UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 6-K

REPORT OF FOREIGN ISSUER PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the six months ended June 30, 2017

Commission file number: 1-10110

BANCO BILBAO VIZCAYA ARGENTARIA, S.A.

(Exact name of Registrant as specified in its charter)

BANK BILBAO VIZCAYA ARGENTARIA, S.A.

(Translation of Registrant’s name into English)

Calle Azul, 4

28050 Madrid

Spain

(Address of principal executive offices)

Ricardo Gómez Barredo

Calle Azul, 4

28050 Madrid

Spain

Telephone number +34 91 537 7000

Fax number +34 91 537 6766

(Name, telephone, e-mail and /or facsimile number and address of Company contact person)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F  ☒            Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes  ☐            No  ☒

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes  ☐            No  ☒

BANCO BILBAO VIZCAYA ARGENTARIA, S.A.

TABLE OF CONTENTS

Certain Terms and Conventions	1
Cautionary Statement Regarding Forward-Looking Statements	1
Presentations of Financial Information	3
Selected Interim Consolidated Financial Data	4
Business Overview	7
Selected Statistical Information	16
Operating and Financial Review and Prospects	35
Unaudited Interim Consolidated Financial Statements	F-1

This Form 6-K is incorporated by reference into BBVA’s Registration Statement on Form F-3 (File No. 333-212729) filed with the Securities and Exchange Commission.

CERTAIN TERMS AND CONVENTIONS

The terms below are used as follows throughout this report:

• “BBVA”, the “Bank”, the “Company”, the “Group” or the “BBVA Group” means Banco Bilbao Vizcaya Argentaria, S.A. and its consolidated subsidiaries unless otherwise indicated or the context otherwise requires.

• “BBVA Bancomer” means Grupo Financiero BBVA Bancomer, S.A. de C.V. and its consolidated subsidiaries, unless otherwise indicated or the context otherwise requires.

• “BBVA Compass” means BBVA Compass Bancshares, Inc. and its consolidated subsidiaries, unless otherwise indicated or the context otherwise requires.

• “Garanti Bank” means Turkiye Garanti Bankasi, A.S, and its consolidated subsidiaries, unless otherwise indicated or the context otherwise requires.

• “Unaudited Interim Consolidated Financial Statements” means our unaudited interim consolidated financial statements as of June 30, 2017 and for the six-month periods ended June 30, 2017 and June 30, 2016 prepared in accordance with the International Financial Reporting Standards adopted by the European Union (“EU-IFRS”) required to be applied under the Bank of Spain’s Circular 4/2004 and in compliance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS-IASB”).

• “Latin America” refers to Mexico and the countries in which we operate in South America and Central America.

First person personal pronouns used in this report, such as “we”, “us”, or “our”, mean BBVA, unless otherwise indicated or the context otherwise requires.

In this report, “$”, “U.S. dollars”, and “dollars” refer to United States Dollars and “€” and “euro” refer to Euro.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report contains statements that constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”). Section 21E of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may include words such as “believe”, “expect”, “estimate”, “project”, “anticipate”, “should”, “intend”, “probability”, “risk”, “VaR”, “target”, “goal”, “objective” and similar expressions or variations on such expressions and includes statements regarding future growth rates. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ materially from those in the forward-looking statements as a result of various factors. The accompanying information in this report on Form 6-K, including, without limitation, the information under the items listed below, identifies important factors that could cause such differences:

• “Business Overview”;

• “Selected Statistical Information” and

• “Operating and Financial Review and Prospects”.

Other important factors that could cause actual results to differ materially from those in forward-looking statements include, among others:

• political, economic and business conditions in Spain, the European Union (“EU”), Latin America, Turkey, the United States and other regions, countries or territories in which we operate;

1

• changes in applicable laws and regulations, including increased capital and provision requirements and taxation, and steps taken towards achieving an EU fiscal and banking union;

• the monetary, interest rate and other policies of central banks in the EU, Spain, the United States, Mexico, Turkey and elsewhere;

• changes or volatility in interest rates, foreign exchange rates (including the euro to U.S. dollar exchange rate), asset prices, equity markets, commodity prices, inflation or deflation;

• ongoing market adjustments in the real estate sectors in Spain, Mexico and the United States;

• the effects of competition in the markets in which we operate, which may be influenced by regulation or deregulation;

• changes in consumer spending and savings habits, including changes in government policies which may influence spending, saving and investment decisions;

• adverse developments in emerging countries, in particular Latin America and Turkey, including unfavorable political and economic developments, social instability and changes in governmental policies, including expropriation, nationalization, international ownership legislation, interest rate caps and tax policies;

• our ability to hedge certain risks economically;

• downgrades in our credit ratings or in the Kingdom of Spain’s credit ratings;

• the success of our acquisitions, divestitures, mergers and strategic alliances;

• our ability to make payments on certain substantial unfunded amounts relating to commitments with personnel;

• the performance of our international operations and our ability to manage such operations;

• weaknesses or failures in our Group’s internal processes, systems (including information technology systems) and security;

• our success in managing the risks involved in the foregoing, which depends, among other things, on our ability to anticipate events that are not captured by the statistical models we use; and

• force majeure and other events beyond our control.

Readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. We undertake no obligation to release publicly the result of any revisions to these forward-looking statements which may be made to reflect events or circumstances after the date hereof, including, without limitation, changes in our business or acquisition strategy or planned capital expenditures, or to reflect the occurrence of unanticipated events.

2

PRESENTATION OF FINANCIAL INFORMATION

Accounting Principles

Under Regulation (EC) no. 1606/2002 of the European Parliament and of the Council of July 19, 2002, all companies governed by the law of an EU Member State and whose securities are admitted to trading on a regulated market of any Member State must prepare their consolidated financial statements for the years beginning on or after January 1, 2005 in conformity with EU-IFRS. The Bank of Spain issued Circular 4/2004 of December 22, 2004 on Public and Confidential Financial Reporting Rules and Formats (as amended or supplemented from time to time, “Circular 4/2004”), which requires Spanish credit institutions to adapt their accounting system to the principles derived from the adoption by the European Union of EU-IFRS.

Differences between EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 and IFRS-IASB are not material for the six months ended June 30, 2017 and June 30, 2016. Accordingly, the Unaudited Interim Consolidated Financial Statements included in this report on Form 6-K have been prepared in accordance with EU-IFRS required to be applied under the Bank of Spain’s Circular 4/2004 and in compliance with IFRS-IASB.

Statistical and Financial Information

The following principles should be noted in reviewing the statistical and financial information contained herein:

• Average balances, when used, are based on the beginning and the month-end balances during each six-month period. We do not believe that such monthly averages present trends that are materially different from those that would be presented by daily averages.

• Unless otherwise stated, any reference to loans refers to both loans and advances.

• Financial information with respect to segments or subsidiaries may not reflect consolidation adjustments.

• Certain numerical information in this report on Form 6-K may not compute due to rounding. In addition, information regarding period-to-period changes is based on numbers which have not been rounded.

Venezuela

The local financial statements of the Group subsidiaries in Venezuela are expressed in Venezuelan bolivar and converted into euros for purposes of preparing the Group’s consolidated financial statements. Venezuela has strict foreign exchange restrictions and different exchange rates in place.

In past years, we have used different exchange rates to prepare the Group’s consolidated financial statements:

• Until January 1, 2014, we used the CADIVI exchange rate (named after the acronym, in Spanish, of the Foreign Exchange Administration Commission, currently the National Center for Foreign Trade or CENCOEX). As of December 31, 2013 the exchange rate was 8.68 Venezuelan bolivars per euro.

• In 2014 the Venezuelan government approved a new exchange rate system referred to as the “foreign-currency system”, in which the exchange rate against the U.S. dollar was determined in an auction which was open to both individuals and companies, resulting in an exchange rate that fluctuated from auction to auction and was published on the website of the Complementary Currency Administration System (SICAD I). Subsequently, in July 2014, the Venezuelan government established a new type of auction called SICAD II only applicable to certain types of transactions and not applicable to credit institutions. As of December 31, 2014 the applicable exchange rate (SICAD I) was 14.71 Venezuelan bolivars per euro. For purposes of preparing our consolidated financial statements as of and for the year ended December 31, 2014 we used the SICAD I exchange rate.

3

• On February 10, 2015, the Venezuelan government announced the cancellation of SICAD II and its combination with SICAD I in order to create a new SICAD and the creation of a new foreign-currency system called SIMADI. The Group used the SIMADI exchange rate starting in March 2015 for purpose of the Group’s interim financial statements. The SIMADI exchange rate increased rapidly to approximately 218 Venezuelan bolivars per euro and stabilized during the second half of 2015 to 216.3 Venezuelan bolivars per euro as of December 31, 2015.

• In February 2016, the Venezuelan government approved a new exchange rate agreement which sets two new mechanisms (DICOM and SICOM) that regulate the purchase and sale of foreign currency and the suspension of the SIMADI exchange rate.

• In May 2017, the Venezuelan Central Bank created the “Comité de Subastas de Divisas” (the Currency Auction Committee), whose object is to administer, regulate and manage the DICOM, with autonomy for the exercise of its functions.

• From December 31, 2015, the Board of Directors considers that the use of the new DICOM and SICOM exchange rates and, the previously used the SIMADI exchange rates, for converting bolivars into euros in preparing the Consolidated Financial Statements do not reflect the true picture of the consolidated financial statements of the Group or the financial position of the Group’s subsidiaries in Venezuela.

• Consequently, as of June 30, 2017 and December 31, 2016, the Group has used alternative conversion exchange rates in the conversion of the financial statements of the Group’s subsidiaries in Venezuela of 4,302 and 1,893 Venezuelan bolivars per euro, respectively. These exchanges rates have been calculated taking into account the evolution of inflation in Venezuela at those dates (122.2% and 300%, respectively as estimated by the Research Service of the Group) (see Note 2.2.20) to the Unaudited Interim Consolidated Financial Statements.

Changes in operating segments

There have been no significant changes to our operating segments during the first six months of 2017 (see Note 6 to the Unaudited Interim Consolidated Financial Statements).

SELECTED INTERIM CONSOLIDATED FINANCIAL DATA

The historical financial information set forth below for the six months ended June 30, 2017 and June 30, 2016 has been selected from, and should be read together with, the Unaudited Interim Consolidated Financial Statements included herein.

For information concerning the preparation and presentation of the financial information contained herein, see “Presentation of Financial Information”.

4

	Six Months Ended June 30,
	2017			2016			Change (%)
	(In Millions of Euros, Except Per Share/ADS (2) Data (In Euros))
Consolidated Statement of Income Data
Interest income		14,305			13,702			4.4
Interest expenses		(5,502	)		(5,338	)		3.1
Net interest income		8,803			8,365			5.2
Dividend income		212			301			(29.6	)
Share of profit or loss of entities accounted for using the equity method		(8	)		1			n.m.	(1)
Fee and commission income		3,551			3,313			7.2
Fee and commission expenses		(1,095	)		(963	)		13.7
Net gains (losses) on financial assets and liabilities (3)		541			642			(15.7	)
Exchange differences (net)		528			533			(0.9	)
Other operating income		562			715			(21.4	)
Other operating expense		(945	)		(1,186	)		(20.3	)
Income from insurance and reinsurance contracts		1,863			1,958			(4.9	)
Expenses from insurance and reinsurance contracts		(1,295	)		(1,446	)		(10.4	)
Gross income		12,718			12,233			4.0
Administration costs		(5,599	)		(5,644	)		(0.8	)
Depreciation and amortization		(712	)		(689	)		3.3
Provisions or (-) reversal of provisions		(364	)		(262	)		38.9
Impairment losses on financial assets (net)		(1,941	)		(2,110	)		(8.0	)
Net operating income		4,102			3,528			16.3
Impairment losses on non-financial assets (net)		(80	)		(99	)		(19.2	)
Gains (losses) on derecognition of non-financial assets and subsidiaries, net		30			37			(18.9	)
Negative goodwill recognized in profit or loss		—			—			—
Profit or (-) loss from non-current assets and disposal groups classified as held for sale not qualifying as discontinued operations		(18	)		(75	)		(76.0	)
Operating profit before tax		4,033			3,391			18.9
Tax expense or (-) income related to profit or loss from continuing operations		(1,120	)		(920	)		21.7
Profit from continuing operations		2,914			2,471			17.9
Profit from discontinued operations (net)		—			—			—
Profit		2,914			2,471			17.9
Profit attributable to parent company		2,306			1,832			25.9
Profit attributable to non-controlling interests		607			639			(5.0	)
Per share/ADS Data
Profit from continuing operations		0.44			0.38
Diluted profit attributable to parent company (4)		0.33			0.26
Basic profit attributable to parent company		0.33			0.26
Dividends declared (In Euros)		—			0.08
Dividends declared (In U.S. dollars)		—			0.09
Number of shares outstanding (at period end)		6,667,886,580			6,480,357,925

(1) Not meaningful

(2) Each American Depositary Share (“ADS”) represents the right to receive one ordinary share.

