Results (pages 4-9)

 

 

 

•

Year-on-year figures are affected by changes in the Group’s scope of consolidation in the second and third quarter of 2015 (Catalunya Banc -CX- and Garanti, respectively).

 

•

Although the negative effect of exchange rates has eased, the cumulative impact through September continues to be significant.

 

•

Taking into account the stake in Garanti in comparable terms, i.e. including it as if it had been incorporated by the full integration method since January 1, 2015, if the impact of corporate operations from January through September 2015 is excluded, and if the exchange-rate effect is isolated, the most relevant aspects in terms of cumulative earnings are as follows:

 

•

Very favorable performance of the most recurring revenue, thanks to growth in activity, mainly in emerging economies, and maintenance of customer spreads.

 

•

Positive contribution from NTI, due basically to sales in ALCO portfolios, the capital gains registered by the VISA Europe transaction in the second quarter and the sale of 0.75% of the BBVA Group’s stake in China Citic Bank (CNCB) in the third quarter.

 

•

Significant reduction in the year-on-year rate of growth of operating expenses, despite the fact that they are still strongly influenced by the incorporation of CX, high inflation in some countries and the exchange-rate effect.

 

•

Further decline of impairment losses on financial assets and real-estate provisions.

Balance sheet and business activity (pages 10-11)

 

 

 

•

The loan book has performed strongly YTD in emerging economies. There has been a decline in Spain, since the favorable performance of new production has not offset the existing level of repayments. In the United States, the area’s strategy of selective growth in the most profitable segments explains its performance, which has been virtually flat since the end of 2015.

 

•

Non-performing loans have continued to decline, particularly in the domestic sector.

 

•

Customer deposits under management have performed well in the most liquid headings in the domestic sector and in time deposits in the non-domestic sector

 

•

The performance of off-balance-sheet customer funds has improved compared with the previous quarter.

Solvency (page 12)

 

 

 

•

Capital position above regulatory requirements. At the close of September 2016, the fully-loaded CET1 ratio stood at 11.0%, thanks to strong generation of capital during the quarter. This will enable the 11% target to be reached ahead of schedule.

 

•

The fully-loaded leverage ratio closed at 6.6%, which compares very favorably with the rest of the peer group.

Risk management (pages 13-14)

 

 

 

•

The improvement in the main asset quality indicators continues: At the close of September 2016, the NPL ratio had declined, the cost of risk remained stable and the coverage ratio had fallen slightly compared with the figures reported as of 30-Jun-2016. There is a clear improvement on the data reported as of December 2015.

The BBVA share (pages 15-16)

 

 

 

•

There was a new bonus share issue in October to implement the “dividend-option”. On this occasion, the holders of 87.85% of the free allocation rights chose to receive new shares, which once more demonstrates the success of this remuneration system.

Other matters of interest

 

 

 

•

The number of digital and mobile customers continues to increase (up 12% and 23% since December 2015, and up 20% and 41% in year-on-year terms, respectively, according to latest data available).

 

 

BBVA Group’s earnings for the first nine months of 2016 continue to be affected by the changes in the scope of consolidation in the second and third quarter of 2015 (CX and Garanti, respectively), the negative impact with respect to the same period last year of exchange rates against the euro of the main currencies that affect the Entity’s financial statements, and the lack of corporate operations. Unless expressly indicated otherwise, to better understand the changes in the Group’s main earnings figures, the year-on-year percentage changes given below refer to constant exchange rates.

In addition, in order to make the year-on-year comparison easier, the end of this section includes an income statement with rates of change that take into account Turkey in comparable terms, i.e. including BBVA’s stake in Garanti as if it had been incorporated by the full integration method since January 1, 2015.

BBVA Group posted a net attributable profit of €2,797m in the first nine months of 2016, a significant increase on the figure for the same period last year (up 111.9%). Not including 2015 corporate operations, earnings have grown by 15.0% (up 10.8% with Turkey in comparable

 

terms). In general, this positive trend continues to reflect the good performance of revenues, the restriction on the rate of growth of operating expenses, reduction in impairment losses on financial assets, and the decline in provisions (net) and other gains (losses).

