Banco Bradesco (BBDC4) Q4 2023 earnings summary

Executive summary

• Recurring net income was R$2.9bn in 4Q23, down 37.7% QoQ and up 80.4% YoY; 2023 recurring net income totaled R$16.3bn, with accumulated ROAE of 10.0%.

• Performance reflected a R$1.4bn 4Q23 expanded ALL reinforcement, primarily from one-off wholesale cases, partly offset by lower retail ALL; total NPL fell 50 bps.

• The strategic plan targets higher profitability through organizational simplification, technology and efficiency initiatives, and growth in Affluent, SME and credit businesses.

Financial highlights

• Net interest income was R$16.1bn in 4Q23, up 1.7% QoQ and down 3.3% YoY; FY23 was R$65.2bn, up 1.8%.

• FY23 fee and commission income was R$35.6bn, down 0.1%; 4Q23 was R$9.0bn, down 0.9% QoQ and 2.4% YoY.

• Operating expenses were R$14.9bn in 4Q23, up 11.2% QoQ and 10.7% YoY; FY23 was R$54.2bn, up 10.4%.

• Insurance, pension and capitalization bonds income was R$106.6bn in FY23, up 11.8%; related net income was R$8.9bn, up 32.2%.

• 4Q23 non-recurring events totaled R$1.175bn: R$570m restructuring provision and R$547m contingent liabilities.

Outlook and guidance

• 2024 guidance: expanded loan portfolio growth of 7%–11%; net interest income 3%–7%; fee and commission income 2%–6%.

• 2024 guidance: operating expenses growth of 5%–9%, with personnel and administrative expenses expected to grow in line with inflation; insurance income growth of 4%–8%.

• 2024 expanded ALL guidance is R$35bn–R$39bn, versus FY23 actual of R$39.5bn.

• Strategic ambitions include improving the efficiency ratio by ~8 p.p. from 48%, reaching 15%–19% credit market share from ~14%, and growing SME clients to 2.0–2.5m from 1.7m.