BBVA in 2012

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20 2. A business model based on three elements:• A retail banking model focused on lasting relationships with a very broad customer base(over 53 million customers worldwide). This ensures highly recurrent earnings and verystable funding sources in the form of customer deposits.• A distribution network of great capillarity that leads the market in terms of efficiency. Itshould be mentioned that once more this year BBVA’s share of business has been greaterthan its network share in every franchise.21• Technology is a pillar that has been strongly supported by BBVA in recent years to improveefficiency. The size and scale of the Group have enabled it to undertake significant investmentsin global technology projects, particularly in the area of transformation and innovation. Theyhave positioned the Bank at the head of technological innovation in the sector.BBVA invests mainly in four core elements within its technological plan:a) Improvement of customer experience.b) Increase in commercial productivity.c) Risk reduction.d) Improvement in operational efficiency.44 Executive summary
In 2012, BBVA has implemented numerous projects to ensure that these four core elementsbecome a reality. Among them are:• The implementation of the new BBVA Compass technological platform in all its branchesin the United States. This allows processing of transactions in real time, and thus gives thisfranchise a clear competitive advantage in the US market. The new platform will improve theservice provided through differentiated, efficient, faster and customer-centric processes.• Progress in the Group’s multi-channel distribution model. In Spain the number of customerschoosing “BBVA Contigo” as their main channel for relations with the Bank has continued toincrease. More than 360,000 customers are already remotely managed by approximately350 specialized advisers. In Mexico the “Dinero Móvil” BBVA Bancomer plan is boostingaccess to banking for new users, thus contributing to increase financial inclusion and thelevel of banking penetration in the country.BBVA wants to take advantage of all the opportunities technology presents to build a moreinnovative, more efficient, more customer-centric, and better-quality model. That is why itwill continue its commitment to technology, which is the main driver of future change in theindustry. The next leaps in efficiency in terms of both revenue and costs will not be throughincremental adjustments, but rather through a new model in which the role of remote channels,customization of products and services and the role of the branch will be radically different.3. A management model based on three elements: prudence, anticipation and a globaloutlook.• Prudence with respect to the decisions made on structural risks, credit risk, capitalmanagement and corporate transactions.• Anticipation in terms of the need to anticipate events and to have the flexibility to adapteasily to them.The strategy of prudence and anticipation has allowed BBVA to easily pass the stress testconducted by Oliver Wyman. Its results were published in September and placed it amongthe limited number of banks that do not need additional capital, even in the most adversescenario. This capacity of anticipation has been key to the Bank’s performance over thesedifficult years. It will continue to be so in the increasingly global and uncertain future.• The third element in the management model refers to the global outlook, including theconcept of cross-cutting approach, which consists of exploiting all the current potential ofBBVA’s businesses, customers and footprint. In 2012 the Group has continued to boost thecross-cutting management of its businesses to generate significant synergies, through:a) The Group’s wholesale businesses, Corporate & Investment Banking (CIB). A neworganizational structure has been announced for this area, designed to boost thestrengths of the business and maximize the opportunities provided by the newenvironment. The new organization strengthens the strategic priorities of BBVACIB: a greater focus on clients as the core element of its value proposition, as wellas optimization of its competitive advantages by boosting cross-border businessand maximizing wholesale activity in partnership with the Group’s banks and localnetworks.b) The Retail Banking business, created last year, has also been transformed in 2012, bycombining the Group’s businesses in South America with Global Retail Banking andInnovation. This new area has the following objectives:– Increase the growth of the franchises in South America and make the most of theopportunities in the region with the support of the corporate units.– Connect the retail businesses within the Group so that best practices can be easilytransferred and boost the development of the global business lines of consumerfinance, insurance, asset management and payment channels.Environment and BBVA positioning45
Page 2 and 3: BBVA Group Highlights
Page 4 and 5: “ In 2012 the Group generateda ne
Page 6: 2
Page 9 and 10: Letter from the Chairman 5
Page 11 and 12: All this is the result of a strateg
Page 13 and 14: 1 As the main expression of t
Page 15 and 16: Our communication in 2012 has conti
Page 17 and 18: Brand management in 2012 was highly
Page 19 and 20: BBVA Board CommitteesIn order to be
Page 21 and 22: • Across-the-board operational co
Page 23 and 24: Primary stakeholdersIntroduction: t
Page 25 and 26: BBVA earnings figures presented in
Page 28 and 29: High liquidity ofBBVA shareBBVA is
Page 30 and 31: Management modelA model of peoplema
Page 32 and 33: To sum up, the combination of the a
Page 35 and 36: South AmericaIn 2012, a common syst
Page 37 and 38: Number of claims filed at the Banki
Page 39 and 40: Environmentand BBVA positioningThe
Page 41 and 42: the measures taken to correct imbal
Page 44 and 45: The easing of financial tensions in
Page 46 and 47: Positioning of BBVA GroupBBVA conti
Page 50 and 51: - Innovate with teams dedicated exc
Page 52 and 53: 25 In short, this banking model
Page 54 and 55: 2. …reflected ingross income…28
Page 56 and 57: Risk under controlBBVA NPAs versusp
Page 58 and 59: Business areasSpainStrong franchise
Page 60 and 61: EurasiaAn area ofgrowth andpositive
Page 62 and 63: South AmericaBusiness activity(Year
Page 64 and 65: In short, abusinesstransformationre
Page 67 and 68: Group financialinformation65 Earnin
