bbva financial report 2010

8/7/2019 BBVA Financial Report 2010

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Financial Report2010


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BBVA Group Highlights

Core capital

(Million euros)

23,191

December2009

30,097

December2010

+29.8%

17,898

December2008

December2007

16,731

Net attributable profit

(Million euros)

4,210

2009

4,606

2010

+9.4%

5,020

20082007

6,126

Core capital ratio

(Percentage)

December2009

December2010

December2008

December2007

6.2 6.2

8.0

9.6

Earnings per share

(Euros)

2009 201020082007

1.641.31

1.081.17

Gross income

(Million euros)

20,666

2009

20,910

2010

+1.2%

18,978

20082007

17,271

Efficiency ratio

(Percentage)

2009 201020082007

45.3 44.6

40.442.9


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BBVA Group Highlights

(Consolidated igures)

31-12-10 % 31-12-09 31-12-08

Balance sheet (million euros)

Total assets 552,738 3.3 535,065 542,650

Total lending (gross) 348,253 4.8 332,162 342,682

Customer funds on balance sheet 378,388 1.7 371,999 376,380

Other customer funds 147,572 7.6 137,105 119,034

Total customer funds 525,960 3.3 509,104 495,414

Total equity 37,475 21.8 30,763 26,705

Stockholders' funds 36,689 25.0 29,362 26,586

Income statement (million euros)

Net interest income 13,320 (4.0) 13,882 11,686

Gross income 20,910 1.2 20,666 18,978

Operating income 11,942 (3.0) 12,308 10,523

Income before tax 6,422 12.0 5,736 6,926

Net attributable proit 4,606 9.4 4,210 5,020

Net attributable proit excluding one-os (1) 4,606 (12.4) 5,260 5,414

Data per share and share performance ratios

Share price (euros) 7.56 (40.6) 12.73 8.66

Market capitalization (million euros) 33,951 (28.8) 47,712 32,457

Net attributable proit per share (euros) (2) 1.17 8.3 1.08 1.31

Net attributable proit per share excluding one-os (euros) (12) 1.17 (13.3) 1.35 1.41

Dividend per share (euros) (3) 0.42 - 0.42 0.63

Book value per share (euros) 8.17 4.3 7.83 7.09

Tangible book value per share (euros) (4) 6.27 6.3 5.90 4.99

P/BV (Price/book value; times) 0.9 1.6 1.2

Price/tangible book value (times) (4) 1.2 2.2 1.7

PER (Price/Earnings; times) 7.4 11.3 6.5

Yield (Dividend/Price; %) (3) 5.6 3.3 7.3

Signiicant ratios (%)

ROE (Net attributable proit/Average equity) 15.8 16.0 21.5

ROE excluding one-os (1) 15.8 20.0 23.2

ROA (Net income/Average total assets) 0.89 0.85 1.04

ROA excluding one-os (1) 0.89 1.04 1.12

RORWA (Net income/Average risk-weighted assets) 1.64 1.56 1.94

RORWA excluding one-os (1) 1.64 1.92 2.08

Eiciency ratio 42.9 40.4 44.6

Risk premium 1.33 1.54 0.83

NPA ratio 4.1 4.3 2.3

NPA coverage ratio 62 57 92

Capital adequacy ratios (%)

BIS Ratio 13.7 13.6 12.2

Core capital 9.6 8.0 6.2

Tier I 10.5 9.4 7.9

Other information

Number of shares (millions) 4,491 3,748 3,748

Number of shareholders 952,618 884,373 903,897

Number of employees 106,976 103,721 108,972

Number of branches 7,361 7,466 7,787

Number of ATMs 16,995 15,716 14,888

General note: The consolidated accounts of the BBVA Group have been drawn up according to the International Financial Reporting Standards

(IFRS) adopted by the European Union and in conformity with Bank of Spain Circular 4/2004, together with the changes introduced therein.

(1) In the third quarter, both for 2009 and 2010, includes capital gains from the sale-and-leaseback of retail branches which have been allocated to generic

provisions for NPA, with no eect on net attributable proit. And in the fourth quarter of 2009, there was an extraordinary provision and a charge for goodwillimpairment in the United States. In 2008, capital gains from Bradesco in the irst quarter, provisions for non-recurrent early retirements in the second and

fourth quarters and provision for the loss originated by the Mado fraud in the fourth quarter.

(2) Earnings per share for periods prior to the share capital increase have been adjusted to the said capital increase as per IAS 33.

(3) The dividend corresponding to 2008 includes0.501 in cash and 0.129 in payment-in-kind (delivery of shares valued at April 17th, 2009 closing price).(4) Net of goodwill.


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In this complex environment,

BBVAs results have beenexcellent. As a result,

we are once more one of the best

performing banks in the world.

Francisco Gonzlez, Chairman and CEO


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Contents

2 Executivesummary

LetterfromtheChairman................................................................................................................................................................................................................................4

BBVAin2010...................................................................................................................................................................................................................................................................8

2011:TheeconomicbackgroundandBBVApositioning..........................................................................................................................................14

Theteam...........................................................................................................................................................................................................................................................................34

TheBBVAbrand........................................................................................................................................................................................................................................................39 Corporateresponsibility.................................................................................................................................................................................................................................42

44 Groupinancialinformation

Earnings...................... ...................... ...................... ...................... ...................... ..................... ...................... ...................... ...................... ...................... ...................... ...................... ....... 46

Balancesheetandbusinessactivity............................................................................................................................................................................................... 56

Capitalbase.....................................................................................................................................................................................................................................................................63

TheBBVAshare.......................................................................................................................................................................................................................................................66

70

Riskmanagement GlobalRiskManagement:BBVAGroupsriskmanagementfunction.................... ...................... ...................... ...................... ............... 72

Integrationofrisksandoverallriskproile................................................................................................................................................................................73

Creditrisk.........................................................................................................................................................................................................................................................................75

Structuralrisks............................................................................................................................................................................................................................................................90

Risksinmarketareas.........................................................................................................................................................................................................................................94

Operationalrisk........................................................................................................................................................................................................................................................98

Riskmanagementinnon-bankingactivities........................................................................................................................................................................101

ManagementofESGrisks..........................................................................................................................................................................................................................103

106 Businessareas

SpainandPortugal..............................................................................................................................................................................................................................................110

Mexico................................................................................................................................................................................................................................................................................122

SouthAmerica........................................................................................................................................................................................................................................................130

TheUnitedStates.................................................................................................................................................................................................................................................142

WholesaleBanking&AssetManagement............................................................................................................................................................................148

CorporateActivities............................................................................................................................................................................................................................................159

162 Corporateresponsibility

178 CoporateGovernanceSystem196 Supplementaryinformation


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3

4 LetterfromtheChairman

8 BBVAin2010

14 2011:Theeconomicbackgroundand

BBVApositioning

34 Theteam

39 TheBBVAbrand

42 Corporateresponsibility

TheLigaBBVAHDapplicationforiPad

hasmadehimsee

thetechnological

invasionina

newlight

Marinalovestechnology,butPablo,herfather,

isnotentirelyconvincedbyit.Hestillcan

notgetthehangofsmartphones,ultra-light

notebooksandtouchscreens.ButtheLiga

BBVAHDapplicationforiPadhasmadehim

seethetechnologicalinvasioninanewlight.

NowonSundayswhenthereisamatchthey

havetodrawlotsforwhowillusetheiPad.

Executivesummary


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4 Executivesummary4

Dear Shareholder:

Theyear2010hasbeenanunevenyearfrom

themacroeconomicpointofview,asnotall

regionshaveperformedsimilarly.TheGDP

oftheG7countriesincreasedby2.8%,with

Japangrowingby3.9%,theUnitedStates

by2.9%,andGermanyby3.5%.Meanwhile,

economicgrowthinemergingcountrieshas

beenverystrong,atanaggregateof8%.

Fororganizationswithabalancedglobal

competitivepositionsuchasBBVA,themacroeconomicenvironmentin2010was

complexbut,overall,favorable.However,asI

anticipatedlastyear,2010wasonceagainadiicult

yearforoursector,markedbytherescuesof

GreeceandIrelandamidaclimateofuncertaintyin

theinancialmarkets.Ourindustryhascontinued

tofacenewregulations,signiicantchangesin

theinancialmarketsandpressureonproits.

Inthiscomplexenvironment,BBVAsresults

havebeenexcellent.Asaresult,weare,again,

oneofthebest-performingbanksintheworld.

BBVAsnetattributableproitin2010wasup9.4%

to4,606m,thankstothesolidmanagement

oftheGroupsrevenuesandcosts.The

diversiicationofourbusinessmodelhasallowed

ustoofsettheefectsofthisdiicultsituation

andincreaseourgrossincomeby1.2%tonearly

21,000m,onceagainanall-timehighforBBVA.

Regardingcosts,wehavecontinuedtoinvest

inpeopleandtechnologyinthefastest-growing

markets.Indoingso,wehaveagainanticipated

thenextphaseofthecycle,andourcostshave

risenby7.3%.Wehavebeenabletomakethis

investmentinthefuturewhilemaintainingour

leadingpositionintheindustry,withaneiciency

ratioof42.9%,areturnonequity(ROE)of15.8%andareturnonassets(ROA)of0.89%.

In2010wealsoimprovedthemainindicators

ofassetqualityonourbalancesheet.TheNPA

ratiofellto4.1%,thecoverageratioincreasedto

62%,newnetadditionstoNPAfellby61%and

thebalanceofNPAhasstabilized.Thisagain

setsBBVAapartfromtherestanddemonstrates

thesoundnessoftheanticipatorymeasures

wetookinthefourthquarterof2009.

Atthesametime,wehaveimprovedour

solvency.Followingthesharecapitalincrease

inNovember,weclosedtheyearwithacore

capitalof9.6%,whichweestimatewillbe

LetterfromtheChairman

Theyear2010hasbeenagoodyearforBBVA,

withanewboosttoourcompetitive

positioningwithrespecttothefuture


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6 Executivesummary6

around8.6%oncetheinvestmentinGarantiis

completed.BBVAcontinuestobeoneofthe

soundestinancialinstitutionsintheworld,

oneofonlyfourmajorinancialinstitutionsatagloballevelthatmaintainanAArating.

TheseresultsdemonstrateBBVAsmanagement

capacityandsolidbusinessmodel.Ourmodel

isresilienttotheenvironment,diversiied,

focusedonrecurrentbusinessandcharacterized

byprudentmanagement,thecapacityto

anticipateandlong-termvision.Thesefactors

haveenabledustomaintainourcommitment

toourshareholders,andaccordinglythe

BoardofDirectorswillproposetotheAnnual

GeneralMeetingatotalremunerationof0.42

pershare.Thisyear,inresponsetomanyof

yourrequests,youwillnowbeabletobepaid

theAprilandOctoberdividendsinshares.

