South America
Highlights
- Positive trend of lending in the main countries.
- Good performance of net interest income is maintained.
- Net Attributable profit impacted by Argentina's hyperinflation adjustment.
- Positive contribution of the main countries: Argentina, Colombia and Peru to the Group’s attributable profit.
Business activity (1)
(Year-on-year change at constant exchange rates (2). Data as of 30-06-19)
(1) Excluding repos.
(2) Excluding BBVA Chile as of June 30, 2018.
Net interest income/ATAs
(Percentage. Constant exchange rates)
Operating income
(Millions of euros at constant exchange rates)
(1)At current exchange rates: +12.7%.
Net attributable profit
(Millions of euros at constant exchange rates)
(1) At current exchange rates: +21.9%.
Financial statements and relevant business indicators (Millions of euros and percentage)
| Income statement | 1Q19 | ∆% | ∆% (1) | 1Q18 |
|---|---|---|---|---|
| Net interest income | 1,613 | 3.9 | 12.1 | 1,553 |
| Net fees and commissions | 298 | (6.9) | 0.0 | 321 |
| Net trading income | 314 | 43.7 | 59.3 | 219 |
| Other operating income and expenses | (231) | 118.9 | 100.2 | (106) |
| Gross income | 1,994 | 0.4 | 9.7 | 1,987 |
| Operating expenses | (779) | (14.3) | (5.5) | (909) |
| Personnel expenses | (402) | (13.7) | (4.5) | (465) |
| Other administrative expenses | (293) | (25.0) | (17.5) | (391) |
| Depreciation | (84) | 60.8 | 73.4 | (52) |
| Operating income | 1,215 | 12.7 | 22.2 | 1,078 |
| Impaiment on financial assets not measured at fair value through profit or loss | (349) | 9.0 | 13.8 | (321) |
| Provisions or reversal of provisions and other results | (19) | (43.6) | (33.9) | (34) |
| Profit/(loss) before tax | 847 | 17.0 | 28.6 | 724 |
| Income tax | (271) | 4.8 | 14.4 | (259) |
| Profit/(loss) for the year | 576 | 23.8 | 36.6 | 465 |
| Non-controlling interests | (171) | 28.8 | 38.7 | (133) |
| Net attributable profit | 404 | 21.9 | 35.7 | 332 |
| Balance sheets | 30-06-19 | ∆% | ∆% (1) | 31-12-18 |
|---|---|---|---|---|
| Cash, cash balances at central banks and other demand deposits | 7,662 | (14.7) | (12.8) | 8,987 |
| Financial assets designated at fair value | 7,378 | 31.0 | 30.7 | 5,634 |
| Of which loans and advances | 70 | (45.8) | (47.3) | 129 |
| Financial assets at amortized cost | 37,996 | 3.7 | 3.4 | 36,649 |
| Of which loans and advances to customers | 35,712 | 3.6 | 3.3 | 34,469 |
| Tangible assets | 1.001 | 23.1 | 24.1 | 813 |
| Other assets | 2,397 | 4.7 | 3.6 | 2,290 |
| Total assets/liabilities and equity | 56,433 | 3.8 | 3.9 | 54,373 |
| Financial liabilities held for trading and designated at fair value through profit or loss | 1,931 | 42.3 | 38.9 | 1,357 |
| Deposits from central banks and credit institutions | 3,231 | 5.0 | 3.0 | 3,076 |
| Deposits from customers | 36,896 | 2.9 | 3.6 | 35,842 |
| Debt certificates | 3,202 | (0.1) | (2.7) | 3,206 |
| Other liabilities | 8,722 | 2.1 | 2.3 | 8,539 |
| Economic capital allocated | 2,452 | 4.2 | 4.7 | 2,355 |
| Relevant business indicators | 30-06-19 | ∆% | ∆% (1) | 31-12-18 |
|---|---|---|---|---|
| Performing loans and advances to customers under management (2) | 35,429 | 2.6 | 2.3 | 34,518 |
| Non-performing loans | 1,853 | 6,1 | 4,4 | 1,747 |
| Customer deposits under management (3) | 36,909 | 2.6 | 3.2 | 35,984 |
| Off-balance sheet funds (4) | 12,577 | 7.8 | 7.4 | 11,662 |
| Risk-weighted assets | 43,995 | 3.0 | 3.5 | 42,724 |
| Efficiency ratio (%) | 39.1 | 46.2 | ||
| NPL ratio (%) | 4.4 | 4.3 | ||
| NPL coverage ratio (%) | 95 | 97 | ||
| Cost of risk (%) | 1.89 | 1.44 |
- (1) Figures at constant exchange rates.
