Banco Bilbao Vizcaya Argentaria SA (BBVA) 2013 Q1 法說會逐字稿

Good morning to everyone.

Welcome to this webcast presenting the BBVA Group earnings for the first quarter of 2013.

The presentation and explanation behind the earnings will be given by Angel Cano, who is the Group's President and Chief Operating Officer, then immediately afterwards we will have the Q&A.

And Manuel Gonzalez Cid is here to accompany us on -- our CFO.

And any questions that can't be answered during the webcast, as always, will be covered by the Investor Relations team some time during the rest of the day.

Good morning everyone and welcome to this presentation of the BBVA Group earnings for the first quarter of 2013.

I think it would be a good idea before I start to go over the highlights for this quarter to also go over some of the comments that we made during the presentation for the 2012 year and earnings when we talked about how we expected 2013 to roll out and the main tendencies we were expecting.

To start with, we talked about one concept which was that it was going to be a year of transition and we'd see a big change between the performance in the developing and the developed economies.

And talking about Spain, we said that in Spain we were still, and we will see this when we talk about the first quarter, we're still going to be seeing a drop in lending volumes because of the de-leveraging that was going on here.

And we'd see that in many different sectors.

We also talked about non-performing assets and we talked about this slight rise that we will be seeing in NPAs for the Group as a whole.

But above all that was because of the growth in NPAs in SMEs.

And we said that in 2013 we'd probably see that there would be more net additions coming from SMEs, and above all from very specific customers.

And the other thing we were looking at was that the behavior of the main lines on the income statement in 2013 was going to gain steam as the year went by as the impacts of the reduction in retail deposits went down and also as wholesale funding became less costly and also as we got the synergies from the (technical difficulty) between BBVA in Spain with Unnim.

And then looking at things from the USA viewpoint, what we expected to see there in 2013 was that the business would continue to be very much influenced by the low interest rates that we are seeing at the moment, and we know that this environment at the end will normalize but we're not quite sure when.

Will it be in 2014?

Will it be in 2015?

But in 2013 we're definitely not expecting interest rates to rise significantly in the US area.

And we said this at the end of last year.

We were expecting to see earnings again and business gaining steam and growth increasing as the year went by.

And then in the emerging economies quite apart from what we will be saying when we talk about the highlights for the quarter, we thought that there would be positive growth in Mexico and in South America which would be able to cover the inter-quarter impact of the de-valuation in Venezuela which obviously affected the quarter-on-quarter earnings.

So now we can move on to the presentation.

And I want to point out that we've had a positive impact on our earnings from two one-offs that the market knows, the sale of the pension business in Mexico, which has been booked to this quarter, and then the life insurance business, here in Spain.

So those two transactions have been booked to this first quarter.

So we've got high earnings because of those two impacts.

But anyway, when we look at the main lines on the income statement, quite apart from these one-offs, we're still seeing how resilient our revenues and all the other items on the income statement are giving us a very robust income statement with the gross margin, gross income of EUR5.4 billion, and that's up 3.9% year on year.

And if we look at risks, earlier on I was saying that we're just incorporating the impact of the NPAs in SMEs here in Spain.

But in general we can say that it's in line with what we were expecting to get out of the beginning of the year.

So there is a slight worsening in the NPA ratio which has gone up from 5.1% to 5.3% whilst coverage ratio remains about the same as what we had at the end of last year.

In capital we're talking about a quarter with a big increase.

In capital we will be looking at two things here.

First of all capital gains on the one-off transaction in Mexico and then the generation of organic capital over the quarter which led to us to generate 42 basis points over the quarter.

And then finally liquidity.

We are really shoring up liquidity in this quarter, above all in the euro balance sheet, about EUR10 billion, nearly EUR10 billion reduction in the liquidity gap this quarter.

So the highlights are that we are doing well on all of these parts of the screen.

What's the most significant about what's going on, well, we're keeping up a high level of gross revenues well-supported this quarter with net trading income.

Net trading income is incorporated when we're talking about the net interest income with low interest rates, so that's pretty normal and to be expected.

We've also incorporated capital gains from two one-offs, the sale of the pension business and the life insurance business here in Spain.

And at the same time we've got some adjustments which were made.

First of all because of the way that we booked China under the equity accounting method and then the CITIC results of the year end, we're impacted by new regulations, and that meant they had to increase their generic provisions and so we wanted to anticipate the impact it would have up to 2016 so that that would be booked to year-end accounts in 2012, and that has an impact on this quarter.

We've also taken advantage to increase our provisioning, as I said before, with very specific customers knowing exactly which books we were provisioning and very often do with real estate.

And also we were able to absorb the quarter-on-quarter impact of the Venezuelan devaluation between year-end last year and this first quarter.

So now looking at the main lines on the income statement.

Obviously we're seeing very resilient performance.

And right from the net interest income we can see how this trickles down into the rest of the account.

Once again, net interest income has growth 0.8% quarter on quarter, and this is clearly the outcome of the business model based on diversification, which is generating recurrent earnings over time.

The interest income in the emerging markets is going up, about 12%, and this tendency is leading us to get a gross income which is also growing positively, nearly EUR5.5 billion, growing nearly 4% quarter on quarter.

The net interest income plus fee income, which is the most recurrent business really has also shown year-on-year growth of 0.4%.

Consequently we're continuing to see this very resilient performance of our income statement.

It's the outcome of the diversification that we've got in the Group.

We're talking here about gross income of which 58% comes from emerging economies which are growing over 9%.

And 42% comes from the developed economies.

If we look at it in geographic terms, Spain is still 30% of the total gross income for the Group.

Mexico is now 28%.

And South America 24% of the total.

That means that very clearly the emerging markets are the driving force behind the growth in revenues.

On the cost side of things, there we have had selective cost management depending on whether we're talking about the developed or the emerging economies.

In the developed economies we're talking about pretty flat year-on-year changes, 0.9% with EUR9 million increase year on year in costs.

And we've also got to incorporate 5 points because of the change of [parameter] with Unnim coming into it, and that's an increase of EUR78 million.

So that's a contribution to the expenses of the Group in this quarter whereas last year we didn't even have that.

So we could say that in terms of the developed economies we are definitely keeping our costs under control, and our outlook is to expect to see further reductions over the next few quarters.

Looking at the emerging economies there we are accompanying the growth that we see in these economies where we want to invest in organic growth in Mexico, Colombia and Chile, and we are investing in regions where we still need to open more branches and increase our number of ATMs, and opening new branches means also that we are employing more people.

So we want to accompany the growth in these economies.

But when we talk about some countries, in particular we will see that in some places we are expecting them to self-finance the growth with internal efficiency.

