(Updates with source confirming earlier media report)
By Aluisio Alves
SAO PAULO, July 20 (Reuters) - Brazil's government will this year inject 1.8 billion reais ($478 million) into state-owned lender Caixa Econômica Federal to raise its capital ratio, one source with knowledge of the matter told Reuters on Friday.
The funds are dividends that the lender paid out to the government last year, the source said. Earlier on Friday newspaper O Estado de S. Paulo reported on the capital injection.
Brazil's government declined to comment. Caixa said that in January it released a capital plan which forecast that the government would return dividends to the bank.
Last May, Chief Financial Officer Arno Meyer said Caixa would not sacrifice profitability to gain market share in loans, as the bank was seeking a higher capital ratio in coming quarters. ($1 = 3.7684 reais) (Reporting by Aluisio Alves, Writing by Carolina Mandl; editing by Jonathan Oatis and Rosalba O'Brien)