Banco do Brasil Blames Farmers as Profit Collapses 66.5%

Banco do Brasil set aside R$21.2 billion, about US$3.8 billion, for bad loans in the third quarter, and its profit fell 66.5% to R$1.3 billion. The numbers came after the close on Wednesday. The bank's CFO, Marco Geovanne Tobias da Silva, wasn't shy about who he thinks is to blame. "Uma parte do agro não quer pagar o Banco do Brasil," he told InfoMoney: part of agribusiness does not want to pay the bank.

That's the line from the top. Borrowers are the problem. Not the lending decisions, not the structure of a state-controlled bank wired into Brazil's farm economy.

Who Has the Power

Banco do Brasil is state-controlled, the bank at the heart of the country's farm-driven economy. It decides who gets credit, on what terms, and what happens when the money doesn't come back. Its own results release shows the damage: agribusiness delinquency above 90 days rose from 6.27% to 6.92%. Formation of new nonperforming agribusiness loans jumped from R$5.7 billion to R$14.7 billion, according to XP. Write-offs of loans considered unrecoverable climbed from R$5.3 billion to R$13.2 billion. Of the R$21.2 billion in credit cost, R$12.2 billion came from expected-loss expenses in agribusiness, a 45% increase quarter over quarter, per Genial's analysts.

Who Gets Crushed

Individuals aren't spared. The share of operations more than 90 days overdue among individual customers rose from 8.41% to 9.14%, according to XP. Credit card delinquency hit 16.35%. Genial spotted a first sign of easing in new nonperforming loans among individuals, down from R$11.8 billion to R$9.3 billion, but that doesn't mean people are catching up. They're falling further behind.

Nearly one in six credit card balances is in trouble. That's what a debt-driven system looks like when the bill comes due.

What They're Calling "Order"

The bank's response is to protect its balance sheet. It slashed its 2026 profit goal to R$9 billion to R$11 billion from R$18 billion to R$22 billion, and raised its credit cost projection from R$65 billion to R$70 billion up to R$80 billion to R$83 billion. Pre-tax income was negative R$832 million, per Genial. The reported profit was propped up by R$3.1 billion in tax credits tied to income tax and the social contribution on net profit. The common equity ratio fell to 10.8%, below the 11% reference.

Then came the dividend cut. The share of profit going to dividends and interest on equity dropped from 30% to 25%, which XP identified as the statutory minimum. Interim distributions planned for November were canceled. For 2027, the board determined there will be no interim payments at all. Any distribution will wait until after the fiscal year ends and depend on capital adequacy.

The Analysts Weigh In

The brokerages, the people whose job is to tell investors where to put their money, called it a disappointment. XP analysts Bernardo Guttmann and Matheus Guimarães said the result came in 54% below their estimates, with return on equity at 2.8% against 6% projected. They pointed to widespread frustration and warned the results delay the bank's expected recovery and raise the risk of further negative revisions, mainly for 2027. XP kept a neutral recommendation with a R$21 target price, 24.3% above the previous close.

Genial, with analysts Matheus Filgueiras, Eduardo Nishio and Alan Frydman, held its recommendation at hold with a R$20.10 target, 18.1% above the prior day's close, and said it would revise everything after the earnings call. The bank presents to investors today, and its shares trade for the first time since the results.

The peak of provisions, previously expected in the third quarter, has now shifted to the last three months of the year, according to Genial. XP's math shows the new guidance implies a fourth-quarter result of only R$400 million to R$2.4 billion.

The people who owe the money are described as unwilling. The people who analyze the money are described as frustrated. Nobody in the bank's own results release is described as accountable.