SECURITIES AND EXCHANGE COMMISSION
06029-900 - Osasco - SP
Federative Republic of Brazil
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes _______ No ___X____
| Banco Bradesco S.A. | ||||||||
| Corporate Taxpayer’s ID (CNPJ) 60.746.948/0001-12 |
Bovespa – BBDC3 (common) and BBDC4 (preferred) |
NYSE – BBD | Latibex – XBBDC | |||||
| Main Indicators (%) | ||||||||||
| Indicators | 2006 | 2007 | 2008 | |||||||
| 4th Qtr. | 1st Qtr. | 4th Qtr. | 1st Qtr. | YTD | ||||||
| CDI | 3.12 | 3.03 | 2.62 | 2.57 | 11.32 | |||||
| Ibovespa | 22.01 | 2.99 | 5.66 | (4.57) | 33.10 | |||||
| USD – Commercial Rate | (1.66) | (4.10) | (3.68) | (1.25) | (14.69) | |||||
| IGP-M | 1.54 | 1.11 | 3.54 | 2.38 | 9.10 | |||||
| IPCA – IBGE | 1.12 | 1.26 | 1.43 | 1.52 | 4.73 | |||||
| TJLP | 1.66 | 1.60 | 1.54 | 1.54 | 6.36 | |||||
| TR | 0.47 | 0.48 | 0.24 | 0.17 | 1.13 | |||||
| Savings Deposits | 1.98 | 1.99 | 1.75 | 1.68 | 7.37 | |||||
| Number of Business Days | 61 | 62 | 62 | 61 | 249 | |||||
| Closing Amount | ||||||||
| Indicators | 2006 | 2007 | 2008 | |||||
| December | March | December | March | |||||
| USD – Commercial Selling Rate – (R$) | 2.1380 | 2.0504 | 1.7713 | 1.7491 | ||||
| Euro – (R$) | 2.8202 | 2.7389 | 2.6086 | 2.7606 | ||||
| Country Risk (Points) | 192 | 167 | 221 | 284 | ||||
| Selic – Copom Base Rate (% p.a.) | 13.25 | 12.75 | 11.25 | 11.25 | ||||
| Pre-BM&F Rate – 1 year (% p.a.) | 12.38 | 11.85 | 12.05 | 12.69 | ||||
| Compulsory Deposit Rates (%) | Rates and Limits (%) | |||||||||||||||||
| Deposits | 2006 | 2007 | 2008 | Items | 2006 | 2007 | 2008 | |||||||||||
| 4th Qtr. | 1st Qtr. | 4th Qtr. | 1st Qtr. | 4th Qtr. | 1st Qtr. | 4th Qtr. | 1st Qtr. | |||||||||||
| Income Tax | 25 | 25 | 25 | 25 | ||||||||||||||
| Demand (1) | 45 | 45 | 45 | 45 | Social Contribution | 9 | 9 | 9 | 9 | |||||||||
| Additional (2) | 8 | 8 | 8 | 8 | PIS (1) | 0.65 | 0.65 | 0.65 | 0.65 | |||||||||
| Time (3) | 15 | 15 | 15 | 15 | Cofins (2) | 4 | 4 | 4 | 4 | |||||||||
| Additional (2) | 8 | 8 | 8 | 8 | Legal Reserve on Net Income | 5 | 5 | 5 | 5 | |||||||||
| Savings Account (4) | 20 | 20 | 20 | 20 | Maximum Fixed Assets (3) | 50 | 50 | 50 | 50 | |||||||||
| Additional (2) | 10 | 10 | 10 | 10 | Capital Adequacy Ratio (Basel) (4) | 11 | 11 | 11 | 11 | |||||||||
| (1) Cash deposit – No remuneration. | (1) The rate applicable to non-financial and similar companies is 1.65% (non-cumulative PIS). | |
| (2) Cash deposit – Compensation by Selic rate. | (2) The rate applicable to non-financial and similar companies is 7.60% (non-cumulative Cofins). | |
| (3) Restricted Securities – From the amount calculated at 15%, R$300 million is deducted. | (3) Maximum Fixed Assets are applied over Reference Equity. | |
| (4) Cash deposit – Compensation by Reference Rate (TR) + interest of 6.17% p.a. | (4) Reference Equity may not be lower than 11% of Weighted Assets. |
Forward-Looking Statements
This Report on Economic and Financial Analysis contains forward-looking statements relating to our business. Such statements are based on management’s current expectations, estimates and projections about future events and financial trends, which could affect our business. Words such as: “believes”, “anticipates”, “plans”, “expects”, “intends”, “aims”, “evaluates”, “predicts”, “foresees”, “projects”, “guidelines”, “should” and similar expressions are intended to identify forward-looking statements. These statements, however, do not guarantee future performance and involve risks and uncertainties, which could be beyond our control. Furthermore, certain forward-looking statements are based on assumptions which, depending on future events, may prove to be inaccurate. Therefore, actual results may differ materially from the plans, objectives, expectations, projections and intentions expressed or implied in such forward-looking statements.
Factors which could modify actual results include, among others, changes in regional, national and international commercial and economic conditions; inflation rates; increase in customer delinquency on the account of borrowers in loan operations, with the consequent increase in the allowance for loan losses; loss of funding capacity; loss of clients or revenues; our capacity to sustain and improve performance; changes in interest rates which could, among other events, adversely affect our margins; competition in the banking sector, in financial services, credit card services, insurance, asset management and other related sectors; government regulations and fiscal matters; disputes or adverse legal proceedings or ruling; as well as credit risks and other loan and investment activity risks.
Accordingly, the reader should not place excessive reliance on these forward-looking statements. These statements are valid only as of the date they were prepared. Except as required under applicable legislation, we assume no obligation whatsoever to update these statements, whether as a result of new information, future events or any other motive.
Economic Scenario
Problems in the USA credit market continued to catch the eyes of the international financial markets. The review of the expectation for the monetary policy was the main change in the domestic scenario.
The problems involving the US economy and financial system continued as the main determining factors of the macroeconomic scenario in 1Q08. The US credit crisis increased during the period, and gradually reduced after the actions taken by the Federal Reserve, which promoted significant drops in the basic interest rate and implemented a policy of wide liquidity provision to the local financial system. The country risk increase was due to the global deterioration of the credit conditions. We point out that the country risk increase was moderately small when compared to other credit assets, such as credit spreads to US companies.
The deterioration of the perspectives for the activity and the significant decrease in US interest rates resulted in a general US dollar devaluation compared to other currencies, mainly Euro. The currencies from several emerging countries also reflected the dollar’s devaluation trend.
The hypothesis that the slowdown in the US internal demand is mainly offset by the strong growth in other regions, chiefly Asia, has been confirmed. The proof is that, despite the high volatility in the last weeks of 1Q08, the prices of the main commodities had a significant increase in the period (the CRB Reuters index, which includes a wide number of commodities, had a 7.9% increase) and remained in a quite high level. In one hand, it contributed to continue the concerns about the inflation increase worldwide. On the other hand, it favors the external accounts of countries exporting commodities. To Brazil, commodity prices were an advantage, for it resulted in the review of the contribution related to external prices to exports in 2008. The main change in the domestic scenario was another expectation for the monetary policy this year. Even the current inflation and the analysts’ expectations remained close to the target of 4.5%, there was an increase in risks for the inflation scenario and a sign of a preventive action by the Central Bank, confirmed at the Copom (Monetary Policy Committee) meeting in April.
The GDP growth ended 2007 at 5.4%, with an outstanding and considerable growth in investments (13.4%) and in the family consumption (6.5%) . The economic activity indices for the 1st quarter showed that the growth rate remained in a significant level. Thus, we increased our GDP growth expectation for 2008 from 4.5% to 4.8% . The increase in loans, government expenses and, mainly, income and employment may continue to support the increase in the family consumption. The liquidity decrease in the international capital markets has not affected the intention of resources or their availability so as to continue a significant growth of the companies’ investments (an increase of 12% in gross fixed assets is expected for 2008).
The inflation to the consumer had not different amounts as expected for the 1st quarter; however, the commodities’ prices, the pressure on prices in wholesale and the higher growth in the GDP than the expectations for this year led us to slightly increase the estimate of IPCA from 4.7% to 4.9% . Thus, we expect an additional increase in interest rates during the next months and estimate a Selic rate of 13.0% at the end of the year.
Risk Factors and Critical Accounting Practices
To assure Bradesco’s commitment to the best international practices for transparency and corporate governance, we point out “Risk Factors” and “Critical Accounting Practices”. We consider these factors and practices the most significant and those which could affect our daily business, the results of our operations or our financial position. We stress that Bradesco addresses the management of all risks inherent to its activities in a complete and integrated manner. This integrated approach facilitates the improvement of risk management models and avoids the existence of any gap that could jeopardize the correct identification and assessment of these risks.
II
Risks Relating to Brazil
1) Brazilian political and economic conditions have direct impact on our business and on the market value of our shares and ADSs
All of our operations and clients are mainly located in Brazil. Accordingly, our financial condition and results of operations are substantially dependent on the Brazilian economy, which in the past has been characterized both by frequent intervention of the Brazilian Government and volatile economic cycles. In addition, our financial condition and the market value of our shares and ADSs may also be adversely affected by changes in policies involving exchange and tax controls, as well as factors such as: fluctuations in exchange rates, interest rates, inflation rates, and other political, diplomatic, social and economic events inside and outside Brazil that affect the country.
We cannot control or predict which measures or policies the Brazilian Government may take in response to the current or future situation of the country’s economy or how these measures or policies may affect the Brazilian economy and, both directly and indirectly, our operations and revenues.
2) Should Brazil undergo a period of high inflation in the future, our revenues and the market value of our shares and ADSs may reduce
For the past 15 years, Brazil has faced periods of extremely high inflation rates, with extremely high annual rates (IGP – DI from Fundação Getulio Vargas) reaching as high as 2,708% in 1993. More recently, Brazil’s inflation rates were 1.2% in 2005, 3.8% in 2006, 7.9% in 2007 and 2.1% in the first quarter of 2008. Inflation and governmental measures to combat it have had in past years significant negative effects on the Brazilian economy. In addition, public speculation about possible future actions has also contributed to economic uncertainty in Brazil and to heightened volatility in the Brazilian securities markets. Should Brazil suffer a period of high inflation in the future, our costs may increase, our operating and net margins may decrease and, if investor’s confidence lags, the price of our shares and ADSs may drop. Inflationary pressures may curtail our ability to access foreign financial markets and may occasionally lead to further government interventions in the economy, including the implementation of policies that may adversely affect the overall performance of the Brazilian economy.
3) Access to international capital markets by Brazilian companies is influenced by the perception of risk in emerging economies which may harm our ability to finance our operations
The market of securities issued by Brazilian companies is influenced by economic and market conditions in Brazil and, at different levels, by the market conditions in other Latin American countries and other emerging countries. Although economic conditions in these countries may significantly differ from the Brazilian economic conditions, the investors’ reaction to events in these countries may have an adverse effect on the market value of the Brazilian companies’ securities. Crises in other emerging countries or economic policies in other countries, especially in the United States and European Union countries, may reduce the demand of investors for Brazilian companies’ securities, including ours. Any of the events described above may negatively affect the market price of our shares and make harder, or even prevent, our access to capital markets and our financing in future operations in acceptable conditions.
4) Developments in other emerging markets may adversely affect the market value of our shares and ADSs
The market value of our shares and ADSs may be adversely affected by declines in the international financial markets and world economic conditions. The Brazilian securities market is influenced by the local and other emerging countries’ economy, especially those in Latin America. Although economic conditions are different in each country, investors’ reaction to developments in one of them may affect the securities markets and the securities issued in other countries, including Brazil.
III
Occasionally, developments in other countries have adversely affected the market value of our and other Brazilian companies’ shares, as investors’ high risk perception due to crisis in other emerging markets may lead to reduced levels of investment in Brazil and, in addition, may hurt our ability to finance our operations through the international capital markets. If the economic situation in Latin America deteriorates, or if similar developments occur in the international financial markets in the future, the market value of our shares and ADSs may be adversely affected.
Risks Relating to Bradesco and the Brazilian Banking and Insurance Industries
1) The Brazilian Government regulates the operations of Brazilian banks and insurance companies, and changes in prevailing laws and regulations or the imposition of new ones may adversely affect our operations and results
Brazilian banks and insurance companies are subject to extensive and continuous regulatory review by the Brazilian Government. We have no control over government regulations, which govern all facets of our operations, including the imposition of minimum reference equity and capital requirements, compulsory deposits, loan limits and other loan restrictions.
The regulatory structure governing Brazilian banks and insurance companies is continuously evolving; laws and regulations may be amended, and more, they may be changed according to their enforcement or interpretation, causing the adoption of new laws and regulations.
Regulatory changes affecting other businesses in which we are engaged, including our broker dealer, consortium and leasing operations, could also have an adverse effect on our operations and our results.
2) The increasingly competitive environment in the Brazilian banking and insurance industries may adversely affect our business prospects
We face significant competition in all of our principal areas of operation from other large Brazilian banks and public and private insurance companies. Brazilian regulations raise limited barriers only to market entry and do not differentiate between local or foreign commercial and investment banks and insurance companies. As a result, the growing presence of foreign banks and insurance companies in Brazil, some of which have greater resources than we do, has grown the competition both in the banking and insurance industries. The privatization of publicly-owned banks has also made the Brazilian markets for banking and other financial services more competitive.
The increased competition may negatively affect our business results and prospects by, among other things: limiting our ability to increase our customer base and expand our operations; reducing our profit margins on the banking, insurance, leasing services and other products we offer; and increasing competition for the foreign investment opportunity.
Furthermore, additional publicly-owned banks and insurance companies may be privatized in the future. The acquisition of a bank or insurance company in a privatization process by one of our competitors would generally add to the acquirers’ market share, and as a result we may face increased competition from the acquirer.
3) Some of our common shares are held by two shareholders, whose interests may conflict with other investors’ interests
On March 31, 2008 Cidade de Deus – Companhia Comercial de Participações held 48.22% of our common shares and Fundação Bradesco directly and indirectly held 50.93% of our common shares. As a result, these shareholders have the power to prevent a change in control of our company, even if a transaction of that nature would be beneficial to our other shareholders, as well as to approve related-party transactions or corporate reorganizations, which may not be beneficial to our other shareholders.
IV
Critical Accounting Practices
Bradesco’s results are susceptible to accounting policies, assumptions and estimates. It is incumbent upon the Management to adopt proper accounting policies and provide reasonable and suitable judgments and estimates when preparing the financial statements.
Our relevant accounting policies are outlined in note 3 to the consolidated financial statements included in chapter 8 of this Report.
In terms of materiality, the following 5 items outline the accounting policies deemed as critical, as well as areas requiring a greater judgment and estimate or involving a higher level of complexity, which may affect our financial condition and the results of our operations. The accounting estimates made under such context impel us to make assumptions on uncertain issues. In each case, if we had made other estimates, or if changes in estimates had occurred period by period, these could have significantly impacted our financial condition or the results of our operations:
1) Allowance for Loan Losses
We periodically adjust our allowance for loan losses, which include leasing operations and other operations with loan characteristic, based on the analysis of our portfolio, including probable losses estimate in these segments at the end of each period.
The determination of allowance for loan losses amount by its nature requires us to make judgments and assumptions related to our loan operations portfolio, not only on an individual basis, but also on a portfolio basis. When we revise our portfolio as a whole, various factors may affect our estimate of probable extension of losses, including the methodology we use to measure historical rates of delinquency and the historical period we take into account in such measurements. When we revise loan operations on an individual basis, we make judgments related to the factors, which most probably should affect the risk levels and which specific credit rating we should attribute. Additional factors which may affect our determination of allowance for loan losses include:
– general economic conditions in Brazil and conditions of relevant sector;
– previous experience with borrower or relevant sector of economy, including losses recent experience;
– credit quality trends;
– guarantees amounts and quality of a loan operation;
– volume, composition and growth of our loan operations portfolio;
– Brazilian Government’s monetary policy; and
– any delays when receiving information necessary to assess loan operations or confirm the deterioration of existing credit.
Our determination of allowance for loan losses is influenced by the risk rating of each loan operation. By assuming a decrease of 1% in delinquency ratio expected for our loan operations portfolio in full performance, on March 31, 2008, the allowance for loan losses would increase, approximately, R$52 million. Such sensitivity analysis is hypothetical and intends to illustrate the risk rating and loss severity impact on our allowance and, thus, must not be considered as an observation of our expectations for future determinations of risk rating or future alterations in loss severity. In view of the procedures we observe, in order to determine our risk rating of loan portfolio and our assessment of loss severity, we believe that the current risk rating and the estimate of loss severity for our loan portfolio are appropriate.
For further information about our practices referring to the allowance for loan losses, see content of loan operations included in chapter 3 and notes 3e and 10 included in chapter 8 hereof.
V
2) Classification of Securities and Derivatives
The classification of securities and derivatives occurs in three categories: for trading, available for sale and held to maturity. This classification is based on the Management’s intent, on the date of acquisition of securities, of maintaining or trading such securities. The accounting treatment of securities held depends on our classification upon their acquisition.
Circumstantial changes may modify our strategy related to a specific security, which will require a transfer among the three categories.
The classification of securities and derivatives can be found in Note 8 included in chapter 8 of this Report.
3) Assessment of Securities and Derivatives
The financial instruments recorded at fair value in our financial statements mainly include securities classified as for trading, available for sale and other trading assets, including derivatives. The fair value is defined as the value in which a position could be closed or sold in a transaction with a party aware of the issue and willing to trade, without any benefit.
We estimate the fair value by using quoted-market prices when available. We observe that the fair value may be affected by the volume of shares traded and also may not reflect the “control premiums” resulting from shareholder agreements, those holding significant investments. However, the Management believes that quoted-market prices are the fair value best indicators.
When quoted-market prices are not available, we use models to estimate the fair value. The factors used in these models include distributors’ quotations, pricing models, prices of instruments with similar characteristics and discounted cash flows. The pricing based on models also uses information about interest rates, exchange rates and options volatility, when these are relevant and available.
In the determination of fair value, when quoted-market prices are not available, we have the Management’s judgment, since the models depend on our judgment concerning the weight to be attributed to different factors and the quality of information we receive. For instance, reliable market data, when estimating the impact of maintaining a high position are generally limited. Likewise, we use our judgment in the estimate of prices when there is no external parameter. Should we make incorrect assumptions or the model itself makes correlations or incorrect assumptions, the value of income or loss recorded for a specific asset or liability may be improper. The judgment shall also determine if a decline in fair value below the up-to-date cost of a held to maturity or available for sale security is not temporary, so that to require we recognize a devaluation of up-to-date cost and we may reflect such reduction as expense. In the assessment, if devaluation is not temporary, the Management decides the historical period to be considered and the level of severity of a loss.
Such assessment methods may lead Bradesco to different results, if models used or assumptions and estimates are inaccurate.
For further information about our practices referring to the assessment of securities and derivative financial instruments, see Notes 3c, 3d and 8 included in chapter 8 of this Report.
4) Income tax and social contribution
The determination of the amount of our taxes and contributions is related to the analysis of our deferred tax assets and liabilities, and income tax and social contribution. Generally, our assessment requires us to estimate the future values of deferred tax assets and income tax and social contribution. Our assessment about the possibility of a deferred tax asset to be realized is subjective and involves evaluations and assumptions originally uncertain. The realization of deferred tax assets is subject to alterations in future tax rates and the development of our tax planning strategies. As a result of unpredictable occurrences or circumstances, the support to our assessments and assumptions may change over time influencing the determination of the value of our tax liabilities.
VI
We constantly monitor and assess the impact of new tax laws on our liabilities, which could affect the assessments and assumptions of our analysis about the possibility of realizing deferred tax assets.
For further information about Bradesco’s income tax and social contribution, see Notes 3f and 34 to our financial statements included in chapter 8 of this Report.
5) Use of Estimates
Our Management estimates and makes assumptions, which include: the amount of provisions for deferred taxes and contributions; the assumptions for the calculation of allowance for loan losses; the assumptions for calculations of technical provisions for insurance, private pension plans and certificated savings plans; the choice of useful lives of certain assets; and the determination of whether an asset or group of specific assets was deteriorated. The estimates are based on the judgment and available information. Therefore, effective results may differ from such estimates.
Commercial Strategy
We understand that the expansion of the Brazilian economy, jointly with a strong growth of the Brazilian population, will increase the demand for our products services. Under such context, our main objective is to maintain the focus on the domestic market and take advantage of our position as the largest private bank in Brazil, to expand profitability, maximize value to our shareholders and generate higher returns compared to other Brazilian financial institutions.
We intend to achieve such goals with a strategy not only to continuously expand our client base, but also to consolidate our role as “the priority bank” of each of our clients, so that to be their first option towards their financial services needs. Our goal is to be a “Banco Completo” (All-inclusive Bank) in the Brazilian market. In this regard, we strive to maintain an outstanding position in every line of financial services.
In the banking segment, we aim at rendering the most varied range of services as a retail bank, supported by a staff with more than 83 thousand employees, a wide Service Network, including our Branches, Corporate Site Branches, Postal Bank and Bradesco Expresso (Correspondent Banks), besides the ATMs (Own, Banco24Horas and sharing of the Network with Banco do Brasil), always concerned with the expansion of business volume. We are also focused on expanding our businesses as a wholesale bank in all its aspects (investment bank and corporate business) and expand our private banking business.
In the insurance segment, we intend to consolidate Bradesco Seguros e Previdência leadership, and in relation to the supplementary private pension segment, we intend to take advantage of our ongoing expansion of demand for our private pension products.
In every line of our operation, we intend to stand out and be recognized by our clients as leaders in terms of performance and efficiency.
We understand that the essence of business success in the financial sector consists of the combination between winning the client and a team highly qualified and devoted to the rendering of services, permanently trained and with rigid discipline standards at work. Our growth plans are not only translated into seeking the addition of new clients but are also focused on the frequent improvement of products/services and distribution channels. It is fundamental to promote the business, the treatment given to our team in terms of qualification, promotion and creation of a solidarity culture at work, with a view to fomenting an environment where our employees may develop a career which endures their professional life.
VII
Finally, the main component of our philosophy is to conduct the business according to the highest ethical standards. Therefore, our strategy is always guided by seeking the best Corporate Governance and sustainability practices.
The key elements of our business strategy are:
– to search for convergence of business goals with social-environmental responsibility aspects;
– expansion by means of organic growth;
– performance based on the “Insurance Bank Model”, which is a business model of a large banking institution, having as subsidiary an important insurance company, with a view to maintaining our profitability and consolidating our leadership in the insurance industry;
– increase of revenues, profitability and value to our shareholders, by consolidating our loan operations, our main activity, and the expansion of new products and services;
– maintenance of our commitment to the technological innovation;
– profitability and return to the shareholders by means of improved efficiency ratio;
– maintenance of acceptable risk levels in our operations; and
– expansion by means of strategic alliances and selective acquisitions, when these are beneficial.
1) To expand main business areas by means of organic growth
The Brazilian economy has been showing solidity over the past years and has been creating strategic opportunities for financial and insurance segments growth, mainly by means of increased business volume. We intend to take advantage of such opportunities to increase our revenues, obtain profitability and maximize value to the shareholders, as outlined as follows:
– benefiting from the opportunity in the Brazilian market to obtain new clients with loan and financial needs only partially met, incrementing the competition for a small level of clients with higher income levels;
– expanding our financial products/services distribution, by using creativity in developing new products/services, solidly employing non-traditional means, for instance, expanding our credit cards offer and extension of loan granting for purchases in stores, by utilizing alliances with such stores and rendering services via Postal Bank;
– using the distribution channels in benefit of the Bank, including our traditional branch network and technology to access the Internet in order to identify demand for new products and services;
– offering our client base, broadly, our products and services;
– using the systems of our Branches, with a view to assessing and monitoring the use of our products and services by clients, so that to drive them to the appropriate sale, delivery and commercialization platforms; and
– developing varied products and services, in compliance with the needs of our current and potential clients.
VIII
2) To operate based on the Insurance Bank Model in order to maintain the profitability and consolidate Bradesco’s leadership in the insurance industry
Our goal is to be “the primary bank” for our clients, thus increasing attendance according to their banking, insurance and private pension needs. We believe to be in a privileged position to capitalize the synergy among banking, insurance, private pension products and services and other financial activities in order to sell our traditional banking products and services and insurance and private pension products and services, by means of our branch network, our brokers and dealerships network, distribution services via Internet and our creativity in developing new distribution channels.
Concurrently, we aim at increasing profitability levels of insurance and supplementary private pension plans segments, by using the profitability measure rather than the volume of underwritten premiums or amounts deposited, as observed as follows:
– maintaining our current policy of carefully assessing the car insurance risks and rejecting them in events where risks are too high;
– intensively trading our products and services; and
– maintaining acceptable risk levels in our operations by means of a strategy of:
- setting priorities to insurance underwriting opportunities, according to the risk spread between the revenue expected pursuant to the terms of insurance agreement and the amount of projected claims (statistically) to be due under the terms of such agreement;
- carrying out hedge transactions, so as to set out the mismatch between the real inflation index and provisions for adjustments of interest rates and inflation in long-term agreements;
- entering into reinsurance agreements with renowned reinsurance companies, executed by means of IRB-Brasil Resseguros, viewing to reducing the exposure to great risks; and
- using reinsurance contracts with important reinsurance companies.
3) Increased revenues from banking activities, profitability and value to shareholders, by reinforcing loan operations and expanding new products and services
We are concerned about the increase of revenues and profitability in our banking operations, with the following measures:
– carrying out our traditional deposit-taking activities and loan operations, continuously seeking to improve the quality of our loan portfolio, by means of risk mitigation plans and improvement in the assessment of loan granting ratings;
– building our customer base, legal entities and individuals, by offering products and services meeting the needs of specific clients, including foreign exchange products and services and import/export financing;
– intensively seeking the development of paid services based on fees, such as collection and payment processing for current and potential clients;
– expanding our financial services and products distributed out of our conventional means of branches, such as credit card activities, taking advantage of change in the consumers’ behavior concerning the financial services consumption;
– increasing our revenues from asset management and private pension plans; and
– continuously building our high-income and wealthy customer base, by providing a varied range of tailor-made financial products and services, and offering maximum efficiency in asset management.
IX
4) To maintain our commitment to technological innovation
The development of efficient means to reach clients and to process operations is a key element of our goal to increase our profitability and thus obtain coordinated growth opportunities. Recently, we resolved to reinforce such strategy with the challenge of changing our technological model, with a view to definitively maintaining our market leadership in the industry in terms of technology. Thus, we set a task force devoted to the advance of our profile and public perception towards technology.
We believe that technology offers unequalled opportunities to reach our clients efficiently in terms of costs and with satisfactory levels of security. We maintain the commitment of being ahead in the banking automation process, by creating opportunities for Brazilians to contact us via the Internet. We expect that the number of clients and operations carried out through the Internet continues to grow and, thus, we count on techniques such as:
– by continuously installing stations of access to the Internet (Web Points) in public sites, allowing clients to use our banking system via the Internet, whether or not they have access to a personal computer;
– by enlarging our mobile banking service (Bradesco Mobile Banking), allowing clients to carry out their banking operations via the Internet, with compatible mobile phones; and
– by providing Pocket Internet Banking for palmtops and Personal Digital Assistants (PDAs) allowing our clients to see their checking and savings accounts, credit card transactions, provide for payments, transfer funds and also obtain institutional information.
5) To obtain profitability and return to shareholders by improving the efficiency ratio
We intend to improve our efficiency levels:
– by maintaining the austerity as guideline for our cost control policy;
– by consolidating the synergies enabled by our recent acquisitions;
– by still reducing our operating costs, by means of technology investments, decreasing the costs per transaction, always maintaining our automated distribution channels updated, including our distribution systems by phone, Internet and teller machines; and
– by still incorporating institutions to be acquired in our existing system, in order to remove potential overlaps, redundancies and inefficiency.
6) To maintain acceptable risk levels in our operations
Bradesco is constantly identifying and assessing the risks inherent to the activities we developed and we maintain proper controls, ensuring the conformity of processes and capital efficient allocation, with a view to maintaining levels similar to international standards, as well as to obtain competitive advantages.
7) To enter into strategic alliances and selective acquisitions
We understand that the expansion phase of Brazilian financial institutions will occur due to the organic growth over the next years. In addition, we believe that acquisition opportunities will be smaller size institutions available. Notwithstanding, we deem that certain institutions, susceptible to be acquired, could present niche opportunities, such as consumer financing, credit cards and investment bank. Therefore, we continuously evaluate potential strategic alliances as well as consolidation opportunities, including privatization and acquisitions proposals, and other forms, which offer potential opportunities for Bradesco to increase its market share or improve its efficiency. In addition to focusing on the value and the quality of assets, we take into account potential operating synergies, cross-selling opportunities, know-how acquisitions and other advantages of potential alliance or acquisition. Our analysis of potential opportunities is guided by the impact these would have over our results.
X
Contents
| List of Main Abbreviations | 12 | |||||
| 1 – Bradesco – Line by Line | 13 | |||||
| Net Income | 14 | Statement of Income | 24 | |||
| Summarized Analysis of the Statement of Income | 15 | Analysis of the Statement of Income | 25 | |||
| Highlights | 17 | Comparative Balance Sheet | 42 | |||
| Bradesco’s Shares | 20 | Equity Analysis | 43 | |||
| 2 – Main Information on Statement of Income | 55 | |||||
| Consolidated Statement of Adjusted Income | 56 | Allowance for Loan Losses | 69 | |||
| Profitability | 58 | Fee and Commission Income | 70 | |||
| Results by Business Segment | 60 | Administrative and Personnel Expenses | 71 | |||
| Change in the Main Items of Statement of Income | 60 | Operating Efficiency | 72 | |||
| Change in Financial Margin Items plus | Other Indicators | 74 | ||||
| Exchange Adjustment | 61 | |||||
| Analysis of the Adjusted Financial Margin and | ||||||
| Average Rates | 62 | |||||
| 3 – Main Information on Balance Sheet | 75 | |||||
| Consolidated Balance Sheet | 76 | Funding | 86 | |||
| Total Assets by Currency and Maturities | 78 | Checking Accounts | 87 | |||
| Securities | 79 | Savings Accounts | 88 | |||
| Loan Operations | 80 | Assets under Management | 89 | |||
| 4 – Operating Companies | 91 | |||||
| Grupo Bradesco de Seguros e Previdência | 92 | Banco Bradesco BBI | 112 | |||
| – Insurance Companies (Consolidated) | 92 | Leasing Companies | 114 | |||
| – Bradesco Saúde | 98 | Bradesco Consórcios (Consortium Purchase Plans) | 116 | |||
| – Bradesco Auto/RE | 100 | Bradesco S.A. – Corretora de Títulos e Valores Mobiliários | 123 | |||
| – Bradesco Vida e Previdência | 103 | |||||
| – Bradesco Capitalização | 106 | Bradesco Securities, Inc. | 126 | |||
| Banco Finasa | 111 | |||||
| 5 – Operational Structure | 127 | |||||
| Corporate Organization Chart | 128 | Customer Service Network | 139 | |||
| Administrative Body | 130 | Bradesco Day&Night Customer Service Channels | 141 | |||
| Risk Ratings | 131 | Investments in Infrastructure, Information | ||||
| Ranking | 132 | Technology and Telecommunications | 145 | |||
| Market Segmentation | 133 | Risk Management and Compliance | 145 | |||
| Bradesco Corporate | 133 | Cards | 170 | |||
| Bradesco Empresas (Middle Market) | 134 | International Area | 174 | |||
| Bradesco Private | 135 | Cash Management Solutions | 178 | |||
| Bradesco Prime | 135 | Qualified Services for Capital Markets | 180 | |||
| Bradesco Varejo (Retail) | 136 | Business Processes | 185 | |||
| Banco Postal | 136 | Acknowledgments | 189 | |||
| 6 – Social-environmental Responsibility | 191 | |||||
| Bradesco Organization and the Social-Environmental | Finasa Esportes | 222 | ||||
| Responsibility | 192 | Social-Cultural Events | 223 | |||
| Human Resources | 196 | Social Report | 224 | |||
| Fundação Bradesco | 214 | |||||
| 7 – Independent Auditors’ Report | 225 | |||||
| Report of Independent Auditors on the Review of Supplementary Accounting Information | ||||||
| included in the Report on Economic and Financial Analysis and in the Social Report | 226 | |||||
| 8 – Financial Statements, Independent Auditors’ Report and Fiscal Council’s Report | 227 | |||||
| Management Report | 228 | Consolidated Value Added Statement | 239 | |||
| Consolidated Balance Sheet | 231 | Index of Notes to the Financial Statements | 240 | |||
| Consolidated Statement of Income | 235 | Management’s Notes to the Consolidated Financial | ||||
| Statement of Changes in | Statements |
241 | ||||
| Shareholders’ Equity | 236 | Management Bodies | 298 | |||
| Statement of Changes in | Independent Auditors’ Report on Special Review | 299 | ||||
| Financial Position | 237 | Fiscal Council’s Report | 300 | |||
| Consolidated Cash Flow | 238 | |||||
| Glossary of Technical Terms | 301 | |||||
| Cross Reference Index | 304 | |||||
| Certain figures included in this document have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be an arithmetic sum of the figures preceding them. |
List of Main Abbreviations
| AACD | – Association of Assistance to Disabled Children | IBNR | – Incurred But Not Reported | |||
| ABC | – Activity-Based Costing | Ibovespa | – São Paulo Stock Exchange Index | |||
| Abecs | – Brazilian Association of Credit Card Companies and Services | Ibracon | – Brazilian Institute of Independent Auditors | |||
| ABEL | – Brazilian Association of Leasing Companies | IBRE | – Brazilian Economy Institute | |||
| ABM | – Activity-Based Management | IDEC | – Brazilian Institute for the Defense of the Consumer | |||
| ACC | – Advances on Foreign Exchange Contracts | IEO | – Operating Efficiency Ratio | |||
| ADR | – American Depositary Receipt | IFC | – International Finance Corporation | |||
| ADS | – American Depositary Share | IFT | – Quarterly Financial Information | |||
| ADVB | – Association of Sales and Marketing Managers of Brazil | IGP-DI | – General Price Index – Internal Availability | |||
| Anbid | – National Association of Investment Banks | IGP-M | – General Price Index – Market | |||
| ANS | – National Agency for Supplementary Healthcare | Inmetro | – National Institute of Metrology, Standardization and | |||
| AP | – Personal Accident | Industrial Quality | ||||
| Apimec | – Association of the Capital Markets Investment Analysts and | INSS | – Social Security National Institute | |||
| Professionals | IPCA | – Extended Consumer Price Index | ||||
| Bacen | – Brazilian Central Bank | IPO | – Initial Public Offering | |||
| BDR | – Brazilian Depositary Receipt | IPTU | – Municipal Real Estate Tax | |||
| BM&F | – Mercantile and Futures Exchange | IR | – Income Tax | |||
| BNDES | – National Bank for Economic and Social Development | IRRF | – Withholding Income Tax | |||
| Bovespa | – São Paulo Stock Exchange | ISE | – Corporate Sustainability Index | |||
| CBLC | – Brazilian Settlement and Custody Company | ISS | – Tax on Services | |||
| CDB | – Bank Deposit Certificate | IT | – Information Technology | |||
| CDC | – Consumer Sales Financing | JCP | – Interest on Shareholders’ Capital | |||
| CDI | – Interbank Deposit Certificate | Latibex | – Latin American Stock Exchange Market in Euros (Spain) | |||
| CEF | – Federal Savings Bank | LOMA | – Life Office Management Association (North-American institution | |||
| Cetip | – Clearing House for the Custody and Financial Settlement of | which develops courses, examinations and researches in life, | ||||
| Securities | health and social security insurance segments) | |||||
| CIAB | – Information Technology Congress and Exposition of the | MBA | – Master of Business Administration | |||
| Financial Institutions | MUFG | – Mitsubishi UFJ Financial Group | ||||
| CMN | – National Monetary Council | NBR | – Registered Brazilian Rule | |||
| CNSP | – National Private Insurance Council | NGO | – Non-Governmental Organization | |||
| Cobit | – Control Objectives for Information and Related Technology | NPL | – Non-Performing Loans | |||
| Cofins | – Contribution for Social Security Financing | NYSE | – New York Stock Exchange | |||
| Conanda | – National Council for the Rights of Children and Adolescents | OHSAS | – Occupational Health and Safety Assessment Series | |||
| Copom | – Monetary Policy Committee | OIT | – International Labor Organization | |||
| Cosif | – Chart of Accounts for National Financial System Institutions | ON | – Common Stocks | |||
| COSO | – Committee of Sponsoring Organizations | PAA | – Advanced Service Branch | |||
| CPMF | – Provisory Contribution on Financial Transactions | PAB | – Banking Service Branch | |||
| CRI | – Certificate of Real Estate Receivables | PAE | – Electronic Service Branch in Companies | |||
| CS or CSLL | – Social Contribution or Social Contribution on Net Income | PDD | – Allowance for Loan Losses | |||
| CVM | – Brazilian Securities Commission | PGBL | – Unrestricted Benefits Generating Plan | |||
| DJSI | – Dow Jones Sustainability World Index | PIS | – Social Integration Program | |||
| DPV | – Available for Sale (Securities) | PL | – shareholders’ Equity | |||
| Dpvat | – Compulsory Vehicle Insurance | PLR | – Employee Profit Sharing | |||
| DR | – Depositary Receipt | PN | – Preferred Stocks | |||
| DRE | – Statement of Income for the Year | PPNG | – Unearned Premiums Provision | |||
| DTVM | – Securities Dealer | RCF | – Optional Third-Party Liability | |||
| DVA | – Value-Added Statement | RE | – Basic lines (of Insurance Products) | |||
| EMBI | – Emerging Markets Bond Index | ROA | – Return on Assets | |||
| EPE | – Specific Purpose Entities | ROAA | – Return on Average Assets | |||
| ERP | – Enterprise Resource Planning | ROAE | – Return on Average Shareholders’ Equity | |||
| EXIM | – Export and Import – BNDES Financing Line | ROE | – Return on Shareholders’ Equity | |||
| Fenaprevi | – National Federation of Life and Private Pension Plans | SA 8000 | – Social Accountability | |||
| FGV | – Fundação Getulio Vargas | SAP | – Systems Applications and Products | |||
| FIA | – Management Institute Foundation | SBPE | – Brazilian Savings and Loan System | |||
| FIDC | – Credit Right Funds | Sebrae | – Brazilian Micro and Small Business Support Service | |||
| FIE | – Exclusive Investment Fund | SEC | – U.S. Securities and Exchange Commission | |||
| Fiesp | – Federation of the Industries of the Sate of São Paulo | Selic | – Special Clearance and Custody System | |||
| Finabens | – Financing Line of other Assets and Services | SESI | – National Industry Social Service | |||
| Finame | – Fund for Financing the Acquisition of Industrial Machinery | SFH | – National Property System | |||
| and Equipment | Sipat | – Internal Week of Labor Accident Prevention | ||||
| FIPE | – Economic Research Institute Foundation | Susep | – Insurance Superintendence | |||
| Fipecafi | – Accounting, Actuarial and Financial Research Institute | TAC | _ Loan Opening Rate | |||
| Foundation | TJLP | – Federal Government Long-Term Interest Rate | ||||
| FlRN | – Floating Rate Note | TR | – Reference Interest Rate | |||
| FxRN | – Fixed Rate Note | TVM | – Securities | |||
| IBCC | – Brazilian Institute of Cancer Control | UN | – United Nations | |||
| IBGE | – Brazilian Institute of Geography and Statistics | VaR | – Value at Risk | |||
| Ibmec | – Brazilian Capital Markets Institute | VGBL | – Long-term Life Insurance |
12
1 Bradesco – Line by Line
| Net Income |
The Reported Net Income was impacted by some extraordinary events. Thus, in order to enable a better analysis and comparability between the quarters, we present below the Reported Net Income statement, without considering such events (Adjusted Net Income).
| R$ million | ||||||
| 2007 | 2008 | |||||
| 1st Quarter | 4th Quarter | 1st Quarter | ||||
| Reported Net Income | 1,705 | 2,193 | 2,102 | |||
| Extraordinary Events in the Period: | ||||||
| (-) Partial Sale of Equity Interest – Visa Inc. | – | – | (352) | |||
| (+) Full Goodwill Amortization | – | 140 | 53 | |||
| (-) Total Sale of Investment in Indiana Seguros | – | (64) | – | |||
| (-) Partial Sale of Bovespa’s Securities | – | (178) | – | |||
| (-) Partial Sale of BM&F’s Securities | – | (227) | – | |||
| (+) Supplementary Labor Provision | – | 232 | – | |||
| (-) Activated Tax Credit of Previous Periods | – | (300) | – | |||
| (-) Other | – | 38 | 21 | |||
| (+/-) Fiscal Effects | – | 20 | 83 | |||
| Adjusted Net Income | 1,705 | 1,854 | 1,907 | |||
| Returns on Shareholders' Equity – Adjusted Net Income – percentages |
| 2007 | 2008 | |||||
| 1st Quarter | 4th Quarter | 1st Quarter | ||||
| Return on Shareholders’ Equity – ROE | 28.9 | 26.8 | 25.3 | |||
| Return on Average Shareholders’ Equity – ROAE | 30.2 | 27.5 | 27.3 | |||
| Return on Shareholders’ Equity – ROE (without adjustment to market value reserve – TVM and Derivatives) | 31.5 | 28.3 | 26.5 | |||
| Return on Average Shareholders’ Equity – ROAE (without adjustment to market value reserve – TVM and Derivatives) | 32.6 | 29.4 | 28.7 | |||
| Return on Shareholders’ Equity – ROE (straight-line calculation) | 26.2 | 24.4 | 23.2 | |||
| Return on Average Shareholders’ Equity – ROAE (straight-line calculation) | 27.2 | 25.1 | 24.9 | |||
| Return on Assets – ROA | 2.4 | 2.2 | 2.2 | |||
| Return on Average Assets – ROAA | 2.5 | 2.3 | 2.2 | |||
| Reported Net Income x Net Income Adjusted by Extraordinary Events and Goodwill Amortizations – R$ million |
14
| Summarized Analysis of the Statement of Income |
With the purpose of favoring a better understanding, comparability and analysis of Bradesco’s results, we are disclosing the Statement of Adjusted Income, which is obtained from a series of adjustments made on the Reported Statement of Income. We point out that the Statement of Adjusted Income will be the basis used for analysis and comments of this Report on Economic and Financial Analysis.
Below, we show tables with the Reported Statement of Income, the respective adjustments and the Statement of Adjusted Income.
| 1Q07 x 1Q08 – R$ million |
| 1Q07 | 1Q08 | Variations | ||||||||||||||||
| Reported Statement of Income |
Adjustments | Adjusted | Reported | Adjustments | Adjusted | Amount | % | |||||||||||
| Fiscal | Statement of | Statement of | Fiscal | Statement of | ||||||||||||||
| Hedge (1) | Income | Income | Hedge (1) | Other | Income | |||||||||||||
| Financial Margin (a) | 5,231 | (212) | 5,019 | 6,096 | (46) | – | 6,050 | 1,031 | 20.5 | |||||||||
| Allowance for Loan Losses – PDD (b) | (1,160) | – | (1,160) | (1,667) | – | – | (1,667) | (507) | 43.7 | |||||||||
| Intermediation Gross Income | 4,071 | (212) | 3,859 | 4,429 | (46) | – | 4,383 | 524 | 13.6 | |||||||||
| Income from Insurance, Private Pension Plans and Certificated Savings Plans Operations (c) | 241 | – | 241 | 515 | – | – | 515 | 274 | 113.7 | |||||||||
| Fee and Commission Income (d) | 2,559 | – | 2,559 | 2,803 | – | – | 2,803 | 244 | 9.5 | |||||||||
| Personnel Expenses (e) | (1,460) | – | (1,460) | (1,737) | – | – | (1,737) | (277) | 19.0 | |||||||||
| Other Administrative Expenses (e) | (1,540) | – | (1,540) | (1,815) | – | – | (1,815) | (275) | 17.9 | |||||||||
| Tax Expenses (e) | (612) | 27 | (585) | (611) | 6 | – | (605) | (20) | 3.4 | |||||||||
| Other Operating Income/Expenses | (793) | – | (793) | (1,032) | – | 56 (2) | (976) | (183) | 23.1 | |||||||||
| Full Goodwill Amortization | – | – | – | (53) | – | 53 (3) | – | – | – | |||||||||
| Operating Income | 2,466 | (185) | 2,281 | 2,499 | (40) | 109 | 2,568 | 287 | 12.6 | |||||||||
| Non-Operating Income | (3) | – | (3) | 402 | – | (387) (4) | 15 | 18 | – | |||||||||
| IR/CS and Minority Interest | (758) | 185 | (573) | (799) | 40 | 83 (5) | (676) | (103) | 18.0 | |||||||||
| Net Income | 1,705 | – | 1,705 | 2,102 | – | (195) | 1,907 | 202 | 11.8 | |||||||||
| (1) partial result of derivatives used for hedge effect of investments abroad, which in terms of Net Income, simply annuls the fiscal and tax effect (IR/CS and PIS/Cofins) of this hedge strategy; |
(2) constitution of operating provisions – civil contingencies; |
| (3) full goodwill amortization in subsidiaries; |
| (4) mainly due to the positive result recorded in the partial sale of our interest in Visa Inc.; and |
| (5) fiscal effect of adjustments. |
Bradesco’s Net Income, in the three-month period ended on March 31, 2008, reached R$1,907 million, accounting for an 11.8% increase in relation to the same period of the previous year. Bradesco’s Shareholders’ Equity amounted to R$32,909 million as of March 31, 2008, equivalent to a 26.4% increase compared to the balance as of March 31, 2007. Consequently, the annualized return on Average Shareholders’ Equity (*) (ROAE) reached 28.7%. Total consolidated assets reached R$355,517 million as of March 31, 2008, accounting for a 26.1% growth in relation to the balance of same date of the previous year. The annualized return on Average Assets (ROAA), in 1Q08, was 2.2%. Earnings per share reached R$0.62.
The main items influencing net income in 1Q08, compared to the previous period, can be seen below:
(a) Financial Margin – R$1,031 million
Such growth is mainly due to “interest” component, with a share of R$941 million (R$1,519 million due to the increase in business volume, and R$578 million to the decrease in spreads), and to the “non-interest” result in the amount of R$90 million, resulting mostly from higher gains with TVM, treasury and loan recovery.
(b) Provision for Loan Losses – R$(507) million
The variation is mostly due to a 37.0% increase in the volume of loan operations in the 12-month period ended on March 31, 2008. Pointing out the individual client operations, mainly under the type “consumer financing”, with an increase of 36.9%, which, in view of its specific characteristic, requires a higher volume of provision.
(c) Income from Insurance, Private Pension Plans and Certificated Savings Plans Operations – R$274 million
The variation is mostly due to the better result assessed in the health line, resulting from the non-constitution of additional provision in 2008, as well as the better result obtained from the Life line, due to the 60.5% increase of the client base.
(d)Fee and Commission Income – R$244 million
The increase in the period is mainly due to a higher volume of operations, pointing out the item “Card Income” R$120 million, “Loan Operations” R$58 million, “Assets under Management” R$51 million, “Custody and Brokerage Services” R$23 million, and “Collection” R$21 million.
(e)Personnel, Administrative and Tax Expenses – R$(572) million
Out of such amount, R$277 million of personnel expenses is mainly due to: (i) the expansion of the customer service network and the consequent hiring of employees, as well as the increase in salary levels resulting from the collective bargaining agreement of 2007 (6.0%), benefits and others, in the amount of R$117 million; (ii) higher expenses with management and employee profit sharing (PLR) in the amount of R$62 million; and (iii) higher expenses with labor proceeding in the amount of R$83 million; and (iv) the consolidation of acquired companies (Credifar and BMC)R$15 million.
The variation of R$275 million in other administrative expenses in the period basically refers to: (i) the organic growth; (ii) the effects on increased volume of business; (iii) the investments in the improvement and optimization of the technological platform (IT Improvements Project); and (iv) the contractual adjustments. The R$20 million of tax expenses derives basically from (i) the increase in PIS/Cofins expenses R$72 million, due to the increase in taxable income; which was partially mitigated: (ii) by the reduction in CPMF expenses, in the amount of R$58 million.
(f) Other Operating Income/Expenses – R$(183) million
The increase in the period is due to: (i) the consolidation of the acquired companies (Credifar and BMC) in the amount of R$97 million; and (ii) higher operating provisions.
(*) It does not consider the mark-to-market effects of Available for Sale Securities.
15
| 4Q07 x 1Q08 – R$ million |
| 4Q07 | 1Q08 | Variations | ||||||||||||||||||
| Reported | Adjustments | Adjusted | Reported | Adjustments | Adjusted | |||||||||||||||
| Statement of | Fiscal | Statement of | Statement of | Fiscal | Statement of | Amount | % | |||||||||||||
| Income | Hedge (1) | Other | Income | Income | Hedge (1) | Other | Income | |||||||||||||
| Financial Margin (a) | 6,156 | (159) | – | 5,997 | 6,096 | (46) | – | 6,050 | 53 | 0.9 | ||||||||||
| Allowance for Loan Losses – PDD (b) | (1,556) | – | – | (1,556) | (1,667) | – | – | (1,667) | (111) | 7.1 | ||||||||||
| Intermediation Gross Income | 4,600 | (159) | – | 4,441 | 4,429 | (46) | – | 4,383 | (58) | (1.3) | ||||||||||
Income from Insurance, Private Pension Plans and Certificated Savings Plans Operations (c) |
146 | – | – | 146 | 515 | – | – | 515 | 369 | 252.7 | ||||||||||
| Fee and Commission Income (d) | 2,896 | – | – | 2,896 | 2,803 | – | – | 2,803 | (93) | (3.2) | ||||||||||
| Personnel Expenses (e) | (1,821) | – | – | (1,821) | (1,737) | – | – | (1,737) | 84 | (4.6) | ||||||||||
| Supplementary Labor Provision | (232) | – | 232(2) | – | – | – | – | – | – | – | ||||||||||
| Other Administrative Expenses (e) | (1,973) | – | – | (1,973) | (1,815) | – | (1,815) | 158 | (8.0) | |||||||||||
| Tax Expenses (e) | (643) | 20 | – | (623) | (611) | 6 | – | (605) | 18 | (2.9) | ||||||||||
| Other Operating Income/Expenses (f) | (662) | – | 74 (3) | (588) | (1,032) | – | 56 (3) | (976) | (388) | 66.0 | ||||||||||
| Full Goodwill Amortization | (140) | – | 140 (4) | – | (53) | – | 53 (4) | – | – | – | ||||||||||
| Operating Income | 2,171 | (139) | 446 | 2,478 | 2,499 | (40) | 109 | 2,568 | 90 | (28.6) | ||||||||||
| Non-Operating Income | 526 | – | (505) (5) | 21 | 402 | – | (387) (7) | 15 | (6) | – | ||||||||||
| IR/CS and Minority Interest | (504) | 139 | (280) (6) | (645) | (799) | 40 | 83(8) | (676) | (31) | 4.8 | ||||||||||
| Net Income | 2,193 | – | (339) | 1,854 | 2,102 | – | (195) | 1,907 | 53 | 2.9 | ||||||||||
| (1) partial result of derivatives used for hedge effect of investments abroad, which in terms of Net Income, simply annuls the fiscal and tax effect (IR/CS and PIS/Cofins) of this hedge strategy; |
| (2) supplementary provision for labor proceedings; due to the improvement in the calculation methodology; |
| (3) constitution of operating provisions – civil contingencies; |
| (4) fully goodwill amortization in subsidiaries; |
| (5) mainly due to the positive result recorded in the sale of part of our interest in Bovespa in the amount of R$178 million, in BM&F in the amount of R$227 million and in Indiana Seguros in the amount of R$64 million; |
| (6) fiscal effect of adjustments in the amount of R$(20) million and activation of the tax credits of previous periods in the amount of R$300 million; |
| (7) mainly by the positive result assessed in the partial sale of our interest in Visa Inc.; and |
| (8) tax effect of adjustments. |
In the 1st quarter of 2008, Bradesco’s Net Income reached R$1,907, against R$1,854 million in the 4th quarter of 2007, a 2.9% increase in the quarter. Bradesco’s Shareholders’ Equity amounted to R$32,909 million on March 31, 2008, a 8.4% increase in relation to December 31, 2007. Total consolidated assets reached R$355,517 million as of March 31, 2008, growing 4.2% in 1Q08.
The main items influencing net income in the 1st quarter of 2008 compared to the previous quarter can be seen below:
(a) Financial Margin – R$53 million
Such variation is due to the increase in the result of interest-bearing operations in the amount of R$315 million (R$421 million due to the increase in business volume, especially the consumer financing operations, and R$106 million to the decrease in spreads), mitigated by the decrease in the “non-interest” income in the amount of R$262 million, in view of the lower gains with loan recoveries, TVM and treasury in 1Q08.
(b) Provision for Loan Losses – R$(111) million
The increase in the expense in 1Q08 is consistent with the growth of our loan portfolio (by R$7,712 million or 5.9%) and mainly with the growth of operations with individual clients (by R$3,495 million or 6.5%), which, due to its characteristic, require higher provisioning volume.
(c) Income from Insurance, Private Pension Plans and Certificated Savings Plans Operations – R$369 million
The variation is basically due to the better result assessed in the health line, resulting from the non- constitution of additional provision in 2008, as well as the better result obtained from the decrease of claims in 1Q08 (from 75.0% to 73.4%).
(d) Fee and Commission Income – R$(93) million
The reduction is due to: (i) a lower volume of capital market operations in view of the economy scenario R$36 million; (ii) the realignment of individual checking accounts fees R$31 million; (iii) a lower loan operation revenue due to a reduction in the Loan Opening Fee (TAC) R$22 million; and (iv) a higher volume of card transactions in the 4Q07 R$11 million.
(e) Personnel, Administrative and Tax Expenses – R$260 million
Personnel expenses decreased R$84 million in the quarter basically as a result of: (i) lower expenses due to the vacation concentration R$21 million; (ii) lower expenses with management and employee profit sharing (PLR) in the amount of R$49 million; (iii) lower expenses for training R$13 million; and (iv) lower expenses with provision for labor proceedings R$10 million. The R$158 million decrease of other administrative expenses is mainly due to lower expenses with: (i) “Advertising” R$107 million; (ii) “Third-party Services” R$28 million; and (iii) “Data Processing” R$17 million.
The R$18 million variation of tax expenses is basically due to the: (i) decrease in CPMF expenses in the amount of R$74 million, which was partially offset; (ii) increase of PIS/Cofins expenses R$37 million, due to the increase of tax income; and (iii) increase in IPTU expenses in the amount of R$11 million.
(f) Other Operating Revenues and Expenses – R$(388) million
The increase in the quarter is basically due to the: (i) increase in interest expenses, net of revenues, in the amount of R$80 million; (ii) increase in expenses with operating provisions in the amount of R$139 million, including the constitution of the provision for restitution of the advanced settlement rate (TLA); and (iii) lower reversion of operating provisions R$93 million.
16
| Highlights |
| Income |
| R$ million | ||||||||||||
| 1st Qtr. | Variation | 2007 | 2008 | Variation | ||||||||
| 2007 | 2008 | % | 4th Qtr. | 1st Qtr. | % | |||||||
| Adjusted Financial Margin | 5,019 | 6,050 | 20.5 | 5,997 | 6,050 | 0.9 | ||||||
| Provision for Loan Losses | 1,160 | 1,667 | 43.7 | 1,556 | 1,667 | 7.1 | ||||||
| Fee and Commission Income | 2,559 | 2,803 | 9.5 | 2,896 | 2,803 | (3.2) | ||||||
| Insurance, Private Pension Plans and Certificated Savings | ||||||||||||
Plans Retained Premiums |
4,643 | 5,285 | 13.8 | 6,052 | 5,285 | (12.7) | ||||||
| Personnel Expenses | 1,460 | 1,737 | 19.0 | 1,821 | 1,737 | (4.6) | ||||||
| Other Administrative Expenses | 1,540 | 1,815 | 17.9 | 1,973 | 1,815 | (8.0) | ||||||
| Operating Income | 2,281 | 2,568 | 12.6 | 2,478 | 2,568 | 3.6 | ||||||
| Adjusted Net Income | 1,705 | 1,907 | 11.8 | 1,854 | 1,907 | 2.9 | ||||||
| Balance Sheet |
| R$ million | |||||||||||||
| March | Variation | 2007 | 2008 | Variation | |||||||||
| 2007 | 2008 | % | December | March | % | ||||||||
| Total Assets | 281,944 | 355,517 | 26.1 | 341,184 | 355,517 | 4.2 | |||||||
| Securities and Derivative Financial Instruments | 97,534 | 105,167 | 7.8 | 114,452 | 105,167 | (8.1) | |||||||
| Loan Operations (Expanded Concept) | 122,355 | 169,408 | 38.5 | 161,407 | 169,408 | 5.0 | |||||||
| • | Loan and Leasing Operations | 101,473 | 139,019 | 37.0 | 131,307 | 139,019 | 5.9 | ||||||
| • | Sureties and Guarantees (Accounted for in Memorandum | ||||||||||||
Accounts) |
15,969 | 25,080 | 57.1 | 24,296 | 25,080 | 3.2 | |||||||
| • | Credit Cards (Cash purchases and credit purchases from | ||||||||||||
store owners) |
4,913 | 5,309 | 8.1 | 5,804 | 5,309 | (8.5) | |||||||
| Permanent Assets | 3,557 | 3,903 | 9.7 | 3,670 | 3,903 | 6.3 | |||||||
| Deposits | 84,162 | 106,710 | 26.8 | 98,323 | 106,710 | 8.5 | |||||||
| Borrowings and Onlendings | 18,634 | 24,013 | 28.9 | 23,410 | 24,013 | 2.6 | |||||||
| Technical Provisions | 50,653 | 59,722 | 17.9 | 58,526 | 59,722 | 2.0 | |||||||
| Shareholders’ Equity | 26,029 | 32,909 | 26.4 | 30,357 | 32,909 | 8.4 | |||||||
| Change in Number of Outstanding Shares |
| Common shares | Preferred shares | Total | ||||
| Number of Outstanding Shares on December 31, 2007 | 1,009,337,030 | 1,009,336,926 | 2,018,673,956 | |||
| Shares Acquired and not Cancelled | (1,600) | (1,600) | (3,200) | |||
| Shares Subscription | 13,953,489 | 13,953,488 | 27,906,977 | |||
| 50% stock bonus | 511,644,460 | 511,644,407 | 1,023,288,867 | |||
| Number of Outstanding Shares on March 31, 2008 | 1,534,933,379 | 1,534,933,221 | 3,069,866,600 |
| Share Performance (*) |
| R$ | ||||||||||||
| 1st Qtr. | Variation | 2007 | 2008 | Variation | ||||||||
| 2007 | 2008 | % | 4th Qtr. | 1st Qtr. | % | |||||||
| Net Income per Share | 0.57 | 0.62 | 8.8 | 0.61 | 0.62 | 1.6 | ||||||
| Dividends/JCP per Common Share (net of Income Tax) | 0.162 | 0.198 | 22.2 | 0.247 | 0.198 | (19.8) | ||||||
| Dividends/JCP per Preferred Share (net of Income Tax) | 0.178 | 0.218 | 22.5 | 0.272 | 0.218 | (19.9) | ||||||
| Book Value per Share (Common and Preferred) | 8.67 | 10.72 | 23.6 | 10.03 | 10.72 | 6.9 | ||||||
| Last Business Day Price – Common | 27.63 | 28.47 | 3.0 | 34.33 | 28.47 | (17.1) | ||||||
| Last Business Day Price – Preferred | 28.00 | 32.53 | 16.2 | 37.97 | 32.53 | (14.4) | ||||||
| Market Value (R$ million) (**) | 83,507 | 93,631 | 12.1 | 109,463 | 93,631 | (14.5) | ||||||
| (*) | For comparison purposes, in 2008 there was a 50% stock bonus, which was applied for 2007. |
| (**) | Number of shares (disregarding treasury shares) x closing price of common and preferred shares of the last day of the period. |
17
| Cash Generation (*) |
| R$ million | ||||||||
| 2006 | 2007 | 2008 | ||||||
| 4th Qtr. | 1st Qtr. | 4th Qtr. | 1st Qtr. | |||||
| Net Income | 1,620 | 1,705 | 1,854 | 1,907 | ||||
| Equity in Earnings (Losses) of Unconsolidated Companies | (30) | (12) | (10) | (32) | ||||
| Allowance for Loan Losses | 1,189 | 1,160 | 1,556 | 1,667 | ||||
| Provision/Reversal for Devaluation | (42) | – | 1 | (10) | ||||
| Depreciation and Amortization | 130 | 133 | 137 | 138 | ||||
| Other | 7 | 17 | 11 | 57 | ||||
| Total | 2,874 | 3,003 | 3,549 | 3,727 | ||||
(*) It considers the Adjusted Net Income.
| Value Added with Hedge Adjustment and without Extraordinary Events |
| R$ million | ||||||||
| 2006 | 2007 | 2008 | ||||||
| 4th Qtr. | 1st Qtr. | 4th Qtr. | 1st Qtr. | |||||
| Value Added (A+B+C) | 4,187 | 4,320 | 4,940 | 4,921 | ||||
| A – Gross Income from Financial Intermediation | 3,856 | 3,859 | 4,441 | 4,383 | ||||
| B – Fee and Commission Income | 2,424 | 2,559 | 2,896 | 2,803 | ||||
| C – Other Income/Expenses | (2,093) | (2,098) | (2,397) | (2,265) | ||||
| Distribution of Value Added (D+E+F+G) | 4,187 | 4,320 | 4,940 | 4,921 | ||||
| D – Employees | 1,273 | 1,278 | 1,594 | 1,523 | ||||
| E – Government Contribution | 1,294 | 1,337 | 1,492 | 1,491 | ||||
| F – JCP/Dividends to Shareholders (paid and provisioned) | 40 | 601 | 683 | 740 | ||||
| G – Profit Reinvestment | 1,580 | 1,104 | 1,171 | 1,167 | ||||
| Distribution of Value Added – percentage | 100.0 | 100.0 | 100.0 | 100.0 | ||||
| Employees | 30.4 | 29.6 | 32.3 | 30.9 | ||||
| Government Contribution | 30.9 | 30.9 | 30.2 | 30.3 | ||||
| JCP/Dividends to Shareholders (paid and provisioned) | 1.0 | 13.9 | 13.8 | 15.0 | ||||
| Profit Reinvestments | 37.7 | 25.6 | 23.7 | 23.8 | ||||
| Calculation of Fixed Assets to Shareholders' Equity Ratio |
| R$ million | ||||||||
| 2006 | 2007 | 2008 | ||||||
| December | March | December | March | |||||
| Shareholders’ Equity + Minority Shareholders | 24,694 | 26,090 | 30,513 | 33,068 | ||||
| Subordinated Debts | 10,411 | 9,550 | 11,750 | 11,269 | ||||
| Tax Credits | (59) | (79) | (81) | (102) | ||||
| Exchange Membership Certificates | (84) | (88) | (35) | (32) | ||||
| Other Adjustments | – | (26) | (733) | (827) | ||||
| Reference Equity (A) (*) | 34,962 | 35,447 | 41,414 | 43,376 | ||||
| Permanent Assets | 8,912 | 9,342 | 14,963 | 19,277 | ||||
| Premises and Equipment and Leasing | (5,334) | (5,702) | (11,203) | (15,286) | ||||
| Unrealized Leasing Losses | (102) | (100) | (102) | (99) | ||||
| Other Adjustments | 799 | 517 | 2,329 | 1,342 | ||||
| Total Premises and Equipment (B) (*) | 4,275 | 4,057 | 5,987 | 5,234 | ||||
| Fixed Assets to Shareholders’ Equity Ratio (B/A) – % | 12.2 | 11.4 | 14.5 | 12.1 | ||||
| Margin | 13,206 | 13,666 | 14,720 | 16,454 | ||||
| (*) | For the calculation of Premises and Equipment to Shareholders’ Equity Ratio, the Exchange Membership Certificates are excluded from the Reference Equity and Premises and equipment, as per Bacen Resolution 2,283. |
18
| Performance Ratios (annualized) – percentages |
| 2006 | 2007 | 2008 | ||||||
| 4th Qtr. | 1st Qtr. | 4th Qtr. | 1st Qtr. | |||||
| Return on Shareholders’ Equity (total) | 29.0 | 28.9 | 26.8 | 25.3 | ||||
| Return on Average Shareholders’ Equity | 32.3 | 30.2 | 27.5 | 27.3 | ||||
| Return on Shareholders’ Equity (total) without adjustment to market value reserve – | ||||||||
| TVM and Derivatives | 31.3 | 31.5 | 28.3 | 26.5 | ||||
| Return on Average Shareholders’ Equity without adjustment to market value reserve – | ||||||||
| TVM and Derivatives | 34.3 | 32.6 | 29.4 | 28.7 | ||||
| Return on Shareholders’ Equity (total) – straight-line calculation | 26.3 | 26.2 | 24.4 | 23.2 | ||||
| Return on Average Shareholders’ Equity – straight-line calculation | 29.0 | 27.2 | 25.1 | 24.9 | ||||
| Return on Total Assets (total) | 2.5 | 2.4 | 2.2 | 2.2 | ||||
| Return on Average Total Assets | 2.6 | 2.5 | 2.3 | 2.2 | ||||
| Shareholders’ Equity on Total Assets | 9.3 | 9.2 | 8.9 | 9.3 | ||||
| Capital Adequacy Ratio (Basel) – Financial Consolidated (*) | 18.8 | 17.8 | 15.6 | 15.6 | ||||
| Capital Adequacy Ratio (Basel) – Total Consolidated (*) | 16.5 | 15.7 | 14.0 | 13.9 | ||||
| Fixed Assets to Shareholders' Equity Ratio – Financial Consolidated | 48.0 | 49.2 | 45.8 | 47.7 | ||||
| Fixed Assets to Shareholders' Equity Ratio – Total Consolidated | 12.2 | 11.4 | 14.5 | 12.1 | ||||
| Combined Ratio – Insurance | 93.7 | 95.9 | 92.8 | 83.9 | ||||
| Efficiency Ratio (in the previous 12 months) | 42.1 | 42.1 | 41.8 | 41.7 | ||||
| Coverage Ratio (Fee and Commission Income / Administrative and Personnel Expenses) | ||||||||
| (in the previous 12 months) | 75.4 | 78.0 | 80.2 | 78.7 | ||||
(*) If we choose the prerogative provided for in article 9 of Circular 3,367 of Bacen, the indexes of March 2008 would be 19.0% in the financial consolidated and 16.7% in the total consolidated.
| Market Share – Consolidated – percentages |
| 2006 | 2007 | 2008 | ||||||
| December | March | December | March | |||||
| Banks – Source: Bacen | ||||||||
| Time Deposit | 9.4 | 9.4 | 9.4 | I | ||||
| Savings Deposit | 14.7 | 14.2 | 14.0 | I | ||||
| Demand Deposit | 16.8 | 17.5 | 16.4 | I | ||||
| Loan Operations | 12.2 | 12.4 | 13.1 | 13.2 (*) | ||||
| Number of Branches | 16.6 | 16.7 | 17.3 (**) | 17.3 (**) | ||||
| Banks – Source: Anbid | ||||||||
| Investment Funds + Portfolios | 14.9 | 14.5 | 14.1 | 14.1 | ||||
| Banks – Source: Internal Revenue Service | ||||||||
| CPMF | 19.8 | 19.7 | 19.7 | N/A | ||||
| Insurance, Private Pension Plans and Certificated Savings Plans – Source: Susep and ANS | ||||||||
| Insurance, Private Pension Plans and Certificated Savings Plans Premiums | 25.8 | 24.4 | 25.5 | 24.1 (*) | ||||
| Insurance Premiums (including VGBL) | 26.3 | 24.4 | 25.8 | 23.8 (*) | ||||
| Revenues from Pension Plans Contributions (excluding VGBL) | 27.9 | 29.0 | 27.9 | 32.3 (*) | ||||
| Revenues from Certificated Savings Plans | 19.9 | 19.0 | 19.9 | 18.4 (*) | ||||
| Technical Provisions for Insurance, Private Pension Plans and Certificated Savings Plans | 37.1 | 36.8 | 36.4 | 35.1 (*) | ||||
| Insurance and Private Pension Plans – Source: Fenaprevi | ||||||||
| Income on VGBL Premiums | 43.4 | 43.4 | 41.9 | 39.1 (*) | ||||
| Revenues from PGBL Contributions | 30.6 | 30.9 | 26.1 | 32.3 (*) | ||||
| Private Pension Plans Investment Portfolios (including VGBL) | 42.0 | 41.4 | 40.9 | 40.2 (*) | ||||
| Credit and Debit Card – Source: Abecs | ||||||||
| Credit Card Revenue | 15.4 | 18.2 | 18.1 | 18.2 | ||||
| Debit Card Revenue | 20.5 | 20.1 | 19.8 | 18.8 | ||||
| Leasing – Source: Abel | ||||||||
| Active Operations | 11.5 | 11.0 | 12.9 | 13.9 (*) | ||||
| Banco Finasa – Source: Bacen | ||||||||
| Finabens (Portfolio) | 18.8 | 18.8 | 14.8 | 13.1 (*) | ||||
| Auto (Portfolio) – Including Banco Bradesco | 25.8 | 25.4 | 26.0 | 25.6 (*) | ||||
| Consortia – Source: Bacen | ||||||||
| Real Estate | 27.3 | 25.9 | 27.1 | 27.2 (*) | ||||
| Auto | 20.2 | 20.0 | 21.1 | 21.2 (*) | ||||
| Trucks, Tractors and Agricultural Implements | 6.3 | 6.3 | 6.8 | 6.7 (*) | ||||
| International Area – Source: Bacen | ||||||||
| Export Market | 22.3 | 19.8 | 20.4 | 21.1 (**) | ||||
| Import Market | 15.4 | 16.6 | 16.1 | 15.2 (**) | ||||
(*) Reference date: February 2008, (in the health insurance case, the ANS indexes were estimated).
(**) Previous data.
NA – Not available.
I – Inapplicable.
19
| Highlights |
| Other Information |
| March | Variation % |
December | March | Variation % |
||||||||
| 2007 | 2008 | 2007 | 2008 | |||||||||
| Funding and Assets Managed – in R$ million | 406,970 | 506,808 | 24.5 | 484,265 | 506,808 | 4.7 | ||||||
| Number of Employees | 79,686 | 83,124 | 4.3 | 82,773 | 83,124 | 0.4 | ||||||
| Number of Branches | 3,015 | 3,169 | 5.1 | 3,160 | 3,169 | 0.3 | ||||||
| Savings Account Holders – thousand | 31,329 | 32,213 | 2.8 | 34,623 | 32,213 | (7.0) | ||||||
| Credit, Private Label and Debit Cards Base – thousand | 60,254 | 72,971 | 21.1 | 70,469 | 72,971 | 3.6 | ||||||
| Bradesco’s Shares |
| Number of Shares (in thousands) – Common and Preferred Shares (*) |
| December | March | |||||||||||
| 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | |||||||
| Common | 1,437,054 | 1,430,107 | 1,468,350 | 1,500,214 | 1,514,006 | 1,534,934 | ||||||
| Preferred | 1,416,492 | 1,416,491 | 1,469,817 | 1,502,435 | 1,514,006 | 1,534,933 | ||||||
| Subtotal – Outstanding Shares | 2,853,546 | 2,846,598 | 2,938,167 | 3,002,649 | 3,028,012 | 3,069,867 | ||||||
| Treasury Shares | 516 | – | 696 | 1,137 | 3,368 | 3 | ||||||
| Total | 2,854,062 | 2,846,598 | 2,938,863 | 3,003,786 | 3,031,380 | 3,069,870 | ||||||
(*) For comparison purposes, the shares had 50% bonus in 2008 which were applied for previous years. Likewise, 100% bonus occurred in 2005 and 2007, as well as 200% in 2004.
On March 31, 2008, Bradesco’s capital stock was R$23 billion, composed of 3,069,869,800 shares, of which 1,534,934,979 are common and 1,534,934,821 are preferred, non-par and book-entry shares. The largest shareholder is the holding company Cidade de Deus Participações, which directly holds 48.22% of our voting capital and 24.12% of our total capital. Cidade de Deus Participações is controlled by the Aguiar Family, Fundação Bradesco and another holding company, Nova Cidade de Deus Participações. Nova Cidade de Deus Participações is owned by Fundação Bradesco and Elo Participações e Investimento, which has as shareholders the majority of members of Bradesco’s Board of Directors and Statutory Executive Board (see page 128).
Number of Shareholders – Domiciled in the Country and Abroad
| December | March | |||||||||||||
| 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | ||||||||
| Individuals | 2,153,800 | 2,158,808 | 1,254,044 | 1,244,572 | 1,248,275 | 1,248,310 | 1,257,120 | |||||||
| Corporations | 179,609 | 180,559 | 116,894 | 116,225 | 116,040 | 115,710 | 115,738 | |||||||
| Subtotal of Domiciled in the Country | 2,333,409 | 2,339,367 | 1,370,938 | 1,360,797 | 1,364,315 | 1,364,020 | 1,372,858 | |||||||
| Domiciled Abroad | 373 | 465 | 3,780 | 3,701 | 3,689 | 3,699 | 3,727 | |||||||
| Total | 2,333,782 | 2,339,832 | 1,374,718 | 1,364,498 | 1,368,004 | 1,367,719 | 1,376,585 | |||||||
Concerning Bradesco’s shareholders, domiciled in the country and overseas, on March 31, 2008, 1,372,858 shareholders were domiciled in Brazil, accounting for 99.73% of total shareholders’ base and holding 71.17% of Bradesco’s shares. The number of shareholders living abroad was 3,727, representing 0.27% of total shareholders’ base and holding 28.83% of Bradesco’s outstanding shares.
20
| Market Value – R$ million |
N.B.: the market value considers the closing quotation of the common and preferred shares multiplied by the respective number of shares (excluding treasury shares).
| Market Value/Shareholders’ Equity |
Market Value/Shareholders’ Equity: indicates the number of times Bradesco’s market value is higher than its accounting shareholders’ equity.
Formula used: number of common and preferred shares multiplied by the closing price of common and preferred shares of the last business day of the period. The amount is divided by the accounting shareholders’ equity of the period.
| Dividend Yield – percentages (in the previous 12 months) |
Dividend Yield: is the ratio between the dividends and/or interest on shareholders’ capital distributed to shareholders over the past 12 months and the share price, indicating the investment’s return related to profit sharing.
Formula used: amount received by shareholders as dividends and/or interest on shareholders’ capital (gross of IR) over the past 12 months, which is divided by the preferred share closing price of the last business day of the period.
21
| Payout Index – percentages (in the previous 12 months) |
Payout Index: indicates the percentage of net income paid as dividends/interest on shareholders’ capital.
Formula used: amount received by shareholders as dividends and/or interest on shareholders’ capital (gross of IR), which is divided by net income adjusted by legal reserve (5% of net income).
| Financial Volume – Bradesco PN x Ibovespa |
Source: Economática
22
| Net Earnings per Share – R$ (in the previous 12 months) (*) |
(*) For comparison purposes, the amounts were adjusted according to bonus and splits occurred in the period.
| Appreciation Index – Bradesco PN (BBDC4) x Ibovespa (percentages) |
Source: Economática
| Bradesco’s Share Performance |
In 1Q08, Bradesco’s preferred shares depreciated by 12.4% (adjusted by dividends), having a lower performance than Ibovespa’s, which had a 4.6% loss in the period.
The shares of the financial sector continued to be affected, in a global scale, by news about the subprime real estate loans in the United States, including those with a null exposition to subprime, like Bradesco. In the Brazilian market, measures taken by the Ministry of Finance to offset the end of CPMF payment (CSLL increase of the financial sector from 9% to 15% and IOF by 0.38 p.p.) and the creation of a compulsory deposit on CDIs raised from leasing companies were other factors that contributed to the weak performance of the segment in the quarter.
23
| Statement of Income |
| R$ million | ||||||||||||
| 1st Qtr | Variation | 4th Qtr. | 1st Qtr | Variation | ||||||||
| 2007 | 2008 | % | 2007 | 2008 | % | |||||||
| Revenues from Financial Intermediation | 9,568 | 11,693 | 22.2 | 11,163 | 11,693 | 4.7 | ||||||
| Loan Operations | 5,233 | 6,571 | 25.6 | 6,073 | 6,571 | 8.2 | ||||||
| Leasing Operations | 192 | 373 | 94.3 | 284 | 373 | 31.3 | ||||||
| Securities Transactions | 1,795 | 1,820 | 1.4 | 1,807 | 1,820 | 0.7 | ||||||
| Insurance, Private Pension Plans and Certificated | ||||||||||||
| Savings Plans | 1,685 | 1,676 | (0.5) | 2,068 | 1,676 | (19.0) | ||||||
| Derivative Financial Instruments | 198 | 528 | 166.7 | 390 | 528 | 35.4 | ||||||
| Foreign Exchange Transactions | 149 | 396 | 165.8 | 232 | 396 | 70.7 | ||||||
| Compulsory Deposits | 316 | 329 | 4.1 | 309 | 329 | 6.5 | ||||||
| Expenses from Financial Intermediation | ||||||||||||
| (not including PDD) | 4,549 | 5,643 | 24.0 | 5,166 | 5,643 | 9.2 | ||||||
| Federal Funds Purchased and Securities Sold under | ||||||||||||
| Agreements to Repurchase | 3,295 | 3,818 | 15.9 | 3,523 | 3,818 | 8.4 | ||||||
| Price-Level Restatement and Interest on Technical | ||||||||||||
| Provisions for Insurance, Private Pension Plans and | ||||||||||||
| Certificated Savings Plans | 1,043 | 1,024 | (1.8) | 1,288 | 1,024 | (20.5) | ||||||
| Borrowings and Onlendings | 209 | 800 | 282.8 | 353 | 800 | 126.6 | ||||||
| Leasing Operations | 2 | 1 | (50.0) | 2 | 1 | (50.0) | ||||||
| Financial Margin | 5,019 | 6,050 | 20.5 | 5,997 | 6,050 | 0.9 | ||||||
| Provision for Loan Losses | (1,160) | (1,667) | 43.7 | (1,556) | (1,667) | 7.1 | ||||||
| Gross Income from Financial Intermediation | 3,859 | 4,383 | 13.6 | 4,441 | 4,383 | (1.3) | ||||||
| Other Operating Income/Expenses | (1,578) | (1,815) | 15.0 | (1,963) | (1,815) | (7.5) | ||||||
| Fee and Commission Income | 2,559 | 2,803 | 9.5 | 2,896 | 2,803 | (3.2) | ||||||
| Operating Income from Insurance, Private | ||||||||||||
| Pension Plans and Certificated Savings Plans | 241 | 515 | 113.7 | 146 | 515 | 252.7 | ||||||
| (+) Net Premiums Issued | 4,801 | 5,367 | 11.8 | 6,175 | 5,367 | (13.1) | ||||||
| ( - ) Reinsurance Premiums | (158) | (82) | (48.1) | (123) | (82) | (33.3) | ||||||
| (=) Retained Premiums from Insurance, Private | ||||||||||||
| Pension Plans and Certificated Savings Plans | 4,643 | 5,285 | 13.8 | 6,052 | 5,285 | (12.7) | ||||||
| Retained Premiums from Insurance | 1,993 | 2,268 | 13.8 | 2,187 | 2,268 | 3.7 | ||||||
| Private Pension Plans Contributions | 2,307 | 2,645 | 14.7 | 3,448 | 2,645 | (23.3) | ||||||
| Income from Certificated Savings Plans | 343 | 372 | 8.5 | 417 | 372 | (10.8) | ||||||
| Variation in Technical Provisions for Insurance, | ||||||||||||
| Private Pension Plans and Certificated Savings Plans | (2,413) | (2,533) | 5.0 | (3,644) | (2,533) | (30.5) | ||||||
| Variation in Technical Provisions for Insurance | (251) | (55) | (78.1) | (293) | (55) | (81.2) | ||||||
| Variation in Technical Provisions for Private | ||||||||||||
| Pension Plans | (2,174) | (2,480) | 14.1 | (3,345) | (2,480) | (25.9) | ||||||
| Variation in Technical Provisions for Certificated Savings Plans | 12 | 2 | (83.3) | (6) | 2 | – | ||||||
| Retained Claims | (1,428) | (1,640) | 14.8 | (1,595) | (1,640) | 2.8 | ||||||
| Certificated Savings Plans Draws and Redemptions | (301) | (318) | 5.6 | (379) | (318) | (16.1) | ||||||
| Insurance, Private Pension Plans and Certificated | ||||||||||||
| Savings Plans Selling Expenses | (260) | (279) | 7.3 | (288) | (279) | (3.1) | ||||||
| Insurance Products Selling Expenses | (206) | (222) | 7.8 | (218) | (222) | 1.8 | ||||||
| Private Pension Plans Selling Expenses | (50) | (56) | 12.0 | (65) | (56) | (13.8) | ||||||
| Certificated Savings Plans Selling Expenses | (4) | (1) | (75.0) | (5) | (1) | (80.0) | ||||||
| Personnel Expenses | (1,460) | (1,737) | 19.0 | (1,821) | (1,737) | (4.6) | ||||||
| Other Administrative Expenses | (1,540) | (1,815) | 17.9 | (1,973) | (1,815) | (8.0) | ||||||
| Tax Expenses | (585) | (605) | 3.4 | (623) | (605) | (2.9) | ||||||
| Equity in Earnings of Unconsolidated Companies | 12 | 32 | 166.7 | 10 | 32 | 220.0 | ||||||
| Other Operating Income | 337 | 330 | (2.1) | 424 | 330 | (22.2) | ||||||
| Other Operating Expenses | (1,142) | (1,338) | 17.2 | (1,022) | (1,338) | 30.9 | ||||||
| Operating Income | 2,281 | 2,568 | 12.6 | 2,478 | 2,568 | 3.6 | ||||||
| Non-Operating Income | (3) | 15 | – | 21 | 15 | (28.6) | ||||||
| Income before Taxes on Income and Profit Sharing | 2,278 | 2,583 | 13.4 | 2,499 | 2,583 | 3.4 | ||||||
| Income Tax and Social Contribution | (570) | (672) | 17.9 | (642) | (672) | 4.7 | ||||||
| Minority Interest in Subsidiaries | (3) | (4) | 33.3 | (3) | (4) | 33.3 | ||||||
| Net Income | 1,705 | 1,907 | 11.8 | 1,854 | 1,907 | 2.9 | ||||||
| Annualized Return on Shareholders’ Equity (*) (%) | 32.6 | 28.7 | 29.4 | 28.7 | ||||||||
(*) Refers to average Shareholders’ Equity and does not consider the mark-to-market effects on available-for-sale securities.
