Good morning, everyone, and welcome to the Second-Quarter 2016 Results Presentation of BBVA. I’m Luisa Gomez Bravo, Global Head of Investor Relations. And here with me today are Carlos Torres, Chief Executive Officer of the Group; and Jaime Sáenz de Tejada, our Chief Financial Officer. As usual, Carlos will begin with the presentation of results and perhaps a few words on the recent reorganization, and we will move straight to the Q&A after that. We will try to answer as many questions as possible during this presentation as always. But needless to say, the IR team will remain available throughout the day to answer any pending questions. And before handing the call over to Carlos, I would like to wish all of you who may be taking some time off in the next few weeks to have a happy summer holidays. So, good morning, Carlos, and over to you.

Thank you. Thank you, Luisa. Good morning, everyone, and welcome to our audio webcast. In fact, before starting with the quarterly results, I would like to briefly comment on the organizational changes that we announced yesterday that are trying to simplify the organization and help us gain efficiency, accelerate also our transformation. On the one hand, the countries will now be reporting directly to me, which I think is a great thing. We’re eliminating one layer and will help me have a direct dialogue with the CEOs of the geographies. On the other hand, we are integrating under one responsibility that of customer solutions all areas that shape our value proposition and deploy locally. And in addition, we have made other changes, shifting responsibilities among some of the areas to further simplify and help us gain efficiency. As you have seen in the organizational charts, now country networks has disappeared and [indiscernible] who is in-charge of that unit up to now will be leaving the Bank, although he will be still very much related to it. After a very long and very successful career, he has really helped me in particular over the past year-and-a-half focusing a lot of efforts in the regional and the commercial businesses driving performance. And he will be continuing to be associated with us through Broad memberships. But now, as you can see on the chart, Spain, Mexico, U.S. and Turkey will be reporting to me, with the same CEOs as in the past. A new position of country monitoring led by Jorge Saenz-Azcunaga will help me, will support me in overseeing the countries and will also channel the reporting of the smaller countries, the South American countries. And then the customer solutions area that I mentioned is led by Derek White, and he takes…

Thank you, Carlos. We’ll start with a few overall questions. The first one is regarding the management changes. Carlos Cobo from Haitong and Daragh Quinn from KBW ask if you could please elaborate on the recent changes to the management structure of the Bank and why do you need to keep changing the management structure?

Yes. Okay, I already mentioned just now that we are making this changes to gain agility an efficiency. So it’s really a very natural evolution of the structure we had a year ago, bringing the businesses closer to me and while at the same time unifying all of the areas that are really shaping the value proposition to our customers, the products and services, and the shaping of those, the creation of the new solutions, leveraging, digital leveraging, technology leveraging data and design under Derek White. In terms of people, however, and despite the ample press speculations given the nature of the topic, in terms of people, if you look at the chart out of the approximately 20 names that you can see there at the top line reporting to either the Chairman or myself, I would say all of those names were there a year ago with the additions only of two names, Jorge Saenz-Azcunaga who will be supporting me in that oversight role of the countries. And Derek White who, as I mentioned, came into the Bank a few months ago and has already shown, he is a great leader who is also because of his track record before BBVA, the right person to lead that wider customer solutions function.

Thank you. With regards to strategy, Stefan Nadialkov from Citigroup and Sofie Peterzens from JPMorgan ask if you are interested in growing outside or inside Spain via acquisitions and which countries are attractive?

Yes. This is a recurring question and the recurring answer. We have full focus on the geographies, where we are present today. We do believe that local market share is a good driver of return. And in that sense, we always aspire to have consolidation moves when they make strategic sense in the sense – in the markets where we’re present when they make financial sense. So if there are opportunities in Spain or in other countries where we have presence, we will surely continue to look at them as we have done in the past. But beyond that, we don’t have any other plans.

Thank you. Also with regards to the Group, Adrian Cighi from RBC asks about the FX impact. He says that the FX impact was quite negative, as you mentioned this quarter. Can you please remind us of your policy of hedging for P&L and why you might believe that we are coming to an end of the headwinds from FX as you noted in your opening remarks?

