Brazil Bad-Loan Provisions Hit US$9.1 Billion as Defaults Climb
Brazil's four largest banks set aside about R$47 billion (US$9.1 billion) against bad loans in the second quarter, while industrial investment plans sank to a 2026 low. The post Brazil Bad-Loan Provisions Hit US$9.1 Billion as Defaults Climb appeared first on The Rio Times .
Brazilian banks set aside a combined R$47 billion (US$9.1 billion) in bad-loan provisions during the second quarter of 2026, indicating a growing trend of defaults among borrowers. The CNI investment-intention index fell to 52.6 in August, marking the weakest reading of 2026. This index reflects the investment appetite of factory bosses and other industrial leaders in Brazil.
The four largest banks – Banco do Brasil, Itau Unibanco, Bradesco, and Santander Brasil – each reported significant bad-loan provisions: Banco do Brasil (R$18.5 billion), Itau Unibanco (R$10.5 billion), Bradesco (R$10.0 billion), and Santander Brasil (R$7.7 billion). Notably, Santander Brasil's provisions rose by 20.6% from the first quarter and 11.5% compared to the previous year.
The agricultural sector, heavily reliant on Banco do Brasil, saw a doubling of overdue farm loans in just one year, with 6.27% of loans past due by June. Overall household indebtedness reached a record 49.9% of annual income in February, with debt service consuming nearly 30% of monthly earnings. The central bank's decision to cut the Selic interest rate to 14.00% in August, its fourth consecutive quarter-point reduction, has not alleviated the pressure on borrowers.
Major banks are increasingly favoring secured loans and better-off customers, while postponing investment decisions until borrowing costs become more favorable.
Written by urgent.news from The Rio Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
