Dallas, Texas 12/20/2013 (FINANCIALSTRENDS) – Banco Bradesco SA (ADR) (NYSE:BBD) with a market cap of $52.41 billion is one of the largest banks in Brazil. Through its six major divisions of business, the bank operates in almost all facets of the South American country’s economy. Hence any weakness displayed by the financial player is an indication of the larger economic sentiments that prevails in the emerging market of Brazil. Similarly observations on the fiscal policy by the bank are also given a close hearing by regulators other market players in Brazil.
Yesterday, Banco Bradesco SA (ADR) (NYSE:BBD) voiced its concern around the possible push back regulators will face from fellow state funded banks in its attempts to raise interest rates at which banks are able to source funds for their operations. The interest rate regime is very important for Banco Bradesco SA (ADR) (NYSE:BBD) at this juncture thanks to its own troubles linked to heavy losses it has suffered in its bonds business and a continued lack of demand for credit among the investor community due to the slowdown in the growth in Brazilian economy.
These opinions were voiced by Chief Financial Officer Luiz Carlos on a conference call he addressed on December 17 to discuss the banks third quarter earnings. He went on to highlight the challenges and focus for his bank going forward by stating that, “The reality we are faced with is one of intense competition and our commitment to a plan to focus on less riskier segments in the credit markets.”
What should be troubling news of long term investors in Banco Bradesco SA (ADR) (NYSE:BBD) ADR is the fact that the bank has gone ahead and reduced its revenue estimates for the second consecutive time in the past one quarter. The reasons being ascribed for this downward estimate in revenue generation are a much slower than expected growth in the demand for new loans and a steep dip in the share holdings at the markets, thanks to a stellar drop in value of the government issued bonds assets which are on the books of Banco Bradesco SA (ADR) (NYSE:BBD).