Nov. 13 (Bloomberg) -- Banco do Brasil SA, Latin America's largest bank, said third-quarter profit rose 50 percent as consumers, farmers and companies borrowed more, taking advantage of record low interest rates and high crop prices.

Net income rose to 1.36 billion reais ($761 million), or 55 centavos a share, from 907 million reais, or 37 centavos, a year earlier, the Brasilia-based bank said today in a statement.

Government-controlled Banco do Brasil expanded lending as the monetary policy makers slashed the benchmark interest rate almost in half over two years to 11.25 percent in September. The bank is the biggest lender to farmers, who are benefiting from increased demand for sugar cane, used to make ethanol.

``Banco do Brasil has the best position to capture all the activity generated by such a positive environment in the agribusiness,'' said Regis Abreu, who helps manage 1.9 billion reais in assets at Mercatto Gestao de Recursos in Rio de Janeiro. ``It's the bank that has a long-time relationship with farmers who are making a lot of money now.''

Banco do Brasil recorded one-time losses of 218 million reais in the third quarter, including costs related to an early retirement program designed to cut staff costs. It also included non-recurring costs with the bank's employee health plan. Excluding the one-time events, recurring net income rose to 1.58 billion reais from 832 million reais a year earlier.

The bank gained 40 centavos, or 1.4 percent, to 28.50 reais at the Sao Paulo stock Exchange.

Auto, Farm Lending

The bank's credit portfolio grew 27 percent in the quarter from a year earlier to 150.2 billion reais. Credit to individuals expanded by 27 percent on payroll-deductible and vehicle loans. Corporate lending rose 34 percent, while agribusiness grew 20 percent. The default rate, defined as payments overdue by more than 60 days, fell to 3.4 percent in September from 3.8 percent a year earlier.

``Banco do Brasil has a gigantic potential in terms of credit growth and today's results just reinforces the positive outlook for the bank,'' said Carlos Macedo, an analyst at Uniao de Bancos Brasileiros SA, who has a ``buy'' rating to the shares.

Banking service fees totaled 2.5 billion reais, an 11 percent increase from a year earlier. Total assets expanded 22 percent to 342.4 billion reais. Banco do Brasil had a recurring annualized return on equity, a measure of profitability, of 31 percent, compared with 18 percent a year earlier.

Acquisitions in Piaui

Banco do Brazil, the National Treasury and Pique state government today signed an agreement in Brasilia that progresses Banco do Brasil's takeover of Banco do Estado do Piaui SA, a bank controlled by the Northeast state government of Piaui.

Banco do Brasil also agreed to process the financial transactions of Piaui state for 60 months, paying about 180 million reais for the contract.

Thirteen of the 19 analysts who cover Banco do Brasil have a ``buy'' recommendation on the stock, while six have a ``hold'' rating, according to data compiled by Bloomberg.

To contact the reporter on this story: Telma Marotto in Sao Paulo at Tmarotto1@bloomberg.net.

Last Updated: November 13, 2007 16:08 EST