But the reality is changing for the bank. It is advancing in the medium-sized companies sector, where there is potential for growth, but with a greater risk of default. “Because they are small companies, the bank is able to increase interest rates, and achieve greater profitability. But they have to keep their eyes open regarding defaults,” comments Duarte.
The positive fact about Banco ABC is the frequent bonuses for shareholders. The bank typically pays interest on its shares to its investors in February and August. And because it has foreign observers, in the case of Arab Banking Corporation, the bank also has a practice of paying out dividends to shareholders in a predictable manner, Duarte says.
One of the challenges of investing in the bank is the increased risk of default as you enter the mid-cap sector. Because we work with corporate credit, there is also a concentration risk if a large company runs into trouble, as was the case with Americana. The effects of a corporate bankruptcy tend to be greater than they would be for other banks, notes Renato Reis, an analyst at Blue3 Research. “The positive part is that the corporate sector tends to be more resilient than retail,” he muses.
Reese was neutral in his recommendation on Banco ABC, seeing the company's defaults as increasing. The expected dividend yield for the next 12 months is 7%. For Duarte, the recommendation is Buy, with an estimated dividend yield of 6.5%.
Itaú Bank has diversified credit.
Banco Itaú has a well-diversified credit portfolio, exceeding R$1 trillion. According to Larissa Quaresma, analyst at Embiricos Research, there are various credit lines for both individuals and companies, with or without collateral. “In recent quarters, Itaú has changed the focus of portfolio growth. Before real estate grew strongly, the main focus is now on car financing, with greater spread and good collateral,” he explains. Reis, of Blue3 Research, says that Banco Itaú would be the best alternative for those looking for long-term income.
