAtoaccompanyits

customersintheirexpansionabroadhas

resultedinanincreasingnumberof

cross-bordertransactionsincountries

suchasMexico,Chile,Canada,Turkeyand

Italy,wheretransnationalteamsoperate,

anddemonstratestheglobalreachofthe

BBVAGroup.

• Intheinstitutionalsegment,workis

beingcarriedouttoadvisetheMinistry

ofEconomyandCompetitivenessand

theMinistryofFinanceandPublic

Administrationsincreatinganddeveloping

theRegionalLiquidityFund(FLA).The

Spanishbankingsystemwillcontribute

€8,000mtothisinitiative,andBBVA’s

contributionwillbe€1,600m.

Corporate & Investment Banking

Thisunitisresponsibleforglobalbusinesses

withinSpain.Itmanagesavolume of

business asof30-Sep-2012ofaround

€28,000m,withaloanbookof€21,293m

andon-balance-sheetcustomerdepositsof

€7,084m.Grosscustomerlendingcontinues

tofallduetothedeleveragingprocess

mentionedearlierandBBVA’spolicyoffocusing

oncustomerswithhighloyalty,profitabilityand

assetquality.Thisheadingfellby20.0%over

thequarter.Theincreaseonthebalanceonthe

samedatein2011istheresultofatemporary

increaseinbalancesfromrepoagreements

andguaranteesrelatedtoGlobalMarkets

transactions.On-balance-sheetcustomerfunds

increasedby5.5%overthequarter,compared

withafallof39.9%inthepreviousquarter,

thankstothefund-gatheringeffortsundertaken

overthequarter.

Thefollowingareworthhighlightingas

regardsearnings:

• Aresilientgrossincome,whichinthe

cumulativefigurethroughSeptember2012

giventheeconomiccontextinwhichithas

takenplace.

Operatingexpensesfellby0.7%onthefigure

forthefirstninemonthsof2011.Thishasled

toanimprovementinefficiencycompared

withthefigure12monthsearlier,andhas

maintainedtheefficiencyratiopractically

thesameasinthefirsthalfof2012(41.0%).

Asaresult,operating incomeamountedto

€2,972m,up6.2%inyear-on-yearterms.

Thestrengthofoperatingincomementioned

abovehasmadeitpossibletoabsorbthe

increaseinloan-loss provisions.Inthethird

quarterof2012therewasfurthersignificant

provisioningagainstimpairmentlosseson

financialassetsandprovisionstooffsetthe

deteriorationinassetsrelatedtothereal

estatesectorinSpain,thuscomplyingwiththe

requirementsofRoyalDecree-Laws

02/2012and18/2012.Atthecloseof

September,theareahadalreadymettwo

thirdsoftheobligationsderivedfromRoyal

Decree-Laws02/2012and18/2012.These

increasedprovisionshaveresultedinan

improvementofthecoverageratiointhearea,

ascommentedabove,andhaveimpactedthe

net attributable profit,whichwasanegative

€532m(apositive€848mnottakinginto

accountthehigherprovisionsresultingfrom

theperimeterofRoyalDecree-Laws02/2012

and18/2012).

Retail and Commercial Banking

RetailandCommercialBankingmanages

90%oftheloanbookintheareaand96%of

customerfunds.

BBVAisworkingtosupportitscustomersand

offerthemincreasinglypersonalizedsolutions

withinthedifficultcurrenteconomicsituation.

Therangeofproductsavailabletothe

differentsegmentsinthisunitisexpanding

steadily,andtheBankcontinuestoreward

customerloyalty.Thefollowingexamplesare

worthmentioning:

• Anewconsumerfinanceschemefor

privateindividualsthatreturns10%of

interestpaymentseachyearforthe

durationoftheloan.

• TheCorporateandBusinessBanking(CBB)

networkhasfocusedonretentionand

attractionofcustomerfundsasawayof

consolidatingandincreasingcustomer

loyalty.Todoso,ithasofferedafullrange

ofproductswithcompetitiveremuneration

30 Businessareas

advantagestoallcustomerswhomaintaina

flowofcollectionsandpaymentswithBBVA.

Itisoneofthemostcompetitiveinitiatives

inthemarketandoneoftheBank’smain

leversforgrowingitscustomerbaseinSpain.

Thesuccessoftheplanhasbeenreflected

intheriseofcustomershareforthesecond

yearinarowreachingaFRSmarketshareof

10.6%asmainsupplier,accordingtothelatest

informationavailable(September2012).

Intheinsurance business,anewcar

insurancewaslaunchedinSeptemberwith

theaimofincreasingcross-sellingthrough

highadded-valueproductsandincreasing

theloyaltyofinsurancepolicyholders.Ithas

averycompetitivepriceandattributesthat

setsitapartfromthecompetition(including

afreedoor-to-doorserviceforthevehicle

roadworthinesstest(ITV)andforrepairs,the

BBVAcommitmenttoquality,freechoiceof

garage,andanadditional5%discountfor

asecondvehicleinsuredinthefamily).In

thisway,BBVAhasnotonlyconsolidatedits

positionasaglobalproviderofinsurance

solutionsforitscustomers,butalsotakena

furtherstepindiversifyingitslinesofbusiness.

TheCalidadX3programwaslaunchedto

boostbestbankingpracticesandtheculture

of excellence.Itisbasedonthe

customer-centricphilosophyandaimsto

raisetheBank’sdifferentiationby:1)beingthe

mostrecommendedbankinthemarketand

2)improvinglevelsofcustomersatisfaction.

TheLiga Calidad BBVA(BBVAQualityLeague)

waslaunchedduringthequartertoboostthis

ambitiousplan.Thisisacompetitionbetween

BBVAbranchesforexcellenceincustomer

service.

Finally,BBVAcontinuestomakeprogress

indevelopingits multichanneldistribution

model.Thenumberofcustomerschoosing

BBVA Contigoastheirmainchannelfor

relationswithBBVAcontinuestoincrease.

Atotalof290,000customersarealready

remotelymanagedbyapproximately300

specializedadvisers.

amountedto€705m,up2.6%onthesame

periodin2011.Itwasboostedmainlyby

thegoodperformanceofrevenuefrom

customersand,inparticular,revenue

generatedbytheGlobalTransactional

Bankingunit.

• Operatingexpensescontinuetheiryear

onyeardownwardtrendasinprevious

quarters.FromJanuarytoSeptember2012

theyamountto€240m,adeclineof4.8%

thanthesameperiodin2011.

• Riseinoperatingincome,whichamounted

to€465minJanuarythroughSeptember,

6.9%uponthefigureforthesameperiod

in2011.

• Generationofacumulativenetattributable

profitof€268m,ayear-on-yearfallof8.7%

(down39.1%inJanuary-June2012).

Themostsignificanttransactionsand

highlightsfortheperiodaredetailedinthe

CIBsectionattheendofthisreport.

Highlights

Thehighlightofthequarterwasthe

completionofthepurchaseofUnnim

Banc,S.A.onJuly27,2012,afterreceiving

authorizationfromtheEuropean

Commission’sDirectorateGeneralfor

CompetitionandtheSpanishNational

CommissionforCompetition.Thisacquisition

strengthensBBVA’scommitmentinCatalonia

anddoublesitsmarketshareinoneofthe

mostattractivemarketsandwithbigger

growthpotentialinSpain.

Onthecommercial side,thisquartersaw

thelaunchofAdiós Comisiones,theplan

thateliminatesaccountfeesandfees

chargedfordebitorcreditcards,andoffers

additionalbenefitstocustomersinother

financialproductsfortheirloyaltytotheBank.

ThecampaignispartofBBVA’srangeof

transactionalproducts,whichofferssignificant

31Eurasia

Eurasia


Eurasia


Net interest income 603 16.0 519

Netfeesandcommissions 336 17.2 287

Nettradingincome 91 0.8 90

Otherincome/expenses 595 37.4 433

Gross income 1,624 22.2 1,329

Operatingcosts (576) 32.2 (436)

Personnelexpenses (299) 21.4 (246)

Generalandadministrativeexpenses (232) 46.3 (159)


Operating income 1,048 17.3 893

Impairmentonfinancialassets(net) (138) 105.5 (67)

Provisions(net)andothergains(losses) (20) n.m. 17

Income before tax 890 5.5 844

Incometax (77) (37.8) (124)

Net income 813 13.0 719

Non-controllinginterests - - -

Net attributable profit 813 13.0 719


Eurasia

30-09-12 ∆% 30-09-11

Cashandbalanceswithcentralbanks 2,097 9.9 1,908


Loansandreceivables 34,593 (10.1) 38,492

Loansandadvancestocustomers 31,457 (8.0) 34,188

Loansandadvancestocreditinstitutionsandother 3,136 (27.1) 4,304

Inter-areapositions - - -

Tangibleassets 587 1.9 576

Otherassets 1,179 0.9 1,169

Total assets/Liabilities and equity 50,724 (4.7) 53,214

Depositsfromcentralbanksandcreditinstitutions 15,523 (8.2) 16,908

Depositsfromcustomers 18,383 (18.3) 22,504

Debtcertificates 1,015 29.8 782

Subordinatedliabilities 907 (54.7) 2,003

Inter-areapositions 5,530 71.6 3,224

Financialliabilitiesheldfortrading 412 28.9 319

Otherliabilities 4,235 60.9 2,632

Economiccapitalallocated 4,720 (2.5) 4,843

32 Businessareas

Industry Trends

Theeconomicbackdropinthethirdquarter

of2012forEuropewasdifficult,withhighly

volatilemarkets.However,progresswas

clearlyachievedintheEuropeanproject

followingthesummitheldattheendofJune,

layingthefoundationsforfuturebanking

unioninthearea.

InTurkey,themostimportantfeatureoverthe

quarterwasthatthelessrestrictivemonetary

policyappliedbytheTurkishcentralbank.

Thisshouldhelpboosteconomicgrowth.

BaselIIregulationsbegantobeappliedin

July.Theimpacthasbeenslightlynegativeon

thecapitalratioofthesectorasawhole,but

positiveinthecaseofGaranti.

Finally,inChina thetwoconsecutiveinterest

ratecuts(inJuneandJuly),thereductions

of150basispointsinthereserveratio

announcedinDecemberandtheincreased

regulatoryflexibility,haveboostedbank

lending.Atthesametime,thefallinrealestate

priceshasstabilizedandanupturninlending

throughthebankingsystemishelpingto

moderatecreditgrowthintheinformal

financialindustry.

Activity

Atthecloseofthethirdquarterof2012,gross

lending to customersintheareaamounted

to€32,284m,ayear-on-yearfallof7.7%anda

quarterlyfallof4.6%,duetotheshrinkingof

thewholesalecustomerloanportfolio.Retail

loansgrewat4.9%inthelast12monthsand

remainsatverysimilarlevelsto30-Jun-2012.

Oncemore,oneofthestrongpointswasthe

positivetrendinbalancesfromTurkey,which

accountfor34%ofgrosscustomerlending

intheareaand56%oftheretailbusiness

inEurope(excludingSpain).Balanceswere

22.8%higherthanthefigureforthesamedate

in2011.

Withrespecttotherisk indicators,the

NPAratioclosed30-Sep-2012at1.7%,which

compareswiththefigureof1.4%attheend

ofthepreviousquarter.Thisslightincreaseis

mainlyduetolowerlending,asthevolume

ofNPAhasremainedfairlystable.The

coverageratioclosedthequarterat114%and

theriskpremiumat0.52%(119%and0.45%,

respectively,asof30-Jun-2012).


