Third Quarter Results 2008 BBVA

Transcription

1 Third Quarter Results 2008 BBVA Madrid, October 29 th 2008

2 Contents Group results for 9M08 Results by business area Spain & Portugal Wholesale Banking & Asset Management Mexico USA South America Conclusions 2

3 3Q08: one of the most complex quarters for the financial sector in decades Asset quality deteriorates Impact on earnings and capital Loss of confidence Interbank and capital markets dry up Refinancing difficulties 3

4 BBVA emerges as one of the strongest banks at international level Its strength is based on... Low leveraging Quality of earnings 1 Comfortable liquidity A Recurrent revenues 2 High asset quality B Strict cost control 3 Recognized solvency C Special effort in provisioning leading to high profitability 4

5 1 BBVA has ample liquidity thanks to customers' deposits Deposits / assets (%, Jun.08) BBVA Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Peer 10 Peer 11 Peer 12 Peer Maturity: wholesale finance ( bn) > Maturities have little impact (Average maturity is 5 yrs; 2/3 of debt matures after 2011) Peers: Santander, BNP Paribas, Intesa Sanpaolo, Unicredit, Barclays, Société Générale, HBOS, Crédit Agricole, Lloyds, Deutsche Bank, Credit Suisse, RBS, UBS Internal sources based on published figures. 5

6 2 NPL ratio rises but less than our European competitors NPL ratio (%) NPL ratio (%, Jun.08) Coverage ratio (%, Jun.08) * Dec.03 Dec.04 Dec.05 Dec.06 Dec.07 Mar.08 Jun.08 Sep.08 European Banks BBVA European Banks BBVA Asset quality is better than our competitors in all core markets * Pre-NIIF Internal sources based on published figures. 6

7 3 BBVA generates important amounts of organic capital Organic creation of core capital (BIS II) +16 bp in 3Q bp in 2Q bp in 1Q08 Core capital 6.4% Tier I 7.8% +60 bp of core capital and Tier I from excess provisions And latent capital gains 7

8 The quality of our capital is better than our competitors... RWAs / total assets (%, Jun.08) Peer 1 BBVA Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Peer 10 Peer 11 Peer 12 Peer BBVA Peer1 Peer2 Peer3 Peer4 Peer5 Peer6 Peer7 Peer8 Peer9 Peer10 Peer11 Peer12 Peer13 Tangible equity / assets (%, Jun.08) which is acknowledged in our ratings 3.59 Peers: Santander, BNP Paribas, Intesa Sanpaolo, Unicredit, Barclays, Société Générale, HBOS, Crédit Agricole, Lloyds, Deutsche Bank, Credit Suisse, RBS, UBS Internal sources based on published figures. Includes capital increases (already carried-out or announced) 8

9 The quality of our capital is better than our competitors... (Core equity + excess deficit provisions) / total assets (%, Jun.08) BBVA 3.86 Peer1 Peer2 Peer3 Peer4 Peer5 Peer6 Peer7 Peer8 Peer9 Peer10 Peer11 Peer12 Peer No unexpected consumption of capital No accounting reclassification of portfolios Recurrent earnings Little exposure to falls in housing prices and economic slowdown (20% fall in housing prices = 0 bp in core capital) (30% fall in housing prices = -3 bp in core capital) Peers: Santander, BNP Paribas, Intesa Sanpaolo, Unicredit, Barclays, Société Générale, HBOS, Crédit Agricole, Lloyds, Deutsche Bank, Credit Suisse, RBS, UBS Internal sources based on published figures. Includes capital increases (already carried-out or announced) 9

