Banco Bradesco SA (BBDC4), Latin America’s second-largest bank by market value, fell the most in almost a year in Sao Paulo trading after increasing provisions in the second quarter on higher delinquencies.
Bradesco, based in Osasco, Brazil, slid 4.8 percent to 29.07 reais ($14.26) at 5:06 p.m., the biggest decline since Aug. 8. The Bovespa benchmark index dropped 2.2 percent.
“Default rates are the main concern about the sector right now, and investors didn’t seem to like the increase in Bradesco’s provisions,” Pedro Galdi, chief strategist at Sao Paulo-based brokerage SLW Corretora, said in a telephone interview.
Provisions jumped 40 percent to 3.41 billion reais from a year earlier and are now adequate “regarding the estimated losses from certain corporate customers under the process of debt restructuring,” Bradesco said in a statement today. Late payments for debt overdue more than 90 days advanced to 4.2 percent in the second quarter, from 4.1 percent in the previous three months and 3.7 percent in June 2011.
Adjusted net income, which excludes one-time items, climbed to 2.87 billion reais, or 2.97 centavos a share, from 2.83 billion reais, or 2.82 centavos, a year earlier, according to the statement. That missed the 2.92 billion reais average estimate of eight analysts in a Bloomberg survey.
Bradesco Chief Executive Officer Luiz Carlos Trabuco Cappi, 60, said the increase in the provisions for corporate clients isn’t a concern and delinquency rates will tend to fall in coming quarters as companies start to deleverage and the central bank reduces interest rates.
“This provision shows conservatism,” he told reporters in a conference call today. “Delinquencies are under control.”
Bradesco expanded lending at a slower pace than federally controlled Banco do Brasil SA, Latin America’s largest bank by assets. Banco do Brasil cut rates and boosted credit after pressure from Brazil President Dilma Rousseff.
“Bradesco is focusing more on maintaining spreads than gaining market share,” Flavio Yoshida and Andre Parize, analysts with Votorantim Corretora in Sao Paulo, wrote in a report July 16.
The lender’s loan book increased 14 percent to 365 billion reais in the second quarter from a year earlier. Last month, Bradesco reduced its credit growth forecast to 14 percent to 18 percent from a previous range of 18 percent to 22 percent. Total assets rose almost 21 percent to 830.5 billion reais from a year earlier.
Banco do Brasil increased lending almost 21 percent in the second quarter, close to the high end of its 17 percent to 21 percent guidance range for 2012, Alexandre Abreu, vice president of the retail business, said July 13, citing preliminary figures.
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