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| Banco do Brasil profit up 46 pct, tops forecast |
| SAO PAULO, 16.11.2010 |
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| Tue Nov 16, 2010 11:06am EST
* Q3 recurring profit 2.58 bln reais, vs forecast 2.38 bln
* Credit portfolio grew 21.1 pct, led by consumer lending
* Assets rose 16.2 percent to 797 billion reais
* Shares up nearly 0.1 pct, outperforming broader market (Adds CFO comments, share performance, analyst comments)
By Elzio Barreto
SAO PAULO, Nov 16 (Reuters) - Banco do Brasil (BBAS3.SA), Latin America's largest bank by assets, beat forecasts with a 46 percent rise in third-quarter profit, buoyed by a boom in its credit portfolio and lower provisions for bad debt.
Growth in Brazil, Latin America's largest economy, has been a boon to the state-run bank and private-sector rivals Itau Unibanco and Bradesco. They have benefited from record-low unemployment and higher consumer demand that pushed credit volumes higher, while also reducing loan default rates.
"Banco do Brasil is very much linked to the real economy, so if Brazil is doing well, our performance is good," Chief Financial Officer Ivan Monteiro said at a press conference. "The business environment continues to be very positive."
Recurring profit, which excludes one-time items such as asset sales and provisions for lawsuits, rose to 2.58 billion reais ($1.5 billion), the company said on Tuesday.
The bank was expected to post recurring profit of 2.38 billion reais, according to a Reuters poll.
Net income rose to 2.63 billion reais from 1.98 billion reais a year earlier.
Return on equity, a key gauge of profitability, averaged 25.7 percent, up from 23.1 percent a year earlier and compared with 26.5 percent in the second quarter.
"The strength came from all lines, with margins showing resiliency, asset quality improving, and expenses showing an expected increase driven by labor costs," Goldman Sachs analysts Carlos Macedo, Jason Mollin and Wesley Okada wrote in a report.
The bank's shares firmed nearly 0.1 percent in early afternoon trading, compared with a 1.3 percent decline in the benchmark Bovespa index .BVSP. The stock gained 20.3 percent in 2010, compared with a 1.3 percent increase in the Bovespa index.
Banco do Brasil's credit portfolio surged 21.1 percent year-on-year to 365 billion reais as payroll deductible loans grew 24 percent and vehicle loans jumped 31 percent, leading an increase in consumer credit.
Corporate loans increased 20.1 percent, led by credit to small- and medium-sized companies.
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