Final Results 2002

Banco Bilbao Vizcaya Argentaria SA
30 January 2003

PRESS RELEASE


30-01-2003

2002 Earnings



 BBVA REPORTS NET ATTRIBUTABLE OF 1.72 billion EUROS (-27.3%) AFTER 427 MILLION
                                     EUROS
                          OF EXTRAORDINARY PROVISIONS




  • BBVA reinforces its competitive edge and starts 2003 with a healthier
    balance sheet, high solvency ratios, a substantial improvement in efficiency
    and a better risk profile


  • The dividend will drop 9.1%, in line with the fall in the net
    attributable, excluding the voluntary provisions


  • The 455 million (427 million after tax) of extraordinary provisions have
    been allocated to the Brazilian exchange differences, the early amortization
    of all the goodwill in non-investment grade countries and to early
    retirement provisions


  • The earnings point to an upturn in the business' recurrent margins:
    Operating Income remained stable (-0.4%) and would have risen 9.4% excluding
    Argentina and the exchange rate effect


  • The efficiency ratio improved 3.2 points, from 50.4 to 47.2%


  • The NPL ratio was better than in September and remained under control, at
    1.71%, excluding Argentina, while the coverage ratio ended at 190%


  • BBVA ended 2002 with a BIS Ratio of 12.5% and a Tier 1 of 8.4%, at the top
    of the sector in Europe






BBVA has applied a policy of maximum prudence and foresight, and has charged 427
million euros of extraordinary provisions against the income for 2002. As a
result, net attributable profit totalled 1.72 billion euros, down 27.3%. If the
provisions had not been brought forward, net income would have been 2.12
billion, down 9.2%, in line with the figure forecast at the end of the first
half year. The Board will propose a 9.1% cut in the dividend for 2002.


In 2002, the most recurrent earnings performed well: operating income jumped
9.4%, considering Argentina by the equity method and excluding exchange rate
effects. This healthy performance by the most recurrent margins contrasts with
declines of 79.2% in income from companies carried by the equity method and
36.5% in capital gains, and an 18.6% increase in total provisions. BBVA still
leads the Euro zone league in terms of efficiency, loan loss, solvency and
yield.


The 2002 earnings were conditioned by three key factors: the Argentinean crisis,
the depreciation of the Latin America currencies and investee companies' smaller
contributions. Against this background, the Group decided to make an additional
effort by bringing forward provisions in order to start 2003 on a firm footing.


This year is also going to be tough due both to narrowing margins in the
European market, which will be offset in Spain by a higher volume of business,
and to the effect of the depreciation of Latin American currencies, although the
Group will continue performing well in local currency terms.


With these medium and long term prospects, BBVA is adopting a realistic strategy
to strengthen its competitive edge in the European market. Consequently BBVA
will be starting 2003:


  • With a healthy balance sheet and high solvency ratios, as the Group's NPL
    ratio now stands at 1.71% and the NPL coverage ratio at 189.5% (excluding
    Argentina), after having improved since September, while the NPL ratio at
    home has fallen to 0.87%, while maintaining its capital strength: BBVA core
    capital stands at 5.9%, Tier 1 at 8.4% and the BIS Ratio, at 12.5%


  • With a substantial gain in efficiency, which improved from 50.4% to 47.2%


  • With a better risk profile, because the weight of Latin American
    non-investment grade countries in the Group has been halved: following the
    Brazil transaction, they now account for only 5% of total assets, as
    compared to 10% in December 2001


  • With a clear strategic focus on retail banking in Spain and Mexico; Retail
    Banking in Spain reported a 13.9% rise in net attributable, while Mexico
    announced an increase of 7.8%, or 18.1% without the exchange rate effect


In spite of the difficulties it faced in 2002, at the end of the year BBVA had
redefined its business model, reinforced its competitive edge in Europe,
improved its solvency levels, the quality of its balance sheet and its risk
profile, in order to face its future as one of the leaders of the European
banking league.


Earnings


The 2002 income statement was conditioned by four factors: Argentina, the
exchange rate fluctuations, the investee companies' smaller contribution and the
extraordinary provisions. In spite of the harsher scenario, BBVA reported
further improvements in recurrent income -especially from the retail business-,
and efficiency levels, and its earnings remained solid, despite fewer capital
gains and income from companies carried by the equity method.


