BHU profits soar 343% to US$68.5mn in Jan-Sep

Uruguay's second largest bank Banco Hipotecario (BHU) saw profits soar 343% in the January-September period to 1.61bn pesos (US$68.5mn) compared to the same 2004 period, the central bank said. The bank returned to the black last year with an annual profit of 3.39bn pesos after losing a combined 20.5bn pesos in 2002 and 2003. BHU's assets dropped 5.3% to 34.4bn pesos, while liabilities (including deposits) fell 15.3% to 35.7bn pesos at the end of September. Its ROA rose to 10.3% in the period from a negative 3.11% in the same year-ago period. Nevertheless, international ratings agency Moody's continues to question BHU's financial and franchise viability due to serious financial impairment and limited commercial capacity. "Important reforms such as cost rationalization measures are needed but there is still no consensus on how to implement them," Teresa Stok, associate analyst at Moody's Argentina, told BNamericas. Earlier this year, Moody's said BHU suffered from a weak financial situation, poor core profitability, extremely high past due loans and very low reserve coverage (as reserves, including general reserves, cover only 33% of past due loans). BHU's past-due loans amounted to a staggering 69.1% of total loans, up from 61.2% in the same period 2004. The bank's loan operations have been suspended since 2002 when Uruguay suffered a severe financial crisis due to spillover effects from the Argentine meltdown. The bank has said it plans to return to lending in February or March next year. The bank is however allowed to grant mortgage loans to finance already built houses. Those loans fell 17.7% to 15.9bn pesos at the end of September. BHU is a state-run mortgage loan bank.