On October 28, Brazilians will turn out to vote in the run-off between right-wing Jair Bolsonaro of the Social Liberal Party and leftist Fernando Haddad of the PT (Workers’ Party). Mr Bolsonaro, a former army captain, almost won a first-round victory, capturing 46% of the vote. The unpredictability of the outcome has sent shivers through the investor community, increasing volatility in an already unstable market.
It has been a tumultuous few years for Brazil’s biggest banks. They went from the heady days of 2012 – when four of the top five reported their biggest balance sheets ever, despite a weak 0.9% growth in gross domestic product – to the low point in 2015 when the economy suffered its worst slump for quarter of a century and the Petrobras scandal ripped through the banking sector. Brazil’s two largest banks by total assets, Itaú Unibanco and Banco do Brasil, lost 34% and 36% in assets, respectively, over those three years.
