Banco do Brasil improves full-year guidance after beating second-quarter profits

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A man walks in front of the headquarters of Banco do Brasil in Brasilia, Brazil, October 29, 2019.REUTERS/Adriano Machado

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SAO PAULO, Aug 10 (Reuters) – Brazil’s state-owned lender Banco do Brasil SA (BBAS3.SA) raised its full-year 2022 earnings forecast on Wednesday after posting better-than-expected second-quarter results, boosted by higher net interest income and cost control measures.

The company said in a securities filing that it now expects adjusted net profit for the full year to reach between 27 billion and 30 billion reais ($5.30 billion to $5.89 billion). , compared to a range of 23 to 26 billion in the previous forecast.

The move came even as Banco do Brasil forecast higher provisions for bad credit, which now stand at between 14 and 17 billion reais this year, compared to 13 and 16 billion previously estimated.

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Peer Itau Unibanco (ITUB4.SA), Brazil’s largest private lender, also raised profit expectations despite higher provisions. Read more

Higher loan loss provisions were a trend among Brazilian banks during the quarter amid a weak economy, but Banco do Brasil’s provisions grew at a slower pace than its peers.

Even so, Itau and Bradesco (BBDC4.SA), like Banco do Brasil, managed to beat earnings expectations.

In the second quarter, Banco do Brasil reported a 38% increase in net profit to 7.62 billion reais, beating analysts’ estimates of 6.48 billion reais polled by Refinitiv.

The bank said its net interest income, a measure of income on loans minus the cost of deposits, rose 18.9% to 17.06 billion reais.

Banco do Brasil’s loan loss provisions increased slightly by 2.3% to 2.94 billion reais in the quarter, while the loan portfolio increased by 19.9% ​​to 919.5 billion reais .

The lender also said it expects its loan book to grow by 12% to 16% in 2022, down from a previous forecast of 8% to 12%.

Shares of Banco do Brasil are up about 46% so far this year, outperforming the Bovespa stock index (.BVSP), up almost 5%, and its peers Itau, up 27%, Bradesco, up 11.5% and Santander Brasil, up. 4.8%.

($1 = 5.0947 reais)

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Reporting by Gabriel Araujo and Aluisio Alves; Editing by David Gregorio and Cynthia Osterman

Our standards: The Thomson Reuters Trust Principles.

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