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Banco BMG's profit falls 73.6% in Q4 due to negative non-operating results

Banco BMG SA's profit for the fourth quarter of 2017 fell 73.6% from a year earlier, mainly due to a sharp decline in the bank's non-operating results.

The lender posted quarterly net income of 6 million Brazilian reais, down from 22 million reais in the fourth quarter of 2016.

The bank's gross profit from financial intermediation more than doubled year over year to 285 million reais, as income from credit and leasing operations improved to 618.0 million reais from 554.0 million reais.

Banco BMG's net interest margin was 13.8% for the three-month period, down from 15.1% in the linked quarter but up from 8.2% a year ago.

The company booked 133 million reais in provisions for credit impairments in the fourth quarter, down from 165 million reais a year ago. Other operating expenses, meanwhile, fell 27.1% to 325 million reais from 445 million reais. Additionally, the bank booked a loss of 1 million reais in non-operating results, compared to a profit of 431 million reais in the year-ago period.

Banco BMG's total credit portfolio grew to 8.63 billion reais at the end of 2017, expanding 1.7% from 8.49 billion reais at the close of 2016. Payroll credit card loans ticked 20.7% higher while personal loans jumped 134.5%. Nonperforming loans accounted for 7.6% of the total portfolio, compared to 7.7% in the linked quarter and 7.4% a year earlier.

Return on average equity was 0.9% for the fourth quarter, down from 3.2% a year ago. Return on average assets declined to 0.1% from 0.5%.

The bank's full-year 2017 net income totaled 26 million reais, falling 48.8% from the 51 million reais earned in 2016.

As of Feb. 22, US$1 was equivalent to 3.26 Brazilian reais.