6-K 1 d432423d6k.htm 6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 6-K

REPORT OF FOREIGN ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of July, 2017

Commission file number: 1-10110

BANCO BILBAO VIZCAYA ARGENTARIA, S.A.

(Exact name of Registrant as specified in its charter)

BANK BILBAO VIZCAYA ARGENTARIA, S.A.

(Translation of Registrant’s name into English)

Calle Azul 4,

28050 Madrid

Spain

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F ☒ Form 40-F ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes ☐ No ☒

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes ☐ No ☒

January-June 2017

2Q17

JANUARY-JUNE 2017

Contents

BBVA Group highlights 2

Group information 3

Relevant events 3 Results 4 Balance sheet and business activity 10 Solvency 12 Risk management 14 The BBVA share 17 Responsible banking 19

Business areas 20

Banking activity in Spain 23 Non Core Real Estate 26 The United States 28 Mexico 31 Turkey 34 South America 37 Rest of Eurasia 40 Corporate Center 42

Annex 43

Other information: Corporate & Investment Banking 43

JANUARY-JUNE 2017 BBVA Group hiGhliGhts P.2 BBVA Group highlights BBVA Group highlights (Consolidated figures) 30-06-17 ?% 30-06-16 31-12-16 Balance sheet (million euros) Total assets 702,429 (5.8) 746,040 731,856 Loans and advances to customers (gross) 424,405 (2.0) 433,268 430,474 Deposits from customers 394,626 (2.9) 406,284 401,465 Other customer funds 137,044 5.3 130,177 132,092 Total customer funds 531,670 (0.9) 536,460 533,557 Total equity 54,727 (2.2) 55,962 55,428 income statement (million euros) Net interest income 8,803 5.2 8,365 17,059 Gross income 12,718 4.0 12,233 24,653 Operating income 6,407 8.6 5,901 11,862 Profit/(loss) before tax 4,033 18.9 3,391 6,392 Net attributable profit 2,306 25.9 1,832 3,475 the BBVA share and share performance ratios Number of shares (millions) 6,668 2.9 6,480 6,567 Share price (euros) 7.27 43.5 5.06 6.41 Earning per share (euros) (1) 0.33 25.7 0.26 0.49 Book value per share (euros) 7.18 (2.3) 7.35 7.22 Tangible book value per share (euros) 5.82 0.2 5.81 5.73 Market capitalization (million euros) 48,442 47.6 32,817 42,118 Yield (dividend/price; %) 5.1 7.3 5.8 Significant ratios (%) ROE (net attributable profit/average shareholders’ funds) (2) 8.6 7.2 6.7 ROTE (net attributable profit/average shareholders’ funds excluding 10.5 8.9 8.2 intangible assets) (2) ROA (profit or loss for the year/average total assets) 0.82 0.67 0.64 RORWA (profit or loss for the year/average risk-weighted assets) 1.53 1.25 1.19 Efficiency ratio 49.6 51.8 51.9 Cost of risk 0.92 0.92 0.84 NPL ratio 4.8 5.1 4.9 NPL coverage ratio 71 74 70 Capital adequacy ratios (%) CET1 fully-loaded 11.1 10.7 10.9 CET1 phased-in (3) 11.8 12.0 12.2 Tier 1 phased-in (3) 13.0 12.7 12.9 Total ratio phased-in (3) 15.5 15.7 15.1 other information Number of shareholders 910,330 (3.1) 939,683 935,284 Number of employees 132,321 (3.6) 137,310 134,792 Number of branches 8,421 (8.0) 9,153 8,660 Number of ATMs 31,194 0.8 30,958 31,120 (1) Adjusted by additional Tier 1 instrument remuneration. (2) The ROE and ROTE ratios include in the denominator the Group’s average shareholders’ funds, but do not take into account the caption within total equity named “Accumulated other comprehensive income” with an average balance of -€ 4,218m in 1H16, –€ 4,492m in 2016 and -€ 6,015m in 1H17. (3) The capital ratios are calculated under CRD IV from Basel III regulation, applying a 80% phase-in for 2017 and a 60% for 2016.

JANUARY-JUNE 2017 Group informAtion P.3 Group information Relevant events Net attributable profit (Million euros) results (pages 4-9) +25.9% General growth of more recurring revenues in practically all geographic areas. 1,832 2,306 Lower contribution from net trading income (nti). operating expenses under control and improvement in the efficiency ratio in comparison with the same period the previous year. 1H16 1H17 Impairment losses on financial assets below the figure for the first half of 2016. Net attributable profit breakdown (1) (Percentage. 1H 2017) provisions (net) and other gains (losses) higher than in the 2.7 Spain (2) 14.9 17.7 same period last year due to allocation for restructuring costs. As a result, the net attributable profit in the first half of 2017 is The United States Mexico 11.0 € 2,306m, 25.9% up on the first six months of 2016. 13.8 Turkey South America Balance sheet and business activity (pages 10-11) Rest of Eurasia 39.9 loans and advances to customers (gross) continue to increase in emerging economies but decline in Spain (albeit less than in (1) Excludes the Corporate Center. previous periods) and the United States. (2) Includes the areas Banking activity in Spain and Non Core Real Estate. non-performing loans continue to improve, particularly in Spain, Capital and leverage ratios (Percentage as of 30-06-2017) the United States and Turkey. 11.8% Deposits from customers have again performed well in the more 11.1% liquid and lower-cost items. 6.8% In off-balance sheet customer funds, the trend in mutual funds continues to be positive. solvency (page 12-13) CET1 phased-in CET1 fully-loaded Leverage fully-loaded The capital position is above regulatory requirements, with a fully-loaded CET1 ratio of 11.1% as of 30-Jun-2017 above the Risk management (Percentage) established target of 11%. Year-to-date, this ratio has increased by 20 basis points primarily due to organic generation of earnings 74% 80% 72% 70% 71% 71% 09% and a reduction of risk-weighted assets (RWAs). NPL coverage 75% 70% 08% One issue of instruments that are eligible as additional Tier 1 for ratio 65% 60% 07% € 500m with a coupon of 5.875%, and a number of issues that are 55% 5.1% 5.1% 50% 4.9% 4.8% 4.8% 06% eligible as Tier 2. NPL ratio 45% 40% 05% 35% 30% 04% risk management (pages 14-16) Jun. 16 Sep. 16 Dec. 16 Mar. 17 Jun. 17 Positive trend in the metrics related to the credit risk management in the first six months of the year (stability in the Digital and mobile costumers (1) (Millions) second quarter): as of 30-Jun-2017, the NPL ratio closed at 4.8%, the NPL coverage ratio at 71% and the cumulative cost of Digital customers Mobile customers risk at 0.92%. +22% +42% transformation 18.1 19.9 16.3 10.2 12.3 14.5 The Group’s digital and mobile customer base (up 22% and 42% year-on-year, respectively, according to latest available data) continues to increase, as do digital sales in all the geographic Jun. 16 Dec. 16 Jun. 17 areas where BBVA operates. Jun. 16 Dec. 16 Jun. 17 (1) Figures in Spain and the United States have been restated.

JANUARY-JUNE 2017 Group informAtion P.4 Results In the first half of 2017, BBVA has generated a net attributable Unless expressly indicated otherwise, to better understand profit of € 2,306m, a year-on-year increase of 25.9%. This the changes in the main headings of the Group’s income positive trend is explained by the good performance of more statement, the percentage changes given below refer to recurring revenues and the heading of other operating income constant exchange rates. and expenses, together with the control of operating expenses and a reduction in impairment losses on financial assets. Consolidated income statement: quarterly evolution (Million euros) 2017 2016 2Q 1Q 4Q 3Q 2Q 1Q net interest income 4,481 4,322 4,385 4,310 4,213 4,152 Net fees and commissions 1,233 1,223 1,161 1,207 1,189 1,161 Net trading income 378 691 379 577 819 357 Dividend income 169 43 131 35 257 45 Share of profit or loss of entities accounted for using the equity method (2) (5) 7 17 (6) 7 Other operating income and expenses 77 108 159 52 (26) 66 Gross income 6,336 6,383 6,222 6,198 6,445 5,788 Operating expenses (3,175) (3,137) (3,243) (3,216) (3,159) (3,174) Personnel expenses (1,677) (1,647) (1,698) (1,700) (1,655) (1,669) Other administrative expenses (1,139) (1,136) (1,180) (1,144) (1,158) (1,161) Depreciation (359) (354) (365) (372) (345) (344) operating income 3,161 3,246 2,980 2,982 3,287 2,614 Impairment on financial assets (net) (997) (945) (687) (1,004) (1,077) (1,033) Provisions (net) (193) (170) (723) (201) (81) (181) Other gains (losses) (3) (66) (284) (61) (75) (62) Profit/(loss) before tax 1,969 2,065 1,285 1,716 2,053 1,338 Income tax (546) (573) (314) (465) (557) (362) Profit/(loss) for the year 1,422 1,492 971 1,251 1,496 976 Non-controlling interests (315) (293) (293) (286) (373) (266) Net attributable profit 1,107 1,199 678 965 1,123 709 Earning per share (euros) (1) 0.16 0.17 0.09 0.13 0.16 0.10 (1) Adjusted by additional Tier 1 instrument remuneration.

JANUARY-JUNE 2017 Group informAtion P.5 Consolidated income statement (Million euros) ?% at constant 1h17 ?% exchange rates 1h16 net interest income 8,803 5.2 9.6 8,365 Net fees and commissions 2,456 4.5 8.0 2,350 Net trading income 1,069 (9.1) (2.4) 1,176 Dividend income 212 (29.6) (29.5) 301 Share of profit or loss of entities accounted for using the equity method (8) n.s. n.s. 1 Other operating income and expenses 185 n.s. 97.7 40 Gross income 12,718 4.0 7.8 12,233 Operating expenses (6,311) (0.3) 2.2 (6,332) Personnel expenses (3,324) (0.0) 2.2 (3,324) Other administrative expenses (2,275) (1.9) 1.0 (2,319) Depreciation (712) 3.4 6.3 (689) operating income 6,407 8.6 13.9 5,901 Impairment on financial assets (net) (1,941) (8.0) (4.9) (2,110) Provisions (net) (364) 38.6 32.1 (262) Other gains (losses) (69) (50.0) (51.1) (137) Profit/(loss) before tax 4,033 18.9 27.2 3,391 Income tax (1,120) 21.8 32.9 (920) Profit/(loss) for the year 2,914 17.9 25.2 2,471 Non-controlling interests (607) (5.0) 7.7 (639) Net attributable profit 2,306 25.9 30.8 1,832 Earning per share (euros) (1) 0.33 0.26 (1) Adjusted by additional Tier 1 instrument remuneration. Gross income net interest income grew 9.6% year-on-year and 3.3% grew 7.8% year-on-year, over the quarter. Once more, the trend can be explained Cumulative gross income again strongly supported by the positive performance of the more by the growth in activity in emerging economies and good recurring items. management of customer spreads. Performance was positive in all the business areas except for Banking activity in Spain, where the current environment of very low interest rates, lower volumes of activity and sales in the wholesale portfolios have had a negative impact on performance. Gross income (Million euros) Net interest income/ATA (Percentage) +4.0% (1) 2.54 2.41 2.44 12,233 12,718 2.34 2.30 6,445 6,383 6,336 6,222 6,198 6,396 6,322 6,180 6,239 6,046 At constant exchange 5,788 rates 5,563 2Q 3Q 4Q 1Q 2Q 2016 2017 1Q 2Q 3Q 4Q 1Q 2Q 2016 2017 (1) At constant exchange rates: +7.8%.

JANUARY-JUNE 2017 Group informAtion P.6 First-half net fees and commissions have also performed Finally, other operating income and expenses have grown well year-on-year in all the Group’s areas, strongly influenced 97.7% year-on-year as a result of the positive contribution of by good diversification, the recovery of activity in the the insurance business (up 14.4% in the last twelve months) wholesale businesses and fees from asset management, due to the improvement in both written premiums and claims credit cards and online banking. on the same period in 2016. In addition, this line includes the annual contribution of € 100m in the second quarter to the As a result, more recurring revenues (net interest income Single Resolution Fund (SRF) (€ 122m in the same period plus fees and commissions) have increased 9.2% year-on- of 2016). year (2.7% over the last three months). operating income Net interest income plus fees and commissions (Million euros) The year-on-year increase in operating expenses continues +5.1% (1) limited, and stands at 2.2%. The above is due to the cost 10,715 11,260 discipline implemented in all the areas of the Group through 5,714 efficiency plans that are beginning to deliver results, and the 5,546 5,546 5,706 5,517 materialization of some synergies (mainly those resulting 5,402 5,554 from the integration of Catalunya Banc –CX-). By business 5,313 5,476 At constant exchange 5,350 area there has been a reduction in Spain (where in May 59 rates 5,222 branches were closed in addition to the 129 in February), the 5,088 Rest of Eurasia and the Corporate Center, and an increase close to inflation levels in the rest of the geographic areas. 1Q 2Q 3Q 4Q 1Q 2Q 2016 2017 Operating expenses (Million euros) (1) At constant exchange rates: +9.2%. -0.3% (1) The positive contribution of nti has moderated in the half- 3,243 year compared with the same period in 2016. This is mainly 6,332 3,216 6,311 because capital gains of € 204m before tax from the sale 3,174 3,204 3,175 3,159 on the market of 1.7% of China Citic Bank (CNCB) in the 3,179 At constant 3,155 3,137 first quarter of the year are lower than those from the VISA exchange rates 3,133 transaction booked in the same period last year (€ 225m). 3,081 3,094 The dividend income heading mainly includes dividends from the Group’s stake in the Telefónica Group (€ 53m). The amount is lower than that paid in the second quarter of 2016 1Q 2Q 3Q 4Q 1Q 2Q as a result of the reduction of the dividend paid by the entity 2016 2017 (from € 0.4 to € 0.2 per share). In 2016 it also included those (1) At constant exchange rates: +2.2%. from CNCB.

