Business Context and Reporting Period
This Form 6-K filing by Banco Bradesco S.A. (Bradesco) discloses the adoption of International Financial Reporting Standards (IFRS) for the years ended December 31, 2015, and December 31, 2014. The filing, dated March 7, 2016, reconciles previously reported Brazilian GAAP (BR GAAP) figures with IFRS requirements, providing updated consolidated financial statements.
Key Financial Metrics (IFRS Basis)
The following metrics reflect the IFRS-adjusted figures for the years ended December 31, 2015, and 2014 (in R$ millions):
- Net Income (Attributable to Controlling Shareholder): 18,133 (2015) vs. 15,315 (2014).
- Net Income (Total): 18,238 (2015) vs. 15,416 (2014).
- Total Assets: 1,026,703 (2015) vs. 930,451 (2014).
- Shareholders' Equity (Controlling): 90,790 (2015) vs. 82,168 (2014).
- Loans and Advances to Customers: 344,869 (2015) vs. 328,064 (2014).
- Deposits from Customers: 194,510 (2015) vs. 210,032 (2014).
Note: The filing does not explicitly state revenue, operating margins, cash flow, or specific debt ratios. Liquidity metrics such as the loan-to-deposit ratio are not calculated in the text.
Material Changes vs. Prior Period
Comparing 2015 to 2014 under IFRS:
- Profitability: Net income attributable to the controlling shareholder increased by approximately 18.4% (from 15,315 to 18,133).
- Balance Sheet Growth: Total assets grew by roughly 10.3% (from 930,451 to 1,026,703).
- Loan Portfolio: Loans and advances to customers increased by 5.1%.
- Deposits: Customer deposits decreased by 7.4%.
- Equity: Controlling shareholders' equity increased by 10.5%.
Accounting Adjustments and Management Commentary
The transition from BR GAAP to IFRS resulted in significant adjustments to both equity and net income. Key drivers for these changes include:
- Loan Impairment Adjustments: The most significant positive adjustment to net income in 2015 was 1,821 (R$ millions) due to changes in the recoverable value of loans and advances.
- Business Combinations: Adjustments related to fair value recognition of assets and liabilities in acquisitions added 184 to 2015 net income.
- Hedge Accounting: A negative adjustment of 307 to 2015 net income occurred because certain financial instruments were not designated as hedges under IAS 39, reversing amounts previously recorded in equity.
- Tax Effects: Deferred income tax and social contribution adjustments reduced net income by 717 in 2015.
Management notes that the net income basis for dividend calculations remains based on BR GAAP, which was released on January 28, 2016. The filing contains standard forward-looking statements regarding economic conditions and operational strategies, noting that actual results may differ materially from expectations.
Investor Verification Checklist
- Verify the complete consolidated financial statements and the unqualified audit opinion from KPMG on the company website (www.bradesco.com.br/ir).
- Confirm the BR GAAP net income figure released on January 28, 2016, as this is the basis for dividend and interest on capital payments.
- Review the specific methodology used for the "Adjustment to the recoverable value of loans and advances" to understand the impact on future provisioning.
- Assess the impact of the decrease in customer deposits (from 210,032 to 194,510) on liquidity and funding costs.
- Monitor the treatment of hedge accounting adjustments to ensure consistency in future reporting periods.