BBVA in 2012

“ Our principles, people and innovation, combined witha diversified business model and very sound fundamentals,place BBVA at the start of a new profit growth cycle in 2013”BBVA’s earnings in 2012 show that our model, based on balanced diversification and differentialmanagement, works.Gross income, i.e. the Group’s revenue, grew 12.1% in 2012, exceeding that of our peer group. 56% ofthe revenue was generated in emerging markets and 44% in developed economies. Looking towardthe future, we are in a unique position as a result of our presence in regions that are leading globalgrowth, such as Mexico, Turkey, South America and China.As for expenses, as we have always done, we are prudent in their management, adapting their growthto the needs in each market. In 2012 they rose 10.8%, less than the 12.1% increase in revenue. Of thisincrease, 2.8% is related to the change in the perimeter, basically owing to the consolidation of Unnim,3.0% to the exchange-rate effect, and 5.1% to growth in emerging markets, due to our investment andexpansion plans. In contrast, in the more developed markets, expenses have been contained and fellby 0.1%.As a result of the increase in revenue and proper cost control, BBVA maintains a position ofleadership in efficiency, with a 48.1% ratio as of 31-Dec-2012, and generated very significant operatingincome of €11,655m, which is up 13.3% on 2011.This operating income has enabled us to absorb in full the significant loan-loss and real-estateprovisions for 2012, which amounted to €9,518m, without having to sell strategic assets, resort to oneoffitems or change our business strategy.Thus, in 2012 the Group generated a net attributable profit of €1,676m in a very difficult environment.This figure highlights that BBVA has a well-balanced business model, with a high capacity forgenerating recurring revenue and future growth potential.As regards to risks, they are under control and well hedged. As of December 31, 2012, the Group’s NPAratio stood at 5.1% and the coverage ratio was up 11 percentage points during the year to 72%, whichcompares very favorably with our peers.Liquidity has been no problem for BBVA in 2012, despite the moments of tension seen in the markets.We were able to issue nearly €14,000m and we reduced the liquidity gap by an additional €23,000mon the euro balance sheet, improving even further its structure. In 2013 we were the first to tap themarket with several issues, one for 10-year covered bonds, the first one of its kind by a Spanish issuersince 2007.As for solvency, in 2012 we generated 45 basis points of capital, complying with the newrequirements, passing the stress tests, maintaining our dividend and without having to sell strategicassets.In short, high-quality earnings, above our peer group, in a very difficult environment, and growingrevenue that enabled us to comfortably absorb the loan-loss provisions, generate earnings andcapital, and protect our dividends, while maintaining risks under control and improving our fundingstructure.As you can see, very sound fundamentals which, combined with the improved prospects for Spainand the easing of the uncertainties surrounding the euro, are driving a gradual upward revision of theBBVA share-price targets.6 Executive summary