2010 Latin American Awards for excellence: By country

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Awards for Excellence 2010

Regional awards

Latin American winners by country


Costa Rica
El Salvador
Guatemala
Nicaragua
Panama
Bahamas
Bermuda
Dominican Republic
Jamaica
Argentina
Bolivia
Brazil
Chile
Colombia
Ecuador
Mexico
Paraguay
Peru
Uruguay
Venezuela

COSTA RICA

BEST BANK
Banco de Costa Rica

Banco de Costa Rica grew its total assets by 9% to $4.8 billion during 2009. However net profits were almost half the previous year’s at $35.1 million. The decline was not altogether surprising given the economic backdrop. The Costa Rican economy contracted by an estimated 1.7% in 2009, net bank profits plummeted by 33.2% and average return on assets fell to 0.99% from 1.72% as the financial system was hit by a slowdown in loan portfolio growth and a worsening in asset quality.

Banco de Costa Rica’s own return on assets fell to 1% from 1.5% the previous year. However, its main rivals suffered bigger woes – Scotiabank de Costa Rica’s return on assets fell to 0.3% from 0.7% the year before as net profits slumped 53% to $5.5 million; HSBC Costa Rica’s return on assets dropped to 0.3% from 1% at the end of 2008.

The operating environment in Costa Rica is expected to continue to be difficult over the next 12 months, mainly because of the increase in delinquency rates, as well as structural weaknesses caused by high dollarization of bank balance sheets. How well the banking sector pulls out of this will depend on its core robustness – at least Banco de Costa Rica is on a relatively firm footing for the moment.

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EL SALVADOR

BEST BANK
Banco Agrícola Comercial de El Salvador

The US recession had a detrimental impact on El Salvador’s economy and borrowers’ ability to pay, weakening asset quality and leading to an increase in loss provisions. But although the political uncertainty surrounding the 2009 elections resulted in the postponement of some investment decisions, it did not have a material impact on deposits from the public.

Banco Agrícola Comercial de El Salvador accounted for nearly 71% of the country’s overall bank profits last year, according to Fitch Ratings. Yet the bank’s performance was weaker than in 2008. Operating income fell by 40.3% and net income by 26.7%, although total assets remained steady at $3.8 billion. Return on equity and return on asset measures stood at 9.55% and 1.17% respectively, higher than the overall average of 2.6% and 0.3%. The black sheep in the El Salvadoran banking sector was Banco Citi de El Salvador, which was responsible for 90% of the banking system’s losses in 2009.

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GUATEMALA

BEST BANK
Banco Industrial

As the largest Central American economy, Guatemala was the only country in the region to register positive GDP growth last year. Even so, Banco Industrial’s performance stood out, winning it the best Guatemalan bank award for the third consecutive time. The bank grew its asset base in 2009, with total assets up 5%, and deposits increasing by 9.8% from the previous year, and remains the market leader in terms of assets, loans, deposits and shareholder equity.

Net profits for the first three months of 2010 were $23.4 million and the bank maintained a strong loan-loss reserve at 243% with a return on equity at 21.69%. As of March 2010 Banco Industrial’s non-performing loans to assets stood at 0.2%, significantly lower than the second-best bank in the country, G&T Continental, which had an NPL-to-total asset ratio of 1.5%.

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NICARAGUA

BEST BANK
Banco de la Producción

Like many central American countries, Nicaragua had a tough 2009. GDP dropped by 1.5%, while overall earnings in the financial industry slumped by 72%. With credit lines from international banks drying up, local banks began to work to strengthen their liquidity positions. Banco de la Producciónhas done better than average, posting earnings of $11.7 million last year, but that’s still 32% down on the year before. At the same time the bank has been working hard to cut costs, trimming $2.7 million in 2009, when its efficiency ratio fell to 4.7% from 5.2% the previous year. Banpro had reduced credit growth in every single business line, which had a direct impact on income. Still, its commitment to reducing costs meant that the hit on the business was a lot less than it might have been.

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PANAMA

BEST BANK
Banco General

Despite a general market slump, and an increasingly competitive environment, Banco General held on to its position as the largest and most dynamic bank in Panama in 2009. It managed to buck the declining market trend, which had meant that overall Panamanian bank profits plummeted by 32.1% in 2009, primarily because of lower revenue generation from services and a decline in efficiency, by posting earnings of $192 million, up 4.8% from the year before.