Page 69 and 70: EarningsIn 2012, BBVA Group reporte
Page 71 and 72: Consolidated income statement: quar
Page 73 and 74: • Resilience in Spain, in a conte
Page 75 and 76: allocations to the deposit guarante
Page 77 and 78: 8 • Maintain its leadership p
Page 79 and 80: 13 Provisions and othersCumulativ
Page 81 and 82: Lastly, earnings per share (EPS) fr
Page 83 and 84: In short, a year in which there has
Page 85 and 86: 20 Lastly, non-performing loans ha
Page 87 and 88: Off-balance-sheet customer funds st
Page 89 and 90: Capital baseThe main highlight in 2
Page 91 and 92: 26 RatingsIn 2012, BBVA’s ratin
Page 93 and 94: Risk management90 Global Risk Manag
Page 95 and 96: Integration of risks andoverall ris
Page 97 and 98: Credit riskCredit risk quantificati
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Behavioral scoring is used to revie
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The economic cycle in PDThe current
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13LGD for Autos Finanzia, BBVA Spai
Page 105 and 106:
The portfolio model and concentrati
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The exposure breakdown by rating of
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22 Real-estate exposure and coverag
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ConcentrationExcluding sovereign ri
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27 BBVA Group. Net NPA entries(Mill
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Structural risksStructural interest
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Interest rate risk measurement is s
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Structural risk in the equity portf
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BBVA continues working to improve a
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Credit risk in market activitiesThe
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Operational riskOperational risk is
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Operational risk management in the
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Reputational riskThis is another ty
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The economic capital of the Pension
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Categories of financing and advice
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Business areas135 Spain149 Eurasia1
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Furthermore, as usual in the case o
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SpainIncome statement(Million euros
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• On July 20, the Government requ
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3 Spain. Efficiency ratio versus pe
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These lines axes of action will con
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10 Spain. Operating income(Million
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- Creation of a SICAV module on the
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As of 31-Dec-2012, BBVA Seguros has
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EurasiaIncome statement(Million eur
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Management prioritiesIn 2012, the E
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17 Eurasia. Efficiency(Million euro
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• The above, together with the hi
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Highlights• The Bank has been rec
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MexicoIncome statement(Million euro
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area has been positive year-on-year
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30 Mexico. Consumer finance plus cr
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The increase of operating expenses
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As a result of the above, the net a
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government employees and tax collec
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South AmericaIncome statement(Milli
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advancing together with economic ac
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43 South America. Net attributable
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Grupo BBVA. Business share ranking
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Colombia Peru Venezuela2012 ∆%
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The macroeconomic and competitive e
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VenezuelaIn 2012, the growth of the
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By companies, Seguros Argentina, fo
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Significant ratios(Percentage)The U
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opportunities in key markets throug
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51 The United States. NPA and cover
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The area was able to successfully m
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HighlightsThe most relevant awards
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Definition of the aggregateCorporat
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held by retail investors. The conve
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Additional information:Corporate &
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greater efficiency, cost control an
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The trend in operating expenses sho
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Main Corporate Finance transactions
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Corporate LendingCorporate Lending
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In Latin America, the funding of Li
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In Mexico, Global Markets maintains
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Supplementaryinformation216 Consoli
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IFRS (Bank of Spain’s Circular 4/
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JapanTokyoFukoku Seimei Bldg. 12 th
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BBVA in 2012

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