Banks - Brazil: Learnings from 1Q26 earnings: losing momentum

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Banks - Brazil: Learnings from 1Q26 earnings: losing momentum

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Banks - Brazil

Learnings from 1Q26 earnings: losing

momentum

Price Objective Change

Earnings momentum decelerated further in 1Q26 26 May 2026

Earnings growth for large-cap Brazilian banks slowed further in 1Q26, driven by weaker Equity

loan growth, NIM contraction, elevated provisions, and accelerating opex growth. On the Brazil

positive side, market NII continued to improve, and fees gained traction, supported by Financial Services

strong performance of insurance. Overall, private banks’ earnings grew 10% YoY (vs 14% Mario Pierry

in 4Q25), while profitability remained elevated at c.20%, on average. Including Banco do Research Analyst

Brasil, large-cap banks’ earnings declined 7% and ROE fell to 16%. Exhibits 1 & 2. BofAS+1 646 743 0047

mario.pierry@bofa.com

1-Conservative lending led to slower loan growth Antonio Ruette >>

Banks maintained a conservative approach on leading given uncertain macro scenario ResearchMerrill LynchAnalyst(Brazil)

(domestic and abroad). Loan growth slowed to 5% (from 6% in 4Q25), driven by +55 11 2188 4225

antonio.ruette@bofa.com

collateralized products and lower-risk client segments. Exhibits 3 & 13.

Augusto Uehara >>

Research Analyst

Merrill Lynch (Brazil)2-Client NIMs seem to have peaked

+55 11 2188 4651

Client NIMs likely peaked in mid-2025, reflecting i) a more conservative loan mix, ii) the augusto.uehara@bofa.com

end of lending rates repricing, and iii) Selic stabilization in June. Consequently, client NII Ernesto Gabilondo >>

growth has decelerated for two consecutive quarters. Exhibits 4 & 14. Research Analyst

Merrill Lynch (Mexico)

+52 55 5201 3428

ernesto.gabilondo@bofa.com3-High provisions pressured risk-adjusted NIMs