Bradesco's recurring net income, which excludes one-off
items, came in at 4.28 billion reais ($858.71 million), while
analysts expected 3.6 billion reais.
The fall in net profit was mainly due to an increase in
provisions for bad loans, which nearly doubled year on year to
9.517 billion reais at the end of March.
It comes as credit quality continued to deteriorate,
with the banks' 90-day loan default ratio at 5.1% in the
quarter, up compared to 3.2% a year ago and 4.3% in the previous
quarter.
Despite higher borrowing costs, Bradesco grew its consolidated credit portfolio by 5.4% year on year to 879.28 billion reais, though it shrank by 1.4% from the end of December.
The lender attributed the quarter on quarter decline to
"the current phase of the credit cycle, as well as the
repositioning of our credit policy to less risky modalities."
On Wednesday, Brazil's central bank held its benchmark
interest rate steady at 13.75% for the sixth consecutive meeting
and said it was "less likely" to resume hikes, but gave no
concrete signal about when to expect rate cuts.
Net interest income (NII) from clients reached 16.65
billion reais, a 7.3% increase year-on-year.
Bradesco's return on average equity, a key metric for
profitability, came in 10.6%, a significant improvement compared
to 3.9% posted in the previous quarter, but still well below the
18% from the year ago period.
($1 = 4.9842 reais)
(Reporting by Peter Frontini; Editing by Anthony Esposito and
Isabel Woodford)
