Banco do Brasil (BBAS3) Q1 2025 earnings summary

Executive summary

• Adjusted net income for Q1 2025 was R$7.4 billion, down 20.7% year-over-year and 23.0% sequentially, with ROE at 16.7%, pressured by regulatory changes and agribusiness delinquencies.

• Loan portfolio expanded to R$1,277.8 billion, up 14.4% year-over-year, with strong growth in companies (+22.4%) and agribusiness (+9.0%).

• Net interest income for Q1 2025 was R$23.9 billion, down 7.2% year-over-year, impacted by new accounting rules and higher funding costs.

• Maintained a 40% dividend payout and reinforced commitment to capital strength and sustainable growth.

• Continued investment in technology, CRM, and omnichannel strategies, with a 30% YoY increase in tech spending and over 1,000 new hires.

Financial highlights

• Provisions for expected losses totaled R$10.2 billion, with significant impact from the rural portfolio and credit expenses at 4.03% of the loan book.

• NPL +90 days ratio increased to 3.32% in Q1 2025, with coverage at 171.3%.

• Funds under management surpassed R$1.7 trillion, with net funding of R$29 billion in the quarter.

• Record consortia revenues of R$818 million and 120,000 quotas sold.

• Administrative expenses totaled R$9.5 billion, up 7.0% year-over-year but flat sequentially.

Outlook and guidance

• Guidance for provisions, NII, and profit is under review due to regulatory changes and agribusiness credit quality.

• Loan growth guidance maintained at 5.5%-9.5%, supported by strong origination in individuals and payroll loans.

• Fee income projected between R$34.5 and R$36.5 billion, and administrative expenses between R$38.5 and R$40.0 billion for 2025.

• Expect continued pressure on provisions in Q2, with improvement anticipated in H2 as new crop cycles and recovery measures take effect.

• Dividend payout expected to remain at 40%, with capital ratios monitored closely.