Eurasia

30-09-12 30-06-12 30-09-11





237277

299312273

249

197

321

366362

420

331317

245

0

50

100

150

200

250

300

350

400

450

1Q 2Q 3Q 4Q 3Q

+17.3%

2011 20121Q

893 1,048

321362

245

317 331

420

2Q

366

1Q 2Q 3Q 4Q 3Q

+13.0%

2011 20121Q

719 813

237

299

197

249273

312

2Q

277

Eurasia. Operating income(Million euros)

Eurasia. Net attributable profit(Million euros)

Eurasia highlights in the third quarter

• Favorabletrendinretailcustomeractivity.

• Positiveperformanceofthemorerecurrent

revenue.

• CNCBannounces28.9%year-on-yeargrowth

ofearnings.

• Strongsolvencyandliquiditypositionin

Garanti.

• Garantisuccessfullycompletesthelargest

EurobondissueevermadebyaTurkish

bank.

33Eurasia

Customer funds(includingreposandoff-balance-sheetfunds)

closedat€19,355m,averysimilarlevelto30-Jun-2012and

ayear-on-yearfallof18.2%.Thisisalsobasicallyduetothe

dropinwholesaledeposits.Turkey’scontributionoverthe

last12monthscontinuestobeverypositive.Customerfunds

consolidatedintheGroupincreased17.9%onthesamefigure

in2011.

Earnings

BothGarantiandCNCBcontinuedtoperformwellfrom

JanuarythroughSeptember2012.Asaresult,Eurasiahad

gross incomeof€1,624m,up22.2%overthelast12months,

despitethedropinNTIoverthequarter.

Operatingexpensesincreasedby32.2%inthesameperiod

duetotheinvestmentprojectsundertaken,mainlyinemerging

countries.However,theirgrowthrateslowedcomparedwith

previousquarters.Thus,operating incomeincreasedby17.3%

onthefigureforthesamedatein2011.Impairmentlosseson

financialassetsamounted€138m,andthenet attributable

profitintheareawas€813m,13.0%uponthefigurefor

January-September2011.

Europe generated42.4%ofthenetattributableprofitinthe

area,at€345m(up1.4%year-on-year).Ofparticularnoteinthe

areaisthecontinuedexcellentperformanceofTurkey,whose

cumulativeearningsof€233mwereovertwicethefigurefor

thefirstninemonthsofthepreviousyear(partlybecause

Garantihascontributedfortheninemonthsin2012,whilein

2011itbegantocontributeattheendofMarch).Intherest

ofEurope,thereducedactivityandmarketturbulenceofthe

previousquarterscontinued.Thishadanegativeimpacton

thenetattributableprofit,withacumulativefigureof€112m.

ThefollowingareworthhighlightingwithrespecttoGaranti

Bank:

• Lending hascontinuedthetrendseeninpreviousquarters

androseby9.6%onSeptember2011.Ofparticularnote

istheselectivegrowthinhigheryieldportfolios,basically

inlocalcurrency,withtheemphasisonprofitabilityrather

thanvolume.Thus,Garanticontinueditssuperiorincrease

inmortgagelending(up13%year-on-yearcomparedwith

thefigureof9.5%forthesectorasawhole),auto-finance

(up15.2%comparedwiththesectorfigureof10.7%)and

personalloans(up17.2%comparedwith16.9%forthe

sector).

• Adequatemixofwelldiversifiedandactivelymanaged

liabilities,withcustomerdepositsup10.6%overthelast

12months.Theincreasedgrowthcontinuestobefocused

onlower-costproducts,suchaslocal-currencycustomer

deposits,inwhichGarantihasperformednotablybetter

thanthesector.

• Inthethirdquarter,therewasalsoasignificantreductionin

thecost of liabilities,bothindepositsandrepos.Asaresult,

thespreadbetweentheyieldonassetsandthecostof

liabilitieshasincreased.

• Withrespecttoliquidity,Garantihasaloan-to-depositratio

ofunder100%.

• Intermsofsolvency,theGarantiGroupmaintainsits

positionasoneofthesoundestinthecountry,withacapital

ratioof16.4%accordingtoBaselIIcriteria.Inthetransition

Eurasia: Lendingbreakdown by geography(30-09-2012)

Eurasia: On-balance sheetcustomer funds breakdownby geography(30-09-2012)

Eurasia: Gross incomebreakdown by geography(30-09-2012)

Eurasia: Net attributableprofit breakdown bygeography(30-09-2012)

Rest of Europe 56%

Turkey34%

Asia10%

Rest of Europe43%

Turkey56%

Asia1%

Rest of Europe28%

Turkey41%

Asia31%

Rest of Europe14%

Turkey29%

Asia57%

Garanti. Significant data (30-09-12) (1)

30-09-12

Financial statements (million euros)

Attributableprofit 1,002

Totalassets 66,608

Loanstocustomers 38,336

Depositsfromcustomers 37,286

Relevant ratios (%)

Efficiencyratio 45.9

NPAratio 2.0

Other information

Numberofemployees 17,118

Numberofbranches 932

NumberofATMs 3,441

(1)BRSAdatafortheGarantiBank.

34 Businessareas

toBaselII,Garantihasincreaseditscapital

ratio,whileitfellintheindustryasawhole.

• Intermsofproductivityperemployeeand

branch,Garantileadstherankingforthe

sectorinTurkey.

• Inearnings,ithasoutstandinglysound

recurringrevenue.Netinterestincome

grewatayear-on-yearrateof23%thanks

toexcellentpricemanagementand

growthinactivity.Incomefromfeesand

commissions,appropriatelydiversified

betweendifferentproductsandsegments,

fellby1%duelargelytothecominginto

forceofanewregulationthatstipulates

newloansmustberecognizedonan

accrualbasis.Theabove,togetherwith

ahighlevelofdisciplineinexpenses,

highassetqualityandthelackofone-off

earnings,ledtoa€1,129mprofitofthe

GarantiGroupforthefirstninemonths

of2012,ayear-on-yearriseof5.6%.Thus,

Garantiremainsasthebiggestbankin

Turkeybyearnings.

Finally,Asia recordedacumulativenet

attributableprofitof€468m,23.3%upon

thefigure12monthsearlierthankstothe

excellentperformanceofCNCB.According

todataforthefirsthalfof2012,thebank

inChinaearned28.9%morethaninthe

sameperiodin2011.Thisisduetoincreased

recurringrevenue(netinterestincomeplus

feesandcommissions)asaresultofstrong

activity,andthepositiveperformanceofthe

intermediationbusiness.Operatingexpenses

roselessthangrossincome,andasaresult

efficiencyimproved.Loan-lossprovisions

increasedwiththeaimofraisingthecoverage

ratio.Amongthehighlightsofactivitywasthe

increaseindeposits,whichgrewmorethan

theloanbook(17%and13%inyear-on-year

terms,respectively).Finally,CNCBimproved

itssolvencyratio,whichstoodat13.4%atthe

closeofJune2012,usinglocalcriteria.

Highlights

• Garantisuccessfullycompletedthebiggest

Eurobondissue(USD1,350m)withthe

lowestcouponbyaTurkishbank.While

Europeanfinancialmarketsaregoing

throughanextraordinarilydifficultperiod,

internationalinvestorsarelookingtocredit

marketsinemergingcountriesandhave

placedagreatdealofconfidenceinthe

bankandtheTurkishfinancialsector.

• GarantiwasoneofthefirstTurkish

companiestoreceiveanInvestorsin

People(IIP)certification,risingfrom“silver”

in2009to“gold”statusin2012.Thismakes

itoneofthe615companieswiththis

statusoutofasampleofover24,000.The

awardrecognizesthevaluesthatitshares

withBBVA:superiorcustomer-centric

management,ahighlyqualifiedteam,and

efficientmanagementoftheorganization.

• Garantiwasnamed“BestTurkishBank,”

“BestCentralEuropeanandEastern

EuropeanBank”and“BestTurkishTrade

FinanceBank”byGlobal Finance.Itwas

alsorecognizedas“BestTurkishBank”by

EuromoneyandistheonlybankinTurkey

toreceiveawardsinfivedifferentcategories.

Garanti. Composition of assets and lending portfolio (1)

(September 2012)

Garanti. Composition of liabilities (1)

(September 2012)

Cash and banks 14.6%

Consumer 20.1%

Securities 24.1%

Commercial 38.3%

Corporate 15.9%

Credit cards 13.0%

SME 12.8%

Other 4.0% Loans to customers57.3%

Shareholders’ equity 13.0%

Deposits from customers56.0%

Bonds issued 3.9%

Fund borrowed 14.2%

Repo obligations 4.9%

Deposits from banks 2.1%

Other 5.9%

(1) Garanti Bank only. (1) Garanti Bank only.

Composition of assets Lending portfolio

35Mexico

Mexico


Units:

Mexico Banking Business Pensions and Insurance

Jan.-Sep. 12 ∆% ∆%(1) Jan.-Sep. 11 Jan.-Sep. 12 ∆% ∆%(1) Jan.-Sep. 11 Jan.-Sep. 12 ∆% ∆%(1) Jan.-Sep. 11

Net interest income 3,079 8.4 8.5 2,840 3,021 8.6 8.7 2,780 56 3.2 3.3 54

Netfeesandcommissions 938 3.6 3.7 906 886 4.6 4.7 847 52 (2.3) (2.2) 53

Nettradingincome 188 (28.6) (28.5) 264 136 (33.0) (33.0) 204 51 (15.2) (15.2) 60

Otherincome/expenses 212 29.1 29.2 164 (93) 9.4 9.5 (85) 345 16.5 16.6 296

Gross income 4,418 5.8 5.9 4,174 3,950 5.4 5.5 3,746 503 8.7 8.8 463

Operatingcosts (1,668) 9.8 9.9 (1,519) (1,584) 10.9 11.0 (1,428) (115) (4.5) (4.4) (121)

Personnelexpenses (715) 7.8 7.9 (663) (661) 8.8 8.9 (607) (54) (3.6) (3.5) (56)

Generalandadministrativeexpenses (856) 10.1 10.2 (778) (828) 11.2 11.3 (744) (60) (4.4) (4.3) (63)

Depreciationandamortization (97) 23.8 23.9 (78) (96) 25.3 25.4 (76) (1) (32.2) (32.1) (2)

Operating income 2,750 3.6 3.7 2,655 2,366 2.1 2.2 2,318 388 13.3 13.4 342

Impairmentonfinancialassets(net) (970) 6.0 6.1 (915) (970) 6.0 6.1 (915) - - - -

Provisions(net)andothergains(losses) (39) (20.9) (20.8) (50) (38) (20.2) (20.1) (47) (2) (34.3) (34.2) (3)

Income before tax 1,741 3.0 3.1 1,691 1,358 0.2 0.3 1,356 386 13.6 13.7 340

Incometax (439) 0.4 0.5 (437) (327) (3.3) (3.2) (338) (113) 13.3 13.4 (100)

Net income 1,302 3.9 4.0 1,254 1,032 1.3 1.4 1,018 273 13.8 13.9 240

Non-controllinginterests (2) 16.9 17.0 (2) (0) 1.6 1.7 (0) (2) 12.1 12.2 (2)

Net attributable profit 1,300 3.9 4.0 1,252 1,031 1.3 1.4 1,018 271 13.8 13.9 238

(1)Atconstantexchangerate.


