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ABC Brasil (ABCB4) reported its Q3 2025 earnings, revealing a slight miss on both earnings per share (EPS) and revenue forecasts. The bank's EPS came in at $1.09, just below the expected $1.11, while revenue reached 771.22 million, missing the forecast of 775.77 million. The stock responded with a minor decline of 0.22%, closing at $23.16, slightly off its 52-week high of $23.6.
Key Takeaways
- ABC Brasil's net profit grew to BRL 257 million, up from BRL 244 million.
- The bank launched new vertical sectors in Agro and Real Estate.
- Financial margin reached a record BRL 652 million.
- Portfolio growth guidance was revised to 1% to 4%.
- Stock fell by 0.22% following the earnings release.
Company Performance
ABC Brasil demonstrated solid performance in Q3 2025, with net profit increasing to BRL 257 million from BRL 244 million in the previous period. The bank's return on investment rose to 15.5%, reflecting its improved efficiency and strategic focus on margin quality. The financial margin hit a record BRL 652 million, showcasing strong operational capabilities. Despite these achievements, the bank's portfolio growth guidance was revised to a more cautious range of 1% to 4%, indicating a measured approach to market conditions.
Financial Highlights
- Revenue: 771.22 million (slightly below forecast)
- EPS: $1.09 (missed forecast of $1.11)
- Net profit: BRL 257 million (up from BRL 244 million)
- Financial margin: BRL 652 million (record high)
- Efficiency ratio: 38.8%
Earnings vs. Forecast
ABC Brasil's actual EPS of $1.09 fell short of the $1.11 forecast, marking a negative surprise of 1.8%. Revenue also missed expectations by 0.59%, coming in at 771.22 million against a forecast of 775.77 million. This slight underperformance contrasts with the bank's previous quarters, where it consistently met or exceeded expectations.
Market Reaction
Following the earnings announcement, ABC Brasil's stock experienced a minor decline of 0.22%, closing at $23.16. This movement places the stock slightly below its 52-week high of $23.6, reflecting a cautious investor sentiment amidst the earnings miss. The broader market conditions and sector performance have also shown signs of deceleration, which may have influenced the stock's movement.
Outlook & Guidance
Looking forward, ABC Brasil maintains a cautious stance on credit growth, focusing on optimizing its risk-return relationship. The bank is exploring revenue diversification beyond credit and potential expansion in credit recovery and vision services. The revised portfolio growth guidance of 1% to 4% reflects a strategic adjustment to anticipated economic cycle changes.
Executive Commentary
"We want to be present in credit. Credit is a product that companies do need, but the idea is to become less and less dependent on credit," stated Sergio Ulia, CEO. This highlights the bank's strategic shift towards a more diversified revenue model. Rodrigo Cordero, VP of Products and Segments, emphasized the importance of client relationships, stating, "Relationship is what generates value."
Risks and Challenges
- Economic slowdown: GDP is projected to reduce to 1.7% in 2025.
- Market deceleration: Corporate credit market shows signs of slowing down.
- Inflation and interest rates: Inflation is expected to decelerate to around 4%, with interest rates anticipated to start reducing in Q1/Q2 2025.
- Competitive landscape: Maintaining a strong position in a competitive market remains a challenge.
Q&A
During the earnings call, analysts inquired about the bank's cautious approach to portfolio growth, with particular interest in the agribusiness sector's complexity. Discussions also focused on spread recovery in corporate markets and capital optimization strategies, reflecting the bank's strategic priorities in navigating current market conditions.
Full transcript - Banco ABC Brasil SA (ABCB4) Q3 2025:
Ricardo Mora, Director of IR, M&A and Strategy, ABC Brasil: Good morning, everyone. Welcome to another ABC Day. This is a moment to present you, shareholders, investors, stakeholders, the results of ABC Brasil and the strategies for the future. I'm Ricardo Mora, director of IR, M and A and owner and strategy. And now ABC Brasil was acknowledged and recognized as the best Latin American bank by the Xcel.
And this is one of the most well known award ceremony. And we were in for first place, and this is in relation to the acknowledgment and recognition of each of you. Now some information about our broadcasting. And if you want to follow in English, you just click in the simultaneous interpretation icon, and there will be at the end of our broadcast Q and A. And for those who are following through YouTube, you can send to the NNR e mail.
Continuing, I would like to call Sergio Ulia, our CEO. Welcome, Sergio. Hello. Good morning, everyone. Thank you, Mora, for the opening and the usual partnership.
It's a great satisfaction to be here once again in another ABC Day. This event is always a valuable opportunity to exchange with our investors, shareholders and stakeholders, reaffirming our commitment to transparency and the highest standards of governance, attributes that led us to the leadership of all categories in the Excel 2025 ranking. Throughout the day, we will share the bank's results, our strategy and our perspectives for the future. We remain firm in our purpose of driving business, building relationships and growing together. This commitment is reflected in the experiences we provide and the long lasting relationship we build to our customers, partners and employees.
This dedication is evidenced by our evolution and the ability to serve with excellence, offering personalized products and services. Traditionally, we have segmented our clients based on the annual turnover and geographic location, large corporate, corporate and since 2019 middle groups. However, with the increasing diversification of our portfolio and performance, we identified opportunities to deepen our industrial knowledge. Therefore, we created two verticals, one dedicated to the agro sector and the other one to the real estate sector. These structures will allow us to serve more the specific demands of each industry regardless of the size or location of the company.
With this new structure, our customers will have an even more consultive and close service supported by specialized teams prepared to understand the specificity of each sector. In addition, we have begun the transition of some leaders with a focus on driving our business strategy and accelerating growth. From 2025, we will have two new VPs, Rodrigo Montemore, who will lead the large corporate and real estate vertical and Daniel Kedillo, who will take over the middle segment and the agrovertical. Agrovertical. I take this moment to thank APMEK for the continuous partnership and for the essential role in training financial professionals.
