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Banco do Brasil to incorporate more risk in loan portfolios

Banco do Brasil SA plans to take on more risk in its loan portfolios in 2018 and 2019, Valor Econômico reported, citing Bernardo Rothe, the bank's vice president of financial management and relations.

"The natural tendency is for us to continue to bring more risk to the portfolio by working with the account holder and higher return lines," Rothe said during a conference discussing the bank's second-quarter 2018 earnings. The bank aims to grow "in line with the market, that is, more on free and less directed credit" in the next few years, Rothe added. The bank expects to expand in free credit at 7.3% for 2019 and 7.9% for 2020.

Although the bank is increasing risk in its portfolios, the bank still expects to cut provisions for bad loans in the short and medium term, Rothe noted. "There will be an improvement in gross provision for the rest of the year and the trend of this indicator is to continue to fall over time," the executive said.

Consumer and agribusiness loans are also "growing within projections," the executive said.

Meanwhile, Rothe said some indicators "are already and will be converging to the guidance until the end of the year." Net interest income, which fell 8.1% in the first half compared to a year earlier, "tends to move toward the target in the coming quarters," Rothe said.

The bank's net income for the year is expected to fall "in the middle of the guidance, a little above that," Rothe said. The bank expects its adjusted net income to reach between 11.5 billion reais and 14 billion reais this year.

Banco do Brasil plans to raise dividends in the second half, after being hampered by volatility in the first half, Rothe said. The executive added that the bank still aims to achieve a payout rate of 40% this year.

The Brazilian banking giant booked quarterly net income of about 3.14 billion reais in the second quarter, up 19.7% from 2.62 billion reais a year earlier.

As of Aug. 9, US$1 was equivalent to 3.81 Brazilian reais.