Banco Bradesco Earnings: Results Improve, but Credit Quality Continues to Deteriorate

No-moat-rated Banco Bradesco reported first-quarter results that, while not impressive, were a significant improvement from a dismal fourth-quarter 2022. Banco Bradesco's recurring net income fell 37.3% from last year but increased 168% from last quarter to BRL 4.28 billion. This translates to a return on average equity of 10.6%, below the bank's historical average. As we incorporate these results, we do not plan to materially alter our fair value estimate for Banco Bradesco of $3.70 per ADR share. We view the shares as currently undervalued, though we note that the bank is clearly being affected by difficult economic conditions in Brazil.