BBVA Bancomer

BBVA
Bancomer
Best positioned for
the opportunities
to come
Disclaimer
This document is only provided for information purposes and does not constitute, nor must it be interpreted as, an offer to sell or
exchange or acquire, or an invitation for offers to buy securities issued by any of the aforementioned companies. Any decision to buy or
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This document contains or may contain forward looking statements (in the usual meaning and within the meaning of the US Private
Securities Litigation Act of 1995) regarding intentions, expectations or projections of BBVA or of its management on the date thereof,
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are based on our current projections, although the said earnings may be substantially modified in the future by certain risks, uncertainty
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factors include, without limitation, (1) the market situation, macroeconomic factors, regulatory, political or government guidelines, (2)
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bound by the foregoing Restrictions.
2
BBVA
Group
3
BBVA, a retail banking group with diversified international
presence
Presence in 32 countries
North America
Rest of the world
785 Br.
12,909 E
USA
Belgium
Germany
UK
Mexico
1,987 Br.
Spain
32,580E
3,055 Br.
South America
Panama
Portugal
144 Br.
27,936 E
1,925 E
Japan
China
Brazil
Paraguay
Bolivia
Data as of dec 31, 2009
Italy
Venezuela
Peru
1,495 Br.
Switzerland
France
Cuba
Ecuador
Uruguay
Argentina
28,371 E
Korea
India
Singapore
BBVA Total
€ 535 bn
Russia
Puerto Rico
Colombia
Chile
Total assets
Taiwan
7,466 Br.
Australia
103,721 E
Customers funds
€ 509 bn
# customers
47 m
# shareholders
884,373
4
Despite high provisioning and other negative one-offs in 2009,
earnings remain high and more stable vs European peers
Attributable profit
BBVA’s net attributable profit
Peer group* excl. BBVA (€bn)
(€m)
6,126
5,020
89.3 79.7
73.7
55.3
36.1
4,736
30.3
21.7
2002 2003 2004 2005 2006 2007 2008 2009
* Peer group: BARCL, BBVA, BNPP, CASA, CMZ,
CS, DB, HSBC, ISP, RBS, SAN, SG, UBS, LBG,
Citi, BOA, JPM, Wells Fargo. Constant exchange
terms dec 2009.
-27.0
4,210
3,806
2,923
2,227
1,719
2002* 2003* 2004 2005 2006 2007 2008 2009
* 2002 - 2003 Pre-IFRS
5
BBVA is a more “productive” owner of its assets
Operating Income vs Total Assets
Peer Group
(%, 2009)
BBVA
Peer 1
Peer 2
Peer 3
Peer 4
Peer 5
Peer 6
Peer 7
Peer 8
Peer 9
Peer 10
Peer 11
Peer 12
Peer 13
Peer 14
Share of operating income vs share of
total assets
BBVA Group vs. peer group
(%)
2.3%
2.1%
1.4%
1.3%
1.3%
1.1%
0.9%
0.8%
0.8%
0.6%
0.5%
0.5%
0.4%
0.2%
0.1%
Peers: BARCL, BNPP, CASA, CMZ, CS, DB, HSBC, ISP, RBS, SAN, SG, UBS, LBG & UCI.
+90 b.p.
6.7
5.8
2.7
2006
2.6
2009
Share of operating income
Share of total assets
6
A high structural profitability that flows to our shareholders
Earnings per share
BBVA vs Peer Group
(Base 100: 2006)
81
BBVA
Average
25
Median
25
2006
2007
2008
2009
No shareholder dilution during the crisis
Peers: BARCL, BNPP, CASA, CMZ, CS, DB, HSBC, ISP, RBS, SAN, SG, UBS, LBG & UCI.
