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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
FORM 6-K
 
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE
SECURITIES EXCHANGE ACT OF 1934
 
For the month of November, 2004

Commission File Number 1-15250
 

 

BANCO BRADESCO S.A.
(Exact name of registrant as specified in its charter)
 

BANK BRADESCO
(Translation of Registrant's name into English)
 

Cidade de Deus, s/n, Vila Yara
06029-900 - Osasco - SP
Federative Republic of Brazil
(Address of principal executive office)
 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. 

Form 20-F ___X___ Form 40-F _______

 Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.  

Yes _______ No ___X____

.







Report on Economic and
Financial Analysis

September 2004






Financial Market Indicators (%)

Index 2003 2004
 

  2nd
Quarter
3rd
Quarter 
Accumulated to September 2nd
Quarter
3rd
Quarter 
Accumulated to September







CDI 5.78  5.61  18.06  3.67  3.86  11.72 
IBOVESPA 15.07  23.42  42.08  (4.49) 9.92  4.54 
USD - Commercial rate (14.35) 1.79  (17.26) 6.84  (8.01) (1.06)
IGP-M (0.35) 1.14  7.10  3.95  3.25  10.26 
IPCA - IBGE 1.43  1.32  8.05  1.60  1.94  5.49 
TJLP 2.87  2.87  8.62  2.35  2.35  7.29 
TR 1.31  1.29  3.93  0.42  0.57  1.35 
Collective labor agreement (*) 12.60  12.60  8.50  8.50 

Closing Price

USD - Commercial rate - sell (in reais) 2.8720  2.9234  2.9234  3.1075  2.8586  2.8586 

Sovereign risk (points) 788  695  695  646  466  466 

SELIC – Central Bank reference rate COPOM (% p.a.) 26.00  20.00  20.00  16.00  16.25  16.25 

Prefixed BMF rate 1 yr. (% p.a.) 22.00  18.10  18.10  17.02  17.40  17.40 

(*)   Increase proposed in 2004.

Compulsory Deposit Rates (%)

Deposits 2003 2004
 

  2ndQuarter 3rdQuarter 2ndQuarter 3rdQuarter





Demand deposits (1) 60  45  45  45 
    Additional (2)
Time deposits (3) 15  15  15  15 
    Additional (2)
Savings deposits (4) 20  20  20  20 
    Additional (2) 10  10  10  10 

(1)   Cash deposit - no remuneration.
(2)   Cash deposit - SELIC rate.
(3)   Deposit in Government Securities.
(4)   Cash deposit - Reference Rate (TR) + interest of 6.17% p.a.
Rates and Limits (%)

Items 2003 2004
 

  2nd Quarter 3rd Quarter 2nd Quarter 3rd Quarter





Income tax 25  25  25  25 
Social contribution
PIS (1) 0.65 0.65 0.65 0.65
COFINS (2)
Legal reserve on net income
Maximum fixed assets (3) 50  50  50  50 
Minimum capital – Basel (4) 11  11  11  11 

(1)   The rate applicable to non-financial and similar companies is 1.65% (non-cumulative PIS).
(2)   The rate applicable to financial and similar companies was increased to 4% in September 2003 and for other companies to 7.60% in February 2004 (non-cumulative COFINS).
(3)   On reference equity.
(4)   Reference equity may not be lower than 11% of weighted assets.

Forward-Looking Statements

This Report on Economic and Financial Analysis contains forward-looking statements relating to our business which are based on management’s current expectations, estimates and projections about future events and financial trends which could affect our business. Words such as: “believes”, “anticipates”, “plans”, “expects”, “intends”, “aims”, “evaluates”, “predicts”, “foresees”, “projects”, “guidelines”, “should” and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and involve risks and uncertainties which are difficult to predict and which could be beyond our control. Furthermore, certain forward-looking statements are based on assumptions which future events may prove to be inaccurate. Therefore, actual results may differ materially from the plans, objectives, expectations, projections and intentions expressed or implied in such forward-looking statements.

Factors which could cause actual results to differ materially include, among others, changes in regional, national and international commercial and economic conditions; inflation rates, increases in customer default and any other delays in credit operations; increases in the allowance for loan loss; loss of funding capacity; loss of clientele or revenues; our capacity to sustain and improve performance; changes in interest rates which could, among others, have an adverse effect on our margins; competition in the banking sector, in financial services, credit card services, insurance, asset management and other related sectors; government regulations and fiscal matters; disputes or adverse legal proceedings or ruling; as well as credit risks and other loan and investment activity risks.

Accordingly, the reader should not place undue reliance on these forward-looking statements. In all cases, these forward-looking statements are valid only as at the date they are made. Except as required under applicable legislation, we assume no obligation whatsoever to update these statements, whether as a result of new information, future events or any other motive.

Contents

1 - Bradesco – Line by Line


2 – Main Statement of Income Information

3 – Main Balance Sheet Information



4 – Operating Companies


5 – Operating Structure


6 – Social Responsibility


7 - Independent Auditors’ Report


8 - Financial Statements, Report of the Fiscal Council and Independent Auditors' Report


Cross Reference Index



Certain figures included in this document have been subject to rounding
adjustments. Accordingly, figures shown as totals in certain tables may not be an
arithmetic aggregation of the figures which precede them.











1 - Bradesco – Line by Line








• Highlights


Earnings – In millions of reais

  2004 Accumulated to September
 

  2nd Quarter 3rd Quarter % Variation 2003  2004  % Variation
 





Financial margin 3,081  3,304  7.2  9,135  9,715  6.3 
Provision for loan losses 514  478  (7.0) 1,998  1,553  (22.3)
Commission and fees 1,375  1,455  5.8  3,282  4,149  26.4 
Insurance premiums, private pension plans and savings bonds 2,989  3,464  15.9  8,291  9,447  13.9 
Personnel expenses 1,234  1,273  3.2  3,507  3,684  5.0 
Other administrative expenses 1,216  1,225  0.7  3,486  3,649  4.7 
Operating income 621  1,163  87.3  2,667  2,583  (3.1)
Net income 641  752  17.3  1,591  2,002  25.8 


Balance Sheet – In millions of reais

  2004 September
 

  June  September % Variation 2003  2004  % Variation
 





Total assets 176,254  179,703  2.0  164,363  179,703  9.3 
Securities 56,212  58,155  3.5  47,906  58,155  21.4 
Credit operations 58,402  59,976  2.7  52,776  59,976  13.6 
Permanent assets 5,271  5,030  (4.6) 5,069  5,030  (0.8)
Total deposits 64,133  64,787  1.0  58,346  64,787  11.0 
Borrowings and onlendings 16,817  16,715  (0.6) 15,186  16,715  10.1 
Technical reserves 29,478  31,585  7.1  24,461  31,585  29.1 
Stockholders’ equity 13,650  14,678  7.5  12,967  14,678  13.2 


Change in Number of Outstanding Shares

  Common Stock Preferred Stock Total 
 


Number of shares held at December 31, 2003 (*) 79,836,525  78,693,936  158,530,461 
Shares acquired and not canceled (386,082) (4) (386,086)
Number of shares held at September 30, 2004 79,450,443  78,693,932  158,144,375 

* Shares divided by 10,000, as a result of the reverse stock split.


Share Performance – in reais

  2004 Accumulated to September
 

  2nd Quarter 3rd Quarter % Variation 2003  2004  % Variation
 





Net income per share 4.05  4.75  17.3  10.03  12.66  26.2 
Dividends/JCP per share – ON (net of income tax) 1.664  1.702  2.3  5.179  5.032  (2.8)
Dividends/JCP per share – PN (net of income tax) 1.831  1.872  2.2  5.697  5.535  (2.8)
Net book value (ON and PN) 86.30  92.81  7.5  81.76  92.81  13.5 
Average last day price (ON) 115.36  118.43  2.7  94.70  118.43  25.1 
Average last day price (PN) 142.63  150.00  5.2  117.20  150.00  28.0 
Market value of stockholders’ equity (in millions of reais) (*) 20,404  21,213  4.0  16,810  21,213  26.3 

(*) Number of shares x average last day quotation for the period.
     JCP = Interest attributed to own capital


Cash Generation – In millions of reais

  2003 2004



  2nd Quarter 3rd Quarter Accumulated to September 2nd Quarter 3rd Quarter Accumulated to September







Net income 519  564  1,591  641  752  2,002 
Equity in the earnings of associated companies 28  (7) 26  (122) (119)
Allowance for loan losses 587  603  1,998  514  478  1,553 
Technical reserves 1,465  1,625  4,946  1,392  2,019  4,941 
(Reversal of) allowance for mark-to-market 16  (1) 30  (4)
Depreciation and amortization 150  179  470  143  134  421 
Amortization of goodwill 62  62  862  226  188  501 
Other 12  (22) (5) (43) 20  (17)

Total 2,839  3,003  9,918  2,751  3,594  9,278 



Added Value – In millions of reais

  2003 2004
 

  2nd Quarter 3rd Quarter Accumulated to September 2nd Quarter 3rd Quarter Accumulated to September
 





ADDED VALUE (A+B+C) 2,192  2,395  6,840  2,311  2,702  7,398 
A - Gross profit from financial intermediation 2,028  2,555  7,137  2,567  2,826  8,162 
B - Commissions and fees 1,083  1,182  3,282  1,375  1,455  4,149 
C - Other operating expenses (919) (1,342) (3,579) (1,631) (1,579) (4,913)
 
DISTRIBUTION OF ADDED VALUE (D+E+F+G) 2,192  2.395  6,840  2,311  2,702  7,398 
 
D - Employees 923  1,094  2,878  995  1,030  2,968 
E - Government 750  737  2,371  675  920  2,428 
F - JCP/Dividends to stockholders (paid and accrued) 343  367  1,000  325  333  985 
G - Reinvestment of profits 176  197  591  316  419  1,017 


Performance Ratios (annualized)

  2004 Accumulated to September
 

  2nd Quarter 3rd Quarter 2003  2004 
 



Return on stockholders’ equity (total) 20.1  22.1  16.7  18.6 
Return on stockholders’ equity (average) 20.5  23.3  18.2  20.0 
Return on total assets (total) 1.5  1.7  1.3  1.5 
Stockholders’ equity to total assets 7.7  8.2  7.9  8.2 
Capital adequacy ratio (Basel) - financial consolidated 18.1  19.9  18.4  19.9 
Capital adequacy ratio (Basel) - total consolidated 15.7  17.0  15.9  17.0 
Permanent assets to stockholders' equity – financial consolidated 41.4  42.7  44.3  42.7 
Permanent assets to stockholders' equity - total consolidated 26.1  24.2  29.9  24.2 
Efficiency ratio (accumulated over the prior 12-month period) 60.1  58.3  55.9  58.3 


Other Information

  2004 September
 

  June September % Variation 2003  2004  % Variation
 





Managed funds – in millions of reais 86,816  90,171  3.9  76,602  90,171  17.7 
    Number of employees 74,784  74,227  (0.7) 77,154  74,227  (3.8)
Number of branches 3,054  3,049  (0.2) 3,033  3,049  0.5 
Checking account holders – million 15.4  15.3  (0.6) 14.4  15.3  6.3 
Debit and credit card base - million 43.5  45.2  3.9  39.1  45.2  15.6 

• Profitability

Bradesco reported net income of R$ 2,002 million, for the first nine months of 2004, up by 25.8%, compared to the same period in 2003. Stockholders’ equity was R$ 14.678 million at September 30, 2004, an increase of 13.2% compared to the prior-year. The return on stockholders’ equity (ROE) was 18.6%. Assets totaled R$ 179,703 million at the end of September 2004, a growth rate of 9.3% compared to the balance at the same date in 2003. Return on total assets (RO) for the first nine months of 2004 was 1.5% per annum.

Third-quarter consolidated net income was R$ 752 million, up by R$ 111 million, or 17.3% compared to second-quarter results (2Q04). Annualized return on stockholders’ equity (ROE) was 22.1% for the quarter and return on total assets (ROA) was 1.7%.

3Q04 was marked by the good performance of revenues comprising financial margin, especially non-interest income which totaled R$ 504 million, up by R$ 380 million, compared to 2Q04, mainly due to increased gains with securities (TVM) and treasury operations, as well as credit recovery improvements, in line with a more favorable economic environment. We also highlight the increase in commissions and fees, up by 5.8% compared to 2Q04, in particular, income on credit operations and fund management.

The improved credit portfolio scenario, in sync with our ongoing selective credit granting policy, was mirrored by improved portfolio risk ratings and the lower provision for loan loss recorded in the amount of R$ 36 million for the quarter, totaling R$ 1,553 million for the first nine months of 2004.

The Operating Efficiency Ratio (accumulated over the prior 12 months) in 3Q04 was 58.3%, down by 0.4% compared to 2Q04, after adjustments for extraordinary events, evidencing the strong commitment of the entire Bradesco management to the strict control of expenses and growing revenues for the quarter.

• Comparative Statement of Income - In millions of reais

 





  Accumulated to September
2003
Accumulated to September
2004
%
Variation 
2nd Quarter
2004
3rd Quarter
2004
%
Variation 
 





 
Income from lending and trading activities 20,087  20,001  (0.4) 7,720  5,525  (28.4)
Credit operations 9,126  9,629  5.5  3,659  2,870  (21.6)
Leasing operations 229  215  (6.1) 57  73  28.1 
Securities 5,098  4,163  (18.3) 2,121  362  (82.9)
Financial income on insurance, private pension plans and savings bonds 3,948  3,763  (4.7) 1,181  1,337  13.2 
Derivative financial instruments 46  709  1,441.3  (69) 582  (943.5)
Foreign exchange transactions 543  663  22.1  502  (100.0)
Compulsory deposits 1,097  859  (21.7) 269  301  11.9 
Expenses 12,950  11,839  (8.6) 5,153  2,699  (47.6)
Deposits 7,930  6,776  (14.6) 3,030  1,292  (57.4)
Price-level restatement and interest on technical reserves for insurance, private pension plans and savings bonds 2,419  2,294  (5.2) 699  943  34.9 
Borrowings and onlendings 593  1,203  102.9  905  (18) (102.0)
Leasing operations 10  13  30.0  (20.0)
Provision for loan losses 1,998  1,553  (22.3) 514  478  (7.0)
Income on financial intermediation 7,137  8,162  14.4  2,567  2,826  10.1 
Other operating income (expenses) (4,470) (5,579) 24.8  (1,946) (1,663) (14.5)
Commissions and fees 3,282  4,149  26.4  1,375  1,455  5.8 
Income from insurance premiums, private pension plans and savings bonds 8,291  9,447  13.9  2,989  3,464  15.9 
    Insurance premiums retained 4,067  4,663  14.7  1,525  1,673  9.7 
    Private pension plan contributions 3,382  3,744  10.7  1,068  1,453  36.0 
    Income on savings bonds 842  1,040  23.5  396  338  (14.6)
Variation in technical reserves for insurance, pension plans and savings bonds (2,527) (2,647) 4.7  (693) (1,076) 55.3 
    Variation in technical reserves for insurance (199) (160) (19,6)  (70) (112) 60.0 
    Variation in technical reserves for pension plans (2,271) (2,441) (7.5) (617) (974) 57.9 
    Variation in technical reserves for savings bonds (57) (46) (19.3) (6) 10  (266.7)
Claims - insurance operations (3,061) (3,842) 25.5  (1,282) (1,328) 3.6 
Savings bond draws and redemptions (798) (932) 16.8  (346) (313) (9.5)
Insurance and pension plan selling expenses (553) (633) 14.5  (205) (216) 5.4 
    Insurance product selling expenses (446) (517) 15.9  (167) (177) 6.0 
    Pension plan selling expenses (107) (116) 8.4  (38) (39) 2.6 
Expenses with pension plan benefits and redemptions (1,406) (1,620) 15.2  (590) (497) (15.8)
Personnel expenses (3,507) (3,684) 5.0  (1,234) (1,273) 3.2 
Other administrative expenses (3,486) (3,649) 4.7  (1,216) (1,225) 0.7 
Tax expenses (761) (1,053) 38.4  (343) (374) 9.0 
Equity in the earnings of associated companies (26) 119  (557.7) 122  (3) (102.5)
Other operating income 1,954  888  (54.6) 280  351  25.4 
Other operating expenses (1,872) (2,122) 13.4  (803) (628) (21.8)
Operating income 2,667  2,583  (3.1) 621  1,163  87.3 
Non-operating income (768) (343) (55.3) (202) (130) (35.6)
Income before taxes and profit sharing 1,899  2,240  18.0  419  1,033  146.5 
Provision for income tax and social contribution (301) (233) (22.6) 225  (279) (224.0)
Minority interest in subsidiaries (7) (5) (28.6) (3) (2) (33.3)
Net income 1,591  2,002  25.8  641  752  17.3 
Return on stockholders’ equity (%) annualized 16.7  18.6  20.1  22.1 

• Analysis of the Statement of Income – In millions of reais

Income from Credit and Leasing Operations




Accumulated to September   2004

 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation



 


9,345 9,831 5.2   3,711 2,939 (20.8)



 


Income was up mostly as a result of: (i) the increase in the volume of the credit portfolio, which totaled R$ 60.0 billion, particularly in the consumer customer segment, up by 26.8%, as compared to the corporate segment up by 8.5%, reflecting the small demand for credit by the latter; (ii) negative exchange variation of 1.1% for the nine-month period through September 2004 (period/04), compared to negative exchange variation of 17.3% in the nine-month period through September 2003 (period/03), impacting foreign-currency indexed and/or denominated operations, which comprise 12.5% of the portfolio (not considering advances on foreign exchange contracts – ACC which comprise 9.4% of the portfolio and whose results impact the foreign exchange transactions account); offset substantially by: (iii) falling average interest rates in line with the variation in CDI of 18.1% for period/03 as compared to 11.7% for period/04.
 
The variation was mainly due to: (i) negative exchange variation of 8.0% in 3Q04, against positive exchange variation of 6.8% in 2Q04, impacting foreign-currency indexed and/or denominated operations, comprising 12.5% of the portfolio (not considering advances on foreign exchange contracts – ACC which comprise 9.4% of the portfolio and whose results impact the foreign exchange transactions account); partially offset by: (ii) increase in the credit portfolio balance, particularly the 4.8% increase for the quarter in the consumer customer segment, compared to a growth rate of 1.8% in the corporate customer segment, partially affected by foreign-currency indexed and/or denominated operations.

 

Results of Securities (TVM) and Derivative Financial Instrument Operations


Accumulated to September   2004

 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation



 


5,144 4,872 (5.3)   2,052 944 (54.0)

 
The variation for the period is mainly due to: (i) falling average interest rates for the period; (ii) decrease in non-interest income of R$ 315 in period/04 against R$ 520 in period/03, as a result of less gains on securities and treasury transactions, offset substantially by: (iii) negative exchange variation of 1.1% in period/04, against negative exchange variation of 17.3% in period/03, impacting foreign-currency-indexed and or denominated securities, which comprise 17.8% of the portfolio; and (iv) increase in the average volume of the securities’ portfolio, particularly federal government securities.
 
