South America
Highlights
- Good performance of the lending activity and the acquisition of customer funds
- Favorable evolution of the net interest income and NTI
- Year-on-year improvement of the efficiency ratio of the area at constant exchange rates
- Lower adjustment for hyperinflation in Argentina in the quarter
BUSINESS ACTIVITY (1)
(VARIATION AT CONSTANT EXCHANGE RATES COMPARED TO 31-12-23)
(1) Excluding repos.
NET INTEREST INCOME / AVERAGE TOTAL ASSETS
(PERCENTAGE AT CONSTANT EXCHANGE RATES)
OPERATING INCOME
(MILLIONS OF EUROS AT CURRENT EXCHANGE RATES)
(1) At constant exchange rates: +71.6%.
NET ATTRIBUTABLE PROFIT (LOSS)
(MILLIONS OF EUROS AT CURRENT EXCHANGE RATES)
(1) At constant exchange rates: +108.7%.
| FINANCIAL STATEMENTS AND RELEVANT BUSINESS INDICATORS (MILLIONS OF EUROS AND PERCENTAGE) | ||||
|---|---|---|---|---|
| Income statement | Jan.-Sep.24 | ∆ % | ∆ % (2) | Jan.-Sep.23 (1) |
| Net interest income | 4,178 | 7.4 | 41.9 | 3,892 |
| Net fees and commissions | 610 | 4.5 | 22.7 | 584 |
| Net trading income | 548 | 42.1 | 74.2 | 386 |
| Other operating income and expenses | (1,471) | 14.5 | 27.2 | (1,285) |
| Gross income | 3,865 | 8.0 | 48.6 | 3,577 |
| Operating expenses | (1,809) | 7.1 | 29.0 | (1,689) |
| Personnel expenses | (826) | 6.1 | 30.6 | (779) |
| Other administrative expenses | (824) | 6.4 | 29.1 | (774) |
| Depreciation | (159) | 16.7 | 20.7 | (136) |
| Operating income | 2,056 | 8.9 | 71.6 | 1,888 |
| Impairment on financial assets not measured at fair value through profit or loss | (1,049) | 21.5 | 32.2 | (864) |
| Provisions or reversal of provisions and other results | (63) | n.s. | n.s. | (15) |
| Profit (loss) before tax | 943 | (6.5) | 136.9 | 1,009 |
| Income tax | (189) | (27.6) | 288.3 | (261) |
| Profit (loss) for the period | 754 | 0.9 | 115.8 | 747 |
| Non-controlling interests | (283) | 8.8 | 128.8 | (260) |
| Net attributable profit (loss) | 471 | (3.4) | 108.7 | 488 |
Balance sheets | 30-09-24 | ∆ % | ∆ % (2) | 31-12-23 |
| Cash, cash balances at central banks and other demand deposits | 7,722 | 17.3 | 26.9 | 6,585 |
| Financial assets designated at fair value | 10,908 | 3.8 | 11.7 | 10,508 |
| Of which: Loans and advances | 283 | (52.2) | (47.2) | 592 |
| Financial assets at amortized cost | 45,296 | 1.8 | 8.6 | 44,508 |
| Of which: Loans and advances to customers | 42,896 | 4.1 | 10.6 | 41,213 |
| Tangible assets | 1,192 | 26.9 | 30.1 | 939 |
| Other assets | 2,933 | 31.0 | 38.7 | 2,239 |
| Total assets/liabilities and equity | 68,052 | 5.1 | 12.3 | 64,779 |
| Financial liabilities held for trading and designated at fair value through profit or loss | 1,845 | (43.9) | (38.7) | 3,289 |
| Deposits from central banks and credit institutions | 4,505 | (12.4) | (9.3) | 5,140 |
| Deposits from customers | 46,467 | 9.2 | 16.9 | 42,567 |
| Debt certificates | 3,088 | 3.4 | 10.4 | 2,986 |
| Other liabilities | 5,647 | 25.4 | 34.0 | 4,502 |
| Regulatory capital allocated | 6,499 | 3.3 | 10.8 | 6,294 |
Relevant business indicators | 30-09-24 | ∆ % | ∆ % (2) | 31-12-23 |
| Performing loans and advances to customers under management ⁽³⁾ | 42,496 | 3.6 | 10.1 | 41,013 |
| Non-performing loans | 2,449 | 6.4 | 11.7 | 2,302 |
| Customer deposits under management ⁽⁴⁾ | 46,467 | 9.2 | 16.9 | 42,567 |
| Off-balance sheet funds ⁽⁵⁾ | 6,862 | 24.2 | 36.8 | 5,525 |
| Risk-weighted assets | 52,612 | 7.1 | 14.1 | 49,117 |
| Efficiency ratio (%) | 46.8 | 45.0 | ||
| NPL ratio (%) | 5.0 | 4.8 | ||
| NPL coverage ratio (%) | 80 | 88 | ||
| Cost of risk (%) | 2.87 | 2.51 | ||
(1) Revised balances. For more information, please refer to the “Business Areas” section.
