Banco do Brasil SA's profitability will withstand macro and competitive pressure in the upcoming 12 months as it aligns its operations with the Brazilian government's aim to cut down state-run banks' share in the financial system, Moody's said.
The rating agency also believes that the lender's profitability will resist downside pressure by aiming for high-return consumer loans and credit to small and midsize companies, and by enhancing fee income and curbing expenses.
"Loan growth in more profitable asset classes and lower loan provisioning will continue to support BB's profits, along with efforts to improve operating efficiency," whereas digital transformation will help reduce administrative expenses, according to Moody's.
The rating agency also noted that despite the improvements, the bank's profitability ratio will still be less than that of its private-sector rivals.
However, the lender's loan growth will increase in 2020, as operating conditions improve moderately, Moody's added.