Banco Bradesco's Credit Costs Are Improving, but the Bank Still Faces Headwinds

Banco Bradesco is seeking to recover from a period of weak performance. Credit costs rose industrywide in 2023, but the bank was a notable underperformer relative to its peers, with the bank's more-than 90-day nonperforming loan ratio reaching a peak of 5.7% in June 2023. While Banco Bradesco had been enjoying a period of high profitability prior to 2023, deteriorating credit conditions and contracting net interest margins put an end to that, with the bank's return on equity falling into the single digits. That said, in recent quarters, Banco Bradesco has seen signs of a recovery, as tighter underwriting had led to improving credit costs, but it will take time for the bank to return to its old profitability.