UPDATE 3-Bradesco reluctant to raise spreads as Brazil rates jump

jueves 24 de abril de 2014 13:35 GYT

(Recasts with Bradesco's view on lending rates, comments, share performance)

By Guillermo Parra-Bernal and Aluísio Alves

April 24 (Reuters) - Banco Bradesco SA is wary about raising lending interest rates even if funding costs in Brazil stay high, executives said on Thursday, a signal the nation's No. 2 private-sector bank wants to protect market share as competition mounts.

The bank wants to stay "competitive" in segments presenting attractive growth opportunities, such as payroll loans, Chief Financial Officer Luiz Carlos Angelotti said on a conference call to discuss the bank's first-quarter results. He suggested that raising lending rates may not be the only way to compensate Bradesco for a higher cost of funding.

"You have to gauge it carefully, especially under these circumstances," Angelotti said .

His remarks illustrate the difficulties Bradesco faces in raising customer borrowing costs despite a year-long central bank monetary tightening cycle. Policymakers have lifted the benchmark Selic overnight rate by about 3.5 percentage points in the past year, triggering a 5 percentage point jump in lending rates.

Earlier in the day, Bradesco reported a quarterly profit that beat forecasts in a Reuters poll, even though the bank failed to stem a decline in interest income or to revive loan disbursements.

Bradesco's recurring net income, or profit excluding one-time items, rose to 3.47 billion reais ($1.56 billion) in the first quarter, beating the 3.38 billion reais estimate of six analysts surveyed.

Performance was mixed: interest income slipped for the first time in three quarters, trading-related gains slumped, and early default data deteriorated. But expenses fell to a one-year low and net interest margin, the average rate charged on loans, was stable.   Continuación...