Balance Sheet at 31 December 2010 of BBVA

Translation of financial statements originally issued in Spanish and prepared in accordance with generally accounting principles Spain
(See Note 1 and 54). In the event of a discrepancy, the Spanish-language version prevails.
The changes in fair value after the initial recognition, for reasons other than those included in the preceding
paragraph, are described below according to the categories of financial assets and liabilities:
- “Financial assets held for trading” and “Other financial assets and liabilities designated at fair
value through profit or loss”
Assets and liabilities recognized under these headings in the accompanying balance sheets are valued
at fair value.
Changes arising from the measurement at fair value (gains or losses) are recognized at their net value
under the heading “Net gains (losses) on financial assets and liabilities” in the accompanying income
statements (see Note 38). On the other hand, valuation adjustments by changes in foreign exchange
rates are recognized under the heading "Net exchange differences" in the income statements.
The fair value of the standard financial derivatives included in the held for trading portfolios is equal to
their daily listed price in an active market. If, under exceptional circumstances, their listed price cannot
be established on a given date, these derivatives are measured using methods similar to those used to
value over-the-counter (“OTC”) derivatives.
The fair value of OTC derivatives ("present value" or "theoretical price") is equal to the sum of future
cash flows arising from the instrument, discounted at the measurement date; these derivatives are
valued using methods recognized by the financial markets: the net present value (NPV) method, option
price calculation models, etc. (see Note 6).
- “Available-for-sale financial assets”
Assets and liabilities recognized under this heading in the accompanying balance sheets are measured
at fair value.
Changes arising from the measurement at fair value (gains or losses) are recognized temporarily, at the
net amount, under the heading “Valuation adjustments - Available-for-sale financial assets” in the
accompanying balance sheets.
Valuation adjustments arising from non-monetary items by changes in foreign exchange rates are
recognized temporarily under the heading “Valuation adjustments - Exchange differences” in the
accompanying balance sheets. Valuation adjustments arising from monetary items by changes in foreign
exchange rates are recognized under the heading “Net exchange differences” in the income statements.
The amounts recognized in the headings “Valuation adjustments - Available-for-sale financial assets”
and “Valuation adjustments - Exchange differences” remain in the equity until the asset is derecognized
from the balance sheet or until the existence of an impairment loss is determined, at which time those
amounts are recognized under the headings “Gains or losses on financial assets and liabilities” (Note 38)
or “Net exchange differences” in the income statement.
The net impairment losses in the available-for-sale financial assets during the period are recognized
under the heading “Impairment losses on financial assets (net) – Other financial instruments not at fair
value through profit or loss” in the income statements (Note 43).
The gains from sales of other equity instruments considered strategic investments registered under
“Available-for-sale Financial Assets” are recognized under the heading “Gains (losses) in non-current
assets held-for-sale not classified as discontinued operations” in the income statement, even though
they had not been classified in a previous balance sheet as non-current assets held for sale, as indicated
in Rule 56 of Circular 4/2004 and subsequent amendments (Note 46).
- “Loans and receivables”, “Held-to-maturity investments” and “Financial liabilities at amortized
cost”
Assets and liabilities recognized under these headings in the accompanying balance sheets are
measured at “amortized cost” using the “effective interest rate” method, as the Bank has the intention to
hold such financial instruments to maturity.
Net impairment losses of assets under these headings arising in a particular year are recognized under
the heading “Impairment losses on financial assets (net) – Loans and receivables” or “Impairment losses
on financial assets (net) – Other financial instruments not valued at fair value through profit or loss” in the
income statement for that year (Note 43).
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