Banco Bradesco Earnings: Net Interest Income Falls on Tighter Lending Standards

No-moat-rated Banco Bradesco reported weak third-quarter earnings that were roughly in line with our expectations even as as weak net interest income was offset by better credit costs than we had excepted. The bank's net revenue decreased 2.0% from last year to BRL 29.6 billion. Recurring net income fell 11.5% from last year but increased 2.3% from last quarter to BRL 4.6 billion. This translates to a return on equity of 11.3%, which is below the firm's historical levels. As we incorporate these results, we do not plan to materially alter our $3.70 per ADR fair value estimate for Banco Bradesco, and we see the shares as modestly undervalued.