Bradesco Profit Rises as Provisions for Bad Loans Drop

Banco Bradesco SA, Latin America’s second-biggest bank by market value, said profit rose 6.5 percent in the third quarter, matching estimates, as it set aside less money to cover bad loans.

Adjusted net income, which excludes one-time items, climbed to 3.08 billion reais ($1.42 billion) from 2.89 billion reais a year earlier, the Osasco, Brazil-based lender said today in a statement. That compares with the 3.09 billion-real median estimate of eight analysts surveyed by Bloomberg.

Bradesco, led by Chief Executive Officer Luiz Carlos Trabuco Cappi, 62, reduced provisions 13 percent as the nation’s unemployment rate fell to a eight-month low of 5.3 percent in August.

“The unemployment rate and wages improved a lot, helping people pay their debts on time,” Pedro Galdi, head strategist at Sao Paulo-based brokerage SLW Corretora, said in a telephone interview. “Bradesco’s results were very good, with a good return on equity of 18.4 percent, meaning the bank could double its size in about five years.”

Provisions dropped to 2.88 billion reais in the third quarter, while the portfolio of loans expanded 11 percent to 412.6 billion reais. Debt payments overdue more than 90 days declined to 3.6 percent in the third quarter from 3.7 percent at the end of June and 4.1 percent a year earlier.

Growth Estimates

Bradesco reduced its growth estimates for net interest income, which is the revenue from interest earned on assets compared with payments to depositors. The bank now sees a 2013 expansion between 1 percent and 3 percent, down from 4 percent to 8 percent. The lower range reflects slower credit growth, Executive Director Luiz Carlos Angelotti told reporters on a conference call today.

“Bradesco’s loan book is tending to expand at the lower end of our guidance,” he said.

In July, the bank reduced its estimates for 2013 loan-portfolio growth to between 11 percent and 15 percent from 13 percent to 17 percent.

Shares of the company declined 1.4 percent to 32.60 reais at 5:06 p.m. in Sao Paulo, while the Ibovespa benchmark index rose 1.3 percent.

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