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South America

South America highlights in the first quarter

  • Business activity remains strong.
  • Excellent price management.
  • Improved asset quality.
  • Positive performance by the pension and insurance businesses.

Industry Trends

In the first quarter of 2012, the economic growth in the region, already mentioned, boosted lending activity and deposits in South America, in line with the trend seen in 2011.

This growth was accompanied by new local regulations, mainly related to provisioning and capital requirements. The new regulations aim to implement international standards to support quality and competitive growth.

The evolution of exchange rates, both over the quarter and over the last 12 months, had a positive impact on activity, the balance sheet and earnings in the area. Unless indicated otherwise, all comments below on percentage changes refer to constant exchange rates, with the aim of providing a better understanding of the performance of the business in this area.

Income statement

(Million euros)



Units:

South America Banking business Pensions and Insurance

1Q12 Δ% Δ% (1) 1Q11 1Q12 Δ% Δ% (1) 1Q11 1Q12 Δ% Δ% (1) 1Q11
Net interest income 947 36.4 29.9 694 930 36.3 29.8 682 17 42.9 34.0 12
Net fees and commissions 310 22.7 17.3 253 217 20.7 15.7 180 95 24.2 18.1 76
Net trading income 149 (25.7) (28.4) 201 122 (30.9) (33.7) 176 27 11.9 11.4 24
Other income/expenses (40) (4.8) (12.1) (41) (82) (0.9) (5.4) (83) 45 4.1 2.8 43
Gross income 1,366 23.6 18.1 1,106 1,185 24.2 18.6 954 184 18.1 14.2 156
Operating costs (553) 18.1 13.1 (468) (488) 21.7 16.4 (401) (58) (4.5) (8.1) (61)
Personnel expenses (282) 17.7 12.9 (239) (247) 21.7 16.6 (203) (28) (5.6) (9.3) (30)
General and administrative expenses (233) 19.7 14.6 (194) (205) 23.9 18.4 (165) (28) (5.3) (8.8) (29)
Deprecation and amortization (39) 11.5 6.0 (35) (36) 10.7 5.2 (33) (2) 26.6 21.4 (2)
Operating income 813 27.6 21.8 637 697 26.1 20.2 553 126 32.6 28.6 95
Impairment on financial assets (net) (98) (18.2) (22.5) (120) (98) (18.5) (22.8) (120) - - - -
Provisions (net) and other gains (losses) (25) 64.8 62.0 (15) (24) 87.9 83.5 (13) - - - -
Income before tax 690 37.4 31.3 502 576 36.9 30.6 420 125 32.6 28.5 94
Income tax (153) 82.2 73.2 (84) (130) 87.9 78.9 (69) (26) 45.5 38.9 (18)
Net income 537 28.4 22.9 418 446 26.9 21.1 351 99 29.6 26.1 76
Non-controlling interests (167) 19.6 14.3 (139) (142) 16.5 11.1 (122) (24) 33.9 30.2 (18)
Net attributable profit 370 32.9 27.1 279 304 32.5 26.4 230 75 28.2 24.8 58
(1) At constant exchange rate.

Balance sheet

(Million euros)



Units:

South America Banking business Pensions and Insurance

31-03-12 Δ% Δ% (1) 31-03-11 31-03-12 Δ% Δ% (1) 31-03-11 31-03-12 Δ% Δ% (1) 31-03-11
Cash and balances with central banks 8,839 25.6 16.6 7,037 8,838 25.6 16.6 7,037 - - - -
Financial assets 9,977 13.3 6.3 8,808 8,509 21.6 13.9 6,998 1,434 (18.8) (23.2) 1,766
Loans and receivables 44,169 32.5 23.5 33,343 43,794 34.5 25.2 32,570 288 (47.2) (49.1) 545
Loans and advances to customers 40,027 33.8 24.5 29,909 39,961 34.3 25.0 29,745 68 (61.7) (62.6) 178
Loans and advances to credit institutions and other 4,142 20.6 14.2 3,434 3,833 35.7 28.1 2,825 220 (40.1) (42.8) 367
Tangible assets 808 24.1 16.0 651 757 26.4 18.0 599 50 (1.9) (7.1) 51
Other assets 2,482 23.1 16.7 2,016 1,962 23.4 15.4 1,591 156 14.4 8.5 136
Total assets/Liabilities and equity 66,274 27.8 19.3 51,855 63,861 30.9 21.9 48,795 1,928 (22.8) (26.7) 2,499
Deposits from central banks and credit institutions 5,640 25.0 15.6 4,513 5,639 25.0 15.6 4,512 1 (70.3) (70.9) 4
Deposits from customers 44,249 34.2 25.1 32,965 44,432 34.3 25.2 33,077 - - - -
Debt certificates 2,676 40.9 30.8 1,900 2,676 40.9 30.8 1,900 - - - -
Subordinated liabilities 1,612 10.6 4.5 1,458 1,157 7.5 (0.3) 1,076 - - - -
Financial liabilities held for trading 902 24.1 17.5 727 902 24.1 17.5 727 - - - -
Other liabilities 8,367 8.2 2.1 7,730 6,376 17.0 9.9 5,451 1,782 (13.4) (17.7) 2,058
Economic capital allocated 2,827 10.3 2.5 2,563 2,678 30.5 20.8 2,052 145 (66.8) (68.8) 436
(1) At constant exchange rate.

Significant ratios

(Percentage)


South America

31-03-12 31-12-11 31-03-11
Efficiency ratio 40.5 45.8 42.4
NPA ratio 2.3 2.2 2.5
NPA coverage ratio 141 146 134
Risk premium 0.97 1.31 1.55

South America. Operating income

(Million euros at constant exchange rate)

(1) At current exchange rates: +27.6%

South America. Net attributable profit

(Million euros at constant exchange rate)

(1) At current exchange rates: +32.9%
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