Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Victor Galliano is an experienced equity banks analyst, having covered Latin America banks and non-bank financials for over 12 years, as well as more recently covering the Italian banks. He has worked in sell side equity research for 30 years in a career spanning Barclays, HSBC, BBVA LatInvest, Barings and NatWest.
Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.
The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

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Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

Equity Bottom-Up

<ul>
<li>The market is likely to fear that <a href="https://www.smartkarma.com/entities/banco-do-brasil-sa" target="_blank" data-smartkarma-citation="entities:24564:1" rel="noopener">Banco Do Brasil Sa (BBAS3 BZ)</a> CEO Andre Brandao’s resignation threatens the restructuring plan, and other pro-market management initiatives</li>
<li>The replacement candidate for CEO is internal, according to press reports, which could imply lesser potential for restructuring, and limited potential for enhanced returns going forward</li>
<li>Despite these concerns, it is relevant to stress that the bank has a relatively strong balance sheet, with an improved core capital ratio and healthy credit quality metrics; rising benchmark rates in Brazil should also support credit spreads going forward</li>
<li>We expect near term downside to the share price, but given its current 64% and 57% PBV ratio discounts to <a href="https://www.smartkarma.com/entities/itau-unibanco-holding-sa-9d47d196-e503-471b-a84e-ca4401033062" target="_blank" data-smartkarma-citation="entities:24550:1" rel="noopener">Itau Unibanco Holding Sa (ITUB4 BZ)</a> and <a href="https://www.smartkarma.com/entities/banco-bradesco-sa" target="_blank" data-smartkarma-citation="entities:24569:1" rel="noopener">Banco Bradesco Sa (BBDC4 BZ)</a>  respectively, a lot seems priced in; the current PBV ratio discounts are close the maximum discounts of the last five years</li>
<li>The share price downside should be limited, in our view, as the market was already cautious on the Banco do Brasil stock following the Petrobras CEO removal</li>
<li>Risks to our view include a more interventionist and populist approach by government towards the management and the strategic direction of Banco do Brasil, as well as a weaker than expected economic recovery leading to higher than expected delinquencies and cost of risk going forward</li>
</ul>


The market is likely to fear that Banco Do Brasil Sa (BBAS3 BZ) CEO Andre Brandao’s resignation threatens the restructuring plan, and other pro-market management initiatives
The replacement candidate for CEO is internal, according to press reports, which could imply lesser potential for restructuring, and limited potential for enhanced returns going forward
Despite these concerns, it is relevant to stress that the bank has a relatively strong balance sheet, with an improved core capital ratio and healthy credit quality metrics; rising benchmark rates in Brazil should also support credit spreads going forward
We expect near term downside to the share price, but given its current 64% and 57% PBV ratio discounts to Itau Unibanco Holding Sa (ITUB4 BZ) and Banco Bradesco Sa (BBDC4 BZ)  respectively, a lot seems priced in; the current PBV ratio discounts are close the maximum discounts of the last five years
The share price downside should be limited, in our view, as the market was already cautious on the Banco do Brasil stock following the Petrobras CEO removal
Risks to our view include a more interventionist and populist approach by government towards the management and the strategic direction of Banco do Brasil, as well as a weaker than expected economic recovery leading to higher than expected delinquencies and cost of risk going forward


Banco Do Brasil (BBAS3 BZ): CEO Resignation, near Term Downside, but How Much Is Already Discounted?