The hedging policy that we have established that we will be hedging on a 12-month forward looking view between 30% and 50% of the FX impact. Currently, we are at the higher-end of that band. The reason why we expect a smaller year-on-year impact in the second-half is because of base effect. Remember that, we already experienced a significant depreciation of some currencies in the second-half of last year.

Thank you. Moving on to capital, Fabio Mostacci from Mirabaud and Carlos Cobo from Haitong ask if we can please elaborate on the capital generation in the quarter and any new guidance? Jaime Sáenz de Tejada: Capital generation was strong during the quarter on a fully-loaded basis, our capital increased by 17 basis point from 10.54% to 10.71%. We had a strong earnings performance that explains the majority of that generation. But we also had some one-offs that had to do with our strategic priority of improving our capital allocation and measures to improve that capital allocation and generated synergies were implemented during the third quarter – the second quarter, sorry, in many geographies. That was case in Peru, in Argentina, in Turkey, in Spain, that allow us to compensate some negative impacts that had to do with the market, especially the stake in Telefonica. The guidance hasn’t changed, and our target ratio for the Bank remains intact, and we expect to reach that a 11% in 2017.

Thank you. Sofie Peterzens from JPMorgan asks if you could please remind us how much AFS gains you have included in your Basel III fully loaded CET1? And what was the quarter-on-quarter change in your available for sale gains? Jaime Sáenz de Tejada: We have included €1.2 billion, and it was slightly negative, the quarter-on-quarter evolution around €150 million.

Thank you. Jemej Omahen from Goldman Sachs asks, have you marked to market your stake in Telefonica? What’s the impact?

As you know, the stake in Telefonica is accounted for as available for sale. So it is mark-to-market daily, and its impact is recognized in the capital number every single quarter. We have a mistake of 5.35% in Telefonica and I think it’s easy to calculate the impact.

Mario Ropero from Fidentiis asks, you are almost at a 11% fully loaded now, please update your targets and the timing of them? Also does this make it easier for you to move to full cash dividends in 2017?

Well, as Jaime just mentioned, we are keeping our target of trying to achieve, and I already said in the presentation as well of achieving an 11% fully loaded target sometime in 2017. So there is no change there. And also there is no update on our cash dividend policy to the one that we already communicated in past quarters. So no changes, Mario.

Santi Lopez from Exane BNP Paribas asks, what would happen the year-to-date evolution of your fully loaded Basel 3 CET1 ratio if you hadn’t moved a material part of the AFS portfolio into held to maturity? Jaime Sáenz de Tejada: Santi, as you can imagine, we do not speculate with this type of information, but I could tell you that the impact would have been positive. As you know, the risk premia for the Spanish sovereign debt that has improved greatly during this year, and that would have had a positive impact in our capital ratio. Precisely, that is why we moved part of the portfolio to held to maturity so as to avoid this type of volatility in the capital ratio.

With regards to the EBA stress test, Sofie Peterzens from JPMorgan asks, the press has speculated that BBVA will have an 8% to 9% CET1 under the stress scenario. Any comment on this?

We will actually see tonight. We are confident that we will have a good result judging from past exercises also. We really had a good result in 2014. It’s true that the stress test this time is more stringent, but we are confident that we will see tonight a good result for BBVA.

Okay. Continuing on capital, Stefan Nedialkov from Citi asks, the risk density was 53% – 53.0% in the quarter versus 53.9% in the first quarter 2016, what drove the decline? Jaime Sáenz de Tejada: As I mentioned before, we’ve had different efficiencies being implemented in the second quarter. The upgrade in the Argentina sovereign rating had a positive impact, the way we account for repo transactions in Peru also had a positive impact. Different ratings of local public entities in Spain also had a positive impact on RWA’s evolutions. Also Turkey implemented additional savvy measures during the quarter. And last but not least, the CIB business especially related to the way that CBA is calculated also allow us to improve our RWAs in the quarter. They went down by 1% and that’s the reason why – and this – the asset density improved slightly.

