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Impairment losses sink Grupo Aval's Q4'16 profit

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Impairment losses sink Grupo Aval's Q4'16 profit

Grupo Aval Acciones y Valores SA on March 27 said that its fourth-quarter 2016 net profit shrank by a third compared to a year earlier as the Colombian bank saw a sharp increase in impairments.

Net income attributable to the company totaled 458.4 billion Colombian pesos for the three months to Dec. 31, 2016, down 33.9% from 693.4 billion pesos earned a year earlier. EPS came to 20.6 pesos, down from 31.1 pesos a year ago.

The drop came as the bank saw a 36.3% rise in net impairment losses on financial assets, jumping to 781.5 billion pesos from 573.2 billion pesos a year earlier. The company said that the higher impairments reflected a deterioration in the group's 90 days past-due consumer loans, as well as 39.8 billion pesos in provisions tied to Electricaribe, the troubled natural gas company, and 9.3 billion pesos related to Bogotá's mass transit system.

Earlier in March, Colombian regulator Superintendente de Servicios Públicos took over Electricaribe's operations and ordered its liquidation, citing the company's "critical financial situation" and "poor performance of the service under its responsibility."

Nonperforming loans more than 90 days past due, meanwhile, rose to 2.96 billion pesos, or 2.0% of total loans, from 2.78 billion pesos, or 1.9%, in the prior quarter and 2.35 billion pesos, or 1.7%, a year earlier. Allowances accounted for 2.8% of the group's total loans and leases in the quarter, up from 2.6% in the fourth quarter of 2015.

Net interest income for the quarter ticked 2.8% higher year over year to 2.31 billion pesos, while net income from commissions and fees rose 8.4% over the year to 1.12 billion pesos. Grupo Aval's net interest margin for the quarter was 5.4%, narrowing from 5.6% in the prior quarter and 5.5% a year ago.

Return on average assets dropped to 1.5%, from 2.2%. Return on average equity was 11.9%, compared to 19.6% a year earlier.

The fourth-quarter 2016 results brought the company's full-year profit to 2.14 billion pesos, up 4.8% from 2.04 billion pesos earned in 2015.

As of March 27, US$1 was equivalent to 2,913.12 Colombian pesos.