31st Jan 2007 08:49
Banco Bilbao Vizcaya Argentaria SA31 January 2007 Press Release 31 January 2007 BBVA Results for 2006 BBVA's net attributable profit rises 24.4% to €4.7 billion Earnings per share (EPS) rise 23.9% and dividends against 2006 earnings will increase 20%, in line with net attributable profit without non-recurrent items BBVA has invested €3 billion to reinforce its position in the USA and Asia, two strategic markets with high growth potential The Group achieved its best results ever, supported by the increase in business volume and recurrent earnings, and with sharp improvements in all areas - Operating profit (without non-recurrent items) is up 22.5% to €8,360m,with significant advances in all margins - Retail banking increased operating profit 14.4% and net attributableprofit rose 13.8% to €1,498m - Wholesale Businesses increased operating profit 30% and net attributableprofit is up 47% to €1,282m - Mexico & USA increase operating profit 40.3% and net attributable profitgoes up 29.6% to €1,775m - Operating profit in South America rises 35.0% and net attributable profitgains 34.4% to €509m BBVA strengthens its position as one of the most profitable and most efficient European banks with the best risk management - Return on equity (ROE) now stands at 37.6% (36.4% without non-recurrentitems), compared to 37% in 2005 - The cost/income ratio improved from 46.7% to 44% (including depreciation)and from 43.2% to 40.9% (without depreciation). - The group's non-performing loan ratio fell from 0.94% to 0.83% andcoverage increased from 252.5% to 272.8% - BBVA ended 2006 with core capital of 6.2% and a BIS ratio of 12%,following the capital increase in November 2006 In 2006, BBVA achieved net attributable profit of €4,736m, an increase of 24.4%compared to the previous year, thanks to a sharp increase in business volume andrecurrent earnings, and to widespread positive performance by all the Group'sbusiness areas. Operating profit rose 22.5% to €8,360m (without Repsol capitalgains), with increases of around 16% in all margins. This demonstrates thestrength of recurrent items in the Group's income statement. BBVA also movedahead with its strategic programme of profitable growth, investing €3,071m inthe USA and Asia - two areas with considerable growth potential. By the end of2006, BBVA had reinforced its competitive edge as one of the most profitable andefficient banks, with the best risk management in Europe. In 2006, the BBVA Group completed its best year yet, with record profits atgroup level and in all business areas. Vigorous marketing by all business areasresulted in significant growth in the volume of business, boosting recurrentrevenues, which are the basis of the increase in profit. During the year, the bank generated net gains on non-recurrent items of €156m.It booked additional profit of €1,157m from capital gains related to divestmentsin Repsol, BNL and Banc Internacional d'Andorra. And this helped to offset thenon-recurrent charges it faced in fourth quarter (€544m for early retirementsand €457m due to new corporate tax rules). If the net amount of thesenon-recurrent items (€156m) is excluded, attributable profit comes to €4,580m,an increase of 20.3% year-on-year. In 2006, BBVA made two important strategic moves. They were the purchase ofTexas Regional and State National in the United States, and the partnership withthe CITIC Group in China and other parts of Asia. These operations represent aninvestment of €3,071m. The bank thus moves ahead with its plan to combine high organic growth withinvestments in markets with high potential, offering shareholders a high returnin a sustained and lasting manner. It ended 2006 as the leading European bank in ROE, which now stands at 37.6%(36.4% without non-recurrent items), compared to 37% in 2005. Furthermore, theGroup's earnings per share (EPS) rose 23.9%. The strength of the Group and its positive results, allows the board to proposean increase of 20% in total dividends against 2006 earnings, which would rise to€0.637 per share. This increase is in line with the growth in the Group'sattributable profit without non-recurring items. Together, dividends plus therise in the share price, provided shareholders with a return of 25% in 2006. Although BBVA invested €3,071m in 2006 in the USA and Asia, the non-recurrentitems mentioned above (the divestment of non-strategic holdings in Repsol, BNL yBanc Internacional d'Andorra) brought in €2,962m, with net capital gains of€1,157m. By the end of 2006, the bank had improved its key performance indicators and itscompetitive edge, maintaining its place at the forefront of European banks. Apart from an ROE of 37.4%, it improved the cost/income ratio includingdepreciation, from 46.7% to 44% (from 43.2% to 40.9% without depreciation). The group's non-performing loan ratio also fell, from 0.94% to 0.83% andcoverage rose from 252.5% to 272.8%. At year-end, core capital stood at 6.2% and the BIS ratio at 12%, following thecapital increase of €3,000m. The highlights of the Group's performance and strategy in the fourth quarter andthe full year are summarised below: - The acquisition of Texas Regional Bancshares was concluded in November.More recently (January 2007), State National Bank also became part of the BBVAGroup. - The Group took a decisive step in its Asia Plan with a strategicpartnership with Citic Group. This will entail an initial investment of €989m,opening the mainland Chinese markets (through a 5% stake in China Citic Bank)and the Hong Kong market (via a 15% stake in Citic International