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 May, 2024
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____
.
SUMMARY
1. Issuer’s activities |
6 |
1.1 – Briefly describe the issuer's history |
6 |
1.2 – Briefly describe the main activities developed by the issuer and its subsidiaries |
7 |
1.3 – Information on operating segments |
7 |
1.4 – Information on products and services relating to the operational segments disclosed in item 1.3 |
11 |
1.5 – Clients responsible for more than 10% of the total net revenue |
37 |
1.6 – Relevant effects of the state regulation of activities |
37 |
1.7 – Countries from which the issuer generates significant revenue |
68 |
1.8 – Foreign countries disclosed in item 1.7, describing relevant impacts arising from the regulation
of these countries on the issuer's business |
68 |
1.9 – Environmental, social and corporate governance (ESG) information, indicate: |
68 |
1.10 – Specific information of mixed economy companies |
69 |
1.11 – Indicate the acquisition or disposal of any relevant asset that is not classified as a normal
operation in the issuer's business |
70 |
1.12 – Indicate merger, division, incorporation, equity incorporation, capital increase or reduction
involving the issuer and documents in which more detailed information can be found |
70 |
1.13 – Indicate the firming, extinction or modification of shareholders’ agreements and the documents
in which more detailed information can be found |
70 |
1.14 – Indicate significant changes in the way of conducting the issuer's business |
71 |
1.15 – Indicate significant contracts not directly related to operating activities entered into by the
issuer or by its subsidiaries |
71 |
1.16 – Other relevant information |
71 |
2. Officers’ notes |
72 |
2.1 – General Financial and Equity Conditions |
72 |
2.2 – Financial and operating income |
91 |
2.3 – Officers must comment on changes in accounting practices |
93 |
2.4 – Events with significant effects (occurred and expected) on financial statements |
94 |
2.5 – If the issuer has disclosed, during the last fiscal year, or wishes to disclose in this form non-accounting
measurements, such as EBITDA (earnings before interest, tax, depreciation and amortization) or EBT (earnings before interest and tax),
the issuer must inform: |
95 |
2.6 – Subsequent events to the latest financial statements |
95 |
2.7 – Officers must comment on the destination of the corporate income |
96 |
2.8 – Relevant Items not evidenced in the financial statements |
98 |
2.9 – Comments on other items not evidenced in the financial statements |
99 |
2.10 – Business plan |
100 |
2.11 – Other factors with relevant influence |
101 |
3. Projections |
102 |
3.1 – Disclosed projections and assumptions |
102 |
3.2 – Monitoring and changes to the disclosed projections |
104 |
4. Risk factors |
106 |
4.1 – Description of risk factors in descending order of relevance |
106 |
4.2 – Indicate the five (5) main risk factors, among those listed in field 4.1, regardless of the category
in which they are inserted |
122 |
4.3 – Describe, quantitatively and qualitatively, the main market risks to which the issuer is exposed,
including in relation to exchange rate risks and interest rates |
122 |
4.4 – Judicial, administrative or arbitral proceedings in which the issuer or its subsidiaries are a
part of, discriminating between labor, tax, civil, environmental and others |
127 |
4.5 – Indicate the total provisioned value, if any, of the processes described in item 4.4 |
139 |
4.6 – Relevant sensitive processes in which the issuer or its subsidiaries are a part of, and which have
not been disclosed in item 4.4, analyze the impact in case of loss and inform the values involved |
139 |
4.7 – Describe other relevant contingencies not covered by the previous items |
139 |
5. Risk management policy and internal controls |
140 |
5.1 – Risks indicated in items 4.1 and 4.3 |
140 |
5.2 – Controls adopted by the issuer to ensure the elaboration of reliable financial statements |
147 |
5.3 – In relation to the internal mechanisms and procedures of integrity adopted by the issuer to prevent,
detect and remedy deviations, fraud, irregularities and illegal acts perpetrated against the public administration, national or foreign |
149 |
5.4 – In relation to the last fiscal year, there were significant changes in the key risks faced by the
issuer or in the risk management policy adopted, including any expectations of reducing or increasing the issuer's exposure to such risks. |
153 |
5.5 – Other relevant information |
153 |
6. Control and economic group |
154 |
6.1 / 6.2 – Equity Position |
154 |
6.3 – Capital Distribution |
158 |
6.4 – companies in which the issuer has participation and that are relevant to the development of its
activities |
159 |
6.5 – Organization chart of shareholders and economic group |
159 |
6.6 – Other relevant information |
162 |
7. Shareholders’ meeting and management |
163 |
7.1 – Describe the main characteristics of the issuing authority's management bodies and fiscal council,
identifying: |
163 |
7.2 – In relation specifically to the board of directors |
167 |
7.3 – For each of the directors and members of the issuer's fiscal council, indicate in a table form: |
170 |
7.4 – Provide the information mentioned in item 7.3 regarding the members of the statutory committees,
as well as the risk committee, even if such committee or structure is not statutory |
236 |
7.5 – Inform about the existence of a marital relationship, stable union or kinship up to the second
degree related to: |
238 |
7.6 – Inform about subordination, service provision or control relationships maintained in the last three
fiscal years between the issuer’s managers and: |
238 |
7.7 – Describe the provisions of any agreements, including insurance policies, which provide for the
payment or reimbursement of expenses incurred by directors, arising from the repair of damages caused to third parties or to the issuer,
of penalties imposed by state agents, or agreements with the aim of terminating administrative or judicial proceedings, by virtue of
the exercise of their duties |
243 |
7.8 – Other relevant information |
244 |
8. Management remuneration |
245 |
8.1 – Description of the policy or compensation practice, including the non-statutory board |
245 |
8.2 – total compensation of the board of directors, statutory board of executive officers and fiscal
council |
252 |
8.3 – variable compensation of the board of directors, statutory board of executive officers and fiscal
council |
256 |
8.4 – Compensation plan based on shares of the board of directors and the statutory board of executive
officers |
258 |
8.5 – Compensation based on shares of the board of directors and of the statutory board of executive
officers |
259 |
8.6 – Information on the options for buying shares performed in the last three fiscal years and planned
for the current fiscal year, of the board of directors and the statutory board of executive officers |
259 |
8.7 – Options exercised and open shares of the board of directors and the statutory board of executive
officers at the end of the last fiscal year |
259 |
8.8 – Options exercised relating to share-based compensation of the board of directors and the statutory
board of executive officers in the last three fiscal years |
259 |
8.9 – In relation to the compensation based on shares, in the form of shares to be delivered directly
to the beneficiaries, recognized in the result of the last three fiscal years and that foreseen for the current fiscal year, of the board
of directors and of the statutory board of executive officers |
259 |
8.10 - In relation to each share program performed in the last three fiscal years and planned for the current
fiscal year, for the board of directors and the statutory board |
260 |
8.11 - In relation to shares delivered regarding the compensation based on shares of the board of directors
and the statutory board of executive officers, in the last three fiscal years |
260 |
8.12 - Information necessary to understand the data disclosed in items 8.5 to 8.11 - Method of pricing the
value of shares and options |
260 |
8.13 – Number of shares, quotas and other securities convertible into shares held by managers and members
of the fiscal council – by body |
261 |
8.14 – Information on private pension plans granted to the members of the Board of Directors and of the
statutory board of executive officers |
261 |
8.15 – Highest, lowest and the average individual compensation for the board of directors, statutory
board of executive officers and fiscal council |
262 |
8.16 – Compensation or indemnity mechanisms for managers in case of removal from office or retirement |
263 |
8.17 – Percentage in total compensation held by management and members of the fiscal council that are
related parties to the controlling companies |
263 |
8.18 – Compensation of managers and fiscal council’s members, grouped by body, received for any
reason other than the position they occupy |
263 |
8.19 – Compensation of managers and fiscal council’s members recognized in the income of the controlling
shareholders, direct or indirect, of companies under common control and of the issuer’s subsidiaries |
263 |
8.20 – Other relevant information |
264 |
9. Independent auditors |
265 |
9.1/9.2 – Identification and remuneration of auditors |
265 |
9.3 - Independence and conflict of interests of auditors |
265 |
1. Issuer’s activities
1.1
– Briefly describe the issuer's history
Bradesco
was founded in 1943 as a commercial Bank under the name of Banco Brasileiro de Descontos S.A. In 1948, we entered a period of intense
expansion, which, by the end of the 1960s, led us to become the largest commercial bank in the private sector in Brazil. We expanded our
activities across the country in the 1970s, winning Brazilian urban and rural markets.
In 1988,
as provided for by the Central Bank of Brazil, the reorganization of the Company took place in the form of a Multiple Bank, with the incorporation
of the real estate loans company, to operate with the Commercial and Real Estate Loan Portfolios, changing its corporate name to Bradesco
S.A. – Banco Comercial e de Crédito Imobiliário, which was again changed to Banco Bradesco S.A. on January 13, 1989.
In 1989,
Financiadora Bradesco S.A. Crédito, Financiamento e Investimentos changed its object and corporate name, resulting in the cancellation
of the authorization to operate as a financial institution, followed by the creation of Carteira de Crédito, Financiamento e
Investimentos and, in 1992, Banco Bradesco de Investimento S.A. (BBI) was incorporated by Bradesco, an occasion in which the investment
portfolio was established.
We are
one of the largest banks in Brazil in terms of total assets. We provide a wide range of banking, financial products and services in Brazil
and abroad, for individuals and legal entities (small, medium and large enterprises). We have the widest network of branches and services
in the private sector in Brazil, which allows us to cover a diverse client base. Our services and products include banking operations,
such as: loan operations and collection of deposits, issuance of credit cards, insurances, capitalization, consortium, leasing, billing
and payment processing, pension plans, asset management and brokerage services as well as securities brokerage.
Strategic
Planning
The
year 2023 was challenging, but the adjustments we made to our strategy have started to show positive effects. We expect 2024 to be a transitional
year and we are aware of the need for transformation, which we are now accelerating. We started to execute what we consider to be an innovative
strategic plan.
Our
goal is to transform the business in an agile manner, aligning technology and people with our company culture. If we achieve this transformation,
we expect it to improve our profitability. We believe in a trajectory of recovery of profitability over time, and expect that the initial
effects will start to show in 2025.
We are
accelerating our transformation, executing a strategic plan that starts from a deep and realistic diagnosis of everything that needs to
change. The implementation of this plan will extend over the next few years. We expect to see some results in 2024, but believe that the
benefits of this strategic plan will largely start from 2025 onwards.
We will
continue being a full-service bank, offering a wide range of services and products, which is close to its clients. We will continue to
offer physical and digital support to our clients. In addition, we will adjust our customer service to improve the experience for our
clients, deliver more value to the client, and increase our efficiency.
We
are looking to implement a transformative culture for an agile and large bank that is customer-centric, without losing our values. We
have accelerated priority initiatives and introduced new ones. We believe that our focus on our employees agenda will enable us to implement
changes that prepare us for our continuous evolution.
Our
strategic plan aims to resume our historical profitability in a sustainable way over the next few years. As part of that, we will change
our organizational structure, reduce hierarchical levels and while maintaining an effective internal control environment. We will have
a team fully dedicated to the execution of these changes, transforming our business and accelerating the changes in our employees, culture
and technology, allowing us to become more competitive in an environment of constant change.
| |
6 – Reference Form – 2023 | |
Macroeconomic
and Sectorial Policies
Considering
the two most recent episodes of contraction of the global economy, the behavior of credit was quite distinct. In the period 2015-2016,
the GDP growth slowdown contributed to the downturn of credit, while the increase in the basic interest rate raised the funding costs
in the activity of banking intermediation. In 2020, due to the pandemic, the loan portfolio registered expansion, favored by regulatory
stimulus measures – such as the reduction of the reserve requirement rate and the increase of the payroll-deductible loan limits,
among other measures –, renegotiations of spread payments, increase of guarantees in loan operations, creation of subsidized lines
and fall in the basic interest rate. At the same time, the bank inflows have increased, in a scenario of accumulation of savings, especially
for families, due to the pandemic. In 2021, the extension of these measures, the rather gradual normalization of the funding and the reopening
of the economy resulted in a significant expansion of credit. And in 2022, the monetary tightening by the Central Bank of Brazil (and
the consequent increase in the cost of credit) and the effects of accelerating inflation on real income led to an increase in delinquency
and consequently to tightening credit concession policies. In addition to the more moderate credit growth in 2023, the adjustments
implemented from 2022 also enabled the decline in the loan delinquency level granted to individuals after the peak reached at the end
of the first semester.
In 2024,
the favorable economic scenario, the improvement in the delinquency ratios and the basic interest rate cutback should sustain a favorable
evolution of the credit cycle. It is important to highlight that the structural vision in relation to
Brazil remains constructive for the banking sector, which should continue advancing in terms of efficiency gains, in an environment of
expansion of competition.
1.2
– Briefly describe the main activities developed by the issuer and its subsidiaries
Currently,
we are one of the largest banks in country in terms of total assets. We offer a wide range of banking and financial products and services
in Brazil and abroad, to individuals, large, medium, small, micro-sized enterprises and major local and international corporations and
institutions. Our products and services comprise of banking and non-banking operations such as loans and advances, deposit-taking, credit
card issuance, purchasing consortiums, insurance, capitalization, leasing, payment collection and processing, pension plans, asset management
and brokerage services, among others. For a better view of the main companies that are part of the Issuer’s Economic Group, and
its respective activities, please see item 6 of this Reference Form.
1.3
– Information on operating segments
| a) | products and services marketed |
We operate
and manage our business through two segments: (i) the banking sector; and (ii) insurance, pension plans and capitalization bonds.
Banking
products and services
In order
to meet the needs of each client, we offer a range of products and services, such as:
| · | deposit-taking,
including checking accounts, savings accounts and time deposits; |
| · | loans
and advances (individuals and companies, real estate financing, microcredit, onlending BNDES/Finame funds, rural credit, leasing, among
others); |
| · | import and export financings; |
| · | credit
cards, debit cards and pre-paid cards; |
| · | cash
management solutions; |
| · | solutions
for the public authorities; |
| · | third-party
asset management and administration; |
| |
7 – Reference Form – 2023 | |
| · | services
related to capital markets and investment banking activities; |
| · | Investment
advisory; |
| · | intermediation
and trading services; |
| · | solutions
for the capital markets; |
| · | international
banking services; and |
| · | purchasing
consortiums. |
Insurance,
pension plans and capitalization bonds products and services
We offer
insurance, pension plans and capitalization bonds products through different segments, which we refer to collectively as “Grupo
Bradesco Seguros”, leader in the Brazilian insurance market. With the objective of meeting the needs of each client, we offer a
range of products and services, such as:
| · | life and personal accident insurance; |
| · | automobile insurance, property and casualty and liability insurance lines; |
b)
segment revenue and its participation in the issuer’s net revenue
The
following information about segments was prepared on the basis of reports that were provided to the Management to assess performance and
to make decisions regarding the allocation of resources for investment and for other purposes. Our Management uses a variety of information,
including financial information, which is prepared in accordance with BR GAAP, and non-financial information, measured on a different
basis. Therefore, the information contained in the segments has been prepared in accordance with accounting practices adopted in Brazil
and the consolidated information has been prepared in accordance with IFRS.
The main
assumptions of the segment for income and expenses include: (i) the excess of cash held by insurance, private pensions and capitalization,
which are included in this segment, resulting in an increase in net revenue interest; (ii) wages and benefits and administrative costs
included within the insurance segment, pension plans and capitalization, which consist only of costs associated directly with these operations;
and (iii) the costs incurred in the banking segment, related to the infrastructure of the branch network and other overhead, that are
not allocated.
| |
8 – Reference Form – 2023 | |
|
|
|
|
R$ million |
Composition of Net Revenues
2023 |
Banking sector
(1) (2) |
Insurance, Pension Plans and Capitalization Bonds
(2) |
Other transactions, adjustments and eliminations
(3) |
Total |
Revenue from financial intermediation |
164,122 |
39,942 |
20,394 |
224,458 |
Fee and Commission income |
34,269 |
1,165 |
(8,477) |
26,957 |
Premiums Retained from Insurance and Pension Plans |
- |
9,801 |
(3,757) |
6,044 |
Equity in the earnings (losses) of unconsolidated companies and Joint Venture |
151 |
422 |
1,529 |
2,102 |
Other operating income |
14,928 |
5,350 |
5,136 |
25,415 |
Contribution for Social Security Financing - COFINS |
(4,036) |
(996) |
(21) |
(5,053) |
Service Tax - ISS |
(896) |
(71) |
(4) |
(971) |
Social Integration Program (PIS) contribution |
(666) |
(139) |
(4) |
(809) |
Total |
207,872 |
55,474 |
14,796 |
278,143 |
Participation in net revenue |
74.7% |
19.9% |
5.3% |
100.0% |
|
|
|
|
R$ million |
Composition of Net Revenues
2022 |
Banking sector
(1) (2) |
Insurance, Pension Plans and Capitalization Bonds
(2) |
Other transactions, adjustments and eliminations
(3) |
Total |
Revenue from financial intermediation |
151,198 |
36,250 |
18,465 |
205,913 |
Fee and Commission income |
33,802 |
1,701 |
(8,379) |
27,124 |
Premiums Retained from Insurance and Pension Plans |
- |
7,425 |
(2,535) |
4,890 |
Equity in the earnings (losses) of unconsolidated companies and Joint Venture |
107 |
125 |
1,124 |
1,356 |
Other operating income |
15,145 |
3,201 |
7,602 |
25,948 |
Contribution for Social Security Financing - COFINS |
(4,457) |
(877) |
(16) |
(5,350) |
Service Tax - ISS |
(930) |
(61) |
- |
(991) |
Social Integration Program (PIS) contribution |
(719) |
(123) |
(3) |
(845) |
Total |
194,146 |
47,641 |
16,258 |
258,045 |
Participation in net revenue |
75.2% |
18.5% |
6.3% |
100.0% |
| (1) | The banking sector is comprised of financial institutions; holding companies
(which are mainly responsible for managing financial resources); and credit card and asset management companies; |
| (2) | The asset, liability, income and expense balances among companies from the
same segment are eliminated; and |
| (3) | They refer to the amounts that were eliminated among companies from different
segments, as well as among other operations and consolidation adjustments. |
| |
9 – Reference Form – 2023 | |
c)
profit or loss resulting from the segment and participation in the issuer’s net income
R$ million |
Income Statement
2023 |
Banking |
Insurance,
pension and
capitalization
bonds |
Other
Activities |
Eliminations |
Managerial
Income
Statement |
Proportionately
consolidated (1) |
Adjustments
of
Consolidation (2) |
Adjustments (3) |
Consolidated
in
accordance
with IFRS |
Revenue from financial intermediation |
164,122 |
39,942 |
481 |
(671) |
203,874 |
(2,864) |
(4,249) |
27,697 |
224,458 |
Expenses from financial intermediation (4) |
(97,496) |
(32,892) |
(0) |
685 |
(129,702) |
552 |
6,914 |
(34,140) |
(156,376) |
Financial margin |
66,626 |
7,049 |
481 |
- |
74,172 |
(2,312) |
2,665 |
(6,443) |
68,082 |
Allowance for loan losses |
(37,111) |
- |
- |
- |
(37,111) |
- |
- |
4,994 |
(32,117) |
Gross income from financial intermediation |
29,516 |
7,049 |
481 |
- |
37,061 |
(2,312) |
2,665 |
(1,449) |
35,965 |
Income from insurance, pension plans and capitalization bonds |
- |
9,801 |
- |
32 |
9,833 |
- |
- |
(3,789) |
6,044 |
Fee and commission income |
34,269 |
1,165 |
5 |
(33) |
35,406 |
(5,341) |
(1,879) |
(1,229) |
26,957 |
Personnel expenses |
(21,257) |
(2,652) |
(31) |
- |
(23,939) |
909 |
- |
2,216 |
(20,814) |
Other administrative expenses (5) |
(20,866) |
(2,066) |
(16) |
424 |
(22,524) |
997 |
(618) |
(167) |
(22,312) |
Tax expenses |
(6,582) |
(1,437) |
(23) |
- |
(8,042) |
698 |
- |
0 |
(7,344) |
Share of profit (loss) of unconsolidated and jointly controlled companies |
151 |
422 |
- |
- |
573 |
1,528 |
- |
1 |
2,102 |
Other operating income / expenses |
(9,199) |
(3,469) |
(141) |
(438) |
(13,247) |
3,521 |
(167) |
3,798 |
(6,095) |
Net Income |
6,033 |
8,813 |
276 |
- |
15,122 |
- |
- |
(619) |
14,503 |
Participation in net income (Managerial Income Statement) |
39.9% |
58.3% |
1.8% |
- |
- |
- |
- |
- |
- |
R$ million |
Income Statement
2022 |
Banking |
Insurance,
pension and
capitalization
bonds |
Other
Activities |
Eliminations |
Managerial
Income
Statement |
Proportionately
consolidated (1) |
Adjustments
of
Consolidation (2) |
Adjustments (3) |
Consolidated
in
accordance
with IFRS |
Revenue from financial intermediation |
151,198 |
36,250 |
401 |
(1,121) |
186,728 |
(2,625) |
(2,167) |
23,977 |
205,913 |
Expenses from financial intermediation (4) |
(81,331) |
(29,163) |
(0) |
1,121 |
(109,373) |
484 |
4,765 |
(26,678) |
(130,802) |
Financial margin |
69,868 |
7,087 |
401 |
- |
77,355 |
(2,140) |
2,598 |
(2,701) |
75,112 |
Allowance for loan losses |
(31,526) |
- |
- |
- |
(31,526) |
43 |
- |
7,716 |
(23,767) |
Gross income from financial intermediation |
38,342 |
7,087 |
401 |
- |
45,829 |
(2,097) |
2,598 |
5,015 |
51,345 |
Income from insurance, pension plans and capitalization bonds |
- |
7,425 |
- |
36 |
7,461 |
- |
- |
(2,571) |
4,890 |
Fee and commission income |
33,802 |
1,701 |
7 |
(36) |
35,474 |
(4,977) |
(1,976) |
(1,397) |
27,124 |
Personnel expenses |
(20,322) |
(2,377) |
(4) |
- |
(22,703) |
764 |
- |
2,050 |
(19,889) |
Other administrative expenses (5) |
(20,950) |
(1,636) |
(8) |
530 |
(22,063) |
1,036 |
(594) |
(259) |
(21,881) |
Tax expenses |
(6,881) |
(1,188) |
(19) |
- |
(8,088) |
522 |
- |
- |
(7,566) |
Share of profit (loss) of unconsolidated and jointly controlled companies |
107 |
125 |
- |
- |
232 |
1,170 |
- |
(47) |
1,356 |
Other operating income / expenses |
(10,145) |
(4,622) |
(115) |
(530) |
(15,411) |
3,583 |
(28) |
(2,066) |
(13,922) |
Net Income |
13,955 |
6,515 |
262 |
- |
20,732 |
- |
- |
725 |
21,457 |
Participation in net income (Managerial Income Statement) |
67.3% |
31.4% |
1.3% |
- |
- |
- |
- |
- |
- |
(1) They refer
to: adjustments of consolidation, originating from proportionally consolidated companies (Grupo Cielo, Grupo Alelo, etc.) for management
purposes; (2) Adjustments of consolidation originating from the “non-consolidation” of exclusive funds; (3) Adjustments due
to the differences of the accounting standards used in the management reports and in the Financial Statements of the Organization that
were prepared in the IFRS. The main adjustments refer to the impairment of loans and advances, effective interest rate and business combinations;
(4) It includes, in the Consolidated IFRS, the balances related to “Net gains/(losses) on financial assets and liabilities at fair
value through income”, “Net gains/(losses) on financial assets at fair value through other comprehensive income” and
“Net gains/(losses) on foreign currency transactions”; and (5) It includes, in the Consolidated IFRS, the balances referring
to depreciation and amortization.
| |
10 – Reference Form – 2023 | |
1.4 – Information on products and services relating to the operational segments disclosed in item 1.3
| a) | Characteristics of the product process |
We present
below some characteristics of the main products and services of Bradesco.
Banking
segment
Deposits
Accounts
We offer
a variety of deposit accounts, including:
·
Checking accounts, such as:
- Easy
Account (Conta Fácil) – A checking account and a savings account under the same bank account number, using the
same card for both accounts, destinated to individuals and companies;
- Click
Account (Click Conta) – Checking accounts for children and young people from 0 to 17 years of age, with exclusive website
and debit card, automatic pocket money service and free online courses, exclusive partnerships, among other benefits;
- Academic
Account (Conta Universitária) – Checking account for undergraduate students with low fees, student finance, exclusive
website, free online courses, exclusive partnerships, among other benefits; and
- Checking
Account (Conta Corrente) – accounts intended for companies and public entities with specific legal nature, which do not
have a linked savings account.
·
traditional savings accounts, which currently earn interest at the Brazilian reference rate, or taxa referencial, known as the
TR, plus 0.5% monthly interest in case the SELIC rate target is higher than 8.5% p.a. or TR plus 70.0% of the SELIC rate target if the
SELIC rate target is equal to or lower than 8.5% p.a.; and
·
time deposits, which are represented by Bank Deposit Certificates (certificados de depósito bancário –
or “CDBs”), and earn interest at a fixed or floating rate.
As of
December 31, 2023, we had 38.1 million account holders (clients who have a deposit account which is available for use), of which 36.3
million of them being individuals and 1.7 million being companies. As of the same date, we had 69.0 million savings accounts.
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11 – Reference Form – 2023 | |
Loans
and advances to clients
The
following table shows loans and advances to clients broken down by type of product on the indicated dates:
|
|
|
|
|
R$ million |
|
2023 |
2022 |
Vertical Analysis % |
Horizontal Analysis |
2023 |
2022 |
2023 x 2022 |
R$ |
% |
Companies |
269,421 |
299,255 |
42.8 |
45.6 |
(29,834) |
(10.0) |
Financing and On-lending |
104,730 |
111,608 |
16.6 |
17.0 |
(6,878) |
(6.2) |
Financing and export |
28,957 |
37,588 |
4.6 |
5.7 |
(8,630) |
(23.0) |
Real Estate Financing |
24,535 |
20,625 |
3.9 |
3.1 |
3,910 |
19.0 |
Onlending BNDES/Finame |
17,516 |
16,380 |
2.8 |
2.5 |
1,136 |
6.9 |
Vehicle loans |
22,316 |
23,243 |
3.5 |
3.5 |
(926) |
(4.0) |
Import |
7,183 |
10,392 |
1.1 |
1.6 |
(3,209) |
(30.9) |
Leases |
4,222 |
3,380 |
0.7 |
0.5 |
842 |
24.9 |
Borrowings |
151,245 |
172,913 |
24.0 |
26.3 |
(21,668) |
(12.5) |
Working capital |
82,844 |
98,964 |
13.2 |
15.1 |
(16,120) |
(16.3) |
Rural loans |
12,807 |
7,620 |
2.0 |
1.2 |
5,188 |
68.1 |
Other |
55,594 |
66,330 |
8.8 |
10.1 |
(10,736) |
(16.2) |
Operations with limits (1) |
13,446 |
14,734 |
2.1 |
2.2 |
(1,288) |
(8.7) |
Credit card |
8,003 |
7,577 |
1.3 |
1.2 |
427 |
5.6 |
Overdraft for corporates/ Overdraft for individuals |
5,443 |
7,158 |
0.9 |
1.1 |
(1,715) |
(24.0) |
Individuals |
360,265 |
357,612 |
57.2 |
54.4 |
2,654 |
0.7 |
Financing and On-lending |
127,765 |
125,995 |
20.3 |
19.2 |
1,771 |
1.4 |
Real Estate Financing |
89,315 |
84,617 |
14.2 |
12.9 |
4,698 |
5.6 |
Vehicle loans |
31,409 |
34,013 |
5.0 |
5.2 |
(2,604) |
(7.7) |
Onlending BNDES/Finame |
6,867 |
7,214 |
1.1 |
1.1 |
(347) |
(4.8) |
Other |
175 |
151 |
0.0 |
0.0 |
24 |
15.6 |
Borrowings |
155,606 |
156,052 |
24.7 |
23.8 |
(447) |
(0.3) |
Payroll-deductible loans |
90,961 |
89,761 |
14.4 |
13.7 |
1,200 |
1.3 |
Personal loans |
31,309 |
35,098 |
5.0 |
5.3 |
(3,789) |
(10.8) |
Rural loans |
12,534 |
12,368 |
2.0 |
1.9 |
166 |
1.3 |
Other |
20,802 |
18,826 |
3.3 |
2.9 |
1,976 |
10.5 |
Operations with limits (1) |
76,894 |
75,565 |
12.2 |
11.5 |
1,330 |
1.8 |
Credit card |
71,927 |
69,955 |
11.4 |
10.6 |
1,972 |
2.8 |
Overdraft for corporates/ Overdraft for individuals |
4,968 |
5,610 |
0.8 |
0.9 |
(642) |
(11.4) |
Total portfolio |
629,687 |
656,867 |
100.0 |
100.0 |
(27,180) |
(4.1) |
(1) It refers
to outstanding operations with pre-established limits linked to checking account and credit card, whose limits are automatically recomposed
as the amounts used are paid.
