bbdfs2q15_6k.htm - Generated by SEC Publisher for SEC Filing

 
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 August, 2015
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____

 .


 

 


 

Financial Statements of the Prudential Conglomerate and Independent Auditor’s Report

 

Statement of Financial Position of the Prudential Conglomerate – In thousands of Reais

 

Assets

June 30

2015

2014

Current assets

502,523,632

453,158,987

Cash and due from banks (Note 4)

11,509,470

11,281,058

Interbank investments (Notes 3d and 5)

175,733,034

136,983,859

Securities purchased under agreements to resell

171,328,788

125,321,861

Interbank investments

4,423,388

11,675,372

Allowance for losses

(19,142)

(13,374)

Securities and derivative financial instruments (Notes 3e, 3f, 6 and 30b)

55,919,999

55,647,530

Own portfolio

31,078,844

33,060,877

Subject to unrestricted repurchase agreements

14,104,427

15,382,529

Derivative financial instruments (Notes 3f, 6e II and 30b)

6,195,652

4,744,983

Given in guarantee to the Brazilian Central Bank

20,096

-

Given in guarantee

4,520,980

2,205,341

Subject to unrestricted repurchase agreements

-

253,800

Interbank accounts

50,083,694

55,273,364

Unsettled payments and receipts

1,074,734

1,635,920

Reserve requirement (Note 7):

 

 

- Reserve requirement - Brazilian Central Bank

48,913,046

53,501,826

- SFH

8,828

4,249

Correspondent banks

87,086

131,369

Interdepartmental accounts

167,646

320,342

Internal transfer of funds

167,646

320,342

Loans (Notes 3g, 8 and 30b)

144,305,268

131,953,838

Loans:

 

 

- Public sector

2,803,212

31,779

- Private sector

156,622,091

145,465,606

Loans transferred under an assignment with recourse

132,808

11,897

Allowance for loan losses (Notes 3g, 8f, 8g and 8h)

(15,252,843)

(13,555,444)

Leasing (Notes 3g, 8 and 30b)

(77,181)

(153,336)

Lease and Sublease Operations receivable:

 

 

- Private sector

1,622,983

2,180,797

Unearned income from leasing

(1,562,597)

(2,103,807)

Allowance for leasing losses (Notes 3g, 8f, 8g and 8h)

(137,567)

(230,326)

Other receivables

62,811,394

59,786,230

Receivables on sureties and guarantees honored (Note 8a-3)

59,143

30,304

Foreign exchange portfolio (Note 9a)

16,245,509

11,476,110

Receivables

6,563,732

6,187,200

Securities trading

822,730

1,846,928

Specific receivables

5,623

3,292

Sundry (Note 9b)

39,970,500

40,985,266

Allowance for other loan losses (Notes 3g, 8f, 8g and 8h)

(855,843)

(742,870)

Other assets (Note 10)

2,070,308

2,066,102

Other assets

1,775,744

1,571,132

Provision for losses

(708,946)

(632,520)

Prepaid expenses (Notes 3i and 10b))

1,003,510

1,127,490

Long-term receivables

290,096,605

278,344,373

Interbank investments (Notes 3d and 5)

526,925

669,821

Interbank investments

526,925

669,821

Securities and derivative financial instruments (Notes 3e, 3f, 6 and 30b)

93,730,645

104,742,255

Own portfolio

62,740,963

50,603,267

Subject to unrestricted repurchase agreements

27,230,099

46,272,105

Derivative financial instruments (Notes 3f, 6e II and 30b)

826,204

1,001,858

Given in guarantee to the Brazilian Central Bank

-

19,008

Privatization rights

55,667

62,237

Given in guarantee

2,555,115

5,958,108

Subject to unrestricted repurchase agreements

322,597

825,672

 

Bradesco     3            

 


 

Financial Statements of the Prudential Conglomerate and Independent Auditor’s Report

 

Statement of Financial Position of the Prudential Conglomerate – In thousands of Reais

 

Assets

June 30

2015

2014

Interbank accounts

626,090

599,801

Reserve requirement (Note 7):

 

 

- SFH

626,090

599,801

Loans (Notes 3g, 8 and 30b)

156,053,261

145,031,278

Loans:

 

 

- Public sector

492,281

1,919,401

- Private sector

155,421,065

145,510,575

Loans transferred under an assignment with recourse

7,073,084

4,205,713

Allowance for loan losses (Notes 3g, 8f, 8g and 8h)

(6,933,169)

(6,604,411)

Leasing (Notes 3g, 8 and 30b)

(84,013)

(155,681)

Leasing receivables:

 

 

- Private sector

1,824,488

2,528,723

Unearned income from leasing

(1,822,840)

(2,528,065)

Allowance for leasing losses (Notes 3g, 8f, 8g and 8h)

(85,661)

(156,339)

Other receivables

38,529,635

26,408,307

Receivables

40

52

Securities trading

419,437

126,860

Sundry (Note 9b)

38,134,236

26,331,256

Allowance for other loan losses (Notes 3g, 8f, 8g and 8h)

(24,078)

(49,861)

Other assets (Note 10)

714,062

1,048,592

Prepaid expenses (Notes 3i and 10b)

714,062

1,048,592

Permanent assets

52,148,877

47,447,014

Investments (Notes 3j, 11 and 30b)

33,024,130

29,115,241

Earnings (losses) of affiliates

 

 

- In Brazil

32,709,517

27,942,510

- Overseas

262,682

871,508

Other investments

195,545

443,835

Allowance for losses

(143,614)

(142,612)

Premises and equipment (Notes 3k and 12)

2,896,521

2,798,250

Premises

44,535

189,028

Other premises and equipment

7,461,126

7,141,817

Accumulated depreciation

(4,609,140)

(4,532,595)

Leased assets (Note 12)

6,971,207

9,496,169

Leased assets

10,785,477

14,506,855

Accumulated depreciation

(3,814,270)

(5,010,686)

Deferred (Notes 3l and 13)

49,431

60,693

Expenses with Organization and Expansion

1,731,053

1,736,294

Accumulated amortization

(1,681,622)

(1,675,601)

Intangible assets (Notes 3m and 14)

9,207,588

5,976,661

Intangible Assets

15,240,150

9,883,007

Accumulated amortization

(6,032,562)

(3,906,346)

Total

844,769,114

778,950,374

                                                                                                                                                                                 

The accompanying Notes are an integral part of these Financial Statements.

