Banco do Brasil SA, the Brazilian lender whose insurance unit held the world’s largest initial public offering this year, said first-quarter lending expanded faster than the company’s forecast, led by corporate loans.
Credit grew 26 percent to 592.7 billion reais ($293.9 billion) in the first quarter, compared with the Brasilia-based bank’s forecast of 16 percent to 20 percent this year, the company said today in a regulatory filing. Corporate loans at Banco do Brasil, led by Chief Executive Officer Aldemir Bendine, 49, increased 33 percent from a year earlier.
Banco do Brasil and the nation’s other federally controlled lenders, Caixa Economica Federal and development bank BNDES, were pushed by President Dilma Rousseff to increase credit as the Brazilian economy slowed. Itau Unibanco Holding SA boosted lending 9.2 percent and Banco Bradesco SA’s increased 12 percent. The companies are the nation’s two largest privately owned banks.
“The quarter reflected strong loan growth, improving asset quality, but weak revenue generation,” especially in light of pressure on the company’s lending margins, Deutsche Bank AG analysts including Mario Pierry wrote in a note to clients today.
The net interest margin, the difference between what the bank pays depositors and what’s earned on loans, dropped to 4.5 percent in the first quarter, from 5.3 percent a year earlier, according to the statement.
Banco do Brasil fell 2.3 percent to 24.68 reais in Sao Paulo, compared with a gain of 2.2 percent for BB Seguridade Participacoes SA insurance unit. The division advanced 8.2 percent from the 17-real IPO price. The offering produced a gross gain of 8.37 billion reais and “the funds raised were fully reverted to Banco do Brasil,” the bank said in the earnings statement.
Adjusted net income, which excludes one-time charges, declined to 2.69 billion reais, or 91 centavos a share, from 2.7 billion reais, or 89 centavos, a year earlier, according to the statement. The results compare with the average estimate of 2.72 billion reais in a Bloomberg survey of four analysts.
Total assets climbed 17 percent to 1.18 trillion reais. The rate of debt payments overdue more than 90 days was 2 percent, down from 2.2 percent a year earlier and 2.05 percent in the three previous months.
Banco do Brasil reduced provisions for bad loans to 3.28 billion reais from 3.64 billion reais in the fourth quarter and 3.58 billion reais a year earlier.
Banco Votorantim, the auto-loan company in which Banco do Brasil has about a 50 percent stake, posted a loss of 278.1 million reais, after losses of 358 million reais in the fourth quarter and 596 million reais a year earlier, the company said on its website. Last month, Bendine said Banco do Brasil is close to an accord to increase its stake in Votorantim.
“It’s almost sure” that Votorantim will break even in the fourth quarter, Banco do Brasil Chief Financial Officer Ivan de Souza Monteiro told reporters in Sao Paulo today. He said the unit will post lower losses in the second quarter.