Release Date: November 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- BCO Estado do Rio Grande do Sul SA (BSP:BRSR3, Financial) achieved a net income of BRL197 million this quarter, showing strong year-on-year growth.
- The bank's net interest income remains on a path of annualized growth, reflecting the expansion of the portfolio.
- Fees and services revenues grew at an annualized rate above inflation, covering 102.8% of personnel expenses.
- The delinquency rate over 90 days decreased to 2%, which is lower than the previous quarter.
- The bank successfully launched a new digital account, opening over 50,000 accounts, aligning with its strategy to expand the customer base.
Negative Points
- The bank faced challenges due to major floods affecting the state's economy, impacting crop harvests and leading to delayed agricultural activities.
- There was a negative impact on the net interest margin due to adjustments related to the floods, resulting in a decrease of almost 30 million in treasury.
- The rural loan portfolio showed unexpected growth due to climatic events, which was not anticipated.
- The bank's ROE, while reasonably good, could be better, indicating room for improvement in profitability.
- There is a tight margin in the rural credit portfolio, which requires careful management to avoid defaults.
Q & A Highlights
Q: Could you provide more details on the drop in the rural market margin this quarter and confirm expectations for the fourth quarter NIM guidance?
A: The rural credit margin is tight due to government-fixed rates and delays in loan disbursements. We are managing the portfolio to control defaults. For the fourth quarter, we aim to achieve an 18% NIM, which is challenging but feasible. (Respondent: CFO)
Q: What are your expectations for next year's financial margin considering interest rates?
A: We are optimistic about our retail operations, particularly with our Baic card, which offers competitive advantages. We aim to leverage small and medium-sized retail customers to improve margins. (Respondent: CEO)
Q: How do you plan to grow in the corporate segment, and what is the relevance of this portfolio?
A: We see significant growth potential in the corporate segment, focusing on receivables and providing competitive products. Our strategy includes leveraging Vero for corporate transactions and improving financial margins. (Respondent: Corporate Segment Manager)
Q: What measures are you taking to protect against high Selic rates, and how do you plan to improve profitability?
A: We are well-balanced in terms of interest rates between assets and liabilities. Our focus is on retail and profitable operations, and we are considering expanding to other states through Vero and digital accounts. (Respondent: CFO)
Q: Can you provide more details about the judicial deposits and their relevance to the bank?
A: Judicial deposits are significant in Brazil, with a portfolio of about 17 billion BRL. We manage these deposits and charge an administration fee, which contributes to our revenue. (Respondent: CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
