SAO PAULO, Nov 10 (Reuters) – Latin America’s largest financial institution Itau Unibanco SA (ITUB4.SA) on Thursday posted a recurring internet revenue rise of 19%, outperforming different personal Brazilian lenders as a bigger mortgage e-book helped it offset mounting danger of debt delinquency.
Latin America’s largest financial institution reported a third-quarter recurring internet revenue of 8.08 billion reais ($1.51 billion), touchdown slightly below the 8.11 billion reais estimate of analysts polled by Refinitiv.
Analysts at XP Inc however hailed the constructive ends in a observe to purchasers, pointing to a much bigger mortgage portfolio and balanced danger administration, which allowed Itau to maintain its defaults in test.
Aggressive financial tightening from Brazil’s central financial institution has left the benchmark rate of interest at a six-year excessive, prompting friends Bradesco SA (BBDC4.SA) and Santander Brasil SA to hike provisions for patrons defaulting on loans. Each posted earnings down some 20%.
Itau hiked its provisions for unhealthy loans by almost 50% to eight.27 billion reais, although in contrast to its friends, it didn’t elevate its 2022 forecast for loan-loss provisions.
“It’s nonetheless unclear the explanation behind this divergence,” mentioned analysts at Citi, pointing to potential variations in underwriting and shopper profiles, “however Itau’s outcomes present far more confidence in its sustainability.”
Itau additionally reported a 90-day default ratio of two.8% on the finish of September, up from the earlier quarter’s 2.7%, albeit at a a lot slower tempo than its friends.
The dimensions of its mortgage e-book surged 15.5% year-on-year to succeed in 1.11 trillion reais, fueled by extra private loans.
The corporate additionally reported greater revenue from curiosity it earned on buyer debt. Its buyer internet curiosity revenue (NII) jumped 33% from a yr earlier to succeed in 23.38 billion reais.
Finance chief Alexsandro Broedel mentioned in a press release the quarterly outcomes mirrored “the power and consistency of our efficiency over time, within the varied strains of enterprise.”
Return on fairness, a gauge for profitability, edged up 0.2 proportion factors from the earlier quarter to 21%.
($1 = 5.3665 reais)
Reporting by Peter Frontini; Enhancing by Sarah Morland and Chris Reese
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