In2010wehavealsotakenmajorstepstowards

futuregrowth.OurentryintoTurkey,withthe

acquisitionof24.9%ofGaranti,isaveryimportant

operation.Garantiisanexcellentfranchise,

withamagniicentmanagementteamandan

innovativeapproachtothebankingbusiness

thatisverysimilartothatofBBVA.Itofers

servicestonearly10millioncustomersthrough

acommercialnetworkof863branchesand

over3,000ATMs.Thetransactionincludes

ashareholderagreementwiththeTurkish

businessgroupDogustomanageGaranti

jointly.ItalsoincludesanoptionforBBVA

toappointthemajorityofthememberson

GarantisBoardofDirectorsinthefuture.

InAsia,wehaveincreasedourholdinginChina

CiticBankto15%,andwearecontinuingtodevelopjointprojectsintheprivatebanking

andcarinancesegments.Inaddition,wehave

takenanimportantirststepinIndiabycreating

ajointcompanyinthecreditcardbusinesswith

theBankofBaroda,anIndianbankwithmore

than36millioncustomersand3,000branches.

InSouthAmerica,wehavestrengthened

ourfranchiseinUruguaywiththe

acquisitionofCrditUruguay,makingus

thesecondlargestbankinthecountry.

Toconclude,2010hasbeenagoodyear

forBBVA,withourresultsresistingthe

strain,improvingsolvencyandthemainrisk

indicators.Wehavealsogivenanewboost

toourcompetitivepositioningwithrespect

totheyearstocome.Thisfutureisonein

whichtechnologicalchangesandthegrowing

importanceofemergingcountrieswillplayavery

signiicantrole.Technologyistransformingthe

inancialindustry.WeatBBVAweareadapting

ourbusinessmodelsandinvestingstrongly

intechnology,inprojectsdesignedtochange

theBank.In2010wemadeverysigniicant

progressinournewtechnologicalplatformin

Spainandhavebegunitsdevelopmentinthe

UnitedStatesandinourWholesaleBanking

&AssetManagementdivision.Wehavethe

visionandwearecontinuingtoinvestinit.

Inaddition,BBVAhascontinuedtoposition

itselfinhigh-growthcountries.In2010we

identiiedagroupofcountriesdubbedEAGLE

(EmergingandGrowthLeadingEconomies),

whosecontributiontoglobalgrowthover

thenextdecadeweestimatetobefarabove

thoseintheG7.Wealreadyhaveasigniicant

presenceintwoofthem,MexicoandChina,

andwithourinvestmentinGaranti,wewill

alsobeinTurkey,aEuropeanEAGLE.

In2010wehavealsostrengthenedour

communityinvolvementbyworkingtowardsa

Theseresults

demonstrate BBVAs

management

capacity

andsolid

business

model


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7LetterfromtheChairman 7

betterfutureforpeople.Wehavemadeprogress

tointegratecorporateresponsibilityacrossthe

Groupswholevaluechain.Atthesametime,

wehavereairmedourcommitmenttotheUnitedNationsGlobalCompact,inparticular

totheMillenniumDevelopmentGoals.For

theirsttime,theinformationoncorporate

responsibilityhasbeenfullyintegratedintothe

FinancialReport.Inthisway,wehaveanticipated

themostinnovativetrendsatthegloballevel

promotedbytheGlobalReportingInitiative.

Intheieldofinancialinclusion,theBBVA

MicroinanceFoundationisalreadypresent

inColombia,Peru,Argentina,Chile,Costa

RicaandPuertoRico.Itprovidesmicrocredits

foranaverageof700tomorethan

620,000peopleinLatinAmerica,nearly

25%morethanthepreviousyear.

Intermsofinancialliteracy,thesecondcore

elementofourcorporateresponsibilitypolicy,

wehavealreadyreachedamillionbeneiciaries

throughprogramsinSpain,LatinAmericaand

theUnitedStates.Finally,in2010wejoinedforces

withtheOrganizationofIbero-AmericanStates

toformthelargestalliancebetweenaprivate

entityandaninternationalinstitutiontopromoteeducationinIbero-America.Thisallianceispartof

theEducationalGoalsfor2021project,whichwill

beneitmorethaneightmillionpeopleby2021.

Theyear2011willalsobeadiicultone.AtBBVA

weareclearaboutthepathwehavetotake.

Wehaveagreatteamofpeople:nearlyone

hundredandseventhousandprofessionals

aroundtheworldwhomakeuptheBBVA

team.Thankstotheireforts,enthusiasmand

dedicationwehaveemergedfromthisyear

withstrengthandwewilldosoagainin2011.

Iwouldliketoendbythankingyouall,our

shareholdersforyourcontinuedsupportfor

BBVA.IcanassureyouthatthisGroupwill

workhardwiththeobjetiveofbecominga

betterbankeveryday,continuingtodeserve

yourtrustandmaintainingourprogressin

constructingthebestuniversalbankintheworld.

Theyear2011

willalsobeadiicult

one.AtBBVA

weareclear

aboutthepath

totake.We

haveagreat

teamof

people,sowe

willoncemore

emergefrom

thisyear

withstrength

March 1, 2011

Francisco Gonzlez Rodrguez

Fortheirsttime,theinformationoncorporateresponsibilityhasbeenfullyintegratedintotheFinancialReport.Inthisway,

wehaveanticipatedthemostinnovativetrendsatthegloballevel


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8 Executivesummary8

2010:agoodyearfor

2. Costs, anticipation

or new growth

cycle

1. Income

diversification:

balanced business

portolio withpotential

Earnings strength:

4,606million euros

(+9.4%)

1. Gross income breakdown and evolution (1)

(Percentage)

Spain &Portugal 33

Mexico 27

SouthAmerica 19

Business areabreakdown

Gross incomeYear-on-year change

Emerging markets: higher revenues,developed markets: market share gains

(1) Ex Corporate Activities.

11.2

Emerging

3.6

DevelopedThe United States 12

WB&AM 9

2. Costs breakdown. Year-on-year change (1)

(Percentage)

(1) ) Ex Corporate Activities.

14.4

Emerging

2.5

Developed

3. Investing

in people and

technology

4. And anticipation

in loss provisioning.

4. Loan-loss provisions

in loan-loss provisions

12.2%

Anticipation in 4Q09

Only 38% of theanticipatedadditions actuallyhave become NPAs

Anticipated NPAs

One-off lossprovisions

The United Statesgoodwill

3. Wider distribution network in expandingfranchises

Headcount (1)

Year-on-year change(Percentage)

Investment inchange-the-bank

BBVA Group and EU average(Percentage

of total investment)

(1) Ex Corporate Activities.

,

,

1,

1,

,

,

,

,

,

,

,

4.7

Emerging

People Technology

0.5

Developed

31.8

BBVA2006

43.3

BBVA2010

27.7

EU Average2009

5. Balance o NPAs

stabilizes

Good perormance

in risk:

19basis points in NPA ratio

61%net additions to NPA

6. NPA and coverage ratios(Percentage)

4.3

2009

4.1

2010

57

62NPA ratio

Coverageratio

5. Balance of NPAs(Billion euros)

16.1

June2010

15.6

September2010

15.7

December2010

15.6

December2009

15.9

March2010

6 and 7. And all

risk indicators are

improving.


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10 Executivesummary

BBVAhasbecomestrongeraftertheagreementtoacquirea24.9%

stakeinGaranti,theleadingbankinTurkey.Thisdealgrantsit

accesstowhatisavery attractive market:

Withahigheconomicgrowth.Theconsensusofforecastspoints

toarealaverageincreaseinthecountrysGDPofabout5%

between2009and2012.

Turkey. Size and growth potential

EUCEE (1)Turkey

(1) CEE: Central and Eastern Europe: Bulgaria, Slovenia, Czech Republic, Hungary, Poland, Romania, Slovakia, Estonia, Lithuania.Source: Global Insight 2009.

Germany

82

Turkey

75

France

63

Italy

60

Spain

47

1.6

3.0

5.0

Poland

38

CGDP real growth(CAGR 2009-2012 estimate. Percentage)

Population(Million inhabitants)

Penetration, loan/deposit ratio and ROE

EU

113

EU

127

EU

10

Loan penetration(Percentage over GDP)

Loan/deposit ratio(Percentage)

ROE 2006-2009(Percentage)

CEE(1)

110

CEE(1)

57

CEE(1)

13

Turkey

75

Turkey

40

Turkey

18

(1) CEE: Central and Eastern Europe: Bulgaria, Slovenia, Czech Republic, Hungary, Poland, Romania, Slovakia, Estonia, Lithuania.Source: Central Bank of Europe, Global Insight, Turkish Banking Association, The Economist Intelligence Unit. Morgan Stanley.

Boostingfuturegrowth

WiththeacquisitionofaholdinginGaranti,BBVAhastakenaveryimportantstepintheprocessofcreatingadiverseandbalancedmixofbusinessesandgeographicalareas,withahighgrowthpotential.


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11BBVAin2010

Withoneofthelargestandyoungest

populationsinEurope:75millionpeople,of

whom50%areunder30yearsofage.

Ithasasoundinancialsystemwithapotential

fordevelopment.Turkeyhasthemostattractive

inancialsysteminEurope,withamongthe

lowestlendingpenetrationrates,agood

inancialsituationandhighrecurrentproits.

Garantiisalsoan excellent ranchisewithahigh-

classmanagementteam:

Garantiisoneofthebestbankingfranchises

inTurkeyandenjoysaleadingpositionin

themainproductlines.Ithas9.5million

customers,anetworkof863branchesand

totalassetsofover60,000m.Itistheleading

lendingbankinthecountryandthethirdin

shareofdeposits.Itisalsotheleadingissuerof

creditcards.

Ithasaninternational-classmanagementteamandanexcellentbrandimageamong

Turkishbanks.Garantihasbeennamedthe

BestBankinTurkeyby Euromoneyforthe

tenthtime.

GarantisharesBBVAsfocus,formofbanking

andirmcommitmenttotechnology

andinnovation.Thebankhasthebest

technologicalplatforminTurkey,whichputsit

inaleadingpositionintermsofonlinebanking.

Thedealincludesanoptionforacontrolling

stake,withanunbeatablepartner(theDogus

Group),andinwhichthetimingdependson

BBVA.Inshort,thedealisexcellentforBBVA.

