LATIN AMERICA EQUITY RESEARCH: LATAM FIRST TO MARKET

Research evidence excerpt

LATIN AMERICA EQUITY RESEARCH: LATAM FIRST TO MARKET

Latin America Equity Research

LatAm First to Market 07 July 2026

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Brazilian Financials (Yuri R Fernandes/Guilherme Grespan)

What to Expect in 2Q26?

Among Brazilian financials, we see asset quality prevailing in the discussions and investors will likely push for management’s

views on NPL trends through 2H26 and 2027. Amid this context, we favor Itau and capital market names XP and BTG. Nubank,

although more exposed to credit cycle risk, is likely to disproportionately benefit from the Desenrola renegotiation program.

Coupled with lower expectations and the expected recovery in risk-adjusted NIM, we believe it could also be a good play into

the print. Elsewhere, we would avoid the Payments sector given its weak gross profit and earnings outlook. As for insurers,

industry written premium growth has been mostly disappointing, and we favor Porto due to improving auto dynamics. We

discuss our short-term expectations for certain stocks, but for our long-term outlooks and ratings, please see the investment

thesis sections at the end of the report. On a separate note, following a period of restriction, we are moving Bradesco to a

Neutral rating and a December 2027 price target of R$22/share (Neutral rating and December 2026 price target of R$22 prior

to restriction) from a Not Rated designation. We incorporate 1Q26 results and slightly revise our 2026-2027 earnings estimates

by ~3%, to R$28.5bn and R$31.7bn, respectively. The small short-term upward revision and 1-year PT rollover was offset,

however, by a lower fair value output from our LatAm P/BV vs ROE regression. Our R$22 PT offers 22% appreciation upside.