Brazil may be the largest country in Latin America, but size doesn’t matter when a country’s economy slips into a recession. Brazil is pulling itself out of recession mode in 2017, but it hasn’t been easy. A series of political and social missteps, weak commodity prices, as well as a dramatic drop in exports thanks to China’s problems have put Brazil in awful economic shape. But the interesting thing about recessions, in general, is banks usually weather a recession better than most businesses, and that is definitely the case in Brazil.
The banks in Brazil are making money without lending a lot of money due to the credit restriction put in place by the banking industry. One of the top private banks in Brazil, Bradesco, is a good example. Net income for the first quarter of 2017 was R$9.35 billion. That’s a 13 percent increase over the same quarter last year. R$6.7 billion of that income is from financial activities and R$2.6 billion is from pension plans, insurance, and bonds. Total bank assets were up 16.8 percent in the first quarter of 2017. Assets under management rose by 20.7 percent, and shareholder equity was 10.8 percent higher. And, according to CEO Luiz Carlos Trabuco, “The peak in defaults is over.” Defaults were down by 4.9 percent in the second quarter. Loan default concerns are not as high as they were a year ago, but the bank still has a tight lid on lending, according to Trabuco.
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In fact, Bradesco’s 2017 performance is, by anyone’s estimation, a very good one. One reason for the bank’s performance is the leadership of Chief Executive Officer Luiz Carlos Trabuco. On Trabuco’s watch, Bradesco has put its footprint on the social-economic development in the country. The Board of Directors emphasizes business initiatives like the Brazilian Green House Emissions Program, Carbon Disclosure Program, Global Compact, and Companies for Climate Change. The bank’s 60-year-old educational program operates 40 schools in Brazil, and that program will benefit more than 100,000 high school students in 2017.
Chief Executive Officer Luiz Carlos Trabuco was instrumental in the purchase of HSBC’s Brazilian subsidiary in 2015. Trabuco’s work didn’t go unnoticed that year. He was Brazil’s 2015 entrepreneur of the year. The people who know and work with Trabuco were happy to hear about the honor. Trabuco is one of those born entrepreneurs, and he is certainly a banker’s banker.
Luiz was born in 1951 in Marília. Marília is also the birthplace of Bradesco. He is a University of São Paulo graduate, and at 18-years-old, he got his first job at the bank. Trabuco went through the bank’s training program, so he got a taste of every bank position before he got a chance to show his management style. That management style was obvious from 2003 to 2009. That was when Trabuco was the president of Bradesco Seguros. Bradesco Seguros accounts for 30 percent of the bank’s profits today. Luiz did something the other bank executives didn’t do. He put a corporate university together to teach leadership qualities to the executives responsible for each bank division.
Trabuco was able to instill a work ethic in the bank by demonstrating what that work ethic looks like. His workday is long, and then he attends business dinners and industry functions several nights a week to keep the Bradesco’s name fresh in the minds of his business competitors. And his dedication is paying off. Bradesco could be the largest private bank in Brazil if Trabuco and his team continue to expand bank programs and help the Brazilian economy get back on track.