BBVAsinancialsoundnesshasenableditto

continuestrengtheningitsinvestmentsin

theCITICGroup,oneofthemainindustrial

conglomeratesinChina.Speciically,onApril

1,2010,itexerciseditspurchaseoptiononan

additional4.93%ofthesharecapitalofChina

CiticBank(CNCB),raisingitsholdingto15%.This

conirmedtheBanksstrategiccommitmentto

theAsianregion,withrevenuesalmostdouble

overtheyear.BBVAisalsoworkingwithCNCB

onprivatebankingbusiness,autoinance,

corporatebanking,mergersandacquisitions,

tradeinance,markettradingandpensions.

InLatinAmerica,BBVAisstrengtheningits

franchises,whichclosedin2010withbusiness

buoyantandoverallincreasesinmarketshare,

andwithambitiousorganicgrowthplans.ItisalsoworthnotingthatBBVAhasbuiltupits

operationsinUruguaywiththepurchaseof

CrditUruguayBanco(CUB).Thedealmakesit

thesecondlargestprivateinancialinstitutionin

thecountry,withavolumeofassetsofalmost

1,900m,andcustomerfundsofover1,500m.

TheintegrationofCUBwillbeginwhenallof

theauthorizationshavebeenreceivedfromthe

regulatoryauthorities.Thisprocessisexpected

tobecompleteintheirsthalfof2011.

Garanti. Market share as of 31-12-2010

and rankings

(Percentage)

Totaldeposits

11.9

Autofinance

15.1

Mortgages

13.9

Numberof credit

cards

17.1

Numberof points

of sale

22.2

Onlinebanking (1)

37.0

3rd 3rd 1st 1st 1st 1st

(1) Data as of 30-6-2010.

Asia. Gross income

(Million euros)

CITIC

2010

425

2009

228

Breakdown

Asiaorganic

75%

25%

BBVAcontinues

tostrengthenitsexpansioninChinaandLatinAmerica.


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Main entities o the Group

12 Executivesummary

Panama

345 employees18 branches

Ecuador


Colombia

5,867 employees405 branches

Peru


Chile


Venezuela


Paraguay


Uruguay

200 employees

9 branches

Argentina


PuertoRico

865 employees

36 branches

Bolivia


Portugal


London

Brussels

Paris

Dusseldorf

Frankfurt

Switzerland

Milan

Moscow

Mumbai

Sydney

Singapore

Taipei

HongKong

Tokyo

Seoul

BeijingShanghai

NewYork

Havana

Spain

28,416 employees3,024 branches

BBVA,agloballeader

TheUnitedStates


Mexico

34,082 employees1,985 branches

BBVA Group countriesootprint

BranchesRepresentative offices

Foundations

Pension unds

MAP LEGEND

GEOGRAPHICALPRESENCE

Groups banks

Spain

BBVA

Finanzia

Uno-e

South AmericaBBVABancoContinental(Peru)

BBVABancoFrancs(Argentina)

BBVABancoProvincial

(Venezuela)

BBVABancomer(Mexico)

BBVAChile

BBVAColombia

BBVAPanam

BBVAParaguay

BBVAPuertoRico

BBVAUruguay

Rest o the Group

BBVACompass(UnitedStates)

BBVAPortugal

BBVASuiza(Switzerland)

Branches

BrusselsDusseldorf

Frankfurt

HongKong

London

Milan

NewYork

Paris

Singapore

Tokyo

Representative

offices

Beijing

Brussels

Havana

Moscow

MumbaiSeoul

Shanghai

Sydney

Taipei

Foundations

BBVAFoundation

BBVAMicroinanceFoundation

BBVABancomerFoundation

BBVABancoContinentalFoundation

BBVABancoProvincialFoundation

BBVABancoFrancsFoundationBBVACompassFoundation

Pension unds

BBVAPensiones(Spain)

AforeBancomer(Mexico)

AFPGnesis(Ecuador)

AFPProvida(Chile)

AFPHorizonte(Peru)

AFPHorizonte(Colombia)

PrevisinAFP(Bolivia)


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13BBVAin2010

Businessfocus:business

areasempowermentsupportedbyholdingunitstoassureintegeranduniiedmanagementwith

regardtodiferentrisks...

Loan s Deposit s Pen sion s

Spain 2nd 2nd 1st

Mexico 1st 1st 2nd

Argentina 3rd 2nd -

Bolivia - - 1st

Chile 5th

4th

1st

Colombia 4th 4th 3rd

Ecuador - - 1st

Panama 4th 4th -

Paraguay 3rd 3rd -

Peru 2nd 2nd 3rd

Uruguay(1) 2nd 2nd -

Venezuela 3rd 3rd -

(1)IncludesCrditUruguay.Scope:SpainandLatinAmerica.

Marketsharerankingin

maincountriesin2010

Strongfranchisesholdingtop-rankingpositionsineachandeverymainmarket.

Organizationchart

Chairman & CEO

President & COO GeneralSecretary

Legal,Tax,AuditandCompliance Serv ic es

BrandandCommunication

AccountingandConsolidation

CorporateStrategyandBusiness Development

Innovation and Technology

SpainandPortugal Mexico SouthAmerica TheUnitedStates WB&AM

Finance GlobalRiskManagement

HR and Services

Chairmans areas

Business units


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14 Executivesummary

In2010theglobaleconomyrecoveredfrom

themajorslumpof2009,withGDPpickingup

fromafallof0.6%toariseof4.8%.Thisigure

isnotfarfromlevelintheyearsimmediately

beforethestartofthecrisisintheSummer

of2007.However,theeconomicrecoveryis

notevenlyspreadacrossregions.Emerging

economies,particularlythoseinAsiaandLatin

America,haveshownthemostrobustprogress

andareturningintothemajordriversofglobal

growth.

Three elementshavegivenshapetothe

economicdevelopmentsinthedierentzones.

First,thefocusofattentionhascontinued

tobetheleveloftensioninthefinancial

marketsandthevariousmeasuresthatthe

authoritiesweretakingtocounterit.Butunlike

whathappenedin2009,in2010theorigin

anddevelopmentoftheproblemshasbeen

morelimitedinEuropeand,speciicallyinthe

governmentdebtmarkets,althoughtension

hasattimesspreadtootherregionsandother

assets.Thisdierencewasconsolidatedinthe

marketsbystimulatingactivitythroughiscal

policiesandguaranteeingthesustainabilityof

thepublicaccounts.Theperipheralcountries

intheEurozonehavebeenmostaected

Thefocusin2010hasbeenontheneedtoguaranteethesustainability

ofpublicaccounts.

2011:TheeconomicbackgroundandBBVApositioning

Theeconomicbackground

Theglobaleconomyrecoversin2010,buttherecoveryvaries

acrossregions.


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inthisrespect,assomeofthemcombined

highdeicitlevelsintheirpublicaccountswith

reducedgrowthprospects.TheEuropean

stabilizationmechanismwaslaunchedinthe

springof2010.Greecewastheirstcountryin

whicharescueplanwasundertakenbythe

InternationalMonetaryFund(IMF)andthe

EuropeanUnion(EU).

Doubtsaboutthesustainabilityofthepublic

accountsinotherEuropeancountriesand

thestateofsomesegmentsoftheEuropean

inancialsystemgaverisetointensecontagion,whichresultedinade factoclosureofthe

markets.Theseriousnessofthesituationled

toawarenessoftheneedtoimplementirmer

measures.AlloftheEuropeangovernments

presentediscalconsolidationplans,which

weresubsequentlystrengthened,withtheaim

ofachievingadeicitof3%byaround2013.

Theseplansasawholehaveallowedsome

distinctiontobemadebetweendierent

assets.Theiscalconsolidationmeasures

wereaccompaniedbystructuralmeasuresin

thosecountriesmostaectedbyproblemsof

competitionandinancingneeds.

However,intheSummerof2010tension

returned,mainlyasaresultofreneweddoubts

regardingtheEuropeaninancialsector.The

authoritiesreactedwiththepublicationof

theinancialsystemsstresstestsundera

scenariothatwasunlikelybutofgreatimpact.

Theresultsconirmedthegoodhealthofthe

Europeaninancialsystem,whilethesolvency

problemshavebeenkeptwellincheck.Thesestresstestswereparticularlydemandingin

thecaseoftheSpanishinancialsector,both

intermsofcoverage(practicallytheentire

system)andtheseverityofthestarting

assumptions.Theygaveaddedcredibilityto

theBanksperformanceinSpain,demonstrated

thesoundnessofthesystemandmadeit

clearthatitincludessomeofthemostsolvent

inancialinstitutionsinEurope.Theseresults

undoubtedlyledtothegradualopening

upofthemarketandthesubsequentasset

dierentiation.

Towardstheendof2010tensionbeganto

reappear.Thistimeitwastheresultofvery

dierentproblemsinIrelandandPortugal.The

publicaccountsoftheIrisheconomywere

threatenedbythehugeinjectionsofcapital

thatitsinancialsystemhadneededdueits

declaredsolvencyproblems,whichhave

beenestimatedat30%ofitsGDP.Intheend,

Irelandneededanassistanceplanfromthe

IMFandtheEU.InthePortugueseeconomy,in

contrast,theweaknessoftheinancialsystem

ismoreaquestionofliquiditythansolvency,

butitspublicaccountsstillhadproblemsin

complyingwiththeobjectivessetout,while

doubtspersistedregardingtheeconomyspotentialforgrowth.Inaddition,tensionswere

heightenedbytheuncertaintyaboutthenew

Europeangovernancemechanismsandin

particularbythedetailsofthenewpermanent

mechanismforsovereigndebtrestructuring,

whichwillbeinplacefrom2013oncethe

currentframeworkapprovedinMayexpires.

The second elementthathasshaped2010

hasbeenthecyclicaldoubtsontheUnited

States economyandtheresponseinterms

ofeconomicpolicy,boththenewmonetary

expansionintroducedbytheFederalReserve

(Fed)knownasquantitativeeasing2(QE2)

andnewexpansionaryiscalpolicies.Theswift

recoveryshownbytheUnitedStates.atthe

endofthe2009loststeamatthestartof2010,

althoughgrowthwasmaintainedthroughout

theyear,makingtheinalrateclose,onaverage,

to3%in2010.Thislossofintensityrelected

weakprivatedemandastheiscalstimuliof

2008and2009werewithdrawn.Theresultwas

renewedfearsaboutadoublediprecession,thoughthisscenariohassubsequentlybeen

ruledoutbydataandactiononeconomic

policy.Evenso,therecoveryisstillextremely

limitedduetothreefactors.First,thegradual

lossofstrengthintherealestatemarketasthe

stimulusprogramsforhomebuyingexpired;

second,theweaknessofthelabormarket;and

inally,thehouseholddeleveragingprocess,

whichisstillunderway.TheUnitedStatesis

relativelyisolatedatpresentfrompressurein

favorofiscalconsolidation.Nevertheless,the

mainthrustofeconomicpolicyattheend

of2010camefromtheFed,whichinitiateda

newprogramofmonetaryexpansionthathas

initiallyledtoadownwardpressureoninterest

Theresultsofthestresstestshaveconirmedthegoodhealth

oftheSpanishinancialsystem.

