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The bank, however, said it will likely maintain its return on equity, a gauge of profitability, around 20%.
Its loan book is likely to grow between 9% and 12%, below its expansion last year, the bank said. Still, its net interest income with clients should grow at a faster pace, between 20.5% and 23.5%.
As consumers and companies feel the burden of little or no economic growth this year, loan-loss provisions are likely to stand up to 9 billion reais above last year. Cash set aside for bad loans is likely to be between 25 billion reais and 29 billion reais, the bank said.
Itau also sees Brazil’s inflation pushing up its operating costs, which are expected to rise between 3.5% and 6.5%. Last year, the lender was able to tame double digit inflation, with its expenses growing just 2%.
Despite fiercer competition among banks and fintechs, Itau expects its fee income to go up between 3.5% and 6.5%.
“Our outlook for 2022 factors in our keeping on a recovery
path and the good results achieved in 2021,” Chief Executive Milton Maluhy said in a statement.
Itau posted on Thursday a higher-than-expected fourth quarter profit, mainly driven by strong gains in consumer lending and in its insurance unit.
Recurring net income, which excludes one-off items, rose 32.9% from a year earlier to 7.159 billion reais ($1.36 billion), above a consensus estimate of 6.828 billion reais compiled by Refinitiv.
The bank’s 90-day loan default ratio was roughly in line with the third quarter, at 2.5%.
Its net interest income rose 20.6% from a year earlier, to 21.2 billion reais.
($1 = 5.2496 reais)