Brazilian banks continue to be more profitable than U.S. peers

Brazilian banks are more profitable than Americans for the eighth consecutive year, according to a recent survey from consulting Economatica.

The return on equity of Brazilian banks was 13.97% in 2011, while U.S. institutions reported a rate of 7.63%. In 2004, the year in which Brazilians first surpassed the North Americans, the return on Brazilian banks was 16.82%, versus 16% for their U.S. counterparts.

Although the profitability of banks in Brazil remains impressive, it fell last year after peaking in 2010, when these institutions were pumping out a 15.57% return on equity.

In the United States, on the other hand, banking profitability has been gradually recovering from the disasters of 2008.

For the study, Economatica used the data of banks in each of the years — both in Brazil and the United States — and simply calculated the median of these numbers.

The continued outperformance is especially impressive in view of the fact that 2011 was a slowdown in economic growth in Brazil, with a spike in bad debts and declining investments of major banks and government agencies on new projects.

The top ranked Brazilian banks such as Itaú Unibanco (ITUB, quote), Banco Bradesco (BBD, quote), Santander Brasil (BSBR, quote) and Banco do Brasil (BDORY, quote) surely have a major stake in this study. And in terms of relative market performance, the returns speak for themselves.

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