Fixed Income Presentation / 1 Fixed Income Investors Presentation 2Q17
Fixed Income Presentation / 2 Disclaimer This document is only provided for information purposes and does not constitute, nor should it be interpreted as, an offer to sell or exchange or acquire, or an invitation for offers to buy securities issued by any of the aforementioned companies. Any decision to buy or invest in securities in relation to a specific issue must be made solely and exclusively on the basis of the information set out in the pertinent prospectus filed by the company in relation to such specific issue. No one who becomes aware of the information contained in this report should regard it as definitive, because it is subject to changes and modifications. This document contains or may contain forward looking statements (in the usual meaning and within the meaning of the US Private Securities Litigation Reform Act of 1995) regarding intentions, expectations or projections of BBVA or of its management on the date thereof, that refer to or incorporate various assumptions and projections, including projections about the future earnings of the business. The statements contained herein are based on our current projections, but the actual results may be substantially modified in the future by various risks and other factors that may cause the results or final decisions to differ from such intentions, projections or estimates. These factors include, without limitation, (1) the market situation, macroeconomic factors, regulatory, political or government guidelines, (2) domestic and international stock market movements, exchange rates and interest rates, (3) competitive pressures, (4) technological changes, (5) alterations in the financial situation, creditworthiness or solvency of our customers, debtors or counterparts. These factors could cause or result in actual events differing from the information and intentions stated, projected or forecast in this document or in other past or future documents. BBVA does not undertake to publicly revise the contents of this or any other document, either if the events are not as described herein, or if such events lead to changes in the information contained in this document. This document may contain summarised information or information that has not been audited, and its recipients are invited to consult the documentation and public information filed by BBVA with stock market supervisory bodies, in particular, the prospectuses and periodical information filed with the Spanish Securities Exchange Commission (CNMV) and the Annual Report on Form 20-F and information on Form 6-K that are filed with the US Securities and Exchange Commission. Distribution of this document in other jurisdictions may be prohibited, and recipients into whose possession this document comes shall be solely responsible for informing themselves about, and observing any such restrictions. By accepting this document you agree to be bound by the foregoing restrictions.
Fixed Income Presentation / 3 Index 01 05 BBVA’s Strengths & MREL 1H17 Financial Highlights 06 Liquidity & Funding 02 Diversified Footprint 07 Transformation Strategy 03 Asset Quality APPENDIX BBVA Group 1H17 Profit & Loss 04 Capital Capital Base: BBVA Group & BBVA S.A. EBA’s Stress Test Debt Issuances – 1H17 Amortized notes – 1H17
Fixed Income Presentation / 4 01 BBVA’s Strengths & 1H17 Financial Highlights
Fixed Income Presentation / 5 Fixed Income Presentation / 5 BBVA’s Strengths Resilience and Low Earnings Volatility Diversified footprint ( € bn, %) 4.2% 3.8% (1) 3.7% 3.7% 3.4% 3.3% 3.2% 3.0% 3.0% Prudent risk profile 2.8% Pre-provision profit / RWAs 12.3 11.9 11.9 11.1 11.4 10.6 10.5 10.4 10.2 Sound capital and 6.4 liquidity position Pre-provision profit Provisions and -2.0 impairments -3.0 -4.1 Delivering on our -4.6 on non-financial -5.2 -4.8 -6.1 -6.3 -7.0 assets transformation -9.1 strategy 2008 2009 2010 2011 2012 2013 2014 2015 2016 1H2017 (1) Annualized Pre-provision profit for comparison purposes Profits generation all through the crisis years
Fixed Income Presentation / 6 1H17 Financial Highlights Core revenues growth Cost control Decreasing impairments 2Q17 NET ATTRIB. PROFIT 1,107 € m Gross income vs. Op. Expenses Net interest income and fees Total Impairments ( YoY, %, constant) ( € m constant) (Financial Assets and RE) +1.0% vs. 2Q16 ( € m constant) 11,260 2,194 10,310 +9.2% (constant € ) 2,020 Gross 7.8 7.2 1H17 NET ATTRIB. PROFIT 6.4 Income -7.9% 2,306 € m 2.2 Operating Expenses +30.8% vs. 1H16 1H16 1H17 1H16 1H17 12M16 6M17 (constant € ) Sound asset quality Strong capital & liquidity ratios Delivering on our transformation NPL COST COVERAGE CET1 LEVERAGE RATIO OF RISK RATIO RATIO Digital sales 22 % 4.8 % 0.9 % 71 % (Fully-loaded) (Phased-In) (Fully-loaded) Jun.17 (1) 11.10 % 11.76 % 6.8 % LIQUIDITY COVERAGE RATIO # 1 Mobile banking LCR > 100 % app in the world (2) (BBVA Group and all subsidiaries) (1) % of total sales YtD, # of transactions. (2) According to 2017 Forrester Research report, “Global Mobile Banking Benchmark”.
