RNS No 7228k
BANCO BILBAO VIZCAYA S.A.
23rd July 1998
THE BBV GROUP, IN FIRST HALF 1998
(23-7-98)
BBV's 28% increase in net attributable profit, which totalled 74,337 million
pesetas (US$ 485 million) in the first half of 1998, was largely due to the
evolution of the operating income. As a result, the BBV Group again created
value for shareholders through significant and sustained growth in profits.
In the first half of 1998, the BBV Group's activity outpaced the ambitious
goals set in Programa Two H1000. Total assets as of 30 June 1998 were 21.9
trillion pesetas (US$ 143 billion. Including off-balance sheet funds (mutual
and pension funds), total assets under management totalled almost 28 trillion
pesetas, 20% higher than in June 1997.
The increase in the absolute size of business volume is indeed impressive, but
it is not the only thing worth noting on the balance sheet. Equally important
is the line item development that occurred within the balance sheet itself,
bringing the overall structure to a more profitable level. Customer business
continued gaining relative importance, showing dynamic growth in Spain but
spectacular growth in Latin America.
Net interest income (US$ 2,185 million) was up 26.1% due to higher than sector
average growth in certain client businesses domestically, combined with skillful
management of yields and costs. As a result, the customer spread improved
slightly from the end of 1997. Net interest income was also boosted by the Latin
American affiliates, whose markets have higher margins, and by the industrial
portfolio.
Growth in the US$ 3,168 million basic margin - net interest income plus
commissions - was even higher, topping 35%, thanks to dynamic activity in net
commissions. The enormous growth of mutual and pension funds managed by the
Group explains the hefty increase of over 61% in this heading. Similarly, the
major role that BBV played in several privatizations in Spain during the
semester as well as its traditional intermediation activity has boosted the
level of commissions associated with securities services. Other areas also
performed well in the half, notably the credit card business.
The industrial portfolio continued to show a high level of recurrent profits
via the 34,642 million pesetas booked through the equity method. Additionally,
the latent capital gains in the portfolio of quoted industrial and real estate
holdings increased to 540 billion pesetas (aprox. US$ 3.5 billion) as of
June 30, 200 billion pesetas more than at the beginning of the year. The
traditional "rotation" of the portfolio in the current bull market led to gross
profits of 73,489 million pesetas. Net provisioning of 130,498 million pesetas
easily surpassed this figure. It is worth noting that more than 60% of the
provisions are extraordinary in nature, including, among other items, the
acceleration of the amortization of goodwill of the Latinamerican acquisitions,
the non-specific provisioning and a sharp increase in country-risk provisioning
to cover the reclassification of certain countries.
Total lending increased to 9.3 trillion pesetas (US$ 60.6 billion) as of 30
June 1998, up 21.4% over June 1997. Resident sector lending increased by 17.8%,
five points above the sector average increase. Personal loans have been the
most dynamic with an increase of 24.1%, which reflects the resurgence of the
consumer in 1998. It should also be emphasised that credit card balances and
actual collateral - including mortgages - increased by almost 17%. As a result
of the important developmental activity in the Latin American units,
non-resident sector lending increased by more than 40%. In addition, the BBV
Group's non-performing loans rate has continued to fall to 2.70% (2.81 % in
March-98; 2.91% in December-97).
The amount of client funds under management totalled 21.9 trillion pesetas
(US$ 143 billion), which is a 23.6% increase more than the volume at the end of
the first half of 1997. The on-balance funds totalled 13.5 trillion pesetas, an
11% increase year-on-year. It is in the resources off-balance sheet where
the BBV Group is achieving the most substantial increase in activity. In the
Spanish market the growth of BBV's mutual funds, 47.9%, surpasses the rate of
growth of the financial system by more than 11 points and has increased its
market share in more than a full point in the previous 12 months - 36 basic
points since December 1997.
BBV's expansion policy in Latin America continued as well. In June, the Group
signed an agreement to take a majority stake in Chile's Banco BHIF, the seventh
largest in the country by assets and one of the most profitable. The Group also
arrived to an agreement with Chase Manhattan Bank to acquire a significant part
of their operation in Puerto Rico; this business, together with the acquisition
of Banco Ponce, will soar BBV's presence in the island to the third place with a
market share of nearly 10%. In July, BBV increased its stake in Colombia's
Banco Ganadero from 44% to 59% of voting capital and has signed an agreement to
acquire a minimum stake of 55.4% of Banco Excel Economico de Brasil.
BBV's industrial portfolio saw a good deal of activity in the second quarter.
The Group sold 0.78% of Telefonica, 3% of Indra Sistemas and 4% of Koipe
(stemming from Koipe's June public offering). The acquisition side was active
as well, with the Group acquiring 7% of Telefonica de Brazil.
