Santander Brasil has upgraded its recommendation for Bradesco from ‘neutral’ to ‘buy’ — now seeing the bank operating with a 17% ROE perpetually, compared to the previous 15%.
Analysts Henrique Navarro and Anahy Rios also raised their profit expectations for 2025 by 9%, and the stock’s target price from R$ 16 to R$ 19, a potential upside of 26% from yesterday’s closing.
The stock is up nearly 4% in late morning trading to R$ 15.22.
With the new numbers, Santander sees Bradesco trading at 0.9x book value. The target multiple is 1.2x.
“Although we still believe that Bradesco’s era of 20% ROE is behind us, recent quarters indicate that the current structure can deliver a 15% ROE by mid-2025,” wrote the analysts.
“Furthermore, the ongoing implementation of the strategic plan could generate an additional 200 basis points increase for this ROE when, and if, cost savings become more relevant by 2026.”
Santander also stated that the main reason for believing in Bradesco’s recovery is that the core business (loans) is what has been driving revenue expansion, leading to sequential improvements in ROE.
“We see client NII growing by 15% in 2025, year-on-year, with Bradesco being more aggressive where it sees controlled/low credit risk, potentially resulting in a 25% growth in earnings per share.”
For 2026, Santander foresees continued ROE expansion due to operational leverage, with synergies from cost reductions, as provisions for most layoffs and branch closures have already been made.
In Santander’s view, Bradesco’s efficiency ratio should improve, moving from 39% to 37% by early 2027.
Source
Arwen Volkov, A graduate of the University of St. Gallen in Switzerland with a degree in International Finance, Arwen specializes in sustainable finance and green investments. She began her career at an investment bank in London, where she developed financing models for environmentally friendly projects. Known for her analytical and strategic thinking skills, Arwen is a sought-after financial consultant. In her spare time, she mentors fintech startups, contributing to their growth strategies. She is also a nature enthusiast and an amateur photographer.
