Banco Bradesco S.A.'s preferred shares (BBDC4) closed Friday down 1.56% at 17.62 reais in São Paulo, mirroring a broader pullback in Brazil's banking sector. The Ibovespa benchmark index fell 0.81% to 176,209.61, while other major lenders also declined: Itaú Unibanco lost 1.7% and Santander Brasil dropped 1.8%, though Banco do Brasil edged up 0.6%. The move appeared sector-wide rather than Bradesco-specific, suggesting profit-taking after a recent rally.
For the week, BBDC4 slipped only about 0.4%, but the path was volatile. After closing at 17.69 reais on May 15, the stock dipped early in the week, surged 2.70% on Wednesday, edged up Thursday, then gave back ground Friday on volume of approximately 20.08 million shares.
The week ahead brings a key test: Brazil's official first-quarter GDP report is due on May 29. Central bank activity data showed the economy grew 1.3% in the quarter, but March fell 0.7% from February, with services — the main engine of activity — down 0.8%. Rafael Perez, an economist at Suno Research, projects official GDP growth of 1.0% quarter-on-quarter, noting the economy "remained resilient in the quarter." For Bradesco, the GDP figure is critical because loan demand, fee income, and bad-loan formation are closely tied to the business cycle.
Bradesco's own first-quarter results underscored a recovery story. The bank reported recurring net income of 6.811 billion reais, up 16.1% year-over-year, with return on average equity (ROAE) at 15.8%. Net interest income rose 16.4% year-on-year, while expanded loan-loss provisions climbed 26.5%. CEO Marcelo Noronha emphasized that the bank's more conservative stance "doesn't mean we're hitting the brakes," with Bradesco still pursuing loan growth in segments backed by stronger guarantees.
Investor relations director André Carvalho described the cautious approach as a "slight shift in tone" amid a tougher macroeconomic environment. He noted that client net interest income rose 2.0% quarter-on-quarter and 16.3% year-on-year, and that adjusted for fewer working days, sequential growth would have been 5%. "The trend points to growth," Carvalho said, while stressing that caution is not a barrier to expansion.
Interest rates remain a significant headwind. Brazil's Finance Ministry last week raised its 2026 inflation forecast to 4.5%, citing oil and fuel pressure from the Middle East conflict, and now expects the Selic benchmark rate to end the year at 13%, with market economists seeing 13.25%. The rate currently stands at 14.5%. Fiscal concerns also persist: Brazil announced a fresh 22.1 billion reais spending block to meet its fiscal framework, while the Finance and Planning ministries projected a 60.3 billion reais primary deficit before allowed exclusions.
The downside scenario is clear: if GDP undershoots, inflation keeps rate cuts shallow, or stress in agribusiness and credit-card books worsens, Bradesco may have to trade loan growth for asset quality. Fitch noted that Bradesco's profitability still lags peers despite the Q1 improvement, and the bank's own materials flagged agribusiness and certain card segments as areas of concern.
For traders, Monday's key question is whether BBDC4 can hold near Friday's 17.60-real low. The bigger test comes Friday, when GDP data will either revive the bank-recovery trade or give sellers another reason to maintain their short positions.
