Bloomberg News

Itau Earnings Matches Estimates as Banking Fees Increase

July 24, 2012

Itau Unibanco Holding SA (ITUB4), Latin America’s biggest bank by market value, said second-quarter profit rose 8.1 percent, matching analysts’ estimates as fee revenue increased.

Recurring net income, which excludes one-time charges, advanced to 3.56 billion reais ($1.74 billion), or 79 centavos a share, from 3.32 billion reais, or 73 centavos, a year earlier, the Sao Paulo-based bank said today in a regulatory filing. That compares with an average estimate of 79 centavos in a Bloomberg survey of seven analysts.

Itau, led by Chief Executive Officer Roberto Setubal, 57, increased banking fees 8.7 percent to 5.08 billion reais in the second quarter, offsetting slower credit growth. The lender’s portfolio of loans reached 413.4 billion reais, up 15 percent from a year earlier. That compares with a 16 percent expansion in the first quarter and 19 percent in the fourth quarter on an annual basis.

Itau, which fell 14 percent this year through yesterday in Sao Paulo trading, gained 2.7 percent to 30 reais at 10:06 a.m. Banco Bradesco SA (BBDC4), Latin America’s second-biggest bank by market value, advanced 0.6 percent to $29.25.

Provisions rose 17 percent to 5.99 billion reais at the end of June from 5.11 billion reais a year earlier, and declined 0.7 percent from the previous three months, according to the statement.

Default Rate

Itau’s average default rate for payments at least 90 days overdue climbed to 5.2 percent at the end of June from 5.1 percent in March and 4.5 percent a year earlier, according to the statement. Total assets reached 888.8 billion reais in the second quarter, down 0.9 percent from the previous quarter and up 12 percent from a year earlier, the company said.

The lender expects provisions will range between 6 billion reais and 6.5 billion reais in the third quarter and 5.7 billion reais to 6.2 billion in the last three months of this year, according to the statement.

Itau said its portfolio of loans excluding car loans will expand 13 percent to 15 percent in 2012. Auto loans will fall to between 50 billion reais and 52 billion reais this year, according to the statement. In February, the lender said it expected credit growth including auto loans of 14 percent to 17 percent in 2012.

The bank reduced its workforce to 99,017 employees in the second quarter from 107,546 a year earlier as it sold its credit-and debit-card processing unit Orbitall and restructured the consumer-loan business, according to the statement.

Itau is offering as much as 11.8 billion reais to buy out the minority shareholders of Redecard SA (RDCD3), Brazil’s second- biggest card-payment processor.

To contact the reporter on this story: Francisco Marcelino in Sao Paulo at

To contact the editor responsible for this story: David Scheer at

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