2012 Annual General Meeting
Francisco González: “I have never seen BBVA so strong and with so much future”
BBVA Chairman Francisco González:
- Strategy: “We maintain a very solid capital position. We will exceed the EBA recommendations, even after purchasing Unnim”
- Management model: “Good practice is not only desirable but also profitable. BBVA will display all its potential and superior ability”
- Group’s future: “We are convinced that our combination of principles, people and technology, together with the diversified customer base, put BBVA in an unbeatable position”
- Dividend: BBVA maintains the total dividend at ¤0.42 per share, which will be an excellent return for shareholders
BBVA President & COO Ángel Cano:
- Earnings: “BBVA has once again outperformed its competitors, closing an excellent year. It demonstrated its ability to generate recurrent profit in any scenario and continues to display great strength in terms of capital and liquidity with an enviable performance in risk indicators"
- Social measures: “The BBVA Group is providing more than ¤100 billion in mortgage finance and in Spain it has helped more than 100,000 families that have difficulties servicing their loans”
Spain should continue the reforms that correct its profound structural weaknesses, BBVA Chairman Francisco González said. “If we persevere, in 2013 we will start to see the fruit of our efforts and the beginning of a new period of growth,” he added when speaking this morning at the Annual General Meeting at Bilbao’s Palacio Euskalduna. “Although the crisis has become long and painful, in my years as chairman I have never seen BBVA so strong and with so much future as today. We are convinced that our combination of principles, people and technology, with a diversified customer base, put BBVA in an unbeatable position,” he added.
Mr. González began his address at the AGM with a description of the current economic and financial climate. In 2011 global growth was slower than 2010, he said. Despite this the world's economy grew nearly 4% although in an uneven fashion. Emerging economies grew 6.2% (Latin America 4.3%,
China more than 9% and Turkey 8.5%). Growth in the USA and Europe was below 2%, with the European continent suffering an evident slowdown.
In Mr. González’s view, “Europe is facing a vicious circle characterized by weak governance, high deficits and mounting levels of public debt, which are restricting economic growth.” Nonetheless the chairman recognized that “politicians and the population are aware of what is at stake." In this regard he noted that some steps had already been taken such as the increased amount and duration of the finance the ECB makes available to banks, the Greek rescue, the creation of the so-called firewall fund and especially the change of government in the countries with the biggest problems.
“Fortunately, Spain is one of those countries whose new governments have decided to deal with the problems and take bold measures. These measures are starting to improve the perception of Spain,” Mr. González said. He also pointed out that the advances have already contributed “to lower financial tensions in 2012.”
“We have to cooperate and stick to the difficult path of adjustments and profound reforms. If we fail, Europe will fail and Spain will suffer a gigantic setback. The crisis offers Spain an opportunity to tackle profound structural reforms in areas that are sapping our ability to compete, increasing our vulnerability and magnifying the negative impacts of the crisis,” the chairman said.
BBVA’s potential and superior ability
Turning to the European crisis Mr. González said it has “generated a difficult situation for banks, which have been forced to boost their capital and manage liquidity shortages in a context of financial stress, low business activity and deteriorating risk.” It was precisely in these critical aspects that BBVA has demonstrated the strength of its management model.
Regarding capital the chairman said, “Last year BBVA demonstrated its ability to generate capital recurrently and it ended the year with a ratio of 10.3% (under the present rules)”. Moreover he confirmed that BBVA will not only comply “easily” with the European Banking Authority’s recommendations –even after purchasing Unnim– but it can also maintain the total dividend at ¤0.42 per share, which is an “excellent return for shareholders.” “In 2012 we also plan to maintain the present dividend payment scheme combining cash with an option in shares (Dividend Choice program),” he added.
BBVA is still growing
During his address Mr. González drew attention to the principal highlights from last year. He noted that BBVA completed its investment in Turkey in 2011 and continues to work closely with Garanti Bank. The acquisition of Crédit Uruguay was also concluded, making the Group the second biggest bank in Uruguay. “We also increased our stake in Forum to 75.5% thus strengthening our position in Chile’s top car-finance company. And a few days ago BBVA won an auction for Unnim. When this operation is finished we will have doubled our presence in Catalonia,” he said.
He also explained BBVA’s strategy for transforming the bank, based on three pillars: principles, people and innovation. In this context, good practice is not only desirable but also profitable, he added. “The world has changed and we must adapt to these changes,” he said. “We have to be more austere, more flexible and more competitive and in this respect BBVA is going to display its potential and superior ability.”
Regarding the financial industry’s future, Francisco González said it will be “marked by technology and by the extensive economic and social changes that technology is driving. There will be a new league of competitors in which few of the present banks will be able to participate. But BBVA will be one of them.”
BBVA President & Chief Operating Officer Ángel Cano
In his address to shareholders BBVA president and COO Ángel Cano, said, “BBVA had an extraordinary performance in 2011, setting itself apart from its competitors. “Once again BBVA has demonstrated its ability to generate recurrent earnings in any scenario,” he added. For Mr. Cano, the year’s highlights were:
1. Substantial solvency and significant ability to generate capital organically, which will allow BBVA to meet EBA requirements comfortably. This was achieved without government aid, with the highest density of risk-weighted assets in its peer group, with no changes in the dividend policy and without selling strategic assets.
2. Sound liquidity position: BBVA has reduced its finance needs and again shown it can access the markets in adverse conditions.
3. Asset quality: BBVA's performance sets it apart. It is one of the few banks whose risk indicators are stable, thanks to its strategy of prudence and anticipation.
4. Resilient earnings that start with revenues, with both net interest income and gross income growing throughout the year, ending in the last quarter of 2011 at levels much higher than the quarterly averages for 2009 and 2010.
BBVA continues to enjoy leading positions in its peer group in terms of profitability and efficiency. In the COO’s opinion the resilience of earnings “is supported by a well-diversified portfolio in which emerging economies already account for more than 50% of net attributable profit, and by superior management in each area."
Mr. Cano emphasized growth, which remains the main concern of management in Mexico and South America. Regarding Spain he said, “We continue to manage business better than our competitors, displaying considerable resilience and taking advantage of the opportunities arising from the restructuring of the sector.”
In the USA he noted that the focus remains on transformation and growth of the franchise. He also drew attention to Eurasia, particularly Turkey and China, whose contributions to Group earnings are growing and stand now at 19%.
Apart from the figures that reflect the creation of value for the Group, he reviewed the events of 2011 from the point of view of social activities. “The BBVA Group is providing more than ¤100 billion in mortgage finance. Looking at this from a different angle, nearly five million people live in dwellings financed by BBVA and in Spain we have helped more than 100,000 families that have difficulties servicing their loans,” he concluded.
BBVA is a customer-centric global financial services group founded in 1857. The Group has a solid position in Spain, it is the largest financial institution in Mexico and it has leading franchises in South America and the Sunbelt Region of the United States. Its diversified business is biased to high-growth markets and it relies on technology as a key sustainable competitive advantage. BBVA ranks among the leading Euro zone banks in terms of ROE and efficiency. Corporate responsibility is at the core of its business model. BBVA fosters financial education and inclusion, and supports scientific research and culture. It operates with the highest integrity, a long-term vision and applies the best practices. The Group is present in the main sustainability indexes.