Business Context and Reporting Period
This Form 6-K filing by Banco Bradesco S.A. (Bank Bradesco) was submitted on July 27, 2017, to report a material fact regarding revised growth projections for the fiscal year 2017. The filing complies with Brazilian corporate law and CVM Instruction no. 358/2002.
Key Financial Metrics and Guidance
The filing provides revised "Pro Forma" projections for 2017, which combine historical data for Bradesco and HSBC Brasil since January 2016. These are not guarantees of future performance.
| Indicator | Previous Projection | Revised Projection |
|---|---|---|
| Loan Portfolio (Expanded) | 1% to 5% | -5% to -1% |
| Interest Earning Portion | 3% to 7% | -5% to -1% |
| Provision of Services | 12% to 16% | 2% to 6% |
| Operating Expenses (Personnel/Admin) | 10% to 14% | -4% to 0% |
| Insurance Premiums | 6% to 10% | 4% to 8% |
| ALL Expenses (Includes credit recovery income) | R$21 billion to R$24 billion | R$18 billion to R$21 billion |
Material Changes Versus Prior Period
Management has significantly downgraded its growth outlook for 2017 compared to previous estimates:
- Loan Portfolio: Shifted from expected growth of 1% to 5% to an expected contraction of 5% to 1%.
- Interest Earning Assets: Revised from growth of 3% to 7% to a contraction of 5% to 1%.
- Service Revenue: Growth expectations were lowered from 12% to 16% down to 2% to 6%.
- Operating Expenses: Revised from an increase of 10% to 14% to a decrease of 4% to 0%.
- Total Expenses: The projected range for ALL expenses was reduced from R$21-24 billion to R$18-21 billion.
Outlook, Risks, and Contingencies
The filing includes a standard forward-looking statements disclaimer, noting that projections are based on current assumptions regarding economic and market conditions. There is no guarantee that expected trends will occur. The projections are explicitly labeled as "Pro Forma" joint projections of Bradesco and HSBC Brasil and should not be considered effective historical data.
Investor Verification Checklist
- Verify the specific impact of the HSBC Brasil acquisition on the "Pro Forma" methodology used for these projections.
- Confirm the drivers behind the significant shift from loan portfolio growth to contraction.
- Review subsequent quarterly reports to assess the accuracy of the revised expense reduction targets.
- Check for any updates on credit recovery income, which is included in the ALL Expenses metric.