Banco Bilbao Vizcaya Argentaria, S.a. · BME:BBVA
Banco Bilbao Vizcaya Argentaria — BBVA — Merrill Lynch Banking & Insurance CEO Conference 2007
37 slides from Banco Bilbao Vizcaya Argentaria's conference presentation, Oct 4, 2007
Slide 1: Merrill Lynch Banking & Insurance CEO Conference 2007
Merrill Lynch Banking & Insurance CEO Conference 2007 BBVA London, 4th October 2007
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: A track record of consistent earnings growth
A track record of consistent earnings growth … Net Attr. Profit +24.4% (€m) 4,736 +30.2% 3,806 +31.3% 2,923 +29.5% 2,227 1,719 2002 2003 2004 2005 2006 High quality recurrent revenues and earnings 3
Slide 4: … while showing great evolution in fundamentals
… while showing great evolution in fundamentals Cost:income ratio ROE (%, incl.amortizations) (%) 54.3 36.0 37.9 13.7 2002 1H07 2002 1H07 NPL Ratio Coverage Ratio (%) (%) 2.24 253.8 145.72 0.86 2002 1H07 2002 1H07 4
Slide 5: High quality growth both in P&L and balance sheet
High quality growh both in P&L and balance sheet (€m) 2002-2006 2002 2006 2006 CAGR Loans to 141,315 256,565 x 1.8 16.1 % customers Attributable 1,719 4,736 x 2.8 28.8% Profit EPS (€) 0.54 1.34 x 2.5 25.5% DPS (€) 0.348 0.637 x 1.8 16.3% ROE 13.7% 37.6% x 2.7 - ROA 0.85% 1.26% x 1.5 - RORWA 1.48% 2.
Slide 6: The environment has changed for the banking sector
The environment has changed for the banking sector From…strong global growth, positive capital markets and revenues, sound asset quality and ample liquidity … … to Liquidity Crunch How is BBVA going to perform in the new environment? 6
Slide 7: BBVA represents an attractive investment choice in this environment
BBVA represents an attractive investment choice in this environment Attractive retail portfolio that combines high A “structural” growth rates and diversification benefits B Transformation Plan: Best-in-class efficiency Risk management as a key competitive advantage: C Credit Risk, Market Risk, Liqu
Slide 8: Our corporate positioning combines medium and long term opportunities
Our corporate positioning combines, A medium and long term opportunities … … driving high “structural” growth rates … Economic capital 2007 Industrial 1 Global Portfolio Spain Businesses 4% Corporate 3 & Portugal USA 13% Center 2 Asia 8% Mexico South America 9% 4 South America USA 12% 5 … and a whol
Slide 9: The Spanish economy has solid roots
1 The Spanish economy has solid roots Real Estate: Soft-landing scenario GDP Growth 2008e (%) 2.8 2.2 High GDP growth Spain EU Employment growth rate 08e: 1.5% 9
Slide 10: Key strategic drivers
Key strategic drivers 1 Change of business mix in anticipation 2 High quality mortgage portfolio 3 Transformation efforts 10
Slide 11: Enjoying a solid position today thanks to significant anticipation of events
Enjoying a solid position today thanks to significant anticipation of events Consumer Finance & SME´s Boosting growth key growth drivers of term deposits Term deposits (YoY Growth, %) 35.9 36.8 33.9 30.7 19.1 17.2 mar-06 jun-06 sep-06 dec-06 mar-07 jun-07 ML Banking & Insurance CEO Conference 2006 1
Slide 12: High quality mortgage portfolio
High quality mortgage portfolio … Loan portfolio distribution in Spain Mortgage Mortgage (Developers) (Individuals) Small businesses SMEs 10% 17% Consumer 8% 2003-2006 CAGR Average BBVA +29% Loan to Value Corporates 13% Peers +44% 53.3% 1st NPL NPL 1st Public Sector home Ratio Ratio home 8% 93% 0.10
Slide 13: … and continuous improvement ambition
… and continuous improvement ambition Branch expansion completed in 2006 Reducing intermediate organisational structures New distribution (Total network expenses network announced in growth about 0%) Jun.06 Improving Productivity +38.4% since Jun.05 Cost:income (%,including amortizations) 42.9 41.4
Slide 14: Bancomer, the best retail bank in Latam
2 “Bancomer, the best retail bank in Latam” Credit penetration (as % of GDP) GDP Growth Loan Growth Average 02-06 Average 02-06 82.0% 2.8% 32.0% 35.0% GDP Growth 18.0% Average 07-08e 3.7% Mexico Brazil Chile Bancomer customer base (m) 18.0 13.6 Target 2010 9.7 dec-04 dec-06 2010 Target Targets accor
Slide 15: A great growth opportunity in mortgages
A great growth opportunity in mortgages … The opportunity Mortgages in Mexico + 26% (Jun.07 YoY Growth) 16 m new houses in the next 20 years BBVA ´s Spain Mortgage portfolio x 10 Bancomer´s Mortgage portfolio Bancomer´s positioning Leader in market share: 44.3% of new mortgages Mortgages + 50% (Jun.
