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Grupo Aval's Q1 profit jumps 25.8%, but additional Electricaribe provisions loom

Grupo Aval Acciones y Valores SA reported a 25.8% year-over-year increase in its first-quarter profit as higher net interest income helped offset a rise in impairment losses.

The company booked net income attributable to owners of the parent of 587.0 billion Colombian pesos, or 26.3 pesos per share, up from 466.4 billion pesos, or 20.9 pesos per share, in the year-ago period.

Grupo Aval's quarterly results were strengthened by a 9.6% annual increase in net interest income, which jumped to about 2.540 trillion pesos from 2.317 trillion pesos a year earlier. However, the company also registered 741.9 billion pesos in net impairment losses on financial assets, rising 10.7% from 670.1 billion pesos a year ago.

The firm's net interest margin improved to 5.8% in the first quarter from 5.4% in the fourth quarter of 2016 and 5.6% a year earlier.

Net income from commissions and fees, meanwhile, ticked 7.6% higher year over year to reach 1.130 trillion pesos. Net trading income, however, declined 75.7% to 32.2 billion pesos from 132.8 billion pesos a year earlier.

Total other expenses reached 2.192 trillion pesos, down 2.8% from 2.255 trillion pesos in the first quarter of 2016. At the same time, the company's income tax expense fell 22.4% to 445.2 billion pesos,

Grupo Aval's net total loans and receivables portfolio expanded 8.0% in the 12 months through March to reach 151.304 trillion pesos. The growth was driven by an 11.0% rise in consumer loans, 9.6% in mortgages and 4.3% in commercial loans.

The company's 90-day nonperforming loan ratio increased to 2.2% in the first quarter from 2.0% in the linked quarter and 1.8% in the year-ago period. Grupo Aval noted that Electricaribe, the troubled natural gas company that was recently liquidated, accounted for 26 basis points of deterioration in its total NPL ratio. Grupo Aval will also book additional provisions for Electricaribe loans between May and December 2017, it said.

The company's return on average assets improved to 1.6% from 1.5% a year earlier, while return on average equity jumped to 15.4% from 12.9%.

As of May 30, US$1 was equivalent to 2,923.78 Colombian pesos.