Banco Bradesco Reports Disappointing Q4 Results as Credit Costs Remain an Issue; FVE to $3.70

No-moat-rated Banco Bradesco reported weak fourth-quarter results as the bank suffered from a significant increase in credit costs while net interest income underperformed our expectations. Banco Bradesco's recurring net income fell 72.4% from last year to BRL 1.44 billion, which translates to a dismal return on average equity of 3.9% for the quarter. As we incorporate these results, we are lowering our fair value estimate for Banco Bradesco to $3.70 per ADR from $4.00. Approximately $0.20 of the decrease comes from higher credit costs projections for 2023 while the remainder comes from lower net interest income expectations, partially offset by earnings accumulated since our last update.