UPDATE 1-Brazil's Itau to be more active in M&A, partnerships in 2021, says CEO

(Adds CEO comments on potential acquisitions, company details)

SAO PAULO, June 2 (Reuters) - Brazil’s Itau Unibanco Holding SA will be more active in making acquisitions and forming partnerships with smaller competitors this year, Chief Executive Milton Maluhy told journalists on Wednesday.

The bank is eying deals with companies in sectors such as payments and investments, he added, which will complement the portfolio of Brazil’s largest lender.

The move comes as Brazilian financial startups and smaller competitors have built up muscle and engaged in a raft of M&A activity to accelerate growth, such as Nubank and Banco BTG Pactual SA.

Earlier on Wednesday in an online event to discuss the lender’s strategy, Itau’s co-chairmen, Roberto Setubal and Pedro Moreira Salles, said the bank must improve its services to fight back against fast-growing financial startups and retain clients.

Setubal said Itau’s branch network is no longer a competitive advantage for the bank, as fintechs have been gaining clients rapidly through digital channels. The bank has 3,041 branches.

Itau’s chief financial officer, Alexsandro Broedel, said that despite fierce competition, the bank sees its net interest income growth accelerating by year-end, with trading gains reaching the upper part of the outlook range, close to 6.4 billion reais ($1.26 billion). ($1 = 5.0670 reais) (Reporting by Carolina Mandl in Sao Paulo Editing by Matthew Lewis)