Banco do Brasil: profit up 44.7% in 1st quarter, higher than expected

RIO DE JANEIRO, BRAZIL – Banco do Brasil (BBAS3) on Thursday reported higher-than-expected net income, supported by lower provisions for losses with default.

The recurring net income rose to R$4.9 billion (US$930 million), up 44.7% over a year earlier and above the market’s average estimate of R$4.04 billion, according to data from Refinitiv.

The figures come as analysts and investors are eager to hear from CEO Fausto Ribeiro, appointed to run the bank after Andre Brandão resigned in the wake of a dispute with President Jair Bolsonaro over a cost-cutting plan.

The measures were aimed at boosting the bank’s profitability and closing the gap with private rivals.

Banco do Brasil’s return on equity reached 15.1% in the first quarter, up 3 percentage points from the previous quarter.

The bank reduced loan-loss provisions by 54.2% year-on-year, in a sign that its management believes it has sufficient funds to weather the economic impact of the pandemic.

Earlier this week, Itaú Unibanco (ITUB4) and Bradesco (BBDC4) reported similar declines.

The 90-day default rate increased slightly to 1.95%, mainly in loans to individuals. With the end of the grace plans announced at the start of the pandemic, banks are beginning to show an increase in defaults.

BB’s credit portfolio increased 2.2% in the quarter, mainly because of individuals and agribusiness. The bank posted net interest income of R$14.56 billion, 4% higher than in the same period last year.

Operating costs remained virtually flat year-on-year, but fell 4.8% on a sequential basis.

Payouts

Banco do Brasil approved the payment of R$970 million in dividends and interest on equity, the document shows.

According to the statement, the amount per share in dividends will be R$0.07433470709 and R$0.34011137994 in complementary JCPs (interest on equity), to be paid on May 28th, 2021.

As of May 24th, the shares will start being traded “ex-dividend.”