Units:

Mexico Banking Business Pensions and Insurance

30-09-12 ∆% ∆% (1) 30-09-11 30-09-12 ∆% ∆% (1) 30-09-11 30-09-12 ∆% ∆% (1) 30-09-11

Cashandbalanceswithcentralbanks 5,149 2.0 (8.9) 5,047 5,149 2.0 (8.9) 5,047 - - - -

Financialassets 32,480 31.8 17.7 24,640 26,261 31.2 17.2 20,013 6,490 33.6 19.3 4,860

Loansandreceivables 42,362 28.1 14.5 33,057 41,701 27.3 13.7 32,754 731 108.1 85.8 352

Loansandadvancestocustomers 37,941 25.3 11.9 30,275 37,745 25.3 11.9 30,123 227 24.7 11.4 182

Loansandadvancestocreditinstitutionsandother 4,421 58.9 41.9 2,782 3,956 50.4 34.3 2,631 504 197.7 165.9 169

Tangibleassets 1,167 29.5 15.7 901 1,161 29.8 15.9 894 6 (3.0) (13.4) 6

Otherassets 3,266 75.2 56.5 1,864 3,134 6.4 (4.9) 2,944 156 40.7 25.7 111

Total assets/Liabilities and equity 84,424 28.9 15.1 65,509 77,405 25.5 12.1 61,653 7,384 38.6 23.8 5,329

Depositsfromcentralbanksandcreditinstitutions 14,913 85.0 65.2 8,062 14,913 85.0 65.2 8,062 - - - -

Depositsfromcustomers 36,131 15.9 3.5 31,170 36,174 16.0 3.6 31,189 - - - -

Debtcertificates 4,362 12.2 0.2 3,887 4,362 12.2 0.2 3,887 - - - -

Subordinatedliabilities 4,327 95.8 74.9 2,210 4,327 28.3 14.6 3,373 - - - -

Financialliabilitiesheldfortrading 6,667 8.4 (3.2) 6,153 6,667 8.4 (3.2) 6,153 - - - -

Otherliabilities 12,827 24.0 10.7 10,348 6,134 7.5 (4.0) 5,707 7,072 42.1 26.9 4,977

Economiccapitalallocated 5,198 41.2 26.2 3,680 4,829 47.1 31.4 3,283 312 (11.3) (20.7) 352


36 Businessareas

Industry Trends

Mexico’sfinancial system remainsstableand

sound.Thisisreflectedinitsadequateliquidity

position,anditshighsolvency,whichisfar

abovetheregulatoryminimum.

Commercialbanklendingtotheprivate

sectorcontinuestoexpandsteadily.At

thecloseofAugustitregisteredthe19th

successivemonthofdouble-digitgrowth

rates.Thebestperformingportfoliosare

consumerfinance(payrollaccountsand

personalloans)andcorporatelending.

Incustomer deposits,theretailsegmentalso

performedwell,whiletimedepositsgrew

ataslowerpaceastheywerereplacedby

investmentcompanies(SIDs).

Boththefixingandaveragepeso/euro

exchange rates appreciatedoverthe

quarterandthelast12months.Thishas

hadapositiveimpactonthebalancesheet

andactivityforthelast12monthsand

thequarter,andtoalesserextentonthe

Group’sincomestatement.Unlessotherwise

indicated,allcommentsbelowonpercentage

changesrefertoconstantexchange

rates,withtheaimofprovidingabetter

understandingoftheperformanceofthe

businessinMexico.

Activity

AtthecloseofSeptember2012,the loan book

inMexicoamountedto€39,719m,ayear-on-year

growthof11.5%.

Retail lendingcontinuestobeparticularly

strong,withgrowthoverthesameperiodof

12.6%to€20,831m.Withinthisportfolio,there

wasoutstandinggrowthinloanstosmall

businesses,whichwentup31.4%year-on-year.

Consumerfinancewasalsoverystrong,with

ariseof18.3%.Residentialmortgagesgrowth

wasstablecomparedwithpreviousquarters

(up4.2%year-on-year).Itisworthnotingthat

duringthethirdquarter,theMexicoarea

grantedthelargestnumberofnewmortgage

loansyeartodate.


Mexico

30-09-12 30-06-12 30-09-11





423446432496

394440416

939910901917866

905881

0

100

200

300

400

500

600

700

800

900

1.000

Mexico. Operating income(Million euros at constant exchange rate)

Mexico. Net attributable profit(Million euros at constant exchange rate)

(1) At current exchange rate: +3.6%. (1) At current exchange rate: +3.9%.

1Q 2Q 3Q 4Q 3Q

+3.7% (1)

2011 20121Q

2,653 2,750

939901881 905 866917

2Q

910

1Q 2Q 3Q 4Q 3Q

+4.0% (1)

2011 20121Q

1,250 1,300

423432416 440394

496

2Q

446

Mexico highlights in the third quarter

• Strongperformanceoftheretailportfolio,

especiallyconsumerandSME.

• Double-digitgrowthofretailcustomer

demanddeposits.

• Positiveperformanceoftheinsurance

business.

• Sustainedrecurringrevenue.

• Successfulissuanceofcapitalnoteson

internationalmarkets.

37Mexico

quarters,withariseof9.9%to€1,668m.This

increasecanbeexplainedbythesteady

riseininvestmentstotakeadvantageofthe

opportunitiesofferedbythelocalmarket.The

numberofemployeesincreasedby3,845in

thelast12months,and538newATMswere

installed.Despitetheabove,theMexicoarea

stillhasoneofthebestefficiency ratiosinthe

localmarket,at37.8%attheendofthethird

quarterof2012.

Theserevenueandexpensesfiguresresulted

inanoperating incomeof€2,750m,a

year-on-yearriseof3.7%.ExcludingNTI,which

isamorevolatilecomponent,theincrease

was7.2%.

Impairmentlossesonfinancialassets

increasedataslowerratethancommercial

activity,withanaccumulatedtotalthrough

Septemberof€970m,ariseof6.1%on

thefigureforthesameperiodin2011.

Riskmanagementintheareacontinues

tobeadequate,ascanbeseeninthelow

cumulativeriskpremiumatthecloseof

Septemberof3.46%.TheNPAratioclosedas

of30-Sep-2012at4.1%andthecoverageratio

at107%.

Finally,Mexicogeneratedanet attributable

profitinthefirstninemonthsof2012of

€1,300m,4.0%abovetheresultinthesame

periodin2011.

Pensions and Insurance

Inthefirstninemonthsof2012,thePensions

andInsuranceunitinMexicogeneratedanet

attributableprofitof€271m,ariseof13.9%on

thesameperiodin2011.

Thepension businesssawyear-on-year

growthinitsearningsof27.2%,thankstothe

stronggrowthincommercialactivity.

Theinsurancebusinessgeneratedanet

attributableprofitof€201m,anincrease

of9.9%overtheprevious12months.This

resulthasbeenboostedbytheoutstanding

earningsfromtheILP,Creditón Nómina,

VidaSegura,HogarSeguroandTransacción

Seguraproducts,aswellasthelowerlevelsof

claimsreportedduetosomeimprovements

implementedbytheinsurancecompany.

Highlights

• TheDinero Móvil BBVA Bancomerplan

launchedinSeptember2012willboost

Lendingto Wholesale customershasalso

continuedtogrow,withayear-on-yearriseof

10.6%to€16,128m.Corporateand

public-sectorlendingperformedparticularly

well,withdouble-digitgrowthsincetheclose

of2011.Lendingtolargecorporationshas

alsocontinuedtobeboostedthroughthe

placementofbondsonthecapitalmarkets.

Inthethirdquarter,Mexicomaintainedits

leadingpositioninthisrespectbyplacingUSD

2,631m.

Customer funds(on-balancesheetdeposits,

repos,mutualfundsandinvestment

companies,andpensionfunds)grew7.2%

year-on-yearto€76,314matthecloseof

September2012.

Demanddeposits(currentandsavings

accounts)grew6.8%,withaparticularly

notableincreaseincustomerfundsgathered

bythecommercialnetwork,withariseof

12.9%onthesamedatein2011.Mexicois

maintainingitsstrategyofincreasingthe

profitabilityofliabilities.Timedepositshave

fallenby17.9%year-on-year.Theywerepartly

offsetbytheincreaseinmutualfunds(up

8.6%).Asaresultoftheabove,attheclose

ofSeptember,themixofcustomerdeposits

maintainedaprofitablestructurewith78%

beinglow-costdeposits,andtheremaining

22%timedeposits.

Earnings

Inthefirstninemonthsoftheyear,theMexico

areacontinuedtogeneraterecurringrevenue

atagoodlevel.Netinterestincomeamounted

to€3,079m,anincreaseof8.5%year-on-year,

despitethecurrentlowinterestratesin

Mexico.

Incomefromfeesandcommissions

amountedto€938m,ayear-on-yearriseof

3.7%.Thislineofbusinesswasboostedby

theuseofcreditanddebitcardsandmutual

funds.

NTIrecordeditsbiggestquarterlygrowth

sofarthisyear,nearlydoublingthefigure

forthesecondquarterin2012.However,in

cumulativetermsitcontinuestopost

year-on-yearfalls,duetothehighlevels

achievedinthesameperiodin2011.There

wasariseof29.2%inotherrevenue.Once

more,itisimportanttonotethepositive

performanceoftheinsurancebusiness.

Operatingexpensesgrewatpractically

thesameyear-on-yearrateasinprevious

38 Businessareas

accesstobankingfornewusers,andthus

contributetoincreasefinancialinclusion

andthelevelofbankingpenetrationinthe

country.Theinnovationintroducedbythe

serviceistheabilitytosendmoneytoany

partofMexicoviatheInternet,ATMsor

cellphones.Therecipientofthedeposit

receivesamessagewithapasswordgiving

accesstothecashthroughATMsinthe

BBVABancomernetwork,withouttheneed

foradebitcardorabankaccount.

• InJuly2012,BBVABancomersuccessfully

issued10-yearadditionalcapitalnotesfor

USD1billionontheinternationalmarkets.

Theissuewas3.5timesoversubscribed,

thusdemonstratingthehighlevelof

investorconfidenceinthebankandinthe

country.InSeptember2012theissuewas

renewedforanotherUSD500m,alsoon

theinternationalmarkets.Onthisoccasion

theissuewas3timesoversubscribed,

oncemoreconfirmingtheconfidence

ofinvestorsinthegrowthprospectsand

positiveperformanceoftheBBVAfranchise

andthecountryoverall.

• TheMexicanCenterforPhilanthropy

(Cemefi),AllianceforSocialResponsibility

inMexico(AliaRSE)andForumEmpresa

havegrantedBBVABancomerthe“Best

CorporateSocialResponsibilityPractice”

awardinthe“Communityengagement”

categoryforthemutualfundB+Educa,

thefirstofitskindcreatedbyMexico

tosupportthePor los que se quedan

(Forthoseleftbehind)socialintegration

scholarshipprogram.

• Finally,theGroup’sbusinesswithSMEs

inMexicohasbeenveryintense,and

ledtoitreceivingthe“SME2012”award

asthebankgrantingmostloansto

SMEsandentrepreneurs.Newsolutions

andvalue-addedserviceshavebeen

launchedforthissegmentwiththeaimof

increasingtheirbusinessefficiencyand

competitiveness.

