Banco Bradesco Sa (BBD)

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Banco Bradesco S.A. (BBD)

Q3 2007 Earnings Call

November 6, 2007, 10:00 AM ET


Jean Philippe Leroy - Department Director

Milton Vargas - EVP and IR Officer

Samuel Monteiro dos Santos, Jr. - CFO of Bradesco Seguros Insurance


Mario Pierry - Deutsche Bank

Juan Partida - JP Morgan

Daniel Abut - Citigroup

Saul Martinez - Bear Stearns



We would like to welcome everyone to Banco Bradesco 2007 Third Quarter Results Conference Call. This call will be conducted by Mr. Márcio Artur Laurelli Cypriano, Chief Executive Officer; Mr. Milton Vargas, Executive Vice President and Investor Relations Officer; Mr. Domingos Figueiredo de Abreu, Managing Director; Mr. Samuel Monteiro dos Santos, Jr., Chief Financial Officer of Bradesco Seguros Insurance; and Mr. Jean Philippe Leroy, Department Director.

This call is being broadcasted simultaneously through the Internet, in the website In that address you can also find a banner through which the presentation will be available for download. We inform that all participants will only be able to listen to the conference call during the Company's presentation. After the presentation there will a question-and-answer session. At that time further instructions will be given. [Operator Instructions].

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 guarantees of performance, they involve risks and 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 could cause results to differ materially from those expressed in such forward-looking statement.

Now I will turn the conference over to Mr. Jean Philippe Leroy, Department Director. Mr. Leroy, you may proceed.

Jean Philippe Leroy - Department Director

Thank you. Good morning and good afternoon to all and welcome to our third quarter earnings conference call.

Let me now transfer the floor to Mr. Milton Vargas, Bradesco's CFO and Investor Relations Officer. Milton?

Milton Vargas - Executive Vice President and Investor Relations Officer

Good morning and welcome to our conference call. This quarter was marked by strong turbulence in international market leading to much volatility and uncertainty regarding the backdrop of subprime market crisis in United States and indirectly in the rest of the world. In this scenario Brazil has lifted in a relatively comfortable way.

In addition of the statements, and upgrade in its rating by Moody's which put us just one notch below the investment grade, which we expect Brazil to reach next year by at least one of the three leading rating agencies.

According to our forecast, the Brazil economy should grow by 4.9% in 2007 and by around 4.4% in 2008. We highlight the maintenance of the level of confidence by consumers and families; driven by the favorable conditions in the labor market we have improvement in employment in salaries, in addition to the preservation of the stability of the inflation.

We forecast inflations at 3.7% for this year and something below 4% for 2008. The base rate, basically, should be maintained up to the end of this year moving down to 10.25% at the end of this 2008. As per the exchange rate, we work with a scenario of relatively stability. We've got of $1.70 reais $1.75 layout there both for the end of 2007 and 2008.

Despite the appreciation of the real, export are actually strong thanks to a remarkable efforts by companies to boost efficiency and productivity. We have found that a growing number of companies from various sector are raising their investment in debt, appetite for the risk had been climbing on a monthly basis.

As far the credit to GDP ratio, we forecast an evolution from the actual 33.1% to 38.1% in 2008.

Delinquency add-on control and tenures are following the natural task of gradual level in consistent lengthening, due to the greater predictability of the economy. With this scenario Bradesco reaches in the first nine months of 2007, a net income of over 5.8 billion reais up 73.6% compared to the same period of 2006.

Insurance, pension plan and premium bond contributed in the bottom line with approximately 1.8 billion reais representing 30.5% of Bradesco results. Revenues reached 15.3 billion reais expanding by 14.6% in the past 12 months, more than the growth of the [indiscernible]. Our combined ratio of 85.8% improved by 6.4 percentage point compared to the same period of 2006. Bradesco stockholders equity surpassed 29.2 billion reais growing by 34.2% over the last 12 months. The BIS equation reached 14.2%, allowing Bradesco to expand in the future it's loan book by more than 78 billion reais.

We think the concept to... continuing to improve the efficiency. Our 12-month accumulated efficiency ratio reached around 41.8%, a reasonable improvement as compared to 42.5% in the same period of 2006.

Tactical dilutions accounted for 88% of our adjusted net income, reaching 5.1 billion reais. The average reserve on average of the nine months period analyzed exceeded 32.6%. On the operational front, Bradesco had an excellent performance.

We highlighted the fund growth in the loan portfolio volume by 20.9% in the year and by 26.5% in the last 12 month. This evolution should be compared to the 16.6% and 24.8% in the banking sector, respectively.

It once includes guarantees and a receivable of credit cards. Our 140 billion reais where volume grew by 20.5% in the year, and by 27% over the last 12 months. Regarding asset quality, in September, AA to C rated operations represented 92.8% of our book compared to 91.5% in the banking sector.

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