So with that performance of the gross operating income we get net profit pretty well flat compared to the last quarter of the previous year, EUR2.7 billion.

And once again with this tendency it's very similar to what we saw in operating income when we were looking at the distribution over the different countries.

Spain, instead of accounting for 30%, it's 28% here.

Mexico is 31%, South America 25%.

And the countries have the same tendencies that we've been seeing over recent times.

So this, I repeat, is the hallmark of our earnings this quarter which give us this structural strength and the possibility to recurrently generate operating income, which means that we can then cover all the provisions that we have to set aside.

So taking into account these levels of revenues plus the one-offs that I have already mentioned, we can see that provisions have consequently gone up.

We increased the volume of provisions over this quarter so that they've grown 26.3% year on year.

And the main focus here is to provision our portfolios with SMEs here in Spain.

The ratios show us an increase in NPA ratio for the Group to 5.3% and coverage ratio is about the same level.

And NPAs have, including the incorporation of Unnim has been going up very slightly but mainly again that's from SMEs and some from the real estate market.

But the main increase year on year has to do with incorporation of Unnim.

So that gives us a net attributable profit of EUR1.7 billion.

Obviously here we have to include the -- we are including the one-offs I've already mentioned.

So what's most important here is to highlight what I said before, the reccurency and the stability of the net interest income, the gross income which are really the underlying performance, the real performance of our management.

Then in terms of capital, we were expecting to have a lot of new capital coming in, 42 basis points came in, which means that our core capital ratio under Based 2.5 is -- went from 10.8% up to 11.2%.

Apart from that we've also got the rest of the capital gains which have to be booked coming from the sale of the rest of the pension business in South America.

And anyways we said at the end of 2012 our internal target was and continues to be to be at around 9% and Basel III fully loaded.

In our liquidity there is not much to say, it's getting stronger and stronger, our ratios are improving, taking advantage of windows to issue this onto the market with the repayment as well of our LRTO to the European Central Bank.

So resilient revenues mean that we get year on year growth of 4%, and that comes from the diversification of revenues also we had in the Group, 58% coming from the emerging economies, which means that bringing in the one-offs we get a net attributable profit EUR1.7 billion which also boosts our capital ratios.

Our core capital ratio is now up to 11.2% under Basel 2.5 and our aspiration is to get this 9% under Basel III fully loaded by the end of this year, 2013.

Liquidity is getting stronger and stronger quarter by quarter.

And in terms of our risk profile I'd say everything is under control.

Where we are focusing at the moment is on SMEs above all here in Spain.

I also talked about the other non-core divestments.

We've already signed off the key transactions, one's already been booked at the first quarter, that's in Mexico, there we've got about EUR0.8 billion.

There is an upfront payment made in December which was booked at the December accounts, but most of this EUR800 million have been booked to in -- to January.

All in all, we have EUR1.8 billion in proceeds of which EUR1.7 billion will be booked this year.

Mexico first quarter, Colombian and Peru will be put, booked in the second quarter, and Chile because of certain additional authorizations that we need to get will be booked to the third quarter of the year.

Anyway, the outcome of these divestments is that we've got an improvement in our core capital of 51 basis points.

Okay, then now let's have a look at the different business areas.

And as always we'll start with Spain.

Business activities in the quarter, Spain has been affected by bringing in the Unnim balances which means that our lending has gone up by 3.6% and we can see how the investment is if we take out Unnim we're closer to a fall of almost 5%.

But deposits are still behaving better than the lending side, and that is why we continue to improve our liquidity ratios.

If we look at the margins now, it means that falling between 8% and 11%, as we can see on the slide here the spread between -- customer spreads in this quarter has improved in comparison with last quarter, but if we compare it with Q1 of last years there is a fall of over 30 basis points, and this is because we haven't entirely taken onboard the cost of the retail lending.

And as I said at the beginning, the margins in Spain will pick up steam through the year and they will be closer to 12%, 13% negative than the levels we were seeing here on this slide.

If we look at the market share, despite the fall in business activity we've gained between a 180 and 190 basis points between lendings and deposits depending on the headings.

So I think the dynamics are pretty good in our bank management business here in Spain.

The NPA ratios, as I said, the trends are the ones that are spread to the group because most of them are businesses based here in Spain, the increase of 4.3 in our NPA ratio without real estate.

And as we can see the real estate has dropped [48.8%] to 46.6%, and all the other NPAs has dropped 4% to 4.3%, and these three decimals, these three tens can be explained basically by the SMEs.

Provisions, if we take out the dark part of the bar graph here, which are the provisions for (inaudible) in 2012, this term we've got more provisioning than the previous quarter because we've set aside more money for provisions.

And if we add in with the real estate provisionings then we're talking about nearly EUR800 million in this quarter in provisions.

And this takes us to our banking business income status that's generating EUR569 million, and the margins that we've seen before that have been affected negatively because of the two items that we have to add in, which is the impact of the fall in the cost of deposits and also the synergies as of the second quarter of our merger with BBVA Spain with Unnim and on the way we're still generating gains in market share.

The second key or the second part of the business in Spain is the real estate business.

And the first thing we're looking at here is a net exposure, once we take out the provisions that we've already set aside for real estate, and we're talking about EUR18 billion at the end of 2011.

And we've ended up with EUR15.4 billion at the close of this quarter.

So you're talking about a fall of -- a 15% fall.

But it's also true that in 2012 in net entries we've added EUR1.4 billion from our assets from Unnim, our Unnim assets.

And then what -- I think the rest of the year what we're going to see, this trend in reducing our exposure as a whole to real estate, both lending and the asset side will continue to fall, which takes us to the income statement with losses at the end of the quarter EUR346 million.

Basically I wouldn't extrapolate this by fall for the whole year.

I think the trend that we're going to see is what we have mentioned at the end of last year, that around EUR700 million, EUR800 million in loan loss provisioning or losses due to the adjustment we have to make in the prices of our real estate assets.

You could say that the acceleration process that we were seeking for in our sales is -- [whatever the ceiling] was sold over 3,000 units at the end of this quarter which is 2.7 times what we sold last year at this date.

So we're talking about an average of over 1,000 units sold a month.

So I think the sales rhythm is picking up speed, and it's up to cruising speed in these three months.

And as we've done at the close of this month, what we're going to do is try and mark all of these assets at market prices and sell them in the market at market prices.

The rest of Europe and Asia now.

We have the gross income here which shows a fall of over 4%, over EUR500 million.

This is due to two affects, on the one hand the positive growth business in Turkey.

Yesterday they presented their results with fantastic growth there, both in lending and in deposits.

