April 26, 2018 / 9:54 AM / a month ago

UPDATE 2-Banco Bradesco profit beats forecasts; loan-loss provisions fall

(Adds CEO and analyst comments)

By Carolina Mandl

SAO PAULO, April 26 (Reuters) - Fewer losses on delinquent loans at Brazil’s Banco Bradesco SA helped the bank beat analyst’s profit estimates and led executives on Thursday to forecast loan-loss provisions at the bottom end of its estimated range by the end of the year.

Brazil’s second largest private lender reported recurring net income, which excludes one-time items, of 5.102 billion reais ($1.46 billion) in the first quarter, up 9.8 percent from a year earlier and beating the Thomson Reuters analyst consensus of 4.877 billion reais.

Amid a gradual recovery in the Brazilian economy, loan-loss provisions dropped more than expected, down 26.3 percent from a year earlier, to 3.892 billion reais.

“The main positive highlight was asset quality,” Credit Suisse’s analysts said in a note to clients.

In a conference call with journalists, Bradesco executives said loan-loss provisions may end 2018 at the bottom of the estimated range, between 16 billion reais and 19 billion reais.

The Osasco-based bank’s 90-day default ratio declined 0.3 percent in the quarter, to 4.4 percent and management said there was room for further improvement in coming quarters.

Bradesco’s loan book, however, shrank 1.3 percent in the quarter, to 486.6 billion reais, mainly because of a contraction in loans to large companies. Bradesco set a cautious tone on its loan book in February with a forecast of growth between 3 percent and 7 percent this year.

CEO Octavio de Lazari told journalists the bank was eager to grow its loan book in 2018, especially for individuals. He said loans to companies are expected to rebound only at the end of the year, following an October presidential election.

Bradesco’s profit was also boosted by higher fee revenues and lower administrative expenses.

Bradesco’s recurring return on equity rose 0.3 percentage points from a year earlier to 18.6 percent, but fell short of analysts’ average estimate of 20.1 percent.

Shares in Bradesco rose 0.4 percent in early Sao Paulo trading to 34.90 reais, slightly underperforming the benchmark Bovespa stock index.

$1 = 3.4841 reais Reporting by Carolina Mandl; Editing by Jane Merriman and David Gregorio

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