Brazilian midsize bank Banco Cruzeiro do Sul (BCSul) reported 41mn reais (US$25.3mn) in 1Q11 net profits, up 3.4% from 1Q10, but new accounting rules from central bank BCB issued last July continue to have an impact, the bank said in its latest financial statements.
"[BCSul] presents its first quarter figures partially based on [BCB's] new accounting methodology, with revenue and expenses from assignments with risk retention apportioned in advance instead of in accordance with the remaining duration of the operations. As a result, the accounting result is once again impacted by advance revenue from assignments," the bank said.
BCSul's on-balance sheet lending hit 7.22bn reais at end-March, up 49.6% from 12 months prior, bolstered by its main product, payroll lending, which jumped 52.0% in the same period to 6.87bn reais.
The bank's net interest margin contracted due to high funding costs, to 8.8% in the quarter versus 10.0% in 4Q10 and 10.5% in 1Q10. BCSul's capital adequacy BIS ratio was 18.9%, compared to 21.2% three months before and 15.1% a year prior.
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