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Galicia's Q2 profit up 316% as gains from government securities surge

Grupo Financiero Galicia SA's second-quarter 2019 profit more than quadrupled from a year earlier, supported by gains in investments on government securities.

The Argentine financial group booked quarterly net income of about 11.58 billion Argentine pesos, up 316% from 2.78 billion pesos earned in the year-ago period. Net income per share came to 8.11 pesos, up from 1.95 pesos a year ago.

Comprehensive income attributable to the company reached 11.61 billion pesos, up 315% from a year ago.

The result came as the contribution of the financial group's Banco de Galicia y Buenos Aires SAU surged 414% year over year to 10.11 billion pesos, while profit at Sudamericana Holding SA rose 186% to 340 million pesos. Results from Tarjetas Regionales SA also jumped 63% annually to 922 million pesos, while profit from Galicia Administradora de Fondos SA declined 5% to 114 million pesos.

On a consolidated basis, net interest income came to 3.09 billion pesos, down 27% from the previous quarter and 54% lower year over year. Net fee income, meanwhile, grew 30% to 5.69 billion pesos.

Results for the quarter included 18.18 billion pesos of net income from financial instruments, skyrocketing 924% year over year due to higher gains on central bank notes. Several Argentine banks have been taking advantage of high returns in short-term Treasury notes called Leliq, which carried interest rates in excess of 60% as of the second-quarter end.

The company's income from gold and foreign currency quotation differences climbed 186% year over year to 2.24 billion pesos, while other operating income increased 43% to 2.87 billion pesos.

On the other hand, the group recorded a 92% yearly rise in its provisions for loan losses, which reached 4.58 billion pesos.

Net loans and other financing grew to 294.09 billion pesos from 249.99 billion pesos at the close of the year-ago quarter. The ratio of nonperforming loans to private-sector loans hit 5.89%, up from 2.95% a year earlier.

The annualized return on average assets jumped to 7.32% in the second quarter from 2.98% a year ago, while annualized return on average shareholder's equity advanced to 68.87% from 24.78%.

As of Aug. 9, US$1 was equivalent to 45.45 Argentine pesos.