On capital, Ignacio Ulargui from Deutsche Bank asks, what should we expect going forward in terms of RWA optimization? Jaime Sáenz de Tejada: Capital allocation, as Carlos always says, is one of our top priorities in our strategic plan. Every single business unit, it extremely conscious about return on regulatory capital as well as return on economic capital, of course second quarter impacts were – very positive and we cannot expect a similar impact going forward, but we do believe that additional saving measures will be implemented in the following quarters.

Thank you. With regards to liquidity, Andrea Unzueta from Credit Suisse asks, if we could update the market on the more recent developments of the MREL requirements, what are you expecting and how are you preparing for it? Jaime Sáenz de Tejada: There’s a – still a lot of question marks open regarding MREL, especially type of instruments that we will eventually issue. But what I think is important is that, it will not change the funding structure of the bank. As we said before, we have – in the next two and a half years wholesale maturities with an original maturity of above one year of €20 billion, and according to our numbers that the rollover of those maturities in MREL eligible debt will be enough to comply with our MREL requirement. We will have more information in the latter part of this year on both the actual requirement and on the type of instruments, and hopefully we’ll be able to provide further clarity by the end of the year.

Okay. We’re going to move to the questions regarding our footprint. We’re going to start with Mexico first, because I believe there are still questions coming in – in other parts of the group. So with regards to Mexico, Carlos Cobo from Haitong, Jose Abad from Goldman Sachs, Adrian Cighi from RBC, Alfredo Alonso from Kepler Cheuvreux and Alvaro Serrano from Morgan Stanley asks, how do you see the competitive environment and therefore margins evolving? Also a view on customer spread outlook and the expected impact on NII from Banxico, new reference rate hikes and what is the sensitivity to the higher rates, and if the slowdown that we’ve seen in NII growth is punctual or we could expect this to continue?

Thank you, Luisa. The environment in Mexico is – a very strong competition as in every single market in which we are operating. Customer spreads went down slightly in the second quarter, although they remain very robust, around 10.8%. Banxico interest rates hikes do have a positive impact on our NII and our expectation is that this will be reflected specially in the second half of the year. Our sensitivity to a 100 basis points parallel increase in the curve, it’s around 2.4% positive. I think that will more or less answer the questions.

Okay. Carlos Cobo from Haitong, Sofie Peterzens from JPMorgan and Daragh Quinn from KBW ask, if we can please update the guidance on Bancomer, still expecting double-digit growth in earnings on the back of similar growth in volumes in 3.5% cost of risk?

Substantially yes, our guidance for Bancomer remains the same. Even though, we are seeing signs of potential slowdown in the economy because of on one had the U.S. deceleration with some numbers that came in April that were softer and the fiscal cuts and the monetary policy rate increases in Mexico. So that plus the uncertainty around the US elections that might impact Mexico to give some signs of a potential slowdown in the economy. Even though that is the case, we maintain activity growth at high levels and we are seeing still ahead for the year double-digit growth. NII growing inline, I think Jaime commented already on the sensitivity of that to the policy increases. Commissions maybe slightly lower growth, above inflation, however, and even though first-half growth was 10% in commissions. So it might be lower for the second-half. Expense is growing because of the investments we’ve made and leases project and the new headquarters, but below the growth in revenue, so maintaining positive jaws for the rest of the year. And asset quality, we reiterate the 350 basis point cost of risk. So that – all of that would leave us with a bottom-line growing above 10% in constant euros, and of course, we will suffer the negative effect of the peso devaluation that has already happened.

