Banco BMG (BMGB4) Q4 2023 earnings summary

Executive summary

• 4Q23 net income was R$124 million, up 73.6% QoQ and 70.9% YoY; FY23 net income was R$205 million, down 9.5% YoY.

• Credit portfolio totaled R$23.827 billion, essentially flat YoY; clients numbered 10.4 million, with 71% holding credit products and 28% insurance products.

• Consignable credit represented 63% of the portfolio; the 90-day NPL ratio fell to 3.5% from 5.6% in 3Q23.

Financial highlights

• Financial margin was R$1.166 billion in 4Q23, up 3.0% QoQ and 9.2% YoY; FY23 reached R$4.474 billion, up 13.4%.

• 4Q23 margin after cost of credit was R$592 million, up 6.8% QoQ and 15.7% YoY; FY23 was R$2.074 billion, up 0.1%.

• Operating expenses, net of other operating income, were R$517 million in 4Q23, down 2.0% QoQ and 1.2% YoY; FY23 rose 4.5% to R$2.180 billion.

• FY23 ROAE was 5.2%, versus 5.8% in FY22; total assets were R$43.918 billion and shareholders’ equity was R$3.925 billion at 4Q23.

Outlook and guidance

• Strategy prioritizes profitable growth, efficiency and client experience, with broader products and services for the 50+ customer base, digital and self-service relationships, and asset-light distribution.

• Payroll loan originations rebounded to R$639 million in 4Q23, 3.9x the prior quarter, as repositioning and operational improvements advanced.

• Funding plans include recurring capital-market issuance and investor diversification; a R$100 million CRI backed by financial bills was issued in January 2024.

• Investees are intended to expand business units, consolidate insurance, improve efficiency and extend sales and service channels; iCertus and QGX operations remained pending completion.