Banco do Brasil Profit Halves as Farm Loans Sour; Stock at 0.6x Book

3 Key Points

—Banco do Brasil (BBAS3), Latin America’s oldest bank — founded 1808, half-owned by the Brazilian state — earned a recurring net profit of R$3.43 billion ($672M) in its latest reported quarter, down 53.5% year over year, with return on equity collapsing to 7.3% from 16.7% as loan-loss provisions jumped 86%, driven above all by souring farm credit.

—Management capitulated on the year: the cost-of-credit guidance rose from R$53–58 billion to R$65–70 billion ($12.7–13.7B) and the 2026 profit guidance was cut from R$22–26 billion to R$18–22 billion ($3.5–4.3B) — the old floor is the new ceiling.

—The stock prices a crisis, not a cycle: at R$20.76, Brazil’s biggest farm lender trades at 0.61x book value and 9.4x depressed earnings, against a consensus target of R$25.17 — the market’s bet being that a bank with a R$1.3 trillion ($255B) loan book and the federal government behind it is either cheap for a reason, or cheap enough to forgive it.

Banco do Brasil Profit Fall: What Happened

01What Happened

Banco do Brasil S.A. (B3: BBAS3) is the oldest working bank in Latin America and one of its largest: 84,600 employees, a R$1.3 trillion ($255B) expanded credit portfolio, and an unmatched franchise in agribusiness lending — it finances more of Brazil’s farm belt than any institution on earth. The federal government holds 50% of the shares; the rest trade on the Novo Mercado, long prized by income investors for fat dividends.

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The latest reported quarter landed in May and was ugly: recurring net income of R$3.43 billion ($672M), down 53.5%, per ADVFN, with return on equity at 7.3% — for scale, private rivals Itaú and Santander Brasil run north of 20%. Provisions for bad loans jumped 86%, concentrated in agribusiness and unsecured personal credit, per Seu Dinheiro.

Company Intelligence · Market Data

Ticker / listingBBAS3 · B3 Novo Mercado

Share price (Jul 17)R$20.76

Market capR$118.5 bn ($23.2B)

52-week rangeR$17.71 – R$27.54

Trailing P/E9.4x

Price / book0.61x

Dividend yield (trailing)2.8%

Wall Street target (consensus)R$25.17

EPS (TTM)R$2.22

Government stake50%

Beta0.25

Source: EODHD market data, July 17, 2026.

Two numbers define the debate: 0.61x book and 7.3% ROE. A bank earning less than its cost of equity deserves a discount to book — the argument is only about how temporary the 7.3% is.

Company Intelligence · Company Profile

CompanyBanco do Brasil S.A.

Sector / industryFinancial Services · Banks

Founded1808 — Latin America’s oldest bank

HeadquartersBrasília, Brazil

Employees~84,600

CEOTarciana Medeiros

CFO / IRMarco Geovanne Tobias da Silva

Credit portfolioR$1.3 tn ($255B), +2.2% YoY

Source: EODHD company fundamentals, July 17, 2026.

Key Drivers Behind the Fall

02Key Drivers

The farm belt is the wound. Brazil’s agricultural boom was financed at floating rates, and the combination of high Selic, weaker grain prices — the same deflation crushing Camil — and two difficult harvests has pushed record numbers of farmers into court-supervised debt workouts.

As the country’s dominant agro lender, Banco do Brasil owns a disproportionate share of that pain: the 86% jump in provisions is the harvest failure arriving on a bank balance sheet.

A new accounting regime sharpened the blow. Brazil’s central bank pushed lenders onto stricter expected-loss provisioning this year, forcing earlier recognition.

And unsecured personal credit — the other growth engine of recent years — is souring alongside. Service fees (+5.5% to R$8.8 billion) and treasury results (+26.4%) cushioned what they could.

Live Company IntelligenceBanco do Brasil S.A. — the full investor dossierInside: live share price, market cap, three-year financials, valuation, ESG and peer benchmarks — plus the latest Rio Times coverage.

Rio Times · Live Ticker Intelligence

Banco do Brasil S.A.

