The United States highlights in the
fourth quarter
• Sound operating revenues.
• Special effort in allocations to loan-loss provisions
boosted coverage ratio.
• Reappraisal of the area’s goodwill.
• Detailed, rigorous analysis of the commercial real-estate
portfolio impacted non-performing asset ratio.
In the first part of 2009, the U.S. economy continued to
show signs of being bogged down in a recession, with
significantly lower levels of economic activity. However,
third-quarter data already showed slight expansion:
financial conditions were stabilizing, residential
investment increased (for the first time since 2005),
consumer spending picked up and business inventories
were more in line with sales. In the last three months of
the year, although the worst of the recession may have
passed, the economy is still weak. The unemployment
rate broke 10% for the first time since 1983 and many
challenges lie ahead. As a result, we are anticipating low
growth in 4Q09 and throughout 2010. The most
significant hurdles to strong recovery will target
personal consumption expenditure. While job
destruction is slowing, it is still prevalent, and job
creation will likely be minimal. Furthermore, despite
indications that household demand is improving (steady
increases in retail sales excluding autos and
manufacturing activity), many households are still
whittling down their debt. Credit standards remain high
for those that seek it, such that credit outstanding in the
market had dropped by more than USA$100 bn in
2009. These factors will continue to constrain
Relevant business indicators
(Million euros and percentages)
Customer lending (gross)
Customer deposits (2)
ROE (%)
Efficiency ratio (%)
NPA ratio (%)
Coverage ratio (%)
(1) At constant exchange rate.
(2) Excluding deposits and Market unit repos.
consumption in 2010, so overall recovery is likely to be
slow.
Growth in residential investment exceeded
expectations in 3Q09 and is expected to continue to
rise, albeit modestly. Low prices, attractive mortgage
rates and the extension of the home buyers’ tax credit
will support demand, which will prompt more
construction. On the other hand, the deterioration of
commercial real-estate fundamentals is eroding
business investment in structures as credit is extremely
limited. However, the negative impact to
non-residential investment will be softened by further
growth in the equipment and software component as
businesses are motivated by cost-savings to replace
technology.
Recent trends in international trade have shown that
both domestic and foreign demand are recovering.
While the latest data report growth in imports
31-12-09
surpassing that of exports, the trend is expected to shift
4Q09 BUSINESS AREAS
The United States
The United States
Δ%
34,108 8.2 12.0 31,518
32,538 26.2 30.7 25,779
(43.0) 11.7
59.9 65.9
5.2 3.4
Δ% (1)
57 57
31-12-08
45
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