                                                                                                                         

                                                                                                                         

 

4                    Prudential – June 2015

 


 

Financial Statements of the Prudential Conglomerate and Independent Auditor’s Report

 

Statement of Financial Position of the Prudential Conglomerate – In thousands of Reais

 

 

Liabilities

June 30

2015

2014

Current liabilities

554,260,814

510,463,367

Deposits (Notes 3o and 15a)

156,533,864

165,799,445

Demand deposits

26,369,826

36,421,103

Savings deposits

91,008,482

84,318,918

Interbank deposits

518,527

332,802

Time deposits (Notes 15a and 30b)

38,637,029

44,726,622

Securities sold under agreements to repurchase (Notes 3o and 15b)

252,409,551

215,014,630

Own portfolio

94,476,502

105,045,917

Third-party portfolio

155,869,230

108,520,557

Unrestricted portfolio

2,063,819

1,448,156

Funds from issuance of securities (Notes 15c and 30b)

44,634,746

36,898,189

Mortgage and real estate notes, letters of credit and others

40,552,530

33,703,331

Securities issued overseas

3,830,280

3,043,455

Structured operations certificates

251,936

151,403

Interbank accounts

1,263,042

1,988,364

Unsettled payments and receipts

77,608

77,934

Correspondent banks

1,185,434

1,910,430

Interdepartmental accounts

3,392,800

3,762,883

Third-party funds in transit

3,392,800

3,762,883

Borrowing (Notes 16a and 30b)

16,909,856

12,867,545

Borrowing overseas

16,909,856

12,867,545

On-lending in Brazil - official institutions (Notes 16b and 30b)

13,155,180

11,860,115

National treasury

30,931

1,109

BNDES

4,543,794

3,261,698

CEF

11,420

16,388

FINAME

8,567,451

8,579,662

Other institutions

1,584

1,258

On-lending overseas (Notes 16b and 30b)

1,676,409

212,745

On-lending overseas

1,676,409

212,745

Derivative financial instruments (Notes 3f, 6e II and 30b)

5,456,372

3,990,507

Derivative financial instruments

5,456,372

3,990,507

Other liabilities

58,828,994

58,068,944

Payment of taxes and other contributions

3,323,685

3,639,962

Foreign exchange portfolio (Note 9a)

8,142,031

5,551,655

Social and statutory

2,720,099

2,329,907

Tax and social security (Note 19a)

3,780,230

4,659,619

Securities trading

2,103,983

3,004,188

Financial and development funds

1,512

1,236

Subordinated debts (Notes 18 and 30b)

2,345,301

2,678,856

Sundry (Note 19b)

36,412,153

36,203,521

Long-term liabilities

203,149,882

191,364,182

Deposits (Notes 3o and 15a)

40,601,084

48,442,416

Interbank deposits

212,502

191,281

Time deposits (Notes 15a and 30b)

40,388,582

48,251,135

Securities sold under agreements to repurchase (Notes 3o and 15b)

18,062,442

26,812,933

Own portfolio

18,062,442

26,812,933

Funds from issuance of securities (Notes 15c and 30b)

54,902,439

38,747,732

Mortgage and real estate notes, letters of credit and others

50,468,750

33,650,611

Securities issued overseas

4,281,704

5,038,363

Structured operations certificates

151,985

58,758

Borrowing (Notes 16a and 30b)

3,537,195

843,258

Borrowing overseas

3,537,195

843,258

 

Bradesco     5            


 

Financial Statements of the Prudential Conglomerate and Independent Auditor’s Report

 

Statement of Financial Position of the Prudential Conglomerate – In thousands of Reais

 

 

Liabilities

June 30

2015

2014

On-lending in Brazil - official institutions (Notes 16b and 30b)

26,073,014

28,340,766

BNDES

6,955,178

8,124,315

CEF

2,840

13,515

FINAME

19,114,996

20,202,564

Other institutions

-

372

Derivative financial instruments (Notes 3f, 6e II and 30b)

126,448

741,053

Derivative financial instruments

126,448

741,053

Other liabilities

59,847,260

47,436,024

Tax and social security (Note 19a)

7,356,713

7,989,464

Subordinated debts (Notes 18 and 30b)

35,104,386

32,734,624

Sundry (Note 19b)

17,386,161

6,711,936

Deferred income

373,141

220,623

Deferred income

373,141

220,623

Non-controlling interests in subsidiaries (Note 20)

13,711

101,924

Shareholders' equity (Note 21)

86,971,566

76,800,278

Capital:

 

 

- Domiciled in Brazil

42,559,829

37,622,310

- Domiciled overseas

540,171

477,690

Capital reserves

11,441

11,441

Profit reserves

44,995,397

38,976,929

Asset valuation adjustments

(764,260)

9,923

Treasury shares (Notes 21d and 30b)

(371,012)

(298,015)

Total

844,769,114

778,950,374

 

The accompanying Notes are an integral part of these Financial Statements.          

                                                                                                                                                               


 

6                    Prudential – June 2015


 

Financial Statements of the Prudential Conglomerate and Independent Auditor’s Report

 

Income Statement of the Prudential Conglomerate – In thousands of Reais

                                                                                                                                                                                                                     

 

Semesters ended June 30

2015

2014

Finance Intermediation Income

55,485,507

48,850,730

Loans (Note 8j)

31,804,841

27,916,278

Leasing (Note 8j)

1,585,222

2,852,550

Operations with securities (Note 6h)

20,554,406

14,690,186

Derivative financial instruments (Note 6h)

(1,588,147)

1,063,382

Foreign exchange operations (Note 9a)

1,252,434

66,122

Reserve requirement (Note 7b)

2,035,409

2,221,748

Sale or transfer of financial assets

(158,658)

40,464

 

 

 

Financial intermediation expenses

47,517,053

29,318,558

Retail and professional market funding (Note 15e)

27,875,027

21,571,497

Borrowing and on-lending (Note 16c)

10,352,614

(1,613,434)

Leasing (Note 8j)

1,316,318

2,510,322

Allowance for loan losses (Notes 3g, 8g and 8h)

7,973,094

6,850,173

 

 

 

Gross income from financial intermediation

7,968,454

19,532,172

 

 

 

Other operating income/expenses

(387,743)

(8,583,701)

Fee and commission income (Note 22)