Thank you. Stefan Nedialkov from Citigroup asks, if we can give some color on the loan growth by segment and the outlook for 2016? Jaime Sáenz de Tejada: Loan growth in the quarter was fairly strong, around 3%. It is true that it is slightly lower than what we saw in the first quarter, which was at 3.7%. It’s taking place what we were expecting at the beginning of the year. Retail performance is converging towards the ratios that increases that commercial used to have last year, especially driven by the consumer portfolio. The payroll loans is growing at a very healthy rate in the quarter of 3.4%. And the SME portfolio still shows a very positive growth rate around 4%. The only portfolio that is not growing at these levels is the mortgage book, which is growing at around 1.7% in the quarter. And as you all know, we continue to experience the leveraging of the former Wal-Mart portfolio in Finanzia, but now it’s a very small part of the book. Going forward, although we are expecting some downside risk on GDP, as Carlos mentioned we remain committed to growing our volumes at double-digits.

Thank you. Mario Ropero from Fidentiis asks, about the evolution of costs in Mexico? Jaime Sáenz de Tejada: As Carlos has just said, we will continue to show positive jaws. During 2016, we are – almost done with refurnishing the branches, 90% of the branches have already been refurnished, only €200 million to go. The same is true with the building, where we still have more investments expected using the technological transformation and that should continue to move through the P&L. But what we are also seeing is a significant increase in productivity due to these investments. So we’re very happy on the way that Bancomer is behaving in the cost side. As you all know, around 10% of our costs in Bancomer are foreign currency denominated and although we might have some hedging in place it does affect our cost performance.

Okay. Alfredo Alonso from Kepler Cheuvreux and Mario Ropero from Fidentiis and Ignacio Cerezo from UBS asks, what are the main reasons for cost of risk increase in Mexico? Jaime Sáenz de Tejada: As I just explained, we have a slight change in mix in the loan production. Retail production is converging to the growth rates that we are seeing in the commercial book, and those do have a higher margin, but also a higher cost of risk. That was expected at the beginning of the year and that explains why our cost of risk guidance for the end of the year is around 350 basis points. The second quarter year-to-date number is around 328, 329 which is exactly the same cost of risk as we had during 2015. So nothing out of what we were expecting.

Okay, moving to Turkey, Carlos Cobo from Haitong, Stefan Nadialkov from Citi, Andrea Unzueta from Credit Suisse, Daragh Quinn from KBW and Sofie Peterzens from JPMorgan, Juan Tuesta from JB Capital Markets, Mario Lodos from Banco Sabadell, Fabio Mostacci from Mirabaud and Adrain Cighi from RBC ask the following questions. How do you view your investment in Turkey given recent political turmoil? What are the potential implications from the recent coup attempt in terms of economic activity in the country and financial impact for Garanti funding costs, volume growth et cetera? How have loan volumes and asset quality behaved in June and July and what would be the outlook under these circumstances for 2016? And do you reiterate the cost of risk guidance for Turkey at 1.1% in 2016?

Okay, it’s too early to really figure out the potential impact this all will have in the economy. We still have to see how the events develop going forward. So far we have not seen relevant effects on our activity in June and July and neither on activity growth, new originations, nothing beyond the ordinary changes, nor on the asset quality beyond the rise that we had in the second quarter that is more associated with other things and not the coup as I already explained in the presentation. But going forward, it’s really depending on how events unfold and how that will affect – uncertainty will effect expectations of the market agents and therefore the economic activity and depending on the political scenarios that we might going forward and how fast the country returns to normality. It’s true that also, and I think it’s an important point that Turkey has a very solid financial system and it has a central bank that has responded with measures, announcement of measures that further reinforce financial stability and provide sustainable liquidity at the markets. So we are not overly concerned right now on that front. But as I say, it’s too early to know how events will unfold and what impact they might have going forward. In terms of guidance, we do reiterate the cost of risk that we indicated at 1.1% for the year. And in – how we view the investment, well we continue to view it as a quite strategic investment and a very important part of BBVA. We are here for the long-term. We do believe Turkey is a great market for the long-term and that Garanti, as we always say is the best bank in the market, the best management team and they continue to deliver quarter-on-quarter with, as you have seen, quite impressive results in the first-half.

