Banco Bradesco S.A. BBD

The business

Bradesco runs two engines. The first is a full-service bank: checking and savings deposits funding mortgages, vehicle loans, payroll-deductible credit, cards and corporate lending across a national branch and digital footprint, staffed by roughly 82,000 people against BRL 2.33tn of assets. The second is Bradesco Seguros, one of Brazil's biggest insurance, pension and capitalization operations, which sells auto, life, health and private-pension products and generates fee and underwriting income that is steadier than the loan book and pays a large share of the dividend. Money is made on the spread between what deposits cost and what loans earn, plus insurance float and asset-management fees. The moat is scale and franchise, a low-cost deposit base and captive insurance cross-sell, not superior returns: right now the bank earns less on its capital than its closest peer does on the same kind of book.