BBVA Banco Francés ups Q2 profits 83%

Monday, August 13, 2007

Argentine bank BBVA Banco Francés (NYSE: BFR) booked an 82.9mn-peso (US$26.4mn) net profit in the second quarter, up 83% compared to the same period in 2006, CFO Martín Zarich told a conference call on Monday.

The US$0.53 per share earnings figure was boosted by fee income, which grew 29.8% to 137mn pesos as well as strong loan growth.

Operating profits, however, were down 7.81% to 131mn pesos due to lower yields from assets indexed to the CER inflation coefficient and poorer returns from securities issued by the central bank.

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Administrative costs rose 20.8% to 205mn pesos given higher personnel and advertising expenses.

The bank's ROE reached 16.4% compared to 9.8% in 2Q06, which represented the highest level for BBVA Banco Francés since the Argentina's crisis in late 2001, according to a report by Deutsche Bank (NYSE: DB).

Private sector lending grew 36.0% to 7.21bn pesos at end-June compared to the same time in 2006 on the back of stronger consumer lending.

The non-performing ratio for private sector loans improved to 1.1% from 1.8% at end-June 2006.


Zarich said the bank expects the cost related to court-ordered releases of deposits called amparos to be over by March 2008, two months before originally planned.

BBVA Banco Francés halved its amparo expenses in 2Q07 to 51.5mn pesos compared to 2Q06. The bank said it allocated voluntary provisions over the last few quarters, which enabled it to complete the pricing of government bonds held in its investment portfolio at market value.

The bank was one of the banks most affected by the financial crisis early this decade, posting significant losses from 2002-04. Since then, the bank has rebuilt its private sector loan portfolio and strengthened its capital base.

BBVA Banco Francés, the local subsidiary of Spain's BBVA (NYSE: BBV), is Argentina's largest private sector bank.