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Bci's Q1'16 profit falls 7.6% YOY on higher operating expenses, taxes

,or Bci, on May 5 reported net income of 73.92 billion Chilean pesos for the firstquarter of 2016, down 7.6% from the same period a year ago, due mainly to lowerincome from exchange rate and financial operations, higher operating expenses, andhigher taxes, partly offset by an increase in net interest income.

Operatingexpenses rose 24.8% to 150.54 billion pesos mainly as the result of higher salariesadjusted for inflation and employee benefits, as well as the incorporation of 's business,and higher expenses on digital technology, the bank said.

In addition,income from net exchange rate and financial operations plunged 69.4% to 11.70 billionpesos, due mainly to lower income from foreign currency exchange operations partlycompensated by higher income from financial operations.

However,the bank's net interest income rose 25.7% to 224.09 billion pesos thanks to higherinterest on commercial and housing loans, as well as an 11.6% increase in net incomefrom commissions. The latter was due mainly to higher commissions on lines of creditand credit card services, as well as account management, Bci said.

Incomefrom investments also improved in the first quarter, which boosted net interestincome, although income taxes rose 29.8% to 28.92 billion pesos.

The bank'sloan book reached 20.41 trillion pesos at the end of the first quarter, up 26.3%from a year ago, mainly on strong growth in consumer and housing loans, as wellas the contribution of City National Bank of Florida's business. Bci its purchase of City NationalBank in October 2015.

In addition,Bci's risk management strategy, including better management of commercial and consumerloan portfolios, helped reduce expenses on provisions and write-offs by 4.4% year-over-year.As a result, the ratio of provisions to total loans fell to 1.85%, down 19 basispoints from a year earlier, the bank said.

Evenso, higher operating expenses reduced the bank's efficiency and took a toll on itsperformance indicators. For example, return on equity for the first quarter was14.39%, down from 17.57% a year earlier, while return on assets was 1.0%, down from1.36%.

As of May 5, US$1 was equivalentto 668.21 Chilean pesos.