Banco do Brasil with Stable Profit and Payment of Income.

Investidor AvançadoWagner Geremia
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Banco do Brasil concentrates its efforts in the areas of agricultural credit and insurance.

When I consider the profile of the average Brazilian family, which values ​​face-to-face service and seeks long-term relationships, it becomes clear that the bank has a competitive advantage. I often ask my clients: where do you feel safer saving, in a digital bank or in a traditional bank ? Most responses lead me to believe that digital banks are preferred for quick transactions, however, institutions with physical branches maintain lasting personal connections with families, forming bonds that are difficult to break. When discussing Banco do Brasil , it is important to consider political risk, since the government is the main shareholder , and government statements can impact the share price , causing some apprehension. This justifies the discount on Banco do Brasil 's multiples in relation to its peers.

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Banco do Brasil presented its quarterly results and I separated some numbers as highlights

  • Banco do Brasil recorded adjusted net profit of R$8.8 billion in 3Q23, remaining stable in the quarter and with growth of 4.5% compared to the same period of the previous year. The annualized RSPL reached 21.3%.

  • In the quarter, the result was influenced by the good commercial performance and the growth of credit and treasury portfolios, which positively impacted the gross financial margin (+3.5%). Revenues from service provision (+1.7%) also increased, mainly influenced by the lines of fund administration, security products, consortiums and capital markets. However, expanded PCLD expenses increased (+4.7%), impacted by the increase in the credit risk of companies in the large corporate segment that filed for judicial recovery in January 2023, leaving risk G (70%) for risk H (100%). Administrative expenses were controlled (+1.5%), reflecting the adequate management of contracts and investments in the Bank's digital transformation.

  • Comparing the nine accumulated months (9M23/9M22), adjusted net profit was R$26.1 billion (+14.0%). The main highlights include the performance of the gross financial margin (+30.4%), influenced by the good results of the credit portfolio and securities allocated in treasury; growth in service revenues (+5.0%), notably in the consortium and insurance commercial segments; 32.5% increase in the result from interests in subsidiaries, associates and JVs; 101.2% increase in expanded PCLD expenses; and growth in administrative expenses (+8.0%).

  • Furthermore, in 3Q23, Gross Financial Margin (MFB) totaled R$23.7 billion, with quarterly growth of 3.5%. Service revenues totaled R$8.7 billion in 3Q23, increasing 4.6% compared to the previous quarter (2Q23). This growth was driven by insurance, pension and capitalization lines (+10.6%); fund management (+5.7%); and consortia (+8.6%), with more than 159 thousand new quotas sold with a turnover of R$12.0 billion in one quarter. The Basel Index was 16.24% in September 2023.

  • Banco do Brasil (BBAS3) approved the distribution of R$ 291,052,643.24 as remuneration to shareholders in the form of dividends and R$ 1,958,323,968.37 in the form of Interest on Equity (JCP ), both relating to the third quarter of 2023.
Tags: Investidor avançado, Valuation

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