Bbva Ord Regulatory News (BVA)

28 Apr 2008 08:38

Banco Bilbao Vizcaya Argentaria SA28 April 2008 First Quarter results for 2008 BBVA increases net profit 14.9% to €1.44bn excluding non-recurrent items The Group once again demonstrates the strength and recurrent nature of itsresults. Despite worldwide uncertainty and instability, it reported vigorousmarketing, high levels of efficiency and profitability, low risk, adequatelevels of capital and solid liquidity. - Net attributable profit including non-recurrent items came to €1.95billion - similar to the first quarter of 2007 - with capital gains from thesale of Bradesco (€509m). The latter amount was €187m less than the capitalgains obtained a year earlier - Earnings per share (EPS) excluding non-recurrent items increased 9.6%,return on equity (ROE) stands at 25.2% and return on assets (ROA) is 1.24%.Including non-recurrent earnings, ROE is 27.4% and ROA is 1.35%. All businessareas contributed to earnings - A sharp rise in net interest income (up 22.4%) boosted operating profit14.9% (21.6% in constant euros) - Efficiency (measured by the cost/income ratio), including depreciationbut without Compass, stands at 40.6%, improving from 41.9% at March 2007 - Loan-loss provisions are less than the fourth quarter of 2007. Theyinclude generic provisions generated by the increase in lending - The non-performing loan ratio remains under control at 0.99% (0.89% inDecember). The coverage ratio is 200% and total provisions now stand at €7.74billion of which €5.71 billion is generic - BBVA's core capital rises to 6.3% (5.8% in December) and it still holdslatent capital gains of nearly €3 billion - The Spain & Portugal Area increased net attributable profit 18.0% to€698m, combining selective growth with prudent risk management - Net attributable profit in the Wholesale Banking & Asset ManagementArea jumped 44.6% to €266m, supported by an excellent quarter in corporate andinvestment banking and a positive performance by the global markets unit - Mexico lifted net attributable profit 25.9% in constant euros to €501m,with solid revenue growth and tight control of expenses thanks to the bank'stransformation plan - The USA Area obtained net attributable profit of €84m. This was anincrease of 12.6% in constant euros compared to the fourth quarter of 2007. Thearea's integration plan is on track. Excluding amortisation of intangibles, netattributable profit in the quarter came to €110m - In the South America Area net attributable profit rose 19.4% inconstant euros to €181m, with solid gains in revenues and a sharp increase inbusiness At the end of the first quarter of 2008, BBVA obtained net attributable profit,excluding non-recurrent items, of €1.44 billion. This was an increase of 14.9%compared to the same period last year. The strength and recurrency of itsearnings, combined with its edge in efficiency, profitability, risk management,capital adequacy and liquidity ratio, put the Group in an advantageous positioncompared to its main competitors. Furthermore this has been achieved in acontext of global instability and uncertainty. Operating profit rose 14.9% withgood performances by all business areas and the cost/income ratio (a measure ofefficiency) improved further to 40.6% (excluding Compass), compared to 41.9% atthe same point last year. The non-performing loan ratio remains low, at 0.99%,the coverage ratio stands at 200% and the core capital ratio is 6.3%. In summaryBBVA has started a difficult year by anticipating an uncertain scenario.Nonetheless it was helped by its solid fundamentals and competitive advantages.Moreover it was able to leverage its customer franchise and enviable positionsin terms of capital and liquidity. The first quarter of 2008 was a period of great uncertainty and instability inthe markets and the international banking sector. Despite this environment theBBVA Group once again demonstrated the recurrent nature and strength of itsearnings. Vigorous marketing by the bank's units boosted business volumes andnet interest income, the main contributor to recurrent revenues. This in turnled to high levels of efficiency and profitability. Furthermore it showed thatthese achievements can be compatible with low risk, appropriate capital adequacyand solid liquidity. All business areas performed positively in the first quarter: 1. Spain & Portugal presented an excellent performance thanks to itsability to anticipate circumstances and selective business growth. 2. Wholesale Banking & Asset Management outperformed its competitors thanksto a business model based on customers. 3. Mexico again demonstrated its strength as the top bank in that market. 4. South America made significant progress helped by the buoyant economicsituation in that region. 