7
Strong organic capital generation
Core capital
BIS II (%)
Tier I and total capital ratio
BIS II (%)
+30 bp
8.1%
+163 bp
6.2%
Dec-08
Organic
(retained
earnings)
Other
Tier I
9.5%
Total capital
ratio
13.4%
Mar-10
High quality capital with RWA / TA at 54.4%
8
Lowest wholesale financing requirements in our peer group
Balance sheet
Peer Group
(€bn, 2009)
BBVA
Peer1
Peer2
Peer 3
Peer 4
Peer 5
Peer 6
Peer 7
Peer 8
Peer 9
Peer 10
Peer 11
Peer 12
Peer 13
Peer 14
Peer 15
Peer 16
Deposits/Total assets
Peer Group
(%) 2009
49. 0
Peer 1
535
625
695
844
904
929
1, 024
1, 111
1, 158
1, 158
47. 5
BBVA
43. 9
Peer 2
41. 1
Peer 3
39. 6
Peer 4
35. 0
Peer 5
1, 501
1, 554
1, 557
1, 649
1, 716
1, 912
2, 058
Small Balance Sheet
Peers: BARCL, BNPP, CASA, CMZ, CS, DB, HSBC, ISP, RBS, SAN, SG, UBS, LBG & UCI.
Peer 6
31. 7
Peer 7
31. 4
Peer 8
30. 6
Peer 9
29. 8
Peer 10
29. 4
Peer 11
29. 3
Peer 12
27. 8
Peer 13
23. 4
Peer 14
22. 9
Large Retail Deposit Base
9
Close to 45% of revenues already come from emerging
economies
Breakdown of gross income
by business area – 1Q10
South America
18%
Spain &
Portugal
34%
USA
12%
Mexico
26%
WB & AM
10%
10
Emerging economies with superior growth prospects
Mexico
The leading bank in one of the most
attractive and under-penetrated
banking markets of the world
South
America
A sizeable franchise becoming
increasingly relevant to BBVA’s
earnings
China
CITIC: a long term opportunity play, with
current earnings delivery
Source: SEE BBVA. May 2010.
11
Mexico
12
Mexico is a modern, stable and strong country
Over the last twenty years Mexico has reinvented itself
1988 2000 2009 2010e
Trade & free
capital flows
Deregulation &
legal frame work
Privatization
& fiscal discipline
Fully independent
Central bank
GDP Growth (%)
1.8
7.2
-6.6
5.0
CPI Inflation (%, eop)
51.7
9.0
3.6
5.6
Cetes 28-day (%, eop)
52.3
16.5
4.5
5.2
Exports as GDP %
19.9
23.6
27.2
26.9
Fiscal Balance* (% GDP)
-7.9**
-3.1
-3.2
-3.6
Public Debt* (% GDP)
47.1
38.3
39.1
39.9
Foreign Debt* (% total)
54.9
34.6
27.1
27.8
Debt maturity (days)
na
550
2,250
2,270
International Reserves
11.9
32.4
78.9
110.0
(bn USD, Avg)
* Public Sector Borrowing Requirements and broader definition of public debt ** Traditional balance (do not includes off-balance operation for 1988)
13
Mexico showed a positive performance during the crisis
Mexico’s Strengths
No adverse effects on purchasing power:
Low inflation, stable interest rates and relatively low impact on unemployment
Less dependence on external funding/ public and private sector:
Total external debt 28% of GDP
Strong financial sector:
High capitalization index, low delinquency ratios and hedging of commercial banks
Quick and positive response from economic policies:
Counter-cyclical fiscal policy
Liquidity provisioning & financing support
Commercial openness:
Increasing share of Mexican imports in US
Positive exchange rate evolution
14
How did Mexico face the crisis? Strengths
Mexico: Short Term Nominal Interes Rate
%
40
50
50
45
45
40
40
35
35
30
30
30
25
25
20
20
25
25
15
15
20
20
10
10
15
15
10
10
5
5
5
5
0
0
0
0
20%
15%
15%
10%
10%
5%
5%
0%
0%
2035
20%
2033
25%
2031
25%
2029
2008
2006
2004
0
2000
0
1998
10
1996
10
1994
20
