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January-September2011

QUARTERLY REPORT

Q



Contents

2 BBVAGrouphighlights

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

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

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

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

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

TheBBVAshare......................................................................................................................................................................................................................................................... 21

Corporateresponsibility.................................................................................................................................................................................................................................22

23 Businessareas Spain......................................................................................................................................................................................................................................................................................25

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

Mexico..................................................................................................................................................................................................................................................................................34

SouthAmerica...........................................................................................................................................................................................................................................................38

TheUnitedStates...................................................................................................................................................................................................................................................42

CorporateActivities.............................................................................................................................................................................................................................................46

Otherinformation:WholesaleBanking&AssetManagement.......................................................................................................................49


QUARTERLYREPORT



2 BBVAGrouphighlights

BBVAGrouphighlights

BBVA Group highlights

(Consolidatedigures)

30-09-11 ∆% 30-09-10 31-12-10

Balance sheet (million euros)

Totalassets 584,438 4.8 557,761 552,738

Customerlending(gross) 352,633 2.8 343,084 348,253

Customerfundsonbalancesheet 282,050 10.3 255,798 275,789

Othercustomerfunds 136,588 (4.4) 142,902 146,188

Totalcustomerfunds 418,638 5.0 398,700 421,977

Totalequity 39,868 21.1 32,909 37,475

Shareholders’funds 41,552 31.5 31,610 36,689

Income statement (million euros)

Netinterestincome 9,676 (5.0) 10,182 13,320

Grossincome 15,052 (5.7) 15,964 20,910

Operatingincome 7,753 (16.8) 9,322 11,942

Incomebeforetax 4,145 (21.2) 5,260 6,422

Netattributableproit 3,143 (14.3) 3,668 4,606

Data per share and share performance ratios

Shareprice(euros) 6.18 (37.6) 9.91 7.56

Marketcapitalization(millioneuros) 29,817 (19.7) 37,124 33,951

Netattributableproitpershare(euros) 0.66 (26.9) 0.90 1.16

Bookvaluepershare(euros) 8.61 2.1 8.43 8.17

P/BV(Price/Bookvalue;times) 0.7 1.2 0.9

Signiicant ratios (%)

ROE(Netattributableproit/Averageequity) 11.3 17.2 15.8

ROA(Netincome/Averagetotalassets) 0.83 0.95 0.89

RORWA(Netincome/Averagerisk-weightedassets) 1.46 1.75 1.64

Eiciencyratio 48.5 41.6 42.9

Riskpremium 1.10 1.38 1.33

NPAratio 4.1 4.1 4.1

NPAcoverageratio 60 62 62

Capital adequacy ratios (%)

BISRatio 12.6 12.8 13.7

Corecapital 9.1 8.2 9.6

TierI 9.8 9.2 10.5

Other information

Numberofshares(millions) 4,825 28.7 3,748 4,491

Numberofshareholders 981,348 10.4 889,104 952,618

Numberofemployees(1) 110,625 5.1 105,265 106,976

Numberofbranches(1) 7,436 1.0 7,362 7,361

NumberofATMs(1)

18,192 9.5 16,619 17,055

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)ExcludingGaranti.



3Relevantevents

Stresslevelsinliquidityandsovereignriskreachedahighinthe

third quarter of 2011,particularlyintheeuroarea.Asaresult,

mostoftheEuropeanbankingsectorhasseensomemajor

sourcesoffundingreduced.Thisinturnhasincreasedtheuse

oftheliquidityfacilitiesprovidedbythecentralbanks.This

situationhasgivenrisetodoubtsinthemarketsaboutcertain

businessmodelswithahighlevelofleverage.Otherfactorsworth

highlightinghavebeenthelossofvalueinnumerousassetsasa

resultofincreasedfundingcostsandtheprevailinguncertainty.Inparticular,thereweresigniicantfallsintheequityandpublicand

privatedebtmarketsandalowlevelofbusinessactivity,above

allthatmostcloselyrelatedtothewholesalebusiness.Against

thisbackgroundoflossofconidence,theGrouphasoncemore

demonstratedoverthequarterthatitsbusinessmodelissound,

particularlyintermsofitsliquidity position andgeneration of

earnings.

Intermsof liquidity,BBVAhasaprivilegedpositionwithrespect

tomostofitscompetitors,inthefollowingaspects:

• Thesmallestbalancesheetwithinitspeergroup,at€584

billion.

• Ahighlycustomer-centricretailmodel,withaverysolid

depositbase,asshownbythefactthatBBVAisthebankwith

thebiggestcustomerdeposit/totalassetratiowithinthepeer

group,at48.3%atthecloseofSeptember2011.

• Awholesalebankingbusinessbasedonastrongrelationship

withitscustomersandcharacterizedbylowleveragelevels.

BBVAisrecoveringcompetitivenessinanenvironmentin

whichotherbankshaveannouncedsigniicantdeleveraging

plans.

• Inaddition,theGrouphasalwaysbeenproactiveinits

managementoflong-termwholesaleinance,andused

conservativelythe“windowsofopportunity”oferedbythe

markets.Infact,inJuneBBVAalreadyhaditsinancingneeds

fullycoveredfor2011;andthecomingyearsithasthelowest

leveloflong-termfundingmaturitiesofanybankinitspeer

group.Itshouldalsobepointedoutthatthesematuritiesare

notconcentratedinanyspeciicperiod.

• ItisworthnotingthatundertheBBVAmanagementmodel

eachbankingsubsidiaryorgroupmustbeself-suicientinits

sourcesoffundingwithinitsrespectivegeographicalarea.

• Finally,itmustbepointedoutthatBBVAdoesnotdependon

theUSmarketforshort-termmarketfunding(oneofthekey

subjectsthisquarter),andithasonlyuseditinthepastwhen

appropriateasacheapsource.

Themostimportantpointwithrespectto generation of earnings

overtheperiodisthecontinuedgrowthofthemostrecurring

income,i.e.grossincomeexcludingdividendsorNTI:

• Therewasnocontributionfromnet trading income (NTI)over

thequarter,whichcharacterizestheproileoftheaccount.TheslightlynegativeNTI(–€25m)canbeexplainedbythelowlevel

ofactivityinWholesaleBankingandthefallinassetpricesover

theperiod.

• Gross incomeforthequarterwas€4,627m.Thefallcompared

with€5,162minthepreviousquarteristheresultofthe

performanceofNTImentionedaboveandthedividendpaidin

MayfromthestakeinTelefónica.ExcludingdividendsandNTI,

thegrossrecurringincomegeneratedbyBBVAbetweenJuly

andSeptemberwas€4,602m,up0.8%quarter-on-quarter.This

givesaigureof€15,052myeartodateand€13,656m(about

91%)excludingNTIordividends.

• Operatingexpensesamountedto€2,461mforthequarter,

slightlybelowtheigureforthesecondquarter.Theeiciency

ratiowas48.5%atthecloseofSeptember,oneofthebest

amongtheBank’sEuropeanpeers.

• Impairment losses on inancial assets,togetherwithallocation

toprovisionsandothergains(losses),remainatasimilarlevel

tothepreviousquarter.

• BetweenJulyandSeptember2011,theGroupobtainedanet

attributable proit of€804m.Thisiguredoesnotincludethe

dividendsfromTelefónica(whicharepaidinthesecondandfourthquarterofeachyear)andhasbeenafectedbythezero

contributionfromNTI.

TheGrouphasmaintaineditsmainrisk indicatorsstableforyet

anotherquarter(theseventhsinceDecember2009).TheNPA

ratioclosed30Sep-2011at4.1%andthecoverageratioat60%.

Withrespecttosolvency,BBVAcontinuestohaveanexcellent

capitalposition.AtthecloseofSeptemberthecoreratiowas9.1%,

supportedbythegenerationofearningsandtheimplementation

ofthe“DividendOption.”

Allthebusiness areashavecontributedpositivelytotheGroup’s

results.Themostsigniicantaspectsforeachofthemaredetailed

below:

Groupinformation

Relevantevents



4 Groupinformation

customerfundsup27.4%)andearnings.Grossincomeis

up19.0%overthelast12months.Thisfact,combinedwith

outstandingmanagementofassetquality,hasenabledthe

banktocontinuetoinanceexpansionprojectsandtoshow

highratesofgrowthinnetattributableproitwhichreached

€754myeartodate,up11.2%.

• TheUnited States iscontinuingwithitsprocessofchanging

itsloan-bookmix.Inthethirdquarterof2011,thefavorableoutcomeinthenewproductionoftargetportfoliosoflending

hasofsetthereductioninloanstothedevelopersector.

Thisexplainsthequarter-on-quartergrowthof1.6%ingross

customerlendinginthearea.Thefocusincustomerfunds

continuestobeonthoseoflowercost.Themostimportant

aspectinearningscontinuestobetheimprovementinthe

costofrisk.Thenetattributableproitintheareayeartodateis

€218m(up1.5%year-on-year).

Finally,itisimportanttomentionthatadividendof€0.10per

sharewaspaidoutinOctober2011underthe Dividend Option

scheme.ThepercentageofshareholderswhohaveoptedtoreceivenewBBVAshareswasover91%,thusoncemore

conirmingthepopularityofthisnewremunerationprogram.

Economic environment

Globaleconomicgrowthcontinuedinthe third quarter of

2011, thankstotheemergingcountries(EAGLES),anddespite

theslowdownindevelopedeconomies,asshownbythelatest

economicdatapublished.Thishasbeentheresultoftwofactors:

irst,theeortsmadeatthestartofthesummerbyEuropean

authoritieshavenotmanagedtodissipatedoubtsabouttheir

capacitytomanagethedebtcrisis;andsecond,theinancial

turmoilinthedebtmarketshashadaneectontheperception

ofsomesegmentsoftheEuropeaninancialsystem,whereitis

extremelyexposedtothedebtofcountriesindiiculties.

IntheUnited States,growthhasslowedduetothesluggish

recoveryinemploymentandwages,aresidentialconstruction

sectorstilldeepintheprocessofcorrection,andthecontinued

householddeleveragingprocess.Despitepressureatthestartof

thequartertoimplementacredibleprocessofiscalconsolidation,

doubtsaboutthestrengthofeconomicactivityhaveledto

thesearchforabalancebetweenlong-termconsolidationand

theneedtosustaintheeconomyintheshortterm,resultingin

• ThebusinessesinSpain showweaklendingactivityasaresult

ofthe(necessaryandpositive)deleveragingprocessbeing

undertakenintheeconomy.Itisimportanttohighlightthat

theliquiditygapintheareaiscontinuingtoimprove:onthe

onehand,throughtherestrictiononlending;andontheother

hand,duetothepositiveperformanceofdeposits,ascanbe

seenfromthehighrateofcustomerrenewalsoftermdeposits

writtenayearago,despitetheirbeingatasigniicantlylower

interestrate.Asaresult,thequarterlynetinterestincomestillshowsstrongresilience(€1,096mcomparedwiththe

€1,102minthesecondquarter).Thequarterlyfallof13.6%in

grossincome(€4,900myeartodate)canbeexplainedby

theeconomicsituation,thelowlevelofactivityinWholesale

Banking,andthedeclineinassetpricesingeneral,witha

majorimpactonNTI.Thearea’snetattributableproityearto

datestandsat€1,162m.TheNPAandcoverageratiosremain

stable,at4.9%and42%respectivelyasof30Sep-2011.The

IPOsinJulybyCaixaBank,BankiaandBancaCívica,combined

withrecentinterventionsinsomesavingsbanks,havebegun

toclearupuncertaintyintermsoftherestructuringofthe

bankingsector.

• OfparticularnoteinEurasiaisthecontributionofthe

ChinesebankCNCBandthepaymentmadebyBBVAforits

capitalincrease.Twofactorshaveinluencedthedecision

toundertakethisoperation:ontheonehand,theneedfor

it,duetothegreatstrengthofbankingactivity;andonthe

otherhand,thewishesoftheChinesesupervisortomaintain

ahighlysolventpartnersuchasBBVAwiththesamestakeas

beforetheoperation.Thenetattributableproitforthequarter

is€257m,upontheigureof€251mthepreviousquarter.The

yeartodateigureis€705m.

• Mexico continuestopostsustainedqualitygrowthinbusiness

activity,aboveallinconsumerinance,creditcardsand

customerfunds,withinahighlycompetitiveinancialsystem

andinterestratesatall-timelows.Netinterestincomehas

improveditsyear-on-yearrateofgrowth(up6.0%atconstant

exchangerates),whileloan-lossprovisionsremainstableand

thenetattributableproityeartodateis€1,275m(up2.9%at

constantexchangerates).ItisimportanttohighlightthatBBVA

Bancomeristhemostproitablebankwithinitspeergroup,

witharatioofnetinterestincomeoverATAof5.9%.

• South Americacontinuestoperformwell,inbothbusiness

activity(lendingup30.7%year-on-yearandon-balance-sheet

Interest rates

(Quarterlyaverages)

2011 2010

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

OicialECBrate 1.50 1.25 1.00 1.00 1.00 1.00 1.00

Euribor3months 1.54 1.44 1.10 1.02 0.87 0.69 0.66

Euribor1year 2.00 2.13 1.74 1.52 1.40 1.25 1.22

USAFederalrates 0.25 0.25 0.25 0.25 0.25 0.25 0.25

TIIE(Mexico) 4.81 4.85 4.85 4.87 4.91 4.94 4.92



5Relevantevents

biasedtowardsadropinthelendingrateattheendof2011ifthe

economicenvironmentworsens.

Growthcontinuestobeverystrongin South America,whereit

issustainedbydomesticdemandandsupportfromwhatisstill

alaxiscalpolicy.Despitetheslowdowninadvancedeconomies,

commoditypricesremainhigh,whichexplainsthestrengthof

income.

TheChinese economystillappearssound.Althoughtheregionis

alreadynotingtheeectsoftheslowdowncausedbythegreater

weaknessofforeigndemand,mostrecenteconomicdatahave

remainedsolid.Strongunderlyingdomesticdemandandwhatis

stillahighinlationratewillprobablypreventtheapplicationofa

policyofmonetaryeasing,althoughtheauthoritiesareprepared

toact(intheiscalareaaswell)iftheglobalweaknesspersists.

Finally,theTurkisheconomyisgrowingatastrongrate,although

inlationisstillrelativelyhighduetothemajordropinvalueof

theTurkishlirainanenvironmentofhighglobalriskaversion,

whichhasingeneralaectedtheTurkishinancialmarkets.Inanyevent,theCentralBank’stoneshowsitisclearlycommittedtoan

accommodativemonetarypolicy.

Intermsofexchange rates evolution,theinalratesofthe

Mexicanpesohavedepreciatednotably,inbothyear-on-yearand

particularlyquarter-on-quarterterms.Thisisthecurrencywith

thebiggestinluenceontheGroup’sinancialstatements.The

ChileanandColombianpesohavefollowedsuit,althoughtoa

lesserextent.Incontrast,theinalrateoftheUSdollarappreciated

inyear-on-year,andparticularlyquarter-on-quarterterms.This

isthesecondmostimportantcurrencyfortheGroup’sresults.

TherestoftheotherimportantcurrenciesinLatinAmericahave

alsogained.Theexceptionistheyear-on-yeardepreciationof

theArgentineanpeso.Overall,theimpactonboththebalance

sheetandbusinessactivityoverthelastyearandinthequarteris

negative.Thesameistrueforearningsinquarterlyand

year-on-yearterms.

theproposalofmeasuresparticularlygearedtojobcreation.

Meanwhile,theFedhasgivensignsofaccompanyingwithan

accommodativemonetarypolicy.

Theslowdownanddoubtsaboutgrowthhavealsobecome

consolidatedinEurope.Thistimeround,theyalsoaectthe

coreeurozoneareas,whichhaveshownsomeweaknessin

domesticdemand,thoughsofarthishasbeenosetbystrength

intheforeignsector.ThecountriessubjecttoEuropeanUnionandInternationalMonetaryFundprogramscontinuewithmajor

adjustments(exceptinthecaseofIreland,wherethemostrecent

iguressuggestarecovery).Nevertheless,thefocusofattention

isstilltheresolutionofthedebtcrisis,speciicallythemeasures

totaketore-channeltheGreekdebttomoresustainablelevels.

Doubtsinthisrespectareaectingtheinancialsystemofthe

eurozoneandleadingtofundingdiicultiesinthewholesale

markets.Theresurgenceoftensionhasledtoachangeinthe

prospectsofagradualtougheningofmonetarypolicybythe

EuropeanCentralBank(ECB).Infact,theECBhasinterruptedits

cycleofinterest-ratehikesandappearspreparedtocontinuewith

measuresthatsupportliquidity.

InSpain,theadjustmentprocesscontinuesandtheeconomy

hasslowedslightly.Evenso,thestrengthoftheforeignsector

hasosettheweaknessofdomesticdemand.Atthesametime,

thepublicadministrationcontinuestobeimmersedinamajor

processofiscalconsolidation.

Despitetheslowdowninadvancedeconomies,emerging

economiescontinuetogrowsolidlytowardsmoresustainable

levels.InMexico,themostimportantindicators(industrialactivity,

formalemployment,retailsales)remainpositive,sotherateof

growthcouldhavecontinuedinthethirdquarteratlevelsthat

areevenslightlyhigherthanthepreviousquarter.Inlationisnot

aconcern,giventhedomesticenvironmentofcontainedactivity

andmoderateprospectsofglobalgrowth.Monetarypolicyis

thereforerespondingbyalongerpause,andthelendingrate

willremainat4.5%beyond2012.Theuncertaintyisifanything

Exchange rates

(Expressedincurrency/euro)

Yearend exchange rates Average exchange rates

30-09-11 ∆% on

30-09-10 ∆% on

30-06-11∆% on

31-12-10 JanuarySep. 11∆% on

JanuarySep. 10

Mexicanpeso 18.5936 (7.9) (8.7) (11.0) 16.9273 (1.3)

U.S.dollar 1.3503 1.1 7.0 (1.0) 1.4065 (6.5)

Argentineanpeso 5.6773 (3.2) 4.6 (3.4) 5.7510 (9.7)

Chileanpeso 695.41 (4.8) (2.1) (10.1) 666.67 2.5

Colombianpeso 2,583.98 (4.9) (0.5) (1.0) 2,564.10 (2.0)

Peruviannewsol 3.7451 1.6 6.1 0.2 3.8930 (4.4)

Venezuelanbolivarfuerte 5.7991 1.1 7.0 (1.0) 6.0403 (8.1)

Turkishlira 2.5100 (21.1) (6.4) (17.6) 2.2920 (12.8)

Chineseyuan 8.6207 5.9 8.4 2.3 9.1378 (2.1)



6 Groupinformation

BBVAgeneratedanet attributable proitforthe

thirdquarterof2011of€804m.Therearetwo

mainfactorsthatcharacterizetheaccountsfor

thisperiod:ontheonehand,thezerocontribution

fromNTI;andontheotherhand,thegrowthofthe

mostrecurrentearningsintheGroup,i.e.thegross

incomeexcludingNTIordividends.Thefollowing

shouldbehighlightedinthisrespect:

• Thepositiveperformanceofnet interest

income,whichwasup2.2%inthequarter.This

isduetothepositivecontributionofemerging

marketsandtheresilienceofnetinterest

incomeindevelopedcountries.

• Thegreatercontributionfromnet income

by the equity method,thankstothepositive

performanceofCNCB.

• Asaresult,thequarterlygross income

excludingNTIordividendswas€4,602m,

continuingwiththeupwardtrendsincethe

startoftheyear.

• Finally,bothoperating expenses and

impairment on inancial assetswereatsimilar

levelstothepreviousquarter.

Earnings

Consolidated income statement: quarterly evolution

(Millioneuros)

2011 2010

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

Net interest income 3,286 3,215 3,175 3,138 3,245 3,551 3,386

Netfeesandcommissions 1,143 1,167 1,114 1,135 1,130 1,166 1,106

Nettradingincome (25) 336 752 252 519 490 633

Dividendincome 50 259 23 227 45 231 25

Incomebytheequitymethod 150 123 121 124 60 94 57

Otheroperatingincomeandexpenses 22 62 79 70 85 47 93

Gross income 4,627 5,162 5,263 4,946 5,084 5,579 5,301

Operatingcosts (2,461) (2,479) (2,359) (2,325) (2,262) (2,262) (2,118)

Personnelexpenses (1,325) (1,306) (1,276) (1,240) (1,211) (1,215) (1,149)

Generalandadministrativeexpenses (920) (964) (887) (887) (855) (855) (796)

Depreciationandamortization (216) (208) (196) (199) (197) (192) (174)

Operating income 2,166 2,683 2,904 2,621 2,821 3,317 3,183

Impairmentoninancialassets(net) (904) (962) (1,023) (1,112) (1,187) (1,341) (1,078)

Provisions(net) (94) (83) (150) (75) (138) (99) (170)

Othergains(losses) (166) (154) (71) (273) 113 (88) (72)

Income before tax 1,002 1,484 1,659 1,162 1,609 1,789 1,862

Incometax (95) (189) (369) (127) (359) (431) ( 510)

Net income 907 1,295 1,290 1,034 1,250 1,358 1,352

Non-controllinginterests (103) (106) (141) (96) (110) (70) (113)

Net attributable proit 804 1,189 1,150 939 1,140 1,287 1,240

Basic earnings per share (euros) 0.17 0.25 0.25 0.22 0.28 0.32 0.31

Net attributable profit

(Million euros)

(1) At constant exchange rate: –13.3%.

