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January-December 2012

South America

South America highlights in the fourth quarter

  • Extremely buoyant activity.
  • Excellent price management.
  • Positive performance of asset quality indicators.
  • Agreement reached on the sale of AFP Horizonte in Colombia.

Industry Trends

In South America, the financial system remains sound in most countries and lending continues to grow strongly, fueled by monetary policies geared toward boosting economic activity. Faced with external monetary expansion and the ensuing increase in capital flows, many central banks have chosen to apply prudent measures to discourage capital inflows and to control the rise in domestic lending (particularly Brazil and Peru).

Exchange rates in the region have appreciated in most countries over the last twelve months, in both average and final terms. However, the trend has been reversed in the quarter, with widespread depreciations. As a result, the impact of foreign currencies on the balance sheet, activity and earnings is negative in the quarter, but positive in year-on-year terms. Unless otherwise indicated, all comments below on business activity and earnings refer to constant exchange rates.

Income statement

(Million euros)

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South America

2012 Δ % Δ % (1) 2011
Net interest income 4,291 35.7 25.6 3,161
Net fees and commissions 910 26.4 18.3 720
Net trading income 443 (8.6) (14.9) 485
Other income/expenses (281) 6.4 (4.3) (264)
Gross income 5,363 30.8 21.6 4,101
Operating costs (2,328) 23.0 15.4 (1,893)
Personnel expenses (1,165) 21.6 14.5 (958)
General and administrative expenses (989) 26.3 18.4 (783)
Deprecation and amortization (173) 14.3 5.7 (152)
Operating income 3,035 37.4 26.8 2,208
Impairment on financial assets (net) (593) 32.1 21.6 (449)
Provisions (net) and other gains (losses) (202) 127.7 110.8 (89)
Income before tax 2,240 34.1 23.7 1,671
Income tax (486) 41.6 30.8 (343)
Net income from ongoing operations 1,754 32.2 21.9 1,327
Net income from discontinued operations 241 51.2 39.2 160
Net income 1,995 34.2 23.7 1,487
Non-controlling interests (649) 35.1 24.0 (480)
Net attributable profit 1,347 33.8 23.6 1,007
(1) At constant exchange rates.

Balance sheet

(Million euros)

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31-12-12 Δ % Δ % (1) 31-12-11
Cash and balances with central banks 12,908 54.9 55.8 8,335
Financial assets 10,144 13.8 10.9 8,912
Loans and receivables 51,638 19.9 17.7 43,069
Loans and advances to customers 47,146 21.4 18.9 38,831
Loans and advances to credit institutions and other 4,492 6.0 6.3 4,238
Tangible assets 881 9.4 8.9 805
Other assets 2,848 22.6 19.7 2,322
Total assets/Liabilities and equity 78,419 23.6 21.6 63,444
Deposits from central banks and credit institutions 5,947 14.3 9.1 5,205
Deposits from customers 53,870 26.8 25.5 42,468
Debt certificates 3,263 43.0 35.7 2,282
Subordinated liabilities 1,196 (23.7) (26.7) 1,568
Financial liabilities held for trading 955 (5.0) (10.7) 1,006
Other liabilities 9,913 23.9 22.9 8,002
Economic capital allocated 3,275 12.5 10.3 2,912
(1) At constant exchange rates.

Significant ratios

(Percentage)

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South America

31-12-12 30-09-12 31-12-11
Efficiency ratio 43.4 43.1 46.2
NPA ratio 2.1 2.2 2.2
NPA coverage ratio 146 142 146
Risk premium 1.34 1.26 1.31

South America. Operating income

(Million euros at constant exchange rates)

(1) At current exchange rates: +37.4%.

South America. Net attributable profit

(Million euros at constant exchange rates)

(1) At current exchange rates: +33.8%.
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