Mexico
Highlights
- Lending growth, supported by commercial, consumer and mortgages.
- Positive trend of net interest income in line with activity.
- Operating expenses influenced by the increase of the contribution to the BBVA Bancomer Foundation.
- Good asset quality indicators.
Business activity (1)
(Year-on-year change at constant exchange rate. Data as of 31-03-19)
(1) Excluding repos.
Net interest income/ATAs
(Percentage. Constant exchange rate)
Operating income
(Millions of Euros at constant exchange rate)
Net attributable profit
(Millions of Euros at constant exchange rate)
(1) At current exchange rate: +11.5%.
(1) At current exchange rate: +10.6%.
Financial statements and relevant business indicators (Millions of euros and percentage)
| Income statement | 1Q19 | ∆% | ∆% (1) | 1Q18 |
|---|---|---|---|---|
| Net interest income | 1,500 | 13.9 | 7.8 | 1,317 |
| Net fees and commissions | 300 | 6.9 | 1.2 | 281 |
| Net trading income | 63 | (7.4) | (12.3) | 67 |
| Other operating income and expenses | 40 | (11.1) | (15.9) | 45 |
| Gross income | 1,902 | 11.2 | 5.3 | 1,711 |
| Operating expenses | (634) | 10.7 | 4.8 | (573) |
| Personnel expenses | (269) | 9.2 | 3.3 | (246) |
| Other administrative expenses | (281) | 5.8 | 0.1 | (266) |
| Depreciation | (84) | 38.9 | 31.5 | (60) |
| Operating income | 1,268 | 11.5 | 5.5 | 1,138 |
| Impairment on financial assets not measured at fair value through profit or loss | (395) | 4.7 | (0.9) | (377) |
| Provisions or reversal of provisions and other results | 4 | (82.1) | (83.1) | 21 |
| Profit/(loss) before tax | 877 | 12.2 | 6.2 | 782 |
| Income tax | (250) | 16.7 | 10.4 | (214) |
| Profit/(loss) for the year | 627 | 10.6 | 4.7 | 567 |
| Non-controlling interests | (0) | 14.1 | 8.0 | (0) |
| Net attributable profit | 627 | 10.6 | 4.7 | 567 |
| Balance sheets | 31-03-19 | ∆% | ∆% (1) | 31-12-18 |
|---|---|---|---|---|
| Cash, cash balances at central banks and other demand deposits | 8,678 | 4.9 | 1.2 | 8,274 |
| Financial assets designated at fair value | 26,193 | 0.7 | (2.9) | 26,022 |
| of which loans and advances | 216 | 198.9 | 188.2 | 72 |
| Financial assets at amortized cost | 60,754 | 5.3 | 1.5 | 57,709 |
| of which loans and advances to customers | 53,480 | 4.7 | 0.9 | 51,101 |
| Tangible assets | 2,029 | 13.5 | 9.5 | 1,788 |
| Other assets | 4,083 | 12.2 | 8.2 | 3,639 |
| Total assets/liabilities and equity | 101,738 | 4.4 | 0.7 | 97,432 |
| Financial liabilities held for trading and designated at fair value through profit or loss | 17,747 | (1.6) | (5.1) | 18,028 |
| Deposits from central banks and credit institutions | 3,533 | n.s. | n.s. | 683 |
| Deposits from customers | 50,904 | 0.7 | (2.8) | 50,530 |
| Debt certificates | 9,071 | 5.9 | 2.1 | 8,566 |
| Other liabilities | 16,545 | 6.8 | 3.0 | 15,485 |
| Economic capital allocated | 3,938 | (4.9) | (8.3) | 4,140 |
| Relevant business indicators | 31-03-19 | ∆% | ∆% (1) | 31-12-18 |
|---|---|---|---|---|
| Performing loans and advances to customers under management (2) | 54,174 | 5.4 | 1.7 | 51,387 |
| Non-performing loans | 1,182 | 3.8 | 0.1 | 1,138 |
| Customer deposits under management (2) | 50,829 | 2.2 | (1.4) | 49,740 |
| Off-balance sheet funds (3) | 22,744 | 10.2 | 6.2 | 20,647 |
| Risk-weighted assets | 54,794 | 3.0 | (0.6) | 53,177 |
| Efficiency ratio (%) | 33.3 | 33.3 | ||
| NPL ratio (%) | 2.0 | 2.1 | ||
| NPL coverage ratio (%) | 159 | 154 | ||
| Cost of risk (%) | 2.93 | 3.07 |
(1) Figures at constant exchange rate.
(2) Excluding repos.
(3) Includes mutual funds, pension funds and other off-balance sheet funds.
Activity
Unless expressly stated, all the comments below on exchange rates, for both activity and results, will be given at constant exchange rate. These rates, together with changes at current exchange rate, can be seen in the accompanying tables of financial statements and relevant business indicators.
The most relevant aspects related to the area’s activity in the first quarter of 2019 were:
- Lending (performing loans under management) registered a 1.7% growth during the first three months of the year (up 10.4% year-on-year). That allows BBVA in Mexico to maintain its leading position in the country, with a market share of 22.3% in performing loans, according to local figures as of February 2019, from the CNBV (National Banking and Securities Commission).
- The wholesale portfolio, which represents 50% of total lending, fell by 2.1% in the quarter due to the year-end seasonal effect. Year-on-year, it grew by 9.9% as a result of the performance in businesses financing. On the other hand, the retail portfolio (including SMEs) rose by 2.4% in the quarter, mainly driven by consumer loans (payroll and personal loans) which increased by 6.7%.
- Asset quality indicators remained at similar levels to those of the previous quarter: the NPL ratio closed at 2.0% (2.1% as of December 31, 2018), and coverage ratio at 159% (154% as of December 31, 2018).
- Total customer funds (customer deposits under management, mutual funds and other off-balance sheet funds) showed an increase of 0.8% in the quarter, mainly due to the seasonal effect at the end of 2018 (up 7.3% year-on-year). Both time deposits and investment funds increased during the quarter (3.1% and 6.3% respectively). The bank maintains a profitable funding mix, where low-cost deposits represent 76% of total customer deposits under management.
Results
During the first quarter of 2019, BBVA in Mexico showed a net attributable profit of €627m, a year-on-year increase of 4.7%. The most relevant aspects in the evolution of the income statement are summarized below:
- Positive performance of net interest income, which showed a year-on-year increase of 7.8%, lower than growth in activity (10.4%) due to a slight deterioration of customer spreads.
- Net fees and commissions showed a moderate growth (up 1.2% year-on-year).
- The NTI showed a 12.3% decrease, mainly due to a lower contribution under this heading from the Global Markets unit.
- Other operating income and expenses registered a year-on-year decrease of 15.9%, due to higher expenses derived from the deposit guarantee fund, as well as lower results from the insurance business.
- The operating expenses increased by 4.8%, compared to the same period from the previous year, strongly influenced by the effect of doubling the contribution to BBVA Bancomer’s Foundation to strengthen community support in 2019. Gross income registered an increase of 5.3%. As a result, the efficiency ratio stood at 33.3% as of March 31, 2019.
- The good evolution of the risk indicators was reflected in the decrease of 0.9% year-on-year of impairment on financial assets. The cost of risk stood at 2.93%, improving from 3.18% in the same period of the previous year or when compared to the 3.07% cumulative figure as of the end of 2018.
- Provisions (net) and other gains (losses) showed an unfavorable comparison in the first quarter of 2018 due to extraordinary income derived from the sale of the stake on a real estate development by BBVA in Mexico.