BBVA in 2012

Significant ratios(Percentage)Spain31-12-12 31-12-11 31-12-10Efficiency ratio 41.5 44.0 40.5NPA ratio 6.9 4.8 4.8NPA coverage ratio 67 44 44Risk premium 2.66 0.78 0.60Spain highlights in 2012• Favorable positioning in the sector’s restructuring.• Overall increases in market share.• Positive performance of customer deposits.• Strong operating income.• Increased impairment of assets related to the real-estate sector.• BBVA Spain named best global bank by The Banker.Definition of the areaThis area includes BBVA Group’s businesses in all the segments it manages in the country. FromJuly 27 2012, it also includes the activities of Unnim Banc, S.A.Spain serves 9.8 million customers through its 31,697 employees and a solid distribution network,with 3,518 branches and 5,995 ATMs.Macroeconomic and industry trendsThe Spanish economy is in the midst of a far-reaching adjustment process of its activity andemployment, a process which in the most likely scenario will extend to the first half of 2013 and willreduce GDP by 1.3%, in 2012 and by 1.1% in 2013. In 2012, the Government has implemented a broadagenda of structural reforms focused mainly on making the economy more competitive. Some ofthe most important reforms are as follows:• A labor reform to make the job market more flexible and stimulate the growth of the mostdynamic companies and sectors.• An unprecedented fiscal adjustment to enable the deficit to be reduced to 3% of GDP in 2014.• Public administrations’ suppliers payment mechanism which has meant a liquidity injection intothe Spanish productive system.• Lastly, financial system restructuring aimed at reestablishing and reinforcing its soundness.In this context, Spanish financial institutions have carried out their banking activity in a context ofnecessary credit deleveraging (more pronounced in the business segment), low credit demand,liquidity tensions in the wholesale funding markets and impairment in asset quality.As far as the Spanish financial system is concerned, the most important step is to complete therestructuring process which is being carried out. In 2012, as was explained in the BBVA Positioningand Environment section of the Executive Summary chapter, significant progress has been madein restructuring the financial system, with the implementation of major reforms. The most relevantreforms and the results achieved are outlined below:• The coming into force of Royal Decree Laws 2/2012 and 18/2012 has meant the coverage of thetotal real-estate portfolio stands at 45% (74% for the problematic portfolio).• In June, a top-down analysis of the Spanish financial system was conducted, in which capitalrequirements for the sector were established at between €51,000m and €62,000m under themost adverse scenario.136 Business areas