J.P. Morgan LatAm FTM 24 Jun 26 Banrisul; LatAm Telcos; Brazil Pharma and Drug Retail; Brazil S&E Fundamentals; Brazilian Shopping Malls and More

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J.P. Morgan LatAm FTM 24 Jun 26 Banrisul; LatAm Telcos; Brazil Pharma and Drug Retail; Brazil S&E Fundamentals; Brazilian Shopping Malls and More

Latin America Equity Research

LatAm First to Market 24 June 2026

Top Stories

Banrisul (Yuri R Fernandes) (BRSR6 BZ, UW, PT R$15.00)

Trimming 27E EPS By 5% - We Incorporate RS Payroll Contract and Remain UW

Last week Banrisul announced it will pay R$1.26bn (~20% of market cap) to renew its payroll contract with the state of Rio

Grande do Sul for a shortened 5-year term (link). We have a negative take: we had assumed a similar contract value (R

$1.25bn) but over 10 years, and a phased payment to limit the NII impact. The shorter tenor and upfront outflow should drive: (i)

higher amortization expenses (from R$125mn/year to R$253mn pre-tax; implying ~5% EPS headwind); (ii) lower NII from cash

outflow (~R$164mn pre-tax; ~8% EPS headwind); and (iii) ~170bp CET1 ratio decrease due to higher intangibles. We have

updated our model to incorporate these impacts and we now sit 12% below consensus for 2026 and 10% below for 2027. We

also roll our PT to Dec-27 unchanged at R$15 (rollover offset by lower EPS) and maintain our UW rating. Beyond this, we still

see challenges: (1) higher rates potentially pressuring NIM; (2) network and headcount reduction to follow private banks; (3)

tougher acquiring (~1/3 of fees) and competition in payroll (~30% of loans); and (4) potential agribusiness asset quality risks

(~21% of loans) tied to El Niño, seasoning of refinanced loans, among others.

LatAm Telcos (Marcelo Santos, CFA)

Consolidation Lessons: Case Study on Brazil Mobile, 2022

Amid a wave of telecom consolidation, we are launching a series of Latin American case studies, beginning with Brazil’s 2022

mobile consolidation.