Gross income

The Group’s cumulative gross income was €18,431m, a rise of 16.2% on the same period in 2015 (up 7.1% with Turkey in comparable terms). All the items making up gross income performed well, except for other operating income and expenses.

 

Net interest income rose by 3.0% over the quarter, and thus cumulative growth for the first nine months is 18.1% compared with the same period in 2015 (up 7.0% with Turkey in comparable terms), thanks to increased activity, mainly in emerging geographical areas, and the defense of customer spreads.

By business areas there has been a positive performance in Turkey, Mexico, South America and the United States. In Spain and the Rest of Eurasia, the figure has declined as a result of the lower business volume and the current environment of very low interest rates, which has led to a narrowing of spreads.

 

Positive performance of income from fees and commissions, which over the first nine months of 2016 increased by 12.5% year-on-year (up 4.0% with Turkey in comparable terms), strongly supported by the good performance of the United States, Turkey, Mexico and South America. This is despite the smaller number of transactions from wholesale businesses.

As a result, more recurring revenues (net interest income plus fees and commissions) has increased year-on-year by 16.8%, or 6.3% with Turkey in comparable terms.

NTI increased year-on-year by 24.3% in the first nine months of the year (up 29.5% with Turkey in comparable terms), mainly due to: sales in ALCO portfolios, the capital gains from the VISA Europe transaction in the second quarter and the sale of 0.75% of BBVA Group’s stake in CNCB in the third quarter.

The dividends heading mainly includes those from the Group’s stakes in Telefónica and CNCB. In the first nine months of

2016 the figure has risen by 18.3% on the same period in 2015, strongly influenced by the payment in the second quarter of the CNCB dividend (which was not booked last year).

Lastly, other operating income and expenses is lower due to the booking in the second quarter of the contribution of €122m to the new Single Resolution Fund (SRF). In 2015, the contribution was made to the FROB in the fourth quarter. It should be highlighted that the net contribution of the insurance business increased by 14.6% in a year-on-year comparison.

Operating income

There has been a significant decline in the year-on-year increase in operating expenses, which in the cumulative figure through September 2016 rose by 14.8% (up 7.4% with Turkey in comparable terms), despite the inclusion of CX expenses

 

all through the year (from April 24th in 2015), the high level of inflation in some geographical areas where BBVA operates, and the negative effect that currency depreciation has had on cost items denominated in dollars and euros.

As a result, the cumulative efficiency ratio through September remains at the 51.8% of the first half of 2016 (51.5% in September 2015) and operating income has risen by 17.7% (up 6.9% with Turkey in comparable terms).

 

 

 

 

Provisions and others

Impairment loses on financial assets for the third quarter were very similar to those of the previous quarter. As a result, the cumulative figure through September continues the decline observed in previous periods, with a year-on-year fall of 2.4% with Turkey in comparable terms (up 3.7% not taking into account the changes in the scope of consolidation). By business area, the decline in the euro area continues, while in

 

Mexico and South America the moderate increases have not negatively affected the year-on-year changes in the cost of risk. There was growth in Turkey, strongly influenced by the negative impact of the depreciation of the Turkish lira and the increase in provisions in Romania. Lastly, in the United States, the rise in provisions following the downgrade in the rating of some companies that operate in the energy (exploration & production) and metals & mining (basic materials) sectors in the first quarter of 2016 has had a negative effect on the cumulative figure of this heading.

 

Lastly, there was a decline in both provisions (down 12.4% year-on-year or down 13.1% with Turkey in comparable terms), despite including a provision of €94m in the third quarter for restructuring costs, and other gains (losses) (down 37.5% year-on-year, or down 36.4% with Turkey in comparable terms), due largely to lower impairments of real-estate activity in Spain.

Profit

Net income from ongoing operations grew by 33.2% in year-on-year terms (up 14.4% with Turkey in comparable terms).

 

The results from corporate operations heading does not include any transaction in this period. The cumulative figure for the first nine months of 2015 (which totaled a loss of €1,113m) included capital gains from the various sale transactions equivalent to 6.34% of BBVA Group’s stake in CNCB, the badwill generated from the CX operation, the impact of the valuation at fair value of the initial 25.01% stake in Garanti and the impact of the sale of 29.68% stake in CIFH.

