operating costs allowed operating income to rise
1.0% to €4,533m. Thus net attributable profit
for the year came to €2,373m, a decline of
7.5% due to the higher loan-loss provisions. In
terms of business volume the more risk-worthy
forms of lending (such as first residence
mortgages and lending to institutions and large
companies) and customer funds (savings and
current accounts, and pension funds) continued
to perform well.
Revenues in the Wholesale Banking & Asset
Management Area remained buoyant, rising
12.8% year-on-year thanks to recurrent items
(net interest income plus net fee income was up
43.5% for the year) and to the contribution
from China Citic Bank. This easily offset the fall
in income from the Industrial and Real Estate
Holdings Portfolio. Loan-loss provisions were
lower and thus net attributable profit for the
year rose 30.9% to €1,011m. The most relevant
aspects related to business volume were the
sustained level of lending, thanks to the area’s
strategy of focusing on customers of high
quality, and the considerable growth in customer
funds.
Mexico reported excellent results that maintain its
high profitability in an especially adverse
macroeconomic scenario. The year-on-year
growth of 5.4% in operating income reflects
higher revenues and cost controls, and led to a
further improvement in efficiency. Nonetheless
higher loan-loss provisions reduced net
attributable profit to €1,359m, a fall of 19.1%
for the year. The most notable aspect of business
volume was the steady level of the loan portfolio,
although the mix changed. Items of less risk
(mortgages and companies) grew in importance
and good performance of customer funds which
were up 5.2% year-on-year.
Excluding the one-off operations already
mentioned, operating income in the United States
grew faster, at 20.3%. This reflects the steady rise
in revenues and the favourable performance of
operating costs. Regarding business activity,
customer funds had positive performance and
lending was contained.
Lastly, South America maintained strong banking
revenues despite a slowdown in business in
previous months. Pension and insurance business
also did well. This, together with operating costs
that grew at a slower pace, helped operating
income to rise 25.1% for the whole year and net
attributable profit was up 21.8% to €871m.
Regarding business volume and as in the other
areas, lending was contained and customer funds
experimented high growth.
Economic environment
In the fourth quarter of 2009 the global economy
gave increasingly clear signs of a return to growth.
Emerging economies –especially Asia and Latin
America– have become the main engines of recovery.
Developed economies are still in an earlier stage,
held down by high unemployment and the need to
complete a difficult process of deleveraging, which is
stifling the growth of internal demand. The United
States’ is in a better position than Europe although
recovery in both areas is embryonic.
In the future there will be uncertainty regarding
sustainability and the scope of recovery. The main
risk is the premature withdrawal of stimulus
packages, particularly in the most advanced
economies where private sector consumption is
extremely fragile and where there is still the risk of
new financial shocks.
Regarding end-of-period exchange rates the US
dollar, the Argentinean peso and the Venezuelan
bolivar fuerte depreciated year-on-year. Other
currencies with an impact on the Group’s financial
statements (the Mexican, Chilean and Colombian
pesos and the Peruvian nuevo sol) appreciated
year-on-year. The overall impact is slightly positive
for the balance sheet and business figures.
Average exchange rates reflect year-on-year
depreciations in the Mexican, Argentine, Chilean
and Colombian pesos. The US dollar, Venezuelan
bolivar fuerte and Peruvian nuevo sol appreciated.
As a result exchange rates have a negative effect on
year-on-year comparisons of the income statement
amounting to about five percentage points.
4Q09 GROUP INFORMATION
Relevant events
5
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