And of course, I thank you all for the trust and the partnership, and enjoy Abeseede. We will see soon when I will present the results of the third quarter. See you soon. It's a pleasure to participate in this ABC Day. I'm Rodrigo Montimore, and I am the commercial VP of large corporate and Corporate segments.
You know those segments. They are responsible for the most of our expanded credit portfolio. They represent the markets in which we have been operating for more than thirty five years and encompass large companies. This year, we have some news to share. While the large corporate continues to bring together companies with annual revenues starting at BRL4 billion, the corporate segment now brings together companies with annual revenue between BRL5 million, 500,000,000 and BRL 4,000,000,000.
Another recent change that we would like to announce on this Abyss Se Day is that in addition to the traditional segments of revenue range, like corporate, corporate and middle, we launched a new vertical sector for leveraging our expertise we have built over the last years. Today, I will delve into the real estate vertical, which represents an important sector in our economy and historically representative in our credit portfolio. The new vertical that we are calling real estate now serves all construction companies, developers, and customers in the areas of properties and shopping malls throughout Brazil. Regardless of the level of revenue in this way, we offer a more niche service focused on the customized offer of products. And speaking of products, in addition to the traditional offers of an interpreter plan and solutions in the fixed income capital market such as PRES, which we already do well, now we have new structures to develop and offer new products.
So we have a very important national presence. Currently, the Abbezeb Brasil Bank is in more than a 120 constructions work spread across all over Brazil, especially in the state of Sao Paulo. The commercial teams, they have a regionalized operation, and they have dedicated teams in several areas of the bank, aiming at optimizing servicing, bringing a fitness in credit approval and promoting the cross sale products. For our clients, this new way of serving brings even more agility in the approval and release of resources, ensuring services that are closer and that favor the consultative approach that is a trademark of Abese Brazil. So we believe that relying the expertise of those who know the sector will offer more appropriate and personalized solution to our clients, seeking to support them in different business cycles with a long term vision and focus on lasting relationship.
And that is what Abeseo Brasil purpose translates, to foster business, build relationships and grow together, believing in the relationship that generates value for the client and the bank. Thank you for being here today. For the middle segment and the agro vertical. And it's a great pleasure to be here to talk about the Abse Brasil agro business front. As everybody knows, agro business is one of the most important pillars in the Brazilian economy, representing more than 20% of Brazil's GDP, and it has always been one of the main sectors of our our BCE Brasil activity.
We want to generate value and support sustainable growth of agro with offering, trust relationship, and amplifying support and development. Our participation goes through the sector as a whole, grains, sugar and alcohol, agriculture, livestock, and imports. What brings me here today is this willingness to share something new something new, how we operate in the sector. ADU has always been one of our strengths. Have served clients for many years, most of them large companies that we classify to be served by CIB and corporate segments.
In 2023, the bank started operating in the middle segment, which serves companies with annual revenue between BRL 30,000,000 and BRL 500,000,000 and also middle sized companies in agro business. We have been strengthening the relationship with the entire agro ecosystem, working with the rural farmers, livestock, corporate, agri industry and groups in the productive sector. This year, well, we start a new chapter in our journey alongside with agribusiness. We have created a business front solely dedicated to the sector, adding up to our expertise in agribusiness. This new vertical has a commercial strength and support areas that are dedicated to seek for business opportunities throughout the entire agribusiness chain and build customized financial solutions to our clients.
Despite the size of the company, to have specialized teams allocated in several cities and agro business hubs allows us to serve clients in a close manner, understanding the needs. And this integrated service will allow us to take a step further. We'll be able to serve clients and suppliers of our clients. We are very happy with this agri business vertical that besides our billing also relates to the profile of clients and the specialty degrees of our team. We believe on the integration of the chain, the use of market intelligence and the relationship as pillars.
We are close to the farmer and agribusiness companies all the time, growing together with a vision for the future. Thank you for your attention, and I hope you enjoy the broadcast. Thank you very much. The company saw a core crop, and they don't understand all the R and D involved. We buy land today.
We'll have a result in six years. We've heard that we are the first operation of CDC zero carbon in Brazil. It was a proposal offered by Abese Brazil, and we really enjoy this idea once we are strongly working with sustainability. Brazil is the world that's facing well, face the pandemic, and ABC Brazil was essential for us to keep our results. The VP Rodrigo Montemore responsible for large corporate and corporate and then the VP, Daniel Credigio, responsible for middle and agro segments.
Now I'm here with Isabel Branco, our VP responsible for talent, branding and ESG. It's a great pleasure to have you here, Isabelle. I thank you. It's a great pleasure to be here. Good morning.
Well, I will start our conversation proposing a subject that is quite trending, ESG. Once again, the bank will be present at COP thirty. Right? Yeah. It's our third time at COP, and this is a very special one being this COP in Brazil.
Where we'll be part of discussions with investors, partners, clients so we can form some alliances that can increase access to capital, promote projects and contribute to the development of the carbon market and also the funding of sustainable solutions. That's because our ESG agenda is quite meaningful. We finished the third quarter with more than BRL 21,000,000,000 in assets aligned to ESG criteria that represents 11% in relation to the same period in the previous year. And that is more than 40% of our portfolio, of expanded portfolio, right? Yes.
And sustainable has been present in more than billion. And what about the decarbonization table? Well, our decarbonization solution table has helped clients in different sectors, always taking into account the specificity and the maturity stage of each of them. Our solutions example we made it feasible was the first CDC zero carbon in the country, compensating the carbon emission related to funding of trucks acquired by one of our clients from the logistic and transportation sector. And this one that we showed in the video we just saw.
Yeah. He's a great example how we are developing new instruments and partnerships to contribute with the development of carbon markets in the country. Tracy, we focus in traceability, governance and real impact. Well, the entire effort is recognized by the market, by agencies and regulators. Now we are part of the CO2 ratio from B3 for the third consecutive years, and we have had some ratings that are amazing, right?
