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Higher interest income helps Mexican banking majors beat Q4'17 profit estimate

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Higher interest income helps Mexican banking majors beat Q4'17 profit estimate

The three largest listed banks in Mexico saw their aggregate fourth-quarter 2017 profit climb 15.3% from a year earlier as higher asset write-downs and operating expenses were offset by a jump in interest income and fees and commissions.

Grupo Financiero Inbursa SAB de CV, Grupo Financiero Banorte SAB de CV and Grupo Financiero Santander Mexico SAB de CV booked combined net income of 17.86 billion Mexican pesos for the fourth quarter, up from 15.48 billion pesos in the year-ago period.

The results beat mean estimates from S&P Capital IQ that had projected aggregate profitability for the group to fall 7.3% annually to 14.76 billion pesos. Inbursa was a driving factor, as a strong jump in market-related income led the company to a fourth-quarter profit of 6.86 billion pesos, considerably higher than estimates of 3.86 billion pesos.

Banorte and Santander Mexico, meanwhile, posted quarterly profits of 6.48 billion pesos and 4.52 billion pesos, respectively, with both lenders seeing improvement from the linked quarter.

Combined net interest income for the three banks rose to 38.30 billion pesos in the fourth quarter from 33.28 billion pesos a year ago, while aggregate net fees and commissions increased to 8.07 billion pesos from 7.16 billion pesos.

Those gains helped counterbalance higher asset write-downs, which ticked to 12.12 billion pesos from 9.23 billion pesos, and operating expenses, which surged to 20.38 billion pesos from 18.06 billion pesos.

Grupo Financiero Santander Mexico merged with and into Banco Santander (México) SA Institución de Banca Múltiple on Jan. 29 in order to help Spain-based parent Banco Santander SA comply with guidelines set by the European Central Bank.

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As of Feb. 6, US$1 was equivalent to 18.72 Mexican pesos.

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