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.

Financials & FinTech research

Brazil Bank Sector Trends to May in Ten Charts

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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>Brazil’s credit quality trends to April seem positive, on balance</li>
<li>Compared to March, there appear to be less concerning consumer credit quality and arrears (15-90 days delay) data</li>
<li>Credit quality to corporates shows that  even though credit risks are rising, the rate of growth is “shallow” in both large corporates as well as micro-enterprises and SMEs</li>
<li>In essence, we believe that credit quality risks may be moderating going forward, especially in higher risk consumer and in micro-enterprise and SME categories</li>
<li>In addition, the bank system’s generally high provisioning levels relative to delinquency provides a healthy buffer, in our view</li>
<li>Credit spreads ticked lower in April, and are still well below their recent highs of early 2020</li>
<li>We continue to see value in the sector and find <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> 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> attractive</li>
<li>Risks to positive view on these big cap Brazil banks include worse than expected credit quality, weak opex control and erosion of credit spreads</li>
</ul>


Brazil’s credit quality trends to April seem positive, on balance
Compared to March, there appear to be less concerning consumer credit quality and arrears (15-90 days delay) data
Credit quality to corporates shows that  even though credit risks are rising, the rate of growth is “shallow” in both large corporates as well as micro-enterprises and SMEs
In essence, we believe that credit quality risks may be moderating going forward, especially in higher risk consumer and in micro-enterprise and SME categories
In addition, the bank system’s generally high provisioning levels relative to delinquency provides a healthy buffer, in our view
Credit spreads ticked lower in April, and are still well below their recent highs of early 2020
We continue to see value in the sector and find Banco Do Brasil Sa (BBAS3 BZ) and Banco Bradesco Sa (BBDC4 BZ) attractive
Risks to positive view on these big cap Brazil banks include worse than expected credit quality, weak opex control and erosion of credit spreads


Brazil Bank Sector Trends to April in Ten Charts

Banco do Brasil

Brazil Bank Sector Trends to April in Ten Charts