Yes. Another advance was our sustainability report. That is an integrated report incorporating some guidelines of the IRS f IFRS one and two. Well, another important point from your area is people. Right?
At the end, we are business that is made by people. How is that front at Abeseo Brasil? Well, in the last years, we have evolved in relation to culture, fostering people to develop themselves continuously, cultivating curiosity as the growth streams. This movement streams not only our capacity to learn and innovate, but it also affects how we attract talents in the market. An example, I believe we can mention our internship program, where we are very proud to have this program that is nationally recognized and that has received awards in many editions.
We train professionals from the financial market based on the journey, development journey that includes technical capacity and also practical experiences and a mentorship program. That's not quite common, but this makes the mix accelerating the learning process and the professional maturity of our young talents. This year, we had more than 8,000 candidates to show how attractive we are, And we have to change to talk about NPS. Just NPS and the mentorship journey, it's more than 90 points. This is a pillar.
Continuously learning and doing our best is essential for us to evolve as an organization. So the training program is something that we take seriously. And with the training aspect, we can talk a little bit about corporate academies. Right? Yeah.
And we are acknowledged with a high technical level of our professionals. Besides being proud, this is also an evolution process. Our commitment to invest and improve training and also knowledge. Of course, it's your own responsibility to continuously learn and evolve. We have three academies.
The Academy of Leaders to form managers, to inspire and develop people, translate strategies and results. The commercial academy that will train the sales force not only with technical knowledge, but also with a consultative vision and relationship intelligence and also the Credit Academy that was created to assure an an excellence level. One of the most one of the most critical points of our business, that is the credit analysis. This was built with a co authorship with specialists in the bank. More than 14 areas totally dedicated to donate their time so they can dive deep in the subject.
That shows that we are an example, not only technical reference, but also the attitudes of our professionals are amazing. Well, Isabelle, this capacity of training people of well, this is part of the culture of Abese Brazil. And in that sense, I would like to invite Rodrigo Cordero. He was recently promoted to the position of products and in terms of so thank you. It's a pleasure to be here.
As you've mentioned, I'm the VP of Products and Segment, an area that manages and evolves our products and services to improve how we serve our clients. Well, you've asked me to talk about my history in the bank. And when I think about it, I see how myself and Abese Brazil, well, we have grown together more than seventeen years here. I entered in the first training program in Abese Brazil in 2008, and I was full of curiosity and willingness to learn. The bank opened doors to a world that I didn't know, and that was here when I learned everything I know for the financial market.
I had the possibility of proposing freedom to learn and make mistakes. And that's how Abeseo Brazil fosters the protagonism of those who are here. When the training program was over, I chose and the product area chose me. Ten years, I was a specialist, an analyst, a manager, a superintendent. And once I felt that the bank has the vocation of developing talents, Abese Brazil believes in people, and it offers real opportunities for growth.
I had leaders who bet on me. And today, I do the same to my team. In 2019, I received the invitation to become the president, the director, sorry, of a new area, that it was the Department of Data and New Business. Great challenge, but I could expand my point of view and learned a lot about the bank and the financial market. Later, I came back to the product area, and now I'm VP of Products and Segments, a very special moment for me.
It's been a while that Abeseo Brazil is recognized from the in the market as a bank that prepares great professionals, and I see that. In my case, I've been through many areas. I got to know nice people. I learned, and I'm still learning. And I've evolved not only as a person, but also as a professional.
And this is a real story that made Abeseo Brazil believe that relationship is what generates value. Thank you. It's been a pleasure, and I'm very honored to share my story with you. Enjoy the broadcasting. Great trajectory, Rodrigo.
Thank you. Thank you for sharing your story. And you can see in his history that here we develop people with strength capacities and also open the horizon. In his statement, well, he was so personal, and I can totally connect it with the actions we have done to position our employment brands in the the market. Well, the bank believes that human relationships build values.
That's why we value real stories that have placed us here. The ones we've built with our employees and each of our clients, that shows how our position is related to positioning and relationship. And this is very present, mainly in our website, partnerships that leverage us, showing clients and how the bank is closed and makes part of the everyday business. And our team is the same. They are protagonists, and they share through our channels how they leave the culture of Abese Brazil presenting the way we are and inspiring our talents.
That's it, Isabelle. If Abese Brazil positions itself as a singular bank, nothing better to translate that with stories like this one. Seeing the stories being built and told in such a personal way, respecting the uniqueness of each of them, as you've mentioned, allows us to value even more those connections that create true relationships, trust and proximity, which is how we believe it can generate value and leverage the country's greatest business. Thank you, Isabelle. Amazing participation at Abbecia Day.
Thank you. Thank you very much for watching, and I hope you enjoy the day. And now we are going to the studio to deliver the Apimaki acidity seal. We are in a moment that we are going to have the delivery of the Apimecchi Acidmi seal. I have Maralimonzo here and Sergio Lula.
Maral, welcome. Thank you. A great pleasure to be here with the Abese Brazil team. It's a pleasure to have CPMEC here. For us, it's a great moment of acknowledgment, not only of Abese Brazil, but our partnership for many years.
To be here in year '19 is very important to us, and we are very proud to deliver the acidity seal to Abese Brazil for the regular participation of public meetings promoted and mediated by Apremech Brazil. This seal translates the transparency and the equity in which Abese relates to the market and all the stakeholders. Thank you. Thank you, Mara. It's a great privilege for Abese Brazil to receive this acknowledge acknowledgment.
It's a reflection of our history of relationship and proximity, mainly coming from a very respectful institution with more than fifty years of presence. Now Daniel Xavier will talk about our macroeconomic scenario. The macroeconomic environment affects the Abese Brazil operations in risk appetite, the growth of portfolio or in default. And I'm here to talk about that with Daniel Xavier, the economist, chief of Abbecile Brasil, and his first participation. It's a pleasure to have you here.