JANUARY-JUNE 2017 Group informAtion P.7 Breakdown of operating expenses and efficiency calculation (Million euros) 1h17 ?% 1h16 personnel expenses 3,324 (0.0) 3,324 Wages and salaries 2,590 0.1 2,587 Employee welfare expenses 478 (1.0) 482 Training expenses and other 256 0.5 255 other administrative expenses 2,275 (1.9) 2,319 Property, fixtures and materials 528 (3.4) 547 IT 499 4.6 477 Communications 149 (1.4) 151 Advertising and publicity 186 (9.3) 205 Corporate expenses 51 (1.9) 52 Other expenses 625 (5.2) 659 Levies and taxes 237 4.0 228 Administration costs 5,599 (0.8) 5,644 Depreciation 712 3.4 689 operating expenses 6,311 (0.3) 6,332 Gross income 12,718 4.0 12,233 Efficiency ratio (operating expenses/gross income; %) 49.6 51.8 Number of employees Number of ATMs 137,310 134,792 30,958 31,120 31,194 132,321 7,079 6,570 6,481 33,053 31,451 30,687 1,025 1,022 Spain Spain 1,019 10,933 10,544 10,656 The United States The United States 11,583 Turkey 11,133 11,434 Turkey 37,340 37,378 36,794 Mexico Mexico 24,020 23,678 23,189 South America 4,957 5,125 4,983 South America Rest of Eurasia Rest of Eurasia 6,743 6,939 7,098 30,713 30,543 29,859 1,251 1,198 1,136 27 27 27 June 2016 December 2016 June 2017 June 2016 December 2016 June 2017 Number of branches As a result of the above, the efficiency ratio stands at 49.6% (51.8% in the first half of 2016 and 51.9% for the whole of 9,153 8,660 8,421 2016), and the operating income has risen 13.9% in the last Spain 3,788 twelve months. 3,303 3,115 The United States Turkey 678 676 650 Mexico 1,821 1,836 1,834 South America Rest of Eurasia 1,146 1,131 1,119 1,673 1,667 1,664 47 47 39 June 2016 December 2016 June 2017

JANUARY-JUNE 2017 Group informAtion P.8 Efficiency (Million euros) and efficiency ratio (Percentage) Impairment on financial assests (net) (Million euros) 51.8 -8.0% (1) 12,233 12,718 49.6 2,110 1,941 Gross 1,077 1,033 1,004 997 income 945 1,001 979 990 1,040 951 Operating 687 expenses At constant 696 exchange 6,332 6,311 rates 1H16 1H17 1H16 1H17 1Q 2Q 3Q 4Q 1Q 2Q 2016 2016 2017 Operating income (Million euros) (1) At constant exchange rates: -4.9%. +8.6% (1) Finally, there was also a slight increase in the allocation to 5,901 6,407 provisions (net) and other gains (losses) (up 4.0% year-on- 3,287 3,246 3,161 year), which include the provisions for contingent liabilities, 2,982 2,980 3,144 2,614 3,263 contributions to pension funds and provisions for buildings 3,145 2,892 2,976 2,482 and foreclosed assets, among others. This increase is mainly At constant explained by higher restructuring costs, basically affecting exchange rates Banking activity in Spain, the area where increasing efficiency is a priority focus. 1Q 2Q 3Q 4Q 1Q 2Q results 20162016 2017 As a result of the above, the Group’s net attributable (1) At constant exchange rates: +13.9%. profit has been very positive (up 30.8% year-on-year). It is important to note that since March 2017 this figure has provisions and other included the additional stake of 9.95% in the capital of Garanti, which has made a positive impact of around € 54m of Impairment losses on financial assets totaled € 1,941m less non-controlling interests. in the first half of the year, below the amount for the first six months of last year. By areas there was a year-on- By business area, Banking activity in Spain has generated year reduction in Spain, where the loan-loss provisioning a profit of € 670m, Non Core Real Estate generated a loss requirements were lower; the United States, as in the first of € 191m, the United States contributed € 297m, Mexico quarter of the previous year provisions were included € 1,080m, Turkey € 374m, South America € 404m and the following the rating downgrades of some companies Rest of Eurasia € 73m. belonging to the energy and metal & mining sectors; and, to a lesser extent, Turkey. In contrast, Mexico and South America have reported increases over the last twelve months, largely related to the increase in lending activity, and to a lesser extent, to the impact of increased requirements for insolvency provisions associated with some wholesale customers customers in the case of South America.

JANUARY-JUNE 2017 Group informAtion P.9 Net attributable profit (Million euros) Earnings per share (1) (Euros) +25.9% (1) +25.9% (1) 1,832 2,306 0.26 0.33 1,123 1,199 0.17 1,107 0.16 0.16 965 1,097 1,209 0.13 1,086 951 At constant exchange 709 678 0.10 rates 0.09 677 668 1Q 2Q 3Q 4Q 1Q 2Q 1Q 2Q 3Q 4Q 1Q 2Q 2016 2017 2017 2016 2016 2017 (1) At constant exchange rates: +30,8%. (1) Adjusted by additional Tier 1 instrument remuneration. ROE y ROTE (1) (Percentage) ROA y RORWA (Percentage) 1.53 10.5 1.25 1.19 8.9 8.6 ROTE 8.2 RORWA 7.2 0.82 ROE 6.7 ROA 0.67 0.64 1H16 2016 1H17 1H16 2016 1H17 (1) The ROE and ROTE ratios include in the denominator the Group’s average shareholders’ funds, but do not take into account the caption within total equity named “Accumulated other comprehensive income” with an average balance of -€ 4,218m in 1H 2016, -€ 4,492m in 2016 and -€ 6,015 in 1H 2017.

JANUARY-JUNE 2017 Group informAtion P.10 Balance sheet and business activity BBVA Group’s activity is continuing the trend of previous selective growth in the more profitable portfolios. periods. The key factors behind the balance sheet and activity figures in the first half of 2017 are summarized below: non-performing loans have again declined, mainly due to decreases in Spain, the United States and Turkey. Geographic disparity of loans and advances to customers (gross). At the same time as an increase in In customer deposits, increase across the board in the volumes in emerging geographic areas, there has been lower-cost items such as current and savings accounts, deleveraging in Spain, although the rate of decline is and a decline in time deposits. steadily falling, largely due to the good performance of new production. In the United States there has been a decline Off-balance-sheet funds have continued to increase, and in lending activity this year, following the area’s strategy for are still strongly focused on mutual funds and investment companies. Consolidated balance sheet (Million euros) 30-06-17 ?% 31-12-16 30-06-16 Cash, cash balances at central banks and other demand deposits 34,720 (13.3) 40,039 25,127 Financial assets held for trading 68,885 (8.1) 74,950 84,532 Other financial assets designated at fair value through profit or loss 2,230 8.2 2,062 2,148 Available-for-sale financial assets 74,666 (5.8) 79,221 90,638 Loans and receivables 458,494 (1.6) 465,977 470,543 Loans and advances to central banks and credit institutions 38,079 (5.4) 40,268 43,603 Loans and advances to customers 409,087 (1.3) 414,500 415,872 Debt securities 11,328 1.1 11,209 11,068 Held-to-maturity investments 14,531 (17.9) 17,696 19,295 Investments in subsidiaries, joint ventures and associates 1,142 49.3 765 1,131 Tangible assets 8,211 (8.2) 8,941 9,617 Intangible assets 9,047 (7.6) 9,786 9,936 Other assets 30,504 (5.9) 32,418 33,072 total assets 702,429 (4.0) 731,856 746,040 Financial liabilities held for trading 49,532 (9.4) 54,675 58,753 Other financial liabilities designated at fair value through profit or loss 2,437 4.2 2,338 2,501 Financial liabilities at amortized cost 566,021 (3.9) 589,210 597,745 Deposits from central banks and credit institutions 89,002 (9.4) 98,241 101,827 Deposits from customers 394,626 (1.7) 401,465 406,284 Debt certificates 69,513 (9.0) 76,375 75,498 Other financial liabilities 12,880 (1.9) 13,129 14,137 Liabilities under insurance contracts 9,846 7.7 9,139 9,335 Other liabilities 19,866 (5.7) 21,066 21,744 total liabilities 647,702 (4.2) 676,428 690,078 Non-controlling interests 6,895 (14.5) 8,064 8,527 Accumulated other comprehensive income (6,991) 28.1 (5,458) (4,327) Shareholders’ funds 54,823 3.8 52,821 51,761 total equity 54,727 (1.3) 55,428 55,962 total equity and liabilities 702,429 (4.0) 731,856 746,040 memorandum item: Guarantees given 47,060 (6.9) 50,540 50,127

JANUARY-JUNE 2017 Group informAtion P.11 Loans and advances to customers (gross) (Billion euros) Loans and advances to customers (Million euros) 433 430 30-06-17 ?% 31-12-16 30-06-16 424 (1) -1.4% public sector 27,135 (1.3) 27,506 30,523 individuals 169,948 (1.5) 172,476 173,240 Mortgages 118,589 (3.1) 122,439 123,831 Consumer 36,570 3.9 35,195 34,593 Credit cards 14,789 (0.4) 14,842 14,816 Business 186,203 (1.9) 189,733 186,743 Business retail 20,146 (17.2) 24,343 24,059 Other business 166,057 0.4 165,391 162,684 June 2016 December 2016 June 2017 other loans 19,388 8.7 17,844 18,550 (1) At constant exchange rates: +1.0%. non-performing loans 21,730 (5.2) 22,915 24,212 loans and advances to 424,405 (1.4) 430,474 433,268 customers (gross) Loan-loss provisions (15,318) (4.1) (15,974) (17,396) loans and advances to 409,087 (1.3) 414,500 415,872 customers memorandum item: Secured loans 197,795 (2.0) 201,772 202,778 Customer funds (Billion euros) Customer funds (Million euros) 30-06-17 ?% 31-12-16 30-06-16 536 534 532 -0.4% (1) Deposits from customers 394,626 (1.7) 401,465 406,284 130 132 137 Demand deposits 239,561 3.4 231,638 219,675 Other customer Time deposits 130,752 (9.5) 144,407 154,886 funds Assets sold under repurchase 11,858 7.3 11,056 16,701 Deposits from agreement customers Other deposits 12,455 (13.3) 14,364 15,021 406 401 395 other customer funds 137,044 3.7 132,092 130,177 Mutual funds and investment 59,905 8.8 55,037 53,487 companies June 2016 December 2016 June 2017 Pension funds 33,412 (0.0) 33,418 32,033 Other off-balance sheet funds 3,217 13.6 2,831 3,370 (1) At constant exchange rates: +1.8%. Customer portfolios 40,510 (0.7) 40,805 41,287 total customer funds 531,670 (0.4) 533,557 536,460

JANUARY-JUNE 2017 Group informAtion P.12 Solvency Capital base The phased-in CEt1 ratio stood at 11.8% at the end of June 2017, with the tier 1 ratio reaching 13.0% and the tier 2 ratio BBVA Group’s fully-loaded CEt1 ratio stood at 11.1% at at 2.5%, resulting in a total capital ratio of 15.5%. These levels the end of June 2017, above the target of 11%. This ratio has are above the requirements established by the ECB in its SREP increased by 20 basis points so far this year, primarily due to letter and the systemic buffers applicable to BBVA Group for organic earnings generation and a reduction in RWAs. 2017 (7.625% for the phased-in CET1 ratio and 11.125% for the This ratio was affected by transactions carried out during total capital ratio). the first quarter of 2017, in particular the acquisition of an Finally, the Group maintains a sound leverage ratio: 6.8% additional 9.95% stake in Garanti and the sale of 1.7% in under fully-loaded criteria (6.9% phased-in), which compares CNCB. Both transactions had a combined negative impact on very favorably with the rest of its peer group. the ratio of 13 basis points. rWAs declined to June 30, 2017 relative to December 2016, Evolution of fully-loaded capital ratios (Percentage) largely explained by depreciation of currencies against the euro (especially the Turkish lira and the U.S. dollar) and 15.0 15.2 Total capital ratio 14.7 an improvement in the risk profile of the Group’s portfolio, 2.4 2.2 2.5 particularly the Spanish portfolio. Worth of note in this regard Tier 2 1.6 1.5 1.7 was the € 3,000m synthetic securitization agreed on June Additional Tier 1 2, which covers potential losses on a portfolio of around 11.0 11.1 CET1 10.9 15,000 loans to Spanish SMEs. This was arranged through a mezzanine guarantee facility provided by the European Investment Fund (EIF, a subsidiary of the supranational 31-12-16 31-03-17 30-06-17 European Investment Bank). This operation enabled the Group to free up € 683m in RWAs with a corresponding ratings positive impact on the capital base. On April 3, 2017, Standard & Poor’s (S&P) raised its outlook During the first half of 2017, BBVA S.A. issued € 500m in for BBVA to positive from stable as a result of a similar preferred securities at a coupon of 5.875%. This is classified improvement in Spain’s sovereign rating outlook (on as additional Tier 1 capital (contingent convertible) under March 31), with both ratings being maintained at BBB+. solvency regulation, capable of converting into ordinary Furthermore, on July 25, Scope Ratings raised its rating for BBVA shares, and contributed 13 basis points to the total BBVA by one notch from A to A+, with a stable outlook. So capital ratio. In addition, BBVA S.A. has undertaken various far this year the remaining credit rating agencies have not subordinate capital issues worth a nominal amount of close changed either their rating or outlook for BBVA. to € 1,500m (of which € 168m were issued in the second quarter). Meanwhile, Garanti in Turkey issued $750m in Ratings the second quarter. These issues compute as tier 2 capital, having a 50 basis point impact on the total capital ratio during rating agency long term short term outlook the first half of the year on a phased-in basis (similar in fully- DBRS A R-1 (low) Stable loaded terms). Fitch A- F-2 Stable Moody’s (1) Baa1 P-2 Stable Finally, the last “dividend-option” program was completed Scope Ratings A+ S-1 Stable in April, with holders of 83.28% of free allocation rights Standard & Poor’s BBB+ A-2 Positive choosing to receive new BBVA shares. 101,271,338 shares were (1) Additionally, Moody’s assigns an A3 rating to BBVA’s long term deposits. ultimately issued.

JANUARY-JUNE 2017 Group informAtion P.13 Capital base (1) (Million euros) CrD iV phased-in (1) CrD iV fully-loaded 30-06-2017 (2) 31-12-16 30-06-16 30-06-2017 (2) 31-12-16 30-06-16 Common Equity Tier 1 (CET 1) 43,888 47,370 47,559 41,425 42,398 42,227 Tier 1 48,484 50,083 50,364 47,733 48,459 48,264 Tier 2 9,351 8,810 11,742 9,123 8,739 11,922 total Capital (tier 1 + tier 2) 57,835 58,893 62,106 56,855 57,198 60,186 risk-weighted assets 373,075 388,951 395,085 373,075 388,951 394,063 CET1 (%) 11.8 12.2 12.0 11.1 10.9 10.7 Tier 1 (%) 13.0 12.9 12.7 12.8 12.5 12.2 Tier 2 (%) 2.5 2.3 3.0 2.4 2.2 3.0 Total capital ratio (%) 15.5 15.1 15.7 15.2 14.7 15.3 (1) The capital ratios are calculated under CRD IV from Basel III regulation, applying a 80% phase-in for 2017 and a 60% for 2016. (2) Preliminary data.

JANUARY-JUNE 2017 Group informAtion P.14 Risk management Credit risk the exchange-rate effect), and 4.2% since December BBVA Group has maintained the positive trend in the metrics 2016, due to the general declines in all the geographic related to credit risk management in the semester (stability in areas. the second quarter): As a result, the NPL coverage ratio has closed the half-year Credit risk has fallen by around 2%, both over the last at 71%, an improvement of 30 basis points over the last six months and in the quarter. At constant exchange three months and 57 basis points since December 2016. rates, the rate of change is up 0.6% year-to-date, and Finally, the cumulative cost of risk through June stands at up 0.7% since the close of March 2017. The key factors 0.92%, practically the same as in the first quarter (0.90%) are: deleveraging in Spain (although the rate of decline and 8 points higher than in the previous year. has eased steadily); the United States; and, due to the exchange rate effect, South America and Turkey. As for Mexico, the area reported growth. Non-performing loans (Million euros) non-performing loans continue to decline with respect 24,834 24,253 23,595 23,236 22,422 to the first quarter of the year (down 3.5%) and the -3.5% close of last year (down 5.0%), due to the positive trend particularly in Spain, the United States and Turkey. The Group’s npl ratio continues to improve (down 8 basis points over the last three months and down 15 basis points compared with the close of 2016), to finish at 4.8% at the close of June 2017. loan-loss provisions have fallen slightly by 3.1% on the June September December March June 2016 2017 figure at the close of March this year (down 1.1% excluding Credit risks (1) (Million euros) 30-06-17 31-03-17 31-12-16 30-09-16 30-06-16 Non-performing loans and guarantees given 22,422 23,236 23,595 24,253 24,834 Credit risks 471,548 480,517 480,720 472,521 483,169 Provisions 15,878 16,385 16,573 17,397 18,264 NPL ratio (%) 4.8 4.8 4.9 5.1 5.1 NPL coverage ratio (%) 71 71 70 72 74 (1) Include gross loans and advances to customers plus guarantees given. Non-performing loans evolution (Million euros) 2Q 17 (1) 1Q 17 4Q 16 3Q 16 2Q 16 Beginning balance 23,236 23,595 24,253 24,834 25,473 Entries 2,525 2,490 3,000 2,588 2,947 Recoveries (1,930) (1,698) (2,141) (1,784) (2,189) net variation 595 792 859 804 758 Write-offs (1,084) (1,132) (1,403) (1,220) (1,537) Exchange rate differences and other (326) (18) (115) (165) 140 period-end balance 22,422 23,236 23,595 24,253 24,834 memorandum item: Non-performing loans 21,730 22,572 22,915 23,589 24,212 Non-performing guarantees given 691 664 680 665 622 (1) Preliminary data.

