BBVA in 2012

BBVA has not been immune to the country’s situation, since around 45% of its lending portfoliocorresponds to the agricultural and farming sector. The bank’s activity has been adversely affected.This, combined with the increase in funding costs, has had a negative impact on net interestincome and on fees and commissions. As a result, the unit’s net attributable profit has declined to€14m, 39.8% down on the 2011 figure.At a local level, the rating agency Feller-Rate maintained the bank’s AA rating, with a negativeoutlook, while at the international level Standard&Poor’s has kept its BB– rating, with a stableoutlook, in line with the sovereign rating.In 2012, BBVA has improved its tools and carried out the actions needed to make the most of thebusiness opportunities that will arise in 2013, when the economy is expected to perform morestrongly. For example, BBVA has boosted its retail business with the purchase of the credit cardportfolio of Citibank NA, Paraguay Branch. With this acquisition, BBVA will become one of the mainbanks in this market and improve its position as a comprehensive bank for the preferred customersegment. It has also launched new mortgage products in a sector that is undergoing significantgrowth in the country. Lastly, BBVA has started to operate as an insurance broker in Paraguay inassociation with the country’s most renowned insurance companies, thus completing the range ofproducts and services available to its customers.UruguayIn 2012, the Uruguayan economy posted solid growth (up 4%, according to estimates), thanks tostrong domestic demand in both consumption and investment. The annual inflation rate stood ataround 7.5%.BBVA Uruguay has kept its second place in the private bank ranking for the loan volumeproduced, with year-on-year growth of 13.6% in gross lending to customers and a 20% marketshare. Customer funds are up 2.4% of which lower-cost funds have performed strongly (currentand savings accounts are up 7.0%). In conclusion, the net attributable profit stands at €27m (up196.6%).The highlights of the year have been the major effort made in the retail segment, supportingbanking penetration in the country, and the growth in credit cards, through alliances withdistributors and differential promotions. The call center has also been resized and a “serves to sale”concept has been adopted, developing the distribution channel and adding quality certificationsand complaints service.Regarding asset/liability management, 2012 has been characterized by positive handling ofliquidity and strong activity in local currency operations, where the bank has been extremely activein the primary and secondary markets, both with its own portfolio and customer brokerage.InsuranceThe insurance business continued to perform well in 2012, despite the lower NTI. The unit postednet attributable profit of €87m, thanks mainly to strong activity and cost control.Major marketing efforts have been made in 2012 aimed at improving and expanding thedistribution channels, developing a wide range of products and promoting interrelation with otherBBVA Group businesses. The bancassurance channel continues to drive the insurance business.The initiatives implemented in partnership with BBVA Microfinance Foundation have been veryproductive, and today all the microfinance institutions in South American countries where BBVAhas insurance companies are distributing its products. Progress will continue to be made next yearin the design of specific products for this sector of the population.184 Business areas