Bradesco Profit Beats Estimates as Lending Margins Increase

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Banco Bradesco SA, Latin America’s second-biggest bank by market value, said profit rose 18 percent, beating analysts’ estimates, as lending margins increased and the firm cut costs.

Second-quarter adjusted net income, which excludes one-time items, climbed to 4.5 billion reais ($1.35 billion) from 3.8 billion reais from a year earlier, the Osasco, Brazil-based lender said Thursday in a statement. The average estimate of nine analysts surveyed by Bloomberg was for profit of 4.39 billion reais. Net income rose 18 percent to 4.47 billion reais.

Chief Executive Officer Luiz Carlos Trabuco Cappi, 63, is boosting margins and revenue as competition from Brazil’s state-controlled banks fades. The average lending margin for the nation’s banks rose 4.6 percentage points to 29.8 percent in May from a year earlier, according to the central bank.

“It’s a very strong and surprising result,” Luis Gustavo Pereira, an analyst at Guide Investimentos, said in a telephone interview from Sao Paulo. “Climbing interest rates are always good for banks, and Bradesco lifted its forecast for net interest margin growth.”

Net interest income, or revenue from interest earned on assets compared with payments to depositors, climbed 12 percent to 13.5 billion reais from a year earlier. The bank boosted its 2015 forecast for net interest income growth to a range of 10 percent to 14 percent. That compares with a prediction in January of 6 percent to 10 percent. Net interest margin rose to 7.4 percent from 7.3 percent in the first quarter and 6.9 percent a year earlier.

Bradesco stock has fallen 5.5 percent this year, while the Ibovespa benchmark index is little changed.

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