JANUARY-JUNE 2017 Group informAtion P.15 structural risks as the renewal of the syndicated loan (second quarter). In the United States, BBVA Compass has returned to the liquidity and funding markets after two years, with a senior debt issue of USD Management of liquidity and funding in BBVA aims to 750m. In Mexico, BBVA Bancomer has carried out two finance the recurring growth of the banking business local senior debt issues for a total of € 338m at 3 and 5 at suitable maturities and costs, using a wide range of years. In South America, BBVA Chile has also made two instruments that provide access to a large number of senior issues at 4 and 10 years on the local market for an alternative sources of finance, always in compliance with equivalent of € 173m. current regulatory requirements. Short-term funding has continued to perform positively, in A core principle in BBVA’s management of the Group’s a context marked by a high level of liquidity. liquidity and funding is the financial independence of its banking subsidiaries abroad. This principle prevents the As regards the LCR liquidity coverage ratio, BBVA propagation of a liquidity crisis among the Group’s different continues at levels of over 100%, clearly higher than areas and ensures that the cost of liquidity is correctly demanded by regulations (over 80% in 2017), both at reflected in the price formation process. Group level and in all its banking subsidiaries. In the first half of 2017, liquidity and funding conditions have foreign exchange remained comfortable across BBVA Group’s global footprint: foreign-exchange risk management of BBVA’s long-term investments, basically stemming from its franchises abroad, The financial soundness of the Group’s banks continues to aims to preserve the Group’s capital adequacy ratios and be based on the funding of lending activity fundamentally ensure the stability of its income statement. through the use of stable customer funds. The first half of 2017 has been marked by: Activity both on the euro balance sheet and in Mexico has continued to generate liquidity, as deposits have shown a Uncertainty with respect to the fiscal and commercial positive trend that has led to a narrowing of the credit gap. policies of the U.S. administration, which generated a high level of volatility in the case of the Mexican peso, above all In the United States, the control of the cost of deposits has in the first three months of 2017. led to an increase in the credit gap. The debate on the elimination of negative rates by the Comfortable liquidity situation in Turkey. Slight increase in European Central Bank (ECB), in view of the improvement the credit gap due to higher lending activity. in macroeconomic data. In South America, the liquidity situation remains Activation of the process for the United Kingdom’s exit comfortable, allowing a reduction of the growth of from the European Union (Brexit). wholesale deposits to match lending activity. The results of the French elections. In addition, BBVA S.A. has accessed the wholesale funding markets for a total of € 3.5 billion, using senior debt (€ 1 The Federal Reserve’s (FED) interest rate hike. billion in the first quarter and € 1.5 billion in the second, this last one with a floating coupon) and Tier 2 debt (€ 1 The result of the constitutional referendum in Turkey and billion in the first quarter). A number of private issuance the action by the Turkish Central Bank (CBRT). transactions of Tier 2 securities have also been closed for around € 500m (of which € 168m were in the second The rise in interest rates by the Central Bank of Mexico quarter) and one additional Tier 1 issue for € 500m in the (Banxico) and the more constructive discussions in relation second quarter. to the North American Free Trade Agreement (NAFTA). The long-term wholesale funding markets have remained In this context, BBVA has maintained its policy of actively stable in the other geographical areas where the Group hedging its main investments in emerging countries, covering operates. It is worth highlighting Garanti’s securities on average between 30% and 50% of earnings expected for issues in Turkey: senior debt for USD 500m in the first 2017 and around 70% of the excess CET1 capital ratio (which quarter; subordinate debt for USD 750m in the second is not naturally covered by the ratio itself). In accordance with quarter; and guaranteed Turkish lira bonds for an this policy, at the close of June 2017, the sensitivity of the CET1 equivalent of € 131m, also in the second quarter; as well ratio to a depreciation of 10% of the main emerging currencies

JANUARY-JUNE 2017 Group informAtion P.16 (Mexican peso or Turkish lira) against the euro remains limited In South America, the monetary authority has lowered to less than 2 basis points, and the coverage level of the rates in Peru (25 basis points), Colombia (125 basis expected earnings for 2017 in these two countries would be points) and Chile (50 basis points). around 60% in Mexico and 50% in Turkey. interest rates Economic capital The aim of managing interest-rate risk is to maintain a Consumption of economic risk capital (ERC) at the close of sustained growth of net interest income in the short and May 2017 stood at € 36,066m in consolidated terms, a decline medium term, irrespective of interest-rate fluctuations, while of 2.9% with respect to the figure for February this year (down controlling the impact on the capital adequacy ratio through 0.9% at constant exchange rates). This fall is due to credit risk the valuation of the portfolio of available-for-sale assets. (mainly in Spain) and equity risk due to goodwill (as a result of the depreciation of the dollar against the euro over the The Group’s banks have fixed-income portfolios to manage quarter), offset partly by an increase in structural exchange-the balance-sheet structure. In the first half of 2017, the rate risk (due to currency fluctuations), interest-rate risk and results of this management have been satisfactory, with investment risk (the latter mainly the result of the increase in limited risk strategies aimed at improving profitability. the stake in Testa Residencial). Finally the following is worth noting with respect to the monetary policies pursued by the different central banks of Attributable economic risk capital breakdown the main geographic areas where BBVA operates between (Percentage as of May 2017) January and June 2017: 8.2 Credit 1.2 No relevant changes in the Eurozone, where rates remain at 0%. Equity 9.6 Structural In the United States the upward trend in interest rates 2.9 Operational continues, with a rise in March and another in June, to 7.1 1.25%. Trading 52.4 Fixed asset 5.6 In Mexico, Banxico has made a number of interest-rate Insurance hikes so far this year, so the monetary policy level at the Other 13.1 close of June is 7%. In Turkey, the half-year has been marked the CBRT’s interest-rate hikes, which have increased the average cost of funding to 11.98%.

JANUARY-JUNE 2017 Group informAtion P.17 The BBVA share Global growth has continued to give signs of improvement The BBVA share and share performance ratios in the first half of 2017. The most recent figures also suggest some stabilization looking forward. The general improvement 30-06-17 31-12-16 in confidence and global trade are underpinning the economic Number of shareholders 910,330 935,284 acceleration. In addition, central banks are continuing their Number of shares issued 6,667,886,580 6,566,615,242 support and there is relative calm in the financial markets. Daily average number of shares traded 42,015,051 47,180,855 Performance in the developed economies continues to be Daily average trading (million euros) 286 272 positive, above all in Europe. In contrast, in Latin America Maximum price (euros) 7.89 6.88 recent trends suggest moderate growth, although with Minimum price (euros) 5.92 4.50 differences between the countries. In China, growth is Closing price (euros) 7.27 6.41 expected to slow in the coming months. As a result of the Book value per share (euros) 7.18 7.22 above, global growth could be around 3.3% in 2017, according Tangible book value per share (euros) 5.82 5.73 to BBVA Research estimates. Market capitalization (million euros) 48,442 42,118 Yield (dividend/price; %) (1) 5.1 5.8 Against this backdrop, the main stock market indices (1) Calculated by dividing shareholder remuneration over the last twelve months over the closing price at the delivered positive results in the first half of the year. This was end of the period. the result of a strong boost from general rises in the first quarter, and a second quarter in which performance was As regards shareholder remuneration, the last “dividend-mixed (slight losses in Europe, stability in Spain and gains in option” was paid in April 2017, with 83.28% of the holders the United States). In this respect, in Europe, the Stoxx 50 of free assignment rights choosing to receive new shares. has gained 3.7% since December 2016, while the Euro Stoxx Looking forward, in line with the significant event published 50 gained 4.6%; and in Spain, the Ibex 35 also increased by on February 1, 2017, BBVA intends to distribute between 35% 11.7%. The S&P 500, which tracks the share prices of U.S. and 40% of profits obtained each year fully in cash. This companies, also performed positively, registering a 8.2% rise. shareholder remuneration policy will be formed each year of an interim dividend (which is expected to be paid in October) The banking sector, in Europe in particular, has and a final dividend (which will be paid out upon completion of outperformed the general market indices in the first six the final year and following approval of the application of the months of the year. The European Stoxx Banks index, which result, foreseeably in April). These payouts will be subject to includes British banks, gained 7.1%, while the Eurozone bank appropriate approval by the corresponding governing bodies. index, the Euro Stoxx Banks, gained 11.5%. In contrast, in the United States, the S&P Regional Banks sector index performed worse than the market with a downturn of 1%. Shareholder remuneration (Euros-gross-/share) The BBVA share remained stable in the last quarter, closing 0.121 0.131 June at € 7.27, with a gain of 13.3% since December 2016, representing a relatively better performance than the European banking sector and the Ibex 35. Dividend-option 0.08 0.08 0.08 BBVA share evolution compared with European indices Cash (Base indice 100=30-06-2016) BBVA Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Stoxx 50 Euro Stoxx 50 30-06-16 30-09-16 31-12-16 31-03-17 30-06-17

JANUARY-JUNE 2017 Group informAtion P.18 As of June 30, 2017, the number of BBVA shares amounted to Finally, BBVA maintains a significant presence on a number of 6,678 million, and the number of shareholders was 910,330. international sustainability indices or ESG (environmental, Residents in Spain hold 43.57% of the share capital, while the social and governance) indices, which evaluate the percentage owned by non-resident shareholders stands at performance of companies in this area, as summarized in the 56.43%. table below. Shareholder structure (30-06-2017) Sustainability indices on which BBVA is listed as of 30-06-2017 (1) shareholders shares Listed on the MSCI Global number of shares number % number % Sustainability indices Up to 150 190,209 20.9 13,500,956 0.2 AAA rating 151 to 450 187,471 20.6 51,197,762 0.8 451 to 1,800 285,001 31.3 276,805,556 4.2 Listed on the FTSE4Good Global, FTSE4Good Europe and FTSE4Good IBEX indices 1,801 to 4,500 129,868 14.3 370,167,831 5.6 4,501 to 9,000 60,339 6.6 380,397,359 5.7 9,001 to 45,000 50,891 5.6 886,690,865 13.3 Listed on the Euronext Vigeo Eurozone 120 More than 45,001 6,551 0.7 4,689,126,251 70.3 and Europe 120 indices total 910,330 100.0 6,667,886,580 100.0 BBVA shares are traded on the Continuous Market of the Included on the Ethibel Excellence (1) Investment Register 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 on the In 2016, BBVA obtained a “B” rating Lima Stock Exchange (Peru), under an exchange agreement between these two markets. Among the main stock market (1) The inclusion of BBVA in any MSCI index, and the use of MSCI logos, trademarks, service indices, BBVA shares are included on the Ibex 35, Euro Stoxx marks or index names herein donot constitute a sponsorship, endorsement or romotion of 50 and Stoxx 50, with a weighting of 8.88%, 2.08% and 1.34% BBVA by MSCI or any of its affiliates. The MSCI indices are the exclusive property of MSCI. MSCI and MSCI index names and logos are trademarks or service marks of MSCI or its respectively. They are also listed on several sector indices, affiliates. including the Euro Stoxx Banks, with a weighting of 9.08%, and the Stoxx Banks, with a weighting of 4.54%.

JANUARY-JUNE 2017 Group informAtion P.19 Responsible banking At BBVA we have a differential banking model that we refer to In its 8th edition, which ended in the second quarter of 2017, a as responsible banking, based on seeking out a return adjusted total of 79,356 children aged 6 to 15 took part. to principles, strict legal compliance, best practices and the creation of long-term value for all stakeholders. In June, the 2017 Edufin summit was held in Mexico City. This is the first annual summit of the Center for Financial Education The main strategic initiatives related to responsible banking and Skills that BBVA has launched with the aim of fostering which we are working on are: financial knowledge. The creation of lasting and more balanced relationships In 2017, to celebrate the 10th anniversary of the BBVA with our customers through transparent, clear and Microfinance Foundation it organized the Forum for the responsible communication and financial education Development of Financial Inclusion, which dealt with the included in the solutions that we offer. issue of financial inclusion, technological challenges and the role of women in the economy. Her Majesty Queen The full integration of how we do business through Letizia presided at the forum. Over these ten years, the responsible business policies, a reputational risk model, Microfinance Foundation granted more than USD 8.2 billion and a people-centric culture throughout the Organization. in loans to vulnerable entrepreneurs. It has become one of the philanthropic initiatives with the biggest social impact in promotion of responsible and sustainable growth Latin America, with 1.8 million customers and an estimated through financial inclusion, sustainable finance, support for indirect impact on the lives of 7.3 million people. Around 60% SMEs and responsible investment. of recipients of the Foundation’s loans are women. Women with priority financial have a long way to go in Latin America to end inequality. This investment in the community, for education initiatives for society, entrepreneurship, has been the main conclusion of the Foundation during its knowledge and other social causes that are relevant from presentation at the biggest intergovernmental meeting of a local point of view. the United Nations (UN) on gender equality and women’s empowerment: the 61st session of the Commission on the Status of Women (CSW61). As regards financial education, the 2015 PISA (Program for International Student Assessment) Report on Financial As part of its promotion of responsible and sustainable Literacy, drafted by the Organization for Economic growth, BBVA has extended its offer of sustainable finance Cooperation and Development (OECD) and sponsored by tools and continues to demonstrate its leadership within BBVA was presented in Paris. The aim is to determine the the scope of green finance. In fact, BBVA has led the first level of knowledge and skills of young people for making global green syndicated loan arranged in June 2017, in term financial decisions. loan format, for € 265m. The deal was underwritten by 11 national and foreign financial institutions and was heavily In Spain BBVA organizes the program Valores de Futuro (Future oversubscribed. This and other formats (green loans, green Values) to improve the financial literacy of young people and bonds, etc.) reflect BBVA’s commitment to sustainability and promote the values associated with the good use of money. green principles.

