I'll show a bunch of selected metrics of the largest brazilian banks in order to take a more clear picture of 2011 results. My comments are as follow:
Banco do Brasil (BBAS)
- Has the lowest ratio Net Income/Portfolio, so to have the similar ROE as the other 2 has to be more leveraged (lowest Capital Adequacy Ratio).
- On the other hand, BBAS has the lowest Delinquency Ratio over 90 days: 2.1%
Bradesco (BBDC)
- It's the average bank, but near to Itau in terms of profitability.
- BBDC earnings are more based on corporate and insurance in relation to the others 2. I like this.
- The market darling has not so good current indicators. Delinquency Ratio over 90 days and Efficiency Ratio is very high. That could probably due to Unibanco acquisition, which may lead to a improve in next year(s).
- On the other hand, Itau can earn more on each BRL loaned (3.7%), so it doesn't need to be much leveraged.
In short: BBAS is the worst, operationally speaking. And ITUB is the best. But ITUB is more fair valued. So I think that BBDC (that has operational and profitability numbers very close to ITUB) and BBAS (that is very cheap now) would be a better pick.
5 comments:
I think BBAS's deliquency rate can't be compared to BBDC and ITUB because of the farm loans portfolio, wich I think shows a much smaller rate than the market average. The same applies to the paycheck garanteed loans, wich are stonger in BBAS than in the others, I think.
Overall, I agree with you: ITUB is well valued, BBDC is good but less expensive and BBAS is cheap, with some risks.
Valor: Cai o lucro dos grandes bancos no quarto trimestre
Valor: Novas regras reprovam até 95bi de capital de bancos
A conclusão foi que se os bancos mantiverem o nível recente de distribuição de lucros, o sistema não precisará de aportes extras de capital. As novas exigências poderiam ser cumpridas apenas com a retenção de resultados.
Valor: Dez maiores bancos vão perder 100 bi em capital
No caso do Banco do Brasil, outro ativo que deve ter um impacto relevante em seu balanço é o fundo de pensão dos seus funcionários, a Previ. Por isso a instituição será uma das mais afetadas por Basileia 3.
One more thing to worry about BB and the PREVI Surplus.
And about the subordinated debt? BICB uses it a lot. BBDC is using it too (US$ 1 billion yesterday). Will it be considered?
I think subordinated debt is considered tier 2 capital.
Post a Comment
We encourage your feedback and we will take your comments into serious consideration. However, you must be warned that any comment that does not follow the blog philosophy (Value Investing and Behavioural Finance) will be promptly removed.