Latin Finance - November/December 2011 - 38

2011

Prudent but Profitable
by Ben Miller t’s always been a close race between the top three banks in Brazil. But Bradesco has won particularly high points at a time when the country’s banks are contending with government macroprudential measures, inflation worries, a potential credit bubble and now a slowdown in economic growth. Despite the somewhat uncertain outlook, the Brazilian banking giant has been able to maintain strong profitability ratios, a diversified portfolio base and healthy reserve cushions. “Banks in Brazil and Bradesco in particular go into the slowdown with comfortable levels of loan loss reserves, are well-capitalized and with margins capable of absorbing big losses,” Peter Shaw, managing director at Fitch Ratings for financial institutions, says. With 689.3 billion reais in assets as of June 30, Bradesco may not be the largest bank in the system, with competitors Itaú and state-owned Banco do Brasil boasting 793 billion reais and 904 billion reais in assets respectively. But it is one of the most profitable During the first half, Bradesco’s return on average equity (ROAE) and on average total assets (ROAA) hit 22.88% and 1.65%, putting it in line with, or slightly ahead of its rival Itaú-Unibanco, which had ROAE and ROAA of 22.4% and 1.8% over the same period. “The history is that Bradesco has performed consistently through various stress tests very well,” Shaw says. “It is profitable and has good reserve coverage. The loan portfolio is balanced one-third individuals, one-third corporate and onethird SME.” Going forward, Luiz Carlos Trabuco Cappi, Bradesco’s president, tells LatinFinance that the bank has identified mortgage lending, credit cards, business

I

Bradesco’s balanced approach to banking has left it well prepared to weather any downturns as it builds market share in key sectors. Organic growth is a top priority.

Bank of the Year Best Bank Brazil
Bradesco
lending and insurance as the most competitive growth areas in the Brazilian banking sector. With inflation running high and the government taking measures to contain the recent credit expansion, this is not the year for international , or even serious domestic expansion This suits Bradesco, the least acquisitive of Brazil’s large

banks, just fine. That said, the bank has made some strategic acquisitions that have solidified its position in certain markets and could prove to be smart bets going forward. In May it made a move to gain control of Banco do Estado do Rio de Janeiro from that state’s government, beating out Santander Brasil and Itaú. In the 1.025 billion real deal, Bradesco won the right to provide services to the Government of the State of Rio de Janeiro including its payroll, supplier payroll, and the collection of state taxes among others services from 2012 to 2014, a right which will cost it an additional 748.7 million reais. It also adds customers in one of the

Bradesco grows in key sectors

38 LATINFINANCE

November/December 2011



Latin Finance - November/December 2011

Table of Contents for the Digital Edition of Latin Finance - November/December 2011

Latin Finance - November/December 2011
Contents
Contagion Risk
Mexican Credit
China Investment
Loan Markets
Mexico Banks
Sub-Sovereign Debt
Banks of the Year 2011
Argentina Investor Report
Reversal of Fortunes
Latin Finance - November/December 2011 - Latin Finance - November/December 2011
Latin Finance - November/December 2011 - Cover2
Latin Finance - November/December 2011 - Contents
Latin Finance - November/December 2011 - 2
Latin Finance - November/December 2011 - 3
Latin Finance - November/December 2011 - 4
Latin Finance - November/December 2011 - 5
Latin Finance - November/December 2011 - 6
Latin Finance - November/December 2011 - 7
Latin Finance - November/December 2011 - 8
Latin Finance - November/December 2011 - 9
Latin Finance - November/December 2011 - 10
Latin Finance - November/December 2011 - 11
Latin Finance - November/December 2011 - Contagion Risk
Latin Finance - November/December 2011 - 13
Latin Finance - November/December 2011 - 14
Latin Finance - November/December 2011 - 15
Latin Finance - November/December 2011 - 16
Latin Finance - November/December 2011 - 17
Latin Finance - November/December 2011 - 18
Latin Finance - November/December 2011 - 19
Latin Finance - November/December 2011 - 20
Latin Finance - November/December 2011 - 21
Latin Finance - November/December 2011 - Mexican Credit
Latin Finance - November/December 2011 - 23
Latin Finance - November/December 2011 - 24
Latin Finance - November/December 2011 - 25
Latin Finance - November/December 2011 - China Investment
Latin Finance - November/December 2011 - 27
Latin Finance - November/December 2011 - 28
Latin Finance - November/December 2011 - 29
Latin Finance - November/December 2011 - Loan Markets
Latin Finance - November/December 2011 - 31
Latin Finance - November/December 2011 - 32
Latin Finance - November/December 2011 - 33
Latin Finance - November/December 2011 - Mexico Banks
Latin Finance - November/December 2011 - 35
Latin Finance - November/December 2011 - Sub-Sovereign Debt
Latin Finance - November/December 2011 - 37
Latin Finance - November/December 2011 - Banks of the Year 2011
Latin Finance - November/December 2011 - 39
Latin Finance - November/December 2011 - 40
Latin Finance - November/December 2011 - 41
Latin Finance - November/December 2011 - 42
Latin Finance - November/December 2011 - 43
Latin Finance - November/December 2011 - 44
Latin Finance - November/December 2011 - 45
Latin Finance - November/December 2011 - 46
Latin Finance - November/December 2011 - 47
Latin Finance - November/December 2011 - 48
Latin Finance - November/December 2011 - 49
Latin Finance - November/December 2011 - 50
Latin Finance - November/December 2011 - 51
Latin Finance - November/December 2011 - 52
Latin Finance - November/December 2011 - 53
Latin Finance - November/December 2011 - 54
Latin Finance - November/December 2011 - 55
Latin Finance - November/December 2011 - 56
Latin Finance - November/December 2011 - 57
Latin Finance - November/December 2011 - 58
Latin Finance - November/December 2011 - 59
Latin Finance - November/December 2011 - 60
Latin Finance - November/December 2011 - Argentina Investor Report
Latin Finance - November/December 2011 - 62
Latin Finance - November/December 2011 - 63
Latin Finance - November/December 2011 - Reversal of Fortunes
Latin Finance - November/December 2011 - Cover3
Latin Finance - November/December 2011 - Cover4
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