By Brazil Stock Guide – Banco Bradesco (B3: BBDC4; NYSE: BBD) posted a recurring net profit of R$6.51 billion in the fourth quarter of 2025, up 21% year-on-year, extending its earnings recovery to an eighth consecutive quarter of growth. The result delivered a 15.2% return on average equity, placing profitability above the bank’s cost of capital and marking a decisive inflection point after a multi-year restructuring cycle.
“Our ROE exceeded the cost of capital. That is an important milestone,” said Marcelo Noronha, chief executive officer of Bradesco. “Our expectation is that profits will continue to increase in each of the coming quarters, in a gradual and safe manner, step by step.”
Revenue momentum remained solid into year-end. Total revenues reached R$36.1 billion in the quarter, supported by stronger net interest income and resilient fee generation. Margin from client operations benefited from loan expansion, improved funding efficiency and a more favorable mix. The expanded loan book climbed to R$1.089 trillion, up 11% year-on-year, driven by retail lending and small and mid-sized enterprises.
Credit quality remained stable despite portfolio growth. Loans overdue by more than 90 days held at 4.1%, while the cost of credit eased to 3.2%, down sequentially. Management pointed to lower formation of new non-performing loans and better recovery dynamics, reinforcing confidence in risk-adjusted profitability.
“Our operation is gaining traction, allowing us to deliver strong revenue growth while keeping delinquency under control,” Noronha said. He added that Bradesco entered 2026 “at a stronger pace than at the start of 2025,” while maintaining a moderate risk appetite amid lingering macroeconomic uncertainty.
The insurance business remained a core earnings stabilizer. The segment delivered R$2.8 billion in quarterly net profit and a 24.3% ROAE, reinforcing bancassurance as a structural buffer against volatility in traditional banking margins.
Looking ahead, Bradesco outlined a disciplined growth path for 2026, supported by explicit operational targets. The bank expects expanded loan growth of 8.5% to 10.5%, signaling a deceleration from 2025 levels but with a stronger focus on risk-adjusted returns. Net financial margin after provisions is projected between R$42 billion and R$48 billion, suggesting continued earnings momentum even under a less accommodative macro environment.
Cost dynamics are also clearly framed. Operating expenses are expected to rise 6% to 8% in 2026, reflecting higher investments in technology, data and process automation. This compares with a 2.2 percentage-point improvement in the efficiency ratio in 2025, as revenue growth outpaced cost inflation. Management argues that the current expense trajectory is consistent with delivering operating leverage once transformation investments mature.
Evidence of this leverage is already visible in productivity metrics. Over the last two years, Bradesco reduced technology lead times by more than 40% and more than doubled the volume of business deliveries supported by digital platforms. Artificial intelligence initiatives now support client servicing, credit underwriting and internal processes, contributing to lower unit costs and higher scalability across retail and corporate segments.
Credit discipline remains a central pillar of the strategy. Despite 11% year-on-year expansion in the loan book, the non-performing loan ratio remained stable at 4.1%, while total expected credit-loss provisions fell 2.6% year-on-year. The cost of credit declined sequentially, indicating that portfolio growth is being achieved without a deterioration in asset quality — a key condition for sustaining returns above the cost of capital.
Diversification continues to smooth earnings volatility. The insurance operation delivered R$2.8 billion in quarterly net profit, accounting for a meaningful share of group earnings, with a 24.3% ROAE. Management expects insurance, pension and capitalization results to grow 6% to 8% in 2026, reinforcing bancassurance as a structural earnings stabilizer rather than a cyclical add-on.
Capital strength provides additional support to the investment case. With a Tier 1 ratio of 13.2% and R$178.4 billion in shareholders’ equity, Bradesco maintains buffers well above regulatory requirements. The bank distributed R$14.5 billion in interest on equity in 2025, underscoring its ability to combine reinvestment in growth with predictable shareholder remuneration.
For investors, the transition now underway is measurable, not theoretical. Profitability has exceeded the cost of capital for eight consecutive quarters, credit growth is running ahead of system averages with stable asset quality, and guidance for 2026 points to earnings expansion that is both slower and safer. The remaining challenge is not execution credibility — but sustaining this trajectory through a full interest-rate cycle.
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