Entity Information
Entity Information | |
12 Months Ended
Dec. 31, 2009 BRL | |
Entity Information | |
Entity registrant name | BANK BRADESCO |
Entity central index key | 0001160330 |
Entity current reporting status | Yes |
Entity voluntary filers | Yes |
Current fiscal year end date | --12-31 |
Entity filer category | Large Accelerated Filer |
Entity well-known seasoned issuer | Yes |
Entity common stock, shares outstanding | 1,534,805,958 |
Document Information
Document Information | |
12 Months Ended
Dec. 31, 2009 BRL | |
Document Information | |
Document type | 20-F |
Document period end date | 2009-12-31 |
Amendment flag | false |
Document Fiscal Year Focus | 2,009 |
Document Fiscal Period Focus | FY |
Balance Sheet
Balance Sheet (BRL ) | |||||||||||||||||||
In Millions | Dec. 31, 2009
| Dec. 31, 2008
| |||||||||||||||||
Assets | |||||||||||||||||||
Cash and due from banks | $6,992 | $9,353 | |||||||||||||||||
Interest-earning deposits in other banks | 11,211 | 14,435 | |||||||||||||||||
Federal funds sold and securities purchased under agreements to resell (includes 46,950 and 82,146 pledged as collateral) | 82,146 | 46,950 | |||||||||||||||||
Brazilian Central Bank compulsory deposits | 32,696 | 26,384 | |||||||||||||||||
Trading securities, at fair value | 106,097 | 91,849 | |||||||||||||||||
Available for sale securities, at fair value | 37,234 | 29,955 | |||||||||||||||||
Held to maturity securities, at amortized cost | 3,883 | 4,097 | |||||||||||||||||
Loans - Assets | 179,934 | 174,835 | |||||||||||||||||
Allowance for loan losses | (14,572) | (10,318) | |||||||||||||||||
Net loans | 165,362 | 164,517 | |||||||||||||||||
Equity investees and other investments | 2,284 | 881 | |||||||||||||||||
Premises and equipment, net | 4,830 | 4,263 | |||||||||||||||||
Goodwill | 1,234 | 1,286 | |||||||||||||||||
Intangible assets, net | 3,643 | 3,138 | |||||||||||||||||
Other assets | 39,203 | 38,363 | |||||||||||||||||
Total assets | 496,815 | 435,471 | |||||||||||||||||
Deposits from customers | |||||||||||||||||||
Demand, non-interest bearing | 35,664 | 28,612 | |||||||||||||||||
Savings | 44,162 | 37,768 | |||||||||||||||||
Time | 90,537 | 97,423 | |||||||||||||||||
Deposits from financial institutions | 752 | 698 | |||||||||||||||||
Total deposits | 171,115 | 164,501 | |||||||||||||||||
Federal funds purchased and securities sold under agreements to repurchase | 108,357 | 74,730 | |||||||||||||||||
Short-term borrowings | 7,976 | 13,849 | |||||||||||||||||
Long-term debt | 50,817 | 47,255 | |||||||||||||||||
Pension plan investment contracts | 52,314 | 43,388 | |||||||||||||||||
Insurance claims and pension plan reserves | 15,354 | 14,689 | |||||||||||||||||
Other liabilities | 44,772 | 39,797 | |||||||||||||||||
Total liabilities | 450,705 | 398,209 | |||||||||||||||||
Shareholders equity | |||||||||||||||||||
Common shares - no par value (issued and authorized at December 31, 2008 - 1,688,428,477 and at December 31, 2009 - 1,713,543,005) | 13,250 | 11,500 | |||||||||||||||||
Preferred shares - no par value (issued and authorized at December 31, 2008 - 1,688,428,303 and at December 31, 2009 - 1,713,542,828) | 13,250 | 11,500 | |||||||||||||||||
Treasury shares (at December 31, 2008 - 141,923 common shares and 38,060 preferred shares and at December 31, 2009 - 3,338,170 common shares and 3,197,260 preferred shares) | (189) | (5) | |||||||||||||||||
Additional paid-in capital | 237 | 212 | |||||||||||||||||
Statutory reserves | 2,254 | 1,853 | |||||||||||||||||
Accumulated other comprehensive income | 1,335 | 85 | |||||||||||||||||
Unappropriated retained earnings | 15,633 | 11,785 | |||||||||||||||||
Shareholders equity of the Parent Company | 45,770 | 36,930 | |||||||||||||||||
Noncontrolling interest | 340 | 332 | |||||||||||||||||
Total shareholders' equity and noncontrolling interest | 46,110 | [1] | 37,262 | [1] | |||||||||||||||
Total liabilities, shareholders' equity and noncontrolling interest | $496,815 | $435,471 | |||||||||||||||||
[1]Under ASC 810, effective January 1, 2009, minority interest in consolidated subsidiaries should be accounted as part of shareholders equity in consolidated financial statements, apart from the shareholders equity of the parent company. For comparison purposes, this reclassification was also made for fiscal year ended December 31, 2008 figures. |
Balance Sheet Parenthetical
Balance Sheet Parenthetical | ||
Dec. 31, 2009
BRL | Dec. 31, 2008
BRL | |
Shareholders equity | ||
Common shares - no par value - issued | 1,713,543,005 | 1,688,428,477 |
Common shares - no par value - authorized | 1,713,543,005 | 1,688,428,477 |
Preferred shares - no par value - issued | 1,713,542,828 | 1,688,428,303 |
Preferred shares - no par value - authorized | 1,713,542,828 | 1,688,428,303 |
Treasury shares - common shares | 3,338,170 | 141,923 |
Treasury shares - preferred shares | 3,197,260 | 38,060 |
Statement of Income
Statement of Income (BRL ) | |||||||||||||||||||
In Millions, except Share data | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 | ||||||||||||||||
Interest income | |||||||||||||||||||
Interest on loans | $32,708 | $33,662 | $22,608 | ||||||||||||||||
Interest on federal funds sold and securities purchased under agreements to resell | 7,701 | 6,466 | 3,429 | ||||||||||||||||
Interest on securities | |||||||||||||||||||
Trading | 8,737 | 7,685 | 5,677 | ||||||||||||||||
Available for sale | 2,591 | 3,248 | 2,843 | ||||||||||||||||
Held to maturity | 439 | 509 | 279 | ||||||||||||||||
Interest on deposits in other banks | 506 | 706 | 429 | ||||||||||||||||
Interest on Brazilian Central Bank compulsory deposits | 1,434 | 1,489 | 1,207 | ||||||||||||||||
Other interest income | 35 | 38 | 37 | ||||||||||||||||
Total interest income | 54,151 | 53,803 | 36,509 | ||||||||||||||||
From customers | |||||||||||||||||||
Savings deposits | (2,450) | (2,442) | (2,002) | ||||||||||||||||
Time deposits | (8,929) | (7,114) | (3,524) | ||||||||||||||||
From financial institutions | (67) | (80) | (33) | ||||||||||||||||
Interest on federal funds purchased and securities sold under agreements to repurchase | (8,704) | (9,169) | (5,540) | ||||||||||||||||
Interest on short-term borrowings | 2,197 | (4,899) | 727 | ||||||||||||||||
Interest on long-term debt | (3,065) | (4,728) | (2,366) | ||||||||||||||||
Total interest expense | (21,018) | (28,432) | (12,738) | ||||||||||||||||
Net interest income | 33,133 | 25,371 | 23,771 | ||||||||||||||||
Provision for loan losses | (10,822) | (6,651) | (4,616) | ||||||||||||||||
Net interest income after provision for loan losses | 22,311 | 18,720 | 19,155 | ||||||||||||||||
Non-interest income | |||||||||||||||||||
Fee and commission income | 9,381 | 8,997 | 7,819 | ||||||||||||||||
Net trading gains (losses) | 3,075 | (371) | 3,694 | ||||||||||||||||
Net realized gains on available for sale securities, including impairment losses | 164 | 609 | 1,456 | ||||||||||||||||
Equity in earnings of unconsolidated companies | 644 | 597 | 407 | ||||||||||||||||
Insurance premiums | 12,521 | 10,963 | 8,843 | ||||||||||||||||
Pension plan income | 607 | 710 | 555 | ||||||||||||||||
Other non-interest income | 5,342 | 2,155 | 2,307 | ||||||||||||||||
Total other-than-temporary impairment losses | (904) | (2) | (6) | ||||||||||||||||
Less: portion of other-than-temporary impairment losses recognized in other comprehensive income | 619 | 0 | 0 | ||||||||||||||||
Net impairment losses recognized in earnings on available-for-sale debt securities | (285) | (2) | (6) | ||||||||||||||||
Total non-interest income | 31,734 | 23,660 | 25,081 | ||||||||||||||||
Non-interest expense | |||||||||||||||||||
Salaries and benefits | (7,404) | (6,880) | (6,769) | ||||||||||||||||
Administrative expenses | (8,211) | (7,288) | (6,236) | ||||||||||||||||
Amortization of intangible assets | (660) | (802) | (620) | ||||||||||||||||
Insurance claims | (8,329) | (7,391) | (6,012) | ||||||||||||||||
Changes in provisions for insurance, pension plans, certificated savings plans and pension investment contracts | (6,008) | (4,225) | (4,981) | ||||||||||||||||
Pension plan operating expenses | (410) | (482) | (478) | ||||||||||||||||
Insurance and pension plan selling expenses | (1,654) | (1,014) | (1,157) | ||||||||||||||||
Depreciation and amortization | (1,053) | (881) | (746) | ||||||||||||||||
Other non-interest expense | (6,647) | (6,669) | (5,940) | ||||||||||||||||
Total non-interest expense | (40,376) | (35,632) | (32,939) | ||||||||||||||||
Income before income taxes | 13,669 | 6,748 | 11,297 | ||||||||||||||||
Taxes on income | |||||||||||||||||||
Current expense | (5,673) | (3,141) | (3,869) | ||||||||||||||||
Deferred tax benefit | 1,253 | 3,542 | 517 | ||||||||||||||||
Total taxes on income | (4,420) | 401 | (3,352) | ||||||||||||||||
Net income | 9,249 | 7,149 | 7,945 | ||||||||||||||||
Net income attributed to noncontrolling interest | (33) | (131) | (37) | ||||||||||||||||
Parent Company net income | 9,216 | 7,018 | 7,908 | ||||||||||||||||
Net income applicable to each class of shares | |||||||||||||||||||
Net income applicable to each class of shares - common shares | 4,389 | [1],[2],[3] | 3,342 | [1],[2],[3] | 3,764 | [1],[2],[3] | |||||||||||||
Net income applicable to each class of shares - preferred shares | 4,827 | [1],[2],[3] | 3,676 | [1],[2],[3] | 4,144 | [1],[2],[3] | |||||||||||||
Parent Company net income | $9,216 | $7,018 | $7,908 | ||||||||||||||||
Earnings per shares (in reais) | |||||||||||||||||||
Earnings per shares - common shares | 2.6 | [1],[2],[3],[4] | 1.98 | [1],[2],[3],[4] | 2.28 | [1],[2],[3],[4] | |||||||||||||
Earnings per shares - preferred shares | 2.86 | [1],[2],[3],[4] | 2.18 | [1],[2],[3],[4] | 2.5 | [1],[2],[3],[4] | |||||||||||||
Weighted average number of shares outstanding | |||||||||||||||||||
Weighted average number of shares outstanding - common shares | 1,687,866,458 | [1],[2],[3] | 1,684,494,483 | [1],[2],[3] | 1,654,409,790 | [1],[2],[3] | |||||||||||||
Weighted average number of shares outstanding - preferred shares | 1,687,895,921 | [1],[2],[3] | 1,684,573,384 | [1],[2],[3] | 1,655,650,313 | [1],[2],[3] | |||||||||||||
[1]On December 18, 2009, our Board of Directors approved a split of our capital stock, in which our shareholders were entitled to one new share for each ten existing shares of the same class. Therefore, all related share amounts have been retroactively adjusted for all periods presented to reflect the stock split, whereby one new share was received in exchange for each ten shares held. | |||||||||||||||||||
[2]On March 24, 2008, our Board of Directors approved a split of our capital stock, in which our shareholders were entitled to one new share for each two existing shares of the same class. Therefore, all related share amounts have been retroactively adjusted for all periods presented to reflect the stock split, whereby one new share was received in exchange for each two shares held. | |||||||||||||||||||
[3]On October 29, 2009, the Special Shareholders Meeting approved the merger of the Banco Ibi S.A. upon the issue of 45,662,775 new shares, being 22,831,389 common shares and 22,831,386 preferred shares, to the formers shareholders of the Banco Ibi S.A. | |||||||||||||||||||
[4]None of our outstanding obligations are exchangeable or convertible into equity securities and as a result, diluted earnings per share do not differ from net income per share (Note 2 (u)). |
Cash Flows
Cash Flows (BRL ) | |||
In Millions | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
Operating activities | |||
Net income | $9,249 | $7,149 | $7,945 |
Adjustment to reconcile net income to net cash from operating activities: | |||
Provision for loan losses | 10,822 | 6,651 | 4,616 |
