The 2014 All-Brazil Research Team: Financials/Banks, No. 1: Marcelo Telles



Marcelo Telles Credit Suisse First-place appearances: 2

Total appearances: 5

Team debut: 2010 Back on the top of this list after slipping to No. 2 last year, Credit Suisse’s Marcelo Telles possesses a “great knowledge of the markets and is very easy to access,” says one client. The São Paulo–based analyst covers six stocks and maintains a positive outlook on the sector. “We have been very contrarian with a bullish view on Brazilian banks since September of last year, mainly on the back of strong earnings momentum and higher return on equity,” says Telles, 37. “Despite the subdued volume-growth environment, we argued earnings growth would be material on the back of rising credit spreads, improving asset quality trends and tight cost-control efforts, which have fortunately materialized.” The shares have indeed outperformed, climbing 13 percent by the end of July — with large-cap names gaining 13.5 percent — compared with the broad market’s 1.6 percent advance. He expects that trend to continue. Within the group, investors should favor private sector players over government-owned banks, Telles adds, pointing to Itaú Unibanco and Banco Bradesco in particular. These two São Paulo–based institutions, respectively Brazil’s second- and third-largest bank, by assets, are reasonably valued, he says, and “better prepared to keep asset quality under control in a persistently low economic growth environment.” Finally, the analyst believes, “margins should continue to benefit from rising credit spreads, which, combined with tight cost controls, should fuel earnings growth in the second half of 2014.”