This decrease reflects mainly:(i) negative exchange variation of 8% in 3Q04, against positive exchange variation of 6.8% in 2Q04, impacting foreign currency-indexed and or denominated securities, which comprise 17.8% of the total portfolio; partially offset by: (ii) increase in non-interest income of R$ 216 in 3Q04 compared to R$ (6) in 2Q04, as a result of increased gains with securities and treasury operations.

 

Financial Income on Insurance, Private Pension Plans and Savings Bonds


Accumulated to September   2004

 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation



 


3,948 3,763 (4.7)   1,181 1,337 13.2

 
During the period, there was an increase in the average volume of the securities’ portfolio, comprising federal government securities, related to technical reserves, especially PGBL and VGBL products. However, overall results were down mainly due to: (i) the decrease in average interest rates, especially CDI, from 18.1% in period/03 to 11.7% for period/04; partially offset by: (ii) variation in the IGP-M index, of 7.1% for period/03, against 10.3% in 2004.
 
Results were up mainly due to: (i) the increase in the average volume of the securities’ portfolio for the quarter, comprising federal government securities, as a result of the increase in the sale of supplementary pension plans and insurance policies, especially PGBL and VGBL, partially offset by: (ii) less variation in the IGP-M index, from 3.3% in 3Q04, against 4% in 2Q04.

 

Results of Foreign Exchange Transactions


Accumulated to September   2004

 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation



 


543 663 22.1   502 - (100.0)

 
During the period, there was an increase in the volume of the foreign exchange portfolio. Considering the adjustments to foreign funding expenses used to finance import/export transactions (Note 13 to the financial statements), results would present a decrease from R$ 247 in period/03 to R$ 143 in period/04, affected by falling average fx portfolio interest rates (spread).
 
The volume of the fx portfolio for the quarter presents a decrease, when measured in reais, mainly as a result of negative exchange variation of 8% in 3Q04. Considering the adjustments to foreign funding expenses used to finance import/export transactions, results would present increases of R$ 35 and R$ 45 in 2Q04 and 3Q04, respectively.

 

Results of Compulsory Deposits


Accumulated to September   2004

 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation



 


1,097 859 (21.7)   269 301 11.9

 
The decrease for the period reflects: (i) drop in the SELIC rate from 18.1% for period/03 to 11.7% for period/04, used to remunerate the additional compulsory deposit; (ii) the decrease in the TR reference rate used to remunerate compulsory savings account deposits, from 3.9% in period/03 to 1.4% for period/04, partially offset by: (iii) the increase in the average volume of deposits for the period.
 
This increase was mainly due to: (i) increase in the SELIC rate from 3.7% in 2Q04 to 3.9% in 3Q04, which is used to remunerate the additional compulsory deposit; (ii) the increase in the TR reference rate used to remunerate compulsory savings account deposits, from 0.4% in 2Q04 to 0.6% for 3Q04, partially offset by: (iii) the increase in the average volume of deposits for the quarter.

 

Interest and Charges on Deposits


Accumulated to September   2004

 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation



 


7,930 6,776 (14.6)   3,030 1,292 (57.4)

 
The decrease mainly reflects: (i) falling average interest rates, in line with the variation in the CDI from 18.1% in period/03 against 11.7% in period/04, impacting expenses for time deposits and purchase and sale commitments – third-party portfolio - R$ 1,050 and R$ 623 respectively, partially offset by: (ii) greater expense for securities abroad - R$ 928, generated by negative exchange variation of 1.1% in period/04 as compared to negative exchange variation of 17.3% in period/03; and (iii) increase in the average volume of funding for the period.
 
The decrease in this expense mainly reflects negative exchange variation of 8% in 3Q04, compared to positive exchange variation of 6.8% in 2Q04, impacting securities and other funds obtained abroad by Bradesco - R$ 2,051, which was partially offset by increased expense for purchase and sale commitments and time deposits of R$ 148 and R$ 130, respectively, as a result of an increase in interest rates, in line with the variation in the CDI of 3.7% in 2Q04 to 3.9% in 3Q04.

 

Price-level Restatement and Interest on Technical Reserves for Insurance, Private Pension Plans and Savings Bonds


Accumulated to September   2004

 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation



 


2,419 2,294 (5.2)   699 943 34.9

 
The decrease mainly reflects (i) the fall in average interest rates, in line with the variation in the CDI rate of 18.1% for period/03 as compared to 11.7% for period/04; offset by: (ii) the increase in the average volume of technical reserves, for insurance, private pension plans and premium bonds, particularly PGBL and VGBL products” and (iii) the improved accounting policies in period/04, with R$ 171, recorded in this account rather than in “Variation in technical reserves for insurance, private pension plans and savings bonds” pursuant to prior policy.
 
The variation was mainly due to growth from: (i) the increase in sales of supplementary pension plans and insurance policies, particularly PGBL and VGBL; (ii) the improved accounting policies in 3Q04, with R$ 171, recorded in this account rather than in “Variation in technical reserves for insurance, private pension plans and savings bonds” pursuant to prior policy; partially offset by: (iii) less variation in the IGP-M, from 3.3% in 3Q04 against 4% in 2Q04, one of the indexes used to remunerate technical reserves for insurance, private pension plans and savings bonds.

 

Expenses for Borrowings and Onlendings


Accumulated to September   2004

 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation



 


593 1,203 102.9   905 (18) (102,0)

 
The increase reflects negative exchange variation of 17.3% in period/03, against negative exchange variation of 1.1% in period/04, impacting borrowings and onlendings indexed and/or denominated in foreign currency, as well as the increase in local funding through onlendings from BNDES/FINAME.
 
This decrease reflects negative exchange variation of 8% in 3Q04 against positive exchange variation of 6.8% in 2Q04, impacting borrowings and onlendings indexed and/or denominated in foreign currency.

 

Financial Margin


Accumulated to September   2004

 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation



 


9,135 9,715 6.3   3,081 3,304 7.2

 
The variation for the period was mainly due to: (i) increase in interest income - R$ 1,024, comprising the effect of appreciation of the real in period/03 (17.3%) compared with period/04 (1.1%) - R$ 510 and growth in the average volume of business - R$ 514; (ii) financial expenses recorded formerly in the “Variation in technical reserves for insurance, private pension plans and savings bonds” account - R$ 171; and (iii) decrease in non-interest income - R$ 273, mainly due to lower gains on securities and treasury transactions for period/04.
 
The variation for the quarter was mainly due to: (i) increase in interest income - R$ 14, comprising growth in the average volume of business - R$ 111 and the drop in spread - R$ 97; (ii) financial expenses recorded formerly in the “Variation in technical reserves for insurance, private pension plans and savings bonds” account - R$ 171; and (iii) increase in non-interest income - R$ 380, derived from the increase in gains on securities and treasury transactions and credit recoveries in 3Q04.

 

Expenses for Provision for Loan Losses


Accumulated to September   2004

 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation



 


1,998 1,553 (22.3)   514 478 (7.0)

 
Excluding additional provisions - R$ 318 in period/03 and R$ 54 in period/04, the decrease in expenses for PDD in the amount of R$ 181, was mainly due to our ongoing selective credit granting policy and tool/instrument enhancements, reflected in the improvement of our credit portfolio risk ratings. In September 2003 and September 2004, our AA to C rated portfolio comprised 90.4% and 91.6% respectively of our total portfolio.
 
Excluding additional provisions - R$ 8 in 3Q04 and R$ 20 in 2Q04, the decrease in expenses for PDD in the amount of R$ 24, was mainly due to our ongoing selective credit granting policy and tool/instrument enhancements, reflected in the improvement of our credit portfolio risk ratings. In June 2004 and September 2004, our AA to C rated portfolio comprised 91.3% and 91.6% respectively of our total portfolio.

 

Income on Commissions and Fees


Accumulated to September   2004

 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation



 


3,282 4,149 26.4   1,375 1,455 5.8

 
Growth for the period is derived substantially from the increase in the average volume of transactions and number of customers, as well as the readjustment of certain fees during the period, especially: (i) fund management - R$ 248; (ii) credit operations - R$ 162; (iii) checking accounts - R$ 158; and (iv) income on cards – R$ 125; and (v) consortium purchase plan management – R$ 46.
 
Growth for the quarter was mainly due to the increase in the average volume of transactions, with: (i) credit operations - R$ 27; (ii) fund management - R$ 21; (iii) collection – R$9; and (iv) checking account – R$ 8.

 

Income from Insurance Premiums, Private Pension Plans and Savings Bonds


Accumulated to September   2004

 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation



 


8,291 9,447 13.9   2,989 3,464 15.9

 
The variation for the period is detailed below:
 
The variation for the quarter is detailed below:

 

a) Insurance Premiums Retained


Accumulated to September   2004

 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation



 


4,067 4,663 14.7   1,525 1,673 9.7

 
The variation for the period was mainly due to growth in sales of Health (corporate) - R$ 335, Auto - R$ 136 and Vida - R$ 116 products.
 
The increase for the third quarter was mainly due to growth in sales of Auto - R$ 61 and Health (corporate) - R$ 58.

 

b) Private Pension Plan Contributions


Accumulated to September   2004

 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation



 


3,382 3,744 10.7   1,068 1,453 36.0

 
The variation for the period was substantially due to: (i) growth in VGBL product sales - R$ 382; (ii) receipt of the transfer of the Previllares supplementary pension plan portfolio - R$ 117; e partially offset by (iii) lower PGBL product sales -R$ 123.
 
The growth for the quarter was substantially derived from; (i) growth in VGBL product sales - R$ 332; (ii) receipt of the transfer of the Previllares supplementary pension plan portfolio - R$ 117; partially offset by (iii) lower PGBL product sales - R$ 31.

 

c) Income on Savings Bonds


Accumulated to September   2004

 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation



 


842 1,040 23.5   396 338 (14.6)

 
This variation reflects the increase in sales and re-investment of bonds maturing during the period.
 
The variation is partly due to the decrease in the re-investment of bonds matured in 3Q04.

 

Variation in Technical Reserves for Insurance, Pension Plans and Savings Bonds


Accumulated to September   2004

 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation



 


(2,527) (2,647) 4.7   (693) (1,076) 55.3

 
The variation for the period is detailed below:
 
The variation for the quarter is detailed below:

 

a) Variation in Technical Reserves for Insurance


Accumulated to September   2004

 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation



 


(199) (160) (19.6)   (70) (112) 60.0

 
Variations in technical reserves for insurance are directly related to the production of premiums in their respective effective periods. In period/04, the most significant variation occurred as a result of the lower reserve recorded in the Auto line - R$ 41.
 
Variations in technical reserves for insurance are directly related to the production of premiums in their respective effective periods. In 3Q04, the most significant amount was recorded in the Auto line - R$ 40.

 

b) Variation in Technical Reserves for Pension Plans


Accumulated to September   2004

 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation



 


(2,271) (2,441) 7.5   (617) (974) 57.9

 
Variations in technical reserves are directly related to the production of premium and contributions in diverse selling periods, against benefits and redemptions. During the period, reserves were recorded in VGBL and traditional products - R$ 351 and R$ 787, respectively, offset by a lower reserve recorded for the PGBL product - R$ 797 and by the improved accounting policies in period/04, with R$ 171, recorded in “Price-level restatement and interest on technical reserves for insurance, private pension plans and savings bonds” rather than in this account.
 
Variations in technical reserves are directly related to the production of premium and contributions in diverse selling periods, against benefits and redemptions. During the quarter, reserves were recorded, mainly, in VGBL and traditional products - R$ 326 and R$ 272, respectively, offset by a lower reserve recorded for the PGBL product - R$ 70 and improved accounting policies in 3Q04, with R$ 171, recorded in “Price-level restatement and interest on insurance, private pension plans and savings bonds” rather than in this account.

 

c) Variation in Technical Reserves for Savings Bonds


Accumulated to September   2004

 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation



 


(57) (46) (19.3)   (6) 10 (266.7)

 
The variations in technical reserves are directly related to income on savings bonds, against related draws.
 
The variations in technical reserves are directly related to income on savings bonds, against related draws.

 

Claims - Insurance Operations


Accumulated to September   2004

 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation



 


(3,061) (3,842) 25.5   (1,282) (1,328) 3.6

 
The increase in expense with claims for the period was mainly due to: (i) improved calculation of the provision for claims incurred but not reported (IBNR) during the period, used to analyze the movement of claims for a period of 54 months rather than 12, as in prior periods, which resulted in the recording of an extraordinary reserve of R$ 276; (ii) an amount of R$ 74, arising from civil contingencies related to insurance operations which were recorded in 2Q04 in “Other operating expenses; and (iii) the increase in indemnities in Health, Auto and Life lines - R$ 393, compatible with earned premium growth.
 
Excluding the extraordinary reserves in 2Q04 – R$ 145, recorded as a result of improved calculation of IBNR and in 3Q04 - R$ 74, arising from civil contingencies related to insurance operations which were recorded in 2Q04 in “Other operating expenses”, the amounts of retained claims would be R$ 1,137 and R$ 1,254, respectively, compatible with earned premium growth.

 

Savings Bond Draws and Redemptions


Accumulated to September   2004

 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation



 


(798) (932) (16.8)   (346) (313) (9.5)

 
The increase for the period is due to increased provision recorded for redemptions and draws - R$ 134, as a result of increased sales of savings bonds.
 
The decrease in this expense for the quarter is due mostly to decreased provision recorded for redemptions - R$ 40, as a result of the decreased volume of sales of savings bonds in 3Q04 as compared to 2Q04.

 

Insurance and Pension Plan Selling Expenses


Accumulated to September   2004

 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation



 


(553) (633) 14.5   (205) (216) 5.4

 
The variation for the period is detailed below:
 
The variation for the quarter is detailed below:

 

a) Insurance Product Selling Expenses


Accumulated to September   2004

 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation



 


(446) (517) 15.9   (167) (177) 6.0

 
The increase in selling expenses for the period occurred mainly in Auto - R$ 28, Life - R$ 24 and Health line – R$ 13 products, in line with the ratio of selling expenses to earned premium.
 
The increase in selling expenses for the period occurred mainly in the Auto - R$ 4, Life - R$ 4 and Health - R$ 2 lines, even though the ratio of selling expenses to earned premium decreased for the quarter.

 

b) Pension Plan Selling Expenses


Accumulated to September   2004

 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation



 


(107) (116) 8.4   (38) (39) 2.6

 
The increase in these expenses for the period reflects substantially the growth in VGBL product sales.
 
Expenses for the quarter remained practically stable.

 

Expenses with Pension Plan Benefits and Redemptions


Accumulated to September   2004

 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation



 


(1,406) (1,620) 15.2   (590) (497) (15.8)

 
The variation for the period was mainly due to the increase in the payment of benefits and redemptions of traditional private pension plans - R$ 170.
 
The decrease in these expenses for the quarter mainly reflects a lower volume of traditional private pension plan redemption payments in 3Q04 compared to 2Q04 - R$ 113.

 

Personnel Expenses


Accumulated to September   2004

 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation



 


(3,507) (3,684) 5.0   (1,234) (1,273) 3.2

 
The variation for the period reflects for the most part: (i) the effect of the collective bargaining agreement (12.6%) and single payment bonus – R$ 171, appropriated in Sept/03 and R$ 279 which impacted period/04; (ii) the effect of the provision recorded for the proposed collective bargaining agreement (8.5%) in Sept/04 R$ 69 ; (iii) increased expenses for labor claims – R$ 40; and (iv) consolidation of BBV Banco, Zogbi and BEM - R$ 186. Disregarding the above events the decrease in payroll would amount to R$ 225 for the period, mainly as a result of the synergy following the merger of banks acquired.
 
The variation was mainly due to: (i) payroll decrease as a result of the synergy following the merger of banks acquired; partially offset by: (ii) the provision recorded for the proposed collective bargaining agreement (8.5%) in Sept/04, with an impact of R$ 69.

 

Other Administrative Expenses


Accumulated to September   2004

 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation



 


(3,486) (3,649) 4.7   (1,216) (1,225) 0.7

 
The increase for the period was mainly due to consolidation of BBV Banco, Zogbi and BEM – R$ 208, acquired in 2004.
 
The variation for the quarter was mainly due to the increase in expense for : (i) transport - R$ 12; (ii) communications - R$ 4; offset by: (iii) decrease in expenses with leased assets - R$ 7.

 

Tax Expenses


Accumulated to September   2004

 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation



 


(761) (1,053) 38.4   (343) (374) 9.0

 
This variation was substantially generated by: (i) the increase in expenses for COFINS - R$ 197, as a result of the rise in the calculation base rate from 3% to 4% in September 2003, as well as an increase in taxable income; (ii) the increase in expenses for ISS - R$ 47, as a result of a change in legislation; and (iii) increased expense for CPMF - R$ 29.
 
The increase for the quarter was mainly generated by an increase in expenses for COFINS - R$ 33, which is compatible with the growth in taxable income during the quarter.

 

Equity in the Earnings of Associated Companies


Accumulated to September   2004

 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation



 


(26) 119 (557.7)   122 (3) (102.5)

 
The variation was mainly derived from improved results in associated companies for period/04, which include R$ 79 of non-recurring income in associated Insurance Group companies.
 
The variation was mainly derived from improved results in associated companies determined in 2Q04, which include R$ 79 of non-recurring income in associated Insurance Group companies.

 

Other Operating Income


Accumulated to September   2004

 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation



 


1,954 888 (54.6)   280 351 25.4

 
The variation for the period was mainly derived from: (i) reversal of provisions for exchange variation - R$ 504 and other operating provisions - R$ 334, in period/03; and (ii) decrease as a result of the non-consolidation of Latasa following disposal in period/03 - R$ 123.
 
The variation for the quarter reflects the reversal of other operating provisions, in particular, the reversal of tax contingencies.

 

Other Operating Expenses


Accumulated to September   2004

 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation



 


(1,872) (2,122) 13.4   (803) (628) (21.8)

 
The increase was generated in particular: (i) by the growth in operating provisions/other – R$ 219; (ii) the increase in sundry losses (discounts granted on credit operations and fraud) – R$ 128; (iii) greater expenses for amortization of goodwill, as a result of the operations of BBV Banco, Zogbi and BEM - R$ 83; and partially offset by: (iv) less financial expense R$ 233.
 
The variation was mainly due to the addition to provisions for civil contingencies arising from insurance operations - R$ 109, in 2Q04. In 3Q04, R$ 74 of this provision was reversed and allocated to the “Claims – insurance operations” account. Disregarding these factors, there was almost no variation in this account.

 

Operating Income


Accumulated to September   2004

 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation



 


2,667 2,583 (3.1)   621 1,163 87.3

 
The variation for the period was due to: (i) increase in income on commissions and fees - R$ 867; (ii) increase in financial margin - R$ 580; (iii) less expenses for provision for loan losses - R$ 445; (iv) increase in equity and earnings in associated companies - R$ 145; partially offset by: (v) decrease in operating revenue (net of expenses) – R$ 1,315; (vi) increase in the personnel and administrative expenses - R$ 340; (vii) decrease in the margin of contribution of insurance, private pension plan and savings bond operations - R$ 173; and (viii) increased tax expense - R$ 292.
 
