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.  

INFORMATION ON THE SPECIAL AND ANNUAL SHAREHOLDERS’ MEETINGS TO BE HELD ON MARCH 10, 2011, INCLUDING THE INFORMATION REQUIRED BY CVM RULES #480 AND #481

Publicly-Held Company

Salão Nobre

1.    Message of the Board of Directors’ Chairman and of the Chief Executive Officer

Cidade de Deus, Osasco, SP, February 8, 2011

Dear Shareholders,

We are pleased to invite you to participate in the Annual and Special Shareholders’ Meetings of Banco Bradesco S.A., to be held on March 10, 2011, at 4:30 p.m., at our headquarters, in Cidade de Deus, Prédio Vermelho, Salão Nobre do 5^o andar, Vila Yara, Osasco, São Paulo.

Thus, we are making available this manual with all necessary information for the examination of the matters to be resolved, as well as the guidelines to exercise your voting right. It is an extremely important event in our annual calendar, in which you will have the opportunity to take part in the discussion of matters relevant to the Company.

As it has been occurring yearly, the Annual Shareholders’ Meeting is characterized as one of the first Shareholders’ Meeting to be held in the market, which happens approximately two months before the deadline set forth by the Brazilian legislation.

Moreover, in order for shareholders to have enough time to examine all documents related to the Shareholders’ Meetings, we have been making all the necessary efforts to make them available approximately thirty days before the Meetings take place.

Before the analysis of the matters to be discussed and voted, the Management’s Comments on the Company is available in item 2 herein, pursuant to CVM Rule #480.

Confident that we will continue receiving your support, we remain at your disposal to provide any other additional information.

Sincerely,

2.Management’s Comments according to Item 10 of the Reference Form of CVM Rule #481, as of 12.7.2009

10. Board’s Comments

10.1 The Board should comment on:

a)   General financial and equity conditions

·            2010

In 2010, the real appreciated by 4.3% in relation to the U.S. dollar, reaching R$ 1.6662 per US$ 1.00 on December 31, 2010 as compared to R$ 1.7412 per US$ 1.00 on December 31, 2009. The Central Bank increased the base interest rate from 8.75% in December 2009 to 10.75% in December 2010.

The year of 2010 was characterized by the world economic growth recovery, although at a slower and uneven pace across the countries. If, on one hand, some developed countries will still have to overcome some difficulties generated by economic destabilization occurred in 2008/2009, on the other hand the clear perception that this scenario open new opportunities for emerging countries remains, in particular for countries like Brazil where the democratic environment is consolidated and the business sector has achieved a capacity consistent with such new challenges.

In spite of many challenges faced by long-term growth, Bradesco is prudently optimist on perspectives for the next years. Brazilian economy, right at the end of 2009, presented solid bases for growth recovery, as confirmed at the end of 2010, which was marked by a robust GDP expansion to the highest level since 1985.

In the political environment, 2010 was a year where the full exercise of citizenship evidenced a deeply-rooted democratic system establishing freedom of speech and choice as a target.

Advances occurred not only in economic indicators, but also in social indicators. In fact, improvements in people’s life quality, especially in consumption power, were encouraging as achievements that introduced a great part of population in the middle class, which is a significant statistical data in the country’s history.

Among the most significant events in 2010, the following stand out: a) expressive volume of credit operations that increased by 20.75% over 2009, and the recovery of overdue credits, which increased by 57.94% over the previous year; b) expansion of Customer  Service

Network operating in all Brazilian municipalities through the opening of 178 new Branches; c) reorganization of facilities abroad to meet properly the demands of the international market; d) Bradesco presence as the leading coordinator of Petrobras capitalization process, the greatest operation of the kind in Brazilian and world stock markets; e) acquisition of the whole capital stock of Ibi Services in Mexico, where partnership with C&A in that country made part of the deal; f) partnership with Banco do Brasil and Caixa Econômica Federal for creation and management of a Brazilian card brand - ELO; g) Bradesco permanence in Dow Jones Sustainability World Index and in the Corporate Sustainability Index - ISE; h) and from socioenvironmental liability standpoint, the launch of the Corporate Code of Ethics of Bradesco Organization in Braille.

Book Net Income was R$ 10.022, corresponding to earnings per share of R$ 2.66 and an annualized Return on Shareholders’ Equity of 22.7%. The annualized Return on Average Total Assets stood at 1.7%, and remained stable in relation to the previous year. The Consolidated Shareholders’ Equity amounted to R$ 48.043 billion, while the total balance of assets amounted to R$ 637.485 billion.

Credit Operations

Supported by the credit democratization strategy and the continuing expansion and diversification of its funding, Bradesco increased its volume of operations, including through direct financing and partnerships with market agents, as well as individual lines, such as payroll-deductible loans through its extensive branch, service points and Banco Postal network, and the Customer Service Center 0800 Loans.

·           R$ 274.227 billion in consolidated loan operations at year-end, including advances on exchange contracts, sureties and guarantees, credit card receivables and leasing, up 20.23% in the period.

·           R$ 16.290 billion in the allowance for loan losses.

Funding and Asset Management

At the close of the year, funds raised and managed totaled R$ 872.514 billion, 24.3% more than the previous year, as follows:

·           R$ 364.698 billion in demand deposits, time deposits, interbank deposits, other deposits, open market and savings accounts;

·           R$ 295.708 billion in assets under management, comprising investment funds, managed portfolios and third-party fund quotas, 19.4% up on the same period in the previous year;

·           R$ 114.495 billion in the exchange portfolio, borrowing and onlending, working capital, tax payment and collection and related charges, funds from the issue of securities and subordinated debt in Brazil, and other funding;

·           R$ 87.177 billion in technical provisions for insurance, private pension plans and savings bonds, a 15.4% improvement over the year before; and

·           R$ 10.436 billion in foreign funding, through public and private issues, subordinated debt and the securitization of future financial flows, equivalent to US$ 6.263 billion.

On December 31, 2010 market capitalization of Bradesco was R$ 109.759 billion, with emphasis on preferred share valuation of 12.1% in the year, as compared to 1.0% valuation of Ibovespa.

·      2009

In 2009, the real appreciated by 25.5% in relation to the U.S. dollar, reaching R$ 1.7412 per US$ 1.00 on December 31, 2009 as compared to R$ 2.3370 per US$ 1.00 on December 31, 2008. The Central Bank gradually decreased the base interest rate from 13.75% in December 2008 to 8.75% in December 2009.

