Banks - Brazil: Estimating potential impacts from Desenrola in 2Q26 earnings

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Banks - Brazil: Estimating potential impacts from Desenrola in 2Q26 earnings

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Banks - Brazil

Estimating potential impacts from

Desenrola in 2Q26 earnings

Industry Overview

Renegotiations help provision charges and NPL ratios 24 July 2026

The Federal Government’s debt renegotiation program, Desenrola, announced in early Equity

May, should have a positive impact on banks' 2Q26 earnings. Renegotiations benefit i) Brazil

cost of risk, through recoveries and reversal of provisions and ii) 90-day NPL ratios, as Financial Services

delinquent balances decline; meanwhile, the impact on stage 3 loans is mixed. According Mario Pierry

to the FGO, the government fund providing collateral to the new credits, R$3.2bn in Research Analyst

loans have been renegotiated so far, with Nubank leading, followed by Bradesco. BofAS+1 646 743 0047

mario.pierry@bofa.com

The mechanism of renegotiations Antonio Ruette >>

Banks can renegotiate either active past-due loans or past-due loans already written off, ResearchMerrill LynchAnalyst(Brazil)

each with a distinct P&L dynamic. For active past-due loans, the transaction generates a +55 11 2188 4225

antonio.ruette@bofa.com

recovery only when the reversal of existing reserves exceeds the sum of the haircut and

Augusto Uehara >>

the new loan's provisions. For written-off loans, which were already fully provisioned, the Research Analyst

benefit comes primarily from cash recoveries, partially offset by the provision on the Merrill Lynch (Brazil)

+55 11 2188 4651

new credit. The past-due mix also impacts stage 3 balances: the renegotiation of active augusto.uehara@bofa.com

past-due loans reduces stage 3 loans via haircuts, while the renegotiation of written-off Ernesto Gabilondo >>