- (2) Excluding repos.
- (3) Excluding repos and including specific marketable debt securities.
- (4) Includes mutual funds, pension funds and other off-balance sheet funds.
South America. Data per country (Millions of euros)
| Operating income | Net attributable profit | |||||||
|---|---|---|---|---|---|---|---|---|
| Country | 1H19 | ∆% | ∆% (1) | 1H18 | 1H19 | ∆% | ∆% (1) | 1H18 |
| Argentina | 335 | 174.3 | n.s. | 122 | 110 | n.s. | n.s. | (2) |
| Chile | 70 | (68.4) | (67.4) | 221 | 33 | (66.9) | (65.9) | 101 |
| Colombia | 331 | 3.3 | 7.9 | 320 | 130 | 8.2 | 13.1 | 120 |
| Peru | 409 | 19.0 | 13.6 | 344 | 98 | 17.9 | 12.6 | 83 |
| Other countries (2) | 70 | (0.7) | 3.4 | 71 | 33 | 10.2 | 16.7 | 30 |
| Total | 1,215 | 12.7 | 22.2 | 1,078 | 404 | 21.9 | 35.7 | 332 |
- (1) Figures at constant exchange rates.
- (2) Venezuela, Paraguay, Uruguay and Bolivia. Additionally, it includes eliminations and other charges.
South America. Relevant business indicators per country (Millions of euros)
| Argentina | Chile | Colombia | Peru | |||||
|---|---|---|---|---|---|---|---|---|
| 30-06-19 | 31-12-18 | 30-06-19 | 31-12-18 | 30-06-19 | 31-12-18 | 30-06-19 | 31-12-18 | |
| Performing loans and advances to customers under management (1) (2) | 3,891 | 3,748 | 2,067 | 2,103 | 12,252 | 12,183 | 14,332 | 13,786 |
| Non-performing loans and guarantees given (1) | 114 | 77 | 64 | 60 | 753 | 791 | 781 | 732 |
| Customer deposits under management (1) (3) | 5,840 | 5,315 | 7 | 10 | 12,726 | 12,912 | 13,808 | 13,261 |
| Off-balance sheet funds (1) (4) | 1,043 | 695 | - | - | 1,431 | 1,325 | 1,686 | 1,720 |
| Risk-weighted assets | 6,435 | 8,036 | 2,268 | 2,243 | 13,778 | 12,680 | 17,715 | 15,739 |
| Efficiency ratio (%) | 41.8 | 73.7 | 32.5 | 42.1 | 35.3 | 37.1 | 35.4 | 36.0 |
| NPL ratio (%) | 2.8 | 2.0 | 3.0 | 2.8 | 5.6 | 6.0 | 4.1 | 4.0 |
| NPL coverage ratio (%) | 104 | 111 | 93 | 93 | 97 | 100 | 95 | 93 |
| Cost of risk (%) | 3.00 | 1.60 | 2.25 | 0.81 | 1.87 | 2.16 | 1.64 | 0.98 |
- (1) Figures at constant exchange rates.
- (2) Excluding repos.
- (3) Excluding repos and including specific marketable debt securities.
- (4) Includes mutual funds, pension funds and other off-balance-sheet funds.
Activity and results
Unless expressly stated otherwise, all the comments below on rates of change, for both activity and results, will be given at constant exchange rates. These rates, together with changes at current exchange rates, can be found in the attached tables of financial statements and relevant business indicators. In addition, the quarterly variations are from the quarter ending with respect to the previous quarter.
