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XP is bullish on Banco do Brasil (BBAS3) and cautious on Nubank (ROXO34), after 1Q24 financial statements




OR Bank of Brazil (BBAS3) presented solid earnings forecasts for 2024, according to XP’s analysis of the financial sector following the first earnings season of the year (1Q24).

The Chamber’s report, signed by analysts Bernardo Guttmann, Matheus Guimarães and Rafael Nobre, strengthens the position of Itaú Unibanco (ITUB4) as a “top pick” – the best choice in the sector – as well as highlighting the shares of BR Partners (BRBI11) and Inter (INBR32).

Therefore, the purchase recommendation for BBAS3 shares was held, with a target price of R$36.5 (33% upside) and for ITUB4 Likewise, “Buy” with a price target of R$42.00 (32% upside).

BR Partners and Inter&Co also renewed their buy recommendations, with target prices at R$20 and R$34 respectively, with upsides of 40% and 34%.

XP evaluates banks in the first quarter

The Q1 2024 earnings season was seen as positive by XP analysts, with most banks showing a decline in NPLs (non-performing loans) despite seasonal factors.

“Companies in our coverage have focused on improving efficiency, which has had a positive impact on their results. In the capital markets segment, revenues remained resilient, with BR Partners as a key strength. Additionally, the Neobanks [como Nubank] have shown sequential improvements in their operations, leading to better results,” analysts say.

According to the house, the risk appetite of banks is gradually increasing, with existing banks starting to test riskier credit lines in a declining interest rate environment.

“In a scenario of falling interest rates, if NPLs (non-performing credit) remain under control, we could see the start of a new credit cycle, with a greater appetite for risk,” they comment.

In the capital market, revenue resilience has attracted attention, with efficiency gains and new sources of income. Overall, the outlook is positive, although a significant recovery in stock market trading volumes is still needed.

Performance of Nubank (ROXO34) and neobank

Neobanks continued to post strong ROE growth and robust profits, validating the operating leverage thesis.

However, the provision of credit will be crucial to the sustainability of this growth.

“In case of Nubank, concerns have been raised regarding credit deterioration and its future impact on sustainability and earnings quality. Managing investor expectations, particularly in relation to share price movements, will also be crucial,” XP highlights.

XP maintains a neutral recommendation for Nubank shareswith an upside forecast of -29% and a target price of R$7.2.

Payments segment

In the payments sector, Stone and PagSeguro reported solid results, with emphasis on the latter.

Despite a seasonally weaker quarter, there was a positive trend in Total Payment Volume (TPV) and consistent growth in credit portfolios, benefiting from a less intense competitive scenario and a progressive reduction in interest rates.

Banco do Brasil (BBAS3): BTG says it is ‘impressed’ by CEO and recommends buying shares

In a new report, after a meeting with Banco do Brasil executives, BTG Pactual analysts reported that they were “impressed” by the company’s CEO, Tarciana Medeiros.

In the opinion of BTG it has maintained the buy recommendation for shares of Banco do Brasilwith a target price of R$36, while the shares BBAS3 they are trading at around R$28 on the Ibovespa.

“We have written previously that Medeiros has been very assertive and has communicated well with all stakeholders, from the government (on the social agenda) to minority shareholders (concerned about the company’s profitability), but we believe that all investors (including us) ) left BB headquarters very impressed with the CEO,” says BTG.

“Not only did he demonstrate that he knows the various operational details of the bank very well, but he also sent a strong message about corporate governance and the bank’s focus on profitability. In the end, he made some comments that we think are positive for BB Seguridade shares “, continues.

Analysts draw attention to the fact that extensive experience in Bank of Brazil (over 24 years) it was crucial for Tarciana Medeiros to carry out her task of managing a publicly listed state company, including functions in customer relations and BB Seguridade, together with the experience and knowledge of her team.

Source: Terra

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