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Bradesco execs: Delinquency could return to 'pre-crisis levels' this year

Banco Bradesco SA expects delinquency levels to decline throughout 2018 as Brazil continues to recover from its deep economic crisis, executives said July 26 during a conference call to discuss the banking giant's second-quarter results where the bank recorded a jump in profits of almost 10% from the previous year on lower provision expenses.

"We believe that delinquency indicators could return to pre-crisis levels by the end of the second half of this year," Director Denise Pavarina said.

Delinquency among small and medium-sized enterprises, however, could take longer to recover, Carlos Firetti, head of market relations, told investors during the call.

Bradesco's expanded loan portfolio grew 4.5% in the 12 months through June to reach about 515.64 billion reais. Its overall 90-day nonperforming loan ratio was 3.92%, down from 4.39% at the end of the first quarter and 4.9% in June 2017. Delinquencies in the large corporates segment declined in the second quarter after remaining at high levels in the three previous quarters.

The bank revised its full-year 2018 guidance for loan-loss allowance expenses to between 13 billion reais and 16 billion reais, down from a previous range of 16 billion reais to 19 billion reais, due to the improved delinquency indicators.

The bank posted second-quarter recurring net income of about 5.16 billion reais. The result included 3.44 billion reais in expanded loan-loss allowance expenses for the quarter, down 36.1% from 5.38 billion reais a year ago, which the bank said was mainly due to an improvement in the quality of its loan book.

Meanwhile, CEO Octavio de Lazari Jr. said during the call that the truck drivers' strike in May that paralyzed Brazil had only a marginal impact on the bank's credit operations as customers continued to carry out transactions on online platforms.

"We have grown in credit for families and businesses, reduced delinquency and built a healthy balance sheet. It may seem surprising, but for us it is not," Lazari said.

As of July 25, US$1 was equivalent to 3.71 Brazilian reais.