10,706,553

8,916,574

Other fee and commission income

8,033,989

6,577,968

Income from banking fees

2,672,564

2,338,606

Payroll and related benefits (Note 23)

(6,200,104)

(5,698,685)

Other administrative expenses (Note 24)

(8,162,844)

(7,471,583)

Tax expenses (Note 25)

(2,035,422)

(1,814,080)

Equity in the earnings (losses) of subsidiaries and affiliates (Nota 11a)

9,215,106

804,207

Other operating income (Note 26)

3,213,835

2,109,990

Other operating expenses (Note 27)

(7,124,867)

(5,430,124)

Operating income

7,580,711

10,948,471

Non-operating income (loss) (Note 28)

(137,147)

(216,639)

Income before taxes and non-controlling interest

7,443,564

10,731,832

Income tax and social contribution (Notes 32a and 32b)

1,274,575

(3,505,229)

Non-controlling interests in subsidiaries

(785)

(5,673)

Net income

8,717,354

7,220,930

 

The accompanying Notes are an integral part of these Financial Statements.       

                                                                                                                                         

 

Bradesco     7            


 

Financial Statements of the Prudential Conglomerate and Independent Auditor’s Report

 

Statement of Changes in Shareholders’ Equity – In Reais

 

Events

Paid- up Capital

Capital reserves

Profit reserves

Asset valuation adjustment

Treasury shares

Retained earnings (accumulated losses)

Total

Share premium

Legal

Statutory

Bradesco

Subsidiaries

Balance on December 31, 2013

38,100,000

11,441

4,439,025

29,712,872

(865,373)

(189,070)

(269,093)

-

70,939,802

Acquisition of treasury shares

-

-

-

-

-

-

(28,922)

-

(28,922)

Asset valuation adjustments

-

-

-

-

587,419

476,947

-

-

1,064,366

Net income

-

-

-

-

-

-

-

7,220,930

7,220,930

Allocations:

-        Reserves

-

-

361,047

4,463,985

-

-

-

(4,825,032)

-

 

-        Interest on Shareholders’ Equity Paid

-

-

-

-

-

-

-

(1,566,898)

(1,566,898)

 

-        Interim Dividends Paid

-

-

-

-

-

-

-

(829,000)

(829,000)

Balance on June 30, 2014

38,100,000

11,441

4,800,072

34,176,857

(277,954)

287,877

(298,015)

-

76,800,278

 

 

 

 

 

 

 

 

 

 

Balance on December 31, 2014

38,100,000

11,441

5,193,467

38,992,668

(405,477)

(85,834)

(298,015)

-

81,508,250

Increase of capital stock with reserves

5,000,000

-

-

(5,000,000)

-

-

-

-

-

Acquisition of treasury shares

-

-

-

-

-

-

(72,997)

-

(72,997)

Asset valuation adjustments

-

-

-

-

(421,620)

148,671

-

-

(272,949)

Net income

-

-

-

-

-

-

-

8,717,354

8,717,354

Allocations:

-      Reserves

-

-

435,867

5,373,395

-

-

-

(5,809,262)

-

 

-      Interest on Shareholders’ Equity Paid and/or provisioned

-

-

-

-

-

-

-

(1,996,092)

(1,996,092)

 

-      Interim Dividends Provisioned

-

-

-

-

-

-

-

(912,000)

(912,000)

Balance on June 30, 2015

43,100,000

11,441

5,629,334

39,366,063

(827,097)

62,837

(371,012)

-

86,971,566

 

The accompanying Notes are an integral part of these Financial Statements.

 

 

                                                                                                                                                                                                 

 

8                    Prudential – June 2015

 


 

Financial Statements of the Prudential Conglomerate and Independent Auditor’s Report

 

Statement of Cash Flows of the Prudential Conglomerate – In Reais

 

 

June 30

2015

2014

Cash flow from operating activities:

 

 

Net Income before income tax and social contribution

7,443,564

10,731,832

Adjustments to net income before income tax and social contribution

7,624,778

10,238,632

Allowance for loan losses

7,973,094

6,850,173

Depreciation and amortization

1,746,259

1,464,838

Expenses with civil, labor and tax provisions

1,694,629

1,319,963

Equity in the earnings (losses) of subsidiaries and associated companies

(9,215,106)

(804,207)

Loss on sale of investments

138

-

Loss on sale of fixed assets

10,838

9,316

Loss on sale of foreclosed assets

120,056

147,463

Other

5,294,870

1,251,086

Adjusted net income before taxes

15,068,342

20,970,464

Decrease in interbank investments

1,564,157

14,555,560

Decrease/(Increase) in trading securities and derivative financial instruments

5,461,526

(5,750,678)

(Increase) in interbank and interdepartmental accounts

(2,186,891)

(2,189,615)

(Increase) in loan and leasing

(16,067,502)

(12,743,372)

Increase/(decrease) in deferred income

83,807

(367,063)

Decrease/(Increase) in other receivables and other assets

(3,414,097)

2,706,309

Decrease in reserve requirement - Brazilian Central Bank

2,011,860

1,879,164

(Decrease) in deposits

(15,372,328)

(4,781,567)

(Decrease) in securities sold under agreements to repurchase

(30,473,103)

(960,966)

Increase in funds from issuance of securities

9,835,669

12,867,171

Increase/(Decrease) in borrowings and on-lending

2,371,346

(1,961,273)

Increase in other liabilities

7,790,513

4,945,209

Income tax and social contribution paid

(2,924,336)

(2,182,215)

Net cash provided by operating activities

(26,251,037)

26,987,128

Cash flow from investing activities:

 

 

(Increase) in held-to-maturity securities

(72,500)

(7,159)

Sale of/maturity of and interests on available-for-sale securities

26,879,495

18,656,571

Proceeds from sale of foreclosed assets

305,870

268,005

Sale of investments

(2,913,999)

-

Disposal of premises and equipment and leased assets

1,565,524

447,215

Purchases of available-for-sale securities

(25,415,325)

(24,957,104)

Foreclosed assets received

(667,577)

(655,410)

Investment acquisitions

(109,069)

(18,382)

Acquisition of premises and equipment and leased assets

(2,164,319)

(1,471,051)

Intangible asset acquisitions

(4,040,965)

(216,749)

Dividends and interest on shareholders’ equity received

1,359,769

106,888

Net cash (used in) investing activities

(554,902)

(7,847,176)

Cash flow from financing activities:

 

 

Increase/(decrease) in subordinated debts

1,605,332

(505,235)

Dividends and interest on shareholders’ equity paid

(3,416,771)

(2,595,321)

Non-controlling interest

4,817

(29,361)

Acquisition of own shares

(72,997)

(28,922)

Net cash provided by/(used in) financing activities

(1,879,619)

(3,158,839)

Net increase in cash and cash equivalents

(27,575,754)

15,981,113

Cash and cash equivalents - at the beginning of the period

204,669,142

117,680,012

Cash and cash equivalents - at the end of the period

177,093,388

133,661,125

Net increase in cash and cash equivalents

(27,575,754)

15,981,113

 

The accompanying Notes are an integral part of these Financial Statements.