Thank you. Franco Insausti from Autonomous Research asks, what is the sensitivity to a downgrade in Turkey AFS Capital, so available for sale capital? And what is the sensitivity to 10% depreciation in the Turkish lira, I understand in capital as well. Jaime Sáenz de Tejada: Okay, the 10% depreciation in the Turkish lira will have a one basis point negative impact on our core capital ratio. As you can see, the hedging is pretty significant. We reduced the sensitivity as soon as we increase the stake. On the downgrade side, lower rating by Moody’s will have an impact of 15, around 15 basis points in our core capital. I do want to say that in the case of Turkey, our P&L coverage, our FX P&L coverage for the year is 100%, so we are fully hedged for 2016. Oh, one – yes, one more thing, if we receive the regulatory equivalent as we expect at the end of the year, this negative impact will be more than recover.

Thank you. Andrea Unzueta from Credit Suisse asks about, net interest income in Turkey, NII was strong, what explains evolution in NII in Garanti? Jaime Sáenz de Tejada: Everything behaved very well in Turkey – in Garanti. In the second quarter of the year, we had very strong loan growth, but also a very good, especially in liras because the foreign currency exposure went down by 2%. Customer spreads improved significantly, both by increases in the loan yield and reduction in the cost of deposits. The reduction in the upper band of the interest rate CAGR had significant impact on reducing our funding cost in Turkey, and that’s the reason why we had a quarter-on-quarter NII growth rate of 8%.

Okay with regard to trading income in Turkey, Fabio Mostacci from Mirabaud asks, if you could please clarify the strong trading performance this quarter and provide any guidance for coming quarters? Jaime Sáenz de Tejada: On the trading income line we had the one-off positive effect coming from Visa, that’s an €85 million positive impact that we had in the second quarter that is clearly non-recurrent. And then I must remind everybody that this year, we do not include in the net trading income line, the cost associated with the swap funding, which is now included in the NII line and this distorts year-on-year comparison. Yes, beside that, we did have a positive quarter, but more or less average.

Thank you. With regards to expenses in Turkey, Fabio Mostacci from Mirabaud asks, do you think the quarter-on-quarter decline in expenses is a sustainable trend?

No, there are some one-offs in the quarter that had to do with negative impacts that were accounted in the first quarter of the year, some taxes on branch openings were front loaded in the first quarter of the year, and that partially explains the improvement. Garanti is committed to grow at console level its expenses at around double-digits and we are clearly on track to delivering those.

Okay and we’re now moving on to Spain banking business and we’ll start with the NII evolution, plenty of questions there. Francisco Riquel from N+1 Equities, Mario Ropero from Fidentiis, Fabio Mostacci from Mirabaud, Stefan Nedialkov from Citi, Andrea Unzueta from Credit Suisse, Jose Abad from Goldman Sachs, Arturo de Frias from Santander Investment Bolsa, Derek Quinn from KBW, Juan Tuesta from JB Capital Markets, Alvaro Serrano from Morgan Stanley, Sofie Peterzens, JPMorgan, Franco Insausti from Autonomous, Alfredo – I don’t want to leave anybody out, Alfredo Alonso from Kepler, Ignacio Ulargui from Deutsche, Carlos Peixoto from BPI, Ignacio Cerezo from UBS, Martha Sanchez from BofA Merrill Lynch and Nuria Garcia from Ahorro Corporacion. I don’t think I’ve left anybody out, asks the following questions. First of all let’s start with the update on our full-year guidance in NII.

