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Financial Report2010
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BBVA Group Highlights
Core capital
(Million euros)
23,191
December2009
30,097
December2010
+29.8%
17,898
December2008
December2007
16,731
Net attributable profit
(Million euros)
4,210
2009
4,606
2010
+9.4%
5,020
20082007
6,126
Core capital ratio
(Percentage)
December2009
December2010
December2008
December2007
6.2 6.2
8.0
9.6
Earnings per share
(Euros)
2009 201020082007
1.641.31
1.081.17
Gross income
(Million euros)
20,666
2009
20,910
2010
+1.2%
18,978
20082007
17,271
Efficiency ratio
(Percentage)
2009 201020082007
45.3 44.6
40.442.9
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BBVA Group Highlights
(Consolidated igures)
31-12-10 % 31-12-09 31-12-08
Balance sheet (million euros)
Total assets 552,738 3.3 535,065 542,650
Total lending (gross) 348,253 4.8 332,162 342,682
Customer funds on balance sheet 378,388 1.7 371,999 376,380
Other customer funds 147,572 7.6 137,105 119,034
Total customer funds 525,960 3.3 509,104 495,414
Total equity 37,475 21.8 30,763 26,705
Stockholders' funds 36,689 25.0 29,362 26,586
Income statement (million euros)
Net interest income 13,320 (4.0) 13,882 11,686
Gross income 20,910 1.2 20,666 18,978
Operating income 11,942 (3.0) 12,308 10,523
Income before tax 6,422 12.0 5,736 6,926
Net attributable proit 4,606 9.4 4,210 5,020
Net attributable proit excluding one-os (1) 4,606 (12.4) 5,260 5,414
Data per share and share performance ratios
Share price (euros) 7.56 (40.6) 12.73 8.66
Market capitalization (million euros) 33,951 (28.8) 47,712 32,457
Net attributable proit per share (euros) (2) 1.17 8.3 1.08 1.31
Net attributable proit per share excluding one-os (euros) (12) 1.17 (13.3) 1.35 1.41
Dividend per share (euros) (3) 0.42 - 0.42 0.63
Book value per share (euros) 8.17 4.3 7.83 7.09
Tangible book value per share (euros) (4) 6.27 6.3 5.90 4.99
P/BV (Price/book value; times) 0.9 1.6 1.2
Price/tangible book value (times) (4) 1.2 2.2 1.7
PER (Price/Earnings; times) 7.4 11.3 6.5
Yield (Dividend/Price; %) (3) 5.6 3.3 7.3
Signiicant ratios (%)
ROE (Net attributable proit/Average equity) 15.8 16.0 21.5
ROE excluding one-os (1) 15.8 20.0 23.2
ROA (Net income/Average total assets) 0.89 0.85 1.04
ROA excluding one-os (1) 0.89 1.04 1.12
RORWA (Net income/Average risk-weighted assets) 1.64 1.56 1.94
RORWA excluding one-os (1) 1.64 1.92 2.08
Eiciency ratio 42.9 40.4 44.6
Risk premium 1.33 1.54 0.83
NPA ratio 4.1 4.3 2.3
NPA coverage ratio 62 57 92
Capital adequacy ratios (%)
BIS Ratio 13.7 13.6 12.2
Core capital 9.6 8.0 6.2
Tier I 10.5 9.4 7.9
Other information
Number of shares (millions) 4,491 3,748 3,748
Number of shareholders 952,618 884,373 903,897
Number of employees 106,976 103,721 108,972
Number of branches 7,361 7,466 7,787
Number of ATMs 16,995 15,716 14,888
General note: The consolidated accounts of the BBVA Group have been drawn up according to the International Financial Reporting Standards
(IFRS) adopted by the European Union and in conformity with Bank of Spain Circular 4/2004, together with the changes introduced therein.
(1) In the third quarter, both for 2009 and 2010, includes capital gains from the sale-and-leaseback of retail branches which have been allocated to generic
provisions for NPA, with no eect on net attributable proit. And in the fourth quarter of 2009, there was an extraordinary provision and a charge for goodwillimpairment in the United States. In 2008, capital gains from Bradesco in the irst quarter, provisions for non-recurrent early retirements in the second and
fourth quarters and provision for the loss originated by the Mado fraud in the fourth quarter.
(2) Earnings per share for periods prior to the share capital increase have been adjusted to the said capital increase as per IAS 33.
(3) The dividend corresponding to 2008 includes0.501 in cash and 0.129 in payment-in-kind (delivery of shares valued at April 17th, 2009 closing price).(4) Net of goodwill.
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In this complex environment,
BBVAs results have beenexcellent. As a result,
we are once more one of the best
performing banks in the world.
Francisco Gonzlez, Chairman and CEO
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Contents
2 Executivesummary
LetterfromtheChairman................................................................................................................................................................................................................................4
BBVAin2010...................................................................................................................................................................................................................................................................8
2011:TheeconomicbackgroundandBBVApositioning..........................................................................................................................................14
Theteam...........................................................................................................................................................................................................................................................................34
TheBBVAbrand........................................................................................................................................................................................................................................................39 Corporateresponsibility.................................................................................................................................................................................................................................42
44 Groupinancialinformation
Earnings...................... ...................... ...................... ...................... ...................... ..................... ...................... ...................... ...................... ...................... ...................... ...................... ....... 46
Balancesheetandbusinessactivity............................................................................................................................................................................................... 56
Capitalbase.....................................................................................................................................................................................................................................................................63
TheBBVAshare.......................................................................................................................................................................................................................................................66
70
Riskmanagement GlobalRiskManagement:BBVAGroupsriskmanagementfunction.................... ...................... ...................... ...................... ............... 72
Integrationofrisksandoverallriskproile................................................................................................................................................................................73
Creditrisk.........................................................................................................................................................................................................................................................................75
Structuralrisks............................................................................................................................................................................................................................................................90
Risksinmarketareas.........................................................................................................................................................................................................................................94
Operationalrisk........................................................................................................................................................................................................................................................98
Riskmanagementinnon-bankingactivities........................................................................................................................................................................101
ManagementofESGrisks..........................................................................................................................................................................................................................103
106 Businessareas
SpainandPortugal..............................................................................................................................................................................................................................................110
Mexico................................................................................................................................................................................................................................................................................122
SouthAmerica........................................................................................................................................................................................................................................................130
TheUnitedStates.................................................................................................................................................................................................................................................142
WholesaleBanking&AssetManagement............................................................................................................................................................................148
CorporateActivities............................................................................................................................................................................................................................................159
162 Corporateresponsibility
178 CoporateGovernanceSystem196 Supplementaryinformation
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3
4 LetterfromtheChairman
8 BBVAin2010
14 2011:Theeconomicbackgroundand
BBVApositioning
34 Theteam
39 TheBBVAbrand
42 Corporateresponsibility
TheLigaBBVAHDapplicationforiPad
hasmadehimsee
thetechnological
invasionina
newlight
Marinalovestechnology,butPablo,herfather,
isnotentirelyconvincedbyit.Hestillcan
notgetthehangofsmartphones,ultra-light
notebooksandtouchscreens.ButtheLiga
BBVAHDapplicationforiPadhasmadehim
seethetechnologicalinvasioninanewlight.
NowonSundayswhenthereisamatchthey
havetodrawlotsforwhowillusetheiPad.
Executivesummary
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4 Executivesummary4
Dear Shareholder:
Theyear2010hasbeenanunevenyearfrom
themacroeconomicpointofview,asnotall
regionshaveperformedsimilarly.TheGDP
oftheG7countriesincreasedby2.8%,with
Japangrowingby3.9%,theUnitedStates
by2.9%,andGermanyby3.5%.Meanwhile,
economicgrowthinemergingcountrieshas
beenverystrong,atanaggregateof8%.
Fororganizationswithabalancedglobal
competitivepositionsuchasBBVA,themacroeconomicenvironmentin2010was
complexbut,overall,favorable.However,asI
anticipatedlastyear,2010wasonceagainadiicult
yearforoursector,markedbytherescuesof
GreeceandIrelandamidaclimateofuncertaintyin
theinancialmarkets.Ourindustryhascontinued
tofacenewregulations,signiicantchangesin
theinancialmarketsandpressureonproits.
Inthiscomplexenvironment,BBVAsresults
havebeenexcellent.Asaresult,weare,again,
oneofthebest-performingbanksintheworld.
BBVAsnetattributableproitin2010wasup9.4%
to4,606m,thankstothesolidmanagement
oftheGroupsrevenuesandcosts.The
diversiicationofourbusinessmodelhasallowed
ustoofsettheefectsofthisdiicultsituation
andincreaseourgrossincomeby1.2%tonearly
21,000m,onceagainanall-timehighforBBVA.
Regardingcosts,wehavecontinuedtoinvest
inpeopleandtechnologyinthefastest-growing
markets.Indoingso,wehaveagainanticipated
thenextphaseofthecycle,andourcostshave
risenby7.3%.Wehavebeenabletomakethis
investmentinthefuturewhilemaintainingour
leadingpositionintheindustry,withaneiciency
ratioof42.9%,areturnonequity(ROE)of15.8%andareturnonassets(ROA)of0.89%.
In2010wealsoimprovedthemainindicators
ofassetqualityonourbalancesheet.TheNPA
ratiofellto4.1%,thecoverageratioincreasedto
62%,newnetadditionstoNPAfellby61%and
thebalanceofNPAhasstabilized.Thisagain
setsBBVAapartfromtherestanddemonstrates
thesoundnessoftheanticipatorymeasures
wetookinthefourthquarterof2009.
Atthesametime,wehaveimprovedour
solvency.Followingthesharecapitalincrease
inNovember,weclosedtheyearwithacore
capitalof9.6%,whichweestimatewillbe
LetterfromtheChairman
Theyear2010hasbeenagoodyearforBBVA,
withanewboosttoourcompetitive
positioningwithrespecttothefuture
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6 Executivesummary6
around8.6%oncetheinvestmentinGarantiis
completed.BBVAcontinuestobeoneofthe
soundestinancialinstitutionsintheworld,
oneofonlyfourmajorinancialinstitutionsatagloballevelthatmaintainanAArating.
TheseresultsdemonstrateBBVAsmanagement
capacityandsolidbusinessmodel.Ourmodel
isresilienttotheenvironment,diversiied,
focusedonrecurrentbusinessandcharacterized
byprudentmanagement,thecapacityto
anticipateandlong-termvision.Thesefactors
haveenabledustomaintainourcommitment
toourshareholders,andaccordinglythe
BoardofDirectorswillproposetotheAnnual
GeneralMeetingatotalremunerationof0.42
pershare.Thisyear,inresponsetomanyof
yourrequests,youwillnowbeabletobepaid
theAprilandOctoberdividendsinshares.