1,240

1Q

1,287

2Q

1,140

3Q

939

4Q

1,189

1Q

–14.3% (1)

2010 2011

1,150

2Q

3,668 3,143

804

3Q



7Earnings

ofincreasedbusinessinemergingmarkets,as

wellastheappropriatemanagementofspreads

indevelopedcountriesasvolumesofbusiness

fall.Theigureyeartodateis€9,676m.

Inbusinesswithcustomersinthedomestic

sectoroftheeuro area,yieldonloanswasup

Net interest income

TheGroup’squarterlynet interest income

continuestoshowgreatresilience.BetweenJuly

andSeptember2011,ittotaled€3,286m,1.3%up

onthesameperiodlastyearand2.2%abovethe

igureforthepreviousquarter.Thisistheresult

Consolidated income statement

(Millioneuros)

JanuarySep. 11 ∆%∆% at constantexchange rates JanuarySep. 10

Net interest income 9,676 (5.0) (3.0) 10,182

Netfeesandcommissions 3,424 0.7 2.5 3,402

Nettradingincome 1,063 (35.3) (34.0) 1,642

Dividendincome 332 10.2 10.7 302

Incomebytheequitymethod 394 86.6 86.6 211

Otheroperatingincomeandexpenses 163 (27.5) (32.3) 225

Gross income 15,052 (5.7) (4.0) 15,964

Operatingcosts (7,299) 9.9 12.3 (6,642)

Personnelexpenses (3,907) 9.3 11.5 ( 3,575)

Generalandadministrativeexpenses (2,771) 10.6 13.2 (2,506)

Depreciationandamortization (620) 10.4 13.6 (562)

Operating income 7,753 (16.8) (15.6) 9,322

Impairmentoninancialassets(net) (2,890) (19.9) (18.4) (3,606)

Provisions(net) (328) (19.7) (19.2) (408)

Othergains(losses) (391) n.m. n.m. (47)

Income before tax 4,145 (21.2) (20.1) 5,260

Incometax (652) (49.8) (49.0) (1,300)

Net income 3,492 (11.8) (10.6) 3,960

Non-controllinginterests (349) 19.3 24.5 (293)

Net attributable proit 3,143 (14.3) (13.3) 3,668

Basic earnings per share (euros) 0.66 (26.9) n.m. 0.90

Net interest income

(Million euros)


3,386

1Q

3,551

2Q

3,245

3Q

3,138

4Q

3,215

1Q

–5.0% (1)

2010 2011

3,175

2Q

10,182 9,676

3,286

3Q

Customer spread. Euros domestic sector

(Percentage)

3Q 4Q 1Q 2Q

2010 2011

Customerspread

Cost ofdeposits

Yield on totalnet lending

3Q

3.223.31

3.483.60

1.70

1.53

1.76 1.81

1.52

1.77

1.73 1.80

3.85

2.10

1.75



8 Groupinformation

Competitivepressureremainshighin South

America.However,buoyantbusinessactivity

meansthatthenetinterestincomeyearto

dateintheareawasup28.4%year-on-yearat

constantexchangerates.

againinthethirdquarterof2011by19basis

pointsto3.50%,whilethecostoffundsslowed

itsrisesigniicantly,andincreasedbyonly8

basispointsto1.72%.Asaresult,thecustomer

spreadwasup11basispointsontheigure

forthesecondquarterof2011to1.78%.This

improvementpracticallyosetstheeectsof

lowerlendingandmoreexpensivewholesale

funding.

InMexico,interbankratesarestilllowand

practicallyatthesamelevelsasatthecloseof

thesecondquarterof2011.Theyieldonloans

hasrisenby14basispointsontheigureatthe

closeofthepreviousquarter,to13.10%,thanks

tothegoodnewproductionigures,aboveall

inconsumerinanceandcreditcards.Deposit

costsincreasedbybarely5basispointsinthe

quarterto1.96%.Thusthecustomerspread

stoodat11.14%atthecloseofthequarter(11.05%

intheirstquarterof2011)andthenetinterest

incomeyeartodateintheareaisup6.0%year-on-yearatconstantexchangerates.

Breakdown of yields and costs

3Q11 2Q 11 1Q11 4Q10 3Q10

% of

ATA

% yield/

Cost

% of

ATA

% yield/

Cost

% of

ATA

% yield/

Cost

% of

ATA

% yield/

Cost

% of

ATA

% yield/

Cost

Cashandbalanceswithcentralbanks 3.8 1.19 3.6 1.25 3.7 1.30 4.0 1.17 4.2 0.99

Financialassetsandderivatives 25.4 2.87 24.3 2.98 24.4 3.03 25.2 2.75 26.0 2.61

Loansandadvancestocreditinstitutions 4.4 2.88 5.3 2.35 4.5 2.23 4.7 1.97 4.2 2.14

Loansandadvancestocustomers 59.7 5.62 60.3 5.42 61.2 5.24 59.9 4.89 59.5 4.86

Euros 38.4 3.50 39.2 3.31 40.0 3.25 39.5 3.12 39.0 3.12

Domestic 33.1 3.85 34.0 3.60 35.4 3.48 35.6 3.31 35.4 3.22

Other 5.2 1.31 5.2 1.41 4.6 1.43 3.9 1.48 3.6 2.10

Foreigncurrencies 21.3 9.44 21.1 9.33 21.3 8.98 20.4 8.31 20.5 8.19

Otherassets 6.7 0.45 6.4 0.37 6.1 0.44 6.2 0.46 6.1 0.43

Total assets 100.0 4.29 100.0 4.19 100.0 4.12 100.0 3.79 100.0 3.73

Depositsfromcentralbanksandcreditinstitutions 14.3 2.73 13.7 2.52 11.3 2.68 12.9 2.15 15.1 1.82

Depositsfromcustomers 48.3 2.17 48.6 2.06 50.6 1.77 48.1 1.63 45.6 1.51Euros 27.3 1.72 26.6 1.64 28.1 1.35 24.6 1.40 22.5 1.23

Domestic 16.6 1.75 17.7 1.80 17.7 1.73 17.3 1.77 16.6 1.52

Other 10.7 1.67 8.9 1.31 10.5 0.72 7.3 0.51 5.8 0.41

Foreigncurrencies 21.0 2.75 22.1 2.57 22.4 2.28 23.4 1.87 23.2 1.78

Debtcertiicatesandsubordinatedliabilities 18.9 2.47 20.3 2.27 20.1 2.15 20.4 2.15 20.6 1.95

Otherliabilities 11.7 0.99 10.7 1.02 11.1 1.29 12.3 0.64 12.8 0.64

Equity 6.8 - 6.7 - 6.9 - 6.3 - 5.9 -

Total liabilities and equity 100.0 2.02 100.0 1.92 100.0 1.77 100.0 1.58 100.0 1.45

Net interest income/Average total assets (ATA) 2.27 2.27 2.35 2.21 2.28

Net interest income/ATABBVA Group (Percentage)

3Q 4Q 1Q 3Q

2010 2011

2.28 2.21 2.272.35

2Q

2.27



9Earnings

fallinassetvalues,reducedcustomeractivity

andthelackofearningsfromportfoliosales.As

aresult,thisitemamountedtoanaccumulated

igureof€1,063mtoSeptember(€1,642mayear

ago).

Dividendincome,whichbasicallyincludes

incomefromBBVA’sholdinginTelefónica,

amountedto€332m,10.2%uponthesameperiodin2010.However,itisimportanttonote

thattheTelefónicaremunerationispaidinthe

secondandfourthquartersof2011.

Income by the equity methodcontinueswithits

positivetrend,withyear-on-yeargrowthof86.6%

to€394m,thanksbasicallytothesigniicant

contributionfromCNCB.

Finally,theitemofother operating income and

expensesamountedto€163m,down27.5%

comparedwiththesameperiodlastyear.Thisfallistheresultofboth,thehyperinlationin

Venezuelaandtheincreasedallocationtothe

depositguaranteefund(up21.8%year-on-year),

whichhavenotbeenosetbythepositive

performanceofincomefromtheinsurance

business(up13.9%).

Tosumup,thestrongresilienceoftheGroup’s

recurringearnings,togetherwiththenegative

iguresfromNTI,combinetoexplainwhythe

gross incomeyeartodateis5.7%downon

theigure12monthspreviously,at€15,052m.

However,itisimportanttopointoutBBVA’s

highcapacitytogeneraterecurringrevenues

quarterafterquarter.Thequarterlygross

incomenetofNTIanddividendsamountedto

€4,602m,ayear-on-yearincreaseof1.8%anda

quarterlyincreaseof0.8%.Intheyeartodate

igures,therecurringgrossincomeexcluding

NTIanddividendsamountedto€13,656m,2.6%

downonthesameperiodin2010.Thisisdue

toacustomer-centricretailmodelthatuses

technologyasleverageandishighlydiversiied

geographically,withtheemergingcountries

gainingincreasingweight.

Operating income

Operating expensesamountedto€7,299myear

todate,slowingtheirrateofyear-on-yeargrowth

to9.9%.Thisitemcontinuestobeinluencedby

theGroup’sinvestmentsinemergingcountries,

ininfrastructure,initsnewtechnological

platformandbrandimage.

Finally,intheUnited Statesnetinterestincome

betweenJulyandSeptember2011remained

atsimilarlevelstothoseoftheprevioustwo

quartersatconstantexchangerates,despitethe

continuedincreaseintheproportionoflower

riskloans,andthusloweryield.Theaboveisthe

resultofcontinuinggoodpricemanagementby

BBVACompass.

Gross income

Fees and commissionsamountto€3,424myear

todate,practicallythesame(up0.7%)asfor

thesameperiodin2010.Therewasapositive

contributionfromtheTurkishbankGaranti,

andgoodiguresfromthebankingbusiness

fees,whichwereup1.4%year-on-year.However,

feesfromthefundmanagementbusinesswere

down1.1%duetotheadversemarketconditions.

Thenegativeperformanceof NTIoverthe

quartercanbeexplainedbyvariousfactors:a

Gross income

(Million euros)


5,301

1Q

5,579

2Q

5,084

3Q

4,946

4Q

5,162

1Q

–5.7% (1)

2010 2011

5,263

2Q

15,964 15,052

4,627

3Q

Gross income net of NTI and dividends

(Million euros)


4,643

1Q

4,858

2Q

4,520

3Q

4,467

4Q

4,566

1Q

–2.6% (1)

2010 2011

4,488

2Q

14,020 13,656

4,601

3Q



10 Groupinformation

Asof30Sep-2011therewere18,192units,9.5%up

year-on-yearand1.9%upquarter-on-quarter.

Tosumup,thistrendinincomeandcosts

hasresultedinanoperating incomeyearto

date(30-Sep-2011)of€7,753m(€9,322min

January-September2010).Excludingtheleast

recurringincome,NTIanddividends,this

figureis€6,358m,13.8%downonthatayear

ago.

AtthecloseofSeptember,theBankemployed

110,625people,ayear-on-yearincreaseof5.1%

andaquarter-on-quarterincreaseof0.9%.The

branch networknumbered7,436unitsasof

30Sep-2011,9morethanatthecloseofJune

and74morethantheigurefor30Sep-2010.

Theincreaseistheresultoftheexpansion

processundertakeninemergingcountries

(basicallyMexicoandSouthAmerica).Finally,

thereistheongoingincreasein ATMnumbers.

Breakdown of operating costs and eiciency calculation

(Millioneuros)

JanuarySep. 11 ∆% JanuarySep. 10 2010

Personnel expenses 3,907 9.3 3,575 4,814

Wagesandsalaries 3,003 8.7 2,763 3,740

Employeewelfareexpenses 567 10.3 514 689

Trainingexpensesandother 337 13.0 298 386

General and administrative expenses 2,771 10.6 2,506 3,392

Premises 633 12.7 562 750

IT 462 8.9 424 563

Communications 223 6.4 209 284

Advertisingandpublicity 271 8.2 250 345

Corporateexpenses 77 19.1 65 89

Otherexpenses 829 8.1 767 1,040

Leviesandtaxes 276 20.8 228 322

Administration costs 6,678 9.8 6,080 8,207

Depreciation and amortization 620 10.4 562 761

Operating costs 7,299 9.9 6,642 8,967

Gross income 15,052 (5.7) 15,964 20,910

Eiciency ratio (Operating costs/Gross income, in %) 48.5 16.5 41.6 42.9

Operating costs

(Million euros)

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

2,118

1Q

2,262

2Q

2,262

3Q

2,325

4Q

2,359

1Q

+9.9% (1)

2010 2011

2Q

6,642 7,299

2,479

3Q

2,461

January-Sep.2010

January-Sep.2011

2010

15,964

20,910

15,052

6,6428,967

7,299

January-Sep.2010

January-Sep.2011

2010

41.642.9

48.5

Efficiency

Grossincome

Operatingcost

(Million euros) (Percentage)

Efficiency ratio



11Earnings

to€2,890m,ayear-on-yearreductionof19.9%.

Asaresult,theGroup’sriskpremiumhas

improvedby8basispointsoverthequarterto

1.01%,andthecoveragerationowstandsat60%.

Provisionsamountto€328m,19.7%downon

lastyear.Theybasicallyincludeprovisionsfor

earlyretirements,othercontributionstopension

fundsandcontingentliabilitiesprovisions.

Other gains (losses)standatanegative€391m,

comparedwithlossesof€47mlastyear.These

lossesaremainlyrelatedtoprovisionsonreal

estateandforeclosedassetswiththeaimof

maintainingcoverageatlevelsofover30%.

Finally,therewasalsoalowtaxchargethis

quarter,mainlyduetothelowerNTI,revenues

withloworzerotaxrates(basicallydividends

andequityaccountedearnings),andthe

higherproportionofresultscomingfrom

TheAmericasandGaranti,whichcarryalow

effectivetaxrate.

Provisions and others

Impairment losses on inancial assetscontinue

toshowaslightdecreaseontheprevious

quarter.UpuntilSeptember2011theyamounted

Operating income

(Million euros)


3,183

1Q

3,317

2Q

2,821

3Q

2,621

4Q

2,904

1Q

–16.8% (1)

2010 2011

2Q

9,322 7,753

2,683

3Q

2,166

, ,, ,

, ,

, ,, ,

, ,

, , , ,, ,

, , , , , ,

18,192

September2011

5,258

7,293

4,540

1,101

16,619

September2010

5,061

6,558

3,910

1,090

17,055

December2010

5,138

6,760

4,079

1,078

Number of ATMs (1)

Spain

Mexico

South America

The United States

(1) Excluding Garanti.

105,265

September2010

, , , ,, ,

, , , ,, ,

, , , , , ,

, , , , , ,

, , , , , ,

106,976

December2010

110,625

September2011

28,629 28,41629,132

33,169 34,082 35,538

28,886 29,608 30,690

12,609 12,863 12,991

Number of employees (1)

Spain

Mexico

South America

The United States

Rest of the world


7,362

September2010

7,361

December2010

7,436

September2011

3,024 3,024 3,018

1,985 1,985 1,999

1,457 1,456 1,545

752 752 745

Number of branches (1)

Spain

Mexico

South America

The United States

Rest of the world


Impairment losses on financial assets

(Million euros)


1,078

1Q

1,341

2Q

1,187

3Q

1,112

4Q

962

1Q

–19.9% (1)

2010 2011

1,023

2Q

3,606 2,890

904

3Q



12 Groupinformation

intheGroup’sshareholders’fundshasledtoa

2.1%year-on-yearincreaseinthebookvalueper

shareto€8.61.Finally,ROEwas11.3%andreturn

onaverageassets( ROA)0.83%,makingBBVA

oneofthemostproitablebanksinitspeer

group.

Net attributable proit

Inconclusion,thepositiveperformanceof

recurringrevenuesandloan-lossprovisions

hasallowedtheBBVAGrouptocontinue

withitsexpansionplansdesignedtolaythe

foundationsforfuturegrowthwhilegenerating

anetattributableproitof€804minthe

secondquarterand€3,143myeartodate.

Thisperformanceisinanadversemarket

environment,despitewhichallthebusiness

areasaregeneratingpositiveresults.Inthis

regard,Spaingenerated€1,162myeartodate,

Eurasia€705m,Mexico€1,275m,SouthAmerica

€754m,andtheUnitedStates€218m.

Earnings per share(EPS)yeartodate

(30Sep-2011)stoodat€0.66compared

with€0.90inthesameperiodin2010,after

correctingfortheeectsofthecapitalincreases

inNovember2010andApril2011.Theincrease

Earnings per share

(Euros)

0.31

1Q

0.32

2Q

0.28

3Q

0.22

4Q

0.25

1Q

–26.9%

2010 2011

0.25

2Q

0.90 0.66

0.17

3Q

ROE

(Percentage)


2010 January-September2011

17.215.8

11.3

ROA

(Percentage)

0.950.89

0.83


2010 January-September2011



13Balancesheetandbusinessactivity

Atthecloseofthe third quarter of 2011,BBVA’s

balancesheetcontinuestoshowgreatstability,at€584billion.ThemainfeaturesoftheGroup’s

balancesheetandbusinessactivityinthis

periodcanbesummedupasfollows:

• Giventhecurrenteconomicandinancial

situation,itisimportanttostressthatBBVAhasasoundbalance sheetwithlittleleverageand

its2011fundingrequirementscovered.For2012

theserequirementsarethelowestamongits

Balancesheetandbusinessactivity

Consolidated balance sheet

(Millioneuros)

30-09-11 ∆% 30-09-10 30-06-11 31-12-10

Cashandbalanceswithcentralbanks 24,637 18.2 20,836 21,369 19,981

Financialassetsheldfortrading 74,859 8.0 69,306 63,421 63,283

Otherinancialassetsdesignatedatfairvaluethroughproitorloss 2,825 4.4 2,706 2,912 2,774

Available-for-saleinancialassets 58,768 2.1 57,558 60,599 56,457

Loansandreceivables 369,919 2.5 360,762 371,314 364,707

Loansandadvancestocreditinstitutions 23,756 (4.4) 24,846 22,890 23,636

Loansandadvancestocustomers 343,416 2.9 333,741 346,222 338,857

Other 2,747 26.3 2,175 2,202 2,213

Held-to-maturityinvestments 11,049 11.9 9,877 9,334 9,946

Investmentsinentitiesaccountedforusingtheequitymethod 5,352 25.9 4,250 4,518 4,547

Tangibleassets 7,026 6.6 6,593 6,965 6,701

Intangibleassets 10,068 29.3 7,785 9,722 8,007

Otherassets 19,935 10.2 18,087 18,551 16,336

Total assets 584,438 4.8 557,761 568,705 552,738

Financialliabilitiesheldfortrading 50,616 6.1 47,706 34,686 37,212

Otherinancialliabilitiesatfairvaluethroughproitorloss 1,716 9.7 1,565 1,815 1,607

Financialliabilitiesatamortizedcost 468,494 3.9 450,843 471,248 453,164

Depositsfromcentralbanksandcreditinstitutions 80,072 6.4 75,225 80,545 68,180

Depositsfromcustomers 282,050 10.3 255,798 278,496 275,789

Debtcertiicates 83,107 (12.0) 94,394 86,669 85,180

Mortgagebondsandcoveredbonds 44,263 15.2 38,436 44,784 40,246

Otherdebtcertiicates 38,844 (30.6) 55,957 41,885 44,933

Subordinatedliabilities 16,067 (13.4) 18,553 17,586 17,420

Otherinancialliabilities 7,198 4.7 6,873 7,948 6,596

Liabilitiesunderinsurancecontracts 7,478 (6.1) 7,961 7,607 8,033

Otherliabilities 16,265 (3.1) 16,777 15,705 15,246

Total liabilities 544,569 3.8 524,852 531,062 515,262

Non-controllinginterests 1,730 21.3 1,426 1,562 1,556

Valuationadjustments (3,414) n.m. (128) (2,596) (770)

Shareholders’funds 41,552 31.5 31,610 38,677 36,689

Total equity 39,868 21.1 32,909 37,643 37,475

Total equity and liabilities 584,438 4.8 557,761 568,705 552,738

Memorandum item:

Contingentliabilities 38,530 13.9 33,819 36,360 36,441



15Balancesheetandbusinessactivity

Customer lending (gross)

(Billion euros)

343

September2010

331

September2009

352

September2011


+2.8% (1)

andresidentialrealestatehavemorethanoset

thefallinloanstothedevelopersector.This

indicatesthattheshiftinthemixtowardsamoresustainablebalancesheetisbeingcompleted.In

Eurasiatheloanbookgrewby45.4%

year-on-year,duepartlytotheincorporation

oftheTurkishbankGarantianditspositive

performanceinlending,andalsototheslight

riseinCorporateandInvestmentBanking(up

3.0%inthequarter).Finally,inSpain(andinline

withtherestofthesystem)therewasafallof

2.4%comparedwithSeptemberlastyear,dueto

thedeleveragingprocessmentionedabove.

