Banco Daycoval SA's net income for the second quarter only marginally improved from the year-ago period due to higher financial intermediation costs and greater provisions for loan losses.

The Brazilian lender booked net income of 126.3 million reais during the quarter, up 0.6% from 125.6 million reais earned a year ago.

Daycoval's gross profit from financial intermediation totaled 363.2 million reais, down 12.4% from 414.3 million reais in the prior-year period, as a 32.8% improvement in financial intermediation income was more than offset by a 58.1% rise in expenses.

The bank's net interest margin hit 12.5% for the period, up from 12.4% in the linked quarter and 11.6% a year ago.

Loan-loss provisions, meanwhile, soared 40.6% annually to around 253.1 million reais in the second quarter.

The lender held about 15.05 billion reais in its loan portfolio for the quarter, up 13.9% from about 13.21 billion reais in the year-ago period. The expansion was driven by an increase of 24.7% in loans to companies and 13.5% in auto loans.

Return on average equity hit 15.7% in the quarter, down from 21.8% in the linked quarter and 18.0% in the year-ago period. Meanwhile, return on average assets was at 2.0% in the period, lower than the 2.2% recorded during the previous year.

As of Aug. 6, US$1 was equivalent to 3.72 Brazilian reais.