Banco Bilbao Vizcaya Argentaria, S.A. · BME:BBVA
Banco Bilbao Vizcaya Argentaria — Investor Presentation (March 2011)
44 slides from Banco Bilbao Vizcaya Argentaria's investor presentation, Mar 3, 2011
Slide 1: Spain: Consumption Outlook
Spain: Consumption Outlook Barcelona, 3 March 2011
Slide 2: Key themes
Consumption Outlook / March 2011 Key themes • Divergences in the world economy (developed vs. emerging, central Europe vs. the peripheral, financial economy vs. real economy) will influence economic policy responses • Economic and institutional reforms in Europe will be key to resolving the financia
Slide 3: Contents
Consumption Outlook / March 2011 Contents 1. International environment: decoupling continues 2. Growth outlook for the Spanish economy: boost from foreign demand while domestic demand remains weak 3. Factors affecting present and future trends in consumer spending of households 4. Consumption of dur
Slide 4: International environment: strong global growth driven by emerging markets
Consumption Outlook / March 2011 Section 1 International environment Strong growth in the global economy driven by emerging markets • Global growth remains strong: having ended 2010 with a growth rate of 4.8%, the world economy is set for a mild slowdown (4.4% in 2011 and 2012) • Greater dynamism fr
Slide 5: International environment: US and Europe outlook
Consumption Outlook / March 2011 Section 1 International environment US growth outlook improves In Europe, a window of opportunity is • Causes: favourable macroeconomic data and new opening to resolve the crisis and monetary and fiscal stimuli • Growth forecasts were revised up by 0.7pp (to 3%) in n
Slide 6: Rising commodity prices have spurred inflation indicators
Consumption Outlook / March 2011 Section 1 International environment Rising commodity prices have spurred inflation indicators • Commodity prices have been rising over recent months due to a number of short-term factors: bad weather and greater investment flows into commodity markets • Stabilisation
Slide 7: Contents
Consumption Outlook / March 2011 Contents 1. International environment: decoupling continues 2. Growth outlook for the Spanish economy: boost from foreign demand while domestic demand remains weak 3. Factors affecting present and future trends in consumer spending of households 4. Consumption of dur
Slide 8: Growth outlook: return to growth in 4Q10 and 1Q11
Consumption Outlook / March 2011 Section 2 Growth outlook After a pause in 3Q10, the Spanish economy returned to growth in 4Q10 and 1Q11 • The Spanish economy grew two tenths of a point in the fourth quarter of 2010... • ... and will continue to grow by between two and three tenths of a point in 1Q1
Slide 9: Outlook 2011-2012: adjustments continue
Consumption Outlook / March 2011 Section 2 Growth outlook Outlook 2011-2012: adjustments continue Negative contribution from the public sector and weak recovery in private domestic demand Factors affecting the outlook for 2011-2012 Spain: Contributions to GDP growth (pp) Source: BBVA Research based
Slide 10: Outlook 2011-2012: exports will continue to lead recovery
Consumption Outlook / March 2011 Section 2 Growth outlook Outlook 2011-2012: adjustments continue Exports will continue to lead recovery Factors affecting the outlook for 2011-2012 Spain: Contributions to GDP growth (% yoy) Source: BBVA Research based on National Statistics Institute and Eurostat da
Slide 11: Outlook 2011-2012: macroeconomic forecasts
Consumption Outlook / March 2011 Section 2 Growth outlook Outlook 2011-2012: adjustments continue • Recovery will be weak in the short term • In 2012, the economy will return to 1.9% growth, enough to create jobs but not to significantly reduce the unemployment rate Macroeconomic forecasts Source: N
Slide 12: Regional divergences in Spanish growth
Consumption Outlook / March 2011 Section 2 Growth outlook Outlook 2011-2012: adjustments continue At regional level, the imbalances generated during the boom and crisis will impact recovery in 2011. Spanish growth is still marked by sharp regional divergences Surplus housing Unemployment Spain: GDP
Slide 13: Uncertainties remain on the recovery
Consumption Outlook / March 2011 Section 2 Growth outlook However, uncertainties remain as to how dynamic the recovery will be Downward risk factors Upward risk factors • Delays in resolving Europe's governance • Stronger growth in the global economy issues • Consolidation of structural reform proce
Slide 14: Contents
Consumption Outlook / March 2011 Contents 1. International environment: decoupling continues 2. Growth outlook for the Spanish economy: boost from foreign demand while domestic demand remains weak 3. Factors affecting present and future trends in consumer spending of households 4. Consumption of dur
Slide 15: Factors shaping consumption