At the same time the bank’s total assets grew by 3.4% to $8.1 billion and its efficiency ratio was boosted to 40%.

Although HSBC Holdings made a big move into the Panamanian bank sector in 2008, through its takeover of Banistmo, it wasn’t able to pose a big challenge to Banco General last year, with profits declining by 28% to $115 million.

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BAHAMAS

BEST BANK
First Caribbean International (Bahamas)

First Caribbean International has maintained a stable presence in the Bahamas against a backdrop of declining fortunes for many other banks. Operating income exceeded the previous year’s by $9.3 million (58%), primarily because of gains on the sale of investment securities and a decline in mark-to-market losses. Net income was marginally down, dropping 6% to $78.6 million, while return on equity fell to 16.7% in 2009.

The bank nonetheless continues to maintain strong capital ratios, with its tier 1 and tier 2 capital ratios at 19.46% at the end of 2009. First Caribbean was also involved in one of the more interesting debt deals of last year, working with Citi as joint lead arranger in the $265 million financing for the redevelopment of the Lynden Pindling International Airport in Nassau.

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BERMUDA

BEST BANK
HSBC Bank Bermuda

BEST INVESTMENT BANK
UBS

Bank of Bermuda rebranded to HSBC Bank Bermuda in 2009 as the bank maintained its leading position on the island. Despite challenging market conditions it posted a net operating profit of $221 million last year. Its consolidated balance sheet grew by $494 million, reaching $10.7 billion at year-end, while its consolidated total capital ratio was at 21% at the end of 2009, almost double the regulatory minimum requirement. The bank also maintained its AA– rating from Standard & Poor’s through a generally tough year and remains the highest-rated bank in Bermuda.

In investment banking, UBS distinguished itself, working as placement agent on Butterfield Bank’s $550 million recapitalization in March, the largest ever capital raise carried out in Bermuda and the largest rights offering ever on the island. It was also the sole bookrunner on Butterfield’s $200 million preference shares offering. In addition the bank worked as the lead adviser on Partner Re’s $2 billion acquisition of Swiss reinsurer Paris Re and advised XL Capital on its sale of XL Re Life America, both sizeable deals in the context of the Bermudan market.

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DOMINICAN REPUBLIC

BEST BANK
Banco Popular Dominicano

Banco Popular Dominicano bucked the trend in the Dominican Republic by posting strong results in 2009. The bank posted a 4.6% increase in total assets, a 9.4% increase in its net loan portfolio and a further 16.6% increase in deposits from the year before. It also moved to cut operating expenses, reducing the cost to revenue ratio to 2.74%, with a 1% reduction in total expenses. It maintains its AA– Fitch rating, and has been praised for its conservative risk culture and strong brand and franchise in the Dominican Republic.

In addition to its strengthening financials, the bank was involved in charity and aid funds helping the reconstruction of Haiti, following the earthquake in January, opening its branches free of charge and setting up a fleet of mobile branches to serve towns in Haiti.

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JAMAICA

BEST BANK
Scotiabank Jamaica

Scotiabank Jamaica’s profits rose 30% to $131.5 million and net interest income also rose to $47 million at the end of 2009. For the first quarter of 2010 pre-tax profit rose to $34.6 million, $1 million up on the same period in 2009, illustrating the bank’s solid performance over the past 12 months. The bank also maintained a healthy return on equity of 23.5% and return on assets at 3.64%.

Economic and social unrest that hit the island this year might put some strain on Jamaica’s bank sector. Scotiabank will have its work cut out tackling these challenges over the next year.

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ARGENTINA

BEST BANK
Santander Rio

BEST INVESTMENT BANK
JPMorgan

Santander Rio came to the fore in 2009 with spectacular results that have driven it way ahead of the competition. The bank’s net income was $316 million for the full fiscal year ended 2009, a 211% growth over 2008, while return on equity hit 59%, trumping competitors BBVA Banco Francés, which posted a 35% return on equity, and Banco Macro, which reported 27%.