Provision for other investments | 0 | 0 | 9 |
Provision for insurance, pension plans, certificated savings plans and pension investment contracts | 6,008 | 4,225 | 4,981 |
Depreciation and amortization | 1,053 | 881 | 746 |
Amortization of intangible assets | 660 | 802 | 620 |
Impairment of intangible assets | 37 | 0 | 0 |
Equity in earnings of unconsolidated companies | (644) | (597) | (407) |
Losses (gains) on foreclosed assets, net | (105) | 37 | 11 |
Net realized gains on available for sale securities, including impairment losses | (164) | (609) | (1,456) |
(Gains) losses on sale of premises and equipment, net | 9 | (34) | 5 |
(Gains) on sale of unconsolidated companies | (3,142) | (168) | (1,225) |
Deferred tax benefit | (1,253) | (3,542) | (517) |
Dividends received from unconsolidated companies | 476 | 563 | 301 |
Changes in assets and liabilities | |||
Net (increase) decrease in interest receivable | 224 | (2,940) | (1,573) |
Net increase (decrease) in interest payable | 2,192 | 2,582 | (262) |
(Increase) decrease in trading assets | (10,072) | (33,803) | 3,382 |
(Increase) decrease in other assets | 1,116 | (12,667) | (2,709) |
Net increase (decrease) in foreign exchange portfolio | (212) | 103 | 179 |
Increase in other liabilities | 2,567 | 3,068 | 4,349 |
Net cash provided by (used in) operating activities | 18,821 | (28,299) | 18,995 |
Investing activities | |||
Net (increase) decrease in Brazilian Central Bank compulsory deposits | (4,723) | 10,338 | (4,875) |
Net (increase) decrease in federal funds sold and securities purchased under agreements to resell | (2,047) | 0 | 0 |
Purchases of available for sale securities | (21,347) | (4,878) | (6,658) |
Proceeds from sale of available for sale securities | 8,614 | 4,715 | 3,094 |
Purchases of held to maturity securities | (14) | (495) | (306) |
Proceeds from maturities of held to maturity securities | 102 | 3 | 37 |
Net increase in loans | (9,750) | (46,315) | (35,363) |
Acquisition of subsidiaries, net of cash and cash equivalents paid | 35 | 149 | (180) |
Acquisition of intangible assets | (390) | (822) | (984) |
Purchases of unconsolidated companies | (340) | (160) | 0 |
Purchases of premises and equipment | (1,340) | (1,289) | (962) |
Proceeds from sale of premises and equipment | 184 | 112 | 271 |
Proceeds from sale of foreclosed assets | 1,028 | 546 | 185 |
Proceeds from sale of unconsolidated companies | 2,559 | 242 | 1,357 |
Net cash used in investing activities | (27,429) | (37,854) | (44,384) |
Financing activities | |||
Net increase in deposits | 2,387 | 64,678 | 14,588 |
Net increase in federal funds purchased and securities sold under agreements to repurchase | 33,526 | 5,715 | 26,140 |
Net increase in pension plans investment contracts | 3,866 | 2,566 | 4,139 |
Net increase (decrease) in short-term borrowings | (5,900) | 5,890 | 2,280 |
Borrowings under long-term debt | 15,224 | 12,917 | 14,071 |
Repayment of long-term debt | (11,043) | (6,137) | (6,421) |
Noncontrolling interest - Financing activities | 23 | (62) | 29 |
Capital increase, financing activities | 0 | 1,207 | 0 |
Sale of shares by a subsidiary | 0 | 0 | 175 |
Purchase of own shares | (184) | (5) | (82) |
Dividends and interest paid on shareholders equity | (2,871) | (3,150) | (808) |
Net cash provided by financing activities | 35,028 | 83,619 | 54,111 |
Cash and cash equivalents | |||
At beginning of the year | 57,562 | 40,096 | 11,374 |
At end of the year | 83,982 | 57,562 | 40,096 |
Increase (decrease) in cash and cash equivalents | 26,420 | 17,466 | 28,722 |
Supplemental cash flow disclosure | |||
Cash paid for interest | (18,825) | (25,850) | (12,999) |
Cash paid for taxes on income and social contribution | (5,274) | (3,358) | (2,959) |
Non-cash transaction | |||
Loans transferred to foreclosed assets | 1,055 | 600 | 192 |
Dividends and interest on shareholders capital declared but not paid | 1,548 | 1,536 | 2,092 |
Issuance of shares for BMC acquisition | 0 | 0 | 790 |
Issuance of shares for Banco Ibi acquisition | 1,393 | 0 | 0 |
Exchange of equity interest in Odontoprev | $1,045 | $0 | $0 |
Shar. Equity
Shar. Equity (BRL ) | |||||||||||||||||||
In Millions, except Share data | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 | Dec. 31, 2006
| |||||||||||||||
Net income | $9,249 | $7,149 | $7,945 | ||||||||||||||||
Available for sale securities | 1,266 | [1] | (1,810) | [1] | 685 | [1] | |||||||||||||
Adjustment upon defined benefit plans | (16) | 7 | 43 | ||||||||||||||||
Comprehensive income | 10,499 | 5,346 | 8,673 | ||||||||||||||||
Interest on shareholders capital and dividends | (2,883) | (2,594) | (2,826) | ||||||||||||||||
Purchase of noncontrolling interest | 23 | 154 | |||||||||||||||||
Decrease from sale of noncontrolling interest | (62) | ||||||||||||||||||
Purchase of own shares - value | (184) | (5) | (82) | ||||||||||||||||
Capital increase - value | 1,393 | [2] | 1,207 | [3] | 894 | [4] | |||||||||||||
Transfers | 0 | [2],[5] | 0 | [6] | |||||||||||||||
Balance on December 31 - value | 46,110 | 37,262 | 33,370 | 26,557 | |||||||||||||||
Distributed earnings (interest on shareholders capital and dividends) and Total | |||||||||||||||||||
Common | 0.8 | [2],[3],[5],[7],[8] | 0.73 | [2],[3],[5],[7],[8] | 0.81 | [2],[3],[5],[7],[8] | |||||||||||||
Preferred | 0.88 | [2],[3],[5],[7],[8] | 0.8 | [2],[3],[5],[7],[8] | 0.89 | [2],[3],[5],[7],[8] | |||||||||||||
Common stock [Member] | |||||||||||||||||||
Shares subscribed and issued | 23,023,257 | ||||||||||||||||||
Shares issued to merge BMC shares | 15,344,370 | ||||||||||||||||||
Shares issued to merge Banco Ibi shares | 25,114,528 | ||||||||||||||||||
Treasury shares cancelled | (1,368,235) | ||||||||||||||||||
Balance on December 31 - shares | 1,713,543,005 | [10],[11],[7],[8],[9] | 1,688,428,477 | [10],[11],[7],[8],[9] | 1,666,773,455 | [10],[11],[7],[8],[9] | 1,651,429,085 | [10],[11],[7],[8],[9] | |||||||||||
Capital increase - value | 684 | 600 | 395 | ||||||||||||||||
Transfers | 1,066 | 1,403 | 2,007 | ||||||||||||||||
Balance on December 31 - value | 13,250 | 11,500 | 9,497 | 7,095 | |||||||||||||||
Preferred stock [Member] | |||||||||||||||||||
Shares subscribed and issued | 23,023,255 | ||||||||||||||||||
Shares issued to merge BMC shares | 15,344,198 | ||||||||||||||||||
Shares issued to merge Banco Ibi shares | 25,114,525 | ||||||||||||||||||
Treasury shares cancelled | (2,339,795) | ||||||||||||||||||
Balance on December 31 - shares | 1,713,542,828 | [10],[11],[7],[8],[9] | 1,688,428,303 | [10],[11],[7],[8],[9] | 1,667,744,843 | [10],[11],[7],[8],[9] | 1,652,400,645 | [10],[11],[7],[8],[9] | |||||||||||
Capital increase - value | 684 | 600 | 395 | ||||||||||||||||
Transfers | 1,066 | 1,397 | 2,003 | ||||||||||||||||
Balance on December 31 - value | 13,250 | 11,500 | 9,503 | 7,105 | |||||||||||||||
Treasury stock [Member] | |||||||||||||||||||
Purchase of own shares - value | (184) | (5) | (82) | ||||||||||||||||
Transfers | 132 | ||||||||||||||||||
Balance on December 31 - value | (189) | (5) | (132) | (50) | |||||||||||||||
Common treasury stock [Member] | |||||||||||||||||||
Treasury shares cancelled | 1,368,235 | ||||||||||||||||||
Purchase of own shares - shares | (3,196,247) | (142,803) | (126,555) | ||||||||||||||||
Balance on December 31 - shares | (3,338,170) | [10],[11],[7],[8],[9] | (141,923) | [10],[11],[7],[8],[9] | (1,367,355) | [10],[11],[7],[8],[9] | (1,240,800) | [10],[11],[7],[8],[9] | |||||||||||
Preferred treasury stock [Member] | |||||||||||||||||||
Treasury shares cancelled | 2,339,795 | ||||||||||||||||||
Purchase of own shares - shares | (3,159,200) | (38,940) | (2,328,355) | ||||||||||||||||
Balance on December 31 - shares | (3,197,260) | [10],[11],[7],[8],[9] | (38,060) | [10],[11],[7],[8],[9] | (2,338,915) | [10],[11],[7],[8],[9] | (10,560) | [10],[11],[7],[8],[9] | |||||||||||
Additional paid-in capital [Member] | |||||||||||||||||||
Capital increase - value | 25 | 7 | 104 | ||||||||||||||||
Transfers | 401 | ||||||||||||||||||
Balance on December 31 - value | 237 | 212 | 205 | 101 | |||||||||||||||
Statutory reserve [Member] | |||||||||||||||||||
Transfers | 376 | 190 | |||||||||||||||||
Balance on December 31 - value | 2,254 | 1,853 | 1,477 | 1,287 | |||||||||||||||
Accumulated other comprehensive income [Member] | |||||||||||||||||||
Available for sale securities | 1,266 | (1,810) | 685 | ||||||||||||||||
Adjustment upon defined benefit plans | (16) | 7 | 43 | ||||||||||||||||
Balance on December 31 - value | 1,335 | [12] | 85 | [12] | 1,888 | [12] | 1,160 | ||||||||||||
Unappropriated retained earnings [Member] | |||||||||||||||||||
Net income | 9,216 | 7,018 | 7,908 | ||||||||||||||||
Interest on shareholders capital and dividends | (2,835) | (2,576) | (2,823) | ||||||||||||||||
Transfers | (2,533) | (3,308) | (4,200) | ||||||||||||||||
Balance on December 31 - value | 15,633 | 11,785 | 10,651 | 9,766 | |||||||||||||||
Noncontrolling interest [Member] | |||||||||||||||||||
Net income | 33 | 131 | 37 | ||||||||||||||||
Interest on shareholders capital and dividends | (48) | (18) | (3) | ||||||||||||||||
Purchase of noncontrolling interest | 23 | 154 | |||||||||||||||||
Decrease from sale of noncontrolling interest | (62) | ||||||||||||||||||
Balance on December 31 - value | $340 | $332 | $281 | $93 | |||||||||||||||
[1]Adjusted by other than temporary losses written off, as described in Note 5. | |||||||||||||||||||
[2]On October 29, 2009, the Special Shareholders Meeting approved the merger of the Banco Ibi SA upon the issue of 45,662,775 new shares, being 22,831,389 common shares and 22,831,386 preferred shares, to the formers shareholders of the Banco Ibi S.A., in amount of R$1,368 and capital increase through the transfer of reserve, without issue new shares, in amount of R$ 132 (R$66 of common shares and R$66 of preferred shares). | |||||||||||||||||||
[3]A capital increase of R$1,200 (R$600 of common shares and R$ 600 of preferred shares) with no par value, was approved on a shareholders meeting in January 4, 2008. | |||||||||||||||||||
[4]In August 2007, a capital increase of R$790, (R$395 of common shares and R$395 of preferred shares ) with no par value was approved in our Shareholders General Meeting for purposes of BMC acquisition (note 1(b)) and a capital transaction related to a sale of shares by a subsidiary in July, 2007. | |||||||||||||||||||
[5]On December 18, 2009, our Special Shareholders Meeting approved a split of our capital stock, in which our shareholders were entitled to one new share for each ten existing shares of the same class. Therefore, all related share amounts have been retroactively adjusted for all periods presented to reflect the stock split, whereby one new share was received in exchange for each ten shares held. The same Special Shareholders Meeting approved the capital increase through the transfer of reserve, in amount of R$2,000 (R$1,000 of common shares and R$1,000 of preferred shares). | |||||||||||||||||||
[6]Increase in capital stock of R$ 4,010, with R$ 2,007 of common shares and R$ 2,003 of preferred shares, through the incorporation of statutory reserves. This increase was approved on shareholders meetings in March and August, 2007. | |||||||||||||||||||
[7]On March 12, 2007, our Board of Directors approved a split of our capital stock, in which our shareholders were entitled to one new share for each existing share of the same class. Therefore, all related share amounts have been retroactively adjusted for all periods presented to reflect the stock split, whereby one new share was received in exchange for each share held. | |||||||||||||||||||