39SouthAmerica

SouthAmerica


Units:

South America Banking business Pensions and Insurance

Jan.-Sep. 12 ∆% ∆%(1) Jan.-Sep. 11 Jan.-Sep. 12 ∆% ∆%(1) Jan.-Sep. 11 Jan.-Sep. 12 ∆% ∆%(1) Jan.-Sep. 11

Net interest income 3,087 36.9 25.6 2,255 3,042 37.6 26.3 2,211 45 4.9 (3.0) 43

Netfeesandcommissions 982 25.8 16.2 780 704 25.5 16.6 561 283 27.1 15.7 223

Nettradingincome 367 3.4 (4.6) 355 325 (2.8) (10.9) 335 42 101.2 106.5 21

Otherincome/expenses (158) (10.4) (21.4) (176) (292) 1.5 (7.7) (288) 141 17.6 13.3 120

Gross income 4,278 33.1 22.7 3,214 3,779 34.1 23.5 2,818 511 25.7 17.2 406

Operatingcosts (1,814) 24.0 15.2 (1,463) (1,611) 27.8 18.4 (1,261) (180) 1.3 (5.6) (178)

Personnelexpenses (921) 23.4 15.0 (747) (812) 26.9 18.0 (640) (90) 2.9 (4.4) (87)

Generalandadministrativeexpenses (762) 26.2 17.2 (604) (675) 31.4 21.6 (514) (83) (2.3) (8.7) (85)

Depreciationandamortization (131) 16.3 6.6 (113) (124) 15.5 5.8 (107) (7) 32.2 22.4 (6)

Operating income 2,463 40.7 29.0 1,751 2,168 39.2 27.5 1,558 330 44.7 35.0 228

Impairmentonfinancialassets(net) (409) 26.9 15.7 (322) (409) 26.8 15.6 (322) - - - -

Provisions(net)andothergains(losses) (128) 194.0 166.3 (44) (124) 165.4 138.4 (47) (3) n.m. n.m. 2

Income before tax 1,926 39.1 27.7 1,385 1,635 37.6 26.3 1,188 327 42.2 32.7 230

Incometax (433) 53.4 40.6 (282) (363) 47.6 35.9 (246) (81) 67.3 53.5 (48)

Net income 1,493 35.4 24.3 1,103 1,273 35.0 23.8 943 246 35.5 27.0 181

Non-controllinginterests (479) 37.0 25.0 (349) (419) 36.2 23.8 (308) (59) 39.7 30.6 (42)

Net attributable profit 1,014 34.7 24.1 753 853 34.4 23.8 635 187 34.3 25.9 139

(1)Atconstantexchangerates.


Units:

South America Banking business Pensions and Insurance

30-09-12 ∆% ∆% (1) 30-09-11 30-09-12 ∆% ∆% (1) 30-09-11 30-09-12 ∆% ∆% (1) 30-09-11

Cashandbalanceswithcentralbanks 9,261 18.2 12.1 7,833 9,261 18.2 12.1 7,833 - - - -

Financialassets 11,584 17.1 7.2 9,891 10,052 19.1 9.4 8,441 1,518 9.0 (1.6) 1,393

Loansandreceivables 50,245 29.3 19.7 38,853 49,821 30.3 20.6 38,238 306 (20.2) (22.7) 383

Loansandadvancestocustomers 45,417 29.3 19.3 35,135 45,358 29.4 19.3 35,062 60 (30.1) (32.3) 85

Loansandadvancestocreditinstitutionsandother 4,828 29.9 24.0 3,718 4,463 40.5 35.2 3,176 246 (17.4) (20.0) 298

Tangibleassets 880 20.8 13.3 728 826 22.1 14.9 677 53 4.1 (7.7) 51

Otherassets 2,107 (14.7) (21.5) 2,469 2,044 1.8 (8.0) 2,008 165 8.6 0.5 151

Total assets/Liabilities and equity 74,077 23.9 14.8 59,774 72,005 25.9 16.7 57,196 2,042 3.2 (5.5) 1,979

Depositsfromcentralbanksandcreditinstitutions 6,307 12.2 0.5 5,623 6,307 12.2 0.5 5,622 1 (79.9) (79.1) 5

Depositsfromcustomers 49,434 27.2 18.9 38,866 49,591 27.2 19.0 38,983 - - - -

Debtcertificates 3,459 61.4 44.4 2,144 3,459 61.4 44.4 2,144 - - - -

Subordinatedliabilities 1,223 (19.4) (26.1) 1,518 1,223 12.4 (0.2) 1,088 - - - -

Financialliabilitiesheldfortrading 1,127 (18.0) (27.9) 1,373 1,127 (18.0) (27.9) 1,373 - - - -

Otherliabilities 9,421 24.3 15.3 7,582 7,350 30.9 22.4 5,616 1,887 12.0 2.6 1,685

Economiccapitalallocated 3,106 16.4 8.0 2,668 2,948 24.4 15.6 2,370 154 (46.6) (51.4) 289


40 Businessareas

Industry Trends

Inthethird quarter of 2012thefinancial

systeminSouthAmericaremainedsound.

Lendinghascontinuedtogrow,boostedby

monetarypoliciesfocusedonsupporting

economicactivity.Lendingcontinuedto

growatafastpaceinallthecountriesinthe

region,particularlyinVenezuela,Uruguayand

Argentina,andalsoinColombia,Chileand

Peru,althoughatlowerrates.Risingdeposits

havealsoreflectedstrongeconomicactivity,

withratessimilartothoseforlending.Peru

hasannouncedmeasuresaimedatincreasing

itsreserverequirements.InArgentina,the

CentralBankhasestablishedtheobligation

forbankstokeepaminimumcreditlinefor

SMEsbasedontheirdeposits.Perutogether

withArgentinahavemadechangestothe

methodusedforcalculatingtheirreserve

requirements,whichwillresultinanincrease

inthelevelofreserves.

Withrespecttoexchange ratemovements,

thereweregeneralappreciationsinthe

averageratesforcurrenciesintheregion,

bothinthequarterandoverthelast12

months.Intermsoffinalexchangerates,there

wasanotablegeneralappreciationoverthe

year,butoverthequarterthiswaslimited

totheChileanpeso.Theabovehashada

positiveimpactontheyear-on-yearfigures

infinancialstatementsandbusinessactivity

intheareaandonthequarterlyfiguresin

theincomestatement.However,theeffect

ofexchangeratesonthebalancesheetand

activityinthequarterisnegative.Unless

indicatedotherwise,allcommentsbelow

onpercentagechangesrefertoconstant

exchangerates,withtheaimofprovidinga

betterunderstandingoftheperformanceof

thebusinessinSouthAmerica.

Activity

Thepositiveperformanceofbusinessactivity

inSouthAmericacontinuedinthethird

quarter of 2012,inbothlendingandcustomer

deposits.

Gross customer lendingclosedSeptember

withabalanceof€46,961m,ayear-on-year

growthof19.0%.Thisgrowthhasbeen

leveragedinthesegmentofprivateindividuals

(up32.0%),thankstothepositiveperformance

ofconsumerfinanceandcreditcards.

303333378

275247273297

822811831

716

625603682

0

100

200

300

400

500

600

700

800

900

South America. Operating income(Million euros at constant exchange rates)

South America. Net attributable profit(Million euros at constant exchange rates)

(1) At current exchange rates: +40.7%. (1) At current exchange rates: +34.7%.

1Q 2Q 3Q 4Q 3Q

+29.0% (1)

2011 20121Q

1,910 2,463

822831

682603 625

716

2Q

811

1Q 2Q 3Q 4Q 3Q

+24.1% (1)

2011 20121Q

818 1,014

303378

297 273 247 275

2Q

333


South America

30-09-12 30-06-12 30-09-11





South America highlights in the third quarter

• Favorableperformanceoflendingactivity,

highlyleveragedonloanstoindividuals.

• Positiveperformanceofcustomerdeposits,

especiallythosewithlower-cost.

• Excellentpricemanagement.

• Goodassetquality.

• Successfulissuanceofcapitaloninternational

markets.

41SouthAmerica

premiumthroughSeptemberclosedat1.26%(1.12%attheend

ofthefirsthalfof2012).

Banking business

Thebankingbusinessgeneratedanetattributableprofitof

€853moverthefirstninemonthsof2012,ayear-on-year

increaseof23.8%.Followingpreviousquarters,themost

significantaspectsinthequarterforeachofthebanksare

detailedbelow.

InArgentinatherewasoutstandinggrowthinallrevenuelines,

aboveallnetinterestincome,whichwasup48.9%thanksto

strongbusinessactivitythroughouttheyear,andthefavorable

performanceofcustomerspreads.Netfeesandcommissions

andNTIhaveincreasedatagoodpace,offsettinghigher

expensesandloan-lossprovisions,thelatterlinkedtoincreased

businessactivity.Asaresult,thenetattributableprofitin

Septemberwas€152m,ayear-on-yearincreaseof39.7%.

BBVAFrancéscontinuestobeextremelyactivefromthe

commercialpointofview.Worthnotingoverthequarterwas

thelaunchofnewcorporatecreditcardslinkedtoLANPASS,

VisaCorporateandVisaBusiness.Theyofferspecialbenefits

suchascash-back,throughwhichcompaniesgetback5%

oftheirLANticketpurchasesandaccumulateLANPASS

kilometers.

LendingactivitycontinuesstronginBBVAChile,witharise

of15.8%inyear-on-yearterms,whichisabovethefigurefor

thebankingsystemasawhole.Asaresult,themarketshare

initsloanbookhasincreasedby29basispointsoverthelast

year(latestavailabledatatoJuly).Therewasaparticularly

significantincreaseinthemarketshareinconsumerfinance

(up66basispoints)andtradefinance(up37points).Customer

deposits,excludingrepos,wereup10.4%inthesameperiod,

andgained36basispointsofmarketsharethankstothegood

performanceofsavingsaccounts(up35points)andtime

deposits(up53points).Theperformanceofthemarketsinthe

firstninemonthsof2012,togetherwithnarrowingspreads,

haveledtoafallof1.9%innetinterestincomeonthesame

periodthepreviousyear.Theabovefactors,combinedwith

reducedfeeincomeandNTIandhigherexpensesand

loan-lossprovisions(thelattercloselylinkedtoincreased

businessactivity),resultedinthenetattributableprofit

dropping15.7%year-on-yearto€81m.Theincreasedexpenses

canbeexplainedbytheinvestmentsthebankisundertaking

intechnologytomakelifeeasierforitscustomers.Amongthe

plansbeingundertakenarethefollowing:launchofvarious

mobilebankingapplications;openingofthefirst“Easy”branch

inLatinAmerica,withextendedopeninghoursandtheuseof

advancedtechnology;andanewcustomerservicephoneline

forpreferredcustomers.

InColombia,lendinghascontinuedtogrowatafastpace(up

14.3%year-on-year),leveragedmainlyontheportfolioofprivate

individuals(up26.0%).Thishasledtoasignificantgainin

marketshareoverthelastyearinallbusinesslines(consumer

financeup105basispoints,creditcardsup123basispoints

andmortgageloansup17basispoints).Riskmanagement

Therewasanotableyear-on-yeargaininmarketshareinthe

individualssegmentof29basispoints,accordingtothelatest

informationavailableforJuly.

Theabovementionedincreasedmarketshareoftheloan

bookhasnotbeenattheexpenseofquality,asshownby

theimprovementintheNPA ratio,whichfellto2.2%asof

30-Sep-2012(2.3%asof30-Jun-2012),andinthecoverage

ratio,whichincreasedto142%overthesameperiod(139%

atthecloseofthefirsthalfof2012).Itisworthnotingthat

thispositiveperformanceisoncemoreduetorigorousrisk

admissionpoliciesandoutstandingmanagementofrecoveries.

On-balance-sheet customer deposits(excludingrepos)have

maintainedtheirrateofgrowth,withayear-on-yearincreaseof

20.1%asof30-Sep-2012,closingSeptemberat€52,626m.This

increaseismainlytheresultofariseinlower-costtransactional

deposits(up22.6%),whichhavegained16basispointsin

marketshareoverthelast12months(alsoaccordingtodata

asofJuly2012).Includingtheassetsundermanagementby

mutual fundsandrepos,customerfundsmanagedbythe

banksinSouthAmericaamountedto€56,158m,up19.0%on

thesamedatein2011.