JANUARY-JUNE 2017 BusinEss ArEAs P.20 Business areas This section presents and analyzes the most relevant aspects rest of Eurasia includes business activity in the rest of the Group’s different business areas. Specifically, it shows of Europe and Asia, i.e. the Group’s retail and wholesale a summary of the income statement and balance sheet, the businesses in the area. business activity figures and the most significant ratios in each of them. In addition to the above, all the areas include a remainder made up basically of other businesses and a supplement that In 2017 the reporting structure of BBVA Group’s business includes deletions and allocations not assigned to the units areas remains basically the same as in 2016: making up the above areas. Banking activity in spain includes, as in previous years, Lastly, the Corporate Center is an aggregate that contains the the Retail Network in Spain, Corporate and Business rest of the items that have not been allocated to the business Banking (CBB), Corporate & Investment Banking (CIB), areas, as it corresponds to the Group’s holding function. It BBVA Seguros and Asset Management units in Spain. includes: the costs of the head offices that have a corporate It also includes the portfolios, finance and structural function; management of structural exchange-rate positions; interest-rate positions of the euro balance sheet. specific issues of equity instruments to ensure adequate management of the Group’s global solvency; portfolios and non Core real Estate covers specialist management in their corresponding results, whose management is not linked Spain of loans to developers in difficulties and real-estate to customer relations, such as industrial holdings; certain assets mainly coming from foreclosed assets, originated tax assets and liabilities; funds due to commitments with from both, residential mortgages, as well as loans to employees; goodwill and other intangibles. developers. New loan production to developers or loans to those that are not in difficulties are managed by Banking In addition to this geographical breakdown, supplementary activity in Spain. information is provided for all the wholesale businesses carried out by BBVA, i.e. Corporate & Investment Banking the united states includes the Group’s business activity (CIB), in all the geographical areas where it operates. This in the country through the BBVA Compass group and the aggregate business is considered relevant to better understand BBVA New York branch. the Group because of the characteristics of the customers served, the type of products offered and the risks assumed. mexico basically includes all the banking and insurance businesses carried out by the Group in the country. Lastly, as usual, in the case of the Americas, Turkey and CIB areas, the results of applying constant exchange rates are turkey includes the activity of the Garanti Group. On March given in addition to the year-on-year variations at current 22 nd 2017 BBVA completed the acquisition of a 9.95% exchange rates. additional stake in Garanti. Thus, BBVA’s total stake in the said entity at present amounts to 49.85%. The information by areas is based on units at the lowest level and/or companies making up the Group, which are assigned south America basically includes BBVA’s banking and to the different areas according to the geographical area in insurance businesses in the region. which they carry out their activity.

JANUARY-JUNE 2017 BusinEss ArEAs P.21 Major income statement items by business area (Million euros) Business areas Banking the BBVA activity in non Core united south rest of ? Business Corporate Group spain real Estate states mexico turkey America Eurasia areas Center 1h17 Net interest income 8,803 1,865 31 1,098 2,676 1,611 1,617 95 8,993 (190) Gross income 12,718 3,201 (6) 1,468 3,507 1,998 2,252 256 12,676 42 Operating income 6,407 1,492 (64) 523 2,309 1,230 1,211 102 6,804 (397) Profit/(loss) before tax 4,033 943 (241) 405 1,469 1,010 790 104 4,480 (447) Net attributable profit 2,306 670 (191) 297 1,080 374 404 73 2,707 (401) 1h16 Net interest income 8,365 1,941 42 938 2,556 1,606 1,441 86 8,610 (245) Gross income 12,233 3,282 11 1,330 3,309 2,154 1,999 278 12,363 (130) Operating income 5,901 1,493 (56) 425 2,112 1,321 1,078 110 6,482 (582) Profit/(loss) before tax 3,391 898 (287) 240 1,300 1,022 804 103 4,079 (688) Net attributable profit 1,832 621 (207) 178 968 324 394 75 2,352 (520) Gross income(1), operating income(1) and net attributable profit breakdown(1) (Percentage. 1st Sem. 2017) Gross income Operating income Net attributable profit 2.0 1.5 17.8 2.7 Spain(2) 25.2 17.8 21.0 14.9 17.7 The United States Mexico 13.8 11.0 15.8 18.1 7.7 Turkey South America 11.6 Rest of Eurasia 33.9 39.9 27.7 (1) Excludes the Corporate Center. (2) Includes the areas Banking activity in Spain and Non Core Real Estate. Major balance sheet items and risk-weighted assets by business area (Million euros) Business areas Banking the BBVA activity in non Core united south rest of ? Business Corporate Group spain real Estate states mexico turkey America Eurasia areas Center 30-06-17 Loans and advances to 409,087 179,920 5,412 55,993 50,425 55,248 45,791 16,298 409,087 -customers Deposits from customers 394,626 181,812 47 59,145 54,826 46,780 44,713 7,304 394,626 -Off-balance sheet funds 96,535 58,891 5—21,040 3,913 12,323 363 96,535 -Total assets/liabilities and 702,429 316,003 12,491 80,015 99,233 83,895 73,323 18,807 683,768 18,662 equity Risk-weighted assets 373,075 107,754 10,298 60,653 48,547 67,270 53,755 14,144 362,420 10,655 31-12-16 Loans and advances to 414,500 181,137 5,946 61,159 46,474 55,612 48,718 15,325 414,370 130 customers Deposits from customers 401,465 180,544 24 65,760 50,571 47,244 47,927 9,396 401,465 -Off-balance sheet funds 91,287 56,147 8—19,111 3,753 11,902 366 91,287 -Total assets/liabilities and 731,856 335,847 13,713 88,902 93,318 84,866 77,918 19,106 713,670 18,186 equity Risk-weighted assets 388,951 113,194 10,870 65,492 47,863 70,337 57,443 15,637 380,836 8,115

JANUARY-JUNE 2017 BusinEss ArEAs P.22 Once the composition of each business area has been internal transfer prices. BBVA Group has a transfer defined, certain management criteria are applied, of which prices system whose general principles apply in the the following are particularly important: Bank’s different entities, business areas and units. risk adjusted return. Calculation of risk adjusted return Allocation of operating expenses. Both direct and per transaction, customer, product, segment, unit and/or indirect costs are allocated to the business areas, except business area is sustained on ERC, which is based on the where there is no clearly defined relationship with the concept of unexpected loss at a specific confidence level, businesses, i.e. when they are of a clearly corporate or depending on the Group’s capital adequacy targets. The institutional nature for the Group as a whole. calculation of the ERC combines credit risk, market risk, structural balance-sheet risk, equity positions, operational Cross-selling. In some cases, adjustments are required to risk, fixed-asset risk and technical risks in the case of eliminate shadow accounting entries that are registered insurance companies. These calculations are carried out in the earnings of two or more units as a result of cross-using internal models that have been defined following the selling incentives. guidelines and requirements established under the Basel III capital accord. Interest rates (Quarterly averages. Percentage) 2017 2016 2Q 1Q 4Q 3Q 2Q 1Q Official ECB rate 0.00 0.00 0.00 0.00 0.00 0.04 Euribor 3 months (0.33) (0.33) (0.31) (0.30) (0.26) (0.19) Euribor 1 year (0.13) (0.10) (0.07) (0.05) (0.02) 0.01 USA Federal rates 1.05 0.80 0.55 0.50 0.50 0.50 TIIE (Mexico) 7.06 6.41 5.45 4.60 4.08 3.80 CBRT (Turkey) 11.80 10.10 7.98 7.99 8.50 8.98 Exchange rates (Expressed in currency/euro) Year-end exchange rates Average exchange rates ?% on ?% on ?% on 30-06-17 30-06-16 31-12-16 1h17 1h16 Mexican peso 20.5838 0.2 5.8 21.0340 (4.1) U.S. dollar 1.1412 (2.7) (7.6) 1.0829 3.1 Argentine peso 18.8080 (12.0) (11.8) 17.0082 (6.0) Chilean peso 757.00 (3.0) (7.1) 714.80 7.6 Colombian peso 3,472.22 (6.8) (8.9) 3,164.56 10.1 Peruvian sol 3.6974 (1.3) (4.5) 3.5447 6.4 Venezuelan bolivar 4,310.34 (72.8) (56.1) 4,310.34 (72.8) Turkish lira 4.0134 (20.1) (7.6) 3.9388 (17.3)

JANUARY-JUNE 2017 BusinEss ArEAs P.23 Banking activity in Spain highlights • Less deleveraging affecting lending, decline in time deposits and increase in more liquid customer deposits and mutual funds. • Good performance of fees and commissions. • positive trend in operating expenses. • Restructuring costs booked to improve efficiency. • stability of risk indicators. Business activity (1) Net interest income/ATA (Year-on-year change. Data as of 30-06-2017) (Percentage) 2.5% 1.17 1.17 1.19 1.16 1.13 -4.4% 2Q 3Q 4Q 1Q 2Q Performing loans Total customer funds under management under management 2016 2017 (1) Excluding repos. Operating income Net attributable profit (Million euros) (Million euros) -0.1% +8.0% 621 670 1,493 1,492 377 375 824 821 761 312 669 671 295 583 243 -28 1Q 2Q 3Q 4Q 1Q 2Q 1Q 2Q 3Q 4Q 1Q 2Q 2016 2017 2016 2017 Breakdown of performing loans under management (1) Breakdown of customer funds under management (1) (30-06-2017) (30-06-2017) 2% 2% Mortgages 8% 47% 25% Consumer and credit cards 47% 14% Public sector Demand deposits Corporates Other commercial Time deposits Off-balance sheet funds Very small businesses 14% Other Other 11% 26% 5% (1) Excluding repos. (1) Excluding repos.

JANUARY-JUNE 2017 BusinEss ArEAs P.24 macro and industry trends Financial statements and relevant business indicators (Million euros and percentage) According to the latest data from the National Institute for Statistics (INE), the Spanish economy picked up again in the income statement 1h17 ?% 1h16 first quarter of 2017, with quarterly GDP growth of 0.8%. In net interest income 1,865 (3.9) 1,941 addition, the data available to date suggest that it could have Net fees and commissions 783 3.0 760 Net trading income 318 (18.5) 390 continued to gain some traction in the second quarter. This Other income/expenses 235 23.3 191 performance is supported by the improvement in investment of which insurance activities (1) 227 8.5 209 and exports, despite the uncertainty generated by Brexit, Gross income 3,201 (2.5) 3,282 while a lower contribution is expected from household Operating expenses (1,709) (4.4) (1,789) Personnel expenses (964) (3.9) (1,003) consumption and tighter control of spending by public Other administrative expenses (585) (6.4) (625) administrations. As a result, GDP growth could be more than Depreciation (161) (0.3) (161) 3% in 2017, according to estimates by BBVA Research. operating income 1,492 (0.1) 1,493 Impairment on financial assets (net) (302) (40.6) (509) In the Spanish financial system, the private residential Provisions (net) and other gains (247) 185.5 (86) sector continues its deleveraging, but the rate is slowing. (losses) Profit/(loss) before tax 943 5.0 898 Total domestic private-sector lending fell by 2.1% in year-on-year terms according to Bank of Spain data through March Income tax (271) (1.7) (276) Profit/(loss) for the year 672 7.9 622 2017, even though new lending to households and SMEs, Non-controlling interests (1) (28.1) (2) has risen for 41 consecutive months (from January 2014 Net attributable profit 670 8.0 621 to May 2017). New lending to the retail sector increased by (1) Includes premiums received net of estimated technical insurance reserves. 3.5% in year-on-year terms, with cumulative figures through May 2017. Total new lending has grown by 1.3% in the same Balance sheets 30-06-17 ?% 31-12-16 period, despite the decline in new lending to large companies Cash, cash balances at central banks 11,315 (7.5) 12,230 (down 2.4%) and the fall in mortgage loans (down 9.4%). and other demand deposits Asset quality indicators in the system continue to improve. Financial assets 88,223 (12.1) 100,394 Loans and receivables 208,151 (3.0) 214,497 The sector NPL ratio stood at 8.8% in March, 116 basis points of which loans and advances to below the previous year, on the back of a significant reduction 179,920 (0.7) 181,137 customers in non-performing loans (down 13.5% year-on-year and Inter-area positions 5,025 7.9 4,658 43% down on the high of December 2013). The system’s Tangible assets 1,007 (29.9) 1,435 profitability began to recover to more positive levels in the Other assets 2,283 (13.3) 2,632 Total assets/liabilities and equity 316,003 (5.9) 335,847 first quarter of 2017, after the decline in the last quarter of Financial liabilities held for trading last year, due partly to the increase in provisions linked to and designated at fair value through 36,244 (10.5) 40,490 the Court of Justice of the European Union ruling on floor profit or loss clauses. As a result, the sector ROE closed March 2017 at Deposits from central banks and 55,919 (15.3) 66,029 6.2%. The liquidity position of Spanish institutions is good. credit institutions Deposits from customers 181,812 0.7 180,544 The funding gap (difference between loans and deposits) is currently at an all-time low, at under 4.5% of the total balance. Debt certificates 32,437 (15.4) 38,322 Inter-area positions — - Finally, May 2017 data show that banks increased their Other liabilities 580 (52.5) 1,220 recourse to ECB liquidity by 36% over the last twelve months, Economic capital allocated 9,013 (2.5) 9,242 taking advantage of the final TLTRO (targeted longer-term refinancing operations) auctions. relevant business indicators 30-06-17 ?% 31-12-16 Loans and advances to customers (1) 179,649 (0.5) 180,595 (gross) Non-performing loans and 11,536 (2.4) 11,819 guarantees given Customer deposits under (2) 174,782 (0.0) 174,809 management Off-balance sheet funds (3) 58,891 4.9 56,147 Risk-weighted assets 107,754 (4.8) 113,194 Efficiency ratio (%) 53.4 55.8 NPL ratio (%) 5.7 5.8 NPL coverage ratio (%) 53 53 Cost of risk (%) 0.34 0.32 (1) Figures at constant exchange rate. (2) Excluding repos. (3) Includes mutual funds, pension funds and other off-balance sheet funds.

JANUARY-JUNE 2017 BusinEss ArEAs P.25 Activity They have increased by 3.0% compared with the same period of 2016. lending (performing loans under management) closed the first half year at € 168,450m. This represents an increase of Contribution from nti is lower than in the first half of the 0.7% on the figure for the close of March 2017, although it is previous year, strongly influenced by the gains from the a fall of 0.4% on the close of 2016. There has been a notable VISA deal in the second quarter of 2016. performance of commercial loans and consumer finance (up 2.7% and 12.9%, respectively over the last six months), The other income/expenses heading registered an which continue to perform well in terms of new production, increase of 23.3% year-on-year. A highlight in this with year-on-year growth of 12.8% in commercial and 24.0% category is insurance activity, which has grown by 8.5% in consumer finance. This contrasts with a decline in the thanks to the good performance of earnings from the residential mortgage and public-sector portfolios (down 3.3% insurance underwriting margins, strongly linked to the and 1.6%, respectively during this period). increase in new policies in the period and the low claims ratio. This line also includes the annual contribution of As regards asset quality, there has been another decline in € 98m in the second quarter to the Single Resolution Fund net additions to NPL, and together with the trend in lending (€ 117m in the same period in 2016). mentioned above, has left the NPL ratio as of 30-Jun-2017 at 5.7%. The NPL coverage ratio remains at 53%. Thus the area’s gross income has declined (down 2.5%), affected mainly by sales of portfolios and the NTI Customer deposits under management have performed generated in the VISA deal in 2016. favorably in the last three months (up 1.4%). In the first half, they have maintained similar levels to the close of December 2016. operating expenses continue to perform well, with a By product, there has been a decrease of 14.7% in time deposits decline of 4.4% compared with the first half of 2016. and an increase of 10.5% in current and savings accounts. This reduction is still linked to the synergies related to the integration of Catalunya Banc and the continued Finally, off-balance-sheet funds have performed well, implementation of efficiency plans (in May 59 branches with growth of 4.9% over the half-year and 2.4% over the were closed in addition to the 129 closed in February). quarter. This performance is largely driven by the progress made by mutual funds (up 8.2% over the half-year and 3.8% As a result, the efficiency ratio closed the half year at over the quarter). 53.4% and operating income stands at very similar levels to the first six months of 2016. results Impairment losses on financial assets declined by 40.6% year-on-year as a result of reduced provisioning The key highlights of the income statement in the area in the requirements. The cost of risk closed the half-year at 0.34%. first half of 2017 are as follows: Finally, the provisions (net) and other gains (losses) 3.9% year-on-year decline in cumulative net interest heading increased significantly, mainly due to higher income through June of 2017 as a result of a lower loan restructuring costs. volumes and sales of wholesale portfolios, and despite the good management of customer spread. As a result, the net attributable profit generated by Banking activity in Spain in the first half of 2017 stands at € 670m, a year- Positive performance of net fees and commissions, thanks on-year increase of 8.0%, strongly influenced by the positive to the positive contribution from the wholesale businesses. performance of operating expenses and loan-loss provisions.