In2010wehavealsotakenmajorstepstowards
futuregrowth.OurentryintoTurkey,withthe
acquisitionof24.9%ofGaranti,isaveryimportant
operation.Garantiisanexcellentfranchise,
withamagniicentmanagementteamandan
innovativeapproachtothebankingbusiness
thatisverysimilartothatofBBVA.Itofers
servicestonearly10millioncustomersthrough
acommercialnetworkof863branchesand
over3,000ATMs.Thetransactionincludes
ashareholderagreementwiththeTurkish
businessgroupDogustomanageGaranti
jointly.ItalsoincludesanoptionforBBVA
toappointthemajorityofthememberson
GarantisBoardofDirectorsinthefuture.
InAsia,wehaveincreasedourholdinginChina
CiticBankto15%,andwearecontinuingtodevelopjointprojectsintheprivatebanking
andcarinancesegments.Inaddition,wehave
takenanimportantirststepinIndiabycreating
ajointcompanyinthecreditcardbusinesswith
theBankofBaroda,anIndianbankwithmore
than36millioncustomersand3,000branches.
InSouthAmerica,wehavestrengthened
ourfranchiseinUruguaywiththe
acquisitionofCrditUruguay,makingus
thesecondlargestbankinthecountry.
Toconclude,2010hasbeenagoodyear
forBBVA,withourresultsresistingthe
strain,improvingsolvencyandthemainrisk
indicators.Wehavealsogivenanewboost
toourcompetitivepositioningwithrespect
totheyearstocome.Thisfutureisonein
whichtechnologicalchangesandthegrowing
importanceofemergingcountrieswillplayavery
signiicantrole.Technologyistransformingthe
inancialindustry.WeatBBVAweareadapting
ourbusinessmodelsandinvestingstrongly
intechnology,inprojectsdesignedtochange
theBank.In2010wemadeverysigniicant
progressinournewtechnologicalplatformin
Spainandhavebegunitsdevelopmentinthe
UnitedStatesandinourWholesaleBanking
&AssetManagementdivision.Wehavethe
visionandwearecontinuingtoinvestinit.
Inaddition,BBVAhascontinuedtoposition
itselfinhigh-growthcountries.In2010we
identiiedagroupofcountriesdubbedEAGLE
(EmergingandGrowthLeadingEconomies),
whosecontributiontoglobalgrowthover
thenextdecadeweestimatetobefarabove
thoseintheG7.Wealreadyhaveasigniicant
presenceintwoofthem,MexicoandChina,
andwithourinvestmentinGaranti,wewill
alsobeinTurkey,aEuropeanEAGLE.
In2010wehavealsostrengthenedour
communityinvolvementbyworkingtowardsa
Theseresults
demonstrate BBVAs
management
capacity
andsolid
business
model
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7LetterfromtheChairman 7
betterfutureforpeople.Wehavemadeprogress
tointegratecorporateresponsibilityacrossthe
Groupswholevaluechain.Atthesametime,
wehavereairmedourcommitmenttotheUnitedNationsGlobalCompact,inparticular
totheMillenniumDevelopmentGoals.For
theirsttime,theinformationoncorporate
responsibilityhasbeenfullyintegratedintothe
FinancialReport.Inthisway,wehaveanticipated
themostinnovativetrendsatthegloballevel
promotedbytheGlobalReportingInitiative.
Intheieldofinancialinclusion,theBBVA
MicroinanceFoundationisalreadypresent
inColombia,Peru,Argentina,Chile,Costa
RicaandPuertoRico.Itprovidesmicrocredits
foranaverageof700tomorethan
620,000peopleinLatinAmerica,nearly
25%morethanthepreviousyear.
Intermsofinancialliteracy,thesecondcore
elementofourcorporateresponsibilitypolicy,
wehavealreadyreachedamillionbeneiciaries
throughprogramsinSpain,LatinAmericaand
theUnitedStates.Finally,in2010wejoinedforces
withtheOrganizationofIbero-AmericanStates
toformthelargestalliancebetweenaprivate
entityandaninternationalinstitutiontopromoteeducationinIbero-America.Thisallianceispartof
theEducationalGoalsfor2021project,whichwill
beneitmorethaneightmillionpeopleby2021.
Theyear2011willalsobeadiicultone.AtBBVA
weareclearaboutthepathwehavetotake.
Wehaveagreatteamofpeople:nearlyone
hundredandseventhousandprofessionals
aroundtheworldwhomakeuptheBBVA
team.Thankstotheireforts,enthusiasmand
dedicationwehaveemergedfromthisyear
withstrengthandwewilldosoagainin2011.
Iwouldliketoendbythankingyouall,our
shareholdersforyourcontinuedsupportfor
BBVA.IcanassureyouthatthisGroupwill
workhardwiththeobjetiveofbecominga
betterbankeveryday,continuingtodeserve
yourtrustandmaintainingourprogressin
constructingthebestuniversalbankintheworld.
Theyear2011
willalsobeadiicult
one.AtBBVA
weareclear
aboutthepath
totake.We
haveagreat
teamof
people,sowe
willoncemore
emergefrom
thisyear
withstrength
March 1, 2011
Francisco Gonzlez Rodrguez
Fortheirsttime,theinformationoncorporateresponsibilityhasbeenfullyintegratedintotheFinancialReport.Inthisway,
wehaveanticipatedthemostinnovativetrendsatthegloballevel
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8 Executivesummary8
2010:agoodyearfor
2. Costs, anticipation
or new growth
cycle
1. Income
diversification:
balanced business
portolio withpotential
Earnings strength:
4,606million euros
(+9.4%)
1. Gross income breakdown and evolution (1)
(Percentage)
Spain &Portugal 33
Mexico 27
SouthAmerica 19
Business areabreakdown
Gross incomeYear-on-year change
Emerging markets: higher revenues,developed markets: market share gains
(1) Ex Corporate Activities.
11.2
Emerging
3.6
DevelopedThe United States 12
WB&AM 9
2. Costs breakdown. Year-on-year change (1)
(Percentage)
(1) ) Ex Corporate Activities.
14.4
Emerging
2.5
Developed
3. Investing
in people and
technology
4. And anticipation
in loss provisioning.
4. Loan-loss provisions
in loan-loss provisions
12.2%
Anticipation in 4Q09
Only 38% of theanticipatedadditions actuallyhave become NPAs
Anticipated NPAs
One-off lossprovisions
The United Statesgoodwill
3. Wider distribution network in expandingfranchises
Headcount (1)
Year-on-year change(Percentage)
Investment inchange-the-bank
BBVA Group and EU average(Percentage
of total investment)
(1) Ex Corporate Activities.
,
,
1,
1,
,
,
,
,
,
,
,
4.7
Emerging
People Technology
0.5
Developed
31.8
BBVA2006
43.3
BBVA2010
27.7
EU Average2009
5. Balance o NPAs
stabilizes
Good perormance
in risk:
19basis points in NPA ratio
61%net additions to NPA
6. NPA and coverage ratios(Percentage)
4.3
2009
4.1
2010
57
62NPA ratio
Coverageratio
5. Balance of NPAs(Billion euros)
16.1
June2010
15.6
September2010
15.7
December2010
15.6
December2009
15.9
March2010
6 and 7. And all
risk indicators are
improving.
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10 Executivesummary
BBVAhasbecomestrongeraftertheagreementtoacquirea24.9%
stakeinGaranti,theleadingbankinTurkey.Thisdealgrantsit
accesstowhatisavery attractive market:
Withahigheconomicgrowth.Theconsensusofforecastspoints
toarealaverageincreaseinthecountrysGDPofabout5%
between2009and2012.
Turkey. Size and growth potential
EUCEE (1)Turkey
(1) CEE: Central and Eastern Europe: Bulgaria, Slovenia, Czech Republic, Hungary, Poland, Romania, Slovakia, Estonia, Lithuania.Source: Global Insight 2009.
Germany
82
Turkey
75
France
63
Italy
60
Spain
47
1.6
3.0
5.0
Poland
38
CGDP real growth(CAGR 2009-2012 estimate. Percentage)
Population(Million inhabitants)
Penetration, loan/deposit ratio and ROE
EU
113
EU
127
EU
10
Loan penetration(Percentage over GDP)
Loan/deposit ratio(Percentage)
ROE 2006-2009(Percentage)
CEE(1)
110
CEE(1)
57
CEE(1)
13
Turkey
75
Turkey
40
Turkey
18
(1) CEE: Central and Eastern Europe: Bulgaria, Slovenia, Czech Republic, Hungary, Poland, Romania, Slovakia, Estonia, Lithuania.Source: Central Bank of Europe, Global Insight, Turkish Banking Association, The Economist Intelligence Unit. Morgan Stanley.
Boostingfuturegrowth
WiththeacquisitionofaholdinginGaranti,BBVAhastakenaveryimportantstepintheprocessofcreatingadiverseandbalancedmixofbusinessesandgeographicalareas,withahighgrowthpotential.
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11BBVAin2010
Withoneofthelargestandyoungest
populationsinEurope:75millionpeople,of
whom50%areunder30yearsofage.
Ithasasoundinancialsystemwithapotential
fordevelopment.Turkeyhasthemostattractive
inancialsysteminEurope,withamongthe
lowestlendingpenetrationrates,agood
inancialsituationandhighrecurrentproits.
Garantiisalsoan excellent ranchisewithahigh-
classmanagementteam:
Garantiisoneofthebestbankingfranchises
inTurkeyandenjoysaleadingpositionin
themainproductlines.Ithas9.5million
customers,anetworkof863branchesand
totalassetsofover60,000m.Itistheleading
lendingbankinthecountryandthethirdin
shareofdeposits.Itisalsotheleadingissuerof
creditcards.
Ithasaninternational-classmanagementteamandanexcellentbrandimageamong
Turkishbanks.Garantihasbeennamedthe
BestBankinTurkeyby Euromoneyforthe
tenthtime.
GarantisharesBBVAsfocus,formofbanking
andirmcommitmenttotechnology
andinnovation.Thebankhasthebest
technologicalplatforminTurkey,whichputsit
inaleadingpositionintermsofonlinebanking.
Thedealincludesanoptionforacontrolling
stake,withanunbeatablepartner(theDogus
Group),andinwhichthetimingdependson
BBVA.Inshort,thedealisexcellentforBBVA.