 

Bradesco     9            


 

Financial Statements of the Prudential Conglomerate and Independent Auditor’s Report

 

Index of Explanatory Notes from Management

 

We have presented the Explanatory Notes that integrate the set of Consolidated Financial Statements of the Prudential Conglomerate of Bradesco, distributed as follows:

Page

 

1) OPERATIONS 11
2) PRESENTATION OF THE FINANCIAL STATEMENTS 11
3) SIGNIFICANT ACCOUNTING PRACTICES 13
4) CASH AND CASH EQUIVALENTS 19
5) INTERBANK INVESTMENTS 20
6) SECURITIES AND DERIVATIVE FINANCIAL INSTRUMENTS 21
7) INTERBANK ACCOUNTS - RESERVE REQUIREMENT 32
8) LOANS 34
9) OTHER RECEIVABLES 45
10) OTHER ASSETS 47
11) INVESTMENTS 48
12) PREMISES AND EQUIPMENT AND LEASED ASSETS 49
13) DEFERRED 49
14) INTANGIBLE ASSETS 50
15) DEPOSITS, SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE AND FUNDS FROM ISSUANCE OF SECURITIES51 51
16) BORROWING AND ON-LENDING 53
17) PROVISIONS, CONTINGENT ASSETS AND LIABILITIES AND LEGAL LIABILITIES – TAX AND SOCIAL SECURITY 54
18) SUBORDINATED DEBT 57
19) OTHER LIABILITIES 60
20) NON-CONTROLLING INTERESTS IN SUBSIDIARIES 60
21) SHAREHOLDERS’ EQUITY (PARENT COMPANY) 60
22) FEE AND COMMISSION INCOME 63
23) PAYROLL AND RELATED BENEFITS 63
24) OTHER ADMINISTRATIVE EXPENSES 63
25) TAX EXPENSES 64
26) OTHER OPERATING INCOME 64
27) OTHER OPERATING EXPENSES 64
28) NON-OPERATING INCOME (LOSS) 64
29) RELATED-PARTY TRANSACTIONS (DIRECT AND INDIRECT) 65
30) FINANCIAL INSTRUMENTS 67
31) EMPLOYEE BENEFITS 73
32) INCOME TAX AND SOCIAL CONTRIBUTION 74
33) OTHER INFORMATION 76

 

 

 

10                 Prudential – June 2015


 

Financial Statements of the Prudential Conglomerate and Independent Auditor’s Report

 

Notes to the Financial Statements of the Prudential Conglomerate

 

1)     OPERATIONS

Banco Bradesco S.A. (Bradesco) is a private-sector publicly traded company and universal bank that through its commercial, foreign exchange, consumer financing and housing loan portfolios carries out all the types of banking activities that it is authorized to do so. The Bank is involved in a number of other activities, either directly or indirectly, through its subsidiaries, specifically leasing, investment banking, brokerage, consortium management, credit cards, real estate projects, insurance, pension plans and capitalization bonds. All these activities are undertaken by the various companies in Organização Bradesco, working together in an integrated fashion in the market.

2)     PRESENTATION OF THE FINANCIAL STATEMENTS

The Financial Statements of the Prudential Conglomerate were prepared to comply with the requirements of Resolution No. 4.280/13, of the National Monetary Council (CMN) and additional rules of the Central Bank of Brazil (Bacen). Thus, specific requirements in the consolidation and/or combination of the entities listed in Resolution No. 4.280/13 determined by the CMN and Bacen were observed, which are not necessarily the same established by the corporate law and by the CMN or Bacen for other types of consolidation. In this sense, they cover the financial statements of Banco Bradesco, and foreign branches, subsidiaries and investment funds, as requested in Resolution No. 4.280/13.

 

In the preparation of these Financial Statements of the Prudential Conglomerate intercompany transactions, including investments, assets and liabilities, revenue, expenses and unrealized profit were eliminated and net income and shareholders’ equity attributable to the non-controlling interests were accounted for in a separate line. For jointly controlled investments with other shareholders, assets, liabilities and income and loss were proportionally consolidated in the consolidated financial statements of the Prudential Conglomerate according to the interest held in the shareholders’ equity of each investee. Goodwill on the acquisition of investments in subsidiary/associate companies or jointly controlled entities is presented in the investments and intangible assets lines (Note 14a).

 

The financial statements include estimates and assumptions, such as: the calculation of estimated loan losses; fair value estimates of certain financial instruments; civil, tax and labor provisions; impairment losses of securities classified as available-for-sale and held-to-maturity securities and non-financial assets; and the determination of the useful life of specific assets. Actual results may differ from those based on estimates and assumptions.

Bradesco’s financial statements of the Prudential Conglomerate were approved by the Board of Executive Officers and by the Disclosure Committee on July 29, 2015.

 

 

Bradesco     11         

 


 

Financial Statements of the Prudential Conglomerate and Independent Auditor’s Report

 

Notes to the Financial Statements of the Prudential Conglomerate

 

Below are the directly and indirectly owned companies included in the financial statements of the Prudential Conglomerate:

 

 

  

June 30

Activity

Equity interest

2015

2014

Financial Institutions

 

 

 

Banco Bradesco S.A.

Banking

Parent Company

Parent Company

Banco Alvorada S.A.

Banking

99.99%

99.99%

Banco Bradesco Financiamentos S.A.

Banking

100.00%

100.00%

BMC Asset Management - DTVM Ltda.

Asset management

100.00%

100.00%

Banco Bradesco BBI S.A. (1)

Investment bank

99.80%

98.35%

Banco Boavista Interatlântico S.A.

Banking

100.00%

100.00%

Banco CBSS S.A.