Okay, well, thank you. Thank you all for the question, which itself indicates that we have to have a cautious view of how our business in Spain is evolving, as I already mentioned in the presentation. So we don’t have much visibility of loan growth in the book and we are seeing it now flattish towards the end of the year, especially we lack visibility in the corporate sector and maybe the uncertainties on the political side have some weighing on that as things get delayed. With that NII will likely continue to trend with the same rate of decrease that we have seen in the first-half, so that was a negative 2% year-on-year drop, and that could be a good proxy of the rate of growth of NII going forward. Commissions, I mentioned quite a disappointment. If market remains the way it is, it’s going to be hard for us to meet our objective of having growth this year in fees and commissions. And in terms of expenses, this is where I already mentioned we’re working hard and will continue to work hard. We have – even though you might see growth in 2016, that’s mainly due to the inclusion of four additional months of Catalunya Caixa and also the restructuring costs associated with that, which are higher in 2016 than they were in 2015. But now we will start to see the synergies materialize in this last part of the year. And also as I indicated, we’ll bring forward the full cost synergies of €200 million one year forward to 2017. In addition to that, we will continue to have addition efficiency measures. And I think the new organization will help us drive that further, as well as the full focus of our management team in Spain in driving efficiency given the environment. In terms of cost of risk, no change in guidance, we are seeing good evolution there. So we will surely be below the 60 basis points we indicated with provisions likely to be lower in the second-half than what they have been in the first-half. I think that’s an overview of the main elements of guidance for Spain.

Okay. Thank you. With – specifically with regards to the net interest income, can you explain the dynamics behind the quarter-on-quarter increase in NII, has the NII bottomed? And with regards to loan growth, can you explain loan evolution in the quarter? Are you seeing a slowdown in corporate loan volumes in Spain? Update loan growth guidance for this year and next, which I think Carlos just did. Please give us some color on new loan production in Spain by category as well as loan yields on back book versus front book. Where do you see the bottom? And with regards to deposit pricing, [indiscernible] deposit pricing, what is realistic for to assume? And last but not least the NIM, NII over average total assets in Spain is up quarter-on-quarter for the first time in several quarters, what is your view for NIM going forward? Jaime Sáenz de Tejada: Okay, I’ll try to be as short and to the point as possible. Loan volumes were up by 2.1% in the quarter, so clearly a positive performance, although we do have to take into account that we had an internal transfer of €1.1 billion from the real estate portfolio to Spain banking activities that we thought that the loan book would have grown slightly above 1%. The growth has been particularly positive in the consumer portfolio that grew quarter-on-quarter by 5%. It was also positive on the large corporate and the CIB business. In the case CIB, it went down by over 7%. We did have some one-offs in the quarter, and we also experience some one-off, which we do not expect to be recurrent in the public sector book. As Carlos mentioned, there is not sufficient clarity on volume evolution as of yet, so we want to be fairly conservative…

Okay, yes. And with that regard, Alvaro Serrano from Morgan Stanley asks NII down 2% second-half – first-half for 2016, 2015, and I’d say, yes, the first-half evolution of NII looks like a good proxy of what the full year growth rate of NII will be for 2016 with the current visibility we have today, especially in regards to volumes. So continuing with Spain and picking up a little bit on speed, TLTRO, Carlos Cobo from Haitong, Franco Insausti from Autonomous Research, Alfredo Alonso from Kepler, Martha Sanchez from BofA Merrill Lynch. Could you please explain your policy towards TLTRO II usage, total take up versus TLTRO I? Do you plan to accrue already in 2016-2017 any interest from conditional negative rates and what would be the expected impact on NII? Jaime Sáenz de Tejada: Our current TLTRO take up is almost €24 billion, after amortizing the €14 billion that we drew from the previous TLTRO. We’ve been able to lengthen the maturities of this money from 2018 to 2020. As we said already many times, we do not really expect this to have a significant impact on loan demand. But we do believe that will continue to help us reduce our funding cost. I think that’s something that we are already delivering. It is helping us to reduce both the funding and the cost of our wholesale funding. In retail maturities are also being re-priced down in significant fashion and this increase on drawdown will allow us to reduce our wholesale market access in the following quarters. Regarding the cost, we are not yet accounting the minus 40 basis points, and that’s a decision that has not been taken yet and we will be able to answer in following calls.

Okay. With regards to ALCO in Spain, Vanessa Guy from JPMorgan and Ignacio Cerezo from UBS ask, what is the size of your current ALCO portfolio in Spain yield and duration and the amount of unrealized available for sale sovereign gain, losses? Jaime Sáenz de Tejada: Losses?