Santander also boasts the best cost-income ratio in its peer group – 42% – as well as a low non-performing loans ratio of 2.2% and a coverage ratio of 134%. Its position as the biggest private bank in Argentina by market capitalization was also boosted through the acquisition of BNP Paribas’ retail business, consisting of 17 branches and 900 SME company clients, leading to a 20% increase in its network. Along with HSBC, Santander Rio is the only Argentine commercial bank to hold a D+ rating.

JPMorgan was the winner in Argentina’s investment bank category, accounting for 54% of overall M&A volumes in the country last year. This included the $3.4 billion investment by Chinese-based oil and gas consortium CNOOC into Bridas Energy Holdings, the largest M&A deal in Argentina since 2001, which was concluded in the middle of this year and its advisory role in Banco Patagonia’s acquisition of GMAC Compañía Financiera in August.

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BOLIVIA

BEST BANK
Banco de Crédito de Bolivia

Bolivian financial markets were shaky in 2009, to say the least. An interest rate plunge and liquidity excess strained the country’s financial resources. Banco de Crédito de Bolivia has managed to keep clear of the wider malaise, expanding its share of the market in 2009. Total assets increased by $159 million, 14.5% up on 2008, with deposits up by 15% to $898 million in 2009.

The bank has the highest return on equity and asset ratios in Bolivia, at 30.9% and 2.8% respectively. As part of its overall strategy BCP was prioritizing high-quality assets in 2009, trimming its non-performing loan ratio to 1.81% from 1.96% the year before, the lowest of all in the Bolivian banking sector and 49% less than the Bolivian average.

BCP also has the second-highest ratio of provisions over non-performing loan portfolio, with a 257% coverage ratio at end 2009, 54% higher than the market average.

These sterling financial indicators allow the bank to recapture the prize it relinquished to Banco Mercantil last year. The latter continues to run a high NPL ratio, although this was reduced to less than 5% from 6% the year before.

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BRAZIL

BEST BANK
Itaú Unibanco

BEST DEBT HOUSE
HSBC

BEST EQUITY HOUSE
BTG Pactual

BEST M&A HOUSE
Credit Suisse

Four banks dominate Brazilian banking: Itaú Unibanco, Bradesco, Santander and Banco do Brasil. Of the four, from a pure numbers point of view, Banco do Brasil is the most impressive. Last year, it made R$10.15 billion ($5.9 billion) in profits, the largest in Brazilian banking history. At $407 billion, it has more assets than any other bank in the region. Its total loans at the end of 2009 were $180 billion and its deposits $287 billion. There’s no doubt also that the bank played a crucial role in the financial crisis, keeping its credit lines open when most private banks battened down their hatches. Banco do Brasil is now expanding its reach – it recently bought a mid-sized lender in Argentina, Banco Patagonia, and is considering similar acquisitions in the US. The bank is about to undertake a rights issue that could raise as much as R$15 billion to improve its capital ratios.

On the surface, then, Banco do Brasil would appear to be a strong candidate for the best bank in Brazil award. The reason it doesn’t win, however, is that while it is taking steps to become more professional and more commercial it is still a policy bank – witness the management changes ordered by president Lula last year, days after he made it clear that he wanted interest rates on retail banking to be lowered.

Instead, the award goes to the outstanding privately owned bank in Brazil, Itaú Unibanco. Over the 12-month period under review Itaú recorded faster profit growth (up from R$3.3 billion to R$5.7 billion) than its main rivals. Its financial indicators are generally impressive – assets grew 28% (Bradesco’s increased by 10.5% in comparison), operating income went up 38.5%, and return on average equity was 18.6%, up from 16.9% a year earlier. The bank is also now established as a leading debt and equity underwriter in Brazil; it ranks second for share offerings in 2010, for example. Its private bank was voted the best in Brazil in Euromoney’s last poll.

March on

Whether or not Itaú manages to stay on top next year will be fascinating to see. Santander Brazil is becoming a force to be reckoned with. Bradesco remains a strong competitor too thanks to its diversified business and revenue base – insurance, for example, is one of its big strengths. But the momentum story is Itaú Unibanco, with robust growth in its lending, its strong capital base and its ability to march on despite the integration issues any merger entails.

