Bank profits back to pre-pandemic levels in Brazil

Bank profitability has returned to pre-pandemic levels, following the growth in the interest margin, lower expenses with provisions (reserves due to credit risks), and efficiency gains. The data can be found in a financial stability report on the second half of 2021, released by the Central Bank today (Aug 9).

“The profitability of the system continues to recover from the effects of the pandemic and should remain resilient in the near term. Following a plunge in the first half of 2020, system profitability has returned to levels close to those observed before the pandemic,” the document reads.

The net income in the system was reported at BRL 132 billion in 2021, 49 percent up from 2020 and 10 percent higher than in 2019. Return on equity was 15 percent, back to pre-pandemic levels.

Nonetheless, profits are likely to see a more moderate evolution in coming periods. “The scenario for 2022 is one of weaker economic activity, lower credit growth, normalization of default, as well as higher funding and operating costs. These are obstacles to the evolution of the profitability ahead,” the report states.