Grupo Inbursa plans spinoff; Q4'20 profit declines 9%

Grupo Financiero Inbursa SAB de CV's fourth-quarter 2020 profit fell 9% from the year-ago period as a sharp decline in interest income offset lower loan loss provisions.

The bank booked a quarterly profit of 4.07 billion Mexican pesos, down from 4.47 billion pesos in the fourth quarter of 2019.

The result came as the company's interest income sank about 26.9% to 8.92 billion pesos from 12.21 billion pesos a year earlier. Commissions and fees income remained relatively stable, edging up to 1.98 billion pesos from 1.95 billion pesos, while other operational income tanked to 10 million pesos from 891 million pesos.

Grupo Inbursa also booked a market-related loss of 152 million pesos for the quarter, compared to a loss of 112 million pesos in the prior-year period.

Loan loss provisions declined substantially to 323 million pesos from 2.01 billion pesos in the fourth quarter of 2019. The company noted that its cost of risk dropped in the fourth quarter from both the linked and year-ago periods, driven by "restructurings throughout the year that were successful" and allowed for the release of provisions for customers that went to performing status.

Nonperforming loans represented 2.2% of Inbursa's total credit portfolio at the close of 2020, the bank said, adding that it did not take "any regulatory accounting advantage to defer payments from customers restructurings."

The company's full-year 2020 profit reached about 12.70 billion pesos, down 2% from 12.96 billion pesos in 2019.

Spin-off plans

Additionally, Grupo Inbursa announced plans to spin off around 25.00 billion pesos worth of assets, equity and liabilities, corresponding to subsidiaries Sinca Inbursa and Promotora Inbursa. The proposed spinoff, which is subject to corporate and government approvals, will result in the creation of a new publicly traded entity that will look to grow the group's investment portfolio.

Under the proposal, shareholders will receive one share of the newly created company for each Grupo Financiero Inbursa share held. The spinoff will not have any impact on the company's financial strength or on the capitalization ratios of its Banco Inbursa SA Institución de Banca Múltiple Grupo Financiero Inbursa unit.

As of Jan. 26, US$1 was equivalent to 20.05 Mexican pesos.