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January-December 2012

Eurasia

Eurasia highlights in the fourth quarter

  • Recovery of deposit gathering in the corporate segment.
  • Reduction in CIB portfolios.
  • Good performance of Garanti and provisions in Portugal.
  • Three new international distinctions reward the management of Garanti.

Industry Trends

In the fourth quarter of 2012, the macroeconomic environment in Europe continued to be very difficult, although clear progress was being made toward banking and fiscal integration. In fact, the first steps were taken to set up single banking supervision, which is considered key to breaking the link between sovereign and banking risk.

In Turkey, the prospects for a more moderate inflation rate, a steadily improving current-account deficit and a slight slowdown in growth of domestic demand, have in the second half of 2012 led to a fall in the official interest rate for the first time in a year and a reduction in the overnight rate. The year-on-year growth in lending has remained high (20%), although below the 2011 figures, and the NPA ratio remains low. Finally, it should be noted that in November Fitch credit rating agency upgraded Turkey from speculative (BB+) to investment grade (BBB–) with a stable outlook. Among the reasons given for this are the Turkish economy’s sound banking sector and favorable growth prospects in the medium and long term.

Finally, in China the financial sector plan was published in September, following on from the twelfth Five-Year Plan (2011-2015). This plan restates the intention to abolish interest-rate controls, promote financial innovation and bolster the framework of financial regulation. The Plan also establishes a goal of increasing the weight of the financial sector as a proportion of GDP in terms of added value from 4.4% in the last decade to 15% by 2015. In this context, growth in the banking sector remains relatively stable. However, the proportion of long-term loans has increased, reflecting the fact that credit flows are already moving toward public infrastructure projects and corporate investment.

Income statement

(Million euros)

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Eurasia

2012 Δ% 2011
Net interest income 847 5.5 802
Net fees and commissions 451 15.4 391
Net trading income 131 16.4 113
Other income/expenses 781 19.2 655
Gross income 2,210 12.7 1,961
Operating costs (778) 20.0 (648)
Personnel expenses (404) 12.7 (359)
General and administrative expenses (319) 30.1 (246)
Deprecation and amortization (54) 23.6 (44)
Operating income 1,432 9.0 1,313
Impairment on financial assets (net) (328) 120.8 (149)
Provisions (net) and other gains (losses) (50) n.s. 11
Income before tax 1,054 (10.4) 1,176
Income tax (103) (28.6) (145)
Net income 950 (7.8) 1,031
Non-controlling interests - - -
Net attributable profit 950 (7.8) 1,031

Balance sheet

(Million euros)

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Eurasia

31-12-12 Δ% 31-12-11
Cash and balances with central banks 2,346 75.1 1,340
Financial assets 11,986 3.9 11,538
Loans and receivables 32,088 (17.2) 38,754
Loans and advances to customers 29,245 (13.7) 33,905
Loans and advances to credit institutions and other 2,843 (41.4) 4,850
Inter-area positions - - -
Tangible assets 309 (48.8) 604
Other assets 1,553 38.8 1,119
Total assets/Liabilities and equity 48,282 (9.5) 53,354
Deposits from central banks and credit institutions 13,665 (24.2) 18,038
Deposits from customers 17,470 (19.8) 21,786
Debt certificates 964 17.8 818
Subordinated liabilities 899 (57.1) 2,097
Inter-area positions 5,473 193.2 1,867
Financial liabilities held for trading 414 3.3 401
Other liabilities 4,791 16.8 4,104
Economic capital allocated 4,607 8.5 4,245

Significant ratios

(Percentage)

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Eurasia

31-12-12 30-09-12 31-12-11
Efficiency ratio 35.2 35.5 33.1
NPA ratio 2.8 1.7 1.5
NPA coverage ratio 87 114 123
Risk premium 0.97 0.52 0.46

Eurasia. Operating income

(Million euros)

Eurasia. Net attributable profit

(Million euros)


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