Brazilian bank Itaú Unibanco improved its credit operations and revenues from services and managed to control expenses in the first quarter, which helped it offset a sharp increase in provisions for loan losses and led to a 15% higher recurring profit.
The largest Brazilian bank announced on Monday that its recurring profit from January to March reached BRL 7.36 billion, almost in line with the average projection of analysts consulted by Refinitiv, of BRL 7.35 billion.
Itaú’s credit portfolio grew 13.9% in the 12-month period ended in March to BRL 1.03 trillion, boosted by credit lines for individuals, such as credit cards (+41.5%), real estate (+44.5%) and personal loans (+26.8%), in addition to a 29.2% increase in financing for small and medium-sized companies.
READ ALSO: Brazilian bank Itaú puts up BRL 1 billion to become a partner in Totvs’ fintech
Driven by the effect of higher interest rates on its liabilities and the acceleration of more profitable credit lines, the bank saw its margin with clients expand 23.9% year on year to BRL 20.04 billion. Besides this, the institution’s service revenues grew 9.6% year-on-year, to BRL 11.6 billion, driven by the card (+18.6%) and insurance (+24.1%) areas.
On the other hand, administrative expenses grew 3.8% to BRL 10.8 billion, well below the 11.3% inflation rate measured for the period.
With this, Itaú was able to offset the 69.5% jump in the so-called credit cost, which measures when the bank has made provisions for losses with expected defaults, minus recovered amounts. The bank explained this improvement as the “higher origination in consumer credit products without guarantees”.
READ ALSO: Mercado Libre’s Q1 net revenue rose 67.4%; the company says it is managing to offset costs through pricing
Overall, Itaú’s recurring return on equity rose 1.9 percentage points to 20.4%. The group maintained its performance projections for 2022.
The result comes after rival Bradesco announced last week a 4.7% increase in profit for the quarter, over a year earlier, reflecting higher revenues from credit and expense control.
And Santander Brasil had announced in late April quarterly profit was 1.3% higher, even after provisions for loan losses increased 45.9% in the period.