BANCO DO ESTADO DO RIO GRANDE DO SUL S.A. PRESS RELEASE
We summarize below Banrisul's performance in the first nine months and third quarter of 2022.
Business Scenario
The highlight of the Brazilian economic scenario was the end of the adjustment cycle for the basic interest, which was initiated by the Central Bank of Brazil in March 2021 and led the basic interest rate to reach 13.75% p.a. in August 2022. In addition, there was a clear decompression in prices, mainly due to the approval of a ceiling for the ICMS tax on important consumer items, such as fuel and electricity. In terms of credit, the average balance in Brazil increased by 16.7% in the 12-month period ended August 2022, while the average default rate in this period was 2.5%, lower than the pre-pandemic levels. In Rio Grande do Sul, the total credit balance grew by 14.9% in the same period, and the average default rate was 1.8%, according to regional credit data from the Central Bank of Brazil.
On May 23, 2022, Banrisul launched its re-branding project, with a new positioning and brand under a new concept: "Nossa conexão transforma" (Our connection transforms). The new brand is aligned with many transformations that have been happening at the Bank and strengthens our connection with customers and partners. Preparing for the future, Banrisul has been reinforcing strategic areas for its business, namely: innovation, people, sustainability and agribusiness.
Aiming to boost Rio Grande do Sul's innovation ecosystem, in April 2022, we initiated the 2nd acceleration cycle for startups, promoted by BanriTech. To monitor the activities of these startups, we selected volunteer professionals within the Bank to act as facilitators and supporters. This interaction also promotes an innovation culture among our business units, in which preference is given to the implementation of new work methodologies and to the improvement of Banrisul's processes, products and services. We concluded Cycle 2022 at the beginning of October with our BanriTech Pitch Day, an event to present the solutions for the 10 finalist startups, from which 3 were highlighted and awarded.
Banrisul's awareness of the mitigation of Greenhouse Gases has made the Bank reinforce the inclusion of sustainability criteria in its hiring processes and in the products and services it offers, fostering the transition into a low carbon economy. In the same sense, during the third quarter, the Bank launched a public notice for the purchase of energy from renewable sources in the Free Contracting Environment (ACL). Furthermore, during the first nine months, the Bank published the update of Banrisul's Social, Environmental and Climate Responsibility Policy and established the Social, Environmental and Climate Responsibility Committee linked to the Board of Directors.
In agribusiness, Banrisul announced R$7.0 billion for the 2022/2023 crop plan, up by 34.6% over the previous crop year. This is expected to benefit more than 50,000 rural producers, reinforcing the Bank's strategic focus and consolidating its position as a promoter for the sector and economic development of Rio Grande do Sul.
In 3Q2022, Banrisul launched the Voluntary Termination Program 2022, giving preference to employees that have already been retired by Social Security (INSS) or that are eligible to be. The financial impact has already been included in the financial statements for the quarter and terminations are expected to take place from April to August of 2023. Also in the third quarter, Banrisul issued Subordinated Financial Letters, in the total amount of R$300.0 million. The Subordinated Financial Letters are authorized to be part of the Bank's Tier 2 Capital, pursuant to Resolution 122/21 of the Central Bank of Brazil.
