SAO PAULO, July 20, 2026 – Banco Bradesco S.A. (BVMF:BBDC4) closed Monday with a modest gain of 0.66%, reaching R$18.41. The uptick follows a 3.0% decline in the prior week, as the stock continues to trade at approximately 1.08 times its March book value. Trading activity occurred while B3's cash market was closed at the reporting deadline.
Earnings and Credit Trends
In its most recent earnings report, Bradesco posted a 4.5% sequential increase in recurring profit, but client interest income after provisions dropped 4.5% quarter over quarter. This divergence highlights the ongoing challenge of rising credit costs. Loan-loss provisions surged 26.5% to R$9.67 billion, while the loan book expanded 8.4% to roughly R$1.09 trillion. Compared to the same period last year, client interest income after provisions rose 7.7% to R$9.83 billion, yet the quarter-on-quarter decline remains a key hurdle for the second quarter.
Interest Rate Outlook
Brazil's Selic rate stands at 14.25%, and the latest Focus survey holds the median year-end projection steady at 14.00%. This implies only 25 basis points of net monetary easing by December, maintaining pressure on underwriting, collections, and provisioning. The poll's 2026 inflation estimate edged down to 5.15%, offering little relief for the banking sector.
Competitive Performance
Last week, Bradesco outperformed Itaú Unibanco by 2.3 percentage points but lagged the Ibovespa by 0.7 points. This pattern aligns with a recovery stock awaiting further confirmation of credit improvement. Bradesco's first-quarter recurring net income climbed 16.1% year over year to R$6.81 billion, with return on average equity rising to 15.8%.
Management Strategy and Risks
Chief Executive Marcelo Noronha noted the bank's “moderate appetite” for lending, emphasizing a shift to a more conservative approach and increased collateral requirements. Fitch Ratings observed in May that Bradesco's profitability trails rivals. The near-book valuation suggests ongoing recovery, but also narrows downside if results disappoint.
Key risks include persistently elevated rates that may weaken borrowers and curb loan growth, as well as potential wholesale losses or rising delinquencies that would require higher provisioning. Fiscal pressures could also increase funding costs.
Upcoming Catalysts
Bradesco enters a quiet period on Wednesday, leading up to its second-quarter results release after B3 and New York markets close on August 5. Until then, shares are likely to track Brazilian interest rates and local credit sentiment. The Focus data offers limited hope for a swift monetary policy boost.
Investors will focus on whether post-provision client interest income can reverse its quarterly decline, as profit growth alone may not suffice to sustain the stock's recovery.
