RNS No 8661r
BANCO BILBAO VIZCAYA
24 July 1997
THE BBV GROUP, FIRST HALF 1997
The BBV Group's business evolution in the first half of 1997 has been very
satisfactory in terms of both business volume and also goals achieved. Net
attributable profit reached 58,113 million pesetas, an increase of 25.9% over
last year. Return on equity continued to improve, topping 17% at the end of
June. These results stem from positive performance across the board at BBV.
The core of BBV's income stems from significant growth - over 34% - in operating
income. In addition, our diversification activities continue to contribute
significant recurring income, as can be seen by the "net income from companies
carried by the equity method" line. We also registered capital gains from the
rotation of our industrial portfolio, though these have been more than offset by
allocations to special reserves to cover potential future contingencies, as well
as to the acceleration of goodwill amortization to which we have allocated
approximately an additional 25 billion pesetas.
Net interest income was up more than 32%, mainly as the result of two factors.
Domestically, the narrowing of our customer spread has been lower than the
sector average, and at the same time we have experienced positive volume-growth.
In addition, the contribution from Latin America, with substantially higher
margins, has led to an improvement in the overall customer spread for the Group.
Net interest margin over average assets has moved from 2.78% to 3%.
Fee income and revenue from market operations showed strong growth, mainly due
to growth in mutual fund activity and positive performance of financial markets
overall.
Operating costs were up 39% due to the incorporation of new affiliates into the
consolidated accounts. In homogeneous terms, wages and salaries were up only
3.1% and general expenses 4.4%. Our efficiency ratio is an impressive 53.7% or
52.5% excluding our Latin affiliates.
Net loan loss provisions were down as a result of lower provisioning needs and
higher recoveries, both indicative of improved risk quality. Allocations to
special reserves were over 13 billion pesetas. If we add securities writedowns
and goodwill amortization, total provisioning of the Group in June 1997 was
approximately 73 billion pesetas, 41% more than the previous year.
Total consolidated assets surpassed 19 trillion pesetas, with a year-on-year
growth over 28%.
Growth in resident-sector and Public Administration financing was above 7% on an
interannual comparison. Growth was fairly even across the board, with exception
of demand loans and discount bills declining as a consequence of high commercial
liquidity in the system. Also exhibiting strong growth were secured loans and
credit card balances.
This growth was accompanied by further improvement in asset quality, with the
non-performing loan ratio declining to 3.3% in June 1997 from 3.7% in June 1996.
This decline is more pronounced if we exclude the non-performing balances of our
recently acquired Latin American affiliates. Excluding Latin balances, the
non-performing loan ratio is 2.4% in June 1997, versus 3.4% one year earlier. In
addition, rigorous provisioning criteria for loans in difficulty has brougt our
coverage ratio well above the 100% mark to 106.6%, or 140.3% including mortgage
guarantees.
Domestic customer savings behaviour continues to be characterized by the move
from traditional deposit balances - notably lime deposits balances - to mutual
funds. Despite this, the BBV Group was able to increase its resident deposits
by more than the sector as a whole. The growth of current and savings account
balances, 23% and 12% respectively, have more than compensated for the decline
in time deposits. Overall, customer funds -including non-resident balances-
increased by more than 31%.
Off-balance sheet funds grew significantly. Mutual funds under management
increased by more than one trillion pesetas over the last twelve months,
reinforcing our leadership in pension fund management with over 500 billion
pesetas under management. Assets under management increased by more than 65%.
Here we should highlight our activity in pension fund management in Latin
America. BBV is active in this area - either directly or through our Latin
affiliates - in five Latin American countries, with impressive rankings in each
as can be seen in the chart. With over 2.4 million pension fund customers, the
total under management has surpassed US$2.7 billion.
On June 6 and 10, 1997, the BBV Group conducted two issues of preferred shares
in the amount of 70 million and 250 million dollars, respectively. The first was
a private issue aimed at institutional investors and the second was aimed at the
U.S. retail market. The issue of preference shares compensates for the
amortization of ordinary shares and the reduction in the shares nominal value,
and simultaneously reduces the average weighted cost of BBV's capital base. With
this operation BBV continues to ensure a strong capital base, in line with the
Group's traditional goal of maintaining high solvency levels.