Withinthedomesticsector,thegeneraltoneis

weaknessinnewproduction,aboveallinthose

itemsthataremostcloselyrelatedtocorporate

andbusinessactivity(corporatelending,

inancialleasingandothertermloans).Secured

loans,whicharethosewiththebiggestrelative

weightandlowestassociatedrisk,showeda

notablestabilitycomparedwiththecloseof

30Jun-2011,atatotalof€102billionasof

30Sep-2011.

Inthenondomestic sector,theannualincrease

of13.9%isduetothestrengthofbusiness

activity,particularlyinSouthAmerica,andthe

additionofGaranti.Theeectofexchangerates

wasnegative.

Finally,NPAhaveremainedstablesince

December2009.

Customer funds

Thebalanceofcustomerfundsasof30Sep-2011

was€419billion,ayear-on-yearincreaseof5.0%.

O-balance-sheetfundsperformedworst,witha

fallof4.4%.Theywerestronglyhitbythecurrent

turmoilinthemarkets.

Onbalancesheet customer fundstotaled

€282billionasof30Sep-2011(up10.3%

year-on-year).Ofnoteherewasthegood

performanceoftimedepositsinthedomestic

sectorthankstothehighratioofrenewalsover

thequarterofthetimedepositsgatheredayear

ago.Asaresult,thislineitemgrewby7.5%

Customer funds

(Millioneuros)

30-09-11 ∆% 30-09-10 30-06-11 31-12-10

Deposits from customers 282,050 10.3 255,798 278,496 275,789

Domestic sector 146,284 33.2 109,848 135,420 133,629

Publicsector 30,672 n.m. 7,409 24,905 17,412

Otherdomesticsectors 115,612 12.9 102,438 110,515 116,217

Currentandsavingsaccounts 42,215 (7.7) 45,740 44,061 43,225

Timedeposits 51,182 7.5 47,599 52,188 49,160

Assetssoldunderrepurchaseagreementandother 22,215 144.1 9,100 14,266 23,832

Nondomestic sector 135,766 (7.0) 145,951 143,076 142,159

Currentandsavingsaccounts 78,127 15.0 67,930 75,002 74,681

Timedeposits 54,958 (25.4) 73,697 63,320 61,626

Assetssoldunderrepurchaseagreementandother 2,681 (38.0) 4,324 4,754 5,852

Other customer funds 136,588 (4.4) 142,902 144,175 146,188

Mutualfunds 38,361 (9.6) 42,422 40,527 41,991

Pensionfunds 73,870 (2.2) 75,567 77,051 78,763

Customerportfolios 24,357 (2.2) 24,913 26,596 25,434

Total customer funds 418,638 5.0 398,700 422,672 421,977



16 Groupinformation

year-on-year.Combinedwiththefallinthe

loan-bookinSpain,ithascontributedtothe

steadynarrowingoftheliquiditygapinBBVA’sbalancesheet.Inaddition,customerdeposits

inthenon-domesticsectorhavefallenby7.0%

year-on-year,basicallyduetothenegative

impactofexchangerates.

Obalance sheet customerfundsclosedthe

thirdquarterat€137billion,4.4%downonthe

igureforthesamedatelastyear,and5.3%down

onthecloseofthepreviousquarter.Ofthese

funds,36.8%(€50billion)arelocatedinSpain,a

year-on-yeardropof8.4%andadeclineof3.9%

overthequarter.Thiscanbeexplainedlargely

duetothereductioninthevalueoftheassets

undermanagement,mainlyinmutualfunds

(down16.4%year-on-yearand3.6%

quarter-on-quarter).Itisworthpointingout

thataccordingtothelatestdatafromAugust

2011theeectofthisfallinBBVAismuchless

signiicantthanintherestofthesystem,given

themoreconservativeproileofitsmutual

funds.Inthethirdquarterof2011,thereal-estate

fundBBVAPropiedadchangeditslegalstatus

andbecameapubliccorporation( sociedad

anónima),whichmeansthatitisnolonger

accountedforasamutualfund.Becauseofthis,

thepreviousdatahavebeenrestatedtoensure

thattheyarecomparable.Pensionfundstotaled

€17billion(down1.6%year-on-yearand1.4%

quarter-on-quarter).BBVAhasmaintainedits

positionastheleadingpensionfundmanager

inSpain,withamarketshareof18.3%(June2011

data,thelatestavailable).

Intherestoftheworld,o-balance-sheetfunds

totaled€86billion,withayear-on-yearfallof2.0%atcurrentexchangerates.Thesefunds

werealsoaectedbythefallinthevalueof

assetsundermanagement.

Statement of changes in equity

Asof30Sep-2011,BBVA’s equitytotaled

€39,868m,ariseoverthequarterof5.9%,despite

thenegativeeectoftheexchangerate.Thiswas

thecombinedresultoftheearningsgenerated

inthequarter,thenewimplementationofthe

dividendoptionschemeandtheconversionof

theconvertiblebondintosharesinJuly2011.

Other customer funds

(Millioneuros)

30-09-11 ∆% 30-09-10 30-06-11 31-12-10

Spain 50,225 (8.4) 54,802 52,254 52,482

Mutualfunds 20,220 (16.4) 24,179 20,966 22,316

Pensionfunds 16,741 (1.6) 17,019 16,986 16,811

Individualpensionplans 9,600 (2.6) 9,856 9,799 9,647

Corporatepensionfunds 7,141 (0.3) 7,162 7,186 7,164


Rest of the world 86,363 (2.0) 88,100 91,922 93,707

Mutualfundsandinvestmentcompanies 18,141 (0.6) 18,243 19,562 19,675

Pensionfunds 57,129 (2.4) 58,548 60,066 61,952


Other customer funds 136,588 (4.4) 142,902 144,175 146,188

398

September2010

382

September2009

418

September2011

+5.0% (1)

142133

136

255249282

Customer funds

(Billion euros)


Other

customerfunds

Customer

funds on

balance

sheet



17Capitalbase

Asof30Sep-2011,theBBVAGroup’scapital base,

calculatedaccordingtotheBISIIregulation,totaled

€41,120m,averysimilarigureto30June-2011

(down0.3%).Themostsigniicantdierencesin

thequarterinclude:anincreaseincorecapitalof

€855m,explainedbythegenerationofearnings

intheperiod,andthehigherdeductionfromthe

investmentmadeinCNCB.Inaddition,therewas

signiicantmovementincurrenciesinthequarter,

speciicallythedepreciationoftheMexicanpeso,

whichhashadanegativeimpactonthecapital

base.

Riskweighted assets(RWAs)wereup1.3%

inthequarterto€325,458m.Thisgrowth

isfundamentallyexplainedbythestrong

performanceofactivityinLatinAmerica

andbytheappreciationofthedollarand

othercurrenciesinSouthAmerica.Another

dierentiatingkeyqualityaspectofBBVAversus

itsEuropeanpeersisthehighRWAdensityand

itsstabilitythroughtime.

Theminimum capital requirements(8%of

RWA)totaled€26,037m,makingthecapital

basesurplusatthecloseofSeptemberreach

€15,083m,thatis,57.9%abovetheminimum

requiredlevels.

Asof30Sep-2011,core capitalwasup3.0%with

respecttotheJune2011igureandamountedto

Capitalbase

Capital base (BIS II Regulation)

(Millioneuros)

30-09-11 30-06-11 31-03-11 31-12-10 30-09-10

Shareholders'funds 41,552 38,677 38,107 36,689 31,610

Adjustmentsanddeductions (11,923) (11,904) (11,654) (8,592) (8,642)

Mandatoryconvertiblebonds - 2,000 2,000 2,000 2,000

Core capital 29,628 28,773 28,452 30,097 24,969

Preferenceshares 5,157 5,114 5,128 5,164 5,165

Deductions (2,733) (2,452) (2,367) (2,239) (1,900)

Capital (Tier I) 32,053 31,435 31,214 33,023 28,234

Subordinateddebtandother 11,800 12,266 12,613 12,140 12,955

Deductions (2,733) (2,452) (2,367) (2,239) (1,900)

Other eligible capital (Tier II) 9,067 9,814 10,246 9,901 11,055

Capital base 41,120 41,249 41,460 42,924 39,289

Minimumcapitalrequirement(BISIIRegulation) 26,037 25,703 25,523 25,066 24,506

Capital surplus 15,083 15,547 15,937 17,858 14,783

Riskweighted assets 325,458 321,282 319,044 313,327 306,319

BIS ratio (%) 12.6 12.8 13.0 13.7 12.8

Core capital (%) 9.1 9.0 8.9 9.6 8.2

Tier I (%) 9.8 9.8 9.8 10.5 9.2

Tier II (%) 2.8 3.1 3.2 3.2 3.6

RWA’s / Total assets

(Percentage)

September2008

September2009

September2010

December2007

September2011

53.5 53.3 54.1 54.9 55.7



18 Groupinformation

andinsuranceentities,standsat€9,067m.This

representsa7.6%decreaseinthequarterdue

totheinvestmentinCNCBandtothefallin

unrealizedcapitalgains.

Tosumup,theBISratioasof30September-2011

was12.6%withaclearpositiveevolutioninthe

qualityofitscomponentssincethestartofthe

crisis.

Ratings

Severalactionsweretakenontheratingsin

EuropeinOctober.InSpain,Fitchdowngraded

thesovereign(KingdomofSpain)bytwo

notches,fromAAtoAA–withanegativeoutlook,

whichresultedinactionsfortheSpanish

bankingsystem.BBVA’sratingdecreasedtoA+

fromAA–.Likewise,Standard&Poor’suniversally

downgradeditsratingsfortheSpanishbankingsystem.BBVA’sratingfelltoAA–fromAA,with

anegativeoutlook.Thesovereignratingwas

alsodowngradedtothesamelevelasthatof

BBVA.Inlinewiththeothertworatingagencies,

Moody’scompletedinOctoberitsSpanish

sovereignratingrevision,whichimpliedatwo

notchdowngradetoA1(negativeoutlook).This

actionhasalsohadadirectimpactonSpanish

banks’ratings.BBVA’sratingwasdowngraded

onenotchtoAa3(negativeoutlook).Thisrating

isonenotchaheadofthesovereignone.

€29,628m,andacoreratioof9.1%.Theorganic

generationofcapitalinthequarterwas15

basispoints,netoftheimpactofthecurrency

evolutionandotherfactors.

TheTier Iratio,9.8%,fellwithrespectto

30Jun-2011by6basispoints.Thelevelof

preferencesharesissimilartothatinthe

previousquarter,at€5,157m,or16.0%oftotalbankcapital.

Therestoftheeligiblecapital, Tier II,which

mainlyconsistsofsubordinateddebt,surplus

genericprovisions,eligibleunrealizedcapital

gainsandthedeductionforholdingsininancial

Ratings

Long term Short term Financial strength Outlook

Moody’s Aa3 P1 B– Negative

Fitch A+ F1+ B Negative

Standard&Poor’s AA– A1+ – Negative

Capital base: BIS II ratio

(Percentage)

Tier II

Core capital

Tier I

December2007

13.0

5.8

7.3

5.7

September2008

12.3

6.4

7.8

4.5

September2009

13.4

8.0

9.4

4.1

September2010

12.8

8.2

9.2

3.6

September2011

12.6

9.1

9.8

2.8



19Riskmanagement

Credit risk

The third quarter of 2011oncemorefeatured

stabilityinthemainindicatorsofcreditquality

withrespecttothecloseof2010.TheNPAratio

closedat4.1%,thecoverageratioat60%andthe

riskpremiumforthequarterstoodat1.01%.

AsofSeptember30,2011,thevolumeoftotal

riskswithcustomers(includingcontingent

liabilities)totaled€390,723m,whichisvery

similartotheigurefromthepreviousquarter

(€391,380m).Thislatdevelopmentisexplained

inpartbythedepreciationofthemaincurrencies

againsttheeuro(atconstantexchangerates,

lendingfell0.1%inthequarter)andalsobythe

deleveragingprocessobservedinSpain.This

trendmightincreaseinthecomingmonths,

thoughBBVAwillbeaectedtoalesserdegree

thanthesystemaverage.

Nonperforming loans haveremainedstable

sinceDecember2009andreached€15,970m.

Therehasbeenadecreaseinnew

Riskmanagement

Variations in nonperforming assets

(Millioneuros)

3Q11 2Q11 1Q11 4Q10 3Q10

Beginning balace 15,790 15,528 15,685 15,560 16,137

Entries 2,918 3,713 2,804 3,852 3,051

Recoveries (1,874) (2,484) (1,882) (2,479) (2,116)

Net variation 1,044 1,229 922 1,373 935

Write-os (876) (939) (1,140) (1,269) (1,119)

Exchangeratedierencesandother 12 (28) 61 21 (393)

Periodend balance 15,970 15,790 15,528 15,685 15,560

Memorandum item:

Non-performingloans 15,689 15,515 15,210 15,361 15,218

Non-performingcontingentliabilities 281 275 319 324 342

Credit risk management (1)

(Millioneuros)

30-09-11 30-06-11 31-03-11 31-12-10 30-09-10

Non-performingassets 15,970 15,790 15,528 15,685 15,560

Totalrisks 390,723 391,380 383,043 384,069 376,421

Provisions 9,503 9,576 9,490 9,655 9,641

Speciic 6,584 6,485 6,516 6,823 6,552

Genericandcountry-risk 2,919 3,090 2,974 2,832 3,089

NPAratio(%) 4.1 4.0 4 .1 4.1 4.1

NPAcoverageratio(%) 60 61 61 62 62

(1)Includingcontingentliabilities.

Non-performing assets

(Million euros)

15,970

September2011

December2010

15,685

March2011

15,528

September2010

15,560

+1.1%15,790

June2011



20 Groupinformation

improvedto140%inSouthAmerica(138%asof

30Jun-2011).Inturn,itfellinEurasiato118%(144%

asof30Jun-2011)andto128%inMexico(134%as

of30Jun-2011).Additionally,itisworthnotingthat

58.9%oftheGroup’srisksarecollateralized.

Economic capital

Attributableeconomicriskcapital(ERC)

consumptionamountedto€28,946masof

30Sep-2011,7.2%upontheigureasof

30Jun-2011.Thisincreaseisduetothe

recalibrationofthecreditriskmodelsinSpainin

themonthofAugust.

AsistobeexpectedfromBBVA’sproile,most

ofthisigure(64.3%)iscreditriskonportfolios

originatedintheGroup’sbranchnetworkfromits

owncustomerbase.

Marketriskcontinuestobetheleastrelevant

item(1.8%),giventhenatureofBBVA’sbusiness

anditspolicyofminimalproprietarytrading.It

remainsatasimilarleveltothepreviousquarter.

Equityrisk(10.1%)basicallyrelectstheportfolio

ofHoldingsinIndustrial&FinancialCompanies

andthestakeinCNCB.Itslevelisalsosimilar

tothatatthecloseofthepreviousquarter.Thestructuralbalance-sheetrisk,originatingfromthe

managementoftheGroup’sstructuralinterest-rate

riskandexchange-raterisk,stoodat7.7%.Finally,

operationalriskstoodat6.9%oftotalERC.

non-performingassetswithrespecttothe

previousquarter,aswellasinrecoveries.The

latter,however,isdueprimarilytotheseasonal

natureofthisperiod,especiallyconsideringthe

summervacationperiodinSpain.Nevertheless,

therateofrecoveriesovernewNPAremainsata

solidlevel(64.2%).

TheNPA ratio oftheGroupstoodat4.1%and

remainedinastablerangewithrespectto

recentquarters.Brokendownbybusinessarea,

theNPAratioroseslightlyinSpain,Mexicoand

Eurasia.ThisvariationinSpainisduetothe

aforementioneddecreaseinlending,astheNPA

asof30Sep-2011remainedstableascompared

totheigureasof30Jun-2011.TheUnitedStates

maintaineditsdownwardtrendintheNPAratio,

andSouthAmericaclosedanotherquarterwith

animprovementof9basispointswithrespectto

theigureforJune2011.

Coverage provisionsforriskswithcustomers

amountedto€9,503m,averysimilarigureto

thatfromthesecondquarteroftheyear.Ofthis

total,genericprovisionsreached2,886mand

represented30.4%.

Finally,theNPA coverage ratio stoodat60%,whichissimilartothatofthepreviousquarter.By

businessarea,itstoodat42%inSpain(43%atthe

endofthepreviousquarter),itincreasedto69%

intheUnitedStates(67%asof30Jun-2011)and

September2011

December2010

March2011

June2011

September2010

62 62 61 61 60

4.1 4.1 4.1 4.0 4.1

NPA and coverage ratios

(Percentage)

NPA ratio

Coverageratio

Recoveries over entries to NPA

(Percentage)

4Q 1Q 2Q

2010

3Q 3Q

2011

69.4

64.467.1 66.9

64.2



21TheBBVAshare

Therewasrenewedturmoilintheixed-incomeandequity

marketsinthethirdquarterof2011,mainlyduetothedeepening

sovereigndebtcrisisandworseningexpectationsofeconomic

growth,bothinEuropeandglobally.Thishasledtoriskaversion,

mainlyfocusedontheeurozone,andasigniicantfallinthemain

stock market indices. TheIbex35wasdownby17.5%,inlinewith

thedropintheStoxx50,whichlost15.7%.Theperformanceofthe

U.S.marketwassimilar,withtheS&P500indexlosing14.3%.

TheEuropean banking sectorwasaectedbothbythe

perceptionofsovereignriskandbyinancialpressuredueto

uncertaintyregardingthescopeandpossiblesolutionofthe

Europeancrisis.Inthisenvironment,thebankswithlower

exposuretoperipheralcountriesdebtandbettermanagement

oftheirliquidityandbalancesheethaveperformedbetteronthe

equitymarkets.Thekeystockmarketindicatorforthesector,the

StoxxBanksindexofEuropeanbanks,wasdown27.9%.

BBVA’s resultsforthesecondquarterof2011werebetterthanthe

consensusestimatesandwerefavorablyreceived.Analystsvalue

thefactorsthatsetBBVAapart,aboveallintermsofcreditquality,

thepotentialofitsinternationalbusinessanditssolidcapitalbase.

TheyalsocontinuetovaluethestrengthofitsearningsinMexico

andSouthAmerica.Elsewhere,theyhavealsovaluedpositively

theimprovedmarginsintheUnitedStatesfranchise,aswellas

BBVA’sstableNPAratiosinSpain,whereithasperformedbetter

thanitsdomesticcompetitors.

TheBBVA sharewasdown23.6%inthequarter,closingat

€6.18pershare,resultinginamarketcapitalizationof€29,817

million.Thisputstheprice/bookvalueratioat0.7,theP/Eratio

(calculatedonestimatedmedianearningsfor2011according

totheconsensusamongBloomberganalysts)at6.5,andthe

dividendyield(alsocalculatedonthemediandividendsper

shareestimatedbyanalystsfor2011ascomparedtothequoted

priceasofSeptember30)at6.8%.ThefallintheBBVAshare

pricewasgreaterthanthatregisteredbytheIbex,butbelowthe

performanceofthesectorinEurope(StoxxBankswasdown

27.9%)andtheeurozone(EuroStoxxBanksdown34.3%).In

thecurrentenvironmentofmacroeconomicweaknessandthe

diicultaccesstoinance,themarkethasvaluedtheproileof

BBVA’sresults,itsdiversiicationviaemergingmarketsandthe

advantagesofaretailcustomer-centricbusiness.

Inthethirdquarteroftheyear,theaveragedaily trading volume

was70millionshares,withanaveragevalueof€475million.

Intermsofshareholder remuneration,onSeptember15a

dividendpayoutwasannouncedof€0.10pershare(up11.0%

comparedwiththeequivalentdividendpaymentlastyear)as

partofthe“dividendoption”systemofflexibleremuneration

agreedattheGeneralShareholdersMeetingon11-Mar-2011.

Thisplanoffersshareholdersthechancetoreceiveanamount

equivalenttooneofthetraditionalinterimdividendsfor2011

ineithernewordinarysharesorincash.ThepercentageofshareholderswhohaveoptedtoreceivenewBBVAshareswas

over91%,whichoncemoreconfirmsthepopularityofthisnew

remunerationprogram.

