UPDATE 2-Itaú shares slump as soaring provisions spark profit miss
(Adds analyst comments, data throughout)
By Guillermo Parra-Bernal
SAO PAULO May 3 (Reuters) - Shares in Itaú Unibanco Holding SA tumbled the most in six weeks on Tuesday as Brazil's largest bank by market value missed first-quarter profit estimates, reflecting the burden of eroding loan book quality and surging loan-loss provisions.
Recurring net income, or profit excluding one-time items, came in at 5.235 billion reais ($1.50 billion) last quarter, down almost 18 percent from the prior three months. The result came in slightly below the average consensus estimate of 5.280 billion reais compiled by Thomson Reuters.
Even after Chief Executive Officer Roberto Setubal, who plans to retire next year, trimmed expenses in the quarter, new disbursements and average interest on loans slumped, hurting revenue. Both provisions and renegotiated loans hit fresh records last quarter after defaults climbed at their fastest quarterly pace in at least seven years.
Nonvoting shares tumbled as much as 4.2 percent to 30.59 reais, the lowest intraday level for the stock in almost a month. Tuesday's decline limited year-to-date gains for the stock to 25 percent.
Investors could begin to trim their Itaú profit, revenue and expense growth estimates, and revise those for provisions in the wake of the profit miss, said Pedro Fonseca, an analyst at Haitong Securities.
"Pressure on results - loan growth, net interest margin, provision expenses - should continue to intensify from the weak backdrop," said Carlos Macedo, an analyst with Goldman Sachs Group Inc.