SAO PAULO, Feb 15 (Reuters) - Net income at Banco Safra SA , a non-listed Brazilian bank owned by billionaire financier Joseph Safra, rose 6.9 percent last year, half the increase posted in the prior year, as defaults doubled and loan-loss provision expenses jumped.
In a statement on Monday, Banco Safra said profit totaled 1.7 billion reais ($425 million) in 2015, up from 1.55 billion reais a year earlier. Return on equity fell slightly to 18.5 percent from 19 percent in 2014.
The bank did not disclose data on interest and fee income, although it said non-interest expenses rose 11.7 percent, slightly above annual inflation in Brazil and about 40 percent more than in 2014. The bank’s loan book slid slightly to 75.6 billion reais, of which 91 percent were loans with the least- risky ratings.
The 90-day default ratio, a benchmark for loan delinquencies, jumped to 1.5 percent of outstanding loans, reversing a drop in the prior year, although still the lowest among the largest Brazilian private-sector banks. Banco Safra is Brazil’s largest non-listed lender after state-controlled Caixa Ecopnômica Federal, and the No. 5 private-sector lender.
The numbers suggest that even the most conservative lenders, such as Banco Safra, are doubling down on efforts to strengthen their balance sheets to offset soaring defaults. A slump in Latin America’s No. 1 economy and fallout from a sweeping corruption probe of state companies are driving a record number of firms and households into insolvency.
The bank’s coverage ratio, a measure of a bank’s ability to absorb potential losses from a surge in defaulted loans, fell to 369 percent at the end of December from about 481 percent in 2014. The number indicates that Chief Executive Officer Rossano Maranhão is keeping provisions elevated as Brazil grapples with a recession that could be the longest and harshest since 1901.
Assets rose 6.2 percent last year to 151.8 billion reais, while client money under management reached 193.2 billion reais, the statement said.
Lebanese-Brazilian financier Joseph Safra and his family control the São Paulo-based bank as part of a vast banking and financial conglomerate that operates in 19 countries. Forbes Magazine ranks Joseph Safra as the world’s richest banker, with a fortune of about $17 billion.
$1 = 3.9961 Brazilian reais Reporting by Guillermo Parra-Bernal; Editing by Dan Grebler