The area’s banking business generated a net attributable profit of €732m in 2010, 12.6% up on the figure for the previous year.
Below are some of the most important aspects of the performance of the banks in the region over the year:
Argentina
The Argentinean economy performed well in 2010, with GDP growth of 8%, boosted by the good performance of both the foreign sector and domestic demand, as well as a political scenario that was less conflictive than in previous years. The least positive factor continues to be the inflation rate, which remains high.
In 2010, BBVA Banco Francés has implemented important initiatives to improve relations with its customers, both individuals (through the alliance with the entertainment producer Time for Fun, the agreement with LAN, the Francés GO campaign and the launch of the first car leasing scheme) and companies (launch of credit lines for SMEs, greater range of products for the agricultural segment and an agreement with the BMW Group). In funds under management, variable-interest deposits were launched (linked to commodity prices, stock market indices and currency trading rates). The year-on-year growth in lending was 43.0% as of 31-Dec-2010, with an increase of 32 basis points in market share to November (latest available figures). There were notable increases in consumer finance (up 88 basis points) and credit cards (up 79 basis points), and no deterioration in asset quality (the NPA ratio continues to be well below that in the rest of the system). Customer funds increased by 22.7% and were highly concentrated in transactional accounts (up 22.2%), with market share up by 24 basis points to November (latest available figures).
The bank’s buoyant business has led to significant improvements in the net interest income, which grew year-on-year by 16.5%, and in net fees and commissions (up 15.6%), despite legal limitations that entered into force during the year. Operating expenses were up 28.5%, affected by the upturn in inflation and the expansion projects launched by the unit. The high asset quality has enabled loan-loss provisioning to remain at similar levels to 2009. In all, the net attributable profit in 2010 was €111m.
Chile
The Chilean economy grew by over 5% in 2010, thanks to the strength of domestic demand and the favorable impact of high commodity prices, particularly copper. Inflation closed the year under 3%, within the Central Bank’s target. Over the year, the Central Bank has gradually reduced its monetary incentives and raised the interest rate by 300 basis points to 3.5%.
In this environment BBVA Chile has strengthened its positioning in the retail businesses by transforming its branch network and the virtual channels, as well as the commercial and distribution models. As a result, the sales volume has doubled, the product range has grown and customer satisfaction levels have improved. So, the loan book grew by 12.2% over the year. There was a notable increase in credit cards (+80.4%) through new products (Signature and MasterCard), as well as associations with other brands (Enjoy) and stores. Increased lending led to an increase in market share in 2010 of 46 basis points in consumer finance plus credit cards and 17 basis points in mortgages (latest available figure to December 2010). The consumer finance unit Forum strengthened its leading position and extended its product range and penetration in its different brands. Finance was up by 31%, without any deterioration in risk indicators (the NPA ratio is 1.9%). In customer funds, current accounts were up by 22.1%, a gain of 13 basis points in market share of transactional deposits (also to December, latest available figure). It is also worth noting the issues of long-term bonds for a total of over €300m.
BBVA Chile and Forum contributed a net attributable profit of €115m (up 41.9%). The figure was benefited by the effect of increased business on net interest income (+12.1%) and net fees and commissions (+27.6%), even though net trading income was below 2009 levels, which included high capital gains from the sale of equity holdings. There was also a positive contribution from the moderate level of expenses (up 7.4%) and major reduction in loan-loss provisions (down 39.4%) due to the improved asset quality.
Colombia
Colombia is also marked by the steady improvement of its economy, particularly in the second half of the year, due to a significant increase in public and private investment, as well as a notable recovery in exports and the maintenance of interest rates at all-time lows. As a result, GDP ended 2010 with a rise of 5%.
Under the guidelines set out by the Plan Unidos (United Plan) and the New Model of Customer Service, BBVA Colombia has performed very well commercially, in both lending and funds. This has led to a year-onyear gain in market share of 17 basis points to November. Mortgage loans and corporate lending played a remarkable role in this respect, with increases in the market share of 78 and 16 basis points, respectively. In business with individual customers the product range was extended (in cards, real estate leasing and payroll bank accounts and others), while in the corporate segment the Bank’s presence in the agroindustrial sector was strengthened and the Cash Net tool was consolidated as a method of customer cash management. In customer funds, there was a year-on-year growth of 22.3% in current and savings accounts, reflecting the policy of reducing the operating costs. In 2010, BBVA Colombia was recognized as the “Bank of the Year” in the country by The Banker. It also received an award as the best Colombian bank for good corporate governance practices, social responsibility and ethics from Latin Finance.
The remarkable fall in interest rates over the year had a negative effect on the results in the sector in 2010. BBVA Colombia has offset much of this impact by greater growth in lending and by applying a strategy of strict defense of spreads, which has limited the downgrade in net interest income (–4.9%). The comparison of the figures for net trading income is affected by the sale of the public securities portfolio in 2009. Expenses remained in check, with a slight increase of 1.4%. There was a significant limitation of loan-loss provisions (–32.4%), which benefits by the reduction in non-performing assets (–26.6%). As a result, the net attributable profit in 2010 amounted to €184m, 12.0% up on the previous year.
Panama
The Panamanian economy has picked up over the year, boosted by the recovery in international trade, abundant liquidity and its achievement of an investment grade rating.
BBVA Panamá has focused its strategy on improving its recognition in the market through various sponsorship deals (including the Panamanian Soccer League) that have supported the product range on offer to individuals, helped by the opening of a new branch. In the corporate segment, efforts have been aimed at the agricultural sector and the Free Zone, with improvements in COMEX and insurance products. Lending increased by 6.8% over the year and customer funds by 5.8%.