5. The USA also reported a comparatively favourable performance despite thedifficult economic and banking situation in that country. The most relevant aspects of the Group's performance in the first quarter aresummarised below: • Net attributable profit in the first quarter of 2008 came to €1,951m,which was similar to the €1,950m obtained in the same quarter last year. • These amounts include a number of non-recurrent items. The first quarterof 2008 contains capital gains of €509m after tax on the divestment of theGroup's equity in Bradesco (a Brazilian bank). And the first quarter of 2007included €696m in capital gains on the sale of shares in Iberdrola. Allsubsequent remarks exclude these non-recurrent items unless otherwise statedbecause this will provide a better picture of the underlying performance. • Therefore net attributable income excluding non-recurrent items came to€1,442m, rising 14.9% compared to €1,254m a year earlier. Taking intoconsideration the results of the American subsidiaries, the increase would be21.4%. • Earnings per share (EPS) rose 9.6% year-on-year to €0.39 and ROE nowstands at 25.2%. Both indicators were affected by the capital increase inSeptember 2007. ROA is 1.24%. After including non-recurrent items EPS is €0.53,ROE is 27.4% and ROA comes to 1.35%. • The most dynamic component of the Group's revenues is net interestincome, which grew 22.4% helped by higher volumes of business and an improvementin spreads. After including other revenues and deducting expenses, operatingprofit rose 14.9% to €2,700m (up 21.6% at constant exchange rates). Efficiency(measured by the cost/income ratio) including depreciation, is 42.9% (40.6%without Compass), compared to 42.4% a year earlier. • Loan-loss provisions in the first quarter were slightly less than thefourth quarter of 2007 and they continue to include generic provisionsassociated with higher lending. There was no need for asset provisions linked tothe instability in financial markets. • Despite the current complex environment, the growth in lending provedcompatible with a moderate NPL ratio, which rose to 0.99% during the quarter(0.89% at 31-Dec-07 and 0.84% at 31-Mar-07). The coverage ratio is still high at200%. The current level of coverage funds stands at €7,740m of which €5,708m isgeneric (€5,061m at 31-Mar-07). • After payment of a third interim dividend of €0.152 per share (grossamount) on 10th January and a final dividend of €0.277 on 10th April, the totaldividend paid against 2007 earnings comes to €0.733 per share. This is 15.1%more than the amount paid against 2006 results. • In reference to the Group's capital base and following Basel II rules,at 31-Mar-08 core capital came to 6.3% (higher than the 5.8% at 31-Dec-07). TierI capital is 7.8% and the BIS ratio is 12.9%. • In addition, at the end of March the Group had latent capital gains ofroughly €3,000m in its portfolios of equity holdings in spite of divestmentsmade in 2007 and 2008 and the recent downturn in the markets. • In the first quarter Standard & Poor's raised its long-term rating forBBVA from AA- to AA. Therefore over the last 12 months all the major agencies(Moody's, S&P and Fitch) have revised their BBVA ratings upwards. • Regarding the information by business areas, the United States will betreated separately in view of its growing importance. Additionally, theorganizational changes implemented at the end of 2007 have produced smallvariations between Spain & Portugal and Wholesale Banking and Asset Managementareas which are not significant. • Once again the main source of revenue in Spain & Portugal was netinterest income, which increased 13.9% compared to the first quarter of 2007,supported by higher volumes of business (lending was up 8.5%) and an improvementin spreads. Expenses increased only 1.6% (only 0.2% in the Spanish retailnetwork) and this led to new improvements in efficiency. Operating profit was up14.0% and net attributable profit rose 18.0% to €698m. • Despite market turbulence during the quarter, Wholesale Banking & AssetManagement, with its business model based on customers, recorded strongincreases in lending and in customer funds from corporate and investmentbanking. Once again this area generated high revenues. Operating profit for thequarter grew 31.4% year-on-year and net attributable profit jumped 44.6% to€266m. • Mexico recorded higher levels of business. Lending was up 28.4% (with adifferent product mix) and customer funds rose 14.1% in local currency. Togetherwith action to defend spreads this increase boosted net interest income 13.4% atconstant exchange rates. Other sources of income also contributed to ordinaryrevenues which grew 20.9% whereas expenses rose more slowly. Therefore the cost/income ratio improved once more, with operating profit rising 27.0% and netattributable profit up 25.9% to €501m at constant exchange rates. • The United States Area increased business volume in the first quarter,contributing €181m to the Group's operating profit and €84m to net attributableprofit. At constant exchange rates the increase in operating profit was 13.6%and net attributable profit rose 12.6%. In March BBVA received approval from theUS authorities to merge its four banks in that country. So far State NationalBank has been integrated with Compass Bank. • In South America the strong growth in lending (up 27.8% at constantexchange rates) and customer funds (up 16.8%) boosted net interest income, whosegrowth accelerated to 39.2% at constant exchange rates. As a result operatingprofit rose 31.3%. After higher provisions linked to the rise in lending, netattributable profit increased 19.4% to €181m. Paste the following link into your web browser to download the PDF document related to this announcement: http://www.rns-pdf.londonstockexchange.com/rns/2058t_-2008-4-28.pdf This information is provided by RNS The company news service from the London Stock Exchange