Banco do Brasil has a better-than-expected result in the 3rd quarter

Banco do Brasil released results on Monday (8) above analysts’ estimates for third-quarter earnings and said it should have higher net income for 2021 than it had previously forecast.

The bank sees its recurring net income, which excludes extraordinary items, from BRL 19 billion to BRL 21 billion, compared to the previous range of BRL 17 billion to BRL 20 billion, as its loan portfolio is expected to expand faster.

Recurring net income from July to September reached R$ 5.139 billion, up 47.6% compared to the same period of the previous year, and above analysts’ estimate compiled by Refinitiv of R$ 4.496 billion. Return on equity was 14.3%.

Its net interest income, a measure of borrowing earnings minus deposit costs, increased 11.9% year-on-year to $15.683 billion, driven by borrowing and commercial earnings.

BB’s loan portfolio grew 6.2% in the quarter, driven by small companies, individuals and agribusinesses. The bank said its loan portfolio is expected to grow between 14% and 16% this year, boosting net interest income. Previously, BB had forecast an expansion of at most 12%.

The bank’s chief executive, Fausto Ribeiro, said in a statement that BB will seek growth in riskier credit lines with higher margins from now on.

The default rate on 90-day loans was virtually stable at 1.82%.

Lower provisions for loan losses also helped the bank to post a higher-than-expected profit, dropping 28.8% from the previous year, to 3.924 billion reais. Still, they grew 36.7% on a sequential basis.

BB shares have fallen about 20% this year, the worst performance among the country’s biggest banks, mainly because of concerns about political interference.