Good afternoon, everyone, and welcome to the Second Quarter 2017 Results Presentation of BBVA. I'm Gloria Couceiro, Global Head of Investor Relations. And here with me today is Carlos Torres, Chief Executive Officer of the Group; and Jaime Sáenz de Tejada, BBVA Group CFO. We're trying to publish the information at the CNMV, but there are some technical difficulties probably because today is a busy day of communications, okay, but we are going to start with the call. As usual, Carlos will begin with the presentation of group's results, and then Jaime will review the business areas. We will move straight to the live Q&A session after that. As always, we would appreciate all the participants to try to make the calls from the landlines and avoid using the speakerphones, so that we can hear you as better as possible. And in this occasion and in order to be on time for the press conference, we need to finish this audio webcast no later than 7:15. And now I'll hand over the call to Carlos.

Thank you, Gloria, and good afternoon or evening to all of you, and welcome to our BBVA second quarter 2017 audio webcast. The second quarter has been another strong quarter. We continue with the good start of the year that we had in the first one. We had a net attributable profit of €1.1 billion, with very high quality of the results, with low NTIs and no significant extraordinary gains. Our capital remains strong with the fully loaded core equity Tier 1 ratio of 11.1%. The highlights of the quarter, we had strong core revenue growth, NII and fees growing in constant euros at 9.3% versus the same quarter of last year. Cost control, the efforts really are resulting in positive operating jaws with the cost growing in constant euros at 2.2% year-to-date. Efficiency continues to be a key strategic priority. We maintain stable risk profile, cost of risk at 0.94%, strong capital generation with the fully loaded ratio of 11.1%, as I just said, generating 9 basis points, which offset the negative market-related impacts, thanks to our ability to generate recurring results and our efforts to allocate capital more efficiently, which is also a key strategic priority. We are progressing very well on our transformation. We continue to deliver products to our customers, putting functionality in their hands. Every quarter, we are growing our digital sales, our mobile customers with exponential trends here. And the digital sales stand already at 22% of the total units sold year-to-date. We had the great news that our mobile banking app in Spain was named number one in the world by Forrester Research. And finally, as highlights, we create value for the shareholder. Our tangible book value per share is up €0.09 year-to-date. And if we add the €0.21 of the dividends that…

Thank you, Jaime. So as you've seen, we have excellent results in the first half with the solid trends that we saw in the first quarter continuing, even stronger with growth in core revenues, control of costs, low cost of risk and solid capital generation. We're progressing in our transformation. We have the best mobile banking app in the world. We're growing our digital sales which are already a relevant part of our business overall and in all of the countries, and we are creating value for our shareholders. Thank you very much, and I give the floor to Gloria for the Q&A.

Thank you, Carlos. We are now ready to move into the live Q&A session. For the sake of time, I would like to ask all of you to limit yourself to two questions per caller, so that we can attend as many participants as possible. So, first question, please.

And the first question comes from Jose Abad from Goldman Sachs. Jose, please go ahead.

Hello. Good afternoon. Thank you very much for the presentation. Just two questions from my side. The first question is on Mexico. Bancomer has one of the highest balance sheets in consumer loans. I think customers account for around 25% of your loan book in the country. And even though you've been slowing down, coming from levels of around 40% growth, I think the latest numbers I've seen in the Central Bank is that you are still growing your loan book at rates of around 20%, which is much higher than what competitors are doing. So, could you give us some color on your strategy here and now whether you are also seeing some deterioration in credit quality? Some of your competitors in the country are saying they are starting to see some deterioration in the credit card portfolios. And the second question is on IFRS 9, whether you could give us some guidance regarding the impact on capital. Thank you very much. Jaime Sáenz de Tejada - Banco Bilbao Vizcaya Argentaria SA: Okay. Regarding the first question, we are growing the consumer portfolio by 11.1% year-on-year as of June, so not the rates that, Jose, you've mentioned in the call. I think in this portfolio, as in many others, I think we've been very clear during the last few quarters that we've been acting in a fairly defensive fashion, and this is allowing us to maintain very good cost of risk numbers in Mexico, which will probably end the year slightly below, where we were expecting at the beginning of the year, so no significant impact whatsoever.

Yeah. There's another question on IFRS9. We are currently not providing an estimate. This is still work in progress. We have yet to see what the final impact is. In any case, you might have seen the EBA's latest publication of the results of the quantitative impact study, which shows some results, averages and ranges, might give you an idea we, in any case, are very comfortable that the effect would be a manageable effect for us. But again, we're not providing estimates just yet because it's work in progress.

