Banco do Brasil S A : 2Q Profit Falls as Provisions for Bad Loans Rise

By Jeffrey T. Lewis

SÃO PAULO--Banco do Brasil SA's profit fell in the second quarter as the Brazilian lender boosted provisions for bad loans amid the coronavirus pandemic.

The state-controlled bank reported net income of 3.2 billion reais ($605 million) in the period, down 24% from the second quarter of 2019, while adjusted net income fell 25% to BRL3.3 billion.

Net interest income rose 8.2% to BRL14.5 billion.

The social-distancing and quarantine measures implemented by Brazilian states and towns had their deepest impact on the economy in April and May, with some locales starting to gradually ease restrictions in June. Various indicators have shown improvement in May and June, and economists have begun to trim their expectations for the size of the economic contraction the country will suffer this year.

Banco do Brasil increased its total allowances for loan and lease losses by 42% over the second quarter of last year, to BRL5.9 billion. The bank said it has the necessary experience, capital and liquidity to weather the health crisis, though it maintained its suspension of guidance on its 2020 results.

Write to Jeffrey T. Lewis at [e-mail]

Corrections & Amplifications

This was corrected at 7:00 a.m. ET because the original incorrectly convertedthe currency of Banco do Brasil reported net income of 3.2 billion reais in the second quarter to $605 billion. The correct conversion figure is $605 million.