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Higher financial margin, lower provisions boost HSBC Mexico Q2 profits

Grupo Financiero HSBC SA de CV on July 26 booked a more than a double increase in second-quarter profit as net interest income rose and loan loss provisions costs declined.

The company posted net income of about 1.81 billion Mexican pesos, up from the 877 million pesos earned in the year-ago period.

Net interest income rose to 7.74 billion pesos, from 7.17 billion pesos a year earlier, while fees and commissions jumped to 2.57 billion pesos from 2.31 billion pesos.

Trading income, meanwhile, was 597 million pesos, up from 410 million pesos year over year, but down from 1.01 billion pesos in the linked quarter.

Grupo Financiero HSBC's administrative and promotional expenses soared to 6.09 billion pesos during the quarter, up from the 5.65 billion pesos spent in the same period in 2017. Other operating income increased to 443 million pesos in the second quarter from 351 million pesos year over year.

The group booked 2.31 billion pesos in provisions for loan losses in the second quarter, down from 2.76 billion pesos in the prior-year period, which the company said was due to a better performance of its unsecured loan portfolio.

HSBC Mexico's total loan portfolio expanded 15.2% to 327.58 billion pesos at the close of the three-month period from 284.29 billion pesos in the preceding year.

Its nonperforming loan ratio was 2.26%, compared to 2.29% in the linked quarter and 2.83% a year earlier.

Return on equity jumped to 11.07% for the three months through June 30 from 5.73% in the year-ago period, while return on average assets grew to 1.02% from 0.54%.

As of July 26, US$1 was equivalent to 18.62 Mexican pesos.