Itau net slips, but loan portfolio still surging
By Todd Benson
SAO PAULO (Reuters) - Brazilian financial group Itau said second-quarter net profit slipped 3.5 percent from a year earlier, when it booked a one-time gain from the sale of its stake in local credit bureau Serasa.
The bank also forecast a rosy outlook for the Brazilian economy over the next two years, predicting that the recent rise in domestic interest rates is unlikely to significantly curb demand for consumer credit.
Banco Itau Holding Financeira (ITU.N: Quote, Profile, Research, Stock Buzz)(ITAU4.SA: Quote, Profile, Research, Stock Buzz), as Brazil's second-largest private-sector bank is formally known, said net income fell to 2.041 billion reais ($1.3 billion) from 2.115 billion reais a year earlier and 2.043 billion reais in the first quarter of this year.
The bank was expected to report net income of 2.051 billion reais, according to the average forecast of three analysts polled by Reuters.
Itau took some one-time charges in the quarter that weighed on its bottom line. Excluding those charges, profit would have totaled 2.079 billion reais.
Itau shares rallied after the earnings report was released, rebounding from a slump in recent days. Its shares were up 3.77 percent at 33.00 reais in afternoon trading, outpacing a 2 percent gain by the Bovespa index .BVSP.
Like other banks in Brazil, Itau is benefiting from growing demand for consumer credit as the country's economy expands at a healthy clip. The increase in lending, coupled with low default rates, has helped Brazilian banks consistently chalk up hefty profits at a time when banks in the United States and Europe are bleeding losses because of the credit crisis there.
Itau's larger domestic rival, Banco Bradesco (BBDC4.SA: Quote, Profile, Research, Stock Buzz) (BBD.N: Quote, Profile, Research, Stock Buzz), has also been racking up big profits thanks to the credit boom. On Monday, Bradesco reported second-quarter net earnings of 2.002 billion reais, in line with expectations. Continued...
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