Investing.com – Banks are expected to show growth in profits in the first quarter, with positive trends for large financial institutions in general. While Santander (BVMF:) should continue on a recovery path, Bradesco (BVMF:) could be under more pressure, according to analysts. See preferences:
XP (BVMF:) Investimentos expects banks to continue with positive trends, mainly in the growth of the credit portfolio and stable default rates for Banco do Brasil (BVMF:) and Itaú Unibanco (BVMF:).
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In a report released to customers and the market, XP considers that the cost of credit must have decreased, which must have led to a greater appetite for risk, “with some banks presenting opportunities for growth in riskier lines of credit”.
Profit growth is likely for large banks in the first quarter, according to Itaú BBA, which sees lower credit granting expenses, considering that the worsening of the NPL should be in the past.
“The slow growth of the loan portfolio and weak NIIs of clients are another common denominator”, he highlights, while also recognizing that higher interest rates have a negative effect on long-term growth prospects, capital flows and valuations, but considering how favorable the short-term scenario is for large banks.
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In this way, Itaú BBA shows optimism with BB and Nubank (BVMF:), both with an outperform rating, equivalent to purchase, with the expectation that the season will be a positive trigger
Bank of America (NYSE:) expects Itaú Unibanco, Banco do Brasil and Santander to present solid operational trends and better results compared to Bradesco, which would remain under pressure and with weak revenue generation.
“We remain comfortable with Itaú, which should present another quarter of constant improvement. Banco do Brasil continues to benefit from the core banking operation and the Argentine subsidiary (Patagonia)”, highlights BofA, which also mentions improvements and solid growth in Santander’s annual net profit, which would be the best in the sector – but with a base of lower comparison.
“Bradesco should move in the right direction, but limited revenue growth (given the process of reducing the risk of the loan portfolio) and high expenses should impede market excitement. At Nubank, we see negative risks to our net profit estimate of R$407 million, given the pressures of the growth strategy in Mexico”, adds BofA.
‘Banks’ on InvestingPro
As InvestingPro, Investing.com’s premium platform, it is possible to build theoretical portfolios and compare the estimated target price of different stocks. By including four main large banks in Brazil, InvestingPro points out potential for appreciation in all shares, with emphasis on the potential of Itaú Unibanco, above 34%. The lowest upside, according to the platform, would be Santander, with 19%.
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Source: InvestingPro
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