Banco Bradesco S.A. (BBD) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary highlights a positive outlook with strong growth expectations in payroll loans, SME, and secured lines. Management is optimistic about future growth, maintaining credit quality, and improving efficiency ratios. The Q&A section further supports this with positive sentiments on technology investments and capital management. Despite some unclear responses, the overall sentiment is positive, with a focus on growth and strategic investments.
Key Financial Performance
Recurring Net Income BRL 6.5 billion, growing 20.6% year-on-year. Reasons for change: Improved operational performance and execution of the transformation plan. Full year recurring net income was BRL 24.7 billion, a 26.1% growth.
Return on Average Equity (ROAE) 15.2%, exceeding the cost of capital for the first time in this quarter. Reasons for change: Improved profitability and operational efficiency.
Digital Retail Clients 19 million fully digital clients, with a 40x reduction in direct cost to serve. Reasons for change: Increased efficiency and adoption of digital channels.
SME Market Share Increased from 14.3% to 16.6% by September 2025. Reasons for change: Introduction of a new digital model, new value propositions, and enhanced service offerings.
Loan Portfolio BRL 1.1 billion in December 2025, growing from BRL 9.6 billion in the previous quarter. Micro-small medium-sized companies grew 21.3%. Reasons for change: High client penetration, improved offerings, and engaged teams.
Net Interest Income (NII) 14.9% increase, with client NII up 17.4%. Reasons for change: Better liability management, increased penetration, and credit traction.
Fee and Commission Income Growth of 5.5% (excluding Cielo tender offer). Reasons for change: Increased card income (14.4%), high income (25%), and construction management (17.3%).
Operating Expenses 8.5% increase. Reasons for change: 22% growth in technology investments and implementation of new offices.
Insurance Operations ROE of 24.3% for the quarter and 22% for the full year. Reasons for change: Balanced growth across all lines and increased client base.
Capital Tier 1 Ratio Increased from 12.4% in December 2024 to 13.2% in December 2025. Reasons for change: Improved capital discipline and operational performance.
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Operating Highlights
Digital Retail: Achieved 19 million fully digital clients, with plans to grow to 40 million by 2026. Reduced direct cost to serve by 40x.
Affluent Clients: Upgraded 3.1 million clients with a new value proposition. Expanded 'Principal' segment to 62 offices and 320,000 clients by end of 2025, with plans to reach 800,000 clients and 70 municipalities by 2026.
SMEs Market Share: Increased market share from 14.3% to 16.6% in SMEs segment (companies up to BRL 300 million/year). Introduced 150 new branches in 2024 and revamped digital and remote services.
Capital Markets: Achieved 29.2% growth in capital markets activities in 2025 compared to 2024, driven by structural changes and investments.
Technology Investments: Invested heavily in technology, with a 22% increase in 2025 compared to 2024. Focused on AI-first culture, cybersecurity, and productivity gains.
Operational Efficiency: Reduced organizational layers, increased span of control, and improved decision-making agility. Reduced problematic assets by BRL 20.5 billion in 2025.
Transformation Plan: Implemented over 200 initiatives since February 2024, focusing on competitiveness, client engagement, and operational improvements.
Credit Business Unit: Established a dedicated credit unit with 250 professionals, enhancing risk-adjusted returns and portfolio management.
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Risk or Challenges
Digital Retail Expansion: The company plans to grow its digital retail client base from 19 million to 40 million by 2026. While this expansion aims to reduce costs, it may face challenges such as increased competition in the digital banking space, potential cybersecurity risks, and the need for significant investment in technology.
Affluent Client Segments: The company is expanding its affluent client segments, including opening new offices and upgrading client services. However, this growth may encounter challenges such as maintaining service quality, training sufficient personnel, and achieving the targeted client base growth.
SME Market Share Growth: The company aims to increase its market share in the SME segment, which has grown from 14.3% to 16.6%. Risks include potential economic downturns affecting SMEs, competition from other financial institutions, and the need for continuous innovation in digital and remote services.
Credit and Loan Portfolio: The company is focusing on growing its credit and loan portfolio with strict risk-adjusted returns. Challenges include managing credit risk, ensuring portfolio quality, and adapting to regulatory changes.