[8]On March 24, 2008, our Board of Directors approved a split of our capital stock, in which our shareholders were entitled to one new share for each two existing shares of the same class. Therefore, all related share amounts have been retroactively adjusted for all periods presented to reflect the stock split, whereby one new share was received in exchange for each two shares held. | |||||||||||||||||||
[9]On December 18, 2009, our Board of Directors approved a split of our capital stock, in which our shareholders were entitled to one new share for each ten existing shares of the same class. Therefore, all related share amounts have been retroactively adjusted for all periods presented to reflect the stock split, whereby one new share was received in exchange for each ten shares held. | |||||||||||||||||||
[10]On January 4, 2008, our Board of Directors approved the cancellation on 3,370,936 book-entry shares, with no par value, constituted of 1,243,850 treasury common shares and 2,127,086 treasury preferred shares, representing its capital stock. | |||||||||||||||||||
[11]On October 29, 2009, the Special Shareholders Meeting approved the merger of the Banco Ibi S.A. upon the issue of 45,662,775 new shares, being 22,831,389 common shares and 22,831,386 preferred shares, to the formers shareholders of the Banco Ibi S.A. | |||||||||||||||||||
[12]Consists of (i) unrealized gains of investment securities classified as available for sale, and (ii) gain on defined-benefit pension plans, all of them net of deferred income tax and social contribution effects amounting to R$1,444, R$(42) and R$1,330 at December 31, 2007, 2008 and 2009, respectively. |
Note 1 - Basis Of Presentation
Note 1 - Basis Of Presentation | |
12 Months Ended
Dec. 31, 2009 BRL | |
Notes to Consolidated Financial Statements | |
Note 1 - Basis of Presentation | 1. Basis of Presentation (a) History Banco Bradesco S.A. (also referred as we, the Company or Bradesco), a publicly traded company organized under the laws of the Federative Republic of Brazil, has its headquarters in Osasco, State of So Paulo, Brazil. We are a multiple service bank under Brazilian banking regulations, operating principally in two segments. The Banking segment includes a wide variety of banking activities, servicing both retail and corporate customers and engaging in investment banking, international banking, consortia administration and asset management operations. The Insurance, Pension Plan and Certificated Savings plans segment relates to auto, health, life, casualty and property insurance, pension and certificated savings plans. Our retail banking products include demand deposits, savings deposits, time deposits, mutual funds, foreign exchange services and a variety of financing operations including overdraft facilities, credit cards, installment loans and consortia administration. Corporate services include cash management and treasury services, foreign exchange operations, corporate finance and investment banking services, hedging programs and financing operations including working capital loans, leasing and installment loans. Such services are conducted primarily in Brazilian markets but also include, to a lesser extent, cross-border services. We have over the years acquired a number of Brazilian financial and broker institutions in order to expand our business and customer base. The effects of acquisitions made in 2007, 2008 and through 2009, either individually or on a combined basis, were not significant to us. We have prepared these financial statements in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP), which differ in certain respects from accounting principles we apply in accordance with accounting practices adopted in Brazil (Brazilian GAAP) including the rules and regulations of the National Monetary Council (CMN), Banco Central do Brasil (Central Bank), Committee for Accounting Pronouncements (CPC), Insurance Superintendency (SUSEP), Brazilian Securities Commission (CVM), National Private Insurance Council (CNSP) and the National Agency for Supplementary Healthcare (ANS). Shareholders' equity and net income included in these financial statements differ from those included in the statutory accounting records prepared in accordance with Brazilian GAAP as a result of adjustments made to reflect the requirements of U.S. GAAP. Appropriated reserves under Corporate Law available for distribution, net of treasury shares, were R$10,002 and R$12,579 at December 31, 2008 and 2009, respectively. The consolidated financial statements include the accounts of Banco Bradesco S.A. (parent company), its foreign branches and all direct or indirect majority-owned subsidiaries, based on the concepts of the FASB Accounting Standards ASC 810 Consolidation. All significant intercompany accounts and transactions have been eliminated. In addition, the consolidated financial statements include account balances of Variable Interest Entities (VIEs), of which we are t |
Note 2 - Significant Accounting
Note 2 - Significant Accounting Policies | |
12 Months Ended
Dec. 31, 2009 BRL | |
Notes to Consolidated Financial Statements | |
Significant Accounting Policies | 2. Significant Accounting Policies The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The consolidated financial statements include various estimates and assumptions, including, but not limited to: the adequacy of the allowance for loan losses, estimates of fair value of certain financial instruments, depreciation and amortization, asset impairments, useful lives of intangible assets, tax valuation allowances, assumptions used for calculation of insurance reserves, pension plans, contingencies and reserves for potential losses from tax uncertainties. Actual results could differ from those estimates a) Constant currency remeasurement Until December 31, 1997, Brazil was considered to be a highly inflationary environment and accordingly all balances and transactions prior to that date were remeasured at December 31, 1997 price levels. The index selected for this remeasurement was the General Price Index - Internal Availability (IGP-DI), which we consider to be the most appropriate index due to its independent source, long history of publication and its mix of wholesale, consumer and construction prices. As from January 1, 1998, Brazil was no longer a highly inflationary environment, since the cumulative rate of inflation over preceding three-year period was below 100% without any indication of a return to the high rates prevailing prior to June 30, 1994. Accordingly, balances and transactions as from January 1, 1998 are expressed in nominal reais, as required by U.S. GAAP and the guidelines of the U.S. Securities and Exchange Commission (SEC). b) Cash and cash equivalents For purposes of the statement of cash flows, cash and cash equivalents include cash and due from banks, interest-earning deposits in other banks and federal funds sold and securities purchased under agreements to resell, that have original maturities of three months or less and present insignificant risk of changes in value. December 31, 2008 2009 Cash and due from banks 9,353 6,992 Interest-earning deposits in other banks 6,220 4,289 Federal funds sold and securities purchased under agreements to resell 41,989 72,701 Total 57,562 83,982 c) Presentation of interest earning assets and interest bearing liabilities. Interest earning assets and interest bearing liabilities are presented in the consolidated balance sheet at amortized cost using the effective yield interest method. Such presentation is required since accrued financial charges are added to the outstanding principal each period for substantially all Brazilian real-based assets and liabilities. The total financial charges accrued on the outstanding principal of assets was R$11,213 and R$10,990 at December 31, 2008 and 2009, respectively. Total financial charges accrued on outstanding principal of liabilities was R$7,155 and R$ |
Note 3 - Brazilian Central Bank
Note 3 - Brazilian Central Bank Compulsory Deposits | |
12 Months Ended
Dec. 31, 2009 BRL | |
Notes to Consolidated Financial Statements | |
Brazilian Central Bank Compulsory Deposits | 3. Brazilian Central Bank Compulsory Deposits a) Like other Brazilian financial institutions, we are required to maintain deposit funds with the Central Bank or to purchase and hold Brazilian federal government securities in the form of compulsory deposits which are as follows: December 31, 2008 2009 Non-interest earning (1) 5,591 8,962 Interest-earning (2) 13,183 14,772 Interest-earning (3) 7,610 8,962 Total 26,384 32,696 (1) Related to demand deposits. (2) Mainly related to time deposits deposited with the Central Bank in the form of Brazilian government securities. (3) Mainly related to saving deposits. b) The Brazilian government securities related to the compulsory deposits and accounted for under ASC 320 were as follows: Available for sale Held to maturity Trading securities securities securities 2008 2009 2008 2009 2008 2009 Amortized cost 13,042 7,998 - 6,795 - - Gross unrealized gains 147 63 - 1 - - Gross unrealized losses (6) (7) - (78) - - Fair value 13,183 8,054 - 6,718 - - Average balance 9,114 15,894 The amortized cost and the fair value of the securities, by maturity, were as follows: December 31, 2008 2009 Amortized Fair Amortized Fair cost value cost value Due in one year or less 3,593 3,593 1,934 1,935 Due after one year through five years 9,449 9,590 12,859 12,837 Total 13,042 13,183 14,793 14,772 |
Note 4 - Trading Securities
Note 4 - Trading Securities | |
12 Months Ended
Dec. 31, 2009 BRL | |
Notes to Consolidated Financial Statements | |
Trading Securities | 4. Trading Securities Fair value December 31, Average balance 2008 2009 2008 2009 Mutual funds(1) 41,042 50,677 39,176 46,162 Brazilian government securities 35,727 44,101 21,217 34,963 Corporate debt and equity securities 6,404 4,992 2,780 6,390 Brazilian sovereign bonds 43 35 35 38 Bank debt securities 4,490 4,839 3,871 3,942 Foreign government securities 1,756 82 3,449 1,245 Total 89,462 104,726 70,528 92,740 Derivative financial instruments 2,387 1,371 2,261 2,199 Total trading account assets 91,849 106,097 72,789 94,939 (1) Includes investments funds with respect to investments contracts (see Note 2(v)). Net unrealized gains (losses) included in trading assets at December 31, 2008 and 2009 were R$1,006 and R$154, respectively. The net change in the unrealized gains (losses) on trading securities held as of December 31, 2007, 2008 and 2009, included in non-interest income, were R$(88), R$1,071 and R$(852), respectively. Trading securities presented above include securities pledged as collateral, that are not permitted by contract to be sold or repledged by counterparts, amounted to R$6,686 and R$4,182 at December 31, 2008 and 2009, respectively. Derivative positions presented above represent the fair values of interest rate, foreign exchange, equity and commodity-related products, including financial forward settlement and option contracts and swap agreements associated with our financial derivative instruments trading activities. |
Note 5 - Available For Sale Sec
Note 5 - Available For Sale Securities | |
12 Months Ended
Dec. 31, 2009 BRL | |
Notes to Consolidated Financial Statements | |
