SÃO PAULO, BRAZIL / MANILA, PHILIPPINES — November 12, 2026 — One of Latin America’s largest banks is facing a deepening profitability crisis after state-controlled Banco do Brasil slashed its annual earnings forecast in half, revealing how mounting agricultural loan defaults are taking a heavy toll on Brazil’s financial system.
Banco do Brasil announced on November 11 that it now expects adjusted net income of R$9 billion to R$11 billion in 2026, dramatically lower than its previous forecast of R$18 billion to R$22 billion.
The downgrade followed a disappointing third-quarter earnings report.
Between July and September, the bank generated adjusted profit of approximately R$1.27 billion, a 66.5% decline from the same period last year.
The result fell far below analysts’ expectations and exposed the growing financial consequences of unpaid loans, especially among agricultural businesses.
The bank also raised its projected full-year credit costs to R$80 billion–R$83 billion from R$65 billion–R$70 billion.
For shareholders, the warning became even more serious when Banco do Brasil reduced its planned dividend payout ratio from 30% to 25%.
The developments are forcing investors to reconsider the outlook for one of Brazil’s most important financial institutions.
The bigger question is whether the bank can stabilize its agricultural lending business before rising defaults, shrinking profits and weaker capital returns trigger an even deeper crisis of confidence.
Banco do Brasil Cuts Its Annual Profit Outlook in Half
The bank’s revised forecast represents one of the clearest signs yet of the deteriorating credit environment facing Brazilian lenders.
Previously, management expected adjusted annual profit of between R$18 billion and R$22 billion.
The new range is R$9 billion to R$11 billion.
Both endpoints have been reduced by 50%.
The revision followed repeated pressure from borrowers who have struggled to keep up with loan repayments.
Banco do Brasil is especially exposed to Brazil’s agricultural industry, including financing provided to soybean, corn and livestock producers.
Agriculture remains a major component of the Brazilian economy and an important source of export earnings.
However, lending to the sector also carries risks related to weather conditions, commodity prices, production costs and borrowers’ financial positions.
When farmers experience weaker cash flow, they may find it more difficult to repay loans on schedule.
For Banco do Brasil, the resulting increase in credit costs has significantly reduced its profitability.
Third-Quarter Profit Collapses 66.5%
Banco do Brasil reported adjusted net income of approximately R$1.27 billion in the third quarter of 2026.
That compares with roughly R$3.79 billion during the same period in 2025.
The result was also well below the R$3.47-billion analyst consensus reported by Reuters using LSEG estimates.
Different analyst surveys published by Brazilian outlets showed somewhat different expectations, but all pointed to a substantial earnings disappointment.
The bank’s return on equity fell to 2.8%, compared with approximately 8.4% a year earlier.
Return on equity measures how efficiently a company generates profit from shareholders’ invested capital.
The sharp decline indicates that Banco do Brasil is producing considerably weaker returns despite maintaining a large banking operation.
During the first nine months of 2026, adjusted net income totaled approximately R$8.6 billion.
That means the bank’s new full-year guidance implies only another R$400 million to R$2.4 billion in adjusted earnings during the final quarter.
The figures suggest management expects profitability to remain under pressure through December.
Farm Loan Defaults Become the Biggest Problem
The agricultural loan portfolio is central to the bank’s difficulties.
Banco do Brasil reported that the percentage of agricultural loans more than 90 days overdue increased to 6.92% in September.
That compares with 6.27% in June and 4.84% a year earlier.
The deterioration is particularly severe in financing used to cover agricultural production expenses.
For agricultural operating loans, the overdue rate reached 12.52%.
The bank said defaults were concentrated among medium-sized and large producers in Brazil’s Center-West region, particularly in soybean farming, corn production and cattle operations.
Farmers have faced a combination of high borrowing costs, earlier adverse weather conditions and weaker prices for some agricultural commodities.
Those pressures have reduced repayment capacity for certain borrowers.
However, the rising default figures do not mean that all Brazilian farms or agricultural businesses are experiencing financial distress.
The deterioration is concentrated in particular lending segments and borrower groups.
For Banco do Brasil, the challenge is assessing which loans can be successfully renegotiated and which require recognition of larger potential losses.
Credit Costs Could Reach R$83 Billion
One of the most alarming figures is the bank’s new credit-cost forecast.
Management now expects credit costs of R$80 billion to R$83 billion in 2026.
That is substantially higher than the previous range of R$65 billion to R$70 billion.
During the third quarter alone, credit costs reached approximately R$21.2 billion, up 18.4% year over year.
These costs include accounting recognition of expected credit losses, the effects of debt renegotiations and recoveries of previously troubled loans.
