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Higher provisions, tax expenses weigh on Bancolombia's Q4'17 profit

Considerably higher income tax expenses and provisions drove Bancolombia SA's fourth-quarter 2017 profit down 20.25% year over year, even as interest and fee income improved.

The bank showed quarterly net income of about 901.90 billion Colombian pesos, or 937.70 pesos per share, down from 1.131 trillion pesos, or 1,175.87 pesos per share, in the year-ago period.

Net interest income totaled 2.646 trillion pesos for the fourth quarter, rising 7.42% from a year earlier on the back of higher volumes of peso-denominated loans. The company's net interest margin from continuing operations was 5.98%, unchanged from a year earlier but up from 5.84% in the third quarter of 2017.

Bancolombia collected 657.63 billion pesos in net fees and income from services for the fourth quarter, up 11.28% from 590.99 billion pesos a year ago, while other operating income jumped 18.02% to 558.36 billion pesos.

Net provisions, however, rose 20.59% from the prior-year period to reach 930.37 billion pesos in the fourth quarter. The lender said these provisions helped it maintain a strong coverage ratio amid a challenging environment, adding that new past-due loans totaled 622.00 billion pesos for the fourth quarter.

Also weighing on the quarterly results were income tax expenses of 345.56 billion pesos. In the year-ago period, the bank saw a tax reversion in the provision of income tax, as well as a reversion for the compensation of fiscal credits, which led to a gain of 125.87 billion pesos.

Meanwhile, Bancolombia's total operating expenses reached 1.620 trillion pesos in the fourth quarter of 2017, falling 15.48% from 1.916 trillion pesos a year earlier. The bank attributed this decrease to several strategic actions, including the reduction of its branch network and automation.

The lender's total credit portfolio expanded 5.75% in the 12 months through December 2017 to reach 160.468 trillion pesos. Allowance for loan losses increased 24.18% year over year to 8.223 trillion pesos. The bank's 30-day nonperforming loan ratio to total loans was 4.49%, compared to 4.50% in the linked quarter and 3.31% a year earlier.

Bancolombia's consolidated net income for full-year 2017 totaled about 2.615 trillion pesos, down 9% from the previous year.

As of Feb. 21, US$1 was equivalent to 2,878.60 Colombian pesos.