Slide 16: … and in SMEs
… and in SME´s The opportunity 550,000 SME´s. Loans to SME´s +27% (Jun.07 YoY Growth) Only 16% credit users vs 29% in Spain Lending / customer funds: 71% vs 392% in Spain BBVA ´s Spain SME portfolio x 10 Bancomer´s SME portfolio Bancomer´s positioning 83 specialized branches and 483 loan officers Ma
Slide 17: We are building a unique platform in the USA
We are building a unique platform 3 in the USA In growing With strong markets franchises And excellent management team 17
Slide 18: A platform focused on high-growth markets
A platform focused on high-growth markets with different dynamics to the rest of the USA Markets served Texas United States by BBVA (1) Economy size % of World GDP 19.7% 3.7% 1.6% Economy Growth GDP Potential Growth 3.0% 3.9% 3.8% Population 299.4 59.0 23.5 Million Population Growth 0.8% 1.6% 1.5% C
Slide 19: BBVA USA: strong franchises in the Southern U.S. States
BBVA USA: strong franchises in the Southern U.S. States Dep. ($ Bn) Mkt. Share Ranking • Texas 19.6 5.9 % 4º • Alabama 6.7 9.5% 3º • Arizona 3.2 4.1% 5º • Florida 2.0 0.6% 25º • Colorado 0.7 1.0% 20º • New Mexico 0.6 2.7% 8º Source: SNL Financial. Deposit data as of June 30, 2006 19
Slide 20: Compass, a unique platform
Compass, a unique platform Retail Corporate Wealth Universal business model Banking Banking Mgmt Better fundamentals than peers ROE NPL Ratio Coverage Ratio (%) (%) (%) 17.7 0.37 517.0 13.3 0.23 256.0 Compass Peer Group Compass Peer Group Compass Peer Group Source: SNL Impressive integration track-r
Slide 21: 2008 focus will be on integration
2008 focus will be on integration Integration “Only One” + BBVA Standards • Management structure • IT platform • BBVA business Model • Distribution network + • New technology platform • Informational systems Achieving announced revenue & cost synergies + Additional synergies 2008 - 2010 BBVA USA Str
Slide 22: We have an excellent track-record integrating acquisitions
We have an excellent track-record integrating acquisitions In Mexico … Cost: income ratio ROE (%) (%) -18.9 p.p. +18.2 p.p. -15.6 p.p. 32.0 66.8 58.1 51.2 +14.2 p.p. 20.9 39.2 13.8 6.7 2002 2006 2002 2006 Data in local currency BBVA Bancomer Mexican banks average 22
Slide 23: South America prospects continue being very good
4 South America prospects continue being very good … GDP Growth BBVA´s clients in South America (m) + 2.3 m GDP Growth (%, real terms) 9.4 2007e 2008e 7.1 Argentina 7.5% 6.3% Chile 5.2% 5.3% Colombia 5.9% 4.8% Peru 7.5% 6.5% Venezuela 6.7% 4.6% dec-04 jun-07 … and bancarisation potential remains hig
Slide 24: Our aim is to increase our share of wallet and bancarisation levels
Our aim is to increase our share of wallet and bancarisation levels … … with a different retail 2010 Target business model “The bank Customers from 8.7 to 12 m in your card” Consumer loans x3 Targets according to Innovation and Transformation Plan announced in May 2007 24
Slide 25: Excellent positioning in clients and products
5 Excellent positioning in clients and products Client Units Product Units “Enhancing our client relationship covering their “Quality and innovative financial and non financial products and services to necessities. more clients” Making this a long term relationship” Europe Global Markets America Inv
Slide 26: Our business model is based on client relationship
