By Jeffrey T. Lewis
SAO PAULO--Brazilian lender Itau Unibanco Holding SA reported profit jumped in the first quarter from a year earlier as the bank reduced the amount of money it set aside as provisions for bad loans.
The company's net income rose 59.2% to 5.4 billion reais, the equivalent of $993 million, Itau said Monday. Net income per share rose to 0.55 real from 0.35 real. Operating revenue was little changed, rising to 30 billion reais from 29.2 billion reais a year earlier. The bank reduced its allowance for loan losses to 3.1 billion reais in the first quarter of this year from 10.9 billion reais in the same period a year earlier.
Itau and other Brazilian banks made large provisions starting in the first quarter of last year to prepare for an increase in delinquent loans arising from the coronavirus pandemic. So far, the country's banks are in a good position to deal with any rise in bad loans over the course of this year, according to Leo Monteiro, an analyst at Ativa Investimentos.
"Provisions are at high levels, so during this year we should expect to see better results than last year, because of all the uncertainty we saw from the pandemic last year," Mr. Monteiro said.
Many Brazilian banks, including Itau, are working to cut costs by closing branches and reducing staff. Itau said its general and administrative expenses increased 27.5% in the first quarter from a year earlier, mainly because of one-time expenses related to closing branches and returning administrative buildings.
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(END) Dow Jones Newswires