Banco do Brasil (BBAS3) has a profit of R$8.785 billion in 3Q23, but still frustrates expectations

The swing bar Banco do Brasil (BBAS3) increased after the good results presented by Itaú (ITUB4). But this time the public bank fell short of expectations and recorded net profit of R$8.785 billion in the third quarter of this year.

Of course, this is a lot of money and still represents a 4.5% increase over the same period last year. The problem is that the market expected an even higher profit, of R$9.010 billion, according to the average projection of analysts that the Your money compiled.

In any case, the return on equity (ROE) of 21.3% of Banco do Brasil surpassed that of Santander (13.1%) and Itaú (21.1%). Tomorrow it will be Bradesco’s turn to release the balance sheet for the third quarter.

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Banco do Brasil (BBAS3): Americanas effect?

An analysis of Banco do Brasil numbers shows an even greater weight of provisions for defaults on credit. They increased 66.4% compared to the same period last year and 4.7% in the quarter, to R$7.5 billion.

The bank attributes the increase in provisions to the increase in the level of credit risk “of a company in the large corporate segment that filed for judicial recovery in January 2023”.

Although the name is not mentioned, it is probably Americanas. Now BB has completely absorbed the company’s default, with 100% of the amount provisioned.

O default rate of Banco do Brasil as a whole ended September at 2.8%. This means an increase of 0.1 percentage point in the quarter and 0.4 point in 12 months.

At the same time, the credit portfolio of BB reached the mark of R$ 1.066 trillion, a quarterly increase of 2% and 10% compared to September last year.

The big highlight was agriculture, which showed an annual growth of 18.9% in the financing balance.

With the advance of credit, the financial margin — a line that accounts for revenue from financing minus the cost of raising money — had a strong increase of 21.1% compared to the third quarter of last year.

Fees and expenses

On the other hand, the revenue from service provision and Banco do Brasil fees slowed down in the third quarter and totaled R$8.7 billion, an increase of 1.7%.

Despite the lower growth, in the year to date BB remains within its guidance (projection) of an increase of between 4% and 8% in service revenues this year.

Something similar happens with the administrative costswhich advanced at a faster pace than revenues and reached R$9.2 billion in the third quarter (+9.2%).

When looking from January to September, the increase in expenses was 8% — therefore, within the growth guidance of between 7% and 11%.

With the third quarter results, Banco do Brasil is also on track to meet the 2023 profit target, which varies between R$33 billion and R$37 billion.

Banco do Brasil: dividend alert

If Banco do Brasil’s result was not perfect, at least the investor focused on earnings has something to celebrate. Along with the balance sheet, BB announced the payment of R$291 million in dividends and R$1.958 billion in interest on equity (JCP).

See the value per share below:

• Dividends: R$0.10198860740
• Complementary JCP: R$ 0.68622202551

Banco do Brasil intends to pay dividends on November 30th. But to be entitled to receive it, you must have BBAS3 shares on 11/21.

BB also informed that it paid R$953.7 million in JCP in advance to shareholders on September 29th.