46
BUSINESS AREAS 1Q09
South America
business volumes, this was driven by an active
entry-price policy and strong spreads. Fee income also
showed excellent performance, reaching €204m in the
quarter (up 12.0%), with especially relevant growth in
customer-related activities. Net trading income this
quarter was also high (€134m) with exchange-rate
positions trading well in general, along with capital
gains on the fixed-income portfolio in Chile. Gross
income went up 19.1% to reach €924m (22.3% at
current exchange rates).
Expenses, at €376m, have slowed their year-on-year
growth rate to 13.3%, helped by the transformation
plans that all units have rolled out, plus lower
inflationary pressure. Thus, the cost-income ratio for
the quarter stood at 40.6%, significantly improving on
the 43.7% reported one year ago. Operating income
showed year-on-year growth of 23.4% (up 28.7% at
current exchange rates), reaching €548m.
Gross lending ended the quarter at €25,207m, up
13.3% on the previous year. This growth is not as
buoyant as in previous periods due to the slowdown in
lending to individuals (up 13.2%) and to companies (up
14.6%).
Meanwhile, the banks’ customer funds continue to
show business as usual, with a closing balance in
March of €32,793m (including mutual funds). This
reflects a 20.1% year-on-year growth, as current and
savings accounts behaved especially positively (up
20.4%). The pension business this quarter has
reported more positive earnings than in previous
quarters, despite the somewhat sluggish performance
of financial markets. The pension-fund businesses were
managing assets of €27,767m at the end of March.
This was 8.8% less than at the end of March 2008
(excluding the impact of exiting Consolidar AFJP),
while the year-to-date revenues for the quarter were
28.1% higher than those obtained twelve months
earlier. Finally, the insurance companies wrote 3.5%
more business year on year (like for like, without
Consolidar Salud).
The deteriorating environment has moderately affected
asset quality. The March 2009 NPA ratio stands at
2.3%, compared against 2.1% at 31-Dec-08. Careful
management of risk acceptance and recoveries policy
continue to be the mainstay of this improvement.
Loan-loss provisions showed a significant year-on-year
increase, up 85.6%. This was largely driven by the low
comparable base from the first quarter of 2008. The
coverage ratio for non-performing assets stood at
139% (compared against 149% at 31-Dec-2008).
Banking business
The banking business in the area generated €206m in
net attributable profit during this quarter, growing
14.2% year on year (up 18.9% at current exchange
rates). The most relevant information on each bank is
given below:
In Argentina, BBVA Banco Francés‘ net interest income
reflected excellent performance, growing 21.9% year on
year. This was driven by good management of spreads
and higher business volumes, especially in retail lending
(up 22.6%) and transactional deposits (up 35.2%). Fee
income also grew strongly (up 44.8%) as did other
revenues, which, in combination with slower growth in
expenses boosted operating income by 25.8% year on
year. Below the line, the rise in provisions and taxes
mainly reflects the low baseline from the previous year.
This limited the growth in net attributable profit, which
ended the quarter at €42m.
The banking business in Chile (run by BBVA and
Forum) obtained a net attributable profit this quarter
of €25m, well above the figure reported for the same
period in 2008 (up 133.1%). The rise was driven by
good performance in revenues. Gross income rose
81.2%, which offset the negative impact of falling
inflation rates on the yields from inflation-linked
assets. Business volumes saw slower growth than in
previous quarters, but maintained positive
year-on-year comparatives, especially in retail lending
(up 6.9%) and current and savings accounts (up
33.6%). It was a very good quarter for fee income (up
45.3%), with high net trading income (€55m), much
of which came from capital gains on fixed-income
portfolio divestments.
During this first quarter, BBVA Colombia obtained a net
attributable profit of €30m. This was 17.5% more than
in the first three months of 2008. Higher revenues stand
out when looking at the income statement and
especially the year-on-year increase in net interest
income, whose 19.2% rise was fuelled by higher
business volumes in retail lending (up 10.5%),
companies lending (up 22.7%) and customer funds (up
11.4%). Moderate growth in costs (up 5.0%) continued
to be reflected in a significant improvement to the
cost-income ratio. This stood at 39.0%, as against
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