January-September 2013


Macro and industry trends

The United States economy has continued to grow, although at a more moderate pace than in the first half of the year. Consumption and residential lending have grown at a more moderate pace. There has also been an impact from the possible end to the extraordinary monetary stimulus measures applied by the Fed in recent years, though this concern was finally dispelled following its decision to extend the current program. Lastly, at the end of the third quarter, the difficulties in reaching agreements on the budget became clear, with the resulting partial closure of the Federal Government.

The result of this has been unfavorable for the exchange rate of the dollar against the euro, which has depreciated 3.1% over the quarter. As a result, the effect of the exchange rate on the Group’s financial statements is negative, both quarterly and year-on-year. As in previous reports, all the comments below on rates of change will be expressed at a constant exchange rate, unless expressly stated otherwise.

The health of the banking system continues to improve steadily quarter by quarter. The expectations are for a stronger credit market, already showing increased consumer and corporate lending. In terms of asset quality, mortgage defaults continue to fall, while consumer and commercial real estate portfolios have recovered and commercial and industrial loans are still at historical lows. This situation explains why the NPA ratio at the end of the second quarter of 2013 (the latest available figures) is 4.2%. On the side of liabilities, the rate of growth of deposits has slowed, after the rapid pace seen in the second half of 2012. Finally, in terms of earnings, the trend in the financial industry continues along the lines explained in previous quarters: rising non-financial revenues and lower provisions.