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Grupo Banamex Q2 profit up slightly YOY, excluding sale of merchant acquiring business

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Grupo Banamex Q2 profit up slightly YOY, excluding sale of merchant acquiring business

Mexico'sGrupo Financiero Banamex SA de CVposted a net profit of 4.51 billion Mexican pesos for the second quarter of 2016,down 31% from the same period a year earlier, mainly due to the sale of  its merchant acquiring business in the secondquarter of 2015, the group said July 21.

Excludingincome from that sale, the group's second-quarter net income grew 2% year over year.

The group'sbanking unit, Banco Nacional de MéxicoSA Integrante del Grupo Financiero Banamex, or Banamex, reported a netprofit of 2.82 billion pesos for the period, down 43% from a year ago. Excludingthe impact of the merchant unit sale, the bank's second-quarter net income grew1% year over year.

Banamexcompleted the sale ofits merchant acquiring business to EVO Payments International in September 2015.

GrupoFinanciero Banamex's net interest income rose 8.5% year over year to 18.62 billionpesos in the second quarter, driven by growth in the company's loan portfolio.

Pretaxincome, however, fell 34.2% in the period to 6.05 billion pesos, mainly due to otheroperating expenses, which reached 1.42 billion pesos, compared to income of 2.78billion pesos a year ago.

Lowerincome from commissions and fees in the quarter, which was partly due to lower feesfor certain services and the lack of income from its merchant acquiring business,was partially compensated by a higher volume of client transactions, the group noted.

Operatingexpenses also rose slightly due to higher spending on physical infrastructure andtechnology, the group noted.

Overall,the group's return on average assets, or ROA, fell to 1.4% from 2.2% in the secondquarter of 2015 and 1.8% in the previous quarter. Its return on equity, or ROE,declined to 10.0%, compared to 15.1% a year ago and 12.9% in the previous quarter.Its net interest margin also dropped to 6.3% from 6.6% a year ago.

Yet despitethe decline in the company's key performance indicators, growth in its loan portfoliocontinued to be strong, reaching 567 billion pesos at the end of June, up 14% yearover year. This includes loans to families, which grew 5% to 256 billion pesos.

Commercialloans rose 24% to 311 billion pesos in the same period, representing an increaseof 59 billion pesos, including 28% growth in loans to small and micro-sized businessesand 40% growth in loans to corporates and financial institutions.

In addition,the group was able to maintain the quality of its loan book. The ratio of overdueloans to total loans in the second quarter was 1.5%, which is one of the lowestratios in the Mexican banking system, the group said.

As ofend-June 2016, the group managed 1.70 trillion pesos on behalf of its clients, thecompany said.

GrupoFinanciero Banamex is a subsidiary of CitigroupInc.

Separately,Banamex announced July 20 that Manuel Medina Mora will step down as nonexecutive chairman of both Grupo FinancieroBanamex and Banamex as of Nov. 15.

MedinaMora resigned as head of Citigroup's global consumer business in June 2015 amida reorganization of Banamex's board following the Oceanografía fraud scandal in2014.

As of July 20, US$1 was worth18.53 Mexican pesos.