Banco do Brasil Q3 net jumps 37 pct on loan surge

* Net income jumps 37 pct as loans surge

* Credit portfolio grows 35 pct led by consumer credit

* Total assets rise to 444.7 bln reais ($196.5 bln)

SAO PAULO, Nov 13 (Reuters) - Latin America's largest bank by assets, state-run Banco do Brasil (BBAS3.SA), said on Thursday its third-quarter profits surged 37 percent because of a lending boom to farmers, retail consumers and businesses.

Net income rose to 1.87 billion reais ($826.3 million) from 1.36 billion reais in the third-quarter of 2007, the bank said in a securities filing.

Return on equity, a key gauge of profitability, averaged 30.5 percent in the third quarter, up sharply from 27.9 percent in the previous quarter and 26.3 percent a year earlier, as it kept default rates under control despite the surge in lending.

Banco do Brasil's credit portfolio soared 34.6 percent to 202.2 billion reais, led by a 45.4 percent increase in consumer lending and 42.7 percent gain loans to companies.

The bank finished the quarter with 444.7 billion reais in total assets, compared with 351.7 billion reais a year ago and 403.5 billion reais in the second quarter.

Banco do Brasil is in talks to buy Banco Nossa Caixa SA (BNCA3.SA), which is controlled by the Sao Paulo state government. It has also snapped up 1.5 billion reais in credit portfolios from smaller banks as it seeks to increase its presence in automobile lending and other types of consumer credit.

Analysts have said Banco do Brasil may step up acquisitions after Brazil's No. 2 private sector bank, Itau (ITAU4.SA)ITU.N agreed to take over smaller rival Unibanco UBBR11.SAUBB.N. The combined bank, Itau Unibanco Holding, would leap ahead of Banco do Brasil with 575.1 billion reais in total assets.

($1=2.263 Brazilian reais)

(Reporting by Elzio Barreto; Editing by Sharon Lindores)