(3) Comprises the following income statement line items contained in the Unaudited Interim Consolidated Financial Statements: “Gains or (-) losses on derecognition of financial assets and liabilities not measured at fair value through profit or loss, net”; “Gains or (-) losses on financial assets and liabilities designated at fair value through profit or loss, net”; “Gains or (-) losses on financial assets and liabilities held for trading, net” and “Gains or (-) losses from hedge accounting, net”.

(4) Calculated on the basis of the weighted average number of BBVA’s ordinary shares outstanding during the relevant period including the average number of estimated shares to be converted and, for comparative purposes, a correction factor to account for the capital increases carried out in April 2016, October 2016 and April 2017, and excluding the weighted average number of treasury shares during the period (6,626 million and 6,626 million shares for the six months ended June 30, 2017 and June 30, 2016, respectively). See Note 5 to the Unaudited Interim Consolidated Financial Statements.

5

	As of and for the Six Months Ended June 30,			As of and for the Year Ended December 31,			As of and for the Six Months Ended June 30,
	2017			2016			2016
	(In Millions of Euros, Except Percentages)
Consolidated Balance Sheet Data
Total assets		702,429			731,856			746,040
Net assets		54,727			55,428			55,962
Common stock		3,267			3,218			3,175
Loans and receivables (net)		458,494			465,977			470,543
Customer deposits		394,626			401,465			406,284
Debt certificates		69,513			76,375			75,498
Non-controlling interest		6,895			8,064			8,527
Total equity		54,727			55,428			55,962
Consolidated ratios
Profitability ratios:
Net interest margin (1)		2.45	%		2.32	%		2.25	%
Return on average total assets (2)		0.8	%		0.6	%		0.7	%
Return on average stockholders’ funds (3)		8.6	%		6.7	%		7.2	%
Credit quality data
Loan loss reserve (4)		15,346			16,016			17,439
Loan loss reserve as a percentage of total loans and receivables (net)		3.35	%		3.44	%		3.71	%
Non-performing asset ratio (NPA ratio) (5)		4.58	%		4.90	%		5.14	%
Impaired loans and advances to customers		21,730			22,915			24,212
Impaired contingent liabilities to customers (6)		691			680			622
		22,421			23,595			24,834
Loans and advances to customers		424,470			430,629			433,366
Contingent liabilities to customers		47,060			50,540			50,127
		474,597			481,169			483,493

(1) Represents net interest income as a percentage of average total assets. In order to calculate “Net interest margin” for the six months ended June 30, 2017 and June 30, 2016, respectively, net interest income is annualized by multiplying the net interest income for the period by two.

(2) Represents profit as a percentage of average total assets. In order to calculate “Return on average total assets” for the six months ended June 30, 2017 and June 30, 2016, respectively, profit is annualized by multiplying the profit for the period by two.

(3) Represents profit attributable to parent company as a percentage of average total equity, excluding “Non-controlling interest”. In order to calculate “Return on average equity” for the six months ended June 30, 2017 and June 30, 2016, respectively, profit attributable to parent company is annualized by multiplying the profit attributable to parent company for the period by two.

(4) Represents impairment losses on loans and receivables to credit institutions and loans and advances to customers.

(5) Represents the sum of impaired loans and advances to customers and impaired contingent liabilities to customers divided by the sum of loans and advances to customers and contingent liabilities to customers.

(6) We include contingent liabilities in the numerator and the denominator in the calculation of our non-performing asset ratio (NPA ratio). We believe that impaired contingent liabilities should be included in the calculation of our NPA ratio where we have reason to know, as of the reporting date, that they are impaired. The credit risk associated with contingent liabilities (consisting mainly of financial guarantees provided to third-parties on behalf of our customers) is evaluated and provisioned according to the probability of default of our customers’ obligations. If impaired contingent liabilities were not included in the calculation of our NPA ratio, such ratio would generally be higher for the periods covered, amounting to approximately 5.1% as of June 30, 2017, 5.3% as of December 31, 2016 and 5.6% as of June 30, 2016.

6

Exchange Rates

Spain’s currency is the euro. Unless otherwise indicated, the amounts that have been converted to euro in this report on Form 6-K have been performed at the corresponding exchange rate published by the European Central Bank (“ECB”) at the end of each relevant period for purposes of the balance sheet, and the average exchange rate during the relevant period for purposes of the income statement.

For convenience in the analysis of the information, the following tables describe, for the periods and dates indicated, information concerning the noon buying rate for euro, expressed in dollars per €1.00. The term “noon buying rate” refers to the rate of exchange for euros, expressed in U.S. dollars per euro, in the City of New York for cable transfers payable in foreign currencies as certified by the Federal Reserve Bank of New York for customs purposes.

Year ended December 31,	Average(1)
2012		1.2908
2013		1.3303
2014		1.3210
2015		1.1032
2016		1.1029
2017 (through September 15, 2017)		1.1251

(1) Calculated by using the average of the exchange rates on the last day of each month during the period.

Month ended	High		Low
March 31, 2017		1.0882		1.0514
April 30, 2017		1.0941		1.0606
May 31, 2017		1.1236		1.0869
June 30, 2017		1.1420		1.1124
July 31, 2017		1.1826		1.1336
August 31, 2017		1.2025		1.1703
September 15, 2017 (through September 15, 2017)		1.2041		1.1886

The noon buying rate for euro from the Federal Reserve Bank of New York, expressed in dollars per €1.00, on September 15, 2017, was $1.1959.

As of June 30, 2017, approximately 48% of our assets and approximately 47% of our liabilities were denominated in currencies other than euro. See Note 2.2.16 to our Unaudited Interim Consolidated Financial Statements.

For a discussion of our foreign currency exposure, please see Note 7.4.2 to our Unaudited Interim Consolidated Financial Statements.

B. Business Overview

BBVA is a highly diversified international financial group, with strengths in the traditional banking businesses of retail banking, asset management, private banking and wholesale banking. We also have investments in some of Spain’s leading companies.

7

Operating Segments

Set forth below are the Group’s current seven operating segments:

• Banking Activity in Spain

• Non-Core Real Estate (until March 2017, this operating segment was referred to as Real Estate Activity in Spain)

• The United States

• Mexico

• Turkey

• South America

• Rest of Eurasia

In addition to the operating segments referred to above, the Group has a Corporate Center which includes those items that have not been allocated to an operating segment. It includes the Group’s general management functions, including costs from central units that have a strictly corporate function; management of structural exchange rate positions carried out by the Financial Planning unit; specific issues of capital instruments to ensure adequate management of the Group’s overall capital position; proprietary portfolios such as holdings in some of Spain’s leading companies and their corresponding results; certain tax assets and liabilities; provisions related to commitments with pensioners; and goodwill and other intangibles.

The breakdown of the Group’s total assets by operating segments and Corporate Center as of June 30, 2017 and December 31, 2016 is as follows:

	As of June 30, 2017		As of December 31, 2016(1)
	(In Millions of Euros)
Banking Activity in Spain		316,003		335,847
Non-Core Real Estate		12,491		13,713
The United States		80,015		88,902
Mexico		99,233		93,318
Turkey		83,895		84,866
South America		73,323		77,918
Rest of Eurasia		18,807		19,106
Subtotal Assets of Operating Segments		683,768		713,670
Corporate Center		18,662		18,186
Total Assets BBVA Group		702,429		731,856

(1) The figures corresponding to December 31, 2016 have been restated due to changes in the scope of operating segments.

8

The following table sets forth information relating to the profit (loss) attributable to parent company by each of BBVA’s operating segments and Corporate Center for the six months ended June 30, 2017 and June 30, 2016:

	Profit/(Loss) Attributable to Parent Company						% of Profit/(Loss) Attributable to Parent Company
	Six months ended June 30,
	2017			2016			2017			2016
	(In Millions of Euros)						(In Percentage)
Banking Activity in Spain		670			621			24.8			26.4
Non-Core Real Estate		(191	)		(207	)		(7.1	)		(8.8	)
The United States		297			178			11.0			7.6
Mexico		1,080			968			39.9			41.2
Turkey		374			324			13.8			13.8
South America		404			394			14.9			16.7
Rest of Eurasia		73			75			2.7			3.2
Subtotal operating segments		2,707			2,352
Corporate Center		(401	)		(520	)
Profit attributable to parent company		2,306			1,832

The following table sets forth information relating to the income of each operating segment and Corporate Center for the six months ended June 30, 2017 and 2016.

	Operating Segments
	Banking Activity in Spain		Non- Core Real Estate			The United States		Mexico		Turkey		South America		Rest of Eurasia		Corporate Center			BBVA Group
	(In Millions of Euros)
June 2017
Net interest income		1,865		31			1,098		2,676		1,611		1,617		95		(190	)		8,803
Gross income		3,201		(6	)		1,468		3,507		1,998		2,252		256		42			12,718
Net margin before provisions(1)		1,492		(64	)		523		2,309		1,230		1,211		102		(397	)		6,407
Operating profit/(loss) before tax		943		(241	)		405		1,469		1,010		790		104		(447	)		4,033
Profit attributable to parent company		670		(191	)		297		1.080		374		404		73		(401	)		2.306
June 2016
Net interest income		1,941		42			938		2,556		1,606		1,441		86		(245	)		8,365
Gross income		3,282		11			1,330		3,309		2,154		1,999		278		(130	)		12,233
Net margin before provisions(1)		1,493		(56	)		425		2,112		1,321		1,078		110		(582	)		5,901
Operating profit/(loss) before tax		898		(287	)		240		1,300		1,022		804		103		(688	)		3,391
Profit attributable to parent company		621		(207	)		178		968		324		394		75		(520	)		1,832

(1) “Net margin before provisions” is calculated as “Gross income” less “Administration costs” and “Depreciation and amortization”.

9

The following table sets forth information relating to the balance sheet of the main operating segments (excluding non-core real estate) as of June 30, 2017 and December 31, 2016:

	As of June 30, 2017
	Banking Activity in Spain		The United States		Mexico		Turkey		South America		Rest of Eurasia
	(In Millions of Euros)
Total Assets		316,003		80,015		99,233		83,895		73,323		18,807
Loans and advances to customers		185,777		56,739		52,019		57,527		47,446		16,816
Of which:
Residential mortgages		78,982		11,627		9,218		5,593		10,954		2,384
Consumer finance		7,773		6,844		12,172		16,286		10,025		245
Loans		6,066		6,344		7,321		11,363		7,423		233
Credit cards		1,707		500		4,851		4,923		2,602		12
Loans to enterprises		44,637		29,726		20,271		33,422		19,677		12,714
Loans to public sector		17,976		4,465		3,844		—		600		165
Total Liabilities		306,072		76,569		95,746		75,312		68,924		17,859
Customer deposits		181,812		59,145		54,826		46,780		44,518		7,304
Current and savings accounts		109,349		44,978		33,511		12,380		21,627		3,976
Time deposits		60,338		10,521		7,455		34,806		18,640		3,018
Other customer funds		5,095		30		6,873		10		4,724		243
Total Equity		9,931		3,446		3,487		8,583		4,400		948
	As of December 31, 2016
	Banking Activity in Spain		The United States		Mexico		Turkey		South America		Rest of Eurasia
	(In Millions of Euros)
Total Assets		335,847		88,902		93,318		84,866		77,918		19,106
Loans and advances to customers		187,201		62,000		47,938		57,941		50,333		15,835
Of which:
Residential mortgages		81,659		12,893		8,410		5,801		11,441		2,432
Consumer finance		7,141		7,413		11,286		15,819		10,527		231
Loans		5,374		6,838		6,630		10,734		7,781		217
Credit cards		1,767		575		4,656		5,085		2,745		15
Loans to enterprises		43,472		33,084		18,684		33,836		21,495		12,340
Loans to public sector		18,268		4,594		3,862		—		685		57
Total Liabilities		325,230		84,719		89,244		75,798		73,425		17,705
Customer deposits		180,544		65,760		50,571		47,244		47,684		9,396
Current and savings accounts		98,989		49,430		31,112		12,237		23,369		4,442
Time deposits		70,696		13,765		7,048		35,231		20,509		4,773
Other customer funds		5,124		—		5,324		21		4,456		107
Total Equity		10,617		4,183		4,074		9,068		4,493		1,401

10

Banking Activity in Spain

The Banking Activity in Spain operating segment includes all of BBVA’s banking and non-banking businesses in Spain, other than those included in the Corporate Center area and Non-Core Real Estate. The main business units included in this operating segment are:

• Spanish Retail Network: including individual customers, private banking, small companies and businesses in the domestic market;

• Corporate and Business Banking (CBB): which manages small and medium sized enterprises (“SMEs”), companies and corporations, public institutions and developer segments;

• Corporate and Investment Banking (C&IB): responsible for business with large corporations and multinational groups and the trading floor and distribution business in Spain; and

• Other units: which include the insurance business unit in Spain (BBVA Seguros), and the Asset Management unit, which manages Spanish mutual funds and pension funds. Real Estate new loan production to developers or loans to developers that are not in difficulties are also included here.

In addition, Banking Activity in Spain includes certain loans and advances portfolios, finance and structural euro balance sheet positions.

