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Bradesco execs see growth in corporate loans, lower defaults by SMEs in 2018

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Bradesco execs see growth in corporate loans, lower defaults by SMEs in 2018

Banco Bradesco SA expects growth in its corporate credit portfolio to pick up in 2018, partially thanks to the passage of pension reform in Brazil, Diário Comércio Indústria e Serviços reported.

In the third quarter, the bank granted 39.7 billion Brazilian reais in corporate loans, down 17.5% from the same period a year ago. Despite this decline, the corporate loan segment is already gaining traction, with greater demand for new credit observed in the bank's daily operations, Chairman and CEO Luiz Carlos Trabuco Cappi reportedly said.

"The worst moment is over and corporate credit is expected to grow well in 2018, mainly because the biggest search is for new credit as well, not just for renegotiation, for example," the executive was quoted as saying.

For individuals and small- and medium-sized companies, Bradesco expects defaults to continue to decline next year, reflecting a general decline in bad debt. The corporate segment is more difficult to predict due to its volatility, but Alexandre da Silva Glüher, Bradesco's chief risk officer, said he expects defaults in the portfolio to trend downward next year as well.

A "return on working capital" is also expected after two years, especially among SMEs, due to higher household consumption and the equalization of debts by companies, Trabuco said. However, a cooling off in the segment of large companies will not be observed in the short term, the executive added.

Separately, Trabuco reportedly said the bank will appoint a new CEO by early February of 2018, Reuters reported. Trabuco, who is 66 years old, will reach the company's new mandatory retirement age in 2018. Bradesco had previously raised the age limit to 67 from 65 so that the executive could complete the integration of the bank's acquisition of HSBC Brasil.

As of Dec. 14, US$1 was equivalent to 3.33 Brazilian reais.