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Banco do Brasil

SAO PAULO, Aug 10 (Reuters) - Brazilian state-run lender Banco do Brasil sees the second half of the year as "very favorable" for its growth strategy for lending to individuals and companies, executives said on Thursday.

The bank reported on Wednesday a 22.6% quarterly increase in the money it has set aside for loans at risk of default, but the provisions should undergo a "normalization" in the last two quarters of 2023, executives said.

"We understand that we have very favorable third and fourth quarters for us to implement our strategy" of credit to individuals, the bank's vice president of risk management, Felipe Prince, said during a conference call with analysts.

For 2024, loan-loss provisions are expected to grow, said vice-president of financial management Marco Geovanne da Silva, but in line with the growth of the bank's credit portfolio.

"We will probably be able to already show (2024 forecasts) when we release third-quarter results, but the outlook is quite favorable, with the resumption of growth (of the economy) and reduction of families' indebtedness," said Silva.

"We have a very optimistic stance for 2024," he added.

Earlier in August, Brazil's central bank cut rates for the first in three years and signaled more of the same in the months ahead. (Reporting by Alberto Alerigi Jr. Editing by Jane Merriman)

Banco do Brasil sees more favorable scenario for credit expansion 

Brazil's state-owned Banco do Brasil (BB) is evaluating holographic technology for customer service through a system termed 'Holograma BB', yet its extensive branch network deployment remains uncertain.

This innovation emerges as financial technology platforms gain popularity, especially among younger, tech-savvy customers.

Banco do Brasil, the nation's oldest public bank and one of its largest, seeks feedback from banking representatives before finalizing this tech adoption, recognizing the shifts in the banking sector due to digitalization and efficiency measures.

CEO Tarciana Medeiros affirmed to Bloomberg that they are in continuous dialogue with banking unions regarding this integration.

Banco do Brasil exploring holographic customer service amid rapidly advancing digitalization

With a positive outlook for the third quarter, driven by an expected gradual improvement in Brazilian default rates, I am upgrading my previous "buy" position to a confident "strong buy."

Banco do Brasil (OTCPK:BDORY) presents compelling reasons for its shareholders to maintain confidence in their investment in Brazil's largest state-owned bank. In my previous article, I underscored my bullish stance on Banco do Brasil, primarily due to its impressive sustainability metrics, exemplified by its above-average Return on Equity (ROE) for a non-private bank.

The recently disclosed second-quarter results further underscore the bank's adept execution of its strategic plans, auguring well for an anticipated dividend yield that could exceed 10% for the year. These results effectively alleviate any concerns that Brazil's prevailing challenges, such as elevated delinquency rates and credit scarcity, might have significantly impacted the bank's second-quarter performance.

Although Banco do Brasil's governance structure entails notable state-related risks, the bank's valuation remains remarkably attractive. Furthermore, while these risks are presently distant, they have yet to materialize. As a result, my outlook on Banco do Brasil remains bullish, and I am buying more shares. Consequently, I am upgrading my stance from "buy" to "strong buy."

Banco do Brasil has unveiled its earnings for the second quarter of 2023, reaffirming its strength in the Brazilian financial landscape. The results strategically position Brazil's largest state-owned bank as a formidable player amidst the country's premier private banks.

Notably, the bank has reported an impressive net profit of R$8.354 billion, outperforming its counterparts in the Brazilian financial sector. Additionally, Banco do Brasil has showcased remarkable growth, solidifying its position with the most robust expansion in its loan portfolio. This accomplishment underscores the bank's resilience and pivotal role in shaping the Brazilian economy.

In the second quarter, Banco do Brasil achieved an impressive Return on Equity (ROE) of 21.3%, which marks an increase from the previous year's 20.8%. This positions Banco do Brasil among the world's most profitable banks, alongside its private domestic peer Itaú Unibanco (ITUB), which reported a ROE of 20.9%. In comparison, giant American banks renowned for their efficiency, such as JPMorgan (JPM) and Morgan Stanley (MS), achieved comparable ROE figures of 16% and 10%, respectively.