BBVAsinancialsoundnesshasenableditto
continuestrengtheningitsinvestmentsin
theCITICGroup,oneofthemainindustrial
conglomeratesinChina.Speciically,onApril
1,2010,itexerciseditspurchaseoptiononan
additional4.93%ofthesharecapitalofChina
CiticBank(CNCB),raisingitsholdingto15%.This
conirmedtheBanksstrategiccommitmentto
theAsianregion,withrevenuesalmostdouble
overtheyear.BBVAisalsoworkingwithCNCB
onprivatebankingbusiness,autoinance,
corporatebanking,mergersandacquisitions,
tradeinance,markettradingandpensions.
InLatinAmerica,BBVAisstrengtheningits
franchises,whichclosedin2010withbusiness
buoyantandoverallincreasesinmarketshare,
andwithambitiousorganicgrowthplans.ItisalsoworthnotingthatBBVAhasbuiltupits
operationsinUruguaywiththepurchaseof
CrditUruguayBanco(CUB).Thedealmakesit
thesecondlargestprivateinancialinstitutionin
thecountry,withavolumeofassetsofalmost
1,900m,andcustomerfundsofover1,500m.
TheintegrationofCUBwillbeginwhenallof
theauthorizationshavebeenreceivedfromthe
regulatoryauthorities.Thisprocessisexpected
tobecompleteintheirsthalfof2011.
Garanti. Market share as of 31-12-2010
and rankings
(Percentage)
Totaldeposits
11.9
Autofinance
15.1
Mortgages
13.9
Numberof credit
cards
17.1
Numberof points
of sale
22.2
Onlinebanking (1)
37.0
3rd 3rd 1st 1st 1st 1st
(1) Data as of 30-6-2010.
Asia. Gross income
(Million euros)
CITIC
2010
425
2009
228
Breakdown
Asiaorganic
75%
25%
BBVAcontinues
tostrengthenitsexpansioninChinaandLatinAmerica.
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Main entities o the Group
12 Executivesummary
Panama
345 employees18 branches
Ecuador
273 employees13 branches
Colombia
5,867 employees405 branches
Peru
5,715 employees257 branches
Chile
5,413 employees172 branches
Venezuela
5,509 employees314 branches
Paraguay
372 employees18 branches
Uruguay
200 employees
9 branches
Argentina
5,705 employees241 branches
PuertoRico
865 employees
36 branches
Bolivia
209 employees9 branches
Portugal
925 employees110 branches
London
Brussels
Paris
Dusseldorf
Frankfurt
Switzerland
Milan
Moscow
Mumbai
Sydney
Singapore
Taipei
HongKong
Tokyo
Seoul
BeijingShanghai
NewYork
Havana
Spain
28,416 employees3,024 branches
BBVA,agloballeader
TheUnitedStates
11,936 employees716 branches
Mexico
34,082 employees1,985 branches
BBVA Group countriesootprint
BranchesRepresentative offices
Foundations
Pension unds
MAP LEGEND
GEOGRAPHICALPRESENCE
Groups banks
Spain
BBVA
Finanzia
Uno-e
South AmericaBBVABancoContinental(Peru)
BBVABancoFrancs(Argentina)
BBVABancoProvincial
(Venezuela)
BBVABancomer(Mexico)
BBVAChile
BBVAColombia
BBVAPanam
BBVAParaguay
BBVAPuertoRico
BBVAUruguay
Rest o the Group
BBVACompass(UnitedStates)
BBVAPortugal
BBVASuiza(Switzerland)
Branches
BrusselsDusseldorf
Frankfurt
HongKong
London
Milan
NewYork
Paris
Singapore
Tokyo
Representative
offices
Beijing
Brussels
Havana
Moscow
MumbaiSeoul
Shanghai
Sydney
Taipei
Foundations
BBVAFoundation
BBVAMicroinanceFoundation
BBVABancomerFoundation
BBVABancoContinentalFoundation
BBVABancoProvincialFoundation
BBVABancoFrancsFoundationBBVACompassFoundation
Pension unds
BBVAPensiones(Spain)
AforeBancomer(Mexico)
AFPGnesis(Ecuador)
AFPProvida(Chile)
AFPHorizonte(Peru)
AFPHorizonte(Colombia)
PrevisinAFP(Bolivia)
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13BBVAin2010
Businessfocus:business
areasempowermentsupportedbyholdingunitstoassureintegeranduniiedmanagementwith
regardtodiferentrisks...
Loan s Deposit s Pen sion s
Spain 2nd 2nd 1st
Mexico 1st 1st 2nd
Argentina 3rd 2nd -
Bolivia - - 1st
Chile 5th
4th
1st
Colombia 4th 4th 3rd
Ecuador - - 1st
Panama 4th 4th -
Paraguay 3rd 3rd -
Peru 2nd 2nd 3rd
Uruguay(1) 2nd 2nd -
Venezuela 3rd 3rd -
(1)IncludesCrditUruguay.Scope:SpainandLatinAmerica.
Marketsharerankingin
maincountriesin2010
Strongfranchisesholdingtop-rankingpositionsineachandeverymainmarket.
Organizationchart
Chairman & CEO
President & COO GeneralSecretary
Legal,Tax,AuditandCompliance Serv ic es
BrandandCommunication
AccountingandConsolidation
CorporateStrategyandBusiness Development
Innovation and Technology
SpainandPortugal Mexico SouthAmerica TheUnitedStates WB&AM
Finance GlobalRiskManagement
HR and Services
Chairmans areas
Business units
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14 Executivesummary
In2010theglobaleconomyrecoveredfrom
themajorslumpof2009,withGDPpickingup
fromafallof0.6%toariseof4.8%.Thisigure
isnotfarfromlevelintheyearsimmediately
beforethestartofthecrisisintheSummer
of2007.However,theeconomicrecoveryis
notevenlyspreadacrossregions.Emerging
economies,particularlythoseinAsiaandLatin
America,haveshownthemostrobustprogress
andareturningintothemajordriversofglobal
growth.
Three elementshavegivenshapetothe
economicdevelopmentsinthedierentzones.
First,thefocusofattentionhascontinued
tobetheleveloftensioninthefinancial
marketsandthevariousmeasuresthatthe
authoritiesweretakingtocounterit.Butunlike
whathappenedin2009,in2010theorigin
anddevelopmentoftheproblemshasbeen
morelimitedinEuropeand,speciicallyinthe
governmentdebtmarkets,althoughtension
hasattimesspreadtootherregionsandother
assets.Thisdierencewasconsolidatedinthe
marketsbystimulatingactivitythroughiscal
policiesandguaranteeingthesustainabilityof
thepublicaccounts.Theperipheralcountries
intheEurozonehavebeenmostaected
Thefocusin2010hasbeenontheneedtoguaranteethesustainability
ofpublicaccounts.
2011:TheeconomicbackgroundandBBVApositioning
Theeconomicbackground
Theglobaleconomyrecoversin2010,buttherecoveryvaries
acrossregions.
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152011:TheeconomicbackgroundandBBVApositioning
inthisrespect,assomeofthemcombined
highdeicitlevelsintheirpublicaccountswith
reducedgrowthprospects.TheEuropean
stabilizationmechanismwaslaunchedinthe
springof2010.Greecewastheirstcountryin
whicharescueplanwasundertakenbythe
InternationalMonetaryFund(IMF)andthe
EuropeanUnion(EU).
Doubtsaboutthesustainabilityofthepublic
accountsinotherEuropeancountriesand
thestateofsomesegmentsoftheEuropean
inancialsystemgaverisetointensecontagion,whichresultedinade factoclosureofthe
markets.Theseriousnessofthesituationled
toawarenessoftheneedtoimplementirmer
measures.AlloftheEuropeangovernments
presentediscalconsolidationplans,which
weresubsequentlystrengthened,withtheaim
ofachievingadeicitof3%byaround2013.
Theseplansasawholehaveallowedsome
distinctiontobemadebetweendierent
assets.Theiscalconsolidationmeasures
wereaccompaniedbystructuralmeasuresin
thosecountriesmostaectedbyproblemsof
competitionandinancingneeds.
However,intheSummerof2010tension
returned,mainlyasaresultofreneweddoubts
regardingtheEuropeaninancialsector.The
authoritiesreactedwiththepublicationof
theinancialsystemsstresstestsundera
scenariothatwasunlikelybutofgreatimpact.
Theresultsconirmedthegoodhealthofthe
Europeaninancialsystem,whilethesolvency
problemshavebeenkeptwellincheck.Thesestresstestswereparticularlydemandingin
thecaseoftheSpanishinancialsector,both
intermsofcoverage(practicallytheentire
system)andtheseverityofthestarting
assumptions.Theygaveaddedcredibilityto
theBanksperformanceinSpain,demonstrated
thesoundnessofthesystemandmadeit
clearthatitincludessomeofthemostsolvent
inancialinstitutionsinEurope.Theseresults
undoubtedlyledtothegradualopening
upofthemarketandthesubsequentasset
dierentiation.
Towardstheendof2010tensionbeganto
reappear.Thistimeitwastheresultofvery
dierentproblemsinIrelandandPortugal.The
publicaccountsoftheIrisheconomywere
threatenedbythehugeinjectionsofcapital
thatitsinancialsystemhadneededdueits
declaredsolvencyproblems,whichhave
beenestimatedat30%ofitsGDP.Intheend,
Irelandneededanassistanceplanfromthe
IMFandtheEU.InthePortugueseeconomy,in
contrast,theweaknessoftheinancialsystem
ismoreaquestionofliquiditythansolvency,
butitspublicaccountsstillhadproblemsin
complyingwiththeobjectivessetout,while
doubtspersistedregardingtheeconomyspotentialforgrowth.Inaddition,tensionswere
heightenedbytheuncertaintyaboutthenew
Europeangovernancemechanismsandin
particularbythedetailsofthenewpermanent
mechanismforsovereigndebtrestructuring,
whichwillbeinplacefrom2013oncethe
currentframeworkapprovedinMayexpires.
The second elementthathasshaped2010
hasbeenthecyclicaldoubtsontheUnited
States economyandtheresponseinterms
ofeconomicpolicy,boththenewmonetary
expansionintroducedbytheFederalReserve
(Fed)knownasquantitativeeasing2(QE2)
andnewexpansionaryiscalpolicies.Theswift
recoveryshownbytheUnitedStates.atthe
endofthe2009loststeamatthestartof2010,
althoughgrowthwasmaintainedthroughout
theyear,makingtheinalrateclose,onaverage,
to3%in2010.Thislossofintensityrelected
weakprivatedemandastheiscalstimuliof
2008and2009werewithdrawn.Theresultwas
renewedfearsaboutadoublediprecession,thoughthisscenariohassubsequentlybeen
ruledoutbydataandactiononeconomic
policy.Evenso,therecoveryisstillextremely
limitedduetothreefactors.First,thegradual
lossofstrengthintherealestatemarketasthe
stimulusprogramsforhomebuyingexpired;
second,theweaknessofthelabormarket;and
inally,thehouseholddeleveragingprocess,
whichisstillunderway.TheUnitedStatesis
relativelyisolatedatpresentfrompressurein
favorofiscalconsolidation.Nevertheless,the
mainthrustofeconomicpolicyattheend
of2010camefromtheFed,whichinitiateda
newprogramofmonetaryexpansionthathas
initiallyledtoadownwardpressureoninterest
Theresultsofthestresstestshaveconirmedthegoodhealth
oftheSpanishinancialsystem.