In 2010, BBVA Panama had a net attributable profit of €31m, with a positive performance in both income and expenses.
Paraguay
The Paraguayan economy performed very favorably in 2010, boosted by the strong agricultural sector and the reactivation plans implemented by the country’s economic authorities.
In 2010 BBVA Paraguay showed great commercial strength, with the launch of numerous commercial campaigns, in both the corporate and institutions and retail businesses. Two highlights were the strategic alliance with John Deere, in corporate and institutions, and the launch of the VIP segment in retail banking. Eight new branches were opened over the year as part of an expansion plan which will continue in 2011. This has enabled a year-onyear growth in lending of 45.2% and customer funds of 24.3%, without any negative effects on the NPA ratio, which continues at minimum levels, or on profitability.
BBVA Paraguay had a net attributable profit of €39m, 21.7% more than the previous year. Euromoney named it the Best Bank in the country for the fourth year in a row.
Peru
In 2010, the Peruvian economy grew almost by 10%, thanks to the recovery in private consumption, high levels of business confidence and favorable financing conditions. This recovery has led the economic authorities to start a cycle of rises in policy rates with the aim of keeping inflationary pressures in check.
BBVA Banco Continental undertook numerous commercial initiatives in all segments in 2010 and increased its sales capacity: an 8% increase in its branch network, 23% in the number of ATMs and 184% in its “express” agent network. As a result, lending was up by 19.5% and customer funds by 20.6%. In lending, BBVA Banco Continental won 47 basis points in market share as of November 2010 (latest available data). There was a particularly notable increase in consumer finance (35 basis points) and corporate lending (46 basis points). The market share in customer funds was 203 basis points above the figure for the previous year. In the private individuals segment, thanks to the Mundo Sueldo product, the number of customers who deposit their payroll directly into their accounts increased by 23%, and the number of companies making salary payments directly by 38%. In mortgage financing, one of Peru’s largest real estate projects was started. The VIP individuals segment saw the launch of the “Black” card in partnership with MasterCard. In Corporate and Investment Banking, the aim was to create closer links with customers, with improved financial advice and a broader range of products. A number of hedging derivatives were launched for corporate customers for this purpose. In 2010, the bank was recognized as the Best Bank in Peru by Global Finance and the Best Foreign Trade Bank in Peru by Trade Finance. It was also in third place as Best Bank in Latin America in the ranking by América Economía, and third in the sustainability ranking drawn up by Management & Excellence and Latin Finance.
In 2010, BBVA Banco Continental had a net attributable profit of €134m (up 6.5%), thanks to the effect of improved economic activity on revenues. The net interest income was up by 4.8%, despite the downward pressure on spreads, and net fees and commissions were up by 12.7%, with a very high recurrent component. Expenses were up by 9.7%, a moderate rate given the expansion in the commercial network and it has not prevented the efficiency ratio from remaining low (30.6%). The NPA ratio continues very low (1.9%), with no pressure on the volume of loan-loss provisioning.
Uruguay
The positive performance of the foreign sector, particularly due to agricultural and livestock production, has pushed GDP up by 9% in 2010.
The most important event of the year for BBVA Uruguay was the agreement to purchase Crédit Uruguay. The deal has converted the unit in the second biggest financial institution in the country. Within its organic business, BBVA Uruguay has shown great commercial strength in 2010, in both the individuals and corporate segments. In the corporate segment, the bank has focused efforts on the agricultural and livestock business, with the launch of new products such as leasing, the Cuenta Pymes (SME account) and special financing lines.
In 2010, the banking business benefited from the recovery in economic growth, although it continued to suffer from an environment of low interest rates. In this context BBVA Banco Uruguay generated a net attributable profit of €3m.
Venezuela
Despite high oil prices in 2010, the Venezuelan economy posted a negative growth, due mainly to the limitation on currency flows settled on the official exchange market, a deteriorating business environment, restrictions on electricity in the first half of the year and sluggish private demand.
Despite this situation, BBVA Banco Provincial had a good year. The bank has continued to invest in improving infrastructures with the aim of guaranteeing security, adapting spaces for the preferential treatment of customers with disabilities, and carrying on with the extension of the “express” zones. In addition, it launched the “BBVA Provinet” and “Provinet Móvil” portals to provide customers easier access to accounts. It has also been an important year from the commercial point of view. Of particular importance in the individuals segment were the credit card initiatives, with the launch of numerous promotions in partnership with VISA and MasterCard, as well as the re-launch of the Crédit Auto product in partnership with General Motors and Chrysler. With respect to attracting funds, a new fund called Nómina Estándar was launched aimed at low-income individuals. It introduces a “popular card” as a way of payment adapted to the financial needs of this customer segment. The loan book increased over the year by 41.0%, with an increase in market share of 139 basis points (as of October 2010, the latest available data). Customer funds increased by 46.6% and the market share increased by 285 basis points over the year (also according to latest data available to October 2010).
Over the year BBVA Banco Provincial generated a net attributable profit of €115m (up 23.0%), based on the excellent performance of business and positive handling of spreads, which has been reflected in the progress of net interest income (up 28.9%). As a result of the positive performance of other revenues and a moderate increase in expenses (under the rate of inflation), the efficiency ratio has improved to 48.0%, and operating income continues to grow strongly (up 43.6%). In 2010, BBVA Banco Provincial was once again named Best Bank in Venezuela by three prestigious publications: Euromoney (for the fourth year in a row), Global Finance (also for the fourth year in a row) and The Banker.