We're talking about growth in Turkey in lending in guarantee of 18% and 13% with excellent performance in this, the customer spreads, and this has led to major growth in the main lines of the income statements in Turkey, and this is offset by the effect that I managed of the adjustment of EUR100 million and the equity accounting this quarter.

So in the end this quarter we're talking about the dividends that we hope, we expect to collect from China.

And this is associated with the provisions that we've set aside in advance and what we did at the end of last year and which we reported in March, and this leads us to the income statement starting with just over EUR500 million in gross income with attributable profit of EUR778 million.

And there are two things here, there is a retail world and the one-off concerning the equity accounting of our share in CNCB.

Mexico now, continues to grow well within growth of between 6% and 7% in their business both in deposits and in lending.

And the customer spreads, we've seen a fall of 50 basis points in the benchmark rates this quarter, and in the end this means that the different margins are growing at the same rate as the business itself.

Costs have gone up at the same rate as revenues.

So this -- we don't have an [open door] in the spreads, so we're seeing growth in the operating income of over the 6%.

Revenues, they have covered the NPA ratio, has dropped from the maximum ceiling we saw last year, and the coverage rate continues to grow as it has over the previous quarters.

The cost of risk is stable, more or less at the same levels as we saw in last few quarters, which takes us to the income statement, which as I said before, the operating income of nearly EUR1 billion, which is a growth of over 6% which takes us to a pretax profit of over 4%, over EUR460 million, and year-on-year, this is an excellent result.

And down at the bottom we see flat growth here, and this is because of the interrupted operations that were associated with adding their pension business last year which we don't have this year because we've sold that, so the trend, as we can see, is still positive.

In the rest of the income statements, South America, business continues to grow maybe not quite as much as we saw last year, but we can see that lending has grown by over 15% and deposits by over 20% which leads us to net interest income as close to 11%, 17% and 15% depending on which one you are talking about in the main ones, in the gross income and the operating income.

The NPA ratio, there is nothing special to highlight here, the same with, we're talking about just over 2% in the region, and the coverage ratio is over 140% as we've seen in recent quarters.

And here, if we look, when we see the income statement we will see that provisioning has reduced the profit because of the operating income, because of the behavior and the provisions between the first quarter this year and the first quarter of last year.

But the provisions of this quarter are in line with what we have seen over the last three quarters of last year, which takes us to an operating income of nearly EUR800 million and, as I said before, with a growth of 15% which enables us to book profits before tax of almost EUR600 million, which is 6% growth because of the provisions that it behaved worse than last year or performed worse than last year, and we've added these discontinued operations this year.

And we look at the net profit because of the -- if we look at the pensions business last year, and this explains the difference, and this accounts for the fall in the contribution from the pension business in the first quarter of this year, we're talking about nearly 19% which means that the attributable profit is EUR348 million.

But what we do continue to see is the resilience, a sound performance in the year from South America.

Moving on to the United State now, business activities, as we can see, is behaving very well, is performing well, and lending has increased by over 9% -- 8% and deposit by over 10%.

The business has increased in residential real estate, but the customer spreads, in particular the business spread continues to fall, this is what we have seen basically this quarter when on the deposit sides with such low interest rates, there is very little elasticity which leads to this fall in the customer spreads, and this is passed straight on to our margins, but in any event the margins that we can see here which you're talking around 10%, 8% and in -- for the operating income you talk about nearly 20%, continue to perform this well, although the expectations that we have, as I said at the beginning for the year as a whole and this is something we will see over coming quarters is we'll see how these margins are going to pick up steam.

And we might be able to see by the end of the year.

And operating income might become positive, year on year, because the cost, as I said before, for the Group as a whole have fallen about 1.4% year on year.

So our balance sheet is very is very sensitive to interest rates.

Risks, once again in the United State we have an NPA ratio below 2%, we've delivered, this is the geography with the best NPA ratio of all, and with negative net entries in recent months, the coverage ratios has gone over 100% and the loan loss provisioning is stabling off in the cost of risks at a very low rate.

And obviously this is in consonance with what we're seeing in the net entries in NPAs, so attributable profit of around EUR100 million.

The greater sensitivity of the business here is to future interest rates.

So that is the different business areas.

So let's go to the main conclusions.

Structural strength in our earnings, resilience, despite the complex environment, and this is thanks to the business structure that we have and the diversification we have between the emerging markets of 58% and the developed market to one-off operations that have made their, let their print on this quarter which is the sale of their pensions business in Mexico and the life insurance business here in Spain, and what we've done is changed the equity accounting, and also there is a devaluation in Venezuela which means we have been able to raise the capital ratios significantly by 42 basis points this quarter.

There is no news on the risk side.

The focus is still on SMEs, and this is something we're going to continue to see in coming quarters, but the risk indicators seem to be stable.

And liquidity, as I said before, we are strengthening our position as we have been over the last few quarters.

So from now, I think what we can do is to move on to the Q&A session.

Thank you very much, Angel.

As we always do what I'll try to do is to put the questions together in groups so that we can answer as many questions as possible.

So we will start with questions about funding and liquidity.

Ignacio Cerezo of Credit Suisse and Carlos Peixoto of BPI asked about how high is the BBVA's dependence on the ECB, and what is the sum of our ALCO portfolio in Spain?

If we look at our position with the European Central Bank, as we disclosed in the annual earnings presentation for 2012, we managed to reduce this by 50% including positions which we brought onboard with Unnim.

So our position, our net position now with the ECB just in LTROs is about EUR14 billion.

As to the assets and liability is committed portfolios in Spain on the euro balance sheet at the moment incorporating the figures from Unnim we will talking about a total position that's EUR35.5 billion, which comes from an end-of-year position of EUR37 billion.

So the position has gone down EUR1.5 billion over the quarter.

And this change has been generated with a reduction in our positions coming from Unnim and from sovereign debt, which we already had about EUR3 billion with other positions taken in non-sovereign securities of about EUR1.8 billion also denominated in euros so the moment the maturity would be EUR2.7 billion, and it means that we have protection of the deposits that we have on our euro balance sheet taking into account the environment that we have in terms of interest rates but over the quarter we've seen a reduction of exposure here with these portfolios although with the de-leveraging and the low interest rates that's the level that we considered suitable.

Now coming on to capital, three questions first of all Britta Schmidt from Autonomous, Mario Lodos from Sabadell and Rohith Chandra from Barclays, Ignacio Cerezo from Credit Suisse and Carlos Garcia from Societe Generale ask first of all about the impact of the CRD IV standard on small- and medium-sized enterprises, so that's exactly how much risk will that entail.

