• Recurring Net Income: BRL 5.2 billion, up nearly 11% quarter-on-quarter.
• Total Revenue: BRL 30.6 billion, a 3.7% increase quarter-on-quarter.
• Net Interest Income (NII): Grew 2.7% quarter-on-quarter.
• Fee and Commission Income: Increased by 2.8% quarter-on-quarter.
• Insurance Group Revenue: Grew 8.7% quarter-on-quarter.
• Loan Book: Approximately BRL 944 billion, up 3.5% quarter-on-quarter.
• Loan Growth by Segment: Individuals up 10%, SMEs up nearly 17%, large corporates up 0.7%.
• Insurance Group Net Income: BRL 2.4 billion with an ROE of 23.7%, up 8.1% quarter-on-quarter.
• Operating Expenses: Grew 2% quarter-on-quarter, excluding Cielo consolidation.
• Tier 1 Basel Ratio: 12.7%, up 0.1 quarter-on-quarter.
• Footprint Revision: 1,041 points of sale adjusted, with an additional 1.8 million clients.

• Warning! GuruFocus has detected 5 Warning Signs with BBD.

Release Date: October 31, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Bank Bradesco SA (NYSE:BBD) reported a recurring net income of 5.2 billion barrels, marking an 11% growth compared to the previous quarter.
• The bank's profitability is on a solid growth trajectory, with a notable reduction in loan loss provision expenses.
• The insurance group delivered a significant return on equity (ROE) of nearly 24%, showcasing strong performance across various lines.
• The bank's loan portfolio grew by 3.5% quarter-on-quarter, with notable growth in small and medium-sized enterprises (SMEs) at almost 17%.
• Bank Bradesco SA (NYSE:BBD) is expanding its client base, adding 1.8 million new clients, and is launching a new segment for high net worth individuals to enhance its service offerings.

Negative Points

• The bank faces challenges in accelerating growth in mass retail for both SMEs and individuals due to cost of risk considerations.
• There is a noted decline in the share of credit cards in the net interest income (NII), attributed to a shift towards high net worth clients who pay off their balances monthly.
• The bank's operating expenses have increased due to investments in technology and senior hires, impacting overall cost management.
• The consolidation of Cielo had a negative impact on earnings, slightly lowering the bank's quarterly results.
• The bank's growth in demand deposits and savings accounts is facing competition, impacting overall deposit growth.

Q & A Highlights

Q: Can you elaborate on the bank's strategy for loan portfolio growth, especially given the lower profitability in corporate and payroll-deducted loans? A: Marcelo de Araujo Noronha, CEO, explained that the bank is focusing on a safe portfolio with the right risk-adjusted return. They are leveraging programs like FGI and ProNEP to achieve better risk-adjusted returns, even if it means lower NII, as it requires fewer provisions. The bank is confident in its strategy and is monitoring the economic scenario closely.

Q: How is the bank addressing the challenge of accelerating growth in mass retail for SMEs and individuals? A: Marcelo de Araujo Noronha, CEO, clarified that the bank is not decelerating in these segments. They are leaders in small businesses and are growing with clients with good ratings. The bank's strategy includes delivering better initiatives and maintaining competitiveness through new segments and credit business units.

Q: What is the bank's outlook on ROE improvement given the higher cost of capital in Brazil? A: Marcelo de Araujo Noronha, CEO, stated that the bank is committed to improving ROE quarter after quarter, regardless of the cost of capital. The focus is on delivering better returns with quality and predictability, supported by strategic investments in technology and credit business units.

Q: How is Bradesco leveraging technology and AI to enhance its operations and close gaps with peers? A: Marcelo de Araujo Noronha, CEO, mentioned that the bank is investing in technology to increase productivity and has been using AI and machine learning for some time. The focus is on improving client experience and operational efficiency, with AI being used in pricing and digital channels.

Q: Can you provide insights into the insurance group's performance and future growth prospects? A: Ivan Luiz Gontijo Junior, CEO of Bradesco Seguros, highlighted robust growth across all revenue streams, with significant improvements in claims ratios and operational efficiency. The group expects continued positive performance, driven by strategic initiatives implemented earlier in the year.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.