South America
Highlights
- Growth in lending activity and acquisition of customer funds
- Favorable evolution of Net interest income and NTI
- Higher adjustment for hyperinflation in Argentina in the other operating income and expenses line in the quarter
- Year-on-year improvement in net attributable profit of the area
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: +27.0%.
NET ATTRIBUTABLE PROFIT (LOSS)
(MILLIONS OF EUROS AT CURRENT EXCHANGE RATES)
(1) At constant exchange rates: +17.1%.
| FINANCIAL STATEMENTS AND RELEVANT BUSINESS INDICATORS (MILLIONS OF EUROS AND PERCENTAGE) | ||||
|---|---|---|---|---|
| Income statement | 2024 | ∆ % | ∆ % (2) | 2023 (1) |
| Net interest income | 5,589 | 27.2 | 31.9 | 4,394 |
| Net fees and commissions | 834 | 19.1 | 21.5 | 700 |
| Net trading income | 798 | 26.0 | 33.3 | 633 |
| Other operating income and expenses | (1,815) | 30.1 | 32.3 | (1,395) |
| Gross income | 5,405 | 24.8 | 30.3 | 4,331 |
| Operating expenses | (2,567) | 31.6 | 34.0 | (1,951) |
| Personnel expenses | (1,188) | 31.4 | 34.7 | (904) |
| Other administrative expenses | (1,153) | 30.9 | 32.9 | (881) |
| Depreciation | (226) | 36.4 | 36.5 | (165) |
| Operating income | 2,838 | 19.2 | 27.0 | 2,381 |
| Impairment on financial assets not measured at fair value through profit or loss | (1,369) | 20.7 | 21.0 | (1,134) |
| Provisions or reversal of provisions and other results | (127) | 120.5 | 131.5 | (58) |
| Profit (loss) before tax | 1,342 | 12.8 | 28.1 | 1,189 |
| Income tax | (313) | 9.3 | 32.5 | (286) |
| Profit (loss) for the period | 1,029 | 14.0 | 26.8 | 903 |
| Non-controlling interests | (394) | 30.5 | 46.3 | (302) |
| Net attributable profit (loss) | 635 | 5.6 | 17.1 | 601 |
Balance sheets | 31-12-24 | ∆ % | ∆ % (2) | 31-12-23 |
| Cash, cash balances at central banks and other demand deposits | 8,906 | 35.2 | 42.0 | 6,585 |
| Financial assets designated at fair value | 10,884 | 3.6 | 7.7 | 10,508 |
| Of which: Loans and advances | 205 | (65.4) | (62.5) | 592 |
| Financial assets at amortized cost | 49,983 | 12.3 | 15.9 | 44,508 |
| Of which: Loans and advances to customers | 46,846 | 13.7 | 16.7 | 41,213 |
| Tangible assets | 1,277 | 35.9 | 35.8 | 939 |
| Other assets | 2,948 | 31.7 | 36.2 | 2,239 |
| Total assets/liabilities and equity | 73,997 | 14.2 | 18.2 | 64,779 |
| Financial liabilities held for trading and designated at fair value through profit or loss | 2,060 | (37.4) | (33.1) | 3,289 |
| Deposits from central banks and credit institutions | 4,292 | (16.5) | (16.3) | 5,140 |
| Deposits from customers | 50,738 | 19.2 | 23.2 | 42,567 |
| Debt certificates | 3,752 | 25.6 | 31.6 | 2,986 |
| Other liabilities | 6,066 | 34.7 | 40.3 | 4,502 |
| Regulatory capital allocated | 7,090 | 12.7 | 17.1 | 6,294 |
Relevant business indicators | 31-12-24 | ∆ % | ∆ % (2) | 31-12-23 |
| Performing loans and advances to customers under management (3) | 46,663 | 13.8 | 16.8 | 41,013 |
| Non-performing loans | 2,387 | 3.7 | 4.7 | 2,302 |
| Customer deposits under management (4) | 50,738 | 19.2 | 23.2 | 42,567 |
| Off-balance sheet funds (5) | 7,936 | 43.6 | 53.5 | 5,525 |
| Risk-weighted assets | 56,489 | 15.0 | 18.7 | 49,117 |
| Efficiency ratio (%) | 47.5 | 45.0 | ||
| NPL ratio (%) | 4.5 | 4.8 | ||
| NPL coverage ratio (%) | 88 | 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 and customer portfolios in Colombia and Peru.
