(Adds details on expenses and provisions)
By Carolina Mandl
SAO PAULO, Oct 29 (Reuters) - Brazil's largest private lender, Itaú Unibanco Holding SA, reported a slightly lower-than-expected third-quarter profit on Monday, as higher non-interest expenses offset loan growth.
Recurring net income of 6.454 billion reais ($1.74 billion) was 3.2 percent higher from a year earlier, but almost 2 percent below the Refinitiv consensus of 6.585 billion reais.
Non-interest expenses went up because of a decision to boost the sales force and open 13 branches in the quarter, Itaú said in a securities filing. Those costs totaled 11.818 billion reais, up 7 percent year-over-year.
Itaú's marketing expenses also rose, as the bank sponsored the Brazilian team in soccer's World Cup and hired Brazilian singer Ivete Sangalo to endorse its credit-card reader machines.
Third-quarter fee income also grew at 3.3 percent year-over-year, at a slower pace than expenses.
Still, the Sao Paulo-based bank posted a return on equity of 21.3 percent, above analysts' estimate of 20.9 percent.
Itaú's loan book grew by 2.5 percent in the third quarter, mainly driven by consumers, while the large corporate loan book kept shrinking. For the year to date, the bank's loan book growth is at 11.2 percent, which indicates the bank is on track to meet its target of growth between 4 and 7 percent in 2018.
"We granted 38 percent more credit to individuals and 22 percent more credit to very small, small and middle-market companies in Brazil compared to the same period of 2017," Chief Executive Candido Bracher said in a statement.
The 90-day default ratio, a widely used metric for delinquencies, came in at 2.9 percent, slightly higher than in the previous quarter.
Loan-loss provisions declined 8.8 percent from the same quarter a year earlier, helped by Itaú's decision to reserve provisions made for a specific client.
($1 = 3.7172 reais) (Reporting by Carolina Mandl; Editing by Leslie Adler and Peter Cooney)