Brazil Caixa aims for 35 pct loan growth this year, profits up

Tue Feb 19, 2013 11:43am EST

* State-owned Caixa says Q4 profits surge 15.6 pct

* Caixa to ramp up disbursements 35 pct this year

* Loan delinquencies could rise in coming quarters

By Aluísio Alves

SAO PAULO, Feb 19 (Reuters) - Caixa Econômica Federal, Brazil's largest mortgage lender, is targeting a 35 percent increase in loan disbursements this year, a sign that the state-controlled bank will keep slashing lending rates to boost market share.

The Brasilia-based lender earned 1.869 billion reais ($953 million) in the fourth quarter, about 15.6 percent more than the same period a year earlier, Chief Executive Officer Jorge Hereda said in a news conference. Caixa's loan book swelled 42 percent to 353.7 billion reais, propelled by a surge in credit to corporations.

Hereda, speaking in São Paulo, said that "defaults could increase a little as the share of commercial credit in our loan mix rises - that type of credit has higher delinquency levels." Caixa's loans in arrears for 90 days or more, an industry benchmark for defaults, rose to 2.1 percent at the end of December from 2 percent in September.

Provisions to cover bad loans rose 6.7 percent from the fourth quarter of 2011 and 8 percent from the third quarter of last year.

According to Chief Financial Officer Márcio Percival, Caixa's target for lending growth in 2013 will allow it to boost its market share to 18 percent from 15 percent currently.

The lender could sell five- or 10-year debt in international bond markets this year to help bolster its capital base and fund credit growth, Percival said. Any transaction could include the offering of subordinated debt - which ranks blow senior obligation in the order of repayment, he noted.

Return on equity, an industry gauge of profitability, fell 3.5 percentage points on an annual basis to 35.4 percent.

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