Bradesco’s Banco Seguros Is Increasing Through bank Clients According To CEO Luíz Carlos Trabuco
Banco Bradesco is one of the up-and-coming shining stars on Wall Street. Foreign investors are jumping back into Brazilian companies, and Bradesco is at the top of the list. Bradesco is currently the second largest bank in Brazil, thanks to the 2015 acquisition of the Brazilian division of HSBC. Itaú Unibanco is a little bigger in terms of assets under management.
The thing that makes Brazilian bank stocks so attractive is their ability to make money in the lean times as well as the good times. For the last two years, while the country of Brazil was under economic water due to the worst recession in almost 100 years, Bradesco was turning in better-than-expected profit numbers. One of the major profit centers in the Bradesco family is Banco Seguros, the insurance arm of the bank, according to Bradesco CEO Luíz Carlos Trabuco.
Mr. Trabuco is the 66-year-old bank president who has never worked for any other bank. Trabuco came on board in 1969, and he didn’t start at the top. He was a rookie, but he was smart enough to learn how the bank functions internally. Luíz quietly went from one job to another within the bank, and he became a director and a couple years later a vice-president. One reason for Bradesco’s profit performance during the recession was the insurance arm of the bank, Banco Seguros. Trabuco took over as president of Seguros in 2003, and for the next five years, Mr. Trabuco and his staff were able to pump more than 30 percent of the Bradesco Seguros profits to the group’s bottom line. In 2008, the Bradesco Board of Directors gave Trabuco the title of bank president and he’s not going anywhere.
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Some Bradesco clients take advantage of in-company products. The average client uses about two bank products. In the first half of 2017, Seguros’ premiums were more than $13.4 billion and bank analysts say the total growth for the year will in the 6 percent to 10 percent range. Growth in life, health and pension coverage continues to be between 13 percent and 14 percent, according to Luíz Carlos Trabuco. Seguros has a “BB” rating for its financial strength, and the new sales approach will help maintain the bank’s overall growth.
Fitch, the rating company, thinks Seguros is playing a strategic role in the Bradesco group strategy. Bradesco Seguros is on track to continue to contribute 30 percent or more to the Bradesco Group’s bottom line. One reason for the optimism is the dramatic growth in life and the pension segments. Last year those segments were responsible for 57 percent of Seguros earnings. The auto and P&C segments were next with 24 percent. Health chipped in 10 percent, and savings bonds were eight percent of the earnings. The other good news is Seguros has great liquidity and capitalization ratios, according to Trabuco.
The consensus among Brazilian bankers is the same. Bank executives believe the Brazilian economy is on the mend, and inflation and unemployment numbers are heading in the right direction. Michel Temer’s government may not be as stable as it was last year, but export figures are up, and the government is cutting some of the red tape out of the political equation, according to Trabuco.
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