Noreturnto
recessionisexpectedintheUnitedStates:
rather,agentleslowdown.
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16 Executivesummary
ratesandasigniicantdepreciationofthedollar.
Inanyevent,noreturntorecessionisexpected
inthefuture,butratheragradualslowdown
fromthehighratesofgrowthpostedattheend
of2009andthestartof2010.
Finally,2010wasalsonotableforthecollateral
eectsofrelaxedeconomic policiesinadvancedeconomies,inparticularmonetary
policies.Thisgaverisetogrowingdilemmas
inemergingeconomiesinAsiaandLatin
America.Theseeconomieshavebeenquickto
recovergrowthandoutputtopre-crisislevels
andhavehardlynoticedsignsofslowdown,
eventhoughtheauthoritieshaveintroduced
measurestopreventeconomicoverheating,
particularlyinthecountriesmostaectedby
thesteepincreasesofsomeassetprices.The
newmonetaryexpansionintheUnitedStates
hasintroducedanaddedcost,giventhat
thedollarsdepreciationrepresentsagreater
incentiveforassetswithgreaterrisk.Someof
theseeconomiesarefacinggrowingcapital
inlowsthatareputtingadditionalpressureon
exchangerates.Asaresult,somecountries
haveintroducedmeasurestolimitcapital
inlowsandslowdowncreditgrowth.
Evenso,growthinSouth Americacontinuesto
besound,withGDPfortheregionclosing2010
atagrowthrateabove5%.Privatedemandisreplacingtheeconomicpolicystimuliadopted
asthemainsourceofrecovery.Although
inlationismaintainingamoderatelyupward
trend,itisstillnotaproblem.InChina,the
latestoutputindicatorssuggestarenewed
GDPsurgeaccompaniedbyariseininlation.
Thishasledtoanincreaseinboththereserve
ratiosandinterestrates,inaclearsignof
commitmenttorebalancetheeconomywhich
neverthelessclosed2010withaGDPincrease
ofaround10.3%.
TheMexican economybeneitedfromthe
recoveryinforeigndemandintheUnited
Statesovertheirsthalfof2010.Inthesecond
halfoftheyear,Mexicoprovedresistantto
weakerforeigndemand,asthereducedpull
oftheU.S.economywascompensatedbya
surgeindomesticdemand.Asaresult,growth
rateseasedlesssharplythanexpected,with
2010growthendingaround5%.Inlation
closedatanall-timelowof4.4%asaresult
oftheappreciationofthepeso,moderate
internationalpricesandthelackofpressure
fromdomesticdemand.Nevertheless,the
monetarypausewillprobablyremainin
placeatleastthroughout2011.Finally,ina
globalinancialenvironmentfocusedoniscal
sustainability,thecommitmenttoabalanced
budgetisaparticularstrengthoftheMexican
economy.
InTurkey,theeconomyrecoveredin2010,
withagrowthof7.6%andinlationslightly
undertheCentralBankstarget.Atthesame
time,publicdebtreductionispickingupspeed.
Giventhissituation,theCentralBankhas
loweredtheoicialinterestrateandcontrolled
creditwithincreasesinthebanksshort-term
reserverequirements.
Long-terminterest rates,bothintheUnited
StatesandinEurope,havemovedconsistentlyinlinewiththeperceptionofthestrengthof
thecyclicalrecovery.Inthesecondandthird
quarters,thetrendwasdownward,while
inthefourthquarter,aspositivesurprises
ineconomicactivityreducedtherisksofa
double-diprecessionandarecoverybegan,
thetrendwasreversed.Thecontinuityof
lowoicialinterestratepoliciesindeveloped
countriesisexpectedtolimitupward
movementsonthepublicdebtyieldcurves
overthecomingmonths.
Interest rates
(Quarterlyandannualaverages)
2010 2009
Year 2010 4Q 3Q 2Q 1Q Year 2009 4Q 3Q 2Q 1Q
OicialECBrate 1.00 1.00 1.00 1.00 1.00 1.25 1.00 1.00 1.10 1.92
Euribor3months 0.81 1.02 0.87 0.69 0.66 1.22 0.72 0.87 1.31 2.01
Euribor1year 1.35 1.52 1.40 1.25 1.22 1.61 1.24 1.34 1.67 2.22
Spain10-yearbond 4.28 4.73 4.23 4.19 3.95 4.02 3.83 3.92 4.16 4.17
USA10-yearbond 3.19 2.86 2.77 3.47 3.70 3.24 3.45 3.50 3.30 2.70
USAFederalrates 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25
TIIE(Mexico) 4.91 4.87 4.91 4.94 4.92 5.89 4.93 4.90 5.89 8.00
AsiaandLatin
Americahaverecoveredtheirgrowthand
outputlevels.
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172011:TheeconomicbackgroundandBBVApositioning
consolidated,althoughthemostprobable
scenarioisforsomeslowdown.Therisein
globalGDPcouldbearound4.4%,barelybelow
theigurefor2010.Thisgrowthwillvary,andinmostadvancedeconomiesitwillbesubjectto
risksanduncertaintiesthathavestillnotbeen
clearedup.Amongtheadvancedeconomies,
theUnited Stateswillonceagainleadthe
growthtable.However,althoughsomefactors
stilllimitthegrowthofprivate-sectordemand
(therealestatesector,thelabormarketand
thedeleveragingprocess)andmakeitdiicult
forgrowthtoreturntosomethingclosetoits
potential,GDPisstillexpectedtogrowat3%
in2011.InEurope,althoughsomecountries
havehadsurprisinglygoodresults(particularly
Germany),amodestgrowthisexpectedof
around1.7%.TheSpanish economy,which
wassluggishin2010,couldbeginaprocessof
recovery,butitwillstillbeweakandinsuicient
tocreatejobs.ForecastssuggestaGDPgrowth
slightlybelow1%(-0.2%in2010).Progress
willbestronginemergingeconomies.Asia,
withChinaleadingtheway,willoncemore
betheregionwiththehighestgrowth,which
willremainover6%forAsiaasawhole,and
above9%inChina.Theseiguresarevery
positiveprovidedthattherisksofinlation
andoverheatingcanbereduced.Therecent
strengthofLatin Americawillbemaintained,
withagreatercontributionfromdomestic
demandinanenvironmentoffavorable
commodityprices.Growthover4%isexpected
fortheregionasawhole,andover4.3%for
Mexico.Finally,theTurkish economywill
continuebuoyantin2011,withagrowthof4.5%.
Onthe oreign exchangemarketsthedollars
trendwasformoderatedepreciationagainst
AsianandLatinAmericancurrenciesduring
theyear.ThiswasinterruptedinMayduetogreaterriskaversion(thesafe-haveneect),
butwasresumedinJuneandencouraged
afterthesummerasaresultoftheanticipation
ofgreaterassetpurchasesbytheFed(QE2).
Theeurodepreciatedsigniicantlyagainst
thedollarintheirsthalfoftheyear.Itwas
furtherweakenedbytheincreasedtension
intheEuropeanperipheryinthesecondhalf
oftheyear.Inall,asanannual averagethe
dollarappreciated5.2%againsttheeuro.This
combinationofaweakeuroandthestrength
oftheemergingcurrenciesagainstthedollar
resultedinagenerallyfavorableperformance
ofthecurrencieswiththegreatestweightin
BBVAsinancialstatements,withsigniicant
appreciationsinthecurrenciesofMexico,
Colombia,PeruandChile.Asaresult,the
eectiveexchangerateispositiveinayear-on-
yearcomparison,despitethedevaluationof
theVenezuelanbolivar.Withrespectto
year-end exchange ratestheVenezuelan
bolivardepreciatedduetothedevaluation
earlyonintheyear.Theothercurrencies
withanimpactontheGroupsbalancesheet
appreciated,sotheireectispositiveon
balancesheetitemsandbusiness.In2011the
forecastisforfurtherappreciationofthedollar
againsttheeuro,whileemergingcurrencies
haveroomforappreciationagainstthedollar.
Withrespecttoprospects or 2011,the
globaleconomicrecoveryisexpectedtobe
Exchange rates
(Expressedincurrency/euro)
Year-end exchange rates Average exchange rates
311210D% on
311209 311209D% on
311208 2010D% on
2009 2009D% on
2008
Mexicanpeso 16.5475 14.4 18.9222 1.6 16.7372 12.3 18.7988 (13.3)
U.S.dollar 1.3362 7.8 1.4406 (3.4) 1.3257 5.2 1.3948 5.4
Argentineanpeso 5.4851 1.3 5.5571 (11.5) 5.2686 (0.1) 5.2649 (10.6)
Chileanpeso 625.39 16.8 730.46 21.3 675.68 15.1 777.60 (1.9)
Colombianpeso 2,557.54 15.0 2,941.18 6.3 2,518.89 18.2 2,976.19 (4.0)
Peruviannewsol 3.7528 10.9 4.1626 4.9 3.7448 11.9 4.1905 2.4
Venezuelanbolivarfuerte 5.7385 (46.1) 3.0934 (3.4) 5.6217 (46.7) 2.9950 5.4
Theeconomicrecoverywillbe
consolidatedin2011,although
withacertainslowdown.
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18 Executivesummary
BBVA: a paradigm o recurrent earnings,sustainability and strength
Morethanthreeyearssincethestartofthecrisis,BBVAcontinuestoshowanexcellentcapacitytogeneraterecurrentandsustainable
earningsandanoutstandingstrengththatgivesittheabilitytotake
advantageofanyopportunitiesthatmayarise.BBVAisaparadigm
of:recurrency,sustainabilityandstrength:
Recurrent earnings and sustainability,becauseinan
environmentofgreatstress,BBVAiscapableofmaintaining
stableearningsandleadershipineiciencyandproitability.
Theseearningshavealsobeencompatiblewithamajoreort
inloan-lossprovisioningandahighlevelofinvestmentinthe
brand,franchises,peopleandtechnology.
Dierential strength,becausetheGrouphasaresistant,well
capitalizedbalancesheetwithrisksthatarewell-knownand
controlledandwithanadequateinancingstructure.Despite
thepressuresueredbytheinancialsystemasawhole,the
BBVAbalancesheethasbeencharacterizedbystrengthinits
risk,solvencyandliquidityindicators.Asaresult,BBVAhasnot
requiredanybail-outandhenceavoidedthegenerationofany
costtothesocietieswhereitoperates.
