Grupo Aval Acciones y Valores SA's third-quarter profit fell 28.7% from a year earlier due mainly to the company's credit exposure to problem clients such as Electricaribe, a power company that was liquidated earlier in 2017.
The Bogotá-based banking group posted net income attributable to owners of the parent of 437.9 billion Colombian pesos, down from 613.9 billion pesos in the third quarter of 2016. EPS dropped to 19.7 pesos from 27.6 pesos.
The company's net interest income totaled about 2.676 trillion pesos, rising 15.1% from 2.324 trillion pesos a year ago. Its net interest margin was 5.9% in the third quarter, up from 5.6% in the year-ago period.
Net income from commissions and fees, meanwhile, reached 1.149 trillion pesos, an increase of 8.8% from 1.056 trillion pesos a year earlier. Net trading income declined 56.3% year over year to 66.9 billion pesos.
Results for the quarter also included a net impairment loss of 1.027 trillion pesos, up 62.6% from 631.9 billion pesos a year earlier.
"Over the last quarter, impairment losses on large corporates impacted our results once again, provisions for Electricaribe and SITP amounted to 47 basis points of our cost of risk, net of recoveries of charged-off assets, and their respective allowances now cover 54.9% and 12.1% of our exposure, respectively," Grupo Aval noted.
The company added, however, that "the impact of the Electricaribe loan provisions is expected to be materially done by early 2018."
The group's total gross loans and receivables grew 7.9% during the 12 months through September, reaching 155.402 trillion pesos. The growth was driven by a 10.6% jump in mortgage loans, a 9.2% increase in consumer loans and a 6.7% increase in commercial loans.
Loans more than 90 days past due represented 2.7% of the company's total portfolio in at the end of the third quarter, compared to 1.9% a year earlier.
Return on average assets fell to 1.3% from 1.8% in the prior-year period, while return on average equity declined to 11.2% from 16.2%.
As of Nov. 27, US$1 was equivalent to 2,977.94 Colombian pesos.
