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Wednesday, January 13, 2010
Today's News Headlines
* Analysts expect Bancolombia 2009 earnings in US$565mn-637mn range - Colombia
* Mutual funds up 22% in 2009, could see similar increase in 2010 - consultancy - Mexico
* Entel PCS, Banco de Chile launch mobile banking platform - Chile
* BB beats market growth rate, grabs 34.4% share of payroll-linked loans - Brazil
* Government officially suspends payments of US$405mn debt with Cabei - Honduras
* Lula to announce US$1.72bn in "Minha Casa, Minha Vida" projects for smaller cities - Brazil
* Remittances drop 8.5% in 2009, total 16% of GDP - El Salvador
* Delinquency rates fall in December, but grow in full-year comparison - Brazil
* Banks' loan growth should pass 10% in 2010 - ABM - Mexico
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* Analysts expect Bancolombia 2009 earnings in US$565mn-637mn range - Colombia
Bancolombia (http://) (NYSE:CIB) will likely post 2009 earnings in the range of 1.11tn-1.25tn pesos (US$565mn-637mn), or 3-15% less than in 2008, analysts told BNamericas.
Colombia's largest bank reported net income of 1.29tn pesos in 2008, up 18.7% compared to 2007.
Local brokerage Interbolsa believes Bancolombia will post earnings of some 1.25tn pesos, below its 1.32tn-peso original estimate, as net interest margin remains pressured by lower interest rates and sluggish loan demand persists.
"Furthermore, the behavior of benchmark interest rates and inflation did not leave room in 4Q09 to make profits from the negotiation of [government benchmark bonds called] TES's," analyst José Fernando Restrepo told BNamericas.
"The surprise can come from the side of fees. I expect the Panama and El Salvador subsidiaries to report results very similar to 2008," he said.
According to Deutsche Bank (NYSE: DB), Bancolombia will post 2009 earnings of 1.17tn pesos mainly due to extraordinary charges related to new accounting rules for derivatives during 2Q09.
In September, Deutsche Bank cut its 2009 earnings estimate for the Colombian bank by 3%, and now expects earnings to decline 9% from 2008 and ROAE to fall to 18.4%.
"Our 2009 core net income estimate remains mostly unchanged at 1.22tn pesos as lower net interest income is offset by higher fee income. We expect core earnings to fall 7% from 2008 and core ROE to fall to 19.1%," Deutsche Bank said in a report.
And according to Medellín-based brokerage Bolsa y Renta, Bancolombia should make a 1.11tn-peso profit in 2009 as revenues will equal 4.24tn pesos and operating expenses are likely to reach 2.85tn pesos, analyst Carlos Eduardo González told BNamericas.
The Colombian bank posted net profits for the first nine months of 885bn pesos, down 11% on the same period the previous year.
Bancolombia ended the third quarter of last year with 60.1tn pesos in assets and had a capital adequacy ratio of 13.8% as of end-September.
By Jorge Porter
Business News Americas
* Mutual funds up 22% in 2009, could see similar increase in 2010 - consultancy - Mexico
Mutual fund assets under management in Mexico increased 22.2% in 2009 to 944bn pesos (US$74.3bn) at the end of the year, the head of research at consultancy FundPro, Guillermo Mazzoni, told BNamericas.
Given that the industry is able to regain investors' confidence this year, "the mutual fund market could maintain its current growth rate, increasing at least 20% in 2010," Compass Group third party distribution head Alejandro Issa said in a FundPro report on the outlook for the year.
"We expect another year of growth for funds [in 2010], but the actual number will depend on changes in interest rates in the local financial market and the general performance of the economy, as fixed income funds make up more than 80% of total assets under management," Mazzoni said.
BREAKDOWN OF FUNDS
According to Issa, variable funds could grow in 2010 due to high expectations for the stock market, which could bring the percentage of variable income funds up close to 20% of total mutual fund assets. There will likely also be a move towards funds with exposure to foreign markets, he said.
Variable income funds closed 2009 with nearly 15.5% of the total, up from 13.7% at end-2008, while funds investing in foreign instruments - both debt and variable - were relatively stable, rising slightly to 5.2% from 4.5%, Issa said.
Without a doubt, investors' preference in 2009 in general was still for peso-denominated Mexican debt funds, especially those investing in instruments backed by the government, he said.
There were 1.98mn mutual fund clients in Mexico at end-2009, up 6.19% from a year earlier, according to FundPro.
"In the long term, investment education and promotion of savings will be key for the development of the industry by increasing the investor base. In this sense, we think independent distributors will play a leading roll," FundPro's Mazzoni said.
By William Schatz
Business News Americas
* Entel PCS, Banco de Chile launch mobile banking platform - Chile
Chilean mobile operator Entel PCS has teamed with the country's second largest bank Banco de Chile (NYSE:BCH) to launch a mobile banking solution which is accessible for users of all types of phones.
