Historically, shares of companies under state control usually trade at some kind of discount compared to private peers, given the inherent risk of political interference in the business.
In Banco do Brasil’s assessment, however, the discount with which its shares are traded on the Stock Exchange is excessive when compared to the market average.
“We are with our profitability recomposition agenda, seeking to align our profitability with peers. We understand that we have a very large, perhaps excessive, discount in relation to our share prices”, said José Ricardo Forni, vice president of financial management, media of payments and investor relations at BB, during a conference call to comment on the bank’s results for the third quarter of 2021.
Among the large banks with shares on the stock exchange, those of the state conglomerate are the ones with the biggest drop in the accumulated result for 2021, until November 8, of approximately 19.7% in the interval. The Ibovespa drops about 12% over the same period.
According to the vice president of BB, the expectation is to obtain a growth in the credit portfolio in 2022 in line with what is expected from the market in general, around the high digits.
The financial institution’s credit portfolio reached BRL 814.2 billion in September, an increase of 11.4% on an annual basis, and 6.2% compared to June 2021, boosted by the advance in segments such as individuals, with growth of 14.2% in the annual comparison, of micro, small and medium companies, with an increase of 24.6%, and of agribusiness, with 18.5%.
In light of the results presented in the third quarter, the bank revised its projections for the growth of the loan portfolio in 2021, from a range between 8% and 12% to something around 14% to 16%.
The performance in the coming years, predicts Forni, should be driven by the same segments that have already been highlighted in the last balance sheets.
Delinquency, in turn, should accompany this growth in the portfolio and normalize at levels higher than current levels. “When some of this effect of the pandemic ends and the provision that was being made in 2020, naturally, it will be accommodated,” said Forni.
Ana Paula Teixeira, vice president of internal controls and risk management at BB, said she expects a “moderate increase” in default, with a consequent reduction in the coverage ratio in the coming periods.
The bank’s internal assessment is that the increase in the delinquency rate should follow the trend that has been observed in recent months, pulled up by individuals, and with a reduction among legal entities and agribusiness.
Among individuals, default ended the third quarter at 1.23%, compared to 0.73% in the same period in 2020, and 1.20% in June 2021.
Among legal entities, the delay rate was 1.53% in September, against 1.99% a year ago, and 1.80% in the second quarter. In the case of agribusiness, the rate rose from 2.84% in September 2020 to 0.74% in June 2021, and 0.71% at the end of the third quarter.
“In light of the 2022 economic scenario, these are the trends in relation to portfolio growth and the effect on delinquency,” said Forni.
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