Bradesco(BBD)2024-11-01 00:36Financial Data and Key Metrics Changes - The company reported a recurring net income of R$5.2 billion, an increase of almost 11% compared to Q2 2024, following a growth of over 12% in the previous quarter [3][4] - Total revenue for the quarter reached R$30.6 billion, reflecting a quarter-on-quarter growth of 3.7% [6][7] - Net interest income (NII) grew by 2.7% quarter-on-quarter, while fee and commission income increased by 2.8% [7][8] Business Line Data and Key Metrics Changes - The loan book expanded to nearly R$944 billion, growing 3.5% quarter-on-quarter, with significant growth in small and medium-sized enterprises (SMEs) at almost 17% [8][9] - The insurance group delivered a return on equity (ROE) of approximately 24%, with growth across nearly all lines [5][42] - The company experienced a 5.9% growth in consumer credit quarter-on-quarter, focusing on high-margin personal loans [15][16] Market Data and Key Metrics Changes - The company reported a 3.9% quarter-on-quarter growth in loans to individuals, with payroll deductible loans growing by 2% compared to a market growth of 1.9% [11][12] - The delinquency ratio is decreasing, indicating improved credit quality and lower provisions required for new vintages [33][66] Company Strategy and Development Direction - The company is focusing on risk-adjusted returns (RAR) as a guiding principle for decision-making, emphasizing the importance of maintaining a high-quality credit portfolio [23][51] - A new segment targeting high net worth individuals was launched, enhancing the company's wealth management capabilities [52][60] - The company is investing in technology and digital channels to improve operational efficiency and client experience [84][85] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the current economic scenario, projecting GDP growth of around 2% to 2.1% for the next year, with real income growth expected between 2% and 2.5% [67][68] - The company anticipates stable provisions and a growing NII, with expectations for continued growth in fee and commission income and the insurance group [71][72] Other Important Information - The company completed a tender offer for Cielo, which had a slight negative impact on quarterly results but is expected to normalize moving forward [34][35] - The company is expanding its footprint with 1,041 points of sale adjustments, exceeding initial expectations [41] Q&A Session Summary Question: Concerns about loan portfolio growth and profitability - Management acknowledged the importance of maintaining a safe portfolio with the right risk-adjusted return, emphasizing a cautious approach to growth [62][63] Question: Dynamics of client NII and challenges in mass retail - Management clarified that they are not decelerating growth in mass markets and highlighted their leadership position in SME lending [73][74] Question: Update on ROE and cost of capital - Management reiterated their commitment to improving ROE and delivering better returns, despite challenges posed by the higher cost of capital in Brazil [80][81] Question: Investment in technology and impact of interest rates - Management discussed ongoing investments in technology to enhance productivity and the neutral impact of high interest rates on their operations [83][87] Question: Results from recent testing of collateralized credit lines - Management confirmed that they are focusing on risk-adjusted returns and providing clean loans selectively, ensuring sustainable results [89][90]