February 10, 2020 / 11:02 PM / 6 months ago

UPDATE 1-Brazil's Itau Unibanco posts higher profit on consumer lending, fees

(Adds profitability, loan book growth, bank’s comments)

By Carolina Mandl

SAO PAULO, Feb 10 (Reuters) - Brazil’s largest lender, Itau Unibanco Holding SA, reported profit on Monday that met analysts’ estimate, mainly on consumer credit growth and fees from investment banking and fund management.

Recurring net income, which excludes one-time items, came in at 7.296 billion reais ($1.69 billion) in the fourth quarter, up 12.6% from a year earlier and in line with a Refinitiv analysts’ consensus estimate of 7.242 billion reais.

Still, the bank’s return on equity, a closely watched measure of profitability, came in at 23.7, above analysts’ expectation of 22.4%.

Although its loan book growth accelerated in the quarter to 2.6%, boosted by consumer lending, the bank posted higher losses on corporate loans, mainly in its Chilean and Colombian units.

Loan-loss provisions rose 70.1% from a year earlier, to 5.811 billion reais.

Itau also increased provisions after posting extraordinary tax gains, following similar moves by rivals Banco Bradesco SA and Banco Santander Brasil SA.

Fee income and insurance gains rose 11.9% from a year earlier, as fee management, investment banking and card issuance offset fiercer competition in the payments business from newcomers such as PagSeguro Digital Ltd and StoneCo Ltd .

The bank also benefited from finance sector upheaval, posting an extraordinary gain of nearly 2 billion reais after Brazil’s largest digital broker, XP Inc, in which Itau holds a minority stake, listed its shares on Nasdaq in December.

Itau also said its loan book is likely to grow between 8.5% and 11.5% this year, roughly in line with its 2019 growth of 10.9%.

At the same time, it sees loan-loss expenses increasing to up to 22 billion reais, from 18 billion reais last year.

Chief Executive Officer Candido Bracher will discuss the bank’s results in conference calls with reporters and analysts on Tuesday morning. ($1 = 4.3248 reais) (Reporting by Carolina Mandl; Editing by Leslie Adler and Dan Grebler)

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