BM&FBovespa Profit Rises 19% on Derivatives Trading

By Camila Russo and Felipe Frisch

BM&FBovespa SA, the operator of Latin America’s biggest securities exchange, said fourth-quarter profit rose 19 percent after derivatives trading increased.

Net income excluding minority interests climbed to 261.5 million reais ($156.6 million), from 220.2 million reais a year earlier, the Sao Paulo-based company said in a regulatory filing yesterday. Adjusted net income was 368 million reais, while net revenue climbed 11 percent to 470.1 million reais.

Trading of derivatives contracts on BM&F exchanges increased as investors stepped up purchases and sales of interest-rate futures to bet on the path of borrowing costs. Equity volumes reflect a “slow recovery from the overhang” stemming from Petroleo Brasileiro SA’s $70 billion stock offering in September, according to Banco BTG Pactual SA.

The fourth-quarter results were “a little lower than our estimates,” said Daniel Malheiros, an analyst at Spinelli Corretora brokerage in Sao Paulo. “It’s not going to be a driver for the stock. The most important thing to look at is that they will have increased competition, so the margins should decrease in the long term.”

Spinelli Corretora has a share target price of 14.17 reais for December 2011 and a neutral recommendation on BM&FBovespa. The shares rose 0.3 percent to 11.94 reais in Sao Paulo trading at 10:40 a.m. New York time. Shares have fallen 9.1 percent this year, exceeding a 1.8 percent drop for the benchmark Bovespa index.

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