(2) At constant exchange rate.
(3) Excluding repos.
(4) Excluding repos and including specific marketable debt securities.
(5) Includes mutual funds, customer portfolios in Colombia and Peru.
| SOUTH AMERICA. DATA PER COUNTRY (MILLIONS OF EUROS) | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Country | Jan.-Sep.24 | ∆ % | ∆ % (1) | Jan.-Sep.23 (2) | Jan.-Sep.24 | ∆ % | ∆ % (1) | Jan.-Sep.23 (2) | |
| Argentina | 470 | (2.7) | n.s. | 484 | 138 | 2.4 | n.s. | 135 | |
| Colombia | 496 | 40.5 | 27.3 | 353 | 91 | (18.9) | (26.6) | 112 | |
| Peru | 912 | 12.3 | 13.4 | 812 | 173 | 14.2 | 15.3 | 151 | |
| Other countries (3) | 177 | (25.8) | (22.2) | 239 | 69 | (22.3) | (19.8) | 89 | |
| Total | 2,056 | 8.9 | 71.6 | 1,888 | 471 | (3.4) | 108.7 | 488 | |
(1) Figures at constant exchange rates.
(2) Revised balances. For more information, please refer to the “Business Areas” section.
(3) Chile (Forum), Uruguay and Venezuela. Additionally, it includes eliminations and other charges.
| SOUTH AMERICA. RELEVANT BUSINESS INDICATORS PER COUNTRY (MILLIONS OF EUROS) | ||||||||
|---|---|---|---|---|---|---|---|---|
| 30-09-24 | 31-12-23 | 30-09-24 | 31-12-23 | 30-09-24 | 31-12-23 | |||
| Performing loans and advances to customers under management (1) (2) | 4,905 | 1,856 | 15,383 | 15,356 | 17,608 | 16,995 | ||
| Non-performing loans (1) | 79 | 32 | 972 | 808 | 1,222 | 1,190 | ||
| Customer deposits under management (1) (3) | 7,825 | 3,336 | 16,714 | 16,192 | 18,102 | 16,758 | ||
| Off-balance sheet funds (1) (4) | 2,273 | 1,186 | 2,435 | 2,270 | 2,151 | 1,556 | ||
| Risk-weighted assets | 8,742 | 4,997 | 18,411 | 19,467 | 19,527 | 18,825 | ||
| Efficiency ratio (%) | 58.8 | 54.1 | 45.2 | 47.5 | 35.7 | 36.7 | ||
| NPL ratio (%) | 1.5 | 1.6 | 5.7 | 4.8 | 5.6 | 5.5 | ||
| NPL coverage ratio (%) | 122 | 136 | 80 | 89 | 75 | 84 | ||
| Cost of risk (%) | 3.88 | 2.18 | 2.85 | 2.13 | 2.92 | 3.04 | ||
(1) Figures at constant exchange rates.
(2) Excluding repos.
(3) Excluding repos and including specific marketable debt securities.
(4) Includes mutual funds and customer portfolios (in Colombia and Peru).
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 the changes at current exchange rates, can be found in the attached tables of the financial statements and relevant business indicators.
Activity and results
The most relevant aspects related to the area's activity during the first nine months of the year 2024 were:
- Lending activity (performing loans under management) increased by 10.1%, with the increase focused on the wholesale portfolio, which grew more than the retail portfolio (+12.5% versus +7.5%), mainly favored by the evolution of commercial loans which increased by 13.9%. In the retail portfolio, the growth of credit cards (+25.4%) stood out, in line with Group BBVA's strategy which is focused in growing in the most profitable segments.
- Customer funds under management increased (+19.1%) compared to the closing balances at the end of 2023, with an increase both in customer deposits (+16.9%) and off-balance sheet funds (+36.8%).
