Itaú donates R$1bn to fight covid-19 as big banks gear up for defaults

Itaú Unibanco announced a R$1 billion donation to fight covid-19, the largest private-sector contribution so far. The resources add up to the R$250 million already announced by the lender. Itaú CEO Candido Bracher said an endowment would be created at charity arm Itaú Foundation and a group of experts would decide how to spend the donation. Meanwhile, Itaú and the other Brazilian banking giants are gearing up to deal with stagnating or even falling profits this year as the pandemic pushes up loan default rates. Credit growth forecasts have already stumbled from 13% to a modest uptick, if any. While well-provisioned to cover souring loans, banks are especially concerned about small and midsize companies, where the 90-day default rate is expected to reach 5% to 7% in 18 months from 3.7% before the crisis. Services revenue, already under pressure from the country’s booming fintechs, is also expected to take a hit.

Source: Valor Econômico