With the highest portfolio growth among large publicly traded banks, Banco do Brasil () wants to continue growing next year. The bank sees room to advance in higher margin lines, which also present higher risks, but like its peers Bradesco () and Itaú Unibanco (), it will start with customers who are at home, and who have a banking relationship below the potential.
The center of this key turnaround must be credit cards, a product in which BB has grown little in the last two years. In the third quarter, the increase was 0.8% compared to the same period last year, to R$54.806 billion, a growth much lower than that of the individual portfolio (+7.9%).
It was a strategic choice: after the Covid-19 pandemic, product defaults soared, with worsening concentrated among customers acquired through digital channels and who had no previous relationship with BB. It’s a profile similar to that seen in other incumbent banks, but BB stopped concessions earlier and took longer to get back up to speed.
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“Where are we behind? Mainly in credit cards, growth in cards is one of our main focuses for 2025”, said the bank’s Vice President of Financial Management and Investor Relations, Geovanne Tobias, to journalists this Thursday.
For BB, expanding the card portfolio has an effect on two lines of revenue, that of customer margins and that of card income, which includes the collection of annual fees and interchange fees, passed on by the machines to the banks with each payment with a card. Increasing the portfolio increases the “mass” of transactions, which increases this revenue, which does not require capital allocation.
The bank’s president, Tarciana Medeiros, said at the press conference that this prospect of advancement also includes the impacts of Cielo’s delisting, which took place this year. “It is part of a more complete, more robust strategy”, stated the executive. According to her, BB no longer sees the card as an isolated product, but rather as part of the relationship with customers in a broad sense.
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The portfolio review involved a reassessment of the issuance contracts maintained by BB with retailers, airlines and other partners. One of the milestones was the end of the contract with Ame, from Americanas, agreed between the parties and anticipated by Coluna do Broadcast. “This product has little associated profitability for the bank”, said the deputy for Internal Controls and Risk Management, Felipe Prince.
Keeping an eye on the margins
Like its rivals, BB has sought to find a way to increase margins with customers without significantly increasing the cost of credit. It is a permanent formula for banks, but it gains greater weight in a scenario of rising interest rates, which compromises customers’ ability to pay by increasing the cost of debt service.
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Therefore, the composition of the portfolio must maintain a relevant role for payroll loans, with the search for greater space in the line destined for private sector employees. “We are able to continue growing at close to 10% next year and maintain control of this stable individual default,” said Tobias in the conference call with analysts.
In the third quarter, BB had R$20.8 billion in customer margins, an increase of around 1% in one year, given the concentration of the portfolio in lower risk lines. “Client margin was sequentially stronger (+5% in one quarter) due to the better funding mix,” stated the team led by Tito Labarta, from Goldman Sachs.
On the market margin, the bank saw a growth of 64.5% in one year, to R$5.1 billion, but saw contributions from Patagonia, the bank it controls in Argentina, decrease quarterly. The “villain” was the negative mark-to-market of securities in the institution’s portfolio, given the volatility of the neighboring country’s economy.
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