Annual report 2009 - Santander

114Latin America• In the current context, focus on customer linkage,transaction banking, control of costs and riskmanagement.• Sound revenues from the moderate increase in businessactivity, improved spreads on assets and GBM’scontribution.• Slower pace in nominal costs, reflecting the moreselective growth policy.• Strong net operating income which, after absorbing thelarger provisions, increased 19.4% (excluding theexchange-rate impact).• Intense management of early NPLs and their recovery.Santander generated attributable profit of EUR 3,833 million in2009, 6.2% more than in 2008 (+11.4% excluding theexchange-rate impact), after incorporating the results of BancoReal in Brazil.As mentioned in other parts of this report, the 2008 figures havebeen restated to include Banco Real by global integration inorder to provide like-for-like comparisons. In July, Banco deVenezuela was sold to the Republic of Venezuela via Banco deDesarrollo de Venezuela for $1,050 million. The results of thisbank in 2008 and 2009 have been eliminated from the variouslines and incorporated on a net basis to discontinuedoperations.Gross income and expenses*% variation in euros 2009 / 2008+9.3GrossincomeExpenses-7.1* Excluding exchange rate impact: Gross income:+14.8%; expenses: -2.6%Net operating incomeMillion euros9,072200811,0712009+22.0%*Efficiency ratio(with amortisations)%43.92008 2009Attributable profitMillion euros3,8333,6092008200937.3+6.2%** Excluding exchange rate impact: +28.4% * Excluding exchange rate impact: +11.4%Economic environmentThe region’s main economies began to show signs as of thethird quarter of emerging from the recession started at the endof 2008, and today the general perception is that this time LatinAmerica has satisfactorily withstood the global crisis.NPL ratio%2.954.25NPL coverage%108105Three factors played a role in this:• First, the Brazilian economy, which accounts for 40% of theregion’s GDP, began to grow in the second quarter and withsuch intensity that its GDP did not fall for the year as a whole.Peru was also able to grow in 2009 (by more than 1%). Brazilthus consolidated its model and together with Chile’s becamethe “second success story” in the region.• Second, for the first time in 50 years, Latin America was ableto implement anti-cyclical monetary and fiscal policies tomitigate the impact of external shocks. The most notable casewas Chile, a country whose strong institutions and orthodoxyenabled fiscal and monetary impulses of around 10% and 6%of GDP, respectively. As a result, Chile was one of the fewreally open economies in the world whose GDP declined byless than 2%.• Third, the region was able to avoid any banking crisisepisodes. Furthermore, this time Latin American banks werenot part of the problem but of the solution and the nominalstock of lending was maintained. Brazil was largelyresponsible for this development and increased its share of theregion’s total lending to 60% of the total stock.200820092008 2009As well as other good developments, most of the region’s largeeconomies were able to get through 2009 without eroding thequality of their institutions, their rules and their basicmacroeconomic fundamentals. As a result, inflation, except inVenezuela and Argentina, is expected to be no more than 5% in2010 and within the target ranges of central banks.Budget deficits in all countries are also expected to be below3% of GDP and net public debt below 40% of GDP. Theimprovement in the international prices of raw materials and thereduction in risk premiums since March 2009 point to GDPgrowth of more than 3.5% and to job creation.Annual Report 2009Economic and Financial Review