Adjusted net income, which excludes extraordinary events, fell to 3.03 billion reais ($1.77 billion) from 3.7 billion reais a year earlier, the Brasilia-based lender said in a regulatory filing today. That beat the average estimate of 2.6 billion reais in a Bloomberg survey of 11 analysts.
Loans grew 20 percent, faster than the industry average, while net interest margin improved because of increased funding from demand deposits, according to a report by Itau BBA Securities today. Banco do Brasil rose 3.2 percent to 27.22 reais at 2:31 p.m. in Sao Paulo, the most since Jan. 18.
“Results improved significantly, confirming our view that the weak third quarter was transitory,” Mario Pierry, an analyst at Deutsche Bank AG in Sao Paulo, wrote in a note to clients.
Rising income from lending helped offset a loss in the Banco Votorantim unit, which mainly handles auto loans. The unit had a loss of 656 million reais in the fourth quarter, compared with net income of 272 million reais in the same period of 2010. Votorantim’s average delinquency rate, defined as a delay in payment of at least 90 days, rose to 5.8 percent in December, up from 4.3 percent in September and 1.6 percent a year earlier.
Chief Executive Officer Aldemir Bendine said he expects Banco do Brasil’s default rate to remain stable in 2012, after ending December at 2.1 percent. Votorantim’s delinquencies will decline this year after the central bank eased restrictions on consumer credit in November and started cutting interest rates in August, Bendine told reporters in Sao Paulo today.
Chief Financial Officer Ivan Monteiro said that Banco do Brasil’s local loan portfolio will expand 17 percent to 21 percent this year. Domestic loans reached 423 billion reais at the end of December, according to the regulatory filing.
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