(Bloomberg) — Brazilian bank Banco Bradesco SA has finally begun to reap the results of a turnaround process that started when Chief Executive Officer Marcelo Noronha took the reins about a year and a half ago.
Bradesco reported first-quarter recurring net income Wednesday that beat analysts’ estimates. That reflected a positive surprise for net interest income and loan-loss provisions that are “under control,” according to Citigroup Inc. analysts led by Gustavo Schroden. Renegotiated loans also improved, they said.
Shares of Bradesco jumped as much as 17% Thursday in Sao Paulo — their biggest intraday gain since March 2020 — while the bank’s American depositary receipts climbed as much as 20% in New York, the most since November 2008. The Brazilian shares plunged 32% last year.
Noronha took over in November 2023 with the task of reversing a streak of losses, with both delinquency and provisions rates at high levels. XP Inc. analysts Bernardo Guttmann and Matheus Guimaraes said in a research report that the CEO’s transformation plan is continuing to gain momentum even amid a challenging macroeconomic environment.
“This is perhaps the first quarter where organic revenue trends suggest a structural improvement, without relevant jumps in any of the remaining lines,” Schroden and his colleagues wrote in a note to clients. They also cited the bank’s growing appetite for risk.
Despite the better-than-expected earnings, the bank didn’t change its guidance for the year. Noronha said in a post-earnings conference call with journalists that “the bank’s tendency is to move toward the guidance throughout the year,” while adding that the company’s goal is to “deliver a better result than the middle of the guidance.”
Noronha said in an interview with Bloomberg News late last year that the goal is to restructure the business to make it competitive even in a scenario of high interest rates and amid the rise of fintechs.
The first-quarter performance isn’t guaranteed to repeat in coming quarters, with the transition process for one of Brazil’s largest banks being “gradual and complex,” XP’s analysts said.
“The restructuring plan in progress is quite profound and the pace of evolution of the bank’s results will probably not follow a linear trajectory,” Guttmann and Guimaraes wrote.
–With assistance from Raphael Almeida Dos Santos.
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