Banco Bradesco S.A. (BBD) Q1 2025 Earnings Call Transcript

2025-05-08 14:49:58 ET

Banco Bradesco S.A. (BBD)

Q1 2025 Earnings Conference Call

May 08, 2025, 09:30 AM ET

Company Participants

Marcelo de Araujo Noronha - Chief Executive Officer

Cassiano Ricardo Scarpelli - Vice President

Andre Carvalho - Investor Relations

Joao Carlos Gomes Da Silva - Executive Officer

Ivan Lima de Queiroz – Credit Policy Manager

Conference Call Participants

Thiago Batista - UBS

Daniel Vaz - Safra

Mario Pierry - BofA Securities

Gustavo Schroden – Citigroup

Pedro Leduc – Itau

Jorge Kuri - Morgan Stanley

Rosman – Unidentified Company

Enrique Navarro – Santander

Eduardo Nishio - Genial

Yuri Fernandes - JPMorgan

Carlos Gomez-Lopez - HSBC

Bernardo Guttmann - XP Investimentos

Renato Meloni – Autonomous

Tito Labarta - Goldman Sachs

Presentation

Marcelo de Araujo Noronha

Good day, everyone. I am Marcelo Noronha and I am here at the headquarters of Banco Bradesco Cidade de Deus, on a Thursday, May 8, 2025. It is now precisely 10:31. It is a pleasure to be here with you to disclose Bradesco earnings in the first quarter of 2025. So thank you very much for all of you who are joining us.

So I'll start speaking about our net income. You probably all had an opportunity to read the earnings release last night. Almost BRL5.9 billion recurring net income, growing more than 39% year-on-year and 8.6% quarter-on-quarter, with this level of ROAE of 14.4%. It is obvious that this result, the net income, is vertical surplus. I will speak about the causes. The main one driver -- the main driver being a revenue in three different pillars, which I will comment on momentarily, and with a very safe portfolio, intensive use of technology helping to increase our productivity and, of course, with a strong result from the insurance group.

So these are the pillars of revenue, which are also a consequence. In a moment, I will speak about what's driving each one of these pillars. But total revenue was BRL32 billion and growing 15% year-on-year. We have this absolute growth seen on the chart below. So total net interest, 13.7 increase year-on-year, 1.4% increase quarter-on-quarter. Fee and commission income increasing 10.3%, and insurance growing 32.7% year-on-year.

So we get to the first item or topic, which is driving our NII, net of provisions. So expanded loan portfolio totaled BRL1 billion bureaus to grow 4.9% year-on-year and 2.4% quarter-on-quarter, excluding John Deere Bank. The growth would be still significant, 11%. And we can see in the charts the level of growth that we had in each one of these segments of the loan book.

Individuals, 16.2% with a relative growth that is growing. And micro, small, and medium sized enterprises almost growing almost to 30% year-on-year. Wholesale, banker growing 1.2%. And if we didn't have the exchange of depreciation, this number would be higher. But here in the wholesale bank, as I normally say, we got a lot of traction in each one of the segments of the wholesale bank. But there are quarters with a BRL10 billion increase and in another quarter, a decrease of BRL10 billion.

For some reason, the capital markets here, DCM, is very active. A lot of company getting loans. We are having issuances. We are participating in those. And we also have the secondary market with our origination book for distribution. If you look at the main publication, you will see a TVM reduction of the wholesale bank of BRL7 billion year-on-year.

And I draw your attention to this. In order to get to that ROA of 14.4%, which, by the way, when we communicated our results in on February 08, 2024, the cost of equity was below 14%. Today, we would be above the cost of capital, but we're not worried about that. We're looking forward because we have much greater ambitions, and gradually, we will achieve them.

So looking at our loan book. We have traction in all of the business units and business segments, but our credit business unit has very important deliveries. We increased our headcount. We have intensive use of machine learning, better credit modeling, better credit policies. And in the last quarter of 2024, it said that our risk appetite was more moderate for the year of 2025, and that continues to apply. And we adjust our models all the time. And we assess this relationship of the team led by Andre, the business unit, and each one of the segment heads, well, they have an excellent communication. We don't have a lot of discussions to step on the brakes when we need to hold back a little or the opposite so that we can have a risk adjusted return, RAR. So we are working with the ratings.

And we have a lot of growth in collateralized portfolios. So I'd like to draw your attention to that. Individuals grow 16.2%. Rural loans posted a significant growth for farmers, for cattle raisers. So this portfolio is 100% collateralized.

Real estate financing. You just have to look at our LTV of origination, about 61%. You can find this in the main publication. And in the portfolio close to 52%. We continue to grow payroll deductible loans. Here for payroll deductible loans, among the private banks, we have the highest share, 14.3%. And here, we see an avenue of opportunities....

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