25th Apr 2007 08:19
Banco Bilbao Vizcaya Argentaria SA25 April 2007 PRESS RELEASE 25 April 2007 First quarter results for 2007 BBVA increases net profit 23% to €1,254m, excluding extraordinary items The BBVA Group expands further in high growth regions. It signed a strategicagreement with CITIC Group for China and other parts of Asia, and it announcedthe purchase of Compass Bancshares in the USA • Net attributable profit rose 91.2%, to €1,950m if the sale of the holding in Iberdrola is included. Earnings per share (EPS) excluding non-recurrent items increased 17.4% to €0.35 • Operating profit excluding non-recurrent items set a new record for a single quarter, rising 21.4% to €2,349m on strong revenues and business activity, and on an improvement in spreads • The cost/income ratio (without non-recurrent items) improved further, from 42.4% to 39.5% (from 45.9% to 42.4% with depreciation) • BBVA remains at the head of European banks in terms of profitability with a return on equity (ROE) of 30.5% and a return on assets (ROA) of 1.26% excluding non-recurrent items • All business areas improved efficiency and recorded significant growth in revenues, operating profit and net profit • Spain & Portugal increased operating profit 21.1% and its net attributable profit rose 26.9% to €601m • Global Businesses increased operating profit 30.2% and its net attributable profit climbed 29.5% to €189m • Mexico & USA increased operating profit 35% at constant rates and net attributable profit rose 26.1% to €484m • South America increased operating profit 22% at constant exchange rates and net attributable profit rose 20.1% to €166m BBVA today announced net attributable profit before non-recurrent items of€1,254m for the first quarter of 2007. This is an increase of 23% compared tothe same period last year. Operating profit for the quarter set a new record at€2,349m (up 21.4%) - all excluding non-recurrent earnings. Thus the BBVA Groupis starting the year off with recurrent earnings of high quality thanks tostrong revenues associated with the high level of business activity and animprovement in spreads. In the first quarter BBVA advanced its expansion strategy in internationalregions with fast-growing economies. It signed a strategic agreement with CITICGroup for China and other parts of Asia. Furthermore, it announced theacquisition of Compass Bancshares in an operation that will make it one of thetop 20 banks in America and the main banking franchise in the Sun Belt. The BBVAGroup also achieved new improvements in efficiency including depreciation, whichfell to 42.4% (45.9% a year earlier) and it maintains a solid position inprofitability, risk management and capital adequacy. Including the sale of Iberdrola shares, BBVA's net attributable profit jumpedmore than 90% in the first quarter to €1,950m. But even without thisnon-recurrent operation, the first quarter of 2007 has confirmed the upwardtrend of recent years at global level and in all business areas. Greaterbusiness volumes boosted net interest income, which is the main source ofrevenue. Total revenues grew faster than expenses and this brought newimprovements in efficiency and sharp increases in operating profit and netattributable profit. In February BBVA announced an agreement to acquire 100% of Compass BancsharesInc for $9,600m. It will finance this operation by an exchange of shares andinternal funds. The latter include proceeds from the sale of its holding inIberdrola, which produced capital gains of €696m after tax. The BBVA Group's new North American franchise will have $47 billion in assets,$32 billion in loans, $33 billion in deposits and 622 branches in 7 states. Thiswill make BBVA one of the top 20 banks in the country with a leading position inthe Sun Belt region. Projected US operations will represent about 10% of thetotal BBVA Group. This is the biggest acquisition ever announced by BBVA and adecisive step in its growth strategy for America. BBVA's investments in CITIC Group took shape in March when the Group recordedthe 4.83% interest in China CITIC Bank (the third retail bank in mainland China)and 14.58% of CITIC International Financial Holdings in Hong Kong (CITIC'sinternational finance unit). These two operations meet BBVA's criteria for non-organic growth: they match theBBVA Group's strategy and they create value for shareholders. Moreover they helpto put BBVA in a prominent position in regions with high economic growth. Unlike recent periods, this quarter saw local currencies in the Americas fallagainst the euro with a significant negative effect on all revenue items and onthe balance sheet. In the case of expenses and provisions the effect waspositive. As the year