The results of the Americas area in 2004 were especially encouraging. Attributable profit grew 70.8% to 1,239 million euros. Even net profit –prior to the effect of the buyout of the minority interests in Bancomer– managed to increase 24.6%, despite the local currencies´ depreciation against the euro. For the first time in recent years, growth both in business volumes and in all income-statement items expressed in local currencies outstripped their depreciation and consequently they all recorded positive increases in current euros.

The more buoyant economic environment in Latin America enabled the lending portfolio of all the group’s banks throughout the region to recover (excluding the old Bancomer mortgage portfolio and non-performing loans). It grew at 22.8% year on year (30.1% in local currencies), spurred on mainly by credit-cards, consumer loans and mortgages. Customer funds (current and savings accounts, deposits as well as repos and mutual funds) rose 5.1% (12.3% at constant rates).

This increase in business volumes, along with the pricing effect (due to interest rate changes which varied from one country to the next but was positive in overall terms) led to an 8.0% year-on-year increase in net interest income (22.8% at constant rates). Fee income rose 9.5% at constant exchange rates, while net trading income shrunk due to the negative impact of rising interest rates, especially in Mexico. Thus, ordinary revenues grew 2.5% in euros and 15.4% at constant rates.

Higher earnings and moderate costs (-5.1% in euros and +6.7% in local currency) made it possible to further boost efficiency, as the cost-income ratio improved to 42.1% (3.4 points better than the 2003 figure of 45.5%), and operating profit reached 2.5 billion euros, with growth rates of 11.6% and 26.0% at current and constant rates, respectively.  

Better asset quality, with the NPL ratio dropping to 3.18%, as against the 4.46% on 31-12-03, meant lower provisions for loan losses. Net profit increased to the above-mentioned 24.6% (40.3% at constant rates). After the effect of the Bancomer minorities’ buyout, attributable profit was 1,239 million euros (+70.8% in euros and +91.4% at constant rates), pushing ROE up to 27.8%, significantly above the 22.2% from 2003.

Mexico accounted for over 60% of all the area’s income items. The substantial growth in business (37.6% growth in lending and 11.4% growth in customer funds in pesos) alongside the effect of rising interest rates, drove net interest income up to 10.3% in euros and 26.8% in pesos. This increase together with moderate cost growth pushed operating profit to 1,654 million euros (+11.2% and +27.9% at current and constant rates, respectively) and the cost-income ratio improved 3.1 points, reaching 39.1%. With lower provisioning, net profit grew 28.9% (48.2% in local currency) and, as the part of net profit corresponding to minority interests went down, attributable profit rose to 841 million euros, more than double that obtained in 2003.