Okay. Thank you, Jose.

Thank you.

Next question, please?

The next question comes from Francisco Riquel from Alantra. Please go ahead.

Yes, and also thank you for taking my questions, two for me. In Spain, we have seen another letdown in the NII, which is now down 4% year-on-year, so then a flattish guidance that you admitted was already challenging, and I wonder if you can update on trends here, when do you see the floor and update the guidance, and also differentiate it between the banking business volumes, margins and the bond portfolios' contribution here. Thank you. Jaime Sáenz de Tejada - Banco Bilbao Vizcaya Argentaria SA: Thank you, Paco. We believe that we've reached the floor in the second quarter of the year. As I mentioned in my presentation, if it – it isn't for – if we exclude the CIB business, the rest of the businesses will be, more or less, flat in the first half of the year versus last, so behaving, more or less, as we were expecting. What has been not expected is that the CIB contribution, especially on the global markets area, has been much lower that what we had in the budget. And that was showing in the first half of the – in the first quarter of the year and also in the second. This has also been helped by the fact that additional securities sales have been done in that area. The contribution of the ALCO portfolio is pretty similar to what we had last year, if we net out the lower cost of wholesale funding, and that remains the case, is what we were expecting at the beginning of the year, and that's still the case as of today. But it's true that flattish NII, taking all things together, it's going to be extremely challenging. We will now be expecting, more or less, to repeat in the second half what we made in the first half of the year.

Okay. Thank you. And the second question, if I may, is if you believe that this shortfall in NII could be offset with lower fee income and cost of risk for the second half of the year, if you can update also on these trends. Thank you. Jaime Sáenz de Tejada - Banco Bilbao Vizcaya Argentaria SA: Fees are behaving very well, both on the CIB and the retail banking side. This is a general trend, as you can see in the whole footprint. We stick with our mid-single-digit guidance for the year, although we might see some upside risk here. Where it's more clear is the potential upside around our cost of risk. Second quarter numbers came in very good, 31 basis points in the quarter. It's much lower than what we were expecting in the year, so we might have additional upside on this line, too.

Okay, thank you.

Okay, thank you, Paco. Next question, please?

The next question comes from Sofie Peterzens from JPMorgan. Sofie, please go ahead.

Yeah. Hi. Yeah, it's Sofie Peterzens from JPMorgan. My first question was around your real estate division and your strategy here. Could you just remind us how long we should expect losses in the real estate division and when they should disappear? And also, at what level and what kind of gains or losses you're seeing for the real estate that you're selling? So, that was my first question. And my second question is around TRIM. Is there any update on TRIM? Is the regulator – or my understanding is that the ECB is looking at Spanish mortgages. Is there anything you can say here? Thank you.

Okay. On the real estate, as we mentioned in prior quarters, we have a strategy of really accelerating divestiture of the portfolio. So this is really a run-off portfolio that we expect to really run it off in about three years' time. So, depending on the speed of that run-off, and we are really going faster than expected, in the first half of the year, we have reduced, as I mentioned already in the presentation, our portfolio in a faster way and there are additional wholesale transactions that are being carried out. So depending on the speed, that would go through the P&L faster, whatever loss there is left. So, that's why we don't provide a specific guidance for 2017. And on the TRIM, do you want to comment, Jaime? Jaime Sáenz de Tejada - Banco Bilbao Vizcaya Argentaria SA: Yes. The TRIM exercise has already begun, but it hasn't finalized yet, so we don't have anything to comment.

Okay. Thank you, Sofie.

Thank you.

Next question, please?

The next question comes from Alvaro Serrano from Morgan Stanley. Alvaro, please go ahead. Alvaro Serrano - Morgan Stanley & Co. International Plc: Hi. Yes. The first one is on Spain NII again, and it's around the visibility you have. You said that you expect Q2 to be the trough. But does that mean you don't expect to sell further bonds? And also in the loan growth, you've grown now 0.7% quarter-on-quarter. In previous occasions, I think you were a bit more cautious. Is the loan growth improving? Do you think you can grow this year and is that contributing to that visibility? And in Mexico, the second question is the costs are doing very well on my numbers, it is very well in Q1. The message was maybe that was too good to be sustainable, I seem to be remember, that it looks like Q2 has been quite good as well. Maybe we have commentary, the Mexican cost specifically? Thank you.

