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Banco de Bogotá's Q1 profit improves YOY, but provisions still weigh

Higher interest and fee income helped Banco de Bogotá SA increase its first-quarter profit by 9.2% year over year, although the bank also booked a rise in provision expenses due partly to impairment losses from liquidated power company Electricaribe.

The bank posted net income attributable to owners of the parent of 609.8 billion Colombian pesos, rising from the 558.4 billion pesos earned in the first quarter of 2017.

Net interest income improved 4.7% annually to about 1.705 trillion pesos from 1.628 trillion pesos, driven by a 12.5% decline in interest expense. The company's net interest margin compressed to 5.6% from 6.0% in both the linked quarter and prior-year period, which it said is in line with the reduction of the Colombian central bank's benchmark interest rate.

Net fees and other services income, meanwhile, ticked 4.8% higher from a year earlier to reach 964.8 billion pesos. This, the lender said, was mainly due to higher commission income from banking services and credit card fees.

However, Banco de Bogotá's results were negatively impacted by a rise in provisions for impairment loss and financial assets, which increased 9.9% to 542.6 billion pesos from 493.6 billion pesos a year ago. The bank said provisions for Electricaribe amounted to 20 basis points of its cost of risk, net of recoveries of charge-offs.

Banco de Bogotá's consolidated gross credit portfolio expanded 4.0% in the 12 months through March to reach about 100.127 trillion pesos. Commercial loans grew 3.5%, consumer loans 4.4% and mortgages 5.8%.

The bank's 90-day nonperforming loan ratio increased to 2.5% from 2.4% in the linked quarter and 2.0% a year earlier. Excluding Electricaribe, however, the ratio was 2.1% for the first quarter.

The company's return on average assets rose to 1.8% from 1.7% a year earlier, while return on average equity improved by a full percentage point to 14.9%.

As of May 17, US$1 was equivalent to 2,883.40 Colombian pesos.