Banco Bradesco Profit Tumbles
November 10 2016 - 6:10AM
Dow Jones News
SÃ O PAULO—Banco Bradesco SA on Thursday posted a near 22% drop
in third-quarter net profit, as the deterioration of its
nonperforming-loan rate led the bank to assume more provision
charges against the backdrop of the country's recession.
Brazil's fourth-largest bank by assets recorded a net profit of
3.24 billion Brazilian reais ($1.01 billion) in the quarter, down
from 4.12 billion reais a year earlier.
The bank opted to assume more provisions for bad loans. It said
provision charges totaled 5.74 billion reais in the latest period,
up nearly 50% from 3.85 billion reais a year earlier.
Bradesco's third-quarter nonperforming loan ratio, or NPL ratio,
increased to 5.4% from 3.8% in the year-earlier period, and was up
from 4.6% in the second-quarter.
The bank's NPL ratio is likely to continue deteriorating, as the
rate covering loans that were more than 60 days, also increased in
the period, to 6.4% from 4.7% in the year ago period.
With the country's economic recession and unemployment
worsening, Brazilians are facing challenges to pay their bills and
loans. After contracting 3.8% last year, Brazil's economy is
expected to shrink 3.2% in 2016, according to economists.
Bradesco's return on equity stood at 17.6% in the third quarter,
down from 20.7% in the year-ago period.
The bank's total credit portfolio increased in the period to 521
billion reais from 474 billion reais, while its assets increased
20.9% to 1.27 trillion reais.
Bradesco saw less demand for new loans from companies. Its loan
portfolio for companies increased 6.5% in the period, while loans
to individuals picked up 17.8%.
The bank, which bought HSBC's Brazilian operations there, in a
$5.2 billion deal in August 2015, said that HSBC Brazil operations
posted a net profit of 90 million reais in the third quarter.
Bradesco reviewed downward its view for the performance of its
credit portfolio this year and increased its forecasts regarding
expenses with provisions.
It now anticipates a portfolio performance of a contraction of
up to 7%, compared with a previous view for contraction of up to
4%.
The bank sees its provisions charges reaching up to 25 billion
reais this year, up from 20 billion reais, expected earlier.
Bradesco said that its new forecasts also assumes the integration
of HSBC unit.
Write to Rogerio Jelmayer at
rogerio.jelmayer@wsj.com<mailto:rogerio.jelmayer@wsj.com>
(END) Dow Jones Newswires
November 10, 2016 06:55 ET (11:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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