Noreturnto

recessionisexpectedintheUnitedStates:

rather,agentleslowdown.


20/208

16 Executivesummary

ratesandasigniicantdepreciationofthedollar.

Inanyevent,noreturntorecessionisexpected

inthefuture,butratheragradualslowdown

fromthehighratesofgrowthpostedattheend

of2009andthestartof2010.

Finally,2010wasalsonotableforthecollateral

eectsofrelaxedeconomic policiesinadvancedeconomies,inparticularmonetary

policies.Thisgaverisetogrowingdilemmas

inemergingeconomiesinAsiaandLatin

America.Theseeconomieshavebeenquickto

recovergrowthandoutputtopre-crisislevels

andhavehardlynoticedsignsofslowdown,

eventhoughtheauthoritieshaveintroduced

measurestopreventeconomicoverheating,

particularlyinthecountriesmostaectedby

thesteepincreasesofsomeassetprices.The

newmonetaryexpansionintheUnitedStates

hasintroducedanaddedcost,giventhat

thedollarsdepreciationrepresentsagreater

incentiveforassetswithgreaterrisk.Someof

theseeconomiesarefacinggrowingcapital

inlowsthatareputtingadditionalpressureon

exchangerates.Asaresult,somecountries

haveintroducedmeasurestolimitcapital

inlowsandslowdowncreditgrowth.

Evenso,growthinSouth Americacontinuesto

besound,withGDPfortheregionclosing2010

atagrowthrateabove5%.Privatedemandisreplacingtheeconomicpolicystimuliadopted

asthemainsourceofrecovery.Although

inlationismaintainingamoderatelyupward

trend,itisstillnotaproblem.InChina,the

latestoutputindicatorssuggestarenewed

GDPsurgeaccompaniedbyariseininlation.

Thishasledtoanincreaseinboththereserve

ratiosandinterestrates,inaclearsignof

commitmenttorebalancetheeconomywhich

neverthelessclosed2010withaGDPincrease

ofaround10.3%.

TheMexican economybeneitedfromthe

recoveryinforeigndemandintheUnited

Statesovertheirsthalfof2010.Inthesecond

halfoftheyear,Mexicoprovedresistantto

weakerforeigndemand,asthereducedpull

oftheU.S.economywascompensatedbya

surgeindomesticdemand.Asaresult,growth

rateseasedlesssharplythanexpected,with

2010growthendingaround5%.Inlation

closedatanall-timelowof4.4%asaresult

oftheappreciationofthepeso,moderate

internationalpricesandthelackofpressure

fromdomesticdemand.Nevertheless,the

monetarypausewillprobablyremainin

placeatleastthroughout2011.Finally,ina

globalinancialenvironmentfocusedoniscal

sustainability,thecommitmenttoabalanced

budgetisaparticularstrengthoftheMexican

economy.

InTurkey,theeconomyrecoveredin2010,

withagrowthof7.6%andinlationslightly

undertheCentralBankstarget.Atthesame

time,publicdebtreductionispickingupspeed.

Giventhissituation,theCentralBankhas

loweredtheoicialinterestrateandcontrolled

creditwithincreasesinthebanksshort-term

reserverequirements.

Long-terminterest rates,bothintheUnited

StatesandinEurope,havemovedconsistentlyinlinewiththeperceptionofthestrengthof

thecyclicalrecovery.Inthesecondandthird

quarters,thetrendwasdownward,while

inthefourthquarter,aspositivesurprises

ineconomicactivityreducedtherisksofa

double-diprecessionandarecoverybegan,

thetrendwasreversed.Thecontinuityof

lowoicialinterestratepoliciesindeveloped

countriesisexpectedtolimitupward

movementsonthepublicdebtyieldcurves

overthecomingmonths.

Interest rates

(Quarterlyandannualaverages)

2010 2009

Year 2010 4Q 3Q 2Q 1Q Year 2009 4Q 3Q 2Q 1Q

OicialECBrate 1.00 1.00 1.00 1.00 1.00 1.25 1.00 1.00 1.10 1.92

Euribor3months 0.81 1.02 0.87 0.69 0.66 1.22 0.72 0.87 1.31 2.01

Euribor1year 1.35 1.52 1.40 1.25 1.22 1.61 1.24 1.34 1.67 2.22

Spain10-yearbond 4.28 4.73 4.23 4.19 3.95 4.02 3.83 3.92 4.16 4.17

USA10-yearbond 3.19 2.86 2.77 3.47 3.70 3.24 3.45 3.50 3.30 2.70

USAFederalrates 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25

TIIE(Mexico) 4.91 4.87 4.91 4.94 4.92 5.89 4.93 4.90 5.89 8.00

AsiaandLatin

Americahaverecoveredtheirgrowthand

outputlevels.


21/208


consolidated,althoughthemostprobable

scenarioisforsomeslowdown.Therisein

globalGDPcouldbearound4.4%,barelybelow

theigurefor2010.Thisgrowthwillvary,andinmostadvancedeconomiesitwillbesubjectto

risksanduncertaintiesthathavestillnotbeen

clearedup.Amongtheadvancedeconomies,

theUnited Stateswillonceagainleadthe

growthtable.However,althoughsomefactors

stilllimitthegrowthofprivate-sectordemand

(therealestatesector,thelabormarketand

thedeleveragingprocess)andmakeitdiicult

forgrowthtoreturntosomethingclosetoits

potential,GDPisstillexpectedtogrowat3%

in2011.InEurope,althoughsomecountries

havehadsurprisinglygoodresults(particularly

Germany),amodestgrowthisexpectedof

around1.7%.TheSpanish economy,which

wassluggishin2010,couldbeginaprocessof

recovery,butitwillstillbeweakandinsuicient

tocreatejobs.ForecastssuggestaGDPgrowth

slightlybelow1%(-0.2%in2010).Progress

willbestronginemergingeconomies.Asia,

withChinaleadingtheway,willoncemore

betheregionwiththehighestgrowth,which

willremainover6%forAsiaasawhole,and

above9%inChina.Theseiguresarevery

positiveprovidedthattherisksofinlation

andoverheatingcanbereduced.Therecent

strengthofLatin Americawillbemaintained,

withagreatercontributionfromdomestic

demandinanenvironmentoffavorable

commodityprices.Growthover4%isexpected

fortheregionasawhole,andover4.3%for

Mexico.Finally,theTurkish economywill

continuebuoyantin2011,withagrowthof4.5%.

Onthe oreign exchangemarketsthedollars

trendwasformoderatedepreciationagainst

AsianandLatinAmericancurrenciesduring

theyear.ThiswasinterruptedinMayduetogreaterriskaversion(thesafe-haveneect),

butwasresumedinJuneandencouraged

afterthesummerasaresultoftheanticipation

ofgreaterassetpurchasesbytheFed(QE2).

Theeurodepreciatedsigniicantlyagainst

thedollarintheirsthalfoftheyear.Itwas

furtherweakenedbytheincreasedtension

intheEuropeanperipheryinthesecondhalf

oftheyear.Inall,asanannual averagethe

dollarappreciated5.2%againsttheeuro.This

combinationofaweakeuroandthestrength

oftheemergingcurrenciesagainstthedollar

resultedinagenerallyfavorableperformance

ofthecurrencieswiththegreatestweightin

BBVAsinancialstatements,withsigniicant

appreciationsinthecurrenciesofMexico,

Colombia,PeruandChile.Asaresult,the

eectiveexchangerateispositiveinayear-on-

yearcomparison,despitethedevaluationof

theVenezuelanbolivar.Withrespectto

year-end exchange ratestheVenezuelan

bolivardepreciatedduetothedevaluation

earlyonintheyear.Theothercurrencies

withanimpactontheGroupsbalancesheet

appreciated,sotheireectispositiveon

balancesheetitemsandbusiness.In2011the

forecastisforfurtherappreciationofthedollar

againsttheeuro,whileemergingcurrencies

haveroomforappreciationagainstthedollar.

Withrespecttoprospects or 2011,the

globaleconomicrecoveryisexpectedtobe

Exchange rates

(Expressedincurrency/euro)

Year-end exchange rates Average exchange rates

311210D% on

311209 311209D% on

311208 2010D% on

2009 2009D% on

2008

Mexicanpeso 16.5475 14.4 18.9222 1.6 16.7372 12.3 18.7988 (13.3)

U.S.dollar 1.3362 7.8 1.4406 (3.4) 1.3257 5.2 1.3948 5.4

Argentineanpeso 5.4851 1.3 5.5571 (11.5) 5.2686 (0.1) 5.2649 (10.6)

Chileanpeso 625.39 16.8 730.46 21.3 675.68 15.1 777.60 (1.9)

Colombianpeso 2,557.54 15.0 2,941.18 6.3 2,518.89 18.2 2,976.19 (4.0)

Peruviannewsol 3.7528 10.9 4.1626 4.9 3.7448 11.9 4.1905 2.4

Venezuelanbolivarfuerte 5.7385 (46.1) 3.0934 (3.4) 5.6217 (46.7) 2.9950 5.4

Theeconomicrecoverywillbe

consolidatedin2011,although

withacertainslowdown.


22/208

18 Executivesummary

BBVA: a paradigm o recurrent earnings,sustainability and strength

Morethanthreeyearssincethestartofthecrisis,BBVAcontinuestoshowanexcellentcapacitytogeneraterecurrentandsustainable

earningsandanoutstandingstrengththatgivesittheabilitytotake

advantageofanyopportunitiesthatmayarise.BBVAisaparadigm

of:recurrency,sustainabilityandstrength:

Recurrent earnings and sustainability,becauseinan

environmentofgreatstress,BBVAiscapableofmaintaining

stableearningsandleadershipineiciencyandproitability.

Theseearningshavealsobeencompatiblewithamajoreort

inloan-lossprovisioningandahighlevelofinvestmentinthe

brand,franchises,peopleandtechnology.

