Banco do Brasil (BBAS3) Q2 2024 earnings summary

Executive summary

• Adjusted net income reached R$9.5 billion in 2Q24, up 8.5% year-over-year and 2.2% sequentially; 1H24 adjusted net income totaled R$18.8 billion, up 8.5% year-over-year, reflecting robust business performance and effective client-focused strategy.

• ROE was 21.7% in 2Q24, up from 21.3% in 2Q23, driven by customer proximity, digital initiatives, sustainable credit, revenue diversification, and cost control.

• Quarterly income benefited from reduced ALLL expenses and higher fee revenue, especially in asset management, cards, and checking accounts.

• NII totaled R$51.3 billion in 1H24, with client NII and fee income both growing despite competitive pressures from digital banks.

• Cost-to-income and cost-to-issue ratios improved, with administrative expenses under control and at historic lows.

Financial highlights

• Net interest income for 2Q24 was R$25.5 billion, up 11.6% year-over-year and down 0.7% sequentially; 1H24 NII rose 16.4% year-over-year to R$51.3 billion.

• Fee income in 2Q24 was R$8.8 billion, up 6.0% sequentially and 6.7% year-over-year; 1H24 fee income grew 4.7% year-over-year.

• Administrative expenses in 2Q24 were R$9.2 billion, up 4.9% year-over-year and 4.1% sequentially; cost-to-income ratio at 25.5%.

• NIM was 4.9% in 2Q24, flat year-over-year and down from 5.1% in 1Q24.

• Basel capital adequacy ratio was 14.19% in June 2024, with CET1 at 11.60%.

Outlook and guidance

• 2024 guidance maintained: loan portfolio growth 8–12%, NII growth 10–13%, fee income growth 4–10%, administrative expenses growth 4–10%, and adjusted net income R$37–40 billion.

• 1H24 performance is tracking at the upper end of guidance for loan portfolio (+11.5%), NII (+16.4%), and agribusiness (+16.6%).

• ROE expected to remain above 20%, with risk-adjusted margins sustainable barring a sharp Selic drop.

• CET1 ratio expected to remain around 11%, well above regulatory minimum.

• Expectation of stable or slightly lower ALLL in the second half, with guidance targeting the middle of the range.