24
| Analysis of the Statement of Income – R$ million |
| Income from Loan and Leasing Operations |
| 1st Qtr./2007 | 1st Qtr./2008 | Variation % | 4th Qtr./2007 | 1st Qtr./2008 | Variation % | |||||
| 5,423 | 6,943 | 28.0 | 6,355 | 6,943 | 9.3 | |||||
In the period, income was up mainly as result of: (i) the increase in the volume of the loan portfolio, which totaled R$139,019 in March/08 against R$101,473 in March/07, i.e., a 37.0% increase. We highlight the corporate portfolio, with an increase of 37.1%, due to “BNDES Onlending”, “Guaranteed Account”, “Financing to Export”, “Working Capital” and “Leasing” products. In the individual portfolio, the growth was 36.9%, with focus on the products connected to consumer financing; partially mitigated: (ii) by the decrease in average interest rates, observing the 2.6% CDI variation in 1Q08, against 3.0% in 1Q07. |
The variation in income in the quarter was mainly due to: (i) the increase of 5.9% in the volume of the loan portfolio, which reached the amount of R$139,019 in March/08, against R$131,307 in December/07, considering that in the corporate portfolio there was an increase of 5.4%, with focus on the “Financing to Export”, “Working Capital” and “Leasing” products, whereas in the individual portfolio the increase was 6.5%, with focus on products linked to consumer financing. |
|||||||||
| Income from Securities (TVM) and Derivative Financial Instruments |
| 1st Qtr./2007 | 1st Qtr./2008 | Variation % | 4th Qtr./2007 | 1st Qtr./2008 | Variation % | |||||
| 1,993 | 2,348 | 17.8 | 2,197 | 2,348 | 6.9 | |||||
The increase in income in the period is mainly due to: (i) the increase in the average volume of the portfolio (TVM, Derivative Financial Investments and Interbank Investments); (ii) the higher “non-interest” income gains in the amount of R$60 in 1Q08; partially offset by: (iii) the reduction in the average interest rates, observing the 2.6% CDI variation in 1Q08, against 3.0% in 1Q07. |
The variation in income in the quarter is mainly due to: (i) the increase in the average volume of the portfolio (TVM, Derivative Financial Instruments and Interbank Investments); partially mitigated: (ii) by lower “non-interest” income gains in the amount of R$15. |
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25
| Income from Insurance, Private Pension Plans and Certificated Savings Plans |
| 1st Qtr./2007 | 1st Qtr./2008 | Variation % | 4th Qtr./2007 | 1st Qtr./2008 | Variation % | |||||
| 1,685 | 1,676 | (0.5) | 2,068 | 1,676 | (19.0) | |||||
The variation in the period was basically due to: (i) the lower “non- interest” income of R$18; (ii) the reduction in the average interest rates, observing the 2.6% CDI variation in 1Q08, against 3.0% in 1Q07; offset by: (iii) the increase in the average volume portfolio; and (iv) the higher IGP-M variation of 2.4% in 1Q08, against 1.1% 1Q07. |
The variation in the quarter was substantially due to: (i) the lower “non- interest” income of R$188; (ii) the lower IGP-M variation of 2.4% in 1Q08, against 3.5% in 4Q07; offset by: (iii) the increase in the average volume of the portfolio. |
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| Income from Foreign Exchange Transactions |
| 1st Qtr./2007 | 1st Qtr./2008 | Variation % | 4th Qtr./2007 | 1st Qtr./2008 | Variation % | |||||
| 149 | 396 | 165.8 | 232 | 396 | 70.7 | |||||
For a better analysis, this item should be analyzed deducted from expenses with foreign funding, used for import/export operation financing, in accordance with Note 11a. After the deductions, the result would be R$72 in 1Q07 and R$135 in 1Q08, basically due to the increase in foreign exchange portfolio volume. |
For a better analysis, this item should be analyzed deducted from expenses with foreign funding used for import/export operation financing, in accordance with Note 11a. After such deductions, the result would be R$113 in 4Q07 and R$135 in 1Q08, basically due to the increase in foreign exchange portfolio volume. |
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26
| Income from Compulsory Deposits |
| 1st Qtr./2007 | 1st Qtr./2008 | Variation % | 4th Qtr./2007 | 1st Qtr./2008 | Variation % | |||||
| 316 | 329 | 4.1 | 309 | 329 | 6.5 | |||||
The variation in the period is basically due to: (i) the increase in the average volume of deposits in the period; mitigated by: (ii) the CDI variation of 2.6% in 1Q08, against 3.0% in 1Q07, used to remunerate the additional compulsory deposit; and (iii) the drop in TR – Reference Interest Rate, used to remunerate the compulsory on savings deposits. |
The variation in the quarter is basically due to the increase in the average volume of time deposits in the quarter. | |||||||||
| Expenses with Federal Funds Purchased and Securities Sold under Agreements to Repurchase |
| 1st Qtr./2007 | 1st Qtr./2008 | Variation % | 4th Qtr./2007 | 1st Qtr./2008 | Variation % | |||||
| 3,295 | 3,818 | 15.9 | 3,523 | 3,818 | 8.4 | |||||
The variation in the period is mostly due to: (i) the increase in the average funding volume; offset by: (ii) the reduction in the average interest rates, observing the 2.6% CDI variation in 1Q08, against 3.0% in 1Q07, mainly affecting the time deposits expenses. |
The variation in the quarter derives basically from the increase in the average volume of the portfolio. |
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27
| Expenses with Price-level Restatement and Interest on Technical Provisions for Insurance, Private Pension Plans and Certificated Savings Plans |
| 1st Qtr./2007 | 1st Qtr./2008 | Variation % | 4th Qtr./2007 | 1st Qtr./2008 | Variation % | |||||
| 1,043 | 1,024 | (1.8) | 1,288 | 1,024 | (20.5) | |||||
The variation in the period is basically due to: (i) the reduction in the average interest rates, observing the 2.6% CDI variation in 1Q08, against 3.0% in 1Q07; mitigated by: (ii) the higher average volume of technical provisions, especially the “VGBL” product; and (iii) the higher IGP-M variation of 2.4% in 1Q08, against 1.1% in 1Q07, one of the indexes which also remunerates the technical provisions. |
The variation in the quarter is mostly due to: (i) the lower IGP-M variation of 2.4% in 1Q08, against 3.5% in 4Q07, one of the indexes which also remunerates the technical provisions; offset by: (ii) the higher average volume of technical provisions, especially the “VGBL” product. |
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| Borrowings and Onlendings Expenses |
| 1st Qtr./2007 | 1st Qtr./2008 | Variation % | 4th Qtr./2007 | 1st Qtr./2008 | Variation % | |||||
| 209 | 800 | 282.8 | 353 | 800 | 126.6 | |||||
The variation in the period is basically due to: (i) the increase in the average funding volume, mainly represented by Finame and BNDES operations; (ii) the lower exchange loss variation of 1.3% in 1Q08, against 4.1% in 1Q07, having an effect on foreign exchange funding; mitigated: (iii) by the decrease in average interest rates, according to the 2.6% CDI variation in 1Q08, against 3.0% in 1Q07, affecting funding in foreign currency. |
The variation in the quarter is mainly due to: (i) the increase in the average volume of fundings, substantially represented by Finame operations; and (ii) the lower exchange loss variation of 1.3% in 1Q08, against 3.7% in 4Q07, effecting the foreign exchange funding. |
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28
| Financial Margin |
| 1st Qtr./2007 | 1st Qtr./2008 | Variation % | 4th Qtr./2007 | 1st Qtr./2008 | Variation % | |||||
| 5,019 | 6,050 | 20.5 | 5,997 | 6,050 | 0.9 | |||||
The variation of R$1,031 in financial margin is basically due to: (i) the increase in the result of interest-bearing operations of R$941, R$1,519 due to a growth in the average business volume and R$578 due to the decrease in spreads; and (ii) the higher “non-interest” income of R$90, basically derived from the loan recovery and higher treasury gains. |
The variation of R$53 in financial margin is due to: (i) the growth in the result of interest-bearing operations in the amount of R$315, R$421 due to the increase in the average business volume and R$106 to the decrease in spreads; mitigated (ii) by the decrease in the “non-interest” income of R$262, basically derived from the lower gains with loan recovery, TVM and treasury. |
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| Provision for Loan Losses Expenses |
| 1st Qtr./2007 | 1st Qtr./2008 | Variation % | 4th Qtr./2007 | 1st Qtr./2008 | Variation % | |||||
| 1,160 | 1,667 | 43.7 | 1,556 | 1,667 | 7.1 | |||||
The increase in the period of R$507 is compatible with the growth of our loan portfolio (37.0% or R$37,546 in the 12-month period and with the relevant participation of individuals which, due to their characteristic, require higher provisioning volume, whose growth in the period was 36.9% or R$15,341. |
The variation in the quarter is compatible with the growth of our loan portfolio and mainly with the 6.5% growth in the operations with individual clients which, due to their characteristic, require higher provisioning volume. |
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29
| Fee and Commission Income |
| 1st Qtr./2007 | 1st Qtr./2008 | Variation % | 4th Qtr./2007 | 1st Qtr./2008 | Variation % | |||||
| 2,559 | 2,803 | 9.5 | 2,896 | 2,803 | (3.2) | |||||
The increase of income in the period is mainly due to a hike in the volume of operations, with focus on: (i) card income R$120; (ii) loan operations R$58; (iii) assets management R$51; (iv) custody and brokerage services R$23; and (v) collection R$21. |
The reduction of income in the quarter is mostly due to: (i) a lower volume of capital market operations in view of the economy scenario of R$36; (ii) the realignment of individual checking accounts fees R$31; (iii) a lower loan operation revenue due to a reduction in the collection of Loan Opening Fee (TAC) R$22; and a higher volume of card transactions in the 4Q07 R$11. |
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| Retained Premiums from Insurance, Private Pension Plans and Certificated Savings Plans |
| 1st Qtr./2007 | 1st Qtr./2008 | Variation % | 4th Qtr./2007 | 1st Qtr./2008 | Variation % | |||||
| 4,643 | 5,285 | 13.8 | 6,052 | 5,285 | (12.7) | |||||
The growth in the period is detailed in the charts below: |
The variation in the quarter is detailed in the charts below: |
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30
| a) Retained Premiums from Insurance |
| 1st Qtr./2007 | 1st Qtr./2008 | Variation % | 4th Qtr./2007 | 1st Qtr./2008 | Variation % | |||||
| 1,993 | 2,268 | 13.8 | 2,187 | 2,268 | 3.7 | |||||
The variation in the period is due to: (i) the increase in the production of: (i) Health line R$124 (substantially in the corporate, health and dental insurance, due to annual restatement by medical, hospital and dental costs variation, and also due to portfolio technical balance); (ii) Life line R$87; (iii) Auto line R$36; (iv) Basic lines R$10; and (v) other segments R$18. N.B. 1: in 2008, there was an increase, even not considering Indiana Seguros, due to its sale. N.B. 2: in order to comply with Susep Circular no. 356, Individual Life redemption was reclassified to “technical provision variation”. |
The variation in the quarter is due to the increase in the production of: (i) the Life line R$26; (ii) the Health line R$22; (iii) the Basic lines R$12; (iv) other lines R$46, due to the Dpvat insurance payment, in which there is a concentration in 1Q08; offset: (iv) by the drop in the Auto Line production R$25. N.B.: in order to comply with Susep Circular no. 356, Individual Life redemption was reclassified to “technical provision variation”. |
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| b) Private Pension Plans Contributions |
| 1st Qtr./2007 | 1st Qtr./2008 | Variation % | 4th Qtr./2007 | 1st Qtr./2008 | Variation % | |||||
| 2,307 | 2,645 | 14.7 | 3,448 | 2,645 | (23.3) | |||||
The increase in the period is due to the higher sale of the following products: (i) “VGBL” R$233; and (ii) “PGBL/Traditional” R$105; N.B.: in order to comply with Susep Circular no. 356, VGBL redemption was reclassified to “technical provision variation”. |
The variation in the quarter is due to the seasonality of 4Q07, for the economy has received resources, impacting the sale of the “VGBL” product R$871. N.B.: in order to comply with Susep Circular no. 356, Life redemption was reclassified to “technical provision variation”. |
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31
| c) Income on Certificated Savings Plans |
| 1st Qtr./2007 | 1st Qtr./2008 | Variation % | 4th Qtr./2007 | 1st Qtr./2008 | Variation % | |||||
| 343 | 372 | 8.5 | 417 | 372 | (10.8) | |||||
The variation in the period is mainly due to the higher sale of certificated savings plans: (i) Pé Quente Bradesco 1000; (ii) Pé Quente Bradesco 1000 Reaplic ; Pé Quente Bradesco Pessoa Jurídica (launch); and (iv) those plans connected to sustainability actions – Pé Quente Bradesco O Câncer de Mama no Alvo da Moda (Breast Cancer in the Fashion Target). |
The variation in the quarter is mainly due to the higher sale of certificated savings plans in 4Q07 due to seasonality, mainly when compared to the 1st quarter. |
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| Variation in Technical Provisions for Insurance, Private Pension Plans and Certificated Savings Plans |
| 1st Qtr./2007 | 1st Qtr./2008 | Variation % | 4th Qtr./2007 | 1st Qtr./2008 | Variation % | |||||
| (2,413) | (2,533) | 5.0 | (3,644) | (2,533) | (30.5) | |||||
The variation in the period is detailed in the charts below: |
The variation in the quarter is detailed in the charts below: |
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32
| a) Variation in Technical Provisions for Insurance |
| 1st Qtr./2007 | 1st Qtr./2008 | Variation % | 4th Qtr./2007 | 1st Qtr./2008 | Variation % | |||||
| (251) | (55) | (78.1) | (293) | (55) | (81.2) | |||||
The variation in technical provisions is directly related to the sale of insurance in their respective effectiveness periods. The variations occurred in 1Q08 were comprised of: higher constitution of provision in the Life line R$55; in the Health insurance R$16; in the Basic lines R$10; offset: by the decrease in the Auto line R$26; The variations occurred in 1Q07 were comprised of higher constitutions of provision: (i) in the Health insurance R$262; (ii) Life line R$77; (iii) Basic lines R$2; mitigated: (iv) by the lower constitution of provision in the Auto line R$90. N.B.: in order to comply with Susep Circular 356, there was a reclassification of Individual Life Plan redemptions. |
The variation in technical provisions is directly related to the sale of insurance in their respective effectiveness periods. The variations occurred in 1Q08 were comprised of: the higher constitution of provision in the Life line R$55; in the Health insurance R$16; in the Basic lines R$10; offset: by the decrease in the Auto line R$26; The variations occurred in 4Q07 were mainly comprised of: (i) higher constitution of provision: (i) in the Health Line R$181; (ii) Auto line R$19; and (iii) Life line R$94. N.B.: In order to comply with Susep Circular 356, there was a reclassification of Individual Life Plan redemptions. |
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| b) Variation in Technical Provisions for Private Pension Plans |
| 1st Qtr./2007 | 1st Qtr./2008 | Variation % | 4th Qtr./2007 | 1st Qtr./2008 | Variation % | |||||
| (2,174) | (2,480) | 14.1 | (3,345) | (2,480) | (25.9) | |||||
Variations in technical provisions are directly related to production. The variations in the period are due to the higher recording of provision for the “VGBL” R$194 and “PGBL/Traditional” R$112 products, due to the increase in production in the period/08. N.B.: In order to comply with Susep Circular 356, there was a reclassification of Individual Life Plan redemptions. |
Variations in technical provisions are directly related to production. The variations in the quarter are due to the lower recording of provision for the “VGBL” R$827 and “PGBL/Traditional” R$38 products, due to the higher production in 4Q07, as a result of the seasonality. N.B.: In order to comply with Susep Circular 356, there was a reclassification of Individual Life Plan redemptions. |
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33
| c) Variation in Technical Provisions for Certificated Savings Plans |
| 1st Qtr./2007 | 1st Qtr./2008 | Variation % | 4th Qtr./2007 | 1st Qtr./2008 | Variation % | |||||
| 12 | 2 | (83.3) | (6) | 2 | – | |||||
The variation in the period is mainly due to the reversion of technical provision for contingency. |
The variation in the quarter is mainly due to the reversion of technical provision for contingency. |
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| Retained Claims |
| 1st Qtr./2007 | 1st Qtr./2008 | Variation % | 4th Qtr./2007 | 1st Qtr./2008 | Variation % | |||||
| (1,428) | (1,640) | 14.8 | (1,595) | (1,640) | 2.8 | |||||
The increase of claims in the period is due to the increase in production and the resulting growth in the volume of reported claims: (i) in the Health line R$205, (ii) in the Life line R$27; (iii) other lines R$18; mitigated: by the decrease in reported claims: (iv) in the Auto line R$29, mainly due to the sale of interest in Indiana Seguros S.A.; and (v) in the Basic lines R$9. N.B.: claim ratios were recalculated due to new resolutions of Susep Circular 356. |
The increase of claims in the quarter is due to the increase in production and the resulting growth in the volume of reported claims: (i) in the Auto line R$31; (ii) in the Life line R$13; (iii) other lines R$34; mitigated: by the decrease in reported claims: (iv) in the Basic lines R$23; and (v) in the Health line R$10. N.B.: claim ratios were recalculated due to new resolutions of Susep Circular 356. |
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34
| Analysis of the Statement of Income – R$ million |
| Certificated Savings Plans Draws and Redemptions |
| 1st Qtr./2007 | 1st Qtr./2008 | Variation % | 4th Qtr./2007 | 1st Qtr./2008 | Variation % | |||||
| (301) | (318) | 5.6 | (379) | (318) | (16.1) | |||||
The redemptions are directly related to revenue. The variation in the period is due to the increase in revenues. |
The redemptions are directly related to revenue. The variation in the quarter is due to lower revenues. |
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| Insurance, Private Pension Plans and Certificated Savings Plans Selling Expenses |
| 1st Qtr./2007 | 1st Qtr./2008 | Variation % | 4th Qtr./2007 | 1st Qtr./2008 | Variation % | |||||
| (260) | (279) | 7.3 | (288) | (279) | (3.1) | |||||
The variation in the period is detailed in the charts below: |
The variation in the quarter is detailed in the charts below: |
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35
| a) Insurance Products Selling Expenses |
| 1st Qtr./2007 | 1st Qtr./2008 | Variation % | 4th Qtr./2007 | 1st Qtr./2008 | Variation % | |||||
| (206) | (222) | 7.8 | (218) | (222) | 1.8 | |||||
The variation in the period is due to the increase of insurance production, mainly in the Health line R$12. N.B.: Selling ratios were recalculated due to new resolutions of Susep Circular 356. |
In nominal terms, selling expenses have remained stable, with a slight decrease when compared to the earned premiums. N.B.: Selling ratios were recalculated due to new resolutions of Susep Circular 356. |
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| b) Private Pension Plans Selling Expenses |
| 1st Qtr./2007 | 1st Qtr./2008 | Variation % | 4th Qtr./2007 | 1st Qtr./2008 | Variation % | |||||
| (50) | (56) | 12.0 | (65) | (56) | (13.8) | |||||
The variation in the period is basically a result of the increase in sales of private pension plan products and, consequently, in selling expenses. |
The variation in the quarter is basically a result of the increase in sales of the “VGBL” product in 4Q07. |
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36
| c) Certificated Savings Plans Selling Expenses |
| 1st Qtr./2007 | 1st Qtr./2008 | Variation % | 4th Qtr./2007 | 1st Qtr./2008 | Variation % | |||||
| (4) | (1) | (75.0) | (5) | (1) | (80.0) | |||||
The variation is basically due to the decreased expenses related to Pé Quente Bradesco campaigns. |
The variation is basically due to the decreased expenses related to Pé Quente Bradesco campaigns. |
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| Personnel Expenses |
| 1st Qtr./2007 | 1st Qtr./2008 | Variation % | 4th Qtr./2007 | 1st Qtr./2008 | Variation % | |||||
| (1,460) | (1,737) | 19.0 | (1,821) | (1,737) | (4.6) | |||||
The growth in the period is basically due to: (i) the expansion of the customer service network and the consequent hiring of employees, as well as the increase in salary levels resulting from the 2007 collective bargaining agreement (6.0%), benefits and others R$117; (ii) the higher expenses with provisions for labor proceedings R$83; (iii) the higher expenses with management and employee profit sharing R$62; and (iv)the consolidation of acquired companies (Credifar and BMC) R$15. |
Personnel expenses, in 1Q08, have suffered a reduction of R$84, highlighting: (i) the lower expenses with management and employee profit sharing R$49; (ii) the lower expenses related to higher number of employees in vacation in 1Q08 R$21; (iii) the lower training expenses R$13; and (iv) the lower expenses with provisions for labor proceedings R$10. |
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37
| Other Administrative Expenses |
| 1st Qtr./2007 | 1st Qtr./2008 | Variation % | 4th Qtr./2007 | 1st Qtr./2008 | Variation % | |||||
| (1,540) | (1,815) | 17.9 | (1,973) | (1,815) | (8.0) | |||||
The increase in the period is basically due to: (i) the organic growth; (ii) the increase in the volume of businesses; (iii) the contractual adjustments; and (iv) the investments in the improvement and optimization of the technological platform (IT Improvements Project). |
The decrease in the quarter is mainly due to: (i) the higher seasonal volume of advertising expenses in 4Q07 R$107; and (ii) the higher expenses with third-party services and data processing in 4Q07 R$45, as a result of the higher business volume characteristic of that period. |
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| Tax Expenses |
| 1st Qtr./2007 | 1st Qtr./2008 | Variation % | 4th Qtr./2007 | 1st Qtr./2008 | Variation % | |||||
| (585) | (605) | 3.4 | (623) | (605) | (2.9) | |||||
The increase in the period mainly derives from: (i) the PIS/Cofins increased expenses in the amount of R$72 in view of the increase of taxable income; and (ii) the ISS increased expenses R$5; mitigated: (iii) by the decreased CPMF expenses R$59, in view of the extinguishment of this contribution in 2008. |
The variation in the quarter is essentially due to: (i) the decreased CPMF expenses R$73, in view of the extinguishment of this contribution in 2008; mitigated by: (ii) the increased PIS/Cofins expenses R$37, in view of the increase of taxable income; and (iii) the increased IPTU expenses, resulting from the discounted prepayment, basically executed in the city of São Paulo. |
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38
| Equity in Earnings (Losses) of Unconsolidated Companies |
| 1st Qtr./2007 | 1st Qtr./2008 | Variation % | 4th Qtr./2007 | 1st Qtr./2008 | Variation % | |||||
| 12 | 32 | 166.7 | 10 | 32 | 220.0 | |||||
The variation in the period is due to the higher results in affiliated companies in the 1Q08, basically in IRB-Brasil Resseguros. |
The variation in the quarter mainly derives from higher results obtained in the affiliated companies in 1Q08, basically through our affiliated company IRB-Brasil Resseguros. |
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| Other Operating Income |
| 1st Qtr./2007 | 1st Qtr./2008 | Variation % | 4th Qtr./2007 | 1st Qtr./2008 | Variation % | |||||
| 337 | 330 | (2.1) | 424 | 330 | (22.2) | |||||
Income remained practically steady in the period. |
The variation in the quarter is mainly due to the lower reversals of operating provisions R$93. |
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39
| Other Operating Expenses |
| 1st Qtr./2007 | 1st Qtr./2008 | Variation % | 4th Qtr./2007 | 1st Qtr./2008 | Variation % | |||||
| (1,142) | (1,338) | 17.2 | (1,022) | (1,338) | 30.9 | |||||
The increase in the period is mostly due to the higher constitution of operating provisions, including the constitution of provision for restitution of the advanced settlement rate (TLA). |
The variation in the quarter basically derives from: (i) the higher expenses with operating provisions, including the constitution of provision for restitution of the advanced settlement rate (TLA); and (ii) the higher interest expenses. |
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| Operating Income |
| 1st Qtr./2007 | 1st Qtr./2008 | Variation % | 4th Qtr./2007 | 1st Qtr./2008 | Variation % | |||||
| 2,281 | 2,568 | 12.6 | 2,478 | 2,568 | 3.6 | |||||
The increase in the period derives from: (i) the higher financial margin R$1,031; (ii) the increase in the income from insurance, private pension plans and certificated savings plans operations R$274; (iii) the increased fee and commission income R$244; (iv) the increase in the equity in earnings (losses) of unconsolidated companies R$20; mitigated by: (v) the increased personnel and administrative expenses R$552; (vi) the higher provision for loan losses R$507; (vii) the increased operating expenses (net of income) R$203; and (viii) the higher tax expenses R$20. N.B.: for a more detailed analysis of the variation of each item, we recommend the reading of each specific item mentioned hereof. |
The variation in the quarter derives from: (i) the increase in the income from insurance, private pension plans and certificated savings plans R$369; (ii) the decreased personnel and administrative expenses R$242; (iii) the increased financial margin R$53; (iv) the increase in the equity in earnings (losses) of unconsolidated companies R$22; (v) the lower tax expenses R$18; mitigated by: (vi) the higher operating expenses (net of income) R$410; (vii) the higher provision for loan losses R$111; and (viii) the decreased fee and commission income R$93. N.B.: for a more detailed analysis of the variation of each item, we recommend the reading of each specific item mentioned hereof. |
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40
| Non-Operating Income |
| 1st Qtr./2007 | 1st Qtr./2008 | Variation % | 4th Qtr./2007 | 1st Qtr./2008 | Variation % | |||||
| (3) | 15 | – | 21 | 15 | (28.6) | |||||
The variation in the period is basically due to higher gains with the sale of amounts, assets and investments. |
1Q07 was affected by the reversion of constitution of non-operating provisions. |
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| Income Tax and Social Contribution |
| 1st Qtr./2007 | 1st Qtr./2008 | Variation % | 4th Qtr./2007 | 1st Qtr./2008 | Variation % | |||||
| (570) | (672) | 17.9 | (642) | (672) | 4.7 | |||||
The variation on income tax and social contribution expenses in the period reflects tax charge on earnings before taxes, adjusted by additions and exclusions, according to Note 34. |
The variation on income tax and social contribution expenses in the quarter reflects tax charge on earnings before taxes, adjusted by additions and exclusions, according to Note 34. |
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41
| Comparative Balance Sheet |
| Assets | R$ million | |||||||||||
| March | Variation % | December | March | Variation % | ||||||||
| 2007 | 2008 | 2007 | 2008 | |||||||||
| Current and Long-Term Assets | 278,387 | 351,614 | 26.3 | 337,514 | 351,614 | 4.2 | ||||||
| Funds Available | 4,244 | 5,702 | 34.4 | 5,487 | 5,702 | 3.9 | ||||||
| Interbank Investments | 31,601 | 48,675 | 54.0 | 37,622 | 48,675 | 29.4 | ||||||
| Securities and Derivative Financial | ||||||||||||
| Instruments | 97,534 | 105,167 | 7.8 | 114,452 | 105,167 | (8.1) | ||||||
| Interbank and Interdepartmental | ||||||||||||
| Accounts | 19,640 | 24,615 | 25.3 | 24,466 | 24,615 | 0.6 | ||||||
| Restricted Deposits: | ||||||||||||
| Brazilian Central Bank | 18,544 | 23,216 | 25.2 | 23,539 | 23,216 | (1.4) | ||||||
| Other | 1,096 | 1,399 | 27.6 | 927 | 1,399 | 50.9 | ||||||
| Loan and Leasing Operations | 88,436 | 123,108 | 39.2 | 116,258 | 123,108 | 5.9 | ||||||
| Loan and Leasing Operations | 95,111 | 131,106 | 37.8 | 123,974 | 131,106 | 5.8 | ||||||
| Allowance for loan losses | (6,675) | (7,998) | 19.8 | (7,716) | (7,998) | 3.7 | ||||||
| Other Receivables and Assets | 36,932 | 44,347 | 20.1 | 39,229 | 44,347 | 13.0 | ||||||
| Foreign Exchange Portfolio | 13,620 | 14,256 | 4.7 | 9,837 | 14,256 | 44.9 | ||||||
| Other Receivables and Assets | 23,411 | 30,197 | 29.0 | 29,502 | 30,197 | 2.4 | ||||||
| Allowance for Other Loan Losses | (99) | (106) | 7.1 | (110) | (106) | (3.6) | ||||||
| Permanent Assets | 3,557 | 3,903 | 9.7 | 3,670 | 3,903 | 6.3 | ||||||
| Investments | 661 | 743 | 12.4 | 604 | 743 | 23.0 | ||||||
| Premises and Equipment and | ||||||||||||
| Leased Assets | 2,234 | 2,345 | 5.0 | 2,295 | 2,345 | 2.2 | ||||||
| Deferred Charges | 662 | 815 | 23.1 | 771 | 815 | 5.7 | ||||||
| Total | 281,944 | 355,517 | 26.1 | 341,184 | 355,517 | 4.2 | ||||||
| Liabilities | ||||||||||||
| Current and Long-Term Liabilities | 255,690 | 322,260 | 26.0 | 310,483 | 322,260 | 3.8 | ||||||
| Deposits | 84,162 | 106,710 | 26.8 | 98,323 | 106,710 | 8.5 | ||||||
| Demand Deposits | 20,115 | 25,846 | 28.5 | 28,495 | 25,846 | (9.3) | ||||||
| Savings Deposits | 27,609 | 33,290 | 20.6 | 32,813 | 33,290 | 1.5 | ||||||
| Interbank Deposits | 158 | 310 | 96.2 | 373 | 310 | (16.9) | ||||||
| Time Deposits | 35,687 | 46,430 | 30.1 | 35,717 | 46,430 | 30.0 | ||||||
| Other Deposits | 593 | 834 | 40.6 | 925 | 834 | (9.8) | ||||||
| Federal Funds Purchased and Securities | ||||||||||||
| Sold under Agreements to Repurchase | 50,901 | 69,540 | 36.6 | 73,634 | 69,540 | (5.6) | ||||||
| Funds from Issuance of Securities | 5,879 | 7,239 | 23.1 | 6,497 | 7,239 | 11.4 | ||||||
| Securities Issued Abroad | 2,316 | 3,600 | 55.4 | 3,000 | 3,600 | 20.0 | ||||||
| Other Funds | 3,563 | 3,639 | 2.1 | 3,497 | 3,639 | 4.1 | ||||||
| Interbank and Interdepartmental | ||||||||||||
| Accounts | 1,950 | 2,160 | 10.8 | 2,538 | 2,160 | (14.9) | ||||||
| Borrowings and Onlendings | 18,634 | 24,013 | 28.9 | 23,410 | 24,013 | 2.6 | ||||||
| Borrowings | 6,957 | 7,962 | 14.4 | 8,066 | 7,962 | (1.3) | ||||||
| Onlendings | 11,677 | 16,051 | 37.5 | 15,344 | 16,051 | 4.6 | ||||||
| Derivative Financial Instruments | 855 | 1,624 | 89.9 | 952 | 1,624 | 70.6 | ||||||
| Technical Provisions for Insurance, | ||||||||||||
| Private Pension Plans and Certificated | ||||||||||||
| Savings Plans | 50,653 | 59,722 | 17.9 | 58,526 | 59,722 | 2.0 | ||||||
| Other Liabilities | 42,656 | 51,252 | 20.2 | 46,603 | 51,252 | 10.0 | ||||||
| Foreign Exchange Portfolio | 8,416 | 7,319 | (13.0) | 3,467 | 7,319 | 111.1 | ||||||
| Taxes and Social Security Contributions, | ||||||||||||
| Social and Statutory Payables | 9,029 | 10,810 | 19.7 | 12,035 | 10,810 | (10.2) | ||||||
| Subordinated Debt | 12,147 | 16,567 | 36.4 | 15,850 | 16,567 | 4.5 | ||||||
| Sundry | 13,064 | 16,556 | 26.7 | 15,251 | 16,556 | 8.6 | ||||||
| Deferred Income | 164 | 190 | 15.9 | 189 | 190 | 0.5 | ||||||
| Minority Interest in Subsidiaries | 61 | 158 | 159.0 | 155 | 158 | 1.9 | ||||||
| Shareholders’ Equity | 26,029 | 32,909 | 26.4 | 30,357 | 32,909 | 8.4 | ||||||
| Total | 281,944 | 355,517 | 26.1 | 341,184 | 355,517 | 4.2 | ||||||
42
| Equity Analysis – R$ million |
| Funds Available |
| March/2007 | March/2008 | Variation % | December/2007 | March/2008 | Variation % | |||||
| 4,244 | 5,702 | 34.4 | 5,487 | 5,702 | 3.9 | |||||
The variation in the period is due to: (i) the increased volume in local currency R$1,128; and (ii) the increased volume of funds available in foreign currency R$330. |
The variation in the quarter is basically due to: (i) the increased volume in local currency R$194; and (ii) the increased volume of funds available in foreign currency R$21. |
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| Interbank Investments |
| March/2007 | March/2008 | Variation % | December/2007 | March/2008 | Variation % | |||||
| 31,601 | 48,675 | 54.0 | 37,622 | 48,675 | 29.4 | |||||
The variation in the period derives from: (i) the increase in the financed position in the amount of R$8,800; (ii) the increase in own portfolio position R$6,335; (iii) the increase in the short position R$3,467; (iv) the increase in investments in interest-earning deposits in other banks R$272; and offset by: (v) the decrease in unrestricted securities in the amount of R$1,800. |
The variation in the quarter is due to: (i) the increase in the financed position in the amount of R$992; (ii) the increase in own portfolio position R$7,599; (iii) the increase in sold position R$2,287; and (iv) the increase in investments in interbank deposits R$175. |
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43
| Securities (TVM) and Derivative Financial Instruments |
| March/2007 | March/2008 | Variation % | December/2007 | March/2008 | Variation % | |||||||
| 97,534 | 105,167 | 7.8 | 114,452 | 105,167 | (8.1) | |||||||
The increase in the period is substantially due to: (i) the additional funds derived from the increase in funding, particularly technical provisions for insurance, private pension plans and certificated savings plans; (ii) the variation in average interest rates, observing the 11.3% CDI variation in the twelve-month period between March/07 and March/08; partially mitigated by: (iii) the redemption/maturity of securities. The portfolio profile (excluded from purchase and sale commitments), based on Management’s intent, is distributed as follows: “Trading Securities” 63.3%; “Available-for-Sale Securities” 21.7%; and “Held-to-Maturity Securities” 15.0%. In March/08, 49.1% of the total portfolio (excluded from purchase and sale commitments) was represented by Government Bonds, 20.2% by Corporate Securities and 30.7% by “ PGBL” and
“ VGBL” fund quotas. |
The decrease in the quarter partially reflects: (i) the redemption/maturity of securities; partially mitigated by: (ii) the additional funds arising from increased funding, especially the technical provisions for insurance, private pension plans and certificated savings plans, as well as the issuance of subordinated notes in the amount of R$315; and (iii) the variation in average interest rates, observing the 2.6% CDI variation in 1Q08. |
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| Interbank and Interdepartmental Accounts |
| March/2007 | March/2008 | Variation % | December/2007 | March/2008 | Variation % | |||||
| 19,640 | 24,615 | 25.3 | 24,466 | 24,615 | 0.6 | |||||
The variation in the period is mainly due to: (i) the increase in volume of compulsory demand deposits R$2,274, due to an expansion in average balance of these deposits, basis for payment in respective periods, from R$20,076 in March/07 to R$25,827 in March/08; (ii) the increase in the volume of the compulsory of savings accounts deposits in the amount of R$1,124, due to the increase in the balance of the savings deposits by 20.6% in the period; (iii) the increase in the additional compulsory on deposits R$1,274; and (iv) the increase in item “Check Payment Services” in the amount of R$173. |
The variation in the quarter is basically due to: (i)the increase in item “Check Payment and Correspondent Relation Services” in the amount of R$750; (ii) the increase in the volume of the compulsory of savings deposits R$128; offset by: (iii) the decrease in the volume of compulsory demand deposits R$419, due to the decrease in the calculation basis; (iv) the decrease in the additional compulsory deposits in the amount of R$31; and (v) the decrease in item “Interdepartmental Accounts” in the amount of R$283. |
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44
| Loan and Leasing Operations |
| March/2007 | March/2008 | Variation % | December/2007 | March/2008 | Variation % | |||||
| 101,473 | 139,019 | 37.0 | 131,307 | 139,019 | 5.9 | |||||
The increase in the period is due to the individual client portfolio, with a 36.9% growth, in particular in the products “Leasing”, up by 373.7%, “ Vehicles ” , up by 26.3%, “ Personal Loan ” , up by 26.9%, “Credit Card”, up by 103.9%, “Rural”, up by 69.2% and “Real Estate Financing” up by 60%. The growth of 37.1% recorded in the corporate portfolio is the result of the 45.9% increase in micro, small and medium- sized companies portfolio, coupled with a 28.3% increase in the portfolio of large companies (Corporate). In the corporate portfolio we point out “Financing to Export” operations, up by 53.3%, “BNDES Onlending” up by 31.4%, “Working Capital” with an increase of 79.1%, “ Leasing”, up by 96.5% and “Real Estate Financing”, up by 63.1% as a result of the maintenance
of the economic activity level. In March/08, the portfolio was distributed at 59.0% for corporate (24.3% of which was directed to industry, public and private sectors, 14.3% to commerce, 18.4% to services, 1.3% to agribusiness and 0.7% to financial intermediation) and 41.0% for individuals. In terms of concentration, the 100 largest borrowers accounted for 22.7% of the portfolio in March/07 and for 20.5% in March/08. The Performing Loan Portfolio reached the amount of R$127,963 in March/08. Out of this total, 28.8% is falling due within up to 90 days. N.B.1: this item includes advances on foreign exchange contracts and other receivables and does not include the allowance for loan losses, as described in Note 10. N.B.2: for a better understanding of these operations, see item “loan operations”, on page 80. |
The variation in the quarter is due to the 5.4% growth recorded in the corporate portfolio resulting from the 3.8% increase in the portfolio of micro, small and medium-sized companies and also the growth of 7.3% in the portfolio of large companies (Corporate). It is worth pointing out the increase of 9.6% in “Working Capital”, 24.6% in “Financing to Export” and 20.3% in “Leasing”, as a result of the maintenance of the economic activity level. There was a 6.5% growth in individual client, especially in the “Leasing” products, with a 59.0% increase, “Overdraft Facilities”, with a 18.5% increase, “Credit Card Financing”, up by 14.7% and “Real Estate Financing”, up by 11.9%. In terms of concentration, the 100 largest borrowers accounted for 20.6% of the portfolio in December/07 and 20.5% in March/08. N.B.1: this item includes advances on exchange contracts and other receivables and does not take into account the allowance for loan losses, as described in Note 10. N.B.2: for a better understanding of these operations, see item “loan operations”, on page 80. |
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45
| Allowance for loan losses (PDD) |
| March/2007 | March/2008 | Variation % | December/2007 | March/2008 | Variation % | |||||
| (6,775) | (8,104) | 19.6 | (7,826) | (8,104) | 3.6 | |||||
The variation in the PDD balance for the period was mostly due to a 37.0% increase in the volume of loan operations. PDD ratio in relation to the loan portfolio increased from 6.7% in March/07 to 5.8% in March/08. Provision coverage ratios in relation to the portfolio of non-performing loans, respectively, rated between E and H, decreased from 148.3% in March/07 to 146.9% in March/08 and, between D and H, reduced from 123.3% in March/07 to 122.1% in March/08. The preventive maintenance of current provision levels made all performance indicators remain in high levels. In the period/08, PDD in the amount of R$6,005 was recorded, R$71 was incorporated arising from acquired institutions and R$4,747 was written off. The exceeding PDD volume in relation to the minimum required increased from R$1,103 in March/07 to R$1,154 in March/08. |
The increase in the PDD balance in the quarter basically reflects a 5.9% growth of the loan portfolio in the quarter, particularly, the individual client portfolio with a 6.5% growth. The PDD ratio in relation to the loan portfolio decreased from 6.0% in December/07 to 5.8% in March/08. The provision coverage ratios in relation to the portfolio of non-performing loans, respectively, rated from E to H, decreased from 148.3%, in December/07 to 146.9% in March/08, and those rated from D to H decreased from 125.7% in December/07 to 122.1% in March/08. The preventive maintenance of current provision levels made all performance indicators remain in high levels. In 1Q08, PDD in the amount of R$1,667 was recorded and R$1,389 was written off. The exceeding PDD volume in relation to the minimum required increased from R$1,128 in December/07 to R$1,154 in March/08. |
|||||||||
| Other Receivables and Assets |
| March/2007 | March/2008 | Variation % | December/2007 | March/2008 | Variation % | |||||
| 36,520 | 43,894 | 20.2 | 38,788 | 43,894 | 13.2 | |||||
The variation in the period is mainly due to: (i) the increase of foreign exchange operations R$636; (ii) the increase in tax credit balances R$1,788, basically as a result of temporary provisions; (iii) the increase in the balance of securities trading of R$986; (iv) the increase in the balance of debtors by guarantee deposits R$1,181; and (v) the increase in prepaid expenses - commission in the placement of financing R$654 and agreement in the provision of banking services R$858. N.B.: balances are deducted (net of corresponding PDD) of R$412 in March/07 and of R$453 in March/08, allocated to the “Loan and Leasing Operations” and “Allowance for loan losses” items. |
The variation in the quarter is mainly due to: (i) the increase of exchange operations R$4,419; (ii) the increased tax credit balances R$534, basically due to temporary provisions; and (iii) the increase in the balance of securities trading R$360. N.B.: balances are deducted (net of corresponding PDD) of R$441 in December/07 and R$453 in March/08, allocated to the “Loan and Leasing Operations” and “Allowance for loan losses” items. |
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46
| Permanent Assets |
| March/2007 | March/2008 | Variation % | December/2007 | March/2008 | Variation % | |||||
| 3,557 | 3,903 | 9.7 | 3,670 | 3,903 | 6.3 | |||||
The variation in the period is due to: (i) the increase of the investment in the affiliated companies, resulting from the equity in the earnings of unconsolidated companies; and (ii) the increase in premises and equipment and leased assets and deferred charges; R$265. |
The variation in the quarter is due to: (i) the increase of the investment in the affiliated company resulting from the equity in the earnings of unconsolidated companies; and (ii) the increase in premises and equipment and leased assets R$50 and deferred charges R$44. |
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| Deposits |
| March/2007 | March/2008 | Variation % | December/2007 | March/2008 | Variation % | |||||
| 84,162 | 106,710 | 26.8 | 98,323 | 106,710 | 8.5 | |||||
| The increase in the period is detailed in the charts below: | The variation in the quarter is detailed in the charts below: | |||||||||
47
| a) Demand Deposits |
| March/2007 | March/2008 | Variation % | December/2007 | March/2008 | Variation % | |||||
| 20,115 | 25,846 | 28.5 | 28,495 | 25,846 | (9.3) | |||||
The evolution of R$5,731 in the period is composed of the increase in funds from individuals R$2,504 and from corporate clients R$3,227. |
In December 2007, demand deposit balance was influenced by the extinguishment of CPMF, which resulted in the maintenance of resources in checking account for future investment. Thus, the variation of R$2,649 in the quarter is due to: (i) the decrease in funds resulting from corporate clients R$2,947; offset: (ii) by the increase in funds stemming from individuals R$298. |
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| b) Savings Deposits |
| March/2007 | March/2008 | Variation % | December/2007 | March/2008 | Variation % | |||||
| 27,609 | 33,290 | 20.6 | 32,813 | 33,290 | 1.5 | |||||
The increase is mainly due to: (i) the deposits made in the period; and (ii) the deposit remuneration (TR + 0.5% p.m.) reaching 7.4% in the twelve-month period between March/07 and March/08. |
The variation is mainly due to the deposit remuneration (TR + 0.5% p.m.), reaching 1.7% in 1Q08. |
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48
| c) Time Deposits |
| March/2007 | March/2008 | Variation % | December/2007 | March/2008 | Variation % | |||||
| 35,687 | 46,430 | 30.1 | 35,717 | 46,430 | 30.0 | |||||
The increase in the period is mostly due to: (i) the remuneration of deposits; and: (ii) the increase in the volume rose in the period, resulting from institutional investors. |
The increase in the quarter is mainly due to: (i) the income appropriated; and (ii) the increase in the volume rose in the quarter, resulting from institutional investors. |
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| d) Interbank Deposits and Other Deposits |
| March/2007 | March/2008 | Variation % | December/2007 | March/2008 | Variation % | |||||
| 751 | 1,144 | 52.3 | 1,298 | 1,144 | (11.9) | |||||
The variation in the period results from: (i) the increase in Other Deposits – Investment Account in the amount of R$241; and (ii) from the increase in the volume of Interbank Deposits in the amount of R$152. |
The variation in the quarter is due to: (i) the decrease in Other Deposits – Investment Account in the amount of R$91; and (ii) the decrease in the volume of Interbank Deposits in the amount of R$63. |
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49
| Federal Funds Purchased and Securities Sold under Agreements to Repurchase |
| March/2007 | March/2008 | Variation % | December/2007 | March/2008 | Variation % | |||||
| 50,901 | 69,540 | 36.6 | 73,634 | 69,540 | (5.6) | |||||
The variation in the period derives from: (i) the increase in funding volume, using as base government and private securities of its own portfolio in R$6,115; (ii) the increase of third-party portfolio R$10,481; and (iii) the increase of the free movement portfolio R$2,043. N.B. : include investment funds applied in purchase and sale commitments with Bradesco, whose owners are subsidiaries included in the consolidated financial statements, at the amount of R$10,571 in March/07 and R$10,995 in March /08. |
The variation in the quarter derives from: (i) the decrease in funding volume, using as base its own portfolio R$2,398; (ii) the reduction of the free movement portfolio R$2,676; offset: (iii) by the increase in the third-party portfolio R$980. N.B. : include investment funds applied in purchase and sale commitments with Bradesco, whose owners are subsidiaries included in the consolidated financial statements, in the amount of R$10,198 in December/07 and R$10,995 in March/08. |
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| Funds from Issuance of Securities |
| March/2007 | March/2008 | Variation % | December/2007 | March/2008 | Variation % | |||||
| 5,879 | 7,239 | 23.1 | 6,497 | 7,239 | 11.4 | |||||
The variation in the period basically derives from: (i) the increased balance of securities issued abroad, mainly in view of funding of securitization securities of the future flow MTN100; offset by: (ii) the redemption of MTN Program Issues; and (iii) the exchange loss variation of 14.7% in the twelve-month period between March/07 and March/08. |
In the quarter, the increase mainly derives from: (i) marketable securities issued abroad, mainly due to funding of securitization securities of the future flow MTN100; offset: (ii) by the MTN Program Issues redemption. |
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50
| Interbank and Interdepartmental Accounts |
| March/2007 | March/2008 | Variation % | December/2007 | March/2008 | Variation % | |||||
| 1,950 | 2,160 | 10.8 | 2,538 | 2,160 | (14.9) | |||||
The variation in the period is mostly due to higher volume of collection of third parties in transit and payment order in foreign currencies. |
The variation in the quarter is mainly due to lower volume of the payment order and collection of third parties in transit. |
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| Borrowings and Onlendings |
| March/2007 | March/2008 | Variation % | December/2007 | March/2008 | Variation % | |||||
| 18,634 | 24,013 | 28.9 | 23,410 | 24,013 | 2.6 | |||||
The variation in the period is basically due to the increase in the volume of funds from foreign and local borrowings and onlendings at the amount of R$2,389 and R$2,990, respectively (mainly by means of BNDES and Finame), influenced by exchange loss variation of 14.7% in the twelve-month period between March/07 and March/08, which affected the foreign currency indexed and/or denominated borrowings and onlendings liabilities, the balances of which were R$7,311 in March/07 and R$9,650 in March/08. |
The variation in the quarter mainly results from the increase in the volume of funds from foreign and local borrowings and onlendings at the amount of R$33 and R$570 respectively (mainly by means of Finame), influenced by the exchange loss variation of 1.3% in 1Q08, which affected the foreign currency indexed and/or denominated borrowings and onlendings liabilities, the balances of which were R$9,621 in December/07 and R$9,650 in March/08. |
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51
| Technical Provisions for Insurance, Private Pension Plans and Certificated Savings Plans |
| March/2007 | March/2008 | Variation % | December/2007 | March/2008 | Variation % | |||||
| 50,653 | 59,722 | 17.9 | 58,526 | 59,722 | 2.0 | |||||
The increase in the period is basically due to: (i) the increase in sales of pension plans and insurance policies; and (ii) the price-level restatement and interest of technical provisions. The main variations occurred: (a) in the private pension plan segment, in the “VGBL” R$5,398 and “PGBL/Traditional” R$2,293 plans; and (b) in the insurance segments, in the Health line R$795, substantially due to the recording of additional provisions related to the amount necessary to readjust Health insurance premiums, and in the provisions of the Life line R$445. |
The increase in the quarter is basically due to: (i) the price-level restatement and interest of technical provisions; and (ii) the increase in sales of supplementary pension plans and insurance policies. The main variations occurred: (a) in the private pension plan segment, in the “VGBL” R$644 and “PGBL/Traditional” R$314 plans; and (b) in the insurance segments, in the Health R$94 and Life R$78 lines. |
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| Other Liabilities, Derivative Financial Instruments and Deferred Income |
| March/2007 | March/2008 | Variation % | December/2007 | March/2008 | Variation % | |||||
| 49,526 | 60,420 | 22.0 | 54,526 | 60,420 | 10.8 | |||||
The variation in the period mostly derives from: (i) the issuance of Subordinated Debt R$3,551; (ii) the increase in the balance of items “Tax and Social Security” R$1,620; (iii) the increase in Credit Cards operations R$676; (iv) the increase in the “Derivative Financial Instruments” R$769; (v) the increase in the “Exchange Portfolio” R$405; (vi) the increase in Collection of Taxes R$716; and (vii) the increase in Provision for Contingent Liabilities R$965. N.B.: excludes advances on foreign exchange contracts of R$5,851 and R$7,354, allocated to the specific item in loan operations in March/07 and March/08, respectively. |
The variation in the quarter is mainly due to the increase in: (i) issuance of “Subordinated Debt” R$315; (ii) “Exchange Portfolio” R$4,424 and (iii) Collection of Taxes R$2,482; mitigated by the reduction in the items: (iv) “Credit Card Operations” R$996; (v) “Social and Statutory” R$1,401; and (vi) “Provision for unsettled payments” R$259. N.B.: excludes advances on foreign exchange contracts of R$6,782 and R$7,354, allocated to the specific item in loan operations in December/07 and March/08, respectively. |
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52
| Minority Interest in Subsidiaries |
| March/2007 | March/2008 | Variation % | December/2007 | March/2008 | Variation % | |||||
| 61 | 158 | 159.0 | 155 | 158 | 1.9 | |||||
The variation in the period is mainly due to: (i) the minority shareholders of Andorra Holdings S.A. R$147; offset: (ii) by the sale of Indiana Seguros S.A., in December/07. |
Item “Minority Interest in Subsidiaries” remained almost stable in the |
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| Shareholders’ Equity |
| March/2007 | March/2008 | Variation % | December/2007 | March/2008 | Variation % | |||||
| 26,029 | 32,909 | 26.4 | 30,357 | 32,909 | 8.4 | |||||
The variation in the period is due to: (i) the appropriation of reported net income in the amount of R$8,407; (ii) the increase in capital in the amount of R$1,990; (iii) the goodwill calculated in the sale of the remaining shares from the subscription in the amount of R$7; which was offset by: (iv) the reduction of the mark-to-market adjustment reserve of TVM and Derivatives R$497; (v) the interest on shareholders ’ capital/dividends paid and provisioned R$2,962; and (vi) the acquisition of own shares for treasury R$65. |
The variation in the quarter is due to: (i) the appropriation of reported net income in the amount of R$2,102; (ii) the goodwill calculated in the sale of the remaining shares from the subscription in the amount of R$7; (iii) the capital increase in the amount of R$1,200; which was offset by: (iv) interest on shareholders’ capital/dividends paid and provisioned R$740; and (v) the reduction of the mark-to-market adjustment reserve of TVM and Derivatives R$17. |
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53
2-Main Statement of Income Information
| Consolidated Statement of Adjusted Income – R$ thousand |
| Years | ||||||||||
| 2007 | 2006 | 2005 | 2004 | 2003 | ||||||
| Revenues from Financial Intermediation | 41,592,988 | 38,375,859 | 34,268,623 | 27,210,965 | 28,573,144 | |||||
| Loan Operations | 22,372,226 | 20,408,469 | 17,158,864 | 13,000,941 | 12,691,851 | |||||
| Leasing Operations | 916,745 | 653,260 | 444,389 | 300,850 | 307,775 | |||||
| Operations with Securities | 7,647,781 | 7,025,986 | 7,073,266 | 5,975,474 | 8,443,246 | |||||
| Financial Income on Insurance, Private Pension Plans and Certificated Savings Plans | 7,501,995 | 6,887,472 | 6,171,213 | 5,142,434 | 5,359,939 | |||||
| Derivative Financial Instruments | 1,264,654 | 1,344,438 | 1,307,818 | 922,827 | (413,134) | |||||
| Foreign Exchange Transactions | 646,352 | 729,647 | 617,678 | 691,302 | 797,702 | |||||
| Compulsory Deposits | 1,243,235 | 1,326,587 | 1,495,395 | 1,177,137 | 1,385,765 | |||||
| Expenses from Financial Intermediation (Excluding PDD) | 19,293,584 | 18,536,698 | 17,719,666 | 13,980,085 | 15,291,477 | |||||
| Federal Funds Purchased and Securities Sold under Agreements to Repurchase | 13,726,131 | 12,666,708 | 12,421,171 | 9,341,527 | 11,039,960 | |||||
| Price-level Restatement and Interest on Technical Provisions for Insurance, Private Pension | ||||||||||
| Plans and Certificated Savings Plans | 4,616,356 | 4,004,823 | 3,764,530 | 3,215,677 | 3,120,342 | |||||
| Borrowings and Onlendings | 942,776 | 1,857,009 | 1,525,270 | 1,405,389 | 1,118,194 | |||||
| Leasing Operations | 8,321 | 8,158 | 8,695 | 17,492 | 12,981 | |||||
| Financial Margin | 22,299,404 | 19,839,161 | 16,548,957 | 13,230,880 | 13,281,667 | |||||
| Provision for Doubtful Accounts Expenses | 5,497,709 | 4,412,413 | 2,507,206 | 2,041,649 | 2,449,689 | |||||
| Gross Income from Financial Intermediation | 16,801,695 | 15,426,748 | 14,041,751 | 11,189,231 | 10,831,978 | |||||
| Other Operating Income/Expenses | (7,172,136) | (6,759,505) | (6,543,186) | (7,071,120) | (7,278,870) | |||||
| Fee and Commission Income | 10,805,490 | 8,897,882 | 7,348,879 | 5,824,368 | 4,556,861 | |||||
| Operating Income on Insurance, Private Pension Plans and Certificated Savings Plans | 711,512 | 1,025,221 | 620,991 | (60,645) | (148,829) | |||||
| Insurance, Private Pension Plans and Certificated Savings Plans Retained Premiums | 20,856,935 | 18,008,226 | 13,647,089 | 13,283,677 | 11,726,088 | |||||
| – Net Premiums Issued | 21,478,969 | 19,021,852 | 16,824,862 | 15,389,170 | 12,817,805 | |||||
| – Reinsurance Premiums and Redeemed Premiums | (622,034) | (1,013,626) | (3,177,773) | (2,105,493) | (1,091,717) | |||||
| Variation in Technical Provisions for Insurance, Private Pension Plans and | ||||||||||
| Certificated Savings Plans | (11,669,410) | (8,711,991) | (5,010,940) | (6,094,753) | (6,032,934) | |||||
| Retained Claims | (6,014,455) | (6,026,651) | (5,825,292) | (5,159,188) | (3,980,419) | |||||
| Certificated Savings Plans Draws and Redemptions | (1,377,758) | (1,221,626) | (1,228,849) | (1,223,287) | (1,099,554) | |||||
| Insurance, Private Pension Plans and Certificated Savings Plans Selling Expenses | (1,083,800) | (1,022,737) | (961,017) | (867,094) | (762,010) | |||||
| Personnel Expenses | (6,569,547) | (5,932,406) | (5,311,560) | (4,969,007) | (4,779,491) | |||||
| Other Administrative Expenses | (6,911,514) | (5,870,030) | (5,142,329) | (4,937,143) | (4,814,204) | |||||
| Tax Expenses | (2,388,815) | (2,149,905) | (1,827,337) | (1,464,446) | (1,054,397) | |||||
| Equity in Earnings of Unconsolidated Companies | 42,268 | 72,324 | 76,150 | 163,357 | 5,227 | |||||
| Other Operating Income | 1,435,192 | 1,420,217 | 1,096,968 | 1,198,532 | 1,697,242 | |||||
| Other Operating Expenses | (4,296,722) | (4,222,808) | (3,404,948) | (2,826,136) | (2,741,279) | |||||
| Operating Income | 9,629,559 | 8,667,243 | 7,498,565 | 4,118,111 | 3,553,108 | |||||
| Non-Operating Income | 24,550 | (8,964) | (106,144) | (491,146) | (841,076) | |||||
| Income before Tax on Income and Profit Sharing | 9,654,109 | 8,658,279 | 7,392,421 | 3,626,965 | 2,712,032 | |||||
| Income Tax and Social Contribution | (2,432,630) | (2,286,765) | (1,869,516) | (554,345) | (396,648) | |||||
| Minority Interest in Subsidiaries | (11,213) | (9,007) | (8,831) | (12,469) | (9,045) | |||||
| Net Income | 7,210,266 | 6,362,507 | 5,514,074 | 3,060,151 | 2,306,339 | |||||
| Return on (average) Equity without market value adjustment | ||||||||||
| reserve – TVM and Derivatives | 28.3% | 31.1% | 32.7% | 22.5% | 19.2% | |||||
| Financial Margin – Interest (*) | 8.3% | 9.0% | 9.0% | 8.2% | 9.0% | |||||
(*) (Financial Margin – Interest) / (Total Assets – Permanent Assets – Purchase and Sale Commitments).
56
| 2008 | 2007 | 2006 | ||||||||||||||
| 1st Qtr. | 4th Qtr. | 3rd Qtr. | 2nd Qtr. | 1st Qtr. | 4th Qtr. | 3rd Qtr. | 2nd Qtr. | |||||||||
| Revenues from Financial Intermediation | 11,693,673 | 11,162,847 | 10,612,598 | 10,248,772 | 9,568,771 | 9,671,491 | 9,582,502 | 9,746,189 | ||||||||
| Loan Operations | 6,571,120 | 6,073,076 | 5,650,541 | 5,416,011 | 5,232,598 | 5,197,274 | 5,231,678 | 5,187,385 | ||||||||
| Leasing Operations | 372,536 | 283,874 | 248,354 | 192,700 | 191,817 | 192,898 | 174,990 | 151,474 | ||||||||
| Operations with Securities | 1,820,337 | 1,807,151 | 2,026,424 | 2,018,989 | 1,795,217 | 1,835,694 | 1,753,091 | 1,603,317 | ||||||||
| Financial Income from Insurance, Private Pension | ||||||||||||||||
| Plans and Certificated Savings Plans | 1,676,345 | 2,068,229 | 1,889,168 | 1,859,454 | 1,685,144 | 1,840,259 | 1,591,834 | 1,622,810 | ||||||||
| Derivative Financial Instruments | 528,615 | 390,459 | 371,879 | 303,746 | 198,570 | 192,399 | 328,799 | 503,911 | ||||||||
| Foreign Exchange Operations | 395,881 | 231,895 | 121,888 | 143,305 | 149,264 | 98,051 | 167,557 | 349,797 | ||||||||
| Compulsory Deposits | 328,839 | 308,163 | 304,344 | 314,567 | 316,161 | 314,916 | 334,553 | 327,495 | ||||||||
| Expenses from Financial Intermediation | ||||||||||||||||
| (Excluding PDD) | 5,643,869 | 5,165,547 | 5,033,028 | 4,545,323 | 4,549,686 | 4,625,777 | 4,715,231 | 4,796,551 | ||||||||
| Federal Funds Purchased and Securities Sold | ||||||||||||||||
| under Agreements to Repurchase | 3,818,055 | 3,523,771 | 3,536,178 | 3,370,988 | 3,295,194 | 3,143,366 | 3,386,251 | 3,086,405 | ||||||||
| Price-level Restatement and Interest on | ||||||||||||||||
| Technical Provisions for Insurance, Private | ||||||||||||||||
| Pension Plans and Certificated Savings Plans | 1,024,234 | 1,287,681 | 1,188,122 | 1,096,964 | 1,043,589 | 1,138,529 | 907,865 | 915,781 | ||||||||
| Borrowings and Onlendings | 800,385 | 352,835 | 306,355 | 74,374 | 209,212 | 341,753 | 418,939 | 792,045 | ||||||||
| Leasing Operations | 1,195 | 1,260 | 2,373 | 2,997 | 1,691 | 2,129 | 2,176 | 2,320 | ||||||||
| Financial Margin | 6,049,804 | 5,997,300 | 5,579,570 | 5,703,449 | 5,019,085 | 5,045,714 | 4,867,271 | 4,949,638 | ||||||||
| Provision for Loan Losses | 1,666,837 | 1,555,779 | 1,438,305 | 1,343,964 | 1,159,661 | 1,189,941 | 1,168,044 | 1,115,986 | ||||||||
| Gross Income from Financial Intermediation | 4,382,967 | 4,441,521 | 4,141,265 | 4,359,485 | 3,859,424 | 3,855,773 | 3,699,227 | 3,833,652 | ||||||||
| Other Operating Income/Expenses | (1,815,336) | (1,960,671) | (1,683,978) | (1,949,496) | (1,577,991) | (1,675,438) | (1,542,072) | (1,752,656) | ||||||||
| Fee and Commission Income | 2,803,529 | 2,895,760 | 2,742,006 | 2,608,536 | 2,559,188 | 2,423,752 | 2,342,847 | 2,090,735 | ||||||||
| Operating Income from Insurance, Private | ||||||||||||||||
| Pension Plans and Certificated Savings Plans | 514,757 | 146,407 | 208,341 | 115,334 | 241,430 | 345,135 | 325,144 | 239,400 | ||||||||
| Insurance, Private Pension Plans and Certificated | ||||||||||||||||
| Savings Plans Retained Premiums | 5,285,116 | 6,052,442 | 5,268,063 | 4,892,880 | 4,643,550 | 5,486,088 | 4,344,061 | 4,008,348 | ||||||||
| – Net Premiums Issued | 5,366,960 | 6,174,894 | 5,448,219 | 5,054,748 | 4,801,108 | 5,662,096 | 4,714,041 | 4,249,174 | ||||||||
| – Reinsurance Premiums and Redeemed Premiums | (81,844) | (122,452) | (180,156) | (161,868) | (157,558) | (176,008) | (369,980) | (240,826) | ||||||||
| Variation of Technical Provisions from Insurance, | ||||||||||||||||
| Private Pension Plans and Certificated | ||||||||||||||||
| Savings Plans | (2,533,242) | (3,643,969) | (2,952,534) | (2,659,549) | (2,413,358) | (2,902,447) | (1,993,374) | (1,775,220) | ||||||||
| Retained Claims | (1,639,572) | (1,594,955) | (1,488,084) | (1,503,530) | (1,427,886) | (1,626,391) | (1,460,137) | (1,454,564) | ||||||||
| Certificated Savings Plans Draws and Redemptions | (318,260) | (378,480) | (345,729) | (352,506) | (301,043) | (343,384) | (305,545) | (288,144) | ||||||||
| Insurance, Private Pension Plans and Certificated | ||||||||||||||||
| Savings Plans Selling Expenses | (279,285) | (288,631) | (273,375) | (261,961) | (259,833) | (268,731) | (259,861) | (251,020) | ||||||||
| Personnel Expenses | (1,736,553) | (1,820,181) | (1,640,132) | (1,649,408) | (1,459,826) | (1,460,199) | (1,584,533) | (1,468,665) | ||||||||
| Other Administrative Expenses | (1,814,994) | (1,972,778) | (1,755,090) | (1,644,146) | (1,539,500) | (1,671,274) | (1,506,957) | (1,374,340) | ||||||||
| Tax Expenses | (605,595) | (622,899) | (599,256) | (581,290) | (585,370) | (577,132) | (532,175) | (532,474) | ||||||||
| Equity in Earnings of Unconsolidated Companies | 32,169 | 9,771 | 16,403 | 4,505 | 11,589 | 30,257 | 7,587 | 29,786 | ||||||||
| Other Operating Income | 329,782 | 424,016 | 374,964 | 298,938 | 337,274 | 430,410 | 418,941 | 316,150 | ||||||||
| Other Operating Expenses | (1,338,431) | (1,020,767) | (1,031,214) | (1,101,965) | (1,142,776) | (1,196,387) | (1,012,926) | (1,053,248) | ||||||||
| Operating Income | 2,567,631 | 2,480,850 | 2,457,287 | 2,409,989 | 2,281,433 | 2,180,335 | 2,157,155 | 2,080,996 | ||||||||
| Non-Operating Income | 14,831 | 21,425 | 1,710 | 4,129 | (2,714) | (29,038) | 40,570 | 11,330 | ||||||||
| Income before Income Taxes and Profit Sharing | 2,582,462 | 2,502,275 | 2,458,997 | 2,414,118 | 2,278,719 | 2,151,297 | 2,197,725 | 2,092,326 | ||||||||
| Income Tax and Social Contribution | (672,009) | (644,495) | (605,489) | (612,311) | (570,335) | (530,168) | (584,759) | (490,445) | ||||||||
| Minority Interest in Subsidiaries | (3,591) | (3,678) | (3,018) | (1,450) | (3,067) | (1,580) | (2,393) | 245 | ||||||||
| Net Income | 1,906,862 | 1,854,102 | 1,850,490 | 1,800,357 | 1,705,317 | 1,619,549 | 1,610,573 | 1,602,126 | ||||||||
| Return on (average) Equity without | ||||||||||||||||
| market value adjustment reserve – | ||||||||||||||||
| TVM and Derivatives | 28.7% | 29.4% | 31.4% | 32.9% | 32.5% | 34.3% | 32.5% | 35.8% | ||||||||
| Financial Margin – Interest (*) | 8.7% | 8.7% | 8.6% | 8.7% | 8.6% | 8.9% | 9.4% | 9.4% | ||||||||
(*) (Financial Margin – Interest)/(Total Assets – Permanent Assets – Purchase and Sale Commitments).
57
| Profitability |
Bradesco’s Adjusted Net Income reached R$1,907 million in 2008, against R$1,854 million reached in 4Q07, which corresponds to a 2.9% increase. Shareholders’ Equity amounted to R$32,909 million on March 31, 2008, with a growth of 8.4% compared to the balance as of December 31, 2007. Accordingly, the Return on Average Shareholders’ Equity (ROAE) reached 28.7% (*). Closing 1Q08, total Assets added up to R$355,517 million, growing 4.2% when compared to the balance of December 31, 2007. The annualized Return on Total Average Assets (ROAA) in 1Q08 was 2.2% . Earnings per share reached R$0.62.
In relation to 1Q07, the result grew R$202 million, representing an increase 11.8% .
Also in 1Q08, it showed an increase in the income composing the Financial Margin, in the amount of R$53 million, mainly composed of the result with interest, which reached R$5,544 million, a R$315 million increase (R$421 million related to business volume increase and R$106 million related to spread reduction). That increase is mainly due to the growth in business volume, particularly the 5.9% growth in the volume of loan operations for individual and corporate clients that was offset by the fall in the interest rates. “Non-interest” result amounted to R$506 million, representing a R$262 million decrease when compared to 4Q07, mainly due to the lower gains with TVM, loan recoveries and treasury.
In 1Q08, the provision for loan losses expenses was R$1,667 million, an increase of R$111 million when compared to the previous quarter. This variation is due to the growth of our loan portfolio and mainly to the growth in the operations with individual clients, which requires a higher provision volume due to its characteristic.
The Operating Efficiency Ratio of the 12-month period ended in 1Q08 was 41.7%, with a slight improvement when compared to the 41.8% ratio assessed in 2007. When compared to the 12-month period ended in 1Q07, there is a 0.4 percentage point increase. This results, mainly, from the combination of strict expense control with permanent efforts for increase in revenue.
The Coverage Ratio of the 12-month period ended in March 2008, which had been showing ongoing improvement, decreased 1.5% (from 80.2% to 78.7%) when compared to December 2007, mainly influenced by investments in our technological platform and in the expansion of our service network. When compared to the 78.0% ratio assessed in the twelve-month period ended in March 2007, there is a 0.7 percentage point increase.
(*) not considering the mark-to-market effects of Securities Available for Sale in the Shareholders’ equity.
58
59
| Results by Business Segment |
| Income Breakdown – in percentage |
N.B: The Balance Sheet and the Statement of Income by Business Segment can be found in Note 5.
| Variation in the Main Statement of Income Items |
| 1st Quarter of 2008 compared to 1st Quarter of 2007 – R$ million |
(1) Composition: Premiums and Net Contributions of variations in Technical Provisions for Insurance, Private Pension Plans and Certificated Savings Plans deducted from Claims, Draws, Redemptions and Commissions, not including Financial Income from Insurance activities and price-level restatement and interest on Technical Provisions, which are included in the Financial Margin.
(2) Composition: Tax Expenses, Equity in Earnings of Unconsolidated Companies, Other Operating Income, Other Operating Expenses, Non-Operating Income and Minority Interest in Subsidiaries.
60
| 1st Quarter of 2008 compared to the 4th Quarter of 2007 – R$ million |
(1) Composition: Premiums and Net Contributions of variations in Technical Provisions for Insurance, Private Pension Plans and Certificated Savings Plans deducted from Claims, Draws, Redemptions and Commissions, not including Financial Income on Insurance activities and price-level restatement and interest on Technical Provisions, which are included in the Financial Margin.
(2) Composition: Tax Expenses, Equity in Earnings of Unconsolidated Companies, Other Operating Income, Other Operating Expenses, Non-Operating Income and Minority Interest in Subsidiaries.
| Variation in Items Composing the Financial Margin with Exchange Adjustment |
| 1st Quarter of 2008 compared to 1st Quarter of 2007 – R$ million |
| (1) | Includes Revenues from Loan Operations + Income on Leasing Operations + Income on Foreign Exchange Transactions (Note 11a). |
| (2) | Includes Expenses with federal funds purchased and securities sold under agreements to repurchase, excluding Expenses from Purchase and Sale Commitments + Expenses from Borrowings and Onlendings + Income on Compulsory Deposits + Adjustments to Income on Foreign Exchange Transactions (Note 11a). |
| (3) | Includes Income from Securities, deducted from expenses with Purchase and Sale Commitments + Income from Derivative Financial Instruments + Adjustments to Income on Foreign Exchange Transactions + Interest Income from Insurance, Private Pension Plans and Certificated Savings Plans (Note 11a). |
| (4) | This refers to the price-level restatement and interest of Technical Provisions for Insurance, Private Pension Plans and Certificated Savings Plans. |
61
| Variation in Items Composing the Financial Margin with Exchange Adjustment |
| 1st Quarter of 2008 compared to the 4th Quarter of 2007 – R$ million |
(1) Includes Revenues from Loan Operations + Income on Leasing Operations + Income on Foreign Exchange Transactions (Note 11a).
(2) Includes Expenses with federal funds purchased and securities sold under agreements to repurchase, excluding Expenses from Purchase and Sale Commitments + Expenses from Borrowings and Onlendings + Income on Compulsory Deposits + Adjustments to
Income on Foreign Exchange Transactions (Note 11a).
(3) Includes Income from Securities, deducted from expenses with Purchase and Sale Commitments + Income from Derivative Financial Instruments + Adjustments to Income on Foreign Exchange Transactions + Interest Income from Insurance, Private Pension
Plans and Certificated Savings Plans (Note 11a).
(4) This refers to the the restatement and interest of Technical Provisions for Insurance, Private Pension Plans and Certificated Savings Plans.
| Analysis of the Adjusted Financial Margin and Average Rates |
| Income x Loan Operations |
| R$ million | 2006 | 2007 | 2008 | |||||
| 4th Qtr. | 1st Qtr. | 4th Qtr. | 1st Qtr. | |||||
| Loan Operations | 84,283 | 88,549 | 109,536 | 117,858 | ||||
| Leasing Operations | 3,743 | 4,013 | 7,264 | 9,682 | ||||
| Advances on Exchange | 5,595 | 5,777 | 6,496 | 7,068 | ||||
| 1 – Total (Quarterly Average Balance) | 93,621 | 98,339 | 123,296 | 134,608 | ||||
| 2 – Income (Loan, Leasing and Exchange Operations) (**) | 5,452 | 5,478 | 6,425 | 6,981 | ||||
| 3 – Average Rate Annualized Exponentially (2/1) | 25.4% | 24.2% | 22.5% | 22.4% | ||||
(*) Does not include other loans.
(**) Includes Income from Loan Operations, Net Results from Leasing Operations and Results of the adjusted Exchange (Note 11a).
62
| Income on TVM x Securities (TVM) |
| R$ million | 2006 | 2007 | 2008 | |||||
| 4th Qtr. | 1st Qtr. | 4th Qtr. | 1st Qtr. | |||||
| Securities | 85,136 | 97,392 | 111,275 | 109,809 | ||||
| Interbank Investments | 30,176 | 28,795 | 38,739 | 43,149 | ||||
| Purchase and Sale Commitments | (41,970) | (49,288) | (71,127) | (71,587) | ||||
| Derivative Financial Instruments | (514) | (687) | (1,642) | (1,288) | ||||
| 4 – Total (Quarterly Average Balance) | 72,828 | 76,212 | 77,245 | 80,083 | ||||
| 5 – Income on Securities (Net of Purchase and Sales | ||||||||
| Commitments Expenses) (*) | 2,698 | 2,340 | 2,639 | 2,193 | ||||
| 6 – Average Rate Annualized Exponentially (5/4) | 15.7% | 12.9% | 14.4% | 11.4% | ||||
(*) Includes Interest Income from Insurance, Private Pension Plans and Certificated Savings Plans, Derivative Financial Instruments and Foreign Exchange Adjustment (Note 11a).
| Income from Financial Intermediation x Total Assets |
| R$ million | 2006 | 2007 | 2008 | |||||
| 4th Qtr. | 1st Qtr. | 4th Qtr. | 1st Qtr. | |||||
| 7 – Total Assets - Permanent Assets - Purchase and Sale Commitments | 208,797 | 220,932 | 254,684 | 272,978 | ||||
| (Quarterly Average Balance) | ||||||||
| 8 – Income from Financial Intermediation | 9,671 | 9,569 | 11,163 | 11,694 | ||||
| 9 – Average Rate Annualized Exponentially (8/7) | 19.9% | 18.5% | 18.7% | 18.3% | ||||
63
| Expenses x Funding |
| R$ million | 2006 | 2007 | 2008 | |||||
| 4th Qtr. | 1st Qtr. | 4th Qtr. | 1st Qtr. | |||||
| Deposits | 81,379 | 84,034 | 92,530 | 102,517 | ||||
| Funds from Acceptance and Issuance of Securities | 5,867 | 5,758 | 6,547 | 6,868 | ||||
| Interbank and Interdepartmental Accounts | 2,073 | 2,091 | 2,151 | 2,349 | ||||
| Subordinated Debt | 11,858 | 12,048 | 14,646 | 16,209 | ||||
| 10 – Total Funding (Quarterly Average Balance) | 101,177 | 103,931 | 115,874 | 127,943 | ||||
| 11 – Expenses (*) | 1,693 | 1,642 | 1,566 | 1,681 | ||||
| 12 – Average Rate Annualized Exponentially (11/10) | 6.9% | 6.5% | 5.5% | 5.4% | ||||
(*) Funding Expenses except Purchase and Sale Commitment expenses, less Income on Compulsory Deposits and Foreign Exchange Adjustment (Note 11a).
| Expenses x Technical Provisions for Insurance, Private Pension Plans and Certificated Savings Plans |
| R$ million | 2006 | 2007 | 2008 | |||||
| 4th Qtr. | 1st Qtr. | 4th Qtr. | 1st Qtr. | |||||
| 13 – Technical Provisions for Insurance, Private Pension Plans and Certificated | ||||||||
| Savings Plans (Quarterly Average Balance) | 47,424 | 49,891 | 56,923 | 59,124 | ||||
| 14 – Expenses (*) | 1,139 | 1,043 | 1,288 | 1,024 | ||||
| 15 – Average Rate Annualized Exponentially (14/13) | 10.0% | 8.6% | 9.4% | 7.1% | ||||
(*) Price-Level Restatement and Interest on Technical Provisions for Insurance, Private Pension Plans and Certificated Savings Plans.
64
| Expenses x Borrowings and Onlendings (Local and Foreign) |
| R$ million | 2006 | 2007 | 2008 | |||||
| 4th Qtr. | 1st Qtr. | 4th Qtr. | 1st Qtr. | |||||
| Borrowings | 5,772 | 6,368 | 7,686 | 8,014 | ||||
| Onlendings | 11,257 | 11,659 | 14,387 | 15,697 | ||||
| 16 – Total Borrowings and Onlendings (Quarterly Average Balance) | 17,029 | 18,027 | 22,073 | 23,711 | ||||
| 17 – Expenses for Borrowings and Onlendings (*) | 272 | 114 | 213 | 419 | ||||
| 18 – Exponentially Annualized Average Rate (17/16) | 6.6% | 2.5% | 3.9% | 7.3% | ||||
(*) Includes Foreign Exchange Adjustment (Note 11a).
| Financial Margin x Total Assets |
| R$ million | 2006 | 2007 | 2008 | |||||
| 4th Qtr. | 1st Qtr. | 4th Qtr. | 1st Qtr. | |||||
| 19 – Total Assets - Permanent Assets - Purchase and Sale Commitments (Quarterly Average Balance) | 208,797 | 220,932 | 254,684 | 272,978 | ||||
| 20 – Financial Margin (*) | 5,045 | 5,019 | 5,997 | 6,050 | ||||
| 21 – Exponentially Annualized Average Rate (20/19) | 10.0% | 9.4% | 9.8% | 9.2% | ||||
(*) Gross Income from Financial Intermediation excluding PDD.
65
| Financial Market Indicators |
| Analysis of Financial Margin |
| a) Financial Margin Adjustment |
We separately show the hedge fiscal effect referring to investments abroad in the compared periods, which in terms of Net Income, simply annuls the fiscal effect (IR/CS and PIS/Cofins) of this hedge strategy.
The fiscal effect is caused by the fact that the foreign exchange variation of investments abroad is not deductible when there is loss and not taxable when there is gain, while the derivatives income is taxable when it generates gain and deductible when it generates loss.
Thus, the gross hedge income is reflected in the Financial Margin, in the “Derivative Financial Instruments” item. In the “Tax Expenses” and “Income Tax and Social Contribution” items, there are their respective taxes, as shown below:
| Hedge Fiscal Effect of Investments Abroad – R$ million |
| Effect in the Items | Effect in the 1st Quarter of 2007 | Effect in the 1st Quarter of 2008 | ||||||||||||||
| Financial Margin |
Tax Expenses |
IR/CS | Net Income |
Financial Margin |
Tax Expenses |
IR/CS | Net Income |
|||||||||
| Partial Result of the Hedge of | ||||||||||||||||
| Investments Abroad | 574 | (27) | (185) | 362 | 124 | (6) | (40) | 78 | ||||||||
| Foreign Exchange Variation of | ||||||||||||||||
| Investments Abroad | (362) | – | – | (362) | (78) | – | – | (78) | ||||||||
| Total | 212 | (27) | (185) | – | 46 | (6) | (40) | – | ||||||||
| Effect in the Items | Effect in the 4th Quarter of 2007 | Effect in the 1st Quarter of 2008 | ||||||||||||||
| Financial Margin |
Tax Expenses |
IR/CS | Net Income |
Financial Margin |
Tax Expenses |
IR/CS | Net Income |
|||||||||
| Partial Result of the Hedge of | ||||||||||||||||
| Investments Abroad | 429 | (20) | (139) | 270 | 124 | (6) | (40) | 78 | ||||||||
| Foreign Exchange Variation of | ||||||||||||||||
| Investments Abroad | (270) | – | – | (270) | (78) | – | – | (78) | ||||||||
| Total | 159 | (20) | (139) | – | 46 | (6) | (40) | – | ||||||||
66
For a better understanding of Financial Margin evolution in the periods, the effects of the referred hedge and the foreign exchange variation of investments abroad in net interest income were excluded, as follows:
| Adjusted Financial Margin |
| R$ million | ||||||||||||
| 1st Quarter | Variation | 2007 | 2008 | Variation | ||||||||
| 2007 | 2008 | 4th Qtr. | 1st Qtr. | |||||||||
| Reported Financial Margin | 5,231 | 6,096 | 865 | 6,156 | 6,096 | (60) | ||||||
| ( - ) Hedge/Exchange Variation | (212) | (46) | 166 | (159) | (46) | 113 | ||||||
| Adjusted Financial Margin | 5,019 | 6,050 | 1,031 | 5,997 | 6,050 | 53 | ||||||
| Average Adjusted Financial Margin Rate (*) | 9.4% | 9.2% | 9.8% | 9.2% | ||||||||
(*) (Adjusted Financial Margin)/(Total Average Assets - Permanent Assets - Purchase and Sale Commitments).
| b) Adjusted Financial Margin Variation |
In 1Q08, the Financial Margin reached R$6,050 million, representing a 0.9% increase related to the R$5,997 million recorded in 4Q07. When compared to 1Q07, there was a 20.5% increase in the Financial Margin. The analytical opening of the Financial Margin result among “interest” and “non-interest” results is shown below:
| Adjusted Financial Margin Breakdown |
| R$ million | ||||||||||||
| 1st Quarter | Variation | 2007 | 2008 | Variation | ||||||||
| 2007 | 2008 | 4th Qtr. | 1st Qtr. | |||||||||
| Interests due to volume | 1,519 | 421 | ||||||||||
| Interests due to spreads | (578) | (106) | ||||||||||
| (=) Financial Margin – Interest | 4,603 | 5,544 | 941 | 5,229 | 5,544 | 315 | ||||||
| (+) Financial Margin – Non-Interest | 416 | 506 | 90 | 768 | 506 | (262) | ||||||
| (=) Adjusted Financial Margin | 5,019 | 6,050 | 1,031 | 5,997 | 6,050 | 53 | ||||||
In 1Q08, the interest Financial Margin amounted to R$5,544 million against R$5,229 million recorded in 4Q07, accounting for an increase of 6.0% or R$315 million. This variation had an impact due to the increase in the volume of operations, which positively contributed to the Financial Margin in R$421 million. This result offset the effect in the margin due to the decrease of spreads in the amount of R$106 million.
Comparing 1Q08 and 1Q07, there was an R$941 increase in the interest Financial Margin. This variation was positively impacted in R$1,519 million due to the increase in volumes, while the decrease in spreads had an adverse effect on the R$578 million amount.
Below, we show the net interest entry among the main business lines of Bradesco:
| R$ million | ||||||||||||
| 1st Quarter | Variation | 2007 | 2008 | Variation | ||||||||
| 2007 | 2008 | 4th Qtr. | 1st Qtr. | |||||||||
| Loan | 3,025 | 3,830 | 805 | 3,567 | 3,830 | 263 | ||||||
| Funding | 548 | 572 | 24 | 541 | 572 | 31 | ||||||
| Insurance | 542 | 557 | 15 | 497 | 557 | 60 | ||||||
| TVM/Other | 488 | 585 | 97 | 624 | 585 | (39) | ||||||
| (=) Financial Margin – Interest | 4,603 | 5,544 | 941 | 5,229 | 5,544 | 315 | ||||||
67
The product which contributed the most to the increase in financial margin, both in the comparison with the previous quarter, and with 1Q07, was the loan portfolio that aggregates greater increase, reaching R$263 million in the last quarter and R$805 million, when compared to 1Q07.
The increase of loan operations for individual clients was an important factor for the financial margin increase in the analyzed periods. The main products of the individual segment which contributed to the increase of the financial margin were payroll deductible loan operations; vehicle financing; Private Label card operations; and credit card financing operations. There was also the material volume increase in the leasing and real estate financing products.
In relation to the loan operations for corporate clients, a strong increase distributed in all segments is observed, as a result of the excellent strategic positioning of Banco Bradesco, which has shown a consistent growth in this business segment by means of its commercial actions and selling efforts.
The products with better performance which contributed to the financial margin in the corporate segment were, mainly, the lines related to the business flow. They are: the working capital operations and guaranteed checking account. It is important to point out the Rural Loan portfolio which had a significant growth volume, when compared to 1Q07.
The increase in the margin of Funding and Insurance products should also be pointed out, because the comparison of 1Q08 against 1Q07 shows a business volume increase which was an important factor to mitigate the drop of the Selic interest rate effect.
In relation to TVM and Treasury operations, the growth over the 1st quarter of 2007 is due to the adequate positioning of the portfolio, even with the Ibovespa decrease and the country risk increase in the 1st quarter of 2008.
Below, we can observe the interest financial margin comparing the quarterly history since 2005:
| Adjusted Interest Financial Margin |
(*) (Financial Margin - Interest) / Total Assets - Permanent Assets - Purchase and Sale Commitments).
68
The annualized interest financial margin rate amounted to 8.4% in 1Q08, a slight decrease when compared to the 8.5% ratio observed in the previous quarter. However, we reaffirm that the spread drop effect was offset by the credit portfolio evolution. Additionally, the margin drop reflects in a larger growth in lower risk products, such as working capital and payroll deductible loan.
The adjusted financial margin coming from “non-interest” results reached R$506 million in 1Q08, against R$768 million in the previous quarter, comparing with 1Q07 and 2006, a growth of R$90 million is observed, mainly resulting from the higher loan recovery, and the higher treasury gains.
| Provision for Loan Losses (PDD) |
| PDD Growth |
| R$ million | ||||||||
| 2006 | 2007 | 2008 | ||||||
| 4th Qtr. | 1st Qtr. | 4th Qtr. | 1st Qtr. | |||||
| Opening Balance | 6,215 | 6,646 | 7,428 | 7,826 | ||||
| Amount Recorded | 1,190 | 1,160 | 1,556 | 1,667 | ||||
| Amount Written-off | (759) | (1,031) | (1,158) | (1,389) | ||||
| Closing Balance | 6,646 | 6,775 | 7,826 | 8,104 | ||||
| Specific Provision | 3,635 | 3,772 | 4,413 | 4,598 | ||||
| Generic Provision | 1,911 | 1,900 | 2,285 | 2,352 | ||||
| Exceeding Provision | 1,100 | 1,103 | 1,128 | 1,154 | ||||
| Credit Recoveries | 197 | 178 | 288 | 232 | ||||
| PDD over Loan and Leasing Operations |
| R$ million | ||||||||
| 2006 | 2007 | 2008 | ||||||
| December | March | December | March | |||||
| PDD (A) | 6,646 | 6,775 | 7,826 | 8,104 | ||||
| Loan Operations (B) | 96,219 | 101,473 | 131,307 | 139,019 | ||||
| PDD over Loan Operations (A/B) | 6.9% | 6.7% | 6.0% | 5.8% | ||||
| Coverage Ratio – PDD/Non-performing Loans (E to H) |
| R$ million | ||||||||
| 2006 | 2007 | 2008 | ||||||
| December | March | December | March | |||||
| (1) Total Provision | 6,646 | 6,775 | 7,826 | 8,104 | ||||
| (2) Abnormal Course Loans (E-H) | 4,390 | 4,569 | 5,277 | 5,518 | ||||
| Coverage Ratio (1/2) | 151.4% | 148.3% | 148.3% | 146.9% | ||||
69
| Allowance for Loan Losses (PDD) |
| Coverage Ratio – Non Performing Loans (NPL) (*) |
| R$ million | ||||||||
| 2006 | 2007 | 2008 | ||||||
| December | March | December | March | |||||
| (1) Total Provision | 6,646 | 6,775 | 7,826 | 8,104 | ||||
| (2) Non-Performing Loans | 4,443 | 4,673 | 5,564 | 5,915 | ||||
| NPL Ratio (1/2) | 149.6% | 145.0% | 140.7% | 137.0% | ||||
(*) Loan Operations Overdue for more than 59 days and which do not generate income under the accrual method of accounting.
For further information on PDD, see pages 154 to 157 of this Report.
| Fee and Commission Income |
| R$ million | ||||||||
| 2006 | 2007 | 2008 | ||||||
| 4th Qtr. | 1st Qtr. | 4th Qtr. | 1st Qtr. | |||||
| Card Income | 541 | 557 | 688 | 677 | ||||
| Checking Accounts | 547 | 574 | 609 | 578 | ||||
| Loan Operations | 411 | 441 | 521 | 499 | ||||
| Assets under Management | 309 | 334 | 384 | 385 | ||||
| Charging | 198 | 204 | 227 | 225 | ||||
| Interbank Fees | 76 | 76 | 85 | 83 | ||||
| Custody and Brokerage Services | 42 | 49 | 71 | 72 | ||||
| Consortium Management | 58 | 53 | 65 | 72 | ||||
| Collection | 68 | 70 | 56 | 59 | ||||
| Other | 174 | 201 | 190 | 153 | ||||
| Total | 2,424 | 2,559 | 2,896 | 2,803 | ||||
In 1Q08, Fee and Commission Income increased by 9.5%, which represents a hike of R$244 million when compared to the same period of the previous year, amounting to R$2,803 million.
The main items that influenced in the increase of Fee and Commission Income between the periods were:
–the growth of 21.5%, represented by the increase of R$120 million in “Card Income”, related to the increase of 21.1% of the cards base, from 60,254 thousand to 72,971 thousand;
–the increase in the volume of Loan Operations, especially to individuals, with highlights to the products “Personal Loan” and “Vehicles”, which was the major factor for the increase in Revenues from Loan Operations, with a R$58 million improvement;
–the 21.2% growth in assets under management, from R$151.7 billion on March 31, 2007 to R$183.8 billion on March 31, 2008, was the main reason for the growth in the item “Assets under Management”, which increased by R$51 million;
–the 10.3% growth, represented by the increase of R$23 million in “Custody and Brokerage Service”, related to the increase in business volume; and
–the 10.3% growth represented by the R$21 million hike in item “Collection”, related to the increase in business volume.
In the comparison between 1Q08 and 4Q07, the R$93 million decrease was due to:
–the realignment of fees related to the checking account charged from individual clients;
–the lower loan operations income due to the decrease in the charging of the Loan Opening Rate (TAC);
–the lower quantity of operations focused on the capital markets in view of the economic scenario; and
–the higher card transaction volume in 4Q07.
70
| Administrative and Personnel Expenses |
| R$ million | ||||||||
| 2006 | 2007 | 2008 | ||||||
| 4th Qtr. | 1st Qtr. | 4th Qtr. | 1st Qtr. | |||||
| Administrative Expenses | ||||||||
| Third-Party Services | 353 | 343 | 474 | 446 | ||||
| Communication | 213 | 220 | 250 | 260 | ||||
| Advertising | 223 | 107 | 229 | 122 | ||||
| Depreciation and Amortization | 130 | 133 | 137 | 138 | ||||
| Financial System Services | 121 | 123 | 142 | 145 | ||||
| Transportation | 139 | 124 | 142 | 133 | ||||
| Data Processing | 87 | 89 | 114 | 97 | ||||
| Rentals | 94 | 96 | 104 | 107 | ||||
| Maintenance and Repairs | 74 | 68 | 82 | 89 | ||||
| Assets Leasing | 52 | 45 | 77 | 74 | ||||
| Materials | 45 | 45 | 52 | 46 | ||||
| Security and Vigilance | 45 | 45 | 50 | 51 | ||||
| Water, Electricity and Gas | 41 | 45 | 45 | 47 | ||||
| Travel | 19 | 14 | 20 | 19 | ||||
| Other | 35 | 43 | 55 | 41 | ||||
| Total | 1,671 | 1,540 | 1,973 | 1,815 | ||||
| Personnel Expenses | ||||||||
| Structural | 1,261 | 1,228 | 1,380 | 1,362 | ||||
| Compensation/Social Charges | 940 | 913 | 1,033 | 1,011 | ||||
| Benefits | 321 | 315 | 347 | 351 | ||||
| Non-Structural | 199 | 232 | 441 | 375 | ||||
| Management and employee profit sharing (PLR) | 95 | 161 | 272 | 223 | ||||
| Provision for Labor Proceedings | 61 | 29 | 122 | 112 | ||||
| Training | 19 | 10 | 24 | 11 | ||||
| Termination cost | 24 | 32 | 23 | 29 | ||||
| Total | 1,460 | 1,460 | 1,821 | 1,737 | ||||
| Total Administrative and Personnel Expenses | 3,131 | 3,000 | 3,794 | 3,552 | ||||
In 1Q08, Administrative and Personnel Expenses showed a R$552 million increase when compared to 1Q07, reaching R$3,552 million against R$3,000 million in 1Q06. The nominal variation of Administrative Expenses between the periods showed a R$275 million increase, reaching R$1,815 million, mainly due to: (i) the organic growth; (ii) the increase in business volume; (iii) the contractual adjustments in the period; and (iv) the investments in the improvement and optimization of the technological platform (IT Improvements Project).
Personnel Expenses increased R$277 million when compared to the same period in 2007, reaching R$1,737 million. The portion considered as “Structural” increased R$134 million, mainly: (i) the expansion of the customer service network and the consequent hiring of employees, as well as the increase in the salary levels, resulting from the 2007 collective bargaining agreements (6.0%), benefits and others in the amount of R$117 million; and (ii) the consolidation of the acquired companies (Credifar and BMC), in the amount of R$15 million. In relation to the portion considered as “Non-structural”, the increase was R$143 million, mainly due to: (i) the higher expenses with employee and management profit sharing (PLR) in the amount of R$62 million; and (ii) the higher expenses with provisions for labor proceedings of R$83 million.
When compared to the previous quarter, Administrative and Personnel Expenses decreased R$242 million, a drop of 6.4%, from R$3,794 million in 4Q07 to R$3,552 million in the 1st quarter of 2008.
When compared to the previous quarter, Administrative Expenses decreased R$158 million, basically due to: (i) the higher seasonal volume of expenses with advertisement in the 4th quarter of 2007 in the amount of R$107 million; and (ii) the higher expenses with third-party services and data processing in the 4th quarter of 2007 in the amount of R$45 million, due to the higher business volume characteristic of that period.
71
| Administrative and Personnel Expenses |
Personnel Expenses decreased R$84 million when compared to the previous quarter, going from R$1,821 million in 4Q07 to R$1,737 million in 1Q08. In the portion considered as “Structural”, there was an R$18 million drop explained, basically, due to higher level of vacation concentration in the 1st quarter of 2008, whereas the “Non-structural” portion had a R$66 million decrease, pointing out: (i) lower expenses with management and employee profit sharing (PLR) in the amount of R$49 million; (ii) lower training expenses R$13 million; and (iii) lower level of provisions of labor proceedings in the amount of R$10 million.
| Operating Efficiency |
| R$ million (*) | ||||||||||||
| Years | 1st Qtr. | |||||||||||
| 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | |||||||
| Personnel Expenses | 4,779 | 4,969 | 5,312 | 5,932 | 6,570 | 6,847 | ||||||
| Employee Profit Sharing | (170) | (182) | (287) | (415) | (521) | (554) | ||||||
| Other Administrative Expenses | 4,814 | 4,937 | 5,142 | 5,870 | 6,912 | 7,187 | ||||||
| Total (1) | 9,423 | 9,724 | 10,167 | 11,387 | 12,961 | 13,480 | ||||||
| Financial Margin | 13,282 | 13,231 | 16,550 | 19,838 | 22,300 | 23,331 | ||||||
| Fee and Commission Income | 4,557 | 5,824 | 7,349 | 8,898 | 10,806 | 11,050 | ||||||
| Insurance, Private Pension Plans and Certificated Savings | ||||||||||||
| Plans Subtotal | (149) | (60) | 621 | 1,025 | 711 | 985 | ||||||
| – Insurance, Private Pension Plans and Certificated Savings | ||||||||||||
| Plans Retained Premiums | 11,726 | 13,284 | 13,647 | 18,008 | 20,857 | 17,074 | ||||||
| – Variation in Technical Provisions for Insurance, Private | ||||||||||||
| Pension Plans and Certificated Savings Plans | (6,033) | (6,095) | (5,011) | (8,712) | (11,670) | (7,365) | ||||||
| – Retained Claims | (3,980) | (5,159) | (5,825) | (6,026) | (6,014) | (6,226) | ||||||
| – Certificated Savings Plans Draws and Redemptions | (1,100) | (1,223) | (1,229) | (1,222) | (1,378) | (1,395) | ||||||
| – Insurance, Private Pension Plans and Certificated Savings | ||||||||||||
| Plans Selling Expenses | (762) | (867) | (961) | (1,023) | (1,084) | (1,103) | ||||||
| Equity in Earnings (Losses) of Unconsolidated Companies | 5 | 163 | 76 | 72 | 42 | 62 | ||||||
| Other Operating Expenses | (2,741) | (2,826) | (3,405) | (4,223) | (4,297) | (4,493) | ||||||
| Other Operating Income | 1,697 | 1,198 | 1,097 | 1,420 | 1,436 | 1,429 | ||||||
| Total (2) | 16,651 | 17,530 | 22,288 | 27,030 | 30,998 | 32,364 | ||||||
| Operating Efficiency Ratio (%) = (1/2) | 56.6 | 55.5 | 45.6 | 42.1 | 41.8 | 41.7 | ||||||
(*) Amounts accumulated over the last twelve months based on the statement of adjusted income.
| Operating Efficiency Ratio – in percentage |
72
In the twelve-month period ended in March 2008, the Operating Efficiency Ratio was 41.7%, practically steady over the 12-month period ended in December 2007. It is also worth mentioning the higher financial margin in R$1,031 million, basically stemming from the “interest” component, stimulated by an increment in business volume, with highlights to an increase in the volume of loan operations for individuals, mainly focused on consumer financing, the profitability of which is higher if compared to the corporate loans, and to an increased fee and commission income, in R$244 million, as a result of the increase in the average volume of operations.
The Coverage Ratio of the twelve-month period ended in March 2008, which had been showing an ongoing improvement, decreased by 1.5 percentage points (from 80.2% to 78.7%) when compared to December 2007, mainly influenced by investments in our technological platform, the expansion of our service network and the realignment of fees charged from individuals as of 2008. When compared to the 78.0% ratio assessed in the twelve-month period ended in March 2007, a 0.7 percentage point increase is observed.
| Administrative + Personnel Expenses and Fee and Commission Income |
73
| Other Indicators |
74
3-Main Balance Sheet Information
| Consolidated Balance Sheet – R$ thousand |
| Assets | March | December | ||||||||
| 2008 | 2007 | 2006 | 2005 | 2004 | ||||||
| Current and Long-term Assets | 351,615,139 | 337,514,243 | 262,054,823 | 204,325,065 | 180,038,498 | |||||
| Funds Available | 5,702,253 | 5,486,606 | 4,761,972 | 3,363,041 | 2,639,260 | |||||
| Interbank Investments | 48,675,310 | 37,622,125 | 25,989,190 | 25,006,158 | 22,346,721 | |||||
| Federal funds purchased and securities sold | ||||||||||
| under agreements to repurchase | 42,893,613 | 32,014,861 | 20,617,520 | 19,615,744 | 15,667,078 | |||||
| Interest-earning deposits in other banks | 5,786,566 | 5,617,413 | 5,372,658 | 5,390,726 | 6,682,608 | |||||
| Allowance for Losses | (4,869) | (10,149) | (988) | (312) | (2,965) | |||||
| Securities and Derivative Financial Instruments | 105,166,736 | 114,451,709 | 97,249,959 | 64,450,808 | 62,421,658 | |||||
| Own Portfolio | 90,636,515 | 84,079,171 | 72,052,850 | 59,324,858 | 51,255,745 | |||||
| Subject to Repurchase Agreements | 2,291,803 | 11,731,427 | 15,352,073 | 1,051,665 | 4,807,769 | |||||
| Derivative Financial Instruments | 2,028,545 | 1,207,040 | 549,065 | 474,488 | 397,956 | |||||
| Restricted Deposits – Brazilian Central Bank | 5,464,743 | 8,273,662 | 440,235 | 2,506,172 | 4,512,563 | |||||
| Privatization Currencies | 100,434 | 79,535 | 70,716 | 98,142 | 82,487 | |||||
| Subject to Collateral Provided | 4,293,761 | 4,070,210 | 765,129 | 995,483 | 1,365,138 | |||||
| Securities from Unrestricted Purchase and Sale Commitments | 350,935 | 5,010,664 | 8,019,891 | – | – | |||||
| Interbank Accounts | 24,469,215 | 24,036,514 | 19,124,806 | 16,922,165 | 16,087,102 | |||||
| Unsettled Receipts and Payments | 743,980 | 36,332 | 50,945 | 39,093 | 22,075 | |||||
| Restricted Credits: | ||||||||||
| – Restricted Deposits – Brazilian Central Bank | 23,216,434 | 23,538,587 | 18,664,706 | 16,444,866 | 15,696,154 | |||||
| – National Treasury – Rural Credit | 578 | 578 | 578 | 578 | 578 | |||||
| – SFH | 456,865 | 452,899 | 405,465 | 396,089 | 335,320 | |||||
| Correspondent Banks | 51,358 | 8,118 | 3,112 | 41,539 | 32,975 | |||||
| Interdepartmental Accounts | 145,798 | 429,362 | 186,338 | 172,831 | 147,537 | |||||
| Internal Transfer of Funds | 145,798 | 429,362 | 186,338 | 172,831 | 147,537 | |||||
| Loan Operations | 112,271,478 | 108,295,627 | 79,714,969 | 68,328,802 | 51,890,887 | |||||
| Loan Operations: | ||||||||||
| – Public Sector | 778,944 | 763,973 | 784,870 | 821,730 | 536,975 | |||||
| – Private Sector | 119,170,986 | 115,001,602 | 85,315,248 | 72,205,630 | 55,242,348 | |||||
| Allowance for Loan Losses | (7,678,452) | (7,469,948) | (6,385,149) | (4,698,558) | (3,888,436) | |||||
| Leasing Operations | 10,836,524 | 7,962,395 | 3,751,558 | 2,411,299 | 1,556,321 | |||||
| Leasing Receivables: | ||||||||||
| – Public Sector | 131,966 | 134,197 | 152,125 | 66,237 | – | |||||
| – Private Sector | 18,540,250 | 13,802,117 | 7,231,519 | 4,896,717 | 3,237,226 | |||||
| Unearned Income from Leasing | (7,516,573) | (5,728,551) | (3,472,246) | (2,444,596) | (1,576,690) | |||||
| Allowance for Leasing Losses | (319,119) | (245,368) | (159,840) | (107,059) | (104,215) | |||||
| Other Receivables | 40,736,483 | 35,829,910 | 29,302,217 | 22,106,013 | 21,664,592 | |||||
| Receivables on Sureties and Guarantees Honored | 12,249 | 12,181 | 38 | – | 811 | |||||
| Foreign Exchange Portfolio | 14,255,544 | 9,836,732 | 7,946,062 | 6,937,144 | 7,336,806 | |||||
| Receivables | 339,265 | 371,427 | 175,570 | 183,015 | 197,120 | |||||
| Securities trading | 1,738,239 | 1,378,130 | 709,034 | 1,124,197 | 357,324 | |||||
| Insurance Premiums Receivable | 1,255,932 | 1,276,612 | 1,257,298 | 1,073,002 | 988,029 | |||||
| Sundry | 23,241,259 | 23,065,328 | 19,315,264 | 12,941,687 | 12,937,408 | |||||
| Allowance for Other Loan Losses | (106,005) | (110,500) | (101,049) | (153,032) | (152,906) | |||||
| Other Assets | 3,611,342 | 3,399,995 | 1,973,814 | 1,563,948 | 1,284,420 | |||||
| Other Assets | 472,357 | 389,856 | 369,099 | 367,688 | 477,274 | |||||
| Provisions for Devaluations | (194,572) | (179,097) | (189,591) | (180,941) | (230,334) | |||||
| Prepaid Expenses | 3,333,557 | 3,189,236 | 1,794,306 | 1,377,201 | 1,037,480 | |||||
| Permanent Assets | 3,902,203 | 3,670,161 | 3,492,450 | 4,357,865 | 4,887,970 | |||||
| Investments | 743,088 | 604,076 | 696,582 | 984,970 | 1,101,174 | |||||
| Interest in Affiliated Companies: | ||||||||||
| – Local | 524,916 | 467,944 | 403,033 | 438,819 | 496,054 | |||||
| Other Investments | 564,327 | 487,365 | 651,568 | 895,836 | 971,311 | |||||
| Allowance for Losses | (346,155) | (351,233) | (358,019) | (349,685) | (366,191) | |||||
| Premises and equipment | 2,333,922 | 2,284,078 | 2,136,783 | 1,985,571 | 2,270,497 | |||||
| Premises and equipment | 1,083,817 | 1,076,053 | 1,055,640 | 1,115,987 | 1,357,063 | |||||
| Other Premises and equipment | 4,460,214 | 4,347,693 | 4,101,918 | 3,644,874 | 3,604,741 | |||||
| Accumulated Depreciation | (3,210,109) | (3,139,668) | (3,020,775) | (2,775,290) | (2,691,307) | |||||
| Leased Assets | 10,588 | 11,421 | 16,136 | 9,323 | 18,951 | |||||
| Leased Assets | 16,656 | 20,777 | 25,142 | 23,161 | 58,463 | |||||
| Accumulated Depreciation | (6,068) | (9,356) | (9,006) | (13,838) | (39,512) | |||||
| Deferred Charges | 814,605 | 770,586 | 642,949 | 1,378,001 | 1,497,348 | |||||
| Organization and Expansion Costs | 1,935,095 | 1,850,219 | 1,593,771 | 1,315,881 | 1,170,866 | |||||
| Accumulated Amortization | (1,120,490) | (1,079,633) | (950,822) | (785,364) | (699,710) | |||||
| Goodwill on Acquisition of Subsidiaries, Net of Amortization | – | – | – | 847,484 | 1,026,192 | |||||
| Total | 355,517,342 | 341,184,404 | 265,547,273 | 208,682,930 | 184,926,468 | |||||
The Notes are an integral part of the Financial Statements.
76
| Consolidated Balance Sheet – R$ thousand |
| Liabilities | March | December | ||||||||
| 2008 | 2007 | 2006 | 2005 | 2004 | ||||||
| Current and Long-term Liabilities | 322,259,729 | 310,482,501 | 240,673,011 | 189,163,465 | 169,596,632 | |||||
| Deposits | 106,710,672 | 98,323,446 | 83,905,213 | 75,405,642 | 68,643,327 | |||||
| Demand Deposits | 25,845,700 | 28,495,555 | 20,526,800 | 15,955,512 | 15,297,825 | |||||
| Savings Deposits | 33,290,059 | 32,812,974 | 27,612,587 | 26,201,463 | 24,782,646 | |||||
| Interbank Deposits | 310,349 | 372,473 | 290,091 | 145,690 | 19,499 | |||||
| Time Deposits | 46,430,303 | 35,717,178 | 34,924,541 | 32,836,656 | 28,459,122 | |||||
| Other Deposits | 834,261 | 925,266 | 551,194 | 266,321 | 84,235 | |||||
| Federal Funds Purchased and Securities Sold | ||||||||||
| Under Agreements to Repurchase | 69,540,135 | 73,633,649 | 47,675,433 | 24,638,884 | 22,886,403 | |||||
| Own Portfolio | 35,466,834 | 37,864,704 | 36,595,268 | 12,690,952 | 8,248,122 | |||||
| Third-party Portfolio | 30,558,507 | 29,578,200 | 3,471,383 | 11,947,932 | 14,430,876 | |||||
| Unrestricted Portfolio | 3,514,794 | 6,190,745 | 7,608,782 | – | 207,405 | |||||
| Funds from Issuance of Securities | 7,238,523 | 6,496,782 | 5,636,279 | 6,203,886 | 5,057,492 | |||||
| Exchange Acceptances | 259 | 406 | – | – | – | |||||
| Mortgage Notes | 974,874 | 901,641 | 857,697 | 847,508 | 681,122 | |||||
| Debentures Funds | 2,663,276 | 2,594,921 | 2,603,194 | 2,624,899 | – | |||||
| Securities Issued Abroad | 3,600,114 | 2,999,814 | 2,175,388 | 2,731,479 | 4,376,370 | |||||
| Interbank Accounts | 312,545 | 16,632 | 5,814 | 139,193 | 174,066 | |||||
| Correspondent Banks | 312,545 | 16,632 | 5,814 | 139,193 | 174,066 | |||||
| Interdepartmental Accounts | 1,847,051 | 2,521,233 | 2,225,711 | 1,900,913 | 1,745,721 | |||||
| Third-party Funds in Transit | 1,847,051 | 2,521,233 | 2,225,711 | 1,900,913 | 1,745,721 | |||||
| Borrowings | 7,961,776 | 8,065,830 | 5,777,906 | 7,135,327 | 7,561,395 | |||||
| Local Borrowings – Official Institutions | 367 | 450 | 778 | 1,088 | 1,376 | |||||
| Local Borrowings – Other Institutions | 390 | 373 | 44,447 | 18 | 11,756 | |||||
| Foreign Currency Borrowings | 7,961,019 | 8,065,007 | 5,732,681 | 7,134,221 | 7,548,263 | |||||
| Local Onlending – Official Institutions | 14,657,056 | 14,086,436 | 11,640,969 | 9,427,571 | 8,355,398 | |||||
| National Treasury | 40,289 | 50,881 | 99,073 | 52,318 | 72,165 | |||||
| BNDES | 6,139,311 | 6,147,703 | 5,532,018 | 4,237,973 | 3,672,007 | |||||
| CEF | 102,780 | 101,280 | 69,909 | 59,588 | 395,820 | |||||
| Finame | 8,373,623 | 7,785,347 | 5,938,037 | 5,075,232 | 4,211,762 | |||||
| Other Institutions | 1,053 | 1,225 | 1,932 | 2,460 | 3,644 | |||||
| Foreign Onlendings | 1,393,690 | 1,257,281 | 170 | 183 | 42,579 | |||||
| Foreign Onlendings | 1,393,690 | 1,257,281 | 170 | 183 | 42,579 | |||||
| Derivative Financial Instruments | 1,623,968 | 951,733 | 519,004 | 238,473 | 173,647 | |||||
| Technical Provisions for Insurance, | ||||||||||
| Private Pension Plans and Certificated Savings Plans | 59,722,411 | 58,526,265 | 49,129,214 | 40,862,555 | 33,668,654 | |||||
| Other Liabilities | 51,251,902 | 46,603,214 | 34,157,298 | 23,210,838 | 21,287,950 | |||||
| Collection of Taxes and Other Contributions | 2,711,207 | 228,722 | 175,838 | 156,039 | 204,403 | |||||
| Foreign Exchange Portfolio | 7,318,890 | 3,467,189 | 2,386,817 | 2,206,952 | 3,011,421 | |||||
| Social and Statutory Payables | 795,222 | 2,195,653 | 190,916 | 1,254,651 | 900,266 | |||||
| Fiscal and Pension Plans Activities | 10,015,046 | 9,839,791 | 8,014,520 | 5,041,312 | 4,495,387 | |||||
| Trading securities | 758,166 | 657,700 | 422,232 | 893,957 | 312,267 | |||||
| Financial and Development Funds | 2,814 | 1,851 | 876 | – | – | |||||
| Subordinated Debt | 16,566,885 | 15,850,464 | 11,949,457 | 6,719,305 | 5,972,745 | |||||
| Sundry | 13,083,672 | 14,361,844 | 11,016,642 | 6,938,622 | 6,391,461 | |||||
| Deferred Income | 189,818 | 189,147 | 180,460 | 52,132 | 44,600 | |||||
| Deferred Income | 189,818 | 189,147 | 180,460 | 52,132 | 44,600 | |||||
| Minority Interest in Subsidiaries | 158,678 | 155,412 | 57,440 | 58,059 | 70,590 | |||||
| Shareholders' Equity | 32,909,117 | 30,357,344 | 24,636,362 | 19,409,274 | 15,214,646 | |||||
| Capital: | ||||||||||
| – Local Residents | 21,411,839 | 17,693,485 | 13,162,481 | 11,914,375 | 6,959,015 | |||||
| – Foreign Residents | 1,588,161 | 1,306,515 | 1,037,519 | 1,085,625 | 740,985 | |||||
| Realizable Capital | – | – | – | – | (700,000) | |||||
| Capital Reserves | 62,498 | 55,624 | 55,005 | 36,032 | 10,853 | |||||
| Profit Reserves | 8,394,029 | 9,963,593 | 8,787,106 | 5,895,214 | 7,745,713 | |||||
| Adjustment to Market Value – TVM and Derivatives | 1,452,744 | 1,469,976 | 1,644,661 | 507,959 | 458,080 | |||||
| Treasury Shares | (154) | (131,849) | (50,410) | (29,931) | – | |||||
| Shareholders' Equity Managed by the Parent Company | 33,067,795 | 30,512,756 | 24,693,802 | 19,467,333 | 15,285,236 | |||||
| Total | 355,517,342 | 341,184,404 | 265,547,273 | 208,682,930 | 184,926,468 | |||||
The Notes are an integral part of the Financial Statements.
77
| Total Assets by Currency and Maturity |
| Total Assets by Currency – R$ million |
| Total Assets by Maturity – R$ million |
78
| Securities |
| Summary of the Classification of Securities – R$ million |
| R$ million | ||||||||||||
| Financial | Insurance/ Certificated Savings Plans |
Pension Plans |
Other Activities |
Total | % | |||||||
| Trading Securities | 25,737 | 4,019 | 29,546 | 279 | 59,581 | 63.3 | ||||||
| Available-for-Sale Securities | 7,530 | 1,348 | 11,558 | 8 | 20,444 | 21.7 | ||||||
| Held-to-Maturity Securities | 860 | 6,264 | 7,022 | – | 14,146 | 15.0 | ||||||
| Subtotal | 34,127 | 11,631 | 48,126 | 287 | 94,171 | 100.0 | ||||||
| Purchase and Sale Commitments | 2,747 | 2,421 | 5,828 | – | 10,996 | |||||||
| Total on March 31, 2008 | 36,874 | 14,052 | 53,954 | 287 | 105,167 | |||||||
| Total on December 31, 2007 | 46,651 | 13,311 | 54,221 | 269 | 114,452 | |||||||
| Total on March 31, 2007 | 38,188 | 11,876 | 46,940 | 530 | 97,534 | |||||||
| Composition of Securities by Issuance – R$ million |
| Securities | R$ million | |||||||
| 2006 | 2007 | 2008 | ||||||
| December | March | December | March | |||||
| Government | 51,479 | 49,607 | 58,284 | 46,225 | ||||
| Private | 14,831 | 14,376 | 17,535 | 18,994 | ||||
| PGBL/VGBL | 22,169 | 22,980 | 28,435 | 28,952 | ||||
| Subtotal | 88,479 | 86,963 | 104,254 | 94,171 | ||||
| Purchase and Sale Commitments: | 8,771 | 10,571 | 10,198 | 10,996 | ||||
| Funds | 3,996 | 5,420 | 4,703 | 5,316 | ||||
| PGBL/VGBL | 4,775 | 5,151 | 5,495 | 5,680 | ||||
| Total | 97,250 | 97,534 | 114,452 | 105,167 | ||||
| Classification of Securities by Segment – in percentage |
N.B.: The composition of Securities Portfolio consolidated by issuer, maturity, business segment and category can be found in Note 8.
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| Loan Operations |
At the end of 1Q08, the consolidated balance of loan operations (according to the concept defined by Bacen which does not include debentures, guarantees, loans to be granted, credit letters, interbank deposit certificates etc.) reached a total of R$139.0 billion, representing a 5.9% increase in the quarter and a 37.0% over the past 12 months.
| Loan Operations – Total Portfolio |
In March 2008, the balance of loans and onlendings indexed and/or denominated in foreign currency (excluding ACCs) reached the total of U$6.9 billion, showing a growth of 2.0% in dollars and of 0.7% in reais in the quarter, which caused a decrease in their interest in the total loan portfolio. Over the past twelve months, the growth was 47.4% and 25.7%, respectively.
| Real Estate Loan |
At the end of March 2008, the balance of real estate financings was R$3.7 billion, a 61.6% increase when compared to March 2007, whereas in 1Q08 the number of operations contracted showed a 69.4% growth when compared to the same period of last year. Some actions carried out have been responsible for the portfolio performance, such as term extension of operations, and the creation of the website www.bradescoimoveis.com.br, aimed at rendering services to help those interested in the acquisition of their own house by means of partnerships with construction companies, developers and real estate agencies, which are clients of the Bank.
| BNDES |
It is worth pointing out Bradesco’s leadership in BNDES onlending operations for the fifth consecutive year. Out of the total operations sold up to February 2008, 48.8% of the amount, representing 90.1% of contracts were directed to SMEs, including operations carried out for individuals.
| Rural |
It is worth pointing out that the website www.bradescorural.com.br was concluded this quarter and can already be accessed. The website was developed with the purpose of subsiding this sector with information related to agribusinesses, products and loan services.
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| Loan Operations – By Purpose |
The performance of the loan portfolio for individuals showed an upturn in the quarter and in the last twelve months of 6.5% and 36.9%, respectively. The main products responsible for the portfolio increase in the quarter were Leasing, Overdraft Facilities, Credit Card Financing and Real Estate Loan, whereas over the last twelve months we point out Leasing and Credit Card Financing.
| Loan Operations – Individual |
In the following graph, the types related to the “consumer financing” for individuals were considered (CDC – vehicles, personal loan, leasing, assets financing and credit card; in the latter, the amounts related to cash purchases and credit purchases from store owners, which are not in the total loan operations, are included). The balance reached the amount of R$50.3 billion in March 2008, representing a 4.5% growth in the quarter and 35.9% in the last twelve months. We point out the vehicle financing and the payroll-deductible and consigned loans, for its guarantees and characteristics, provided the portfolio with an adequate loan risk level. Thus, these two portfolios represented, at the end of 1Q07, 57.9% of the total consumer financing balance.
| Loan Operations – Consumer Financing |
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The growth in loans granted to companies was 5.4% in the quarter and 37.1% in 2007 YTD. The main products responsible for the portfolio increase in the quarter were Working Capital, Export Financing and Leasing, as well as Real Estate Financing and BNDES/Finame onlending in the year.
| Loan Operations – Corporate |
The following graph shows the growth of the five main types of products destined to corporate entities services, which represented 64.7% of the total loan portfolio in March 2007. Among the main types, we highlight the increase in the Working Capital and Export Financing balance in the quarter and in the year.
| Loan Operations – Main Types – Corporate |
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We point out below the increase of the share in Large Companies’ loan portfolio and Individual Clients in the quarter and of Micro, Small and Medium-Sized Companies in the year.
| Loan Operations – Client Characteristics |
| Client Characteristics | R$ billion | |||||||||||||||
| 2007 | 2008 | Variation | ||||||||||||||
| March | % | December | % | March | % | Quarter | YTD | |||||||||
| Large Companies | 30.0 | 29.6 | 35.9 | 27.3 | 38.5 | 27.7 | 7.3 | 28.3 | ||||||||
| Micro, Small and Medium-Sized | ||||||||||||||||
| Companies | 29.9 | 29.4 | 41.9 | 32.0 | 43.5 | 31.3 | 3.8 | 45.9 | ||||||||
| Individuals | 41.6 | 41.0 | 53.5 | 40.7 | 57.0 | 41.0 | 6.5 | 36.9 | ||||||||
| Total | 101.5 | 100.0 | 131.3 | 100.0 | 139.0 | 100.0 | 5.9 | 37.0 | ||||||||
In the table below we show the evolution in the significance of the Conglomerate’s business segments, highlighting in the quarter the Retail, Postal and Prime segments and, in the last twelve months, the Companies segment, which showed an evolution higher than the total portfolio. It is worth pointing out that, over the last twelve months, the increase in item “Others” was motivated by the BMC merger in September 2007.
| Loan Operations – By Business Segment |
| Business Segment | R$ billion | |||||||||||||||
| 2007 | 2008 | Variation | ||||||||||||||
| March | % | December | % | March | % | Quarter | YTD | |||||||||
| Corporate | 33.5 | 33.0 | 39.7 | 30.2 | 42.2 | 30.4 | 6.3 | 26.1 | ||||||||
| Retail / Postal / Prime | 34.6 | 34.1 | 43.1 | 32.8 | 46.5 | 33.4 | 7.9 | 34.5 | ||||||||
| Finasa | 19.3 | 19.0 | 25.0 | 19.1 | 26.2 | 18.9 | 4.9 | 36.2 | ||||||||
| Companies | 12.9 | 12.7 | 18.7 | 14.3 | 18.6 | 13.4 | (0.6) | 43.9 | ||||||||
| Other | 1.2 | 1.2 | 4.8 | 3.6 | 5.5 | 3.9 | 14.5 | 370.7 | ||||||||
| Total | 101.5 | 100.0 | 131.3 | 100.0 | 139.0 | 100.0 | 5.9 | 37.0 | ||||||||
| Loan Operations – By Type |
We highlight in the quarter the growth in interest in leasing operations and discounted trade receivables and other loan operations due to its performance, which is higher than the growth in the portfolio.
We present below the total loan operations, including Sureties and Guarantees and Credit Card (cash purchases and credit purchases from store owners), which presented a growth of 5.0% in 4Q07 and 38.5% over the last twelve months.
| Types | R$ million | |||||||
| 2006 | 2007 | 2008 | ||||||
| December | March | December | March | |||||
| Loans and Discounted Securities (1) | 43,155 | 46,609 | 60,792 | 63,212 | ||||
| Financings | 35,347 | 36,678 | 45,777 | 47,202 | ||||
| Rural and Agribusiness Loans | 7,599 | 7,711 | 9,197 | 9,536 | ||||
| Leasing Operations | 3,911 | 4,113 | 8,208 | 11,156 | ||||
| Advances on Foreign Exchange Contracts | 5,703 | 5,851 | 6,782 | 7,354 | ||||
| Subtotal of Loan Operations | 95,715 | 100,962 | 130,756 | 138,460 | ||||
| Other Loans | 504 | 511 | 551 | 559 | ||||
| Total Loan Operations (2) | 96,219 | 101,473 | 131,307 | 139,019 | ||||
| Sureties and Guarantees Recorded in Memorandum Accounts | 14,791 | 15,969 | 24,296 | 25,080 | ||||
| Credit Cards (3) | 5,215 | 4,913 | 5,804 | 5,309 | ||||
| Total | 116,225 | 122,355 | 161,407 | 169,408 | ||||
(1) It includes revolving credit of credit card.
(2) According to the concept defined by the Brazilian Central Bank.
(3) Cash purchases and credit purchases from store owners.
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| Loan Operations – Financial Margin |
Over the past twelve months, Financial Margin of Loan Operations had an increase of 14.0% when compared to the twelve-month period ended in March 2007, as shown in the graph below:
| Loan Operations – Delinquency |
As of 2008, we started taking into consideration, for the delinquency percentage assessment, the total of overdue agreements (past due and falling due installments) on the total balance of portfolio agreements, recalculating the delinquency curves presented in the table below, which are currently higher, however maintaining the historical trend. In the previous criterion, the delinquency curves followed the criteria set forth by Brazilian Central Bank Resolution 2,682, which considers the “doubled count” for the classification of operations falling due up to 3 years. The change in the criterion for the formation of new delinquency curves did not cause any effect in the constitution of allowance for loan losses.