1992
20
1990
30
1988
30
1986
Source: IMF
40
Public Sector
30%
2027
Private Sector
40
30%
2025
50
35%
2023
50
35%
2021
60
40%
2019
60
40%
2017
70
45%
2015
70
45%
2013
80
50%
(% PIB)
2011
80
2002
Sustainability
of Public debt
in the medium
term
50%
90
Source: BBVA Bancomer ERD
90
Mexico´s Public Debt
Inertial´s Economic Outlook
2009
Mexico´s External Debt
% PIB
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
30
Source: BBVA ERD
35
Dashed, recession periods
35
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Source: BBVA ERD
40
Dashed, recession periods
Nominal
Stability:
there were
no adverse
effects on
purchasing
power
Mexico: Inflation
%
15
Financial Sector: Strength built through better regulation
18
18
16
16
14
14
12
12
10
10
Delinquency Rate, Commercial Banks
Delinquency loans / Portfolio, %
12
12
11
11
10
10
9
9
8
8
7
7
6
6
5
5
IIIT09
IIT09
IT09
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
IIT09
1995
0
1994
0
Source: CNBV
0
IT09
0
2008
1
2007
1
2006
2
2005
2
2
2004
3
2
2003
3
2002
4
2001
4
2000
4
1999
4
Crédito Bancario T otal, PIB de Minería,
Construcción y Manufacturas
Commercial Bank Lending and GDP
Tasa de (real
Crecimiento
annual growth Real
rate, %)Anual, %
20
30
15
20
10
10
5
0
0
-5
-10
-10
-20
IV
III
II
I-09
IV
III
II
I-08
IV
III
II
I 07
IV
III
II
I 06
IV
III
II
I-05
IV
III
-20
II
-15
I 04
1998
6
1997
6
1996
8
1995
8
1994
Source: CNBV
Capitalization
Index,
Commercial
Banks
Capital Ratio,
Commercial
Banks
(%) (%)
-30
GDP Construction (left axis)
PIB Const rucción (Eje Izq)
GDP Manufacturing (right axis)
PIB Manufact uras (Eje Izq)
GDP
Agriculture
(right
axis) (Eje Der)
PIB
A ct
ividades T
erciarias
Crédit
o Bancario
Der)
Commercial
Bank(Eje
Lending
(right axis)
16
BBVA
Bancomer
17
BBVA Bancomer is the leader of the Mexican banking
system
Market Share (%)
Bancomer
26.5%
28.0%
40.6%
29.7%
25.5%
21.4%
2nd largest
competitor
17.7%
24.9%
10.3%
17.5%
20.5%
Loans1
Mortgages2
Commercial
Consumer
Deposits
#1
#1
#1
#1
#1
21.6%
20.0%
18.2%
16.5%
Mutual Funds Pension Funds
#1
#2
21.4%
Insurance
#1
Source: CNBV, SHF, CONSAR, AMIS y AMIB. Figures as of December 2009
(1) Gross Loans
(2) Includes Sofoles, excludes securitizations
18
With presence in all Mexican States
Leader in deposits 2009
Municipalities
566
# 1 in 27 States
# 2 in 5 States
19
With the widest network to cater its customers
Customers (million)
No. Branches
16.3
1,653
1,796
2003
1T10
8.9
2003
1T10
No. Employees
25,230
26,566
2003
1T10
20
BBVA Bancomer: Outstanding track record in a difficult
environment
2005 - 07
GDP
CAGR
2007 - 09
+4.1%
-2.6%
Total loans
+28%
+5%
Loans to individuals
Loans to Small Businesses
+39%
+48%
+2%
+121%
Total Deposits
Mutual Funds
+5%
+32%
+12%
+7%
Net profit (avg. %change)
+37%
+8%
Fundamentals (1T10)
Market share growth:
Total loans
Demand deposits
Efficiency ratio
Coverage ratio
Risk Premium
+246bp
+83bp
34.8%
131%
4.03%
+98bp
+147bp
21
…Maintaining the leader position in market share and
quality ratios in 2009
Market Share:
Demand deposits
Mutual Funds
1Q10/4Q09
+84 bp
+21 bp
Risk Premium
1Q10
52
3
-10
-185
1T09
2T09
3T09
4T09
+24 bp
+53 bp
Risk Premium*
quarterly changes in bp
51
Market Share:
Commercial loans
