9th May 2005 10:01
Banco Bilbao Vizcaya Argentaria SA09 May 2005 2005 first quarter results BBVA's net attributable profit rises 20% to €815m • An increase in activity and revenues boosted Group's profit in all threebusiness areas. • All recurrent margins grew strongly. Operating profit grew 16.3%;ordinary revenues grew 9%; core revenues 7.3% and net interest income 7.2%. • The cost/income ratio improved from 51.2% to 48.5% (before amortizationit improved from 46.9% to 45%). Improvements were noted in all three businessareas thanks to the improvement in revenues and cost control. • Earnings per share (EPS) increased 17.4% and return on equity (ROE)stands at 30.8%. • In the Retail Banking area lending grew at 20.4% and customer funds at8.2% with an increase of 11.5% in operating profit and 13.2% in net attributableprofit. • In Wholesale Banking lending grew 11.7% and customer funds 31.9%. Therewere increases of 12% in operating profit and 22.7% in net attributable profit. • The Americas area recorded increases of 26.2% and 14.6%, respectively, inlending and customer funds with increases of 15% in operating profit and 61.1%in net attributable profit. • Mexico confirmed the dynamic growth of lending in all segments(mortgages, SMEs and consumer finance) which grew 36% without includingHipotecaria Nacional. • Once again BBVA improved risk quality with a drop in the non-performingloan ratio to 1.06% and an increase in coverage to 228.1% (compared to 1.46% and194.9% a year ago). • The group improved its high level of liquidity. The BIS ratio rose from11.4% to 12.3% and core capital from 5.4% to 6%. BBVA kicked off 2005 with a sharp rise in profitable growth. In the firstquarter it generated €815m in net attributable profit with an increase of 20%over the same period last year. There were substantial improvements in allrecurrent margins thanks to an important increase in revenues associated withhigher activity. As a result, operating profit increased 16.3% to €1.43 billionin the first quarter. The positive performance of revenues, management and results led to a newimprovement in all the group's fundamentals. Return on equity (ROE) now standsat 30.8% and the cost/income ratio has improved from 51.2% to 48.5% (45% beforeamortisation). The non-performing loans ratio improved to 1.06% and coveragerose to 228%. Capital adequacy strengthened, the BIS ratio stands at 12.3% andcore capital at 6% (compared to 11.4% and 5.4% a year ago). In summary, BBVA hasfurther improved its competitive position and is moving forward with its policyof profitable growth. During the first quarter of 2005 the group concluded the acquisition of LaredoNational Bancshares in Texas, reinforcing the BBVA USA franchise. In addition, BBVA launched a takeover bid for 100% of the capital of BancaNazionale de Lavoro (BNL), the sixth largest bank in Italy. The Italian bank'sboard of directors has accepted the bid and CONSOB and the European Commissionhave authorized the operation. The main agencies (S&P, Fitch y Moody's) haveconfirmed their ratings for the Group. Both operations are part of the profitable growth strategy followed by BBVAsince 2002. In terms of organic growth the bank also recorded importantincreases in business activity and revenues in the first quarter with acorresponding improvement in profit. These improvements occurred in all businessareas. All recurrent margins increased strongly in the quarter. Net interest incomegrew 7.2%; core revenues grew 7.3%; ordinary revenues 9% and operating profitgrew 16.3% to €1.43 billion. The above positive performance led to an increase of 17.4% in earnings per share(EPS) and return on equity (ROE) now stands at 30.8%. This quarter the financial statements for 2005 and 2004 are presented inaccordance with the international financial reporting standards (IFRS) and thenew Bank of Spain Circular, 4/2002. Therefore both years are calculated on auniform basis. The most relevant aspects of the BBVA group's financial performance and strategyin the first quarter are summarized below: • Net attributable profit in the first quarter of 2005 came to €815m. Thisis a 20% increase over the €679m obtained in the same quarter last year.Earnings per share increased to 17.4% and return on equity to 30.8%. • The higher profit is due to increases in all types of revenue and to arestricted rise in operating expense. Operating profit was €1.43 billion, ayear-on-year increase of 16.3%. • Net interest income grew 7.2% on important increases in volume in theSpanish market and on the combined effect in Mexico of higher interest rates andsignificant growth in the most profitable lines of business. • Ordinary revenues increased 9.0% to €2.85 billion. Apart from netinterest income, this figure includes net fee income and insurance (which grew7.9%) and net trading income (up 27.8%). • Operating expenses increased 4.7% (3.5% if depreciation and amortizationare included). • The cost/income ratio (an area in which BBVA leads the other largeEuropean banks) improved to 45%, compared to 46.9% in the same period of 2004.Including amortization, the ratio is 48.5% and the year-on-year improvement is2.7 percentage points. • The amount of non-performing loans (NPLs) continued to decline despitethe sharp growth in