Bank of the Year 2018 -- Brazil: Bradesco

Bank of the Year 2018 -- Brazil: Bradesco

Corporate & Sovereign Strategy Economy & Policy Brazil

After a severe, two-year recession ended in 2017, Brazil’s GDP has recorded modest growth, rising just over 1% in the first half of 2018. The economic recovery and historically low interest rates helped Bradesco, the second largest privately owned bank in Brazil, increase net income by 9.7% year-on-year to 5.16 billion reais ($1.4 billion) in 2018’s second quarter and boost lending by 6% to 516 billion reais by the end of the June.

“Everything has proceeded as normal,” says Bradesco CEO Octavio de Lazari. “We have emerged from the recession with a positive outlook, whichever way you look at it.”

Now, as employment and household income levels rise, Bradesco is hoping to improve the quality of its loan portfolio and increase the sales of products and services in 2019. De Lazari is confident that declining mortgage rates will release a pent-up demand for home loans, especially among middle-class homebuyers, and solidify the bank’s top spot in the segment.

“We are pinning our greatest expectations on home loans, car loans and payroll loans, as well as working capital for small and mid-sized companies,” he says.

Bradesco also wants to expand its client base by turning long-time customers from other areas, such as credit cards, car loans, insurance and pension plans, into account holders. “We are talking about more than 30 million clients who are in this situation,” de Lazari says.

But pursuing these goals comes with challenges. Customers do not visit bank branches as often as they used to, opting instead to bank through smart phones or other digital channels. Bradesco, which took over a number of bank branches when it acquired HSBC’s Brazilian business in 2016, closed or merged 500 branches in 2017 and plans to shutter another 150 branches in 2018.

In turn, it has signed up 250,000 clients at its digital bank Next since last year. “The Next client is young, and looking for simple, fast attention,” de Lazari says. “Next’s operating volumes are growing at an impressive rate.” LF