© Reuters. FILE PHOTO: Banco Bradesco logo is seen on a smartphone in front of displayed same logo in this illustration taken, December 1, 2021. REUTERS/Dado Ruvic/Illustration/File Photo
SAO PAULO (Reuters) – Brazilian lender Banco Bradesco SA on Tuesday reported a 22.8% drop in third-quarter recurring net profit and raised its forecast for set-aside funds that may be needed to cover bad loans.
Bradesco’s recurring net profit totaled 5.22 billion reais ($1.01 billion), coming in below a Refinitiv consensus estimate of 6.76 billion reais.
The lender also raised its expectation for the amount of money it will set aside for non-performing loans this year. It now expects to hold provisions in the range of 25.5 billion reais to 27.5 billion reais, as high interest rates have caused a deterioration in asset quality.
During the July to September period, Bradesco set aside 7.27 billion reais, more than double the amount compared to a year ago.
In September, Brazil’s central bank paused an aggressive monetary tightening cycle, leaving its key Selic interest rate at 13.75% after 12 consecutive hikes. The central bank’s rate-setting committee also left its benchmark rate unchanged in October.
Bradesco said its 90-day loan default ratio was 3.9% at the end of September, a 1.3 percentage point growth from a year earlier and 0.4 points above the second quarter ratio.
($1 = 5.1440 reais)