Banco Bradesco Earnings: Positive Credit Trends Lead to Better Results

No-moat-rated Banco Bradesco reported decent second-quarter results, as the positive trends in net interest income and credit costs raise prospects that the bank is recovering from its recent disappointing performance. Recurring net income increased 12% from last quarter and 4.4% from last year to BRL 4.7 billion. This result translates to a return on average equity of 11.4%. Despite the strong sequential increase, that is still well below the firm's long-term historical average. As we incorporate these results, we do not plan to materially alter our $2.90 per ADR share fair value estimate. We see the shares as undervalued at the current price.