The variation for the quarter was derived from: (i) increase in financial margin - R$ 223; (ii) increase in the margin of contribution of insurance, private pension plan and savings bond operations – R$ 161; (iii) less operating expenses (net of revenues) – R$ 246; increase in commissions and fees – R$ 80; (v) less expenses for provision for loan losses - R$ 36; partially offset by: (vi) decrease in equity and earnings in associated companies - R$ 125; (vii) increased personnel and administrative expenses - R$ 48; (viii) increased tax expense -R$ 31.

 

Non-operating Income


Accumulated to September   2004

 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation



 


 
(768) (343) (55.3)   (202) (130) (35.6)

 
The variation for the period mainly reflects extraordinary amortization of goodwill - R$ 681 for period/03; offset by extraordinary amortization of goodwill in period/04 - R$ 237.
 
The variation for the quarter reflects substantially: (i) extraordinary amortization of goodwill - R$ 135 in 2Q04 compared to R$ 102 in 3Q04 and the increase in non-operating provisions recorded in 2Q04.

 

Income Tax and Social Contribution


Accumulated to September   2004

 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation



 


(301) (233) (22,6)   225 (279) (224,0)

 
The variation in the expense for income tax and social contribution, for the period, reflects tax charges on pre-tax income, after additions and exclusions, as described in Note 35 to the financial statements.
 
The variation in this expense for the quarter, reflects the increase in income before income tax and social contribution, as well as the effect of exchange gain (loss) and equity accounting, which totaled - R$ 142 in 2Q04 and R$ (127) in 3Q04.

 

• Comparative Balance Sheet - In millions of reais








ASSETS September September June  September
  2003  2004  Variation 2004  2004  Variation







 
Current assets and long-term receivables 159,294  174,673  9.7  170,983  174,673  2.2 
Funds available 2,234  2,386  6.8  2,222  2,386  7.4 
Interbank investments 28,558  25,126  (12.0) 20,529  25,126  22.4 
Securities and derivative financial instruments 47,906  58,155  21.4  56,212  58,155  3.5 
Interbank and interdepartmental accounts 13,253  15,336  15.7  14,683  15,336  4.4 
    Restricted deposits:
    Brazilian Central Bank 12,069  14,244  18.0  13,637  14,244  4.5 
    Other 1,184  1,092  (7.8) 1,046  1,092  4.4 
Credit and leasing operations 41,863  49,859  19.1  47,488  49,859  5.0 
    Credit and leasing operations 45,845  53,832  17.4  51,511  53,832  4.5 
    Allowance for loan and leasing losses (3,982) (3,973) (0.2) (4,023) (3,973) (1.2)
Other receivables and assets 25,480  23,811  (6.6) 29,849  23,811  (20.2)
    Foreign exchange portfolio 11,926  8,960  (24.9) 15,126  8,960  (40.8)
    Other receivables and assets 13,724  15,059  9.7  14,913  15,059  1.0 
    Allowance for losses (170) (208) 22.4  (190) (208) 9.5 
Permanent assets 5,069  5,030  (0.8) 5,271  5,030  (4.6)
Investments 504  971  92.7  1,006  971  (3.5)
Property and equipment in use and leased assets 2,613  2,288  (12.4) 2,326  2,288  (1.6)
Deferred charges 1,952  1,771  (9.3) 1,939  1,771  (8.7)
    Deferred charges 555  541  (2.5) 540  541  0.2 
    Goodwill on acquisition of subsidiaries, net of amortization 1,397  1,230  (12.0) 1,399  1,230  (12.1)







Total 164,363  179,703  9.3  176,254  179,703  2.0 

 







LIABILITIES September September June  September
  2003  2004  Variation 2004  2004  Variation







 
Current and long-term liabilities 151,256  164,907  9.0  162,500  164,907  1.5 
Deposits 58,346  64,787  11.0  64,133  64,787  1.0 
    Demand deposits 11,240  14,782  31.5  13,541  14,782  9.2 
    Savings deposits 20,897  23,186  11.0  22,457  23,186  3.2 
    Interbank deposits 411  14  (96.6) 47  14  (70.2)
    Time deposits 25,798  26,805  3.9  28,088  26,805  (4.6)
Deposits received under security repurchase agreements 23,069  21,551  (6.6) 16,746  21,551  28.7 
Funds from issuance of securities 7,895  6,116  (22.5) 7,080  6,116  (13.6)
    Securities issued abroad 7,008  5,227  (25.4) 5,989  5,227  (12.7)
    Other resources 887  889  0.2  1,091  889  (18.5)
Interbank and interdepartmental accounts 1,474  1,739  18.0  1,090  1,739  59.5 
Borrowings and onlendings 15,186  16,715  10.1  16,817  16,715  (0.6)
    Borrowings 8,123  8,695  7.0  8,895  8,695  (2.2)
    Onlendings 7,063  8,020  13.5  7,922  8,020  1.2 
Derivative financial instruments 331  308  (6.9) 785  308  (60.8)
Technical reserves for insurance, private pension plans and savings bonds 24,461  31,585  29.1  29,478  31,585  7.1 
Other liabilities 20,493  22,106  7.9  26,371  22,106  (16.2)
    Foreign exchange portfolio 5,966  3,974  (33.4) 8,750  3,974  (54.6)
    Taxes and social security contributions, social and statutory payables 4,912  5,208  6.0  4,771  5,208  9.2 
    Subordinated debt 3,482  6,089  74.9  6,181  6,089  (1.5)
    Sundry 6,133  6,835  11.4  6,669  6,835  2.5 
Deferred income 30  44  46.7  38  44  15.8 
Minority interest in subsidiaries 111  74  (33.3) 66  74  12.1 
Stockholders’ equity 12,967  14,678  13.2  13,650  14,678  7.5 







Total 164,363  179,703  9.3  176,254  179,703  2.0 









• Equity Analysis - In millions of reais


Funds Available

September/2003 September/2004 % Variation   June/2004 September/2004 % Variation



 


2,234 2,386 6.8   2,222 2,386 7.4

 
This increase reflects the increase in the volume of local currency cash funds – R$ 377, offsetting the decrease in the volume of foreign currency cash funds - R$ 225.
 
This variation was due mainly to the increase in the volume of foreign currency cash funds - R$ 163.

 

Interbank Investments

September/2003 September/2004 % Variation   June/2004 September/2004 % Variation



 


28,558 25,126 (12.0)   20,529 25,126 22.4

 
The variation for the period reflects: (i) the decrease in the third-party portfolio and own portfolio positions of open market investments, down by R$ 5,096 and R$ 1,131, respectively; partially offset by: (ii) the increase in interbank deposits up by R$ 2,795.
 
The increase for the quarter is mainly due to the increase in the third-party portfolio and own portfolio positions of open market investments, up by R$ 2,202 and R$ 1,090 respectively, and interbank deposits - R$ 1,356.

 

Securities (TVM) and Derivative Financial Instruments

September/2003 September/2004 % Variation   June/2004 September/2004 % Variation



 


47,906 58,155 21.4   56,212 58,155 3.5

 
The increase for the period is due substantially to: (i) additional funds derived from the increase in funding, particularly technical reserves for insurance, private pension plans and savings bonds, as well as issuance of subordinated debit and mitigated in part by: (ii) negative exchange variation of 2.2% for the period/03 to period/04, impacting foreign-currency indexed and/or denominated securities, which comprise 17.8% of the portfolio; and (iii) the redemption/maturity of securities during the period.
 
The variation is mainly due to: (i) additional funds derived from the increase in funding, particularly technical reserves for insurance, private pension plans and savings bonds; partially offset by (ii) negative exchange variation of 8% for the quarter, impacting foreign-currency indexed and/or denominated securities, which comprise 17.8% of the portfolio; and (iii) the redemption/maturity of securities during the quarter.

 

Interbank and Interdepartmental Accounts

September/2003 September/2004 % Variation   June/2004 September/2004 % Variation



 


13,253 15,336 15.7   14,683 15,336 4.4

 
The variation for the period reflects the increase in compulsory Brazilian Central Bank (BACEN) deposits, as a result of the increase in the volume of demand and savings deposits which grew 31.5% and 11.0%, respectively.
 
The increase for the quarter reflects the growth in compulsory BACEN deposits, as a result of the increase in the volume of demand and savings deposits which grew 9.2% and 3.2%, respectively.

 

Credit and Leasing Operations

September/2003 September/2004 % Variation   June/2004 September/2004 % Variation



 


52,776 59,976 13.6   58,402 59,976 2.7

 
The growth was mainly due to: (i) the individual customer segment with a growth rate of 26.8%, in particular, “vehicle” products up by 43.6% and “Personal Credit”, up by 45.7%, reflecting increased consumer confidence in the present economic scenario. Among corporate customers, the growth rate of 8.5% reflects the reduced demand in this segment, mainly as a result of excess liquidity of major corporations. In this segment, we highlight the rural credit product, up by 37.2%, due to the increase in production and price recovery of the majority of products, in both foreign and domestic markets; and prices in the ; (ii) consolidation of Banco Zogbi and Banco BEM; (iii) contract adjustments; partially offset by: (iv) negative exchange variation of 2.2% for period/03 to period/04, affecting foreign-currency indexed and/or denominated contracts, comprising 21.9% of the total portfolio; and (v) contract settlements.
N.B. Includes advances on foreign exchange contracts and other receivables and does not include the allowance for loan losses, as described in Note 12 to the financial statements.
 
This growth was mainly due to: (i) increase in the balance of the credit portfolio, especially the 4.8% increase for the quarter in the individual customer segment, in particular “vehicle” products up by 9.5% and “Personal Credit”, up by 9.3%, while the corporate customer segment was up by 1.8% partially affected by its participation in foreign-currency indexed and/or denominated operations; (ii) contract adjustments; and mitigated in part by: (iii) negative exchange variation of 8.0% in 3Q04, affecting foreign-currency indexed and/or denominated contracts, comprising 21.9% of the total portfolio; and (iv) contract settlements.
N.B. Includes advances on foreign exchange contracts and other receivables and does not include the allowance for loan losses, as described in Note 12 to the financial statements.

 

Allowance for Loan Losses (PDD)

September/2003 September/2004 % Variation   June/2004 September/2004 % Variation



 


(4,151) (4,181) 0.7   (4,213) (4,181) (0.8)

 
The balance of PDD remained practically stable for the period, evidencing the excellent quality of the Bank’s credit portfolio. We noted that the ratio of total PDD to the credit portfolio dropped from 7.9% in September/03 to 7.0% in September/04, and the ratio of allowance coverage to the abnormal course credit portfolio, rated from D to H, increased from 142.1% in September/03 to 165.1% in September/04. These ratios evidence the improvement in credit portfolio quality, as a result of our safe, selective and consistent credit granting strategy. During the period, R$ 2,004 was recorded, R$ 2,051 was written off and R$ 77 was added from acquisitions. Additional allowance over minimum requirements increased from R$ 822 in September/03 to R$ 913 in September/04.
 
The balance of PDD remained practically stable for the quarter, evidencing the excellent quality of the Bank’s credit portfolio. We noted that the ratio of total PDD to the credit portfolio dropped from 7.2% in June/04 to 7% in September/04, and the ratio of allowance coverage to the abnormal course credit portfolio, rated from D to H, increased from 159.0% in June/04 to 165.1% in September/04. These ratios evidence the improvement in credit portfolio quality, as a result of our safe, selective and consistent credit granting strategy. During the quarter, R$ 478 was recorded and R$ 510 was written off. Additional allowance over minimum requirements increased from R$ 905 in June/04 to R$ 913 in September/04.

 

Other Receivables and Assets

September/2003 September/2004 % Variation   June/2004 September/2004 % Variation



 


24,886 23,493 (5.6)   29,407 23,493 (20.1)

 
This variation is mainly due to: (i) the decrease in fx portfolio volume – R$ 2,965; partially mitigated by: (ii) the increase in credit card transactions during the period.
N.B. This total is less (net of corresponding PDD) an amount of R$ 595 in September/03 and R$ 318 in September/04, allocated to the “Credit Operations and Leasing Operations” and “Allowance for loan losses” accounts.
 
This variation mostly reflects: (i) the decrease in fx portfolio volume – R$ 6,166. N.B. This total is less (net of corresponding PDD) an amount of R$ 442 in June/04 and R$ 318 in September/04, allocated to the “Credit Operations and Leasing Operations” and “Allowance for loan losses” accounts.

 

Permanent Assets

September/2003 September/2004 % Variation   June/2004 September/2004 % Variation



 


 
5,069 5,030 (0.8)   5,271 5,030 (4.6)

 
The variation mainly reflects: (i) transfer of the investment in Banco Espírito Santo (BES) from current to permanent assets – R$ 356; (ii) goodwill on the acquisition of Banco Zogbi and Banco BEM; partially offset by: (iii) sale of permanent assets in Latasa - R$ 306, following its sale in December/03; and (iv) amortization of goodwill in subsidiaries – R$ 675, of which R$ 355 was amortized on an extraordinary basis during the period.
 
The variation for the quarter was substantially due to amortization of goodwill in subsidiaries - R$ 188, of which R$ 102 was amortized on an extraordinary basis.

 

Demand Deposits

September/2003 September/2004 % Variation   June/2004 September/2004 % Variation



 


11,240 14,782 31.5   13,541 14,782 9.2

 
The increase for the period is principally due to the growing number of individual customers, as well as the increase in funds deposited by corporate entities.
 
The increase for the quarter is principally due to the increase in funds deposited by corporate entities.

 

Savings Deposits

September/2003 September/2004 % Variation   June/2004 September/2004 % Variation



 


20,897 23,186 11.0   22,457 23,186 3.2

 
This growth reflects substantially: (i) 8.3% remuneration (TR + 0.5% p.m.) for the period on deposits; (ii) increase in the number of customers; offset by: (iii) withdrawals during the period.
 
This growth reflects substantially: (i) 2.1% remuneration (TR + 0.5% p.m.) for the quarter on deposits; (ii) increase in average volume; offset by: (iii) withdrawals during the quarter.

 

Time Deposits

September/2003 September/2004 % Variation   June/2004 September/2004 % Variation



 


25,798 26,805 3.9   28,088 26,805 (4.6)

 
This increment is due to: (i) remuneration recognized for the period; (ii) increased volume of deposits by institutional investors; and (iii) net of redemptions during the period.
 
This decrease is due to: (i) the volume of funds redeemed by institutional investors; partially offset by (iii) remuneration recognized for the quarter.

 

Interbank Deposits

September/2003 September/2004 % Variation   June/2004 September/2004 % Variation



 


411 14 (96.6)   47 14 (70.2)

 
The variation for the period is due to decreased funding between national financial system institutions.
 
The oscillation for the quarter is due to decreased funding between national financial system institutions.

 

Deposits Received under Security Repurchase Agreements

September/2003 September/2004 % Variation   June/2004 September/2004 % Variation



 


23,069 21,551 (6.6)   16,746 21,551 28.7

 
The variation in this account balance for the period was due mostly to: (i) decrease in the third-party portfolio – R$ 5,161; partially offset by: (ii) increase in own portfolio – R$ 3,540.
N.B. Includes investment fund and managed portfolio resources invested in purchase and sale commitments with Banco Bradesco, the investors in which are subsidiary companies included in the consolidated financial statements in the amounts of R$ 10,512 (September/03) and R$ 8,518 (September/04).
 
The variation in this account balance for the quarter was mostly due to increases in the own and third-party portfolios of R$ 2,720 and R$ 2,085, respectively.
N.B Includes investment fund and managed portfolio resources invested in purchase and sale commitments with Banco Bradesco, the investors in which are subsidiary companies included in the consolidated financial statements in the amounts of R$ 8,537 (June/04) and R$ 8,518 (September/04).

 

Funds from Acceptance and Issuance of Securities

September/2003 September/2004 % Variation   June/2004 September/2004 % Variation



 


7,895 6,116 (22.5)   7,080 6,116 (13.6)

 
The decrease is due to the redemption of securities issued broad (Eurobonds) matured and not renewed during the period, as well as negative exchange variation of 2.2% for the period.
 
The decrease is due to the redemption of securities issued abroad (Eurobonds) matured and not renewed during the quarter, as well as negative exchange variation of 8% for the quarter.

 

Interbank and Interdepartmental Accounts

September/2003 September/2004 % Variation   June/2004 September/2004 % Variation



 


1,474 1,739 18.0   1,090 1,739 59.5

 
The variation reflects mainly the increased volume of foreign currency money orders in September/04 as compared to September/03.
 
The variation reflects mainly the increased volume of foreign currency money orders in September/04 as compared to June/04.

 

Borrowings and Onlendings

September/2003 September/2004 % Variation   June/2004 September/2004 % Variation



 


15,186 16,715 10.1   16,817 16,715 (0.6)

 
The variation is due mainly to: (i) the increase in the volume of funds obtained in Brazil via onlendings from BNDES/FINAME; and (ii) new funding transactions abroad, partially offset by: (iii) negative exchange variation of 2.2% for period/03 to period/04, affecting the foreign borrowings and onlendings account, whose transactions are indexed and/or denominated in foreign currency.
 
The decrease for the quarter is mainly due to: (i) negative exchange variation of 8.0% in 3Q04, affecting the foreign borrowings and onlendings account, whose transactions are indexed and/or denominated in foreign currency; and partially offset by: (ii) interest appropriated for the quarter.

 

Other Liabilities and Derivative Financial Instruments

September/2003 September/2004 % Variation   June/2004 September/2004 % Variation



 


26,992 28,032 3.9   33,415 28,032 (16.1)

 
The increase was due mostly to: (i) new issuance of subordinated debt in foreign currency; offset by (ii) decrease in the volume of the fx portfolio; and (iii) negative exchange variation of 2.2% for the period.
N.B. Excludes advances on foreign exchange contracts of R$ 6,168 and R$ 5,618, allocated to the specific account in credit operations in September/03 and September/04, respectively.
 
The variation for the quarter reflects substantially: (i) the decrease in the volume of the fx portfolio - R$ 4,776; and (ii) negative exchange variation of 8.0% for 3Q04.
N.B. Excludes advances on foreign exchange contracts of R$ 6,259 and R$ 5,618, allocated to the specific account in credit operations in June/04 and September/04, respectively.

 

Technical Reserves for Insurance, Private Pension Plans and Savings Bonds

September/2003 September/2004 % Variation   June/2004 September/2004 % Variation



 


24,461 31,585 29.1   29,478 31,585 7.1

 
The increase for the period reflects mainly the increased sales of private supplementary pension plans and insurance policies, in particular, PGBL and VGBL products, for which reserves were accordingly recorded.
 
The growth for the quarter is substantially due to the increased sales of private supplementary pension plans and insurance policies, in particular, PGBL and VGBL products, for which reserves were accordingly recorded.

