(Adds profitability, new target for net interest income)
SAO PAULO, Nov 8 (Reuters) - State-controlled Banco do Brasil SA on Thursday posted a third-quarter profit roughly in line with analysts' expectations, but forecast a sharper fall in net interest income on sluggish loan book growth.
Recurring net income, which excludes one-time items, came in at 3.402 billion reais ($911.65 million), up 25.6 percent from a year earlier and 2 percent above a consensus estimate compiled by Refinitiv of 3.334 billion reais, helped by lower loan-loss provisions.
The bank's expanded loan book remained roughly stable in the quarter, reaching 686.3 billion reais. Brazil's biggest lender lags its private peers amid the country's gradual economic recovery.
It said it expected net interest income to contract by 5-6.5 percent in 2018. Previously, it had forecast a drop of up to 5 percent.
In August, Chief Financial Officer Bernardo Rothe had said net interest income growth would resume in 2019.
The bank's 90-day default ratio decreased 0.5 percentage points in the quarter to 2.83 percent.
Its return on equity of 14.3 percent was up 0.5 percentage points from the previous quarter and topped an estimate compiled by Refinitiv of 13.1 percent.
New Chief Executive Officer Marcelo Labuto will host a news conference on the results on Thursday. Former CEO Paulo Caffarelli left the bank on Nov. 1 after accepting an offer to become chief executive at card processor Cielo SA.
$1 = 3.7317 reais Reporting by Carolina Mandl; editing by Mark Potter and Jason Neely