Banco ABC CEO Feedback - Targeting 35% Long-Term Efficiency Ratio

Research evidence excerpt

Banco ABC CEO Feedback - Targeting 35% Long-Term Efficiency Ratio

Yuri R Fernandes AC Latin America Equity Research

(1-212) 622-3400 19 May 2026 J P M O R G A N

yuri.r.fernandes@jpmorgan.com

the later stages of the cycle rather than deteriorating further. The bank continues to guide

cost of risk (provisions / expanded book) around ~0.8%, which tend to run between 0.5–

1% depending on the phase of the cycle. Their view is that the current stress largely

reflects the lagged effects of prolonged high interest rates on companies that had already

been weakening over time. Importantly, they described the portfolio as well positioned,

with limited large problematic exposures and conservative underwriting throughout the

past year.

• Fees – to continue gradually gaining relevance. Management spent considerable time

discussing the importance of cash management and transaction banking as structural

drivers of higher-quality earnings, lower funding costs, and stronger client stickiness.

These are tailwinds to margins, but also tailwinds to products cross-sell and fees. The

bank has spent the last several years building a more robust cash management platform

and is now beginning to scale monetization efforts. Management also noted that many

corporate clients prioritize familiarity and operational simplicity over other variables to

minimize internal friction and training costs.Management also discussed insurance,

consortium and other opportunities.

• Costs – a driver for future ROE improvement. Core personnel and administrative

expenses remain controlled, growing closer to ~4% Y-o-Y on an underlying basis, despite

some temporary distortions on cost to income ratio from mark-to-market effects on stock-

based compensation.