In the debt markets HSBC beats off stiff competition from JPMorgan for the award. It ticks all the boxes – jumbo deals, local currency, structured finance, high-yield and hybrid bonds.

It managed international deals for core clients such as the sovereign (the longest-dated bond ever issued by Brazil), Petrobras (the biggest dollar transaction ever out of Brazil) and Vale (the first Brazilian corporate euro-denominated bond). It helped construction company Camargo Correa raise R$3 billion in the local market through six-month promissory notes as part of its funding for the acquisition of Portugal’s Cimpor. HSBC also arranged Banco GMAC’s first public securitization.

The best equity house award goes to BTG Pactual, which edges out Credit Suisse and Itaú Unibanco. The past 12 months can be split in two – the first half featured well-priced deals, generally holding up in the secondary market. The second six months tell a very different story. Too many recent deals have performed badly after listing, largely because the bookrunners have failed in their duty to price their clients’ shares properly. Five out of the past seven IPOs have failed to hit their target range, with OSX the prime example. This is a problem facing all the banks; there is no single culprit. Company chief executives too need to be less greedy and let their advisers get on with the task of building a book in a transparent way and letting the market decide what should be an appropriate listing price.

Having said that, there are enough deals that are performing well to justify an award. Twenty-one of the market’s 38 deals since May 2009, mostly those launched last year, were trading above their offer price at the end of April this year. Of those 21, BTG was a bookrunner on 12, Credit Suisse on 11 and Itaú on nine. In addition, BTG tops the league tables if deals including those won by UBS but executed by BTG are included. Throw in the fact that BTG is a start-up that’s had to integrate the Pactual business following its acquisition from UBS and all the issues that would entail and it’s the momentum story in the market.

The best M&A house award is also a tight call, between Credit Suisse and JPMorgan. JPMorgan’s portfolio includes the merger between Aracruz and Votorantim, the merger between JBS and Bertin, and Shell’s formation of a Brazilian joint venture with Cosan.

But Credit Suisse just takes it, acting as adviser to GVT in its sale to Vivendi in a complex transaction where Telefónica was also bidding, helping Bunge in the sale of its Brazilian fertilizer division to Vale, and advising Camargo Correa in its purchase of a minority stake in Portugal’s Cimpor.

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CHILE

BEST BANK
Banco Santander

BEST INVESTMENT BANK
JPMorgan

Banco Santander has been the strongest Chilean bank for the past three years and holds on to its position at the top. Return on equity was 28% last year, the highest in the Chilean banking system, and almost double the average ROE figure of 15.7%. At the same time the bank has managed to maintain the best efficiency ratio of any in Chile at 32.2%, although this was a small decline from the previous year’s 35.7%.

Net interest revenue fell by a small 4% to Ps856 billion ($1.6 billion) but net operating income rose by 8.9% to Ps525 billion. Santander’s close rival Banco de Chile experienced a 6.9% decline in net income last year. Santander was able to boost its capital reserves through a $500 million two-year floating-rate issue in April last year. The deal was the first short-dated floater in Latin American history. Additionally the bank issued a $500 million, three-year note at 150 basis points over US treasuries, the lowest spread for any Latin American debt issue in 2009.

JPMorgan was joint lead bookrunner on the Santander deal. Indeed the bank has once again excelled in the Chilean investment-banking category with a slew of M&A and debt market deals in 2009. As well as taking top position in Chile’s DCM league tables by market share, its M&A work has been impressive. The bank worked as exclusive financial adviser on the landmark $924 million restructuring of steel producer CAP’s mining operations and sale of a minority stake to Japanese trading company Mitsubishi in February, as well as advising Celulosa Arauco y Constitución, a local wood producer, on its $227 million acquisition of Brazil’s Tafisa Brasil in August.

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COLOMBIA

BEST BANK
Bancolombia

BEST DEBT HOUSE
Citi

BEST M&A HOUSE
BNP Paribas

Already Colombia’s largest bank, grew its assets by 3% in the fourth quarter of 2009 from the third quarter to Ps61.8 trillion ($31.3 billion).

Net income totalled Ps1.2 trillion, decreasing 3% as compared with full-year 2008. The bank increased deposits by 4% during 2009, and the ratio of net loans to deposits, including borrowings from development banks, was 88% at the end of the year.

