Rising Fee Income and Consistent Loan Growth Support Banco Bradesco's Second-Quarter Results

Headline numbers for Banco Bradesco’s second-quarter results were mostly positive, with recurring net income of BRL $7.4 billion showing growth of 3.2% quarter over quarter and 11.4% year over year. The bank’s fee-based income and insurance segments put up modest quarterly growth (4.2% and 12.8%, respectively) and even stronger year-over-year growth (6.7% and 135.5%, respectively). However, when taken in the context of nearly 12% inflation in Brazil, these numbers are less impressive. Nonetheless, this quarter translated to a return on equity of 18.1%, well above the bank’s historical average. As we incorporate these results, we don't expect to materially alter our fair value estimate for Banco Bradesco of $4.10 per ADR.