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

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2.2.22. CONSOLIDATED STATEMENTS OF CASH FLOWS The indirect method has been used for the preparation of the consolidated statement of cash flows. This method starts from the entity’s consolidated net income and adjusts its amount for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments, and items of income or expense associated cash flows classified as investment or finance. For these purposes, in addition to cash on hand, cash equivalents include very short term, highly liquid investments subject to very low risk of impairment. The composition of component of cash and equivalents with respect to the headings of the consolidated balance sheets is shown in the accompanying consolidated cash flow statements. To prepare the consolidated cash flow statements, the following items are taken into consideration: • Cash flows: Inflows and outflows of cash and cash equivalents, the latter being short-term, highly liquid investments subject to a low risk of changes in value, such as balances with central banks, short-term Treasury bills and notes, and demand deposits with other credit institutions. • Operating activities: The typical activities of credit institutions and other activities that cannot be classified as investing or financing activities. • Investing activities: The acquisition, sale or other disposal of long-term assets and other investments not included in cash and cash equivalents. • Financing activities: Activities that result in changes in the size and composition of equity and of liabilities that do not form part of operating activities. 2.2.23. ENTITIES AND BRANCHES LOCATED IN COUNTRIES WITH HYPERINFLATIONARY ECONOMIES In accordance with the IFRS-EU criteria, to determine whether an economy has a high inflation rate the country's economic situation is examined, analyzing whether certain circumstances are fulfilled, such as whether the population prefers to keep its wealth or save in non-monetary assets or in a relatively stable foreign currency, whether prices can be set in that currency, whether interest rates, wages and prices are pegged to a price index or whether the accumulated inflation rate over three years reaches or exceeds 100%. The fact that any of these circumstances is fulfilled will not be a decisive factor in considering an economy hyperinflationary, but it does provide some reasons to consider it as such. Since the end of 2009, the Venezuelan economy is considered to be hyperinflationary as defined by the aforementioned criteria. Accordingly, as of June 30, 2010 and December 31, 2009, it was necessary to adjust the financial statements of the Group's subsidiaries based in Venezuela to correct for the effect of inflation. Pursuant to the requirements of IAS 29, the monetary headings (mainly loans and credits) have not been re-expressed, while the non-monetary headings (mainly tangible fixed assets) have been re-expressed in accordance with the change in the country's Consumer Price Index. The historical differences as of January 1, 2009 between the re-expressed costs and the previous costs in the non-monetary headings were credited to "Reserves” on the consolidated balance sheet for 2009, while the differences for 2009, and the re-expression of the income statement as of December 31, 2009 were recognized in the consolidated income statement for 2009. The effects of inflation accounting in Venezuela in the consolidated income statement corresponding to the six months ended June 30, 2010 were not significant. In January 2010, the Venezuelan authorities announced the devaluation of the Venezuelan bolivar with regard to the main foreign currencies and that other economic measures will be adopted. The effects of this devaluation in the consolidated income statement corresponding to the six months ended June 30, 2010 and on consolidated equity were not significant. 36
2.3 RECENT IFRS PRONOUNCEMENTS a) STANDARDS AND INTERPRETATIONS EFFECTIVE DURING THE SIX MONTHS PERIOD ENDED JUNE 30, 2010 The following modifications to the IFRS or their interpretations (IFRIC) came into force in the first half of 2010. Their integration in the Group has not had a significant impact on these interim consolidated financial statements: Second IFRS annual improvements project The IASB published its second annual improvements project, which includes small amendments in the IFRS. These are mostly applicable for the annual period starting after January 1, 2010. The amendments are focused mainly on eliminating inconsistencies between some IFRS and on clarifying terminology. IFRS 2 Amended - Share-based payment The IASB published an amendment to IFRS 2 - "Share-based payment" on how a subsidiary is to account, in its individual financial statements, for share-based payment arrangements of the group (for both creditors and employees) in the event the payment is made with another Group subsidiary or the parent company. The amendments made clarify that the entity receiving the goods and services in a share-based payment transaction must, in its financial statements, account for said goods and services in accordance with IFRS 2, regardless of which group entity makes the payment or of the payment being made in shares or cash. Under IFRS 2, the Group includes the parent company and its subsidiaries, in line with that stipulated in IAS 27 - Consolidate and separate financial statements. Furthermore, the contents of IFRIC 8 - "Scope of IFRS 2” and IFRIC 11- “Group and Treasury Share Transactions" are incorporated into IFRS 2, thus nullifying them. IFRS 3 Revised – Business combinations, and Amendment to IAS 27 - Consolidated and separate financial statements The amendments to IFRS 3 and IAS 27 represent some significant changes to various aspects related to accounting for business combinations. They generally place more emphasis on using the fair value. Some of the main changes are: acquisition costs will be recognized as expense instead of the current practice of considering them at the greater the cost of the business combination; acquisitions in stages, in which at the time of the takeover the acquirer will revalue its investment at fair value or there is the option of valuing the non-controlling interests in the acquired company at fair value, instead of the current practice of only valuing the proportional share of the fair value of the acquired net assets. For the six months ended June 30, 2010, no significant business combination has required the application of the modifications established in the IFRS 3 and IAS 27 standards. IAS 39 Amended – Financial Instruments: Recognition and valuation. Eligible hedged items The amendment to IAS 39 introduces new requirements on eligible hedged items. The amendment stipulates that: • Inflation may not be designated as a hedged item unless it is identifiable and the inflation portion is a contractually specified portion of cash flows of an inflation-linked financial instrument, and the rest of the cash flows are not affected by the inflation-linked portion. • When changes in cash flows or the fair value of an item are hedged above or below a specified price or other variable (a one-side risk) via a purchased option, the intrinsic value and time value components of the option must be separated and only the intrinsic value may be designated as a hedging instrument. 37
Page 1: BANCO BILBAO VIZCAYA ARGENTARIA, S.