Available for Sale Securities | 5. Available for Sale Securities Gross Gross Amortized unrealized unrealized Fair cost gains losses value December 31, 2008 Brazilian government securities 19,860 931 (341) 20,450 Brazilian sovereign bonds 1,642 249 (114) 1,777 Corporate debt securities 4,051 137 (83) 4,105 Bank debt securities 341 98 (1) 438 Marketable equity securities 4,216 433 (1,464) 3,185 Total 30,110 1,848 (2,003) 29,955 December 31, 2009 Brazilian government securities 23,865 2,222 (111) 25,976 Brazilian sovereign bonds 1,535 68 (131) 1,472 Corporate debt securities 4,513 50 (200) 4,363 Bank debt securities 1,178 37 (12) 1,203 Foreign government securities 148 - (18) 130 Marketable equity securities 3,304 917 (131) 4,090 Total 34,543 3,294 (603) 37,234 In 2007, 2008 and 2009 as a result of the assessment of the other than temporary impairment we recorded R$26, R$89 and R$290, respectively, as other than temporary losses and they were written off and recorded as non-interest income, for which the Company considers that would not recover substantially all of its recorded investment. In 2009, the R$ 290 of other than temporary impairment recorded by the Company includes R$ 283 of other-than-temporary impairment in earnings related to debt securities denominated in foreign currency as the Company intends to sell portion of those securities, as well as for some securities the cash flow expected to be received will not recover the amortized cost due to our expectation in relation to the exchange rate and the maturity date of such securities. The Company has not recorded any material other than temporary impairment related to credit losses during 2009. Twelve months or longer Less than twelve months Gross Gross Fair Unrealized Fair Unrealized Value Losses Value Losses Brazilian government securities 134 2 1,034 109 Brazilian sovereign bonds 1,042 127 103 4 Corporate debt securities 477 89 2,137 111 Bank debt securities - - 64 12 Marketable equity securities 1,475 131 - - Foreign government securities - - 113 18 Total 3,128 349 3,451 254 At December 31, 2009, the amortized cost of approximately R$ 6,579 available for sale securities exceed their fair value by R$ 603 million. Included in the R$ 603 of gross unrealized losses on available for sale securities at December 31, 2009, was R$ 254 of gross unrealized losses that have existed for less than twelve months and R$ 349 of gross unrealized losses that have existed for twelve months or longer. Of the gross unrealized losses existing of twelve months or longer, R$ 127 or 36% is related to Brazilian sovereign bonds that based upon our analyses performed as described on Note 2(i), which have been applied to those securities the Company believes that the unrealized losses for those securities result from market conditions and not from credit l |
Note 6 - Held To Maturity Secur
Note 6 - Held To Maturity Securities | |
12 Months Ended
Dec. 31, 2009 BRL | |
Notes to Consolidated Financial Statements | |
Held to Maturity Securities | 6. Held to Maturity Securities The amortized cost and fair value of held to maturity securities were as follows: Gross Gross Amortized Unrealized Unrealized Fair cost Gains Losses value December 31, 2008 Brazilian government securities 2,961 1,087 (14) 4,034 Brazilian sovereign bonds 1,073 214 (67) 1,220 Foreign government securities 63 - - 63 Total 4,097 1,301 (81) 5,317 December 31, 2009 Brazilian government securities 2,951 1,227 - 4,178 Brazilian sovereign bonds 856 110 - 966 Foreign government securities 76 - - 76 Total 3,883 1,337 - 5,220 The amortized cost and market value of held to maturity securities, by maturity, were as follows: December 31, 2008 2009 Amortized Fair Amortized Fair cost value cost value Due in one year or less 63 63 90 90 Due after one year through five years 1,105 1,232 905 1,005 Due after five years through ten years 258 263 242 255 Due after ten years 2,671 3,759 2,646 3,870 Total 4,097 5,317 3,883 5,220 At December 31, 2008 and 2009, we recorded securities pledged as collateral in our portfolio of held to maturity securities, that are not permitted by contract to be sold or repledged by counterparts, in the amount of R$557 and R$14, respectively. In addition, held to maturity securities recorded as Federal funds sold and securities purchased under agreements to resell in an amount R$75 in 2008, with a market value of R$ 84 in comprise mainly Brazilian sovereign bonds (maturities from 3 to 10 years). In 2009 we didn't have held to maturity securities, presented with investments in purchase and sale commitments. The following table sets out our securities by denomination: December 31, 2008 2009 Amortized Amortized cost Percentage cost Percentage Brazilian currency (reais) 2,961 72% 2,951 76% Indexed to and denominated in foreign currency 1,136 28 932 24 4,097 100% 3,883 100% |
Note 7 - Loans
Note 7 - Loans | |
12 Months Ended
Dec. 31, 2009 BRL | |
Notes to Consolidated Financial Statements | |
Loans | 7. Loans December 31, 2008 2009 Commercial: Industrial and others 62,216 62,886 Import financing 3,350 3,824 Export financing 24,130 18,137 Leasing 20,096 19,787 Construction 3,134 4,201 Individuals: Overdraft 2,409 2,604 Real estate 2,174 2,640 Financing (1) 34,325 36,604 Credit card 2,501 3,452 Rural credit 10,459 11,661 Foreign currency loans 2,769 2,958 Public sector 94 88 Non-performing loans 7,178 11,092 Total loans 174,835 179,934 (1) Consisting primarily of automobile financing and direct consumer financing. |
Note 8 - Allowance For Loan Los
Note 8 - Allowance For Loan Losses | |
12 Months Ended
Dec. 31, 2009 BRL | |
Notes to Consolidated Financial Statements | |
Allowance for Loan Losses | 8. Allowance for Loan Losses Year ended December 31, 2007 2008 2009 At beginning of year 6,552 7,769 10,318 Provision for loan losses 4,616 6,651 10,822 Loan charge-offs (4,281) (5,345) (8,264) Loan recoveries 882 1,243 1,696 Net charge-offs (3,399) (4,102) (6,568) At end of year 7,769 10,318 14,572 At December 31, 2008 and 2009, the recorded investment in loans for which impairment has been recognized in accordance with ASC 310 totaled R$1,208, and R$2,170, respectively, of which R$1,100, and R$1,694, related to loans with a corresponding valuation allowance of R$538, and R$552, respectively. For the year ended December 31, 2009, the average recorded investment in impaired loans was approximately R$1,693. For 2007, 2008 and 2009, interest income recognized on impaired loans was deemed immaterial. At December 31, 2007, 2008 and 2009, we had non-accrual loans of R$5,277, R$7,178 and R$11,092, respectively. The calculation of the allowance for loan losses comprises an individual analysis of impaired loans and an aggregate loss analysis for groups of homogeneous loans, as follows: Year ended December 31, 2007 2008 2009 Impaired loans 187 538 552 Homogeneous loan losses 7,582 9,780 14,020 At end of year 7,769 10,318 14,572 The allowance for loan losses represents managements estimate of probable losses inherent in the portfolio. The allowance for homogeneous loans portfolios which consist mainly of consumer loans (e.g. direct consumer financial, real estate, credit card loan) and commercial loans (e.g. industrial, import financing and export financing), is based on loss estimation models which consider a variety of factors including, but not limited to, historical loss experience, delinquencies, estimated defaults, internal credit ratings, together with analyses that reflect current trends and economic conditions. |
Note 9 - Equity Investees And O
Note 9 - Equity Investees And OtherInvestments | |
12 Months Ended
Dec. 31, 2009 BRL | |
Notes to Consolidated Financial Statements | |
Equity Investees and Other Investments | 9. Equity Investees and Other Investments December 31, Company December 31, 2009 2007 2008 2009 Equityin Equityin Equityin Voting earnings earnings Shareholders Net income earnings ownership % (losses) Investment (losses) Equity (losses) Investment (losses) BES Investimentos do Brasil S.A. 20.00 10 37 7 430 94 64 11 BIU Participaes S.A. (1) 33.84 4 - 17 238 67 25 27 CIELO S.A.(2) 26.56 351 281 573 860 1,534 247 492 Cia. Brasileira de Solues e Servios Visavale 34.33 7 28 13 126 79 28 11 CPM Holding Ltd. 49.00 25 33 - - - - - Serasa S.A. (1) - 10 - - - - - - Fidelity Processadora e Servios S.A 49.00 - 112 (4) 460 20 122 10 Cia. Brasileira de Gesto e Servios S.A 41.85 - 35 (9) 86 2 36 1 Integritas Participaes(3) 20.54 - - - 597 446 410 92 Odontoprev S.A.(4) 43.50 - - - 780 - 1,045 - Other Investments (5) - - 355 - - - 307 - Total 407 881 597 2,284 644 (1) In June 2007, we sold an 18.1% interest of the total capital of Serasa S.A. to Experian Brasil Aquisies Ltda. The gross gain on sale was R$ 599. The remaining interest in the shareholders' equity of Serasa was contributed to BIU, a newly created entity where we obtained 33.84% participation and whose other shareholders also contributed shares of Serasa to BIU. BIU had as of December 31, 2009 a 24.39% participation in Serasa. (2) Current name of Companhia Brasileira de Meios de Pagamento Visanet. (3) Investment acquired in January 2009, through our subsidiary Bradesco Seguros, for the amount of R$ 342, generating goodwill in the amount of R$ 287. (4) See Note 1(c). (5) Including mainly our investments in preferred shares of IRB- Brasil Resseguros S.A - 42.5% and CPM Braxis S.A - 31.8%, as well as other investments. As of December 31, 2009, with exception of Cielo S.A. and Odontoprev S.A., the above investments were not regularly traded on any stock exchange. The fair value of our investments in Cielo and Odontoprev, based on the market price, amounts to R$ 5,560 and R$ 1,089, respectively. The following table sets forth, on a combined basis, aggregated summary financial information for our equity investees and other investments. December 31, December 31, 2008 2009 Current assets 5,350 7,314 Non-current assets 1,313 2,464 Current liabilities 5,019 6,733 Non-current liabilities 1,096 586 Gross Profit 2,591 2,976 Profit before income taxes 2,227 2,653 Net income 1,450 1,792 In 2009, we recorded a gross gain mainly from the partial sale of our investments CIELO S.A, in the amount of R$2,410, is related the sale of 12.7%. Dividends, including interest on shareholders capital, received from the equity investees above were as follows: Year ended December 31, 2007 200 |
Note 10 - Premises And Equipmen
Note 10 - Premises And Equipment Net | |
12 Months Ended
Dec. 31, 2009 BRL | |
Notes to Consolidated Financial Statements | |
Premises and Equipment, Net | 10. Premises and Equipment, Net December 31, 2008 2009 Furniture and equipment 1,854 1,959 Leased equipment 2,212 2,265 Data processing equipment 1,722 1,944 Development and acquisition costs of software 911 1,314 Leasehold improvements 915 1,181 Buildings 756 781 Land 502 433 Vehicles 28 31 Others 10 9 Less: accumulated depreciation and amortization (4,647) (5,087) Total 4,263 4,830 Depreciation and amortization expense were R$746, R$881 and R$1,053 for the years ended December 31, 2007, 2008 and 2009, respectively. We have entered into leasing agreements, primarily related to data processing equipment, which are accounted for as capital leases. Under this accounting method both an asset and an obligation are recorded in the financial statements and the asset is depreciated in a manner consistent with our normal depreciation policy of owned assets. In 2002 and 2003, certain bank branches were sold through public auctions as part of a disposal program. These comprised cash transactions or installment sales financed by the Bank. There were no sales of bank branches through public auctions in 2008 and 2009. At the same time, these branches were leased to us for the purpose of continuing our business operations and were accounted for mostly as operating leases. Only the financed sales were maintained as fixed assets, reflecting the possibility of repossession in the event of default by the purchaser. In 2009 all of the contracts of financings were paid. |
Note 11 - Goodwill And Other In
Note 11 - Goodwill And Other Intrangible Assets | |
12 Months Ended
Dec. 31, 2009 BRL | |
Notes to Consolidated Financial Statements | |
