Banco do Brasil (BBAS3) shares climbed again on Thursday, extending their steady comeback after falling below R$20 in August.
The state-owned lender, which has been hampered this year by mounting defaults on its agro loan book, has received relief from government policies and regulatory amendments targeted at reducing the load on rural loans.
On September 5, President Luiz Inácio Lula da Silva approved a Provisional Measure (MP) that released R$12 billion for debt renegotiation among rural producers affected by climate-related losses.
Just days ago, the National Monetary Council (CMN) issued Resolution No. 5,244/2025, which eased the requirements for resolving outstanding credits.
According to local media outlet InfoMoney, analysts believe the combined actions might reduce Banco do Brasil’s provisioning load, increase profitability, and restore investor confidence.
Safra provides short-term relief for profitability and capital pressures
According to Safra analysts led by Daniel Vaz, both measures have a direct impact on how agribusiness loans are accounted for and the bank’s probable recovery route.
The Provisional Measure establishes a framework for the voluntary restructuring of rural farmers’ loans on more favourable terms.
Meanwhile, the CMN resolution enables banks to designate long-term operations as stage 2 after 90 days of established repayment capacity.
Previously, such loans could be locked at stage 3, necessitating a full payment cycle before reclassification.
Safra stated that the new decision addresses a loophole in the previous resolution number 4,966, which penalised loans with semi-annual or annual instalments.
The change should free up some of Banco do Brasil’s rural loan portfolio, removing accounting limits and resuming interest income recognition.
The Safra team believes that the modifications will provide short-term relief, reduce capital pressure, and potentially add R$1.5 billion to net income in 2026, with provisions beginning to lighten as early as the fourth quarter of 2025.
The CEO sought a smooth transition amid rising defaults
The regulatory shift comes after months of turmoil at Banco do Brasil.
When CEO Tarciana Medeiros released first-quarter results earlier this year, she mentioned ongoing conversations with the Central Bank about ways to mitigate the impact of Resolution 4,966.
The rule resulted in a substantial increase in recorded defaults, raising investor fears.
In its second-quarter earnings, Banco do Brasil disclosed that 34.6% of its stage 3 loans, worth R$32.2 billion, were not in default.
A sizable percentage consisted of bullet loans with longer maturities, which can now be reclassified under the current CMN resolution.
Market reaction and share performance
Investor sentiment has improved since August, when Banco do Brasil’s shares reached a year low of R$18.35. On Thursday at 10:35 a.m., shares increased 0.68% to R$22.20, extending a 3.79% gain in September after rising 8.58% in August.
The year’s high was R$29.22 on May 14, shortly before the bank disclosed weaker-than-expected first-quarter earnings and suspended some of its guidance.
Analysts at BTG Pactual, led by Eduardo Rosman, deemed the recent statements “quite favourable” for the bank, citing a Central Bank order dated July 17.
The guideline allows loans renegotiated under CMN or legal methods to avoid being classified as restructured.
According to BTG, this distinction is critical: some loans that were previously classed as stage 3 can now be renegotiated and reclassified as stage 1 or 2.
While the adjustment does not lessen provisions, it does allow the bank to accumulate interest revenue earlier rather than only recognising it in cash.
Risks continue despite valuation appeal
Despite regulatory tailwinds, analysts are apprehensive about the overall outlook. Safra stressed that fundamentals remain unstable, citing significant debt in agribusiness and increasing credit risks for people and small and medium-sized businesses.
“We do not believe there is a positive asymmetry in the fundamentals,” the Safra team said, despite some investors claiming that the shares are cheap given Brazil’s potential monetary policy easing and political outlook for 2026.
Safra restated its neutral recommendation for the Banco do Brasil stock.
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