Banco do Brasil cuts 2025 net income outlook as farmer defaults surge
Banco do Brasil has revised its 2025 net income outlook downward to 18-21 billion reais due to increased funding costs and rising defaults among farmers. The bank's agribusiness default ratio surged to 5.34% in Q3, raising concerns over its exposure to the sector. Adjusted net profit for Q3 was 3.79 billion reais, a 60.2% decline year-on-year. Additionally, the bank increased its 2025 credit cost estimate to 59-62 billion reais.
By Fernando Cardoso
SAO PAULO, Nov 12 (Reuters) - Brazilian state-run lender Banco do Brasil (BBAS3.SA) on Wednesday lowered its outlook for adjusted net income this year, citing higher funding expenses and rising defaults among local farmers.
The bank now expects annual net income of
18 billion t
o
21 billion reais ($3.33 billion-$3.89 billion), down from a previous forecast of 21-25 billion reais.
Banco do Brasil, long seen as a pillar of farm credit in the country, has been grappling with
record default levels
in its agribusiness portfolio, which hit results and raised investor concern over
its exposure
to the sector.
In the third quarter, the bank’s agribusiness default ratio hit 5.34%, up from 3.49% in the prior three-month period and above its overall 90-day default ratio of 4.93%, which rose 72 basis points sequentially.
“Given this scenario, we have acted with transparency and implemented effective measures to address the situation, responding quickly and decisively,” the bank said in its earnings report.
Banco do Brasil posted an adjusted net profit of 3.79 billion reais ($701.35 million) for the third quarter, down 60.2% from a year earlier but slightly above the 3.71 billion reais expected by analysts polled by LSEG.
The lender’s return on equity, a gauge of profitability, was down 1,276 basis points year-on-year to 8.4%, but unchanged quarter-over-quarter.
In another revision, Banco do Brasil also raised its estimate for cost of credit in 2025 to a range between 59 billion and 62 billion reais, from the 53 billion to 56 billion reais forecast before.
($1 = 5.4039 reais)