JANUARY-JUNE 2017 BusinEss ArEAs P.26 Non Core Real Estate highlights • Data related to the spanish real-estate sector continues its positive trend. • impulse to the area’s strategy, focused on growing sales and reducing stock, while aiming to preserve the economic value of the assets. • reduction in net exposure and non-performing loans. • sale of portfolios through the wholesale channel, contribution of land to testa residencial and disposal of a significant office building. industry trends The figures for construction activity indicate that new home starts continue to rise, according to data on new approved The buoyancy with which the real-estate sector in Spain housing construction permits, which rose at a year-on-year closed 2016 continued into the first half of 2017. Sales rate of 15.1% in the first four months of 2017, with permits for continue to increase, which is still being reflected in the price nearly 25,000 units approved. of housing and new starts. Overall, the real-estate market in Spain continues to grow, According to the latest available information from the General following the trend begun in 2014. If this trend is maintained, Council of spanish notaries, over 212,000 homes were 2017 will be the fourth consecutive year of growth in both sold in Spain in the first five months of 2017, a year-on-year sales and home starts and the third in which home prices increase of 14.5%. The rise is based on the positive trend that have risen. continues in the determinants of demand, including: growth in employment, increased consumer confidence, low interest rates and expectations of a revaluation of housing in the Coverage of real-estate exposure coming years among other. (Million of euros as of 30-06-17) Thus the price of homes at the close of the first quarter of the Gross net % year has risen at a year-on-year rate of 5.3%, in accordance Value provisions exposure Coverage with the latest figures from the National Institute for Statistics real-estate developer 5,872 2,590 3,281 44 (INE). This rate of growth is slightly higher than that at the loans (1) close of the previous quarter (up 4.5%), and maintains the performing 1,482 34 1,449 2 positive trend. Finished properties 1,084 23 1,061 2 Construction in The mortgage market retains its momentum. New 236 3 233 1 progress residential mortgage loans, not including refinancing, have Land 135 6 129 5 increased year-on-year by 16.8%, according to data from the Without collateral and Bank of Spain corresponding to the first five months of the 27 1 26 4 other year. If refinancing is taken into consideration, the new loans have fallen 9.4% year-on-year in the same period. npl 4,389 2,557 1,833 58 Finished properties 1,806 880 926 49 Construction in Net exposure to real-estate (Million euros) 274 156 118 57 progress Land 1,877 1,202 674 64 -14.2% Without collateral and 433 319 114 74 10,212 other 9,293 foreclosed assets 13,183 8,261 4,922 63 Net exposure to real 8,760 estate 3,812 Finished properties 7,493 4,147 3,346 55 3,700 Real-estate developer 3,281 Construction in loans(1) 685 442 243 65 progress Foreclosed assets 5,321 5,032 4,922 Land 5,005 3,672 1,333 73 Other real-estate other real-estate (2) 1,135 579 556 51 (2) assets assets 1,079 561 556 real-estate exposure 20,190 11,431 8,760 57 31-12-16 31-03-17 30-06-17 (1) Compared to Bank of Spain’s Transparency scope (Circular 5/2011 dated November 30), real-estate developer loans do not include € 1.2 Bn (June 2017) mainly related to developer performing loans transferred to the Banking activity in Spain unit. (2) Other real-estate assets not originated from foreclosures.

JANUARY-JUNE 2017 BusinEss ArEAs P.27 Activity results BBVA continues with its strategy of reducing its exposure to This business area posted a cumulative loss in the first half of the real-estate sector in Spain, both in the developer segment 2017 of € 191m, compared with a loss of € 207m in the same (lending to real-estate developers plus foreclosed assets period last year. The highlights of the income statement in derived from those loans) and in other real-estate assets. As this respect are: earnings from sales higher than the first six of 30-Jun-2017, the net exposure stood at € 8,760m, a fall of months of 2016, boosted by the sale of an office building, and 14.2% since December 2016, driven primarily by wholesale the generation of lower net interest income as a result of lower transactions during the half year. In addition, it should be exposure, partly due to the different transfers made of the mentioned that in the second quarter of 2017 there was a outstanding portfolio to Banking activity in Spain. further transfer of the outstanding portfolio of € 220m to Banking activity in Spain. Financial statements (Million euros) During the first six months of 2017, on top of steady growth in standard retail sales there were three notable sales of income statement 1er sem. 17 ?% 1er sem. 16 wholesale real-estate assets portfolios: one of the rental net interest income 31 (24.7) 42 buildings in the service sector for a gross value of close to Net fees and commissions 2 (1.1) 2 Net trading income 0 n.s. (0) € 300m; another for around 3,400 residential dwellings with a gross value of € 357m; and a third that corresponds to the Other income/expenses (40) 21.1 (33) Gross income (6) n.s. 11 contribution of assets to the subsidiary Testa Residencial of Operating expenses (57) (13.8) (67) around 1,500 rental units for residential and service-sector Personnel expenses (31) (3.3) (32) use, and for a gross value of € 485m. An office building has Other administrative expenses (17) (20.1) (21) Depreciation (10) (28.9) (14) also been sold for a gross value of € 56m. Overall, 14,563 units were sold during the half year at a total sale price of € 1,169m. operating income (64) 13.9 (56) Impairment on financial assets (net) (89) 5.3 (85) This represents a significant increase on the same period last Provisions (net) and other gains (losses) (88) (39.5) (146) year, both in the number of units and sales price. The policies Profit/(loss) before tax (241) (15.8) (287) and commercial plans established for each asset type will Income tax 49 (38.2) 80 Profit/(loss) for the year (192) (7.3) (207) continue in place in 2017 with the aim of accelerating sales Non-controlling interests 1 n.s. 0 and reducing the stock, with specific actions targeted at the Net attributable profit (191) (7.6) (207) product which has spent the longest time on the balance sheet. In addition, work will also be carried out to increase Balance sheet 30-06-17 ?% 31-12-16 the pace of reducing stock through the sale or contribution Cash, cash balances at central banks and 12 32.5 9 of packages of assets to participated real-estate companies other demand deposits Financial assets 766 33.3 575 or through commercial agreements with developers. The different initiatives under consideration are analyzed on a Loans and receivables 5,412 (9.0) 5,946 of which loans and advances to case-by-case basis, with the goal of preserving the economic 5,412 (9.0) 5,946 customers value of the assets. Inter-area positions — - Tangible assets 350 (24.7) 464 In terms of total real-estate exposure, including outstanding Other assets 5,952 (11.4) 6,719 Total assets/liabilities and equity 12,491 (8.9) 13,713 loans to developers, foreclosed assets and other assets, the Financial liabilities held for trading coverage ratio was 57% at the close of the first half of 2017, an improvement of one percentage point on 31-Mar-2017. and designated at fair value through profit — - or loss Deposits from central banks and credit — - non-performing loans have fallen again, with limited net institutions additions to NPLs over the period and a coverage ratio of 60% Deposits from customers 47 93.5 24 as of 30-Jun-2017. Debt certificates 792 (5.0) 834 Inter-area positions 8,486 (10.9) 9,520 Other liabilities 0 n.s. (0) Economic capital allocated 3,167 (5.0) 3,335 memorandum item: Risk-weighted assets 10,298 (5.3) 10,870

JANUARY-JUNE 2017 BusinEss ArEAs P.28 The United States highlights • Lending continues to focus on selective and profitable growth. • Decline in customer deposits due to good cost management and increased profitability. • positive performance of more recurring revenues. • Moderation of operating expenses and reduction in the impairment of financial assets. • stability of risk indicators. Business activity (1) Net interest income/ATA (Year-on-year change at constant exchange rate. Data as of 30-06-2017) (Percentage. Constant exchange rate) 2.73 2.57 2.60 2.40 2.28 -3.1% -4.3% Performing loans Total customer funds 2Q 3Q 4Q 1Q 2Q under management under management 2016 2017 (1) Excluding repos. Operating income Net attributable profit (Million euros at constant exchange rate) (Million euros at constant exchange rate) +19.9% (1) +62.4% (1) 437 523 183 297 266 257 159 166 224 222 219 213 133 131 123 50 1Q 2Q 3Q 4Q 1Q 2Q 1Q 2Q 3Q 4Q 1Q 2Q 2016 2017 2016 2017 (1) At current exchange rate: +23.3%. (1) At current exchange rate: +66.4% Breakdown of performing loans under management (1) Breakdown of customer funds under management (1) (30-06-2017) (30-06-2017) 8% 19% 21% Mortgages Consumer and credit cards Demand deposits 12% 81% SMEs Time deposits Other commercial 7% Public sector 52% (1) Excluding repos. (1) Excluding repos.

JANUARY-JUNE 2017 BusinEss ArEAs P.29 macro and industry trends Financial statements and relevant business indicators (Million euros and percentage) According to the latest information from the Bureau of Economic Analysis (BEA), U.S. GDp slowed in the first quarter income statement 1h17 ?% ?%(1) 1h16 of 2017 to 1.4% in annualized terms. The most recent figures net interest income 1,098 17.0 13.6 938 suggest there will be a moderate upturn in the second quarter. Net fees and commissions 338 10.7 7.6 306 Net trading income 55 (40.7) (42.1) 93 Although the sluggish start to the year could raise concerns Other income/expenses (24) 206.0 191.6 (8) about the chances of achieving 2% growth for the whole year, Gross income 1,468 10.4 7.3 1,330 there seems to be sufficient capacity for investment, following Operating expenses (945) 4.4 1.4 (905) the slowdown in 2016. The growth forecast by BBVA Research Personnel expenses (545) 2.3 (0.6) (533) Other administrative expenses (302) 8.9 5.8 (278) is still above 2% for 2017, supported by a pick-up in investment Depreciation (97) 3.0 (0.0) (94) (the energy sector and residential construction), which should operating income 523 23.2 19.9 425 offset the moderation expected in consumption as a result of Impairment on financial assets (net) (113) (23.8) (26.2) (149) higher inflation and more gradual improvement in the labor Provisions (net) and other gains (5) (86.5) (86.8) (36) market than expected. (losses) Profit/(loss) before tax 405 68.8 64.4 240 Income tax (108) 75.5 70.3 (62) With regard to the currency markets in the first half of 2017, the dollar’s depreciating trend against the euro heightened in the Profit/(loss) for the year 297 66.4 62.4 178 Non-controlling interests — — second quarter of the year. This is primarily a reflection of two Net attributable profit 297 66.4 62.4 178 factors: the FED’s restatement of the gradual normalization of its monetary policy and the lower probability of a fiscal stimulus Balance sheets 30-06-17 ?% ?%(1) 31-12-16 in the short term in the United States; and also, a stronger than Cash, cash balances at central banks expected economy in Europe so far this year. 5,955 (25.2) (19.0) 7,963 and other demand deposits Financial assets 13,374 (8.3) (0.7) 14,581 The financial system continues in good shape overall. Loans and receivables 57,550 (8.6) (1.0) 62,962 According to the FED’s latest available data, the system’s of which loans and advances to 55,993 (8.4) (0.9) 61,159 overall NPL ratio has been on the decline since the first customers Inter-area positions — — quarter of 2010. At the close of March 2017 it posted a Tangible assets 706 (10.2) (2.8) 787 significant fall, dropping below 2% for the first time since Other assets 2,430 (6.9) 0.8 2,609 2007. In terms of the total volume of credit, the latest available Total assets/liabilities and equity 80,015 (10.0) (2.6) 88,902 information as of May 2017 gives moderate year-on-year Financial liabilities held for trading rates of growth of around 5%. Commercial loans have grown and designated at fair value through 2,296 (20.8) (14.3) 2,901 profit or loss by 0.9%, residential mortgage loans increased by 3.7% and Deposits from central banks and consumer finance by 1.4%. The trend for total deposits in the 4,415 27.1 37.6 3,473 credit institutions system continues upward, and as of May 2017 the year-on- Deposits from customers 59,145 (10.1) (2.6) 65,760 year growth was 8.1%. Debt certificates 2,896 18.4 28.2 2,446 Inter-area positions 2,343 (51.9) (48.0) 4,875 Other liabilities 5,927 (2.3) 5.8 6,068 Activity Economic capital allocated 2,993 (11.4) (4.1) 3,379 All the comments below on rates of change, for both activity and earnings, will be given at constant exchange rate, relevant business indicators 30-06-17 ?% ?%(1) 31-12-16 unless expressly stated otherwise. These rates, together Loans and advances to customers (2) 56,739 (8.5) (0.9) 62,000 with changes at current exchange rate, can be seen in the (gross) Non-performing loans and guarantees attached tables of financial statements and relevant business 776 (20.4) (13.8) 976 given indicators. Customer deposits under (2) 55,529 (12.1) (4.9) 63,195 management Off-balance sheet funds (3) — —Risk-weighted assets 60,653 (7.4) 0.3 65,492 Efficiency ratio (%) 64.4 68.1 NPL ratio (%) 1.3 1.5 NPL coverage ratio (%) 105 94 Cost of risk (%) 0.38 0.37 (1) Figures at constant exchange rate. (2) Excluding repos. (3) Includes mutual funds, pension funds and other off-balance sheet funds.

JANUARY-JUNE 2017 BusinEss ArEAs P.30 lending activity (performing loans under management) results continues the trend to moderation which began in the second half of 2015. This trend is based on the area’s selective growth The United States has generated a cumulative net strategy in the most profitable portfolios and segments that attributable profit through June 2017 of € 297m, far higher represent more efficient capital consumption. As a result, than the same period the previous year. The most relevant there has been a decrease overall in this heading, over the aspects of the area’s income statement are as follows: semester (down 1.7%). At the close of June 2017, total balance net interest income continues to perform positively, is similar to the close of March (down 0.3%). By portfolios, with a cumulative figure rising by 13.6% year-on-year. This growth is still primarily focused on consumer loans (up 0.4% is due to the combined result of the strategic measures over the first-half and 1.2% in the quarter), and in some adopted by BBVA Compass to improve loan yields and categories of commercial loans (commercial real-estate, reduce the cost of deposits, as well as the FED’s interest-mortgage-backed loans and above all credit cards). rate hikes. The main asset quality indicators have been stable over the Cumulative income from fees and commissions up quarter and significantly improved in the first half. The NPL ratio to June reported an increase of 7.6% due to the good closed at 1.3%, and the NPL coverage ratio at 105%. performance of virtually all items. Customer deposits under management declined (down 4.9% Reduction of 42.1% in nti compared with the figure for the year-on-year and 4.2% in the quarter), strongly influenced by same period the previous year. The positive performance of the strategic measures implemented by the area to manage the Global Markets unit, particularly in the first part of the the cost of liabilities and increase profitability. semester, has not been sufficient to offset the capital gains In terms of capital, for the fourth consecutive year that from portfolio sales in the first half of 2016. BBVA Compass has been subject to the Comprehensive operating expenses reported a slight increase of 1.4% Capital Analysis Review, the FED did not raise any objections concentrated on administrative expenses, as personnel to the capital plan presented by BBVA Compass. BBVA costs and amortization of intangible assets declined. Compass has also passed the stress test carried out under the provisions of the Dodd-Frank Act, with regulatory capital Lastly, impairment losses on financial assets were ratios exceeding the required minimums. significantly down on the first half of 2016 (down 26.2%), when (above all in the first quarter) provisions were allocated in response to the rating downgrade of some companies operating in the energy (exploration & production) and metal & mining (basic materials) sectors. As a result, the cumulative cost of risk as of 30-Jun-2017 was 0.38%, a clear fall compared with the figure in the same period of 2016 and the first quarter of 2017.