The most relevant aspects related to the area's activity in the first half of 2019 were:
- Lending activity (performing loans under management), increased by 2.3% compared to the end of 2018. Credit cards and corporate lending performed particularly well.
- In asset quality, the NPL ratio stood at 4.4% as of June 30, 2019, slightly higher that at December 31, 2018; the coverage ratio stood at 95%, marginally lower than at the end of the previous year.
- In terms of customer funds, deposits increased by 3.2% in the first half of the year, driven mainly by time deposits, off-balance sheet funds grew by 7.4% in the same period.
With respect to results, South America generated a cumulative net attributable profit of €404m in the first half of 2019, representing a year-on-year increase of 35.7% (21.9% at current exchange rates). As in the previous quarter, this performance was affected by the negative impact of inflation in Argentina on the area's net attributable profit (-€94m). The most relevant aspects of the income statement in the first half of the year were:
- Continued growth of recurring income (10.0%, 2.0% at current exchange rates), especially due to the contribution of net interest income (12.1%, 3.9% at current exchange rates).
- Net fees and commissions remained stable (-6.9% at current exchange rates) compared to the same period last year.
- Increased requirements due to the impairment on financial assets (up 13.8%, up 9.0% at current exchange rates), bringing the cumulative cost of risk to 1.89% at the end of June 2019.
- Lower provisions (net) and other gains (losses) than in the same period of the previous year (down 33.9%, down 43.6% at current exchange rates).
On homogeneous comparison, i.e. excluding BBVA Chile due to the sale completed in July 2018, net attributable profit grew by 51.8% year-on-year in the first half of 2019 at current exchange rates (up 72.4% at constant exchange rates).
The most significant countries in the business area, Argentina, Colombia and Peru, performed as follows in the first half of 2019 in terms of activity and results:
Argentina
- Lending activity grew by 3.8% in the first half of 2019, driven by retail consumer portfolios, mortgages and credit cards. Regarding asset quality, there was an increase in the NPL ratio, which stood at 2.8% as of June 30, 2019, although it continued to compare favorably with the system.
- Customer deposits increased by 9.9%, while off-balance sheet funds increased by 50.0%, both with respect to December 2018 figures.
- Net attributable profit stood at €110m, supported by the strong performance of recurring revenue items (driven by an increased contribution from securities portfolios and a better customer spread) as well as an increase in NTI, positively impacted by the sale of the holding in Prisma Medios de Pago S.A. in the first quarter of 2019. This strong performance was partially offset by increased operating expenses, significantly influenced by high levels of inflation and greater requirements due to impairment on financial assets as a result of the country's macroeconomic situation.
Colombia
- Lending activity grew by 0.6% in the first six months of the year, driven by the performance of retail portfolios (mainly mortgages and credit cards). In terms of asset quality, the NPL ratio decreased in the first half of the year, reaching 5.6%.
- Deposits from customers declined by 1.4% compared to the end of 2018, although they increased 1.3% year-on-year.
- Net interest income stood at €130m, increasing by 13.1% year-on-year, driven by the strong performance of net interest income (3.8%), due to higher business volumes, solid management of customer spreads, and a stable level of impairments on financial asset (0.3%).
Peru
- Lending activity grew by 4.0% compared to the end of 2018, explained by the positive performance of both, the retail o (consumer loans, credit cards and mortgages) and the wholesale portfolios; on a year-on-year basis, the lending activity increased by 6.3%. Regarding asset quality, there was a slight increase in the NPL ratio to 4.1% and in the coverage ratio to 95%.
- Customer deposits increased by 4.1% in the first half of 2019 (up 12.2% year-on-year), supported by time deposits (up 20.9% in the first half of the year).
- Strong performance of net interest income, which grew by 13.7% year-on-year due to higher business volumes. NTI also grew by 11.4% year-on-year, influenced by positive performance in foreign exchange transactions. As a result, net attributable profit stood at €98 million, an increase of 12.6% year-on-year.