Banco do Brasil registra lucro 60% menor com inadimplência recorde no agronegócio

On the evening of August 14th, in Brasília, Tarciana Medeiros stood before investors and analysts with news that would reshape how the market saw Brazil's largest agricultural lender. The Banco do Brasil had just posted adjusted net profit of R$ 3.784 billion for the second quarter of 2025—a collapse of more than 60 percent from the same three months a year earlier. The culprit was agriculture, the sector that had long been the bank's bread and butter. Default rates in the rural credit portfolio had reached 3.49 percent, the highest figure in the institution's history. Within weeks, the stock would lose 30 percent of its value, tumbling from R$ 27 in May to R$ 19.24 by August. What had been a dividend darling was becoming an asset analysts advised clients to avoid.

The numbers told a story of cascading pressure on Brazil's farming sector. Agriculture represents roughly one-third of the Banco do Brasil's total credit portfolio, a staggering R$ 404.9 billion in outstanding loans. The default rate had climbed 2.17 percentage points in a single year, driven by forces largely beyond any farmer's control. Commodity prices for soy and corn had fallen sharply, squeezing profit margins. The cost of fertilizers and other agricultural inputs had surged. And across 2024, droughts and floods had ravaged harvests, leaving producers unable to generate the cash needed to service their debts. The impact fell hardest on small and medium-sized farmers, who make up a significant portion of the bank's agricultural exposure. In the first quarter of 2025 alone, judicial recovery requests among these producers jumped 21.5 percent, according to Serasa data—a stark measure of how many were being forced into formal insolvency proceedings.

The bank's response to this crisis was constrained by new regulatory requirements. In January 2025, a resolution from the Monetary Policy Council, known as CMN 4.966, had fundamentally changed how banks must account for expected credit losses. Rather than provisioning only when a loan actually defaulted, the new three-stage expected loss model required banks to anticipate losses earlier. For the Banco do Brasil, this meant setting aside R$ 94.7 billion in provisions by the second quarter—a 50.6 percent increase from the prior year. The regulation was technically sound from a prudential standpoint, but it accelerated the recognition of pain on the bank's balance sheet and compressed reported earnings.

Mediaeiros acknowledged the severity of the moment while laying out a strategy to contain further damage. The bank had begun aggressively pursuing judicial collection of delinquent loans, a practice it had previously avoided. It was tightening credit standards, requiring fiduciary liens on new agricultural contracts and shifting toward lending programs backed by guarantee funds. Leadership changes were underway too: Gilson Alceu Bittencourt, an agronomist with experience at the Finance Ministry and Embrapa, was being appointed vice president of agronegócio to bring fresh expertise to the crisis. And despite the turmoil, the bank was committing R$ 230 billion to the 2024-2025 harvest plan—though this represented a 10 percent reduction from the prior year.

The full-year outlook had been slashed. Where the bank had previously projected profit between R$ 37 and R$ 41 billion for 2025, it was now guiding to R$ 21 to R$ 25 billion. Return on equity had collapsed to 8.4 percent, the lowest since 2016, compared to 21.6 percent in the same quarter the year before. The market's reaction was swift and unforgiving. Analysts revised their recommendations toward caution. The regulatory uncertainty compounded the damage—Medeiros indicated the bank was negotiating with the Central Bank for special treatment of the agricultural portfolio, arguing that seasonal payment flows and the sector's structural importance warranted different provisioning rules.

Yet there were glimmers of hope embedded in the outlook. The CEO projected that default rates would remain elevated through the third quarter, when many agricultural loans were scheduled to mature. But she expected improvement in the fourth quarter, buoyed by the new harvest cycle and the prospect of a record crop in 2025. If commodity prices stabilized and weather cooperated, the pressure on farmers' cash flows would ease. Full normalization—with default rates returning to the 2 to 2.5 percent range that had been normal—might not arrive until 2026, but the trajectory could begin to turn. In the meantime, the bank was also pivoting toward private payroll-deducted lending, a higher-margin business with lower risk, to offset losses in the agricultural sector.

Mediaeiros, the first woman to lead the Banco do Brasil, faced mounting pressure. She had delivered record profit of R$ 35.6 billion in 2023, but recent results had shaken confidence. President Luiz Inácio Lula da Silva had not signaled any intention to replace her, but the expectation for a swift reversal of the deterioration was unmistakable. The broader credit picture added to the strain: defaults in corporate lending, particularly among micro, small, and medium enterprises, had also risen. The bank's overall default rate climbed to 4.21 percent from 3 percent a year earlier, with credit costs in the second quarter reaching R$ 15.9 billion. Only in personal lending did there appear to be modest improvement, with early signs that tightened underwriting was beginning to pay dividends.

What unfolded in Brasília that August evening was the reckoning of a bank caught between its mission to support Brazilian agriculture and the brutal mathematics of a sector in distress. The Banco do Brasil could not simply walk away from farmers—agriculture is too central to the nation's economy and the bank's identity. But neither could it absorb unlimited losses. The path forward required navigating regulatory constraints, managing market expectations, and betting that the next harvest would bring relief. For the farmers themselves, many of them small producers with limited alternatives, the squeeze was already real. The question now was whether the worst had passed or whether the third quarter would bring fresh pain.