Well, it's a great pleasure and a great satisfaction that I'm here with you at Abbecile. This time, in order to design the general lines of the macroeconomic scenario that will be the base of the bank results that will be presented. Well, starting, Daniel, checking the GDP. What should we expect for the GDP at the 2025 and the 2026? Well, our base scenario projects a reduction in the speed of GDP of 1.7 throughout the year coming from 2.2 this year, 2025.
And keep in mind that in 2024, we have registered growth of 3.4%.
Speaker 1: And you
Ricardo Mora, Director of IR, M&A and Strategy, ABC Brasil: can see that it's a chain of growth rates that are smaller, a trend of deceleration. So this is a trend that should be observed not only in the sectors that are cyclical, services, manufacturing. Cyclic are the ones that are basically sensitive to the interest rate. And also, the noncyclic sectors, commodities, for instance, and the trend is also to have growth, a smaller growth ratio, mainly the agriculture GDP. And we can see the base scenario with deceleration close to 2% in 2026, Preliminary data from our statistics, the agents say that it's coming from 9% this year.
And if we divide the GDP, how can we see employment or this unemployment in this situation? Are pretty interesting because the working market is one of the ones that takes a while to react to the economic cycle. It takes a while to have an effect of the increase of reduction in interest in order to affect the hiring or firing dynamics. So the current situation of the working markets today in Brazil also shows a working market that is pretty heated. Unemployment is around 5.6% according to the most recent numbers, and this is way below the historical margin and below any estimation of unemployment.
So the working market is heated, but if a little bit more of time, it will fuel this effect of the deceleration that we are projecting throughout next year. We have this dictation of increasing the unemployment rate up to twenty twenty six. And now another part, how is the participation of the government in the GDP, and how does that contribute? Well, what is interesting here to see is that one of the elements that have affected the working market is the weight related to governmental transferences. And that geographically spread has affected the decision making of offering job opportunities.
So revenue transferences, they have had an effect of increasing the revenue of the population, but also affect the decision to work or not. And that has a fiscal cost and has collaborated for a dynamic that is not so positive when we look to the public accounts. And this fiscal scenario, well, how would that impact the work of the central bank to regulate interest and also checking inflation. The central bank assumes the fiscal scenario as a data. It's something exogenous.
So it comes from the assumption that you are registering there. Structural deficit that, in fact, it's what we have observed here with the Brazilian economy. Such deficit has contributed with the relationship with the GDP debt. And as a result, when you have a GDP debt as a result, well, the inflation may reduce for the next interval. And this is our base scenario at ABC.
IPCA, a little bit below 4.5 and not well, close to 4% throughout 2026. So it's a deceleration picture of the activity and the domestic inflation. Well, to summarize it, the GDP pulls down, the inflation starts to be more controlled, going all the way to 4%. But you also have an interest rate that is going down, but the average levels are high. Yeah.
And the perspective for rate interest rate is exactly the one you've mentioned. PC, the Central Bank, will start a cycle of reductions in the first or second quarter of the year, and there should be room to reduce. And probably, they will reduce the CELIK ratio. We are projecting 1.75. But when you see the average, it starts with 15%.
So it has an average interest rate that is restrictive without nominal numbers so far. And to add this situation, maybe the question, the $1,000,000 question, how do you see the exchange rate navigating that? Well, exchange rate answer to some variations, and one of them is interest. You can see that the differential between the Brazilian interest rate and The US or the Fed funds, they will reduce next year, so it's less attractiveness for our currency. So it's a trend of real throughout next year to depreciate in relation to dollar.
And in parallel, traditionally, during year election years, the currency and other domestic assets, they also show a higher volatility in relation to the historical averages. So this is another trend for the interest ratio. Well, there will be a lot of thrill next year. Yeah. For sure.
And last but not least, your point of view on how we should expect the default in corporate credit checking 2026. Well, when we model the default in relation to the macro point of view using the central bank statistics, one of the things that means the most is exactly the real interest rate and with a difference that is quite relevant around a year, a year and a half. So the real interest we see today, it tends to carry information in relation to the default ratio for free credit And all indicate that those are my default rates in relation to the historic history. That during the 2026. So this is a scenario that will require some care.
Yes. You should be careful, mainly managing the economic risks. And we understand that the business, the banking business is based on the proper management of the economic risks throughout the cycle, assuring that we are sustainable. Daniel, thank you. Thank you very much.
It was a great conversation. Thank you, Mora. My pleasure. Thank you all. And now we are going to hand the floor for corporate credit in Brazil, and then we are going to talk about the third quarter results.
Good morning, everyone. We are going to share now a little bit about our vision about the corporate credit market. And here, this page translates pretty well what is this market. It is divided in three instruments, loans that represent two thirds of the entire portfolio, private securities and last but not least, guarantees issued that represent the rest seven well, around 500,000,000,000. And as this portfolio had an evolution in the last
Speaker 1: years, we
Ricardo Mora, Director of IR, M&A and Strategy, ABC Brasil: can see that loan represents the lowest growth ratio, 8% per year from 2020 up to the last data we have available. Well, guarantees issued growing 13%, similar to the total of the expanded portfolio and also securities with a higher growth ratio of 27%. And those are the ones that are making securities more attractive in the total of the corporate credit portfolio. In 2020, it represented less than 14%. And as time went by, it represents something around 24%.
When we see a zooming in the loan portfolio, we can see some dynamics. Here in this page, we have the monthly growing ratio in which we compare the growth of one month versus the other, and we have a ratio with the gross originations plus interest accrual divided by the due dates. And whenever it overcomes 100%, we have a growth of one month in relation to the previous year. Below 100%, so we have a decrease in the portfolio. Some effects, we are able to analyze throughout years.
The first month of each quarter seems to be a weaker month. Just like the last month is always the strongest one. The second half is of the year is more dynamic than the first one. When we observe 2025, this seasonality stays. But however, we have seen a deceleration of this growth.