 

 

 

 

By business area, banking activity in Spain has generated €936m, real-estate activity in Spain generated a loss of €315m, the United States contributed €298m, Turkey €464m, Mexico €1,441m, South America €576m and the Rest of Eurasia €101m.

The Group’s income statement with Turkey in comparable terms

To ensure comparable figures, the Group’s income statement with year-on-year rates of change and Turkey in comparable terms is presented below (to isolate the effects of the purchase of an additional 14.89% stake in Garanti, as explained above).

 

The rates of change of BBVA Group’s balance-sheet and business activity balances from the end of December 2015 to the close of September 30, 2016 continue to be negatively affected by the depreciation of exchange rates against the euro. The most notable aspects in this period are summarized below:

 

•

Decline in gross lending to customers. In the domestic sector, the decline despite the good performance of new production can be explained by the trend in activity in the wholesale business and with institutions and because

repayments in the mortgage segment continue to be higher than new production. In the non-domestic sector, the decline can be explained by the negative impact of exchange rates, as excluding this effect lending continues to be strong, above all in emerging geographical areas (Turkey, Mexico and South America).

 

•

Non-performing loans have continued the decline of previous quarters, particularly in the domestic sector (banking and real-estate activity in Spain) and in Mexico.

 

 

•

The Group’s deposits from customers have fallen YTD, strongly influenced by the significant reduction within the domestic sector in the balances from the public sector (down 60%), and to a lesser extent, by the adverse foreign-currency effect mentioned above. Of particular note is the positive performance of lower-cost funds (current and savings accounts) in the domestic sector and time deposits in the non-domestic sector.

 

•

Off-balance-sheet funds have improved on the figure for the first half of the year, closely linked to the positive performance of mutual and pension funds in Spain and the rest of the world.

 

 

Loans and advances to customers

(Million euros)

 

		30-09-16				D%				31-12-15				30-09-15
Domestic sector			171,775				(2.5	)			176,090				177,928
Public sector			20,621				(4.0	)			21,471				22,596
Other domestic sectors			151,153				(2.2	)			154,620				155,332
Secured loans			94,210				(3.7	)			97,852				99,240
Other loans			56,944				0.3				56,768				56,093
Non-domestic sector			227,481				(1.7	)			231,432				222,620
Secured loans			105,822				2.7				103,007				100,305
Other loans			121,659				(5.3	)			128,425				122,316
Non-performing loans			23,589				(6.9	)			25,333				25,747
Domestic sector			16,874				(13.5	)			19,499				20,181
Non-domestic sector			6,715				15.1				5,834				5,566
Loans and advances to customers (gross)			422,844				(2.3	)			432,855				426,295
Loan-loss provisions			(16,720	)			(10.5	)			(18,691	)			(18,841	)
Loans and advances to customers			406,124				(1.9	)			414,165				407,454

 

 

Customer funds

(Million euros)

 

		30-09-16				D%				31-12-15				30-09-15
Deposits from customers			385,348				(4.5	)			403,362				389,154
Domestic sector			159,580				(8.9	)			175,142				172,110
Public sector			6,152				(60.0	)			15,368				12,843
Other domestic sectors			153,429				(4.0	)			159,774				159,267
Current and savings accounts			88,126				12.3				78,502				74,044
Time deposits			60,474				(12.8	)			69,326				68,999
Assets sold under repurchase agreement and other			4,828				(59.6	)			11,947				16,224
Non-domestic sector			225,522				(1.1	)			227,927				216,746
Current and savings accounts			119,119				(3.8	)			123,854				117,056
Time deposits			99,611				1.0				98,596				94,531
Assets sold under repurchase agreement and other			6,791				24.0				5,477				5,159
Subordinated liabilities			246				(15.9	)			293				298
Other customer funds			130,833				(0.8	)			131,822				129,752
Spain			78,159				(1.3	)			79,181				76,667
Mutual funds			31,566				0.2				31,490				31,250
Pension funds			23,103				0.9				22,897				22,397
Other off-balance sheet funds			50				(59.8	)			123				119
Customer portfolios			23,440				(5.0	)			24,671				22,901
Rest of the world			52,674				0.1				52,641				53,085
Mutual funds and investment companies			22,989				0.3				22,930				24,271
Pension funds			9,525				10.2				8,645				7,959
Other off-balance sheet funds			3,106				(15.2	)			3,663				3,683
Customer portfolios			17,054				(2.0	)			17,404				17,173
Total customer funds			516,181				(3.6	)			535,184				518,906

 

Capital base

BBVA Group closed September 2016 with a fully-loaded CET1 ratio of 11.0%. This enables the 11% fully-loaded CET1 target to be met ahead of schedule (in 2017).

