Banco Bradesco’s Healthy Reserve Levels Remain Intact in 2022, but Uncertainty Remains

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 with the bank's more than 60-day nonperforming loan ratio rising to 4.6% at the end of September 2022. While Banco Bradesco has been enjoying a period of high profitability, driven by below average credit costs, deteriorating credit conditions will likely put an end to that.