Banco Bradesco: Re-Capitalizing IOC Dividend - Positive Take for Capital and DTA Consumption

Research evidence excerpt

Banco Bradesco: Re-Capitalizing IOC Dividend - Positive Take for Capital and DTA Consumption

J P M O R G A N Latin America Equity Research

29 July 2026

Banco Bradesco Neutral

BBDC4.SA, BBDC4 BZ

Re-Capitalizing IOC Dividend - Positive Take for Capital Price (29 Jul 26):R$18.35

and DTA Consumption

Latin American Financials

Bradesco just announced the launch of a capital increase up to R$10bn together Yuri R Fernandes AC

with the advance payment of IOC dividend that the company would pay later this (1-212) 622-3400

year and in early 2027 (link). We have written extensively on this alternative yuri.r.fernandes@jpmorgan.com

(“What If Dividends Were Capitalized? Tangible Book Could Have Been >2.5x J.P. Morgan Securities LLC

Higher” ) and we have a positive first take. Guilherme Grespan

(55-11) 4950-3058

guilherme.grespan@jpmorgan.com

This strategy brings two main benefits: (1) a capital boost through a dividend Banco J.P. Morgan S.A.

recapitalization without losing the tax benefit of interest on capital (IOC); and (2)

Fernanda Sayao

higher tangible book value, which allows for higher NII accrual and, in turn, the (55-11) 4950-6588

utilization of deferred tax assets (DTAs). We note that Bradesco has a large stock fernanda.sayao@jpmchase.com

of DTAs of approximately R$120bn, and in a country like Brazil - where reference Banco J.P. Morgan S.A.

rates run above 14% - having more tangible book value matters and can be a Diego Marquez Antonio

competitive advantage. As we described in detail in our theoretical exercise earlier (52-55) 5339-94899

this year, more tangible capital enables greater DTA utilization, which in turn diego.marquez@jpmorgan.com

generates more tangible book value. While investors will need to dig into it to J.P.MorganMorganGrupoCasaFinancierode Bolsa, S.A.