February 13, 2020 / 5:09 PM / 5 days ago

UPDATE 2-Banco do Brasil to raise 'billions of reais' with asset management sale -CEO

(Adds CEO comments on asset sales)

By Carolina Mandl

SAO PAULO, Feb 13 (Reuters) - Banco do Brasil SA’s chief executive, who has pushed unsuccessfully to privatize the entire bank, said on Thursday that the lender will likely raise “billions of reais” from the sale of a controlling stake in its asset management unit.

At the helm of Banco do Brasil since January 2019, Rubem Novaes has been trying to find ways to make the state-controlled lender more competitive and fight back against private rivals.

Speaking alongside Chief Financial Officer Carlos Hamilton Araujo at a news conference after Banco do Brasil forecast double-digit earnings gains for 2020, Novaes said the bank is seeking the sale of at least 51% of its asset management unit, which has roughly 1 trillion reais under management.

Novaes said the bank is about to receive binding offerings, declining to specify when that would happen.

Already, the bank has sold some non-core assets and also formed joint-ventures to expand some businesses, such as an investment banking deal announced in November with UBS Group AG .

Earlier on Thursday, Banco do Brasil said it could achieve double-digit net income growth in 2020 after reporting fourth-quarter profit rose by a fifth to 4.625 billion reais ($1.06 billion), roughly in line with a Refinitiv estimate.

Profitability - as measured by return on equity - came in at 17.7%, roughly in line with the previous quarter even as its loan book shrank for another quarter, reflecting a move toward higher-margin consumer lending.

Novaes said he expected the bank to post an ROE above 18% this year. The bank expects its 2020 net income to be between 18.5 billion reais and 20.5 billion reais, implying a potential 15% rise from last year’s results.

Operating expenses rose 8.7% from a year earlier, boosted by higher costs related to employees’ health insurance plan, while tax expenses halved.

Banco do Brasil forecast that its loan book would resume growth across all lines in 2020, with consumer lending leading the expansion. Total loan book growth is seen at between 5.5% and 8.5% in 2020.

Management is planning reforms to compete more effectively with private rivals after President Jair Bolsonaro quashed an attempt by management to fully privatize the lender, as Reuters reported last month.

$1 = 4.3558 reais Reporting by Carolina Mandl; Editing by Jane Merriman and Steve Orlofsky

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