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January - September 2012

Earnings

In the first nine months of the year, the Mexico area continued to generate recurring revenue at a good level. Net interest income amounted to €3,079m, an increase of 8.5% year-on-year, despite the current low interest rates in Mexico.

Income from fees and commissions amounted to €938m, a year-on-year rise of 3.7%. This line of business was boosted by the use of credit and debit cards and mutual funds.

NTI recorded its biggest quarterly growth so far this year, nearly doubling the figure for the second quarter in 2012. However, in cumulative terms it continues to post year-on-year falls, due to the high levels achieved in the same period in 2011. There was a rise of 29.2% in other revenue. Once more, it is important to note the positive performance of the insurance business.

Operating expenses grew at practically the same year-on-year rate as in previous quarters, with a rise of 9.9% to €1,668m. This increase can be explained by the steady rise in investments to take advantage of the opportunities offered by the local market. The number of employees increased by 3,845 in the last 12 months, and 538 new ATMs were installed. Despite the above, the Mexico area still has one of the best efficiency ratios in the local market, at 37.8% at the end of the third quarter of 2012.

These revenue and expenses figures resulted in an operating income of €2,750m, a year-on-year rise of 3.7%. Excluding NTI, which is a more volatile component, the increase was 7.2%.

Impairment losses on financial assets increased at a slower rate than commercial activity, with an accumulated total through September of €970m, a rise of 6.1% on the figure for the same period in 2011. Risk management in the area continues to be adequate, as can be seen in the low cumulative risk premium at the close of September of 3.46%. The NPA ratio closed as of 30-Sep-2012 at 4.1% and the coverage ratio at 107%.

Finally, Mexico generated a net attributable profit in the first nine months of 2012 of €1,300m, 4.0% above the result in the same period in 2011.


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