42
BUSINESS AREAS 4Q09
Mexico
BBVA has further consolidated its leadership in Mexico
throughout the financial crisis, growing the most
significant items on its income statement. At year-end
2009, net interest income stood at €3,307m, having
risen 2.7% year on year. This was the result of well
focussed price management and increased customer
funds (6.8% more funds were gathered through current,
savings and time deposits since the end of December
2008; current accounts grew 7.9%). Fee income reached
€1,077m. This 4.6% growth came from positive
performance of charges on banking services and
pension-fund management. Net trading income rose to
€370m, 13.7% more than in the same period of the
previous year. The rise was due to an increase in
revenues from customer business and favourable market
conditions. Along with sound earnings from the
insurance business, all the above said contributed to a
3.4% increase in gross income compared with
January-December 2008. Gross income totalled
€4,870m year-to-end 2009.
Transformation and efficiency plans were rolled out
during 2009, bringing down operating costs by 0.6%
year on year. And since revenues were strong, the
year-end cost-income ratio stood at 31.9%, more than
one percentage point below the figure of last year. The
combined performance of revenues and expenses meant
that the year-to-end operating profit rose 5.4% to
€3,319m.
Year-on-year growth in losses from impairment on
financial assets continued to slow down, reaching
€1,525m year to end (up 58.5%). At the same time,
provisions increased in the fourth quarter, above all due
to the application of tougher metrics to calculate the
internal expected-loss models for the credit-card
business. BBVA Bancomer was the only bank in Mexico
to be certified by the national banking and exchange
authority (Comisión Nacional Bancaria y de Valores -
CNBV) and the Bank of Spain to use internal expected
loss models for credit-card provisioning. This has meant
that it was less affected than other banks by the stricter
provisioning standards established by the CNBV. If a
standard calculation was used throughout the financial
industry, ie, if everything was booked to the income
statement that prevailing legislation has allowed to
charge against reserves, Bancomer would have one of
the lowest cost of risk among its principal competitors.
This is not just the outcome of more prudent risk
management, with more restrictive acceptance policies,
but also of applying expected-loss criteria to calculate
the level of provisions required.
Despite the adverse economic environment, this
performance has enabled the Mexico area to record a
sound attributable profit, which ended 2009 at
€1,359m. The NPA ratio was 4.3% on 31-Dec-09 and
coverage 130%.
Banking business
The economic downturn has led to a slower growth in
banking business volumes throughout the Mexican
banking system. Despite this, BBVA Bancomer has
managed to grow its franchise and enhance its
reputation by the positive results it achieved in both
lending and customer funds. Its outstanding
performance against this complicated global economic
and financial backdrop was recognised by Euromoney
who named BBVA Bancomer Best Bank in Mexico.
Gross customer lending reached €28,916m at the end
of 2009. Although this was 0.4% lower than the
previous year, it left Bancomer’s leadership intact. The
loan book gradually changed its composition over the
year. The percentage of consumer-credit and card
business shrank as lower-risk products grew their share
of the total. The year-end figures show a diversified
structure: 39.7% of the lending was in the commercial
book (which includes loans to large corporations, small
and medium-sized enterprises, financial institutions and
the Government); 30.8% in the housing book (including
developers and excluding the old mortgage portfolio)
and 20.7% in the consumer-finance book.
The commercial loan-book grew 7.1% year-on-year.
The fastest growth came from lending to SMEs, which
went up 21.7% year-on-year to €968m. A programme
was launched to boost liquidity in SMEs (small and
medium-sized enterprises). More than 6,000 SMEs have
been beneficiaries of this programme during the
financial crisis, taking up over €95m in new loans. The
specialist network for servicing SMEs had over 96,000
customers as 2009 ended. Also noteworthy is the
51.2% increase over 2008 in lending to government
bodies.
In October, BBVA Bancomer received a national prize,
Premio Nacional de Vivienda 2008 for launching six
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