BBVA in 2012

Significant ratios(Percentage)The United States31-12-12 31-12-11 31-12-10Efficiency ratio 66.1 64.4 58.9NPA ratio 2.4 3.5 4.3NPA coverage ratio 90 73 61Risk premium 0.23 0.89 1.65The United States highlights in 2012• Positive trend in activity, strongly supported by local businesses.• Costs kept in check.• Outstanding asset quality.• Implementation of the technological platform in all the branches.• Significant progress in brand recognition.• Sale of the Puerto Rico business.Definition of the areaThis area currently encompasses the Group’s business in the United States and the assets andliabilities of the BBVA office in New York, which specializes in transactions with large corporations.In the second quarter of 2012, BBVA reached an agreement with Oriental Financial Group forthe sale of its business in Puerto Rico for USD 500m. The transaction was closed on December16, 2012. BBVA Puerto Rico accounted for less than 1% of the Group’s total assets and, accordingto data as of the end of June 2012, had 36 branches and 912 employees. Its small size (it is theseventh bank by deposits on the island, with a market share of under 6% according to the latestavailable information) limits the possibility of implementing the BBVA model, which aims for largemarkets and requires a bigger market share. The deal has had a positive effect on the Group’scapital.Industry trendsEconomic activity in the United States in 2012 has been uneven. The year began with relativelystrong activity. Business confidence and industrial output had been gaining momentum since theend of 2011. However, in the second quarter, growth was slowed by weak consumption and highoil prices. The situation was worsened by the heightened sovereign debt crisis in Europe in the firsthalf of the year. In the third quarter, economic conditions improved significantly. However, growinguncertainty surrounding the imminent fiscal reform had an adverse effect on activity toward theend of 2012. The latest data also suggest the negative impact of Hurricane Sandy, which has addedfurther pressure on output and expenditure in the fourth quarter.The concerns about inflation diminished considerably when oil prices increased in early 2012. Withstable inflation expectations in the long run, the Federal Reserve (Fed) has shifted its main focusof attention to boosting employment through additional quantitative easing, anticipating that theexceptionally low federal funds rate will probably be justified until at least mid-2015. Ultimately,the Fed is willing to accept higher inflation in the short term in order to reach a point where theeconomy is sufficiently strong to generate employment on its own.The prospects for 2013 are modest, due to possible tax hikes and spending cuts, which willprobably have a negative impact on business expansion plans and consumer spending. In general,the risks for 2013 have a negative bias and include, among other factors, the fiscal reforms, theEuropean crisis, ongoing household deleveraging and geopolitical conflicts.As regards the financial sector, the health of the U.S. banking system has continued to improvein 2012, and there are now fewer institutions facing problems. Most banks are increasing earnings,asset quality, capital and liquidity.The United States187