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Economic and Financial Indicators
Main Income Statement Accounts - R$ million | 9M2022 | 9M2021 | 3Q2022 | 2Q2022 | 3Q2021 | 9M2022/ | 3Q2022/ | 3Q2022/ | ||||
9M2021 | 3Q2021 | 2Q2022 | ||||||||||
Financial Margin | 3,388.4 | 3,672.3 | 1,151.5 | 1,115.1 | 1,215.8 | -7.7% | -5.3% | 3.3% | ||||
Expenses for Provisions for Expected Credit Losses | 686.7 | 632.1 | 237.9 | 202.3 | 284.5 | 8.6% | -16.4% | 17.6% | ||||
Income from Services and Banking Fees | 1,532.9 | 1,456.6 | 522.0 | 518.6 | 495.7 | 5.2% | 5.3% | 0.7% | ||||
Adjusted Administrative Expenses (1) | 2,907.7 | 2,689.2 | 1,027.8 | 972.9 | 930.9 | 8.1% | 10.4% | 5.6% | ||||
Other Adjusted Income and Expenses | (539.2) | (429.7) | (138.3) | (227.4) | (178.7) | 25.5% | -22.6% | -39.2% | ||||
Adjusted Net Income | 529.8 | 732.3 | 137.8 | 227.8 | 171.5 | -27.7% | -19.6% | -39.5% | ||||
Net Income | 463.9 | 700.8 | 71.9 | 227.8 | 156.6 | -33.8% | -54.1% | -68.4% | ||||
Main Balance Sheet Accounts - R$ Million | Sep 2022 | Sep 2021 | Sep 2022 | Jun 2022 | Dec 2021 | Sep 2022/ | Sep 2022/ Sep 2022/ | |||||
Sep 2021 | Dec 2021 | Jun 2022 | ||||||||||
Total Assets | 113,333.5 | 101,648.6 | 113,333.5 | 109,657.1 | 104,575.8 | 11.5% | 8.4% | 3.4% | ||||
Securities (2) | 31,474.6 | 38,487.4 | 31,474.6 | 31,438.4 | 35,819.4 | -18.2% | -12.1% | 0.1% | ||||
Total Loan Portfolio | 47,440.6 | 38,701.8 | 47,440.6 | 44,585.5 | 41,042.0 | 22.6% | 15.6% | 6.4% | ||||
Provision for Credit Losses | 2,442.8 | 2,693.3 | 2,442.8 | 2,542.9 | 2,629.8 | -9.3% | -7.1% | -3.9% | ||||
Past Due Loans > 90 Days | 751.8 | 854.1 | 751.8 | 795.3 | 849.2 | -12.0% | -11.5% | -5.5% | ||||
Funds Raised and Under Management | 86,984.9 | 81,188.1 | 86,984.9 | 83,850.2 | 84,900.0 | 7.1% | 2.5% | 3.7% | ||||
Equity | 9,009.7 | 8,749.5 | 9,009.7 | 8,970.4 | 9,048.6 | 3.0% | -0.4% | 0.4% | ||||
Prudential Conglomerate Reference Equity | 8,595.6 | 6,831.2 | 8,595.6 | 8,401.2 | 9,021.8 | 25.8% | -4.7% | 2.3% | ||||
Average Interest-Earning Assets | 95,204.8 | 85,791.5 | 98,762.9 | 95,105.8 | 92,318.0 | 11.0% | 7.0% | 3.8% | ||||
Stock Market Information - R$ Million | 9M2022 | 9M2021 | 3Q2022 | 2Q2022 | 3Q2021 | 9M2022/ | 3Q2022/ | 3Q2022/ | ||||
9M2021 | 3Q2021 | 2Q2022 | ||||||||||
Interest on Equity / Dividends (3) | 335.5 | 323.5 | 45.0 | 154.0 | 105.1 | 3.7% | -57.2% | -70.8% | ||||
Market Capitalization | 4,805.5 | 4,768.6 | 4,805.5 | 3,664.4 | 4,768.6 | 0.8% | 0.8% | 31.1% | ||||
Book Value per Share | 22.03 | 21.39 | 22.03 | 21.93 | 21.39 | 3.0% | 3.0% | 0.4% | ||||
Average Price per Share (R$) | 10.05 | 12.72 | 10.57 | 9.89 | 12.25 | -21.0% | -13.7% | 6.9% | ||||
Earnings per Share (R$) | 1.13 | 1.71 | 0.18 | 0.56 | 0.38 | -33.8% | -54.1% | -68.4% | ||||
Financial Indexes | 9M2022 | 9M2021 | 3Q2022 | 2Q2022 | 3Q2021 | |||||||
Adjusted ROAA (p.a.) (4) | 0.6% | 1.0% | 0.5% | 0.9% | 0.7% | |||||||
Adjusted ROAE (p.a.) (5) | 7.8% | 11.4% | 6.1% | 10.1% | 7.9% | |||||||
Adjusted Efficiency Ratio (6) | 64.8% | 54.5% | 64.8% | 63.3% | 54.5% | |||||||
Net Interest Margin on Interest-Earning Assets | 4.75% | 5.71% | 4.66% | 4.69% | 5.50% | |||||||
Default Rate > 90 Days (7) | 1.58% | 2.21% | 1.58% | 1.78% | 2.21% | |||||||
Coverage Ratio 90 days (8) | 324.9% | 315.3% | 324.9% | 319.7% | 315.3% | |||||||
Provisioning Index (9) | 5.1% | 7.0% | 5.1% | 5.7% | 7.0% | |||||||
Basel Ratio (Prudential Conglomerate) | 16.7% | 14.5% | 16.7% | 16.8% | 14.5% | |||||||
Structural Indicators | Sep 2022 | Sep 2021 | Sep 2022 | Jun 2022 | Sep 2021 | |||||||
Branches | 495 | 499 | 495 | 496 | 499 | |||||||
Service Stations | 142 | 142 | 142 | 138 | 142 | |||||||
Electronic Service Stations | 435 | 414 | 435 | 410 | 414 | |||||||
Employees | 8,730 | 9,080 | 8,730 | 8,789 | 9,080 | |||||||
Economic Indicators | 9M2022 | 9M2021 | 3Q2022 | 2Q2022 | 3Q2021 | |||||||
