Ten Key Questions on Asset Quality: Focus on High-Quality Growth and Profitability

Research evidence excerpt

Ten Key Questions on Asset Quality: Focus on High-Quality Growth and Profitability

Equity Research

29 June 2026 | 8:11PM EDT

BRAZIL BANKS

Ten Key Questions on Asset Quality: Focus on High-Quality Growth and

Profitability

Brazil’s credit cycle is growing more complex Tito Labarta

+1(212)357-6760 | tito.labarta@gs.com

While system-wide delinquency is rising, the deterioration is highly fragmented. Goldman Sachs & Co. LLC

Drawing on Brazil Central Bank data, corporate filings, and insights from our recent Tiago Binsfeld, CFA

Brazil investor trip, this note addresses ten key investor questions on asset quality. +55(11)3371-4574tiago.binsfeld@gs.com|

The deterioration in retail NPLs is mostly concentrated in state-owned banks and Goldman Sachs do Brasil CTVM S.A.

Juliana Oharasmaller banks, while fintech NPL increases are driven by rapid growth rather than +55(11)3372-0202 |

structural decay. Banco do Brasil also faces ongoing pressure in rural asset quality, juliana.ohara@gs.comGoldman Sachs do Brasil CTVM S.A.

with weak on-time payments spilling over into its credit card book. Among

private-sector incumbent banks, Itau remains highly insulated compared to Bradesco

and Santander Brasil. As such, we maintain our preference for Buy-rated Itau, Nu,

and Inter, while remaining more cautious on Sell-rated Banco do Brasil and

Santander Brasil, and Neutral-rated Bradesco.

Itau and Nu offer the highest cushion against a complex credit cycle

We remain relatively cautious on Brazilian banks given the challenging credit

environment, in which Itau and Nu offer the strongest defensive cushions, in our view.

While Nu is more exposed to low-income consumers and unsecured lending, its short

portfolio duration, excess capital, and superior profitability provide robust buffers.