10 Conclusion: BBVA is one of the safest banks in the present environment Balance sheet ( m, Jun.08) % Income from Inv Bkg (%, Jun.08) Net attrib. profit ( m, 1H08) Peer 1 BBVA Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Peer 10 Peer 11 Peer 12 Peer , ,990 Peer 1 627,701 BBVA 740,814 Peer 2 918,332 Peer 3 929,166 Peer 4 1,059,767 Peer 5 1,075,925 Peer 6 1,251,512 Peer 7 1,464,822 Peer 8 1,817,193 1,862,213 Peer 9 1,990,740 Peer 10 2,657,319Peer 11 Internal sources based on published figures. BBVA Research 3.6% 9.8% 11.8% 11.9% 24.6% 29.9% 31.4% 37.1% 38.5% 38.7% 46.0% 52.9% -7,164 Peer 1 Peer 2 BBVA Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Peer Peer 11-1,904 Peer 12 Peer 13 1, ,343 1,740 Internal sources based on published figures. Low leveraging + Retail business model = Recurrent revenues Peers: Santander, BNP Paribas, Intesa Sanpaolo, Unicredit, Barclays, Société Générale, HBOS, Crédit Agricole, Lloyds, Deutsche Bank, Credit Suisse, RBS, UBS 4,730 3,486 3,108 3,105 2,873 10

11 BBVA emerges as one of the strongest banks at international level Its strength is based on... Low leveraging Quality of earnings 1 Comfortable liquidity A Recurrent revenues 2 High loan quality B Strict cost control 3 Recognized solvency C Special effort in provisioning resulting in high profitability 11

12 Despite complex conditions, BBVA continues to deliver solid profit growth Net attributable profit (Excluding one-offs, m) +9.1% 4,321 3,962 1,254 1,369 1,339 1,440 1,442 1,486 1,392 Attrib. Profit: 4,321M in constant (+13.7%) 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 Quality earnings based on... 12

13 A Recurrent revenues... Net interest income Quarter-by-quarter ( m) Revenues Cumulative change (%) +25.5% BBVA Group ex-oneoffs Eur os Constant euros 2,233 7,025 2,380 2,411 2,745 2,734 8,818 2,952 3,132 Net Interest Income Core Revenues Ordinary Revenues M25.5% 31.8% M18.5% 24.0% M14.9% 19.9% 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 13

14 B... strict cost controls Efficiency incl. depreciation (Excluding one-offs and Compass, m) Operating profit (Excluding one-offs, m) +14.1% p.p ,195 8,209 9M07 9M08 9M07 9M08 Efficiency incl. depreciation, excl. one-offs: offs: 42.5% Oper. profit excl. one-offs: offs: +19.0% (constant ) +19.0% 14

15 C... a special effort in provisioning during the quarter Loan-loss provisions ( m) Generic provisions vs expected loss on performing loans ( m, Sep.08) 51.3% 1,994 5,804 1,318 2,211 9M07 9M08 Generic provisions Expected loss on performing loans 15

16 Growing and creating value Net attributable profit ( m) Recurrent economic profit: 2.584M 3, % 4,321 EPS excl. one-offs: offs: 1.16 (+4.2%) ROE (excl. one-offs): offs): 24.8% ROA (excl. one-offs): offs): 1.21% 9M07 9M08 Recurrent RARoC: : 30.9% 16

17 BBVA Group excluding one-offs: 9M08 results ( m) BBVA Group Accum 9M08 Annual Growth Abs. % Net Interest Income Core Revenues Ordinary Revenues 14,536 8, , % 13, , % + 1, % Operating Profit 8, , % Pre-Tax Profit 6, Net Profit 4, Net Attributable Profit 4, % 9.6% 9.1% 17

18 BBVA Group: one-off items One-offs in 9M07 (Before tax) One-offs in 9M08 (Before tax) Iberdrola + 847M Bradesco + 727M Sale of buildings + 273M Early retirements - 470M Microcredits - 200M Net attributable profit 794M Net attributable profit 180M 18

19 BBVA Group: 9M08 results ( m) BBVA Group Accum 9M08 Annual Growth Abs. % Net Interest Income Core Revenues Ordinary Revenues 15,263 8, , % 13, , % + 1, % Operating Profit 8, % Pre-Tax Profit 6, % Net Profit 4, % Net Attributable Profit 4, % 19

20 Contents Group results for 9M08 Results by business area Spain & Portugal Wholesale Banking & Asset Management Mexico USA Conclusions South America 20

21 Spain and Portugal: key figures for 9M08 Operating profit +11.7% Efficiency incl. depr. 35.3% Net attributable profit +10.2% NPL ratio Spain and Portugal 1.86% NPL ratio Businesses in Spain 1.45% ROE 36.4% Coverage Spain and Portugal 97% Coverage Businesses in Spain 106% 21