Effective Selic Rate | 8.91% | 2.52% | 3.31% | 2.91% | 1.23% | |||||||
Exchange Rate Variation (%) | -3.12% | 4.67% | 3.22% | 10.56% | 8.74% | |||||||
IGP-M (General Market Price Index) | 6.61% | 16.01% | -1.44% | 2.54% | 0.80% | |||||||
IPCA (Extended Consumer Price Index) | 4.09% | 6.90% | -1.32% | 2.22% | 3.02% |
- Includes Adjusted Personnel Expenses and Other Administrative Expenses. (2) Includes Derivatives, Interbank Deposits and Cash Equivalents and deduces Repurchase Obligations. (3) Interest on Own Capital and Dividends paid credited and/or provisioned (before retention of income tax). (4) Net Income over Average Total Assets. (5) Net Income over Average Shareholders' Equity. (6) Personnel Expenses + Other Administrative Expenses / Financial
Margin + Income from Services and Fees + (Other Income - Other Expenses). Considers LTM income and expenses. (7) Past Due Loans > 90 days / Total Credit Portfolio. (8) Provisions for Expected Losses Associated with Credit Risk / Past Due Loans > 90 days. (9) Provisions for Expected Losses Associated with Credit Risk / Credit Portfolio.
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Financial Highlights
Adjusted Net income for the first nine months of 2022 reached R$529.8 million, decreasing by 27.7% or R$202.6 million compared to the adjusted net income in the same period of 2021, mainly due to (i) a reduction in financial margin, (ii) an increase in adjusted administrative expenses, (iii) increase in other operating expenses, net of other income, (iv) higher expenses with provision for credit losses, (v) an increase in income from services and banking fees, and (vi) related tax effect.
In 3Q2022, adjusted net income totaled R$137.8 million, down by 39.5% or R$90.0 million over the net income in 2Q2022, mainly due to: (i) an increase in adjusted administrative expenses, (ii) higher expenses with provision for credit losses, (iii) a reduction in other operating expenses, net of other income, (iv) an increase in financial margin, and (v) related tax effect and lower volume of profit-sharing expenses.
Net Income for in 3Q2022 was impacted, by R$65.9 million, due to the Voluntary Dismissal Program 2022 and related tax effect. The financial incentive related to the 511 employees who joined the Voluntary Dismissal Program totaled R$119.8 million and was treated, for performance analysis purposes, as a non-recurring item. The dismissals will take place from April 1 to August 31, 2023, with the exception of employees working in the Information Technology Department, who may be dismissed gradually until August 31, 2024.
The reconciliation between net income and adjusted net income is presented below, given the occurrence of non-recurring events. The reconciliation is used to demonstrate the return on equity and return on assets and efficiency indicators, calculated based on adjusted net income.
Accounting Net Income Statement X Adjusted Net Income - R$ Million and %
9M2022 | 9M2021 | 3Q2022 | 2Q2022 | 3Q2021 | |
Adjusted Net Income | 529.8 | 732.3 | 137.8 | 227.8 | 171.5 |
Adjustments | (65.9) | (31.6) | (65.9) | - | (14.9) |
Voluntary Dismissal Program | (119.8) | - | (119.8) | - | - |
Provision for Tax Contingencies | - | (76.0) | - | - | - |
Tax Effects | 53.9 | 34.2 | 53.9 | - | - |
Tax Credits (CSLL) - Law 14,183/21 (1) | - | 10.3 | - | - | (14.9) |
Net Income | 463.9 | 700.8 | 71.9 | 227.8 | 156.6 |
Adjusted ROAA | 0.6% | 1.0% | 0.5% | 0.9% | 0.7% |
Adjusted ROAE | 7.8% | 11.4% | 6.1% | 10.1% | 7.9% |
Adjusted Efficiency Ratio (2) | 64.8% | 54.5% | 64.8% | 63.3% | 54.5% |
- Refers to the update of the installments to be recognized for deferred tax credits and debits, due to the enactment of Law No. 14,183/21, which increased the CSLL rate of the financial sector from 20% to 25%, in the period between July 1, 2021 and December 31, 2021.
