Mon Jan 28, 2013 3:23am EST
* Recurring profit at 2.92 bln reais misses poll estimate
* Provisions fall on sequential basis, helping net income
* Loan book expands slightly below guidance for last year
* Bank issues prudent lending expansion, expense estimate
By Guillermo Parra-Bernal
SAO PAULO, Jan 28 (Reuters) - Profit at Banco Bradesco SA slightly missed analysts' estimates in the fourth quarter as lower insurance-related income and higher operating expenses offset the positive impact of a decline in bad loan provisions.
Osasco, Brazil-based Bradesco earned recurring profit, or net income excluding one-time items, of 2.918 billion reais ($1.44 billion) in the quarter, up 0.9 percent from the prior three months, the bank said on Monday. On an annual basis, recurring profit climbed 5.3 percent.
The number came in below the average estimate of 2.950 billion reais in a Thomson Reuters poll of six analysts. Recurring profit was, however, the highest since at least the first quarter of 2009, according to Thomson Reuters data.
In the statement, Bradesco forecast its loan book to expand this year at a slightly slower pace than in 2012, reflecting an economic recovery in Brazil that has so far turned out to be weaker than previously expected. The bank estimates credit growth between 13 percent and 17 percent for this year, compared with a revised range of 14 percent to 18 percent in 2012.
Provisions fell 2.8 percent from the third quarter, helping prop up recurring profits. But insurance income, or the difference between underwritten premiums and casualties, sank 7.2 percent from the prior quarter and expenses rose - limiting profit gains.
Return on equity, a measure of profitability in the banking industry commonly known as ROE, dropped to 19.2 percent in the fourth quarter from 21.3 percent a year earlier and 19.9 percent in the third quarter. The indicator fared better than the 18 percent forecast in the poll but slid to the lowest in almost four years.
Analysts in the same poll predicted that earnings data from Bradesco could help reinforce the view that profitability in the sector will keep declining as record-low rates in the country hamper revenue and force lenders to roll over maturing loans at a discount. In their view, ROE likely will keep sinking throughout this year.
Loans in arrears for more than 90 days, the industry's benchmark gauge for delinquencies in the banking system, remained unchanged at 4.1 percent of outstanding loans for the second straight quarter. The poll predicted that the so-called default ratio would decline to 4 percent.
Last year, Bradesco's loan book rose 11.5 percent on an annual basis to 385.53 billion reais, slightly below management guidance. On a sequential basis, the bank's loan book rose 3.7 percent, way above the poll's estimate of 2.4 percent quarter-on-quarter lending growth.
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