advances, the difference between current and constantrates may decline due to changes in average exchange rates and to activemanagement of structural exchange rate risk by the BBVA Group. The most relevant aspects of the BBVA Group's financial performance in the firstquarter are summarised below: • In the first quarter of 2007 the BBVA Group generated net attributable profit of €1,950m. After stripping out the capital gains related to Iberdrola (in view of their non-recurrent nature), net attributable profit comes to €1,254m. This is a 23% increase over the €1,020m obtained in the first quarter of 2006 and this increase would be 31.1% at constant exchange rates. The latter figure compares very favourably with the 21.0% obtained on the same basis for the whole of 2006. • Earnings per share came to €0.55 and the return on equity stands at 34.7%. Without non-recurrent items, earnings per share are €0.35 (up 17.3% compared to the €0.30 achieved in the first quarter last year) and ROE stands at 30.5% (34.1% in March 2006). • The net profits are supported by solid operating profit of €3,196m. Without the Iberdrola capital gains the figure is €2,349m, rising 21.4% over the €1,936m obtained in the first quarter of 2006 (up 29.0% at constant exchange rates and thus higher than the 23.2% obtained for the whole of 2006). • The major source of revenue is net interest income. It increased 14.5% year-on-year (22.1% at constant rates), supported by higher business volumes and an improvement in spreads. Net fee income and insurance revenues rose 3.7% (9.5% at constant exchange rates) and net trading income climbed 32.7% (excluding non-recurrent items). • The growth in ordinary revenues excluding non-recurrent items (12.3% in euros and 18.9% at constant exchange rates) easily offset the increase in operating expense including depreciation (4.6% and 9.9%, respectively). This led to a new improvement in the cost/income ratio which stands at 42.4% compared to 45.9% at this point a year ago. • Lending has risen sharply in recent years and there is a greater proportion of the more profitable forms (consumer finance, credit cards and SME lending), which have higher default rates. Despite this, the BBVA Group's indices of loan quality continue at excellent levels. At 31-Mar-07 the non-performing loan ratio improved to 0.84% (0.90% a year earlier) and the coverage ratio stands at 263.4% (261.7% at 31-Mar-06). It should be noted that coverage funds at the end of March came to €7,093m. Those of a generic nature account for €5,061m, compared to €4,119m a year earlier. • At 31-Mar-07 the Group's capital base remained sound with core capital at 6.2% (compared to 6.2% at 31-Dec-06 and 5.6% at 31-Mar-06). Tier I stands at 7.7% and the BIS ratio is 11.6%. • After payment of a third interim dividend of €0.132 per share on 10th January and the final dividend of €0.241 on 10th April, the total dividend paid against 2006 earnings comes to €0.637 per share. This is 20% more than the amount paid against 2005 results. • In the Spain & Portugal area, net interest income grew 13.2% year-on-year thanks to higher lending (up 15.7% with positive contributions from all the main units and types) and to the increase in customer funds (up 5.7% aided by an improvement in spreads). Other revenues increased 11.1% and ordinary revenues grew 12.4% whereas expenses rose only 1.4%. Therefore, the cost/income ratio improved once more, increasing operating profit 21.1% and net attributable profit rose 26.9% to €601m. • The Global Businesses area also had an excellent quarter with sharp increases in lending and customer funds. Ordinary revenues were up 19.7%, operating profit rose 30.2% and net attributable profit increased 29.5% to €189m. • In the Mexico & USA area, lending and customer funds continue to grow strongly (up 39.5% and 22.6%, respectively, in local currency). Helped by a further increase in customer spreads, net interest income increased 33.9% at constant exchange rates. Net fee income and insurance revenue increased 19.5% and this boosted ordinary revenues 28.9%, outpacing the rise in expenses. This meant the cost/income ratio continued to improve and operating profit climbed 35.0%. This increase amply offset loan-loss provisions, which doubled on higher lending, and increased net attributable profit to €484m (up 26.1% at constant exchange rates). • In the South America area, business is on the rise (lending is up 29.8% and customer funds are up 20.4% in local currencies). As a result, net interest income rose 26.2% at constant exchange rates and net fee income plus insurance income increased 9.4%. Therefore, operating profit grew 22.0% and net attributable profit rose 20.1% to €166m. Paste the following link into your web browser to download the PDF document related to this announcement: http://www.rns-pdf.londonstockexchange.com/rns/4741v_-2007-4-25.pdf D I S C L A I M E R Forward-Looking Statements This document may include "forward-looking statements" within the meaning of the"safe harbor" provisions of the United States Private Securities LitigationReform Act of 1995. Forward-looking statements may be identified by the use ofwords such as "anticipate," "believe," "expect," "estimate," "plan," "outlook,"and "project" and other similar expressions that predict or indicate futureevents or trends or that are not statements of historical matters. Investorsare cautioned that such forward-looking statements with respect to revenues,earnings, performance, strategies, prospects and other aspects of the businessesof Banco Bilbao Vizcaya Argentaria, S.A. ("BBVA"), Compass Bancshares, Inc. ("Compass") and the combined group after completion of the proposed transactionare based on current expectations that are subject to risks and uncertainties. Anumber of factors could cause actual results or outcomes to differ materiallyfrom those indicated by such forward-looking statements. These factors include,but are not limited to, the following risks and uncertainties: those set forthin BBVA's and Compass's filings with the Securities and Exchange Commission ("SEC"), the failure to obtain and retain expected synergies from the proposedtransaction, failure of Compass stockholders to approve the transaction, failureof BBVA stockholders to approve the related capital increase, delays inobtaining, or adverse conditions contained in, any required regulatoryapprovals, failure to consummate or delay in consummating the transaction forother reasons, changes in laws or regulations and other similar factors.Readers are referred to BBVA's and Compass's most recent reports filed with theSEC. BBVA and Compass are under no obligation to (and expressly disclaim anysuch obligation to) update or alter their forward-looking statements whether asa result of new information, future events or otherwise. Additional Information and Where to Find It This filing may be deemed to be solicitation material in respect of the proposedtransaction involving BBVA and Compass. In connection with the proposedtransaction, BBVA has filed with the SEC a registration statement on Form F-4(File no. 333-141813) (the "Registration Statement") to register the BBVAordinary shares to be issued in the proposed transaction and that includes aproxy statement of Compass that also constitutes a prospectus of BBVA. BBVA andCompass have also filed, and intend to continue to file, additional relevantmaterials with the SEC. The Registration Statement and the related proxystatement/prospectus contain and will contain important information about BBVA,Compass, the proposed transaction and related matters. SHAREHOLDERS OF COMPASSARE URGED TO READ THE REGISTRATION STATEMENT AND ANY OTHER RELEVANT DOCUMENTSFILED WITH THE SEC, INCLUDING THE PROXY STATEMENT/PROSPECTUS, BECAUSE THEYCONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. The final proxystatement/prospectus will be mailed to shareholders of Compass. Investors andsecurity holders may obtain a free copy of the disclosure documents (includingthe Registration Statement) and other documents filed by BBVA and Compass withthe SEC at the SEC's website at www.sec.gov, from BBVA's Investor Relationsdepartment or from Compass's Investor Relations department. BBVA will also filecertain documents with the Spanish Comision Nacional del Mercado de Valores inconnection with its shareholders' meeting to be held in connection with theproposed transaction, which will be available on the CNMV's website atwww.cnmv.es. Participants in the Transaction BBVA, Compass and their respective directors and executive officers and othermembers of management and employees may be deemed to be participants in thesolicitation of proxies in respect of the proposed transactions. Informationregarding BBVA's directors and executive officers is available in BBVA's annualreport on Form 20-F, which was filed with the SEC on March 30, 2007, andinformation regarding Compass's directors and executive officers is available inCompass's proxy statement for its 2006 annual meeting of shareholders, which wasfiled with the SEC on March 17, 2006. Additional information regarding theinterests of such potential participants is also included in the RegistrationStatement (and will be included in the definitive proxy statement/prospectus forthe proposed transaction) and the other relevant documents filed with the SEC. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Bbva Ord