Banco Santander (México) SA Institución de Banca Múltiple's profit for the fourth-quarter of 2017 remained nearly flat from a year earlier as higher loan-loss provisions offset an increase in interest and fee income.
The bank, which is the successor of Grupo Financiero Santander Mexico SAB de CV as a result of their merger, posted net income of about 4.52 billion Mexican pesos for the fourth quarter, down just 0.6% from 4.54 billion pesos in the year-ago period.
The bank's net interest income ticked 7.1% higher year over year to 13.87 billion pesos, while net fee and commission income jumped 4.9% to 4.11 billion pesos from 3.92 billion pesos. The lender's net interest margin was 5.34%, compared to 5.81% in the linked quarter and 5.12% a year earlier.
However, those gains were offset by a substantial increase in provisions for loan losses, which rose 13.9% to 5.43 billion pesos from 4.77 billion pesos a year ago. Administrative and promotional expenses also increased, rising 15.4% to 8.40 billion pesos from 7.28 billion pesos.
Banco Santander's total loan portfolio expanded 4.5% in the 12 months through December 2017 to reach about 617.87 billion pesos. Its nonperforming loan ratio was 2.54%, compared to 2.26% in the linked quarter and 2.48% a year earlier.
Return on average equity fell to 15.97% from 16.30% a year ago, while return on average assets dropped to 1.34% from 1.42%.
For full year 2017, the company's net income totaled 17.71 billion pesos, up 12.7% from the 15.72 billion pesos earned in 2016.
"While our focus on margins will enable us to drive higher profitability in coming years, this is resulting in higher expenses and muting profits in the short term," CEO Héctor Grisi said in a statement. He added that the bank is "addressing our relatively lower retail business exposure, making important headway in reducing attrition and attracting new customers."
As of Jan. 31, US$1 was equivalent to 18.60 Mexican pesos.
