DBRS Changes BBVA’s Trend to Stable after Sovereign Rating Trend Change; Confirms “A” rating

DBRS Ratings Limited (DBRS) has today confirmed the ratings of Banco Bilbao Vizcaya Argentaria, S.A. (BBVA or the Group), including its Issuer & Senior Debt rating at “A”, Subordinated Debt rating at A (low), the Short-Term Instruments rating at R-1 (low) and the Long-Term Critical Obligations Rating (COR) at A (high). The trend on all ratings has been changed to Stable from Positive. At the same time, the agency has confirmed the Short-Term Critical Obligations Rating at R-1 (middle) with Stable trend. BBVA’s intrinsic assessment (IA) was maintained at “A” and the support assessment remained SA3.

The change in the trend to Stable from Positive on the Group’s Long-Term ratings exclusively reflects the change in trend in the Sovereign rating of the Kingdom of Spain to Stable from Positive on April 8, 2016. As a result, DBRS considers that the Group’s capacity to grow earnings domestically will depend on the growth of Spain’s economy and continued developments in the Sovereign position of Spain. DBRS continues to see the Group’s international diversification of BBVA’s franchise as a key factor for the Group’s ratings.

The Group’s Issuer & Senior Debt rating remains positioned one notch above the Spanish sovereign rating, due to the Group’s fundamental strengths which include the benefits of solid international diversification. BBVA’s ratings also reflect the Group’s solid base to continue supporting the generation of organic capital, robust liquidity and funding position, good management and adequate capitalisation.

Downward pressure to the Group’s ratings, although unlikely in the short to medium term, could arise if there is any indication of a sharp deterioration in BBVA’s risk profile together with weakening profitability and capitalisation. A material deterioration in the Group’s international business contributions and risk profile would likely put downward pressure on BBVA’s ratings as well, as this would reduce the benefit of the Group’s geographical diversification. On the contrary, upward movement to the rating would come from a change in the rating or trend of the Sovereign rating of Spain. However, any increases in the Spanish sovereign rating beyond the “A” rating level, would likely lead to the rating of BBVA converging with the Spanish sovereign rating.

Notes:
All figures are in EUR unless otherwise noted.

The principal applicable methodology is the Global Methodology for Rating Banks and Banking Organisations (December 2015). Other applicable methodologies include the DBRS Criteria: Support Assessments for Banks and Banking Organisations (March 2016), DBRS Criteria: Rating Bank Capital Securities – Subordinated, Hybrid, Preferred & Contingent Capital Securities (February 2016) and DBRS Criteria: Critical Obligations Rating (February 2016). These can be found at: http://www.dbrs.com/about/methodologies

The sources of information used for this rating include company reports, the European Central Bank, European Banking Authority, Bank of Spain and SNL Financial. DBRS considers the information available to it for the purposes of providing this rating was of satisfactory quality.

DBRS does not audit the information it receives in connection with the rating process, and it does not and cannot independently verify that information in every instance.

Generally, the conditions that lead to the assignment of a Negative or Positive Trend are resolved within a twelve month period. DBRS’s outlooks and ratings are under regular surveillance.

For further information on DBRS historic default rates published by the European Securities and Markets Administration (“ESMA”) in a central repository, see:
http://cerep.esma.europa.eu/cerep-web/statistics/defaults.xhtml.

Ratings assigned by DBRS Ratings Limited are subject to EU regulations only.

Lead Analyst: Maria Rivas
Rating Committee Chair: Elisabeth Rudman
Initial Rating Date: November 23, 2009
Most Recent Rating Update: December 16, 2015

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