Brazil's public banks more profitable than private peers for second year

Banco Santander Brasil SA

06/06/2024 14:14

BRASILIA, June 6 (Reuters) - Brazilian public banks were
more profitable than private competitors in 2023 for the second
year in a row, the central bank said on Thursday, while the
profitability of foreign institutions in the country faced a
sharp downturn.
    In its Banking Economy Report, the central bank said public
banks' return on equity (ROE) in Latin America's largest economy
remained above 15% last year, just as in 2022, exceeding the
system average of 14.06%.
    The group of state-controlled lenders includes institutions
such as Banco do Brasil  BBAS3.SA  and Caixa Economica Federal
 CEF.UL .
    The report noted that although private banks' ROE showed a
modest recovery last year, it remained below 15%, dragged down
by "a decline in the profitability of a large institution".
    Last year Bradesco  BBDC4.SA , one of Brazil's largest
private lenders, reported low profitability, with results
falling short of expectations, penalizing its shares.
    Foreign banks in the country were more significantly
impacted by increased problematic assets and higher growth in
loan-loss provisions, the central bank said, influenced by an
accounting scandal at retailer Americanas  AMER3.SA .
    According to the central bank's report, these institutions'
ROE was closer to 10% than to 15% last year.
    The local unit of Spain's Santander  SAN.MC   SANB3.SA  is
the largest foreign bank operating in Brazil, but has reported
some poor results in recent years while trying to be more
selective in its lending as credit conditions deteriorated.

 (Reporting by Marcela Ayres; Editing by Gabriel Araujo and Jan
Harvey)
 ((marcela.ayres@thomsonreuters.com; +55 11 5047-2444;))