Credit Card loans
1Q10/4Q09
Bancomer
4.03%
Peer 1
5.81%
Peer 2
6.37%
Peer 3
7.67%
1T10
* Peers in local accounting standards
22
Opportunities
23
Bancomer has been working in initiatives to enhance long
term productivity
Transformation Plan (2008-2010)
Productivity
+15% in productivity
business network
Higher sales in
branches
Efficiency
Efficiency Ratio:
34.8% (1T10)
More efficient
processes
Customer
insight
Customer knowledge
New products for
new market
niches
New technology
platforms
Higher collection
intelligence
Focused on a better service for our customers
24
And today, we are designing a new Plan to achieve higher
growth
g
PLAN
Positioning for future GROWTH
(2010-2012)
1
Bancarisation
2
Distribution
3
Cross-selling
Growth in key market segments supported on a
strong risk platform
25
1
Bancarisation:
Lower financial penetration than Brazil and Chile
%GDP, 2008
Deposits1
Mexico
Brazil
Chile
Retail
14%
6%
7%
33
16
20
69
45
93
UK 54
Asset
Management 4
21%
76
51
65
92
50
51
27
84
Spain
USA
28
86
South Korea
Poland
Commercial
Loans3
Loans2
21
21
80
90
100
97
47
14
29
162
177
(1) Retail Payments + Retail Deposits + PyMES and Corporate payments and deposits
(2) Personal loans, credit cards, automobile, mortgages
(3) Trade Finance for corporates and PyMEs, Factoring, structured loans, syndicated loans, direct financing to PyMEs and corporates, specialized products for PyMEs
(4) Retail mutual funds, pension and other institutional funds
Source: BBVA Bancomer, McKinsey Global Banking Profit Pools
26
1
Bancarisation: 30 million to be bancarised
2008
85+
80 ‐ 84
75 ‐ 79
70 ‐74
65 ‐ 69
60 ‐ 64
55 ‐ 59
50 ‐ 54
45 ‐ 49
40 ‐ 44
35 ‐ 39
30 ‐ 34
25 ‐ 29
20 ‐ 24
15 ‐ 19
10 ‐ 14
5 ‐ 9
0 ‐ 4
Million people between
15 and 65 years
HNW
0.4
15
2008
6
4
2
0
2
4
6
Distribución por Edad
Mass
Middle
Market
34.1
17
17
2
0
Affluent
1.3
Mass
Affluent
12.9
2025
4
100%
580 €*
+
6
Bank penetration
%
Mass
Low
Income
21.2
2
4
6
Young people that need
access to financial services
100%
120€*
67%
13€*
32%
3.5€*
*Annual Income in thousand
€ per household.
12%
34%
27
1
Mortgage Market: Household creation determines
potential demand for mortgages
Household creation (cumulative data and flows)
New Households
Number of Households (cumulative)
700
45
40
600
35
550
30
Millions
Households (thousand)
650
Firm
Firm
government
government
support
support
500
25
450
400
20
'06 '08 '10 '12 '14 '16 '18 '20 '22 '24 '26 '28 '30
600,000 new
homes each
year
New households = potential demand for mortgages
28
1
Mortgage Market: structural housing deficit
Housing Deficit (million)
New homes (projects)
450,000
Houses in poor
conditions
no access to public services
Houses in bad
conditions
Necessary improvement
Without House
2.5
3,000
400,000
2,500
350,000
2,000
300,000
1.1
250,000
1,500
200,000
0.7
1,000
150,000
100,000
500
Deficit
4.3
50,000
0
0
2001
2002
2003
2004
Started Units
2005
2006
2007
2008
2009
Started Projetcs
Potential credit demand: 6.1 million houses
Source: BBVA Bancomer: Economic Research, CONAPO,SOFTEC
29
1
Bancomer: best positioned to take advantage of
the Mortgage Market opportunities
Market share in New Mortgage Portfolio
Private Sector (%, february 2010)
