| SAO PAULO, March 28
SAO PAULO, March 28 State-controlled Caixa
Econômica Federal, Brazil's largest mortgage lender, posted a
sharp jump in fourth-quarter profit on Tuesday, reflecting
declining loan-loss provisions in light of a drop in
Brasilia-based Caixa posted recurring net income of
2.449 billion reais ($783.40 million) last quarter, up
three-fold from the prior three months and the highest in at
least a year. In the same period a year earlier, Caixa had
posted a net loss before one-off items of 322 million reais.
In a statement, Caixa cited a robust increase in fee income
- or revenue from financial services - and a drop in provisions
triggered by a sharp decline of 0.6 percentage points in the
90-day default ratio to 2.9 percent. Provisions, or capital that
banks set aside to cover bad loans, fell 3.3 percent to 4.937
billion reais last quarter.
Management plans to discuss results at an event in São Paulo
later in the day.
Since taking over in the middle of last year, Chief
Executive Officer Gilberto Occhi has focused on fine-tuning
Caixa's credit risk assessment models to drive down a surge in
defaults and in bad loans, which last year touched all-time
highs in some segments. Until last year, delinquencies at Caixa
came in well below the average of Brazil's banking industry,
since more than 60 percent of its loan book is earmarked for
secured, collateralized mortgage lending.
Interest income fell 1 percent from the third quarter, while
fee income climbed 5.5 percent in the same period, the statement
said. Non-interest expenses, which are comprised of payroll and
administrative expenses, rose to 8.803 billion reais in the
quarter, while Caixa's loan book rose 4.4 percent last year to
709.289 billion reais.
($1 = 3.1261 reais)
(Reporting by Guillermo Parra-Bernal; Editing by Chizu