Earnings

EarningsinSouthAmericahavecontinuedtoperformvery

welleachquarter.Thisexplainstheregion’ssteadilyincreasing

contributiontoBBVA’sprofits.Inthefirstninemonthsof2012

thenetattributableprofitintheregionwas€1,014m(up24.1%

year-on-year).

Theoutstandingperformanceofrevenuesisexplained

bysustainedgrowthinactivity,combinedwithadefense

ofspreadsthroughgoodpricemanagement.Cumulative

netinterestincomethroughSeptember2012amountedto

€3,087m,25.6%uponthesameperiodthepreviousyear.

Netfeesandcommissionsincreasedby16.2%overthesame

periodto€982m.NTIfell4.6%onthefirstninemonthsof

2011,whichincludedtherevaluationofBBVAProvincial’sUS

dollarpositions.Inadditiontothis,theinsurancebusinessalso

performedwell.Asaresult,thecumulativegrossincomefor

theareaincreasedby22.7%year-on-yearto€4,278m.

SouthAmericahascontinuedtodevelopandimplement

itsexpansionandtechnologicaltransformationplans

designedtotakeadvantageofthegrowthopportunities

intheregionresultingfromstrongeconomicactivityand

increasedbankingpenetration.Thesefactors,combinedwith

theinflationinthearea,explainwhyoperatingexpenses

haveremainedhigh,withayear-on-yearincreaseof15.2%

to€1,814m.Specifically,workisbeingcarriedouttoimprove

thequalityofcustomerservice,basedonthecorporate

customer-centricpolicy.However,higherrevenuesmean

thattheefficiency ratioremainsat42.4%,asimilarlevelto

previousquarters,andoperating incomeat€2,463m,a

year-on-yearincreaseof29.0%.

Finally,impairment losses on financial assets increased15.7%

to€409m,inlinewithbusinessactivity.Thecumulativerisk

42 Businessareas

periodin2011.Theresultsfromthepensions businesswere

particularlystrong,withanetattributableprofitof€121m(up

53.7%year-on-year),basicallythankstostrongincomefrom

feesandcommissionsandtightcontrolofexpenses.

Theinsurance business contributedanetattributableprofit

of€67m,withahighlevelofwrittenpremiums.Thisreflects

itscommercialstrengthandoffsetslowerfinancialearnings.

Bycompanies,Seguros Argentinahadanetattributableprofit

of€5.4mfollowingthesaleofARTandRetiro,thankstoits

goodcommercialperformanceandmoderatelevelofclaims.

Chilehadanetattributableprofitof€33m,Colombiaposted

anotablegrowthinprofitto€22mandSegurosProvincialin

Venezuelaclosedat€6.5m.

Highlights

• BBVAContinentalhasraisedUSD500millionina

successful10-yearbondissueatoneofthelowestyields

inthePeruvianmarket.Thisdemonstratesitssoundness

andtheconfidenceofinternationalmarketsinthePeruvian

franchise.Thefundsobtainedwillbeusedtomeetdemand

forcreditinthecountry.

• Forthethirdyearinarow,BBVAChilehasbeenranked

asoneofthemostsociallyresponsiblecompaniesin

thecountry,accordingtothe2012NationalBusiness

ResponsibilityRankingpublishedbyFundaciónProhumana

andthemagazineQué Pasa.Themainfactorscontributing

totheawardhavebeen:theNiños Adelante (Forward,

children)program;theworkoftheCorporateVolunteer

scheme;theapplicationofstrictprinciplesandethical

standardsinitsactivity;theglobalEco-efficiencyplan;

continuousimprovementinprofessionalstandards;andthe

creationofanequalityplananddiversitycommittee.

• BBVAChilehasforthefirsttimebeenlistedintheBusiness

CorporateReputationMonitor(Merco)asoneoftheleading

andmostrespectedcompaniesinthecountry.

continuestobeadifferentiatingfactorinthelocalmarket,

withaNPAratiothatisfarbelowthatofthebankingsectoras

awhole.Therehavebeensignificantincreasesincustomer

fundsinyear-on-yearterms(demanddepositsandsavings

accountsup13.5%andtimedepositsup54.2%).Asinthe

caseoflending,therehasbeenasignificantgaininmarket

shareoverthesameperiod(demanddeposits24basispoints,

savingsdeposits164basispointsandtimedeposits139basis

points).Themostsignificantfactorinearningshasbeen

thehighgrowthofnetinterestincome,andthusofgross

income(up14.1%and17.9%respectively).Thishasboostednet

attributableprofitto€203m,ariseof17.7%onthefigureforthe

sameperiodin2011.

InPeru,increasedactivityhasbeenreflectedinrisesinall

revenuelines.Lendingincreasedby11.6%onthecloseof

September2011,customerfundsby9.7%andgrossincomeby

14.8%.Asaresultoftheincreasedrevenue,combinedwiththat

ofexpensesandloan-lossprovisions,thenetattributableprofit

was€123m,ayear-on-yeargrowthof7.6%.

Venezuelacontinuestoshowsignsofstrongbusinessactivity.

Lendingincreasedby46.9%since30-Sep-2011,andcustomer

fundsby49.3%.Asaresult,netinterestincomeroseby46.4%

inyear-on-yearterms,andnetfeesandcommissionsby40.4%.

NTIfell,asthefiguresforfirstquarterof2011reflectedthe

effectoftherevaluationofUSdollarpositions.Withincreased

expensesandlowerloan-lossprovisions,thenetattributable

profittotaled€240m,ariseof65.2%onthesameperiodin

2011.

Amongtheotherbanks,BBVA Panamareportedearningsof

€23m,BBVA Paraguay€10mandBBVA Uruguay€21m.

Pensions and Insurance

ThePensionsandInsurancebusinessinSouthAmerica

continuedtoperformwellinthefirstninemonthsof2012,with

anetattributableprofitof€187m,ariseof25.9%onthesame

South America. Data per country (banking business, pensions and insurance) (Millioneuros)

Operating income Net attributable profit

Country Jan.Sep. 12 ∆% ∆% at constant exchange rates Jan.-Sep. 11 Jan.-Sep. 12 ∆%

∆% at constant exchange rates Jan.-Sep. 11

Argentina 342 40.1 39.3 244 156 19.5 18.8 131

Chile 379 10.6 4.0 343 190 10.9 4.3 171

Colombia 429 48.4 33.0 289 250 36.1 22.0 184

Peru 502 36.9 19.6 367 142 34.6 17.6 105

Venezuela 764 64.8 50.1 464 246 77.7 61.8 139

Othercountries(1) 47 5.8 (3.9) 44 30 26.9 13.3 23

Total 2,463 40.7 29.0 1,751 1,014 34.7 24.1 753

(1)Panama,Paraguay,Uruguay,BoliviaandEcuador.Additionally,itincludeseliminationsandothercharges.

43TheUnitedStates


Units:

The United States BBVA Compass

Jan.-Sep. 12 ∆% ∆% (1) Jan.-Sep. 11 Jan.-Sep. 12 ∆% ∆% (1) Jan.-Sep. 11

Net interest income 1,285 5.7 (3.6) 1,216 1,112 5.9 (3.0) 1,044

Netfeesandcommissions 463 (3.6) (11.6) 480 388 (1.8) (10.7) 396

Nettradingincome 121 10.2 1.3 109 97 30.5 22.0 72

Otherincome/expenses (43) (28.9) (35.2) (60) (39) (30.1) (39.3) (58)

Gross income 1,826 4.6 (4.4) 1,745 1,558 6.5 (2.4) 1,454

Operatingcosts (1,191) 8.3 (1.1) (1,100) (1,042) 7.6 (1.2) (960)

Personnelexpenses (672) 12.6 2.9 (597) (590) 11.1 2.3 (525)

Generalandadministrativeexpenses (386) 2.3 (6.5) (377) (322) 2.8 (6.1) (313)

Depreciationandamortization (134) 6.0 (3.4) (126) (130) 5.4 (3.5) (122)

Operating income 634 (1.7) (10.0) 645 517 4.1 (4.7) 494

Impairmentonfinancialassets(net) (92) (67.5) (70.4) (285) (64) (68.8) (78.5) (273)

Provisions(net)andothergains(losses) (46) 99.8 88.4 (23) (39) n.m. n.m. (5)

Income before taxes 496 46.8 34.8 338 413 81.8 73.9 216

Incometaxes (155) 61.9 48.8 (96) (129) 112.4 104.8 (57)

Net incomes 341 40.9 29.3 242 284 70.8 62.7 159

Non-controllinginterests - - - - - - - -

Net attributable profit 341 40.9 29.3 242 284 70.8 62.7 159


TheUnitedStates


Units:

The United States BBVA Compass

30-09-12 ∆% ∆% (1) 30-09-11 30-09-12 ∆% ∆% (1) 30-09-11

Cashandbalanceswithcentralbanks 4,514 58.5 51.8 2,847 3,538 89.1 90.6 1,778

Financialassets 7,905 (2.3) (6.5) 8,096 7,821 7.8 4.1 7,196

Loansandreceivables 39,731 (2.1) (6.2) 40,564 35,375 11.2 7.7 31,445

Loansandadvancestocustomers 37,525 (3.9) (8.0) 39,054 33,532 8.7 5.0 30,588

Loansandadvancestocreditinstitutionsandother 2,206 46.1 39.9 1,510 1,842 103.4 105.8 857

Inter-areapositions - - - 29 414 n.m. n.m. 2

Tangibleassets 776 (0.8) (5.0) 782 762 1.9 (2.2) 746

Otherassets 5,993 165.3 154.0 2,259 1,820 (9.1) (13.9) 2,024

Total assets/Liabilities and equity 58,919 8.0 3.4 54,577 49,729 13.6 10.3 43,190

Depositsfromcentralbanksandcreditinstitutions 7,716 (15.8) (19.4) 9,161 4,602 7.1 3.3 4,265

Depositsfromcustomers 38,435 4.6 0.1 36,753 37,590 14.4 11.1 32,411

Debtcertificates - - - 348 - - - -

Subordinatedliabilities 892 (22.8) (26.1) 1,156 831 (9.7) (14.6) 932

Inter-areapositions 621 n.m. n.m. - - - - -

Financialliabilitiesheldfortrading 444 1.2 (3.1) 439 434 2.0 (2.1) 424

Otherliabilities 7,811 120.3 110.9 3,546 3,814 37.0 35.1 2,703

Economiccapitalallocated 3,001 (5.5) (9.5) 3,174 2,458 0.1 (4.1) 2,455


44 Businessareas

Industry Trends

Thehealthofthebanking systemcontinues

toimproveintheUnitedStates.Thenumber

ofbanksexperiencingproblemshas

dropped.Inaddition,asset qualityingeneral

maintainsapositivetrend,withtheNPAratio

fallingfortheninthquarterinarowto5.05%,

thelowestfiguresincethefourthquarterof

2008.Assetqualityhasthereforebecome

afavorableaspectforagrowingmajority

ofbankswhich,generallyspeaking,have

returnedtonormallevelsofprovisionsand

reducedtheirNPAratios.

Asregardslending,businessandindustrial

sectorandcarfinancecontinuetopost

betterresultsthanothersegments.The

residentialmortgageportfoliohasalsoseen

significantgrowth,asithasbenefitedfrom

refinancingassociatedwithgovernmentaid.

