Bradesco Profit Misses Estimates as Bank Boosts Bad Loan Cover

  • Brazilian lender's provisions climbed 52% in the first quarter
  • Bank said provisions `largely' impacted by a specific case

Banco Bradesco SA, Latin America’s second-biggest bank by market value, said first-quarter profit fell 3.8 percent, missing analysts’ estimates, as provisions to cover souring loans increased.

Adjusted net income, which excludes one-time items, declined to 4.11 billion reais ($1.17 billion) from 4.27 billion reais a year earlier, the Osasco, Brazil-based company said in a statement Thursday. That compares with the 4.35 billion-real estimate of nine analysts surveyed by Bloomberg. Net income declined to 4.12 billion reais from 4.24 billion reais.

Late payments in Brazil have been increasing as bank customers face the nation’s worst recession in a century. The delinquency rate for loans more than 90 days overdue reached 3.5 percent in February, a three-year high, according to central bank data. Bradesco’s provisions reached 5.44 billion reais in the first quarter, up from 3.58 billion reais a year earlier, while debt overdue more than 90 days climbed to 4.2 percent from 3.6 percent.

The bank said bad-loan provisions were “largely” impacted by a corporate client case of 836 million reais after the company’s credit rating worsened, according to the earnings statement. Bradesco didn’t name the client.

Bradesco rose 53 percent this year, compared with a 26 percent gain for the Ibovespa benchmark index.

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