BBVA in 2012

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Global Risk Management:BBVA Group’s riskmanagement functionIn the field of risk management, the Board of Directors is responsible for approving therisk control and management policy, as well as periodically monitoring internal reportingand control systems. In order to properly perform this duty, the Board is supported by theExecutive Committee and a Risk Committee. Both the corporate Global Risk Management(GRM) area and the risk units in the business areas also play an essential role in the Group’srisk management, each with well defined roles and responsibilities. The corporate GRM areaestablishes the global risk management strategies and policies, while the risk units in thebusiness areas propose and maintain the risk profile of each customer independently, butwithin the corporate framework for action.The Group’s risk function is a unique, independent and global function whose principles are:• The assumed risks must be compatible with the target capital adequacy and must be identified,measured and assessed. Monitoring and management procedures and sound control andmitigation systems must likewise be in place.• All risks must be managed integrally during their life cycle. They must be treated differentlydepending on their type and with active portfolio management based on a common variable:economic capital.• It is each business area’s responsibility to propose and maintain its own risk profile bothindependently and within the corporate action framework (defined as the set of risk policies andprocedures), using an adequate risk infrastructure.• The risk infrastructure must be suitable in terms of people, tools, databases, informationsystems and procedures so that there is a clear definition of roles and responsibilities,ensuring efficient allocation of resources between the corporate area and the risk units inthe business areas.The Group has developed an integrated risk management system based on these principles andstructured around three main core elements:• A set of tools, circuits and procedures that make up different management schemes.• A system of internal controls.• A corporate risk governance plan which separates functions and responsibilities.Board ofDirectorsRiskCommitteeCorporateRiskCommitteesRisk Committeesin the risk unitsof the businessareas90 Risk management
Integration of risks andoverall risk profileIntegration of risksThe economic capital required to cover the Group’s losses is calculated by integrating the various risksmanaged by the Entity. The difference between this economic capital and the sum of the individualcapital amounts is known as the benefit of diversification.1Sum of risks and diversificationCredit riskDiversificationMarket riskOperational riskTotal riskOther risksBBVA Group’s risk integration model recognizes diversification among the various types of risks.The calculation process is divided into two stages. In the first stage, each of the risks is modeledindividually (credit, market, structural and operational), taking the special features of each case intoaccount. In the second stage, they are added to a common measure through a model that looks atthe structure of dependency between risks.2Risk integration diagramCredit riskStructural equity riskMarket riskOperational riskStructural exchange rate riskStructural interest rate riskDistribution ofoverall lossesExpectedlossEconomiccapitalInterdepency betweentypes of riskIn this framework, the diversification level of each risk depends mainly on the relative size of the riskagainst global risk, as well as on the correlation among risks and the characteristics of individual lossdistributions.Integration of risks and overall risk profile91
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BBVA Group Highlights
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“ In 2012 the Group generateda ne
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2
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Letter from the Chairman 5
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All this is the result of a strateg
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1 As the main expression of t
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Our communication in 2012 has conti
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Brand management in 2012 was highly
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BBVA Board CommitteesIn order to be
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• Across-the-board operational co
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Primary stakeholdersIntroduction: t
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BBVA earnings figures presented in
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High liquidity ofBBVA shareBBVA is
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Management modelA model of peoplema
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To sum up, the combination of the a
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South AmericaIn 2012, a common syst
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Number of claims filed at the Banki
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Environmentand BBVA positioningThe
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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 48 and 49: 20 2. A business model based on th
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: Risk management90 Global Risk Manag
Page 97 and 98: Credit riskCredit risk quantificati
Page 99 and 100: Behavioral scoring is used to revie
Page 101 and 102: The economic cycle in PDThe current
Page 103 and 104: 13LGD for Autos Finanzia, BBVA Spai
Page 105 and 106: The portfolio model and concentrati
Page 107 and 108: The exposure breakdown by rating of
Page 109 and 110: 22 Real-estate exposure and coverag
Page 111 and 112: ConcentrationExcluding sovereign ri
Page 113 and 114: 27 BBVA Group. Net NPA entries(Mill
Page 115 and 116: Structural risksStructural interest
Page 117 and 118: Interest rate risk measurement is s
Page 119 and 120: Structural risk in the equity portf
Page 121 and 122: BBVA continues working to improve a
Page 123 and 124: Credit risk in market activitiesThe
Page 125 and 126: Operational riskOperational risk is
Page 127 and 128: Operational risk management in the
Page 129 and 130: Reputational riskThis is another ty
Page 131 and 132: The economic capital of the Pension
Page 133 and 134: Categories of financing and advice
Page 135 and 136: Business areas135 Spain149 Eurasia1
Page 137 and 138: Furthermore, as usual in the case o
Page 139 and 140: SpainIncome statement(Million euros
Page 141 and 142: • On July 20, the Government requ
Page 143 and 144: 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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