BM&FBovespa Quarterly Profit Misses Forecasts on Low Trading

BM&FBovespa SA (BVMF3), the operator of Latin America’s biggest securities exchange, said fourth-quarter profit fell short of forecasts on higher expenses combined with a drop in trading volumes.

Net income fell 27 percent to 191 million reais ($110 million), down from 261.5 million reais a year earlier, Sao Paulo-based BM&FBovespa said in a regulatory filing yesterday. Adjusted net income was 352.7 million reais, below the average estimate of 377.3 million reais from nine analysts surveyed by Bloomberg.

The exchange’s expenses increased 55 percent to 291.6 million reais. Revenue was 471.2 million reais in the fourth quarter, compared with 473.3 million reais in the same period a year before, according to the statement.

Bovespa’s average daily trade volume fell 5.5 percent in the quarter compared with the same period last year, while BM&F’s average daily contract value fell 6.1 percent, according to the statement.

The exchange’s operating figures were “uninspiring” as both cash equity and derivative volumes shrank, Itau Corretora de Valores’ analysts including Regina Longo Sanchez wrote in a note to clients before the earnings were released yesterday.

Brazil scrapped a tax on foreigners’ equity purchases in December, two years after it was implemented, to boost investment in the country’s financial markets.

“The removal of the IOF tax in December was insufficient to compensate for the lower volatility in the quarter and the continuation of low market capitalization,” Bradesco Corretora’s analysts including Carlos Firetti wrote in a note to clients before earnings were released.

The shares rose 1.2 percent yesterday to 12.31 reais in Sao Paulo trading. They have risen 26 percent this year.

To contact the reporter on this story: Ney Hayashi in Sao Paulo at ncruz4@bloomberg.net Fabiola Moura in New York at fdemoura@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos in New York at papadopoulous@bloomberg.net

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