(Adds CEO comments, financial details, company background, share price)
By Carolina Mandl
SAO PAULO, Oct 30 (Reuters) - Brazil’s largest private lender, Itaú Unibanco Holding SA, may pursue loans with a higher risk of defaults in the near future as a way to accelerate loan-book growth, Chief Executive Candido Bracher said on Tuesday.
Bracher told analysts on a conference call that a proposal to increase loan-risk appetite will be submitted to the bank’s board, without specifying when it could be implemented.
Itaú’s move toward riskier loans would address the concerns of some analysts, who believe that remaining too cautious has hindered lending.
In the wake of the country’s deepest recession in decades, Brazilian banks have become more selective when lending money, hoping to avoid losses.
Itaú’s total loan book went up 10.6 percent in the year up to September. When adjusted for a weaker currency, however, it increased only 3.4 percent. The bank targets loan-book growth between 4 and 7 percent in 2018.
“Overall, Itaú continues to struggle to grow revenues,” said Brasil Plural analyst Eduardo Nishio in a note to clients, referring to net interest and fee incomes.
Still, Bracher said the bank should meet its goal for loan-book growth, mainly due to higher lending to individuals.
Itaú on Monday reported recurring net income of 6.454 billion reais ($1.74 billion), 3.2 percent higher than a year earlier, but almost 2 percent below a Refinitiv consensus of 6.585 billion reais.
Preferred shares of Itaú were up 2.5 percent at 49.46 reais on Tuesday morning, roughly in line with the Sao Paulo stock index Bovespa.
Bracher told analysts that non-interest expenses should continue growing below inflation, although the bank will keep hiring people for its insurance brokerage and credit card acquiring businesses.
Itaú’s number of employees increased by 842 in the quarter, reaching 100,756 workers.
Non-interest expenses came in at 12.646 billion reais in the third quarter, 7 percent higher than the same period a year earlier. Excluding the acquisition of the Brazilian retail banking assets of Citigroup Inc, however, expenses are 0.9 percent higher in the first nine months of the year on an annual basis. ($1 = 3.7041 reais) (Reporting by Carolina Mandl in Sao Paulo Additional reporting by Paula Laier in Sao Paulo Editing by Chizu Nomiyama and Matthew Lewis)