At the end of 2010, BBVA Bancomer achieved a substantial recovery in its business and results, while maintaining its leading position in the Mexican market. This outstanding performance has been recognized by the magazine Latin Finance, which named it the best bank in Mexico for its profit and returns, asset growth, management quality, strategic vision and technological sophistication.
The economic recovery, the excellent commercial management of Bancomer, and improved productivity in its distribution networks, have all been reflected in its business results. Gross lending to customers, excluding the balances for existing homes, rose year-on-year by 10.1%, the highest figure since October 2008 (+16.5%), to €36,410m at the close of 2010.
The commercial portfolio, in other words, the combined loans to corporations, SMEs, financial institutions and the government, amounts to €15,782m, a year-on-year increase of 15.3%. The strength of the corporate portfolio is particularly notable, with growth of 23.4% to a balance of €6,600m. Lending to SMEs and micro-enterprises continued to increase, ending the year at €1,253m. There was a 16.0% growth of new customers in finance for medium-sized companies. This has led to a further increase of 142 basis points in the market share of lending over the year.
Consumer finance, including credit cards, recovered significantly over the year to €7,186m at 31-Dec-2010, a year-on-year increase of 14.6% and the highest level since August 2008. Consumer loans (car, payroll and personal) increased by 23.8% and credit card finance increased at a rate of 9.0%. This performance, together with the low level of activity among some competitors in this segment of finance, helped increase Bancomer’s market share in credit cards over the year by 430 basis points and in consumer finance as a whole by 320 basis points.
The mortgage loan-portfolio (excluding existing housing but including developer mortgages) was €10,796m, a rise of 5.8% compared with the close of the previous year.
This maintains BBVA Bancomer’s leading position in this segment. It financed one out of every three new mortgages and granted more than 34,000 loans to individual customers and more than 93,000 to developers.
The investment portfolio mix remains adequately diversified by segments, with a similar breakdown to the close of 2009. It is worth mentioning that throughout last year, there was a gradual change in its composition, with an increase in the proportion of lower-risk types.
The balance of customer funds (bank deposits, repos, mutual funds, investment companies and other placements) amounted to €56,519m on 31-Dec-2010, up year-on-year by 10.9%. Particularly notable are figures for current accounts, which increased by 16.5%. They thus continue to be the main component on the liabilities side of the balance sheet and ensure that BBVA Bancomer maintains a profitable funding structure, as can be seen in Chart 27. In terms of off-balance sheet funds 2010 was notable for the positive performance of assets under management in mutual funds, which closed on 31-Dec-2010 at €15,341m, a year-on-year growth of 27,2%. As a result, BBVA Bancomer increased its market share by 59 basis points over the year, as well as remaining the most profitable pension fund manager in the market.
It is also worth highlighting the area’s adequate handling of liquidity and solvency. BBVA’s model of liquidity and interest rate risk management ensures the independence and financial autonomy of its subsidiaries. In Mexico, a total of MXN 29,000m debt was issued on local financial markets, with a total debt issuance of MXN 118,653m. This makes BBVA Bancomer the main debt issuer on the Mexican market. To ensure adequate capital management, Bancomer made the largest-ever capital notes issue by a Mexican bank on the international markets, at USD 1 billion with a term of 10 years. This issue has been placed with investors in the United States, Europe and Asia at a very attractive price, at a bid-to-offer ratio of 3.5.
Finally, BBVA Bancomer has consolidated its community involvement in Mexico by using its leading position to create development and education programs and actions in the country. Over the year corporate responsibility strategy has been integrated into the business and stakeholder dialog has been extended. In addition, BBVA Bancomer’s Corporate Social Responsibility Report is the first in the Mexican financial sector to receive the highest (A+) rating from Global Report Initiative. It is also the first to submit its results for verification by Deloitte.