Page 4 and 5: 27. COMMON STOCK...................
Page 6 and 7: Translation of consolidated financi
Page 8 and 9: Millions of Euros LIABILITIES AND E
Page 10 and 11: Millions of Euros June June Notes 2
Page 16 and 17: BANCO BILBAO VIZCAYA ARGENTARIA, S.
Page 18 and 19: The BBVA Group ICFR Model is summar
Page 20 and 21: 2.2. ACCOUNTING POLICIES AND VALUAT
Page 22 and 23: - Other financial instruments The f
Page 24 and 25: In the case of unsecured transactio
Page 26 and 27: 2.2.2. TRANSFERS AND DERECOGNITION
Page 28 and 29: The fair value of non-current asset
Page 30 and 31: 2.2.7. BUSINESS COMBINATIONS The re
Page 32 and 33: insurees, as the case may be, based
Page 34 and 35: • The discount rate used is deter
Page 36 and 37: 2.2.16. FOREIGN CURRENCY TRANSACTIO
Page 40 and 41: IFRIC 17 - Distributions of non-cas
Page 42 and 43: The Group’s activity is mainly lo
Page 44 and 45: Changes in the Group The most signi
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Page 48 and 49: The breakdown of the consolidated n
Page 50 and 51: Management & Asset Allocation, Risk
Page 52 and 53: Maximum exposure to credit risk The
Page 54 and 55: debtors includes mortgages, cash gu
Page 56 and 57: Policies and procedures for prevent
Page 58 and 59: December 2009 Less than 6 Months Pa
Page 60 and 61: 7.2 MARKET RISK a) Market Risk Mark
Page 62 and 63: Below are the average interest rate
Page 64 and 65: 7.4. RISK CONCENTRATIONS Below is p
Page 66 and 67: Determining the fair value of finan
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Page 72 and 73: 10.2. DEBT SECURITIES The breakdown
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Page 76 and 77: 12.3. EQUITY INSTRUMENTS The breakd
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Page 84 and 85: 17.1. ASSOCIATES The following tabl
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The main activity of the Group is c
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21.3 RECONCILIATION The reconciliat
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23. FINANCIAL LIABILITIES AT AMORTI
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Millions of Euros December 2009 Dem
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The item “Subordinated Liabilitie
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The breakdown of the commitments pe
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June 30, 2010 and December 31, 2009
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Post-employments Benefits in Spain
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Post-Employment Actuarial Hypothesi
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during which to increase the common
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Reserves Assigned to the Consolidat
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Millions of Euros Valuation Adjustm
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on equity (ROE) by each business; a
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39. INTEREST, INCOME AND SIMILAR EX
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39.3. AVERAGE RETURN ON INVESTMENTS
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41. SHARE OF PROFIT OR LOSS OF ENTI
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45. OTHER OPERATING INCOME AND EXPE
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linked to the movement of the Total
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48. PROVISIONS (NET) The net allowa
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The table below breaks down the mai
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The amount disposed of the loans gr
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BBVA executive team. It is to end o
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Commission (CNMV) announced the lif
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APPENDIX I. FINANCIAL STATEMENTS OF
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Millions of Euros LIABILITIES AND E
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Millions of Euros (Continued) June
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APPENDIX II. Additional information
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APPENDIX III. Additional informatio
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APPENDIX V. Changes and notificatio
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APPENDIX VI. Fully consolidated sub
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APPENDIX VIII. Breakdown of the mos
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Outsanding as of June 30, 2010 of S
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APPENDIX IX. Consolidated balance s
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Diluted earnings per share Early re
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Other financial assets/liabilities
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BANCO BILBAO VIZCAYA ARGENTARIA, S.
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The explanations of the changes in
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4. SUMMARIZED INTERIM CONSOLIDATED
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Spain and Portugal Millions of Euro
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Mexico Millions of Euros Mexico Jun
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South America Millions of Euros Sou
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The United States Millions of Euros
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Wholesale Banking and Asset Managem
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The changes in the principal headin
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Aggregating Tier I and Tier II, as
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BANCO BILBAO VIZCAYA ARGENTARIA, S.A. AND ... - BBVA

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