In a press conference this Thursday (9), the CEO of Bank of Brazil (BBAS3), Tarciana Medeiros and the other bank executives were asked about the default and provisioning numbers for the first quarter of 2024 (1Q24) – perhaps the only ones that aroused any concern among analysts and investors.
The Provision for Doubtful Credit (PCLD) indicator showed R$8.5 billion this quarter, signaling that Banco do Brasil is heading towards the top of its guidance – which foresees a range between R$27 billion and R$30 billion.
If this figure were replicated equally in the following three quarters, the bank would exceed its guidance by R$4 billion.
Despite this, the executives highlighted that they remain calm with the current scenario, highlighting that the peak of default has already passed, remaining in December 2023.
Tarciana Medeiros, CEO of Banco do Brasilcommented that the provisioning rates “are already done” and sees no surprises in what was reported in 1Q24.
Tobias, the CFO, added that looking at the increase in defaults in agribusiness, there is also no concern “since it is a level that can be provisioned”.
In this sense, the executive also highlighted the data presented during the press conference, relating to non-performing loans (in English, non-performing loan or NPL), which totaled R$ 9.53 billion in the quarter, still below 1% of the Banco do Brasil credit portfolio.
The data presented shows that the 90-day default rate in agribusiness closed the quarter at 1.19%, showing successive growth quarter by quarter. At the end of 2023, this number was 0.96%.
A default of 90 days for individuals, in turn, showed a retraction, going from 4.79% in the previous quarter to 4.77% in this quarter.
Likewise, the same indicator fell when looking at legal entities, going from 3.37% to 3.19%.
Will Banco do Brasil suffer ‘RS effect’?
Furthermore, questions were asked about the impacts of floods in Rio Grande do Sul (RS). The assessment, at the moment, is that it is too early to quantify the damage.
Tarciana pointed out that “it is an event that not only affects the bank, but the entire economic cycle of the place and is related to it”.
“That said, we have a premium to deal with accidents, when it comes to the insurance company. We entered into partnerships with the main reinsurers in the world, and they were well prepared as this type of event is more common in other places in the world. We know that when the water recedes, the risks will be covered and customers will be able to count on help,” she declared.
Rio Grande do Sul currently represents 4% of the country’s credit portfolio. Bank of Brazil and 6% of the credit portfolio aimed at agribusiness.
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