Brazil’s incumbent banks have been facing a series of challenges: vibrant digital banks, credit squalls from large corporate insolvencies and rising retail delinquencies.
The large private banks have struggled. Bradesco’s poor performance led to a change in chief executive: in the first quarter of 2023 its return on equity (RoE) dropped to 11.1%, which is low for Brazil – 12 months earlier it had been 18.5%. In November, Marcelo Noronha was promoted, bringing Octavio de Lazari’s time at the helm to an end.
Meanwhile, Santander’s relatively new CEO in Brazil, Mario Roberto Opice Leão, was appointed in 2022 and inherited most of the causes of the bank’s deteriorating performance. As such he will probably be given more time to right the ship. The bank’s 2023 RoE was scarcely better than Bradesco’s, at 11.8%.
Itaú, meanwhile, has sailed serenely on. Its RoE did dip to 14.5% in 2020, but this was mainly due to higher provisions amid the global pandemic rather than actual losses, and it was back above 20% by 2022. In its most recent results, the bank reported a RoE of 21.2% in the fourth quarter of 2023, and 22.2% for its Brazilian business.
When Euromoney spoke to analysts that cover Itaú before heading to the bank’s futuristically shiny 3500 Faria Lima offices to meet chief financial officer Alexsandro Broedel (who took up his post at the start of 2021), the reason often cited for this performance was better credit underwriting control.
That