However,asawhole,growthinlendinghas

beenmodestinthethirdquarterof2012,as

ithasbeennegativelyaffectedbypressures

onprices.

Finally,liquidity and capital levelsareat

recordlevelsinthecountry’sfinancialindustry,

withcapitalallocationimproved.

Asaresult,andaccordingtodataforthe

firsthalfof2012,thebankingsectorin

theUnitedStatespostedbetterearnings

thaninpreviousperiods,althoughinterest

ratesareexpectedtoremainlowandexert

pressuresonnetinterestincomeintheshort

term.Incomefromfeesandcommissions

willalsobelowerasaresultofregulatory

changes.Againstthisbackground,banks

haveonceagainfocusedtheirattentionon

costmanagement.Streamliningofbranches

andinvestmentintechnologyhavereceived

specialattention.

Activity

Followingtheagreementreachedwith

OrientalFinancialGrouptosellthePuerto

Ricobusiness,theassetsofthisunithave

beenclassifiedasnon-currentassetsheldfor

sale.Practicallyalltheinformationmentioned

below,unlessotherwiseindicated(andasin

thepreviousquarter)thereforereferstoBBVA

Compasswhich,asofSeptember30,2012

accountedfor94%ofthebusinessvolumein

thearea(meaningthesumofgrosslending


The United States

30-09-12 30-06-12 30-09-11





The United States. Operating income(Million euros at constant exchange rate)

The United States. Net attributable profit (adjusted)(Million euros at constant exchange rate)

93

130117

7966

96102

187

227221

187212

235258

0

100

200

300

(1) At current exchange rate: +40.9%.(1) At current exchange rate: –1.7%.

1Q 2Q 3Q 4Q 3Q

–10.0% (1)

2011 20121Q

705 634

187

221

258235

212187

2Q

227

1Q 2Q 3Q 4Q 3Q

+29.3% (1)

2011 20121Q

264 341

93117

102 96

6679

2Q

130

The United States highlights in the third quarter

• Sustainedgrowthoftheloanbook.

• Increaseincustomerdeposits.

• Soundcapitalratios.

• Significantincreaseinearningsthanksto

favorableevolutionofprovisions,costdiscipline

andrevenueresilience.

45TheUnitedStates

andisgraduallyincreasingitscontributionto

theGroup’searnings.

Withrespecttorevenue,netinterestincome

intheareacontinuedtobenegativelyaffected

bytheGuarantyrun-off,thewrite-down

ofsecuritiesportfoliosandthecurrent

environmentmarkedbylowinterestrates

andapracticallyflatcurve.Howeverthere

wasalsoapositiveimpactfromincreased

lendingvolumeandayear-on-yearreduction

inthecostofdeposits.Inaddition,newloans

showedatrendtowardsimprovedyields.

Asaresult,thisheadingremainedatthe

levelsseeninpreviousquartersandstoodat

€1,285m,down3.6%ontheamountposted

forthesameperiodin2011.Incomefrom

feesandcommissionsbetweenJanuaryand

Septemberalsofell11.6%to€463masaresult

ofregulatorypressures.Excludingthesetwo

items,BBVACompasswouldhaveshowna

slightyear-on-yearincreasethankspartlyto

theriseinservicefees,whichwentup9%year

todate.Theotherincome/expensesheading

tocustomersplustotalcustomerfunds)and

83%ofthenetattributableprofit.

BBVACompasscontinuedtoseesustained

growthinitsloanbookoverthequarter,with

gross lending to customers of€34,383mas

of30-Sep-2012,up4.5%year-on-yearand0.8%

overthequarter.Loanstothecommercialand

residentialrealestatesegmentcontinueto

drivegrowthinthebank’slendingactivity,with

year-on-yearincreasesof25.5%and20.3%,

respectively.Specifically,commercialloans

arebenefitingfromthegoodperformanceof

lendingtothehealthcaresector,public-sector

financeandasset-basedlending.Thestrategic

planofBBVACompassincludesareduction

inlendingtotheconstructionrealestate

industry,withafallof41.3%year-on-yearand

8.7%quarter-on-quarter.

Withrespectto asset quality indicatorsin

thearea,theNPAratiodroppedto2.4%atthe

closeofSeptember2012,whilethecoverage

ratioroseto94%.Attheendofthefirsthalfof

2012,theNPAratiowas2.8%andthecoverage

ratiowas82%.

Customer deposits inBBVACompassalso

grewby4.6%inthequarter(up9.5%over

thelasttwelvemonths)thankstorecent

campaignstowinnewcustomers.Both

demandandtimedepositsgrew,although

mostofthisincreasewasduetothe

continuedriseinlower-costliabilities(current

andsavingsaccounts).

Earnings

TheUnitedStatesgeneratedanet

attributable profitof€341minthefirstnine

monthsof2012,ariseof29.3%year-on-year,

Consumer13.2

Interest bearing accounts 48.5

Commercialreal estate

18.1

Residentialreal estate23.8

Commercial33.4

BBVA Compass. Loan mix(Percentage)

BBVA Compass. Deposit mix(Percentage)

Construction real estate 9.5

Consumer14.9

Commercial real estate 18.3

September 2011 September 2012

Residential real estate25.9

Commercial 38.0

Constructionreal estate 4.9

Time deposits22.1

Non interest bearing accounts 29.4

Interest bearing accounts48.6

September 2011 September 2012

Time deposits 21.1

Non interestbearing

accounts30.5

Averagecost of

deposits0.42

Averagecost of

deposits0.38

4.95.4

7.48.1

9.5

10.411.2

0

2

4

6

8

10

12

Developer loans over BBVA Compasstotal loan portfolio(Percentage)

1Q 2Q 3Q 4Q 3Q2011 2012

1Q

4.95.4

11.210.4

9.5

8.1

2Q

7.4

Créditos a promotores sobre el total de la carteracrediticia de BBVA Compass (Porcentaje)

1er Trim. 2o Trim. 3er Trim. 4o Trim. 3er Trim.

–56.3%

2011 20121er Trim.

4.95.4

11.210.4

9.5

8.1

2o Trim.

7.4

46 Businessareas

accordingtotheoriginallyplanned

timeline,andhasreceivedverypositive

feedbackfromusersandcustomers.

Benefitsincludeanenhancedcustomer

experiencethroughdifferentiated,efficient,

fasterandcustomer-centricprocesses.

• BBVACompassopeneditsfirstofficein

Miamiinordertoexpanditscommercial

andwealthmanagementactivitiesinSouth

Florida.Thenewoffice,locatedinthe

financialcenterofthecity,bringsthetotal

numberofBBVACompassofficesinFlorida

to47.

• American Bankermagazinehasrecognized

BBVACompassforitsconsumer-friendly,

web-basedcollectionsapproach.The

awardcameastheorganizationhas

reduceddramaticallyitsnon-performing

loansoverthepasttwoyears.

• BBVACompassjoinedtheranksofApple,

Coca-Colaandsomeofthecountry’smost

prestigiouscompaniesasa“DaleCarnegie

LeadershipAward”recipient.Thisimportant

awardrecognizesthosecompanieswhich

placeanemphasisonhumanresources,

innovationandorganizationalcreativityin

ordertoachievetheirbusinessobjectives.

Specifically,ithighlightedthebank’s

commitmenttoprovidingexcellentservice

andqualityproductstoitscustomers,its

constantdedicationtotheprofessional

developmentofitsemployeesandthe

senseofresponsibilitythatdrivesahigh

levelofcommunityinvolvement.

• BBVACompasscontinuestobenefitfrom

thehighprofileofitsbrand.Specifically,

theinaugurationoftheBBVACompass

stadiuminHoustonwasmentionedmore

than1,800timesinthemediainthe

monthsfollowingitsopeningceremony,

equivalenttonearly29milliondollarsof

advertisingvalue.

amountedtoanegative€43minthearea,

comparedwith–€66minthefirstninemonths

of2011(atconstantexchangerates).Finally,

NTIroseslightlyby1.3%to€121m.Asaresult,

thearea’sgrossincomeintheyearthrough

Septembertotaled€1,826m(down4.4%

year-on-year)andshowshighresilienceifthe

situationinwhichitwasgeneratedistaken

intoaccount:lowinterestrates,turmoilinthe

marketsandstrongregulatorypressures.

Goodmanagementofoperatingexpenses

enabledcoststofallby1.1%inthelast12

monthsto€1,191m.Specifically,certain

expensesrelatedtopremiseswerebrought

downbymorethanhalfinCompass

comparedwiththeaccumulatedfigureas

ofSeptember2011.Impairmentlosseson

financialassetswereinlinewiththetrend

seeninpreviousquarters,leadingtoa

year-on-yeardecreaseof70.4%to€92m.

Finally,itisworthhighlightingthesound

capital ratios publishedbyBBVACompass

asofSeptember30,2012:11.5%forTierIand

11.3%forTierICommon,bothusinglocal

criteria.

Inshort,therehasbeenasignificantincrease

inthearea’searnings,verymuchsupported

onthelocalbusiness,thankstoreduced

impairmentsonfinancialassets,costdiscipline

andtheresilientrevenues.

Highlights

Belowisasummaryofthemaininitiatives

undertakeninthearea,aswellasthemost

relevanthighlightsforthequarter:

• Implementationofthenewbanking

platformwascompletedinallthebranches

thatBBVACompasshasinthe7states

whereitoperates.Thiscomplexconversion

processwasexecutedseamlesslyand

47CorporateActivities

CorporateActivities


Corporate Activities


Net interest income (404) (12.2) (460)

Netfeesandcommissions (228) 42.8 (160)

Nettradingincome 415 158.8 161

Otherincome/expenses 138 (18.7) 169

Gross income (79) (72.7) (290)

Operatingcosts (789) 12.5 (701)

Personnelexpenses (444) 14.6 (387)

Generalandadministrativeexpenses (99) (13.6) (115)


Operating income (868) (12.4) (991)

Impairmentonfinancialassets(net) 9 n.m. (46)

Provisions(net)andothergains(losses) (1,238) 79.4 (690)

Income before tax (2,098) 21.5 (1,727)

Incometax 818 8.6 753

Net income (1,280) 31.4 (974)

Non-controllinginterests 1 (39.3) 2

Net attributable profit (1,279) 31.6 (972)

Adjusted(1) (308) - (235)

Net attributable profit (adjusted) (1) (971) 31.8 (737)

In2011and2012,impairmentchargerelatedtothedeteriorationoftherealestatesectorinSpain.Andinthethirdquarterof2012,impactofUnnimbadwill.


Corporate Activities

30-09-12 ∆% 30-09-11

Cashandbalanceswithcentralbanks (415) (80.7) (2,153)


Loansandreceivables (3,880) (30.1) (5,548)

Loansandadvancestocustomers 934 n.m. (3,274)

Loansandadvancestocreditinstitutionsandother (4,814) 111.7 (2,274)

Inter-areapositions (365) 21.2 (301)

Tangibleassets 4,130 32.1 3,125

Otherassets 23,314 20.9 19,278

Total assets/liabilities and equity 55,676 37.1 40,598

Depositsfromcentralbanksandcreditinstitutions 13,990 n.m. (172)

Depositsfromcustomers 24,269 (25.3) 32,476

Debtcertificates 68,462 (9.4) 75,600

Subordinatedliabilities 3,277 (1.2) 3,317

Inter-areapositions (54,552) (24.6) (72,394)

Financialliabilitiesheldfortrading (4,805) 56.6 (3,068)

Otherliabilities (7,509) 31.2 (5,721)

Valuationadjustments (2,300) (32.6) (3,414)

Shareholders'funds 42,802 9.8 38,995

Economiccapitalallocated (27,958) 11.7 (25,021)

48 Businessareas

Themostrelevantaspectsofearningsinthisareainthefirst nine months of 2012aresummarizedbelow:

• Netinterestincomewaslessnegativethaninthesameperiod

of2011,with–€404masofSeptember2012,comparedwith

–€460m12monthsearlier.Thisheadinghascontinuedto

improveasaresultofpositivemanagementofthestructural

interest-rateriskagainstthebackdropoffallinginterestrates.

