(Adds details of results, background)
By Carolina Mandl
SAO PAULO, Aug 8 (Reuters) - State-controlled Banco do Brasil SA reported on Thursday second-quarter recurring net income surged 36.8% from a year earlier, but said loan growth in 2019 would be slower than earlier expected, according to a securities filing.
Recurring net income, which excludes one-time items, came in at 4.432 billion reais ($1.12 billion), helped by lower operating expenses and higher fee income. It was also 4.6% above analysts' estimates, according to data from Refinitiv.
The bank said its loan book may shrink up to 2% this year, or grow 1% at the most, as its corporate loan book continues to decline. In the first six months, its loan book grew only 1.1%.
Banco do Brasil had previously expected its loan book to grow 3% to 6% this year, and earlier in May, Chief Executive Rubem Novaes said the bank was likely to hit this range.
Still, the bank did not revise its guidance for profit in 2019, and still foresees net income growing up to 17.5%.
The bank is likely to continue to slash costs to meet its profit estimates, and last month, it launched a voluntary severance program towards this effort. It also said it would turn 333 of its bank branches into simpler physical locations, which usually have lower costs.
The bank's return on equity, a gauge of profitability, was at 17.6%, up 0.8 percentage point from the previous quarter. Its second-quarter operating expenses declined 1.1% from a year earlier.
Fee income also helped the bank's results, growing 9.4% from a year earlier.
Loans in arrears for more than 90 days stood at 3.25%, up 0.7 percentage point from the previous quarter.
($1 = 3.97 reais) (Reporting by Carolina Mandl; Editing by Angus MacSwan and Bernadette Baum)