In This Article:
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Net Income: BRL18.8 billion, growing 8.5% on a half-year basis.
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Net Interest Income (NII): BRL51.3 billion.
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Fee Income: BRL17.2 billion, growing 4.7%.
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Non-Performing Loans (NPL) over 90 days: 3%.
Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Banco do Brasil SA BB Brasil (BDORY) reported a robust net income of BRL18.8 billion, marking an 8.5% growth on a half-year basis.
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The bank successfully increased its fee income to BRL17.2 billion, a 4.7% growth, despite competitive pressures from digital banks.
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The bank's cost-to-issue rate and cost-to-income ratio were reported as the best, indicating efficient cost management.
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Banco do Brasil SA BB Brasil (BDORY) has been proactive in leveraging macroeconomic opportunities, resulting in positive outcomes from treasury interactions and hedging strategies.
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The bank's strategy to focus on payroll loans is expected to drive growth in the individual segment, with delinquency rates remaining under control at 3%.
Negative Points
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There is a noted increase in provisions for loan losses, particularly in the agribusiness sector, due to farmers delaying payments amid volatile commodity prices.
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The bank's capital consumption has increased due to growth in the loan portfolio and treasury activities, which may demand more capital.
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Concerns were raised about the sustainability of the current high return on equity (ROE) of 21.7%, given potential changes in interest rates.
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The legal risk expenses have increased significantly, with a 35% rise in the quarter, impacting overall expenses.
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The bank's exposure to economic plans continues to be a recurring issue, with provisions amounting to BRL1 billion in the quarter.
Q & A Highlights
Q: Could you elaborate on your strategy for the corporate portfolio and capital management for the second half of the year and beyond? A: Marco Geovanne Tobias da Silva, CFO, explained that despite a restricted market in the first half, Banco do Brasil capitalized on opportunities, particularly in capital market transactions. The bank ranks between second and third in CM transactions and aims to continue leveraging its strong corporate and individual client base. The strategy involves maintaining adequate capital management to support growth, with a focus on working capital and investment portfolios, which have shown significant growth.
Q: What is your outlook on the Allowance for Loan Losses (ALLL) and the impact on different segments, particularly agribusiness? A: Geovanne noted that the ALLL increase is partly due to agribusiness, where farmers delayed payments amid volatile commodity prices. The bank is negotiating to regularize delinquencies and expects to stabilize NPL rates. The ALLL from the individual portfolio is seen as "good cholesterol," stemming from credit expansion, especially payroll loans.