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Colombia's Grupo Aval sees delinquencies grow as economy slows; Q1 profit rises

Grupo Aval Acciones y Valores SA's first-quarter profit increased slightly from a year earlier as higher interest income was partly offset by a rise in impairment losses and a negative trading result.

Grupo Aval showed net income attributable to owners of the parent of 597.7 billion Colombian pesos, up 1.8% from 587.0 billion pesos in the year-ago period.

Net interest income, the company said, improved 7.4% year over year to about 2.728 trillion pesos from 2.540 trillion pesos a year earlier. Its net interest margin was 5.9%, up from 5.8% in both the linked quarter and prior-year period.

Net income from commissions and fees, meanwhile, ticked 1.8% higher to 1.150 trillion pesos, with net income from the sale of goods and services to clients in the non-financial sector growing 19.6% to 205.8 billion pesos.

However, the company booked a loss of 90.3 billion pesos in its net trading results, compared to a gain of 32.2 billion pesos in the first quarter of 2017.

It also registered 873.4 billion pesos in net impairment losses, representing an increase of 17.6% from 742.9 billion pesos in the year-ago period. Grupo Aval said its impairment loss on loans and accounts receivable ticked 24.4% higher annually to 984.3 billion pesos due mainly to higher impairment losses in the company's commercial loan book.

Net total loans and receivables grew 3.2% in the 12 months through March to reach about 156.100 trillion pesos, with commercial loans expanding 2.7%, consumer loans 6.0% and mortgages 8.3%.

Grupo Aval's 90-day nonperforming loan ratio increased to 2.9% in the first quarter from 2.8% in the linked quarter and 2.2% in the year-ago period.

"During last year the quality of our loan portfolio has evidenced a deterioration in line with a slower pace of the economy, a slight weakening in urban and national unemployment metrics and due to certain corporate exposures," the company said. It noted that its cost of risk for the quarter was 2.3%, including an impact of 24 basis points due to specific large corporate exposures, primarily Electricaribe.

Grupo Aval added that loan growth was slow during the first quarter across all segments, but is expected to gain momentum in the second half "due to positive macro trends and less political and fiscal uncertainty."

The company's return on average equity fell to 15.3% from 15.4% a year earlier, while return on average assets remained stable at 1.6%.

As of May 16, US$1 was equivalent to 2,874.40 Colombian pesos.