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Thursday May 03, 2012
Bank on Banco Bradesco
by Yiannis Mostrous, editor Global Investment Strategist We particularly like investing in banks when it comes to emerging markets. Investor should look at Banco Bradesco SA (BBD), the country's second-largest private bank with over 40 million customers and more than 4,000 braches. The Brazilian economy has been run in a characteristically sober fashion for the past 10 years, especially when compared to its Latin American peers. Brazil was a no-show at the credit-expansion and easy-money party of the past decade. Given Brazil's strong fundamentals, economic growth could surprise to the upside when the global economy finally finds its footing. Investors had expected too much from the Brazilian economy and market last year following a strong 2010. Now that expectations have become more realistic, the relative strength of Brazil's economy makes allocating some funds to this market a smart move. Banco Bradesco controls around 15 percent of the market in terms of assets. Banco Bradesco also boasts sizeable leasing, insurance, private pension funds, and asset management business lines. The bank is famous for its superior asset quality and its conservative loan policies. As a result, its non-performing loan (NPL) ratio is around 5 percent, and should continue to hover at this level. Banco Bradesco's insurance business (30 percent of earnings) is one of the best run in the country. Rising incomes and the strength of Banco Bradesco's brand should drive customers to its insurance offerings. The stock trades at 9 times expected earnings and 1.8 times expected book value. Investors will also receive a 3.6 percent dividend yield. This is probably the best investment climate I have seen to grow wealth quickly and safely. Learn more about this financial newsletter at Yiannis Mostrous' Global Investment Strategist. Related articles: 
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