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

The explanations of the changes in the principal items in the accompanying consolidated income statements
are as follows:
• “Net interest income” for the six months ended June 30, 2010 totaled €6,937 million, an 1.2% increase
over the €6,858 million recorded for the six months ended June 30, 2009. This increase is mainly due to
pricing policies and the management of customer spreads, designed to transfer the greater cost of credit
and liquidity risk to asset operations, contain the cost of funds and optimize their structure, and select
products or segments with a greater risk-adjusted return. The increase is also due to the management of
structural interest-rate and liquidity risks in the euro balance sheet, characterized by anticipation and
governed by prudential criteria designed to generate a sound balance sheet, with a low level of leverage
and reduced risk profile.
• The balance of “Dividend income” for the six months ended June 30, 2010 was €257 million, a 3.4%
increase over the €248 million recorded for the six months ended June 30, 2009. This increase was the
result of the increased dividends received from Telefónica. It was partly offset by the fact that the
dividends of some Spanish companies, which were normally paid in January each year, were paid this
time in December 2009.
• The balance of “Share of profit or loss of entities accounted for using the equity method” for the
six months ended June 30, 2010 was €151 million, compared with €27million recorded for the six months
ended June 30, 2009, mainly due to the increase in the contribution of China National Citic Bank
(CNCB).
• The balance of “Net fees and commissions” the six months ended June 30, 2010 was €2,272 million,
a 4.2% increase over the €2,181 million recorded for the six months ended June 30, 2009, due stable
fees for mutual funds and pensions, and the increase of fees linked to banking services and asset
custody.
• The balance of “Net gains (losses) on financial assets and liabilities and net exchange
differences” for the six months ended June 30, 2010 was €1,123 million, a 40.6% increase over €799
million recorded for the six months ended June 30, 2009, due mainly to the positive effect of the
devaluation of the bolivar on some positions and the management of COAP portfolios to adjust their
duration and take advantage of market volatility in sovereign debt markets to make gains through the
sale of certain financial instruments.
• The balance of “Other operating income and expenses” for the six months ended June 30, 2010 was
€140 million, a 47.9% decrease of €268 million recorded for the six months ended June 30, 2009, mainly
as a result of the adjustment for the hyperinflation in Venezuela. There was also an effect from the
provision to deposit guarantee funds made in various countries in which the Group operates.
As a result, the balance of “Gross income” for the six months ended June 30, 2010 was €10,880 million, a
4.8% increase from €10,380 million for the six months ended June 30, 2009.
The balance of "Operating expenses” ” for the six months ended June 30, 2010 amounted €4,380 million,
a 7.1% increase compared with €4,088 million for the six months ended June 30, 2009, partly due to
exchange-rate effects. This increase was also the result of greater rental costs following the sale and
leaseback operation on properties in Spain carried out in September 2009; and on the positive outlook for
the Group's business, which has maintained the transformation plans and boosted investment in growth
plans that are being implemented in different units.
As a result of the foregoing, the "Operating income" for the six months ended June 30, 2010 was €6,500
million, a 3.3% increase from the 6,292 million recorded for the six months ended June 30, 2009.
• The balance of “Impairment losses on financial assets (net)” for the six months ended June 30, 2010
was €2,419 million, a 24.4% increase over the €1,945 million recorded for the six months ended June
30, 2009, mainly as a result of increased loan-loss provisions determined collectively which have been
made to increase the Group's coverage.
• The balance of "Provisions (net)” for the six months ended June 30, 2010 was €270 million, an
increase of 76.8% on the €153 million for the six months ended June 30, 2009, mainly due to greater
provisions determined collectively for contingent exposures and commitments.
• The balance of “Other gains (losses)" for the six months ended June 30, 2010 was a loss of €160
million, a fall of 16.7% on the loss of €192 million for the six months ended June 30, 2009. This figure
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