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Brazil nears fiscal deficit plan; Grupo Aval earnings slide on impairments

* An economic team lead by Brazilian Finance Minister Henrique Meirelles has put forward a plan that would see 14 billion Brazilian reais in tax increases coupled with a 30 billion reais spending freeze in an effort to meet Brazil's fiscal deficit target, Reuters reported citing an unidentified official. However, President Michel Temer is purportedly opposed to most of the tax increases. A formal announcement on the measures could come today or tomorrow.

* Grupo Aval Acciones y Valores SA's 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 totaled 458.4 billion Colombian pesos, down from 693.4 billion pesos earned a year earlier, as net impairment losses on financial asset jumped 36.3% to 781.5 billion pesos. In addition to seeing deterioration in its consumer loan portfolio, Grupo Aval said it booked 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. Net interest income, meanwhile, ticked 2.8% higher, while net fee income grew 8.4% year over year.

MEXICO AND CENTRAL AMERICA

* Investa Bank SA Institución de Banca Múltiple plans to push ahead with its acquisition of Deutsche Bank México SA Institución de Banca Múltiple and will file authorization requests with regulators in the coming weeks, El Economista reported citing bank Chairman Enrique Vilatela. The deal had been in question after an Investa Bank founding shareholder, Carlos Djemal, was arrested on accusations of money laundering.

* Financial intermediation margins at Costa Rican banks have narrowed over the past decade, El Financiero reported, citing a study from the country's banking association. In colones, margins compressed to about 6.8% in 2016 from 13.5% in 2005, while in dollars they shrunk to 3.7% from 6.6%.

* Mexican Economy Secretary Ildefonso Guajardo Villarreal, said the country's development banks will make 18 billion pesos in loans available for start-up companies, El Economista reported.

* Banco de México is expected to raise its benchmark interest rate by a quarter percentage point to 6.50% in its next meeting, Reuters reported, citing a survey of analysts. The lender has been increasing the interest rate by 50-basis point, however, a rally in the country's currency is expected to slow the pace of rates hikes.

* Consumer credit and mortgage demand in Mexico is increasing, despite the recent increase in the central banks' benchmark rate, Edgardo del Rincón, Grupo Financiero Banamex SA de CV's head of consumer banking, told El Economista in an interview.

* JP Morgan upped its estimate for Mexico's GDP growth to 2.0% from 1.3% as it expects stronger auto production and manufacturing data in the first quarter, El Financiero reported.

* Fitch Ratings placed a positive outlook on Mapfre La Centro Americana SA's insurance financial strength rating on the back of the company's technical performance and overall financial profile. The insurer should continue to see improved accident rates and operational efficiencies, Fitch said, which should lead to a stronger combined ratio.

* Mexico recorded a trade surplus of about $684 million in February, compared to a deficit of $783 million registered a year ago, The Wall Street Journal reported, citing data from the National Statistics Institute.

BRAZIL

* Credit quality among Brazil's smaller companies is starting to improve, with a higher proportion paying their bills on time in February, Valor Econômico reported citing data from Serasa Experian. "This is yet another sign that, little by little, the Brazilian economy is beginning to emerge from the recession," the credit research firm said.

* Asian Infrastructure Investment Bank has given both Brazil and South Africa until the end of the year to formally join the lender after the countries missed a previous deadline, London's Financial Times reported. The bank was established by 57 member countries, out of which Brazil was the only South American country.

* Brazil's senate has set up a commission to assess the concentration within the banking industry, Valor Econômico reported. Senators Tasso Jereissati and Armando Monteiro will head the commission.

* Banco Santander (Brasil) SA CEO Sergio Rial was elected to be the new chairman of CNF, Brazil's national confederation of financial institutions, Valor Econômico reported. Rial succeeds Banco Bradesco SA CEO Luiz Carlos Trabuco Cappi in the post.

* Brazilian antitrust regulator Cade's approval Cetip SA – Mercados Organizados and BM&FBOVESPA SA – Bolsa de Valores Mercadorias e Futuros' merger is credit positive for BM&FBOVESPA, according to Moody's. The approval marked the deal's final regulatory hurdle, allowing BM&FBOVESPA to consolidate its leading position in Brazil's financial markets infrastructure sphere, the rating agency said.

ANDEAN

* Venezuelan President Nicolas Maduro said that the country will soon introduce a new currency exchange mechanism to replace the DICOM rate, one of several official exchange rates, Reuters reported. "In a process of perfecting the system of collecting, administering and stabilizing the flow of hard currency in Venezuela, we have decided to activate from next week a new model of DICOM," Maduro reportedly said.

* The Venezuelan government urged the Organization of American States to suspend its April 4 meeting, which had been called to discuss the country's economic crisis and democratic standards, Reuters reported. In a statement, Venezuela argued that the planned meeting was against organization rules. "If this illegal, unilateral, deviant and biased behavior in favor of violent extremists in Venezuela continues, we will proceed with severity and firmness," the government statement read.

* Inflation in Peru jumped to 1% in March, the highest monthly level recorded in nine years, El Comercio reported citing Scotiabank.

SOUTHERN CONE

* Citigroup's Latin America head, Jane Fraser, predicts Argentina will see more corporate M&A activity and IPOs, El Cronista reported. The executive noted that while Citigroup is selling its Argentine consumer banking operations because it saw the retail banking space as overcrowded, the U.S. bank plans to open 10 offices in the country to build its corporate client base.

* The Argentine government's new mortgage loan program should help Argentina's banking sector meet an increased mortgage demand, according to Moody's, which called the program a credit positive for banks. The 30-year inflation-adjusted mortgage program, offered through three state-run banks, "will foster growth in an underdeveloped market segment and increase banks' exposure to a secured asset class, supporting asset quality, earnings and portfolio diversity," Moody's said.

* Meanwhile, Banco de la Provincia de Buenos Aires Chairman Juan Curuchet said mortgage loan demand is increasing in Argentina thanks to slower lower inflation rates, La Nación reported.

* European financial technology company 4finance has started operations in Argentina, offering online loans and targeting millennial consumers, El Cronista reported. The company, which operates in 16 countries, also has offices in Mexico and the Dominican Republic and plans to expand to Brazil and Guatemala.

* Banco BTG Pactual Chile SA shareholders agreed to increase the bank's share capital. The bank will issue 95,481 new common shares worth about 70 billion Chilean pesos.

IN OTHER PARTS OF THE WORLD

* Asia-Pacific: 3 firms shortlisted for ICICI Lombard stake; Singapore, France ink fintech deal

* Middle East & Africa: Gordhan ordered home; Ghana rate cut; Gulf's 1st green bond

* Europe: BoE outlines stress-test scenarios; OneSavings Bank stake sold; NN Group sued

S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.

Matthew Craze contributed to this article.

The Daily Dose has an editorial deadline of 8 a.m. São Paulo time, and scans news sources published in English, Portuguese and Spanish. Some external links may require a subscription.