The delinquency ratio was stable in the quarter. The ratio had a slight decrease when compared to the last twelve-month period, due to the improvement in the delinquency ratio of Micro, Small and Medium-Sized Companies and the stability in Individuals.
| Loan Operations – Delinquency over 90 days (in percentage) |
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| Loan Operations – Portfolio Movement |
Over the past twelve months, the movement of the consolidated loan portfolio showed the adequacy and consistency of the loan evaluation instruments used in the granting process, maintaining its quality, as shown in the graph and table below:
| Loan Operations – Portfolio Movement between March 2007 and 2008 |
| Loan Operations – Portfolio Movement by Rating between March 2007 and 2008 |
| Rating | Borrowers Remaining from March 2007 |
New Borrowers between April 2007 and March 2008 |
Total Loans in March 2008 |
|||||||||
| R$ million | % | R$ million | % | R$ million | % | |||||||
| AA – C | 105,276 | 93.3 | 24,614 | 94.0 | 129,890 | 93.4 | ||||||
| D | 1,785 | 1.6 | 409 | 1.6 | 2,194 | 1.6 | ||||||
| E – H | 5,786 | 5.1 | 1,149 | 4.4 | 6,935 | 5.0 | ||||||
| Total | 112,847 | 100.0 | 26,172 | 100.0 | 139,019 | 100.0 | ||||||
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| Loan Operations – Portfolio Indicators |
Aiming at facilitating the follow-up of the quantitative and qualitative performance of the Conglomerate’s loan portfolio, we present below a comparative summary of the main figures and indicators:
| Items | R$ million (except percentages) | |||||||
| 2006 | 2007 | 2008 | ||||||
| December | March | December | March | |||||
| Total Loan Operations | 96,219 | 101,473 | 131,307 | 139,019 | ||||
| – Individual | 39,611 | 41,628 | 53,474 | 56,969 | ||||
| – Corporate | 56,608 | 59,845 | 77,833 | 82,050 | ||||
| Existing Provision | 6,646 | 6,775 | 7,826 | 8,104 | ||||
| – Specific | 3,635 | 3,772 | 4,413 | 4,598 | ||||
| – Generic | 1,911 | 1,900 | 2,285 | 2,352 | ||||
| – Additional | 1,100 | 1,103 | 1,128 | 1,154 | ||||
| Specific Provision/Existing Provision (%) | 54.7 | 55.7 | 56.4 | 56.7 | ||||
| Existing Provision/ Loan Operations (%) | 6.9 | 6.7 | 6.0 | 5.8 | ||||
| AA – C Rated Loan Operations / Loan Operations (%) | 92.1 | 92.2 | 93.3 | 93.4 | ||||
| D Rated Operations under Risk Management / Loan Operations (%) | 1.9 | 2.0 | 1.6 | 1.6 | ||||
| E – H Rated Loan Operations / Loan Operations (%) | 6.0 | 5.8 | 5.1 | 5.0 | ||||
| D Rated Loan Operations | 1,831 | 1,998 | 2,060 | 2,194 | ||||
| Existing Provision for D Rated Loan Operations | 483 | 532 | 544 | 587 | ||||
| D Rated Provision/Loan Operations (%) | 26.4 | 26.6 | 26.4 | 26.8 | ||||
| D – H Rated Non-Performing Loan Operations | 5,225 | 5,492 | 6,227 | 6,635 | ||||
| Existing Provision/D – H Rated Non-Performing Loan Operations (%) | 127.2 | 123.3 | 125.7 | 122.1 | ||||
| E – H Rated Loan Operations | 5,757 | 5,869 | 6,693 | 6,934 | ||||
| Existing Provision for E – H Rated Loan Operations | 5,041 | 5,111 | 5,848 | 6,027 | ||||
| E – H Rated Provision/Loan Operations (%) | 87.6 | 87.1 | 87.4 | 86.9 | ||||
| E – H Rated Non-Performing Loan Operations | 4,389 | 4,569 | 5,277 | 5,518 | ||||
| Existing Provision/E – H Rated Non-Performing Loan Operations (%) | 151.4 | 148.3 | 148.3 | 146.9 | ||||
| Non-Performing Loans (*) / Loan Operations (%) | 4.6 | 4.6 | 4.2 | 4.3 | ||||
| Existing Provision/ Non-Performing Loans (*) (%) | 149.6 | 145.0 | 140.7 | 137.0 | ||||
(*) Loan Operations overdue for more than 59 days and which do not generate income under the accrual method of accounting.
Throughout the year of 2008, Bradesco remains prepared to take full advantage of all business opportunities focused on increasing the loan portfolio, while respecting the established loan granting parameters, based on the security, consistency, selectivity, diversification and adequate assessment of the risk/return ratio.
| Funding |
| Investment Department |
The Department was structured in view of the need of facilitating the client’s orientation in the diversification of investments, centralizing the commercial management of the Funds, CDB, Savings Account, Demand Deposits, Purchase and Sale Commitments and Mortgage Notes products.
In this sense, the Department establishes funding policies and strategies, develops products and services and provides structures for local and specialized assistance directed to the Branch Network and especially investors, such as the Bradesco Investment Consulting Services, the Online Chat and the Scheduling of Consulting Services via Internet.
86
Being in a continuous improvement process, it started to manage the Checking Account product in 2004, developing initiatives towards improving the relationship with account holders and optimizing results, by rationalizing the distribution of Bank Statements, valuing the attribution and presentation of Debit Cards and check books and adjusting fees. More recently, it incorporated the management of the University Account, establishing specific strategies for the niche.
The achievement of improvements and the figures recorded are an evidence of the benefits that come from the strategic centralization of subjects inherent to fund raising.
| Composition of Deposits by Maturity |
| Deposits | R$ million | |||||||||||
| 2007 | 2008 | |||||||||||
| December | March | |||||||||||
| Total | Up to 30 days |
From 31 to 180 days |
From 181 to 360 days |
More than 360 days |
Total | |||||||
| Demand | 28,495 | 25,846 | – | – | – | 25,846 | ||||||
| Savings | 32,813 | 33,290 | – | – | – | 33,290 | ||||||
| Interbank | 373 | 201 | 42 | 67 | – | 310 | ||||||
| Time | 35,717 | 3,280 | 7,832 | 6,301 | 29,017 | 46,430 | ||||||
| Other | 925 | 834 | – | – | – | 834 | ||||||
| Total | 98,323 | 63,451 | 7,874 | 6,368 | 29,017 | 106,710 | ||||||
| Demand Deposits – R$ billion |
| Checking Accounts |
At the end of March 2008, the balance of the Checking Accounts of Bradesco Organization was R$25.8 billion, representing an increase of o 28.5% compared to the balance of March 2007.
Aligned with the recent launching of Conta Flex Bradesco, we have reformulated the Check Books line for Retail Corporate clients, adopting a specific visual identity adjusted to the segment’s needs. Besides the new cover, distinguishing corporate check books from others, we developed the new Flex check form, which is now printed with the product’s logo.
87
| Number of Checking Accounts – Individuals and Corporate |
| Savings Accounts |
At the end of 1Q08, the balance of Bradesco Organization Savings Accounts totaled R$33.3 billion, a 20.6% growth over the balance of the same period last year, representing a 17.2% market share in the Brazilian Savings and Loan System (SBPE) and Bradesco’s leadership among all private banks in the Brazilian Financial System.
| Savings Account Deposits – R$ billion |
Traditionally in the 1st quarter of the year, the balance of savings account has a small reduction due to withdrawals for payment of IPVA, IPTU and school supply, among others. However, last year’s situation was repeated this year: the verified balance was higher than that ascertained in December 2007.
We believe that the fall in the interest rates observed in the market made savings accounts more appealing, which added to the increase of the workers’ income, resulted in the positive balance of this product.
88
| Share of SBPE – in percentage |
| Number of Savings Accounts – in thousands |
| Assets under Management |
| Bradesco was elected the Best Share Funds Manager, Long-short and Exchange, according to GazetaInveste magazine |
BRAM – Bradesco Asset Management, the company which manages Bradesco Investment Funds, obtained the largest number of 5 Diamond Funds, in 3 categories: Variable Income, Long Short and Exchange – in the ranking published in March 2008 by GazetaInveste magazine in partnership with Austin Rating. The magazine awarded the best managers and the funds that obtained the best results in 2007.
| New Corporate Governance Funds |
BRAM – Bradesco Asset Management has created two new Share Funds of companies that belong to the Corporate Governance Index (IGC) of the São Paulo Stock Exchange (Bovespa). The first one is aimed at clients from the Retail Segment; Bradesco FIC FIA Corporate Governance. The second one is aimed at Prime clients; Bradesco Prime FIC FIA Corporate Governance. Both Funds are destined to investors who seek to optimize results and chose companies with high levels of transparency in their relationship with shareholders and the society.
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| Shareholders’ Equity |
| R$ million | ||||||||
| 2006 | 2007 | 2008 | ||||||
| December | March | December | March | |||||
| Investment Funds | 135,837 | 139,777 | 157,383 | 160,422 | ||||
| Managed Portfolios | 6,938 | 7,115 | 12,597 | 15,302 | ||||
| Third-Party Fund Quotas | 4,333 | 4,759 | 7,506 | 8,098 | ||||
| Total | 147,108 | 151,651 | 177,486 | 183,822 | ||||
| Asset Distribution |
| R$ million | ||||||||
| 2006 | 2007 | 2008 | ||||||
| December | March | December | March | |||||
| Investment Funds – Fixed Income | 130,609 | 133,415 | 143,214 | 145,923 | ||||
| Investment Funds – Variable Income | 5,228 | 6,362 | 14,169 | 14,499 | ||||
| Investment Funds – Third-Party Funds | 4,068 | 4,500 | 6,580 | 7,240 | ||||
| Total | 139,905 | 144,277 | 163,963 | 167,662 | ||||
| Managed Portfolio – Fixed Income | 4,265 | 4,377 | 4,952 | 5,900 | ||||
| Managed Portfolio – Variable Income | 2,673 | 2,738 | 7,645 | 9,402 | ||||
| Managed Portfolios – Third-Party Funds | 265 | 259 | 926 | 858 | ||||
| Total | 7,203 | 7,374 | 13,523 | 16,160 | ||||
| Total Fixed Income | 134,874 | 137,792 | 148,166 | 151,823 | ||||
| Total Variable Income | 7,901 | 9,100 | 21,814 | 23,901 | ||||
| Total Third-Party Funds | 4,333 | 4,759 | 7,506 | 8,098 | ||||
| Overall Total | 147,108 | 151,651 | 177,486 | 183,822 | ||||
| Total Assets under Management according to Anbid’s Global Ranking – R$ million (*) |
(*) Considering third-party fund quotas.
| Number of Funds, Portfolios and Quotaholders |
| March 2007 | December 2007 | March 2008 | ||||||||||
| Number | Quotaholders | Number | Quotaholders | Number | Quotaholders | |||||||
| Investment Funds | 546 | 3,309,959 | 666 | 3,312,565 | 684 | 3,288,220 | ||||||
| Managed Portfolios | 98 | 525 | 121 | 540 | 196 | 685 | ||||||
| Total | 644 | 3,310,484 | 787 | 3,313,105 | 880 | 3,288,905 | ||||||
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4- Operating Companies
| Grupo Bradesco de Seguros e Previdência |
| Insurance Companies (Consolidated) |
| Consolidated Balance Sheet (*) |
| R$ million | ||||||||
| 2006 | 2007 | 2008 | ||||||
| December | March | December | March | |||||
| Assets | ||||||||
| Current and Long-Term Assets | 59,267 | 61,114 | 72,215 | 72,440 | ||||
| Securities | 55,297 | 57,294 | 67,718 | 68,077 | ||||
| Insurance Premiums Receivable | 1,232 | 1,069 | 1,225 | 1,226 | ||||
| Other Receivables | 2,738 | 2,751 | 3,272 | 3,137 | ||||
| Permanent Assets | 1,291 | 1,276 | 1,103 | 1,175 | ||||
| Total | 60,558 | 62,390 | 73,318 | 73,615 | ||||
| Liabilities | ||||||||
| Current and Long-Term Liabilities | 53,249 | 55,070 | 64,647 | 64,435 | ||||
| Tax, Civil and Labor Contingencies | 1,629 | 1,665 | 1,710 | 1,732 | ||||
| Payables on Operations of Insurance, Private Pension Plans and Certificated | ||||||||
| Savings Plans | 440 | 369 | 468 | 428 | ||||
| Other Liabilities | 2,438 | 2,383 | 3,943 | 2,553 | ||||
| Technical Provisions for Insurance | 4,397 | 4,903 | 5,492 | 5,588 | ||||
| Technical Provisions for Life and Private Pension Plans | 42,038 | 43,430 | 50,543 | 51,607 | ||||
| Technical Provisions for Certificated Savings Plans | 2,307 | 2,320 | 2,491 | 2,527 | ||||
| Minority Interest | 59 | 64 | 24 | 25 | ||||
| Shareholders’ Equity | 7,250 | 7,256 | 8,647 | 9,155 | ||||
| Total | 60,558 | 62,390 | 73,318 | 73,615 | ||||
| Consolidated Statement of Income (*) |
| R$ million | ||||||||
| 2006 | 2007 | 2008 | ||||||
| 4th Qtr. | 1st Qtr. | 4th Qtr. | 1st Qtr. | |||||
| Premiums of Insurance, Private Pension Plan Contribution and Certificated Savings Plan Revenues | 5,662 | 4,801 | 6,175 | 5,367 | ||||
| Premiums Earned of Insurance, Private Pension Plan Contribution and | ||||||||
| Certificated Savings Plan Revenues | 2,610 | 2,467 | 2,574 | 2,751 | ||||
| Interest Income of the Operations | 851 | 636 | 758 | 698 | ||||
| Sundry Operating Revenues | 245 | 182 | 248 | 247 | ||||
| Retained Claims | (1,653) | (1,428) | (1,595) | (1,640) | ||||
| Private Pension Plan Draws and Redemptions | (344) | (301) | (379) | (318) | ||||
| Selling Expenses | (269) | (260) | (287) | (279) | ||||
| General and Administrative Expenses | (277) | (240) | (305) | (286) | ||||
| Other Operating Expenses | (27) | (31) | (57) | (26) | ||||
| Tax Expenses | (58) | (60) | (25) | (72) | ||||
| Health Provision | (386) | (237) | (166) | – | ||||
| Operating Income | 692 | 728 | 766 | 1,075 | ||||
| Equity Result | 50 | 72 | 29 | 38 | ||||
| Non-operating Income | (42) | 13 | 67 | 8 | ||||
| IR/CS and Minority Interest | (132) | (284) | (280) | (375) | ||||
| Net Income | 568 | 529 | 582 | 746 | ||||
(*) Information prepared in accordance with the accounting policies established by CNSP, Susep and ANS.
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| Performance Ratios – in percentage |
| 2006 | 2007 | 2008 | ||||||
| 4th Qtr. | 1st Qtr. | 4th Qtr. | 1st Qtr. | |||||
| Claims Ratio (1) | 81.3 | 72.9 | 75.0 | 73.4 | ||||
| Selling Ratio (2) | 11.2 | 11.5 | 11.5 | 10.9 | ||||
| Administrative Expense Ratio (3) | 4.9 | 5.0 | 5.1 | 5.3 | ||||
| Combined Ratio (4) | 93.7 | 95.9 | 92.8 | 83.9 | ||||
(1) Retained Claims/Earned Premiums.
(2) Selling Expenses/Earned Premiums.
(3) Administrative Expenses/Net Premiums Written.
(4) (Retained Claims + Selling Expenses + Other Operating Income and Expenses)/Earned Premiums + (Administrative Expenses + Taxes)/ Net Premiums Written.
N.B.: the ratios have been recalculated, pursuant to Susep Circular 356.
| Insurance Premiums – Market Share (%) |
Source: Susep and ANS
According to information published by Susep and ANS, up to February 2008, in the insurance segment, Bradesco Seguro e Previdência collected R$2.9 billion in premiums and maintained its leadership in the ranking with a 23.8% market share. The insurance sector obtained a total of R$12.2 billion in premiums in the same period.
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| Grupo Bradesco de Seguros e Previdência |
| Increase in Technical Provisions for Insurance – R$ million |
The technical provision charts of Bradesco Vida e Previdência and Bradesco Capitalização are presented in the section specifically related to these companies.
| Earned Premiums (Retained Premiums less Variation of Technical Provisions) by Insurance Line – R$ million |
| Insurance Line | 2006 | 2007 | 2008 | |||||
| 4th Qtr. | 1st Qtr. | 4th Qtr. | 1st Qtr. | |||||
| Health | 999 | 983 | 1,096 | 1,117 | ||||
| Auto/RCF | 523 | 511 | 464 | 482 | ||||
| Life/AP/VGBL | 340 | 285 | 413 | 432 | ||||
| Basic Lines | 114 | 108 | 108 | 111 | ||||
| Other Lines | 57 | 72 | 45 | 92 | ||||
| Total | 2,033 | 1,959 | 2,126 | 2,234 | ||||
N.B.: As of 4Q07, we do not consider premiums related to Indiana Seguros S.A, whose interest sale was approved by Susep on December 12, 2007.
In the 1st quarter of 2008, there was an increase of 14% in premiums earned in the insurance segment, if compared to the 1st quarter of 2007.
| Earned Premiums (Retained Premiums less Variation of Technical Provisions) by Insurance Line (%) |
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| Retained Claims by Insurance Line – R$ million |
| Insurance Line | 2006 | 2007 | 2008 | |||||
| 4th Qtr. | 1st Qtr. | 4th Qtr. | 1st Qtr. | |||||
| Health | 939 | 766 | 981 | 971 | ||||
| Auto/RCF | 375 | 383 | 322 | 337 | ||||
| Life/AP/VGBL | 225 | 158 | 172 | 186 | ||||
| Basic Lines | 67 | 63 | 77 | 70 | ||||
| Other Lines | 47 | 58 | 43 | 76 | ||||
| Total | 1,653 | 1,428 | 1,595 | 1,640 | ||||
| Claims Ratio by Insurance Line (%) |
| Selling Expenses by Insurance Line – R$ million |
| Insurance Line | 2006 | 2007 | 2008 | |||||
| 4th Qtr. | 1st Qtr. | 4th Qtr. | 1st Qtr. | |||||
| Health | 29 | 30 | 39 | 41 | ||||
| Auto/RCF | 98 | 97 | 90 | 94 | ||||
| Life /AP/VGBL | 77 | 78 | 95 | 86 | ||||
| Basic Lines | 23 | 21 | 21 | 23 | ||||
| Total | 227 | 226 | 245 | 244 | ||||
| Selling Ratios by Insurance Line (%) |
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| Number of Policyholders – in thousands |
As of 4Q07, we do not consider policyholders related to Indiana Seguros, whose interest sale was approved by Susep on December 12, 2007.
In the 1st quarter of 2008, there was an increase of 41.4% in the client base compared to the same period of 2007.
| Operational Risk |
Grupo Bradesco de Seguros e Previdência, in permanent commitment to comply with the laws and regulations, has adapted its processes and activities, by using methodologies and resources aligned with the best market practices, mainly those related to risk management.
Thus, in order to comply with the guidelines established by the New Capital Basel Accord (Basel II), provisions of the monetary authority and alignment of definitions related to Solvability II, we carried out the survey and analysis of the events related to operating risk. This initiative enabled the improvement in the management and knowledge of losses and their causes. The dissemination of the operating risk management culture on several levels, the disclosure of corporate policies and establishment of ongoing monitoring procedures of exposure levels are inserted in this context.
| Awards/Acknowledgments |
1 – Bradesco Seguros e Previdência achieved the Fides award in the Institutional category with the marketing campaign for the 2006 edition of Bradesco Seguros e Previdência’s Christmas Tree, with the theme A Present for the Brazilian Family. The award, promoted by Inter-American Federation of Insurance Companies (Fides), comprises marketing pieces used in campaigns by the affiliated insurance companies. The event took place in January, in Ecuador.
2 – Once again, Bradesco Seguros e Previdência was elected the favorite brand in the Insurance Company category according to the research Marcas de Quem Decide (Brands of People Who Decide) with businessmen and self-employed professionals of Rio Grande do Sul. This initiative was carried out by Jornal do Commercio newspaper of the State of Rio Grande do Sul in a partnership with QualiData Pesquisas e Reconhecimento Estratégico. In its tenth edition, the survey pointed out Bradesco Seguros e Previdência as the favorite brand among local businessmen. This project aims at presenting a radiograph of the largest brands of the state, using the survey as a strategic tool for the consolidation of the brand with companies, advertising agencies and marketing and communications professionals.
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3 – Grupo Bradesco de Seguros e Previdência was awarded with the Prêmio Segurador Brasil 2008 (2008 Brazilian Insurance Company Award), as Highlight in Global Insurance Sales. The award was promoted by Segurador Brasil magazine as a means to acknowledge the leadership, performance and achievements of companies of the insurance sector in 2007. The award points out the role of companies and entities in the implementation and in the development of concepts, products and services for the Brazilian insurance market.
| Sponsorships |
1 – Bradesco Seguros e Previdência was one of the sponsors of the 3ª Corrida Oral-B – Prevenção do Câncer Bucal (3rd Oral-B Race – Oral Cancer Prevention), which took place on January 27, in São Paulo. The race was part of the activities of the 26th International Dentistry Congress of São Paulo, and marked the beginning of this year’s calendar of street racing in the city.
2 – Bradesco Seguros e Previdência sponsored the exhibition Segall Realista, which occurred from January 28 to March 16 at Centro Cultural Fiesp, in São Paulo. The exhibition occurred in the 50th year after the death of Lasar Segall and celebrates 40 years of existence of the homonym museum, dedicated to the artist. It was comprised of approximately 150 works of the artist, such as oil paintings, aquarelles, drawings, engravings and sculptures.
3 – Bradesco Seguros e Previdência is one of the sponsors of the series of events to be promoted by the Insurance Brokers Union of São Paulo (Sincor-SP) in 2008. The purpose is to provide opportunities for integration and updating of the professionals who operate in the insurance market.
4 – Bradesco Seguros e Previdência, in a partnership with Ibmec (Brazilian Institute of Markets and Capitals), formed the second class of the MBA course – Business Management focused on Insurance. Nominated by their managers, forty-one employees of Grupo Bradesco de Seguros e Previdência comprise the class of 2008, that began in March and will end in December this year. The purpose of the MBA is to qualify the students through disciplines in the Business Management area and other areas focused on insurance.
5 – Bradesco Seguros e Previdência was one of the sponsors of the second edition of Você S/A HR Meeting, which took place from March 13 to March 16 in São Paulo. Brazil’s greatest human resources leaders participated in the meeting, discussing about market trends with the invited lecturers.
6 – Grupo Bradesco de Seguros e Previdência sponsors the play Otelo, written by the English writer and poet William Shakespeare. The play, staged by Diogo Vilela and a great cast, premiered on March 13 and shall be extended until June 1, at Teatro SESC Ginástico in Rio de Janeiro. Employees of Grupo Bradesco de Seguros e Previdência have a 20% discount on the ticket price by presenting their name tag.
7 – Bradesco Seguros e Previdência sponsors the exhibition O Teatro Pitoresco de Debret, at Casa França-Brasil in Rio de Janeiro, from March 26 to May 11. It is the most complete exhibition ever presented on the works of painter Jean-Baptiste Debret. The event is part of the official programming of the celebrations of the 200th years after the arrival of the Portuguese Royal Court in Brazil.
8 – Bradesco Seguros e Previdência sponsors the theater play No Natal a gente vem te buscar, with the actress Cláudia Jimenez, at Teatro Leblon in Rio de Janeiro, which premiered on March 27. The play, which deals with subjects such as loneliness, family and ethical values, shall remain in theatres up to September 2008. Employees of Bradesco Organization have a 20% discount on the ticket price, by presenting their name tag. Brokers registered in Bradesco Seguros e Previdência may also obtain a discount by informing the Brokerage Firm’s name and Corporate Taxpayer’s ID (CNPJ).
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9 – Bradesco Seguros e Previdência sponsors the series of international concerts executed by Dell’Arte. The season with presentations in Theatro Municipal in Rio de Janeiro begins in March and lasts until September. Employees of Bradesco Organization have a 20% discount on the ticket price. Brokers registered in Bradesco Seguros e Previdência may also obtain a discount by informing the Brokerage Firms’ name and Corporate Taxpayer’s ID (CNPJ).
| Bradesco Saúde |
| Health Insurance Premiums – Market Share (%) |
Source: ANS
| Net Premiums Written – R$ million |
| Insurance Line | 2006 | 2007 | 2008 | |||||
| 4th Qtr. | 1st Qtr. | 4th Qtr. | 1st Qtr. | |||||
| Corporate Plan | 782 | 758 | 851 | 875 | ||||
| Individual Plan | 251 | 251 | 260 | 258 | ||||
| Total | 1,033 | 1,009 | 1,111 | 1,133 | ||||
| Growth in Technical Provisions for Health – R$ million |
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| Number of Policyholders in Health Insurance Lines – in thousands (*) |
In March 2008, Bradesco Saúde maintained its outstanding market position in the corporate segment (source: ANS). Brazilian companies are increasingly convinced that Health and Dental Insurance are the best alternatives for meeting their medical, hospital and dental care needs. Bradesco Saúde has around 3 million customers, of which almost 2.7 million belong to the corporate segment.
More than 20,000 companies in Brazil have acquired Bradesco Saúde insurance products. Among Brazil’s 100 largest companies in terms of revenues, 39 are Bradesco’s insurance clients (source: Exame magazine’s Melhores e Maiores de Agosto de 2007 – Best and Largest List, August 2007).
The large market share of corporate insurance in Bradesco Saúde’s total portfolio (91.17% in March 2008) confirms the insurance company’s high level of expertise and personalization in the corporate insurance services, a distinct advantage in the Supplementary Health Insurance market.
On February 22, 2008, Mediservice Administradora de Planos de Saúde Ltda. started to integrate Grupo Bradesco de Seguros e Previdência. With a portfolio of more than 250,000 clients, Mediservice operates in health and dental insurance for corporate clients in the post-payment line.
| Awards/Acknowledgments |
1 – Bradesco Saúde was acknowledged in the health insurance segment as the best valuated company according to the Os 100 Melhores Fornecedores para RH 2008 ranking ( The Top 100 Best HR Suppliers 2008), promoted by Gestão RH and Editora. Bradesco Saúde was also awarded with the trophy 10 Fornecedores Mais Votados e Melhores Avaliados (10 Most Voted and Best Valuated Suppliers), being the only insurance company in the list, in which the participating companies were voted regardless of their area of operations. The company achieved both awards for the second consecutive time. The research, comprised of questionnaires, was carried out between August and November 2007 by the Human Resources area (HR) of the companies listed in the 1,000 Largest Companies and Best Companies to Work For published by Exame magazine.
2 – Bradesco Saúde was granted the Prêmio Segurador Brasil 2008 (2008 Brazilian Insurance Company Award), pointed out in Sales by Health Insurance Line. The award was promoted by Segurador Brasil magazine as a means to acknowledge the leadership, performance and achievements of the companies in the insurance sector in 2007. The award highlights the role of companies and entities in the implementation and development of concepts, products and services for the Brazilian insurance market.
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| Highlights |
With the acquisition of Mediservice (Health Insurance Manager), Bradesco Saúde surpassed the figure of 3.2 million clients and expanded its market share in premiums. With Mediservice’s corporate clients, Bradesco Saúde now has almost half of Brazil’s 100 largest employer companies in its portfolio.
| Bradesco Auto/RE |
| Insurance Premiums of Auto/RE – Market Share (%) |
Source: Susep
N.B.: in 2007, premiums from Indiana Seguros were included.
| Growth in Technical Provisions of Auto/RE – R$ million |
N.B.1: In 2004, Bradesco Seguros’ Auto/RE portfolio was merged.
N.B.2: in 2008, technical provisions from Indiana Seguros are not included.
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| Net Premiums Written – R$ million |
| Insurance Line | 2006 | 2007 | 2008 | |||||
| 4th Qtr. | 1st Qtr. | 4th Qtr. | 1st Qtr. | |||||
| Auto/RE | 774 | 604 | 653 | 653 | ||||
N.B.: as of 4Q07 and 1Q08, premiums from Indiana Seguros are not included.
| Number of Policyholders of Auto/RE – thousand |
N.B.: in December 2007 and March 2008, Indiana Seguros’ policyholders are not included.
Grupo Bradesco de Seguros e Previdência maintained an outstanding position among the main insurance companies in the Brazilian Basic Line (RE) Insurance Market, with a 6.7% share of total market sales in February 2008 in this area.
In Lines related to Equity Insurance, Bradesco Auto/RE has updated the insurance programs of its main clients, by means of partnerships with brokers specialized in the segment and closeness to Bradesco Corporate and Bradesco Empresas. The fact that the oil industry had an outstanding performance and the civil construction had picked up stream has also contributed to the growth of Bradesco Auto/RE in this segment.
In the insurance of Aeronautic products and Sea Hull, the exchange with managers of Bradesco Corporate and Empresas has been largely used, taking advantage of the market increase in the sales of new aircraft, as well as in the sea segment, of naval constructions.
The Transportation segment is still the main focus, with material investments to improve new businesses, specially, among others, the qualification of Transportation Products Managers, which will be established in the main Brazilian economic centers, and the creation of Bradesco Cargo System, a complete Transports Insurance Management System on the Internet.
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In the mass market insurance segment of Basic Lines, whose products are designed to individuals, self-employed professionals and SMEs, the launch of new products, along with the continuous improvement of processes and systems, have contributed to the growth of the client base. Such increment can be observed mainly in the residential and equity insurance, such as Bradesco Seguro Residencial and Bradesco Seguro Empresarial. We also highlight the new insurance line destined to support machinery and equipment that operate in expansion activities (such as agriculture, civil construction and industries): Bradesco Seguro Equipamentos, Bradesco Seguro Benfeitorias, Bradesco Seguro Penhor Rural Público and Bradesco Seguro Penhor Rural Privado. These products gained more competitiveness and a new issue process, enabling a faster quoting process and a better use of business opportunities.
Despite the strong competition in the Auto/RCF Lines, the Insurance Company has increased its client base. This is mainly due to the current products improvement and to the creation of products for specific publics. Among these, we can name Bradesco Seguro Exclusivo Cliente Bradesco, for Banco Bradesco’s account holders, Auto Mulher, for the female public, and Auto Corretor, for insurance brokers. One of the positive factors is the maintenance perspective of the growth in sales of new vehicles, which contributes to increase the insurance production of this line.
Grupo Bradesco de Seguros e Previdência’s market share of the Auto/RCF portfolio, up to February 2008, was 13.5% .
| Award |
Bradesco Auto/RE Companhia de Seguros was awarded with the Prêmio Segurador Brasil 2008 (2008 Brazilian Insurance Company Award), as Highlight in the Auto/RE Market. The award was promoted by Segurador Brasil magazine as a means to acknowledge the leadership, performance and achievements of the companies of the insurance sector in 2007. The award highlights the role of companies and entities in the implementation and development of concepts, products and services for the Brazilian insurance market.
| Highlights |
1 – Bradesco Auto/RE Companhia de Seguros renewed the insurance agreement with Hering, one of the largest textile companies of Brazil. The Operational Risks policy covers property and equipment damage and loss of profits, among others, in all of the company’s production facilities.
2 – Bradesco Auto/RE Companhia de Seguros organized an initiative in order to tranquilize the drivers who left the cities of São Paulo and Rio de Janeiro during the Carnival holiday. Breakdown trucks of the Day and Night Assistance service were made available on Niterói-Manilha and Rio-Santos roads, in Rio de Janeiro, and the South Coast, in São Paulo. Each driver assisted received a snack and a handout of the Bradesco Seguro Auto product.
3 – Bradesco Auto/RE Companhia de Seguros also made available breakdown trucks of the Day and Night Assistance service on Niterói-Manilha and Rio-Santos roads, in the state of Rio de Janeiro, and Padre Manuel da Nóbrega road, in the South Coast of São Paulo, during the Easter Holiday. The drivers served received a snack and a brochure informing about the Bradesco Seguro Auto product.
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| Bradesco Vida e Previdência |
| Income from Private Pension Plans and VGBL – Market Share (%) |
Up to 1Q08, total income from private pension plans totaled R$2.645 billion.
| People Insurance Premiums (Life and Personal Accidents) – Market Share (%) |
Up to 1Q08, total income from net premiums written amounted to R$469 million.
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| Growth in Technical Provisions – R$ million |
Technical provisions of Bradesco Vida e Previdência in March 2008 reached R$51.6 billion, of which R$25.2 billion was for VGBL, R$24.2 billion for supplementary private pension plans and R$2.2 billion for life, personal accident and other lines.
| Private Pension Plans and VGBL Investment Portfolios – Market Share (%) |
Source: Fenaprevi
In March 2008, the Investment Portfolio of Bradesco Vida e Previdência reached R$54.0 billion, of which R$51.7 billion came from Pension Plans and VGBL and R$2.3 billion came from the Life and Personal Accidents Plans.
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| Increase in Number of Participants – in thousands |
| Increase in Life Insurance and Personal Accidents Policyholders – in thousands |
Due to its solid structure, innovative product policy and trusted market standing, Bradesco Vida e Previdência maintained its leadership of both markets in which it operates, with a 38.4% share of income from private pension plans and VGBL and a 17.3% share of personal insurance premiums. Bradesco is also sole leader in VGBL plans, with a 39.1% share, and in PGBL, with a 32.2% share (sources: Fenaprevi – data accumulated up to February 2008).
The number of Bradesco Vida e Previdência clients grew by 51.8% in March 2008 compared to March 2007, surpassing the record of 1.9 million private pension plans and VGBL participants and 15.6 million life insurance and personal accident policyholders. This significant increase was prompted by the strength of the Bradesco Brand and by the use of appropriate management and sales policies.
Also in March 2008, technical provisions totaled R$51.6 billion, an increase of 18.8% as compared to March 2007. In February 2008, the Portfolio of Investments in Private Pensions Plans and VGBL totaled R$51.7 billion, comprising 40.2% of all market resources.
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| Awards/Acknowledgments |
Bradesco Vida e Previdência received from the Segurador Brasil magazine the Prêmio Segurador Brasil (Brazilian Insurance Company Award) in four categories:
-
Insurance company of the year: Marco Antonio Rossi;
-
Best global performance in Private Pension Plan: sales result higher than 1 million;
-
Highlight in sales by type – Life Insurance; and}
- Highlight in global sales in Private Pension Plans.
| Bradesco Capitalização | |
Bradesco Capitalização’s outstanding position in the certificated savings plans market is the result of its transparent operating policy, which is focused on adjusting its products to meet the potential consumer demand.
Regionally, Bradesco Capitalização is a leading company in two Brazilian states: it has a 27.36% market share in Amazonas and 25.18% in São Paulo, according to the latest figures for February 2008 published by Susep.
Aiming at offering the bond that best suits its clients’ different profiles and budgets, a number of products were developed, which vary in accordance with the type of payment (single or monthly), contribution term, regularity of draws and related prize amounts. That phase was mainly characterized by the closeness to the public, by means of the consolidation of Pé Quente Bradesco family products.
Continuing with the consolidation process of traditional products, two products were launched in 1Q08. The first one is Pé Quente Bradesco Pessoa Jurídica, which is tailor-made for companies. Its main attractive factor is the highest monthly prize of Pé Quente Bradesco: gross amount of R$100 thousand in the last Saturday of each month during the period from January to November; and gross amounts of R$2 million in a special draw in December. The second one is Pé Quente Bradesco Amazonas Sustentável, derived from the partnership between the government of the State of Amazonas and Banco Bradesco, which costs R$20 and is paid on a monthly basis. In this product, weekly prizes in the gross amount of R$50 thousand are offered. Part of the amount collected is destined to Fundação Amazonas Sustentável, which develops programs and projects for the environment preservation and sustainable development.
We also point out the important performance of social-environmental products. Among them, it is worth pointing out Pé Quente Bradesco SOS Mata Atlântica, which, in addition to enabling the formation of a financial reserve, contributes to reforestation projects of Fundação SOS Mata Atlântica, as well as Pé Quente Bradesco GP Ayrton Senna, whose great competitive advantage is the destination of a percentage of the amount collected with bonds to social projects of Instituto Ayrton Senna and O Câncer de Mama no Alvo da Moda (Fashion Targets Breast Cancer). Upon acquiring this last product, the client contributes to the development of projects for prevention, early diagnosis and treatment of cancer in Brazil, since part of the amount collected is given to IBCC – Brazilian Institute of Cancer Control.
| Rating |
Standard & Poor’s increased from brAA+/Positive to brAAA/Stable the rating of Bradesco Capitalização, which is the only company of the certificated savings plans segment with this rating. The solid financial and equity protection standard that Bradesco Capitalização ensures to its clients contributed to this result.
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| Quality Management System |
Bradesco Capitalização S.A. was the first private certificated savings plans company in Brazil to receive ISO 9002 Certification. In 2007, it maintained its quality management system, in the ISO 9001:2000 version within the scope of Bradesco Certificated Savings Plans Management. Granted by Fundação Vanzolini, this certificate shows the quality of its internal processes and confirms the principle which is the origin of Bradesco Certificated Savings Plans: good products, good services and permanent evolution.
| Income from Certificated Savings Plans – Market Share (%) |
Source: Susep
| Technical Provisions for Certificated Savings Plans – Market Share (%) |
Source: Susep
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| Growth in Technical Provisions for Certificated Savings Plans – R$ million |
Due to the increasing strengthening of the Technical Provisions volume, Bradesco Capitalização surpassed the amount of R$2.5 billion in March 2008, and according to February 2008 data released by Susep, it holds 20.7% of the total volume of Technical Provisions in the market.
All these results convey safety and reaffirm the financial solidity and the ability to honor the commitments to its clients.
| Number of Clients of Certificated Savings Plans – in thousands |
As a result of a customer loyalty building policy, focused on the quality of the customer service and on the offer of innovative products, Bradesco Capitalização ended 1Q08 surpassing the figure of 2.3 million clients.
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| Outstanding Traditional Certificated Savings Plans – in thousands |
| Outstanding Certificated Savings Plans With Transfer of Draw Participation Right – in thousands |
| Outstanding Certificated Savings Plans – in thousands |
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The portfolio is comprised of 14.2 million outstanding certificated savings plans. Out of this total, 68.1% comprise plans with “transfer of draw participation rights” modality, including Bradesco Cartões, Bradesco Vida e Previdência, Bradesco Auto/RE etc. Considering that the purpose of this type of certificated savings plans is to add value to partners’ products or even to provide incentives for customer due payments, these plans are sold with reduced terms and grace periods and at a lower unit purchase price.
| Awards/Acknowledgments |
1 – Bradesco Capitalização received the 2o Prêmio Brasil de Meio Ambiente (Second Environment Brazil Award) in the Best Work in Environment Communication Action category, with the product Pé Quente Bradesco SOS Mata Atlântica. The award, which is an initiative of Jornal do Brasil newspaper, was created to encourage the continuity and the expansion of the environmental awareness in Brazil. It is destined to artists and public and private institutions of several sectors which perform an essential and active role in relation to the environment. The prizewinners are chosen by the Brazilian Industry Confederation (CNI).
2 – Bradesco Capitalização was granted the Prêmio Top Ambiental ADVB (ADVB Environmental Top Award), promoted by the Brazilian Association of Sales and Marketing Managers (ADVB), due to the case Pé Quente Bradesco SOS Mata Atlântica. The award aims at stimulating the creation of environmental projects, as well as awarding and disclosing those companies which ensure their own and the country’s economic growth, without harming the environment, and contribute to the environmental preservation by means of the sustainable development, thus motivating the consumers and other companies to be part of the environment defense actions.
3 – Bradesco Capitalização was granted the Prêmio Segurador Brasil 2008 (2008 Brazilian Insurance Company Award), in the Marketing 10 and Entrepreneurs in Certificated Savings Plan area categories. The award was promoted by Segurador Brasil magazine as a way to acknowledge the leadership, the performance and the achievements of insurance companies in 2007. It points out the role of the companies and entities in the implementation and development of concepts, products and services for the Brazilian insurance market.
| Highlights |
1 – Bradesco Capitalização, in partnership with Fundação SOS Mata Atlântica, opened, in February 12, in the city of Piracicaba (state of São Paulo) a community nursery where 250 thousand seedlings from native trees of 80 different types can be raised. They will be planted in properties of the region, mainly in areas for the restructuring of the Atlantic Forest. These trees will allow the complete neutralization of CO2 (carbon dioxide) emission, derived from the work of more than 83,000 employees of Bradesco Organization.
2 – Bradesco Capitalização launched in March 10 the certificated savings plan Pé Quente Bradesco Amazonas Sustentável. The product, created in partnership with Fundação Amazonas Sustentável, grants part of the amount collected in benefit of Fundação to programs and projects for the environmental preservation and the sustainable development. With the new product, Bradesco Capitalização increases its social-environmental commitment, which counts on partnerships with Fundação SOS Mata Atlântica, the Brazilian Institute of Cancer Control (IBCC) and Instituto Ayrton Senna.
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| Banco Finasa |
| Consolidated Balance Sheet |
| R$ million | ||||||||
| 2006 | 2007 | 2008 | ||||||
| December | March | December | March | |||||
| Assets | ||||||||
| Current and Long-Term Assets | 19,492 | 20,777 | 29,867 | 33,048 | ||||
| Funds Available | 1 | 6 | 1 | 1 | ||||
| Interbank Investments | 466 | 830 | 3,580 | 5,467 | ||||
| Securities and Derivative Financial Instruments | 78 | 82 | 189 | 200 | ||||
| Interbank Accounts | – | 38 | 4 | 45 | ||||
| Loan and Leasing Operations | 18,455 | 19,267 | 25,022 | 26,238 | ||||
| Allowance for Loan Losses | (986) | (1,035) | (1,260) | (1,402) | ||||
| Other Receivables and Other Assets | 1,478 | 1,589 | 2,331 | 2,499 | ||||
| Permanent Assets (1) | 1,770 | 1,832 | 2,057 | 64 | ||||
| Total | 21,262 | 22,609 | 31,924 | 33,112 | ||||
| Liabilities | ||||||||
| Current and Long-Term Liabilities | 20,177 | 21,438 | 30,420 | 26,608 | ||||
| Demand, Time and Interbank Deposits | 19,753 | 20,969 | 29,472 | 25,446 | ||||
| Borrowings and Onlendings | 2 | 2 | 1 | _ | ||||
| Derivative Financial Instruments | 2 | 2 | – | _ | ||||
| Other Liabilities | 420 | 465 | 947 | 1,162 | ||||
| Deferred Income | 22 | 17 | 18 | 18 | ||||
| Shareholders’ Equity (2) | 1,063 | 1,154 | 1,486 | 6,486 | ||||
| Total | 21,262 | 22,609 | 31,924 | 33,112 | ||||
(1) Investment Reduction in March/2008: Banco Bradesco acquired an interest (34.6%) in Banco Alvorada, which belongs to Banco Finasa S.A.
(2) The Special Shareholders’ Meeting held on March 3, 2008 resolved on the capital increase in the amount of capital R$5.0 billion.
| Consolidated Statement of Income |
| R$ million | ||||||||
| 2006 | 2007 | 2008 | ||||||
| 4th Qtr. | 1st Qtr. | 4th Qtr. | 1st Qtr. | |||||
| Income from Financial Intermediation | 1,424 | 1,486 | 1,928 | 2,213 | ||||
| Financial Intermediation Expenses | (844) | (858) | (1,195) | (1,424) | ||||
| Financial Margin | 580 | 628 | 733 | 789 | ||||
| Provision for Loan Losses | (289) | (275) | (324) | (428) | ||||
| Gross Income from Financial Intermediation | 291 | 353 | 409 | 361 | ||||
| Other Operating Income/Expenses | (233) | (243) | (225) | (335) | ||||
| Operating Income | 58 | 110 | 184 | 26 | ||||
| Non-Operating Income | (4) | (2) | (19) | (40) | ||||
| Income before Taxes and Contributions | 54 | 108 | 165 | (14) | ||||
| Taxes and Contributions on Income | (3) | (20) | (12) | 18 | ||||
| Net Income | 51 | 88 | 153 | 4 | ||||
| Profile |
Banco Finasa offers financing lines of direct loan to consumer for acquisition of passenger vehicles, transportation and other goods and services, in addition to leasing and personal loan operations.
Operating in a special way, by having as main characteristic the partnerships with stores and resale, Banco Finasa complements the distribution network of Bradesco Organization’s financing products.
In addition to its outstanding operation in the granting of financing segment, the policy to enter into operational agreements with large car makers, as well as auto, truck and implements resale, in addition to important retail chains, is consolidated.
For the new business prospect, Banco Finasa contracts the services of Finasa Promotora de Vendas, its wholly-owned subsidiary, which, through its 357 branches established nationwide and a structure of business partners.
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| Operating Performance |
In March 2008, the Bank amounted to R$26.238 billion in financing portfolio, leasing and personal loan, a growth of 36.2% over the same period in 2007. We point out the leasing portfolio which grew by 319.6%, from R$1.459 billion to R$6.122 billion, as a result of the strategy of assembling a team focused on serving large concessionaires/vehicle resellers, resulting in an increase in granting of financing in this type. The production of new businesses increased, on average, from R$1.391 billion/month in 1Q07 to R$1.643 billion/month in the same period in 2008, with a growth of 18.1% .
The Net Income for the 1st quarter of 2008 was R$4 million, representing a decrease of R$149 million compared to the previous quarter. This variation results basically from: (i) the increase of the allowance for loan losses expenses; (ii) the lower fee and commission income, due to the reduction in the charging of the Loan Opening Rate (TAC); (iii) the constitution of provision for the return of the Advanced Settlement Rate ( TLA); and (iv) the decrease in the equity in the earnings (losses) of unconsolidated companies, due to the sale of our interest in Banco Alvorada.
The increase in the allowance for loan losses expenses was mainly a result of a change implemented in the data analysis procedures for loan granting, which resulted in higher delinquency ratios, mainly in motorcycle lines. This inconsistency was already detected and solved, thus the delinquency ratios returned to their historical levels, allowing the estimation of a decrease in allowance for loan losses expenses for the next quarters.
In March 2008, Shareholders’ Equity reached R$6.5 billion, highlighting the increase of R$5.0 million resolved at the Special Shareholders’ Meeting as of March 3, 2008.
| Banco Bradesco BBI |
| Balance Sheet |
| R$ thousand | ||||||||
| 2006 | 2007 | 2008 | ||||||
| December | March | December | March | |||||
| Assets | ||||||||
| Current and Long-Term Assets | 1,680,664 | 1,106,904 | 1,607,369 | 3,327,868 | ||||
| Funds Available | 2 | 2 | 20 | 4 | ||||
| Interbank Investments | 966,528 | 934,318 | 537,631 | 2,141,072 | ||||
| Securities and Derivative Financial Instruments | 563,409 | 28,752 | 896,930 | 1,059,415 | ||||
| Interdepartmental Accounts | 475 | – | 292 | 115 | ||||
| Other Receivables and Other Assets | 150,250 | 143,832 | 172,496 | 127,262 | ||||
| Permanent Assets | 230,685 | 247,429 | 378,392 | 446,851 | ||||
| Total | 1,911,349 | 1,354,333 | 1,985,761 | 3,774,719 | ||||
| Liabilities | ||||||||
| Current and Long-Term Liabilities | 705,994 | 107,594 | 559,322 | 2,318,330 | ||||
| Time Deposits | – | – | – | 1,532,173 | ||||
| Federal Funds Purchased and Securities Sold under Agreements to Repurchase | 599,863 | – | 242,819 | 233,823 | ||||
| Interdepartmental Accounts | – | 2,906 | – | – | ||||
| Derivative Financial Instruments | – | – | 123,458 | 405,835 | ||||
| Other Liabilities | 106,131 | 104,688 | 193,045 | 146,499 | ||||
| Shareholders’ Equity | 1,205,355 | 1,246,739 | 1,426,439 | 1,456,389 | ||||
| Total | 1,911,349 | 1,354,333 | 1,985,761 | 3,774,719 | ||||
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| Statement of Income |
| R$ thousand | ||||||||
| 2006 | 2007 | 2008 | ||||||
| 4th Qtr. | 1st Qtr. | 4th Qtr. | 1st Qtr. | |||||
| Income from Financial Intermediation | 46,424 | 38,591 | 47,291 | 34,205 | ||||
| Financial Intermediation Expenses | (18,265) | (7,216) | (19,672) | (13,698) | ||||
| Gross Income from Financial Intermediation | 28,159 | 31,375 | 27,619 | 20,507 | ||||
| Other Operating Income/Expenses | 10,937 | 18,163 | 46,098 | 14,886 | ||||
| Operating Income | 39,096 | 49,538 | 73,717 | 35,393 | ||||
| Non-Operating Income | 118 | 94 | 378 | 137 | ||||
| Income before Taxes and Contributions | 39,214 | 49,632 | 74,095 | 35,530 | ||||
| Taxes and Contributions on Income | (8,666) | (9,372) | (19,760) | (8,627) | ||||
| Adjusted Net Income (1) | 30,548 | 40,260 | 54,335 | 26,903 | ||||
(1) In 4Q07, income was adjusted by the partial sale of our interest in BM&F, in the amount of R$91,840 thousand.
Banco Bradesco BBI S.A. is the company responsible for the development of operations in the Variable Income, Fixed Income, Structured Operations, Mergers and Acquisitions, Project Financing and Treasury segments.
| Variable Income |
In 1Q08, characterized by a significant decrease in share offering operations, we point out our participation as contracted coordinators in the public offering of shares of Visa Inc., carried out in the United States of America, by means of our subsidiary Bradesco Securities Inc., in the amount of US$19.7 billion.
| Fixed Income |
In March 2008, pursuant to the ranking of Origination and Distribution of Anbid – National Association of Investment Banks, BBI ranks first, by volume, in fixed income in the domestic market. We point out our participation in the issuance of debentures of Usiminas – Usinas Siderúrgicas de Minas Gerais S.A., in the amount of R$500 million and in the issuance of promissory notes of Ultrapar Participações S.A., in the amount of R$1,200 million.
| Structured Operations |
BBI develops structures used to segregate credit risks, through securitization, using Special Purpose Entities (SPEs), Loan Assignments with shared risk, Credit Right Investment Funds (FIDCs), Certificates of Real Estate Receivables (CRIs) and Medium and Long-term Financing, structured based on receivables and/or other collaterals. Additionally, BBI structures pre-IPO financing and has an outstanding position in acquisition finance.
In Structured Operations we highlight our participation as coordinators of Chemical III – FIDC –Petrochemical Industry, in the amount of R$324 million.
| Mergers and Acquisitions |
BBI advises important clients on mergers, acquisitions, joint ventures, corporate restructuring and privatization operations.
In 1Q08, BBI ranked first in the financial advisor in merger and acquisition operations announced in Latin America with lower amounts of up to US$500 million ranking, according to Thomson Financial. During this period, we provided advisory services to Bovespa Holding S.A. in the merger with Bolsa de Mercadorias e Futuros S.A.; to American Banknote in the acquisition of Interprint; to AMC Têxtil in the acquisition of four companies of TF Modas Group, owner of Forum and Triton brands, among others, to Bradesco Organization in the acquisition of Ágora Holdings and Mediservice Administradora de Planos de Saúde.
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| Project Financing |
BBI has a solid track record playing the role of financial advisor and structurer for several projects in the Project and Corporate Finance categories. We always seek the best financing solution for projects. We operate in the most important sectors of the economy and we have an excellent relationship with several different promotion agencies, such as BNDES, BID and IFC.
BBI conquered the leadership in Project Finance operations, according to Anbid (National Association of Investment Banks) ranking related to 2007. We ranked first in the Financial Advisor in Financing ranking, with the amount of R$2.0 billion, and Structurer ranking, with the amount of R$2.8 billion.
We also ranked third in the Financial Advisor in Concession Auction ranking, with the amount of R$336 million.
In 1Q08, BBI continued to provide financial advisory and/or structuring services for several projects, mainly: i) Santo Antônio Hydroelectric Power Plant, with installed capacity of 3,150 MW, belonging to Madeira River Complex; ii) port complexes sponsored by LLX Logística; iii) three new ventures of the sugar and alcohol industry; and iv) expansion project of the sanitary sewage system of Rio das Ostras (RJ), in the PPP – Administrative Concession type; among others.
| Treasury |
BBI’s treasury is complete, acting in the local and foreign markets, comprised of the following areas:
– Sales & Distribution
Team responsible for the origination and distribution, local and abroad, of fixed income products in the primary and secondary markets. Interest rate, currency, commodities and credit derivatives comprise, materially, the range of products provided to our clients.
– Markets
Management of BBI’s owner position in different markets, focused on making the operations available to the clients.
– Structured Products
Creation and structuring of tailor-made products and transactions, complying with the different client demands.
– Economical Analysis
Team responsible for the total support to Treasury operations, contributing with detailed and deep analysis of global economic subjects.
| Leasing Companies |
On March 31, Bradesco Organization controlled the following leasing companies: Bradesco Leasing S.A. Arrendamento Mercantil, Zogbi Leasing S.A. Arrendamento Mercantil and Bankpar Arrendamento Mercantil S.A., besides the leasing portfolio of Banco Finasa S.A., which is directly shown in its financial statements.
On January 17, 2008, under the number CVM/SRE/PRO/2008/002, the 3rd Public Debenture Distribution Program of Bradesco Leasing S.A. Arrendamento Mercantil was filed at CVM, limited to the amount of R$10 billion with maturity term of 2 years, of which the following issue was recorded:
– Under the number CVM/SRE/DEB/2008/003, 50,000,000 simple debentures (5th issuance), in the unit price of R$100.00, issued on January 2, 2008, in the total amount of R$5.0 billion with the use of the remaining 35%, thus totaling the amount of R$6.75 billion, with a 20-year term, upon the payment of interest in the debentures maturity, restated by the CDI rate, which was traded on January 18, 2008.
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| Aggregated Balance Sheet |
| R$ million | ||||||||
| 2006 | 2007 | 2008 | ||||||
| December | March | December | March | |||||
| Assets | ||||||||
| Current and Long-Term Assets | 32,610 | 33,587 | 36,257 | 44,152 | ||||
| Interbank Investments | 28,428 | 29,231 | 30,387 | 37,206 | ||||
| Securities and Derivative Financial Instruments | 911 | 976 | 1,091 | 1,161 | ||||
| Leasing Operations | 2,568 | 2,655 | 4,040 | 5,033 | ||||
| Allowance for Doubtful Accounts | (106) | (106) | (133) | (154) | ||||
| Other Receivables and Other Assets | 809 | 831 | 872 | 906 | ||||
| Permanent Assets | 60 | 61 | 57 | 61 | ||||
| Total | 32,670 | 33,648 | 36,314 | 44,213 | ||||
| Liabilities | ||||||||
| Current and Long-Term Liabilities | 30,033 | 30,940 | 33,450 | 41,309 | ||||
| Federal Funds Purchased and Securities Sold under Agreements to Repurchase | ||||||||
| and Funds Received from Issuance of Securities | 28,376 | 29,237 | 31,360 | 39,091 | ||||
| Borrowings and Onlendings | 252 | 273 | 484 | 530 | ||||
| Subordinated Debt | 620 | 619 | 616 | 616 | ||||
| Other Liabilities | 785 | 811 | 990 | 1,072 | ||||
| Shareholders’ Equity | 2,637 | 2,708 | 2,864 | 2,904 | ||||
| Total | 32,670 | 33,648 | 36,314 | 44,213 | ||||
| Aggregated Statement of Income |
| R$ million | ||||||||
| 2006 | 2007 | 2008 | ||||||
| 4th Qtr. | 1st Qtr. | 4th Qtr. | 1st Qtr. | |||||
| Income from Financial Intermediation | 1,111 | 1,306 | 1,375 | 1,607 | ||||
| Financial Intermediation Expenses | (982) | (1,186) | (1,246) | (1,472) | ||||
| Financial Margin | 129 | 120 | 129 | 135 | ||||
| Allowance for Doubtful Accounts Expenses | (2) | (1) | (13) | (22) | ||||
| Gross Income from Financial Intermediation | 127 | 119 | 116 | 113 | ||||
| Other Operating Income/Expenses | (36) | (16) | (6) | (6) | ||||
| Operating Income | 91 | 103 | 110 | 107 | ||||
| Non-Operating Income | (2) | – | (3) | (1) | ||||
| Income before Taxes and Contributions | 89 | 103 | 107 | 106 | ||||
| Taxes and Contributions on Income | (21) | (35) | (34) | (36) | ||||
| Net Income | 68 | 68 | 73 | 70 | ||||
| Leasing Performance – Aggregated Bradesco |
Leasing operations are carried out by Bradesco Leasing S.A. Arrendamento Mercantil and Banco Finasa S.A.
On March 31, aggregated leasing operations brought to present value totaled R$11.2 billion (*). Banco Finasa’s leasing portfolio is mainly comprised of vehicle operations to individuals.
According to ABEL (Brazilian Association of Leasing Companies), Bradesco Organization’s leasing companies are positioned amongst sector leaders, with a 13.91% share of this market (reference date: February 2008). This good performance is a result of its branch network integrated operations and the maintenance of its diversified business strategies in various market segments, in particular, the implementation of operating agreements with major industries, mainly in the transportation vehicles and machinery/equipment industries.
The following graph presents the breakdown of Bradesco's aggregated leasing portfolio by type of asset:
(*) It includes leasing operations of Banco Finasa.
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| Portfolio by Type of Asset |
| Bradesco Consórcios |
| Management Company |
| Balance Sheet |
| R$ thousand | ||||||||
| 2006 | 2007 | 2008 | ||||||
| December | March | December | March | |||||
| Assets | ||||||||
| Current and Long-Term Assets | 256,159 | 270,372 | 384,597 | 396,520 | ||||
| Funds Available | – | – | 1 | – | ||||
| Securities | 248,735 | 266,778 | 374,172 | 390,526 | ||||
| Other Receivables | 7,424 | 3,594 | 10,424 | 5,994 | ||||
| Permanent Assets | 5,483 | 5,975 | 9,790 | 11,199 | ||||
| Total | 261,642 | 276,347 | 394,387 | 407,719 | ||||
| Liabilities | ||||||||
| Current and Long-Term Liabilities | 70,305 | 52,738 | 111,600 | 84,606 | ||||
| Dividends Payable | 25,409 | 25,409 | 50,000 | 50,000 | ||||
| Amounts Refundable to Former Groups Now Closed | 6,888 | 7,051 | 7,454 | 7,588 | ||||
| Other Debits | 38,008 | 20,278 | 54,146 | 27,018 | ||||
| Shareholders’ Equity | 191,337 | 223,609 | 282,787 | 323,113 | ||||
| Total | 261,642 | 276,347 | 394,387 | 407,719 | ||||
| Statement of Income |
| R$ thousand | ||||||||
| 2006 | 2007 | 2008 | ||||||
| 4th Qtr. | 1st Qtr. | 4th Qtr. | 1st Qtr. | |||||
| Fee and Commission Income | 57,956 | 57,603 | 70,769 | 71,642 | ||||
| Taxes Payable | (6,220) | (6,203) | (7,299) | (7,512) | ||||
| Interest Income | 7,418 | 7,868 | 9,682 | 9,660 | ||||
| Administrative Expenses (Including Personnel Expenses) | (7,439) | (7,096) | (8,905) | (7,197) | ||||
| Selling Expenses | (9,283) | (4,138) | (8,299) | (6,700) | ||||
| Other Operating Income/Expenses | 1,339 | 1,338 | 1,437 | 1,270 | ||||
| Income before Taxes and Contributions | 43,771 | 49,372 | 57,385 | 61,163 | ||||
| Taxes and Contributions on Income | (14,252) | (17,100) | (18,559) | (20,837) | ||||
| Net Income | 29,519 | 32,272 | 38,826 | 40,326 | ||||
116
| Consortium Groups |
| Balance Sheet |
| R$ thousand | ||||||||
| 2006 | 2007 | 2008 | ||||||
| December | March | December | March | |||||
| Assets | ||||||||
| Current and Long-Term Assets | 2,283,343 | 2,493,844 | 3,125,723 | 3,342,627 | ||||
| Amount Offset | 13,195,593 | 12,581,834 | 14,390,248 | 14,671,856 | ||||
| Total | 15,478,936 | 15,075,678 | 17,515,971 | 18,014,483 | ||||
| Liabilities | ||||||||
| Current and Long-Term Liabilities | 2,283,343 | 2,493,844 | 3,125,723 | 3,342,627 | ||||
| Amount Offset | 13,195,593 | 12,581,834 | 14,390,248 | 14,671,856 | ||||
| Total | 15,478,936 | 15,075,678 | 17,515,971 | 18,014,483 | ||||
| Operating Overview |
Bradesco Consórcios sells automobile, trucks, tractors, agricultural implements and real estate plans, according to the rules of the Brazilian Central Bank.
Referring to the sale of plans offered, the company relies on Banco Bradesco Branches Network, liable for the increase in Bradesco Consórcios’ share in the consortium purchase plan market. The variety of plans, the coverage, the safety and seriousness they are traded associated to the Bradesco Brand are important advantages in the expansion of sales.
The consortia market should grow more and more, offering attractive competitive advantages: inexistence of interest, freedom to choose the asset, accessible installments and, for house acquisition, there is the possibility to use the FGTS (according to the Financial Housing System legislation) to the offering of a bidding or as a complement of the value of the letter of credit.
Large managers contribute to this growth and the ten largest ones hold 76.6% of the entire real estate segment and represent 8.9% of the participants of the consortium segment. Within this scope Bradesco Consórcios takes over the leadership position.
In January 2008, Bradesco Consórcios celebrated five years of activities, holding an outstanding position in the consortia market. Currently, with the expressive amount of R$5 billion of assets paid to clients, the company keeps its leadership in the segments of Automobiles and Real Estate, a position reached in the second year of its history.
The consortia sector is responsible for 1% of the Gross Domestic Product (GDP) of the country. Specifically in the real estate segment, there was a growth of 90% in the last three years, according to data from the Brazilian Association of Consortium Managers (ABAC). The search for the Consortia System as a more economic and advantageous alternative for real estate acquisition continues to be high.
Another segment which had a growth in its businesses was the one of heavy vehicles, which includes trucks, buses, tractors and agricultural and highway implements. Active participants, with a growth of 5.1%, increased from 131.7 thousand (in January 2007) to 138.4 thousand (in January 2008). Draws had the highest increase. According to ABAC, in January 2007 there were 1.6 thousand draws and in January 2008 there were more than 1.9 thousand draws, a growth of 18.8% .
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| Segmentation |
Banco Bradesco’s entry into this market is part of its strategy to offer the most complete range of product and service options to its clients, with a view to providing all social classes with the opportunity to purchase items at accessible prices through the consortium quota system, and filling a market gap, taking into account that, in terms of real estate product, there is currently a high housing deficit in the country.
Aiming to fully meet the needs of its clients, in 2007 Bradesco Consórcios increased from 120 to 144 months the term of the real estate consortia plans, and from 60 to 72 months the term for automobile plans, without changing the current rates. Thus, the product became even more attractive, since, by increasing the term, the value of the installments was reduced. In addition, there was a change in the real estate credit ranges offered, which started being from R$25 thousand to R$300 thousand, providing more options to the interested parties.
| Operating Performance |
The different way of trading products (Real Estate, Automobiles and Trucks), with a specialized and focused team, provided Bradesco Consórcios with a growth of 25% in 1Q08 when compared to 1Q07.
To Bradesco Consórcios, providing an excellent assistance to clients is not only an obligation, but mainly a positive advertising to the Organization. Due to that, we had an important achievement for the company: Bradesco Consórcios is since January 2007 out of the list of the ten that receive more complaints from its clients, companies among consortia managers, disclosed by the Brazilian Central Bank.
In December, we were certified with the Top Consumer – Excellence in Assistance and Respect to the Consumer seal, an event carried out by INEC (National Institute of Consumer and Citizen Education), in partnership with Consumidor Teste magazine, whose purpose was to motivate and acknowledge the companies which managed to bond development and excellence practices in the assistance and respect to consumer, in addition to ethics in its relations with the consumer market.
| Representativeness |
| Market Share – Real Estate Consortium – in percentage |
Source: Brazilian Central Bank
N.B.: Herval’s market share in February 2007 was not disclosed
118
| Market Share – Automobile Consortium - in percentage |
Source: Brazilian Central Bank.
N.B.: ABN’s market share for February 2007 was not disclosed.
| Market Share – Trucks, Tractors and Agricultural Implements Consortium – in percentage |
Source: Brazilian Central Bank
Bradesco has been playing an important role in the consortium purchase plan industry, providing the population with access to loan for the acquisition of personal and real property. The freedom to select an asset is one of the main characteristics of the plans sold by Bradesco Consórcios, since the consortium member is free to choose, according to value of the letter of credit, the automobile, real property, truck, tractor or agricultural implement of ones preference when one wins the draw. The huge Brazilian housing deficit, of more than 8 million houses, is one of the factors which also explain the sales expansion in the real estate segment. It is in the real estate segment that consortium records the best performance.
In 1Q08, 68 groups were inaugurated and 32.8 thousand consortium quotas were sold, a 58.2% growth as compared to the same period last year. Until March 2008, we recorded sales results in excess of R$11.6 billion and recording 164.9 thousand draws, with 124.8 thousand properties delivered and 1,842 active groups.
119
| Drawn Quotas and Paid Credits – Reference Date: 3.31.2008 |
| Active Consortium Quotas |
| Total Active Consortium Quotas |
120
| Leadership |
According to a strategy defined by the Organization, Bradesco Consórcios leads the Vehicle and Real Estate segments, focusing on an outstanding position in the segment of Trucks, Tractors and Agricultural Implements.
In the Real Estate segment, we ended March with 130,324 active quotas. In the vehicle segment, we ended with 160,899 active quotas, surpassing consortium management companies associated with car makers, consolidated in the market, such as Volkswagen, Fiat and General Motors.
In the Trucks, Tractors and Agricultural Implements segment, we ended this first quarter with 9,788 active quotas, ranking 6th place in Bacen. The public is getting to know the advantages to acquire assets, such as Trucks and Tractors by means of a consortium. Thus, Bradesco Consórcios shows its capacity to rank among the first positions this year.
Leadership (Real Estate and Vehicle) is conquered and consolidated as a result of ongoing and determined efforts, motivated by the enthusiasm and strength of the Bradesco Branch Network.
Bradesco Consórcios also points out its continuous actions to improve more and more its services: expressive investments the whole year in the qualification of employees, following a strong program to keep the sales team informed, providing each employee with training from professionals who travel Brazil to provide courses. Thus the consumer will not have doubts when acquiring our products.
As a result of all these actions, the users in general find a safe information source offered by means of customized assistance, advertising campaigns and Internet, with the Bank’s website being among the most visited ones in the last years.
| Consortium Quotas Sold |
121
| Total Consortium Quotas Sold |
| Number of active participants comprising the 10 largest real estate consortium management companies |
Source: Brazilian Central Bank.
N.B.: Herval was not included in the ranking of the 10 largest managers in February 2007.
| Number of active participants comprising the 10 largest auto segment consortium management companies |
Source: Brazilian Central Bank.
N.B.: Herval was not included in the ranking of the 10 largest managers in February 2007.
122
| Number of active participants of the 10 largest consortium management companies in the truck, tractor and agricultural implement segment |
Source: Brazilian Central Bank.
| Bradesco S.A. Corretora de Títulos e Valores Mobiliários |
| Balance Sheet |
| R$ thousand | ||||||||
| 2006 | 2007 | 2008 | ||||||
| December | March | December | March | |||||
| Assets | ||||||||
| Current and Long-Term Assets | 406,501 | 382,232 | 417,575 | 571,591 | ||||
| Funds Available | 206 | 63 | 32 | 119 | ||||
| Interbank Investments | 81,748 | 94,565 | 54,327 | 144,000 | ||||
| Securities | 66,821 | 77,773 | 142,244 | 167,579 | ||||
| Other Receivables | 257,666 | 209,775 | 220,903 | 259,802 | ||||
| Other Assets | 60 | 56 | 69 | 91 | ||||
| Permanent Assets | 36,886 | 39,035 | 113,363 | 113,955 | ||||
| Total | 443,387 | 421,267 | 530,938 | 685,546 | ||||
| Liabilities | ||||||||
| Current and Long-Term Liabilities | 351,702 | 320,042 | 345,086 | 437,753 | ||||
| Other Liabilities | 351,702 | 320,042 | 345,086 | 437,753 | ||||
| Shareholders’ Equity | 91,685 | 101,225 | 185,852 | 247,793 | ||||
| Total | 443,387 | 421,267 | 530,938 | 685,546 | ||||
| Statement of Income |
| R$ thousand | ||||||||
| 2006 | 2007 | 2008 | ||||||
| 4th Qtr. | 1st Qtr. | 4th Qtr. | 1st Qtr. | |||||
| Income from Financial Intermediation | 5,015 | 4,743 | 4,728 | 6,521 | ||||
| Gross Income from Financial Intermediation | 5,015 | 4,743 | 4,728 | 6,521 | ||||
| Other Operating Income/Expenses | 6,579 | 7,137 | 10,813 | 11,631 | ||||
| Operating Income | 11,594 | 11,880 | 15,541 | 18,152 | ||||
| Income before Taxes and Contributions | 11,594 | 11,880 | 15,541 | 18,152 | ||||
| Taxes and Contributions on Income | (3,893) | (4,031) | (4,656) | (6,078) | ||||
| Adjusted Net Income (1) | 7,701 | 7,849 | 10,885 | 12,074 | ||||
(1) In 4Q07, income was adjusted by the partial sale of our interest in BM&F, in the amount of R$68,756 thousand.
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Bradesco Corretora ended 1Q08 in the 11th position of the São Paulo Stock Exchange – Bovespa ranking among the 84 participant brokers. In the period, 89,034 investors were served, and 750,839 thousand shares calls and put orders were executed, summing up a volume corresponding to R$18,865 million. Bradesco Corretora has been participating with Bovespa in the event Bovespa vai até você (Bovespa reaches you), with a view to popularizing the stock market.
In 1Q08, Bradesco Corretora traded 1,116 thousand contracts at the Brazilian Mercantile & Futures Exchange – BM&F, with a financial volume of R$83,371 million, reaching the 23rd position in the ranking among the 66 participant brokers. The Company has been driving its efforts to proceed with the expansion of businesses, as well as to disseminate future markets. Concerning the agricultural sector, Bradesco Corretora has been directly acting in the main producing regions of the country, through visits, lectures, and participation in agribusiness fairs and exhibitions. Bradesco Corretora has been sponsoring the clients’ visit from various regions of the country to São Paulo, for visits to BM&F and Bradesco Corretora. It has also been receiving producers, teachers, opinion makers and dealers of goods physical market. It also takes part in the trading of future mini-contracts of Bovespa, U.S. dollar, Boi Gordo (live cattle) and coffee Indices through the Web Trading system, with a view to offering alternatives to carry out derivative operations of price protection, directly in the trading session. The intermediation of future market operations is certified by NBR ISO 9001:2000.
Home Broker Bradesco ended 1Q08 maintaining the 2nd position in the ranking of Bovespa’s home broker dealers. In this period, Bradesco Corretora obtained the amount of R$5.949 billion of traded volume by means of the electronic channel.
The client base evolved 13.2% compared to 4Q07, representing an increase of 16,056 new registrations and 30,583 e-mails received in 1Q08.
The executed orders in 1Q08 were 624,369, showing an 11.5% increase as compared to the 2007 period.
At the beginning of 2008, we noticed that new investors are more and more trying to get to know the stock market, despite the crisis in the United States. Internet is a channel easy to access the stock market and with the lowest cost.
For 2008, Bradesco Corretora will continue the expansion process of its retail area, by means of share rooms in order to bring the client closer to the Stock Market throughout the country.
Bradesco Corretora inaugurated, in 1Q08, two new Share Rooms in Campinas (SP) and Rio de Janeiro (RJ), totaling nine share rooms.
The ISO9001:2000 certificates of the Home Broker, Sana and GoodPriv@cy Data Protection Label (2002 edition) systems were renewed.
With a total volume traded of R$79.4 million in 1Q08, Bradesco Corretora maintained a highlighting position in the market, operating in Public Offerings for Share Purchase, Primary and Secondary Public Distributions and Special Operations and Privatization Auctions, assisting a total of 409 clients among individuals and legal entities, in the Public Distributions.
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In the institutional clients segment, besides traditionally focusing on the Brazilian market, we expanded our presence in the United States and Europe. Our activities are developed by commercial and operating teams located in São Paulo, New York and London.
Bradesco Corretora offers to its clients a complete investment analysis service with coverage of the main sectors and companies of the Brazilian market. Our team of analysts is comprised of sector specialists (senior analyst and assistants) who disclose their opinions to clients in an equitable way by means of follow-up reports and guides of shares. Besides counting on its own economist team dedicated to the specific demand of the Brokerage firm’s clients, they may count on analyses of the team of economists of Banco Bradesco.
It also offers the Tesouro Direto (Direct Treasury) Program, which allows the individual client to invest in federal government bonds via the Internet; he/she just has to register at Bradesco Corretora via the Website www.bradesco.com.br.
The Adjusted Net Income recorded in 1Q08 amounted to R$12.1 million.
The Shareholders’ Equity, on March 31, 2008, reached R$247.8 million, equivalent to 36.1% of total assets, which added up to R$685.5 million.
| Information – Trading on BM&F and Bovespa |
| 2006 | 2007 | 2008 | ||||||
| 4th Qtr. | 1st Qtr. | 4th Qtr. | 1st Qtr. | |||||
| BM&F | ||||||||
| Ranking | 27th | 29th | 24th | 23rd | ||||
| Contracts Traded (thousand) | 737 | 796 | 924 | 1,116 | ||||
| Financial Volume (R$ million) | 57,594 | 49,870 | 68,112 | 83,371 | ||||
| Stock Exchange | ||||||||
| Ranking | 12th | 15th | 13th | 11th | ||||
| Number of Investors | 24,309 | 26,040 | 51,270 | 89,034 | ||||
| Number of Orders Executed | 258,304 | 364,607 | 669,194 | 750,839 | ||||
| Financial Volume (R$ million) | 8,657 | 9,454 | 17,806 | 18,865 | ||||
| Home Broker | ||||||||
| Ranking | 6th | 2nd | 2nd | 2nd | ||||
| Number of Registered Clients | 62,369 | 71,761 | 121,751 | 137,807 | ||||
| Number of Orders Executed | 185,608 | 281,579 | 559,776 | 624,369 | ||||
| Financial Volume (R$ million) | 1,298 | 2,075 | 5,178 | 5,949 | ||||
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| Bradesco Securities, Inc. |
| Balance Sheet |
| R$ thousand | ||||||||
| 2006 | 2007 | 2008 | ||||||
| December | March | December | March | |||||
| Assets | ||||||||
| Current and Long-Term Assets | 48,238 | 45,743 | 39,699 | 35,227 | ||||
| Funds Available | 7,227 | 8,027 | 16,723 | 14,812 | ||||
| Interbank Investments | 247 | 229 | 205 | 194 | ||||
| Securities and Derivative Financial Instruments | 40,426 | 37,139 | 20,304 | 20,073 | ||||
| Other Receivables and Other Assets | 338 | 348 | 2,467 | 148 | ||||
| Permanent Assets | 545 | 504 | 381 | 347 | ||||
| Total | 48,783 | 46,247 | 40,080 | 35,574 | ||||
| Liabilities | ||||||||
| Current and Long-Term Liabilities | 413 | 293 | 2,546 | 1,718 | ||||
| Other Liabilities | 413 | 293 | 2,546 | 1,718 | ||||
| Shareholders’ Equity | 48,370 | 45,954 | 37,534 | 33,856 | ||||
| Total | 48,783 | 46,247 | 40,080 | 35,574 | ||||
| Statement of Income |
| R$ thousand | ||||||||
| 2006 | 2007 | 2008 | ||||||
| 4th Qtr. | 1st Qtr. | 4th Qtr. | 1st Qtr. | |||||
| Gross Income from Financial Intermediation | 908 | 535 | 535 | 567 | ||||
| Other Operating Income/Expenses | (413) | (969) | 23 | (1,537) | ||||
| Operating Income | 495 | (434) | 558 | (970) | ||||
| Net Loss/Income | 495 | (434) | 558 | (970) | ||||
Bradesco Securities, Inc., a wholly-owned subsidiary of Banco Bradesco, operates as a broker dealer in the United States. The company's activities are focused on the intermediation of share purchase and sale, with emphasis on ADR operations. The company is also authorized to operate with Bonds, Commercial Paper and Deposit Certificates, among others, and to provide Investment Advisory services. This Bradesco initiative was motivated by the more than 90 ADR programs of Brazilian companies traded in New York and by the growing interest of foreign investors in the emerging markets, which is designed to offer support for global economy investors who invest part of this flow in countries such as Brazil.
The Board of Governors of the Federal Reserve System considers Banco Bradesco to be a Financial Holding Company that enables the expansion of Bradesco Securities’ activities.
This status is given following a strict analysis of various aspects determined by the US banking legislation, including Banco Bradesco’s high level of capitalization and the quality of its Management. Thus, the Bank is allowed to, either directly or through its subsidiaries, to operate in the US market, whenever considered convenient, carrying out financial activities under the same conditions as local banks, in particular the following:
– Securities market (underwriting, private placement and market-making);
– Acquisitions, mergers, portfolio management and financial services (merchant banking);
– Mutual funds portfolio management; and
– Sale of insurance.
Thus, Banco Bradesco has strengthened its role in the Investment Banking segment, expanding its opportunity to explore various financial activities in the US market, and contributing to the increase in the volume of transactions carried out with Brazilian companies.
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5 - Operating Structure
| Corporate Organization Chart |
| Main Shareholders |
(1) Bradesco’s management (Board of Executive Officers and Board of Directors) comprises the Presiding Board of Fundação Bradesco, maximum Deliberative Body of this Entity. Reference Date: 4.16.2008
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| Main Subsidiaries and Affiliated Companies |
Reference Date: 3.31.2008
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| Administrative Body |
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| Main Ratings – Bank |
| Fitch Ratings | Moody's Investors Service | Standard & Poor’s | Austin Rating | |||||||||||||||||||||
| International Scale | Domestic Scale | International Scale | Domestic Scale | Financial Soundness (1) |
International Scale – Counterparty Rating | Domestic Scale |
Domestic Scale | Corporate Governance (3) |
||||||||||||||||
| Individual | Support | Foreign Currency (1) |
Local Currency (1) |
Domestic (1) |
Foreign Currency Deposit | Foreign Currency Debt |
Domestic Currency Deposit |
Deposits | Foreign Currency |
Local Currency |
Counterparty Rating |
Financial Soundness (1) | Short- term |
|||||||||||
| IDR – Delinquency Probability of Issuer Long-term |
IDR – Delinquency Probability of Issuer Short-term |
IDR – Delinquency Probability of Issuer Long-term |
IDR – Delinquency Probability of Issuer Short-term |
Long- term |
Short- term |
Long- term (2) |
Short- term |
Long-term (2) |
Long-term (2) |
Short- term |
Long- term (2) |
Short- term |
Long- term (1) |
Short- term |
Long- term (1) |
Short- term |
Long- term (1) |
Short- term |
||||||
| A | 1 | AAA | F1 | AAA | F1 | AAA (bra) | F1+ (bra) | Aaa | P-1 | Aaa | Aaa | P-1 | Aaa.br | BR-1 | A | AAA | A-1 | AAA | A-1 | brAAA | brA-1 | AAA | A-1 | AAA |
| A/B | 2 | AA | F2 | AA | F2 | AA (bra) | F2 (bra) | Aa | P-2 | Aa | Aa | P-2 | Aa.br | BR-2 | A– | AA | A-2 | AA | A-2 | brAA | brA-2 | AA | A-2 | AA |
| B | 3 | A | F3 | A | F3 | A (bra) | F3 (bra) | A | P-3 | A | A1 | P-3 | A.br | BR-3 | B+ | A | A-3 | A | A-3 | brA | brA-3 | A | A-3 | A |
| B/C | 4 | BBB- | B | BBB | B | BBB (bra) | B (bra) | Baa | NP | Baa3 | Baa | NP | Baa.br | BR-4 | B | BBB- | B | BBB- | B | brBBB | brB | BBB | B | BBB |
| C | 5 | BB | C | BB | C | BB (bra) | C (bra) | Ba2 | Ba | Ba | Ba.br | B– | BB | B-1 | BB | B-1 | brBB | brC | BB | C | BB | |||
| C/D | B | D | B | D | B (bra) | D (bra) | B | B | B | B.br | C+ | B | B-2 | B | B-2 | brB | brSD | B | D | B | ||||
| D | CCC | CCC | CCC (bra) | Caa | Caa | Caa | Caa.br | C | CCC | B-3 | CCC | B-3 | brCCC | brD | CCC | CCC | ||||||||
| D/E | CC | CC | CC (bra) | Ca | Ca | Ca | Ca.br | C– | CC | C | CC | C | brCC | CC | CC | |||||||||
| E | C | C | C (bra) | C | C | C | C.br | D+ | brSD | C | C | |||||||||||||
| RD | RD | DDD (bra) | D | brD | ||||||||||||||||||||
| D | D | DD (bra) | D– | |||||||||||||||||||||
| D (bra) | E+ | |||||||||||||||||||||||
| E | ||||||||||||||||||||||||
N.B.: Bradesco’s risk ratings are among the highest attributed to Brazilian banks.
(1) Signs of plus (+) and minus (-) are used to identity a better or worse position within a same rating scale.
(2) Numeric modifiers 1, 2 and 3 are added to each generic rating from Aa to Caa, meaning lower or higher risk in the same category.
(3) This is the first governance rating granted in Latin America. The assessment acknowledges that Bradesco adopts excellent corporate governance practices and a relationship policy characterized by high level of quality,
transparency and ethics.
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| Main Ratings – Insurance Company and Certificated Savings Plans |
| Insurance | Certificated Savings Plans | |||||
| Fitch Ratings | Standard & Poor’s | Standard & Poor’s | ||||
| Domestic Scale | International Scale | Domestic Scale (1) | Domestic Scale | |||
| Domestic Rating of Financial | International Rating of Financial | Counterparty Rating |
Counterparty Rating | |||
| Strength of Insurance Company | Strength of Insurance | |||||
| Company | ||||||
| AAA (bra) | AAA | brAAA | brAAA | |||
| AA (bra) | AA | brAA | brAA | |||
| A (bra) | A | brA | brA | |||
| BBB (bra) | BBB | brBBB | brBBB | |||
| BB (bra) | BB | brBB | brBB | |||
| B (bra) | B | brB | brB | |||
| CCC (bra) | CCC | brCCC | brCCC | |||
| CC (bra) | CC | brCC | brCC | |||
| C (bra) | C | brSD | brSD | |||
| DDD (bra) | DDD | brD | brD | |||
| DD (bra) | DD | |||||
| D (bra) | D | |||||
| Main Rankings |
| Source | Criterion | Position | Disclosure Date | |||
| “Forbes the World’s Leading Companies” Research | Banks/Forbes 2000* | 1st (Brazil) | March 2008 | |||
| “Forbes the World’s Leading Companies” Research | Banks/Forbes 2000* | 23rd (Worldwide) | March 2008 | |||
| “Forbes the World’s Leading Companies” Research | Overall/Forbes 2000* | 3rd (Brazil) | March 2008 | |||
| “Forbes the World’s Leading Companies” Research | Overall/Forbes 2000* | 85th (Worldwide) | March 2008 |
(*) Forbes 2000: companies comprising “The World’s Leading Companies” list are rated based on a combination of criteria which takes into consideration income, profit, assets and market value.
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| Market Segmentation |
Focusing its actions on relationship, the segmentation process in Bradesco is aligned to the market trend which consists of grouping together customers with similar profiles, thus allowing a personalized customer service and increasing gains of productivity and quickness. That process provides larger flexibility and competitiveness to the Bank in the execution of its business strategy, providing dimension to operations for not only individual or corporate clients, concerning quality and specialization, but also in specific demands of sundry customer profiles.
| Bradesco Corporate Banking |
| Mission and Values |
Bradesco Corporate's mission is to meet the clients’ needs, developing long-term ethical and innovative relationship that ensures sustainable growth, in harmony with the interests of shareholders and the community.
The area has values that guide its day-to-day activities. They are:
– teamwork;
– ongoing pursuit of innovation and excellence in customer service;
– transparency in all its actions;
– commitment to self-development;
– adherence to strategic guidelines;
– creativity, flexibility and initiative; and
– agile delivery to clients.
| Background and Achievements |
The Corporate Banking segment was introduced in 1999, designed to serve companies from its target market. Based on a “customer” rather than a “product” standpoint, it maintains a centralized relations management, offering, in addition to traditional products, Tailor-made and Capital Markets structured solutions, through Managers who have a clear vision of risk, market, economic industries and relationship.
Bradesco Corporate Banking’s absolute commitment with quality, the essence of a long-term effort, started to take shape in 2000, when the company was granted the ISO 9001:2000, which is a reference for excellence in efficiency in the service providing, evaluated by clients. With the adoption of practices acknowledged by the market, its Management System has been improving, resulting in the achievement of the Prêmio Gestão Banas de Qualidade (Banas Quality Management Award) in 2006, and the Prêmio Paulista de Qualidade da Gestão - Medalha de Ouro (Paulista Quality Management Award – Golden Medal) in 2007, which indicates companies with the best management practices, for its efficiency and quality.
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The concern about seeking solutions with significant added value for the Institution is reflected in the partnerships entered into with major retail networks for consumer sales financing, made feasible as a result of the relationship and familiarity with this industry's production chain and the synergy which exists among the Bank's segments.
The managed funds comprising assets (credits, bonds and guarantees) and liabilities (deposits, funds and portfolios) amounted to R$120 billion.
| Target Market |
The 1,204 economic groups comprising Bradesco Corporate Banking’s target market, which is mostly comprised of large corporations which record sales results in excess of R$350 million/year are located in the states of São Paulo, both the capital and inner state, Rio de Janeiro, Minas Gerais, Paraná, Rio Grande do Sul, Santa Catarina, Goiás, Pernambuco and Bahia.
| Bradesco Empresas (Middle Market) |
Bradesco Empresas (Middle Market) segment was implemented with a view to offering services to companies with sales results from R$30 million to R$350 million/year, through 68 exclusive branches in the main Brazilian capitals.
This segment aims at offering the best business management, such as: Loans, Financings, Investments, Foreign Trade, Derivatives, Cash Management and Structured Operations, targeting customers’ satisfaction and results to the Organization.
The 68 branches are strategically distributed throughout Brazil as follows: Southeast (41), South (16), Mid-West (4), Northeast (5) and North (2).
Bradesco Empresas is formed by a team of 44 Lead Managers and 342 Relationship Managers, who are included in the Anbid Certification Program, as well as 214 Assistant Managers who render tailor-made services to an average of 35 economic groups per Relationship Manager, encompassing 25,329 companies from all sectors of the economy.
Bradesco Empresas manages funds, among loan operations, guarantees, deposits, funds and collections, of approximately R$48.4 billion.
In the pursuit of ongoing quality, the Bradesco Empresas Department and the Empresas Santo Amaro Branch were granted the NBR ISO 9001:2000 certification by Fundação Carlos Alberto Vanzolini in the scope “Client Relations Management of the Bradesco Empresas Segment” and “Client Relations Management of Bradesco Empresas of the Empresas Santo Amaro Branch - SP”, respectively, attesting to the Bank’s commitment to process improvement and client satisfaction.
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| Bradesco Private Banking |
Bradesco Private Banking, through its highly qualified and specialized professionals, offers the Bank's high-income individual clients with minimum funds available for investment of R$1 million, an exclusive line of products and services aimed at increasing their equity by maximizing returns. Therefore, according to a Tailor-Made concept, the most appropriate financial solution is sought, considering each client profile, providing advisory services for asset allocation, as well as tax and successive guidance.
Bradesco Private Banking, always focused on the proximity to its client base, has two offices in the cities of São Paulo and Rio de Janeiro, as well as 8 service units located in Porto Alegre, Blumenau, Curitiba, Belo Horizonte, Brasília, Salvador, Recife and Fortaleza.
Bradesco Private Banking is certified both by ISO 9001:2000 with scope on the “Relationship Management of High Net Wealth Individual Clients” and GoodPriv@cy (Data Protection Label – 2002 Edition) granted by IQNet (The International Quality Network), in the “Management of Privacy of Data Used in the Relationship with High Net Wealth Clients”.
| Bradesco Prime |
Bradesco Prime operates in the segment of high-income clients having as target-public individuals with income of R$4 thousand or higher or with an investment of R$50 thousand or higher. Bradesco Prime’s mission is to be the primary Bank of the Client, focused on the quality of relationships and on the offering of appropriate solutions to their needs with prepared staff, adding value to shareholders and employees, within ethical and professional standards. The segment value proposal is based on the following premises:
Personalized assistance, provided by Relationship Managers who manage a small client portfolio and are continually enhancing their professional qualification, in order to provide a high-level financial consulting service.
Personalized products and services, among them, the Bradesco Prime Loyalty Program, which aims to encourage the relationship between the clients and the Bank, by means of the offer of increasing benefits.
Exclusive branches, specifically designed to provide comfort and privacy.
Relationship channels, such as: exclusive Internet Banking (www.bradescoprime.com.br), with the competitive advantage of the online chat, where financial consultants interact with clients in real time, the call center with an exclusive assistance center, in addition to an extensive Customer Service Network, comprised of its branches, ATM equipment and Banco24Horas throughout Brazil.
During its years of existence, Prime invested in technology, in the improvement in the relationship with its clients and in the qualification of its professionals, as well as achieved an outstanding position in the Brazilian high-income market and has consolidated its position as the largest segment in Customer Service Network, with 228 branches, strategically located.
Since 2005, the Bradesco Prime Department has been certified by Fundação Carlos Alberto Vanzolini, NBR ISO 9001:2000 rule under the scope “Bradesco Prime Segment Management”, enhancing Bradesco’s commitment to continuously improving processes and pursuing clients’ satisfaction.
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| Bradesco Retail |
Bradesco is a traditional Retail Bank, serving with high quality all segments of the Brazilian population. For the success of this assistance which comprises all social classes, the Organization counts on an extensive customer service network which reaches companies and people in all regions of the country, including those with lower economic level. Thus, it reflects the effort that the Organization puts in the democratization of banking products and services, social inclusion and better income distribution.
The Bank has more than 18 million account holders, individual and corporate clients, who carry out millions of transactions daily in Brazil's largest Customer Service Network, comprised of branches, service branches, Postal Bank branches and Bradesco Expresso, apart from thousands of teller machines, providing easy and convenient services in different hours.
In order to make this assistance easier and special, clients can use channels such as the Fone Fácil (Easy Phone) service, Internet Banking and Bradesco Celular, through which a significant portion of daily transactions are carried out.
The Retail segment has been focusing on the growth in the client base and the loan portfolio. Also, the development of financial products, tailor-made to meet the customers' profiles, is an evidence of a constant search for service excellence, valorizing and strengthening agile and reliable relationships.
Significant investments have been made in staff training, aiming at qualifying employees for providing customized and efficient customer services, increasing the client’s loyalty to the Bank.
Bradesco Retail not only has more than 2,800 branches and 2,600 service branches (PAB/PAE), but also makes available a Digital Branch, operating in a virtual environment and offering courier service, in which a team of managers serves its clients, regardless of location, from 8:00 am to 10:00 pm, seven days a week.
| Postal Bank |
Postal Bank is a brand through which Bradesco offers its products and services in a partnership with the Brazilian Post Office Company (ECT). The segment is an example of success of Correspondent Banks, due to its large scope, products and services portfolio, and the social role it plays in society.
The Postal Bank provides a new way for the banking retail, as it reaches all Brazilian cities, allowing millions of Brazilians to enter the banking system. There are 5,851 Branches set up in more than 5 thousand Brazilian cities.
Around 1.7 thousand branches were set up in cities which, until then, were devoid of banks, benefiting many people who had the opportunity to, for the first time in their lives, obtain a check book, make a deposit in a savings account, or obtain a loan in a regulated institution.
Thanks to Postal Bank, thousands of beneficiaries of the Brazilian Social Security Institute (INSS) can now receive their benefits in a branch close to their homes. Thus, clients can carry out banking transactions easier, without having to travel long distances, and without spending a good part of their earnings on the way from their homes to the Branch.
Postal Bank’s expansion has also disseminated in the municipalities where it is present the use of credit and debit cards and the affiliation of the commercial establishments to the Visa Network, improving services in the postal branches. Such expansion also provided more options for the local populations to make their payments and became an important support to Bradesco’s clients who make transactions in Brazil.
Postal Bank also promotes the social-economic development of cities where it is present, as it makes easier the circulation of money, attracting new merchants and greater offer of goods and merchandise.
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| Available Services: |
- Reception and submission of account opening proposals;
- Withdrawals in checking account and savings account;
- Deposits in checking account and savings account;
- Provision of balances and bank statements of checking account, savings account and INSS;
- Receipt of banking collection documents; (*)
- Receipt of consumption bills (water, energy, telephone, etc.); (*)
- Payment of INSS benefits;
- Revalidation of INSS passwords;
- Reception and submission of loan proposals;
- Online loans to clients with available limit;
- Debit Card requests;
- Receipt of state (except Minas Gerais) and municipal taxes, as well as FGTS; (*)
- Receipt of Federal Taxes (DARF);
- Receipt of Social Security Form (GPS);
- Vehicle licensing in the States of Bahia and Rio Grande do Sul; and
- Positive Card Verification Value (CVV2) identification –Security Code.
(*) With bar code.
| Number of Postal Bank Branches |
| Bradesco Expresso |
Bradesco has been increasing its share in the correspondent bank segment with the expansion of Bradesco Expresso Network, by means of partnerships entered into with supermarkets, drugstores, department stores and other retail chains.
On 3.31.2008, Bradesco Expresso Network totaled 12,381 units implemented.
Attractiveness for Store Owners, Clients and Bank
In addition to direct gains for the remuneration received, there are also indirect gains for the store owner, mainly due to the increase of sales. Such gains, provided by the greater flow of people, potential consumers of the products sold in the establishment, also open possibilities for client’s loyalty.
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| Postal Bank |
Thinking about the well being of its clients and the community in general, Bradesco Expresso offers banking service in establishments which they identify to and already have a relationship closer to their homes or workplace, thus providing convenience in their banking transactions.
For Bradesco, this is the best way to reach low-convenience, especially the population deprived of bank services, promoting a banking inclusion that would not be possible by means of traditional bank branches.
Bradesco Expresso has operated in the receipt of consumption bills, taxes and collection slips, pre-paid cell phone recharge and withdrawals in checking account, savings account and INSS.
| Number of Bradesco Expresso Units |
| Number of Transactions Carried out in Correspondent Banks (Postal Bank+ Bradesco Expresso) – in thousands |
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| Customer Service Network |
| Customer Service Network | 2006 | 2007 | 2008 | |||||
| December | March | December | March | |||||
| Service Branches – Own | ||||||||
| Branches | 3,008 | 3,015 | 3,160 | 3,169 | ||||
| – Bradesco | 3,007 | 3,014 | 3,143 | 3,152 | ||||
| – Banco Finasa | 1 | 1 | 1 | 1 | ||||
| – Banco BBI | – | – | 1 | 1 | ||||
| – Banco BMC | – | – | 15 | 15 | ||||
| PABs | 1,056 | 1,069 | 1,151 | 1,175 | ||||
| PAEs | 1,415 | 1,429 | 1,495 | 1,515 | ||||
| PAAs | 71 | 111 | 130 | 135 | ||||
| Finasa Promotora de Vendas (Finasa Branches) | 381 | 390 | 375 | 357 | ||||
| ATM Network Outplaced Terminals | 2,540 | 2,580 | 2,776 | 2,877 | ||||
| Total Service Branches – Own | 8,471 | 8,594 | 9,087 | 9,228 | ||||
| Service Branches – Third Parties | ||||||||
| Banco24Horas Network Assisted Terminals | 2,990 | 3,086 | 3,523 | 3,763 | ||||
| Postal Bank | 5,585 | 5,639 | 5,821 | 5,851 | ||||
| Bradesco Expresso (Correspondent Banks) | 8,113 | 9,084 | 11,539 | 12,381 | ||||
| Total Service Branches – Third Parties | 16,688 | 17,809 | 20,883 | 21,995 | ||||
| Total Service Branches in the Country (Own + Third Parties) | 25,159 | 26,403 | 29,970 | 31,223 | ||||
| Branches Abroad | 3 | 3 | 5 | 5 | ||||
| Subsidiaries Abroad | 5 | 5 | 7 | 7 | ||||
| Overall Total Service Branches (Country + Abroad) | 25,167 | 26,411 | 29,982 | 31,235 | ||||
| Finasa – Associated Stores and Auto Dealers (**) | 39,893 | 39,542 | 36,970 | 33,816 | ||||
| Total Branches containing ATMs in the Country – Own Network + | ||||||||
| Banco24Horas (included in the total) (*) | 10,919 | 11,155 | 12,312 | 12,957 | ||||
| ATMs | ||||||||
| Own | 24,099 | 24,464 | 25,974 | 26,735 | ||||
| Banco24Horas | 3,201 | 3,346 | 3,939 | 4,221 | ||||
| Total ATMs | 27,300 | 27,810 | 29,913 | 30,956 | ||||
PAB (Posto de Atendimento Bancário) – branch located in a company, with an employee from the Bank.
PAE (Posto de Atendimento Eletrônico em Empresas) – branch located in a company, with an ATM.
PAA (Posto Avançado de Atendimento) – branch located in a city where there isn’t a Bank branch.
(*) In March 2008, there were 1,060 overlapping branches between the Own Network and the Banco24Horas Network.
(**) The decrease, as of December 2007 occurred due to the company’s strategic repositioning in personal loans and installment sales in stores.
| Customer Service Network – Branches |
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| Bradesco and Market Share |
| Region/State | March 2007 | March 2008 | ||||||||||
| Bradesco | Total Banks | Market | Bradesco | Total Banks | Market | |||||||
| in the Market(1) | Share (%) | in the Market(1) | Share (%) | |||||||||
| North | ||||||||||||
| Acre | 5 | 35 | 14.3 | 5 | 35 | 14.3 | ||||||
| Amazonas | 60 | 151 | 39.7 | 60 | 155 | 38.7 | ||||||
| Amapá | 4 | 27 | 14.8 | 4 | 28 | 14.3 | ||||||
| Pará | 49 | 300 | 16.3 | 49 | 301 | 16.3 | ||||||
| Rondônia | 18 | 89 | 20.2 | 18 | 91 | 19.8 | ||||||
| Roraima | 2 | 19 | 10.5 | 2 | 19 | 10.5 | ||||||
| Tocantins | 13 | 86 | 15.1 | 15 | 89 | 16.9 | ||||||
| Total | 151 | 707 | 21.4 | 153 | 718 | 21.3 | ||||||
| Northeast | ||||||||||||
| Alagoas | 11 | 126 | 8.7 | 12(4) | 127 | 9.4 | ||||||
| Bahia | 208 | 764 | 27.2 | 210(4) | 769 | 27.3 | ||||||
| Ceará | 92 | 369 | 24.9 | 94(4) | 375 | 25.1 | ||||||
| Maranhão | 68 | 230 | 29.6 | 68 | 233 | 29.2 | ||||||
| Paraíba | 20 | 175 | 11.4 | 20 | 177 | 11.3 | ||||||
| Pernambuco | 62 | 483 | 12.8 | 65(4) | 488 | 13.3 | ||||||
| Piauí | 8 | 117 | 6.8 | 8 | 116 | 6.9 | ||||||
| Rio Grande do Norte | 14 | 149 | 9.4 | 15 | 153 | 9.8 | ||||||
| Sergipe | 12 | 163 | 7.4 | 13 | 165 | 7.9 | ||||||
| Total | 495 | 2,576 | 19.2 | 505 | 2,603 | 19.4 | ||||||
| Mid-West | ||||||||||||
| Distrito Federal | 31 | 314 | 9.9 | 33 | 319 | 10.3 | ||||||
| Goiás | 106 | 566 | 18.7 | 111(4) | 572 | 19.4 | ||||||
| Mato Grosso | 62 | 248 | 25.0 | 63 | 252 | 25.0 | ||||||
| Mato Grosso do Sul | 57 | 228 | 25.0 | 57 | 231 | 24.7 | ||||||
| Total | 256 | 1,356 | 18.9 | 264 | 1,374 | 19.2 | ||||||
| Southeast | ||||||||||||
| Espírito Santo | 39 | 367 | 10.6 | 40 | 373 | 10.7 | ||||||
| Minas Gerais | 281 | 1,864 | 15.1 | 295(5) | 1,885 | 15.5 | ||||||
| Rio de Janeiro | 257(2) | 1,704 | 15.1 | 279(2) (4) | 1,732 | 16.1 | ||||||
| São Paulo | 1,090 | 5,933 | 18.4 | 1,167(3) (6) | 6,028 | 19.4 | ||||||
| Total | 1,667 | 9,868 | 16.9 | 1,781 | 10,018 | 17.8 | ||||||
| South | ||||||||||||
| Paraná | 175 | 1,229 | 14.2 | 183(4) | 1,243 | 14.7 | ||||||
| Rio Grande do Sul | 158 | 1,471 | 10.7 | 165(4) | 1,480 | 11.1 | ||||||
| Santa Catarina | 113 | 861 | 13.1 | 118(4) | 872 | 13.5 | ||||||
| Total | 446 | 3,561 | 12.5 | 466 | 3,595 | 13.0 | ||||||
| Overall Total | 3,015 | 18,068 | 16.7 | 3,169 | 18,308 | 17.3 | ||||||
(1) Source: Unicad – Information on Entities of Interest to the Brazilian Central Bank (in 2008, it refers to September 2007).
(2) It includes 1 Banco Finasa’s branch.
(3) It includes 1 Banco Bradesco BBI’s branch
(4) It includes 1 Banco BMC’s branch.
(5) It includes 2 Banco BMC’s branches.
(6) It includes 4 Banco BMC’s branches.
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| Customer Service Network – Branches – Market Share |
| Bradesco Dia&Noite (Day&Night) Customer Service Channels |
Bradesco’s clients are able to consult their banking transactions, carry out financial transactions and purchase products and services available via state-of-the-art technology through the following alternative channels: Auto-Atendimento (ATM Network), Fone Fácil (Easy Phone) and Internet Banking.
Reassuring the commitment to social responsibility, the Bradesco Dia&Noite (Day&Night) Customer Service Channels provide access to people with special needs, as follows:
– Internet Banking for visually impaired people;
– Personalized assistance for hearing impaired people, by means of the digital language in Fone Fácil (Easy Phone); and
– Access to visually impaired people and wheelchair users in Auto-Atendimento (ATM Network) (which is being extended).
| Bradesco Dia&Noite (Day&Night) – ATM Network |
The ATM network has 26,735 machines on 3.31.2008, strategically distributed throughout Brazil. This Network provides fast and practical access to a diverse range of products and services. In addition,
Bradesco’s clients who have debit cards in checking or savings accounts can use 4,221 Banco24Horas machines for withdrawal, balance and bank statement transactions.
| Banking Service Outlets |
| Items | 2006 | 2007 | 2008 | |||||
| December | March | December | March | |||||
| Total Own Network | 7,929 | 8,069 | 8,789 | 9,194 | ||||
| – Branches, PABs, PAEs and PAAs | 5,332 | 5,489 | 6,013 | 6,317 | ||||
| – Outplaced Terminals | 2,597 | 2,580 | 2,776 | 2,877 | ||||
| Total Banco24Horas (*) | 2,990 | 3,086 | 3,523 | 3,763 | ||||
| Overall Total | 10,919 | 11,155 | 12,312 | 12,957 | ||||
(*) In March 2008, it includes 1,060 outlets overlapping with own network.