Out of the nine months we have data available, seven represented a growing ratio that is below the average the that was in 2021. And how is the growth throughout time? Here, you can see a longer series that we have growth in twelve months since 2022. This is a portfolio that has grown 17. And then in 2023, it goes through a deceleration on this growth rhythm, finishing 2023 with more a little bit more than 2% of growth.
And in 2024, it recovers, and it finishes the year in around 10%. And now in 2025, we see a new deceleration based on the last available from the Central Bank, an elevation of 4% in relation to the same period of the previous year. When we observe this dynamic by instrument, by product line, we are able to bring some new conclusions. For instance, the discount of receivables, they it's been losing space. It has been a product line that represents an increment that was meaningful in years like 2022.
It lost some room due to some changes in the taxation. And now in 2025, it will become a problem to the corporate credit portfolio growth. Another important line that we can see how it behaved is the working capital. It represents the greatest source of resources inside the expanded credit portfolio for companies. Historically, also, there were some deltas, Important was for growth.
And in 2023, it was no longer good. And in 2024, it came back to the growth rhythm. 2025, it is decelerating. And the foregain market, another line that contributed to this increase in our portfolio, and it lost its relevance in the last twenty twenty five months of 2025. In our point of view, this deceleration of the growth ratio of the expanded portfolio, it relates to the high level of the interest ratio that has increased the debts of companies.
Based on the estimations from the Central Bank and Febraben, at the beginning of the year, in February 2024, we had an expectation of, in 2024, grow the portfolio of around 8% to 9%. And after many cuts in the projections, today, we have this expectation closer to 5%, 6% based on the last available data. For 2026, the reading is pretty similar. The expectation is that it will grow a little bit more than 6%. And here, as a result of a select index in relation to a level that will keep on generating this behavior in the portfolio.
And how default has been working? We divided data in two different profiles of clients, major companies that we present here. They have had an overdue more of more than thirty years. That is thirty days, that is more comfortable. When we compare data from 2024 with September 2025, we can see only a small increase in the rhythm of delay, and that is mainly because of the access to capital markets that the companies have available.
On the other hand, small and middle sized companies, well, they don't have the same access, and they are the ones that once they depend on the banking balance sheet, they have more default rates when we compare 2024 with 2025. In the nine first months of 2025, there was an increase in the overdue of more than 130 bps. And that's real when we observe Stage three of the portfolio. And also, with the size of companies, small and middle sized companies, they had an increment of the stage three level from the portfolio. And keep in mind that this is a new metric that just started to work with the resolution four nine six six.
That's why we have data available from 2025 on. For major companies, they are in a stable level. They are in stage three according to the portfolio. And the effect of the total portfolio is still, well, stable in relation to the beginning of the year. Another movement that it's pretty important for corporate credit was the repricing of spread.
Spreads that were in 2024 aligned with a lower perspective. And throughout 2025, they are being given a new price. And that happens due to repricing by the banks and also some new other equation of the relationship risk benefit, and that inspire us to be more careful due to market agents. And banks have shown a better discipline when allocating capital and also a better relationship of risk and return when compared to capital markets in a scenario in which we have decreasing spreads mainly in the AAA rating. What goes against or faces the other credit mechanisms or credit ratings.
Here, we have a concentration under a few names that have a shortening of the spreads. And those are spreads that in a way or another, they are below the reference ratio for CELICI and also any other taxation like NV. And what about volumes? Well, they have historically high levels. And in the first nine months of 2025, we have a very similar level to the one observed in 2024, and that was a record year of issuing fixed income titles, and that is due to the entrance of resources for fixed revenue that since 2023 have accumulated a positive flow, and that goes against the exit of resources from equity funds and multimarket funds that will add in the last three years withdrawals of around $630,000,000,000.
And this flow is benefit for fixed revenue funds related to the level of the basic interest rate and what fosters this migration. With that, I close the panel about the corporate credit market. And now we are going to continue with Abbece Dei going for the 2025. Thank you very much. Thank you, Thiago.
Now let's present our highlights from the third quarter. Our net profit was BRL257 million, a growth in relation to BRL244 million of the previous partner. ROI, 15.5 compared to 15% of the previous period, a growth also. Our portfolio has a coverage ratio that is very interesting. And the balance of total provisions divided by overdue more than ninety year ninety days, almost 400%, and the total provisions divided by Stage three operations, around 90%, a very comfortable ratio.
And then the financial margin reached BRL $652,000,000. It was a record, and it grew three major aspects, margin with clients, margin with the market and the CDI compensated stake. So we have reached the recovery, reaching 4.4 percent. And in relation to expenditures, work that we have been very rigid at growth of 3%, nominal number, versus 2024 with an efficiency ratio of 38.8%. Here, we have the growth of our expanded portfolio considering the resegmentation that was followed and explained previously by Daniel as well as by Rodrigo.
We see a portfolio that is growing 0.4% in half of the year and in a year, year versus year, 4.6%. As we have been saying here, this is a year we have privileged way more margin and quality of the portfolio instead of growth. So we only grow as it's possible to grow with proper margin and the portfolio quality that is adequate. So the growth was a little bit below what we have expected in the beginning of the year, and that will take us to review the guidance, and that will be shown soon. When we look segment by segment, here, it's impacted by the resegmentation.
So operations in the middle, already considered companies with BRL500 million and all other companies from agro and real estate segments that were in segments, they are concentrated in corporate segments. So it has presented 7% per year. In relation to the sectorial exposition, we still have an exposition that is quite diverse, all major activities for the Brazilian economy. And here, it's pretty clear why we have made special VPs. Agribusiness is the major segment for nonurban.
So in civil construction, 8%, the third largest one. So these two, they have a segment or a service that is specialized. And the energy segment is quite relevant, almost 14%. So in practice, it had a dedicated service as we have people in relationship as well as in the analysis part that are specialized in such scenario. So we have most almost half of our portfolio that will be served by specialized teams in their business line.
