The Brazil-based bank is also looking for possible joint ventures with domestic as well as overseas insurance players
Banco do Brasil intends to increase its revenues from insurance operations to 25%, over the next five years – reported Bloomberg. At present insurance operations account for almost 12% of the bank earnings. However, Banco Bradesco – a competitor to Banco do Brasil, got 36% of its revenue from insurance sector in Q2, 2009.
According to a recent report by Fitch Rating, insurance industry in Brazil is worth BRL96.2 billion in premiums and accounts for 3.3% of GDP. The bank seeks to combat the pressure on margins from plunging interest rates by increasing its operations in insurance, reported the Daily Mail.
Aldemir Bendine, president, said: Banco do Brasil doesn’t earn as much from insurance as rivals. We’re seeking to increase the capital the bank has in these companies. Laura Lyra Schuch, an analyst at Ativa Corretora in Rio de Janeiro, commented: Expanding in insurance is a positive strategy. The insurance sector has great growth potential in Brazil. It’s a good way of reducing dependence on credit growth, reported the Daily Mail.