Gains or losses. Jaime Sáenz de Tejada: Okay. The current size of our euro ALCO portfolio is €33 billion, is down slightly from the first quarter, and is down by almost €3 billion on a year-on-year basis. The average yield is 2.5%. And the average maturity has increased slightly from the first quarter to 3.3 years. And we do have capital gains in the euro portfolio above a billion.

Okay. On fees, Mario Ropero from Fidentiis and Alvaro Serrano from Morgan Stanley ask, if we can please explain the quarterly decrease of fees in Spain and please update your guidance? Jaime Sáenz de Tejada: Okay. Fees were – as Carlos said, clearly the negative of the P&L of the group in the quarter. Market related fees did not behave well. This is the case of the CIB business, fees went down by 44% and they do represent around 10%, 15% of the overall fee structure. We also had a significant decrease in the mutual funds and pension business after an accounting change that took place at the beginning of the year. But more important than that is that the average commission that we’re charging on our mutual funds is down by nine basis points this year to around 104 basis points. We are being a lot more conservative in the type of products that we are selling to our clients, and that is explaining the decrease in the average commission charge. On banking services, commissions grew in the quarter and that’s clearly the positive of the quarter.

Okay, thank you. On expenses, Francisco Raquel from N+1 Equities, Mario Ropero Fidentiis, Carlos Cobo from Haitong, Arturo de Frias from Santander Investment Bolsa, Sofie Peterzens from JPMorgan, Andrea Unzueta from Credit Suisse, Daragh Quinn from KBW, Ignacio Ulargui from Deutsche, Juan Tuesta from JB Capital Markets, Ignacio Cerezo from UBS, and Jose Abad from Goldman Sachs ask the following questions. Could you please comment on the reports of 2000 reduction in Spanish employees and the outlook for Spanish costs? Also can you comment on cost restructuring initiatives at the group level beyond the Catalunya Banc integration? Can you update on the Catalunya Banc integration pending restructuring measures and update on your target for synergies? Can you give us guidance for the cost base in 2017 in absolute terms in both the Spanish division and the corporate center?

Okay, so a lot of interest as well in – as it’s natural, in our cost reduction efforts in Spain. In Spain and elsewhere this is one of our critical strategic priorities, improving customer experience, while at the same time driving further levels of efficiency. And we are focused on several initiatives to do that. In terms of Catalunya Caixa, I already commented, but very briefly we are bringing forward the total cost synergies that amount to €200 million per year by one year. So it will be achieved in 2017 reducing, starting – in September we’re going to be closing down 400 branches. There will be the employee exits and this is well beyond the plans we had originally with the requirements from Brussels. Beyond that, we are working in Spain and elsewhere in adopting our operating model. I would not pay much attention to the press numbers that are frequently misquoting things that are running around, so the 2000 could refer to anything. What we’re doing is working on one hand the distribution model that I just mentioned with the first 400 closures in September. But we have many projects in engineering with the new paradigms around the infrastructure as a Service, Platform as a Service, Data as a Service, all of that will allow us to cope with growing numbers of transactions and customer interactions, which are big part of the improving experience at costs that are coming down very significantly on a per transaction basis. We have also lots of efforts ongoing in terms of streamlining our operations, leveraging automation, and there is big potential there in Spain and elsewhere to do that. And we’re working as well in the intermediate structures. There was also an announcement yesterday or the day before on simplify structures in Spain, in the regions and intermediate structures that are being reduced. Similarly, the holding level and with the organization we will have further synergies that will have effect in Spain among others. For example, in the U.S. we have our real state, even here at the headquarters where we have. Now this summer, we’re going to use the month of August to bringing more people to the headquarters, that can hold up to 8,000 people and we had a 6,000 now. So with the open space we now have that flexibility to cram in more people and still maintain a good working environment. That will allow us to close a couple of buildings. So, there’s a lots of things we’re working on. Rather than come up with a flashy announcement of a grand plan, we would rather show results as we progress. So will be informing you of our delivery quarter-on-quarter on all of these plans. But I just would highlight once again that cost control, cost reduction is one of our key strategic priorities and it’s going to be one of the drivers of management going forward, in particular in Spain because of the environment.

