Banco do Brasil reports profit of R$7.3 billion from January to March 2025

Banco do Brasil's (BB) profit started 2025 with a decline. From January to March, the financial institution had an adjusted net profit of R$7.3 billion, a drop of 20.7% compared to the same period last year and 23% compared to the fourth quarter of 2024, according to the balance sheet released on Thursday night 15 by the institution.

That was the first decline after 16 consecutive quarters of profit growth, compared with gains in the same period a year earlier. New accounting rules and defaults in agribusiness, the segment in which the bank leads, weighed.

In a statement, BB reported that the entry into force of a resolution by the National Monetary Council (CMN), which changed the accounting of financial institutions, interfered with the result. Approved in 2021, the new rules only came into force in January.

The resolution changes the model from provisions (financial reserves to cover possible defaults) to expected loss, made based on estimates. This has affected the way some expenses and revenues are recognized.

Under the new rules, the recognition of interest income from operations considered stage 3 (with delays of more than 90 days) under the cash basis meant that the bank failed to recognize R$1 billion in credit income. The cash basis only allows the recognition of income when the money actually enters the financial institution's cash register.

The default rate , which considers delays of more than 90 days, rose to 3.86% in the first quarter, against 3.32% in the fourth quarter of 2024 and 2.90% in the first quarter of last year. According to BB, the increase is due to the increase in the Selic rate (the economy's basic interest rate) and crop failures in 2023 and 2024, which caused default in agribusiness to reach 3.04% at the end of March, against 2.45% in December and 1.19% in March of last year.

Review of projections

With the drop in profit, BB put forward projections for profit, gross financial margin and cost of credit (expected losses due to default and other risks) for 2025. The new figures are yet to be released.

According to previous estimates, presented in February, the bank projected adjusted net income between R$37 billion and R$41 billion, gross financial margin between R$111 billion and R$115 billion and cost of credit between R$38 billion and R$42 billion.

Credit growth

Despite the drop in profits, BB lent more in the first quarter. The expanded credit portfolio ended March at R$1.278 trillion, up 1.1% in the quarter and 14.4% in 12 months.

In the distribution by credit segments , the results were as follows:

• Individuals: R$335.8 billion at the end of March, up 1.2% in the quarter and 6.6% in one year, with emphasis on the new type of payroll loan for CLT, aimed at private sector workers.
• Legal Entities: R$459.9 billion, up 1.6% in the quarter and 22.4% in one year. Of this total, R$141.3 billion went to large companies, R$123.8 billion to micro, small and medium-sized companies and R$74.6 billion to government customers.
• Agribusiness: R$406.2 billion, up 9.0% in one year, with emphasis on financing and investment lines. In the nine months of the 2024/2025 Harvest Plan, Banco do Brasil disbursed R$174.5 billion in credit to the segment.
• Sustainable Credit Portfolio: R$393.5 billion, financing activities that generate positive social and environmental impacts, with an increase of 1.8% in the quarter and 9.6% in 12 months.

Income and expenses

Service revenues fell 9% in the first three months of the year, but grew 0.2% in 12 months. Administrative expenses fell 0.1% in the quarterly comparison, but rose 7% compared to March last year.