A Brazilian Financials Public Service Announcement

To the people, like myself, looking at their Brazil holdings and thinking you're smart. Just remember that yesterday you ripped higher because of a political poll. And before you enter the sector blindly make sure you're aware that you're making a bet on Brazilian politics, interest rates, and the economy, which are three things to know well without being an expert. Even if you are an expert they're hard to predict.

The latest runoff poll has Lula at 42% and Bolsonaro at 41%, basically a tie. Lula led by 5 points as recently as August 5th. Lula being worse for business in the minds of investors. I cannot handicap who will win.

I do track rates and credit trends in Brazil, which I also can't predict. The main rate is the Selic, and it's 14% down from 15% with the cutting cycle beginning in March of this year. The Copom cut 25 bps in August and the latest survey data has the Selic ending the year at 13.75%. Real rates however are still really high, somewhere around 9% after inflation and among the highest in the world.

Like the Fed, they too are behind on inflation, and IPCA is about 5% against a 3% target and a 4.5% ceiling.

Why is this important?

High rates lead to less credit growth and increased charge-offs. Two bad things for a credit originator.

Remember too that Brazil is one of the least crypto friendly environments in the World, and in my opinion, a reason why Trump doesn't like them. Years back they created a national free payments system, PIX, that is amazing to be honest. It works. They forced adoption. And it has changed banking behavior. If you invest in Brazil and don't know about this, you probably shouldn't.

Below is a table to orient yourself and a rough summary of what each one is about.

Ticker	Cap	P/B	ROE (Q2'26)	P/E (TTM)	Fwd P/E (FY26E)	EPS CAGR (FY25A→27E)	Div yld
ITUB	$89B	2.1x	24.3% mgmt	9.7x	8.8x	+8%	7.6%
NU	$75B	5.6x	~33%	20.8x	17.7x	+36%	0%
BBD	$37B	1.1x	~16%	7.9x	6.5x	+12%	6.7%
XP	$11B	2.1x	~22% TTM	9.9x	9.6x	+11%	1.9%
INTR	$2.6B	1.3x	16.3%	8.6x	7.6x	+26%	1.9%
PAGS	$2.8B	0.9x	14.6% TTM	6.7x	5.9x	+10%	~5%
STNE	$2.5B	1.4x	21.6% adj	5.4x adj	5.0x	+13%	~nil

ITUB – largest private bank, high ROE, lots of non-interest income.
NU – everyone knows it, the monster eating trad banking, unreal growth, unreal story.
BBD – traditional banking plus one of Brazil's largest insurers.
XP – Brazil's largest independent investment platform.
INTR – a bit of a financial super app, lending growth off the charts.
PAGS – merchant payments plus small business lending.
STNE – merchant acquiring, digital banking, and working capital loans for small business.

Table figures pulled September 3, 2026. Caps in USD; books and EPS for the Brazilian filers in BRL, converted near 5.09 per USD where a dollar multiple is shown. Forward P/E is FY26E; EPS CAGR is the consensus FY2025 actual to FY2027 estimate. ROE is Q2 2026 annualized except XP and PAGS, shown trailing (the feed has no clean quarterly ROE for those two); ITUB's is managerial, its IFRS trailing ROE is 21.9%. STNE figures are adjusted, since GAAP is distorted by a one-time first-quarter deferred-tax gain and a special dividend. Not investment advice.