Dierential strength,becausetheGrouphasaresistant,well

capitalizedbalancesheetwithrisksthatarewell-knownand

controlledandwithanadequateinancingstructure.Despite

thepressuresueredbytheinancialsystemasawhole,the

BBVAbalancesheethasbeencharacterizedbystrengthinits

risk,solvencyandliquidityindicators.Asaresult,BBVAhasnot

requiredanybail-outandhenceavoidedthegenerationofany

costtothesocietieswhereitoperates.

Inshort,BBVAcontinueswithitssuccessfulmanagementofthe

fourkeyleversofearnings,risk,capital andliquidity,underastrict

codeofconduct.Thishasbeenpossiblebecausethroughoutits

history,theBankhasdevelopedawinning business model that

isfocusedonthecustomerratherthantheproduct.Itisuniversal

anddiversiied,notonlyintermsofcustomerandproduct

segments,butalsobusiness(banking,insurance,pensions,asset

management,etc.)andgeographicalareas(Europe,Asiaandthe

Americas).

Inall,thepillarsoftheBBVAbusinessmodelareitscustomers,

distribution,simpleprocessesandtechnology.TheGroups

bankingmodelisbasedoncreatingvaluefromclose,lastingand

mutuallybeneicialrelationshipswithitscustomers.Itscustomer

baseisbroadanddiversiied,withalmost48millioncustomers

throughouttheworld.Itissupportedbyoneofthemostextensiveandcloselyintegrateddistribution networksontheplanetmaking

thebankaccessibleviaanychannelatanytime.Theemphasisis

onsimplicity,providingcustomerswithproductsandservicesat

thelowestcostandintheshortestpossibletime.Thisinvolvesa

newformofcustomerrelationsandaradicalchangeintheinternal

processesoftheOrganization:inhowthingsaredone.Finally,BBVA

continuestomakeamajoreortintheareaoftechnology.During

thecrisis,ithasinfactbeenoneofthefewbankstoincreaseitsrate

ofinvestmentintechnology,withapriorityonthoseprojectsthat

willtransformtheBank.

ThisbusinessmodelwillenabletheGrouptobepreparedfor

changesthatareonthehorizon,amongthemanewregulatory

frameworkandadistinctcompetitivescenario.

The new regulatory ramework

Thediicultsituationoverthelastthreeyearshasforcedthe

inancialsectortochangetherulesofthegametomakeitmore

transparent,probablysmaller,betterregulatedandwithamore

signiicantroleforthesupervisorybodies.

Therehasbeenamajorboosttotheregulatoryagendain2010,on

bothaglobalandregionalscale,withsigniicantprogressmadeon

anumberofdiversefronts:

BBVApositioning

Investment in "change-the-bank"BBVA Group vs. European Union average

(Percentage of total investment)

BBVA

European Unionaverage

2009

27.7

2006

31.8

2010

43.3


23/208


Macroprudential supervision

Macroprudentialsupervisionhasbecomeoneofthemajor

challengesforinancialregulationatagloballevel.Itaimstoreduce

thechanceofacollapseoftheinancialsystemasawholeby

mitigatingsystemicriskthroughthecombinationofexistingtools

andnewerones.Forexample,inEuropetheauthoritieshavetaken

amajorstepforwardbyapprovinganewinancialsupervisoryframeworkthroughthenewEuropeanSystemicRiskCouncil

(ESRC).StartingonJanuary1,2011,theEuropeanbankingsectorwill

haveanewsupervisor,theEuropeanBankingAgency,whichisin

chargeofoverseeingcompliancewithEuropeanUnionregulations

andmakingprogressinharmonizingthenationalregulatory

frameworks.TheUnitedStateshascreatedtheFinancialStability

OversightCouncilandMexicohassetupitsownFinancialStability

Council.

Amongtheimportanttoolsforthismacroprudentialpolicyare

thestress tests.InJuly2010,theCommitteeofEuropeanBanking

Supervisors(CEBS)coordinatedanexerciseusingthesetests.The

publishedresultswerewellreceivedbytheinancialmarketsvery

positively.Theyalsovaluedtheoutstandingrobustnessofthe

Spanishsector,withthetestcoveringthe95%oftheassetsofthe

inancialsystem,andthehighleveloftransparencyprovidedbythe

BankofSpain,thusenablingtheclearestpossiblediscrimination

betweenbanks.InthecaseofBBVA,thepublicationoftheresults

ofthestresstestsconirmedtheGroupsstrengthasoneofthe

soundestandsolventbanksinEurope.Thefactthattheexercise

willberepeatedin2011iswelcomedverypositivelybyBBVA.

New regulations

Thenewregulationstobeintroducedincludeaprocessof

internationalstandardizationonanumberoffronts,including

solvency,liquidity,leverage,transparencyandremuneration

policy.Theobjectiveistotransformtheinancialsystemintoone

wherebusinessismoresecureandrecurrentandlessprocyclical;

withgreaterriskcoverageandreturnsbetteradjustedtothe

risksassumed;moresolventandwithgreaterqualityofcapital,

transparencyandconsistency;andwithabetter,liquidityposition

andlessleveraged.

Basel III basicallyregulatessolvency,liquidityandleverage.With

respecttosolvency,inancialinstitutionswillhavetoincreasethe

qualityandquantityofcapitaltheyholdaccordingtotherisksthey

assumeintheiractivity.Inaddition,aprocyclicalprovisionmay

berequiredwhenthereisexcessivegrowthinaggregatelending.

Newliquidityrequirementshavebeenaddedtothesecapital

requirements.Theaimistoensurethatthebankshavesuicient

cashorequivalenttoovercomeaverysevereshort-termscenario,

withlesssevereconditionsinthelong-term.Italsoestablishes

leverage limits.

Allofthesemeasureshaveanintroductoryperiodfortheir

implementationbeginningin2013andendingin2018.Thebanking

industryisthusfacedwithafewyearsofmajorchallengesinwhich

toadapttothenewregulations.InthespeciiccaseofBBVA,the

GroupisinacomfortablesituationtocomplywiththenewBasel

IIIregulationsandfacefuturecrisisscenariosinamoresecure

position:

Itisamongthebestcapitalizedinternationalinstitutionsthanks

toitsquarter-by-quarterorganiccapitalgeneration.

Thispositionhasalsobeenstrengthenedafteritsrecentsuccessfulsharecapitalincrease.Withthisoperation,BBVA

hasoncemoredemonstrateditscapacitytobeproactive;

ithasanticipatedpossiblefuturecapitalincreasesbyother

banksdesignedtoensurecompliancewiththenewsolvency

requirements.

Ithasabalancesheetwithfullyknownandlimitedrisks.

Ithasacomfortableliquiditypositionandadequateleverage,

complyingwithallregulatoryrequirements.

Withrespecttothenewremuneration ramework,both

governmentsandregulatoryauthoritiesinthecountriesmost

aectedbytheinancialcrisishaveintroducedvariousmeasures

designedtoensurethatthevariableremunerationsystemsare

adaptedtothelevelofriskassumed.Speciically,withinitsprojectto

modifyDirective48/2006,theEuropeanCommissionhasdecided

toincludealltheFinancialStabilityBoards(FSB)Principlesfor

SoundCompensationPractices.Amongthemainnewpointsare

thattheBankofSpainwillcarryoutmonitoringandsupervision

duties,andsanctionthosebanksthatdonotcomplywiththe

regulationsasapproved.TheSustainableEconomybillalso

expresslymentionsthenewrequirementsregardingthequestion

ofremuneration.Speciically,recommendationsareincludedforremunerationpoliciesthatarecoherentwithaprudentandeicient

riskmanagementandthatincreasetransparencyandimprove

corporategovernancebyimposinggreatercontrolonexecutive

remuneration.Inthisrespect,itisimportanttopointoutthatBBVAs

remunerationsystemcomplieswiththerecommendationsofthe

proposedlaw.Itsvariablecompensationpolicyfortheexecutive

team,basedonaprudentandeicientriskmanagementand

withpaymentsontheshort,mediumandlongterm,complies

withtheserequirements.ForBBVA,thissystemrepresentsa

competitiveadvantage,asitoptimizestherelationshipbetween

valuegenerationinthemediumandlongtermandeicientrisk

management.

Finally,anotherofthefrontsonwhichprogressisbeingmadeis

thecreationofacrisis management and resolution ramework

forglobalbankswhenthesearenolongersolvent.Throughout

2010,theregulatorshavetakensigniicantstepsthroughthe

reformofDodd-FrankintheUnitedStates,andthroughaformal

EuropeanCommissionproposalinEurope,whoseinalversion

willbepublishedinthespringof2011.Thesemovesincludethe

aimtoimplementtoughercapitalrequirementsforsystematically

importantinancialinstitutions.Currently,BBVAalreadyhasmost

oftheinstrumentsproposedintheregulationsapproved,thuscontributingtothestabilityoftheinancialsystemswhereit

operatesandalsoanticipatingtheregulatorychallengesscheduled

forthecomingyear.Anyeicientsolutionmustcreatetheright


24/208

20 Executivesummary

incentivesforachievinginancialstabilityata

globallevel.Simplisticmeasuresbasedonlyon

sizemustbeavoided,andvariousmitigating

factorsshouldbeincludedintheproposed

solutions:thebusinessmodel;thecomplexity

oftheorganizationalstructure;theexistence

ofsubsidiarieswithdecentralizedliquidity

management;theintensityofsupervision;thequalityofcorporategovernance;andstrong

marketinfrastructures.Thesefactorsallow

prudentbanksthatoperateinaccordance

withtheobjectiveofinancialstabilitytobe

distinguishedfromthosethatdonot.

The new competitive scenario

Inadditiontotheabove,thesectorwillhaveto

faceanothermoredeeptransformationthatwill

requireagreatinnovativeeortofthebanks.

Technological,socialandeconomicchangesthat

haveredeinedtheforminwhichotherindustries

operatewillalsobethedriversofchangeinthe

bankingsysteminthefuture.Inthemediumterm,

acompletelynewplayingieldisexpectedforthe

industrywithnewactorsmakinganappearance

(moretechnological,withnewproposals,more

lexible,etc.),newformsofbanking(newadded

valueproposals)andnewformsofrelationships

anddistribution.Thebanksthatunderstandand

adapttothischangewillbethosethatregisterthegreatestfuturegrowth.

