Brazilian lender Itau's recurring profit rises; Citi cites 'decent quarter'

SAO PAULO, May 8 (Reuters) - Brazilian lender Itau Unibanco ITUB4.SA posted on Thursday a 13.9% increase in its first-quarter net recurring profit compared with a year earlier, marginally beating analysts' forecast amid a rise in profitability and a lower default ratio.

Latin America's largest private bank by total assets, Itau posted an 11.13 billion reais ($1.97 billion) net recurring profit in the quarter ended in March, while analysts polled by LSEG had expected 11 billion reais.

The Brazilian lender, which kept its annual projections unchanged, posted a 22.5% return on equity (ROE), a gauge of profitability, rising from 21.9% a year earlier.

Citi analysts in a note to clients called the results a "decent quarter," and said Itau showed "skill in its reading of the credit cycle, managing to deliver one of the best ROE levels among our Latin American coverage."

Shares of peer Bradesco, which has been working to recover profitability following difficult recent years, closed up near 16% after reporting results late on Wednesday.

Brazilian rivals Banco do Brasil BBAS3.SA and Nubank NU.N are set to publish quarterly results next week. Santander Brasil SANB11.SA already released its first-quarter results.

Itau's total credit portfolio stood at 1.38 trillion reais, rising 13.2% year-on-year, but declining 1.7% compared with the previous quarter. Itau said it would be stable compared with the prior quarter without currency effects.

Itau's 90-day default ratio improved 0.4 percentage points from a year earlier and 0.1 point from the last quarter of 2024, reaching 2.3%. Including securities, the ratio hit the lowest level since 2021, at 1.9%.

Itau's main source of revenue, net interest income, rose almost 13% year-on-year to 30.3 billion reais. Cost of credit also increased, by 2.1% to near 9 billion reais.

($1 = 5.6620 reais)