Release Date: August 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Banco Bmg SA (BSP:BMGB4, Financial) reported a net profit of BRL105 million, reflecting a 12% increase from the previous quarter.
- The bank's capital indicators improved, with capital increasing from 12.5% to 13.9%.
- Operational efficiency has been a strong focus, leading to higher revenue and strong cost control.
- Customer satisfaction has improved significantly, with a 54% drop in complaints to the Central Bank and a 34% reduction in call center activations.
- The bank received two awards for excellent customer service, including the RA1000 seal from Reclame Aqui.
Negative Points
- The market remains difficult with tightened rates, posing challenges for future growth.
- There was a significant drop in the retail portfolio due to a BRL1.2 billion portfolio transfer.
- The bank's wholesale insurance segment showed negative results, affecting overall performance.
- Civil lawsuits remain a persistent issue for the banking industry, including Banco Bmg SA (BSP:BMGB4).
- The origination of payroll loans dropped in Q2 compared to Q1, attributed to seasonality and other factors.
Q & A Highlights
Q: I would like to know about the contract with Itaú. Maturity is for December 2026. What can you say about this contract?
A: (Felix Cardamone, CEO) We have a 10-year contract with Itaú that matures at the end of 2026. We respect this contract and work closely with Itaú to develop other products and services. We are focusing on improving our sales force, product portfolio, and customer service to maximize the value of our partnership.
Q: How does the bank see the new INSS auction? Do you believe the current rate will allow BMG to participate?
A: (João Consiglio, Executive Vice President) We see the INSS auction as a market evolution that will allow us to reach more customers. Despite tight margins, we aim to be efficient and competitive in this auction. (Flavio Neto, Executive Vice President) We will participate in the auction, although tight rates may diminish the appetite from our bank and others.
Q: What is the level of payout that we can expect this year?
A: (Flavio Neto, Executive Vice President) We will continue maximizing interest over our own capital within our limits. Any payout above this level will depend on growth opportunities, funding processes, and the availability of partners for credit assignments.
Q: What is the rationale for the seasonality in terms of profits? When will we see the reversion of IRR? What affected the net result of insurance that remained flat?
A: (Flavio Neto, Executive Vice President) Seasonality in results is due to target provisions that oscillate quarterly. We expect a complete reversion of IRR by Q4. The flat net result in insurance was due to negative results in wholesale insurance, which oscillates more than retail.
Q: How do you see the issue of civil lawsuits? Do you expect any negative surprises in this area?
A: (Flavio Neto, Executive Vice President) We do not expect any negative surprises regarding civil lawsuits. We have been focusing on this issue for the past four to five years, and our success rate in lawsuits has increased to 70%. We see a drop in the pace of lawsuits and expect a decrease in expenses related to them.
Q: Could you comment on loss provisions because of civil lawsuits?
A: (Flavio Neto, Executive Vice President) There are no provisions beyond normal regarding civil lawsuits. We adjusted our commission expenses entries due to more aggressive policies, which consumed the difference between the provision for a lawsuit already tried and the gain from the assignment of BRL1.2 billion in FGTS.
Q: The origination of payroll loans dropped. What can we expect?
A: (João Consiglio, Executive Vice President) There is a seasonal drop in loans connected to INSS benefits in Q2 compared to Q1. However, we have seen strong origination in July and expect the second semester to be better than the first.
Q: Banks are growing in credit cards. Does BMG want to grow with these products?
A: (Felix Cardamone, CEO) We have a relevant credit card portfolio connected to payroll. We focus on leveraging our payroll and benefit cards, which have the lowest rates in the market. Our plan is to increase the sale of these cards while maintaining our commitment to our core business.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