Second question, an update on the impact of Basel III on the core capital, both in terms of fully loaded and phase in.

And then the third question, several analysts apart from those I have already mentioned are asking about whether you could give a bit more color on with respect to the news that came out on Reuters yesterday about forthcoming Tier 1 related issue.

And so -- and if you could talk a little bit about conditions if possible.

Do you want me to talk about the impact of Basel III and you can answer about CRD4 and the Tier 1 operation.

Basel III, I said in the presentation that our objective, and this is what we're working to, is to by the end of the year 2013 is to have around 9% fully loaded pursuant to Basel III.

When we talk about the impact of moving from 2.5 to 3 under Basel III, the impact on deductions, our best guess is going to be 335 basis points, and there are several items that take into account it, and maybe I should highlight one of these.

In our tax assets the DTAs within these 335, there is one line which is tax credits themselves beyond the deferred tax assets, and these are tax assets that will never be added to the deductions because they will be offset before the stipulated phase-in period.

So they will never have an impact here.

But of this 335 basis points that I mentioned, 100 basis points are associated with the negative tax basis or the tax credits -- and about 90 are related to the investments in our share in China, that's the data basically.

But by the end of the year, as I said, we should have 9% fully loaded as I say.

The impact of the final draft of the European capital rules with regard to the -- risk-weighted assets in SMEs, in the preliminary estimations we have we're talking about EUR1.7 billion in risk-weighted assets.

From the point of view of the second question, the announcement that Reuters made yesterday concerning a possible Tier 1 instrument, basically BBVA along with many other banks with (inaudible) have been asked to issue what is known perpetual additional Tier 1 security.

This is a Basal III requirement, so you're talking about perpetual fixed income which can be changed into equity and certain conditions.

Traditionally these are called cocos but this time they are Tier 1. And what we're reporting is we're starting the process.

But until a few days or weeks have passed, we don't really know whether this deal is going to come off, we don't know exactly what the coupon is going to be or the final amounts that are going to be issued.

We were talking about a benchmark issue.

Neither do can we confirm that it's actually going to occur, so what we're doing is a market prospection with the idea to assess the value of these instruments.

The reason why we are thinking about issuing a Tier 1 Basal III, if you remember a significant part of the reconstruction of our core capital levels is comparable with the European average despite the fact we are the -- we have the highest density of risk-weight -- risk asset over total average assets in Europe, and part of this effort was made by swapping preferred issue, basically DT, for a convertible and mandatory convertible bond, which at least means there is one convertible issue pending in June for a total initial amount of EUR3.5 billion.

This means that the remaining Tier 1 that we have is only EUR1.8 billion, and it's not Basal III with finance either, so it will gradually lose its eligibility over time.

So -- and if we look at the deductions, Tier 1 deductions that we have at the moment, these exceed the deductions that we have Tier 1 by about EUR900 million, which means that these deductions are not going to Tier 1 but rather to core capital as will happen under Basal III.

So our core capital is EUR900 million less than what it really is.

Because of this, the excess deductions that we have in the Tier 1, and this is penalizing our core capital, this EUR900 million, you're talking about 30 basis points of core capital.

And as the COO with the Basal 2.5 without this Tier 1 limitation we will be talking about 11.5% capital ratio.

This is also too, has an effect on our core capital.

These are regulatory capital requirements today.

Moreover, this Tier 1 we want to -- we wanted to be eligible in the EBA as a buffer.

And, as you know, in Basal III, the directive talks about a total, a maximum bucket of 1.5 of risk-weighted assets over total average asset.

It has to be perpetual, it has to be discretional in the payment of the coupon, and it has to be able to absorb losses.

And in our case what we're defining is a convertible instrument at a market price with a minimum conversion price that will be established in hand, in advance but only in very negative circumstances, and we're a long way from that in our capital ratios.

So the logic of this operation for us is to generate core capital at significantly -- core capital at a significantly lower rate without penalizing our shareholders unless we become highly insolvent.

And the same time we are strengthening our main capital and adapting to Basel III.

And I think this is good news for our shareholders, and those who have seen the unsubordinate debt and also for our depositors because moreover we're talking about an instrument that will be highly attractive for investors.

And finally, we hope that this instrument, if we end up going ahead with this operation, will be well-accepted by the rating agencies.

Okay, moving on now to Spain, several questions concerning the net interest income, Rohith Chandra from Barclays asked for more information concerning the performance of the net interest income in 2013.

Britta Schmidt from Autonomous would like information on the impact that a potential additional real legislative decree number three would have.

Britta also asks about the -- a guidance for the contribution to the deposit guarantee fund and the change in legislation with regard to a one-off contribution, how much is this going to be, how are we going to absorb this?

Mario Lodos from Banco Sabadell asks about what factors would justify the good performance in the net trading income in Spain in Q1 2013.

And finally, this first block about Spain, David Vaamonde from Fidentiis has a question about the effort that's been made in this first quarter with regard to term deposits.

And his question is, is there any -- are you worried at all about what could happen in the market, in the coming months or do we want to get ahead of other -- the curve in restructuring, get ahead of other banks.

Can we see this flight to quality, this internal flight to quality in Spain?

So these are the first questions regarding Spain.

Well, let's start with net interest income for 2013 then.

As I said in the presentation, the first quarter performance will probably be the worst of the whole year with the biggest falls that we'll see throughout the year.

You should think that right now we're comparing against the best quarter in terms of deposit costs of all of 2012.

In 2012 we saw the price of deposits going from lower to higher.

And in the second quarter was when we started to see the price of deposits going up again.

So with this year, mainly since February rather than from the very beginning, we've seen an across-the-board drop in the cost of deposits, above all 70 basis points drop for us over the last two months of the quarter.

As I was saying before, in terms of the performance of the net interest income for the rest of the year, we'll see improvements in the year-on-year drop.

And we should reach levels which will be closer, well, minus 1, 2, 3, and we think that by the end of the year we'll probably be at about same level last year.

And in terms of a possible new royal decree, at the moment we haven't heard that there is going to be any new one.

We know that there is an MOU which includes some things that have to do with provisioning, but to-date we definitely haven't been given any indication from the ministry or from the Bank of Spain that would lead us to expect to have anything coming out.

So to-date that's what we know.

And as to contributions to the deposit guarantee fund, the royal decree talked about the incorporation of an extraordinary contribution, and for us if it comes out and in the first 20 days of 2014 if we have to pay a third of the total for BBVA, our best estimate would be about EUR120 million.

And then what the royal decree would make it possible for the board of the deposit guaranteed fund to do would be to alter the term.