On the debt side Citi carried out one of the most innovative municipal financings ever executed in Colombia, for GFI Bonos Agua, an infrastructure developer.

The deal securitized cashflows from the central government to municipalities to finance the development of a drinking water and sewerage facility into 19-year loans. The first tranche was placed for $62.5 million and involved 29 municipalities. The bank also worked on the $200 million inaugural bond offering by pulp manufacturer Carvajal last year and a $400 million issue by Pacific Rubiales Energy – deals that enabled it to capture a 14.5% debt capital markets share in the past 12 months.

BNP Paribas was a standout performer in Colombia’s M&A business, capturing 27% of market share. It advised on investment company Colinversiones’ $1.1 billion takeover of Epsa, the largest power deal in Latin America in 2009 as well as one of the largest tender offers ever in Colombia. It was also involved in the sale of Codensa’s consumer finance unit to Colpatria bank for $287 million. The deal was the largest banking M&A transaction in Colombia in 2009.

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ECUADOR

BEST BANK
Banco del Pichincha

Banco del Pichincha remains the largest and most active bank in Ecuador. And 2009 was another growth year. With little dependence on foreign loans during the debt crisis and a well-diversified deposit base the bank was able to consolidate its position in the Ecuadorian market. Total assets grew to $5 billion, a $700 million increase from 2009. Net income was up $2 million to $15 million. Non-performing loans as a percentage of assets fell from 1.4% to 1.2%. One small note of disappointment was return on equity for the retail division, which dropped to 60.3% from about 88% last year.

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MEXICO

BEST BANK
Santander México

BEST DEBT HOUSE
Citi

BEST M&A HOUSE
Credit Suisse

It has been a difficult 18 months for Mexico’s economy, although the worst appears to be over as a recovery from deep recession takes place. These economic difficulties are reflected in the performance of the country’s leading banks, most of which have struggled.

BBVA Bancomer’s net attributable profit fell to €1.35 billion in 2009 from €1.9 billion a year earlier. For the first quarter of 2010 too, the bank’s profits were down on the same period a year earlier – €347 million compared with €362 million. Its return on equity and return on assets have also fallen. Banorte’s leading financial indicators, such as net income and return on equity, also took a hit during our review period, although the bank has grown its total assets and improved its capital adequacy ratio.

Banamex has turned its fortunes around after a difficult 2008. Net income is up 35.7% and return on equity is improving, as is the bank’s capital adequacy. However, there are still questions about its strategy, notably its cost-to-income ratio. Critics also say the bank lost its way, plagued by rumours of a power struggle at the top. Its supporters will hope that a reshuffle earlier in the year will help Banamex regain its former sparkle.

A bank to watch out for is Scotiabank, which endured a difficult second and third quarter last year but a much-improved fourth quarter and first quarter of 2010. First-quarter profits, for example, were up 75% compared with the same period a year earlier. It needs to maintain its good run.

One bank, however, has managed to significantly grow its income during the most difficult of times. Santander Méxicoachieved a 39% increase in its net income in 2009, while most other leading banks were making less money. Its operating income jumped 54%. All this while maintaining a conservative strategy – its non-performing loan ratio fell 140 basis points while its coverage ratio increased by 181bp. Its cost-to-income ratio fell by 4%. Santander is also a leading player in the local capital markets. It was involved in eight debt transactions, totalling Ps12.5 billion. The bank participated in the first and largest placement of development certificates (CKSs) to help recapitalize a highway network. Therefore Santander, which last month seized full control of the Mexican bank after it bought Bank of America’s 25% stake for $2.5 billion, wins our best bank award.

The best debt house award goes to Citi, which beats JPMorgan and Bank of America Merrill Lynch for the award. Both Citi and JPMorgan were bookrunners (along with Goldman Sachs) on the most impressive Mexican debt transaction during our review period: América Móvil’s $4 billion triple-tranche bond. That deal was particularly interesting because of the amount of money it attracted from high-grade investors. Citi and JPMorgan also participated in transactions for other well-regarded borrowers in Mexico, such as the sovereign. What wins the award for Citi, however, is the sheer range of its business. It did 21 deals (both cross-border and local currency), according to Dealogic, compared with JPMorgan’s nine. Its other deals include a number of transactions for Pemex both in the international and local markets; a $2 billion inflation-linked bond for Grupo Bimbo; and a securitization for Infonavit.