Banco do Brasil and Itaú have established a remarkable global presence underpinned by their stellar ROE. In Banco do Brasil's case, the significance of this achievement is threefold: the attained ROE level is exceptionally high, it surpasses domestic peers, and it upholds consistency with prior management strategies.

There is a positive trend regarding the efficiency ratio, a key metric indicating the relationship between expenses and revenues. The ratio improved, declining to 28% during the quarter. This decline indicates that while expenses have risen, revenue growth has outpaced these expenditures, contributing to heightened efficiency.

The discussion then turns to credit quality, specifically portfolio defaults. Banco do Brasil has effectively maintained a default rate below the national financial system average, showcasing adept credit management. Despite a rise in delinquencies to 2.73%, it's important to note that this rate remains below the average of the National Financial System (SFN) sector, which concluded at 3.6%. While this 2.73% represents the highest delinquency in 12 months, the prevailing trend suggests a continued decline in SFN delinquencies.

Banco do Brasil's credit portfolio is distinguished by its safety, primarily composed of agricultural and consigned credits with lower risk profiles. The quarter concluded with a substantial portfolio size of one trillion reais, reflecting an impressive growth rate of 13.6%. This portfolio diversification is a positive attribute for investors, contributing to a safer outlook relative to industry norms.

Moving to the coverage ratio, which gauges the bank's provisioning ability for defaults, Banco do Brasil has consistently maintained a robust ratio of provisions to defaults. This underscores the bank's conservative risk management stance. While a modest decline in this ratio is observable, it still surpasses the financial system average.

Furthermore, Banco do Brasil's leverage, represented by the Basel ratio, remains at 14.1%, closely aligned with the industry average. This suggests a potential adjustment in the pace of future loan portfolio growth.

Banco do Brasil has announced a dividend payment of 14 cents per share alongside 65% of Interest on Equity (IOE). Notably, the bank's history of increasing payouts at 53% above the 10-year average opens the possibility of an additional dividend payment.

In conclusion, Banco do Brasil's Q2 2023 results demonstrate a positive trajectory consistent with prior management approaches. Despite certain areas warranting attention, such as the decline in leverage, the overall narrative reflects the bank's steadfast journey toward enhanced profitability and efficiency.

Banco do Brasil trades at a significantly more discounted valuation than its peers. It boasts a forward non-GAAP P/E ratio of 3.8x, notably lower than its domestic counterparts: Itaú Unibanco, Bradesco (BBD), and Santander Brasil (BSBR), trading at 7.9x, 8.9x, and 9.6x, respectively.

When we turn our attention to the price-to-book ratio (P/B), a widely used metric in financial institutions due to its incorporation of factors like provisions for loan losses, Banco do Brasil's valuation becomes even more compelling. With a price-to-book ratio of 0.88x, it demonstrates a substantial discount compared to its peers. This discrepancy is particularly pronounced when considering the most efficient player in the field, Itaú Unibanco, which trades at a price-to-book ratio of 1.48x.

Considering Banco do Brasil's high-quality metrics, the significantly lower valuation can be attributed to substantial risks arising from its status as a bank, with half of its shares owned by the Brazilian state. This is particularly relevant when considering Brazil's significant political risk.

Brazilian legislation delineates governance guidelines for public and mixed-economy companies, encompassing specific criteria for selecting directors, CEOs, and board members. As the previous year drew to a close, conversations arose concerning the prospective easing of these regulations.

This movement was propelled by the new direction of the Brazilian political and economic leadership, which leaned towards a more interventionist stance. If these modifications are implemented, their potential impact could extend to state-owned enterprises, including Banco do Brasil. This consideration is particularly relevant given the new leadership trajectory exemplified by the oil-giant Petrobras (PBR) case. Notably, Petrobras appointed a former politician as the company's new CEO earlier this year.