Over the quarter, 29 basis points of fully-loaded CET1 were generated. The increase in the ratio is a result of the recurring generation of earnings in the Group, as well as the reduction in risk-weighted assets (RWA) (down 1.3% over the quarter under fully-loaded criteria) due to the Group’s focus on optimizing capital consumption. These results were produced despite Moody’s downgrade of Turkey’s sovereign debt rating, leading to an increase in RWA and thus a negative impact on the Group’s fully-loaded CET1 ratio of 15 basis points.

Another relevant aspect linked to the changes in the capital base is related to shareholder remuneration. In April a “dividend-option” program was completed, in which the holders of 82.13% of free allocation rights chose to receive bonus BBVA shares; in July a cash amount of €0.08 per share was paid, amounting to a disbursement of €518m; and in October a further “dividend-option” program was implemented, which has once more had a great uptake, as holders representing 87.85%

 

of the free allocation rights have chosen to receive new BBVA shares. The remaining 12.15% have sold their free allocation rights, either to BBVA at a fixed price of €0.08 gross per right, or on the market. Specifically, a total of 86,257,317 ordinary new shares were issued under this last “dividend-option” program, increasing the capital by €42,266,085.33.

It is worth of note that from a fully-loaded perspective, Tier 1 and Tier 2 are also above minimum requirements. Thus, BBVA has covered all required buckets.

In phased-in terms, the CET1 ratio was 12.3%, the Tier 1 ratio closed at 13.0% and the Tier 2 ratio at 3.0%, giving a total capital ratio of 15.9%. The CET1 ratio is above the regulator’s requirements and the systemic buffers applicable to BBVA Group in 2016 (9.75%).

Lastly, the Group maintains a high leverage ratio: 6.6% under fully-loaded criteria (6.8% phased-in), which compares very favorably with the rest of its peer group.

Ratings

Since the previous presentation of quarterly results in July 2016, none of the credit rating agencies have modified BBVA’s rating. It therefore remains at the levels shown in the accompanying table.

 

 

Ratings

 

Rating agency

Long term

Short term

Outlook

DBRS

A

R-1 (low)

Stable

Fitch

A–

F-2

Stable

Moody’s (1)

Baa1

P-2

Stable

Scope Ratings

A

S-1

Stable

Standard & Poor’s

BBB+

A-2

Stable

 

(1)	Additionally, Moody’s assigns an A3 rating to BBVA’s long term deposits.

 

Credit risk

At the close of the third quarter of 2016, BBVA Group maintained the positive trend in the variables related to credit risk management. Thus:

 

•

Credit risk has fallen by 2.2% over the quarter and 2.1% since the close of 2015 (down 0.7% and up 0.5%, respectively, at constant exchange rates). Credit activity has been strong in Mexico, Turkey and South America, down in Spain and practically flat in the United States since the close of 2015.

 

•

Non-performing loans, which account for 5.1% of the Group’s total credit risk, have once more performed well since the start of the year. Over the last three months the balance has fallen by 2.3%: Banking Activity in Spain (down 4.1%), Real-Estate Activity in Spain (down 3.4%) and Mexico (down 3.8%) were the areas mainly responsible for the decline, as was the case in the previous quarter. South America registered an increase of 1.2%, the United States of 4.9% and Turkey of 3.3%.

 

•

The Group’s NPL ratio continues to improve (down 1 basis point over the last three months and down 25 basis points since the start of the year) to 5.1% as of 30-Sep-2016.

 

•

Loan-loss provisions have fallen by 4.7% on the figure for June (down 3.5% excluding the exchange-rate effect), due to declines in all the geographical areas except for South America (up 0.8%), the United States (up 0.6%), Turkey (up 0.3%) and Rest of Eurasia (up 1.9%).

