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Venezuela's banking majors post higher earnings amid hyperinflation, economic troubles

Amidsevere economic turmoil,hyperinflation and the prospect of a sovereign default, combined earnings at Venezuela's top banks rose28.44% year over year in the second quarter of 2016 on sharp increases in both netinterest income and noninterest revenues.

SNL datashows that leading Venezuelan banks BanescoBanco Universal CA and BancoOccidental de Descuento SACA both showed improvements in net incomeduring the most recent quarter, posting increases of 47.87% and 35.25%, respectively.Mercantil Servicios Financieros CA,meanwhile, saw its quarterly profit slip by 2.2% year over year.

Acrossthe board, the group of Venezuelan banks posted sharply higher revenues, with netinterest income more than doubling year over year to 57.98 billion Venezuelan bolivarsand other noninterest income jumping ninefold to 16.63 billion bolivars. Expenses,however, have also increased sharply, tripling year over year to 66.89 billion bolivars,as both operating expenses and asset write-downs have increased substantially.

The figures,however, must be taken with a grain of salt, given the rampant level of inflationVenezuela is experiencing. The IMF estimatesthat the country's consumer price inflation rate will hit nearly 500% in 2016, andpredicts a rate of more than 1,600% for 2017. And while currency controls on thebolivar have kept the official exchange rate at 10 bolivars to US$1, the black market rate is more than 100xweaker than that.

SNL Image

Click here to view country level information for Venezuela.

Click here to view SNL's profile of individual banks and view key information in both tabular and graphical format for your selected company.

 

 

 

 

 

As of Sept. 26, US$1 was equivalentto 9.95 Venezuelan bolivars.