Goldman Sachs Bullish on Latin Banks (BBD, ITUB, BSBR)

Goldman Sachs is out with an investor note this morning that is bullish on Brazilian banks. Analysts cited Q1 earnings that showed Brazilian banks are ahead of peers in Latin America in terms of asset quality recovery and loan growth. Earnings for large Brazilian banks were on average 5.1% ahead of Goldman’s above consensus estimates. Analysts cited Banco Bradesco BBD as the top performer with the most consistent earnings in Q1, saying that they had the most clear improvement in asset quality and acceleration in loan growth. Goldman also said that “the recovery of Latin banks’ operating trends is clear, with the strongest operating performance shown by Brazilian banks. Nonetheless, year-to-date, Brazilian bank stock prices have underperformed their main regional peers in Mexico, Peru, Chile and Colombia. While the Brazilian bank stocks justifiably outperformed in 2009, before the recent underperformance, we believe that the expected operating trends for Brazilian banks are not fully reflected in current valuations.” Goldman is also bullish on Unibanco Itausa ITUB, Banco Santander BSBR and Banco do Brasil (which does not trade in the US).