So we'd have to see when the rest of the contribution would be, which would be about EUR180 million, and that could probably be staggered over a seven-year period.

Maybe Manuel will talk about net trading income.

And then in terms of term deposits we are gaining market share and deposits in general without talking about specific figures.

And that means an increase of our market share in deposits, and at the same time we're seeing this drop in the price of the deposits.

So in summary I can say more deposits, more market share and above all more customers, more customers.

And there has been a big change of tendency compared to 2102.

And our explanation is that apart from the fact that the technology platform is now up and running and services have improved that we are offering our customers.

And we've also got that flight to quality you mentioned in the question.

And that is clearly leading to an improvement every single month.

And so maybe you can talk about net trading income Manuel.

And it's really what we've said anyway in the presentation, with such low interest rates as we're seeing in Spain and in the United States the contribution in net trading income tends to go up which has to do with the coverage that we've got in the balance sheet for the Group as a whole.

And that is one part of the explanation at least.

Thank you very much, Angel.

Indeed as the COO said, it's clear that on our portfolios we are positioned for the kind of scenario we've got, so when you get this scenario in the market the reaction is to accumulate capital gains with a proactive management of the portfolios that had lot of volatility on the market.

So we have to have very proactive management of these books.

And that means that we are often realizing the gains.

But whilst the market environment continues to be as it is we will continue to have the possibility of generating net trading income with these low interest rates.

So that's the main message that you can take home from this.

The other factor that comes into the net trading income figure is what we're doing in restructuring the Unnim books to reduce our exposure, to bring us into our target levels for risk profile.

And especially to move away from the sovereign debt and from the private customer risks.

And that explains the NTI performance this quarter and also the figures that we've been reporting over previous quarters.

But basically it's what Angel said, that is to say we've got low interest rates on the market.

And so it's only normal for these portfolios to protect our gross income.

And with the de-leveraging and the low interest rates I think we can explain a lot of this.

And we also have talked about business volumes in the markets area.

In global terms for the Group, the contribution to the bottom line is positive at gross income but between net interest income and NTI in the first quarter of the year or over the last couple of months really.

Although -- yes, and also in April we are seeing a growth of NTI and a drop in the net interest income, but you couldn't bring them together which means that gross operating income is growing against the previous year.

This is positive in Europe and in Spain definitely, in Mexico and South America and flatter in the United States.

So you should incorporate that because that gives us greater stability because we are incorporating the NTIs into all these different areas.

Continuing then with Spain, three questions, the first one from Daragh Quinn from Nomura regarding the latest unemployment figures here in Spain, over 27%, which is the most adverse scenario reported in recent times.

How could this risk lead to an increase in provisioning here in Spain?

And then connected to that question, how much can, well, what estimates do we have for the economy in Spain in 2013 to avoid the recession that is predicted for the rest of the year.

What's our best guess of what the macro economy is going to do here in Spain?

Jaime Becerril from JPMorgan asks about the estimated impact that we are expecting to see in Spain with the new mortgage law, have we got any value that we can place on that impact?

And [Backo Ricke] from [End Plus One] although I think the COO has largely answered this regarding change in the legislation, asks whether we think there might be a change in regulations on provisioning specifically for refinance loans here in Spain.

So there are three questions, unemployment, how it might affect us, then refinance loans, new regulations, and the impact of the new mortgage act and how that might impact us in Spanish franchise?

Starting at the end, as I've said before, the final question we have no further question than the market has.

Our information on exposure to refinancing, at the end of 2012 we gave this information, and we will once again at the end of Q2.

There's not usually any major change in six months, so we will provide that information twice a year in December and in June.

And basically we have no further information of any potential changes in regulations.

The MoU sets out possible changes in the definition or provisions but to-date we do not have this information on the table.

Unemployment data, the figures is very negative if you take it at itself we took about 27% unemployment rate, but if we look at the expected trend for this rate, this is something we knew had to continue to climb, and maybe the upside of this is the increase in the unemployment rate is slowing down if we compare it with last year, but what is true is that we still need stimulus measures, measures to stimulate the economy so that we can start generating jobs as soon as possible in normal conditions.

While the economy doesn't grow it's very difficult to see any fall in the unemployment ratio, and from what we know from the performance of the economy in 2013, and this is inline with our forecasts, we're forecasting a fall of 1.1% in the area as a whole and we can't see any growth until 2014.

And at the moment we're estimating growth of 1%, 1.2%, 1.3% for 2014.

So to see a fall in the unemployment rate we have to see an increase in the growth, which we don't think is going to happen this year, we think it won't happen until next year.

When growth starts in the economy, then in the large companies have always insisted on the need to bring in greater reforms that will stimulate the economy and promotes job growth as soon as possible so and that's what we're seeing.

The impact that these increases may have, as you say we have taken these into accounts on our provisions, and we can't see any change in the trend in the private and individuals, and where we are seeing more clearly is the deterioration in SMEs, that's our opinion of the -- on the information available.

And when we get further information of the effects it will have then obviously we will factor this into our financial statements.

Now, if you'd like to talk about the mortgage act, Manuel, and the impact that this may have.

In my understanding the question -- I think the question is talking about the mortgage act that's been adopted, and this affects four major aspects, and that is the suppression of evictions for two years for families in danger of exclusion.

Especially the limit of arrears interest that can be charged, there is -- a ceiling has been placed on this, a modification is also, in the civil procedure to improve the foreclosure procedure to enhance protections for people involved in these processes, and then as the code of best practices established especially in the threshold of the exclusion defined by the regulations.

In short, we're talking about a new law that contains some very far-reaching impacts to protect the most vulnerable people in this crisis and to enhance the protection they have, but without making it more difficult for people to access housing nor to threaten the rule of law or legal security in the country with regard to mortgages, et cetera.

As for evictions, we have to recognize that this is a serious, a very serious problem that affects 0.4% of our mortgage customers.

We are very sensitive to this, and we are dealing with specific solutions, but this is the scope of the mortgage act that's been adopted and enacted.

When we talked about the perform -- the cost of performance, one thing I didn't mention is one line that generates an increase, especially in Spain, is one -- and one sum we've set aside for social plans and one of these concerns all of this, and that is how we can help families who have risk of exclusion so that they can pay a social rent.

And in a different social class that we've launched this quarter, others concern job creation, we're trying to create 10,000 jobs working with the SMEs and larger companies that work with the bank, so over the next two years we're hoping to generate a minimum of 10,000 jobs.

This means that this quarter that we have some [30 million quarters] that have been added to costs, but this is to cover the social impact of unemployment that we're seeing because this is certainly the most negative figure that we've seen, because before people lose their houses they lose their job, and this is what leads to it.