Big event for the Group in the first half was the formal presentation of
PRACTYCO, the plan aimed at improving BBVs efficiency ratio to 50% by the year
2000. The plan consists of four basic work lines: productivity improvements,
expenses optimization, the reduction of financial inefficiencies and the
elimination of idle assets.
On 30 June 1998, the BBV share traded at 7,870 pesetas, an increase of 59.6%
over the course of the year. It is important to note that such increase is
greater than the one from any of its domestic peers and the third largest among
the main 20 European Union banks by market capitalization during the same period
and this benchmark is one of the major goals of the new strategic plan called
Programa Two *1000.
During the first half of 1998 the Group underwent successive capital increases
for a total of 652,411 shares (near 0.09% of capital), some US$ 10.13 million,
to meet the conversion requests of holders of a July 1996 subordinated
convertible bond issue.
In addition, at the June 30th General Shareholders Meeting, a number of
agreements were passed which will affect shareholders funds. The first is in
reference to the capital increase necessary to proceed with the exchange of BBV
shares for Banco Ganadero shares that resulted from the public offer for 15% of
Banco Ganadero voting shares. The final rate of exchange was set at 135 Banco
Ganadero shares for 1 BBV share. As Banco Ganadero shares were trading at 520
Colombian pesos per share, the resulting value of the new shares issued by BBV
was 7,833 pesetas per share. The public offering was successfully concluded at
the beginning of July, and as a result, BBV now controls more than 50% of its
affiliate bank, having issued 3,440,777 new shares which have been given to the
sellers of Ganadero shares.
Another three for one share split was also approved at the General Shareholders
Meeting; such split took place on July 11th in Spain. On that date, shareholders
received a 10 peseta gross return of capital that was authorized at the January
1998 Extraordinary General Meeting of Shareholders. They also received the 1
peseta gross final dividend on fiscal 1997. After these operations, and on the
very same day, a capital increase was undertaken by increasing the nominal value
of each share from 250 pesetas to 270 pesetas with a charge to reserves.
Finally, the split was taking into effect, dividing the nominal per share by
three to 90 pesetas per share, and consequently tripling the number of shares in
circulation.
On the same day, each of these newly split shares then received 7.7 pesetas
gross as first interim dividend of fiscal year 1998. This represents an
increase of 21.6% over the 6.33 peseta first interim dividend of fiscal 1997
(which was 19 pesetas on a pre-split basis).
Investor relations office
(Spain/34) 94 487 65 87
(Spain/34) 91 374 42 22
(USA/212) 728 15 00
(UK/171) 397 60 76
Internet info (http://www.bbv.es)
BBV GROUP HIGHLIGHTS
(consolidated figures)
JUNE 98 JUNE 97
Balance sheet (Millions of pesetas)
Total assets 21,870,515 19,158,122
Total lending 9,283,206 7,648,388
Customer funds recorded on the
balance sheet 13,491,598 12,140,682
Other Customer funds managed 8,377,043 5,554,933
Shareholders' funds 823,011 754,922
Income statement (Millions of pesetas)
Basic Margin 485,268 358,783
Operating income 203,017 156,618
Income before taxes 153,935 120,043
Net attributable profit 74,337 58,011
Data per share (Pesetas)
Net attributable profit 110 86
Book value 1,216 1,120
Share price 7,870 3,990
Key ratios (%)
R,O,A, (Net income/Average total assets) 0.99 0.90
RORWA (Net income/Risk weighted assets) 1.88 1.82
R,O,E, (Net attributable/Average equity) 19.2 17.2
Other relevant figures
Number of employees 62,031 58,655
Spain 25,279 25,789
Abroad 36,752 32,866
Number of branches 4,341 4,019
Spain 2,802 2,828
Abroad 1,539 1,191
BBV GROUP INCOME STATEMENT
(millions of pesetas)
JUNE 98 JUNE 97 (US$ millions)
Financial revenues 823,098 722,153 5,372
Financial costs -488,357 -456,716 - 3,187
NET INTEREST INCOME 334,741 265,437 2,185
Fees & Commissions 150,527 93,346 983
Collection and payment
services 52,532 39,669 343
Investment securities
services 31,577 17,108 206
Mutual and pension funds
