Banco Bilbao Vizcaya Argentaria, S.a. · BME:BBVA
Banco Bilbao Vizcaya Argentaria — Goldman Sachs European Financial Conference 2008
23 slides from Banco Bilbao Vizcaya Argentaria's conference presentation, Jun 12, 2008
Slide 1: And now… it’s about earnings
And now… it’s about earnings Goldman Sachs European Financial Conference Panel: Managing through the crisis Berlin, June 12th 2008
Slide 2: Disclaimer
Disclaimer This document is only provided for information purposes and does not constitute, nor must it be interpreted as, an offer to sell or exchange or acquire, or an invitation for offers to buy securities issued by any of the aforementioned companies. Any decision to buy or invest in securities
Slide 3: Current market sentiment on financials
Current market sentiment on financials • Underweight of financials since the second half of 2007 with very little discrimination • Currently the focus is being placed on damage recognition and capital restoration • Macro concerns seem to dominate But after short term drivers are over, what will be t
Slide 4: BBVA: A unique case in the current environment
And now… it’s about earnings 1 BBVA: A unique case in the current environment 2 Outperforming peers in each market 4
Slide 5: BBVA managed liquidity risk ahead of the crisis
BBVA managed liquidity risk ahead of the crisis • 32.4 Bn of medium and long term funding from January to July 2007 • Strong deposit gathering in Spain since 2Q06 Wholesale funding (€ Bn) Spain: Retail Term deposits – YoY Growth (%) +80% 36.8 39.2 36.7 32.4 33.9 35.9 30.7 18.0 17.2 19.1 Jan-Jul 06 J
Slide 6: BBVA management continues to be focused on liquidity
BBVA management continues to be focused on liquidity, as tensions are likely to persist Active management of liquidity risk Low concentration of future maturities With > €50 bn additional sources of liquidity ready to be used (covered bonds, CP programs and more) Strict management of the liqui
Slide 7: (Small) balance sheet size as an advantage
(Small) balance sheet size as an advantage Assets (31/12/07) bn € % Deposits/Total assets RBS 2.592 BBVA 47% 5,2 DB 2.027 Lloyds 44% 4,0x BNPP 1.694 3,4x UCI 38% BARCL 1.674 3,3x HBOS 36% HSBC 1.507 3,0x ISP 36% CASA 1.414 2,8x RBS 36% UBS 1.369 2,7x SAN 35% SG 1.072 2,1x UBS 28% UCI 1.022 2,0x CMZ
Slide 8: Strong capital base with organic generation and sizeable capital cushions
Strong capital base with organic generation and sizeable capital “cushions” Capital ratios BIS II rules (%) Tier I Latent capital gains Generic provisions over expected loss 7.8% Core €2,900m €3,900m 6.3% 1.1% 1.5% March 2008 Ordinary activities added 13 bp to core capital in 1Q08 8
Slide 9: Asset quality under control, risk premium to remain stable
Asset quality under control, risk premium to remain stable NPL Provisions Risk premium (bp) Asset quality (%) BBVA €7,740m European Peer Group (2) 68 2.72 47 200 75% Generic 0.99 62.3 25% Specific 1 Q0 8 BBVA European NPL Coverage Average (1) (1) Largest European Banks as at Dec 2007 (2) Average of
Slide 10: BBVA, the only major bank with rating upgrades in the last 12 months
BBVA, the only major bank in the world with 2 rating upgrades in the last 12 months •Strong and manageable BBVA Group long term ratings balance sheet •Stable emerging economies S&P AA • Multinational retail banking • Low deviation of revenues • Diversification of earnings Moodys Aa1 • Low cost produ
Slide 11: BBVA: A unique case in the current environment
And now… it’s about earnings 1 BBVA: A unique case in the current environment 2 Outperforming peers in each market 11
Slide 12: Spain: Effective price management leads to higher Net Interest Income
1 Spain: Effective price management leads to higher Net Interest Income Customer spread and NII/ATA Net Interest Income (%) (€m) 3.96 SMEs customer spread 3.72 +13.9% 3.51 3.54 3.45 1,132 3.60 994 3.49 3.54 3.35 3.42 Retail Network in Spain Spain & Portugal NII/ATA customer spread 2.12 2.15 2.15 2.1
