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A healthcare sale could be just the tonic for Bradesco

The pressure for a short-term boost to ROE might force Bradesco to re-evaluate its insurance portfolio.


Bradesco – Brazil’s second largest bank – is used to playing second fiddle in terms of size and financial metrics to rival Itaú. However, in 2021, it was pushed into third place in terms of private sector return on equity (ROE), with 15.2% compared to Santander Brasil’s 18.9% and Itau’s 17.33%.

That has got to hurt.

Add in to the mix a resurgent Banco do Brasil with 15.7% ROE, which, according to consultancy Economatica, now puts Bradesco at lowly fourth spot. Bradesco faces a deep strategic challenge.

Analysts tend to focus on what the bank should do with its digital bank Next, a platform that Bradesco is deliberately building as a standalone from the main bank. The presumption is that a spin-off would release fintech-like valuations for the parent, though it would complicate the long-term capitalization of this customer base.

Insurance business

However, a more pressing question is being asked of its insurance business. Bradesco has long touted its outsized insurance business as a differentiator in the market and one that will, in the longer term as insurance purchasing becomes a greater part of the country’s financial services industry, drive better performance.


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