The macroeconomic environment in Chile has been favorable in 2012. The economy grew at a good pace thanks to strong investment and domestic demand. In 2012, GDP is expected to grow slightly above 5%. Full employment has been maintained, since the unemployment rate is expected to close the year at 6.2%, and inflation remains low, at around 1.5%, according to the country’s Central Bank forecasts. Against this background, the main risks the local economy faces continue to come from abroad. Nevertheless, the economic outlook for 2013 continues to be favorable, with growth rates expected to once again reach 5% and inflation well within the Central Bank’s target range (3%). The monetary policy rate should remain at current levels (5%).
In an environment of strong economic activity, the financial system has seen a significant expansion in lending in 2012, concentrated mainly in consumer finance and mortgage loans. According to November figures released by the Superintendency of Banks and Financial Institutions, lending is growing year-on-year at 14.3% (at constant exchange rates), with strong activity in the consumer portfolio (up 17.7%) and accelerating growth in corporate loans (up 15.6%). The earnings posted by the local banks show a 1.1% contraction compared with the previous year (figures as of November), due in part to the negative impact of the increase in expenses (up 10.3%) and loan-loss provisions (up 14.2%). The levels of return on equity have therefore been adjusted downward: from 17.4% as of November 2011 to 15.1% as of November 2012. However, the capitalization ratios of the banks in Chile have increased.
The macroeconomic and competitive environment in Chile have been favorable for BBVA. Lending grew 16.5% year-on-year, focused mainly on the private individual segment, and a market share gain of 4 basis points to 7.8%, according to the latest data for November. This improvement in the competitive position can be seen basically in mortgage loans and consumer finance, which increased in the year by 29 and 39 basis points, respectively. These results have been achieved by the successful development of the strategic plan, with strong growth in the installed capacity that additionally allows for the increase in the customer base. Forum, the unit specializing in consumer finance and leader in the automotive sector in Chile, has also benefited from strong car sales and has increased its market penetration rate in new car sales to 13.4%. The trend in the insurance business has also been positive thanks to contained levels of claims. With respect to on-balance-sheet customer funds, Chile has posted a year-on-year increase of 10.2%.
From the point of view of earnings, this year has been more difficult for Chile than the previous one as a result of investor perception of the macroeconomic situation in Europe and, particularly, in Spain. The uncertainty in the euro zone has resulted in an increase in the cost of funding, which has slowed down growth in more recurring revenue. However, net attributable profit stood at €268m, 11.2% up on the same period in 2011.
In addition, BBVA Chile has made progress in its social responsibility plan. For the third year in a row, it has been ranked as one of the most socially responsible companies in the country, according to the “2012 National Business Responsibility Ranking” published by Fundación Prohumana and the magazine Qué Pasa. The main factors contributing to the award have been: the Niños Adelante (Forward, children) program; the work of the “Corporate Volunteer”; the application of strict principles and ethical standards in its activity; the global Eco-efficiency plan; continuous improvement in professional standards; and the creation of an equality plan and diversity committee. BBVA Chile has also been recognized by the Chilean-US Chamber of Commerce with the “Good Corporate Citizen Award” for its program “Niños Adelante”, which provides quality nursery education to children suffering from poverty.
Finally, BBVA Chile has for the first time been listed in the Business Corporate Reputation Monitor (Merco) as one of the leading and most respected companies in the country.