Slide 13: Spain: Controlled growth with low risk
Spain: Controlled growth with low risk Individuals Developers BBVA individual mortgage Lending growth BBVA Developer market market share (YoY %) share Spain (%) 45% Banks + Savings banks - 126 b.p. • 5.6% (-184 b.p. in 40% the last 3 years) 13.2% • Selective 12.0% 35% commercial policy: 30% 95% 1st
Slide 14: Continuous improvement in efficiency due to Transformation Plan
Continuous improvement in efficiency due to Transformation Plan In December 2006 we finalized the branch expansion and launched the first stage of a new distribution network strategy Revenues and Costs Cost/income ratio incl. deprec. (%) (%) 120 -2.6 p.p. 115 Revenues 110 38.7 36.1 105 Expenses 100
Slide 15: BBVA is well prepared to cope with macroeconomic headwinds in Spain
BBVA is well prepared to cope with macroeconomic headwinds in Spain 1. Strong liquidity = ability to lend with normality Not paying marginal rates to capture deposits + prioritizing margins Vs. volume = better spreads 2. Transformation Plan = flat cost growth 3. Distinctive asset quality €3 Bn gener
Slide 16: The Mexican economy is surprising on the upside
2 The Mexican economy is surprising on the upside Stock markets Mexican peso / USD (Base is 100) (YTD) 0.096 115 110 Mexico 0.095 105 0.094 100 USA 95 (S&P 500) 0.093 0.092 90 85 0.091 Europe (E300) 80 0.09 jan-08 feb-08 mar-08 apr-08 1-1 8-1 15- 22- 29- 5-2 12- 19- 26- 4-3 11- 18- 25- 1-4 8-4 15- 2
Slide 17: Bancomer’s strong growth in 1Q08
Which is clearly reflected on Bancomer’s strong growth in 1Q08 Lending Lending and Customer Funds Year-on-year growth (%) (Average balances) SMEs +36.6% 27.6% Mortgages +33.6% 14.7% Consumer + cards: +21.4% 5% Current accounts +15.1% 0% Lending Customer Funds Term+M.Funds+ +14.3% Repos+Money mkt 17
Slide 18: Bancomer is ahead of the competition, promoting a more balanced asset mix
Bancomer is ahead of the competition, actively promoting a more balanced asset mix… Loan Portfolio (flow) Contributions by product Average balances (%) Consumer + Consumer + Consumer + Cards; 25.6% Cards; 24.8% Cards; 42.0% Mortgages; 35.6% Mortgages; 35.1% Mortgages; 39.7% Other; 24.3% Other; 21.8%
Slide 19: NPL levels flat - thanks to high asset quality
NPL levels flat - thanks to high asset quality Impairment losses NPL and Coverage Ratios Mexico Mexico (Constant €m) (%) +13.7% 221 276.2 Coverage ratio 194 206 190 190 263.0 250.4 254.6 249.0 NPL ratio 2.33 2.36 2.32 2.15 2.16 1Q07 2Q07 3Q07 4Q07 1Q08 1Q07 2Q07 3Q07 4Q07 1Q08 Provisions and NPL´s h
Slide 20: BBVA has a distinctive position in the USA
3 BBVA has a distinctive position in the USA Texas (65%) and Alabama (15%) represent 80% of exposure: thus limited impact from real estate slowdown U.S. percent change in house prices (OFHEO) 500 7 Quarterly 1-Yr. 5-Yr. Since 1980 5 400 3 300 1 200 -1 -3 100 -5 0 -7 TX AL NM USA FL CA TX AL NM USA F
Slide 21: …while integration plans progress well
…while integration plans progress well Excluding amortisation of intangibles (€m constant) Annual Annual Acum Acum Growth Growth USA 1Q08 4Q07 Acum % Ordinary Revenues 497 487 10 2.1% Total expenses -276 -282 7 -2.4% Operating Profit 222 206 17 8.1% Loan-loss provisions -47 -47 0 -0.1% Net Attributa
Slide 22: In short:
In short: It is and it will be about earnings Key drivers to deliver earnings cannot be improvised 1 Portfolio mix and business model 2 Balance-sheet size and strength 3 Capability and track record of efficiency management 4 Superior asset quality BBVA, an earnings play 22
Slide 23: And now… it’s about earnings
And now… it’s about earnings Goldman Sachs European Financial Conference Panel: Managing through the crisis Berlin, June 12th 2008