Banking

100.00%

100.00%

Banco Bradesco Cartões S.A.

Cards

100.00%

100.00%

Banco Bradesco BERJ S.A.

Banking

100.00%

100.00%

Bradesco Leasing S.A. Arrendamento Mercantil

Leasing

100.00%

100.00%

Bradesco S.A. Corretora de Títulos e Valores Mobiliários

Brokerage

100.00%

100.00%

BEC - Distribuidora de Títulos e Valores Mobiliários Ltda.

Asset management

100.00%

100.00%

BEM - Distribuidora de Títulos e Valores Mobiliários Ltda.

Asset management

100.00%

100.00%

BRAM - Bradesco Asset Management S.A. DTVM

Asset management

100.00%

100.00%

Ágora Corretora de Títulos e Valores Mobiliários S.A.

Brokerage

100.00%

100.00%

Banco Bradescard S.A.

Cards

100.00%

100.00%

Crediare S.A. - Crédito, Financiamento e Investimento

Banking

50.00%

50.00%

Everest Leasing S.A. Arrendamento Mercantil

Leasing

100.00%

100.00%

Tibre Distribuidora de Títulos e Valores Mobiliários Ltda.

Asset management

100.00%

100.00%

Banco Bradesco Argentina S.A.

Banking

99.99%

99.99%

Banco Bradesco Europa S.A.

Banking

100.00%

100.00%

Banco Bradesco S.A. Grand Cayman Branch (2)

Banking

100.00%

100.00%

Banco Bradesco S.A. Grand Cayman Branch II (3)

Banking

-

100.00%

Banco Bradesco New York Branch

Banking

100.00%

100.00%

Bradesco Securities, Inc.

Brokerage

100.00%

100.00%

Bradesco Securities, UK.

Brokerage

100.00%

100.00%

Bradesco Securities Hong Kong

Brokerage

100.00%

100.00%

Bradescard México, Sociedad de Responsabilidad Limitada

 Cards

100.00%

100.00%

Consortium management

 

 

 

Bradesco Administradora de Consórcios Ltda.

Consortium management

100.00%

100.00%

Payment Institutions

 

 

 

Cielo S.A. (4) (5)

Services

30.06%

28.65%

Cia. Brasileira de Soluções e Serviços - Alelo (5)

Services

50.01%

50.01%

Tempo Serviços Ltda. (6)

Services

100.00%

-

Paggo Soluções e Meios de Pagamentos S.A. (6)

Services

15.03%

-

Braspag – Tecnologia em Pagamentos (6)

Services

30.06%

-

Cielo Inc. (6)

Services

30.06%

-

Merchant E-Solutions (6)

Services

30.06%

-

Cateno Gestão de Contas de Pagamentos S.A. (6)

Services

21.04%

-

Cidade Capital Markets Limited

Banking

100.00%

100.00%

Farly Participações Ltda. (6)

Services

50.01%

-

Livelo S.A. (6)

Services

50.01%

-

Stelo S.A. (6)

Services

44.02%

-

Elo Holding Financeira S.A. (6)

Services

50.01%

-

Leader S.A. Administradora de Cartões de Crédito (6)

Services

50.00%

-

MPO Processadora de Pagamentos Móveis S.A. (6)

Services

50.00%

-

IBI Promotora de Vendas Ltda. (6)

Services

50.01%

-

Alvorada Administradora de Cartões Ltda. (6)

Services

100.00%

-

Securitization Companies

 

 

 

Cia. Securitizadora de Créditos Financeiros Rubi

Credit acquisition

100.00%

100.00%

Alvorada Cia. Securitizadora de Créditos Financeiros

Credit acquisition

100.00%

100.00%

Promosec Cia. Securitizadora de Créditos

Credit acquisition

100.00%

100.00%

BCN – Consultoria, Adm. Bens, Serv. e Publicidade Ltda. (6)

Credit acquisition

100.00%

-

Alvorada Serviços e Negócios Ltda. (6)

Credit acquisition

100.00%

-

Investment funds (9)

 

 

 

Bradesco FI MULT Cred. Priv. Inv. Exterior Pioneiro

Investment funds

100.00%

100.00%

Bradesco F.I.C. F.I. Referenciado DI Galáxia

Investment funds

100.00%

100.00%

Bradesco FI Multimercado Cred. Privado Apolo

Investment funds

100.00%

100.00%

F II - Fundo de Investimento RF Cred. Privado

Investment funds

100.00%

100.00%

FIDC Hiper (7)

Investment funds

-

100.00%

FIP Multisetorial Plus

Investment funds

100.00%

100.00%

BMC FIDC - Crédito Consignado INSS Subordinada (8)

Investment funds

-

100.00%

Bradesco FI Referenciado DI União

Investment funds

100.00%

94.12%

Bradesco F.I. Referenciado DI Performance

Investment funds

100.00%

100.00%

BRAD FI Mult. Cred. Priv. Inv. Exterior Andromeda

Investment funds

100.00%

100.00%

Strong Fundo de Inv. em Cotas FUN Inv. Multimercado

Investment funds

100.00%

100.00%

Fundo Inv. em Participações Multisetorial Plus II

Investment funds

100.00%

100.00%

Bradesco FIC Fundo Inv. Referenciado DI Carnaúba

Investment funds

50.01%

50.01%

Bradesco FIC FI Multimercado Cristal II (6)

Investment funds

100.00%

-

Bradesco FIC FI Multimercado Performance Liquidez (6)

Investment funds

100.00%

-

Bradesco Private FIC FI RF IRF – M Ativo (6)

Investment funds

100.00%

-

Bradesco     11         

 


 

Financial Statements of the Prudential Conglomerate and Independent Auditor’s Report

 

Notes to the Financial Statements of the Prudential Conglomerate

 

 

  

June 30

Activity

Equity interest

2015

2014

Investment funds (9)

 

 

 

Bradesco FI MULT Cred. Priv. Inv. Exterior Pioneiro

Investment funds

100.00%

100.00%

Bradesco F.I.C. F.I. Referenciado DI Galáxia

Investment funds

100.00%

100.00%

Bradesco FI Multimercado Cred. Privado Apolo

Investment funds

100.00%

100.00%

F II - Fundo de Investimento RF Cred. Privado

Investment funds

100.00%

100.00%

FIDC Hiper (7)

Investment funds

-

100.00%

FIP Multisetorial Plus

Investment funds

100.00%

100.00%

BMC FIDC - Crédito Consignado INSS Subordinada (8)