However, Banco do Brasil boasts the highest corporate governance listing on the Brazilian stock exchange. This category mandates companies to issue shares with voting rights exclusively, irrespective of the shareholder's position. Furthermore, Banco do Brasil's board includes an equal number of independent members and two representatives from minority shareholders.

A positive development is that since the appointment of Tarciana Paula Gomes Medeiros as the CEO of Banco do Brasil earlier this year, concerns regarding potential state intervention risks under the new management have not materialized. Investors' risk perception has been diminishing over the past two quarters. Consequently, confidence in Banco do Brasil's stocks has grown by over 60% by the beginning of August this year.

Banco do Brasil has unveiled robust Q2 results despite minor blemishes, effectively allaying any concern among shareholders arising from a more stringent credit landscape and elevated delinquency rates prevailing in Brazil.

The bank continues to uphold exceptional efficiency, outshining its domestic peers. The outlook for maintaining a double-digit dividend yield and retaining a stock price valuation at a noteworthy discount remains promising, despite political risks that have yet to manifest.

I am maintaining a positive outlook on the company's performance in the third quarter, anticipating a gradual improvement in delinquency rates in Brazil. Consequently, I am upgrading my previous recommendation from "buy" to "strong buy." Nonetheless, I am maintaining close monitoring of Banco do Brasil due to its status as a state-owned bank in Brazil.

Banco Do Brasil Q2 Earnings: Setting New Heights Amid Brazilian Notable Banks (BDORY)

On August 4, 2023, at 3:00 p.m., at the head office of Banco do Brasil S.A. ("BB" or "Company"), located at Setor de Autarquias Norte, Quadra 5, Lote B, 14th floor, Torre Sul, Asa Norte, Zip Code 70040-912,Brasília-DF, held in a virtual format only, pursuant to art. 124, paragraph 2-A, of Law 6,404/1976, and articles 5, paragraph 2, I, and 28, paragraphs 2 and 3, both of CVM Resolution 81/2022. The Electronic System made available by the Company for remote participation in the BB Shareholders' Extraordinary General Meeting ("Meeting") meets the requirements set forth in art. 28 of CVM Resolution No. 81/2022.

BOARD, ATTENDANCE AND QUORUM

The meeting was conducted in accordance with article 9, paragraph 2, of BB's bylaws, by the Chairwoman of the Board of Directors, Mrs. Anelize Lenzi Ruas de Almeida ("Chairwoman"), who, upon opening the Meeting, invited to compose the Board:

The following participated remotely, via the Electronic System, as provided in articles 134, paragraph 1, and164 of Law No. 6,404/1976, article 28, paragraph 5, CVM Resolution No. 81/2022; and in article 43, sole paragraph, of BB's Bylaws, respectively:

The number of shareholders who participated remotely, by themselves or by proxy, and those who manifested their vote remotely, was nine hundred and eighty-seven (987) shareholders, holding two billion, one hundred and eighty million, six hundred thousand, four hundred and ninety-one (2,180,600,491) common shares, representing 76.4% of the total of two billion, eight hundred sixty-five million, four hundred seventeen thousand and twenty (2,865,417,020) common shares, minus treasury shares, in compliance with legal provisions.

Between July 05, 2023, and July 28, 2023, the Company registered the receipt of nine hundred and sixty-four (964) remote votes, which were duly counted, as shown on the Final Voting Map (Annex 1) published on Banco do Brasil's Investor Relations page (https://ri.bb.com.br/).

The list of shareholders who participated in the Meetings, via the Electronic System and via the distance voting ballot, can be found in Annex 2.

