48
BUSINESS AREAS 3Q09
South America
South America highlights in the
third quarter
• Excellent results both in banks and pensions &
insurance.
• Significant advance in customer funds.
• Maintenance of solid profitability and solvency levels.
• Good asset quality with NPAs stable and under
control.
The South America area manages the BBVA Group’s
banking, pension and insurance businesses in the region.
Year-on-year comparison of the business variables and
earnings in the area are impacted by the divestment of the
Consolidar health business and the State takeover of the
Consolidar pension fund, both of which took place in the
fourth quarter of last year.
Although the region’s macro-economy still shows quite
moderate activity levels, encouraging signs of recovery have
appeared, such as an improvement in consumer confidence, a
slight increase in foreign trade, and rising business
expectations. There are hopes that the economy will
re-establish itself early next year, based on two positive
factors. Firstly, the abundant liquidity created by monetary
easing, fiscal-policy stimulation and improvement in
commodity and financial-asset prices. Secondly, a return to
more normal risk-aversion levels, as interest rates and country
risk dropped, enabling several countries in the region to place
issues abroad under quite standard conditions. The financial
systems in the region are still performing well, albeit reflecting
lower business volumes. However, their returns and their
solvency levels are holding up well and asset quality is not
suffering the marked drop seen in other parts of the world.
South America. Operating income
(Million euros at constant exchange rate)
431 421
(1) At current exchange rate: +33.9%.
426
497
1Q 2Q 3Q 4Q
1Q
2Q
3Q
2008
2009
+31.7% (1)
1,279 1,684
537
583
564
Relevant business indicators
(Million euros and percentages)
Customer lending (gross)
Customer deposits (2)
Off-balance-sheet funds
• Mutual funds
• Pension funds
ROE (%)
Efficiency ratio (%)
NPA ratio (%)
Coverage ratio (%)
(1) At constant exchange rate.
(2) Including debt certificates.
During the third quarter, most currencies’ exchange rates
strengthened against the US dollar, largely offsetting the
depreciation observed in the first half of the year. The
impact on the area’s financial statements was slightly
positive in the income statement, but negative in the
balance sheet. As usual, the comments in this section refer
to the columns in the attached tables showing year-on-year
changes at a constant exchange rate.
Against this backdrop, the area performed very well, as it
grew revenues and continued to prune expenses without
undermining the quality of its assets. This has meant that
in the first nine months of 2009, the net income reached
€1,049m, a similar contribution to that of Mexico. The
area’s net attributable profit reached €689m, with a
year-on-year increase of 27.5% and a return on equity
(ROE) of 42.4% (37.7% in the same period of 2008).
South America. Net attributable profit
(Million euros at constant exchange rate)
182 187
172 182
1Q 2Q 3Q 4Q
1Q
2Q
3Q
2008
2009
(1) At current exchange rate: +27.8%.
+27.5% (1)
540 689
30-09-09
South America
219
Δ% Δ% (1)
24,529 (1.7) (0.3) 24,946
29,899 6.1 8.1 28,169
35,619 6.8 8.7 33,360
2,439 60.8 61.6 1,516
33,180 4.2 6.2 31,843
42.4 37.7
39.9 44.9
2.8 2.0
127 147
238
30-09-08
232
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