Yeah. Well, thank you. Maybe I should take that, Jaime, on the NII, just to add on what Jaime said. I think the best way to think about this is that the NII for the remainder of the year would be, more or less, to repeat the number that we have recorded in the first half. Now, the underlying commercial trends have been in line with what we expected. And as Jaime said, the main reason why we are behind our guidance overall is because the CIB unit has underperformed in this respect of NII. We did have a better net rating income but on NII particular because of the sale of portfolios. But really that's over in the sense that in the comparison with the first half, there will be no further reductions of size of the portfolio. And in terms of the volumes, we do expect flattish or slightly decreasing volumes of the year-end balances versus 2016. And in Mexico, yes, again, this is something that one has to work every quarter to ensure that costs, especially in countries which are emerging countries, don't continue to grow at high levels in context of growing activity. And in Mexico, we have so far been quite successful at doing that during the first half, and we have many more plans in place in Mexico and elsewhere to try to continue to have this great evolution. But we're not changing any guidance in this respect, which is happy to see that the results are bearing fruit, and we expect to continue to work hard at this. Alvaro Serrano - Morgan Stanley & Co. International Plc: Thank you.

Okay, thank you, Alvaro. Next question, please?

The next question comes from Carlos Peixoto from CaixaBank. Carlos, please go ahead.

Hi. Good morning – I'm sorry, good afternoon. My questions would be basically, first of all, if you could update us on your main business area sensitivity to interest rates movements? And also the – and the second question would be on whether there were any restructuring costs booked in the second quarter. I know there were some restructuring costs pending. And what was the split of such restructuring costs between Spain and the Corporate Center? Thanks.

Yeah, I'll take that one. Quickly, I think it's about $50 million, about $40 million and $10 million restructuring costs, Jaime? Jaime Sáenz de Tejada - Banco Bilbao Vizcaya Argentaria SA: Yes, more or less, along those numbers.

And do you want to comment on the NII sensitivity? Jaime Sáenz de Tejada - Banco Bilbao Vizcaya Argentaria SA: Yeah. On sensitivities, I already mentioned in the presentation, Spain and the U.S., Mexico and Latin America, they are more or less around the same levels as in the previous quarter, around 2% both. And then Turkey, again, is the only country where we have negative sensitivity. And for every 100 basis points increase, NII goes down now by 3.7%.

Okay, thank you, Carlos. Next question, please?

The next question comes from Ignacio Ulargui from Deutsche Bank. Ignacio, please go ahead.

Hi. Good afternoon. I just have one question on the Mexican NII. Could you just update on how do you see the competitive landscape in Mexico and what will be your guidance in terms of loan growth or if you'd stick to the high single-digit 10% level that you have given before? Thanks. Jaime Sáenz de Tejada - Banco Bilbao Vizcaya Argentaria SA: We stick with our guidance of high single-digits growth, both in volumes and in NII. Regarding the competitive dynamics, there's probably one bank that is growing very fast this first half of the year. The rest, I think, are following a more of a conservative approach, taking into account the situation in the country, but that's the most I think that I could say. In our case, we maintain a very disciplined approach, as we've had in the last few quarters, and we don't expect any major changes in our strategy.

Thanks very much.

Thank you, Ignacio. Next question, please?

Next question comes from Marta Romero from Bank of America Merrill Lynch. Marta, please go ahead.

Thank you. Good afternoon. My first question is on Turkey. Thank you for the update on your outlook for loan growth and cost of risk for 2017. I'm aware you don't provide guidance for 2018, but it would be great to hear your thoughts on the government-sponsored measures and whether using that loan growth rates that we are seeing today are sustainable, the asset quality trends are sustainable in the cost of risk, and where do you see more normalized levels for Turkey? And the second question is on loan growth in Spain. Are there any seasonal element this quarter that would go away in the following quarters? Where do you expect to end your loan book and spend for this year? Thank you.

Well, I think I did mention that we expect the loan book to be flattish or decrease slightly versus last year. And in Turkey, it's a great question. We have seen very significant growth rates of activity, very much driven also by the support given by the government fund to the small business lending, so that should be decreasing as we go forward. And in terms of asset quality, Jaime did mention that our performance has been so far better than expected in a significant way, about 30 basis points below our guidance of 110 basis points. And we, going forward, are not counting on an increase of size of that cost of risk but, of course, it all depends as well on how the activity continues to evolve. Jaime, I don't know if you want to add. Jaime Sáenz de Tejada - Banco Bilbao Vizcaya Argentaria SA: Yes. We want to be conservative, and that's why we're not increasing the – reducing, in this case, the cost of risk guidance for Turkey. And in the case of Spain, there is one large transaction in the quarter that has positively affected the numbers, but those are seasonal impacts that they happen from time to time, but it won't change significantly the trend, though.

