...2014 Earnings Broadly Stable: In 2014, most Brazilian banks performed relatively well and managed to weather significant challenges in the operating environment. Average return on assets (ROA) of the banking system remained unchanged at 1.15% as of Dec. 31, 2014. Average operating income/average assets rose to 1.19% from 1.02% in 2013, and impairment charges/pre-impairment operating profit declined to 54.19% from 59.36% in 2013, offsetting the fall in net interest margin to 4.64% from 4.85% in 2013. Sector Profitability Likely to Drop: Fitch Ratings expects sector profitability to decline in 2015 as a result of higher provisioning expenses, reflecting the weak economic environment. The extent of the reduction will vary among banks and will depend on the banks' capabilities to sustain their net interest margins. State-owned banks are likely to be most affected, followed by small and medium banks. Overall, Fitch expects the declines to be manageable and within acceptable ranges for the respective...