As of June 30, 1997, the BBV Group's capital base stood at 1.26 trillion
pesetas, in accordance with Bank of Spain regulations. This represents a
solvency ratio of 13.2% (equivalent to a 14.3% BIS ratio) and a capital surplus
of 440 billion pesetas.
BBV GROUP INCOME STATEMENT(*)
(millions pesetas)
JUNE 97 JUNE 96 % Change (US$ million)
Financial revenues 722,153 704,958 2.44 4,901
Financial costs -456,716 -504,843 -9.53 -3,099
NET INTEREST INCOME 265,437 200,115 32.64 1,802
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Fees & Commissions 93,346 64,233 45.32 634
Market operations 34,404 25,185 36.61 233
ORDINARY REVENUE 393,187 289,533 35.80 2,669
Administrative Costs -211,119 -152,203 38.71 -1,433
Personnel -143,522 -108,297 32.53 -974
Wages and other -137,071 -104,631 31.00 -930
Pensions -6,451 -3,666 75.97 -44
General expenses -67,597 -43,906 53.96 -459
Other income-costs -3,962 -6,070 -34.73 -27
DGF annual fee -5,678 -5,835 -2.69 -39
Other items 1,716 -235 N.A. 12
Depreciation -21,488 -14,746 45.72 -146
OPRATING INCOME 156,618 116,514 34.42 1,063
---------------------------------------------------------------------------
Income from associates 46,161 16,067 N.A. 313
Group Net transaction 29,941 5,847 N.A. 203
Income by the equity method 16,220 10,220 58.71 110
Loan Loss provision (net) -28,512 -34,888 -18.28 -194
Gross -51,301 -53,000 -3.21 -348
Reversals 15,972 11,665 36.92 108
Bad debts' recoveries 6,817 6,447 5.74 46
Securities writedowns 78 -1,771 N.A. 1
Goodwill amortization -31,316 -5,086 N.A. -212
Extraodinary items -13,513 -2,427 N.A. -92
Disposals 2,531 2,056 23.10 17
Other -16,044 -4,483 N.A. -109
PROFIT BEFORE TAX 129,516 88,409 46.50 879
Corporate Tax -46,470 -30,869 50.54 -316
NET INCOME 83,046 57,540 44.33 563
Minority interests -24,933 -11,387 N.A. -169
Preference shares -4,660 -3,924 18.76 -32
Other -20,273 -7,463 N.A. -137
NET ATTRIBUTABLE 58,113 46,153 25.91 394
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(*) Non audited. 1 US$: Ptas 143.7 Consolidated accounts are presented in
accordance with Bank of Spain Circular 4/91 (and ensuing circulars) and
follow generally accepted accounting principles.
BBV GROUP BALANCE SHEET
(millions of pesetas)
1997
ASSETS JUNE 97 JUNE 96 % Change (US$ million)
Cash and Central Banks 362,265 215,661 67.98 2,458
Government Debt 1,572,468 1,490,558 5.50 10,672
Due from Banks 5,829,561 4,606,936 26.54 39,563
Total lending (Gross) 7,648,388 6,031,111 26.82 51,907
- Reserves -270,138 -210,910 28.08 -1,833
Investment Portfolio 2,751,714 1,918,036 43.47 18,675
Fixed income 2,117,882 1,389,187 52.45 14,373
Securities 633,832 528,849 19.85 4,302
Premises and Equipment 570,028 388,467 46.74 3,868
Other Assets Accounts 388,969 278,113 39.86 2,640
Accrual Accounts 321,460 237,481 35.36 2,182
TOTAL 19,174,715 14,955,453 28.21 130,132
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LIABILITIES
Capital 129,220 134,838 -4.17 877
Reserves 654,907 533,133 22.84 4,445
Minority Interests 410,647 142,111 188.96 2,788
Due to Banks 5,093,856 4,390,032 16.30 34,570
Customer Funds 12,140,682 9,234,838 31.47 82,394
Other Liabilitie Accounts 308,750 179,114 72.38 2,095
Accrual Accounts 353,607 293,847 20.34 2,400
Net Income 83,046 57,540 44.33 563
TOTAL 19,174,715 14,955,453 28.21 130,132
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(*) Non audited. 1 US$: ptas 143.7. Consolidated accounts are presented in
accordance with Bank of Spain Circular 4/91 (and ensuing circulars) and
follow generally accepted accounting principles.
