BANCO BILBAO VIZCAYA ARGENTARIA, S.A. AND ... - BBVA

BANCO BILBAO VIZCAYA ARGENTARIA, S.A. AND COMPANIES COMPOSING THE BANCO
BILBAO VIZCAYA ARGENTARIA GROUP
MANAGEMENT REPORT ON THE SIX MONTHS PERIOD ENDED JUNE 30, 2010
1. THE BBVA GROUP
Banco Bilbao Vizcaya Argentaria, S.A. (“the Bank” or “BBVA”) is a private-law entity governed by the rules
and regulations applicable to banks operating in Spain and is the Parent of the financial group whose object
is to engage directly or indirectly in activities, transactions, agreements and services relating to the banking
business. The Bank conducts its business through branches and offices located throughout Spain and
abroad.
The Banco Bilbao Vizcaya Argentaria Group (“the Group” or “the BBVA Group”) is an internationally
diversified financial group with a significant presence in traditional retail banking, asset management, private
banking and wholesale banking.
The financial information included in this management report is presented in accordance with the criteria
established by the International Financial Reporting Standards endorsed by the European Union (“IFRS-EU”)
and taking into account Bank of Spain Circular 4/2004 and its subsequent amendments.
2. THE ECONOMIC BACKGROUND FOR THE SIX MONTHS ENDED JUNE 30, 2010
The macroeconomic data published for the six months ended June 30, 2010 confirm that although the
recovery is underway worldwide, there is still much uncertainty and the risk balance is weighted slightly to
the downside. The Greek crisis and its transfer to other European sovereign debt in recent months has
increased tension on the money and debt markets. The impact on the real economy, reflected in a
moderation in the indices of consumer and business confidence, has yet to be fully felt. In addition, the
implementation of fiscal adjustment and budget plans in a number of developed economies with high levels
of debt and deficit, and tough monetary programs in emerging areas with problems of high growth levels and
price tensions, could have a short-term effect on their capacity to grow and generate employment.
In the United States, following quarterly GDP growth of 0.7% in the first quarter of 2010, the indicators of
economic activity and, to a lesser extent, those of demand, remain relatively positive. The labor market is still
weak, but it is beginning to show signs of recovery, with the unemployment rate falling. Core inflation has
been moving down since the end of last year. This gives some room for maneuver to the Federal Reserve,
whose tone appears even more cautious as a result of the problems on the European debt markets.
In contrast, in Europe the pace of recovery is considerably gentler than in the United States. The slight GDP
growth in the euro zone in the first quarter of 2010 confirms a scenario of slower growth than in the American
economy. However, the indicators of economic activity, particularly in the industrial sector, were relatively
more positive in the second quarter of 2010.
The Mexican economy is benefiting from the recovery in external demand in the United States, as this is the
main destination of its exports. Growth forecasts for 2010 suggest this positive trend will continue.
Finally, economic activity in South America is continuing to strengthen as a result of the increase in foreign
and domestic demand. More recently, domestic demand is also rising as a result of notable growth in credit.
However, there are some risks, particularly those derived from an excessively high rate of growth and an
upturn in prices. This suggests that the central banks in the region, may follow the path of some Asian
economies and start a gradual move towards tougher monetary policies to ensure a more sustainable rate of
growth, as is already the case in Brazil and Chile.
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