customer loans. Thus the NPL ratio improved to 1.06% at31-Mar-05, compared to 1.46% at 31-Mar-04. Coverage now stands at 228.1% (194.9%in March 2004). • The group's capital base remains sound with core capital at 6% and a BISratio of 12.3% at 31-Mar-05. • Following distribution in January of the third interim dividend of €0.10per share against 2004 earnings and a final dividend of €0.142 in April, thetotal dividend per share comes to €0.442, an increase of 15.1% over the previousyear. • The strong growth in the Retail Banking area for Spain and Portugalcontinued and ordinary revenues increased 6.2% while expenses were practicallyflat. Operating profit increased 11.5% and net attributable profit 13.2%. Interms of average balances, lending grew 20.4% and customer funds 8.2%. • The Wholesale and Investment Banking area also recorded high levels ofgrowth in its main business units and there were strong results in markettrading. Operating profit grew 12% compared to the same quarter last year andnet attributable profit grew even further (22.7%) following a significant dropin loan provisioning requirements. Lending grew 11.7% and customer funds 31.9%(on average balances). • In the Americas area business activity grew faster in the quarter,especially in lending to companies as well as to individuals. The importantincrease in net interest income helped operating profit to climb 15% (21.8% atconstant exchange rates). Net profit was 37.4% higher than the first quarter of2004 and net attributable profit 61.1% higher. Lending and customer fundsincreased 26.2% and 14.6%, respectively, in terms of average balances. • Net interest income at BBVA Bancomer performed particularly well, causingoperating profit to rise 28.4% year-on-year at constant exchange rates. Netprofit grew 50.6% (41.2% excluding Hipotecaria Nacional). Lending activitycontinued high, surging 36% before incorporation of Hipotecaria Nacional. Withthe incorporation of Hipotecaria Nacional, growth in lending rises to 60.9%. BBVA Group Highlights (Consolidated figures) 31-03-05 31-03-04 D%BALANCE SHEET (million euros)Total assets 345.221 315.180 9,5Customer lending (gross) 185.533 156.192 18,8On-balance sheet customer funds 211.389 193.786 9,1Other customer funds managed 125.336 117.335 6,8Total customer funds managed 336.725 311.121 8,2Equity 14.220 12.287 15,7Shareholders' funds (including profit for the year) 11.767 10.321 14,0 INCOME STATEMENT (million euros)Net interest income 1.549 1.445 7,2Core revenues 2.567 2.393 7,3Ordinary revenues 2.854 2.617 9,0Operating profit 1.432 1.232 16,3Pre-tax profit 1.203 1.028 17,0Net attributable profit 815 679 20,0 DATA PER SHARE AND MARKET CAPITALIZATIONShare price 12,56 10,77 16,6Market capitalization (million euros) 42.589 36.519 16,6Net attributable profit 0,24 0,20 17,4Book value 3,47 3,04 14,0PER (Price/earnings ratio; times) (1) 12,3 12,5P/BV (Price/book value; times) 3,6 3,5 SIGNIFICANT RATIOS (%)Operating profit/ATA 1,69 1,53ROE (Net attributable profit/Average equity) 30,8 32,0ROA (Net profit/ATA) 1,02 0,94RORWA (Net profit/Risk weighted average assets) 1,76 1,55Efficiency ratio 45,0 46,9Efficiency ratio including depreciation and 48,5 51,2amortizationNPL ratio 1,06 1,46NPL coverage ratio 228,1 194,9 CAPITAL ADEQUACY RATIOS (BIS Regulation) (%)Total 12,3 11,4Core capital 6,0 5,4TIER I 8,0 7,5 OTHER INFORMATIONNumber of shares (million) 3.391 3.391Number of shareholders 1.058.876 1.150.391Number of employees 88.588 88.750. Spain 31.033 31.294. America (2) 55.579 55.456. Rest of the world 1.976 2.000Number of branches 7.006 6.958. Spain 3.410 3.390. America (2) 3.420 3.374. Rest of the world 176 194 (1) The 2005 PER is calculated taking into consideration the median of the analysts' estimates (April 2005).(2) Includes those related to the BBVA Group's banking, pension fund managers and insurance companies in allthe American countries in which it is present Consolidated income statement (Million euros) Memorandum item: D% at constant 1Q 05 D% 1Q 04 exchange rates Core net interest income 1.528 7,9 1.416 10,8Dividends 22 (25,0) 29 (25,0) NET INTEREST INCOME 1.549 7,2 1.445 10,1Net income by the equity method 23 (10,7) 26 (10,4)Net fee income 899 8,2 831 10,7Income from insurance activities 96 5,8 90 9,5 CORE REVENUES 2.567 7,3 2.393 10,0Net trading income 286 27,8 224 29,5 ORDINARY REVENUES 2.854 9,0 2.617 11,7 Net revenues from non-financial 28 33,5 21 35,2activitiesPersonnel costs (838) 3,3 (811) 5,2General expenses (479) 7,3 (447) 10,6Depreciation and amortization (102) (9,8) (113) (7,9)Other operating income and expenses (31) (15,1) (36) (9,6)(net) OPERATING PROFIT 1.432 16,3 1.232 19,3 Impairment losses on financial assets (123) (46,8) (230) (45,7)(net) . Loan-loss provisions (118) (47,5) (225) (46,4) . Other (5) (18,5) (6) (18,5)Provisions (net) (131) (54,2) (286) (53,9)Other income/losses (net) 24 (92,4) 313 (92,4) . From disposal of equity holdings 4 (98,5) 240 (98,5) . Other 20 (72,2) 73 (71,8) PRE-TAX PROFIT 1.203 17,0 1.028 19,8Corporate income tax (337) 8,5 (311) 11,3 NET PROFIT 866 20,6 718 23,5Minority interests (50) 31,3 (38) 50,5 NET ATTRIBUTABLE PROFIT 815 20,0 679 22,2 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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