Banco Do Brasil(US:BDORY)2021-02-15 14:57Financial Data and Key Metrics Changes - In Q4 2020, Banco do Brasil's net income grew by 6.1% compared to the previous quarter, with an adjusted net income of BRL 13.9 billion, resulting in a return on equity (ROE) of 12% [63] - The pre-tax and pre-provision earnings (PPOP) reached BRL 42.4 billion, growing 5.9% year-over-year [63] - The expanded loan portfolio increased to BRL 742 billion, reflecting a 1.5% growth from Q3 2020 and a 9% increase from the end of 2019 [64] Business Line Data and Key Metrics Changes - The individuals' loan portfolio grew by 6.7% compared to 2019, with payroll deductible loans increasing by 15.2% [65] - The SME segment saw a significant growth of 25.6% year-over-year, largely due to participation in government aid programs [65] - Agribusiness loans increased by 4.3% compared to 2019, primarily driven by rural credit [66] Market Data and Key Metrics Changes - The credit forbearance portfolio amounted to BRL 130.1 billion, serving 2.3 million customers, with 95% of operations rated AA to C [67] - The non-performing loans (NPL) over 90 days stood at 1.9%, lower than the national average of 2.1% [80] - The net interest income (NII) rose by 5.1% to BRL 56.7 billion, benefiting from reduced funding costs [82] Company Strategy and Development Direction - Banco do Brasil is focusing on digital transformation and customer-centric strategies, emphasizing the importance of both digital and personal interactions [6][7] - The bank aims to reduce administrative expenses by BRL 3 billion annually, targeting a 10% reduction in recurring expenses [40][87] - The strategy includes enhancing agribusiness operations with 2,000 specialized professionals and 18 dedicated branches [37] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges of 2020 but highlighted the bank's strong performance and resilience, particularly in loan growth and credit quality [60] - The bank anticipates a robust growth in the loan portfolio, expecting an increase of 8% to 12% in 2021 [95] - Management emphasized the importance of sustainability and social responsibility as key pillars of the bank's strategy moving forward [54][59] Other Important Information - Banco do Brasil's CET1 ratio reached 13.62%, indicating a strong capital base to support future growth [93] - The bank plans to invest heavily in digital platforms, aiming for 17 million paperless customers by 2025 [59] - The bank's ESG commitments include reaching BRL 20 billion in ESG funds by 2025 and achieving 100% renewable energy consumption by 2030 [56][57] Q&A Session Summary Question: Inquiry about adjusted fee income figures - Management did not provide a specific pro forma number for adjusted fee income but acknowledged the challenges in the competitive environment affecting fee income [100][103] Question: Capital allocation and CET1 target - Management confirmed that the CET1 target remains at 11%, with plans to utilize surplus capital primarily for loan performance [112][114] Question: Decision to continue offering renegotiated loans - Management explained that the decision to continue renegotiations was due to regulatory changes and the low risk associated with government-backed loans [116][117]