Technology Investments: The company has increased its technology investments by 22% in 2025 and plans to continue. Risks include the high cost of technology upgrades, potential delays in implementation, and reliance on AI and cybersecurity measures to ensure operational efficiency.
Insurance Operations: The company’s insurance operations have shown growth, but maintaining this growth may be challenging due to market competition, regulatory changes, and the need for continuous innovation.
Operating Expenses: Operating expenses grew by 8.5%, driven by investments in technology and transformation. Risks include the potential for cost overruns and the challenge of balancing investment with profitability.
Regulatory and Compliance Risks: The company has made significant investments in cybersecurity and compliance. However, evolving regulatory requirements and potential cyber threats pose ongoing risks.
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Guidance & Outlook
ROAE Growth: The company plans to continue growing its ROAE (Return on Average Equity) in the coming quarters and years.
Digital Retail Expansion: The company aims to increase its digital retail client base from 19 million to approximately 40 million by 2026, while reducing the cost to serve these clients.
Affluent Client Growth: The company expects to upgrade more than 1.5 million affluent clients, reaching 4.7 million clients by the end of 2026. Additionally, it plans to open almost 50 new offices for the Principal segment, expanding to 70 municipalities and targeting 800,000 clients by year-end 2026.
SME Market Share: The company aims to increase its penetration in the SME segment, which is expected to grow its share in the financial system in the coming years. The company has already increased its market share from 14.3% to 16.6% as of September 2025.
Technology Investments: The company plans to continue investing heavily in technology, with a focus on AI, cybersecurity, and productivity enhancements. Technology investments grew by 22% in 2025 compared to 2024, and this trend is expected to continue.
Loan Portfolio Growth: The company expects continued growth in its loan portfolio, particularly in the SME segment, supported by enhanced credit management systems and risk-adjusted returns.
Insurance Operations: The company expects continued growth in its insurance operations, which exceeded guidance in 2025 with a 16.1% increase in operating results.
Guidance for 2026: The company has set guidance for 2026, with expectations for expanded loan portfolio growth and continued traction in insurance operations.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:How do you see the underlying business trends, particularly regarding NII guidance and LLP?
A:The management stated that NII remains focused on their standard, with a mix change for 2025 emphasizing secured products. They are comfortable with the quality of their portfolio and expect LLP to grow in line with operations. They highlighted risk-adjusted returns, pricing, and growth opportunities in payroll loans, SME, and secured lines backed by receivables. They are optimistic about future growth with credit quality under control.
Q:Can you elaborate on the additional expense of BRL 700 million for restructuring and its impact on expenses?
A:The management explained that the restructuring focuses on reviewing the footprint, refurbishing physical stores, and opening new offices. They highlighted that technology expenses grew by 22% and will continue to grow. They aim to reduce costs in other areas like third-party services and transportation. The efficiency ratio improved, and they aim to reach 40% by 2028. They expect expenses to remain under control, with a focus on investments in technology and restructuring.
Q:What is the bank's position in the investment cycle, particularly regarding technology investments and efficiency ratio improvements?
A:The management stated they are in the middle of the investment cycle, with plans stretching until 2028. They emphasized continuous investment in technology to maintain competitiveness and improve efficiency. They aim to achieve efficiency gains and reduce the efficiency ratio, with a target of 40% by 2028. They believe technology investments will require constant growth over time.
Q:What is the strategy for Cielo, particularly in terms of integration and growth in SMEs and large accounts?
A:The management explained that Cielo is undergoing significant transformation, with improved logistics, pricing systems, and digital integration. They are focused on growing in SMEs while maintaining profitability in large accounts. They aim to leverage their distribution channels and digital offerings to drive growth and reduce attrition. They are optimistic about Cielo's integration and its contribution to the bank's competitiveness.
Q:What is the capital outlook for CET1, considering prudential adjustments and portfolio growth?
A:The management expects CET1 to remain around 11% throughout 2026, despite regulatory measures and portfolio growth. They highlighted their disciplined capital allocation and ability to absorb portfolio growth and increased interest on equity. They are confident in their capital management and expect to maintain CET1 at 11% with some fluctuations.