Financing
and On-lending
Import
and export financing
Our
Brazilian foreign-trade related business consists of giving finance services to our clients in their export and import activities.
In
import financing/refinancing, we directly transfer funds in foreign currency to foreign exporters, fixing the payment in local currency
for Brazilian importers. In export financing, exporters obtain advances in reais on closing an export forex contract for future receipt
of foreign currency on the contract due date. The export financing in this modality can be done in the phases of pre- or post-loading/execution
of the services, and are
| |
12 – Reference Form – 2023 | |
called Advance Payment
on Forex Operations, or (AOCs), the moment in which the resources received are used in the manufacture of goods/services that are exported,
or as a form of anticipating sales made in spread payments of goods/service already loaded/executed.
There
are other forms of export financing, such as Export Prepayments, onlendings from BNDES-EXIM funds, Export Credit Notes and Export Credit
Bills (referred to locally as NCEs and CCEs, respectively), and Export Financing Program with rate equalization – PROEX.
Our
foreign trade portfolio is funded primarily by credit lines from correspondent banks. We maintain relations with various American, European,
Asian and Latin American financial institutions for this purpose, using our network of 770 correspondent banks abroad, 65 of which credit/guarantee
lines as of December 31, 2023.
Real
Estate Financing
As of
December 31, 2022, we had 340 thousand financing contracts.
Real
Estate Financing are provided for: (i) the acquisition of residential and commercial real estate, and urban plots; and (ii) the construction
of residential and commercial developments.
The
financing for the acquisition of residential properties has a maximum term of up to 35 years and the contracts may have annual interest
rates between 10.5% and 11.7% p.a. plus TR, or an annual interest rate of 4.5% p.a. plus savings remuneration. The financing for the acquisition
of commercial properties has a maximum term of up to 10 years and annual interest rates starting at 12.2% p.a. plus TR.
The
construction financing, also called the Plano Empresário, has a work period of up to 36 months plus the grace period to implement
the transfers to borrowers that varies between 6 and 12 months. Interest rates are priced on a case-by-case basis, both in TR+ and Savings+
modality.
Central
Bank of Brazil regulations require us to provide at least 65.0% of the balance of savings accounts in the form of Real Estate Financing.
The remaining funds are to be used for financings and other operations permitted under the terms of the legislation in force.
BNDES/Finame
Onlending
The
BNDES is the main instrument of the Federal Government to support entrepreneurs of all sizes, including individuals, rural producers,
in carrying out their plans for modernization, expansion and implementation of new business, with the potential of generating jobs, income
and social inclusion in Brazil. Its portfolio has certain products and programs to provide government-funded long-term loans with different
interest rates, focusing on economic development. We are one of the structuring agents of BNDES funds, to borrowers in several sectors
of the economy. We determine the margin of return on the loans based on the borrowers’ credit. Although we bear the risk for these
BNDES and Finame onlending transactions, these transactions are always secured.
In 2023,
we disbursed R$7.4 billion, 53.6% of which were loaned to micro, small and medium-sized enterprises.
Vehicle
loans
Vehicle
Loans is a financing line for the purchase of light and heavy vehicles, both new and used, for individuals and legal entities. We offer
these products through our branch network, via the Bradesco App in a totally digital process and Bradesco Financiamentos, with direct
contact with clients and business partners for the acquisition of light vehicles, motorcycles, trucks, buses, machinery and equipment.
The
vehicle loans portfolio grew in 2023, due to the optimization of concession policies, economic recovery and improvements in procurement
processes, maintaining the position among the main portfolios of the Brazilian market.
Leasing
As of
December 31, 2023, we had 3,395 active leasing agreements. According to ABEL, our leasing companies were among the sector leaders, with
a 27.9% market share in Brazil, considering the market
| |
13 – Reference Form – 2023 | |
portfolio of leases of
R$15.7 billion.
Financial
leasing involves trucks, cranes, aircraft, ships and heavy machinery. In this same period, 23.4% of our transactions were for vehicles
(cars, buses, micro-buses and trucks).
We conduct
our leasing transactions through our primary leasing subsidiary, Bradesco Leasing and also through Bradesco Financiamentos.
Borrowings
Working
Capital
Line
of credit destined to companies with the aim of covering expenses or investments inherent in the company’s working capital, such
as: payment of 13th salary, stock renewal, training and other.
Personal
loans/Payroll-deductible loans
They
are loans with a pre-approved limit to meet needs without a specific purpose. It also includes payroll-deductible loans to Social Security
National Service (INSS) pension plan beneficiaries and retirees, to public servants and to the private sector.
The
average term of these operations is 61 months and interest rates ranging from 1.6% to 3.1% p.m., as of December 31, 2023.
Rural
loans
The
provision of loans and financing to the Agribusiness sector is carried out with resources:
| · | From the demand deposit, where there is a requirement by the Central Bank of Brazil for the investment
of 30% of the Value Subject to Collection (VSR), which is called Obligatory Resources (RO), with maximum rates from 3.00% p.a. to 12.0%
p.a., as per the rule of investment of the Manual of Rural Credit (MCR). |
| · | The Bank’s own, from the Bank’s Treasury for the operations. |
| · | BNDES onlending, through lines directed to the sector of Agribusiness, destined for investments in equipment,
machinery, infrastructure, recovery of pasture, etc., with a term of up to 15 years. |
The
majority of loans have semiannual or annual payments with payment terms matched to periods of the harvest cycle. The guarantees are usually
with the disposal/mortgage of property and machines, the last one valid for the financing of goods in addition to agricultural or livestock
lien.
Operations
with Limits
Credit
card
We offer
a range of credit cards to our clients including Elo, American Express, Visa, MasterCard brands, and also the Private Label cards, which
stand out due to the extent of benefits and convenience offered to associates.
We earn
revenues from our credit card operations through:
| · | exchange fees on purchases carried out in commercial establishments; |
| · | interest on credit card balances; |
| · | interest and fees on cash withdrawals through ATMs; and |
| · | interest on cash advances to cover future payments owed to establishments that accept credit cards. |
We offer
our clients a complete line of credit cards and related services, including:
| · | credit cards for different audiences for purchases and withdrawals in Brazil and abroad; |
| |
14 – Reference Form – 2023 | |
| · | credit cards directed toward high-net-worth clients, such as “The Centurion Card Bradesco”,
“The Platinum Card”, “Visa Infinite”, “Mastercard Black”, “Elo Nanquim”, “Elo Diners”
and “Visa Aeternum” from Elo, Visa, American Express and MasterCard brands; |
| · | credit cards destined for corporate clients, geared for business expenses and control of expenditure; |
| · | multiple cards that combine credit and debit features in a single card, which may be used for traditional
banking transactions and shopping; |
| · | co-branded credit cards, which we offer through partnerships with companies; and |
| · | private label credit cards, which we only offer to clients of retailers, designed to increase business
and build client loyalty for the corresponding retailer, which may or may not have a restriction on making purchases elsewhere, among
others. |
We
hold 50.01% of the shares of Elopar, an investment holding company whose investments include Alelo (benefit and prepaid cards), Livelo
(coalition loyalty program) and participation in Elo Serviços (payment network). At Cielo S.A., a payment solutions company,
we have shared control and relevant participation.
We also
have a card business unit abroad, Bradescard Mexico, operating with exclusivity in store chains that are leaders in that country.
We have
several partners with whom we offer co-branded/hybrid and private label cards. This allows us to integrate our relationships with our
clients and offer by means of banking products, such as financing and insurance.
The
following table shows our volume of transactions and the total number of transactions of credit cards for the years indicated:
In millions |
2023 |
2022 |
Volume traded - R$ |
318,360.4 |
298,107.5 |
Number of transactions |
2,536.3 |
2,497.3 |
Overdraft
The
overdraft is an emergency revolving credit limit contracted and made available in the checking account that allows greater availability
of financial resources for withdrawals, transfers and honoring payments and other debits, whenever own resources are not sufficient.
Guaranteed
Account (Conta Garantida)
Conta garantida
is a revolving credit limit for companies and individuals to meet short-term needs. The limit of the conta garantida allows the negotiation
of more attractive rates. However, in most cases, it requires a guarantee which can be; a surety, disposal of assets, guarantees of contracts
or anticipation of receivables, and investments, among others.
Cash
Management Solutions
Management
of accounts payable and receivable – In order to meet the cash management needs of our clients in both public and private
sectors, we offer a broad portfolio of high-quality products and services of accounts payable and receivable, supported by our network
of branches, banking correspondents, digital channels and Bradesco App, all of which provided more speed, stability and security for client
data and transactions. Our solutions include receipt and payment services; and resource management, enabling our clients to pay suppliers,
salaries, and taxes and other levies to governmental or public entities.
These
solutions, which can also be customized, facilitate our clients’ day-to-day tasks and help to generate more business. We also earn
revenues from fees and investments related to collection, check custody, credit order, collection and payment processing services, and
by funds in transit received up to its availability to the related recipients.
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15 – Reference Form – 2023 | |
Our clients
have flexibility in making Pix transactions using the Mobile and Internet Banking, including options of Pix with loan. In addition, they
can also count on BIA (Bradesco’s Artificial Intelligence) on WhatsApp to make their transactions. In 2023, we recorded more than
5.5 billion transactions by Pix.
Solutions
for receipts and payments – In 2023, we settled 1.1 billion invoices through the services of Cobrança Bradesco and
500.7 million receipts by the tax collection systems and utility bills (such as water, electricity, telephone and gas), check custody
service, identified deposits and credit orders. The corporate systems processed 913.8 million documents related to payments to suppliers,
salaries and taxes.
Global
Cash Management – Global Cash Management aims at structuring solutions for foreign companies that
want to operate in the Brazilian markets and for Brazilian companies making business in the international market. By way of customized
solutions, partnerships with international banks and access to the Society for Worldwide Interbank Financial Telecommunication (SWIFT)
network, our exclusive client service team offers customized products and services to identify solutions for companies. Also, the
area of Global Cash Management centralized the receipt of all Formal Proposal Requests (RFP) of corporate clients, coordinating with the
other bank departments the development of technical and commercial proposals, as well as, the centralization of bids of public agencies
for cash management services.
Niche
Markets – We operate in various niche markets, such as franchise business, Individual
Microentrepreneur (MEI), education, health, condominiums, notary offices, and among others, where our clients have the support of a specialized
team with the mission of structuring custom solutions that add value to their business.
As an
example, the franchising niche has a team of franchising specialists that, through their relationship with franchising brands, identify
opportunities for financing and providing services to all franchisees and their employees. The partnership with the franchise networks
occurs through structured commercial activities in synergy with the managing departments, commercial segments, and affiliated companies.
The focus on the peculiarities of this sector creates a competitive and sustainable position by structuring appropriate solutions and,
in particular, through the strategy of providing differentiated and specialized services. We have approximately 600 agreements in place
with franchising companies, generating numerous opportunities to open new checking accounts and leveraging business with the respective
franchisees.
Another
important feature in this area is the support we provide towards the development of Local Production Groups (APLs), by providing service
to businesses and assistance to these clients. Participating in an APL strengthens the companies, because together they can form an articulated
and important group for local development, allowing for greater competitive and sustainable advantages for micro and small businesses.
Currently, Brazil has 839 Local Productive Arrangements (APLs) spread across 2,580 municipalities.
Microentrepreneurs
use the MEI Portal, including free services provided by partners to meet their day-to-day needs.
Public
authority solutions
We have
a specific area dedicated to serving public administration, which offers specialized services to identify business opportunities and structuring
customized solutions to entities and bodies of the Executive, Legislative and Judiciary branches at federal, state and municipal levels,
in addition to independent governmental agencies, public foundations, state-owned and mixed companies, the armed forces (army, navy and
air force) and the auxiliary forces (federal and state police forces).
Our
exclusive website, developed for our clients, offers corporate solutions for federal, state and municipal governments for payments, receipts,
human resources and treasury services.
Our
commercial relationships with such public authorities are developed by specialized business managers located in distribution platforms
throughout the country, which can be identified on our website. We have nine Specialized Platforms to assist governments, capitals, courts,
class councils, chambers, prosecutors, public defenders and the largest municipalities according to the Brazilian GDP, in addition to
31 Platforms that operate providing services to the City Halls and other Authorities.
| |
16 – Reference Form – 2023 | |
In 2023,
we took part and were successful in payroll bidding processes sponsored by the Brazilian government. Furthermore, according to INSS, we
continue to be leaders in payments of INSS benefits, with more than 11.7 million retirees and pensioners.
Management
and administration of third-party funds
We provide
fiduciary administration services to investments funds and managed portfolios, with regulatory responsibility for operation of investments
funds.
Bradesco
Asset also conducts the management of third-party resources, where it is responsible for investment decisions:
| · | FIDCs (Receivable Funds); |
| · | FIIs (Real Estate Investment Funds); |
| · | ETFs (Exchange Traded Funds); and |
| · | FIPs (Private Equity Investment Funds). |
Management
of funds and portfolios – On December 31, 2023, Bradesco Asset managed 1,785 funds and 448 portfolios, providing services
to 3.2 million investors. Among its biggest clients are those from the businesses we operate and Grupo Bradesco Seguros, in addition to
institutional investors in Brazil and abroad. These funds comprise a wide group of fixed-income, non-fixed income, investments abroad
and multimarket funds, among others.
In March
2024, the incorporation of Bradesco Asset Management Distribuidora de Títulos e Valores Mobiliários S.A. (Bradesco Asset)
was approved by us, in compliance with the provisions of article No. 227 of Law No. 6,404/76. This incorporation aims to promote the corporate
restructuring in order to optimize the organizational structure of the Bradesco Group, whereby we will be managing the securities portfolio
in the category of asset management, transferring all rights and obligations to Bradesco Asset.
| |
17 – Reference Form – 2023 | |
The
following tables show the equity of funds, portfolios under our management, the number of investors and the number of investment funds
and managed portfolios for each period:
|
|
R$ million (1) |
Distribution of the Shareholders' Equity |
2023 |
2022 |
Financial investment funds - Total |
659,218 |
569,226 |
Fixed Income |
596,287 |
495,149 |
Variable income |
15,752 |
14,526 |
Multimarket |
47,179 |
59,551 |
Managed Portfolios - Total |
85,955 |
81,147 |
Fixed Income |
83,687 |
72,932 |
Variable income |
2,268 |
8,216 |
Overall Total |
745,173 |
650,373 |
(1)
Source: ANBIMA. We present these amounts in order to give an indication of the scale of our fund activities. We generally earn administration
and/or management fees at a percentage of the equity amount of the fund.
|
2023 |
2022 |
|
Quantity |
Quotaholders |
Quantity |
Quotaholders |
Investment funds |
1,785 |
3,230,047 |
1,786 |
3,718,997 |
Managed Portfolios |
447 |
811 |
454 |
845 |
Overall Total |
2,232 |
3,230,858 |
2,240 |
3,719,842 |
Management
of third-party funds – On December 31, 2023, we provided administration service to 4,531 funds, 481 portfolios and 48 investment
clubs, providing services to 3.4 million investors.
The
following tables show the equity of funds and portfolios, which are under administration, the number of investors, investment funds, portfolios
and investment clubs for each period:
|
|
R$ million (1) |
Distribution of the Shareholders' Equity |
2023 |
2022 |
Financial investment funds - Total |
1,101,368 |
1,008,574 |
Fixed Income |
904,971 |
814,214 |
Variable income |
52,883 |
65,753 |
Third party share funds |
143,514 |
128,607 |
Managed Portfolios - Total |
91,143 |
93,581 |
Fixed Income |
75,617 |
72,932 |
Variable income |
10,339 |
8,216 |
Third party share funds |
5,188 |
12,434 |
Overall Total |
1,192,511 |
1,102,156 |
(1)
Amounts shown are funds of third parties and calculate by us (they are not derived from our fiscal statements). We present these amounts
in order to give an indication of the scale of our fund activities. We generally earn administration and/or management fees at a percentage
of the equity amount of the fund.
| |
18 – Reference Form – 2023 | |
|
2023 |
2022 |
|
Quantity |
Quotaholders |
Quantity |
Quotaholders |
Investment funds |
4,531 |
3,364,006 |
4,415 |
3,180,201 |
Managed Portfolios |
481 |
- |
486 |
- |
Investment Clubs |
48 |
330 |
48 |
359 |
Overall Total |
5,060 |
3,364,336 |
4,949 |
3,180,560 |
Services
related to capital markets and investment banking activities
As our
investment bank, Bradesco BBI is responsible for (i) originating and executing project financing operations; (ii) originating and executing
mergers and acquisitions; (iii) originating, structuring, syndicating and distributing fixed income securities in Brazil and abroad; and
(iv) originating, structuring, syndicating and distributing issuances of securities of equity in Brazil and abroad.
Bradesco
BBI conquered in 2023 the award for “Best Bank in Emerging Markets” by Global Finance.
In 2023,
Bradesco BBI advised clients in a total of 316 operations across a range of investment banking products, totaling R$350 billion.
Mergers
and acquisitions – Bradesco BBI provides advisory services in merger and acquisition and corporate sale transactions,
including the sale and purchase of companies and assets, private placements, creation of joint ventures, financial and corporate restructuring,
and privatizations. In 2023, Bradesco BBI advised 17 transactions disclosed totaling R$17 billion.
Equity
– Bradesco BBI coordinates public offerings of shares in national and international markets. In 2023, Bradesco BBI coordinated
12 operations totaling R$26 billion.
Fixed
income – Bradesco BBI coordinates public offerings of securities of fixed income in the local and international debt capital
markets. In 2023, Bradesco BBI coordinated a total of R$306 billion in the capital market and a total of 287 transactions. In Fixed Income,
we can highlight:
| · | Operations in the Local Market – Bradesco BBI ended the year in the local fixed income market
with the coordination of 147 transactions and involving a total amount of R$104 billion; |
| · | Project finance – Bradesco BBI acts as advisor and structuring agent in the areas
of “Project” and “Corporate Finance”, seeking to optimize financing solutions for projects across various industries
through both credit and capital markets operations. In 2023, Bradesco BBI advised 92 structured operations for different clients, totaling
R$75 billion; |
| · | Structured operations – Bradesco BBI structures customized financial solutions for its clients
in terms of their needs such as: investments, acquisitions, corporate reorganization, share repurchase, improved financial ratios, capital
structure streamlining, and assets and risk segregation, by offering a number of funding tools to companies. Additionally, Bradesco BBI
has a strong presence in the acquisition finance segment. In 2023, Bradesco BBI advised 29 structured operations for different clients,
with a total amount of R$24 billion; and |
| · | Operations in the International Market – Bradesco BBI also featured in the international
capital market, coordinated 19 transactions with an amount of R$104 billion. |
Investment
Advisory
We offer
to the clients differentiated investment advisory services, remotely and personally, contemplating the products of Bradesco Asset, Ágora
Investimentos, Treasury and the entire portfolio of Bradesco Previdência (Pension), considering the moment of life, objectives and
profile of the client regarding their tolerance to risk. The client benefits also from recommended portfolios, combining a variety of
financial products, prepared monthly based on their profile and on the perspectives of the domestic and international markets. Besides
counting on the assistance of the managers from the branch network, we have a team of investment specialists, who are ready to assist
our clients by online chat on Internet Banking or on the Bradesco App and by telephone
in our call centers.
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19 – Reference Form – 2023 | |
Intermediation
and trading services
Ágora
Investimentos
Ágora
– Banco Bradesco’s official Brokerage – is a complete, open and independent investment platform that prioritizes the
journey and experience of the investor, it aggregates technology and innovation, as well as financial education, quality content and advice
for all its clients. It is dedicated to the care of non-institutional individuals and legal entities, whether Bradesco account holders
or not. Through the website or App, the client finds a modern Home Broker, its asset trading platform on B3 and a select portfolio of
investments that is offered from a careful selection among the most relevant institutions in the market, providing the best opportunities
in fixed income, investment funds, COEs, LIGs, public offers and private pension, including with access to investments abroad; all in
one place, 24 hours a day, via the website or Ágora App.
To assist
in making decisions when investing, on Ágora Insights, the house clients have at their disposal recommendations, reports, analyses,
live streams during the trading session and podcasts, as well as greater coverage of companies listed on the stock exchange, with content
prepared by the team of renowned economists and market analysts. And if necessary, in Ágora whatever the profile, the client has
a team of specialists who understand the subject when it comes to investing, finding the best opportunities according to the objectives.
In addition
to the complete grid of investment products, the Ágora client has exclusive programs and services for their day-to-day life, such
as the Ágora Visa Infinite credit card, with 1% investment and several advantages, exclusive benefits such as toll tag and car
parking with no fees, in partnership with Veloe and the Ágora Plus Program, which brings discount coupons and cashback in several
partner stores.
In the
pillar of financial education, through the Ágora Academy, we offer more than 90 courses, 50 of which are totally free. All developed
by the best business schools in the country: for those who want to learn, specialize and even professionalize in the market.
Young
people and university students can start their investment journey through special programs with Ágora Kids and Universitário.
Market professionals have modern and advanced asset trading platforms, by Ágora Trader.
In December
2023, it reached 1.0 million clients, with a total of R$96.9 billion assets in custody, occupying the fourth position in the Ranking of
Custody of Individuals of B3, the result of the focus on the journey and experience of the investor, through technology and innovation,
as well as dissemination of financial education, quality content and specialized advice to all its clients.
Bradesco
Corretora
Bradesco
S.A. CTVM, or Bradesco Corretora, provides services exclusively to the institutional segment, offering a full service of investment analysis
that covers the main industries and companies in the Latin American market, with a team composed of 29 sector specialists who provide
consultations to the clients by follow-up reports and stock guides, with a wide range of projections and comparison multiples. Bradesco
Corretora also has teams of its own capital economists and fixed income analysts dedicated to institutional clients. Over 360 reports,
in English and Portuguese, are forwarded on a monthly basis to the most important investors around the world, such as those domiciled
in Brazil, the United States, Europe and Asia.
Bradesco
Corretora has as its objective the mediation of the purchase and sale of shares, commodities futures contracts, financial assets, indexes,
options, share rental, swaps and forward contracts, in the primary and secondary market, negotiations in B3 and in the organized over-the-counter
market, which are tailored to the needs of large corporate and institutional investors.
Regarding
B3 variable income markets in 2023, Bradesco Corretora traded R$506.0 billion and ranked second in Brazil in terms of the total trading
revenue and third considering revenue from global investors, according to MacLagan.
In
addition, in the same period, Bradesco Corretora traded 1.6 billion futures, forwards, swaps and options totaling R$43.6 trillion in
B3. In 2023, it ranked third in the Brazilian markets, in relation to the number of futures contracts, terms, swaps and options executed.
| |
20 – Reference Form – 2023 | |
Bradesco
Corretora remains adherent to the Operational Qualifying Program (PQO), confirming the high quality of its futures contracts and variable
income markets.
Capital
markets solutions
In 2023,
we were one of the main providers of capital market services and we maintained our leadership position in the domestic and global market
according to the ANBIMA’s ranking of custody of assets.
Among
the main services we offer in this segment, we highlight: qualified custody of securities for investors and issuers, administrators of
investment funds, clubs and managed portfolios; bookkeeping of securities (shares, BDRs, quotas of investment funds, CRIs and debentures);
custody of shares backed by Depositary Receipts (DR), loan of shares, liquidating bank, depositary (Escrow Account – Trustee), clearing
agent, tax and legal representation for non-resident investors, and fiduciary management for investment funds.
Bradesco
Custódia has Quality Management System ISO 9001:2015 certifications and GoodPriv@cy certifications. We also hold an ISAE 3402 (International
Standard on Assurance Engagements) certification, which includes the issuance of the Control Assurance report in a Service Provider Organization.
These certifications expand our structures of controls, increasing the level of effectiveness and quality of processes.
As of
December 31, 2023, the set of the services provided by us, which we call Bradesco Custódia was composed of:
| · | Custody and controllership services for investment funds and managed portfolios involving: |
- R$2.3
trillion in assets under custody;
- R$3.6
trillion in assets under controllership; and
- R$252.5
billion in market value, related to 50 ADR (American Depositary Receipts) programs and 4 GDR (Global Depositary Receipts) programs.
| · | Fiduciary administration for funds, investment clubs and portfolios under management with: |
- R$1.1
trillion total shareholders’ equity of investment funds under fiduciary management in investment funds, portfolios and investment
clubs.
- 237
member companies of the Bradesco Book-entry Stock System, with 10.5 million shareholders;
- 454
companies with 785 issues in the Bradesco Book-Entry Debenture System, with a market value of R$773.4 billion;
- 1,114
investment funds in the Bradesco Book-Entry Quotas System (value of R$97.7 billion); and
- 44
BDRs programs managed, with a market value of R$11.0 billion.
| · | Depositary (Escrow Account – Trustee): |
- 31,285
contracts, with a financial volume of R$18.0 billion.
International
presence
In the
quality of private commercial bank, we offer an extensive line of international services, including to foreign trade financing and loans,
working capital in foreign currencies, forex operations and international sureties, credit lines for individuals and legal entities, on
our Corporate banking activity platforms and Global Private banking. The services provided to multinational companies is materialized
both in the support to foreign multinationals operating in Brazil or Brazilian multinationals operating abroad, both in their operations
as the main link of communication between prospective Multinational clients and Bradesco Brasil.
In October
2020, we concluded the acquisition of Bradesco Bank and its subsidiaries to offer a complete platform of banking and investments products
and services also in the United States.
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21 – Reference Form – 2023 | |
The
International and Forex area, in Brazil and Abroad, coordinates our international operations, through a team of specialists in forex and
foreign trade business, offering technical support to our clients and to the Retail and Wholesale Sectors, for the products of forex,
Trade Finance (for export and import financing), financial transfers and Direct Loans Abroad. We also have a specialized team in structured
operations (syndicated loans, club deals, risk participations, bridge facilities, among other) and International Sureties, besides Digital
Forex, a team dedicated to meet the needs of clients that use our digital channels (Net Empresa, mobile and internet banking) to purchase
all-purpose off the shelf forex operations.
Foreign
branches and subsidiaries
Our
foreign branches and subsidiaries principally provide financing in foreign currency (particularly foreign trade finance operations) to
Brazilian and non-Brazilian clients. Total assets of the foreign branches, considering the elimination of intra-group transactions, were
R$35.0 billion, as of December 31, 2023, denominated in currencies other than the real.
Funding
required for the financing of Brazilian foreign trade is primarily obtained from the international financial community, through credit
lines granted by correspondent banks abroad. We issued debt securities in international capital markets, which amounted to US$1.6 billion
during 2023 and funding transactions amounted to US$2.6 billion, as an additional source of funding.
The
following is a brief description of our subsidiaries abroad:
Cidade
Capital Markets – In February 2002, we acquired Cidade Capital Markets in Grand Cayman, through to the acquisition of its parent
company in Brazil, Banco Cidade.
