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Lower provisions, higher net interest income boost Santander Mexico's Q2 profits

Banco Santander (México) SA Institución de Banca Múltiple on July 26 posted a 12.1% rise in 2018 second-quarter profit year over year, as lower provisions and a boost in net interest income offset rising administrative costs.

The company booked net income of about 5.17 billion pesos for the second quarter, up by 12.1% from 4.61 billion pesos in the year-ago period.

Santander Mexico's net interest income jumped 9.5% higher year over year to 14.80 billion pesos from 13.51 billion pesos, while net fee and commission income ticked 6.5% to 4.26 billion pesos from 4.00 billion pesos a year ago.

The lender's net interest margin was 5.27%, compared to 5.52% in the linked quarter and 5.29% a year earlier.

However, administrative expenses rose 13.3% to 8.85 billion pesos from 7.81 billion pesos, mainly due to increased personal expenses, the bank said.

Provisions for loan losses, meanwhile, decreased 11.0% from the year-ago period to 4.67 billion pesos from 5.24 billion pesos. Santander México's total loan portfolio expanded 10.6% to 652.25 billion pesos at the close of the three-month period from 589.91 billion pesos in the preceding year.

Its nonperforming loan ratio was 2.46%, compared to 2.43% in the linked quarter and 2.29% a year earlier.

Return on average equity rose to 17.33% from 16.76% a year ago, while return on average assets grew to 1.53% from 1.43%.

Santander Mexico's capital ratio at quarter-end stood at 15.52%, down from 15.71% three months earlier and 16.17% a year earlier.

As of July 25, US$1 was equivalent to 18.81 Mexican pesos.