In December 2020, the banking system’s aggregate return on equity was 11.5%, the lowest in the central bank’s series, although the 2021 outlook is improving despite ongoing uncertainty surrounding the pandemic, it said.
“The fall in profitability was widespread, affecting banks of different types of control, size and activity,” the central bank said in its annual report.
“Bolstering provisions in 2020 reduces the need for significant new provisions, and the rebound in economic activity will support growth, credit quality, and demand for banking services,” it added.
The report also highlighted reduced concentration of the banking system, as the market share of state-owned institutions such as Banco do Brasil, Caixa Economica Federal and the BNDES national development bank fell.
The five largest banks – Itau, Bradesco, Santander (MC:SAN), Banco do Brasil and Caixa Economica Federal – accounted for 77.6% of total assets in December 2020, down from 81% a year earlier, the central bank said.
The concentration of total deposits in these institutions dropped to 79.1% from 83.4% in December 2019, it added.