Inshort,BBVAcontinueswithitssuccessfulmanagementofthe
fourkeyleversofearnings,risk,capital andliquidity,underastrict
codeofconduct.Thishasbeenpossiblebecausethroughoutits
history,theBankhasdevelopedawinning business model that
isfocusedonthecustomerratherthantheproduct.Itisuniversal
anddiversiied,notonlyintermsofcustomerandproduct
segments,butalsobusiness(banking,insurance,pensions,asset
management,etc.)andgeographicalareas(Europe,Asiaandthe
Americas).
Inall,thepillarsoftheBBVAbusinessmodelareitscustomers,
distribution,simpleprocessesandtechnology.TheGroups
bankingmodelisbasedoncreatingvaluefromclose,lastingand
mutuallybeneicialrelationshipswithitscustomers.Itscustomer
baseisbroadanddiversiied,withalmost48millioncustomers
throughouttheworld.Itissupportedbyoneofthemostextensiveandcloselyintegrateddistribution networksontheplanetmaking
thebankaccessibleviaanychannelatanytime.Theemphasisis
onsimplicity,providingcustomerswithproductsandservicesat
thelowestcostandintheshortestpossibletime.Thisinvolvesa
newformofcustomerrelationsandaradicalchangeintheinternal
processesoftheOrganization:inhowthingsaredone.Finally,BBVA
continuestomakeamajoreortintheareaoftechnology.During
thecrisis,ithasinfactbeenoneofthefewbankstoincreaseitsrate
ofinvestmentintechnology,withapriorityonthoseprojectsthat
willtransformtheBank.
ThisbusinessmodelwillenabletheGrouptobepreparedfor
changesthatareonthehorizon,amongthemanewregulatory
frameworkandadistinctcompetitivescenario.
The new regulatory ramework
Thediicultsituationoverthelastthreeyearshasforcedthe
inancialsectortochangetherulesofthegametomakeitmore
transparent,probablysmaller,betterregulatedandwithamore
signiicantroleforthesupervisorybodies.
Therehasbeenamajorboosttotheregulatoryagendain2010,on
bothaglobalandregionalscale,withsigniicantprogressmadeon
anumberofdiversefronts:
BBVApositioning
Investment in "change-the-bank"BBVA Group vs. European Union average
(Percentage of total investment)
BBVA
European Unionaverage
2009
27.7
2006
31.8
2010
43.3
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192011:TheeconomicbackgroundandBBVApositioning
Macroprudential supervision
Macroprudentialsupervisionhasbecomeoneofthemajor
challengesforinancialregulationatagloballevel.Itaimstoreduce
thechanceofacollapseoftheinancialsystemasawholeby
mitigatingsystemicriskthroughthecombinationofexistingtools
andnewerones.Forexample,inEuropetheauthoritieshavetaken
amajorstepforwardbyapprovinganewinancialsupervisoryframeworkthroughthenewEuropeanSystemicRiskCouncil
(ESRC).StartingonJanuary1,2011,theEuropeanbankingsectorwill
haveanewsupervisor,theEuropeanBankingAgency,whichisin
chargeofoverseeingcompliancewithEuropeanUnionregulations
andmakingprogressinharmonizingthenationalregulatory
frameworks.TheUnitedStateshascreatedtheFinancialStability
OversightCouncilandMexicohassetupitsownFinancialStability
Council.
Amongtheimportanttoolsforthismacroprudentialpolicyare
thestress tests.InJuly2010,theCommitteeofEuropeanBanking
Supervisors(CEBS)coordinatedanexerciseusingthesetests.The
publishedresultswerewellreceivedbytheinancialmarketsvery
positively.Theyalsovaluedtheoutstandingrobustnessofthe
Spanishsector,withthetestcoveringthe95%oftheassetsofthe
inancialsystem,andthehighleveloftransparencyprovidedbythe
BankofSpain,thusenablingtheclearestpossiblediscrimination
betweenbanks.InthecaseofBBVA,thepublicationoftheresults
ofthestresstestsconirmedtheGroupsstrengthasoneofthe
soundestandsolventbanksinEurope.Thefactthattheexercise
willberepeatedin2011iswelcomedverypositivelybyBBVA.
New regulations
Thenewregulationstobeintroducedincludeaprocessof
internationalstandardizationonanumberoffronts,including
solvency,liquidity,leverage,transparencyandremuneration
policy.Theobjectiveistotransformtheinancialsystemintoone
wherebusinessismoresecureandrecurrentandlessprocyclical;
withgreaterriskcoverageandreturnsbetteradjustedtothe
risksassumed;moresolventandwithgreaterqualityofcapital,
transparencyandconsistency;andwithabetter,liquidityposition
andlessleveraged.
Basel III basicallyregulatessolvency,liquidityandleverage.With
respecttosolvency,inancialinstitutionswillhavetoincreasethe
qualityandquantityofcapitaltheyholdaccordingtotherisksthey
assumeintheiractivity.Inaddition,aprocyclicalprovisionmay
berequiredwhenthereisexcessivegrowthinaggregatelending.
Newliquidityrequirementshavebeenaddedtothesecapital
requirements.Theaimistoensurethatthebankshavesuicient
cashorequivalenttoovercomeaverysevereshort-termscenario,
withlesssevereconditionsinthelong-term.Italsoestablishes
leverage limits.
Allofthesemeasureshaveanintroductoryperiodfortheir
implementationbeginningin2013andendingin2018.Thebanking
industryisthusfacedwithafewyearsofmajorchallengesinwhich
toadapttothenewregulations.InthespeciiccaseofBBVA,the
GroupisinacomfortablesituationtocomplywiththenewBasel
IIIregulationsandfacefuturecrisisscenariosinamoresecure
position:
Itisamongthebestcapitalizedinternationalinstitutionsthanks
toitsquarter-by-quarterorganiccapitalgeneration.
Thispositionhasalsobeenstrengthenedafteritsrecentsuccessfulsharecapitalincrease.Withthisoperation,BBVA
hasoncemoredemonstrateditscapacitytobeproactive;
ithasanticipatedpossiblefuturecapitalincreasesbyother
banksdesignedtoensurecompliancewiththenewsolvency
requirements.
Ithasabalancesheetwithfullyknownandlimitedrisks.
Ithasacomfortableliquiditypositionandadequateleverage,
complyingwithallregulatoryrequirements.
Withrespecttothenewremuneration ramework,both
governmentsandregulatoryauthoritiesinthecountriesmost
aectedbytheinancialcrisishaveintroducedvariousmeasures
designedtoensurethatthevariableremunerationsystemsare
adaptedtothelevelofriskassumed.Speciically,withinitsprojectto
modifyDirective48/2006,theEuropeanCommissionhasdecided
toincludealltheFinancialStabilityBoards(FSB)Principlesfor
SoundCompensationPractices.Amongthemainnewpointsare
thattheBankofSpainwillcarryoutmonitoringandsupervision
duties,andsanctionthosebanksthatdonotcomplywiththe
regulationsasapproved.TheSustainableEconomybillalso
expresslymentionsthenewrequirementsregardingthequestion
ofremuneration.Speciically,recommendationsareincludedforremunerationpoliciesthatarecoherentwithaprudentandeicient
riskmanagementandthatincreasetransparencyandimprove
corporategovernancebyimposinggreatercontrolonexecutive
remuneration.Inthisrespect,itisimportanttopointoutthatBBVAs
remunerationsystemcomplieswiththerecommendationsofthe
proposedlaw.Itsvariablecompensationpolicyfortheexecutive
team,basedonaprudentandeicientriskmanagementand
withpaymentsontheshort,mediumandlongterm,complies
withtheserequirements.ForBBVA,thissystemrepresentsa
competitiveadvantage,asitoptimizestherelationshipbetween
valuegenerationinthemediumandlongtermandeicientrisk
management.
Finally,anotherofthefrontsonwhichprogressisbeingmadeis
thecreationofacrisis management and resolution ramework
forglobalbankswhenthesearenolongersolvent.Throughout
2010,theregulatorshavetakensigniicantstepsthroughthe
reformofDodd-FrankintheUnitedStates,andthroughaformal
EuropeanCommissionproposalinEurope,whoseinalversion
willbepublishedinthespringof2011.Thesemovesincludethe
aimtoimplementtoughercapitalrequirementsforsystematically
importantinancialinstitutions.Currently,BBVAalreadyhasmost
oftheinstrumentsproposedintheregulationsapproved,thuscontributingtothestabilityoftheinancialsystemswhereit
operatesandalsoanticipatingtheregulatorychallengesscheduled
forthecomingyear.Anyeicientsolutionmustcreatetheright
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20 Executivesummary
incentivesforachievinginancialstabilityata
globallevel.Simplisticmeasuresbasedonlyon
sizemustbeavoided,andvariousmitigating
factorsshouldbeincludedintheproposed
solutions:thebusinessmodel;thecomplexity
oftheorganizationalstructure;theexistence
ofsubsidiarieswithdecentralizedliquidity
management;theintensityofsupervision;thequalityofcorporategovernance;andstrong
marketinfrastructures.Thesefactorsallow
prudentbanksthatoperateinaccordance
withtheobjectiveofinancialstabilitytobe
distinguishedfromthosethatdonot.
The new competitive scenario
Inadditiontotheabove,thesectorwillhaveto
faceanothermoredeeptransformationthatwill
requireagreatinnovativeeortofthebanks.
Technological,socialandeconomicchangesthat
haveredeinedtheforminwhichotherindustries
operatewillalsobethedriversofchangeinthe
bankingsysteminthefuture.Inthemediumterm,
acompletelynewplayingieldisexpectedforthe
industrywithnewactorsmakinganappearance
(moretechnological,withnewproposals,more
lexible,etc.),newformsofbanking(newadded
valueproposals)andnewformsofrelationships
anddistribution.Thebanksthatunderstandand
adapttothischangewillbethosethatregisterthegreatestfuturegrowth.
BBVA is prepared to lead thisnew phase or the financialsystem
Wearepreparedforthisnewphasebecause
BBVAsmanagementhasalwaysbeen,andwill
alwaysbe,theembodimentofproactiveand
prudentpolicy.Prudent,becausealldecisions
havebeentakenbasedonexhaustiveandprecise
measurementofreturnsadjustedtotherisks
assumedorthatwillbeassumed.Thispremiseis
thebasisfortheconstructionofabalancesheet
withlimitedrisksandgreatstructuralstrength
andthatispreparedtocomfortablyassume
anyupcomingregulatorychanges.Atthesame
time,ithasenabledustoovercomethecrisis
withouttheimpactsexperiencedbymostofthe
inancialindustry(forexample,withoutexposure
totoxicassets).Andproactive,becausethis
capacitytoanticipateeventshasbeenkeytotheGroupsperformanceinthesediicultyears.Itwill
continuetobeinstrumentalinanincreasingly
globalanduncertainfuture.