Investment funds

-

100.00%

Bradesco FI Referenciado DI União

Investment funds

100.00%

94.12%

Bradesco F.I. Referenciado DI Performance

Investment funds

100.00%

100.00%

BRAD FI Mult. Cred. Priv. Inv. Exterior Andromeda

Investment funds

100.00%

100.00%

Strong Fundo de Inv. em Cotas FUN Inv. Multimercado

Investment funds

100.00%

100.00%

Fundo Inv. em Participações Multisetorial Plus II

Investment funds

100.00%

100.00%

Bradesco FIC Fundo Inv. Referenciado DI Carnaúba

Investment funds

50.01%

50.01%

Bradesco FIC FI Multimercado Cristal II (6)

Investment funds

100.00%

-

Bradesco FIC FI Multimercado Performance Liquidez (6)

Investment funds

100.00%

-

Bradesco Private FIC FI RF IRF – M Ativo (6)

Investment funds

100.00%

-

(1)  Increase in equity interest through share acquisition in December 2014;

(2)  The special purpose entity International Diversified Payment Rights Company is being consolidated. The company is part of a structure set up for the securitization of the future flow of payment orders received overseas (Note 15d);

(3)  Company incorporated by Banco Bradesco S.A. Grand Cayman Branch in November 2014;

(4)  Increase in equity interest through share acquisition in February and March 2015;

(5)  Company proportionally consolidated, pursuant to CMN Rule No. 4.280/13;

(6)  They have been part of the Prudential Conglomerate since January 2015;

(7)  Ended in January 2015;

(8)  Ended in May 2014; and

(9)  The Investment Funds in which Bradesco substantially assumes or retains risks and benefits were consolidated.

 

3)     SIGNIFICANT ACCOUNTING PRACTICES

a)   Functional and Presentation Currencies

 

Financial statements of Prudential Conglomerate are presented in Brazilian reais, which is also Bradesco’s functional currency. Foreign branches and subsidiaries are mainly a continuation of activities in Brazil, and, therefore, assets, liabilities and profit or loss are translated into Brazilian reais using the appropriate currency exchange rate to comply with accounting practices adopted in Brazil. Foreign currency translation gains and losses arising are recognized in the period’s income statement in the lines “Derivative Financial Instruments” and “Borrowing and On-lending”.

 

b)   Income and Expense Recognition

 

The result is calculated according to the regime of competence, which establishes that the revenues and expenses should be included in the calculation of the results for the periods in which they occur, always simultaneously when they are correlated, regardless of being a receipt or payment.

 

Fixed rate contracts are recorded at their redemption value with the income or expense relating to future periods being recorded as a deduction from the corresponding asset or liability. Finance income and costs are recognized daily on a pro-rata basis and calculated using the compounding method, except when they relate to discounted notes or to foreign transactions, which are calculated using the straight-line method.

 

Floating rate and foreign-currency-indexed contracts are adjusted for interest and foreign exchange rates applicable at the end of the reporting period.

 

 

 

 

Bradesco     13         


 

Financial Statements of the Prudential Conglomerate and Independent Auditor’s Report

 

Notes to the Financial Statements of the Prudential Conglomerate

 

c)   Cash and cash equivalents

 

Cash and cash equivalents include: funds available in currency, investments in gold, securities sold under agreements to repurchase and interest-earning deposits in other banks, maturing in 90 days or less, which are exposed to insignificant risk of change in fair value. These funds are used by Bradesco to manage its short-term commitments.

 

Cash and cash equivalents detailed balances are presented in Note 4.

 

d)   Interbank investments

 

Unrestricted repurchase and reverse repurchase agreements are stated at their fair value. All other interbank investments are stated at cost, plus income earned up to the end of the reporting period, net of any devaluation allowance, if applicable.

 

The breakdown, terms and proceeds relating to interbank investments are presented in Note 5.

 

e)   Securities – Classification

 

·       Trading securities – securities acquired for the purpose of being actively and frequently traded. They are recorded at cost, plus income earned and adjusted to fair value with movements recognized in the Income Statement for the period;

 

·       Available-for-sale securities – securities that are not specifically intended for trading purposes or to be held to maturity. They are recorded at cost, plus income earned, which is recorded in profit or loss in the period and adjusted to fair value with movements recognized in shareholders’ equity, net of tax, which will be transferred to the Income Statement only when effectively realized; and

 

·       Held-to-maturity securities – securities for which there is positive intent and financial capacity to hold to maturity. They are recorded at cost, plus income earned recognized in the Income Statement for the period.

 

Securities classified as trading and available-for-sale, as well as derivative financial instruments, are recognized in the consolidated statement of financial position at their fair value. Fair value is generally based on quoted market prices or quotations for assets or liabilities with similar characteristics. If market prices are not available, fair values are based on traders’ quotations, pricing models, discounted cash flows or similar techniques to determine the fair value and may require judgment or significant estimates by Management.

 

Classification, breakdown and segmentation of securities are presented in Note 6 (a to d).

 

f)    Derivative financial instruments (assets and liabilities)

 

Derivate instruments are classified based on the objective for which the underlying instrument was acquired at the date of purchase, taking into consideration its use for possible hedging purposes.

Operations involving derivative financial instruments are designed to meet the Bank’s own needs in order to manage overall exposure, as well as to meet customer requests to manage their positions. The gains or losses are recorded in profit-and-loss and shareholders’ equity accounts.

 

Derivative financial instruments used to mitigate risk deriving from exposure to variations in the fair value of financial assets and liabilities are designated as hedges when they meet the criteria for hedge accounting and are classified according to their nature:

 

·       Market risk hedge: the gains and losses, realized or not, of the financial instruments classified in this category as well as the financial assets and liabilities, that are the object of the hedge, are recorded in the Income Statement; and

 

 

14                 Prudential – June 2015


 

Financial Statements of the Prudential Conglomerate and Independent Auditor’s Report

 

Notes to the Financial Statements of the Prudential Conglomerate

 

·       Cash flow hedge: the effective portion of valuation or devaluation of the financial instruments classified in this category is recorded, net of taxes, in a specific account in shareholders’ equity. The ineffective portion of the hedge is recognized directly in the Income Statement.

 

A breakdown of amounts included as derivative financial instruments, in the balance sheet and off-balance-sheet accounts, is disclosed in Note 6 (e to g).

