UPDATE 1-Banco do Brasil CEO says Bolsonaro demanded higher profitability

(Adds CEO comments on divestment plans, branch closures)

SAO PAULO, May 7 (Reuters) - Banco do Brasil SA’s new chief executive on Friday denied any political interference at the bank, saying President Jair Bolsonaro had only asked him to work on improving the state-controlled lender’s profitability.

Fausto Ribeiro took the helm in April, replacing Andre Brandao, who quit in March after a tussle with Bolsonaro over a cost-cutting plan that included the closure of several branches and an employee buyout program.

“President Bolsonaro told me to seek a higher profitability, to increase efficiency,” Ribeiro told reporters, adding his management would be technical.

“There is no political interference, the bank is only getting closer to the Economy Minister.”

Shares in Banco do Brasil were up roughly 4% in morning trade following its results and Ribeiro’s remarks.

Currently, Banco do Brasil lags the profitability of its peers. On Thursday, it posted first-quarter net income of 4.913 billion reais, beating analysts’ estimate. Its return on equity came in at 15.1%, below Santander Brasil SA, Itau Unibanco Holding SA and Banco Bradesco SA.

Ribeiro said the bank had kept a cost-cutting plan announced by Brandao in January, which includes closing 361 business units and two employee buyout programs.

Still, the CEO was not clear how the bank would get closer to peers. He said the bank did not plan for now to close additional branches this year, but that it constantly reviewed its branch network.

The new CEO said he would also maintain plans to divest non-core assets, without naming them. Ribeiro added the bank continued to seek a partner for its asset management unit BB DTVM. (Reporting by Carolina Mandl. Editing by Mark Potter)