Latin Finance - November/December 2009 - 42

2009 Best Bank – Venezuela BBVA Banco Provincial Outmaneuvering the Locals H igh inflation, a weakening currency and overt political intervention are just some of the reasons running a bank in Venezuela is more challenging than in other parts of LatAm. A successful banking operation in the country requires an effective and flexible risk management policy, as well as deep familiarity with local issues. BBVA Banco Provincial is Venezuela’s third largest bank by assets, according to June 30 figures, trailing Banco Mercantil by a small margin and Banesco. But in key areas like profitability and quality of the loan book, the Spanish-owned entity gives local competitors a target to aim for in 2010. “Being a Spanish bank, Provincial benefits from a different culture that is highly focused on efficient use of resources,” says Pedro El Khaouli, banks analyst at Fitch in Caracas. “They have sophisticated internal structures to monitor indicators and redeploy their resources [to maximize efficiency,]” he adds. In terms of profitability, the bank’s performance over the past year has been unmatched. Provincial’s return on assets (ROA) saw a 6.80% drop to 4.51% in the 12 months through June 2009, according to data posted on Venezuela’s bank regulator. That is compared to the 41% drop at Mercantil to 2.15% from 3.64%, and a 34% decline at Banesco to 1.58% during the same period, from 2.41%. As for return on equity (ROE), the differences are similarly stark. Provincial’s 3.00% fall to 46.29% ROE in the period is hardly comparable to Mercantil’s 38.00% plunge during the year to 24.98% ROE, or Banesco’s 34.00% drop to 19.69% ROE. Provincial has succeeded in working around hurdles imposed on banks by state control, says El Khaouli. Of the three kinds of deposits, only checking accounts are not controlled by government-imposed minimum returns. Provincial has been particularly successful in convincing customers to use these unregulated checking accounts by offering linked value added services like insurance and fund transfers, adds the analyst. By increasing volume in that part of the system, it has been able to generate higher financial income, handily maneuvering its way around state controls. On the asset side, Provincial has also been successful at working with government ceilings on credit card and consumer credit rates. Aggressive marketing strategies have been helpful in increasing volume in credit and loans, says El Khaouli. Provincial’s NPL ratio of 0.93% is second only to Mercantil’s 0.86%, but the Spanish bank achieved this relatively slim figure with a comparably lower rate of provisioning: 2.89% of its total portfolio in provisions compared to 3.50% at Mercantil. Provincial’s ratio of nonperforming assets as a portion of the total asset base is the lowest of Venezuela’s top 15 financial institutions, according to the country’s bank regulator. Provincial’s performance in the past year highlights the benefits of being part of a larger institution like BBVA that has been highly focused on profitability in every market it enters in LatAm. Navigating a unique and highly controlled banking environment better than local peers is no small achievement. LF largest bank with $7.9 billion in assets, and even in global financial crisis it has managed to maintain NPLs at a level lower than peers while keeping return on assets (ROA) and return on equity (ROE) higher than the competition. According to Alemán, non-performing loans (NPLs) dropped to 0.66% in June from 0.72% in June 2008. This is the lowest NPL rate in Panama’s banking system. HSBC’s NPLs have grown to 2.3% in June 2009 from 0.9% a year earlier and Banco Nacional’s have increased to 2.7% from 2.6% in the same period. As for ROA, Banco General’s was 2.4% in June 2009 from almost 2.8% in June 2008. Meanwhile, HSBC’s ROA dropped to 2.1% in June 2009 from 6.0% in June Keeping a lid on NPLs: Alemán 2008 and Banco Nacional’s dropped to 1.5% in June 2009 from 2.4% in June 2008. ROE show a similar pattern. Banco General’s ROE was 19.0% as of June 2009, from 22.5% a year before. Meanwhile, HSBC’s dropped to 9.8% in June 2009 from 20.9% in June 2008 and Banco Nacional’s dropped to 14.5% from 20.2% in the same period. Deposits also did well, despite the crisis. “Our deposit base increased by $507 million between June 2008 and June 2009,” says the bank’s executive vice president and general manager Raúl Alemán. As of June 2009, deposits totaled $6.1 billion. That, in turn, helped assets Best Bank – Banco General Panama Proceed with Caution P anama’s Banco General has seen its assets and deposits grow and nonperforming loans drop slightly in the 12 months to June 2009, despite the global downturn. And while in the past it has made acquisitions, it will cool its heels for the time being, focusing on increasing liquidity levels. Banco General is Panama’s second 42 LatinFinance November/December 2009

