Market reacts badly to BB’s balance sheet (BBAS3), affected by Americanas provisions By Investing.com

Investing.com – The market reacted poorly to the balance sheet of Banco do Brasil (BVMF:), with the quarter negatively affected by the need for additional provisions for credits related to Americanas (BVMF:). According to analysts, without this impact, the financial institution would have presented more robust indicators, possibly the highest profit among large banks. However, expenses for provisions for doubtful debts weighed on the result.

At 1:35 pm (Brasília time), the shares fell by 3.74%, to R$49.74.

In a report released to clients and the market, Bank of America (NYSE:) (BofA) considered managerial net profit of R$8.8 billion in line with expectations, with ROE of 20.8%.

“The results reflected robust growth in loans and NII, but were offset by high charges and expenses with provisions”, ponder analysts Mario Pierry and Flavio Yoshida, who mention the provision of R$507 million for Americanas, now fully provisioned and a double-digit increase in operating expenses. BofA continues with a buy rating based on the discounted valuation, below the peer average, with a target price of R$65.

In a report, BTG (BVMF:) also cited Americanas’ provisions as a point of reservation, with the total provisions being higher than expected by the bank. The data, in general, came in slightly below what the bank expected, but still demonstrates the resilience of the financial institution.

“Excluding this effect, BB would have recorded a drop in profits, reinforcing expectations of more favorable earnings dynamics in the fourth quarter”, consider analysts Eduardo Rosman, Ricardo Buchpiguel and Thiago Paura. BTG continues with a buy recommendation and target price of R$66.

Santander (BVMF:), in turn, considered the results favorable, given the stability of asset quality. “BB reported solid results, despite higher provisioning. Given the results of 3Q23, the net result for 2023 revenue should come closer to the midpoint of the guidance of R$35 billion (below our estimates), but reinforcing our vision of double-digit net profit expansion in 2024”, highlight analysts Henrique Navarro, Arnon Shirazi and Anahy Rios, who reinforce BB as the preferred choice in the sector, with an outperform recommendation, equivalent to purchase, and a target price of R$75.

According to Genial Investimentos, the bank interrupted its quarterly growth sequence and was below market estimates and consensus. Still, profitability was considered solid, with “Banco do Brasil at a similar level to Itaú (BVMF:) and considerably ahead of Santander and Bradesco”