• FavorableperformanceofNTI,basicallyasaresultofthe

capitalgainsrecordedontherepurchaseofsecuritization

bondsinthesecondquarterof2012.Asaresult,therewas

significantgrowthof158.8%inNTIoverthelast12monthsto

€415m.

• Gross incomewasanegative€79m,whichcompares

favorablywiththefigurepostedinthesameperiodin2011(a

negative€290m).

• OperatingexpensescontinuetoreflecttheGroup’sinvestment

effortinstafftraining,technology,brandandinfrastructure.

Theyincreasedby12.5%year-on-yearto€789m

• Therewasasignificantadditionalincreaseinprovisionsto

absorbtheimpairmentontherealestateandforeclosedassets

inSpain,andtheUnnimoperationgeneratedbadwill.

• Asaresult,net attributable profitintheareabetweenJanuary

andSeptember2012wasanegative€971m,comparedwith

anegative€737m12monthsearlier.Thismorenegative

performancethaninthesameperiodofthepreviousyear

isduetotheprovisioningeffortmentionedabove,since

operatingincomeperformedbetterthaninthefirstnine

monthsof2011.

Asset/Liability Management

TheAssetsandLiabilitiesManagementunitisresponsiblefor

managingstructuralinterest-rateandforeign-exchangepositions,

aswellastheGroup’soverallliquidityandshareholders’funds.

Liquidity managementhelpstofinancetherecurringgrowthof

thebankingbusinessatsuitablematuritiesandcosts,usingawide

rangeofinstrumentsthatprovideaccesstoalargenumberof

alternativesourcesoffinance.AcoreprincipleintheBBVAGroup’s

liquiditymanagementcontinuestobetoencouragethefinancial

independenceofitssubsidiariesinAmerica.Thisaimstoensure

thatthecostofliquidityiscorrectlyreflectedinpriceformation

andthatthereissustainablegrowthinthelendingbusiness.

Inthethirdquarterof2012,long-termwholesalefinancialmarkets

inEuropewereoncemoreaffectedbytheextremevolatilityof

thesovereignriskpremium,althoughtherewasasignificant

improvementinSeptember.ThemeasuresadoptedbytheECBat

itsmeetingonSeptember6haveledtoasignificantreductionin

riskpremiumsinEuropeandthustheopeningofthe

medium-termfinancialmarkets.Inthisenvironment,BBVAhas

successfullycompletedseveralseniordebtdealswithavery

significantdemand,demonstratingitsaccesstothemarketat

verysuccessfulconditionsintermsofpriceandamount.

Short-termfinanceinEuropehasalsoperformedverywell,with

greatstabilityintheamountsgathered.

TheenvironmentoutsideEuropehasalsobeenveryconstructive.

BBVAhassuccessfullycompletedissuesinMexicoandPeru,

amongothermarkets.Thissituationofgreaterinternational

stabilityhasalsoenabledtheGrouptostrengthenitsretail

liquiditypositionthankstoitscustomer-centricapproach.

Tosumup,BBVA’sproactivepolicyinitsliquiditymanagement,

itsprovenabilitytoaccessthemarketindifficultenvironments,

itsretailbusinessmodel,itslowervolumeofdebtredemptions

comparedtoitspeersanditsrelativelysmallvolumeofassets

giveitacomparativeadvantageagainstitsEuropeancompetitors.

Moreover,theincreasedproportionofretaildepositsonthe

liabilitysideofthebalancesheetinallthegeographicalareas

continuestostrengthentheGroup’sliquiditypositionandto

improveitsfinancingstructure.

TheBank’scapital managementhasatwofoldaim:tomaintain

levelsofcapitalizationappropriatetothebusinesstargetsinallthe

countriesinwhichitoperatesand,atthesametime,tomaximize

returnonshareholders’fundsthroughtheefficientallocationof

capitaltothevariousunits,goodmanagementofthebalance

sheetandproportionateuseofthevariousinstrumentsthat

comprisetheGroup’sequity:commonstock,preferredsharesand

subordinateddebt.

InJulythisyearBBVApaidincashthefirstinterimdividend

against2012earnings,foranamountof€0.10pershare.In

Septemberitonceagainannouncedpaymentofitstraditional

seconddividendthroughtheremunerationschemeknownas

the“DividendOption”,whichoffersshareholdersawiderrange

ofremunerationalternativesfortheirshares.Thismechanism

alsoallowstheGrouptoaccumulatecapitalthroughahigher

proportionofretainedearningsinthecurrentyear.

Inaddition,theacquisitionofUnnimwascompletedinthethird

quarterof2012.Thedealconsumedaround10basispointsof

corecapital.Therewasalsotheannouncementofatenderoffer

torepurchase15issuesofpreferredsecuritiesandsubordinated

bondsdistributedthroughUnnim’sretailnetwork(T1,UT2and

LT2)at95%oftheirnominalvaluefor€490m,inexchangefor

theBank’streasuryshares.Thus,BBVAoffersasolutiontoUnnim

customersandprovidesthemwithliquidityandprofitability

(someoftheseinstrumentspaidnocoupon).Inaddition,thedeal

protectstheinterestsofBBVAshareholders,sincethisexchange

isnotdilutive,anditwillhaveapositiveimpactontheGroup’s

generationofcorecapitalinthefourthquarterof2012.Thus,the

Unnimacquisitionwillbepracticallyneutralintermsofcapital

consumption.

Inthethirdquarter,BBVABancomerissuedUSD1.5billionin

subordinateddebt,thusstrengtheningtheGroup’sTierIIcapital.

Inconclusion,thecurrentsolvencylevelsenabletheBanktofulfill

allofitscapitalobjectives.Alsoofnoteistheanalysisconducted

byOliverWyman,whichconfirmedBBVA’ssoundcapitalposition

thatplacesitinGroup0(bankswithnocapitalrequirements).The

GroupestimatesthatunderthenewBaselIIIregulationsitwill

reachafully-loadedcoreratioofover9%attheendof2013,taking

49CorporateActivities

Inthefirstninemonthsof2012,theresultsofthismanagement

havebeenverysatisfactory,withextremelylimitedriskstrategies

inEurope,theUnitedStatesandMexico.Thesestrategiesare

managedbothwithhedgingderivatives(caps,floors,swaps,FRAs)

andwithbalance-sheetinstruments(mainlygovernmentbonds

withthehighestcreditandliquidityratings).

Holdings in Industrial and Financial Companies

Thisunitmanagestheportfolioofindustrialandfinancial

investmentsincompaniesoperatinginthetelecommunications,

media,electricity,oil,gasandfinancialsectors.LikeAsset/Liability

Management,itlieswithintheGroup’sFinanceDivision.

BBVAappliesstrictrequirementstothisportfolioregarding

risk-controlprocedures,economiccapitalconsumptionandreturn

oninvestment,diversifyinginvestmentsacrossdifferentsectors.

Italsoappliesdynamichedgingandmonetizationmanagement

strategiestoitsholdings.Inthefirstninemonthsof2012it

invested€460manddivested€230m.

AsofSeptember30,2012,themarketvalueoftheholdingsin

Industrial&FinancialCompaniesportfoliowas€2,816m.

intoaccountorganicgenerationandothercapitalaccumulation

operationsalreadyannounced.

Foreign-exchange riskmanagementofBBVA’slong-term

investments,basicallystemmingfromitsfranchisesinthe

Americas,aimstopreservetheGroup’scapitaladequacyratios

andensurethestabilityofitsincomestatement.

Inthethirdquarteroftheyear,BBVAmaintainedapolicyof

activelyhedgingitsinvestmentsinMexico,Chile,Peruandthe

dollararea,withaggregatehedgingofcloseto50%.Inaddition

tothiscorporate-levelhedging,dollarpositionsareheldatalocal

levelbysomeofthesubsidiarybanks.Theforeign-exchange

riskoftheearningsexpectedintheAmericasfor2012isalso

strictlymanaged.Inthethirdquarter,theimpactofvariationsin

exchangerateshasbeenpositive,bothontheincomestatement

andoncapitaladequacyratios.For2012asawhole,thesame

prudentandproactivepolicywillbepursuedinmanagingthe

Group’sforeign-exchangeriskfromthestandpointofitseffecton

capitaladequacyratiosandontheincomestatement.

Theunitalsoactivelymanagesthestructural interest-rate exposureontheGroup’sbalancesheet.Thisaimstomaintaina

steadygrowthinnetinterestincomeintheshortandmedium

term,regardlessofinterest-ratefluctuations.

50 Businessareas

Otherinformation:Corporate&InvestmentBanking



January-Sep. 12 ∆% ∆% (1) January-Sep. 11

Net interest income 1,289 12.2 9.8 1,149

Netfeesandcommissions 529 8.7 6.6 486

Nettradingincome 183 (10.6) (15.7) 205

Otherincome/expenses 66 3.4 7.0 63

Gross income 2,067 8.6 6.0 1,904

Operatingcosts (659) 5.5 3.3 (625)

Personnelexpenses (370) 0.5 (1.0) (368)

Generalandadministrativeexpenses (279) 10.5 7.3 (253)

Depreciationandamortization (11) 119.5 113.0 (5)

Operating income 1,408 10.0 7.4 1,279

Impairmentonfinancialassets(net) (109) 82.3 78.8 (60)

Provisions(net)andothergains(losses) (11) 50.4 38.6 (7)

Income before tax 1,288 6.2 3.7 1,212

Incometax (379) 9.3 6.7 (346)

Net income 909 5.0 2.5 866

Non-controllinginterests (90) 52.0 38.1 (59)

Net attributable profit 819 1.5 (0.4) 806




30-09-12 ∆% ∆% (1) 30-09-11

Cashandbalanceswithcentralbanks 8,131 (4.7) (6.1) 8,528

Financialassets 87,474 10.3 7.8 79,298

Loansandreceivables 65,161 (12.6) (14.4) 74,547

Loansandadvancestocustomers 53,712 (2.3) (5.0) 54,997

Loansandadvancestocreditinstitutionsandother 11,449 (41.4) (41.5) 19,549

Inter-areapositions 16,534 n.m. n.m. 2,903

Tangibleassets 35 42.0 39.0 25

Otherassets 3,004 27.0 23.7 2,365

Total assets/liabilities and equity 180,340 7.6 5.2 167,666

Depositsfromcentralbanksandcreditinstitutions 73,093 32.2 28.7 55,302

Depositsfromcustomers 36,274 (25.6) (27.8) 48,769

Debtcertificates (106) (46.9) (46.9) (199)

Subordinatedliabilities 1,623 (17.7) (20.7) 1,973

Inter-areapositions - - - -

Financialliabilitiesheldfortrading 58,509 19.9 19.5 48,779

Otherliabilities 5,395 (41.9) (43.9) 9,283

Economiccapitalallocated 5,550 47.7 43.2 3,758


51Corporate&InvestmentBanking

Industry Trends

Theeconomicenvironmentinthethird quarter of 2012was

verycomplex,withextremelyhighvolatilityinthefinancial

marketsatthestartoftheperiod.Half-waythroughthequarter,

thetrendchanged,mainlyduetothealreadymentioned

announcementbytheECBofpossiblesovereigndebt

purchasesincaseswhereeconomieswithintheeurozone

neededstabilization.Thisnewenvironmenthashelpedreduce

volatilityandpushed-upthefixed-incomeandequitymarkets

globally.Theseeffectsarepositiveforbankswithexposure

totheglobalmarketsbusiness.Againstthisbackdrop,

transactionalandlendingactivityremainswellbelow

pre-2009levels.Tradefinanceisalsodownasaresultofa

slightslowdowninsomeofthemostdynamiceconomies

(suchasChinaandBrazil).

