Banco do Brasil to push forward with cost cuts after Bolsonaro spat

FILE PHOTO: A man wearing a protective face mask and gloves walks in front of Banco do Brasil (Bank of Brazil) during the coronavirus disease (COVID-19) outbreak in Sao Paulo, Brazil, March 24, 2020. REUTERS/Amanda Perobelli

SAO PAULO (Reuters) - State-controlled lender Banco do Brasil SA on Thursday said it would push forward with cost cuts this year, despite a recent spat between new CEO Andre Brandao and President Jair Bolsonaro over branch closings.

Banco do Brasil’s operating expense is likely to end 2021 contracting 2% or growing by 2% at most, the bank said in a statement, leading to a higher net profit.

The bank estimated its recurring net income at between 16 billion reais and 19 billion reais, up from 12.7 billion reais last year.

Last month, Bolsonaro threatened to fire Brandao after he announced a plan to save 2.7 billion reais by 2025, including the closure of 361 branches and around 5,000 voluntary layoffs.

Brandao kept his job but it is not clear whether his plan remains intact after the disagreement went public.

The confirmation that some form of cost-cuts are in the offing came on a day Banco do Brasil posted a fourth-quarter recurring net income of 3.695 billion reais, beating estimates, but down 30.1% from a year earlier. The bank was hit by higher provisions for bad loans amid the coronavirus pandemic.

Its return on equity came in at 12.1%.

For 2021, the bank sees its loan book growing by between 8% and 12%, versus 9% last year. But fee income may still decrease from last year.

(This story corrects to operating expenses, not operating income, in paragraph 2.)

Reporting by Carolina Mandl; Editing by Christian Plumb