Bradesco Chief Says Crisis Won’t Hit Brazil

Neither Brazil’s economy nor its banking sector will be dented by the financial crisis ripping through developed markets, according to the head of Brazil’s largest private financial institution by assets. “There isn’t the slightest chance this crisis will affect Brazil,” Bradesco CEO Marcio Cypriano tells LatinFinance. He argues that in Brazil, all aspects and entities of the economy are overseen by a single prudent and competent entity – the central bank – and that since the financial system is properly regulated, it will avoid contamination. Cypriano points to the central bank’s recent decision to raise rates to quash inflation as an example of the swift policy response. And Cypriano is similarly optimistic about the future of his own institution, saying that the crisis poses no threat to Bradesco’s margins. Financial sector analysts have expressed concern about Brazilian banks’ ability to continue growing portfolios amid rising external funding costs. While acknowledging that the higher cost of dollar-denominated funding has led it and other banks to refinance smaller portions of their credit lines, Cypriano says the overall impact on profits and revenues on Bradesco will be zero. The bank’s local deposits funding base, worth some BRL123bn, will more than make up for a drop in other funding sources, he adds. Bradesco recorded a net profit of BRL4.1bn in the first half. It is among the most profitable banks in the country, with an ROE 28.9%, ROA of 2.5% and NPLs of 4.5%. At the end of last week its market cap stood at BRL81.5bn.