 

Minority Interest in Subsidiaries

September/2003 September/2004 % Variation   June/2004 September/2004 % Variation



 


111 74 (33.3)   66 74 12.1

 
The decrease for the period was due to the sale of our stake in Sete Quedas Empreendimentos Imobiliários e Participações Ltda.
 
This variation reflects minority interest in the increased results determined for 3Q04.

 

Stockholders’ Equity

September/2003 September/2004 % Variation   June/2004 September/2004 % Variation



 


 
12,967 14,678 13.2   13,650 14,678 7.5

 
This variation is due to: (i) appropriation of net income for the period - R$ 2,718; (ii) increase in the mark-to-market adjustment reserve of securities and derivatives - R$ 378; (iii) others - R$ 3; offset by: (iv interest attributed to own capital, paid and accrued - R$ 1,332; and (v) acquisition of own shares - R$ 56.
 
This variation is due to: (i) appropriation of net income for 3Q04 - R$ 752; (ii) increase in the mark-to-market adjustment reserve of securities and derivatives - R$ 612; offset by: (iii) interest attributed to own capital, paid and accrued - R$ 333 and (iv acquisition of own shares - R$ 3.

 






2 – Main Statement of Income Information








• Consolidated Statement of Income – In thousands of reais

 
  9 months                
  2004  2003  2002  2001  2000  1999 
 





 
Income from lending and trading activities 20,001,283  27,529,706  31,913,379  21,411,673  15,519,008  18,286,815 
 
Credit operations 9,629,398  12,294,528  15,726,929  11,611,236  7,787,745  9,602,701 
Leasing operations 215,294  307,775  408,563  420,365  512,962  730,929 
Securities transactions 4,162,688  7,328,805  9,527,663  7,367,600  6,122,486  5,875,823 
Financial income on insurance, private pension plans and savings bonds 3,763,277  5,359,939  3,271,913 
Derivative financial instruments 708,965  55,192  (2,073,247) (270,572)
Foreign exchange transactions 662,657  797,702  4,456,594  2,045,092  872,234  1,776,925 
Compulsory deposits 859,004  1,385,765  594,964  237,952  223,581  300,437 
 
Expenses 11,839,195  17,201,888  23,259,783  13,312,726  9,132,137  12,821,198 
Interest and charges on:
Deposits 6,776,173  10,535,497  10,993,327  6,986,027  5,521,407  4,954,854 
Price-level restatement and interest on technical reserves for insurance, private pension plans and savings bonds 2,293,659  3,120,342  2,241,283 
Borrowings and onlendings 1,203,254  1,083,379  7,194,161  4,316,682  2,158,725  5,819,063 
Leasing operations 13,192  12,981  12,486  93  18,852 
Provision for loan losses 1,552,917  2,449,689  2,818,526  2,010,017  1,451,912  2,028,429 
 
Income from financial intermediation 8,162,088  10,327,818  8,653,596  8,098,947  6,386,871  5,465,617 
 
Other operating income (expenses) (5,579,130) (6,774,710) (6,343,850) (5,324,166) (4,647,041) (4,404,370)
 
Commissions and fees 4,148,774  4,556,861  3,711,736  3,472,560  3,042,699  2,099,937 
Income on insurance premiums, private pension plans and savings bonds 9,447,520  11,726,088  10,134,873  8,959,259  6,919,942  5,975,488 
Variation in technical reserves for insurance, private pension plans and savings bonds (2,647,145) (3,670,163) (2,784,647) (3,492,217) (3,001,118) (2,341,648)
Claims - insurance operations (3,841,992) (3,980,419) (3,614,963) (3,251,706) (2,511,146) (2,532,768)
Savings bond draws and redemptions (931,517) (1,099,554) (720,932) (744,402) (355,243) (311,403)
Insurance and pension plan selling expenses (633,248) (762,010) (667,527) (689,352) (645,020) (635,351)
Expenses with pension plan benefits and redemptions (1,619,539) (2,362,771) (1,688,639) (1,369,424) (912,784) (557,608)
Personnel expenses (3,684,584) (4,779,491) (4,075,613) (3,548,805) (3,220,607) (2,783,627)
Other administrative expenses (3,648,632) (4,814,230) (4,028,377) (3,435,759) (2,977,665) (2,566,657)
Tax expenses (1,052,952) (1,054,397) (847,739) (790,179) (670,138) (651,801)
Equity in the earnings of associated companies 118,560  5,227  64,619  70,764  156,300  127,100 
Other operating income 887,869  2,163,639  1,320,986  1,326,459  902,807  1,069,562 
Other operating expenses (2,122,244) (2,703,490) (3,147,627) (1,831,364) (1,375,068) (1,295,594)
 
Operating income 2,582,958  3,553,108  2,309,746  2,774,781  1,739,830  1,061,247 
 
Non-operating income (expenses), net (342,963) (841,076) 186,342  (83,720) (123,720) (224,874)
 
Income before taxes and profit sharing 2,239,995  2,712,032  2,496,088  2,691,061  1,616,110  836,373 
 
Provision for income tax and social contribution (232,229) (396,648) (460,263) (502,257) (258,776) 307,186 
 
Non-recurring/extraordinary income 400,813 
 
Minority interest in subsidiaries (5,368) (9,045) (13,237) (18,674) (17,982) (38,753)
 
Net income 2,002,398  2,306,339  2,022,588  2,170,130  1,740,165  1,104,806 







Return on stockholders' equity 18.59% 17.02% 18.65% 22.22% 21.50% 16.32%










2004 2003 2002



  3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr.



INCOME FROM LENDING AND TRADING ACTIVITIES 5,525,100  7,719,563  6,756,620  7,443,322  7,911,617  5,096,140  7,078,627  3,083,730 
 
Credit operations 2,870,585  3,659,023  3,099,790  3,169,261  3,504,644  2,685,193  2,935,430  1,519,950 
Leasing operations 73,467  56,715  85,112  78,660  85,952  65,777  77,386  74,886 
Securities transactions 361,241  2,120,909  1,680,538  2,230,775  2,312,036  995,040  1,790,954  (712,805)
Financial income on insurance, private pension plans and savings bonds 1,337,097  1,181,151  1,245,029  1,411,927  1,334,756  1,172,214  1,441,042  1,398,046 
Derivative financial instruments 582,105  (68,697) 195,557  8,877  33,158  (360,489) 373,646  307,885 
Foreign exchange transactions (746) 502,246  161,157  254,543  275,508  168,153  99,498  169,630 
Compulsory deposits 301,351  268,216  289,437  289,279  365,563  370,252  360,671  326,138 
 
EXPENSES 2,699,294  5,152,601  3,987,300  4,251,574  5,357,189  3,068,353  4,524,772  721,442 
Interest and charges on:
Deposits 1,291,812  3,029,988  2,454,373  2,605,171  3,434,326  1,826,314  2,669,686  (5,216)
Price-level restatement and interest on technical reserves for insurance, private pension plans and savings bonds 942,651  698,695  652,313  701,184  761,148  755,950  902,060  978,809 
Borrowings and onlendings (18,123) 905,617  315,760  490,305  555,389  (103,670) 141,355  (834,266)
Leasing operations 4,585  4,747  3,860  3,398  3,187  3,194  3,202  3,204 
Provision for loan losses 478,369  513,554  560,994  451,516  603,139  586,565  808,469  578,911 
 
INCOME FROM FINANCIAL INTERMEDIATION 2,825,806  2,566,962  2,769,320  3,191,748  2,554,428  2,027,787  2,553,855  2,362,288 
 
OTHER OPERATING INCOME (EXPENSES) (1,663,296) (1,945,378) (1,970,456) (2,305,000) (1,887,139) (1,168,690) (1,413,881)  (1,703,272) 
 
Commissions and fees 1,454,636  1,375,202  1,318,936  1,274,590  1,182,359  1,082,637  1,017,275  991,101 
Income on insurance premiums, private pension plans and savings bonds 3,464,550  2,989,637  2,993,333  3,434,634  2,873,832  2,728,022  2,689,600  3,243,557 
Variation in technical reserves for insurance, private pension plans and savings bonds (1,076,201) (693,433) (877,511) (1,143,458) (863,897) (708,447) (954,361) (1,484,011)
Claims - insurance operations (1,328,082) (1,281,728) (1,232,182) (920,068) (1,066,766) (1,055,767) (937,818) (937,460)
Savings bond draws and redemptions (312,043) (346,151) (273,323) (301,838) (283,009) (282,275) (232,432) (169,295)
Insurance and pension plan selling expenses (215,775) (205,157) (212,316) (208,229) (190,761) (182,499) (180,521) (179,671)
Expenses with pension plan benefits and redemptions (496,399) (590,492) (532,648) (955,812) (555,691) (461,256) (390,012) (508,501)
Personnel expenses (1,273,981) (1,233,345) (1,177,258) (1,272,063) (1,306,415) (1,147,838) (1,053,175) (1,047,093)
Other administrative expenses (1,225,032) (1,215,747) (1,207,853) (1,328,021) (1,232,599) (1,152,697) (1,100,913) (1,111,005)
Tax expenses (373,965) (343,100) (335,887) (293,466) (254,650) (238,429) (267,852) (257,997)
Equity in the earnings of associated companies (3,708) 122,309  (41) 30,723  7,218  (27,989) (4,725) 32,855 
Other operating income 350,660  279,688  257,521  209,159  422,630  855,810  676,040  (70,632)
Other operating expenses (627,956) (803,061) (691,227) (831,151) (619,390) (577,962) (674,987) (205,120)
 
OPERATING INCOME 1,162,510  621,584  798,864  886,748  667,289  859,097  1,139,974  659,016 
 
NON-OPERATING INCOME (EXPENSES), NET (129,249) (202,568) (11,146) (73,495) 9,854  (95,872) (681,563) 54,804 
 
INCOME BEFORE TAXES AND PROFIT SHARING 1,033,261  419,016  787,718  813,253  677,143  763,225  458,411  713,820 
 
PROVISION FOR INCOME TAX AND SOCIAL CONTRIBUTION (278,499) 224,907  (178,637) (95,620) (111,614) (242,190) 52,776  5,271 
 
MINORITY INTEREST IN SUBSIDIARIES (2,413) (2,587) (368) (2,496) (1,638) (1,325) (3,586) (21,058)
 
NET INCOME 752,349  641,336  608,713  715,137  563,891  519,710  507,601  698,033 

• Results by Business Segment - In millions of reais

Amounts Accumulated from January to September

Financial Insurance Group Other Activities Amount Eliminated Consolidated Bradesco


Local Foreign Local Foreign







Income from financial intermediation 6,298  373  1,476  11  8,162 
Other operating income (expenses) (5,160) (98) (901) (1) (3) (6,160)
Commissions and fees 3,675  14  224  528  (292) 4,149 
Personnel expenses (3,123) (17) (371) (1) (172) (3,684)
Other administrative expenses (3,406) (59) (400) (1) (133) 350  (3,649)
Other revenue (expenses) (2,306) (36) (354) (220) (61) (2,976)


Net income accumulated to September 2004 1,138  275  575  14  2,002 



Net income accumulated to September 2003 918  164  451  56  1,591 


Composition of Income - %

• Increase in the Main Statement of Income Items

Accumulated over the first nine months of 2004 as compared to the same period in 2003 – In millions of reais

(*) Composition: Premiums and contributions, net of variations in technical reserves for insurance, private pension plans and savings bonds, less claims, redemptions, benefits and commissions, not including financial income on insurance activities and price-level restatement and interest on technical reserves which are included in financial margin.
(**) Mainly reversal of provision for exchange variation of R$ 504 and other operating provisions of R$ 334.

3Q04 in relation to 2Q04 - In millions of reais


(*)

Composition: Premiums and contributions, net of variations in technical reserves for insurance, private pension plans and savings bonds, less claims, redemptions, benefits and commissions, not including financial income on insurance activities and price-level restatement and interest on technical reserves which are included in financial margin.

• Increase in Financial Margin Items plus Exchange Adjustment

Accumulated over the first nine months of 2004 as compared to the same period in 2003 – In millions of reais

3Q04 in relation to 2Q04 - In millions of reais


(1)

Includes income on credit operations + income on leasing operations + income on foreign exchange transactions (Note 13a).

(2)

Includes interest and charges on deposits, excluding expenses for purchase and sale commitments + expenses for borrowings and onlendings + income on compulsory deposits + adjustments to income on foreign exchange transactions (Note 13a).

(3)

Includes income on securities transactions, less expenses with purchase and sale commitments + financial income on insurance, private pension plans and savings bonds + income on derivative financial instruments + adjustments to income on foreign exchange transactions (Note 13a).

(4)

Includes price-level restatement and interest on technical reserves for insurance, private pension plans and savings bonds.

• Analysis of the Adjusted Financial Margin and Average Rates

Credit Operations x Income



In millions of reais Accumulated to September 2003 Accumulated to September 2004 2nd Qtr.
2004
3rd Qtr.
2004




Credit operations 43,575  48,814  48,460  51,270 
Leasing operations 1,496  1,400  1,364  1,402 
Advances on foreign exchange contracts 5,799  6,031  6,162  5,938 
1 - Total – Average balance (quarterly) 50,869  56,245  55,986  58,610 
2 - Income (*) 9,430  9,891  3,704  2,983 
3 - Average return annualized exponentially (2/1) 25.5% 24.1% 29.2% 22.0%

(*)

Includes income from credit operations, net results from leasing operations and adjusted results on foreign exchange transactions (Note 13a).

Securities x Income on Securities Transactions



In millions of reais Accumulated to September 2003 Accumulated to September 2004 2nd Qtr.
2004
3rd Qtr.
2004




Securities 40,534  55,329  54,679  57,184 
Interbank investments 23,609  24,153  19,881  22,827 
Subject to repurchase agreements (17,998) (21,543) (15,915) (19,149)
Derivative financial instruments (389) (371) (562) (546)
4 – Total - Average balance (quarterly) 45,755  57,568  58,083  60,316 
5 – Income on securities transactions (net of expenses for repurchase agreements) (*) 6,133  6,266  2,582  1,509 
6 – Average rate annualized exponentially (5/4) 18.3% 14.8% 19.0% 10.4%

(*)

Includes financial income on insurance, private pension plans, savings bonds, derivative financial instruments and foreign exchange adjustments (Note 13a).

Total Assets x Income from Financial Intermediation



In millions of reais Accumulated to September 2003 Accumulated to September 2004 2nd Qtr.
2004
3rd Qtr.
2004




7 - Total assets - Average balance (quarterly) 151,659  173,255  168,610  177,979 
8 - Income from financial intermediation 20,086  20,001  7,720  5, 525 
9 - Average rate annualized exponentially (8/7) 18.0% 15.7% 19.6% 13.0%

Funding x Expenses



In millions of reais Accumulated to September 2003 Accumulated to September 2004 2nd Qtr.
2004
3rd Qtr.
2004




Deposits 56,601  61,532  61,660  64,460 
Funds from acceptance and issuance of securities 5,435  6,651  6,821  6,598 
Interbank and interdepartmental accounts 1,744  1,580  1,135  1,415 
Subordinated debt 3,383  5,602  5,661  6,135 
10 - Total funding - average balance (quarterly) 67,163  75,366  75,277  78,608 
11 - Expenses (*) 3,881  3,584  2,138  218 
12 - Average rate annualized exponentially (11/10) 7.8% 6.4% 11.9% 1.1%

(*)

Funding expenses without repurchase agreements less income on compulsory deposits and foreign exchange adjustments (Note 13a).

Technical Reserves for Insurance, Private Pension Plans and Savings Bonds x Expenses



In millions of reais Accumulated to September 2003 Accumulated to September 2004 2nd Qtr.
2004
3rd Qtr.
2004




13 – Technical reserves for insurance, private pension plans and savings bonds - Average balance (quarterly) 21,850  28,855  28,713  30,532 
14 – Expenses (*) 2,419  2,294  699  943 
15 – Average rate annualized exponentially (14/13) 15.0% 10.7% 10.1% 12.9%

(*)

Price-level restatement and interest on technical reserves for insurance, private pension plans and savings bonds.

Borrowings and Onlendings (Local and Foreign) x Expenses



In millions of reais Accumulated to September 2003 Accumulated to September 2004 2nd Qtr.
2004
3rd Qtr.
2004




Borrowings 8,663  8,152  8,345  8,795 
Onlendings 6,943  7,883  7,971  7,971 
16 - Total borrowings and onlendings - Average balance (quarterly) 15,607  16,036  16,316  16,766 
17 - Expenses for borrowings and onlendings (*) 128  564  369  26 
18 - Average rate annualized exponentially (17/16) 1.1% 4.7% 9.4% 0.6%

(*)

Includes foreign exchange adjustments (Note 13a).

Total Assets x Financial Margin



In millions of reais Accumulated to September 2003 Accumulated to September 2004 2nd Qtr.
2004
3rd Qtr.
2004




19 - Total assets - Average balance (quarterly) 151,659  173,255  168,610  177,979 
20 - Financial margin (*) 9,135  9,715  3,081  3,304 
21 - Average rate annualized exponentially (20/19) 8.1% 7.5% 7.5% 7.6%

(*)

Income from financial intermediation excluding provision for loan losses (PDD).

Financial Market Indicators

Analysis of Financial Margin

Banco Bradesco’s consolidated financial margin totaled R$ 9,715 million for the nine-month period accumulated to September 2004, up by 6.3% as compared to the same period in 2003 (R$ 9,135 million).

The increase of R$ 1,024 million in interest income comprised growth of R$ 514 million in average business volume and R$ 510 million as effects of appreciation of the real in period/03 (17.3%) compared to period/04 (1.1%). This variation was offset by financial expenses recorded formerly in the “Variation in technical reserves for insurance, private pension plans and savings bonds” account of R$ 171 million. However, results of non-interest income decreased margin by R$ 273 million, following a decrease in gains on securities and treasury transactions, totaling a positive variation of R$ 580 million between amounts accumulated to September 2004 and for the same period in 2003.

In 3Q04, financial margin totaled R$ 3,304 million, compared to R$ 3,081 million in 2Q04, i.e. up by 7.2% or R$ 223 million. Compared to the prior quarter, interest income was up by R$ 14 million, as a result of growth in the volume of operations in the amount of some R$ 111 million and a drop in spread of R$ 97 million. Interest income was affected by financial expenses of R$ 171, recorded formerly in the “Variation in technical reserves for insurance, private pension plans and savings bonds” account. On the other hand, non-interest income had a positive effect on margin of R$ 380 million, as a result of the strongly positioned securities portfolio and the sound recovery of credits in 3Q04.

The average financial margin rate annualized (obtained by dividing the result of financial margin by the average balance of total assets) was up by 0.1 percentage point from 7.5% in 2Q04 to 7.6% in 3Q04. However, there is a decrease of 0.6 percentage points if we compare the accumulated rate to September 2004 (7.5%) with the same period in 2003 (8.1%). This downturn was influenced in particular by the sharp fall in the interest rate (CDI) used to remunerate own working capital, funding and float, considering that up to September 2003, CDI annualized was 24.9%, compared to 15.9% for the same period in 2004.

