Ditch Banco do Brasil (BBAS3) for These 2 Top Bank Picks in 2025, Says Itaú BBA
- Why Bradesco (BBDC4) Remains a Top Pick
- Nubank (NU): The Digital Disruptor Charging Ahead
- The BBAS3 Problem: Why Banco do Brasil Stalls
- Santander's Downgrade: Too Much, Too Fast?
- Bank Stock Showdown: Key Metrics Compared
- Final Verdict: Where to Park Your Money
- Bank Stock FAQ: Your Questions Answered
As Brazil's banking sector wraps up Q3 earnings season, analysts at Itaú BBA have reshuffled their preferences in a major way. Their latest report suggests investors should steer clear of Banco do Brasil while doubling down on Nubank and Bradesco - two financial stocks poised for stronger growth through 2026. Here's why these analysts believe BBAS3 is stuck in neutral while NU and BBDC4 are hitting the gas.
Why Bradesco (BBDC4) Remains a Top Pick
Bradesco continues to shine in Itaú BBA's portfolio recommendations, and for good reason. The bank's micro and macro fundamentals create what analysts call a "perfect storm" for profit growth. Trading at attractive valuations with a R$22 price target (17% upside potential), BBDC4 benefits from:
- Restored credit revenue generation through portfolio growth and spread management
- Structural improvements in insurance (particularly health)
- Tight cost controls amid favorable macroeconomic conditions
"We're seeing the bank's ROE climb steadily - projected to hit 16.6% by 2026," notes the BTCC research team. "With 7% annual credit portfolio growth and 19% earnings expansion expected, this is essentially a safer play on Brazil's banking sector rerating."
Nubank (NU): The Digital Disruptor Charging Ahead
Already up 46% YTD, Nubank gets Itaú BBA's enthusiastic buy rating for its:
| Strength | Detail |
|---|---|
| Brazilian Operations | Expanding credit card limits and improved value propositions |
| Mexican Expansion | Building solid client/deposit base before credit push |
| Cost Structure | Industry-leading disruptive model |
While profitability currently lags behind key performance indicators (KPIs) due to ongoing investments, analysts believe NU's "growth-at-reasonable-price" profile makes it compelling. "They're playing the long game," one trader commented, "and winning the customer acquisition battle."
The BBAS3 Problem: Why Banco do Brasil Stalls
Itaú BBA maintains its neutral stance on Banco do Brasil due to:
- Persistent agricultural portfolio underperformance
- Unrecovered producer margins
- Rising NPLs in SME/retail renegotiated portfolios
Projecting modest 6% annual credit growth and 11% ROE by 2026, analysts conclude: "The cheap valuation simply doesn't compensate for the weak earnings momentum we're seeing."
Santander's Downgrade: Too Much, Too Fast?
After a 38% YTD rally, Santander (SANB11) got downgraded from buy to neutral. While acknowledging the bank's solid long-term thesis (including credit portfolio cleanup since 2022), Itaú BBA cites:
- Reduced earnings estimates
- Already fair multiples at current R$33 price
- Weak revenue expansion despite niche gains
The R$32 price target suggests limited upside through 2026. "They've done the hard work," says an analyst, "but now need to show they can grow profitably."
Bank Stock Showdown: Key Metrics Compared
Here's how these banking contenders stack up:
| Metric | Bradesco | Nubank | Banco do Brasil | Santander |
|---|---|---|---|---|
| 2026 ROE Projection | 16.6% | N/A* | 11% | N/A |
| YTD Performance | +22% | +46% | +15% | +38% |
| Itaú BBA Rating | Buy | Buy | Neutral | Neutral |
*NU remains in investment phase. Data source: TradingView as of November 2025
Final Verdict: Where to Park Your Money
While Brazil's banking sector offers multiple opportunities, Itaú BBA's analysis clearly favors Nubank and Bradesco for growth-oriented investors. Banco do Brasil might appeal to value hunters, but as one portfolio manager quipped, "In this market, you don't get paid to wait." Santander sits somewhere in between - a solid hold for existing positions but not compelling enough for new money.
This article does not constitute investment advice. Market data verified through TradingView and company filings.
Bank Stock FAQ: Your Questions Answered
Why did Itaú BBA downgrade Santander?
The downgrade reflects reduced earnings estimates combined with the stock's strong YTD performance leaving less upside potential. While the long-term story remains intact, near-term growth appears limited.
Is Nubank's valuation justified given its lack of profits?
Analysts argue NU's disruptive cost structure and rapid customer acquisition justify its premium. The bank trades on growth potential rather than current profitability - a common approach for digital disruptors.
What would make Banco do Brasil attractive again?
Three things: 1) Agricultural portfolio recovery 2) Improved asset quality in SME/retail segments 3) Evidence that cheap valuation translates to earnings acceleration.
