Banco Bradesco’s Healthy Reserve Levels Remain Intact, but Credit Quality Is a Concern

As pandemic conditions have eased, Bradesco has been able to generate impressive loan growth during much of 2021 and 2022, with commercial loans and mortgages in particular leading the way. With a slew of government guarantee programs for small and midsize enterprises and fiscal stimulus spending, the bank's credit costs during the pandemic were surprisingly low. However, credit conditions have begun to normalize in earnest and the bank has underperformed its peers in recent quarters, with the bank's more than 90-day nonperforming loan ratio rising to 4.3% at the end of December 2022. While Banco Bradesco had been enjoying a period of high profitability, deteriorating credit conditions have put an end to that as the bank's loan loss provisions have ballooned.