We highlight the following items responsible for generating financial margin:

-

Credit operations, particularly, in the individual customer segment, up by 4.8% for 3Q04, with increases in the Vehicle and Personal Loan products of 9.5% and 9.3%, respectively.

Comparing the balance at September 2004 with the same month in 2003, the individual customer segment was up by 26.8%, with increases of 43.6% in Auto Financings and 45.7% in Personal Credits. We stress that this increment was partially affected by the acquisitions of Banco Zogbi and Banco BEM in 2004.

The improving economic scenario and the increase in consumer confidence, as well as the supply of products designed to meet different customer profiles, were decisive factors in this segment’s good performance.

We also stress that Bradesco is improving the quality of its credit granting process to guarantee minimum risk of loss.

-

Insurance area transactions also contributed to financial margin, as a result of the good performance recorded by insurance, private pension plan and savings bond activities, mainly as a result of the increase in sales of supplementary pension plans (PGBL and VGBL) and insurance policies with the corresponding amounts recorded as reserves, since between the second and third quarters, the average volume of technical reserves grew by 7.1%, from R$ 29,478 million in June 2004 to R$ 31,585 million in September 2004 and by 29.1% compared with the same period in 2003.


-

Emphasis should also be given to the performance of demand and savings account deposits, between June 2004 and September 2Q04, up by 9.2% and 3.2% respectively. Comparing the growth of the closing balances at September 2003 and 2004, demand deposits were up by some 31.5% and savings deposits by 11%.

• Provision for Loan Losses (PDD)

Movement of Allowance for Loan Losses - In millions of reais

  2003 2004


  2nd Qtr. 3rd Qtr. Accumulated to September 2nd Qtr. 3rd Qtr. Accumulated to September






Opening balance 3,902  4,109  3,665  4,192  4,213  4,059 
 
Amount recorded for the period 587  603  1,998  514  478  1,553 
Amount written off for the period (551) (561) (1,683) (493) (510) (1,508)
Balance derived from acquired institutions 171  171  77 
 
Closing balance 4,109  4,151  4,151  4,213  4,181  4,181 
 
Specific provision 2,006  1,939  1,939  1,876  1,885  1,885 
Generic provision 1,286  1,390  1,390  1,432  1,383  1,383 
Additional provision 817  822  822  905  913  913 
 
Credit recoveries 117  138  351  124  228  458 

Allowance for Loan Losses (PDD) on Credit and Leasing Operations - In millions of reais

  2003 2004


  June September June September




Allowance for loan losses - PDD (A) 4,109  4,151  4,213  4,181 
Credit operations (B) 53,048  52,776  58,402  59,976 
PDD on credit operations (A/B) 7.7%  7.9%  7.2%  7.0% 

Ratio of PDD Coverage to Abnormal Course Credits (D to H)


  In millions of reais

  2003 2004


  June September June September




Total provisions (1) 4,109  4,151  4,213  4,181 
Abnormal course credits (D to H) (2) 2,871  2,922  2,649  2,533 
PDD coverage ratio (1/2) 143.1%  142.1%  159.0%  165.1% 

• Commissions and Fees


  In millions of reais

  2003 2004


  2nd Qtr. 3rd Qtr. Accumulated to September 2nd Qtr. 3rd Qtr. Accumulated to September






Checking account 264  287  796  316  324  954 
Cards 193  203  598  241  241  723 
Fund management 131  163  401  212  233  649 
Collection 146  155  440  151  160  461 
Credit operations 143  149  420  195  222  582 
Interbank charges 61  65  189  63  67  192 
Collection of taxes 45  48  138  49  50  150 
Custody and brokerage services 19  21  55  26  24  73 
Consortium purchase plan management 12  20  23  58 
Other 77  83  233  102  111  307 

Total 1,083  1,182  3,282  1,375  1,455  4,149 

• Administrative and Personnel Expenses


  In millions of reais

  2003 2004


  2nd Qtr. 3rd Qtr. Accumulated to September 2nd Qtr. 3rd Qtr. Accumulated to September






Third-party services 193  214  583  218  216  630 
Communications 151  163  463  155  159  476 
Depreciation and amortization 138  137  403  118  118  359 
Financial system services 85  92  260  102  101  300 
Publicity and advertising 81  83  233  86  88  285 
Transport 87  91  258  88  100  282 
Leasing 62  79  209  83  76  236 
Rents 67  72  206  75  73  223 
Data processing 65  73  199  71  70  199 
Maintenance and repairs 61  60  174  68  69  197 
Materials 43  47  129  35  36  109 
Water, electricity and gas 28  27  83  31  30  95 
Travel 15  17  46  13  14  41 
Other 77  78  240  73  75  217 
Administrative expenses 1,153  1,233  3,486  1,216  1,225  3,649 
Remuneration 577  632  1,734  613  636  1,863 
Single payment bonus (*) 98  98  14  14 
Benefits 240  265  706  243  257  736 
Social charges 206  196  587  229  228  683 
Employee profit sharing 38  48  128  39  43  127 
Training 20  16  46  11  15  37 
Labor/other 67  51  208  99  80  224 
Personnel expenses 1,148  1,306  3,507  1,234  1,273  3,684 

Total administrative and personnel expenses 2,301  2,539  6,993  2,450  2,498  7,333 

(*)

In 2004, the single payment bonus refers to the proposed additional food basket.

• Operating Efficiency


  In millions of reais

  Year September/2004(*)

  1999 2000 2001 2002 2003






Personnel expenses 2,784  3,221  3,549  4,076  4,780  4,957 
Employee profit sharing (104) (112) (160) (140) (171) (170)
Other administrative expenses 2,567  2,978  3,436  4,028  4,814  4,976 
Total (1) 5,247  6,087  6,825  7,964  9,423  9,763 
Financial margin = Gross income from financial intermediation less PDD 7,494  7,839  10,109  11,472  12,778  13,358 
Commissions and fees 2,100  3,043  3,473  3,712  4,557  5,424 
Income from insurance premiums, private pension plans and savings bonds 5,975  6,920  8,959  10,135  11,726  12,881 
Variation in technical reserves for insurance, pension plans and savings bonds (2,342) (3,001) (3,492) (2,785) (3,670) (3,790)
Claims - insurance operations and savings bond draws and redemptions (2,844) (2,866) (3,996) (4,336) (5,080) (5,995)
Insurance and pension plan selling expenses (635) (645) (689) (667) (762) (841)
Expenses with pension plan benefits and redemptions (558) (913) (1,370) (1,689) (2,363) (2,577)
Subtotal (404) (505) (588) 658  (149) (322)
Equity in the earnings of associated companies 127  156  71  65  150 
Other operating expenses (1,296) (1,376) (1,831) (3,148) (2,704) (2,953)
Other operating income 1,070  903  1,326  1,321  2,164  1,097 
Total (2) 9,091  10,060  12,560  14,080  16,651  16,754 
Efficiency ratio (%) = (1/2) 57.7  60.5  54.3  56.6  56.6  58.3 

(*)

Amounts accumulated over prior 12-month period.

Operating Efficiency Ratio (%)

In 2Q04, results were impacted negatively as a result of additional provisions, mainly relating to IBNR and labor and civil contingencies. Disregarding these extraordinary events, the Operating Efficiency Ratio (accumulated for the 12-month period) would be 58.7% rather than 60.1%.

The Operating Efficiency Ratio (accumulated for the 12-month period) in 3Q04 was 58.3%, down by 0.4% as compared to the prior quarter adjusted by extraordinary events, prompted mainly by the combination of the strong commitment of the entire Bradesco management to the strict control of expenses and the increase in revenue for the quarter, especially in financial margin and commissions and fees.

The strict control of expenses, enhanced as a result of the creation of the Expenditure Appraisal Committee in March 2004, as well as the synergy process of acquired institutions, have had a positive effect on the Operating Efficiency Ratio.

Another initiative adopted for rationalizing expenditure was the implementation of the PROGRAMA BIS - DE OLHO NA ECONOMIA, exclusively focused on economic ideas and suggestions.

• Other Indicators

Other Indicators






3 – Main Balance Sheet Information








• Consolidated Balance Sheet - In thousands of reais

September December


ASSETS 2004 2003 2002 2001 2000 1999


Current assets and long-term receivables 174,673,737  171,141,348  137,301,711  105,767,892  90,693,025  75,136,910 
Funds available 2,386,029  2,448,426  2,785,707  3,085,787  1,341,653  827,329 
Interbank investments 25,125,701  31,724,003  21,472,756  3,867,319  2,308,273  2,590,599 
Open market investments 18,279,891  26,753,660  19,111,652  2,110,573  1,453,461  1,890,828 
Interbank deposits 6,848,497  4,970,343  2,370,345  1,760,850  854,815  699,771 
Provision for losses (2,687) (9,241) (4,104) (3)
Securities and derivative financial instruments 58,154,659  53,804,780  37,003,454  40,512,688  33,119,843  29,196,857 
Own portfolio 48,943,603  42,939,043  29,817,033  27,493,936  21,743,924  20,950,342 
Subject to repurchase agreements 2,624,914  5,682,852  1,497,383  9,922,036  10,822,637  5,987,713 
Subject to negotiation and intermediation of securities 526,219  9,394  157 
Restricted deposits - Brazilian Central Bank 3,920,427  3,109,634  3,536,659  1,988,799  421,727  2,359,466 
Privatization currencies 73,773  88,058  77,371  25,104  9,526  7,241 
Subject to collateral provided 1,185,998  1,752,882  1,836,169  715,858  783,501  449,536 
Derivative financial instruments 584,317  232,311  238,839  581,169 
Allowance for mark-to-market (740,433) (670,866) (557,598)
Unrestricted notes 821,627 
Interbank accounts 15,236,591  14,012,837  12,943,432  5,141,940  5,060,628  6,454,553 
Unsettled payments and receipts 638,390  20,237  16,902  10,118  6,920  7,635 
Restricted deposits:
- Brazilian Central Bank 14,244,337  13,580,425  12,519,635  4,906,502  4,848,668  6,184,959 
- National Treasury - Rural funding 578  578  578  712  660  599 
- National Housing System - SFH 320,955  391,871  374,177  217,518  197,191  142,653 
Interbank onlendings 2,024  116,733 
Correspondent banks 32,331  19,726  32,140  7,090  5,165  1,974 
Interdepartmental accounts 99,863  514,779  191,739  176,073  111,636  49,018 
Internal transfer of funds 99,863  514,779  191,739  176,073  111,636  49,018 
Credit operations 48,508,061  42,162,718  39,705,279  35,131,359  30,236,106  21,535,633 
Credit operations:
- Public sector 623,495  186,264  254,622  199,182  275,479  154,266 
- Private sector 51,757,706  45,768,970  42,842,693  37,689,671  32,244,482  22,848,128 
Allowance for loan losses (3,873,140) (3,792,516) (3,392,036) (2,757,494) (2,283,855) (1,466,761)
Leasing operations 1,351,242  1,306,433  1,431,166  1,567,927  1,914,081  1,712,343 
Leasing receivables:
- Public sector 45  138  160  800 
- Private sector 2,892,388  2,859,533  3,141,724  3,248,050  3,813,369  3,515,396 
Unearned lease income (1,441,224) (1,438,534) (1,560,278) (1,557,642) (1,760,305) (1,490,803)
Allowance for leasing losses (99,922) (114,566) (150,325) (122,619) (139,143) (313,050)
Other receivables 22,665,995  24,098,765  20,690,054  15,685,433  16,226,725  12,420,787 
Receivables on guarantees honored 434  624  1,577  1,131  2,020 
Foreign exchange portfolio 8,960,299  11,102,537  10,026,298  5,545,527  6,417,431  3,375,563 
Income receivable 242,843  331,064  249,849  187,910  191,873  109,734 
Negotiation and intermediation of securities 85,323  602,543  175,185  761,754  497,655  839,758 
Specific credits 146,919  124,776  206,952 
Insurance premiums receivable 961,615  889,358  718,909  995,662  818,773  994,718 
Sundry 12,623,797  11,324,857  9,640,966  8,107,714  8,258,402  7,021,988 
Allowance for other losses (208,316) (152,218) (122,730) (61,184) (84,205) (127,926)
Other assets 1,145,596  1,068,607  1,078,124  599,366  374,080  349,791 
Other assets 523,128  575,182  679,515  415,484  409,771  406,910 
Allowance for losses (255,587) (245,373) (243,953) (164,290) (171,876) (166,447)
Prepaid expenses 878,055  738,798  642,562  348,172  136,185  109,328 
Permanent assets 5,029,761  4,956,342  5,483,319  4,348,014  4,185,458  5,186,682 
Investments 970,926  862,323  512,720  884,773  830,930  2,453,425 
Investments in associated companies:
- Local 471,130  369,935  395,006  742,586  689,002  2,044,120 
Other investments 863,376  857,985  439,342  452,871  525,316  753,901 
Allowance for losses (363,580) (365,597) (321,628) (310,684) (383,388) (344,596)
Property and equipment in use 2,263,225  2,291,994  2,523,949  2,152,680  2,017,093  1,683,069 
Buildings in use 1,368,973  1,398,735  1,748,409  1,475,581  1,491,847  1,415,720 
Other fixed assets 3,512,586  3,480,636  3,459,950  2,988,008  2,705,577  2,285,918 
Accumulated depreciation (2,618,334) (2,587,377) (2,684,410) (2,310,909) (2,180,331) (2,018,569)
Leased assets 24,581  34,362  34,323  46,047  10,688  17,026 
Leased assets 66,216  63,812  51,198  51,214  19,421  18,451 
Accumulated depreciation (41,635) (29,450) (16,875) (5,167) (8,733) (1,425)
Deferred charges 1,771,029  1,767,663  2,412,327  1,264,514  1,326,747  1,033,162 
Organization and expansion costs 1,220,472  1,124,058  1,037,559  874,970  731,717  477,058 
Accumulated amortization (679,317) (572,620) (568,525) (481,127) (391,417) (190,510)
Goodwill on acquisition of subsidiaries, net of amortization 1,229,874  1,216,225  1,943,293  870,671  986,447  746,614 
 
T O T A L 179,703,498  176,097,690  142,785,030  110,115,906  94,878,483  80,323,592 

September December


LIABILITIES AND STOCKHOLDERS' EQUITY 2004 2003 2002 2001 2000 1999


Current and long-term liabilities 164,907,794  162,406,307  131,652,394  100,199,709  86,654,746  73,249,480 
Deposits 64,786,810  58,023,885  56,363,163  41,083,979  36,468,659  34,723,630 
Demand deposits 14,781,735  12,909,168  13,369,917  8,057,627  7,500,518  6,803,429 
Savings deposits 23,186,217  22,140,171  20,730,683  18,310,948  17,835,745  17,244,520 
Interbank deposits 14,267  31,400  23,848  40,446  568,416  468,950 
Time deposits 26,804,591  22,943,146  22,238,715  14,674,958  10,563,980  10,206,731 
Deposits received under security repurchase agreements 21,551,113  32,792,725  16,012,965  14,057,327  12,108,350  7,814,288 
Own portfolio 5,820,361  6,661,473  915,946  12,178,855  10,696,199  5,973,260 
Third-party portfolio 15,628,952  17,558,740  12,188,054  1,878,472  1,412,151  1,841,028 
Unrestricted portfolio 101,800  8,572,512  2,908,965 
Funds from issuance of securities 6,115,921  6,846,896  3,136,842  4,801,410  4,111,171  4,628,344 
Exchange acceptances 1,214 
Mortgage notes 889,114  1,030,856  384,727  780,425  741,248  452,379 
Debentures 7,291  100,369  48,921  1,039  1,043,125 
Securities issued abroad 5,226,807  5,808,749  2,650,532  3,972,064  3,368,884  3,132,840 
Interbank accounts 322,154  529,332  606,696  192,027  107,129  59,607 
Interbank onlendings
Correspondent banks 171,619  159,098  35,686  4,519  1,059  10,016 
Interdepartmental accounts 150,535  370,234  571,010  187,508  106,070  49,591 
Third-party funds in transit 1,417,570  1,782,068  1,337,729  762,505  904,188  879,592 
Borrowings 1,417,570  1,782,068  1,337,729  762,505  904,188  879,592 
Local borrowings - official institutions 8,694,942  7,223,356  9,390,630  7,887,154  6,463,555  4,864,414 
Local borrowings - other institutions 1,648  2,070  3,368  2,979  9,737  10,178 
Foreign borrowings 11,784  4,010  216,812  230,468  170,775  138,279 
Local onlendings - official institutions 8,681,510  7,217,276  9,170,450  7,653,707  6,283,043  4,715,957 
National Treasury 7,969,414  7,554,266  7,000,046  5,830,633  5,096,604  4,123,486 
National Bank for Economic and Social Development (BNDES) 57,950  51,398  62,187 
Federal Savings Bank (CEF) 3,568,367  3,403,462  3,437,319  3,067,220  2,589,284  1,650,243 
Government Agency for Machinery and Equipment Financing (FINAME) 399,298  459,553  453,803  433,381  405,264  388,109 
Other institutions 3,939,822  3,638,966  3,045,176  2,321,508  2,090,374  2,064,153 
Foreign onlendings 3,977  887  1,561  8,524  11,682  20,981 
Foreign onlendings 50,855  17,161  47,677  316,283  108,178  185,774 
Derivative financial instruments 50,855  17,161  47,677  316,283  108,178  185,774 
Technical reserves for insurance, private pension plans and savings bonds 308,046  52,369  576,697  111,600 
Other liabilities 31,584,982  26,408,952  19,155,479  13,853,426  10,338,065  7,563,919 
Collection of taxes and other contributions 22,105,987  21,175,297  18,024,470  11,303,365  10,948,847  8,406,426 
Foreign exchange portfolio 1,211,707  130,893  108,388  181,453  128,785  113,693 
Social and statutory payables 3,974,239  5,118,801  5,002,132  1,343,769  2,439,657  1,029,963 
Taxes and social security contributions 737,548  851,885  666,409  572,265  560,533  603,405 
Negotiation and intermediation of securities 4,470,918  4,781,458  4,376,031  3,371,127  3,094,628  2,665,681 
Subordinated debt 6,089,471  4,994,810  3,321,597  969,842 
Sundry 5,547,973  4,701,492  4,440,439  3,557,524  4,132,849  3,079,557 
Deferred income 44,032  31,774  15,843  9,020  34,632  17,543 
Deferred income 44,032  31,774  15,843  9,020  34,632  17,543 
Minority interest in subsidiary companies 73,965  112,729  271,064  139,231  96,903  287,350 
Stockholders' equity 14,677,707  13,546,880  10,845,729  9,767,946  8,092,202  6,769,219 
Capital:
- Local residents 6,343,955  6,343,955  4,960,425  4,940,004  5,072,071  4,206,644 
-Foreign residents 656,045  656,045  239,575  259,996  74,429  58,856 
Unpaid capital (400,500) (465,500)
Capital reserves 10,645  8,665  7,435  7,435  19,002  5,643 
Revenue reserves 7,084,529  6,066,640  5,715,317  4,614,110  3,403,020  2,963,576 
Mark-to-market adjustment - securities and derivatives 638,628  478,917  9,152 
Treasury stock (56,095) (7,342) (86,175) (53,599) (75,820)
 
Stockholders' equity managed by the parent company 14,751,672  13,659,609  11,116,793  9,907,177  8,189,105  7,056,569 
 
T O T A L 179,703,498  176,097,690  142,785,030  110,115,906  94,878,483  80,323,592 

• Balance Sheet by Currency and Exchange Exposure at September 30, 2004 - In millions of reais


Balance Sheet Currency

Local Foreign (1) (2)



ASSETS      
Current and long-term receivables 174,673  144,625  30,048 
Funds available 2,386  1,955  431 
Interbank investments 25,126  19,730  5,396 
Securities and derivative financial instruments 58,155  48,865  9,290 
Interbank and interdepartmental accounts 15,336  15,328 
Credit and leasing operations 49,859  42,418  7,441 
Other receivables and assets 23,811  16,329  7,482 
Permanent assets 5,030  4,597  433 
Investments 971  541  430 
Property and equipment in use and leased assets 2,288  2,285 
Deferred charges 1,771  1,771 
Total assets 179,703  149,222  30,481 
LIABILITIES
Current and long-term liabilities 164,907  138,401  26,506 
Deposits 64,787  61,663  3,124 
Deposits received under security repurchase agreements 21,551  19,300  2,251 
Funds from issuance of securities 6,116  889  5,227 
Interbank and interdepartmental accounts 1,740  464  1,276 
Borrowings and onlendings 16,715  7,474  9,241 
Derivative financial instruments 308  308 
Technical reserves for insurance, private pension plans and savings bonds 31,585  31,561  24 
Other liabilities
- Subordinated debt 6,089  2,963  3,126 
- Other 16,016  13,779  2,237 
Deferred income 44  44 
Minority interest in subsidiaries 74  74 
Stockholders' equity 14,678  14,678 
Total 179,703  153,197  26,506 
 
Net position of assets and liabilities       3,975 
Net position of derivatives (2)       (3,781)
Other memorandum accounts, net (3)       (404)
Net exchange position (liability)     (210)


(1)

Amounts expressed and/or indexed mainly in USD.