22 Spain & Portugal: 9M08 highlights We continue adjusting to the slowdown in Spain, focusing on: Appropriate control of the liquidity gap Price management and cross-selling Asset quality better than competitors 22

23 Appropriate control of the liquidity gap Lending and customer funds Year-on-year growth (% average balances) Lending and customer funds Year-on-year growth (Average balances, m) CBB: +6.1% Mortgages: +5.1% Spain & Portugal Dec.07 Sep.08 Total consumer: +3.4% Lending 23,530 9,497 Total lending: +4.9% On-balance sheet funds 10,222 9,960 Time deposits: +27.6% Liquidity gap -13, Total on-balance sheet funds: +11.0% Gaining 229bp of market share in mutual funds in the last year 23

24 Price management: our first priority Net interest income/atas & NII+Fees ex-mutual funds/atas (%) Net interest income (%) +11.0% NII+Fees ex-mutual funds/atas ,134 3, Net interest income/atas 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 9M07 9M08 24

25 And emphasis on cross-selling Other income year-on-year (%) Ordinary revenues ( m) Fee income -2.7% excl. mut.. funds +5.2% Insurance business +7.8% 4, % 5,282 Net trading income +13.5% Total other income: : +0.9% (ex funds:: +6.7%) 9M07 9M08 25

26 Constant attention to transformation leads to new improvements in efficiency General admin expenses Cumulative year-on-year growth (%) Operating profit ( m) +11.7% ,051 3,410 9M08 3M07 6M07 9M0712M073M08 6M M07 9M08 Networks in Spain: -1.4% Efficiency incl. deprec: 35.3% (-2.6( points) 26

27 NPL ratio rises but less than Spanish competitors NPL ratio Businesses in Spain (%) Coverage: 106% Sep.07 Dec.07 Mar.08 Jun.08 Sep.08 Spain & Portugal NPL ratio: 1.86% Provisions: +42.6% Maximum risk premium fenced in Purchase of properties in 2008 for 340m Asset quality advantage over competitors widens 27

28 Spain & Portugal: net attributable profit and profitability Net attributable profit ( m) ROE (%) +10.2% 1,784 1, p.p M07 9M08 9M07 9M08 Double-digit growth and high returns 28

29 Spain & Portugal: 9M08 results ( m) Spain & Portugal Net Interest Income Core Revenues Ordinary Revenues Operating Profit Pre-Tax Profit Accum Annual Growth 9M08 Abs. % 3, % 5, % 5, % 3, % 2, % Net Profit 1, % Net Attributable Profit 1, % 29

30 Contents Group results for 9M08 Results by business area Spain & Portugal Wholesale Banking & Asset Management Mexico USA South America Conclusions 30

31 Wholesale Banking & Asset Management: key figures in 9M08 Operating profit +20.9% Net attributable profit +14.8% ROE 30.4% Efficiency incl. depr. 25.6% NPL ratio 0.05% Coverage 2,114% 31

32 Wholesale Banking & Asset Management: 9M08 highlights Leveraging the wholesale banking model based on customers Taking advantage of opportunities in Corporate & Investment Banking Global Markets: how to generate recurrent business with customers Expanding our franchise in Asia 32

33 Taking advantage of opportunities in Corporate & Investment Banking Corp. & Investment Bkg* Lending Year-on-year growth (Average balances) Corp. & Investment Bkg RARoC on new business Quarter by quarter 34.9% 33.7% 37.3% 40% 35% 34% 38% 30% 25% 20% 15% 11% 12% 15% 19% 22% 10% 5% 0% Mar.08 Jun.08 Sep.08 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 Ordinary revenues: 601M (+33.2%) * Europe + Asia + Investment Bkg 33

34 With good earnings from Global Markets Global Markets Ordinary revenues ( m) 72% of revenues comes from business with the customer franchise Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 With a diversified portfolio and less risk than the sector. Average 9M08 VAR is 18.5M (half the sector) 34

35 Resulting in solid growth of revenue and operating profit in the Area Ordinary revenues Wholesale & Inv Bkg ( m) Operating profit Wholesale & Inv Bkg ( m) +27.3% +20.9% 1,169 1, ,126 Efficiency incl. deprec: 25.6% (-0.9 points) 9M07 9M08 9M07 9M08 With efficiency improving 35

