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Lower provisions buoy Q2 profits for Brazilian banking majors

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Lower provisions buoy Q2 profits for Brazilian banking majors

The combined profit of Brazil's three largest listed banks rose 10.93% year over year in the second quarter of 2018 as lower provision expenses helped offset lackluster income from loans and other financial operations.

Aggregate net income for the major banks — Banco do Brasil SA, Itaú Unibanco Holding SA and Banco Bradesco SA — came to 13.91 billion Brazilian reais in the three-month period, up from 12.54 billion reais in the second quarter of 2017.

Itaú continued to be the most profitable lender among the group, booking net income of 6.24 billion reais in the quarter. Banco do Brasil's profit grew 19.85% annually, representing the highest percentage increase in profitability, while Bradesco's net income improved to 4.53 billion reais from 3.91 billion reais a year earlier.

The banks' overall gross income from financial operations declined to 20.13 billion reais from 28.07 billion reais in the year-ago period as a small rise in income from loans, leases, securities and derivatives was more than offset by a 45.23% decline in income from other financial operations.

Combined provisions for loan losses, meanwhile, fell 28.33% year over year to 12.32 billion reais in the second quarter as asset quality improved across the board. In its quarterly earnings release, Banco do Brasil said it now expects net loan loss provisions to total between 14.0 billion and 16.0 billion reais in 2018, down from a previous forecast of between 16.0 billion and 19.0 billion reais.

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As of Aug. 14, US$1 was equivalent to 3.88 Brazilian reais.

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