In a report on expectations for banks’ results in the first quarter of 2024, Safra experts highlighted that the Bank of Brazil (BBAS3) should show “positive numbers, but the moving parts could take center stage again”.
“We expect another positive result, although again with some impacts on capital formation in the quarter. We expect Banco do Brasil to record stable profit in the quarter, at R$9.44 billion (ROE of 22.1%), with Banco Patagonia again representing 6% of NII or 11% of net profit, which should have a direct impact the growth in book value due to exchange rate impacts”, says the house.
Even so, Safra highlights that the bank has managed to present solid results.
Therefore, the expectation is that the results of the BBAS3 stay at the midpoint of the guidance.
The house has a neutral recommendation for shares of Banco do Brasilwhile recommending purchases for Itaú (ITUB4) and Bradesco (BBDC4) in the same sector.
Regarding Itaú, Safra highlights that “consistency must prevail” and that the bank must continue to show positive profit dynamics, without any change in recent trends.
“Total loans are expected to increase sequentially (+0.8% quarter-on-quarter), while NII is expected to decline slightly due to unfavorable seasonality in the first quarter, despite still good performance on an annual basis,” notes the house .
Regarding Bradesco, which has made a series of internal changes, Safra points out that the dynamics of profits and losses are still under pressure and the quality of assets must be the focal point.
“As the 2024 earnings baseline is expected to be close to R$18.5 billion (at the midpoint of the guidance), the first quarter should not bring surprises, with results close to R$4 billion (ROE of 9 .8%), +37% in the quarter and -8% drop on an annual basis”, he notes.
“Revenues will likely be pressured due to lower spreads, a still difficult comparison base and a 2% year-on-year drop in loans, while costs are expected to reach a higher level after the implementation of the new strategic plan, he adds.
Despite this, the assessment is that the quality of assets could still trigger positive reactions at Bradesco, as it could indicate lesser or greater pressure on provisions in the future.
“Our opinion is that there is a good positive asymmetry, considering the risk reduction observed in recent quarters”, he concludes.
Banco do Brasil share price
BBAS3 Quote
Graph generated on: 04/16/2024
1 Again