36 Growth of attributable profit and high profitability Net attributable profit ( m) +14.8% ROE: 30.4% 9M07 9M08 36

37 Wholesale Banking & Asset Management: 9M08 results ( m) Wholesale Banking & Asset Management Operating Profit Pre-Tax Profit Accum Ordinary Revenues 1, % Net Profit Annual Growth 9M08 Abs. % % 1, % 14.2% Net Attributable Profit % 37

38 Contents Group results for 9M08 Results by business area Spain & Portugal Wholesale Banking & Asset Management Mexico USA Conclusions South America 38

39 Mexico: key figures for 9M08 Operating profit +19.9% (Constant ) Net attributable profit +16.3% (Constant ) ROE - Efficiency incl. depr. 31.8% NPL ratio 2.75% Coverage 191% 39

40 Mexico: 9M08 highlights Good earnings thanks to Bancomer s strategy of anticipation 1 Lending still growing (mortgages and SMEs) but consumer finance slows 2 3 Transformation Plan helps to clamp down on expenses Risk premium is substantially lower than peers thanks to provisioning based on expected loss 40

41 Anticipation is part of Bancomer s business strategy... New-lending mix (%) SMEs+Corporations Mortgages Consumer+Cards 57.7% 38.9% 3.4% 42.5% 40.1% 17.3% 27.0% 37.5% 35.5% 5.6% 56.2% 38.2% YTD Excl. government Lending: +17.7% Lending and customer funds y-o-y growth - average balances (%) SMEs: +34.6% Mortgages: +23.5% Consumer + cards: + 7.9% Current + Savings Acts: +14.5% Time+MF+Repo+MDD: +9.1% Customer funds: +11.0% 41

42 ... leading to solid growth in net interest income Net interest income / ATAs (%) Net interest income Mexico country Quarter by quarter (Constant m) +15.4% , , Q07 3Q07 4Q07 1Q08 2Q08 3Q08 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 42

43 Anticipation in cost management... General admin expenses Mexico country Cumulative year-on-year growth (%) Operating profit Mexico country (Constant m) +19.9% ,343 2, Efficiency incl. deprec: 31.8% (-2.4 points) 3M07 6M07 9M0712M073M08 6M08 9M08 9M07 9M08... leading to solid growth of operating profit 43

44 Anticipation through provisions based on expected loss 3.72 NPL ratio Mexico country (%) * Risk premium Mexico (%) Dec.03 Dec.04 Dec.05 Dec.06 Dec.07 Mar.08 Jun.08 Sep.08 Jun.07 Dec.07 Mar.08 Jun.08 Coverage: 191% Bancomer Peer 1 Peer 2 Peer 3 Internal sources based on published figures & local criteria Provisions in constant : : +32.6% Risk premium is substantially lower than peers * Pre-NIIF 44

45 Mexico: net attributable profit Net attributable profit Mexico country (Constant m) +16.3% Bancomer BG +15.3% 1,317 1,531 Pensions & Insurance +21.9% 9M07 9M08 45

46 Mexico: 9M08 results (Constant m) Mexico Accum 9M08 Annual Growth Abs. % Net Interest Income 2,794 Core Revenues 4,004 Ordinary Revenues 4,240 Operating Profit Pre-Tax Profit Net Profit % % % 2, % 2, % 1, Net Attributable Profit 1, % 16.3% 46

47 Contents Group results for 9M08 Results by business area Spain & Portugal Wholesale Banking & Asset Management Mexico USA South America Conclusions 47

48 USA: key figures for 9M08 Operating profit* n.a. (Constant ) Net Attributable profit* +104% (Constant ) ROE* 20.1% Efficiency* 56.9% NPL ratio 2.71% Coverage 73% * Without amortisation of intangibles 48

49 USA: 9M08 highlights Integration process continues as planned but focus remains on business Increasing business activity continues after the integration of Compass Costs are stable. Synergies generation Special effort in provisioning in a very complex scenario 49

