Higher Credit Costs Pressure Banco Bradesco's Profits in the Third Quarter

No-moat-rated Banco Bradesco reported weak results during the third quarter, with high interest rates impacting the bank’s credit results. The bank’s recurring net income of BRL 5.22 billion fell 26% quarter over quarter and 23% year over year. The drop in net income was primarily driven by higher provisioning for future credit losses that rose to BRL 7.27 billion from last year’s BRL 3.36 billion. With the release, the bank also increased its guidance for 2022 provision for loan losses to between BRL 22.5 billion and BRL 27.5 billion from BRL 17 billion to BRL 21 billion, a dramatic revision. Growth in the bank’s fee-based income also stagnated during the quarter, rising 1.1% from last quarter and 4.8% from last year, less than the rate of inflation in Brazil, to BRL 8.86 billion.