So what we need to do is to try and generate more jobs.

Okay, credit worthiness in Spain, several -- or credit quality, there are several questions, Rohith Chandra from Barclays, Ignacio Cerezo from Credit Suisse, [Adrea Gwen] from Mediobanca, Frederic Teschner from Natixis and Carlos Berastain from Deutsche Bank, Juan Pablo Lopez from Espirito Santo, [Lato Sanchez] from [KBW].

There are two or three questions all aimed at the same subject.

First of all, the doubtful assets have growth this quarter, NPAs have grown, so the question is are we seeing some sort of impairment in the mortgage portfolio, or basically is the impairment in SMEs?

That's the first question.

Question two, what is the outlook for provisions for real estate throughout 2013?

Will there be a normal ground rate, about EUR650 million, EUR700 million which is what we have been seeing in recent years.

Question three, about our outlook for the cost of risk both for real estate assets and also for non-real estate loans.

And question, the next question is what is our sales policy with regard to selling real estate assets?

And how much impairment do we expect to have to absorb this year in our real estate portfolio?

And the final question, and I think this includes everything that's been asked, the question is whether we can give some more details on the coverage of the different segments of our portfolio in Spain.

There are a whole lot of questions.

Shall we share them out, Manuel?

You can talk about the cost of risk or the risk premium in real estate and non-real estate.

And NPA ratios.

NPAs increased two-thirds, one-third more or less in Spain, above all SMEs two-thirds, and then one-third would be real estate.

So the non-performing asset ratio as you saw, when we talk about Spain, reached 46%, 46.6% which is 4.3% up.

So EUR500 million or not -- yes, not in EUR500 million is in real estate, and then the rest in SMEs.

And the provisions for real estate, the tendency of between EUR600 million, EUR700 million is exactly what we budgeted for and what we're estimating for the year as a whole.

And nowadays we're not expecting to see anything different happen.

We tend to say that from the beginning of the crisis from the peaks in 2008 there has been a drop of 35%.

Obviously, this is uneven over the different regions in Spain.

The north is quite different from the south here in Spain the way that that's performing, but we think that between 5%, 8% more drop would be possible in some regions in Spain.

What we do think is that from these peaks down to the end of the fall -- the fall could be between 42%, 43% overall including what we still have ahead of us.

So another 10% further fall could be expected.

And in 2013 we could expect that may be we get 5%, 7%.

But anyway we're not expecting to see anything very different from what you said, between EUR700 million, EUR800 million for the year as a whole.

Our sales policy, basically, as I said over the last two or three quarters, we are trying to create a strong business unit, a strong department with a good set of people working intensively on the reduction of our exposure to the real estate market.

As you've seen, we've said it in the presentation, there is a 15% drop in our exposure but you should also include the fact that in this period we've included EUR1.4 billion net from Unnim.

So the fall would even be -- seems greater.

So we had set up this business unit with all the necessary resources.

We are talking about a unit that now has about 800 people working for it on the different aspects.

Loans to developers recoveries, non-performing asset management et cetera, and we were talking about sales of about 1,000 units, so we were talking about 11,000, so by the end of the year with that monthly rate, and so our risk exposure to developers means that we are also selling properties which are owned still by the developers.

They are not actually ours yet, they are on the balance sheet of the developers that we have been financing.

So by the end of the year our target is to sell over 22,000 units both of our own assets and those of our developers, thereby reducing our exposure to developers and real estate.

Okay.

I'll talk about NPA's coverage, the different segments and such like.

Well, I think that in the documentation you've been given you've got a detailed explanation of the new reporting regulations in Spain, and I think that a lot of progress has been done with respect to planning and business management and internal control getting greater transparency so it's easier to interpret what our results in Spain are.

So you've got the results here in Spain in business in Spain without including real estate, which is what Michael was talking about, because that's his specialist area now that manages all our foreclosed assets and all of our exposure to developers as well.

And you've also got the data of our entire exposure to the real estate market which is managed by that unit, and there you can see, for example, that if we eliminate the data on the non-performing assets related to developers and the -- to the real estate market in Spain, as we defined it right now NPA ratio will be 4.2% -- 4.3%, and the coverage ratio is 50%.

So those -- that 4.3% NPA ratio corresponds to everything excluding our exposure to developers in real estates.

So we're talking about SMEs and small companies and individuals and well also larger companies because we include larger corporations there in fact.

So it's our exposure.

And there the coverage of the unsecured part of those non-performing assets is quite high because we've got all the retail mortgages which have high levels of collateral.

And as to developers, well, you can see all the details in the documents you've been given.

Whether they're on the watch list, they're foreclosed, the EVO with land collateral and with development collateral, we've got all the data there.

And then as to the cost of risk this year and the outlook for the rest of the year here in Spain, I just want to remind you that last year between loan loss provisioning and real estate provisioning we had EUR7 billion provisioning set aside this year as we've been saying since the year-end results were presented.

And as our COO said on the road show we're estimating provisioning in Spain for everything, loan loss provisioning and real estate provisioning to be about EUR3.5 billion for the year as a whole.

So we are still seeing very similar levels of provisioning as we were expecting at the end of last year.

We haven't really changed at all our outlook, everything that's happening, all the data that we are recording in the macro economy and microeconomic level in our books as well do correspond to the scenarios that we were expecting to see as of the beginning of the year.

Okay.

Now, changing subject matter, let's have a look at the questions we've got about the different subsidiaries and franchises.

So let's start with Mexico.

Daragh Quinn from Nomura, Carlos Berastain, Juan Pablo Lopez from Espirito Santo and BPI have asked about two things.

First of all, how is the growth in the loan book in Mexico performing, what's our outlook for 2013?

And the second question is what is going on and what can we expect in terms of the net interest income in Mexico?

First of all lending throughout the year of the loan book, what we saw at the closure Q1, as I said before in Mexico SMEs and consumer is growing but we are seeing a reduction in our exposure, this is developer exposure that we've seen over the last two years.

If we go back two years we would have seen a fall of 50% in our exposure to developers in Mexico, and in fact the total risk in Mexico is about EUR1 billion, is for developers.

So first of all we've adjusted that exposure.

We've also adjusted our business relations within the number of developers in Mexico.

Instead of working with 700 we now work with 150 selected promoters, that's the first point.

The second point is the performance in Mexico because of the liquidity that's available there as it is in South America too.

First of all this leads to -- it pushes prices down, so this pushes spreads down.

And there is another trend, and that is a lack of intermediation with -- instead of going to banks for credit we are seeing bonds being issued in the primary market, and that's the trend we are seeing.

