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 R$18.8 billion in 1H24, 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, and cost control.

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

• Total assets grew to R$2.36 trillion as of June 30, 2024.

• The bank maintained strong capital adequacy, with CET1 ratio of 11.60% and Basel III capital adequacy ratio of 14.19%.

Financial highlights

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

• Fee income reached R$17.2 billion in 1H24, up 4.7% year-over-year; 2Q24 fee income was R$8.8 billion, up 6.7% year-over-year.

• Administrative expenses in 2Q24 were R$9.2 billion, up 4.9% year-over-year; cost-to-income ratio at a historic low of 25.5%.

• Allowance for loan losses rose to R$19.96 billion in 1H24, reflecting a more conservative risk approach.

• Loan portfolio (net of provisions) increased to R$965.6 billion from R$919.4 billion at year-end 2023.

Outlook and guidance

• 2024 guidance maintained: loan portfolio growth 8–12%, NII growth 10–13%, fee income growth 4–8%, 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%).

• Management confirmed the bank’s ability to continue as a going concern, with no material uncertainties identified.

• The bank is preparing for new accounting standards effective January 2025, with ongoing impact assessments.

• Focus remains on payroll loans, expanding credit card and non-payroll portfolios for individuals.