Latin America's best bank 2020: BBVA
Awards for Excellence 2020
Latin America’s best bank this year is BBVA. The Spanish-headquartered bank has long been vulnerable to competitors’ claims that it was more a federation than an integrated network of subsidiaries, but the bank’s most recent performance shows that the management – overseen by Jorge Sáenz-Azcúnaga, head of country monitoring at BBVA – has addressed this weakness.
The net attributable profit of its operations in south America increased to €721 million in 2019, representing growth of 64% (excluding the bank’s Chilean operations that were sold last year from the annual comparison).
BBVA sits its Mexican bank outside its south American organizational chart, but here too growth was solid if less spectacular at 8.2%, but it is already the standout performer in this market.
Of course, Euromoney includes Mexico in its Latin America analysis, and BBVA has had a breakthrough year in terms of the region’s importance for the bank. Not only is its gross income up to 47.3% of the bank’s total, the region generated more than half of its operating income (54.9%) and net attributable profit (56.8%) – statistics that show that not only are the bank’s Latin American operations becoming bigger but they are also driving the global bank’s profitability.
This was helped by the delicate decision to offload the Chilean subsidiary as management conceded it wouldn’t be able to attain the scale to match the region’s targeted levels of profitability.
The bank’s ability to deploy its new digital platforms across the region has been a leading source of profitability and efficiency (40.9% in 2019, compared with 46.2% in 2018). BBVA keeps its digital data confidential – a reflection of the emphasis the bank places on its ability to generate competitive advantage through its new regional digital integration.
However, a confidential presentation shown to Euromoney as part of the research process for these awards confirmed that the bank has moved to another level in terms of its digital strategy and its ability to drive business results throughout south America and Mexico.
The digital integration of the bank across the region also helped BBVA to rebrand its Latin American businesses last year. Gone are the individual country names: this year for example the best bank in Argentina was BBVA Argentina not BBVA Frances, while BBVA Bancomer in Mexico is now simply BBVA Mexico.
Meanwhile the bank also delivered in terms of asset control: both the non-performing loan ratio and the NPL coverage ratio remained controlled at 4.4% and 100% respectively.
On the funding side, deposits under management increased by 6% in the year – mainly due to the growth of time deposits and, to a lesser extent, demand deposits.
Off balance-sheet funds grew by 10.7% in the same period.