Business Context and Reporting Period
This Form 6-K filing by Banco Bradesco S.A. (Bradesco) is dated May 3, 2017, and pertains to the period ending June 30, 2017. The document serves as a formal response to an inquiry from the Brazilian Securities and Exchange Commission (CVM) regarding a media report published on April 28, 2017, in the newspaper Valor Econômico. The report alleged that Bradesco sold BRL 4 billion in "rotten" credit to Banco do Brasil (BB).
Key Financial Metrics
The filing does not provide standard financial performance metrics such as revenue, profit, cash flow, margins, or debt levels for the reporting period. The only specific financial figure mentioned is the nominal value of the loan portfolio in question:
- Portfolio Nominal Value: BRL 4 billion (loans written-off for impairment).
- Financial Impact: Management states the trade value and consequent effect on Bradesco's income were not relevant to its financial statements.
Material Changes and Transaction Details
Bradesco clarifies that the transaction involved the disposal of overdue loans, a normal operation in the financial market. The company asserts that:
- The BRL 4 billion figure represents the nominal value of loans already written-off for impairment, not the transaction price.
- The primary objective was to improve internal efficiency in managing overdue loans.
- The operation was previously disclosed in the explanatory notes of financial statements for the year ended December 31, 2016, and the quarter ended March 31, 2017.
- The transaction followed governance procedures, including independent auditing and a competitive bid process with major market participants.
Management Commentary and Risks
Management contends that the transaction did not meet the requirements for disclosure as a material fact under CVM Instruction No. 358/2002 due to the lack of relevance to financial statements. The filing includes a standard forward-looking statements disclaimer, noting that future results depend on economic conditions, industry trends, and operating factors, and that actual results may differ materially from expectations.
Investor Verification Checklist
- Verify the specific accounting treatment of the BRL 4 billion portfolio in the 2016 annual and Q1 2017 financial statement notes.
- Confirm the actual consideration received for the loan portfolio versus the nominal BRL 4 billion value.
- Review the CVM's final determination on whether the transaction required immediate public disclosure as a material fact.
- Assess the volume of similar overdue loan disposals in subsequent periods to gauge the scale of this operation relative to total non-performing assets.