BBVA recorded 5.56 billion euros of Operating Income, most likely the Euro
Zone's highest figure in 2002, underscoring the strength of the Group's
recurrent income.


The effects of the exchange rates and Argentina distort any comparison with the
previous year. The income statement with Argentina consolidated by the equity
method offers a truer comparison with the real performance of the most recurrent
earnings.


On this basis, net interest income would have dropped 8.3%, meaning a decrease
of only 0.9% with respect to 2001 at constant exchange rates. After applying net
fee income, the basic margin fell 6.1%, or 1% excluding the exchange rate
effect, while the 4.1% decrease in ordinary revenue would be an increase of 3.1%
at constant exchange rates.


All business areas reported lower general administrative expenses (personnel and
general expenses), which fell 9.2% or 1.7% excluding the exchange rate effect,
in spite of high inflation rates in certain markets in which the Group operates.
Much of this was due to the headcount and branch network streamlining process in
place since the merger, and which in 2002 focused especially on America.


Efficient income and expense management allowed BBVA to record a further gain in
the efficiency ratio, which improved from 50.4% to 47.2%.


Consequently, operating income excluding Argentina and at a constant exchange
rate rose 9.4%, the biggest rises being reported by Retail Banking in Spain and
Portugal (+11.8%), Banking in America (+65.3%) and Mexico, which grew 2.0%
because the higher net fee income and lower expenses offset the fall in net
interest income prompted by the rate cut.


As for the lower part of the income statement, the items as far as the pre-tax
profit subtracted more than double the amount recorded in 2001. BBVA has decided
to bring forward certain items and charge them to the income for 2002, and
allocated total provisions of 2.73 billion, 18.6% up on 2001. Of that total
figure, 455 million (427 million after tax) correspond to the extraordinary
provisions allocated to bring forward charges planned for 2003 and subsequent
years:


  • The amortization of all the goodwill outstanding in Latin American
    non-investment grade countries, totalling 129 million euros


  • 245 million euros to write off the exchange differences following the
    Brazil transaction, recorded under Group transactions, which has no affect
    on the net worth because the same amount has been credited to the reserves

  • An 81 million euros early retirement provision, with an impact of 53
    million on net attributable.


Excluding these extraordinary provisions, Group net attributable would have
amounted to 2.12 billion euros, 9.2% down on 2001, in line with the forecast
issued at the end of the first half, and the ROE of 13.7% would have risen to
17.1%, comparing favourably with the main European banks.


Two further factors made the situation more complicated for BBVA:


  • Less income from companies carried by the equity method, due to the lower
    income reported by investee companies and the inclusion of Argentina, which
    dropped 79.2%


  • 36.5% fewer capital gains than in 2001, as the market slumps brought down
    asset valuations, prompting the Group adopted a prudent disposal policy


In short, Group earnings at the end of 2002 were in line with forecasts, before
the extraordinary provisions, as a result of the healthy recurrent margins and
in spite of fewer capital gains and less income from companies carried by the
equity method.


Business


Throughout 2002, Group activity was conditioned by the exchange rate effect in
Latin America, while wholesale business was hit by the volatility and
uncertainty on the financial markets. At home, however, it devoted further
efforts to relaunching the business, focusing in particular on lending.


At the end of 2002, BBVA's assets amounted to 279.54 billion euros (-9.6%),
total lending totalled 146.41 billion euros (-6.2%) and total customer funds
managed rose to 289.39 million euros (-10.7%). Excluding Argentina and at
constant exchange rates, lending increased 4.5% and total funds under management
rose 2.1%.


On the Spanish market, net lending continued to grow as throughout 2002, rising
8.9%, while loans secured by in-rem collateral jumped 14.9%. Growth in deposits
was slower on account of the sluggish markets, the best news being the improved
mix structure as the least expensive transactional deposits gained further
weight.


Capital strength


Despite the performance of earnings and the harsh scenario, at the end of 2002
BBVA still enjoyed a clear competitive edge: the strength of its capital ratios.