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| Distribution of ATM Network |
Note: It includes Banco24Horas ATMs.
| ATM Network – Number of Transactions – in thousand |
N.B.: It includes the transactions performed in Banco24horas ATMs.
| ATM Network Highlights – millions |
| Items | 2006 | 2007 | 2008 | |||||
| 4th Qtr. | 1st Qtr. | 4th Qtr. | 1st Qtr. | |||||
| Number of Cash Withdrawal Transactions | 123.5 | 114.1 | 126.6 | 118.6 | ||||
| Number of Deposit Transactions | 47.5 | 44.2 | 45.0 | 42.1 | ||||
N.B.: It includes the transactions performed in Banco24horas ATMs.
Bradesco has innovated and made available to its clients the largest number of services as possible.
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| Bradesco Dia&Noite (Day&Night) – Fone Fácil (Easy Phone Service) |
With a 24/7 telephone access, the client can obtain information, make transactions and acquire products and services related to his/her Checking Account, Savings Account, Credit Cards and other products available in this channel through electronic and personalized assistance.
By means of specific numbers, the client has access to several other telephone service centers. The main ones are: Internet Banking, Net Empresa, Consortium, Private Pension Plan, Finasa and Collection. There is also Alô Bradesco and the Ombudsman, channels which are destined to make compliments, suggestions or complaints.
| Fone Fácil – Calls Evolution – million |
| Fone Fácil – Number of Transactions – thousands |
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| Bradesco Dia&Noite (Day&Night) – Internet Banking |
Bradesco Dia&Noite (Day&Night) manages a Portal, which contains links to 49 related websites, 36 of which are institutional and 13 are transactional.
Since it was first launched, Bradesco has innovated and made available the largest number of online services as possible to its clients.
| Internet Banking – thousands of registered users |
| Internet – Number of Transactions – in thousands (*) |
(*) Number of transactions made via Internet Banking, ShopInvest, Cards, ShopCredit, Certificated Savings Plan, Net Empresa and Net Empresa – WebTA (Web File Transmission) and Cidadetran.
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| Services | Website | Transactions carried out | ||
| 1st Quarter of 2008 | ||||
| • Bradesco Internet Banking | (www.bradesco.com.br) | 90.6 million | ||
| • ShopInvest Bradesco | (www.shopinvest.com.br) | 1.2 million | ||
| • ShopCredit | (www.shopcredit.com.br) | 5.1 million | ||
| • Bradesco Net Empresa | (www.bradesco.com.br) | 16.1 million | ||
| • Bradesco Cartões | (www.bradescocartoes.com.br) | 7.2 million | ||
| • Net Empresa – WebTA | (Web File Transmission) | 213.5 million | ||
| • Bradesco – Cidadetran | (www.cidadetran.com.br) | 2.1 million |
| Investments in Infrastructure, Information Technology and Telecommunications |
At Bradesco Organization, the investments for expanding infrastructure capacity, IT and telecommunications are designed to maintain a modern, practical and secure Customer Service Network. The Bank is one of the world's most contemporary companies, creating a unique advantage for its clients and users in Brazil and abroad.
| Investments Evolution |
| R$ million | ||||||||||||
| Years | 1st Qtr. | |||||||||||
| 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | |||||||
| Infrastructure | 469 | 230 | 245 | 354 | 478 | 118 | ||||||
| IT/Telecommunications | 1,225 | 1,302 | 1,215 | 1,472 | 1,621 | 433 | ||||||
| Total | 1,694 | 1,532 | 1,460 | 1,826 | 2,099 | 551 | ||||||
| Risk Management and Compliance |
| Credit Risks, Market Risks, Liquidity, Operational Risks, Internal Controls and Compliance |
Bradesco Organization deems the risk management essential in all its activities, using it with the purpose of adding value to its business, to the extent that it enables support to the commercial areas in the planning of their activities, maximizing the utilization of own funds and of third parties, in benefit of shareholders and the company.
It also considers that the risk management activity is highly relevant, due to the growing complexity of services and products offered by the Organization, and also in view of the globalization of its business. Therefore, Bradesco is constantly improving its risk management-related activities, duly aligned with the applicable regulations and the best international practices, adjusted to the Brazilian reality.
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The Organization carries out considerable investments in activities related to risk management processes, especially in the qualification of employees, so as to enhance the quality of the operation and ensure the necessary focus, inherent to these activities, which produce a strong added value.
| Corporate Governance |
In a broad sense, the Corporate Governance process represents the set of practices that aims to optimize the performance of a company and protect stakeholders, such as shareholders, investors, clients, employees, suppliers etc., as well as to facilitate access to capital, add value to the company and contribute to its sustainability, mainly involving, aspects focused on transparency, equal treatment of shareholders and accountability.
In this context, Bradesco Organization’s Risk Management Process counts on the participation of all segments within the scope of Corporate Governance, which comprises the Senior Management until the several business and product areas in the identification of risks.
| Governance Scope |
This structure is aligned with the best market practices, counting on independent board members, policies, committees with specific functions and dedicated directive structure, establishing rules and procedures, providing human resources and technology focused on the execution of the respective activities.
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| Risk Management Process |
Bradesco Organization approaches the management of all the risks inherent to its activities in an integrated manner, within a process, based on the support from its Internal Controls and Compliance structure (concerning regulations, rules and internal policies).
This view allows the ongoing improvement of its risk management models, minimizing gaps that could jeopardize their correct identification and assessment.
| Risk Management |
The structure of the Bradesco Organization’s Risk Management Process allows Credit, Market, Liquidity and Operational risks to be effectively identified, evaluated, monitored, controlled and mitigated in a centralized manner.
In order to ensure unicity to the risk management process, there is a high-level permanent forum with the intention to obtain synergy among these activities at the Organization. This instance called Integrated Risk Management Committee and Capital Allocation Committee, is a Statutory Committee, and has as attribution to advise the Board of Directors in the approval of institutional policies, operational guidelines and establishment of exposure limits to risks within the scope of the economic-financial consolidated. Additionally, there are three Executive Committees for issues related to Credit, Market, Liquidity and Operational Risk which, among their attributions, suggest the tolerance limits to their respective risks and prepare mitigation plans to be submitted to the Integrated Risk Management and Capital Allocation Committee.
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| Below we show Bradesco Organization’s Risk Management Structure |
We also point out the existence of the Risk Management and Compliance Department – DGRC, which is a dedicated and independent department exclusively focused on activities related to global risk and internal controls management, reflecting the Organization’s commitment to the theme, besides showing the recommendations enacted by the New Capital Accord (Basel II) and the best Corporate Governance practices. The Department has as duty to coordinate the work to comply with Resolutions 2,554 (Internal Controls), 3,380 (Operational risk), 3,464 (Market Risk), 3,490 (Required Reference Equity) of the National Monetary Council and with the provisions of the U.S. Sarbanes-Oxley act, Section 404.
The risk management process in Bradesco Organization comprises a virtuous circle, which involves:
– Identification of risks: present in the daily routine of the units of business, operations, products and services. This activity comprises identification, classification and the assessment of the exposure to risk level and its control effectiveness, task made by means of the structure of Internal Controls and Compliance;
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| Risk Management and Compliance |
– Measurement of risks: it involves the use of a series of methodologies, such as calculation of the expected and unexpected losses, calculation of VaR (Value at Risk), stress tests and use of market benchmarks;
– Mitigation of risks: it represents the reduction of the estimated gross weighted risks, leading to acceptable residuals by means of the adoption of actions aiming at transferring and implementing effective controls, periodically revaluated and regularly tested as to its adequate execution;
– Monitoring and control of risks: it uses the results of measurement models for the establishment of policies and limits. These limits are divided and monitored daily, weekly, monthly or according to each situation. In addition, we have an integrated management system which incorporates several elements, such as specific models for measurement of each risk, historical data base, adequate procedures of internal controls and a qualified team in the risk management function; and
– Risk Report: for each business unit, information aiming at the integrated risk management is reported in analytical and consolidated bases.
| New Capital Accord– Basel II |
| Structure and Fundamentals |
One of the main functions of the central banks of several countries is the supervision of the financial system under their jurisdiction, in the sense of avoiding and mitigating possible banking crises which, in case it occurs, may deeply affect local economies.
With the financial globalization, a banking crisis in a certain country may affect the banking and economic activities of other countries, with the need for alignment of the supervision activities of the several central banks, so as to level the banking risk measurement criteria and ensure the solvability of the international financial market. This need was met by the Basel Capital Accord of 1988. The main guideline of this accord was the requirement of minimum capital in relation to the credit risk. The supervisors of each country require from the banks under their jurisdiction a minimum capital amount in relation to their portfolio assets, weighted by the risk level determined by the supervisors. Later, in 1996, the Basel Committee on Banking Supervision added market risk as one more risk factor to be considered for capital allocation.
The evolution of the global banking scenario and the acceleration of the integration pace of several financial systems through complex and sophisticated instruments resulted in the need to improve the Capital requirement rules established in 1988 and 1996. After more than six years of studies, the New Capital Accord (Basel II), disclosed in June 2004, improved the requirements of the previous accord, based on the “three pillars”:
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The First Pillar has two main innovations concerning the previous accord: a) the risk weighing rules which currently are established by the regulator, may be based on internal classifications of the banks themselves; and b) the addition to the capital requirement of the amount related to the operational risk.
The Second Pillar comes from the fact that the supervising authority excludes itself from the function of determining the risk level of banking assets in the internal evaluation models. The exclusion fundamental is that the banks themselves are best qualified to determine them. On the other hand, the supervising tasks of the banking authority are added to the internal risk measurement processes of the banks under its jurisdiction.
The Third Pillar recommends to the banks a set of minimum information for the disclosure to the market, so that it can make a better evaluation based on the risks incurred by each one of the institutions in their activities.
| Implementation in Brazil |
As of 1994, the Central Bank of Brazil started disclosing normative rulings based on the orientations given by the Basel Accord (Basel I) for the financial instructions risk follow-up, continuously updated.
In September 2007, the Central Bank of Brazil issued Notice 16,137, which updated the initial schedule defined by Notice 12,746, of December 2004, for implementation of the New Basel Accord (Basel II), as the following table:
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| 2007 | – Establishment of the capital allocation installment for Operational Risk. (*) | |
| 2008 | – Establishment of eligibility criteria for adoption of internal models of market risk; | |
– Implementation of a credit risk management structure; and | ||
– Disclosure of criteria to prepare database for internal systems for capital requirement for credit risk. | ||
| 2009 | – Beginning of the validation process of the advanced version for market risk; |
|
– Establishment of criteria to implement the approach based on internal ratings for capital requirement for credit risks; and |
||
– Disclosure of criteria for the recognition of internal models of capital requirement for operational risk. |
||
| 2010 | – Beginning of authorization process to use the basic approach based on internal ratings to calculate the capital requirement for credit risk. | |
| 2011 | – Beginning of authorization process to use the advanced approach based on internal ratings to calculate the capital requirement for credit risk; |
|
– Establishment of criteria for the adoption of internal models of capital requirement for operational risk; and |
||
– Disclosure of an authorization process to use internal models of capital requirement for operational risk. |
||
| 2012 | – Beginning of the authorization process to use the advanced approach based on internal ratings to calculate the capital requirement for operational risk. |
|
(*) Regulation not disclosed yet.
In accordance with the New Accord, the Central Bank published Resolutions 3,380 and 3,464 which deal with the structures for operational and market risk management, respectively. Resolutions 3,444 and 3,490 were also published, changing the ascertainment rules of the Reference Equity and providing for the ascertainment of the Required Reference Equity, respectively.
| Implementation of Basel II in the Bradesco Conglomerate |
Based on the consulting documents disclosed by the Basel Committees and on the exercises of quantitative impacts (QIS) for implementation of Basel II, Bradesco, since 2003, prepares in an integrated manner to its adequacy to the requirements proposed by said documents.
In 2004, with the publication of the definite document about the New Capital Accord (International Convergence of Capital Measurement and Capital Standards), an internal implementation plan was established. Under the coordination of the Risk Management and Compliance Department, the plan involves areas of Bradesco Organization and is followed by a structure of PMO (Project Management Office), under the responsibility of the Organization and Methods Department.
The main activities established for adequacy are aimed at:
– historical data storage on default, recoveries and operational losses;
– review and update of the loan granting and recovery models;
– review of limit and guarantee management processes;
– definition, formalization and structuring of data, processes and management of banking and trading portfolios;
– evaluation of the market and liquidity risks data and models;
– definition and formalization of the mark-to-market processes;
– refining in the capture of operational risks data and models;
– risk models backtesting structure;
– development and effective application of economic capital models; and
– certification by the internal audit of all processes and models related to Basel II.
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All these works follow orientations from an Executive Committee designated by the Board of Directors, under the coordination of the Organization’s CEO, showing the total commitment of our management to the implementation of Basel II.
We believe that the implementation of the approaches of Basel II, connected to the best market practices, will bring to our Organization improvements to the risk management processes.
| Credit Risk Management |
Credit Risk consists of the possibility of a counterparty of a loan or financial operation might not intend nor suffer any change in its ability to comply with its contractual liabilities, thus may generate any loss for the Organization.
| Loan Granting |
Under the responsibility of the Loan Department, the Organization’s loan process meets the determinations of the Loan Executive Committee and the Brazilian Central Bank, in addition to being based on the pursuit of security, quality, liquidity and diversification in the application of the loan assets.
In a constant search for agility and profitability in businesses, we use methodologies directed and adequate to each segment the Bank operates, guiding the granting of loan operations and the determination of operational limits when adequate.
| Loan Policies |
Within the rules and Loan Policy, the branches maintain their limit values variable, according to the size and guarantees of operations, whose automatic classification is verified against global risk of client/economic group global risk.
Loan proposals pass through an automated and under parameters system in a continuous improvement process, aiming at supplying indispensable subsidies for analysis, granting and follow-up of loans granted, thus minimizing the risks inherent to loan operations.
For the granting of mass loans, the specialized Credit and Behavior Scoring systems enable greater agility and reliability, besides the standardization of procedures in the credit analysis and granting processes.
The Loan Executive Committee located at Bradesco's Headquarters aims at joint decision-making processes within its skills referring to consultations about limits or operations proposed by the Bradesco Conglomerate, previously analyzed and with opinion of the Loan Department.
Operations are diversified, non-selective and focused on individuals and corporate customers with sound payment capacity and proven creditworthiness. Care is taken to ensure that the underlying guarantees are sufficient to cover the risks assumed, taking into consideration the purpose and terms of the loan granted.
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| Loan Granting |
| Methodology Used for Client Assessment and Loan Portfolio |
The credit risk assessment methodology, besides delivering data to establish minimum parameters in the loan granting and risk management, also enables to define special loan policies in view of characteristics and size of client, providing grounds not only for the correct pricing of operations, but also for the definition of adequate guarantees according to each situation.
The risk ratings for corporate are made on a corporate basis and periodically followed up, so as to preserve the quality of loan portfolio clients.
Regarding individuals, the risk ratings are mainly defined based on their registered reference variables, out of which we point out: income, equity, restrictions and indebtedness, besides standard and past relationship with the Bank.
| Credit Risk Control |
Aiming at mitigating the Credit Risk, Bradesco is continuously following up the processes of loan activities, in the improvement, examination and preparation of inventories of credit risk models, on the monitoring of credit concentration and on the identification of new components that offer credit risks.
In addition, the efforts, which are focused on the utilization of advanced models of measuring risks and on the continuous improvement of processes, have reflected on performance of the credit portfolio, both in terms of results and solidity, in various scenarios.
The credit risk control is made in a corporative manner through “Credit and Recovery Portfolio Follow-up” meetings. All meetings are monthly followed by the Executive Board and Officers of the main management areas, and by the Executive Credit Risk Management Committee, which has the following attributions:
a) to evaluate and recommend risk measurement strategies, policies, rules and methodologies to the Committee of Integrated Risk Management and Capital Allocation;
b) to follow and evaluate credit risk and measures taken to mitigate risks;
c) to follow and evaluate alternatives for credit concentration risk mitigation, aware of those people who may cause unexpected and unacceptable losses for Bradesco Organization;
d) to follow the implementation of methodologies, models and corporate credit risk management tools;
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e) to evaluate the sufficiency of allowance for loan losses for coverage of expected losses on loan operations;
f) to follow the movements and development of the credit market, evaluating implications, risks and opportunities for Bradesco Organization; and
g) to regularly inform the CEO and the Integrated Risk Management and Capital Allocation Committee about its activities and make the recommendations deemed important.
We point out the following credit risk management activities:
– backtesting and gauging of the models used for measuring loan portfolio’s risks;
– active participation in the process of improving risk rating models of clients, respecting the particular characteristics of the business and product segments in which Bradesco operates;
– concentration analysis, by economic groups, activities, regions etc.;
– follow-up of critical risks: periodical monitoring of the main events of default, by means of individual analysis based on the growth of clients’ balances and recovery estimates;
– follow-up of the provisioning on expected and unexpected losses;
– continuous review and restructuring of the internal processes, including roles and responsibilities, qualification, organizational structures review and IT demands; and
– participation in the evaluation of credit risks upon creation or review of products.
In addition, the whole process of Credit Risk control comprises periodical review of projects related to the compliance with best market practices and requirements of New Capital Basel Accord, by means of action plans. Aiming at the improvement of the management process, all actions in progress are monitored, and we seek to identify and cover new gaps or needs that may arise.
We point out that we are focused on the adequacy of processes for alignment to the requirements of the IRB – Advanced approach of Basel II.
| Credit Risk Analysis |
For the credit risk control and management, we point out mainly the quality topics (classification and evaluation of clients), portfolio composition and concentration (by client/economic group, activity sector and maturity).
| Portfolio Quality |
In relation to the previous quarter, there was a slight increase in the quality of the total portfolio due to the growth in the participation of AA-C Rated credits in the operations focused on Corporate Clients.
| Loan Operations – By Rating (in percentage) |
| Clients’ Characteristics | 2007 | 2008 | ||||||||||||||||
| March | December | March | ||||||||||||||||
| AA-C | D | E-H | AA-C | D | E-H | AA-C | D | E-H | ||||||||||
| Large Companies | 98.3 | 0.9 | 0.8 | 98.6 | 0.7 | 0.7 | 98.8 | 0.6 | 0.6 | |||||||||
| Micro, Small and Medium-sized Companies | 91.3 | 2.7 | 6.0 | 93.7 | 2.0 | 4.3 | 94.0 | 1.9 | 4.1 | |||||||||
| Individuals | 88.6 | 2.2 | 9.2 | 89.6 | 1.8 | 8.6 | 89.4 | 1.9 | 8.7 | |||||||||
| Total | 92.2 | 2.0 | 5.8 | 93.3 | 1.6 | 5.1 | 93.4 | 1.6 | 5.0 | |||||||||
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| Provisioning |
The processes to constitute the allowance for loan losses (PDD) meet the requirements of the Central Bank of Brazil, based on Resolutions 2,682 and 2,697 and complementary circulars, with the purpose of ensuring the adequate classification and quality of loan operations. The classification process for purposes of provision is composed by stages:
– evaluation and classification of the client/ economic group: quantitative (economic and financial indicators) and qualitative aspects (registration and behavioral data), connected to the clients’ capacity to honor their commitments, are considered;
– classification of the operation: evaluation of the classification of the client connected to the type, liquidity and sufficiency level of the guarantee (s); and
– reclassification by delay and term of the operation and by renegotiation.
After all classification steps for purposes of provision are carried out, the loss expected in 1 year is evaluated, trying to maintain a minimum coverage margin above this loss in order to ensure impacts by a possible acceleration of default, not captured by means of risk classification models applied to the portfolio. For the composition of this margin, exceeding provisions are constituted, which are allocated in the operations.
For the determination of this margin the highest amplitude of default above 90 days occurred in the last two years and applied on the expected loss in a year of the portfolio is calculated. For the portfolio of March 2008, the minimum margin verified was 38%.
The total amount of the provision is constituted by the generic (classification of the client and/or operation), specific (non-performing loan) and exceeding (internal criteria and policies) provisions.
| PDD x Delinquency x Losses (Percentage over Loan Operation Balance) |
The total volume of allowance for loan losses reached R$8,104 million, representing 5.8% of the total loan portfolio (6.0%, in December 2007), ensuring a coverage level of 47% above the expected loss of 1 year.
It is important to highlight the adherence of the provisioning criteria adopted, which may be proved by means of analysis of historical data of allowances for loan losses and losses effectively occurred in the subsequent period of twelve months during the analyzed period. For instance, in March 2007, for an existing provision of 6.7% of the portfolio, the loss in the twelve subsequent months was 4.7% of the portfolio in that date, that is, the existing provision covered with the margin the loss which really occurred.
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| Portfolio Concentration |
| By Activity Sector |
The distribution of the portfolio by economic activity sector did not have a concentration. Operations for individuals, despite their significant participation, are covered. In the last quarter we point out the participation and balance growth of the Industry sector (especially in Food and Beverage).
| Activity Sector | R$ million | |||||||||||||||
| 2006 | 2007 | 2008 | ||||||||||||||
| December | % | March | % | December | % | March | % | |||||||||
| Public Sector | 940 | 1.0 | 967 | 1.0 | 901 | 0.7 | 913 | 0.6 | ||||||||
| Private Sector | 95,279 | 99.0 | 100,506 | 99.0 | 130,406 | 99.3 | 138,106 | 99.4 | ||||||||
| Corporate | 55,668 | 57.8 | 58,878 | 58.0 | 76,932 | 58.6 | 81,137 | 58.4 | ||||||||
| Industry | 24,393 | 25.3 | 25,207 | 24.8 | 31,401 | 23.9 | 33,479 | 24.1 | ||||||||
| Commerce | 13,452 | 13.9 | 15,255 | 15.0 | 18,724 | 14.3 | 19,896 | 14.3 | ||||||||
| Financial Intermediates | 462 | 0.5 | 422 | 0.4 | 1,049 | 0.8 | 862 | 0.6 | ||||||||
| Services | 16,054 | 16.7 | 16,601 | 16.4 | 24,135 | 18.4 | 25,094 | 18.1 | ||||||||
| Agriculture, Cattle Raising, Fishing, Forestry and Forest Exploration | 1,307 | 1.4 | 1,393 | 1.4 | 1,623 | 1.2 | 1,806 | 1.3 | ||||||||
| Individual | 39,611 | 41.2 | 41,628 | 41.0 | 53,474 | 40.7 | 56,969 | 41.0 | ||||||||
| Total | 96,219 | 100.0 | 101,473 | 100.0 | 131,307 | 100.0 | 139,019 | 100.0 | ||||||||
| By Flow of Maturities |
The term of operations falling due has been extended, mainly due to the consumer financing operations, which are, by their nature, of larger term.
The operations with term larger than 180 days represented 57.5% of the total portfolio in March 2008, against 51.2% twelve months ago.
| Loan Operations – Flow of Loan Portfolio Falling Due By Terms (in percentage) |
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| By Debtor |
In the last twelve months the concentration levels of loan operations of the total portfolio had a reduction in all intervals of the largest debtors, as well as an improvement in the quality of these assets, with higher participation of the rating “AA and A” (excellent and great concept and economic-financial condition).
| Loan Operations – Portfolio Concentration (in percentage) |
| Market Risk Management |
Market risk is related to the possibility of loss from fluctuating prices and rates caused by mismatched maturities, currencies and indexes of the Organization’s assets and liabilities portfolios. The market follows this risk with great interest, wich had a significant technical growth over the last years, with a view to avoiding, or at least minimizing, occasional losses to institutions, due to higher complexity in operations carried out in the markets.
The Organization’s current market risk management policy consists of the daily monitoring of positions subject to market risk and its respective established limits. This monitoring is made by means of VaR ( Value at Risk) methodologies, Stress Test and Sensitivity Analysis, as well as the Stop Loss limits and financial exposure.
| Market Risk Control |
Market risk control is carried out through methodologies and models, which are consistent with the best international practices, ensuring that the Organization's strategic decisions are implemented with speed and a high level of reliability.
The market risk is weekly followed by the meetings of the Executive Treasury Committee, which focuses on the following items:
a) a) to define operation strategies for optimizing results and present positions held by the Organization;
b) b) to analyze the national and international political-economic scenario;
c) to follow investment limits in public federal, private, national and international securities;
d) to follow the limits of VaR (Value at Risk) and Stop Loss of the portfolios;
e) to follow the compliance with the minimum liquidity limit, according to the established policy;
f) to establish operational limits of separation of assets, liabilities and currencies; and
g) to hold special meetings to analyze positions and situations in which the position limits, Stop Loss or VaR, are exceeded.
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Among the main activities of the Market Risk Management Area, which is independent from business management, we highlight:
– to follow the limits of Stop Loss established for the positions by the Senior Management;
– to do a backtesting of the models adopted for measurement of market risks;
– to prepare sensibility analyses and simulate results in stress scenarios for the positions of the Conglomerate;
– to meet the demands of regulatory bodies concerning the calculation and sending of information related to prefixed positions, as well as the requirement of resulting capital (Circulars 2,972 and 3,046); and
– To analyze and follow the evolution of the markets, involving operations, quotations and liquidity of assets, including pricing methods and evaluation of structured operations and derivatives, in addition to calculation systems of volatilities and correlations.
Concerning Resolution 3,464 of the National Monetary Council, which provides for the implementation of the market risk management structure, Banco Bradesco is aligned with the resolutions issued by the Central Bank, especially regarding policies, strategies and systems for risk management, as well as the realization of stress tests.
| Market Risk Analysis |
The Organization adopts a conservative policy regarding market risk exposure, with VaR (Value at Risk) limits defined by specific Committees and validated by the Board of Executive Officers, and compliance therewith is daily monitored by an area that is independent to the manager of positions. The methodology used to determine VaR has a reliability level of 97.5% and time horizon of 1 day, with volatilities and correlations used by the models calculated on a statistical basis and adjusted, when necessary, to facts not yet captured by the data used in the models and the sensibility of the participants of the work.
The 1st quarter of 2008 was characterized by the high volatility level in international financial markets, a fact that has been observed since the end of 3Q07. The maintenance of this volatility level was a result of the ongoing problems in the US loan market, which have significantly affected financial institutions in the US and other countries. As a consequence, central banks of the main economies continued their joint action to provide higher liquidity to the financial systems affected and, thus, contain the deterioration of the growth prospects of their economies, mainly for the significant action of the Federal Reserve, both in the liquidity provision and in the reduction of the basic interest rate (three reductions in the quarter, from 4.25% to 2.25%) .
Additionally, the disclosure by some institutions of the accounting write-off expected for the quarter and the acquisition operation of a US investment bank with the direct involvement of the Federal Reserve minimized the possibility of systemic risk, indicating the path that this Central Bank should follow. These actions contributed to soften problems faced by the markets, but they were not enough to remove them definitively, since the risk of a stronger downturn of the North American economy remains.
In the domestic scenario, the main innovation was the change in the expectations regarding the path of the monetary policy, and now an increase in interest during this year is expected, due to the expectations of a possible increase in inflation. The permanence of a high growth level of the internal activity and the strong pressures of commodities and other products in wholesale were added to the signaling of a preventive operation by the Central Bank, resulting in the increase of the interest curve.
Despite the maintenance of the high volatility level, the Global VaR decreased in the period due to the reduction of the financial exposure in prefixed risk factors and IPCA coupon.
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| Risk Factors | R$ thousand | |||||||||||||||||
| 2006 | 2007 | 2008 | ||||||||||||||||
| March | June | September | December | March | June | September | December | March | ||||||||||
| Pre-fixed | 4,527 | 15,114 | 13,402 | 6,729 | 13,343 | 26,083 | 100,199 | 47,509 | 9,474 | |||||||||
| IGP-M | 12,038 | 10,343 | 7,401 | 5,865 | 4,177 | 14,451 | 15,176 | 13,042 | 6,025 | |||||||||
| IPCA | 40,900 | 40,855 | 45,753 | 17,108 | 37,787 | 59,679 | 171,366 | 93,481 | 40,483 | |||||||||
| TR | 7,223 | 6,164 | 4,036 | 2,292 | 6,110 | 4,550 | 10,094 | 14,973 | 12,178 | |||||||||
| Domestic Exchange Coupon | 3,410 | 8,609 | 745 | 2,714 | 467 | 930 | 686 | 2,972 | 4,318 | |||||||||
| Foreign Currency | 8,331 | 851 | 5,734 | 3,154 | 420 | 5,107 | 6,182 | 969 | 1,975 | |||||||||
| Variable income | 2,053 | 2,935 | 1,198 | 1,552 | 2,743 | 967 | 1,450 | 5,527 | 2,823 | |||||||||
| Sovereign/Eurobonds and Treasuries | 32,251 | 41,098 | 16,998 | 9,420 | 20,861 | 17,493 | 38,229 | 39,444 | 50,946 | |||||||||
| Other | 3,413 | 1,002 | 250 | 73 | 70 | 5,328 | 9,134 | 9,329 | 8,585 | |||||||||
| Correlation/Diversification Effect | (50,799) | (41,206) | (18,765) | (15,976) | (18,005) | (68,877) | (209,561) | (118,306) | (48,984) | |||||||||
| VaR | 63,347 | 85,765 | 76,752 | 32,931 | 67,973 | 65,711 | 142,955 | 108,940 | 87,823 | |||||||||
| Average VaR in the Quarter | 60,495 | 71,419 | 75,632 | 62,887 | 55,083 | 75,392 | 113,938 | 116,904 | 81,944 | |||||||||
| Minimum VaR in the Quarter | 44,856 | 37,556 | 52,850 | 32,931 | 33,700 | 52,317 | 42,385 | 81,539 | 47,233 | |||||||||
| Maximum VaR in the Quarter | 74,138 | 100,305 | 107,750 | 82,635 | 78,357 | 109,539 | 175,989 | 139,561 | 105,812 | |||||||||
N.B.: Investments abroad protected by hedge operations are not considered in the VaR calculation, since these are strategically managed differently, with amounts taking into account the tax effects, which minimize the sensitivity to risks and corresponding impacts on results, as well as foreign securities positions, which are funding-matched.
The methodology applied and current statistical models are validated on a daily basis using backtesting techniques. The backtesting compares the daily VaR calculated with the result obtained with these positions (excluding result with intraday positions, brokerage rates and commissions). The main purpose of the backtesting is to monitor, validate and evaluate the adherence to the VaR model, and the number of disruptions must be in accordance with the reliability interval previously established in the modeling. The following chart shows the daily VaR and the corresponding result of the last 12 months, in which the adverse results exceed VaR only twice, that is, the number of disruptions is within the limit defined by the reliability level of the model adopted, showing its efficiency.
| Backtesting – Global VaR |
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With the purpose of estimating the possible loss not included in VaR, Banco Bradesco daily evaluates the possible effects on the positions of stress scenarios. Stress Analysis is a tool that tries to quantify the negative impact of shocks and economic events financially unfavorable to the positions of the institution. Thus, crisis scenarios are determined for risk factors in which the Trading portfolio has a position. Thus, considering the diversification effect among risk factors, the possibility of the average estimated loss in a stress situation would be R$222 million in the 1st quarter of 2008, and the maximum estimated loss would be R$378 million. In the quarter analyzed, the positions which would contribute the most, in terms of risk in a stress situation, were related to the short/medium term Brazilian sovereign risk securities and IPCA coupon.
| Trading Portfolio Stress Analysis | R$ thousand | |||||||||||||
| Without Diversification Effect | With Diversification | |||||||||||||
| 2007 | 2008 | 2007 | 2008 | |||||||||||
| March | June | September | December | March | December | March | ||||||||
| Stress Analysis – Trading Portfolio | 463,991 | 623,524 | 889,505 | 626,632 | 275,693 | 403,230 | 81,108 | |||||||
| Average in the Quarter | 434,631 | 580,716 | 667,328 | 817,837 | 461,661 | 473,525 | 221,587 | |||||||
| Minimum in the Quarter | 284,863 | 340,138 | 473,897 | 626,632 | 232,787 | 371,634 | 81,108 | |||||||
| Maximum in the Quarter | 616,011 | 864,533 | 934,854 | 983,025 | 626,992 | 578,315 | 378,245 | |||||||
Besides the follow-up and control of VaR and stress analysis, the Sensitivity Analysis is made daily, which measures the effect on the portfolio of the movement of the market curves and prices.
| Liquidity Risk Management |
The liquidity risk management is made by the Department of Operational Control and is designed to control the different mismatched settlement terms of the Institution's rights and obligations, as well as the liquidity of the financial instruments used to manage the financial positions. Knowledge and monitoring of this risk are critical since they enable the Organization to settle transactions on a timely and secure manner.
| Liquidity Risk Control |
The Bradesco Conglomerate has a Liquidity Policy approved within the scope of the Executive Treasury Committee. The positions are consolidated and distributed daily – some are updated in real time – to the Risk Management and Compliance Committee, the Treasury Department and Board of Executive Officers. In this policy, the minimum liquidity levels that the Organization intends to maintain are defined, as well as the liquidity management instruments in a normal scenario and a crisis scenario. The policy and controls established fully comply with Resolution 2,804 of the National Monetary Council.
The several reports cover historical information, which allow the Organization to assess the behavior and level of liquidity maintained, as well as simulations for the period of at least one year. The simulations are made with Budget and information of scenarios produced by the Department of Research and Economic Studies.
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| Management of Internal Controls and Compliance |
We are continually developing policies, systems and internal controls to mitigate possible potential losses generated by our risk exposure and strengthen the processes and procedures focused on Corporate Governance. We have also adopted additional methodologies and criteria for identifying, measuring, monitoring risks and respective controls. The network of dedicated staff and the investments in technology and in personnel training and recycling, together, allow us to assert that Bradesco Organization’s internal control and compliance management is effective and is in line with international standards, so as to comply with the requirements set forth by national and international regulatory agencies. The Internal Control Area is one of the units of the Risk Management and Compliance Department, and is responsible for preparing and disclosing instructions of technical nature, criteria and procedures related to internal controls and compliance providing periodical status reports to the Internal Controls and Compliance and Audit Committees and to the Board of Directors.
The Internal Controls and Compliance Committee, each half year, issues an opinion on the effectiveness of the Internal Controls System maintained in the Organization and submits it to the approval of the Board of Directors, at a specific meeting about the subject, with the following attributions:
a) to evaluate if the recommendations of improvements in the internal controls were duly implemented by the managers;
b) to certify the conformity of procedures with rules, regulations and applicable laws; and
c) to appreciate the reports issued by the Regulatory Bodies and Internal and External Audits concerning the deficiencies of internal controls and respective measures of the areas involved.
Among the main items focused on internal control and compliance management, we highlight:
– the internal control structure has as basis the control component and objectives included in the methodology of the Sponsoring Organizations Committee – COSO for business areas and on the framework of Control Objectives for Information and Related Technology – Cobit, for the Information Technology environments, and adheres to the 13 Basel Internal Control Principles and to the requirements of the Brazilian Central Bank. That structure strengthens the ongoing improvement of the process used to identify and assess controls and mitigate risks.
– the Compliance Agents responsible for executing the activities for identification, classification, assessment and monitoring of risks and controls, as well as for performing adherence tests and preparing and implementing action plans, according to models defined by the Internal Control Area.
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– the Brazilian Payment System (SPB) Management, whose main activity is to monitor the delivery of all messages of SPB sent to and/or received by the Banks of the Organization and other participating entities. This activity is supported by an infrastructure of monitoring tools of the Organization’s information systems combined with continuous training and professional qualification with a view to ensuring full operationality and availability of funds. The said infrastructure has a Business Continuity Plan (BCP) to SPB, which is documented in a specific tool and with corporate access covering all possible risk scenarios, alternative operating website, human and technological resources and predefined actions enabling the reduction of the impact that an operating unavailability, for any reason, may cause in business processes. In order to ensure the effectiveness of BCP-SPB, tests and simulations defined in an annual calendar are carried out. After each test evidences are generated, with improvement actions whenever the case may be, and results are published in our Intranet. Aiming at the clients’ protection against fraud and errors, the messages about financial transferences generated through SPB of the Organization’s Banks, are monitored online by means of an intelligent system called TED (Available Electronic Transference) Legitimation, with a view to hinder improper money outflow and, accordingly, to ensure more security and reliability to the transactions.
– the Organization maintains specific policies, processes and systems to prevent the utilization of its structure, products and services for money “laundering”, illegal businesses, connected to corruption or, also, to the financing of terrorism. Significant investments are made in the training of its employees, with programs in several formats such as videos, e-learning and presence courses, including specific courses for areas in which the activities require them. A multidepartment commission evaluates the pertinence of the submission of the suspicious or atypical cases identified to the proper authorities, whether the operation has been carried out or not. The Executive Committee of Prevention and Fight against Money “Laundering” and Financing to Terrorism meets on a quarterly basis to evaluate the progress of the work and the need to adopt new measures with the intention to align the Organization’s Program of Prevention and Fight against Money “Laundering” and Financing to Terrorism to the rules from the regulatory bodies and to the best international practices.
– Information Security basically comprises a set of controls, including policies, processes, organizational structures and security rules and procedures. It aims at protecting clients’ and the Organization’s information, in the confidentiality, integrity and availability aspects.
Bradesco Organization created the Corporate Policy on Information Security, whose guidelines are made available on our website, and maintains a formal infrastructure, whose purpose is to promote the corporate management of Information Security, and thus providing effective protection to Information Assets. The Corporate Policy on Information Security includes Privacy Guidelines, voluntarily set forth by Bradesco Organization, aiming at protecting the privacy of its clients’ data. This reflects the values of the Organization and reassures its commitment to the continuous improvement of Data Protection process efficiency.
A Business Continuity Plan – BCP was also set forth by Bradesco Organization, in which actions to be taken are standardized, in order to, in crisis periods, make effective the recovery and continuity of business crucial process, avoiding or minimizing financial losses for the Organization and its clients.
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In order to maintain total compliance to these procedures, constant training and awareness programs, as well as reviews of the policies, are carried out.
In this context, Bradesco Organization obtained in June 2007, according to Form 20-F filed with the SEC – U.S. Securities and Exchange Commission, the certification of its internal controls, audited by PricewaterhouseCoopers, focused on the preparation of the financial statements related to the fiscal year ended on December 31, 2006, in accordance with the requirement in Section 404 of U.S. Sarbanes-Oxley Act of 2002.
| Continuous Improvement |
| Operational Risk Management |
Under the corporate scope, Bradesco Organization defines operational risk as the risk of loss resulting from inadequate or faulty internal processes, people and systems and from external events which may or may not cause the interruption of businesses.
| Operational Risk Control |
The operational risk management is based on the preparation and implementation of methodologies and tools that standardize the format of collection and treatment of the loss historical data and is in accordance with the best practices of operational risk management. The works related to operational risk are in line with the best market practices, as well a the new corporate platform, which is under validation process. This new corporate system, called Operational Risk and Internal Control System (ROCI), has the advantage of integrating in a single data base Operational Risk and Internal Controls information and will also meet the requirements established in Section 404 of Sarbanes-Oxley Act.
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This new systemic outline via the web will increment the Organization’s Operational Risk Management, as it improves the activities of capture, identification, measurement, monitoring and report, by means of a unified platform, providing the necessary qualitative support given by the Internal Control Areas to analyses made by the Operational Risk Area. It also allows to meet the guidance in the New Capital Basel Accord, the schedule established by the Brazilian Central Bank, by means of the Notice 12,746, issued in December 2004 (and substituted by Notice 16,137/07) and the requirements in Resolution 3,380 of Bacen which provides for the implementation of the operational risk management structure in financial institutions.
The historical data base of Operational Risk completed 4 years of storage at the end of 2007 and is in compliance with the minimum provided for according to paragraph 672 of Basel II for application of the advanced methodology. The data for preparation of the model calculation are obtained by means of accounting accounts opened exclusively for registration of losses resulting from Operational Risk events. From this information internally obtained we made the calculations related to the advanced method of capital allocation separated by company which comprises the financial consolidated.
The centralized operational risk management meets all activities of the Organization, including the ones of the Grupo Bradesco de Seguros e Previdência. As a result of this strategy, it was possible to obtain synergy and rationalization of resources, for the convergence of implementation of concepts of Basel II and Solvability II, unifying the criteria within Bradesco Organization, in conformity with Resolution 3,380 in what concerns the financial economic consolidated statement.
| Approaches and Implementation of Basel II |
For purposes of operational risk management and respective capital allocation, the recommendations in the New Capital Accord - Basel II and concepts required by the Brazilian Central Bank by means of Impact Studies carried out in 2005 and 2006, comprise the following approaches:
– BIA – Basic Indicator Approach: application of a single percentage on the gross result for the last 36 months.
– STA – Standardized Approach: application of distinct percentages on gross result for the last 36 months segregated by business lines.
– ASA – Alternative Standardized Approach: application of a fixed percentage (M factor) on the average of credit assets (Business Lines: Retail and Commercial Bank) and distinct percentages on the gross result segregated by other business lines.
– ASA 2 – Aggregated Alternative: guided by the Brazilian Central Bank, it differs from ASA –Alternative Standardized Approach as to the segregation of the business lines.
– AMA - Advanced Measurement Approach: the focus on losses resulting from operational risk events by means of the construction of proprietary models for purposes of management and capital allocation.
To the advanced approach (AMA), which is the purpose of the Organization, we use the Loss Distribution Approach methodology (LDA), which comprises the estimate of distribution of severity (loss amount) and frequency (number of events) for each Business Line and Loss Event. In order to model the severity, we use statistic distributions, from which we point out the exponential, gamma, weibull and lognormal. For the modeling of the frequency distribution, we use distributions of poisson, geometric and negative binomial.
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Using the simulation methodology of Monte Carlo the Organization carries out the simulation of distributions of severity and its frequency. Thus, it is possible to determine the distribution of aggregated loss that reflects the estimate of Expected Loss (EL) and exposure to risk in the horizon of certain period of time (monthly, quarterly, annually etc.), considering the businesses and controls environment existing at the time of the calculations. In the simulation methodology of aggregated losses, the possibility of using the correlation between events of loss or business lines was included, allowing a more accurate determination of the capital related to the exposure of Operational Risk. Key indicators of risk, controls and analysis of scenarios are used to estimate loss models considering changes in businesses and controls environments.
We constantly try to update this information with the departments and affiliated companies of the Organization, with the purpose of carrying out the calibration of the models and studies internally practiced.
We consider the exposure to the Operational Risk, that is, the capital to be allocated, as the Unexpected Loss (UL), which is represented by the difference obtained between the Expected Loss (EL) and the VaR (Value at Risk) measure with 99.9% of reliability, which will be reflected on future capital allocations by the advanced method. Additionally, we calculated the TVaR (Tail Value at Risk) measure, which is the expected loss value in case this is higher than the VaR with 99.9% of reliability. Below there are the classifications of losses arising from the operational risk:
| Aggregated Loss Value |
We are analyzing whether it is feasible for us to participate in the world consortium of database of losses for financial intuitions, called ORX (Operational Riskdata eXchange Association) to use information made available with the intention of assisting in the calculations of analyses of scenarios and comparisons of the positioning of Bradesco concerning large global players in relation to loss events.
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| Operational Risk Analysis |
The Brazilian Central Bank required in September/ 2007 to 12 financial institutions the participation in an impact study of operational losses recorded, called LDCE (Loss Data Collection Exercise). The reference date required was June 2007 and applied to the financial consolidated. The recovery concept accepted in the calculation of the exposure to the risk would be only that coming from insurance.
We participated in this study and sent the data establishing a cut line of one thousand reais for events registered in Banco Bradesco and cut line exemption for those belonging to related financial companies. However, there are events registered in the Bank that were fully reported inclusively below the cut line as we have managerial information that supports registrations, such as: losses in credit and debit cards, civil and labor indemnifications, maintenance etc. For this study effect, we neither used an external loss data base, nor any key indexes of risk, scenarios or changes in the Organization’s control environment.
Below we show a comparative table between the methods determined of capital allocation and the analyses of frequency and severity by events of loss and business lines updated until the reference date of December 2007.
| Representativeness in Relation to the Basic Method (BIA) – Reference date: December 2007 |
| Approach (1) | ||||||||
| Business Line | BIA | ASA | ASA2 | AMA (VaR) | ||||
| – Corporate Finance | 100.0% | 0.6% | – | <0.1% | ||||
| – Negotiation and Sales | 100.0% | 14.6% | – | 0.5% | ||||
| – Retail Bank | 100.0% | 6.9% | – | 20.3% | ||||
| – Commercial Bank | 100.0% | 7.7% | – | 0.4% | ||||
| – Payment and Settlement | 100.0% | 6.9% | – | 1.9% | ||||
| – Centralized Services | 100.0% | 1.0% | – | 1.0% | ||||
| – Asset Management | 100.0% | 2.3% | – | 0.2% | ||||
| – Retail Brokerage | 100.0% | 0.0% | – | <0.1% | ||||
| – Aggregate LOB (2) | – | – | 26.8% | – | ||||
| – Retail and Commercial Bank (3) | – | – | 16.4% | – | ||||
| – Corporate (4) | – | – | – | 5.4% | ||||
| Total | 100.0% | 40.0% | 43.2% | 29.7% | ||||
(1) Calculated by the Brazilian Central Bank criterion, Financial Conglomerate (Cadoc 4040);
(2) and (3) Business line used for the Aggregate Alternative Standard Method (ASA2); and
(4) Business line used for the Advanced Method (AMA).
For a better understanding of the following tables, initially we present the definitions of the 8 categories of loss events and 9 business lines composing the matrix 8 x 9 adopted in our internal model of behavior analyses of operational losses.
| Loss Events |
1. External Fraud - fraudulent actions practiced by clients or third parties.
2. Internal Fraud - fraudulent actions practiced by an employee of the Organization or with his/her indirect participation.
3. Human Resources - practices related to the management of human resources, labor demands, security and occupational medicine.
4. Commercial Relations - improper commercial practices used in the trading of products and services to clients or in the relationship with third parties, suppliers, service providers etc.
5. External Events - damages to premises and equipment and to persons which result or not in the total or partial interruption of the Organization’s activities.
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6. Information Technology – failures in equipment, systems and/or technological infrastructure which result or not in the total or partial interruption of the activities.
7. Processes – deficiencies in the drawing of products and services or in the execution of the operational and control activities.
8. Regulatory – legal modifications established by governmental authorities that interfere in the private relations and change rights and obligations legally contracted.
| Business Lines: |
1. Corporate Finance – businesses focused on mergers, acquisitions and incorporations of companies, as well as structuring of financial and investment operations, comprising national or foreign funds.
2. Negotiation and Sales – domestic and foreign treasury operations.
3. Retail Bank – banking operations related to active and passive products and mass services for the large public.
4. Commercial Bank – operations that provide funds for short and medium-term loans and financings for commerce, industry and companies that provide services.
5. Payments and Settlements –services related to payments and collections, transfers of funds, compensation and settlement of client orders.
6. Centralized Services – front office services provided in outlets made available to clients, whose Back office activities are processed in a centralized manner in back-office units, comprising revenues ascertained with custody of securities, letters of credit, guarantees, sureties, etc.
7. Fund Management – services related to the management of funds and third-party resources, whose management is separated from those pertaining to the own portfolio.
8. Retail Brokerage –provision of services related to the intermediation of securities, comprising operations carried out on the stock exchange, of mercantile and futures.
9. Corporate – it is about values not liable of registration in any business line suggested by Basel II. They represent events that are not necessarily connected to products and/or services provided by the Organization.
| Percentage of Quantity of Loss by Business Line and Loss Event |
| Internal Fraud | External Fraud | Human Resources |
Commercial Relations |
External Events |
Information Technology |
Processes | Regulatory | Overall Total | ||||||||||
| Corporate Finance | 0.0% | <0.1% | 0.0% | <0.1% | 0.0% | 0.0% | <0.1% | 0.0% | <0.1% | |||||||||
| Negotiation and Sales | 0.0% | 0.0% | <0.1% | <0.1% | 0.0% | <0.1% | 0.4% | 0.0% | 0.4% | |||||||||
| Retail Bank | 0.3% | 66.3% | 2.2% | 1.8% | 4.2% | 0.5% | 12.0% | 3.7% | 90.9% | |||||||||
| Commercial Bank | <0.1% | 0.1% | <0.1% | <0.1% | <0.1% | <0.1% | 0.1% | 0.0% | 0.3% | |||||||||
| Payment and Settlement | <0.1% | 3.5% | 0.0% | <0.1% | <0.1% | <0.1% | 1.3% | <0.1% | 4.8% | |||||||||
| Centralized Services | <0.1% | 0.6% | <0.1% | <0.1% | <0.1% | <0.1% | 0.1% | 0.0% | 0.7% | |||||||||
| Asset Management | <0.1% | <0.1% | <0.1% | <0.1% | <0.1% | <0.1% | <0.1% | <0.1% | <0.1% | |||||||||
| Retail Brokerage | 0.0% | <0.1% | 0.0% | 0.0% | 0.0% | <0.1% | <0.1% | 0.0% | 0.1% | |||||||||
| Corporate | <0.1% | 0.1% | 1.2% | <0.1% | 0.1% | 0.3% | 0.9% | <0.1% | 2.7% | |||||||||
| Overall Total | 0.4% | 70.5% | 3.5% | 1.9% | 4.2% | 0.9% | 14.9% | 3.7% | 100.0% | |||||||||
Period: January/2005 to December/2007
| 0% – 1% | 1% – 5% | 5% – 10% | > 10% |
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| Internal Fraud |
External Fraud |
Human Resources |
Commercial Relations |
External Events |
Information Technology |
Processes | Regulatory | Overall Total | ||||||||||
| Corporate Finance | 0.0% | <0.1% | 0.0% | <0.1% | 0.0% | 0.0% | <0.1% | 0.0% | <0.1% | |||||||||
| Negotiation and Sales | 0.0% | 0.0% | <0.1% | <0.1% | 0.0% | <0.1% | 0.2% | 0.0% | 0.2% | |||||||||
| Retail Bank | 0.7% | 24.5% | 31.0% | 1.7% | 0.9% | 0.3% | 9.3% | 4.8% | 73.3% | |||||||||
| Commercial Bank | <0.1% | 0.1% | 0.3% | <0.1% | <0.1% | 0.1% | 0.2% | 0.0% | 0.7% | |||||||||
| Payment and Settlement | 0.1% | 3.2% | 0.0% | <0.1% | <0.1% | <0.1% | 1.6% | <0.1% | 4.9% | |||||||||
| Centralized Services | 0.2% | 2.5% | <0.1% | <0.1% | <0.1% | <0.1% | 0.1% | 0.0% | 2.9% | |||||||||
| Asset Management | <0.1% | <0.1% | <0.1% | <0.1% | <0.1% | <0.1% | <0.1% | <0.1% | 0.1% | |||||||||
| Retail Brokerage | 0.0% | <0.1% | 0.0% | 0.0% | 0.0% | <0.1% | <0.1% | 0.0% | <0.1% | |||||||||
| Corporate | <0.1% | 0.2% | 16.1% | 0.2% | 0.1% | 0.4% | 1.0% | <0.1% | 18.0% | |||||||||
| Overall Total | 1.1% | 30.5% | 47.3% | 1.9% | 1.0% | 0.8% | 12.6% | 4.8% | 100.0% | |||||||||
Period: January/2005 to December/2007
| 0% – 1% | 1% – 5% | 5% – 10% | > 10% |
| Distribution of the Percentage of Effective Loss of Loss Events (January/2005 to December/2007) |
For the standardized methods of Operational Risk, we made calculations by company that comprises the financial consolidated. Below we show the results obtained by the Basic Indicator Approach (BIA), the Alternative Standardized Approach (ASA), and the one called Aggregated Alternative Approach, provided for in the New Capital Accord. We emphasize that the Alternative Standardized method requires a lower capital allocation when compared to the other ones.
| Participation among Approaches in the Calculation of Capital Allocation for Operational Risk (*) |
| Approach | March (in percentage) | |||
| 2008 | 2007 | |||
| Basic Indicator (BIA) | 100.0 | 100.0 | ||
| Alternative Standardized (ASA) | 40.0 | 44.1 | ||
| Corporate Finance | 0.6 | 0.4 | ||
| Negotiation and Sales | 13.8 | 17.1 | ||
| Retail Bank | 6.8 | 6.9 | ||
| Commercial Bank | 8.1 | 8.7 | ||
| Payment and Settlement | 7.3 | 7.6 | ||
| Centralized Services | 1.0 | 0.9 | ||
| Asset Management | 2.4 | 2.5 | ||
| Retail Brokerage | 0.0 | 0.0 | ||
| Alternative Standardized 2 (ASA 2) | 43.1 | 47.3 | ||
| Aggregated LNs | 26.5 | 30.0 | ||
| Retail and Commercial Bank | 16.6 | 17.3 | ||
(*) Calculated according to the Brazilian Central Bank criterion, as per Financial Consolidated
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| Capital Management |
The Organization's capital management tries to optimize the risk to return ratio, in such a way to minimize losses through the well-defined business strategies and maximizing efficiency in the combination of factors impacting on the Capital Adequacy Ratio (Basel).
| Capital Adequacy Ratio (Basel) in March 2008 – R$ million |
Calculation Statement
| Calculation Basis | Financial | Total | ||
| Consolidated(1) | Consolidated (2) | |||
| Shareholders' Equity | 32,909 | 32,909 | ||
| Decrease in Tax Credits pursuant to Bacen Resolution 3,059 | (102) | (102) | ||
| Decrease in deferred assets pursuant to Bacen Resolution 3,444 | (267) | (354) | ||
| Decrease in gains/losses of adjustments to market value in DPV and derivatives | ||||
| pursuant to Bacen Resolution 3,444 | 233 | 233 | ||
| Minority Interest/Other | 179 | 159 | ||
| Reference Shareholders’ Equity Level I | 32,952 | 32,845 | ||
| Gains/losses sum of adjustments to market value in DPV and derivatives | ||||
| pursuant to Bacen Resolution 3,444 | (233) | (233) | ||
| Subordinated Debts/Other | 11,357 | 11,269 | ||
| Reference Shareholders’ Equity Level II | 11,124 | 11,036 | ||
| Total Reference Shareholders’ Equity (Level I + Level II) | 44,076 | 43,881 | ||
| Deduction of Instruments for Funding pursuant to Bacen Resolution 3,444 | (42) | (473) | ||
| Reference Shareholders’ Equity | 44,034 | 43,408 | ||
| Risk-Weighted Assets | 283,207 | 311,838 | ||
| Capital Adequacy Ratio (%) | 15.55 | 13.92 | ||
| • Level I | 11.63 | 10.53 | ||
| • Level II | 3.93 | 3.54 | ||
| • Deduction – Instruments for Funding | (0.01) | (0.15) | ||
| Ratio Variation (in percentage) | ||||
| Ratio in March 2007 | 17.76 | 15.74 | ||
| Movement in the Reference Shareholders’ Equity: | 4.28 | 3.49 | ||
| • Net Income for the Period | 4.21 | 3.73 | ||
| • Interest on Own Capital/Dividends | (1.48) | (1.32) | ||
| • Adjustment to Market Value – TVM and Derivatives | (0.25) | (0.22) | ||
| • Capital Increase through Subscription, Share Merger and Goodwill | 1.00 | 0.88 | ||
| • Subordinated Debt | 0.86 | 0.76 | ||
| • Instruments for Funding | (0.02) | (0.20) | ||
| • Other | (0.04) | (0.14) | ||
| Movement in Weighted Assets: | (6.49) | (5.31) | ||
| • Securities | (0.08) | (0.49) | ||
| • Loan Operations | (2.37) | (1.78) | ||
| • Tax Credit | (0.30) | (0.28) | ||
| • Risk (Swap, Market, Interest Rate and Foreign Exchange) | (1.57) | (1.27) | ||
| • Memorandum Accounts | (0.62) | (0.48) | ||
| • Other Assets | (1.55) | (1.01) | ||
| Ratio in March 2008 (3) | 15.55 | 13.92 | ||
| (1) |
Financial companies only. |
| (2) |
Financial and non-financial companies. |
| (3) |
Article 9 of Circular 3,367 of Bacen provides for the option for the exclusion prerogative, for purposes of determination of the Capital Adequacy Ratio, of the short position in foreign currency, including computing the tax effects, carried out with
the purpose of providing hedge for the interest in investments abroad. Should we choose this prerogative, the Capital Adequacy Ratio on March 31, 2008 would be 18.98% in the Financial Consolidated and 16.65% in the Total Consolidated. |
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| Cards |
| 2006 | 2007 | 2008 | ||||||
| 4th Qtr. | 1st Qtr. | 4th Qtr. | 1st Qtr. | |||||
| Cards Base – in thousands | 57,942 | 60,254 | 70,469 | 72,971 | ||||
| Credit | 12,980 | 13,924 | 17,543 | 18,423 | ||||
| Debit | 40,076 | 40,543 | 43,200 | 44,412 | ||||
| Private Label | 4,886 | 5,787 | 9,726 | 10,136 | ||||
| Revenue – R$ million | 12,328 | 11,825 | 15,591 | 14,861 | ||||
| Credit | 7,492 | 7,232 | 9,321 | 9,169 | ||||
| Debit | 4,241 | 3,810 | 5,044 | 4,611 | ||||
| Private Label | 595 | 783 | 1,226 | 1,081 | ||||
| Number of Transactions – in thousands | 181,707 | 177,911 | 228,601 | 222,322 | ||||
| Credit | 86,643 | 86,447 | 111,582 | 112,278 | ||||
| Debit | 88,102 | 81,323 | 100,875 | 94,782 | ||||
| Private Label | 6,962 | 10,141 | 16,144 | 15,262 | ||||
| Credit Cards |
By making available to its clients the most complete line of Credit Cards in the country, Bradesco has been increasing its share in the segment. It provides Visa, American Express, MasterCard and Private Label credit cards, which stand out for the range of benefits and convenience offered to its associates.
With the purpose of protecting more and reducing the fraud incidence, Bradesco started the expansion process of the chip credit card base of the Visa banner for the International, Gold and Platinum modalities of individual clients of the retail and prime segments.
In March 2008, Bradesco increased by 32.3% its Credit Card base compared to March 2007. The number of transactions in 1Q08 climbed 29.9% in relation to the same period of the previous year.
The revenue for the 1st quarter of 2008 reached R$9.2 billion with a 26.8% increase compared to the 1st quarter of 2007.
In March, 2008, American Express card base reached a growth higher than 55% since the acceptance of the control of this operation in 2006.
| Credit Cards Base – thousand |
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| Credit Cards Revenue – R$ million |
| Debit Cards |
Bradesco closed March 2008 with 44.4 million Debit Cards, 9.5% higher than the base of March 2007. In 1Q08, the average number of transactions per Card grew 6.4% compared to the same quarter of the previous year. The total number of transactions made by Debit Card in 1Q08 was 94.8 million, a 16.6% growth compared to 1Q07.
In terms of revenue, there was an increase of 21.0% over 1Q07. The financial volume reached R$4.6 billion in 1Q08.
| Debit Cards Base – thousand |
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| Debit Cards Revenue – R$ million |
| Private Label Cards |
In this market, Bradesco operates in the issuance of cards by means of agreements with retail stores that operate in the segments of electrical appliances, supermarkets, department stores, clothing, drugstore and cosmetics. Agreements with the stores Casas Bahia, Comper, Carone, Dois Irmãos, G. Barbosa, Coop, LeaderCard, Esplanada (Grupo Deib Otoch), Luigi Bertolli, Panvel, Drogasil and O Boticário can be highlighted. The agreements are one way to appreciate and make their clients loyal, making available the access to bank products and services.
In 1Q08, revenue added up to R$1,081 million, with 15.2 million transactions, closing the period with 10.1 million cards in the base, figures substantially higher than the ones recorded in the same period of 2007: revenue added up to R$783 million, with 10.1 million transaction and 5.8 million cards in the base.
| Meal and Food Cards |
In partnership with other issuers and Visa International, Bradesco constituted Visa Vale and actively participates in the distribution of its cards.
The value proposal for this business, in addition to reducing the operational cost, increases the efficiency of means of payment with 100% of the electronic transactions, and offers higher security and convenience for companies and employees.
In 1Q08, Bradesco contributed with a base of 1.6 million Visa Vale Cards, representing a growth of 29.9% compared to 1Q07. Revenue in 1Q08 amounted to R$582.8 million, a growth of 25.2% compared to 1Q07.
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| Revenue from Cards |
Card services revenue reached, in 1Q08, R$677.3 million, with a growth of 21.5% compared to 1Q07, due to the outstanding performance mainly in revenues on purchases and services.
The revenues coming from financing had a 57.5% increase compared to 1Q07, reaching R$744.4 million.
In March 2008, Bradesco sold its stake in the capital stock of Visa Inc., in the process regarding the Initial Public Offering (IPO) held in the United States of America, reaching a profit, before taxes, in the amount of R$352 million.
| Credit Card Assets |
In 1Q08, Credit Card assets, which include financings to the bearer, advances to establishments and credits for cash purchases or by installments, increased by 38.5% compared to the same period in 2007, ending the quarter with R$12.7 billion.
| Assets Generated by the Credit Card Business – R$ million |
| Social-environmental Responsibility |
Since 1993, Bradesco Cartões promotes social-environmental and humanitarian actions, transferring to philanthropic entities part of the annual fees of cards. It is worth to point out the issuance of SOS Mata Atlântica, AACD, APAE and Casas André Luiz cards. At the end of 2007, they entered into an agreement with Fundação Amazonas Sustentável.
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| International Area |
The International Area presents the following framework:
| 10 Units Abroad (Branches and Subsidiaries) | |
| Branches: | |
| New York | – Bradesco |
| Grand Cayman | – Bradesco (2) and BMC |
| Nassau | – Bradesco |
| Subsidiaries: | |
| Buenos Aires | – Banco Bradesco Argentina S.A. |
| Luxembourg | – Banco Bradesco Luxembourg S.A. |
| Tokyo | – Bradesco Services Co., Ltd. |
| Grand Cayman | – Cidade Capital Markets Ltd. |
| Hong Kong | – Bradesco Trade Service Ltd. |
12 Operating Units in Brazil and 13 Exchange Platforms
Belo Horizonte, Blumenau, Campinas, Curitiba, Fortaleza, Manaus, Porto Alegre, Recife, Rio de Janeiro, Salvador, São Paulo and Vitória. There are also 13 exchange platforms located in ABC, Belém, Caxias do Sul, Franca, Goiânia, Guarulhos, Joinville, Jundiaí, Londrina, Novo Hamburgo, Ribeirão Preto, Santos and Sorocaba.
It is worth to point out that in the other regions of the country, the International Area is represented by the business units and branches of the Corporate, Middle Market and Retail segments, regarding the business prospecting and opportunities with clients/ potential clients, reporting the operating unit or nearest exchange platform.
At the end of 1Q08, the numbers presented ratify once again the commitment of the Bradesco Organization, here represented by the International Area, supporting the expansion, strengthening and consolidation of the exchange market and Brazilian foreign trade.
| Export Market |
At the end of the first quarter of 2008, US$9.5 billion in agreements were entered into, which represents an increase of 6.7% on the US$8.9 billion entered into in the same period of 2007.
The market share increased from 19.8% in 1Q07 to 21.1% in the first three months of 2008.
| Financings to Brazilian Exports |
In the first quarter of 2008, the amount financed reached US$4.1 billion, a 41.4% surplus when compared to the US$2.9 billion financed during 1Q07. It is important to highlight that in these amounts the financings with funds from BNDES–EXIM are also considered, which totaled US$65.9 million in 1Q07 and US$225.9 million in 1Q08.
| Import Market |
It is worth pointing out the excellent performance obtained in 1Q08. The import exchange contracts added up to US$4.7 billion, increasing by 23.7%, when compared to the amount of US$3.8 billion of the same period of 2007.
The market share obtained in 1Q08 was 15.2% .
| Financings to Brazilian Imports |
It is also worth pointing out the increase of financings granted to Brazilian import companies in 1Q08. The total amount released of US$567.3 million in 2008 exceeds by 16.6% the total amount of US$486.5 million released in 1Q07.
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| Volume of Exchange Closing – US$ billion |
| Export Market |
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| Import Market |
At the end of 1Q08, the International Area showed, in its Asset Portfolio, the significant balance of US$13.8 billion, comprising in this amount the financings to export and import, international guarantees granted, including confirmed export letters of credit, loans to Brazilian companies headquartered abroad and committed lines.
When compared to the balance at the end of March 2007 of US$9.4 billion, the asset portfolio showed an increase in dollars of about 46.8% .
The following table shows the balances of the several products comprising the International Area Portfolio on the reference dates of 3.31.2007 and 3.31.2008:
| March 2007 | March 2008 | |||||||
| Foreign Trade Portfolio | US$ million | R$ million | US$ million | R$ million | ||||
| Export Financing | ||||||||
| Advance on Foreign Exchange Contracts – Undelivered Bills | 2,128 | 4,363 | 3,704 | 6,476 | ||||
| Advance on Foreign Exchange Contracts – Delivered Bills | 746 | 1,528 | 776 | 1,356 | ||||
| Export Prepayments | 2,393 | 4,906 | 3,031 | 5,302 | ||||
| Onlending of Funds Borrowed from BNDES – EXIM | 1,139 | 2,334 | 1,334 | 2,331 | ||||
| Exports Credit Note/Certificate – NCE/CCE | 197 | 404 | 1,285 | 2,247 | ||||
| Documentary Drafts and Bills of Exchange in Foreign Currency | 3 | 6 | 2 | 3 | ||||
| Indirect Exports | 8 | 17 | – | – | ||||
| Total Export Financing | 6,614 | 13,558 | 10,132 | 17,715 | ||||
| Import Financing | ||||||||
| Foreign Currency | 520 | 1,067 | 757 | 1,324 | ||||
| Imports Draft Discounted | 378 | 775 | 643 | 1,125 | ||||
| Open Import Credit | 120 | 245 | 154 | 270 | ||||
| Total Import Financing | 1,018 | 2,087 | 1,554 | 2,719 | ||||
| Collateral | ||||||||
| Foreign Collateral Provided | 546 | 1,119 | 615 | 1,075 | ||||
| Total Foreign Collateral Provided | 546 | 1,119 | 615 | 1,075 | ||||
| Total Foreign Trade Portfolio | 8,178 | 16,764 | 12,301 | 21,509 | ||||
| Loans via Branches Abroad | 507 | 1,039 | 906 | 1,585 | ||||
| Committed Lines | 676 | 1,385 | 569 | 995 | ||||
| Overall Total | 9,361 | 19,188 | 13,776 | 24,089 | ||||
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The funding necessary for the foreign trade financing is obtained from the international financial community, by means of credit lines granted by correspondent banks abroad. On 3.31.2008, approximately 105 banks, especially U.S., Asian and European banks, had extended credit lines to Bradesco.
During this first quarter, we recorded that, in addition to the traditional funding source of correspondent banks aimed totally at financing the Brazilian foreign trade, Bradesco Organization raised the amount of US$542.6 billion in the international capital markets. We point out the securitization operation MT100, with a 6-year term, in the amount of US$500.0, paid on 3.6.2008.
The amount raised is due to long and medium-term public and private placements. These funds were also allocated to the financing of the foreign trade and to working capital loan.
The following table lists the outstanding operations on the reference date March 2008:
| Foreign Public Issuances – Outstanding – Reference Date: March 2008 (Amounts exceeding US$50 million) |
| Issuances | Currency | Million | Date issued | Maturity | ||||
| Subordinated Debt | US$ | 150 | 12.17.2001 | 12.15.2011 | ||||
| Subordinated Debt (US$133.2 million) | Yen | 17,500 | 4.25.2002 | 4.17.2012 | ||||
| Subordinated Debt | US$ | 500 | 10.24.2003 | 10.24.2013 | ||||
| Subordinated Debt (US$275.9 million) | Euro | 225 | 4.15.2004 | 4.15.2014 | ||||
| FIRN | US$ | 125 | 12.11.2004 | 12.11.2014 | ||||
| FIRN | US$ | 100 | 8.8.2005 | 8.4.2015 | ||||
| FxRN – BRL (US$100.0 million) | R$ | 227 | 10.3.2005 | 1.4.2010 | ||||
| FxRN | US$ | 200 | 3.23.2007 | 4.1.2008 | ||||
| Securitization MT 100 – Series 2007-1 – Floating | US$ | 250 | 6.11.2007 | 5.20.2014 | ||||
| Securitization MT 100 – Series 2007-2 – Floating | US$ | 250 | 6.11.2007 | 5.20.2014 | ||||
| Securitization MT 100 – Series 2003-1 – Fixed (1) | US$ | 108 | 8.20.2003 | 8.20.2010 | ||||
| Securitization MT 100 – Series 2004-1 – Fixed (1) | US$ | 76 | 7.28.2004 | 8.20.2012 | ||||
| Securitization MT 100 – Series 2007- 3 – Floating | US$ | 200 | 12.20.2007 | 12.20.2014 | ||||
| Securitization MT 100 – Series 2007- 4 – Floating | US$ | 200 | 12.20.2007 | 12.20.2014 | ||||
| Securitization MT 100 – Series 2008- 1 – Floating | US$ | 500 | 3.6.2008 | 5.20.2014 | ||||
| Perpetual Securities (2) | US$ | 300 | 6.3.2005 | Perpetual | ||||
| Public Issuances | US$ | 3,503 | ||||||
| Private Issuances | US$ | 337 | ||||||
| Overall Total (equivalent in US$) | US$ | 3,840 |
(1) International Diversified Payment Rights Company.
(2) Perpetual Non-cumulative Junior Subordinated Securities.
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The main activity of the agencies and subsidiaries abroad is the support to financing of the Brazilian foreign trade, as well as funding from the international financial community and Brazilian companies with units abroad.
The main goal of the subsidiary Banco Bradesco Luxembourg S.A. is to provide additional services to private banking clients, as well as to increase foreign trade operations.
The following table shows the book balances of assets and shareholders’ equity of the units abroad on the reference dates of 3.31.2007 and 3.31.2008:
| Foreign Branches and Subsidiaries | US$ million | |||||||
| March 2007 | March 2008 | |||||||
| Total | Shareholders’ | Total | Shareholders’ | |||||
| Assets | Equity | Assets | Equity | |||||
| Bradesco New York | 1,276 | 162 | 1,636 | 172 | ||||
| Bradesco Grand Cayman | 10,597 | 3,849 | 10,275 | 3,825 | ||||
| Bradesco Grand Cayman – 2(1) | – | – | 420 | 420 | ||||
| BMC Grand Cayman | – | – | 48 | 44 | ||||
| Boavista Nassau (2) | 9 | 9 | – | – | ||||
| Bradesco Nassau (3) | – | – | 25 | 25 | ||||
| Cidade Capital Markets Ltd. – Grand Cayman | 34 | 34 | 36 | 36 | ||||
| Bradesco Services Co., Ltd. – Tokyo | 1 | 1 | 1 | 1 | ||||
| Banco Bradesco Argentina S.A. (4) | 20 | 17 | 38 | 31 | ||||
| Banco Bradesco Luxembourg S.A. | 511 | 145 | 529 | 154 | ||||
| Total | 12,448 | 4,217 | 13,008 | 4,708 | ||||
(1) Acquisition of Santander / Banespa Grand Cayman Branch on 11.1.2007. In January 2008, there was a US$300 million capital increase.
(2) Boa Vista Nassau – ended its activities on 12.31.2007. The capital of US$9 million was transferred to Bradesco Nassau.
(3) Bradesco Nassau – started its activities on 8.16.2007.
(4) There was a capital increase on 5.29.2007 in the amount of US$14 million.
| Cash Management Solutions |
Cash management solutions are structured by an area composed of experts. These experts conduct analysis and implementation of customized solutions, which follow the same parameter and converge among them, taking into account the company, its suppliers, its clients, employees, and other stakeholders. These solutions are conditioned to the needs of cash management of the companies, maximizing results in the mutual view of businesses offered and operated with clients, with a technological synergy of the products and channels involved.
Among the key product and service solutions made available by Bradesco, we point out the following:
| Receivables Solutions |
| Bradesco Online Collection |
The high efficiency standard of Bradesco's online Collection service generate confidence, minimizing costs and maximizing customer returns, covering all of their Accounts Receivable management needs.
As a result of these features, Bradesco is the market leader, generating other business opportunities for the Organization.
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| Collections |
Developed based on high standards of efficiency and quality, Bradesco's collections serve a dual purpose. On the one hand, they seek to provide customer satisfaction with appropriate and innovative solutions for the settlement of taxes, frees and contributions; on the other hand, they effectively interact with the different Government Departments in the federal, state and local scope and with Public Utility concessionaires. Our services are emphasized for the speed and security in processed information and amounts collected.
| Payment Solutions |
| Pag-For Bradesco (Supplier Payment), Bradesco Net Empresa and PTRB (Electronic Payment of Taxes) |
Based on the efficiency commitment, Bradesco's payment solutions, available via Pag-For Bradesco, Bradesco Net Empresa and Electronic Payment of Taxes products, meet all clients’ needs, enabling supplier payments, tax settlements and e-transfers, via online or by the transmission of files with speed and security.
| Corporate Solutions |
| Bradesco Digital Certificate |
Being aware of to the market trends, Bradesco is accredited as Register Authority to issue the Digital Certificate – an electronic identification document ensuring integrity, authenticity and the irreversibility of any transaction or message – thus assisting in the protection of data protected and allowing documents storage.
Bradesco Digital Certificate is legally valid and is digitally signed by a Certifying Authority, and may be used for documents digital signature.
| Government Authority Solutions |
The activities of the Government Authority area comprise a specialized service to entities and bodies of the Executive, Legislative and Judiciary Branches, within the federal, state and municipal scopes, in addition to Independent Governmental Agencies, Public Foundations, Government and Mixed Companies, Armed Forces (Army, Navy and Air Force) and Auxiliary Forces (Federal, Military and Civil Police), Notary Officers and Registers, identifying business opportunities and structuring customized solutions, also counting on a portal on the Internet (www.bradescopoderpublico.com.br), to provide exclusive assistance for this market, thus strengthening relationships, and establishing a consolidated presence before the Public Authorities in Brazil.
The website presents Corporate Solutions for Payments, Receipts, HR and Treasury to Governments, meeting the needs and expectations of the Executive, Legislative and Judiciary Power and has an exclusive place for Public Servants and Military Policemen, with all the products and services Bradesco makes available for these clients.
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| Statistical Data |
| Number of Documents Processed – million | ||||||||
| 2006 | 2007 | 2008 | ||||||
| 4th Qtr. | 1st Qtr. | 4th Qtr. | 1st Qtr. | |||||
| Receipt Solutions | 130.3 | 130.4 | 146.0 | 142.2 | ||||
| Payment Solutions | 39.2 | 38.6 | 47.4 | 46.9 | ||||
| Public Sector (*) | 82.0 | 89.4 | 92.0 | 97.0 | ||||
| Taxes | 19.5 | 25.1 | 21.4 | 26.7 | ||||
| Water, Electricity, Telephone and Gas | 48.2 | 49.5 | 54.5 | 55.0 | ||||
| Social Security Payments (1) | 14.3 | 14.8 | 16.1 | 15.3 | ||||
| Total | 251.5 | 258.4 | 285.4 | 286.1 | ||||
| (1) Total of Beneficiaries: over 4.948 million retirees and pensioners (corresponds to 19.54% of the population subject to INSS). |
| (*) Includes public and privatized utility service concessionaires. |
| Payments by means of automatic debit. |
| 12.728 million – 1Q07. |
| 12.763 million – 1Q08. |
| Qualified Services to the Capital Markets |
Bradesco, by means of the Share and Custody Department, is one of the main suppliers of Qualified Services to the Capital Markets, being the national leader in Qualified Custody – according to Anbid ranking. With a modern infrastructure and specialized team, Bradesco proposes innovative solutions, expanding service options and generating operating flexibility to its clients.
In addition to structuring the best products and services, it submits its processes to the Quality Management System ISO 9001:2000 and Good Priv@cy. There are 13 Certifications related to Data Privacy and Quality that ensure absolute tranquility to clients.
The Share and custody Department provides Qualified Services to the Capital Markets related to the Bookkeeping of Assets: Shares, BDRs – Brazilian Depositary Receipts; Investment Fund Quotas, Certificates of Real Estate Receivables – CRIs and Debentures; Qualified Custody of Securities; Custody of Shares for Coverage of DRs – Depositary Receipts; Controllership of Investment Funds and Managed Portfolios; Mandatory Bank; Investment Fund in Credit Rights – FIDC; Investment Fund in Interest –FIP, Qualified Depository and Compensation Agent.
| Our services: |
| Assets Bookkeeping |
In this segment, Bradesco offers Bookkeeping Services for Shares, Brazilian Depositary Receipt – BDR, Investment Fund Quotas, Certificates of Real Estate Receivables – CRIs and Debentures.
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| Shares |
A pioneer of this segment in the country, Bradesco has services that gather all procedures related to the bookkeeping of shares, serving more than 2.9 million shareholders.
The Bradesco System of Book-Entry Shares was developed to serve both publicly and closely-held companies, in all their needs related to the registration and updating of the shares issued, either Book-Entry or Registered shares. By means of the website Bradesco Custody (www.bradescocustodia.com.br), the company may access, online and in real time, the positions of its shareholders; registration, banking data; share movements and may also consult resolved dividends (Dividends/Interest on Shareholders’ Capital) paid and/or to be paid of its investors. On a daily basis, the system makes available the total base of shareholders of the companies, showing the position of shares registered in the records of the Depository Financial Institution and/or Brazilian Clearing and Depository Corporation – CBLC. Bradesco also offers to investors of the companies to which it provides Share Bookkeeping services a customized assistance by means of the Network of Branches nationwide.
We point out the participation of Bradesco as the Depository Financial Institution of the Companies’ Shares, in IPO (Initial Public Offering) operations, whose market share was 100% among the structured operations in the first quarter.
| BDRs – Brazilian Depositary Receipts |
A Pioneer and responsible for the development of the depository service of BDRs traded on the stock exchange, Bradesco offers, in its bookkeeping service of BDRs, the registration of the Program with the CVM and Bacen, the control of issuances and cancellations of BDRs and the management of all events, in addition to customized assistance to investors, by means of the Network of Branches.
| Investment Fund Quotas |
The Bradesco System of Book-Entry Quotas was developed to meet the needs of clients in the activities related to their funds managed and in the bookkeeping of quotas of these funds, aiming at the access to their positions, registration data of quotaholders and issuance of reports.
Bradesco Book-Entry System eliminates the complexity of the conventional system, making easier the work of brokerage firms in the negotiations and makes possible the conquest of new quotaholders in any part of Brazil, once the system has a national scope. In addition, we make the control and registration of movements and process the payments of proceeds.
| Debentures |
The system records the issuance of debentures and controls the movements, processing the payments of rights granted to debenture holders and maintaining the control of the balances of debentures registered in SND – National System of Debentures. Managerial reports for the follow-up of the debentures and debenture holders are sent to the issuing company.
In the operations of issuance of debentures we reached a 45.5% market share, considering the number of issuances carried out.
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| Mandatory Bank (Debentures/Promissory Notes) |
The Share and Custody Department operates as the liquidator of the issuing company in the Custody and Settlement Chamber – Cetip, by means of the National System of Debentures – SND and/or of the Brazilian Clearing and Depository Corporation –CBLC – Bovespa FIX, complying with all legal procedures described in the Regulations of Operations of the Systems.
In 1Q08, the total financial volume of issuances reached R$34.3 billion, and 49.8% of market share related to Bradesco.
| Main Indicators in 1Q08: | ||
| Book-Entry Shares | 224 companies, with market value of R$533.5 billion, combining more than 2.9 million shareholders. | |
| Book-Entry Debentures | 79 companies with 119 issues, totalizing a restated amount of R$109.6 billion. | |
| Book-Entry Quotas | 90 closed funds, with restated amount of R$14.8 billion. | |
| Brazilian Depositary Receipt – BDR | 3 programs, with market value of R$492.9 million. | |
| Custody, Controllership and Investment Fund Management and Managed Portfolios |
Targeted at companies, assets, foundations, insurance companies and private pension plan entities, the provision of service for this segment has continuously grown. Part of this growth may be verified in the evolution graphic of Assets under Custody, whose increase was 0.19% in 1Q08.
| Qualified Custody of Securities |
With innovative solutions and great operational flexibility, Bradesco assumed, since April 2007, the leadership in the national segment of Qualified Custody of Securities, according to Anbid ranking.
The Qualified Custody service comprises the physical and financial settlement of assets, their custody, as well as the management and information of events associated to these assets. It also comprises the financial settlement of derivatives, exchange agreements of financial flows, swap and forward operations, as well as the payment of rates related to the service provided, such as, but not limited to, rate of movement and registration of depositories and chambers and systems of settlement. In this segment there are activities that are related to the following factors: the control and exercises of the rights related to fixed income and variable income events and the flow of payments and receipts of deposited assets; physical settlement of the fixed income, variable income and futures market operations; maintenance of registrations of investors with depository agents and/or custody of physical assets; conciliation of assets such as Clearings and banking of checking accounts; operations in the over-the-counter market on behalf of investors, daily updating of the Assets and control of assets deposited in CBLC, Selic, Cetip and BM&F.
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| Custody of Shares for Coverage of DRs – Depositary Receipts |
Bradesco launched the first Brazilian DR program. The provision of this service comprises the registration of the Program in CVM and in Bacen, the control of issuances and cancellations, the receipt of rights on shares and the remittance of funds abroad. In addition, it carries out in the Depository Bank the transmission of information related to resolutions taken at the meetings of the issuing companies of DRs.
| Controllership and Management of Investment Funds and Managed Portfolios |
Bradesco, in addition to providing the Custody service, counts on the best structure in the provision of services of Controllership for Investment Funds and Managed Portfolios.
In this segment there are activities related to the following factors: the control of movements of cash, risk and legal framing and investment policy; banking conciliation and fixed income assets traded with Selic or Cetip, and variable income assets, traded with the Stock Exchanges and Mercantile Exchanges; registration of purchase and sale operations of assets integrating the portfolio of Funds/Portfolios; accounting of assets, provisions, movement of quotaholders. These activities aim at trial balances and periodical reports for the statement of income sent to proper bodies and to quotaholders, and are monitored by a control team, which verifies the compliances related to the legal and contractual aspects, with the investment policy and with the specific rules of the client, aiming at the elimination of risks involved and ensuring the total quality of services provided
| Main Indicators in 1Q08: | ||
| Custody | R$428.8 billion in assets under custody (funds, portfolios, DRs and receivable funds). | |
| Controllership | R$421.2 billion distributed in 6,882 investment funds and portfolios under management. | |
| Depositary Receipt – DR | R$99.4 billion in 12 programs. | |
| Investment Fund and Credit Rights – FIDC |
The service is based on the following activities: the receipt and analysis of the documentation that proves the existence of Credit Rights; verification if the Credit Rights are framed in the eligibility criteria of the Fund; physical and financial settlement of the acquisitions and sales of Credit Rights and other assets of the Fund portfolio; operational follow-up of the Fund portfolio, such as maturity of the Credit Rights, verification of concentration indexes and other obligations described in the regulation of the Fund; the execution of the collection of Credit Rights duly complying with contractual obligations or those not complying with contractual obligations; the preparation of all the documentation required for the compliance with the legal requirements; and meeting the clients’ needs, as well as helping them in the follow-up aspects of the collection of Credit Rights.
| FIDC | R$7.5 billion in 52 FIDCs. |
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| Qualified Depository |
It is a type of service provision in which the Bank, as an independent entity, agrees to receive, keep in custody, meet and settle operations in favor of the contracting parties, as agreed in the contract, for greater comfort of financial obligations guaranteed or assumed, maintaining the control and the supervision by means of an Escrow Account.
| Qualified Depository | 1,037 contracts with financial volume of R$1.6 billion. |
| Compensation Agent |
It is a type of service provision for Financial Institutions (Brokerage Firms and Distributors of Securities) and Qualified Institutional Investors (Managed Portfolios, Investment Funds and Clubs). In this position, Bradesco is responsible, before the CBLC – Brazilian Clearing and Depositary Corporation, for the physical and financial settlement of the operations registered on the São Paulo Stock Exchange – Bovespa, within daily operational limits which are established due to guarantees presented by the respective clients in view of the volume and type of operations carried out on the stock exchange.
| Compensation Agent | Volume of R$39.3 billion. |
| Assets under Custody Growth – R$ billion |
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| Business Processes |
| Ombudsman Area |
Bradesco Organization always had the philosophy of giving voice to its clients and users of banking products and services, innovatively creating in April 1985 the service Alô Bradesco (Hello Bradesco), the first financial market communication channel for suggestions and complaints, five years prior to the launching of the Consumer Defense Code. Such channel contributed to enhance these relations and has been an important strategic tool for relations transparency.
As a result, we implemented the Ombudsman area in July 2005, in which we centralized all manifestations recorded in different channels, including those stemming from the Central Bank and Procon.
In compliance with the rule of the National Monetary Council, published by means of Bacen Resolution 3,477 as of July 26, 2007, we appointed the Departmental Director in charge of the Ombudsman area and the Ombudsman itself, and we created a 2nd level service so that clients may check the solution found to their complaint previously recorded by the Customer Service Network – through Alô Bradesco, by phone, or through the Internet channel, by e-mail, in the “Talk to Us” section.
It is incumbent upon the Ombudsman area to manage all these manifestations, follow-up the term and quality of answers offered, provide the managers of products, services and processes with updated information. It is expected that these managers can learn from these “warnings received” and anticipate compatible solutions with needs and demands of our clients. The Ombudsman area must also continuously follow the notes until the concretion of correction actions.
| Quality Management – NBR ISO 9001:2000 Certifications |
Bradesco Organization adopts a Management System as tools that help in the execution and operation of its processes in a transparent and systematic manner.
A Management system comprises an organizational structure, planning activities, responsibilities, practices, procedures, processes and funds for the development, implementation, revision and maintenance of the Organization’s policies.
The SGQB – Bradesco Quality Management System is an important tool of Bradesco Organization, with the purpose of continuously improving the performance of processes, taking into consideration the needs of all interested parties. By means of SGQB, the Premises show their capacity to provide products/services that meet the client’s requirements and the applicable regulatory requirements, aiming to increase the client’s satisfaction.
Bradesco Organization counts on a group of highly qualified professionals, responsible for the methodology definition of Bradesco Quality Management System (SGQB) and implementation process management.
In the permanent search to provide its clients and users with the easiness and commodity that only a Complete Bank can offer, Bradesco Organization reached the acknowledgement in 197 processes certified in NBR ISO 9001:2000, all related to its products and services.
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The ISO 9001:2000 certifications are formal evidences that all the activities related to the quality of the product or service certified were planned, implemented and controlled according to an international acknowledgment rule.
Accordingly, the certifications are important competitiveness instruments ensured only to companies that show their commitment to quality.
The ISO 9001:2000 certifications motivate the Organization to advance in the quality management practices, thus adopting the Excellence Criteria –Worldwide Class in its processes, which represent a great advantage in business management, as well as they highly contribute to issues of sustainability and corporate governance.
| Data Protection and Privacy Seal – GoodPriv@cy |
GoodPriv@cy – Data Protection and Privacy Seal – is a standard internationally established, comprising requirements aimed at the management of data protection and privacy at the organizations.
Bradesco Data Protection Management System has as purpose to standardize data protection management at Bradesco Organization and minimize risks related to violation in data protection and failures in information security, by means of the compliance with the legal and internal requirements and the continuous improvement of data protection and privacy processes.
As Bradesco Organization is a pioneer in technological innovation, it constantly invests in IT, concerning about information security in all levels. Therefore, it establishes procedures in the ethical treatment of personal data collected for any purpose, including the establishment of the Information Security Corporate Rules and Policy.
The certifications show this practice and reassure the Organization’s permanent concern about data protection of its clients and users. Out of the 18 GoodPriv@cy certifications granted in Brazil, 15 belong to Bradesco Organization (Source: IQNet –December 2007).
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| GoodPriv@cy Certifications of Bradesco Organization: |
| – Fax Fácil | – WebTA – File Transference |
| – Fone Fácil | – NetEmpresa |
| – Home Broker | – ShopCredit |
| – Internet Banking | – Electronic Commerce – Individuals |
| – Private | – Electronic Commerce – Corporate |
| – Custody– Liabilities Dockets | – Cards |
| – Custody – Assets Dockets | – Password Privacy Management |
| – Custody – Report Data Privacy |
| Methodology for Process Mapping and Documentation |
This is a corporate methodology for Precess Mapping and Documentation whose goal is to enable the Bank’s Departments to map and document the product and service processes it manages, in a systematized and standardized manner.
The result of the documentation is stored in a specific Corporate Database, from which the documentation requested is provided concomitantly, in order to comply with:
– Activity-Based Costing System – ABC;
– Bradesco Quality Management System – NBR ISO 9001:2000;
– Internal Controls and Compliance;
– Section 404 of the Sarbanes-Oxley Act; and
– Ongoing Improvement of Processes.
The methodology establishes a standardized document structure, which is adopted by the Departments and allows an overview of processes from products/services, as follows:
– Organization Chart;
– Product and Service Tree;
– Context Diagram;
– Process Macro Vision;
– Process Flow; and
– Activity Detailing.
The structure defined for the Methodology, combined with the information on products and services, effectively enables the analysis and diagnosis for the development of operations aimed at improving processes and complying with the requirements of the management systems.
| Activity-Based Costing |
Designed to support the Bank in its actions to improve processes and optimize productive resources, such as practices recommended for decreasing costs, Bradesco adopts the Activity-Based Costing System – ABC, which measures the cost and performance of its activities, resources and cost centers.
Thus, the knowledge of the Bank's activities, as well as the correct measurement of the resources consumed by these activities, allows a more accurate analysis of the cost/benefit ratio of each of the Organization's productive processes and results centers.
We point out that as a result of the application of Activity- Based Costing, the Bank is now meeting the following targets: improvements to allocation of costs to products, channels and customers; support to qualification studies and negotiation of bank fees; subsidy to product, unit and client profitability systems; support to studies concerning outsourcing, merger and equipment sharing; as well as support to cost rationalization studies.
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| Activity-Based Management Program |
Seeking to explore the potential applications of the information base of the “Activity-Based Cost”, we are to adopt a Cost Management model by means of the “Activity-Based Management” – ABM, which will rapidly lead to the prevention of costs and a proactive approach regarding the identification of opportunities.
Concurrently, as processes are improved, operating performances can be seamlessly integrated with Bradesco's strategic goals, to create and/or sustain Bradesco's competitive advantages and add value both for clients and shareholders.
Thus, the future mission of Activity-Based Management is to provide permanent support to the planning and control of the Bank's business processes, ensuring that tactical and operational issues are continually improved, as well as support their strategic gearing.
| Integrated Management System – ERP |
In the pursuit of improving results, as well as extending its capacity to manage the Organization's resources, for purposes of always providing permanent and appropriate support for its operations, Bradesco adopted one of the most modern concepts for integrating organizational processes, using Integrated Management System –ERP, mySAP Business Suite solution.
The implementation of this system represents an innovation in terms of the treatment of the value chain supporting Bradesco's financial industry, comprising analyses dimensions focused on processes, people, organizational structure and technology.
Initially, the system will integrate processes in the Human Resources, Training, Material and Service Purchases, Accounts Payable, Physical and Fiscal Receiving, Fixed Assets and Accounting, in addition to the Availability Control process, for the effective follow-up of the Bank’s administrative expenses.
Currently, the processes of Works Management, Maintenance Management, Cash Management, Real Estate Management, Supplies Management (Auction and Electronic Quotation), Audit Management, Banking Accounting and Consolidation of Financial Statements are being implemented.
The adoption of the Integrated Management System for the process already implemented by the areas integrated through this technology allowed them to renew processes and review organizational structures and over 83 thousand system users were qualified via presence and e-learning training.
As the main result of the implementation of the Integrated Management System, Bradesco will benefit from the organization and standardization of the processes carried out in different areas, agile decision-making, secure data processing, as well as decreased operating costs and increased productivity. These factors are crucial for the Organization's growth, especially in view of current fierce competition in the financial area, prompting us to pursue increasingly effective management methods designed to ensure that all of Bradesco's business potential is properly leveraged.
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| Acknowledgments |
In 1Q08, Bradesco was acclaimed as Latin America’s largest publicly-held bank by market value, according to a study from the consulting firm Economática. With an estimated market value of US$61.840 million, Bradesco, besides being the largest private bank, is the one with the largest working capital of the region.
It was also acclaimed as the world’s champion in three categories in the IR Global Ranking Award: Disclosure of Results, Online Annual Report and Investors Relations Website. Promoted by MZ Consult, the survey, which evaluated 160 companies from 32 countries, points out the companies that maintain a consistent communication with the investing public.
Bradesco was also acclaimed as the best financial institution of Brazil in Private Banking services, according to a study published in Euromoney magazine, one of the most respected publications specialized in international finances.
The Bradesco Brand was considered the most valuable one of the Latin America’s banking sector, at a study carried out by the international consulting firm Brand Finance, published in The Banker magazine, the Top 500 Financial Brands 2008 edition, disclosed by Folha de S. Paulo newspaper. It was also the most remembered bank brand by the consumers of the state of Bahia, according to the Bahia Top of Mind survey, published in A Tarde newspaper.
GazetaInveste magazine, a publication of Gazeta Mercantil newspaper, acknowledged Bradesco as the best market fund manager, based on the survey of the Austin Rating consulting firm. Among the eight categories that comprised the study, Bradesco was highlighted in three of them – Long Short, Exchange and Equity Income Funds. It had 55 products among the best ones due to the outstanding performance. It was also the fund manager with the largest number of equity funds on the list of the most profitable in 2007, published by Época magazine. The full ranking has 25 equity funds and Bradesco is responsible for the management of six of them.
Grupo Bradesco de Seguros e Previdência was the great highlight of the Prêmio Segurador Brasil 2008 (2008 Brazilian Insurance Company Award) when acclaimed in nine categories. This year’s edition acknowledged the Group as Insurance Global Sales Highlight. Bradesco Capitalização received two awards: Marketing 10 and Entrepreneurs in the Certificated Savings Plans Area. Bradesco Saúde was acclaimed in the Sale Highlight by Health Insurance Modality. Bradesco Vida e Previdência received the trophies of Best Global Performance in Private Pension Plans (for a net revenue larger than R$1 billion), Global Sale Highlight in Private Pension Plans, Sales Highlight in Life Insurance and Insurance Company of the Year. Bradesco Auto/RE Companhia de Seguros was acclaimed as Market Highlight in Auto/RE. The award is provided by Segurador Brasil magazine and acknowledges the role of companies and entities in the implementation and development of concepts, products and services to the Brazilian insurance market.
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6-Social-environmental Responsibility
| Bradesco Organization and the Social-environmental Responsibility |
| Bank of the Planet |
Aligned with the strong tendency that is also present in the financial sector, Bradesco has decided to intensify its social-environmental commitments –being aware of the new world reality of climate changes and how to deal with the global warming. Besides spreading the concept of sustainability among its employees, suppliers and commercial partners, Bradesco aims at incorporating, day by day, innovative management practices. For this purpose, the Organization has focused on the alignment of its responsible conduct with the commitment to the environment preservation, with a view to ensuring its commitment to a sustainable development and, at the same time, ensuring the financial return.
At the end of 2007, in order to ratify this posture, the Organization took a historical step, expanding the role of a bank and the focus on sustainability, when it launched the Bank of the Planet. The initiative represents a milestone in its path and aims at unifying social-environmental actions, creating new products and services and investing in a more seamless interaction of people with the environment. More than guaranteeing the continuity of its business, Bradesco decided to expand its market operations in order to contribute with the continuity of the planet.
Such initiative is in sync with the main international agreements and commitments that Bradesco adopts in its management: Equator Principles (since September 2004), Global Compact (November 2005) and the Millennium Development Goals.
Learn more about Bradesco’s social-environmental initiatives at www.bradesco.com.br/rsa.
The material events for the period are as follows:
| Amazonas Sustentável Credit Card and Pé Quente FAS Certificated Savings Plan |
Through the partnership with the State of Amazonas in November 2007, in which Bradesco became one of the co-founders of Fundação Amazonas Sustentável (FAS); and as part of the commercial strategy of the Bank of the Planet, it was launched the Amazonas Sustentável Credit Card, the first card manufactured in the Brazilian market in recycled plastic coming from disposable plastic bottles, aiming that part of the income resulting from the new product is transferred to FAS.
Bradesco’s newest certificated savings plan, Pé Quente Bradesco Amazonas Sustentável, also aims at reverting part of the fund raised in benefit of FAS. The plan, with the monthly value of R$20, allows the client to compete for R$50 thousand weekly premiums, in draws by the Federal Lottery. After the total investment period, the redemption shall be 100% of the amount paid monetarily restated by TR.
Amazonas Sustentável Credit Card and Pé Quente Amazonas Sustentável Certificated Savings Plan are products in which Bradesco will invest funds in benefit of Fundação Amazonas Sustentável, in which FAS received, as initial contribution of the Bank, R$ 20 million and will receive R$10 million annually during the next 5 years.
| Opening of Piracicaba Nursery |
In February, Bradesco, through Bradesco Capitalização, opened, in partnership with Fundação SOS Mata Atlântica, the “Elvira Guarda Mascarim” Center of Forestry Seedling Production and Environmental Education, located in the city of Piracicaba (state of São Paulo). The unit focuses on the production of native seedlings from the Atlantic Forest for the forestry recovery in areas of gallery forest as part of the carbon (CO2) neutralization program of the Organization and the Eco Financing program –to make up for the CO2 emissions of vehicles financed by the Bank.
In the same space took by the nursery, counting on twelve employees that work in the seedling production, plantation, administration and environmental education, the region’s first Natural Sciences Museum was opened.
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| 2007 Sustainability Report Launching |
In March, Bradesco launched the 2007 edition of its Sustainability Report, which presents an aggregation of information regarding the main initiatives developed by the Organization, in light of the economic, environmental and social scenarios, for instance, sustainable finances, environment, relationship with stakeholders, initiatives of Fundação Bradesco and activities of Finasa Esportes.
The report follows guidelines proposed by the Global Reporting Initiative (GRI), level A+ correspondent to the most advanced stage, which proposes a sustainability report standard that may be used by investors, market analysts and other people.
The online version of the 2007 Sustainability Report is available at www.bradesco.com.br/rsa.
| Bradesco’s Contribution to Preserve the Environment |
Aware of the need to maintain its adequate facilities, without disregarding the environmental aspects, Bradesco has adopted practical measures that contribute to environmental preservation.
The Organization permanently seeks to apply new technologies minimizing the impact on ecosystems. It also seeks the contracted companies’ commitment to the Bank’s goals, as well as an ongoing awareness of our staff in pursuit of eco-efficiency.
1) Program for the Neutralization of Carbon Emissions
With a view to neutralizing its greenhouse gases (GHG) emissions, Bradesco was the first bank to launch a measurement program of its direct and indirect participation in the emission of these gases in the atmosphere. The proposal is that all Bradesco’s business chain – including clients, suppliers and other stakeholders – takes part in this cause in the medium term.
In the first stage of the program, a survey of all the greenhouse gas (GHG) emissions referring to operations at Cidade de Deus – Bradesco’s headquarters, in Osasco (SP) – was carried out, calculated in accordance with GHG Protocol methodology and ISO 14064. In 2007, the Organization will increase the inventory scope of GHG emissions.
Initially, the environmental impact caused by the Organization will be offset by the planting of 38 thousand trees (in partnership with Fundação SOS Mata Atlântica).
2) Resources Consumption Rationalization
With a view to rationing electricity and water consumption, Bradesco maintains an area to manage the consumption of these strategic resources. Its attributions consist of managing agreements of demand for electricity with the concessionaires and the permanent research of more efficient and intelligent new technologies for the equipment, observing the environment preservation policy.
Bradesco, always concerned about this issue, invests in the Branches Network awareness. Thus, it indicates consumption targets for each unit – based on size, quantity of equipment installed and headcount, and it also releases information about the rational use of electricity and water, by means of circulars, internal newsletters, Intranet, among others.
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a. Electricity
Timing machines were installed in the branches for the automatic turning-off of lights, allowing an easy utilization in scheduled hours. Turning off lights in non-used areas and using natural light are also encouraged.
Similar care is adopted in the acquisition and installation of air-conditioning systems, such as thermo-accumulation devices, which reduce the energy consumption in peak hours. The employees are guided towards optimizing the use of lifts, air conditioning and other energy consuming equipment. In addition, more than 250 mercury lamps installed in the lampposts of Cidade de Deus were replaced by sodium steam light bulbs. Approximately 30 thousand 40 Watt lamps have been replaced by 32 Watt lamps, substantially reducing substantially energy consumption, without losing lighting efficiency. Electronic ballasts were also installed, which consume less energy than the normal ones, as well as adjustments were provided in the general electricity condition. In 1Q08, in corridors, bathrooms and halls in the premises of Cidade de Deus, 1,030 common lamps were replaced by 9 to 26 Watt compact fluorescent lamps, providing higher light efficiency and low consumption.
b. Water
Same concern is expressed as to the rational use of water. Thus, our premises are periodically guided concerning the monthly follow-up of consumption and maintenance aiming at correcting possible leakage in valves, flushing and faucets. Technical measures contributing to the water consumption reduction have been adopted, such as the replacement of mechanical faucets with automatic ones for use on the headquarters premises and common valves for coupled boxes, in the building of Avenida Paulista, with an estimated reduction of 50% of consumption.
In 1Q08, we reused 180 m3 of water, provided by a new-developed tank which collects and stores rainwater in Cidade de Deus, used to water gardens and wash sidewalks and streets. The development of more three tanks for the same purpose is in progress.
The Organization considers the possibility of the reuse of water that comes from the partial sewage treatment generated at the headquarters, with the purpose of watering and usage in the air conditioning towers. In the recovery of parking places and sidewalks in Cidade de Deus, permeable material has been used, allowing the ground to better absorb rainwater.
At Avenida Paulista, a former fuel tank of the generating group was adapted as a container to receive and store rainwater destined to garden watering. Only taking into account the water consumed in this building in 2007, this measure enabled an economy of up to 37 m3 in the annual water consumption. In 1Q08, 4 m3 of water were reused.
3) Solid Residues Destination
a. Paper and Cardboard
In 1Q08, approximately 380 tonnes of paper and cardboard were collected in our main administrative centers, which are submitted to a selective process. Bradesco is contemplating the possibility of its implementation in other regions. In addition, methods to assess the quantity of paper consumed by the Organization are under study, both office paper and forms. The purpose is to identify possible measures that may be adopted to reduce that consumption.
