Banco do Brasil Profit Plummets Amidst Surging Agribusiness and Credit Defaults
Rising loan defaults force Banco do Brasil to slash annual profit projections by half.
1Sharp Profit Decline
Banco do Brasil reported an adjusted net profit of R$ 1.27 billion for the third quarter of 2026. This figure represents a significant 66.5% drop compared to the same period in 2025. Consequently, the institution halved its annual profit guidance, now projecting between R$ 9 billion and R$ 11 billion for 2026.
2Agribusiness Sector Strain
The primary driver behind the profit slump is rising delinquency within the agribusiness portfolio. Defaults are concentrated among medium and large-scale producers of soy, corn, and livestock, particularly in the Center-West region. The agribusiness default rate reached 6.92% in September, a sharp increase from the 4.84% recorded one year prior.
3Credit Card Delinquency Spike
Individual credit lines show severe stress, with credit card defaults hitting 16.35% by September 2026. This is a dramatic rise from 8.89% in September 2025. While credit card balances grew 7.2% over twelve months to R$ 68.46 billion, the rapid escalation in late payments forced the bank to increase its credit loss provisions.
4Rising Credit Costs
Total expenses related to credit costs, which include provisions for potential defaults and debt renegotiations, surged to R$ 21.2 billion in the third quarter. This represents an 18.4% increase compared to the same period in 2025. The bank raised its annual cost of credit projection to between R$ 80 billion and R$ 83 billion.
5Portfolio Performance Metrics
The overall default rate for loans overdue by more than 90 days reached 6.08% in September, compared to 4.51% a year earlier. While agribusiness and individual segments struggle, corporate lending defaults remain lower at 3.44%. The expanded credit portfolio reached R$ 1.3 trillion, showing a modest 2.2% growth over the last twelve months.
6Capital Adequacy Ratios
The Basel Index, which measures a bank's ability to absorb financial losses, fell to 13.45% in September from 14.81% a year ago. Similarly, the core capital index dropped to 10.80% from 11.16%. These metrics indicate a reduced buffer against potential financial instability as the bank navigates a challenging credit environment throughout 2026.
7Dividend Policy Changes
Due to the financial downturn, the bank will limit dividend distributions to the mandatory 25% minimum for 2026. Interest on equity payments for the third quarter totaled R$ 197 million, a 52% reduction from the previous year. Furthermore, the bank suspended intermediate dividend announcements, deferring remaining payments until February 2027 to preserve capital.
8Future Financial Outlook
Banco do Brasil has revised its credit portfolio growth expectations from a previous expansion of up to 4.5% to a range between stability and a 2% contraction. With return on equity falling to 2.8%, the institution is prioritizing capital preservation over growth to manage the ongoing volatility in its loan portfolio.