The fiscal year of 2009, began with the worst possible forecasts for the global economy, but ended with consistent signs of recovery. The actual pace of recovery varied from country to country, accompanied by a lingering degree of uncertainty regarding the developed world, where the adjustments in progress may impose reduced consumption growth over the previous years’ levels. At the same time, we see challenges ahead related to the strong fiscal deterioration in these nations as part of the anti-cyclical response to the risk of an economic depression.

Brazil has successfully overcome the challenges imposed by the crisis. The adoption of anti-cyclical policies resulted in a decline in household consumption, the main component of GDP, but not nearly to the same extent as in previous periods of major turbulence. The decline in investments – temporarily interrupting the expansion cycle of the previous five years – is already showing unmistakable signs of a reversal thanks to reduced idle capacity, the favorable outlook for domestic demand and the opportunities arising from the World Cup and the Olympic Games, as well as from pre-salt oil exploration. At that occasion, Brazil was already one of the main destinations for direct investments by foreign companies.

Book Net Income was R$ 8.012 billion, corresponding to earnings per share of R$ 2.34 and an annualized Return on Shareholders’ Equity of 21.4%. The annualized Return on Average Total Assets stood at 1.7%, compared to 1.9% in the previous year. Total Consolidated Shareholders’ Equity amounted to R$ 41.754 billion, the balance of total assets amounted to R$ 506.223 billion.

Credit Operations

Supported by the credit democratization strategy and the continuing expansion and diversification of its funding, Bradesco increased its volume of operations, including through direct financing and partnerships with market agents, as well as individual lines, such as payroll-deductible loans through its extensive Branches Network, Service Stations and Banco Postal, and the Customer Service Center 0800 Loans.

·           R$ 228.078 billion in consolidated loan operations at year-end, including advances on exchange contracts, sureties and guarantees, credit card receivables and leasing, up 6.78% in the period.

·           R$ 16.313 billion in the allowance for loan losses.

Funding and Asset Management

All in all, the Bank managed R$ 20.910 million in checking accounts and was responsible for 17.73% of the Brazilian Savings and Loan System - SBPE.

At the close of the year, funds raised and managed totaled R$ 702.065 billion, 17.48% more than the previous year, as follows:

·           R$ 284.346 billion in demand deposits, time deposits, interbank deposits, other deposits, open market and savings accounts;

·           R$ 247.700 billion in assets under management, comprising investment funds, managed portfolios and third-party fund quotas, 32.35% up on the same period in the previous year;

·           R$ 86.411 billion in the exchange portfolio, borrowing and onlending, working capital, tax payment and collection and related charges, funds from the issue of securities and subordinated debt in Brazil, and other funding;

·           R$ 75.572 billion in technical provisions for insurance, supplementary private pension plans and savings bonds, a 17.01% improvement over the year before; and

·           R$ 8.036 billion in foreign funding, through public and private issues, subordinated debt and the securitization of future financial flows, equivalent to US$ 4.615 billion.

•     2008

In 2008, Brazilian GDP increased by 5.1%, and the real depreciated by 31.9% in relation to the U.S. dollar, reaching R$ 2.3370 per US$ 1.00 on December 31, 2008, as compared to R$ 1.7713 per US$ 1.00 on December 31, 2007. The Central Bank gradually increased the base interest rate from 11.25% in December 2007 to 13.75% in December 2008.

The fiscal year of 2008 was marked by a variation in the robust expansion cycle of global growth initiated in 2004, a period of several structural changes that benefited emerging economies like Brazil’s. This change occurred with the onset of the most severe crisis of the past 70 years, basically characterized by a strong deleveraging process that intensified in September and has affected several interconnected markets. The most relevant outcomes of this process were noticeable in the financial volatility, the banking system became unstable in various economies, credit constraints and reduced capital flows, changes in asset and commodity prices and higher risk aversion.

Notwithstanding an unfavorable international scenario, the Brazilian economy behaved well most of the year, with growth around 5%, a level achieved for the second consecutive year.

Household consumption and investments are still the main drivers of economic expansion, benefited by an environment of higher confidence among consumers and businessmen and by credit and income growth. Inflationary pressures deriving from a disparity between supply and demand and intensified by high commodity prices by mid–2008, resulted in monetary tightening, which decisively contributed to Brazil avoiding an acceleration of inflation as strong as that verified in several economies. Within this scenario, Brazil obtained the coveted investment grade in the first half of 2008 amid high volatility in the global markets. It is also worth mentioning a significant inflow of foreign direct investments, which reached the level of US$ 40 billion for the first time in history.

The Net Income for the year was R$ 7.620 billion, corresponding to R$ 2.48 per share and annualized return on average Shareholders’ Equity of 23.76%. The annualized Return on Average Total Assets stood at 1.93%, compared to 2.67% in the previous year. Consolidated Shareholders’ Equity amounted to R$ 34,257 million, while the balance of total assets amounted to R$ 454,413 million.

Credit Operations

An increased volume of Bradesco loan operations, both in financing directly made and partnerships with market agents, and in other lines focused on Individuals, such as Payroll Deductible Loans, is based on the credit democratization strategy and on the continuous expansion and diversification of financing by means of its extensive Branches Network, Service Stations and Banco Postal as well as several alternative channels, such as Bradesco Dia&Noite ATMs, Internet Banking, Fone Fácil, Bradesco Celular and on Customer Service Center 0800 Loan.

·           R$ 213.602 billion in consolidated loan operations at year-end, including advances on exchange contracts, sureties and guarantees, credit card receivables and leasing, up 34.2% in the period.

·           R$ 10.263 billion in the allowance for loan losses

Funding and Asset Management

The Bank managed, together, 20.081 million checking accounts and held 18.0% of the Brazilian Savings and Loan System - SBPE.

At the end of the year, the total volume of funding and assets managed by the Organization stood at R$ 597.615 billion, a 23.74% growth compared to the previous year:

·           R$ 244.470 billion in Demand Deposits, Time Deposits, Interbank Deposits, Other Deposits, Open Market and Saving Accounts;

·           R$ 187.151 billion in assets under management, comprising Investment Funds, Managed Portfolios and Third-Party Fund Quotas, with a 5.45% growth compared to the same period of the previous year;

·           R$ 92.944 billion recorded at the Exchange Portfolio, Borrowing and Onlending, Own Working Capital, Tax Payment and Collection and Related Taxes, Funds From Issuance of Securities, Subordinated Debt in the Country and Other Funding;

·           R$ 64.587 billion in Technical Provisions for Insurance, Private Pension Plan and Savings Bonds, with a 10.36% increase when compared to the previous year; and

·           R$ 8.463 billion in foreign funding, through public and private issues, subordinated debt and the securitization of future financial flows, equivalent to US$ 3.621 billion.

b)  Capital structure and possibility of share or quotas redemption, indicating: i) possibility of redemption; ii) formula for redemption price calculation

•     Capital Structure

P.S.: It does not consider bonuses and developments in the periods.

