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

TMI Snapshot:  Early Signs of Bottoming in Brazil Macro Sentiment

Brazil Banking Data Trends to September in Ten Charts – Credit Quality Divergence

Brazil Bank Sector Trends to July in Ten Charts

Brazil Bank Sector Trends to June in Ten Charts

Battle Lines Drawn As BABA Builds Out First/Last-Mile Capacity; But Who Will Fund 75+ Bn CNY CapEx?

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 August remain broadly constructive</li>
<li>System loan growth slowed slightly on a YoY basis to 15.9% in August from 16.2%, driven by slower growth in corporate loans</li>
<li>Compared to July, consumer credit quality seemed well controlled although household arrears (15-90 days delay) data to August could be an amber signal for the medium-term NPL ratio, not least with household debt levels rising further</li>
<li>Credit quality of corporates showed that risks improved in micro-enterprises and SMEs further, and the differential in default rates narrowed further with large corporates</li>
<li>The NPL ratio worsened slightly in the case of private international banks, albeit from low levels and these delinquencies – along with the banking system generally – were more than fully covered by provisions</li>
<li>Credit spreads edged higher in August, on a MoM basis, and we expect the sharp  rise in benchmark rates to feed through with a time lag</li>
<li>We remain constructive on the Brazil bank sector, and retain our positive view on <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>  for its value attributes</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 August remain broadly constructive
System loan growth slowed slightly on a YoY basis to 15.9% in August from 16.2%, driven by slower growth in corporate loans
Compared to July, consumer credit quality seemed well controlled although household arrears (15-90 days delay) data to August could be an amber signal for the medium-term NPL ratio, not least with household debt levels rising further
Credit quality of corporates showed that risks improved in micro-enterprises and SMEs further, and the differential in default rates narrowed further with large corporates
The NPL ratio worsened slightly in the case of private international banks, albeit from low levels and these delinquencies – along with the banking system generally – were more than fully covered by provisions
Credit spreads edged higher in August, on a MoM basis, and we expect the sharp  rise in benchmark rates to feed through with a time lag
We remain constructive on the Brazil bank sector, and retain our positive view on Banco Do Brasil Sa (BBAS3 BZ)  for its value attributes
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 Banking Data Trends to August in Ten Charts

Banco do Brasil

Brazil Banking Data Trends to August in Ten Charts