Banco Bradesco CEO Discusses Q2 2012 Results - Earnings Call Transcript

Banco Bradesco (BBD)

Q2 2012 Earnings Call

July 24, 2012 10:00 AM ET

Executives

Paulo Faustino da Costa - Market Relations Department Director

Luiz Carlos Angelotti - Executive Managing Director & IR Officer

Analysts

Regina Longo Sanchez - Itau BBA

Saul Martinez - JPMorgan

Daniel Abut - Citi

Victor Galliano - HSBC

Philip Finch - UBS

Mario Pierry - Deutsche Bank

Carlos Macedod - Goldman Sachs

Marcelo Telles - Credit Suisse

Boris Molina - Santander

Presentation

Operator

Good morning ladies and gentlemen. We would like to welcome everyone to Banco Bradesco’s First Half 2012 Earnings Results Conference Call. (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 based on the beliefs and assumptions of Branco 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 will turn the conference over to Mr. Paulo Faustino da Costa, Market Relations Department Director. Mr. Paulo, you may proceed.

Paulo Faustino da Costa

Good morning everyone and thank you all for participating in our second quarter conference call. We are here to provide you with all the information you may need about our numbers. It is in in-line with our goal of always increasing the transparency of information disclosed to the market.

We have here today Mr. Julio de Siqueira Carvalho de Araujo, Executive Vice President; Mr. Marco Antonio Rossi, Chief Executive Officer of Bradesco Seguros Group and Bradesco Executive Vice President; Mr. Carlos Angelotti, Executive Managing Officer and Investor Relations Officer; and Mr. Moacir Nachbar, Jr. Deputy Officer.

I will now turn to our Executive Managing Director and Investor Relations Officer Mr. Angelotti, who will lead our conference call. After this presentation we will be open to answer your question. Angelotti, please go ahead.

Luiz Carlos Angelotti

Good morning everyone. First of all I would like to thank you all for taking part in this conference call. In slides two and three show our main (inaudible) highlights. On the slide two I will particularly like to mention our first half adjusted net income which totaled 5.7 billion reals, 2.7 more than the same period last year.

I switch to draw your attention to our adjusted net interest income which were by 15.4% over the first half of last year. And our total assets which came to 830 billion reals, 5.2% up in the quarter and 20.5% more than in June 2011.

On slide three, it specifically worked noting our assets under management which aided the quarter at 103 billion reals, a 20% increase over June 2011 and our efficiency ratio it fell by strong third base point in the last 12 months closing the first half at 42.4%.

On slide four, we showed a reconciliation between our books net income and additional net income in the respective periods. This quarter as in the previous three months there was only one non-recurring item, the provisions for civil contingencies, which totaled 67 million reals growth. Adjusting for this event, our book net income increased from 2.833 billion reals generating an NOI returning of 20.9% in the quarter. Also in this slide, you can see that our return on average assets came to around 21% in both the booked and adjusted net income concepts.

Slide five shows our historical series of our quarterly net income. Income growth in the second quarter and in the first half of the year was mainly due to the higher net interest income, the higher fee income and increased revenues from our insurance group.

This occurrence was partially impacted by higher provision for loan loss. It is particular was noting that our earnings per share for the last 12 months increased by 5.3% from 2.82 reals to 2.90 reals.

Slide six shows our efficiency ratio, the improvement in the second quarter efficiency ratio over the last 12 months was due to investments in our organic growth strategic, it started producing effect with the maturation of this certain investments and our continuous efforts to control expenses including the actions taken by our efficiency committee (ph) as the rate that most contributed to this improvement were the upturn in mass interest income and fee income thanks to the higher volume of business, the growth of our client base that are around 5 million new clients considering the financial and the insurance business and the 1.6 million new checking accounts.

On the slide seven, I would particularly like to draw your attention to the increasing our shareholders equity positively impacted by 4.1 billion reals in gain strong certain insurance group securities which used to be booked as held to maturity and are now classified as available for sale and the difference between their market value and their book value, it's taken directly to shareholders equity net of tax.

It is also worth mentioning our exceptionally health based ratio which closes by quarter at 17% leading to a big increase in our capitalization margin. The upturn in this ratio was due to the addition of 7.9 billion in subordinate financial bills but ratified by the central bank in the period, in addition to the gains from the securities I have just mentioned. As we have our (inaudible) 11:49 total assets came to 800 billion reals, a 100 billion (ph) or 20.5% margin in June 2011. Return on average assets totaled 1.4% while the additional return on average equity stood at 20.6% (ph).

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