Itau sees loan portfolio slowing in 2022 and provisions rising

A man is reflected in an Itau branch window in Rio de Janeiro, Brazil April 29, 2019. REUTERS/Sergio Moraes

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SAO PAULO, Feb 10 (Reuters) – Brazil’s biggest private sector lender, Itau Unibanco Holding SA (ITUB4.SA), said on Thursday that 2022 is likely to be a year of weaker loan portfolio growth and higher provisions for loan losses, in a difficult economic environment in Brazil. prospects.

The bank, however, indicated that it would probably maintain its return on equity, a guarantee of profitability, around 20%.

Its loan portfolio is expected to grow between 9% and 12%, below its expansion last year, the bank said. Nevertheless, its net interest income with customers should grow at a faster rate, between 20.5% and 23.5%.

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As consumers and businesses feel the burden of weak or no economic growth this year, loan loss provisions are expected to reach 9 billion reais compared to last year. The cash set aside for bad debt should be between 25 billion and 29 billion reais, the bank said.

Itau also sees Brazilian inflation pushing up its operating costs, which are expected to rise between 3.5% and 6.5%. Last year, the lender managed to rein in double-digit inflation, with spending rising just 2%.

Despite fiercer competition between banks and fintechs, Itau expects its commission income to grow between 3.5% and 6.5%.

“Our outlook for 2022 takes into account our continued recovery

path and the good results achieved in 2021,” chief executive Milton Maluhy said in a statement.

QUARTERLY PERFORMANCE

Itau posted a stronger-than-expected fourth-quarter profit on Thursday, driven mainly by strong gains in consumer loans and its insurance unit.

Recurring net profit, which excludes one-time items, rose 32.9% year-on-year to 7.159 billion reais ($1.36 billion), above a consensus estimate of 6.828 billion reais compiled by Refinitiv.

The bank’s 90-day default ratio was roughly in line with the third quarter, at 2.5%.

Its net interest income increased by 20.6% compared to the previous year, to 21.2 billion reais.

($1 = 5.2496 reais)

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Reporting by Carolina Mandl Editing by Chris Reese and Lincoln Feast.

Our standards: The Thomson Reuters Trust Principles.

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