Q:What are the expectations for payroll loans, particularly private payroll loans?
A:The management is optimistic about growth in payroll loans, with a focus on gaining market share in private payroll loans. They highlighted their competitive models and 24/7 operations, which have shown growth in the past quarter. They expect continued growth and market share gains in this segment.
Q:What is the outlook for ROE in 2026 and beyond, and what are the levers for increasing profitability?
A:The management does not see 2026 as a year of settling but as part of their plan to improve step by step. They are optimistic about increasing ROE and absolute results, with opportunities in credit growth, liability management, fee and commission income, and cross-selling. They aim to deliver superior results and maintain competitiveness.
Q:What is the relevance of the insurance group to the bank's results, and how does it impact DTAs?
A:The insurance group is a significant contributor to the bank's results, with a diversified portfolio and strong performance. It does not hinder DTA consumption, and the bank expects DTAs to start reducing in 2027-2028. The insurance group is expected to continue growing and contributing to the bank's profitability.
Q:What are the expectations for SME growth and competition in this segment?
A:The management is confident in their position in the SME segment, with strong distribution channels, digital tools, and segmentation. They aim to grow in government lines, funding for company vehicles, and prepayments to suppliers. They are focused on increasing penetration and leveraging AI and analytics to manage the portfolio and engage clients.
Q:What is the outlook for credit growth across different segments in 2026?
A:The management expects strong growth in SMEs, followed by individuals and wholesale. They highlighted traction across all fronts, with a mix of products tailored to different segments. They aim to grow in secured loans, payroll loans, and other credit lines while maintaining risk-adjusted returns.
Q:Review of Unclear Management Responses
A:Management avoided directly addressing the question about corporate defaults and their expectations for deterioration, providing a vague response. Additionally, they did not provide a clear answer regarding the long-term tax rate outlook, instead discussing various factors influencing the tax rate without a definitive projection.
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BBD Transcript
Banco Bradesco S.A. (BBD) Q4 2025 Earnings Call Transcript
Positive2-6
The earnings call summary highlights a positive outlook with strong growth expectations in payroll loans, SME, and secured lines. Management is optimistic about future growth, maintaining credit quality, and improving efficiency ratios. The Q&A section further supports this with positive sentiments on technology investments and capital management. Despite some unclear responses, the overall sentiment is positive, with a focus on growth and strategic investments.
Banco Bradesco S.A. (BBD) Q2 2025 Earnings Conference Call Transcript
Unknown8-5
The earnings call presents a mixed outlook. Financial performance is stable, but there is no strong positive catalyst. Product development and market strategy show potential, especially in the SME and agribusiness segments, but face economic challenges. Expenses are managed well, but operating costs have risen. Shareholder returns are stable, with no significant increases announced. The Q&A indicates cautious optimism but lacks specific guidance and clear targets, leading to a neutral overall sentiment for the stock price.
Banco Bradesco S.A. (NYSE:BBD) Q4 2024 Earnings Call Transcript
Positive2-10
Despite some concerns in the Q&A regarding hedging strategies and vague management responses, the overall earnings call is positive. Strong financial performance with significant net income and revenue growth, a strategic share buyback program, and optimistic guidance on loan portfolio and insurance growth support this. The bank's cautious credit management and capital buffer further enhance stability. However, increased loan loss provisions and competitive pressures are noted but do not overshadow the positive aspects, leading to a likely 2-8% stock price increase.
Banco Bradesco S.A. (BBD) Q3 2024 Earnings Call Transcript
Unknown11-1
Bradesco's earnings call reflects a mixed sentiment. The financial performance shows strong metrics such as a growing recurring net income and improved loan quality, but competitive pressures and regulatory issues pose risks. The lack of a share buyback or dividend program could concern investors. The Q&A section reveals uncertainty about interest rates and future guidance, which may offset positive financial results. Without a clear market cap, the overall sentiment remains neutral, as positive financial growth is balanced by competitive and regulatory challenges.
BBD Slides
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Frequently Asked Questions
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