The following table sets forth information relating to the activity of this operating segment as of June 30, 2017, and December 31, 2016:

	As of June 30, 2017		As of December 31, 2016
	(In Millions of Euros)
Total assets		316,003		335,847
Loans and advances to customers		185,777		187,201
Customer deposits		181,812		180,544
Mutual funds		35,322		32,648
Pension funds		23,522		23,448
NPA ratio (%)		5.7		5.8

Loans and advances to customers in this operating segment as of June 30, 2017 amounted to €185,777 million, a 0.8% decrease from the €187, 201 million recorded as of December 31, 2016.

Customer deposits in this operating segment as of June 30, 2017 amounted to €181,812 million, a 0.7% increase from the €180,544 million recorded as of December 31, 2016.

Mutual funds in this operating segment as of June 30, 2017 amounted to €35,322 million, an 8.2 % increase from the €32,648 million recorded as of December 31, 2016 mainly due to new net contributions. Pension funds in this operating segment as of June 30, 2017 amounted to €23,522 million, a 0.3% increase from the €23,448 million recorded as of December 31, 2016.

This operating segment’s non-performing asset ratio decreased to 5.7% as of June 30, 2017, from 5.8% as of December 31, 2016. This operating segment’s non-performing assets coverage ratio decreased to 53% as of June 30, 2017, from 60% as of December 31, 2016.

11

Non-Core Real Estate

This operating segment was set up with the aim of providing specialized and structured management of the real estate assets accumulated by the Group as a result of the economic crisis in Spain. It includes primarily lending to developers in difficulties and real estate assets mainly coming from foreclosed assets, originated from both residential mortgages, as well as loans to developers.

The Group’s exposure in this operating segment to the real estate sector in Spain, including loans and advances to customers and foreclosed assets, has declined over recent years. As of June 30, 2017 the balance stood at €8,106 million, 11.9% lower than as of December 31, 2016. Non-performing assets of this segment were 254 basis points lower as of June 30, 2017 than at December 31, 2016. The coverage of non-performing and potential problem loans of this segment increased to 60.1% as of June 30, 2017, compared with 59.4% of the total amount of real estate assets in this operating segment as of December 31, 2016.

The number of real estate assets sold amounted to 14,563 units for the six months ended June 30, 2017.

The United States

This operating segment encompasses the Group’s business in the United States. BBVA Compass accounted for approximately 96% of the operating segment’s balance sheet as of June 30, 2017. Given its size in this segment, most of the comments below refer to BBVA Compass. This operating segment also includes the assets and liabilities of the BBVA office in New York, which specializes in transactions with large corporations.

The following table sets forth information relating to the business activity of this operating segment as of June 30, 2017 and December 31, 2016:

	As of June 30, 2017		As of December 31, 2016
	(In Millions of Euros)
Total assets		80,015		88,902
Loans and advances to customers		56,739		62,000
Customer deposits		59,145		65,760
NPA ratio (%)		1.3		1.5

The U.S. dollar depreciated 8.3% against the euro as of June 30, 2017 compared with December 31, 2016, negatively affecting the business activity of the United States operating segment as of June 30, 2017 expressed in euro. See “Item 5. Operating and Financial Review and Prospects—Factors Affecting the Comparability of our Results of Operations and Financial Condition -Trends in Exchange Rates”.

Loans and advances to customers in this operating segment as of June 30, 2017 amounted to €56,739 million a 8.5% decrease from the €62,000 million recorded as of December 31, 2016, mainly due to the depreciation of the U.S. dollar against the euro and, to a lesser extent, due to decreased loans and advances to enterprises and, to a lesser extent, the public sector.

Customer deposits in this operating segment as of June 30, 2017 amounted to €59,145 million, a 10.1% decrease from the €65,760 million recorded as of December 31, 2016, mainly attributable to the depreciation of the U.S. dollar against the euro and, to a lesser extent, due to decrease in the balance of current and saving accounts and time deposits.

This operating segment’s non-performing asset ratio as of June 30, 2017 was 1.3% compared with 1.5% as of December 31, 2016. This operating segment non-performing assets coverage ratio increased to 104.6% as of June 30, 2017, from 93.9% as of December 31, 2016. Both changes are mainly as a result of a decrease in the amount of impaired loans, particularly related to some companies that operate in the energy, metal and mining sectors.

12

Mexico

The Mexico operating segment comprises the banking and insurance businesses conducted in Mexico by the BBVA Bancomer financial group.

The following table sets forth information relating to the business activity of this operating segment as of June 30, 2017 and December 31, 2016:

	As of June 30, 2017		As of December 31, 2016
	(In Millions of Euros)
Total assets		99,233		93,318
Loans and advances to customers		52,019		47,938
Customer deposits		54,826		50,571
Mutual funds		17,871		16,331
Other placements		3,170		2,780
NPA ratio (%)		2.3		2.3

The Mexican peso appreciated 5.5% against the euro as of June 30, 2017 compared with December 31, 2016, positively affecting the business activity of the Mexico operating segment as of June 30, 2017 expressed in euro. See “Item 5. Operating and Financial Review and Prospects—Factors Affecting the Comparability of our Results of Operations and Financial Condition—Trends in Exchange Rates”.

Loans and advances to customers in this operating segment as of June 30, 2017 amounted to €52,019 million, a 8.5% increase from the €47,938 million recorded as of December 31, 2016, primarily due to the appreciation of the Mexican peso against the euro, and to an increase in loans to enterprises and residential mortgages.

Customer deposits in this operating segment as of June 30, 2017 amounted to €54,826 million, an 8.4% increase from the €50,571 million recorded as of December 31, 2016, mainly as a result of an overall increase in most product lines and, to a lesser extent, due to the impact of the appreciation of the Mexican peso.

Mutual funds in this operating segment as of June 30, 2017 amounted to €17,871 million, a 9.4% increase from the €16,331 million recorded as of December 31, 2016, primarily due to the appreciation of the Mexican peso against the euro.

This operating segment’s non-performing asset ratio was 2.3% as of June 30, 2017 and December 31, 2016. This operating segment’s non-performing assets coverage ratio decreased to 125.5% as of June 30, from 127.4% as of December 31, 2016.

13

Turkey

The following table sets forth information relating to the business activity of this operating segment as of June 30, 2017 and December 31, 2016:

	As of June 30, 2017		As of December 31, 2016
	(In Millions of Euros)
Total assets		83,895		84,866
Loans and advances to customers		57,527		57,941
Customer deposits		46,780		47,244
Mutual funds		1,234		1,192
Pension funds		2,679		2,561
NPA ratio (%)		2.5		2.7

The Turkish lira depreciated 8.3% against the euro as of June 30, 2017 compared to December 31, 2016, negatively affecting the business activity of the Turkey operating segment as of June 30, 2017 expressed in euro. See “Item 5. Operating and Financial Review and Prospects— Factors Affecting the Comparability of our Results of Operations and Financial Condition—Trends in Exchange Rates”.

Loans and advances to customers in this operating segment as of June 30, 2017 decreased 0.7% to €57,527 million from the €57,941 million recorded as of December 31, 2016.

Customer deposits in this operating segment as of June 30, 2017 decreased 1.0% to €46,780 million from the €47,244 million recorded as of December 31, 2016.

Mutual funds in this operating segment as of June 30, 2017 increased 3.5% to €1,234 million from the €1,192 million recorded as of December 31, 2016.

Pension funds in this operating segment as of June 30, 2017 increased 4.6% to €2,679 million from the €2,561 million recorded as of December 31, 2016.

This operating segment’s non-performing asset ratio was 2.5% as of June 30, 2017 compared to 2.7% as of December 31, 2016. This operating segment’s non-performing assets coverage ratio increased to 135.0% as of June 30, from 123.8% as of December 31, 2016.

South America

The South America operating segment includes the BBVA Group’s banking and insurance businesses in the region.

The business units included in the South America operating segment are:

• Retail and Corporate Banking: includes banks in Argentina, Chile, Colombia, Paraguay, Peru, Uruguay and Venezuela.

• Insurance: includes insurance businesses in Argentina, Chile, Colombia and Venezuela.

The following table sets forth information relating to the business activity of this operating segment as of June 30, 2017 and December 31, 2016:

	As of June 30, 2017		As of December 31, 2016
	(In Millions of Euros)
Total assets		73,323		77,918
Loans and advances to customers		47,446		50,333
Customer deposits		44,518		47,684
Mutual funds		5,473		4,859
Pension funds		6,849		7,043
NPA ratio (%)		3.5		2.9

14

The Venezuelan bolivar depreciated significantly against the euro in the six months ended June 30, 2017. Similarly, all the currencies of the countries in which BBVA operates in South America depreciated against the euro during the same period. The effect of the devaluation of all these currencies negatively affected the business activity of the South America operating segment as of June 30, 2017 expressed in euro. See “Item 5.Operating and Financial Review and Prospects—Factors Affecting the Comparability of our Results of Operations and Financial Condition”.

Loans and advances to customers in this operating segment as of June 30, 2017 amounted to €47,446 million, a 5.7% decrease from the €50,333 million recorded as of December 31, 2016, as a result of the impact of the depreciation of the currencies of the region. Excluding this impact, there was a positive change in loans and advances to customers, mainly as a result of an increase in consumer loans, and, to a lesser extent, due to increase in residential mortgages. By country, the main variation (excluding the impact of the depreciation of the currencies) was the increase recorded in Argentina.

Customer deposits in this operating segment as of June 30, 2017 amounted to €44,518 million, a 6.6% decrease from the €47,684 million recorded as of December 31, 2016, mainly as a result of the impact of the depreciation of the currencies of the region, particularly the Venezuelan bolivar and Argentine Peso. Excluding this impact, there was a positive change in customer deposits, mainly as a result of an increase in other customer funds, and, to a lesser extent, due to an increase in current and savings accounts. By country, the main variation (excluding the impact of the depreciation of the currencies) was the increase recorded in Argentina..

Mutual funds in this operating segment as of June 30, 2017 amounted to €5,473 million, a 12.6% increase from the €4,859 million recorded as of December 31, 2016, mainly due to the positive performance in Argentina (27% increase) and Colombia (32% increase) which was partially offset by the depreciation of the currencies of the region.

Pension funds in this operating segment as of June 30, 2017 amounted to €6,849 million, a 2.8% decrease from the €7,043 million recorded as of December 31, 2016.

This operating segment’s non-performing asset ratio increased to 3.5% as of June 30, 2017, from 2.9% as of December 31, 2016, due to the weaker economic conditions in the region. This operating segment non-performing assets coverage ratio decreased to 94.4% as of June 30, 2017, from 103.3% as of December 31, 2016, mainly as a result of increased impaired assets, particularly in Colombia.

Rest of Eurasia

This operating segment includes the retail and wholesale banking businesses carried out by the Group in Europe (primarily Portugal) and Asia, excluding Spain and Turkey.

The following table sets forth information relating to the business activity of this operating segment as of June 30, 2017 and December 31, 2016:

	As of June 30, 2017		As of December 31, 2016
	(In Millions of Euros)
Total assets		18,807		19,106
Loans and advances to customers		16,816		15,835
Customer deposits		7,304		9,396
Pension funds		362		366
NPA ratio (%)		2.6		2.7

15

Loans and advances to customers in this operating segment as of June 30, 2017 amounted to €16,816 million, a 6.2% increase from the €15,835 million recorded as of December 31, 2016, mainly as a result of an increase in loans to foreign companies.

Customer deposits in this operating segment as of June 30, 2017 amounted to €7,304 million, a 22.3% decrease from the €9,396 million recorded as of December 31, 2016, mainly as a result of decreased current and saving accounts and time deposits, particularly by foreign customers and foreign currency creditors.

Pension funds in this operating segment as of June 30, 2017 amounted to €362 million, a 1.2% decrease from the €366 million recorded as of December 31, 2016, mainly as a result of higher contributions and the appreciation of pension funds.

This operating segment’s non-performing asset ratio decreased to 2.6% as of June 30, 2017 from 2.7% as of December 31, 2016. This operating segment’s non-performing assets coverage ratio decreased to 81.8% as of June 30, from 84.3% as of December 31, 2016.

Selected Statistical Information

The following is a presentation of selected statistical information for the periods indicated. Where required under Industry Guide 3, we have provided such selected statistical information separately for our domestic and foreign activities, pursuant to our calculation that our foreign operations are significant according to Rule 9-05 of Regulation S-X.

Average Balances and Rates

The tables below set forth selected statistical information on our average balance sheets, which are based on the beginning and month-end balances in each period. We do not believe that monthly averages present trends materially different from those that would be presented by daily averages. Interest income figures, when used, include interest income on non-accruing loans to the extent that cash payments have been received. Loan fees are included in the computation of interest income.