So here, we have revenue with clients, and today is Abeseed Day. So we want to show you a bigger perspective. In 2019, we have two dimensions. One, from total revenue that come from BRL 900,000,000, which is BRL 1,000,000,900. So a growth that is a little bit more than 100% in the period and the proportion.
The ones with high capital consumption and low capital consumption, starting with 32%, it reaches 45% in 2024. And in 2025, it capped to this level. This is something pretty strong that we have been doing, and it shows not only the quality of products, and they are pretty accepted by clients, but also our capacity to have revenue that consume little or no capital, and they add to the return of the bank. The financial margin, the net interest margin, it went from $372,000,000 to €393,000,000 And the interest rate shows this reaction, but we have been quite conservative when exposing to market risk and the maintenance that is pretty high. And the numeral part of CDI is high.
And when we see the local comparison, we have growth annually into revenues, as it was mentioned, and this revenue will go back to evolve in the last quarters. And here, we have the net income margin, as I've mentioned in the highlights. Here, the first quarter, and then it's recovery, and it reaches a level that we are quite pleased with. The revenue with services, they had a similar point, BRL 130,000,000 in the previous semester versus 107 now. And when we look at nine months, then I believe it's more relevant in a scenario like that.
We see more positive results in the guarantees that were granted or granted guarantees. Guarantees. The investment bank has a very pleasant performance. And in 2024, the volume of transactions continued proper and the papers placed in the market also. At the end, they are a little bit below.
It's something in the industry. So today, we have numbers that are lower than the previous year. Probably, we will keep on with this trend. And what about other tariffs and brokerage, insurance brokerage? This will be uptake as soon as possible with the growth of our portfolio.
The credit portfolio is quite positive, and I can show here, considering a challenging credit scenario, we believe it's important to be more conservative when provisioning. And the the provisioning comes from the floor, and the level of provisions to have in the cycle is 1% to 2%. So it was half. Considering the credit scenario that is a little bit more challenging, we managed to bring that to the core of the the thing. It's going to be 0.7%, something that will continue in the next semester.
So the provision provisions goes to up to BRL 90,000,000, and the balance is quite proper. The bank as a whole, a whole, has 2.4% of provisions despite the overdue is complicated. Corporate has 1.9, a large corporate 0.9, and the operations overdue more than ninety years. They are going down, reinforcing what I've mentioned, a provision that is a little bit more preventive. So operations overdue more than ninety days goes from 0.9 to 0.7, a new drop to 0.6 now with a good behavior, mainly in the middle market that can improve their due dates in more than one hundred and twenty days for 3.3%.
The Stage three and two operations, another ratio we are getting used to, they represented 5.5% of the entire portfolio in the first quarter. It increased to 5.8% and now 6%. And the growth of Stage three two sorry. Stage two is a little bit more intermediate, and they call our attention more than stage three because I'll have increases. And in relation to provisions, the coverage ratio, 390% per year.
And also new indexes, that is 90%. And we have the addition of different scenarios like two and three with 39,000,000,000. So the companies are behaving pretty well. So expenditures grew just like 3%, and we had only 4% if we consider 9% below the guidance, and we still have three months to finish the year. So another guidance that will be reviewed, and it will show at the end of our presentation.
Well, revenue have been behaving a very flat way, almost the same level of revenue, mainly due to smaller companies and lower revenues in the market. And that makes us efficiency ratio, despite everything, will be 38.8% above the guidance, the proposal we had at the beginning of the year. So the third guidance that will be reviewed and we will show you. We have the funding that is pretty constant and solid, and it's important to have that. We have 36% coming from institutional investors in a good deadline, 19% of individuals, 12% of our own fund corporates, and this is important, BNDES with 8%.
The entire issue of the bank is comprised by all that and also lines of trade, finance, and multilateral agencies. We closed the basal line in 16.7%, coming from 17%, and the main impact is the reduction in half percent. And we said that we were going to retire some of these securities. So we can expect that of 30 times in this ratio. It's pretty comfortable.
We have shown to you the capital level one that goes from 11.6, 11.9 now despite the high payout we have had showing that the come the the bank has the possibility to generate results that will have a good compensation to shareholders and also allow allow the bank to grow their activities as planned. And then the recurrent net income, in a way or another, is constant, 256.8 versus 255,300,000.0 last year. And things are clear here. There is an improvement of the client margin and also a drop in the market margin due to the issues I've mentioned. Here, we see smaller things, provisions or taxation, and you see that it goes all the way from capital to CDI.
We've reached the review of our guidance. And in relation to the growth of the expanded portfolio, we had 7% to 12%. As I've mentioned, and I will restate when we think about the three pillars of a commercial activity that are: first, what is the margin that you get with clients what is the quality of your portfolio and third, how much you can grow. This year, we are planning both things, to have a proper levels of return upon the risk and to have a healthy portfolio. The review guidance of growth to 1% to 4% represents a growth in the last quarter of 3% to 6%.
So we know that the last three partner has a positive movement. We do hope this will happen this year. And we also say that if we go from 3% to 6% in the last quarter, we will reach that number that is 1% to 4%. In relation to expenditures, we grew nine nine months versus nine months. It was before point 3%.
Our guidance was 6% to 11%. And we can see our expenditures and the efficiency level, as I've mentioned, despite we will have the revenues that went down, as we imagine, at the end of the year, and we are keep on searching for this improvement in efficiency. That's what I have to share with you. Now with Vorejo and Voro, we are going to go to our Q and A session. Thank you, Sergio, showing the overview of the 2025.
I also thank you who are following the broadcast today. As Sergio mentioned, we are here with Sergio Borrejo. And Borrejo, welcome. Thank you, Itado. Hello, everyone, who's watching.
I hope you enjoyed the broadcast, and it's a great pleasure to be here once again at our conference of results. It's such an important moment to all of us. Now we also have you all who are in the broadcast through Zoom. In order to ask questions, just raise your hand in the bottom icon of Zoom. Feel comfortable, and we are available to answer any questions.