Our business model is based on client relationship … First relation bank in Spain and America Total Penetration Large corporations (%) 97% 88.0 72.0 68.0 65.0 1st78% -2nd 50.0 player 29.0 Spain Mexico South America ex Brazil Spain Mexico South America ex Brazil … and represents a lever to enter new
Slide 27: Global products units to serve value added products to more clients
And global products units to serve value added products to more clients Global Investment Asset Global Markets Banking Management Global Markets and Distribution Europe Mark-to-market revenues Spain (€m) 2nd top bank in AuM Latam Trade Funds €43bn 2nd 69.7 64.4 69.1 Finance 60.4 Pen- AuM sions €15bn
Slide 28: BBVA represents an attractive investment choice in this environment
BBVA represents an attractive investment choice in this environment Attractive retail portfolio that combines a high A “structural” growth rate and diversification benefits B Transformation Plan: Best-in-class efficiency Risk management as a key competitive advantage: C Credit Risk, Market Risk, Liq
Slide 29: New technology driven by digitalization and connectivity
B New technology driven by … Digitalization Connectivity A new model in place … … continue … and … to reduce boosting industrialise “servicing”… commercial back & middle productivity … offices Transformation Plan … 29
Slide 30: 2010 Target Cost:income from 44% to 35%
… with very demanding objectives at Group level 2010 Target Cost:income from 44% to 35% Targets according to Innovation and Transformation Plan announced in May 2007 30
Slide 31: BBVA represents an attractive investment choice in this environment
BBVA represents an attractive investment choice in this environment Attractive retail portfolio that combines a high A “structural” growth rate and diversification benefits B Transformation Plan: Best-in-class efficiency Risk management as a key competitive advantage: C Credit Risk, Market Risk, Liq
Slide 32: Credit Risk management as a key competitive advantage
C Credit Risk management as a key competitive advantage Asset distribution Jun.07 (%) Latam Invest. Grade 46% of lending Europe 12.4 collateralised 78.2 Latam Non-Invest. Grade 4.6 USA 4.8 No exposure to subprime assets 95% investment grade assets Fitch´s AA- positive outlook Fitch´s upgrade to Banc
Slide 33: And best-in-class vs. peers
And best-in-class vs. peers NPL Ratio Coverage Ratio (%) (%) 4.63 253.8 2.24 2.43 145.72 0.86 79.0 78.0 2002 1H07 2002 1H07 With € 5.5 Bn of generic provisions vs. € 2.2 Bn of expected losses 1H07 or latest available data 33
Slide 34: Also, strict control of market and liquidity risk
Also, strict control of market and liquidity risk Market risk Liquidity risk Strict market risk control based on risk technology: Var, stress testing, No conduit-related exposure simulations … Well diversified business portfolio and client driven business model Negligible leverage finance exposure B
Slide 35: BBVA ready to outperform in the current macro environment
BBVA ready to outperform in the current macro environment Corporate positioning Business Model Client driven recurrent revenue growth Best-in-class efficiency With low risk Profitable growth 35
Slide 36: BBVA Investor Day 15th-16th November 2007
BBVA Investor Day 15th - 16th November 2007 Madrid 36
Slide 37: Merrill Lynch Banking & Insurance CEO Conference 2007
Merrill Lynch Banking & Insurance CEO Conference 2007 BBVA London, 4th October 2007
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