Banco do Brasil hikes 2022 outlook as surging profit tops forecasts

SAO PAULO (Reuters) -Brazilian state lender Banco do Brasil SA on Wednesday hiked its full-year profit outlook on the back of bigger-than-expected quarterly earnings, helped by higher interest income on a bigger loan book.

Banco do Brasil now expects its 2022 profit to reach between 30.5 billion and 32.5 billion reais ($5.9 billion-$6.3 billion), up from a previous range of 27 billion to 30 billion reais.

It said its loan book should grow some 15%-17% this year, from a previous forecast of 12%-16%. Over the third quarter, its loan book grew 19% over the same period last year to 969.2 billion reais.

The lender's quarterly adjusted net income surged 63% from a year earlier, reaching 8.36 billion reais and surpassing the 7.36 billion estimate of analysts polled by Refinitiv.

Banco do Brasil's results were a stark contrast to its private peers Bradesco and Santander Brasil, which earlier reported shrinking profitability and a steep rise in provisions for loans at risk of default.

It set aside 4.52 billion reais in loan-loss provisions, up 15.1% from a year earlier, while its 90-day default ratio was at 2.3%, or 0.3 percentage point above the previous quarter.

Return on equity, which measures profitability, was 20.5%, up 1 percentage point from the previous quarter.

Fee income grew 14.6% to 8.52 billion reais, while net interest income (NII), a measure of earnings it makes on loans while stripping out the deposit costs, rose 25% to 19.56 billion reais.

Analysts at Citi praised the lender's "strong performance in both NII and fees, more than compensating the deterioration of asset quality," they wrote in a note to clients.

($1 = 5.1864 reais)

(Reporting by Peter Frontini; Editing by Sarah Morland and Leslie Adler)