TheBBVAshare

The BBVA share and share performance ratios

30-09-11 30-06-11

Numberofshareholders 981,348 921,650

Numb er ofshares issued 4 ,824,793,497 4 ,551,602 ,570

Dailyaveragenumberofsharestraded 69,688,609 47,764,365

Dailyaveragetrading(millioneuros) 475 387

Maximumprice(euros) 8.38 8.95

Minimumprice(euros) 5.03 7.34

Closingprice(euros) 6.18 8.09

Bookvaluepershare(euros) 8.61 8.50

Marketcapitalization(millioneuros) 29,817 36,822

Price/Bookvalue(times) 0.7 1.0

PER(Price/Earnings;times) 6.5 7.7

Yield(Dividend/Price;%) 6.8 5.2

Share price index

(30-09-10=100)

3 1-1 2-10 3 1- 03 -1130-09-10 30-06-11 30-09-11

Stoxx 50

BBVA

Europe Stoxx

Banks

50

60

70

80

90

100

110

120

130

140



22 Groupinformation

AtBBVAweareconcernednotonlyabouthowwespendthe

moneyweearn,butaboveallhowweearnit.Thatiswhywe

areworkingtointegratecorporateresponsibility(CR)across

thevaluechain,fromthedesignoftheproduct,itsadvertising

andmarketing,tothemanagementofitsrisks.Asaresult,

BBVAremainsoneoftheleadingglobalcompaniesinterms

ofsustainabilityandrepeatsitslistingontheDowJones

SustainabilityIndex(DJSI).BBVAhasalsobecomeamodelat

theEuropeanlevelinCRcommunication.Itwasdistinguishedat

theDigitalCommunicationAwards2011foritscommunication

strategybasedonitsongoingdirect,transparentandsimple

conversationwithallitsstakeholders.Thisperiodhasalsoseen

thepublicationoftheCR2010reportsforBBVACompassand

BBVAChile.Belowisasummaryofthemostoutstandingactivityrelatedtocorporateresponsibilityduringthequarter.

Financial Literacy

BBVABancomerhasincludedapersonalinanceworkshopdealing

withlifeinsuranceinits‘ Adelante con tu futuro ’(Forwardwithyour

future),ainancialeducationprogram.Theaimistogivepeople

theknowledgeandskillstheyneedtomakethebestlifeinsurance

choicesandbettermanagetheirpolicy.In2011BBVACompass

hasalsobeguntheCrédito Inteligente(Smartcredit)scheme,in

whichthebank’semployeesvolunteertheirtimeinschoolsinthe

communitieswheretheyworkinordertoshareinformationwith

youngpeopleabouttheresponsibleuseofcredit.

Responsible Banking

Human Resources.Themagazine Actualidad Económica

haschosenBBVAas‘thebestcompanytoworkfor.’Theaward

recognizestheeortandcommitmentmadebytheGroupto

the110,000employeesontheBBVAteam.Criteriasuchastalent

management,remunerationpolicy,theworkingenvironment,

employeetrainingandtheirownopinionswerekeyfactorsin

decidingthattheGroupisthebestplacetowork.BBVAChilehasalsobeenrecognizedasbeingamongthemostsociallyresponsible

companiesinthecountry,accordingtothenationalrankingof

CorporateSocialResponsibility2011drawnupbythemagazineQué

PasaandtheProhumanaFoundation.InSpain,BBVAhasreached

anagreementwiththetradeunionstoregulateandimprovethe

conditionsunderwhichteleworkschemesareimplemented.

The Environment. BBVAhasreinforceditscommitmentand

strategyonquestionsrelatingtoclimatechange,ascanbeseenin

thelatesteditionoftheGlobal500Report2011publishedbythe

CarbonDisclosureProject(CDP).TheGrouphasimprovedits

ratingby10pointsinthisanalysis,whichassessesclimatechange-relatedstrategyandmanagementatthe500biggest

companiesbymarketcapitalization.

Customer focus. BBVABancomerhasworkedwithNacional

FinancieratolaunchtheMicronegocios(micro-enterprise)card,

whichisdesignedtocovertheinancingneedsofmicro-enterprises

andthussupportthecountry’sproductivesector.

Community Involvement

FranciscoGonzálezpresentedthethirdBBVAINTEGRAAwardto

theirmLantegiBatuakfromVizcaya,whichhasbeengenerating

innovativeandqualityjobopportunitiesforpeoplewithdisabilities

overthelast25years.TheBBVAINTEGRAAwardcarrieswithit

prizemoneyof200,000euros.Itsaimistofosterexcellenceand

innovationintheintegrationofpeoplewithdisabilitiesintotheworkforceandtopromoteequalopportunitiesandabetterqualityof

lifeforthisgroup.BBVAEspañaandFundosa,thebusinessdivision

oftheFundaciónONCE,havealsosignedainancialagreement

throughwhichtheBankmakesavailable10millioneurostothe

companytosupportthedevelopmentofSpecialEmployment

Centersandpromotethehiringofpeoplewithdisabilities.

BBVA and Sustainability Indices

Asoftheendofthequarter,BBVA’sweightingsinthemain

sustainabilityindiceswereasfollows:

Formoreinformationandcontactdetails,pleasevisit

www.bancaparatodos.com

Corporateresponsibility

Main sustainability indices in which BBVA

participates

Weighting (%)

DJSIWorld 0.52

DJSIEurope 1.18

DJSIEurozone 2.48

ASPIEurozoneIndex 2.13

EthibelSustainabilityIndexExcellenceEurope 1.47

EthibelSustainabilityIndexExcellenceGlobal 0.85

MSCIWorldESGIndex 0.36

MSCIWorldex U SAE SGIndex 0.69

MSCIEuropeESGIndex 1.24

MSCIEAFEESGIndex 0.78

FTSE4GoodGlobal 0.35

FTSE4GoodGlobal100 0.58

FTSE4GoodEurope 0.81

FTSE4GoodEurope50 1.31



23Businessareas

Inthissectionwediscussthemoresigniicantaspectsofthe

activitiesandearningsoftheGroup’sdierentbusinessareas,along

withthoseofthemainunitswithineach,plusCorporateActivities.

Speciically,wedealwiththeincomestatement,thebalancesheet

andthemainratios:eiciency,NPAratio,NPAcoverageratioand

theriskpremium.

Followingtheacquisitionof24.9%oftheTurkishbankGaranti

anditsincorporationintotheinancialstatementsoftheGroup

startinginMarch2011,BBVAbegantohaveasigniicantpresence

inEuropeandAsiaintermsofitsbalancesheetandearnings.

Inaddition,sincethestartofthecrisis,theimportanceofthe

geographicallocationofbusinesshasbeenclearforproviding

aproperperceptionofrisksandanimprovedestimateofthecapacityforfuturegrowth.Finally,thenewregulationsfavoralocal

managementofstructuralrisksthatavoidspossiblecontagion

betweeninancialsystems.Forthesemotives,thebusinesses

includedinSpainandPortugalandWB&AMduring2010havebeen

regroupedintothefollowingareas:

• Spain:includesBBVAbusinessesinallsegments,withinthe

country.

• Eurasia:coversallBBVAactivityintherestofEuropeandAsia,

includingtheGroup’sstakeinGaranti.

Thisrespondstotheincreaseddemandforgeography-speciic

informationfromdierentusers,includingtheregulators.

Inaddition,itisworthnotingthatin2010liquidityconditionson

theinancialmarketshavemadeaccesstoinancemoreexpensive

forSpanishcreditinstitutions.BBVAhasbeennoexceptiontothis,

andthussinceJanuary2011,andwithretroactiveeectfor2010

data,theliquiditypremiumimputedtobusinessareasthroughthe

systemofinternalreferencerateshasbeenincreased.Theaimisto

adapttothenewrealityoftheinancialmarkets.

Thebusiness areasarenoworganizedasfollows:

• Spain,whichincludes:Theretailnetwork,withthesegmentsof

individualcustomers,privatebanking,andsmallbusinessand

retailbankinginthedomesticmarket;CorporateandBusiness

Banking(CBB),whichhandlestheneedsofSMEs,corporations,

governmentanddevelopersinthecountry;Corporateand

InvestmentBanking(C&IB),whichincludesactivitywithlarge

corporationsandmultinationalgroups;GlobalMarkets(GM),

withthetradinglooranddistributionbusinessinthedomestic

market;andotherunits,amongthemBBVASegurosandAsset

Management(managementofmutualandpensionfundsin

Spain).

• Eurasia,whichincludesbusinessintherestofEuropeandAsia.In

2010itwasreportedeitherinSpainandPortugal(BBVAPortugal,

ConsumerFinanceItalyandPortugal,andtheretailbusinessof

branchesinParis,LondonandBrussels),orinWB&AM(Corporate

andInvestmentBanking,Markets,CNCBandCIFH).Additionally,it

alsoincludestheinformationonGaranti.

• Mexico:includesthebanking,pensionsandinsurance

businessesinthecountry.

• United States:encompassestheGroup’sbusinessintheUnited

StatesandintheCommonwealthofPuertoRico.

• South America:includesthebanking,pensionsandinsurance

businessesinSouthAmerica.

Aswellastheunitsindicated,alltheareasalsohaveallocationsofotherbusinessesthatincludeeliminationsandotheritemsnot

assignedtotheunits.

Finally,theaggregateof Corporate Activitiesincludestherest

ofitemsthatarenotallocatedtothebusinessareas.These

basicallyincludethecostsofheadoiceswithastrictlycorporate

function,certainallocationstoprovisionssuchasearlyretirements

andothersalsoofacorporatenature.CorporateActivitiesalso

performsinancialmanagementfunctionsfortheGroupasawhole;

essentiallymanagementofassetandliabilitypositionsforinterest

ratesintheeuro-denominatedbalancesheetandforexchange

rates,aswellasliquidityandcapitalmanagementfunctions.The

managementofassetandliabilityinterest-rateriskincurrencies

otherthantheeuroisrecordedinthecorrespondingbusiness

areas.ItalsoincludestheIndustrialandFinancialHoldingsunitand

theGroup’snon-internationalrealestatebusinesses.

Inaddition,supplementary informationisprovidedoftheglobal

business(WB&AM)carriedoutbytheBBVAGroup.Homogeneous

productsandrisks,andcommoncharacteristicsofthecustomers

served,makethisaggregateofbusinessesrelevanttobetter

understandtheBBVAGroup.

Furthermore,asusualinthecaseofTheAmericas,bothconstant

andcurrentexchange rateshavebeenappliedwhencalculatingyear-on-yearvariations.

TheGroupcompilesreportinginformationonalevelas

disaggregatedaspossible,andalldatarelatingtothebusinesses

theseunitsmanageisrecordedinfull.Thesebasicunitsare

thenaggregatedinaccordancewiththeorganizationalstructure

establishedbytheGroupathigher-levelunitsand,inally,the

businessareasthemselves.Similarly,allthecompaniesmakingup

theGrouparealsoassignedtothedierentunitsaccordingtothe

geographicalareaoftheiractivity.

Oncethecompositionofeachbusinessareahasbeendeined,certainmanagement criteriaareapplied,ofwhichthefollowingare

particularlyimportant:

Businessareas



24 Businessareas

• Capital:Capitalisallocatedtoeachbusinessaccordingto

economicriskcapital(ERC)criteria.Thisisbasedontheconcept

ofunexpectedlossataspeciicconidencelevel,depending

ontheGroup’scapitaladequacytargets.Thesetargetshave

twolevels:theirstiscoreequity,whichdeterminesthecapital

allocated.Thisamountisusedasabasisforcalculating

theproitabilityofeachbusiness.Thesecondlevelistotal

capital,whichdeterminestheadditionalallocationintermsof

subordinatedebtandpreferredsecurities.ThecalculationoftheERCcombinescreditrisk,marketrisk,structural

balance-sheetrisk,equitypositions,operationalriskandixed

assetandtechnicalrisksinthecaseofinsurancecompanies.

Thesecalculationsarecarriedoutusinginternalmodelsthat

havebeendeinedfollowingtheguidelinesandrequirements

establishedundertheBaselIIcapitalaccord,witheconomic

criteriaprevailingoverregulatoryones.

ERCisrisk-sensitiveandthuslinkedtothemanagementpolicies

ofthebusinessesthemselves.Itstandardizescapitalallocation

betweentheminaccordancewiththerisksincurredandmakes

iteasiertocompareproitabilityacrossunits.Inotherwords,itiscalculatedinawaythatisstandardandintegratedforallkinds

ofrisksandforeachoperation,balanceorriskposition,allowing

itsrisk-adjustedreturntobeassessedandanaggregatetobe

calculatedfortheproitabilitybyclient,product,segment,unitor

businessarea.

• Internal transfer prices:Internaltransferratesareappliedto

calculatethenetinterestincomeofeachbusiness,onboththe

assetsandliabilities.Theseratesarecomposedofamarket

ratethatdependsontherevisionperiodoftheoperation,

andaliquiditypremiumthathasbeenrevisedasindicated

above.Earningsaredistributedacrossrevenue-generatingand

distributionunits(e.g.,inassetmanagementproducts)atmarket

prices.

• Assignment of operating expenses:Bothdirectandindirect

costsareassignedtothebusinessareas,exceptwherethereis

noclearlydeinedrelationshipwiththebusinesses,i.e.whentheyareofaclearlycorporateorinstitutionalnaturefortheGroupas

awhole.

• Cross selling:insomecases,consolidationadjustmentsare

requiredtoeliminateshadowaccountingentriesintheresultsof

twoormoreunitsasaresultofcross-sellingincentives.

Recurrent economic proit by business area

(January-September2011.Millioneuros)

Adjusted net

attributable proit

Economic proit

(EP)

Spain 1,339 571

Eurasia 654 265

Mexico 1,316 955

SouthAmerica 577 323

TheUnitedStates 222 12

CorporateActivities (553) (549)

BBVA Group 3,555 1,576

Mayor income statement items by business area and presence in emerging and developed countries

(Millioneuros)

Business areas Geography

BBVAGroup Spain Eurasia Mexico

SouthAmerica

The UnitedStates

CorporateActivities Emerging (1) Developed

JanuarySeptember 11

Netinterestincome 9,676 3,308 516 2,874 2,255 1,182 (460) 5,398 4,738

Grossincome 15,052 4,900 1,319 4,208 3,214 1,711 (300) 8,228 7,124

Operatingincome 7,753 2,806 887 2,686 1,751 613 (991) 5,001 3,742

Incomebeforetax 4,145 1,633 837 1,722 1,385 305 (1,737) 3,620 2,262

Net attributable proit 3,143 1,162 705 1,275 754 218 (970) 2,508 1,605

JanuarySeptember 10

Netinterestincome 10,182 3,734 247 2,748 1,843 1,384 226 4,614 5,343

Grossincome 15,964 5,461 743 4,126 2,814 1,963 857 7,205 7,901

Operatingincome 9,322 3,389 528 2,717 1,599 828 260 4,540 4,522

Incomebeforetax 5,260 2,653 495 1,716 1,277 308 (1,188) 3,211 3,236

Net attributable proit 3,668 1,881 418 1,254 698 223 (808) 2,172 2,304

(1)Mexico,SouthAmerica,TurkeyandAsia.



25Spain

Spain

Income statement

(Millioneuros)

Spain

JanuarySep. 11 ∆% JanuarySep. 10

Net interest income 3,308 (11.4) 3,734

Netfeesandcommissions 1,135 (10.8) 1,273

Nettradingincome 91 (4.6) 95

Otherincome/expenses 365 1.9 358

Gross income 4,900 (10.3) 5,461

Operatingcosts (2,093) 1.0 (2,072)

Personnelexpenses (1,274) 1.2 (1,259)

Generalandadministrativeexpenses (745) 0.6 (741)

Depreciationandamortization (74) 2.5 (72)

Operating income 2,806 (17.2) 3,389

Impairmentoninancialassets(net) (1,246) 36.1 (916)

Provisions(net)andothergains(losses) 73 (59.3) 179

Income before tax 1,633 (38.4) 2,653

Incometax (472) (38.8) (770)

Net income 1,162 (38.3) 1,883

Non-controllinginterests - n.m. (2)

Net attributable proit 1,162 (38.2) 1,881

Balance sheet

(Millioneuros)

Spain

30-09-11 ∆% 30-09-10

Cashandbalanceswithcentralbanks 9,142 74.2 5,249

Financialassets 73,128 5.6 69,232

Loansandreceivables 222,449 (2.1) 227,204

Loansandadvancestocustomers 207,980 (2.2) 212,693

Loansandadvancestocreditinstitutionsandother 14,469 (0.3) 14,512

Tangibleassets 932 (4.8) 979

Otherassets 3,310 12.8 2,933

Total assets/Liabilities and equity 308,960 3.4 305,597

Depositsfromcentralbanksandcreditinstitutions 37,664 14.0 33,047

Depositsfromcustomers 120,530 7.1 112,564

Debtcertiicates - n.m. 1

Subordinatedliabilities 5,880 2.7 5,727

Inter-areapositions 71,376 (13.6) 82,645

Financialliabilitiesheldfortrading 45,442 3.4 43,929

Otherliabilities 17,626 1.7 17,336

Economiccapitalallocated 10,443 0.9 10,349



26 Businessareas

TheareaofSpainincludesallthesegmentsof

BBVA’sbankingandnon-bankingbusinessinthe

country.

Inthethird quarter of 2011,Spanishcredit

institutionshaveoperatedunderasetofspecialcircumstancesaectingthesector:abank

restructuringprocess,gradualdeleveraging,

growingdiicultiesininternationalwholesale

fundingmarkets,moderateeconomicgrowth,

andnegativedevelopmentsintheinancial

markets.Amongthehighlightsofthebank

restructuringprocesshavebeentheIPOs

ofBankia,CaixaBankandBancaCívica,the

announcementofmergersbetween

medium-sizedbanks(suchasPopularand

Pastor),recentinterventionsinsomesavings

banks,morebranchclosuresinthesectorsince

theonsetofthecrisis(1,768fewerintheirsthalf

oftheyear,thelatestavailabledata),andthe

trendtowardsareturntonormalintheasset

andliabilitypricesinthesystem.Therewillbe

opportunitiesforbanksthatarewellpositioned

inthisenvironment.

Thegradualdeleveragingprocess,whichis

necessaryandpositivefortheSpanisheconomy,

hasledtoayear-on-yearfallof3.5%incorporate

andhouseholdlending(latestavailableigures

forAugust).Individualshavecontinuedto

reducetheirconsumerspending,whilenewhomemortgageshavefallenby46%inthe

sametimeframe(alsoAugustigures);atthe

sametime,companieshavesteadilyreduced

theirhighlevelsofcreditleverage.Asaresult,

thestockofcreditonthebalancesheetsofthe

commercialnetworkshasfallenby€56,100m

sincethestartoftheyear.Thecostofnew

inancehasincreasedby75basispointsinthis

period,duetothemoreexpensiveinterbank

marketconditions.However,thevolumeofnew

depositsandotheron-balance-sheetfundsis

upby€12,264msinceSeptember2010,thus

reducingdependenceonwholesalemarkets

overthelast12months.Therateofrenewalof

themostconservativedepositproductsunder

betterconditionsthanlastyearhasbeenhigh,

thusincreasingcustomerspreadsinthesector.

BBVAhasconsolidateditsleadingposition

inbothlendingandcustomerfundsinthehouseholdandcorporatesegments.Ithasalso

increasedproitability,measuredasthenet

interestincomeoverATA,fromtheminimum

levelsofthefourthquarterof2010.Thisis

largelytheresultofincreasingmarketsharein

theproductsinvolvingthebiggestcustomer

loyalty,adaptingcommercialproductand

servicestothespeciicneedsofeachcustomer,

andadequateriskcontrolprocedures.

Gross lending to customersintheareaasof

30Sep-2011amountedto€212,639m,afallof

2.4%year-on-year;however,yieldonloanswas

upby46basispointsonthefourthquarterof

2010.

Customer fundsundermanagement(deposits,

mutualfundsandpensionfunds)amountedto

€150,182m.BBVAmadeasigniicantgainof16

basispointsinmarketshareinhouseholdand

corporatecurrentandsavingsaccountstoreach

9.6%(latestavailabledatatoAugust).Inaddition,

theareahasimproveditspositioningintime

depositsandmutualfundsby76basispoints

sincethestartoftheyear.Morethan73%offundscorrespondtohouseholdcustomers,who

haveincreasedtheirloyaltytotheBank.

Inobalancesheet fundstheGrouphas

maintaineditsmarketshareinmutualfunds

at16.8%(Septemberdata),withassetsunder

managementinSpainof€20,220m.Theamount

fellby3.6%inthethirdquarterasthevalueof

assetsundermanagementdeteriorateddue

tothemarketturmoil.Itisworthpointingout

that,accordingtothelatestdatafromAugust

2011,theeectofthisfallinBBVAismuchless

signiicantthanintherestofthesystem,given

themoreconservativeproileofitsmutual

Signiicant ratios

(Percentage)

Spain

30-09-11 30-06-11 30-09-10





Spain highlights in the third quarter

• Improvedmarketsharesandspreads.