16

	Average Balance Sheet - Assets and Interest Earning Assets
	Six Months ended June 30, 2017							Six Months ended June 30, 2016
	Average Balance		Interest		Average Yield (1)			Average Balance		Interest		Average Yield (1)
	(In Millions of Euros, Except Percentages)
Assets
Cash and balances with central banks and other demand deposits		33,009		6		0.04	%		25,003		5		0.04	%
Domestic		11,759		—		0.00	%		7,614		—		0.01	%
Foreign		21,250		6		0.06	%		17,389		5		0.06	%
Debt securities and derivatives		183,002		2,442		2.69	%		207,222		2,562		2.49	%
Domestic		113,680		692		1.23	%		137,790		921		1.34	%
Foreign		69,322		1,750		5.09	%		69,431		1,640		4.75	%
Loans and receivables		451,048		11,598		2.57	%		457,080		11,010		2.41	%
Loans and advances to central banks		12,443		148		2.41	%		17,215		99		1.15	%
Loans and advances to credit institutions		26,042		144		1.12	%		27,865		163		1.18	%
Loans and advances to customers		412,563		11,306		5.53	%		412,000		10,748		5.25	%
In euros		197,588		1,714		1.75	%		203,819		1,918		1.89	%
Domestic		187,764		1,678		1.80	%		194,185		1,888		1.96	%
Foreign		9,824		36		0.74	%		9,634		30		0.62	%
In other currency		214,974		9,591		9.00	%		208,182		8,830		8.53	%
Domestic		15,942		200		2.53	%		15,246		161		2.12	%
Foreign		199,032		9,391		9.51	%		192,936		8,669		9.04	%
Other assets		50,688		259		1.03	%		53,184		125		0.47	%
Total average assets (2)		717,747		14,305		4.02	%		742,489		13,702		3.71	%

(1) Rates have been presented on a non-taxable equivalent basis.

(2) Foreign activity represented 45.79% of the total average assets for the six months period ended June 30, 2017.

	Average Balance Sheet - Liabilities and Interest Paid on  Interest Bearing Liabilities
	Six Months ended June 30, 2017							Six Months ended June 30, 2016
	Average Balance		Interest		Average Yield (1)			Average Balance		Interest		Average Yield (1)
	(In Millions of Euros, Except Percentages)
Liabilities
Deposits from central banks and credit institutions		93,471		938		2.02	%		102,555		952		1.87	%
Customer deposits		396,690		3,024		1.54	%		404,701		3,027		1.50	%
In euros		186,550		245		0.26	%		203,558		420		0.41	%
Domestic		176,172		238		0.27	%		193,451		404		0.42	%
Foreign		10,378		7		0.14	%		10,106		15		0.31	%
In other currency		210,140		2,779		2.67	%		201,143		2,607		2.61	%
Domestic		12,689		28		0.44	%		11,081		21		0.38	%
Foreign		197,451		2,752		2.81	%		190,063		2,586		2.74	%
Debt certificates and subordinated liabilities		86,208		865		2.02	%		89,982		876		1.96	%
Non-interest-bearing liabilities		86,003		675		1.58	%		90,117		483		1.08	%
Stockholders’ equity		55,374		—		—			55,135		—		—
Total average liabilities and equity (2)		717,747		5,502		1.55	%		742,489		5,338		1.45	%

(1) Rates have been presented on a non-taxable equivalent basis.

(2) Foreign activity represented the 56.09% of the total average liabilities for the six months period ended June 30, 2017.

17

Changes in Net Interest Income-Volume and Rate Analysis

The following tables allocate changes in our net interest income between changes in volume and changes in rate for the six months ended June 30, 2017 compared to the six months ended June 30, 2016. Volume and rate variance have been calculated based on movements in average balances over the period and changes in interest rates on average interest-earning assets and average interest-bearing liabilities. The only out-of-period items and adjustments excluded from the following table are interest payments on loans which are made in a period other than the period in which they are due. Loan fees were included in the computation of interest income.

	For the Six Months Ended June 30, 2017/June 30, 2016
	Increase (Decrease) Due to Changes in
	Volume (1)			Rate (2)			Net Change
	(In Millions of Euros)
Interest income
Cash and balances with central banks and other demand deposits		2			(1	)		1
Debt securities and derivatives		(306	)		185			(120	)
Loans and advances to central banks		(28	)		77			50
Loans and advances to credit institutions		(11	)		(7	)		(19	)
Loans and advances to customers
In euros		(64	)		(140	)		(204	)
Domestic		(67	)		(143	)		(210	)
Foreign		1			6			6
In other currencies		263			498			761
Domestic		7			32			39
Foreign		249			473			722
Other assets		(6	)		140			134
Total income								603
Interest expense
Deposits from central banks and credit institutions		(87	)		73			(14	)
Customer deposits
In euros		(36	)		(139	)		(175	)
Domestic		(37	)		(130	)		(167	)
Foreign		—			(9	)		(9	)
In other currencies		109			63			172
Domestic		3			4			7
Foreign		93			73			166
Debt certificates		(39	)		28			(11	)
Other liabilities		(23	)		215			192
Total expense								164
Net interest income								438

(1) The volume effect is calculated as the result of the average interest rate of the earlier period multiplied by the difference between the average balances of both periods.

(2) The rate effect is calculated as the result of the average balance of the earlier period multiplied by the difference between the average interest rates of both periods.

18

Interest Earning Assets—Margin and Spread

The following table analyzes the levels of our average earning assets and illustrates the comparative gross and net yields and spread obtained for each of the periods indicated.

	Six Months Ended June 30,
	2017 (*)			2016 (*)
	(In Millions of Euros, Except Percentages)
Average interest earning assets		667,059			689,307
Gross yield (1)		4.29	%		3.99	%
Net yield (2)		3.99	%		3.70	%
Net interest margin (3)		2.64	%		2.43	%
Average effective rate paid on all interest-bearing liabilities		1.91	%		1.79	%
Spread (4)		2.38	%		2.19	%

(*) Ratios are annualized.

(1) Gross yield represents total interest income divided by average interest earning assets.

(2) Net yield represents total interest income divided by total average assets.

(3) Net interest margin represents net interest income as percentage of average interest earning assets.

(4) Spread is the difference between gross yield and the average cost of interest-bearing liabilities.

ASSETS

Interest-Bearing Deposits in Other Banks

As of June 30, 2017, interbank deposits (excluding deposits with central banks) represented 3.84% of our total assets. Of such interbank deposits, 28.6% were held outside of Spain and 71.4% in Spain. We believe that our deposits are generally placed with highly rated banks and have a lower risk than many loans we could make in Spain. However, such deposits are subject to the risk that the deposit banks may fail or the banking system of certain of the countries in which a portion of our deposits are made may face liquidity or other problems.

Securities Portfolio

As of June 30, 2017, our total securities portfolio (consisting of investment securities and loans and receivables) was carried on our consolidated balance sheet at a carrying amount (equivalent to its market or appraised value as of such date) of €120,577 million, representing 17.2% of our total assets. €33,160 million, or 27.5%, of our securities portfolio consisted of Spanish Treasury bonds and Treasury bills. The average yield for the six months ended June 30, 2017 on the investment securities that BBVA held was 2.2%, compared with an average yield of approximately 2.57% earned on loans and advances for the six months ended June 30, 2016. See Notes 10 and 12 to the Unaudited Interim Consolidated Financial Statements. For a discussion of our investments in affiliates, see Note 16 to the Unaudited Interim Consolidated Financial Statements. For a discussion of the manner in which we value our securities, see Notes 2.2.1 and 8 to the Unaudited Interim Consolidated Financial Statements.

The following tables analyze the carrying amount and fair value of debt securities as of June 30, 2017 and December 31, 2016, respectively. The trading portfolio is not included in the tables below because the amortized costs and fair values of these items are the same. See Note 10 to the Unaudited Interim Consolidated Financial Statements.

19

	As of June 30, 2017
	Amortized cost		Fair Value (1)		Unrealized Gains		Unrealized Losses
	(In Millions of Euros)
DEBT SECURITIES -
AVAILABLE FOR SALE PORTFOLIO
Domestic-		23,810		24,653		858		(16	)
Spanish Government and other government agencies debt securities		21,689		22,414		739		(15	)
Other debt securities		2,121		2,239		119		(1	)
Issued by Central Banks		—		—		—		—
Issued by credit institutions		951		1,028		77		—
Issued by other institutions		1,170		1,211		42		(1	)
Foreign-		45,535		45,861		920		(594	)
The United States		12,763		12,623		46		(186	)
U.S. Treasury and other U.S. Government agencies debt securities		2,553		2,547		8		(14	)
States and political subdivisions debt securities		5,936		5,873		7		(71	)
Other debt securities		4,273		4,203		31		(101	)
Issued by Central Banks		—		—		—		—
Issued by credit institutions		66		67		1		(0	)
Issued by other institutions		4,207		4,136		30		(101	)
Mexico		11,341		11,332		153		(161	)
Mexican Government and other government agencies debt securities		9,826		9,832		145		(139	)
Other debt securities		1,515		1,500		8		(23	)
Issued by Central Banks		—		—		—		—
Issued by credit institutions		115		116		1		(1	)
Issued by other institutions		1,400		1,384		6		(22	)
Turkey		4,982		5,020		109		(71	)
Turkey Government and other government agencies debt securities		4,869		4,906		107		(70	)
Other debt securities		113		114		2		(1	)
Issued by Central Banks		—		—		—		—
Issued by credit institutions		85		85		1		(1	)
Issued by other institutions		28		29		1		(0	)
Other countries		16,449		16,886		613		(176	)
Other foreign governments and other government agencies debt securities		8,059		8,322		370		(107	)
Other debt securities		8,390		8,564		243		(69	)
Issued by Central Banks		2,157		2,159		3		(1	)
Issued by credit institutions		3,005		3,101		140		(44	)
Issued by other institutions		3,228		3,304		100		(23	)
TOTAL AVAILABLE FOR SALE PORTFOLIO		69,345		70,514		1,779		(609	)
HELD TO MATURITY PORTFOLIO
Domestic-		6,401		6,456		55		—
Spanish Government and other government agencies debt securities		6,075		6,128		53		—
Other domestic debt securities		326		328		2		—
Issued by Central Banks		—		—		—		—
Issued by credit institutions		281		282		1		—
Issued by other institutions		45		46		1		—
Foreign-		8,130		8,209		111		(32	)
Government and other government agencies debt securities		7,186		7,247		93		(32	)
Other debt securities		944		962		18		—
TOTAL HELD TO MATURITY PORTFOLIO		14,531		14,628		166		(32	)
TOTAL DEBT SECURITIES		83,876		85,142		1,945		(643	)

(1) Fair values for listed securities are determined on the basis of their quoted prices at the end of the period. Fair values used for unlisted securities are based on our estimates and valuation techniques. See Note 8 to the Consolidated Financial Statements.

20

	As of December 31, 2016
	Amortized cost		Fair Value (1)		Unrealized Gains		Unrealized Losses
	(In Millions of Euros)
DEBT SECURITIES -
AVAILABLE FOR SALE PORTFOLIO
Domestic-		24,731		25,540		828		(19	)
Spanish Government and other government agencies debt securities		22,427		23,119		711		(18	)
Other debt securities		2,305		2,421		117		(1	)
Issued by Central Banks		—		—		—		—
Issued by credit institutions		986		1,067		82		—
Issued by other institutions		1,319		1,354		36		(1	)
Foreign-		49,253		49,040		773		(987	)
The United States		14,256		14,043		48		(261	)
U.S. Treasury and other U.S. Government agencies debt securities		1,702		1,683		1		(19	)
States and political subdivisions debt securities		6,758		6,654		8		(112	)
Other debt securities		5,797		5,706		39		(130	)
Issued by Central Banks		—		—		—		—
Issued by credit institutions		95		97		2		—
Issued by other institutions		5,702		5,609		37		(130	)
Mexico		11,525		11,200		19		(343	)
Mexican Government and other government agencies debt securities		9,728		9,438		11		(301	)
Other debt securities		1,797		1,763		8		(42	)
Issued by Central Banks		—		—		—		—
Issued by credit institutions		86		87		2		(1	)
Issued by other institutions		1,710		1,675		6		(41	)
Turkey		5,550		5,443		73		(180	)
Turkey Government and other government agencies debt securities		5,055		4,961		70		(164	)
Other debt securities		495		482		2		(16	)
Issued by Central Banks		—		—		—		—
Issued by credit institutions		448		436		2		(15	)
Issued by other institutions		47		46		—		(1	)
Other countries		17,923		18,354		634		(203	)
Other foreign governments and other government agencies debt securities		7,882		8,156		373		(98	)
Other debt securities		10,041		10,197		261		(105	)
Issued by Central Banks		1,657		1,659		4		(2	)
Issued by credit institutions		3,269		3,311		96		(54	)
Issued by other institutions		5,115		5,227		161		(49	)
		—		—		—		—
TOTAL AVAILABLE FOR SALE PORTFOLIO		73,985		74,580		1,601		(1,006	)
		—		—		—		—
HELD TO MATURITY PORTFOLIO		—		—		—		—
Domestic-		8,625		8,717		92		—
Spanish Government and other government agency debt securities		8,063		8,153		90		—
Other domestic debt securities		562		564		2		—
Issued by Central Banks		—		—		—		—
Issued by credit institutions		494		496		2		—
Issued by other institutions		68		68		—		—
Foreign-		9,071		8,902		16		(185	)
Government and other government agency debt securities		7,982		7,830		13		(165	)
Other debt securities		1,089		1,072		4		(21	)
		—		—		—		—
TOTAL HELD TO MATURITY PORTFOLIO		17,696		17,619		108		(185	)
		—		—		—		—
TOTAL DEBT SECURITIES		91,681		92,199		1,709		(1,192	)

(1) Fair values for listed securities are determined on the basis of their quoted prices at the end of the period. Fair values used for unlisted securities are based on our estimates and valuation techniques. See Note 8 to the Unaudited Interim Consolidated Financial Statements.