The solution, called Cuenta Móvil, allows prepaid and postpaid customers to set up a bank account and make intra-bank transfers as well as withdraw cash from an ATM. Banco de Chile has 350 branches and more than 1,250 ATMs activated for the service.
However, once an exclusivity period of several months is up, Entel expects more banks to use the platform, which would enable interbank and intercompany transfers, Entel PCS president Richard Büchi told reporters.
Entel PCS will charge 120 pesos (US$0.24) per transaction, while the bank will charge the typical maintenance and related fees, Büchi said.
People opening a mobile bank account can do so with a maximum balance of 300,000 pesos and can carry out transfers of up to 50,000 pesos at a time.
"The idea of this account is micro payments. It's not intended for large bank transactions, rather minor transactions that people carry out in their daily lives," Büchi added.
LESSONS LEARNED FROM KENYA, THE US AND BRAZIL
Martin Cook, Entel PCS's assistant manager for new business lines, told BNamericas that Entel PCS had adopted the mobile banking solution as part of its strategic partnership with Vodafone, signed in 2008.
One of the most successful markets where Vodafone has implemented such a solution is in Kenya where some 50% of Vodafone's customers use mobile banking after just 4-5 years of the solution being launched.
"Our objective is to achieve the same success as Vodafone, so we're talking about an annual growth rate of 10% to end this year with some 500,000-600,000 users and keep growing until we reach 50% of our client base in approximately five years," Cook said.
Entel has some 6mn clients.
Cook said there is a lot of potential for mobile banking in emerging markets which tend to have high mobile penetration but a low level of people with bank accounts.
Other cases Entel looked at are Nokia (NYSE: NOK), which launched a service in the US aimed at more high-end users through mobile payments company Obopay, in which Nokia bought a stake, and Brazilian telco Oi, which allows customers to make payments and top up their bank accounts.
The greatest challenge to adoption is convincing a market that has been used to traditional pay methods to trust in the mobile platform, Cook said.
Asked whether the new service was expected to add a lot of profitability to the Entel PCS network, Büchi said the idea was to create a new use for cell phones and demonstrate the company is constantly innovating.
This year, competition is due to heighten in the Chilean market with the entrance of two new mobile players - cable operator VTR and digital trunking company Nextel - and with the introduction of number portability.
By Patrick Nixon
Business News Americas
* BB beats market growth rate, grabs 34.4% share of payroll-linked loans - Brazil
Brazil's federally controlled Banco do Brasil (BB) more than doubled the rate of growth in the so-called consignado payroll-linked loan market in November and has grabbed a 34.4% share in the segment, the bank said in a statement.
According to the latest data from central bank BCB, consignado loans in Brazil totaled 105bn reais (US$60.3bn) at end-November, growing 1.6% from the end of October. BB said it saw its payroll-linked loan book grow 4.3% in the same comparison.
The bank made its biggest gains with public sector employees, growing 5.4% in November in this sub-segment.
BB said its above-market growth was a result of its new push in the segment via its branches, alternative channels and its use of its acquisitions in Nossa Caixa and Votorantim. In October, the São Paulo state government, the former controlling shareholder in Nossa Caixa, signed a letter of intent to keep BB as its payroll services provider and sole supplier of the payroll-linked loans to state employees until 2014.
In the 12 months to end-November, consignado loans grew 34.8%, according to the BCB data.
BB also released a statement noting its performance in foreign exchange contracts. The bank said it had taken 31.4% of the export foreign exchange market in 2009, compared to 27.9% in 2008, and 25.4% of the import foreign exchange market, versus 24.7% in 2008.
By Business News Americas staff reporters
* Government officially suspends payments of US$405mn debt with Cabei - Honduras
The government of Honduras has officially ceased repaying its debt with the Central American Bank for Economic Integration (Cabei), a finance ministry spokesperson confirmed to BNamericas.
The debt is estimated at US$405mn, local papers reported finance minister Gabriela Núñez as saying.
The decision was ultimately because the presidents of Cabei member countries voted formally to suspend payments to Honduras in September, after the bank stopped disbursing funds as a result of the country's coup on June 28, Núñez said.
The government continues to make payments on the rest of its external debts, which totaled US$2.46bn as of the end of September, she said.
PREVIOUS ACTIONS
In response to Cabei cutting off loans to Honduras, the government in August stopped paying commissions on loans committed but not yet disbursed by the bank, saying that if it would not receive the money it should not pay these fees.
In September, the government asked financial institutions in the country to withdraw all funds deposited with Cabei - an amount reportedly totaling US$120mn. It made its last loan repayment to the bank earlier that month.
LAWSUIT
This week the Honduran congress will choose a law firm to represent the country in a multi-million dollar lawsuit against Cabei, Núñez reportedly said.
"The lawsuit will be brought for all the damages to Honduras, not only for the amount of undisbursed and committed credit, but for the violation of Cabei's statutes," said the finance minister.
