August 2, 2016 / 11:19 AM / 2 years ago

UPDATE 1-Brazil's Itaú sees loan book shrinking, provisions up

(Specifies forecast revisions)

Aug 2 (Reuters) - Itaú Unibanco Holding SA, Brazil’s largest non-government bank, announced on Tuesday revisions to several operating estimates for this year, including a substantial contraction in loans.

The bank for the first time reported consolidated numbers for the Latin American division, comprising operations in Chile, Argentina, Colombia, Paraguay and Uruguay.

Itaú’s consolidated loan book, which includes guarantees and corporate debt holdings, is expected to grow between a negative 5.5 percent and a negative 10.5 percent this year, compared with a prior estimate of a 0.5 percent expansion to a contraction of 4.5 percent.

Itaú now targets interest income, or revenue from lending-related transactions, to fall between 0.5 percent and 2.5 percent this year. Previously, the estimate was for expansion of between 2 percent and 5 percent.

Itaú is forecasting fee income, or revenue from fees, financial services and commissions and insurance premium underwriting, to grow between 4 percent and 7 percent this year, down from a prior range of 6 percent to 9 percent.

Itaú sees non-interest expenses, or general and administrative expenditures, to rise between 2 percent and 5 percent this year. The previous guidance was for growth of 5 percent to 7.5 percent this year.

The bank expects to set aside between 23 billion reais and 26 billion reais ($7.05 billion and $8 billion) in loan-loss provisions this year. The prior guidance was for so-called LLPs of between 22 billion reais and 25 billion reais.

$1 = 3.2614 Brazilian reais Reporting by Guillermo Parra-Bernal; Editing by W Simon

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