21

The following tables analyze the carrying amount and fair value of our ownership of equity securities as of June 30, 2017 and December 31, 2016, respectively. See Note 10 to the Unaudited Interim Consolidated Financial Statements:

	As of June 30, 2017
	Amortized cost		Fair Value (1)		Unrealized Gains		Unrealized Losses
	(In Millions of Euros)
EQUITY SECURITIES -
AVAILABLE FOR SALE PORTFOLIO
Domestic-		3,711		2,864		34		(881	)
Equity listed		3,667		2,820		33		(880	)
Equity unlisted		44		44		1		(1	)
Foreign-		1,126		1,288		181		(18	)
United States-		561		603		50		(7	)
Equity listed		24		48		24		—
Equity unlisted		537		555		26		(7	)
Other countries-		565		685		131		(11	)
Equity listed		404		481		86		(9	)
Equity unlisted		161		204		45		(2	)
TOTAL AVAILABLE FOR SALE PORTFOLIO		4,837		4,152		215		(899	)
TOTAL EQUITY SECURITIES		4,837		4,152		215		(899	)
TOTAL INVESTMENT SECURITIES		88,713		89,294		2,160		(1,542	)

(1) Fair values for listed securities are determined on the basis of their quoted prices at the end of the year. Fair values used for unlisted securities are based on our estimates or on unaudited financial statements, when available.

22

	As of December 31, 2016
	Amortized cost		Fair Value (1)		Unrealized Gains		Unrealized Losses
	(In Millions of Euros)
EQUITY SECURITIES -
AVAILABLE FOR SALE PORTFOLIO
Domestic-		3,748		2,822		19		(945	)
Equity listed		3,690		2,763		17		(944	)
Equity unlisted		57		59		2		(1	)
Foreign-		1,501		1,819		336		(17	)
The United States-		553		588		35		—
Equity listed		16		38		22		—
Equity unlisted		537		550		13		—
Other countries-		948		1,231		301		(17	)
Equity listed		777		1,028		268		(15	)
Equity unlisted		171		203		33		(2	)
TOTAL AVAILABLE FOR SALE PORTFOLIO		5,248		4,641		355		(962	)
TOTAL EQUITY SECURITIES		5,248		4,641		355		(962	)
TOTAL INVESTMENT SECURITIES		96,930		96,839		2,064		(2,154	)

(1) Fair values for listed securities are determined on the basis of their quoted prices at the end of the year. Fair values used for unlisted securities are based on our estimates or on unaudited financial statements, when available.

23

The following table analyzes the maturities of our debt investment and fixed income securities, excluding trading portfolio, by type and geographical area as of June 30, 2017:

	Maturity at One Year or Less				Maturity After One Year to Five Years				Maturity after Five Years to 10 Years				Maturity after 10 Years				Total
	Amount		Yield % (1)		Amount		Yield % (1)		Amount		Yield % (1)		Amount		Yield % (1)		Amount
	(Millions of Euros, Except Percentages)
DEBT SECURITIES
AVAILABLE-FOR-SALE PORTFOLIO
Domestic
Spanish government and other government agencies debt securities		3,387		0.26		2,985		1.25		10,952		2.34		5,090		4.42		22,414
Other debt securities		444		2.05		1,141		2.12		19		3.36		636		7.11		2,239
Total Domestic		3,831		0.48		4,125		1.53		10,971		2.35		5,725		4.19		24,653
Foreign
The United States		867		0.68		1,875		2.10		1,423		2.32		8,458		2.01		12,623
U.S. Treasury and other government agencies debt securities		852		0.65		884		1.67		809		1.94		—		—		2,547
States and political subdivisions debt securities		2		6.64		2		1.55		52		2.59		5,818		1.92		5,873
Other debt securities		12		1.49		989		2.51		562		2.87		2,640		2.22		4,203
Mexico		456		2.45		6,679		3.78		4,022		1.20		177		4.78		11,332
Mexican Government and other government agencies debt securities		347		1.00		5,657		3.71		3,720		0.89		108		1.42		9,832
Other debt securities		109		6.10		1,022		4.13		302		4.29		69		5.88		1,500
Turkey		225		9.16		1,425		10.20		1,275		9.63		2,094		13.31		5,020
Turkey Government and other government agencies debt securities		221		9.17		1,391		10.28		1,240		9.63		2,052		13.31		4,906
Other debt securities		3		8.73		35		7.19		35		—		41		—		114
Other countries		4,018		6.72		6,444		1.67		2,911		3.09		3,514		3.61		16,886
Securities of other foreign governments (2)		912		1.46		3,163		1.07		1,649		2.00		2,598		3.56		8,322
Other debt securities of other countries		3,107		8.43		3,280		2.28		1,263		4.45		916		3.77		8,564
Total Foreign		5,565		5.69		16,422		3.80		9,632		3.97		14,243		2.51		45,861
TOTAL AVAILABLE-FOR-SALE		9,396		3.46		20,549		3.27		20,603		3.05		19,968		2.99		70,514
HELD-TO-MATURITY PORTFOLIO
Domestic
Spanish government		480		3.53		2,825		4.63		852		2.28		1,917		3.08		6,075
Other debt securities		243		3.99		83		2.93		—		—		—		—		326
Total Domestic		723		3.59		2,909		4.51		852		2.28		1,917		3.08		6,401
Total International		494		6.95		3,986		6.00		2,256		9.06		1,394		5.53		8,130
TOTAL HELD-TO-MATURITY		1,217		4.93		6,895		5.39		3,109		7.17		3,311		4.26		14,531
TOTAL DEBT SECURITIES		10,613		3.63		27,444		3.80		23,712		3.59		23,279		3.17		85,045

(1) Rates have been presented on a non-taxable equivalent basis.

(2) Securities of other foreign Governments mainly include investments made by our subsidiaries in securities issued by the Governments of the countries where they operate.

24

Loans and Advances to Credit Institutions and Central Banks

As of June 30, 2017, our total loans and advances to credit institutions including central banks amounted to €38,037 million, or 5.4% of total assets. Net of our valuation adjustments, loans and advances to credit institutions amounted to €38,079 million as of June 30, 2017, or 5.4% of our total assets.

Loans and Advances to Customers

As of June 30, 2017, our total loans and advances to customers amounted to €424,470 million, or 60.4% of total assets. Net of our valuation adjustments (impairment losses), loans and advances amounted to €409,152 million as of June 30, 2017, or 58.2% of our total assets. As of June 30, 2017 our loans and advances in Spain amounted to €180,175 million. Our foreign loans and advances amounted to €244,296 million as of June 30, 2017. For a discussion of certain mandatory ratios relating to our loan portfolio, see “—Business Overview—Supervision and Regulation—Capital Requirements” and “—Business Overview— Supervision and Regulation—Investment Ratio” in our annual report on Form 20-F for the year ended December 31, 2016 (the “2016 20-F”).

Loans by Geographic Area

The following table shows, by domicile of the customer, our net loans and advances as of the dates indicated:

	As of June 30, 2017			As of December 31, 2016			As of June 30, 2016
	(In Millions of Euros)
Domestic		180,175			182,492			190,690
Foreign
Europe		26,916			25,763			23,843
The United States		54,176			60,388			58,167
Mexico		54,514			50,242			50,320
Turkey		53,753			54,174			57,230
South America		50,162			53,512			49,408
Other		4,774			4,058			3,706
Total foreign		244,296			248,137			242,676
Total loans and advances		424,470			430,629			433,366
Impairment losses		(15,318	)		(15,974	)		(17,396	)
Total net lending (1)		409,152			414,655			415,970

(1) Total net lending includes financial assets held for trading for loans and advances to customers.

25

Loans by Type of Customer

The following table shows, by domicile and type of customer, our net loans and advances at each of the dates indicated. The classification by type of customer is based principally on regulatory authority requirements in each country:

	As of June 30, 2017			As of December 31, 2016			As of June 30, 2016
	(In Millions of Euros)
Domestic
Government		20,416			20,741			23,767
Agriculture		1,146			1,076			1,070
Industrial		14,132			13,670			14,270
Real estate and construction		12,683			15,179			16,252
Commercial and financial		12,392			13,111			12,113
Loans to individuals (1)		101,519			102,299			105,094
Other		17,887			16,415			18,124
Total Domestic		180,175			182,492			190,690
Foreign					—
Government		13,767			14,132			14,487
Agriculture		3,356			3,236			3,093
Industrial		41,113			43,402			42,568
Real estate and construction		20,557			21,822			20,680
Commercial and financial		35,151			33,933			32,746
Loans to individuals		88,522			89,981			90,240
Other		41,830			41,630			38,862
Total Foreign		244,296			248,137			242,676
Total Loans and Advances		424,470			430,629			433,366
Impairment losses		(15,318	)		(15,974	)		(17,396	)
Total net lending (2)		409,152			414,655			415,970

(1) Includes mortgage loans to households for the acquisition of housing.

(2) Total net lending includes financial assets held for trading for loans and advances to customers.

The following table sets forth a breakdown, by currency, of our net loan portfolio as of June 30, 2017, December 31, 2016 and June 30, 2016:

	As of June 30, 2017		As of December 31, 2016		As of June 30, 2016
	(In Millions of Euros)
In euros		198,986		199,289		205,175
In other currencies		210,166		215,366		210,796
Total net lending (1)		409,152		414,655		415,971

(1) Total net lending includes financial assets held for trading for loans and advances to customers.

As of June 30, 2017, loans by BBVA and its subsidiaries to associates and jointly controlled companies amounted to €547 million, compared with €442 million as of December 31, 2016. Loans outstanding to the Spanish government and its agencies amounted to €20,416 million, or 4.8% of our total loans and advances as of June 30, 2017, compared with €20,741 million, or 4.8% of our total loans and advances as of December 31, 2016. None of our loans to companies controlled by the Spanish government are guaranteed by the government and, accordingly, we apply normal credit criteria in extending credit to such entities. Moreover, we carefully monitor such loans because governmental policies necessarily affect such borrowers.

26

Diversification in our loan portfolio is our principal means of reducing the risk of loan losses. We also carefully monitor our loans to borrowers in sectors or countries experiencing liquidity problems. Our exposure to our five largest borrowers as of June 30, 2017, excluding government-related loans, amounted to €19,326 million or approximately 4.6% of our total outstanding loans and advances. As of June 30, 2017 there did not exist any concentration of loans exceeding 10% of our total outstanding loans and advances, other than by category as disclosed in the table above.

Maturity and Interest Sensitivity

The following table sets forth an analysis by maturity of our total loans and advances to customers by domicile of the office that issued the loan and the type of customer as of June 30, 2017. The determination of maturities is based on contract terms.

	Maturity
	Due in One Year or Less		Due After One Year Through Five Years		Due After Five Years		Total
			(In Millions of Euros)
Domestic
Government		8,573		6,600		5,243		20,416
Agriculture		439		477		230		1,146
Industrial		5,885		5,118		3,129		14,132
Real estate and construction		2,394		4,509		5,780		12,683
Commercial and financial		6,296		3,381		2,715		12,392
Loans to individuals		12,203		23,457		65,860		101,519
Other		6,440		7,884		3,563		17,887
Total Domestic		42,230		51,425		86,520		180,175
Foreign
Government		807		2,223		10,737		13,767
Agriculture		1,852		1,027		477		3,356
Industrial		16,349		16,401		8,363		41,113
Real estate and construction		7,045		9,345		4,168		20,557
Commercial and financial		20,573		12,008		2,570		35,151
Loans to individuals		19,263		23,658		45,600		88,522
Other		12,962		19,298		9,570		41,830
Total Foreign		78,851		83,959		81,485		244,295
Total loans and advances (1)		121,080		135,384		168,005		424,470

(1) Total loans and advances include financial assets held for trading for loans and advances to customers.

The following table sets forth a breakdown of our fixed and variable rate loans which had a maturity of one year or more as of June 30, 2017.

	Interest Sensitivity of Outstanding Loans and Advances Maturing in One Year or More
	Domestic		Foreign		Total
			(In Millions of Euros)
Fixed rate		13,238		90,843		104,082
Variable rate		124,706		74,601		199,308
Total loans and advances		137,945		165,444		303,389

27

Impairment Losses on Loans and Advances

For a discussion of loan loss reserves, see “Operating and Financial Review and Prospects—Critical Accounting Policies—Impairment losses on financial assets” in the 2016 20-F and Note 2.2.1 to the Unaudited Interim Consolidated Financial Statements.

The following table provides information, by domicile of customer, regarding our loan loss reserve and movements of loan charge-offs and recoveries for periods indicated.