Consumption Outlook / March 2011 Section 3 Factors shaping consumption Factors affecting present and future trends in consumer spending of households: 1. Decrease in risk aversion 2. Correction of imbalances accumulated prior to (deleverage) and during (unemployment) the crisis 3. Consequences of he
Slide 16: Decrease in risk aversion
Consumption Outlook / March 2011 Section 3 Factors shaping consumption 1 Decrease in risk aversion Uncertainty will gradually decrease, reducing saving as a precautionary measure Spain: household consumption, GDP and confidence indicator (t-1) (%) Spain: household saving rate (% GDHI) Source: BBVA R
Slide 17: Acceleration of fiscal consolidation process
Consumption Outlook / March 2011 Section 3 Factors shaping consumption 2 Acceleration of fiscal consolidation process • During the first half of 2010, consumer spending rose temporarily as a result of consumers bringing forward purchases in response to the Government's announcement to accelerate the
Slide 18: Correction of imbalances: deleverage
Consumption Outlook / March 2011 Section 3 Factors shaping consumption 3 Correction of imbalances: deleverage • International empirical evidence indicates that: • The decrease in disposable income in 2H10 – deleveraging starts some time after a financial crisis contributed to the stagnation of house
Slide 19: Deleverage: consumer credit
Consumption Outlook / March 2011 Section 3 Factors shaping consumption 3 Correction of imbalances: deleverage During 2H10, consumer credit continued to decline in Spain, while it began to grow in the EMU, bolstering the convergence process Consumer credit (% yoy) Consumer credit as a percentage of G
Slide 20: Deleverage: interest rates and default rates
Consumption Outlook / March 2011 Section 3 Factors shaping consumption 3 Correction of imbalances: deleverage The expected weakness in demand and persistently high default rates suggest consumer credit will not rise in the near term Spain: interest rates for new consumer credit transactions (%) Spai
Slide 21: Deleverage: bank-lending survey
Consumption Outlook / March 2011 Section 3 Factors shaping consumption 3 Correction of imbalances: deleverage The most recent Spanish bank-lending survey indicates that access to credit will not be restricted at the beginning of the present year, while demand will continue to be weak, in line with t
Slide 22: Deleverage: employment and household income
Consumption Outlook / March 2011 Section 3 Factors shaping consumption 3 Correction of imbalances: deleverage • The decline in the labour market is easing off, but will not be sufficient to offset the reduction in salaries as a percentage of GDHI in 2011, the rate of decline of which will slowdown i
Slide 23: Financial stress
Consumption Outlook / March 2011 Section 3 Factors shaping consumption 4 Financial stress The difficulties some entities are encountering in raising financing are resulting into higher rates on deposits, which encourages saving to the detriment of consumption Spread between rates offered on term Spa
Slide 24: Contents
Consumption Outlook / March 2011 Contents 1. International environment: decoupling continues 2. Growth outlook for the Spanish economy: boost from foreign demand while domestic demand remains weak 3. Factors affecting present and future trends in consumer spending of households 4. Consumption of dur
Slide 25: Durable consumer goods
Consumption Outlook / March 2011 Section 4 Durable consumer goods As it is more sensitive to fluctuations in prices and income, domestic demand for durable goods was particularly affected by the deeper fiscal adjustment in 2H10 • The VAT hike in July, the cut in public sector salaries, and the end o
Slide 26: Durable goods: export demand improved
Consumption Outlook / March 2011 Section 4 Durable consumer goods In contrast, export demand improved, driven by the dynamism of the European economy -especially Germany- and robust demand from emerging economies • Exports of durable goods rose 13.9% between June • External demand for consumer durab
Slide 27: Cars
Consumption Outlook / March 2011 Section 4 Durable consumer goods Cars • With the VAT hike coinciding with the end of Plan 2000E, demand for cars was particularly affected by the acceleration of the fiscal consolidation process – After a first quarter of gradual weakening of growth, car registration
Slide 28: Cars: used versus new car sales
Consumption Outlook / March 2011 Section 4 Durable consumer goods Cars • The drop in sales of used cars (UC) has been significantly lower than the decrease in new car (NC) sales • The ratio of UC to NC therefore stands at approximately 1.6 in 2010, the highest in the last decade Spain: car sales Wha
Slide 29: Cars: households purchasing used cars
Consumption Outlook / March 2011 Section 4 Durable consumer goods Cars Minor qualitative changes in the type of households purchasing UC Pre-crisis Crisis • Autonomous regions: Andalusia, Balearic • Autonomous regions: Extremadura, Islands, Murcia, Navarre Aragon, Murcia, La Rioja • Household: • Hou