Banco do Brasil S A  :  ESM - Minutes of the Extraordinary General Meetings 08.04.2023

Banco do Brasil is among the main South American banking group. The activity is organized around 5 areas: - retail bank: sale of classic and specialized banking products and services (consumer credit, leasing, insurance, etc.); - businesses bank; - investments bank; - market bank; - assets management: EUR217.7 billion of assets under management at the end of 2017. At the end of 2017, the group managed EUR129.9 billion in current deposits and EUR147.4 billion in current credits. Products and services are marketed through a network of more than 4,770 branches located in Brazil.

Banco do Brasil S A  :  Comunicado ao Mercado - Remuneração aos acionistas referente ao 2T23, atualizado até a data-base

Banco do Brasil S A  :  Comunicado ao Mercado - JCP Complementar 2T23 - Atualização até a data de pagamento

Good morning, everyone. I'm Janaína Storti, General Manager of Investor Relations at Banco do Brasil. I'd like to welcome you to our live event to discuss the results for the second quarter of 2023.

Our event will be in Portuguese, with simultaneous translation into English. To choose the language, click on the button in the right-hand corner of the page and select the desired audio. To begin, our CEO, Taciana Medeiros, and our CFO, Geovanne Tobias, will present our performance, followed by a Q&A session. We remind analysts that they can only ask questions via the webcast link. Also with us is the Vice-President of Internal Controls and Risk Management, Felipe Prince. I will now give the floor to our president Taciana to begin.

Tarciana Medeiros - CEO

Good morning everyone, thank you for being here for our 2Q23 results live stream. This is an important opportunity for us to discuss our performance and the outlook for our business. Our profit in the 2Q reached R$8.8 billion, representing growth of 11.7 compared to the same period last year, and in the semester our profit reached 17.3 billion, an increase of 19.5%. This significant performance demonstrates the success of our business guidelines and comes in the wake of growing results, which shows how disciplined we are in fulfilling our strategic planning.

Those who follow us know what to expect from our performance. The results and the close relationship we have with our clients every quarter back up this confidence. The number on the bottom line of the balance sheet is important to us, but the most important thing has been the consistency with which the company has achieved its results.

The performance of several lines of business contributed to the quarter's profit, especially the loan offer, which grew more than 13% in one year, reaching a balance of R$1.045 trillion. I would stress that this significant growth in the loan portfolio was accompanied by adequate risk management. Delinquency over 90

Banco do Brasil S A  :  Transcript Earnings Videoconference 2Q23

Banco do Brasil S A  :  Reference Form 2023

Banco do Brasil S.A. (BB) hereby informs that, the Board of Directors (BoD), in a meeting held on today, appointed, in accordance with Article 20 of its Bylaws, Mr. Paulo Roberto Simão Bijos as a member of the BoD, whose election will be discussed at an Extraordinary General Meeting convened on August 08, 2023.

2. Mr. Paulo Roberto Simão Bijos is a Doctoral Candidate in Political Science at the University of Brasília (UnB). He holds a Master's Degree in Legislative Branch from CEFOR (Center for Qualification, Training and Improvement) of the Chamber of Deputies. Since 2016, he has been a consultant for the Budget and Financial Supervision of the Chamber of Deputies. He has held the following positions: Consultant for Budget, Inspection and Control in the Federal Senate; Federal Auditor of External Control of the Federal Court of Accounts (TCU); Auditor (Deputy Advisor) of the São Paulo State Court of Accounts; and Planning and Budget Analyst at the then Ministry of Planning, Budget and Management.

Relações com Investidores / Investor Relations

Banco do Brasil S A  :  Board of Directors member appointment - Paulo Roberto Simão Bijos

At the beginning of this year, Nubank had 73.1 million customers in Brazil, as reported by the company. And David Vélez, founder, and CEO of Nubank stated in a statement that:

"The successive growth of our customer base continues to reinforce the efficiency and potential of our digital business model. This allows us to grow at scale, providing high-quality and low-cost financial services. We have solid levels of activity, above 82%, and increasing cross-selling possibilities, which have driven the company's revenues."