 

•

The coverage ratio stands at 72%.

 

•

Lastly, the cumulative cost of risk as of September remains stable at the levels of the close of the first half of 2016 (0.92%), well below the figure for the same period in 2015 (1.10%).

Structural risks

Liquidity and funding

Management of liquidity and funding aims to finance the recurring growth of the banking business at suitable maturities and costs, using a wide range of instruments that provide access to a large number of alternative sources of finance, always in compliance with current regulatory requirements.

A core principle in BBVA’s management of the Group’s liquidity and funding is the financial independence of its banking subsidiaries abroad. This principle prevents the propagation of a liquidity crisis among the Group’s different areas and ensures that the cost of liquidity is correctly reflected in the price formation process.

In the first nine months of 2016 liquidity and funding conditions have remained comfortable across BBVA Group’s global footprint.

 

•

The financial soundness of the Group’s banks is based on the funding of lending activity, basically through the use of customer funds.

 

•

On the euro balance sheet, total deposits have shown a stable trend, despite the current environment of low interest rates. This is also the case in the United States.

 

•

In Mexico, deposits show a positive evolution.

 

•

In Turkey, the domestic environment also remains stable, with no tensions affecting the sources of funding, and supported by the measures adopted by the Central Bank of Turkey (CBRT).

 

•

In the rest of the emerging economies, the liquidity and funding situation in both local currencies and dollars remains, likewise, stable.

 

•

BBVA S.A. completed an issue of internationalization bonds for €1,500m with a 3-year maturity, with the aim to increase its available collateral. It is the first issue of this kind carried out in Spain.

 

•

The long-term wholesale funding markets have remained stable in the other geographical areas where the Group operates. There have been no international securities issues.

 

•

Short-term funding has also continued to perform positively, in a context marked by a high level of liquidity.

 

•

With respect to the new LCR regulatory liquidity ratio, BBVA Group keeps levels over 100%, clearly higher than demanded by regulations (over 70% in 2016), both at Group level and in all its banking subsidiaries.

Foreign exchange

Foreign-exchange risk management of BBVA’s long-term investments, basically stemming from its franchises abroad,

aims to preserve the Group’s capital adequacy ratios and ensure the stability of its income statement.

The third quarter of 2016 has been marked by the maintenance of the quantitative easing (QE) measures applied by the European Central Bank and the Bank of Japan, the delay in interest rate hikes by the Federal Reserve (Fed) until economic figures strengthen, and some volatility in Turkey. Against this background, BBVA has maintained a policy of actively hedging its investments in Mexico, the United States, Chile, Colombia, Peru and Turkey. In addition to this corporate-level hedging, dollar positions are held at local level by some of the subsidiary banks. The foreign-exchange risk of the earnings expected from the international subsidiary banks for 2016 and 2017 has also been managed.

Interest rates

The aim of managing interest-rate risk is to maintain sustained growth of net interest income in the short and medium term, irrespective of interest-rate fluctuations.

So far in 2016, the results of this management have been satisfactory, with limited risk strategies in all the Group’s banks aimed at improving profitability. The amount of NTI generated in Europe and the United States is the result of prudent portfolio management strategies, particularly of sovereign debt, in a context marked by low interest rates. Portfolios are also held in Mexico, Turkey and South America, mainly of sovereign debt, to optimize the balance-sheet structure.

The debt markets have only had a very limited reaction to the UK’s Brexit referendum to leave the European Union. In Turkey, despite geopolitical tensions and the downgrade of Moody’s credit rating, the markets have shown resilience, helped by the global stability registered in the third quarter.

Economic capital

Attributable economic risk capital (ERC) consumption at the close of August, in consolidated terms, stood at €38,328m, practically flat over the quarter (up 0.5%). The increase of ERC in structural interest-rate risk and equity risk is offset by the reductions in market risk and fixed-asset risk.

