This article first appeared on GuruFocus .
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Net Earnings:BRL3.9 billion in Q2, up 13.9% quarter-over-quarter and 3.3% year-to-date.
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Net Interest Income:Totaled BRL27.5 billion, supported by a better risk-return credit mix and diversified funding sources.
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Fee Income:Grew by nearly 5%, driven by AUM and consortium businesses.
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Expected Credit Loss Provisions:Slight decrease in the quarter, remaining the main drag on earnings.
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CET1 Ratio:Strong at 11.27% in June.
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Expanded Loan Portfolio:BRL1.3 trillion in June, a year-over-year increase of 1.5%.
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Loss Recovery:Reached nearly BRL2 billion in the quarter, a 51.4% increase compared to Q1.
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Legal Recovery Measures:BRL15.5 billion in 2026, exceeding the total handled in 2025.
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Agribusiness Collateral:BRL90 billion of the portfolio backed by fiduciary sales; 70% of '25/'26 harvest plan disbursements secured by such collateral.
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High-Value Customer Segment:Loan portfolio grew by 4%; AUM grew by 12%; card revenue grew at twice the rate of other segments.
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Debt Renegotiation:Totaled BRL31 billion; Novo Desenrola exceeded BRL12 billion, serving over 440,000 individuals and 40,000 businesses.
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BB Move Brasil:Reached BRL1.4 billion in new hires, a 40% increase over the June ballast of the auto portfolio.
Release Date: August 13, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Earnings totaled BRL3.9 billion in Q2, up 13.9% quarter-over-quarter and 3.3% year-to-date.
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Net interest income grew to BRL27.5 billion, supported by a better credit mix and diversified funding sources.
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Fee income grew nearly 5%, driven by strong performance in AUM and consortium businesses.
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Loss recovery reached nearly BRL2 billion in the quarter, a 51.4% increase from Q1, with legal measures to recover BRL15.5 billion in 2026.
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CET1 ratio remained strong at 11.27%, with plans to maintain robust capital through organic and inorganic measures.
Negative Points
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Delinquency remained high, particularly in the agricultural segment, with expected credit loss provisions still a major drag on earnings.
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Credit card NPL (90 days) spiked to 14.6% in Q2, driven by a one-off effect from automatic installment payments and contamination from rural loans.
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The provisional measure 1,376, aimed at renegotiating agricultural loans, has not yet been executed, creating uncertainty and potential delays in improving asset quality.
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The adjustment in discount rate for post-employment benefits (Cassi) resulted in a significant one-off impact on equity, reducing the BIS ratio by 18 basis points.
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The bank faces challenges in achieving its guidance, with provisions expected at the higher end and earnings at the lower end, with a possible deviation of 5-6% in a worst-case scenario.
Q & A Highlights
Q: How will the Provisional Measure 1,376 impact provisions and the cost of risk, and what is the expected size of the renegotiation pool for Banco do Brasil? A: Management expects the measure to be a key driver for improving the agribusiness portfolio's performance. The potential eligible portfolio totals up to BRL100 billion, involving up to 113,000 customers. The initial focus will be on delinquent producers, with an expected renegotiation volume of around BRL30 billion under controlled rates. This is expected to help return on-time payment rates to ~90% and converge the cost of risk towards the guidance range. For every BRL1 billion renegotiated, the bank expects a positive impact of BRL150 million to BRL200 million on the bottom line through a combination of provision reversals and resuming interest accrual.
Q: Can you explain the sharp increase in credit card delinquency (from 7.1% to 14.6%) and whether the peak has been reached? A: The spike was driven by a one-off effect related to an automatic installment payment program for lower-income (D&E bracket) clients. The bank allowed automatic installments without a down payment, which led to increased risk. After identifying the issue, the bank stopped this practice and required down payments, which caused a temporary adjustment in NPLs. Management states that normalization is already being seen in July, and the peak has likely been reached.