(2)

Excluding operations maturing in D +1, to be settled in currency at September 30, 2004 price levels.

(3)

Leasing commitments and others are controlled in memorandum accounts.

Total assets by currency

• Balance Sheet by Maturity at September 30, 2004 - In millions of reais


  Up to
30 days
From 31 to 180 days From 181 to 360 days More than 360 days Indeterminate Total






ASSETS
Current assets and long-term receivables 104,470  18,798  14,430  36,975  174,673 
Funds available 2,386  2,386 
Interbank investments 23,570  502  387  667  25,126 
Securities and derivative financial instruments(1) 41,121  840  3,741  12,453  58,155 
Interbank and interdepartmental accounts 15,042  280  15,336 
Credit and leasing operations 8,959  16,420  8,745  15,735  49,859 
Other receivables and assets 13,392  1,030  1,549  7,840  23,811 
Permanent assets 57  284  342  2,766  1,581  5,030 
Investments 971  971 
Property and equipment in use and leased assets 20  98  118  1,442  610  2,288 
Deferred charges 37  186  224  1,324  1,771 
Total 104,527  19,082  14,772  39,741  1,581  179,703 
LIABILITIES
Current and long-term liabilities 94,702  14,723  9,775  45,707  164,907 
Deposits(2) 41,195  4,517  4,959  14,116  64,787 
Deposits received under security repurchase agreements 19,290  635  247  1,379  21,551 
Funds from the acceptance and issuance of securities 249  2,725  217  2,925  6,116 
Interbank and interdepartmental accounts 1,740  1,740 
Borrowings and onlendings 1,766  5,215  3,639  6,095  16,715 
Derivative financial instruments 276  19  308 
Technical reserves for insurance, private pension plans and savings bonds (2) 19,504  980  291  10,810  31,585 
Other liabilities:
- Subordinated debt 114  24  5,951  6,089 
- Other 10,568  623  403  4,422  16,016 
Deferred income 44  44 
Minority interest in subsidiaries 74  74 
Stockholders' equity 14,678  14,678 
Total 94,746  14,723  9,775  45,707  14,752  179,703 
Accumulated net assets in 2004 9,781  14,140  19,137  13,171 
Accumulated net assets in 2003 14,690  19,810  22,053  11,970 

(1)

Investment fund applications are classified as up to 30 days.

(2)

Demand and savings account deposits and technical reserves for insurance and private pension plans, comprising VGBL and PGBL products, are classified as up to 30 days without considering average historical turnover.

Total Assets by Maturity

• Securities - In millions of reais

Consolidated Portfolio Composition by Issuer at September 30, 2004 (1)


Securities (1) Up to
30 days
From 31 to 180 days From 181 to 360 days More than 360 days Market/Book value (4), (5) and (6) Restated cost value Mark-to-market adjustment

GOVERNMENT SECURITIES 1,396  4,618  7,083  25,907  39,004  38,879  125 
Financial Treasury Notes 643  2,235  2,017  10,868  15,763  15,771  (8)
Federal Treasury Notes 210  479  57  8,332  9,078  9,092  (14)
National Treasury Bonds 200  1,881  4,958  58  7,097  7,099  (2)
Brazilian foreign debt notes 198  6,522  6,720  6,571  149 
Central Bank Notes 55  55  56  (1)
Other 145  23  51  72  291  290 
 
CORPORATE BONDS 3,156  2,609  262  4,606  10,633  9,798  835 
Certificates of Bank Deposit 292  2,399  52  1,117  3,860  3,860 
Debentures 105  11  61  1,354  1,531  1,562  (31)
Shares 2,257  2,257  1,368  889 
Corporate bonds abroad 39  36  66  1,402  1,543  1,507  36 
Derivative financial instruments 319  146  70  49  584  594  (10)
Other 144  17  13  684  858  907  (49)
PURCHASE AND SALE COMMITMENTS(3) 2,329  2,597  3,592  8,518  8,518 

Total at September 30, 2004 4,552  9,556  9,942  34,105  58,155  57,195  960 

Total at September 30, 2003 3,148  3,165  7,581  34,011  47,905  47,297  608 

Composition by Maturity at September 30, 2004

Securities (1) Up to
30 days
From 31 to 180 days From 181 to 360 days More than 360 days Market/Book value (4), (5) and (6) Restated cost value Mark-to-market adjustment








Trading securities (2) 2,013  8,926  9,748  22,222  42,909  42,952  (43)
 
Financial Treasury Notes 569  1,990  1,970  10,237  14,766  14,768  (2)
Purchase and Sale Commitments (3) 2,329  2,597  3,592  8,518  8,518 
National Treasury Bonds 200  1,875  4,958  58  7,091  7,093  (2)
Federal Treasury Notes 210  268  57  4,575  5,110  5,128  (18)
Debentures 16  11  922  949  949 
Certificates of Bank Deposit 130  2,395  47  1,094  3,666  3,666 
Brazilian foreign debt notes 36  862  898  876  22 
Shares 560  560  560 
Other 292  58  119  882  1,351  1,394  (43)
 
Securities available for sale (2) 2,181  399  124  7,463  10,167  9,154  1,013 
 
Brazilian foreign debt notes 124  4,333  4,457  4,330  127 
Shares 1,697  1,697  808  889 
Corporate bonds abroad 10  1,076  1,087  1,043  44 
National Treasury Bonds 73  224  47  630  994  1,000  (6)
Federal Treasury Notes 126  714  840  836 
Debentures 89  61  431  581  612  (31)
Brazilian foreign debt notes 161  23  193  193 
Other 27  23  12  256  318  332  (14)
 
Securities held to maturity (7) 39  85  4,371  4,495  4,495 
 
Federal Treasury Notes 85  3,043  3,128  3,128 
Brazilian foreign debt notes 38  1,327  1,365  1,365 
Other
 
Derivative financial instruments 319  146  70  49  584  594  (10)

Total at September 30, 2004 4,552  9,556  9,942  34,105  58,155  57,195  960 

Total at September 30, 2003 3,148  3,165  7,581  34,011  47,905  47,297  608 

Derivative financial instruments (Liabilities)
 
Total at September 30, 2004 (276) (4) (19) (9) (308) (307) (1)

 
Total at September 30, 2003 (206) (18) (23) (84) (331) (302) (29)

(1)

Investments in fund quotas were distributed based on the securities comprising their portfolios maintaining the fund category classification.

(2)

Securities of Banco BEM, in the amount of R$ 521 million, mainly financial treasury notes, classified as securities held to maturity, were reclassified at June 30, 2004, R$ 499 million of which to trading securities, decreasing results by R$ 7 million, net of tax effects and R$ 22 million to securities available for sale, decreasing the specific stockholders’ equity account by R$ 4 million, net of tax effects. In Banco Zogbi, equity securities in the amount of R$ 5 million, classified as trading securities, were transferred to securities available for sale, pursuant to BACEN Circular 3068/2001, in line with the portfolio profile of Banco Bradesco, the new parent company.

(3)

Investment fund and managed portfolio resources invested in purchase and sale commitments with Banco Bradesco, the investors in which are subsidiary companies, included in the consolidated financial statements.

(4)

The number of days to maturity was based on the maturity of the securities, regardless of accounting classification.

(5)

This column reflects book value subsequent to mark-to-market adjustment, except for securities held to maturity, the market value of which is higher than purchase cost by R$ 884 million (September 2003 - R$ 448 million).

(6)

The market value of securities is determined based on the market price practiced on the balance sheet date. In the event no market prices are available, amounts are estimated based on the prices quoted by dealers, on price definition models, quotation models or quotations for instruments with similar characteristics.

(7)

In compliance with the provisions of Article 8 of BACEN Circular 3068/2001, Bradesco declares that it has both the financial capacity and the intention to hold to maturity the securities classified in the ‘securities held to maturity’ category. This financial capacity is evidenced in Note 7, which presents the maturities of asset and liability operations at the base date of September 30, 2004.

Summary of the Classification of Securities at September 30, 2004

 
Financial Insurance/
Savings Bond
Private Pension Plan Other Activities Total %






Trading securities 13,826  4,722  24,280  81  42,909  73.80 
Securities available for sale 7,195  1,459  1,492  21  10,167  17.47 
Securities held to maturity 1,452  3,043  4,495  7.73 
Derivative financial instruments 584  584  1.00 

Total at September 30, 2004 23,057  6,181  28,815  102  58,155  100.00 

Total at September 30, 2003 21,285  4,302  22,185  133  47,905 

Classification of Securities by Segment – %

• Credit Operations

We present below the composition of the credit portfolio by type of operation and economic activity sector.

By Type of Operation - In millions of reais


  2003 2004


  June September June September




Discount of trade receivables and other loans 24,826  24,481  25,731  26,818 
Financings 16,082  15,721  18,815  19,608 
Rural and agribusiness loans 4,007  4,204  5,613  5,955 
Leasing operations 1,521  1,439  1,352  1,451 
Advances on foreign exchange contracts 5,814  6,168  6,259  5,618 
Credit operations - Subtotal 52,250  52,013  57,770  59,450 
Other receivables 798  763  632  526 
Total credit operations 53,048  52,776  58,402  59,976 
 
Sureties and guarantees recorded in memorandum accounts 5,581  6,433  6,751  6,960 

By Economic Activity Sector - In millions of reais


  2004

  June % September %




Public Sector 608  1.0  625  1.0 
Private Sector 57,794  99.0  59,351  99.0 
    Manufacturing 18,530  31.8  18,458  30.8 
    Commerce 8,698  14.9  9,544  15.9 
    Financial intermediation 657  1.1  355  0.6 
    Services 10,989  18.8  11,203  18.7 
    Agriculture, livestock raising, fishing, forest
        development and management
1,092  1.9  1,103  1.8 
    Individuals 17,828  30.5  18,688  31.2 
 

Total 58,402  100.0  59,976  100,0 

By Segment

At the end of the third quarter of 2004, 99.0% of the credit portfolio was directed to the private sector, remaining stable as compared with the prior quarter. By economic activity sector, manufacturing maintained the majority of credit volume, with a 30.8% share of total operations, particularly food and beverage, steel, metal products and mechanics. Credits directed to the service sector, including financial intermediaries, comprised 19.3%, whereas commerce and farming/livestock activities recorded a 15.9% and 1.8% portfolio share, respectively. Loans to consumers comprised 31.2% of the portfolio.

Portfolio Performance

The balance of credit operations in 3Q04 was compatible with economic activity for the quarter, reflecting the continued dynamic export performance and recovery of internal demand, strengthened by the expansion of income and employment, and recovery of consumer customer payment capacity.

As a result, the balance of Bradesco’s consolidated credit portfolio at September 30, totaled R$ 60.0 billion, an increase of 2.7%, as compared to June 30, or 13.6% when analyzed over the prior 12-month period.

For 4Q04, the rhythm of economic growth is expected to be maintained, especially considering seasonal year-end factors, with the increases in internal demand and private investment reflected in credit expansion.

Composition of the Credit Portfolio by Risk Levels

The classification and quality of the credit portfolio by risk level, at the end of September 2004, improved in comparison with the second quarter of 2004. AA to C rated operations, classified by BACEN as normal course operations, totaled 91.6% of portfolio balance, maintaining the trend for improvement, while 2.9% of operations were classified at risk administration level D and will remain so until this risk is reduced or guarantees with greater liquidity are obtained. Only 5.5% were considered to be abnormal course operations, subject to partial loss after the application of customary recovery procedures. The maintenance of these rates reflects the Bank’s permanent use and enhancement of credit assessment and monitoring instruments.

By Rating – In millions of reais


Risk Level Portfolio
Balance
Accumulated
Percentage (1)
Minimum Requirement Additional Allowance (4) Existing Allowance

Specific (2) Generic (3) Total

Past Due Falling Due









AA 15,957  26.6 
A 23,117  65.1  115  115  68  183 
B 6,061  75.3  55  61  21  82 
C 9,789  91.6  16  272  294  368  662 
Subtotal 54,924  91.6  21  442  470  457  927 
D 1,765  94.5  14  22  141  177  221  398 
E 385  95.2  35  35  45  115  62  177 
F 579  96.1  61  65  163  289  89  378 
G 354  96.7  83  63  102  248  84  332 
H 1,969  100.0  1,015  464  490  1,969  1,969 

Total at September
30, 2004
59,976  1,215  670  1,383  3,268  913  4,181 

Total at June
30, 2004
58,402  1,146  730  1,432  3,308  905  4,213 

(1)

On total portfolio.

(2)

For operations with installments overdue by more than 14 days.

(3)

Recorded based on the customer/transaction classification.

(4)

The additional provision is recorded based on management's experience and expected collection of the credit portfolio to determine the total allowance deemed sufficient to cover specific and general portfolio risks, as well as the provision calculated based on risk level ratings and the corresponding minimum provision requirements established by CMN Resolution 2682. The additional provision per customer was classified in the above table according to the corresponding risk levels.

The volume of the allowance for loan losses in September 2004 totaled R$ 4,181 million, corresponding to 7.0% of total credit operations. However, of this amount, only 45.1% effectively comprises overdue operations (past due and falling due), and the remaining portion is recorded as a precaution only, based on the customers' internal classification (33.1%) or to cover specific and general portfolio risks (21.8%).

Credit Portfolio by Maturity - in millions of reais

The maturity of the normal course credit portfolio evidences a concentration of short-term credits, with 40.7% maturing in up to 90 days. However, over the prior 12-month period, operation terms have gradually lengthened, as a result of economic stability.

N.B. percentage rates are accumulated.

Movement of the Portfolio between September 2003 and 2004

The performance of the consolidated credit portfolio over the prior twelve months up to September 2004, despite the low level of economic activity, evidences the maintenance of the quality of the assets, in particular as a result of new borrowers, corresponding to an increase of 17.1%, compared to the balance of the credit portfolio up to September 2003.

Portfolio Movement between September 2003 and 2004




Borrowers remaining
from September 2003
New borrowers between
September 2003 and 2004
Total credit at
September 2004



Level In millions reais % In millions reais % In millions reais %







AA to C 46,318  90.9  8,606  95.2  54,924  91.6 
D 1,658  3.3  107  1.2  1,765  2.9 
E to H 2,960  5.8  327  3.6  3,287  5.5 







Total 50,936  100.0  9,040  100.0  59,976  100.0 







As a result, the quality of the credits granted to new borrowers during the year has proved satisfactory and accordingly the percentage of credit operations classified as normal course (from AA to C) maintained its customary high level, totaling 91.6% at the end of September 2004, compared to 91.3% at the end of June 2004 and 90.4% in September 2003.

Concentration of Credit Portfolio – In millions of reais


  2003 2004


  June % September % June % September %








Largest borrower 784  1.5  771  1.5  779  1.3  931  1.6 
10 largest borrowers 4,871  9.2  5,060  9.6  5,536  9.5  5,746  9.6 
20 largest borrowers 7,926  14.9  8,111  15.4  8,497  14.5  8,803  14.7 
50 largest borrowers 13,265  25.0  13,500  25.6  14,028  24.0  14,196  23.7 
100 largest borrowers 17,305  32.6  17,493  33.1  18,234  31.2  18,062  30.1 

Credit Portfolio Indicators

To facilitate the analysis of the Bank's credit portfolio performance, we present below a comparative summary of the main parameters, based on the rules established by BACEN for recording provisions.

In millions of reais


2003 2004



Items June September June September





Total Credit Operations 53,048  52,776  58,402  59,976 
    - Consumer 14,406  14,740  17,828  18,688 
    - Corporate 38,642  38,036  40,574  41,288 
Existing Allowance 4,109  4,151  4,213  4,181 
    - Specific 2,006  1,939  1,876  1,885 
    - Generic 1,286  1,390  1,432  1,383 
    - Additional 817  822  905  913 
 
Specific Allowance/Existing Allowance (%) 48.8  46.7  44.5  45.1 
Existing Allowance/Total Credit Operations (%) 7.7  7.9  7.2  7.0 
 
Normal Course Operations (from AA to C)/Total Credit Operations (%) 90.2  90.4  91.3  91.6 
Operations under risk management (D)/Total Credit Operations (%) 3.4  2.8  2.8  2.9 
Abnormal Course Operations (from E to H)/Total Credit Operations (%) 6.4  6.8  5.9  5.5 
 
Credit Operations (D) 1,841  1,460  1,629  1,765 
Existing Allowance (D) 520  413  374  398 
Allowance/Credit Operations (D) (%) 28.2  28.3  23.0  22.5 
 
Credit Operations (from E to H) 3,375  3,580  3,464  3,287 
Existing Provision (from E to H) 2,939  3,027  2,966  2,856 
Allowance/Credit Operations (from E to H) (%) 87.1  84.6  85.6  86.9 

The figures at the end of September 2004 continue to confirm the low credit risk of the Bradesco portfolio, as a result of its comfortable coverage levels and moreover that the Organization's credit granting strategy is being applied on a secure, selective and consistent basis.

