Brazil

Brazil has Latin America's largest banking system. Bank-led prudential conglomerates held R$16.7tn (US$3.2tn) of assets in June 2026, about 142% of GDP, and 170 commercial, multiple, savings, exchange, investment and development banks are authorised by the Banco Central do Brasil. Concentration is high: Itaú Unibanco, Banco do Brasil, Caixa Econômica Federal, Bradesco and Santander Brasil held two-thirds of banking-segment assets. The state retains a large footprint through Banco do Brasil, Caixa and the development bank BNDES, while credit cooperatives, with more than R$1tn of assets and 21.2 million members in 2025, are steadily gaining share.

Credit to households and firms totalled R$7.37tn in July 2026, equivalent to 55.6% of GDP. Funding is overwhelmingly domestic; the BCB's Financial Stability Committee describes the system's foreign-exchange exposure and dependence on external funding as low. Retail payments have been reshaped by Pix, the central bank's instant payment system, which processed almost 80 billion transactions worth more than R$35tn in 2025 and was used by 148 million people. Digital entrants such as Nubank, whose Brazilian prudential conglomerate held R$363bn of assets in June 2026, compete in cards, personal loans and deposits.

Capital and liquidity are comfortable. The BCB's latest Financial Stability Report judged provisions adequate to expected losses and found stress tests confirming the banking system's robustness, and system profitability was broadly stable in the second half of 2025. Credit quality is deteriorating, however: the system-wide non-performing loan ratio (over 90 days) rose to 4.88% in July 2026 from 3.96% a year earlier. The BCB has flagged household indebtedness, rising income commitment and the rapid growth of unsecured non-payroll personal loans as areas requiring caution.

Monetary policy is the dominant driver of bank earnings and credit risk. The Selic was held at 15.00% from June 2025 to March 2026; the Copom has since cut it in 25bp steps to 13.75% (16 September 2026), with inflation expectations still above target. The liquidation of the Banco Master conglomerate, reviewed in the BCB's report on the second half of 2025, had no systemic effects, although deposits migrated towards larger institutions and the authorities have since tightened rules on FGC-covered funding. Key risks are household over-indebtedness, fast growth in unsecured personal lending and fraud in instant payments.