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BBVA Francés doubles Q4'18 profit as interest, fee income skyrocket

BBVA Banco Francés SA's fourth-quarter 2018 net profit more than doubled from a year ago as stronger interest and fee revenues offset a jump in loan-loss provisions.

The Argentine bank booked total net income of 2.99 billion pesos in the fourth quarter, up 120.2% from 1.36 billion pesos recorded in the year-ago period. Earnings per share came to 4.79 pesos, up from 2.19 pesos a year ago.

Excluding a result of 51.5 million pesos in other comprehensive income, the bank's net income hit 2.94 billion pesos, up 119.2% from 1.34 billion pesos in the fourth quarter of 2017.

Net interest income for the period ended Dec. 31, 2018, reached 8.46 billion pesos, up 28.9% from 6.56 billion pesos in the linked quarter and more than double the 4.11 billion pesos booked in the year-ago period. Net fee income, meanwhile, rose 135.8% on an annual basis to 1.50 billion pesos.

The bank also booked income tied to foreign exchange difference of 977.6 million pesos, up 34.4% year over year, and other operating income worth 1.21 billion pesos, up 85.0% from a year ago. The results offset a 74.9% annual decline in net income of financial instruments, which hit 197.0 million pesos. The bank also recorded a loss of 67.2 million pesos from results tied to assets at amortized cost.

Fourth-quarter net interest margin was 13.22%, up from 11.6% in the previous quarter and 11.7% a year earlier.

Provision for loan losses surged 255.3% yearly to 1.10 billion pesos. Operating expenses also tallied a 50.6% rise to reach 7.45 billion pesos.

At the end of the fourth quarter, net total loans expanded 42.2% annually to 181.42 billion pesos. Nonperforming loans as a ratio of net total loans hit 1.92% in the fourth quarter, up from 0.99% in the previous quarter and from 0.67% a year ago.

Return on average assets rose to 3.4% from 2.7% a year ago. Return on average shareholder's equity also grew to 31.38% from 18.2% in the fourth quarter of 2017.

The bank's fourth-quarter results brought its total net income to 9.59 billion pesos in 2018, up 118.4% from 4.39 billion pesos in the previous year.

The results cap a turbulent year for Argentina, where inflation topped 47.6% and the country's currency lost about half of its value against the U.S. dollar.

Separately, BBVA Francés said that its board approved a measure that will see the bank absorb brokerage unit BBVA Francés Valores SA. Shareholders will be asked to approve the combination at an April 24 meeting.

As of March 8, US$1 was equivalent to 41.38 Argentine pesos.