Uncertainty about the Bolsonaro government’s ability to balance public accounts, pressured inflation and high interest rates are likely to affect the recovery of the economy this year, in the predictions of Bradesco’s chief executive, Octavio de Lazari Jr.
“Unfortunately, there are still fiscal uncertainties and high inflation, a global phenomenon, with some local flavor, which ended up leading to a sharp rise in interest rates. in 2022″, said the executive, when commenting on the bank’s results in the fourth quarter and last year’s consolidated.
According to him, the prospects of low economic growth, with high interest rates and inflation should slow down the pace of expansion of the main lines of business for the next 12 months. Lines of credit for large companies and real estate financing are likely to be among the most affected.
After having marked an evolution of 18.3% of the loan portfolio in 2021, which reached R$ 812.7 billion, for 2022, the bank projects an advance that should be between 10% and 14%.
“In a year of such high interest rates, companies will not have to take resources for 5, 10 years to make investments, in a year that is also a political election”, said Lazari.
On the other hand, lines to individuals such as payroll-deductible loans and personal loans tend to present a more resilient performance in terms of customer demand this year, said the executive.
Bradesco’s president also stated that, in a scenario of interest rates back to double digits and low growth in economic activity, an increase in delinquency should be expected during the next quarterly balance sheets.
The bank’s over 90-day default rate rose from 2.2% in December 2020, and from 2.6% in September 2021, to 2.8% at the end of last year.
“It is intuitive for us to imagine that delinquency may increase a little”, said Lazari. He predicts that the rate of delays may experience levels between 3.5% and 4% over the next few months.
“Bradesco presented mixed operating results and a slightly disappointing guidance. However, we assess that the bank’s shares are trading at attractive multiples and reiterate our buy recommendation for the shares”, wrote UBS BB analysts in a report. The target price for Bradesco’s shares estimated by analysts is R$29 in 12 months.
Also with a buy recommendation and a target price of R$26 for Bradesco’s shares, Goldman Sachs analysts pointed out that the quarterly net income was about 10% below their estimates.
The return on equity, as well as the guidance disclosed, also fell short of what analysts at the American bank had expected.
“We expect a negative reaction from the market, given the weak fourth quarter result and lower guidance,” said analysts at Goldman Sachs.
This Wednesday, the bank’s preferred shares fell sharply and closed down 8.6%, trading at R$20.77. The Ibovespa rose 0.2%.
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