• Stabilizationofthenetinterestincome.

• Expensesremainlat.

• Riskindicatorskeptincheck.



27Spain

resultedingross incomefortheninemonths

ended30-Sep-2011of€4,900m.

Operatingcostsinthearearemaincloselyin

check.Intheninemonthsended30Sep-2011

theytotaled€2,093m,ayear-on-yearincreaseof

1.0%,belowtherateofinlation(3.1%).Asaresult,

theoperating incomefortheninemonths

ended30Sep-2011was€2,806m(€3,389mfor

thesameperiodof2010).

Themainasset qualityindicatorsshowaslight

increaseintheNPAratio,to4.9%(4.7%asof

30Jun-2011).Thisisbasicallybecauseofthe

reductioninlendingmentionedabove,since

thebalanceofNPAasof30Sep-2011isstable

comparedwiththeigurefor30Jun-2011.The

igureforBBVAcompareswithanincreasingNPA

ratiointhemarketthatstandsat7.2%according

tothelatestavailableigures(August).The42%

coverageratioremainsatsimilarlevelstothepreviousquarter(43%asof30Jun-2011).Finally,

thelevelofnewNPAhasfallensigniicantly

andtheratioofrecoveriesovernewNPAhas

alsoimproved,closingthequarterat72%(64%

betweenAprilandJune2011).

Inshort,themostrecurringrevenueremained

steady,thanksamongotherfactorstoadequate

managementofspreads,increasedloyaltyand

gainsinmarketshareinthemainsegments.At

thesametime,therewasalowerpercentage

ofnon-recurringearnings,costrestraintand

stabilityinassetquality.Asaresult,thenet

attributable proit intheareawas€1,162m

(€1,881minthesameperiodin2010).

Exposureinthedeveloper sectorinSpainasof

30Sep-2011stoodat€15,256m,asteadyfalland

€1,352mbelowtheigureatthecloseof2010.

Ofthistotal,€6,024mareNPAorsubstandard,

asimilariguretoninemonthsearlier(€5,924m)

funds.Lastly,thepensionfundsmanagedby

BBVAinSpainamountto€16,741m,inlinewith

theigureasof30Jun-2011.Thishasallowed

BBVAtomaintainitspositionasthebiggest

pensionfundmanagerinSpain,withamarket

shareof18.3%(latestavailabledataasofJune).

Themostimportantaspectsofearningsinthe

areaovertheninemonthsended30Sep-2011aregivenbelow.

BBVAhasstabilizeditsquarterlynetinterest

incomeataround€1,100m,inaquarterwith

growingfundingcostsandlowercontribution

fromglobalbusiness.Thisispartlydueto

theturmoilonthefinancialmarketsthathas

ledtoalossintheassetvalues,andpartly

toreducedactivity.Theresilientnetinterest

incomehasbeenaresultoftherepricingof

loans,theincreasedvolumeoflower-cost

currentandsavingsaccountdeposits,andthehighproportionoftimedepositsrenewed

atsignificantlylowerratesthanthoseinitially

takenout12monthspreviously.Overthenine

monthsended30-Sep-2011,netinterestincome

stoodat€3,308m.Feesandcommissions

forthequarter,at€336m,werebelowthe

averagefortheyear,foranumberofreasons:

theseasonalfactorofthesummermonths;

thenegativeimpactofthemarketsonfees

linkedtomutualfunds;thelowervolumeof

M&Aoperationsinthecorporatesegment;

andfeereductionsassociatedwithgreater

customerloyalty.Thegoodperformanceof

theinsurancebusinessdoesnotcompensate

theadverseperformanceofNTIinthequarter,

whichwerehitbytheeconomicsituation,the

lowlevelofactivityinWholesaleBankingand

thefallinassetprices.Overall,thesteadynet

interestincomeandpositiveperformanceof

theinsurancebusiness,balancedagainstthe

negativeperformanceofotherincome,have

Spain. Net attributable profit

(Million euros)

Spain. Operating income

(Million euros)

1,238

1Q

1,162

2Q

989

3Q

851

4Q

1,062

1Q

–17.2%

2010 2011

2Q

3,389 2,806

982

3Q

763

714

1Q

651

2Q

515

3Q

374

4Q

477

1Q

–38.2%

2010 2011

2Q

1,881 1,162

419

3Q

265



28 Businessareas

Retail and CommercialBanking

ThisunitincludestheRetailNetwork,with

thehouseholdcustomers,privatebanking,

smallcompaniesandretailersegmentsinthedomesticmarket;CorporateandBusiness

Banking(CBB),whichhandlestheneedsofthe

SMEs,corporations,governmentanddevelopers

inthedomesticmarket;andotherbusinesses,

amongwhichisBBVASeguros.

Asof30Sep-2011thisunithada loan bookof

€192,274m,afallof2.5%ontheigurefor

30Sep-2010.Thisisinlinewiththedeleveraging

processacrossthemarketasawhole,but

withasmallerfallthanaverageinthesector

(down3.5%accordingtothelatestiguresto

August).ThishasenabledBBVAtopreserve

andconsolidateitspositioninhousehold

butbelowthatforthepreviousquarter(6,183m).

Itisalsoworthhighlightingthegreatstabilityin

theNPAcoverageratio,whichisupfrom25%at

thecloseofDecember2010andJune2011,to

26%asof30Sep-2011.Thevalueofthe

collateralcoveringdeveloperrisk,basedonup-to-dateappraisals,is€21,471m,which

maintainstheaverageLTVof71%andeasily

coverstheportfoliovalue.Inaddition,speciic

andgenericprovisionscover26%ofthemost

substandardimpairedassetsand61%ofthe

amounttobeprovisioned(thevalueinexcess

ofthecollateralafterapplyingtheregulatory

criteriathatenteredintoforcewithBankof

SpainCircular3/2010).BBVAalsomaintainsa

totalof€4,300minrealestateassetsatgross

bookvaluefromlendingtocompanies.These

assetshaveanaveragecoverageratioof33%

(abovetheigureof32%inJune2011and31%in

March2011).

Detail of real estate developers lending

(Millioneuros)

30-09-11 % Weighting 31-12-10 % Weighting Absolute variation

Withcollateral 14,118 92.5 15,249 91.8 (1,131)

Finishedproperties 7,344 48.1 7,403 44.6 (59)

Constructioninprogress 2,794 18.3 3,531 21.3 (737)

Land 3,980 26.1 4,315 26.0 (335)

Withoutcollateralandother 1,138 7.5 1,359 8.2 (221)

Total 15,256 100.0 16,608 100.0 (1,352)

Coverage of real estate developers exposure

(Millioneurosat300911)

Risk amountShortfall over

collateral (1) Provision% Coverage

over shortfall% Coverage

over risk

NPL 3,676 1,482 972 66 26

Substandar 2,348 1,048 304 29 13

Genericprovision 263

Total 6,024 2,530 1,539 61 26

(1)ShortfalloverupdatedcollateralvaluesandadditionalhaircutestablishedbytheBankofSpainregulation.

Foreclosures and asset purchases

(Millioneurosat300911)

Gross amount Provision % Coverage Net amount

Fromrealestatedevelopers 4,300 1,407 33 2,893

FromDwellings 1,306 333 25 973

Other 1,026 416 41 610

Total 6,632 2,156 33 4,476



29Spain

ontheigureforthepreviousquarter.Ininancingofworking

capital,€11,452mweregrantedinnationalandinternational

factoringtransactions,and€10,631minaccountspayable

inancingto31Aug-2011(datafromtheSpanishAccounts

PayableAssociation).TheseresultsconsolidateBBVA’sleading

positioninbothproducts.

Total funds under management increasedtheirmarketshare

year-on-yearasof30Sep-2011asaresultoftheimplementationofaproitablecommercialproducts,combinedwiththecapable

managementofthematuritiesoftimedepositstakenout12

monthspreviously.Asof31Aug-2011,thelatestavailableigures,

themarketshareforhouseholdswas8.4%andforcompanies

8.9%(8.0%and8.6%asof31Aug-2010),withanimprovementin

thespreadof57basispointswithrespecttothefourthquarter

of2010.Thetotalamountwas€138,826m(€144,959masof

30Sep-2010).Oncemoreitisimportanttohighlightthegood

performanceoverthequarterofcustomerdeposits,andthusthe

improvementintheliquiditygapinthearea.

Current and savings accountsinthehouseholdsegmentwereparticularlybuoyant.Thispositivenotewasbasicallyduetothe

promotionslaunchedinpay-rollandpension-linkedaccounts,which

haveattracted36,461newpay-rolldepositsand19,070pension

depositsoverthequarter.Inall,themarketshareis9.3%inpay-roll

accountsand9.6%inpensionaccounts,withdataasof31Aug-2011.

Theoerofadditionaladvantagesaccordingtoloyaltyhasbeen

maintainedin timedepositsaspartofthecustomer-centric

strategy.Thisquarterhasbeenmarkedbyasigniicantnumber

ofmaturitiesoftimedepositstakenoutinthethirdquarterof

2010.Appropriatemanagementofthesematuritieshasledto

amaintenancerateofover80%,withreductionsinthecostof

operationsofaround100basispoints.The“ Depósito BBVA UNO”

hasalsobeenmaintainedasthemainloyalty-buildingproduct,

withanaccumulatednewproductionto30Sep-2011of€1,475m.

Anumberofdierentoershavebeenmaintainedtoattractnew

customers,includingtheDepósito BBVA 11.Asaresultofallthe

above,thebalanceoftimedepositsincreasedby€9,275mover

thelastyearandtheiraveragecostis88basispointsbelowthe

marketaverage(latestavailableigurestoAugust).

Inpension savingsthe Ahorro Asegurado(GuaranteedSavings)

campaignlaunchedinthesecondquarteriscontinuing

successfully.Newproductioninthethirdquarterof2011

was€185m,9%uponthepreviousquarter.Inaddition,thecontributionstoindividualpensionplansbetweenJulyand

September2011amountedto€66m,5%uponthesecondquarter,

withthemostpopularproductsbeingguaranteedpension

savings(around70%).

BBVA Private Banking endedthethirdquarterof2011withfunds

undermanagementinSpainof€38,471m,6.4%uponthesame

datelastyear,andwithagrowthinitscustomerbaseof0.7%.The

unitremainsmarketleaderinassetsundermanagementinSICAV

(€2,666m),withamarketshareof10.5%inSeptember2011,and

291companies.

Coveredsavingscontinuetoperformwellintheinsurance

business,particularlythecompanyinsuranceschemes,whichhave

andcorporatelending,withgainsinmarketshareinresidential

mortgagesandthelowest-riskcorporatecategories.

• Infact,BBVAcontinuestogainmarketshareinresidential

mortgage lending(up8basispointsin2011and17basispoints

overthe12months,accordingtothelatestAugustigures)ina

marketinwhichnewproductiontoAugustisdown46%

year-on-yearto€23,965m.Inthisenvironment,BBVA’snew

productionwas€3,935mintheninemonthsended30Sep-2011,accountingfor13.6%ofthenewtransactionsin

thesector,accordingtoAugustigures.Thepersonalizedand

specialfeaturesoftheBank’smortgageproductsrespondto

demandquicklyandlexibly,whileincreasingthespreadof

newtransactionsby86basispointsfromDecember2010to

thecloseofAugust.Inall,themanagedstockofmortgages

toindividualswasverystableat€77,825masof30Sep-2011

(78,071mon30Sep-2010).

• Withrespecttoconsumer inance,inthethirdquarterof2011

therewassigniicantgrowthinthePIDE Préstamo Inmediato

instantloanfacilitydesignedtohelphouseholdsaccessinance,whichincreaseditsbalanceby15.0%onthethird

quarterof2010.Thepositiveresultsofthecampaign,launched

thepreviousquarter,haveledtoanextensiontilltheendof

November.Ithasalsohelpedincreasethemarketshareof

newproductionby16basispointssinceDecember2010.At

thesametime,anexclusivelyonlinecampaignwaslaunched

inSeptemberaimedathelpingtoinancethepurchaseof

usedcars,giventhatusedcarsaleshaveincreasedby14.3%

intheirsthalfof2011andareexpectedtocontinuegrowing.

Inall,newproductioninthisitemreached€1,055minthenine

monthsended30Sep-2011.

• BBVAcontinuestobeoneofthemostactivebanksinloan

allocationunderthe ICO credit facility scheme,withan

accumulatedbalanceintheirstthreequartersoftheyearof

€1,808m.Ithasincreaseditsmarketshareto12.7%asof

30Sep-2011.Anewlocal-authoritycreditprogramwassigned

thisquarter,withtheaimofprovidingtheliquidityneededby

localgovernmenttopaydebtspendingwithcompaniesand

theself-employed.

• BBVAcontinuestosupportinanceforthesegment of the

selfemployed, retail trade, farming communities and small

businesses tomakeiteasierforthemtoaccessinance.Within

theframeworkofthe Plan Comercios(RetailerPlan),aimedatincreasingcustomerloyalty,priorityhasbeengiventoactions

relatedtopoint-of-saleterminalsasakeyelementforbuilding

upretailerloyalty.Intheninemonthsended30Sep-2011,the

turnoverofpoint-of-saleterminalsamountedto€3,668m,an

increaseof8.7%onthesameperiodlastyear.Efortscontinue

tobemadetowinandmaintainnewcustomergroups,suchas

educationalcentersandprivateacademies.Anotherexample

isthenewagreementwiththeoicialIACAutomoción

associationofrepairshops.

• ThebalanceoftheinancegrantedtoSMEs, corporations

and public and private institutionsatthecloseofSeptember

wasdown1.7%year-on-yearto€89,192m.However,itisworth

notingthattheyieldonloanshasincreased28basispoints



30 Businessareas

nowbecomeamodelinthemarket,with€340m

inwrittenpremiums(up182%year-on-year).

Individualfundpremiumsarealsoperforming

well,at€724m(up225%).Asaresult,thevolume

ofmanagedfundsis€8,655m,anincreaseof

6.3%intheninemonthsended30Sep-2011.The

levelofbusinessinnon-lifeinsurancehasbeen

maintained,withpremiumsof€181m(up4%

year-on-year).Particularlynotableisthegrowthinthecarbusiness,with7millionpremiums(up

25%).Overall,thetotalpremiumswrittenbyBBVA

Segurosintheninemonthsended30Sep-2011

amountedto€1,462m(up85%year-on-year).

Thecompanymaintainsitsleadingpositionin

individuallifeinsurance,withamarketshare

of11.0%ofpremiumsattheendofJune(latest

availableigures).

Tosumup,theadequatemanagementof

volumesand,aboveall,assetandliability

prices,haveboostedthenetinterestincometo€2,817m.Gross incomeasof30Sep-2011

amountedto€4,118m(4,696masof

30Sep-2010).Withoperatingexpenses

remainingatpracticallythesamelevelsasin

January-September2010,the operating income

was€2,333m(2,906mayearago).Aftermaking

increasedallocationsofgenericprovisions,the

net attributable proit amountedto€842m.

Wholesale Banking

Thisunitmanagesthebusinesswithlarge

corporationsandmultinationalgroupsin

thedomesticmarketthroughCorporateand

InvestmentBanking(C&IB),andtheactivityof

GlobalMarketsinthesamegeographicalarea,

withtheirtradingloorbusinessanddistribution.

Itisacustomerbasewithdiversiiedbusiness

andhighcashlowsfromothercountries.BBVAis

abletooerafullrangeofproductsand

services,supportedbyitsextensiveinternational

presence.

InSpain,WholesaleBankingmanageda loan

bookof€20,366masof30Sep-2011,and

customer fundsof€17,637m.Bothiguresshow

greatstabilitywithrespecttothoseforthesamedatelastyear(€20,667mand€17,443m

respectively,asof30Sep-2010).Theunit

continuestofocusstronglyoncustomerswith

thehighestlevelsofloyalty,proitabilityand

creditquality.

Themostsigniicantaspectsofearningsinthe

unitareasfollows:

• Resi lientrecurring revenuesintheunit(net

interestincomeplusfees):theigureforthe

ninemonthsended30Sep-2011isverysimilartothesameperiodin2010,at€723m.

• NegativecontributionfromNTIinthequarter.

Thisisexplainedbytheeconomicsituation

inthisperiod,thelowlevelofbusinessand

fallingassetpricesingeneral.

• Asaresult,thegross incomestandsat

€782m,2.2%abovetheigurefor

January-September2010.Year-on-year

growthinexpensesof9.4%,sustainedby

theinvestmentprojectexplainedinprevious

quarters;asaresult,theoperating income

was€474m(down1.9%year-on-year).

• Stabilityinimpairmentlossesoninancial

assets,withanet attributable income inthe

ninemonthsended30Sep-2011of€320m

(€346masof30Sep-2010).



31Eurasia

Eurasia

Income statement

(Millioneuros)

Eurasia

JanuarySep. 11 ∆% JanuarySep. 10

Net interest income 516 108.7 247

Netfeesandcommissions 287 71.9 167

Nettradingincome 83 (8.1) 90

Otherincome/expenses 433 81.8 238

Gross income 1,319 77.6 743

Operatingcosts (432) 101.5 (215)

Personnelexpenses (237) 81.4 (130)

Generalandadministrativeexpenses (164) 129.4 (71)

Depreciationandamortization (32) 151.0 (13)

Operating income 887 67.9 528

Impairmentoninancialassets(net) (67) 214.9 (21)

Provisions(net)andothergains(losses) 17 n.m. (12)

Income before tax 837 69.1 495

Incometax (132) 70.0 (77)

Net income 705 68.9 418

Non-controllinginterests - n.m. 1

Net attributable proit 705 68.6 418

Balance sheet

(Millioneuros)

Eurasia

30-09-11 ∆% 30-09-10

Cashandbalanceswithcentralbanks 1,908 n.m. 290

Financialassets 11,110 74.5 6,367

Loansandreceivables 38,492 46.9 26,211

Loansandadvancestocustomers 34,188 44.7 23,622

Loansandadvancestocreditinstitutionsandother 4,304 66.3 2,589

Inter-areapositions - n.m. 15,879

Tangibleassets 576 61.0 358

Otherassets 1,169 190.6 402

Total assets/Liabilities and equity 53,254 7.6 49,507

Depositsfromcentralbanksandcreditinstitutions 16,908 (13.7) 19,591

Depositsfromcustomers 22,504 (8.7) 24,657

Debtcertiicates 864 n.m. -

Subordinatedliabilities 2,010 49.4 1,345

Inter-areapositions 3,146 n.m. -

Financialliabilitiesheldfortrading 319 (25.3) 427

Otherliabilities 2,650 151.1 1,055

Economiccapitalallocated 4,854 99.6 2,432



32 Businessareas

ThisareacoversBBVA’sactivityinEurope

(excludingSpain)andAsia.Inotherwords,it

includesBBVAPortugal,ConsumerFinanceItaly

andPortugal,theretailbusinessofbranches

inParis,LondonandBrussels(in2010these

werereportedinSpainandPortugal),and

WB&AMactivity(CorporateandInvestmentBanking,GlobalMarketsandCNCB)withinthis

geographicalarea.ItalsocoverstheGroup’s

stakeinGaranti.

Theeconomic situationinEurasiaisoneof

greatdisparity.InEurope,thesituationinthe

thirdquarterwascharacterizedbyuncertainty

andafocusonresolvingthedebtcrisis.These

doubtshavebeenaectingtheinancialsystem

oftheeurozoneandareleadingtofunding

diicultiesinthewholesalemarkets.InTurkey,

however,agoodrateofbusinessactivityhasbeensustained,thoughinlationremains

relativelyhigh.Finally,theChineseeconomy

stillappearssound,despitetheeectsofthe

slowdowncausedbytheheightenedweakness

offoreigndemand.

Theareaisofincreasingimportancebothin

termsofearningsandthebalancesheet,and

hasincreasedtheGroup’sdiversiicationand

growthcapacity.FromJanuarytoSeptember

2011,Eurasiagenerateda net attributable proit

of€705m.Thisigurerepresents17.2%ofthe

earningsgeneratedbytheGroup’sbusiness

areasor22.4%,iftheaggregateofCorporate

Activitiesisincluded.

Inthethird quarter of 2011theincreased

contributionofCNCBwasremarkableasit

maintainedsigniicantgrowthinitsbanking

business.Itsloan-bookwasup7.2%intheirst

halfof2011comparedtothecloseof2010;

customerdepositsgrew8.2%forthesame

period;andthenetattributableproitforthe

semesterwasup40.6%year-on-year.The

successofCNCB’ssharecapitalincreasedone

throughJulyandAugustof2011,inwhichBBVA

tookpartinordertomaintainits15%holding,

alsomeritsmention.Twofactorshaveinluencedthedecisiontoundertakethisoperation:on

theonehand,theneedforit,duetothegreat

strengthofbankingactivity;andontheother

hand,thewishesoftheChinesesupervisorto

maintainahighlysolventpartnersuchasBBVA

withthesamestakeasbeforetheoperation.The

restoftheunits,ingeneral,presentedstability

withrespecttopreviousquarters.