| SOUTH AMERICA. DATA PER COUNTRY (MILLIONS OF EUROS) | |||||||||
|---|---|---|---|---|---|---|---|---|---|
Country | |||||||||
| 2024 | ∆ % | ∆ % (1) | 2023 (2) | 2024 | ∆ % | ∆ % (1) | 2023 (2) | ||
| Argentina | 691 | 44.6 | n.s. | 478 | 182 | 41.3 | 176.5 | 129 | |
| Colombia | 622 | 23.2 | 16.0 | 505 | 90 | (41.0) | (44.4) | 152 | |
| Peru | 1,198 | 8.7 | 9.1 | 1,102 | 227 | 14.4 | 14.8 | 198 | |
| Other countries (3) | 327 | 10.5 | 16.1 | 296 | 136 | 12.0 | 16.4 | 121 | |
| Total | 2,838 | 19.2 | 27.0 | 2,381 | 635 | 5.6 | 17.1 | 601 | |
(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) | ||||||||
|---|---|---|---|---|---|---|---|---|
| 31-12-24 | 31-12-23 | 31-12-24 | 31-12-23 | 31-12-24 | 31-12-23 | |||
| Performing loans and advances to customers under management (1) (2) | 7,021 | 1,880 | 15,609 | 15,629 | 19,168 | 18,066 | ||
| Non-performing loans (1) | 103 | 32 | 966 | 822 | 1,132 | 1,264 | ||
| Customer deposits under management (1) (3) | 9,219 | 3,379 | 17,177 | 16,481 | 20,338 | 17,813 | ||
| Off-balance sheet funds (1) (4) | 2,840 | 1,202 | 2,539 | 2,310 | 2,554 | 1,654 | ||
| Risk-weighted assets | 11,037 | 4,997 | 18,868 | 19,467 | 20,384 | 18,825 | ||
| Efficiency ratio (%) | 59.5 | 54.1 | 46.9 | 47.5 | 36.5 | 36.7 | ||
| NPL ratio (%) | 1.4 | 1.6 | 5.7 | 4.8 | 4.9 | 5.5 | ||
| NPL coverage ratio (%) | 145 | 136 | 82 | 89 | 90 | 84 | ||
| Cost of risk (%) | 4.48 | 2.18 | 2.83 | 2.13 | 2.83 | 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 year 2024 were:
- Lending activity (performing loans under management) registered a variation of 16.8%, with the increase focused on the wholesale portfolio, which grew more than the retail portfolio (+20.5% versus +12.9%), mainly favored by the evolution of commercial loans (+22.6%). In the retail portfolio, the growth was originated in credit cards (+45.7%), in line with Group's strategy which is focused on growing in the most profitable segments. In terms of countries, Argentina stood out, with lending activity growing faster than inflation.
- Customer funds under management increased (+26.6%) compared to the closing balances at the end of 2023, with growth driven by customer deposits (+23.2%).
The most relevant aspects related to the area's activity during the fourth quarter of the year 2024 have been:
- Lending activity increased by 6.3%,favored by the dynamism of commercial loans (+8.0%), consumer loans (+3.2%) and credit cards (+16.8%).
- With regard to asset quality, the NPL ratio at regional level stood at 4.5%, which represents a decrease of -46 basis points lower than in the previous quarter, where the evolution was stronger in the main geographical areas, particularly in Peru, favored by lower entries into non-performing assets and higher recoveries. The coverage ratio for the area was 88%, which represents an increase of 836 basis points higher than the previous quarter (stable compared to the end of 2023).
- Customer funds under management increased by 6.4%, supported by higher balances of time deposits (+2.8%), the increase of demand deposits (+7.4%) and the evolution of off-balance sheet funds (+12.2%).