- Personnel Expenses + Other Administrative Expenses / Financial Margin + Income from Services and Fees + (Other Income - Other Expenses). Considers LTM income and expenses.
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9M2022 x 9M2021
Financial Margin Interest-Earning Assets
3Q2022 and 2Q2022, this indicator reduced by 0.03 p.p.
The financial margin in 9M2022, of R$3,388.4 million, declined by 7.7% or R$283.9 million against 9M2021, mainly reflecting the substantial increase in interest expenses in relation to the rise in interest income, in a scenario with a higher Selic Rate and increase in credit volumes. In 3Q2022, the financial margin increased by 3.3% or R$36.5 million against 2Q2022, mainly reflecting the substantial increase in interest expenses in relation to the rise in interest income, in a scenario with a higher credit volume and Selic Rate. The financial margin on interest- earning assets in 9M2022 decreased by 0.96 p.p. over 9M2021, and in the comparison between
In 9M2022, expenses with provision for credit losses totaled R$686.7 million, up by 8.6% or R$54.6 million from the same period of 2021. In 3Q2022, these expenses totaled R$237.9 million, up by 17.6% or R$35.6 million over 2Q2022. The results for these expenses in both comparison periods was mainly due to the rolling over of the loan portfolio according to the credit rating levels, in a scenario in which there was a reduction in overdue loans.
Income from services and banking fees in 9M2022 grew by 5.2% against 9M2021, reflecting mainly the increase in revenues from Banrisul Pagamentos, which was offset by the reduction in fees for consortium management and credit cards. This line remained flat in the comparison period between 3Q2022 and 2Q2022.
Breakdown of Income from Services and Bank Fees - R$ Million
9M2022 | 9M2021 | 3Q2022 | 2Q2022 | 3Q2021 | 9M2022/ | 3Q2022/ | 3Q2022/ | |||||
9M2021 | 3Q2021 | 2Q2022 | ||||||||||
Banrisul Pagamentos | 537.5 | 441.9 | 179.8 | 187.6 | 155.3 | 21.6% | 15.8% | -4.2% | ||||
Insurance Commissions | 192.1 | 198.2 | 67.6 | 64.7 | 68.2 | -3.1% | -0.9% | 4.5% | ||||
Current Account Fees | 438.6 | 434.5 | 150.5 | 149.7 | 144.2 | 1.0% | 4.4% | 0.6% | ||||
Consortium Management Fees | 70.5 | 82.7 | 25.3 | 17.0 | 29.4 | -14.7% | -13.9% | 48.9% | ||||
Other Revenues (1) | 294.3 | 299.3 | 98.8 | 99.7 | 98.7 | -1.7% | 0.2% | -0.9% | ||||
Total | 1,532.9 | 1,456.6 | 522.0 | 518.6 | 495.7 | 5.2% | 5.3% | 0.7% |
(1) Includes mainly debit account income, collection services, brokerage operations, credit card, fund management, collection and custody services.
In 9M2022, adjusted administrative expenses, comprised by personnel expenses adjusted by the Voluntary Dismissal Program and other administrative expenses, increased by 8.1% over the first nine months of 2021. In the comparison between 3Q2022 and 2Q2022, adjusted administrative expenses recorded a 5.6% growth. The adjusted administrative expenses increased by 7.3% in the first nine months of 2022 compared to the same period of 2021, reflecting the collective salary agreement, as well as the extinction of the variable compensation model, which was in force until the end of 2021, and the implementation of a profit sharing program. Other administrative expenses increased by 9.0%, mainly influenced by the growth in expenses with third-party services, specialized technical services and data processing. In the comparison between 3Q2022 and 2Q2022, adjusted personnel expenses increased by 9.6%, reflected mainly by collective salary agreement, and other administrative expenses increased by 1.5%, mainly due to the rise in expenses with third-party services and data processing, partially offset with the reduction in expenses relating to specialized technical services.
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BANRISUL - Banco do Estado do Rio Grande do Sul SA published this content on 14 November 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 November 2022 21:39:07 UTC.