50 Business continues to grow thanks to Compass BG s vigorous marketing Lending and customer funds Compass BG Year-on-year growth (Average balances) Lending Compass BG Year-on-year growth (Average balances) 4.8% 1.5% 6.6% 3.1% 9.3% 13.3% 4.2% 4.5% APR Sep.08/Sep % APR Sep.08/Sep % Individuals SMEs FICO SCORE: 729 vs 712 at Dec.07 Risk grade: 5.6 vs 6.2 at Dec.07 Dec.07* Mar.08* Jun.08* Sep.08 Lending Customer Funds * Includes Compass in continuity 50

51 ... reflected by net interest income and stable costs Net interest income (Constant m) Total expenses excl. amort. of intangibles and excl. merger & integration costs Quarter by quarter (Constant m) Efficiency excl. amort. intangibles: 56.9% (-1.9 points) 4Q07 1Q08 2Q08 3Q08 4Q07 1Q08 2Q08 3Q08 Integration of Texas State Bank under the new brand in 3Q08 51

52 Special effort in provisioning in a very complex scenario Loan-loss provisioning (Constant m) NPL ratio (%) Q07 1Q08 2Q08 3Q08 Sep.07 Dec.07 Mar.08 Jun.08 Aug.08 Updating collateral values Coverage: 73% 52

53 USA: 9M08 results (Constant m excl. amort. of intangibles) USA Accum. Quarter-by-quarter 9M08 3Q08 2Q08 1Q08 4Q07 Net Interest Income Core Revenues 1, Ordinary Revenues 1, Operating Profit Net Attributable Profit Net attrib. profit: 184M (incl. amortisation of intangibles) ROE: 20.1% (excl. amort intang.) ROE: 14.2% (incl. amort intang.) 53

54 Contents Group results for 9M08 Results by business area Conclusions Spain & Portugal Wholesale Banking & Asset Management Mexico USA South America 54

55 South America: key figures in 9M08 Operating profit +28.1% (Constant ) Net attributable profit +17.7% (Constant ) ROE 37.7% Efficiency incl. depr. 44.0% NPL ratio 2.05% Coverage 146% 55

56 South America: 9M08 highlights Strong growth in South America Solid growth of revenue maintained thanks to strong business With new improvements in efficiency NPLs stable at minimum levels 56

57 Business continues to be strong in South America... % % % % Lending and customer funds Year-on-year growth (Average balances) 22.7% 15.7% Consumer + cards: +32.2% Mortgages: +22.8% Companies: % % % Time deposits: +20.9% % Lending Customer Funds Current + savings: +14.0% Good performance in lending and customer funds 57

58 ... resulting in strong growth of recurrent revenues Net interest income (Constant m) Ordinary revenues (Constant m) +34.3% +23.2% 338 1, , , , Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 58

59 Efficiency continues to improve... Efficiency incl. depreciation (%) Operating profit (Constant m) +28.1% -1.8 p.p. 1, M07 9M08 9M07 9M08 59

60 and with a stable NPL ratio, leading to solid profit growth NPL ratio (%) Net attributable profit (Constant m) +17.7% Sep.07 Dec.07 Mar.08 Jun.08 Sep.08 9M07 9M08 Coverage: 146% ROE: 37.7% 60

61 South America: 9M08 results (Constant m) South America Accum 9M08 Annual Growth Abs. % Net Interest Income 1, Core Revenues 2, Ordinary Revenues 2, % 26.2% 23.2% Operating Profit 1, % Pre-Tax Profit 1, % Net Profit Net Attributable Profit % 17.7% 61

62 Contents Group results for 9M08 Results by business area Conclusions Spain & Portugal Wholesale Banking & Asset Management Mexico USA South America 62

63 Conclusions Spain & Portugal Management has a different approach to the slowdown, with focus on pricing, costs and asset quality Wholesale & Inv Bkg Despite the environment, recurrent revenues based on customer activity Mexico Good earnings thanks to Bancomer s strategy of anticipation USA Integration process continues as planned but focus remains on business South America Strong growth in South America 63

64 The financial sector crisis highlights BBVA s strengths Proven model for retail banking business + Long track-record in efficiency and prudent risk management + A different positioning in capital and liquidity = Sound capital position and steady recurrent earnings 64

65 Third Quarter Results 2008 BBVA Madrid, October 29th 2008