There has been a paucity of equity transactions in Mexico making it impossible to make a best equity house award. The biggest offerings were from Cemex: a $1.4 billion follow-on in September and a $715 million convertible bond in March that was US-listed. But a whole host of banks worked on these deals, rendering any judgment pointless.

In M&A, Credit Suisseis the standout adviser. It was sole adviser to Heineken in its $7.6 billion acquisition of Femsa Cerveza in the largest cross-border transaction in Latin America. It was also adviser to Americas Mining Corporation, a subsidiary of Grupo México, in a complex restructuring. It is also adviser to América Móvil in its acquisition of Carso Global Telecom and Telmex International, the biggest deal in the region.

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PARAGUAY

BEST BANK
BBVA Paraguay

BBVA Paraguay increased its deposits by 25% last year as well as posting a 20.9% increase in net profits. The success comes in the face of a general decline in the Paraguayan economy last year, whose growth rate contracted to 3.8% from 4.6%.

The first quarter of 2010 has been one of continued strong performance for BBVA. In the first three months of the year the bank increased its loan base by 14.3% compared with the first quarter of 2009. The bank has maintained a non-performing loan ratio of 0.6%, significantly lower than the market average of 1.8%.

As a result the bank attained a historical record net profit increase of 28.5% compared with the first quarter of 2009.

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PERU

BEST BANK
Banco de Crédito del Perú

BEST DEBT HOUSE
JPMorgan

Banco de Crédito del Perú (BCP) remains dominant in Peru. Operating income grew by 7.4%, net revenue from interest by 10.4%, and loans by 10.8%, reaching $11.57 million by the end of the year. At the same time the bank increased its asset base by 5.1% to $19.2 billion and holds on to its position as Peru’s largest bank. BCP aimed to expand its retail banking business in local currency and achieved 24% growth. Despite these successes, net earnings performance was slower on the back of a contraction in credit demand experienced in the wider Peruvian economy. BCP’s net earnings were down by 6.2% from the year before, to $397 million.

In 2009 the bank continued with its expansion of BCP agents and automated tellers, increasing them by 51.3% and 11.9% respectively.

JPMorgancontinued to motor in the capital markets, having worked on some 25% ($644 million) of debt market issuance deals in 2009. One of its main successes came as joint arranger on the first hybrid securities offering out of Peru, a $250 million junior subordinated tier 1 deal for BCP.

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URUGUAY

BEST BANK
Santander

Santander hit some dizzy heights in Uruguay in 2009, capturing 31% of overall private bank volumes and 17.5% of the overall domestic market. It ranks as the largest of the non-state-owned banks in the country, with nearly double the business volumes of its nearest private banking rival, Banco Itaú. At the same time net profits rose to $59 million, beating Itaú and Nuevo Banco Comercial, which posted losses of $23 million and $68 million respectively. The bank also has the highest returns on equity and assets in the country at 19% and 1.5% respectively. BBVA will become the second-largest bank in Uruguay when its acquisition of Credit Uruguay, the local unit of Crédit Agricole, is authorized – something that is expected to happen later this year. The local economy is expected to grow strongly this year, so loan demand should accelerate and banks should find more opportunities for profit.

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VENEZUELA

BEST BANK
BBVA Banco Provincial

BBVA Banco Provincial’s total assets grew by 29% to $9 billion last year and net income was up 35% to $261.6 million. Return on equity was also higher at 56.54% from 43.7% and return on assets ended the year at 4.5% from 4.4% in 2008.

However Venezuela’s parlous financial state is a source of concern for the country’s banking institutions. The devaluation of the peso by president Hugo Chávez in January is likely to lead to a fall in private consumption, and economists expect the Venezuelan economy to shrink by 5% this year amid electricity rationing and rising unemployment. Despite economic uncertainty and hyperinflation in Venezuela, Banco Provincial’s positioning in the country was, perversely, something that helped aid overall group results in the first quarter this year.

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