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27th April 2012

BBVA big expense increase

BBVA reported Q1 net attributable of €1,005m (£819m $1,323m ¥107.3bn Y8,339m) DOWN 13% on the year ago period. Part of the fall was due to the requirement to increase loan loss provisions for the bank's Spanish property and construction lending. The other, not adequately explained is the 10% increase in expenses. This can be seen to come roughly equally from personnel and other expenses.


The profit was a little higher than had been expected and the stock price increased on the day around 5% initially, falling back to end the day around 2.5%. If the bank does not get its expenses under tighter control this is likely to impact its ongoing share prices. Following the day's rise the stock price is still down nearly 30% from its YTD high. Some Spanish banks have suggested that NPL will peak around tis quarter and fall. Analysts are less convinced believing the very high levels of unemployment and continued recession will continue to turn some loans bad. BBVA has some protection against this from its extensive Latin American banking operations and its growing US banking business.


Income Summary Q1 2012 2011 Change
€m €m %
Net interest income 3,597 3,175 13
Net fees and commissions 1,216 1,114 9
Net trading income 367 752 -51
Dividend income 27 23 17
Income by the equity method 193 121 60
Other operating income and expenses 47 79 -40
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Gross income 5,447 5,263 4

Personnel expenses -1,379 -1,276 8
General and administrative expenses -974 -887 10
Depreciation and amortization -232 -196 18
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Operating costs -2,585 -2,359 10

Operating income 2,862 2,904 -2
Impairment on financial assets (net) -1,085 -1,023 6
Provisions (net) -131 -150 -13
Other gains (losses) -222 -71 >
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Income before tax 1,423 1,659 -14
Income tax -250 -369 -32
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Net income 1,173 1,290 -9
Non-controlling interests -168 -141 19
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Net attributable profit 1,005 1,150 -13