Bradesco
Securities (U.S., U.K. and H.K.) – Bradesco Securities, our wholly-owned subsidiary, is a broker dealer in the United States,
England and Hong Kong:
| · | Bradesco Securities U.S. focuses on facilitating the intermediation of operations of fixed income and
variable income of Brazilian companies for global institutional investors; raising of short-term funds, placement of Equity Capital Market
(ECM) and Debt Capital Market (DCM) operations, distribution of research reports and corporate access services; |
| · | Bradesco Securities U.K. focuses on the intermediation of equities and fixed income operations for Brazilian
companies with global institutional investors; short-term fund-raising activities for us in Euro Certificate of Deposit (Euro CD) program
and Global Medium-Term Note program (MTN); and sale of research reports and services of corporate access by subscriptions to institutional
investors in Europe; and the sale of variable-income and fixed-income regional transactions to European institutional investors (IPOs,
secondary public offerings, etc.); and |
| · | Bradesco Securities H.K. focuses on the trading of ADRs and public and private securities issued by Brazilian
companies to global institutional investors. |
Bradesco
Trade Services – A non-financial institution and a subsidiary of our branch in the Cayman Islands, which we incorporated in
Hong Kong in January 2007, in partnership with the local Standard Chartered Bank.
Bradescard
Mexico – The business unit of credit card issuance.
Bradesco
Bank – Commercial bank in the United States with deposits guaranteed by the FDIC, providing banking products and services to
resident and non-resident individuals, and corporate and institutional clients.
Bradesco
Investments – Broker dealer that offers a complete and open platform of investments for Private, high-income, corporate and
institutional clients.
Bradesco
Global Advisors – Investment advisory firm that manages discretionary and non-discretionary portfolios for Private and high-income
clients.
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22 – Reference Form – 2023 | |
Banking
operations in the United States
In January
2004, the United States Federal Reserve Bank authorized us to operate as a financial holding company in the United States. As a result,
we may do business in the United States directly or through a subsidiary and, among other activities, may sell insurance products and
certificates of deposit, provide underwriting services, act as advisors on private placements, provide portfolio management and merchant
banking services and manage mutual fund portfolios.
Bradesco
Bank is positioned to meet the demands of Brazilian and Latin American clients who wish to diversify their assets in the global market
by offering investment, banking and financing solutions.
Foreign
exchange products
In addition
to import and export financing, our clients have access to a range of services and foreign exchange products such as:
| · | foreign loans to clients; |
| · | WEB and mobile exchange contracts; |
| · | collecting import and export receivables; |
| · | cross border money transfers; |
| · | advance payment for exports; |
| · | accounts abroad in foreign currency; |
| · | non-resident account in Brazil in national currency; |
| · | cash holding in other countries; |
| · | structured foreign currency transactions; through our overseas units; |
| · | service agreements – receiving funds from individuals abroad via money orders; |
| · | global account in US dollars (individuals); |
| · | purchasing and selling of currency paper; |
| · | cashing checks denominated in foreign currency; and |
| · | clearance certificate (international financial capacity certificate). |
Consortia
In Brazil,
persons or entities that wish to purchase certain goods may set up a group known as a “consortium”. Consortia in Brazil are
made up of pooled funds for the purpose of financing an acquisition. Consortia groups, which are formed for the purchase of real estate,
vehicles, motorcycles, trucks and other assets, have a fixed term and quota, both previously determined by its members and are run by
an administrator.
Bradesco
Consórcios manages groups of consortia and, as of December 31, 2023, registered total sales of 1,531,419 outstanding quotas; net
income of R$2.0 billion; and fee and commission income from consortiums of R$2.3 billion and accrued revenue of R$101.6 billion.
Insurance
products and services, pension plans and capitalization bonds
We offer
insurance products, pension plans and capitalization bonds through different segments, which we refer to collectively as Grupo Bradesco
Seguros.
With
the objective of meeting the needs of each client, we offer a range of products and services, such as:
| |
23 – Reference Form – 2023 | |
Life
and personal accident insurance
We offer
life and personal accident insurance, as well as insurance against miscellaneous events, such as job loss, through our subsidiary Bradesco
Vida e Previdência. As of December 31, 2023, there were 25.3 million life insurance policyholders.
Health
insurance
The
health insurance policies cover medical/hospital expenses. We offer health insurance policies through Bradesco Saúde for small,
medium or large enterprises wishing to provide benefits for their employees.
On December
31, 2023, Bradesco Saúde and its subsidiary Mediservice Administradora de Planos de Saúde S.A., along with Bradesco Saúde
Operadora de Planos S.A., had 3.8 million beneficiaries covered by company plans and individual/family plans. Around 173 thousand companies
in Brazil pay into plans provided by Bradesco Saúde and its subsidiaries, including 47 of the 100 largest companies in the country.
As of
December 31, 2023, it included 11,544 laboratories, 18,804 specialized clinics, 15,470 physicians and 2,157 hospitals located throughout
the country.
Automobiles,
property/casualty and liability insurance
We offer
car insurance with flexible options according to the client’s profile, through our subsidiary Bradesco Auto/RE. The “Auto
Light Rede Referenciada Insurance” is more affordable (vehicle insurance), while “Auto Lar” covers both the vehicle
and the residence. There are also options for fleets and account holders of Banco Bradesco. We cover damages caused to the vehicle, passengers
and third parties, with several additional options for purchase, as well as discounts on establishments and a complete Bradesco Seguros
App to facilitate the management.
The
insurance of retail property and casualty include protection for residential, business, condos and
equipment risks, with customized coverage according to the needs of each business or residence. We highlight the “Lar Mais Seguro”
(Safer Home) and the “Residencial Sob Medida” (Customized Home Insurance) for individuals, and “Bradesco Seguro
Equipamento” (Equipment Insurance) for individuals and legal entities, with full coverage for various sectors, such as agricultural,
civil construction, medical, musical, portable electrical and electronic devices and forestry.
As of
December 31, 2023, Bradesco Auto/RE had 1.5 million insured automobiles and 1.5 million property policies, making it one of Brazil’s
main insurance companies.
Capitalization
bonds
Bradesco
Capitalização is market leader in income among the companies of the sector, with a market share of 21.1% according to data
from SUSEP in 2023. Our clients can purchase capitalization bonds with a single or monthly payment from R$10 and run for prizes whose
net amounts can reach up to R$1.5 million.
In
December 2023, we had 3.1 million active clients and 19.2 million capitalization bonds, whereby 8.2 million were in the traditional
modality and 11.0 million were incentive bonds.
The traditional
modality is the most representative of our operation, where the client saves money and can win prizes as a tool of financial regulation.
At the end of the plan the amount paid is 100% of the amount paid restated by the TR.
In the
modality of incentive, the aim of the securities is to add value to the products of partner companies or even encourage the prompt payment
of their clients. In these cases, the securities have terms, grace periods and amounts according to the need of the partners.
In line
with the diversification of our portfolio, in 2023 we launched 5 more products.
| · | where the client invests R$5 thousand or R$10 thousand at a time and can win over 20 monthly prizes up
to R$400 thousand and can still be used as a loan operation guarantee; |
| · | Novo Max Prêmios Cem, where the client invests R$100 at a time and participates in 324 draws
of up to R$10,000 during the month; |
| |
24 – Reference Form – 2023 | |
| · | Max Prêmios MEI, for the Retail Companies from R$500 with prize draws of up to R$1 million; |
| · | Max Prêmios Instantâneos in the version of single and monthly payment, from R$10, where the
client on purchasing a security receives a digital “scratch” card on the App and can check whether they have won the instant
prize draw; and |
| · | Max Natal Bradesco (at Christmas) which with only R$100 has handed out prizes to 162 clients amounting
to more than R$1.3 million. The first product with a mandatory contemplation. |
Maintaining
the focus of Bradesco Capitalização on actions promoting sustainability and the constant search for dematerialization and
digitalization of their services, were made available to non-account holders on the Bradesco Seguros App the possibility of checking statements
and securities, as well as certificates, income tax earnings report and information regarding draws, like results and lucky numbers. Currently
the quantity of securities sold to the individual client in the digital channels represents 40% of the total of securities.
Supplementary
Pension plans
We have
managed individual and corporate pension plans since 1981 through our wholly-owned subsidiary Bradesco Vida e Previdência, which
is now one of the leading pension plans managers in Brazil, as measured by investment portfolio and technical provision criteria, based
on information published by FENAPREVI and SUSEP.
Bradesco
Vida e Previdência offers and manages a range of individual and group pension plans. Our largest individual plans in terms of contributions
known as VGBL and PGBL are exempted from paying taxes on income generated by the fund portfolio. The participants of these funds are taxed
upon the redemption of quotas, and/or receipt of benefits.
As of
December 31, 2023, Bradesco Vida e Previdência accounted for 23.0% of the supplementary pension plans in terms of contributions,
according to SUSEP, in 2023. On December 31, 2023, Bradesco Vida e Previdência accounted for 21.8% of assets under management: 20.9%
of VGBL, 20.6% of PGBL and 40.3% of traditional pension plans, according to FENAPREVI, in 2023.
Brazilian
law currently permits the existence of both “open” and “closed” private pension entities. Open private pension
entities are those available to all individuals and legal entities wishing to join a benefit plan by making regular contributions. Closed
supplementary pension plan entities are those available to discrete groups of people such as employees of a specific company or a group
of companies in the same sector, professionals in the same field, or members of a union. Private pension entities grant benefits on the
basis of periodic contributions from their members, or their employers, or both.
As of
December 31, 2023, we managed open supplementary pension plans covering 2.9 million participants, with a total balance of R$304 billion
in collateral assets.
Under
VGBL and PGBL plans rules, participants are allowed to make contributions either in installments or in lump-sum payments. Participants
in pension plans may deduct the amounts contributed to PGBL up to 12.0% of the participant’s taxable income when making their annual
tax declaration. At the time of redemption and/or when benefits are paid out, taxes will be levied on the income accrued, pursuant to
current legislation, in relation to the total redeemed/received as benefit. VGBL plan participants may not deduct their contributions
when declaring income tax. At the time of redemption and/or when benefits are paid out, taxes will be levied on the income accrued, pursuant
to current legislation.
These
plans can be contracted either individually as well as in business plans. Individual plans represent 55.1% and business plans 44.9% of
the total number of participants. The business plans account for 14.7% and Individual for 85.3% of the technical provisions.
The
plans being commercialized allow contribution, portability, redemption and conversion into income.
Bradesco
Vida e Previdência also offers pension plans for corporate clients that are in most cases negotiated and adapted to the specific
needs of this type of client.
Bradesco
Vida e Previdência earns revenues primarily from:
| |
25 – Reference Form – 2023 | |
| · | supplementary pension plan contributions, PGBL and VGBL, life insurance and personal accidents premiums; |
| · | revenues from management fees charged to pension plan participants in accordance with mathematical provisions;
and |
| b) | Characteristics of the distribution process |
Distribution
channels
The
following table presents our main distribution channels in the period stated:
|
|
|
|
Structural Information - Units |
2023 |
2022 |
Service Points |
83,147 |
85,609 |
|
- Branches |
2,695 |
2,864 |
|
- Service Centers |
3,351 |
3,524 |
|
- Electronic Service Centers |
522 |
645 |
|
- Business Units |
820 |
897 |
|
- Banco24Horas Network |
17,967 |
17,449 |
|
- Bradesco Expresso (Banking Correspondents) |
38,264 |
40,456 |
|
- Bradesco Promotora |
19,514 |
19,759 |
|
- Branches/Overseas Subsidiaries |
14 |
15 |
ATMs |
43,768 |
46,562 |
|
- Bradesco Network |
19,582 |
22,163 |
|
- Banco24Horas Network |
24,186 |
24,399 |
Distribution
channels of insurance products, pension plans and capitalization bonds
We sell
our insurance, pension plan and capitalization products through our website, our branches, brokers based in our network of bank branches
and non-exclusive brokers throughout Brazil, all of whom are compensated on a commission basis. Our capitalization bonds are offered through
our branches, the Internet, our call center, ATMs and external distribution channels.
The
following table shows the distribution of sales of these products through our branches and outside our branches:
% of total sales, per product |
2023 |
2022 |
Insurance products: |
|
|
Sales through branches |
33.9% |
37.1% |
Sales outside branches |
66.1% |
62.9% |
Supplementary pension plans products: |
|
|
Sales through branches |
89.2% |
87.1% |
Sales outside branches |
10.8% |
12.9% |
Capitalization bonds: |
|
|
Sales through branches |
63.8% |
71.0% |
Sales outside branches |
36.2% |
29.0% |
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26 – Reference Form – 2023 | |
Partnerships
with retail companies – Bradesco Expresso
“Bradesco
Expresso” enables us to expand our share of the correspondent bank segment through partnerships with supermarkets, drugstores, grocery
stores, department stores and other retail chains. These companies provide basic banking services offered by employees of the establishments
themselves, while decisions regarding granting of credit or opening of accounts are made by us.
The
main services we offer through Bradesco Expresso are:
·
receipt and submission of account application form;
·
receipt and submission of loans, financing and credit card application form;
·
withdrawals from checking account and savings account;
·
Social Security National Service (INSS) benefit payments;
·
checking account, savings account and INSS balance statement;
·
receipt of utility bills, bank charges and taxes; and
·
prepaid mobile recharge.
As of
December 31, 2023, the Bradesco Expresso network totaled 38,264 service points, with an average of 32.4 million monthly transactions or
1.5 million transactions per business day.
Digital
Channels
We offer
various products and services through our mobile App, internet banking, ATM, and contact center digital channels. They can be accessed
from anywhere and at any time, with the aim of taking convenience, practicality and security for clients. In 2023, digital channels represented
over 98% of the transactions performed at Bradesco, highlighting the mobile and internet banking, which represented 94% of this total.
Below
is a brief description of each digital channel:
Mobile
App – at the end of December 2023, we have 25.9 million active natural person clients (accounts who carried out transactions
in the last three months). Comparing against December 2021, this number total an increase of 4.2 million clients in the channel. We believe
in the consolidation and continuous growth of mobile channel in the coming years.
Currently,
we have a broad and diversified set of solutions. Available for iOS and Android systems, this channel is used by clients to make payments,
transfers, purchase loans, consortia, carry out foreign exchange operations, access non-financial benefits, among other services. They
also take advantage of integration with the Ágora app, our investment platform. With it, clients receive tips, market news and
expert reviews through the “single sign on”.
Corporate
clients use the Bradesco Net Empresa app for their banking operations, such as payments, transfers, Pix, DOC/TED, check deposits, factoring
of receivables, purchase of loans, among other transactions. The convenience of the App on the cell phone encompasses the full online
contracting of the instant QR Code for cash terminals (TEF), POS and e-commerce.
In 2023,
individuals and legal entity clients made 20.5 billion transactions by mobile phone.
BIA
– the proximity to the client is increasingly relevant, as well as the customization of the service. Thinking about continuing the
customer experience, we invest in research and technologies that also include pioneering solutions. This is the case of BIA, Bradesco’s
artificial intelligence launched in 2016. Initially established for branch employees throughout Brazil, BIA matured until it began to
interact with clients through the Bradesco app and through other channels. The evolutions continue and BIA becomes increasingly a customer
concierge, acting in a resolute and agile way.
BIA
presents itself as one of the main channels of relationship with clients and non-clients. Present in Bradesco’s digital channels
and on the WhatsApp messaging app, BIA ensures mobility and helps clients
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27 – Reference Form – 2023 | |
digitally wherever they
are. Among its features in the messaging app, for example, BIA interacts with the client in cases of suspected credit card and Pix fraud.
On the Bradesco app, clients can also make transfers between Bradesco accounts by voice or text, in addition to clarifying doubts about
the bank’s products and services.
Inspired
by the movement “Hey, update my voice”, of UNESCO, we changed the answers of BIA so that she can react fairly and firmly against
harassment. We will continue to make investments focused on its evolution, expanding her skills with resources that help clients organize
their financial flow and improve her communication capacity to provide an increasingly intuitive and intelligent experience.
Internet
– We were the first financial institution in Brazil to have an e-mail address on the Internet, beginning in 1996. We provide individuals
clients access to financial services on Bradesco Internet Banking, a solution that has transformed the relationship between clients and
the financial market, and that continues to be an important source of information and transactions.
With
the 27th anniversary on March 31, 2023, Bradesco Internet Banking continues to evolve. With its own domain (banco.bradesco), the Organization
is one of the few Brazilian companies to have a top-level domain or generic top-level domains (gTLDs) – an initiative of the ICANN
(Internet Corporation for Assigned Names and Numbers), the body responsible for internet protocols, which regulates the addresses on the
worldwide web.
This
communication platform is divided into two main pillars, which are:
| · | Bradesco Institutional Website (banco.bradesco): with simplified content and plain language, offers
to Individual clients access to information and clarifications on various financial products and services, with the support of tutorials
in videos that facilitate the understanding, in addition to the features that help in the client’s day-to-day activities, like issuing
the copy of the bank payment slip. Also available on the homepage of the portal, the online purchase of products of the Organization and
of partners, such as cards, consortium, Losango, Cielo, among others, also serving clients who do not have a checking account. |
| · | Bradesco Internet Banking for Financial Services: with more than 500 services and products available,
individual clients can use the channel to check statements, make payments, transfers, Pix, investments and much more. |
The new
visual concept of the channel is more modern and technological, presenting facilities, such as customizing the distribution of services
on the homepage according to each client’s preference. In addition, it has relevant information of the investment portfolio, with
the possibility of customized tips and viewing of credit card limits and real-time purchases, and gives the client even more autonomy
using the transaction limit manager.
On Bradesco
Net Empresa, the corporate client can make queries, transfers, Pix, investments, file submission, among other transactions, all in a simple
and secure manner. We also emphasize that the MEI Digital Platform delivers to the individual micro-entrepreneurs, financial and non-financial
services by means of partners that meet their main needs.
In 2023,
the individual and legal entity clients made 4.8 billion transactions using Bradesco Internet Banking.
ATM
– Focused on innovation, evolution and availability, the ATM machines are available to facilitate the daily lives of
our clients, offering them capillarity and intuitive journeys.
Currently
there are over 43 thousand active machines, distributed among Bradesco’s Own Network (19,582) and Shared Network – Banco24Horas
(24,186). All of our machines are equipped with biometric reading, bringing more security and convenience for cardless transactions.
Our machine
park also has recycling machines, to increase efficiency and reduce costs, due to not requiring the use of envelopes. Currently, there
are 8,520 machines that recycle bank notes, which enables the cash deposit with immediate credit in the account of the beneficiary. The
functions of the channel also contribute towards sustainability as well as sending the receipts by email. Since 2022, the cash deposit
without the envelope was also enabled on the 3,635 recycling machines of the Banco24Horas.
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28 – Reference Form – 2023 | |
Thinking
of the experience of our clients, we also have disruptive functions, like the purchase of dollars and euros (with more than 115 machines)
- foreign exchange of 2 currencies in a single machine - with representative participations in the Forex operations. In 2021, we also
implanted the Virtual Safe, in which the client has autonomy to purchase a foreign currency by the Bradesco App and retrieve them in the
BDNs.
In addition,
since 2020, the proxies have had more autonomy in individual client transactions, with the possibility of access to the self-service machines,
where they can conduct transactions intuitively and securely by biometric registration and a PIN number with 6 exclusive digits. The project
won the Prêmio Smart2023 award.
Telephone
services – Fone Fácil (Contact Center) – We allow clients to bank by telephone, which can be accessed by
choosing an electronic service or personalized service.
In the
electronic service, we provide a sophisticated service system powered by voice command, which provides clients the experience of doing
what they want to do through simple voice commands, without the need for listening to various service options and having to choose them
by typing the option on the telephone. The client can request the desired service and proceed directly to its execution, choosing the
preferred option.
Through
this channel, we offer our main financial services, such as payments, transfers between Bradesco accounts, TED, investments, loan contracting,
among others.
By calling
Fone Fácil, clients can access other relationship centers, such as for credit cards, private pension plans, capitalization and
support for internet banking and mobile, among others.
Social
networks – we are innovators and pioneers in social networks, operating in them since 2009 and becoming a market reference.
The focus is on communication, relationship, content creation and business activation. The Social Networks team monitors, analyzes and
interacts with people who seek us or mention our brand, relying on the participation of segments, managers and branches to resolve demands.
This work strengthens the relationship with people and protects the Organization. The team is also responsible for answering doubts, complaints,
suggestions and conducting relationship interactions with the user.
The
tables below show the number of transactions carried out through digital channels, and the number of digital clients:
In millions of transactions |
2023 |
2022 |
Mobile Individuals and Companies+ WhatsApp |
20,461 |
19,684 |
Internet Individuals + Companies – with WebTA (1) |
4,810 |
4,701 |
ATMs |
1,052 |
1,246 |
Direct Debit |
158 |
159 |
Telephone Banking (Fone Fácil) |
31 |
43 |
Total |
26,514 |
25,833 |
(1)
WebTA its a file transmission service to Bradesco via Internet, carried out by Corporate clients, who use the Net Empresa channel.
|
2023 |
2022 |
Clients with Digital Profile - In million |
28.0 |
26.4 |
next
Created
in 2017 as a digital platform focused on the hyperconnected generation, next seeks to simplify the life of people, offering solutions
to facilitate the financial management and be a partner so that clients may achieve their dreams and objectives.
next
has a portfolio of solutions that include various services, both financial and non-financial, which was researched based on clients and
non-clients.
| |
29 – Reference Form – 2023 | |
In addition
to the checking account and credit and debit card, it offers a variety of investments and loans, insurance, financial management tools,
salary account, a dedicated account for children and teens (nextJoy), cell phone top up, gift card, toll and parking tag (Veloe), and
benefits in partnership with more than 35 brands on the Mimos (gratuities) hub and integration with the Apple Pay, Google Pay, Samsung
Pay and WhatsApp Pay digital wallets.
In Open
Finance, next counts on the function “Minhas Finanças” (My Finances), aggregating accounts so clients can check, in
a single place, their checking account information, credit cards and loans in several institutions participating in the system, besides
recommendations and personalized tips for clients to better manage their finances.
The
focus of next is customer-centricity, investing continuously in the analysis and intelligence of data to identify trends and behaviors,
anticipating the creation of new services and suggestions. Also, it uses anthropological studies to understand trends and anticipate the
needs of clients. The more modern solutions of Design and User Experience, combined with the feedback in all points of contact, are essential
elements to provide the best experience and listen actively to the demands.
next
establishes goals aiming at a sustainable growth, the quality of the services and actual indices of satisfaction and engagement in
the use of the platform. As a result of the actions implemented, seeking the concern and loyalty of the client, it ended 2023 with an
increase of 15% in the volume of active clients compared to the same period in 2022, processing 800 million financial transactions that
represent 24% of growth compared to the previous year.
Digio
Digio
is a multiple digital bank created in 2016. The portfolio of bank products includes the credit card, payroll-deductible loans (INSS and
advanced birthday withdrawal of the FGTS), personal loan and 100% digital payment account. Digio has as the objective is to increase the
engagement by cross-selling the Digio products and Bradesco products through the APIs, delivering the experience of a fully digital bank.
Digio works to become one of the best platforms of financial products and services in Latin America, providing a simple, fast and secure
experience.
Digio
closed the year of 2023 with 7.0 million total accounts, recording a growth of 38% over the same period in 2022 and a total portfolio
of R$6.2 billion with growth of 50% in the year. The excellence in customer service provided by Digio is recognized by the clients in
the App stores (iOS and Android) and in Reclame Aqui, with an excellent assessment rate of 8.2 and the RA1000 seal.
inovabra
Our
aim is to create opportunities for personal achievement and the sustainable development of companies and society. We believe that we can
improve the experience of our clients through innovation. This way, we create an ecosystem of innovation capable of supporting and inspiring
the institution, creating paths and conditions that place the financial and non-financial products at the forefront.
We work
on three fronts:
| · | Expediting the introduction of new features or improvements to existing products; |
| · | Encouraging new products and services within existing businesses; and |
| · | Exploring, indicating and experimenting with emerging technologies. |
To
meet the challenges of these three areas inovabra works together with the business areas to establish priorities and develop a
portfolio of initiatives and to ensure the competitiveness of business in the long-term. inovabra has the following channels of corporate
innovation:
| · | Strategy
and portfolio: team of innovation partners that works consultatively in the discussion of priorities according to the strategic drivers
of the domains and areas of business, supporting in promoting initiatives from the stage of conception, process of case construction,
validation of the business model, experimentation and scaling of the project under production. The objective is to generate innovative
solutions to provide better experiences to our clients, optimize existing products and services, expand to adjacent business and increase
the share in new markets. |
| |
30 – Reference Form – 2023 | |
| · | R&D – Multi-disciplinary
research team: constantly interacting with partners, universities and research institutes in Brazil and abroad, bringing new knowledge
on emerging technologies, evolution of the market, proposals of new business models, efficiency improvements, development of pilot projects
and experimentations. Among the topics discussed, there are onboard finance, Artificial Intelligence, Tokenized Economy (Blockchain, Decentralized
Finances, CBDCs, Digital Assets), Quantic Computing, Metaverse, Web3, ESG, besides new business models, open finance, ecosystems, and
hyper-personalization, among others. |
| · | Open Innovation: in an
environment of physical and digital co-innovation, large companies, startups, investors and consultants work together to accelerate innovation
and foment entrepreneurship through the generation of business to the community and for us. The environment counts on more than 200 startups,
who work with emerging technologies, and 50 large companies that seek innovative solutions. In addition, it tends to cooperate with the
country seeking a position of greater leadership in global innovation. To complement the performance, the co-innovation environment establishes
partnership with 8 innovation centers: Porto Digital, Gyntec, Artemisia, Nexus, ACATE, Hotmilk, Hospital do Amor and Manaus Tech
Hub – Sidia) to increase opportunities for members and for us. |
| · | Unified and collaborative
laboratory: centralizes our technology areas and large tech partners, with a safe environment for testing frontier technologies. The
model provides operational efficiency in innovation, prototyping and product design, experimentation of new solutions with startups and
big techs, proof of concept, launches and solutions of new challenges. Our laboratory also has a Sandbox that allows the test of solutions
simulating our core banking, which guarantees more accurate experimentations reducing integration uncertainties and the time-to-market
of innovation. |
| · | Corporate venture (inovabra
ventures): proprietary capital fund for strategic investments in startups and high-growth companies that have innovative technologies
and/or business models. The fund is controlled by the area of Private Equity & Venture Capital and it actively contributes to the
generation of value in the companies especially when they involve solutions that meet the needs of our clients. |
| · | Culture program: initiative
to develop a culture that drives and rewards innovation within the Bradesco Organization. With the program we generate repertoire through
three pillars: |
o
Empower: inspire and empower our employees on emerging
technologies, facilitation tools and innovation themes;
o
Engage: connect a community of intrapreneurs, increasing
the exchange of knowledge, experiences and causing change at all levels; and
o
Realize: materialization of culture in the form
of challenges, experiments and metrics of results and innovation behavior.
