Banco do Brasil (BBAS3) approves share split

Banco do Brasil (BBAS3) approves share split
Banco do Brasil (BBAS3) approves share split
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02/02/2024 19:42

Banco do Brasil (BBAS3). Photo: Giovanni Nobile – BB Press Office

The shareholders of Banco do Brasil (BBAS3) approved, during an extraordinary general meeting held this Friday, the 2nd, the proposal to split the shares in the proportion of one to two, without diluting each shareholder’s share, according to a statement sent to the market.

In addition to ordinary papers, the split of BB shares also includes the American Depositary Receipt (ADR)traded on the American market.

Banco do Brasil: after announcement of share split, XP recommended purchase

after the board of directors of Banco do Brasil announcing at the beginning of December a proposal for a share split, XP Investimentos said that the movement is positive, as it does not change the bank’s fundamentals or growth prospects. The target price for the shares would be R$30.50.

According to XP, unlike an issue of new shares, the Bando do Brasil split does not dilute the shareholding of existing shareholders. In other words, when a company declares a stock splitthe price of its shares decreases, but the shareholder’s total market value remains the same.

With a lower value, analysts say, Banco do Brasil shares could be purchased by a greater number of investors.

XP highlights that, if the split continues, the “target price currently at R$61 per share will also be adjusted to R$30.5 per share”. The broker continues with a purchase recommendation for Banco do Brasil papers.

BTG increases bet on BB dividends

Updating your portfolio dividends for December, experts from BTG Pactual increased the weight of Banco do Brasil shares to 10%.

The house’s estimate is that the dividends from Banco do Brasil have a yield of 9.9% over the next two years.

“We believe the recent underperformance of private equity peers BBAS3 opens a window for investors to add more shares of the state-owned bank to their portfolios. In December/January, investors were concerned about potential bad credit practices, political influence at the bank and a dividend cut, to name a few,” says the house.

“However, the new ‘narrative’ is that BB is already at peak profits and its exposure to Patagonia (Argentine bank), Previ and the agro segment (impacted by the continuous heat wave/climate change) are major risks”, he continues.

Finally, despite the projection that dividends from Bank of Brazil represent a yield of 10% over the next two years, experts also highlight that this level could increase, given that the bank is evaluating an increase in its payout from 40% to 50%.

The article is in Portuguese

Brazil

Tags: Banco Brasil BBAS3 approves share split

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