BBAS3 · B3 São PauloFinancial ServicesBanks – Regional

Share price · live

R$20.76

▲ +1.02% today

Market cap

R$118.5 bn (US$23.2 bn)

5.7 bn shares

P / E

9.4

EPS 2.22

Dividend yield

2.8%

R$0.57 / share

The company

Employees

84,619

Headquarters

Brasília

Listed since

—

Website

Banco do Brasil S.A., together with its subsidiaries, provides banking products and services for individuals, companies, and public sectors in Brazil and internationally. The company operates through Banking, Investments, Fund Management, Insurance (including insurance, private pension funds and capitalization) and Electronic Payments segments. Its Banking segment…

Financial performance · FY · BRL

RevenueNet income

2023

R$302.2 bn

R$29.9 bn

2024

R$310.8 bn

R$26.4 bn

2025

R$365.6 bn

R$13.7 bn

Net income declined to R$13.7 bn in 2025, from R$29.9 bn in 2023.

Valuation & returns

EBITDA margin

—

Net margin

20.4%

Return on equity

9.2%

Price / book

0.61

Enterprise value

R$917.3 bn (US$179.9 bn)

Revenue growth · YoY

-21.8%

Latest earnings

Q1 2026 — reported EPS 0.53 vs 0.51 expected

Beat +4%

ESG score

27.9

/ 100

Peers & comparators

IBOV

▼ -1.24%

USD/BRL

▲ +0.03%

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Data: EODHD Fundamentals & live feed · The Rio Times Ticker Intelligence

Banco do Brasil Financial Detail

03Financial Detail

Metric

1T25

1T26

Chg

Recurring net profit

R$7.38 bn ($1.4B)

R$3.43 bn ($672M)

−53.5%

Return on equity

16.7%

7.3%

−9.4 pp

Provisions (cost of credit)

—

—

+86%

Service revenue

R$8.3 bn ($1.6B)

R$8.8 bn ($1.7B)

+5.5%

Market NII (treasury)

R$3.5 bn ($686M)

R$4.4 bn ($862M)

+26.4%

Expanded credit portfolio

R$1.27 tn

R$1.3 tn ($255B)

+2.2%

The Guidance Capitulation

2026 guidance

Before

After

Cost of credit

R$53–58 bn

R$65–70 bn ($12.7–13.7B)

Net profit

R$22–26 bn

R$18–22 bn ($3.5–4.3B)

Five-Year Profit Track

Fiscal year

Net income

Change

2021

R$19.7 bn ($3.9B)

—

2022

R$31.1 bn ($6.1B)

+58%

2023

R$29.9 bn ($5.9B)

−4%

2024

R$26.4 bn ($5.2B)

−12%

2025

R$13.7 bn ($2.7B)

−48%

Earnings vs. Estimates

Quarter

EPS actual

EPS estimate

Surprise

Q1 2026

R$0.53

R$0.51

+3.9%

Q4 2025

R$1.06

R$0.72

+47.2%

Q3 2025

R$0.66

R$0.65

+1.5%

Q2 2025

R$0.67

R$0.87

−23.0%

Q1 2025

R$1.29

R$1.57

−17.8%

Management Signals

04Management Signals

CEO Tarciana Medeiros’ team chose the kitchen-sink route: cut the guidance hard, front-load the provisioning, and rebuild credibility from a floor the bank can actually defend. The tell will be the dividend — Banco do Brasil’s payout is politically visible (half flows to the Treasury), and how management balances capital preservation against its income-stock identity says what it really expects from the farm book.

What to Watch Next

05What to Watch Next

August 12: second-quarter results — the first full quarter under the new guidance; the market needs provisions to decelerate. Farm-debt workouts: the monthly count of judicial recovery filings in the agro belt is this stock’s leading indicator. Selic cuts: relief for floating-rate farm debtors, but pressure on the treasury income now cushioning results. Politics: any hint of the state leaning on its bank for policy lending would widen the discount.

Risks

06Risks

The bear case: farm-credit stress runs into the 2026-27 harvest, provisions stay at the new guidance ceiling, and the 7.3% ROE becomes a plateau rather than a trough — at which point 0.61x book is not cheap. State control cuts both ways: it guarantees the franchise and clouds the governance.

And the dividend that anchored the shareholder base is arithmetically at risk if the profit guidance slips again.

Brazilian Banking Sector Context

07Sector Context

The gap between Brazil’s private and public banks has rarely been this wide: Itaú and Santander Brasil print 20%+ returns while the state lender halves its profit — same country, same rates, different loan books. Banco do Brasil is paying for being the bank of Brazilian agriculture in the one year agriculture could not pay.

That is precisely the bet the stock offers at 0.61x book: agro credit is cyclical, Brazil’s farm engine is structural, and the bank financing it has survived every crisis since 1808. The counter-argument reports on August 12.

This report is part of The Rio Times’ Company Intelligence coverage of B3-listed companies. It is journalism, not investment advice.