Bradesco lags behind in value and efficiency

Banco Bradesco, Brazil’s largest non-government bank in asset terms, is enjoying impressive income growth. But it cannot afford to rest on its laurels if it wants to keep up with the competition.Bill Hieronymous in Săo Paulo explains why.Márcio Cypriano, president and CEO of Banco Bradesco SA, appears confident yet relaxed as he talks to The Banker at the bank’s headquarters in Osasco, Săo Paulo. His contentment may be due to the bank’s announcement a few days earlier that its third-quarter net income has soared to R$752m ($263m) from R$564m a year ago – growth of 33%.Yet Bradesco has some way to go to catch up with its rival Banco Itaú, a fact that Mr Cypriano appears to shrug off. “This [larger market capitalisation for Itaú] is a function of its higher profitability in the last four years, higher than that of Bradesco,’’ he says. “This doesn’t bother us because we aren’t going to sell Bradesco.’’

by Banker Editor

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At the end of the first half, Bradesco had a market value of R21.2bn, about $7.5bn, compared with $9.8bn for Banco Itaú – a condemnatory judgment from the market, considering Bradesco’s much larger assets: R179.7bn compared with Itaú’s R122.76bn.

This could affect Bradesco’s ability to buy other institutions. After the wave of bank mergers in recent years, there are few institutions left to buy, says Mr Cypriano. But there are some state banks to be sold, he adds, mentioning Banco do Estado de Ceará, Banco do Estado de Espírito Santo, Banco do Estado de Santa Catarina and Banco do Estado do Piauí.