(Adds CEO comment and default ratio)
By Carolina Mandl
SAO PAULO, May 1 (Reuters) - Brazil’s Itaú Unibanco Holding SA relied more on lower loan-loss expenses than on loan growth to slightly beat analysts’ average earnings estimate amid a still gradual recovery in the Brazilian economy.
The bank, Brazil’s largest private lender, on Tuesday reported a recurring net income of 6.419 billion reais ($1.83 billion) in the first quarter, 0.9 percent above the Reuters consensus estimate and 3.9 percent higher than a year earlier.
Itaú posted loan-loss expenses of 3.788 billion reais in the quarter, down 28.3 percent from a year earlier. In a securities filing, Itaú said improvements came from loans to individuals.
The São Paulo-based bank’s 90-day default ratio remained stable in the quarter, at 3.1 percent. Although default ratios fell for retail loans, asset quality decreased for large companies.
Itaú posted a modest loan book growth of 0.2 percent in the quarter, to 601.1 billion reais. On an annual basis, loans rose 2.4 percent helped by the acquisition of Citigroup Inc’s retail banking in the country last October, which had a 6.2 billion reais loan book.
In a statement, Itaú’s chief executive officer, Candido Bracher, said consumers and small and medium-sized companies are regaining economic confidence. As a consequence, he said, Itaú disbursements for both categories have increased nearly 30 percent year-over-year.
As Brazil’s interest rates hit a record low, Itaú’s net interest income fell 2.4 percent to 16.999 billion reais.
In February, Itaú predicted its loan book would grow between 4 percent and 7 percent in 2018, which should at least partially offset lower interest margins.
Itaú’s recurring return on equity was 22.2 percent, topping analysts’ estimates of 20.6 percent for the quarter. ($1 = 3.51 Brazilian reais) (Reporting by Carolina Mandl; editing by Jonathan Oatisand Leslie Adler)