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Bradesco also standardized the dispensers and respective consumption products (toilet paper, paper towel and liquid soap) used in bathrooms of Cidade de Deus and administrative buildings. Assessments carried out concluded that, even with the need of installing more equipment and the increase of the “population” (employees and service providers) in Cidade de Deus, there was a decrease in the consumption: toilet paper: 3.1%, paper towel: 37% and liquid soap: 20%. Besides the economic aspects and quality improvement, this measure contributes to the aware consumption, since the new liberation system of toilet paper and paper towel inhibits the waste and reduces the consumption.
b. Metal, Glass and Plastics
At Cidade de Deus and in administrative centers, Bradesco maintains the selective collection of metal, glass and plastics. In 2007, approximately 30 tonnes of these materials were recycled, arising from the maintenance process. In 1Q08, 6 tonnes of these materials were recycled. This practice has been encouraged and improved by means of in house campaigns and actions, in the expectation of increasing to other centers, as well as to increase the quantity of recycled products.
The use of biodegradable plastic bags has also been implemented in all of Bradesco’s premises. This material degrades completely within a short period of time, minimizing the impacts to the environment. At Cidade de Deus and administrative centers, plastic bags with colors corresponding to waste collected are also used, with a view to facilitating the recycling process of these materials.
c. Lamps
In Cidade de Deus buildings there are more than 36 thousand installed lamps. Monthly, more than 600 lamps are replaced. Concerned with the appropriate destination of this material, the Organization included in maintenance agreements a specific clause about the service company’s obligation to conduct the ecologically correct discard. In 2007, approximately 30 thousand lamps of the headquarters and administrative buildings were sent to recycling. In 1Q08, approximately 5,000 lamps were sent to recycling.
In August 2007, the correct collection and destination of this type of material were implemented in more than 200 branches in the city of São Paulo, and a future expansion to other Network branches is expected.
d. Technological products
The Organization started a project related to the management of technological waste arising from the maintenance and replacement of electric and electronic equipment, in order to recycle and properly discharge this material. In this first phase, 2,532 equipment and components were collected, totaling approximately 3 tonnes, which were discharged without harming the environment.
e. Other Residues
In Cidade de Deus, approximately 115,000 m2 of green area is maintained, with more than 4,100 trees cataloged under the replacement and planting program. In the maintenance of these areas, dried leaves and branches from sweeping are crushed. The crushed material (nearly 1.5 ton/month) is used as fertilizer and in gardening, contributing to the natural ground strengthening and avoiding the discharge in landfills. The parings of grass are also used as input.
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4) Use of Sustainable Products
a. Recycled Paper Usage Program
This Program, based on the certainty that Bradesco is able to contribute to the dissemination of environmental responsibility, has been gradually implemented in our Organization. The option to use recycled paper was made after long negotiations with suppliers, and even if it does not mean costs optimization, the beneficial result for the environment was the most important factor for the change. Recycled paper is used in the production of internal and external communication material, such as posters, magazines, circulars, business cards, statements distributed to clients and check books. Currently, nearly 90% of the paper consumed per month is recycled.
b. Remanufactured Cartridges
For five years Bradesco has used remanufactured cartridges in printers, aiming – besides cost savings – at the reduction of environmental pollution. Out of 30 types of toner cartridges composing the consumption list, 21, i.e., 70%, are remanufactured products.
c. Certified Wood
Recently pencils manufactured with certified wood were made available in the premises. The raw material used contributes to the fight against exploration of illegal wood with a predatory origin, besides minimizing the environment degradation.
In 2007, approximately 64 m3 of wood, provided from reforestation areas, were used in furniture and division walls so as to equip the buildings of the Administrative Centers. In 1Q08, we used 8.15 m3 of wood.
d. Biodegradable Products for Cleaning
In Cidade de Deus, biodegradable products are used in cleaning and maintenance services. Contracted companies are encouraged to use products of such type, which will later become one of the requirements to be considered in a further agreement renewal.
This measure integrates an improvement program seeking to standardize the biodegradable products, appropriate dilution, in conformity with the manufacturer’s guidance and the obligation to present information about chemical products used on the Organization’s premises.
| Human Resources |
The foundation to sustain Bradesco Organization’s businesses is based on acknowledging the value of its team’s performance and achievement potential.
The Company offers to its employees ongoing professional development opportunities, in a healthy, safe and ethical environment, with transparent commitments and goals.
Bradesco believes in its ability to promote a sustained growth for people and through these people.
The Company seeks to maintain an excellence model in Human Resources Management, guided by respect and transparency in its relations, through the continuous investment in development, sharing of knowledge and valuing of the human being value, without discrimination.
Bradesco adopted a closed-career policy, whereby the admission occurs at apprentice levels and growth opportunities are destined to the staff, allowing access to all hierarchical levels.
This assurance of professional development and growth opportunities allows employees to see the possibility of holding all the positions: leadership, supervision, management and also the senior management. That is a motivational factor for all the staff, stimulating creativity, innovation and the ceaseless search for knowledge and updating.
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When an employee joins the Bradesco Organization, whose closed-career system privileges, supports and strongly invests in the growth and development of its staff, the employees start a career full of opportunities, connected with their effort and dedication.
Encouraging the professionals to exceed their limits and stimulating their creativity in search for solutions, aiming at the self-satisfaction, clients’ satisfaction and business expansion, have been a priority for Bradesco and is one of the assumptions of its Human Resources Management Policy.
Only creative and innovative teams, highly skilled, with ensured career opportunities can surpass goals and show the excellent results that have highlighted the Organization.
The incentive to creativity and investment in the professional and personal qualification of our employees are essential for Bradesco’s success, strongly contributing to its brand solidity and the accomplishment of its market strategies.
Bradesco’s performance is disseminated and continuously expanded throughout the country, enabling job opportunities in all the operation segments.
A Bank which takes into account, by means of its clients and partners, the diversity which expresses the Brazilian social structure, has as main commitment the respect to cultural and ethnical diversity. The respect to the Brazilian diversity is part of Bradesco’s strategic vision towards good performance, once we are inserted nationwide
| Certification in International Rules |
In 2006, we achieved the certification of OHSAS 18001:1999 Rule of Occupational Safety and Health that allows establishing and developing conditions that contribute to a safe and healthy work environment. The certification was granted to the building located at Avenida Paulista, no. 1.450, city and state of São Paulo and, in June 2007, we obtained the certification again. In December 2007, we updated the certification in the 2007 version.
Aligned with the sustainability concept added to our business strategy, in 2006 we implemented the Bradesco Social Responsibility Management System, based on the SA 8000®:2001 International Rule.
This Rule establishes requirements in compliance with the Human Resources Management Policy of Bradesco Organization and has the purpose of promoting an ongoing improvement of relationships and the work environment, including the commitment to respecting Human Rights, Children’s Rights and Labor Fundamental Rights to its suppliers.
In 1H07, Banco Bradesco received the SA 8000®:2001 Rule certification, ranking first among the financial institutions in the Americas to receive an international Social Responsibility certification. In March 2008, Bradesco received the certificate for the second time.
Banco Bradesco has been certified in the SA 8000®:2001 International Rule of Social Responsibility in the management of the human resources that operates in the business and related companies located at the building on Avenida Paulista, no. 1.450, city and state of São Paulo, and in the Human Resource Department, at Bradesco’s headquarters, at Cidade de Deus, city of Osasco, state of São Paulo.
Aiming at expanding the scopes, Bradesco is working for the certification of the main administrative centers in the country.
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| A Great Place to Work |
Over the last years, shared with all our employees the satisfaction and importance of being included in indexes based on the quality of relations and the work environment.
Every year, around 3,500 employees in all structure levels, from all businesses and activities lines, voluntarily answer to surveys about the organizational environment through questionnaires and interviews. They assess items such as the work environment, benefits, compensation, professional development, ethics, citizenship values and social responsibility of companies.
The Company seeks to promote transparency, respect and confidence, so as to ensure a motivating and challenging organizational environment. Evidence is that Bradesco is currently recognized in several rankings.
The Company was listed for the eighth time in Guia Você S/A – Exame – As Melhores Empresas para Você Trabalhar (The Best Companies to Work), in addition to being part of this selected group, Bradesco has also been acknowledged among the 50 Best Companies for Women to Work, for four years. In 2006, Bradesco was also highlighted as one of the Best Companies for Businessmen in the Country.
Guia Você S/A-Exame is considered the best and most comprehensive study on organizational environment in Brazil and, since 2006, it has presented the index of happiness at work, in which we are highlighted for providing our employees with a positive corporate environment, promoting everyone’s well-being.
In 2007, Bradesco was once again elected one of the 100 Best Companies to Work in Brazil in a research developed by the Great Place To Work Institute, published in a special edition of Época magazine.
We were also pointed out among the 100 Best Companies in Organizational Human Development Index (IDHO), the 20 Best Companies in Human Resources Practices and the Best Companies for Executives. This list presents the companies in which the executive group, which comprises officers, managers and supervisors, reports feeling more satisfaction at work.
For the fourth consecutive year, Bradesco stood out in the survey As Melhores na Gestão de Pessoas (The Best Companies in People Management) of Valor Carreira magazine, edited by Valor Econômico newspaper. It was the first bank to be in the ranking. In 2007, Bradesco ranked first among the companies in the survey.
These results show the acknowledgment of our commitment not only to clients, but also to our employees. Improving talents with professional training, stimulating education and maintaining a fair and dynamic organizational structure, we try to offer conditions so that each employee can grow and build a solid career, from a relationship policy based on respect and valuation.
| Human Resources Management Policy of Bradesco Organization |
We reaffirm the commitment to our employees by formalizing guidelines for the management and development of our human resources, by means of the Human Resources Management Policy of Bradesco Organization. Basic assumptions:
1. To comply with all the requirements, regulating rules and legal conventions concerning work relationships and environment, applicable to our activities;
2. To assume the public commitment of defense and protection of Human Rights, Children’s Rights and Labor Fundamental Rights, in line with national and international Principles, Standards and Treaties;
3. To respect the diversity and dignity of the human being, preserving the individuality and privacy, not admitting the practice of discriminatory acts of any nature in the work environment and in all our relationships, with the internal and external public;
4. To ensure a good relationship among all professionals of the Organization, maintain a safe and healthy work environment and provide conditions for great performance and productivity levels;
5. To contribute to the improvement in the quality of life of employees, offering conditions for the balance among work, health and family;
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6. To encourage our professionals to surpass their limits and stimulate creativity in search for solutions, aiming at the self-achievement, clients’ satisfaction and business expansion;
7. To promote the constant development and improvement of technical and behavioral potentialities of our employees and make available favorable mechanisms which allow them to manage their personal and professional growth plan, in order to ensure the continuous improvement of management processes; and
8. To ensure opportunity priority for the professional growth of people, by means of permanent investment and development of internal competences, by the valuation and respect to knowledge and professional qualification acquired during the career.
In addition to the principles set forth in our Human Resources Management Policy, we have implemented the Bradesco Social Responsibility Management System, based on the SA 8000®:2001 Rule, whose requirements aim at promoting a continuous improvement of the work relationships and environment, including the commitment to respecting Human Rights, Children’s Rights and Labor Fundamental Rights to our suppliers.
Social Responsibility Requirements –SA 8000®:2001 Rule
1. Child Labor
2. Forced Labor
3. Occupational Health and Safety
4. Freedom of Association and Collective Bargaining Rights
5. Discrimination
6. Disciplinary Practices
7. Working Hours
8. Compensation
9. Management System
| In-house Communication |
We strongly invest in our in-house communication so that our employees are effective participants of the Organization’s strategy for expansion of results.
Simultaneously and from any location in the country, Bradesco’s employees receive key information via Intranet and e-mail.
On a daily basis, the Organization makes available the newsletter Sempre em Dia (Always Updated), with articles on the Bank’s strategic direction, launch of products, quality practices and business focus.
Brochures and magazines are periodically published and addressed to each employee.
Produced in compliance with the best quality standards, the editions in video of Bradesco TV approach institutional messages and technical guidance on a monthly basis. Created in 1990, Bradesco TV is one of the country’s oldest corporate television projects.
The annual goals and strategies are disclosed at meetings with the Presidency, where Directors, Regional Managers, Managers of Branches and Departments of the Organization take part. All the issues are referred to the respective teams.
With the purpose of making the communication between the Human Resources Department and the staff closer, more energetic and transparent, we have created ALÔ RH, an effective and fast communication channel that guides about benefits, legislation, policies and practices of human resources, in addition to responding to suggestions and complaints. This channel offers the option of anonymity, ensuring complete secrecy to those who use it.
ALÔ RH’s service standard implies in the full understanding of doubts and the correct referral of the manifestation immediately, or within 72 hours at the latest, via telephone, e-mail, or fax. Thus, we constitute an effective dialog and interaction process between the company and its employees.
In 1Q08, ALÔ RH recorded 15.5 thousand calls that included clearing doubts, suggestions and complaints.
The Human Resources Department keeps, in its functional structure, the Union Relations area, whose mission is maintaining a permanent dialog and interaction channel with union representatives’ nationwide, receiving manifestations, clearing doubts, and allowing a relationship based on ease of access, agility and proactivity between the parties involved.
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| People Management |
Bradesco maps the human capital through individual interviews with employees and their leaders. The focus is identifying corporate and essential competencies by supporting professional growth and searching for goals and results by means of the development of the competencies of the Organization’s Human Resources.
The Company already recorded 36.4 thousand employees’ profiles in this process.
Based on this knowledge, leaders and employees gained conditions to share actions focused on improving their individual and team performance, making effective the practice of feedback by generating professional improvement and short, medium and long-term results.
The maintenance of such work is the management of competencies with the involvement of employees and their leaders by means of constant follow-up, guidance and technical and behavioral development.
| Respect to Diversity – Social Inclusion |
Bradesco respects the diversity and self-respect of the human being, by preserving the individuality and privacy, not accepting the practice of discriminatory acts of any nature: at the work environment and in all Company’s relationships with the internal and external public.
The appreciation of diversity is incorporated in the Human Resources Management Policy of Bradesco Organization. The guidelines of relationship with employees are based on appreciation of professionals and are in accordance with the Global Compact principles, among other international regulations concerning human rights.
Bradesco’s success is based on group effort, which means that each employee adds something so that the Organization may constantly innovate and modernize, embracing more and more the possibilities of diversity, which is a constant value in its daily operations, through client magnitude, geographical comprehensiveness and staff.
Being present in several places in Brazil shows our commitment to serve equally for all our publics.
Bradesco has gone far beyond the commercialization of products and services, with the purpose of getting to know better people from all the different groups in society, in order to ensure a service that meets their needs and work together towards the country’s sustainable development.
With a view to effectively contributing to an improved relationship of the Company with its different publics, as well as maintaining a balanced internal demography, both in the admission and retention of talents, Bradesco created the Diversity Appreciation Work Group, composed of representatives of different areas.
Believing in people, understanding and welcoming differences are pioneering values present throughout Bradesco’s history, making it a Bank that works towards being more and more a development agent.
This issue is broadly supported in the Code of Ethics and Social-Environmental Responsibility Corporate Policy of the Organization.
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| Ethnical Groups |
We ended 1Q08 with 12,598 afro-descendent employees, and 5,890 of them hold managerial positions.
Bradesco entered into a partnership with Faculdade Cidadania Zumbi dos Palmares – Unipalmares, by means of a professional qualification program which aims at hiring interns to work in important business areas of the Bank. Unipalmares’ mission, by means of NGO Afrobrás, is to promote the inclusion of black citizens into higher education of the country.
The program is divided into various modules, with 2-year duration and also relies on a partnership with renowned institutions, such as FGV, USP, FIPE, Fipecafi and FIA.
Students work in technical and business areas of the Bank and are trained to improve themselves as citizens and qualified professionals for the job market.
The program, which started with 30 interns, has been expanded and currently counts on 72 students.
| Inclusion Policy for Disabled People |
Bradesco was one of the banks sponsoring the Professional Qualification Program of the Brazilian Banks Federation (Febraban), which qualified handicapped professionals to hold positions in the job market.
Aiming at hiring and retaining disabled people, Bradesco has set forth partnerships with specialized entities focused on the inclusion of these professionals, qualifying them and creating job opportunities in the Organization.
In 2007, we established a partnership with a specialized consulting firm in order to develop and implement the Inclusion Program of Disabled People, with the purpose of attracting and retaining disabled people, contributing for the sedimentation of an inclusive organizational culture.
We have in our Call Center a specific part comprised of visually impaired employees.
Currently, Bradesco has a staff of 1,107 disabled people.
Through Bradesco’s website, in the link Career Opportunities, the Company offers an exclusive channel for the collection of disabled people’s curriculums.
Due to the importance of the issue, Bradesco created a permanent Work Group focused on issues involving accessibility. One of the actions developed by the group was the preparation of a video training about the subject to the entire staff.
| Opportunities for Women |
Bradesco ended 1Q08 with a quota of 39,660 women employees, corresponding to approximately 48% of the staff. In leading positions, Bradesco has 17,945 women, including in the Board of Executive Officers and the Board of Directors.
In the Prime segment, 73% of staff is women.
| Internship Program |
Aiming at providing real professional development opportunities, Bradesco Organization offers an internship program in all operation and business areas, allowing the student to relate the academic learning with the practical activity. Currently, the program benefits 669 students.
| Traineeship Programs |
Fundação Bradesco’s Information Technology students have the opportunity to start their professional career as employees in the Systems Development Department of the Organization. In order to do so, students are provided with a structured program addressed to technical and behavioral approaches with theoretical experience in the classroom and practice in the Department. All students approved in the selection process are hired.
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| Youth Apprentice Program |
The Youth Apprentice Program was implemented by Bradesco Organization in 2004 and executed in partnership with Fundação Bradesco and other qualified entities, encompassing the administrative centers and branches throughout the country.
The program estimates the contracting of youngsters from 16 to 24 years old, with the purpose of providing personal and professional development to adolescents.
We ended 1Q08 with 1,023 apprentices and we have already provided the program for 1,746 youngsters.
| Young Citizen Program |
With a view to reinforcing Bradesco’s actions in the Social Responsibility area, the Company entered into a partnership with the São Paulo State Government by means of the Young Citizen Program – My First Job.
The purpose is to provide students with their first professional experience opportunities, preparing them to exercise the citizenship, by means of paid internship. These students come from families with higher social vulnerability, between 18 and 21 years old, regularly enrolled and effectively attending high school classes of the state public school system.
570 youngsters have already participated in the Program.
| Occupational Health and Safety Policies |
Bradesco is a company that develops actions in health, disease prevention, safety and work conditions.
The occupational safety and health aspect is approached in two premises of the Organization’s Human Resources Management Policy:
• Ensuring the good relationship among all the professionals of the Organization, maintaining a safe and healthy work environment, and providing conditions for excellent levels of performance and productivity; and
• Contributing to the improvement of employees’ quality of life, offering them conditions to balance work, health and family.
Bradesco offers to its employees an adequate work environment with conditions for a complete physical, mental and emotional well-being.
Bradesco invests in programs and methodologies which allow the mapping and identification of the causes of symptoms and diseases occurred in the work environment and relationships, aiming at promoting health and disease prevention, on a broad basis.
The issues addressed include Repetitive Stress Injury, Stress, Chemical Addiction (Alcoholism/Drugs/ Tobacco), Obesity, Cardiovascular Diseases, Sexually Transmitted Diseases, AIDS, among others. Those campaigns are carried out monthly through Interação magazine and in the Sipat (Internal Week of Occupational Accident Prevention).
Since hiring, Bradesco’s employees receive information and guidance on behavior and conduct adequate to the maintenance of health and improvement of life quality.
Bradesco has been an active member of the National Business Council for HIV/AIDS Prevention – CEN, which aims at promoting and strengthening the combat against such epidemic in the work environment, diffusing information to a considerable portion of workers, family members and the community as a whole about the safe ways for prevention from the infection by HIV virus.
Another outstanding issue related to life quality is the balance between the employee’s personal and professional life. We are permanently concerned with the working hours of our employees, so that they don’t surpass their contract time and are able to comply with their personal commitments and leisure.
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In order to offer an appropriate environment and extra emotional support to employees, the Bank created in its Call Center at the Santa Cecília building, in the city of São Paulo, a room for winding down. It is a reserved room with a different infrastructure from all other Organization environments. There the employee can find comfort and material that help to relax and soften the impact caused by day-to-day activities inside and outside of the call center. The room is available to everyone who may eventually go through situations related to psychological and emotional aspects.
Thus, we consider that the Bradesco Occupational Safety and Health System Management reassures the commitment to the safety and health of our employees, with the adoption of programs for ergonomic management and awareness about the importance of safety and health in the work environment.
| Benefits |
Our management model is grounded on the belief in people.
We acknowledge the value of performance and people’s potential for accomplishments as being the foundation of Bradesco Organization’s business.
We know that in order to have a better performance, people need to have prospects and confidence in the future, their basic needs met, and their families’ well-being guaranteed. For that reason, we have put together a benefit package which, going well beyond legal requirements, has the purpose of providing our employees and their families safety and comfort in the supply of their basic needs, professional development and special loan conditions for acquiring goods and properties.
This management strategy contributes to a healthier, more productive and participative work environment, providing conditions for great performance levels and better results.
The special benefits we provide to our employees constitute a factor of talent attraction and retention for the Organization, in addition to contributing to Banco Bradesco’s acknowledgment as one of the best companies to work for in Brazil.
| Health and Dental Care Insurance |
Our employees and their dependents have access to Health and Dental Care plans with premiums fully paid for by the Bank. The Healthcare Insurance includes non-traditional treatments, such as dialysis, organ transplants, acupuncture, homeopathy, myopia correction, GPR (Global Postural Re-education), heart valve, physiotherapy and treatment for Aids (with reimbursement of expenses for medicine prescriptions).
The Dental Care Insurance includes preventive and surgical treatment, oral rehabilitation, child dentistry, endodontics, periodontology and prosthodontics. Implants are offered at costs lower than the market by means of agreements.
In 1Q08, there were 525,438 medical and hospital consultations and 108,328 dental consultations.
| Supplementary Private Pension Plan |
Bradesco makes available for all its employees a Supplementary Private Pension Plan, in which the Organization contributes with 50% of the monthly installments, including in the 13th salary.
The plan guarantees coverage to the retiree, the retiree’s widow or widower and their children under the age of 21, or up to the age of 24, if they are undergraduates.
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| Group Life Insurance |
All Bradesco’s employees have access to Group Life and Personal Accidents Insurance, with subsidized costs. The employees retired by INSS, who left the company without cause, are offered the option to maintain the policy, with subsidized costs.
| Social Service and Psychological Assistance |
Bradesco’s employees and their dependents are provided with Social Service and Psychological Assistance follow-up under situations of need and emergency.
Services are offered in most varied situations: medical treatment, accidents, decease in the family and release of special loans.
In 1Q08, 2.2 thousand social and psychological assistances were provided.
Such initiative shows Bradesco’s concern with its employees’ well-being when facing personal problems.
| Snack Supply |
Bradesco’s employees receive snacks on a free basis all working days.
In 1Q08, we invested around R$10 million, distributing approximately 6.6 million snacks.
| Medicine |
For the states of São Paulo and Rio de Janeiro, Bradesco offers agreements with the drugstores Drogasil and Drogasmil, for the acquisition of medicine at a cost lower than that practiced in the market.
| Influenza Vaccination |
Bradesco carries out an annual vaccination campaign against influenza, offering the vaccination free of charge to all its employees and at subsidized prices to their dependents. In the 2007 campaign, 54,750 doses of the vaccine were given, with a cost higher than R$1.7 million.
| Leisure Activities |
Bradesco maintains in Cidade de Deus, in the city of Osasco, an area with swimming pools, racetrack, soccer field, basketball, volleyball, soccer, tennis and squash courts, destined to leisure and recreation activities to employees and their dependents.
In 1Q08, 13.9 thousand people attended the facilities.
| Social Loan |
By means of Caixa Beneficente (Benefit Fund), the Organization offers financial assistance to its employees, granting loans with subsidized fees, destined to emergency conditions, education expenditures, acquisition of orthopedic instruments, glasses, funerals, psychologists, psychiatrists and speech therapists, among others.
| Credit Facilities for Acquisition of Computers, Vehicles, Real Estate and Personal Expenses |
Bradesco offers loans to its employees with subsidized fees for acquisition of computers, vehicles and personal expenses. Employees and their first relatives may also finance the acquisition of residential real estate at lower interest rates.
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| Fee Exemption |
The Bank exempts its employees to pay several fees, such as: checking account maintenance, fee to open credit, issuance and annuity of credit and debit cards, financial transactions on ATMs, access to Fone Fácil, issuance of bank statements in electronic terminals and utilization of single check sheets.
| Online Shopping Channel |
The ShopFácil Funcionário is a special online shopping channel, through which Bradesco negotiates special discounts directly with various products suppliers. Partnerships are also executed with some stores, by means of which the employees have access to special prices and payment conditions.
| Other Benefits provided for by law and in the Collective Convention of Bank Employees: |
• Transportation Voucher
• Meal Voucher
• Food Voucher
• Maternity/Paternity/Wedding/Decease Leave
• Funeral Assistance
• Day Care/Baby Sitter Assistance
• Professional Requalification Allowance
| Human Resources – March 2008 |
On March 31, 2008, Bradesco, including its subsidiaries, had 83,124 employees.
The following table presents the variation in the last periods:
| December | March | |||||||||||
| 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | |||||||
| Banco Bradesco | 59,430 | 62,013 | 61,347 | 63,163 | 65, 050 | 65,682 | ||||||
| Subsidiaries | 9,407 | 11,631 | 12,534 | 13,577 | 17,054 | 16,762 | ||||||
| Bradesco Subtotal | 68,837 | 73,644 | 73,881 | 76,740 | 82,104 | 82,444 | ||||||
| Banco BCN | 5,203 | – | – | – | – | – | ||||||
| Subsidiaries | 1,741 | – | – | – | – | – | ||||||
| BCN Subtotal | 6,944 | – | – | – | – | – | ||||||
| Amex Brasil | – | – | – | 442 | – | – | ||||||
| Subsidiaries | – | – | – | 2,124 | – | – | ||||||
| Amex Subtotal | – | – | – | 2,566 | – | – | ||||||
| Banco BMC | – | – | – | – | 669 | 680 | ||||||
| Subsidiaries | – | – | – | – | – | – | ||||||
| BMC Subtotal | – | – | – | – | 669 | 680 | ||||||
| Total | 75,781 | 73,644 | 73,881 | 79,306 | 82,773 | 83,124 | ||||||
We point out below some indicators of the human capital of Bradesco in March 2008:
| Gender | Age | Years of Service with Bradesco |
Educational Background |
Managerial Position | ||||||||||||||
| Younger than 30 | 50% | Less than 5 years | 43% | High School | 17% | |||||||||||||
| Men | 52% | From 31 to 40 | 27% | From 6 to 10 years | 19% | University | 82% | Non-commissioned | 50% | |||||||||
| Women | 48% | From 41 to 50 | 19% | From 11 to 20 years | 20% | Other | 1% | Commissioned | 50% | |||||||||
| Older than 50 | 4% | More than 20 years | 18% | |||||||||||||||
| Personnel Expenses |
In 1Q08, Bradesco’s personnel expenses reached R$1,737 million, including those related to compensation, social charges, benefits, training, employees’ profit sharing, among others.
The following pie graphs show the percentage share of each item in relation to total Bradesco’s personnel expenses in the 1st quarter of 2007 and 2008.
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| Breakdown of Personnel Expenses |
| Personnel Expenses by Business Segment |
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| Training |
Believing in people’s value and in the capacity of development of each individual is one of the values declared by the Organization, made feasible by means of actions which aim at qualifying and developing its professionals, making available training programs aligned with the organizational strategies, comprising all the Organization’s areas and all its employees from different positions, motivating the self-development and the constant search for their improvement.
Certified by NBR ISO 9001:2000, since December 2002, the Staff Training Department has the purpose of, by means of the most modern qualification media, reinforcing its commitment to contributing to the development and appreciating the staff and the employees through the constant search for quality.
Investments in educational actions focused on employees of Bradesco Organization increase each year and show the importance given to the team qualification as a competitive advantage to the success of its results. Among others, these aspects make Bradesco a Complete Bank, which respects the client and shows its various actions with transparency and credibility, reflected by the qualification, commitment and involvement culture of its employees.
For 2008, a R$84.9 million budget was made available, 42% higher than the average of investments made over the last 5 years, with the purpose of continuing the main training programs targeted at several areas of the Organization and implementing new programs aimed at meeting corporate business strategies.
In this special context of knowledge management, Bradesco Organization has strongly invested in training programs that prioritize the strengthening of internal competences and to the development of talents, as a support to the mission described in the internal policy of people management, “Recognizing that people are the sustaining basis of our business, we have as mission to attract, develop, recognize, manage, esteem and stimulate Bradesco Organization’s talents, by means of the permanent construction of an integrated value relation among corporate activities.”
In 1Q08, trainings had 318,855 participations in the several available media: TreiNet, Video Training, Brochures and Presence Courses. 573 different courses were made available and R$ 10.6 million was invested.
| Presence Courses |
In this quarter, there were more than 25 thousand participations in presence courses, mainly actions for Retail segment comprising nearly 9 thousand participants in several programs. We point out the Loan in Retail program, in partnership with Sebrae, focused on loan analysis and granting for micro and small-sized companies, with a view to contributing with the financial growth and strengthening of such public in the competitive market.
We also count on the Loan Business course, whose program was implemented for the Managers of Corporate Accounts, in the Retail segment, aiming at improving service; identifying the companies’ needs through a commercial approach; negotiating appropriate credit lines; and improving client loyalty and results. By means of these factors, we are able to provide the necessary knowledge and techniques for the ongoing expansion of business.
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In the ongoing search for excellence in the provision of our services, we count on the courses “Assistance –A New Business View”, “Workshop for Bank Cashier” and “Pre-Assistance Techniques”. These courses are specifically focused on the quality of assistance and on the preparation and awareness of the teams directly connected to the assistance of new clients.
In this quarter, we point out the following courses: Interpersonal Relationship; Verbal Communication and Personal Marketing; as well as Perception Techniques. They provide the improvement of behavioral skills essential for the development of the activities of employees from several hierarchical levels.
We also carried out important courses in partnership with renowned educational entities, such as Faculdade Largo São Francisco/USP (Basic Law Learning); FGV (Administration and Finance); and FIPE/USP (Economics and Markets and Financial Intermediation). By means of these courses, we aim at enlarging the global and market view of professionals operating in several segments and who are directly focused on the corporate relationship and businesses.
In order to contribute to the improvement of professionals working in the PAB (Banking Service Branch) segment, we made available special programs focused on the clients’ needs, businesses and strategies, such as: Business Program for PAB; Loan Strategies; Business Practices, among others.
Other highlights are the courses destined to the branches’ managers of Prime and Retail segments, such as: Leadership and Technical Supplementary Qualification for Branches’ Managers – First Management, which improve the technical and behavioral competences required for this position; and the Coaching, Enterprising and Results Leadership Program, which prepares the professionals to perform as managers of teams in the current scenario, by absorbing the competences and instruments necessary to transform work groups into enterprising and winner teams, focused on leverage of businesses and higher corporate results.
As a supplement to the qualification process, we are currently developing the PAA (Advanced Service Branch) Managers Education Program, which increases the professionals’ view about the segment and market niche in which they are focused. Thus, the participants are able to identify and understand the specific needs and expectations of their clients, establishing service strategies and business planning.
In order to provide initial qualification for Account Managers, we count on the Programs of Basic Education for Corporate Clients and Individuals, destined to technical, behavioral and commercial education, essential for the initial development of the competences necessary for this position.
We also point out the Program of Business Skills Development for Individuals and Corporate Clients, which have as purpose the technical and commercial education of professionals who perform in the business area of the branches, highlighting the development and improvement of knowledge and behaviors, which favor the proper relationship and the meeting of the clients’ needs, focusing on results.
Another action in progress is the Education Program for Individual and Corporate Assistant Managers, which qualify the professionals of Retail branches, responsible for the structuring and operationalization of loan product processes, thus providing quality and efficiency of operations.
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We also highlight the actions for Prime segment, to which we made available the Managerial Development Program for Relationship Managers so as to provide for the participants technical, operational and commercial knowledge related to the segment’s business, thus improving the service for the public and optimizing the Organization’s results. Other highlights were the courses of Shares, Capital Markets and Investments, that rescue technical and commercial aspects essential to trading, so that clients see Bradesco as a Complete Bank, and the Qualification Programs for Administrative Managers and Assistant Managers, which prepare the team for the execution of its responsibilities and functions in the Prime segment.
The qualification process has been continued with the Coaching Leadership, Enterprising and Results Program, which enables the professional improvement and the consolidation of their role as people managers and coach, so as to meet their goals by means of their teams.
We intensified the Business and Financial Consulting Program, developed by FIA, which qualified and trained the teams of Prime Relationship Managers with techniques and methodologies favoring their performance as financial and business consultants, helping them to identify and stimulate the clients’ needs, aiming to present viable solutions or profitable investments, taking into account the ethical and social elements, as well as the focus on results for the client and the Organization. We launched the Agribusiness Program: Risk and Opportunity Identification, which increases the group knowledge on agribusiness market, its potential, current situation and future trends. This program focused on the development of the managers’ commercial view so that they perform the proper planning and follow-up of agribusiness business / results, aiming at the identification of opportunity and risk signals, as well as on the meeting the clients’ needs and expectations, in order to ensure the achievement of established goals for the segment.
For the Bradesco Empresas and Corporate segments, we recently launched the Business Strategic Vision and Strategic Finance Programs, which encourage the professionals to innovate their managerial practices before their challenges in the market, based on self-knowledge for an analysis of the institutional and organizational environments. These programs also allow the conciliation between corporate theory and practice, focused on analysis, assessment and innovation in their activities. Also regarding launches, the Program for Qualification of Bradesco Empresas’ and Bradesco Corporate’s Assistant Managers was developed with the purpose of expanding the team’s technical and managerial view necessary to the professional development, taking into consideration their duties and responsibilities.
The training actions for the Bank’s Departments and its Affiliated Companies are also pointed out due to more than 15 thousand attendances in several external and internal events, made available by specialized companies, which offer vacancies to the general public and internal events – developed by specialized consultants as well as by teams of instructors and employees of the Organization.
We continued with the courses offered on a quarterly basis, whose contents are related to the development of behavioral skills, such as the Meeting Techniques course, whose purpose is to prepare, carry out and assess the results of a meeting, so as to increase the business’s results; Presentation Techniques course, whose purpose is to improve skills to effectively present projects or develop presentations in a simple and objective manner; Service: A New Corporate View course, which reinforces the importance of using intrapersonal and interpersonal knowledge when serving the internal and external clients.
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We also point out the most recent launched program: Leadership Techniques, focused on the development of interpersonal skills, larger motivation and best leadership practices. Especially for the managerial positions, we continued the courses Interpersonal Relationship, Verbal Communication and Personal Marketing, Economy and Markets, Financial Intermediation, Administration and Finance and Management Skills Development.
Training for Information Technology in 1Q08 had the attendance of 285 professionals in technical training courses, aiming at improving storage performance and information availability to internal and external clients.
The Project Management Program was continued, and there are currently 114 professionals undergoing training and two more classes with 60 professionals are expected to begin, so as to provide solutions ensuring quality to technology systems. In addition, 51 employees obtain the PMP – Project Management Professional certification. As a competitive edge, the Software Quality Certification processes, presenting several software engineering techniques and concepts about product quality, have been continued, as it is an innovative certification in the country, whose fourth class, in progress, is attended by 22 professionals who should join the 65 ones already certified. We also point out the Certification for Experts in Positions Points, which qualifies employees to measure systems in accordance with standard technique in the international market. Currently, we count on 59 employees certified and 20 employees are being trained to apply for the exam.
Aligned to the IT Improvement Project, we have promoted courses on the new System Development Methodology for approximately 129 professionals, in addition to carrying out technical/operational courses and lectures approaching themes on COBIT, IT Governance and Critical Chain, which aim at a faster and more effective service in identifying IT needs.
With the purpose of bringing forward the preparation and qualification of new professionals, generating a technical renovation and qualification atmosphere for operation in IT areas, we are promoting the IT Qualification Programs for trainees and interns. We currently have 40 trainees, coming from Fundação Bradesco, and 28 interns from renowned universities.
We continued the first qualification class for 26 professionals of the Business Technology Department in the best international market practices for the Business Analyst position, based on the BABok (Business Analysis Body of Knowledge) manual, which is an innovative course in Brazil.
Also in IT areas, we have 16 employees taking part of MBA, graduate or master’s degree courses focused on IT in several renowned educational institutions. In addition, we have two classes of MBA in Corporate Management, with focus on Business Technology, in partnership with FIA/USP, benefiting 66 professionals, which aims at qualifying them to managerial and business skills to operate in an integrated manner in the company scope, with domestic and foreign markets and the society.
We point out that the training for Bradesco Seguros e Previdência, which involved more than 9,000 attendances, is still carried out in this quarter through the UniverSeg brand – Universo do Conhecimento de Seguro (Insurance Knowledge Universe), consolidating new actions that reflect the strength of the project, such as: the second class of the MBA in Business Management with focus on Insurance, in partnership with Ibmec–RJ, benefiting 41 professionals on management and superintendence levels; the Technical Workshops: Normative Resolution 167 – ANS (National Health Agency) and Automobile Claim Regulation, which update and improve the professionals operating in Bradesco Saúde and Bradesco Auto/RE in the normative and process procedures set forth for 2008.
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We started the qualification programs estimated for the year with the project Qualification for Production Supervisors, with 25 new professionals, which entered in the commercial area from the market. The courses of Market Quality and Profile, Competitive Strategies of Service and DRI –Interpersonal Relations Development were also carried out to the Insurance Company employees.
For the brokers who commercialize Bradesco Seguros’ products, in the insurance market and in the Bank’s branches, we continued the basic courses, such as Vehicle, Equipment, Residential, Corporate, Health, SPG, Odontological, Applicable Sales and Communication & Professional Development, which aim at providing them information that set our products apart from the competitors’ ones, as sales argument. We also created the Mass Basic Lines program, so as to support the advisory teams of brokerage companies operating as partners in the commercialization of Bradesco Auto/RE products.
| Number of Presence Participations in the Last Quarters |
| Partnerships with Universities and Colleges |
Since 1996, in partnership with educational institutions, such as FIA, FIPE, Fipecafi, FGV and Ibmec, 2,151 Bradesco’s employees obtained MBAs, Post-Graduate, Specialization and Master’s Degree certificates, important for the maintenance of quality of information provided and for the qualification of the staff to be aligned with the most modern management practices.
In this quarter, a class of the MBA in Controller (Fipecafi), two classes of the MBA in Banking Business (FGV – SP), two classes of the MBA in Online Banking Business (FGV – RJ), two classes of the MBA in Corporate Management with focus on Business Technology (FIA) and one class of the MBA in Business Management with focus on Insurance (Ibmec – RJ), totaling 304 professionals from different areas of the Organization, are in progress.
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| Certification in Investment Products |
Programs that prepare for the exam of Certification in Investment Products are in progress and are specially prepared for employees who need to obtain a certification, after study of the material previously made available.
From January to March 2008, 771 professionals were certified. The average approval index reached by Bradesco, this quarter, was 59.7%, while the market index stood at 49.5% . This fact consolidates the concern the Organization has to adequately prepare professionals and also the involvement shown by employees during the certification process.
These figures enabled the certification of 16,582 professionals directly involved in the assistance to clients of the Branches Network and to investors qualified in compliance with the Resolution no. 3,158/03, of the Brazilian Monetary Council.
| TreiNet – Training through the Intranet/Internet |
TreiNet, a special qualification tool, allows the dissemination of new knowledge indiscriminately and quickly to all the Organization’s staff. It constitutes an important instrument of personal and professional development.
Bearing witness to that are the over 2.5 million participations in the 103 available courses since its implementation in 2000. In this quarter, there were more than 234 thousand participations and, on average, each Organization’s employee attended one course only in March.
In this quarter, two new titles have been launched:
Bradesco University Account: its purpose is to provide information about Bradesco University Account, disclose its advantages and increase the business opportunities.
Individual Client Multirisk: the training related to Basic Lines was restructured and organized into five courses. This is the second course of the series and has as purpose to provide information on the multirisk insurance destined to Individual Clients.
In English learning, on-line training has also been a competitive advantage, enabling the participation of around 1,000 employees in courses from basic to advanced level.
By means of Fundação Bradesco Portal, some TreiNet courses are available for clients who hold a Bradesco University Account. Moreover, by means of the website 100% Broker of Bradesco Seguros e Previdência, TreiNet is also available for brokers and dealerships who sell the Organization’s insurance products.
| Evolution of courses launched in TreiNet |
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| Brochures and Video Training |
Based on the demands of Bradesco areas of standard and operational issues and, with a view to employees’ orientation, this quarter we have made four brochures available about the following themes:
– Investment Diversification Practices – with the purpose of guiding the employees to completely serve the investor clients in the needs of their businesses;
– New Service Baskets – with information on changes in baskets and the realignment of some fees, among other;
– SALE System - developed for the Prime segment, in which there is a guide to the managers teaching how to use the system to manage their portfolios, since the system warns when there is credit risk;
– PCME – Market Conquest Platform, with the purpose to guide the Retail segment managers about the Market Conquest Platform, a tool which aims at providing the view of the market potential of Bradesco and of the competitors operating in a certain influence area to support the Branches in the conquest of new Corporate clients.
The PPE (Politically-Exposed People) video training was also launched for the Branches’ employees to support people who operate in the public sector.
| Social and Corporate Responsibility |
We continued with the projects that focus on human valuation, such as: Youth Apprentice Program, Young Citizen Program and Internship Programs with students from different universities, among them, the Bradesco Program – Unipalmares (Universidade Zumbi dos Palmares). These programs benefit youngsters in the beginning of their careers, with qualification, social inclusion, as well as personal and professional development. Also under this context, Bradesco developed preparatory training in Libras –Brazilian Language of Signs (the sign language for deaf-mute people), for employees providing direct services to disabled clients, including hearing impaired clients, in order to guarantee this public accessibility to our branches.
| Number of Employees in Training– thousands |
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| Total Amount Invested in Training – R$ million |
| Fundação Bradesco – The Bradesco Organization’s Social Action |
| Background |
Fundação Bradesco, a non-profitable entity, with its headquarters at Cidade de Deus, Osasco – SP, was founded in 1956 and declared to be of Federal Public Utility by Decree 86,238, on July 30, 1981.
Aware that education should correspond to equal opportunities and personal and collective fulfillment, Fundação Bradesco currently holds 40 schools installed as priority in the country's most underprivileged regions, in all Brazilian states and the Federal District.
| Targets and Goals |
Through the innovative action of private social investment, the main mission of Fundação Bradesco is to provide formal quality education to children, young people and adults, so that they achieve personal fulfillment through their work and the effective exercise of citizenship.
In the last ten years, Fundação Bradesco has provided presence and distance education courses on a free of charge basis and with quality to 1,474,000 students comprising children, youngsters and adults.
In 2008, the goal is surpassing 411,665 thousand services in its several performance segments. Out of this result, 110,415 thousand students will be served in its own Schools, in the basic education, from Kindergarten to High School and High School Technical Education; in youngsters and adults education; and in the preliminary and continuing qualification of workers. In addition to these benefits, through virtual school, its e-learning portal, and CIDs – Digital Inclusion Centers, there will be more than 300 thousand services. Uniform, school supply, food and medical and dental assistance are ensured to the approximately 50 thousand students of Fundação in the basic education on a free of charges basis.
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| Areas and Methods of Action |
| Basic Education |
Basic Education, which includes Kindergarten, Elementary School (first to ninth grades) and High School, comprises more than 45% of all students on courses provided on a free basis by Fundação Bradesco each year. In addition, the students receive free school materials, uniforms, meals and health and dental care assistance.
Fundação Bradesco is always evaluating the contemporary learning trends and, therefore, is always bringing new challenges for learning practices so that the conclusions are spread throughout all school units and that propose ongoing interaction among them.
The school is understood as a privileged environment for citizenship values and for regarding students as original, creative human beings and culture producers. Students learn through experiences in both school and society. Hence, their potential and needs to interact and reflect on the diversity of knowledge are approached in the classrooms.
Fundação Bradesco’s multi-disciplinary learning seeks to provide students with access to practical and theoretical cognitive content, based on the principle that the development process is both dialectic and constructive.
On this intent, Fundação Bradesco offers several continuing education opportunities to educators, including presence and distance education courses.
Concomitantly to teachers education, there is the production of teaching materials and resources. Books are used by students from the 1st to the 5th year of Elementary School, Philosophy material for High School, and CD-ROMs and DVDs for teachers with guidelines for their work.
| Technical Professional Education |
Based on the commitment of offering technical professional education capable of guaranteeing to the student the continuous right to develop their skills for a fruitful and social life, Fundação Bradesco is in consonance to a new model of technical education in force in Brazil. Bradesco structured the course syllabuses, prioritizing the demands from the market and the society from a brand new perspective, offering work preparation.
| High School Technical Education |
Based on the professional areas of Agribusiness, Management, Industry (Electronics) and Information Technology, a number of courses were developed and offered according to the specific needs of the communities in which the school units are located.
The syllabus of these courses aims to ensure a close relationship among work, knowledge and citizenship. The final target is to bring out creative, productive and business-minded citizens, as well as showing students the importance of permanent education.
By offering students, who arise from underprivileged backgrounds, courses whose syllabus will facilitate their entry and re-entry into the labor market, Fundação Bradesco provides access to the emerging and fast-changing business world.
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| Preliminary and Continuing Qualification of Workers |
Fundação Bradesco offers on a free of charge basis this mode of education, designed for the needs of update, qualification and re-qualification of workers with different school levels. There are more than 100 options for free courses, presenting flexible programs, in the same track of the labor market conditions, in the following professional areas: Management, Personal Image, (Fashion and Personal Beauty Care), Industry (Electrical, Electronics and Printing Technology), IT, Leisure and Social Development, Tourism and Hospitality (Tourism, Hospitality and Catering Services). In the Agribusiness Area, Fundação Bradesco offers courses which include Artificial Insemination techniques.
| Youth and Adult Education |
These youngsters and adults come from different regions but often have similar life histories and comprise in their majority, workers and housewives who were unable to attend or remain at school up to the conclusion of the studies. At Fundação Bradesco, they are given adult literacy courses and graduate at both Elementary and High School levels, apply for university entry, in order to improve their employment prospects and most importantly to increase their skills.
Youth and Adult Education courses are given in two segments: Youth and Adult Literacy and Tele-education for Elementary and High School Equivalency.
The Tele-education courses are offered in the own schools of the Fundação or on the premises of the companies that have entered into operating agreements with it, with flexible timetables to suit the different work shifts, once the classrooms are taken up to the companies, respecting the different working hours and avoiding the need for students to commute to school units. Another reason for the good performance is related to the investments made by Fundação Bradesco in technical-learning resources.
Developed for the parents of students who attend the schools of Fundação Bradesco, the Adult Literacy Course is structured around a social-constructivist concept, whereby the student becomes an active subject in the learning process. The topics addressed during classes arouse interest and motivate learners, guaranteeing the success of the course.
The main purpose of the Fundação Bradesco is to prepare students to improve their life conditions, based on the acquisition of organized knowledge, since according to Bradesco’s philosophy education alone is capable of forming citizens who are participative and aware of their role in society.
| Distance Learning – Virtual School |
Maintained by Fundação Bradesco since 2001, the e-learning “Virtual School” portal, in partnership with worldwide well-known content providers, enables the spread of service of its 40 Schools to locations out of where they are placed.
Based on pedagogical mediation concept, in which the student is the main agent of one’s learning, the Virtual School currently offers 184 distance and hybrid education courses in the IT area, benefiting around 165 thousand students and teachers. The portal allows experience, knowledge and information exchange, through online tools, such as chats, conferences and virtual campus which may comprise more than 150 thousand users. In 2008, we expect to serve more than 180 thousand people.
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| Digital Inclusion |
Fundação Bradesco promotes fast and easy access to new information technologies to people who live near its schools by means of Digital Inclusion Centers (CIDs).
In addition to be a learning and professional qualification center, by offering short and long-term courses similar to those provided in Fundação Bradesco Schools, the CIDs also work as a discussion forum of local problems, associated with companies in partnership with Bradesco Organization, Public Schools, Universities and Brazilian and Foreign Research Centers, such as Universidade de São Paulo (USP) and Media Lab (MIT).
Currently, Fundação counts on 90 Digital Inclusion Centers, with an estimate of more than 100 thousand assistances in 2008 to users of different profiles, such as Indians, Afro-descendents, youngsters, adults, elderly and urban and rural communities in all Brazilian regions.
| Material Facts |
On March 9, all School Units of Fundação Bradesco promoted for the 6th consecutive year the “Brazilian Day of Voluntary Action”. More than 1.7 million services were carried out in 225 places, including the 40 Schools of Fundação Bradesco and the Digital Inclusion Centers (CIDs) throughout Brazil.
This year, the Brazilian Day of Voluntary Action gathered 34.1 thousand volunteers to help the community, among employees of Bradesco Organization, students, teachers and employees of Fundação, in addition to representatives of the community from several professional sectors, such as physicians, dentists and lawyers. The participation of the Organization’s employees stood out in the entire country, with the formation of groups which, connected to schools of Fundação, carried out a solidarity marathon. Out of the total of volunteers, 5.6 thousand were employees of the Organization.
With the educational support of Fundação Bradesco, the International Exhibition “Genomic Revolution” premiered in the American Museum of Natural History, in New York, organized by the Sangari Institute. The exhibition, held in the Ibirapuera Park in São Paulo, shows a study of the genes and their functions and approaches fundamental fields of molecular biology and genetics, as well as their impacts on our everyday life.
Representatives of Fundação Bradesco traveled to Japan and South Korea with the purpose of getting to know the public and private educational system, the application of technology in teaching and learning and the benchmarking in schools and research centers.
Bradesco Historic Museum celebrated 25 years of existence, more than two decades dedicated to preserving the Organization’s memory, reflecting Bradesco’s leadership and innovation path.
Coordinated by Fundação Bradesco, the Museum activities include documental management, research and preservation of the collection, disclosure by means of temporary and permanent exhibitions and the Internet Portal, as well as support to internal and external researchers, assistance to the public and educational actions, which provide experiences to special publics such as children and disabled people.
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| Main Acknowledgments |
Projects of 8th grade students in Middle School, High School and Technical Courses of public and private schools all around Brazil participated in the VI Febrace – Brazilian Fair of Sciences and Engineering, promoted by USP (Universidade de São Paulo). It was aimed at encouraging new vocations in Sciences and Engineering by developing creative and innovative projects. Fundação Bradesco was represented with thirty nine projects and, for the fifth consecutive year, it achieved important awards, totaling twenty four:
• Intel ISEF Award and Ricoh Corporation Award
Project: Scraps of washing machine are turned into bread kneader – Participation in Intel International Science and Engineering Fair in Atlanta, USA – School Unit of Cuiabá/MT.
• Febrace Awards
Project: Evaluation of sugarcane cultivations – 1st place in Agrarian Sciences – School Unit of Canuanã/TO.
Project: Analysis of the healing action of mangaba tree for cattle – 2nd place in Agrarian Sciences – and 3rd place Innovation and Creativity Highlight –School Unit of Canuanã/TO.
Project: Recovery of metal in school laboratory – 3rd place in Popular Voting – School Unit of Jardim Conceição – Osasco/SP.
Project: When sound and image become unseen threats: research and analysis of the effects of visual and sound pollution in the everyday of metropolis. Is there a solution? 1st place Best Poster, 1st place Best Stand and 1st place in Human Sciences – School of Osasco/SP – Unit I.
Project: Living well in São Paulo, is this a utopia? Scientific and architectural proposals as an instrument to improve the life quality of the population of the city of São Paulo with the intervention in the traffic of marginal avenues and removal of pollution of Pinheiros River – 3rd place in Applied Social Sciences – School of Osasco/SP – Unit I.
Project: Reuse waste by feeding your pet! – 1st place in Agrarian Sciences – School Unit of São Luís/MA.
Project: Beriberi: I don’t like it, I don’t like it! – 3rd place in Health Sciences – School Unit of São Luís/MA.
• Incentive to Technological Innovation Award
Project: Evaluation of Sugarcane Cultivations –School Unit of Canuanã/TO.
Project: Test of the use of “neen” in the organic tomato production – School Unit of Bodoquena/MS
• Embrapa Award
Project: Evaluation of Sugarcane Cultivations –School Unit of Canuanã/TO.
Project: Living well in São Paulo, is this a utopia? Scientific and architectural proposals as an instrument for improving the life the quality of the population of the city of São Paulo with the intervention in the traffic of marginal avenues and removal of pollution of Pinheiros River – School of Osasco/SP – Unit I.
• SBPC – Brazilian Society for the Science Progress Award
Project: Analysis of the healing action of mangaba tree for cattle – School Unit of Canuanã/TO.
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• Prêmio Galileu Galilei de Incentivo à Ciência
(Galileu Galilei Award of Incentive to Science)
Project: Analysis of the healing action of mangaba tree in the cattle – School Unit of Canuanã/TO.
Project: Earthworm breeding as a resource for the teaching of Sciences – School Unit of João Pessoa/PB.
Project: Beriberi: I don’t like it, I don’t like it! –School Unit of São Luís/MA.
Project: Reuse waste by feeding your pet! – School Unit of São Luís/MA.
• Prêmio destaque Mulheres em Geociências
(Women in Geosciences Highlighting Award)
Project: Electronic Waste – the pro-environmental reutilization of computers discarded in benefit of the society – School Unit of Campinas/SP.
• Prêmio Faculdade de Medicina da USP
(USP Medical School Award)
Project: Monitored chair to correct posture –School Unit of Gravataí/RS.
• Prêmio Sangari: Brasil Descobrindo a Ciência
(Sangari Brazil Discovering Science Award)
Project: Beriberi: I don’t like it, I don’t like it! –School Unit of São Luís/MA.
Prêmio Executivo de IT do Ano
(IT Executive of the Year Award)
The Manager of the Educational Technology Department of Fundação Bradesco achieved the award in the Several Services category. Our representative stood out in the development of the technological innovation project focused on education and social inclusion. The award acknowledges leading executives in the innovation process applied to businesses and activities in the institutions. The highlights were the projects of technological mobility (one computer by student), the network of partnerships in the Open Innovation concept articulated by the BIT (Bradesco Technology Institute) and the BSC (Balanced Scorecard) methodology of strategy management.
Motion of Applause – Acknowledgment granted by the City Council of Registro to the School Unit of Registro/SP due to the Brazilian Day of Voluntary Action.
Homage – Granted during the Special Session by the City Council of João Pessoa to the School Unit of João Pessoa/PB for its 10th anniversary.
First Lego League Power Puzzle – The teams Free Access – Team #8079, from the School Unit of Osasco I and Escorpiões – Team #8228 from the School Unit of Jardim Conceição – Osasco/SP received the respective awards: Missions and Regional Champion and the Jury Award.
First Robotics Competition Overdrive– Two teams from the School Units of Gravataí/RS and Osasco I/SP received the respective awards: Regional Winner #2, Autodesk Visualization Award and Motorola Quality Award, Underwriters Laboratory Industrial Safety Award and Johnson & Johnson Award.
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| Schools’ Location |
The majority of the Fundação Bradesco’s educational units are located in the outskirts of major cities or in rural areas where there is a significant lack of educational and welfare assistance. Thousands of students all over Brazil are given the opportunity to study at these schools.
| Schools | Students | Schools | Students | |||
| Aparecida de Goiânia-GO | 2,104 | João Pessoa-PB | 2,348 | |||
| Bagé-RS | 2,321 | Laguna-SC | 2,080 | |||
| Boa Vista-RR | 2,525 | Macapá-AP | 2,112 | |||
| Bodoquena-MS | 1,353 | Maceió-AL | 2,195 | |||
| Cacoal-RO | 2,464 | Manaus-AM | 2,513 | |||
| Campinas-SP | 4,404 | Marília-SP | 3,163 | |||
| Canuanã-TO | 1,552 | Natal-RN | 2,252 | |||
| Caucaia-CE | 2,313 | Paragominas-PA | 2,300 | |||
| Ceilândia-DF | 3,415 | Paranavaí-PR | 1,921 | |||
| Cidade de Deus – Osasco-SP | Pinheiro-MA | 2,148 | ||||
| • Unit I | 4,026 | Propriá-SE | 2,221 | |||
| • Unit II | 2,816 | Registro-SP | 2,436 | |||
| • Education Offices of Young People and Adults | 6,180 | Rio Branco-AC | 2,848 | |||
| • Preliminary and Continuing Qualification of Workers | 6,215 | Rio de Janeiro-RJ | 4,308 | |||
| Conceição do Araguaia-PA | 2,492 | Rosário do Sul-RS | 975 | |||
| Cuiabá-MT | 2,397 | Salvador-BA | 2,211 | |||
| Feira de Santana-BA | 886 | São João Del Rei-MG | 2,537 | |||
| Garanhuns-PE | 971 | São Luis-MA | 2,469 | |||
| Gravataí-RS | 3,609 | Teresina-PI | 2,422 | |||
| Irecê-BA | 2,635 | Vila Velha-ES | 2,191 | |||
| Itajubá-MG | 2,577 | |||||
| Jaboatão-PE | 2,765 | |||||
| Jardim Conceição – Osasco-SP | 2,745 | Total | 110,415 |
| Fundação Bradesco – An Educational Project as large as Brazil |
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| Source of Funds |
Funds for the financing of the activities of Fundação Bradesco derive from income, exclusive of its own Shareholders’ Equity.
| – Funds Invested in the last 10 years (*) | R$1.392 billion | |
| – Funds Expected for 2007 | R$200.982 million | |
| – Funds expected for 2008 | R$220.069 million |
| Courses – Grades |
| Assistance Forecast for 2008 | ||||
| Students | % of Total | |||
| Basic Education | 49,534 | 12.03 | ||
| Youth and Adult Education | 19,667 | 4.78 | ||
| Preliminary and Continuing Qualification of Workers | 41,214 | 10.01 | ||
| Subtotal | 110,415 | 26.82 | ||
| Distance education (CIDs and Virtual School) | 301,250 | 73.18 | ||
| Total Services | 411,665 | 100% | ||
| Student Profile – Reference: Service in 2007 |
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| Increase in the Number of Students – Assistance in Schools |
| Finasa Sports Program |
By means of Finasa Sports Program, Bradesco Organization shows its support for the development of citizenship and social inclusion of children and young adults between 9 and 18 years old.
During its 20 years of activity, Finasa Sports entered into many partnerships, among which the most outstanding is the agreement with Osasco’s Local Government. This partnership contributes to expand the Program’s social reach.
Currently, the Program has a total of 116 professionals carrying out activities at state and local schools, at Osasco’s city hall sport centers, at SESI –Osasco unit, at Fundação Bradesco and at private schools, assisting 3,000 girls free of charge in 54 qualification centers and 154 athletes in 13 Specialists’ Centers, in volleyball and basketball.
Most of these girls come from deprived backgrounds.
The Program’s main goal is the whole development by means of a healthy activity such as sport practice, education, health and well-being actions that help raise these girls’ awareness about citizenship, so that they can be in charge of their own lives and make responsible choices in their actions before society.
The Program also supports the formal education process by adopting as a requirement the girls’ enrollment and attendance in regular schools.
At the Training Centers, all students have guaranteed access to quality sports education, regardless of their physical characteristics, such as weight, height or skills for sports.
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| Programa Finasa Esportes (Finasa Sports Program) |
The activities for children and young adults in the Specialists’ Centers, besides sports learning with medical, psychological, physiotherapic and nutritional follow-up, also comprise regular information on hygiene, stress, adolescence, drug use and teen pregnancy prevention, turning these places into true citizenship centers.
This program also offers, according to categories, a support structure, with benefits such as: life insurance, health care, among others, including sporting material used in training and competitions.
The sports practice, in addition to contributing to a healthy life, is responsible for the formation of high level athletes, enabling the players’ participation in Finasa Osasco’s Adult Volleyball team and in the children’s and junior’s Brazilian female volleyball and basketball teams.
It is the first social sports program to receive funds from tax incentive, made available by the Estatuto da Criança e do Adolescente (Statute of Children and Adolescents), through the agreement executed between the National Council for the Rights of Children and Adolescents (Conanda) and Ministry of Sports in 2003. The Finasa Sports Program is a benchmark in sporting activities of this nature.
| Social-cultural Events |
In 1Q08, Bradesco supported and sponsored several social-cultural events in different locations of the country, from regional feasts that preserve folkloric traditions to worldwide spectacles.
It participated in the Summer Festival of Salvador (BA), it was present in the carnivals of Salvador (BA), Rio de Janeiro (RJ), Recife and Olinda (PE), as well as the Grape Feast, in Caxias do Sul (RS).
Continuing the season started last year, Bradesco was the exclusive sponsor of Cirque du Soleil with the Alegria spectacle, which counted on the presentation of American Express Cards. In 2008, the Canadian group will visit Rio de Janeiro, São Paulo and Porto Alegre, in its second tour in Brazil.
West Side Story and Aida – The Timeless Love Story super productions, two of the most famous Broadway musicals that had a Brazilian version, both presented in São Paulo, also counted on the exclusive sponsorship of Bradesco Prime and the presentation of American Express Cards.
In 1Q08, the Organization was directly involved in the support of other large cultural events, such as the international exhibition Genomic Revolution shown by the first time in Latin America, in São Paulo; and Darwin – Discover the Man and the Revolutionary Theory that Changed the World, in Rio de Janeiro. Bradesco also took part in the plays O Bem Amado and Ensina-me a Viver; in addition to supporting the movies Chega de Saudade and Polaróides Urbanas.
It also took part in the exhibitions Nativismo Revisitado, of Susy Magalhães, and Amazônia sem Retoques, in partnership with O Estado de S. Paulo newspaper, as well as the 2008 Giants Project –Huging the Amazon, which includes a book and an award. It was also present in the Rural Show Coopavel, in Cascavel (PR), and Expogrande, in Campo Grande (MS), among other business fairs.
Bradesco Seguros e Previdência sponsored the plays Otelo and No Natal a Gente Vem te Buscar, played in Rio de Janeiro, in addition to the exhibitions Seagall Realista, held in São Paulo, and O Teatro Pitoresco de Debret, in Rio de Janeiro. And, once more, it took part in the international concert series, performed by Dell’Arte, with a season up to September at Theatro Municipal, in Rio de Janeiro. It also supported the 3rd Oral-B Race – Prevention of Oral Cancer, in São Paulo, and the second edition of Você S/A HR Meeting.
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| Social Report – 1st quarter of 2008 and 2007 |
| 1) Calculation basis |
| 1st Quarter of 2008 – R$ thousand | 1st Quarter of 2007 – R$ thousand | |||
| Net revenue (NR) (1) | 4,428,630 | 4,070,947 | ||
| Operating income (OI) | 2,498,539 | 2,466,422 | ||
| Gross payroll (GP) | 1,736,553 | 1,459,826 |
| 2) Internal social indicators |
| R$ thousand | % on GP | % on NR | R$ thousand | % on GP | % on NR | |||||||
| Meals | 151,350 | 8.7 | 3.4 | 119,501 | 8.2 | 2.9 | ||||||
| Compulsory social charges | 297,770 | 17.1 | 6.7 | 259,208 | 17.8 | 6.4 | ||||||
| Private pension plans | 77,942 | 4.5 | 1.8 | 78,604 | 5.4 | 1.9 | ||||||
| Healthcare insurance | 82,962 | 4.8 | 1.9 | 79,769 | 5.5 | 2.0 | ||||||
| Occupational health and safety | – | – | – | – | – | – | ||||||
| Education | – | – | – | – | – | – | ||||||
| Culture | – | – | – | – | – | – | ||||||
| Professional qualification and training | 10,625 | 0.6 | 0.2 | 9,726 | 0.7 | 0.2 | ||||||
| On-site child care and child-care benefit | 10,324 | 0.6 | 0.2 | 10,311 | 0.7 | 0.3 | ||||||
| Employee profit sharing | 156,984 | 9.0 | 3.5 | 123,834 | 8.5 | 3.0 | ||||||
| Other | 28,644 | 1.7 | 0.7 | 26,868 | 1.8 | 0.7 | ||||||
| Total – Internal social indicators | 816,601 | 47.0 | 18.4 | 707,821 | 48.6 | 17.4 |
| 3) External social indicators |
| R$ thousand | % on OI | % on NR | R$ thousand | % on OI | % on NR | |||||||
| Education (*) | 1,184 | 0.1 | – | 304 | – | – | ||||||
| Culture | 10,937 | 0.4 | 0.3 | 1,565 | 0.1 | – | ||||||
| Health and basic sanitation | 741 | – | – | 1,037 | – | – | ||||||
| Sports | 5,005 | 0.2 | 0.1 | – | – | – | ||||||
| Prevention of hunger and food security | – | – | – | – | – | – | ||||||
| Other | 1,701 | 0.1 | – | 1,474 | 0.1 | – | ||||||
| Total contribution to society | 19,568 | 0.8 | 0.4 | 4,380 | 0.2 | – | ||||||
| Taxes (excluding social charges) | 1,399,272 | 56.0 | 31.6 | 1,473,605 | 59.7 | 36.2 | ||||||
| Total – External social indicators | 1,418,840 | 56.8 | 32.0 | 1,477,985 | 59.9 | 36.2 |
| 4) Environmental indicators |
| R$ thousand | % on OI | % on NR | R$ thousand | % on OI | % on NR | |||||||
| Investments related to company production/operation | – | – | – | – | – | – | ||||||
| Investments in external programs and/or projects | 2,482 | 0.1 | 0.1 | 4,205 | 0.2 | 0.1 | ||||||
| Total investments in environmental protection | 2,482 | 0.1 | 0.1 | 4,205 | 0.2 | 0.1 | ||||||
| As regards the establishment of "annual goals" for minimizing waste, general production/operation consumption and increasing the efficient use of natural resources, the company: | ( ) has no established goals ( ) complies 51 to 75% | ( ) has no established goals ( ) complies 51 to 75% | ||||||||||
| ( ) complies 0 to 50% ( ) complies 76 to 100% | ( ) complies 0 to 50% ( ) complies 76 to 100% | |||||||||||
| 5) Employees indicators |
| 1st Quarter of 2008 | 1st Quarter of 2007 | |||
| Employees at the end of the period | 83,124 | 79,686 | ||
| Admissions during the period | 2,693 | 2,089 | ||
| Outsourced employees | 7,777 | 7,361 | ||
| Trainees/interns | 797 | 806 | ||
| Employees older than 45 | 8,325 | 7,477 | ||
| Women employees | 39,660 | 37,887 | ||
| % of management positions held by women | 43.5 | 42.5 | ||
| Black employees | 12,598 | 9,939 | ||
| % of management positions held by blacks | 14.3 | 12.9 | ||
| Disabled employees or employees with special needs | 1,107 | 866 |
| 6) Key information regarding the exercise of business citizenship |
| 1st Quarter of 2008 | Targets – 1st Quarter of 2009 | |||||||
| Ratio between maximum and minimum salary: | 18.7 | N/A | ||||||
| Total number of occupational accidents: | 170 | Employees awareness to avoid work accidents | ||||||
| The company's social and environmental projects were established by: | ( ) directors | ( x ) directors and managers | ( ) all employees | ( ) directors | ( x ) directors and managers | ( ) all employees | ||
| Occupational safety and health standards were defined by: | ( ) directors | ( ) all employees | ( x ) all + Cipa | ( ) directors | ( ) all employees | ( x ) all + Cipa | ||
| As regards freedom of trade union activities, collective bargaining rights and internal employee representation, the company: | ( x ) does not interfere | ( ) complies with OIT rules | ( ) encourages activities and complies with OIT rules | ( x ) does not interfere | ( ) complies with OIT rules | ( ) encourages activities and complies with OIT rules | ||
| Private pension plans are offered to: | ( ) directors | ( ) directors and managers | ( x ) all employees | ( ) directors | ( ) directors and managers | ( x ) all employees | ||
| The company's profit sharing plan is distributed to: | ( ) directors | ( ) directors and managers | ( x ) all employees | ( ) directors | ( ) directors and managers | ( x ) all employees | ||
| When selecting suppliers, the ethical, social and environmental responsibility standards adopted by the company: | ( ) are not considered | ( ) are suggested | ( x ) are required | ( ) are not considered | ( ) are suggested | ( x ) are required | ||
| As regards the participation of employees in voluntary work programs, the company: | ( ) does not interfere | ( ) gives support | ( x ) organizes and encourages participation | ( ) does not interfere | ( ) gives support | ( x ) organizes and encourages participation | ||
| Total number of consumer’s complaints and critics: | In company: 32,316 | At Procon: 3,384 | At court: 24,634 | Prepare and make our employees aware, thus, reducing the number of complaints | ||||
| % of complaints and critics solved: | In company: 100% | At Procon: 100% | At court: 54.8% | In company: 100% | At Procon: 100% | At court: 100% | ||
| Total added value to be distributed (in R$ thousand): | 1st Quarter of 2008: R$ 5,245,057 | 1st Quarter of 2007: R$ 4,532,371 | ||||||
| Distribution of added value (DVA): | 30.9% government 29.0% taxpayers | 34.2% government 28.2% taxpayers | ||||||
| 14.1% shareholders 26.0% withheld | 13.2% shareholders 24.4% withheld | |||||||
| 7) Other information | ||
| The information contained in the Social Report was reviewed by PricewaterhouseCoopers Auditores Independentes. | ||
| (*) The information above does not include funds invested by Fundação Bradesco (one of Bradesco’s parent companies). | ||
| (1) Net Revenue (NR) is considered Gross Income from Financial Intermediation. | N/D – Not available | N/A – Non-applicable. |
224
7- Report of Independent Auditors
Independent Auditors' Report on the Limited Review of Supplementary Accounting Information Presented in the Report on Economic and Financial Analysis and in the Statement of Social Responsibility |
||
To the Board of Directors
Banco Bradesco S.A.
1. In connection with our limited reviews of the Quarterly Information of Banco Bradesco S.A. and its subsidiaries (consolidated) as of March 31, 2008, December 31, 2007 and March 31, 2007, on which we issued a report without exceptions dated April 25, 2008, we carried out a limited review of the supplementary accounting information presented in the Report on Economic and Financial Analysis and in the Statement of Social Responsibility. This supplementary information was prepared by the Bank’s management to permit additional analysis and is not a required part of the quarterly information.
2. Our work was carried out in accordance with the specific standards established by the Institute of Independent Auditors of Brazil – IBRACON, in conjunction with the Federal Accounting Council – CFC for the purpose of reviewing the supplementary accounting information described in paragraph one and mainly comprised: (a) inquiries of and discussions with management responsible for the accounting, financial and operating areas of the Bank and its subsidiaries with regard to the main criteria used for the preparation of this additional accounting information and (b) a review of the significant information and the subsequent events which have, or could have significant effects on the financial position and operations of the Bank and its subsidiaries.
3. Based on our limited reviews, we are not aware of any material modifications which should be made to the supplementary information, referred to above, in order that this information be fairly stated, in all material respects, in relation to the Quarterly Information referred to in paragraph one, taken as a whole.
4. As described in Note 35 (b), Law 11.638 was enacted on December 28, 2007 and became effective on January 1, 2008. This Law amended, revoked and introduced new provisions to Law 6.404/76 (the Brazilian Corporation Law) and will change the accounting practices adopted in Brazil. Even though this law has already come into force, the main changes introduced depend on standardization by the regulatory agencies prior to their full application by companies. Accordingly, during this transition phase, the Brazilian Central Bank – BACEN, through Communication 16.669 of March 20, 2008, has waived the application of the provisions of Law 11.638/07 for preparation purposes of the interim financial statements in 2008. As a result, the accounting information contained in the quarterly financial information for the quarter ended March 31, 2008 was prepared in accordance with specific instructions from BACEN and does not consider the changes to the accounting practices introduced by Law 11.638/07.
5. As described in Note 15, the goodwill on investments in associated and subsidiary companies was amortized.
São Paulo, April 25, 2008
Auditores Independentes
CRC 2SP000160/O-5
Washington Luiz Pereira Cavalcanti
Contador
CRC 1SP172940/O-6
226
8- Financial Statements, Independent Auditors’ Report and Fiscal Council’s Report
| Management Report |
Dear Shareholders,
We are pleased to present the Consolidated Financial Statements of Banco Bradesco S.A. for the period ended on March 31, 2008, pursuant to the Brazilian Corporate Law.
At the Bradesco Organization, among the material events of the period, the most outstanding were:
• on January 21, Grupo Bradesco de Seguros e Previdência, by means of Bradesco Seguros S.A., entered into a “Quota Assignment Agreement” with Marsh Corretora de Seguros Ltda., aiming at the control acquisition of Mediservice –Administradora de Planos de Saúde Ltda. It was an important strategic step that will allow the expansion of its client base with scale gains;
• on March 6, Banco Bradesco BBI S.A. entered into a “Private Instrument of Share Merger Commitment and Other Covenants” with the shareholders of Ágora Corretora de Títulos e Valores Mobiliários S.A., aiming at the full acquisition of its capital. Ágora Corretora is the largest brokerage house in Brazil in online transactions of purchase and sale of shares to individuals (home broker), with nearly 29 thousand active clients. The operation is subject to approval by the proper authorities and to the results of due diligence.
• on March 17, the payment of Monthly Dividends, as of 5.2.2008, was approved, in replacement for the Monthly Interest on Shareholders’ Capital. As there is no Withholding Income Tax on Dividends, the measure represents an increase of 17.6% in the amount monthly paid to shareholders who received net interest of this taxation.
• it is also worth pointing out that Bradesco is the Brazilian Bank with the best placement in the ranking of the world’s 2 thousand largest companies in 2007, ranking 85th, according to Forbes, one of the most respected international economy, finances and businesses magazines.
In the quarter, Bradesco posted a Net Income of R$2,102 billion, equivalent to R$0.68 per share, and an annualized profitability of 31.95% on the average Shareholders’ Equity(*). The annualized return on average Total Assets was 2.44% as compared to 2.51% in the same period of the previous year.
Assessed based on the main activities carried out by Bradesco Organization, own taxes and contributions in the period, including paid or accrued pension taxes and contributions, totaled R$1.697 billion, equivalent to 80.72% of the Net Income. Relatively to taxes corresponding to the financial intermediation, the amount of R$1.317 billion was retained and collected by the Organization.
The strict control of administrative expenses and the permanent effort for increasing revenues, together with the efficient synergy process of the acquired institutions, reflect on the improvement in the year-to-date Operating Efficiency Ratio – IEO, from 42.09% in March 2007 to 41.65% on March 31, 2008.
At the end of the quarter, the paid-up Capital Stock was R$23 billion, resulting from the increase due to the subscription of new shares by shareholders, of R$1.200 billion, as per resolution at the Special Shareholders’ Meeting held on January 4 and ratified at the Meeting held on March 24, which produced an additional R$6.874 million for the goodwill assessed at the auction of placement of unsold shares, incorporated to the “Capital Reserve – Share Goodwill” account; and the increase of R$2.800 billion, with a 50% stock bonus, by using part of the “Income Reserve – Statutory Reserve” account, as per resolution at the Special Shareholders’ Meeting held on March 24, both processes were approved by the Brazilian Central Bank on March 27. Added to Equity Reserves of R$9.909 billion, it comprised the Shareholders’ Equity of R$32.909 billion, with an evolution of 26.43% when compared to the same period of the previous year, corresponding to the equity value of R$10.72 per share.
It is worth pointing out that the Managed Shareholders’ Equity represents 9.30% of the consolidated Assets, which added up to R$355.517 billion, a 26.09% increase over March/2007. Thus, the capital adequacy ratio reached 15.55% in the financial consolidated and 13.92% in the economic-financial consolidated, therefore higher than the minimum of 11% set forth by Resolution 2,099, as of 8.17.1994, of the National Monetary Council, in accordance with the Basel Committee. At the end of the quarter, the shareholders’ equity to fixed assets ratio, compared to the Consolidated Reference Shareholders’ Equity, was 47.70% in the financial consolidated and 12.07% in the economic-financial consolidated, placed within the maximum limit of 50%.
228
In compliance with the provisions in Article 8 of Circular 3,068, as of 11.8.2001, of the Brazilian Central Bank, Bradesco states that it has financial capacity and intention to hold to maturity the securities rated in the “securities held to maturity” category.
On March 31, with the 24.53% growth over the same period of the previous year, the volume of funds raised and managed by Bradesco Organization amounted to R$506.808 billion, distributed as follows:
| • | R$176,251 |
billion in Demand Deposits, Time Deposits, Interbank Deposits, other Deposits, Open Market and Savings Accounts; |
|
| • | R$183,822 |
billion in assets under management, comprising Investment Funds, Managed Portfolios and Quotas of Third-Party Funds, 21.21% higher than March/2007; |
|
| • | R$80,829 |
billion recorded in the Exchange Portfolio, Borrowings and Onlendings, Own Working Capital, Tax Payment and Collection of Related Taxes, Funds From Issuance of Securities, Subordinated Debt in the country and Other Fundings; |
|
| • | R$59,722 |
billion recorded in Technical Provisions for Insurance, Supplementary Private Pension Plans and Certificated Savings Plans, with an increase of 17.91% when compared to the same period in the previous year; |
|
| • | R$6,184 |
billion in Foreign Funding, by means of public and private issuances, Subordinated Debt and Securitization of Future Financial Flows, representing US$3.535 billion. |
|
At the end of the period, loan operations recorded a balance of R$169.408 billion, being included in this amount:
| • | R$7,354 |
billion in Advances on Foreign Exchange Contracts, for a total Portfolio of US$10.132 billion of Export Financing; | |
| • | US$1,554 |
billion operations in Import Financing in Foreign Currencies; | |
| • | R$11,156 |
billion in Leasing; | |
| • | R$9,536 |
billion in businesses in the Rural Area; | |
| • | R$50,266 |
billion in Consumer Financing; |
| • | R$25,080 | billion from Sureties and Guarantees; | |
| • | R$5,309 | billion from credits receivable from Credit Cards; |
|
| • | R$13,239 | billion referring to onlending operations of external and internal funds, mainly coming from BNDES – Brazilian Development Bank. | |
In the quarter, for Real Estate Loan activities, the Organization allocated funds for house construction and acquisition in the amount of R$1.514 billion, corresponding to 13,545 properties. It has also made available the website www.bradescoimoveis.com.br, for consultations to projects for sale by real estate developers and real estate agencies partners of the Bank.
Bradesco, through Banco Bradesco BBI S.A., to support the capitalization of companies, intermediated primary and secondary operations of shares, debentures, promissory notes, as well as operations of Credit Right Investment Funds, which totaled, in the period, R$7.024 billion, representing 19.13% of the total volume of issuances registered at the CVM – Brazilian Securities and Exchange Commission. According to Thomson Financial, it ranked first in the ranking of financial advisor in operations of Mergers and Acquisitions in Latin America, with amounts up to U$500 million. It was also highlighted in Project Financing, Structured Operations and Treasury, taking care of the structuring, origination, distribution and asset management businesses, and clients’ financial flows and inventories.
Project Financing, Structured Operations and Treasury, taking care of the structuring, origination, distribution and asset management businesses, and clients’ financial flows and inventories.
Grupo Bradesco de Seguros e Previdência, holding an outstanding position in the Insurance, Supplementary Pension Plans and Certificated Savings Plans areas, recorded a Net Income of R$745.819 million and Shareholders’ Equity of R$9.155 billion on March 31. Net premiums issued reached R$5.367 billion, with an 11.79% growth compared to the same period of the previous year.
Bradesco Organization’s Network, made available for clients and users, on March 31, was comprised of 27,472 outlets, 26,735 machines of Bradesco Dia&Noite (Day&Night) ATM Network, 26,305 of them working even on weekends and holidays, in addition to 4,221 machines of Banco24Horas (24-hour Bank) were made available for Bradesco clients for withdrawal operations, issuance of statements and balances consultation.
229
3,169 |
Branches in the Country (3,152 of Bradesco, 15 of Banco BMC, 1 of Bradesco BBI and 1 of Banco Finasa); | |
5 |
Branches Overseas, 1 in New York, 3 in Grand Cayman and 1 in Nassau, in the Bahamas; | |
7 |
Subsidiaries Overseas (Banco Bradesco Argentina S.A., in Buenos Aires, Banco Bradesco Luxembourg S.A., in Luxembourg, Bradesco Securities, Inc., in New York, Bradesco Securities UK Limited, in London, Bradesco Services Co., Ltd., in Tokyo, Cidade Capital Markets Ltd., in Grand Cayman; and Bradesco Trade Services Limited, in Hong Kong); | |
5,851 |
Postal Bank Branches; | |
12,381 |
Bradesco Expresso Outlets; | |
2,825 |
Corporate Site Branches; | |
2,877 |
Outplaced Terminals of Bradesco Dia&Noite (Day&Night) ATM Network; | |
357 |
Branches of Finasa Promotora de Vendas, a company present in 20,959 car dealers. | |
In the quarter, it is worth mentioning that Bradesco Organization, as per Instruction 381, issued by the Brazilian Securities and Exchange Commission, did not contract or had services rendered by PricewaterhouseCoopers Auditores Independentes unrelated to the independent audit in levels higher than 5% of total costs thereof. The policy adopted complies with the principles preserving the auditor’s independence, pursuant to the internationally accepted criteria, such as: the auditor shall neither audit his own work, nor perform management duties with his client or promote his interests.
In the Human Resources area, aiming at the permanent evolution in customer service and at the level of services rendered, the Bank continued its intense training program, aiming at the staff ’s qualification and professional development. In the quarter, 573 courses with 318,855 participations were conducted. The assistance benefits aimed at the improvement of the quality of life, well being and safety of the employees and their dependents comprised 180,027 lives at the end of the quarter.
In the social area, with the purpose of contributing to the improvement in the Brazilian education, the Organization develops, through Fundação Bradesco, a wide social-educational program, with 40 schools mainly set up in poor social-economical regions, in all Brazilian states and in the Federal District. This year, with a planned budget of R$220.069 million, it will assist over 411 thousand people, in its many segments, such as free and quality education, of which 110 thousand students, in its own schools, in Basic Education – from Kindergarten to High School –, Adult and Youngster Education Courses, and Initial and Continuing Education of Workers and assisted over 301 thousand people in other presence and distance education courses, by means of the Virtual School, its e-learning portal, and CIDs – Digital Inclusion Centers. Basic Education students, about 50 thousand, are also ensured free food, medical and dental assistance, uniforms and school supplies.
We also highlight Bradesco’s support to Finasa Sports Program, with volleyball and basketball training centers at Fundação Bradesco in Osasco, SP, and in local schools and sports centers in the city. It currently assists approximately 3,000 girls from 9 to 18 years of age. The Program, created 20 years ago, reinforces the commitment of defending a country that is more and more opened to the appreciation of talents, effort and full exercise of citizenship.
The performance and results that have been obtained ensure Bradesco’s commitment to always offering better products and services. Advances like these are successful thanks to the support and trust of our shareholders and clients and the efficient and dedicated work of our employees. We would like to thank all of them.
Cidade de Deus, April 25, 2008
Board of Directors and Board of Executive Officers
(*) It does not take in consideration the mark-to-market effect of Securities Available for Sale registered in Shareholders’ Equity.
