RIO DE JANEIRO, BRAZIL – Government controlled Banco do Brasil (BB), the oldest Bank in Brazil, and one of the oldest banks in continuous operation in the world, has posted a record adjusted profit of R$21 billion (US$4 billion) in 2021, a 51.4% growth compared to 2020.
According to the institution’s financial statements released overnight today (14), profits totaled R$55.9 billion (US$1.1 billion) in the fourth quarter alone, up 60.5% from the same period last year.
According to BB, which is among the top three largest banking institutions in Brazil and Latin America, the profit growth can be explained by the decrease in expenses for loan provisions (reserve of the Bank to cover possible defaults).
This item, calculated as an expense in financial accounting, decreased by 40.2% in 2021. At the beginning of the Covid-19 pandemic in 2020, banks had increased provisions to counter a possible increase in defaults.
Other factors that contributed to the increase in the Bank’s profit last year included growth in the loan portfolio, increased income from the provision of services, and improved gross financial margin. Administrative expenses remained stable.
In a statement, Banco do Brasil President Fausto Ribeiro celebrated the profit growth. “Our record profit has brought our profitability even closer to our private competitors. The result we delivered balances return and solidity. It is proof of our commitment to all shareholders,” he said.
LOAN PORTFOLIO
Banco do Brasil’s expanded loan portfolio totaled R$874.9 billion at the end of 2021, an increase of 17.8 % compared to 2020, with the highlights being transactions with individuals, agribusiness, and private securities.
In the agribusiness sector, the expanded portfolio amounted to R$248 billion last year, surpassing the record recorded in 2020. In the fourth quarter alone, growth amounted to 9.9% over the previous quarter. Loans to individuals increased by 4.5% in the same period.
The default rate of the Bank’s loan transactions over 90 days was 1.75%, lower than the average of the national financial system.
The sustainable business portfolio, which includes loans for projects with positive social and environmental impacts, exceeded R$291 billion last year and represented about one-third of the Bank’s total lending.
REVENUES AND EXPENSES
Revenues from the provision of services amounted to R$29.3 billion in 2021, an increase of 2.2% compared to 2020. The main areas were fund administration (+8.8%), security (+10.7%), and syndicates (+29.2%).
Administrative expenses increased 1.4% last year, according to company forecasts for 2021.
BB has also published forecasts for 2022. For this year, the institution expects adjusted net income between R$23 billion and R$26 billion, loan portfolio expansion of 8% to 12%, and growth of 4% to 8% in service revenue and administrative expenses.
Last year, the financial institution conducted a tender. Those who were approved have been called since November.