(Recasts with voluntary severance program, branch closures)
SAO PAULO, July 29 (Reuters) - Brazil’s largest lender, Itaú Unibanco Holding SA, said on Monday it has closed nearly 200 brick-and-mortar branches and was launching a voluntary severance program to slash costs amid rising competition.
The bank announced the cost-cutting moves even as quarterly estimates met analysts forecasts. It reported recurring net income of 7.034 billion reais ($1.86 billion), up 10.2% from a year earlier, helped by loans for individuals and trading gains.
Itau said in a securities filing that it will offer buyouts to some employees aiming to “adjust the company’s structures to the reality of the market,” but did not disclose the number of reductions targeted.
Its workforce had already decreased by 1.2% in the quarter as the bank closed branches.
Still, Itau said it has hired new employees for its technology department as it seeks to speed up its digital transformation.
In May, Itaú said it would tighten its belt to compensate for fiercer competition, especially in the card-processing business.
Itau is not alone in its cost-cutting efforts. On Monday, state-controlled lender Banco do Brasil also announced a voluntary severance program, seeking to cut personnel.
Itau’s quarterly results showed that while its client revenues are under pressure, they are still on a upward trend. The bank’s fee income increased by 3.5% from the year-ago period, helped by its investment banking and asset management units.
The bank’s net financial income came in at 18.4 billion reais, up 6.7% from the same period a year earlier.
The bank’s loan book grew by 2%, reaching 659.7 billion reais in the quarter, mainly boosted by loans for individuals and small companies.
Loans in arrears for more than 90 days stood at 2.9% of its portfolio in June, down 0.1 percentage point from March. Loan-loss provisions grew by 12.3% from a year earlier, driven by higher provisions in loans for individuals.
Still, Itau’s return on equity came in nearly in line with the previous quarter, at 23.5%.
Chief Executive Officer Candido Bracher will discuss Itau’s second-quarter results with reporters and analysts on Tuesday morning.
$1 = 3.7814 reais Reporting by Carolina Mandl; Editing by Christian Plumb, Peter Cooney and Leslie Adler