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State-controlled lender Banco do Brasil sees 2020 profit up 10%

Credit: REUTERS/PAULO WHITAKER

Brazilian state-controlled lender Banco do Brasil SA sees its profits likely growing 10% in 2020 from this year, its Chief Financial Officer Carlos Hamilton Araujo said on Thursday in a meeting with analysts.

By Carolina Mandl

SAO PAULO, Nov 28 (Reuters) - Brazilian state-controlled lender Banco do Brasil SA BBAS3.SA sees its profits likely growing 10% in 2020 from this year, its Chief Financial Officer Carlos Hamilton Araujo said on Thursday in a meeting with analysts.

Banco do Brasil's 2019 profit should reach up to 18.5 billion reais, according to targets set earlier this year.

Next year, net income will be boosted by consumer lending and lower loan loss provision expenses, while fee income will rise in line with inflation, Chief Executive Rubem Novaes said at the same event.

Still, its total loan book is likely to present sluggish growth as corporate loans should decline for another year, as Banco do Brasil sees large companies raising money in capital markets.

Banco do Brasil recently announced a joint-venture with UBS in investment banking, with Rubens saying on Thursday it is likely to start serving customers by June.

Novaes said the central bank's capping of interest rates on overdraft credit at 8% annually will have a negative impact on the bank's profit, but it should not be "that big."

On Wednesday, Brazil capped interest rates on overdraft lines, but allowed banks to charge monthly fees for limits extended.

PAYMENTS PROCESSOR

Banco do Brasil is mulling hiring a consulting firm to review its strategy in the card processing business, which includes a stake in Cielo SA CIEL3.SA.

Novaes said the bank is not eyeing a sale of its stake in Cielo for now, but that he was not sure if Banco Bradesco SA BBDC4.SA, its partner in Cielo, has the same long-term strategic view for the card processor as it has.

(Reporting by Carolina Mandl; editing by Diane Craft and Nick Zieminski)

((carolina.mandl@thomsonreuters.com; +55 11 5644 7703; +55 11 97116-3806;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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