JANUARY-JUNE 2017 BusinEss ArEAs P.31 Mexico highlights • Growth of lending. • Good performance of customer funds. • Costs continue to increase below gross income, and double-digit year-on-year growth in net attributable profit. • stable asset quality indicators. Business activity (1) Net interest income/ATA (Year-on-year change at constant exchange rate. Data as of 30-06-2017) (Percentage. Constant exchange rate) 8.8% 5.38 5.47 5.44 5.35 5.36 5.6% Performing loans Total customer funds 2Q 3Q 4Q 1Q 2Q under management under management 2016 2017 (1) Excluding repos. Operating income Net attributable profit (Million euros at constant exchange rate) (Million euros at constant exchange rate) +14.0% (1) +16.4% (1) 928 1,080 2,025 2,309 1,228 546 551 1,166 1,143 998 1,027 1,040 529 472 463 466 1Q 2Q 3Q 4Q 1Q 2Q 1Q 2Q 3Q 4Q 1Q 2Q 2016 2017 2016 2017 (1) At current exchange rate: +9.3%. (1) At current exchange rate: +11.6%. Breakdown of performing loans under management (1) Breakdown of customer funds under management (1) (30-06-2017) (30-06-2017) 8% 1% Mortgages 19% 31% Consumer Demand deposits Credit cards Time deposits SMEs 56% 15% Off-balance sheet funds Other commercial Public sector Other commercial 41% 13% 10% 7% (1) Excluding repos. (1) Excluding repos.

JANUARY-JUNE 2017 BusinEss ArEAs P.32 macro and industry trends Financial statements and relevant business indicators (Million euros and percentage) According to the latest information available from the National Institute of Statistics and Geography, year-on-year income statement 1h17 ?% ?% (1) 1h16 GDp growth in Mexico was 2.8% in the first quarter of 2017, net interest income 2,676 4.7 9.2 2,556 driven by internal consumption, which could reflect purchase Net fees and commissions 595 7.1 11.7 556 Net trading income 117 20.1 25.3 97 decisions being brought forward in the face of a pick-up in Other income/expenses 120 19.2 24.3 101 inflation expectations, and more dynamic export growth. On Gross income 3,507 6.0 10.5 3,309 the basis of these results, Banxico has slightly revised up (by Operating expenses (1,198) 0.1 4.3 (1,198) 0.2 percentage points) its forecast for growth in 2017, to a Personnel expenses (520) 0.2 4.5 (519) Other administrative expenses (549) (1.5) 2.7 (558) range of between 1.5% and 2.5%. Depreciation (129) 6.7 11.2 (121) As regards inflation, following the increase registered in the operating income 2,309 9.3 14.0 2,112 Impairment on financial assets (net) (831) 5.5 10.0 (788) first quarter of the year, there are now signs emerging to Provisions (net) and other gains (8) (65.4) (63.9) (24) suggest that it may be leveling out. This is partly due to the (losses) exchange rate gains in recent months (mainly supported by Profit/(loss) before tax 1,469 13.1 17.9 1,300 Income tax (389) 17.4 22.5 (331) the perception that any renegotiation of NAFTA will maintain the core elements of the existing trade relationship with the Profit/(loss) for the year 1,081 11.6 16.4 968 Non-controlling interests (0) (58.6) (56.8) (0) United States). Given this situation, Banxico could be nearing Net attributable profit 1,080 11.6 16.4 968 the end of its cycle of interest rate hikes. The main monetary policy rate looks set to remain around current levels of 7% Balance sheets 30-06-17 ?% ?% (1) 31-12-16 until the end of the year. Cash, cash balances at central banks 6,406 23.4 16.7 5,192 and other demand deposits As has been the case in previous years, the Mexican financial Financial assets 31,958 2.2 (3.4) 31,273 system retains very comfortable levels of capital adequacy Loans and receivables 53,904 12.3 6.2 47,997 of which loans and advances to and asset quality. According to the latest data released by 50,425 8.5 2.6 46,474 customers the National Securities Banking Commission (CNBV), the Tangible assets 2,017 3.1 (2.6) 1,957 capital ratio stood at 15.3% at the end of April, while the Other assets 4,948 (28.3) (32.2) 6,900 NPL ratio closed May at 2.19% with the NPL coverage ratio Total assets/liabilities and equity 99,233 6.3 0.5 93,318 exceeding 154%. Nominal year-on-year growth in the loan Financial liabilities held for trading and designated at fair value through 10,390 4.3 (1.4) 9,961 portfolio in May was similar to growth rates registered during the previous year (up 11.6%). All portfolios contributed to this profit or loss Deposits from central banks and credit 6,628 11.9 5.8 5,923 good performance. Traditional bank deposits (demand and institutions time) rose 11.3% year-on-year in nominal terms, with both Deposits from customers 54,826 8.4 2.5 50,571 categories performing similarly. Debt certificates 8,183 (5.0) (10.2) 8,611 Other liabilities 15,261 9.5 3.5 13,941 Economic capital allocated 3,945 (8.5) (13.5) 4,311 Activity All rates of change given below, for both activity and earnings, relevant business indicators 30-06-17 ?% ?% (1) 31-12-16 will be given at constant exchange rate, unless expressly Loans and advances to customers (2) 51,949 8.5 2.6 47,865 stated otherwise. These rates, together with changes at (gross) Non-performing loans and guarantees current exchange rate, can be seen in the attached tables of 1,270 10.2 4.2 1,152 financial statements and relevant business indicators. given Customer deposits under (2) 45,980 9.5 3.5 41,989 management BBVA’s loan book in Mexico (performing loans under Off-balance sheet funds (3) 21,040 10.1 4.1 19,111 management) increased by 2.4% relative to December Risk-weighted assets 48,547 1.4 (4.1) 47,863 2016 and 2.1% in the second quarter of the year, which is Efficiency ratio (%) 34.2 35.4 NPL ratio (%) 2.3 2.3 an improvement over the behavior observed during the NPL coverage ratio (%) 126 127 first three months of the year. As a result, BBVA Bancomer Cost of risk (%) 3.35 3.40 maintains its leadership position, with a market share for its (1) Figures at constant exchange rate. performing portfolio of 23.4% (according to the latest local (2) Excluding repos. information from the CNBV to the close of May 2017). (3) Includes mutual funds, pension funds and other off-balance sheet funds.

JANUARY-JUNE 2017 BusinEss ArEAs P.33 The weight of retail and wholesale portfolios remained results practically unchanged at the end of June relative to published data through March 31 (51% and 49% respectively). The highlights of the income statement for Mexico for the first Wholesale lending was up 1.1% on December and 2.4% over half of 2017 are summarized below: the quarter. Business loans continue to perform particularly Positive performance of net interest income, with a well, including loans to corporate clients and mid-sized year-on-year increase of 9.2%, driven primarily by greater companies, which have risen by 2.6% so far this year, activity volumes and the favorable development of excluding developer loans. Meanwhile lending to housing customer spreads. developers remains on a positive trend since last year, with an increase of 1.8% in the first six months of the year. Good performance of net fees and commissions, with growth of 11.7% over the last twelve months. These remain The retail portfolio has registered growth of 3.6% in the strongly influenced by an increased volume of transactions first half of the year and 1.7% over the second quarter. This with credit card customers and fees from online and portfolio continues to be buoyed mainly by lending to SMEs investment banking. and for auto finance, which rose 9.3% and 7.8% respectively over the last six months. Meanwhile, credit cards declined by Strong growth in nti (up 25.3% year-on-year) thanks to 1.5% over the same period, though new production during the a very good performance from the Global Markets unit in first six months of the year rose by 9.8% year-on-year. The the first part of the year. mortgage portfolio continues to show the effect of maturities on the overall amount, which increased by 3.6% over the last six months. In the other income/expenses line (up 24.3% year-on-year), earnings from insurance activity performed strongly, partly due to the change introduced at the end of These developments in lending have been accompanied 2016 relating to the method for calculating mathematical by asset quality indicators which remained stable relative reserves. March 31, 2017 and December 31, 2016. Accordingly, the NPL and NPL coverage ratios stood at 2.3% and 126% respectively at the end of June. operating expenses continued to grow at a controlled pace (up 4.3% year-on-year) and below the area’s gross income growth of 10.5%. As a result, the efficiency ratio Total customer funds (customer deposits under stood at 34.2% in the first half of 2017. management, mutual funds and other off-balance sheet funds) posted half-year growth of 3.7% (up 2.8% in the second quarter of the year). All products continued to Impairment losses on financial assets grew by 10.0% perform positively: current and savings accounts rose 3.6% year-on-year, slightly more than the increase in the loan-year-on-year (up 1.7% on the previous quarter), and time book over the same period (up 8.8%). The above puts the deposits grew by 3.4% (up 3.7% over the quarter). BBVA area’s cumulative cost of risk at 3.35%. in Mexico has a profitable funding mix with low-cost items Overall, BBVA in Mexico posted a net attributable profit for continuing to account for over 81% of total customer deposits the first six months of the year of € 1,080m, a year-on-year under management. Mutual funds registered growth of 3.5% increase of 16.4%. over the half-year and 3.1% over the quarter.

JANUARY-JUNE 2017 BusinEss ArEAs P.34 Turkey highlights • solid growth in lending. • Good performance of deposits, both in turkish lira and foreign currency, strongly focused on current and savings accounts. • Very good performance of more recurring revenues, cost discipline and reduction of loan-loss provisions. • improvement of the asset quality indicators, which have performed better than in the rest of the sector. Business activity (1) Net interest income/ATA (Year-on-year change at constant exchange rate. Data as of 30-06-2017) (Percentage. Constant exchange rate) 19.7% 4.06 4.09 3.99 3.84 3.84 13.6% 2Q 3Q 4Q 1Q 2Q Performing loans Total customer funds under management under management 2016 2017 (1) Excluding repos. Operating income Net attributable profit (Million euros at constant exchange rate) (Million euros at constant exchange rate) +12.6% (1) +39.3% (1) 1,093 1,230 268 374 636 643 214 588 555 490 159 160 457 117 122 110 1Q 2Q 3Q 4Q 1Q 2Q 1Q 2Q 3Q 4Q 1Q 2Q 2016 2017 2016 2016 2017 (1) At current exchange rate: -6.9%. (1) At current exchange rate: +15.3%. Breakdown of performing loans under management (1) Breakdown of customer funds under management (1) (30-06-2017) (30-06-2017) 9% 8% 24% 30% Demand deposits Retail loans Business banking Time deposits Credit cards Off-balance sheet funds 61% 68% (1) Excluding repos. (1) Excluding repos.

JANUARY-JUNE 2017 BusinEss ArEAs P.35 macro and industry trends Financial statements and relevant business indicators (Million euros and percentage) According to the most recent figures from the Turkish Statistical Institute, Turkey’s economic growth is accelerating income statement 1h17 ?% ?% (1) 1h16 significantly, now standing at 5% in year-on-year terms in the net interest income 1,611 0.3 21.3 1,606 first quarter of 2017, strongly influenced by the fiscal stimulus Net fees and commissions 352 (10.3) 8.4 392 Net trading income 9 (93.0) (91.6) 128 and solid growth of exports. This acceleration could continue Other income/expenses 26 (7.0) 12.3 28 into the second quarter, supported by increased orders, Gross income 1,998 (7.2) 12.1 2,154 imports of intermediate goods, robust exports, the delayed Operating expenses (768) (7.8) 11.4 (833) effects of the significant increase in credit thanks to the Credit Personnel expenses (407) (7.0) 12.4 (438) Other administrative expenses (267) (12.8) 5.4 (307) Guarantee Fund (CGF), the extension of tax cuts on durable Depreciation (93) 5.5 27.5 (88) goods, and fiscal expansion. Higher than expected growth operating income 1,230 (6.9) 12.6 1,321 in the first quarter, together with signs of stronger private Impairment on financial assets (net) (239) (20.7) (4.2) (301) demand, could lead to overall economic growth for 2017 of Provisions (net) and other gains 18 n.s. n.s. 1 around 5%, according to BBVA Research estimates. (losses) Profit/(loss) before tax 1,010 (1.1) 19.5 1,022 Income tax (201) (1.0) 19.7 (203) Despite being still high, inflation has fallen to 10.9% (June 2017 data) as a result of movements in food and energy prices. Core Profit/(loss) for the year 809 (1.2) 19.4 819 Non-controlling interests (436) (11.9) 6.4 (495) inflation has moderated slightly, but given inflationary pressure Net attributable profit 374 15.3 39.3 324 and possible second-round effects, headline inflation is likely to remain in double-digits until the end of the year. Balance sheets 30-06-17 ?% ?% (1) 31-12-16 Against this backdrop, the Central Bank of Turkey (CBRT) has Cash, cash balances at central banks 1,917 (29.6) (23.8) 2,724 been tightening monetary policy since the end of last year, and other demand deposits Financial assets 12,264 (10.3) (2.9) 13,670 with an increase of around 367 basis points in the average Loans and receivables 66,420 2.5 10.9 64,814 funding rate (from 8.31% to 11.98%) year-to-date. Moreover, of which loans and advances to 55,248 (0.7) 7.6 55,612 the CBRT has declared that this restrictive stance would be customers maintained until the prospects for inflation show a significant Tangible assets 1,385 (3.1) 4.9 1,430 improvement. Other assets 1,909 (14.3) (7.3) 2,229 Total assets/liabilities and equity 83,895 (1.1) 7.0 84,866 Financial liabilities held for trading The Turkish financial sector has again increased the trend and designated at fair value through 615 (39.0) (33.9) 1,009 in year-on-year credit growth at the end of the first half of profit or loss 2017, according to CBRT data. Adjusted for the effect of the Deposits from central banks and credit 13,210 (2.1) 6.0 13,490 depreciation of the lira, this rise is 17.6% to June 30, due institutions Deposits from customers 46,780 (1.0) 7.2 47,244 basically to commercial lending fostered by the Government’s Debt certificates 8,649 9.4 18.4 7,907 CGF. Deposit gathering has been fairly strong (also according Other liabilities 11,896 (7.7) (0.1) 12,887 to CBRT information), with a year-on-year growth of 12.1%, Economic capital allocated 2,745 17.8 27.6 2,330 according to data at the close of June, and also adjusted for the exchange-rate effect. Turkish-lira deposits grew by 5% and foreign-currency deposits by 16%. As a result of the rapid relevant business indicators 30-06-17 ?% ?% (1) 31-12-16 expansion of credit, interest rates on deposits have grown Loans and advances to customers (2) 57,527 (0.7) 7.5 57,941 by around 180 basis points in the second quarter. Finally, the (gross) NPL ratio in the system remains at 3.05%, according to the Non-performing loans and guarantees 1,766 (10.9) (3.6) 1,982 given latest available information from the CBRT as of June 30. Customer deposits under (2) 47,196 (0.6) 7.6 47,489 management Off-balance sheet funds (3) 3,913 4.3 12.9 3,753 Risk-weighted assets 67,270 (4.4) 3.5 70,337 Efficiency ratio (%) 38.4 40.8 NPL ratio (%) 2.5 2.7 NPL coverage ratio (%) 135 124 Cost of risk (%) 0.84 0.87 (1) Figures at constant exchange rate. (2) Excluding repos. (3) Includes mutual funds, pension funds and other off-balance sheet funds.

