BBVA in 2012

Management prioritiesIn 2012, the Eurasia area focused on:• In terms of business in Europe, managing prices and liquidity tensions appropriately byprioritizing both the relationship with customers and cross-selling over volumes.• In Turkey, managing the relationship with Garanti has continued to be essential to BBVA. In addition,Garanti has focused on selective activity growth and prioritized profitability over volume. In termsof the loan book, the Turkish bank has concentrated on boosting more profitable products, mainlywithin the retail segment and in local currency, such as mortgages, in so-called “general purposeloans” (personal loans) and auto-finance. On the liabilities side, the focus was on more stable andlower-cost sources of funding. In other words, lira deposit growth was boosted throughout mostof the year, thus avoiding the price competition existing in deposits in other currencies. However,this trend shifted towards the end of the year due to greater pressure for customer fund raising inTurkish lira.Management priorities in 2013 will focus on:• In Europe the focus in terms of lending will continue to be on selective growth in specificportfolios and customers. On the liability side, customer fund raising will continue to beboosted. The aim is to properly manage the area’s liquidity. Price management will alsobe important, just as promoting cross-selling and controlling costs. They will be usedto maintain the value of the franchise. In addition, BBVA will exploit the opportunitiesdeveloped by its business model in an environment that will remain difficult and with lowgrowth.• In Turkey, managing the BBVA-Garanti relationship will continue to be critical in boostingthe synergies between the two banks, particularly in those fields where they have anextensive knowledge base. On the technological front, the aim is to take advantage ofGaranti’s technological platform in different areas within BBVA. Likewise, collaboration willbe encouraged between working teams from different units, such as insurance, paymentchannels, trading floor, asset management or investment banking. Garanti’s strategic linesfor 2013 include the steady development of new products, such as gold deposits, andboosting business among young people, especially college students. Regarding creditcards, new forms of collaboration will be sought, linking their use to day-to-day paymentssuch as transportation as well as growing in the corporate credit card market. Two newinvestment centers have been planned in the investment banking segment, which willbegin operating in new markets to attract more foreign institutional investors. While doingso, the Bank will continue to stand behind its commitment to being at the cutting edge ofnew technologies.ActivityThis area managed gross customer lending of €30,228m at the close of 2012, down 13.0%year-on-year. The fall is a result of the reduction in the loan portfolio of wholesale customers dueto the deleveraging process underway in Europe. In contrast, lending activity in the retail businessperformed well. The volume of residential mortgage lending, consumer finance and loans to smallbusinesses has risen over the last 12 months by 11.3%. There was a notable contribution from thebalances in Turkey, which account for 36.8% of gross customer lending in the area. They increasedby 15.1% on the figure at the same date the previous year.The balance of customer funds (including repos and off-balance-sheet funds) as of 31-Dec-2012was €18,963m, a year-on-year fall of 16.6%. However, over the last three months the decline wasbarely 2.0%. The recovery in deposits in the wholesale sector in the fourth quarter explains thisimprovement toward the end of the year, after being very weak in the first nine months due to thedowngrades in Spain and BBVA’s credit ratings.Eurasia151