Q: Given the high level of provisions and limited organic capital generation, what is the timeline for CET1 recovery, and what inorganic measures are on the table? A: Management refuted the premise of limited capital generation, stating that CET1 remains strong at 11.27% and is expected to stay in that range. They highlighted that the main drag on capital is the agribusiness portfolio, which the 1,376 measure will address. They also mentioned inorganic measures already taken, such as renegotiating hybrid instruments to extend maturities. For 2027, the bank does not anticipate capital constraints, and if a more pessimistic scenario unfolds, they have a "bold asset structure" that allows for further RWA optimization or inorganic measures to preserve capital.
Q: What is the outlook for the individual loans portfolio, and what sustains the maintenance of the guidance given the slowdown in growth and rising delinquency? A: The bank is shifting its focus to more secured lines, particularly private payroll loans. Key measures include using FGTS funds as collateral and the automatic portability of loans when a customer changes jobs (operational at the end of August), which will help control delinquency. The bank also highlighted growth in auto finance through BB Move Brasil and mortgage-secured loans. These initiatives are expected to support the delivery of the individual loans guidance.
Q: Can provisions continue to decline in 2027, and what is the visibility on ROE improvement given macro concerns? A: Management expects the cost of risk to decline below the current ~5% level, aiming for a 3.5% average cost of risk for the full portfolio in 2027. This will depend on the successful execution of the 1,376 renegotiation program and a focus on growing less risky loans. They do not plan to reduce the coverage ratio, aiming to balance it to guarantee sound coverage. The improvement in ROE is tied to the successful execution of these measures.
Q: What is the mechanics of the provision reversion under the 1,376 measure, and will it be a reversion or a reduction of future provisions? A: Reversion will happen in two ways. First, by reducing NPLs through the new resilience matrix, which will cover 57% of the portfolio by December. Second, through the renegotiation of delinquent rural loans, which will involve down payments and additional collateral. This will allow the bank to migrate operations to different stages, potentially reversing provisions and resuming interest accrual. The bank emphasized that this is not a pre-emptive reversion but a result of actual execution and improved client payment ability.
Q: Can you explain the impact of the Cassi (healthcare plan) adjustment on capital and whether there are any other similar adjustments expected? A: The adjustment was a one-off change in the discount rate for post-employment benefits, required by the Central Bank. The rate was changed from ~9.7% to 8.5%, which increased the liability and directly impacted equity. The bank had requested a delayed implementation but had to comply with the regulator. The impact is directly in equity, and the rate will be adjusted every 6 months. No other similar adjustments of this magnitude are expected.
Q: What is the impact of the 1,376 measure on the third and fourth quarter earnings, and can the bank deliver on its guidance? A: Management is confident in delivering the guidance, citing the successful execution of the previous 1,314 measure, where they renegotiated over BRL30 billion. They expect the impact of 1,376 to be felt more strongly in the fourth quarter. The guidance is maintained, with provisions expected at the higher end and profit at the lower end. The bank is working to avoid a guidance revision and will provide updates with third-quarter results.
Q: How is the corporate portfolio performing, and what is driving the increase in NPLs in that segment? A: The large corporate segment is performing well, with no deterioration. The increase in NPLs is concentrated in the middle market (companies grossing between BRL50 million and BRL200 million), which are struggling due to the macro landscape and record levels of in-court reorganizations. The bank is closely monitoring this segment and offering liability management opportunities. For small and micro companies, the bank is focusing on government-guaranteed lines (FGI and FGO) to mitigate risk.
Q: What are the projections for El Nino's impact on the agribusiness portfolio in 2027, and is this embedded in the credit models? A: Management is closely monitoring El Nino effects with 280 experts across the country. They noted that historically, El Nino's impact on overall yields has been mitigated by regional variations. Farmers are preparing by adjusting planting windows and crop choices. The bank is incorporating these assumptions into its credit engine and loan granting models. The impacts are already embedded in the 2026 LLP guidance, and for 2027, the bank is adjusting its risk appetite and expects lower loan loss provisions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