Signiicant ratios

(Percentage)

Eurasia

30-09-11 30-06-11 30-09-10





Eurasia. Operating income(Million euros)

Eurasia. Net attributable profit(Million euros)

159

1Q

199

2Q

170

3Q

257

4Q

249

1Q

+67.9%

2010 20112Q

528 887

317

3Q

321

124

1Q

147

2Q

147

3Q

169

4Q

198

1Q

+68.6%

2010 20112Q

418 705

251

3Q

257

Eurasia highlights in the third quarter

• StrongbusinessactivityinTurkey.

• HighgrowthofthecontributionfromAsia.

• ResilienceofglobalbusinessesinEurope.

• PaymentoftheCNCBsharecapital

increase.



33Eurasia

Gross lending to customersamountedto

€34,960masof30Sep-2011,a5.0%increasein

thequarter.Thiswasexplainedbythepositive

contributionofpracticallyallofthebusiness

units.Brokendownbysegment,loanstoglobal

businessesrose,whilethebalanceforlocal

businessremainedstable.

Customer funds decreased17.2%inthequarterto€22,069m.Thisisdueprimarilytothe

decreaseofbalancesinEurope.

ThemostnotableaspectsofGarantiinthethird

quarterof2011areasfollows:

• EventhoughtheTurkishCentralBankis

takingactionstopreventtheoverheatingof

theeconomy,thelending activitymaintains

solidgrowth,whichisparticularlynoticeablein

personalloans.

• Favorableperformanceofthecustomer

spreadthankstotherepricingeforts.

• Positiveperformanceofcustomer deposits,

whichprogressedbetterthanthesector

average.Thiswasduetothesuccessful

customerattractioncampaignscarriedoutby

theSMEandindividualcustomersegments.

• Asset qualityremainsexcellent,withanNPA

ratiomuchlowerthanthatofthesector.

Garanti. Signiicant data (30-06-2011) (1)

30-06-11

Financial statements (million euros)

Attributableproit 874

Totalassets 65,620

Loanstocustomers 34,576

Depositsfromcustomers 35,970

Relevant ratios (%)

Eiciencyratio 42.3

NPAratio 2.2

Other information

Numberofemployees 19,784

Numberofbranches 894

NumberofATMs 3,144

(1)BRSAdataforthegroup.

Garanti. Composition of assets and lending portfolio (1)

(September 2011)

Garanti. Composition of liabilities (1)

(September 2011)

Cash and banks 16.4%

Credit cards 11.6%

Securities 25.0%

Corporate 18.5%

Consumer 18.1%

SME 12.8%

Commercial 39.0%

Composition of assets Lending portfolio

Other 4.2% Loan to customers54.4%

Shareholders’ equity 11.6%

Deposits from customers52.7%

Bonds issued 2.4%

Fund borrowed 15.1%

Repo obligations 10.1%

Deposits from banks 1.5%

Other 6.6%

(1) Garanti Bank data.. (1) Garanti Bank data..



34 Businessareas

Mexico

Income statement

(Millioneuros)

Units:

Mexico Banking Business Pensions and Insurance

Jan.-Sep. 11 ∆% ∆%(1) Jan.-Sep. 10 Jan.-Sep. 11 ∆% ∆%(1) Jan.-Sep. 10 Jan.-Sep. 11 ∆% ∆%(1) Jan.-Sep. 10

Net interest income 2,874 4.6 6.0 2,748 2,814 4.5 5.9 2,693 54 6.6 8.0 51

Netfeesandcommissions 906 (0.8) 0.5 913 848 (1.4) (0.1) 860 53 3.7 5.1 51

Nettradingincome 264 (20.4) (19.4) 331 204 (10.6) (9.4) 228 60 (42.2) (41.4) 104

Otherincome/expenses 164 23.3 24.9 133 (85) (25.4) (24.4) (114) 296 16.1 17.7 255

Gross income 4,208 2.0 3.3 4,126 3,780 3.1 4.5 3,666 463 0.6 1.9 460

Operatingcosts (1,522) 8.1 9.5 (1,408) (1,431) 10.4 11.8 (1,297) (121) 8.3 9.7 (112)

Personnelexpenses (663) 2.6 4.0 (646) (607) 2.5 3.8 (592) (56) 5.0 6.4 (53)

Generalandadministrativeexpenses (781) 11.5 13.0 (700) (748) 16.1 17.6 (644) (63) 11.6 13.0 (57)

Depreciationandamortization (78) 26.1 27.7 (62) (76) 27.0 28.6 (60) (2) (0.0) 1.3 (2)

Operating income 2,686 (1.2) 0.1 2,717 2,349 (0.9) 0.4 2,369 342 (1.9) (0.6) 349

Impairmentoninancialassets(net) (915) (4.1) (2.8) (953) (915) (4.1) (2.8) (953) - - - -

Provisions(net)andothergains(losses) (50) 2.9 4.2 (48) (47) (2.5) ( 1.3) (49) (3) n.m. n.m. 1

Income before tax 1,722 0.3 1.7 1,716 1,387 1.4 2.8 1,367 340 (2.8) (1.5) 349

Incometax (445) (2.9) (1.6) (458) (345) (3.0) (1.7) (356) (100) (1.4) (0.1) (101)

Net income 1,277 1.5 2.9 1,257 1,041 3.0 4.3 1,011 240 (3.3) (2.1) 248

Non-controllinginterests (2) (34.7) (33.8) (3) - - - - (2) (5.9) (4.7) (2)

Net attributable proit 1,275 1.6 2.9 1,254 1,041 3.0 4.4 1,011 238 (3.3) (2.0) 246

(1)Atconstantexchangerate.

Balance sheet

(Millioneuros)

Units:

Mexico Banking Business Pensions and Insurance

30-09-11 ∆% ∆% (1) 30-09-10 30-09-11 ∆% ∆% (1) 30-09-10 30-09-11 ∆% ∆% (1) 30-09-10

Cashandbalanceswithcentralbanks 5,771 1.4 10.0 5,693 5,771 1.4 10.0 5,693 - - - -

Financialassets 24,682 (3.0) 5.3 25,440 20,055 (3.4) 4.9 20,757 4,860 (1.7) 5.3 4,944

Loansandreceivables 35,024 (7.7) 0.3 37,927 34,721 (7.9) 0.0 37,686 352 24.9 35.6 281

Loansandadvancestocustomers 32,242 (0.7) 7.8 32,458 32,090 (0.7) 7.8 32,325 182 16.4 26.4 157

Loansandadvancestocreditinstitutionsandother 2,782 (49.1) (44.8) 5,469 2,631 (50.9) (46.7) 5,361 169 35.5 47.1 125

Tangibleassets 901 9.7 19.1 821 895 9.9 19.3 814 6 (7.6) 0.4 7

Otherassets 1,654 2.8 11.6 1,610 2,700 23.2 33.7 2,193 111 (11.4) (3.8) 125

Total assets/Liabilities and equity 68,032 (4.8) 3.3 71,492 64,142 (4.5) 3.7 67,143 5,329 (0.5) 8.0 5,358

Depositsfromcentralbanksandcreditinstitutions 9,788 (19.3) (12.4) 12,128 9,788 (19.3) (12.4) 12,128 - - - -

Depositsfromcustomers 31,703 (4.4) 3.8 33,157 31,722 (4.4) 3.8 33,175 - - - -

Debtcertiicates 3,887 (5.9) 2.1 4,132 3,887 (5.9) 2.1 4,132 - - - -

Subordinatedliabilities 2,244 24.6 35.3 1,800 3,373 35.0 46.6 2,497 - - - -

Financialliabilitiesheldfortrading 6,153 0.7 9.3 6,110 6,153 0.7 9.3 6,110 - - - -

Otherliabilities 10,376 (3.8) 4.5 10,783 5,735 (4.3) 3.9 5,995 4,972 (3.0) 5.3 5,127

Economiccapitalallocated 3,883 14.8 24.7 3,381 3,485 12.3 21.9 3,104 352 52.6 65.7 231




35Mexico

Thisareacomprisesthebanking,pensionsand

insurancebusinessconductedinMexicobythe

BBVABancomerFinancialGroup(hereinafter,

BBVABancomer).

Despitetheslowdowninadvancedeconomies,

emergingeconomiesstillcontinuetogrow

solidlytowardsmoresustainablelevels.

InMexico,themostimportant indicators(industrialactivity,formalemployment,retail

sales)remainpositive,sothegrowthratecould

havecontinuedinthethirdquarteratlevels

thataresimilartothoseofthepreviousquarter.

Inlationisnotaconcern,giventhedomestic

environmentofcontaineddemand,which

limitsthepowerofthetransferofcostsfrom

companiestoconsumers.Againstthisbackdrop,

withinlationinBanxico’stargetrange,the

CentralBankcouldanalyzeinterestratelowering

scenarios.Theovernightratecouldalsobe

maintainedatsimilarlevelstocurrentonesbeyond2012iftheglobaleconomicscenario

weretodeteriorate.

Asregardstotheexchange rate,theMexican

peso/euroratehasdepreciatedbothin

year-on-yearterms(down7.9%)andin

quarter-on-quarterterms(down8.7%).Thusthe

impactofthecurrencyonthebalancesheet

andbusinessvolumeintheareaisnegative.The

averageexchangeratealsodeclined,thoughin

thiscasetoalesserextent(down1.3%

year-on-yearanddown1.4%quarter-on-quarter).

Thustheeectofthecurrencyontheincome

statementwasslightlynegative.Unlessotherwise

indicated,allcommentsbelowrefertochangesat

aconstantexchangerate.

Inthethirdquarterof2011,Mexicocontinuedto

presentpositivegrowthinrecurringrevenues.

Therefore,betweenJanuaryandSeptember

2011,thenetinterestincomegrew6.0%

year-on-yearrate,mainlyboostedbyincreased

lendinganddepositgatheringvolumesandby

positivepricemanagement.Thishasenabled

toosettheeectsofthelowinterestrate

situationandthelowercontributiontoincome

byglobalbusinesses.Thesewereaected,in

part,bytheconvulsedsituationoftheinancial

marketsthatledtoalossofassetvaluesand

alsotodecreasedactivity.Nevertheless,fromthe

pointofviewofproitability,measuredoverATA,

boththenetinterestincomeandimpairment

lossesoninancialassetsdemonstratedgreat

stabilityinthepastyear.Feesandcommissions

remainatthesamelevelasthepreviousyear.

Theperformanceofassetmanagementfees

(investmentcompaniesandpensionfunds)

Signiicant ratios

(Percentage)

Mexico

30-09-11 30-06-11 30-09-10





Mexico highlights in the third quarter

• Strengthofbankingactivity,especiallyinthe

retailportfolio.

• Stabilityintheriskpremium.

• BBVABancomer,themostproitableentityin

thesector.

• Goodperformanceofpensionsandinsurance

activity.

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

(1) At current exchange rate: +1.6%.(1) At current exchange rate: –1.2%.

876

1Q

907

2Q

899

3Q

874

4Q

893

1Q

+0.1% (1)

2010 2011

2Q

2,682 2,686

916

3Q

877

362

1Q

431

2Q

445

3Q

449

4Q

425

1Q

+2.9% (1)

2010 2011

2Q

1,238 1,275

448

3Q

402



36 Businessareas

AsofSeptember30,2011,the net attributable

proitstoodat€1,275m.BBVABancomeristhe

entitywiththehighestproitability,asitachieved

anROEof20.2%(accordingtolocalaccounting

criteria)andsurpassedtheaverageofitsmain

competitorsby6percentagepoints.

Banking Business

Adequatemanagementofthebankingbusiness

contributedtothegrowthofthecommercial

activity.Asof30Sep-2011,the loanbook,

excludingtheoldmortgageportfolio,posted

ayear-on-yeargrowthof8.0%.Itsworth

mentioningthatlendingtocorporateclientshas

beenslowedbyamorecomfortableliquidity

positionincompaniesandthepublicsector,

whichledtoanincreaseinearlyprepaymentof

bankloans.Ifthiseectisexcluded,grossloans

andadvancestocustomerswereup14.2%inthelast12months.

Thegrowthofloansintheretailsegmenthas

beenoutstanding.Theconsumerportfolio,

includingcreditcards,presented23.4%

year-on-yeargrowthandreached€7,296m.The

solidperformanceofcar,personalandpayroll

loanshasbeenespeciallyimportant;together,

theygrew23.0%comparedtoSeptember2010.

LendingtoSMEsandmicro-businesseshas

likewisebeenveryfavorable,up16.8%

year-on-year.Thebalanceofmortgagelending,

excludingtheoldmortgageportfolio,reached

€7,870matthecloseofSeptember2011,a

6.4%increasecomparedtothesamedatethe

previousyear.BBVABancomermaintainsits

leadershippositionandcontinuestoinnovate

withprogramssuchas“HipotecaSelecta”,

jointlycreatedwithINFONAVIT(Instituteofthe

NationalHousingFundforWorkers)forprivate

sectoremployeeswhoareoeredpreferential

fundingconditions.

Customer funds,includingbankdeposits,

repos,mutualfundsandinvestmentcompanies,grewby13.1%year-on-yearto€52,075m.Italso

continuestomaintainaproitablemix.Demand

deposits,whicharelower-cost,represent41.8%

ofthetotalandincreasedatayear-on-yearrate

of15.1%,whiletimedepositsincreased11.7%

inthesameperiod.Inthethirdquarter,“Meta

Ahorro”waslaunched;thisproduct,withan

attractiveyield,allowscustomerstochooseboth

theamountoftheirinvestmentsandtheperiod

oftimetheywishtokeepthem.In

o-balance-sheetfunds,theassetsunder

managementbyinvestmentcompanies

wasabletoosetthelessfavorableevolution

ofbankingfees,aectedbyregulatorychanges.

Theaforementionedsituationoftheinancial

markets,especiallyinthelastpartofthequarter,hasledtolowerbrokeragerevenues.

Thus,asofSeptember30,2011,NTIstoodat

€264m.Insuranceactivityhasmaintainedits

positivetrajectory,whichexplainswhyother

incomegrewatayear-on-yearrateof24.9%

Consequently,theaccumulated gross income

reached€4,208m,marking3.3%year-on-year

growth.

Operatingexpensesat€1,522mwereup9.5%

withrespecttothesameperiodof2010.

Personnelcostsgrewattherateofinlation,so

theincreasecanbeexplainedbytheinvestment

ininfrastructureandbankingexpansion

(bankingpenetration).Inthelast12months,the

branchnetworkgrewby14branches,whilethe

numberofATMstotaled7,293(735morethan

oneyearprior).Consequently,BBVABancomer

retainsitsleadingpositioninthecountryby

numberofbranchesandATMswithamarket

shareof15.8%and20.4%,respectively,according

toinformationfromthe Comisión Nacional

Bancaria y de Valores(CNBV)inAugust2011.

Asaresultoftheserevenuesandexpenses,the

accumulatedoperating incomeasof30Sep-2011remainedlatascomparedtothe

sameperiodlastyearandstoodat€2,686m.

Lendinggrowthhasbeenaccompaniedby

properriskmanagement.Thishasenabledthe

impairmentlossesoninancialassetstoremain

atpracticallythesamelevelsasintheprevious

yearandtheaccumulated risk premium to

improveby47basispoints(standingat3.39%)

inthelasttwelvemonths.Furthermore,the

NPAandcoverageratiosclosedthemonthof

Septemberat3.5%and128%respectively.

BBVA Bancomer. Net interest income/Impairment

losses on financial assets

(Percentage)

3Q 4Q 1Q

2010 2011

2Q 3Q

. ..

. .

. .. . .

Impairmentlosses onfinancial

assets/ATA

Net interestincome/ATA

5.9 5.9 6.0 5.9 5.9

3.1 3.4 3.1 3.1 3.0

1.9 1.8 2.0 1.9 1.9



38 Businessareas

SouthAmerica

Income statement

(Millioneuros)

Units:

South America Banking business Pensions and Insurance

Jan.-Sep. 11 ∆% ∆% (1) Jan.-Sep. 10 Jan.-Sep. 11 ∆% ∆% (1) Jan.-Sep. 10 Jan.-Sep. 11 ∆% ∆% (1) Jan.-Sep. 10

Net interest income 2,255 22.4 28.4 1,843 2,211 22.1 28.1 1,811 45 29.4 32.6 35

Netfeesandcommissions 780 10.0 13.4 709 561 11.2 16.8 505 222 3.3 2.0 215

Nettradingincome 355 (11.8) (7.0) 402 335 9.2 15.4 306 21 (78.1) (77.2) 96

Otherincome/expenses (176) 25.5 3 9.2 (141) (288) 24.6 35.7 (231) 120 22.8 29.5 97

Gross income 3,214 14.2 19.0 2,814 2,818 17.9 23.4 2,391 408 (8.1) (6.5) 443

Operatingcosts (1,463) 20.5 26.1 (1,215) (1,261) 20.7 26.9 (1,044) (179) 3.0 6.1 (173)

Personnelexpenses (747) 19.3 24.7 (626) (640) 19.6 25.5 (535) (87) (0.5) 2.4 (88)

Generalandadministrativeexpenses (604) 22.9 28.8 (491) (514) 23.0 29.4 (417) (86) 7.2 10.5 (80)

Depreciationandamortization (113) 15.6 21.6 (98) (107) 16.6 23.0 (92) (6) (0.7) 0.6 (6)

Operating income 1,751 9.5 13.7 1,599 1,558 15.6 20.7 1,347 229 (15.2) (14.5) 270

Impairmentoninancialassets(net) (322) 7.0 1 1.2 (301) (322) 7.0 11.2 (301) - - - -

Provisions(net)andothergains(losses) (44) 105.5 114.3 (21) (47) 211.0 225.8 (15) 3 n.m. n.m. (6)

Income before tax 1,385 8.5 12.6 1,277 1,188 15.3 20.5 1,030 226 (14.2) (13.6) 264

Incometax (282) (0.1) 5.1 (282) (246) 14.0 20.6 (215) (47) (25.0) (23.1) (63)

Net income 1,103 10.9 14.7 994 943 15.7 20.5 815 179 (10.9) (10.7) 201

Non-controllinginterests (349) 18.0 23.0 (296) (308) 26.8 33.7 (242) (42) (21.9) (22.4) (53)

Net attributable proit 754 7.9 11.2 698 635 11.0 15.0 573 137 (6.8) (6.4) 148


Balance sheet

(Millioneuros)

Units:

South America Banking business Pensions and Insurance

30-09-11 ∆% ∆% (1) 30-09-10 30-09-11 ∆% ∆% (1) 30-09-10 30-09-11 ∆% ∆% (1) 30-09-10

Cashandbalanceswithcentralbanks 7,833 44.3 44.9 5,429 7,833 44.3 44.9 5,429 - - - -

Financialassets 9,891 13.2 15.7 8,736 8,441 18.3 (0.6) 7,136 1,396 (13.1) 7.8 1,605

Loansandreceivables 38,853 24.7 26.8 31,152 38,238 25.1 27.2 30,563 404 (42.8) (40.6) 706

Loansandadvancestocustomers 35,135 28.6 30.8 27,324 35,062 29.1 31.3 27,159 85 (51.1) (49.3) 174

Loansandadvancestocreditinstitutions

andother 3,718 (2.9) (1.6) 3,828 3,176 (6.7) (5.7) 3,405 319 (40.1) (37.7) 532

Tangibleassets 728 14.9 16.5 634 677 17.0 18.3 578 51 (7.3) (3.2) 55

Otherassets 2,403 14.6 17.4 2,097 2,008 13.3 16.5 1,773 152 (14.2) (11.0) 177

Total assets/Liabilities and equity 59,707 24.3 26.4 48,048 57,196 25.8 27.7 45,480 2,033 (21.3) (18.1) 2,544

Depositsfromcentralbanksandcreditinstitutions 5,623 30.3 33.2 4,314 5,622 30.5 33.3 4,309 5 7.2 8.7 5

Depositsfromcustomers 38,866 28.9 30.5 30,145 38,983 28.8 30.4 30,255 - - - -

Debtcertiicates 2,144 0.2 3.4 2,139 2,144 0.2 3.4 2,139 - - - -

Subordinatedliabilities 1,451 14.1 17.0 1,272 1,088 10.2 13.9 987 - - - -

Financialliabilitiesheldfortrading 1,373 50.9 57.8 910 1,373 50.9 57.8 910 - - - -

Otherliabilities 7,582 10.0 12.4 6,893 5,616 13.6 15.2 4,944 1,708 (18.6) (15.4) 2,100

Economiccapitalallocated 2,668 12.4 15.1 2,374 2,370 22.5 24.8 1,935 290 (34.1) (31.4) 440




39SouthAmerica

TheSouthAmericanareamanagestheBBVA

Group’sbanking,pensionandinsurance

businessesintheregion.Theirsthalfof2011

sawtheincorporationofCréditUruguay

(purchasedattheendof2010andmerged

withBBVAUruguayinMay2011)andthesaleof

theGroup’sholdingintheinsurancecompany

ConsolidarRetiroofArgentina.Anadditional

24.5%holdinginthecompanyForumChilewasalsopurchasedinSeptember2011.

