Brazil’s Itau Unibanco beats earnings expectations, raises loan forecast


A man is reflected in an Itau branch window in Rio de Janeiro, Brazil April 29, 2019. REUTERS/Sergio Moraes

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SAO PAULO, Aug 8 (Reuters) – Itau Unibanco (ITUB4.SA) beat its profit expectations on Monday and significantly raised its loan growth forecast for this year, while increasing provisioning for bad loans, reflecting the rise in Brazilian interest rates.

Brazil’s biggest lender said second-quarter recurring net profit rose 17.4% year-on-year to 7.67 billion reais ($1.50 billion), beating expectations analysts of 7.48 billion reais, as compiled by Refinitiv.

The bank also said its loan portfolio is expected to grow between 15.5% and 17.5% this year, above a previous estimate of 9% to 12%.

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Its cost of credit for 2022, which is mostly made up of cash set aside for loans likely to default, is now between 28 and 31 billion reais, compared to a previous forecast of between 25 and 29 billion reais.

In the three months ending June 30, Itau’s loan loss provisions reached 7.81 billion reais, up 61.7% from a year ago, while its loan portfolio increased by 19.3% on an annual basis to reach 1.08 trillion reais.

The growth in cash set aside for bad debts is in line with the trend seen among its peers, such as Bradesco SA (BBDC4.SA) and Santander Brasil SA, reflecting the economic environment of higher interest rates and d ‘inflation. Read more

Credit volume expansion was the main driver of growth in customers’ net interest income (NII), Itau said, which amounted to 21.98 billion reais, or 30.9 percent of more than the previous year.

The strong performance prompted the lender to raise its 2022 growth projection for client NII to between 25% and 27%, from 20.5% to 23.5%.

At the end of June, its 90-day default rate was 2.7%, up slightly from the previous quarter.

Itau’s return on equity, an indicator of profitability, was 20.8% in the quarter, above the 20.4% seen in the previous three months.

($1 = 5.1110 reais)

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Reporting by Peter Frontini in Sao Paulo Editing by David Alire Garcia, Christian Plumb and Matthew Lewis

Our standards: The Thomson Reuters Trust Principles.


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