21 de agosto de 2015 / 0:21 / en 2 años

Uncertainty clouds Itaú's view on corporate defaults, CEO says

SAO PAULO, Aug 20 (Reuters) - Itaú Unibanco Holding SA, Brazil’s No. 1 bank by market value, is having a difficult time predicting prospects for corporate loan delinquencies amid an uncertainty outlook for some industries and policies to shore up the economy, the bank’s CEO said on Thursday.

The quality of Itaú’s consumer loan book is relatively less difficult to control because the segment is affected by fewer influences than corporate credit, Roberto Egydio Setubal said at an event with the bank’s shareholders in São Paulo.

“In the corporate segment, asset quality is more linked to things that go beyond the pure act of lending, which are linked to government policies or certain industry aspects over which we have no control,” he said.

A bigger-than-expected jump in defaults cast a shadow over second-quarter profit at Itaú, underscoring a deteriorating outlook for banks in Latin America’s largest economy. Default ratios at Itaú increased in the period for the first time in 11 quarters, offsetting the benefits of rising borrowing costs and strong fee income that helped drive its profit to an all-time high.

Last quarter, Itaú’s 90-day default ratio rose to 3.3 percent, the highest in a year and above expectations. Executives expect delinquencies to rise through year-end, a sign that fallout from a corruption scandal at state firms and Brazil’s worst recession in 25 years will hurt creditworthiness.

“One or another shift in the economic outlook could indeed worsen our expectations about defaults,” Setubal added.

Economists expect Brazil’s gross domestic product to shrink in 2015 and next year, which would be the first consecutive annual contractions since the 1930s. (Reporting by Guillermo Parra-Bernal; Editing by Ken Wills)

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