With ‘solid’ operation, what’s left for the action to fire

For BB Investimentos, Bradesco’s share may rise 52.17%. (Image: Money Times/ Gustavo Kahil)

The operation of Bradesco (BBDC4) was classified as “solid” by the BB Investimentos after the bank presents a net profit recurring revenue of R$7.04 billion, up 11.4% year-on-year, and a ROAE of 18.6%.

The BB analyst Rafael Reis said that he remains optimistic about the institution’s execution capacity, which, in his opinion, shows growth with good profitability.

The assessment is carried out at a time when BBDC4 accumulates a decline of more than 20% in 12 months, a performance similar to that of private pairs.

For Reis, the performance of the papers is a reflection of the more volatile moment of the stock market as a whole, but also of the economy with high interest rates and inflation.

The factors listed by the bank imply higher expenses with Allowance for Doubtful Accounts (PDD), among other things.

what would you do action for Bradesco to shoot would be precisely the “imminent climate” of the end of the Selic high cycle, in the assessment of BB Investimentos.

The new scenario, for Reis, would enable a dynamic of default and a less “thorny” treasury result in the bank’s future.

For BB Investimentos, Bradesco’s share may rise 52.17%, to R$28, by the end of 2023.

Bradesco in 2Q22

Bradesco had a second trimester favored mainly by the strong financial margin with customers, benefited by higher spreads on a credit portfolio that grows at a good pace, said BB Investimentos.

The margin was also the result of revenue from services, in particular insurance, which operates with less pressure due to relief in the pandemic, according to the bank.

The balance sheet’s detractors were due to the significant drop in the margin with the market (treasury), given the sensitivity of assets and liabilities to the scenario of high feesand escalation of allowance for loan losses, due to the expansion of the portfolio and the bolder mix.

“When we look at Bradesco’s operation, its solidity is evident”, said Reis.

“The loan portfolio expands with appetite, the default scale at a pace that we consider to be at the limit of the comfortable, cost management is ‘exemplary’, the strong margin with clients is the protagonist and solid service revenue reminds us of the importance of diversification”.

For the analyst, net income also looks healthy, as does the ROE

“However, in the details, it is possible to observe that in 2Q22, these were helped by unusually favorable items, such as the positive impact of impairment of financial assets much higher than usual”, he pondered.

He also listed the ‘other expenses’ line, which helped to balance exceptionally punished items in the quarter, such as the negative market margin and the “large” expenses with provisions for doubtful accounts.


O Money Times publishes informative articles of a journalistic nature. This publication does not constitute an investment recommendation.

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About Yadunandan Singh

Born in 1992, Yadunandan approaches the world of video games thanks to two sacred monsters like Diablo and above all Sonic, strictly in the Sega Saturn version. Ranging between consoles and PCs, he is particularly fond of platform titles and RPGs, not disdaining all other genres and moving in the constant search for the perfect balance between narration and interactivity.

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