Revenue grows while profits fall—the cost of credit losses tells the real story
Adjusted profit fell 60% to R$ 3.785 billion in Q3 2025 versus Q3 2024, with accounting profit down 66%, signaling earnings pressure despite revenue growth. Gross financial margin grew 5.1% quarterly to R$ 26.4 billion, supported by credit operations and the Worker Credit program which contracted R$ 11 billion since March 2025.
- Adjusted profit fell 60% to R$ 3.785 billion in Q3 2025 versus Q3 2024
- Gross financial margin grew 5.1% quarterly to R$ 26.4 billion
- Credit costs surged 66.4% year-to-date to R$ 44 billion
- Worker Credit program contracted R$ 11 billion since March 2025
- Expanded credit portfolio reached R$ 1.28 trillion, up 7.5% year-over-year
Banco do Brasil posted adjusted net income of R$ 3.785 billion in Q3 2025, down 60% year-over-year, though gross financial margin grew 5.1% quarterly driven by credit operations and worker lending program.
Banco do Brasil's third-quarter earnings tell a story of a bank caught between two currents. The state-controlled lender reported adjusted net profit of R$ 3.785 billion in the July-September period, a sharp 60 percent decline from the same quarter a year earlier. The accounting profit fell even harder, dropping 66 percent to R$ 3.02 billion. These are substantial declines, the kind that would normally trigger alarm among investors and analysts watching Brazil's largest bank by assets.
Yet the bank's leadership is pointing to a different narrative: one of solid business generation and strategic positioning. The gross financial margin—the raw spread between what the bank earns on loans and what it pays on deposits—actually grew. It expanded 5.1 percent from the second quarter to reach R$ 26.4 billion, and was up 1.9 percent year-over-year. Over the first nine months of 2025, the margin accumulated to R$ 75.3 billion. This growth came primarily from credit operations, particularly from a new worker lending program that has become a centerpiece of the bank's strategy.
The Worker Credit initiative, launched in March 2025, has moved quickly into the market. The program has contracted R$ 11 billion in loans to salaried employees, with an impressive 95 percent completion rate on paperwork. More than 1.3 million operations have been processed across 97.4 percent of Brazil's municipalities. The program offers favorable terms to workers with formal employment, and it has helped improve the bank's credit mix and risk-adjusted returns. Service revenues also grew modestly, up 1.3 percent from the previous quarter, with fund administration, insurance and pension products, and consortium operations all posting gains.
But the earnings pressure is real, and it stems largely from credit costs. The bank set aside R$ 44 billion for loan losses in the first nine months of 2025, a 66.4 percent increase from the same period in 2024. In the third quarter alone, credit costs reached R$ 17.9 billion, up 12.7 percent from the second quarter. The deterioration has been driven by rising defaults, particularly acute in the agricultural sector where specific large borrowers have also encountered difficulties. This is the weight pressing down on profits even as the bank generates more revenue.
The bank's total expanded credit portfolio stood at R$ 1.28 trillion in September, up 7.5 percent from a year earlier. Consumer lending grew 7.9 percent, with unsecured personal loans surging 12.9 percent and credit cards jumping 16.6 percent. Business lending to mid-sized and small enterprises actually contracted 3.7 percent, while lending to large corporations grew sharply at 20.3 percent. Agricultural lending, a traditional strength, expanded 3.2 percent to R$ 398.8 billion, though this is where the credit stress is most visible.
The bank has also positioned itself as a sustainability leader, with a sustainable credit portfolio of R$ 399 billion, up 8 percent year-over-year. It has been named the world's most sustainable bank six times by Corporate Knights and was the first Brazilian bank to provide guidance on sustainable credit growth. Administrative expenses grew 5.4 percent over nine months as the bank invested in technology and digital transformation, yet it achieved a 12-month efficiency ratio of 27.6 percent, the best among Brazil's largest banks.
On the digital front, Banco do Brasil launched ARI—Área de Recomendações Inteligentes—described as the first conventional artificial intelligence solution in Brazil's financial sector. The tool offers personalized guidance to business customers on management and operations. The bank also reported strong growth in its open finance ecosystem, with 3.2 million customers now connected, up 16 percent from the previous quarter and 73 percent from a year earlier. In the first nine months of 2025, the bank captured 20 percent of all account portability requests in the system.
The picture that emerges is of a bank managing a difficult transition. Profitability is under pressure from credit losses that reflect broader economic stress, particularly in agriculture. Yet the bank is generating more revenue, expanding its market share in consumer lending and large corporate loans, and positioning itself in growth areas like worker credit and sustainable finance. Whether the revenue growth can outpace the rising cost of credit losses will determine whether this quarter marks a temporary setback or the beginning of a more sustained earnings challenge.
Citas Notables
The bank demonstrated solid business generation capacity with consistent growth in gross financial margin, driven primarily by credit operations and the Worker Credit program.— Banco do Brasil management
La Conversación del Hearth Otra perspectiva de la historia
The profit fell 60 percent year-over-year. That's a dramatic drop. How does the bank explain that away?
They don't, really. They acknowledge it directly. But they're pointing out that the gross financial margin—the raw earning power—actually grew. The problem isn't that the bank stopped making money on its core business. It's that they're setting aside much more money for loans that won't be repaid.
So the credit losses are the culprit.
Exactly. Credit costs jumped 66 percent in the first nine months. That's the weight pressing down on the bottom line. And it's concentrated in agriculture and some large corporate accounts that hit trouble.
Is the bank losing market share because of this?
No, actually the opposite. The expanded credit portfolio grew 7.5 percent. Consumer lending is up, business lending to large corporations is up sharply. The Worker Credit program alone has moved R$ 11 billion since March. They're winning customers.
Then why are defaults rising?
That's the harder question. It could be that they're lending to riskier borrowers as they push for growth. Or it could be that the economy is weakening and borrowers across the board are struggling. The agricultural sector seems particularly stressed. The bank doesn't separate those causes clearly.
What about the efficiency ratio—27.6 percent?
That's their best-in-class number. It means they're spending less to generate each real of revenue than their competitors. They're investing heavily in technology and digital transformation, but they're doing it without letting costs spiral. That's actually a bright spot.
So the real question is whether revenue growth can outpace credit losses.
That's exactly it. If the economy stabilizes and defaults level off, the bank's revenue engine—especially the new worker lending program—could drive profits back up. If defaults keep rising, profits stay under pressure no matter how much revenue they generate.