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Banorte posts 16% rise in Q2 profit

GrupoFinanciero Banorte SAB de CV posted a 16% rise in net profit forthe second quarter, as stronger net interest and non-interest income outpacedgrowth in provision expenses.

The Mexican lender showed second-quarter net income of 4.63billion Mexican pesos, or 1.67 pesos per share, up from 4.00 billion pesos, or1.44 pesos per share, earned in the year-ago period.

Banorte attributed the improved results to stronger resultsfrom all group subsidiaries. The company's main unit, , contributed 3.10 billion pesos to the group'squarterly profit, up 38% from 2.24 billion pesos a year ago.

For the group, net interest income ticked 9% higher yearover year to 12.65 billion pesos from 11.58 billion pesos in the second quarterof 2015. The net interest margin expanded to 4.6% from 4.3% a year earlier.Banorte noted that its net interest income for the first half of 2016 increaseddue to the positive impact of a hike in benchmark interest rate by .

Non-interest income for the quarter jumped 16% year overyear to 4.43 billion pesos, from 3.83 billion pesos, as income from servicefees grew 8% year over year to 2.71 billion pesos. The company also booked a69% increase in income related mainly to loan recoveries and provisionreversals, which helped bolster other operating income by 84% year over year to955 million pesos.

Non-interest expenses fell 1% annually to 7.53 billion pesosfrom 7.58 billion pesos.

Provisions for loan losses increased 27% to 3.53 billionpesos from 2.78 billion pesos a year ago, which Banorte attributed to higher requirementsin the corporate, payroll and credit card loans. Banorte's past due loan ratiofell to 2.3% in the second quarter from 2.8% in the same period of 2015.

The bank's return on equity was 13.4% for the secondquarter, up from 12.6% in the year-ago period. Return on assets was 1.5%.

Banorte's total performing loan portfolio held 544.12billion pesos at the end of the second quarter, a 12% annual increase from486.02 billion pesos. The company's consumer loan portfolio also grew 13%annually to 186.98 billion pesos.

As of July 21, US$1was equivalent to 18.56 Mexican pesos.