(Adds comment, share performance in paragraphs 3-8)
By Guillermo Parra-Bernal
SAO PAULO, Jan 29 (Reuters) - Banco Bradesco SA, Brazil’s second-biggest private sector bank, on Thursday forecast lower lending growth for this year than it estimated for 2014, highlighting the economic headwinds facing Latin America’s largest economy.
In a securities filing, Bradesco said its loan book could grow 5 percent to 9 percent in 2015, compared with the 6.5 percent growth achieved last year. The lender had predicted 7 percent to 11 percent credit growth for 2014.
Net interest income could grow 6 percent to 10 percent, signaling Bradesco may keep raising borrowing costs through the year to offset slower loan volumes.
The forecasts highlight increased caution as Brazil’s economic problems and growing skepticism over President Dilma Rousseff’s ability to jumpstart growth dampen demand for credit. Last year, banks extended loans to Brazilian consumers and companies at the slowest pace since 2007, central bank data showed this week.
Economists and companies warn that Brazil is faced with a second straight year of stagnation and persistently high inflation in 2015. Falling commodity prices are a particular problem given its dependence on commodity exports and foreign capital inflows to fund its record current account shortfall.
In spite of the challenging outlook, Bradesco beat fourth-quarter estimates on the back of prudent loan disbursements, rising interest rates on loans and a decline in defaults that enabled management to trim loan-loss provisions.
Bradesco posted record recurring net income, or profit before one-time charges, of 4.132 billion reais ($1.59 billion), up 4.6 percent and 29.2 percent on quarterly and annual bases, respectively. A Reuters poll expected recurring profit at 3.971 billion reais.
“Though seeing notable risks to commercial credit quality, we continue to be encouraged by good results,” said Saúl Martínez, an analyst with JPMorgan Securities. “Profitability will remain good and, if Brazil risk diminishes, the profit bias over time seems skewed to the upside.”
Shares were almost unchanged at 35.17 reais on Thursday.
Return on equity, a gauge of profitability for banks, totaled 20.1 percent, above the poll’s estimate of 19.8 percent.
Higher rates helped boost interest income for a third consecutive quarter. Loan-loss provisions fell 1.2 percent to 3.307 billion reais, well below estimates, even after delinquencies in some corporate loans climbed.
Rising fee and insurance income helped offset rising non-interest expenses, the filing showed.
Management will discuss results at a conference call later in the day.
$1 = 2.5959 Brazilian reais Editing by Mark Potter and Alden Bentley