Postcard from Brazil: Meeting with Management

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Postcard from Brazil: Meeting with Management

Global Research

31 July 2026ab

BMG Equities

BrazilPostcard from Brazil: Meeting with

Management Banks, Ex-S&L

12-month rating Neutral *

12m price target R$5.40Meeting with Management

We are assuming coverage of BMG. We recently met with BMG's management (Mr.

Luis Felix Cardamone Neto, CEO and Mr. Flávio Pentagna Guimarães Neto, VP and Price (31 Jul 2026) R$5.24

IRO). Management highlighted the successful modernization of its technology RIC: BMGB4.SA BBG: BMGB4 BZ

infrastructure, including the migration of most systems, the digitalization of

operational processes, and the reorganization of its data architecture to support Trading data and key metrics

future AI initiatives. Funding costs continue to improve, while capital management 52-wk range R$5.89-3.43

remains disciplined, with the bank targeting Tier 1 ratio above 10%. As a result, we Market cap. R$3.06b/US$0.60b

highlight that the bank is posting some improvement on its profitability, but note Shares o/s 583m (PREF)

however that BMG's ROAE remains below its cost of capital. Free float 48%

Avg. daily volume ('000) 1,210

Private payroll loans remain attractive Avg. daily value (m) R$6.4

Private payroll loans remain one of the most attractive growth opportunities for the Common s/h equity (12/26E) R$4.73b

bank. BMG emphasized that the product is being rolled out in stages, allowing risk P/BV (12/26E) 0.7x

models to evolve as performance data becomes available. Despite higher-than- Tier 1 ratio 10%

expected delays on initial payments, management noted that customer behavior

tends to improve over time and that operational frictions, particularly related to EPS (UBS, diluted) (BRL)

UBS Cons.

payroll deduction processing, remain an important driver of reported delinquency.