230
| Consolidated Balance Sheet – R$ thousand | ||
| Assets | 2008 | 2007 | ||||
| March | December | March | ||||
| Current assets | 275,505,263 | 259,884,466 | 224,020,139 | |||
| Funds available (Note 6) | 5,702,253 | 5,486,606 | 4,243,926 | |||
| Interbank investments (Notes 3b and 7) | 48,112,116 | 36,967,044 | 31,036,284 | |||
| Investments in federal funds purchased and securities sold under agreements to repurchase | 42,893,613 | 31,950,677 | 26,091,028 | |||
| Interest-earning deposits in other banks | 5,223,372 | 5,026,516 | 4,945,372 | |||
| Allowance for losses | (4,869) | (10,149) | (116) | |||
| Securities and derivative financial instruments (Notes 3c, 3d, 8 and 32b) | 93,786,182 | 98,133,256 | 85,476,758 | |||
| Own portfolio | 82,214,836 | 75,919,673 | 69,411,110 | |||
| Subject to repurchase agreements | 1,615,018 | 6,789,392 | 8,208,182 | |||
| Derivative financial instruments | 1,417,180 | 608,202 | 819,772 | |||
| Restricted deposits – Brazilian Central Bank | 4,206,268 | 7,771,857 | 5,022,477 | |||
| Subject to collateral provided | 3,981,945 | 3,234,762 | 2,013,010 | |||
| Securities purpose of unrestricted purchase and sale commitments | 350,935 | 3,809,370 | 2,207 | |||
| Interbank accounts | 24,017,589 | 23,589,375 | 19,166,315 | |||
| Unsettled receipts and payments | 743,980 | 36,332 | 568,738 | |||
| Restricted credits: (Note 9) | ||||||
| – Restricted deposits – Brazilian Central Bank | 23,216,434 | 23,538,587 | 18,544,346 | |||
| – National treasury – rural credit | 578 | 578 | 578 | |||
| – SFH | 5,239 | 5,760 | 6,585 | |||
| Interbank onlendings | – | – | 3,131 | |||
| Correspondent banks | 51,358 | 8,118 | 42,937 | |||
| Interdepartmental accounts | 145,798 | 429,362 | 72,984 | |||
| Internal transfer of funds | 145,798 | 429,362 | 72,984 | |||
| Loan operations (Notes 3e, 10 and 32b) | 68,156,719 | 66,400,261 | 55,249,979 | |||
| Loan operations: | ||||||
| – Public sector | 74,077 | 70,330 | 77,381 | |||
| – Private sector | 73,607,833 | 71,655,801 | 59,892,881 | |||
| Allowance for loan losses (Notes 3e, 10f, 10g and 10h) | (5,525,191) | (5,325,870) | (4,720,283) | |||
| Leasing operations (Notes 2, 3e, 10 and 32b) | 3,854,652 | 3,056,428 | 1,892,563 | |||
| Leasing receivables: | ||||||
| – Public sector | 56,553 | 44,401 | 50,802 | |||
| – Private sector | 6,758,474 | 5,427,991 | 3,622,250 | |||
| Unearned income from leasing | (2,820,855) | (2,306,176) | (1,697,415) | |||
| Allowance for leasing losses (Notes 3e, 10f, 10g and 10h) | (139,520) | (109,788) | (83,074) | |||
| Other receivables | 29,767,974 | 23,951,895 | 25,551,218 | |||
| Receivables on sureties and guarantees honored (Note 10a–2) | 12,249 | 12,181 | 2,054 | |||
| Foreign exchange portfolio (Note 11a) | 14,255,544 | 9,836,732 | 13,620,180 | |||
| Receivables | 338,842 | 368,622 | 206,353 | |||
| Trading securities | 809,610 | 682,879 | 498,939 | |||
| Insurance premiums receivable | 1,255,932 | 1,276,612 | 1,093,530 | |||
| Sundry (Note 11b) | 13,198,094 | 11,877,255 | 10,223,800 | |||
| Allowance for other loan losses (Notes 3e, 10f, 10g and 10h) | (102,297) | (102,386) | (93,638) | |||
| Other assets (Note 12) | 1,961,980 | 1,870,239 | 1,330,112 | |||
| Other assets | 467,753 | 385,251 | 381,913 | |||
| Provision for devaluations | (194,056) | (178,581) | (188,520) | |||
| Prepaid expenses (Notes 3g and 12b) | 1,688,283 | 1,663,569 | 1,136,719 | |||
| Long-term receivables | 76,109,876 | 77,629,777 | 54,366,773 | |||
| Interbank investments (Notes 3b and 7) | 563,194 | 655,081 | 564,972 | |||
| Investments in federal funds purchased and securities sold under agreements to repurchase | – | 64,184 | – | |||
| Interest-earning deposits in other banks | 563,194 | 590,897 | 564,972 | |||
231
| Assets | 2008 | 2007 | ||||
| March | December | March | ||||
| Securities and derivative financial instruments (Notes 3c, 3d, 8 and 32b) | 11,380,554 | 16,318,453 | 12,056,872 | |||
| Own portfolio | 8,421,679 | 8,159,498 | 8,156,984 | |||
| Subject to repurchase agreements | 676,785 | 4,942,035 | 1,735,107 | |||
| Derivative financial instruments | 611,365 | 598,838 | 205,487 | |||
| Restricted deposits – Brazilian Central Bank | 1,258,475 | 501,805 | 1,846,509 | |||
| Privatization currencies | 100,434 | 79,535 | 80,100 | |||
| Subject to collateral provided | 311,816 | 835,448 | 32,685 | |||
| Securities purpose of unrestricted purchase and sale commitments | – | 1,201,294 | – | |||
| Interbank accounts | 451,626 | 447,139 | 401,057 | |||
| Restricted credits: (Note 9) | ||||||
| – SFH | 451,626 | 447,139 | 401,057 | |||
| Loan operations (Notes 3e, 10 and 32b) | 44,114,759 | 41,895,366 | 29,247,872 | |||
| Loan operations: | ||||||
| – Public sector | 704,867 | 693,643 | 741,341 | |||
| – Private sector | 45,563,153 | 43,345,801 | 30,286,068 | |||
| Allowance for loan losses (Notes 3e, 10f, 10g and 10h) | (2,153,261) | (2,144,078) | (1,779,537) | |||
| Leasing operations (Notes 2, 3e, 10 and 32b) | 6,981,872 | 4,905,967 | 2,045,399 | |||
| Leasing receivables: | ||||||
| – Public sector | 75,413 | 89,796 | 95,258 | |||
| – Private sector | 11,781,776 | 8,374,126 | 3,906,087 | |||
| Unearned income from leasing | (4,695,718) | (3,422,375) | (1,863,372) | |||
| Allowance for leasing losses (Notes 3e, 10f, 10g and 10h) | (179,599) | (135,580) | (92,574) | |||
| Other receivables | 10,968,509 | 11,878,015 | 9,377,486 | |||
| Receivables | 423 | 2,805 | 1,493 | |||
| Trading securities | 928,629 | 695,251 | 252,528 | |||
| Sundry (Note 11b) | 10,043,165 | 11,188,073 | 9,129,244 | |||
| Allowance for other loan losses (Notes 3e, 10f, 10g and 10h) | (3,708) | (8,114) | (5,779) | |||
| Other assets (Note 12) | 1,649,362 | 1,529,756 | 673,115 | |||
| Other assets | 4,604 | 4,605 | 7,959 | |||
| Provision for devaluations | (516) | (516) | (1,043) | |||
| Prepaid expenses (Notes 3g and 12b) | 1,645,274 | 1,525,667 | 666,199 | |||
| Permanent assets | 3,902,203 | 3,670,161 | 3,557,375 | |||
| Investments (Notes 3h, 13 and 32b) | 743,088 | 604,076 | 661,698 | |||
| Ownership in affiliated companies: | ||||||
| – Local | 524,916 | 467,944 | 410,413 | |||
| Other investments | 564,327 | 487,365 | 610,409 | |||
| Allowance for losses | (346,155) | (351,233) | (359,124) | |||
| Premises and equipment (Notes 3i and 14) | 2,333,922 | 2,284,078 | 2,215,976 | |||
| Premises | 1,083,817 | 1,076,053 | 1,061,150 | |||
| Other premises and equipment | 4,460,214 | 4,347,693 | 4,239,812 | |||
| Accumulated depreciation | (3,210,109) | (3,139,668) | (3,084,986) | |||
| Leased assets (Note 14) | 10,588 | 11,421 | 17,864 | |||
| Leased assets | 16,656 | 20,777 | 28,561 | |||
| Accumulated depreciation | (6,068) | (9,356) | (10,697) | |||
| Deferred charges (Notes 2, 3j and 15) | 814,605 | 770,586 | 661,837 | |||
| Organization and expansion costs | 1,935,095 | 1,850,219 | 1,612,739 | |||
| Accumulated amortization | (1,120,490) | (1,079,633) | (950,902) | |||
| Total | 355,517,342 | 341,184,404 | 281,944,287 | |||
| The Notes are an integral part of the Financial Statements. | ||||||
232
| Liabilities | 2008 | 2007 | ||||
| March | December | March | ||||
| Current liabilities | 210,581,635 | 213,446,966 | 175,057,686 | |||
| Deposits (Notes 3k and 16a) | 77,693,179 | 75,797,142 | 61,807,134 | |||
| Demand deposits | 25,845,700 | 28,495,555 | 20,115,520 | |||
| Savings deposits | 33,290,059 | 32,812,974 | 27,608,759 | |||
| Interbank deposits | 309,774 | 364,508 | 157,625 | |||
| Time deposits (Note 32b) | 17,413,385 | 13,198,839 | 13,331,940 | |||
| Other deposits | 834,261 | 925,266 | 593,290 | |||
| Federal funds purchased and securities sold under agreements to repurchase | ||||||
| (Notes 3k and 16b) | 45,001,283 | 54,693,633 | 33,729,568 | |||
| Own portfolio | 10,927,982 | 18,924,688 | 12,180,278 | |||
| Third-party portfolio | 30,558,507 | 29,578,200 | 20,077,321 | |||
| Unrestricted portfolio | 3,514,794 | 6,190,745 | 1,471,969 | |||
| Issuance of securities (Notes 16c and 32b) | 1,658,635 | 1,733,135 | 2,051,628 | |||
| Exchange acceptances | 32 | 406 | – | |||
| Mortgage notes | 973,863 | 901,490 | 876,212 | |||
| Debentures (Note 16c-1) | 111,176 | 42,821 | 131,533 | |||
| Securities issued abroad | 573,564 | 788,418 | 1,043,883 | |||
| Interbank accounts | 312,545 | 16,632 | 181,618 | |||
| Correspondent banks | 312,545 | 16,632 | 181,618 | |||
| Interdepartmental accounts | 1,847,051 | 2,521,233 | 1,768,224 | |||
| Third-party funds in transit | 1,847,051 | 2,521,233 | 1,768,224 | |||
| Borrowings (Notes 17a and 32b) | 7,372,525 | 7,718,270 | 6,707,311 | |||
| Local borrowings – official institutions | 126 | 154 | 334 | |||
| Local borrowings – other institutions | 390 | 373 | 345 | |||
| Borrowings abroad | 7,372,009 | 7,717,743 | 6,706,632 | |||
| Local onlendings – official institutions (Notes 17b and 32b) | 5,665,277 | 5,360,030 | 5,251,834 | |||
| National treasury | 40,289 | 50,303 | 79,705 | |||
| BNDES | 2,515,813 | 2,490,548 | 2,975,199 | |||
| CEF | 15,326 | 14,760 | 10,850 | |||
| Finame | 3,093,614 | 2,804,046 | 2,185,270 | |||
| Other institutions | 235 | 373 | 810 | |||
| Foreign onlendings (Notes 17b and 32b) | 1,393,690 | 1,257,281 | 10,045 | |||
| Foreign onlendings | 1,393,690 | 1,257,281 | 10,045 | |||
| Derivative financial instruments (Notes 3d and 32) | 1,357,328 | 668,954 | 815,447 | |||
| Derivative financial instruments | 1,357,328 | 668,954 | 815,447 | |||
| Technical provisions for insurance, private pension plans and certificated savings plans | ||||||
| (Notes 3l and 21) | 42,976,819 | 42,055,115 | 39,964,734 | |||
| Other liabilities | 25,303,303 | 21,625,541 | 22,770,143 | |||
| Collection and collection of taxes and other contributions | 2,711,207 | 228,722 | 1,994,968 | |||
| Foreign exchange portfolio (Note 11a) | 7,318,890 | 3,467,189 | 8,416,047 | |||
| Social and statutory | 795,222 | 2,195,653 | 634,250 | |||
| Fiscal and social security (Note 20a) | 2,379,722 | 2,356,153 | 2,001,568 | |||
| Trading securities | 758,166 | 657,700 | 378,536 | |||
| Financial and development funds | 2,814 | 1,851 | 1,235 | |||
| Subordinated debts (Notes 19 and 32b) | 695,138 | 650,635 | 107,294 | |||
| Sundry (Note 20b) | 10,642,144 | 12,067,638 | 9,236,245 | |||
233
| Liabilities | 2008 | 2007 | ||||
| March | December | March | ||||
| Long-term liabilities | 111,678,094 | 97,035,535 | 80,633,005 | |||
| Deposits (Notes 3k and 16a) | 29,017,493 | 22,526,304 | 22,354,762 | |||
| Interbank deposits | 575 | 7,965 | – | |||
| Time deposits (Note 32b) | 29,016,918 | 22,518,339 | 22,354,762 | |||
| Federal funds purchased and securities sold under agreements to repurchase | ||||||
| (Notes 3k and 16b) | 24,538,852 | 18,940,016 | 17,171,854 | |||
| Own portfolio | 24,538,852 | 18,940,016 | 17,171,854 | |||
| Funds from issuance of securities (Notes 16c and 32b) | 5,579,888 | 4,763,647 | 3,827,310 | |||
| Exchange Acceptances | 227 | – | – | |||
| Mortgage notes | 1,011 | 151 | 2,902 | |||
| Debentures (Note 16c-1) | 2,552,100 | 2,552,100 | 2,552,100 | |||
| Securities issued abroad | 3,026,550 | 2,211,396 | 1,272,308 | |||
| Borrowings (Notes 17a and 32b) | 589,251 | 347,560 | 250,043 | |||
| Local borrowings – official institutions | 241 | 296 | 362 | |||
| Borrowings abroad | 589,010 | 347,264 | 249,681 | |||
| Local onlendings – official institutions (Notes 17b and 32b) | 8,991,779 | 8,726,406 | 6,415,304 | |||
| National treasury | – | 578 | – | |||
| BNDES | 3,623,498 | 3,657,155 | 2,348,103 | |||
| CEF | 87,454 | 86,520 | 62,853 | |||
| Finame | 5,280,009 | 4,981,301 | 4,003,371 | |||
| Other institutions | 818 | 852 | 977 | |||
| Derivative financial instruments (Notes 3d and 32) | 266,640 | 282,779 | 40,084 | |||
| Derivative financial instruments | 266,640 | 282,779 | 40,084 | |||
| Technical provisions for insurance, private pension plans and certificated savings plans | ||||||
| (Notes 3l and 21) | 16,745,592 | 16,471,150 | 10,687,767 | |||
| Other liabilities | 25,948,599 | 24,977,673 | 19,885,881 | |||
| Fiscal and social security (Note 20a) | 7,635,324 | 7,483,638 | 6,393,057 | |||
| Trading securities | – | – | 17,417 | |||
| Subordinated debts (Notes 19 and 32b) | 15,871,747 | 15,199,829 | 12,039,661 | |||
| Sundry (Note 20b) | 2,441,528 | 2,294,206 | 1,435,746 | |||
| Deferred income | 189,818 | 189,147 | 163,978 | |||
| Deferred income | 189,818 | 189,147 | 163,978 | |||
| Minority interest in subsidiaries (Note 22) | 158,678 | 155,412 | 60,963 | |||
| Shareholders’ equity (Note 23) | 32,909,117 | 30,357,344 | 26,028,655 | |||
| Capital: | ||||||
| – Local residents | 21,411,839 | 17,693,485 | 16,691,642 | |||
| – Foreign residents | 1,588,161 | 1,306,515 | 1,308,358 | |||
| Capital reserves | 62,498 | 55,624 | 55,178 | |||
| Profit reserves | 8,394,029 | 9,963,593 | 6,091,423 | |||
| Adjustment to market value – TVM and derivatives | 1,452,744 | 1,469,976 | 1,948,731 | |||
| Treasury share (Notes 23e and 32b) | (154) | (131,849) | (66,677) | |||
| Shareholders' equity managed by parent company | 33,067,795 | 30,512,756 | 26,089,618 | |||
| Total | 355,517,342 | 341,184,404 | 281,944,287 | |||
| The Notes are an integral part of the Financial Statements. | ||||||
234
| 2008 | 2007 | |||||
| 1st Quarter | 4th Quarter | 1st Quarter | ||||
| Revenues from financial intermediation | 11,739,336 | 11,321,594 | 9,780,294 | |||
| Loan operations (Note 10j) | 6,571,120 | 6,073,076 | 5,232,598 | |||
| Leasing operations (Note 10j) | 372,536 | 283,874 | 191,817 | |||
| Operations with securities (Note 8f) | 1,820,337 | 1,807,151 | 1,795,217 | |||
| Financial income on insurance, private pension plans and certificated savings plans (Note 8f) | 1,676,345 | 2,068,229 | 1,685,144 | |||
| Derivative financial instruments (Note 8f) | 574,278 | 549,206 | 410,093 | |||
| Foreign exchange transactions (Note 11a) | 395,881 | 231,895 | 149,264 | |||
| Compulsory deposits (Note 9b) | 328,839 | 308,163 | 316,161 | |||
| Expenses from financial intermediation | 7,310,706 | 6,721,326 | 5,709,347 | |||
| Market funding operations (Note 16e) | 3,818,055 | 3,523,771 | 3,295,194 | |||
| Price-level restatement and interest on technical provisions for insurance, | ||||||
| private pension plans and certificated savings plans (Note 16e) | 1,024,234 | 1,287,681 | 1,043,589 | |||
| Borrowings and onlendings (Note 17c) | 800,385 | 352,835 | 209,212 | |||
| Leasing operations (Note 10j) | 1,195 | 1,260 | 1,691 | |||
| Allowance for loan losses (Notes 3e, 10g and 10h) | 1,666,837 | 1,555,779 | 1,159,661 | |||
| Gross income from financial intermediation | 4,428,630 | 4,600,268 | 4,070,947 | |||
| Other operating income (expenses) | (1,930,091) | (2,427,289) | (1,604,525) | |||
| Fee and commission income (Note 24) | 2,803,529 | 2,895,760 | 2,559,188 | |||
| Insurance, private pension plans and certificated savings plans retained | ||||||
| premiums (Notes 3l and 21d) | 5,285,116 | 6,052,442 | 4,643,550 | |||
| Net premiums written | 5,366,960 | 6,174,894 | 4,801,108 | |||
| Reinsurance premiums | (81,844) | (122,452) | (157,558) | |||
| Variation in technical provisions for insurance, private pension plans and | ||||||
| certificated savings plans (Note 3l) | (2,533,242) | (3,643,969) | (2,413,358) | |||
| Retained claims (Note 3l) | (1,639,572) | (1,594,955) | (1,427,886) | |||
| Certificated savings plans draws and redemptions (Note 3l) | (318,260) | (378,480) | (301,043) | |||
| Insurance, private pension plans and certificated savings plans selling expenses (Note 3l) | (279,285) | (288,631) | (259,833) | |||
| Personnel expenses (Note 25) | (1,736,553) | (1,820,181) | (1,459,826) | |||
| Supplementary provision for labor proceedings (Note 18b) | – | (232,398) | – | |||
| Other administrative expenses (Note 26) | (1,814,994) | (1,972,778) | (1,539,500) | |||
| Tax expenses (Note 27) | (611,323) | (642,812) | (611,904) | |||
| Equity in earnings (losses) of unconsolidated companies (Note 13c) | 32,169 | 9,771 | 11,589 | |||
| Other operating income (Note 28) | 329,782 | 424,016 | 337,274 | |||
| Other operating expenses (Note 29) | (1,394,428) | (1,095,278) | (1,142,776) | |||
| Full goodwill amortization (Note 15a) | (53,030) | (139,796) | – | |||
| Operating income | 2,498,539 | 2,172,979 | 2,466,422 | |||
| Non-operating income (Note 30) | 402,233 | 525,962 | (2,714) | |||
| Income before tax on income and interest | 2,900,772 | 2,698,941 | 2,463,708 | |||
| Income tax and social contribution (Notes 34a and 34b) | (794,696) | (502,374) | (755,324) | |||
| Minority interest in subsidiaries | (3,591) | (3,678) | (3,067) | |||
| Net income | 2,102,485 | 2,192,889 | 1,705,317 | |||
| The Notes are an integral part of the Financial Statements. | ||||||
235
| Statement of Changes in Stockholders’ Equity – R$ thousand |
| Events | Restated | Adjustment to Market | Treasury Shares |
Retained Earnings |
Total | |||||||||||||||
| Paid-Up | Capital Reserves | Profit Reserves | Value–TVM | |||||||||||||||||
| Capital | and Derivatives | |||||||||||||||||||
| Capital Stock |
Tax Incentives from Income Tax |
Other | Legal | Statutory | Own | Subsidiaries | ||||||||||||||
| Balances as of 12.31.2006 | 14,200,000 | 2,103 | 52,902 | 1,287,592 | 7,499,514 | 12,762 | 1,631,899 | (50,410) | – | 24,636,362 | ||||||||||
| Capital increase with reserves | 3,800,000 | – | – | – | (3,800,000) | – | – | – | – | – | ||||||||||
| Restatement of exchange membership certificates | – | – | 173 | – | – | – | – | – | – | 173 | ||||||||||
| Acquisition of treasury shares | – | – | – | – | – | – | – | (16,267) | – | (16,267) | ||||||||||
| Adjustment to market value – available-for-sale securities | – | – | – | – | – | 3,971 | 300,099 | – | – | 304,070 | ||||||||||
| Net income | – | – | – | – | – | – | – | – | 1,705,317 | 1,705,317 | ||||||||||
| Allocations: – Reserves | – | – | – | 85,266 | 1,019,051 | – | – | – | (1,104,317) | – | ||||||||||
| – Interest on shareholders’ capital | – | – | – | – | – | – | – | – | (601,000) | (601,000) | ||||||||||
| Balances as of 3.31.2007 | 18,000,000 | 2,103 | 53,075 | 1,372,858 | 4,718,565 | 16,733 | 1,931,998 | (66,677) | – | 26,028,655 | ||||||||||
| Balances as of 9.30.2007 | 19,000,000 | 2,103 | 53,521 | 1,277,482 | 7,176,224 | (32,957) | 1,837,742 | (100,503) | – | 29,213,612 | ||||||||||
| Adjustment to market value – available-for-sale securities | – | – | – | – | – | (14,467) | (320,342) | – | – | (334,809) | ||||||||||
| Acquisition of treasury shares | – | – | – | – | – | – | – | (31,346) | – | (31,346) | ||||||||||
| Net income | – | – | – | – | – | – | – | – | 2,192,889 | 2,192,889 | ||||||||||
| Allocations: – Reserves | – | – | – | 200,155 | 1,309,732 | – | – | – | (1,509,887) | – | ||||||||||
| – Proposed dividends | – | – | – | – | – | – | – | – | (683,002) | (683,002) | ||||||||||
| Balances as of 12.31.2007 | 19,000,000 | 2,103 | 53,521 | 1,477,637 | 8,485,956 | (47,424) | 1,517,400 | (131,849) | – | 30,357,344 | ||||||||||
| Balances as of 12.31.2007 | 19,000,000 | 2,103 | 53,521 | 1,477,637 | 8,485,956 | (47,424) | 1,517,400 | (131,849) | – | 30,357,344 | ||||||||||
| Capital increase through subscription | 1,200,000 | – | – | – | – | – | – | – | – | 1,200,000 | ||||||||||
| Capital increase with reserves | 2,800,000 | – | – | – | (2,800,000) | – | – | – | – | – | ||||||||||
| Goodwill in share subscription | – | – | 6,874 | – | – | – | – | – | – | 6,874 | ||||||||||
| Acquisition of treasury share | – | – | – | – | – | – | – | (154) | – | (154) | ||||||||||
| Cancellation of treasury share | – | – | – | – | (131,849) | – | – | 131,849 | – | – | ||||||||||
| Adjustment to market value – available-for-sale securities | – | – | – | – | – | 7,229 | (24,461) | – | – | (17,232) | ||||||||||
| Net income | – | – | – | – | – | – | – | – | 2,102,485 | 2,102,485 | ||||||||||
| Allocations: – Reserves | – | – | – | 105,124 | 1,257,161 | – | – | – | (1,362,285) | – | ||||||||||
| – Interest on shareholders’ capital | – | – | – | – | – | – | – | – | (740,200) | (740,200) | ||||||||||
| Balances as of 3.31.2008 | 23,000,000 | 2,103 | 60,395 | 1,582,761 | 6,811,268 | (40,195) | 1,492,939 | (154) | – | 32,909,117 | ||||||||||
| The Notes are an integral part of the Financial Statements. | ||||||||||||||||||||
236
| Consolidated Statement of Changes in Financial Position – R$ thousand | ||
| 2008 | 2007 | |||||||
| 1st Quarter | 4th Quarter | 1st Quarter | ||||||
| Financial resources were provided by: | 31,538,549 | 30,480,122 | 19,137,486 | |||||
| Net income | 2,102,485 | 2,192,889 | 1,705,317 | |||||
| Adjustments to net income | 1,872,614 | 1,835,337 | 1,297,924 | |||||
| Allowance for loan losses | 1,666,837 | 1,555,779 | 1,159,661 | |||||
| Depreciation and amortization | 137,721 | 137,481 | 132,818 | |||||
| Goodwill amortization | 53,030 | 139,796 | – | |||||
| Provision (Reversal) for losses in interbank investments and investments | (10,358) | 861 | 233 | |||||
| Equity in earnings (losses) of unconsolidated companies | (32,169) | (9,771) | (11,589) | |||||
| Other | 57,553 | 11,191 | 16,801 | |||||
| Change in deferred income | 671 | 15,895 | (16,482) | |||||
| Change in minority interest | 3,266 | (21,240) | 3,523 | |||||
| Adjustment to market value – available-for-sale securities | (17,232) | (334,809) | 304,070 | |||||
| Resources from shareholders’ | 1,206,874 | – | – | |||||
| Capital stock increase by subscription | 1,200,000 | – | – | |||||
| Goodwill in share subscription | 6,874 | – | – | |||||
| Third parties' funds provided by: | ||||||||
| – Increase in liabilities sub-items | 16,544,924 | 24,056,774 | 15,475,067 | |||||
| Deposits | 8,387,226 | 11,587,377 | 256,683 | |||||
| Federal funds purchased and securities sold under agreements to repurchase | – | 5,012,740 | 3,225,989 | |||||
| Funds from issuance of securities | 741,741 | – | 242,659 | |||||
| Interbank accounts | 295,913 | – | 175,804 | |||||
| Interdepartmental accounts | – | 951,058 | – | |||||
| Borrowings and onlendings | 602,975 | 2,674,223 | 1,215,492 | |||||
| Derivative financial instruments | 672,235 | – | 336,527 | |||||
| Technical provisions for insurance, private pension plans and certificated savings plans | 1,196,146 | 3,207,391 | 1,523,287 | |||||
| Other liabilities | 4,648,688 | 623,985 | 8,498,626 | |||||
| – Decrease in assets sub-items | 9,589,217 | 2,576,732 | 277,122 | |||||
| Interbank investments | – | 2,223,914 | – | |||||
| Securities and derivative financial instruments | 9,284,973 | – | – | |||||
| Interdepartmental accounts | 283,564 | – | 113,354 | |||||
| Insurance premiums receivable | 20,680 | 127,221 | 163,768 | |||||
| Other receivables | – | 225,597 | – | |||||
| – Sale (write-off) of assets and investments | 189,737 | 157,833 | 84,780 | |||||
| Foreclosed assets | 132,732 | 69,427 | 31,855 | |||||
| Premises and equipment and leased assets | 20,973 | 39,172 | 5,524 | |||||
| Investments | 34,991 | 48,231 | 47,029 | |||||
| Sale (write-off) of deferred charges | 1,041 | 1,003 | 372 | |||||
| Interest on shareholders’ capital and dividends received and/or provisioned from | ||||||||
| affiliated companies | 45,993 | 711 | 6,165 | |||||
| Financial resources were used for: | 31,322,902 | 29,093,802 | 19,655,532 | |||||
| Interest on shareholders’ capital and dividends paid and/or provisioned | 740,200 | 683,002 | 601,000 | |||||
| Acquisition of shares issued by the Company | 154 | 31,346 | 16,267 | |||||
| Capital expenditures in | 654,870 | 464,314 | 247,514 | |||||
| Foreclosed assets | 243,577 | 65,588 | 51,218 | |||||
| Premises and equipment and leased assets | 176,250 | 229,314 | 188,175 | |||||
| Investments | 235,043 | 169,412 | 8,121 | |||||
| Deferred charges | 88,700 | 92,856 | 64,043 | |||||
| Increase in assets sub-items | 25,071,282 | 26,163,920 | 18,269,221 | |||||
| Interbank investments | 11,047,905 | – | 5,611,194 | |||||
| Securities and derivative financial instruments | – | 6,353,717 | 283,628 | |||||
| Interbank accounts | 432,701 | 3,158,632 | 442,566 | |||||
| Interdepartmental accounts | – | 339,654 | – | |||||
| Loan operations | 4,184,355 | 12,459,431 | 4,897,553 | |||||
| Leasing operations | 2,947,880 | 1,888,273 | 202,212 | |||||
| Other receivables | 4,922,758 | – | 5,788,623 | |||||
| Write-off of allowance for loan losses | 1,389,077 | 1,158,294 | 1,030,814 | |||||
| Other assets | 146,606 | 805,919 | 12,631 | |||||
| Decrease in liabilities sub-items | 4,767,696 | 1,658,364 | 457,487 | |||||
| Federal funds purchased and securities sold under agreements to repurchase | 4,093,514 | – | – | |||||
| Funds from issuance of securities | – | 100,627 | – | |||||
| Interbank accounts | – | 177,905 | – | |||||
| Interdepartmental accounts | 674,182 | – | 457,487 | |||||
| Derivative financial instruments | – | 1,379,832 | – | |||||
| Increase/(decrease) in funds available | 215,647 | 1,386,320 | (518,046) | |||||
| Changes in | At the beginning of the period | 5,486,606 | 4,100,286 | 4,761,972 | ||||
| financial | At the end of the period | 5,702,253 | 5,486,606 | 4,243,926 | ||||
| position | Increase/(decrease) in funds available | 215,647 | 1,386,320 | (518,046) | ||||
| The Notes are an integral part of the Financial Statements. | ||||||||
237
| Additional Information – Consolidated Cash Flow – R$ thousand | ||
| 2008 | 2007 | |||||||
| 1st Quarter | 4th Quarter | 1st Quarter | ||||||
| Operating activities: | ||||||||
| Net income | 2,102,485 | 2,192,889 | 1,705,317 | |||||
| Adjustments to reconcile net income to net cash provided by (used in) | ||||||||
| operating activities | 1,872,614 | 1,835,337 | 1,297,924 | |||||
| Provision for loan losses | 1,666,837 | 1,555,779 | 1,159,661 | |||||
| Provision for losses on interbank investments and investments | (10,358) | 861 | 233 | |||||
| Depreciation and amortization | 137,721 | 137,481 | 132,818 | |||||
| Goodwill amortization | 53,030 | 139,796 | – | |||||
| Equity in the earnings of unconsolidated companies | (32,169) | (9,771) | (11,589) | |||||
| Other | 57,553 | 11,191 | 16,801 | |||||
| Adjusted net income | 3,975,099 | 4,028,226 | 3,003,241 | |||||
| Change in assets and liabilities | (10,398,400) | (19,541,504) | (7,945,612) | |||||
| Decrease (increase) in interbank investments | (11,047,905) | 2,223,914 | (5,611,194) | |||||
| Decrease (increase) in securities and derivative financial instruments | 9,957,208 | (7,733,549) | 52,899 | |||||
| Decrease (increase) in interbank accounts | (458,941) | 212,896 | (387,122) | |||||
| Decrease (increase) in interdepartmental accounts | (390,618) | 611,404 | (344,133) | |||||
| Decrease (increase) in loan operations | (4,184,355) | (12,459,431) | (4,897,553) | |||||
| Decrease (increase) in leasing operations | (2,947,880) | (1,888,273) | (202,212) | |||||
| Decrease (increase) in insurance premiums receivable | 20,680 | 127,221 | 163,768 | |||||
| Decrease (increase) in other receivables | (4,922,758) | 225,597 | (5,788,623) | |||||
| Decrease (increase) in other assets | (146,606) | (805,919) | (12,631) | |||||
| Write-off of provision for loan losses | (1,389,077) | (1,158,294) | (1,030,814) | |||||
| Increase (decrease) in technical provisions for insurance, private pension | ||||||||
| plans and certificated savings plans | 1,196,146 | 3,207,391 | 1,523,287 | |||||
| Increase (decrease) in other liabilities | 3,932,267 | (1,785,547) | 8,301,128 | |||||
| Increase (decrease) in deferred income | 671 | 15,895 | (16,482) | |||||
| Adjustment to market value – available-for-sale securities | (17,232) | (334,809) | 304,070 | |||||
| Net cash used in operating activities | (6,423,301) | (15,513,278) | (4,942,371) | |||||
| Investment activities: | ||||||||
| Decrease (increase) in compulsory deposits – Brazilian Central Bank | 322,153 | (3,549,432) | 120,360 | |||||
| Proceeds from sale of foreclosed assets | 132,732 | 69,427 | 31,855 | |||||
| Sale of investments | 34,991 | 48,231 | 47,029 | |||||
| Proceeds from sale of premises and equipment and leased assets | 20,973 | 39,172 | 5,524 | |||||
| Decrease in deferred charges | 1,041 | 1,003 | 372 | |||||
| Acquisition of foreclosed assets | (243,577) | (65,588) | (51,218) | |||||
| Acquisition of investments | (235,043) | (169,412) | (8,121) | |||||
| Acquisition of premises and equipment and leased assets | (176,250) | (229,314) | (188,175) | |||||
| Deferred charges | (88,700) | (92,856) | (64,043) | |||||
| Interest on shareholders’ capital and dividends received and/or provisioned from | ||||||||
| affiliated companies | 45,993 | 711 | 6,165 | |||||
| Net cash used in investing activities | (185,687) | (3,948,058) | (100,252) | |||||
| Financing activities: | ||||||||
| Increase (decrease) in deposits | 8,387,226 | 11,587,377 | 256,683 | |||||
| Increase (decrease) in federal funds purchases and securities sold under | ||||||||
| agreements to repurchase | (4,093,514) | 5,012,740 | 3,225,989 | |||||
| Increase (decrease) in funds from issuance of securities | 741,741 | (100,627) | 242,659 | |||||
| Increase (decrease) in borrowings and onlendings | 602,975 | 2,674,223 | 1,215,492 | |||||
| Subordinated debt | 716,421 | 2,409,531 | 197,498 | |||||
| Capital increase by subscription | 1,200,000 | – | – | |||||
| Goodwill in share subscription | 6,874 | – | – | |||||
| Interest on shareholders’ capital and dividends paid and/or provisioned | (740,200) | (683,002) | (601,000) | |||||
| Acquisition of shares issued by the Company | (154) | (31,346) | (16,267) | |||||
| Variation in minority interest | 3,266 | (21,240) | 3,523 | |||||
| Net cash provided by financing activities | 6,824,635 | 20,847,656 | 4,524,577 | |||||
| Increase/(decrease) in funds available | 215,647 | 1,386,320 | (518,046) | |||||
| Changes in | At the beginning of the period | 5,486,606 | 4,100,286 | 4,761,972 | ||||
| Financial | At the end of the period | 5,702,253 | 5,486,606 | 4,243,926 | ||||
| position | Increase/(decrease) in funds available | 215,647 | 1,386,320 | (518,046) | ||||
| The Notes are an integral part of the Financial Statements. | ||||||||
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| Additional Information – Consolidated Value Added Statement – R$ thousand | ||
| 2008 | 2007 | |||||||||||
| 1st Quarter | % | 4th Quarter | % | 1st Quarter | % | |||||||
| Value added breakdown | ||||||||||||
| Gross income from financial intermediation | 4,428,630 | 84.4 | 4,600,268 | 85.3 | 4,070,947 | 89.8 | ||||||
| Fee and commission income | 2,803,529 | 53.5 | 2,895,760 | 53.7 | 2,559,188 | 56.5 | ||||||
| Other income/expenses | (1,987,102) | (37.9) | (2,105,374) | (39.0) | (2,097,764) | (46.3) | ||||||
| Total | 5,245,057 | 100.0 | 5,390,654 | 100.0 | 4,532,371 | 100.0 | ||||||
| Value added distribution | ||||||||||||
| Employees | 1,522,234 | 29.0 | 1,825,275 | 33.8 | 1,278,113 | 28.2 | ||||||
| Compensation | 807,587 | 15.4 | 843,151 | 15.6 | 723,206 | 16.0 | ||||||
| Benefits | 351,222 | 6.7 | 373,756 | 6.9 | 315,053 | 6.9 | ||||||
| FGTS | 83,450 | 1.6 | 82,673 | 1.5 | 77,494 | 1.7 | ||||||
| Other charges | 279,975 | 5.3 | 525,695 | 9.8 | 162,360 | 3.6 | ||||||
| Contribution to the Government | 1,620,338 | 30.9 | 1,372,490 | 25.5 | 1,548,941 | 34.2 | ||||||
| Tax expenses | 611,323 | 11.7 | 642,812 | 12.0 | 611,904 | 13.5 | ||||||
| Income tax and social contribution | 794,696 | 15.1 | 502,374 | 9.3 | 755,324 | 16.7 | ||||||
| INSS | 214,319 | 4.1 | 227,304 | 4.2 | 181,713 | 4.0 | ||||||
| Interest on shareholders’ capital and dividends paid and/or | ||||||||||||
| provisioned | 740,200 | 14.1 | 683,002 | 12.7 | 601,000 | 13.2 | ||||||
| Profit reinvestment | 1,362,285 | 26.0 | 1,509,887 | 28.0 | 1,104,317 | 24.4 | ||||||
| Total | 5,245,057 | 100.0 | 5,390,654 | 100.0 | 4,532,371 | 100.0 | ||||||
| The Notes are an integral part of the Financial Statements. | ||||||||||||
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| Notes to the Consolidated Financial Statements | ||
We present below the Notes to the Consolidated Financial Statements of Banco Bradesco S.A. subdivided as follows:
| Pages | ||
| 1) Operations | 241 | |
| 2) Presentation of the Financial Statements | 241 | |
| 3) Significant Accounting Policies | 243 | |
| 4) Information for Comparison Purposes | 247 | |
| 5) Adjusted Balance Sheet and Statement of Income by Business Segment | 248 | |
| 6) Funds Available | 249 | |
| 7) Interbank Investments | 249 | |
| 8) Securities and Derivative Financial Instruments | 250 | |
| 9) Interbank Accounts – Restricted Deposits | 260 | |
| 10) Loan Operations | 260 | |
| 11) Other Receivables | 269 | |
| 12) Other Assets | 271 | |
| 13) Investments | 271 | |
| 14) Premises and Equipment and Leased Assets | 273 | |
| 15) Deferred Charges | 273 | |
| 16) Deposits, Federal Funds Purchased and Securities Sold under Agreements to Repurchase and Funds from Issuance of Securities | 274 | |
| 17) Borrowings and Onlendings | 276 | |
| 18) Contingent Assets and Liabilities and Legal Liabilities – Tax and Social Security | 277 | |
| 19) Subordinated Debts | 279 | |
| 20) Other Liabilities | 280 | |
| 21) Insurance, Private Pension Plans and Certificated Savings Plans Operations | 281 | |
| 22) Minority Interest in Subsidiaries | 283 | |
| 23) Shareholders’ Equity (Parent Company) | 283 | |
| 24) Fee and Commission Income | 286 | |
| 25) Personnel Expenses | 286 | |
| 26) Other Administrative Expenses | 286 | |
| 27) Tax Expenses | 287 | |
| 28) Other Operating Income | 287 | |
| 29) Other Operating Expenses | 287 | |
| 30) Non-Operating Income | 287 | |
| 31) Transactions with Parent Companies (Direct and Indirect) | 288 | |
| 32) Financial Instruments | 288 | |
| 33) Employee Benefits | 293 | |
| 34) Income Tax and Social Contribution | 294 | |
| 35) Other Information | 297 |
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1) Operations
Banco Bradesco S.A. (Bradesco) is a private-sector publicly-held company which, operating as a Multiple Service Bank, carries out all types of authorized banking activities through its commercial, foreign exchange, consumer financing, housing loan and credit card portfolios. The Bank also operates in a number of other activities through its direct and indirect subsidiary companies, particularly in Leasing, Investment Bank, Consortium Management, Insurance, Private Pension Plan and Certificated Savings Plans. Operations are conducted within the context of the companies comprising the Bradesco Organization, working in an integrated manner in the market.
In this context, Bradesco carried out the following operations in 1Q08:
• On January 21, 2008, Grupo Bradesco de Seguros e Previdência, by means of Bradesco Seguros S.A., entered into a “Quota Assignment Agreement” with Marsh Corretora de Seguros Ltda., parent company of Mediservice – Administradora de Planos de Saúde Ltda. (Mediservice), in order to acquire the ownership control of the latter at the amount of R$84.9 million.The execution of the agreement is subject to the approval by the proper authorities.
• On March 6, 2008, Banco Bradesco BBI S.A. entered into a “Private Instrument of Share Merger Commitment and Other Covenants” with shareholders of Ágora Corretora de Títulos e Valores Mobiliários S.A., in order to acquire the total capital of the latter. Ágora Corretora is the largest brokerage house in Brazil relating to online purchase and sale of shares to individuals (home broker), with approximately 29 thousand active clients. The operation is subject to approval by the proper authorities and to the results of due diligence.
2) Presentation of the Financial Statements
The financial statements of Bradesco include the financial statements of Banco Bradesco, its foreign branches and its direct and indirect subsidiaries and jointly controlled investments, in Brazil and abroad, and Special Purpose Entities (SPEs). They were prepared based on accounting policies determined by Brazilian Corporate Law for the recording of operations, as well as the rules and instructions of the National Monetary Council (CMN), Bacen, Brazilian Securities Commission (CVM), Brazilian Council of Private Insurance (CNSP), Insurance Superintendence (Susep) and the National Agency for Supplementary Healthcare (ANS), and consider the financial statements of the leasing companies based on the capital leasing method of accounting, whereby leased assets are reclassified to the leasing operations account, deducted from the residual amount received in advance.
Accordingly, for preparation purposes, intercompany investments, asset and liability account balances, revenue, expenses and unrealized profit were eliminated from these financial statements, as well as the portions of the net income and the shareholders’ equity referring to the interest of minority shareholders were highlighted. In the case of investments which are jointly controlled with other shareholders, asset, liability and income components were included in the consolidated financial statements in proportion to the percentage capital ownership of each investee. Goodwill on the acquisition of investments in subsidiaries and jointly controlled investments has been fully amortized in the period in which the investments acquisition occurred (Note 15a). The exchange variation arising from transactions of foreign branches and subsidiaries is presented in the income accounts with derivative financial instruments, in order to eliminate the effect of the protection instruments of these investments (Note 4).
The financial statements include estimates and assumptions, such as the calculation of the allowance for loan losses, estimation of the fair value of certain financial instruments, provision for contingencies, other provisions, quantification of technical provisions for insurance, supplementary pension plans and certificated savings plans and the determination of the useful life of specific assets. Actual results could differ from these estimates and assumptions.
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We highlight the main direct and indirect ownerships included in the Consolidated Financial Statements:
| Activity | Total Ownership | |||||||
| 2008 | 2007 | |||||||
| March 31 |
December 31 |
March 31 |
||||||
| Financial area – local | ||||||||
| Alvorada Cartões, Crédito, Financiamento e Investimento S.A. | Loan and Financing | 100.00% | 100.00% | 100.00% | ||||
| Banco Alvorada S.A. | Banking | 99.88% | 99.88% | 99.88% | ||||
| Banco BMC S.A. (1) (2) | Banking | 100.00% | 100.00% | – | ||||
| Banco Bankpar S.A. | Banking | 100.00% | 100.00% | 100.00% | ||||
| Banco Bradesco BBI S.A. | Investment Bank | 100.00% | 100.00% | 100.00% | ||||
| Banco Boavista Interatlântico S.A. | Banking | 100.00% | 100.00% | 100.00% | ||||
| Banco Finasa S.A. | Banking | 100.00% | 100.00% | 100.00% | ||||
| Bankpar Arrendamento Mercantil S.A. | Leasing | 100.00% | 100.00% | 100.00% | ||||
| Banco Bradesco Cartões S.A. (7) | Banking | 100.00% | 100.00% | 100.00% | ||||
| Bradesco Administradora de Consórcios Ltda. | Consortium Management | 100.00% | 100.00% | 100.00% | ||||
| Bradesco Leasing S.A. Arrendamento Mercantil | Leasing | 100.00% | 100.00% | 100.00% | ||||
| Bradesco S.A. Corretora de Títulos e Valores Mobiliários | Brokerage | 100.00% | 100.00% | 100.00% | ||||
| BRAM – Bradesco Asset Management S.A. DTVM | Assets under Management | 100.00% | 100.00% | 100.00% | ||||
| Companhia Brasileira de Meios de Pagamento – | ||||||||
| Visanet (2) (5) (6) (8) (10) (16) | Service Provision | 39.31% | 39.76% | 39.72% | ||||
| Financial area – abroad | ||||||||
| Banco Bradesco Argentina S.A. | Banking | 99.99% | 99.99% | 99.99% | ||||
| Banco Bradesco Luxembourg S.A. | Banking | 100.00% | 100.00% | 100.00% | ||||
| Banco Boavista Interatlântico S.A. Nassau Branch (14) | Banking | – | – | 100.00% | ||||
| Banco Bradesco S.A. Grand Cayman Branch (9) | Banking | 100.00% | 100.00% | 100.00% | ||||
| Banco Bradesco S.A. New York Branch | Banking | 100.00% | 100.00% | 100.00% | ||||
| Banco BMC S.A. Grand Cayman Branch (1) (2) (5) | Banking | 100.00% | 100.00% | – | ||||
| Banco Bradesco S.A. Nassau Branch (4) | Banking | 100.00% | 100.00% | – | ||||
| Bradesco Securities, Inc. | Brokerage | 100.00% | 100.00% | 100.00% | ||||
| Bradesco Securities, Uk (3) | Brokerage | 100.00% | – | – | ||||
| Insurance, private pension plans and certificated | ||||||||
| savings plans area | ||||||||
| Atlântica Capitalização S.A. | Certificated Savings Plans | 100.00% | 100.00% | 100.00% | ||||
| Áurea Seguros S.A. (2) (5) (6) (13) | Insurance | 18.41% | 18.41% | 27.50% | ||||
| Bradesco Argentina de Seguros S.A. | Insurance | 99.90% | 99.90% | 99.90% | ||||
| Bradesco Auto/RE Companhia de Seguros | Insurance | 100.00% | 100.00% | 100.00% | ||||
| Bradesco Capitalização S.A. | Certificated Savings Plans | 100.00% | 100.00% | 100.00% | ||||
| Bradesco Saúde S.A. | Insurance/Health | 100.00% | 100.00% | 100.00% | ||||
| Bradesco Seguros S.A. | Insurance | 100.00% | 100.00% | 100.00% | ||||
| Bradesco Vida e Previdência S.A. | Private Pension | |||||||
| Plans/Insurance | 100.00% | 100.00% | 100.00% | |||||
| Atlântica Companhia de Seguros (15) | Insurance | 100.00% | 100.00% | 100.00% | ||||
| Indiana Seguros S.A. (11) | Insurance | – | – | 40.00% | ||||
| Seguradora Brasileira de Crédito à Exportação S.A. (2) (5) (6) | Insurance | 12.09% | 12.09% | 12.09% | ||||
| Other activities | ||||||||
| Átria Participações Ltda. | Holding | 100.00% | 100.00% | 100.00% | ||||
| Andorra Holdings S.A. (12) | Holding | 54.01% | 54.01% | 99.90% | ||||
| Bradescor Corretora de Seguros Ltda. | Insurance Brokerage | 100.00% | 100.00% | 100.00% | ||||
| Bradesplan Participações Ltda. | Holding | 100.00% | 100.00% | 100.00% | ||||
| Cia. Securitizadora de Créditos Financeiros Rubi | Credit Acquisition | 100.00% | 100.00% | 100.00% | ||||
| Cibrasec – Companhia Brasileira de Securitização (2) (5) (6) | Credit Acquisition | 9.09% | 9.09% | 9.09% | ||||
| CPM Holdings Limited (6) | Holding | 49.00% | 49.00% | 49.00% | ||||
| Nova Paiol Participações Ltda. | Holding | 100.00% | 100.00% | 100.00% | ||||
| Scopus Tecnologia Ltda. | Information Technology | 100.00% | 100.00% | 100.00% | ||||
| Tempo Serviços Ltda. | Service Provision | 100.00% | 100.00% | 100.00% | ||||
| União Participações Ltda. | Holding | 100.00% | 100.00% | 100.00% | ||||
(2) Companies whose audit services in 2007 were carried out by other independent auditors;
(3) Company incorporated in February 2008;
(4) Company incorporated in August 2007;
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(5) Companies whose audit (review) services in 2008 are carried out by other independent auditors;
(6) Companies proportionally consolidated, in conformity with Resolution 2,723 of CMN and CVM Instruction 247;
(7) Current name of Bankpar Banco Múltiplo S.A.;
(8) Special purpose entity called Brazilian Merchant Voucher Receivables Limited is being consolidated, a company which takes part in the securitization operation of the future flow of credit card bills receivables of clients domiciled abroad (Note
16d);
(9) Special purpose entity called International Diversified Payment Rights Company is being consolidated, a company which takes part in the securitization operation of future flow of payment orders received from overseas (Note 16d);
(10)
Increase of equity interest in December 2007 is due to the canceling of treasury shares in August 2007;
(11) Company sold in December 2007;
(12) Reduction in equity interest due to the non-interest in capital increase occurred in August 2007;
(13)
Reduction in equity interest due to the non-interest in capital increase occurred in June 2007;
(14) Company merged by Banco Bradesco S.A. Nassau Branch in December 2007;
(15) Current name of Finasa Seguradora S.A.; and
(16) Reduction in equity
interest due to the non-interest in capital increase occurred in January 2008.
3) Significant Accounting Policies
a) Determination of net income
Income and expenses are determined on the accrual basis of accounting. Transactions with prefixed rates are recorded at their redemption amounts and income and expenses for the future period are recorded as a discount to the corresponding asset and liability accounts. Income and expenses of a financial nature are prorated daily and calculated based on the exponential method, except when relating to discounted notes or to cross-border transactions which are calculated based on the straight-line method. Post-fixed or foreign-currency-indexed transactions are adjusted to the balance sheet date.
The insurance, coinsurance and commission premiums, net of premiums assigned in coinsurance and reinsurance and corresponding commissions, are appropriated to results upon effectiveness of the corresponding insurance policies and invoices and are deferred for appropriation on a straight-line basis over the terms of the insurance policies, during the risk coverage period, by means of recording and reversal of unearned premiums reserve and deferred selling expenses. The accepted coinsurance and retrocession operations are recorded based on the information received from other companies and the Brazilian Institute of Reinsures (IRB), respectively.
The supplementary pension plans contributions and life insurance premiums covering survival are recognized in income when effectively received.
The revenue from certificated savings plans is recognized at the time it is effectively received. The expenses for placement of bonds, classified as “Selling Expenses”, are recorded as they are incurred. Brokerage expenses are recorded when the certificated savings plans contributions are effectively received. The payment for draw redemptions is considered as expenses of the month when this occur.
The expenses for technical provisions for private pension plans and certificated savings plans are recorded at the same time as the corresponding revenues there from are recognized.
b) Interbank investments
Purchase and sale commitments subject to unrestricted movement agreements are adjusted to market value. Other assets are recorded at acquisition cost, including income earned up to the balance sheet date, net of loss accrual, when applicable.
c) Securities
Trading securities – securities which are acquired for the purpose of being actively and frequently traded are adjusted to market value as a counter-entry to income for the period;
Securities available for sale – securities which are not specifically intended for trading purposes or as held to maturity are adjusted to market value as a counter-entry to a specific account in shareholders' equity, at amounts net of tax effects; and
Securities held to maturity – securities for which there are intention and financial capacity for maintenance in portfolio through to maturity are recorded at acquisition cost, plus income earned, as a counter-entry to income for the period.
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d) Derivative financial instruments (assets and liabilities)
These are classified based on Management’s intended use thereof on the date of the operation and whether it was carried out for hedging purposes or not.
The derivative financial instruments, which do not comply with the hedging criteria established by Bacen, particularly derivatives used to manage general exposure to risk, are recorded at market value, with the corresponding mark-to-market adjustments taken directly to income for the period.
e) Loan and leasing operations, advances on foreign exchange contracts, other receivables with characteristics of loan granting and allowance for loan losses
Loan and leasing operations, advances on foreign exchange contracts and other receivables with characteristics of loan granting are classified at their corresponding risk levels in compliance with: (i) the parameters established by CMN Resolution no. 2,682, at nine levels from “AA” (minimum risk) to “H” (maximum risk); and (ii) Management’s risk level assessment. This assessment, which is carried out on a periodic basis, considers current economic conditions and past loan loss experience, as well as specific and general risks relating to operations, borrowers and guarantors. Moreover, the length of the delay in payment defined in CMN Resolution no. 2,682 is also taken into account for client risk classification purposes as follows:
| Past-due period | Client classification | |
| • From 15 to 30 days | B | |
| • From 31 to 60 days | C | |
| • From 61 to 90 days | D | |
| • From 91 to 120 days | E | |
| • From 121 to 150 days | F | |
| • From 151 to 180 days | G | |
| • More than 180 days | H |
The accrual of these operations past due up to 59 days is recorded in revenues and subsequent to the 60th day, in unearned income.
Past-due operations classified at “H” level remain at this level for six months, subsequent to which time they are written-off against the existing allowance and controlled in memorandum accounts, for at least five years, no longer being recorded in equity accounts.
Renegotiated operations are maintained, at least, with a classification equal to their prior rating. Renegotiated loan operations, already written-off against the allowance and which are recorded in memorandum accounts, are classified at “H” level and the possible revenues derived from their renegotiation are recognized as revenue only when they are effectively received. When there is a significant amortization of the operation or when new material facts justify the risk level change, the operation may be reclassified to a lower risk category.
The allowance for loan losses is calculated in an amount sufficient to cover probable losses and takes into consideration CMN and Bacen rules and instructions, connected to assessments carried out by the Management, in the loan risks determination.
f) Income tax and social contribution (asset and liability)
Tax credits on income tax and social contribution, calculated on tax losses, negative basis of social contribution and temporary additions are recorded in “Other receivables – Sundry” and the provision for deferred tax liabilities on depreciation excess and market value adjustments of securities is recorded in “Other liabilities – Fiscal and social security activities”.
Tax credits on temporary additions are carried out upon use and/or reversal of the corresponding provisions on which they were recorded. Tax credits on tax losses and negative basis of social contribution will be carried out as taxable income is generated, considering the 30% limit of the actual profit of the reference period. Such tax credits are recorded based on the current expectations for their realization, taking into account the technical studies and analyses carried out by the Management.
Provision for income tax is recorded at the base rate of 15% of taxable income, plus 10%. Provision for social contribution is calculated on profit before income tax, considering a 9% rate.
Provisions were recorded for other income tax and social contribution in accordance with specific applicable legislation.
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g) Prepaid expenses
These record investments of resources in prepayments, whose rights of benefits or service provision will take place in future periods, therefore, are recorded in assets considering the accrual method of accounting, which determines that income and expenses must be included in the determination of the income for the periods in which they occur, always simultaneously when they are correlated, regardless of receipt or payment.
Prepaid payments correspond to the installment already paid for service rights to be received or for the future use of financial assets or resources from third-parties.
This group is basically represented by: commission in the placement of financings, contracts in the rendering of banking services, insurance selling expenses, insurance expenses and other costs on funding abroad and advertising expenses, as described in Note 12b.
Thus, based on the “accrual method of accounting” and the “confrontation between income and expense”, incurred costs related to underlying assets which will generate income in subsequent periods are recorded in prepaid expenses. These assets are appropriated to the income in accordance with terms and amounts of benefits which are expected and directly written-off in the income when underlying assets and rights are no longer part of the institution’s assets or the expected future benefits cannot be realized.
h) Investments
The investments in subsidiaries, jointly controlled investments and affiliated companies, when relevant, are evaluated by the equity accounting method. The financial statements of the foreign branches and subsidiaries are adjusted to comply with the accounting practices adopted in Brazil, translated into reais and their effects recognized in income for the period.
The exchange membership certificates of the São Paulo Stock Exchange (Bovespa), the Mercantile and Futures Exchange (BM&F) (up to the date of demutualization), and the Custody and Settlement Chamber (Cetip) are evaluated and adjusted at their unaudited book value, informed by the corresponding stock exchanges as counterentry to the account highlighted in the shareholders’ equity, and fiscal incentives and other investments are recorded at acquisition cost, net of the provision for losses, when applicable.
i) Fixed assets
This is shown at acquisition cost, net of respective accumulated depreciations, calculated by the straight-line method according to the estimated useful-economic life of assets of which: premises – 4% p.a.; furniture and fixtures, machinery and equipment – 10% p.a.; transport systems – 20% p.a.; and data processing systems – 20% to 50% p.a.
j) Deferred assets
Deferred assets are recorded at acquisition or formation cost, net of the corresponding accumulated amortization at 20% per annum, calculated on the straight-line method.
k) Deposits and federal funds purchased and securities sold under agreements to repurchase
These are recorded at the amount of the liabilities and include, when applicable, related charges up to the balance sheet date, on a daily pro rata basis.
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l) Provisions relating to insurance, private pension plans and certificated savings plans activities
Technical provisions are calculated according to actuarial technical notes approved by Susep and ANS, and criteria set forth by CNSP Resolution 162/2006.
• Insurance of basic lines, life and health
– The provision of unearned premiums (PPNG) is comprised of retained premiums which are deferred during the term of effectiveness of the insurance agreements, determining the pro rata day value of the unearned premium of the period of the risk to accrue (future risk of policies in effect). When this provision’s insufficiency is ascertained by means of actuarial calculation, the Provision of Premium Insufficiency will be formed.
– The provision of claims incurred but not reported (IBNR) is calculated on an actuarial basis to quantify the amount of claims incurred and not reported by those policyholders/beneficiaries. The provision is established net of recoveries of co-insurance and re-insurance.
– The provision of unsettled claims is established based on the estimates of payments of indemnities, net of recoveries of co-insurance and re-insurance, pursuant to notices of claims received from those policyholders until the balance sheet date.
The provision is monetarily restated and includes all the claims under litigation. In the case of Health insurance, according to the technical note approved by ANS, the provision of unsettled claims complements the provisions of claims incurred but not reported – IBRN.
– The supplementary premium provision (PCP) is monthly recorded to complement PPNG, considering the effective risks issued or not. The value of the PCP is the difference, if positive, between the average of the sum of the PPNG values verified daily and the recorded PPNG;
– Other Technical Provisions refer to the provision to face the differences of future readjustments of premiums and those required for the technical balance of the individual health plan portfolio, adopting a formulation with Actuarial Technical Note approved by ANS.
• Supplementary private pension plans and life insurance covering survival
– The mathematical provision of benefits to be granted refers to participants whose benefits have not started yet. The mathematical provision of benefits granted refers to participants already using the benefits. Mathematical provisions related to private pension plans known as “traditional” represent the difference between the current value of the future benefits and the current value of the future contributions, corresponding to the obligations assumed under the form of retirement plans, disability, pension and savings funds. They are calculated according to the methodology and premises set forth in Actuarial Technical Notes. The provisions linked to life insurance covering survival (VGBL) and to the private pension plans of the “unrestricted benefits generating” (PGBL) category represent the amount of the contributions made by the participants, net of loadings and other contractual charges, plus financial earnings generated by the investment of resources in investment funds specially established (FIEs).
– The contribution insufficiency provision is constituted to complement the mathematical provisions of benefits to be granted and granted, should they not be sufficient to guarantee future commitments. The provision is calculated on an actuarial basis and takes into consideration the actuarial table AT.2000 (mitigated), increased in 1.5% (improvement), considering males separated from females, who have higher life expectancy, and the actual interest rate of 4.3% p.a.
– The financial fluctuation provision is established until the limit of 15% of the mathematical provision of benefits to be granted related to the private pension plans in the category of variable contribution with guarantee of earnings to meet possible financial fluctuations.
– The administrative expenses provision is constituted to cover administrative expenses of the defined benefit and variable contribution plans. It is calculated in conformity with the methodology set forth in the Actuarial Technical Note.
• Certificated savings plans
– The mathematical provision for redemptions is constituted for each active or suspended security during the term estimated in the General Conditions of the plan. It is calculated according to the methodology set forth in the Actuarial Technical Notes approved by Susep.
– The provisions for redemptions are established by the values of the expired certificated savings plans and also by the values of the certificated savings plans which have not expired but whose redemption has been early required by the clients.
The provisions are monetarily restated based on the indexes estimated in each plan.
– The provisions for unrealized and payable draws are constituted to meet premiums arising from future draws (unrealized) and also to premiums arising from draws in which clients were already selected (payable).
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m) Contingent assets and liabilities and legal liabilities – tax and social security
The recognition, measuring and disclosure of contingent assets and liabilities and legal liabilities are made according to the criteria defined in CVM Resolution 489/05.
• Contingent Assets: they are not recognized on an accounting basis, except when the Management has total control of the situation or when there are real guarantees or favorable judicial decisions, on which more resources are not provided for, characterizing the gain as practically certain. The contingent assets with probability of probable success are only disclosed in the notes to the financial statements (Note 18a);
• Contingent Liabilities: they are established taking into consideration the opinion of the legal advisors, the nature of the lawsuits, the similarity with previous processes, the complexity and positioning of Courts, whenever the loss is evaluated as probable, what would cause a probable outflow of resources for the settlement of liabilities and when the amounts involved are measurable with enough safety. The contingent liabilities classified as possible losses are not recognized on an accounting basis, and they must only be disclosed in the notes, when individually relevant, and those classified as remote do not require provision nor disclosure (Notes 18b and 18c); and
• Legal Liabilities – Tax and Social Security: they result from judicial proceedings related to tax liabilities, whose purpose of contestation is their legality or constitutionality, which, regardless of the evaluation about the probability of success, have their amounts fully recognized in the financial statements (Note 18b).
n) Other assets and liabilities
The assets are stated at their realizable amounts, including, when applicable, related income and monetary and exchange variations (on a daily pro rata basis), and provision for loss, when deemed appropriate. The liabilities include known or estimated amounts, plus related charges and monetary and exchange variations (on a daily pro rata basis).
4) Information for Comparison Purposes
Reclassifications
For a better comparison of the financial statements, reclassifications were carried out in the balances of the 1st and 4th quarter of 2007, in view of the compliance with the accounting procedures/classifications adopted in the 1st quarter of 2008.
| Statement of Income | R$ thousand | |||||||||||
| 2007 | ||||||||||||
| 4th Quarter | 1st Quarter | |||||||||||
| Previous disclosure |
Reclassifications | Reclassified balance |
Previous disclosure |
Reclassifications | Reclassified balance |
|||||||
| Income from financial intermediation | 11,059,789 | 261,805 | 11,321,594 | 9,525,111 | 255,183 | 9,780,294 | ||||||
| Loan operations (1) | 5,810,695 | 262,381 | 6,073,076 | 4,936,359 | 296,239 | 5,232,598 | ||||||
| Income from securities operations (1) | 1,568,961 | 238,190 | 1,807,151 | 1,481,724 | 313,493 | 1,795,217 | ||||||
| Income from derivative financial instruments (1) | 787,972 | (238,766) | 549,206 | 764,642 | (354,549) | 410,093 | ||||||
| Expenses with financial intermediation | 6,459,521 | 261,805 | 6,721,326 | 5,454,164 | 255,183 | 5,709,347 | ||||||
| Sold under agreements to repurchase operations (1) | 3,221,750 | 302,021 | 3,523,771 | 2,884,640 | 410,554 | 3,295,194 | ||||||
| Loan and onlending operations (1) | 393,051 | (40,216) | 352,835 | 364,583 | (155,371) | 209,212 | ||||||
| Gross income from financial intermediation | 4,600,268 | – | 4,600,268 | 4,070,947 | – | 4,070,947 | ||||||
| Other operating income/expenses | ||||||||||||
| Insurance, private pension plans and certificated savings plans | ||||||||||||
| retained premiums (2) | 4,837,265 | 1,215,177 | 6,052,442 | 3,605,971 | 1,037,579 | 4,643,550 | ||||||
| Reinsurance premiums (2) | (1,337,629) | 1,215,177 | (122,452) | (1,195,137) | 1,037,579 | (157,558) | ||||||
| Variation of technical provisions for insurance, private pension | ||||||||||||
| plans and certificated savings plans (2) | (1,964,826) | (1,679,143) | (3,643,969) | (663,215) | (1,750,143) | (2,413,358) | ||||||
| Expenses with private pension plans benefits and redemptions (2) | (463,966) | 463,966 | – | (712,564) | 712,564 | – | ||||||
| Net income | 2,192,889 | – | 2,192,889 | 1,705,317 | – | 1,705,317 | ||||||
(1) The exchange variation of operations of branches and subsidiaries abroad, which were distributed in the lines of the statement of income, according to the respective assets and liabilities originated, were reallocated to the line of Income from
Financial Instruments and Derivatives, to eliminate the effect of these hedge instruments of investments abroad.
(2) In accordance with the resolution of Susep Circular 356/2007 and Susep/Decon/GAB Circular Letter 003/2008, we are reclassifying the item “Expenses with Benefits and Redemptions of Private Pension Plans” to “Variation of Technical
Provision of Insurance, Private Pension Plans and Certificated Savings Plans”.
247
5) Adjusted Balance Sheet and Statement of Income by Business Segment
The following information is presented in conformity with the definitions set forth in the Chart of Accounts for National Financial System Institutions (Cosif).
a) Balance sheet
| R$ thousand | ||||||||||||||
| Financial (1) (2) |
Insurance group (2) (3) |
Other activities (2) |
Amount eliminated (4) |
Consolidated Total |
||||||||||
| Brazil | Abroad | Brazil | Abroad | |||||||||||
| Assets | ||||||||||||||
| Current and long-term assets | 262,671,949 | 22,263,074 | 72,425,391 | 24,883 | 719,056 | (6,489,214) | 351,615,139 | |||||||
| Funds available | 5,374,309 | 306,145 | 69,693 | 1,976 | 9,085 | (58,955) | 5,702,253 | |||||||
| Interbank investments | 47,250,771 | 1,465,620 | – | – | – | (41,081) | 48,675,310 | |||||||
| Securities and derivative financial instruments | 31,182,187 | 6,375,734 | 67,987,595 | 20,002 | 287,654 | (686,436) | 105,166,736 | |||||||
| Interbank and interdepartmental accounts | 24,603,534 | 11,479 | – | – | – | – | 24,615,013 | |||||||
| Loan and leasing operations | 114,884,677 | 12,711,605 | – | – | – | (4,488,280) | 123,108,002 | |||||||
| Other receivables and other assets | 39,376,471 | 1,392,491 | 4,368,103 | 2,905 | 422,317 | (1,214,462) | 44,347,825 | |||||||
| Permanent assets | 21,039,207 | 37,628 | 1,146,929 | 39 | 196,747 | (18,518,347) | 3,902,203 | |||||||
| Investments | 18,282,758 | 32,333 | 870,352 | – | 75,992 | (18,518,347) | 743,088 | |||||||
| Premises and equipment and leased assets | 1,993,096 | 5,182 | 230,569 | 39 | 115,624 | – | 2,344,510 | |||||||
| Deferred charges | 763,353 | 113 | 46,008 | – | 5,131 | – | 814,605 | |||||||
| Total on March 31, 2008 | 283,711,156 | 22,300,702 | 73,572,320 | 24,922 | 915,803 | (25,007,561) | 355,517,342 | |||||||
| Total on December 31, 2007 | 270,389,087 | 21,588,636 | 73,274,211 | 23,530 | 953,940 | (25,045,000) | 341,184,404 | |||||||
| Total on March 31, 2007 | 220,151,529 | 24,711,080 | 63,793,925 | 20,775 | 1,423,959 | (28,156,981) | 281,944,287 | |||||||
| Liabilities | ||||||||||||||
| Current and long-term liabilities | 250,502,302 | 13,374,181 | 64,394,643 | 8,361 | 469,456 | (6,489,214) | 322,259,729 | |||||||
| Deposits | 103,286,465 | 3,524,557 | – | – | – | (100,350) | 106,710,672 | |||||||
| Federal funds purchased and securities sold under agreements | ||||||||||||||
| to repurchase | 68,788,687 | 751,780 | – | – | – | (332) | 69,540,135 | |||||||
| Funds from issuance of securities | 4,609,112 | 3,507,726 | – | – | – | (878,315) | 7,238,523 | |||||||
| Interbank and interdepartmental accounts | 2,158,084 | 1,512 | – | – | – | – | 2,159,596 | |||||||
| Borrowings and onlendings | 25,793,513 | 2,514,763 | – | – | – | (4,295,754) | 24,012,522 | |||||||
| Derivative financial instruments | 1,392,655 | 231,313 | – | – | – | – | 1,623,968 | |||||||
| Technical provisions for insurance, private pension plans and | ||||||||||||||
| certificated savings plans | – | – | 59,716,806 | 5,605 | – | – | 59,722,411 | |||||||
| Other liabilities: | ||||||||||||||
| – Subordinated debt | 13,983,017 | 2,583,868 | – | – | – | – | 16,566,885 | |||||||
| – Other | 30,490,769 | 258,662 | 4,677,837 | 2,756 | 469,456 | (1,214,463) | 34,685,017 | |||||||
| Deferred income | 183,792 | – | 6,026 | – | – | – | 189,818 | |||||||
| Shareholders’ equity/minority interest in subsidiaries | 115,945 | 8,926,521 | 9,171,651 | 16,561 | 446,347 | (18,518,347) | 158,678 | |||||||
| Shareholders’ equity, parent company | 32,909,117 | – | – | – | – | – | 32,909,117 | |||||||
| Total on March 31, 2008 | 283,711,156 | 22,300,702 | 73,572,320 | 24,922 | 915,803 | (25,007,561) | 355,517,342 | |||||||
| Total on December 31, 2007 | 270,389,087 | 21,588,636 | 73,274,211 | 23,530 | 953,940 | (25,045,000) | 341,184,404 | |||||||
| Total on March 31, 2007 | 220,151,529 | 24,711,080 | 63,793,925 | 20,775 | 1,423,959 | (28,156,981) | 281,944,287 | |||||||
b) Statement of income
| R$ thousand | ||||||||||||||
| Financial (1) (2) |
Insurance group (2) (3) |
Other activities (2) |
Amount eliminated (4) |
Consolidated Total | ||||||||||
| Brazil | Abroad | Brazil | Abroad | |||||||||||
| Revenues from financial intermediation | 9,948,769 | 159,789 | 1,674,604 | 1,663 | 6,329 | (51,818) | 11,739,336 | |||||||
| Expenses from financial intermediation | 6,155,144 | 184,387 | 1,024,234 | – | (1,530) | (51,529) | 7,310,706 | |||||||
| Gross income from financial intermediation | 3,793,625 | (24,598) | 650,370 | 1,663 | 7,859 | (289) | 4,428,630 | |||||||
| Other operating income/expenses | (2,296,595) | (18,992) | 369,590 | 1,123 | 14,494 | 289 | (1,930,091) | |||||||
| Operating income | 1,497,030 | (43,590) | 1,019,960 | 2,786 | 22,353 | – | 2,498,539 | |||||||
| Non-operating income | 175,877 | 151,927 | 66,099 | – | 8,330 | – | 402,233 | |||||||
| Income before taxes on profit and profit sharing | 1,672,907 | 108,337 | 1,086,059 | 2,786 | 30,683 | – | 2,900,772 | |||||||
| Income tax and social contribution | (441,800) | (1,583) | (342,140) | (797) | (8,376) | – | (794,696) | |||||||
| Minority interest in subsidiaries | (3,511) | – | (2) | – | (78) | – | (3,591) | |||||||
| Net income on 1st quarter of 2008 | 1,227,596 | 106,754 | 743,917 | 1,989 | 22,229 | – | 2,102,485 | |||||||
| Net income on 4th quarter of 2007 | 1,577,051 | (8,341) | 579,139 | 3,148 | 41,892 | – | 2,192,889 | |||||||
| Net income on 1st quarter of 2007 | 1,063,702 | 78,823 | 528,097 | 891 | 33,804 | – | 1,705,317 | |||||||
(1) The “Financial” segment comprises: financial institutions; holding companies (which are mainly responsible for managing financial resources); as well as credit card management and asset management companies;
(2) The balances of equity
accounts, revenues and expenses are being eliminated among companies from the same segment;
(3) The “Insurance Group” segment comprises insurance, private pension plans and certificated savings plans companies; and
(4) Amounts eliminated
among companies from different segments, as well as operations carried out in Brazil and abroad.
248
6) Funds Available
| R$ thousand | ||||||
| 2008 | 2007 | |||||
| March 31 | December 31 | March 31 | ||||
| Local currency | 5,158,361 | 4,963,418 | 4,030,210 | |||
| Foreign currency | 543,837 | 523,132 | 213,668 | |||
| Investments in gold | 55 | 56 | 48 | |||
| Total | 5,702,253 | 5,486,606 | 4,243,926 | |||
7) Interbank Investments
a) Composition and terms
| R$ thousand | ||||||||||||||
| 2008 | 2007 | |||||||||||||
| Up to 30 days |
From 31 to 180 days |
From 181 to 360 days |
More than 360 days |
March 31 |
December 31 |
March 31 |
||||||||
| Investments in the open market: | ||||||||||||||
| Own portfolio position | 4,820,613 | 3,767,811 | 266,813 | – | 8,855,237 | 1,256,066 | 2,519,899 | |||||||
| • Financial treasury bills | 1,372,407 | – | – | – | 1,372,407 | 199,103 | 246,822 | |||||||
| • National treasury notes | 278,529 | 1,663,398 | 266,813 | – | 2,208,740 | 7,017 | 852,514 | |||||||
| • National treasury bills | 3,112,046 | 2,090,341 | – | – | 5,202,387 | 863,653 | 1,420,563 | |||||||
| • Other | 57,631 | 14,072 | – | – | 71,703 | 186,293 | – | |||||||
| Funded status | 30,366,588 | 204,871 | – | – | 30,571,459 | 29,578,846 | 21,770,845 | |||||||
| • Financial treasury bills | 21,075,570 | – | – | – | 21,075,570 | 22,020,821 | 14,492,008 | |||||||
| • National treasury notes | 2,627,614 | – | – | – | 2,627,614 | 1,365,972 | 765,810 | |||||||
| • National treasury bills | 6,663,404 | 204,871 | – | – | 6,868,275 | 6,192,053 | 6,513,027 | |||||||
| Short position | 3,466,917 | – | – | – | 3,466,917 | 1,179,949 | – | |||||||
| • National treasury bills | 3,446,917 | – | – | – | 3,466,917 | 1,179,949 | – | |||||||
| Unrestricted securities | – | – | – | – | – | – | 1,800,284 | |||||||
| • Generic operations | – | – | – | – | – | – | 1,800,284 | |||||||
| Subtotal | 38,654,118 | 3,972,682 | 266,813 | – | 42,893,613 | 32,014,861 | 26,091,028 | |||||||
| Interest-earning deposits in other banks: | ||||||||||||||
| • Interest-earning deposits in other banks | 2,753,372 | 1,752,462 | 717,538 | 563,194 | 5,786,566 | 5,617,413 | 5,510,344 | |||||||
| • Provisions for losses | (4,869) | – | – | – | (4,869) | (10,149) | (116) | |||||||
| Subtotal | 2,748,503 | 1,752,462 | 717,538 | 563,194 | 5,781,697 | 5,607,264 | 5,510,228 | |||||||
| Total on March 31, 2008 | 41,402,621 | 5,725,144 | 984,351 | 563,194 | 48,675,310 | |||||||||
| % | 85.0 | 11.8 | 2.0 | 1.2 | 100.0 | |||||||||
| Total on December 31, 2007 | 30,429,725 | 4,076,005 | 2,461,314 | 655,081 | 37,622,125 | |||||||||
| % | 80.9 | 10.8 | 6.5 | 1.8 | 100.0 | |||||||||
| Total on March 31, 2007 | 26,194,686 | 4,320,188 | 521,410 | 564,972 | 31,601,256 | |||||||||
| % | 82.9 | 13.7 | 1.6 | 1.8 | 100.0 | |||||||||
b) Income from interbank investments
Classified in the statement of income as income on securities transactions
| R$ thousand | ||||||
| 2008 | 2007 | |||||
| 1st Quarter | 4th Quarter | 1st Quarter | ||||
| Income on investments in purchase and sale commitments: | ||||||
| Own portfolio position | 105,292 | 96,661 | 103,472 | |||
| Funded status | 826,511 | 655,753 | 652,804 | |||
| Sold position | 47,822 | 51,314 | 100 | |||
| Unrestricted securities – Generic operations | 9,767 | 14,864 | 24,934 | |||
| Subtotal | 989,392 | 818,592 | 781,310 | |||
| Income from interest-earning deposits in other banks | 150,265 | 99,424 | 117,020 | |||
| Total (Note 8f) | 1,139,657 | 918,016 | 898,330 | |||
249
8) Securities and Derivative Financial Instruments
Find below the information related to securities and derivative financial instruments:
a) Summary of the consolidated classification of securities by business segment and issuer
| R$ thousand | ||||||||||||||||||||
| 2008 | 2007 | |||||||||||||||||||
| Financial | Insurance/ certificated savings plans |
Private pension plans |
Other activities |
March 31 |
% | December 31 |
% | March 31 |
% | |||||||||||
| Trading securities | 25,737,251 | 4,019,075 | 29,546,360 | 278,777 | 59,581,463 | 63.3 | 68,126,480 | 65.4 | 57,143,923 | 65.7 | ||||||||||
| – Government securities | 15,557,654 | 2,089,874 | 359,624 | 161,579 | 18,168,731 | 19.3 | 28,322,479 | 27.2 | 25,291,343 | 29.0 | ||||||||||
| – Corporate bonds | 8,151,052 | 1,929,201 | 235,212 | 117,198 | 10,432,663 | 11.1 | 10,161,995 | 9.7 | 7,847,337 | 9.0 | ||||||||||
| – Derivative financial instruments (1) | 2,028,545 | – | – | – | 2,028,545 | 2.2 | 1,207,040 | 1.2 | 1,025,259 | 1.2 | ||||||||||
| – PGBL / VGBL restricted bonds | – | – | 28,951,524 | – | 28,951,524 | 30.7 | 28,434,966 | 27.3 | 22,979,984 | 26.5 | ||||||||||
| Available-for-sale securities | 7,528,989 | 1,348,209 | 11,558,236 | 8,233 | 20,443,667 | 21.7 | 22,987,311 | 22.0 | 26,622,435 | 30.6 | ||||||||||
| – Government securities | 4,339,336 | 74,654 | 9,972,624 | 204 | 14,386,818 | 15.3 | 17,276,212 | 16.5 | 21,120,280 | 24.3 | ||||||||||
| – Corporate bonds | 3,189,653 | 1,273,555 | 1,585,612 | 8,029 | 6,056,849 | 6.4 | 5,711,099 | 5.5 | 5,502,155 | 6.3 | ||||||||||
| Held to maturity securities | 859,665 | 6,264,478 | 7,022,028 | – | 14,146,171 | 15.0 | 13,140,335 | 12.6 | 3,195,833 | 3.7 | ||||||||||
| – Government securities | 859,665 | 6,264,478 | 6,545,268 | – | 13,669,411 | 14.5 | 12,685,570 | 12.2 | 3,195,833 | 3.7 | ||||||||||
| – Corporate bonds | – | – | 476,760 | – | 476,760 | 0.5 | 454,765 | 0.4 | – | – | ||||||||||
| Subtotal | 34,125,905 | 11,631,762 | 48,126,624 | 287,010 | 94,171,301 | 100.0 | 104,254,126 | 100.0 | 86,962,191 | 100.0 | ||||||||||
| Purchase and sale commitments (2) | 2,746,231 | 2,420,880 | 5,828,324 | – | 10,995,435 | 10,197,583 | 10,571,439 | |||||||||||||
| Overall total | 36,872,136 | 14,052,642 | 53,954,948 | 287,010 | 105,166,736 | 114,451,709 | 97,533,630 | |||||||||||||
| – Government securities | 20,756,655 | 8,429,006 | 16,877,516 | 161,783 | 46,224,960 | 49.1 | 58,284,261 | 55.9 | 49,607,456 | 57.0 | ||||||||||
| – Corporate bonds | 13.369.250 | 3,202,756 | 2,297,584 | 125,227 | 18,994,817 | 20.2 | 17,534,899 | 16.8 | 14,374,751 | 16.5 | ||||||||||
| – PGBL / VGBL restricted bonds | – | – | 28,951,524 | – | 28,951,524 | 30.7 | 28,434,966 | 27.3 | 22,979,984 | 26.5 | ||||||||||
| Subtotal | 34,125,905 | 11,631,762 | 48,126,624 | 287,010 | 94,171,301 | 100.0 | 104,254,126 | 100.0 | 86,962,191 | 100.0 | ||||||||||
| Purchase and sale commitments (2) | 2,746,231 | 2,420,880 | 5,828,324 | – | 10,995,435 | 10,197,583 | 10,571,439 | |||||||||||||
| Overall total | 36,872,136 | 14,052,642 | 53,954,948 | 287,010 | 105,166,736 | 114,451,709 | 97,533,630 | |||||||||||||
250
b) Consolidated portfolio breakdown by issuer
| Securities (3) | R$ thousand | |||||||||||||||||||||
| 2008 | 2007 | |||||||||||||||||||||
| March 31 | December 31 | March 31 | ||||||||||||||||||||
| Up to 30 days |
From 31 to 180 days |
From 181 to 360 days |
More than 360 days |
Market value/ book value (5) (6) (8) |
Restated cost value |
Mark-to- market |
Market value/ book value (5) (6) (8) |
Mark-to- market |
Market value/ book value (5) (6) (8) |
Mark-to- market |
||||||||||||
| Government securities | 3,993,531 | 1,388,957 | 4,725,648 | 36,116,824 | 46,224,960 | 45,274,171 | 950,789 | 58,284,261 | 1,182,451 | 49,607,456 | 2,042,238 | |||||||||||
| Financial treasury bills | 1,307,381 | 421,428 | 861,590 | 2,316,444 | 4,906,843 | 4,906,932 | (89) | 5,263,819 | (1,697) | 3,351,332 | (2,648) | |||||||||||
| National treasury bills | 2,159,601 | 599,547 | 1,027,355 | 1,730,251 | 5,516,754 | 5,543,806 | (27,052) | 16,022,640 | (44,888) | 17,168,103 | 15,390 | |||||||||||
| National treasury notes | 377,974 | 332,317 | – | 29,047,319 | 29,757,610 | 29,151,682 | 605,928 | 31,894,101 | 826,991 | 24,763,013 | 1,561,395 | |||||||||||
| Brazilian foreign debt notes | 10,198 | 16,233 | 28,567 | 2,943,040 | 2,998,038 | 2,631,026 | 367,012 | 3,120,681 | 383,847 | 4,020,486 | 461,714 | |||||||||||
| Privatization currencies | – | – | – | 79,667 | 79,667 | 61,655 | 18,012 | 79,535 | 18,467 | 201,880 | 5,847 | |||||||||||
| Foreign government securities | 136,349 | 19,431 | 2,808,136 | – | 2,963,916 | 2,976,922 | (13,006) | 1,901,355 | (253) | 100,515 | 558 | |||||||||||
| Other | 2,028 | 1 | – | 103 | 2,132 | 2,148 | (16) | 2,130 | (16) | 2,127 | (18) | |||||||||||
| Corporate bonds | 7,007,116 | 881,485 | 1,825,631 | 9,280,585 | 18,994,817 | 17,740,676 | 1,254,141 | 17,534,899 | 1,167,203 | 14,374,751 | 948,180 | |||||||||||
| Bank deposit certificates | 132,912 | 540,251 | 133,597 | 1,596,012 | 2,402,772 | 2,402,772 | – | 2,484,282 | – | 3,113,238 | (1,946) | |||||||||||
| Shares (7) | 4,023,134 | – | – | – | 4,023,134 | 3,064,262 | 958,872 | 3,528,606 | 833,313 | 3,371,179 | 898,215 | |||||||||||
| Debentures | 17,130 | 11,387 | 122,419 | 5,200,088 | 5,351,024 | 5,194,987 | 156,037 | 5,751,725 | 135,160 | 4,163,439 | (4,566) | |||||||||||
| Foreign securities | 598,134 | 48,127 | 37,135 | 972,109 | 1,655,505 | 1,627,469 | 28,036 | 1,841,055 | 31,190 | 1,458,766 | 67,919 | |||||||||||
| Derivative financial instruments (1) | 873,607 | 258,782 | 284,791 | 611,365 | 2,028,545 | 1,949,542 | 79,003 | 1,207,040 | 116,623 | 1,025,259 | 1,385 | |||||||||||
| Other | 1,362,199 | 22,938 | 1,247,689 | 901,011 | 3,533,837 | 3,501,644 | 32,193 | 2,722,191 | 50,917 | 1,242,870 | (12,827) | |||||||||||
| PGBL / VGBL restricted bonds | 2,593,588 | 3,073,774 | 4,784,109 | 18,500,053 | 28,951,524 | 28,951,524 | – | 28,434,966 | – | 22,979,984 | – | |||||||||||
| Subtotal | 13,594,235 | 5,344,216 | 11,335,388 | 63,897,462 | 94,171,301 | 91,966,371 | 2,204,930 | 104,254,126 | 2,349,654 | 86,962,191 | 2,990,418 | |||||||||||
| Purchase and sale commitments (2) | 5,107,388 | 930,468 | 1,607,557 | 3,350,022 | 10,995,435 | 10,995,435 | – | 10,197,583 | – | 10,571,439 | – | |||||||||||
| Overall Total | 18,701,623 | 6,274,684 | 12,942,945 | 67,247,484 | 105,166,736 | 102,961,806 | 2,204,930 | 114,451,709 | 2,349,654 | 97,533,630 | 2,990,418 | |||||||||||
251
c) Consolidated classification by category, days to maturity and business segment
I) Trading Securities
| Securities (3) | R$ thousand | |||||||||||||||||||||
| 2008 | 2007 | |||||||||||||||||||||
| March 31 | December 31 | March 31 | ||||||||||||||||||||
| Up to 30 days |
From 31 to 180 days |
From 181 to 360 days |
More than 360 days |
Market value/ book value (5) (6) (8) |
Restated cost value |
Mark-to- market |
Market value/ book value (5) (6) (8) |
Mark-to- market |
Market value/ book value (5) (6) (8) |
Mark-to- market |
||||||||||||
| – Financial | 5,457,516 | 1,153,644 | 6,053,263 | 13,072,828 | 25,737,251 | 25,644,001 | 93,250 | 34,057,176 | 122,418 | 24,681,886 | 37,794 | |||||||||||
| National treasury bills | 2,125,673 | 399,313 | 909,163 | 1,504,596 | 4,938,745 | 4,965,661 | (26,916) | 15,101,745 | (44,888) | 15,525,673 | 15,373 | |||||||||||
| Financial treasury bills | 1,276,828 | 349,513 | 749,496 | 511,728 | 2,887,565 | 2,888,725 | (1,160) | 3,237,289 | (2,118) | 1,539,602 | (2,463) | |||||||||||
| Bank deposit certificates | 37,048 | 82,486 | 81,093 | 1,238,199 | 1,438,826 | 1,438,826 | – | 1,344,527 | – | 1,292,391 | (1,946) | |||||||||||
| Derivative financial instruments (1) | 873,607 | 258,782 | 284,791 | 611,365 | 2,028,545 | 1,949,542 | 79,003 | 1,207,040 | 116,623 | 1,025,259 | 1,385 | |||||||||||
| Debentures | – | – | – | 3,698,046 | 3,698,046 | 3,544,052 | 153,994 | 3,981,285 | 128,826 | 3,187,801 | 1,256 | |||||||||||
| Brazilian foreign debt notes | – | – | – | 37,376 | 37,376 | 34,203 | 3,173 | 36,219 | 3,355 | 52,197 | 4,035 | |||||||||||
| National treasury notes | 2 | 6,720 | – | 4,723,328 | 4,730,050 | 4,831,368 | (101,318) | 5,163,250 | (82,034) | 1,153,523 | 4,689 | |||||||||||
| Foreign corporate securities | 587,117 | 37,398 | 10,730 | 118,736 | 753,981 | 754,547 | (566) | 777,468 | 2,907 | 341,772 | 15,479 | |||||||||||
| Foreign government securities | 136,349 | 19,431 | 2,808,136 | – | 2,963,916 | 2,976,922 | (13,006) | 1,901,355 | (253) | 91,588 | (14) | |||||||||||
| Shares (7) | 88,011 | – | – | – | 88,011 | 87,965 | 46 | 19,132 | – | 39,559 | – | |||||||||||
| Other | 332,881 | 1 | 1,209,854 | 629,454 | 2,172,190 | 2,172,190 | – | 1,287,866 | – | 432,521 | – | |||||||||||
| – Insurance and certificated savings plans companies | 980,816 | 701,648 | 233,618 | 2,102,993 | 4,019,075 | 4,019,075 | – | 4,838,658 | – | 8,142,969 | – | |||||||||||
| Financial treasury bills | – | 6,644 | 43,209 | 1,163,308 | 1,213,161 | 1,213,161 | – | 1,373,192 | – | 1,155,838 | – | |||||||||||
| National treasury bills | 7,796 | 200,234 | 101,241 | 208,322 | 517,593 | 517,593 | – | 890,383 | – | 1,480,600 | – | |||||||||||
| Bank deposit certificates | – | 447,456 | 23,285 | 244,520 | 715,261 | 715,261 | – | 952,830 | – | 1,245,741 | – | |||||||||||
| National treasury notes | – | 43,251 | – | 315,869 | 359,120 | 359,120 | – | 222,136 | – | 3,630,919 | – | |||||||||||
| Shares | 155,447 | – | – | – | 155,447 | 155,447 | – | 168,643 | – | 87,760 | – | |||||||||||
| Debentures | – | 1,971 | 65,883 | 118,403 | 186,257 | 186,257 | – | 348,774 | – | 204,245 | – | |||||||||||
| Other | 817,573 | 2,092 | – | 52,571 | 872,236 | 872,236 | – | 882,700 | – | 337,866 | – | |||||||||||
252
| Securities (3) | R$ thousand | |||||||||||||||||||||
| 2008 | 2007 | |||||||||||||||||||||
| March 31 | December 31 | March 31 | ||||||||||||||||||||
| Up to 30 days |
From 31 to 180 days |
From 181 to 360 days |
More than 360 days |
Market value/ book value (5) (6) (8) |
Restated cost value |
Mark-to- market |
Market value/ book value (5) (6) (8) |
Mark-to- market |
Market value/ book value (5) (6) (8) |
Mark-to- market |
||||||||||||
| – Private pension plans | 2,846,988 | 3,073,879 | 4,794,395 | 18,831,098 | 29,546,360 | 29,546,360 | – | 28,972,358 | – | 23,820,563 | – | |||||||||||
| Financial treasury bills | – | 4 | 3,828 | 320,992 | 324,824 | 324,824 | – | 208,504 | – | 74,485 | – | |||||||||||
| National treasury notes | – | – | – | 4,225 | 4,225 | 4,225 | – | 4,190 | – | 13,975 | – | |||||||||||
| Bank deposit certificates | – | 101 | 60 | 4,911 | 5,072 | 5,072 | – | 492 | – | 398,361 | – | |||||||||||
| National treasury bills | 24,177 | – | 6,398 | – | 30,575 | 30,575 | – | 6,238 | – | 31,321 | – | |||||||||||
| Shares | 79,425 | – | – | – | 79,425 | 79,425 | – | 88,976 | – | 66,895 | – | |||||||||||
| Privatization currencies | – | – | – | – | – | – | – | – | – | 121,780 | – | |||||||||||
| Debentures | – | – | – | 917 | 917 | 917 | – | 480 | – | 2,009 | – | |||||||||||
| PGBL / VGBL restricted bonds | 2,593,588 | 3,073,774 | 4,784,109 | 18,500,053 | 28,951,524 | 28,951,524 | – | 28,434,966 | – | 22,979,984 | – | |||||||||||
| Other | 149,798 | – | – | – | 149,798 | 149,798 | – | 228,512 | – | 131,753 | – | |||||||||||
| – Other activities | 35,244 | 18,999 | 37,192 | 187,342 | 278,777 | 278,777 | – | 258,288 | – | 498,505 | – | |||||||||||
| Financial treasury bills | 29,149 | 3,859 | – | 113,176 | 146,184 | 146,184 | – | 126,351 | – | 290,701 | – | |||||||||||
| Bank deposit certificates | 153 | 5,732 | 3,421 | 17,468 | 26,774 | 26,774 | – | 25,703 | – | 12,537 | – | |||||||||||
| National treasury bills | 1,955 | – | 10,553 | 2,314 | 14,822 | 14,822 | – | 24,274 | – | 128,760 | – | |||||||||||
| Debentures | 3,932 | 9,408 | 23,218 | 53,811 | 90,369 | 90,369 | – | 50,468 | – | 52,051 | – | |||||||||||
| National treasury notes | – | – | – | 573 | 573 | 573 | – | 27,351 | – | 381 | – | |||||||||||
| Other | 55 | – | – | – | 55 | 55 | – | 4,141 | – | 14,075 | – | |||||||||||
| Subtotal | 9,320,564 | 4,948,170 | 11,118,468 | 34,194,261 | 59,581,463 | 59,488,213 | 93,250 | 68,126,480 | 122,418 | 57,143,923 | 37,794 | |||||||||||
| Purchase and sale commitments (2) | 5,107,388 | 930,468 | 1,607,557 | 3,350,022 | 10,995,435 | 10,995,435 | – | 10,197,583 | – | 10,571,439 | – | |||||||||||
| – Financial | 38,410 | 77,949 | 165,943 | 2,463,929 | 2,746,231 | 2,746,231 | – | 2,370,691 | – | 3,084,783 | – | |||||||||||
| – Insurance and certificated savings plans companies | 2,109,289 | 12,156 | 103,402 | 196,033 | 2,420,880 | 2,420,880 | – | 1,947,216 | – | 1,591,191 | – | |||||||||||
| – Private pension plans | 2,959,689 | 840,363 | 1,338,212 | 690,060 | 5,828,324 | 5,828,324 | – | 5,879,676 | – | 5,895,465 | – | |||||||||||
| Overall total | 14,427,952 | 5,878,638 | 12,726,025 | 37,544,283 | 70,576,898 | 70,483,648 | 93,250 | 78,324,063 | 122,418 | 67,715,362 | 37,794 | |||||||||||
| Derivative financial instruments (liabilities) | (1,017,463) | (153,589) | (186,276) | (266,640) | (1,623,968) | (1,637,299) | 13,331 | (951,733) | (54,310) | (855,531) | (9,856) | |||||||||||
253
II) Securities available for sale
| Securities (3) | R$ thousand | |||||||||||||||||||||
| 2008 | 2007 | |||||||||||||||||||||
| March 31 | December 31 | March 31 | ||||||||||||||||||||
| Up to 30 days |
From 31 to 180 days |
From 181 to 360 days |
More than 360 days |
Market value/ book value (5) (6) (8) |
Restated cost value |
Mark-to- market |
Market value/ book value (5) (6) (8) |
Mark-to- market |
Market value/ book value (5) (6) (8) |
Mark-to- market |
||||||||||||
| – Financial | 1,156,383 | 57,301 | 131,686 | 6,183,619 | 7,528,989 | 6,695,808 | 833,181 | 9,343,427 | 587,425 | 9,434,489 | 960,356 | |||||||||||
| National treasury bills | – | – | – | 15,019 | 15,019 | 15,155 | (136) | – | – | – | – | |||||||||||
| Brazilian foreign debt notes | 10,198 | 16,233 | 28,567 | 2,059,957 | 2,114,955 | 1,751,116 | 363,839 | 2,218,707 | 380,492 | 2,981,682 | 457,679 | |||||||||||
| Foreign corporate securities | 11,017 | 10,729 | 26,405 | 853,373 | 901,524 | 872,922 | 28,602 | 1,063,587 | 28,283 | 1,116,994 | 52,440 | |||||||||||
| National treasury notes | – | – | – | 2,036,803 | 2,036,803 | 2,082,765 | (45,962) | 3,804,559 | (70,293) | 3,660,161 | 101,773 | |||||||||||
| Financial treasury bills | – | 5,226 | – | 85,536 | 90,762 | 90,083 | 679 | 91,792 | 127 | 88,393 | (52) | |||||||||||
| Certificates of bank deposit | 90,550 | 4,267 | 25,738 | 90,914 | 211,469 | 211,469 | – | 158,011 | – | 132,272 | – | |||||||||||
| Debentures | 13,168 | – | 20,470 | 743,261 | 776,899 | 781,648 | (4,749) | 798,457 | (2,267) | 123,038 | (34,059) | |||||||||||
| Shares (7) | 1,014,199 | – | – | – | 1,014,199 | 551,972 | 462,227 | 861,112 | 219,664 | 966,440 | 389,001 | |||||||||||
| Privatization currencies | – | – | – | 79,667 | 79,667 | 61,655 | 18,012 | 79,535 | 18,467 | 80,100 | 5,847 | |||||||||||
| Foreign government securities | – | – | – | – | – | – | – | – | – | 8,927 | 572 | |||||||||||
| Other | 17,251 | 20,846 | 30,506 | 219,089 | 287,692 | 277,023 | 10,669 | 267,667 | 12,952 | 276,482 | (12,845) | |||||||||||
| – Insurance and certificated savings plans companies | 1,151,848 | 14,357 | 26,286 | 155,718 | 1,348,209 | 1,172,421 | 175,788 | 1,138,563 | 206,142 | 2,142,043 | 559,898 | |||||||||||
| Financial treasury bills | 248 | 14,148 | 26,286 | 33,741 | 74,423 | 74,363 | 60 | 73,765 | 31 | 76,911 | (273) | |||||||||||
| Shares | 1,100,247 | – | – | – | 1,100,247 | 952,819 | 147,428 | 901,387 | 159,561 | 740,492 | 224,134 | |||||||||||
| Debentures | 30 | – | – | 121,746 | 121,776 | 114,984 | 6,792 | 116,656 | 8,601 | 110,628 | 6,259 | |||||||||||
| Certificates of bank deposit | 4,654 | 209 | – | – | 4,863 | 4,863 | – | 456 | – | 14,004 | – | |||||||||||
| National treasury notes | – | – | – | 231 | 231 | 231 | – | 230 | – | 1,155,159 | 329,778 | |||||||||||
| Other | 46,669 | – | – | – | 46,669 | 25,161 | 21,508 | 46,069 | 37,949 | 44,849 | – | |||||||||||
| – Private pension plans | 1,585,612 | 40,487 | 38,771 | 9,893,366 | 11,558,236 | 10,455,700 | 1,102,536 | 12,494,362 | 1,433,580 | 15,014,722 | 1,432,243 | |||||||||||
| Shares | 1,585,612 | – | – | – | 1,585,612 | 1,236,616 | 348,996 | 1,489,250 | 454,000 | 1,469,905 | 284,970 | |||||||||||
| Debentures | – | – | – | – | – | – | – | – | – | 479,746 | 21,978 | |||||||||||
| Financial treasury bills | – | 40,487 | 38,771 | 76,392 | 155,650 | 155,318 | 332 | 137,704 | 262 | 125,402 | 140 | |||||||||||
| National treasury notes | – | – | – | 9,816,974 | 9,816,974 | 9,063,766 | 753,208 | 10,867,408 | 979,318 | 12,939,669 | 1,125,155 | |||||||||||
| – Other activities | 700 | 204 | 7,329 | – | 8,233 | 8,058 | 175 | 10,959 | 89 | 31,181 | 127 | |||||||||||
| Certificates of bank deposit | 507 | – | – | – | 507 | 507 | – | 2,263 | – | 17,932 | – | |||||||||||
| Debentures | – | – | – | – | – | – | – | 840 | – | 3,921 | – | |||||||||||
| Shares | 193 | – | – | – | 193 | 18 | 175 | 106 | 88 | 128 | 110 | |||||||||||
| National treasury bills | – | – | – | – | – | – | – | – | – | 1,749 | 17 | |||||||||||
| Financial treasury bills | – | 204 | – | – | 204 | 204 | – | 384 | 1 | – | – | |||||||||||
| Other | – | – | 7,329 | – | 7,329 | 7,329 | – | 7,366 | – | 7,451 | – | |||||||||||
| Overall total | 3,894,543 | 112,349 | 204,072 | 16,232,703 | 20,443,667 | 18,331,987 | 2,111,680 | 22,987,311 | 2,227,236 | 26,622,435 | 2,952,624 | |||||||||||
254
III) Securities held to maturity
| Securities | R$ thousand | |||||||||||||
| 2008 | 2007 | |||||||||||||
| March 31 | December 31 | March 31 | ||||||||||||
| Up to 30 days |
From 31 to 180 days |
From 181 to 360 days |
More than 360 days |
Restated cost value (5) |
Restated cost value (5) |
Restated cost value (5) |
||||||||
| Financial | 1,156 | 1,231 | – | 857,278 | 859,665 | 880,484 | 986,607 | |||||||
| Brazilian foreign debt notes | – | – | – | 845,707 | 845,707 | 865,755 | 986,607 | |||||||
| Financial treasury bills | 1,156 | 1,231 | – | 11,571 | 13,958 | 14,729 | – | |||||||
| Insurance companies and certificated savings | ||||||||||||||
| plans companies | 116,670 | 282,346 | – | 5,865,462 | 6,264,478 | 5,385,916 | – | |||||||
| National treasury notes | 116,670 | 282,346 | – | 5,865,462 | 6,264,478 | 5,385,916 | – | |||||||
| Private pension plans | 261,302 | 120 | 12,848 | 6,747,758 | 7,022,028 | 6,873,935 | 2,209,226 | |||||||
| Debentures | – | 8 | 12,848 | 463,904 | 476,760 | 454,765 | – | |||||||
| National treasury notes | 261,302 | – | – | 6,283,854 | 6,545,156 | 6,419,061 | 2,209,226 | |||||||
| Financial treasury bills | – | 112 | – | – | 112 | 109 | – | |||||||
| Overall total (4) | 379,128 | 283,697 | 12,848 | 13,470,498 | 14,146,171 | 13,140,335 | 3,195,833 | |||||||
d) Breakdown of the portfolios by publication items
| R$ thousand | ||||||||||||||
| 2008 | 2007 | |||||||||||||
| Up to 30 days |
From 31 to 180 days |
From 181 to 360 days |
More than 360 days |
Total on March 31 (3) (5) (6) (8) |
Total on December 31 (3) (5) (6) (8) |
Total on March 31 (3) (5) (6) (8) |
||||||||
| Own portfolio | 16,490,923 | 5,330,053 | 12,066,031 | 56,749,508 | 90,636,515 | 84,079,171 | 77,568,094 | |||||||
| Fixed income securities | 12,467,789 | 5,330,053 | 12,066,031 | 56,749,508 | 86,613,381 | 80,550,565 | 74,196,915 | |||||||
| • Financial treasury bills | 1,307,381 | 121,481 | 821,225 | 1,403,802 | 3,653,889 | 3,793,362 | 3,133,037 | |||||||
| • Purchase and sale commitments (2) | 5,107,388 | 930,468 | 1,607,557 | 3,350,022 | 10,995,435 | 10,197,583 | 10,571,439 | |||||||
| • National treasury notes | 377,974 | 332,317 | – | 23,275,996 | 23,986,287 | 24,584,443 | 21,899,849 | |||||||
| • Brazilian foreign debt notes | 10,198 | – | – | 2,255,396 | 2,265,594 | 761,708 | 320,927 | |||||||
| • Bank deposit certificates | 132,912 | 540,251 | 133,597 | 1,596,012 | 2,402,772 | 2,484,282 | 3,113,238 | |||||||
| • National treasury bills | 822,508 | 229,878 | 504,164 | 81,078 | 1,637,628 | 1,863,200 | 5,426,567 | |||||||
| • Foreign corporate securities | 598,134 | 48,127 | 37,135 | 972,109 | 1,655,505 | 1,270,340 | 1,125,064 | |||||||
| • Debentures | 17,130 | 11,387 | 122,419 | 4,434,693 | 4,585,629 | 2,535,005 | 4,159,518 | |||||||
| • Foreign government securities | 136,349 | 19,431 | 2,808,136 | – | 2,963,916 | 1,901,355 | 100,515 | |||||||
| • Privatization currencies | – | – | – | – | – | – | 121,780 | |||||||
| • PGBL/VGBL restricted bonds | 2,593,588 | 3,073,774 | 4,784,109 | 18,500,053 | 28,951,524 | 28,434,966 | 22,979,984 | |||||||
| • Other | 1,364,227 | 22,939 | 1,247,689 | 880,347 | 3,515,202 | 2,724,321 | 1,244,997 | |||||||
| Equity securities | 4,023,134 | – | – | – | 4,023,134 | 3,528,606 | 3,371,179 | |||||||
| • Shares of listed companies (technical provision) | 905,306 | – | – | – | 905,306 | 221,230 | 1,267,785 | |||||||
| • Shares of listed companies (other) (7) | 3,117,828 | – | – | – | 3,117,828 | 3,307,376 | 2,103,394 | |||||||
| Subject to commitments | 1,337,093 | 684,726 | 592,123 | 9,536,799 | 12,150,741 | 24,154,834 | 18,938,070 | |||||||
| Repurchase agreement | – | 140,967 | 53,335 | 2,097,501 | 2,291,803 | 11,731,427 | 9,943,289 | |||||||
| • National treasury bills | – | 13,087 | 17,546 | 297,347 | 327,980 | 1,948,834 | 4,877,367 | |||||||
| • Brazilian foreign debt notes | – | 16,233 | 28,567 | 687,644 | 732,444 | 2,358,973 | 3,699,559 | |||||||
| • Financial treasury bills | – | 111,647 | 7,222 | 121,855 | 240,724 | 889,521 | 12,085 | |||||||
| • National treasury notes | – | – | – | 225,260 | 225,260 | 2,746,664 | 1,016,655 | |||||||
| • Foreign corporate securities | – | – | – | – | – | 570,715 | 333,702 | |||||||
| • Debentures | – | – | – | 765,395 | 765,395 | 3,216,720 | 3,921 | |||||||
255
| R$ thousand | ||||||||||||||
| 2008 | 2007 | |||||||||||||
| Up to 30 days |
From 31 to 180 days |
From 181 to 360 days |
More than 360 days |
Total on March 31 (3) (5) (6) (8) |
Total on December 31 (3) (5) (6) (8) |
Total on March 31 (3) (5) (6) (8) |
||||||||
| Brazilian Central Bank | 1,316,282 | 7,232 | 62,827 | 4,078,402 | 5,464,743 | 8,273,662 | 6,868,986 | |||||||
| • National treasury bills | 1,316,282 | 2,108 | 58,524 | 1,407 | 1,378,321 | 7,755,646 | 5,022,477 | |||||||
| • National treasury notes | – | – | – | 3,631,061 | 3,631,061 | 511,264 | 1,846,509 | |||||||
| • Financial treasury bills | – | 5,124 | 4,303 | 445,934 | 455,361 | 6,752 | – | |||||||
| Privatization currencies | – | – | – | 100,434 | 100,434 | 79,535 | 80,100 | |||||||
| Collateral provided | 20,811 | 536,527 | 475,961 | 3,260,462 | 4,293,761 | 4,070,210 | 2,045,695 | |||||||
| • National treasury bills | 20,811 | 354,474 | 447,121 | 1,018,650 | 1,841,056 | 1,665,429 | 1,839,485 | |||||||
| • Financial treasury bills | – | 182,053 | 28,840 | 326,810 | 537,703 | 555,516 | 206,210 | |||||||
| • National treasury notes | – | – | – | 1,915,002 | 1,915,002 | 1,849,265 | – | |||||||
| Derivative financial instruments (1) | 873,607 | 258,782 | 284,791 | 611,365 | 2,028,545 | 1,207,040 | 1,025,259 | |||||||
| Securities purpose of unrestricted purchase and sale | ||||||||||||||
| commitments | – | 1,123 | – | 349,812 | 350,935 | 5,010,664 | 2,207 | |||||||
| • National treasury bills | – | – | – | 331,769 | 331,769 | 2,789,531 | 2,207 | |||||||
| • National treasury notes | – | – | – | – | – | 2,202,465 | – | |||||||
| • Financial treasury bills | – | 1,123 | – | 18,043 | 19,166 | 18,668 | – | |||||||
| Overall total | 18,701,623 | 6,274,684 | 12,942,945 | 67,247,484 | 105,166,736 | 114,451,709 | 97,533,630 | |||||||
| % | 17.8 | 6.0 | 12.3 | 63.9 | 100.0 | 100.0 | 100.0 | |||||||
(1) For comparison purposes with the criterion adopted by Bacen Circular 3,068 and due to securities characteristics, we are considering the derivative financial instruments under the category “Trading Securities”;
(2) These refer to
investment funds and managed portfolios applied in purchase and sale commitments with Bradesco, the owners of which are subsidiaries, included in the consolidated financial statements;
(3) The investment fund quotas were distributed according to
instruments composing their portfolios and preserving the classification of funds category;
(4) In compliance with the provisions of Article 8 of Bacen Circular 3,068, Bradesco declares that it has both the financial capacity and the intention to
hold to maturity the securities classified in the held to maturity securities’ category. This financial capacity is evidenced in Note 32a, which presents the maturities of asset and liability operations on the reference date of March 31, 2008.
On June 30, 2007, R$8,321,604 thousand was transferred from “Securities Available for Sale” to “Securities Held to Maturity”, due to the management’s intention as to its realization;
(5) The number of days to maturity
was based on the maturity of the securities, regardless of their accounting classification;
(6) This column reflects book value subsequent to mark-to-market according to item
(7), except for held to maturity securities, whose market value is higher
than the restated cost value in the amount of R$1,428,075 thousand (December 31, 2007 – R$1,246,211 thousand and March 31, 2007 – R$1,103,877 thousand);
(7) In March 2008, it includes the remaining participation of 3,706,287
shares, originated from the process referring to Visa Inc.’s Initial Public Offering (IPO); and
(8) The market value of securities is determined based on the market price available on the balance sheet date. In case no market prices are
available, amounts are estimated based on the prices quoted by dealers, on price definition models, quotation models or price quotations for instruments with similar characteristics; in case of investment funds, the restated cost reflects the market
value of respective quotas.
e) Derivative financial instruments
Bradesco carries out transactions involving derivative financial instruments, which are recorded in equity or memorandum accounts, for its own needs and for customers. The derivative financial instruments, when used by the Bank, aim at hedging its asset and liability positions against the effect of exchange and interest rate variations. The derivatives generally represent future commitments for exchanging currencies or indices, or purchasing and selling other financial instruments according to the terms and dates set forth in the contracts. Under the option contracts, the purchaser is entitled, but not obliged, to purchase or sell a financial instrument at a specific strike price in the future.
256
I) Amounts of the derivative financial instruments recorded in equity and memorandum accounts
| R$ thousand | ||||||||||||
| 2008 | 2007 | |||||||||||
| March 31 | December 31 | March 31 | ||||||||||
| Overall amount | Net amount | Overall amount | Net amount | Overall amount | Net amount | |||||||
| Futures contracts | ||||||||||||
| Purchase commitments: | 11,947,191 | 8,667,896 | 10,173,159 | |||||||||
| – Interbank market | 10,554,544 | – | 4,783,947 | – | 5,621,873 | – | ||||||
| – Foreign currency | 1,392,647 | – | 3,835,059 | – | 4,551,286 | – | ||||||
| – Other | – | – | 58,890 | 58,890 | – | – | ||||||
| Sale commitments: | 75,978,344 | 46,033,511 | 28,694,631 | |||||||||
| – Interbank market | 60,897,339 | 50,342,795 | 32,011,467 | 27,227,520 | 17,601,241 | 11,979,368 | ||||||
| – Foreign currency | 15,014,319 | 13,621,672 | 14,022,044 | 10,186,985 | 11,090,429 | 6,539,143 | ||||||
| – Other | 66,686 | 66,686 | – | – | 2,961 | 2,961 | ||||||
| Option contracts | ||||||||||||
| Purchase commitments: | 11,075,380 | 4,404,225 | 562,589 | |||||||||
| – Interbank market | 9,858,900 | 21,900 | 3,312,450 | 396,450 | – | – | ||||||
| – Foreign currency | 466,166 | – | 769,943 | – | 562,589 | – | ||||||
| – Other | 750,314 | – | 321,832 | – | – | |||||||
| Sale commitments: | 12,230,778 | 5,724,495 | 2,129,705 | |||||||||
| – Interbank market | 9,837,000 | – | 2,916,000 | – | – | – | ||||||
| – Foreign currency | 1,104,185 | 638,019 | 1,946,633 | 1,176,690 | 2,129,705 | 1,567,116 | ||||||
| – Other | 1,289,593 | 539,279 | 861,862 | 540,030 | – | – | ||||||
| Forward contracts | ||||||||||||
| Purchase commitments: | 3,365,860 | 1,481,063 | 1,968,365 | |||||||||
| – Foreign currency | 3,230,616 | 1,966,178 | 1,464,861 | – | 1,873,252 | 1,385,707 | ||||||
| – Other | 135,244 | – | 16,202 | – | 95,113 | – | ||||||
| Sale commitments: | 1,714,915 | 1,953,973 | 990,813 | |||||||||
| – Foreign currency | 1,264,438 | – | 1,873,118 | 408,257 | 487,545 | – | ||||||
| – Other | 450,477 | 315,233 | 80,855 | 64,653 | 503,268 | 408,155 | ||||||
| Swap contracts | ||||||||||||
| Asset position: | 35,632,449 | 32,724,888 | 16,125,618 | |||||||||
| – Interbank market | 10,082,092 | 3,177,533 | 10,467,976 | 4,667,843 | 6,786,712 | 4,193,128 | ||||||
| – Prefixed | 685,780 | – | 1,012,381 | 357,300 | 1,113,290 | 496,308 | ||||||
| – Foreign currency (1) | 22,358,746 | – | 19,077,821 | – | 6,721,407 | – | ||||||
| – Reference interest rate (TR) | 924,893 | 857,299 | 842,757 | 780,538 | 822,356 | 687,977 | ||||||
| – Selic | 281,009 | 277,543 | 406,265 | 344,185 | 550,033 | 447,901 | ||||||
| – IGP-M | 575,720 | – | 550,343 | – | 19,338 | – | ||||||
| – Other | 724,209 | – | 367,345 | – | 112,482 | – | ||||||
| Liability position: | 35,136,302 | 32,421,019 | 15,849,842 | |||||||||
| – Interbank market | 6,904,559 | – | 5,800,133 | – | 2,593,584 | – | ||||||
| – Prefixed | 2,008,795 | 1,323,015 | 655,081 | – | 616,982 | – | ||||||
| – Foreign currency (1) | 23,330,139 | 971,393 | 24,330,725 | 5,252,904 | 12,151,538 | 5,430,131 | ||||||
| – Reference interest rate (TR) | 67,594 | – | 62,219 | – | 134,379 | – | ||||||
| – Selic | 3,466 | – | 62,080 | – | 102,132 | – | ||||||
| – IGP-M | 1,814,878 | 1,239,158 | 1,002,032 | 451,689 | 128,647 | 109,309 | ||||||
| – Other | 1,006,871 | 282,662 | 508,749 | 141,404 | 122,580 | 10,098 | ||||||
(1) It includes loan derivative operations (Note 8g).
257
Derivatives include operations maturing in D+1.
II) Breakdown of derivative financial instruments (assets and liabilities) stated at restated cost and market value
| R$ thousand | ||||||||||||||||||
| 2008 | 2007 | |||||||||||||||||
| March 31 | December 31 | March 31 | ||||||||||||||||
| Restated cost |
Adjustment to market value |
Market value |
Restated cost |
Adjustment to market value |
Market value |
Restated cost |
Adjustment to market value |
Market value |
||||||||||
| Adjustment receivables – | ||||||||||||||||||
| swap | 1,119,134 | 70,082 | 1,189,216 | 765,342 | 97,803 | 863,145 | 403,177 | 1,734 | 404,911 | |||||||||
| Receivable forward | ||||||||||||||||||
| purchases | 201,165 | (69) | 201,096 | 48,022 | (2) | 48,020 | 95,177 | – | 95,177 | |||||||||
| Receivable future sales | 450,497 | (231) | 450,266 | 82,988 | (41) | 82,947 | 520,471 | (25) | 520,446 | |||||||||
| Premiums on | ||||||||||||||||||
| exercisable options | 178,746 | 9,221 | 187,967 | 194,065 | 18,863 | 212,928 | 5,049 | (324) | 4,725 | |||||||||
| Total assets | 1,949,542 | 79,003 | 2,028,545 | 1,090,417 | 116,623 | 1,207,040 | 1,023,874 | 1,385 | 1,025,259 | |||||||||
| Adjustment payables – | ||||||||||||||||||
| swap | (714,229) | 21,160 | (693,069) | (524,784) | (34,492) | (559,276) | (106,704) | (22,431) | (129,135) | |||||||||
| Payable forward | ||||||||||||||||||
| purchases | (234,631) | 69 | (234,562) | (16,202) | 2 | (16,200) | (224,746) | – | (224,746) | |||||||||
| Payable future sales | (508,437) | 231 | (508,206) | (234,955) | 41 | (234,914) | (488,008) | 25 | (487,983) | |||||||||
| Premiums on written | ||||||||||||||||||
| options | (180,002) | (8,129) | (188,131) | (121,482) | (19,861) | (141,343) | (26,217) | 12,550 | (13,667) | |||||||||
| Total liabilities | (1,637,299) | 13,331 | (1,623,968) | (897,423) | (54,310) | (951,733) | (845,675) | (9,856) | (855,531) | |||||||||
III) Future, option, forward and swap contracts
| R$ thousand | ||||||||||||||
| 2008 | 2007 | |||||||||||||
| From 1 to 90 days |
From 91 to 180 days |
From 181 to 360 days |
More than 360 days |
Total on March 31 |
Total on December 31 |
Total on March 31 |
||||||||
| Future contracts | 33,320,551 | 32,920,201 | 12,654,716 | 9,030,067 | 87,925,535 | 54,711,407 | 38,867,790 | |||||||
| Option contracts | 1,372,174 | 7,130,083 | 617,653 | 14,186,248 | 23,306,158 | 10,128,720 | 2,692,294 | |||||||
| Forward contracts | 1,366,867 | 664,563 | 2,054,437 | 994,908 | 5,080,775 | 3,435,036 | 2,959,178 | |||||||
| Swap contracts | 2,709,785 | 2,641,388 | 11,175,625 | 17,916,435 | 34,443,233 | 31,861,743 | 15,720,707 | |||||||
| Total on March 31, | ||||||||||||||
| 2008 | 38,769,377 | 43,356,235 | 26,502,431 | 42,127,658 | 150,755,701 | |||||||||
| Total on December 31, | ||||||||||||||
| 2007 | 37,717,731 | 7,852,565 | 12,294,623 | 42,271,987 | 100,136,906 | |||||||||
| Total on March 31, | ||||||||||||||
| 2007 | 21,151,302 | 9,798,565 | 16,360,897 | 12,929,205 | 60,239,969 | |||||||||
258
IV) Types of margin granted as collateral for derivative financial instruments, mainly comprising future contracts
| R$ thousand | ||||||
| 2008 | 2007 | |||||
| March | December | March | ||||
| 31 | 31 | 31 | ||||
| Government bonds | ||||||
| National treasury notes | 1,446,949 | 1,325,095 | – | |||
| National treasury bills | 620,545 | 484,351 | 1,400,826 | |||
| Total | 2,067,494 | 1,809,446 | 1,400,826 | |||
V) Net revenue and expenses amounts
| R$ thousand | ||||||
| 2008 | 2007 | |||||
| 1st Quarter | 4th Quarter | 1st Quarter | ||||
| Swap contracts | 1,790 | 104,864 | 256,268 | |||
| Forward contracts | (1,880) | (2,361) | (19,605) | |||
| Option contracts | 85,897 | 21,669 | 46,593 | |||
| Future contracts | 488,471 | 425,033 | 126,837 | |||
| Total | 574,278 | 549,205 | 410,093 | |||
VI) Overall amounts of the derivative financial instruments, broken down by trading place
| R$ thousand | ||||||
| 2008 | 2007 | |||||
| March | December | March | ||||
| 31 | 31 | 31 | ||||
| Cetip (over-the-counter) | 33,786,785 | 30,834,976 | 13,078,702 | |||
| BM&F (floor) | 116,968,916 | 69,301,930 | 47,161,267 | |||
| Total | 150,755,701 | 100,136,906 | 60,239,969 | |||
f) Income from securities, interest income on insurance, private pension plans and certificated savings plans and derivative financial instruments
| R$ thousand | ||||||
| 2008 | 2007 | |||||
| 1st Quarter | 4th Quarter | 1st Quarter | ||||
| Fixed income securities | 693,638 | 819,773 | 891,836 | |||
| Interbank investments (Note 7b) | 1,139,657 | 918,016 | 898,330 | |||
| Equity securities | (12,958) | 69,362 | 5,051 | |||
| Subtotal | 1,820,337 | 1,807,151 | 1,795,217 | |||
| Interest income on insurance, private pension plans and certificated savings plans | 1,676,345 | 2,068,229 | 1,685,144 | |||
| Income from derivative financial instruments | 574,278 | 549,206 | 410,093 | |||
| Total | 4,070,960 | 4,424,586 | 3,890,454 | |||
259
g) Credit derivatives
| R$ thousand | ||||||||||||
| Credit risk value | Effect in the calculation of the Required Shareholders’ Equity |
|||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||
| March | December | March | March | December | March | |||||||
| 31 | 31 | 31 | 31 | 31 | 31 | |||||||
| Transferred | ||||||||||||
| Swaps from credits whose underlying assets are: | ||||||||||||
| • Securities – Brazilian public debt bond | (881,546) | (963,587) | – | – | – | – | ||||||
| • Securities – Foreign public debt bond | (1,749,100) | (1,771,300) | – | (192,401) | (97,421) | – | ||||||
| Received | ||||||||||||
| Swaps from credits whose underlying assets are: | ||||||||||||
| • Securities – Brazilian public debt bond | 11,612,275 | 9,928,137 | 1,453,840 | – | – | – | ||||||
| • Derivatives with companies | 367,500 | 184,500 | – | 40,425 | 20,295 | – | ||||||
| Total | 9,349,129 | 7,377,750 | 1,453,840 | (151,976) | (77,126) | – | ||||||
| Deposited Margin | 1,069,571 | 744,118 | 55,141 | |||||||||
Bradesco carries out operations involving credit derivatives with the purpose to optimize its risk exposure and assets management. Contracts related to the credit derivatives operations described above have several maturities until 2017. The mark-to-market of protection rates which remunerates the risk receiving counterparty amounts to (R$97,476) thousand (December 31, 2007 –(R$29,802) thousand and March 31, 2007 – R$25,037 thousand). During the year there was no occurrence of a credit event related to generating facts provided for in the contracts.
