We value ABCB4 shares utilizing a DDM model, assuming a cost of equity of 15.5%, a terminal growth rate of 6.0% (both in nominal BRL), and sustainable ROE of 15.0%. This leads to a target price of R$29 per share.

Main upside risks to our thesis and to the stock’s ability to exceed our target price are: 1) faster stability in asset quality; 2) better-than-expected repricing of portfolio; and 3) stronger recovery in fees.


Potential downside risks: 1) further deterioration of asset quality; and 2) increase in competition from newcomers.