The program
includes initiatives for influencers (select group with representatives from various areas of the bank, which are the catalysts for innovation
in their departments), for executives and all employees of the Organization. In the 2023/2024 cycle, 217 influencers have participated
in the program, representing 70% of our areas.
| · | inovabra results for 2023: |
| o | 62 experiments, 20 of which include
new technologies; |
| o | 374 certifications between software
and hardware; |
| o | 114 technical recommendations
(software and hardware); |
| o | 72 studies carried out by the
multidisciplinary research team; |
| |
31 – Reference Form – 2023 | |
| o | 9 contracted startups; and |
| o | 5 investments in startups. |
| c) | Characteristics of the market segments, specially: |
i) Participation
in each market:
In the
following section, we demonstrate the percentages of Bradesco’s participations in relation to banking and insurance segment and
its distribution channels:
|
|
As (%) |
Market Share |
2023 |
2022 |
|
|
|
Bank |
|
|
Demand Deposits |
8.7 (1) |
11.0 |
Savings Deposits |
13.3 |
13.2 |
Time Deposits |
13.3 (1) |
13.7 |
Loans Operations |
10.2 |
11.4 |
Loans Operations - Private Institutions |
17.8 |
19.8 |
Loans Operations - Vehicles Individuals (CDC + Leasing) |
11.4 |
13.8 |
Payroll-Deductible Loans |
14.7 |
15.2 |
- National Institute of Social Security (INSS) |
17.0 |
18,0 |
- Private Sector |
11.5 |
11.1 |
- Public Sector |
13.4 |
13.7 |
Real Estate Financing |
9.1 |
9.4 |
Consortia |
|
|
Real Estate |
14.4 |
17.6 |
Auto |
25.3 |
27.2 |
Trucks, Tractors and Agricultural Implements |
19.1 |
24.3 |
International Area |
|
|
Export Market |
13.5 |
13.9 |
Import Market |
8.7 |
7.9 |
Insurance |
|
|
Insurance Premiums, Pension Plan and Capitalization Bond |
22.7 |
22.4 |
Technical provisions for insurance, pension plans and capitalization bonds |
21.8 |
22.2 |
Pension Plan Investment Portfolios (including VGBL) |
21.8 |
22.6 |
Funds |
|
|
Investment Funds and Managed Portfolios |
16.6 |
16.7 |
National Social Security Institute (INSS) |
|
|
Benef it Payment to Retirees and Pensioners |
30.1 |
30.8 |
Leasing |
|
|
Lending Operations |
25.4 |
21.2 |
(1) Reference date: September
2023
| |
32 – Reference Form – 2023 | |
ii) competitive
conditions in markets
As
of September 30, 2023, state-owned financial institutions held 34.0% of the National Financial System’s (SFN) assets, followed
by domestic private financial institutions (taking into consideration financial conglomerates) with a 49.9% share and foreign-controlled
financial institutions, with a 16.1% share.
Public-sector
financial institutions play an important role in the banking sector in Brazil. Essentially, they operate within the same legal and regulatory
framework as private-sector financial institutions, except that certain banking transactions involving public entities must be made exclusively
through public-sector financial institutions (including, but not limited to, depositing federal government funds or judicial deposits).
We highlight
below some rules that may impact competitiveness, due to some regulatory requirements:
Through
Circular No. 3,590/12, as amended, transfers of corporate control, takeovers, mergers, transfers of business, contracts with a view to
cooperation in the financial sector, acquisitions of holdings greater than or equal to 5% and acquisitions that result in the purchaser
having a stake increase interest equal to or higher than 5% in cases in which the investor holds 5% or more of the voting capital, directly
or indirectly involving financial institutions must be submitted to the Central Bank of Brazil.
Through
CMN Resolution No. 4,970/21, as amended, the CMN set out and procedures for authorization related to the operations of financial institutions
and other entities authorized by the Central Bank of Brazil.
In short,
it includes institutions, in the scope of application of CMN Resolution No. 4,970/21, such as (i) development banks; (ii) foreign exchange
banks; (iii) development banks; (iv) investment banks; (v) multiple banks; (vi) foreign exchange brokers; (vii) securities and exchange
brokers and real estate agencies; (viii) securities and exchange distribution companies; and (ix) loan companies between private individuals.
In addition, on August 30, 2022, the Central Bank of Brazil issued Normative Instruction No. 299/22, as amended, which discloses procedures,
documents, terms and information necessary for the instruction of authorization requests related to the operation of the institutions
covered by CMN Resolution No. 4,970/21.
Through
Resolution No. 5,050/22, as amended, CMN regulated credit fintechs, providing for the establishment and operation of the Direct Loan Companies
(SCD) and Interpersonal Loan Companies (SEP), regulating loans and financing between people using electronic platforms. In summary, SCD
and SEP have to be constituted in the form of joint stock companies and may meet less stringent criteria than those of other financial
institutions to obtain authorization. However, the SCD can only perform loans and financing using their own resources or by obtaining
resources in repo operations and loans originating from the BNDES, while the SEP cannot make use of operations
with its own resources, acting as an intermediary between creditors and debtors, and providing other services established in the Resolution.
In 2019,
the CMN created rules for the Credit Society for Microentrepreneurs and Small Business (SCMEPP), through Resolution No. 4,721/19, as amended,
which provides for the constitution, authorization for operation, corporate restructuring and cancellation of authorization for operation.
The SCMEPP has the role of granting funding to individuals, microenterprises and small businesses based on the viability of their projects.
The SCMEPP cannot raise money from the public, nor can it issue bonds and securities to place bids and public offerings.
In these
circumstances, the fintechs that are already expanding in the Brazilian markets may act in a regulated manner and independently from a
financial institution already constituted, as an SCD or SEP. The process of obtaining authorization for the operation of the SCD, SEP
and SCMEPP has fewer requirements than those of a multiple bank; in contrast, these entities have a more limited scope of action.
In June
2020, the CMN enacted Resolution No. 4,822/20, regulating the joint-guarantee society and the counter-guarantee society, provisioning
on the constitution, organization and functioning of these societies, introduced by Complementary Law No. 169/19. The joint-guarantee
society has as its main objective the granting of guarantees in favor of its participating members in the context of loans contracted
by them, and counter-guarantee societies, in turn, is aimed at granting the counter-guarantee to joint-guarantee societies.
| |
33 – Reference Form – 2023 | |
Subsequently,
in November 2022, the CMN issued Resolutions No. 5,046/22, No. 5,047/22, No. 5,050/22 and No. 5,051/22, which provision, respectively,
on the Organization and operation (i) of investment banks, (ii) of development banks, (iii) of direct credit companies (SCD and peer-to-peer
lending (SEP in Portuguese), (iv) as well as credit unions.
Through
Resolution No. 5,050/22, which revoked Resolution No. 4,792/20 and Resolution No. 4,656/18, the CMN began to provision on the Organization
and operation of a direct credit company and a peer-to-peer lending company and regulate the execution of loan and financing operations
between peers through an electronic platform.
Open
Finance
Open Finance
is seen as one of the ways of fostering innovation and competition. The implementation of its regulatory was instituted by Joint Resolution
No. 01/20, enacted by the Central Bank of Brazil and the National Monetary Council, with the aim to stimulate innovation, promote competition,
increase the efficiency of the National Financial System and Brazilian Payment System and promote financial citizenship. For this purpose,
it establishes that standards of systemic integration between participant institutions must be adopted.
Institutions
authorized to operate by the Central Bank of Brazil assume the following roles as participants in Open Finance:
| c) | holding a demand, savings deposit account or prepaid payment account; |
| d) | initiating the payment transaction; and |
| e) | having a digital correspondent contract in Brazil. |
Due
to our importance in the National Financial System and the characteristics of its activities, it is mandatory to implement Open Finance
as a participant in securities “a”, “c” and “e”. Despite being optional, we will participate in the
other securities considering business opportunities with data receiver and payment initiator.
The implementation
of Open Finance in Brazil consists of four stages, according to the schedule established by the Central Bank of Brazil and highlighted
below:
| • | Stage 1: as of February 2021 – implementation of the necessary requirements for publishing
institution data on service channels and products and services related to demand and savings deposit accounts, prepaid and postpaid accounts
and loan operations; |
| • | Stage 2: as of August 2021 – for the sharing of client's registration data and transactional
information from bank accounts (deposit, savings, and payment), as well as credit card and loan operations; |
| • | Stage 3: as of October 2021 – implementation of the
necessary requirements for sharing payment transaction initiation services and forwarding of a loan operation proposal; |
| • | Stage 4: since of April 2023 – implementation of the requirements needed for the data sharing
on products and services and transaction data, as foreign exchange transactions, investments, insurance and private pension plan, in addition
to transactional information related to these products and services by clients. |
Our
Open Finance Squad has highly qualified professionals at Bradesco, focused on developing the best solutions regarding new financial system,
inserted in multi-functional groups, the Bradesco Squads work with an agile mindset and exercise an end-to-end vision in creating intuitive
and personalized journeys to achieve increasingly positive results.
Deposits
The deposit
market is highly concentrated, with our main competitors being Itaú Unibanco, Caixa Econômica Federal, Banco do Brasil and
Santander. The five largest institutions hold 67.6% of deposits in the Brazilian markets. Reference: September 2023.
| |
34 – Reference Form – 2023 | |
Loans
and advances
Competition
in loans and advances has been increasing in recent years. Our main competitors are Itaú Unibanco, Banco do Brasil and Santander
Brasil.
Credit
cards
The credit
card market in Brazil is highly competitive. Our primary competitors in the market are the major banks. However, digital banks have increased
their importance in the Brazilian markets. Management believes that the primary competitive factors in this area are card distribution
channels, both physical and digital ones, the services and benefits offered, in addition to better user experience for the cardholder
client.
Consortia
In December
2023, according to the Central Bank of Brazil, the consortia market included 136 administrators, divided between the bank, manufacturer
and independent administrators.
Our main
competitors are Banco de Brasil and Porto Seguro in the real estate segment; Banco do Brasil and Itaú in the property segment.
One of
our competitive advantages is the credibility of the Bradesco brand, our amount of monthly contemplations, which reinforces the ability
to manage the groups and resources of the consortium clients, and our extensive distribution network, with the largest service network
throughout Brazil.
Investment
Bank
The investment
bank market in Brazil is very competitive, involving the participation of national and international financial institutions. Among the
main players are Itaú BBA, BTG Pactual, Santander and other national and international institutions. Bradesco BBI has nonetheless
achieved significant success in this market, obtaining recognition from renowned international agencies that follow the sector globally.
Leasing
In general,
our main competitors in the Brazilian leasing market are Santander Leasing, Banco IBM, HP Financial Service and Daycoval Leasing. We currently
enjoy certain competitive advantages, as we have a larger service network than any of our private sector competitors.
Asset
management
On December
31, 2023, the asset management industry in Brazil managed funds worth R$8.3 trillion in shareholders’ equity according to ANBIMA’s
investment funds management ranking. Bradesco Asset held a portion of R$659.2 billion or 7.9% of market share. We are one of the leading
institutions as measured by the number of investment fund quotaholders with 3.2 million. Our main competitors are BB DTVM and Itaú
Unibanco.
Insurance,
pension plans and capitalization bonds
Insurance
sector
According
to SUSEP/ANS, in 2023, we were market share leader of the Brazilian insurance market. Grupo Bradesco Seguros faces growing competition
from several domestic and multinational companies in all branches of this sector, which has changed in Brazil in recent years. In this
respect, the main competitive factors are price, financial stability, and recognition of the name and services provided by companies.
With respect to services, competition primarily involves the ability to serve the branches that market such services, including the claims
handling, automation level, and development of long-term customer relationship.
Our principal
competitors are SulAmérica, Porto Seguro, BB Seguridade, HDI and Tokio, which account for a combined total of 36.7% of all premiums
generated in the market, as reported by SUSEP/ANS in 2023.
We believe
that the penetration of our service network, present in all municipalities in Brazil, gives Grupo Bradesco Seguros a significant competitive
edge over most insurance companies, thereby promoting cost savings and marketing synergies.
| |
35 – Reference Form – 2023 | |
Regarding
the healthcare sector, although most insurance activities are carried out by companies with nationwide operations, there is also competition
from companies that operate locally or regionally.
Supplementary
pension plan sector
The Brazilian
government’s monetary stabilization policies stimulated the supplementary pension plan sector and attracted new international players.
Bradesco
Vida e Previdência’s main competitive advantages are the “Bradesco” brand, our extensive branch network, our strategy
and our record of being in the forefront of product innovation.
Our main
competitors are BrasilPrev, Caixa Seguridade, Itaú Seguridade, Zurich/Santander, Icatu and XP Previdência.
Capitalization
bonds sector
Our competitive
strengths in this sector include our offering of low-cost products with a higher number of prize drawings, security, financial stability,
and brand recognition.
Our main
competitors are BrasilCap, Santander, Cia. Itaú de Capitalização, Icatu, Caixa Seguridade and Capemisa, which together
represent 63.4% of the total capitalization revenue generated in the market, according to information provided by SUSEP in 2023.
We generally
have some seasonality in certain parts of our business. There is certain seasonality in our consumer financing business (including our
credit card business, financing of goods and others), with increased levels of credit card transactions and financing of goods at the
end of the year and a subsequent decrease of these levels at the beginning of the year. We also have certain seasonality in our fee collections
at the beginning of the year, which is when taxes and other fiscal contributions are generally paid in Brazil. For our PGBL and VGBL business,
seasonality happens at the end of the year, when the 13th salary and profit-sharing distributions are usually paid.
| e) | Main raw materials, stating: |
i)
Description of relationships with suppliers, including whether they are subject to governmental control or regulation, with agencies and
applicable legislation:
Bradesco
hires suppliers and establishes business relationships with partners that operate with ethical standards that are compatible with the
Organization, through a rigorous homologation process for subsequent selection and does not negotiate with those who, verifiably, disrespect
the provision of its Code of Ethical Conduct, and also guides its business relationship by the Sectorial Code of Ethical Conduct for the
Purchasing Professional.
Additionally,
in the Organization's Contracts, the supplier declares to be aware of the provisions of the Bradesco Organization's Code of Ethical Conduct,
the Bradesco Organization's Sectorial Code of Ethical Conduct for Purchasing Professionals, the Corporate Information Security Policy
and the Bradesco Integrity Program, and all Policies, Codes and Standards, available at www.bradescofornecedores.com.br, which the supplier
undertakes to make known to its employees, agents and employees and agents of its subcontractors, as applicable.
ii)
Any dependence on a small number of suppliers:
Banco
Bradesco has a broad base of suppliers and encourages the constant search and use of new companies for approval and competition processes.
However, for some specific situations, the Bank is dependent on suppliers to carry out its activities. For these situations, there is
monitoring carried out by the Specialist Areas, through the Organization's Business Continuity Plan (PCN).
For any
situations in which there is a shortage of suppliers, either due to their limited supply in the market as a whole and/or in the region
in question, in addition to ensuring the robustness of our processes, with regard to Risk Governance, we place great value on to an important
point in this business relationship, which is to have good communication with that supplier. However, Bradesco generally opts for a diversification
| |
36 – Reference Form – 2023 | |
of suppliers, thus avoiding
creating dependence on a few suppliers to carry out its activities, in addition to work aimed at developing new suppliers.
iii)
Possible volatility affecting its prices:
The prices
volatility, as resources for loans, interest rates charged on products, among other things, rely on macroeconomic conditions and market
rates.
If there
is an expected inflation growth rate, the Central Bank of Brazil may increase the base interest rate, increasing, consequently, interest
rates for loans. Another factor that can enhance loans is the increase in the delinquency rate for clients. Moreover, variations in tax
rates on loans also make these operations more expensive.
1.5
– Clients responsible for more than 10% of the total net revenue
Bradesco
has no clients that are responsible for more than 10% of the total net revenue of the institution.
1.6
– Relevant effects of the state regulation of activities
| a) | need for governmental authorization for the exercise of activities and history of relation with the
public administration in order to obtain such authorizations |
The
basic institutional framework of the Brazilian Financial System was established in 1964 by Law No. 4,595/64, known as the “Banking
Reform Law”. The Banking Reform Law dealt with monetary, banking and credit policies and institutions, and created the CMN.
Principal
regulatory agencies
CMN
CMN
is responsible for overall supervision of monetary, credit, budgetary, fiscal and public debt policies. CMN has the following functions:
·
regulating loans and advances granted by Brazilian financial institutions;
·
regulating Brazilian currency issue;
·
supervising Brazil’s reserves of gold and foreign exchange;
·
determining saving, foreign exchange and investment policies in Brazil; and
·
regulating capital markets in Brazil.
Within
its functions, the CMN provides, through Resolution No. 3,427/06, as amended, the adoption by the CVM of the risk-based supervision model
as general guidance for its activities, on which the Risk Based Supervision System (SBR) was created. The SBR is also regulated by CVM
Resolution No. 53/21, which sets its objectives.
Central
Bank of Brazil
The
Central Bank of Brazil was created by Law No. 4,595/64 and is the primary executor of the guidelines of the CMN, responsible for ensuring
the purchasing power of the national currency, including responsibility for:
| · | implementing currency and credit policies established by the CMN; |
| · | regulating and supervising public and private sector Brazilian financial institutions; |
| · | controlling and monitoring the flow of foreign currency to and from Brazil; and |
| · | overseeing the Brazilian financial markets. |
| |
37 – Reference Form – 2023 | |
The
Central Bank of Brazil supervises financial institutions by:
| · | setting minimum capital requirements, compulsory deposit requirements and operational limits; |
| · | authorizing corporate documents, capital increases, acquisition of interest in new companies and the establishment
or transfer of principal places of business or branches (in Brazil or abroad); |
| · | authorizing changes in shareholder control of financial institutions; |
| · | requiring the submission of annual and semiannual audited financial statements, quarterly revised financial
statements and monthly unaudited financial information; and |
| · | requiring full disclosure of loans and advances and foreign exchange transactions, import and export transactions
and other directly related economic activities. |
Through
Complementary Law No. 179/21, the Central Bank of Brazil ensured its autonomy. Thus, it conferred greater freedom to the Central Bank
of Brazil in the use of monetary instruments for the fulfillment of goals established by the CMN. Through this law, price stability was
defined as the primary objective of the Central Bank of Brazil, in addition to ensuring the stability and efficiency of the financial
system, smoothing out economic activity level fluctuations and promoting full employment. The Central Bank of Brazil is considered an
autarchy of a special nature, characterized by the absence of any ties to a ministry.
CVM
The
CVM is a local entity, linked to the Ministry of Finance, with its own legal personality and its own capital, independent administrative
authority, absence of hierarchical subordination, fixed mandate, stability of its managers, and financial and budgetary autonomy. It was
created on December 7, 1976 by Law No. 6,385/76 with the objective of overseeing, standardizing, regulating and developing the Brazilian
securities markets in accordance with securities and capital-market policies established by CMN.
The
main objectives of the CVM are:
| · | to ensure the integrity of the capital markets; |
| · | to boost the efficiency of the capital markets; |
| · | to regulate on issues provided for by law; |
| · | to monitor compliance with the legislation applicable to agents working in the capital market; and |
| · | to promote the development of the capital markets. |
The
main focus of the CVM in overseeing and regulating the Brazilian capital markets is:
| · | to promote a culture of investment in the Brazilian capital markets; |
| · | to increase the participation in the capital market as a competitive source of financing; |
| · | to reduce the costs of observance of market participants; |
| · | to increase the liquidity of markets; |
| · | to improve the efficiency of supervision of the market; and |
| · | to increase the efficiency of the sanctioning action. |
Banking
regulations
Principal
limitations and restrictions on activities of financial institutions
Under
applicable laws and regulations, a financial institution operating in Brazil:
| · | may not operate without the prior approval of the Central Bank of Brazil. In the case of foreign banks,
approval of the Central Bank of Brazil, pursuant to Decree No. 10,029/19, may be granted where it is considered to be in the national
interest to do so. Through Circular No. 3,977/20, it is recognized
as of interest to the Brazilian government to allow the participation, in the capital of financial institutions
based in Brazil, of individuals or legal entities residing or domiciled abroad; |
| |
38 – Reference Form – 2023 | |
| · | may not invest in the equity of any other company beyond regulatory limits; |
| · | may not conduct credit and leasing transactions or provide guarantees of more than 25.0% of its reference
equity (RE) to a single person or group; |
| · | may not own real estate, except for its own use; and |
| · | according to Law No. 4,595/64 and CMN Resolution No. 4,693/18, financial institutions are prohibited from
conducting loans with related parties. Exempted from the prohibition are loans with related parties that comply with the conditions stipulated
by Law No. 4,595/64. CMN Resolution No. 4,693/18 explains who are considered related parties, from the point of view of the Central Bank
of Brazil. |
| · | CMN Resolution No. 4,693/18 also brought a definition of qualified shareholding, which is considered a
direct or indirect stake, owned by individuals or companies in the capital of financial institutions and of leasing companies or of these
institutions in the capital of companies, equivalent to 15% or more of the respective shares or quotas representing the share capital.
The restrictions with respect to the concentration limit to a single person or group do not apply to interbank deposits entered into by
financial institutions subject to the consolidation of their financial statements. |
| · | On September 26, 2022, the Central Bank of Brazil issued BCB Resolution No. 246/22, establishing maximum
limits for the exchange rate fee and prohibiting the establishment of different maximum deadlines for the provision of resources for the
receiving end user in the domestic payment arrangements, purchase arrangements, and prepaid payment and deposit accounts. According to
the Resolution, it was established, as of April 1, 2023, that the maximum limits for the exchange rate shall respect the following percentage:
(a) 0.5%, to be applied in any transaction, in the arrangements classified as deposit accounts; and (b) 0.7%, to be applied in any transaction,
in the arrangements classified as prepaid payment accounts. |
| · | On March 28, 2023, the Plenary of the National Council of Social Security issued Resolution CNPS/MPS No.
1,351/23, which established that the INSS should set the maximum interest ceiling per month for payroll loan operations granted for social
security benefit at 1.97% and, for transactions carried out by credit card and payroll-deductible loan benefit card, at 2.89%. |
Punitive
instruments applicable to Financial Institutions
Law No.
13,506/17 and the BCB Resolution No. 131/21, as amended, regulate the administrative sanctioning process in the sphere of activity of
the Central Bank of Brazil and CVM and, significantly amended the punitive instruments in the context of banking supervision, of the capital
market, of the Brazilian Payment System, Payment Institutions and Consortium.
Capital
adequacy and leverage
Financial
institutions based in Brazil are subject to capital measurement and standards based on a weighted risk-asset ratio, according to CMN Resolutions
No. 4,958/21 and No. 4,955/21, as amended. The parameters of this methodology resemble the international framework for minimum capital
measurements adopted for the Basel Accord.
In accordance
with Basel III recommendations, Circular No. 3,748/15, and CMN Resolution No. 4,615/17, provide for the minimum requirement for the Leverage
Ratio (LR) as a supplementary capital measure. It is a ratio that acts to limit the level of exposure to risk assumed by financial institutions
and evaluates the leverage through its relation between Tier I Capital and the Total Exposure, calculated through the sum of assets registered
in accounting values, added to off-balance exposures (limits, endorsements, guarantees and derivatives), as detailed in the circular.
The relevant institutions classified in Segment 1 (S1) and Segment 2 (S2), must comply with the minimum requirement for LR of 3%.
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In order
to establish minimum quantitative requirements for the liquidity of financial institutions and limit excessive liquidity risk taking,
Basel III introduced two liquidity indices: The Liquidity Coverage Ratio (LCR) and the Net Stable Funding Ratio (NSFR).
BCB
Resolution No. 207/22, as amended, regulates the preparation and remittance, by financial institutions of information related to (i) the
indicator of Short-Term Liquidity (LCR); and (ii) exposure to liquidity risk, which must be kept at the disposal of the Central Bank of
Brazil, for a minimum period of five years, together with the documentation of the methodology for its calculation and the respective
original data.
According
to CMN Resolution No. 4,950/21, financial institutions must keep consolidated accounting records (for calculating their capital requirements)
of their investments in companies whenever they hold, directly or indirectly, individually or together with partners, a controlling interest
in the investee companies. If their interest does not result in control of a company, financial institutions may choose to recognize the
interest as equity in the earnings of unconsolidated companies instead of consolidating such interests.
Under
certain conditions and within certain limits, financial institutions may include eligible instruments when determining their capital requirements
in order to calculate their operational limits, provided that this instrument complies with the requirements of the regulation in force.
Risk
Weighting
Pursuant
to BCB Resolution No. 229/22, as amended, the Central Bank of Brazil consolidated the risk-weighted
assets (RWA) applied to different exposures in order to calculate capital requirements through a standardized approach (RWAcpad). Risk-weight
factors applicable to different exposures are often changed by the Central Bank of Brazil. Subsequently, mitigation instruments were provided
for the portion RWA related to the exposure to credit risk subject to the calculation of capital requirements through a RWAcpad, through
Circular No. 3,809/16. A new criterion for application of the 85% Risk-weight factor (FPR), established by Circular No. 3,921/18.
In addition,
there are specific standards of the Central Bank of Brazil to determine procedures to calculate the portion of risk-weighted assets related
to other exposures. In March 2022, BCB Resolution No. 202/22 was edited, as amended, and now establishes the calculation of the portion
of RWA related to the calculation of capital required for risks associated with payment services (RWAsp) established in CMN Resolutions
No. 4,958/21 and 4,606/17 and on the BCB Resolutions No. 200/22 and 201/22, as amended.
The
total consolidated exposure of a financial institution in foreign currencies, gold, and transactions subject to exchange variation limited
up to 30.0% of its Reference Equity (RE), pursuant to CMN Resolution No. 4,956/21, this limit may be altered by the Central Bank of Brazil,
observing the minimum value of 15% and the maximum value of 75% of the Reference Equity (RE). It should be noted that compliance with
the above limit must take place in a consolidated manner for institutions that are members of the same prudential conglomerate.
Financial
institutions authorized to operate by the Central Bank of Brazil shall inform (i) exposure in gold, foreign currency and operations subject
to the exchange rate variation; (ii) RWAMint portion of the RWA amount; and (iii) the RWAMpad portion of the RWA amount and its components,
daily, being available to BACEN for a period of 5 years, as established in BCB Resolution No. 100/21, as amended, which entered into force
on July 1, 2021.
In November
2022, BCB Resolution No. 266/22 was edited, promoting changes in the circulars and in BCB Resolutions that establish the procedures and
parameters for calculating the portions for calculating the amount of risk-weighted assets (RWA) related to credit risk, market risk and
operational risk, so that they are applicable to the prudential conglomerate led by the payment institution and integrated by a financial
institution or another institution authorized to operate by the Central Bank of Brazil (Type 3 conglomerate). In addition, this resolution
also amends the normative acts dealing with the calculation of the additional countercyclical principal capital (ACPContraciclico) and
the risk of variation in interest rates in instruments classified in the bank portfolio (IRRBB), so that they are applicable to the Type
3 conglomerate.
In addition,
the Central Bank of Brazil issued BCB Resolution No. 229/22, as amended, which establishes the procedures for calculating the RWA portion
of credit risk exposures subject to the calculation
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of the capital requirement
by means of a standardized approach (RWAcpad), that deal with CMN Resolution No. 4,958/21, of October 2021, and BCB Resolution No. 200/22,
of March 2022, as amended.
BCB
Resolution No. 229/22 aims to improve two main points, which are: (i) methods of measuring the value of exposures, also admitting the
use of a method of calculating the mark-to-market value for a specific asset class. This methodology can be used even if the Accounting
Standard of the institutions regulated by the Central Bank of Brazil (Cosif) does not provide on this; and (ii) Risk Weighting Factors
(FPR), especially on exposures to sovereign entities and multilateral bodies (EMD), financial institutions, non-financial, retail, and
real estate legal entities.
In August
2022, the Central Bank of Brazil launched Public Inquiry Notice No. 92/22, which discloses the motion for a resolution that improves the
procedures for calculating the capital requirement for credit risk exposures through internal credit risk classification systems.
In February
2023, the Central Bank of Brazil issued BCB Resolution No. 291/23, which establishes the procedures for calculating the portion of the
RWA regarding exposures to the risk of variation in the value of derivative instruments due to the variation in the credit quality of
the counterpart (RWACVA), as well as amending Circular No. 3,646/13.
Compulsory
Deposits
The
Central Bank of Brazil periodically sets compulsory deposit and related requirements for financial institutions based in Brazil. The Central
Bank of Brazil uses reserve requirements as a mechanism to control liquidity in the SFN.