They are not necessarily equivalent to cash immediately leaving the bank.
Nevertheless, higher credit costs reduce reported profitability.
Banco do Brasil said repayments in parts of its agricultural portfolio continued to deteriorate, while a government-supported debt-renegotiation initiative produced weaker results than anticipated.
The company also warned that concentrations of agricultural loan maturities could lead to additional provisioning pressure during the fourth quarter.
That means the latest earnings shock may not represent the final stage of the credit deterioration.
Government Debt-Relief Program Falls Short of Expectations
Brazil has attempted to provide support for distressed agricultural borrowers.
Provisional Measure 1,376/2026 introduced mechanisms intended to facilitate rural debt renegotiations.
Banco do Brasil began operating the relevant financing arrangements in late August.
But the bank reported limited progress.
By September, operations under the measure totaled approximately R$163 million.
That was modest relative to the scale of its agricultural lending exposure.
The Brazilian Senate also approved legislation on November 11 expanding the categories of rural debt potentially eligible for renegotiation.
However, legislative approval alone does not guarantee that borrowers will successfully restructure their loans or resume payments.
The effectiveness of support measures will depend on final implementation, eligibility requirements and borrowers’ capacity to generate cash.
For Banco do Brasil, those factors will influence the outlook for future credit losses.
Consumer Loans and Credit Cards Are Also Showing Stress
Although agricultural lending remains the main source of concern, other areas of the bank are also experiencing rising delinquencies.
The overall percentage of loans more than 90 days overdue increased to 6.08% in September, compared with 4.51% a year earlier.
Among individual borrowers, the overdue rate climbed to 9.14% from 8.41% in June.
Credit-card delinquencies rose to 16.35% from 14.58% during the same period.
These figures indicate that loan repayment pressure is not confined to farms and agricultural businesses.
Some households are also finding it more difficult to manage their debts.
Higher financing costs can increase the burden of repayment, especially for borrowers with variable-rate obligations or outstanding revolving credit balances.
However, delinquency figures alone do not establish that Brazil is experiencing a nationwide banking crisis.
A broader assessment requires examining capital buffers, liquidity, profitability and the financial position of other banks.
Banco do Brasil Cuts Dividend Payouts to Protect Capital
The earnings disappointment is also affecting shareholders.
Banco do Brasil reduced its planned dividend and interest-on-capital payout ratio from 30% to 25% for 2026.
The bank also canceled previously scheduled interim distribution announcements for November.
Management intends to apply the 25% payout level in 2027 as well, subject to its capital projections and applicable requirements.
The decision reflects an effort to preserve financial resources while credit conditions remain difficult.
Lower distributions allow a bank to retain more of its earnings.
Those retained funds can help support capital levels and absorb potential future losses.
However, dividend reductions can make shares less appealing to investors who rely on regular income.
Banco do Brasil’s common equity Tier 1 capital ratio stood at approximately 10.8% at the end of September, down from 11.27% in June.
The broader capital adequacy ratio was approximately 13.45%.
The figures show why capital management has become a major priority.
They do not, by themselves, establish that the bank is insolvent.
Brazil’s Agricultural Economy Creates a Unique Banking Risk
Banco do Brasil’s difficulties are closely connected to its role in financing Brazilian agriculture.
The bank has historically supported farmers through working-capital loans, crop financing and other credit products.
That gives it exposure to a sector important to Brazil’s food production and exports.
But agricultural earnings can fluctuate dramatically.
Droughts and floods may reduce harvests.
Global commodity-price movements can weaken revenue.
Higher fertilizer, fuel and borrowing costs can increase financial pressure.
Farmers may also need to borrow ahead of production and repay after crops are sold.
When several adverse factors occur together, loan repayment problems can increase.
For a lender with substantial agricultural exposure, the effects can be significant.
Banco do Brasil’s current experience demonstrates why diversification and careful credit assessment are important even for large, established institutions.
Itaú Unibanco Offers a Contrasting Picture of Brazilian Banking
The difficulties at Banco do Brasil do not mean every major Brazilian bank is reporting the same performance.
Itaú Unibanco, a leading private-sector lender, reported adjusted recurring profit of approximately R$12.6 billion in the third quarter of 2026, up 6.2% year over year.
Its loan portfolio reached approximately R$1.54 trillion.
As WWC ONE MEDIA reported in its coverage of Itaú Unibanco’s earnings growth and credit-risk outlook, the lender maintained positive profit growth while continuing to monitor loan quality.
The contrast is significant.
Banco do Brasil is facing deep pressure from its agricultural portfolio.
Itaú’s more diversified operations and different credit mix have produced stronger reported results.
