Banco do Brasil S.A. (BBAS3.SA) is one of Brazil’s largest banks, majority-owned by the government but publicly traded with strong corporate governance. The bank benefits from a wide deposit base, extensive branch network, and leading agribusiness lending. With the Selic rate expected to decline further, Banco do Brasil’s net interest income should improve as funding costs fall and loan repricing lags. The bank trades at a price-to-book of 0.8x, a discount to private peers, and offers a dividend yield of approximately 8% based on 2026 consensus. Earnings are supported by lower provisions as credit quality stabilizes and fee income growth from digital banking. Catalysts include continued rate cuts, potential privatization progress, and strong agribusiness loan demand. Risks include government interference, slower-than-expected rate cuts, and asset quality deterioration in a recession. The balance sheet is solid with a Basel ratio above 14% and high liquidity. This pick adds financial sector exposure to the portfolio, diversifying from logistics and consumer cyclicals.
Risk Disclaimer: This is not financial advice. Investing in equities involves risk, including loss of principal. Past performance does not guarantee future results. Consider your own risk tolerance and consult a financial advisor before investing.