Brazil's Banco do Brasil open to resizing branch network

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SAO PAULO, Aug 5 - Banco do Brasil remains open to a resizing of its branch network, the Brazilian bank's new chief executive told reporters on Thursday.

Fausto Ribeiro replaced Jair Bolsonaro because of his plans to close branches. In the second quarter, Banco do Brasil closed 112 branches as a demand for efficiency was increased.

The new branch was still closed, but Ribeiro did not provide any vision.

Shares in state-controlled Brazilian lender Banco do Brasil SA rose more than 2% in morning trading, as the bank forecasted a higher than - expected 2021 profit on lower losses for bad loans.

Recurring net income, which excludes one item, came in at 5.039 billion reais from 52.5% from one year earlier as lender-loss provisions dropped. The bank added it was poised to end 2021 with a profit of 20 billion reais, 1 billion reais higher than expected earlier this year.

Given the bank's performance, analysts at BTG Pactual wrote to clients that Banco do Brasil is undervalued.

All in all, the Q2 results were decent, especially given low expectations for the name. We see BBAS 3 trading at an undemanding valuation of 0.6x latest PBV, they said.

Shares in Banco do Brasil are down 14.3% this year, below its main peers reflecting Bolsonaro's decision to replace CEO Andre Brandao in March after the executive announced a cost-cutting plan which included the closure of several branches. Investor saw this move as political interference.