On December 31, 2010, Bradesco Capital Stock amounted to R$ 28.5 billion divided into 3,762,450 thousand book shares, being 1,881,225 thousand common shares and 1,881,225 thousand preferred shares with no face value.

Capital stock in 2009 amounted to R$ 26.5 billion, divided into 3,427,086 thousand book shares, being 1,713,543 thousand common shares and 1,713,543 thousand preferred shares with no face value.

In 2008 the Capital Stock amounted to R$ 23 billion divided into book 3,069,869 shares, being 1,534,935 common shares and 1,534,934 preferred shares with no face value.

There is no expected redemption of shares issued by the Company other than the legal redemptions.

c)  Capacity to pay financial commitments

Bradesco has full ability to pay all its financial commitments, because it daily reviews its asset and liability management policy to ensure sufficient liquidity to honor withdrawals, deposits, repay other obligations at maturity, extend loans or other forms of credit to its customers and meet its own needs of working capital for investment. The following table presents our consolidated balance sheet by maturity:

Consolidated Balance Sheet by maturity:

(1)    Investments in investments funds are classified as up to 30 days;

(2)       Operations related to repurchase commitments are classified per term of operation; and

(3)     Demand and savings deposits and technical provisions for insurance, private pension plans and savings bonds comprising VGBL and PGBL products are classified as up to 30 days, without considering average historical turnover.

Subordinated debt – 2010

(1)   Upon including the cost of dollar swap, rate increases to 10.15% per annum;

(2)  In June 2005, a perpetual subordinated debt was issued in the amount of US$ 300,000,000, with exclusive full redemption option by the issuer upon prior  authorization of Bacen, provided that: (i) after the period of five years from the issuance date and after each interest payment date; and (ii) at any time, upon the occurrence of any change to the fiscal law in Brazil or abroad, which is likely to increase costs for the issuer, and the issuer is notified in writing by Bacen that such securities can no longer be included in the consolidated capital stock for the purposes of solvency rate calculation. On April 14, 2010, Bacen approved an advanced redemption request for that financing, which took place on June 3, 2010, in the amount of R$ 556,834,000;

(3)   It refers to subordinated CDB operations linked to credit/other operations that, according to the Circular Letter No. 2,953/01, do not integrate the level II of    reference assets;

(4)    In August 2010, a subordinated debt in the amount of US$ 1,100,000,000 was issued abroad, at the rate of 5.90% p.a. and due in 2021; and

(5) It refers to advanced redemptions on subordinated CDB linked to credit/other operations occurred on December 21, 2010.

Subordinated debt – 2009

(1)  Upon including the cost of dollar swap, rate increases to 10.15% per annum;

(2)  In June 2005, a perpetual subordinated debt was issued in the amount of US$ 300,000,000, with exclusive full redemption option by the issuer upon prior authorization of Bacen, provided that: (i) after the period of five years from the issuance date and after each interest payment date; and (ii) at any time, upon the occurrence of any change to the fiscal law in Brazil or abroad, which is likely to increase costs for the issuer, and the issuer is notified in writing by Bacen that such securities can no longer be included in the consolidated capital stock for the purposes of solvency rate calculation; and

(3)   It refers to subordinated CDB operations linked to credit/other operations that, according to the Circular Letter No. 2,953/01, do not integrate the level II of reference assets.

d)  Funding sources used for working capital and investments in non-current assets

e)  Funding sources for working capital and investments in non-current assets that it intends to use to cover liquidity deficits

f)  Indebtedness levels and characteristics of related debts, also describing: i) relevant loan and financing contracts; ii) other long-term relationships with financial institutions; iii) level of subordination among debts.

Main Funding Sources

Liquidity and Financing

Central Bank requirements for compulsory deposits determine our minimum liquidity levels. We review our asset and liability management policies from time to time to ensure that we have sufficient liquidity available to honor withdrawals, deposits, repay other liabilities at maturity, extend loans or other forms of credit to our customers and meet our own working capital needs.

The treasury department acts as a support center for our business segments by managing our funding and liquidity positions and executing our investment objectives in accordance with our asset and liability management policies. It is also responsible for setting the rates for our different products, including exchange and interbank transactions. The treasury department covers any funding shortfall through borrowing in the interbank market. It seeks to maximize efficient use of our deposit base by investing any surpluses in liquid instruments in the interbank market.

We have used our excess liquidity to invest in Government bonds and expect to continue doing so, subject to regulatory requirements and investment considerations. Our principal sources of financing are:

·           demand deposits, savings deposits and term deposits; and

·           debentures, borrowing and onlending, funds from issuance of securities and subordinated debts.

·           Deposits

Deposits are our most important source of funding. Our deposits balance over these years progressed in the following manner:

·           in 2010, the balance of our deposits increased approximately 13% as compared to 2009, mainly due to the increase in time and saving deposits; and

·           in 2009, the balance of our deposits increased approximately 4% as compared to 2008, mainly due to the increase in demand and savings deposits.

Deposits accounted for approximately 60% of total liabilities at December 31, 2010. Our deposits consist primarily of real-denominated, interest-bearing time and savings deposits and real-denominated, non-interest-bearing demand deposits. The increase in the balances of our savings and demand deposits from December 31, 2010 through December 31, 2009 was due basically to the increase in our client base. At December 31, 2010, we had 23.1 million checking accounts and 41.1 million savings accounts, compared to 20.9 million checking accounts and 37.7 million savings accounts at December 31, 2009.

·           Debentures

Positive variation recorded between 2010 and 2009 basically refers to the placement of such papers, with are used to  back purchase and sale commitments that are impacted by the maintenance of the economic activity pace.

In 2009 x 2008 comparison, the positive variation observed basically reflects: a) the placement of these securities, which are used to back purchase and sale commitments; and b) the better rates of these operations in relation to those practiced for time deposits, which suffered contraction due to the return of liquidity in the market.

·           Borrowing and Onlending

Variation in the year of 2010, as compared to 2009 balance, is mainly due to the increased volume of loans and onlending in the country, basically from Finame and BNDES operations.

