RNS No 9546e
BBV INTERNATIONAL FINANCE LIMITED
1st February 1999
THE BBV GROUP IN 1998
BBV NET ATTRIBUTABLE PROFIT RISES 25.1% DESPITE
MAJOR EXTRAORDINARY PROVISIONING
BBYs net attributable profit to shareholders in 1998 reached 983 million euros
(163.6 billion pesetas). Earnings per share were 0.48 euros (80 pesetas), and
the Group's return on equity (ROE) increased to 21% (from 18.4% in 1997). The
capital base remained strong with a BIS ratio of 12.1 % (9% Tier 1).
This profit was achieved after the Group provisioned a significant 1,728 million
euros (287 billion pesetas), nearly 60% of which was extraordinary in nature and
mainly related to accelerated goodwill amortization.
Customer business performed very satisfactorily, with a 17.7% increase in net
lending, 6.3% in deposits and 37.5% in off-balance sheet products, particularly
mutual and pension funds. The balance sheet itself grew by only 5.5% thanks to
effective assets and liabilities management. The Group increased its domestic
market share in 1998 across the board (lending, deposits, mutual funds and
investment funds).
The non-performing loan ratio improved both domestically (from 1.96% to 1.25%)
and on a Group-consolidated basis (from 2.91% to 2.52%), despite the recent
Latin American incorporations. The Group's coverage ratio continued its steady
increase in 1998, from 114.3% to 128%.
All margins (net interest income, basic and operating) grew at or above 20%.
The basic margin (net interest income plus commissions) has over the past few
years become the most accurate financial measure of evolution of the business,
given the drop in interest rates, increased competition and the customer shift
from traditional savings to off-balance funds. At BBV, this margin increased by
27.2% in 1998 (8.5% domestically), showing the capacity that the BBV network has
to adapt to changing market conditions.
Operating income showed healthy growth in 1998 despite the 26.4% drop in
revenue from market operations that resulted from the extreme market turbulence
during the year. On a more positive note, operating expenses were very
contained during the year, thanks to PRACTYCO. The Group's domestic efficiency
ratio improved from 52.4% to 50.4%, and excluding the recent incorporation of
Brazil, the overall efficiency ratio improved as well.
The significant 700 million euros in capital gains booked for the year
represents only 40% of the Group's provisions, an indication that the quality of
the Group's earnings has improved. Despite these gains, the latent capital gains
in the portfolio are still 35% higher now than in December 1997. This is
proof-positive that the area of Diversification or Industrial Holdings, one of
the BBV Group's seven core businesses, is indeed recurrent in nature.
At the Annual General Meeting, to be held on February 27th, the Board will
propose a dividend of 22.8 eurocents (38 pesetas), a 20% increase for the year
that will maintain a pay-out ratio below 50%.
The objectives established in Programa Two*Thousand for 1998, the first year of
the new strategic plan, have been amply surpassed:
1998
ACTUAL 98-TARGET
Net attributable profit +25.1% +20%
Dividend per share +20.0% +15%
Business volume +16.5% +15%
ROE +21.0% +20% (by year 2000)
Market Capitalization +35.4% Above domestic peers
1998 avg: 30.2%
If you prefer to receive BBV information via e-mail, please let us
know at fax 94 487 60 60
Investor relations office
(Spain/34) 94 487 65 87
(Spain/34) 91 374 42 22
(USA/212) 728 15 00
(UK/171) 397 60 76 Internet info (http://www.bbv.cs)
BBV GROUP HIGHLIGHTS
(consolidated figures)
DEC. 98 DEC. 97 % Change
Euros Pesetas
Balance sheet (Millions)
Total assets 133,990 22,294,001 21,138,716 5.5
Total lending 62,785 10,446,525 8,872,980 17.7
Customer funds (balance sheet) 87,131 14,497,280 13,633,715 6.3
Other Customer funds managed 54,724 9,105,267 6,621,213 37.5
Shareholders' funds 4,951 823,767 776,024 6.2
Income statement (Millions)
Basic Margin 6,023 1,002,074 787,567 27.2
Operating income 2,411 401,180 334,408 20.0
Income before taxes 1,680 279,558 234,914 19.0
Net attributable profit 983 163,627 130,848 25.1
Data per share
Net attributable profit 0.48 80 65 24.3
Book value 2.42 403 382 5.4
Share price 13.373 2,225 1,643 35.4
Key ratios (%)
R.O.A. (Net income / Average total assets) 1.01 0.96
RORWA (Net income / Risk weighted assets) 1.90 1.90
R.O.E. (Net attributable / Average equity) 21.0 18.4
Other relevant figures
