North American banks, Brazil’s largest banking group, Bradesco,
continues to post impressive earnings growth. Its business has been
boosted by higher interest rates and efficiency gains as well as
robust growth in its insurance and lending businesses.
Douglas Blakey reports.
Already boasting a customer base of 36.6 million and an
impressive distribution network of over 24,500 branches and over
30,000 ATMs, Bradesco, Brazil’s largest banking group, expects to
open an additional 1.6 million net new accounts during 2008 and
increase its branch and ATM network by around 20 percent by the end
of 2009.
Go deeper with GlobalData
Bradesco expects total credit in Brazil to grow by 22 percent in
2008 (compared with 28 percent in 2007) and present further
opportunities to grow its retail profits. Total bank lending in
Brazil has expanded every month since February 2004 and rose 6.1
percent in the first quarter of the year.
“All in all, Bradesco did a good job in the first quarter of
this year, given the [credit] cycle, and the strong volatility in
the markets,” said the bank’s CFO Milton Vargas, talking at an
investor roadshow in London on 21 May.
He pointed out that the group’s cost-income ratio for the period
was 41.7 percent, down from 42.1 percent a year ago and a
significant fall from over 56 percent five years ago.
Bradesco continues to benefit from Brazil’s strong economic
fundamentals – in particular, a stronger consumer banking market.
Latin America’s largest economy grew 5.4 percent in 2007, the
fastest pace in three years, although it is expected to slow to 4.7
percent in 2008.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataAnd while Brazilian banks continued profitability growth is
threatened by higher taxes and increased international competition
(such as Santander and HSBC), Bradesco’s senior management remain
highly optimistic over their company’s prospects.
The bank’s net income in the first quarter of 2008 grew by more
than 23 percent to BRL2.1 billion, ($1.29 billion) with the bank’s
total assets increasing 26 percent compared with a year ago to
BRL355 billion.
Impressive lending results
In particular, Bradesco posted strong performances from its
insurance arm as well as impressive lending results.
Insurance contributed 39 percent of the bank’s revenues in the
first quarter, up from 31 percent a year ago and is a key part of
Bradesco’s growth strategy, with Bradesco Seguros already the
largest insurance company in Latin America. Premiums in the first
quarter totaled BRL5.4 billion equivalent to a market share of 24.1
percent, according to Vargas.
“The contribution of insurance increased strongly thanks to
reduced claims and better sales ratios.”
The prospects for mortgages were also very positive, said
Vargas. Last year, Bradesco originated BRL4 billion in mortgage
financing, representing a 22 percent market share.
For 2008, its target of origination stands at BRL5.3 billion,
and, Vargas added, he has “no doubt” the bank will meet this goal
given that it has already originated more than BRL1.5 billion in
the first quarter, financing more than 13,000 properties – a 27
percent market share.
“Our total loan portfolio grew by 37 percent over the last 12
months and by 59 percent in the first quarter this year, higher
than the market as a whole.”
While the Brazilian credit card market remains very
concentrated, with four domestic banks accounting for
three-quarters of the cards in force (Bradesco ranks second in
terms of market share with around 18 percent, compared to market
leader Unibanco with 26 percent), it remains a fast-growing sector
offering encouraging growth prospects for Bradesco.
In September 2007, Bradesco had a combined card base of 67.2
million, (up from 53.3 in September 2006) made up of 16.3 million
credit cards, 42.1 million debit cards and 8.9 million
private-label cards. By the end of the first quarter, Bradesco’s
credit card customer base had reached 18.4 million.
The bank offers a wide range of cards, including Visa,
MasterCard and private label credit cards. In 2007 it launched the
FixCard which, in addition to offering a lower interest rate,
allows cardholders to plan their expenditures knowing ahead of time
what the monthly payment will be.
Bradesco began issuing American Express’s Blue Card in the third
quarter of 2007, a first for the Brazilian market.