Goodwill and Other Intangible Assets | 11. Goodwill and Other Intangible Assets (a) Goodwill The changes in the carrying amount of goodwill as a result of our acquisitions (Note 1 (b)) for the years ended December 31, 2008 and 2009 are as follows: Segments Insurance, pension plans and certificated savings Banking plans Total Balance as of December 31, 2007 825 - 825 gora acquisition 430 - 430 Mediservice acquisition - 81 81 Tax benefit on realization for tax purposes of tax deductible goodwill on acquisitions (50) - (50) Balance as of December 31, 2008 1,205 81 1,286 Tax benefit on realization for tax purposes of tax deductible goodwill on acquisitions (52) - (52) Balance as of December 31, 2009 1,153 81 1,234 The banking segment and the insurance, pension plans and certificated savings plans, in which we allocated the acquisitions, is tested annually for impairment of goodwill. We did not identify any impairment losses to be recorded in 2008 and 2009. (b) Other intangible assets The net carrying amount of finite-lived intangible assets for the year ended December 31, 2008 and 2009 are as follows: Segments Insurance, pension plans and certificated Banking savings plans Total Balance at January 1, 2008 2,972 3 2,975 Acquisition of gora 143 - 143 Acquisition of rights for rendering banking services 822 - 822 Amortized during the year (799) (3) (802) Balance as of December 31, 2008 3,138 - 3,138 Acquisition of Ibi 812 - 812 Acquisition of rights for rendering banking services 390 - 390 Impairment (37) - (37) Amortized during the year (660) - (660) Balance as of December 31, 2009 3,643 - 3,643 The following table presents the gross carrying value and accumulated amortization for finite-lived intangible assets subject to amortization: December 31, 2008 December 31, 2009 Gross carrying Accumulated Gross carrying Accumulated value amortization value amortization Customer relationship (including core deposits) 6,356 3,218 6,709 3,873 Exclusive access to customers - - 812 5 Total Intangible assets 6,356 3,218 7,521 3,878 The aggregate amortization expense was R$620, R$802 and R$660 for 2007, 2008 and 2009, respectively. The estimated amortization expense for the next five years is as follows: For the year ended December 31, Amortization expense 2010 885 2011 779 2012 571 2013 257 2014 203 |
Note 12 - Other Assets
Note 12 - Other Assets | |
12 Months Ended
Dec. 31, 2009 BRL | |
Notes to Consolidated Financial Statements | |
Other Assets | 12. Other Assets December 31, 2008 2009 Deferred tax assets 9,963 9,674 Credit card operations 7,547 10,661 Restricted escrow deposits for taxation and labor matters 6,173 5,676 Taxes available for offset 2,274 2,366 Insurance premiums receivable 1,432 2,305 Negotiation and intermediation of securities 2,985 1,173 Advances to FGC (Deposit Garantee Association) 898 715 Deferred policy acquisition costs (1) 817 462 National property system 467 490 Securitization of credit card bill receivables (Note 14 (d)) 241 111 Prepaid expenses 133 279 Foreclosed assets, net 327 457 Restricted cash 63 43 Other 5,043 4,791 Total 38,363 39,203 (1) Commissions paid to insurance brokers on trade of insurance products, private pension plans and certificated savings plans. |
Note 13 - Short Term Borrowings
Note 13 - Short Term Borrowings | |
12 Months Ended
Dec. 31, 2009 BRL | |
Notes to Consolidated Financial Statements | |
Short-term Borrowings | 13. Short-term Borrowings December 31, 2008 2009 Import and export financings 10,958 4,761 Commercial paper 2,890 3,214 Other 1 1 Total 13,849 7,976 Import and export financings represent credit lines available to finance imports and exports by Brazilian companies, typically denominated in foreign currency. At December 31, 2009 interest rates applicable to short-term borrowings were between 0.14% and 1.28% per annum (2008 1.62% and 5.47%) for import and export financings, and 0.14% and 4.37% per annum (2008 1.62% and 6.04%) for commercial paper. Average borrowing rates in 2008 and 2009 were 3.95% and 1.94% per annum, respectively. In 2009 and 2007 we have recognized as interest expense of short-term borrowings a net interest income in the total amount of R$ 2,197 and R$ 727, respectively, due to the impact of the appreciation of the Real against the U.S dollar. The interest income of short-term borrowings recorded in 2008, that amounted to R$ 4,899, was due to the depreciation of the Real against the U.S dollar. Our short-term borrowings are mainly denominated in US dollars. |
Note 14 - Statements Long Term
Note 14 - Statements Long Term Debt | |
12 Months Ended
Dec. 31, 2009 BRL | |
Notes to Consolidated Financial Statements | |
Long-term Debt | 14. Long-term Debt December 31, 2008 2009 Local onlendings 19,095 20,908 Subordinated notes 19,249 22,795 Non-convertible debentures 1,220 740 Debt issued under securitization of payment orders and credit card billreceivables (Note 14 (d)) 5,305 4,220 Euronotes 217 237 Mortgage notes 771 899 Obligations under capital leases 1,042 988 Foreign currency loans 356 30 Total 47,255 50,817 (a) Local onlendings Local onlendings represent amounts borrowed from Brazilian agencies for loans to Brazilian entities that invest primarily in premises and equipment. Such amounts are due in monthly installments through 2033 and bear fixed interest between 0.97% and 21.10% per annum, plus variable interest based on the Taxa de Juros de Longo Prazo (Federal Government long-term interest rate determined on a quarterly basis, or TJLP) and Taxa Referencial de Juros (reference interest rate, or TR) respectively. These borrowings are primarily from Banco Nacional de Desenvolvimento Econmico e Social -BNDES (National Economic and Social Development Bank) and Fundo de Financiamento para Aquisio de Mquinas e Equipamentos Industriais - FINAME (National Industrial Equipment Finance Authority) in the form of credit lines. (b) Subordinated notes Original December 31, term Maturity/date (in years) Currency Interest % 2008 2009 2011 5 R$ 102.5% CDI(1) 104% CDI(1) 6,328 6,979 2011 10 US$ 10.25% 347 261 2012 5 R$ 103% CDI(1) 100% CDI(1) + 0.344% IPCA + (7.102% - 7.632%) 3,758 4,153 2012 10 R$ 100% CDI(1) + (0.75% - 0.87%) 100% CDI(1) 102.5%CDI(1) 4,252 4,689 2013 5 R$ 100% CDI(1) + (0.34% - 0.87%) IPCA + (7.44% - 8.20%) 631 701 2014 5 R$ 112% CDI(1) 1,018 1,132 2015 6 R$ 108.0% and 112% CDI(1) IPCA + (6.9% - 8.7%) - 1,362 2012 10 Yen 4.05% 315 236 2013 10 US$ 8.75% 1,172 878 2014 10 EUR 8.00% 729 567 2019 10 US$ 6.75% - 1,313 No stated maturity(2) US$ 8.87% 699 524 Total 19,249 22,795 (1) Brazilian benchmark interest rate. (2) On June 3, 2005, perpetual subordinated debt was issued in the amount of US$ 300. With interest paid on a quarterly basis as from September 3, 2005. (c) Non-convertible debentures December 31, Original term Maturity/date years Currency Interest % 2008 2009 2011 6 R$ 104% - CDI 1,220 740 Total 1,220 740 (d) Debt issued under securitization of payment orders and credit card bill receivables As from 2003, we securitize current and future flows of (i) payment orders from individuals and corporations outside Brazil to individuals and corporations in Brazil on which we act as the paying bank and (ii) credit card bill receivables from purchases in Brazil by foreign cardholders. The Long-term debt issued by the SPF entities and sold to investors is expected to be repaid through the f |
Note 15 - Other Liabilities
Note 15 - Other Liabilities | |
12 Months Ended
Dec. 31, 2009 BRL | |
Notes to Consolidated Financial Statements | |
Other Liabilities | 15. Other Liabilities (a) Breakdown of other liabilities December 31, 2008 2009 Litigation (Note 24 (b)) 9,968 10,835 Credit card operations 5,921 9,158 Certificated savings plans 2,706 3,024 Unpaid claims and claim adjustment reserves (Note 15 (b)) 3,052 3,948 Payment orders to be settled 2,844 2,687 Interest on shareholders capital payable 1,686 1,688 Negotiation and intermediation of securities 2,454 1,539 Taxes on income 1,022 1,219 Labor related liabilities 1,274 1,488 Foreign exchange portfolio, net 710 498 Social security program reserve 331 270 Taxes other than on income 335 320 Collection of third-party taxes, social contributions and other 327 364 Deferred tax liabilities 181 218 Others 6,986 7,516 Total 39,797 44,772 (b) Changes in unpaid claims and claim adjustment reserves December 31, 2007 2008 2009 Balance at the beginning of the year 2,821 2,738 3,052 ( - ) Reinsurance recoverables(1) (35) (55) (38) Net balance at January 1 2,786 2,683 3,014 Incurred related to: current year 6,462 7,162 8,490 prior years 399 555 807 Total incurred 6,861 7,717 9,297 Payments related to: current year 5,970 5,244 6,488 prior years 994 2,142 1,902 Total payments 6,964 7,386 8,390 Net balance at December 31 2,683 3,014 3,921 ( + ) Reinsurance recoverables(1) 55 38 27 Balance at the end of the year 2,738 3,052 3,948 (1) Reinsurance recoverables are recorded as Insurance premiums receivable in Other assets. |
Note 16 - Income Taxes And Soci
Note 16 - Income Taxes And Social Contribution | |
12 Months Ended
Dec. 31, 2009 BRL | |
Notes to Consolidated Financial Statements | |
Income Tax and Social Contribution | 16. Income Tax and Social Contribution We and each of our subsidiaries file separate company tax returns for each fiscal year. Income taxes in Brazil comprise federal income tax (rate of 15% plus an additional of 10%) and social contribution (rate of 15%), which is an additional federal tax, applicable to all periods presented. On January, 2008, the Brazilian Government increased the social contribution rate for companies of the financial sector, from 9.0% to 15.0%. Financial Institutions have collected the social contribution at a rate of 15% since May 1, 2008. The amounts reported as income tax expense in the consolidated financial statements are reconciled to the statutory rates as follows: Years ended December 31, 2007 2008 2009 Income before income tax and social contribution 11,297 6,748 13,669 Adjusted for: equity in earnings of unconsolidated companies (407) (597) (644) Adjusted tax basis 10,890 6,151 13,025 Tax expense at statutory rates (3,703) (2,460) (5,210) Non deductible expenses/(non-taxable income) 89 (15) 22 Tax benefit on interest attributed to shareholders capital paid 539 783 853 Non-deductible exchange gains (losses) on foreign assets (606) 803 (673) Foreign exchange variation adjustment on available for sale securities 99 - - Reversal of prior year allowance for non-realization of deferred tax assets 107 - - Effect of changes in tax laws and rates on deferred tax - 1,240 340 Others 123 50 248 Income tax expense (3,352) 401 (4,420) The major components of the deferred tax accounts in the consolidated balance sheet are as follows: December 31, 2008 2009 Provisions not currently deductible, mainly allowance for loan losses and contingencies 11,803 13,767 Tax loss carryforwards 1,446 1,160 Other temporary differences 93 387 Total gross deferred tax assets 13,342 15,314 Allowance for non-realization (42) (46) Total deferred tax assets 13,300 15,268 Temporary non-taxable gains, mainly relating to mark-to-market adjustment on securities, derivative financial instruments 955 1,520 Temporary non-taxable gains, mainly relating to leasing 1,325 2,996 Other temporary differences 1,238 1,296 Total deferred tax liabilities 3,518 5,812 Net deferred tax asset, included in other assets (Note 12 and Note 15a) 9,782 9,456 Net deferred income taxes include Brazilian tax loss carryforward, which have no expiration dates, available for offset against future taxable income. Carryforward losses are available for offset within any year up to 30% of annual income before taxes, determined in accordance with Brazilian Tax Rules. For tax loss carryforwards recorded by subsidiaries or foreign branches there is no limit as to offsetting. We adopted the provisions ASC 740, Income Taxes. A reconciliation of the beginning and ending liabilities amounts of unrecognized tax benefits are as follows: December, 31 2008 2009 Balance at the beginning |
