(Remodel title, add details)
SAO PAULO, October 28 (Reuters) – Brazilian lender Banco Bradesco SA reported a higher-than-expected third-quarter recurring net profit on Wednesday, despite a surge in loan loss provisions amid the coronavirus pandemic.
Brazil’s second-largest private sector lender posted net income of 5.031 billion reais ($ 894.56 million), about 15% above the consensus analyst forecast according to Refinitiv, but down 23.1% from a year earlier.
Bradesco set aside 5.588 billion reais for bad loans, up 67.5% from a year earlier, but down 37.1% from the previous quarter. That includes 2.6 billion reais in extraordinary provisions related to potential losses caused by the coronavirus crisis.
“The results show the first signs of returning to normality,” said Bradesco Chief Executive Octavio de Lazari in a statement.
As the bank provided a grace period of up to 180 days to help clients deal with the economic crisis stemming from the coronavirus pandemic, the 90-day default ratio fell 0.7 percentage points to 2.3%.
The bank said it was providing a loan grace period of up to 73 billion reais.
Its lending books rose only 0.5% during the quarter, mainly on consumer loans, even though Brazil is facing a recession and unemployment is at its highest level in eight years.
The bank also indicated it has taken some cost-cutting steps as it fell 5.7% from a year earlier, but rose during the quarter.
Return on equity was at 15.2%, recovering from the second quarter, when the bank decided to set aside extraordinary provisions to deal with the coronavirus pandemic.
$ 1 = 5,6240 reais Reported by Carolina Mandl; Edited by Leslie Adler and Sam Holmes