Brazil’s second-largest bank by assets, Itau Unibanco Holding SA, reported a drop in net profit of 9.3% in the third quarter, as the country’s persistent economic recession reduced demand for new loans among Brazilians, while the bank assumed more provision charges amid the deterioration of its nonperforming loan rate.
The bank said on Monday that its profit was 5.4 billion Brazilian reais ($1.7 billion) for the period, down from 5.95 billion reais a year earlier.
After nearly a decade of posting increases in net profit, in recent quarters the bank’s earnings have shown signs of deterioration due to the effects of the country’s struggling economy. Brazil’s gross domestic product contracted 3.8% last year, and it is expected to shrink around 3.2% this year, according to economists.
Itau Unibanco ended the third quarter with a credit portfolio of 605.7 billion reais, down 11% from 680.1 billion reais in the same period a year earlier. Total assets were valued at 1.39 trillion reais, down from 1.44 trillion reais in the previous year’s period.
Provisions increased to 6.17 billion reais in the third quarter from 6 billion reais a year earlier. The lender’s nonperforming loan rate—covering loans that were more than 90 days overdue—was 3.9%, up from 3% a year ago and from 3.6% in the second quarter.
The bank’s financial service revenues increased 7.3% in the period, totaling 7.8 billion reais.
Recurring net profit—which doesn’t account for amortization and extraordinary provisions—totaled 5.59 billion reais in the third quarter, down from 6.14 billion reais a year earlier.