Itaú boosts Q2 profits 8%

Brazil's second largest private sector bank Banco Itaú (NYSE: ITU) boosted its second quarter net profit by 8.3% to 949mn reais (US$311mn) compared to the same quarter last year, the bank said in an earnings release. Itaú showed a very strong quarter by meeting "great expectations" and the 2Q04 bottom-line came in 2% above forecast, Bear Stearns' Latin American banking analyst Jason Mollin said in a research note after the results were published. Rafael Quintanilha at local brokerage BES Securities told BNamericas Q2 result was 6%above his expectations mainly due to strong fee income. In the quarter Itaú performed strongly on many different fronts such as profitability, loan growth, asset quality, fee income and expense control, Mollin pointed out. The first half net profit was up 22.4% to 1.82bn reais compared to the same half in 2003. Itaú's annualized ROE reached 33.1% and 30.6%, respectively in Q2 and H1. The bank highlighted the fact that it had managed to both expand and improve the quality of its loan portfolio. It also pointed out that the increased focus this year on lending to micro, small and medium-sized businesses, credit cards, personal loans and vehicle finance impacted positively on the results. Itaú's total assets at the end of June amounted to 123bn reais, up 14.9% on the same date the previous year while its consolidated shareholders' equity rose 18.7% during the same period to 12.8bn reais. The bank's solvency ratio at the end of June stood at 19.5%, well above the 11% minimum required by the Brazilian central bank. Mollin has an outperform recommendation on the Itaú stock and Quintanilha a buy recommendation. Banco Itaú is the second largest private bank in Brazil in terms of assets, after archrival Banco Bradesco (NYSE: BBD).