Business Context and Reporting Period
This Form 6-K filing by Banco Bradesco S.A. (Bank Bradesco), dated March 30, 2012, discloses the company's consolidated financial results for the years ended December 31, 2011, and December 31, 2010. The primary purpose of this filing is to present the reconciliation of financial statements from Brazilian GAAP (BR GAAP) to International Financial Reporting Standards (IFRS), in compliance with Brazilian Monetary Council Resolution 3,786/09 and CVM Rule 457/07.
Key Financial Metrics (IFRS Basis)
The following metrics reflect the adjusted IFRS figures for the periods ended December 31, 2011, and December 31, 2010, in millions of Brazilian Reais (R$).
| Metric | 2011 | 2010 |
|---|---|---|
| Total Assets | 722,087 | 602,954 |
| Total Liabilities and Equity | 722,087 | 602,954 |
| Shareholders' Equity (Controlling) | 59,139 | 51,051 |
| Net Income (Controlling) | 10,958 | 9,940 |
| Net Income (Total) | 11,089 | 10,052 |
| Loans and Advances to Customers | 245,875 | 210,280 |
| Deposits from Customers | 216,321 | 192,476 |
Note: The filing does not provide explicit data for operating cash flows, profit margins, or specific debt-to-equity ratios. Dividend calculations are based on BR GAAP net income, not IFRS.
Material Changes and IFRS Adjustments
The transition from BR GAAP to IFRS resulted in significant reclassifications and adjustments to the balance sheet and income statement:
- Asset Reclassification: Significant reclassification occurred in financial assets. "Financial assets held for trading" decreased by R$ 36,272 million in 2011 due to reclassification, while "Financial assets available for sale" increased by R$ 31,394 million. "Investments held to maturity" were reduced by R$ 27,397 million.
- Equity Impact: Shareholders' equity attributable to the controlling shareholder increased by R$ 3,557 million in 2011 and R$ 3,008 million in 2010 due to IFRS adjustments.
- Net Income Impact: IFRS net income for 2011 was R$ 10,958 million compared to R$ 11,028 million under BR GAAP. The primary reduction was due to the reversal of hedge accounting (R$ 1,082 million) and deferred tax effects, partially offset by adjustments to the recoverable value of loans (R$ 979 million).
- Liabilities: Deposits from banks decreased by R$ 47,508 million in 2011 due to reclassification adjustments.
Outlook, Risks, and Management Commentary
The filing includes standard forward-looking statements regarding future economic circumstances, industry conditions, and company performance. Management notes that statements involving words such as "anticipates," "believes," and "expects" are subject to risks and uncertainties, including general economic and market conditions. There is no guarantee that expected trends will occur. The filing does not contain specific quantitative guidance or detailed management commentary on future operational strategies beyond the standard disclaimer.
Key Facts for Investor Verification
- Dividend Basis: Verify that dividends and interest on capital are calculated based on BR GAAP net income (R$ 11,028 million for 2011), not the IFRS net income figure.
- Asset Classification: Confirm the impact of reclassifying "held-to-maturity" and "trading" assets into "available-for-sale" categories on future volatility of equity.
- Hedge Accounting: Note the R$ 1,082 million reversal of hedge accounting in 2011 net income, which reduced reported earnings under IFRS compared to BR GAAP.
- Loan Provisions: Review the R$ 979 million positive adjustment to the recoverable value of loans under IFRS, indicating differences in impairment modeling between the two standards.