Brazilian lender Itau reaffirms 2022 guidance as Q1 net income jumps

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FILE PHOTO: Man is reflected in an Itau branch window in Rio de Janeiro

By Gabriel Araujo

SAO PAULO (Reuters) -Brazilian lender Itau Unibanco Holding SA reported on Monday that first-quarter recurring net income rose 15% on a year-on-year basis, driven by higher credit volume as its loan book accelerated, and it reaffirmed its full-year guidance.

Although analysts viewed the results as solid, Itau’s shares were down 2.7% at 23.15 reais in morning trading, while the broader Bovespa stock index fell 1.8%.

The country’s largest bank posted a quarterly recurring net income of 7.36 billion reais ($1.45 billion), in line with the 7.35 billion reais expected by analysts polled by Refinitiv.

Itau followed in the footsteps of its peer, Banco BTG Pactual SA, which posted record quarterly net income and revenue on Monday.

The bottom line growth for Itau came even as loan-loss provisions jumped by 57.8% to 6.998 billion reais, it said in a securities filing.

“Our first quarter results show the consistency and sustainability of our performance even in a challenging scenario,” Itau Chief Financial Officer Alexsandro Broedel said.

He added that Itau had all the conditions needed to keep an “extremely robust balance sheet” in 2022.

Analysts at BTG Pactual said it was a “clean quarter” for Itau and that the results do not change their view for the year, with Itau and Banco do Brasil being their top picks among large-cap Brazilian banks.

Guide Investimentos analysts said that Itau’s results were solid overall, but noted that some key indicators such as the default ratio worsened amid a deteriorating macroeconomic scenario.

Itau’s return on equity, a gauge of profitability, was at 20.4% in the quarter – roughly flat from the 20.2% seen in the previous three months.

The bank’s loan book rose 13.9% on a year-on-year basis to 1.03 trillion reais, boosted by secured personal loans such as real estate-related ones and credit cards, which grew about 40% each.

The lender expects its loan book to grow between 9% and 12% in 2022, while the financial margin with clients is seen between 20.5% and 23.5%. Cost of credit was estimated at 25 billion to 29 billion reais.

($1 = 5.0776 reais)

(Reporting by Gabriel Araujo, Editing by Louise Heavens, Toby Chopra, Emelia Sithole-Matarise and Paul Simao)