Slide 30: Cars: probability of purchasing a car
Consumption Outlook / March 2011 Section 4 Durable consumer goods Cars • To identify if purchasing households • While the number of variables influencing the preferences are changing, it is necessary to probability of purchasing a car is high… separate the decision to purchase from the decision on w
Slide 31: Cars: effect of income on used car choice
Consumption Outlook / March 2011 Section 4 Durable consumer goods Cars • …, only income levels, home ownership. rental, the level of education of the main breadwinner and their nationality directly affect the probability of choosing a UC • The magnitude of the effects has changed during the crisis:
Slide 32: Cars: home ownership and nationality effects
Consumption Outlook / March 2011 Section 4 Durable consumer goods Cars • The magnitude of the effects has changed during the crisis: 2. Stronger correlation between demand for cars and 3. Natives and immigrants are converging with residential investment: households owning homes respect to preference
Slide 33: Motorcycles
Consumption Outlook / March 2011 Section 4 Durable consumer goods Motorcycles • The Plan Moto-E - extended until the end of 2010 or until the allocated budget runs out - has continued to be ineffective – The exclusion of motorcycles with higher cylinder capacity from the programme and the requiremen
Slide 34: Furniture
Consumption Outlook / March 2011 Section 4 Durable consumer goods Furniture • After two years of double-digit declines, the decrease in the turnover of the furniture sector eased off in 2010 to -6.1% – The temporary slowdown in the decline of the real estate market, underpinned by the end of the tax
Slide 35: Major appliances
Consumption Outlook / March 2011 Section 4 Durable consumer goods Major appliances • As with furniture, the effect of the VAT rise on demand was mitigated by the complementary nature of housing purchases and the acquisition of household appliances • The number of homes sold fell by 4.4% in 2010 (whi
Slide 36: Consumer electronics and ICT equipment
Consumption Outlook / March 2011 Section 4 Durable consumer goods Consumer electronics and ICT equipment • The bringing forward of purchases has significantly affected consumption of consumer electronic products, but not consumption of ICT equipment (different elasticity-price) • The brown goods sec
Slide 37: Contents
Consumption Outlook / March 2011 Contents 1. International environment: decoupling continues 2. Growth outlook for the Spanish economy: boost from foreign demand while domestic demand remains weak 3. Factors affecting present and future trends in consumer spending of households 4. Consumption of dur
Slide 38: BBVA surveys of economic activity and business trends
Consumption Outlook / March 2011 Section 5 BBVA surveys of economic activity and business trends • To understand the economic position of a sector and its outlook, relevant quantitative and qualitative data on the companies operating therein are required • It is also recommended that the views of th
Slide 39: Survey sample composition by sector
Consumption Outlook / March 2011 Section 5 BBVA surveys of economic activity and business trends • The share of the car distribution sector is comparatively high in both surveys • The composition of the sample in the BTS is more balanced than in the EAS Composition of samples by sector of activity S
Slide 40: Headline results: weak consumption hit company results
Consumption Outlook / March 2011 Section 5 BBVA surveys of economic activity and business trends Headline results Extremely weak consumption which had a significant negative impact on companies' results in 2H10 Results hardly vary when the question Business position: 2H10 vs. 1H10 Perception of econ
Slide 41: Headline results: financing conditions
Consumption Outlook / March 2011 Section 5 BBVA surveys of economic activity and business trends Headline results • During the latter half of last year, the changes in financing conditions does not appear to have significantly limited the performance of the companies included in the survey – Less th
Slide 42: Headline results: expectations for 1H11
Consumption Outlook / March 2011 Section 5 BBVA surveys of economic activity and business trends Headline results • Improved expectations of companies and managers for 1H11 … • ... underpinned by a favourable outlook for supply of credit (70.9% believe it will not decrease in 1H11, compared to 44.0%
Slide 43: Key themes
Consumption Outlook / March 2011 Key themes • Divergences in the world economy (developed vs. emerging, central Europe vs. the peripheral, financial economy vs. real economy) will influence economic policy responses • Economic and institutional reforms in Europe will be key to resolving the financia
Slide 44: Spain: Consumption Outlook
Consumption Outlook / March 2011 Spain: Consumption Outlook Barcelona, 3 March 2011 Page 44
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