BBVA in 2012

Mexico highlights in 2012Significant ratios(Percentage)Mexico31-12-12 31-12-11 31-12-10Efficiency ratio 37.7 36.4 34.6NPA ratio 3.8 3.7 3.3NPA coverage ratio 114 120 152Risk premium 3.49 3.49 3.74• Sustained growth in activity, particularly in the retail portfolio.• Positive growth in revenue, above all in recurring revenue.• Implementation of expansion plans to make the most of marketopportunities, focused mainly on technology and infrastructure.• Stable risk indicators.• Successful issuance of capital notes on international markets.• Conclusion of the Afore Bancomer sale in January 2013.Definition of the areaThis area comprises the banking, pensions and insurance business conducted in Mexico by BBVAGroup (hereinafter, BBVA Mexico). It should be mentioned that on January 9, 2013 the Groupsuccessfully concluded the sale of its entire stake in the company Administradora de Fondos parael Retiro Bancomer, S.A. de C.V. The total adjusted price was USD 1,735m, representing capital gainsof approximately €800m, net of tax.Industry trendsIn 2012, the Mexican economy maintained a strong rate of growth. Of particular interest wasthe domestic market strength, which has been underpinned by the progress of employment,improved competitiveness and increased capital flows. Inflation has begun to revert to 4% levels.The supply shocks prevalent in the third quarter have subsided.In 2012, more than 700,000 jobs were created in the formal private sector, which marks thestrongest average rate of growth in the last four years. The good job market performance wasreflected in the positive performance of private consumption. In this way, both consumer financeand investment benefitted from financial stability and a greater flow of credit.In the foreign sector, Mexico’s contribution to US manufacturing imports amounted to 12.6%,the highest figure in history. Despite the difficult foreign situation, Mexico has kept its fiscal andmonetary policies geared towards stability, which has allowed it to rein in public deficit and keepinflation and debt low.The year 2013 is expected to be more positive, with new opportunities arising for the approval ofkey reforms that, as they materialize, would represent an additional boost to the internal sources ofgrowth.As far as the financial sector is concerned, Mexico has continued to show a high degree ofstrength, with a capital ratio that is far above the minimum required (10%). As a result, it has beenone of the first systems to adopt Basel III regulations.With respect to banking activity, the loan book remains robust and has recorded 20 consecutivemonths of growth. All the portfolios have grown, and this dynamic mood is expected to continuedue to the favorable macroeconomic environment. Customer fund gathering is also positive, sothere are no liquidity tensions.With respect to the exchange rate, the peso has appreciated over the year, both in terms of thefixing and average rates. This means its impact on the balance sheet, activity and earnings in the160 Business areas