A Solid Start to 2022 for Banco Bradesco as Good Cost Management and Loan Growth Drive Results

No-moat-rated Banco Bradesco reported strong first-quarter earnings that continued the loan growth momentum from the fourth quarter but without the high operating expense growth seen in fourth-quarter 2021. The bank recorded recurring net income of BRL 6.8 billion, 4.7% higher than last year. This translates to a return on equity of 18%, while strong cost management brought the bank’s efficiency ratio down to 43.5%, some of the best numbers in the bank’s history. While there are lingering macroeconomic concerns in Brazil, this quarter’s results highlight a strong start to the year. As we incorporate these results, we are increasing our fair value estimate to $4.30 per ADR shares. The increase is primarily due to higher estimated net interest income as Bank Bradesco enjoys both the effects of rising interest rates and better loan growth then we had initially expected.