UPDATE 2-Banco do Brasil cuts loan book guidance, misses profit forecast

miércoles 5 de noviembre de 2014 11:21 GYT

(Adds share performance, comments throughout)

By Guillermo Parra-Bernal and Aluísio Alves

SAO PAULO Nov 5 (Reuters) - State-run Banco do Brasil SA on Wednesday cut its estimate for loan book growth this year, a sign that management is increasingly cautious about the challenges facing the nation's economy next year.

Brazil's No. 1 bank by assets lowered its forecast for credit expansion this year to a range of 12 percent to 16 percent. It had previously expected 14 percent to 18 percent.

In the third quarter, Banco do Brasil's loan book grew 2 percent, the slowest pace in a year, and expanded 13.2 percent on an annual basis, near the low end of the new target. The grimmer outlook indicates weaker consumer spending, a cooling labor market and languid confidence may extend into next year.

"There is a clear retraction of the consumer that has created this overhang," Chief Financial Officer Ivan Monteiro said at a São Paulo event to discuss earnings.

Shares of the bank, which in recent years expanded rapidly by grabbing market share from private-sector peers by slashing borrowing costs, fell 7 percent, their steepest intraday plunge since Oct. 23.

Also on Wednesday, Banco do Brasil posted the weakest set of quarterly results among Brazil's top four banks, with profit missing estimates as an expansion in interest income fell short of expectations.

Earnings before special items came to 2.885 billion reais ($1.2 billion), below the 3.014 billion reais average estimate of five analysts in a Reuters poll. Profit slipped 3.9 percent from the previous three months despite a 32 percent tumble in income tax payouts as well as lower-than-expected loan-loss provisions and operating expenses.   Continuación...