Okay. Thank you. Going pretty quickly now. With regards to asset quality, Carlos Cobo from Haitong, Mario Ropero from Fidentiis, Juan Tuesta from JB Capital Markets, and Carlos Peixoto from BPI ask, if we reiterate our cost of risk guidance to 60 basis points for the Spanish banking and real estate activity, does your 60 basis points guidance cover any potential top-up of provision reserves resulting from the new Bank of Spain circular? And what is the bottom level of costs of risk you expect for Spain in the future? Jaime Sáenz de Tejada: Okay. Yes, we do reiterate our cost of risk guidance. Although, we did already say in the first quarter call that it is clearly conservative. As we’ve mentioned before, we do not expect significant impacts on because of the new circular. And we do not speculate with the bottom level of cost of risk. Clearly, the second quarter number was very good, below 50 basis points. We could experience certain write-backs in the future, but I don’t think that we should speculate on that.

Okay. Moving to the U.S., mainly the questions are with regards to the evolution of cost of risk, NPLs and everything that’s related to our oil exposure there. Carlos Peixoto from BPI asks, if the increase in NPLs is related to the oil exposures and if we should expect further increases? Martha Sanchez from BofA Merrill Lynch asks on update on oil exposure, total and also undrawn coverage, what can we expect from the October reviews? Are you comfortable with the level of current coverage? Fabio Mostacci from Mirabaud, Ignacio Cerezo from UBS, Andrea Filtri from Mediobanca, and Martha Sanchez from BofA Merrill Lynch also ask, this quarter you experience a significant decline in cost of risk versus first quarter. Do you stick to the guidance of the full-year or is there any chance to review it downwards? What is your expectation in the U.S. Bank for 2017 from oil and gas going forward and loan growth and cost of risk? And last but not least, Carlos Peixoto from BPI asks or mentions that the loan loss coverage in the U.S. was down 13 points quarter-on-quarter, falling below a 100%. To what levels would you be willing to allow NPL coverage in the U.S. to drop? So basically, NPL evolution, cost of risk evolution, coverage evolution, and guidance for this year and next? Jaime Sáenz de Tejada: Okay. I’ll try to be short into the point. Regarding NPLs, it’s true that we had 20 basis points, almost 20 basis points increased from 143% to 162%. That had to do with some internal rating downgrades that we did during the second quarter of the year on our oil and gas exposure. These downgrades did not have any impact on the provision line as parts of them were already provisioned and another portion of that had every good collateral. We stick with the guidance of cost of risk below 55 basis points, even if the cost of risk in the quarter was around 35 basis points only. As you know, we have the shared national credit coming again in the third quarter of the year. And there is always a certain level of certainty around them. It is true that our coverage ratio is precisely because the increasing in NPLs, were down in the quarter. But we feel comfortable with the 30%, almost 30% coverage that we have on our oil and gas NPL portfolio. The actual oil and gas exposure went down by €300 million in Compass to €3.6 billion. Taking into account, the oil price evolution and we feel confident that current levels are sufficient.

And finally moving to South America, Arturo de Frias from Santander asks, Latam provisions are much lower than previous quarters. Why is this happening? And do you think this is a sustainable level? And Ignacio Ulargui from Deutsche Bank asks, given the impact of IAS 39 in Colombia, what should we expect in terms of cost of risk in 2017? Jaime Sáenz de Tejada: Okay, I’m going to answer Ignacio first. Ignacio, you more than anybody else should know that we do not give guidance beyond the current year. So nothing can be shared about 2017. On the cost of risk in Latin America, it has been going down for quite long time already. First quarter numbers were already very strong, and that’s why we are ready to improve on the guidance. And we are not expecting now any deterioration whatsoever from last year levels. Clearly, countries are proving very resilient, and portfolio is clearly very well constructed.

Okay. Thank you very much everybody for the call and your questions. As mentioned previously, we remain available from now on – from Investor Relations to take any further calls or questions. Thank you very much all, and happy summer holidays.