 

 

According to the latest information available, global growth is slightly below 3% in year-on-year terms. The improvement in the developing economies is not yet sufficient to offset the slowdown in emerging markets. The impact of “Brexit” on the financial markets has been temporary and is not likely to have significant effects on GDP in 2016 and 2017 in the rest of Europe, although uncertainty associated with the negotiations and the type of agreements between the United Kingdom and the EU are risk factors. At the same time, the U.S. economy is recovering, but remains subject to the uncertainty surrounding the presidential elections. The pace of normalization of the Fed’s monetary policy is another factor of uncertainty, with potentially global repercussions. Geopolitical tension in some geographical areas completes this outlook of global uncertainty for 2016 and 2017. In the longer term, the performance of the Chinese economy, which is growing in line with expectations but is still vulnerable due to the country’s high level of debt, will continue to determine the forecasts for global growth and, in particular, for emerging economies.

Against this backdrop, the main stock-market indices have posted gains with respect to the close of the previous quarter. In Europe, the Stoxx 50 was up by 1.1%, while in the Eurozone, the Euro Stoxx 50 gained 4.8%. In Spain, the Ibex 35 has also gained 7.5%. The S&P 500, which tracks the share prices of U.S. companies, closed the quarter with a 3.3% increase.

This has also been the trend in the share prices of the banking sector. The European bank index Stoxx Banks, which includes British banks, gained 11.7% over the quarter, while the Eurozone bank index, the Euro Stoxx Banks, was up 11.2%. In the United States, the S&P Regional Banks sector index gained 9.8% on its level at the close of the second quarter.

The price of the BBVA share also increased over the quarter, reaching 5.38 euros as of 30-Sep-2016, 6.3% above the price at the end of June.

 

 

The BBVA share and share performance ratios

 

		30-09-16				31-12-15
Number of shareholders			947,244				934,244
Number of shares issued			6,480,357,925				6,366,680,118
Daily average number of shares traded			50,836,536				46,641,017
Daily average trading (million euros)			290				393
Maximum price (euros)			6.88				9.77
Minimum price (euros)			4.50				6.70
Closing price (euros)			5.38				6.74
Book value per share (euros)			7.33				7.47
Tangible book value per share (euros)			5.88				5.85
Market capitalization (million euros)			34,877				42,905
Yield (dividend/price; %) (1)			6.9				5.5

 

(1)	Calculated by dividing shareholder remuneration over the last twelve months over the closing price at the end of the period.

As regards shareholder remuneration, the Board of Directors of BBVA approved at its meeting on September 28, 2016 a capital increase against voluntary reserves, in accordance with the terms agreed at the Annual General Meeting of March 11, 2016, to develop the “dividend-option” shareholder remuneration system. This system offers BBVA shareholders the chance to choose between receiving all or part of their remuneration in either new BBVA shares or in cash. The number of free allocation rights needed to receive a new share is 66. Holders of 87.85% of these rights opted to receive new shares, an acceptance percentage that continues to be high and once again confirms its popularity among BBVA shareholders.

 

 

 

The number of BBVA shares as of 30-Sep-2016 remains at 6,480,357,925. However, the number of shareholders has increased by 0.8% over the quarter to 947,244. Residents in Spain hold 47.8% of the share capital, while the percentage owned by non-resident shareholders stands at 52.2%.

 

 

Shareholder structure

(30-09-2016)

 

		Shareholders								Shares
Number of shares		Number				%				Number				%
Up to 150			199,446				21.1				14,568,833				0.2
151 to 450			194,655				20.5				53,112,027				0.8
451 to 1,800			297,384				31.4				285,724,863				4.4
1,801 to 4,500			134,488				14.2				382,982,194				5.9
4,501 to 9,000			62,140				6.6				391,373,879				6.0
9,001 to 45,000			52,322				5.5				912,218,345				14.1
More than 45,001			6,809				0.7				4,440,377,784				68.5
Total			947,244				100.0				6,480,357,925				100.0

BBVA shares are traded on the Continuous Market of the Spanish Stock Exchanges and also on the stock exchanges in London and Mexico. BBVA American Depositary Shares (ADS) are traded on the New York Stock Exchange and also on the Lima Stock Exchange (Peru) under an exchange agreement between these two markets. Among the main stock-market indices, BBVA shares are included on the Ibex 35 and the Euro Stoxx 50, with a weighting of 7.7% in the former and 1.7% in the latter. They are also listed on several sector indices, such as the Stoxx Banks, with a weighting of 4.5%, and the Euro Stoxx Banks, with a weighting of 9.9%.