Below are some of the most important aspects of the performance of the various business units in 2010:
Commercial Banking
The excellent capillarity of the commercial banking unit’s retail network has increased the balance of funds in current accounts and the assets managed in mutual funds. This has had a positive impact on the maintenance of a very profitable deposit structure and the Bank’s position as market leader. In terms of lending, finance for SMEs and microbusinesses showed a positive trend. The “Micro-Business Card” was launched in 2010, offering lines of credit from 20,000 to 180,000 pesos, designed to finance working capital mainly. This product is backed by guarantees from Nacional Financiera. The risk is therefore shared with the Federal Government. BBVA Bancomer has been recognized by the Secretariat for the Economy with its SME Award 2010 for its specialized service and complete range of comprehensive financial solutions offered to its customers in this segment.
Consumer Finance
After nearly two years of low levels of activity due to the economic crisis, the Consumer Finance unit closed 2010 with a positive result in its portfolio. Origination of new loans has been very positive, above all in recent months. The number of new consumer finance, paycheck and car loans has increased by 58,2%. To continue boosting car loans, BBVA Bancomer signed an agreement with Ford that in 2010 generated significant growth in the Bank’s market share in this type of financing, of more than 600 basis points. Over 2.6 millions of credit cards have also been issued in the year, 25.1% more than in the previous year. In addition, in 2010 the unit has boosted the use of ATMs for issuing pre-approved paycheck loans. This increases the use of multiple channels for granting finance: 27% of all consumer finance is now issued through channels other than the branches. It also enlarges the product distribution options, thus increasing the loyalty of paycheck customers and ensuring that the process of processing and approval of loans is much more efficient.
Government and Corporate Banking
This unit has a specialized network of 80 branches for companies and 38 for government clients. In 2010 the number of customers totaled 45,100, 16.0% more than in 2009. In addition, there was a notable improvement in the lending penetration rate among its customers. At the close of 2010, 64% of customers had five or more families of products, the best figure in the last five years.
Mortgage Banking
This unit provides finance for individuals to buy homes and lends to developers. It has maintained a sustained year-onyear growth throughout the year. The balance of outstanding individual mortgage loans increased by a year-on-year rate of 8.1%. For the third year in a row, BBVA Bancomer was awarded the National Housing Prize. This time the award was granted for offering a variety of solutions as a response to the crisis and supporting more than 50,000 customers affected. A number of new products were launched in 2010: “Ahorra y Estrena” (Save and move in), a mortgage loan for people with variable income that enables them to finance their home with monthly installments equivalent to the balances of their monthly savings; and the “Alia2 Plus” loan in partnership with Fovissste (Housing Fund of the Security and Social Services Institute for State Workers), which allows affiliates to increase the amount of their loan and buy a home at a fixed interest rate with set repayment amounts. A similar product “Bancomer Cofinavit AG” was launched in partnership with the Institute of the National Housing Fund for Workers (Infonavit).
Corporate and Investment Banking (C&IB)
This unit’s outstanding contribution was the establishment of a new asset class in the local market with the issue of dollar-denominated senior bonds. C&IB has also participated as a leading issuer, including the first public issue of stock in SARE Holding, the housing construction company, for MXN 930m; the issue of development capital certificates by Prudencial Real Estate Investors for MXN 3,095m; and the initial public offering of shares in the Grupo Comercial Chedraui for USD 425m, which was placed in Mexico and abroad.
Asset Management
The unit extended its product catalog in 2010 with the launch of five new international mutual funds for private and HNW banking. The range of products available was extended to new regions and countries (Asia not including Japan, Latin America, emerging countries), technological companies and dollardenominated government debt. It has given BBVA Bancomer greater coverage of international funds, with 12 funds that invest through the International Quotations System (SIC).
Global Markets
This unit has for more than three years in a row maintained its leadership in structured notes, and closed the year with a market share of 27.0%. At the same time, warrants and a wide variety of underlying assets were placed in 2010 through issues by major companies in the country, such as GMéxico (mining), Grupo Televisa (telecommunications) and Cemex (construction).