Economic growthcontinuesverystrongin

SouthAmerica,sustainedbydomesticdemand

andalsothesupportfromwhatisstillalax

iscalpolicy.Growthratesintheconsumption

ofdurablegoodsandbanklendinginmost

countriesareveryhigh.Employmentigures

alsocontinuetobeverypositiveandare

providingsigniicantsupportfordomestic

demand.Commoditypricesremainhigh,which

explainsthebuoyancyofincome..

Withrespecttothemaincurrenciesinthe

region,theinalexchange ratesofthe

Argentinean,ChileanandColombianpesohave

fallenoverthelast12monthsand,exceptinthe

caseofArgentina,overthequarter.Incontrast,

thePeruviannuevosolandVenezuelanbolivar

gainedovertheyear,andparticularlyover

thequarter.Theoverallimpactonbusiness

activityandthebalancesheetintheareais

slightlynegativecomparedwiththeiguresfor

thesamedatelastyear.Intermsofaverage

exchangerates,allthecurrenciesexceptthe

Chileanpesolostinyear-on-yearterms,sothe

eectontheincomestatementisalsonegative

andmoresigniicantthaninthebalancesheet

andbusinessactivityigures.Unlessotherwise

indicated,allcommentsbelowrefertochanges

atconstantexchangerates.

Thepersistentpositiveeconomicclimate

continuestofavorgrowthinactivityinthe

region.Theloan bookintheareaattheendof

Septemberamountedto€36,403m,a

year-on-yearincreaseof30.7%andagainof

29basispointsinmarketshareoverthelast

12months(Augustigures,thelatestavailable).

Theiguresforcustomer fundsarealsovery

positive,particularlyinthecaseoflower-cost

fundssuchascurrentandsavingsaccounts,

whichgrewby31.0%overthe12months.

South America. Operating income

(Million euros at constant exchange rate)

South America. Net attributable profit


(1) At current exchange rate: +7.9%.(1) At current exchange rate: +9.5%.

568

1Q

464

2Q

507

3Q

516

4Q

628

1Q

+13.7% (1)

2010 2011

2Q

1,540 1,751

553

3Q

570235

1Q

210

2Q

233

3Q

187

4Q

276

1Q

+11.2% (1)

2010 2011

2Q

678 754

252

3Q

225

Signiicant ratios

(Percentage)

South America

30-09-11 30-06-11 30-09-10





South America highlights in the third

quarter

• Positiveactivityinallthegeographicalareas.

• Newgainsinmarketsharehighlyfocusedon

theindividualsegment.

• Strongrevenues.

• Improvementinriskindicators.



40 Businessareas

signiicantaspectsforeachofthebanksare

detailedbelow.

InBanco FrancesinArgentina,thepositive

netinterestincomefiguresstandout,with

year-on-yeargrowthof16.7%thankstothe

excellentperformanceoftheloanbook,which

wasboostedbyalmostallthelinesofbusiness.

Therewasagain44basispointsinmarketshareoverthelast12months,accordingto

dataforAugust2011.Particularlyoutstanding

wastheincreasedmarketshareinconsumer

finance(up99basispoints)andcorporate

lending(up66basispoints).Thehighrateof

growthinfeeshasbeenboostedbycredit

cardsandincomefromtransactionalservices

whichtogetherwithNTIalsoincreasingdueto

thesaleofassets,grossincomeyear-on-year

roseby23.9%.Operatingexpenseswereup

by24.1%,duetoinflationandexpansionplans

implementedbythebank.Atthesametime,highassetqualityhasrequiredonlymoderate

loan-lossprovisions.Inall,thesefactorshave

ledtonetattributableprofitof€109m,a

year-on-yearriseof38.5%.

InChile,BBVA andForumhavepostedgood

netinterestincomeigures,whichwereup

28.4%thankstoasigniicantincreaseinlending

toprivateindividuals,particularlyinconsumer

inance(withayear-on-yeargainof115basis

pointsinmarketshare)andmortgagelending

(up27basispoints).ThedownturninNTIisthe

resultofthehighcapitalgainsfromthesaleof

assetportfoliosin2010.Asaresultofallthese

factors,grossincomewasup17.0%.Including

theexpensesundertheexpansionplanscarried

outin2011,togetherwiththefavorablelevelof

loan-lossprovisions,thenetattributableproit

amountedto€91m.

BBVA Colombiacontinuesitsstrongpaceof

year-on-yeargrowthinlendingactivity(up

29.2%),particularlyincreditcards(up56.1%)

andconsumerfinance(up47.5%).Thebank

hasgainedsignificantlyinmarketshareinthesetwoitems(up116and126basispoints,

respectively).Netinterestincomewasup6.9%

andgrossincomeby2.8%,affectedbylower

NTIthistheyearcomparedwith2010.The

increasedexpensesarelargelytheresultofthe

impactofthetaxonfinancialtransactionsand

thewealthtax(whichdidnotapplytoBBVAin

2010).Loan-lossprovisionsandriskindicators

continuetobepositive.Asaresultofthese

factors,thenetattributableprofitinthenine

monthsended30-Sep-2011was€154m(up4.6%

year-on-year).

Includingtheassetsundermanagementin

mutualfunds,customerfundsmanagedbythe

banksamountedto€43,926masof

30Sep-2011,25.4%uponthesamedatein

2010.Inthepensionbusiness,thehighlevelof

volatilityintheinancialmarketshasimpacted

theproitabilityofthemanagedportfolios,and

ledgrowthoftheassetsundermanagementto

slowoverthelasttwelvemonthstoonly1.9%,amountingto€44,708asof30Sep-2011.

Thislevelofgrowthinbusinessactivityhas

beenrelectedinthenetinterestincomeinthe

area,whichtotaled€2,255myeartodate

(30Sep-2011),28.4%uponthesameperiodlast

year.Therewasalsogrowthof13.4%

year-on-yearinnetfeesandcommissionsto

€780m.NTI,at€355m,wasinluencedstrongly

bythevalueofUSdollarpositionsinBanco

Provincialandbytheturmoilonthemarkets.As

aresultoftheabove,combinedwiththeotherincome/expensesitem,the gross incomeyear

todatewas€3,214m,19.0%uponthesame

periodlastyear.

Expensesintheareawereup26.1%to€1,463m,

duetotheexpansionandpositioningprojects

undertakenbymostoftheunits.However,

thankstothepositiverevenueigures,the

eiciency ratioremainsatareasonablelevelof

45.5%.Theoperating incometoSeptemberwas

€1,751m,up13.7%.

Itisofparticularnotethatthemajorgrowth

inbusinessactivityhasbeenaccompaniedby

maintenanceofassetquality.Thisisreflectedin

thereductionintheNPA ratio,whichasof

30-Sep-2011stoodat2.3%(2.4%asof

30-Jun-2011).Impairmentlossesonfinancial

assetswereup11.2%to€322masaresultof

increasedlendingactivity,whilethecoverage

ratiohasimprovedoverthequarterbymore

than2percentagepointsto140%.

Tosumup,therehasbeenasigniicantgrowth

inactivityrelectedintheboostprovidedbyrevenues.This,togetherwiththeperformance

ofexpensesandloan-lossprovisionshaveledto

agrowthof11.2%inthenet attributable proitto

€754mintheninemonthsended30Sep-2011.

Banking Business

Intheirstninemonthsof2011,thearea’s

bankingbusinesshasgeneratedanet

attributableproitof€635m,15.0%uponthe

igureforthesameperiodlastyear.Themost



41SouthAmerica

Pensions and Insurance

ThePensionsandInsuranceunitinSouth

Americaisaleaderinthepensionbusinessin

LatinAmerica.Ithadanetattributableproitin

theninemonthsended30Sep-2011of€137m,

6.4%downontheigurefor2010.Thisfallisdue

tothepension businesscontributing30.4%less,

at€71m.Whilethecommercialperformancehasbeengood,thebusinesshasbeenbadlyhit

bythehighvolatilityoftheinancialmarkets.In

contrast,theinsurance businesshadaproitof

€67m,ayear-on-yeargrowthof47.5%,thanks

tothesteadygrowthinbusinessactivity,as

relectedinthe28.7%riseinwrittenpremiums.

AFP ProvidainChilehadanetattributable

proitof€54m,despitethenegativeeectofthe

markets.Thefavorableperformanceofreceipts

wasparticularlynotable.Theyposteda

year-on-yeargrowthof5.1%andboostedincomefromfees(up3.0%). AFP Horizonte de Colombia

generatedanetattributableproitof€13mand

AFP Horizonte de Peru,of€6m.

Theinsurancecompaniesinthe Grupo

Consolidar hadanetattributableproitinthe

ninemonthsended30Sep-2011of€25m,51.6%

abovetheigureforthesameperiodin2010.

Thisgrowthistheresultofincreasedactivity,

withpremiumsupby25%,andthelimitedrise

inclaims.Intherestoftheregion,theinsurance

businessinChilegenerated€24m,withagrowth

inpremiumsof44%;Colombia,€11m;and

Venezuela,€6m.

InPeru,Banco Continentalalsoperformedwell

duringthequarter,asrelectedinthe

year-on-yeargainsinmarketshareinlending

(up118basispoints,thankstothegrowthin

creditcardsandmortgages)andincustomer

funds(up201basispoints).Thisgrowthin

activityisrelectedintheriseof13.4%innet

interestincome,whichcombinedwitha7.0%

growthinfeesandcommissionshasresultedinanincreaseof5.4%ingrossincome.Therise

inexpensescanbeexplainedbythebank’s

expansionprojects(28newbrancheshavebeen

openedinthelast12months).Finally,withstable

loan-lossprovisions,thenetattributableproit

amountsto€100m(up4.1%).

Thenetattributableproitof Banco Provincial

was€132m,66.1%uponthepreviousyear.The

resultisgreatlyinluencedbytherevaluingof

USdollarpositionsheldbythebank,asrelected

inthelineitemofNTI(in2010therewasasimilareectfollowingthedevaluationofthe

Venezuelanbolivar).Netinterestincomewas

up57.7%asaresultofthegrowthinbusiness

activity,particularlyconsumerinance(up57.3%)

andcreditcards(up63.3%),whichincreased

theirmarketshareby173and443basispoints,

respectively.Operatingexpensesaregrowing

inlinewithinlationandloan-lossprovisions

includeincreasedgenericpreventiveprovisions.

Amongtheotherbanks, Panamahadaproit

fortheninemonthsended30Sep-2011of

€19m,Paraguay of €23m,andUruguayof€8m

(includingthecontributionofCréditUruguay).

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

(Millioneuros)

Operating income Net attributable proit

Country Jan.Sep. 11 ∆%∆% at constantexchange rate Jan.Sep. 10 Jan.Sep. 11 ∆%

∆% at constantexchange rate Jan.Sep. 10

Argentina 244 9.7 21.6 222 131 30.6 44.6 101Chile 343 3.2 0.7 332 171 (4.4) (6.8) 179

Colombia 289 (13.0) (11.2) 333 184 1.8 3.9 180

Peru 367 (5.5) (1.2) 388 105 (6.0) (1.7) 112

Venezuela 464 67.4 82.2 277 139 49.8 63.1 92

Othercountries(1) 44 (6.2) (6.2) 47 23 (30.7) (31.4) 34

Total 1,751 9.5 13.7 1,599 754 7.9 11.2 698

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



42 Businessareas

Income statement

(Millioneuros)

Units:

The United States BBVA Compass

Jan.Sep. 11 ∆% ∆% (1) Jan.Sep. 10 Jan.Sep. 11 ∆% ∆% (1) Jan.Sep. 10

Net interest income 1,182 (14.6) (9.1) 1,384 1,044 (12.3) (7.6) 1,209

Netfeesandcommissions 480 (3.7) 2.3 498 396 (5.4) 0.6 421

Nettradingincome 109 (5.7) (0.8) 116 72 (1.7) 5.0 74

Otherincome/expenses (60) 71.9 84.0 (35) (58) 79.2 101.2 (31)

Gross income 1,711 (12.8) (7.3) 1,963 1,454 (11.8) (7.0) 1,672

Operatingcosts (1,097) (3.3) 3.1 (1,135) (960) (5.0) 1.0 (1,017)

Personnelexpenses (599) 5.2 12.1 (570) (525) 3.2 10.8 (507)

Generalandadministrativeexpenses (372) (10.3) (4.4) (415) (313) (12.7) (8.1) (364)

Depreciationandamortization (126) (16.2) (10.4) (151) (122) (14.8) (10.6) (146)

Operating income 613 (25.9) (21.5) 828 494 (22.2) (19.4) 655

Impairmentoninancialassets(net) (285) (42.9) (38.8) (498) (273) (36.1) (36.0) (456)

Provisions(net)andothergains(losses) (23) 7.3 14.9 (22) (5) (70.2) (76.4) (21)

Income before tax 305 (0.8) 3.2 308 216 19.4 30.1 178

Incometax (88) 3.7 7.7 (84) (57) 24.6 36.3 (45)

Net income 218 (2.5) 1.5 223 159 17.6 28.0 133

Non-controllinginterests - - - - - - - -

Net attributable proit 218 (2.5) 1.5 223 159 17.6 28.0 133


Balance sheet

(Millioneuros)

Units:

The United States BBVA Compass

30-09-11 ∆% ∆% (1) 30-09-10 30-09-11 ∆% ∆% (1) 30-09-10

Cashandbalanceswithcentralbanks 2,124 (26.5) (27.3) 2,890 1,778 (2.1) ( 3.3) 1,819

Financialassets 8,054 8.9 7.7 7,396 7,196 8.7 10.9 6,561

Loansandreceivables 38,841 (2.3) (3.4) 39,762 31,445 1.8 0.9 30,836

Loansandadvancestocustomers 37,331 (2.6) (3.6) 38,317 30,588 1.6 0.7 30,064

Loansandadvancestocreditinstitutionsandother 1,510 4.5 3.4 1,445 857 9.9 9.8 772

Inter-areapositions 27 (99.8) (99.8) 11,990 2 (88.5) (98.3) 127

Tangibleassets 782 (3.0) (4.0) 806 746 (2.7) (4.0) 768

Otherassets 2,259 (8.8) (9.8) 2,476 2,024 (8.6) (10.5) 2,237

Total assets/Liabilities and equity 52,086 (20.3) (21.1) 65,320 43,190 1.8 0.9 42,349

Depositsfromcentralbanksandcreditinstitutions 7,436 29.2 27.8 5,756 4,265 17.8 18.5 3,562

Depositsfromcustomers 36,220 (28.8) (29.6) 50,892 32,411 (0.0) (1.1) 32,422

Debtcertiicates 348 (29.0) (29.8) 490 - - - -

Subordinatedliabilities 1,156 (1.7) (2.8) 1,176 932 2.7 1.9 905

Inter-areapositions - - - - - - - -

Financialliabilitiesheldfortrading 439 24.3 22.9 353 424 27.2 28.8 326

Otherliabilities 3,516 (1.5) (2.6) 3,571 2,703 (0.1) (1.2) 2,707

Economiccapitalallocated 2,972 (3.5) (4.6) 3,081 2,455 1.0 0.1 2,427


TheUnitedStates



43TheUnitedStates

ThisareaencompassestheGroup’sbusinessin

theUnitedStatesandintheCommonwealthof

PuertoRico.BBVACompassaccountsforaround

83%oftheassetsand85%oftheearnings

generatedinthecountry.Mostofthecomments

belowarethereforefocusedonthisbank.

Inthethirdquarterof2011,thecountry’s

economic growth slowed,althoughthechanceofareturntorecessionisstilllow

andanupturnintheeconomyisexpected

overthesecondhalfoftheyear.However,the

sluggishrecoveryinemploymentandwages,a

residentialconstructionsectorstilldeepinthe

processofadjustment,thecontinuedhousehold

deleveragingprocess,andthevolatilityof

inancialmarketsmayallcontinuetoholdthe

recoveryincheck.

Withrespecttothe labor market,thelatest

availableiguresplacetheunemploymentrateat9.1%,withlayosinthepublicsectorandthe

weaknessoftherealestatemarketbeingthe

factorsthatcontributemosttotherise.Labor

marketgrowthisexpectedtoremainlow,inline

withaslowerthanexpectedeconomicrecovery.

Acombinationofaweakeconomicactivityand

stablecommoditypricesarehelpingcontain

inlationarypressures.Delationaryriskshave

alsodeclined,withthelatestconsumerprice

indexhigherthanexpected.

TheFEDisexplicitlycommittedtokeeping

interest rateslowthroughmid-2013and

recentlyannouncedthatitplanstolengthen

theaveragematurityofitsbalancesheet

bysellingUSD400billionofshorter-term

Treasuryholdingsandpurchasingthesame

amountoflonger-termsecurities.Moreover,it

couldimplementfurtherstimulusmeasuresif

downsidegrowthrisksincrease.

TheexchangerateoftheUS currencyagainst

theeurohasgainedyear-on-year(1.1%),and

inparticularquarter-on-quarter(7.0%),sothe

impactofthecurrencyonthebalancesheet

andvolumeofbusinessintheareaispositive.

However,intermsofaverageexchangerates

thedollarisdown6.5%overthelast12months,

thoughpracticallyunchangedontheigure

forthepreviousquarter.Thustheeectofthe

year-on-yearchangesintheincomestatement

isnegativeandpracticallynilbetweenJuneand

Signiicant ratios

(Percentage)

The United States

30-09-11 30-06-11 30-09-10





The United States. Operating income


The United States. Net attributable profit


(1) At current exchange rate: – 2.5%.(1) At current exchange rate: –25.9%.

251

1Q

272

2Q

259

3Q

199

4Q

225

1Q

–21.5% (1)

2010 2011

2Q

782 613

205

3Q

184

55

1Q

80

2Q

79

3Q

15

4Q

80

1Q

+1.5% (1)

2010 2011

2Q

215 218

73

3Q

65

The United States highlights in the

third quarter

• Thefavorablenewproductioniguresfor

targetportfolioshaveofsetfallingloanstothe

developersector.

• Thepositivetrendinthecustomerspread

continues.

• Newimprovementsinassetquality.

• BBVACompasshasthebestnetinterest

income/ATAratiowithinitspeergroup.



44 Businessareas

increased3%onthepreviousquarter.Residentialrealestateis

alsoup,inlinewiththebank’snewmanagementpriorities,witha

quarter-on-quarterriseof4.4%andayear-on-yearriseof29.9%.In

contrast,loanstothedevelopersectorcontinuetofall,bothover

thequarter(down5.6%)andovertheyear(down31.4%),inline

withthestrategyofreducingriskinthesetypeofportfoliosandto

improvepositionsinthecommercial,industrialandresidentialreal

estatesegments.

Incustomer funds BBVACompasshasalsomanagedtoreduce

highcostdepositsandincreasethoseoflowercost.Infact,the

percentageofnon-interestbearingdepositsoutofthetotalrose

from25.8%at30Sep-2010to29.4%asof30Sep-2011.

Theaboveexplainsthefavorabletrendindepositcostigures,

whichhavefallenoverthelastyearby20basispointsfrom

0.62%to0.42%.Yieldonloansfell,buttoalesserextent,by12

basispointsoverthesametimeperiod.ThusBBVACompassis

continuingtoimproveits customer spread,whichasof

30Sep-2011stoodat3.94%(up8basispointsfromthesame

datethepreviousyearand2basispointsfromthecloseofthepreviousquarter).Asaresult,thebankhasmanagedtomaintain

itsquarterlynet interest incomeatpracticallythesamelevelas

inthepreviousquarter.Infact,BBVACompasshasthebestnet

interestincome/ATAratiowithinitspeergroup.Accordingto

datafromthesecondquarterof2011,thisratiowasabove3.96%

(followinglocalcriteria)fortheprevioussixquarters,whilethe

medianfortherestofthesectorwas3.52%.

RegulatorypressureshavenotpreventedBBVACompassfrom

makingconstantimprovementstoits feestructure.Retaillending

andinsurancepremiumshavemorethanosetthenegative

impactonservicechargesduringtheyearresultingfrom

regulatorychanges.Infact,BBVACompassactuallyincreased

servicechargesinthisquarter,provingthebank’sswiftresponse

andabilitytocompensateforlostincome.

Withrespecttootherrevenues,ofparticularnoteistheincreasein

theallocationtotheFederalDepositInsuranceCorporation(FDIC).

Inall,theBank’s gross incomeYTDstandsat€1,454m(down7.0%

year-on-year).

