Banco Bradesco's preferred shares (BBDC4) closed up 3.28% at R$17.96 on Wednesday, outperforming Brazil's benchmark Ibovespa index, which gained 2.12% to near 177,980. The stock touched a session high of R$17.99 after opening at R$17.51, with trading volume of approximately 30.9 million shares. The broader market rebounded after a 1.5% decline on Tuesday, with financial stocks leading the advance amid lower oil prices, according to Trading Economics.
Earnings Growth Amid Rising Provisions
Bradesco reported first-quarter recurring net income of R$6.8 billion, a 16.1% increase year-over-year, driven by a 16.4% rise in net interest income. Return on equity reached 15.8%. However, the bank's loan-loss provisions surged 26.5% to approximately R$9.7 billion, reflecting higher credit costs. The expanded loan book grew 8.4% to R$1.09 trillion, while loans over 90 days past due rose to 4.2%.
CEO Marcelo Noronha described the bank's appetite as “moderate” and said Bradesco will “continue to grow.” Investor Relations Director André Carvalho noted a “slight shift in tone” around risk appetite but insisted caution is “not a barrier to growth.” Noronha added the bank is not “hitting the brakes.”
Macro Headwinds and Political Uncertainty
Brazil's Selic rate remains at 14.5% after two 25-basis-point cuts, with the central bank declining to provide forward guidance due to oil market risks from Iran and uncertain inflation. The Finance Ministry raised its 2026 inflation forecast to 4.5% from 3.7%, now matching the upper end of the central bank's target range. Higher rates typically boost bank spreads but also pressure borrowers, increasing the risk of defaults.
Political developments are also in play. A poll by AtlasIntel/Bloomberg, reported by Reuters, showed President Luiz Inacio Lula da Silva leading Senator Flavio Bolsonaro in a potential second-round runoff, following allegations linking Bolsonaro to former banker Daniel Vorcaro, which Bolsonaro denied.
Credit Quality Concerns
The rally could face headwinds from higher oil prices, a weaker real, or a persistently high Selic, which may squeeze Bradesco on bad loans and provisions, particularly in agribusiness and unsecured consumer lending. Carvalho described the short-term uptick in delinquencies as “100% seasonal,” while Noronha acknowledged “some temporary setbacks” in agribusiness.
Bradesco's preferred ADR (BBD) traded at $3.565 in New York. The stock is listed on B3 under common shares BBDC3 and preferred shares BBDC4. Wednesday's trading suggests buyers are returning to the rebound, but credit costs remain a key focus for investors.