The reduction in the comparative between the fiscal years of 2009 and 2008 was basically due to: a) the 25.5% negative exchange rate variation, which directly impacted borrowing and onlending denominated and/or indexed in foreign currency, which was partially offset by: b) the increase in the volume of funds from borrowing and onlending in the country, especially through Finame and BNDES operations.

·           Funds from Issuance of Securities

The variation in the fiscal year of 2010 compared to 2009, mainly derives from: a) new issuances of Financial Bonds in the market, occurred in the 2^nd quarter of 2010, the balance of which in December 2010 amounted to R$ 7,820 million; b) the increased volumes of securities issued abroad in the amount of R$ 1,100 million; c) the increased operations of Real Estate Exchange Bills in the amount of R$ 777 million; and d) the greater volume of Mortgage-Backed Securities in the amount of R$ 379 million.

In the comparison between fiscal years of 2009 and 2008, the reduction was mainly due to: a) the negative exchange rate variation of 25.5%, which directly impacted operations with MT100; b) the reduction in funds from Debentures, due to repurchase by third parties in 2^nd quarter of 2009; which was offset by: c) new operations with Agribusiness Mortgage Letters.

•     Subordinated debt

In December 2010, Bradesco’s Subordinated Debt totaled R$ 26.315 million (R$ 5.079 million abroad and R$ 21.236 million in Brazil).

In 2010, there was an issuance of R$ 2,026 million of Subordinated Debts (R$ 193 million locally and R$ 1,833 million abroad), being this total is eligible to compose Level II of Basel Index, due between 2016 and 2021. Issuance of subordinated notes in August 2010, in the amount of US$ 1.1 billion, stands out.

It is worth mentioning that only R$ 8.051 million of the total subordinated debt are used in the calculation of the Basel Index, given the respective maturity.

Additionally, it should be pointed out that on January 13, 2011, Bradesco issued subordinated notes in the total amount of US$ 500 million, which will be submitted to Bacen to compose Level II of Basel Index.

In December 2009, Bradesco’s Subordinated Debt totaled R$ 23,104 million (R$ 3,779 million abroad and R$ 19,325 million in Brazil). In this period, Bradesco issued R$ 1,295 million in Subordinated CDB in Brazil, with maturities in 2015. Overseas, Bradesco concluded its US$ 750 million funding operation through the issuance of subordinated notes.

It is worth mentioning that only R$ 10,951 million of the total subordinated debt are used in the calculation of the Basel Index, given the maturity of each subordinated debt operation.

In the fiscal year of 2008, Bradesco issued R$ 1,575 million in Subordinated CDB in Brazil.

·           Sources of Additional Liquidity

In some limited circumstances we may obtain emergency funds from the Central Bank through a transaction referred to as “redesconto.” A redesconto is a loan from the Central Bank to a financial institution, that loan being guaranteed by federal government securities owned by the financial institution. The amount of federal government securities held by the financial institution as trading securities limits the amount of redesconto transactions. Banco Bradesco did not enter into redesconto transactions for liquidity purposes.

iv) Eventual restrictions to the issuer, in particular with respect to limits of indebtedness and taking on new debts, distribution of dividends, sale of assets, issuance of new securities, and sale of shareholding control

There are no restrictions imposed to Bradesco.

g)  Limits for use of contracted financing

Minimum short-term liquidity limits are established by Internal Committees, Executive Board and Administrative Board. Such limits are intended to ensure a sufficient liquidity and meet the minimum expected needs. Bradesco reviews periodically such limits, on which projected cash needs are based.

h)  Significant changes to each item of financial statements

The significant changes in each item in the consolidated statement of income are discussed in the item 10.2 a). We highlight the following items:

·                Financial Margin (Interest and non-interest);

·                Provision for loan losses;

·                Income from Insurance, Private Pension Plans and Savings Bonds;

·                Fee and Commission Income;

·                Administrative and Personnel expenses.

Regarding the significant changes in the consolidated balance sheet items, we provide below a comparison between the major significant events in the following periods:

·         Interbank Investments

The Interbank Investments totaled R$73,232 million in 2010, decreasing R$37,565 million, or 33.9% compared to 2009, the mainly impacts were registered in securities portfolios related to: (i) own portfolio position, especially the national treasury bills and national treasury notes, and (ii) funded position - national treasury bills.

In the comparison between the years 2009 and 2008, the increase of 49.3% is noted mainly in the portfolio of funded position, highlight to the national treasury notes and national treasury bills, partially impacted by the reduction of applications related to national treasury bills.

·         Securities

The securities represented 33.5% of our total assets in 2010 (2009 – 29.0%, 2008 – 28.9%).

In 2010, the balance of securities increased 45.6% compared to 2009, primarily due to the increase in our exposure in government securities, mainly national treasury bills and national treasury notes.

In 2009, the balance of securities increased 11.4% compared to 2008, primarily due to the growth in repurchase agreements.

·         Interbank and interdepartmental accounts

Interbank and interdepartmental accounts basically correspond to the compulsory deposits held by the Bacen and represented 10.4% of our total assets in 2010 (2009 – 3.7%, 2008 – 3.0%).

In the comparison of the fiscal years of 2010 and 2009, there was a growth of 254.2%, principally explained by the increase of compulsory deposits related to time deposits, pursuant to Bacen Circular 3,513/10 and the increase of additional compulsory related to demand, time and saving deposits, pursuant to Bacen Circular 3,514/10.

Regarding the comparative of 2009 and 2008, the increase of 35.6% primarily reflects the growth of our deposits, which evolved 4.0% at the period.

·         Loan and leasing operations

Loan and leasing operations represented 33.5% of our total assets in 2010 (2009 – 34.2%; 2008 – 35.3%).

In the comparison of the fiscal years of 2010 and 2009, the increase of 23.4% basically refers to the growth in the volume of operations, highlighting the following products targeted at individual customers: (i) evolution of 58.8% in payroll-deductible loans, (ii) BNDES/Finame onlending operations, which had an increment of 52.6%; and (iii) real estate financing which increased 44.2%.

In relation to the loan and leasing portfolio for corporate customers, we highlight the annual development of the following products: (i) BNDES/Finame onlending operations – 63.8%; (ii) credit card – 51.4%; and (iii) real estate financing – corporate plan – 36.7%.

The increase of 7.8% in 2009 compared to 2008, due mainly to the increase in transactions with individual customers, highlighting the payroll-deductible loans, with an increase of 38.2%, and credit card, which evolved 53.8%.

