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Public Banks Face Increase in Rural Credit Defaults, With Direct Impact on Profits and Changes in Lending Strategies Amid Adverse Weather, High Interest Rates, and Debt Restructuring.
Defaults in the agribusiness sector have increased among public banks from the first half of 2023 to the first six months of 2025 and are already pressuring results.
The Banco do Brasil was the most affected, but Caixa, BNB, and Basa also reported deterioration, driven by crop failures and extreme weather events in the South and Northeast.
Analysts point out that the increase in delays of over 90 days has forced institutions to strengthen provisions and reassess their appetite for credit to the sector.
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Stronger Pressure on Caixa and BB
In Caixa, agribusiness defaults jumped between April and June: reaching 7.02% in the second quarter, compared to 4.3% in the previous three months and 2.11% a year earlier.
The bank’s management acknowledged a “significant challenge” in the segment and slowed new loans to rural producers.
The rural portfolio totaled R$ 60.5 billion at the end of June, a decrease compared to March.
At Banco do Brasil, a traditional lender to the countryside, the rate of delays over 90 days rose to 4.21% compared to the first half of 2023, with agribusiness as the main driver of deterioration.
The escalation of defaults is reflected in the results: the adjusted net profit for the 1st half of 2025 was R$ 11.2 billion, about 40% below comparable periods, in line with the repricing of risks and the increase in provisioning expenses.
Adverse Weather and Debt Restructuring
Excessive rainfall in the South and drought in the Northeast affected productivity and cash flow for producers, a scenario that was reflected in financial statements.
For Henrique Southier, investment advisor at Ável Investimentos, the deterioration requires more attention as it may result in larger provisions and consequently reduce profits.
“This increase requires greater attention from the bank, as it may lead to an increase in provisions for doubtful debtors, which would impact future profit,” said the analyst when evaluating the balance sheets.
In response, banks and the government have been activating relief mechanisms.
At Caixa, executives emphasized that debt restructuring and recent measures from the CMN should help stabilize the rural portfolio, although the bank maintains a cautious stance until there is greater visibility on crop yields and commodity prices.
At BB, restructuring and debt extension programs have been employed to reduce the stock of overdue operations and contain new defaults.
BNB and Basa: Lower Advance, But on the Radar
The Banco do Nordeste (BNB) also reported an increase in the late payment indicator, which reached 3.6% by the end of the first half of 2025.
Although the bank reported robust operational performance, defaults over 90 days grew by about 1 percentage point year over year.
Meanwhile, the Banco da Amazônia (Basa) saw an increase in defaults in the semester, rising to 3.45%, in line with the region’s greater vulnerability to climate shocks, such as drought.
Profit Under Pressure and Change in Revenue Mix
The drop in BB’s profit has forced it to increase service revenue and bolster the offering of products such as insurance, consortia, funds, and payroll loans to mitigate margin declines after provisions.
Among federal public banks, BB was the only one to report a decline in results for the semester, while other institutions showed moderate profit growth, despite the “sectoral” deterioration in agribusiness.
Simultaneously, banks have tightened lending criteria in rural credit and increased demand for real guarantees and insurance tied to production.
The deterioration in the agribusiness sector occurs amid a cycle of digital transformation in public institutions.
According to Alexandre Martins, an analyst at Módulo Capital, “among private banks, this movement is already at an advanced stage and naturally for digital-native banks,” which pressures state-owned banks to accelerate digitalization to reduce costs and improve efficiency without relaxing risk control.
High Interest Rates Increase Credit Costs and Raise Risk
In addition to the weather, heavier financial costs aggravate defaults.
The Selic rate has been 15% per year since July and was maintained by the Copom on September 17, 2025, which raises the cost of debt service and erodes the ability of producers already pressured by crop losses and volatility in grain and input prices.
In this context, banks adjust prices, limits, and terms of operations while strengthening provisions for doubtful debtors as a safety cushion.
What Changes for Rural Credit
In the short term, credit is likely to become more selective.
The priority will fall on clients with a better history, solid guarantees, and cultivation practices that are less exposed to climate risk.
Operations with risk mitigators — such as rural insurance and barter — will gain weight in origination.
At the same time, portfolios are undergoing cleanses of overdue accounts through renegotiations and write-offs, with a delayed effect on the 90-day default rate.
Meanwhile, producers facing liquidity difficulties should seek debt restructuring and equalization where public lines are available, in addition to private solutions combining receivables discounting and price hedging.
For banks, the immediate challenge is to calibrate provisions without excessively hindering supply, in order to preserve market share and avoid losing relationships when the cycle turns.
Alert Signal On
The situation remains one of caution. The behavior of the agribusiness portfolio in the third quarter will remain decisive for the risk cost in 2025, especially at BB and Caixa, which have a greater exposure.
Once the peak phase of defaults is overcome, normalization will depend on a more benign climate, recovery of producers’ income, and possible monetary relief ahead — factors that may take months to fully reflect in the statistics.
In your view, what should be the priority for public banks: preserving credit to the countryside even with higher risk or tightening up to protect results?
É preciso um equilíbrio para preservar o crédito e também proteger o resultado. A preservação do crédito é de suma importância para a renovação da lavoura, que, se não for adequadamente cuidada, pode gerar inflação de alimentos no médio e longo prazo. É preciso equilíbrio.
Toda operação rural dever ter contrato de seguro contra intempéries da natureza e garantia de preço mínimo remuneratório.