BBVAalsohasagoodlevelofdiversiication.
Recurringearningsare,toalargeextent,the
resultofaportfoliothatisdiversiiedinterms
ofgeography,businessandcustomers.Today,
morethan58%oftheGroupsearningscome
fromAmericaandAsia,regionsinwhichBBVA
operatesthroughleadingfranchises.Thisallows
theGrouptotakebetteradvantageoftheopportunitiesineacheconomy.
Inlinewithitsproactivestance,BBVAnever
losessightofthemanagementoftheBanks
futureandtheneedtoanticipateevents.In
2010,theBankimplementednewprojectswith
theaimofstrengtheningitspositionafterthe
inevitablediscriminationthatwillresultfromthe
newenvironmentanditsdiiculties.Withthis
objective,ithasworkedonthreeelementsin
particular:
Anorganic growth plan,basedon
addressingamorecomplicatedenvironment
andanticipatingnewdemandsfrommore
demandingcustomers.
Consolidation o the business approach
in the dierent areas,byanticipatingand
accompanyingthechangeswithinthenew
schemeofglobaleconomicgrowth.
Maintenanceofthestructural strengthofits
balancesheet.
The BBVA ranchises
TheBBVAfranchisessharetheGroupsbusiness
andmanagementmodel.However,each
franchiseisatadierentstageofdevelopment
andatadierentmomentintheeconomiccycle.
Eachthus,hasdierentspeciicpriorities.
Spain and Portugalhasdemonstrated
agreatcapacityforanticipation,which
hasenabledittofarethecrisisinbetter
conditionsthanitscompetitors.Thisputs
BBVAinagoodpositiontotakeadvantage
oftheopportunitiesthatwillemergeina
marketundergoingarestructuringprocess,
wheremajordierenceswillemerge
betweenstrongbanksandtherest.The
launchofPlanUnohasbeenanextremely
importantstepinthecommercialstrategy
ofthearea,whichcontinuestobemoving
towardsanincreasinglycustomer-focusedorganization.In2011thefocuswillcontinue
tobethepersonalizedmanagementofthe
customerbase,increasingcustomerloyalty,
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212011:TheeconomicbackgroundandBBVApositioning
andthedevelopmentofnewchannelsfor
customerconveniencewiththepossibilityof
customization.
TheleadingpositionoftheBBVAfranchisein
Mexico willenableittotakefulladvantageof
theeconomicrecoveryandtheopportunities
forextendingbankingpenetrationinthecountry.ThiswastheaimoftheStrategic
GrowthPlan20102012launchedthis
year.Thisplanwillleadtoaqualitative
transformationofthebusinessmodel,service,
commercialeiciency,controlandmonitoring
ofactivityandrisk,andthustheBanks
proitabilityasawhole.Mexicoiscurrently
inapositiontoconstructthebankofthe
future,withabasicfocusoncustomersanda
dierentwayofrelatingtothem.
TheSouth Americanfranchiseisalso
expectedtocontinueitsgoodperformance,
asithasthroughoutthewholecrisis.Regional
leadershipinthisareamustbeusedto
reinforcethelocalpositioningofeachbank
withineachcountry.Themanagement
prioritiesfor2011willbefocusedonthe
customerbase(newcustomers,growth,
loyaltyandmarketshare),theprogresswith
thecustomerinsightandbusinessintelligence
models,increasedcommercialproductivity,
maintenanceofeiciencyinthepensionbusinessandcontinueddevelopment
andimprovementofamulti-channel
approach.Growthwillalsobebasedonboth
technologicalandmanagementinnovation.
The United States.ThisisoneoftheGroups
strategicmarkets.DeploymentofBBVAs
businessmodelandtechnologicalplatformis
beingsteadilyextendedinthisarea,withclear
operationalimprovementseveryquarter.Asa
result,theweightoftherelativecontribution
ofthisfranchisewillgraduallyincrease.A
dierentiationplanwillbeimplementedin2011
thatiscapableofsupplyingtheproductsand
servicesrequiredfortheneedsoftheBanks
dierentcustomersthroughtheappropriate
channels.And,ofcourse,technologywillplay
animportantroleinallofthis.
China and Asia.Theresultsintermsof
earningsandtheBankscommitmenttothe
regionhavebeguntoregisterin2010.Inthe
mediumtermthecontributionofthisareaisexpectedtoincreaseevenmorethankstothe
multipleinitiativesthatarebeingundertaken
inthearea.
Wholesale Banking & Asset Management
(WB&AM)willcontinuetoenhanceits
modelacrosstherestoftheareas,basedon
globalization,strongcustomerrelations,and
improvedproductcapacitiesandinnovation.
ThestrategicalliancewiththeCITICgroup
willcontinuetobestrengthenedintheAsian
regionbydevelopingthecollaboration
agreementsalreadyinplaceandsearching
fornewopportunities.
Afurtherstepwastakenin2010todiversify
BBVAsbusiness,inlinewiththenewframework
ofglobalgrowth,throughtheagreementto
acquire24.9%ofGarantiinTurkey.Thisgives
BBVAentryintooneoftheemergingmarkets
withthegreatestgrowthpotentialandoneof
thebestbankingfranchisesinthecountry.In
thisrespect,itisworthnotingthegoodearnings
iguresreportedbytheBankfor2010,withanet
attributableproitup6%year-on-yeartoall-time
high.Thedrivingforceofgrowthcontinuesto
betheexcellentperformanceofthelending
business,whichwasup31%,eventhoughasset
qualitywasnotnegativelyaected.Infact,the
NPAratioandriskpremiumimprovedoverthe
year.Garantistrengthensthebusinessportfolio
andBBVAsgrowthproile.Similarly,GarantibeneitsfromBBVAsexperienceinmarketand
productdevelopment.Inotherwords,BBVAs
experienceofsimilarsuccessfuldealsconcluded
inothermarkets(aboveall,LatinAmerica)gives
itthecapacitytoboostGarantisgrowthinthe
future.
BBVA always ocuses on itscustomers
Thesetimesofuncertaintyandchangedemand
thatallinancialinstitutionsthathopetoprevail
bereadilyabletoadapt.Butthisenvironment
alsorepresentsagreatopportunityforBBVA.It
hasimplementednumerousproactiveplansand
initiativestoensuretransformationandgrowth.
Butatleastonethingwillremainunchanged:our
commitment to our customers andthesociety
inwhichweoperate.Ouraimistosupportthem
eveninthemostdiicultcircumstances.This
appearssimple,buttodayitisonlywithinthe
reachofafewbanks.AtBBVAweareproudtobeoneofthesefew.
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22 Executivesummary
SpainandPortugal
Margins(Year-on-yearchange)
Keyratios
5.5%
39.0%
9.0%
46% 0.6%
8.0%
5.0%
Gross income
Eiciency
Net attributable profit
Coverage Risk premium
Operating income
NPA
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232011:TheeconomicbackgroundandBBVApositioning
Thekeyin2010:
Increasedmarketshareanddierentialperformancethroughouttheincomestatement.
Outlookfor2011:
Pressureonmargins,dierentialperformanceinrisksandincreasedmarketshare.Maximizeopportunities.
Increasedmarketshareinkeyproductsforcustomerloyalty:residentialmortgagesand
customerdeposits.
Diferentialincomeperformance.
Strictcontrolofoperatingcosts.
Positivetrendofriskindicators,asaresultoftheproactivemeasurestakenin2009.
BestprivatebankinSpainaccordingtoEuromoneyandTheBanker.
PlanUnolaunch,whichhasbeenaveryimportantstepintheareascommercial
strategy.
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24 Executivesummary
Mexico
Margins(Year-on-yearchange)
Keyratios
+0.5%
34.6%
+11.9%
152% 3.6%
3.4%
3.2%
Gross income
Eiciency
Net attributable profit
Coverage Risk premium
Operating income
NPA
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252011:TheeconomicbackgroundandBBVApositioning
Thekeyin2010:
Upwardtrendinearnings.Improvementinbusinessactivityandriskindicators.
Outlookfor2011:
Leadershipconsolidation,upwardtrendinearningsandreducedriskpremium.
Signiicantrecoveryinbusinessactivity.
Growthinmarketshareinstrategicsegments.
Solidearningsthatsetitapartfromtherest.
Majorimprovementintheriskpremium.
Soundliquidityandcapitalmanagement,withthelargest-eversubordinatedebtissueon
internationalmarketsbyaMexicanbank.
Numerousprizesandawards.InformationWeekmagazinenamesBBVABancomerone
ofcountrysmostinnovativecompanies,andLatinFinancenominatesittheBestBankin
Mexico.SegurosBBVABancomerischosenasbestinsurancecompanyinMexicobyWorld
Finance.
20102012StrategicGrowthPlanLaunch
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26 Executivesummary
SouthAmerica
Margins(Year-on-yearchange)
Keyratios
+9.7%
43.9%
+16.5%
130% 1.5%
+6.4%
2.5%
Gross income
Eiciency
Net attributable profit
Coverage Risk premium
Operating income
NPA
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272011:TheeconomicbackgroundandBBVApositioning
Thekeyin2010:
Excellentperformancethroughoutthecrisisinearnings,businessactivityandrisks.
Outlookfor2011:
Therecoverydynamismof2010willcontinueinbothactivityandearnings,withlowlevelsof
default,inahighlycompetitiveenvironment.
Strongbusinessactivity.
Signiicantprogressinearnings.
Costmoderation.
Comfortableliquidityandsolvencypositioninallunits.
Numerousprizesandawards,including:BancoContinentalandBancoProvincialwere
consideredbyGlobal FinanceasthebestbanksinPeruandVenezuela.BBVAColombiawas
recognizedastheBankoftheYearinthecountrybyThe Banker.Italsoreceivedanaward
asthebestColombianbankforgoodcorporategovernancepractices,socialresponsibility
andethicsfromLatin Finance.AndEuromoneynamedBBVAParaguayastheBestBankin
thecountryforthefourthyearinarow.
AcquisitionofCrditUruguayBanco.
Launchofmultiplegrowthanddiferentiationplans.
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28 Executivesummary
TheUnitedStates
Margins(Year-on-yearchange)
Keyratios
+0.1%
59.6%
+116.8%
61% 1.7%
7.0%
4.4%
Gross income
Eiciency
Net attributable profit
Coverage Risk premium
Operating income
NPA
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292011:TheeconomicbackgroundandBBVApositioning
Thekeyin2010:
ImplementationoftheBBVAbusinessmodel.Across-the-boardindicatorimprovement.