So for 2013 as a whole I think we're going to continue to see how loans will grow as they have in the first quarter.

I think it's going to be close to double digit growth.

And its impact on margins, I think we are going to I guess see things picking up speed.

It might not pick up too much but we could reach 7% for the year as a whole.

The South America franchise, I have four questions on this, asked by Andrea Filtri, Mediobanca, [Nicos] from [Citic], Daragh Quinn from Nomura, Carlos Berastain from Deutsche Bank, and Jaime Becerril from JPMorgan.

First of all, are we concerned about the overheating that can be seen in this South America franchise in our business over there, are the growth ratios that we're seeing sustainable, that's question one.

Question two is more specific, more focused on the devaluation that's occurred in Venezuela, so what's the recurrent impact that we're going to see of the Venezuelan devaluation?

And question three, are we expecting any devaluation in Argentina?

And the final question, are there any outstanding adjustments in Argentina and Venezuela because of the capital restrictions that we are facing?

I'll repeat, first question is are the growth rates that we're seeing in the Latin America sustainable?

Question two, the impact on the accounts of the Venezuelan devaluation?

And question three, are we expecting a devaluation in Argentina?

And the final question, are there any outstanding adjustments to be made in Venezuela and Argentina because of the capital restrictions that we have seen recently?

Maybe if we want to talk about the sustainability of the growth in South America we have to talk about how we manage these things.

We have sound planning, well, as we do everywhere, which is, looks at risks in very general terms, liquidity risks, structural risks of all kinds and also, obviously, the risks on the loan book.

And so for each country we have a way of planning our asset allocation for the different countries, the different sectors.

Every sector is in turn related to the economic growth and performance of each sector.

So we get maximum growth in each sector and linked to that sector for each customer.

So we are very much on top of the growth of our lending in this region and everywhere else as well.

Apart from that, what we look at is the self-financing of the different countries.

So we look at the deposits, we look at the loans and make sure that they're growing at a similar rate.

And that means that we get really robust growth.

We've got limits, we've got alerts that get triggered in the sectors, in the countries, in the different risks.

And with the kind of monitoring we've got, everything is evolving as expected at micro and macro levels for all the different countries.

As for the devaluation in Venezuela, well, there, one of the main impacts from the last quarter of last year to the first quarter of this year, from the net interest income, but it trickles down further, has been the impact in revenues in cost, but above all, in the incomes lines for this quarter.

For 2013 then in the first quarter we have incorporated a reduction of about EUR150 million in net interest income, for example, when we compare it against the last quarter of last year.

And that's probably the main drop.

When we look at what happened from the net interest income we see how it trickles down to the rest of the account, between [4T and 1T] then we took the main hit.

The main cause is Venezuela, as I said.

The next in the Group as a whole is Spain, although less so here we're talking about EUR1 million more EUR40 million last quarter to first quarter.

And very much linked to the price, well, the spread on, the customer spread.

And then, the US because of the fall in the customer spread, above all with SMEs.

But the main item was the -- for whether we get from the Venezuela about a EUR150 million less net interest income in the quarter because of the Venezuela devaluation.

So for the year as a whole we're expecting an impact of about EUR50 million negative, for the year as a whole.

And that those EUR50 million will be offset by positive impacts from our dollar positions on the Venezuela balance sheet.

And that means that we just have EUR50 million left instead of the EUR180 million that we could have expected had we not taken into account the impact of our dollar position or dollar-denominated position.

As for Argentina, well, there the exposure is much lower for the Group, and any devaluation that might happen in Argentina, I think over the next few months it's not that likely, for the next six, seven months definitely we're not expecting to see it, but anyway the impact, if it did occur, would be much lower than the hit that we took in Venezuela.

And then the restrictions and the adjustments, Manuel maybe you could talk about that.

Yes.

Well, in event of -- well, Argentina is quite different from Venezuela.

In Argentina there are capital requirements on the basis of which there are certain thresholds you have to get before you can repatriate dividends.

Whereas in Venezuela things are a little bit more complex and more related to the control of the exchange rates.

And so the dividends outstanding are in reserves and have been adjusted because of the devaluation like all reserves.

The impact on capital that we have taken because of the Venezuela devaluation in reserves, looking at the book value and in minority holdings was EUR800 million, which is offsetted by the risk-weighted assets, which go down, which means that the core ratio has maybe gone down a point, point and half, because of Venezuela, absorbing very positive impacts with respect to currency trading and such like, which have better positive impact.

And then in terms of dividends there the impact of this EUR800 million, EUR200 have to do with dividends which are pending repatriation which are there in the results that we have in Venezuela.

Okay.

And now we can go on with the different franchises grouping together Eurasia and the United States.

In Eurasia one single question, what's the contribution of CNBC to the earnings for 2013?

What we saw in the first quarter, was it a one-off?

In the United States, Frederic Teschner from Natixis and Juan Pablo Lopez from Espirito Santo ask, first all, about whether or not the provisioning levels are sustainable, because they think they are low.

And ask about whether the net profits, if they were to go down over the year, would there be any risk of further impairment of goodwill before the end of 2013?

So three questions, the first, the contribution of [CNCBC] to CNBC to the year.

And then is the provisioning in the US sustainable?

And finally, whether any potential fall of profits from the US could lead to an impairment of the goodwill before the end of the year?

First of all the Chinese contribution and the equity accounting.

The first thing you need to bear in mind is the EUR100 million that I mentioned in my presentation that reduced the equity accounting, which means that this is [going to be] the same throughout the year.

So we expect less equity accounting this year than last year.

And all the rest will depend on the performance of the bank in China, which is difficult to forecast.

I think maybe the most important adjustments were made at the close of the year when we got ahead of the time line set out by the Chinese Central Bank as they set a deadline for 2016 to do this, and we started doing it in 2012, which means that we shouldn't expect any growth in the provisions in China there.

So in the end we're talking about EUR100 million less than we saw last year.

The US now.

The cost of risk in the United State is in line with the risk information we have.

We have seen the NPA that's below to, is at 1.8%, but the most important thing is the net entries, if we look at this in the last 7, 8 months, the negative net entries, which has led to the fall in the NPA ratio.

But it's not just a falling trend.

Apart from that, the pre-entries in NPA of payments due after 90 days down at minimum levels, so it's not just the positive performance of entries, there is also the trend for coming quarter we don't foresee any change, which means that this year -- well, I think throughout this year we're going to see a cost of risk just as low as we're seeing at the moment.

In the mid term it might go up a little bit, but for now the behavior is highly objective.