-------------------------------------------------------------------------------
Average Total Assets 16,605,336 14,152,346 17.3 112,695
Average shareholders funds 719,739 639,770 12.5 4,885
BIS ratio (Tier 1) 14.3 (10.2) 12.5 (9.4) -
BBV BBV(1)
JUNE 97 JUNE 96 JUNE 1997
Lending quality
(B. of Spain's regulations)
NPL as % Lending 3.31 3.73 2,38
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N.P.L.
Initial 227,203 242,227 168,622
June 30th 253,439 224,766 144,527
Net Change 26,236 -17,461 -24,095
% Net Change 11.55 -7.21 -14.29
NPL's Reserves
Last 270,138 210,910 152,342
% Coverage NPL 106.59 93.84 105.41
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Lending quality
(International regulation)
NPL as % Lending 1.63 1.78 0.94
% Coverage NPL 182.03 150.12 190.89
(1) Excluding Probursa (Mexico) Contintental (Peru) Ganadero (Colombia),
Frances (Argentina) and Provincial (Venezuela).
TOTAL LENDING AND CUSTOMERS' FUNDS BREAKDOWN
(millions of pesetas)
JUNE 97 JUNE 96 % Change
Due from Public Sector 534,124 457,122 16.8
Due from residents 4,592,159 4,320,456 6.3
Commercial bills 661,553 762,586 -13.2
Borrowers with collateral 1,393,762 1,113,880 25.1
Personal loans 1,526,306 1,497,794 1.9
Credit accounts 507,024 464,586 9.1
Other term loans 69,728 58,498 19.2
Others 210,741 223,461 -5.7
Leasing 223,045 199,651 11.7
Due from non residents 2,268,666 1,028,767 120.5
Non performing loans 253,439 224,766 12.8
TOTAL LENDING (GROSS) 7,648,388 5,031,111 26.8
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(-) Reserves -270,138 -210,910 28.1
TOTAL LENDING (NET) 7,378,250 5,820,201 26.8
Pesetas 5,021,768 4,665,314 7.6
Foreign currencies 2,356,482 1,154,887 104.0
JUNE 97 JUNE 96 % Change
General government 595,093 564,311 5.5
Other resident sectors 6,540,329 6,138,731 6.5
Current accounts 1,563,405 1,263,109 23.8
Savings accounts 1,045,440 929,318 12.5
Time deposits 2,085,003 2,216,629 -5.9
Sales with repurchase
agreements 1,777,654 1,692,073 5.1
Others 68,827 37,602 83.0
Non-residents 3,908,495 2,068,215 89.0
Marketable Debt Securities 795,793 307,412 158.9
Subordinated Debt 300,972 156,169 92.7
TOTAL CUSTOMERS' FUNDS 12,140,682 9,234,838 81.5
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Pesetas 7,521,921 7,036,946 6.9
Foreign currencies 4,618,761 2,197,892 110.1
Mutual funds 3,175,449 1,975,531 60.7
Pension funds 510,735 364,623 40.1
Portfolio management 1,137,272 686,691 65.6
Technical reserves of
Euroseguros 309,120 301,577 2.5
OFF-BALANCE FUNDS 5,132,576 3,328,422 54.2
TOTAL MANAGED CUSTOMERS'
FUNDS 17,273,258 12,563,260 87.5
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YIELDS AND COSTS
(millions of pesetas and %)
JUNE 97 JUNE 96
Average Yield Average Average Yield Average
Balance Rates Balance Rates
Total lending 7,235,099 372,458 10.38 5,680,814 328,245 11.62
Pesetas 5,007,295 220,329 8.87 4,555,695 250,952 11.08