First question we have is from Brian Flores from Citi. Brian, thank you for your participation. Please, the floor is yours. Thank you, Moura, and congratulations for the initiatives. Good morning, Sergio, Paulo.
Well, I would like to ask two questions. First one, you've mentioned about more difficult conditions for growth, and you are foreseeing a return over growth. And what about the capital ratio? It's quite solid, And, Lulya, you've showed it has grown consistently. Considering also some optimization you had in perpetuals.
And you've done a lot of things, but the ratio is pretty strong. Do you see room to optimize that even more considering the growth of portfolio that is going to be a little bit weaker considering the guidance you just proposed? And if you want, I can ask my question my second question later. Good morning, Brian. Thank you for your question.
In fact, we have worked with this capital optimization since last year when we issued the instruments, the perpetual level one instruments, we saw that this retirement of the titles that were issued in 2019, 2020. This year, this was done. We finished that in the the fourth quarter. It is around thirteen thirteen point five bps. And besides that, I see that the major work, well, it's done.
We are a bank, and we enjoy working with certain solid capitalization level. We don't know when when this economic scenario will relax to allow us to speed up a little bit more. So we enjoy having a good capital to have everything. So whenever we have this possibility, we will surf the wave. And historically speaking, since 2012, the bank has that policy that whenever you realize a growth, a possibility of growth that is a little bit larger, We pay dividends.
The payout is good, but we offer to investors the possibility of reinvestment. So this alternative is still worth, so we will be always evaluating. And when we think it's proper, we suggest to the board.
Speaker 1: Very clear. Just to
Ricardo Mora, Director of IR, M&A and Strategy, ABC Brasil: remind the appetite in relation to to the ROA ratio. 11%. Right? Yeah. Yes.
It's our parameter that, of course, can vary according to the economic scenario. But a parameter we have is to have a tier one that is 13 and a core action of around 11. And questions about the short term. In the last quarters, we've talked about crossing that goal of 1,000,000,000 in relation to earnings for the year. So do you think it is more difficult to more complicated?
It seems that the last quarter had to be very strong in order to achieve that. Are you optimistic? Or do you think that targets can be moved to the future of ABC? Thank you. Well, of course, this 1,000,000,000 reais, it's a round number, a symbolic number.
But in relation to the economic relevance, well, it's small. I joined seeing the bank in a long term trajectory. So for instance, when I've mentioned about the revenue with clients, the bank more than doubled this number. Number of clients The number of transactions grew four times.
And what happens is that in the credit activity, that is our main activity, you see the cycle. You need to respect the economic cycle calendar and not the Gregorian calendar. Sometimes one thing does not match the other. So having said that, the fourth quarter is not over. We have services that are very important for the bank's result.
So this game is underway, but we have a level of activity that seems to be stronger. September was a very strong month. So well, we will we had July that was weak, improved in August and a strong September. In the fourth quarter, it's going to be stronger. 1,000,000,000, I cannot answer you now.
That's why we haven't defined so far. Amazing. I thank you, and congratulations. Thank you, Brian. Next question, Antonio Huecchi from Bank of America.
Antonio, the floor is yours. Good morning. Thank you for your time and for the Investor Day. A subject that was mentioned in many points at the Investor Day is the difficulty of the economic scenario. The macro is not certain and then policies that are a little bit restrictive.
You've mentioned 6%, 7% for the industry. Well, always in relation to guidance for next year. But what does that mean to you? We see now the credit growing in a level that is below the industry level of what we are seeing now. And we as well, we will have that next year, for portfolio growth that is below the industry and also the spreads.
It's been a while that we have been a little bit relieved, but maybe that's what we are going to see next year. And provisions, well, I would like to ask you. One is the credit growth and the other one provisioning. You prefer not you said that you prefer not to go in this trio. And so should that be the most probable scenario for next year?
Thank you for your question. It's a very good question. I may say that we have many aspects. We didn't bring graph. But throughout cycles, we speed up more than the industry average when we believe that the market is good, but we also take a step back faster than the industry when we feel the environment is not good.
And when you think about consistent return on the long term, this is what we should do. The credit scenario, since the beginning of the we have talked about that. There's no secret. The CELIQUI, that is 15%, representing a real interest at 10%. If you consider the spread, this real interest rate is even higher with an economy that has a resilience in growth above what we expected, but as Daniel mentioned here, showing signs of cooling down.
We don't see any deterioration in our portfolio. But if the past is a good indicator, the system can live with a higher level of losses. That made our provision to increase. Well, historically speaking, our band goes to 0.5 to one in the pandemic, 1.1, 1.2 or during the La Vazato, the car wash operation. But it goes to 0.7.
It's in the middle, and it's the moment in which you say, look, I have a good portfolio. There's no Well, there's no defaults. And you can see some companies that have their spreadsheets being presented, but they are a little bit more complicated. When you have public data, the secondary mark the secondary market of securities, they have an opening ratio that is a little bit higher in risk. So we should be careful.
We need to pay attention to the spreads. And if we wanted to grow, we could. But the risk return relationship wouldn't be correct. We will follow. And whenever we believe that the economy is getting better and we are going to feel in the beginning of next year or when the risk return relationship is adequate.
So if there is a new pricing of operations that will result in a risk return ratio that is good, We will be prepared to grow, but we are not prepared there yet. Thank you, Antonio. Thank you, Antonio. Now next question, Pedro LeDuc, Itau BBA. Welcome.
Thank you, everyone. Congratulations for the day and the trajectory during this year. I would like to take a look to the CPE part. And in the last years, you found several revenue diversification that allowed you to grow with profitability, well, guarantees, so insurance. And with this portfolio that is not that accelerated, these other divisions, they gain importance to generate value.