The most relevant aspects related to the area's activity during the third quarter of the year 2024 have been:
- Lending activity increased by 3.4%,favored by the dynamism of commercial loans (+5.0%), consumer loans (+2.9%) and credit cards (+6.8%).
- With regard to asset quality, the NPL ratio at regional level stood at 5.0%, remaining practically stable with respect to the previous quarter (-2 basis points), where a better evolution is mainly observed in Peru, which has mitigated the increase in the indicator in Colombia, affected by higher entries in retail portfolios and a singular customer in wholesale. The area's NPL coverage ratio stood at 80%.
- Customer funds under management increased by 7.1%, supported by higher balances of time deposits (+6.9%), the increase of demand deposits (+5.8%) and the evolution of off-balance sheet funds (+13.6%).
South America generated a cumulative net attributable profit of €471m at the end of the first nine months of 2024, which represents a year-on-year increase of 108.7%, driven by the good performance of recurring income (+39.1%) and the net trading income, which offset the increase in expenses and the more negative impact of "Other operating income and expenses". This line mainly includes the impact of the adjustment for hyperinflation in Argentina, whose net monetary loss stood at €1,178m in the period from January-September 2024, which is higher than the €953m registered in the period from January-September 2023.
More detailed information on the most representative countries of the business area is provided below.
Argentina
Macro and industry trends
The significant fiscal consolidation and relative exchange rate stability has contributed to a process of moderation of inflation throughout 2024. Furthermore, after a sharp contraction in the first half of the year, there are incipient signs of a recovery in economic activity, mostly in line with BBVA Research's expectations, which continue to forecast a 4.0% decline in GDP in 2024,followed by an expansion of 6.0% in 2025. As for inflation, expectations for further reduction have improved. On the other hand, there are doubts about the evolution of the exchange rate, which has recently remained more appreciated than expected.
The banking system continues to grow at a stable pace but is affected by high inflation. At the end of September 2024, total credit had grown by 248% compared to the same month in 2023, favored by both consumer and corporate portfolios above all, which reached year-on-year growth rates of 239% and 268% year-on-year, respectively. On the other hand, deposits continued the trend of the previous months and had grown by 121% year-on-year at the end of September. Finally, the NPL ratio improved significantly to 1.68% as of April 2024 (138 basis points below the level of July 2023).
Activity and results
- Between January and September 2024, performing loans under management increased by 164.3%, (+38.5% in the third quarter), although still well below the year-on-year inflation rate, showing positive evolution in the corporate segment (+179.5%, mainly corporates) and all the households products (+149.5%), highlighting the growth in credit cards (+113.3%). In the third quarter, the NPL ratio stood at 1.5%, slightly lower with respect to the previous quarter (-2 basis points), favored by the increase in lending activity. On the other hand, the NPL coverage ratio stood at 122%, far below the end of June 2024,as a result of the increase in the doubtful balance (mainly in credit cards and consumer).
- On balance sheet funds grew by 134.6% between January and September 2024 (+42.4% in the third quarter), with growth in both demand deposits (+114.4%, boosted in the third quarter by U.S. dollar balances) and time deposits (+192.0%). Mutual funds (off-balance resources) also had a good performance (+91.6% in the same period).
- The cumulative net attributable profit at the end of September 2024 stood at €138m. Net interest income continued to be driven by both higher activity and better customer spreads, while the NTI registered a positive evolution. On the other hand, there was a more negative adjustment for hyperinflation (mainly reflected in the other operating income and expenses line) and higher expenses, both in personnel due to salary revisions in a context of high inflation, and general expenses.
Colombia
Macro and industry trends
Recent data supports the view of a progressive recovery in economic growth as inflation and interest rate reductions consolidate. BBVA Research expects GDP to grow by 2.0% in 2024 (20 basis points above the previous forecast) and 2.8% in 2025 (unchanged compared to the previous forecast). Annual inflation, which was 5.8% in September, is expected to continue to ease in the coming months, but will remain above the 3% inflation target. Official interest rates, which fell to 10.25% in October, from 13.25% a year ago, will likely continue to decrease to around 6.0% by the end of 2025.
