WRAPUP 1-Brazil's Cetip meets estimates on expenses; BM&FBovespa misses

Thu Nov 7, 2013 4:55pm EST

SAO PAULO Nov 7 (Reuters) - Third-quarter earnings at Brazilian exchange and clearinghouse companies came in mixed on Thursday, as expense controls failed to offset the impact of declines in trading volumes and weak revenue from registration of securities and other financial services.

BM&FBovespa SA, Brazil's sole listed bourse, missed analysts' estimates for third-quarter profit, as volume in equities and derivatives trading suffered from feeble activity between July and September. For Cetip SA Mercados Organizados, lower expenses helped profit come in line with analysts' estimates even as revenue expansion faltered.

As widely expected in a Thomson Reuters poll, earnings in the so-called market structure industry reflected various reductions in activity related to market participants that are uncertain about macroeconomic conditions in Brazil and abroad. Management of both companies will discuss results with investors in a series of conference calls scheduled for Friday.

Net income at Cetip, Latin America's largest securities clearinghouse, totaled 93.46 million reais ($41 million) in the third quarter, largely in line with a profit estimate of 94 million reais in a Thomson Reuters poll. Profit rose 2.5 percent and 48.2 percent on a quarter-on-quarter and year-on-year basis, respectively.

BM&FBovespa earned 281.9 million reais in net income, below the 291 million reais net income estimate in the same poll. Profit tumbled 19.7 percent from the prior quarter but rose 1.9 percent on an annual basis.

Overall, slower economic growth this year has weighed on equity and derivatives trading volumes, fixed-income registration and auto lien sales. The market momentum may extend into this quarter, as a policy by private-sector banks to limit exposure to certain lending segments and rein in trading-related risks may continue.

"This process of financial deleveraging across the banking system is definitely having an impact on revenue growth," Francisco Carlos Gomes, chief financial officer at Cetip, said in a telephone phone interview after the results.

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