2012 has been a difficult year for the country’s economy, with its main drivers affected. Meat exports have fallen in the farming sector due to two outbreaks of foot-and-mouth disease in the second half of 2011. In the agricultural sector, the severe drought at the beginning of 2012 affected crops. Given the weight of the primary sector in the country’s economy, the latest GDP estimate released by the Central Bank suggests a 1.5% contraction for 2012. At 4%, the CPI is within the inflation target.
BBVA has not been immune to the country’s situation, since around 45% of its lending portfolio corresponds to the agricultural and farming sector. The bank’s activity has been adversely affected. This, combined with the increase in funding costs, has had a negative impact on net interest income and on fees and commissions. As a result, the unit’s net attributable profit has declined to €14m, 39.8% down on the 2011 figure.
At a local level, the rating agency Feller-Rate maintained the bank’s AA rating, with a negative outlook, while at the international level Standard&Poor’s has kept its BB- rating, with a stable outlook, in line with the sovereign rating.
In 2012, BBVA has improved its tools and carried out the actions needed to make the most of the business opportunities that will arise in 2013, when the economy is expected to perform more strongly. For example, BBVA has boosted its retail business with the purchase of the credit card portfolio of Citibank NA, Paraguay Branch. With this acquisition, BBVA will become one of the main banks in this market and improve its position as a comprehensive bank for the preferred customer segment. It has also launched new mortgage products in a sector that is undergoing significant growth in the country. Lastly, BBVA has started to operate as an insurance broker in Paraguay in association with the country’s most renowned insurance companies, thus completing the range of products and services available to its customers.