In South America economic growth has been hampered by Brazil, which has hovered around stagnation during most of 2013. In most South American countries, however, growth has been even higher than expected, despite the steady deterioration on the international front, as commodity prices have remained high and financial tensions have eased toward the end of the year. Both consumption and investment have been supported by the strength of the labor and credit markets and by monetary policies that are still expansive.
The financial system in most countries in South America remains sound. Both the delay in the withdrawal of its monetary expansion policy announced by the Fed and the consolidation of growth in China have generated a stability in capital flows in the region in the final months of the year, after the outflows seen earlier. There has also been a recovery in the stock markets, a narrowing of sovereign spreads and appreciation in interest rates but, in general, without returning to pre-May levels when Fed announced the withdrawal of the monetary stimuli.
Lending continues to grow at a fast pace (though the trend is declining in some countries), boosted by economic policies focused on encouraging domestic activity and by the structural changes undertaken in recent years, which are underpinning sustainable growth in most of these countries.
In fact, the financial systems in the area have high profitability ratios, while NPA ratios are being kept in check, though they are likely to increase due to the moderation in the growth of lending and the levels of debt that are currently higher than in previous periods.
It is also worth noting the advances made in the regulatory framework of the banking sector in the region, with several countries (such as Colombia and Peru) making progress in implementing international regulations.
There has been a general depreciation in both the final and average exchange rates of the different currencies. As a result, the impact of currencies on the year-on-year changes in the Group’s financial statements is negative (particularly due to the devaluation of the Venezuelan bolivar in February 2013). Unless indicated otherwise, all comments below on percentage changes refer to constant exchange rates, with the aim of providing a better understanding of the performance of the business in South America.
Exchange rates
(Expressed in currency/euro)
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Year-end exchange rates | Average exchange rates | ||||||
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31-12-13 | Δ% on 31-12-12 |
31-12-12 | Δ% on 31-12-11 |
2013 | Δ% on 2012 |
2012 | Δ % on 2011 |
| Argentinean peso | 8.9890 | (27.9) | 6.4768 | (38.1) | 7.2767 | (19.7) | 5.8434 | (21.0) |
| Chilean peso | 722.54 | (12.3) | 633.31 | (6.6) | 658.33 | (5.1) | 625.00 | 2.1 |
| Colombian peso | 2,659.57 | (12.4) | 2,331.00 | (5.5) | 2,481.39 | (6.9) | 2,309.47 | 3.6 |
| Peruvian new sol | 3.8535 | (12.6) | 3.3678 | (9.5) | 3.5903 | (5.6) | 3.3896 | 6.7 |
| Venezuelan bolivar fuerte | 8.6775 | (34.8) | 5.6616 | (36.0) | 8.0453 | (31.4) | 5.5187 | (25.7) |