management 51,106 22,703 334
Other Commissions 15,312 13,866 100
BASIC MARGIN 485,268 358,783 3,168
Market operations 33,836 34,404 221
ORDINARY REVENUE 519,104 393,187 3,389
Administrative Costs -280,351 -211,119 - 1,830
Personnel -182,112 -143,522 - 1,189
Wages and other -172,189 -137,071 - 1,124
Pensions - 9,923 -6,451 - 65
General expenses - 98,239 -67,597 - 641
Other income-costs - 9,891 -3,962 - 65
DGF annual fee -10,012 -5,678 - 66
Other items 121 1,716 1
Depreciation - 25,845 -21,488 - 169
OPERATING INCOME 203,017 156,618 1,325
Income from associates 83,298 35,335 544
Group Net transactions 73,489 27,997 480
Income by the equity method 9,809 7,338 64
Loan Loss provisions (net) -65,387 -28,512 - 427
Gross -93,026 -51,301 - 607
Reversals 17,456 15,972 114
Bad debts' recoveries 10,183 6,817 66
Securities writedowns -206 78 - 1
Goodwill amortization 31,776 -31,316 - 207
Extraordinary items 35,011 -12,160 - 229
Disposals 4,163 2,531 27
Other -39,174 -14,691 - 256
PROFIT BEFORE TAX 153,935 120,043 1,005
Corporate Tax -50,729 -37,709 - 331
NET INCOME 103,206 82,334 674
Minority interests -28,869 -24,323 - 189
Preference shares -7,757 -4,660 51
Other -21,112 -19,663 - 138
NET ATTRIBUTABLE 74,337 58,011 485
BBV GROUP BALANCE SHEET (*)
(millions of pesetas)
JUNE98
ASSETS JUNE 98 JUNE 97 (US$ millions)
Cash and Central Banks 382,394 362,265 2,496
Government Debt 1,222,725 1,527,101 7,981
Due from Banks 6,811,115 5,829,561 44,455
Total lending (Gross) 9,283,206 7,648,388 60,591
- Reserves -295,429 -270,138 -1,928
Investment Portfolio 3,055,299 2,751,714 19,942
Fixed income 2,319,489 2,117,882 15,139
Securities 735,810 633,832 4,802
Premises and Equipment 575,535 570,028 3,756
Other Assets Account 503,228 388,969 3,285
Accrual Accounts 332,442 350,234 2,170
TOTAL 21,870,515 19,158,122 142,747
LIABILITIES
Capital 176,019 129,220 1,149
Reserves 718,478 655,009 4,690
Minority Interests 460,543 411,257 3,006
Due to Banks 6,154,051 5,093,856 40,167
Customer Funds 13,491,598 12,140,682 88,058
Other Liabilities Accounts 403,452 308,750 2,633
Accrual Accounts 363,168 337,014 2,370
Net Income 103,206 82,334 674
TOTAL 21,870,515 19,158,122 142,747
(*) 1 US$: ptas, 153,2 , 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 20,391,169 16,605,335 133,091
Average shareholders' funds 765,327 734,143 4,995
BIS Ratio (Tier 1) 12,6(9,0) 14,3(10,2) -
Risk weighted assets 10,479,275 8,239,890 68,397
B B V
JUNE 98 JUNE 97
NPL as % Lending (Bank of Spain) 2,70 3,31
NPL
Initial 257,980 227,203
JUNE 30th 250,600 253,439
Net Change -7,380 26,236
% Net Change -2.86 11.55
NPL's Reserves
Last 295,429 170,138
% Coverage NPL 117.89 106.59
Lending quality (International regulations)
NPL as % Lending 1.66 1.68
% Coverage NPL 169.81 179.38
(1) Excluding Probursa (Mexico), Continental (Peru), Ganadero (Colombia),
Frances (Argentina) and Provincial (Venezuela).
TOTAL LENDING AND CUSTOMER FUNDS BREAKDOWN
(millions of pesetas)
June 98 June 97
Due from Public Sector 438,521 534,124
Due form residents 5,409,351 4,592,159
Commercial bills 640,809 661,553
Borrowers with collateral 1,629,985 1,393,762
Personal loans 1,894,869 1,526,306
Credit accounts 552,724 507,024
Other term loans 173,412 69,728
Others 258,800 210,741
Leasing 258,752 223,045
Due from non residents 3,184,734 2,268,666
Non performing loans 250,600 253,439
TOTAL LENDING (GROSS) 9,283,206 7,648,388
(-) Reserves -295,429 -270,138
TOTAL LENDING (NET) 8,987,777 7,378,250
Pesetas 5,733,267 5,021,768
Foreign currencies 3,254,510 2,356,482
Public sector 601,737 595,093
Other resident sectors 7,032,158 6,540,329
Current accounts 1,646,068 1,563,405
Savings accounts 1,111,444 1,045,440
Time deposits 2,352,387 2,085,003
Sales with repurchase agreements 1,890,827 1,777,654
Others 31,432 68,827
Non-residents 4,489,191 3,908,495
Marketables Debt Securities 1,080,650 795,793
Subordinated Debt 287,862 300,972
TOTAL CUSTOMER FUNDS 13,491,598 12,140,682
Pesetas 7,998,976 7,521,921
Foreign currencies 5,492,622 4,618,761
Mutual funds 4,790,158 3,212,266
Pension funds 1,285,167 909,458
Portfolio management 2,301,718 1,433,209
OFF-BALANCE FUNDS 8,377,043 5,554,933
TOTAL MANAGED CUSTOMER FUNDS 21,868,641 17,695,615
END
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