By Brazil Stock Guide — Bradesco, one of Brazil’s largest private-sector banks, sees little incentive to participate extensively in Desenrola Brasil 3.0, a federal government debt-relief initiative under which authorities plan to purchase portfolios of delinquent consumer loans at discounts of at least 90% of their face value.
The assessment came on Friday (October 23) from Bradesco CEO Marcelo Noronha during the bank’s third-quarter earnings call, where the executive also carefully avoided taking sides in Brazil’s presidential election, just two days before the runoff vote on Sunday.
“We always look at every program, and our team is analyzing this one. But so far, we haven’t seen a compelling reason to become heavily involved,” Noronha said in response to a question about the debt auction being prepared by Brazil’s Finance Ministry.
The program is not among Bradesco’s priorities, he added. Noronha pointed out that banks have other market-based alternatives for managing delinquent loan portfolios and noted that Bradesco itself has not been actively selling such assets.
His remarks did not amount to a definitive decision to stay out of Desenrola 3.0, but they suggested limited enthusiasm for the government’s proposed terms.
The comments came a day after Brazil’s Finance Ministry issued a formal invitation for financial institutions to submit delinquent debt portfolios for potential purchase by the federal government.
Creditors have until October 30 to submit their portfolios. The government expects offers covering as much as R$90 billion in delinquent loans, which could be acquired at discounts of at least 90%.
Desenrola 3.0 was established in September through a provisional measure issued by President Luiz Inácio Lula da Silva’s administration. The initiative is designed to help consumers renegotiate overdue debts after the government acquires them from creditors.
The auction is scheduled for November, although it could be postponed until December. The actual volume of debt purchased will depend on creditor participation and the financial terms offered.
Steering clear of election politics
With Brazil’s presidential runoff between incumbent Luiz Inácio Lula da Silva of the Workers’ Party (PT) and Flávio Bolsonaro of the Liberal Party (PL) just two days away, Noronha repeatedly declined to express a political preference or assess the candidates’ campaign proposals.
Asked specifically about Bolsonaro’s proposal to freeze household debt payments for six months and corporate debt payments for one year, the Bradesco chief executive declined to discuss its merits.
“I would rather not comment on campaign issues, because someone could later accuse me of campaigning for one candidate or the other,” he said.
In a separate exchange, Noronha was asked whether a potential Bolsonaro victory could lead to lower interest rates and an improved economic outlook. Once again, he avoided commenting on the electoral implications.
Instead, he emphasized that Bradesco’s strategic direction had already been established and would remain in place regardless of the political outcome.
The bank may adjust its day-to-day operations in response to changing macroeconomic conditions, he said, but it does not intend to alter its long-term strategy based on the election result.
Noronha also dismissed any suggestion that Bradesco had brought forward the release of its quarterly results because of the election calendar.
He explained that the decision was driven by scheduling constraints, including an upcoming international trip and the need to coordinate the board’s approval of the financial statements.
Loan delinquencies expected to remain under pressure
While cautious about politics, Noronha was considerably more outspoken about the economic challenges Bradesco expects to face in 2027.
High household debt burdens and slowing economic activity are likely to keep upward pressure on loan delinquencies and credit costs next year, he said.
The Bradesco CEO cited forecasts pointing to Brazilian GDP growth of around 1% in 2027 and said he saw no clear signs of a recovery that would quickly ease the financial strain on households.
Against that backdrop, the bank intends to continue prioritizing secured lending, including payroll-deducted loans, mortgages and corporate credit backed by government guarantee funds.
The strategy also involves reducing exposure to riskier lending categories, particularly unsecured personal loans and revolving credit card balances.
Bradesco reported an 11.1% increase in its loan portfolio over the past 12 months, with growth increasingly concentrated in corporate rather than consumer lending.
Noronha stressed that the bank has no intention of abandoning its growth ambitions, although he acknowledged that the macroeconomic environment calls for greater caution.
Bradesco reported recurring net income of R$7.1 billion in the third quarter, up 14.6% from a year earlier, with a return on equity of 16.1%.
Throughout the earnings call, Noronha repeatedly emphasized that Bradesco cannot insulate itself from the challenges facing the Brazilian economy, regardless of who wins Sunday’s election.
“Bradesco is Brazil. We’re here doing our job. If the economy slows, we have to deal with it and keep making money,” he said. The bank will maintain its focus on growth and risk management while adapting to broader economic conditions, he added. “We’re not operating outside the Brazilian market. We’re part of it.”
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