According
to the Central Bank of Brazil’s rules, we must place a percentage of the demand deposits, savings deposits and time deposits we
receive from our clients with the Central Bank of Brazil:
| · | Time deposits: we are obliged to deposit 20.0% of the arithmetic mean of the Value Subject to Collection
(VSR) established on the working days of the calculation period, deducted from R$30 million, in accordance with BCB Resolution No. 145/21. |
Time
deposits are represented by bank deposit certificates (CDBs) and notes (exempted); and pay either a fixed or a floating rate, which is
typically a percentage of the interbank interest rate (CDI), as disclosed by COPOM.
| · | Demand deposits: we are required to deposit 21.0% of the arithmetic mean of the Value Subject to
Collection (VSR), on each working day, determined in the calculation period, deducting R$500 million, pursuant to the provisions of BCB
Resolution No. 189/22, as amended. The verification of compliance with these requirements is made on the basis of established positions
on each day of the period of transactions and the calculation period begins on Monday of one week and ends on Friday of the following
week. |
| · | Savings deposits: each week we are required to deposit in an account with the Central Bank of Brazil
an amount equivalent to 20.0% of the arithmetic average of the sum of the balances entered under the headings of Savings Deposits and
Resources of Associated Savers, according to BCB Resolution No. 188/22, as amended, which that defines and consolidates the rules of compulsory
collection on savings deposit resources. The balance of the account is remunerated by the “TR” plus interest, as detailed
in the same resolution. |
In
February 2013, the Central Bank of Brazil defined rules for financial cost collection on non-compliance with compulsory deposit, reserve
or compulsory assignment requirements. The financial cost charged to institutions that failed to comply with these requirements was adjusted
to the SELIC rate plus 4.0% p.a.
In
February 2022, BCB Resolution No. 188/22 was edited, which defines and consolidates the rules of compulsory collection on savings deposit
resources. In the same month in 2022, BCB Resolution No. 190/22 was issued, as amended, which extinguishes the enforceability regarding
the compulsory collection of deposit resources and guarantees made.
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Additionally,
present Central Bank of Brazil regulations require that we:
| · | allocate a minimum of 30.0% of demand deposits to providing rural loans; |
| · | we maintain investments in targeted productive microcredit program operations, of at least 2.0% of demand
deposits; and |
| · | allocate a minimum of 65.0% of the total amount of deposits in savings accounts to finance residential
real estate. |
Standards
on compulsory deposits and additional reserve requirements are periodically altered by the Central Bank of Brazil.
Asset
composition requirements
According
to CMN Resolution No. 4,677/18, as amended, financial institutions headquartered in Brazil must limit their exposure to a single client
to a maximum amount of 25.0% of Tier 1 of its RE, or 15% of Tier 1 of its RE if the institution is listed as systemically important in
the global scope by the Financial Stability Board.
BCB
Resolution No. 76/21 regulates on instruments of operation of the Central Bank of Brazil in the Brazilian foreign exchange market for
the purposes of implementing the exchange rate policy, establishing that the terms of the repo operations for the purchase of foreign
currency with a commitment to resell and sell foreign currency with a commitment to repurchase, correspond to the period comprised between
the date of liquidation of the purchase or sale operation, inclusive, and the respective date of liquidation of the resale or repurchase
commitment, exclusive.
Repurchase
transactions
Repurchase
transactions are subject to operational capital limits based on the financial institution’s equity, as adjusted in accordance with
Central Bank of Brazil regulations. A financial institution may only hold repurchase transactions in an amount up to 30 times its RE. Within that limit, repurchase transactions involving private securities may not exceed five times the amount of the financial
institution’s RE. Limits on repurchase transactions involving securities issued by Brazilian governmental authorities vary in accordance
with the type of security involved in the transaction and the perceived risk of the issuer as established by the Central Bank of Brazil.
In September
2016, the Central Bank of Brazil prohibited the execution, extension or renewal of repurchase transactions with securities issued or accepted
from associated institutions, or institutions that are members of the same prudential conglomerate.
Subsequently,
in September 2021, the Central Bank of Brazil issued BCB Resolution No. 76/21, which provisions on the instruments of operation of the
Central Bank of Brazil in the Brazilian exchange market for the purpose of implementing the foreign exchange policy. This Resolution provisions
that the Central Bank of Brazil may perform, among others, the following operations in the Brazilian foreign exchange market: (i) purchase
of foreign currency with resale commitment, in conjunction with a repurchase commitment, made by the counterpart, for settlement on a
pre-established date; and (ii) sale of foreign currency with a repurchase commitment, in conjunction with a resale commitment, made by
the counterpart, for settlement on a pre-established date.
Onlending
of funds borrowed abroad
Financial
institutions and leasing companies are permitted to borrow foreign currency-denominated funds in the international markets (through direct
loans or the issuance of debt securities) in order to on-lend such funds in Brazil. These onlendings take the form of loans denominated
in reais but indexed to the U.S. dollar. The terms of the onlending transaction must reflect the terms of the original transaction. The
interest rate charged on the underlying foreign loan must also conform to international market practices. In addition to the original
cost of the transaction, the financial institution may charge onlending commission only.
Furthermore,
the amount of any loan in foreign currency should be limited to the sum of foreign transactions undertaken by the financial institution
to which loan funds are to be directed.
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Foreign
currency position
Operations
in Brazil involving the sale and purchase of foreign currency may be conducted only by institutions authorized by the Central Bank of
Brazil to operate in the foreign exchange market.
Beginning
in 1999, the Central Bank of Brazil adopted a foreign exchange free float system, which gave rise to increased volatility. Since mid-2011,
the Brazilian real has depreciated against the U.S. dollar and the Central Bank of Brazil has intervened in the foreign exchange market
to control the foreign rate volatility.
The
Central Bank of Brazil does not impose limits on long positions in foreign exchange operations and short positions in foreign exchange
operations for banks authorized to operate in the foreign exchange market.
Standards
that address foreign exchange markets are frequently changed by CMN and the Central Bank of Brazil.
In December
2022, Law No. 14,286/21 entered into force, which deals with the Brazilian exchange market, the Brazilian capital abroad, the foreign
capital in the country and the provision of information to the Central Bank of Brazil with the aim of modernizing, simplifying and bringing
greater legal certainty regarding such matters, considering the best international standards and practices, as well as the insertion of
Brazil in the globalized economy. In view of this, CMN published CMN Resolutions No. 5,042/22 and No. 5,056/22, as well as the Central
Bank of Brazil published BCB Resolutions No. 277/22, No. 278/22, No. 279/22, No. 280/22 and No. 281/22, aiming to regulate foreign exchange
operations.
Contextualizing,
the main changes that the new exchange rate framework presents:
| · | It will be the competence of the Central Bank of Brazil to regulate foreign currency accounts in the country,
including regarding the requirements and procedures for opening and operating them, the Central Bank of Brazil may expand, depending on
the regulation, the possibility of individuals and legal entities being holders. The ownership of foreign currency accounts in the country
is still limited to companies, such as brokers, credit card administrators and other sectors specified by the Central Bank of Brazil. |
| · | Opening of deposit abroad was already possible, but the project expands and reinforces this, by stating
that institutions authorized by the Central Bank of Brazil will be able to allocate, invest and destine for credit and financing operations,
in the country and abroad, funds raised here or abroad. |
| · | Extension from R$10 thousand to US$10 thousand of the limit of cash in kind that each passenger can carry
when leaving or entering Brazil. |
| · | The negotiation of up to US$500 between Individuals is now authorized, allowing the purchase and sale
of foreign currency to be made by Individuals and not only banks and brokers, provided that the operation is made occasionally and not
professionally. |
| · | Depending on the regulation by the Central Bank of Brazil, the possibility of private compensation of
credits between residents and non-residents, as well as payment in foreign currency of enforceable obligations in the national territory
in situations such as foreign trade operations. |
| · | Inclusion of payment institutions to operate in the exchange market in ready-made settlement operations
up to a limit of US$100,000.00. |
| · | Formalization of the foreign exchange operation with free format, however, the institution authorized
to operate in the foreign exchange market should be able to prove that the parties are in mutual agreement with the established conditions. |
| · | The client is responsible for the classification of the purpose of the exchange operation. |
| · | Change in the obligation to register the foreign direct investment before the Information Delivery System
of the Central Bank of Brazil (SCE-IED), should be carried out only when (i) the financial transfer related to the non-resident investor
of a value equal to or greater than US$100,000.00 or its equivalent in other currencies occurs; (ii) the transactions of resources of
a value equal to or greater than
US$100,000.00 or its equivalent in other currencies; (iii) the base date of the periodic declarations shall occur for the recipients subject
to such declarations. |
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| · | Change in the obligation to register foreign loan operations before the Information Delivery System of
the Central Bank of Brazil (SCE-Crédito): (i) direct loan, security, early receipt of exports and financial leasing with payment
term of more than 360 days and financing of entities with a value equal to or greater than US$1,000,000.00 or its equivalent in other
currencies; and (ii) import financing with a payment term of more than 180 days and with a value equal to or greater than US$500,000.00
or its equivalent in other currencies. |
| · | End of the obligation to carry out simultaneous foreign exchange operations for: (i) conversion of debt
into foreign direct investment and vice versa; (ii) conversion between different types of foreign credit; (iii) assumption and resettlement
of foreign credit, in the modalities of direct loan and securities; and (iv) change of residence of the resident investor to non-resident. |
Registration
of cross-border derivatives and hedging transactions and information on derivatives
In December
2009, the Central Bank of Brazil issued specific rules that became effective in February 2010, requiring Brazilian financial institutions
to register their cross-border derivative transactions with a clearing house regulated by the Central Bank of Brazil and by the CVM. Specifically,
cross-border derivative transactions must (i) be registered within two business days; and (ii) cover details of underlying assets, values,
currencies involved, terms, counterparties, means of settlement and parameters used.
In January
2010, registration rules were extended to cover hedging transactions in foreign OTC markets or exchanges.
In November
2010, to facilitate the management of derivatives-related risk incurred by financial institutions, the CVM stipulated that market participants
should create mechanisms in order to share information on derivatives contracts traded or registered in their systems, subject to banking
confidentiality rules.
Treatment
of loans and advances
For
statutory reporting purposes, financial institutions are required to classify their loans and advances into nine categories, ranging from
AA to H, based on their risk. These credit risk classifications are determined in accordance with Central Bank of Brazil criteria relating
to:
| · | the conditions of the debtor and the guarantor, such as their economic and financial situation, level
of indebtedness, capacity for generating profits, cash flow, delay in payments, contingencies and credit limits; and |
| · | the conditions of the transaction, such as its nature and purpose, the type, the level of liquidity, the
sufficiency of the collateral and the total amount of the credit. |
In the
case of corporate borrowers, of the nine categories that we use, according to our classification, five are considered operational and
four of dubious liquidation.
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The
classification of operating categories follows the following concept:
Rating |
Bradesco Classification |
Bradesco Concept |
AA |
Excellent |
First-tier large company or group, with a long track record, market leadership and excellent economic and financial concept and positioning. |
A |
Very Good |
Large company or group with sound economic and financial position that is active in markets with good prospects and/or potential for expansion. |
B |
Good |
Company or group, regardless of size, with good economic and financial positioning. |
C |
Acceptable |
Company or group with a satisfactory economic and financial situation but with performance subject to economic variations. |
D |
Fair |
Company or group with economic and financial positioning in decline or unsatisfactory accounting Information, under risk management. |
A loan
and advance transaction may be upgraded if it has credit support or downgraded if in default.
Doubtful
loans are classified according to the loss perspective, as per E-H ratings as follows:
Rating |
Bradesco Classification |
E |
Deficient |
F |
Bad |
G |
Critical |
H |
Uncollectible |
A
similar nine-category ranking system exists for transactions with individuals. We grade credit based on data including the individual’s
income, equity and credit history, as well as other database, behavioral and transactional information considering both internal
and market-related sources.
For
regulatory purposes, financial institutions are required to classify the level of risk of their loans according to the Central Bank of
Brazil’s criteria, taking into consideration both the borrower and guarantors’ characteristics and the nature and value of
the transaction, among others, in order to identify potential loan losses.
Past
due loans and advances must be reviewed monthly. For this type of loan, regulatory provisions set the following minimum risk classifications:
Number of Days Past Due (1) |
Minimum Classification |
15 to 30 days |
B |
31 to 60 days |
C |
61 to 90 days |
D |
91 to 120 days |
E |
121 to 150 days |
F |
151 to 180 days |
G |
More than 180 days |
H |
(1) | These time periods are doubled in the case of loans with maturities in excess
of 36 months. |
Financial
institutions are required to determine whether any loans must be reclassified as a result of these minimum classifications. If so, they
must adjust their regulated accounting provisions accordingly.
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The
regulations specify a minimum provision for each category of loan (BR GAAP), which is measured as a percentage of the total amount of
the loan and advance operation, as follows:
Classification of Loan |
Minimum Provision % |
AA |
- |
A |
0.5 |
B |
1.0 |
C |
3.0 |
D |
10.0 |
E |
30.0 |
F |
50.0 |
G |
70.0 |
H (1) |
100.0 |
(1)
Financial institutions must write of any loan six months after its initial classification as an H
loan.
Loans
and advances of up to R$10,000 may be classified by the method used by the financial institution itself or the arrears criteria, described
above. Classifications should be at least level A, according to the Central Bank of Brazil.
Financial
institutions must make their lending and loan classification policies available to the Central Bank of Brazil and their independent accountants.
They are also required to submit information relating to their loan portfolio to the Central Bank of Brazil, together with their financial
statements. This information must include:
| · | a breakdown of the business activities and nature of borrowers; |
| · | maturities of their loans; and |
| · | amounts of rescheduled, written-off and recovered loans. |
The
Central Bank of Brazil requires authorized financial institutions to compile and submit information on the portfolio of loans and advances.
Exclusivity
in loans and advances to clients
As stipulated
in Circular No. 3,522/11 of the Central Bank of Brazil, it is prohibited for financial institutions provide services and loans from entering
into agreements, contracts or other arrangements that prevent or restrict the ability of their clients to access loans and advances offered
by other institutions, including payroll-deductible loans, aiming to increase competition among credit providers and prevent exclusivity
agreements between state-owned banks and government bodies with respect to payroll-deductible loans.
Debit
balance of the credit card bill
Through
CMN Resolution No. 4,549/17, as amended, the Central Bank of Brazil started regulating the financing of the debit balance of the credit
card bill and other postpaid instruments, not settled in full at maturity, as a result, credit card administrators were no longer allowed
to finance clients’ outstanding balances through revolving credit for more than a month.
CMN
Resolution nº 4,882/20 stipulates that in case of a delay in the payment or settlement of obligations related to these shares, certain
charges may be charged exclusively such as remunerative interest, fine; and late payment interest. It is prohibited to charge any other
remuneration or arrears charges for late payment or settlement of overdue obligations related to loan operations.
Overdraft
In April
2018, the Self-Regulation Council of the FEBRABAN – Federação Brasileira de Bancos (Brazilian Federation of
Banks), published Regulatory Standard No. 19/18 (Regulatory Standard on the Conscious Use of Overdraft), with new guidelines to promote
and stimulate the proper use of overdraft facilities.
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Among
the Regulatory Standard No. 19/18 main guidelines, we highlight that: (i) financial institutions which have signed the regulatory standard
shall, at any time, provide more advantageous conditions to the consumer to settle his overdraft balance, including the possibility of
installment payments; (ii) if the consumer uses more than 15% of the overdraft limit available during 30 consecutive days, and as long
as the value is above R$200.00, the financial institution shall proactively offer to the consumer alternatives for the settlement of the
balance; and (iii) financial institutions shall promote financial guidance related to the overdraft, especially with respect to its use
in emergency situations and on a temporary basis.
In November
2019, the CMN published Resolution No. 4,765/19, as amended, which provides for overdrafts granted by financial institutions for cash
deposit accounts. This Resolution sets forth that the interest rates charged on the amount used are limited to 8% per month.
Brazilian
Clearing System (Sistema de Pagamentos Brasileiro, or “SPB”)
The
SPB was regulated and restructured under Law No. 12,865/13. These regulations are intended to streamline the system by adopting multilateral
clearing and boost security and solidity by reducing systemic default risk and financial institutions’ credit and liquidity risks.
SPB
comprises the entities, systems and procedures related to the processing and settlement of transactions of transfers of funds, operations
with foreign currency or with financial assets and securities. The subsystems in the SPB are responsible for maintaining security mechanisms
and rules for controlling risks and contingencies, loss sharing among market participants and direct execution of custody positions of
contracts and collateral by participants. In addition, clearing houses and settlement service providers, as important components of the
system, set aside a portion of their assets as an additional guarantee for settlement of operations.
Currently,
responsibility for settlement of a transaction has been assigned to the clearinghouses or service providers responsible for it. Once a
financial operation has been submitted for clearing and settlement, it generally becomes the obligation of the relevant clearinghouse
and/or settlement service provider to clear and settle, and it is no longer subject to the risk of bankruptcy or insolvency on the part
of the market participant that submitted it for clearing and settlement.
CMN
Resolution No. 4,952/21 defines the activities of the clearing and payment (settlement) chambers and service providers under the Brazilian
Payments System, in order for the SPB to be structured in accordance with principles that ensure the safety, efficiency, integrity and
reliability of the clearing and payment (settlement) chambers and service providers that operate in it.
The
Central Bank of Brazil and CVM have the power to regulate and supervise the SPB. The only members of the SPB are institutions of payments
and payment arrangements that have high financial volumes. These volumes accumulated in the last 12 months are equivalent to R$500 million
in total value of transactions and 25 million transactions, in the case of payment arrangements.
BCB
Resolution No. 80/21, as amended, regulates the establishment and operation of payment institutions, establishing the parameters for authorization
requests made by these institutions to operate and provide payment services by other institutions authorized to operate by the Central
Bank of Brazil. BCB Resolution No. 81/21 regulates the processes of authorization related to the operation of payment institutions and
to the provision of services of payment by other institutions authorized to operate by the Central Bank of Brazil.
It is
worth mentioning that, in March 2022, the Central Bank of Brazil edited BCB Resolution No. 205/22, amending BCB Resolution No. 81/22 in
order to include the possibility: (i) of investment funds holding qualified participation in payment institutions; and (ii) that the provisions
applicable to the individual or legal entity holding a qualified holding provided for by BCB Resolution No. 81/21 also cover the shareholders
of the investment fund who are effectively authorized to conduct their operations, in addition to preventing the possibility of an investment
fund being a controller, or a member of a control group, of a payment institution.
BCB
Resolution nº 150/21, as amended, provides rules about the BR Code, a rapid response code standard (QR Code) to be used by the payment
arrangements, which must be offered in a standardized
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47 – Reference Form – 2023 | |
manner, in order to facilitate
the interoperability, the internationalization and increased efficiency of retail payments.
The
Pix was instituted and regulated by BCB Resolution No. 01/20, and BCB Resolution No. 79/21 enabled the implementation of features, such
as the permission to associate the corporate name to the Pix token, change of details, avoiding exclusion in the case of rectification
and threshold amount limiting the number of transactions that can be resent or received by end users.
BCB
Resolution No. 195/22, as amended, establishes the Instant Payments Systems (SPI) and the Instant Payment Account (PI Account), approving
their respective regulations. SPI came into operation on November 3, 2020, with the possibility of gradual availability of system features,
including in relation to the hours of operation.
In March
2022, BCB Normative Instruction No. 243/22 was edited, which discloses procedures to be observed for direct participation in the SPI,
for the opening of the Instant Payments Account (PI Account). and sets the maximum time limits for validation and settlement of instant
payment orders.
Pix
Cobrança, the function that consists in the possibility of the recipient user managing and receiving, in a facilitated manner,
collections related to immediate payments and payments with maturity, was included in the regulation by BCB Resolution No. 30/20, in accordance
with the deadlines for implementation provided for by BCB Normative Instruction No. 43/20, as amended.
The
procedures necessary for accession to the PIX by institutions permitted are laid down in BCB Normative Instruction No. 291/22 and on BCB
Normative Instruction No. 373/23.
BCB
Normative Instruction No. 243/22, as amended, governs the procedures to be observed for direct participation in the SPI, for the opening
of the Instant Payments Account (PI Account), under the same terms as the Normative Instruction revoked. In addition, this Resolution
has set the maximum time limits for validation and settlement of instant payment orders, which is provisioned in the Regulation annexed
to BCB Resolution No. 195/22. Furthermore, on December 9, 2022, BCB Normative Instruction No. 200/22, as amended by BCB Normative Instruction
No. 290/23, which establishes the operational procedures for the collection and for the execution of the reimbursement of operational
costs for each Pix for the purpose of withdrawal or exchange settled outside the SPI and establishes the format, periodicity and information
to be provided by Pix participants on these transactions.
Pix
participants can also establish maximum value limits for initiating a Pix, for the purpose of purchase or transfer, by transactional account,
which must be per transaction and per period, with the possibility of differentiating the limit established for the day period and for
the night period, according to BCB Normative Instruction No. 331/22, as amended.
In October
2021, BCB Normative Instruction No. 171/21 was edited, disclosing operational limits and terms for the scheduled and efficient entry of
interfaces dedicated to sharing the initiation service of the Pix payment transaction in Open Banking.
Later,
in December 2021, BCB Resolution No. 177/21 was issued, as amended, which approved the Penalty Manual for Pix, reformulating the distribution
of punishable conduct and establishing penalties for participants who fail to adopt essential security mechanisms in the implementation
of applications, Application Programming Interfaces (APIs), and any other systems related to Pix that could significantly compromise the
arrangement's security or the security and privacy of user data.
On December
1, 2022, BCB Resolution No. 270/22 was edited, which amended Annex I to BCB Resolution No. 177/21 to adjust devices on penalties.
In parallel
with BCB Resolution No. 177/21, BCB Resolution No. 293/23 was also issued, amending the Regulation attached to BCB Resolution No. 1/20,
which governs the operation of the Pix payment arrangement.
BCB
Resolution No. 293/23 aims to define arrangements for establishing partnerships between Pix participants and to regulate transitional
provisions regarding criteria and conditions for outsourcing activities and for establishing partnerships between Pix participants.
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On December
7, 2023, BCB Resolution No. 361/23 was edited, which adjusted and inserted devices related to the application of penalty in case of non-compliance
with rules regarding the Automatic Pix.
On the
same date, the BCB Normative Instruction No. 436/23 was edited, which established the operational procedures related to Automatic Pix,
Scheduled Pix and Collection Pix.
Special
Temporary Administrative, Intervention and Extrajudicial Liquidation Regimes – Under Law No. 6,024/74
Intervention
The
Central Bank of Brazil will intervene in the operations and management of any financial institution not controlled by the Federal Government
if the institution:
| · | suffers losses due to mismanagement, putting creditors at risk; |
| · | repeatedly violates banking regulations; or |
Intervention
may also be ordered upon the request of a financial institution’s management and may not exceed 12 months. During the intervention
period, the institution’s liabilities are suspended in relation to overdue obligations, maturity dates for pending obligations contracted
prior to intervention, and liabilities for deposits in the institution existing on the date intervention was ordered.
Administrative
liquidation
The Central
Bank of Brazil will liquidate a financial institution if:
| · | the institution’s economic or financial situation is at risk, particularly when the institution
ceases to meet its obligations as they fall due, or upon the occurrence of an event that could indicate a state of bankruptcy; |
| · | management commits a material violation of banking laws, regulations or rulings; |
| · | the institution suffers a loss that subjects its unsecured creditors to severe risk; or |
| · | upon revocation of the authorization to operate, the institution does not initiate ordinary liquidation
proceedings within 90 days, or, if initiated, the Central Bank of Brazil determines that the pace of the liquidation may impair the institution’s
creditors. |
As
a consequence of administrative liquidation:
| · | lawsuits pleading claims on the assets of the institution are suspended; |
| · | the institution’s obligations are accelerated; |
| · | the institution may not comply with any liquidated damage clause contained in unilateral contracts; |
| · | interest does not accrue against the institution until its liabilities are paid in full; and |
| · | the limitation period of the institution’s obligations is suspended. |
The
Central Bank of Brazil may end the extrajudicial settlement of a financial institution, in the following cases:
| · | full payment of unsecured creditors; |
| · | change of the institution’s scope to an economic activity that is not part of the SFN; |
| · | transfer of the institution’s control; |
| · | conversion into an ordinary settlement; and |
| · | sale/loss of the institution’s assets, upon its completion and the distribution of the proceeds
among the creditors, even if the debts are not fully paid; or |
| · | absence of liquidity or difficult completion of the institution’s remaining assets, as recognized
by the Central
Bank of Brazil. |
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Temporary
Special Administration Regime
The Temporary
Special Administration Regime, known as (RAET), is a less severe form of Central Bank of Brazil intervention in financial institutions,
which allows institutions to continue to operate normally. RAET may be ordered in the case of an institution that:
| · | repeatedly makes transactions contravening economic or financial policies under federal law; |
| · | faces a shortage of assets; |
| · | fails to comply with compulsory deposit rules; |
| · | has reckless or fraudulent management; or |
| · | has operations or circumstances requiring an intervention. |
Credit
Guarantee Fund (Fundo Garantidor de Crédito)
In the
case of liquidation of a financial institution, employees’ wages, indemnities and tax claims have the highest priority among claims
against the bankrupt institution. In November 1995, the Central Bank of Brazil created the Credit Guarantee Fund (FGC) to guarantee the
payment of funds deposited with financial institutions in case of intervention, administrative liquidation, bankruptcy, or another state
of insolvency. Members of the FGC are financial institutions that accept demand, time and savings deposits as well as savings and loans
associations. The FGC is funded principally by mandatory contributions from all financial institutions based in Brazil accepting deposits
from clients.
The
FGC is a deposit insurance system that guarantees a certain maximum amount of deposits and certain credit instruments held by the same
client against a financial institution (or against member financial institutions of the same financial group). The liability of the participating
institutions is limited to the amount of their contributions to the FGC, with the exception that in limited circumstances, if FGC payments
are insufficient to cover insured losses, the participating institutions may be asked for extraordinary contributions and advances. The
payment of unsecured credit and client deposits not payable under the FGC is subject to the prior payment of all secured credits and other
credits to which specific laws may grant special privileges.
The
maximum amount of the guarantee provided by the FGC as stipulated by the CMN at the moment.is R$250,000.00, maintained until the present
date.
CMN
Resolution No. 4,653/18 regulated an additional monthly contribution to be collected when the Reference Value is 4 times higher than the
Adjusted Shareholders’ Equity. In November 2019, the CMN amended Resolution No. 4,764/19, increasing the amount of the additional
contribution and stating that such contribution shall be collected as of July 2020.
Central
Bank of Brazil enacted BCB Resolution No. 102/21, which revoked Circular No. 3,915/18 establishing the new obligation of providing information
to the FGC by financial institutions, whereby these institutions should have systems and controls that can produce and supply such information
in up to two working days in an electronic file with various data listed in the Circular.
Internal
compliance procedures
All
financial institutions must have in place internal policies and procedures to control:
| · | their financial, operational and management information systems; and |
| · | their compliance with all applicable regulations. |
The
board of executive officers of a financial institution is responsible for implementing an effective structure for internal controls by
defining responsibilities and control procedures and establishing corresponding goals and procedures at all levels of the institution.
The board of executive officers is also responsible for verifying compliance with all internal procedures.
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Restrictions
on foreign investment
The
Brazilian Constitution allows foreign individuals or companies to invest in the voting shares of financial institutions based in Brazil
only if they have specific authorization from the Brazilian government, declaring that the participation of foreign capital is in the
interest of the Brazilian government by means of a presidential decree, pursuant to article 52, of the Act of Transitional Constitutional
Provisions (ADCT). On September 26, 2019, the federal government published Decree No. 10,029, delegating to the Central Bank of Brazil
the power to recognize the government’s interest in the viability of investment operations. On January 22, 2020, the Central Bank
of Brazil issued Circular No. 3,977/20, which recognizes the shareholding in the capital of financial institutions headquartered in Brazil,
of natural persons or legal entities resident or domiciled abroad, as of interest to the Brazilian Government, provided that the requirements
provided for in the regulations of the Central Bank of Brazil are met, including: constitutional procedures, an operating permit, cancellation
of the permit, control changes and corporate restructuring of financial institutions. Thus, the analysis regarding the shareholding of
foreign capital in financial institutions will be performed in the same way as the analysis of composition of capital and shareholding,
which financial institutions of national capital are submitted to. However, foreign investors that do not comply with the requirements
and procedures laid down in the regulations of the Central Bank of Brazil may acquire publicly traded non-voting shares of financial institutions
based in Brazil or depositary receipts representing non-voting shares offered abroad. Any investment in common shares would depend on
government authorization. In January 2012, the Central Bank of Brazil authorized us to create an ADR program for our common shares in
the U.S. market. Foreign interest in our share capital is currently limited to 30.0%.