Outlookfor2011:
Conirmationoftherecovery,althoughstillslowintermsofbusinessactivity.Improvedbottom
line.
Gradualchangeinthemixoftheloan-booktowardslower-riskportfoliosandgreater
customerloyalty.
Positiveperformanceoflower-costdeposits.
Positiveperformanceinthemostrecurrentrevenues:netinterestincomeandfeeincome.
Improvedassetquality.
SuccessfulcompletionoftheintegrationofGuarantyinrecordtime.
TheincorporationoftheWB&AMbusinesscarriedoutinthecountryisyetanotherstepin
theconstructionoftheUSfranchise.
BBVACompassbecomesthesponsoroftheworldsmostimportantbasketballleague,the
NBA.
ImplementationofthebusinessTransformationPlan,aimedtoimplementamodelcustomer-centricmodel.
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30 Executivesummary
WholesaleBanking&AssetManagement
Margins(Year-on-yearchange)
Keyratios
+3.4%
28.5%
+11.4%
71% 0.3%
+3.5%
1.2%
Gross income
Eiciency
Net attributable profit
Coverage Risk premium
Operating income
NPA
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312011:TheeconomicbackgroundandBBVApositioning
Thekeyin2010:
Qualityofrevenues,strengtheningofthecustomerfranchiseandgrowingcontributionofAsia.
Outlookfor2011:
Growthinalllinesofbusinessandgeographicalareas,leveragedonitscustomermodel.
Focusonhighloyaltyandhighcreditqualitycustomers.
Positiveevolutionfrommorerecurrentrevenuesandbasedoncustomer.
Strongassetqualitythankstotheselectivecustomermanagementpolicy.
BBVAconsolidatesitspositionasoneofthekeybanksatagloballevelinanumberof
investmentbankingproducts.
Numerousprizesandawards,includingthenineDealoftheYearawardsfrom The Banker
magazinetoC&IB.
SigningofanagreementwithBankofBarodaforthecreationofacreditcardcompanyin
India.
CompletionoftheTransformationPlan,basedonfourpillars:globalization,closerrelations
withthecustomer,added-valueproductandservicedevelopmentandriskdiscipline.
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32 Resumenejecutivo32 Executivesummary
Riskmanagement
NPA and coverage ratio(Percentage)
4.3
2009
4.1
2010
57
62NPA ratio
Coverageratio
Overall risk premium(Percentage)
1.5
2009
1.3
2010
Recoveries(Million euros)
2009 2010
6,524
9,063
+39%
Net entries(Million euros)
2009 2010
8,279
4,144
61%
2,461
10,740
Anticipation
50%
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33332011:TheeconomicbackgroundandBBVApositioning
Thekeyin2010:
BBVAhasimprovedandstabilizeditsmainindicatorsofcreditquality
Signiicantprogressovertheyearinimprovingportfoliocreditquality:growthinlower-risk
segmentsandreductionofmoreproblematicportfoliosinallgeographicalareas.
ReductioninnewNPA.
StabilityinoutstandingNPAfollowingtheanticipatoryprovisionsmadeatyear-end2009.
TheNPAratiohasremainedundercontrolthroughouttheyear,andhasnotexceededthe
peakofDecember2009.
Theriskpremiumwasdownin2010ontheigurefor2009.Nevertheless,thecoverageratio
isstillimprovingsteadilyfromitslowinDecember2009.
Bybusinessarea:
SouthAmericaandWB&AMaremaintainingtheirNPAratioincheckandathistorically
lowlevels.
Mexicoisoutstandingintermsofthepositivetrendinallitsindicators.
SpainandPortugalandtheUnitedStateshavemanagedtostabilizetheirindicatorsafter
severalyearsofdeteriorationfollowingthe2007crisis.
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34 Executivesummary
Thedevelopmentofhuman capital isabasic
elementofthe21stcentury,whereemployee
knowledge,skillsandabilitiesarethemaintools
forcreatingbusinessvalue.OnekeytothesuccessofBBVAiswithoutdoubtthemenand
womenwhomakeupitshumanresources.The
professionalismofthealmost107,000 people
in31 countriesmakeitpossiblefortheGroups
dierentfranchisestooccupyleadingpositions
inpracticallyallofthemarketswhereitoperates.
Notonlypeople,butteamworkanddevelopment
ofleadershiparecriticalpillarsintheBanks
cultureofHumanResources,asBBVAconsiders
thattheresultobtainedasateamisgreaterthan
thesumofindividualeorts.Allofthemeasures
takenwithinourGrouparedeterminedbya
commoninterest:toboostourteamsinallof
theirdimensionsbyselectingthebestcandidates,
givingthemtheopportunityforprofessional
developmentandpromotingmanagementstyles
thatencouragethesenseofbelongingtothe
Group,themaximumexpressionoftheteam.
Thisiswhywehavemadeprofessional
developmentourhallmark.Inaknowledge-based
economy,whatdierentiatesorganizationsis
theirvisionofthefutureandtheircapacityto
createitbyusingthehumanfactor.
Theteam
Humancapital:akeytoolforacompanyssuccess.
AtBBVAwehavealways
believedthatbusinesseducationisacriticalcompetitiveadvantage.
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35Theteam
Throughout2010,theHumanResourcesareahas
continuedtoworkontwomajorlinesofaction:customer ocus,consideringcustomersintheir
broadestsense,fromtheindividualstotheareas
intheGroup;andtechnological inrastructure,
withtheaimofstrengtheningtheadvantage
representedbyamoreglobalandintegrated
managementofthefunction.Aspectssuchas
selection,traininganddevelopmentareclear
examplesofthecombinationofthesetwolines
ofaction.
Selection
Ourexperienceisbasicallyfocusedonnetworks
ofglobalscopetoextendouremployerbranding,
togetherwithothersthatsupportthesearch
forcandidates.BBVAalsohasitsownselection
portal,calledCampus Virtual de Empleo BBVA
(BBVAVirtualEmploymentCampus).
TheCampusgivesusglobal positioning,whileat
thesametimeprovidingcoverageforeachand
TheactiveonlinepresenceoftheSelectionunit
providesBBVAwithanewrelationshipmodelintherecruitmentprocess,inline
withnewtrends.
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36 Executivesummary
Intermsoftheselection process,aseriesoftests
identiiesthecandidatespotentialagainsttherequirementsdeinedbytheOrganizationand
thedegreetowhichtheyitBBVAscorporate
culture.Althoughtheprocessvariesaccording
tothetypeofcandidate(recentgraduate,
withpreviousexperience,senior,etc.),equal
opportunityisguaranteedthroughstandard
tests.Thismodelisalignedandconsistentwith
internalassessmentschemes,thusallowing
thecandidateswhoentertohaveaninitial
competenciesassessmentthatiscomparableto
thatgiventotherestoftheGroupsemployees.
Thismethodhelpsfocustheirprofessional
developmentfromtheirirstdaywiththeGroup.
everyoneofthedierentunits.Eachcountryhas
itsownstandthatpresentsthejoboersavailableatanytime;andcandidatesmayuploadtheirCVs
online.
Allofourchannelsarealsoconnectedtoour
CVmanagementsystem,sothatalltheCVs
areincorporatedintoasingle database,thus
optimizingworkingtimeforbothrecruitersand
candidates.
Finalcandidatef
ileCandidate screeningStage Evaluation Final assessment
Recruiting process stages
Recruitingportal
ePreselecePreselec
Technology usage
eValueTechnology
CVsreceived
Newhires
2010 240,409 10,569
2009 234,720 8,263
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37Theteam
specializationandglobal scope.Itisworth
highlighting,amongotherinitiatives,thefollowing:
FullintegrationofBBVACompassintothe
Groupstrainingmodel.
LaunchoftheGlobalTrainingProgramin
WB&AM.
Developmentof15programsinMandarinChinesetocovertheGroupsgrowing
presenceinAsia.
Selectionofnewtrainingprovidersof
maximumacademicprestigeatagloballevel,
suchasWhartonandtheLondonBusiness
School,inadditiontothosealreadyusedby
theGroup.
Consolidationoftheworldoftrainingin
BBVAsSharedServiceCenterforknowledge
andlearning.
Training
In2010thisdistinguishingfeaturetranslatedinto
4,564,426hoursoftrainingactivity,anincreaseof
16.0%on2009.
InBBVAtrainingismainlyfocusedonupdating
commercialandinancialknowledgeandtraining
forleadership,whichiscarriedoutthrougha
uniquemodelwithcoursesgiveninpartnership
withthebestbusinessschoolsintheworld.
Itisworthnotingthat48%oftheGroupstraining
in2010wascarriedoutthroughthee-campus,
theGroupsonlinelearningplatform.
Thetrainingmodelalsoevolvedin2010by
adaptingtotheGroupsgrowthchallenges
andobjectives,withanincreasingfocuson
TrainingistherelectionoftheGroupscommitmenttothedevelopmentofitsprofessionals.
Technology 4%
BBVA Group. Distribution of training hours by subject
Customer services78%
Languages6%
Skills 12%
BBVA Group. Percentage of hours of online trainingthrough the e-campus platform
14
2006
20
2007
25
2008
40
2009
48
2010
Training hours and training budget in BBVA Group
2009 2010 Variation (%)
Traininghours(millions) 3.9 4.6 16.0
Budget(millions) 32 37 17.0
Budget/hours 8.1 8.2 0.9
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38 Executivesummary
withthetaskofproposingandsupportingthe
implementationofinitiatives,aswellasmonitoringtheGroupspositiononthisissue.
Technologyisnotonlyanimportantpartofthe
selection,traininganddevelopmentprocesses;
italsoenablespeopletoworkwithinnew
mobility and flexibilityschemes.Throughout
2010dierenttypesofdistanceworkinghave
beentriedasameansofmakingprogressin
thesearchfornewmodelsthatprovideabetter
reconciliationoftheneedsoftheOrganization
andindividuals.Technologyalsoenablesaglobal
anduniformintroductionofotherprocesses
withintheGroup,suchasperformance
evaluationandskillsmanagement.Buttheuse
oftechnologytoprovideabetterservicetothe
employeeisalsoevidentinthedeploymentof
employee care services (SAE),whichcombine
variouschannels(callcenter,email,portals,etc.)
toprovideaswiftresponsetoanyqueryfrom
thestarelatedtohumanresourcespolicies
andprocesses.Currently,morethan95%ofthe
BBVAteamcantakeadvantageofthispersonal
serviceschannel.
