Citi warns of worsening loan quality at Banco do Brasil

Citi has placed Banco do Brasil on a ‘negative catalyst watch’ due to concerns regarding deteriorating asset quality and rising credit costs. While maintaining a Neutral rating, the US bank reduced its 12-month price target for the state-controlled lender from R$21 to R$18.

Analysts highlighted worsening loan quality, particularly within agricultural lending, and noted an increase in non-performing loans (NPL) and Stage 3 credit classifications. Citi expressed concern that current provision levels may be insufficient to absorb the ongoing weakening of credit quality. Consequently, Citi has lowered its net profit forecasts for the bank, projecting 2026 earnings near R$16.6 billion, which falls below the lender’s own guidance of R$18-22 billion.