Unibanco profits up 2.3% in Jan-Sept.

Brazilian private bank Unibanco (NYSE: UBB) posted a 2.3% increase in net profits for the first nine months of the year, with 761mn reais (US$261mn), compared to the same year-ago period, the bank said in a statement. Growth was triggered by the operational result, which grew 68.5% year-on-year, reaching 1.45bn reais, thanks to a 7.9% increase in services revenues and a 36.3% reduction in provisions for loans losses. However, the appreciation of the Brazilian real against the US dollar in the period shrunk Unibanco's securities operations and loans portfolio, which in turn caused a reduction in the bank's total assets, to 68.1bn reais compared to 73.4bn reais last year, Unibanco's investor relations director Lucas Melo told BNamericas. The dollar decreased in value from 3.89 reais at end-September last year to 2.92 reais this past September. Most of Unibanco's securities operations are in US dollars, Melo said, which explains the 14.2% drop seen in the bank's securities portfolio in the period to 15.7bn reais, compared to 18.3bn reais a year earlier. Loans fell to 26.6bn reais at end-September, from 28.5bn reais in 2002. Most of the reduction was felt in Unibanco's wholesale banking division, which saw a 13% year-on-year portfolio shrinkage, reaching 15.2bn reais in the period. The bank's retail loans division, in contrast, increased 3.2% year-on-year to 11.4bn reais. Unibanco will not see recuperation in the loan segment in the fourth quarter, but the portfolio will see an increase in 2004, according to Melo. Net equity was 7bn reais, up from 6.2bn reais a year earlier, but annualized return on equity fell to 15.2% compared to 16.5% last year. If amortization paid by Unibanco on acquisitions made in 2000 are discounted, the bank would have reported a 7.5% growth in net profits for the nine-month period, at 800mn reais. Those acquisitions were Banco Bandeirantes and consumer credit business Fininvest. This year Fininvest is finally performing according to Unibanco's original business plan, he said. In the nine-month period the unit posted 88mn reais compared to 28mn reais last year, a "weak" performance, Melo said. Moving forward with acquisitions, Melo said Unibanco could be interested in snapping up foreign banks and insurers that decide to exit the Brazilian market. Foreign insurers are finding it hard to maintain healthy margins because they are not backed by a bank like most of Brazil's largest insurers, he said. In the banking sector, foreign banks, especially in the US, continue to eye Brazil with suspicion, and international rating agencies are still associating the Brazilian market with the Argentine crisis, he added. Increasingly, foreign banks in Brazil are feeling pressure from headquarters to exit the market, he said. In the third quarter the bank opened 202,000 new checking accounts, bringing the nine-month total additions to 548,000. The bank launched a marketing campaign called ContAtiva2 in February designed to add 3.6 million new accounts in five years. Total clients reached 13.3 million, of which 5.9 million belonged to the Unibanco brand, with the bulk belonging to Unibanco's consumer finance divisions Finivest, InvestCred and LuizaCred.