Brazil's public banks more profitable than private peers for second year
BRASILIA, June 6 (Reuters) -Brazilian public banks were more profitable than private competitors in 2023 for the second year in a row, the central bank said on Thursday, while the profitability of foreign institutions in the country faced a sharp downturn.
In its Banking Economy Report, the central bank said public banks' return on equity (ROE) in Latin America's largest economy remained above 15% last year, just as in 2022, exceeding the system average of 14.06%.
The group of state-controlled lenders includes institutions such as Banco do Brasil BBAS3.SA and Caixa Economica Federal CEF.UL.
The report noted that although private banks' ROE showed a modest recovery last year, it remained below 15%, dragged down by "a decline in the profitability of a large institution".
Last year Bradesco BBDC4.SA, one of Brazil's largest private lenders, reported low profitability, with results falling short of expectations, penalizing its shares.
Foreign banks in the country were more significantly impacted by increased problematic assets and higher growth in loan-loss provisions, the central bank said, influenced by an accounting scandal at retailer Americanas AMER3.SA.
According to the central bank's report, these institutions' ROE was closer to 10% than to 15% last year.
The local unit of Spain's Santander SAN.MC, SANB3.SA is the largest foreign bank operating in Brazil, but has reported some poor results in recent years while trying to be more selective in its lending as credit conditions deteriorated.
Reporting by Marcela Ayres; Editing by Gabriel Araujo and Jan Harvey
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