Banco Bradesco SA, one of Brazil’s biggest banks, is replacing its chief executive as it seeks to restore profitability and emerge from a credit downturn in Latin America’s largest economy.
Marcelo de Araujo Noronha, who’s been at the bank for 20 years, becomes the lender’s new CEO, Bradesco said in a regulatory filing on Thursday. He replaces Octavio de Lazari Junior, who’s been at the firm since 1978 and will be appointed to a seat in the board of directors.
Lazari led Bradesco amid a challenging credit cycle in Brazil since he took the post in 2018. The bank’s earnings have regularly missed analysts estimates, with figures for the fourth quarter of last year considered by some the worst in its history. It was severely hit by provisions for loan losses tied to the collapse of retailer Americanas SA, and also struggled with its higher exposure to small companies and low-income clients relative to peers.
While Bradesco managed to keep bad loans under control in the third quarter, that came at a high cost, with net interest income disappointing analysts. Its return on average equity totaled 11.3% during that period, compared to 21.1% for rival Itau Unibanco Holding SA.
The bank has lost its position as Latin America’s second-largest by market value to Nu Holdings Ltd, according to data compiled by Bloomberg. Grupo Financiero Banorte SAB de CV is also closing in, the data show.
The bank’s preferred shares gained as much as 5.8% in Sao Paulo Thursday, extending year-to-date gains. The stock is down 13% in the past two years, while Itau jumped 38% and the benchmark Ibovespa equity index rose 22% over the same period.
Noronha has a “solid reputation” and the move could be well-received by investors, Citigroup Inc analyst Rafael Frade wrote in a note.
The move isn’t the first leadership change amid weak results. At the end of last year, Bradesco announced a new head of investor relations — Carlos Firetti, who replaced Leandro Miranda.
“We believe investors may see a management change as accountability for past years,” JPMorgan Chase & Co. analysts including Yuri Fernandes said in a note.
--With assistance from Daniel Cancel.
(Updates stock move in sixth paragraph, adds context and JPMorgan commentary starting in eighth.)
Author: Vinícius Andrade and Vanessa Dezem
