Banco Bradesco S.A. (BBD)
Q1 2010 Earnings Call
April 29, 2010 10:00 am ET
Paulo Faustino da Costa - Market Relations Director
Domingos Figueiredo de Abreu - EVP & IRO
Alexandre Rappaport - Planning Director
Jorge Kuri - Morgan Stanley
Daniel Abut - Citigroup
Victor Galliano - HSBC
Saul Martinez - JPMorgan
Rafael Fahas - Banco Safra
Larry Batali - Moore Capital
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Before proceeding, let me mention that forward-looking statements are being made under the Safe Harbor of the Securities Litigation Reform Act of 1996. Forward-looking statements are based on the beliefs and assumptions of Banco Bradesco's management and on information currently available to the company. Forward-looking statements are not guarantee of performance. They involve risks, uncertainties and assumptions, because they relate to future events and therefore depend on circumstances that may or may not occur in the future.
Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of Banco Bradesco and can cause results to differ materially from those expressed in such forward-looking statements. Now I will turn the conference over to Paulo Faustino da Costa, Market Relation Director. Mr. Paulo you may proceed.
Paulo Faustino da Costa
Good morning everyone. Welcome to Bradesco’s first quarter 2010 conference call. I would like to announce the participation of Mr. Domingos Figueiredo de Abreu, Executive Vice President and Investor Relation Officer. Mr. Marco Antonio Rossi, CEO of Bradesco Insurance Group. Mr. Samuel Monteiro de Santos Jr., Executive Vice President of Bradesco Insurance Group, Mr. Alexandre Rappaport, Director of Planning, Bradescards, and Mr. Luiz Carlos Angelotti, General Accounts Committee Director. Let me now give the floor to Mr. Arbeu who will continue with the presentation.
Domingos Figueiredo de Abreu
Good morning and welcome to our conference call. Brazil maintained its outstanding performance in the global economy, having proved to be remarkably resilient through the crisis. It has now moved into its own growth track. All sectors of the economy are undergoing expansion, even those that did not benefit directly from the government incentives. It has its roots in the strong job market and income growths, leading to a big upturn in industrial investments which are proving to have one of the highest diffusion rates in the recent history.
A 21.4% increase in capital goods production since the beginning of the recovery in March last year shows just how much Brazilian companies are gearing up for the expansion of demand. Bradesco has a positive outlook of the country’s future and believes strongly in this increase in the economic activity. We have therefore been investing strongly in Brazil, expanding its business and its national presence.
In the first quarter of 2010, it add almost 2000 points of service through its distribution network and invested around 717 million in infrastructure and IT. Also, in the first quarter, Bradesco acquired more than 3 million new clients with an impressive total of 57 million customers. Our aim is to always do more and better with a constant focus on improving client service process and quality.
I will now be going into more detail regarding our numbers, results and financial indicators. I would just like to clarify that in order to ensure a better understanding and analysis of the data in line with our press release and reports on economic and financial analysis. All the numbers and financial indicators in this presentation has been calculated based on adjusted net income. In order words, after adjustment for non-recurring items in their respective periods.
In slides two and three, on the following two slides we outline our results and key financial indicators. Specifically, I would like to point out in slide two, adjusted net income which totaled R$2.147 billion in the first quarter of 2010, approximately 10% more than the R$1.956 billion reported in the same period of the last year, and a 70% increase compared to adjusted net income in the first quarter 2009.
In slide three, assets under management totaled R$740 billion, 15% higher than in March 2009. And the delinquency ratio we recorded a substantial reduction compared to the increase in 2009. We will be dealing with the other items in more detail subsequently.
In slide four, this slide shows that non-recurring items which impact our results in their respective periods. We therefore refer to the red line at the bottom as our adjusted net income, our recurring net income if you prefer. In the first quarter, our results were adversely impacted by the constitutional provisions for that contingency and economic plans totaling R$397 million and R$36 billion respectively.
On the other hand, we were able to realize tax credits from previous periods in the amount of R$242 million. I would also like to draw your attention through our first quarter and annual returns on average equity, both in terms of reported and adjusted net income which stood at around 20% to 22%.
Slide five, I’d like to point out our operational efficiency ratio which closed the first quarter 2010 at 21.2%, a substantial improvement over the first three months of 2009 as a result of increase in our fee income and net interest income. And the quarterly comparison, the upturn was caused by the increase in order of (inaudible) and personnel expenses impacted by high organic growth and partially due to incorporation of Banco Ibi.