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Double-digit decline in provisions helps bump up Bradesco's Q4 recurring profit

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Double-digit decline in provisions helps bump up Bradesco's Q4 recurring profit

Banco Bradesco SA's fourth-quarter 2017 recurring profit increased 10.9% from a year earlier as the bank saw a double-digit decline in provision expenses and booked slightly higher fee and commission income.

The São Paulo-based lender reported recurring net income of about 4.86 billion Brazilian reais for the quarter, or 3.13 reais per share, up from 4.39 billion reais, or 2.81 reais per share, a year ago.

When factoring for non-recurring items totaling 1.07 billion reais, including 600 million reais in goodwill amortization expenses, the bank's book net income reached 3.79 billion reais for the fourth quarter, up from 2.88 billion reais in the linked three-month period.

Bradesco's net interest income totaled 15.03 billion reais in the fourth quarter, down 4.1% from 15.67 billion reais a year earlier. Fee and commission income, meanwhile, ticked 6.9% higher year over year to 8.06 billion reais.

The bank's annualized net interest margin fell to 6.5% from 6.6% in the third quarter and 7.5% in the prior-year period.

The lender booked 4.62 billion reais in allowance for loan loss expenses, down 16.3% from 5.53 billion reais in the fourth quarter of 2016. Administrative and personnel expenses also fell, declining 2.5% annually to 10.22 billion reais.

Bradesco's expanded loan portfolio held 492.93 billion reais at the end of 2017, representing a contraction of 4.3% during the last year as loans to companies decreased 7.4%, the bank said. Its 90-day nonperforming loan ratio improved to 4.7% in the fourth quarter from 4.8% in the linked quarter and 5.5% a year ago.

Providing guidance for 2018, the company said it expects its expanded loan portfolio to grow between 3% and 7% while fee and commission income is projected to rise 4% to 8%.

The fourth-quarter results brought the bank's full-year 2017 recurring net income to 19.02 billion reais, up from 17.12 billion reais in 2016.

As of Jan. 31, US$1 was equivalent to 3.17 Brazilian reais.