South America generated a net attributable profit of €635m at the end of 2024, which represents a year-on-year variation of 17.1%, driven by the good performance of recurring income (+30.5%) and the good performance of net trading income in the area, which offset the increase in expenses and in loan-loss provisions, as well as the higher negative impact of "Other operating income and expenses". This last line mainly includes the impact of the adjustment for hyperinflation in Argentina, whose net monetary loss stood at €1,419m in the period January-December 2024, which is higher than the €1,062m registered in the period January-December 2023.
More detailed information on the most representative countries of the business area is provided below.
Argentina
Macro and industry trends
Significant fiscal consolidation and relative exchange rate stability have contributed to a process of moderating inflation over the course of 2024. Also, after a large contraction in the first half of the year, there are early signs of a recovery in economic activity, which after falling by 3.8% or slightly less in 2024, should expand by around 5.5% in 2025, according to BBVA Research (growth forecasts for 2024 and 2025 have been adjusted upwards by 20 basis points and downwards by 50 basis points, respectively). The forecast is for inflation to converge to around 30% by the end of 2025. On the other hand, there is high uncertainty around the evolution of the exchange rate, which has recently remained more appreciated than expected.
The banking system continues to grow at a high pace but affected by inflation control and the structural reforms introduced by the new government. At the end of 2024, total lending grew 248% compared to December 2023, favored by both consumer and, above all, corporate portfolio, which grew 244% and 255% year-on-year, respectively. Deposits followed the trend of previous months and grew 104% year-on-year at the end of December. Finally, the NPL ratio improved notably to 1.51% at the end of October 2024 (131 basis points lower than in October 2023).
Activity and results
- In 2024, performing loans under management registered a growth of 273.5%, (+41.3% in the fourth quarter), which stands above the year-on-year inflation rate, with a favorable evolution in the corporate segment (+304.2%) and all the households products (+242.4%), highlighting credit cards (+191.2%). At the end of December 2024, the NPL ratio stood at 1.4%, which represents a variation of -12 basis points compared to the previous quarter, favored by the increase in lending activity. On the other hand, the NPL coverage ratio stood at 145%, higher than at end of September 2024, as a result of the annual review of the parameters of the loss estimation models.
- On balance sheet funds grew by 172.8% during 2024 (+16.3% in the fourth quarter), with growth in both demand deposits (+141.3%, favored in the fourth quarter by U.S. dollar balances) and time deposits (+262.5%). For its part, mutual funds (off-balance resources) also had a good performance (+136.3% in the same period).
- The cumulative net attributable profit at the end of December 2024 stood at €182m. Net interest income continued to be driven by both higher activity and better customer spreads, while the NTI registered a positive evolution, driven by the performance of the securities portfolio. On the other hand, there was a higher negative adjustment for hyperinflation (mainly reflected in the other operating income and expenses line) and higher expenses, both personnel and general expenses affected by inflation, the main variation being technology expenditure. As for impairment on financial assets, they registered an increase associated with the growth of lending activity and greater requirements of the retail portfolio.
Colombia
Macro and industry trends
Economic growth has gradually recovered during 2024 as the processes of inflation and interest rate reductions have been consolidating. BBVA Research expects GDP growth to stand at 2.0% in 2024 and to accelerate to 2.5% in 2025 (30 basis points lower than the previous forecast). The slight downward revision of the growth forecast in 2025 is largely due to a less favorable external environment than expected and the perspective of a slower monetary easing process than previously anticipated. In particular, interest rates, which fell by 350 basis points to 9.50% during 2024, are likely to be reduced at a more gradual pace in the future, ending 2025 at around 7.0%. Annual inflation, which ended 2024 at 5.2%, is expected to ease further in the coming months, but will remain above the 3.0% inflation target this year, probably around 3.9% in December 2025.
Total credit growth in the banking system stood at 1.6% year-on-year in October 2024. As in previous months, the system's lending continued to be driven by credit to companies and housing loans, with growth of 3.6% and 7.7% respectively. Of particular relevance is the slowdown in consumer credit, which has gone from a year-on-year growth rate of 20% throughout 2022 to year-on-year decreases since October of last year. In October 2024 this trend continued, showing a 4.6% drop compared to the same month of 2023. On the other hand, total deposits grew by 6.7% year-on-year at the end of October 2024, with a much more balanced evolution by portfolios than in previous quarters. Demand and time deposits grew by 5.9% and 7.8% year-on-year respectively. The system's NPL ratio has slightly improved in the last few months to 5.0% at the end of October 2024, 10 basis points lower than in the same month of the previous year.
