LatinFinance - November/December 2014 - 39

BANK OF THE YEAR BRAZIL

BANCO BRADESCO

Amid an environment of
slower lending growth, this
institution stands out for a
solid balance sheet
Banco Bradesco's assets and profitability
may not grow as quickly as some of its
peers. But its consistent demonstration
of solid results has given it an edge in this
year's awards. The bank boasts a 12.1% core
tier one capital ratio, 50 basis points higher
than a year earlier. It has further trimmed
bad loans, to 3.5%. And deposits, assets and
loans are all growing: the bank's lending
book rose 8.1% in the 12 months to the end
of June 2014.
Bradesco retains solid profitability at the
same time: return on assets grew 30 basis
points, to 1.6%, while return on assets rose
190 basis points, to 20.7%. Net profits were
15.6% higher in June than a year earlier.
LUIZ CARLOS ANGELOTTI
BRADESCO

"I DON'T EXPECT
ANOTHER YEAR LIKE
2013 WHEN WE HAD
HUGE VOLATILITY IN
THE MARKET"
Itaú Unibanco also shone in many
metrics - its profits shot up 32.1% yearon- year, while loans grew 9.6%. The bank
has aggressively re-shaped its business,
agreeing to sell its major risks insurance
business while pushing for market share
outside Brazil, including with a bid for
Chile's CorpBanca. But complications in
that acquisition, as well as Itaú's weaker
capital ratio, left Bradesco in a better light.
A large portion of Bradesco's funding -
some 40% - comes from its clients in the
form of time deposits and debentures. Luiz
Carlos Angelotti, executive director and
investor relations officer, describes the
bank as having a "huge offer" for funding,
and notes that the bank's balance sheet
has been growing slightly more slowly than
expected.

"Considering the position we have in
the market, normally we receive from our
clients, from the existing base and the retail
clients, huge funding which is at a low cost."
Borrowing costs are likely to rise a little
in the year ahead, as the US Federal Reserve
normalizes interest rates, he says. "But I
don't expect another year like 2013 when
we had huge volatility in the market,"
he says.
Bradesco has a comfortable capital
position, but it may look at issuing tier two
subordinated debt toward the end of 2015,
Angelotti says. As for a new-style Basel III
tier one hybrid instrument - something
other Brazilian lenders have started to issue
- that is more likely to be a project for 2016
or 2017 for Bradesco, he says. LF

BANK OF THE YEAR ARGENTINA

BBVA BANCO FRANCÉS

The bank has grown profitability and focused on
improving retail services.
It remains hopeful of an
improvement in the local
environment
When the entire banking sector goes
through two downgrades in a single year
and phrases such as "entrenched high
inflation" and "deteriorating conditions"
mark Moody's ratings reports, you know it
has been a tough year to operate.
Even in the rating agencies' dire reports
on Argentina, however, they manage to find
something positive in BBVA Banco Francés,
paying testament the firm's resilient
profitability. The bank's return on equity
has steadily increased in recent years, rising
from 28.55% to 33% in 2013, up from 25%
in 2011, while the other banks have seen
declines. Return on assets increased from
3.3% to 3.9% in 2013, from 2.6% in 2011.
With Argentina's increasingly stringent
currency controls, markedly slower
economy and the default on its external
debt, the operating environment is tough.
But the attitude the bank takes in the face
of such difficulties is laudable: "Argentine
banks have huge growth potential in the
event macro [and] political risks diminish,"
BBVA Francés says in a report.
But the bank is not just waiting out

the storm. It is using the time to focus on
three areas: transaction banking, quality
improvements and the development of
digital banking.
Cementing customer loyalty is important
to BBVA Francés, because retail banking
is "crucial to the bank's business strategy,"
it says. Further attempting to improve
client experience, the bank is trying to
"achieve differentiation [through] quality
of its services and increase the level of
recommendations". A key component,
here, is the digital and mobile product,
BBVA Francés acknowledges. Among other
things, the bank last year embarked on a
project to revamp its web presence.
A particular contribution to the success
in the local market may have been an
alliance the bank signed with LAN Airlines.
Argentine customers have been known
to pay attention to discounts and benefits
associated with the use of a bank's credit
and debit cards, and the deal allows them
to accumulate points with the carrier's
frequent-flier program.
Once the economy improves, then,
there's a good chance that the bank's solid
performance will transform into something
truly stellar. LF

BANK OF THE YEAR COLOMBIA

BANCOLOMBIA

As Colombia's banks gear
up for organic growth, one
bank took the first move in
replenishing capital after
an acquisition spree
After expansion, consolidation. Colombia's
largest lenders have grown internationally
through regional acquisitions in recent
years, increasing their weight in Latin
America's banking industry.
Now Bancolombia says it is in a phase of
integrating its newly-acquired operations,
and strengthening at home as well. "We've
had strong organic and inorganic growth,"
says Carlos Raúl Yepes, Bancolombia's chief
executive.
"In the past three years, Bancolombia
has doubled its assets - they have risen
from $35bn to $70bn, which is important.
And at the same time we've doubled our
capital. The growth strategy that we have

November/December 2014 - L ATINFINA NCE.COM 39
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