Banco Bradesco S.A.’s Capital Targets and NII Guidance Clash in Earnings Call Contradictions

Date of Call: Aug 6, 2026

Financials Results

• Revenue: BRL 37.6 billion, up 10.3% year-on-year
• EPS: Net income of BRL 7.1 billion, up 16.2% year-on-year
• Operating Margin: ROAE of 16.2%, higher than the market's expected 16% for the last quarter of 2026

Guidance:

• Expect to deliver net income within the midpoint to top of the guidance range by year-end 2026, implying acceleration of risk-adjusted NII.
• Insurance results expected to be close to or slightly above the midpoint of the 6%-8% guidance for the year.
• Fee and commission income growth expected to be within guidance, driven by diversification across at least 15 lines.
• NIM expected to remain close to 9% for the year, supported by flat liability costs and strong asset-side performance.
• Operating expenses growth expected to be at the lower end of the guidance range, driven by efficiency gains.

Business Commentary:

Strong Financial Performance:

• Bradesco reported a net income of BRL 7.1 billion for the second quarter of 2026, reflecting a 16.2% year-on-year growth and 3.5% quarter-over-quarter increase, with a ROAE of 16.2%.
• This performance was driven by strong commercial traction across business segments and a strategic focus on high-risk-adjusted return loan portfolios.

Loan Portfolio Expansion:

• The total loan portfolio grew to BRL 1.137 billion, with an overall growth of 11.6% year-on-year, and SMEs alone grew by 16.1%.
• Growth was fueled by high penetration commercial traction, a well-equipped commercial team, and digital channels, focusing on secured lines like FGI and FGO.

Insurance and Fee Income Growth:

• Insurance operations reported a 28.3% growth in net income, reaching BRL 2.9 billion, while fee and commission income increased by 1.7%.
• This was attributed to resilience in insurance operations and the diversification of revenue streams, with strong performance in areas like asset management and custodian brokerage services.

Capital Management and Strategic Investments:

• Bradesco executed a BRL 10 billion capital increase, aiming to strengthen tangible capital and support further growth and transformation initiatives.
• The capital increase reflects the confidence of controlling shareholders in the company's strategic direction and transformation plan.

Sentiment Analysis:

Overall Tone: Positive

• "We are very confident on what we have been delivering... We are delivering strong traction... everything is within plan, step by step." "Our SME growth year-over-year was BRL 37 billion... the level of loss is minimal." "We have a very good and well-equipped commercial team... we are growing in different lines and in all aspects that we wanted to grow." "We are leaders in some areas... this is the level of growth we posted."

Q&A:

• Question from Mario Pierry (Bank of America): Focus on capital slide, why delay recognition of 140 bps from Bradesco transaction and what is missing to reach 12.7% Tier 1, and why need high capital now?
  Response: Delay is due to P&L delivery timing and regulatory green light. High capital is seen as healthy for resilience, especially with collateralized credit growth, and reflects controlling shareholders' confidence in the transformation plan.

• Question from Navarro (Santander Bank): How does Bradesco see the structurally challenging credit landscape impacting portfolio growth, cost of risk, and fee income for 2027?
  Response: Growth will continue but with some pressure on cost of risk from FGI/FGO maturities and agribusiness. Mix has shifted to more secured loans, reducing exposure to lower-income clients, and traction in payroll and SME segments supports resilience.

• Question from Thiago Batista (UBS): What are levers for continued ROAE growth after capitalization, and what will be the future dividend policy?
  Response: ROAE expected to continue growing step-by-step, with capital increase presenting a challenge but supported by transformation gains. Dividend policy will aim to pay the most possible IOE, with no other plans currently on the table.

• Question from Gustavo Schroden (Citibank): How should we think about market NII going forwards, and what is the hedge policy?
  Response: Market NII strength is due to treasury work and commercial traction; no formal hedge policy, but daily efforts to capture best results. Expectation is for NII to remain slightly ahead of the soft guidance range.

• Question from Daniel Safra (Safra): With lower Selic, should NIM be lower and cost of risk higher, given macro risks?
  Response: Confident in NIM and cost of risk; lower Selic is positive, funding costs are low, and diversified revenue lines (including insurance, payments) provide multiple growth levers beyond just banking.

• Question from Yuri Fernandes (JPMorgan): Do FGI/FGO provisions carry over to stage 3, and is there pressure to cut current account fees?
  Response: FGI/FGO could spill over to stage 3 but is recoverable within the guarantee period. Current account fee trend is not to grow; growth in Bradesco Expresso and cross-selling in other services will offset potential declines.

• Question from Pedro Leduc (Itaú BBA): Why did corporate loan growth not correspond with revenue growth in financial advisory and LLP was lower?
  Response: LLP lower due to specific case adjustments; wholesale bank growth in securities and Plano Empresário, which are net guarantees. DCM fees lower due to a strong prior-year comparison; focus is on risk-adjusted return, not just origination volume.

• Question from Eduardo Rosman (BTG): What is the sustainability and expected return pressure on directed credits like FGI/FGO?
  Response: FGI/FGO are long-term, sustainable lines with high risk-adjusted return and stop-loss protection; no significant pressure on returns expected in 2026, with cross-selling opportunities enhancing client relationships.

