South America closed the year with a significant increase in earnings of 23.6%, reaching a net attributable profit of €1,347m.

Recurring revenues have continued to grow thanks to growing activity and good price management, which is reflected in increased spreads. As a result, net interest income closed the quarter at €4,291m, up 25.6% on the figure posted in 2011. Fees and commissions were up 18.3% to €910m.

NTI is down 14.9% on the previous year, since 2011 earnings included the revaluation of USD positions of BBVA Provincial in Venezuela. The other income/expenses heading amounts to a negative €281m, despite the favorable performance of the insurance business in the region, due to the negative effect of hyperinflation in Venezuela and the greater contribution of the deposit guarantee funds in the countries where the Bank operates.

As a result of the above, cumulative gross income for the area increased by 21.6% year-on-year to €5,363m.

Operating expenses have remained high and stand at €2,328m, up 15.4% on the figure for the same period in the previous year. This increase is the result of the high inflation recorded in the area and the investments made to implement the expansion and technological transformation plans. This investment plan seeks to make the most of the growth opportunities in the region, due both to buoyant activity and the possibilities for bank penetration. It also seeks to improve the quality of customer service, based on the corporate customer-centric policy.

This performance of revenues and expenses has resulted in an improvement of the efficiency ratio in the area, which closes the year at 43.4% (45.7% the previous year), and a 26.8% increase in operating income to €3,035m.

Finally, impairment losses on financial assets are up 21.6%, in line with increased activity, and stand at €593m. As a result, the risk premium remains at levels similar to 2011 (1.34%).