Inaddition,aSatisaction Surveyiscarriedout
onlineeverytwoyearstodiscovertheopinionof
thepeopleinBBVA.Thesurveywaslastcarried
outinSeptemberandOctober2010,with76%
oftheworkforcetakingpart(comparedwith71%
intheprevioussurvey).Therehasbeenpositive
progressinthelevelofsatisfactionamongour
teams,withanincreaseofover4pointsinthe
employeeswhoareverysatisied.Themodel
usedhasbeendesignedwiththeaimofmakingBBVAthebestplacetowork,andthusputs
particularemphasisidentifyingpotentialareasfor
improvement.
Development
Ourhighlydevelopedhumanresourcespolicies,
processesandtoolsallowustoidentifythe
availableinternaltalentconsideredcriticalto
theGroupandmanageitselectively.Inaddition,
mostoftheinternalrecruitmentprocesseshave
beenpublishedthroughtheapntateplatform,
BBVAsjobpostingtool,inordertoguaranteethat
thebestprofessionalsoccupythemostimportant
functionsandtoboosttransparencyand
objectivityinteamdevelopmentandpromotion.
BBVAalsoaimstoeliminateallbarrierstothe
professionaldevelopmentofwomenintheGroup.
Tothisend,in2010continuedtomakeprogress
inthegender diversityprojecttoensurethat
thebestprofessionalsillthemostimportant
positionsineachofthedierentareas,unitsand
geographicalareas.Giventheimportanceofthis
project,astrategic committeehasbeensetup
TalentmanagementisacrucialelementinBBVA.
BBVA Group. Satisfaction survey
2010 results
2010
8%
19%
73%
2008
10%
21%
69%
Unsatisfied
Satisfied
Very satisfied
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39TheBBVAbrand
Weat BBVAunderstandthebrand tobethe
promisewemaketoourstakeholdersandthe
experiencestheyhavewithus.Itspositioningis
awayofactivatingourvision today:Workingtowardsabetterfutureforpeople.
TheBBVAbrandaimstotakeupapositionin
anewspaceofsustainabledierentiationnot
occupiedbyitscompetitors,guidingexperiences
andcommunicationdeliveredtoourstakeholders
atallthepointsofcontact.Thisspaceisthe
brandscorporatepositioningandconsistsoffour
values:customercentricity,simplicity,reliability
andglobality.
Simplicityisthevaluethatshoulddierentiateus
most.Itisournewwayofbeingcustomer-centric.
WewantcustomerstofeelthatBBVAisthebank
thatbeneitsitscustomersmostbymakingtheir
liveseasier.Simplicityistodayakeyconsumer
demand.Itisanessentialrequirementforabetter
future.
TheBBVAbrand
Simplicity,
theessenceofthe
BBVAbrandsnewpositioning.
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40 Executivesummary
First,brandmanagementhasbeenstrengthened,
withthecreationofanewdepartmentthat
includestheresponsibilitiesforbrandpositioning,
reputation,communicationofcorporate
responsibility,contentsandsponsorships,
andmanagementoftheBBVAbrandinsocial
networks.Thisensuresclosercollaboration
betweenallofthepeoplewhoworkonbrand
communication.
Second,workhasbeendoneonthenewbrand
positioning.Itisworthhighlightingthefollowing
actionscarriedout:
Designofanewvisual identitythat
aimsforasimpleanddistinctivestyle
ofcommunicationandhelpseasy
brandrecognitionacrossallapplications
andchannels.Thenewidentitywillbe
implementedover2011.
Communicationofthisnewpositioningto
alltheGroupsemployees(asofNovember
2010,84,641employeeswereawareofit).
BBVAconsidersthatemployeesarethebrand
themselves,astheyarethemaincreatorsof
experiences.
WorkshopswiththebusinessareasinSpain
andPortugal,Mexico,SouthAmericaand
theUnitedStatestogointotheimplications
ofthisnewpositioningonthedesignof
products,processesandchannels.
Alloftheseinitiativesmeanbuildingabrand
fromtheinside(principles,culture,behaviorand
processes)out(communication,visualidentity,
toneofvoice).FortheBBVAbrandtocontinueto
strengthen,whatemployeesdomustbeafaithful
relectionofwhattheysay.
Third,intheieldof advertisingandcontent,
BBVAhasextendedfromthesoccerterritory,
withsponsorshipinSpainoftheProfessional
SoccerLeague(throughtheBBVALeague
andtheAdelanteLeague)tothebasketball
territory:BBVAisnowtheoicialbankofthe
NBA,themostimportantbasketballleaguein
theworld.ThesetwosponsorshipsincreasetheBankscommitmenttosportandidentifyitwith
thevaluesofeort,improvement,teamworkand
fairplayinherentinsoccerandbasketball.The
agreementwiththeNBAincludestheWomens
NBAandtheNBADevelopmentLeague,inthe
UnitedStates,SpainandPuertoRico.Itisalso
worthnotingthatbothsoccerandbasketball
areaccessibletoallandthemostpopular
sportsacrosstheworld.ThisreinforcesBBVAspositioningasasimplebankthatisclosetoits
customers.Thesponsorshipstrategyisbased
onlivingthebrandbyincorporatingitintothe
content.Thismeans:
StrengtheningtheBBVAbrandnotoriety and
visibility,bothinSpainandacrosstheworld.
Reinforcingpositioning inthevalues
speciiedabovethatarecloselylinkedto
BBVA(teamwork,thespiritofimprovement,
eortandfairplay).
Andexploitingthesevaluescommercially
throughproductsthatcanattractnew
customersandbuildtheloyaltyofexisting
ones.
Accordingtothelastrankingpreparedby
MillwardBrownOptimorontheTop100Most
ValuableBrands,BBVAstoodatnumber56,
signifyingthatthevalueoftheBBVAbrandhas
grown3%.Furthermore,intheglobalrankingof
inancialbrands,BBVAisnowin13thplaceoutof20banks.Also,accordingtoSustainableAsset
Management(SAM),BBVAmaintaineditsglobal
BBVA,oicialsponsoroftheProfessionalSoccer
LeagueandtheNBA.
In2010,progress
wasmadeinthreeareas:
managementstructure,implementationofthenew
positioning,andaboosttosponsorships.
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41TheBBVAbrand
brandscorein2010,continuinganotheryearwell
abovetheaverageinitssector.
Oneoftheaspectsmosthighlyvaluedbyexperts
ispreciselyhavingthehomogenousmeasurement
toolsavailablethatenablemonitoringofhowthe
brandisperceivedintheprincipalcountriesin
whichtheGroupoperates.Theperceptionofthe
BBVAbrandhasstabilizedorimprovedinmost
countriesintermsofreputationandcontinues
tobeconsideredasolidbrandinallcountriesin
whichtheGroupispresent.
During2010,brandmanagementin
BBVAhasbeenveryhighlyvaluedbyexperts.
2010 2009 2008 2007 2006
Scope: SAM.
Brand management score
(1-100)
97
55
97
36
93
38
93
32
75
24
BBVA
Sectoraverage
BBVA brand awareness
(1100)
Spain Mexico Argentina Chile Peru Colombia Venezuela United States
2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010
Awareness 66.1 68.3 89.0 86.0 65.0 71.0 20.0 21.0 70.0 77.0 33.0 31.0 44.0 49.0 n.a. n.a.
Awareness(rank) 1st 1st 1st 1st 2nd 3rd 5th 5th 2nd 2nd 4th 4th 3rd 3rd n.a. n.a.
Reputationwithcustomers 73.6 72.2 67.5 66.9 73.6 72.5 71.2 70.9 71.0 74.5 61.6 66.1 71.0 73.7 68.9 73.2
Notes:ReputationdatafromFebruarytoSeptember2010.
Thedataforawarenessin2010arefortheJanuary-SeptemberperiodinallcountriesexceptSpain,wheretheyrunthroughtoJuly,andChile,datacollectedbetweenJulyandAugust.
Avariationbetweentwoyearsisonlystatisticallysigniicantwhenitisgreaterthanorequalto2.
Awarenessdatasource:AdvanceTrackingProgramme,MillwardBrown.
Reputationdatasource:RepTrack,ReputationInstitute.
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42 Executivesummary
TheaimofBBVAsCorporateResponsibilitypolicycontinuesto
betodeineandpromotebehaviorthatcreatesvalueforallofits
stakeholders(socialvalue),aswellasforBBVAitself(reputational
valueanddirecteconomicvalue).Itisessentialthatsuch
commitmentandbehaviorshouldexpressbothBBVAsvisionof
workingforabetterfutureforpeopleanditsprinciples,which
shouldrespondinthebestpossiblewaytotheexpectationsof
stakeholders(customers,employees,shareholders,suppliersand
society)whilereinforcingtheBanksbusinessstrategy.
Corporateresponsibility
Subjects Main CR objectives in 2010
Complianceobjectives 2010
verified by Deloitte Objectives or 2011
CRprinciplesandpolicies MaketwoappearancesbeforetheBoardofDirectors.
50%Reportregularly(atleastonceayear)totheBoardofDirectors.
Stakeholders MakingofaroadshowbyCRwithsustainabilityanalysts.
50%IncludeCRESG(environmental,socialandgovernance)issuesinInvestorsDay2011.
Promotesocialprojectswithinvolvementofshareholdersand/orcustomers.
50%CreateaninternalESGCommitteewithmembersfromInvestorRelations(IR),CRandCorporateGovernance.
FinancialLiteracy ValoresdefuturoinSpain:reach550,000childrenand2,800participatingcenters.
LaunchofValoresdefuturoinPortugal,with100,000childrentakingpart.ImplementationoftheAdelantecontufuturo(Forwardwithyourfuture)programincountriesinSouthAmerica.AdelantecontufuturoinMexico:reach240,000beneiciaries.
100%
ExceedatotalofonemillionbeneiciariesoftheGlobalFinancialEducationPlanandconcludeanagreementwith
PISAtopromoteinancialliteracy.ConsolidatetheiguresofcentersandbeneiciariesoftheValoresdefuturoprograminthe20102011academicyear(inSpain578,000studentsand3,060centers,andinPortugal100,000studentsand600centers).Reachatotalof400,000beneiciariesoftheprogramAdelantecontufuturoinMexico.
Financialinclusion OperationalpresenceoftheBBVAMicroinanceFoundationinArgentina,MexicoandCentralAmerica.
50%
ExtendtheBBVAMicroinanceFoundationscurrentcustomerbaseof620,000by20%.ExtendtheoperationalpresenceoftheMicroinanceFoundationfromthecurrent6countries(Argentina,Chile,Colombia,Panama,PeruandPuertoRico)to9.
Customerfocus DeineandimplementanewproceduretoincreasethetransparencyandclearlanguageusedintheGroupsadvertisingcampaig