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SAO PAULO (Reuters) – Shares in Brazil’s Banco Bradesco SA fell to their lowest level in almost two years on Friday after the bank reported fourth-quarter net income equivalent to less than half that of analysts’ estimates.
Bradesco reported a 75% drop in net income and sharply increased its provisions for loan losses to around $3 billion. The bank’s preferred shares were down 6.6% in early trading in Sao Paulo to 12.89 reais, paring losses that reached 8.7% after the open. Bradesco’s common shares were down almost 6% to 11.61 reais.
Bradesco Chief Executive Officer Octavio de Lazari told analysts in an earnings call on Friday that he expects the bank’s default ratio to remain high in the first half of 2023, and added that it should have restricted its lending criteria during the COVID-19 pandemic. “We extended more credit than we should have,” he said.
Bradesco set aside 4.9 billion reais in provisions in the fourth quarter to cover its loans to retailer Americanas SA, which has asked for bankruptcy protection. The Bradesco CEO said Americanas’ accounting inconsistencies happened due to fraud.
