Banco Bilbao Vizcaya Argentaria, S.a. · BME:BBVA
Banco Bilbao Vizcaya Argentaria — BBVA — Spring European and Middle East Large Cap Conference 2008
32 slides from Banco Bilbao Vizcaya Argentaria's conference presentation, May 21, 2008
Slide 1: And now… it's about earnings
And now… it’s about earnings Spring European and Middle East Large Cap Conference Paris, May 21th, 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: And now… it's about earnings
And now… it’s about earnings 1 A unique case in the current environment 2 Outperforming peers in each market 3
Slide 4: BBVA had a clear assessment of the situation affecting the financial sector
BBVA had a clear assessment of the situation affecting the financial sector But the world out there has changed , D ay stor 2007 e Inv 15th B VA ber B vem • Current situation points towards a lower growth No environment • Monetary policy should be adapted, despite short term inflation risks • Emergi
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: 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 7
Slide 8: 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 9: Efficiency management credentials and sustained profitability
Efficiency management credentials and sustained profitability Efficiency ROE (%, incl. depreciation) (%) 56.8 25.2 42.9 17.6 BBVA (1) European Peer Group (2) BBVA (1) European Peer Group (2) (1) Ex-One Offs (2) Average of the following 13 banks: Santander, Deutsche Bank, BNPP, SG, CASA, UCI, ISP, RB
Slide 10: Rating agencies acknowledge BBVA's differential situation
Rating agencies acknowledge BBVA´s differential situation “The upgrade is based BBVA Group on BBVA's more long term ratings robust performance than that of its S&P AA European peers, strong local franchises, increased diversification, Moodys Aa1 resilient asset quality, prudent management, and reduc
Slide 11: Business model matters for earnings growth potential
Business model matters for earnings growth potential Banking sector BBVA • Material write-downs • Stable emerging economies • High volatility of earnings • Low deviation of revenues • Large weight of wholesale • Diversification of earnings • Unsustainable business models • Multinational retail banki
Slide 12: Earnings
How is the market reacting? • Underweight of financials in the second half of 2007… with no discrimination • Currently the focus is being placed on damage recognition and capital restoration • Macro concerns seem to dominate market sentiment But after short term drivers are over, what will be the fo
Slide 13: 1Q08 confirms the excellent performance of BBVA's results
1Q08 confirms the excellent performance of BBVA’s results in a complex environment for international banks Net Attrib. Profit (Ex one-off items, Mill €) +14.9% (Ex one-off items) 1,440 1,442 1,369 1,339 1,254 +21.4% at constant exchange rates 1Q07 2Q07 3Q07 4Q07 1Q08 EPS exclud. one-off items: 0.39
Slide 14: And now… it's about earnings
And now… it’s about earnings 1 A unique case in the current environment 2 Outperforming peers in each market 14
Slide 15: 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 16: 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 17: 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 18: 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 19: 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 20: 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 20
Slide 21: 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 22: With strong gains in efficiency and operating profit
With strong gains in efficiency and operating profit Cost/income ratio incl. deprec. Operating profit Mexico Mexico (%) (Constant €m) +27.0% -3.0 p.p. 960 34.2 756 31.2 1Q07 1Q08 1Q07 1Q08 Improvements despite heavy investments in infrastructure: 106 branches, 483 ATMs, 20,000 PoS increase in 2007 2
Slide 23: 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 24: 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 25: …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 26: Wholesale Banking & AM: profitable growth with no shocks
4 Wholesale Banking & AM: profitable growth with no “shocks” Global Businesses Outstanding performance of Corporate & IB in 1Q08, combining strong lending activity (+35.3%) with margin improvements (NII +40.1%) Customer activity is the main driver of market revenues (77%) Excellent management of len
Slide 27: South America continues delivering outstanding results
5 South America continues delivering outstanding results South America Favorable macroeconomic environment and strong evolution of activity and revenues in 1Q08 Significant improvements in efficiency and credit quality, positively reflected on P&L Well diversified and strong franchise by business an
Slide 28: Sharp growth in lending and customer funds
Sharp growth in lending and customer funds Lending and Customer Funds Core revenues year-on-year growth (€m constant) (average balances) +30.1% 29.8% 702 539 16.2% Loans Customer funds 1Q07 1Q08 Good performance in all countries 28
Slide 29: Improvement in efficiency boosts operating profit
Improvement in efficiency boosts operating profit Cost/income ratio incl. deprec. Operating profit (%) (Constant €m) +31.3% -2.1 p.p. 431 44.9 328 42.8 1Q07 1Q08 1Q07 1Q08 Bottom line growing at 19.4% 29
Slide 30: Stable asset quality control despite strong growth
Stable asset quality control despite strong growth BBVA South America NPL ratio BBVA South America Vs. Sector (4Q07) (%) (%) BBVA Sector average 2.9 NPL ratio 1.9 2.0 1.5 2.62 2.52 2.44 2.42 1.1 1.3 2.14 0.9 0.8 0.7 0.8 1Q07 2Q07 3Q07 4Q07 1Q08 Arg(3) Chile Col Peru Ven Coverage ratio ROE: 39.9% 131
Slide 31: In short:
In short: It is and will be about earnings Key drivers to deliver earnings cannot be improvised 1 Portfolio mix and business model 2 Capability and track record of efficiency management 3 Superior asset quality BBVA, an earnings play 31
Slide 32: And now… it's about earnings
And now… it’s about earnings Spring European and Middle East Large Cap Conference Paris, May 21th, 2008
BBVA — Spring European and Middle East Large Cap Conference 2008 on 6ix