Thank you.

Thank you, Marta. Next question, please?

Next question comes from Adrian Cighi from RBC. Adrian, please go ahead.

Hi there. This is Adrian Cighi from RBC. Thank you for taking my questions, two follow-up, please. On Spain, can you please provide the amount of the TLTRO-II that you included in Q2 NII? And also on Spain on cost, given the restructuring cost you've taken in H1, what is your expectation now on the development cost of costs from 2017 to 2018? Do you still expect them to decline by mid single digits? Thank you. Jaime Sáenz de Tejada - Banco Bilbao Vizcaya Argentaria SA: Yes. The first question, the answer is €36 million, exactly the same number as in the first quarter. And regarding cost, we're expecting cost to go down by – in the mid single-digits range, so that hasn't changed.

That's for this year. We're not yet just yet providing guidance for 2018, just to be clear. Jaime Sáenz de Tejada - Banco Bilbao Vizcaya Argentaria SA: Yeah.

Okay, thank you.

Now, the restructuring which was questioned earlier, we don't expect significant restructuring charges for the second half of the year. That's also relevant.

Thank you, Adrian. Next question, please?

The next question comes from Carlos Cobo from Société Générale. Carlos, please go ahead. Carlos Cobo Catena - Société Générale SA (Spain): Hello. Thank you very much for the presentation and also for changing the date and the time of the call. That was also very much appreciated. A quick question on volumes in Spain. Earlier today, we've heard other peers guiding to some potential growth in lending even when they are also focused on mortgages in Spain, which is presumably the segment that grows the less. So, could you explain a little bit your strategy towards lending in Spain and why are you that conservative compared with other peers, which are already growing the loans books? And secondly, just if you could help me to understand a little bit the cost of risk in Mexico and the resiliency that we've seen after a significant increase in interest rates in the market for 100 basis points or more. So what are the changes to study during some – or asset quality as you implemented just to maintain the cost of risk so flattish and whether you expect any pickups for next year? Thank you. Jaime Sáenz de Tejada - Banco Bilbao Vizcaya Argentaria SA: I think the main difference versus some of our competitors is the size of our mortgage portfolio. This portfolio keeps deleveraging. It's true that they're clearly slowing down, and we could end the year maybe growing this portfolio. But so far in the quarter, that portfolio went down by €1.2 billion. And that's lower than the €1.5 billion that was down in the first quarter, but those are significant numbers and probably conditioned a little bit the numbers. Our consumer book keeps growing and keeps growing very fast, almost 7% quarter-on-quarter. We had very good numbers…

Thank you, Carlos. Next question, please?

The next question comes from Britta Schmidt from Autonomous Research. Britta, please go ahead.

Yes, hi there. I've got two questions. Coming back to the cost of risk outlook, you mentioned that there's some upside versus the guidance in Spain, but it's trending well below your targets also in Mexico, U.S. and we just discussed Turkey. What are the reasons for not changing the guidance in these areas? Is there anything that you're aware of that's around the corner? I know in Turkey there might be some cases that are still unknown, but what about the Mexico and the U.S.? And my second question will be on the other income in the Spanish division that has performed very well, especially in light of the SLM (53:06) charges that were booked this quarter. Is there anything unusual in there in this quarter? And perhaps, you can also comment a little bit on the outlook for the growth rate for the insurance business. Jaime Sáenz de Tejada - Banco Bilbao Vizcaya Argentaria SA: There's nothing in particular we're seeing in any of the countries that you mentioned. I think it's a general policy not to change guidance too much during the course of the year. We are seeing very good numbers in the U.S., in Turkey and Spain. And we feel that there is some upside, but that does not necessarily lead to change the guidance. The same thing happened last year. And I think at the end, we did – presented better numbers. We're not seeing anything in particular that we think that we should share. On other income, well, there are two major effects, as Carlos pointed out. Spain's contribution to the Resolution Fund was €98 million, slightly less than what we were expecting. We were expecting a figure around €117 million, €120 million, which is what we paid last year. But then the more recurrent and sustainable impact is the very good behavior that we are having in the insurance business. Their fees are growing year-on-year by 8.5%, quarter-on-quarter by 11%, and this is what is allowing Spain to show a very good showing in this line.

