UPDATE 1-Itau's new CEO sets growth targets, but flags uncertainty on the horizon

(Adds CEO comments)

SAO PAULO, Feb 2 (Reuters) – Itau Unibanco Holding SA’s new CEO Milton Maluhy announced plans to tighten the bank’s belt, expand fee income and reduce loan losses, but also said the scenario was still very uncertain due to the pandemic.

“The bank foresees a 4% GDP growth this year, but if mass vaccination gets delayed by 6 months, GDP is likely to grow only 2%,” Maluhy told journalists in a conference call.

Maluhy took the helm of Brazil’s largest bank on Tuesday, replacing Candido Bracher, who retired.

Still, Itau expects its cost of credit to decline by up to roughly 30% in 2021 from a year earlier, to a range between 21.3 billion reais and 24.3 billion reais in 2021. Last year, it totaled 30.2 billion reais, as the lender cushioned for potential future losses.

Loan delinquency ratio, however, should rise this year, reaching its peak by the year-end or in the first quarter of 2021. Its 90-day default ratio ended December at 2.3%.

Loan book growth should be between 5.5% and 9.5%, signaling it could expand at a slower pace than in 2020, when it rose 9.6%. Depending on how the economy resumes growth, Maluhy said the bank considers more disbursements in riskier credit lines.

Net interest income with clients is likely to grow by between 2.5% and 6.5%.

Amid economic uncertainties, the new CEO intends to speed up a cost control program in 2021, targeting cost reduction of 2% or a 2% growth at most. But the bank did not intend to close more branches this year, he added.

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