Lender Itau hikes net interest income outlook as profit slightly beat forecasts

Brazilian lender Itau Unibanco ITUB3 on Tuesday posted a 14.3% rise in second-quarter net recurring profit from a year earlier, slightly beating estimates while also upping its yearly projection for the growth of net interest income with clients.

Itau, Latin America's most valuable bank by market value, reported an 11.5 billion reais ($2.09 billion) net recurring profit for the quarter through the end of June, compared with an estimate of 11.3 billion reais from analysts polled by LSEG.

The Brazilian lender's annualized return on equity (ROE), a gauge of profitability, stood at 23.3%, rising from 22.4% a year earlier.

"We have a positive first take as guidance was revised up and we see this as a quality and consistent print," analysts at JPMorgan led by Yuri Fernandes wrote, stressing the performance of net interest income and CET1 capital ratio.

Itau said it expects the net interest income (NII) with clients to grow between 11% and 14% this year, from an expected 7.5% to 11.5% increase previously.

The bank attributed the revised outlook in part to positive effects of a more profitable mix of products and segments than originally expected. "Additionally, the liabilities margin has shown better performance, driven by higher volumes," Itau said.

The projection of a net interest income with the market between 1 billion and 3 billion reais this year remained unchanged.

In a separate filing, Itau announced interest on equity to shareholders of about 0.36 real per share.

The lender's credit portfolio reached 1.39 trillion reais in the quarter, nearly stable from the first quarter, while the over-90-day delinquency rate remained at its lowest level in 18 quarters, at 1.9%.

Itau also revised its estimate for this year's effective tax rate to between 28.5% and 30.5%, from between 27% and 29% previously.

($1 = 5.5043 reais)