(Adds net revenue, comments from chief financial officer)
By Guillermo Parra-Bernal and Aluísio Alves
SAO PAULO, Aug 6 (Reuters) - Net income at Cetip SA Mercados Organizados, Latin America’s largest securities clearinghouse, came in line with expectations in the second quarter as financial income reported a surplus for the first time in five years.
São Paulo-based Cetip earned 118.7 million reais ($33.5 million) in profit last quarter, compared with 119 million reais estimated in a Reuters poll of five analysts. Profit slid 1.7 percent on a quarterly basis and rose 19.1 percent from a year earlier, Cetip said in a statement late on Thursday.
The results underscore Cetip’s resilient business model, with revenues from registration and custody of financial securities withstanding the impact of Brazil’s steepest downturn in 25 years. Cetip remained exposed to a dramatic decline in credit demand and to changes in terms for contract registration that weighed on revenue at the loan liens unit.
Net revenue totaled 287 million reais, slightly above the poll’s estimate of 286 million reais. Sales, general and administrative expenses jumped to 122 million reais, compared with the poll’s 116 million estimate because of the contractual changes in car financing registrations.
Revenue trends may remain the same for the coming quarters, Chief Financial Officer Willy Jordan said in an interview. Increasing borrowing costs in Brazil are helping boost the stock of outstanding fixed-income securities, bolstering double-digit growth in registration and custody income.
“We are trying to take advantage of the current market turmoil while mitigating the impact of a poor credit market on our business,” Jordan said.
Last quarter, financial income surpassed debt-servicing and other non-operational expenses for the first time in at least five years, in a surprising contribution to profits. Chief Executive Officer Gilson Finkelsztain’s steps to cut debt and gains in derivatives contracts to protect Cetip’s external debt led to financial income of 15 million reais, compared with the poll’s expected shortfall of 6 million reais.
Earnings before interest, tax, depreciation, amortization and stock options, a gauge of operational profits known as adjusted EBITDA, were 191 million reais last quarter, above the poll’s estimate of 187 million reais.
Management plans to discuss second-quarter results on a call with analysts on Friday.
$1 = 3.5495 Brazilian reais Editing by Bernard Orr and Lisa Shumaker