Investors responded to Bradesco’s second-quarter earnings announcement with enthusiasm: its share price rose 8% in the following trading session and is now up 19% over the past month.
Eduardo Rosman, financial equity analyst at BTG Pactual, believes new chief executive Marcelo Noronha has been able to convince the market that he is pulling off a turnaround story – though Rosman and other analysts are themselves more cautious.
“We’ve seen a lot more interest from investors, and there are probably many buying the shares who think this is a turning point,” he says. “But the recovery is going to be tough – it’s going to be long and it won’t be a straight line.”
The headline news that excited investors was higher-than-expected income of R$4.74 billion ($860 million) – 7% higher than consensus estimates. Also, after shrinking for six quarters in a row, net interest income expanded by 5% in the quarter, non-performing loans improved by 50 basis points and provisions fell by 7%.
Fees and insurance results also beat expectations.
Investors are clearly hoping that this quarter marks the beginning of a structural return by the bank towards its place at the top table of Brazilian banking.
