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BBVA Francés, Galicia's profits surge; Argentine central bank ups rates to 74%

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BBVA Francés, Galicia's profits surge; Argentine central bank ups rates to 74%

* BBVA Banco Francés SA's second-quarter profit more than tripled to 6.78 billion Argentine pesos in the second quarter of 2019, from 2.12 billion pesos a year earlier. Net operating income grew 161.2% annually to 20.90 billion pesos. This helped offset a growth in loan-loss provisions, which more than doubled to 1.86 billion pesos from 804.2 million pesos a year ago.

* Grupo Financiero Galicia SA booked quarterly net income of about 11.58 billion Argentine pesos in the second quarter, up 316% from 2.78 billion pesos earned in the year-ago period, supported by gains in investments on government securities. Net income from financial instruments skyrocketed 924% annually to 18.18 billion pesos due to higher gains on central bank notes.

* Banco Central de la República Argentina on Aug. 12 raised interest rates in daily auctions to 74%, aimed at containing a run on the peso following Alberto Fernandez's surprise triumph in the presidential primaries on Sunday, La Nación reported. The currency lost about a third of its value against the U.S. dollar as of midday yesterday, following the news of the primaries. The benchmark MERVAL stock index sank nearly 38% on Aug. 12, while shares of several major Argentine banks lost more than half their value. Fernandez then criticized President Mauricio Macri, saying the incumbent leader raised the country's short-term debt, Bloomberg News reported.

MEXICO AND CENTRAL AMERICA

* Guatemalan President-elect Alejandro Giammattei, who received 58% of votes based on preliminary results of Aug. 11 elections, said he will seek a better deal with the U.S. regarding migrant issues, Reuters reported. Outgoing President Jimmy Morales had struck a deal with the U.S. to reduce the number of U.S.-bound migrants, but Giammattei said he would look into possibly removing from the deal "the things that are not right for us," such as Guatemala serving as a safe third country.

* A majority of analysts surveyed by Reuters expect Mexico's central bank to hold the benchmark rate at 8.25% in its meeting on Aug. 15. According to the newswire, Banco de México has not cut its rates since 2014.

BRAZIL

* Banco BTG Pactual SA reported adjusted net income of about 1.03 billion reais in the second quarter of 2019, about 50% higher than the 685 million reais a year earlier. Revenue from sales and trading surged 232% higher annually to 886 million reais from 267 million reais. Revenue from principal investments was also up 517% yearly to 344 million reais from just 56 million reais a year ago.

* Although Brazil has made progress in stabilizing its debt burden through lower interest rates, a more pronounced decline in debt depends on faster economic growth and further fiscal adjustments, Moody's said. However, while the pension reform bill will support fiscal sustainability, it is not enough to "fundamentally change Brazil's fiscal strength," Moody's said.

* Brazil's central bank's IBC-Br economic activity index was down 0.13% in the second quarter, extending a 0.68% drop in the first quarter, which could mean the country slipped into recession, Reuters reported. Central bank president Roberto Campos Neto said the economy should improve "a little" in the second half of 2019, and that the country has a "very solid" foreign exchange reserves position.

* Brazilian company Grupo Bitcoin Banco, which owns cryptocurrency trading platforms, has kept its clients' accounts blocked for more than two months, Valor Econômico reported. The legal proceedings against the company have also multiplied within this period.

* Brazilian consumer credit demand grew 7.8% in the first half of 2019 compared to the same period of 2018, Valor Econômico reported, citing data from credit research firm Serasa Experian.

* Banco Nacional de Desenvolvimento Econômico e Social President Gustavo Montezano said the entity will "do everything possible to help the private sector provide public services" and call on private funds and companies to invest in the bank, Estadão reported.

* The secretary of the Brazilian Federal Revenue, Marcos Cintra, admitted there are risks arising from a tax on financial transactions, although he said that a 2% rate of this tax is preferable than a VAT of "30% or 35%," Reuters reported. Even so, Cintra said that tax has yet to be debated on.

* Federal prosecutors in Brazil filed a request for a court to block the son of President Jair Bolsonaro, Eduardo, as ambassador to the U.S., citing lack of experience as a diplomat, Reuters reported.

* The governor of Brazil's Rio Grande do Sul state, Eduardo Leite, said his administration will keep Banco do Estado do Rio Grande do Sul SA as a public bank, since the bank's privatization would imply "a great effort of political capital without solving the state deficit," Infomoney reported. "The income generated would be quickly consumed by the state deficit," Leite added.

* Caixa Seguridade Participações SA launched the first phase of the selection process of a new operating partner to operate its high risk, health and dentistry segments, Valor Econômico reported.

ANDEAN

* Intercorp Financial Services Inc. posted a 71.3% jump in its second-quarter net attributable profit, up to 347.9 million Peruvian soles from 203.1 million soles in the year-ago period. The year-over-year improvement was mainly attributed to a reduction in its adjustment of technical reserves within its insurance segment, with unit Interseguro Compañía de Seguros SA unit swinging to a 32.8 million-sol profit from a loss of 113.7 million soles a year earlier.

* A manager at Ecuador's central bank said the regulator is working on a bill to be presented in September that will allow it to tap part of a $4.2 billion financing package from the IMF, Reuters reported. The law would help the regulator return to independence, as it served to directly finance the government under former President Rafael Correa.

* Colombian central bank chief Juan Jose Echavarria said inflation in the country will reach 3.6% at the end of 2019, though with monetary policy decisions, it should fall to 2.8% by the end of 2020, Reuters reported. Yearly inflation through July was recorded at 3.79%.

* Venezuela's government-backed Constituent Assembly said it would form a commission that will look into early legislative elections in a bid to dissolve the opposition-led Congress, Reuters reported. Legislative elections are not scheduled until 2020.

SOUTHERN CONE

* Ahead of the implementation of new Basel III capital standards in Chile, the country's CMF financial market commission published for public consultation a methodology on defining systemically important banks based on their size, interconnection, substitutability and complexity. Using information as of December 2018, the CMF has preliminarily identified six banks as systemically important, requiring additional basic capital of about $2.5 billion.

IN OTHER PARTS OF THE WORLD

* Asia-Pacific: China resumes open market operations; NZ legalizes cryptocurrency salaries

* Middle East & Africa: Mizrahi Tefahot Q2 profit rises; Euroclear joins TASE; Discovery shares slump

* Europe: New Swiss fees on euro deposits; Talanx raises guidance; Aareal profit flat YOY

Pablo Jiménez Arandia contributed to this article.

The Daily Dose has an editorial deadline of 8:00 a.m. São Paulo time, and scans news sources published in English, Portuguese and Spanish. Some external links may require a subscription. Links are current as of publication time, and we are not responsible if those links are unavailable later.