Bradesco Shares Decline After Earnings Miss Estimates

Banco Bradesco SA, Latin America’s No. 2 bank by market value, rose 3.7 percent after the company said it expects delinquencies to continue falling in the second half of this year.

Bradesco climbed to 28.79 reais at 5:07 p.m. in Sao Paulo, reversing a drop of as much as 1.7 percent. The benchmark Ibovespa index gained 2.5 percent and Itau Unibanco Holding SA, the biggest Latin American bank, advanced 2.1 percent.

Late-payment rates are improving in all businesses and will keep falling for the rest of 2013, Luiz Carlos Angelotti, Bradesco’s executive director, said on an earnings conference call with journalists. “The unemployment rate at low levels signals a falling trend to delinquency rates,” he said.

Loans at least 90 days overdue, a signal of future write-offs, fell to 3.7 percent in the second quarter from 4 percent at the end of March and 4.2 percent a year earlier, Osasco, Brazil-based Bradesco said in a statement today.

“The shares reversed earlier losses after the bank said the delinquency rate may fall further,” Alvaro Bandeira, a partner at Orama Asset Management in Rio de Janeiro, said today in a telephone interview.

Second-quarter adjusted net income, which excludes one-time items, climbed to 2.98 billion reais ($1.3 billion) from 2.87 billion reais a year earlier, according to the statement. That missed the 3.07 billion-real estimate of six analysts in a Bloomberg survey.

Loan Growth

“Loan growth remains anemic and shareholders’ equity contracted for a second consecutive quarter,” Deutsche Bank AG analysts including Mario Pierry wrote in a research note today. They cited “positive operating trends,” including asset quality, costs and net interest margin.

Lending at Bradesco, led by Chief Executive Officer Luiz Carlos Trabuco Cappi, has slowed as Brazil’s economic growth cooled. The nation’s economic activity index fell 1.4 percent in May, the biggest decline since December 2008, and economists have cut their growth estimates nine straight times, according to the latest central-bank survey.

Bradesco’s portfolio of loans increased 10 percent to 402.5 billion reais, down from a 14 percent expansion a year earlier and 12 percent in the previous three months. Bradesco cut its 2013 estimated range for loan growth to 11 percent to 15 percent, from 13 percent to 17 percent, according to the statement.

Administrative and personnel expenses rose 4.3 percent to 6.77 billion reais in the second quarter from a year earlier.

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