In 2012, the economic growth in the region boosted lending activity and customer funds in South America. This growth was supported, particularly in the first half of the year, by new local regulations, mainly related to provisioning and capital requirements. The new regulations aim to implement international standards in the region to maintain quality growth while remaining highly competitive.
The financial system remains sound in most countries. Lending continues to increase at high rates, boosted by monetary policies focused on supporting economic activity. It has been growing significantly in all the countries in the region, particularly in Venezuela, Uruguay and Argentina, and also in Colombia, Chile and Peru, although at a slower pace. Customer deposits are robust, advancing together with economic activity, and with annual growth similar to that for lending. Faced with external monetary expansion and the ensuing increase in capital flows, many central banks have chosen to apply prudential measures to discourage capital inflows and to control domestic lending growth (particularly in Brazil and Peru).
Exchange rates in the region have appreciated in most countries over the last twelve months, in both average and final terms. As a result, the impact of foreign currencies on the Group’s balance sheet, activity and earnings is positive in the year. The comments below on business activity and earnings refer to constant exchange rates, unless otherwise indicated.