BBVA is prepared to lead thisnew phase or the financialsystem

Wearepreparedforthisnewphasebecause

BBVAsmanagementhasalwaysbeen,andwill

alwaysbe,theembodimentofproactiveand

prudentpolicy.Prudent,becausealldecisions

havebeentakenbasedonexhaustiveandprecise

measurementofreturnsadjustedtotherisks

assumedorthatwillbeassumed.Thispremiseis

thebasisfortheconstructionofabalancesheet

withlimitedrisksandgreatstructuralstrength

andthatispreparedtocomfortablyassume

anyupcomingregulatorychanges.Atthesame

time,ithasenabledustoovercomethecrisis

withouttheimpactsexperiencedbymostofthe

inancialindustry(forexample,withoutexposure

totoxicassets).Andproactive,becausethis

capacitytoanticipateeventshasbeenkeytotheGroupsperformanceinthesediicultyears.Itwill

continuetobeinstrumentalinanincreasingly

globalanduncertainfuture.

BBVAalsohasagoodlevelofdiversiication.

Recurringearningsare,toalargeextent,the

resultofaportfoliothatisdiversiiedinterms

ofgeography,businessandcustomers.Today,

morethan58%oftheGroupsearningscome

fromAmericaandAsia,regionsinwhichBBVA

operatesthroughleadingfranchises.Thisallows

theGrouptotakebetteradvantageoftheopportunitiesineacheconomy.

Inlinewithitsproactivestance,BBVAnever

losessightofthemanagementoftheBanks

futureandtheneedtoanticipateevents.In

2010,theBankimplementednewprojectswith

theaimofstrengtheningitspositionafterthe

inevitablediscriminationthatwillresultfromthe

newenvironmentanditsdiiculties.Withthis

objective,ithasworkedonthreeelementsin

particular:

Anorganic growth plan,basedon

addressingamorecomplicatedenvironment

andanticipatingnewdemandsfrommore

demandingcustomers.

Consolidation o the business approach

in the dierent areas,byanticipatingand

accompanyingthechangeswithinthenew

schemeofglobaleconomicgrowth.

Maintenanceofthestructural strengthofits

balancesheet.

The BBVA ranchises

TheBBVAfranchisessharetheGroupsbusiness

andmanagementmodel.However,each

franchiseisatadierentstageofdevelopment

andatadierentmomentintheeconomiccycle.

Eachthus,hasdierentspeciicpriorities.

Spain and Portugalhasdemonstrated

agreatcapacityforanticipation,which

hasenabledittofarethecrisisinbetter

conditionsthanitscompetitors.Thisputs

BBVAinagoodpositiontotakeadvantage

oftheopportunitiesthatwillemergeina

marketundergoingarestructuringprocess,

wheremajordierenceswillemerge

betweenstrongbanksandtherest.The

launchofPlanUnohasbeenanextremely

importantstepinthecommercialstrategy

ofthearea,whichcontinuestobemoving

towardsanincreasinglycustomer-focusedorganization.In2011thefocuswillcontinue

tobethepersonalizedmanagementofthe

customerbase,increasingcustomerloyalty,


25/208


andthedevelopmentofnewchannelsfor

customerconveniencewiththepossibilityof

customization.

TheleadingpositionoftheBBVAfranchisein

Mexico willenableittotakefulladvantageof

theeconomicrecoveryandtheopportunities

forextendingbankingpenetrationinthecountry.ThiswastheaimoftheStrategic

GrowthPlan20102012launchedthis

year.Thisplanwillleadtoaqualitative

transformationofthebusinessmodel,service,

commercialeiciency,controlandmonitoring

ofactivityandrisk,andthustheBanks

proitabilityasawhole.Mexicoiscurrently

inapositiontoconstructthebankofthe

future,withabasicfocusoncustomersanda

dierentwayofrelatingtothem.

TheSouth Americanfranchiseisalso

expectedtocontinueitsgoodperformance,

asithasthroughoutthewholecrisis.Regional

leadershipinthisareamustbeusedto

reinforcethelocalpositioningofeachbank

withineachcountry.Themanagement

prioritiesfor2011willbefocusedonthe

customerbase(newcustomers,growth,

loyaltyandmarketshare),theprogresswith

thecustomerinsightandbusinessintelligence

models,increasedcommercialproductivity,

maintenanceofeiciencyinthepensionbusinessandcontinueddevelopment

andimprovementofamulti-channel

approach.Growthwillalsobebasedonboth

technologicalandmanagementinnovation.

The United States.ThisisoneoftheGroups

strategicmarkets.DeploymentofBBVAs

businessmodelandtechnologicalplatformis

beingsteadilyextendedinthisarea,withclear

operationalimprovementseveryquarter.Asa

result,theweightoftherelativecontribution

ofthisfranchisewillgraduallyincrease.A

dierentiationplanwillbeimplementedin2011

thatiscapableofsupplyingtheproductsand

servicesrequiredfortheneedsoftheBanks

dierentcustomersthroughtheappropriate

channels.And,ofcourse,technologywillplay

animportantroleinallofthis.

China and Asia.Theresultsintermsof

earningsandtheBankscommitmenttothe

regionhavebeguntoregisterin2010.Inthe

mediumtermthecontributionofthisareaisexpectedtoincreaseevenmorethankstothe

multipleinitiativesthatarebeingundertaken

inthearea.

Wholesale Banking & Asset Management

(WB&AM)willcontinuetoenhanceits

modelacrosstherestoftheareas,basedon

globalization,strongcustomerrelations,and

improvedproductcapacitiesandinnovation.

ThestrategicalliancewiththeCITICgroup

willcontinuetobestrengthenedintheAsian

regionbydevelopingthecollaboration

agreementsalreadyinplaceandsearching

fornewopportunities.

Afurtherstepwastakenin2010todiversify

BBVAsbusiness,inlinewiththenewframework

ofglobalgrowth,throughtheagreementto

acquire24.9%ofGarantiinTurkey.Thisgives

BBVAentryintooneoftheemergingmarkets

withthegreatestgrowthpotentialandoneof

thebestbankingfranchisesinthecountry.In

thisrespect,itisworthnotingthegoodearnings

iguresreportedbytheBankfor2010,withanet

attributableproitup6%year-on-yeartoall-time

high.Thedrivingforceofgrowthcontinuesto

betheexcellentperformanceofthelending

business,whichwasup31%,eventhoughasset

qualitywasnotnegativelyaected.Infact,the

NPAratioandriskpremiumimprovedoverthe

year.Garantistrengthensthebusinessportfolio

andBBVAsgrowthproile.Similarly,GarantibeneitsfromBBVAsexperienceinmarketand

productdevelopment.Inotherwords,BBVAs

experienceofsimilarsuccessfuldealsconcluded

inothermarkets(aboveall,LatinAmerica)gives

itthecapacitytoboostGarantisgrowthinthe

future.

BBVA always ocuses on itscustomers

Thesetimesofuncertaintyandchangedemand

thatallinancialinstitutionsthathopetoprevail

bereadilyabletoadapt.Butthisenvironment

alsorepresentsagreatopportunityforBBVA.It

hasimplementednumerousproactiveplansand

initiativestoensuretransformationandgrowth.

Butatleastonethingwillremainunchanged:our

commitment to our customers andthesociety

inwhichweoperate.Ouraimistosupportthem

eveninthemostdiicultcircumstances.This

appearssimple,buttodayitisonlywithinthe

reachofafewbanks.AtBBVAweareproudtobeoneofthesefew.


26/208

22 Executivesummary

SpainandPortugal

Margins(Year-on-yearchange)

Keyratios

5.5%

39.0%

9.0%

46% 0.6%

8.0%

5.0%

Gross income

Eiciency


Coverage Risk premium

Operating income

NPA


27/208


Thekeyin2010:

Increasedmarketshareanddierentialperformancethroughouttheincomestatement.

Outlookfor2011:

Pressureonmargins,dierentialperformanceinrisksandincreasedmarketshare.Maximizeopportunities.

Increasedmarketshareinkeyproductsforcustomerloyalty:residentialmortgagesand

customerdeposits.

Diferentialincomeperformance.

Strictcontrolofoperatingcosts.

Positivetrendofriskindicators,asaresultoftheproactivemeasurestakenin2009.

BestprivatebankinSpainaccordingtoEuromoneyandTheBanker.

PlanUnolaunch,whichhasbeenaveryimportantstepintheareascommercial

strategy.


28/208

24 Executivesummary

Mexico


Keyratios

+0.5%

34.6%

+11.9%

152% 3.6%

3.4%

3.2%

Gross income

Eiciency



Operating income

NPA


29/208


Thekeyin2010:

Upwardtrendinearnings.Improvementinbusinessactivityandriskindicators.

Outlookfor2011:

Leadershipconsolidation,upwardtrendinearningsandreducedriskpremium.

Signiicantrecoveryinbusinessactivity.

Growthinmarketshareinstrategicsegments.

Solidearningsthatsetitapartfromtherest.

Majorimprovementintheriskpremium.

Soundliquidityandcapitalmanagement,withthelargest-eversubordinatedebtissueon

internationalmarketsbyaMexicanbank.

Numerousprizesandawards.InformationWeekmagazinenamesBBVABancomerone

ofcountrysmostinnovativecompanies,andLatinFinancenominatesittheBestBankin

Mexico.SegurosBBVABancomerischosenasbestinsurancecompanyinMexicobyWorld

Finance.

20102012StrategicGrowthPlanLaunch


30/208

26 Executivesummary

SouthAmerica


Keyratios

+9.7%

43.9%

+16.5%

130% 1.5%

+6.4%

2.5%

Gross income

Eiciency



Operating income

NPA


31/208


Thekeyin2010:

Excellentperformancethroughoutthecrisisinearnings,businessactivityandrisks.

Outlookfor2011:

Therecoverydynamismof2010willcontinueinbothactivityandearnings,withlowlevelsof

default,inahighlycompetitiveenvironment.

Strongbusinessactivity.

Signiicantprogressinearnings.

Costmoderation.

Comfortableliquidityandsolvencypositioninallunits.

Numerousprizesandawards,including:BancoContinentalandBancoProvincialwere

consideredbyGlobal FinanceasthebestbanksinPeruandVenezuela.BBVAColombiawas

recognizedastheBankoftheYearinthecountrybyThe Banker.Italsoreceivedanaward

asthebestColombianbankforgoodcorporategovernancepractices,socialresponsibility

andethicsfromLatin Finance.AndEuromoneynamedBBVAParaguayastheBestBankin

thecountryforthefourthyearinarow.

AcquisitionofCrditUruguayBanco.

Launchofmultiplegrowthanddiferentiationplans.


32/208

28 Executivesummary

TheUnitedStates


Keyratios

+0.1%

59.6%

+116.8%

61% 1.7%

7.0%

4.4%

Gross income

Eiciency



Operating income

NPA


33/208


Thekeyin2010:

ImplementationoftheBBVAbusinessmodel.Across-the-boardindicatorimprovement.