 

g)   Loans and leasing, advances on foreign exchange contracts, other receivables with credit characteristics and allowance for loan losses

 

Loans and leasing, advances on foreign exchange contracts and other receivables with credit characteristics are classified by risk level, based on: (i) the parameters established by CMN Resolution No. 2.682/99, which requires risk ratings to have nine levels, from “AA” (minimum risk) to
“H” (maximum risk); and (ii) Management’s assessment of the risk level. This assessment, which is carried out regularly, considers current economic conditions and past experience with loan losses, as well as specific and general risks relating to operations, debtors and guarantors. Moreover, the days-past-due is also considered in the rating of customer risk as per CMN Resolution No. 2.682/99, as follows:

 

Past-due period (1)

Customer rating

·  from 15 to 30 days

B

·  from 31 to 60 days

C

·  from 61 to 90 days

D

·  from 91 to 120 days

E

·  from 121 to 150 days

F

·  from 151 to 180 days

G

·  more than 180 days

H

(1)  For transactions with terms of more than 36 months, past-due periods are doubled, as permitted by CMN Resolution No. 2.682/99.

Interest and inflation adjustments on past-due transactions are only recognized in the Income Statement up to the 59th day that they are past due. As from the 60th day, they are recognized in off-balance sheet accounts and are only recognized in the Income Statement when received.

 

H-rated past-due transactions remain at this level for six months, after which they are written-off against the existing allowance and controlled in off-balance-sheet accounts for at least five years.

 

Renegotiated transactions are held at the same rating as on the date of the renegotiation or classified in a higher risk rating. Renegotiations already written-off against the allowance and that were recorded in off-balance-sheet accounts, are rated as level “H” and any possible gains derived from their renegotiation are recognized only when they are effectively received. When there is a significant repayment on the operation or when new material facts justify a change in the level of risk, the operation may be reclassified to a lower risk category.

 

The estimated allowance for loan losses is calculated to sufficiently cover probable losses, considering CMN and Bacen standards and instructions, together with Management’s assessment of the credit risk.

 

Type, values, terms, levels of risk, concentration, economic sector of client’s activity, renegotiation and income from loans, as well as the breakdown of expenses and statement of financial position accounts for the allowance for loan losses are presented in Note 8.

 

Leasing operations

 

The portfolio of leasing operations consists of contracts firmed with the support of Decree No. 140/84, of the Ministry of Finance, which contains clauses of: (a) non-cancellation; (b) purchase option; and c) post-fixed or fixed restatement and are accounted for in accordance with the standards established by Bacen, as follows:

 

Bradesco     15         

 


 

Financial Statements of the Prudential Conglomerate and Independent Auditor’s Report

 

Notes to the Financial Statements of the Prudential Conglomerate

 

 

I-    Leases receivable

 

Reflect the balance of installments receivable, restated­ according to the indexes and criteria established by contractual agreement.

 

II-   Unearned revenues from leases and Guaranteed Residual Value (GRV)

 

Recorded at the contractual amount, conversely to adjusted accounts of unearned revenues from leasing and Residual value to balance, both submitted through negotiated conditions. The GRV received in advance is recorded in Other Liabilities – Creditors by Anticipation of the Residual Value until the date of contractual termination. The adjustment at present value of the lease payments and the GRV receivable from the financial leasing operations is recognized as excessive/insufficient depreciation on leased assets, in order to reconcile the accounting practices. In operations in arrears equal to or greater than 60 days, the appropriation to the result occurs upon receipt of contractual installments, in accordance with Resolution No. 2.682/99 of the CMN.

 

III- Fixed assets for leasing operations

 

It is recorded at acquisition cost, minus the accrued depreciations. The depreciation is calculated using the linear method, with the benefit of a 30% reduction in the normal life cycle of the asset, provisioned in the current legislation. The main annual rates of depreciation used, as base for this reduction, are the following: vehicles and related, 20%; furniture and utensils, 10%; machinery and equipment, 10%; and other assets, 10% and 20%.

 

IV- Losses on leases

 

The losses recorded in the sale of leased assets are deferred and amortized over the remaining normal life cycle of assets, and are shown along with the Leased Fixed Assets (Note 8k).

 

V-  Excessive (insufficient) depreciation

 

The accounting records of leasing operations are maintained as legal requirements, specific for this type of operation. The procedures adopted and summarized in items "II" to "IV" above differ from the accounting practices provisioned in Brazilian corporate law, especially concerning the regime of competence in the record of revenues and expenses related to lease contracts. As a result, in accordance with Bacen Circular No. 1.429/89, the present value of outstanding leasing installments was calculated, using the internal rate of return of each contract, recording a leasing revenue or expenditure, conversely to the entries of excessive or insufficient depreciation, respectively, recorded in Permanent Assets, with the objective of adapting the leasing operations to the regime of competence (Note 8k).

 

h)   Income tax and social contribution (assets and liabilities)

 

Income tax and social contribution deferred tax assets, calculated on income tax losses, social contribution losses and temporary differences, are recorded in “Other Receivables - Sundry” and the deferred tax liabilities on tax differences in leasing depreciation (applicable only for income tax),
mark-to-market adjustments on securities, restatement of judicial deposits, among others, are recorded in “Other Liabilities - Tax and Social Security”.

 

Deferred tax assets on temporary differences are realized when the difference between the accounting treatment and the income tax treatment reverses. Deferred tax assets on income tax and social contribution losses are realizable when taxable income is generated, up to the 30% limit of the taxable profit for the period. Deferred tax assets are recorded based on current expectations of realization considering technical studies and analyses carried out by Management.

 

16                 Prudential – June 2015


 

Financial Statements of the Prudential Conglomerate and Independent Auditor’s Report

 

Notes to the Financial Statements of the Prudential Conglomerate

 

The provision for income tax is calculated at 15% of taxable income plus a 10% surcharge. Social contribution on net income is calculated at 15% for financial companies and similar companies and for insurance companies, and at 9% for other companies.

Provisions were recorded for other income tax and social contribution in accordance with specific applicable legislation.

The changes in the criteria for recognition of revenues, costs and expenses computed in the calculation of the net profit for the period, introduced by Law No. 11.638/07 and subsequent amendments were made fiscally by the new regime of the taxation in force instituted by Law No. 12.973/14.

