Best bank: Nubank
The definition of excellence in these Euromoney awards is multifaceted. Sometimes the best bank is the one that has innovated and changed the market, sometimes the momentum in the market deserves recognition and at other times the player that dominates in terms of scale and profitability is the winner. It’s not often all three, but in Brazil, Nubank has revolutionized the retail banking market while enjoying unprecedented growth that has begun to feed – thanks to its highly efficient operating model – into operational leverage that is driving market-leading profitability.
Led since it was launched in 2013 by David Velez, Nubank has been a banking story that has demanded attention around the world. The bank has recently powered through the 100 million customer threshold, the vast majority from Brazil. In 2023 the bank added 19 million clients, with net monthly ‘adds’ in Brazil of 1.3 million clients. Nubank can now claim to bank 53% of the adult population of Brazil and is already the fourth-largest financial institution in terms of number of customers. The bank started by offering credit cards – still a key differentiator among digital banking startups in the region – but accelerated its growth by managing to offer intuitive, net promoter score-strong digital platforms. The addition of interest-bearing current accounts reinforced its emerging ecosystem and the subsequent growth has been relentless.
Nubank’s ability to deliver deposits has also been critical to its funding strategy, with the bank’s deposit portfolio climbing 38% during 2023 to $23.7 billion, while the cost of deposit was stable at 80% of the blended interbank rates. The bank’s loan-to-deposit ratio ended 2023 at 34%.
In the fourth quarter of 2023 the positive operating leverage of this rapid growth in its client base become evident. Revenues came in at a record $2.4 billion (up 57%), net income jumped 489% to $360.9 million and with a return on income of 23%. This operational leverage is underpinned by the fact that monthly average revenue per customer increased 23% during 2023 to $10.6, while the cost-to-serve remained stable at 90 cents.
Best investment bank: Itaú BBA
The award for Brazil’s best investment bank goes to Itaú BBA, which is led by Roderick Greenlees, global head of investment banking. Itaú BBA has long been the dominant local player, but in the past 12 months has emphatically proven that its franchise can fend off the challenge delivered from the international banks. Itaú BBA dominated both local and international fixed income league tables, with an impressive 24% of market share for local issuance – a full nine percentage points higher than its nearest rival.
Itaú originated R$75 billion of bonds from issuers within Brazil and it also topped international issuance with a further R$1.5 billion over 10 deals. Notable deals include the R$25.6 billion of debentures the bank led for Aguas do Rio 12 and Aguas do Rio 2, which combined are the largest sanitation project financed in Brazil. It was also the largest environmental, social and governance-labelled transaction in the country.
The bank also led bond deals for the sovereign and displayed capability across the emerging bond space, including a sustainability-linked bond for Aegea and a mixed debt-and-equity transaction for CCR Aeroportos, as well as securitizations (Barzel), high grade (Braskem) and high yield (Azul).
Itaú BBA also claimed top place in the equity capital markets tables. The bank led more than $2 billion of equity issuance for 33 companies (a 50% market share in terms of the number of deals) and was a bookrunner for all the 10 largest Brazilian equity transactions in 2023. The bank led on some of the most important transactions of the year, including leading follow-ons for Localiza, Assai, Viveo, MRV, Smartfit and CVC.
Itaú BBA was also successful in terms of winning M&A mandates – the bank claimed second spot in this business (behind BTG Pactual) with 38 deals worth a combined $5.2 billion. The bank points to deals across industry sectors and led on cross-border transactions as well as domestic consolidation. A good example of its M&A franchise is the advisory work Itaú BBA provided for Arauco in its sale of some of its forestry assets in Brazil to Klabin. The deal covered about 150,000 hectares and is the largest forestry sale in Brazil.
Best international bank: Banco Santander
Banco Santander saw strong growth in the sustainability and digital space in Brazil last year.
The bank tightened credit criteria in 2023, and its over 90-day delinquencies stood at 3.1% at the end of the year, while short-term delinquencies (15 to 90 days) declined for three consecutive quarters, dropping from 4.5% in January to 3.8% in December. As a result, in the fourth quarter of 2023 the credit portfolio’s profitability was over 50% higher than in 2021 and nearly 40% higher than in 2022.
In the high-income segment – a key area for the bank – both volume and transactions grew, with customer numbers doubling from 600,000 to 1.2 million by year-end 2023.
In the environmental, social and governance areas, the bank’s sustainable business portfolio reached R$23.1 billion ($4.07 billion), a 55% increase year on year. Record funding of R$26 million was raised through the Amigo de Valor programme to support projects that guarantee the rights of children and adolescents.
In digital, the bank quintupled its technology deployments and used generative artificial intelligence to support its remote channel, reducing average service times by 18%. Open finance data was used to offer renegotiation options to 1.8 million customers with available funds from other institutions.
Best digital bank: Nubank
NuBank significantly expanded its customer base and product offering last year while also pioneering advances in artificial intelligence-driven customer service.
The bank added 1.3 million new customers per month in 2023. Overall customer numbers reached 87.8 million by the year end, representing 53% of Brazil’s adult population.