·         Funding

In 2010, the funding increased 51.4% compared to 2009.

In the comparison of the fiscal years of 2010 and 2009, the increase in funding was, basically, due to the growth of government securities from own portfolio, which in 2010 increased R$62,513 million, partially offset by the reduction of R$24,333 million, which represented 35.6% of the third-party portfolio.

The growth of 41.6% in 2009 compared to 2008 reflects, basically, the increase in operations with government securities from third-party portfolio.

We also highlight that the main funding sources are discussed in the item 10.1 d); e) and f).

10.2. The Board should comment on:

a)   Results of issuer’s operations, in particular: i) description of important income components; ii) factors that materially affected the operating results

The financial information of the fiscal years ended December 31, 2010, 2009 and 2008 are presented below. It is worth mentioning that, in order to enhance understanding, comparability and analysis of results, we are using the Managerial Statement of Income. For more information regarding the managerial adjustments, we suggest that you refer to the Announcement to the Market sent on July 3, 2009.

In 2010, we started to exclude extraordinary events from our managerial statement of income, and adjusted accordingly the year of 2009 for a better comparison with 2010.

We provide below a comparison between the major extraordinary events that impacted the Net Book Profit in the following periods:

(*)    Annualized;

(1)   Gross earnings from investments: In 2010 - BM&F Bovespa and CPM Braxis; 2009 - Cielo and Cetip; and 2008 – Visa Inc.

(2)   Considers R$ 1,303 million in 2Q09; and R$ 177 million in 1Q09, relating to credit cards; and

(3)  In 2010: refers to Fidelity capital gain of R$ 86 million; and expenses from asset recovery analysis – impairment in the amount of R$ 27 million. In 2009: gain related to Laboratório Fleury IPO obtained by our affiliate Integritas Participações, in the amount of R$ 60 million; expenses from asset recovery analysis – impairment in the amount of R$ 64 million; and provision for loss of investments in the amount of R$ 26 million. In 2008: basically effects from adoption of Law No. 11,638/07 in the amount of R$ 60 million and premium amortization in the amount of R$ 53 million. Net effect of tax payment under the tax debt repayment program – Law No. 11,941/09 (REFIS), in the amount of R$ 388 million (2009) and R$ 18 million (2010).

(*)   Income from Insurance, Private Pension Plans and Savings Bond = Insurance, Private Pension Plans and Savings Bond Premiums - Variation in the Technical Provisions of Insurance and Private Pension Plans – Retained Claims – Drawings and Redemption of Savings Bonds – Selling Expenses with Insurance, Private Pension Plans and Savings Bonds.

Adjusted Net Income for the year of 2010 amounted to R$ R$ 9,804 million, corresponding to an increase of 29.2%, or R$ 2,218 million, over the previous year. Consequently, the Return on Average Shareholders’ Equity (ROAE) reached 22.2%. The Return on Average Assets (ROAA) was 1.7% in the fiscal year of 2010.

Adjusted Net Income in 2009 was R$ 7,586 million with a decrease of 0.5% compared to 2008, due to the negative impact of economic retraction observed in 1st quarter of 2009.The Return on Average Shareholders’ Equity (ROAE) reached 20.3%. The Return on Average Assets (ROAA) was 1.6% in the fiscal year of 2009.

Below, we comment the substantial accounts that affected the results of the last three fiscal years:

•    Financial Margin

Financial margin in 2010 amounted to R$ 33,056 million, increasing by R$ 3,302 million in relation to 2009, or 11.1%, as a result of the following factors: a) an increase of R$ 4,297 million in results of remunerated operations, mostly derived from the increased credit results, which had been impacted by the increase volume of operations; and offset by: b) lower result obtained from “non-interest” margin in the amount of R$ 995 million, derived from lower treasury gains as a result of the return of internal and external marks to normality, which provided significant gains in 2009.

In the comparison between the fiscal years of 2009 and 2008, financial margin improved by R$ 6,611 million, which corresponds to an increase of 28.6%, driven by the following factors: a) the increase of R$ 4,290 million in the result of interest-earning operations, basically due to the higher average business volume; and b) the increase in non-interest income of R$ 2,321 million, basically derived from higher treasury/securities gains.

•    Provision for Loan Losses

In 2010, Provision for Loan Losses amounted to R$ 8,703 million, decreasing by 24.2% in relation to the previous year, as a result of lower default and higher credit recovery, which increased by 57.9% in the period to R$ 2,677 million. Credit operations increased by 23.0% in the same period, showing that Bradesco credit portfolio increased with quality.

In the comparison between the fiscal years of 2009 and 2008, Provision for Loan Losses shows a variation of R$ 4,561 million, essentially due to the constitutions required to adjust provisioning levels in view of the weak economic performance, especially in the first six months of 2009, in addition to additional efforts in PDD resulting from rating revisions.

•     Income from Insurance, Private Pension Plans and Savings Bonds

Until December 2010, the income from Insurance, Private Pension Plans and Savings Bonds increased by 39.8% over the same period of the previous year. That increase was due to the performance of Saving Bonds, Car, Health and Life products.

It should be highlighted that, with respect to the adjusted net income for 2010 compared to the same period of 2009, the Insurance Group recorded an expansion of 16.3%, reaching in 2010 R$ 2,904 million, derived from the following factors: (i) 18.0% increase in sales; (ii) improved financial income; and (iii) 2.6% fall in casualties.

The Insurance Group’s technical provisions represented 30.6% of the insurance industry in November 2010, according to Susep and the National Supplementary Health Agency (ANS).

Book Net Income in fiscal year 2009 was R$ 2,723 billion (R$ 2,648 billion in 2008), with a Return on Equity of 27.1%.

Revenue in fiscal year 2009 was R$26.3 billion, an increase of 13.8% on the prior year. Meanwhile, Net Income was 2.8% higher than in 2008, due to: a) the better financial result, despite the reduction in interest rates; b) the net effect from the payment of taxes through the program for settlement of tax debits through cash and installment payments under Law No. 11,941/09 (REFIS); c) the higher equity income; which was partially offset by:

d) the constitution of the technical provisions described above; and e) the increase of 6% in the CSLL tax rate.

In November 2009, Net Income at Bradesco Insurance Group accounted for 36.5% of net income in Brazil’s entire insurance industry (Source: Insurance Superintendence – Susep). The Insurance Group’s technical provisions represented 31.8% of the insurance industry in November 2009, according to Susep and the National Supplementary Health Agency (ANS).

