• Net Income: BRL5.4 billion for Q4 2024, a growth of 37%; BRL19.6 billion for the full year 2024, a 20% increase.
• Total Revenue: Over BRL32 billion, a 7.9% year-on-year growth.
• Net Interest Income (NII): Increased by 5.4% year-on-year.
• Fee and Commissions Income: Grew by 7.9% year-on-year.
• Insurance Revenue: Increased by 16.6% year-on-year.
• Total Loan Portfolio: Exceeded BRL980 billion, growing almost 12% year-on-year.
• Assets Under Management (AUM): Reached BRL122 billion.
• Customer Base Growth: Increased by more than 2 million clients.
• Digital Transactions: 99% of transactions conducted through digital channels.
• Insurance Net Income: BRL2.5 billion for Q4 2024; BRL9.1 billion for the full year, with an ROAE of 21%.
• Capital Index: Ended 2024 with 12.4%, increased to 12.8% at the start of 2025.
• Credit Card Growth: 5.1% year-on-year, with high-income segment growth of 14.5%.
• Payroll Loans: Grew by 5.8%.
• Fee and Commissions Income: BRL10.3 billion year-on-year, a 13.7% increase.
• Operating Expenses: Grew by 9.3%, excluding Elopar and Cielo, growth was 6.9%.
• Technical Provisions: Exceeded BRL400 billion, with almost 12% growth.

• Warning! GuruFocus has detected 6 Warning Signs with BBD.

Release Date: February 07, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Bank Bradesco SA (NYSE:BBD) reported a significant net income growth of 37% for the fourth quarter and 20% for the full year 2024.
• The bank's total loan portfolio grew by almost 12% year on year, with notable growth in micro-, small-, and medium-sized companies.
• Digital transformation efforts have been successful, with 99% of transactions occurring through digital channels, enhancing customer experience and reducing costs.
• The bank's insurance business showed strong performance with a 13.6% growth in total revenue and a net income of BRL2.5 billion for the quarter.
• Bank Bradesco SA (NYSE:BBD) has been recognized with two awards by InfoMoney for providing the best customer experience in its business processes.

Negative Points

• The bank's guidance for 2025 is more cautious due to macroeconomic uncertainties and a conservative risk appetite.
• Despite growth, the bank's CET1 capital ratio is slightly below the average among peers, raising concerns about capital adequacy.
• There is a potential challenge in maintaining NII growth due to lower spreads in certain loan segments like payroll loans and real estate.
• The bank faces intense competition in the high-income and secured loan segments, which could impact margins.
• Market NII remains a challenging area to forecast, with expectations of neutrality in 2025, indicating potential volatility.

Q & A Highlights

Q: Can you explain the good performance of your treasury department in Q4 and any changes in the hedge policy? How should we think about market NII dynamics for 2025? A: Cassiano Ricardo Scarpelli, Executive Vice President, explained that the surprise in Q4 was due to arbitration gains. Although there isn't a specific hedge operation, they do hedge in certain circumstances. For 2025, they expect to be more cautious, aiming for NII close to neutrality. Marcelo de Araujo Noronha, CEO, added that while they are conservative in their guidance, they have a strong team and expect a potentially better year.

Q: How comfortable is the bank with its CET1 capital level, and what is the strategy to return it to a higher level? A: Marcelo de Araujo Noronha, CEO, stated that they are comfortable with their capital, having reached 12.8% after adjustments. They have room to grow with stability and expect to increase profitability and net income, which will raise CET1 over time. An unidentified company representative added that their capital is stable and sufficient to fit within their guidance range.

Q: Regarding the guidance, is there anything to highlight about provisions or their levels? A: Marcelo de Araujo Noronha, CEO, mentioned that they expect the cost of risk to remain around 3%. They are comfortable with their credit strategy and have grown in safe lines like payroll loans and secured loans. They focus on risk-adjusted returns and expect better margins with controlled credit costs.

Q: What is the strategy for digital channels and capital management with a core capital of 10.9%? A: Marcelo de Araujo Noronha, CEO, stated they are comfortable with their capital and have no restructuring plans in the insurance group. Regarding digital channels, they plan to integrate new value propositions in 2025 and will provide more details later.

Q: Can you elaborate on the impact of IFRS implementation and the timeline for achieving normalized returns? A: Cassiano Ricardo Scarpelli, Executive Vice President, explained that the IFRS impact was due to reclassification of securities and adjustments to the Central Bank's criteria. Marcelo de Araujo Noronha, CEO, added that they aim for higher ROE than the cost of capital and are on track to deliver improved returns, though normalization may extend beyond 2026.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.