(Adds loan book, profitability and loan losses)
SAO PAULO, July 30 (Reuters) - Itaú Unibanco Holding SA , Brazil's largest private lender, on Monday reported a weaker-than-forecast quarterly profit, hit by a slide in Brazil's interest rate to record lows.
Recurring net income of 6.382 billion reais ($1.71 billion) was 1.5 percent below the Thomson Reuters consensus estimate of 6.481 billion reais, but 3.4 percent higher year-over-year.
The Sao Paulo-based bank reported net interest income of 17.295 billion reais, 0.5 percent down from a year earlier, as Brazil's interest rate hit a record low.
Asset quality at the lender improved in the quarter, helping Itaú's profit. Loan-loss provisions totaled 3.601 billion reais, down 19.5 percent from a year earlier. Default rates above 90 days fell to 2.8 percent in the second quarter, 0.3 percentage points below the ratio on a sequential basis.
Faced with a slow recovery in the Brazilian economy, Itaú's loan book grew by 3.7 percent in the quarter, led by lending to individuals and small companies. Itaú previously forecast a loan book growth between 4 and 7 percent in 2018.
The Sao Paulo-based bank posted a return on equity of 21.6 percent, in line with analysts' estimates. ($1 = 3.7273 reais) (Reporting by Carolina Mandl; Editing by Richard Chang and Phil Berlowitz)