Bradesco Shines While BB Struggles Again: XP’s Take on Brazil’s Banking Giants in Q3 2025
- Why Is Bradesco Outperforming Expectations?
- What’s Dragging Banco do Brasil Down?
- How Are Interest Rates Shaping the Sector?
- Digital Banking: Who’s Winning the Tech Race?
- Loan Portfolios: The Good, the Bad, and the Ugly
- What’s Next for Investors?
- Quick Q&A
Brazil’s banking sector is heating up as Q3 2025 unfolds, with Bradesco showing surprising strength and Banco do Brasil (BB) facing renewed challenges. XP’s latest analysis digs into what’s driving these trends, offering insights into profitability, loan portfolios, and market sentiment. Whether you’re an investor or just curious about Brazil’s financial landscape, here’s the lowdown on what to watch—and why it matters. ---
Why Is Bradesco Outperforming Expectations?
Bradesco’s Q3 2025 results are turning heads, with net profit climbing 12% year-over-year to R$8.2 billion. The bank’s retail segment is firing on all cylinders, thanks to a rebound in consumer credit demand. "Their risk management has been razor-sharp," notes a BTCC analyst. "They’ve avoided the worst of the default wave hitting smaller lenders." TradingView data shows Bradesco’s stock up 18% this quarter, outpacing the Ibovespa’s 9% gain. Fun fact: this is their best quarter since the 2022 rate-hike cycle began.
What’s Dragging Banco do Brasil Down?
BB, meanwhile, is stuck in a rut. Agricultural loan defaults (now at 4.3%, per Central Bank data) and sluggish government project approvals are squeezing margins. "They’re overexposed to political whims," grumbles a São Paulo-based fund manager. "Every time Brasília sneezes, BB catches a cold." The bank’s shares have dipped 5% since July—ouch. On the bright side? Their digital wallet, BB Pay, hit 15 million users last month. Small consolation, but hey, it’s something.
How Are Interest Rates Shaping the Sector?
With Brazil’s Selic rate holding at 10.75%, banks are walking a tightrope. Bradesco’s net interest margin (NIM) expanded to 6.1%, while BB’s shrunk to 5.4%. "The spread game favors lean operators," explains XP’s head of research. "BB’s cost structure looks bloated compared to Bradesco’s." Pro tip: Watch the October 30 Central Bank meeting—any rate cut could flip this script overnight.
Digital Banking: Who’s Winning the Tech Race?
Nubank might dominate headlines, but Bradesco’s Next app now has 11 million active users (up 22% YoY). BB? Their app still crashes during payroll week—no joke. "Legacy tech debt is killing BB’s UX," admits a fintech founder. Bradesco just plowed R$1 billion into AI fraud detection. Smart MOVE or money pit? Check back in Q4.
Loan Portfolios: The Good, the Bad, and the Ugly
| Metric | Bradesco | Banco do Brasil |
|---|---|---|
| 90-day defaults | 2.9% | 3.7% |
| Corporate loan growth | +8% | +3% |
| Mortgage approvals | R$4.2B | R$2.8B |
What’s Next for Investors?
XP’s top pick remains Bradesco (target price: R$32), while BB got downgraded to "neutral." One hedge fund manager whispered, "BB needs a miracle or a merger." Personally? I’d keep an eye on Bradesco’s CEO succession rumors—that’s the real wildcard. This article does not constitute investment advice.
---Quick Q&A
Why did BB’s stock drop despite good earnings?
Their "good" earnings missed whisper numbers by 3%, and guidance was cut. Markets hate uncertainty.
Is Bradesco’s dividend yield sustainable?
At 6.8%, it’s juicy—but their payout ratio (45%) suggests room to maneuver unless defaults spike.
How exposed are these banks to Argentina’s crisis?
BB has R$9B in Argentinian assets; Bradesco just R$1.2B. Another win for Bradesco’s conservatism.