JANUARY-JUNE 2017 BusinEss ArEAs P.36 Activity results In March 2017, BBVA completed the acquisition of an Turkey has generated a cumulative net attributable profit additional 9.95% stake in the share capital of Garanti, through June 2017 of € 374m, up 39.3% on the figure in the increasing BBVA’s total stake in this entity to 49.85%, which same period in 2016. The most significant aspects of the year-continues to be incorporated into the Group’s financial on-year changes of the income statement are as follows: statements by the full integration method. Positive performance of net interest income (up 21.3%) Unless expressly stated otherwise, all the comments below due to an increase in activity and good management of on rates of change, for both activity and earnings, will be given customer spreads against a backdrop of high interest at constant exchange rate. These rates, together with changes rates (adequate liability mix with higher weighting of at current exchange rate, can be seen in the attached tables low cost products and rising of loan yields). In addition, of financial statements and relevant business indicators. the upward revision of inflation expectations from 7% to 9% used for the valuation of CPI linker bonds has had a The solid growth of lending activity (performing loans positive contribution of € 24m in this line. under management) in the area in the first quarter of 2017 has continued into the second quarter. The total portfolio income from fees and commissions continues to has accelerated its growth rate so far this year to 8.0%, perform well (up 8.4%), thanks to good diversification boosted once more by the Turkish lira loans. The trend in (payment systems, money transfers, loans, insurance, foreign-currency loans continues to be muted. By segments, etc.). This positive performance is achieved despite business banking loans and consumer loans continue to the lower generation of fees for account maintenance perform favorably. The CGF program, backed by the Turkish due to the suspension of charges in the retail segment Treasury to boost business loans, continues to contribute implemented by the Turkish Council of State in January positively to the increase in lending, above all in Turkish lira. 2016, and the high revenues generated in the same period In addition, favorable trend in mortgage loans and general of 2016 by the Miles & Smiles program. purpose loan portfolios cotinues but with price discipline at the same time. It is worth noting that Garanti is strengthening Reduction of nti (down 91.6%) due mainly to the capital its market position in the credit card segment, mainly due gains generated in the first half of 2016 derived from the to the increase in commercial credit cards. Overall, the bank VISA deal. is maintaining its leading position in consumer lending, mortgages, auto loans and company credit cards. Overall, gross income was 12.1% higher than in the first six months of 2016. In asset quality, the NPL ratio fell to 2.5%, well below the sector average, and the NPL coverage ratio climbs to 135%. operating expenses continue under control, which have reduced the efficiency ratio to 38.4% (39.8% in the first Customer deposits remain the main source of funding for quarter of 2017 and 40.8% in 2016). Over the quarter this the balance sheet in the area, with their proportion growing heading fell by 2.4%. However, in the cumulative figure for to 56% of total liabilities and growth of 7.6% in the last six the half-year there was a year-on-year increase of 11.4%, months. Deposits in both Turkish lira and foreign currency are basically due to the high level of inflation and the impact growing. There was a good performance of current and savings of the depreciation of the Turkish lira on the cost items accounts, which grew by 9.5% over the first-half. In this regard, denominated in foreign currency. it is worth of note that the average balance of low cost deposits (current and savings accounts) in the area as of 30-Jun-2017 A decrease in impairment losses on financial assets represents 26.2% of total balance-sheet deposits (current and (down 4.2% year-on-year). As a result, the cost of risk in savings accounts plus time deposits), well above the sector the area closed the half-year at 0.84%. average (around 21%). The above has a bigger positive effect in Finally, BBVA Group’s additional stake of 9.95% in Garanti’s Garanti’s cost of financing than the sector. capital has had a positive effect of approximately € 54m of less non-controlling interests heading.

JANUARY-JUNE 2017 BusinEss ArEAs P.37 South America highlights • Growth of activity in the region continues to moderate, in line with the current macro economic situation. • Customer funds are increasing at a good pace. • positive trend of more recurring revenues. • Expenses conditioned by the high level of inflation in some countries. • The macroeconomic environment continues to influence the behavior of the risk indicators. Business activity (1) Net interest income/ATA (Year-on-year change at constant exchange rate. Data as of 30-06-2017) (Percentage. Constant exchange rate) 10.8% 4.52 6.4% 4.41 4.40 4.27 4.22 Performing loans Total customer funds 2Q 3Q 4Q 1Q 2Q under management under management 2016 2017 (1) Excluding repos. Operating income Net attributable profit (Million euros at constant exchange rate) (Million euros at constant exchange rate) +9.4% (1) -3.0% (1) 417 404 1,107 1,211 647 217 222 200 191 189 183 587 563 564 544 542 1Q 2Q 3Q 4Q 1Q 2Q 1Q 2Q 3Q 4Q 1Q 2Q 2016 2017 2016 2017 (1) At current exchange rate: +12.4%. (1) At current exchange rate: +2.7%. Breakdown of performing loans under management (1) Breakdown of customer funds under management (1) (30-06-2017) (30-06-2017) 1% 3% Mortgages 22% 24% Consumer 43% Credit cards Demand deposits SMEs Time deposits Other commercial 16% Off-balance sheet funds Public sector 43% Other commercial 6% 35% 7% (1) Excluding repos. (1) Excluding repos.

JANUARY-JUNE 2017 BusinEss ArEAs P.38 macro and industry trends Financial statements and relevant business indicators (Million euros and percentage) South America is emerging from a weak cyclical position. In recent years, the region has seen a contraction in activity income statement 1h17 ?% ?% (1) 1h16 caused mainly by declining external demand and commodity net interest income 1,617 12.3 10.3 1,441 prices (the latter has a significant impact on performance) Net fees and commissions 352 17.6 15.3 299 Net trading income 247 (22.7) (6.0) 319 and, more recently, by factors related to political issues. Other income/expenses 36 n.s. n.s. (59) There are currently some signs of a change in trend enabling Gross income 2,252 12.6 10.3 1,999 the region to post modest growth this year, which should Operating expenses (1,041) 12.9 11.4 (921) consolidate over the coming years. This recovery will be led, Personnel expenses (538) 12.5 10.4 (479) Other administrative expenses (442) 11.6 10.6 (396) above all, by Argentina. Depreciation (60) 28.6 29.8 (47) Inflation is slowing in most countries, given the modest operating income 1,211 12.4 9.4 1,078 Impairment on financial assets (net) (375) 53.0 46.6 (245) depreciation of South American currencies against the Provisions (net) and other gains (46) 61.2 3.7 (29) dollar and the spare capacity built up following the decline (losses) in economic activity in recent years. Accordingly, monetary Profit/(loss) before tax 790 (1.8) (2.1) 804 Income tax (229) (15.3) (4.5) (271) policy is shifting toward a more relaxed stance (except in Argentina), as central banks put greater emphasis on Profit/(loss) for the year 560 5.1 (1.1) 533 Non-controlling interests (156) 11.9 4.3 (139) supporting the recovery, in the absence of a clear threat from Net attributable profit 404 2.7 (3.0) 394 inflationary pressures. Balance sheets 30-06-17 ?% ?% (1) 31-12-16 As regards the financial systems within BBVA’s regional Cash, cash balances at central banks 8,320 (21.4) (12.2) 10,586 footprint, the macroeconomic backdrop and reduced levels and other demand deposits of banking penetration in these countries in aggregate terms Financial assets 11,953 11.3 20.1 10,739 (with obvious differences between countries), is enabling Loans and receivables 50,533 (6.5) 1.1 54,057 of which loans and advances to the main indicators of profitability and solvency to remain 45,791 (6.0) 1.7 48,718 customers elevated while limiting non-performing loans. In addition, Tangible assets 749 (7.2) 5.4 807 there has been sustained growth in lending and deposits. Other assets 1,768 2.2 10.9 1,729 Total assets/liabilities and equity 73,323 (5.9) 2.2 77,918 Financial liabilities held for trading and designated at fair value through 2,372 (8.3) (1.3) 2,585 Activity profit or loss Deposits from central banks and credit All the comments below on rates of change, for both activity 6,385 (4.1) 1.8 6,656 institutions and earnings, will be given at constant exchange rates, unless Deposits from customers 44,713 (6.7) 1.9 47,927 expressly stated otherwise. These rates, together with changes Debt certificates 7,069 (5.1) 1.7 7,447 at the current exchange rates, can be seen in the attached Other liabilities 9,876 (6.8) 1.2 10,600 Economic capital allocated 2,909 7.6 18.0 2,703 tables of financial statements and relevant business indicators. lending (performing loans under management) increased slightly on the close of December 2016 (up 1.2%), still relevant business indicators 30-06-17 ?% ?% (1) 31-12-16 Loans and advances to customers hampered by weak economic growth in the region, and (2) 47,434 (5.7) 2.0 50,316 (gross) changes in the portfolios denominated in U.S. dollars Non-performing loans and guarantees (impacted by the depreciation of the dollar against some local 1,834 12.0 19.9 1,637 given currencies). By segments, the strong performance of the Customer deposits under (3) 44,991 (6.9) 1.7 48,334 individual customer segment (particularly consumer finance management Off-balance sheet funds (4) 12,323 3.5 12.1 11,902 and mortgages) offset the moderation in the commercial Risk-weighted assets 53,755 (6.4) 2.2 57,443 and public sectors. By country, the fastest growth was in Efficiency ratio (%) 46.2 46.7 Argentina (up 15.2%), Chile (up 3.8%) and Colombia (up NPL ratio (%) 3.5 2.9 2.2%). In summary, the loan book grew by 6.4% in the region NPL coverage ratio (%) 94 103 in year-on-year terms, slowing relative to the end of 2016, but Cost of risk (%) 1.52 1.15 (1) Figures at constant exchange rate. slightly better than growth at March 30, 2017, supported by (2) Excluding repos. the credit card and consumer finance portfolios, which both (3) Excluding repos and including specific marketable debt securities. saw double-digit growth in year-on-year terms. (4) Includes mutual funds, pension funds and other off-balance sheet funds.

JANUARY-JUNE 2017 BusinEss ArEAs P.39 In terms of asset quality, the macroeconomic situation Impairment losses on financial assets increased by continues to shape the NPL and NPL coverage ratios, which 46.6%, reflecting the still weak economic growth in the closed the first half of the year at 3.5% and 94% respectively. region. Furthermore, this line item is affected by the impact of provisions associated with one particular On the liabilities side, customer funds have continued to customer. As a result, the cumulative cost of risk stood grow at a healthy pace, registering an increase over the first at 1.52% for the first half of the year (1.15% in 2016 and six months of 3.7% (up 10.8% in year-on-year terms). This 1.49% in the first quarter of 2017). trend in customer funds is explained by the good performance of transactional funds and off-balance sheet funds, with By country, recurring revenues performed well in Argentina; particularly positive trends in Argentina (up 14.4% in the half-net interest income grew more rapidly in the second quarter year) and Colombia (up 6.9% over the same period). of 2017, and the figures for cumulative fees have been excellent. However, expenses continue to be affected by high results inflation, which is why the country’s earnings have declined by 8.2% relative to the same period of 2016. In Chile, positive In the first half of the year, South America posted a net developments in gross income (net interest income is growing attributable profit of € 404m, down 3.0% year-on-year on thanks to growth in lending and effective management of the same period in 2016 (up 2.7% at current exchange rates). spreads) and the decline in expenses comfortably offset the The key aspects of the year-on-year changes in the income rise in loan-loss provisioning and the increase in the nominal statement in the area are: tax rate. Accordingly, the country recorded a net attributable profit 63.2% up on the first half of 2016. In Colombia, gross Gross income has grown by 10.3%, thanks to the strong income performed strongly, thanks to positive developments capacity to generate recurring revenues in the area. In this in net interest income and fees, albeit mitigated by lower NTI regard, net interest income is up 10.3% and net fees and (the same period of 2016 included capital gains from the sale of commissions have grown by 15.3%. There was a lower holdings) and an increase in loan-loss provisioning. As a result, contribution from NTI, basically due to Argentina (lower net attributable profit was 40.3% lower than the same period revenues from securities trading) and Colombia (in 2016 of 2016. In peru, earnings are 1.1% above the figure for the first capital gains were registered from the sale of holdings). half of last year, since the good performance of NTI and the operating expenses have increased by 11.4% year-on- reduction in expenses have largely been mitigated by limited year. However, this heading increased by less than the growth in recurring revenues and greater loan-loss provisions. area’s gross income, if Argentina is excluded (with its high inflation). South America. Data per country (Million euros) operating income Net attributable profit Country 1h17 ?% ?%(1) 1h16 1h17 ?% ?% (1) 1h16 Argentina 232 (15.2) (9.8) 273 106 (13.7) (8.2) 123 Chile 219 42.6 32.5 153 96 75.6 63.2 54 Colombia 329 25.4 13.9 262 84 (34.2) (40.3) 128 Peru 365 11.8 5.1 326 85 7.6 1.1 79 Other countries (2) 67 7.0 36.4 62 33 253.1 87.5 9 total 1,211 12.4 9.4 1,078 404 2.7 (3.0) 394 (1) Figures at constant exchange rate. (2) Venezuela, Paraguay, Uruguay and Bolivia. Additionally, it includes eliminations and other charges. South America. Relevant business indicators per country (Million euros) Argentina Chile Colombia peru 30-06-17 31-12-16 30-06-17 31-12-16 30-06-17 31-12-16 30-06-17 31-12-16 Loans and advances to customers (gross) (1, 2) 4,729 4,073 14,240 13,676 12,027 11,603 13,172 13,906 Deposits from customers 45 36 373 404 634 455 686 649 Customer deposits under management (1, 3) 6,646 6,059 9,011 9,377 12,123 11,584 12,217 12,792 Off-balance sheet funds (1, 4) 1,392 967 1,554 1,392 982 676 1,546 1,454 Risk-weighted assets 8,785 8,717 13,417 14,300 11,805 12,185 15,536 17,400 Efficiency ratio (%) 60.1 53.8 44.9 49.1 36.5 38.9 36.3 35.8 NPL ratio (%) 0.9 0.8 2.4 2.6 5.1 3.5 4.1 3.4 NPL coverage ratio (%) 294 391 69 66 86 105 101 106 Cost of risk (%) 1.13 1.48 0.84 0.74 2.83 1.34 1.43 1.31 (1) Figures at constant exchange rates. (2) Excluding repos. (3) Excluding repos and including specific marketable debt securities. (4) Includes mutual funds, pension funds and other off-balance sheet funds.

