* Profit gains on higher revenue, expense controls
* Net income at Cetip jumps 78.6 pct, beats estimates
* BM&FBovespa profit up, but slightly misses forecast
* Expenses again become defining element in earnings
By Guillermo Parra-Bernal
SAO PAULO, May 10 (Reuters) - Expense cuts and stronger-than-expected revenue boosted first-quarter earnings at Brazilian financial companies BM&FBovespa and Cetip , signaling that local markets are gradually recovering from risk aversion in past months.
Trading volumes were strong at BM&FBovespa, the world’s third-largest exchange, on the back of robust demand for equities and derivatives.
For Cetip, rising revenue for custody and clearing and lower debt-servicing expenses offset poor registration of auto loan liens.
Cetip outperformed BM&FBovespa in terms of profit and revenue growth, beating analysts’ estimates thanks to expense controls -- which again became a defining element in earnings.
BM&FBovespa reported a slight miss in earnings, but strong trading volumes for the month of April might signal that revenue gains may be sustained throughout the year.
Cetip, Latin America’s largest securities clearinghouse, earned 71.434 million reais ($36.4 million) in profit in the quarter, up 78.6 percent from a year earlier, according to a securities filing on Thursday. This was above the average 66.9 million reais estimate in a Reuters poll of six analysts.
In the company’s traditional segment of registration and custody of fixed-income securities, revenue increased 20 percent from a year earlier, while sales of liens on auto loans at its financing unit fell a lower-than-expected 1.3 percent, the filing showed.
Revenue at the financing unit fell for a second straight quarter, after the number of car sales financed by loans dropped by 5.4 percent in the quarter. The decline in revenue at the unit, known as SNG, was offset by higher fees on the liens.
Operating expenses rose 0.9 percent on an annual basis, but fell 12.9 percent from the fourth quarter. Net financial income, or the difference between non-operating revenue and debt-servicing costs, posted a shortfall of 23.6 million reais compared with the poll’s forecast for 25 million reais.
Earnings before interest, tax, depreciation and amortization, a gauge of operational profitability known as EBITDA, gained 10.2 percent to 142 million reais from a year ago. On a sequential basis, EBITDA advanced 1.5 percent.
The result topped the poll’s prediction for EBITDA of 137.2 million reais.
The central bank’s decision to trim the overnight rate since August is helping Cetip cut borrowing costs.
Net income at São Paulo-based BM&FBovespa slightly missed analysts’ expectations on Thursday after a tumble in operating expenses. The São Paulo-based company earned 280.4 million reais during the quarter, up 3.6 percent from a year earlier.
The result came below the 282.9 million reais average estimate of nine analysts in a Reuters poll, mainly because the company’s effective tax rate rose significantly and financial expenses climbed.
Net revenue rose 6.5 percent to 502.8 million reais, slightly above the 500 million reais predicted in the poll. Earnings before interest, tax, depreciation and amortization - a measure of cash flow known as EBITDA - rose 20 percent to 368.3 million reais, topping the forecast of 337.1 million reais in the period.
Revenue per contract at the equities and derivatives segments rose, while cash-equity margins edged higher after the share of high-frequency trading fell slightly on a sequential basis.
Expenses fell 11.9 percent, driven by a tumble in payroll costs and outsourced services. Marketing spending plummeted 63 percent.
Management at both companies will discuss first-quarter results with investors at conference calls on Friday.