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Higher provisions, operating expenses shrink Bancolombia's Q2 profit

Bancolombia SA registered a 10.85% annual decline in its second-quarter 2017 profit amid a surge in provision charges and operating expenses.

The bank reported quarterly net income of about 653.54 billion Colombian pesos, or 679.48 pesos per share, down from 733.06 billion pesos, or 751.44 pesos per share, in the year-ago period.

Net interest income grew 8.26% year over year to 2.633 trillion pesos in the quarter from 2.432 trillion pesos a year ago. The growth was driven by an expansion of the net interest margin during the second part of 2016 and by higher volumes of peso-denominated loans.

Bancolombia's net interest margin from continuing operations in the second quarter came in at 6.16%, up from 6.09% in the year-ago period.

Net fees and income from services also improved yearly, rising 7.62% to 615.22 billion pesos from 571.67 billion pesos. The growth was primarily driven by an increase in fees related to credit and debit cards, banking services as well as trust services.

At the same time, the lender booked 789.74 billion pesos in net provisions, up 25.66% from 628.47 billion pesos in the second quarter of 2016. The rise in provision charges shows moderation in the credit demand in Colombia as well as a sustained growth in the Central America operations, the bank said.

Allowance for loan losses, meanwhile, surged 29.59% to 7.485 trillion pesos from 5.776 trillion pesos.

Total operating expenses reached 1.880 trillion pesos in the second quarter, rising 14.58% from 1.641 trillion pesos a year ago.

Bancolombia's net total loans expanded 7.63% annually to reach 150.747 trillion pesos. Past-due loans more than 30 days overdue represented 4.3% of total gross loans at the end of the second quarter, compared to 4.1% in the linked quarter.

Return on average total assets from continuing operations declined to 1.31% from 1.53% a year earlier, while return on average shareholder's equity slid to 12.29% from 15.19%.

As of Aug. 7, US$1 was equivalent to 2,983.02 Colombian pesos.