Banco Bradesco Sa (BBD)

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Banco Bradesco SA (BBD)

Q3 2012 Earnings Call

October 23, 2012 9:00 AM ET


Paulo Faustino da Costa – Market Relations Department Director

Luiz Carlos Angelotti – Executive Managing Director and Investor Relation Officer


Jorge Kuri – Morgan Stanley

Mario Pierry – Deutsche Bank

Thiago Batista – Itaú BBA

Carlos Macedo – Goldman Sachs

Marcelo Telles – Credit Suisse

Philip Finch – UBS

Saul Martinez – JP Morgan

Victor Galliano – HSBC

Jorg Friedemann – Bank of America

Boris Molina – Santander



Morning, ladies and gentlemen. We would like to welcome everyone to Banco Bradesco’s Third Quarter 2012 Earnings Results Conference Call. 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 be 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 to – 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 could cause results to differ materially from those expressed in such forward-looking statements.

Now, I will turn the conference over to Mr. Paulo Faustino da Costa, Market Relations Department Director. Please go ahead, sir.

Paulo Faustino da Costa

Good morning, everyone, and thank you all for participating in our third quarter conference call. We are here today to provide you with all the information you may need about our numbers. This is in line with our goal of always increasing the transparency of information disclosed to the market.

We have here today Mr. Julio de Siqueira Carvalho de Araujo, Executive Vice President; Mr. Marco Antonio Rossi, Chief Executive Officer of Bradesco Seguros Group and Bradesco Executive Vice President; Mr. Luiz Carlos Angelotti, Executive Managing Director and Investor Relation Officer; Mr. Moacir Nachbar Jr., Deputy Officer.

I will now turn to our Managing Director, Mr. Luiz Carlos Angelotti, who will lead our conference call. After his presentation, we will be open to answer your questions. Mr. Angelotti, please go ahead.

Luiz Carlos Angelotti

Good morning, everyone. Thank you for being with us. I will begin with the main period’s highlights, among which I would like to draw your attention, on the right, to our year-to-date adjusted net income, which reached to R$8.605 billion, 2.1% up on the same period last year. Total assets came to more than R$856 billion, 18.6% up in 12 months, while our expanded loan portfolio increased by 11.8% in the same period totaling R$372 billion..

On slide three, it is worth noting our assets under management, which ended the quarter at R$1.172 trillion, a 20.4% increase over September 2011. It is also worth mentioning the reduction in our delinquency ratio to 4.1%; and the improvement in our efficiency ratio, which closed the third quarter at 42.1%.

On slide four, we show the reconciliation between our book net income and the adjusted net income in the respective periods. This quarter, the main non-recurring items were: first, the earnings of R$2.1 billion from expanding maturities of securities, guaranteeing technical provision classified as available for sale; and second, the constitution of additional technical provision in the equivalent amounts, due to a lower interest rate usage in the calculation in line with the current economic scenario; and the third, the constitution of our provision for civil contingencies, which came to R$52 million.

Adjusting for these items, our third quarter adjusted net income came through R$2.893 billion and our year-to-date adjusted net income came to R$8.605 billion. Also, on this slide, you can see that our return on average equity came to around 20%.

Slide five shows our net income in recent quarters. Income growth in the third quarter was mainly due to the reduction in the costs of delinquency and the increased volume of operation, financial transactions and our broader offer of products, which had a positive impact on fee income, partially offset by the increase in administrative and personnel expenses, the latter mainly due to the collective bargaining agreement.

In comparison with the first nine months of 2011, year-to-date adjusted net income increased by R$178 million or 2.1% due to: the first is the growth of the net interest income net of provisions for loan loss; and second, our investments in organic growth, among which our client base growth of around 1 million clients ended at 3 million new credit cards, elements which helped increase the fee income resulting from a higher volume of transactions; and third, higher revenues from our Insurance group, partially impacted by the increase in personnel and administrative expenses.

Slide six shows our efficiency ratio. It is important to emphasize the 12 months ratio, the red line, which improved for the third consecutive quarter, this time by 30 basis points to 42.1%, its lowest level for the last nine quarters. This good performance was due to our investments in organic growth, infrastructure and technology, which are beginning to produce effects on net interest income and fee income and to our continued efforts to control expense, including the initiative of our efficiency committee.

The third quarter ratio improved by 110 basis points over the same period last year due to the same factors as well as the 19.1% increase in the results of our Insurance group. The blue line shows the efficiency ratio adjusted to risk, which remained flat over the previous quarter reflecting this acute stabilization of delinquency.

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