Business Context and Reporting Period
This Form 6-K filing by Banco Bradesco S.A. (Bradesco) discloses the results for the fiscal year ended December 31, 2019, prepared in accordance with International Financial Reporting Standards (IFRS). The filing, dated March 6, 2020, details the reconciliation between Brazilian GAAP (BR GAAP) and IFRS, highlighting adjustments required for international reporting.
Key Financial Metrics (IFRS Basis)
- Total Assets: R$ 1,378,528 million
- Total Liabilities: R$ 1,242,984 million
- Total Equity: R$ 135,544 million (Attributable to controlling shareholders: R$ 135,100 million)
- Net Income (12M19): R$ 21,173 million (Attributable to controlling shareholders: R$ 21,023 million)
- Loans and Advances to Customers (Net): R$ 423,529 million
- Deposits from Customers: R$ 366,228 million
Note: The filing text does not provide explicit values for operating cash flow, profit margins, or specific debt-to-equity ratios.
Material Changes and Adjustments
The transition from BR GAAP to IFRS resulted in a net increase in total assets of R$ 19,389 million and total equity of R$ 1,111 million. Key adjustments include:
- Expected Loss on Financial Assets: Reduced equity by R$ 1,471 million and net income by R$ 1,011 million due to provisions on loans and other financial assets.
- Complementary Provision for Coverage: Reduced equity by R$ 1,359 million and net income by R$ 781 million, reflecting differences in insurance technical provisions.
- Business Combination: Increased equity by R$ 3,750 million and net income by R$ 722 million, primarily due to fair value recognition and non-amortization of goodwill.
- Asset Reclassification: Significant reclassification of financial assets, including a R$ 69,442 million reduction in assets at fair value through other comprehensive income and a R$ 69,842 million increase in securities at amortized cost.
Guidance, Outlook, and Risks
The filing contains standard forward-looking statements regarding future economic circumstances, industry conditions, and company performance. Management notes that actual results may differ materially from expectations due to risks including general economic and market conditions. The filing confirms that dividends and interest on own capital are calculated based on BR GAAP net income (R$ 22,583 million), not the IFRS net income.
Investor Verification Checklist
- Verify the full consolidated financial statements and the independent auditor's report (KPMG) on the company website (www.bradescori.com.br).
- Confirm dividend declarations based on BR GAAP net income (R$ 22,583 million) rather than IFRS net income.
- Review the specific impact of the "Expected Loss on Financial Assets" adjustment on future provisioning requirements.
- Monitor the treatment of goodwill under IFRS, which is tested for impairment rather than amortized.