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Banrisul's Q2 income up 40% with lower expenses, loan loss allowances

Banco do Estado do Rio Grande do Sul SA's second-quarter net income rose about 40%, thanks to lower loan-loss allowances and financial expenses, and higher profit from financial operations.

Banrisul, as the bank is known, posted 262.0 million Brazilian reais in the second quarter, or 64 centavos per share, about 39.6% higher from the 187.7 million reais, or 45 centavos per share, in the year-ago period.

Net interest income was 1.33 billion reais in the quarter, about 4% higher year over year from 1.28 billion reais a year ago. The bank's net interest margin on profitable assets stood at 8.38% in the quarter, 1 basis point lower in the linked quarter but down from 8.51% in the year-ago period.

Meanwhile, income from services and fees was slightly up to 468.4 million reais from 423.9 million reais in the same period.

Recurring administrative expenses fell a little over the year to 928.8 million reais, from 930.5 million reais a year prior. Financial expenses slid to 1.45 billion reais in the quarter from 1.66 billion reais a year ago. However, other operational expenses rose in the quarter to 152.9 million reais from 130.7 million reais last year.

Allowance for loan losses dropped to 2.66 billion reais as of June 2018, compared to 2.71 billion reais as of June 2017.

Banrisul's total credit portfolio expanded 3.6% to 32.01 billion reais as of June 2018 from the 30.91 billion reais held as of June 2017.

The amount of loans that were more than 90 days past due fell over the year to 1.08 billion reais, 25.8% lower year over year from 1.46 billion reais. Meanwhile, the 90-day default rate was 3.37% in June 2018, lower than the 3.43% in the first quarter and 4.72% a year ago.

Return on average assets was up to 1.4% in the quarter from 1.1% a year prior. Return on average equity also grew to 15.6% from 11.7%.

For the first half of the year, the bank's net income jumped 60.0% to 505.9 million reais from 316.2 million reais in the prior-year period.

As of Aug. 13, US$1 was equivalent to 3.90 Brazilian reais.