Brazilian state-controlled lender Banco do Brasil said in a filing on Monday that its 2022 net income is likely to rise by up to 23.7% from last year, despite a slower loan book growth.
Banco do Brasil forecast a recurring net income, which excludes one-off items, between BRL 23 billion ($4.4 billion) and BRL 26 billion this year, compared to BRL 21 billion in 2021.
The bank indicated it plans to weather Brazil‘s dim growth outlook with good asset quality, higher net interest income, and sales of financial services.
Loan-loss provisions were estimated between BRL 13 billion and 16 BRL billion, versus BRL 13.1 billion in 2021. Latin America‘s biggest economy is likely to post little or no economic expansion this year, hurting consumers and companies.
Loan book growth is also expected to slow down to between 8% and 12%, compared to 19.1% last year, mainly driven by rural loans and consumer lending.
The bank, however, said it expects to post a 4% to 8% rise in fee income, similar to forecasts from brick-and-mortar banks such as Itau Unibanco Holding SA and Banco Bradesco SA last week.
Still, amid Brazil‘s surging inflation, operating costs are likely to go up by a similar percentage rise. In 2021, Banco do Brasil was able to tame inflation and post a rise of only 1.4% in expenses.
Banco do Brasil posted a 60.5% jump in fourth-quarter recurring net income from a year earlier to BRL 5.900 billion, beating an average analyst estimate compiled by Refinitiv of BRL 4.810 billion.
Profit was mainly helped by loan-loss provisions of BRL 3.790 billion, down 26.5% from a year earlier. Its 90-day loan default ratio stood at 1.75%, slightly down from the previous quarter.
Net interest income – a measure of earnings on loans minus deposit cost – rose 4.5% from a year earlier, to BRL 14.801 billion.
Its return on equity, a gauge of profitability, was 16.6%, up 2.3 percentage points from the previous quarter.