Banking Business

The banking business in Mexico generated a net attributable profit in 2011 of €1,426m (up 5.6% year-on-year).

BBVA Bancomer continues to take advantage of market opportunities, and through an appropriate commercial management strategy it recorded gross customer lending (excluding the old mortgage portfolio) of €35,538m as of 31-Dec-2011, up 9.3% year-on-year. The figure was boosted mainly by retail lending. Wholesale lending has been affected by specific events that have limited its growth. These include the early payment by the Federal Government of a credit line underwritten with a number of banks in the country; and the switch made by large corporations from bank lending to financing in wholesale markets due to the low interest rates.

The retail portfolio performed strongly and grew 14.3% year-on-year as of 31-Dec-2011 to €17,717m. It includes consumer finance, credit cards, individual mortgages and loans to small businesses.

Within the retail portfolio, consumer finance (including credit cards) presented a balance up 23.6% year-on-year to €8,070m. The boost from consumer loans (car, payroll and personal) led to an increase of 16.3% in new loans over the last twelve months, while the outstanding balances increased at a rate of 36.2% over the same period. Credit card lending amounted to €4,486m over the same period, 15.0% up on the previous year. As a result, BBVA Bancomer gained 68 basis points in market share and maintained its position as market leader.

BBVA Bancomer’s extensive expertise in mortgage lending has enabled it to grant the highest number of new mortgages –one out of every three– out of all the banks and Sofoles. Thus, it has granted more than 32,900 individual mortgages, which as of 31-Dec-2011 registered a year-on-year increase of 13.2% in new production and a mortgage loan balance (excluding the old mortgage portfolio) of €8,234m, 5.5% up on 2010.

At the same time, the wholesale portfolio, which includes loans to corporations, SMEs, financial institutions and the public sector, was up 3.7% year-on-year. Broken down by segment, lending to corporates was up 6.2% to €6,371m, and lending to SMEs increased by 14.8%. Finally, loans to the public sector increased by 10.4% to €3,316m.

The above explains the gradual shift in the composition of the loan portfolio over the year toward a more profitable mix. The weight of consumer lending grew from 21% in 2010 to 24% in 2011, while mortgage loans represented 24% of the total in 2011 and the commercial portfolio, the largest in volume, accounted for 52% as of 31-Dec-2011.

Customer funds (bank deposits, repos, mutual funds and investment companies) closed on 31-Dec-2011 at €55,326m, with a year-on-year increase of 9.8%. There was a notable increase in fund gathering in local-currency demand deposits, which were up 10.0% year-on-year at the close of 2011 to €21,129m. Retail customer demand deposits have performed particularly well, with a rise of 8.2% on the close of 2010. This rise maintains the profitable mix of liabilities, as 76% of customer deposits on the balance sheet are low-cost funds. In terms of off-balance-sheet funds, the performance of mutual funds has been excellent, reaching a balance of €15,612m as of 31-Dec-2011, with a year-on-year increase of 11.0%.

Through its autonomous management model that is independent of the parent company, BBVA Bancomer maintained efficient handling of liquidity and capital levels. In 2011, more than 118,000m pesos were issued on the Mexican market. To ensure adequate capital management, Bancomer made a capital notes issue on the international markets of USD 2,000 million. Thus, at the close of 2011, BBVA Bancomer’s total capital ratio stood at 15.8% (according to local accounting standards).

Finally, BBVA Bancomer achieved third place in the “Most sustainable bank” ranking out of 55 companies due to its community involvement in Mexican society. This recognition was granted by the Inter-American Development Bank (IDB) and covers the areas of environmental sustainability, social responsibility and corporate governance. It also won third place out of 86 participating companies in the list of most transparent companies according to the “Transparency and Corporate Sustainability Index in Mexico”.