September2011.Unlessotherwisenoted,theiguresreferredto

belowaregivenatconstantexchangerates.

Overtheirstninemonthsoftheyear,thisareageneratedanet

attributable proitof€218m,ayear-on-yearincreaseof1.5%.The

mostimportantpartoftheincomestatementcontinuestobe

riskcontainment.Thisisrelectedintheiguresforimpairment

lossesoninancialassets,whichweredownovertheyearby

38.8%.Thishasinturnhadapositiveimpactontheriskpremiuminthearea,whichwas1.04%atthecloseofSeptember(1.16%as

of30Jun-2011).Itisalsoworthhighlightingthatthesefavorable

iguresforloan-lossprovisioningarenothavinganegativeimpact

oncoverageintheUnitedStates,whichincreasedbyovertwo

percentagepointsoverthequarterto69%.TheNPAratioalso

improved,closingon30Sep-2011at3.9%(4.2%asof30Jun-2011).

Intermsofbusiness activity,theareaiscontinuingwithits

processofalteringtheloan-bookmix.Inthethirdquarterof2011,

thefavorablenewproductioniguresfortargetlendingportfolios

haveosetfallingloanstothedevelopersector.Thisexplainsthe

quarter-on-quartergrowthof1.6%ingrosslendingtocustomersintheareato€38,456masof30Sep-2011.Customerfundsstood

at€35,335masof30Sep-2011,withthefocusstillonthosewith

lowercosts.

BBVA Compass banking group

TheBBVACompassbankinggroup(hereinafter,BBVACompass)

basicallyincludestheretailandcorporatebankingbusinessinthe

UnitedStates,excludingPuertoRico.Thisunithastakenseveral

keystepsin2011toimproveitspositionwithrespecttooperations

inthecurrenteconomicenvironmentandthusmaintain

proitability.

Gross customer lendingclosed30Sep-2011at€31,503m,

practicallythesameamountasinSeptember2010and2.7%

abovethatfor30Jun-2011.TheC&Iportfolio(notincluding

developerloansnorsecuredloans)showedthebiggestrisein

thequarter,at12.7%.Recentindustrydatareportforthesector

releasedbytheFederalReserveshowedthatcorporatelending

Interest bearing accounts48.6

Commercialreal estate

18.3

Residentialreal estate18.7

Commercial28.4

BBVA Compass. Loan mix

(Percentage)

BBVA Compass. Deposit mix

(Percentage)

Construction real estate 14.2

Consumer 16.8Commercial real estate 21.8

September 2010 September 2011

Residential real estate 23.8

Commercial 33.4

Construction realestate 9.5

Consumer 14.9

Time deposits27.4

Non interest bearing accounts25.8

Interest bearing accounts46.8

September 2010 September 2011

Time deposits 22.1

Non interestbearing

accounts29.4

Averagecost of

deposits0.60

Averagecost of

deposits0.42



45TheUnitedStates

to€13,889m,whiledepositswereupatayear-on-yearrateof6.6%

(down1.9%overthequarter)to€8,985m.

BBVACompasscontinuestostandoutfromthecompetitionby customer service.Thankstomorethan50schemesbeing

implemented,newcustomerretentionandcross-sellratioshave

increasedsteadilyoverthelastthreequarters.Moreover,the

Bankcontinuestolaunchnew productsandinnovateinorder

tomaintainitscompetitiveedgedespitethechangingregulatory

environment.AprimeexampleistheintroductionoftheBusiness

Rewardscreditcardthisquarter,whichoersexclusivediscounts

ofupto30%onQuickBookspurchasesandbusinesssavings

throughtheVisaSavingsEdgescheme.Thecardhasnoannual

feeattached.OthernewproductsincludeaSafeSpendCardand

aChargeCard,bothofwhichoerseveralattractivefeatures.

Distribution networksarebeingimprovedthroughongoing

technologicalupdatesinbranchesandbetteraccessviabothcell

phonesandtheInternet.Thiscanbeseenbythe75%increase

sofarthisyearinthenumberofcustomerswhoaccessthebank

throughtheircellphones.

Finally,employeescontinuetobeveryactiveintheirrespective

communities,wheretheyparticipateinbothlocalandnational

initiatives.Onenotableprojectisvolunteerparticipationtorebuild

schoolswithinthebank’sfootprint,towhichover715employees

havecontributedtheirtimeandeortsofarthisyear.The

“CompassForYourCause”program,whichbeneitsnon-proit

organizations,hasmorethantripledinthelastyearwitharecord

11,000peopletakingpart.

Operatingexpensescontinuetobeheldincheck,despitethe

investmentinbothpeopleandtechnology.Theyincreasedby

only1.0%withrespecttotheigureforthesameperiodlastyear.

Overall,theoperating incomefellby19.4%to€494m.However,theimprovementincredit quality continuestobeakeyfactor

intheproitabilityofBBVACompass.Inthethirdquarterof2011

allthemainbusinessunitsofBBVACompassimprovedtheir

creditqualityonthepreviousquarter.NPAweredown€78million

(aquarter-on-quarterdropof5.7%),andimpairmentlosseson

inancialassetsyeartodatetoSeptemberweredown36.0%

year-on-year.Thishasnotaectedthebank’scoverageratio,

whichwas7.3percentagepointsbetterasof30Sep-2011thanon

thesamedatelastyearand1.9percentagepointsbetterthanthe

closeofJune2011.Thusthecostofriskinannualizedtermshas

falleninthelast12monthsfrom1.89%to1.23%,withareduction

overthequarterof10basispoints.Asaresult,the net attributable

proitamountedto€159m(up28.0%year-on-year).

ThismeansthatBBVACompasshasachievedorganic capital

growthandmaintainsconsistentlystrongcorecapitalratios.

Accordingtolocalcriteria,thebankhasacorecapital(TierI)ratio

of11.7%andleverageratioof9.5%.

BBVACompassisdividedintothreemain business units:Retail,

Commercialbanking,andWealthManagement.Retaillending

increased12.4%overtheyear(up3.1%overthequarter)to

€13,500m,whiledepositsfellby3.7%year-on-year(–2.8%

quarter-on-quarter)to€21,918m.Incommercialbanking,loans

wereupby8.2%fromSeptember2010and4.5%fromJune2011

Developer loans over BBVA Compass total loan

portfolio

(Percentage)

14.2

September2010

22.3

September2009

9.5

September2011

BBVA Compass. Net interest income/Impairment

losses on financial assets

(Percentage)

3Q 4Q 1Q

2010 2011

2Q 3Q

3.7

3.33.5 3.5

3.3

2.82.6

3.8 3.4 4.4

1.3 1.3

0.9 1.00.8

Impairmentlosses onfinancial

assets/ATA

Net interestincome/ATA



47CorporateActivities

Thisareaincludesallthoseactivitiesnot

includedinthebusinessareas.Theseare

basicallythecostsoftheheadquarterswith

strictlycorporatefunctions,certainallocations

toprovisionssuchasearlyretirementsand

othersalsoofacorporatenature.Theareaalso

includestheassetsandliabilitiesderivedfrom

themanagementofstructuralliquidity,

interest-rateandexchange-raterisksbytheAssetsandLiabilitiesManagementunit,as

wellastheirimpactonearningsthatarenot

recognizedinthebusinessareasviatransfer

pricing.Finally,itincludescertainportfoliosand

assets,andtheirresults,whosemanagement

isnotlinkedtocustomerrelations,suchas

HoldingsinIndustrialandFinancialCompanies

andRealEstateManagement.

BetweenJanuaryandSeptember2011,net

interestincomeamountedtoanegative€460m,

ascomparedtothepositive€226mforthesameperiodin2010.Ascommentedinprevious

quarters,thisvariationisduetotheinalization

ofthemortgageloanrepricingafterthe2009

fallininterestratesandthesubsequentriseof

theinterestratecurveintheeurozone.The

above,togetherwithNTIbelowthatofthelast

twelvemonths,duetothelackofearningsfrom

portfoliosalesandthelossofassetvaluecaused

bytheturbidmarketsituation,resultedin gross

incomeof–€300m(+€857minthesame

periodin2010).Operatingexpensesamounted

to€690m,asaresultofinvestmentsmadeat

corporatelevel,mainlyintechnology,brandand

infrastructures.Asaresult,theoperatingincome

was–€991m(+€260m12monthsago).

Impairmentlossesoninancialassetstotaled

€54m,ascomparedtothe€916mtheprevious

year,inwhichadditionalprovisionswere

allocatedtotakeadvantageofthehighlevel

ofNTI.Furthermore,theincreaseinprovisions

(net)andothergains/lossesstoodat–€692m,

whichisdueprimarilytogreaterprovisionson

realestateandforeclosedassets.Asaresult,

theaccumulatednet attributable proitasofSeptember2011was–€970m(–€808minthe

sameperiodof2010).

Assets/Liability Management

TheAssetsandLiabilitiesManagementunitis

responsibleforactivelymanagingstructural

interest-rateandforeignexchangepositions,

aswellastheGroup’soverallliquidityand

shareholders’funds.

Liquidity managementhelpstoinancethe

recurrentgrowthofthebankingbusinessat

suitablematuritiesandcosts,usingawide

rangeofinstrumentsthatprovideaccesstoa

largenumberofalternativesourcesofinance.

AcoreprincipleintheBBVAGroup’sliquidity

managementcontinuestobetoencourage

theinancialindependenceofitssubsidiaries

intheAmericas.Thisaimstoensurethatthe

costofliquidityiscorrectlyrelectedinprice

formationandthatthereissustainablegrowthin

thelendingbusiness.Short-termandlong-termwholesaleinancialmarketswereaectedby

heighteneduncertaintyalongthethirdquarter

of2011.Thelong-termmarketshaveremained

practicallyclosedtotheEuropeaninancial

sector,withtheexceptionoftheissueofseveral

coveredbondsinthelastweekofAugust.

Moreover,theshort-termmarketshavebeen

aectedbythelackofappetiteofAmerican

investorsduetotheuncertaintiesregarding

thepossibleeectsoftheGreekdefaultonthe

Frenchbankingsystemandthesustainability

ofItalianinances.Againstthisbackdrop,BBVA’sproactivepolicyinitsliquiditymanagement,

itsretailbusinessmodelandasmallervolume

ofassetsgiveitacomparativeadvantage

againstitsEuropeanpeers.BBVAhasalready

covereditsmedium-andlong-terminancing

needsfor2011thankstothetotalissuedinthe

year(approximately€10,000m),aswellasthe

liquiditycontributedbyitsmainbusinessesin

Spain.Inaddition,thedebtmaturityproilefor

thecomingyears,withanaverageof€10,000m

peryear,canbeaddressedcomfortablyina

scenarioofverylowlendingactivityinSpain

andnaturalgrowthofcustomerdeposits.

Thefavorabletrendintheproportionofretail

depositsinthestructureofthebalancesheetin

allthegeographicalareascontinuestoallowthe

Grouptostrengthenitsliquiditypositionandto

improveitsinancingstructure.

TheGroup’scapital managementhasatwofold

aim:tomaintainthelevelsofcapitalization

appropriatetothebusinesstargetsinallthe

countriesinwhichitoperates;and,atthesame

time,tomaximizethereturnonshareholders’

fundsthroughtheeicientallocationofcapitaltodierentunits,goodmanagement

ofthebalancesheetandproportionateuse

ofthevariousinstrumentsthatcomprisethe

Group’sequity:shares,preferredsharesand

subordinateddebt.Intheirstninemonthsof

2011,BBVA’sAnnualGeneralMeetingapproved

theintroductionofa“DividendOption”

program,tooershareholdersawiderrangeof

remunerationontheircapital.Inaddition,inJuly

2011theBoardofDirectorshasapprovedthe

totalconversionofthemandatoryconvertible

subordinatedbondsissuedinSeptember2009

(worth€2,000m)intonewlyissuedBBVA

ordinaryshares.Inconclusion,thecurrentlevels

ofcapitalizationensuretheBank’scompliance



48 Businessareas

managementhavebeenverysatisfactory,with

extremelylimitedriskstrategiesinEurope,the

UnitedStatesandMexico.Thesestrategiesare

managedbothwithhedgingderivatives(caps,

loors,swaps,FRAs)andwithbalance-sheet

instruments(mainlygovernmentbondswiththe

highestcreditandliquidityratings).

Holdings in Industrial andFinancial Companies

Thisunitmanagestheportfolioofindustrialand

inancialinvestmentsincompaniesoperating

inthetelecommunications,media,electricity,

oil,gasandinancialsectors.LikeAsset/Liability

Management,thisunitlieswithintheGroup’s

FinanceDivision.

BBVAappliesstrictrequirementstothisportfolio

regardingrisk-controlprocedures,economiccapitalconsumptionandreturnoninvestment,

diversifyinginvestmentsacrossdierent

sectors.Italsoappliesdynamichedgingand

monetizationmanagementstrategiestoits

holdings.Intheirstninemonthsof2011,it

invested€440manddivested€180m.

Asof30Sep-2011,themarketvalueofthe

HoldingsinIndustrial&FinancialCompanies

portfoliowas€3,954m,withunrealizedcapital

gainsof€428m.

withallofitscapitalobjectives,ashasbeen

recognizedintheEBAstresstestspublishedin

July2011.

Foreignexchange riskmanagementofBBVA’s

long-terminvestments,basicallystemmingfrom

itsfranchisesintheAmericas,aimstopreserve

theGroup’scapitalratiosandensurethestability

ofitsincomestatement.InthesixmonthsendedJune30,2011,BBVAhasmaintainedapolicyof

activelyhedgingitsinvestmentsinMexico,Chile,

Peruandthedollararea,withaggregatehedging

ofcloseto50%.Inadditiontothis

corporate-levelhedging,dollarpositionsareheldat

alocallevelbysomeofthesubsidiarybanks.The

foreign-exchangeriskoftheearningsexpected

intheAmericasfor2011isalsostrictlymanaged.

Intheirstninemonthsoftheyear,hedginghas

mitigatedthenegativeimpactofexchangerates

onthecapitalandtheGroup’sincomestatement.

Fortherestof2011,and2012asawhole,thesameprudentandproactivepolicywillbepursuedin

managingtheGroup’sforeign-exchangeriskfrom

thestandpointofitseectoncapitalratiosandon

theincomestatement.

Theunitalsoactivelymanagesthe structural

interestrate exposureontheGroup’sbalance

sheet.Thisaimstomaintainasteadygrowthin

netinterestincomeintheshortandmedium

termregardlessofinterest-rateluctuations.In

theirstninemonthsof2011,theresultsofthis



49Otherinformation:WholesaleBanking&AssetManagement

Otherinformation:WholesaleBanking&AssetManagement

Income statement

(Millioneuros)Wholesale Banking & Asset Management

JanuarySep. 11 ∆% ∆% (1) JanuarySep. 10

Net interest income 1,153 0.8 2.3 1,144

Netfeesandcommissions 632 2.6 3.7 616

Nettradingincome 222 (30.8) (28.7) 320

Otherincome/expenses 70 (1.7) (3.7) 71

Gross income 2,077 (3.5) (2.1) 2,151

Operatingcosts (705) 14.5 15.5 (615)

Personnelexpenses (419) 11.3 12.1 (376)

Generalandadministrativeexpenses (276) 19.4 20.9 (231)

Depreciationandamortization (10) 19.5 20.0 (9)

Operating income 1,372 (10.6) (9.2) 1,535

Impairmentoninancialassets(net) (61) 5.7 7.4 (58)

Provisions(net)andothergains(losses) (7) n.m. n.m. 5

Income before tax 1,304 (12.1) (10.6) 1,483

Incometax (382) (8.7) ( 6.9) (419)

Net income 922 (13.4) (12.1) 1,064

Non-controllinginterests (60) (20.2) (16.1) (75)

Net attributable proit 862 (12.9) (11.8) 989


Balance sheet

(Millioneuros)

Wholesale Banking & Asset Management

30-09-11 ∆% ∆% (1) 30-09-10

Cashandbalanceswithcentralbanks 8,531 66.1 67.4 5,136

Financialassets 79,683 9.5 (9.3) 72,759

Loansandreceivables 74,713 13.5 14.5 65,838

Loansandadvancestocustomers 55,016 6.9 8.1 51,466

Loansandadvancestocreditinstitutionsandother19,696 37.0 36.9 14,372

Inter-areapositions - n.m. n.m. 25,955

Tangibleassets 47 3.1 3.5 45

Otherassets 2,527 13.0 13.4 2,237

Total assets/liabilities and equity 165,500 (3.8) (3.2) 171,970

Depositsfromcentralbanksandcreditinstitutions 53,728 1.2 2.5 53,075

Depositsfromcustomers 48,972 (21.6) (21.3) 62,481

Debtcertiicates (117) n.m. n.m. 0

Subordinatedliabilities 1,462 (21.3) (21.4) 1,857

Inter-areapositions 2,449 n.m. n.m. -

Financialliabilitiesheldfortrading 48,819 8.9 9.0 44,825

Otherliabilities 6,352 (0.1) 1.2 6,358

Economiccapitalallocated 3,836 13.7 13.6 3,374




50 Businessareas

TheWholesaleBanking&AssetManagement

(WB&AM)areahandlestheGroup’swholesale

businessesandassetmanagementinallthe

geographicalareaswhereitoperates.Itis

organizedinthreemainbusinessunits:Corporate

andInvestmentBanking(C&IB),GlobalMarkets

(GM)andAssetManagement(AM).

Despitethecomplicatedeconomicbackdrop

andthenegativeevolutionoftheinancial

markets,especiallyinthesecondandthird

quartersof2011,theBBVAGroup’sWB&AMhas

maintainedaclearfocusontheclientandhigh

recurrenceandqualityinits revenues.This

wasduetotheGroup’soutstandingbusiness

model,whichisstronglybasedonasolid

relationshipwithitscustomersandlowleverage

levels.Thisbusinessmodelinthecurrent

economicsituationallowsBBVAtorecover

competitivenessagainstabackdropthathas

forcedotherbankstoannouncesigniicant

deleveragingplans.

Theaccumulated gross incomeasof

Septemberstoodat€2,077m,down2.1%at

constantexchangeratescomparedtothesame

periodof2010.Brokendownbygeographical

area,Asiahaspostedanexcellent29.3%

year-on-yeargrowthsupportedbyitsGlobal

Marketsunit.Europe,excludingSpain,recorded

a2.7%increase.

Investmentinsystemsandthevariousgrowth

plansunderwayinallthegeographicalareas

haveledtoa15.5%year-on-yearincrease

inoperatingexpenses,andresultedinanoperating incomeamountingto€1,372masof

30Sep-2011,a9.2%decreasecomparedtothe

sameperiodof2010.

Theunitsinthisareacontinuetoshowhigh

assetquality,withalowNPAratio,ahigh

coverageratioandloan-lossprovisionsthat

represent5.1%oftheoperatingincome.Asa

resultofthesefactors,thenet attributable proit

intheninemonthsended30Sep-2011was

€862m(down11.8%ascomparedtoSeptember

2010).

AsofSeptember30,2011,thisaggregate

recordedgross lending to customersof

€55,683mandmanaged€50,140min customer

funds.Itsyear-on-yearevolutionvariesby

geographicalarea.Activitywasdownor

remainedstableinthedevelopedmarkets

(SpainandtheUnitedStates,primarily),whileit

wasupinemergingregions(EurasiaandLatin

America).

ThemaintransactionsintheGroup’swholesale

businessinthethirdquarterof2011are

summarizedbelow:

Inequity capital marketsinSpain,BBVA

participatedasco-leadmanagerinthe

institutionaltrancheofBankia’sIPO(€3,092m).

InAsia,itactedasjointlead-managerinthe

internationaltrancheofCITICSecuritiesgoing

WB&AM. Operating income


WB&AM. Net attributable profit


(1) At current exchange rate: –12.9%.(1) At current exchange rate: – 10.6%.

630

1Q

455

2Q

426

3Q

470

4Q

558

1Q

–9.2% (1)

2010 2011

2Q

1,511 1,372

440

3Q

374

413

1Q

295

2Q

270

3Q

229

4Q

349

1Q

–11.8% (1)

2010 2011

2Q

978 862

313

3Q

200

WB&AM highlights in the third

quarter

• Resilienceofcustomerrevenuesinan

especiallycomplicatedquarterforthe

markets.

• Leadershipinseveralofthewholesalebanking

operationsinEuropeandLatinAmerica.

• Highassetquality.



INVESTOR RELATIONS

PaseodelaCastellana.81–22ndloor

E28046Madrid-Spain

Tel,:+34913746201

Fax:+34915378512

Email:inversoresbbva@grupobbva,com

1345Av,oftheAmericas.45thloor

NewYork.NY10105-USA

Tel,:(+1212)7281660

Fax:(+1212)3332905

Email:ricardo,marine@bbvany,com

http://inversores,bbva,com



3 Q1 1

Download - 3Q11 Quarterly Report Eng2 Tcm240-273407

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