September 3, 2019 / 7:10 PM / 20 days ago

Brazil's Itau Unibanco looks to keep costs down, compete with fintechs

FILE PHOTO: A man walks past an Itau Unibanco logo in Rio de Janeiro, Brazil September 6, 2017. REUTERS/Pilar Olivares

SAO PAULO (Reuters) - Brazil’s largest private lender, Itau Unibanco Holding SA (ITUB4.SA) is keeping costs under control to compete with financial technology companies, executives told investors in a conference on Tuesday.

The bank’s Chief Financial Officer Milton Maluhy said adherence to an employee buyout program, for which 7,000 employees are eligible, was higher than expected, without giving a precise figure. The exact figure will be announced with third-quarter earnings, he said.

Itau Co-Chairman Roberto Setubal said the bank is prepared to adapt to stronger competition from financial technology companies, or fintechs.

Chief Executive Officer Candido Bracher said there was still “some room” to close brick-and-mortar branches as a way to control costs. The bank, which has more than 4,000 branches, closed 270 over the last 18 months.

Itau had been pushing to raise usage of digital channels by its clients. Service via digital or remote channels already accounts for more than half of its retail earnings, retail head Marcio Schettini told investors in a conference on Tuesday.

In October, the bank will launch payments solution Iti, with around 600,000 clients initially, after five months of tests.

As competition with fintechs increases and the cost of capital falls, Itau expects a potential decline on its return on equity in the future, Setubal said.

Reporting by Tatiana Bautzer; editing by Jonathan Oatis and Lisa Shumaker

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