•    Fee and Commission Income

In 2010, Fee and Commission Income  increased by R$ 1,756 million, as a result, especially from: (a) the good performance of credit card segment derived from the increase of card/client base, revenues from Banco Ibi, and effects of changes in equity capital of Visavale and Cielo; (b) the increase of current account revenues, derived from the expansion of operations and account holder base, which recorded a net increase of some 2.2 million new accounts in the period; (c) the increase of revenues from credit operations; (d) the increase of revenues from fund management; (e) the increase of revenues from collections and taxes; and (f) the increase of revenues from consortium management.

In the comparison between the fiscal years of 2009 and 2008, fee and commission income presented an increase of R$ 872 million, mainly due to the growth in credit card operations and the strong performance of underwriting operations, as well as by the larger business and client base, which expanded some 4.0% over the last 12 months.

•    Personnel Expenses

In the comparison of the fiscal years of 2010 and 2009, there was an increase of R$ 1,335 million principally explained by: a) the amount of R$ 900 million in “structural” portion related to: (i) increase of wage levels; and (ii) net staff increase of 7,574 employees; and (iii) incorporation of Banco Ibi occurred in November 2009; and b) the “non-structural” portion in the amount of R$ 435 million, basically derived from: (i) higher expenses related to profit sharing by officers and employees (PLR); and (ii) higher expenses related to provision for labor proceedings.

In the comparison of the fiscal years of 2009 and 2008, there was an increase of R$ 577 million principally explained by: a) the R$ 505 million in “structural” expenses, which were basically related to higher expenses with share-based compensation and charges; and b) R$ 72 million in "non-structural expenses”, which was basically due to the build in the provision for employee profit sharing (PLR).

•    Administrative Expenses

The comparison between the year of 2010 and the year of 2009 shows that the 21.5% increase is basically due to: (i) the impact of incorporation of Banco Ibi occurred in November 2009 (should this effect have been excluded, administrative expenses would have increased by 15.6%); (ii) higher costs of advertising and publicity in 2010, as in 2009 that expense recorded a significant reduction in relation to its history; (iii) increase of volume of business and services; (iv) increase of variable expenses associated with revenues (e.g., Bradesco Expresso and Banco Postal); (v) higher costs of legal advice, mainly related to credit recoveries that increased by 60% in 2010; and (vi) expansion of Customer Service Network by 10,307 outlets, including 174 branches, 368 PAB/PAE/PAA, 5,904 Bradesco Expresso, and other 3,861 other facilities totaling 54,884 customer service outlets on December 31, 2010.

In 2009, in comparison with the fiscal year of 2008, administrative expenses presented an increase of R$ 1,186 million, mainly due to the expansion in the Customer Service Network, the higher business volume and the expansion in the client base.

•    Tax Expenses

The comparison between the year of 2010 and the year of 2009 shows that tax expenses increased by R$ 585 million, which was basically an effect from increased expenses related to ISS/PIS/Cofins derived from increased tax revenues, especially the financial margin and revenues from services provided.

In 2009, presented an evolution of R$ 305 million compared to the fiscal year of 2008, mainly derived from the higher expenses with PIS/Cofins taxes due to an increase of taxable revenue from the higher financial margin and fee  and  commission  income  in  the  period.

•    Other Operating Income and Expenses

In 2010, the increase of other operating expenses net of other operating income, in the amount of R$ 433 million, derives mainly from higher expenses related to: (i) constitution of operating provisions, with emphasis on civil contingencies; (ii) premium amortization; and (iii) operating expenses incurred with the incorporation of Banco Ibi in November 2009.

In the comparison between the fiscal years of 2009 and 2008, the increase in operating expenses net of other operating income of R$ 645 million basically results from the builds in operating provisions and premium amortization.

b)   Variations in income from price changes, foreign exchange rates, inflation, changes in volumes and introduction of new products and services

c)   Impact of inflation, variation of prices of main inputs and products, and foreign exchange and interest rates on the issuer’s operating income and financial income

During periods of high interest rates, our interest income increases due to increasing interest rates on our interest-earning assets. At the same time, our interest expense increases as interest rates on our interest-bearing liabilities also increase. Changes in the volumes of our interest-earning assets and interest-bearing liabilities also affect our interest income and interest expense. For example, an increase in our interest income attributable to an increase in interest rates may be offset by a decrease in the volume of our outstanding loans.

In addition, when the real depreciates, we incur (i) losses on our liabilities denominated in, or indexed to, foreign currencies, such as our U.S. dollar-denominated long-term debt and foreign currency loans, as the cost in reais of the related interest expense increases and (ii) gains in our assets denominated in, or indexed to, foreign currencies, such as our dollar-indexed securities and loans, as the income from such assets as measured in reais increases. Conversely, when the real appreciates, as was the case from 2003 to 2007, we incur (i) losses on our assets denominated in, or indexed to foreign currencies and (ii) gains in our liabilities denominated in, or indexed to, foreign currencies.

In 2010, the interest income growth 15.8% compared to 2009, from R$27,288 million in 2009 to R$31,525 million in 2010. The increase of R$4,297 million in interest income, primarily reflects the growth in the volume of operations, due to the fact that the interest rate (CDI) remained practically stable, decreasing 0.1 p.p., from 9.9% in 2009 to 9.8% in 2010.

In 2009, the interest income growth 18.7% compared to 2008, from R$22,938 million in 2008 to R$27,228 million in 2009. The increase in interest income was, basically, due to the growth of in the volume of operations.

