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In the second quarter of 2009, state owned Banco do Brasil  reported an asset increase of 43.9 percent compared to the same period in 2008, becoming the number one bank in Latin America and the seventh largest on the continent.

Banco do Brasil had slipped in the rankings in November 2008, said Portafolio, when Banco Itaú announced its merger with Unibanco, giving rise to the largest financial institution in the southern hemisphere.

The latest figures show the privately owned Itaú-Unibanco, Banco do Brazil’s main competitor, according to AméricaEconomía, has now fallen to second place. The data was featured in a six-month report issued by consulting firm Economática, which compiled results released by the continent’s trading banks.

“Private banks must learn that it is better to profit from issuing more credit than restricting their offer. It would be better for them to react now or their market quota will further diminish,” commented Brazilian Finance Minister Guido Mantega in Estadao, and urged private banks to lower their interest rates.

In contrast to the majority of private banks, who cut back on loans due to the world economic crisis, Brazil’s state bank provided more credit, mainly to consumers. Another reason for the Banco do Brasil’s rapid ascent back to first place was its increased presence in Brazil’s richest province, Sao Paulo, after acquiring Nosso Caixa’s regional assets.

According to EFE, Banco do Brasil is now the seventh largest bank in the Americas after the top three U.S. institutions Bank of America, JP Morgan Chase and Citigroup. Other Brazilian banks in the top 20 include Itaú-Unibanco (ITUB), Bradesco (BBD) and Banco Santander Brasil (BSBR).

Banco do Brasil’s next steps included opening consumer branches in the United States followed by further expansion in Latin America and Asia, announced the bank’s president, Aldemir Bandine, to O Globo. Bandine also stated that the bank’s policy “is to implement development strategies and forward the government’s policy of lowering interest rates to dampen the effects of the world economic crisis.”