Economic activity in Argentina has slowed in 2012, following the strong performance seen in 2011. It has been affected by the drought, low growth in Brazil and the impact of recent restrictions imposed on the foreign-exchange market. GDP over the first nine months of 2012 posted a 1.8% increase on the same period the previous year (latest public data available).
The Argentinean financial system has maintained good liquidity and solvency indicators, although growth has been more sluggish compared with the previous year, as it was affected by various regulatory changes. In the foreign exchange market, the limits imposed on foreign exchange trading and capital movement have been tightened up. New regulations have also been issued on the establishment of reserve coefficients and the interest rate and allocation of funds for financing investment projects.
In this new scenario, BBVA in Argentina has once again proved its great flexibility and capacity to adapt quickly, not only developing new products and services, but also managing its resources more efficiently. The bank’s loan portfolio has increased 23.8%, fueled mainly by consumer finance and lending to businesses, achieving a market share of 7.5% (data as of November 2012). As for risks, the quality indicators for the financial system’s portfolio have deteriorated. However, prudent risk management has enabled BBVA Francés to maintain its ratios at optimal levels and maintain its leading position in this respect. Customer funds are up 16.9% in year-on-year terms. It is important to point out that following the regulations imposed on the forex market, there has been a major outflow of deposits in dollars. For this reason, the bank has posted a 38.8% reduction in its balance of deposits in foreign currencies. However, deposits denominated in pesos have grown at a rate of 31.0%, driven by the increase in lower-cost deposits (up 39.2%).
In earnings, Argentina has improved its net attributable profit by 23.9% thanks to the increase in net interest income, fees and commissions, and the excellent performance of the insurance business. This is despite the increase in operating expenses, which is mainly the result of the general increase in prices.