Total credit growth for the banking system stood at 1.7% year-on-year in July 2024. As in previous months, the system's credit continues to be driven by the growth in corporate lending and mortgages at 3.8% and 8.1% respectively. Noteworthy is the slowdown in consumer credit, which changed from a year-on-year growth rate of 20% during 2022, to year-on-year decreases since October 2023. In July 2024, this trend continues, showing a decline of 4.9% compared to the same month in 2023. On the other hand, total deposits showed a year-on-year growth rate of 8.3% year-on-year at the end of July 2024, with a much more balanced development in portfolios than in previous quarters. Thus, demand and time deposits grew by 9.1% and 7.3% year-on-year respectively. The NPL ratio of the system has improved slightly in recent months to 5.1% at the end of July 2024. However, this ratio is 22 basis points higher than in the same month of 2023.
Activity and results
- Lending activity remained stable (+0.2%) compared to the end of 2023, mainly due to the favorable evolution of corporate loans (+1.2%, in the third quarter, +8.9% from December 2023), which offset the deleveraging in the rest of products. In terms of asset quality, in the third quarter, the NPL ratio stood at 5.7%, which is a deterioration compared to the previous quarter of 47 basis points mainly due to, the NPL entries in the retail portfolio (consumer loans and credit cards). For its part, the NPL coverage ratio reduced in the quarter to 80%, due to the new NPL inflows as mentioned previously.
- Customer deposits increased by 3.2% compared to the end of 2023, thanks to the growth in time deposits (+6.7%, +3.2% in the third quarter).
- The cumulative net attributable profit at the end of September 2024 stood at €91m, that is 26.6% below the result of the same period of the previous year. The significant growth of the net interest income (+20.6%) stood out, favored by the increase in the customer spread accompanied by a greater volume of deposits and a good performance of the securities portfolio, compensated by the provisions for impairment on financial assets, due to higher portfolio requirements. The profit of the quarter stood at €36m, in line with the previous quarter (-1.0%), noteworthy was the positive performance of NTI thanks to the results of the Global Markets.
Peru
Macro and industry trends
BBVA Research expects GDP to grow by 2.9% in 2024, without changes compared to the previous forecast, helped by more favorable weather conditions and the impact on consumption of the most recent extraordinary pension fund withdrawal program. Furthermore,the improvement of financial conditions derived from a controlled inflation (1.8% in September, and probably between the range of 1-3% inflation target in the coming months) and the reduction in interest rates (from 5.25% at the end of September 2024 to around 4.50% in the beginning of 2025, according to BBVA Research estimations), reinforce growth prospects. The growth forecast for 2025 remains unchanged at 2.7%.
Total credit in the Peruvian banking system decreased slightly year-on-year in August 2024 (-0.6%). The performance by portfolios was mixed, with declines in the consumer finance portfolios (-4.8%) and corporate lending (-0.8%), and growth in the mortgage portfolio (+5.5% year-on-year) in line with previous months. On the other hand, total deposits in the system increased up to 9.1% year-on-year in August 2024, due to the strength of demand deposits (+12.5% year-on-year), which offset the weakness of time deposits (+3.3% year-on-year in August 2024). Lastly, the NPL ratio across the banking system rose slightly to 4.22%.
Activity and results
- Lending activity increased compared to the end of December 2023 (+3.6%), mainly due to the positive evolution of corporate loans (+3.0%, favored by CIB operations), and consumer loans (+6.3%) and mortgages (+7.8%). In terms of credit quality indicators, the NPL ratio reduced compared to June 2024 (-22 basis points) standing at 5.6%, as a result of more contained entries to doubtful assets, higher recoveries and maintaining the dynamics of portfolio sales and write-offs. As a result, the NPL coverage ratio stood at 75%, which represents a decrease of 239 basis points compared to the end of June.
- Customers funds under management increased during the first nine months of 2024 (+10.6%), boosted by both the good performance of customer deposits (+8.0%) and off-balance sheet funds (+38.3%).
- BBVA Peru's net attributable profit stood at €173m at the end of September 2024, which is an increase of 15.3% compared to the same period of 2023. Good performance of the net interest income, favored by the higher volume of lending and a growing customer spread, fee income and NTI, which together offset comfortably the increase in operating expenses, leading to double-digit net margin growth (+13.4%). In terms of provisions for impairment of financial assets, the figure for the quarter is far below the previous quarter (-47.5%) with lower requirements in the retail portfolio, although in cumulative terms, they are above those recorded in the first nine months of 2023. As such, the profit of the quarter stood at €63m, which is a decrease of -5.4% compared to the previous quarter, with lower recurring revenues and NTI.