Its multi-product platform continued to expand, with credit cards reaching around 41 million active customers, current accounts 69 million and personal loans reaching over seven million. The bank also saw success in its insurance and investment offerings, with over one million active insurance policies and more than 15 million active investment customers.
NuBank’s lending business also saw substantial growth, with originations doubling in a year. The introduction of payroll loans for federal employees and pensioners, and loans backed by FGTS (the mandatory savings fund for Brazilian employees) contributed significantly to this growth.
Innovation remains a cornerstone of NuBank’s strategy. The neobank introduced over 25 new products and features in Brazil during the year, including new insurance options such as Nubank Auto and Nu Vidas Juntas, alongside the launch of its payment loans product NuConsignado.
The bank also ventured into generative artificial intelligence, enhancing customer service through an AI-powered virtual assistant. This innovation, leveraging ChatGPT4 and proprietary tools, offers personalized credit options.
Best bank for SMEs: BTG Pactual
BTG Pactual enhanced its operational efficiency in small and medium-sized enterprise banking last year through a combination of strategic product diversification and technological advances, resulting in strong growth in the segment.
The bank’s SME lending portfolio grew by 35% to R$21 billion ($3.7 billion). This growth was instrumental in pushing its overall corporate and SME loan book up by 19%.
Recent strategic expansion of the bank’s product offering, especially in agribusiness financing, was another important factor in this growth. The bank launched new credit lines for crop and machinery financing, in addition to introducing a clean energy credit line focused on photovoltaic projects.
Taking advantage of the booming deregulated energy market in Brazil, the bank also rolled out a guaranteed discount product offering customers a discount of up to 30% compared with regulated market pricing. As a result, the lender recorded a 10% share of this market at the end of the awards period.
Improving automation in commercial banking was another key focus for BTG Pactual. It made 1,700 productivity improvements across its channels and introduced 35 integrations with platforms such as Telegram and Google. This was accompanied by the launch of the bank’s open banking portal powered by integration with over 200 external applications.
In another important development, the bank entered a joint venture with Senior Sistemas, a leading enterprise resource provider. By integrating BTG Pactual’s financial services with Senior’s management solutions, the bank can offer more tailored solutions to clients.
Best bank for ESG: Banco Santander
Banco Santander’s environmental, social and governance portfolio in Brazil reached R$23 billion ($4.05 billion) over the awards period, marking a 55% increase year on year. The bank dominated the subscription market for carbon credits for the transport sector with a 41% market share in Brazil and operated the largest private productive microcredit programme for community entrepreneurs in the country with a loan portfolio of R$3 billion.
The bank acted on a number of landmark sustainable transactions during the year. Notable examples include a R$500 million debenture issue for Concessionária Linha Universidade, a R$7 billion debenture for Eletrobras and the Brazilian National Treasury’s inaugural green bond issue.
Innovative financing mechanisms included a pioneering green agribusiness receivables certificate. This initiative, structured in a mixed financing model, supported 26 small bio-businesses and impacted 4,500 producers in Brazil’s northern and northeastern regions, focusing on non-timber forest products and agroforestry.
Internally, the bank developed a bespoke taxonomy to transparently classify transactions as green, social and sustainable.
Best bank for corporate responsibility: Citi
Citi demonstrated a strong commitment to social responsibility and community engagement in Brazil last year through philanthropic contributions and volunteering efforts.
The bank allocated R$15 million ($2.6 million) towards various initiatives. These included support for the Instituto Brazolin’s basketball project, which provided 300 socially vulnerable children with access to sports opportunities, and the bank’s own Agita Comunidade initiative, which reached 500 students through weekly wellness classes and community events.
The bank also partnered with NESsT to improve investment readiness for six social businesses employing low-income people of colour. This effort resulted in the provision of 4,032 hours of business assistance and the creation of 6,086 jobs within this demographic.
The bank also made significant contributions to the food sector by supporting 50 community organizations with a total of $25 million aimed at enhancing food security.
Citi’s Global Community Day registered significant participation in Brazil, with approximately 1,000 bank employees and their families and friends participating in the bank’s volunteering initiatives. This event, spanning across all 95 operations in the country, represented the bank’s largest volunteering effort to date.
Employees also contributed considerable volunteering hours to initiatives conducted through the bank’s partnerships, including that with the NGO Ensina Brasil. Through this collaboration staff provided online diversity and inclusion training to 700 public school teachers in São Paulo, enhancing educational outreach and inclusivity.
Best bank for corporates: Citi
Citi was a dominant presence in Brazil’s corporate banking market last year and advised on some of its most complex transactions. Corporate banking revenues for the year neared $1.45 billion. The bank commanded a 14% share in the foreign exchange sector and a dominant 68% share in direct custody clearing services.
Among the deal highlights in the awards period, Citi advised on a hybrid cash management solution for the Brazilian energy group, Energisa, and facilitated the group’s R$2.5 billion ($440 million) follow-on offering, its first since 2016.
It also assisted Azul Brazilian Airlines on its comprehensive recapitalization. This involved a $1 billion par-for-par exchange offer for the airline’s senior unsecured notes due in 2024 and 2026, and a subsequent $800 million financing.