	As of and for the Six Months Ended June 30,			As of and for the Year Ended December 31,			As of and for the Six Months Ended June 30,
	2017			2016			2016
	(In Millions of Euros, Except Percentages)
Loan loss reserve at beginning of period:
Domestic		9,113			12,357			12,364
Foreign		6,903			6,385			6,378
Total loan loss reserve at beginning of period		16,016			18,742			18,742
Loans charged off:
Total domestic (1)		(976	)		(3,298	)		(1,853	)
Total foreign (2)		(1,114	)		(2,400	)		(1,178	)
Total Loans charged off:		(2,090	)		(5,698	)		(3,032	)
Provision for possible loan losses:
Domestic		573			1,095			641
Foreign		1,615			3,046			1,594
Total Provision for possible loan losses		2,188			4,141			2,235
Acquisition and disposition of subsidiaries					—
Effect of foreign currency translation		(306	)		(601	)		(132	)
Other		(462	)		(567	)		(374	)
Loan loss reserve at end of period:
Domestic		8,440			9,113			10,364
Foreign		6,906			6,903			7,075
Total Loan loss reserve at end of period		15,346			16,016			17,439
Loan loss reserve as a percentage of total loans and receivables at end of period		3.35	%		3.44	%		3.71	%
Net loan charge-offs as a percentage of total loans and receivables at end of period		0.46	%		1.22	%		0.65	%

(1) Domestic loans charged off in the six months ended June 30, 2017 and 2016 were mainly related to the real estate sector.

28

(2) Foreign loans charged off in the six months ended June 30, 2017 include €889 million related to real estate loans and loans to individuals and others and €207 million related to commercial and financial loans. Foreign loans charged off in 2016 include €2,012 million related to real estate loans and loans to individuals and others and €361 million related to commercial and financial loans.

When the recovery of any recognized amount is considered to be remote, this amount is removed from the consolidated balance sheet, without prejudice to any actions taken by the consolidated entities in order to collect the amount until their rights extinguish in full through expiry, forgiveness or for other reasons.

The loans charged off amounted to €2,090 million during the six months ended June 30, 2017 compared with €3,032 million during the six months ended June 30, 2016.

Our loan loss reserves as a percentage of total loans and advances decreased to 3.3% as of June 30, 2017 from 3.4% as of December 31, 2016.

Impaired Loans

As described in Note 2.2.1 to the Unaudited Interim Consolidated Financial Statements, loans are considered to be impaired when there are reasonable doubts that the loans will be recovered in full and/or the related interest will be collected for the amounts and on the dates initially agreed upon, taking into account the guarantees received by the consolidated entities to ensure (in part or in full) the performance of the loans.

Amounts collected in relation to impaired loans and receivables are used to recognize the related accrued interest and any excess amount is used to reduce the unpaid principal. The approximate amount of interest income on our impaired loans which was included in profit attributable to parent company for the six months ended June 30,

2017 and 2016 was €118 million and €131 million, respectively.

The following table provides information regarding our impaired loans, by domicile and type of customer, as of the dates indicated:

	As of June 30, 2017			As of December 31, 2016
	(In Millions of Euros, Except Percentages)
Impaired loans
Domestic		15,308			16,360
Public sector		217			270
Other resident sector		15,091			16,090
Foreign		6,432			6,565
Public sector		8			42
Other non-resident sector		6,424			6,523
Total impaired loans		21,740			22,925
Total loan loss reserve		(15,346	)		(16,016	)
Impaired loans net of reserves		6,394			6,908

Our total impaired loans amounted to €21,740 million as of June 30, 2017, a 5.2% decrease compared with €22,925 million as of December 31, 2016. This decrease is mainly attributable to a decline in domestic impaired loans, particularly in the real estate and construction sectors.

As mentioned in Note 2.2.1 to the Unaudited Interim Consolidated Financial Statements, our loan loss reserve includes loss reserve for impaired assets and loss reserve for unimpaired assets but which present an inherent loss. As of June 30, 2017, the loan loss reserve amounted to €15,346 million, a 4.2% decrease compared with €16,016 million as of December 31, 2016. This decrease in our loan loss reserve is mainly due to the improved performance in Spain.

29

The following table provides information, by domicile and type of customer, regarding our impaired loans and the loan loss reserves to customers taken for each impaired loan category, as of June 30, 2017:

	Impaired Loans		Loan Loss Reserve			Impaired Loans as a Percentage of Loans by Category
	(In Millions of Euros)
Domestic:
Government		217		(48	)		1.06	%
Credit institutions		—		—			—
Other sectors		15,091		(6,890	)		9.45	%
Agriculture		102		(45	)		8.91	%
Industrial		1,061		(655	)		7.51	%
Real estate and construction		5,483		(3,192	)		43.23	%
Commercial and other Financial		1,179		(672	)		9.51	%
Loans to individuals		6,110		(1,762	)		6.02	%
Other		1,157		(564	)		6.47	%
Total Domestic		15,308		(6,939	)		8.50	%
Foreign:
Government		8		(6	)		0.06	%
Credit institutions		10		(5	)		0.00	%
Other sectors		6,414		(3,285	)		2.79	%
Agriculture		109		(58	)		3.25	%
Industrial		1,037		(452	)		2.52	%
Real estate and construction		508		(191	)		2.47	%
Commercial and other financial		588		(306	)		1.67	%
Loans to individuals		2,904		(1,543	)		3.28	%
Other		1,268		(735	)		3.03	%
Total Foreign		6,432		(3,297	)		2.63	%
Collective allowance for incurred but not reported losses				(5,112	)
Total impaired loans		21,740		(15,348	)		5.35	%

Troubled Debt Restructurings

As of June 30, 2017, “troubled debt restructurings”, as described in Appendix IX to our Unaudited Interim Consolidated Financial Statements, totaling €10,114 million were not considered impaired loans.

Potential Problem Loans

The identification of “Potential problem loans” is based on the analysis of historical non-performing asset ratio trends, categorized by products/clients and geographical locations. This analysis is focused on the identification of portfolios with non-performing asset ratio higher than our average non-performing asset ratio. Once these portfolios are identified, we segregate such portfolios into groups with similar characteristics based on the activities to which they are related, geographical location, type of collateral, solvency of the client and loan to value ratio.

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The non-performing asset ratio in our domestic real estate and construction portfolio was 43.2% as of June 30, 2017 (compared with 41.2% as of December 31, 2016), substantially higher than the average non-performing asset ratio for all of our domestic activities (8.5%) and the average non-performing asset ratio for all of our consolidated activities (4.8%). Within such portfolio, construction loans and property development loans (which exclude mainly infrastructure and civil construction) had a non-performing asset ratio of 23.6% as of such date (compared with 25.3% as of December 31, 2016). Given such non-performing asset ratio, we performed an analysis in order to define the level of loan provisions attributable to these loan portfolios (see Note 2.2.1 to our Unaudited Interim Consolidated Financial Statements).

Foreign Country Outstandings

The following table sets forth, as of the dates indicated, the aggregate amounts of our cross-border outstandings (which consist of loans, interest-bearing deposits with other banks, acceptances and other monetary assets denominated in a currency other than the home-country currency of the office where the item is booked) where outstandings in the borrower’s country exceeded 1% of our total assets as of June 30, 2017 and December 31, 2016. Cross-border outstandings do not include loans in local currency made by our subsidiary banks to customers in other countries to the extent that such loans are funded in the local currency or hedged. As a result, they do not include the vast majority of the loans made by our subsidiaries in South America, Mexico and United States or other regions which are not listed below.

	As of June 30, 2017					As of December 31, 2016
	Amount		% of Total Assets			Amount		% of Total Assets
	(In Millions of Euros, except %)
United Kingdom		9,875		1.4	%		5,854		0.8	%
Mexico		2,305		0.3	%		1,947		0.3	%
Turkey		4,092		0.6	%		1,665		0.2	%
Other OECD (Organization for Economic Co-operation and Development)		8,570		1.2	%		7,745		1.1	%
Total OECD		24,842		3.5	%		17,211		2.4	%
Central and South America		3,080		0.4	%		4,001		0.6	%
Other		3,874		0.6	%		4,056		0.6	%
Total		31,797		4.5	%		25,268		3.5	%

The Bank of Spain requires that minimum reserves be maintained for cross-border risk arising with respect to loans and other outstandings to countries, or residents of countries, falling into certain categories established by the Bank of Spain on the basis of the level of perceived transfer risk. The category that a country falls into is determined by us, subject to review by the Bank of Spain.

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The following table shows the minimum required reserves with respect to each category of country for BBVA’s level of coverage as of June 30, 2017.

Categories(1)	Minimum Percentage of Coverage (Outstandings Within Category)
Countries belonging to the OECD whose currencies are listed in the Spanish foreign exchange market		0.0
Countries with transitory difficulties(2)		10.1
Doubtful countries(2)		22.8
Very doubtful countries(2)(3)		83.5
Bankrupt countries(4)		100.0

(1) Any outstanding which is guaranteed may be treated, for the purposes of the foregoing, as if it were an obligation of the guarantor.

(2) Coverage for the aggregate of these three categories (countries with transitory difficulties, doubtful countries and very doubtful countries) must equal at least 35% of outstanding loans within the three categories. The Bank of Spain has recommended up to 50% aggregate coverage.

(3) Outstandings to very doubtful countries are treated as impaired under Bank of Spain regulations.

(4) Outstandings to bankrupt countries must be charged off immediately. As a result, no such outstandings are reflected on our consolidated balance sheet. Notwithstanding the foregoing minimum required reserves, certain interbank outstandings with an original maturity of three months or less have minimum required reserves of 50%. We met or exceeded the minimum percentage of required coverage with respect to each of the foregoing categories.

Our exposure to borrowers in countries with difficulties (the last four categories in the foregoing table), excluding our exposure to subsidiaries or companies we manage and trade-related debt, amounted to €160 million and €104 million as of June 30, 2017 and December 31, 2016, respectively. These figures do not reflect loan loss reserves of 20.6% and 35.6% respectively, of the relevant amounts outstanding at such dates. Deposits with or loans to borrowers in all such countries as of June 30, 2017 did not in the aggregate exceed 0.02% of our total assets.

The country-risk exposures described in the preceding paragraph as of June 30, 2017 and December 31, 2016 do not include exposures for which insurance policies have been taken out with third parties that include coverage of the risk of confiscation, expropriation, nationalization, non-transfer, non-convertibility and, if appropriate, war and political violence. The sums insured as of June 30, 2017 and December 31, 2016 amounted to $123 million and $90 million, respectively (approximately €108 million and €85 million, respectively, based on a euro/dollar exchange rate on June 30, 2017 of $1.00 = €0.88 and on December 31, 2016 of $1.00 = €0.95).

LIABILITIES

Deposits

The principal components of our customer deposits are domestic demand and savings deposits and foreign time deposits. The following tables provide information regarding our deposits by principal geographic area for the dates indicated.

	As of June 30, 2017
	Customer Deposits		Bank of Spain and Other Central Banks		Other Credit Institutions		Total
	(In Millions of Euros)
Total Domestic		163,847		26,524		5,325		195,696
Foreign
Europe		28,379		101		28,501		56,981
The United States		55,361		121		3,961		59,443
Mexico		58,171		3,701		2,866		64,738
Turkey		38,742		3,873		2,164		44,778
South America		47,048		2,205		4,872		54,125
Other		3,078		—		4,789		7,868
Total Foreign		230,778		10,001		47,152		287,932
Total		394,626		36,525		52,477		483,628

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	As of December 31, 2016
	Customer Deposits		Bank of Spain and Other Central Banks		Other Credit Institutions		Total
	(In Millions of Euros)
Total Domestic		161,022		26,602		6,768		194,393
Foreign
Europe		30,949		101		38,338		69,388
The United States		62,311		38		5,040		67,389
Mexico		54,117		2,400		3,663		60,181
Turkey		38,211		3,191		1,463		42,865
South America		50,282		2,407		4,035		56,725
Other		4,572		—		4,194		8,766
Total Foreign		240,442		8,138		56,733		305,313
Total		401,465		34,740		63,501		499,706

For an analysis of our deposits, including non-interest bearing demand deposits, interest-bearing demand deposits, saving deposits and time deposits, see Note 22.1 to the Unaudited Interim Consolidated Financial Statements.

As of June 30, 2017 the maturity of our time deposits (excluding interbank deposits) in denominations of $100,000 or greater was as follows:

	As of June 30, 2017
	Domestic		Foreign		Total
	(In Millions of Euros)
3 months or under		5,263		38,128		43,390
Over 3 to 6 months		3,967		8,629		12,595
Over 6 to 12 months		7,258		5,576		12,834
Over 12 months		7,090		10,127		17,217
Total		23,578		62,459		86,037

Time deposits from Spanish and foreign financial institutions amounted to €28,745 million as of June 30, 2017, substantially all of which were in excess of $100,000.

Large denomination deposits may be a less stable source of funds than demand and savings deposits because they are more sensitive to variations in interest rates. For a breakdown by currency of customer deposits as of June 30, 2017, December 31, 2016 and June 30, 2016, see Note 22.2 to the Unaudited Interim Consolidated Financial Statements.

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Short-term Borrowings

Securities sold under agreements to repurchase and promissory notes issued by us constituted the only categories of short-term borrowings that equaled or exceeded 30% of stockholders’ equity as of June 30, 2017, December 31, 2016 and June 30, 2016.