So, as I said before, if we put the performance of the cost of risk and the cost management, that is very tightly controlled in the United States, we're seeing falls around 2% in costs in the first quarter.

And I think this is a trend that we're going to see throughout the year.

And the different lines are going to pick up throughout the year.

I mean, I hope to see positive data by the end of the year and we certainly don't expect any fall in profits in the year as a whole.

So the profit is in line with our forecast.

So we certainly wouldn't expect any additional impairment.

Although, obviously this is not our opinion or our decision.

That is up to the supervisors, they regulate us, but we believe that's the performance of the United States.

We shouldn't forget that this is a balance that's very sensitive to interest rates.

We think that they will go up in the midterm.

The net interest income would grow by 7 basic points when interest rates aren't going up.

Strategy now, there are several questions on strategy, Andrea Filtri from Mediobanca and Daragh Quinn from Nomura, Juan Pablo Lopez from Espirito Santo and Jaime Becerril from JP Morgan, I think we can put them all together in a single question, what plans do you have for CITIC, Telefonica and Guaranty?

Okay, CITIC, Telefonica, I don't think really there is anything new to report other than what we've already been reporting in previous quarters.

I'll be going on talking about similar levels.

Telefonica is a financial investment, and right now at the prices we have in the market, we have no intention to divest, and it's true that anyway in terms of capital, right now it wouldn't really have the relevant impact

As to our investors in China obviously we are sensitive, as I said at the year-end presentation, we are sensitive to the 90 basis points impact on the impact that we have under Basel III fully loaded -- because at the moment the impact is less, but we're trying to think in terms of what impact would be reported under fully loaded Basel III.

But anyway, as in Telefonica, we don't have any intention to sell, at least at current market prices.

Having said that, as long as we have the comfort of knowing that we can get to the level if we want to under Basel III fully loaded, we can be very rational in what we do.

And the same for Guaranty.

Obviously, we got a much more long-term view, until 2016, we don't have to come to any decision anyway about what we are going to do and we are very clear about the (inaudible) which is established already under the shareholders' agreement.

And from there on we have no particular -- we are in no particular hurry to grow in Turkey.

Turkey, as I said before, is performing very well, very positive news on the earnings, the market likes our investment there.

And the incorporation of this franchise to the Group is going even better than we had expected.

They're working very well with us and making very positive contribution.

And so we'll now wait for market conditions to become more positive, and we want to be very rational in decisions we make.

But we've got strategic long-term planning here in the Group.

And the moment we are rolling things out as we had expected on the basis of the rational established.

And now three final questions, quite different.

Ignacio Cerezo from Credit Suisse asks if we can give any guidance regarding the line of costs in Spain but above all in Mexico, given the high growth we've seen there when the duo is going to come together.

Second question regarding dividends, Jaime Becerril and Andrea Filtri from Mediobanca ask what's our dividend policy for 2013, and can we talk about 2014, will it be cash or scrip dividends?

The third and last one has to do with the tax rate for the bank, that is to say the potential gains in sales of real estate assets, could that change our tax ratios and make them different from what we've been reporting in previous quarters?

So what would our tax rate be for 2013?

What kind of range would be expect?

As I said before, and I showed you that on the slide, without going into the detail, of how we're managing costs in the Group, and there are two ways of looking at this.

On the one hand we -- there is the flow management which is costs associated with organic growth in the emerging markets.

That's one the one side.

The second point you need to bear in [the total] is the controlled management of costs in the developed world.

You see fairly flat and even negative growth in costs, especially in the United States.

We've seen efficiency plans which are even greater, they're being rolled out both in Spain and throughout the Group, but what we don't do is allow the cost to grow just because we have organic growth plans in places like emerging markets.

What we do is we work just as hard on the stock of costs we have for all different areas, and that's the way we're going to look at it.

Throughout the year we're going to -- we think that costs are going to improve their performance in general.

In Mexico in particular, I think I mentioned this before too, when we recently launched an invention -- an investment plan of $3.5 billion and we put this together with the existing plans, the technology plan or building branches, in Mexico what we do, as we have in other areas, is to concentrate the different buildings that we had, in this case in Mexico City, and we've done this in other franchises.

And we've even done it here in Madrid and in Spain.

And it means that once you've finished building your head offices, then you have depreciation and amortization, but the rents are lower because we sold the buildings here in Spain and Mexico in the (technical difficulty) so we're seeing enhancements in our productivity.

And what we really want to change now is the morphology of our offices, our branches in Mexico.

We're budgeting for transformation, and we're working actively on the morphology of our branches.

We're talking about a third of the total investment which will be for transforming our branches and this is associated with far more personalized attention to the high value products.

We want to accelerate the sale of this and reinforce the generation of value for our top value customers.

And we want to migrate all those services, especially repetitive services, the administrative services, a custom of where there are alternative challenge -- [canals], we want to migrate these two alternative channels which will enable us to recover the -- which will open the doors in Mexico again.

In the first quarter in Mexico the costs are growing at the same rate as revenues, which is better than previous quarters, and our outlook for 2013, I think the trend is going to continue with revenue and costs increasing at the same, maybe with revenues growing slightly more than cost and by 2014 the doors will start to open again.

Company tax Manuel, or corporation tax.

One thing we have to clarify here, 2012, as you know, because of the earnings or the dividends, the equity accounting rate did not pay tax or the loss because of loan loss provisioning meant that we are paying a very low tax rate.

In Q1 we're observing the return to a normal tax rate, and at the moment it's around 26%, and we think that for the year as a whole it's going to be around there, 26%, maybe 25%, but this is a more, far more normal tax rate.

And this is an important message that we are absorbing this return to a normal tax rate.

And just to finish off the question about the dividend, no news with regard to when we presented 2012 as a whole.

If you remember, we talked about maintaining our current policy to scrip and to cash at -- dividends at EUR0.42, that is our policy.

Obviously it has to be adopted by the general assembly.

And another thing we said at the end of last year is the trend that we need to move towards cash dividends and less scrip dividends.

2014, whether we're going to see it in 2014 as we always say, there are two important points that we shouldn't lose sights of, and that is the capital.

With the information that we have we think that we can start this trend in 2014 to move towards cash dividends, and obviously it depends on earnings as well because dividends have to be in consonance with certain payout for normal earnings of the bank, and that is why with the information available today we think that this trend towards more cash dividends is something that we're going to start doing in 2014.

I repeat, with those precautions that I've mentioned.

Well, having answered that final question I'd like to thank you for coming on to webcast and I would remind you once again that any questions that have not been answered will be answered throughout in the course of the day by Investor Relations.

Thank you very much.

Thank you very much to all of you for coming along.

Thank you.