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Euro crisis: "The crisis could be a great opportunity to build a new European Union and a Spanish economy on more solid and competitive foundations"
Growth: "BBVA leads the ranking among its European peers in terms of absolute income growth and profitability measured by gross income over total assets"
Principles: "BBVA gives top priority to good practices, to principles"
Dividend: BBVA proposes to keep the dividend at €0.42 per share
BBVA President & COO Angel Cano
Earnings: "In 2012 BBVA has continued to demonstrate its considerable ability to generate results in an environment that was extremely complex for developed markets"
Business model: "Our model is customer-centric and based on diversification; it leverages technology with a management approach that is prudent and anticipatory while seeking principle-adjusted returns"
BILBAO, Spain, March 15, 2013 /PRNewswire/ -- BBVA shareholders today received a message charged with ambition and optimism from the Group's chairman Francisco Gonzalez. He explained that "BBVA is at the start of a new cycle of conspicuously strong growth of business and earnings." Speaking at the Annual General Meeting he said, "We are emerging from the crisis in pole position to lead the next phase of global growth."
At this morning's AGM in Bilbao's Euskalduna Palace, Francisco Gonzalez centered his address on three aspects: the economic and financial environment, BBVA's earnings in 2012 and the Group's future plans.
In his opinion, "2012 was another difficult year." Nonetheless he believes that "very important steps have been taken to achieve global recovery." As examples, Francisco Gonzalez pointed to the improved outlook for a fiscal agreement in the United States, the roadmap to enhance European integration and the progress made on adjustments and reforms in Spain. "This crisis could be a great opportunity to build a new European Union and a Spanish economy on more solid and competitive foundations," he added. Although 2013 will still be "a difficult year," he said "it can be the turning point in the search for a period of greater stability and growth."
Francisco Gonzalez then turned to unfortunate practices in the banking industry and the need to differentiate among banks. He said, "We have a great opportunity to build a new financial system on stronger foundations, one based on firm ethical principles. BBVA gives absolute priority to good practices, to principles. We seek principle-adjusted returns and we do this because we believe the fundamental asset of banking business is the trust of customers, shareholders, employees, regulators and society." Furthermore he reminded the audience that "throughout the crisis BBVA has not cost taxpayers a dime. These factors are a huge asset in our daily business and for our future."
In the second part of his address Francisco Gonzalez reviewed the key figures of the income statement for last year, during which BBVA obtained a net attributable profit of €1.68 billion. He said, "BBVA confirmed its ability to outperform with sound earnings of high quality in a difficult year." Moreover he believes the achievements of 2012 can be summarized as follows:
As a result, "BBVA leads the ranking among its European peers in terms of absolute income growth and profitability measured by gross income over total assets," he added.
The recurring nature and strength of earnings underlie the proposal to maintain unchanged the shareholder remuneration policy for another year. The dividend will thus be €0.42 per share with the same arrangement: two interim payments in cash and two with a scrip option. "This is an excellent yield for shareholders (6% at December 31st 2012) and considerably higher than our peer group average," he explained.
Lastly the chairman described the bank's future plans, which are based on three pillars: principles, people and innovation. "The principles have allowed us to have a firm and efficient corporate governance while fostering a culture of prudence, integrity and transparency," he said. "Sometimes this means sacrificing substantial easy profits in the short term. But it is the only way to ensure the BBVA project in the mid and long terms." This model of a 'leading bank' means that "during the crisis BBVA strengthened its position in all the countries where it operates-including Spain-and in the entire global industry."
Mr. Gonzalez explained that "BBVA innovates for people, based on knowledge," such as data mining and the use of intelligent algorithms to understand customers' needs. The bank is moving towards a new concept of distribution in which customers can interact wherever they are, at any time and via any channel, and receive an appropriate response in real time.
He also referred to the strategy in the various regions where the bank is present. "The crisis is a great opportunity for BBVA Spain," he declared. "We're already gaining market share. From our present position of about 12%, we want to reach 20% within a reasonable amount of time." In the United States "the new technology platform gives us a significant competitive edge" and in a few years it will make this market "one of the most important for the bank." Furthermore, "we are the leader in Mexico and in Latin America overall and we have a relevant position in China. In Turkey, Garanti is an outstanding bank and we have the possibility of increasing our investment."
BBVA's chairman next referred to two social projects that were recently announced in Spain. The first is the "I am employment" initiative with a budget of €25 million and a target of creating 10,000 jobs. The second is the "Family Protection Plan" with €32 million and whose aim is to help customers who have lost their only dwelling. They gain access to a program that will accompany them in their search for new employment and provides direct economic aid.
Mr. Gonzalez pointed out that "we have a different kind of model that is far superior to the usual ones in our industry, in terms of positioning and strategy. We have a big lead in technological transformation. Furthermore we have a first-class tightly-knit team with clear ideas and an enormous will to work."
Francisco Gonzalez was followed by BBVA president and chief operating officer, Angel Cano, who reviewed last year's strategic priorities:
Angel Cano also commented on the highlights, the challenges and the performance of the various business units in 2012.
In Spain the complex environment "offered an opportunity for banks like BBVA that have emerged stronger" from the crisis with market share increases in lending and deposits. Mr. Cano said the area's operating income was close to €4 billion and it had "negative earnings of €1.27 billion as a result of provisions associated with deterioration in the real estate sector."
Eurasia will become "one of the key parts of BBVA's diversification," he said. The unit's operating income increased 9% and net attributable profit for 2012 came to €950 million, with Turkey as a growth driver.
He pointed out that "Mexico recorded a big surge in both lending and customer funds." Operating income was more than €3.5 billion and net attributable profit exceeded €1.8 billion. "Once again BBVA Bancomer strengthens itself as the top franchise in that country and the market still has high growth potential," he added.
Mr. Cano said, "South America continues to be the area with the best performance in new business and in earnings." The buoyant activity was reflected in all levels of earnings, which continue to grow at more than 20%. Furthermore, "South America has substantial growth potential and it contributed net attributable profit of €1.35 billion."
In the United States, local activities (lending and customer funds) grow at double-digit rates. The area ended the year with net attributable income of €475 million, up 40%. "The solid growth of earnings was obtained despite important regulatory demands, which required considerable investment, and there was a sharp improvement in the tools and methods used in the risk and internal control areas," Mr. Cano explained. Last year also witnessed the rollout of the new technology platform. This makes BBVA Compass "the first of the 50 majors in the United States with the ability to process information in real time."
He summed up by saying: "In 2012 BBVA has continued to demonstrate its considerable ability to generate results at the same time as it invested in opportunities to ensure future growth."
He concluded by drawing attention to the priorities in BBVA's business model, which is based on "diversification, a customer-centric focus and leveraging of technology with a management approach that is prudent and anticipatory while seeking principle-adjusted returns."
BBVA is a customer-centric global financial services group founded in 1857. The Group has a solid position in Spain, is the largest financial institution in Mexico, and has leading franchises in South America and the Sunbelt region of the United States. Its diversified business is geared toward high-growth markets and relies on technology as a key sustainable competitive advantage. BBVA ranks among the leading eurozone banks in terms of return on equity 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 best practices. More information about the BBVA Group can be found at www.bbva.com.
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