Anti-money
laundering regulations, banking secrecy and financial transactions linked to terrorism
Under
Brazilian anti-money laundering rules and financial operations linked to terrorism, especially Law No. 9,613/98 (as amended by Law No.
12,683/12), Law No. 13,260/16, BCB Resolution No. 119/21, and Circulars No. 4,005/20 and No. 3,978/20, as amended by BCB Resolution No.
282/22, bringing the requirement of informing the address in the client identification stage required in the qualification procedures,
in order to make the products offered operational; identification of the final beneficiary; and identification of the bearer in the case
of operation in specie contribution, and by BCB Resolution No. 344/2023, which establishes cases for disregarding qualification
procedures and classification of clients in purchasing loan operations based on a program instituted by the federal agency promoting the
renegotiation of debts of individuals registered in default databases. The financial institutions must,
among other things:
| · | keep up-to-date records regarding their clients; |
| · | maintain internal controls and records; |
| · | record transactions involving Brazilian and foreign currency, securities, metals or any other asset which
may be converted into money; |
| · | keep records of all transactions made, products and services contracted, including withdrawals, deposits,
contributions, payments, receipts and transfers of resources; and |
| · | keep records and include additional information about withdrawal operations, including those carried out
by means of a check or money order, of individual value equal to or greater than R$50 thousand, as well as inform the Council for Financial
Activities Control (COAF). |
The
financial institution must review transactions or proposals whose characteristics may indicate the existence of a crime and inform COAF
about suspicious operations of the proposed or executed transaction and implement control policies and internal procedures. Records of
multiple transactions must be kept for at least ten years, unless the bank is notified that a CVM investigation is underway, in which
case the ten-year obligation may be extended.
In addition,
as provided by CVM Resolution No. 50/21, as amended, and consolidated in Central Bank of Brazil’s Circular No. 3,978/20, as amended,
the qualification of the politically exposed person was extended. Politically exposed are those who hold or held prominent public positions
in Brazil or abroad during the past five years and their relatives and close associates. Such individuals include heads of state and government,
senior politicians and civil servants, judges or high-ranking military officers, and leaders of state-owned companies or political parties,
members of the Judiciary, Legislative and Executive powers, the Federal Public
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Prosecutor, Minister
of State, members of the Court of Auditors (at federal, state and municipal), as well as individuals who held or still hold relevant positions
in foreign governments.
In addition,
Resolution No. 50/21, among other issues: (i) establishes and details the Anti-Money Laundering Policy, Terrorism Financing and the Financing
of the Proliferation of Weapons of Mass Destruction to be adopted by the people indicated in the Resolution; (ii) lays down the methods
and procedures of organization and internal controls; and (iii) indicates the responsibilities of the officer responsible for compliance
with the rules provided for in the Resolution, as well as the responsibilities of the senior management of the entity.
In 2008,
the Central Bank of Brazil expanded the applicable rules for controlling financial transactions related to terrorism. Law No. 12,683/12,
a more rigorous standard has been established for money laundering offenses. According to the new law, any offense or misdemeanor –
and not only serious offenses, such as drug traffic and terrorism – may be deemed as a precedent to the money laundering offense.
Additionally, the law expands, to a great extent, the list of individuals and legal entities subject to the control mechanisms of suspicious
transactions, which need to notify the COAF, including, among them, companies providing advisory or consulting services to operations
in the financial and capital markets, under the penalty of fines of up to R$20.0 million. We have an obligation to send to the regulatory
or inspection agency information regarding the existence or non-existence of suspicious financial transactions and other situations that
generate the need for communications.
The
Central Bank of Brazil changed the procedures related to AMLTF to be adhered to by the payment institutions, in order to meet international
requirements set forth under the scope of the Financial Action Task Force (FATF), which is the body responsible for establishing AMLTF
standards to be adhered to by the countries of the G20. Accordingly, in addition to the AMLTF procedures already required, payment institutions
must also adopt procedures and controls to confirm the client’s identification and implement AMLTF risk management systems. CVM
Resolution No. 50/21 which also replaced Normative Instruction No. 617/19, states the standards of AMLTF, with definition of the functions
of the responsible officer, definition of the stages linked to conducting the policy of getting to know your client and greater details
on the warning signs to be monitored, and the points that must integrate the analysis of the operation or atypical situation detected.
Also
in 2014, SUSEP established the Permanent Committee on Anti-money Laundering and Combating Terrorism Financing in the Insurance, Reinsurance,
Capitalization and Private Pension Plan Markets (CPLD). The CPLD is a permanent governing body acting to prevent money laundering and
curtail terrorism financing, both in connection with SUSEP and the insurance, reinsurance, capitalization and private pension plan markets.
In March
2019, Law No. 13,810/19 was enacted, which deals with the enforcement of sanctions imposed by the resolutions of the United Nations Security
Council (CSNU), regulated by BCB Resolution No. 44/20, having operational clarifications of its procedures made by Normative Instruction
No. 262/22.
In January
2020, the Central Bank of Brazil issued Circular No. 3,978/20, as amended, as specified below. This Circular revoked Circular No. 3,461/09,
enhancing the policy, procedures and internal controls to be adopted to give greater efficiency to the procedures practiced in the prevention
of money laundering and terrorist financing. Among the main guidelines introduced by Circular No. 3,978/20, we highlight:
| · | Internal risk assessment: guidelines that the regulated institutions use as subsidy, when available,
the evaluations carried out by public entities of the country concerning the risk of money laundering and terrorist financing; |
| · | Registration of operations: maintenance of records of all operations, products and services contracted,
including withdrawals, deposits, contributions, payments, receipts and transfers of resources, including the operations carried out in
the context of the institution itself, indicating information enabling the identification of the parties of each operation and origin
and destination of resources in cases of payment transactions, receipts and transfer of resources; |
| · | Operations in kind: a guideline was included requiring the inclusion of the identity of the sender
where operations involving resources in kind of individual value exceed R$2 thousand; |
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| · | Procedures to get to know clients: enhancement and inclusion of new procedures destined to get
to know clients, in order to understand the identification, qualification and classification of the client compatible with the risk profile
and nature of the business relationship, in addition to the possibility, if necessary, of cross-checking information collected with those
available on databases of public or private character. These procedures of identification and qualification shall also be adopted for
managers of corporate clients and representatives of clients, compatible with the function exercised; |
| · | Politically Exposed People: expansion of the group of people characterized as politically exposed
to the Executive, Legislative and Judicial Powers, the Public Attorney’s Office and, in terms of state companies, at federal, state
and municipal levels; |
| · | Guidelines for hiring: inclusion in the AMLTF policies of guidelines for the selection and hiring
of employees, partners and service providers considering the risk of money laundering and terrorist financing; |
| · | Relationship with third parties: inclusion of forecast that if the institution establishes a business
relationship with third parties not subject to the operating permit from the Central Bank of Brazil, the institution’s access to
the identification of the final recipients of resources for purposes of the AMLTF must be stipulated in the contract; and |
| · | Monitoring procedures: inclusion of specific situations to the non-exhaustive list of operations
that, considering the parties involved, the values, the forms of implementation, the instruments used or the lack of economic or legal
basis, may establish the existence of solid evidence of suspected money laundering or terrorist financing. |
BCB
Resolution No. 119/21 regulated new themes, with the objective of improving some regulatory points, in order to enable adequate and effective
compliance with the rules established by Circular No. 3,978/20 of the Central Bank of Brazil, which are:
| · | Requirement of the address information in the client identification stage: obtaining information
from the client’s place of residence, in the case of a natural person, or from the place of the head office or branch, in the case
of a legal entity, is now only required in the client’s qualification procedures, in order to make it possible to operate some of
the products offered; |
| · | Identification of the final beneficiary: in order to conform to Circular No. 3,978/20 to the CVM
regulations on AMLTF, some exceptions have been made to the need to identify the final beneficiary. Thus, except for the need to identify
the final beneficiary, for example (i) legal entities characterized as an open company, non-profit entities and cooperatives; (ii) the
investment funds registered in the CVM, constituted in the form of a closed condominium, the quotas of which are traded on an organized
market, in addition to (iii) certain non-resident investors; and |
| · | Identification of the holder: in the case of operation with the use of in-kind resources performed
by a security and protection company, the identification of the natural person carrying the resources is not effective for AMLTF purposes,
especially in view of the number of changes in the person who actually holds the resources. In this way, BCB Resolution No. 119/21 changed
the sense of considering the security and protection company as the carrier of the resources. |
In August
2020, SUSEP issued Circular No. 612/20, amended by Circular No. 622/21, which provides on the policy, procedures and internal controls
intended specifically for preventing and combating the crimes of money laundering or concealment of assets, rights and values, or the
crimes that they can relate to, as well as preventing and combating the terrorism financing.
Anticorruption
Law
In August
2013, Law No. 12,846/13 was enacted to regulate civil and administrative liability of legal entities for performing acts against public
management, either domestic or foreign. Based on this legal provision, legal entities shall be strictly liable, in both the administrative
and civil spheres, for the practice of harmful acts in their exclusive or non-exclusive interest or benefit.
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The
Decree No. 11,129/22 regulates the application of Law No. 12,846/13. Among others, it establishes the guidelines with respect to the calculation
of the fines to be imposed in cases involving corruption scandals. The basis of calculation for the application of financial penalty will
be the gross legal entity billing in the last year prior to the establishment of the Administrative Accountability Procedure, excluding
taxes. Articles 22 and 23 of the Decree relate to the "compromise" of the fine, providing for "mitigating" and "aggravating”
factors. In the first case, there are provisions regarding the non-consummation of the infraction, compensation for damages, level of
cooperation, non-existence or lack of proof of advantage and damage resulting from the injurious act, spontaneous communication, preparation
of the program of governance and internal structure of compliance; in the second, as “aggravating factors”, it provides for
the continuity of the conduct during the relevant period, number of harmful acts, any tolerance by the Board of the company, suspension
of construction or public service and positive economic situation, recurrence. If it is not possible to use the revenue as a parameter
for the calculation of the fine, the values to be applied may be between R$6 thousand, minimum, and R$60 million, maximum. An additional
3% fine will be levied if within five years of the “corrupt” conduct such “corrupt” conduct is repeated.
Audit
partner rotation requirements
Under
Brazilian regulations, all financial institutions must:
| · | be audited by an independent accounting firm; and |
| · | have the specialist in charge, officer, manager or audit team supervisor periodically replaced without
the need to change the independent auditor firm itself. Rotation must take place after five fiscal years at most and replaced professionals
may be reintegrated three years later. Terms of responsible specialists, officers, managers or audit team supervisors begin on the day
the team begins work on the audit. |
Each
independent accounting firm must immediately inform the Central Bank of Brazil of any event that may materially adversely affect the relevant
financial institution’s status.
According
to BCB Resolution No. 130/21, as amended, payment institutions that are registered as publicly-held companies and are conglomerate leaders
classified within Segment S1, S2 or S3 should constitute a statutory body called the Audit Committee, which will be responsible for the
fulfillment of the attributions and responsibilities of the Resolution.
For
the entities regulated by SUSEP, the applicable standards determine the replacement of the actuary and members responsible for the independent
accounting audit, every five fiscal years (Article 107 of CNSP Resolution No. 432/21). According to Article 119, VIII, of aforementioned
CNSP Resolution No. 432/21, amended by CNSP Resolution No. 448/22, both revoked CNSP Resolution No. 321/15, the member responsible for
the independent accounting audit is the technical responsible, officer, manager, supervisor or any other member in a management function
that is a member of the team responsible for independent accounting audit work. A member responsible for the independent accounting audit
can only return three years after being replaced.
For
the entities regulated by ANS, the applicable standards in effect since 2016 determine that the professional responsible for signing the
auditors’ report should change at least every five fiscal years, requiring a minimum interval of three years from its replacement.
The
members of the Board of Directors, elected in the form of Article 141, paragraph 4 of the Brazilian Corporate Law, will have veto rights,
provided that it is in a substantiated manner, the appointment or removal of the independent accounting firm.
Auditing
requirements
Because
we are a financial institution and registered with the local stock exchange, we are required to have our financial statements, prepared
in accordance with BR GAAP, audited every six months, applicable to institutions authorized to operate by the Central Bank of Brazil.
Quarterly financial information filed with the CVM is also subject to review by independent auditors. Additionally, as required by CMN
Resolution No. 4,818/20, we are required to publish annual consolidated financial statements prepared in accordance with
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IFRS, accompanied by
the independent auditors’ report and the management report on social business and the main administrative facts for the period.
Resolution
No. 4,818/20 consolidates the general criteria for the preparation and disclosure of financial statements and other institutions authorized
to operate by the Central Bank of Brazil, with the exception of the managers of consortium and payment institutions. These institutions
must draw up and publish annual financial statements relating to the fiscal year, and semiannual, relating to the six months ended June
30 and December 31, which are: (i) balance sheet; (ii) income statement; (iii) comprehensive statement of income; (iv) statement of cash
flows; and (v) statement of changes in stockholders’ equity.
In addition,
in December 2020, the CMN enacted Resolution No. 4,877/20 which contains provisions on the general criteria for the measurement and recognition
of social and labor obligations by institutions authorized to operate by the Central Bank of Brazil (except consortium managers and payment
institutions). With this resolution, the authorized institutions are obliged to recognize as a monthly liability, when drawing up trial
balance or balance sheets, the values due on the portions of the results of the period allotted or to be allotted to employees, managers
or to funds and assistance and other obligations with employees.
The
independent auditors must also declare to the audited company’s management that their provision of these services does not affect
the independence and objectivity required for external auditing services.
CMN
issued CMN Resolution No. 4,910/21, which revoked Resolution No. 3,198/04, establishing that financial institutions and other institutions
authorized to operate by the Central Bank of Brazil that (i) are registered as an open company; (ii) are leaders of a prudential conglomerate
classified in Segment S1, S2 or S3, according to specific regulations; or (iii) meet the criteria laid down in the specific regulations
for the framework in S1, S2 and S3, in which they must constitute a statutory body called “audit committee”.
This
resolution defined the minimum requirements to be observed by financial institutions when electing members for the Audit Committee, establishing
the composition, mandate, and duties.
The
Audit Committee is responsible for recommending to the Board of Directors which independent accounting firm to engage, reviewing the company’s
financial statements, including the notes thereto, and the auditors’ opinion prior to public release, evaluating the effectiveness
of the auditing services provided and internal compliance procedures, assessing Management’s compliance with the recommendations
made by the independent accounting firm, among other matters. Our Bylaws were amended in December 2003 to stipulate the existence of an
Audit Committee. In May 2004, our Board of Directors approved the internal regulations for the Audit Committee and appointed its first
members. Our Audit Committee has been fully operational since July 2004.
The
Audit Committee shall keep at the disposal of the Central Bank of Brazil and of the board of directors the Audit Committee’s report
for a minimum period of five years, counted from its preparation. In addition, institutions should disclose, together with their individual
and consolidated, semi-annual and annual financial statements, a summary of the audit committee’s report, showing the main information
contained in this document.
Operations
in other jurisdictions
We have
branches and subsidiaries in several other jurisdictions, such as New York, Florida, London, Grand Cayman Islands, Hong Kong, Mexico,
Guatemala and Luxembourg. The Central Bank of Brazil supervises Brazilian financial institutions’ foreign branches, subsidiaries
and corporate properties, and prior approval from the Central Bank of Brazil is necessary to establish any new branch, subsidiary or representative
office or to acquire or increase any interest in any company abroad. In any case, the subsidiaries’ activities should be complementary
or related to our own principal activities. In most cases, we have had to obtain governmental approvals from local central banks and monetary
authorities in foreign jurisdictions before commencing business. In each jurisdiction in which we operate, we are subject to supervision
by local authorities.
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Asset
management
In August
2004, the CVM issued Instruction No. 409/04, consolidating all previous regulations applicable to fixed-income asset funds and equity
mutual funds. Prior to this ruling, fixed-income asset funds were regulated by the Central Bank of Brazil, and equity mutual funds were
regulated by the CVM.
In December
2014, the CVM enacted Instruction No. 555/14, which replaced Instruction No. 409/04, in order to improve electronic communications, rationalize
the volume, content and manner of disclosing information, and to make investment limits less rigid for certain financial assets, particularly
foreign financial assets.
In December
2022, CVM issued Resolution No. 175/22, which replaced Instruction No. 555/14, with the aim of modernizing the regulatory framework for
investment funds, systematizing and regulating the innovations brought by Law No. 13,874, of September 20, 2019, in order to improve the
regulatory framework for investment funds. known as the “Law of Economic Freedom”. In general, it establishes higher standards
of transparency, governance, criteria for the composition of investment portfolios and defines the rights and responsibilities of the
shareholders and service providers, seeking to provide greater legal certainty to the participants of the capital market.
In addition
to the above, CVM Resolution No. 175/22, as amended, among the changes provided by the said Resolution, highlights (i) the possibility
of the fund to define whether the liability of the shareholders will be limited or unlimited to the value of the quotas; (ii) the liability
of the essential service providers (administrators and managers) and other service providers of the fund, who will respond to the CVM
in their respective spheres of activity, for their own acts and omissions contrary to the law, the regulation of the fund or the current
regulation; (iii) the creation of different classes of quotas, with different rights and obligations, and must belong to the same category
as the fund; (iv) determines that all portfolio assets are identified by an ISIN (International Securities Identification Number) code
in order to establish an international standardization in the identification of financial assets, assigning each asset traded on the market
a unique identification code; and (v) possibility of investing in new asset classes, such as cryptoassets, decarbonization credits and
carbon credits.
Pursuant
to Resolution No. 175/22, securities, as well as other financial assets which are an integral part of the investment fund portfolio, should
be duly registered in the registration system with a custodian or central depository, in all cases, with institutions duly authorized
by the Central Bank of Brazil or the CVM to carry out such activities, in their respective areas of competence.
Broker
and dealer firms
Broker
and dealer firms are part of the SFN and are subject to CMN, Central Bank of Brazil and CVM regulation and supervision. Brokerage and
distribution firms must be authorized by the Central Bank of Brazil and are the only institutions in Brazil authorized to trade on Brazil’s
stock exchanges. Both brokers and dealers may act as underwriters for public placement of securities and engage in the brokerage of foreign
currency in any exchange market.
Brokers
must observe B3 rules of conduct previously approved by the CVM, and must designate an executive officer responsible for observance of
these rules.
Broker
and dealer firms may not:
| · | with few exceptions, execute transactions that may be characterized as the granting loans to their clients,
including the assignment of rights; |
| · | collect commissions from their clients related to transactions of securities during the primary distribution;
or |
| · | acquire assets, including real estate properties, which are not for their own utilization, with certain
exceptions. |
Broker
and dealer firms’ employees, managers, partners, controlling and controlled entities may trade securities on their own account only
through the broker they are related to.
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In March
2022, CMN Resolution No. 5,008/22 totally revoked CMN Resolution No. 4,750/19, which amended the regulation applicable to brokers and
distributors, allowing their role as issuers of electronic money. The new Resolution provisions on the constitution, organization and
operation of securities dealers and brokers (CTVM) and of securities’ distributors and brokers (DTVM).
Internet
brokerage services
The
CVM approved regulations on Internet brokerage activities, which may be carried out only by registered companies. Brokers’ website
must contain details of their systems, fees, security and procedures for executing orders. They must also contain information about how
the market functions generally and the risks involved with each type of investment offered.
Brokers
that carry out transactions over the Internet must guarantee the security and operability of their systems, which must be audited at least
twice a year.
Leasing
The
basic legal framework governing leasing transactions is established by Law No. 6,099/74, as amended (the Leasing Law) and related regulations
issued periodically by the CMN. The Leasing Law provides general guidelines for the incorporation of leasing companies and the business
activities they may undertake. The CMN, as the regulator of the Financial System, is responsible for issuing Leasing Law related regulations
and overseeing transactions made by leasing companies. Laws and regulations issued by the Central Bank of Brazil for financial institutions
in general, such as reporting requirements, capital adequacy and leverage regulations, asset composition limits and treatment of doubtful
loans, are also applicable to leasing companies.
The
accounting criteria applicable to leasing operations contracted by consortium managers and by payment institutions authorized to operate
by the Central Bank of Brazil are set out in BCB Resolution No. 178/22.
Insurance,
health and pension plans regulation
Principal
regulatory agencies
National
Private Insurance Council (CNSP)
The
National Private Insurance Council (CNSP) is the agency responsible for establishing the guidelines and standards of private insurance
policy. The agency is composed of representatives of the Ministry of Finance, the Ministry of Justice, the Ministry of Social Security
and Social Assistance of the Superintendence of Private Insurance, the Central Bank of Brazil and the CVM.
In addition
to laying down the guidelines and standards of private insurance policy, it is the responsibility of the CNSP:
| · | to regulate those exercising activities, subordinate to the National Private Insurance System, as well
as the application of penalties; |
| · | to establish the general characteristics of insurance, open private pension, capitalization and reinsurance
contracts; |
| · | to establish the general guidelines of reinsurance operations; and |
| · | to prescribe the criteria for the establishment of Insurance Companies, of Capitalization, Open Private
Pension Entities and Reinsurers. |
Private
Insurance Superintendence (SUSEP)
SUSEP
is responsible for implementing and overseeing CNSP’s policies and ensuring compliance with such policies by insurance companies,
insurance brokers and insured individuals. SUSEP is linked to the Ministry of Finance and was created by Decree-Law No. 73 of November
1966.
Thus,
for insurers to operate, they need government approval, as well as specific approval from the SUSEP to commercialize each of their products,
where they may underwrite policies either directly to consumers or through qualified brokers (Article 13 and paragraph 2 of Law No. 4,594/64).
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SUSEP
is responsible for:
| · | Supervising the constitution, organization, functioning and operation of insurance companies, of capitalization,
open private pension entities and reinsurers; |
| · | Complying with and enforcing the deliberations of the CNSP and performing the activities delegated by
it; |
| · | Acting in order to protect the acquisition of popular savings that are made through the operations of
insurance, open private pension, and of capitalization and reinsurance; |
| · | Promoting the improvement of institutions and operational instruments; |
| · | Promoting the stability of the markets under its jurisdiction, ensuring their expansion and the operation
of the entities that operate in them; |
| · | Ensuring the liquidity and solvency of companies that make up the insurance market; and |
| · | Ensuring the protection of consumer interests of the markets supervised. |
National
Supplemental Health Agency (ANS)
The ANS
is a municipality linked to the Ministry of Health, with operations throughout Brazil, as an agency of regulation, standardization, control
and supervision of activities that ensure the qualification of health care in the supplemental health sector.
The main
initiatives of ANS are to stimulate the quality of the supplemental health sector and encourage programs to promote and prevent diseases
in the sector in which it operates.
To fulfill
its objectives, the following are incumbent upon the ANS:
| · | Regulation of the Supplemental Health Care, creating general policies and guidelines, actions to standardize
and foment actions that aim to protect the public interest and the sustainability of the supplemental health care market; |
| · | Qualification of the supplemental health care, creating policies, guidelines and actions that seek, among
others the qualification of the sector, in relation to the regulated market; and |
| · | Institutional Articulation, creating policies, general guidelines and actions to optimize the internal
and external institutional relations enabling the effectiveness of the regulatory process. |
Insurance
Regulation
The
Brazilian insurance business is regulated by Decree-Law No. 73/66, as amended, which created two regulatory agencies, the CNSP and SUSEP.
SUSEP is responsible for implementing and overseeing CNSP’s policies and ensuring compliance with such policies by insurance
companies, capitalization companies, open private pension entities, insurance brokers, reinsurers and the insured persons. Insurance
companies require government approval, as well as specific approval from SUSEP to offer each of their products. Insurance companies may
underwrite policies both directly to consumers and through qualified brokers (Article 13 of Law No. 4,594/64).
Insurance
companies must set aside reserves in accordance with CNSP criteria. Investments covering these reserves must be diversified and meet certain
liquidity, solvency and security criteria, rules for which were consolidated by CNSP Resolution No. 321/15, revoked by CNSP Resolution
No. 432/21, later amended by CNSP Resolution No. 448/22 and No. 453/22. The insurance companies are major investors in the Brazilian financial
markets and are subject to CMN rules and conditions for their investments and coverage of technical reserves.
Insurance
companies may not, among other activities:
| · | act as financial institutions by lending or providing guarantees; |
| · | trade in securities (subject to exceptions); or |
| · | invest outside of Brazil without specific permission from the authorities. |
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Insurance
companies must operate within certain retention limits approved by SUSEP pursuant to CNSP rules. These rules reflect the economic and
financial situation of insurance companies and the conditions of their portfolios. Insurers must also meet certain capital requirements
as provided by SUSEP regulations.
Under
Complementary Law No. 126/07, the ceding party (local insurer or reinsurer) must offer local reinsurers preference when contracting reinsurance
or retrocession in the percentage of 40% of risks ceded.
The
Complementary Law also places more severe restrictions on ceding risk to foreign reinsurance companies and contracting of insurance abroad.
Insurance companies must reinsure amounts exceeding their retention limits.
Since
CNSP Resolution No. 168/07 was amended by CNSP Resolution No. 353/17, it does not require the insurance company to utilize a minimum number
of local reinsurers. However, in accordance with Article 15 of the CNSP Resolution No. 168/07, the insurance company needed to give preference
to local reinsurers in at least 40% of the assignment of reinsurance agreements to each automatic or optional contract. In addition, as
per CNSP Resolution No. 168/07, there were no more limits on the transference of risks by insurers to companies that belong to its financial
conglomerate. Pursuant to its amendment by CNSP Resolution No. 353/17, it was established that reinsurance and retrocession operations
within the same economic conglomerate should "ensure the effective transfer of risk between the parties" and "take place
under conditions of fair competition".
Subsequently,
Resolution CNSP No. 168/07 was revoked by Resolution CNSP No. 451/22, regulated by Circular No. 683/22, which provides for the transfer
and acceptance of reinsurance and retrocession operations and their intermediation, coinsurance operations, foreign currency operations
and insurance contracts abroad. These rules provide for new rules on preferential offer to local reinsurers, indicating that, for the
purposes of fulfilling the preferential offer, the insurance company should conduct formal consultation with one or more local reinsurers
of their free choice, according to the limits provided for in the legislation.
Resolution
No. 432/21, amended by the Resolution No. 448/22 and No. 453/22, as well as Circular No. 648/21, amended by Circular No. 678/22, provides
for regulating technical provisions, assets which reduce the need for coverage of technical provisions, risk capital, adjusted shareholders’
equity, solvency regularization plans, retention limit, criteria for investments, accounting standards, accounting and independent actuarial
audits, and Audit Committee applicable to insurance companies, open pension fund entities (EAPCs), capitalization companies and reinsurers.
Insurance
companies are exempt from ordinary financial liquidation procedures in case of bankruptcy, and instead follow the special procedure administered
by SUSEP. Resolution CNSP No. 444/22 provides for preventive prudential measures aimed at preserving the stability and soundness of the
National Private Insurance System, of the National Capitalization System and the Supplementary Pension System and ensuring the solvency,
liquidity and regular functioning of those supervised. Financial liquidation may be either voluntary or compulsory.
As was
already the case in relation to entities subject to CMN, SUSEP issued rules in December 2008 with specific internal controls for preventing
and fighting money laundering crimes. These rules include a series of provisions for notifying proposed transactions with politically
exposed individuals and suppression of terrorist financing activities. These rules were subsequently amended and consolidated. CNSP Resolution
No. 416/21 and SUSEP Circular No. 612/20, as amended by SUSEP Circular No. 622/21, are current in force.
