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Caixa Econômica Federal Q1 profit sinks 45.9% YOY

Caixa EconômicaFederal posted net income of 837.8 million Brazilian reais for the firstquarter, down 45.9% compared to 1.55 billion reais earned in the year-ago periodas the Brazilian lender saw a marked increase in expenses.

Operating income for the period sank to 385 million reais from806 million reais a year ago as a 6.7% increase in income from financial intermediationwas offset by a 3.1% rise in administrative costs and a 71.8% jump in other operatingexpenses. Results for the quarter also included a 655 million reais tax gain, wellbelow the 1.06 billion reais gain seen a year earlier.

The state-run bank's financial margin reached 11.5 billion reaisin the first quarter, an increase of 9.9% compared to a year ago.

Caixa's loan portfolio grew 9.2% from 12 months earlier to 684.2billion reais at the end of March. Mortgage lending was the key area of growth withan increase of 9.8% to 389 billion reais, maintaining Caixa as Brazil's top mortgagelender with a 66.9% market share. The bank, however, said overall Brazil's creditmarket continued to see a slowdown in the first quarter, due to rising unemploymentand higher interest rates.

The delinquency ratio over 90 days was 3.51% for the first quarter,a slight reduction of 4 basis points from the previous quarter but up from 2.85%a year ago. The bank took 3.81 billion reais in provisions for doubtful loans, downfrom 3.95 billion reais booked in the linked quarter and 5.03 billion reais a yearearlier.

The bank's ROE decreased to 10.3% in the first quarter from 11.4%in the previous quarter and 13.7% a year ago.

As of May 6, US$1 was equivalentto 3.54 Brazilian reais.