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Itau Falls to Three-Month Low on Drop in Banking Fees

Itau, led by Chief Executive Officer Roberto Setubal set aside 5.94 billion reais for bad loans in the quarter. That’s down from 5.99 billion reais in the three previous months, though it’s higher than the 4.97 billion reais in the year-
earlier period. Photographer: Paulo Fridman/Bloomberg
Itau, led by Chief Executive Officer Roberto Setubal set aside 5.94 billion reais for bad loans in the quarter. That’s down from 5.99 billion reais in the three previous months, though it’s higher than the 4.97 billion reais in the year- earlier period. Photographer: Paulo Fridman/Bloomberg

Oct. 23 (Bloomberg) -- Itau Unibanco Holding SA, Latin America’s largest bank by market value, posted a 13 percent drop in third-quarter profit, matching analysts’ estimates, as the Brazilian lender increased provisions for bad loans.

Recurring net income, which excludes one-time charges, declined to 3.41 billion reais ($1.69 billion) in the quarter, or 0.76 reais a share, from 3.94 billion reais, or 0.87 reais, a year earlier, the Sao Paulo-based bank said today in a filing. That compares with the 0.77 real-per-share median estimate of 10 analysts surveyed by Bloomberg.

Brazilian borrowers have been delaying debt payments because of the slowing economy, which has prompted the central bank to cut interest rates to a record low over the past year. Itau, led by Chief Executive Officer Roberto Setubal, 58, set aside 5.94 billion reais for bad loans in the quarter. That’s down from 5.99 billion reais in the three previous months, though it’s higher than the 4.97 billion reais in the year-earlier period.

The nation’s “lower interest rates, still-heated job market, relatively higher payment terms and controlled delinquency enable some ease in the deleverage of families’ indebtedness,” Flavio Yoshida and Andre Parize, analysts with Votorantim Corretora in Sao Paulo, wrote in a note to clients on Oct. 11.

The bank’s overall delinquency rate fell to 5.1 percent at the end of September from 5.2 percent in the second quarter. The rate was at 4.7 percent a year earlier.

Itau shares fell 0.5 percent yesterday in Sao Paulo, compared with a decline of 1.9 percent for Banco Bradesco SA, Latin America’s second-largest bank by market value.

Itau said it agreed to sell a 16.1 percent stake in Serasa, a Brazilian consumer credit-rating firm, for 1.7 billion reais to Experian Plc, according to another regulatory filing today. Last month, the lender paid 11.8 billion reais to buy out card-payment processor company Redecard SA.

To contact the reporter on this story: Francisco Marcelino in Sao Paulo at mdeoliveira@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net

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