However, the two banks should not be compared solely through headline profit figures.
Their business models, customer exposure, accounting adjustments and capital structures differ.
The broader lesson is that credit quality can be just as important as loan growth in determining banking profitability.
Philippine Banks Reveal a Similar Credit-Cost Challenge
The connection between lending activity and profitability is also evident in the Philippines.
EastWest Bank reported approximately ₱5 billion in net income during the first nine months of 2026, down 24% despite higher revenue.
Its provisions for expected credit losses increased significantly.
As WWC ONE MEDIA examined in its report on EastWest’s 24% earnings decline and ₱15.9-billion credit-loss provisions, rising credit costs can overwhelm otherwise improving operating results.
Metrobank has also faced pressure from additional provisions.
WWC ONE MEDIA’s report on Metrobank’s ₱36.3-billion nine-month profit and rising bad-loan provisions highlighted the need to monitor asset quality alongside credit expansion.
These Philippine examples do not demonstrate that the country’s banking industry is experiencing the same agricultural lending difficulties as Brazil.
The institutions operate in different economies and face different risks.
But they illustrate a shared principle: Banks can grow their loan portfolios and revenues while earning less if borrowers become more expensive to finance or more likely to default.
BDO Shows Why Strong Lending Does Not Always Translate Into Higher Profit
Another comparison comes from BDO Unibank.
The Philippine lender reported ₱63.6 billion in net income for January through September 2026.
Its customer loan portfolio increased 16% to approximately ₱4.1 trillion.
But net profit grew by less than 1%.
As WWC ONE MEDIA reported in its analysis of BDO’s loan growth and nearly flat earnings, lending expansion alone does not guarantee proportionate profit growth.
The comparison with Banco do Brasil is instructive but limited.
BDO reported a lower nonperforming-loan ratio and a very different credit mix.
Banco do Brasil, meanwhile, has experienced pronounced deterioration in agricultural loans.
Investors evaluating banks should therefore focus not only on how much they lend, but also on how reliably borrowers repay those loans and how much capital the lender maintains.
Banco do Brasil Also Cuts Its Lending-Growth Expectations
The bank has revised its plans for loan expansion.
Previously, it expected its overall credit portfolio to grow between 0.5% and 4.5% in 2026.
Management now forecasts a range between a 2% contraction and no growth.
Its outlook for lending to individuals was cut to growth of 0%–2%, from 6%–10%.
Corporate lending is now expected to contract by 2%–4%.
Agricultural lending is projected to decline by 1%–3%.
The bank also lowered its forecast for growth in gross financial margin to 2.5%–4.5%, down from 7%–11%.
These changes suggest management is prioritizing loan quality and capital preservation over aggressive lending expansion.
That approach may improve resilience, but it can also limit near-term revenue growth.
The challenge is finding a balance between reducing risk and maintaining a profitable lending business.
Investors Face Uncertainty Over the 2027 Recovery
The bank’s latest results raise difficult questions about its future.
A reduction in credit costs could improve profitability if borrowers resume payments and the volume of new problem loans declines.
More successful agricultural debt renegotiations could also help.
But further deterioration in repayment performance may require additional provisions.
Management will need to monitor the quality of both agricultural and consumer loans.
Investors will also be watching capital levels, dividend policy and the ability to generate earnings without relying heavily on tax-related benefits.
Brazil’s economic conditions will remain important.
High borrowing costs, agricultural commodity prices and household income trends can all affect loan repayment.
The revised profit guidance does not provide a guarantee of recovery in 2027.
The Bottom Line: Banco do Brasil’s Profit Crisis Is a Warning About Bad Loans
Banco do Brasil remains one of Brazil’s major financial institutions, with a broad customer base and a loan portfolio worth approximately R$1.3 trillion.
But its latest earnings report demonstrates how quickly profitability can weaken when borrowers struggle to repay debts.
The bank halved its 2026 adjusted profit forecast to R$9 billion–R$11 billion.
Third-quarter adjusted earnings dropped 66.5% to R$1.27 billion.
Expected credit costs rose to R$80 billion–R$83 billion for the year.
And management reduced shareholder payouts to conserve capital.
The bank’s difficulties are especially concentrated in agricultural financing, although household loan delinquencies are also increasing.
The immediate challenge is to stabilize credit quality. The longer-term challenge is restoring profitability without taking on the same risks that contributed to the current downturn.
As Banco do Brasil confronts rising farm defaults, shrinking profits and reduced dividends, could stronger debt recovery help the bank stage a comeback in 2027—or is Brazil’s biggest agricultural lender entering an even more difficult phase of its credit crisis?
