2022-12-27-瑞士信贷集团-BCB_November_Credit_Data-Positive_seasonality_helping_retail_asset_quality_10页_629kb

BCB November 2022 Credit Data: Brazil Analysis

Overview

The report analyzes Brazil's Central Bank credit data for November 2022, highlighting loan growth, asset quality trends, and credit spreads. It also provides investment recommendations for banks, noting positive seasonality effects but cautions on risks from economic factors.

Key Findings

• Loan Growth: Year-over-year loan growth was 14.7%, slightly lower than October's 15.7%. Retail loans increased 18.5% y/y, while corporate loans grew 9.4% y/y. Monthly growth rose 1.0% to R$ millions.

• Asset Quality: Non-performing loan (NPL) ratios remained relatively stable, with retail NPLs at 5.9%. Seasonal factors like Black Friday boosted 90-day NPLs, but short-term delinquency indicators showed improvement in decelerating deterioration trends. Provision-to-loan ratios held steady at 6.0%.

• Credit Spreads: Front book spreads rose, with unmarked loans increasing 53 basis points y/y. Back book spreads were flat, influenced by de-risking and holiday seasonality.

Bank Recommendations

• Itau Unibanco (ITUB4.SA): Outperform rating; target price R$36.
• Banco do Brasil (BBAS3.SA): Outperform rating; target price R$55.
• Bradesco (BBDC4.SA): Underperform rating; target price R$19.
• Nu Holdings (NU.N): Outperform rating; target price $6.50.
• Santander Brasil (SANB11.SA): Neutral rating; target price R$35.

Risks

• Severe economic slowdown, increased delinquency, and regulatory changes may affect bank profitability.
• Market competition, higher capital requirements, and currency fluctuations pose additional threats.

Valuation Notes

• Brazil's macro environment and specific bank multiples influenced target prices, incorporating historical data and forward projections.