By Kylie Madry
MEXICO CITY (Reuters) -Mexican lender Banorte's net profit ticked up 4% in the second quarter, lifted by a double-digit jump in its loan book, it reported on Tuesday.
Net profit for the period was 14.62 billion pesos ($779.09 million), but below the 15.01-billion-peso estimate from analysts polled by LSEG.
Net interest income, the difference between what banks earn on loans and dole out in deposits, grew 12% from the year-ago quarter, which Banorte attributed to a more diversified portfolio and lower funding costs. That rise helped offset an 887-million-peso hit from foreign exchange impacts, Banorte, one of Mexico's largest banks, said.
The growth comes during an interest-rate-cutting cycle from Mexico's central bank, which in June trimmed the benchmark rate to its lowest level in nearly three years. Lower rates typically pressure rate margins.
Banorte's total portfolio, minus government loans, posted 13% growth year-on-year. The consumer segment posted the strongest performance, with auto loans climbing 30% and credit card loans rising 18%.
Corporate and commercial loans also grew in the double digits, though government lending fell as loans were paid back early.
Return on equity, a key measure of profitability, ticked up to 23.6% from 23.3% a year earlier, while the bank's non-performing loan ratio held steady at 1.1%.
Banorte maintained its full-year guidance, projecting net income between 59.6 billion and 62.1 billion pesos and loan growth of 8% to 11%.
“Given Banorte's track record, we translate (that) into confidence on the provided ranges, particularly in loan growth,” analysts at Citi wrote in a note, saying it was a key concern among investors.
MONEY LAUNDERING JITTERS
Banorte's CEO, Marcos Ramirez, told journalists that the lender was wrapping up its relationships with firms which in June had been targeted by the U.S. Treasury for alleged money laundering concerns.
The sanctions applied to three financial institutions — CIBanco, Intercam Banco and Vector Casa de Bolsa — and while the groups are relatively small, they have sent shockwaves through Mexico's banking system.
Ramirez said Banorte had doubled down on its own anti-money laundering standards, which it had boosted earlier in the year after calls to do so from the U.S.
Ramirez said as head of Mexico's banking association, the group was unaware of any investigations into other groups, which the market has widely speculated.
($1 = 18.7654 pesos at end-June)
(Reporting by Kylie Madry; Additional reporting by Natalia Siniawski and Andre Romani; Editing by Leslie Adler)
