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Brazil's Caixa posts 11.2% rise in Q4'16 profit on stronger net interest income

Caixa Econômica Federal on March 28 posted an 11.2% rise in fourth-quarter 2016 profit as the company saw stronger net interest income and boasted its best efficiency ratio in a decade.

The state-run bank showed a net profit of 691 million Brazilian reais for the three months to Dec. 31, 2016, up from 621 million reais earned in the year-ago period.

The result came as the bank posted 2.45 billion reais in operating profit for the quarter, reversing from a 322 million reais loss in the prior-year period. Net interest income grew to 11.79 billion reais from 11.14 billion reais a year ago, while income services and banking fees rose to 5.95 billion reais from 5.57 billion reais.

The bank's allowance for loan losses totaled 4.94 billion reais in the fourth quarter of 2016, up 25.0% from 3.95 billion reais a year earlier. Caixa said that its default rate at year-end 2016 stood at 2.88%, down 7 basis points from a year earlier.

Funding expenses, meanwhile, more than doubled to 25.68 billion reais from 11.53 billion reais year over year.

Despite the quarterly profit improvement, Caixa showed a 41.8% drop in full-year 2016 profit compared to the year-ago period, falling to 4.14 billion reais from 7.11 billion reais.

Still, Caixa noted that its operating efficiency ratio at year-end 2016 improved 1.63 percentage points to 52.06%, its best level in 10 years.

"Caixa's growth in operating results, reduction of delinquencies, and cost control in 2016 are clear indications that the bank is steadily treading the path of improving efficiency," CEO Gilberto Occhi said in a statement.

The bank's amplified credit portfolio at year-end 2016 totaled 709.29 billion reais, up 4.4% from a year earlier. Most of the increase came from Caixa's housing loan book, which grew 5.6% year over year, and infrastructure loans, which jumped 10.8%.

As of March 27, US$1 was equivalent to 3.13 Brazilian reais.