In 2007 the BBVA Group passed a milestone few corporations can match: its 150th anniversary. In 1857 an enterprising group of Basque businessmen and shopkeepers, all members of the Bilbao Board of Commerce, founded the Banco de Bilbao, the senior member of the BBVA Group. Today, BBVA is a dynamic, youthful group, which has a reputation throughout the global financial industry for efficiency, profitability and capacity to grow by creating value.

Over recent years, the Group has set itself a major new management challenge, embarking on a fresh dynamic of profitable growth and value creation. This has involved: a change in the way the Group is managed, aligning all procedures with value creation and the creation of total return for shareholders; changing the relationship between the corporate centre and the business units, which now enjoy greater independence of movement in order to encourage growth; changing the model and instruments of management, setting medium and long-term targets and applying new metrics for monitoring them; and bringing in a new incentivisation scheme, that will align the interests of management with the interests of shareholders.

BBVA's strategy is based on five key points:
1. Very attractive corporate positioning with financial discipline
2. Very strong businesses with growth levered by innovation
3. Continuous improvement in efficiency
4. A highly committed management team
5. Delivery of short, medium and long-term results with a strong focus on value creation.

Arising out of this strategy, the Group has developed a number of competitive advantages:
• Excellent retail banking franchise
• A customer-based model in corporate and investment banking
• Best in class efficiency
• Excellent solvency and liquidity on the balance sheet
• Excellent risk management, with a low risk profile.

One of the key features of BBVA's strategy is innovation, which is a way of offering solutions for customers and society at large. In this area, the main targets of the Innovation and Transformation Plan, launched in 2007, are to significantly increase the customer portfolio and business, to extend the offer to new financial and non-financial products and services, as well as improving productivity and efficiency. The plan will enable the BBVA Group to meet the major challenges the financial system is now facing.

With the experience garnered over 150 years in business, BBVA looks to the future with confidence and ambition, and hopes to continue playing a major role in the search for the best solutions in people's lives.

2007 saw record earnings for the BBVA, thanks to the excellent performance of the different business areas and the Group’s continued position as a leader in efficiency and profitability.

In a complex context, the Group has continued to deliver solid earnings combined with excellent risk management. Operating profit was up 18.7% on 2006, while net attributable profit rose 29.4%, to €6,126m. Even excluding one-off earnings, the operating profit was up 16.0% and net attributable profit 18.0%, or at constant exchange rates 21.0% and 22.8% respectively. BBVA has therefore maintained the upward trends of recent years, with profits growing threefold in the last five years.

One of the Group's distinguishing features, its risk management, has proved particularly important at this time of uncertainty, allowing BBVA to maintain its leadership among major European financial groups, with an excellent 0.89% NPL ratio, high coverage (225%), and generic funds of €5,660m.

The BBVA Group also enjoyed zero exposure to conduit vehicles or subprime assets. Its strong forward-looking focus in the management of its balance sheet has allowed it to maintain a sound position of liquidity and solid solvency, with a core capital ratio of 5.3% and a major volume of unrealised capital gains in its portfolios of holdings.

Another important feature of the Group is its excellent efficiency ratios. BBVA stands at the forefront of the major European financial institutions with an efficiency ratio excluding one-offs of 43.3%. All this has been made possible thanks to the Group's capacity for recurrently generating higher increases in earnings (with growing commercial productivity) than in spending (where the new structure of the distribution networks has left a positive mark).

Despite the Group’s strong growth over recent years, this improved efficiency and good risk management made BBVA the most profitable of the large financial groups in Europe in 2007, with an ROE of 30.2% excluding one-offs. This has been further helped by a capacity to generate earnings and advances in management competencies – which will continue to be developed in the coming years, as the Innovation and Transformation Plan is rolled out.

These excellent results have made it possible once again to increase shareholders remuneration. At the AGM, the board will be proposing a dividend of €0.733 per share, up 15.1% on the €0.637 figure paid out charged to earnings in 2006.