Mexican retail and banking firm Grupo Elektra SAB (ELEKTRA.MX) said Wednesday its net profit turned negative during the first quarter due to losses on financial instruments that had generated extraordinary gains for the company in recent quarters.

Elektra reported a quarterly net loss of 3.83 billion pesos ($291 million) compared with a net profit of MXN622 million in the year-ago quarter and a MXN11.07 billion net gain in the fourth quarter. Thinly traded Elektra shares recently moved 2% higher on the Mexican Stock Exchange, to MXN1,240, outpacing the broader IPC index's 0.6% advance.

The first-quarter earnings loss stemmed from a MXN7.08 billion decrease in non-cash financial income as a result of a shift in the value of financial instruments in the company's possession. That was offset by a MXN1.80 billion decrease in tax provisions.

Elektra sells items such as kitchen appliances on credit, while also offering banking services. In addition to Mexico, the company operates in Argentina, Brazil, El Salvador, Guatemala, Honduras, Panama and Peru.

Earnings before interest, taxes, depreciation and amortization, or Ebitda, were 54% higher compared with the first three months of 2011, at MXN3.31 billion, for an Ebitda margin of 22% versus 19% a year-earlier. Revenue rose 35% to MXN15.11 billion.

Elektra said explosive growth of its banking operations drove its increase in consolidated revenue, as an expansion in lending pushed that division's revenue up 67% on the year while the retail division's revenue grew by a far more modest 4%. The Mexican banking unit's revenue accounted for MXN7.65 billion of the firm's quarterly revenue.

The company said its banking units' credit portfolio expanded 49% versus the year-ago quarter to MXN49.42 billion, with 5.2% of those loans past-due. Deposits grew 9% to MXN55.29 billion.

Elektra said its total quarterly expenses rose to MXN6.83 billion from MXN4.86 billion a year-earlier, largely due to higher interest payments on customer deposits and bigger loan-loss provisions.

Elektra had 2,989 points of sale in operation as of end-March, 678 more than a year ago, with most of the expansion for stores dedicated to financial services. Of its total outlets, 2,457 were in Mexico and the rest in other parts of Latin America.

The company announced in February that it plans to buy South Carolina lender Advance America Cash Advance Centers Inc. (AEA) for $780 million. The deal marks Elektra's first major foray into the U.S. financial services market.

-By Amy Guthrie, Dow Jones Newswires; (5255) 5980-5177; amy.guthrie@dowjones.com

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