Itaú president recommends that large companies reduce debt

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Itaú president recommends that large companies reduce debt

Latin America’s biggest bank wants big companies to curb their appetite for loans. The president of Itaú Unibanco, Milton Maluhy Filho, recommended that companies “reduce their debt levels” to face the current moment of high interest rates and uncertainties.

During a conversation with journalists this Wednesday (8), Maluhy commented on the jump in the bank’s coverage ratio, which consists of separate amounts to protect against delays greater than 90 days in the payment of loans.

In the case of Itaú’s portfolio of large companies, this index increased from 588% at the end of 2021 to 1,857% at the end of last year. In September, Itaú’s coverage against defaults by large companies was 1,371%.

“In the last quarter of 2022, the main factor for this increase is the isolated case we had of a company that filed for bankruptcy,” says Maluhy, referring to Americanas. In the list of creditors delivered by the retailer to Justice, there are debts of R$ 2.9 billion with Itaú.

But the Americanas case alone does not explain this greater precaution taken by Itaú in relation to large companies, which began in the second quarter of 2022, when the Coverage Ratio went from 599% to 1,125%, almost doubling in three months.

The explanation for this increase goes through the process of analysis of large companies by Itaú. The bank’s president claims that there is constant monitoring of the fundamentals of companies, and that in most cases, it is possible to detect problems before there is an effective delay in the payment of debts.

“When we realize that the company is in a more difficult moment, we already try to restructure the debt. Therefore, seeing the default level of large companies is not the most appropriate. When it occurs, it is for a short period of time”, explains Maluhy .

High interest rates complicate big companies

Maluhy claims that the bank is more cautious in relation to credit for large companies. But avoid comparing other situations with the one that occurs in Americanas. “Fraud is not something commonplace, it is something very occasional.”

In addition to the numbers, the concern appears in the paths pointed out by the Itaú executive for companies to be healthy again in the short term. “Right now, companies need to reduce their debt levels. The current economic environment does not favor highly leveraged companies.”

Itaú expects the basic interest rate (Selic) to reach 12.50% per year at the end of 2023. But Maluhy points out that, even if confirmed, it is still a very high level. “This greatly harms the financial expenses of companies. Brazil needs to have conditions for interest rates to fall in a more structural way”, says Maluhy.

The executive makes a parallel with the crisis of 2015 and 2016, which preceded the impeachment of former president Dilma Rousseff. “At that time, companies were highly leveraged, in a recessionary environment. Today, debt levels are lower, but interest rates are high.”

He adds that it is necessary to do a broader work to reduce the spreads of credit operations, which consist of the difference between the cost that the bank has to raise money and the interest charged to those who take loans.

“We need to improve the rules for executing guarantees. The tax part also weighs. Banks in Brazil are among the most taxed in the world”, says the president of Itaú.

2023 will be the year of ‘reduced appetite’

Regarding the so-called retail segment, which includes individuals, micro, small and medium-sized companies, Itaú decided to adopt a more conservative strategy, reducing credit concessions, especially in riskier lines.

“On credit cards, we decided to cut concessions by 90%. We also greatly reduced credit for vehicle purchases”, says Maluhy. The executive claims that Itaú should maintain this “reduced appetite” for a while.

Alexsandro Broedel, Itaú’s CFO, points out that the projection of a slowdown in the growth of the loan portfolio for 2023, which is in the range between 6% and 9%, is based on this strategy. Last year, Itaú’s portfolio grew 11.1%.

With that, according to Broedel, the bank intends that default levels remain healthy. “We are seeing stability in delays above 90 days, and we will seek to maintain this scenario in 2023”, he says.

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