50
BUSINESS AREAS 4Q09
South America
The magnificent revenue performance was made possible
by the well focussed entry-price policy and the strong
spreads that all the units in the area applied. These were
fundamental in offsetting the progressive slowdown in
lending volumes. At the end of the year, these stood at
€26,223m, down 1.6% on year-end 2008, but up 4.2%
quarter on quarter. Lower funding requirements due to
slower lending growth meant units could apply a selective
policy when marketing customer funds, giving priority to
the lower cost range. At the end of December, customer
funds showed a balance of €34,169m (including mutual
funds), 6.6% higher than in December 2008. Growth
was largely concentrated in current and savings accounts
(19.7%). The assets under management in the region’s
pension funds ended the year at €36,104m, 27.6% up on
twelve months previous. Fund gathering growth in 2009
was 5.9% higher than in 2008, excluding the effect of the
Consolidar AFJP divestment. Year-on-year comparison of
business written by the insurance companies was
impacted by the exit of Consolidar Salud from the
perimeter at the end of the previous year.
Spread management and improved lending volumes over
the final months of the year boosted year-end net
interest income to €2,463m. This was 15.2% higher
than the previous year. It was also a good year for fee
income (€836m and up 9.6% year on year). The more
traditional lines of business did well and those related to
mutual funds and securities improved in the later
quarters. Net trading income stood at €405m, reflecting
a positive year on the financial markets. The sale of
financial instruments in the banking business generated
capital gains and the pension managers and insurance
companies reported high returns from proprietary
trading. Year-to-end gross income in 2009 reached
€3,706m, up 17.4% on the previous year.
As pointed out above, austerity and focussed cost
management were also key elements in the year’s
performance. Operating costs were €1,504m. This was
7.8% higher than the previous year and substantially
below the average regional inflation rate. This
moderation in expenses and positive revenue growth
meant that, as in previous years, the cost-income ratio
improved, reaching 40.6% as against the 44.5%
reported in 2008. Operating profit rose 25.1% over the
year, to €2,202m.
The third characteristic marking the year was the strict
policy applied to risk acceptance and the success of the
recoveries policy implemented by the area’s units. This
considerably curtailed the impact of the crisis on asset
quality. Thus, the 2.7% year-end NPA ratio remained
quite close to the 2.1% reported in 2008. Coverage
remained high, at 130%. In 2009, losses from
impairments on financial assets grew 17.6% year on
year to €419m.
Banking business
The area’s banking business generated a net attributable
profit of €769m, as against €689m the previous year.
The most relevant information on each bank is given
below:
In 2009, BBVA Banco Francés in Argentina produced
€116m in attributable profit, with excellent
net-interest-income and fee-income performance (up
24.8% and 27.8% respectively). Lending grew more
slowly, especially in the wholesale business. Excluding
public-sector lending (which was impacted by the swap
done at the beginning of the year), it rose 4.4%. The year
saw very positive performance in customer funds, which
grew 11.9%, driven above all by transactional items (up
10.4%). This pushed operating income up 27.2% over
the year, to €258m, although the normalised tax rate
marred its contribution to the bottom line.
BBVA Chile and Forum generated an attributable profit of
€73m in 2009, 18.7% more than in 2008. This was
helped by the excellent revenue performance, despite the
significant drop in interest and inflation rates. This led to
a gross income of €380m, up 20.9% year on year. The
slowdown in lending volumes (which shrunk 7.9%) was
felt mainly in wholesale business. Volumes went up in
retail lending, above all in consumer credit, which rose
13.3% year on year, gaining 53 basis points in market
share to November 2009. In customer funds, transactional
business had a good year (up 31.3%). Growing revenues
and slower growth of expenses meant that the end-of-year
operating profit was €213m (up 32.1%).
It was a complicated year for BBVA Colombia. But even
plummeting interest rates during the year did not
prevent it from growing its attributable profit 8.7% to
€139m. Positive spread management during the year
offset the drop in the lending balance. Net interest
income continued to grow (up 6.9% against 2008),
which, with austerity in costs (down 1.2%) positioned
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