9) Interbank Accounts – Restricted Deposits
a) Restricted deposits
| R$ thousand | ||||||||
| Remuneration | 2008 | 2007 | ||||||
| March | December | March | ||||||
| 31 | 31 | 31 | ||||||
| Compulsory deposits – demand deposits | Not remunerated | 8,511,507 | 8,930,823 | 6,237,336 | ||||
| Compulsory deposits – savings account deposits | Savings index | 6,626,184 | 6,498,190 | 5,502,478 | ||||
| Additional compulsory deposits | Selic rate | 8,078,743 | 8,109,574 | 6,804,532 | ||||
| Restricted deposits – SFH | Reference interest rate – TR + interest | 456,865 | 452,899 | 407,642 | ||||
| Funds from rural credit | Not remunerated | 578 | 578 | 578 | ||||
| Total | 23,673,877 | 23,992,064 | 18,952,566 | |||||
b) Compulsory deposits
| R$ thousand | ||||||
| 2008 | 2007 | |||||
| 1st Quarter | 4th Quarter | 1st Quarter | ||||
| Restricted deposits – Bacen (compulsory deposits) | 322,476 | 299,911 | 307,859 | |||
| Restricted deposits – SFH | 6,363 | 8,252 | 8,302 | |||
| Total | 328,839 | 308,163 | 316,161 | |||
10) Loan Operations
The information relating to loan operations, including advances on foreign exchange contracts, leasing operations and other receivables with characteristics of loan granting, is presented as follows:
260
a) By type and maturity
| R$ thousand | ||||||||||||||||||||||||
| Performing loans | ||||||||||||||||||||||||
| Up to 30 days | From 31 to 60 days | From 61 to 90 days | From 91 to 180 days | From 181 to 360 days | More than 360 days | 2008 | 2007 | |||||||||||||||||
| Total on March 31 (A) | % (5) | Total on December 31 (A) | % (5) | Total on March 31 (A) | % (5) | |||||||||||||||||||
| Discounted trade receivables and other loans | 11,584,737 | 7,015,109 | 5,269,915 | 7,909,479 | 8,458,130 | 17,508,815 | 57,746,185 | 37.7 | 55,708,868 | 38.3 | 42,125,833 | 38.8 | ||||||||||||
| Financings | 2,599,995 | 2,505,723 | 2,047,965 | 5,008,088 | 8,545,691 | 21,962,080 | 42,669,542 | 27.9 | 41,638,758 | 28.6 | 32,936,555 | 30.4 | ||||||||||||
| Rural and agribusiness financings | 634,461 | 385,295 | 453,388 | 1,536,300 | 1,895,491 | 4,264,354 | 9,169,289 | 6.0 | 8,937,418 | 6.1 | 7,316,459 | 6.7 | ||||||||||||
| Subtotal | 14,819,193 | 9,906,127 | 7,771,268 | 14,453,867 | 18,899,312 | 43,735,249 | 109,585,016 | 71.6 | 106,285,044 | 73.0 | 82,378,847 | 75.9 | ||||||||||||
| Leasing operations | 447,823 | 322,956 | 320,434 | 927,201 | 1,747,999 | 6,832,411 | 10,598,824 | 6.9 | 7,828,584 | 5.4 | 3,869,865 | 3.6 | ||||||||||||
| Advances on foreign exchange contracts (1) | 1,385,980 | 867,849 | 789,851 | 2,126,549 | 2,134,672 | – | 7,304,901 | 4.8 | 6,767,458 | 4.6 | 5,833,531 | 5.4 | ||||||||||||
| Subtotal | 16,652,996 | 11,096,932 | 8,881,553 | 17,507,617 | 22,781,983 | 50,567,660 | 127,488,741 | 83.3 | 120,881,086 | 83.0 | 92,082,243 | 84.9 | ||||||||||||
| Other receivables (2) | 165,068 | 59,927 | 19,816 | 59,130 | 119,630 | 50,338 | 473,909 | 0.3 | 457,983 | 0.3 | 454,135 | 0.4 | ||||||||||||
| Total loan operations (3) | 16,818,064 | 11,156,859 | 8,901,369 | 17,566,747 | 22,901,613 | 50,617,998 | 127,962,650 | 83.6 | 121,339,069 | 83.3 | 92,536,378 | 85.3 | ||||||||||||
| Sureties and guarantees (4) | 611,343 | 673,460 | 473,887 | 2,262,401 | 3,188,528 | 17,870,527 | 25,080,146 | 16.4 | 24,296,177 | 16.7 | 15,968,503 | 14.7 | ||||||||||||
| Overall total on March 31, 2008 | 17,429,407 | 11,830,319 | 9,375,256 | 19,829,148 | 26,090,141 | 68,488,525 | 153,042,796 | 100.0 | ||||||||||||||||
| Overall total on December 31, 2007 | 18,104,299 | 11,219,185 | 9,343,435 | 18,021,773 | 24,644,823 | 64,301,731 | 145,635,246 | 100.0 | ||||||||||||||||
| Overall total on March 31, 2007 | 14,350,123 | 11,979,171 | 7,877,097 | 13,731,965 | 18,055,810 | 42,510,715 | 108,504,881 | 100.0 | ||||||||||||||||
| R$ thousand | ||||||||||||||||||||||
| Non-performing loans | ||||||||||||||||||||||
| Past due installments | ||||||||||||||||||||||
| Up to 30 days | From 31 to 60 days | From 61 to 90 days | From 91 to 180 days | From 181 to 720 days | 2008 | 2007 | ||||||||||||||||
| Total on March 31 (B) | % (5) | Total on December 31 (B) | % (5) | Total on March 31 (B) | % (5) | |||||||||||||||||
| Discounted trade receivables and other loans | 544,710 | 442,093 | 456,515 | 773,300 | 1,039,025 | 3,255,643 | 74.9 | 3,085,647 | 76.6 | 2,529,778 | 73.5 | |||||||||||
| Financings | 233,590 | 187,130 | 84,315 | 172,918 | 153,177 | 831,130 | 19.1 | 794,426 | 19.7 | 727,007 | 21.1 | |||||||||||
| Rural and agribusiness financings | 3,123 | 69,995 | 6,937 | 17,883 | 5,755 | 103,693 | 2.4 | 30,447 | 0.8 | 78,561 | 2.3 | |||||||||||
| Subtotal | 781,423 | 699,218 | 547,767 | 964,101 | 1,197,957 | 4,190,466 | 96.4 | 3,910,520 | 97.1 | 3,335,346 | 96.9 | |||||||||||
| Leasing operations | 20,946 | 15,218 | 6,995 | 13,044 | 9,821 | 66,024 | 1.5 | 48,457 | 1.2 | 43,908 | 1.3 | |||||||||||
| Advances on foreign exchange contracts (1) | 35,563 | 2,247 | 874 | 2,626 | 7,923 | 49,233 | 1.1 | 14,857 | 0.4 | 17,370 | 0.5 | |||||||||||
| Subtotal | 837,932 | 716,683 | 555,636 | 979,771 | 1,215,701 | 4,305,723 | 99.0 | 3,973,834 | 98.7 | 3,396,624 | 98.7 | |||||||||||
| Other receivables (2) | 10,884 | 3,510 | 3,028 | 3,923 | 24,222 | 45,567 | 1.0 | 53,639 | 1.3 | 44,644 | 1.3 | |||||||||||
| Overall total on March 31, 2008 | 848,816 | 720,193 | 558,664 | 983,694 | 1,239,923 | 4,351,290 | 100.0 | |||||||||||||||
| Overall total on December 31, 2007 | 729,579 | 562,931 | 512,982 | 997,991 | 1,223,990 | 4,027,473 | 100.0 | |||||||||||||||
| Overall total on March 31, 2007 | 715,205 | 532,325 | 485,106 | 789,502 | 919,130 | 3,441,268 | 100.0 | |||||||||||||||
261
| R$ thousand | ||||||||||||||||||||||||
| Non-performing loans | ||||||||||||||||||||||||
| Installments falling due | ||||||||||||||||||||||||
| Up to 30 days | From 31 to 60 days | From 61 to 90 days | From 91 to 180 days | From 181 to 360 days | More than 360 days | 2008 | 2007 | |||||||||||||||||
| Total on March 31 (C) | % (5) | Total on December 31 (C) | % (5) | Total on March 31 (C) | % (5) | |||||||||||||||||||
| Discounted trade receivables and other loans | 279,370 | 230,969 | 174,089 | 398,391 | 509,476 | 617,498 | 2,209,793 | 33.0 | 1,996,847 | 33.5 | 1,953,200 | 35.5 | ||||||||||||
| Financings | 228,650 | 213,777 | 193,174 | 536,900 | 851,112 | 1,677,662 | 3,701,275 | 55.2 | 3,343,912 | 56.3 | 3,014,325 | 54.9 | ||||||||||||
| Rural and agribusiness financings | 2,266 | 1,605 | 478 | 12,189 | 9,231 | 237,611 | 263,380 | 3.9 | 229,252 | 3.9 | 315,953 | 5.8 | ||||||||||||
| Subtotal | 510,286 | 446,351 | 367,741 | 947,480 | 1,369,819 | 2,532,771 | 6,174,448 | 92.1 | 5,570,011 | 93.7 | 5,283,478 | 96.2 | ||||||||||||
| Leasing operations | 17,406 | 13,338 | 12,862 | 39,257 | 78,873 | 329,059 | 490,795 | 7.3 | 330,722 | 5.6 | 199,837 | 3.6 | ||||||||||||
| Advances on foreign exchange contracts (1) | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||
| Subtotal | 527,692 | 459,689 | 380,603 | 986,737 | 1,448,692 | 2,861,830 | 6,665,243 | 99.4 | 5,900,733 | 99.3 | 5,483,315 | 99.8 | ||||||||||||
| Other receivables (2) | 5,895 | 646 | 641 | 1,366 | 3,353 | 27,693 | 39,594 | 0.6 | 39,827 | 0.7 | 12,399 | 0.2 | ||||||||||||
| Total loan operations (3) | 533,587 | 460,335 | 381,244 | 988,103 | 1,452,045 | 2,889,523 | 6,704,837 | 100.0 | 5,940,560 | 100.0 | 5,495,714 | 100.0 | ||||||||||||
| Sureties and guarantees (4) | – | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||
| Overall total on March 31, 2008 | 533,587 | 460,335 | 381,244 | 988,103 | 1,452,045 | 2,889,523 | 6,704,837 | 100.0 | – | |||||||||||||||
| Overall total on December 31, 2007 | 527,488 | 409,265 | 363,028 | 869,399 | 1,273,062 | 2,498,318 | 5,940,560 | 100.0 | ||||||||||||||||
| Overall total on March 31, 2007 | 452,325 | 430,402 | 363,770 | 884,125 | 1,245,284 | 2,119,808 | 5,495,714 | 100.0 | ||||||||||||||||
| R$ thousand | ||||||||||||
| Overall Total | ||||||||||||
| 2008 | 2007 | |||||||||||
| Total on March 31 (A+B+C) | % (5) | Total on December 31 (A+B+C) | % (5) | Total on March 31 (A+B+C) | % (5) | |||||||
| Discounted trade receivables and other loans | 63,211,621 | 38.5 | 60,791,362 | 39.0 | 46,608,811 | 39.7 | ||||||
| Financings | 47,201,947 | 28.8 | 45,777,096 | 29.4 | 36,677,887 | 31.2 | ||||||
| Rural and agribusiness financings | 9,536,362 | 5.8 | 9,197,117 | 5.9 | 7,710,973 | 6.6 | ||||||
| Subtotal | 119,949,930 | 73.1 | 115,765,575 | 74.3 | 90,997,671 | 77.5 | ||||||
| Leasing operations | 11,155,643 | 6.8 | 8,207,763 | 5.3 | 4,113,610 | 3.5 | ||||||
| Advances on foreign exchange contracts (1) | 7,354,134 | 4.5 | 6,782,315 | 4.4 | 5,850,901 | 5.0 | ||||||
| Subtotal | 138,459,707 | 84.4 | 130,755,653 | 84.0 | 100,962,182 | 86.0 | ||||||
| Other receivables (2) | 559,070 | 0.3 | 551,449 | 0.4 | 511,178 | 0.4 | ||||||
| Total loan operations (3) | 139,018,777 | 84.7 | 131,307,102 | 84.4 | 101,473,360 | 86.4 | ||||||
| Sureties and guarantees (4) | 25,080,146 | 15.3 | 24,296,177 | 15.6 | 15,968,503 | 13.6 | ||||||
| Overall total on March 31, 2008 | 164,098,923 | 100.0 | ||||||||||
| Overall total on December 31, 2007 | 155,603,279 | 100.0 | ||||||||||
| Overall total on March 31, 2007 | 117,441,863 | 100.0 | ||||||||||
(2) The item “Other Receivables” comprises receivables on sureties and guarantees honored, receivables on purchase of assets, securities and credit instruments receivable, income receivable on foreign exchange contracts and receivables arising from export contracts;
(3) Total loan operations include financing of credit card operations and operations for prepaid credit card receivables in the amount of R$7,393,792 thousand (December 31, 2007 – R$6,744,924 thousand and March 31, 2007 – R$4,213,531 thousand) . Other receivables relating to credit cards in the amount of R$5,308,535 thousand (December 31, 2007 – R$5,804,398 thousand and March 31, 2007 – R$4,913,290 thousand) are classified in the item “Other Receivables – Sundry” and presented in Note 11b;
(4) Amounts recorded in memorandum account, which include R$2,237,119 thousand referring to operations in which the beneficiary is Banco Bradesco S.A. Grand Cayman Branch; and
(5) Ratio between type and total loan portfolio including sureties and guarantees.
262
b) By type and risk level
| Loan Operations | R$ thousand | |||||||||||||||||||||||||||||
| Risk Levels | ||||||||||||||||||||||||||||||
| AA | A | B | C | D | E | F | G | H | 2008 | 2007 | ||||||||||||||||||||
| Total on March 31 | % | Total on December 31 | % | Total on March 31 | % | |||||||||||||||||||||||||
| Discounted trade receivables and other loans | 13,462,678 | 28,637,183 | 6,424,343 | 8,942,152 | 1,177,326 | 631,100 | 534,637 | 434,317 | 2,967,885 | 63,211,621 | 45.5 | 60,791,362 | 46.3 | 46,608,811 | 45.9 | |||||||||||||||
| Financings | 4,729,567 | 24,521,411 | 6,036,803 | 9,778,196 | 550,517 | 266,845 | 232,369 | 170,179 | 916,060 | 47,201,947 | 33.9 | 45,777,096 | 34.9 | 36,677,887 | 36.1 | |||||||||||||||
| Rural and agribusiness financings | 884,719 | 3,345,728 | 1,207,843 | 3,232,530 | 358,333 | 127,505 | 142,553 | 115,066 | 122,085 | 9,536,362 | 6.9 | 9,197,117 | 7.0 | 7,710,973 | 7.6 | |||||||||||||||
| Subtotal | 19,076,964 | 56,504,322 | 13,668,989 | 21,952,878 | 2,086,176 | 1,025,450 | 909,559 | 719,562 | 4,006,030 | 119,949,930 | 86.3 | 115,765,575 | 88.2 | 90,997,671 | 89.6 | |||||||||||||||
| Leasing operations | 178,157 | 5,510,769 | 2,261,242 | 2,912,218 | 90,890 | 40,078 | 41,051 | 20,161 | 101,077 | 11,155,643 | 8.0 | 8,207,763 | 6.2 | 4,113,610 | 4.1 | |||||||||||||||
| Advances on foreign exchange contracts | 4,591,849 | 1,193,774 | 1,169,229 | 365,021 | 15,916 | 984 | 1,441 | – | 15,920 | 7,354,134 | 5.3 | 6,782,315 | 5.2 | 5,850,901 | 5.8 | |||||||||||||||
| Subtotal | 23,846,970 | 63,208,865 | 17,099,460 | 25,230,117 | 2,192,982 | 1,066,512 | 952,051 | 739,723 | 4,123,027 | 138,459,707 | 99.6 | 130,755,653 | 99.6 | 100,962,182 | 99.5 | |||||||||||||||
| Other receivables | 208,649 | 38,927 | 216,669 | 40,254 | 1,445 | 1,347 | 12,223 | 383 | 39,173 | 559,070 | 0.4 | 551,449 | 0.4 | 511,178 | 0.5 | |||||||||||||||
| Overall total on March 31, 2008 | 24,055,619 | 63,247,792 | 17,316,129 | 25,270,371 | 2,194,427 | 1,067,859 | 964,274 | 740,106 | 4,162,200 | 139,018,777 | 100.0 | |||||||||||||||||||
| % | 17.3 | 45.5 | 12.4 | 18.2 | 1.6 | 0.8 | 0.7 | 0.5 | 3.0 | 100.0 | ||||||||||||||||||||
| Overall total on December 31, 2007 | 22,932,245 | 60,983,061 | 15,193,162 | 23,445,880 | 2,060,396 | 1,019,298 | 839,084 | 759,395 | 4,074,581 | 131,307,102 | 100.0 | |||||||||||||||||||
| % | 17.4 | 46.4 | 11.6 | 17.9 | 1.6 | 0.8 | 0.6 | 0.6 | 3.1 | 100.0 | ||||||||||||||||||||
| Overall total on March 31, 2007 | 19,882,974 | 46,072,925 | 10,500,068 | 17,150,433 | 1,998,191 | 896,343 | 801,384 | 726,564 | 3,444,478 | 101,473,360 | 100.0 | |||||||||||||||||||
| % | 19.6 | 45.4 | 10.3 | 16.9 | 2.0 | 0.9 | 0.8 | 0.7 | 3.4 | 100.0 | ||||||||||||||||||||
263
c) Maturity ranges and risk level
| R$ thousand | ||||||||||||||||||||||||||||||
| Risk level | ||||||||||||||||||||||||||||||
| Non-performing loan operations | ||||||||||||||||||||||||||||||
| AA | A | B | C | D | E | F | G | H | 2008 | 2007 | ||||||||||||||||||||
| Total on March 31 | % | Total on December 31 | % | Total on March 31 | % | |||||||||||||||||||||||||
| Installments falling due | – | – | 1,849,003 | 1,712,302 | 705,393 | 511,876 | 415,194 | 287,936 | 1,223,133 | 6,704,837 | 100.0 | 5,940,560 | 100.0 | 5,495,714 | 100.0 | |||||||||||||||
| Up to 30 | – | – | 146,138 | 149,968 | 60,819 | 29,420 | 29,282 | 19,186 | 98,774 | 533,587 | 8.0 | 527,488 | 8.9 | 452,325 | 8.2 | |||||||||||||||
| From 31 to 60 | – | – | 127,452 | 135,509 | 44,116 | 25,567 | 21,917 | 17,590 | 88,184 | 460,335 | 6.9 | 409,265 | 6.9 | 430,402 | 7.8 | |||||||||||||||
| From 61 to 90 | – | – | 113,622 | 102,607 | 36,462 | 21,718 | 18,185 | 14,414 | 74,236 | 381,244 | 5.7 | 363,028 | 6.1 | 363,770 | 6.6 | |||||||||||||||
| From 91 to 180 | – | – | 262,895 | 260,841 | 101,543 | 63,641 | 52,066 | 40,393 | 206,724 | 988,103 | 14.7 | 869,399 | 14.6 | 884,125 | 16.1 | |||||||||||||||
| From 181 to 360 | – | – | 389,490 | 383,018 | 148,089 | 91,899 | 77,004 | 59,394 | 303,151 | 1,452,045 | 21.6 | 1,273,062 | 21.4 | 1,245,284 | 22.7 | |||||||||||||||
| More than 360 | – | – | 809,406 | 680,359 | 314,364 | 279,631 | 216,740 | 136,959 | 452,064 | 2,889,523 | 43.1 | 2,498,318 | 42.1 | 2,119,808 | 38.6 | |||||||||||||||
| Past due installments | – | – | 294,874 | 565,170 | 411,267 | 319,561 | 327,074 | 274,083 | 2,159,261 | 4,351,290 | 100.0 | 4,027,473 | 100.0 | 3,441,268 | 100.0 | |||||||||||||||
| Up to 14 | – | – | 68,021 | 114,456 | 25,831 | 13,958 | 11,252 | 8,096 | 46,702 | 288,316 | 6.6 | 232,651 | 5.8 | 173,376 | 5.0 | |||||||||||||||
| From 15 to 30 | – | – | 207,090 | 167,341 | 55,235 | 23,861 | 22,145 | 12,375 | 72,453 | 560,500 | 12.9 | 496,928 | 12.3 | 541,829 | 15.8 | |||||||||||||||
| From 31 to 60 | – | – | 19,763 | 273,688 | 142,763 | 58,219 | 39,018 | 24,694 | 162,048 | 720,193 | 16.6 | 562,931 | 14.0 | 532,325 | 15.5 | |||||||||||||||
| From 61 to 90 | – | – | 6,890 | 175,773 | 78,967 | 57,471 | 35,341 | 204,222 | 558,664 | 12.8 | 512,982 | 12.7 | 485,106 | 14.1 | ||||||||||||||||
| From 91 to 180 | – | – | 2,795 | 11,665 | 140,350 | 191,756 | 187,212 | 449,916 | 983,694 | 22.6 | 997,991 | 24.8 | 789,502 | 22.9 | ||||||||||||||||
| From 181 to 360 | – | – | – | – | 4,206 | 5,432 | 6,365 | 1,150,866 | 1,166,869 | 26.8 | 1,175,953 | 29.2 | 835,023 | 24.3 | ||||||||||||||||
| More than 360 | – | – | – | – | – | – | – | 73,054 | 73,054 | 1.7 | 48,037 | 1.2 | 84,107 | 2.4 | ||||||||||||||||
| Subtotal | – | – | 2,143,877 | 2,277,472 | 1,116,660 | 831,437 | 742,268 | 562,019 | 3,382,394 | 11,056,127 | 9,968,033 | 8,936,982 | ||||||||||||||||||
| Specific provision | – | – | 21,439 | 68,324 | 111,666 | 249,432 | 371,134 | 393,413 | 3,382,394 | 4,597,802 | 4,412,783 | 3,772,145 | ||||||||||||||||||
264
| R$ thousand | ||||||||||||||||||||||||||||||
| Risk level | ||||||||||||||||||||||||||||||
| Performing loan operations | ||||||||||||||||||||||||||||||
| AA | A | B | C | D | E | F | G | H | 2008 | 2007 | ||||||||||||||||||||
| Total on March 31 | % | Total on December 31 | % | Total on March 31 | % | |||||||||||||||||||||||||
| Installments falling due | 24,055,619 | 63,247,792 | 15,172,252 | 22,992,899 | 1,077,767 | 236,422 | 222,006 | 178,087 | 779,806 | 127,962,650 | 100.0 | 121,339,069 | 100.0 | 92,536,378 | 100.0 | |||||||||||||||
| Up to 30 | 3,261,152 | 8,995,649 | 1,371,850 | 2,890,751 | 104,782 | 32,322 | 22,585 | 14,546 | 124,427 | 16,818,064 | 13.1 | 17,251,922 | 14.2 | 13,241,695 | 14.3 | |||||||||||||||
| From 31 to 60 | 2,050,553 | 5,627,820 | 1,212,217 | 2,106,814 | 58,788 | 16,879 | 10,612 | 7,979 | 65,197 | 11,156,859 | 8.7 | 10,476,350 | 8.6 | 11,705,299 | 12.7 | |||||||||||||||
| From 61 to 90 | 1,827,591 | 4,165,818 | 1,002,956 | 1,773,957 | 44,899 | 12,995 | 9,008 | 6,214 | 57,931 | 8,901,369 | 7.0 | 8,683,541 | 7.2 | 7,658,439 | 8.3 | |||||||||||||||
| From 91 to 180 | 3,461,571 | 8,380,718 | 2,314,046 | 3,132,545 | 100,140 | 32,637 | 20,812 | 15,147 | 109,131 | 17,566,747 | 13.7 | 16,805,689 | 13.8 | 12,605,103 | 13.6 | |||||||||||||||
| From 181 to 360 | 5,023,450 | 10,904,494 | 2,563,616 | 4,028,952 | 150,659 | 42,000 | 27,109 | 18,587 | 142,746 | 22,901,613 | 17.9 | 21,458,893 | 17.7 | 16,098,258 | 17.4 | |||||||||||||||
| More than 360 | 8,431,302 | 25,173,293 | 6,707,567 | 9,059,880 | 618,499 | 99,589 | 131,880 | 115,614 | 280,374 | 50,617,998 | 39.6 | 46,662,674 | 38.5 | 31,227,584 | 33.7 | |||||||||||||||
| Generic Provision | – | 316,232 | 151,632 | 689,787 | 107,777 | 70,926 | 111,003 | 124,661 | 779,806 | 2,351,824 | 2,284,956 | 1,900,210 | ||||||||||||||||||
| Overall total on March 31, 2008 | 24,055,619 | 63,247,792 | 17,316,129 | 25,270,371 | 2,194,427 | 1,067,859 | 964,274 | 740,106 | 4,162,200 | 139,018,777 | ||||||||||||||||||||
| Existing provision | – | 316,919 | 175,218 | 997,206 | 587,435 | 512,427 | 647,542 | 704,629 | 4,162,200 | 8,103,576 | ||||||||||||||||||||
| Minimum required provision | – | 316,232 | 173,071 | 758,111 | 219,443 | 320,358 | 482,137 | 518,074 | 4,162,200 | 6,949,626 | ||||||||||||||||||||
| Additional provision | – | 687 | 2,147 | 239,095 | 367,992 | 192,069 | 165,405 | 186,555 | – | 1,153,950 | ||||||||||||||||||||
| Overall total on December 31, 2007 | 22,932,245 | 60,983,061 | 15,193,162 | 23,445,880 | 2,060,396 | 1,019,298 | 839,084 | 759,395 | 4,074,581 | 131,307,102 | ||||||||||||||||||||
| Existing provision | – | 305,570 | 153,700 | 974,440 | 544,301 | 492,881 | 562,068 | 718,275 | 4,074,581 | 7,825,816 | ||||||||||||||||||||
| Minimum required provision | – | 304,914 | 151,920 | 703,376 | 206,040 | 305,790 | 419,542 | 531,576 | 4,074,581 | 6,697,739 | ||||||||||||||||||||
| Additional provision | – | 656 | 1,780 | 271,064 | 338,261 | 187,091 | 142,526 | 186,699 | – | 1,128,077 | ||||||||||||||||||||
| Overall total on March 31, 2007 | 19,882,974 | 46,072,925 | 10,500,068 | 17,150,433 | 1,998,191 | 896,343 | 801,384 | 726,564 | 3,444,478 | 101,473,360 | ||||||||||||||||||||
| Existing provision | – | 231,003 | 136,742 | 764,556 | 531,597 | 441,841 | 536,207 | 688,461 | 3,444,478 | 6,774,885 | ||||||||||||||||||||
| Minimum required provision | – | 230,365 | 104,989 | 514,514 | 199,820 | 268,902 | 400,692 | 508,595 | 3,444,478 | 5,672,355 | ||||||||||||||||||||
| Additional provision | – | 638 | 31,753 | 250,042 | 331,777 | 172,939 | 135,515 | 179,866 | – | 1,102,530 | ||||||||||||||||||||
265
d) Concentration of loan operations
| R$ thousand | ||||||||||||
| 2008 | 2007 | |||||||||||
| March 31 | % | December 31 | % | March 31 | % | |||||||
| Largest borrower | 1,443,668 | 1.0 | 916,619 | 0.7 | 1,266,671 | 1.2 | ||||||
| 10 largest borrowers | 8,856,772 | 6.4 | 7,188,171 | 5.5 | 7,294,481 | 7.2 | ||||||
| 20 largest borrowers | 13,579,616 | 9.8 | 11,803,479 | 9.0 | 11,102,407 | 10.9 | ||||||
| 50 largest borrowers | 21,895,691 | 15.8 | 20,530,279 | 15.6 | 17,756,954 | 17.5 | ||||||
| 100 largest borrowers | 28,435,647 | 20.5 | 27,069,657 | 20.6 | 23,069,073 | 22.7 | ||||||
e) By economic activity sector
| R$ thousand | ||||||||||||
| 2008 | 2007 | |||||||||||
| March 31 | % | December 31 | % | March 31 | % | |||||||
| Public Sector | 913,454 | 0.6 | 900,750 | 0.7 | 967,376 | 1.0 | ||||||
| Federal Government | 426,439 | 0.3 | 427,910 | 0.3 | 507,773 | 0.5 | ||||||
| Petrochemical | 294,473 | 0.2 | 293,712 | 0.2 | 361,714 | 0.4 | ||||||
| Financial intermediary | 131,966 | 0.1 | 134,198 | 0.1 | 146,059 | 0.1 | ||||||
| State Government | 484,471 | 0.3 | 470,261 | 0.4 | 457,008 | 0.5 | ||||||
| Production and distribution of electric power | 484,471 | 0.3 | 470,261 | 0.4 | 457,008 | 0.5 | ||||||
| Municipal Government | 2,544 | – | 2,579 | – | 2,595 | – | ||||||
| Direct administration | 2,544 | – | 2,579 | – | 2,595 | – | ||||||
| Private sector | 138,105,323 | 99.4 | 130,406,352 | 99.3 | 100,505,984 | 99.0 | ||||||
| Manufacturing | 33,478,724 | 24.1 | 31,400,607 | 23.9 | 25,207,306 | 24.8 | ||||||
| Food and beverage | 9,445,274 | 6.8 | 8,300,624 | 6.3 | 6,044,582 | 6.0 | ||||||
| Steel, metallurgy and mechanics | 4,766,014 | 3.4 | 4,659,096 | 3.5 | 3,926,986 | 3.9 | ||||||
| Chemical | 4,022,479 | 2.9 | 4,092,483 | 3.1 | 2,770,031 | 2.7 | ||||||
| Light and heavy vehicles | 1,955,751 | 1.4 | 1,673,277 | 1.3 | 1,659,457 | 1.6 | ||||||
| Extraction of metallic and non-metallic ores | 1,866,806 | 1.3 | 1,582,503 | 1.2 | 1,799,763 | 1.8 | ||||||
| Pulp and paper | 1,823,326 | 1.3 | 1,646,425 | 1.3 | 1,872,966 | 1.8 | ||||||
| Textiles and clothing | 1,781,364 | 1.3 | 1,701,269 | 1.3 | 1,042,444 | 1.0 | ||||||
| Rubber and plastic articles | 1,482,454 | 1.1 | 1,415,783 | 1.1 | 1,001,015 | 1.0 | ||||||
| Electric and electronic products | 1,064,755 | 0.8 | 980,211 | 0.7 | 680,833 | 0.7 | ||||||
| Leather articles | 940,116 | 0.7 | 1,148,865 | 0.9 | 446,233 | 0.4 | ||||||
| Automotive parts and accessories | 902,998 | 0.6 | 894,894 | 0.7 | 758,422 | 0.7 | ||||||
| Furniture and wood products | 854,398 | 0.6 | 835,968 | 0.6 | 644,853 | 0.6 | ||||||
| Oil refining and production of alcohol | 778,938 | 0.6 | 697,490 | 0.5 | 670,378 | 0.7 | ||||||
| Non-metallic materials | 579,567 | 0.4 | 529,872 | 0.4 | 539,106 | 0.5 | ||||||
| Publishing, printing and reproduction | 524,811 | 0.4 | 523,381 | 0.4 | 418,492 | 0.4 | ||||||
| Other industries | 689,673 | 0.5 | 718,466 | 0.6 | 931,745 | 1.0 | ||||||
| Commerce | 19,895,529 | 14.3 | 18,724,469 | 14.3 | 15,254,835 | 15.0 | ||||||
| Products in specialty stores | 4,677,144 | 3.4 | 4,399,588 | 3.4 | 3,571,664 | 3.5 | ||||||
| Food products, beverage and tobacco | 2,689,110 | 1.9 | 2,650,017 | 2.0 | 1,734,943 | 1.7 | ||||||
| Grooming and household articles | 1,637,343 | 1.2 | 1,699,253 | 1.3 | 1,325,447 | 1.3 | ||||||
| Self-propelled vehicles | 1,550,382 | 1.1 | 1,460,561 | 1.1 | 875,780 | 0.9 | ||||||
| Non-specialized retailer | 1,514,746 | 1.1 | 1,490,554 | 1.1 | 1,167,041 | 1.2 | ||||||
| Clothing and footwear | 1,340,491 | 1.0 | 1,277,252 | 1.0 | 2,094,997 | 2.1 | ||||||
| Repair, parts and accessories for self-propelled vehicles | 1,055,319 | 0.8 | 1,012,324 | 0.8 | 739,872 | 0.7 | ||||||
| Residues and scrap | 1,018,954 | 0.7 | 987,769 | 0.8 | 821,090 | 0.8 | ||||||
| Wholesale of goods in general | 878,791 | 0.6 | 891,156 | 0.7 | 733,830 | 0.7 | ||||||
| Fuel | 850,635 | 0.6 | 796,074 | 0.6 | 608,702 | 0.6 | ||||||
| Agricultural products | 820,675 | 0.6 | 728,951 | 0.6 | 508,287 | 0.5 | ||||||
| Trade intermediary | 699,872 | 0.5 | 657,092 | 0.5 | 482,832 | 0.5 | ||||||
| Other commerce | 1,162,067 | 0.8 | 673,878 | 0.4 | 590,350 | 0.5 | ||||||
266
| R$ thousand | ||||||||||||
| 2008 | 2007 | |||||||||||
| March 31 | % | December 31 | % | March 31 | % | |||||||
| Financial intermediaries | 862,057 | 0.6 | 1,049,740 | 0.8 | 421,703 | 0.4 | ||||||
| Services | 25,094,001 | 18.1 | 24,134,845 | 18.4 | 16,600,946 | 16.4 | ||||||
| Transport and storage | 6,652,667 | 4.8 | 6,089,898 | 4.6 | 4,564,785 | 4.5 | ||||||
| Civil construction | 4,371,397 | 3.1 | 3,876,247 | 3.0 | 2,412,196 | 2.4 | ||||||
| Real estate activities, rentals and corporate services | 4,023,600 | 2.9 | 3,769,857 | 2.9 | 2,696,453 | 2.7 | ||||||
| Production and distribution of electric power, gas and water | 2,064,414 | 1.5 | 2,058,260 | 1.6 | 1,699,751 | 1.7 | ||||||
| Social services, education, health, defense and social security | 1,522,292 | 1.1 | 1,368,338 | 1.0 | 1,038,669 | 1.0 | ||||||
| Clubs, leisure, cultural and sports activities | 904,770 | 0.7 | 926,902 | 0.7 | 669,384 | 0.7 | ||||||
| Telecommunications | 812,863 | 0.6 | 1,250,161 | 1.0 | 1,012,548 | 1.0 | ||||||
| Hotel and catering | 757,802 | 0.5 | 714,603 | 0.5 | 428,255 | 0.4 | ||||||
| Holding companies, legal, accounting and business advisory services | 687,015 | 0.5 | 1,017,126 | 0.8 | 641,000 | 0.6 | ||||||
| Other services | 3,297,181 | 2.4 | 3,063,453 | 2.3 | 1,437,905 | 1.4 | ||||||
| Agribusiness, fishing, forestry development and management | 1,805,868 | 1.3 | 1,622,899 | 1.2 | 1,393,516 | 1.4 | ||||||
| Individuals | 56,969,144 | 41.0 | 53,473,792 | 40.7 | 41,627,678 | 41.0 | ||||||
| Total | 139,018,777 | 100.0 | 131,307,102 | 100.0 | 101,473,360 | 100.0 | ||||||
f) Breakdown of loan operations and provision for loan losses
| Risk level | R$ thousand | |||||||||||||||||
| Portfolio Balance | ||||||||||||||||||
| Non-performing loans | Performingloans | Total | % | 2008 | 2007 | |||||||||||||
| Past due | Falling due | Total – non-performingloans | % March 31 YTD | % December 31 YTD | % March 31 YTD | |||||||||||||
| AA | – | – | – | 24,055,619 | 24,055,619 | 17.3 | 17.3 | 17.4 | 19.6 | |||||||||
| A | – | – | – | 63,247,792 | 63,247,792 | 45.5 | 62.8 | 63.8 | 65.0 | |||||||||
| B | 294,874 | 1,849,003 | 2,143,877 | 15,172,252 | 17,316,129 | 12.4 | 75.2 | 75.4 | 75.3 | |||||||||
| C | 565,170 | 1,712,302 | 2,277,472 | 22,992,899 | 25,270,371 | 18.2 | 93.4 | 93.3 | 92.2 | |||||||||
| Subtotal | 860,044 | 3,561,305 | 4,421,349 | 125,468,562 | 129,889,911 | 93.4 | ||||||||||||
| D | 411,267 | 705,393 | 1,116,660 | 1,077,767 | 2,194,427 | 1.6 | 95.0 | 94.9 | 94.2 | |||||||||
| E | 319,561 | 511,876 | 831,437 | 236,422 | 1,067,859 | 0.8 | 95.8 | 95.7 | 95.1 | |||||||||
| F | 327,074 | 415,194 | 742,268 | 222,006 | 964,274 | 0.7 | 96.5 | 96.3 | 95.9 | |||||||||
| G | 274,083 | 287,936 | 562,019 | 178,087 | 740,106 | 0.5 | 97.0 | 96.9 | 96.6 | |||||||||
| H | 2,159,261 | 1,223,133 | 3,382,394 | 779,806 | 4,162,200 | 3.0 | 100.0 | 100.0 | 100.0 | |||||||||
| Subtotal | 3,491,246 | 3,143,532 | 6,634,778 | 2,494,088 | 9,128,866 | 6.6 | ||||||||||||
| Overall total on March 31, 2008 | 4,351,290 | 6,704,837 | 11,056,127 | 127,962,650 | 139,018,777 | 100.0 | ||||||||||||
| % | 3.1 | 4.8 | 7.9 | 92.1 | 100.0 | |||||||||||||
| Overall total on December 31, 2007 | 4,027,473 | 5,940,560 | 9,968,033 | 121,339,069 | 131,307,102 | |||||||||||||
| % | 3.1 | 4.5 | 7.6 | 92.4 | 100.0 | |||||||||||||
| Overall total on March 31, 2007 | 3,441,268 | 5,495,714 | 8,936,982 | 92,536,378 | 101,473,360 | |||||||||||||
| % | 3.4 | 5.4 | 8.8 | 91.2 | 100.0 | |||||||||||||
267
| Risk level | R$ thousand | |||||||||||||||||||||
| Provision | ||||||||||||||||||||||
| Minimum required | Additional | Existing | 2008 | 2007 | ||||||||||||||||||
| % Minimum required provision | Specific | Generic | Total | % On March 31 (1) | % On December 31 (1) | % On March 31 (1) | ||||||||||||||||
| Past due | Falling due | Total specific | ||||||||||||||||||||
| AA | 0.0 | – | – | – | – | – | – | – | – | – | – | |||||||||||
| A | 0.5 | – | – | – | 316,232 | 316,232 | 687 | 316,919 | 0.5 | 0.5 | 0.5 | |||||||||||
| B | 1.0 | 2,949 | 18,490 | 21,439 | 151,632 | 173,071 | 2,147 | 175,218 | 1.0 | 1.0 | 1.3 | |||||||||||
| C | 3.0 | 16,955 | 51,369 | 68,324 | 689,787 | 758,111 | 239,095 | 997,206 | 3.9 | 4.2 | 4.5 | |||||||||||
| Subtotal | 19,904 | 69,859 | 89,763 | 1,157,651 | 1,247,414 | 241,929 | 1,489,343 | 1.1 | 1.2 | 1.2 | ||||||||||||
| D | 10.0 | 41,127 | 70,539 | 111,666 | 107,777 | 219,443 | 367,992 | 587,435 | 26.8 | 26.4 | 26.6 | |||||||||||
| E | 30.0 | 95,869 | 153,563 | 249,432 | 70,926 | 320,358 | 192,069 | 512,427 | 48.0 | 48.4 | 49.3 | |||||||||||
| F | 50.0 | 163,537 | 207,597 | 371,134 | 111,003 | 482,137 | 165,405 | 647,542 | 67.2 | 67.0 | 66.9 | |||||||||||
| G | 70.0 | 191,858 | 201,555 | 393,413 | 124,661 | 518,074 | 186,555 | 704,629 | 95.2 | 94.6 | 94.8 | |||||||||||
| H | 100.0 | 2,159,261 | 1,223,133 | 3,382,394 | 779,806 | 4,162,200 | – | 4,162,200 | 100.0 | 100.0 | 100.0 | |||||||||||
| Subtotal | 2,651,652 | 1,856,387 | 4,508,039 | 1,194,173 | 5,702,212 | 912,021 | 6,614,233 | 72.5 | 73.0 | 71.7 | ||||||||||||
| Overall total on March 31, 2008 | 2,671,556 | 1,926,246 | 4,597,802 | 2,351,824 | 6,949,626 | 1,153,950 | 8,103,576 | 5.8 | ||||||||||||||
| % | 33.0 | 23.8 | 56.8 | 29.0 | 85.8 | 14.2 | 100.0 | |||||||||||||||
| Overall total on December 31, 2007 | 2,642,774 | 1,770,009 | 4,412,783 | 2,284,956 | 6,697,739 | 1,128,077 | 7,825,816 | 6.0 | ||||||||||||||
| % | 33.8 | 22.6 | 56.4 | 29.2 | 85.6 | 14.4 | 100.00 | |||||||||||||||
| Overall total on March 31, 2007 | 2,129,987 | 1,642,158 | 3,772,145 | 1,900,210 | 5,672,355 | 1,102,530 | 6,774,885 | 6.7 | ||||||||||||||
| % | 31.5 | 24.2 | 55.7 | 28.0 | 83.7 | 16.3 | 100.0 | |||||||||||||||
g) Movement of allowance for loan losses
| R$ thousand | ||||||
| 2008 | 2007 | |||||
| 1st Quarter | 4th Quarter | 1st Quarter | ||||
| Opening Balance | 7,825,816 | 7,428,331 | 6,646,038 | |||
| – Specific provision (1) | 4,412,783 | 4,196,308 | 3,635,341 | |||
| – Generic provision (2) | 2,284,956 | 2,120,317 | 1,910,790 | |||
| – Additional provision (3) | 1,128,077 | 1,111,706 | 1,099,907 | |||
| Amount recorded | 1,666,837 | 1,555,779 | 1,159,661 | |||
| Amount written–off | (1,389,077) | (1,158,294) | (1,030,814) | |||
| Closing balance | 8,103,576 | 7,825,816 | 6,774,885 | |||
| – Specific provision (1) | 4,597,802 | 4,412,783 | 3,772,145 | |||
| – Generic provision (2) | 2,351,824 | 2,284,956 | 1,900,210 | |||
| – Additional provision (3) | 1,153,950 | 1,128,077 | 1,102,530 | |||
(2) Recorded based on the customer/transaction classification and accordingly not included in the preceding item; and
(3) The additional provision is recorded based on Management's experience and expected collection of the loan portfolio, to determine the total provision deemed sufficient to cover specific and general loan risks, as well as the provision calculated based on risk level ratings and the corresponding minimum percentage of provision established by CMN Resolution 2,682. The additional provision per customer was classified according to the corresponding risk levels (Note 10f).
268
h) Recovery and renegotiation
Expenses from allowance for loan losses, net of recoveries of written-off credits.
| R$ thousand | ||||||
| 2008 | 2007 | |||||
| 1st Quarter | 4th Quarter | 1st Quarter | ||||
| Amount recorded | 1,666,837 | 1,555,779 | 1,159,661 | |||
| Amount recovered (1) | (231,541) | (288,300) | (177,623) | |||
| Expense net of recoveries | 1,435,296 | 1,267,479 | 982,038 | |||
i) Movement of renegotiated portfolio
| R$ thousand | ||||||
| 2008 | 2007 | |||||
| 1st Quarter | 4th Quarter | 1st Quarter | ||||
| Opening balance | 2,682,997 | 2,728,513 | 2,708,521 | |||
| – Amount renegotiated | 595,748 | 601,305 | 587,514 | |||
| – Amount received | (369,104) | (406,152) | (361,717) | |||
| – Amount written-off | (238,238) | (240,669) | (203,539) | |||
| Closing balance | 2,671,403 | 2,682,997 | 2,730,779 | |||
| Allowance for loan losses | 1,768,302 | 1,781,375 | 1,766,302 | |||
| Percentage on portfolio | 66.2% | 66.4% | 64.7% | |||
j) Income on loan and leasing operations
| R$ thousand | ||||||
| 2008 | 2007 | |||||
| 1st Quarter | 4th Quarter | 1st Quarter | ||||
| Discounted trade receivables and other loans | 4,040,408 | 3,516,684 | 3,076,770 | |||
| Financings | 2,067,845 | 2,010,318 | 1,791,131 | |||
| Rural and agribusiness loans | 231,326 | 257,774 | 187,074 | |||
| Subtotal | 6,339,579 | 5,784,776 | 5,054,975 | |||
| Recovery of credits written-off as loss | 231,541 | 288,300 | 177,623 | |||
| Subtotal | 6,571,120 | 6,073,076 | 5,232,598 | |||
| Leasing, net of expenses | 371,341 | 282,614 | 190,126 | |||
| Total | 6,942,461 | 6,355,690 | 5,422,724 | |||
269
11) Other Receivables
a) Foreign exchange portfolio
Balance sheet accounts
| R$ thousand | ||||||
| 2008 | 2007 | |||||
| March | December | March | ||||
| 31 | 31 | 31 | ||||
| Assets – other receivables | ||||||
| Exchange purchases pending settlement | 10,377,443 | 7,829,612 | 9,563,961 | |||
| Foreign exchange acceptances and term documents in foreign currencies | 3,061 | 6,831 | 6,211 | |||
| Exchange sale receivables | 4,044,483 | 2,020,690 | 4,471,643 | |||
| (-) Advances in local currency received | (306,689) | (138,676) | (508,359) | |||
| Income receivable on advances granted | 137,246 | 118,275 | 86,724 | |||
| Total | 14,255,544 | 9,836,732 | 13,620,180 | |||
| Liabilities – other liabilities | ||||||
| Exchange sales pending settlement | 4,052,759 | 2,016,944 | 4,466,371 | |||
| Exchange purchase payables | 10,612,710 | 8,222,890 | 9,783,068 | |||
| (-) Advances on foreign exchange contracts | (7,354,134) | (6,782,315) | (5,850,901) | |||
| Other | 7,555 | 9,670 | 17,509 | |||
| Total | 7,318,890 | 3,467,189 | 8,416,047 | |||
| Net foreign exchange portfolio | 6,936,654 | 6,369,543 | 5,204,133 | |||
| Memorandum accounts | ||||||
| Imports loans | 269,459 | 360,883 | 245,411 | |||
| Confirmed exports loans | 47,767 | 27,670 | 21,077 | |||
Exchange results
Breakdown of results of foreign exchange transactions adjusted to facilitate presentation
| R$ thousand | ||||||
| 2008 | 2007 | |||||
| 1st Quarter | 4th Quarter | 1st Quarter | ||||
| Foreign exchange operations result Adjustments: | 395,881 | 231,895 | 149,264 | |||
| – Income on foreign currency financing (1) | 56,402 | 22,486 | 3,948 | |||
| – Income on export financing (1) | 40,333 | 20,690 | 12,943 | |||
| – Income on foreign investments (2) | 23,833 | (22,929) | 1,718 | |||
| – Expenses from liabilities with foreign bankers (3) (Note 17c) | (346,751) | (124,998) | (19,919) | |||
| – Other | (34,894) | (14,378) | (75,534) | |||
| Total adjustments | (261,077) | (119,129) | (76,844) | |||
| Adjusted foreign exchange operations result | 134,804 | 112,766 | 72,420 | |||
(2) Demonstrated in the item “Income on securities transactions”; and
(3) Related to funds from financing advances on foreign exchange contracts and import financing, classified in the item “Expenses from borrowings and onlendings”.
b) Sundry
| R$ thousand | ||||||
| 2008 | 2007 | |||||
| March | December | March | ||||
| 31 | 31 | 31 | ||||
| Tax credits (Note 34c) | 9,301,599 | 8,767,600 | 7,513,914 | |||
| Credit card operations | 5,308,535 | 5,804,398 | 4,913,290 | |||
| Borrowers by escrow deposits | 5,017,458 | 4,626,939 | 3,836,464 | |||
| Prepaid taxes | 951,237 | 1,105,867 | 785,668 | |||
| Sundry borrowers | 1,224,310 | 1,043,227 | 753,027 | |||
| Receivable securities and credits | 719,854 | 936,997 | 615,492 | |||
| Payments to be reimbursed | 503,373 | 466,635 | 493,801 | |||
| Borrowers due to purchase of assets | 164,463 | 173,651 | 216,146 | |||
| Other | 50,430 | 140,014 | 225,242 | |||
| Total | 23,241,259 | 23,065,328 | 19,353,044 | |||
270
12) Other Assets
a) Foreclosed assets/others
| R$ thousand | ||||||||||
| Cost | Provision for losses | Residual value | ||||||||
| 2008 | 2007 | |||||||||
| March 31 | December 31 | March 31 | ||||||||
| Real estate | 179,097 | (41,656) | 137,441 | 112,949 | 103,419 | |||||
| Goods subject to special conditions | 90,231 | (90,231) | – | – | – | |||||
| Vehicles and similar | 167,190 | (50,730) | 116,460 | 76,066 | 68,710 | |||||
| Inventories/storehouse | 18,205 | – | 18,205 | 15,920 | 22,267 | |||||
| Machinery and equipment | 10,223 | (5,618) | 4,605 | 4,686 | 4,806 | |||||
| Other | 7,411 | (6,337) | 1,074 | 1,138 | 1,107 | |||||
| Total on March 31, 2008 | 472,357 | (194,572) | 277,785 | |||||||
| Total on December 31, 2007 | 389,856 | (179,097) | 210,759 | |||||||
| Total on March 31, 2007 | 389,872 | (189,563) | 200,309 | |||||||
b) Prepaid expenses
| R$ thousand | ||||||
| 2008 | 2007 | |||||
| March | December | March | ||||
| 31 | 31 | 31 | ||||
| Commission on the placement of financing (1) | 1,477,577 | 1,477,887 | 822,636 | |||
| Partnership agreement in the rendering of banking services (2) | 1,395,329 | 1,252,510 | 537,545 | |||
| Insurance selling expenses (3) | 261,541 | 270,619 | 270,816 | |||
| Advertising expenses (4) | 101,169 | 109,587 | 52,509 | |||
| Insurance expenses and other costs on funding abroad (5) | 59,666 | 54,297 | 67,565 | |||
| Other | 38,275 | 24,336 | 51,847 | |||
| Total | 3,333,557 | 3,189,236 | 1,802,918 | |||
(2) Amounts paid for acquisition of right to provide banking services;
(3) Commissions paid to insurance brokers on trade of insurance, private pension plans and certificated savings plans products;
(4) Prepaid advertising expenses, whose disclosure in the media will occur in the future; and
(5) Prepaid insurance expenses and other costs when contracting funding from foreign bankers/investors.
13) Investments
a) Movement of the main investments in branches and direct and indirect subsidiaries abroad, which were fully eliminated upon consolidation of the financial statements
| Investments in branches and subsidiaries abroad | R$ thousand | |||||||
| Balance on 12.31.2007 | Movement in the period (1) | Balance on 3.31.2008 | Balance on 3.31.2007 | |||||
| Banco Bradesco S.A. Grand Cayman Branch | 6,912,094 | 378,643 | 7,290,737 | 7,717,738 | ||||
| Bradport SGPS, Sociedade Unipessoal, Lda. | 537,162 | (79,219) | 457,943 | 528,669 | ||||
| Banco Bradesco S.A. New York Branch | 298,870 | 1,682 | 300,552 | 332,778 | ||||
| Banco Bradesco Luxembourg S.A. | 268,452 | 97 | 268,549 | 298,577 | ||||
| Others | 293,271 | 329,873 | 623,144 | 181,857 | ||||
| Total | 8,309,849 | 631,076 | 8,940,925 | 9,059,619 | ||||
271
b) Breakdown of investments in the consolidated financial statements
| Affiliated companies | R$ thousand | |||||
| 2008 | 2007 | |||||
| March 31 | December 31 | March 31 | ||||
| – IRB-Brasil Resseguros S.A. | 387,917 | 410,988 | 361,395 | |||
| – Serasa | 79,451 | – | – | |||
| – BES Investimento do Brasil S.A. | 42,307 | 41,334 | 22,826 | |||
| – NovaMarlim Participações S.A. | 9,694 | 9,677 | 15,123 | |||
| – Marlim Participações S.A. | 5,367 | 5,764 | 10,111 | |||
| – Other | 180 | 181 | 958 | |||
| Total in affiliated companies | 524,916 | 467,944 | 410,413 | |||
| – Tax incentives | 327,429 | 333,464 | 328,067 | |||
| Other investments | 236,898 | 153,901 | 282,342 | |||
| Provision for: | ||||||
| Tax incentives | (288,719) | (293,469) | (290,963) | |||
| Other investments | (57,436) | (57,764) | (68,161) | |||
| Overall total of consolidated investments | 743,088 | 604,076 | 661,698 | |||
c) The adjustments resulting from the evaluation of investments by the equity accounting method were recorded in income under “Equity in the earnings of affiliated companies” and corresponded to R$32,169 thousand in the 1st quarter of 2008 (4th quarter of 2007 – R$9,771 thousand and 1st quarter of 2007 – R$11,589 thousand).
| Companies | R$ thousand | |||||||||||||||||
| Capital stock | Adjusted shareholders’ equity | Number of shares/ quotas held (thousands) | Consolidated ownership on capital stock | Adjusted net income | Adjustment resulting from evaluation (3) | |||||||||||||
| Common | Preferred | 2008 | 2007 | |||||||||||||||
| 1st Quarter | 4th Quarter | 1st Quarter | ||||||||||||||||
| IRB-Brasil Resseguros S.A. | 1,030,000 | 1,825,971 | – | 212 | 21.24% | 124,901 | 26,529 | 9,029 | 13,151 | |||||||||
| NovaMarlim Participações S.A. (1) | 48,263 | 56,454 | 22,100 | – | 17.17% | 1,963 | 337 | 455 | 698 | |||||||||
| Marlim Participações S.A. (1) | 37,790 | 45,348 | 10,999 | 21,998 | 11.84% | 1,470 | 174 | 264 | (2,245) | |||||||||
| BES Investimento do Brasil S.A. – Banco de Investimento (1) | 80,000 | 211,536 | 7,993 | 7,993 | 20.00% | 9,015 | 1,803 | 127 | 84 | |||||||||
| Serasa (2) | 145,000 | 962,321 | 909 | – | 8.26% | 40,266 | 3,326 | – | – | |||||||||
| Other companies | – | – | – | – | – | – | – | (104) | (99) | |||||||||
| Equity in the earnings of affiliated companies | 32,169 | 9,771 | 11,589 | |||||||||||||||
(2) Unaudited data related to March 31, 2008; and
(3) Adjustment resulting from evaluation considers results recorded by the companies as from their acquisition and includes equity variations in the investees not derived from results, as well as adjustments arising from the equalization of accounting practices, when applicable.
272
14) Premises and Equipment and Leased Assets
Stated at acquisition cost, depreciation is calculated on the straight-line method at annual rates, which take into consideration the economic useful lives of the assets.
| R$ thousand | ||||||||||||
| Annual rate | Cost | Depreciation | Residual value | |||||||||
| 2008 | 2007 | |||||||||||
| March 31 | December 31 | March 31 | ||||||||||
| Premises and equipment: | ||||||||||||
| – Buildings | 4% | 666,232 | (378,070) | 288,162 | 285,482 | 292,015 | ||||||
| – Land | – | 417,585 | – | 417,585 | 417,103 | 407,965 | ||||||
| Facilities, furniture and equipment in use | 10% | 2,405,731 | (1,397,650) | 1,008,081 | 991,877 | 911,502 | ||||||
| Security and communications systems | 10% | 156,083 | (95,076) | 61,007 | 58,885 | 49,761 | ||||||
| Data processing systems | From 20 to 50% | 1,792,018 | (1,322,139) | 469,879 | 449,550 | 456,708 | ||||||
| Transport systems | 20% | 31,792 | (17,174) | 14,618 | 15,395 | 14,352 | ||||||
| Construction in progress | – | 74,590 | – | 74,590 | 65,786 | 83,673 | ||||||
| Subtotal | 5,544,031 | (3,210,109) | 2,333,922 | 2,284,078 | 2,215,976 | |||||||
| Leased assets | – | 16,656 | (6,068) | 10,588 | 11,421 | 17,864 | ||||||
| Total on March 31, 2008 | 5,560,687 | (3,216,177) | 2,344,510 | |||||||||
| Total on December 31, 2007 | 5,444,523 | (3,149,024) | 2,295,499 | |||||||||
| Total on March 31, 2007 | 5,329,523 | (3,095,683) | 2,233,840 | |||||||||
Premises and equipment of Bradesco Organization present an unrecorded increment of R$1,381,454 thousand (December 31, 2007 –R$1,251,168 thousand and March 31, 2007 – R$1,161,041 thousand) based on appraisal reports prepared by independent experts in 2007, 2006 and 2005.
The fixed assets to shareholders’ equity ratio, in relation to “economic-financial consolidated” reference shareholders’ equity is 12.07% (December 31, 2007 – 14.46% and March 31, 2007 – 11.45%), and the “financial consolidated” basis is 47.70% (December 31, 2007 - 45.81% and March 31, 2007 – 49.23%), within the maximum 50% limit.
The difference between the fixed assets to shareholders’ equity ratio of the “economic-financial consolidated” and of the “financial consolidated” derives from the existence of non-financial subsidiaries which have high liquidity and low fixed assets to shareholders’ equity ratio, with the consequent increase in the fixed assets to shareholders’ equity ratio of the “consolidated financial”. Whenever necessary, we may reallocate the funds for the financial companies through the payment of dividends/interest on shareholders’ capital to financial companies or corporate reorganization between the financial and non-financial companies, thus allowing the improvement of that ratio.
15) Deferred Charges
a) Goodwill
Goodwill calculated by the acquisition of investments was fully amortized, in the amount of R$53,030 thousand in the 1st quarter of 2008 (4th quarter of 2007 – R$139,796 thousand).
b) Other deferred charges
| R$ thousand | ||||||||||
| Cost | Amortization | Residual value | ||||||||
| 2008 | 2007 | |||||||||
| March 31 |
December 31 |
March 31 |
||||||||
| Systems development | 1,913,989 | (1,102,809) | 811,180 | 767,734 | 660,195 | |||||
| Other deferred expenditures | 21,106 | (17,681) | 3,425 | 2,852 | 1,642 | |||||
| Total on March 31,2008 | 1,935,095 | (1,120,490) | 814,605 | |||||||
| Total on December 31, 2007 | 1,850,219 | (1,079,633) | 770,586 | |||||||
| Total on March 31, 2007 | 1,612,739 | (950,902) | 661,837 | |||||||
273
16) Deposits, Federal Funds Purchased and Securities Sold Under Agreements to Repurchase and Funds from Issuance of Securities
a) Deposits
| R$ thousand | ||||||||||||||
| 2008 | 2007 | |||||||||||||
| Up to 30 days |
From 31 to 180 days |
From 181 to 360 days |
More than 360 days |
March 31 |
December 31 |
March 31 |
||||||||
| • Demand deposits (1) | 25,845,700 | – | – | – | 25,845,700 | 28,495,555 | 20,115,520 | |||||||
| • Savings deposits (1) | 33,290,059 | – | – | – | 33,290,059 | 32,812,974 | 27,608,759 | |||||||
| • Interbank deposits | 201,010 | 42,186 | 66,578 | 575 | 310,349 | 372,473 | 157,625 | |||||||
| • Time deposits (2) | 3,280,415 | 7,832,416 | 6,300,554 | 29,016,918 | 46,430,303 | 35,717,178 | 35,686,702 | |||||||
| • Other investment deposits | 834,261 | – | – | – | 834,261 | 925,266 | 593,290 | |||||||
| Overall total on March 31, 2008 | 63,451,445 | 7,874,602 | 6,367,132 | 29,017,493 | 106,710,672 | |||||||||
| % | 59.4 | 7.4 | 6.0 | 27.2 | 100.0 | |||||||||
| Overall total on December 31, 2007 | 64,754,377 | 6,505,910 | 4,536,855 | 22,526,304 | 98,323,446 | |||||||||
| % | 65.9 | 6.6 | 4.6 | 22.9 | 100.0 | |||||||||
| Overall total on March 31, 2007 | 51,396,868 | 5,940,293 | 4,469,973 | 22,354,762 | 84,161,896 | |||||||||
| % | 61.1 | 7.0 | 5.3 | 26.6 | 100.0 | |||||||||
(2) It considers the maturities established in investments;
b) Federal funds purchased and securities sold under agreements to repurchase
| R$ thousand | ||||||||||||||
| 2008 | 2007 | |||||||||||||
| Up to 30 days | From 31 to 180 days | From 181 to 360 days | More than 360 days | March 31 | December 31 | March 31 | ||||||||
| Own portfolio | 1,182,990 | 6,301,363 | 3,443,629 | 24,538,852 | 35,466,834 | 37,864,704 | 29,352,132 | |||||||
| • Government bonds | 247,601 | 455,267 | 61,693 | 21,512 | 786,073 | 5,494,174 | 5,868,453 | |||||||
| • Debentures of own issuance | 441,954 | 5,686,538 | 3,333,923 | 24,466,566 | 33,928,981 | 29,548,616 | 19,634,592 | |||||||
| • Foreign | 493,435 | 159,558 | 48,013 | 50,774 | 751,780 | 2,821,914 | 3,849,087 | |||||||
| Third-party portfolio (1) | 30,558,507 | – | – | – | 30,558,507 | 29,578,200 | 20,077,321 | |||||||
| Unrestricted notes portfolio (1) | 3,427,163 | 87,631 | – | – | 3,514,794 | 6,190,745 | 1,471,969 | |||||||
| Total on March 31, 2008 (2) | 35,168,660 | 6,388,994 | 3,443,629 | 24,538,852 | 69,540,135 | |||||||||
| % | 50.5 | 9.2 | 5.0 | 35.3 | 100.0 | |||||||||
| Total on December 31, 2007 (2) | 42,768,817 | 6,186,634 | 5,738,182 | 18,940,016 | 73,633,649 | |||||||||
| % | 58.1 | 8.4 | 7.8 | 25.7 | 100.0 | |||||||||
| Total on March 31, 2007 (2) | 27,036,156 | 5,252,883 | 1,440,529 | 17,171,854 | 50,901,422 | |||||||||
| % | 53.1 | 10.3 | 2.9 | 33.7 | 100.0 | |||||||||
(2) This includes R$10,995,435 thousand (December 31, 2007 – R$10,197,583 thousand and March 31, 2007 – R$10,571,439 thousand) of funds invested in purchase and sale commitments with Bradesco, the quotaholders of which are subsidiaries composing the consolidated financial statements (Notes 8a and 8b).
274
c) Funds from issuance of securities
| R$ thousand | ||||||||||||||
| 2008 | 2007 | |||||||||||||
| Up to 30 days |
From 31 to 180 days |
From 181 to 360 days |
More than 360 days |
March 31 |
December 31 |
March 31 |
||||||||
| Securities – Local: | ||||||||||||||
| • Exchange acceptances | – | 32 | – | 227 | 259 | 406 | – | |||||||
| • Mortgage notes | 189,705 | 474,248 | 309,910 | 1,011 | 974,874 | 901,641 | 879,114 | |||||||
| • Debentures (1) | – | 111,176 | – | 2,552,100 | 2,663,276 | 2,594,921 | 2,683,633 | |||||||
| Subtotal | 189,705 | 585,456 | 309,910 | 2,553,338 | 3,638,409 | 3,496,968 | 3,562,747 | |||||||
| Securities – Foreign: | ||||||||||||||
| • Eurobonds (2) | – | – | – | – | – | – | 3,816 | |||||||
| • Fixed Rate Note (2) | 3,302 | 87,415 | – | – | 90,717 | 89,528 | – | |||||||
| • MTN Program Issues (2) | 289,789 | – | – | 226,821 | 516,610 | 720,999 | 1,459,578 | |||||||
| • Securitization of future flow of money orders received from abroad (d) | 10,847 | 49,401 | 50,607 | 2,621,471 | 2,732,326 | 1,905,722 | 458,330 | |||||||
| • Securitization of future flow of credit card bill receivables from foreign cardholders (d) | 714 | 40,170 | 41,319 | 178,258 | 260,461 | 283,565 | 394,467 | |||||||
| Subtotal | 304,652 | 176,986 | 91,926 | 3,026,550 | 3,600,114 | 2,999,814 | 2,316,191 | |||||||
| Total on March 31, 2008 | 494,357 | 762,442 | 401,836 | 5,579,888 | 7,238,523 | |||||||||
| % | 6.8 | 10.5 | 5.6 | 77.1 | 100.0 | |||||||||
| Total on December 31, 2007 | 315,113 | 853,351 | 564,671 | 4,763,647 | 6,496,782 | |||||||||
| % | 4.9 | 13.1 | 8.7 | 73.3 | 100.0 | |||||||||
| Total on March 31, 2007 | 163,763 | 695,599 | 1,192,266 | 3,827,310 | 5,878,938 | |||||||||
| % | 2.8 | 11.8 | 20.3 | 65.1 | 100.0 | |||||||||
(1) This refers to installment of issuances of simple debentures not convertible into shares of Bradesco Leasing S.A. Arrendamento Mercantil, maturing on May 1, 2011 and has a 102% of CDI remuneration, whose installments referring to interest are
classified in the short term; and
(2) These consist of funds obtained from banks abroad, from the issuance of notes in the international market and under National Monetary Council (CMN) Resolution 2,770 for:
(i) onlending to local customers,
maturing until 2012, under terms which do not exceed those of the funds obtained, with interest payable at Libor, plus a spread or prefixed interest; and
(ii) foreign exchange operations for customers, through purchase and sale of foreign
currencies, related to discounts of export bills, pre-financing of exports and financing of imports, substantially in the short term.
d) Since 2003, Bradesco Organization has been entering into certain agreements designed to optimize its funding and liquidity management activities through the use of Specific Purposes Entities (SPEs). These SPEs, named International Diversified Payment Rights Company and Brazilian Merchant Voucher Receivables Limited, are financed through long-term liabilities and settled through the future cash flows of the underlying assets, which basically comprise:
(i) Current and future flows of money orders remitted by individuals and corporate entities located abroad to beneficiaries in Brazil for which the Bank acts as paying agent; and
(ii) Current and future flows of credit card receivables arising from expenses made in Brazilian territory by holders of credit cards issued outside Brazil.
The long-term securities issued by the SPEs and sold to investors will be settled through funds derived from the money order flows and credit card bills. Bradesco is obliged to redeem these securities in specific cases of default or if the SPEs’ operations are discontinued.
The funds derived from the sale of current and future money orders and credit card receivables, received by the SPEs, must be maintained in a specific bank account until such time as a specific minimum limit is attained.
275
We present below the main features of the notes issued by the SPEs:
| R$ thousand | ||||||||||||
| Issuance | Transaction amount | Maturity | Total | |||||||||
| 2008 | 2007 | |||||||||||
| March 31 | December 31 | March 31 | ||||||||||
| 8.20.2003 | 595,262 | 8.20.2010 | 141,259 | 150,863 | 303,426 | |||||||
| 7.28.2004 | 305,400 | 8.20.2012 | 133,641 | 142,460 | 154,904 | |||||||
| 6.11.2007 | 481,550 | 5.20.2014 | 439,034 | 445,868 | – | |||||||
| 6.11.2007 | 481,550 | 5.20.2014 | 439,034 | 456,801 | – | |||||||
| 12.20.2007 | 354,260 | 11.20.2014 | 351,302 | 354,865 | – | |||||||
| Securitization of future flow of money | 12.20.2007 | 354,260 | 11.20.2014 | 351,302 | 354,865 | – | ||||||
| orders received from abroad | 3.6.2008 | 836,000 | 5.20.2014 | 876,754 | – | – | ||||||
| Total | 3,408,282 | 2,732,326 | 1,905,722 | 458,330 | ||||||||
| Securitization of future flow of credit card bills receivables from foreign cardholders abroad | 7.10.2003 | 800,818 | 6.15.2011 | 260,461 | 283,565 | 394,467 | ||||||
| Total | 800,818 | 260,461 | 283,565 | 394,467 | ||||||||
e) Expenses with funding and price-level restatement and interest on technical provisions for insurance, private pension plans and certificated savings plans
| R$ thousand | ||||||
| 2008 | 2007 | |||||
| 1st Quarter | 4th Quarter | 1st Quarter | ||||
| Savings deposits | 512,516 | 500,560 | 500,124 | |||
| Time deposits | 1,242,841 | 1,145,697 | 1,227,929 | |||
| Federal funds purchased and securities sold under agreements to repurchase | 1,808,115 | 1,649,944 | 1,337,205 | |||
| Funds from issuance of securities | 202,624 | 179,655 | 191,115 | |||
| Other funding expenses | 51,959 | 47,915 | 38,821 | |||
| Subtotal | 3,818,055 | 3,523,771 | 3,295,194 | |||
| Expenses for price-level restatement and interest on technical provisions for insurance, private pension plans and certificated savings plans | 1,024,234 | 1,287,681 | 1,043,589 | |||
| Total | 4,842,289 | 4,811,452 | 4,338,783 | |||
17) Borrowings and Onlendings
a) Borrowings
| R$ thousand | ||||||||||||||
| 2008 | 2007 | |||||||||||||
| Up to 30 days | From 31 to 180 days | From 181 to 360 days | More than 360 days | March 31 | December 31 | March 31 | ||||||||
| Local | 401 | 52 | 63 | 241 | 757 | 823 | 1,041 | |||||||
| • Official institutions | 11 | 52 | 63 | 241 | 367 | 450 | 696 | |||||||
| • Other institutions | 390 | – | – | – | 390 | 373 | 345 | |||||||
| Foreign | 1,105,334 | 3,734,727 | 2,531,948 | 589,010 | 7,961,019 | 8,065,007 | 6,956,313 | |||||||
| Total on March 31, 2008 | 1,105,735 | 3,734,779 | 2,532,011 | 589,251 | 7,961,776 | |||||||||
| % | 13.9 | 46.9 | 31.8 | 7.4 | 100.0 | |||||||||
| Total on December 31, 2007 | 1,251,439 | 4,193,517 | 2,273,314 | 347,560 | 8,065,830 | |||||||||
| % | 15.5 | 52.0 | 28.2 | 4.3 | 100.0 | |||||||||
| Total on March 31, 2007 | 732,392 | 3,222,461 | 2,752,458 | 250,043 | 6,957,354 | |||||||||
| % | 10.5 | 46.3 | 39.6 | 3.6 | 100.0 | |||||||||
276
b) Onlendings
| R$ thousand | ||||||||||||||
| 2008 | 2007 | |||||||||||||
| Up to 30 days | From 31 to 180 days | From 181 to 360 days | More than 360 days | March 31 | December 31 | March 31 | ||||||||
| Local | 823,684 | 1,874,372 | 2,967,221 | 8,991,779 | 14,657,056 | 14,086,436 | 11,667,138 | |||||||
| • National Treasury | – | – | 40,289 | – | 40,289 | 50,881 | 79,705 | |||||||
| • BNDES | 197,511 | 653,377 | 1,664,925 | 3,623,498 | 6,139,311 | 6,147,703 | 5,323,302 | |||||||
| • CEF | 1,735 | 6,254 | 7,337 | 87,454 | 102,780 | 101,280 | 73,703 | |||||||
| • Finame | 624,438 | 1,214,624 | 1,254,552 | 5,280,009 | 8,373,623 | 7,785,347 | 6,188,641 | |||||||
| • Other institutions | – | 117 | 118 | 818 | 1,053 | 1,225 | 1,787 | |||||||
| Foreign | 4,909 | – | 1,388,781 | – | 1,393,690 | 1,257,281 | 10,045 | |||||||
| Total on March 31, 2008 | 828,593 | 1,874,372 | 4,356,002 | 8,991,779 | 16,050,746 | |||||||||
| % | 5.2 | 11.7 | 27.1 | 56.0 | 100.0 | |||||||||
| Total on December 31, 2007 | 614,853 | 2,158,202 | 3,844,256 | 8,726,406 | 15,343,717 | |||||||||
| % | 4.0 | 14.1 | 25.0 | 56.9 | 100.0 | |||||||||
| Total on March 31, 2007 | 439,208 | 1,476,668 | 3,346,003 | 6,415,304 | 11,677,183 | |||||||||
| % | 3.8 | 12.6 | 28.7 | 54.9 | 100.0 | |||||||||
c) Expenses from borrowings and onlendings
| R$ thousand | ||||||
| 2008 | 2007 | |||||
| 1st Quarter | 4th Quarter | 1st Quarter | ||||
| Borrowings: | ||||||
| • Local | 118 | 237 | 43 | |||
| • Foreign | 33,859 | 29,734 | 23,623 | |||
| Subtotal borrowings | 33,977 | 29,971 | 23,666 | |||
| Local onlendings: | ||||||
| • National treasury | 464 | 773 | 1,433 | |||
| • BNDES | 117,109 | 119,429 | 106,272 | |||
| • CEF | 2,062 | 2,043 | 1,750 | |||
| • Finame | 161,660 | 159,246 | 124,210 | |||
| • Other institutions | 21 | 48 | 43 | |||
| Foreign onlendings: | ||||||
| • Payables to foreign bankers (Note 11a) | 346,751 | 124,998 | 19,919 | |||
| • Other expenses with foreign onlendings | 138,341 | (83,673) | (68,081) | |||
| Subtotal onlendings | 766,408 | 322,864 | 185,546 | |||
| Total | 800,385 | 352,835 | 209,212 | |||
18) Contingent Assets and Liabilities and Legal Liabilities – Tax and Social Security
a) Contingent assets
Contingent assets are not recognized on an accounting basis; however, there are proceedings whose perspective of success is probable. The main ones are:
– Tax on Net Income - (ILL) R$362,255 thousand: it pleads the return, by means of compensation or restitution, of the amounts collected as Tax on Net Income established by article 35 of Law 7,713/88, once the referred tax was deemed unconstitutional by the Federal Supreme Court; and
– Social Integration Program - (PIS) R$51,911 thousand: it pleads the compensation of PIS on the Operating Gross Revenue, collected under the terms of the Decrees Laws 2,445 and 2,449/88, in what exceeded the amount due under the terms of the Supplementary Law 07/70 (PIS Repique).
b) Contingent liabilities classified as probable losses and legal liabilities – tax and social security
Bradesco Organization is currently a defendant in a number of legal suits in the labor, civil and tax spheres, arising from the normal course of its business activities.
The provisions were recorded based on the opinion of the legal advisors; the types of lawsuit; similarity with previous lawsuits; complexity and positioning of Courts, whenever loss is deemed probable.
277
Bradesco’s Management considers that the provision recorded is sufficient to cover losses generated by the corresponding proceedings.
The liability related to the legal liability in judicial discussion is maintained until the definite gain of the lawsuit, represented by favorable judicial decision, on which resources are not provided, or its prescription.
I – Labor claims
These are claims brought by former employees seeking indemnity, especially the payment of unpaid overtime. In the proceedings requiring judicial deposit, the amount of the labor claims is recorded considering the effective perspective of loss of these deposits. For the other proceedings, the provision is recorded based on the average value determined by the total payments made of the claims ended in the last 12 months, considering the year of the determination of judicial deposits.
Following the effective control over working hours implemented in 1992, via electronic time cards, overtime is paid regularly during the employment contract and accordingly, claims on an individual basis subsequent to 1997 substantially reduced its amounts.
II – Civil lawsuits
These are claims for pain and suffering and property damages, mainly protests, bounced checks, the inclusion of information about debtors in the restricted credit registry and the reposition of inflation rates excluded as a result of economic plans. These lawsuits are individually controlled and provisioned whenever the loss is evaluated as probable, considering the opinion of the legal advisors, the nature of the lawsuits, similarity with previous lawsuits, complexity and positioning of Courts.
The issues discussed in the lawsuits usually are not events that cause a representative impact on the interest income. Most of these lawsuits are brought at the Special Civil Court (JEC), in which the requests are limited to 40 minimum wages. Moreover, approximately 50% of JEC’s lawsuits are judged unfounded and the amount of the condemnation imposed corresponds to the historical average of only 5% of the total amount claimed.
It is worth pointing out the increase in claims pleading the incidence of inflation rates which were excluded as a result of the savings accounts balance correction due to Economic Plans (specially Bresser and Verão Economic Plans), although the Bank had complied with the legal requirements in force at the time.
At present, there are no significant administrative lawsuits in course, moved as a result of the lack of compliance with National Financial System regulations or payment of fines, which could cause representative impacts on the Bank’s interest income.
III – Legal Liabilities – Tax and Social Security
Bradesco Organization is judicially disputing the legality and constitutionality of certain taxes and contributions, for which provisions have been recorded in full, despite the likelihood of a successful medium and long-term outcome based on the opinion of the legal advisors.
The main matters are:
– Cofins – R$1,879,287 thousand: it pleads to calculate and collect Cofins, as from October 2005, on the effective sales results, whose concept is in the article 2 of Supplementary Law 70/91, removing the unconstitutional increase of the calculation basis intended by paragraph 1 of article 3 of Law 9,718/98;
– CSLL – R$1,307,429 thousand: questioning of CSLL required from financial institutions in the reference years from 1995 to 1998 by rates higher than the ones applied to general legal entities, not complying with the constitutional principle of isonomy;
– IRPJ/Credit Losses – R$581,040 thousand: it pleads to deduct, for purposes of determination of the calculation basis of due IRPJ and CSLL, the amount of the effective and definite losses, total or partial, suffered in the reference years from 1997 to 2006, in the reception of credits, regardless of the compliance with the conditions and terms provided for in articles 9 to 14 of Law 9,430/96 which only apply to the provisory losses;
– INSS Autonomous Brokers – R$554,074 thousand: it discusses the incidence of the social security contribution on the remunerations paid to the autonomous service providers, established by the Supplementary Law 84/96 and subsequent regulations/amendments, to the rate of 20% and additional of 2.5%, under the argument that the services are not provided to the insurance companies, but to the policyholder, thus being out of the incidence field of the contribution provided for in the item I, Article 22, of Law 8,212/91, with new wording in Law 9,876/99;
– CSLL – R$487,622 thousand: it pleads the non-collection of CSLL of the reference years from 1996 to 1998, years in which some companies of Bradesco Organization did not have employees, once the subsection I, article 195, of the Federal Constitution provides for that this contribution is only due by employers; and
– PIS – R$252,783 thousand: it pleads the compensation of the amounts unduly overpaid in the reference years of 1994 and 1995 as contribution to PIS, corresponding to the exceeding amount to what would be due on the calculation basis constitutionally provided for, i.e. operating gross revenue, as defined in the income tax legislation – concept in article 44 of Law no. 4,506/64, not included interest income.
278
IV – Provisions divided by nature
| R$ thousand | ||||||
| 2008 | 2007 | |||||
| March 31 | December 31 | March 31 | ||||
| Labor proceedings | 1,559,990 | 1,492,229 | 1,240,529 | |||
| Civil proceedings | 1,508,755 | 1,413,673 | 863,238 | |||
| Subtotal (1) | 3,068,745 | 2,905,902 | 2,103,767 | |||
| Tax and social security (2) | 6,608,847 | 6,310,924 | 5,648,675 | |||
| Total | 9,677,592 | 9,216,826 | 7,752,442 | |||
(1) Note 20b; and
(2) Classified under the item “Other liabilities – tax and social security” (Note 20a).
V – Movement of Provisions
| R$ thousand | ||||||
| 2008 | ||||||
| Labor | Civil | Tax and social security (1) | ||||
| At the beginning of the period | 1,492,229 | 1,413,673 | 6,310,924 | |||
| Monetary restatement | 43,499 | 7,504 | 97,643 | |||
| Constitutions/(reversals) | 104,859 | 138,658 | 273,744 | |||
| Acquired/assigned balance | 842 | – | – | |||
| Payments | (81,439) | (51,080) | (73,464) | |||
| At the end of the period | 1,559,990 | 1,508,755 | 6,608,847 | |||
(1) It comprises, substantially, legal liabilities.
c) Contingent Liabilities classified as possible losses
Bradesco Organization maintains a follow-up system for all administrative and judicial proceedings in which the institution is the “plaintiff” or “defendant” and based on the opinion of the legal advisors classifies the lawsuits according to the expectation of non-success. In this context the contingent proceedings evaluated as risk of possible loss are not recognized on an accounting basis, and the main proceedings are related to leasing companies’ ISSQN, in the amount of R$100,648 thousand. In this proceeding, the demand of the referred tax by municipalities other than those where the companies are set up and to which the tax is collected in compliance with law is discussed.
19) Subordinated Debt
| Instrument | Issuance | R$ thousand | ||||||||||||
| Amount of the operation | Maturity | Remuneration | 2008 | 2007 | ||||||||||
| March 31 | December 31 | March 31 | ||||||||||||
| In Brazil: | ||||||||||||||
| Subordinated CDB | March/2002 | 528,550 | 2012 | 100.0% of DI rate – Cetip | 1,361,160 | 1,326,962 | 1,222,591 | |||||||
| Subordinated CDB | June/2002 | 41,201 | 2012 | 100.0% of CDI rate + 0.75% p.a. | 107,209 | 104,318 | 95,566 | |||||||
| Subordinated CDB | October/2002 | 200,000 | 2012 | 102.5% of CDI rate | 476,637 | 464,367 | 426,967 | |||||||
| Subordinated CDB | October/2002 | 500,000 | 2012 | 100.0% of CDI rate + 0.87% p.a. | 1,222,784 | 1,189,455 | 1,088,672 | |||||||
| Subordinated CDB | October/2002 | 33,500 | 2012 | 101.5% of CDI rate | 79,043 | 77,028 | 70,882 | |||||||
| Subordinated CDB | October/2002 | 65,150 | 2012 | 101.0% of CDI rate | 152,696 | 148,821 | 137,004 | |||||||
| Subordinated CDB | November/2002 | 66,550 | 2012 | 101.0% of CDI rate | 155,607 | 151,659 | 139,616 | |||||||
| Subordinated CDB | November/2002 | 134,800 | 2012 | 101.5% of CDI rate | 315,825 | 307,773 | 283,217 | |||||||
| Subordinated CDB | January/2006 | 1,000,000 | 2011 | 104.0% of CDI rate | 1,317,238 | 1,282,838 | 1,178,071 | |||||||
| Subordinated CDB | February/2006 | 1,171,022 | 2011 | 104.0% of CDI rate | 1,529,808 | 1,489,856 | 1,368,183 | |||||||
| Subordinated CDB | March/2006 | 710,000 | 2011 | 104.0% of CDI rate | 914,529 | 890,645 | 817,908 | |||||||
| Subordinated CDB | June/2006 | 1,100,000 | 2011 | 103.0% of CDI rate | 1,355,385 | 1,320,323 | 1,213,489 | |||||||
| Subordinated CDB | July/2006 | 13,000 | 2011 | 102.5% of CDI rate | 15,973 | 15,561 | 14,308 | |||||||
| Subordinated CDB | July/2006 | 505,000 | 2011 | 103.0% of CDI rate | 619,237 | 603,219 | 554,409 | |||||||
| Subordinated CDB | August/2006 | 5,000 | 2011 | 102.5% of CDI rate | 6,059 | 5,903 | 5,427 | |||||||
| Subordinated CDB | May/2007 | 995,978 | 2012 | 103.0% of CDI rate | 1,098,643 | 1,070,223 | – | |||||||
279
| Instrument | Issuance | R$ thousand | ||||||||||||
| Amount of the operation | Maturity | Remuneration | 2008 | 2007 | ||||||||||
| March 31 | December 31 | March 31 | ||||||||||||
| Subordinated CDB | October/2007 | 13,795 | 2012 | 100.0% of CDI rate + 0.344% p.a. | 14,468 | 14,092 | – | |||||||
| Subordinated CDB | October/2007 | 110,000 | 2012 | IPCA + (7.102% p.a. to 7.367% p.a.) | 116,303 | 112,319 | – | |||||||
| Subordinated CDB | November/2007 | 390,000 | 2012 | 100.0% of CDI rate + 0.344% p.a. | 405,969 | 395,426 | – | |||||||
| Subordinated CDB | November/2007 | 164,000 | 2012 | IPCA + (7.446% p.a. to 7.593% p.a.) | 172,631 | 166,912 | – | |||||||
| Subordinated CDB | December/2007 | 1,552,500 | 2012 | 100.0% of CDI rate + 0.344% p.a. | 1,599,564 | 1,557,446 | – | |||||||
| Subordinated CDB | December/2007 | 10,000 | 2012 | IPCA + 7.632 p.a. | 10,453 | 10,116 | – | |||||||
| Subordinated CDB | January/2008 | 30,000 | 2012 | 100.0% of CDI rate + 0.344% p.a. | 30,694 | – | – | |||||||
| Subordinated CDB | February/2008 | 85,000 | 2012 | IPCA + (7.44% p.a. – 7.897% p.a.) | 86,161 | – | – | |||||||
| Subordinated CDB | February /2008 | 200,000 | 2012 | 100.0% of CDI rate + 0.4914% p.a. | 202,663 | – | – | |||||||
| Subordinated debentures | September/2001 | 300,000 | 2008 | 100.0% of CDI rate + 0.75% p.a. | 302,559 | 310,950 | 303,191 | |||||||
| Subordinated debentures | November/2001 | 300,000 | 2008 | 100.0% of CDI rate + 0.75% p.a. | 313,719 | 305,284 | 316,094 | |||||||
| Subtotal in Brazil | 10,225,046 | 13,983,017 | 13,321,496 | 9,235,595 | ||||||||||
| Abroad: | ||||||||||||||
| Subordinated debt (DOLLAR) | December/2001 | 353,700 | 2011 | rate of 10.25% p.a. | 268,978 | 265,087 | 314,337 | |||||||
| Subordinated debt (YEN) (1) | April/2002 | 315,186 | 2012 | rate of 4.05% p.a. | 243,981 | 241,092 | 285,701 | |||||||
| Subordinated debt (DOLLAR) | October/2003 | 1,434,750 | 2013 | rate of 8.75% p.a. | 903,571 | 895,867 | 1,058,822 | |||||||
| Subordinated debt (EURO) | April/2004 | 801,927 | 2014 | rate of 8.00% p.a. | 638,986 | 591,864 | 633,134 | |||||||
| Subordinated debt (DOLLAR) (2) | June/2005 | 720,870 | – | rate of 8.875% p.a. | 528,352 | 535,058 | 619,366 | |||||||
| Subtotal abroad | 3,626,433 | 2,583,868 | 2,528,968 | 2,911,360 | ||||||||||
| Overall total | 13,851,479 | 16,566,885 | 15,850,464 | 12,146,955 | ||||||||||
(1) Including the swap to U.S. dollar cost, the rate increases to 10.15% p.a.; and
(2) In June 2005, a perpetual subordinated debt was issued in the amount of US$300,000 thousand, with exclusive redemption option on the part of the issuer, in its totality and by means of previous authorization of the Bacen, considering that:
(i) a 5-year term from the issuance date has elapsed and subsequently on each date of interest maturity; and (ii) at any moment in the event of change in the tax laws in Brazil or abroad, which may cause an increase in costs for the issuer and in
case the issuer is notified in written by Bacen that securities may no longer be included in the consolidated capital, for capital adequacy ratio calculation purposes.
20) Other Liabilities
a) Tax and social security
| R$ thousand | ||||||
| 2008 | 2007 | |||||
| March 31 |
December 31 |
March 31 |
||||
| Provision for tax risks (Note 18b IV) | 6,608,847 | 6,310,924 | 5,648,675 | |||
| Provision for deferred income tax (Note 34f) | 1,806,502 | 1,606,242 | 1,448,464 | |||
| Taxes and contributions on profits payable | 1,083,467 | 1,434,712 | 830,371 | |||
| Taxes and contributions collectible | 516,230 | 487,913 | 467,115 | |||
| Total | 10,015,046 | 9,839,791 | 8,394,625 | |||
b) Sundry
| R$ thousand | ||||||
| 2008 | 2007 | |||||
| March 31 |
December 31 |
March 31 |
||||
| Credit card operations | 5,056,214 | 6,052,404 | 4,380,419 | |||
| Provision for accrued liabilities | 2,673,262 | 2,932,216 | 2,549,046 | |||
| Provision for contingent liabilities (civil and labor) (Note 18b IV) | 3,068,745 | 2,905,902 | 2,103,767 | |||
| Sundry creditors | 1,427,759 | 1,335,948 | 1,194,643 | |||
| Liabilities for acquisition of assets and rights | 161,539 | 141,240 | 137,589 | |||
| Official operating agreements | 288,222 | 383,417 | 82,268 | |||
| Other | 407,931 | 610,717 | 224,259 | |||
| Total | 13,083,672 | 14,361,844 | 10,671,991 | |||
280
21) Insurance, Private Pension Plans and Certificated Savings Plans Operations
a) Provisions by account
| R$ thousand | ||||||||||||||||||||||||
| Insurance (1) | Life and Private Pension Plans (2) | Certificated Savings Plans | Total | |||||||||||||||||||||
| 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | |||||||||||||||||
| March | December | March | March | December | March | March | December | March | March | December | March | |||||||||||||
| 31 | 31 | 31 | 31 | 31 | 31 | 31 | 31 | 31 | 31 | 31 | 31 | |||||||||||||
| Current and long-term liabilities | ||||||||||||||||||||||||
| Mathematical provision for benefits to be granted | – | – | – | 42,063,748 | 41,263,839 | 35,120,986 | – | – | – | 42,063,748 | 41,263,839 | 35,120,986 | ||||||||||||
| Mathematical provision for benefits granted | – | – | – | 3,991,512 | 3,815,978 | 3,546,122 | – | – | – | 3,991,512 | 3,815,978 | 3,546,122 | ||||||||||||
| Mathematical provision for redemptions | – | – | – | – | – | – | 2,051,497 | 2,014,346 | 1,845,133 | 2,051,497 | 2,014,346 | 1,845,133 | ||||||||||||
| IBNR Provision | 1,287,052 | 1,218,574 | 1,261,926 | 450,977 | 396,795 | 421,613 | – | – | – | 1,738,029 | 1,615,369 | 1,683,539 | ||||||||||||
| Unearned premiums provision | 1,431,190 | 1,441,229 | 1,436,446 | 48,499 | 46,867 | 37,174 | – | – | – | 1,479,689 | 1,488,096 | 1,473,620 | ||||||||||||
| Contribution insufficiency provision (3) | – | – | – | 2,567,455 | 2,499,733 | 2,085,529 | – | – | – | 2,567,455 | 2,499,733 | 2,085,529 | ||||||||||||
| Provision for unsettled claims | 670,921 | 642,896 | 678,478 | 554,290 | 530,748 | 486,501 | – | – | – | 1,225,211 | 1,173,644 | 1,164,979 | ||||||||||||
| Financial fluctuation provision | – | – | 583,859 | 575,452 | 572,039 | – | – | – | 583,859 | 575,452 | 572,039 | |||||||||||||
| Premium insufficiency provision | 16 | 31 | 24 | 470,597 | 495,188 | 155,136 | – | – | – | 470,613 | 495,219 | 155,160 | ||||||||||||
| Financial surplus provision | – | – | – | 374,980 | 401,806 | 365,157 | – | – | – | 374,980 | 401,806 | 365,157 | ||||||||||||
| Provision for draws and redemptions | – | – | – | – | – | – | 388,147 | 386,157 | 384,541 | 388,147 | 386,157 | 384,541 | ||||||||||||
| Provision for administrative expenses | – | – | – | 110,678 | 109,110 | 389,918 | 75,518 | 76,064 | 61,400 | 186,196 | 185,174 | 451,318 | ||||||||||||
| Provision for contingencies | – | – | – | – | – | – | 12,224 | 14,730 | 29,302 | 12,224 | 14,730 | 29,302 | ||||||||||||
| Other provisions | 2,198,781 | 2,188,876 | 1,525,277 | 390,470 | 407,846 | 249,799 | – | – | – | 2,589,251 | 2,596,722 | 1,775,076 | ||||||||||||
| Total Provisions | 5,587,960 | 5,491,606 | 4,902,151 | 51,607,065 | 50,543,362 | 43,429,974 | 2,527,386 | 2,491,297 | 2,320,376 | 59,722,411 | 58,526,265 | 50,652,501 | ||||||||||||
(1) “Other provision” refers basically to the technical provision in the “individual health” portfolio created in order to cover the differences of future premium adjustments and those necessary to the portfolio technical
balance, by adopting a constant formulation of Actuarial Technical Note approved by ANS; and
(2) Includes the insurance operations for individuals and private pension plans; and
(3) The contribution insufficiency provision is calculated according to
the mitigated biometric table AT-2000, increased in 1.5% (improvement), considering males separated from females, who have higher life expectancy, and to the actual interest rate of 4.3% p.a.
281
b) Technical provisions by product
| R$ thousand | ||||||||||||||||||||||||
| Insurance (1) | Life and Private Pension Plans (2) | Certificated Savings Plans | Total | |||||||||||||||||||||
| 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | |||||||||||||||||
| March | December | March | March | December | March | March | December | March | March | December | March | |||||||||||||
| 31 | 31 | 31 | 31 | 31 | 31 | 31 | 31 | 31 | 31 | 31 | 31 | |||||||||||||
| Health (1) | 3,296,313 | 3,202,200 | 2,501,517 | – | – | – | – | – | – | 3,296,313 | 3,202,200 | 2,501,517 | ||||||||||||
| Auto/RCF | 1,638,004 | 1,666,411 | 1,769,386 | – | – | – | – | – | – | 1,638,004 | 1,666,411 | 1,769,386 | ||||||||||||
| Dpvat | 73,643 | 57,532 | 70,933 | 134,888 | 106,250 | 109,456 | – | – | – | 208,531 | 163,782 | 180,389 | ||||||||||||
| Life | 21,925 | 20,594 | 36,015 | 2,097,993 | 2,021,629 | 1,638,241 | – | – | – | 2,119,918 | 2,042,223 | 1,674,256 | ||||||||||||
| Basic lines | 558,075 | 544,869 | 524,300 | – | – | – | – | – | – | 558,075 | 544,869 | 524,300 | ||||||||||||
| PGBL | – | – | – | 9,469,789 | 9,413,064 | 8,368,566 | – | – | – | 9,469,789 | 9,413,064 | 8,368,566 | ||||||||||||
| VGBL | – | – | – | 25,161,321 | 24,517,024 | 19,762,835 | – | – | – | 25,161,321 | 24,517,024 | 19,762,835 | ||||||||||||
| Traditional plans | – | – | – | 14,743,074 | 14,485,395 | 13,550,876 | – | – | – | 14,743,074 | 14,485,395 | 13,550,876 | ||||||||||||
| Certificated savings plans | – | – | – | – | – | – | 2,527,386 | 2,491,297 | 2,320,376 | 2,527,386 | 2,491,297 | 2,320,376 | ||||||||||||
| Total technical provisions | 5,587,960 | 5,491,606 | 4,902,151 | 51,607,065 | 50,543,362 | 43,429,974 | 2,527,386 | 2,491,297 | 2,320,376 | 59,722,411 | 58,526,265 | 50,652,501 | ||||||||||||
(1) See Note 21a, item 1.
c) Guarantees of technical provisions
| R$ thousand | ||||||||||||||||||||||||
| Insurance (1) | Life and Private Pension Plans (2) | Certificated Savings Plans | Total | |||||||||||||||||||||
| 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | |||||||||||||||||
| March | December | March | March | December | March | March | December | March | March | December | March | |||||||||||||
| 31 | 31 | 31 | 31 | 31 | 31 | 31 | 31 | 31 | 31 | 31 | 31 | |||||||||||||
| Investment fund quotas (VGBL and PGBL) | – | – | – | 34,631,110 | 33,930,088 | 28,131,401 | – | – | – | 34,631,110 | 33,930,088 | 28,131,401 | ||||||||||||
| Investment fund quotas (except for VGBL and PGBL) | 5,285,757 | 5,252,196 | 4,539,518 | 13,029,945 | 13,436,613 | 11,485,464 | 2,224,800 | 2,246,591 | 2,060,034 | 20,540,502 | 20,935,400 | 18,085,016 | ||||||||||||
| Government securities | 62,378 | 52,779 | 63,526 | 2,829,744 | 2,755,530 | 2,327,838 | – | – | – | 2,892,122 | 2,808,309 | 2,391,364 | ||||||||||||
| Private securities | 456 | 460 | 2,547 | 476,752 | 454,756 | 457,760 | 121,746 | 116,627 | 110,600 | 598,954 | 571,843 | 570,907 | ||||||||||||
| Shares | 2,196 | 3,600 | 1,175 | 652,384 | – | 1,067,555 | 250,456 | 217,630 | 199,055 | 905,036 | 221,230 | 1,267,785 | ||||||||||||
| Credit rights | 443,948 | 478,481 | 422,359 | – | – | – | – | – | – | 443,948 | 478,481 | 422,359 | ||||||||||||
| Real estate | 7,521 | 7,598 | 18,787 | – | – | – | 10,434 | 10,499 | 10,797 | 17,955 | 18,097 | 29,584 | ||||||||||||
| Deposits retained at IRB and court deposits | 75,022 | 60,336 | 46,092 | 67,863 | 51,305 | 43,883 | – | – | – | 142,885 | 111,641 | 89,975 | ||||||||||||
| Total guarantees of technical provisions | 5,877,278 | 5,855,450 | 5,094,004 | 51,687,798 | 50,628,292 | 43,513,901 | 2,607,436 | 2,591,347 | 2,380,486 | 60,172,512 | 59,075,089 | 50,988,391 | ||||||||||||
282
d) Retained premiums from insurance, private pension plans contributions and certificated savings plans
| R$ thousand | ||||||
| 2008 | 2007 | |||||
| 1st Quarter | 4th Quarter | 1st Quarter | ||||
| Premiums issued | 2,367,030 | 2,414,338 | 2,228,364 | |||
| Supplementary private pension plan contributions (including VGBL) | 2,645,049 | 3,448,303 | 2,307,458 | |||
| Revenues from certificated savings plans | 372,317 | 417,681 | 342,829 | |||
| Coinsurance premiums granted | (1,159) | (76,155) | (44,250) | |||
| Refunded premiums | (16,277) | (29,273) | (33,293) | |||
| Net premiums issued | 5,366,960 | 6,174,894 | 4,801,108 | |||
| Reinsurance premiums granted, consortia and funds | (81,844) | (122,452) | (157,558) | |||
| Retained premiums from insurance, private pension plans and certificated savings plans (1) | 5,285,116 | 6,052,442 | 4,643,550 | |||
(1) See Note 4.
22) Minority Interest in Subsidiaries
| R$ thousand | ||||||
| 2008 | 2007 | |||||
| March 31 |
December 31 |
March 31 |
||||
| Andorra Holdings S.A. | 147,431 | 144,308 | – | |||
| Banco Alvorada S.A. | 7,393 | 6,845 | 6,083 | |||
| Baneb Corretora de Seguros S.A. | 3,662 | 3,584 | 3,392 | |||
| Indiana Seguros S.A. | – | – | 51,363 | |||
| Other minority shareholders | 192 | 675 | 125 | |||
| Total | 158,678 | 155,412 | 60,963 | |||
23) Shareholders’ Equity (Parent Company)
a) Composition of capital stock in number of shares
Fully subscribed and paid-up capital stock comprises non-par registered, book-entry shares, as follows:
| 2008 | 2007 | |||||
| March | December | March | ||||
| 31 | 31 | 31 | ||||
| Common shares | 1,534,934,979 | 1,010,165,730 | 1,000,866,112 | |||
| Preferred shares | 1,534,934,821 | 1,010,754,450 | 1,001,454,936 | |||
| Subtotal | 3,069,869,800 | 2,020,920,180 | 2,002,321,048 | |||
| Treasury (common shares) | (1,600) | (828,700) | (780,800) | |||
| Treasury (preferred shares) | (1,600) | (1,417,524) | (180,800) | |||
| Total outstanding shares | 3,069,866,600 | 2,018,673,956 | 2,001,359,448 | |||
b) Movement of capital stock in number of shares
| Common | Preferred | Total | ||||
| Outstanding shares held on December 31, 2007 | 500,071,456 | 500,811,468 | 1,000,882,924 | |||
| Shares acquired and not cancelled | (28,800) | (174,400) | (203,200) | |||
| 100% stock bonus | 500,042,656 | 500,637,068 | 1,000,679,724 | |||
| Number of outstanding shares on March 31, 2007 | 1,000,085,312 | 1,001,274,136 | 2,001,359,448 | |||
| Number of outstanding shares on September 30, 2007 | 1,009,337,030 | 1,009,904,350 | 2,019,241,380 | |||
| Shares acquired and not cancelled | – | (567,424) | (567,424) | |||
| Number of outstanding shares on December 31, 2007 | 1,009,337,030 | 1,009,336,926 | 2,018,673,956 | |||
| Shares acquired and not cancelled | (1,600) | (1,600) | (3,200) | |||
| Increase from share subscription | 13,953,489 | 13,953,488 | 27,906,977 | |||
| Increase from 50% stock bonus | 511,644,460 | 511,644,407 | 1,023,288,867 | |||
| Outstanding shares on March 31, 2008 | 1,534,933,379 | 1,534,933,221 | 3,069,866,600 |
283
The Special Shareholders’ Meeting held on March 12, 2007 resolved on a R$3,800,000 thousand increase in the capital stock, raising it from R$14,200,000 thousand to R$18,000,000 thousand, by using part of the balance in the account “Profit Reserves – Statutory Reserve”, assigning to Company’s shareholders, free of charge, as a bonus, one (1) new share of the same type for each share owned. 1,000,679,724 non-par registered, book-entry shares were issued, 500,042,656 of which were common shares and 500,637,068 were preferred shares.
Simultaneously and in the same proportion to the transaction in the Brazilian Market, Depositary Receipts (DRs) were granted as bonus in the American (NYSE) and European (Latibex) Markets, and investors received one (1) new DR for each DR owned, which continued to be traded in the proportion of one (1) preferred share to one (1) DR, in the respective markets. The proceeding was ratified by Bacen on March 15, 2007.
