Banco Hipotecario SA :BHPTY-US: Earnings Analysis: Q2, 2017 By the Numbers : September 8, 2017

Banco Hipotecario SA reports financial results for the quarter ended June 30, 2017.

We analyze the earnings along side the following peers of Banco Hipotecario SA – First Bancorp and Opus Bank (FBP-US and OPB-US) that have also reported for this period.


  • Summary numbers: Revenues of USD 174.33 million, Net Earnings of USD 23.20 million.
  • Net interest income margins narrowed from 48.04% to 44.87% compared to the same period last year.
  • Year-on-year change in operating cash flow of 67.43% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings growth from operating margin improvements as well as from one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income (See complete table at the end of this report):

2017-06-30 2017-03-31 2016-12-31 2016-09-30 2016-06-30
Relevant Numbers (Quarterly)
Revenues (mil) 174.33 177.35 160.31 144.04 145.85
Revenue Growth (%YOY) 19.53 26.59 -34.4 -27.44 -19.79
Earnings (mil) 23.2 16.22 8.73 6.88 10.07
Earnings Growth (%YOY) 130.31 3.1 -82.45 -70.6 -46.57
Net Margin (%) 13.31 9.14 5.45 4.77 6.91
EPS 0.16 0.11 0.06 0.05 0.07
Return on Equity (%) 5.46 3.95 2.21 1.73 2.54
Return on Assets (%) 2.66 1.87 1.11 0.96 1.44

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Market Share Versus Profits

Revenues History
Earnings History

BHPTY-US‘s change in revenue this period compared to the same period last year of 19.53% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that BHPTY-US is holding onto its market share. Also, for comparison purposes, revenues changed by -1.70% and earnings by 43.05% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

BHPTY-US‘s earnings rose year-on-year. But this growth has not come as a result of improvement in net interest income margins or any loan loss improvement activities in its operations. Net interest income margins were 44.87% compared to 37.72% in the immediate last period. Net interest income after provisions margins were 39.59% this period compared to 33.65% in the previous period. In addition, loan loss provisions as a percentage of net interest income were 11.76% this period and 0.92% a year ago.

Net Interest Income Margin Versus Loan Loss Provisions Margin

Quadrant label definitions. Hover to know more

High Risk; High Reward Loans, Risky Loan Portfolio, Conservative Loan Portfolio, Safer Loan Portfolio
Net Interest Income Margin History
Loan Loss Provisions Margin History

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

BHPTY-US‘s change in operating cash flow of 67.43% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings


The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating margins from 17.75% to 21.23% and (2) one-time items. The company’s pretax margins are now 19.95%, compared to 13.57% for the same period last year.

EBIT Margin History
PreTax Margin History
EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables

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Company Profile

Banco Hipotecario SA engages in the provision of personal and corporate loans, deposits, credit and debit cards, and additional financial services. It is also involves in offering insurance related services. The company is headquartered in Buenos Aires, Argentina.

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