Banco Bradesco’s Profit Rises 23% on Higher Lending Revenue

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Banco Bradesco SA, Latin America’s second-biggest bank by market value, said profit rose 23 percent, in line with analysts’ estimates, as lending revenue increased.

First-quarter adjusted net income, which excludes one-time items, climbed to 4.27 billion reais ($1.45 billion) from 3.47 billion reais a year earlier, the Osasco, Brazil-based company said in a statement Wednesday. That compared with the 4.25 billion-real estimate of eight analysts surveyed by Bloomberg. Net income rose to 4.24 billion reais from 3.44 billion reais.

Chief Executive Officer Luiz Carlos Trabuco Cappi, 63, is boosting lending margins and revenue as competition from Brazil’s state-controlled banks fades. The average lending margin for the nation’s banks rose 3.6 percentage points to 27.9 percent in the first quarter from a year earlier, according to the central bank.

A higher net interest margin and “robust” loan growth helped Bradesco’s net interest income exceed Fator Corretora’s projections, the Sao Paulo-based brokerage wrote in a note to clients.

Net interest income, or revenue from interest earned on assets compared with payments to depositors, reached 13.6 billion reais in the first quarter, up from 11 billion reais in the same period of last year. Net interest margin rose to 7.3 percent in the first quarter from 6.8 percent a year earlier.

Benchmark Rate

The bank said it benefited from the increase in Brazil’s benchmark interest rate, which was 12.75 percent in March, up from 10.75 percent a year earlier.

Bradesco fell 2.3 percent to 31.71 reais in Sao Paulo at 12:49 p.m., compared with a 0.8 percent drop for the Ibovespa benchmark index.

Lending expanded 7.2 percent to 463.3 billion reais in the first quarter from a year earlier. That was near the mid-point of Bradesco’s 2015 credit growth estimate of 5 percent to 9 percent.

Bad-loan provisions increased 25 percent to 3.58 billion reais in the first quarter from the same period of last year. Bradesco said the jump was largely related to “certain transactions with corporate customers.” Bradesco expects provisions to grow 8 percent to 12 percent this year, Luiz Carlos Angelotti, executive managing director, said.

“This is an year of adjustment for the economy” in Brazil, Angelotti told reporters on a conference call Wednesday.

The delinquency rate for debt overdue more than 90 days climbed to 3.6 percent in the first quarter, up from 3.5 percent in the three previous months and 3.4 percent a year earlier. Bradesco expects delinquencies to remain stable this year, Angelotti said.

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