By Brazil Stock Guide – Brazil’s banks are bracing for stability through year-end, with the Selic rate expected to stay at 15% until December and the first cuts arriving between January and March 2026. In the FEBRABAN Banking Economy and Expectations Survey, 85.7% of institutions foresee the easing cycle beginning in early 2026 — up from 70% in the previous survey. The median forecast calls for a 0.25-point cut in January, followed by 0.50-point steps in subsequent meetings of the Central Bank’s monetary committee.
The Federação Brasileira de Bancos (FEBRABAN) — Brazil’s main banking association — represents more than 100 financial institutions responsible for over 90% of the country’s credit volume. Its Banking Economy and Expectations Survey, conducted every 45 days after the release of the Central Bank’s policy minutes, gathers the outlook of major banks on monetary policy, credit, and macroeconomic trends.
Credit Growth Holds as Economy Cools
While 57.1% of banks still expect GDP growth in line with the 2.2% consensus, 38.1% now project weaker expansion, citing tighter financial conditions. Nearly all respondents (95%) agree that structural shifts in the labor market — from reforms to app-based work — have lowered the NAIRU, though unemployment remains below equilibrium.
Credit growth remains resilient: total loans are set to expand 8.7% in 2025, matching August’s forecast. Directed lending is the main driver (+9.8%, led by corporate credit at +12.2%), while free credit should rise 8.0%, with consumer credit up 9.6% and corporate credit 5.7%.
Non-performing loans in the free portfolio are projected at 5.1% by end-2025 — below the 5.4% reported by the Central Bank in August — before easing to 4.9% in 2026. Six in ten banks expect a moderate rise in household delinquency, with limited impact on credit supply.
For inflation, opinions are evenly split: 47.6% expect the 2026 rate in line with the 4.3% consensus, while another 47.6% see lower outcomes, reflecting a stronger real, subdued global growth, and sustained monetary tightness.
Fed Cuts and Global Backdrop
Internationally, 85.7% of respondents foresee the U.S. Federal Reserve cutting rates twice (0.25 pp each) before year-end, responding to softer U.S. labor data. The survey captures a cautious but steady outlook: credit still advancing, inflation easing, and monetary relief only on the horizon.
The latest edition, carried out between September 23 and 29, included 21 institutions such as Banco do Brasil, Itaú, Bradesco, Santander, BTG Pactual, BNDES, Caixa Econômica Federal, Citi, XP, PicPay, Banrisul, Banco ABC Brasil, Banco BV, Banco Daycoval, Banco BRB, Banco do Nordeste and Sicredi — a mix of private, public, development, and cooperative banks.
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