• Funding

Deposits by Maturity - In millions of reais

2004

June September



Days to maturity Total Up to
30 days
From 31 to
180 days
From 181 to
360 days
More than
360 days
Total







Demand 13,541  14,782  14,782 
Savings 22,456  23,186  23,186 
Interbank 47  14  14 
Time 28,089  3,213  4,517  4,959  14,116  26,805 
 

Total 64,133  41,195  4,517  4,959  14,116  64,787 

Demand Deposits - In billions of reais

• Checking Accounts - Million

Increase in Checking Accounts - million

Consumer and Corporate Customers – September 2004

• Savings Accounts

The balance of Bradesco Organization Savings Accounts totaled R$ 23.2 billion in deposits at the end of the third quarter of 2004, corresponding to a 19.1% market share of the Brazilian Savings and Loan System (SBPE).

Savings Account Deposits - In billions of reais

Share of SBPE (Brazilian Savings and Loan System) - %

Savings Accounts - Million

• Asset Management

Bradesco ranked Best Fund Manager for the third time in a row

Bradesco was rated Brazil’s Best Fund Manager for the third time running according to a study carried out by Guia Exame’s Best Investment Funds, organized by Exame magazine in partnership with the Study Center maintained by Fundação Getúlio Vargas.

Net assets - In millions of reais

  2003 2004


  June September June September




Investment funds 60,949  67,552  78,059  80,852 
Managed portfolios 9,279  9,050  8,757  9,319 

Total 70,228  76,602  86,816  90,171 

Distribution of Assets - In millions of reais

  2003 2004


  June September June September




Investment funds - fixed return 59,063  65,272  75,580  78,148 
Investment funds - floating rate 1,886  2,280  2,479  2,704 
Total 60,949  67,552  78,059  80,852 

Fixed return customer portfolios 6,648  6,372  6,561  6,742 
Floating rate customer portfolios 2,631  2,678  2,196  2,577 
Total 9,279  9,050  8,757  9,319 

Total fixed-return funds 65,711  71,644  82,141  84,890 
Total floating-rate funds 4,517  4,958  4,675  5,281 

Total 70,228  76,602  86,816  90,171 

Total Volume of Managed Assets according to ANBID’s Global Ranking - In millions of reais

Number of Funds, Portfolios and Quotaholders at September 30, 2004

  Number Quotaholders


Investment funds 499  2,738,046 
Customer portfolios 106  361 

Total 605  2,738,407 






4 – Operating Companies








• Bradesco Insurance Group

Insurance Companies

Consolidated Balance Sheet - In millions of reais

  2003 2004


  June September June September




ASSETS
Current assets and long-term receivables 26,800  29,156  35,090  37,873 
Securities 24,451  26,735  32,470  35,157 
Insurance premiums receivable 874  817  880  844 
Other receivables 1,475  1,604  1,740  1,872 
Permanent assets 970  956  1,036  1,016 

Total 27,770  30,112  36,126  38,889 

LIABILITIES
Current and long-term liabilities 24,819  26,819  32,231  34,551 
Tax, civil and labor contingencies 866  895  1,120  1,065 
Payables on insurance, private pension plans and savings bonds 454  452  680  696 
Other liabilities 767  1,011  953  1,205 
Technical reserves for insurance 1,864  1,949  2,335  2,477 
Technical reserves for private pension plans 19,170  20,733  25,134  27,059 
Technical reserves for savings bonds 1,698  1,779  2,009  2,049 
Minority interest 45  45  35  36 
Stockholders’ equity of the parent company 2,906  3,248  3,860  4,302 

Total 27,770  30,112  36,126  38,889 

Consolidated Statement of Income - In millions of reais


  2003 2004


  2nd Qtr. 3rd Qtr. Accumulated to September 2nd Qtr. 3rd Qtr. Accumulated to September






Income on insurance premiums, private pension plans and premium bonds 2,729  2,873  8,291  2,989  3,464  9,447 
Variation in technical reserves (763) (952) (2,755) (693) (1,077) (2,647)
Commission and fees 41  52  128  73  83  224 
Retained claims (1,046) (1,069) (3,062) (1,291) (1,338) (3,867)
Expenses for premium bond draws and redemptions (282) (283) (797) (346) (313) (932)
Expenses for private pension plan benefits and redemptions (464) (558) (1,421) (581) (486) (1,594)
Selling expenses (184) (194) (560) (206) (216) (637)
Other operating income (expenses) 13  (1) 15  (113) 46  (72)
Personnel and administrative expenses (246) (238) (708) (277) (244) (768)
Tax expenses (22) (16) (59) (36) (32) (97)
Financial results 405  624  1,596  469  405  1,462 
Operating income (expense) 181  238  668  (12) 292  519 
Non-operating income (22) 12  (12) (27) 18  (17)
Equity in the earnings of subsidiary and associated companies (16) 34  158  (1) 174 
Minority interest
Income before taxes and contributions 143  284  663  121  309  679 
Taxes and contributions on income (49) (92) (224) 90  (108) (103)

Net income 94  192  439  211  201  576 

Performance Ratios - %

  2003 2004


  2nd Qtr. 3rd Qtr. Accumulated to September 2nd Qtr. 3rd Qtr. Accumulated to September






Claims ratio (1) 81.3  78.6  78.5  87.3  84.2  84.6 
Selling ratio (2) 12.4  12.4  12.4  12.3  12.0  12.3 
Combined ratio (3) 107.4  106.0  106.0  122.4  99.4  110.6 
Expanded combined ratio (4) 99.2  92.6  95.7  113.6  88.6  100.3 
Administrative expense ratio (5) 13.8  13.6  13.5  14.3  12.9  13.1 

(1)

Retained claims/earned premiums.

(2)

Selling expenses/earned premiums.

(3)

(Retained claims + selling expenses + administrative costs + taxes + other operating expenses)/earned premiums.

(4)

(Retained claims + selling expenses + administrative costs + taxes + other operating expenses)/(earned premiums + financial result).

(5)

Administrative expenses/earned premiums.

Insurance Premiums - Market Share (%)

Up to August 2004, Bradesco Seguros secured R$ 7.2 billion in premiums and maintained its industry leadership with a 25% market share. The insurance sector obtained a total of R$ 28.8 billion in premiums through August 2004.

Growth in Technical Reserves
In millions of reais

Growth in Guaranteeing Assets of Technical Reserves
In millions of reais

Earned Premiums by Insurance Line - In millions of reais

  2003 2004


Line 2nd Qtr. 3rd Qtr. Accumulated to September 2nd Qtr. 3rd Qtr. Accumulated to September







Health 630  661  1,909  710  792  2,231 
Auto/RCF(a) 346  349  1,022  393  413  1,198 
Life/AP(b)/VGBL(c) 196  242  626  257  268  778 
Basic Lines 89  86  258  90  90  275 
DPVAT(d) 25  22  84  28  26  88 

Total 1,286  1,360  3,899  1,478  1,589  4,570 

(a)

Optional third-party liability.

(b)

Personal accident.

(c)

Long-term life products.

(d)

Compulsory vehicle insurance.

In September of 2004, the Company’s earned premiums grew by 17.2% compared to the same period in 2003.

Earned Premiums by Line - %

Retained Claims by Insurance Line - In millions of reais

  2003 2004


Line 2nd Qtr. 3rd Qtr. Accumulated to September 2nd Qtr. 3rd Qtr. Accumulated to September







Health 588  604  1,714  660  734  2,056 
Auto/RCF 270  275  794  381  357  1,067 
Life/AP 110  129  350  172  164  507 
Basic Lines 56  40  134  57  61  166 
DPVAT 22  21  70  21  22  71 

Total 1,046  1,069  3,062  1,291  1,338  3,867 

Retained Claims by Insurance Line (%)

N.B. Retained claims/earned premiums.

Selling Expenses by Insurance Line - In millions of reais

  2003 2004


Line 2nd Qtr. 3rd Qtr. Accumulated to September 2nd Qtr. 3rd Qtr. Accumulated to September







Health 19  20  58  23  25  71 
Auto/RCF 64  64  189  71  77  219 
Life/AP 61  68  191  69  72  220 
Basic Lines 16  16  47  19  17  54 

Total 160  168  485  182  191  564 

Selling Expenses by Insurance Line (%)

N.B. Expenses for selling/earned premiums

Number of Policyholders - Thousand

Up to September 2004, the average number of customers grew by 15.3% compared to the same period in 2003.

In comparison with the same period in 2003, Bradesco Saúde maintained its outstanding market position, especially in the corporate health insurance segment (source: ANS). Brazilian consumers are increasingly convinced that Health and Dental Insurance are the best alternatives for meeting their medical, hospital and dental care needs. At present, Bradesco Saúde has more than 2.5 million customers.

The increasing number of policyholders employed by micro, small and medium companies, as well as major corporations that have contracted Bradesco Saúde, confirms the insurance company’s high level of expertise and personalization in Corporate Insurance services, a distinct advantage in the Supplementary Health Insurance market.

Almost 12 thousand companies in Brazil have acquired Bradesco Health Insurance. Out of Brazil’s 100 largest companies in terms of billings, 33 are Bradesco clients in the Health and Dental Health lines and out of the country’s 50 largest companies, 28% are Bradesco Saúde clients. (source: Exame Magazine’s Biggest and Best List, July 2004).

Finally, emphasis should also be given to the user-friendly nature of the Bradesco Saúde Portal (www.bradescosaude.com.br), which, in addition to providing information on available products, also offers access to a number of services for policyholders, prospects and brokers.

Through August 2004, the Bradesco Insurance Group maintained its position as one of the main players in the Brazilian Basic Line Insurance market, with a significant 10.6% share of total market billings in this area.

In the Corporate Risk area, Bradesco maintained its position among Brazil’s largest insurance companies.

In particular, emphasis should be given to the successful launching of Bradesco FLIGHT INSURANCE, which after only 6 months, has already secured R$ 6 million in premiums, for some 70 aircraft.

Another highlight during the nine-month period was the launching of the SIGA Transport (Integrated Policy Management System) website, in March 2004, the wide market acceptance of which has given Bradesco a marked advantage in terms of negotiating power.

In the mass market insurance segment, focusing on the consumer and small and medium corporate segments, Bradesco maintained a significant number of customers, in particular, for the Bradesco Bilhete Residencial product, with 589,572 homes insured.

In the pursuit to always offer our customers best quality services, the launching of our new products made a substantial contribution to the results achieved during the period.

In the Auto/RCF line, the market was affected by intense competition, aggravated by slacking vehicle sales. During the period, we maintained our technically correct pricing policy, guaranteeing balanced portfolio results. Emphasis should also be given to the launching of our new pricing policy based on the policyholders’ specific characteristics and maintenance of the differentiated services which add value to our products, such as discounts given through the nationwide customer service networks and autoglass repair, as well as the increase in the number of relationships with brokers which are carried out exclusively online via the Internet.

Bradesco’s market share of the Auto/RCF portfolio up to August, 2004 was 16.3%.

Awards/Recognition

Bradesco Seguros

1. In April, Bradesco Seguros was rated among the 100 largest investors in this area for 2003, according to research carried out in Brazil by Info magazine. Indiana Seguros, another Bradesco Insurance Group company, was also highlighted in the 2004 edition of “Brazil’s 100 most wired companies”.

2. Bradesco Seguros was the brand name preferred by consumers in the southern state of Rio Grande do Sul. This preference was revealed in May 2004 in the sixth edition of the poll “Decision-maker Brands”, prepared by the Jornal do Comércio, a regional newspaper specialized in business and economy, in partnership with Instituto Qualidata. Bradesco was rated preferred insurance company by 13.2% of those interviewed.

3. The Bradesco Insurance website is 3-time champion award winner at the iBEST awards, considered Brazil’s equivalent to the Internet Oscar. In May, at the awards ceremony held in São Paulo, the insurance company was voted winner by popular jury in the "Insurance" category.

4. Bradesco Seguros won the Segurador Brasil award in the “Best Institutional Campaign” and “Arts and Culture Support Highlight” categories. These awards were given in June by Brasil/Notícias Editora e Comunicação Empresarial, publishers of the Planeta Seguros magazine.

5. Bradesco Seguros was rated best company in the vehicle insurance line according to the "Gazeta Mercantil Financial Report” prepared in partnership with the consultancy Austin Rating in June. The report was prepared based on data for 2003.

6. Bradesco Seguros won the insurance "Market Award" ("Prêmio Mercado de Seguros"), in June, given by the Seguro Total magazine in the "Excellence in Total Premiums" category.

7. Bradesco Seguros sponsors the Dell’Arte series of International Concerts held at the Municipal Theater in Rio de Janeiro. The following concerts were held up to September 2004:

- Nelson Freire (pianist) – April 7.
- Italian Concert – May 17.
- Academie Für Alte Musik – June 22.
- Emma Kirkby & The Romantic Chamber Group of London – July 29.
- Quartet Herold – August 23.
- Les Arts Florissants – September 29.

Bradesco Saúde

1. In May, Bradesco Saúde was announced winner of the “Prêmio Segurador Brasil” award in the “Excellence in Health Insurance” category. This award is given by Brasil/Notícias Editora e Comunicação Empresarial, publishers of the Planeta Seguros magazine.

2. Bradesco Saúde won the “Hospital Best” award in the “Health Operator of the Year” category, according to a poll carried out among innumerous physicians and other health professionals nationwide. The poll was organized by Simonsen e Associados. The first edition of this award held in June is an initiative of the Brazilian Association of Health Marketing (Associação Brasileira de Marketing em Saúde).

Vida e Previdência (Private Pension Plan Companies)(1)

Bradesco Vida e Previdência is specialized in the preparation, implementation and administration of individual and corporate retirement, pension and savings plans, as well as life insurance. As a result of its solid structure, innovative product policy and trusted market standing, Bradesco maintained its leadership of all segments in which it operates and presented excellent results for the period in this economic sector, which is among the most dynamic in Brazil.

Balance Sheet - In millions of reais

  2003 2004


  June September June September




ASSETS
Current assets and long-term receivables 20,783  22,719  27,008  29,454 
Funds available 24  36  29  41 
Interbank investments 19  19 
Securities 20,355  22,197  26,489  28,826 
Insurance operations and other receivables 385  467  490  587 
Permanent assets 256  253  1,063  1,194 

Total 21,039  22,972  28,071  30,648 

LIABILITIES
Current and long-term liabilities 19,695  21,404  26,017  28,171 
Tax and social security contingencies 402  503  554  704 
Operating liabilities for insurance and private pension 91  124  256  331 
plans
Other liabilities 32  44  73  77 
Technical reserves 19,170  20,733  25,134  27,059 
Stockholders' equity 1,344  1,568  2,054  2,477 

Total 21,039  22,972  28,071  30,648 

In August 2004, the Previllares private pension plan portfolio in the amount of R$ 117 million and the “pending approval” life insurance portfolio of Bradesco Auto/RE Companhia de Seguros (formerly União Novo Hamburgo de Seguros S.A.) in the amount of R$ 67 million, were transferred to Bradesco Vida e Previdência.

Statement of Income - In millions of reais

  2003 2004


  2nd Qtr. 3rd Qtr. Accumulated to September 2nd Qtr. 3rd Qtr. Accumulated to September






Retained premiums 187  210  593  224  266  717 
Variations in premium reserves (19) (5) (48) (4) (25) (39)
Earned premiums 168  205  545  220  241  678 
Retained claims (103) (117) (329) (125) (138) (424)
Expenses with benefits - VGBL (10) (11) (26)
Selling expenses - insurance (43) (45) (135) (50) (55) (162)
Other operating income (expenses) 35  45  116  49  75  188 
Income from contributions and VGBL 1,206  1,348  3,767  1,396  1,810  4,670 
Variation in technical reserves and VGBL (669) (821) (2,494) (617) (973) (2,440)
Expenses with benefits/matured plans (463) (559) (1,422) (581) (486) (1,594)
Expenses for redemptions – VGBL (138) (200) (385) (330) (357) (926)
Selling expenses - pension plans and VGBL (35) (39) (109) (36) (39) (114)
Administrative expenses (47) (53) (148) (50) (62) (168)
Tax expenses (5) (3) (11) (13) (12) (32)
Financial income 973  1,081  3,295  988  1,117  3,112 
Financial expenses (736) (701) (2,261) (691) (926) (2,251)
Equity income and expenses 167  58  227 
Non-operating income (expense) (1)
Income before taxes and contributions 144  149  440  317  245  743 
Taxes and contributions on income (42) (42) (132) (49) (64) (173)

Net income 102  107  308  268  181  570 

(1)

Includes Bradesco Vida e Previdência S.A. and from June 2003, Alvorada Vida S.A. (formerly BBV Previdência e Seguradora Brasil S.A.).

Bradesco Vida e Previdência adopted a number of measures during the period designed to decrease expenses. As a result of these efforts, the percentage of administrative expenses for income on premiums and contributions decreased from 3.4%, up to September 2003 to 3.1% up to September 2004.

Furthermore, we highlight the decrease in selling expenses comprising 5.1% of income on premiums and contributions up to September 2004 compared to 5.6% for the same period in 2003.

The following stockholdings influenced the composition of results accumulated to September 2004:

  In thousands of reais

Bradesco Capitalização S.A. 141,369 
IRB - Brasil Resseguros S.A. 27,522 
Other investments 52,626 

Total 221,517 

Income from Plans and VGBL - Market Share (%)

Bradesco Vida e Previdência is Brazil’s sole leader in complementary pension plans and VGBL, with a 34.7% share of the market, more than double that held by its nearest rival. Up to September 2004, plan income totaled R$ 4.670 billion, a 24.0% growth rate compared to the same period in 2003.

Life Insurance Premiums – Market Share (%)

Income on premiums retained of R$ 717 million accumulated up to September 2004 guaranteed Bradesco’s leadership of the market with a 15.0% share. We highlight during the period the “Vida Segura Bradesco” and “Vida Máxima Mulher Bradesco”, products which strengthen the strategy designed to offer products to different market segments and facilitate access to life insurance to lower income bracket consumers.

Increase in Technical Reserves – In millions of reais

Total technical reserves in September 2004 of R$ 27,059 million comprise R$ 18,386 million for supplementary pension plans, R$ 7,853 million for VGBL, R$ 748 million for life and personal accident, R$ 67 million for DPVAT and R$ 5 million for retrocession.

Growth in Guaranteeing Assets of Technical Reserves – In millions of reais

The continuing increase in revenues and appropriate investment policy adjustments prompted a significant growth in the investment portfolios of Bradesco Vida e Previdência, thereby guaranteeing full coverage of technical reserves.

Pursuant to new legislation (SUSEP/DECON/GAB Circular Letter 5/04 of July 16, 2004), only the volume of guaranteeing assets necessary for covering technical reserves may be held under custody.

Pension Plan and VGBL Investment Portfolios – Market Share (%)

In August, the investment portfolios totaled R$ 28,226 million, comprising almost half of market resources.

Participants

Increase in Number of Participants – thousand

N.B. Includes VGBL long-term life products

The strength of the Bradesco Brand, its commitment to innovation and the adoption of appropriate pricing and management policies, prompted a continuing growth in the number of customers, which is nearing 1.5 million.