Núñez argued that Honduras, as a founding country of Cabei, should not be treated as just another client.
Incoming President Porfirio Lobo is due to take office on January 27, which could mean a change in the government's current policy stance toward the multilateral.
By Business News Americas staff reporters
* Lula to announce US$1.72bn in "Minha Casa, Minha Vida" projects for smaller cities - Brazil
Brazilian President Luiz Inácio Lula da Silva was due to announce late Tuesday 3bn reais (US$1.72bn) in projects through federal housing program "Minha Casa, Minha Vida" (My House, My Life) and infrastructure acceleration program PAC for cities with fewer than 50,000 residents, the urban development ministry said in a statement.
The Minha Casa, Minha Vida program, which is run by federal savings bank Caixa Econômica Federal (CEF), will get 1bn reais from the general federal budget, while the PAC portion will be for 2bn reais from government workers' compensation and savings fund FGTS, the statement said.
There will be 15 financial institutions, which were selected in a public bidding process that concluded last month, managing 1bn reais for the program, according to daily Valor Econômico.
Minha Casa, Minha Vida aims to build 1mn homes.
By Business News Americas staff reporters
* Remittances drop 8.5% in 2009, total 16% of GDP - El Salvador
El Salvador brought in US$3.47bn in remittances in 2009, 8.5% less than the prior year, El Salvador's central bank (BCR) said in a statement.
The figure accounted for 16.1% of the country's estimated GDP in 2009.
In the final month alone, remittances amounted to US$337mn, down 0.3% from December 2008 for the smallest year-on-year decline of 2009.
Although remittance figures have been steadily improving in recent months, the still-high unemployment rate in the US, which was 12.9% for Hispanics in December, will limit that improvement in coming months, the bank said.
Remittance trends in other Central American countries showed similar drops, with Guatemala seeing a decrease of 9.3% and Honduras a drop of 11% in 2009. Nicaragua's remittances were down 6.3% in the first 11 months of 2009 compared to the same period in 2008.
By Business News Americas staff reporters
* Delinquency rates fall in December, but grow in full-year comparison - Brazil
The delinquency indicator for Brazilian consumers from credit information firm Serasa Experian fell in December, but was still worse during full-year 2009 than it was in 2008, the firm said in a statement.
The 2009 delinquency indicator grew 5.9% compared to 2008, which was less than the 8% worsening it showed in 2008 from 2007, the statement said.
However, the indicator, which is based on bounced checks, overdue loans and credit card debt, showed improvement in December 2009 from 12 months prior, dropping 3.3%. In the comparison of December 2008 over December 2007, the measure had risen 12.8%.
Serasa Experian said overdue bank loans were still the leading cause of delinquency for Brazilian consumers, followed by credit card debt.
By Business News Americas staff reporters
* Banks' loan growth should pass 10% in 2010 - ABM - Mexico
Mexican commercial banks' active loan book should grow more than 10% this year, according to banking association ABM president Ignacio Deschamps.
This growth could be three to four times higher than that of GDP, which is predicted to rise some 3% in 2010, and should help push the economy forward, local press quoted Deschamps, who is also CEO of BBVA Bancomer, Mexico's biggest bank, as saying.
Growth in credit will be led by lending to SMEs, which should see a 20% increase, and mortgage loans, which should rise 15%. The challenge will be reactivating consumer credit, the executive said at the Seminario de Perspectivas Económicas 2010, a seminar organized by the Instituto Tecnológico Autónomo de México (ITAM).
The effects of the crisis in 2009 did not create structural problems in lending, he said, as shown by the system's improving non-performing loan ratio, which has dropped to close to 3% from a high of nearly 4%, and by its capitalization, which is about 16%.
By Business News Americas staff reporters
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In-deph interview
* BES follows Bradesco's bet on Brazil
Ricardo Espírito Santo
CEO
BES Investimento do Brasil
Brazil
http://www.bnamericas.com/interviews/banking/Ricardo_Espirito_Santo_,BES_Investimento_do_Brasil,/169679398
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Main companies covered in today's news
* Banco Central do Brasil
http://www.bnamericas.com/company-profile/en/Banco_Central_do_Brasil-BCB/169679398
* BNP Paribas
http://www.bnamericas.com/company-profile/en/BNP_Paribas-BNP_Paribas/169679398
* Banco de Chile S.A.
http://www.bnamericas.com/company-profile/en/Banco_de_Chile_S,A,-Banco_de_Chile/169679398
* Entel PCS Telecomunicaciones S.A.
http://www.bnamericas.com/company-profile/en/Entel_PCS_Telecomunicaciones_S,A,-Entel_PCS/169679398
* Tele Norte Leste Participações S.A.
http://www.bnamericas.com/company-profile/en/Tele_Norte_Leste_Participacoes_S,A,-Oi/169679398
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