BBVA ended 2002 with a core capital of 5.9%, a Tier 1 of 8.4% and a BIS Ratio of
12.5%, together with an equity surplus of 5.56 billion euros. The capital
adequacy ratio, according to Bank of Spain regulations, amounted to 11.2%.


Therefore the Group ranks number one in Europe in capital strength terms, a
variable that matters all the more at low points of the cycle, such as the
present.





Highlights of the BBVA Group

(Consolidated figures)
                                                                            2002              2001              +%

BALANCE SHEET (millions of euros)
Total assets                                                               279,542       309,246              (9.6)
Total lending (gross)                                                      146,413       156,148              (6.2)
Customer funds recorded on balance sheet                                   180,570       199,486              (9.5)
Other customer funds managed                                               108,815       124,496             (12.6)
Total customer funds managed                                               289,385       323,982             (10.7)
Shareholders' funds (including profit for the year) (1)                     12,351        13,315              (7.2)

INCOME STATEMENT (millions of euros)
Net interest income                                                          7,808         8,824             (11.5)
Basic margin                                                                11,476        12,862             (10.8)
Ordinary revenue                                                            12,241        13,352              (8.3)
Operating income                                                             5,577         5,599              (0.4)
Operating income (Argentina consolidated by equity method)                   5,251         5,109                2.8
Pre-tax profit                                                               3,119         3,634             (14.2)
NET ATTRIBUTABLE PROFIT (2)                                                  1,719         2,363             (27.3)

PER SHARE DATA AND MARKET CAPITALISATION (31-12)
Share price                                                                   9.12         13.90             (34.4)
Market capitalisation (million euros)                                       29,146        44,422             (34.4)
Net attributable profit                                                       0.54          0.74             (27.3)
Book value                                                                    3.86          4.17              (7.2)
PER (Price Earnings Ratio; times)                                             17.0          18.8
P/BV (Price/Book value; times)                                                 2.4           3.3

RELEVANT RATIOS (%)
Operating income / ATA                                                        1.93          1.85
ROE (Net attributable profit / Average equity)                                13.7          18.0
ROA (Net income / Average total assets)                                       0.85          0.99
RORWA (Net income / Risk weighted assets)                                     1.48          1.78
Cost / income ratio                                                           47.2          50.4
NPL ratio                                                                     2.37          1.71
Coverage ratio                                                               146.8         221.6

CAPITAL ADEQUACY RATIOS (BIS regulations) (%)
Total                                                                         12.5          12.6
TIER I                                                                         8.4           8.5

OTHER INFORMATION
Number of shares (millions)                                                  3,196         3,196
Number of shareholders                                                   1,179,074     1,203,828
Number of employees                                                         93,093        98,588
. Spain                                                                     31,737        31,686
. America (3)                                                               59,293        64,835
. Rest of the world                                                          2,063         2,067
Number of branches                                                           7,504         7,988
. Spain                                                                      3,414         3,620
. America (3)                                                                3,886         4.161
. Rest of the world                                                            204           207

N.B.: Non-audited data. Consolidated statements follow generally accepted accounting principles of Bank of Spain
Circular 4/91 and later Circulars.
(1) After applying the income for the year.
(2) Excluding the extraordinary provisions allocated in 4Q2002, net attributable would have been only 9.2% lower.
(3) This heading includes BBVA Group's banking and pension management activities in all Latin American countries in
which it is present.



Consolidated income statement

                                                (Million euros)
                                                                         2002            +%              2001

Financial revenues                                                       17,234        (20.2)             21,608
Financial expenses                                                      (9,784)        (26.3)           (13,279)
Dividends                                                                   358        (27.7)                495
NET INTEREST INCOME                                                       7,808        (11.5)              8,824
Net fee income                                                            3,668         (9.1)              4,038

BASIC MARGIN                                                             11,476        (10.8)             12,862
Market operations                                                           765          56.1                490

ORDINARY REVENUE                                                         12,241         (8.3)             13,352
Personnel costs                                                         (3,698)        (12.9)            (4,243)
General expenses                                                        (2,074)        (16.4)            (2,482)

