Credit Suisse sees Bradesco's projections for 2021 as 'strong and bold'

The bank's record surprised positively, showing a better than expected profit

Bradesco recorded recurring net of R $ 6.8 billion within the fourth quarter, a rise of two.3% within the annual comparison, with the typical of analysts' projections pointing to a profit of R $ 5.333 billion. The results pleased Credit Suisse analysts, who also point to the projections for 2021 as "strong and bold", reiterating the advice to shop for with a target price of R $ 34.00 per share.

“We see positive results as for stocks thanks to a way stronger than expected fourth quarter, but more importantly, a 2021 well before the consensus, with growth in credit and net interest income from the client, lower cost of risk and significant cost reduction setting the tone for a robust 2021 ”, wrote the institution's analysts, during a note sent to customers.

For this year, Bradesco's management expects a 9% -13% growth within the loan portfolio (Credit's estimate is 10.7%), a forty five -8% increase in net interest income (the expectation of Swiss bank is 2.0%), fee revenue growth of 1% –5% (above the 0.5% estimate), and net provisions (including impairment and discounts) of R $ 14.0 billion - R $ 17.0 billion (Credit's expectation is R $ 17.9 billion).

The main difference in guidance in reference to Credit Suisse's estimates came from provisions, since the midpoint implies a risk cost of two.9%, materially above estimates of three.5% and 3.3% in 2019, and of net interest income, consistent with Swiss bank report.

Even if a more normalized risk cost level almost like 2019 is assumed (implying provisions of R $ 2.5 billion higher) and a hypothetical drop of 20% within the margin with the market, “the implicit managerial net income would still be R $ 25.8 billion, 5% above market consensus ”this year, analysts maintain.

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