	As of and for the Period Ended June 30, 2017					As of and for the Year Ended December 31, 2016					As of and for the Period Ended June 30, 2016
	Amount		Average rate			Amount		Average rate			Amount		Average rate
	(In Millions of Euros, except percentages)
Securities sold under agreements to repurchase (principally Spanish Treasury bills):
As of end of period		32,899		2.6	%		39,682		1.6	%		36,879		1.2	%
Average during period		33,381		2.5	%		39,589		1.4	%		38,638		1.3	%
Maximum quarter-end balance		33,863		—			41,399		—			40,396		—
Bank promissory notes:
As of end of period		805		0.6	%		1,033		0.2	%		1,092		1.5	%
Average during period		459		0.6	%		883		0.7	%		856		0.9	%
Maximum quarter-end balance		805		—			1,079		—			1,092		—
Bonds and Subordinated debt :
As of end of period		8,952		5.2	%		14,708		3.7	%		15,210		3.1	%
Average during period		9,920		4.3	%		15,092		3.5	%		14,844		3.2	%
Maximum quarter-end balance		10,888		—			16,016		—			15,210		—
Total short-term borrowings as of end of period		42,656		3.1	%		55,423		2.1	%		53,182		1.8	%

Return Ratios

The following table sets out our return ratios:

	As of and for the Six Months Ended June 30, 2017			As of and for the year ended December 31, 2016			As of and for the Six Months Ended June 30, 2016
	(In Percentages)
Return on stockholders’ funds (1)		8.6	%		6.7	%		7.2	%
Return on assets (2)		0.8	%		0.6	%		0.7	%
Equity to assets ratio (3)		7.7	%		7.6	%		7.4	%

(1) Represents profit attributable to parent company for the period as a percentage of average stockholders’ funds for the period. For June 30, 2017 and June 30, 2016 data, profit attributable to parent company is annualized by multiplying the profit attributable to parent company for the period by two.

(2) Represents profit attributable to parent company as a percentage of average total assets for the period. For June 30, 2017 and June 30, 2016 data, profit attributable to parent company is annualized by multiplying the profit attributable to parent company for the period by two.

(3) Represents average stockholders´ funds over average total assets.

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OPERATING AND FINANCIAL REVIEW AND PROSPECTS

Factors Affecting the Comparability of our Results of Operations and Financial Condition

Trends in Exchange Rates

We are exposed to foreign exchange rate risk in that our reporting currency is the euro, whereas certain of our subsidiaries and investees keep their accounts in other currencies, principally Mexican pesos, U.S. dollars, Turkish liras, Argentine pesos, Chilean pesos, Colombian pesos, Venezuelan bolivar and Peruvian new soles. For example, if Latin American currencies, the U.S. dollar or the Turkish lira depreciate against the euro, when the results of operations of our subsidiaries in the countries using these currencies are included in our consolidated financial statements, the euro value of their results declines, even if, in local currency terms, their results of operations and financial condition have remained the same. By contrast, the appreciation of Latin American currencies, the U.S. dollar or the Turkish lira against the euro would have a positive impact on the results of operations of our subsidiaries in the countries using these currencies when their results of operations are included in our consolidated financial statements. Accordingly, changes in exchange rates may limit the ability of our results of operations, stated in euro, to fully show the performance in local currency terms of our subsidiaries.

The assets and liabilities of our subsidiaries which maintain their accounts in currencies other than the euro have been converted to the euro at the period-end exchange rates for inclusion in our Unaudited Interim Consolidated Financial Statements. Income statement items have been converted at the average exchange rates for the period. The following table sets forth the exchange rates of several Latin American currencies, the U.S. dollar and the Turkish lira against the euro, expressed in local currency per €1.00 as of and for the six months ended June 30, 2017 and June 30, 2016 according to the European Central Bank (“ECB”).

	Average Exchange Rates				Period-End Exchange Rates
	For the Six Months Ended June 30, 2017		For the Six Months Ended June 30, 2016		As of June 30, 2017		As of December 31, 2016
Mexican peso		21.0340		20.1694		20.5838		21.7718
U.S. dollar		1.0829		1.1159		1.1412		1.0541
Argentine peso		17.0082		15.9880		18.8080		16.5846
Chilean peso		714.7963		769.2308		757.0023		703.2349
Colombian peso		3,164.5570		3,484.3206		3,472.2222		3,164.5570
Peruvian new sol		3.5447		3.7715		3.6974		3.5310
Venezuelan bolivar (*)		4,310.3448		1,170.9602		4,310.3448		1,893.9394
Turkish lira		3.9388		3.2589		4.0134		3.7072

(*) With respect to 2017 and 2016, an alternative exchange rate (see “Presentation of Financial Information—Venezuela”) has been used as a reference.

During the six months ended June 30, 2017, the Mexican Peso, the Argentine Peso, the Venezuelan bolivar and the Turkish Lira depreciated against the euro in average terms, and the U.S Dollar, the Chilean peso, Colombian peso and Peruvian new sol, each appreciated against the euro. With respect to period-end exchange rates, there was a period-on-period depreciation of all of the above currencies against the euro, except for the Mexican Peso, which appreciated. The overall effect of changes in exchange rates was negative for the period-on-period comparisons of the Group’s income statement and balance sheet.

Operating Environment

Our results of operations are dependent, to a large extent, on the level of demand for our products and services (primarily loans and deposits but also intermediation of financial products such as sovereign or corporate debt) in the countries in which we operate. Demand for our products and services in those countries is affected by the overall performance of their respective economies regarding activity, employment, inflation and, particularly, interest rates. The demand for loans and saving products correlates positively with income, which correlates in turn with the Gross Domestic Product (GDP), as well as with employment and corporate profits evolution.

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Interest rates have a direct impact on banking results given that our banking activity mainly relies on the generation of positive interest margins by paying lower interest on our interest-bearing liabilities, principally deposits, than the interest received on interest-bearing assets, principally loans. However, it should be noted that higher interest rates, all else being equal, also reduce the demand for banking loans and increase the cost of funding of our banking business.

In spite of recent improvement, world growth remains at historically low levels, 3.2% in 2016 and, according to BBVA Research estimates, 3.3% in 2017, below the long-term average of around 3.5%. This stable path at low growth rates is similar for the GDP of advanced economies, while emerging markets GDP growth rates remain slightly above 4%. Global GDP growth expectations for 2018 are currently 3.4% according to BBVA Research forecasts.

Regarding the evolution of key economic areas for the Group, after growing by 3.2% in 2016, the Spanish GDP continued to expand at an annualized rate slightly higher than 3.0% in the first half of 2017. According to BBVA Research’s current estimates, growth is expected to remain around an average of 3.3% for the full year 2017. Nevertheless, some of the tailwinds of the Spanish economy, which have had an expansionary effect on growth, are losing momentum and diminishing growth perspectives. For example, oil prices are no longer falling, the euro has gained in value, thereby deteriorating the zone’s relative competitiveness, and interest rates have ceased to decline. However, improvements in the credit market and the structural economic reforms implemented in Spain, including in the labor market, are expected to remain anchors for long-term growth of the Spanish economy.

Mexican GDP grew by 2.0% in 2016, with growth trending slower over the course of the year. As such, the current BBVA Research forecast for 2017 and 2018 GDP growth are 2.2% and 2.0%, respectively. External demand improvement is offsetting weakening domestic demand relying on better price competitiveness and demand for manufactured goods from the US. Higher inflation diminishes domestic disposable income improvement, offsetting formal employment sustained growth slightly above 4%. Mexico’s outlook is plagued with uncertainty which mainly stems from the final outcome of the renegotiation of the NAFTA trade agreement and also from potential changes in U.S. migration policy. Against this backdrop, sound fiscal policy and monetary policy focused on price stability are crucial for limiting the impact of uncertainties around the Mexican economy.

As regards Turkey, the recalculation of Turkey’s national accounts in accordance with the ESA 2010 (The European System of National and Regional Accounts 2010) methodology resulted in higher GDP levels for prior years. Under the new methodology, the annual GDP growth in the period 2011-15 was 7.1% on average compared to 4.4% according to the previous methodology. 2016 annual GDP growth is estimated to have decreased to 2.9% weighted by the tightening of foreign funding conditions, the end of the fall in oil prices, and the uncertainty stemming from a challenging geopolitical and domestic political background. Nevertheless, GDP growth has increased in the first half of 2017 relying on fiscal stimulus, the support of a public credit guarantee fund and heightened tourist demand, all of them against the backdrop of improved global funding conditions. Current BBVA Research forecasts for Turkish GDP growth are 5% in 2017 and 4.5% in 2018. It is worth noting uncertainties such as the complicated geopolitical scenario in the Middle East or the dependence on global risk appetite.

South America GDP growth (based on the weighted average of Argentina, Brazil, Chile, Colombia, Mexico, Paraguay, Peru, Mexico, Uruguay and Venezuela, calculated based on their proportional contribution to total GDP) was -1.3% in 2016 according to BBVA Research estimates, due to the combined effect of lower commodity prices, lower demand from China, tougher global financial conditions and domestic problems in some economies such as Brazil and Argentina. Following a positive first half of 2017, South America GDP growth is expected to be positive 1.0% in 2017 and 1.6% in 2018. GDP growth in 2017-2018 is expected to be driven by external demand, including higher commodity prices, supportive monetary policies and investment in countries such as Argentina and Colombia. Against the background of sustained global demand and supportive funding conditions, domestic vulnerabilities such as political noise or delays in investment are the most important domestic risks.

The U.S. economy slowed down in 2016 (GDP grew by 1.6% in 2016 and 2.6% in 2015) but continued to grow at approximately 2% in the first half of 2017 due to slowing consumption after above-average gains over the past two years. This year stronger global growth could support the recovery in exports while previous gains in oil prices are likely to continue to support increased investment in the oil & gas sector. Our baseline forecasts for U.S. GDP growth are 2.1% for 2017 and 2.2% in 2018. We believe the U.S. economic outlook rests on two key factors: whether the new administration’s ambitious pro-business agenda aimed at boosting investment and

36

employment spurs consumption and investment and whether the administration can uphold the institutions that have given the U.S. economy a comparative advantage. The main risks to U.S. outlook include a sharp adjustment in assets prices and expectations, weaker growth abroad, cyclical headwinds and a disorderly Federal Reserve balance sheet exit. Political uncertainty may also remain elevated.

BBVA Group Results of Operations for the Six Months Ended June 30, 2017 Compared to the Six Months Ended June 30, 2016

The table below shows the Group’s unaudited interim consolidated income statements for the six months ended June 30, 2017 and June 30, 2016.

	For the Six Months Ended June 30,
	2017			2016			Change (In %)
	(In Millions of Euros)
Interest income		14,305			13,702			4.4
Interest expenses		(5,502	)		(5,338	)		3.1
Net interest income		8,803			8,365			5.2
Dividend income		212			301			(29.6	)
Share of profit or loss of entities accounted for using the equity method		(8	)		1			n.m.	(1)
Fee and commission income		3,551			3,313			7.2
Fee and commission expenses		(1,095	)		(963	)		13.7
Net gains (losses) on financial assets and liabilities (2)		541			642			(15.7	)
Exchange differences (net)		528			533			(0.9	)
Other operating income		562			715			(21.4	)
Other operating expense		(945	)		(1,186	)		(20.3	)
Income from insurance and reinsurance contracts		1,863			1,958			(4.9	)
Expenses from insurance and reinsurance contracts		(1,295	)		(1,446	)		(10.4	)
Gross income		12,718			12,233			4.0
Administration costs		(5,599	)		(5,644	)		(0.8	)
Personnel expenses		(3,324	)		(3,324	)		(0.2	)
Other administrative expenses		(2,275	)		(2,319	)		(1.9	)
Depreciation and amortization		(712	)		(689	)		3.3
Net margin before provisions		6,407			5,900			8.6
Provisions or (-) reversal of provisions		(364	)		(262	)		38.9
Impairment losses on financial assets (net)		(1,941	)		(2,110	)		(8.0	)
Impairment losses on other assets (net)		(80	)		(99	)		(19.2	)
Gains (losses) on derecognition of non-financial assets and subsidiaries, net		30			37			(18.9	)
Negative goodwill recognized in profit or loss		—			—			—
Profit (-) or loss from non-current assets and disposal groups classified as held for sale not qualifying as discontinued operations		(18	)		(75	)		(76.0	)
Operating profit before tax		4,033			3,391			18.9
Tax expense or (-) income related to profit or loss from continuing operations		(1,120	)		(920	)		21.7
Profit from continuing operations		2,914			2,471			17.9
Profit from discontinued operations (net)		—			—			—
Profit		2,914			2,471			17.9
Profit attributable to parent company		2,306			1,832			25.9
Profit attributable to non-controlling interests		607			639			(5.0	)

(1) Not meaningful.

(2) Comprises the following income statement line items contained in the Unaudited Interim Consolidated Financial Statements: “Gains or (-) losses on derecognition of financial assets and liabilities not measured at fair value through profit or loss, net”; “Gains or (-) losses on financial assets and liabilities designated at fair value through profit or loss, net”; “Gains or (-) losses on financial assets and liabilities held for trading, net” and “Gains or (-) losses from hedge accounting, net”.

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Net interest income

The following table summarizes the principal components of net interest income for the six months ended June 30, 2017 and June 30, 2016.