Inthisturbulentsituation,Corporate & Investment Banking

hasmanagedtoimproveitsearningscomparedwiththosefor

thefirstninemonthsof2011,byleveragingitsrelationshipwith

keyclientsanditsgeographicaldiversification.

Unlessindicatedotherwise,allcommentsbelowonpercentage

changesrefertoconstantexchange rates.

Activity

WithrespecttothebalancesofCIBactivity,therearetwo

clearlydifferentiatedscenarios.

Atgloballevel,gross customer lendingasof30-Sep-2012was

€54,432m,4.9%downonthefigureforthesamedatein2011.

Thisismainlyduetothedeleveragingprocessunderwayinthe

EuropeanandU.S.economies.Aspartofthisprocess,CIBhas

reduceditslendingexposureinSpain,EurasiaandtheUnited

States,whileinMexicoandSouthAmericaithasrisenby3.2%

and5.5%respectivelyinyear-on-yearterms.

Customer funds(bothonandoff-balancesheet)closed

Septemberat€38,883m,afallof26.3%onthefigurefor

30-Sep-2011,explainedbytheratingdowngradesoftheSpanish

sovereignandBBVA.Asinthecaseoflendingexposure,

performanceinLatinAmericahasbeenpositive.Customer

fundshavecontinuedtogrowatagoodpace(7.2%inMexico

and6.4%inSouthAmerica,bothinyear-on-yearterms).Itis

worthpointingoutthatwhilethelevelofcustomerfundsfell

fromMaytoAugust,inSeptembertherewasanupturn,withan

increaseof13.7%onthebalanceattheendofAugust.

EarningsInthisdifficultenvironmentCIBhasmanagedtoposthighly

recurringandresilientearnings.Inthefirstninemonthsof

2012itgeneratedgross incomeof€2,067m,ariseof6.0%on

thefigureforthesameperiodlastyear.Bygeographicalareas,

revenuegrewinSouthAmerica,MexicoandSpain(up30.8%,

38.0%and2.6%,respectively)andfellinEurasiaandtheUnited

States(down26.2%and10.0%,respectively).ProgressinSouth

AmericaandMexicocanbeexplainedbybuoyantactivity.

ThegrowthinSpainisduetoincreasedincomefromfeesand

commissions.ThedecreaseinEurasiaandtheUnitedStatesis

theresultofreducedbankingactivity.

CumulativeoperatingexpensesthroughSeptembercontinued

atasimilaryear-on-yearpacetothefirsthalfof2012(up3.3%).

Thetightcostcontrolofthepreviousquarterisstillinplace.

Thisevolutionofrevenueandexpensesresultinanoperating

incomeforJanuarytoSeptember2012was€1,408m,a

year-on-yeargrowthof7.4%.

Impairmentlossesonfinancialassetsstoodat€109m.These

accountfor7.7%ofoperatingincome.Thus,thecumulativenet

CIB. Operating income(Million euros at constant exchange rates)

CIB. Net attributable profit(Million euros at constant exchange rates)

263274281230

178

300344

445457505

367344

424

543

0

100

200

300

400

500

600

(1) At current exchange rates: +10.0%. (1) At current exchange rates: +1.5%.

1Q 2Q 3Q 4Q 3Q

+7.4% (1)

2011 20121Q

1,311 1,408

445505

543

424

344 367

2Q

457

1Q 2Q 3Q 4Q 3Q

–0.4% (1)

2011 20121Q

822 819

263281

344300

178230

2Q

274

CIB highlights in the third quarter

• PositiveperformanceoflendingactivityinLatinAmericaand

reductioninEuropeandtheUnitedStates.

• FavorableperformanceofcustomerfundsinSeptember,which

representsaturningpoint.

• Resilienceandrecurrenceofearningsinaverycomplex

environment.

52 Businessareas

creditlineforTelefónica-HuaweiwithChinaDevelopmentBank

andIndustrial&CommercialBankofChina.

InGlobal Transactional Bankingthefundgatheringoperations

andcustomerdepositsareworthmentioning.InSpain,tax

managementforover€300mandadepositofUSD300mwas

arrangedwiththeleadingoilcompany.InMexicoanexclusive

agreementwasclosedtoofferservicesforcard-payment

terminals,payrollsandcommercialallianceswithoneofthe

mostimportantgroupsinthecountry.Threerequestsfor

proposals(RFPs)wereawardedinPortugalandMexico.These

aregeneratingnewtransactionalbusiness,inparticularpayment

managementandinternationalcollection,withtheleading

telecommunicationscompanyinPortugal.Finally,“BBVAnet

cash”receivedthe“BestWebDesigninLatinAmerica”award

fromGlobal Finance.The“BBVAglobalnetcash”on-linebanking

systemwasalsolaunched,givingmultinationalcompaniesa

globalconnectionwiththecapacitytooperateatlocallevel.

Global Markets hascontinuedtogrowinanenvironment

affectedbyeconomicandfinancialtensionlinkedtoinstabilityin

EuropeandpoliticalchangeintheUnitedStates.Grossincome

amountedto€867m,anincreaseof9.3%onthefirstninemonths

of2011.Thisgrowthwasboostedbythecontinuedparticipation

ofGlobalMarketsinsolutionsforitsclients,thusprovidingstable

franchiserevenuefortheunit.

InSpainGlobalMarketsachievedgoodearningsfigures:total

mark-to-marketrevenueincreasedbyover20%year-on-year.

SMEs,andtheretailandcorporatecustomersegmentsposted

thebiggestgrowth.Byproducttype,interestrates,exchange

ratesandlendinghaveincreasedatdouble-digitratesinyear-

on-yearterms.BBVAcontinuestobethemarketleaderinequity

brokerage,withamarketshareof16.4%inSeptember2012,nearly

9percentagepointsaboveitsnearestcompetitor.BBVAResearch

obtainedanawardasbeststock-marketanalystfromThomson

Reutersforthequalityofitsforecastingandrecommendations.

InEurasia,revenuefromSMEsandretailcustomershasgrown

above40%comparedwiththecumulativetotalthrough

September2011.Therewasanotableincreaseintotalfranchise

revenuefromtheMilan(up60%)andTaiwantradingfloors,the

latterpracticallytriplingitsearningscomparedwiththesame

periodin2011.

InMexico,GlobalMarketsisstillwellpositionedtotakeadvantage

ofthecountry’spositiveeconomicsituation.Thisenvironment

hashelpedcustomerrevenuetoperformwell,asalltheproducts

postedpositiveresults.Asaresultoftheabove,GlobalMarkets

grossincomegrew80.4%year-on-year.

BBVAinSouth Americacontinuestoboostitslocaldistribution

capacity.GlobalMarketsrevenueintheareaincreasedby25.9%

year-on-year.

IntheUnited Statesrevenuefrominterestrateswasparticularly

good,withariseof47%onthefirstninemonthsof2011.BBVA

iscontinuingtomakeprogressinitsstrategytointegratethe

business,focusingonitscompetitiveadvantages:theCompass

distributionnetwork,itsknow-howinderivativesanditsLatin

Americanproductsasadifferentiatingfactorforinvestors.

attributable profitwas€819m,verysimilartothefigureposted

12monthspreviously(down0.4%year-on-year).

Theasset quality ofthevariousunitsinthisarearemainsstable.

TheNPAratiocontinuesat0.6%,thesamefigureasthecloseof

June2012,whilethecoverageratioimprovedoverthequarter

to151%.

Highlights

ThemostimportantdealscarriedoutbythedifferentCIB

departmentsonthethirdquarterof2012aresummarizedbelow:

InCorporate Finance,BBVAisleaderinSpainasadvisorin

transactions.AccordingtoThomsonReuters,theGrouphas

advisedin49dealssince2009.RecentlyitworkedwithCementos

PortlandinaprivateplacementunderwrittenbytheU.S.

BlackstoneGroup,andwithEnagásontheacquisitionof90%of

NaturgasEnergíaTransporte.InAmerica,BBVAhascontinuedto

strengthenitsfranchise,particularlyinMexico,whereitiscurrently

veryactive.

InEquity Capital Markets,theBankhasbeenjointbookrunner

inthedomesticinitialpublicoffering(IPO)ofSantanderMexico,

worth€3,179m.Thiswasthethirdbiggestdealthisyearatglobal

levelandthesecondbiggesteverinLatinAmerica.

Corporate LendinghasmaintaineditsleadingpositioninSpain

inbilateralandsyndicatedloans(includingFCC,Abertisand

CementosPortland).IntheUntiedStates,BBVAcontinuesto

strengthentheCompassfranchisewithnumeroussyndicated

deals(includingAvon,BestBuyandH&RBlock).InLatinAmerica,

ithasmaintaineditsleadingpositionthankstothepromotionof

bothbilateralandsyndicatedloansinMexico(includingComex,

Frisa,Kaluz)andColombia(UNE).

Project Finance continuestobeleaderinEurope,withthe

completionofdealsincludingstructuredfinanceforhospitalsin

Tuscany(Italy)andtheCarringtoncombined-cycleplantinthe

UnitedKingdom.InLatinAmericatheBankhasledoperations

inrenewableenergy(loanandprojectbondsinOaxaca,Mexico),

conventionalenergy(hydropowerplantinCerrodelÁguila,

Peru,andcombined-cycleplantinSalamanca,Mexico)and

infrastructures(projectbondforReddeCarreterasdeOccidente

inMexico).IntheUnitedStatesitwasmandatedleadarrangerin

thefinanceofSabinePassandinfinancingparkinglotsinOhio

andinParkwayprison.

Leveraged Financehasalsoconfirmeditsleadingposition

inSpain.Ithasstructuredandcollaboratedonfourleveraged

acquisitionsinvarioussectors.InEuropeitwasmandatedlead

arrangerinthefinanceofaleveragedbuy-out(LBO)inItalyfor

oneofthebiggestglobalfinancialinvestors.

Structured Trade FinanceincreaseditsCESCE-backedguarantee

activityinSpain,andacreditlineforFCCstands-out.Intherestof

EuropeBBVAhasamajorpositionfinancingexports,particularly

toLatinAmericancountries,TurkeyandAsia,andparticipating

innewprogramsdevelopedbyEuropeanexportcreditagencies

(ECAs).InAsiaBBVAhasclosedthesecondtrancheofthebuyer’s

BBVA INVESTOR RELATIONS

Headquarters

PaseodelaCastellana,81–17thfloor

28046Madrid

SPAIN

Telephone:+34913746201

E-mail:[email protected]

New York Office

1345AvenueoftheAmericas,45thFloor

10105NewYork,NY

Telephones:+12127282416/+12127281660

London Office

108CannonStreet,LondonEC4N6EU

Telephone:+442076487671

Hong Kong Office

43/F,twoInternationalFinanceCentre;

8FinanceStreet

CentralHongKong

Telephone:+85225823229

Moreinformationat:

http://shareholdersandinvestors.bbva.com

3Q12 3Q

12

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