Outlookfor2011:

Conirmationoftherecovery,althoughstillslowintermsofbusinessactivity.Improvedbottom

line.

Gradualchangeinthemixoftheloan-booktowardslower-riskportfoliosandgreater

customerloyalty.

Positiveperformanceoflower-costdeposits.

Positiveperformanceinthemostrecurrentrevenues:netinterestincomeandfeeincome.

Improvedassetquality.

SuccessfulcompletionoftheintegrationofGuarantyinrecordtime.

TheincorporationoftheWB&AMbusinesscarriedoutinthecountryisyetanotherstepin

theconstructionoftheUSfranchise.

BBVACompassbecomesthesponsoroftheworldsmostimportantbasketballleague,the

NBA.

ImplementationofthebusinessTransformationPlan,aimedtoimplementamodelcustomer-centricmodel.


34/208

30 Executivesummary

WholesaleBanking&AssetManagement


Keyratios

+3.4%

28.5%

+11.4%

71% 0.3%

+3.5%

1.2%

Gross income

Eiciency



Operating income

NPA


35/208


Thekeyin2010:

Qualityofrevenues,strengtheningofthecustomerfranchiseandgrowingcontributionofAsia.

Outlookfor2011:

Growthinalllinesofbusinessandgeographicalareas,leveragedonitscustomermodel.

Focusonhighloyaltyandhighcreditqualitycustomers.

Positiveevolutionfrommorerecurrentrevenuesandbasedoncustomer.

Strongassetqualitythankstotheselectivecustomermanagementpolicy.

BBVAconsolidatesitspositionasoneofthekeybanksatagloballevelinanumberof

investmentbankingproducts.

Numerousprizesandawards,includingthenineDealoftheYearawardsfrom The Banker

magazinetoC&IB.

SigningofanagreementwithBankofBarodaforthecreationofacreditcardcompanyin

India.

CompletionoftheTransformationPlan,basedonfourpillars:globalization,closerrelations

withthecustomer,added-valueproductandservicedevelopmentandriskdiscipline.


36/208

32 Resumenejecutivo32 Executivesummary

Riskmanagement

NPA and coverage ratio(Percentage)

4.3

2009

4.1

2010

57

62NPA ratio

Coverageratio

Overall risk premium(Percentage)

1.5

2009

1.3

2010

Recoveries(Million euros)

2009 2010

6,524

9,063

+39%

Net entries(Million euros)

2009 2010

8,279

4,144

61%

2,461

10,740

Anticipation

50%


37/208


Thekeyin2010:

BBVAhasimprovedandstabilizeditsmainindicatorsofcreditquality

Signiicantprogressovertheyearinimprovingportfoliocreditquality:growthinlower-risk

segmentsandreductionofmoreproblematicportfoliosinallgeographicalareas.

ReductioninnewNPA.

StabilityinoutstandingNPAfollowingtheanticipatoryprovisionsmadeatyear-end2009.

TheNPAratiohasremainedundercontrolthroughouttheyear,andhasnotexceededthe

peakofDecember2009.

Theriskpremiumwasdownin2010ontheigurefor2009.Nevertheless,thecoverageratio

isstillimprovingsteadilyfromitslowinDecember2009.

Bybusinessarea:

SouthAmericaandWB&AMaremaintainingtheirNPAratioincheckandathistorically

lowlevels.

Mexicoisoutstandingintermsofthepositivetrendinallitsindicators.

SpainandPortugalandtheUnitedStateshavemanagedtostabilizetheirindicatorsafter

severalyearsofdeteriorationfollowingthe2007crisis.


38/208

34 Executivesummary

Thedevelopmentofhuman capital isabasic

elementofthe21stcentury,whereemployee

knowledge,skillsandabilitiesarethemaintools

forcreatingbusinessvalue.OnekeytothesuccessofBBVAiswithoutdoubtthemenand

womenwhomakeupitshumanresources.The

professionalismofthealmost107,000 people

in31 countriesmakeitpossiblefortheGroups

dierentfranchisestooccupyleadingpositions

inpracticallyallofthemarketswhereitoperates.

Notonlypeople,butteamworkanddevelopment

ofleadershiparecriticalpillarsintheBanks

cultureofHumanResources,asBBVAconsiders

thattheresultobtainedasateamisgreaterthan

thesumofindividualeorts.Allofthemeasures

takenwithinourGrouparedeterminedbya

commoninterest:toboostourteamsinallof

theirdimensionsbyselectingthebestcandidates,

givingthemtheopportunityforprofessional

developmentandpromotingmanagementstyles

thatencouragethesenseofbelongingtothe

Group,themaximumexpressionoftheteam.

Thisiswhywehavemadeprofessional

developmentourhallmark.Inaknowledge-based

economy,whatdierentiatesorganizationsis

theirvisionofthefutureandtheircapacityto

createitbyusingthehumanfactor.

Theteam

Humancapital:akeytoolforacompanyssuccess.

AtBBVAwehavealways

believedthatbusinesseducationisacriticalcompetitiveadvantage.


39/208

35Theteam

Throughout2010,theHumanResourcesareahas

continuedtoworkontwomajorlinesofaction:customer ocus,consideringcustomersintheir

broadestsense,fromtheindividualstotheareas

intheGroup;andtechnological inrastructure,

withtheaimofstrengtheningtheadvantage

representedbyamoreglobalandintegrated

managementofthefunction.Aspectssuchas

selection,traininganddevelopmentareclear

examplesofthecombinationofthesetwolines

ofaction.

Selection

Ourexperienceisbasicallyfocusedonnetworks

ofglobalscopetoextendouremployerbranding,

togetherwithothersthatsupportthesearch

forcandidates.BBVAalsohasitsownselection

portal,calledCampus Virtual de Empleo BBVA

(BBVAVirtualEmploymentCampus).

TheCampusgivesusglobal positioning,whileat

thesametimeprovidingcoverageforeachand

TheactiveonlinepresenceoftheSelectionunit

providesBBVAwithanewrelationshipmodelintherecruitmentprocess,inline

withnewtrends.


40/208

36 Executivesummary

Intermsoftheselection process,aseriesoftests

identiiesthecandidatespotentialagainsttherequirementsdeinedbytheOrganizationand

thedegreetowhichtheyitBBVAscorporate

culture.Althoughtheprocessvariesaccording

tothetypeofcandidate(recentgraduate,

withpreviousexperience,senior,etc.),equal

opportunityisguaranteedthroughstandard

tests.Thismodelisalignedandconsistentwith

internalassessmentschemes,thusallowing

thecandidateswhoentertohaveaninitial

competenciesassessmentthatiscomparableto

thatgiventotherestoftheGroupsemployees.

Thismethodhelpsfocustheirprofessional

developmentfromtheirirstdaywiththeGroup.

everyoneofthedierentunits.Eachcountryhas

itsownstandthatpresentsthejoboersavailableatanytime;andcandidatesmayuploadtheirCVs

online.

Allofourchannelsarealsoconnectedtoour

CVmanagementsystem,sothatalltheCVs

areincorporatedintoasingle database,thus

optimizingworkingtimeforbothrecruitersand

candidates.

Finalcandidatef

ileCandidate screeningStage Evaluation Final assessment

Recruiting process stages

Recruitingportal

ePreselecePreselec

Technology usage

eValueTechnology

CVsreceived

Newhires

2010 240,409 10,569

2009 234,720 8,263


41/208

37Theteam

specializationandglobal scope.Itisworth

highlighting,amongotherinitiatives,thefollowing:

FullintegrationofBBVACompassintothe

Groupstrainingmodel.

LaunchoftheGlobalTrainingProgramin

WB&AM.

Developmentof15programsinMandarinChinesetocovertheGroupsgrowing

presenceinAsia.

Selectionofnewtrainingprovidersof

maximumacademicprestigeatagloballevel,

suchasWhartonandtheLondonBusiness

School,inadditiontothosealreadyusedby

theGroup.

Consolidationoftheworldoftrainingin

BBVAsSharedServiceCenterforknowledge

andlearning.

Training

In2010thisdistinguishingfeaturetranslatedinto

4,564,426hoursoftrainingactivity,anincreaseof

16.0%on2009.

InBBVAtrainingismainlyfocusedonupdating

commercialandinancialknowledgeandtraining

forleadership,whichiscarriedoutthrougha

uniquemodelwithcoursesgiveninpartnership

withthebestbusinessschoolsintheworld.

Itisworthnotingthat48%oftheGroupstraining

in2010wascarriedoutthroughthee-campus,

theGroupsonlinelearningplatform.

Thetrainingmodelalsoevolvedin2010by

adaptingtotheGroupsgrowthchallenges

andobjectives,withanincreasingfocuson

TrainingistherelectionoftheGroupscommitmenttothedevelopmentofitsprofessionals.

Technology 4%

BBVA Group. Distribution of training hours by subject

Customer services78%

Languages6%

Skills 12%

BBVA Group. Percentage of hours of online trainingthrough the e-campus platform

14

2006

20

2007

25

2008

40

2009

48

2010

Training hours and training budget in BBVA Group

2009 2010 Variation (%)

Traininghours(millions) 3.9 4.6 16.0

Budget(millions) 32 37 17.0

Budget/hours 8.1 8.2 0.9


42/208

38 Executivesummary

withthetaskofproposingandsupportingthe

implementationofinitiatives,aswellasmonitoringtheGroupspositiononthisissue.

Technologyisnotonlyanimportantpartofthe

selection,traininganddevelopmentprocesses;

italsoenablespeopletoworkwithinnew

mobility and flexibilityschemes.Throughout

2010dierenttypesofdistanceworkinghave

beentriedasameansofmakingprogressin

thesearchfornewmodelsthatprovideabetter

reconciliationoftheneedsoftheOrganization

andindividuals.Technologyalsoenablesaglobal

anduniformintroductionofotherprocesses

withintheGroup,suchasperformance

evaluationandskillsmanagement.Buttheuse

oftechnologytoprovideabetterservicetothe

employeeisalsoevidentinthedeploymentof

employee care services (SAE),whichcombine

variouschannels(callcenter,email,portals,etc.)

toprovideaswiftresponsetoanyqueryfrom

thestarelatedtohumanresourcespolicies

andprocesses.Currently,morethan95%ofthe

BBVAteamcantakeadvantageofthispersonal

serviceschannel.

