Banco Indusval SA continued to struggle with profitability in the final quarter of 2017, although it made some progress on an operational restructuring that involves shrinking its loan book and setting up a digital banking platform.
The São Paulo-based lender booked a quarterly net loss of 61.6 million Brazilian reais, compared to net losses of 74.9 million reais in the linked quarter and 28.8 million reais a year earlier. For full year 2017, the bank posted a net loss of 223.5 million reais, widening from a loss of 100.4 million reais in the previous year.
The company attributed the quarterly result to the intentional reduction of its credit portfolio, high loan-loss provision expenses, and the cost of cash carryover.
Revenues from loan operations and agro bonds fell 45.7% year over year to 21.3 million reais in the fourth quarter of 2017, while revenues from securities, derivatives and forex operations declined 71.9% to 25.9 million reais.
The bank's net interest margin with clients fell to 3.85% in the fourth quarter from 4.24% in the linked quarter and 4.61% a year earlier.
The bank also booked 33.9 million reais in loan-loss allowance expenses, down from 63.6 million reais in the third quarter but up 23.1% from 27.6 million reais a year earlier. This led to a loss of 36.6 million reais in the bank's results from financial intermediation, higher than the loss of 11.9 million reais recorded in the fourth quarter of 2016.
Personnel and administrative expenses, meanwhile, ticked 7.1% higher annually to 44.3 million reais.
Banco Indusval's expanded credit portfolio held about 1.24 billion reais at the end of 2017, representing "an intentional downsizing" of 43.1% through the year. Loans more than 90 days past due totaled 149.1 million reais, up from 121.3 million reais at the end of the third quarter and 61.9 million reais a year ago.
The company said it has "undertaken important measures in order to restructure its operations" during the past few months, including a deal to sell a 70% stake in brokerage and distribution platform Guide Investimentos.
Additionally, the bank said a plan to create a digital banking platform for unit Banco Intercap SA is "in the final stages of development."
As of March 23, US$1 was equivalent to 3.31 Brazilian reais.