Banco Bradesco S.A. Q3 FY2026 earnings call

• Portfolio Growth & Risk Appetite: The loan portfolio reached BRL 1.15 trillion, growing 11.1% YoY. Growth was concentrated in high-risk appetite areas: Large Corporates (+14.8%), Private Payroll Loans (+102% YoY), Vehicles (+27%), and Mortgages/Real Estate (+15.2%). Conversely, the bank reduced exposure to unsecured personal loans and certain rural individual loans.
• Net Interest Margin (NIM) Dynamics: NIM was impacted by the rapid expansion of the wholesale/large corporate portfolio, which has shorter duration and lower spreads compared to retail. Excluding this impact, the underlying NIM would be approximately 9.3% rather than the reported 9.0%. Management expects NIM to improve in Q4 as the mix shifts slightly.
• Asset Quality & Cost of Risk: Over-90-day NPLs increased from 4.3% to 4.6%. This increase is primarily driven by FGI/FGO government-guaranteed SME loans and seasonality in the John Deere Bank portfolio, both of which have lower expected losses due to collateral/guarantees. The bank’s overall delinquency rate remains below the national financial system average.
• Efficiency & Transformation: Operational expenses grew but efficiency gains are ongoing. Key drivers include footprint optimization (branch closures), procurement savings, and technology adoption. Gen AI tools like 'Bridge' have increased delivery capacity fourfold since 2023. Digital wholesale migrated 45 million clients, with BIA handling 90% of interactions.
• Capital & Treasury: CET1 ratio stands at 12.1%, supported by a recent BRL 10 billion capital increase. Treasury operations are robust, with Market NII performing strongly. The bank continues to invest in digital platforms and customer experience initiatives like 'Principal' and 'Prime'.

The transcript does not provide a formal breakdown of financial performance by distinct product segments (e.g., Retail, Wholesale, Insurance) with specific absolute revenue figures and percentage contributions for each. Management highlights that Total Net Interest Income (NII) grew 14% year-over-year, driven by growth in loan portfolios (particularly large corporates, individuals, and SMEs), fee income, and insurance premiums. The insurance group is noted to have a resilient Return on Equity (ROE) of 22%. Specific segment revenues are not isolated in the provided text.

• NII Net of Provisions: Full-year guidance is maintained at BRL 42 billion to BRL 48 billion. Management is currently in the lower range but expresses optimism for Q4 performance.
• Interest Rate Environment: Management anticipates that declining interest rates will positively impact the broader economy and client repayment capacity, though the effect on cost of risk is cyclical and gradual.
• Q4 Expectations: Management expects higher NII in Q4, particularly in Client NII and Market NII, driven by strong treasury performance and continued portfolio traction in targeted segments.

• Cost of Credit Pressure: Elevated real interest rates and macroeconomic conditions are pressuring cost of risk, particularly in clean personal loans, credit cards, and agribusiness. Delinquency in older client cohorts is increasing.
• Regulatory Changes: Potential reduction or discontinuation of FGI/FGO government guarantee programs could impact SME lending volumes and require strategic pivots to alternative collateralized products.
• Macroprudential Measures: While no hard measures are currently expected, potential anti-cyclical buffers from the Central Bank could restrict retail lending growth.
• Operational Execution: Continued success depends on executing the transformation agenda, including migrating remaining clients to digital channels and maintaining profitability in the 'Prime' segment after supporting the 'Principal' launch.

Q: Daniel Vaz asked if the NIM decline due to large corporate growth is a permanent trend and when cost of risk will offset NIM pressure.

A: Marcelo Noronha explained that wholesale portfolios now have short durations (60 days), while long-duration assets are in retail (payroll, mortgages). He stated that top-line growth via wholesale is prioritized over margin percentage, noting that wholesale also drives fee and treasury revenue. He expects NIM to rise in Q4 as the mix shifts and believes the macro environment will improve towards 2027-2028, easing cost of risk pressures.

Q: Pedro Leduc asked about trends in cost of risk and provisions, noting stable LLP despite court reorganizations.

A: Noronha highlighted that auto loan rollovers are performing well due to strong credit policies. However, cost of risk is under pressure from FGI/FGO guarantees and older clients in personal loans/credit cards delaying payments. He emphasized that Bradesco’s NPL levels remain below the market average and that the bank is actively monitoring court reorganizations, participating less than peers.

Q: Anahy Rios asked for the magnitude of FGI/FGO impact on NPL growth and future estimates.

A: Noronha clarified that half of the 30 bps NPL increase came from FGI/FGO. As these guaranteed portfolios grow (31% YoY), they naturally contribute more to the over-90-day curve. André Carvalho added that John Deere Bank seasonality accounted for ~10 bps. He projected that the NPL curve for these portfolios should inflect downward in Q2 or Q3 next year as the cure period passes.

Q: Antonio Hoefi asked how Bradesco would react if FGI/FGO volumes were reduced next year and if macroprudential measures were imposed.

A: Noronha described FGI/FGO as a valuable program for SMEs with grace periods and low rates. If removed, the bank would seek alternative revenue streams and collateralized products, noting that the headwind would affect all banks. Regarding macroprudential measures, he expressed skepticism about any hard restrictions coming from the Central Bank soon.

Q: Matheus Guimarães asked if Market NII’s strong performance (BRL 3 billion YTD) is recurring and sustainable.

A: Noronha attributed the success to excellent treasury management and ALM strategies. He confirmed that Market NII is becoming more recurring due to deeper integration with wholesale and middle-market clients. He expects similar strong results in Q4 and views 2027 as a promising year for treasury income, especially if interest rates stabilize or decline.