35%
Fovissste Other Private
1% Sector
14%
(15%)
30%
Infonavit
70%
25%
20%
15%
Private Sector
10%
5%
Banks
41%
0%
Peer 1
Peer 2
Peer 3
Peer 4
Peer 5
Peer 6
Bancomer
40%
Sofoles
19%
Peer 7
y-o-y market share growth: +252bp
30
1
Micro, small and medium-sized enterprises:
low financial penetration
Financing
come
mainly
from suppliers
xico, la mayor
parte
del financiamiento
Financiamiento
empresarial
, 2009
Commercial
financing,
2009
Porcentaje
%
# enterprises: 3.8 Million
mero de=empresas:
3.8 millones
100%
MXN 3.6
billion
Working
Capital
100% = MXN 3.6 miles de millones
Otros
Other
18%
18%
24
Bancos
Banks
24%
Uses of credit %
66
Investment
59 ProSuppliers
veedores
59%
EnPyMEs
, 67% se financian por proveedores
Liabilities
External
Trade
23
7
5
Microcompanies:
67% financing from suppliers
31
Small and Medium-Sized
(Sales:40–100 MXN M)
0.02 Million
Small
(Sales:12–40 MXN M)
0.32 Million
Formal Micro
(Sales:12–4 MXN M)
1.21 Million
Informal Micro
(Sales:12-4)
3.62 Million
Economic Units (1)
Business
Equipment
Liquid Loan
Channel
Business
Centers
Market Size
Bancomer’s Specialized
Business Model
Direct
Credit
Tarjeta
Negocios
Working capital
from MX$180 th
Micro-enterprises:
40% of employment
15% of GDP
Tarjeta
Micro-negocios
Network
1
Micro, small and medium-sized enterprises:
low financial penetration
CC from MX$20th
to MX$180th
Leveraged on NAFIN guarantees
32
2
Distribution :
Poor access to financial services
Physical Access to Financial Services
Points per 100,000 inhabitants, 2008
40
Network
14
15
12
50
Correspondents
10
61
ND
157
110
ATMs
40
56
3,523
POS
1 Data as of 2007
432
450
Mexico
Chile
1,471
Brazil
Spain
33
2
Distribution : Bancomer’s Approach
Servicing: transaction migration to low-cost channels
Cash-recycling Cashpoints
ATMs
(Correspondents)
2nd
(branches)
generation
Bank Correspondents
Bancomer Express
+20%
# Transactions (million)
1,700
1,421
862
66%
76%
82%
34%
24%
18%
2009
2012e
2004
Tellers
Channels
34
2
Distribution : Bancomer’s Initiatives
Electronic
Electronic payments
payments
New
New means
means of
of payment
payment
Network
Network Expansion:
Expansion:
Bank
Bank correspondents:
correspondents: 12,000
12,000 points
points
ATMs:
ATMs: >3,000
>3,000
Branches:
Branches: 100-200
100-200 new
new branches
branches
POS:
POS: >60,000
>60,000
35
3
Cross-selling: Bancomer has the largest customer
base and huge opportunities to cross-selling
Corporate
Medium Size Bus.
Ultra & High Net
Mass Affluent
(Preferente)
Small & Micro
banking
Business
“Easy”
Total customers (million)
Large Bus. & Gov
Bkng Payrolls
Standard Bkng
“CROSS SELLING”
banking
“Relationship”
2009 – 15.7 M Customers
15.7
+ 6.8 M
8.9
2003
2009
Private Lalbels
Social Payments
Micro Payments
Pre-Pay cards
“Low Cost”
service
banking
“Express”
Walmart Credit Card
• Correspondent
• Mobile banking
• Express card (debit & prepay)
36
Concluding
Remarks
37
Concluding remarks
Mexico is a strong country and offers
unique opportunities
BBVA Bancomer has been resilient to the
global crisis
BBVA Bancomer has huge opportunities
to growth in the Mexican market
BBVA Bancomer continues to strengthen
its fundamentals and is prepared to
address the significant growth
38