Resolution
No. 383/20 issued by CNSP in March 2020, later amended by Resolution No. 454/22 and No. 461/23, established that insurance companies,
EAPCs, capitalizations companies and local reinsurers must record their operations of insurance, open supplementary pension plan, capitalization
and reinsurance, as the case may be, in the registration system (i) previously approved by SUSEP; and (ii) managed by a registration entity
accredited by SUSEP in order to increase the control of the operations carried out by these companies.
There
is currently no restriction on foreign investment in insurance companies.
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Health
insurance
Private
health insurance and health plans are regulated by Law No. 9,656/98, as amended, which we refer to as the “Health Insurance Law”,
containing general provisions applicable to health insurance companies, in accordance with Law No. 10,185/01, and the general terms and
conditions of agreements entered into between health insurance companies and their clients.
The
ANS is responsible for regulating and supervising supplemental health services provided by health insurance companies pursuant to directives
set forth by the Supplemental Health Council (Conselho de Saúde Suplementar).
Until
2001, SUSEP had authority over insurance companies, which were authorized to offer private health plans. Since 2001, pursuant to ANS regulations
and supervision, only operators of private health plans may offer such plans. We created Bradesco Saúde in 1999 to fulfill this
requirement. However, in accordance with the terms of article 1, paragraph 5 of Law No. 10,185/01, the insurance companies specializing
in health insurance will remain subject to the rules on the application of assets guaranteeing the technical provisions issued by CMN.
Private
pension plans
Open
pension plans are subject, for purposes of inspection and control, to the authority of the CNSP and the SUSEP, which are under the regulatory
authority of the Ministry of Finance. The CMN, CVM and Central Bank of Brazil may also issue regulations pertaining to private pension
plans, particularly related to assets guaranteeing technical reserves.
Private
pension entities must set aside reserves and technical provisions as collateral for their liabilities.
EAPCs
and insurance companies have been allowed to create, trade and operate investment funds with segregated assets since January 2006. Notwithstanding
the above, certain provisions of Law No. 11,196/05 will only become effective when SUSEP and CVM issue regulatory texts. In September
2007, CVM issued Instruction No. 459/07, subsequently amended by Instruction No. 587/17, which addresses the setup, management, operation
and disclosure of information on investment funds exclusively related to supplementary pension fund plans. Both were revoked by Resolution
No. 175/22, which provides for the establishment, operation and dissemination of information from investment funds, as well as the provision
of services for the funds. In January 2013, the CMN determined rules to govern the application of reserves, provisions and funds of insurance
companies, capitalization companies and EAPCs. In December 2019, the CMN published Resolution No. 4,769/19, changing the limits for the
investment of resources addressed in Resolution No. 4,444/15. Both standards were subsequently revoked by CMN Resolution No. 4,993/22,
which provides for the rules governing the investment of technical reserve resources, from provisions and funds of insurance companies,
capitalization companies, open supplementary pension entities and local reinsurers, on the investments of resources required in the country
to guarantee the obligations of reinsurers admitted and on the portfolio of Individual Scheduled Retirement Funds (FAPI), later amended
by CMN Resolution No. 5,016/22. In turn, CNSP enacted CNSP Resolution No. 432/21, later amended by CNSP Resolution No. 448/22 and No.
453/22, revoking Resolution No. 321/15, which among various subjects, also regulates the investments by insurers, open entities of supplementary
pension plans, capitalization companies and local reinsurers.
Currently,
in addition to Complementary Law No. 109/01, the main rules governing the activity of open supplementary pension are CNSP Resolution No.
349/17 and CNSP Resolution No. 348/17, SUSEP Circular No. 563/17, SUSEP Circular No. 564/17, both amended by Circular No. 585/19, CNSP
Resolution No. 458/22 and SUSEP Circular No. 685/22.
Reinsurance
Insurance
companies must operate with reinsurers registered with SUSEP, and may, exceptionally, contract out reinsurance or retrocession operations
not authorized to operate in Brazil when local and foreign reinsurers lack sufficient capacity.
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Currently,
due to Decree No. 10,167/19, the Brazilian law provides that the insurer or the cooperative society may concede occasional reinsurers
up to 95% of premiums ceded in reinsurance, based on the totality of its operations in each calendar year. In the same way, the local
reinsurer may also concede up to 95% of the premiums issued relating to risks they have underwritten, also calculated on the basis of
the totality of its operations in each calendar year. It is worth noting that some lines or insurance modalities may have greater or lesser
restrictions on the percentages of premiums that may be ceded in reinsurance.
The
regulation of SUSEP established a minimum compulsory contracting of 15% of the reinsurance ceded, with Brazilian reinsurers. In addition,
it provided a limit to certain lines of up to 75%, so that a Brazilian-based insurer or reinsurer could transfer risks to related or foreign-based
companies belonging to the same financial conglomerate. These limits were revoked when CNSP Resolution No. 353/2017 and CNSP Resolution
No. 451/22 came into force. CNSP Resolution No. 451/22 indicates that, for the purposes of fulfilling the preferential offer related to
Brazilian reinsurers, the insurance company must observe the percentage established in the current legislation, applicable to each automatic
or optional contract. In addition, it establishes that insurance companies should submit to SUSEP, by March 31 of the following calendar
year, technical justification for a percentage of reinsurance assignment in excess of 90%, considering the totality of their operations,
per calendar year. In addition, reinsurance and retrocession operations carried out between companies linked or belonging to the same
financial conglomerate must occur under balanced conditions of competition, and the parties involved will be responsible for demonstrating
compliance with these conditions.
Recently,
CNSP Resolution No. 380/20 extended the list of people who can purchase reinsurance, including: (i) Open Supplementary Pension Fund Entity
(EAPC) (Article 2, paragraph 1); and (ii) Closed Supplementary Pension Fund Entity (EFPC) and operators of private health care plans (Article
2, paragraph 2). Although it was revoked by CNSP Resolution No. 451/22, the provisions in this regard were maintained.
Taxes
on our main transactions
Taxes
on financial transactions (“IOF”)
On
loan transactions
IOF
on loans levied on loan operations have as their taxable event the delivery of the obligation amount or value or its placement available
to borrowers.
Rate
applicable to loans and advances of any type, including credit opening is 0.0041% per day to legal entity borrowers and 0.0082% to individual
borrowers.
The
IOF on loans daily rate will be charged on principal available to borrowers regarding the loans and advances, whereby:
| • | for cases in which the amount of principal is determined, the IOF on loans daily rate shall not exceed
the amount resulting from the daily rate applied to each principal amount, which is expected to be used for the transaction, multiplied
by three hundred and sixty-five days (365); |
| • | for cases in which the amount of principal is not determined before the transaction (revolving credit),
the values of interest and charges that will use the limits of revolving credits, will be part of the principal amount, subject to IOF
on loans rates, so that the calculation base will comprise the sum of daily outstanding debt balances calculated on the last day of each
month. |
Since
January 2008, besides IOF on loans daily rate on the transactions mentioned above, loans and advances have been subject to IOF on loans
additional rate of 0.38% irrespective of the repayment period or whether the borrower is an individual or a legal entity. This way, in
loan operations with defined principal, for legal entities, IOF on loans rate shall not exceed 1.8765% and for individuals, it will not
exceed a 3.373% rate, which corresponds to the result of applying the daily rate to each amount of principal stipulated for the transaction,
multiplied by 365 days, plus an additional rate of 0.38% even if the loan is to be repaid by installment.
IOF
on loans is levied on loan operations between individuals and legal entities domiciled in Brazil, as well as on operations whose creditor
resides in Brazil, even if the debtor is located abroad. However, IOF on loans is not levied on loans where the lender is located abroad,
and the borrower is in Brazil.
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Insurance
transactions
IOF on
insurance levied on insurance operations has as its taxable event the receipt of premium. Applicable rates are as follows:
| · | 0.0% on: (i) reinsurance operations; (ii) operations related to mandatory insurance, linked to residential
housing loans granted by an agent of the national housing system (SFH); (iii) insurance operations for export credits and international
merchandise transportation; (iv) insurance operations entered into Brazil, related to the cover for risks relating to the launch and operation
of the satellites Brasilsat I and II; (v) aeronautical insurance and civil liability of airlines; (vi) premiums intended to finance life
insurance plans with survival coverage; and (vii) guarantee insurance; |
| · | 0.38% of premiums paid, in the case of life insurance and similar policies, for personal or workplace
accidents, including mandatory insurance for personal injuries caused by vehicles or ships or cargo to persons transported or others; |
| · | 2.38% private health insurance business; and |
| · | 7.38% for all other insurance transactions. |
Income
and social contribution taxes on income
Federal
taxes on company profits include two components, income tax known as IRPJ and tax on net income, known as Social Contribution or CSLL,
both calculated on the adjusted net income. Income tax charges are calculated based on a rate of 15.0% plus a surcharge of 10.0% on taxable
income exceeding R$240 thousand per annum, corresponding to a combined rate of 25.0%. Social contribution tax payable by the majority
of financial institutions is calculated based on a rate of 15% as of January 1, 2019.
However,
with the enactment of Constitutional Amendment No. 103/19, as of March 1, 2020, the banks of any kind and the development agencies began
to be subject to the increased rate of 20%. On March 1, 2021, Provisional Measure No. 1,034/21 was enacted, which increases the rates
for Social Contribution by 5% for the majority of financial institutions (including banks of any kind) during the period from July 1,
2021 to December 31, 2021. Provisional Measure No. 1,034/21 was converted into Law No. 14,183/21, which (i) increased to 25% the CSLL
rate on banks of any kind, reduced to 20% as of January 1, 2022; and (ii) maintained the increase in the Social Contribution rate to 20%
for most of the other financial institutions until December 31, 2021, which was subsequently reduced to 15%.
In 2022,
however, Provisional Measure No. 1,115/22 was edited, later converted into Law No. 14,446/22, increasing until December 31, 2022: (i)
from 20% to 21% the CSLL rates on banks of any kind; and (ii) from 15% to 16% for other financial institutions.
Legal
entities in Brazil are taxed based on their global income, and not just the income produced exclusively in Brazil. As a result, profits,
capital gains and other income obtained abroad by Brazilian entities are computed in the determination of their taxable profits on an
annual basis.
As a
rule, affiliates abroad will have their dividends (and not the corporate profit) taxed in Brazil at the time of effective distribution,
except: (i) if they are domiciled in a tax haven or if they adopt a sub-taxation scheme, or (ii) they are treated as subsidiaries. With
regard to the subsidiaries, the controller legal entities in Brazil must: (i) record in sub accounts the investment account, in proportion
to the stake held, the share of the adjustment of the investment value equivalent to corporate profits (calculated before local income
tax), earned by the subsidiaries, directly and indirectly, in Brazil or abroad, concerning the calendar year in which they were calculated
in the balance sheet; and (ii) compute these values in their calculation base of the IRPJ and Social Contribution.
Interest
paid or credited by a company based in Brazil to: (i) an addressee domiciled abroad, whether or not holding equity interest in the company
paying; or (ii) an addressee resident, domiciled or incorporated in a tax haven or locality with a low or privileged tax regime are subject
to the deductibility limits imposed by thin-capitalization and transfer pricing rules.
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Tax
deductions for any payment to a beneficiary resident or domiciled in a country with tax haven are also subject to the following: (i) identification
of the actual beneficiary of the person domiciled abroad; (ii) proof of the ability of the person located abroad to complete the transaction;
and (iii) documented proof of payment of the respective price and of receipt of the assets, rights, or utilization of service.
The
variation in the monetary value of companies’ credit rights and obligations in Brazil due to varying exchange rates can be calculated
on a cash or accrual basis. The election of the tax regime must be exercised in January of each calendar year and may only be altered
during the fiscal year if there is “material variation in the exchange rate”, as published by a Finance Ministry Directive.
PIS
and Cofins
Two
federal taxes are imposed on the gross revenues of legal entities: PIS and Cofins. Nonetheless, many revenues, such as: dividends, equity
earnings from unconsolidated companies, revenues from the sale of non-current assets (investments, fixed assets and intangible assets)
and, in general, export revenues paid in foreign currency are not included in the calculation base for PIS and Cofins. Revenues earned
by corporations domiciled in Brazil are subject to PIS and Cofins taxes corresponding to interest on own capital.
Brazilian
legislation authorizes certain adjustments to the calculation base of those taxes depending on the business segment and on other aspects.
Between
2002 (PIS) and 2003 (Cofins), the government implemented a non-cumulative collection system of PIS and Cofins taxes, allowing taxpayers
to deduct from their calculation basis credits originating from certain transactions. In order to offset these credits, the rates of both
PIS and Cofins were substantially increased. Subsequent to the changes made to PIS and Cofins, as of May 2004, both taxes are applicable
on imports of goods and services when the taxpayer is the importing company domiciled in Brazil.
Since
August 2004, the PIS and Cofins rates due on financial revenues were 0.0%, including those arising from operations carried out for purposes
of hedge, earned by legal entities subject to the system of non-accrual of these contributions. However, Decree No. 8,426/15 establishes
that from July 2015, the rates will be restored to 0.65% regarding the PIS and 4.0% regarding the Cofins. Note that on December 30, 2022,
Decree No. 11,322/22 had been published reducing the related rates to 0.33% and 2.0%, respectively, however, this Decree was revoked on
January 1, 2023 by Decree No. 11,374/23, if the original wording provided for in Decree No. 8,426/15 is reestablished.
On the
other hand, according to the amendments made by Decree No. 8,451/15 to Decree No. 8,426/15, the contributions to PIS and Cofins are subject
to a zero tax rate, specifically in relation to financial revenues arising from: (i) monetary variation, depending on the exchange rate,
of export operations of goods and services, as well as obligations incurred by the legal entity, including loans and financing; and (ii)
hedge operations carried out on the stock exchange, of commodities and of futures, or in the organized OTC market. Certain economic activities
are expressly excluded from the procedures of the non-accrual collection of the PIS and Cofins. This is the case of financial institutions,
which shall remain subject to PIS and Cofins by the “accrued” procedures, which does not permit the discount of any credits,
as provided by Article 10, paragraph I, of Law No. 10,833/03. Despite this impossibility of accrual of credits, the legislation in force
enables the exclusion of certain expenditure in the calculation by such entities of the bases of calculation of the PIS and Cofins (as
is the case, for example, of the expenses incurred by the banks in financial mediation operations and expenditure on severance payments
corresponding to accidents occurring in the case of private insurance companies). In such cases, the income received by the financial
institutions is subject to Contribution to the PIS and Cofins at the rates of 0.65% and 4.0%, respectively.
In July
2010, the Brazilian tax authorities introduced digital tax records (Escrituração Fiscal Digital – EFD) for PIS and
Cofins taxes, which must be adopted, including by financial institutions.
In 2023,
the National Congress approved PEC No. 45/19 responsible for the Tax Reform in Brazil, resulting in Constitutional Amendment No. 132/23.
This Constitutional Amendment reorganizes the taxation on consumption in Brazil, having as main milestone the replacement of five current
taxes (PIS, COFINS, ICMS, ISS and IPI) by a Value Added Tax (VAT) rate, divided into two: (i) the Contribution on Goods and Services
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(CBS), which will be
allocated to the Government, and (ii) the Goods and Services Tax (IBS), which will go to states and municipalities.
In this
sense, after the end of the transition process of the Tax Reform, starting in 2026, the social contributions, PIS and COFINS, will cease
to exist, being replaced by the Contribution on Goods and Services (CBS).
At the
moment, we cannot estimate the impacts that the implementation of the Tax Reform approved by PEC No. 45/19 will have on the operations
developed by the company. In this sense, although taxation on consumption has undergone significant changes, which may result in a possible
increase in the tax burden, there is no way of predicting the impacts on the gross margin of the company.
Compliance
with the Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standard (CRS) (Tax Compliance Laws for Foreign Accounts)
Based
on the commitment to observe the laws and regulations applicable to their business, we comply with the criteria established by the international
treaties, FATCA and CRS, which aim to combat and curb tax evasion, money laundering and terrorist financing.
Established
by the United States government and with the aim of identifying the financial accounts of American taxpayers residing in other countries,
the FATCA law was published in Brazil through Decree Law No. 8,506/15, of the Executive Branch.
The
CRS, conceived under the coordination of the OECD (Organization for Economic Co-operation and Development) with the participation of the
main countries of the world, was released by the Brazilian Federal Revenue Service, through Normative Instruction No. 1,680/16, following
the same guidelines as the American Fatca Law, that is to identify the financial accounts of taxpayers from foreign countries who are
acceding to the agreement.
To meet
national and international requirements, internal compliance standards were established to highlight the transparency of information and
to adopt effective measures to control, monitor and improve existing processes.
Centralized
Registration and Deposit of Financial Assets and Securities
In August
2017, the Brazilian Congress converted Provisional Measure (PM) No. 775/17, issued by the President of Brazil in April 2017, into Law
No. 13,476/17. The new law consolidates the provisions on the creation of liens over financial assets and securities. On the same day,
the CMN issued Resolution No. 4,593/17, as amended, to regulate the provisions set by Law No. 13,476/17 and consolidate the regulation
on centralized deposits and registry of financial assets and securities issued or owned by financial institutions and other institutions
authorized to operate by the Central Bank of Brazil. Resolution No. 4,593/17, as amended, presents a clearer definition of financial assets
which includes, in addition to traditional financial instruments such as certificates and bank deposit receipts, credit securities subject
to discount and credit card receivables. In addition, the rule establishes that the record of financial assets and securities is (i) applicable
to bilateral operations (meaning operations directly with clients), with some exemptions in certain situations; and (ii) the centralized
deposit is applicable to credit securities with payment obligations and securities issued by financial institutions or other institutions
authorized to operate by the Central Bank of Brazil as a condition for engaging in certain negotiations and in the assumption of custody.
The Central Bank of Brazil will issue regulations governing the implementation of such rules, including the creation of an electronic
system for the constitution of liens and encumbrances.
As of
December 2020, by means of BCB Normative Instruction No. 61/20, the financial institutions and other institutions authorized to operate
by the Central Bank of Brazil should inform the standardized identifier of the loan (IPOC), dealt by in Circular No. 3,953/19, as amended
by BCB Resolution No. 36/20, in the registry of financial instruments representative of loan and leasing operations, including those subject
to assignment of credit, chattel and portability and in the form of credit rights, in systems of registration and financial settlement
of assets authorized by the Central Bank of Brazil.
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In March
2023, the Central Bank of Brazil issued BCB Resolution No. 308/23, which provides for the conditions for the exercise of the activities
of registration and centralized deposit of real estate receivables by central financial asset registrars and depositories. Among these
conditions, the said Resolution provisions that the contracts must establish, among others, that the real estate receivables of the enterprise
will be registered or deposited exclusively in the registered entity or in the contracted central depositary, whereby portability is admitted.
For
the purposes of BCB Resolution No. 308/23, the real estate credit right constituted or to be constituted is considered receivable, which
is the result of a purchase and sale contract or a promise of purchase and sale, with or without the issuance of a Mortgage Bond (CCI),
agreed between syndicator or developer and purchaser or committed purchaser of an autonomous real estate unit or lot.
| b) | main aspects related to compliance with legal and regulatory obligations related to environmental and
social issues by the issuer |
Sustainability
is one of the strategic drivers of Bradesco, because we understand that the management of environmental, social and governance (ESG or
ASG in Portuguese) issues has become key to our survival and growth in an environment that is increasingly dynamic and challenging. As
we seek to generate shared and long-term value for investors, employees, suppliers, clients and society, we also contribute to the sustainable
development of the country.
Guidelines
and governance
Our
actions are guided by a set of policies and standards which incorporate best practices in sustainability management and which also govern
our voluntary commitments.
Our
Corporate Sustainability Policy aims to promote our sustainability goals and guide the actions related to the socio-environmental factors
of our business. Other policies and rules incorporate these guidelines, consolidating the practices of social and environmental responsibility,
including from a risk management perspective.
The
Socio-Environmental and Climate Responsibility Standard (PRSAC) defines the main compliance procedures for the socio-environmental and
climate criteria governing our business, relationships with stakeholders and the overall governance of the theme. The Social, Environmental
and Climate Risk Standard establishes the scope and approach to managing these risks, covered in more detail in the section on “Social,
environmental and governance criteria in business decisions”.
The
main governance body presiding over the topic is the Sustainability and Diversity Committee, which includes members of the Board of Directors
and of the Board of Executive Officers, including the CEO. The Committee is advised by the Sustainability Committee, an executive body
composed of officers and managers of various areas, ensuring the implementation of the strategy, monitoring the execution of projects
and their impact on our performance. From the perspective of socio-environmental risk, the main decision-making forums are the Executive
Risk Management Committee and the Integrated Risk Management and Capital Allocation Committee.
Sustainability
Strategy
In line with the Sustainable
Development Goals (SDGs) prioritized by the Organization, our sustainability strategy is based on promoting a change agenda focused on
three important themes:
Sustainable business |
Climate change |
Financial citizenship |
To drive businesses with a positive impact that foster socio-environmental development. |
To ensure that our businesses are prepared for climate challenges, raising awareness and engaging our clients about risks and opportunities. |
To promote education and financial inclusion to leverage socioeconomic development. |
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65 – Reference Form – 2023 | |
These
strategic objectives are aligned to the 2030 Agenda of the United Nations and incorporate the commitment to contribute to the Sustainable
Development Goals (SDGs), with an emphasis on six goals that we prioritize:
4
– Quality education
5
– Gender equality
8
– Decent work and economic growth
9
– Industry, innovation and infrastructure
10
– Reduced inequalities
13
– Climate action
Voluntary
commitments
We adhere
to internationally recognized business initiatives and voluntary commitments, such as: Global Compact,
Sustainable Development Goals (SDGs), Equator Principles, Principles for Responsible Investment
(PRI), Principles for Sustainable Insurance (PSI), Principles for Banking Responsibility (PRB), Women’s Empowerment Principles (WEPs),
Investors for the Climate (IPC), Partnership for Carbon Accounting Financials (PCAF), among others.
We commit
to raising awareness and financing of our clients in the transition to a low-carbon economy and adhere to the Net-Zero Banking Alliance
(NZBA), committing to decarbonize our loan and investment portfolios to achieve zero net emissions by 2050.
Social,
environmental and climate criteria to business decisions
We seek
to incorporate and to constantly improve the analysis of the social, environmental and climate criteria to the business decisions, as
well as to the offer of credit, investments and insurance.
Credit
We have
a governance structure, comprised of committees, policies, standards and procedures, which is intended to identify, measure, mitigate,
monitor and report social, environmental and climate risks. This structure complies with the Central Bank of Brazil’s Resolutions
and observes the principles of relevance and proportionality, which are necessary given the complexity of financial products and the profile
of our activities.
Following
an institutional governance, the area of Socioenvironmental and Climate Risk Analysis and Control conducts processes for the evaluation
of operations and clients, formulation of socio-environmental risk rating, and monitoring of activities, according mainly to the scope
and criteria indicated in the Social, Environmental and Climate Risk Standard, in addition to the requirements and obligations established
by Brazilian laws and regulations.
Investment
Bradesco
Asset, in accordance with the guidelines of its Responsible Investment Policy, adopts an analysis methodology that considers Environmental,
Social and Governance factors (ESG) for all types of assets under its management. This methodology, applied to both private and public
securities, allows a more comprehensive assessment of risks and opportunities, aligning asset management with the principles of sustainability
and social responsibility.
For
private securities, the methodology takes into account the relevant topics of each sector, identifying the risks and opportunities that
companies face. In the case of public securities, indicators are considered that assess regulatory quality and public policies aimed at
providing basic services to the population, environmental conservation and reducing social inequality. Thus, Bradesco Asset incorporates
socio-environmental aspects in its business, with the aim of providing superior and sustainable returns in the management of its clients’
investments.
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In addition,
Bradesco Asset strives to engage companies and business partners to adopt best practices in their respective sectors. Annually, it publishes
the results of this work in the Transparency Report of Principles for Responsible Investment (PRI), to which it is a signatory.
Bradesco
Asset offers funds with strategies dedicated to ESG in various modalities, such as variable income, fixed income and fund of funds. Among
the local funds, the FIA Corporate Sustainability, with variable income, and the Private Credit Performance SRI 20, with fixed income
are featured. In addition, Bradesco Asset has other funds that adopt different active management strategies, combining local and global
action strategies, such as the FIC FIA ESG Global BDR Level I and the FIC MM ESG Global.
In 2023,
Bradesco Asset managed R$659.2 billion in investment funds, of which R$658.7 billion were evaluated considering ESG issues, representing
99.9% of the total assets.
Insurance
Grupo
Bradesco Seguros integrates ESG aspects into its business by offering widely diversified and accessible solutions, products and services,
seeking to further our commitment to contribute towards the country’s sustainable development. Therefore, since 2012, Grupo Bradesco
Seguros has integrated into its business the Principles for Sustainable Insurance (PSI) and its voluntary commitment to the United Nations
Environment Programme Finance Initiative (UNEP-FI), which seeks to continuously evaluate the demand for financial and insurance products
that offer adequate solutions to clients, both in order to boost a low-carbon economy and protect clients from the impacts of, or adapt
them to, the transformations originating from climate change. The Group also participates as a member of the UNEP-FI Global Steering Committee.
In May
2022, the Group signed the Task Force Climate-Related Financial Disclosures (TCFD) commitment initiative that seeks to develop and implement
recommendations for the dissemination and analysis of risks and opportunities related to climate issues and the way they are managed.
In
addition, the Group has its own Sustainability Committee, subject to the Steering Committee of Bradseg Participações S.A.,
which relies on the participation of the Executive Officers and Superintendents of the companies of the Company. The committee aims to
propose strategies and solutions fostering the implementation of sustainability best practices to the activities and business of
the Company, of Associates and Subsidiaries, contributing towards their capacity of adding value in the long run. Bradesco
Seguros also has an area dedicated to the Socio-environmental and Climate Risk Management, which reports to its Risk Committee and, via
the latter, to the Boards of Executive Officers of the business units on the evolution of sustainability risks (social, environmental
and related to climate change).
The
Group is also governed by its own Sustainability Policy and internal rules on Social and Environmental
Responsibility and Socio-environmental Risk, which adopt environmental, social and governance criteria in the monitoring of the processes
and operations of the companies of Grupo Bradesco Seguros.
| c) | reliance on patents, trademarks, licenses, concessions, franchises, contracts of royalties relevant
to the development of the activities |
No reliance
on patents, trademarks, licenses, concessions, franchises, contracts of royalties relevant to the development of the Bradesco activities.
| d) | financial contributions, with indication of the respective values, made directly or through third parties: |
| i. | in favor of occupiers or candidates for political positions |
| ii. | in favor of political parties |
| iii. | to fund the exercise of influence activity in public policy decisions, especially in the content of
normative acts |
According
to the provisions of Law No. 9,504/1997 (Electoral Law) and Law No. 9,096/1995 (Political Party Law), and in our “Bradesco Integrity
Program” Standard donations of legal entities to candidates or political parties are
prohibited, therefore, Bradesco Organization and its jointly or individually controlled companies are expressly prohibited from making
any political donations.
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67 – Reference Form – 2023 | |
Although
donations by Individuals are allowed, it is recommended to all who exercise statutory functions in the Bradesco Organization to refrain
from making personal donations to electoral campaigns, extending the same recommendation to those who are inserted in their circle of
economic dependence.
The
Bradesco Integrity Program standard is available on the Bradesco RI website https://www.bradescori.com.br/en/corporate-governance/compliance-and-ethics/integrity-program/.
1.7
– Countries from which the issuer generates significant revenue
Bradesco
does not get relevant revenues from its holdings in foreign countries.
1.8
– Foreign countries disclosed in item 1.7, describing relevant impacts arising from the regulation of these countries on the issuer's
business
Since
they do not provide relevant revenues, specific regulations of the countries where Bradesco has business do not have relevant impacts
on the operations of the Bank.