	For the Six Months Ended June 30,
	2017			2016			Change
	(In Millions of Euros)						(In %)
Interest income		14,305			13,702			4.4
Interest expenses		(5,502	)		(5,338	)		3.1
Total		8,803			8,365			5.2

Net interest income for the six months ended June 30, 2017 amounted to €8,803 million, a 5.2% increase compared with the €8,365 million recorded for the six months ended June 30, 2016, mainly as a result of the following factors:

• in United States, mainly as a result of good customer spread management despite declining volumes due to a growth strategy focused on the most profitable portfolios and segments, as well as the impact of the Federal Reserve Board benchmark interest rate increases.

• in Mexico, mainly as a result of higher interest rates applicable to loans and advances to customers continuing the positive trend;

• in Turkey, as result of a higher volume and good price management, offset by the negative impact of the depreciation of the Turkish Lira; and

• in South America, due to positive volume and rate effects in all the countries of this region where BBVA operates.

• which was partially offset by the performance of the Banking Activity in Spain, operating segment, which was adversely affected by lower (volumes (mainly securities portfolio, derivatives, and loans) and the current environment of very low interest rates.

For further information regarding the contribution of our operating segments to our consolidated net interest income, see “—Results of Operations by Operating Segment for the Six Months Ended June 30, 2017 Compared to the Six Months Ended June 30, 2016”.

Dividend income

Dividend income for the six months ended June 30, 2017 amounted to €212 million, a 29.6% decrease compared with the €301 million recorded for the six months ended June 30, 2016, mainly as a result of the absence of dividends from China CITIC Bank Corporation Limited (“CNCB”) in the more recent period as a result of its disposal by the Group and lower dividends from Telefónica, S.A.

Share of profit or loss of entities accounted for using the equity method

Share of profit or loss of entities accounted for using the equity method for the six months ended June 30, 2017 amounted to a €8 million loss, compared with the €1 million gain recorded for the six months ended June 30, 2016.

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Fee and commission income

The breakdown of fee and commission income for the six months ended June 30, 2017 and June 30, 2016 is as follows:

	For the Six Months Ended June 30,
	2017		2016		Change (In %)
	(In Millions of Euros)
Bills receivables		24		27		(11.1	)
Demand accounts		247		224		10.3
Credit and debit cards		1,386		1,293		7.2
Checks		104		100		4.0
Transfers and others payment orders		296		278		6.5
Insurance product commissions		97		88		10.2
Commitment fees		122		121		0.8
Contingent risks		198		201		(1.5	)
Asset management		444		415		7.0
Securities fees		216		171		26.3
Custody securities		62		60		3.3
Other		355		335		6.0
Total		3,551		3,313		7.2

Fee and commission income increased by 7.2% to €3,551 million for the six months ended June 30, 2017, from €3,313 million for the six months ended June 30, 2016, mainly as a result of an increase in transfers, fees and commissions from credit cards in South America, Mexico and the United States, and, to a lesser extent, an increase in securities fees and asset management in Spain.

Fee and commission expenses

The breakdown of fee and commission expenses for the six months ended June 30, 2017 and June 30, 2016 is as follows:

	For the Six Months Ended June 30,
	2017		2016		Change (In %)
	(In Millions of Euros)
Credit and debit cards		717		613		17.0
Transfers and others payment orders		52		51		2.0
Commissions for selling insurance		29		30		(3.3	)
Other fees and commissions		297		269		10.4
Total		1,095		963		13.7

Fee and commission expenses increased by 13.7% to €1,095 million for the six months ended June 30, 2017, from €963 million for the six months ended June 30, 2016, primarily due to an increase in commissions for use of credit and debit cards in South America, Mexico and Spain.

Net gains (losses) on financial assets and liabilities

Net gains (losses) on financial assets and liabilities decreased by 15.8% to €541 million for the six months ended June 30, 2017, from €642 million for the six months ended June 30, 2016, primarily as result of the capital gain of €204 million before tax from the sale of CNCB and the gains of the VISA operation carried out in the same period of the previous year of €225 million.

39

The table below provides a breakdown of net gains (losses) on financial assets and liabilities for the six months ended June 30, 2017 and 2016:

	For the Six Months Ended June 30,
	2017			2016			Change (In %)
	(In Millions of Euros)
Gains or losses on derecognition of financial assets and liabilities not measured at fair value through profit or loss, net		683			683			0.0
Available-for-sale financial assets		623			469			32.8
Loans and receivables		59			77			(23.7	)
Other		1			137			(99.3	)
Gains or losses on financial assets and liabilities designated at fair value through profit or loss, net		139			106			30.6
Gains or losses on financial assets and liabilities held for trading, net		(88	)		24			n.m.	(1)
Gains or losses from hedge accounting, net		(193	)		(171	)		12.7
Net gains (losses) on financial assets and liabilities		541			642			(15.8	)

(1) Not meaningful.

Exchange differences (net)

Exchange differences (net) decreased 0.9% from €533 million for the six months ended June 30, 2016 to €528 million for the six months ended June 30, 2017.

Other operating income and expense

Other operating income amounted to €562 million for the six months ended June 30, 2017, a 21.4% decrease compared to €715 million for the six months ended June 30, 2016, mainly as a result of lower income from non-financial services in Spain.

Other operating expense for the six months ended June 30, 2017 amounted to €945 million, a 20.3% decrease compared to the €1,186 million recorded for the six months ended June 30, 2016, mainly as a result of lower expenses from non-financial services in Spain, lower contribution to the Single Resolution Fund and the impact of the depreciation of the Venezuelan bolivar and Argentine peso.

Income and expenses from insurance and reinsurance contracts

Income from insurance and reinsurance contracts for the six months ended June 30, 2017 was €1,863 million, a 4.9% decrease compared with the €1,958 million of income recorded for the six months ended June 30, 2016, mainly as a result of lower insurance premiums in Spain.

Expenses from insurance and reinsurance contracts for the six months ended June 30, 2017 were €1,295 million, a 10.4% decrease compared with the €1,446 million gain recorded for the six months ended June 30, 2016 mainly as a result of the impact of the new method for calculating mathematical reserves in Mexico.

Administration costs

Administration costs for the six months ended June 30, 2017 amounted to €5,599 million, a 0.9% decrease compared with the €5,644 million recorded for the six months ended June 30, 2016, mainly due to lower costs in Spain, Turkey, rest of Eurasia and Mexico, partially offset by the higher costs in South America and the United States.

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The table below provides a breakdown of personnel expenses for the six months ended June 30, 2017 and June 30, 2016:

	For the Six Months Ended June 30,
	2017		2016		Change (In %)
	(In Millions of Euros)
Wages and salary		2,590		2,587		0.1
Social security costs		394		403		(2.2	)
Defined contribution plan expense		52		45		15.6
Defined benefit plan expense		32		34		(5.9	)
Other personnel expenses		256		255		0.4
Personnel expenses		3,324		3,324		—

The table below provides a breakdown of general and administrative expenses for the six months ended June 30, 2017 and June 30, 2016:

	For the Six Months Ended June 30,
	2017		2016		Change (In %)
	(In Millions of Euros)
Technology and systems		342		333		2.7
Communications		149		151		(1.3	)
Advertising		186		205		(9.3	)
Property, fixtures and materials		528		547		(3.5	)
Of which:
Rent expenses		299		313		(4.5	)
Taxes other than income tax		237		228		3.9
Other expenses		833		855		(2.6	)
General and administrative expenses		2,275		2,319		(1.9	)

Property, fixtures and materials expenses decreased from €547 million for the six months ended June 30, 2016 to €528 million mainly due to a decrease in general expenses related to facilities and properties. Rent expenses decreased from €313 million to €299 million mainly as a result of the reduction in the number of branches. Advertising decreased from €205 million to €186 million due to lower sponsorships in Spain.

Depreciation and amortization

Depreciation and amortization for the six months ended June 30, 2017 was €712 million, a 3.3% increase compared with the €689 million recorded for the six months ended June 30, 2016, mainly due to the increase in South America, particularly in Argentina, due to the high inflation and to a lesser extent in Chile.

Provisions or (-) reversal of provisions

Provisions for the six months ended June 30, 2017 totaled €364 million, a 38.9% increase compared with the €262 million recorded for the six months ended June 30, 2016, largely as a result of an increase in the costs related to early retirements and contributions to pension funds in Spain.

Impairment losses on financial assets (net)

Impairment losses on financial assets (net) for the six months ended June 30, 2017 was a loss of €1,941 million, a 8.0% decrease compared with the €2,110 million loss recorded for the six months ended June 30, 2016 mainly as a result of the continued improvement of credit quality in Spain and lower provision requirements, and to a lesser extent, due to decreases registered in the United States and Turkey, offset in part by increases in Mexico and South America largely related to increases in lending activity. The Group’s non-performing asset ratio was 4.8% as of June 30, 2017, compared to 4.9% as of December 31, 2016 and 4.9% as of June 30, 2016.

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Impairment losses on other assets (net)

Impairment losses on other assets (net) for the six months ended June 30, 2017 amounted to €80 million, a 19.2% decrease compared to the €99 million recorded for the six months ended June 30, 2016, due to lower impairments losses after portfolio sales.

Gains (losses) on derecognition of non-financial assets and subsidiaries, net

Gains (losses) on derecognition of non-financial assets and subsidiaries, net for the six months ended June 30, 2017 amounted to €30 million, an 18.9% decrease compared to a gain of €37 million recognized for the six months ended June 30, 2016.

Profit or (-) loss from non-current assets and disposal groups classified as held for sale not qualifying as discontinued operations

Profit or (-) loss from non-current assets and disposal groups classified as held for sale not qualifying as discontinued operations for the six months ended June 30, 2017 amounted to a loss of €18 million, compared to a loss of €75 million for the six months ended June 30, 2016.

Operating profit before tax

As a result of the foregoing, operating profit before tax for the six months ended June 30, 2017 was €4,033 million, an 18.9% increase from the €3,391 million recorded for the six months ended June 30, 2016.

Tax expense or (-) income related to profit or loss from continuing operations

Tax expense or (-) income related to profit or loss from continuing operations for the six months ended June 30, 2017 was an expense of €1,120 million, a 21.7% increase compared with an expense of €920 million recorded for the six months ended June 30, 2016, due mainly to the higher operating profit before tax.

Profit from continuing operations

As a result of the foregoing, profit from continuing operations for the six months ended June 30, 2017 was €2,914 million, a 17.9% increase from the €2,471 million recorded for the six months ended June 30, 2016.

Profit

As a result of the foregoing, profit for the six months ended June 30, 2017 was €2,914 million, a 17.9% increase from the €2,471 million recorded for the six months ended June 30, 2016.

Profit attributable to parent company

Profit attributable to parent company for the six months ended June 30, 2017 was €2,306 million, a 25.9% increase from the €1,832 million recorded for the six months ended June 30, 2016.

Profit attributable to non-controlling interests

Profit attributable to non-controlling interests for the six months ended June 30, 2017 was €607 million, a 5.0% decrease compared with the €639 million recorded for the six months ended June 30, 2016, mainly as a result of the acquisition of an additional 9.95% stake in Garanti partially offset by the stronger performance of our Peruvian and Argentinian operations where there are minority shareholders.

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Results of Operations by Operating Segment

The information contained in this section is presented under management criteria.

The tables set forth below reconcile the income statement of our operating segments presented in this section to the consolidated income statement of the Group. The “Adjustments” column reflects the differences between the Group income statement and the income statement calculated in accordance with management operating segment reporting criteria:

	For the Period Ended June 30, 2017
	Banking Activity in Spain			Non-Core Real Estate			The United States			Mexico			Turkey			South America			Rest of Eurasia			Corporate Center			Group Income
	(In Millions of Euros)
Net interest income		1,865			31			1,098			2,676			1,611			1,617			95			(190	)		8,803
Net fees and commissions		783			2			338			595			352			352			82			(47	)		2,456
Net gains (losses) on financial assets and liabilities and exchange differences (net) (1)		318			—			55			117			9			247			80			244			1,069
Other operating income and expenses (net) (2)		235			(40	)		(24	)		120			26			36			—			36			390
Gross income		3,201			(6	)		1,468			3,507			1,998			2,252			256			42			12,718
Administration costs		(1,549	)		(48	)		(848	)		(1,069	)		(675	)		(980	)		(148	)		(283	)		(5,593	)
Depreciation and amortization		(161	)		(10	)		(97	)		(129	)		(93	)		(60	)		(6	)		(156	)		(712	)
Net margin before provisions		1,492			(64	)		523			2,309			1,230			1,211			102			(397	)		6,407
Impairment losses on financial assets (net)		(302	)		(89	)		(113	)		(831	)		(239	)		(375	)		9			(1	)		(1,941	)
Provisions or (-) reversal of provisions		(247	)		(88	)		(5	)		(8	)		18			(46	)		(7	)		(49	)		(432	)
Operating profit/ (loss) before tax		943			(241	)		405			1,469			1,010			790			104			(447	)		4,033
Tax expense or (-) income related to profit or loss from continuing operation		(271	)		49			(108	)		(389	)		(201	)		(229	)		(31	)		61			(1,120	)
Profit from continuing operations		672			(192	)		297			1,081			809			560			73