Latin Finance - November/December 2009

Table of Contents for the Digital Edition of Latin Finance - November/December 2009

Latin Finance - November/December 2009
Contents
Latam-China Flows
Petrobras Interview
Best Boutiques
Banks of the Year 2009
Itau Unibanco Interview
Mexico: How to Capitalize on Crisis
Colombia: Local Shop Repels Foreign Pretenders
Chile: Pefecting the Art of Retail
El Salvador: A Foreign-owned Bank Dominates
Infrastructure & Energy Awards
Private Equity Fundraising
Latin Finance - November/December 2009 - Latin Finance - November/December 2009
Latin Finance - November/December 2009 - Cover2
Latin Finance - November/December 2009 - Contents
Latin Finance - November/December 2009 - 2
Latin Finance - November/December 2009 - 3
Latin Finance - November/December 2009 - 4
Latin Finance - November/December 2009 - 5
Latin Finance - November/December 2009 - 6
Latin Finance - November/December 2009 - 7
Latin Finance - November/December 2009 - 8
Latin Finance - November/December 2009 - 9
Latin Finance - November/December 2009 - 10
Latin Finance - November/December 2009 - 11
Latin Finance - November/December 2009 - 12
Latin Finance - November/December 2009 - 13
Latin Finance - November/December 2009 - 14
Latin Finance - November/December 2009 - 15
Latin Finance - November/December 2009 - 16
Latin Finance - November/December 2009 - 17
Latin Finance - November/December 2009 - Latam-China Flows
Latin Finance - November/December 2009 - 19
Latin Finance - November/December 2009 - 20
Latin Finance - November/December 2009 - 21
Latin Finance - November/December 2009 - 22
Latin Finance - November/December 2009 - 23
Latin Finance - November/December 2009 - Petrobras Interview
Latin Finance - November/December 2009 - 25
Latin Finance - November/December 2009 - 26
Latin Finance - November/December 2009 - 27
Latin Finance - November/December 2009 - Best Boutiques
Latin Finance - November/December 2009 - 29
Latin Finance - November/December 2009 - 30
Latin Finance - November/December 2009 - 31
Latin Finance - November/December 2009 - Banks of the Year 2009
Latin Finance - November/December 2009 - 33
Latin Finance - November/December 2009 - 34
Latin Finance - November/December 2009 - Mexico: How to Capitalize on Crisis
Latin Finance - November/December 2009 - 36
Latin Finance - November/December 2009 - 37
Latin Finance - November/December 2009 - 38
Latin Finance - November/December 2009 - Colombia: Local Shop Repels Foreign Pretenders
Latin Finance - November/December 2009 - Chile: Pefecting the Art of Retail
Latin Finance - November/December 2009 - 41
Latin Finance - November/December 2009 - 42
Latin Finance - November/December 2009 - El Salvador: A Foreign-owned Bank Dominates
Latin Finance - November/December 2009 - 44
Latin Finance - November/December 2009 - 45
Latin Finance - November/December 2009 - 46
Latin Finance - November/December 2009 - 47
Latin Finance - November/December 2009 - 48
Latin Finance - November/December 2009 - 49
Latin Finance - November/December 2009 - Infrastructure & Energy Awards
Latin Finance - November/December 2009 - 51
Latin Finance - November/December 2009 - 52
Latin Finance - November/December 2009 - 53
Latin Finance - November/December 2009 - 54
Latin Finance - November/December 2009 - Private Equity Fundraising
Latin Finance - November/December 2009 - 56
Latin Finance - November/December 2009 - Cover3
Latin Finance - November/December 2009 - Cover4
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