Policyholders

Increase in Life Insurance Policyholders – thousand

• Savings Bond Companies (1)

Balance Sheet - In millions of reais

2003 2004


  June September June September




ASSETS
Current assets and long-term receivables 1,946  2,152  2,683  2,813 
Securities 1,871  2,059  2,596  2,719 
Accounts receivable and other receivable 75  93  87  94 
Permanent assets 294  329  201  205 

Total 2,240  2,481  2,884  3,018 

 
LIABILITIES
Current and long-term liabilities 1,906  2,033  2,416  2,413 
Tax and labor contingencies 195  238  174  177 
Other liabilities 13  16  233  187 
Technical reserves 1,698  1,779  2,009  2,049 
Stockholders' equity 334  448  468  605 

Total 2,240  2,481  2,884  3,018 

Statement of Income - In millions of reais

  2003 2004


  2nd Qtr. 3rd Qtr. Accumulated to September 2nd Qtr. 3rd Qtr. Accumulated to September






Income from savings bonds 301  292  842  396  338  1.039
Variation in technical reserves (14) (42) (55) (7) 10  (46)
Redemption of bonds (282) (283) (797) (346) (313) (932)
    Bonds redeemed (279) (277) (783) (336) (298) (896)
    Winning bonds (3) (6) (14) (10) (15) (36)
Other operating income (expenses) (1) (2) (1)
Financial income, net 81  110  249  71  60  237 
Administrative expenses/taxes (20) (18) (55) (28) (22) (69)
Equity results 35  43  26  32 
Non-operating income
Income before taxes and contributions 72  94  226  112  76  262 
Taxes and contributions on income (21) (20) (60) (27) (24) (76)

Net income 51  74  166  85  52  186 

(1)

Includes: Bradesco Capitalização and Atlântica Capitalização (formerly BCN Capitalização).

Bradesco Capitalização’s outstanding position in the premium bond market is the result of its transparent operating policy, which is focused on the deployment of products in line with potential consumer demand.

The company holds a leadership position in two Brazilian states, according to the latest figures for August, 2004 published by SUSEP. The company’s market share was as follows: 35.4% in Amazonas and 26.5% in São Paulo.

In pursuit of a bond which is suited to its customers’ different profiles and budgets, a number of products were developed varying in accordance with the type of payment (single or monthly), contribution terms, regularity of draws (weekly or monthly) and related prize amounts. This phase brought the general public closer and consolidated the success of the popular “Pé Quente” (Lucky Bond) savings bond series.

Bradesco Capitalização was the first private savings bond company in Brazil to receive ISO 9002 certification and in December 2002 this certificate was upgraded to the 2000 Version ISO 9001:2000. This certification from Fundação Vanzolini attests to the management quality of Bradesco savings bonds and confirms the principles on which their creation was based: good products, good services and continuous growth.

Income from Plans - Market Share (%)

Technical Reserves - Market Share (%)

Growth in Technical Reserves - In millions of reais

Bradesco Capitalização’s fast-growing volume of technical reserves totaled R$ 2.0 billion in September 2004, a growth rate of 15.2% compared to the same period in 2003. According to data for August 2004 published by SUSEP, the company has 22.8% of the total market volume of technical reserves.

These results transmit confidence and confirm the company’s financial soundness and capacity to honor the commitments assumed with its customers.

Growth in Assets Guaranteeing Technical Reserves - In millions of reais

Number of Customers - Thousand

As a result of its customer loyalty building policy, focused on quality customer service and the offer of innovative products, the number of Bradesco Capitalização customers totaled more than 2.7 million at the end of 3Q04.

Outstanding Savings Bonds - Thousand

Outstanding Savings Bonds with Transfer of Draw Participation Rights - Thousand

Total Outstanding Savings Bonds - Thousand

The outstanding savings bond portfolio also presented a significant increase of 112.81% compared to the same period in 2003, with more than 45 million outstanding bonds. Of this amount, 90.2% are certificates with “Transfer of Draw Participation Rights”, which were sold via partnership agreements with companies in different market segments, including Bradesco Cartões, Bradesco Vida e Previdência, Banco Finasa etc. Since the purpose of this type of savings bond certificate is to add value to partners’ products or to provide incentives for customer payments, these are low-priced bonds sold with reduced terms and grace periods and at a lower unit purchase price.

The number of traditional bonds comprising 9.8% of the total portfolio, dropped slightly, as a result of the offer of single and monthly payment bonds at higher sales prices.

Awards

In June, Bradesco Capitalização won the Insurance Market Award in the “Best Savings Bond Company”category, organized by Seguro Total magazine.

• Banco Finasa

Consolidated Balance Sheet - In millions of reais

  2003 2004


  June September June September




ASSETS        
Current assets and long-term receivables 4,260  4,841  7,037  7,652 
Funds available
Interbank investments 28  25  111  37 
Securities and derivative financial instruments 14  15  68  78 
Interbank accounts 42  20  29  30 
Credit and leasing operations 4,041  4,595  6,482  7,129 
Allowance for loan losses (133) (134) (227) (233)
Other receivables and other assets 268  317  569  603 
Permanent assets 11  12  361  343 

Total 4,271  4,853  7,398  7,995 

LIABILITIES
Current and long-term liabilities 3,988  4,557  7,023  7,551 
Demand, time and interbank deposits 3,624  4,128  6,479  7,025 
Deposits received under security repurchase agreements and funds from the issuance of securities
Interbank accounts
Borrowings and onlendings 101  124  55  51 
Derivative financial instruments 81  92  241  203 
Other liabilities 177  210  245  270 
Deferred income 22  18  30  35 
Stockholders’ equity 261  278  345  409 

Total 4,271  4,853  7,398  7,995 

Consolidated Statement of Income - In millions of reais

  2003 2004


  2nd Qtr. 3rd Qtr. Accumulated to September 2nd Qtr. 3rd Qtr. Accumulated to September






Income from lending and trading activities 395  408  1,165  594  590  1,667 
Expenses for lending and trading activities (237) (239) (689) (300) (333) (895)
Gross profit from financial intermediation 158  169  476  294  257  772 
Other operating income (expenses), net (115) (133) (355) (160) (160) (449)
Operating income 43  36  121  134  97  323 
Non-operating income (expenses), net (3) (5) (6) (5)
Income before taxes and contributions 40  36  116  128  98  318 
Taxes and contributions on income (14) (13) (40) (6) (34) (72)

Net income 26  23  76  122  64  246 

Profile

Banco Finasa operates in the retail sector, financing new and used vehicles, consumer durables, clothing, footwear and services, as well as personal loans, through Finasa Promotora de Vendas and from February 16, 2004, also through Promovel Empreendimentos e Serviços, which is Banco Zogbi’s sales promotion company. Banco Zogbi was acquired by the Bradesco Organization, through Banco Finasa on November 6, 2003, together with Promovel, Zogbi Leasing and Zogbi Distribuidora de Títulos e Valores Mobiliários.

At the end of September 2004, Banco Finasa operated through 121 Branches distributed nationwide (Finasa Promotora de Vendas – 52 and Zogbi – Promovel – 69), 31,046 registered service outlets, including 13,270 new and used vehicle dealerships and 17,776 stores selling different types of goods and services.

Customers served totaled some 1,835 thousand (Banco Finasa – 1,071 thousand and Banco Zogbi – 764 thousand).

Measured by Austin Rating, Banco Finasa obtained the maximum “AAA” rating for financial soundness and a “Low Risk” long-term rating.

Operating Performance

At September 30, 2004, consolidated assets totaled R$ 8.0 billion, a growth rate of 8.1% compared to June 2004 and 64.7% compared to September 2003. Credit operations, before the allowance for loans losses, totaled R$ 7.1 billion, a growth rate of 10.0% compared to June 2004 and 55.2% as compared to the same period in 2003. Of this total, R$ 6.6 billion comprised the new and used auto financing portfolio, compared to R$ 6.0 billion at June 30, 2004 and R$ 4.5 billion in September 2003.

Auto-financing production for 3Q04 totaled R$ 1.6 billion and R$ 4.4 billion for the period between January and September, a growth rate of 59.8% as compared to the same period in 2003. During the nine-month period, operations for the financing of other assets and services totaled R$ 626.0 million, compared to R$ 110.8 million for the same period in 2003 and a personal loans were granted in the amount of R$ 114.6 million, compared to R$ 5.0 million, in the prior period, including in 2004 production in Banco Zogbi.

Banco Finasa reported third-quarter net income of R$ 63.7 million, totaling R$ 245.5 million for the nine-month period. Stockholders’ equity at September 30, 2004 increased to R$ 408.7 million.

We stress that income in the amount of R$ 18.1 million was recorded for 3Q04, derived from the mark-to-market (MTM) adjustment of swap transactions, in compliance with Central Bank Circular 3082, which totaled R$ 98.0 million for the period from January to September. These transactions are designed to hedge overall credit operations and were entirely successful from an economic viewpoint. However, from a formal standpoint, these transactions are not acceptable as hedges pursuant to the aforementioned legislation. As a result, the asset transactions to which they are a counter entry receive a different accounting treatment, ie, they are adjusted based on the rates established in the corresponding contracts, whereas swaps are marked to market.

Net income for the period is comprised as follows:

  In millions of reais

  2004

  1st Half 3rd Qtr. Accumulated to September






Net income before MTM - SWAP 101.9  45.6  147.5 
Mark-to-market effect - SWAP 79.9  18.1  98.0 
Net income 181.8  63.7  245.5 

Moreover, we stress that expenses for amortization and provision for goodwill on investments made in 2004 totaled R$ 11.6 million for the second quarter and R$ 34.2 million for the first nine months of the year.

• Leasing Companies

At September 30, 2004, the Bradesco Organization had the following leasing companies: Bradesco Leasing S.A. Arrendamento Mercantil, formerly Potenza Leasing S.A. Arrendamento Mercantil, Alvorada Leasing Brasil S.A. Arrendamento Mercantil, formerly BBV Leasing Brasil S.A. Arrendamento Mercantil and Zogbi Leasing S.A. Arrendamento Mercantil.

Balance Sheet in Aggregate - In millions of reais

  2003 2004


  June September June September




ASSETS        
Current assets and long-term receivables 4,950  4,989  5,259  4,737 
Funds available
Interbank investments 3,081  2,105  2,325  2,257 
Securities and derivative financial instruments 12  1,096  1,273  618 
Leasing operations 1,477  1,405  1,271  1,348 
Allowance for leasing losses (127) (122) (107) (95)
Other receivables and other assets 501  499  496  608 
Permanent assets 40  40  37  485 

Total 4,990  5,029  5,296  5,222 

LIABILITIES
Current and long-term liabilities 3,012  2,994  3,060  3,131 
Interbank deposits 117 
Securities received under security repurchase agreements and funds received from issuance of securities 1,523  1,593  1,766  1,834 
Borrowings and onlendings 256  256  203  191 
Derivative financial instruments 10  10  15  11 
Subordinated debt 635  635  623  624 
Other liabilities 471  497  453  471 
Stockholders' equity 1,978  2,035  2,236  2,091 

Total 4,990  5,029  5,296  5,222 

Statement of Income - In millions of reais

  2003 2004


  2nd Qtr. 3rd Qtr. Accumulated to September 2nd Qtr. 3rd Qtr. Accumulated to September






Income from lending and trading activities 242  283  723  426  257  1,098 
Expenses for lending and trading activities (132) (161) (378) (324) (191) (819)
Gross profit from financial intermediation 110  122  345  102  66  279 
Other operating income (expenses), net (12) (20) (57) (25) (31)
Operating income 98  102  288  77  74  248 
Non-operating income (5) (4)
Income before taxes and contributions 98  102  291  77  69  244 
Tax and contributions on income (34) (33) 34  (24) (15) (76)

Net income 64  69  325  53  54  168 

Corporate Restructuring

Bradesco made the following changes to the organizational structure of the Leasing companies:

- In July, BancoCidade Leasing Arrendamento Mercantil S.A. was merged into Banco Alvorada S.A.

- In September Bradesco BCN Leasing S.A. Arrendamento Mercantil was merged into Bradesco Leasing S.A. Arrendamento Mercantil (formerly Potenza Leasing).

Leasing Performance - Consolidated Bradesco

Bradesco's leasing operations are carried out through Bradesco Leasing S.A. Arrendamento Mercantil and Banco Finasa S.A.

At September 30, 2004, leasing operations brought to present value totaled R$ 1.451 billion, with a balance of R$ 18.4 million receivable in operating leases.

According to the Brazilian Association of Leasing Companies (ABEL), the Bradesco Organization leasing companies are sector leaders, with a 12.3% share of this market (base date: July 2004). This sound performance is rooted in its Branch Network integrated operations and the maintenance of its diversified business strategies in various market segments, in particular, the implementation of operating agreements with major industries, mainly in the heavy vehicle and machinery/equipment sectors.

The following pie graph presents the composition of Bradesco's consolidated leasing portfolio by types of asset.

Portfolio by Types of Asset at September 30, 2004

• Bradesco Consórcios (Consortium Purchase System)

Administradora (management company)

Balance Sheet - In thousands of reais


  2003 2004


  June September June September




ASSETS        
Current assets and long-term receivables 22,521  19,956  47,501  61,552 
Funds available
Securities 18,853  17,335  45,765  60,217 
Other receivables 3,668  2,621  1,736  1,327 
Permanent assets 726  731  800  770 

Total 23,247  20,687  48,301  62,322 

LIABILITIES
Current and long-term liabilities 11,446  6,456  14,336  15,055 
Amounts refundable to former groups now closed 5,090  5,292  5,650  5,749 
Other liabilities 6,356  1,164  8,686  9,306 
Stockholders’ equity 11,801  14,231  33,965  47,267 

Total 23,247  20,687  48,301  62,322 

Statement of Income - In thousands of reais

  2003 2004


  2nd Qtr. 3rd Qtr. Accumulated to September 2nd Qtr. 3rd Qtr. Accumulated to September






Income on commission and fees 3,820  8,437  12,451  20,023  22,935  58,293 
Taxes payable (280) (591) (902) (1,183) (1,370) (3,457)
Financial income 510  560  1,438  1,263  1,780  3,962 
Administrative expenses (including personnel expenses) (1,461) (1,790) (4,967) (2,443) (2,522) (6,898)
Selling expenses (1,231) (2,993) (8,025) (5,194) (4,550) (11,830)
Other operating (expenses) income 50  37  57  120  210  377 
Income before taxes and contributions 1,408  3,660  52  12,586  16,483  40,447 
Taxes and contributions on income (521) (1,239) (123) (2,657) (3,181) (7,789)

Net income (loss) 887  2,421  (71) 9,929  13,302  32,658 

Quarterly Results – 2003 and 2004 – In thousands of reais

Consortium Groups

Balance Sheet - In thousands of reais

  2003 2004


  June September June September




ASSETS        
Current assets and long-term receivables 19,342  49,809  164,330  201,818 
Amount offset 1,465,378  2,750,813  5,499,952  6,189,691 

Total 1,484,720  2,800,622  5,664,282  6,391,509 

 
LIABILITIES
Current and long-term liabilities 233  1,595  21,626  30,923 
Stockholders’ equity 19,109  48,214  142,704  170,895 
Amount offset 1,465,378  2,750,813  5,499,952  6,189,691 

Total 1,484,720  2,800,622  5,664,282  6,391,509 

Operations

At September 30, 2004, a total of 108 thousand consortium quotas had been sold, with billings in excess of R$ 3.3 billion, 17,349 participants had been selected by bid or draw and 10,537 items had been delivered to members comprising 564 groups. 78 new groups were formed in the third quarter of 2004.

The company uses all the facilities offered by the Bradesco Organization customer service network to commercialize the products offered, a distinct market advantage responsible for the rapid growth presented by the consortium purchase system segment. The extensive nature and security associated with the Bradesco brand name also favors the expansion of consortium plan sales.

Mission

The company’s mission is to manage consortium plans and groups for consumer and corporate purchasers regardless of whether they are Bradesco account holders or not, and to operate in the car, truck, tractor and combine harvester segment, as well as in real estate, maintaining excellent standards in the quality of the services offered and in consortium system practice, pursuant to regulations determined by the Brazilian Central Bank and in line with the Bradesco Organization’s philosophy.

Segmentation

The Bradesco Organization’s entry into this segment is part of its strategy to offer the most complete range of product and services possible to its customers.

Providing all income brackets with the opportunity to purchase items through the consortium quota system, filling a market lacuna at accessible prices, especially considering, as regards the country’s present housing deficit, real estate products.

Representation

Within this segment, Bradesco plays a central role in providing Brazilians with the opportunity to acquire consumer durables and real estate. In this sector consumers can acquire apartments, houses, building plots or commercial offices.

From January to September 2004, Bradesco Consórcios sold a total of 62,751 quotas, with billings of R$ 1.7 billion. Of this total, 36,015 are vehicle quotas, followed by 25,784 in real estate quotas sold during the period.

Quotas sold in 2004

Market leadership

Bradesco Consórcios maintained its leadership of the real-estate segment, according to information published by the Brazilian Central Bank, in August, with 36,001 active quotas.

This leadership position is the result of the efforts and motivation of our sales teams and the distribution force of our customer service network.

Quotas sold in 3Q03 and 3Q04

Quotas sold and accumulated to September 2003 and 2004

Total outstanding real-estate quotas in 2004

Number of active participants comprising the 10 largest real-estate consortium administrators (*)

(*) Brazilian Central Bank data for August 2004.

• Bradesco S.A. - Corretora de Títulos e Valores Mobiliários

Balance Sheet – In thousands of reais

  2003 2004


  June September June September




ASSETS        
Current assets and long-term receivables 153,910  188,853  128,999  110,193 
Funds available 10  38  27 
Interbank investments and securities 88,530  96,730  69,514  73,695 
Other receivables and other assets 65,370  92,117  59,447  36,471 
Permanent assets 18,908  19,753  22,154  23,058 

Total 172,818  208,606  151,153  133,251 

LIABILITIES
Current and long-term liabilities 79,006  109,212  77,818  56,872 
Other liabilities 79,006  109,212  77,818  56,872 

Stockholders' equity 93,812  99,394  73,335  76,379 

Total 172,818  208,606  151,153  133,251 

Statement of Income - In thousands of reais

  2003 2004


  2nd Qtr. 3rd Qtr. Accumulated to September 2nd Qtr. 3rd Qtr. Accumulated to September






Income from lending and trading activities 4,583  4,943  13,979  2,557  2,741  7,796 
Gross profit from financial intermediation 4,583  4,943  13,979  2,557  2,741  7,796 
Other operating income (expenses), net 1,142  1,088  2,543  1,162  1,209  7,484 
Operating income 5,725  6,031  16,522  3,719  3,950  15,280 
Non-operating income (expense) (1) (390) (391)
Income before taxes and contributions 5,724  5,641  16,131  3,721  3,950  15,282 
Taxes and contributions on income (1,898) (2,051) (5,569) (1,234) (1,341)