According to data from the Central Bank (BC), Caixa Econômica Federal remains the largest bank in the country, based on data from the end of the second quarter.

The customer numbers are as follows:

Additionally, according to the statement, almost 60% of active SMEs (small and medium-sized enterprises) have Nubank as their main account, and among the company's customer base, there are 10 million entrepreneurs, representing great potential for further growth in the segment.

The Brazilian unicorn has been investing in the growth of its customer base in Mexico and Colombia, expanding its presence in Latin America. Combined with the customer volume in Brazil, Nubank now has more than 85 million customers in Latin America.

Nubank has also been investing in new products for other countries, with digital accounts and credit cards already available in Mexico. In Colombia, the account is expected to be launched later this year.

Nubank reaches 80 million customers and surpasses Banco do Brasil |

Banco do Brasil S A  :  FTSE4Good Index Series in 2023

Notice on Transaction with Related Party (CVM Resolution 80/2022

Following next, the detailing required by Appendix F (art. 2) to CVM Resolution 80, as of 03/29/2022.

I - transaction description, including:

III - detailed explanation of the reasons why BB's management considers that the transaction has observed commutative conditions or provides for an appropriate compensatory payment, informing, for example:

If the transaction is a loan granted by BB to the related party, the information provided must necessarily include:

Banco do Brasil S A  :  Federal Government

In anticipation of the transformation that 5G will bring to various sectors of society, Claro and Embratel have joined forces with Banco do Brasil to implement a standalone 5G network at the institution's headquarters in Brasília.

The partnership aims to develop new applications that can enhance the bank's customer service, security and internal processes, as well as co-create solutions with the potential to boost businesses in other sectors of the economy. These solutions will be useful for the product offerings of Banco do Brasil, Claro and Embratel for their customers.

The 5G technology is being used in Banco do Brasil's corporate program, Lentes BB, which enables innovative projects to become a reality, promoting the bank's purpose through a structure that connects people, develops skills and empowers new business models. The initiative aims to explore and disseminate technological trends to conduct experiments and foster innovation for creating new business models, improving experiences and enhancing operational efficiency.

Through this project, the bank can leverage the 5G infrastructure with new applications across various sectors as agribusiness, Smart Cities, industry, education and others, within an ecosystem in collaboration with the beOn Claro innovation hub and Embratel. The agreement also includes workshops, events and training focused on 5G for employees involved in the initiative.

Claro and Embratel partner with Banco do Brasil to activate a 5G technology project - Intelligent CIO LATAM

BANCO DO BRASIL S.A. (the "Company"), pursuant to the CVM Resolution 81/2022, discloses in the attached spreadsheet the synthetic voting map related to the shareholders' voting instructions, received through the financial institution depositary of its common shares (Banco do Brasil S.A.), consolidated with those sent directly to the Company for each proposal for consideration included in the distance voting ballots. Such votes will be considered in the final calculation of the resolutions of the Extraordinary General Meeting to be held on August 4, 2023.

Banco do Brasil S A  :  ESM -08.04.2023 - Summary Statement Voting Map

Banco do Brasil S A  :  ESM - 08.04.2023 - Final Summary Statement of Voting

We hereby inform you of the decisions of the Extraordinary General Meeting of Banco do Brasil held on August 4, 2023:

I. elected the following members, nominated by the Controlling shareholder, to the Board of Directors, to conclude the 2023/2025 term of office:

Mr. Paulo Roberto Simão Bijos, as a non-independent member; and

Mr. Dario Carnevalli Durigan, as a non-independent member, with his investiture conditioned to the favorable manifestation of the Humans, Remuneration and Eligibility Committee and the Board of Directors of BB.

Mr. Bernard Appy, as full member, and Mr. Manoel Nazareno Procópio de Moura Júnior, as alternate member; and

Ms. Tatiana Rosito, as full member, and Mr. Ivan Tiago Machado Oliveira, as alternate member.

Banco do Brasil

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