UPDATE 4-Bradesco sees provisions within goal despite rising Brazil defaults
(Recasts to add executive comments, share performance, data throughout)
By Guillermo Parra-Bernal
SAO PAULO, April 28 (Reuters) - Banco Bradesco SA expects loan-loss provisions to end the year within target even if defaults climbed further, executives said on Thursday, trying to allay concerns that a harsh recession will lead Brazil's third-largest listed bank to accelerate loan refinancings for troubled individual and corporate borrowers.
Loan renegotiations will only happen when Bradesco can stem losses, Chief Financial Officer Luiz Carlos Angelotti said at a conference call to discuss first-quarter results. Provisions hit 17 billion reais ($4.9 billion) in the 12 months through March, close to the ceiling of Bradesco's guidance at 18 billion reais.
With bankruptcy filings more than doubling this year and the economy seen contracting by about 4 percent for the second year in a row, Bradesco and rivals are stepping up loan refinancing deals, a tack that Goldman Sachs Group Inc analysts have likened to "kicking the can a short distance down the road."
While the strategy has helped Bradesco stem the fastest jump in defaults in seven years last quarter, investors are growing concerned over the bank's ability to prevent a further deterioration in profitability and loan book quality.
"Our strategy is inherently conservative," Angelotti told reporters at the call. "We believe that the measures needed to help us avoid any unexpected event have been put in place."
Nonvoting shares, Bradesco's most widely traded class of stock, posted their steepest intraday decline in six weeks on Thursday as provisions at the Osasco, Brazil-based lender soared and refinancing for large corporate borrowers took place in a greater scale than expected.
Recurring net income came in at 4.113 billion reais ($1.17 billion) last quarter, below an average consensus estimate of 4.292 billion reais compiled by Thomson Reuters. The indicator, which measures profit excluding one-time items, sank 9.8 percent from the prior three months. Continuación...