Note 17 - Shareholders Equity
Note 17 - Shareholders Equity | |
12 Months Ended
Dec. 31, 2009 BRL | |
Notes to Consolidated Financial Statements | |
Shar. Equity | 17. Shareholders' Equity (a) Capital and shareholders' rights (i) Capital The Special Shareholders Meeting held on March 12, 2007 resolved on a R$3,800 increase in the capital stock, raising it from R$14,200 to R$18,000, by using part of the balance in the account Profit Reserves Statutory Reserve, assigning to the Companys stockholders, free of charge, as a bonus, one (1) new stock of the same type for each stock owned. 1,000,679,724 non-par registered, book-entry stocks were issued, 500,042,656 of which were common stocks and 500,637,068 were preferred stocks. All share amounts presented above are demonstrated before the split of our capital stock of March 24, 2008. In our Extraordinary General Shareholders Meeting held on August 24, 2007, we approved a capital increase of R$ 790, from R$ 18,000 to R$ 18,790, through the issuance of 18,599,132 new book-entry nominative shares, with no par value, with 9,299,618 common shares and 9,299,514 preferred shares. This increase happened as a result of the merger of BMC shares, which belonged to the former BMC shareholders, into Bradesco, making BMC one of our wholly-owned subsidiaries. There was another capital increase in the amount of R$ 210 reaching R$ 19,000, through the capitalization of a partial balance from the Profits Reserve Statutory Reserve account, with no issuance of shares. These transactions were approved by the Central Bank on September 28, 2007. All share amounts presented above are demonstrated before the split of our capital stock of March 24, 2008. The Special Shareholders Meeting held on January 4, 2008 resolved to increase the capital stock by R$1,200, increasing it from R$19,000 to R$20,200 thousand, by means of the issuance of 27,906,977 new shares, all non-par, registered, book-entry shares, 13,953,489 of which are common shares and 13,953,488 are preferred shares. The Special Shareholders Meeting held on March 24, 2008 resolved to increase the capital stock in the amount of R$2,800, raising it from R$20,200 to R$23,000, by using part of the balance of Profit Reserves Statutory Reserve, attributing to the Companys shareholders, free of charge, as a bonus, one (1) new share of the same type for each two (2) shares owned. 1,023,288,867 non-par, registered, book-entry shares were issued, 511,644,460 of which are common shares and 511,644,407 are preferred shares. The Special Shareholders Meeting held on October 29, 2009, it was approved the merger of all of shares representing the Banco Ibi S.A. capital stock into Bradesco, became Bradescos wholly-owned subsidiary, upon the capital increase in the amount of R$1,368, from R$23,000 to R$24,368, with the issuance of 45,662,775 new shares, all non-par, registered, book-entry shares, 22,831,389 of which are common shares and 22,831,386 are preferred shares. Too approved the capital stock increase by R$132, from R$24,368 to R$24,500 , upon the capitalization of reserves, without the issue of shares. The Special Shareholders Meeting held on December 18, 2009, it was approved the capital stock increase by R$2,000, from R$24,500 to R$26,500, upon the capitalization of part of the Profit Reserves Statutory Reserves |
Note 18 - Fee And Comission Inc
Note 18 - Fee And Comission Income | |
12 Months Ended
Dec. 31, 2009 BRL | |
Notes to Consolidated Financial Statements | |
Fee and Commission Income | 18. Fee and Commission Income Years ended December 31, 2007 2008 2009 Fees charged on checking account services 2,108 1,794 1,497 Asset management fees 1,455 1,826 1,587 Collection fees 859 959 984 Credit card fees 1,273 1,696 1,972 Fees for receipt of taxes 237 219 235 Financial guarantees 197 330 559 Consortium management 256 318 351 Other(1) 1,434 1,855 2,196 Total 7,819 8,997 9,381 (1) None of the items included in other is significant on an individual basis. |
Note 19 - Administrative Expens
Note 19 - Administrative Expenses | |
12 Months Ended
Dec. 31, 2009 BRL | |
Notes to Consolidated Financial Statements | |
Administrative Expenses | 19. Administrative Expenses Years ended December 31, 2007 2008 2009 Third-party services 1,820 2,281 2,769 Financial system services 658 831 647 Communication 923 1,052 1,176 Transport 509 553 528 Rents 353 453 530 Advertising and publicity 557 610 562 Maintenance and repairs 292 373 381 Data processing 467 440 615 Office supplies 189 200 217 Water, electricity and gas 172 180 196 Other 296 315 590 Total 6,236 7,288 8,211 |
Note 20 - Other Non Interest In
Note 20 - Other Non Interest Income And Expenses | |
12 Months Ended
Dec. 31, 2009 BRL | |
Notes to Consolidated Financial Statements | |
Other Non-Interest Income and Expenses | 20. Other Non-Interest Income and Expenses Years ended December 31, 2007 2008 2009 Other non-interest income: Net gains in foreign exchange transactions 48 488 54 Recovery of expenses 46 59 68 Rental income 10 14 7 Gain (losses) on sale of foreclosed assets, unconsolidated investments and premises and equipment, net (1) 1,200 165 3,238 Other(3) 1,003 1,429 1,975 Total non-interest income 2,307 2,155 5,342 Other non-interest expense: Taxes on services, income and other taxes 2,327 1,816 2,552 Litigation(2) 509 635 1,267 Monetary variation and exchange loss, net 1,459 210 353 Branch network losses 130 165 164 Credit card bonus 162 196 274 Asset management expenses 23 34 68 Other(3) 1,330 3,613 1,969 Total non-interest expenses 5,940 6,669 6,647 (1) In 2007, we recorded a gross gain mainly from the partial sale of our investments (i) in Serasa, in the amount of R$599, (ii) in Bovespa R$253 and (iii) in BMF R$263. The remaining balance of our investments in Bovespa and BMF was reclassified as available for sale securities, at fair value. In 2009, we recorded a gain mainly from the partial sale of our investments in Cielo S.A. in the amount of R$2,410 and R$ 732 related to the exchange of equity interest on Odontoprev S.A. (Note 1(c)). (2) Excludes litigation expenses in relation to labor and tax expenses, registered in personnel expenses and current expenses on taxes , respectively. (3) None of the items included in other is significant on an individual basis. |
Note 21 - Fair Value Disclosure
Note 21 - Fair Value Disclosures | |
12 Months Ended
Dec. 31, 2009 BRL | |
Notes to Consolidated Financial Statements | |
Fair Value Disclosures | 21. Fair Value Disclosures The fair market values of financial instruments are measured in accordance with ASC 820, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs to determine the amount that would be exchanged to sell an asset or transfer a liability, in an orderly transaction between market participants, also referred to as exit price. Also in accordance with ASC 820, we categorize its financial instruments, based on the priority of inputs to the valuation technique, into a three-level hierarchy, as discussed below. Trading account assets, derivative assets and liabilities and available for sale debt and marketable equity securities are carried at fair value in accordance with accounting literature, including ASC 320, Investments in Debt and Equity Securities and ASC 815. The fair value of collateral for impaired loans depends whether there is an observable market price. Trading Assets and Available-for-Sale Securities The fair values of trading account assets and liabilities and available for sale securities are primarily based on actively traded markets where prices are based on either direct market quotes, observed transactions or market prices for similar assets. Liquidity is a significant factor in the determination of the fair values of trading account assets or liabilities and available for sale securities. Level 1 securities included highly liquid equity securities, mutual funds, Brazilian government securities as well certain foreign government securities. Level 2 include corporate and bank debt securities for which market price quotes may not be readily available. The fair value of these instruments are estimated based on quoted prices for similar assets or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets. We also use pricing models or discounted cash flow methodologies . Situations of illiquidity generally are triggered by the markets perception of credit uncertainty regarding a single company or a specific market sector. In these instances the securities are classified within level 3 of the valuation hierarchy once the fair value is determined based on unobservable inputs that are supported by limited available market information and that are significant to the fair value of the assets as well as other factors which require significant management judgment or estimation. Derivative Assets and Liabilities Exchange traded derivatives valued using quoted prices are classified within level 1 of the valuation hierarchy. However few classes of derivatives contracts are listed on an exchange, thus, the majority of the Banks derivative positions are determined using quantitative models that require the use of multiple inputs including interest rates, prices, and indices to generate continuous yield or pricing curves and volatility factors, including the period to maturity, which are used to value the position. The majority of market inputs are observable and can be obtained mainly from BMFBovespa and the secondary market. The yield curves are used to determine the fair value for curr |
Note 22 - Fair Value Of Financi
Note 22 - Fair Value Of Financial Instruments | |
12 Months Ended
Dec. 31, 2009 BRL | |
Notes to Consolidated Financial Statements | |
Fair Value Financial Instruments | 22. Fair Value of Financial Instruments (ASC 825 Disclosure) ASC 825-10-50-10 Disclosures About Fair Value of Financial Instruments, requires disclosure of the estimated fair values of financial instruments. Quoted market prices, if available, are utilized as estimates of the fair value of financial instruments. Because no quoted market prices exist for certain of our financial instruments the fair values have been derived based on management's assumptions, the amount, timing of future cash flows and estimated discount rates. The estimation methods for individual classifications of financial instruments are described with more details below. Different assumptions could significantly affect these estimates. Accordingly, net realizable values could be different from the estimates presented below. In addition, the estimates are only indicative of the value of individual financial instruments and should not be considered an indication of the fair value of the Company. Cash and cash equivalents Cash and cash equivalents include cash and due from banks, interest-earning deposits in other banks and federal funds sold and securities purchased under agreements to resell, that have original maturities of the three months or less and present insignificant risk of changes in value. Held to maturity securities Held to maturity securities are carried at amortized cost. Fair values are estimated according to the assumptions described on note 2 (e) and 21. See Note 6 for further details regarding the amortized cost and fair values of held to maturity securities. Loans, net of allowance for loan losses Fair values were estimated for groups of similar loans based upon type of loan, credit quality and maturity. The fair value of fixed-rate loans was determined by discounting estimated cash flows using interest rates approximating our current origination rates for similar loans. For most variable-rate loans, the carrying amounts were considered to approximate fair value. Where credit deterioration has occurred, estimated cash flows for fixed and variable-rate loans have been reduced to incorporate estimated losses. The fair values for performing loans are calculated by discounting scheduled principal and interest cash flows through maturity using market discount rates and yield curves that reflect the credit and interest rate risk inherent in the loan type at each reporting date. The fair values for impaired loans are based on the discounting cash flows or the value of underlying collateral. The non-performing loans were allocated into each loan category for purposes of fair value disclosure. Assumptions regarding cash flows and discount rates are determined using available market information and specific borrower information. The following table presents the carrying amounts and estimated fair values for loans, excluding leasing operations: December 31, 2008 2009 Carrying Fair Carrying Fair amount value amount value Commercial: Industrial and others 60,576 60,758 60,089 60,503 Import financing 3,346 3,346 3,779 3,779 Export financing 23,798 |
