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Lower financial expenses, provisions help Davivienda's Q1 profit rise 39.4%

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Lower financial expenses, provisions help Davivienda's Q1 profit rise 39.4%

Banco Davivienda SA's first-quarter profit jumped 39.4% from a year earlier as the bank's net interest income grew more than 20% and provision expenses fell slightly.

The company booked quarterly net income of 454 billion Colombian pesos, up from 326 billion pesos in the year-ago period. Profit from Colombian operations increased 37.5% while profit from Central American operations grew 55.7%, the bank said.

The lender's net interest income improved 21.2% year over year to reach 1.051 trillion pesos from 867 billion pesos. Interest income from loans grew 2.3% annually to 2.230 trillion pesos, while financial expenses slid 12.0% to 890 billion pesos.

Banco Davivienda's net interest margin for the quarter was 6.51%, up from 6.38% in the linked quarter and 6.26% a year earlier.

The bank booked 464 billion pesos in provision expenses, net of recoveries, in the three-month period, down 4.5% from 486 billion pesos in the prior-year period. The bank noted that its provisions in Colombia declined 5.1% as a result of lower provisions in the commercial portfolio, but increased 2.2% in its international operations due mainly to higher provisions in the consumer portfolio.

At the same time, the company's operating expenses ticked 6.7% higher to 789 billion pesos from 740 billion pesos in the first quarter of 2017. Personnel expenses increased 7.9% to 347 billion pesos.

Davivienda's gross loan portfolio expanded 6.7% in the 12 months through March to reach 78.4 trillion pesos, with the mortgage and consumer loan books growing 13.9% and 6.1%, respectively. The bank's nonperforming loan ratio was 3.25% in the first quarter, rising from 2.76% in the linked quarter and 2.07% a year earlier.

Return on average equity fell to 13.5% from 17.0% a year ago, while return on average assets declined to 1.42% from 1.77%.

As of June 7, US$1 was equivalent to 2,829.70 Colombian pesos.