Number of employees 69,999 60,282
Spain 24,678 25,067
Abroad 45,321 35,215
Number of branches 4,905 4,349
Spain 2,813 2,829
Abroad 2,092 1,520
BBV GROUP INCOME STATEMENT (*)
(Millions)
Dec 98 DEC. 97 % Change
Euros Pesetas
Financial revenues 10,491 1,745,592 1,511,350 15.50
Financial costs -6,299 -1,048,100 -943,226 11.50
NET INTEREST INCOME 4,192 697,492 568,124 22.77
Fees & Commissions 1,831 304,582 219,443 38.80
Collection and Payment services 654 108,856 91,704 18.70
Investment securities services 337 56,130 38,635 45.28
Mutual and pension
funds management 654 108,858 54,858 98.44
Other Commissions 185 30,738 34,246 -10.24
BASIC MARGIN 6,023 1,002,074 787,567 27.24
Market operations 364 60,577 82,256 -26.36
ORDINARY REVENUE 6,387 -1,062,651 869,823 22. 17
Administrative Costs -3,526 -586,659 -475,006 23.51
Personnel -2,236 -371,965 -312,484 19.03
Wages and other -2,132 -354,715 -300,246 18.14
Pensions -104 -17,250 -12,238 40.95
General expenses -1,290 -214,694 -162,522 32.10
Other income-costs -126 -20,965 -13,968 50.09
DGF annual fee -115 -19,114 -14,667 30.32
Other items -11 -1,851 699 n.m
Depreciation -324 -53,847 -46,441 15.95
OPERATING INCOME 2,411 401,180 334,408 19.97
Income from associates 914 152,095 81,616 86.35
Group Net transactions 733 122,028 60,075 103.13
Income by the equity method 181 30,067 21,541 39.58
Loan Loss Provisions (net) -893 -148,635 -77,466 91.87
Gross -1,225 -203,854 -118,115 72.59
Reversals 215 35,759 24,109 48.32
Bad debts' recoveries 117 19,460 16,540 17.65
Securities writedowns -4 -676 9 n.m
Goodwill amortization -547 -90,966 -72,214 25.97
Extraordinary items -201 -33,440 -31,439 6.36
Disposals 53 8,876 4,823 84.03
Other -254 -42,316 -36,262 16.70
PROFIT BEFORE TAX -1,680 279,558 234,914 19.00
Corporate Tax -391 -65,020 -54,460 19.39
NET INCOME 1,289 214,538 180,454 18.89
Minority interests -306 -50,911 -49,606 2.63
Preference shares -96 -16,015 -11,230 42.61
Other -210 -34,896 -38,376 -9.07
NET ATTRIBUTABLE 983 163,627 130,848 25.05
(*) Audited data. 1 Euro ptas. 166.386 Consolidated accounts are presented in
accordance with Bank of Spain 4/91 (and ensuing circulars) and follow
generally accepted accounting principles
BBV GROUP BALANCE SHEET(*)
(Millions)
ASSETS
DEC.98 DEC 97 % Change
Euros Pesetas
Cash and Central Banks 3,927 653,359 389,394 67.79
Government Debt 3,419 568,862 971,866 -41.47
Due from Banks 34,101 5,673,896 6,842,349 -17.08
Total lending (Gross) 62,785 10,446,525 8,872,980 17.73
- Reserves -2,024 -336,786 -294,968 14.18
Investment Portfolio 21,980 3,657,208 2,937,369 24.51
Fixed income 17,070 2,840,220 2,255,375 25.93
Securities 4,910 816,988 681,994 19.79
Property and equipment 3,375 561,529 550,912 1.90
Goodwill on consolidation 1,152 191,703 132,823 44.3
Other Assets 5,272 877,705 735,991 19.3
TOTAL 133,990 22,294,001 21,138,716 5.47
Capital 1,105 183,895 175,849 4.58
Reserves 4,536 754,732 623,250 21.10
Minority interests 3,091 514,237 416,391 23.50
Due to Banks 31,850 5,299,409 5,410,006 -2.04
Customer Funds 87,130 14,497,280 13,633,715 6.33
Deposits 77,508 12,896,220 12,314,853 4.70
Marketable debt securities 7,949 1,322,666 1,024,755 29.10
Subordinated debt 1,673 278,394 294,107 -5.30
Other Liabilities Accounts 2,679 445,685 353,433 26.10
Accrual Accounts 2,309 384,225 345,618 11.17
Net Income 1,289 214,538 180,454 18.89
TOTAL LIABILITIES 133,990 22,294,001 21,138,716 5.47
Average Total Assets 127,736 21,253,407 18,853,738 12.7
Average shareholders' funds 4,702 782,372 712,902 9.7
BIS Radio (Tier 1) 12.1 (9.0) 13.5 (9.7) -
Risk weighted assets 67,782 11,277,896 9,517,130 18.5
BBV BBV (1)
DEC. 98 DEC.97 DEC 98
NPL as % Lending (Bank of Spain) 2.52 2.91 1.28
NPL
Initial 1,550 257,980 227,203 135,374
DEC. 31st 98 1,581 263,063 257,980 97,619
Net Change 31 5,083 30,777 -37,755
NPL's Reserves
Last 2,024 336,706 294,968 124,379
% Coverage NPL 128.02 114.34 127.41
Lending quality (International regulation
NPL as % Lending 1.59 1.65 1.14
% Coverage NPL 185.09 175.64 138.72
(1) Excluding BBV Mexico (Mexico), Continental (Peru) Ganadero (Colombia) BBV
B. Frances (Argentina), Provincial(Venezuela), BBV Panamia, PPV Puerto Rico,
Excel (Brazil) and Bhif (Chile)
(*) Audited data. 1 Euro = 166.386 ptas. Consolitated accounts are presented in
accordance with Bank of Spain circular 4/91 (and ensuing circulars) and follow
generally accepted accounting principles.
END
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