Inaddition,aSatisaction Surveyiscarriedout

onlineeverytwoyearstodiscovertheopinionof

thepeopleinBBVA.Thesurveywaslastcarried

outinSeptemberandOctober2010,with76%

oftheworkforcetakingpart(comparedwith71%

intheprevioussurvey).Therehasbeenpositive

progressinthelevelofsatisfactionamongour

teams,withanincreaseofover4pointsinthe

employeeswhoareverysatisied.Themodel

usedhasbeendesignedwiththeaimofmakingBBVAthebestplacetowork,andthusputs

particularemphasisidentifyingpotentialareasfor

improvement.

Development

Ourhighlydevelopedhumanresourcespolicies,

processesandtoolsallowustoidentifythe

availableinternaltalentconsideredcriticalto

theGroupandmanageitselectively.Inaddition,

mostoftheinternalrecruitmentprocesseshave

beenpublishedthroughtheapntateplatform,

BBVAsjobpostingtool,inordertoguaranteethat

thebestprofessionalsoccupythemostimportant

functionsandtoboosttransparencyand

objectivityinteamdevelopmentandpromotion.

BBVAalsoaimstoeliminateallbarrierstothe

professionaldevelopmentofwomenintheGroup.

Tothisend,in2010continuedtomakeprogress

inthegender diversityprojecttoensurethat

thebestprofessionalsillthemostimportant

positionsineachofthedierentareas,unitsand

geographicalareas.Giventheimportanceofthis

project,astrategic committeehasbeensetup

TalentmanagementisacrucialelementinBBVA.

BBVA Group. Satisfaction survey

2010 results

2010

8%

19%

73%

2008

10%

21%

69%

Unsatisfied

Satisfied

Very satisfied


43/208

39TheBBVAbrand

Weat BBVAunderstandthebrand tobethe

promisewemaketoourstakeholdersandthe

experiencestheyhavewithus.Itspositioningis

awayofactivatingourvision today:Workingtowardsabetterfutureforpeople.

TheBBVAbrandaimstotakeupapositionin

anewspaceofsustainabledierentiationnot

occupiedbyitscompetitors,guidingexperiences

andcommunicationdeliveredtoourstakeholders

atallthepointsofcontact.Thisspaceisthe

brandscorporatepositioningandconsistsoffour

values:customercentricity,simplicity,reliability

andglobality.

Simplicityisthevaluethatshoulddierentiateus

most.Itisournewwayofbeingcustomer-centric.

WewantcustomerstofeelthatBBVAisthebank

thatbeneitsitscustomersmostbymakingtheir

liveseasier.Simplicityistodayakeyconsumer

demand.Itisanessentialrequirementforabetter

future.

TheBBVAbrand

Simplicity,

theessenceofthe

BBVAbrandsnewpositioning.


44/208

40 Executivesummary

First,brandmanagementhasbeenstrengthened,

withthecreationofanewdepartmentthat

includestheresponsibilitiesforbrandpositioning,

reputation,communicationofcorporate

responsibility,contentsandsponsorships,

andmanagementoftheBBVAbrandinsocial

networks.Thisensuresclosercollaboration

betweenallofthepeoplewhoworkonbrand

communication.

Second,workhasbeendoneonthenewbrand

positioning.Itisworthhighlightingthefollowing

actionscarriedout:

Designofanewvisual identitythat

aimsforasimpleanddistinctivestyle

ofcommunicationandhelpseasy

brandrecognitionacrossallapplications

andchannels.Thenewidentitywillbe

implementedover2011.

Communicationofthisnewpositioningto

alltheGroupsemployees(asofNovember

2010,84,641employeeswereawareofit).

BBVAconsidersthatemployeesarethebrand

themselves,astheyarethemaincreatorsof

experiences.

WorkshopswiththebusinessareasinSpain

andPortugal,Mexico,SouthAmericaand

theUnitedStatestogointotheimplications

ofthisnewpositioningonthedesignof

products,processesandchannels.

Alloftheseinitiativesmeanbuildingabrand

fromtheinside(principles,culture,behaviorand

processes)out(communication,visualidentity,

toneofvoice).FortheBBVAbrandtocontinueto

strengthen,whatemployeesdomustbeafaithful

relectionofwhattheysay.

Third,intheieldof advertisingandcontent,

BBVAhasextendedfromthesoccerterritory,

withsponsorshipinSpainoftheProfessional

SoccerLeague(throughtheBBVALeague

andtheAdelanteLeague)tothebasketball

territory:BBVAisnowtheoicialbankofthe

NBA,themostimportantbasketballleaguein

theworld.ThesetwosponsorshipsincreasetheBankscommitmenttosportandidentifyitwith

thevaluesofeort,improvement,teamworkand

fairplayinherentinsoccerandbasketball.The

agreementwiththeNBAincludestheWomens

NBAandtheNBADevelopmentLeague,inthe

UnitedStates,SpainandPuertoRico.Itisalso

worthnotingthatbothsoccerandbasketball

areaccessibletoallandthemostpopular

sportsacrosstheworld.ThisreinforcesBBVAspositioningasasimplebankthatisclosetoits

customers.Thesponsorshipstrategyisbased

onlivingthebrandbyincorporatingitintothe

content.Thismeans:

StrengtheningtheBBVAbrandnotoriety and

visibility,bothinSpainandacrosstheworld.

Reinforcingpositioning inthevalues

speciiedabovethatarecloselylinkedto

BBVA(teamwork,thespiritofimprovement,

eortandfairplay).

Andexploitingthesevaluescommercially

throughproductsthatcanattractnew

customersandbuildtheloyaltyofexisting

ones.

Accordingtothelastrankingpreparedby

MillwardBrownOptimorontheTop100Most

ValuableBrands,BBVAstoodatnumber56,

signifyingthatthevalueoftheBBVAbrandhas

grown3%.Furthermore,intheglobalrankingof

inancialbrands,BBVAisnowin13thplaceoutof20banks.Also,accordingtoSustainableAsset

Management(SAM),BBVAmaintaineditsglobal

BBVA,oicialsponsoroftheProfessionalSoccer

LeagueandtheNBA.

In2010,progress

wasmadeinthreeareas:

managementstructure,implementationofthenew

positioning,andaboosttosponsorships.


45/208

41TheBBVAbrand

brandscorein2010,continuinganotheryearwell

abovetheaverageinitssector.

Oneoftheaspectsmosthighlyvaluedbyexperts

ispreciselyhavingthehomogenousmeasurement

toolsavailablethatenablemonitoringofhowthe

brandisperceivedintheprincipalcountriesin

whichtheGroupoperates.Theperceptionofthe

BBVAbrandhasstabilizedorimprovedinmost

countriesintermsofreputationandcontinues

tobeconsideredasolidbrandinallcountriesin

whichtheGroupispresent.

During2010,brandmanagementin

BBVAhasbeenveryhighlyvaluedbyexperts.

2010 2009 2008 2007 2006

Scope: SAM.

Brand management score

(1-100)

97

55

97

36

93

38

93

32

75

24

BBVA

Sectoraverage

BBVA brand awareness

(1100)

Spain Mexico Argentina Chile Peru Colombia Venezuela United States

2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010

Awareness 66.1 68.3 89.0 86.0 65.0 71.0 20.0 21.0 70.0 77.0 33.0 31.0 44.0 49.0 n.a. n.a.

Awareness(rank) 1st 1st 1st 1st 2nd 3rd 5th 5th 2nd 2nd 4th 4th 3rd 3rd n.a. n.a.

Reputationwithcustomers 73.6 72.2 67.5 66.9 73.6 72.5 71.2 70.9 71.0 74.5 61.6 66.1 71.0 73.7 68.9 73.2

Notes:ReputationdatafromFebruarytoSeptember2010.

Thedataforawarenessin2010arefortheJanuary-SeptemberperiodinallcountriesexceptSpain,wheretheyrunthroughtoJuly,andChile,datacollectedbetweenJulyandAugust.

Avariationbetweentwoyearsisonlystatisticallysigniicantwhenitisgreaterthanorequalto2.

Awarenessdatasource:AdvanceTrackingProgramme,MillwardBrown.

Reputationdatasource:RepTrack,ReputationInstitute.


46/208

42 Executivesummary

TheaimofBBVAsCorporateResponsibilitypolicycontinuesto

betodeineandpromotebehaviorthatcreatesvalueforallofits

stakeholders(socialvalue),aswellasforBBVAitself(reputational

valueanddirecteconomicvalue).Itisessentialthatsuch

commitmentandbehaviorshouldexpressbothBBVAsvisionof

workingforabetterfutureforpeopleanditsprinciples,which

shouldrespondinthebestpossiblewaytotheexpectationsof

stakeholders(customers,employees,shareholders,suppliersand

society)whilereinforcingtheBanksbusinessstrategy.

Corporateresponsibility

Subjects Main CR objectives in 2010

Complianceobjectives 2010

verified by Deloitte Objectives or 2011

CRprinciplesandpolicies MaketwoappearancesbeforetheBoardofDirectors.

50%Reportregularly(atleastonceayear)totheBoardofDirectors.

Stakeholders MakingofaroadshowbyCRwithsustainabilityanalysts.

50%IncludeCRESG(environmental,socialandgovernance)issuesinInvestorsDay2011.

Promotesocialprojectswithinvolvementofshareholdersand/orcustomers.

50%CreateaninternalESGCommitteewithmembersfromInvestorRelations(IR),CRandCorporateGovernance.

FinancialLiteracy ValoresdefuturoinSpain:reach550,000childrenand2,800participatingcenters.

LaunchofValoresdefuturoinPortugal,with100,000childrentakingpart.ImplementationoftheAdelantecontufuturo(Forwardwithyourfuture)programincountriesinSouthAmerica.AdelantecontufuturoinMexico:reach240,000beneiciaries.

100%

ExceedatotalofonemillionbeneiciariesoftheGlobalFinancialEducationPlanandconcludeanagreementwith

PISAtopromoteinancialliteracy.ConsolidatetheiguresofcentersandbeneiciariesoftheValoresdefuturoprograminthe20102011academicyear(inSpain578,000studentsand3,060centers,andinPortugal100,000studentsand600centers).Reachatotalof400,000beneiciariesoftheprogramAdelantecontufuturoinMexico.

Financialinclusion OperationalpresenceoftheBBVAMicroinanceFoundationinArgentina,MexicoandCentralAmerica.

50%

ExtendtheBBVAMicroinanceFoundationscurrentcustomerbaseof620,000by20%.ExtendtheoperationalpresenceoftheMicroinanceFoundationfromthecurrent6countries(Argentina,Chile,Colombia,Panama,PeruandPuertoRico)to9.

Customerfocus DeineandimplementanewproceduretoincreasethetransparencyandclearlanguageusedintheGroupsadvertisingcampaig

bbva financial report 2010

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