Activity and results
- Lending activity remained stable (-0.1%) compared to the end of 2023, mainly due to the favorable evolution of corporate loans (-0.3%, in the fourth quarter, +8.5% from December 2023), which offset the deleveraging in the rest of products. In terms of credit quality indicators, at the end of December, the NPL ratio stood at 5.7%, which represents an improvement compared to the previous quarter of -6 basis points favored by higher recoveries, more contained entries to non-performing assets and a higher volume of write-offs, which contributed to an increase in coverage in the quarter (107 basis points), reaching 82%.
- Customer deposits grew by 4.2% compared to the end of 2023, thanks to the growth in time deposits (+6.5%, -0.2% in the fourth quarter).
- The cumulative net attributable profit at the end of December 2024 stood at €90m, that is 44.4% below the result of the same period of the previous year. The significant growth in net interest income (+18.2%) stood out, favored by the increase in customer spreads associated with lower funding costs, offset by provisions for impairment losses on financial assets, mainly due to higher requirements in the retail portfolio. In the last quarter of the year, the growth in operating expenses and loan-loss provisions fully offset the growth in recurring revenues and NTI.
Peru
Macro and industry trends
BBVA Research estimates that GDP grew by 3.1% in 2024, 20 basis points above the previous forecast, driven by more favorable weather conditions and the impact on consumption of the most recent program of extraordinary withdrawals from pension funds. Moreover, improved financial conditions derived from controlled inflation (2.0% in December, and probably within the inflation target range of 1-3% during 2025) and the reduction of interest rates (from 5.0% at the end of December 2024 to around 4.50% in the first half of 2025, according to BBVA Research's estimates) reinforce the growth outlook. The growth forecast for 2025 remains unchanged at 2.7%.
Total lending in the Peruvian banking system decreased slightly year-on-year in November 2024 (-0.4%). The performance by portfolios was uneven, with decreases in consumer credit (-3.3%) and corporate credit portfolios (-1.1%), and growth in the mortgage portfolio (+5.1% year-on-year), in line with previous months. The system's total deposits increased 9.9% year-on-year in November 2024, due to the strength of demand deposits (+13.0% year-on-year), which offset the slower growth in time deposits (+4.7% year-on-year in August 2024). Finally, the system's NPL ratio slightly improved to 3.9%, 46 basis points better than in November 2023.
Activity and results
- Lending activity increased compared to the end of December 2023 (+6.1%), mainly due to the positive evolution of corporate loans (+5.3%, favored by CIB operations), consumer loans (+10.5%) and mortgages (+12.3%). In terms of credit quality indicators, the NPL ratio fell compared to the end of September 2024 (-67 basis points) standing at 4.9%, as a result of more contained entries to non-performing assets, higher recoveries and maintaining the dynamics of portfolio sales and write-offs of previous quarters. As a result, the NPL coverage ratio stood at 90%, which represents a decrease of 1,480 basis points compared to the end of September.
- Customers funds under management increased during 2024 (+17.6%), boosted by both the good performance of customer deposits (+14.2%) and off-balance sheet funds (+54.5%).
- BBVA Peru's cumulative attributable profit stood at €227m at the end of December 2024, which represents an increase of 14.8% compared to 2023. Good performance of net interest income, favored by higher volume of lending and a growing customer spread, fee income and NTI (which includes better results on Global Markets), all together comfortably offset the increase in operating expenses. In terms of provisions for impairment of financial assets, in cumulative terms, they are below those recorded in 2023 (-2.5%), due to the expected improvement in flows during the second half of the year. Thus, the profit of the quarter stood at €53m, a variation of -16.3% compared to the previous quarter, mainly due to the growth of expenses, specifically personnel expenses, which include in the last quarter of the year the adjustment of the variable compensation based on the annual performance.