April 30, 2013 8:20 pm

Itaú Unibanco beats profit estimates

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Itaú Unibanco, Latin America’s biggest lender by market value, beat profit estimates in the first quarter after the bank reduced its exposure to bad loans and cut costs to protect itself from the sector’s recent downturn.

The São Paulo-based bank on Tuesday reported recurring net income, which excludes one-off charges, of R$3.51bn ($1.74bn), 0.3 per cent more than during the previous three months. Analysts polled by Reuters had forecast recurring net profit of R$3.45bn.

After reporting the highest banking profits in Brazil’s history in 2011, the country’s large banks have since suffered from government pressure to cut lending costs and a slowdown in borrowing among indebted consumers.

Overall, Itaú’s loan book expanded 9.2 per cent to R$456.2bn from a year earlier – below the bank’s forecast for credit growth this year of 11-14 per cent.

Although its first-quarter net profit rose from the previous quarter, it still represented a slight decrease from the R$3.54bn reported in the same three months of last year.

Roberto Setúbal, Itaú’s chief executive and descendant of the bank’s founding family, has responded to pressures in the sector with a more cautious approach to lending and measures to make the bank more cost-efficient.

Itaú cut bad-loan provisions by 12.1 per cent to R$4.42bn and forecast total provisions of between R$19bn and R$22bn this year. Loans at the bank overdue by more than 90 days reached 4.5 per cent of outstanding loans in the first quarter, down from 4.8 per cent in December and 5.1 per cent a year earlier, it said.

The bank reduced its operating expenses by 2.5 per cent in the quarter to R$8.28bn.

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