So I would like to hear from you how these verticals are, how are you planning growth if you are going to dive deeper in clients, product arrangements, geography, So thinking outside credit in other verticals, so how they can contribute. Thank you. Thank you, Lenduki, for your question. Well, just keep in mind that not only the verticals that are highlighted in the results, like the investment bank and the insurance part, but inside the family of products that we have in our financial margin, we have a larger diversification in relation to cash management, exchange ratio, derivatives that inside the financial margin has more relevance than before. And they are products that are less related to this credit cycle.
And even the NIM you have better stability. We are getting deeper on that. And the resegmentation we just did, well, first, taking the middle to from 300 to 500, that bring us an opportunity to have a more adequate offer of products with a better price for that range of clients that were in low corporate. So now they are in BRL 500,000,000. So that will allow us to serve these clients better as well as those two verticals, agro business and real estate.
Those are a specialization that will add in relation to risk analysis as well as the commercial presence and the understanding of the value chain. So the idea is to work in both segments in the entire value chain, and then we have an opportunity of cross cross sell of other products and not credit. And in credit, you have more say, security because you are offering that. And besides the verticals, we are always checking other alternatives, credit, recovery. We have Vision.
It's a company that's been here for two and a half years, and it it has a ramp up that is careful and slow. And this is important because this is one of the metrics of stressed portfolios and relation to what the market practices is not that good. So up to 2026, this may represent a part of our results. And we are going to look to other fronts. We are a bank that enjoys credit.
We want to be present in credit. Credit is a product that companies do need, but the idea is to become less and less dependent on credit. Thank you, Luria. Thank you, Pedro. Next question, Carlos Gomez Lopez from HSBC.
Thank you, Carlos. Thank you. I will ask in English.
Speaker 1: One is in the previous call, I remember I think it was Borrejo who told us that, you know, the the spreads have started to recover versus where they were last year. And he thought at that point that maybe it had recovered, like, one third of where they should be. So where would you say the corporate spreads are today given the risk that you perceive where where where you think that that they should be? And second, if you could comment a little bit more on the agricultural side.
Ricardo Mora, Director of IR, M&A and Strategy, ABC Brasil: Now I will translate for the audience. In the last call for results, we said that there was a spread recovery, and it had recovered in one third of the of the point. And the question question would be about this recovery. And the second one is related on how we see the agro business sector. Carlos.
Carlos. We have seen in spreads after the recovery we had and you've mentioned. In the last months, we have been stable. More recently, yes, and just going back, in my interpretation, one of the reasons Thiago showed that when he talked about the credit market is that despite the bank's repricing operations, in the capital market that is more and more relevant for companies, the major possibility of getting resources for fixed revenue funds made the capital market reduce the spread. So there is a certain tension there between the banking world and the capital market world.
In the last week, there was a repricing in the operations of capital market. So we see operations in the secondary market. The spreads are going up in the capital market as well as in the primary market. Some operations coordinated maybe by major banks. They are postponed or liquidated, but the banks keep the position, position that is related to the balance sheet, and it shows that this concern about risk and return has reached the capital market.
If that happens, this spread recovery will process, will be present. Otherwise, we will always have those two sides fighting. In relation to the agro sector, well, it's a very well, it's a very broad name. And Daniel brought that this morning. So we have the entire industry.
And it's by type of crops. So we have sugarcane that doesn't relate to soy crushing, not related to animal protein. That has an entire supply chain. We have a geographic differentiation that is huge with climate problems here, improvements there. You have commodity prices that are behaving in an uncoordinated way.
Some are high, others are down. And it's a matter of the specialty to understand each culture, each region. If it is a rural farmer, a major cooperative, a fertilizer company or agricultural resale, if it is an international trading. And you should be careful because besides all the diversification, commodities are lower. And in general, we had an increase in input prices, and that made good crops.
Well, the margin of farmers, mainly grain farms, they are more compressed. And that's where we have good opportunities to have good guarantees, to have good spreads. So it's a segment that is pretty important to Brazil. It's pretty important to the bank. Brazil is pretty competitive, and we are not only paying attention, but we are working hard with that.
Our next question, Eric Ito from Bradesco. Eric, you. Following that, in relation to the spread you've mentioned, Lucia, I believe that at the end, the spread of the capital market has gone a little bit up. And I want to see if you see at the end, we have entire October, a week of November. Do you see any migration to the banking credit market, or is it too early?
And could you comment about pricing? How do you see the market competition at the end for spreads? Do you have something there? Or is it too early to think about? Well, thank you, Eric, for your question.
In relation to the banking market, I haven't noticed any. So our frontline is reporting banks being more careful. The situation we have competing one another without being rational in pricing operations, we don't have we haven't seen that. There isn't a consensus among banks that the scenario is a little bit tighter, and we should be more careful. It's not a crisis.
Okay? It's just some adjustments, fine tuning between the risk appetite and the proper returns.
Speaker 1: The
Ricardo Mora, Director of IR, M&A and Strategy, ABC Brasil: capital market issue is recent a couple of year days ago. The flow is interesting. And that's when I
Speaker 1: well, I've
Ricardo Mora, Director of IR, M&A and Strategy, ABC Brasil: seen that we have the capital market operations that will be adjusted? Or are we going through those hubs in which the market sets a new price and the sovereign flow comes with the cash. And we will have to wait a little bit more. Thank you, Eric. We are reaching the end of our Q and A session.
I would like to thank you all, those who have sent questions and have offered this exchange moment. Thank you, Borrejo, for your participation. I thank you. It's always a great pleasure to be here, and it's amazing to be part of that. Abeseed Day from 2025 is over.
I would like to hand the floor to Lulya for his final remarks. Well, I would like to thank you all for the audience and the participation. And I would like to thank you for being here, for sharing our strategies and the results. And we are pretty confident with the new segments, the new commercial dynamics and also changes of how we treat the segments with Rodrigo Cordero, they were planned to generate results closer and more prosper and offer more to our clients. Thank you very much.
We are available and hope to see you soon. Thank you, Sergio. This was our ABC Day for 2025. Thank you very much for your audience and the results that were presented here and all other materials were are present at the website. And thank you very much, and see you soon.
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