Brazilian banks urged to assess financial health before attracting investors

Financial experts caution investors to evaluate the soundness of Brazilian banks rather than chasing high yields. They point to recent problems at institutions that rapidly expanded credit portfolios, which sometimes concealed balance‑sheet deterioration.

The analysts stress that unusually generous CDB rates often signal higher risk and recommend checking a bank’s consistent profitability, Basel capital ratio and ability to generate profit even in crises. While the Fundo Garantidor de Créditos (FGC) offers a safety net, its resources are limited, so diversification across banks of different profiles is advised.

“Growth accelerated the credit portfolio while masking balance‑sheet deterioration,” said economist Marilia Fontes. “The incentive is the same: very fast credit growth and CDBs offering returns far above market averages,” added educator Thiago Godoy.