Esporte UPDATE 1-Banco do Brasil remains open to resizing of branch network, says CEO
Esporte (Updates with share reaction, analysts comments, background)
By Carolina Mandl
SAO PAULO, Aug 5 (Reuters) – Banco do Brasil remains open to a resizing of its branch network, the Brazilian bank’s new chief executive told reporters on Thursday.
President Jair Bolsonaro had ousted CEO Fausto Ribeiro’s predecessor over plans to close branches. Banco do Brasil closed 112 branches in the second quarter as the lender sought to boost efficiency.
Still, Ribeiro did not provide any outlook on new branch closures.
Shares in state-controlled Brazilian lender Banco do Brasil SA jumped more than 2% in morning trading, as the bank on Wednesday forecast a higher-than-expected 2021 profit on lower losses for bad loans.
Recurring net income, which excludes one-off items, came in at 5.039 billion reais ($975 million), up 52.5% from a year earlier as loan-loss provisions dropped. The bank added it was poised to end 2021 with a profit of 20 billion reais, 1 billion reais higher than expected earlier this year.
Given the bank’s performance, analysts at BTG Pactual wrote in a note to clients that Banco do Brasil has been undervalued.
“All in all, the Q2 results were decent, especially given the low expectations for the name. We see BBAS3 trading at an undemanding valuation of ~0.6x latest P/BV,” they said.
Shares in Banco do Brasil are down 14.3% this year, underperforming its main peers, reflecting Bolsonaro’s decision to replace CEO Andre Brandao in March, after the executive announced a cost-cutting plan which included the closure of several branches. Investor saw this move as political interference.
(Reporting by Carolina Mandl; Additional reporting by Paula Laier; Editing by David Goodman and Bernadette Baum)