Brazilian Banks "2Q26 Preview: Keeping an eye on Asset Quality" Batista

Research evidence excerpt

Brazilian Banks "2Q26 Preview: Keeping an eye on Asset Quality" Batista

Global Research

13 July 2026ab

Brazilian Banks Equities

Americas2Q26 Preview: Keeping an eye on Asset Quality

Banks

Thiago Batista, CFA

Asset quality remains on the radar Analyst

Asset quality evolution was one of the main discussions back in 1Q26 earnings season thiago.batista@ubs.com

for Brazilian banks, which we believe it should remain for 2Q26. While we highlight +55-11-3513 6518

that in 1Q26 there was a negative impact on seasonality (for early NPL ratio), it is Beatriz Shinye

worth mentioning that the high leverage of Brazilian families remains and several Associate Analyst

large corporates are still facing challenges. Overall, most of the private incumbents beatriz.shinye@ubs.com

have been able to maintain relatively positive trends without a major increase in +55-11-2767 6569

their cost or risk, which was not the case for most of the newcomers. But for 2Q26, Kaio Prato

we do expect a normalization on cost of risk (especially for Nu) and some positive Analyst

impact from the new refinancing program launched in May (Novo Desenrola) - kaio.prato@ubs.com

although its accounting impact is not 100% clear, we see a high chance of some +55-11-3513 6573

recovery from the already written-off loans that will be renegotiated in 2Q26 and

also a potential reduction in the loss given default due to the collateral of the FGO

fund (government fund that guarantee up 50% of the banks' exposure on refinanced

loans).

2Q26 should be positive for Nu; Bradesco's focus should remain on BradSaúde

For Nu, we believe the YTD weak performance of the stock was mainly driven by the

asset quality concerns around the name and we expect 2Q26 results to be a sweet