Note 23 - Risk and Risk Managem
Note 23 - Risk and Risk Management Risks and Risk Management | |
12 Months Ended
Dec. 31, 2009 BRL | |
Notes to Consolidated Financial Statements | |
Risk and Risk Management Risks and Risk Management | 23. Risk and Risk Management Risks and Risk Management The main risks related to financial instruments, which result from the Companys and its subsidiaries business are: credit risk; market risk and; liquidity risk. Management of these risks is a process that involves different levels of the Company and covers several policies and strategies. In order to ensure uniqueness in the risk management process, a high level permanent forum was created with the intention of obtaining synergy among these activities at the Company. This forum, called Integrated Risk Management and Capital Allocation Committee, is a statutory body and has as duty to advise the Board of Directors on the approval of institutional policies, operational guidelines and the establishment of exposures limits to risks within the scope of the Company. Risk management policies are, in general, conservative, seeking to limit absolute losses to a minimum. Credit Risk and Concentration Risk Credit risk deals with the possibility of occurring losses associated with the borrower's or counterparty's failure to comply with its financial obligations as agreed, as well as with the depreciation of loan operations resulting from a deterioration in the borrower's risk, reduced gains or remunerations, advantages granted in renegotiations, recovery costs and other related amounts. We work constantly to mitigate potential credit risks by monitoring loan activities, developing, enhancing and preparing inventories of credit risk models, monitoring credit concentration and identifying previously unknown credit risks. In addition, we have focused our efforts on the utilization of advanced risk measuring models and on the continuous improvement of the processes. The benefits that we have achieved from these efforts are reflected in the quality and performance of our loan portfolio. Credit risk is corporately controlled by means of a process that includes meetings called Follow-up on Credit Portfolio and Recovery. These meetings count on the participation, every month, of the board of executive officers and officers of the key managerial areas, and by the executive committee on credit risk management, which has the following functions: to evaluate and recommend risk measurement strategies, policies, norms and methodologies to the integrated risk management and capital allocation committee; to follow up on and assess the credit risk and the actions taken to mitigate risks; to follow up on and assess the alternatives to mitigate credit concentration risks; to follow up on the implementation of credit risk corporate management methodologies, models and tools; to assess the sufficiency of the allowance for loan losses for coverage of incurred losses on credit operations; to follow up on the credit market moves and development, analyzing the implications, risks and opportunities for the Organization; and to regularly report to the chief executive officer and to the integrated risk management and capital allocation committee its activities and make the recommendations it deems important. Among the key activities of credit risk management, we point out: back-testing and gauging o |
Note 24 - Derivative Financial
Note 24 - Derivative Financial Instruments and Financial Instruments Related to Credit | |
12 Months Ended
Dec. 31, 2009 BRL | |
Notes to Consolidated Financial Statements | |
Derivative Financial Instruments and Financial Instruments Related to Credit | 24. Derivative Financial Instruments and Financial Instruments Related to Credit (a) Derivatives We enter into financial derivative instruments contracts with various counterparties to manage our overall exposures as well as to assist customers in managing their exposures. Such derivatives are summarized as follows: Notional amounts Fair value December 31, December 31, 2008 2009 2008 2009 Interest rate futures contracts: Purchases 39,349 29,278 - - Sales 16,814 69,914 - - Foreign currency futures contracts: Purchases 4,308 3,507 - - Sales 17,905 16,089 - - Futures contracts others: Purchases 28 129 - - Sales 10 101 - - Interest rate option contracts: Purchases 2,949 9,825 39 3 Sales 4,216 19,665 (52) (2) Foreign currency option contracts: Purchases 2,341 2,043 395 62 Sales 2,497 2,259 (283) (21) Option contracts - others: Purchases 949 777 14 41 Sales 2,320 2,499 (345) (91) Foreign currency forward contracts: Purchases 9,811 2,805 601 217 Sales 2,437 4,713 (222) (128) Forward contracts - others: Purchases - 19 - - Sales - - - - Swap contracts: Asset Position: Interest rate swaps 8,546 9,536 278 1,008 Currency swaps 12,934 5,858 1,060 40 Liability Position: Interest rate swaps 8,023 5,892 (319) (171) Currency swaps 13,273 8,744 (820) (119) Interest rate, currency and cross-currency interest rate swaps are contracts in which a series of interest rate cash flows of a single currency or interest or principal payments in two different currencies are exchanged for a contractual period. The notional amount represents the basis on which the cash flows are determined. The risks associated with swaps relate to the potential inability or unwillingness of the counterparties to perform according to the contractual terms and the risk associated with changes in market conditions due to changes in interest rates and the exchange rate of currencies. The total credit exposure associated with interest rate and currency swaps was R$2,387 and R$1,371 at December 31, 2008 and 2009, respectively. Interest rate and currency futures and interest rate forwards are contracts for the delayed delivery of an instrument at a specified price or yield. The notional amounts represent the face value of the underlying instrument for which daily cash settlements of the price changes are made. The credit risk associated with futures contracts is minimized due to daily cash settlements. Futures contracts are also subject to the risk of changes in interest rates or the value of the underlying instruments. (b) Credit Derivatives Credit derivatives are financial instruments whose value is derived from the credit risk associated with the debt of a third party issuer (the reference entity) and which allow one party (the protection purchase |
Note 25 - Commitments and Conti
Note 25 - Commitments and Contingencies | |
12 Months Ended
Dec. 31, 2009 BRL | |
Notes to Consolidated Financial Statements | |
Commitments and Contingencies | 25. Commitments and Contingencies (a) Assets under management We manage a number of assets and customer portfolios that are available to institutional investors and the general public. These assets are not included in our consolidated balance sheet. Fees are generally charged monthly, representing approximately 0.69% (2008 0.92%) per annum of the market value of the assets under management. (b) Litigation In the normal course of business, we are involved in various legal proceedings arising out of our operations. We are subject to challenges from tax authorities regarding amounts of tax due. These challenges may alter the timing or amount of taxable income or deductions, or the allocation of income among tax jurisdictions. The probable losses recognized in our consolidated financial statements are related to litigation matters related to (i) inflation adjustments and (ii) legality of certain taxes and contributions. The remaining litigation matters, considered as possible under our judgment based on information available, are related to tax assessments in the amount of R$189 as of December 31, 2009 (R$134 in 2008), which we believe are inconsistent with existing law and, therefore, are not recognized in our consolidated financial statements. Resolution of these issues is not expected to have a significant impact on our financial position or results of operations. Like many other Brazilian banks, we are defendants in various labor suits by employees. These suits are related to compensation and indemnification for employees who have been laid off as a result of our recent acquisitions of financial institutions and their integration into our structure. Management continually monitors and evaluates the impact of current events and circumstances on the estimates and assumptions used in the recognition of probable losses. We also face a number of civil matters, which primarily consist of claims for pecuniary damages, such as (i) to collect on unpaid financial instruments, (ii) in relation to returned checks; (iii) in reporting adverse claims arising from credit information to credit reporting agencies and (iv) replacement of inflation rates excluded as a result of economic plans. None of these claims is individually significant. The other labor suits and civil matters, to which we are a party, are subject to many uncertainties and the outcome of any individual matter is not predictable with assurance. Although the final resolution of any such matters could have a material effect on the consolidated operating results for a particular reporting period, we believe that it would not materially affect our consolidated financial position. The changes in the provision during the periods were as follows: Year ended December 31, Tax litigation 2007 (1) 2008 (1) 2009 (1) At beginning of year 5,046 6,272 6,911 Business combinations 160 - 287 Indexation charges 387 438 630 Provisions net of reversal 704 342 (694) Payments (25) (141) (215) At end of the year 6,272 6,911 6,919 (1) Includes the total amounts of R$ 3,229 and R$1,683 related to liabil |
Note 26 - Regulatory Matters
Note 26 - Regulatory Matters | |
12 Months Ended
Dec. 31, 2009 BRL | |
Notes to Consolidated Financial Statements | |