• Question from Matheus Guimarães (XP): What is your vision on private payroll-deductible loan growth given new changes?
  Response: Product is maturing with disciplined filters; delinquency is stable at 4.7% vs. market's 8.9%. Growth is focused on the private segment with capacity to increase share, supported by strong origination filters and RAR discipline.

• Question from Carlos Gomez-Lopez (HSBC): Should insurance normalize to 6%-8% guidance in H2, and what tangible equity metric are you targeting?
  Response: Insurance expects to finish H2 close to or slightly above the midpoint of the 6%-8% guidance. No specific tangible equity target, but more capital is better for resilience and reducing the DTA gap; focus is on profit and net income.

• Question from Renato Meloni (Autonomous): How to reconcile accelerating risk-adjusted NII with flat NII net provisions and portfolio growth above guidance?
  Response: Reconciliation is based on net income step-by-step growth; guidance covers five lines (insurance, services, expenses, NII net of provisions, revenue). All lines are expected to be delivered within their intervals, with no crazy deviations from the plan.

• Question from Tito Labarta (Goldman Sachs): Why are you comfortable growing rural loans and vehicle loans given peers' challenges in those segments?
  Response: In rural loans, growth is driven by specific M&A deals with high-rated clients and a focus on good guarantees. In vehicles, growth is in specific quadrants (like semi-new vehicles) with AI-driven risk modeling and pricing, targeting higher risk-adjusted return opportunities.

Contradiction Point 1

Capital Position and Growth Outlook

Guidance on capital adequacy and management appears inconsistent.

Mario Pierry (Bank of America) - Mario Pierry (Bank of America)

2026Q1: The bank aims for a strong but prudent capital position, not a target. - [Cassiano Scarpelli](CFO)

Why is there a delay in recognizing the 140 basis points from the Bradesco transaction to reach 12.7% Tier 1, and what is the rationale for the BRL 10 billion capital increase despite investor skepticism about the need for such a high level of common equity? - Yuri Fernandes (JPMorgan Chase & Co)

2025Q4: CET1 is expected to remain around 11% in 2026, with fluctuations. - [Andre Carvalho](IR Director)

Contradiction Point 2

Credit Portfolio Strategy and Risk

Outlook on credit portfolio risk and cost of risk pressure differs.

Daniel (Safra) - Daniel (Safra)

2026Q1: While cost of risk may face temporary pressure from structural items (FGI/FGO maturities, agribusiness), the bank is confident in its diversified revenue streams... and cross-selling to sustain returns. - [Marcelo Noronha](CEO), [Cassiano Scarpelli](CFO)

How are you balancing potential NIM pressure from lower Selic rates and increased cost of risk due to a worsening macroeconomic environment to optimize risk-adjusted returns? - Pedro Leduc (Itaú Corretora de Valores S.A.)

2025Q4: The average rate is maintained, and loan loss provision (LLP) growth is aligned with operations. The bank is comfortable with credit quality. - [Marcelo de Noronha](CEO)

Contradiction Point 3

Net Interest Income (NII) Guidance and Trajectory

Contradiction on the expected path and drivers for Net Interest Income.

Gustavo Schroden (Citibank) - Gustavo Schroden (Citibank)

2026Q1: The strong market NII (21.7% growth) was driven by good treasury work and commercial traction... The soft guidance of 1.5-1.9% is seen as surpassed... - [Cassiano Scarpelli](CFO and CTO), [Marcelo Noronha](CEO)

How should we think about the trajectory of Net Interest Income (NII) given the change in interest rate perspective and the bank's hedge policy? - Pedro Leduc (Itaú Corretora de Valores S.A.)

2025Q2: The NII net of provisions guidance of BRL 39 billion (midpoint) already includes a cautious outlook. The bank is focused on risk-adjusted return, not just margin. - [Cassiano Scarpelli](CFO), [Marcelo Noronha](CEO)

Contradiction Point 4

Strategy and Timeline for Mass Retail Profitability Improvement

Contradiction on the primary lever and timeline for improving ROAE.

What were UBS's earnings results? - Thiago Batista (UBS)

2026Q1: The bank believes ROAE will continue to grow step-by-step, driven by transformation, productivity gains, and portfolio management. - [Marcelo Noronha](CEO)

With ROAE at 16% and approaching the cost of capital, what are the key levers for further growth? - Thiago Batista (UBS)

2025Q1: The primary lever for improvement is mass retail, specifically addressing the cost to serve. - [Marcelo Noronha](CEO)

Contradiction Point 5

Growth Strategy for Private Payroll-Deductible Loans

Contradiction in the aggressiveness and timing of the growth strategy for private payroll loans.

What is Matheus Guimarães' role at XP? - Matheus Guimarães (XP)

2026Q1: Growth was initially delayed to ensure the Dataprev model was solid. The bank has significant growth opportunity... Origination is focused on corporate clients... with good RAR. - [Marcelo Noronha](CEO), [André Carvalho](Head of IR), [Cassiano Scarpelli](CFO)

What is Bradesco's vision for the private payroll-deductible loan product in light of recent changes, and what is the growth outlook? - Daniel Vaz (Safra)

2025Q1: The bank is shifting from a defensive to an aggressive, active strategy. The bank will focus on its existing client base and expects growth to pick up around June/July. - [Marcelo Noronha](CEO)