Foreign currencies 2,227,804 152,129 13.77 1,125,119 77,293 13.82
Investment securities 3,400,671 164,841 9.77 2,616,289 129,690 9.97
Pesetas 1,373,666 43,153 6.33 1,288,882 52,584 8.20
Foreign currencies 2,027,005 121,688 12.11 1,327,407 77,106 11.68
Equity method
securities 547,956 21,113 7.77 451,620 19,242 8.57
Other investment
securities 91,164 2,139 4.73 57,199 1,810 6.36
Credit entities 5,336,741 152,370 5.76 4,671,634 217,907 9.38
Pesetas 2,301,427 65,968 5.78 2,195,774 145,273 13.30
Foreign currencies 3,035,314 86,402 5.74 2,475,860 72,684 5.90
Bank of Spain 179,272 5,620 6.32 218,510 6,662 6.13
Non-income producing
assets 1,029,417 - - 781,328 - -
Other financial
products - 3,612 - - 1,402 -
INTEREST REVENUES 17,820,320 722,153 8.17 14,477,394 704,958 9.79
-------------------------------------------------------------------------------
JUNE 97 JUNE 96
Average Cost Average Average Cost Average
Balance Rates Balance Rates
Customers' funds 11,073,800 297,093 5.41 8,874,278 302,328 6.85
Pesetas 7,132,744 146,525 4.14 6,675,911 200,270 6.03
Customers'deposits 5,293,016 91,453 3.48 5,108,807 134,058 6.28
Repo assets 1,740,917 51,579 5.97 1,495,643 63,600 8.55
Marketable debt
securit. 98,811 3,493 7.13 71,461 2,612 7.35
Foreign currencies 3,941,056 150,568 7.70 2,198,367 102,058 9.34
Due to cre.ent. and
B. of Spain 4,981,735 155,372 6.29 4,274,519 200,189 9.42
Pesetas 2,115,301 60,766 5.79 2,079,606 133,932 12.95
Foreign currencies 2,866,434 94,606 6.66 2,194,913 66,257 6.07
Shareholders' funds 719,739 - - 639,770 - -
Funds without cost 1,045,046 - - 688,827 - -
Other interest expenses - 4,251 - - 2,326 -
TOTAL INTEREST
EXPENSES 17,820,320 456,716 5.17 14,477,394 504,843 7.01
-------------------------------------------------------------------------------
NET INTEREST INCOME 265,437 3.00 200,115 2.78
-------------------------------------------------------------------------------
BV GROUP HIGHLIGHTS
(consolidated figures)
JUNE 97 JUNE 96 %
Balance sheet
(Millions of pesetas)
Total assets 19,174,715 14,955,453 28.2
Total lending 7,648,388 6,031,111 26.8
Customers' funds 12,140,682 9,234,838 31.5
Shareholders' funds 696,809 637,559 9.3
Income statement
(Millions of pesetas)
Net interest income 265,437 200,115 32.6
Operating income 156,618 116,514 34.4
Income before taxes 129,516 88,409 46.5
Net attributable profit 58,113 46,153 25.9
Data per share (Pesetas)
Earnings 259 205 25.9
Book value 3,101 2,837 9.3
Share price 11,970 5,190 130.6
Key ratios (%)
R.O.A. (Net income/Average
total assets) 0.92 0.81 -
RORWA (Net income/Return on
risk weighted as.) 1.84 1.60 -
R.O.E. (Net attributable/
Average equity) 17.2 15.1 -
Other relevant figures
Number of employees 58,655 34,520 -
Spain 25,789 25,632 -
Abroad 32,866 8,888 -
Number of branches 4,019 3,335 -
Spain 2,828 2,869 -
Abroad 1,191 466 -
END
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