For 2023, Bradesco said it expected loan-loss provisions in the range of 36.5 billion to 39.5 billion reais, up from provisions of 32.3 billion reais last year. The bank also said it expected slower growth in its loan book, which reached 891.93 billion reais at the end of 2022 - up 9.8% from a year earlier. This year, however, Bradesco expects growth to slow to a range of 6.5% to 9.5%. High interest rates, however, should help drive its net interest income from clients up 7% to 11% in 2023, it predicted, compared to 3.8% last year. Bradesco's return on average equity, a key metric for profitability, came in at just 3.9%, significantly lower than the 13% it posted last quarter. ($1 = 5.2911 reais) (Reporting by Peter Frontini; Editing by Sarah Morland and Christopher Cushing)
(Adds details, Bradesco comment)
SAO PAULO, Feb 9 (Reuters) - Banco Bradesco SA , Brazil's second-largest lender, reported a 75.9%
dive in its fourth-quarter net income on Thursday, as it booked
nearly 15 billion reais ($2.83 billion) in provisions for bad
loans amid high interest rates.
Bradesco's recurring net income, which excludes one-off
items, landed at 1.59 billion reais for the last three months of
2022, it said, as it warned of even higher provisions in 2023 as
well as slower growth in its loan book.
The bank set aside 14.9 billion reais for non-performing
loans in the quarter, more than double the amount it reported a
year earlier, to prepare for the risk of more customers
defaulting on their loans amid higher borrowing costs.
Brazil's central bank has maintained the benchmark interest
rate at 13.75% because it is "technically adequate", despite
repeated protests from President Luiz Inacio Lula da Silva that
rates should be lower.
Of the provisions, around 4.9 billion reais was prompted by
an incident "involving a specific large corporate client, which
occurred in early 2023", it said, saying this provision covered
100% of its exposure to the case.
Bradesco did not name the client, but its peers Itau
Unibanco and Santander Brasil , who both
missed their quarterly profit forecasts, made extra provisions
related to the bankruptcy protection of retailer Americanas SA .
Americanas entered bankruptcy protection last month after
disclosing massive "inconsistencies" in its accounting. It owes
creditors some $8 billion in debt.
RAPIDLY RISING RATES
Bradesco cited rapid worldwide inflation, interest rates
rising more than expected and "major political and economic
instability" hitting its 2022 earnings.
Its 90-day loan default ratio landed at 4.3% at the end of
December, 1.5 percentage point down from a year earlier but 0.4
percentage point above the third-quarter ratio.
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