Banco Bradesco S.A. (
Q3 2010 Earnings Call
October 28, 2010 09:00 am ET
Domingos Figueiredo de Abreu - EVP & IR Officer
Marco Antonio Rossi - CEO of Bradesco Seguros Group Insurance
Samuel Monteiro dos Santos Junior - EVP & CFO of Bradesco Seguros Group Insurance
Luiz Carlos Angelotti - Assistant Executive Officer
Paulo Faustino da Costa - Market Relations Department Director
Jason Mollin - Goldman Sachs
Boris Molina - Santander
Eduardo Nishio - BTG Pactual
Victor Galliano - HSBC
Previous Statements by BBD
» Banco Bradesco S.A. Q1 2010 Earnings Call Transcript
» Banco Bradesco S.A. Q4 2009 Earnings Call Transcript
» Banco Bradesco S.A. Q3 2007 Earnings Call Transcript
Good morning, ladies and gentlemen. We would like to welcome everyone to Banco Bradesco’s Third Quarter 2010 Earnings Results Conference Call. This call will be conducted by Mr. Domingos Figueiredo de Abreu, Executive Vice President and Investor Relations Officer;
Mr. Marco Antonio Rossi, Chief Executive Officer of Bradesco Seguros Group Insurance; Mr. Samuel Monteiro dos Santos Junior, Executive Vice President and Chief Financial Officer of Bradesco Seguros Group Insurance; Mr. Luiz Carlos Angelotti, Assistant Executive Officer; and Mr. Paulo Faustino da Costa, Market Relations Department Director.
This call is being broadcasted simultaneously through the internet in the website, www.bradesco.com.pr/ir. In the address, you can also find a banner through which the presentation will be available for download. We are informed that all participants will only be able to listen to the conference call during the Company’s presentation. After the presentation, there will be a question-and-answer session. At that time, further instructions will be given. (Operator Instructions)
Before proceeding, let me mention that forward-looking statements are being made under the Safe Harbor of the Securities Litigation Reform Act of 1996. Forward-looking statements are based on the beliefs and assumptions of Banco Bradesco’s management and on information currently available to the Company.
Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions because they relate to future events, and therefore, depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of Banco Bradesco and could cause results to differ materially from those expressed in such forward-looking statements.
Now, I’ll turn the conference over to Mr. Domingos Figueiredo de Abreu, Executive Vice President, Investor Relations Officer. Mr. Abreu, you may proceed.
Domingos Figueiredo de Abreu
Good morning, everyone. Welcome to our conference call. I will begin with our main highlights among which I would like to point out on slide number two. Our adjusted net income for the first nine months of 2010, which totaled R$7,120 million, around 24% higher than in the same period last year. Total assets amounted to R$612 billion, a 26% improvement over September 2009.
In slide three, we point out our funds under management, which totaled R$838 billion, showing an evolution of 24% in that one year period. I’d also like to call your attention to our delinquency ratio, which fell substantially in compares to 2009 and to our coverage ratios, which have meet both the unimportant evolutions.
On slide four, we show the reconciliation of between book net income and adjusted net income. The main non-recurring events this quarter were a gross gain of R$79 million from the partial sale of the investment and CPM Braxis, offset by the constitution of provisions for civil contingencies for economic plans in the growth amount of R$71 million.
After this adjustment, our book net income of R$2,527 million went to R$2,580 million, generating an annualized return of 24.4% in the quarter. In this slide, you can also see that our return on average equity reached over 22% in the first nine months of the year both in terms of book and adjusted net income.
Slide number five shows our third quarter net income. Evolution this quarter comes from the growth in the net interest income, mainly due to the increase in the volume of operations. Higher fees income as a result of the expansion of the private base and the reduction in the provisions for loan losses as well as the impact from higher personnel expenses due to the collective bargaining agreement, and greater administrative expenses mainly as a result of organic growth. I’d like to point out that our earnings per share in the last 12 months recorded a large increase from R$2.19 to R$2.38.
In slide number six, we report our efficiency ratio. The blue line show the efficiency ratio adjusted to risk, which improved by 130 basis points this quarter, reflecting lower delinquency and the consequent reduction in the provisions for loan losses, they increase in the 12-month ratio, the red curve, very fine in recent quarters was primarily due to outstanding treasury gains and the reduction in advertising expenses within the first nine months of 2009 favoring this indicator in this period, as well as the upturn in the expenses from organic growth and the collective bargaining agreement.
On a quarterly basis, the increase in the efficiency ratio was usually due to the upturn in the personnel and the administrative expenses as we had previously mentioned and we’ll discuss in greater details later on. Despite our recent organic growth, we believe these ratios will remain close to their current levels in the short-term. In the mid term, however, we expect them to improve, thanks to the conclusion and maturation of the IT project.
Slide number seven, total assets reached R$612 billion, registering an evolution of 26% year-on-year. Return on average assets remain at 1.7% while return on average equity, as mentioned before, totaled 22.5%. The Basel ratio closed the period at 15.7% and this level of capitalization, together with our capacity to generate results, did result in a very comfortable position to sustain expected growth. As for Basel III, we have looked into the possible change, in terms of the new capital requirements, and we believe we will have no problem in adapting to them, thanks to our high level of capitalization.