Brazilian banks gain about R$117 billion in market value in a week

The five largest banks listed in Brazil gained about R$117 billion in market value in the week after the first round of the election, when Flávio Bolsonaro was ahead of President Luiz Inácio Lula da Silva.

The banks are Itaú, Bradesco, Banco do Brasil, Santander Brasil and BTG Pactual.

Their combined gain was slightly more than Santander Brasil’s total market value, and their shares rose 10% on average.

Investors appeared to expect a possible Bolsonaro government to pursue credible public-spending changes, which could give Brazil’s central bank more room to cut interest rates.

Lower rates could ease loan defaults and reduce banks’ funding costs, although these outcomes depend on future policy and economic conditions.

The rise in bank shares was part of a broader market rally, and analysts said the gains reflected expectations rather than confirmed improvements in the banks’ finances.

Bradesco is due to report results on the 22nd, which could offer an early indication of banks’ financial performance.