January-December 2013


Macro and industry trends

In South America, the economic growth of most of the countries in the region (except for Brazil) has actually been slightly better than expected, despite the steady deterioration of the external backdrop, given the continued high commodity prices and moderation in financial tension toward the end of the year. Both consumption and investment have been supported by the strength of the labor markets and by monetary policies that are still expansive.

The financial system in most countries in South America remains sound. Lending continues to grow at a fast pace (though the trend is declining in some countries), boosted by economic policies focused on encouraging domestic activity and by the structural changes undertaken in recent years, which are underpinning sustainable growth in most of the region. As a result, the financial systems in the area have high rates of profitability with NPA ratios held in check.

There has been a general depreciation against the euro in both the final and average exchange rates of the different currencies over the quarter. As a result, the impact of currencies on the year-on-year changes in the Group’s financial statements is negative for the quarter and for the whole of the year (particularly due to the devaluation of the Venezuelan bolivar at the start of 2013). Unless indicated otherwise, all comments below on percentage changes refer to constant exchange rates, with the aim of providing a better understanding of the performance of the business in South America.