10.3. The Board should comment on the significant effects eventually caused or expected to cause to the issuer’s financial statements and results:

a)   Introduction or disposal of operational segment

During the period there was no release or disposal of operational segment, however, we highlight the participation of the acquisition of the entire capital of Ibi Services S. de R.L. Mexico (Ibi Mexico) and RFS Human Management S. of R.L, discussed on item 10.3 b.

b)   Constitution, acquisition or sale of equity

In Bradesco Organization, the following significant events that marked the period stand out:

·                On February 11, 2010, Bradesco, Banco do Brasil and Banco Santander (Brasil) signed a Memorandum of Understanding to allow the consolidation of operations carried out in their respective Automated Teller Machine Networks like

·                those installed in airports, gas stations, supermarkets, shopping centers, drugstores and bus terminals. The operation, the successful pilot activity of which occurred on November 25 2010, is expected to provide a significant increase of Network availability and capillarity, including efficiency gains over its current form of individualized use;

·               On April 23, 2010, Bradesco submitted to Santander Group Spain a proposal to purchase part of its shares issued by Cielo S.A., corresponding to 2.09% of the capital stock, for the amount of R$ 431.7 million, and shares issued by Companhia Brasileira de Soluções e Serviços – CBSS, corresponding to 10.67% of the capital stock for the amount of R$ 141.4 million, being that operation completed on July 13, 2010 was approved by the relevant authorities. On January 24, 2011, the Bank acquired from Visa International Service Association shares issued by CBSS, corresponding to 5.01% of the capital stock, for a total of R$85.8 million. The transaction is pending approval by the proper authorities.Upon such acquisitions, Bradesco participation in Cielo and CBSS increased to 28.65% and 50%, respectively, thus increasing its participation in the card market;

·           On April 27, 2010, a Memorandum of Understanding was signed by Bradesco and Banco do Brasil to make a partnership to administer a Brazilian credit card, debit card, and prepaid card brand for account holders and non-account holders, known as Elo, which will include, among other activities, the development of new business for private label cards. Further, on August 9, a Memorandum of Understanding was signed with Caixa Econômica Federal, which joined the partnership;

·           On June 2, 2010, the acquisition of the whole capital stock of Ibi Services S. de R.L. Mexico (Ibi Mexico) and RFS Human Management S. de R.L., a company controlled by Ibi México, was completed for the approximate amount of R$ 297.6 million. The deal includes a partnership with C&A Mexico S. de R.L. (C&A Mexico)

·            to jointly sell, on an exclusive basis and for a period of 20 years, financial products and services through the stores of the C&A México chain;

·           On August 19, 2010, Bradesco Seguros and ZNT Empreendimentos e OdontoPrev signed a Memorandum of Understanding with BB Seguros to make a strategic partnership for the development and commercialization of dentistry products; and

·           On September 2, 2010, Bradesco, jointly with its controlled company CPM Braxis S.A. and its other shareholders entered into an agreement with Capgemini S.A., under which Capgemini acquired 55% of shares issued by CPM Braxis and became its controlling company.

In 2010, these transactions did not significantly impact our financial statements.  We believe that each transaction mentioned above, related to assets and liabilities, will increase our revenues, expenses and future results.

The amount of these increases is uncertain, and we therefore cannot estimate their impact on our future financial performance.

c)   Unusual event or operations

In the first table shown in item 10.2a) we highlight the extraordinary events that impacted results in 2010, 2009 and 2008.

10.4. The Board should comment on:

a)   significant changes in accounting practices

b)   significant effects of changes in accounting practices

In line with our process of compliance with international accounting standards, some regulations and their interpretations have been issued by the Accounting Decision Committee (CPC), which shall apply to financial institutions only when approved by CMN.

Accounting decisions already approved include:

·   Resolution No. 3,566/08 – Impairment (CPC 01);

·   Resolution No. 3,604/08 – Cash Flow Statement (CPC 03);

·   Resolution No. 3,750/09 – Disclosure on Related Parties (CPC 05); and

·   Resolution No. 3,823/09 – Provisions, Contingent Liabilities and Contingent Assets (CPC 25).

Currently it is not possible to estimate when Bacen will approve other CPC accounting decisions or whether their application will be prospective or retrospective. Therefore, it is not yet possible to quantity the accounting impacts of the application of such decisions to Bradesco financial statements.

CMN Resolution No. 3,786/09 and Bacen Circular Letters No. 3,472/09 and No. 3,516/10 established that financial and other institutions authorized to operate by Bacen, which have been incorporated as a public corporation or are required to establish an Audit Committee, shall prepare every year, starting on December 31, 2010, and publish not more than 90 days after the baseline date of December 31 their consolidated financial statements in conformity with international accounting standards (IFRS), after the international decisions issued by IASB – International Accounting Standards Board. Bacen Circular Letter No. 3,516/10 extended the period for publication of IFRS Financial Statements related to 2010 to 120 days. As such, Bradesco is at the stage of evaluating the accounting effects of transition to IFRS, and is expected to complete that process within the period established by Bacen.

In that process, main adjustments identified in accounting practices used by Bradesco and described in the explanatory note 2 (BR GAAP), as compared to IFRS include:

On December 28, 2007, Law No. 11,638/07 was enacted, which changes the Corporation Law with respect to accounting practices adopted in Brazil, as from the corporate year ended on December 31, 2008.

According to the new Law, the issuance of accounting regulations by CVM for public companies should comply with the international standards.

We highlight below the accounting practices changed by the new Law:

•     Permanent assets is now part of “Intangible” group and formally includes the rights related to immaterial goods for the company maintenance or exercised for that purpose, including goodwill acquired from consolidated/incorporated companies;

•     Fixed assets now includes the goods resulting from operations where there is transfer of benefits, control and risk, regardless of ownership transfer;

•     Deferred assets is now restricted to pre-operating expenses and incremental reorganization costs;

•     The parameter for evaluation of investments in affiliates by the equity method is changed, by applying that method to all affiliated where the investor has a significant influence. A significant influence is assumed when participation accounts is 20% or more of voting capital (formerly, the percentage was on total capital stock);

•     Creation of a new subgroup in shareholders’ equity named “Equity Evaluation Adjustment,” intended to record the counterpart of foreign exchange variation of corporate investments abroad, when the beneficiary’s functional currency is different from the controlling company’s, and the counterpart of increases or decreases of value assigned to assets and liabilities items as a result of their evaluation at market price. Because investments held by Banco Bradesco and controlled companies have substantially the same functional currency of Bradesco, this change required no adjustments;

•     Introduction of the concept of Adjustment to Present Value for long-term assets and liabilities and significant short-term operations. As established by the explanatory note to CVM Directive No. 469, the objective of that change is not to eliminate the presence of an expectation of future income or charge embedded in monetary assets and liabilities, but the need of obtaining values representative of the operation time;

•     Operations made by Bradesco and its controlled companies are already presented for their values prevailing at the time they were made, as fixed-interest asset and liability operations have been adjusted to the present value by the existence of income and expenses to appropriate, which adjust such operations to values that would obtained at their realization if they were demand operations, as well as for credits and obligations subject to post-fixed variations and are realized for their demand value, the respective values of which are periodically adjusted by operation rates. This way, the Adjustment to Present Value for long-term assets and liabilities, as well as for short-term operations, have not required any adjustments by Bradesco and its controlled companies;

