* Recurring profit falls less than expected in 3rd-qtr

* Credit portfolio surges 41.1 pct, led by consumer, autos

* Assets rise 50 pct to 685.68 bln reais with Votorantim

SAO PAULO, Nov 12 (Reuters) - Banco do Brasil, Latin America's largest bank by assets, posted a smaller-than-expected decline in third-quarter profit as its credit portfolio surged.

Net income fell to 1.98 billion reais ($1.15 billion) from 1.87 billion reais a year earlier, the bank said in a securities filing.

Recurring profit, which excluded one-off items such as the sale of a stake in credit card operator VisaNet (VNET3.SA: Quote, Profile, Research), dropped to 1.76 billion reais from 2.04 billion reais in the third-quarter of 2008.

State-controlled Banco do Brasil (BBAS3.SA: Quote, Profile, Research) was expected to report a third-quarter recurring profit of 1.68 billion reais, according to the average estimate of 10 analysts in a Reuters survey.

Like other public banks Caixa Economica Federal and state development bank BNDES, Banco do Brasil has expanded its loan book faster than private-sector banks as the government sought to speed up lending to lift Brazil's economy out of recession.