By Brazil Stock Guide – Banco do Brasil S.A. (B3: BBAS3) signaled it could revisit its dividend policy from 2026, after slashing its payout to 30% this year. CFO Geovanne Tobias said the decision was a prudential move to preserve capital as soaring farm loan defaults forced higher provisions, squeezed margins and led the state-controlled bank to suspend its profit guidance.
Speaking at BB Day in New York, Tobias said the lower payout helps offset regulatory and risk-related headwinds, including the refund of hybrid instruments (IHCD), operational RWA adjustments and the phasing of Resolution 4.966, which together could shave as much as 105 basis points from the bank’s CET1 ratio. “These are temporary effects. From 2026, as profitability recovers and the loan book normalizes, we’ll be in a position to reassess dividends, whether by raising the payout or paying extraordinary distributions,” he said.
Tobias also stressed the role of business diversification. Units such as BB Seguridade (B3: BBSE3), BB Asset and Banco Patagonia have cushioned earnings volatility, showing that BB’s resilience is not tied solely to its lending business.
Most challenging year
CEO Tarciana Medeiros described 2025 as the most challenging year in the bank’s history. Since April, defaults in soybeans, corn and cattle have surged, with medium and large farmers increasingly seeking court protection. The rise in delinquencies spilled over into other portfolios, prompting BB to toughen credit standards: real estate collateral now backs 60% of rural disbursements for the 2025/26 crop, up from 31% previouslyBB.
“It used to be unanimous in the market that BB didn’t collect debts. That has changed radically,” Medeiros told investors, citing stricter collection processes, selective disbursements and AI-driven credit underwriting.
Despite the credit storm, BB used the New York event to underscore its cultural and digital transformation. Over 65,000 employees are in digital reskilling programs, 5,000 have completed AI training, and the new “App 5.0” integrates hyper-personalized journeys. BB counts 30 million active digital clients and 20 million served through WhatsApp.
Efficiency is also a pillar: new service hubs and the Loja BB correspondent model could deliver operational savings of up to 70%.
Sustainability and the future
The bank highlighted a R$396.5 billion sustainable loan portfolio, with a target of R$500 billion by 2030 and the recovery of 2 million hectares of degraded land. Medeiros said the green agenda is not just reputational, but strategic for unlocking new credit flows and investor demand.
With R$111.6 billion in agricultural maturities concentrated in 2025, provisions are likely to remain elevated. For investors, dividends are now the key test of confidence, particularly after weeks of sharp sell-offs in Brazilian bank stocks.
Medeiros summed up the bank’s stance in New York: “With responsibility, hard work and a vision for the future, we are confident the adjustments we’ve made will help us absorb the impacts and lead us back to growth.”