The Special Shareholders’ Meeting held on August 24, 2007 resolved on a R$789,559 thousand increase in the capital stock, raising it from R$18,000,000 thousand to R$18,789,559 thousand by means of the issuance of 18,599,132 new shares, all non-par registered, book-entry shares, 9,299,618 of which are common shares and 9,299,514 are preferred shares, due to the merger of the totality of shares representing BMC’s capital stock by Bradesco, in the proportion of 0.086331545 fraction of Bradesco’s shares for each of BMC’s, granted to BMC’s former shareholders, of which 0.043166014 is a fraction of common share and 0.043165531 of preferred share, changing BMC into a wholly-owned subsidiary of Bradesco. It also resolved on a R$210,441 thousand increase in the capital stock, raising it to R$19,000,000 thousand by means of the capitalization of part of the “Profit Reserve – Legal Reserve” balance account, without issuance of shares. The said processes were approved by Bacen as of September 28, 2007.
The Special Shareholders’ Meeting held on January 4, 2008 resolved to increase the capital stock by R$1,200,000 thousand, raising it from R$19,000,000 thousand to R$20,200,000 thousand, by means of the issuance of 27,906,977 new shares, all non-par registered, book-entry shares, 13,953,489 of which are common shares and 13,953,488 are preferred shares, at the price of R$43.00 per share, by means of the private subscription by shareholders from January 22 to February 22, 2008, in the proportion of 1.382441029% on the stock position which each one had on the date of the meeting. The shareholders paid the shares subscribed on March 17, 2008, accounting for 94.29% of the shares; the remaining ones, which account for 5.71% of the total of the offering, were sold in an auction carried out on March 19, 2008 in Bovespa and the financial settlement occurred on March 25, 2008. The excess of the amount allocated to the capital stock, in the amount of R$6,874 thousand, calculated by the difference between the issuance price and the sale of shares in auction, was recorded in “Capital Reserve –Share Goodwill”. The process was ratified by Bacen on March 27, 2008.
The Special Shareholders’ Meeting held on March 24, 2008 resolved to increase the capital stock in the amount of R$2,800,000 thousand, raising it from R$20,200,000 thousand to R$23,000,000 thousand, by means of the utilization of part of the balance of “Profit Reserves – Statutory Reserve”, attributing to the Company’s shareholders, free of charge, as bonus, one (1) new share of the same type to each two (2) shares owned. 1,023,288,867 non-par registered, book-entry shares were issued, 511,644,460 of which are common shares and 511,644,407 are preferred shares.
Simultaneously and in the same proportion to the transaction in the Brazilian Market, Depositary Receipts (DRs) were granted as bonus in the American (NYSE) and European (Latibex) Markets, and investors received one (1) new DR for each two (2) DRs owned, which continued to be traded at the ratio of one (1) preferred share for one (1) DR, in the respective markets. The process was ratified by Bacen on March 27, 2008.
c) Interest on shareholders’ capital/Dividends
Non-voting preferred shares are entitled to all rights and benefits attributed to common shares and, in conformity with Bradesco’s Bylaws, have priority to repayment of capital and 10% (ten per cent) additional of interest on shareholders’ capital and/or dividends, in accordance with the provisions of Paragraph 1, item II, of Article 17 of Law 6,404/1976, as amended in Law 10,303/2001.
In conformity with Bradesco’s Bylaws, shareholders are entitled to interest on shareholders’ capital and/or dividends, which total correspond to, at least, 30% of net income for the year, adjusted in accordance with Brazilian corporate law.
Interest on shareholders’ capital is calculated based on the shareholders' equity accounts and limited to the variation in the Federal Government long-term interest rate (TJLP), subject to the existence of profits, computed prior to the deduction thereof, or of retained earnings and profit reserves in amounts that are equivalent to, or exceed twice, the amount of such interest.
Bradesco’s capital remuneration policy aims at distributing the interest on shareholders’ capital, at the maximum amount calculated in conformity with the prevailing laws, which is estimated, net of Withholding Income Tax, in the calculation of mandatory dividends of the year provided for in the Company’s Bylaws.
284
The shares resulting from the bonus stock resolved at the Special Shareholders’ Meeting held on March 12, 2007, declared after March 23, 2007, did not entail an increase in the distribution of the monthly and, occasionally, supplementary interest on shareholders’ capital, as they aimed solely at improving their liquidity. Thus, the amount of monthly interest on shareholders’ capital, declared after March 23, 2007, was adjusted, decreasing from R$0.036052500 to R$0.018026250 per common share, and from R$0.039657750 to R$0.019828875 per preferred share, so that shareholders continued to receive an equal amount of interest on shareholders’ capital.
At the Board of Directors meeting held on December 28, 2007 resolved to approve the Board of Executive Officers’ proposal for the payment of supplementary interest on shareholders’ capital related to 2007, in the amount of R$0.536962584 (net of tax R$0.456418196) per common share and R$0.590658842 (net of tax R$0.502060016) per preferred share, paid on March 17, 2008. In complement to the interest on shareholders’ capital of the year, the dividends distribution was proposed, in the amount of R$850,000 thousand, at the ratio of R$0.401017613 per common share and R$0.441119374 per preferred share paid on March 17, 2008, at the declared amount, not occurring Withholding Income Tax, pursuant to Article 10 of Law 9,249/95.
At a meeting held on March 17, 2008, the Board of Directors approved the Board of Executive Officers’ proposal for the payment of monthly dividends to shareholders as from May 2, 2008, replacing monthly interest on shareholders’ capital, at the amount of R$0.018026250 per common share and R$0.019828875 per preferred share. After the 50% bonus, the shareholders’ monthly compensation will be R$ 0.012017500 per common share and R$ 0.013219250 per preferred share.
The calculation of interest on shareholders’ capital related to the 1st quarter of 2008 is shown as follows:
| R$ thousand | % (1) | |||
| Net income for the period | 2,102,485 | |||
| (-) Legal reserve | (105,124) | |||
| Adjusted calculation basis | 1,997,361 | |||
| Monthly interest on shareholders’ capital, paid and payable | 114,598 | |||
| Supplementary interest on shareholders’ capital provisioned (payable) | 625,602 | |||
| Interest on shareholders’ capital (gross) | 740,200 | 37.06 | ||
| Withholding income tax on interest on shareholders’ capital | (111,030) | |||
| Interest on shareholders’ capital (net) on March 31, 2008 | 629,170 | 31.50 | ||
| Interest on shareholders’ capital (net) on March 31, 2007 | 510,850 | 31.53 | ||
(1) Percentage of interest on shareholders’ capital/dividends over adjusted calculation basis.
Interest on shareholders’ capital was paid and provisioned, as follows:
| Description | R$ thousand | |||||||||
| Per share (gross) (1) | Gross amount paid/accrued |
IRRF (15%) |
Net amount paid/accrued | |||||||
| Common | Preferred | |||||||||
| Monthly interest on shareholders’ capital | 0.036053 | 0.039658 | 114,598 | 17,190 | 97,408 | |||||
| Supplementary and provisioned interest on shareholders’ | ||||||||||
| capital | 0.196767 | 0.216443 | 625,602 | 93,840 | 531,762 | |||||
| Total in the 1st quarter of 2008 | 0.232820 | 0.256101 | 740,200 | 111,030 | 629,170 | |||||
(1) Adjusted by the 50% stock bonus occurred in March 2008.
d) Capital and Profit Reserves
| R$ thousand | ||||||
| 2008 | 2007 | |||||
| March | December | March | ||||
| 31 | 31 | 31 | ||||
| Capital reserves | 62,498 | 55,624 | 55,178 | |||
| Profit reserves | 8,394,029 | 9,963,593 | 6,091,423 | |||
| • Legal reserve (1) | 1,582,761 | 1,477,637 | 1,372,858 | |||
| • Statutory reserve (2) | 6,811,268 | 8,485,956 | 4,718,565 | |||
(1) Mandatorily formed based on 5% of net income for the year, until reaching 20% of paid-up capital stock, or 30% of the capital stock, accrued of capital reserves. After this limit, the appropriation is no longer mandatory. The legal reserve only
may be used for capital increase or to offset losses; and
(2) With a view to maintaining the operating margin compatible with the development of Company’s active operations, it may be established at 100% of remaining net income after statutory
allocations and the balance limited to 95% of Paid-up Capital Stock.
285
e) Treasury Shares
Up to March 31, 2008, 1,600 common shares and 1,600 preferred shares were acquired and held in treasury, in the amount of R$154 thousand. The minimum, weighted average and maximum cost per share is, respectively, R$42.99698, R$48.28009 and R$53.56320. These shares’ market value on March 31, 2008 was R$42.28 per common share and R$48.30 per preferred share.
The Special Shareholders’ Meeting held on January 4, 2008 resolved to cancel 2,246,224 non-par registered, book-entry shares, 828,700 of which are common shares and 1,417,524 are preferred shares held in Treasury up to December 31, 2007. The proceeding was ratified by BACEN on February 14, 2008.
24) Fee and Commission Income
| R$ thousand | ||||||
| 2008 | 2007 | |||||
| 1st Quarter | 4th Quarter | 1st Quarter | ||||
| Card income | 677,267 | 688,058 | 557,389 | |||
| Checking accounts | 577,800 | 608,546 | 573,921 | |||
| Loan operations | 498,981 | 520,723 | 441,077 | |||
| Fund management | 384,642 | 383,584 | 333,506 | |||
| Charging | 225,548 | 227,346 | 204,234 | |||
| Interbank fees | 83,063 | 84,603 | 76,099 | |||
| Custody and brokerage services | 71,707 | 71,399 | 48,562 | |||
| Consortium management | 71,642 | 65,426 | 53,380 | |||
| Collections | 59,527 | 55,906 | 69,788 | |||
| Other | 153,352 | 190,169 | 201,232 | |||
| Total | 2,803,529 | 2,895,760 | 2,559,188 | |||
25) Personnel Expenses
| R$ thousand | ||||||
| 2008 | 2007 | |||||
| 1st Quarter | 4th Quarter | 1st Quarter | ||||
| Compensation | 807,587 | 843,151 | 723,206 | |||
| Benefits | 351,222 | 373,756 | 315,053 | |||
| Social charges | 297,770 | 309,977 | 259,208 | |||
| Employee profit sharing | 156,984 | 148,031 | 123,834 | |||
| Provision for labor proceedings | 112,365 | 121,041 | 28,799 | |||
| Training | 10,625 | 24,225 | 9,726 | |||
| Total | 1,736,553 | 1,820,181 | 1,459,826 | |||
26) Other Administrative Expenses
| R$ thousand | ||||||
| 2008 | 2007 | |||||
| 1st Quarter | 4th Quarter | 1st Quarter | ||||
| Third-party services | 445,856 | 474,388 | 342,343 | |||
| Communication | 259,669 | 249,920 | 220,250 | |||
| Financial system services | 144,679 | 141,579 | 123,014 | |||
| Depreciation and amortization | 137,721 | 137,481 | 132,818 | |||
| Transportations | 133,216 | 142,510 | 124,147 | |||
| Advertising and promotions | 122,372 | 228,973 | 107,119 | |||
| Rentals | 107,258 | 104,272 | 95,849 | |||
| Data processing | 97,515 | 113,644 | 88,838 | |||
| Assets maintenance and conservation | 89,096 | 81,540 | 67,958 | |||
| Assets leasing | 74,261 | 77,186 | 44,753 | |||
| Security and vigilance | 50,684 | 49,783 | 45,142 | |||
| Water, electricity and gas | 47,140 | 44,526 | 45,158 | |||
| Materials | 45,503 | 51,644 | 45,085 | |||
| Travels | 18,981 | 20,162 | 13,811 | |||
| Other | 41,043 | 55,170 | 43,215 | |||
| Total | 1,814,994 | 1,972,778 | 1,539,500 | |||
286
27) Tax Expenses
| R$ thousand | ||||||
| 2008 | 2007 | |||||
| 1st Quarter | 4th Quarter | 1st Quarter | ||||
| Cofins Contribution | 399,956 | 379,149 | 356,758 | |||
| Tax on services – ISS | 87,629 | 91,032 | 82,772 | |||
| CPMF Expenses | – | 73,355 | 59,197 | |||
| PIS Contribution | 70,333 | 68,366 | 61,664 | |||
| IPTU Expenses | 14,010 | 3,293 | 19,942 | |||
| Other | 39,395 | 27,617 | 31,571 | |||
| Total | 611,323 | 642,812 | 611,904 | |||
28) Other Operating Income
| R$ thousand | ||||||
| 2008 | 2007 | |||||
| 1st Quarter | 4th Quarter | 1st Quarter | ||||
| Other interest income | 119,337 | 119,549 | 119,024 | |||
| Reversal of other operating provisions | 79,393 | 171,778 | 73,729 | |||
| Income on sale of goods | 27,007 | 19,571 | 33,336 | |||
| Revenues from recovery of charges and expenses | 15,480 | 7,735 | 15,558 | |||
| Other | 88,565 | 105,383 | 95,627 | |||
| Total | 329,782 | 424,016 | 337,274 | |||
29) Other Operating Expenses
| R$ thousand | ||||||
| 2008 | 2007 | |||||
| 1st Quarter | 4th Quarter | 1st Quarter | ||||
| Other interest expenses | 467,520 | 387,363 | 428,301 | |||
| Sundry losses expenses | 235,967 | 232,676 | 226,290 | |||
| Cost of goods sold and services rendered | 194,166 | 191,831 | 195,948 | |||
| Expenses with operating provisions | 183,977 | 62,740 | 73,377 | |||
| Other | 312,798 | 220,668 | 218,860 | |||
| Total | 1,394,428 | 1,095,278 | 1,142,776 | |||
30) Non-Operating Income
| R$ thousand | ||||||
| 2008 | 2007 | |||||
| 1st Quarter | 4th Quarter | 1st Quarter | ||||
| Result on sale and write-off of assets and investments (1) | 407,317 | 524,478 | 4,148 | |||
| Record/reversal of non-operating provisions | (15,937) | 4,518 | (2,778) | |||
| Other | 10,853 | (3,034) | (4,084) | |||
| Total | 402,233 | 525,962 | (2,714) | |||
(1) It includes, in 1Q08, the result of the partial sale of the equity interest in Visa Inc. in the amount of R$352,402 thousand originated from the Initial Public Offering (IPO) process, and in 4Q07, the result of the sale of Bovespa’s bonds in the amount of R$177,744 thousand, BM&F R$263,144 thousand and Indiana Seguros S.A. R$63,649 thousand.
287
31) Transactions with Parent Companies (Direct and Indirect)
Transactions with parent companies are carried out under conditions and rates compatible with the average practiced with third parties, prevailing on the dates of operations, and are represented as follows:
| R$ thousand | ||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||
| March 31 | December 31 | March 31 | 1 Quarterst | 4 Quarterth | 1 Quarterst | |||||||
| Assets | Assets | Assets | Income | Income | Income | |||||||
| (liabilities) | (liabilities) | (liabilities) | (expenses) | (expenses) | (expenses) | |||||||
| Interest on shareholders’ capital and dividends: | ||||||||||||
| Cidade de Deus Companhia Comercial de Participações | (7,461) | (424,975) | (7,462) | – | – | – | ||||||
| Fundação Bradesco | (13,754) | (182,354) | (3,435) | – | – | – | ||||||
| Titanium Holdings S.A. | – | – | (121) | – | – | – | ||||||
| Demand deposits: | ||||||||||||
| Fundação Bradesco | (711) | – | (436) | – | – | – | ||||||
| NCD Participações Ltda. | – | – | (9) | – | – | – | ||||||
| Titanium Holdings S.A. | – | – | (7) | – | – | – | ||||||
| NCF Participações S.A. | – | – | (6) | – | – | – | ||||||
| Elo Participações e Investimentos S.A. | (1) | (6) | (4) | – | – | – | ||||||
| Nova Cidade de Deus Participações S.A. | (1) | – | (1) | – | – | – | ||||||
| Cidade de Deus Companhia Comercial de Participações | (1) | (1) | – | – | – | |||||||
| Time deposits: | ||||||||||||
| Cidade de Deus Companhia Comercial de Participações | (11,502) | (75,538) | (106,981) | (795) | (2,094) | (3,551) | ||||||
| Branch rentals: | ||||||||||||
| Fundação Bradesco | – | – | – | (102) | (102) | (97) | ||||||
| Subordinated debts: | ||||||||||||
| Fundação Bradesco | (504,687) | (491,864) | (344,392) | (12,823) | (12,700) | (8,845) | ||||||
| NCD Participações Ltda. | – | – | (88,605) | – | – | (2,571) | ||||||
| NCF Participações S.A. | – | – | (4,662) | – | – | (139) | ||||||
| Titanium Holdings S.A. | – | – | (38,194) | – | – | (867) | ||||||
| Cidade de Deus Companhia Comercial de Participações | (369,240) | (353,273) | (125,474) | (9,253) | (8,701) | (1,989) | ||||||
32) Financial Instruments
a) Risk Management Process
Bradesco approaches on an integrated basis the management of all risks inherent to its activities, supported by its Internal Controls and Compliance structure. Such multidisciplinary vision enables the improvement of risk management standards and avoids the existence of gaps which may jeopardize its correct identification and measurement.
Credit Risk Management
Credit Risk is the possibility that a counterparty of a loan or financial operation might neither intend nor suffer any change in its ability to comply with its contractual liabilities, which may generate losses for the Organization.
Aiming at mitigation of Credit Risk, Bradesco continuously works in the follow-up of credit activities processes, in improvements, examination and preparation of inventories of credit granting and recovery standards, in the monitoring of concentrations and identification of new components offering credit risks.
In addition, efforts, focused on the use of advanced standards of risk measurement and on the ongoing improvement of processes, have reflected on loan portfolio quality and performance, in both results and strength, in the different scenarios in the past and future.
288
Market Risk Management
Market risk is related to the possibility of loss from fluctuating rates caused by unhedged terms, currencies and indices of the Institution's asset and liability portfolios.
At Bradesco, market risks are managed by means of methodologies and standards adherent and compatible with the national and international market reality, enabling to base the Organization’s strategic decisions with high agility and level of reliance.
We present below the Balance Sheet by currency on March 31, 2008 and the position in foreign currency on December 31, 2007 and March 31, 2007:
| R$ thousand | ||||||||||
| 2008 | 2007 | |||||||||
| March 31 | December 31 | March 31 | ||||||||
| Balance | Domestic | Foreign (1) (2) |
Foreign (1) (2) |
Foreign (1) (2) |
||||||
| Assets | ||||||||||
| Current and long-term assets | 351,615,139 | 317,154,352 | 34,460,787 | 31,602,849 | 29,360,573 | |||||
| Funds available | 5,702,253 | 5,158,416 | 543,837 | 523,132 | 213,668 | |||||
| Interbank investments | 48,675,310 | 47,124,947 | 1,550,363 | 2,342,836 | 2,526,368 | |||||
| Securities and derivative financial instruments | 105,166,736 | 96,823,387 | 8,343,349 | 7,602,537 | 6,310,710 | |||||
| Interbank and interdepartmental accounts | 24,615,013 | 24,603,534 | 11,479 | 11,401 | 14,768 | |||||
| Loan and leasing operations | 123,108,002 | 110,965,088 | 12,142,914 | 12,051,988 | 9,660,568 | |||||
| Other receivables and assets | 44,347,825 | 32,478,980 | 11,868,845 | 9,070,955 | 10,634,491 | |||||
| Permanent assets | 3,902,203 | 3,896,869 | 5,334 | 4,927 | 4,071 | |||||
| Investments | 743,088 | 743,088 | – | – | – | |||||
| Premises and equipment and leased assets | 2,344,510 | 2,339,289 | 5,221 | 4,814 | 3,925 | |||||
| Deferred charges | 814,605 | 814,492 | 113 | 113 | 146 | |||||
| Total | 355,517,342 | 321,051,221 | 34,466,121 | 31,607,776 | 29,364,644 | |||||
| Liabilities | ||||||||||
| Current and long-term liabilities | 322,259,729 | 298,063,582 | 24,196,147 | 22,508,568 | 24,162,568 | |||||
| Deposits | 106,710,672 | 103,218,233 | 3,492,439 | 2,284,221 | 3,707,391 | |||||
| Federal funds purchased and securities sold under agreements to repurchase | 69,540,135 | 68,788,355 | 751,780 | 2,821,913 | 3,849,087 | |||||
| Funds from issuance of securities | 7,238,523 | 3,452,095 | 3,786,428 | 3,145,773 | 2,602,731 | |||||
| Interbank and interdepartmental accounts | 2,159,596 | 944,039 | 1,215,557 | 1,253,915 | 1,169,054 | |||||
| Borrowings and onlendings | 24,012,522 | 14,362,548 | 9,649,974 | 9,621,089 | 7,311,401 | |||||
| Derivative financial instruments | 1,623,968 | 1,340,232 | 283,736 | 134,417 | 68,974 | |||||
| Technical provision for insurance, private pension plans and certificated savings plans | 59,722,411 | 59,716,806 | 5,605 | 7,065 | 9,875 | |||||
| Other liabilities: | ||||||||||
| – Subordinated debt | 16,566,885 | 13,983,017 | 2,583,868 | 2,528,968 | 2,911,360 | |||||
| – Other | 34,685,017 | 32,258,257 | 2,426,760 | 711,207 | 2,532,695 | |||||
| Deferred income | 189,818 | 189,818 | – | – | – | |||||
| Minority interest in subsidiaries | 158,678 | 158,678 | – | – | – | |||||
| Shareholders’ equity | 32,909,117 | 32,909,117 | – | – | – | |||||
| Total | 355,517,342 | 331,321,195 | 24,196,147 | 22,508,568 | 24,162,568 | |||||
| Net position of assets and liabilities | 10,269,974 | 9,099,208 | 5,202,076 | |||||||
| Net position of derivatives (2) | (15,168,146) | (13,520,844) | (10,354,121) | |||||||
| Other memorandum accounts, net (3) | (121,318) | (81,642) | (21,944) | |||||||
| Net exchange position (liability) | (5,019,490) | (4,503,278) | (5,173,989) | |||||||
(2) Excluding operations maturing in D+1, to be settled in the currency of the last day of the month; and
(3) Leasing commitments and other, recorded in memorandum accounts.
289
Bradesco Organization adopts a conservative policy regarding market risk exposure, and VaR (Value at Risk) limits are defined by Senior Management, and compliance is monitored on a daily basis by an area which is independent from portfolio management. The methodology used to determine VaR has a reliability level of 97.5% . The fluctuations and correlations used by the models are calculated on statistical bases that are used on forward-looking processes, in accordance with economic studies. The methodology applied and current statistical models are daily validated using backtesting techniques.
In the chart below, we show VaR as of March 31, 2008, December 31, 2007 and March 31, 2007:
| R$ thousand | ||||||
| 2008 | 2007 | |||||
| March 31 | December 31 | March 31 | ||||
| Prefixed | 9,474 | 47,509 | 13,343 | |||
| Internal exchange coupon | 4,318 | 2,972 | 467 | |||
| Foreign currency | 1,975 | 969 | 420 | |||
| IGP-M | 6,025 | 13,042 | 4,177 | |||
| IPCA | 40,483 | 93,481 | 37,787 | |||
| Reference interest rate (TR) | 12,178 | 14,973 | 6,110 | |||
| Variable income | 2,823 | 5,527 | 2,743 | |||
| Sovereign/Eurobonds and Treasuries | 50,946 | 39,444 | 20,861 | |||
| Other | 8,585 | 9,329 | 70 | |||
| Correlation/Diversification effect | (48,984) | (118,306) | (18,005) | |||
| VaR (Value at Risk) | 87,823 | 108,940 | 67,973 | |||
Investments abroad protected by hedging programs are not being considered in the VaR calculation, as these are strategically managed on a differential basis, in amounts taking into account the tax effects, which minimize the sensitivity to risks and corresponding impacts on results, as well as foreign notes positions, which are matched with funding.
Liquidity Risk
Liquidity risk management is designed to control the different unhedged settlement terms of the Institution's rights and obligations, as well as the liquidity of the financial instruments used to manage the financial positions.
The knowledge and monitoring of this risk are crucial, specially to enable the Organization to settle transactions on a timely and secure manner.
At Bradesco Organization, liquidity risk management involves a series of controls, mainly the establishment of technical limits, with an ongoing assessment of the positions assumed and financial instruments used.
In the chart below we show the Balance Sheet by maturity on March 31, 2008:
| R$ thousand | ||||||||||||
| Up to 30 days | From 31 to 180 days | From 181 to 360 days | More than 360 days | No stated maturity | Total | |||||||
| Assets | ||||||||||||
| Current and long-term assets | 201,788,872 | 44,944,352 | 28,772,040 | 76,109,875 | – | 351,615,139 | ||||||
| Funds available | 5,702,253 | – | – | – | – | 5,702,253 | ||||||
| Interbank investments | 41,402,621 | 5,725,144 | 984,351 | 563,194 | – | 48,675,310 | ||||||
| Securities and derivative financial instruments (1) | 90,021,978 | 1,193,498 | 2,570,706 | 11,380,554 | – | 105,166,736 | ||||||
| Interbank and interdepartmental accounts | 24,160,031 | 1,513 | 1,843 | 451,626 | – | 24,615,013 | ||||||
| Loan and leasing operations | 17,028,713 | 33,985,511 | 20,997,148 | 51,096,630 | – | 123,108,002 | ||||||
| Other receivables and assets | 23,473,276 | 4,038,686 | 4,217,992 | 12,617,871 | – | 44,347,825 | ||||||
| Permanent assets | 493,854 | 155,111 | 186,101 | 1,906,464 | 1,160,673 | 3,902,203 | ||||||
| Investments | – | – | – | – | 743,088 | 743,088 | ||||||
| Premises and equipment and leased assets | 280,829 | 104,130 | 124,923 | 1,417,043 | 417,585 | 2,344,510 | ||||||
| Deferred charges | 213,025 | 50,981 | 61,178 | 489,421 | – | 814,605 | ||||||
| Total on March 31, 2008 | 202,282,726 | 45,099,463 | 28,958,141 | 78,016,339 | 1,160,673 | 355,517,342 | ||||||
| Total on December 31, 2007 | 189,947,235 | 43,838,132 | 26,843,510 | 79,534,348 | 1,021,179 | 341,184,404 | ||||||
| Total on March 31, 2007 | 161,404,494 | 41,646,168 | 21,543,480 | 56,273,237 | 1,076,908 | 281,944,287 | ||||||
290
| R$ thousand | ||||||||||||
| Up to 30 | From 31 to | From 181 to | More than | No stated | Total | |||||||
| days | 180 days | 360 days | 360 days | maturity | ||||||||
| Liabilities | ||||||||||||
| Current and long-term liabilities | 166,548,860 | 22,808,160 | 21,224,615 | 111,149,742 | 528,352 | 322,259,729 | ||||||
| Deposits (2) | 63,451,445 | 7,874,602 | 6,367,132 | 29,017,493 | – | 106,710,672 | ||||||
| Federal funds purchased and securities sold under agreements to | ||||||||||||
| repurchase | 35,168,660 | 6,388,994 | 3,443,629 | 24,538,852 | – | 69,540,135 | ||||||
| Funds from issuance of securities | 494,357 | 762,442 | 401,836 | 5,579,888 | – | 7,238,523 | ||||||
| Interbank and interdepartmental accounts | 2,159,596 | – | – | – | – | 2,159,596 | ||||||
| Borrowings and onlendings | 1,934,328 | 5,609,151 | 6,888,013 | 9,581,030 | – | 24,012,522 | ||||||
| Derivative financial instruments | 1,017,463 | 153,589 | 186,276 | 266,640 | – | 1,623,968 | ||||||
| Technical provision for insurance, private pension plans and | ||||||||||||
| certificated savings plans (2) | 40,881,082 | 1,384,972 | 710,765 | 16,745,592 | – | 59,722,411 | ||||||
| Other liabilities: | ||||||||||||
| – Subordinated debt | 78,860 | 316,278 | 300,000 | 15,343,395 | 528,352 | 16,566,885 | ||||||
| – Other | 21,363,069 | 318,132 | 2,926,964 | 10,076,852 | – | 34,685,017 | ||||||
| Deferred income | 189,818 | – | – | – | – | 189,818 | ||||||
| Minority interest in subsidiaries | – | – | – | – | 158,678 | 158,678 | ||||||
| Shareholders’ equity | – | – | – | – | 32,909,117 | 32,909,117 | ||||||
| Total on March 31, 2008 | 166,738,678 | 22,808,160 | 21,224,615 | 111,149,742 | 33,596,147 | 355,517,342 | ||||||
| Total on December 31, 2007 | 169,978,276 | 23,258,815 | 20,399,023 | 96,453,686 | 31,094,604 | 341,184,404 | ||||||
| Total on March 31, 2007 | 140,354,034 | 18,833,371 | 16,034,259 | 80,013,639 | 26,708,984 | 281,944,287 | ||||||
| Accumulated net assets on March 31, 2008 | 35,544,048 | 57,835,351 | 65,618,877 | 32,435,474 | – | – | ||||||
| Accumulated net assets on December 31, 2007 | 19,968,959 | 40,548,277 | 46,992,763 | 30,075,318 | – | – | ||||||
| Accumulated net assets on March 31, 2007 | 21,050,460 | 43,863,257 | 49,372,478 | 25,632,076 | – | – | ||||||
(2) Demand and savings deposits and technical provisions for insurance, private pension plans and certificated savings plans comprising VGBL and PGBL products are classified as up to 30 days, without considering average historical turnover.
Capital Risk
Bradesco's capital risk is managed to optimize the risk-return ratio, aiming at minimizing losses, through the implementation of well-defined business strategies and maximizing efficiency in the combination of factors which impact the Capital Adequacy Ratio (Basel).
In the chart below, we show the Capital Adequacy Ratio as of March 31, 2008, December 31, 2007 and March 31, 2007:
| Calculation Basis – Capital Adequacy Ratio (Basel) |
R$ thousand | |||||||||||
| 2008 | 2007 | |||||||||||
| March 31 | December 31 | March 31 | ||||||||||
| Financial | Economic– | Financial | Economic– | Financial | Economic– | |||||||
| (1) | financial (2) | (1) | financial (2) | (1) | financial (2) | |||||||
| Shareholders’ equity | 32,909,117 | 32,909,117 | 30,357,344 | 30,357,344 | 26,028,655 | 26,028,655 | ||||||
| Decrease in tax credits – Bacen Res. 3,059 | (101,538) | (101,538) | (81,230) | (81,230) | (78,917) | (78,917) | ||||||
| Decrease in deferred assets – Bacen Res. 3,444 | (267,463) | (354,274) | (214,151) | (272,611) | (19,148) | (26,068) | ||||||
| Decrease in gains/losses of adjustments to market | ||||||||||||
| value in DPV and derivatives – Bacen Res. 3,444 | 233,091 | 233,091 | 215,875 | 215,875 | (262,905) | (262,905) | ||||||
| Minority interest/other | 178,523 | 158,678 | 252,659 | 155,412 | 6,314 | 59,975 | ||||||
| Reference shareholders’ equity – Tier I | 32,951,730 | 32,845,074 | 30,530,497 | 30,374,790 | 25,673,999 | 25,720,740 | ||||||
| Gains/losses sum of adjustments to market value | ||||||||||||
| in DPV and derivatives – Bacen Resolution 3,444 | (233,091) | (233,091) | (215,875) | (215,875) | 262,905 | 262,905 | ||||||
| Subordinated debt/other | 11,357,059 | 11,269,424 | 11,837,795 | 11,750,160 | 9,550,439 | 9,551,427 | ||||||
| Reference shareholders’ equity – Tier II | 11,123,968 | 11,036,333 | 11,621,920 | 11,534,285 | 9,813,344 | 9,814,332 | ||||||
| Total reference shareholders’ equity | ||||||||||||
| (Tier I + Tier II) | 44,075,698 | 43,881,407 | 42,152,417 | 41,909,075 | 35,487,343 | 35,535,072 | ||||||
| Deduction of instruments for funding – | ||||||||||||
| Bacen Resolution 3,444 | (42,307) | (473,107) | (41,009) | (460,772) | – | – | ||||||
| Reference Shareholders’ equity | 44,033,391 | 43,408,300 | 42,111,408 | 41,448,303 | 35,487,343 | 35,535,072 | ||||||
| Risk weighted assets | 283,207,093 | 311,837,641 | 269,135,673 | 296,736,180 | 199,823,423 | 225,789,125 | ||||||
| Capital adequacy ratio | 15.55% | 13.92% | 15.65% | 13.97% | 17.76% | 15.74% | ||||||
291
Capital Adequacy Ratio Variation (Basel) – R$ thousand and %
| R$ mil | ||||||||||||
| 1st Quarter/2008 | 4thQuarter/2007 | From March 2007 to | ||||||||||
| March 2008 | ||||||||||||
| Financial | Economic– | Financial | Economic– | Financial | Economic– | |||||||
| (1) | financial (2) | (1) | financial (2) | (1) | financial (2) | |||||||
| Movement in the reference shareholders’ equity: | ||||||||||||
| Starting period | 42,111,408 | 41,448,303 | 39,250,839 | 38,167,682 | 35,487,343 | 35,535,072 | ||||||
| • Net income for the period | 2,102,485 | 2,102,485 | 2,192,889 | 2,192,889 | 8,406,892 | 8,406,892 | ||||||
| • Interest on shareholders’ capital/dividends | (740,200) | (740,200) | (683,002) | (683,002) | (2,961,996) | (2,961,996) | ||||||
| • Adjustment to market value – TVM and derivatives | (17,232) | (17,232) | (334,809) | (334,809) | (495,987) | (495,987) | ||||||
| • Capital increase by subscription, share merger and goodwill | 1,206,874 | 1,206,874 | – | – | 1,996,433 | 1,996,433 | ||||||
| • Subordinated debt | (480,736) | (480,736) | 1,722,327 | 1,722,327 | 1,718,985 | 1,718,985 | ||||||
| • Instruments for funding | (1,298) | (12,335) | 20,163 | 533,368 | (42,307) | (473,107) | ||||||
| • Deferred assets | (53,312) | (81,663) | (76,491) | (95,251) | (248,315) | (328,206) | ||||||
| • Other | (94,598) | (17,196) | 19,492 | (54,901) | 172,343 | 10,214 | ||||||
| End of period | 44,033,391 | 43,408,300 | 42,111,408 | 41,448,303 | 44,033,391 | 43,408,300 | ||||||
| Movement in risk-weighted assets: | ||||||||||||
| Starting period | 269,135,673 | 296,736,180 | 241,480,674 | 268,723,568 | 199,823,423 | 225,789,125 | ||||||
| • Securities | (906,541) | 348,374 | 2,406,301 | 3,141,065 | 741,689 | 5,895,982 | ||||||
| • Loan operations | 2,589,184 | 2,611,124 | 11,140,853 | 11,145,176 | 24,521,036 | 24,443,304 | ||||||
| • Interbank accounts | 653,834 | 653,834 | (351,928) | (351,928) | 252,129 | 252,129 | ||||||
| • Tax credit | 1,497,624 | 1,541,073 | 366,918 | 271,212 | 4,422,243 | 5,295,192 | ||||||
| • Risk (swap, market, interest and exchange rates) | 4,629,476 | 4,637,551 | 2,305,678 | 2,310,724 | 25,976,345 | 25,985,840 | ||||||
| • Memorandum accounts | 151,221 | 131,686 | 5,817,690 | 6,039,861 | 8,718,224 | 8,412,297 | ||||||
| • Other assets | 5,456,622 | 5,177,819 | 5,969,487 | 5,456,502 | 18,752,004 | 15,763,772 | ||||||
| • End of period | 283,207,093 | 311,837,641 | 269,135,673 | 296,736,180 | 283,207,093 | 311,837,641 | ||||||
| In % | ||||||||||||
| 1st Quarter/2008 | 4th Quarter/2007 | From March 2007 to | ||||||||||
| March 2008 | ||||||||||||
| Financial | Economic– | Financial | Economic– | Financial | Economic– | |||||||
| (1) | financial (2) | (1) | financial (2) | (1) | financial (2) | |||||||
| Starting period | 15.65 | 13.97 | 16.25 | 14.20 | 17.76 | 15.74 | ||||||
| Movement in the reference shareholders’ equity: | 0.71 | 0.66 | 1.19 | 1.22 | 4.28 | 3.49 | ||||||
| • Net income for the period | 0.78 | 0.71 | 0.91 | 0.82 | 4.21 | 3.73 | ||||||
| • Interest on shareholders’ capital/dividends | (0.28) | (0.25) | (0.28) | (0.26) | (1.48) | (1.32) | ||||||
| • Adjustment to market value – TVM and derivatives | (0.01) | (0.01) | (0.14) | (0.13) | (0.25) | (0.22) | ||||||
| • Capital increase by subscription, share merger and goodwill | 0.45 | 0.40 | – | – | 1.00 | 0.88 | ||||||
| • Subordinated debt | (0.18) | (0.16) | 0.71 | 0.65 | 0.86 | 0.76 | ||||||
| • Instruments for funding | – | – | 0.01 | 0.19 | (0.02) | (0.20) | ||||||
| • Other | (0.05) | (0.03) | (0.02) | (0.05) | (0.04) | (0.14) | ||||||
| Movement in risk-weighted assets: | (0.81) | (0.71) | (1.79) | (1.45) | (6.49) | (5.31) | ||||||
| • Securities | 0.05 | (0.01) | (0.17) | (0.18) | (0.08) | (0.49) | ||||||
| • Loan operations | (0.15) | (0.12) | (0.76) | (0.60) | (2.37) | (1.78) | ||||||
| • Interbank accounts | (0.04) | (0.04) | 0.03 | 0.02 | (0.03) | (0.02) | ||||||
| • Tax credit | (0.08) | (0.07) | (0.02) | (0.01) | (0.30) | (0.28) | ||||||
| • Risk (swap, market, interest and exchange rates) | (0.26) | (0.21) | (0.13) | (0.11) | (1.57) | (1.27) | ||||||
| • Memorandum accounts | (0.01) | (0.01) | (0.36) | (0.30) | (0.62) | (0.48) | ||||||
| • Other assets | (0.32) | (0.25) | (0.38) | (0.27) | (1.52) | (0.99) | ||||||
| • End of period | 15.55 | 13.92 | 15.65 | 13.97 | 15.55 | 13.92 | ||||||
(2) Includes financial and non-financial companies.
Article 9 of Circular 3,367 of Bacen encompasses the option based on the exclusion prerogative, for purposes of ascertaining the Capital Adequacy Ratio, of the position sold in foreign currency, also computing tax effects, carried out with the purpose of providing hedge for interest in investments abroad. Had we chosen this prerogative, Capital Adequacy Ratio on March 31, 2008, would have been 18.98% in the Financial Consolidated and 16.65% in the Economic-Financial Consolidated.
292
b) Market value
The book value, net of provisions for mark-to-market adjustments, of the main financial instruments are as follows:
| Portfolios | R$ thousand | |||||||||||||||
| Book Value |
Market Value |
Unrealized income (loss) without tax effects | ||||||||||||||
| In the Result | In Shareholders’ Equity | |||||||||||||||
| 2008 | 2008 | 2007 | 2008 | 2007 | ||||||||||||
| March 31 | 1st Quarter | 4th Quarter | 1st Quarter | March | December | March | ||||||||||
| 31 | 31 | 31 | ||||||||||||||
| Securities and derivative financial | ||||||||||||||||
| instruments (Notes 3c, 3d and 8) | 105,166,736 | 106,594,811 | 3,539,755 | 3,473,447 | 4,056,501 | 1,428,075 | 1,246,211 | 1,103,877 | ||||||||
| – Adjustment of available-for-sale securities | ||||||||||||||||
| (Note 8 cII) | 2,111,680 | 2,227,236 | 2,952,624 | – | – | – | ||||||||||
| – Adjustment of held-to-maturity securities | ||||||||||||||||
| (Note 8d item 7) | 1,428,075 | 1,246,211 | 1,103,877 | 1,428,075 | 1,246,211 | 1,103,877 | ||||||||||
| Loan and leasing operations (1) | ||||||||||||||||
| (Notes 3e and 10) | 139,018,777 | 139,026,792 | 8,015 | 356,012 | 411,672 | 8,015 | 356,012 | 411,672 | ||||||||
| Investments (2) (3) (Notes 3h and 13) | 743,088 | 1,478,253 | 735,165 | 1,080,670 | 1,816 | 735,165 | 1,080,670 | 1,816 | ||||||||
| Treasury shares (Note 23e) | 154 | 145 | – | – | – | (9) | 40,798 | (26,609) | ||||||||
| Time deposits (Notes 3k and 16a) | 46,430,303 | 46,421,364 | 8,939 | 4,341 | 4,841 | 8,939 | 4,341 | 4,841 | ||||||||
| Funds from issuance of securities (Note 16c) | 7,238,523 | 7,220,457 | 18,066 | 28,645 | (12,724) | 18,066 | 28,645 | (12,724) | ||||||||
| Borrowings and onlendings | ||||||||||||||||
| (Notes 17a and 17b) | 24,012,522 | 23,920,889 | 91,633 | 77,542 | (39,092) | 91,633 | 77,542 | (39,092) | ||||||||
| Subordinated debt (Note 19) | 16,566,885 | 16,828,419 | (261,534) | (311,407) | (546,070) | (261,534) | (311,407) | (546,070) | ||||||||
| Unrealized income without tax effects | 4,140,039 | 4,709,250 | 3,876,944 | 2,028,350 | 2,522,812 | 897,711 | ||||||||||
(2) Refer to shares of publicly-held companies not considering the increment in investments in affiliated companies; and
(3) It includes the increase of the interest in Bovespa Holding in the amount of R$430,790 thousand (December 31, 2007 – R$608,092 thousand) and BM&F in the amount of R$301,328 thousand (December 31, 2007 – R$469,596 thousand).
Determination of market value of financial instruments:
• Securities and derivative financial instruments, investments, subordinated debts and treasury share are based on the market price practiced on the balance sheet date. In case no quotation of market prices is available, amounts are estimated based on the prices quoted by dealers, on price definition models, quotation models or quotations for instruments with similar characteristics;
• Prefixed loan operations were determined by discounting estimated cash flows, using interest rates applied by Bradesco Organization for new contracts with similar features. These rates are compatible with prices practiced in the market on the balance sheet date; and
• Time deposits, funds from issuance of securities and borrowings and onlendings were calculated by discounting the difference between the cash flows under the contract terms and the rates practiced in the market on the balance sheet date.
33) Employee Benefits
Bradesco and its subsidiaries sponsor a supplementary private pension plan for employees and directors, in the modality Unrestricted Benefits Generating Plan (PGBL). The PBGL is a private pension plan of the variable contribution type, which permits the accumulation of financial resources by participants over their professional careers through contributions paid by themselves and the sponsoring company. The related resources are invested in an Exclusive Financial Investment Fund – FIE.
The PGBL is managed by Bradesco Vida e Previdência S.A. and BRAM – Bradesco Asset Management S.A. DTVM is responsible for the financial management of the FIE funds.
The contributions paid by employees and directors of Bradesco and its subsidiaries are equivalent to 4% of salary, except for participants who in 2001 opted to migrate to the PGBL plan from the defined benefit plan, whose contributions to the PGBL plan were maintained at the levels in force for the defined benefits plan at the time of migration, respecting nevertheless the 4% minimum.
The actuarial liabilities of the variable contribution plan (PGBL) are fully covered by the net assets of the corresponding FIE.
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In addition to the aforementioned variable contribution plan (PGBL), former participants of the defined benefit plan are guaranteed a proportional deferred benefit, corresponding to their accumulated rights in the latter plan. For participants of the defined benefit plan, transferred or not to the PGBL plan, retired participants and pensioners, the present value of the plan’s actuarial liabilities is fully covered by guaranteeing assets.
Banco Alvorada S.A. (merging company of Banco Beneb S.A.) maintains supplementary retirement plans of variable contribution and defined benefit, through Fundação Baneb de Seguridade Social – Bases (related to former employees of Baneb). The actuarial obligations of the variable contribution and defined benefit plans are fully covered by the assets of the plans.
Banco Bradesco BBI S.A. (currently name of Banco BEM S.A.) sponsors supplementary retirement plans of both defined benefit and variable contribution types, through Caixa de Assistência e Aposentadoria dos Funcionários do Banco do Estado do Maranhão – Capof.
Alvorada Cartões, Crédito, Financiamento e Investimento S.A. (Alvorada CCFI) (merging company of Banco BEC S.A.) sponsors a defined benefit plan by means of Cabec – Caixa de Previdência Privada do Banco do Estado do Ceará.
The funds guaranteeing the private pension plans are invested in compliance with applicable legislation (government securities and private securities, listed company’s shares and real estate properties).
Bradesco and its facilities abroad provide their employees and directors with a private pension plan with variable contribution, which enables to accumulate financial resources during the participant’s professional career, by means of contributions paid by himself/herself and in equal proportion by Bradesco. The contributions of employees, managers and of Bradesco in its facilities overseas are jointly equivalent to at most 5% of the annual salary of the benefit.
Expenses with contributions made during 1Q08 amounted to R$77,942 thousand (4Q07 – R$107,132 thousand and 1Q07 –R$78,604 thousand).
In addition, Bradesco and its subsidiaries offer their employees and directors a number of other benefits including: health insurance, dental care, group life and personal accident insurance, as well as professional training, the expenses for which, including the aforementioned contributions, amounted to R$361,847 thousand in 1Q08 (4Q07 – R$397,981 thousand and 1Q07 – R$324,779 thousand).
34) Income tax and social contribution
a) Statement of calculation of income tax and social contribution charges
| R$ thousand | ||||||
| 2008 | 2007 | |||||
| 1st Quarter | 4th Quarter | 1st Quarter | ||||
| Income before income tax and social contribution | 2,900,772 | 2,698,941 | 2,463,708 | |||
| Total charge of income tax and social contribution at rates of 25% and 9%, | ||||||
| respectively | (986,262) | (917,640) | (837,661) | |||
| Effect of additions and exclusions on tax calculation: | ||||||
| Equity in the earnings of affiliated companies | 10,937 | 3,322 | 3,940 | |||
| Exchange loss | (26,357) | (81,180) | (120,547) | |||
| Non-deductible expenses, net of non-taxable income | (20,673) | (31,242) | (36,968) | |||
| Tax credit recorded in prior periods | – | 300,618 | 10,944 | |||
| Interest on shareholders’ capital (paid and payable) | 158,596 | 137,745 | 132,892 | |||
| Other amounts | 69,063 | 86,003 | 92,076 | |||
| Income tax and social contribution for the period | (794,696) | (502,374) | (755,324) | |||
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b) Breakdown of income tax and social contribution result
| R$ thousand | ||||||
| 2008 | 2007 | |||||
| 1st Quarter | 4th Quarter | 1st Quarter | ||||
| Current taxes: | ||||||
| Income tax and social contribution payable | (1,379,068) | (632,972) | (1,011,322) | |||
| Deferred taxes: | ||||||
| Amount recorded/realized for the period on temporary additions | 593,141 | (119,123) | 159,069 | |||
| Use of opening balances of: | ||||||
| Negative basis of social contribution | (12,389) | (14,148) | (6,289) | |||
| Tax loss | (35,472) | (40,920) | (33,288) | |||
| Prior period’s tax credits were recorded on: | ||||||
| Negative basis of social contribution | – | – | 1,343 | |||
| Tax loss | – | – | 3,729 | |||
| Temporary additions | – | 300,618 | 5,872 | |||
| Constitution/utilization in the period on: | ||||||
| Negative basis of social contribution | 525 | 1,095 | 33,299 | |||
| Tax loss | 38,567 | 3,076 | 92,263 | |||
| Total deferred taxes | 584,372 | 130,598 | 255,998 | |||
| Income tax and social contribution f or the period | (794,696) | (502,374) | (755,324) | |||
c) Origin of tax credits of deferred income tax and social contribution
| R$ thousand | ||||||||||
| Balance on | Amount | Amount | Balance on | Balance on | ||||||
| 12.31.2007 | recorded | realized | 3.31.2008 | 3.31.2007 | ||||||
| Provision for loan losses | 3,292,689 | 595,364 | 62,165 | 3,825,888 | 2,979,190 | |||||
| Provision for civil contingencies | 475,871 | 55,903 | 22,650 | 509,124 | 258,685 | |||||
| Provision for tax contingencies | 1,378,706 | 96,236 | 25,592 | 1,449,350 | 1,147,193 | |||||
| Labor provisions | 503,903 | 52,336 | 28,788 | 527,451 | 406,514 | |||||
| Provision for depreciation on securities and investments | 135,433 | 398 | 4,207 | 131,624 | 130,760 | |||||
| Provision for depreciation on foreclosed assets | 70,722 | 6,506 | 1,403 | 75,825 | 75,757 | |||||
| Adjustment to market value of trading securities | 223,260 | 1,712 | 222,633 | 2,339 | 105,762 | |||||
| Amortized goodwill | 944,963 | 18,529 | 57,362 | 906,130 | 812,547 | |||||
| Provision for interest on shareholders’ capital (1) | – | 119,633 | – | 119,633 | 96,830 | |||||
| Other | 474,075 | 146,174 | 74,850 | 545,399 | 174,617 | |||||
| Total tax credits over temporary differences | 7,499,622 | 1,092,791 | 499,650 | 8,092,763 | 6,187,855 | |||||
| Tax losses and negative basis of social contribution | 761,372 | 39,092 | 47,861 | 752,603 | 677,081 | |||||
| Subtotal | 8,260,994 | 1,131,883 | 547,511 | 8,845,366 | 6,864,936 | |||||
| Social contribution – Provisional Measure no. 2,158-35 as of 8.24.2001 (2) | 506,606 | – | 50,373 | 456,233 | 648,978 | |||||
| Total tax credits (Note 11b) | 8,767,600 | 1,131,883 | 597,884 | 9,301,599 | 7,513,914 | |||||
| Deferred tax liabilities (Note 34f) | 1,606,242 | 605,049 | 404,789 | 1,806,502 | 1,448,464 | |||||
| Tax credits net of deferred tax liabilities | 7,161,358 | 526,834 | 193,095 | 7,495,097 | 6,065,450 | |||||
| – Percentage of net tax credits over total reference shareholders’ equity (Note 32a) | 17.3% | 17.3% | 17.1% | |||||||
| – Percentage of net tax credits over total assets | 2.1% | 2.1% | 2.1% | |||||||
(2) Up to the end of the year, the amount of R$49,846 thousand is expected to be realized, which shall be recorded after its effective utilization (item d).
295
d) Expected realization of tax credits over temporary differences, tax losses and negative basis of social contribution and social contribution tax credit – Provisional Measure 2,158-35
| R$ thousand | ||||||||||
| Temporary differences | Tax losses and negative basis | Total | ||||||||
| Income | Social | Income | Social | |||||||
| tax | contribution (1) | tax | contribution (1) | |||||||
| 2008 | 1,748,982 | 609,934 | 87,427 | 17,188 | 2,463,531 | |||||
| 2009 | 1,894,604 | 669,847 | 156,045 | 45,450 | 2,765,946 | |||||
| 2010 | 2,104,902 | 713,987 | 150,209 | 56,181 | 3,025,279 | |||||
| 2011 | 187,723 | 66,664 | 126,805 | 47,469 | 428,661 | |||||
| 2012 | 70,905 | 24,821 | 38,372 | 27,436 | 161,534 | |||||
| 2013 (1st Qtr.) | 299 | 95 | 20 | 1 | 415 | |||||
| Total | 6,007,415 | 2,085,348 | 558,878 | 193,725 | 8,845,366 | |||||
| R$ thousand | ||||||||||||||
| Social contribution tax credit Provisional Measure 2,158-35 | ||||||||||||||
| 2008 | 2009 | 2010 | 2011 | 2012 | 2013 to 2015 |
Total | ||||||||
| Total | 49,846 | 54,202 | 35,899 | 112,040 | 102,708 | 101,538 | 456,233 | |||||||
Projected realization of tax credit is estimated and not directly related to the expected accounting income.
The present value of tax credits, calculated based on the average funding rate, net of tax effects, amounts to R$8,609,839 thousand (December 31, 2007 – R$8,186,569 thousand and March 31, 2007 – R$6,950,342 thousand), of which R$7,536,491 thousand (December 31, 2007 – R$7,037,933 thousand and March 31, 2007 – R$5,789,169 thousand) comprises temporary differences, R$680,107 thousand (December 31, 2007 – R$697,395 thousand and March 31, 2007 –R$601,810 thousand) comprises tax losses and negative basis of social contribution and R$393,241 thousand (December 31, 2007 – R$451,241 thousand and March 31, 2007 – R$559,363 thousand) comprises tax credit over social contribution – Provisional Measure no. 2,158-35.
e) Unrecorded tax credits
The amount of R$65,755 thousand (December 31, 2007 – R$63,064 thousand and March 31, 2007 – R$408,194 thousand) was not recorded as tax credit, and will be recorded when they present effective prospects of realization according to studies and analyses prepared by the management and in accordance with Bacen rules. Provisional Measure 413 increased the social contribution rate from 9% to 15% of taxable income (see Note 35c).
f) Deferred tax liabilities
| R$ thousand | ||||||
| 2008 | 2007 | |||||
| March | December | March | ||||
| 31 | 31 | 31 | ||||
| Adjustment to market value of derivative financial instruments | 719,365 | 746,290 | 948,650 | |||
| Depreciation supervenience | 693,544 | 517,455 | 278,731 | |||
| Operations in future liquidity market | 55,994 | 82,866 | 34,764 | |||
| Other | 337,599 | 259,631 | 186,319 | |||
| Total | 1,806,502 | 1,606,242 | 1,448,464 | |||
296
35) Other Information
a) Bradesco Organization manages investment funds and portfolios, whose net equity on March 31, 2008 amount to R$183,821,652 thousand (December 31, 2007 – R$177,486,660 thousand and March 31, 2007 – R$151,650,992 thousand).
b) On December 28, 2007, Law no. 11,638/07 was published, which amends the Corporation Law, as to the accounting practices adopted in Brazil, as of the fiscal year which will end on 12.31.2008.
According to the new Law, the issuance of accounting standards by CVM to publicly-held companies shall be made in compliance with international standards. In a notice to the market, with its preliminary understanding, CVM informs that the standards adopted by IASB – International Accounting Standards Board are currently considered as an international reference for accounting standards.
A representative portion of the main amendments promoted by the Law are already substantially adopted by the Bank and its subsidiaries (i) voluntarily, as in the case of the presentation of the Statements of Cash Flows and of the Statement of Value Added, or (ii) due to the requirements of Bacen and Susep, for the adoption of the classification and mark-to-market criterion of the financial instruments (Notes 3 (c) (d) and 8).
Brazilian Central Bank (Bacen), through Notice No. 16,669 of March 20, 2008 and CVM through the Notice to the Market of January 14, 2008 waived the application of the provisions of Law 11,638/07 in the preparation of the intermediate financial statements of 2008. Thus, the accounting information within the quarterly information of the quarter ended on March 31, 2008 was prepared according to the specific Bacen and CVM instructions and do not comprise the changes in accounting practices pursuant to Law 11,638/07.
Bacen, SUSEP and CVM are formalizing the corresponding amendments related to Law 11, 638 throughout 2008, considering the scope of each regulatory body. The Bank has promoted studies and evaluation of the impacts of this new Law, including with the support of the representative entities of the sector to, subsequently, measure the effects of the changes of accounting practices. Among the main changes promoted by the Law, we point out:
• Permanent assets start comprising the subgroup “Intangible” assets and include, formally, the rights that have as purpose incorporeal assets destined to the maintenance of the company or exercised with this purpose, including the acquired goodwill. Fixed assets start including assets resulting from operations where there is transfer of benefits, control and risk, regardless of having transfer of property. Deferred assets are restricted to pre-operating expenses and to increasing restructuring expenses;
• Change of the parameter for assessment of affiliated companies by the equity method of accounting, applying the method to all affiliated companies in which the investor has a significant influence, with the presumption of significant influence when the investor holds a 20%-stake or more of the voting capital (previously it was the total capital).
• Creation of a new subgroup in the shareholders’ equity called “Equity Evaluation Adjustment”, destined to register the counterparty entry of the exchange variation of corporate investments abroad when the functional currency of the investee is different from the functional currency of the parent company, and in counterparty of increases and decreases of amounts attributed to elements from assets and liabilities, as a result of its market price evaluation;
• Introduction of the concept of Adjustment to Present Value for the long-term assets and liabilities operations to short-term relevant operations;
• Obligatoriness of the periodical analysis to verify the recovery level of amounts recorded in fixed assets, intangible assets and deferred charges;
• Change of treatment of tax incentives, which starts to transit by the result, subjecting its allocation to profit reserves –tax incentives reserve and excluded from the base of minimum mandatory dividends; and
• In the operations of incorporation, merger or spin-off (combination of companies) all assets and liabilities of the company subject to incorporation, merger or spin-off shall be identified, evaluated and accounted for at market value, as long as carried out between non-related parties and subject to the effective transfer of control.
Management considers that the changes above will not cause material effects in the financial statements of the Bank as of 12.31.2008, however, at the moment and in this circumstances, it is not practicable to determine with security the effects of the full adoption of the new law.
c) The Provisional Measure (M.P.) no. 413, as of January 3, 2008, increased the rate of the Social Contribution on the Net Income –CSLL of the financial sector from 9% to 15% of the taxable income. Said Provisional Measure shall result in an increase in payments related to the Social Contribution on the Net Income generated as of May 1, 2008. Said Provisional Measure must be submitted to the appreciation of the National Congress, within regulatory terms, also existing the Direct Clause of Unconstitutionality and, if it is not approved or the Supreme Court – STF declares its unconstitutionality, its effects shall be annulled and the corresponding tax credits shall be realized at the 9% rate. On March 31, 2008, no tax credits were constituted related to said increase in the social contribution rate, which correspond to an amount of R$1,237,211 thousand net of deferred liabilities, and shall be recorded when they present effective realization perspectives, according to studies and analyses carried out by the management in compliance with the Bacen rules.
297
| Management Bodies |
Cidade de Deus, Osasco, SP, April 25, 2008.
| Board of Directors | ||||
| Chairman Lázaro de Mello Brandão Vice-Chairman Antônio Bornia Members Mário da Silveira Teixeira Júnior Márcio Artur Laurelli Cypriano João Aguiar Alvarez Denise Aguiar Alvarez Valente Ricardo Espírito Santo Silva Salgado Board of Executive Officers Executive Officers Chief Executive Officer Márcio Artur Laurelli Cypriano Executive Vice-Presidents Laércio Albino Cezar Arnaldo Alves Vieira Luiz Carlos Trabuco Cappi Sérgio Socha Julio de Siqueira Carvalho de Araujo Milton Almicar Silva Vargas José Luiz Acar Pedro Norberto Pinto Barbedo Managing Directors Armando Trivelato Filho Carlos Alberto Rodrigues Guilherme José Alcides Munhoz José Guilherme Lembi de Faria Luiz Pasteur Vasconcellos Machado Milton Matsumoto Odair Afonso Rebelato Aurélio Conrado Boni Domingos Figueiredo de Abreu Paulo Eduardo D’Avila Isola Ademir Cossiello Sérgio Alexandre Figueiredo Clemente |
Departmental Directors Adineu Santesso Airton Celso Exel Andreolli Alexandre da Silva Glüher Alfredo Antônio Lima de Menezes André Rodrigues Cano Antônio Carlos Del Cielo Antônio Celso Marzagão Barbuto Candido Leonelli Cassiano Ricardo Scarpelli Clayton Camacho Douglas Tevis Francisco Fábio Mentone Fernando Barbaresco Jair Delgado Scalco Jean Philippe Leroy José Luiz Rodrigues Bueno José Maria Soares Nunes Josué Augusto Pancini Laércio Carlos de Araújo Filho Luiz Alves dos Santos Luiz Carlos Angelotti Luiz Carlos Brandão Cavalcanti Júnior Luiz Fernando Peres Marcelo de Araújo Noronha Marcos Bader Mario Helio de Souza Ramos Marlene Moran Millan Mauro Roberto Vasconcellos Gouvêa Moacir Nachbar Junior Nilton Pelegrino Nogueira Octavio Manoel Rodrigues de Barros Ricardo Dias Robert John van Dijk Roberto Sobral Hollander Toshifumi Murata Walkíria Schirrmeister Marquetti Directors Altair Antônio de Souza Aurélio Guido Pagani Cláudio Fernando Manzato Fernando Antônio Tenório Márcia Lopes Gonçalves Gil Marcos Daré Paulo de Tarso Monzani Tácito Naves Sanglard |
Compensation Committee Lázaro de Mello Brandão – Coordinator Antônio Bornia Mário da Silveira Teixeira Júnior Márcio Artur Laurelli Cypriano Audit Committee Mário da Silveira Teixeira Júnior – Coordinator Hélio Machado dos Reis Paulo Roberto Simões da Cunha Yves Louis Jacques Lejeune Compliance and Internal Controls Committee Mário da Silveira Teixeira Júnior – Coordinator Milton Almicar Silva Vargas *Carlos Alberto Rodrigues Guilherme Domingos Figueiredo de Abreu *Clayton Camacho Nilton Pelegrino Nogueira Roberto Sobral Hollander Disclosure Executive Committee Milton Almicar Silva Vargas – Coordinator Julio de Siqueira Carvalho de Araujo José Luiz Acar Pedro Carlos Alberto Rodrigues Guilherme José Guilherme Lembi de Faria Domingos Figueiredo de Abreu Denise Pauli Pavarina de Moura Jean Philippe Leroy Luiz Carlos Angelotti Antonio José da Barbara Ethical Conduct Committee Domingos Figueiredo de Abreu – Coordinator Arnaldo Alves Vieira Milton Almicar Silva Vargas José Luiz Acar Pedro Carlos Alberto Rodrigues Guilherme Milton Matsumoto Clayton Camacho Nilton Pelegrino Nogueira Roberto Sobral Hollander * Integrated Risk Management and Capital Allocation Committee Márcio Artur Laurelli Cypriano – Coordinator Laércio Albino Cezar Arnaldo Alves Vieira Luiz Carlos Trabuco Cappi Sérgio Socha Julio de Siqueira Carvalho de Araujo Milton Almicar Silva Vargas José Luiz Acar Pedro Norberto Pinto Barbedo Domingos Figueiredo de Abreu Roberto Sobral Hollander Fiscal Council Sitting Members Ricardo Abecassis Espírito Santo Silva – Coordinator José Roberto Aparecido Nunciaroni Domingos Aparecido Maia Deputy Members João Batistela Biazon Nelson Lopes de Oliveira Renaud Roberto Teixeira Ombudsman Cleuza de Lourdes Lopes Curpievsky – Ombudswoman | ||
General Accounting Department
|
||||
| * Process pending approval by the Brazilian Central Bank. | ||||
298
| Report of Independent Auditors |
To the Board of Directors
Banco Bradesco S.A.
1. We carried out limited reviews of the accounting information contained in the consolidated Quarterly Information of Banco Bradesco S.A. and its subsidiaries, comprising the balance sheets as of March 31, 2008, December 31 and March 31, 2007 and the related statements of income, of changes in stockholders’ equity, of changes in financial position, of cash flows and of added value for the quarters then ended. This information is the responsibility of the Bank’s management.
2. Our reviews were carried out in accordance with specific standards established by the Institute of Independent Auditors of Brazil – IBRACON, in conjunction with the Federal Accounting Council – CFC and mainly comprised: (a) inquiries of and discussions with management responsible for the accounting, financial and operating areas of the Bank with regard to the main criteria used for the preparation of the Quarterly Information and (b) a review of the significant information and the subsequent events which have, or could have significant effects on the financial position and operations of the Bank and its subsidiaries.
3. Based on our limited reviews, we are not aware of any material modifications which should be made to the Quarterly Information, referred to above, in order that this information be stated in accordance with the rules established by the Brazilian Central Bank – BACEN applicable to the preparation of the quarterly information, including Communication16.669 of March 20, 2008.
4. As described in Note 35 (b), Law 11.638 was enacted on December 28, 2007 and became effective on January 1, 2008. This Law amended, revoked and introduced new provisions to Law 6.404/76 (the Brazilian Corporation Law) and will change the accounting practices adopted in Brazil. Even though this law has already come into force, the main changes introduced depend on standardization by the regulatory agencies prior to their full application by companies. Accordingly, during this transition phase, BACEN, through Communication 16.669 of March 20, 2008, has waived the application of the provisions of Law 11.638/07 for preparation purposes of the interim financial statements in 2008. As a result, the accounting information contained in the quarterly financial information for the quarter ended March 31, 2008 was prepared in accordance with specific instructions from BACEN and does not consider the changes to the accounting practices introduced by Law 11.638/07.
5. As described in Note 15, the goodwill on investments in associated and subsidiary companies was amortized.
São Paulo, April 25, 2008
Auditores Independentes
CRC 2SP000160/O-5
Washington Luiz Pereira Cavalcanti
Contador
CRC 1SP172940/O-6
299
| Fiscal Council’s Report |
Banco Bradesco S.A.
The undersigned members of the Fiscal Council of Banco Bradesco S.A., in the exercise of their legal and statutory attributions, having examined the Management Report and the Financial Statements related to the 1st quarter of 2008, and in view of the limited review report of PricewaterhouseCoopers Auditores Independentes, have the opinion that the aforementioned documents, examined based on the current corporate law, fairly reflect the Company’s equity and financial position.
Cidade de Deus, Osasco, SP, April 25, 2008
Ricardo Abecassis Espírito Santo Silva
José Roberto A. Nunciaroni
Domingos Aparecido Maia
300
| Glossary |
Glossary of Technical Terms
Acquirer: company responsible for affiliating, maintaining and paying establishments of a Card flag. For instance, in Brazil, the only VISA acquirer is VisaNet.
Activity Based Costing: is a methodology used to facilitate the analysis of the costs of activities that consume the most significant volume of resources. The volume, relationship between cause and effect and the effectiveness with which the resources are consumed during the activities comprise the objective of the strategic ABC cost analysis, ensuring that indirect costs are directed as a priority to these activities and processes and subsequently to products, services and customers.
Added value: value created by the company as a result of its productive activities, representing the level of the company’s contribution to society.
Advisor: economic/financial consultant.
Asset management: company whose activity is to manage third-party funds. It may be part of a financial group, but must create operating barriers, such as a “Chinese Wall” to avoid possible conflicts of interest and focus their business on the management of investors’ funds.
Back test: this method is used to test the validity of the statistical models used, through the comparison of historical data and data generated by the models.
Basel Capital Accord: agreement signed by the Basel Committee, Switzerland, in 1988, designed to establish new conditions for the system used to regulate and supervise banking activities (compulsory for G-10 countries). The methodology used seeks to ensure that minimum capital requirements are compatible with the degree of risk of transactions. In June 2004, this agreement was revised and related changes must be implemented by January 2007.
Basel Committee: formed by the chairmen of the central banks of the world’s 10 most developed economies for purposes of introducing regulations for compliance by G-10 countries.
Bonds: government securities or corporate bonds, which are subscribed and traded.
Brazilian Depositary Receipts – BDRs: these are certificates comprising securities issued by publicly held companies headquartered abroad, negotiable in the Brazilian market.
Broker dealer: a specialized firm, which trades securities for its own account or as an intermediary for third parties.
Capital adequacy ratio (Basel): index introduced by the Basel Committee and regulated by the Brazilian Central Bank, which shows the ratio between the bank’s stockholders’ equity and its risk weighted assets.
Capital savings: comprise the capital paid as a lump sum to the beneficiaries indicated in the plan proposal, in the event of decease of the pension plan participant.
Cash management: cash administration.
Chinese Wall: set of procedures characterized by the clear separation between the management of the treasury funds of the financial institutions and the management of third-party funds. Regulated by the Central Bank of Brazil, it aims to avoid the conflict of interests between the financial institutions in the administration and management of its funds and the administration and management of the funds of its clients.
Claims: this is the realization of risk provided for in the insurance contract, which causes material or personal damages to the policyholders or their beneficiaries.
Claims ratio: used by insurance companies to measure the proportion of expenses for claims to earned premium. Accordingly, the lower the ratio, the better the insurance company’s risk selection strategy.
Clearing (or clearing house): system by means of which stock exchanges ensure compliance with sales and purchase commitments undertaken on trading floors. It may be an internal or external structure connected to the stock exchange. The clearing house is responsible for recording all transactions performed, following positions maintained, financial offset of flows and settlement of contracts.
Co-insurance: insurance distributed among various insurance companies, with the related risk distributed in proportion to the corresponding quota held.
Combined ratio: ratio used by the insurance companies, according to which the sum of the expenses incurred with claims, administrative expenses and selling expenses are divided by the premium earned. Accordingly, the lower the ratio, the higher the efficiency of the insurance company.
Commercial paper: securities issued by publicly held companies for purposes of raising public funds for financing working capital.
Committee of Sponsoring Organizations – COSO: it is a not-for-profit entity, dedicated to improving the presentation of financial reports based on ethics, efficient internal controls and corporate governance. Its members are representatives from the industry, accounting firms, investment companies and the New York Stock Exchange.
Compliance: adherence to a set of laws, rules and instructions introduced by either governmental or internal bodies.
Compulsory deposits: this compulsory reserve is the percentage of demand deposits and the terms under which banks are obliged to deposit at the Brazilian Central Bank (Bacen). The National Monetary Council (CMN) establishes the required percentage for purposes of limiting the expansion of credit operations in the economy. The compulsory deposit is a classic Central Bank instrument used to control the volume of currency available in the banking system.
Contingent liabilities: reflect the uncertainty as to whether, when and for how much an obligation will be paid. In general, the amounts recorded as contingencies are calculated based on the progress of the related lawsuits.
Corporate finance: banks act as intermediaries in complex transactions involving corporate mergers, spin-offs and acquisitions. In this segment, in conjunction with specialized consulting firms, the banks use their experience in financial and investment transactions ensuring that they are made feasible through the use of funds, which are obtained either locally or from abroad.
Corporate governance: system by which companies are managed and monitored, involving relationships between stockholders, the board of directors, the executive board, the independent auditors, audit committee and fiscal council. Good corporate governance practices are designed to increase the company’s value, facilitating access to capital and ensuring that it will continue as a going concern on a perennial basis.
Corporate Sustainability Index (ISE): Bovespa index which reflects the return of a portfolio composed of companies’ stocks with the best performances regarding all dimensions related to corporate sustainability, i.e., economic-financial, social, environmental and corporate governance.
Correspondent banks: these are commercial companies or service providers contracted by banks to operate in banking services authorized by the Brazilian Central Bank (Bacen). Since they are usually located in different commercial outlets, the correspondent bank can offer extended hours, often on a 24-hour basis.
Country risk: this is an index calculated by the US investment bank J. P. Morgan used to measure the degree of risk to which a foreign investor is exposed when investing in a particular country. Technically, this risk is the surcharge payable in relation to the guaranteed returned on US treasury bonds, since the US is considered to offer less risk to investors. Every 100 points represent 1% of additional interest as compared to US interest.
Courier: messenger service, available for use by customers, to carry out a number of bank services, including check deposits, bill payments, checkbook delivery, among others, with no need for customers to leave the home or office.
Covenants: commitments contained in any formal debt agreement establishing that certain acts must be fulfilled, while others must not be executed. These commitments are designed to protect the lender’s interests and involve matters such as working capital, dividend payment and the ratio of indebtedness.
Coverage of technical reserves: is the allocation of assets, by insurance, private pension plans and savings bonds companies, in particular financial assets, in sufficient amount to cover technical reserves. These assets must offer diversity, liquidity, security and profitability. See Guarantees of technical reserves.
Coverage ratio – PDD: measures the ratio between the amount of the allowance for loan losses (PDD) and the amount of non-performing loans (D to H rated credits).
Coverage ratio – Fee and Commission: relation between fee and commission income and administrative and personal expenses. The higher the ratio, the better for the Financial Institution.
Credit scoring: is a method using statistical tools to measure the probability of loss on a credit operation based on historical data.
Consigned loan: this is a line of personal credit for companies’ employees whose loan installments are deducted from payroll.
Cross – selling: sale of related merchandise and services.
Depositary Receipts – DRs: are deposit receipts issued by a foreign institution (Depositary), guaranteed by shares of a local company.
Derivatives: financial instruments used by companies, substantially for protection purposes and classified in 4 categories: futures market, swap, forward market and options.
Earned premium: the portion of an insurance premium retained which corresponds to the period of risk time passed, i.e., it is the deferral of the retained premium for the period counted from the date of the insurance coverage.
Equator Principles: it is a set of social-environmental measures, based on criteria defined by the International Finance Corporation (IFC), used in the evaluation and concession of financing of infrastructure projects known as project finance.
Eurobonds: securities with notional value expressed in U.S. dollars or other currencies and which the banks issue through institutions abroad, the resources of which will be used to finance credit operations in Brazil. These are medium to long-term securities at fixed or floating rates and with premium or discount, depending on market demand. The Eurobond market is an important source of capital for multinational companies and governments, including those located in developing countries.
Euronotes: are long-term notes, issued by governments and major companies and traded in the international financial market.
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Exchange coupon rate: is the difference between the internal interest rate and the expected Brazilian exchange rate devaluation and, in general, is compatible with the composition of the remuneration offered by exchange bills in investments pegged to the variation in the U.S. dollar, i.e., the interest rate in U.S. dollar paid to an investor who assumes the risk of investing in another currency.
Exchange exposure: assets and liabilities subject to exchange risks as a result of local currency valuation or devaluation as compared to other currencies.
Financial holding company (FHC): status granted by the U.S. Federal Reserve – FED, which permits the subsidiary company of a foreign financial institution to carry out its activities under the same conditions as local US banks. This status is awarded subsequent to a detailed analysis of key factors determined by US banking legislation. For purposes of obtaining FHC status, the institution must comply with 3 main requirements: a) it must be properly capitalized, b) properly managed and c) submit a proper request for FHC status to the Federal Reserve Board – FRB.
Financial intermediation: is a bank’s main activity. The bank obtains funds from customers with resources available for investment, which are onlent to borrowers. Other activities such as leasing and exchange transactions also comprise financial intermediation.
Financial margin: this is the difference between interest income and expense generated by investments, funds obtained, credit and leasing operations and foreign exchange transactions. Non-interest income also comprises financial margin, derived from securities, treasury transactions and credit recoveries.
Floating funds: permanence of third-party funds in banks for a specific period without remuneration.
Funding: funds taken from third parties to make financial operations with the client. A company takes funds from third parties for its operations when it raises funds by means of issuance of debt securities or by other means of funding.
Global Compact: initiative of the United Nations in which encourages participant entities to commit with guiding its actions in the sense of contributing to the development of a more inclusive and sustainable economy, broadening its scale in the social-environmental area. It is based on values aiming at promoting institutional education. The power of transparency and dialog is used to identify and disclose new practices which have as base the universal principles. It is comprised of 10 principles related to human rights, labor, environmental protection and bribery.
GoodPriv@cy: it is an international data privacy and protection seal, which comprises requirements for data protection and privacy management within the corporations.
Greenfield: implementation of new projects, i.e., those that are not characterized as expansion.
Guarantee of technical reserves: see coverage of technical reserves.
Hedge: an instrument used to offset risk investments subject to price and rate fluctuations.
Holding: it is the company holding share control over another company or a group of subsidiary companies.
Home broker: relationship channel between investors and brokerage houses, for stock market trading purposes through the online transmission of buy and sell orders via internet, permitting real time access to price quotations and share portfolio monitoring, among other resources.
Ibovespa: this is the most important Brazilian stock market performance index, as it portrays the behavior of main stocks traded on Bovespa. It is established from an imaginary Reais investment in a theoretical number of stocks (portfolio). Each stock composing this portfolio has a certain weight, which varies according to its liquidity. Frequently, both the composition and weights change so that the index may accurately represent the stock market. Its basic purpose is to work as a market behavior average index. Hence, the stocks composing this index account for more than 80% of the number of trades and financial volume traded on the spot market. As the stocks integrating this portfolio are highly representative, it is possible to affirm that if most of stocks are climbing, the market, measured by Bovespa Index, is bull, and if it is declining, it is a bear market.
Interbank accounts: comprise checks which are being cleared between banks and other notes, such as bank docket payments, as well as restricted deposits at the Brazilian Central Bank (deposits in foreign currency, deposits for exchange contracts, payment of funds for rural credit, credits subject to the National Housing System – SFH, etc).
Interbank deposits: securities negotiated in the interbank market between financial institutions.
Interdepartmental accounts: comprise the amounts, which are in transit between the bank’s branches and departments or other group member companies (brokerage firms, insurance companies, supplementary private pension entities etc.).
Investment advisory service: these are consulting services for investors and include financial advice, preparation of financial reports and management of customer funds. The services are provided by consultants who are properly registered at the regulatory organs.
Investment grade: in the establishment of investment alternatives to international investors, companies and countries are rated by the international risk rating agencies, such as Moody’s, Standard & Poor’s and Fitch, among others, normally in three risk levels: Investment Grade; Investment Risk; and Default. Investment grade is the safest grade, in which there is maximum trust of markets. It is when a country or a company is better evaluated by investors and manages to raise funds with lower interest rates, for it is considered of low risk.
Leasing: this is an alternative medium, or long-term, financing method, documented through an agreement in which the leasing company purchases the assets, which are then ceded for use by the lessee in exchange for payment in installments.
Libor: it is the preferential interest rate charged on foreign currency loans and prevailing in the international financial market. It is used among first-tier banks.
Market-making: the maintenance of buy and sell offers for a specific securities and preparation to buy or sell standard lots at publicly quoted prices.
Market share: percentage sales or inventories in a specific segment of a certain company. It could also be the share that a specific brand holds in the market in which it operates.
Mark-to-market: method used to adjust a security or portfolio based on present market values.
Merchant banking: activities carried out by a financial institution including investment bank activity, advisory services, and intermediary services in mergers and acquisitions.
Microcredit: is the granting of limited loan amounts to small informal business owners and microcompanies, with difficult access to the traditional financial system, especially since they are unable to offer real guarantees. This credit is used for production purposes (working capital and investment) and its main features are less bureaucracy, access by all customer income brackets and a quick and efficient approvals process.
Mitigate: word frequently used in the risk management environment, in the sense to minimize, soothe or even attenuate the risks which the company is exposed to.
Mobile banking (WAP): this technology allows banks to offer their customers banking services (balances, statements, institutional information consultation, rates and prices) via mobile communication equipment, such as cell phones. An option in addition to other channels, such as the Internet, magnet strip cards, branches and call centers.
Money laundering: method by which funds derived from illegal activities are incorporated into the economic system. The main purpose is to disguise the illicit origin of the funds using transactions, which cannot be traced.
Operating efficiency ratio: ratio between administrative expenses (personal + administrative) and operating income. Lower the ratio, better the efficiency of the Financial Institution.
Overnight: one-day investments, which are guaranteed by government securities or corporate bonds, comprising a transaction between two institutions involving a sale, with a repurchase commitment.
Over-the-counter market: in which transactions are not carried out in the stock exchanges. Not only shares, but also assets, including derivatives, can be traded in this market. Since they attend certain customer specifications, not provided for in stock exchange trading, over-the-counter trades are also known as tailor-made transactions. Own position: securities maintained in stock, available for trading, derived from definitive purchases or repurchases, recorded as fixed income securities.
PGBL (Unrestricted Benefits Generating Plan): this is a supplementary private pension product destined to accumulate funds and converting them into future income. PGBL is very flexible, since amongst other facilities, it allows that funds invested in this plan may be redeemed at any time (observing the grace period). It is interesting to participant, submitting income tax return, as it is possible to deduct the contributions amount from the income tax calculation basis up to the limit of 12% of annual gross income. Upon receipt of redemption or yield, income tax will be withheld at source over total received, pursuant to prevailing laws (progressive or regressive tables).
Plano remido: in the health Insurance Line products, this is a plan in which insurance holders do not have the obligation to pay premiums to the insurance company, which, in turn, still has the obligation to pay benefits to the holder.
Privatization currency: government securities generally traded with discount and accepted by the government in payment for the acquisition of state-owned companies.
Project finance: is the combination of contracts which involve a specific business venture, inter-relating all the operating agents and the guarantees related thereto. Project finance is a technical model in which the project is the center of gravity of the interaction between the related agents. Project finance is generally used in major engineering projects.
Purchase and sale commitments: a financial investment through which the bank sells government securities or corporate bonds to the customer, and whereby the bank is committed to repurchase and the customer to resell the related securities within the terms established in the contract.
Qualified custody service: this consists of the physical and financial settlement of assets and their safekeeping, as well as the administration and information on related income. The custody service also comprises the financial settlement of derivatives, swap contracts and forward transactions.
Quality certification (ISO – International Organization for Standardization): is the combination of activities carried out by an independent commercial body designed to certify, publicly and in documental form, that a determined product, process or service complies with specific requirements. ISO certification improves the company’s image, facilitating purchase decisions by customers and consumers.
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Rating: it is a classification mechanism of the credit quality of a company or a country. The rating aims to classify the risk of a company or country verifying if they are able to comply with the financial liabilities. This classification is made by rating agencies which, periodically, review their opinions about the rating of the company or country previously evaluated. See Rating agencies.
Rating agencies: companies experienced in analyzing the risk of public and private, financial or non-financial institutions. Based on detailed analyses, these agencies attribute a score (rating) to the companies or countries under analysis. This score serves as a risk indicator for investors. See Rating.
Reinsurance: is the ceding by the insurance company to the reinsurer of that portion of a liability which exceeds the limit of its capacity to retain risks. Reinsurance is a form of risk distribution and is contracted with IRB-Brasil Resseguros S.A., which has the monopoly on reinsurance in Brazil.
Retained premium: is the portion of an insurance premium which remains with the insurance company in the exact proportion of its retention, i.e., the portions ceded as co-insurance and re-insurance are excluded from the premium issued, as well as refunds and cancellations.
Retrocession: is the transaction used by the reinsurer to cede to the local or international market, the liabilities which exceed the limits of its capacity to retain risks, i.e., retrocession is the reinsurance of reinsurance.
SA 8000® – Social Accountability: a new rule developed by SAI (Social Accountability International, a non-profit organization which promotes workers’ human rights all over the world). The Company with certification in this international rule adopts good social responsibility practices, such as respect to human rights, child rights and fundamental labor rights, in addition to a safe and healthy work environment, which is reflected on the Company’s quality of actions and relations with its public: employees, suppliers, clients and the community in general.
SANA (Automatic System of Stocks Negotiation): structured system aiming at facilitating the participation of small individual investors in the stock market, assuring easy purchasing and selling of stocks in the Stock Market, in small lots, through computer terminals. The system can also be used in public offerings intermediation.
Sarbanes-Oxley (see Sarbanes-Oxley Act)
Sarbanes-Oxley Act, Section 404: established to restore confidence in the financial information disclosed by companies listed in the U.S. stock exchanges. The U.S. politicians, Sarbanes (senator) and Oxley (federal congressman) drew up legislation to provide improved orientation on the following: clarity in the presentation of financial information, corporate governance, internal controls process and independence of the independent auditors and increased assurance procedures. Pursuant to Section 404, both companies and their auditors must identify all key controls for each of their processes and test thoroughly the effectiveness and management appraisal capacity of these controls.
Securitization: is the financial transaction whereby a loan and other debts are converted into securities which are negotiable in the market.
SMS: short message service, used in cell phones. The service allows the user to send and receive text messages containing different types of information.
Social responsibility: is the philosophy whereby certain companies conduct their business as a partner, co-responsible for social development. The socially responsible company is capable of assimilating the interests of different stakeholders (stockholders, employees, service providers, suppliers, consumers, community, government and environment), ensuring that these interests are fully integrated into the planning of its activities, in the pursuit to meet the demands of all segments, not just those of the stockholders or owners.
Spread: this is the difference between the interest rate charged to the borrower by the bank and the rate paid to customers for the use of the funds invested.
Stock guide: this is a report used as a guide for those interested in accompanying the performance of the secondary share market and an important tool for use in capital market area studies. Its content is updated periodically and includes information on all major listed companies. The inclusion of companies in this report is directly related to their share liquidity. The companies are grouped under different sectors, facilitating a comparative analysis of their performance (share behavior and profitability) in their own activity segment and between the different sectors.
Stress testing: a technique used to assess the response of an asset and/or liability portfolio to extreme variations in the prices, interest and exchange rates which affect these portfolios. The purpose of the stress test is to quantify possible loss on the portfolio in the event of an adverse market situation.
Structured transactions: a combination of two or more financial instruments (e.g. a purchase and sale commitment + Swap), designed to take advantage of market opportunities or secure protection against financial risks.
Subordinated debt: this is an instrument customarily used by financial institutions for obtaining funds since it is classified as tier II capital for purposes of calculating the capital adequacy ratio (Basel) and accordingly increases their credit granting capacity. In the event of bankruptcy, this debt is the ultimate obligation payable by the financial institution and is subordinate to the payment of all other creditors.
Subordinated perpetual debt: this is a security without maturity, which pays interest on a periodical basis on dates set out in advance. It includes an exclusive redemption option for the issuer after the term contractually determined has elapsed as from the issuance date.
Subprime loan: loan offered to those who do not qualify for prime rate loans, have low credit ratings or have a reasonable chance of defaulting on the debt repayment, among other reasons. It is assessed as a high-risk loan.
Supplementary private pension plan: it is an instrument used to accumulate resources over the years in the form of savings to be withdrawn during retirement. This plan is supplementary to the government retirement pension scheme.
Sustainability: assumes that the companies will commit with the economic-social-environmental tripod, i.e., value generation, environmental care and social development.
Swap: financial derivative with a view to promoting the swap (simultaneously) of financial assets between economic agents involved.
Tag Along: right assured by law through which the minority stockholders holding common stocks have the power of selling their stocks for a predetermined percentage, when a publicly-held company’s control is sold.
Technical reserves: these are liabilities recorded by the insurance companies to guarantee the payment to policyholders of claims occurred or which will occur in the future as a result of the risks assumed. For the supplementary private pension entities and savings bonds companies, these liabilities comprise the amounts accumulated with funds derived from the cost of the benefits contracted, for payment purposes of such benefits. All technical reserves are calculated established on actuarial bases.
Third-party position: securities with repurchase commitments not subject to resale commitments, i.e., they are the institutions own portfolio securities related to the open market, recorded as fixed income securities – subject to repurchase.
Track record: accumulated experience.
Treasury stocks: own company stocks acquired to remain in treasury or for cancellation.
Underwriting: term used internationally to define the launching of stocks or debentures for public subscription, generally carried out by financial institutions authorized by the CVM, via three types of contracts: straight (the financing institution subscribes the total launch and payment is made directly to the issuing company), stand-by (the financing company is bound to subscribe the securities not acquired by the public) and best-efforts (the financing company does not assume the responsibility to subscribe the securities and returns those that were not acquired by the public to the issuing company).
Verified by Visa: electronic means of debit and credit card transactions verification at virtual stores, providing clients with greater protection and security.
VGBL (Long-term life insurance): this is a life insurance guaranteeing insured’s coverage in case of his/her survival with a view to accumulating funds and converting them into future income. It works as a private pension plan, as it was developed based on PGBL. VGBL is very flexible, since amongst other facilities, it allows that funds invested in this plan may be redeemed at any time (observing the grace period). The most important difference between PGBL and VGBL is the tax treatment given to each one. While in PGBL income tax is levied over the total redeemed or received as income, in VGBL the taxation occurs only over financial investments yields, according to prevailing laws (progressive or regressive tables). VGBL is more indicated for those participants submitting simplified income tax return. In addition, this is an option for those insured who already exceeded the limit of income tax deduction in a supplementary private pension plan (12%) and who are planning to invest a bit more in his/her future.
V@R (value at risk): is the expected maximum potential loss of an asset and/or liability portfolio with pre-established confidence level and over a specific time horizon.
Web point: this is a self-service terminal providing access to Internet Banking services.
WebTA: is the online transfer of files between the Bank and its corporate customers with security, efficiency and economy, using cryptography and data compaction.
Wireless: this technology permits connection between equipment with no direct physical link. For example, internet access by cell phone is made feasible through the use of wireless technology.
Write-off: term related to the loan operations written off from the assets of the company, due to client’s delinquency. According to Bacen, this write-off is made after six (6) months of credit rating in the risk level (rating) H. These loan operations in write-off are recorded in memorandum accounts.
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| Cross Reference Index |
Cross Reference Index
| Abbreviations | Certificated Savings Plans, 106 | |
| List of Main, 12 | Certifications | |
| Active Consortium Quotas, 120 | GoodPriv@cy, 187 | |
| Action | in International Rules, 197 | |
| Social, 214 | in Products and Investments, 212 | |
| Social-environmental, 192 | ISO, 185 | |
| Activity-Based Costing (ABC Cost), 187 | OHSAS, 197 | |
| Activity-Based Management (ABM), 188 | SA 8000®, 197 | |
| Accounts (see Clients) | Change | |
| Checking, 87 | in Number of Outstanding Shares, 17 | |
| Savings, 88 | in Shareholders’ Equity, 236 | |
| Acknowledgments (see Awards), 96, 99, 106, 110, 189, 218 | Channels – Bradesco Dia&Noite (Day&Night), 141 | |
| Affiliated Companies, 129, 272 | Clients (see Accounts) | |
| Allowance/Provision | Checking Accounts, 87 | |
| x Delinquency x Loss, 155 | Savings Accounts, 88 | |
| for Loan Losses, 46, 69, 267 | Collection, 179 | |
| Alô Bradesco (Hello Bradesco), 185 | Commercial Strategy, 7 | |
| Amazonas Sustentável, 192 | Committee | |
| Analysis | Audit, 298 | |
| Equity, 43 | Compensation, 298 | |
| of the Adjusted Financial Margin and Average Rates, 62 | Ethical Conduct, 298 | |
| of the Statement of Income, 25 | Executive Disclosure, 298 | |
| Summarized Statement of Income, 15 | Executive Loan, 152 | |
| Assets Bookkeeping, 180 | Integrated Risk Management and | |
| Assets under Management, 89 | Capital Allocation, 298 | |
| Awards (see Acknowledgments), 96, 99, 106, 110, 189, 218 | Internal Controls and Compliance, 161, 298 | |
| Balance Sheet, 42, 76, 231 | Comparison Purposes, 247 | |
| Banco Bradesco BBI, 112 | Compensation Agent, 184 | |
| Banco Finasa, 111 | Compliance, 161 | |
| Bradesco Consórcios, 116 | Compulsory Deposits, 1, 27, 260 | |
| Bradesco Corretora de Títulos e Valores Mobiliários, 123 | Consortium, 116 | |
| Bradesco Securities, 126 | Consumer Financing, 81 | |
| by Business Segment, 248 | Contents, 11 | |
| by Currency, 78, 289 | Contingencies, 247, 277 | |
| by Maturity, 78, 290 | Controllership, 182 | |
| Highlights, 17 | Corporate, 133 | |
| Insurance Companies, 92 | Corporate Governance, 146 | |
| Leasing Companies, 114 | Correspondent Banks (see Bradesco Expresso), 137 | |
| Banco Finasa, 111 | Corretora de Títulos e Valores Mobiliários, 123 | |
| Bank of the Planet, 192 | Custody, 182 | |
| Basel (see Capital Adequacy), 19, 169, 291 | Customer Service Network, 139 | |
| Basel II, 149 | Data Privacy and Protection Seal, 186 | |
| BM&F, 125 | Debentures, 181 | |
| BNDES, 80 | Deferred Charges, 245, 273 | |
| Board | Delinquency, 84 | |
| of Directors, 298 | Deposits | |
| of Executive Officers, 298 | by Maturity, Breakdown of, 87, 274 | |
| Borrowings and Onlendings, 51, 276 | Demand, 48, 87, 274 | |
| Bovespa (see Ibovespa), 125 | Savings, 48, 88, 274 | |
| Bradesco Auto/RE, 100 | Derivative Financial Instruments | |
| Bradesco BBI, 112 | Securities and, 250 | |
| Bradesco Brand, 189 | Derivatives, 6, 25, 44, 244, 250, 256, 260 | |
| Bradesco Capitalização, 106 | Digital Certificate, 179 | |
| Bradesco Dia&Noite (Day&Night), 141 | Digital Inclusion, 217 | |
| Bradesco Empresas, 134 | Dividends (see Interest on Shareholders’ Capital), 284 | |
| Bradesco Expresso, 137 | Dividend Yield, 21 | |
| Bradesco Saúde, 98 | Economic Scenario, 2 | |
| Bradesco Securities, 126 | Employee | |
| Bradesco Seguros e Previdência, 92 | Benefits, 203, 293 | |
| Bradesco Vida e Previdência, 103 | Number of, 205 | |
| BRAM | Environment, 193 | |
| Asset under Management, 89 | Equator Principles, 192 | |
| Branches, 139 | Events, 192, 228 | |
| Capital Adequacy (see Basel), 19, 169, 291 | Expenses | |
| Capital Allocation, 148, 168, 298 | Administrative, 71, 286 | |
| Capital and Profit Reserves, 285 | for Allowance for Loan Losses, Net of Recoveries of | |
| Carbon | Written-off Credits, 268 | |
| Neutralization of Emissions, 193 | for Borrowings and Onlendings, 28, 277 | |
| Cards, 170 | Operating, 287 | |
| Cash | Personnel, 37, 71, 205, 286 | |
| Flow, 238 | Personnel Expenses by Business Segment, 206 | |
| Generation, 18 | Prepaid, 245, 271 | |
| Cash Management | Selling, 35, 95 | |
| Solutions, 178 | Tax, 287 |
304
| Export, 174 | Investments, 245 | |
| Federal Funds Purchased and Securities Sold under | Breakdown of, 271 | |
| Agreements to Repurchase, 50, 245, 274 | in Infrastructure, IT and Telecommunications, 145 | |
| Financial Instruments, 244, 256, 258, 288 | ISO, 185 | |
| Financial Margin, 29 | Labor Claims, 278 | |
| Analysis of, 62 | Lawsuits | |
| Total Assets x, 65 | Civil and Tax, 278 | |
| Variation in Items Composing the, 61 | Corporate, 185 | |
| Financial Statements, 227 | Leasing, 114 | |
| Finasa Sports | Companies, 114 | |
| Program, 222, 230 | List of Main Abbreviations, 12 | |
| Fiscal Council, 298, 300 | Loan | |
| Fone Fácil (Easy Phone), 143 | Real Estate, 80 | |
| Foreclosed Assets, 271 | Rural, 80 | |
| Foreign | Loan Granting, 152, 153 | |
| Branches and Subsidiaries, 174, 178 | Loan Portfolio (see Loan Operations), 80, 153, 229 | |
| Public Issuances, 177 | by Activity Sector, 156, 266 | |
| Trade Portfolio, 176 | by Business Segment, 83 | |
| Foreign Exchange (see International Area) | by Maturity, 261 | |
| Change in Financial Margin Items plus | by Rating, 85 | |
| Exchange Adjustment, 60 | by Risk Levels, 263 | |
| Portfolio, 270 | by Type, 83, 261 | |
| Result, 270 | Concentration of, 156, 266 | |
| Foreign Exchange Portfolio, 270 | Consumer Financing, 81 | |
| Foreign Trade | Corporate, 82 | |
| Portfolio, 176 | Individuals, 81 | |
| Forward-Looking Statements, 1 | Methodology Used for Evaluation of, 153 | |
| Fundação Bradesco, 214 | Movement of, 85 | |
| Funding, 86 | Performance Indicators, 86 | |
| and Assets Managed, 20 | Quality, 154 | |
| x Expenses, 64 | Renegotiation, 269 | |
| Funds | Management Bodies, 298 | |
| Available, 43, 249 | Market(s) | |
| from Issuance of Securities, 275 | Capital, 180 | |
| Global Compact, 192, 200 | Export, 175 | |
| Glossary of Technical Terms, 301 | Import, 176 | |
| GoodPriv@cy | Risk Management, 157 | |
| Certificate, 186 | Segmentation, 133 | |
| Goodwill, 273 | Value, 21 | |
| Government Authority, 179 | Market Share, 19 | |
| Guarantees of Technical Provisions, 282 | Brazilian Savings and Loan System (SBPE), 89 | |
| Highlights, 17 | Consortium, 118, 119 | |
| Home Broker, 125 | Customer Service Network, 140 | |
| Human Resources, 196 | Export, 175 | |
| Ibovespa, 1, 22, 23 | Import, 176 | |
| Import, 174 | Income from Certificated Savings Plans, 107 | |
| Income | Income from Private Pension Plans and VGBL, 103 | |
| Breakdown, 60 | Insurance Premium, 93, 98, 100, 103 | |
| Fee and Commission, 30, 70, 286 | Private Pension Plans and | |
| from Interbank Investments, 249 | VGBL Investment Portfolio, 104 | |
| Loan Operations, 25, 269 | Technical Provisions (Certificated Savings Plans), 107 | |
| on Retained Premiums, 283 | Mergers and Acquisitions, 113 | |
| Operating (other), 287 | Minority Interest, 53, 283 | |
| Income Tax and Social Contribution, 1, 6, 41, 244, 294 | Money Laundering | |
| Calculation of Charges with, 294 | Prevention and Fight against, 162 | |
| Index | Net Income, 14 | |
| Appreciation (Shares), 23 | Notes to the Financial Statements | |
| Notes to the Financial Statements, 240 | Index, 240 | |
| Pay Out, 22 | Ombudsman, 185, 298 | |
| Indicators, 1 | Operating Companies, 91 | |
| Financial Market, 66 | Operating Efficiency, 72 | |
| Loan Portfolio, 86 | Operations, 241 | |
| Other, 74 | Borrowings and Onlendings, 276 | |
| Social, 224 | Insurance, Private Pension Plans and | |
| Information Security, 162 | Certificated Savings Plans, 281 | |
| Information Technology (IT), 145, 167, 210 | Loan, 80, 260 | |
| Insurance Companies, 92 | Structured, 113 | |
| Integrated Management System – ERP, 188 | Organization Chart | |
| Interbank Accounts, 260 | Administrative Body, 130 | |
| Interbank Investments, 43, 243, 249 | Corporate, 128 | |
| Interest on Shareholders’ Capital, 284 | Other Assets, 271 | |
| Internal Communication, 199 | Other Information, 297 | |
| Internal Controls, 145, 161 | Other Loans, 270 | |
| International Area, 174 | Parent Companies | |
| Internet, 144 | Transactions with, 288 | |
| Banking – Transactions, 144 | Partnerships, 211 | |
| Banking – Users, 144 | Pay Out, 22 | |
| Investment Funds, 89, 181 | People Management, 200 |
305
| Policies | Segmentation | |
| Critical Accounting, 5 | Bradesco Corporate, 133 | |
| HR Management, 198 | Bradesco Empresas (Middle Market), 134 | |
| of Loan, 152 | Bradesco Prime, 135 | |
| Significant Accounting, 243 | Bradesco Private, 135 | |
| Postal Bank, 136 | Bradesco Varejo (Retail), 136 | |
| Premises and Equipment and Leased Assets, 245, 273 | Market, 133 | |
| Premiums | Postal Bank, 136 | |
| Earned by Insurance Line, 94 | ||
| Income on, 283 | Self-Service Network | |
| Insurance, 93 | ATMs, 139 | |
| Presentation of the Financial Statements, 241 | Bradesco Dia&Noite (Day&Night), 141 | |
| Prime, 135 | Shareholders | |
| Private, 135 | Main, 128 | |
| Private Pension Plans, 103 | Number of, 20 | |
| Profitability, 58 | Shareholders’ Equity | |
| Project Finance, 114 | (Parent Company), 283 | |
| Qualified Services to the Capital Markets, 180 | Shares, 181 | |
| Quality | Change in Number of, 157 | |
| Management, 185 | Market Value, 21 | |
| Quality Management – Certifications | Movement of Capital Stock, 283 | |
| NBR ISO 9001:2000, 185 | Number of, 17, 20, 283 | |
| Ranking, 132 | Performance of, 17, 23 | |
| Ratings | ||
| Bank, 131 | Treasury, 20, 286 | |
| Insurance and Certificated Savings Plans, 132 | ShopCredit, 145 | |
| Loan Operations, 85 | ShopInvest, 145 | |
| Sustainability, 193 | Social-cultural Events, 223 | |
| Ratio | Social Inclusion, 200 | |
| Capital Adequacy (Basel), 19, 169, 291, 292 | Social Report, 224 | |
| Claims, 34, 93, 95 | SPB (Brazilian Payment System), 162 | |
| Combined, 93 | Sponsorships, 97 | |
| Coverage, 58, 69, 73 | Statement | |
| Fixed Assets to Shareholders’ Equity, 18, 273 | of Cash Flows, 238 | |
| Operating Efficiency, 58, 72 | of Changes in Financial Position, Consolidated, 237 | |
| Performance, 19, 93 | of Changes in Shareholders’ Equity, 236 | |
| Selling, 93, 95 | of Value Added, 239 | |
| Reclassifications (see Comparison Purposes), 247 | Statement of Income, 24, 56, 57, 235 | |
| Renegotiation | ||
| Portfolio of, 269 | Analysis of, 25 | |
| Report | Banco Bradesco BBI, 112 | |
| Fiscal Council, 300 | Banco Finasa, 111 | |
| Independent Auditors, 226, 299 | Bradesco Consórcios, 116 | |
| Management, 228 | Bradesco Corretora de Títulos e Valores Mobiliários, 123 | |
| Responsibility | Bradesco Securities, 126 | |
| Social-environmental, 173, 191 | by Business Segment, 60, 248 | |
| Results/Income, 15 | Insurance Companies, 92 | |
| Analysis of the Statement of, 25 | Leasing Companies, 115 | |
| by Business Segment, 60 | Subordinated Debts, 279 | |
| Exchange, 26, 270 | Subsidiaries | |
| Non-operating, 287 | Main, 129 | |
| Statement of, 15, 24, 56, 57, 235 | Movement of Investments, 271 | |
| Summarized Analysis of the Statement of Income, 15 | Transactions with, 288 | |
| Variation of the Main Items of, 60 | Sustainability, 193 | |
| Retail (Varejo), 136 | ||
| Retained Claims, 34, 95 | Tax Credits | |
| Returns | Expected Realization of, 296 | |
| on Assets, 14, 19, 58, 59 | Not Triggered, 296 | |
| on Shareholders’ Equity, 14, 19, 58, 59 | Origin of, 295 | |
| Risk | Tax Payment, 178 | |
| Capital, 169, 291 | Technical Provisions, 52, 242, 282 | |
| Credit, 152, 288 | Telecommunications, 145 | |
| Levels, 263, 267 | Training, 207 | |
| Liquidity, 160, 290 | Transactions | |
| Management, 145, 288 | ATM Network, 142 | |
| Market, 157, 289 | Fone Fácil, 143 | |
| Operating, 96, 163 | Internet, 144 | |
| Risk Factors, 2, 159, 290 | Number of (Postal Bank + Correspondent Banks), 138 | |
| Risk Management, 145, 288 | with Parent Companies, 288 | |
| Savings (see Accounts), 88 | ||
| Securities (TVM), 126 | Treasury, 114 | |
| and Derivative Financial Instruments, 44, 250 | Value | |
| Classification of, 79, 250 | Added, 18, 239 | |
| Market Value of, 293 | Market, 21 | |
| Portfolio Breakdown by Issuer, 79, 251 | Market (TVM), 293 | |
| Portfolio Breakdown by Maturity, 252 | VaR, 158, 159, 290 | |
| Segment and Category, 79, 250, 252 | Vida e Previdência (Private Pension Plans), 103 | |
| x Income on Securities Transactions, 63 | Websites, 145 |
306
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BANCO BRADESCO S.A. |
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By: |
/S/ Milton Almicar Silva Vargas
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Milton Almicar Silva Vargas
Executive Vice-President and Investor Relations Director |
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This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates of future economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.