(Image: Disclosure / Editing: Bruna Martins)
O Brazil heading towards a new cycle of rising Selicthe basic interest rate. Some houses, like the BTGalready see an increase of 12.50%, increase of 2 percentage points. Given this scenario, the highlight goes to the bankssaid to XP in report.
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The broker carried out a roadshow in São Paulo to discuss the perspectives of the financial sector. According to XP, investors appear to be overweight (with exposition above) in the sector, which is seen as a safe haven amid rising interest rates and decreasing default rates.
But not all banks are encouraging. For the Banco do Brasil (BBAS3)for example, doubts persist about the Patagonia Bankthe Argentine operation. At the same time, it notes a slight increase in concerns about defaults and its impact on provisions.
“On the other hand, investors were surprised by the bank's ability to maintain a ROE very healthy. Finally, we observed that investors agree that the multiple remains discounted in relation to peers, but they do not see a trigger for an expansion of multiples”, he says.
In the case of Bradesco (BBDC4)XP says that the thesis was the most discussed at all meetings, despite few investors being positioned after the strong recent rise.
“The strategy of cost reduction e growth accelerationespecially in SO (financial margin), was seen positively, although the speed of improvement remains uncertain. There is an expectation that the bank will deliver solid results in the coming quarters”, he says.
The discussions surrounding the ROE of Bradesco indicate that, currently traded at 1,0x P/BV (price over book value), the bank must return to an ROE of 15-16% faster, while the market doubts its ability to achieve 17-18%.
“Following the recent rally, the market is questioning whether the bank can achieve this higher ROE level to justify another round of share price appreciation. The consensus is that, despite the challenges, Bradesco continues to be a strong brand with potential”, he says.
The bank also has several branches to close, and many investors simplify their view without recognizing that Bradesco has a differentiated structure, including a significant insurance company in its operations.
But for the XPthe big star continues to be the Itaú (ITUB4).
“We saw some investors reduce their exposure, motivated by a valuation which is no longer perceived as discounted. However, the consensus remains that the bank remains the most efficient in the sector, and the dividend yield is still attractive, with the possibility of distributing surplus capital”.
Some investors also questioned the current reduced appetite for creditwhich could compromise growth going forward. “While we remain positive about the case, we understand the reduction in investor exposure due to the generation of alfa potentially minor”, he completes.
BTG, Inter and Nubank
The actions of BTG remain very popular among investors in São Paulo. The feeling is that the strength of the M&A e Fixed Income (DCM) will continue to compensate for weakness in Stocks (ECM). Overall, the valuation of the bank continues to be the main driver of its shares.
For the Inter (BIDI11)despite the rally over the last 12 to 18 months, investors continue to compare their multiples with those of the Now (NOW) and therefore, they do not see the bank as expensive.
“However, most agree with our thesis that the bank has struggled to accelerate monetization for its customers. Overall, the positioning in the bank’s shares remains light”, he says.
No purplethe name still appears in practically every interaction. However, poor performance in consigned credit e investimentos (Easyinvest) is raising questions about enforcement. Potential difficulties in Mexico are also becoming more evident.
“As a result, there is a growing consensus regarding the likely slowdown in the growth of the credit portfolio in Brazil. Furthermore, the market remains attentive and concerned about the credit portfolio quality from the bank. However, we still see some investors positioned in the shares due to the continuous flow of buyers”, they say.