Regulatory Matters | 26. Regulatory Matters The Bank is subject to regulation by the Central Bank, which issues directions and instructions regarding currency and credit policies for financial institutions operating in Brazil. The Central Bank also determines minimum capital requirements, fixed asset limits, lending limits, accounting practices and compulsory deposit requirements, and requires banks to comply with regulations, based on the Basel Accord as regards capital adequacy. The Basel Accord requires banks to have a ratio of capital to risk-weighted assets of a minimum of 8%. At least half of total capital must consist of Tier I Capital. Tier I, or core capital, includes equity capital less certain intangibles. Tier II Capital includes, subject to certain limitations, asset revaluation reserves, general loan loss reserves and subordinated debt, and is limited to the amount of Tier I Capital. However, Brazilian banking regulations: (i) require a minimum capital ratio of 11%, (ii) do not permit general loan loss reserves to be considered as Capital, (iii) specify different risk-weighted categories, and (iv) impose a deduction from Capital corresponding to possible excess in fixed assets over the limits imposed by the Central Bank. The following table sets forth our required capital ratios (in percentages) based on the Brazilian GAAP financial statements. December 31, 2007 2008 2009 In accordance with the Basel Accord applicable to Brazil Tier I Capital 10.24% 12.94% 14.83% Tier II Capital 3.73 3.15 3.00 Total Capital 13.97 16.09 17.83% Minimum required by Brazilian Central Bank 11.00% 11.00% 11.00% Currently, the Central Bank does not limit the amount of dividends that may be paid subject to the capital requirements set forth above. As of each reporting date, we were in compliance with all capital requirements imposed by the Central Bank. |
Note 27 - Segment Information
Note 27 - Segment Information | |
12 Months Ended
Dec. 31, 2009 BRL | |
Notes to Consolidated Financial Statements | |
Segment Information | 27. Segment Information We operate primarily in the banking, insurance, pension plan and certificated savings plans business. Banking operations include retail and corporate banking, leasing, international banking, private banking and investment banking activities. We carry out our banking operations through our own operations located in Brazil, foreign branches and majority-owned subsidiaries as well as equity investments in other companies. Additionally, we engage in insurance, pension plan and certificated savings plans activities through our majority-owned subsidiary, Bradesco Seguros S.A. and its affiliates. The following segment information was compiled based on reports used by Senior Management to evaluate the segment performance and make decisions as to the allocation of resources for investment and other purposes. Our Senior Management uses a variety of information for such purposes including financial and non-financial information measured on different bases. In accordance with ASC 280 Disclosures about Segments, the information included below has been compiled from that prepared on the basis which is most consistent with that used in measuring the amounts included in the financial statements in accordance with Brazilian GAAP. Principal segment assumptions for revenues and expenses include: (i) cash surpluses generated by the insurance, pension plan and certificated savings plans segment are retained by that segment resulting in an increased net interest income, (ii) salaries and benefits and administrative costs included within the insurance, pension plan and certificated savings plans segment consist of only costs directly related to those operations, and (iii) costs incurred in the Banking segment relating to branch network infrastructure and other overheads are not allocated. Year ended December 31, 2007 Insurance, pension Other operations, plan and adjustments, certificated savings reclassifications and U.S. GAAP Banking plans eliminations consolidated Interest income 30,000 6,577 (68) 36,509 Interest expense (12,901) - 163 (12,738) Net interest income 17,099 6,577 95 23,771 Provision for loan losses (4,617) - 1 (4,616) Insurance premiums - 12,556 (3,713) 8,843 Pension plan income - 2,447 (1,892) 555 Certificated saving plans - 1,556 (1,556) - Equity in earnings (losses) of unconsolidated companies 434 79 (106) 407 Other income 13,258 2,068 (50) 15,276 Salaries and benefits (6,105) (510) (154) (6,769) Administrative expenses (5,846) (581) 191 (6,236) Insurance claims - (7,391) 1,379 (6,012) Changes in provisions related to insurance, pension plan, certificated savings plans and pension investment contracts - (9,661) 4,680 (4,981) Pension plan operating expenses - (2,037) 1,559 (478) Insurance and pension plan selling expenses - (1,247) 90 (1,157) Other expense (7,992) (385) 1,071 (7,306) Income before income taxes 6,231 3,471 1,595 11, |
Note 28 - Pension Plans
Note 28 - Pension Plans | |
12 Months Ended
Dec. 31, 2009 BRL | |
Notes to Consolidated Financial Statements | |
Pension Plans | 28. Pension Plans We sponsor defined-benefit pension plans, which supplement benefits that the Brazilian government social security system provides to employees of Bradesco and its Brazilian subsidiaries. The pension plans were established solely for the benefit of eligible employees and directors, and their assets are held independently of Bradesco. During 2001, participants of the defined benefit plan for Bradesco employees joined a new defined contribution plan (PGBL). In addition to this plan, we have Alvorada, BEM and BEC defined benefit pension plans, as a result of their acquisitions on June, 2003, February , 2004 and January , 2006, respectively. There are no other defined pension plan sponsored by Bradesco. Our contributions to the PGBL plan in 2009 totaled R$267 (2008 R$269). Our policy is to fund the pension plans through contributions based on payroll, adjusted periodically pursuant to recommendations of the Funds external actuary. At December 31, 2009 our contribution represents 3.6% (2008 3.9% and 2007 5.0%) of payroll, and employees and directors contribute amounts of at least 4% (2008 4% and 2007 4%) of their salaries. The pension plans assets are mainly invested in government and private securities, marketable equity securities and properties. Employees and directors who withdraw from the pension plans for any reason receive the minimum benefit based on past contributions in a single lump sum installment. BEC, BEM and Banco Alvorada plans are measured annually Based upon the report of the pension plans external actuary, changes in the benefit obligation and plan assets and the amounts recognized in the consolidated financial statements are as follows: Alvorada, BEM and BEC plans Year ended 2007 2008 2009 (i) Projected benefit obligation: At beginning of year 712 729 690 Service cost 5 5 4 Benefits paid (58) (58) (61) Interest cost 70 72 78 Adjustment from date change 13 - - Actuarial loss (gain) (13) (58) 86 At end of year 729 690 797 (ii) Plan assets at market value: At beginning of year 724 807 798 Contributions received: Employer 4 6 5 Employees 2 2 2 Current return on plan assets 123 41 157 Adjustment from date change 12 - - Benefits paid (58) (58) (60) At end of year 807 798 902 (iii) Funded status: Excess of plan assets over projected benefit obligation acquired (78) (108) (105) Amounts recognized in the balance sheet, net (78) (108) (105) Net pension (benefit) cost includes the following components: Alvorada, BEM and BEC plans Year ended 2007 2008 2009 Projected benefit obligation: Service cost 5 4 4 Interest cost 72 79 87 Amortization of prior service cost (3) (6) (2) Expected return on assets (81) (92) (99) Expected participant contribution (1) (1) (2) Net periodic pension cost (be |
Note 29 - Related Party
Note 29 - Related Party | |
12 Months Ended
Dec. 31, 2009 BRL | |
Notes to Consolidated Financial Statements | |
Related Party Transactions | 29. Related Party Transactions Bradesco has Cidade de Deus Companhia Comercial de Participaes and Fundao Bradesco as primary shareholders. Fundao Bradesco is a not-for-profit trust that for over 40 years has been promoting and developing the potential of children and young people through schools maintained in underprivileged areas. We have made no loans to our officers or directors, since this practice is prohibited for all Brazilian banks by the Central Bank. Transactions with primary shareholders and direct and indirect affiliates (mainly represented by CPM Braxis S.A. and Cia. Brasileira de Meios de Pagamento Visanet), are conducted in similar conditions to those used when making transactions with third-parties, which are effective as of the date of the operations as follows. December 31, 2007 2008 2009 ASSETS Dividends receivable 16 - - Other assets 110 5 4 LIABILITIES Demand deposits 11 15 1 Time deposits 120 75 59 Debentures 582 248 15 Interest on shareholders capital and dividends 607 687 653 Subordinated notes 845 106 134 Other liabilities 541 1 62 INCOME AND EXPENSES Income on securities 24 6 - Other income 40 12 16 Interest on long-term debt 228 69 40 Other expenses 240 105 173 |
Note 30 - Subsequent Events
Note 30 - Subsequent Events | |
12 Months Ended
Dec. 31, 2009 BRL | |
Notes to Consolidated Financial Statements | |
Subsequent Events | 30. Subsequent Events a)On June 2, 2010, Bradesco concluded the acquisition of the entire capital stock of the controlling group of Ibi Services S. de R.L. Mxico (Ibi Mxico) and of RFS Human Management S. de R.L. As of December 31, 2009, Ibi Mxico had a credit portfolio of R$ 205 million and more than 1.3 million credit cards. This transaction includes a partnership contract with CA Mxico S. de R.L. (CA Mxico) for a period of 20 years for the exclusive joint sale of financial products and services through the CA Mxico retail chain. b)On April 23, 2010, Bradesco presented to the Spanish Santander Group (Santander), a Binding Proposal (Proposal) for the acquisition of the shares held by Santander in the following companies: In Cielo S.A. (Cielo), corresponding to 2.09% of the companys capital for the amount of R$ 425; and In Companhia Brasileira de Solues e Servios (CBSS), corresponding to 10.67% of the companys capital for the amount of R$ 139.2. Considering that the Proposal was accepted by Santander on the same date, the completion of the purchase is now contingent upon a satisfactory negotiation process related to the final documents and compliance with the applicable legal and regulatory formalities. Once the transaction has been concluded, Bradescos stake in Cielo will increase from 26.56% to 28.65% and in CBSS from 34.33% to 45.00%, strengthening its percentage of ownership of companies operating in the banking card market. c) On April 27, 2010 Banco Bradesco S.A. and Banco do Brasil S.A. signed a non-binding memorandum of understanding for the preparation of a business model, involving: The integration of part of their card operations The launch of a Brazilian brand of credit, debit and pre-paid cards for account-holders and non-account-holders; The joint creation of new businesses for private label cards (cards offered to non-account-holder clients through partner merchants); The creation of a company to sell cards to certain determined groups of non-account-holder clients; The transfer of shareholdings retained by both institutions and their subsidiaries in CBSS S.A., for the subsequent creation of a new company. The Banks announced that they are studying the possibility of transferring their interests in Cielo S.A. to a new company to be created, while observing the interests of their shareholders, the requirements of the BMFBovespas Novo Mercado listing rules and the companies' Bylaws. If the operation is concluded, the Banks intend to set up a holding company which will integrate and manage the businesses listed above, in addition to generating gains in synergy, the structuring of new private label businesses, and other similar businesses, and constructing a business model that will permit the offer of branded cards on a nationwide basis. The conclusion of the operation is subject to technical, legal and financial studies, the satisfactory negotiation of the final documents and compliance with the applicable legal and regulatory requirements. d) On June 10, 2010, the Special Shareholders Meeting approved the increase of the capital stock from R$26,500 to R$28,500, by means of capitalization |