Lastly, BBVA maintains a significant presence on the main international sustainability indices, or ESG (Environmental, Social and Governance) indices, which evaluate the performance of companies in this area, as summarized in the table below.

 

 

 

(1)

The inclusion of BBVA in any MSCI index, and the use of MSCI logos, trademarks, service marks or index names herein, do not constitute a sponsorship, endorsement or promotion of BBVA by MSCI or any of its affiliates. The MSCI indices are the exclusive property of MSCI. MSCI and the MSCI index names and logos are trademarks or service marks of MSCI or its affiliates.

 

The current environment still demands a change in behavior and a new focus from financial institutions. At BBVA we respond to this social demand through a differential model of banking, which we call responsible banking, based on the search for return adjusted to principles, strict compliance with legality, best practices and the creation of long-term value for all our stakeholders. Of note in this regard is the signing in July of an agreement between BBVA Group and the Regional Government of Catalonia for the implementation of a social housing project. BBVA will transfer 1,800 homes to the Regional Government for families in a situation of social vulnerability. The Regional Government will implement a social insertion plan as part of this agreement.

Financial Literacy

With the aim of raising awareness of the importance of financial literacy in the lives of people, and helping to train consumers to be more aware and better informed about banking products, BBVA Chile has just implemented its new web site educacionfinancierabbva.cl. Over 10,300 young people in Chile, of whom 60% live in remote regions far from the capital, have taken part this year in Liga de Educación Financiera BBVA (BBVA Financial Literacy League), a program designed to teach good financial habits to students aged 14 to 17.

For the second year in a row, the BBVA Provincial Foundation has held the ceremony for the presentation of its “Adelante con la educación” (Forward with Education) awards. Their aim is to recognize students and teachers who participate in its educational programs.

Products with a high social impact

Financial inclusion

BBVA has received recognition at the ECOFIN awards, as the best “International Brand-Image of Spain” in 2016. The award recognizes the work of the BBVA Microfinance Foundation (FMBBVA) and the advice BBVA provides to companies expanding abroad.

Support for SMEs

BBVA and the European Investment Bank (EIB) have joined forces for the third time to boost funding for small and medium-sized enterprises, provide liquidity and help them with their investments.

Science and Culture

For the second year running, the BBVA Foundation and the Spanish Royal Mathematical Society (RSME) have presented the

Vicent Caselles Mathematical Research Awards to two young Spanish mathematicians, who will receive 2,000 euros for their innovative work.

The BBVA Foundation Awards for Biodiversity Conservation recognize individuals and organizations that work to protect nature and achieve relevant and measurable results with a lasting impact. At this 11th edition, the awards went to Grupo para la Rehabilitación de la Fauna Autóctona y su Hábitat (Group for the Rehabilitation of Indigenous Fauna and its Habitat) (GREFA), the Conservation Land Trust (CLT) and the communicator Carlos de Hita.

Innovation

The two entrepreneurship projects that won BBVA Open Talent Europa 2016 have been announced: the Israeli company Paykey and the Dutch company Musoni, which will receive 30,000 euros in prize money and will participate in a two-week immersion program with BBVA executives in Madrid and Mexico City.

The Environment

Ciudad BBVA has been awarded the LEED Gold certification, one of the world’s most demanding sustainable construction standards. It has recognized a construction that ensures 40% savings in drinking water, the reuse of gray water and rainwater for irrigation, and a reduction of over 30% in energy usage, among other benefits. BBVA Group currently has 16 buildings certified under the LEED seal in Spain, Chile, Paraguay and the United States.

The urban mobility plan of Ciudad BBVA has been chosen as the best practice conducted by a large Spanish company at the awards presented each year by the Renault Foundation, for the promotion of public transportation and a more rational use of private vehicles.

The team

BBVA and the Integra Foundation have signed a partnership agreement to support the employability and integration into the labor market of people living in a situation of social exclusion through a corporate volunteer project by which BBVA professionals will become voluntary trainers at the Empowerment School of the Integra Foundation.