By Andre Romani

SAO PAULO (Reuters) – Brazil's Itau Unibanco, Latin America's largest private lender, on Monday bumped up its estimated portfolio growth for the year after logging an 18% increase in its third-quarter net recurring profit.

Itau reported a 10.68 billion real ($1.84 billion) net recurring profit for the quarter ended in September, beating an estimate of 10.4 billion reais from analysts polled by LSEG.

Itau said it now expects its total credit portfolio to grow between 9.5% and 12.5%, up from a previous estimate of 6.5% to 9.5% growth.

Itau management has previously said the bank was close to wrapping up an overhaul of its personal credit segment by cutting back on loans likely to go unpaid.

That has raised analysts' expectations for coming quarters, as Itau could start to deliver higher portfolio growth once the process is wrapped up.

"It is important to mention the resumption of the growth of the credit card portfolio," Itau said in the earnings report, noting it grew 1.7% sequentially as the bank cut back on risky clients.

The bank's over 90-day delinquency rate inched down to 2.6% from 2.7% the previous quarter, and was also under the 3% a year earlier.

Analysts at Citi called the results "solid," nodding toward the bumped-up loan growth guidance.

The new outlook "shows the benefits of Itau's ample capital position and an opportunistic approach to gain share and be selective with clients," they wrote in a note to clients.

Itau's return on equity, a gauge of profitability, stood at 22.7%, up from 21.1% a year earlier, and 22.4% in the second quarter.

The lender posted an 8.5% year-on-year increase in its net interest income, its main source of revenue, while its cost of credit fell 11% on lower provisions.

Itau logged a 500 million real gain from a large client, it said, without naming them.

Analysts had expected a potential gain for Itau as Brazilian retailer Americanas started to pay creditors to the bankrupt department store giant.

($1 = 5.7916 reais)