GENERAL ADMINISTRATIVE EXPENSES                                         (5,772)        (14.2)            (6,725)
Depreciation and amortization                                             (631)        (14.9)              (742)
Other operating revenues and expenses (net)                               (261)         (8.7)              (286)

OPERATING INCOME                                                          5,577         (0.4)              5,599
Net income from comp. carried by the eq. method                              33        (91.5)                393
Memorandum item: dividends received                                       (242)        (36.1)              (379)
Amortization of goodwill in consolidation                                 (679)           9.0              (623)
Net income on Group transactions                                            361        (62.2)                954
Net loan loss provisions                                                (1,743)         (9.2)            (1,919)
. Gross provisions                                                      (2,385)         (4.6)            (2,501)
. Reversals                                                                 434          47.8                294
. Recoveries                                                                208        (27.8)                288
Net securities writedowns                                                     3          n.s.               (43)
Extraordinary items                                                       (433)        (40.4)              (727)

PRE-TAX PROFIT                                                            3,119        (14.2)              3,634
Corporate income tax                                                      (653)           4.4              (625)

NET INCOME                                                                2,466        (18.0)              3,009
Minority interests                                                        (747)          15.8              (646)
. Preference shares                                                       (276)        (12.5)              (316)
. Other                                                                   (471)          42.8              (330)

NET ATTRIBUTABLE PROFIT (1)                                               1,719        (27.3)              2,363

(1) Excluding the extraordinary provisions allocated in 4Q2002, which amounted to 455 million euros (427 million
euros after tax), net attributable would only have been 9.2% lower.




Consolidated income statement (Argentina consolidated by equity method) (Millions of euros)

                                                                  2002              +%     +% at constant       2001
                                                                                           exchange rate

Financial revenues                                                16,152       (20.3)           (15.0)         20,264
Financial expenses                                               (9,026)       (28.4)           (24.4)       (12,599)
Dividends                                                            358       (27.7)           (27.2)            495
NET INTEREST INCOME                                                7,484        (8.3)            (0.9)          8,160
Net fee income                                                     3,567        (1.0)              5.1          3,602

BASIC MARGIN                                                      11,051        (6.1)              1.0         11,762
Market operations                                                    664         47.3             60.3            451

ORDINARY REVENUE                                                  11,715        (4.1)              3.1         12,213
Personnel costs                                                  (3,606)        (7.3)            (0.7)        (3,890)
General expenses                                                 (1,993)       (12.4)            (3.5)        (2,275)

GENERAL ADMINISTRATIVE EXPENSES                                  (5,599)        (9.2)            (1.7)        (6,165)
Depreciation and amortization                                      (612)        (8.6)            (0.9)          (669)
Other operating revenues and expenses (net)                        (253)        (6.4)              2.8          (270)

OPERATING INCOME                                                   5,251          2.8              9.4          5,109
Net income from comp. carried by the eq. method                       35       (79.2)           (79.3)            168
Memorandum item: dividends received                                (242)       (36.1)           (35.5)          (379)
Amortization of goodwill in consolidation                          (679)          9.0              9.0          (623)
Net income on Group transactions                                     361       (62.2)           (61.9)            954
Net loan loss provisions                                         (1,494)          7.8             15.5        (1,387)
. Gross provisions                                               (2,113)         10.7             24.1        (1,908)
. Reversals                                                          422         54.5             64.9            273
. Recoveries                                                         197       (20.9)           (14.0)            248
Net securities writedowns                                              3         n.s.              n.s           (43)
Extraordinary items                                                (280)         n.s.              n.s             24

PRE-TAX PROFIT                                                     3,197       (23.9)           (20.2)          4,202
Corporate income tax                                               (745)       (24.2)           (20.6)          (982)

NET INCOME                                                         2,452       (23.9)           (20.0)          3,220
Minority interests                                                 (733)       (14.6)            (7.0)          (857)
. Preference shares                                                (276)       (12.5)           (12.5)          (315)
. Other                                                            (457)       (15.7)              3.2          (542)

NET ATTRIBUTABLE PROFIT (1)                                        1,719       (27.3)           (24.5)          2,363

(1) Excluding the extraordinary provisions allocated in 4Q2002, which amounted to 455 million euros (427 million
euros after tax), net attributable would have been only 9.2% lower.


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