FinancialHoldings). The Group has also opened a representative office in Sydney andobtained approval to open another in Mumbai. - In the fourth quarter of 2006, BBVA generated operating profit of€2,274m, with a year-on-year increase of 21.1% (26.0% at constant exchangerates). Net attributable profit came to €279m, affected by non-recurrentprovisions of €777m for early retirements (€544m after tax) and an additionaltax charge of €457m due to new rules that will reduce the effective tax rate infuture years. Excluding these charges, net attributable profit for the fourthquarter comes to €1,280m, an increase of 18.7% compared to the same period in2005 (an increase of 23.2% at constant exchange rates). - For the full year, net attributable profit rose 24.4% to €4,736m. Thisled to a 23.9% rise in earnings per share (EPS), which increase to €1.39 pershare. Return on equity (ROE) was 37.6%. Excluding 156m of non-recurrent items(those mentioned above in the fourth quarter and €1,157m of capital gainsassociated with BNL, Repsol and Andorra in the second quarter), net attributableprofit comes to €4,580m, rising 20.3% over the €3,806m obtained in 2005. Thismeans earnings per share were €1.34 (up 19.8% from €1.12 in 2005) and ROE standsat 36.4% (37.0% in 2005). - The growth in profit stems from the increase in operating profit. Thisrose 22.5% year-on-year to €8,360m (without the Repsol capital gains). Atconstant exchange rates, the increase is 23.2% and the trend is upwards inrecent quarters. - The strong performance of operating profit can be traced to growth inall revenue streams. Net interest income rose 16.2% on higher business volumeand the improvement in spreads. Net income from fees and insurance was up 12.6%and net trading income rose 19.2%. - Because of the above, ordinary revenues without non-recurring itemsgrew 16.5%, which was much higher than the 9.5% increase in operating expenses(including depreciation). This further improved the cost/income ratio to 44.0%(without Repsol capital gains), compared to 46.7% a year earlier. - The substantial growth in lending to customers did not affect the highquality of the loan portfolio (the NPL ratio improved to 0.83% at year-end,compared to 0.94% at 31-Dec-05). However, it led to hefty generic loan-lossprovisions, which increased coverage to 272.8% (252.5% a year earlier). Thetotal amount of coverage funds now stands at €4,952m, compared to €3,967m at31-Dec-05. - In a move to strengthen equity and to finance the Group's growth whilemaintaining appropriate levels of capital adequacy, BBVA increased its capitalby €3 billion on 27th November by means of an accelerated bookbuilding procedurewith institutional investors, at €18.62 per share. As a result, at year-end theGroup's core capital stands at 6.2% (6.0% at 30-Sep-06 and 5.6% at 31-Dec-05),Tier I capital is 7.8% and the BIS ratio 12.0%. - On 10th January the group paid a third interim dividend of €0.132 pershare against 2006 results. This was the same amount as the July and Octoberdividends and 15% higher than the dividends paid a year earlier. - All Group business areas reported record profits in 2006, based on thegrowth of recurrent earnings. In all cases, this exceeded the increase inexpenses and thus generated widespread improvements in efficiency andsubstantial rises in operating profit. - In Retail Banking in Spain and Portugal, lending was up 18.3% (withcontributions from all main types) and customer funds rose 9.3%. Theseincreases, together with the improvement in spreads, helped net interest incometo grow 9.2%. Net income from fees and insurance were up 11.2% and expensesremained under control. Therefore, operating profit grew 14.4% and netattributable profit rose 13.8% to €1,498m. - The Wholesale Business area demonstrated its ability to generaterecurrent earnings. Ordinary revenues grew progressively during the year,accumulating an increase of 26.1% by year-end. This carried over to operatingprofit (up 30.0%) and led to net attributable profit of €1,282m (up 47.0%). - In Mexico and the United States, the dominant factor behind theincrease in revenues was net interest income. At constant exchange rates, thisgrew 33.3%, helped by sharp increases in lending and customer funds (up 40.6%and 24.5%, respectively, in local currencies). The improvement in customerspreads also contributed. After adding net income from fees and insurance (up18.8%) and deducting expenses (which rose at a slower pace), operating profitgrew 41.7%. This was sufficient to offset higher provisions required by theincrease in lending and therefore net attributable profit came to €1,775m (up30.8% at constant exchange rates and 29.6% at current rates). - South America maintained the trend of previous quarters with strongyear-on-year growth in all the main revenue streams. At constant exchange rates,net interest income rose 28.4% (boosted by a 28.8% increase in lending and 21.0%in customer funds). Net income from fees and insurance rose 17.2% and nettrading income jumped 85.5%. Operating profit increased 37.4% and netattributable profit grew 37.0% to €509m (34.4% at current exchange rates). - In December, the Group adopted a new management structure designed tofoster growth and the current profound process of transformation and innovation,moving towards the creation of a large global entity. Paste the following link into your web browser to download the PDF document related to this announcement: http://www.rns-pdf.londonstockexchange.com/rns/4276q_-2007-1-31.pdf This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Bbva Ord