1.9
– Environmental, social and corporate governance (ESG) information, indicate:
a)
If the issuer discloses ESG information in an annual report or other specific document for this purpose
Bradesco’s
Integrated Report comprises main financial and non-financial actions and results based on topics considered most relevant to the Organization
and its stakeholders. In addition, specific contents are disclosed on the Investor Relations (www.bradescori.com.br/en/) and Sustainability
(banco.bradesco/html/classic/sobre/sustentabilidade/en/index.shtm) websites.
b)
The methodology or standard followed in the preparation of this report or document
To prepare
the Report we follow the Global Reporting Initiative (GRI) and International Integrated Reporting Council (IIRC) methodologies. We also
consider the transparency guidelines of the Sustainability Accounting Standards Board (SASB) and the Abrasca Code for Self-Regulation
and Good Practices of Publicly Traded Companies. We seek to meet the transparency requirements used by B3’s Corporate Sustainability
Index (ISE) and the Dow Jones Sustainability Index (DJSI); among others.
c)
If this report or document is audited or reviewed by an independent entity, identifying that entity, if applicable
The
process of preparation and the information published in the Integrated Report are ensured by KPMG Auditores Independentes Ltda.
d)
The page on the internet where the report or document can be found
More
information about the Integrated Report, and Bradesco’s policies, practices and rules, is available on: www.bradescori.com.br/en/
and https://banco.bradesco/html/classic/sobre/sustentabilidade/en/index.shtm.
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e)
If the report or document produced considers the disclosure of a materiality matrix and ESG key performance indicators, and what
are the material indicators for the issuer
We used
as methodology the dual materiality, analyzing the sustainability aspects in the priorities of socio-environmental impact, financial
materiality and perception of relevance of stakeholders. Several ESG key indicators are presented throughout the integrated report with
special emphasis on those inserted in the sections on the themes of Financial Citizenship, Sustainable Business and Climate Agenda. Available
on: https://www.bradescori.com.br/en/bradesco/integrated-report/.
f)
If the report or document considers the Sustainable Development Goals (SDGs) established by the United Nations and what are the
material SDGs for the issuer's business
Aligned
with the Sustainability Strategy and leveraging our commitment to generating value to our stakeholders, we prioritize six SDGs, which
reinforce the commitment to align business with the 2030 Agenda, monitoring the impact and contribution to the goals of society and its
progress in the implementation of the Principles for Banking Responsibility (PRB).
The
prioritization process took place in 2019 and considered consultation with stakeholders, comparative study of industry benchmarking, relevance
matrix and strategic pillars of the Organization, Brazilian scenario (main social and environmental issues) and recommendations and reporting
and performance guidelines, among others. The result and the prioritization process were verified by external consulting, with opinion.
The
priority SDGs listed in the process are:
4 –
Quality education
5 –
Gender equality
8 –
Decent work and economic growth
9 –
Industry, innovation, and infrastructure
10 –
Reduced inequalities
13 –
Climate action
| g) | If the report or document considers the recommendations of the Task Force for Climate Change-Related
Financial Disclosures (TCFD) or recommendations for financial disclosures of other recognized entities that are related to climate issues |
Yes,
we follow Task Force guidelines for Climate Change-Related Financial Disclosures (TCFD) and also report climate-related requirements for
key market indices and ratings, such as CDP, ISE and Dow Jones.
| h) | If the issuer performs greenhouse gas emission inventories, indicating, if applicable, the scope of
the inventoried emissions and the page on the world computer network where additional information can be found |
Since
2006, we have developed the Emission Inventory of our operations, following the guidelines of the ABNT ISO 14,964-1 Standard. From 2008,
we also incorporated the specifications of the Brazilian GHG Protocol Program into the process. The inventory can be found on: https://banco.bradesco/assets/classic/pdf/sustentabilidade/en/bradesco-inventory-of-GHG-emissions-2023.pdf.
1.10
– Specific information of mixed economy companies
Not applicable.
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1.11 – Indicate the acquisition or disposal of any relevant asset that is not classified as a normal operation in the issuer's business
BV
DTVM (Tivio Capital)
On August
24, 2022, Bradesco, through its subsidiary Kartra Participações Ltda., firmed with Banco Votorantim S.A., a contract for
the formation of an independent investment manager, through the acquisition of the equity stake of 51% of the capital of BV Distribuidora
de Títulos e Valores Mobiliários S.A. (“BV DTVM”, previous denomination of Tivio Capital Distribuidora de Títulos
e Valores Mobiliários S.A.), whereby Banco Votorantim S.A. remains as a holding shareholder of 49%. On February 28, 2023, after
compliance with the previous legal and regulatory conditions, the acquisition was completed.
Hospital
Santa Lúcia
On
August 31, 2023, Atlântica Hospitais e Participações S.A. (“Atlântica”), a company indirectly controlled
by Banco Bradesco S.A. and Bradseg Participações S.A. (member of the Grupo Bradesco Seguros), firmed with Hospital Santa
Lúcia S.A. (“HSL”) and, together with its subsidiaries, (“Grupo Santa”) and its current partners (“Família
Leal”), an Investment, Purchase and Sale Agreement of Shares and other Covenants for Atlântica to acquire 20% of the
share capital of HSL. Grupo Santa is the largest hospital network in the Midwest region, with presence in the Federal District, Goiás,
Mato Grosso and Mato Grosso do Sul. The consummation of the transaction is subject to compliance with certain suspensive conditions,
including the appropriate regulatory approvals.
Hospital
Mater Dei
On December
21, 2023, Atlântica Hospitais e Participações S.A. (“Atlântica”), a company indirectly controlled
by Banco Bradesco S.A. and Bradseg Participações S.A. (member of the Grupo Bradesco Seguros), firmed with Hospital Mater
Dei S.A. (“Mater Dei”) an Investment Agreement for the establishment of a Specific Purpose Entity (“SPE”) in which
Atlântica will hold a 51% stake, and Mater Dei a 49% one, with the aim of developing and operating a new general hospital located
in the North region of the city of São Paulo. The hospital will be built on a property owned by a company of the Bradesco Organization,
which will be responsible for the development and lease of the building to the SPE, in the built to suit modality. The consummation of
the transaction is subject to compliance with certain suspensive conditions, including the appropriate regulatory approvals.
1.12
– Indicate merger, division, incorporation, equity incorporation, capital increase or reduction involving the issuer and documents
in which more detailed information can be found
In the
fiscal year 2023, there were no merger, divestiture, incorporation, incorporation of shares, increase or reduction of capital involving
the issuer.
On March
11, 2024, we approved our merger with Bradesco Asset in accordance with the provisions of article No. 227 of Law No. 6.404/76. This merger
is part of our corporate reorganization intended to optimize out organizational structure, with us assuming the role of managing securities
portfolio activities as resource manager, succeeding Bradesco Asset in all rights and obligations.
1.13
– Indicate the firming, extinction or modification of shareholders’ agreements and the documents in which more detailed information
can be found
This did not happen in the
fiscal year 2023.
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1.14 – Indicate significant changes in the way of conducting the issuer's business
In the
fiscal year 2023 there was no significant alterations in the issuer’s manner of conducting its business.
1.15
– Indicate significant contracts not directly related to operating activities entered into by the issuer or by its subsidiaries
All
contracts that we consider relevant have been duly described in item 1.11 of this Reference Form.
1.16
– Other relevant information
There
is no other information deemed relevant at this time.
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2. Officers’ notes
2.1
– General Financial and Equity Conditions
| a) | general financial and equity conditions |
The
Officers of the Organization understand that the Company has all financial and asset conditions to ensure the compliance with obligations,
guaranteeing the business expansion in the short- and long-term.
The
Officers’ analysis is based on information from the last two financial statements on the balance sheet date in accordance with international
accounting standards (IFRS – International Financial Reporting Standards), as follows:
In 2023
we adopted the IFRS 17. The date of transition was January 1, 2023. As a result, the financial statements for the periods ending on December
31, 2023 and 2022 were prepared according to IFRS 17. For more details, see item 2.3.a.
2023
The
economic activity remains consistent. The labor market remains vibrant, sustaining income gains above inflation and consumption growth.
The GDP ended 2023 with an expansion of 2.9%. This year, we projected a 2.0% advance. The inflation chart is favorable, mainly with the
slowdown in service inflation, reinforcing our 3.6% forecast for the IPCA in 2024.
The
Copom should maintain SELIC's cuts. We predict that the basic interest rate will end 2024 at 9.5%, completing the cut cycle with an accumulated
reduction of 4.25 p.p.
Developed
countries have completed the high interest rate cycle. However, the discourse of major central banks does not yet suggest imminent cuts
in basic rates. Despite the recent decompression of inflation in the USA and Europe, price change remains above its targets. The gradual
deceleration of the economic activity in these regions also does not recommend urgency to begin interest cuts. China, on the other hand,
has been recording successive deflations and low economic growth.
In 2023,
the net income was R$14.503 billion in the fiscal year, corresponding to a profitability of 8.8% on the average net shareholders’
equity. The return on the average total assets was 0.8%. The consolidated shareholders’ equity attributed to the controlling shareholders
reached R$166.331 billion and the total balance of the assets was R$1.928 trillion.
Loan
and Fundraising Operations and Resource Management
We expanded
and diversified offers in the distribution channels, especially in the digital media, supplemented by the Branch Network and Banking Correspondents.
Our capillarity allows us to offer loans and financing directly or through strategic partnerships with various business chains, keeping
the focus on improving the customer experience and assessing their real needs.
We are
in full operational capability. The policy we have guides management’s actions, which is constantly updated and consistent with
the economic reality.
Among
the lines, we highlight:
Agribusiness:
we are featured among the biggest financiers in this niche. We have 14 Agro Platforms that, distributed throughout Brazil, have
agribusiness managers and agronomists specialized in each region. Acting inside and outside the gate, we are present at the main agribusiness
fairs in Brazil, maintaining agreements with manufacturers and resales of both inputs and agricultural machinery and implements;
Special
Business: solutions in structured operations for wholesale clients, among the largest funders in Emergency Programs, leader in transfer
of resources of the BNDES (National Bank for Economic and Social Development), leader in the leasing market, largest portfolio of securities
in the market and market leader in advances to suppliers;
Real
Estate Financing: we are one of the most relevant in this market, maintaining a commitment to meet the demand of the sector and our
clients, financing both the construction industry and the acquisition of
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72 – Reference Form – 2023 | |
property by the final
borrowers, they have 100% digital hiring for residential properties, including the signing and electronic registration of the contract
and digitalization of the processes carried out through real estate partners by means of APIs. We have real estate platforms with coverage
throughout the national territory;
For
companies: working capital items, advances on receivables and financing of goods focused on small and medium-sized enterprises. With
Bradesco Corporate, leader in assets of the Brazilian market for large and medium-sized enterprises, we offer complete solutions for different
needs and business sectors; and
Individuals
(mass-market): all personal loans, payroll-deductible loans, vehicle and rotary credit lines, where we continue transforming our customer
experience with these products through the evolution of commercialization and digital after-sales journeys and highlighting the massive
use of algorithms and advanced analytics, mapping the clients’ needs in real time, responding with the best product and business
conditions according to the context and moment of life for each profile, with a smooth, multi-channel approach.
Balance
of the main portfolios in the fiscal year:
| · | R$629.687 billion in 2023, of the reduction of 4.1% compared to 2022, reflecting the decrease in lending
to corporate customers that decreased by 10.0% compared to 2022, with emphasis on the decrease of 12.5% in loans (includes working capital,
rural credit and others) and 6.2% in financing and transfers (includes import/export financing, real estate, vehicles, BNDES/Finame transfers
and Leasing). It is worth mentioning that operations with individuals presented an increase of 0.7% compared to 2022, with highlights
for the growth of 1.4% in financing and transfers (including real estate and vehicle financing, BNDES/Finame transfers and others) and
a 1.8% in operations with limits (includes credit card and overdraft). The individual segment reflects the quality of the newly selected
cohorts of clients, characterized by the concession of products with lower risk profiles, who are inclined to make timely payments, resulting
in a volume of overdue entries that is lower than in previous years; |
| · | R$621.935 billion in client resources, including: cash deposits, savings and term deposits, showing an
increase of 5.3% compared to the previous year; |
| · | R$344.792 billion in technical provisions for insurance and pension, with an evolution of 13.1% compared
to the previous year; |
| · | R$323.423 billion in financial institution resources, an increase of 14.7% compared to the previous year,
including: demand deposits, interfinancial, funds obtained funds on the open market and bonds for loans and transfers; |
| · | R$50.338 billion in subordinated debts, reduction of 3.6% compared to the previous year, comprising higher
volume of settlement and interest payments; and |
| · | R$244.966 billion in securities issuance resources, of which R$237.598 billion is issued in the country
and R$7.368 billion is issued abroad. |
By the
end of 2023, the market value of Bradesco, considering the closing prices of the common and preferred shares at B3, totaled R$172.2 billion,
representing 1.1 times the shareholders’ equity.
The
following are our key indicators:
It is
important to highlight that the comments, in relation to the return on average shareholders’ equity (ROAE) and the return on average
assets (ROAA), are presented in item 2.1.h. Other analyses that are relevant to our financial and economic conditions related to liquidity
sources and levels of indebtedness are presented in items 2.1.d, 2.1.e, 2.1.f and 2.1.h.
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73 – Reference Form – 2023 | |
| I. | Operating
Coverage Ratio |
R$ million |
Calculation Basis |
2023 |
2022 |
Variation |
2023 x 2022 |
R$ |
% |
Personnel expenses |
(20,814) |
(19,889) |
(925) |
4.7 |
Administrative Expenses |
(16,286) |
(16,575) |
289 |
(1.7) |
|
Total (A) |
(37,100) |
(36,464) |
(636) |
1.7 |
Net fee and commission income (B) |
26,957 |
27,124 |
(167) |
(0.6) |
Operating Coverage Ratio (B)/(A) |
72.7% |
74.4% |
(1.7) |
p.p. |
|
|
|
|
|
|
In
2023, the operational coverage ratio decreased by 1.7 p.p. compared to 2022, due to the increase in our personnel expenses – given
the effect of the collective bargaining agreements – and by the reduction of the net income of services and commissions,
especially checking accounts and collection.
Regarding
the variations presented for fee and commission income, payroll and related benefits and administrative expenses comments are included
in item 2.1.h.
| II. | Indicators of loans and overdue advance payments and expected loss from loans and advance payments |
We will
only use some of these indicators to monitor and support the decision-making process in relation to the loan operations and advance payments.
The following
tables show a summary of our loans and advances indicators:
|
R$
million (unless otherwise stated) |
Indicators
of losses on loans and advances and non-performing loans overdue for over 60 days |
2023
|
2022
|
Horizontal
Analysis |
2023
x 2022 |
R$ |
% |
Non-performing
loans and advances to customers, over 60 days |
38,241
|
34,269
|
3,972
|
11.6
|
Foreclosed
assets |
1,329
|
1,237
|
92
|
7.4
|
Total
non-performing loans and advances to customers and foreclosed assets |
39,570
|
35,506
|
4,064
|
11.4
|
Total
loans and advances to clients |
629,687
|
656,867
|
(27,180) |
(4.1) |
Expected
credit losses for loans and advances (1) |
53,662
|
59,665
|
(6,003) |
(10.1) |
Non-performing
loans and advances as a percentage of total loans and advances to clients |
6.1
|
5.2
|
0.9
p.p. |
Non-performing
loans and advances and foreclosed assets as a percentage of total loans and advances to clients |
6.3
|
5.4
|
0.9
p.p. |
Expected
credit losses for loans and advances as a percentage of total loans and advances to clients |
8.5
|
9.1
|
-0.6
p.p. |
Expected
credit losses for loans and advances as a percentage of nonperforming loans and advances to clients |
140.3
|
174.1
|
-33.8
p.p. |
Expected
credit losses for loans and advances as a percentage of nonperforming loans and advances to clients and foreclosed assets |
135.6
|
168.0
|
-32.4
p.p. |
Net
charge-offs for the period as a percentage of the average balance of loans and advances to clients (including non-performing loans
and advances) (2) |
6.3
|
2.9
|
3.4
p.p. |
(1) Considers expected
losses on loans, commitments to be released and financial guarantees provided; and
(2) Total
net asset written off divided by average total assets.
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74 – Reference Form – 2023 | |
|
|
|
R$
million |
Changes
of balance for impairment of loans and advances |
2023
|
2022
|
Horizontal
Analysis |
2023
x 2022 |
R$ |
% |
Balance
at the beginning of the year |
59,214
|
46,182
|
13,032
|
28.2
|
Expected
credit loss for loans and advances (1) (2) |
34,849
|
31,786
|
3,064
|
9.6
|
Loan
charge-offs |
(40,402) |
(18,754) |
(21,648) |
115.4
|
Expected
credit losses for loans and advances at the end of the year |
53,662
|
59,214
|
(5,552) |
(9.4) |
Ratio
of expected credit losses for loans and advances to average loans and advances to customers |
5.5
|
5.0
|
0.5
p.p. |
(1) Considers expected
losses on commitments to be released, financial guarantees provided and income from credit recovery.
(2) It
does not include revenues with credit recovery worth R$4,673 million in 2023 (R$5,871 million in 2022) in BR GAAP they are allocated under
Other Operating Revenues, while in IFRS they are allocated under Expenses with Expected Losses.
In 2023, our expected
loss on loans and advances increased by 14.5%, reflecting the prevailing economic conditions (inflation and volatility in interest rates)
during this credit cycle and higher expenses with clients in the wholesale segment. We
note that our expected loss expenses continue to be concentrated in older cohorts, while more recent credit cohorts show positive performance,
since it is a concession policy focused on lower-risk operations and, consequently, lower expected loss expenses, in line with the new
strategies implemented. Our level of credit losses, net of recoveries, reached 5.6% of the average balance of loans and advances to clients
in 2023 (2.0% in 2022).
We
had a provision for expected losses on loans and advances amounting to R$53,662 million in
2023, reaching a coverage ratio of loans over 90 days of 164.6% (209.4% in 2022)
and over 60 days of 140.3% (172.8% in 2022).
Our
loan portfolio and advances to clients reduced 4.1%, going
from R$629,687 million, in 2023 from R$656,867 million in
2022, a reflection of the reduction of operations with clients
corporate that showed a decrease of 10.0% compared to 2022, with
emphasis on the decrease of 12.5% in loans (includes working capital, rural loans and
others) and 6.2% in financing and transfers (includes import/export financing, real estate, vehicles,
BNDES/Finame transfers and Leasing). It is worth mentioning that operations with individuals presented
an increase of 0.7% compared to 2022, with highlights for the growth of 1.4% in financing and transfers
(including real estate and vehicle financing, BNDES/Finame transfers and others) and a 1.8% in operations with
limits (includes credit card and overdraft). The individual segment reflects the quality of the newly selected cohorts of clients, characterized
by the concession of products with lower risk profiles, who are inclined to make timely payments, resulting in a volume of overdue entries
that is lower than in previous years.
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Analyzing
the following tables, we understand that the bank’s current capital structure is adequate and consistent with our business expansion
strategy. The largest funding source for our operations is from third-party capital.
Over
the last two years, Bradesco has kept its proportion of capital held by third parties over 90%, which is seen as a normal level for institutions
in the financial intermediation business.
|
|
R$ billion |
Capital Structure |
Dec23 |
Dec22 |
Capital Stock |
87.1 |
87.1 |
|
|
|
|
|
In thousands |
Number of Shares (1) |
Dec23 |
Dec22 |
Common |
5,330,305 |
5,338,394 |
Preferred |
5,311,866 |
5,320,094 |
Total |
10,642,170 |
10,658,488 |
Treasury Stocks (ON - Common) |
- |
8,089 |
Treasury Stocks (PN - Preferred) |
- |
8,229 |
Subtotal – Outstanding shares |
10,642,170 |
10,642,170 |
(1) Considers
the bonuses that occurred in each period due to the capital increase.
|
|
|
|
R$ million |
Standard of Financing |
2023 |
% in relation to total liabilities |
2022 |
% in relation to total liabilities |
Shareholders' equity attributable to controlling shareholders |
166,331 |
8.6% |
159,535 |
8.9% |
Third-Party Portfolio (1) |
1,761,192 |
91.4% |
1,632,754 |
91.1% |
Total liabilities |
1,927,523 |
100.0% |
1,792,289 |
100.0% |
(1)
Adjusted total liabilities excluding controlling shareholder´s equity.
| |
76 – Reference Form – 2023 | |
Basel
Ratio
Brazilian
financial institutions are subject to methodology for capital metrics and levels based on a risk-weighted asset index. The parameters
of this methodology resemble the international framework for minimum capital measurements adopted for the Basel Accord.
The calculation
of our Basel Ratio is shown below:
|
|
|
|
R$
million |
Calculation
Basis |
Basel
III |
|
Variation
|
Prudential
Conglomerate |
|
Dec23 |
Dec22 |
|
Dec23
x Dec22 |
|
R$
|
% |
Capital
- PR |
149,969
|
144,283
|
|
5,687
|
3.9
|
Tier
I |
125,412
|
120,624
|
|
4,788
|
4.0
|
Common
equity |
110,689
|
106,501
|
|
4,189
|
3.9
|
Shareholders’
equity |
161,182
|
154,263
|
|
6,919
|
4.5
|
Non-controlling
interests / Other |
272
|
(114) |
|
386
|
-
|
Prudential
adjustments as per CMN Resolution No. 4,192/13 |
(50,766) |
(47,649) |
|
(3,117) |
6.5
|
Additional
capital |
14,723
|
14,123
|
|
600
|
4.2
|
Tier
II |
24,557
|
23,659
|
|
899
|
3.8
|
Risk-weighted
assets - RWA |
947,738
|
971,611
|
|
(23,874) |
(2.5) |
Credit
risk |
842,400
|
883,428
|
|
(41,028) |
(4.6) |
Market
risk |
18,957
|
8,844
|
|
10,113
|
-
|
Operational
Risk |
86,381
|
79,339
|
|
7,042
|
8.9
|
Total
Ratio |
15.8% |
14.8% |
|
1.0
|
p.p. |
Tier
I capital |
13.2% |
12.4% |
|
0.8
|
p.p. |
Common
equity |
11.7% |
11.0% |
|
0.7
|
p.p. |
Additional
capital |
1.6% |
1.5% |
|
0.1
|
p.p. |
Tier
II capital |
2.6% |
2.4% |
|
0.2
|
p.p. |
0.8
p.p. increase in Tier 1 Ratio (vs. December 2022) due to the generation of net income, adjustments of equity valuation and reduction of
risk-weighted assets (RWA), partially offset by the effect of prudential adjustments.
| c) | capacity to pay financial commitments |
The
Officers understand that the operations shown in the balance sheet by terms, presented below for the last fiscal year, show that Bradesco
has a comfortable liquidity margin to honor its obligations in the short-term. It is worth highlighting that the management policy is
regularly reviewed to ensure sufficient liquidity to honor withdrawals, deposits, repay other obligations at maturity, extend loans or
other forms of credit to its clients and meet its own needs of working capital for investment.
The
following table shows the financial assets and liabilities of the Organization segregated by maturities used for the management of liquidity
risks, in accordance with the remaining contractual maturities on the date of the consolidated financial statements:
| |
77 – Reference Form – 2023 | |
Consolidated
Statement of Financial Position presented by maturity (in accordance with International Financial Reporting Standards – IFRS):
R$ million |
|
1 to 30 days |
31 to 180 days |
181 to 360 days |
1 to 5 years |
Over 5 years |
No stated maturity |
Total |
2023 |
2022 |
2023 |
2022 |
2023 |
2022 |
2023 |
2022 |
2023 |
2022 |
2023 |
2022 |
2023 |
2022 |
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and balances with banks |
151,054 |
122,522 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
151,054 |
122,522 |
Financial assets at fair value through profit or loss |
374,454 |
289,577 |
1,036 |
1,742 |
4,409 |
2,532 |
5,216 |
8,048 |
2,483 |
- |
- |
- |
387,598 |
301,899 |
Financial assets at fair value through other comprehensive income |
9,982 |
23,168 |
8,923 |
8,743 |
9,652 |
16,784 |
112,980 |
128,752 |
71,314 |
38,141 |
- |
- |
212,850 |
215,588 |
Loans and advances to customers, net of impairment |
79,862 |
84,783 |
125,889 |
145,169 |
85,193 |
85,068 |
211,665 |
213,731 |
76,893 |
73,669 |
- |
- |
579,502 |
602,419 |
Loans and advances to banks, net of impairment |
167,594 |
101,591 |
29,616 |
13,079 |
6,202 |
5,465 |
1,691 |
2,352 |
- |
- |
- |
- |
205,103 |
122,488 |
Securities, net of provision for losses |
1,875 |
4,113 |
10,837 |
4,123 |
13,996 |
15,427 |
108,111 |
109,340 |
40,388 |
78,609 |
- |
- |
175,207 |
211,611 |
Other financial assets (1) |
45,053 |
53,829 |
814 |
956 |
301 |
342 |
7,004 |
7,019 |
3,786 |
3,560 |
- |
- |
56,959 |
65,706 |
Total financial assets |
829,873 |
679,583 |
177,115 |
173,811 |
119,754 |
125,618 |
446,666 |
469,242 |
194,864 |
193,978 |
- |
- |
1,768,272 |
1,642,233 |
Percentage in relation to Total |
46.9 |
38.4 |
10.0 |
9.8 |
6.8 |
7.1 |
25.3 |
26.5 |
11.0 |
11.0 |
- |
- |
100.0 |
100.0 |
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities at amortized cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits from banks |
274,817 |
226,805 |
20,631 |
29,304 |
9,837 |
9,369 |
15,310 |
13,376 |
2,827 |
3,094 |
- |
- |
323,423 |
281,948 |
Deposits from customers (2) |
205,027 |
213,570 |
47,922 |
42,699 |
94,806 |
83,394 |
274,003 |
250,695 |
177 |
324 |
- |
- |
621,935 |
590,682 |
Securities issued |
8,623 |
6,206 |
17,361 |
33,450 |
22,992 |
62,006 |
185,539 |
111,239 |
10,452 |
9,357 |
- |
- |
244,966 |
222,257 |
Subordinated debt |
358 |
3,843 |
27 |
1,511 |
37 |
1,803 |
14,781 |
2,503 |
20,412 |
28,458 |
14,723 |
14,123 |
50,338 |
52,241 |
Other financial liabilities (3) |
51,708 |
60,164 |
21,549 |
19,316 |
1,482 |
3,222 |
5,857 |
8,234 |
2,024 |
1,619 |
- |
- |
82,620 |
92,556 |
Financial liabilities at fair value through profit or loss |
2,142 |
409 |
1,354 |
1,361 |
2,730 |
3,222 |
7,168 |
5,122 |
2,149 |
3,227 |
- |
- |
15,542 |
13,341 |
Provision for Expected Credit Loss |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
Loan Commitments |
- |
- |
- |
- |
- |
- |
2,274 |
2,997 |
- |
- |
- |
- |
2,274 |
2,997 |
Financial guarantees |
124 |
482 |
- |
- |
- |
- |
1,079 |
1,287 |
- |
- |
- |
- |
1,203 |
1,769 |
Insurance technical provisions and pension plans (2) |
302,554 |
263,383 |
- |
- |
- |
- |
42,239 |
41,373 |
- |
- |
- |
- |
344,792 |
304,756 |
Total Financial Liabilities |
845,352 |
774,863 |
108,843 |
127,641 |
131,884 |
163,016 |
548,251 |
436,826 |
38,040 |
46,080 |
14,723 |
14,123 |
1,687,092 |
1,562,549 |
Percentage in relation to Total |
50.1 |
45.9 |
6.5 |
7.6 |
7.8 |
9.7 |
32.5 |
25.9 |
2.3 |
2.7 |
0.9 |
0.8 |
100.0 |
100.0 |
(1) It includes mainly
foreign exchange transactions, debtors for guarantee deposits and negotiation and intermediation of securities;
(2) Demand and savings
deposits and liability of insurance contracts comprising VGBL and PGBL products are classified as up 1 to 30 days, without considering average
historical turnover;
(3) It includes mainly
credit card transactions, foreign exchange transactions, negotiation and intermediation of securities, finance lease and capitalization
bonds.