Banco do Estado do Rio Grande do Sul (BRSR6) Q4 2024 earnings summary

Executive summary

• Net income for 2024 reached R$916.1 million, up 5.2% year-over-year, driven by higher financial margin, stable loan loss provisions, and growth in service revenues, despite higher administrative and tax expenses and unfavorable other operating results.

• Total assets grew to nearly R$148 billion, up 17.9% year-over-year, with the loan portfolio expanding 15.6% to R$62.1 billion, mainly from commercial, rural, long-term, and foreign exchange loans.

• Digital transformation advanced with over 74,000 new digital accounts, nationwide rollout of digital accounts, modernization of IT infrastructure, and new products like Banri Global Account and contactless payments, with over R$474.4 million invested in technology upgrades.

• Equity increased to R$10.4 billion, and the Basel Ratio stood at 17.2%, well above regulatory minimums.

• Proactive response to major weather events in Rio Grande do Sul, including BRL 15 million in donations, targeted credit support, contingency plans, and new credit lines for affected sectors and communities.

Financial highlights

• Net interest income rose 16.2% year-over-year to R$6,375.6 million, with financial margin up 16.2% to R$6.38 billion.

• Fees and services revenue grew 8.5% to R$2.1 billion, led by credit card and payment services.

• Administrative expenses increased 7.2% to R$4.45 billion, mainly due to personnel, data processing, and marketing.

• Default ratio improved to 1.73%, down 0.22 p.p. year-over-year.

• Coverage ratio for loans >90 days at 243% in December 2024.

Outlook and guidance

• 2025 guidance: loan portfolio growth of 6% to 10%, net interest income up 7% to 12%, cost of risk between 1.2% and 2.2%, and administrative expenses rising 7% to 11%.

• Anticipates BRL 14-15 billion in state-driven infrastructure investment in Rio Grande do Sul, supporting credit growth.

• Guidance reflects confidence in credit growth, supported by infrastructure rebuilding and agricultural recovery, despite higher expected interest rates.

• Focus on maintaining low default ratios and further expanding digital and commercial credit offerings.