Payroll: Banco do Brasil wants to boost credit – 02/14/2023 – Market

BB (Banco do Brasil) is committed to increasing the share of payroll loans in its portfolio and reducing exposure to large companies in order to improve the relationship between the risk of the loans it grants and the return offered by operations.

According to the president of BB, Tarciana Medeirosit will be important for the institution to grow in segments where the bank is already strong, such as INSS retirees and pensioners, but the idea is also to seek other audiences to boost payroll.

The speech of the executive, during an interview with journalists about the results this Tuesday (14), is in line with a recent statement by President Luiz Inácio Lula da Silva (PT), who wants BB as a “champion of payroll loans”.

BB’s adjusted profit in the fourth quarter of 2022 was BRL 9 billion, and in the accumulated result for the year, it reached almost BRL 32 billion. The projection for 2023 is to profit between R$ 33 billion and R$ 37 billion.

In order to achieve these objectives, the bank is betting on the growth of revenues from services provided, and on a composition of the credit portfolio with lower risks.

“We can grow more in payroll, and for that we are betting mainly on diversification, both in service channels and in the type of customer we serve today”, says Tarcia.

José Ricardo Forni, Vice President of Financial Management and Investor Relations at BB, says that the share of payroll in total credit granted to individuals reached 40% in 2022. The growth of this type of loan in 12 months was 7 .8%. This pace is lower than credit card and personal loan advances, which grew 14.5% and 18%, respectively.

BB’s main objective with this strategy is to stabilize delinquency, which doubled in 2022, rising from 1.75% in December 2021 to 2.51% at the end of last year.

BB projects a growth of up to 37% in provisions for loan losses for this year. According to Francisco Lassalvia, Vice President of Business and Wholesale, the projection follows the expected growth pace for credit.

Americans

BB’s new management explained the provisioning of 50% of its exposure to Americanas, with a reserve of almost R$800 million.

The bank’s option at this time is to wait for more details about the accounting inconsistency exposed at the retailer, and then review the strategy.

“We can provision 100% of the exposure. But for the moment, this amount is enough, and our balance sheet is well protected”, says the executive.

Lassalvia says that BB’s lower exposure to Americanas, in comparison with the large private banks, is due to the strategy of not directing so much credit to large companies. “We prefer to operate more in the capital market, helping companies raise funds.”

In 2022, the loan portfolio for large companies grew by 15.7%. In comparison, financing for micro, small and medium-sized companies advanced 21%.

Numbers surprise positively

Market analysts welcomed BB’s numbers for the fourth quarter of 2022. Raphael Figueredo and Carlos Daltozo, from Eleven, claim that the bank presented “yet another strong and surprising result”. The house recommends buying the bank’s shares, with a target price of R$ 65, which represents a potential appreciation of almost 55% for the share.

For Levante Investimentos’ analysis team, BB shares are very cheap, mainly due to the perception of political risk by investors.

“We believe that part of this discount in relation to private peers overestimates the real power of state interference in the bank’s performance, which has the potential for a much greater impact on the BNDES and Caixa Econômica Federal”, says Levante.