Fixed Income Presentation / 7 02 Diversified Footprint
Fixed Income Presentation / 8 Fixed Income Presentation / 8 Well diversified footprint with high growth prospects Higher Growth Prospects Breakdown by Business Area (1) (% GDP growth, BBVA Research) Total Assets Developed Markets 2.9 2.8 (Jun.17) 1.9 Rest of 1.6 Eurasia South Positive macro outlook 2.8% America BBVA’s Footprint (3) 10.7% Eurozone + UK Well positioned to benefit Turkey Spain (2) 2017e 2018e 12.3% 48.0% from interest rates hikes (3) BBVA’s footprint GDP growth: weighted by each country contribution to Group’s gross income. Leadership positioning Mexico 14.5% 62% Market share (4) (in %) and ranking US 11.7% Developed US (SUNBELT) #4 Emerging Markets Markets 6.6% SPAIN #2 TURKEY #2 14.2% 11.6% Gross Income (1H17) Leading position in main Rest of Eurasia MEXICO #1 markets South 2.0% 23.4% America Spain (2) 17.8% 25.2% Resilient franchises despite SOUTH AMERICA #1 challenging environments (EX BRAZIL) Turkey US 10.2% 15.8% 11.6% 39% Developed (4): Spain based on BoS other domestic sector and public sector loans (Jun.17), Mexico Markets ranking based on AEB and CECA (Apr.17); Mexico data as of May.17 (CNBV); South 27.7% America data as of May.17; ranking considering only our main peers in each country; USA : SNL data as of Jun.16; market share and ranking by deposits considering only (1) Excluding Corporate Center. (2) Includes the areas Banking Texas and Alabama; Turkey : BRSA performing loans; data for commercial banks as of activity in Spain and Non Core Real Estate. Jun.17;ranking only considers private banks.
Fixed Income Presentation / 9 Fixed Income Presentation / 9 Business areas in 1H17 SPAIN Banking activity MAIN MESSAGES Slight loan growth QoQ (+0.7%) thanks to SMEs and Consumer, NET ATTRIBUTABLE PROFIT NPL RATIO Jun.17 1H17 offsetting deleverage in mortgages 5.7% vs. 5.8% Dec.16 670 € m NII excluding CIB remains stable in 1H17. Lower contribution from CIB COST OF RISK Jun.17 (YtD) due to Global Markets and securities portfolio sales 0.34% vs. 0.32% Dec.16 (YtD) +8.0% vs. 1H16 Good trends in fees and insurance Cost and impairments reductions as the main P&L drivers Non Core Real Estate Sound asset quality indicators with NPLs decreasing by 8% YoY NET ATTRIBUTABLE PROFIT NET EXPOSURE 1H17 ( € bn) -14.2% 10.2 Good market trends 9.3 8.8 -191 € m Other RE 1.1 0.6 RE assets 0.6 -48.5% Delivering on our strategy: reducing exposure using all available sources owned Foreclosed assets 5.3 5.0 assets -7.5% 4.9 -7.6% vs. 1H16 RE developer 3.8 3.7 loans 3.3 -13.9% USA constant € Dec-16 Mar-17 Jun-17 Profitable growth strategy, focusing on growing consumer loans (+1.2% qoq) NPL RATIO Jun.17 NET ATTRIBUTABLE PROFIT 1H17 1.3% vs. 1.5% Dec.16 Strong growth in core revenues, leveraging NII 297 € m Contained costs. Room for improvement in efficiency COST OF RISK Jun.17 (YtD) 0.38% vs. 0.37% Dec.16 (YtD) Significant reduction of impairments and provisions. CoR evolution better +62.4% vs. 1H16 than expected DFAST & CCAR results prove the strength of our capital and risk processes
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