•     Requirement of periodic analysis to determine the level of recovery of amounts recorded in fixed, intangible and deferred assets. The management performed an analysis and amounts recorded on December 31, 2008 in such accounts had no significant adjustments;

•     Change in treatment of fiscal incentives, which now pass by profit and loss account, thus allowing their destination to profit reserves – tax incentive reserve excluded from the base of minimum mandatory dividends. Banco Bradesco and its controlled companies have no specific regime with any type of tax incentive, and like any other company, they have the possibility of direct part of their income tax liabilities to the acquisition of shares of companies located in regions benefiting of governmental incentives, provided that the balance outstanding in tax incentive reserve account in the shareholder's equity was constituted before the effectiveness of Law No. 11,638/07; and

•     Initial record of funds from third parties, which are classified in current liabilities, must evidence the net amounts received and available for use, while the incremental costs incurred in such funding should be recorded as an adjustment of current liabilities. All financial charges, such as interest, monetary and foreign exchange variations, and incremental funding costs should be appropriated to income  according to the operation term and based on the concept of internal return rate.

•     Bradesco already defers costs related to funding operations and appropriate such values to income according to the operation term. Pursuant to Law No. 11.638/07, such costs to be appropriated are being recorded against liabilities, and were formerly recorded as deferred expenses.

c)   Restrictions and emphases in the auditor’s opinion

There were no restrictions or emphases in the auditor’s opinion.

10.5. The Board should indicate and comment on critical accounting policies adopted by the issuer, in particular the management’s accounting estimates of uncertain issues that are important for the description of financial conditions and results and require subjective or complex judgments, such as: provisions, contingencies, revenue recognition, tax credits, long-term assets, useful life of non-current assets, private pension plans, adjustments of conversion into foreign currency, costs of environmental recovery, criteria for impairment test, and financial instruments.

•     Critical Accounting Policies

Bradesco has disclosed risk factors and critical accounting policies under the best international practices of transparency and corporate governance and the financial statements prepared in accordance with US GAAP, when referring to possible political and economic conditions in domestic and international markets which can directly affect daily operations and, as a result, the Bank´s financial condition.

Bradesco results are susceptible to accounting policies, assumptions and estimates. It is the Management’s responsibility to adopt adequate accounting policies, in addition to make judgments and estimates that are reasonable and prudent for the preparation of financial statements.

In terms of materiality, the following items describe the accounting policies that are considered critical, as well as the areas that require a better judgment and estimate or involve a high complexity level and are likely to affect our financial conditions and the results of our operations. Accounting estimates made in such a context force us to make assumptions about uncertain matters. In each case, if we had made other estimates or if changes in estimates occurred every period, this could have a significant impact on our financial conditions or the result of our operations.

•     Allowance for loan losses

The allowance for loan losses is calculated at an amount sufficient to cover probable losses and takes into consideration CMN and Bacen rules and instructions, together with assessments carried out by the Management, in the determination of credit risk.

At the end of each period, allowance for loan losses is adjusted on the basis on an analysis of our portfolio, including the estimate of losses from credit operations and leasing and other operations with credit characteristics.

Determination of the amount of allowance for loan losses, by its nature requires us to make judgments and assumptions about our portfolios, both individually and for specific product portfolios. Upon reviewing the portfolio as a whole, several factors are likely to affect the estimate of possible scope of losses, including the methodology adopted to evaluate historical default rates and the historical period to be considered for that evaluation. Additional factors likely to affect our determination of allowance for loan losses include:

•   general Brazilian economic conditions, and conditions of the relevant sector;

•   previous experience with the debtor or the relevant economy sector, including the recent experience of losses;

•   credit quality trends;

•   value of guarantees of an operation;

•   volume, composition and growth of our portfolio;

•  monetary policy of the Brazilian government; and

•  any delays in the receipt of information necessary to evaluate the operations or confirm the deterioration of existing credit.

We usually adopt models that help us to analyze our portfolios and determine the necessary provisions for losses. We apply statistical loss factors and other risk indicators for group of loans with similar risk characteristics to achieve an estimate of losses incurred by the portfolio and calculate the models. Although our models are frequently reviewed and improved, they are, by their nature, dependant on our judgment of information/forecasts that we receive. In addition, volatility of Brazilian economy may bring a greater uncertainty to our models than would be otherwise expected in more stable macroeconomic environment. Consequently, our allowance for loan losses may not be an indication of real future losses.

Process to determine the level of allowance for loan losses requires a high level of judgment. It is possible that others, upon considering the same information, may eventually draw reasonably different conclusions.

•     Securities and derivatives classification

Securities and derivatives classification comprises three categories: trading, available-for-sale, and held-to-maturity. This classification is based on the Management intent, on the date of acquisition of securities, to keep or trade such securities. Accounting treatment of securities in our possession will depend on our classification at their respective acquisition.

Possible transformations may modify our strategy with respect to a specific security, which will require a transfer among the three categories.

•     Securities and derivatives evaluation

Financial instruments recorded for the fair value in our financial statements basically include those securities classified as: trading, available-for-sale and other tradable assets, including derivatives. The fair value is defined as the value for which a position could be closed or short in a transaction with a knowledgeable party willing to negotiate without any advantages.

We usually estimate the fair value using prices quoted in the market, as available. We note that that value may be affected by the volume of traded securities, and fail to reflect the “control premiums” derived from agreements with shareholders who maintain significant investments. However, the Management believes that quoted market prices are the best indicators of the fair value.

At fair value determination, when quoted market prices are not available, the Management makes a judgment, as the models depend on that judgment on the weight to be assigned to different factors and quality of information received. Factors used in such models include dealers’ quotations, pricing models, prices of instruments with similar characteristics, and discounted cash flows. Pricing based on models also uses information on interest rates, foreign exchange rates, and option volatility, if significant and available. For example, reliable market data when estimating the impact of maintaining a strong position are generally limited. Likewise, we use our judgment to estimate prices when there are no external parameters. If we make incorrect assumptions, or the actual model makes incorrect correlations or assumptions, the amount of income or loss recorded for a specific asset or liability will likely be inadequate. Judgment should also determine whether a fall of the fair value to below the updated cost of a security held to maturity or a security available for sale is not temporary, in a way that would allow us to recognize a devaluation of the updated cost and consider that reduction as an expense. At evaluation, is a devaluation is not temporary, the Management will decide which historical period should be considered and how serious a loss can be.

Such evaluation methods may lead Bradesco to different results, should such models, assumptions or estimates be inaccurate.