JANUARY-JUNE 2017 BusinEss ArEAs P.40 Rest of Eurasia highlights • the loan book continues its upward path begun in the fourth quarter of 2016. • reduction in the balance of deposits. • Slight decline in earnings, which compare with an excellent performance during the first half of 2016. • improvement in the asset quality indicators. Financial statements and relevant business indicators macro and industry trends (Million euros. Percentage) Economic recovery in the Eurozone has gained traction since the close of last year, according to figures from Eurostat, with income statement 1h17 ?% 1h16 net interest income 95 10.8 86 a quarterly rise of 0.5% in the fourth quarter of 2016 and Net fees and commissions 82 (9.2) 90 0.6% in the first quarter of 2017, supported by the growth of Net trading income 80 34.0 59 global demand in a context of generally improved confidence. Other income/expenses (0) n.s. 42 Gross income 256 (7.8) 278 However, uncertainty remains high. Some stimuli that are supporting the recovery could fade out over the coming Operating expenses (154) (8.4) (168) Personnel expenses (80) (10.1) (89) quarters, making it difficult to imagine a much greater Other administrative expenses (68) (7.3) (73) acceleration moving forward in an economy that has already Depreciation (6) 4.3 (6) been growing above its potential since 2015. Overall, BBVA operating income 102 (6.8) 110 Impairment on financial assets (net) 9 n.s. (9) Research expects growth of around 2% in 2017, with greater support from the foreign sector and investment offsetting Provisions (net) and other gains (losses) (7) n.s. 2 Profit/(loss) before tax 104 1.8 103 some moderation in private consumption. Fiscal policy will Income tax (31) 12.1 (28) remain expansive in the area as a whole. The ECB remains Profit/(loss) for the year 73 (2.1) 75 cautious with respect to the future of inflation and is still Non-controlling interests 0—0 Net attributable profit 73 (2,1) 75 committed to an accommodative monetary policy, despite the greater optimism with respect to growth. Balance sheets 30-06-17 ?% 31-12-16 Cash, cash balances at central banks and other 792 (40.8) 1,337 demand deposits Activity and results Financial assets 1,131 (36.7) 1,787 Loans and receivables 16,525 6.1 15,574 This business area basically includes the retail and wholesale of which loans and advances to customers 16,298 6.3 15,325 Inter-area positions — - business of the Group in Europe (excluding Spain) and Asia. Tangible assets 37 (2.7) 38 The area’s loan book (performing loans under management) Other assets 322 (12.8) 369 Total assets/liabilities and equity 18,807 (1.6) 19.106 increased 5.4% in the first half of 2017 on the figure at the Financial liabilities held for trading and 52 (23.4) 67 close of 2016, with growth in the branches in both Europe (up designated at fair value through profit or loss 5.9%) and Asia (up 3.6%). Deposits from central banks and credit institutions 2,435 (8.8) 2,670 Deposits from customers 7,304 (22.3) 9,396 Debt certificates 242 (23.2) 315 With respect to the main credit risk indicators, since March 2017 there has been a slight improvement in the NPL ratio, Inter-area positions 7,442 54.3 4,822 Other liabilities 365 (36.8) 577 which closed June at 2.6% (compared with 2.8% at the close Economic capital allocated 968 (23.1) 1,259 of March 2017, and 2.7% in December), while the NPL coverage relevant business indicators 30-06-17 ?% 31-12-16 ratio has increased to 82% (75% as of 31-Mar-2017 and 84% Loans and advances to customers (gross) (1) 16,816 6.2 15,835 as of 31-Dec-2016). Non-performing loans and guarantees given 652 3.0 633 Customer deposits under management (2) 7,237 (22.4) 9,322 Customer deposits under management have fallen by 22.4% Off-balance sheet funds (3) 363 (1.0) 366 in the half-year, due to the reduction in branches in Europe Risk-weighted assets 14,144 (9.5) 15,637 (down 15.5%) and those in Asia (down 49.2%) and influenced Efficiency ratio (%) 60.2 69.6 NPL ratio (%) 2.6 2.7 by the negative interest-rate environment. NPL coverage ratio (%) 82 84 Cost of risk (%) (0.14) (0.22) (1) Figures at constant exchange rate. (2) Excluding repos. (3) Includes mutual funds, pension funds and other off-balance sheet funds.

JANUARY-JUNE 2017 BusinEss ArEAs P.41 With respect to earnings, gross income has fallen by 7.8% check. Finally, it was a period with no relevant changes over on the same period last year, mainly due to the payment, in the period in impairment losses on financial assets. As a 2016, of the CNCB dividend. In addition, operating expenses result, this geographic area has contributed a net attributable continue to moderate (down 8.4% year-on-year), due mainly profit in the first half of 2017 of € 73m, 2.1% less than in the to personnel expenses and general expenses being kept in same period in 2016.

JANUARY-JUNE 2017 BusinEss ArEAs P.42Corporate CenterThe Corporate Center basically includes: the costs of the Financial statements (Million euros. Percentage) head offices that have a corporate function; management of structural exchange-rate positions; specific issues of equity income statement 1h17 ?% 1h16 instruments o ensure adequate management of the Group’s global solvency; portfolios and their corresponding earnings, net interest income (190) (22.3) (245) whose managemen is not linked to customer relations, such Net fees and commissions (47) (14.2) (55) as industrial holdings; certain tax assets and liabilities; funds Net trading incme 244 172.7 89 due to commitments with employees; goodwill and other Other income/expenses 36 (55.4) 80 intangibles. The Corporate Center’s income statement as Gross income 42 n.s. (130)been influenced mainly by: Operating expenses (439) (2.7) (451) Personnel expenses (238) 3.0 (231) Greater contribution from nti than in the same period last Other administrative expenses (45) (27.9) (63) year, mainly due to the booking in the first quarter of 2017 Dereciation (156) (1.0) (158) of € 204m before tax (€ 174m after tax) in capital gains operating income (397) (31.7) (582) from the sale on the market of 1.7% of CNCB. mpairment on financialassets (net) (1) (97.5) (26) Provisions (net) and other gains (losses) (49) (40.0) (81) Payment of the Telefónica dividend in the second quarter Profit/(loss)before tax (447) (35.1) (688) (€ 53m). The amount is lower than that paid in the second Income tax 61 (64.4) 171 quarter of 2016 as a result of the reduction of the dividend Profit/(loss) for the yar (386) (25.4) (517) paid by the entity (from € 0.4 to € 0.2 per share). Non-controlling interests (15) n.s. (3) Net attributable profit (401) (22.9)(520) Containment of operating expenses, which declined 2.7% year-on-year. Balance sheets 30-06-17 ?% 31-12-16 Cash, cash balances at central banks and Overall, the Corporate Center posted a cumulative negative 2 n.s. (2)other demand deposits result of € 401m, compared with a bigger loss of € 520m in Financial assets 1,784 6.5 1,675the first half of 2016. Loans and receivables — 130 of which loans and advances to — 130 customers Inter-area positions (5,025) 7.9 (4,658) Tangible assets 1,961 (3.1) 2,023 Other assets 19,939 4.8 19,017Total assets/liabilities and equity 18,662 2.6 18,186 Financial liabilities held for trading and designated at fair value through profit — -or loss Deposits from central banks and credit 11 n.s. -institutions Deposits from cstomers — -Debt certificates 9,245 (11.9) 10,493 Inter-area positions (18,270) (4.9) (19,217) Other liabilities 651 (75.6) 2,666 Economic capital allocated (25,739) (3.1) (26,559) Shareholders’50,803

JANUARY-JUNE 2017 AnnEx P.43 Annex Other information: Corporate & Investment Bankinghighlights • Continued pressure on margins and excess liquidity.• Lending has remained flat since March 2017.• increase of deposits year-to-date. • positive trend in earnings, strongly supported by good performance of revenues, costrestraint and lower provisions. • stable risk indicators. Business activity (1) Gross income/ATA (Year-on-year change at constant exchange rate. Data as of30-06-2017) (Percentage. Constant exchange rate) 8.3% 1.31 1.32 1.17 1.10 1.18-3.7% 2Q 3Q 4Q 1Q 2Q Performing loans Total customer funds under management under management 2016 2017 (1) Excluding repos.Operating income Net attributable profit (Million euros at constant exchange rate) (Million euros at constant exchange rate)+80.7% (1) +22.3% (1)784 959 326 589 313 321 497 515 444 269 432 425 247 208 352 119 1Q 2Q 3Q 4Q 1Q 2Q 1Q 2Q 3Q 4Q 1Q 2Q 2016 2017 2016 2017(1) At current exchange rate: +19.8%. (1) At currnt exchange rate: +75.4%.Breakdown of performing loans under management (1) Breakdown of customer funds under management (1) (30-06-2017) (30-06-2017) 8%21% Spain 27%Spain 19% 40% The United States The United States Mexico Mexico South America 15% South America Rest of Eurasia Rest of Eur17% 19%2(1) Excluding repos. (1) Excluding repos.

JANUARY-JUNE 2017 AnnEx P.44 macro and industry trends Financial statements and relevant business indicators (Million euros and percentage) In the first half of 2017, and specifically in the second quarter of the year, the financial markets experienced a low level of income statement 1h17 ?% ?%(1) 1h16 volatility and lack of financial tension, despite some political net interest income 545 (19.0) (18.5) 673 uncertainty in developed countries and the expected progress Net fees and commissions 359 17.7 17.4 305 Net trading income 463 92.5 103.9 241 in the normalization of monetary policy by the central banks. Other income/expenses 94 5.4 4.7 89 Gross income 1,461 11.7 13.1 1,307 Against this backdrop, in the united states equity market Operating expenses (502) (0.9) (1.0) (507) has continued its upward trend, boosted by the still low Personnel expenses (248) (5.0) (5.1) (262) interest rates and limited volatility. Other administrative expenses (200) 1.6 1.4 (197) Depreciation (53) 11.0 11.5 (48) operating income 959 19.8 22.3 800 In Europe, the victory of Macron in France, the lack of an Impairment on financial assets (net) (24) (87.6) (87.8) (194) agreement in Italy on electoral reform and the agreement on Provisions (net) and other gains Greece have given a positive tone to the markets, boosting (24) (48.8) (51.2) (47) (losses) the equity markets and moderating the country risk premium Profit/(loss) before tax 911 62.7 69.1 560 in the peripherals and in France. Against this backdrop, Income tax (255) 53.0 60.4 (167) Profit/(loss) for the year 655 66.8 72.7 393 everything suggests that the ECB is prepared to start a Non-controlling interests (66) 16.1 23.8 (57) normalization process, given the improvement in the cyclical Net attributable profit 589 75.4 80.7 336 situation and the disappearance of the risk of deflation. This imminent turning point has had an impact on the market: (1) specifically, long-term interest rates have picked up and the Balance sheets 30-06-17 ?% ?% 31-12-16 Cash, cash balances at central banks euro has gained against the dollar. 2,337 (10.1) (4.3) 2,600 and other demand deposits Financial assets 75,554 (8.6) (8.8) 82,666 In summary, the environment of low volatility, U.S. rates Loans and receivables 82,259 (6.5) (5.4) 87,988 anchored at moderate levels and the current stability of of which loans and advances to 58,622 (3.0) (1.6) 60,428 customers Chinese growth, have been favorable for emerging assets in general, including currency, equity and fixed-income. Inter-area positions — — Tangible assets 32 (9.0) (10.4) 35 However, some specific countries linked to commodities have Other assets 2,730 9.5 13.1 2,492 experienced some tension, slowed down by a change in the Total assets/liabilities and equity 162,911 (7.3) (6.7) 175,781 trend in the oil price. Financial liabilities held for trading and designated at fair value through 51,506 (6.0) (5.5) 54,785 profit or loss In the coming months an increase in volatility cannot be ruled Deposits from central banks and credit out in the face of expectations that abundant liquidity in the 38,832 (11.1) (11.9) 43,705 institutions markets will be moderated as central banks make progress in Deposits from customers 45,312 1.1 2.1 44,836 the strategy of switching to a less expansive policy. Debt certificates 481 (16.2) (15.4) 574 Inter-area positions 19,373 (19.1) (16.8) 23,957 Other liabilities 3,642 (5.4) (5.3) 3,850 Economic capital allocated 3,765 (7.6) (6.7) 4,074 Activity All the comments below on rates of change, for both activity relevant business indicators 30-06-17 ?% ?% (1) 31-12-16 and earnings, will be given at constant exchange rate, unless Loans and advances to customers expressly stated otherwise. These rates, together with changes (2) 52,991 (3.9) (2.4) 55,160 (gross) at the current exchange rate, can be seen in the attached tables Non-performing loans and guarantees 678 (16.1) (12.8) 808 of financial statements and relevant business indicators. given Customer deposits under (2) 37,419 (0.5) 0.8 37,616 management The market context remains unchanged, with margins Off-balance sheet funds (3) 1,367 18.1 27.0 1,157 squeezed and surplus liquidity. lending (performing loans Efficiency ratio (%) 34.4 37.7 under management) has remained flat since March 2017 NPL ratio (%) 0.8 1.0 (up 0.1%). However, there has been a decrease of 2.2% NPL coverage ratio (%) 89 79 year-to-date. Performance has varied by geographic area: Cost of risk (%) 0.10 0.12 outstanding growth in the Rest of Europe, Asia, Mexico, (1) Figures at constant exchange rate. (2) Excluding repos. Argentina and Chile, and a decline in Spain, the United States, (3) Includes mutual funds, pension funds and other off-balance sheet funds. Colombia and Peru.

JANUARY-JUNE 2017 AnnEx P.45 As regards asset quality indicators, the NPL ratio has the transactions completed in the first quarter, it has improved on December 2016 and remains stable with respect participated in the biggest IPO so far this year in Spain to March 2017 (0.8% as of 30-Jun-2017, 0.8% as of 31-Mar- (Gestamp); while in Europe BBVA has been present in 2017 and 1.0% as of 31-Dec-2016), and the NPL coverage the most significant transactions in the market, such ratio closed at 89% (93% as of the close of the first quarter of as the IPO of ALD Automotive in France and the capital 2017 and 79% as of the close of 2016). increases of Deutsche Bank in Germany and Credit Suisse in Switzerland. There has been a fall of 2.6% in total customer funds over the last three months, strongly focused in Spain (down From the point of view of mergers & acquisitions (M&A), 2.9%) and the Rest of Eurasia (down 41.5%). The rest the second quarter continued in line with the good outlook of geographical areas have reported significant growth. of the previous quarter, thus closing a good half year, However, there was an increase of 1.5% year-to-date thanks both in terms number of deals and their volume. There to their favorable performance in Mexico and South America. is still a great deal of liquidity and interest on the part of international investors in investing in Spain and Portugal. The M&A market continues to take advantage of results low interest rates and the good performance of the CIB posted a net attributable profit of € 589m in the first half Spanish economy. of 2017, 80.7% up on the same period of 2016. This is mainly In addition, BBVA has demonstrated its leading position due to good revenue figures, contained expenses and a lower in green finance with the start-up of the green loans plan, level of loan-loss provisions. The highlights of the income following the success achieved in recent years with the statement are summarized below: green bonds format. Interest in the green bond market is Year-on-year increase in gross income of 13.1%, thanks expected to grow among issuers and financial institutions, to the results of managing market volatility, above all which will have increasingly major quantitative and during the early part of the half-year, and the positive qualitative goals in terms of sustainability. BBVA believes performance of activity with customers. The good in and is committed to this growing financial market. performance of this item is bolstered strongly by the Deep Cumulative operating expenses have declined by Blue commercial initiative, whose aim is to proactively 1.0% on the same period in 2016. The keys to this figure and selectively promote potential covered operations in a continue to be a slowdown in the growth of personnel context of acquisitions. and discretionary expenses, and the increase in costs the associated with technology investment plan. The corporate finance business in first half of the year was characterized by a high level of activity and Lastly, it is worth of note the lower impairment losses on significant marketing effort, thanks to which BBVA financial assets with respect to the first half of 2016 (when has won numerous mandates, some of which will be there were increased provisions arising from downgrades completed in the coming months. in the rating of oil & gas companies in the United States, The above all in the first three months of this year). Equity Capital markets (ECM) unit has continued very active in the primary equity market. In addition to

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

|  |  |  | Banco Bilbao Vizcaya Argentaria, S.A.
Date: July 28, 2017 |  |  |  | By: |  | /s/ María Ángeles Peláez
|  |  |  | Name: |  | María Ángeles Peláez
|  |  |  | Title: |  | Head of Group Financial Accounting