Itaú Unibanco Holding SA booked a higher recurring profit for the fourth quarter of 2017 compared to a year earlier as the bank recorded a 23.7% decline in provisions for loan losses.
The São Paulo-based lender's recurring net income, which excludes one-off items, totaled about 6.28 billion Brazilian reais for the fourth quarter, or 97 centavos per share, rising from 5.82 billion reais, or 89 centavos per share, in the year-ago period.
When taking into account 459 million reais in expenses from nonrecurring events, including 135 million reais of goodwill amortization costs, the bank's net income reached 5.82 billion reais in the fourth quarter, compared to 5.54 billion reais a year earlier.
Itaú Unibanco's managerial financial margin contracted 11.2% year over year to reach 16.75 billion reais in the fourth quarter as its financial margin with clients fell 9.2% to 15.31 billion reais. Commissions and fees, meanwhile, ticked 8.3% higher year over year to 8.65 billion reais.
Results from the company's insurance, pension plan and premium bond operations, before retained claims and selling expenses, reached 2.12 billion reais, up 2.7% from 2.07 billion reais in the fourth quarter of 2016.
Itaú booked 4.44 billion reais in provisions for loan losses in the final quarter of 2017, a sharp fall from 5.82 billion reais a year earlier. The bank said this was due to lower provisions in both the retail and wholesale banking segments, in line with lower delinquency rates. The company also registered 14.03 billion reais in other operating expenses, an increase of 1.5% from 13.82 billion reais a year ago.
Itaú's total credit portfolio, including financial guarantees provided and corporate securities, shrank to 593.71 billion reais at the end of 2017 from 598.43 billion reais a year earlier. Its 90-day nonperforming loan ratio fell to 3.0% from 3.2% in the linked quarter and 3.4% a year ago.
Annualized recurring return on average equity improved to 21.9% from 20.7% a year earlier while annualized recurring return on average assets rose to 1.7% from 1.6%.
The fourth-quarter results brought the bank's full-year 2017 recurring net profit to 24.88 billion reais, up 12.3% from 22.15 billion reais in 2016.
In 2018, the company expects its total credit portfolio to expand between 4.0% and 7.0%, while noninterest expenses are forecast to rise 0.5% to 3.5%. Itaú also expects commissions and fees and the results from its insurance operations to grow between 5.5% and 8.5% this year.
Additionally, the bank's board approved the payment of 13.04 centavos per share as mandatory dividend for 2017 and additional dividends in the amount of 96.38 centavos per share. The board also declared 97.65 centavos per share as net interest on capital for 2017.
For 2017, the company's stockholders will receive about 2.71 reais per share, or a total of 17.6 billion reais, in dividends and interest on capital net of income tax. This is equivalent to 70.6% of the bank's consolidated recurring profit for 2017 and represents an increase of 75.6% from 2016.
As of Feb. 5, US$1 was equivalent to 3.24 Brazilian reais.
