South America highlights in
the first quarter
• High earnings growth.
• Positive evolution of the loan-book and excellent
performance of customer funds.
• Outstanding quality of credit risk.
• Banco Continental and Banco Provincial were
considered by Global Finance the best banks in Peru and
Venezuela.
This area manages the Group’s banking, pension and
insurance businesses in the region.
After successfully riding the adverse shock of the global
crisis, South America has begun 2010 favorably and
consolidated the economic recovery started in the second
half of 2009. Continued expansive economic policies,
increased commodity prices and the growing strength of
internal demand are the keys to this recovery. This appears
to indicate that the area will return to annual growth rates
of around 4% in 2010, with no significant inflationary
tensions expected, except in some exceptional cases.
Nevertheless, some risks remain, in particular doubts about
the consolidation of recovery in the world economy, the
challenge of harmonizing the withdrawal of the monetary
and fiscal stimuli and possible distortions that could be
generated by the electoral processes occurring in various
countries this year. The improved overall economic climate
continues to have a favorable effect on Latin American
financial systems, with progress in lending activity,
although this is moderate, given the seasonally low nature
of the first quarters of the year.
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.
The movement of exchange rates in the quarter has been
strongly affected by the devaluation of the Venezuelan
Bolívar at the start of January, which has had a negative
effect on financial statements and economic activity in the
area. As usual, the attached tables include the year-on-year
changes at constant exchange rates, which is what the
following comments refer to.
In the first three months of 2010, South America achieved
a positive growth in its income, supported by a recovery in
economic activity and a marked moderation in costs and
loan-loss provisioning. In addition, the notable level of
asset quality at the end of 2009 was maintained. In all, the
net attributable profit for the period was €233m, a
year-on-year increase of 26.1% and a return on equity
(ROE) of 43.4%.
(1)
31-03-10 Δ% Δ% 31-03-09
The signs of recovery in economic activity were reflected in
the quarter closing with a banking business loan book of
South America
24,961 (1.0) 0.2 25,212
30,815 (1.0) 5.3 31,126
42,688 45.0 29.5 29,435
2,995 79.5 62.6 1,668
39,693 42.9 27.6 27,767
43.4 36.7
39.4 42.6
2.8 2.3
132 139
| 1Q10 |
41
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