Thank you, Britta. Next question, please?

The next question comes from Benjie Creelan-Sandford from Jefferies. Benjie, please go ahead.

Yeah. Good afternoon. Just one quick question left from my side on risk-weighted assets. I mean, obviously, the risk weightings are still comparatively high, but it does look like the risk weightings have gone down about 1 percentage point quarter-on-quarter. I just wondered whether there's any particular driver of that in terms of the risk weightings. Jaime Sáenz de Tejada - Banco Bilbao Vizcaya Argentaria SA: No, nothing in particular. RWAs went down in the quarter mainly because of FX movements. 85% of the impact is explained by FX movements. The only particular impact worth sharing is in Spain. We did do a synthetic ABS on a SME portfolio in the quarter that has free up some capital. And in general, the risk profile in Spain is behaving a little bit better than what we were expecting. But risk weightings haven't changed much in the last few quarters. They remain fairly stable.

Thanks.

Thank you, Benjie. Next question, please?

The next question comes from Mario Ropero from Fidentiis. Mario, please go ahead.

Hello. Two questions. The first one is if you can give a little bit more color on the asset quality indicators for Colombia and Peru. I don't know if maybe just NPL ratios or, if possible, what are the portfolios driving the deterioration there and what to expect going forward? When can we expect the stabilization in this deterioration? Some more color on these, please. And then the second question is on how should we think about the cost structure of the real estate unit in Spain. I'm talking about mainly personnel cost, if these costs should go down as the portfolio of assets goes down or not because these personnel cost will be eventually reallocated to other units as assets are sold. Thank you. Jaime Sáenz de Tejada - Banco Bilbao Vizcaya Argentaria SA: Okay. On the first question, asset quality in Colombia and Peru, these are two countries where BBVA Research has revised downwards in a fairly significant fashion its GDP growth estimates for the year. Probably for different reasons in each country, Peru affected by the Niño and lower basic material prices, and Colombia mainly affected by the lower price of oil. This has had an impact on cost of risk in both countries, but in different portfolios. In the case of Peru, it has more to do with the commercial book. And in the case of Colombia has more to do with the consumer portfolios. If you remember also in Colombia, we had a fairly significant one-off in the first quarter coming from one very large ticket.

Yeah. And on the real estate question, absolutely, the cost structure of real estate, I guess, the best way to see is it has two parts, one of which would be the costs associated with the assets themselves, another which would be the structure of managing those assets. And both will be coming down as the assets are sold, one of them very directly, the ones linked to maintaining the assets, which are very significant costs. And the cost of managing sort of the assets from our side would be reducing that cost base, as this non-core business really runs off completely, as I said, in that timeframe of three years.

Okay, thank you.

Thank you, Mario. We have also received two questions by e-mail. The first one is a question from Carlos García Gonzalez from Kepler, and it's regarding the NII sensitivity in Spain, the 15% in the first 12 months. How much could be after the full re-pricing? Jaime Sáenz de Tejada - Banco Bilbao Vizcaya Argentaria SA: That means beyond first 12 months. I don't remember, but some of you have actually done a very good analysis on NII sensitivity all across a number of our peers. And you came with a conclusion that Spain, it's a good play to play the 12 to 24 months' timeframe. Well, that is correct according to our internal metrics, although we haven't disclosed that sensitivity as of yet, but it's still significant, still significant.

Okay, thank you. And there's another question from Marissa Massa (01:00:25) from Bankinter. She's asking, are you planning to issue annual compliant bonds? Jaime Sáenz de Tejada - Banco Bilbao Vizcaya Argentaria SA: Yes, we are. We were waiting for the law to be approved in Spain, that has happened, and we will expect to issue and senior non-preferred probably after the summer. As you know, we've already made the necessary changes in our MTM program.

Okay. So, operator, are there any more questions?

There are currently no further questions on the line.

Okay then, I would really like to thank you all for connecting today in the evening and also for the flexibility on your side. We were also sorry that the information was not readily available at the CNMV, as it should have been. As Gloria indicated at the beginning of the call, we did experience some technical problems in trying to get the information over published probably because it was a busy day of communications, as she indicated. In any event, we again appreciate your time and connecting to the call, your questions as well, and wish you all a great rest of the summer. And for those of you who can take a break, I really hope that it's a fruitful time to rest and enjoy some time off, and we'll see you in the fall. Bye-bye.

Bye. Thank you. Jaime Sáenz de Tejada - Banco Bilbao Vizcaya Argentaria SA: Thank you.