 

The breakdown of income tax and social contribution, showing the calculations, the origin and expected use of deferred tax assets, as well as unrecorded deferred tax assets, are presented in Note 32.

 

i)    Prepaid expenses

 

Prepaid expenses consist of funds already disbursed for future benefits or services, which are recognized in the profit or loss on an accrual basis.

 

Incurred costs relating to assets that will generate revenue in subsequent periods are recorded in the Income Statement according to the terms and the amount of expected benefits and directly written-off in the Income Statement when the corresponding assets or rights are no longer part of the institution’s assets or when future benefits are no longer expected.

 

In the case of the remuneration paid by the origination of credit operations to the banking correspondents related to credit operations originated during 2015, Bradesco opted to recognize 2/3 of the total value of compensation, pursuant to the provisions of Bacen Circular No. 3.738/14.

 

Prepaid expenses are shown in detail in Note 10b.

 

j)    Investments

 

Investments in affiliates, where Bradesco has significant influence over the investee or holds at least 20% of the voting rights, are accounted for using the equity method.

 

Tax incentives and other investments are stated at cost, less allowance for losses/impairment, where applicable.

 

Subsidiaries and jointly controlled entities are consolidated - the composition of the main companies can be found in Note 2. The composition of affiliates, as well as other investments, can be found in Note 11.

 

k)   Premises and equipment

 

Relates to the tangible assets used by the Bank in its activities, including those resulting from transactions that transfer risks, benefits and control of the assets to the Bank.

 

Premises and equipment are stated at acquisition cost, net of accumulated depreciation, calculated by the straight-line method based on the assets’ estimated economic useful life, using the following rates: real estate - 4% per annum; furniture and utensils and machinery and equipment - 10% per annum; transport systems - 20% per annum; and data-processing systems - 20% to 50% per annum, and adjusted for impairment, when applicable.

 

The breakdown of asset costs and their corresponding depreciation, as well as the unrecorded surplus value for real estate and the fixed asset ratios, are presented in Note 12.

 

 

Bradesco     17         

 


 

Financial Statements of the Prudential Conglomerate and Independent Auditor’s Report

 

Notes to the Financial Statements of the Prudential Conglomerate

 

l)    Deferred assets

 

It is recorded at cost of acquisition or composition, net of their accrued depreciation of 20% per annum, calculated using the linear method. Since December 2008, the new operations have been recorded in intangible assets, in accordance with Circular Letter No. 3.357/08 of Bacen.

 

The composition of fixed assets is shown in Note 13.

 

m) Intangible assets

 

Relates to the right over intangible assets used by the Bank in its activities.

 

Intangible assets comprise:

 

·        Future profitability/acquired client portfolio and acquisition of right to provide banking services: they are recorded and amortized over the period in which the asset will directly and indirectly contribute to future cash flows and adjusted for impairment, where applicable; and

 

·        Software: stated at cost less amortization calculated on a straight-line basis over the estimated useful life (20% to 50% p.a.), from the date it is available for use and adjusted for impairment, where applicable. Internal software development costs are recognized as an intangible asset when it is possible to show the intent and ability to complete and use the software, as well as to reliably measure costs directly attributable to the intangible asset. These costs are amortized during the software’s estimated useful life, considering the expected future economic benefits.

 

Goodwill and other intangible assets and the movement in these balances by class, are presented in Note 14.

 

n)   Impairment

 

Financial and non-financial assets are tested for impairment.

 

Impairment evidence may comprise the non-payment or payment delay by the debtor, possible bankruptcy process or the significant or extended decline in an asset value.

 

An impairment loss of a financial or non-financial asset is recognized in the profit or loss for the period if the book value of an asset or cash-generating unit exceeds its recoverable value.

 

Impairment losses are presented in Note 6d(10).

 

o)   Securities sold under agreements to repurchase

 

These are recognized at the value of the liabilities and include, when applicable, related charges up to the end of the reporting period, calculated on a daily pro-rata basis.

 

A breakdown of the contracts recorded in deposits and securities sold under agreements to repurchase, as well as terms and amounts recognized in the statement of financial position and income statement, is presented in Note 15.

 

p)   Provisions, contingent assets and liabilities and legal obligations tax and social security

 

Provisions, contingent assets and liabilities, and legal obligations, as defined below, are recognized, measured and disclosed in accordance with the criteria set out in CPC 25, approved by
CMN Resolution No. 3.823/09 and CVM Resolution No. 594/09:

 

·       Contingent assets: these are not recognized in the financial statements, except to the extent that there are real guarantees or favorable judicial decisions, to which no further appeals are applicable, and confirmation of the capacity of the counterparty to pay or the ability of Bradesco to realize the asset via compensation against another liability upon which the gain is considered practically certain. Contingent assets with a chance of probable success are disclosed in the notes to the financial statements;

 

18                 Prudential – June 2015


 

Financial Statements of the Prudential Conglomerate and Independent Auditor’s Report

 

Notes to the Financial Statements of the Prudential Conglomerate

 

 

·         Provisions: these are recorded taking into consideration the opinion of legal counsel, the nature of the lawsuits, similarity with previous lawsuits, complexity and positioning of the courts, whenever the loss is deemed probable, it requires a probable outflow of funds to settle the obligation and when the amount can be reliably measured;

 

·       Contingent liabilities: according to CPC 25, the term “contingent” is used for liabilities that are not recognized because their existence will only be confirmed by the occurrence of one or more uncertain future events beyond Management’s control. Contingent liabilities considered as possible losses should only be disclosed in the notes when relevant. Obligations deemed remote are not recorded as a provision nor disclosed; and

 

·       Legal obligations – provision for tax risks: results from judicial proceedings, which contest the applicability of tax laws on the grounds of legality or constitutionality, which, regardless of the assessment of the probability of success, are fully provided for in the financial statements.

 

Details on lawsuits, as well as segregation and changes in amounts recorded, by type, are presented in Note 17.

 

q)   Other assets and liabilities

 

Assets are stated at their realizable amounts, including, when applicable, related income and inflation and exchange variations (on a daily prorated basis), less provision for losses, when deemed appropriate. Liabilities include known or measurable amounts, including related charges and inflation and exchange variations (on a daily prorated basis).

 

r)    Subsequent events

 

These refer to events occurring between the reporting date and the date the financial statements are authorized to be issued.

 

They comprise the following:

 

·       Events resulting in adjustments: events relating to conditions already existing at the end of the reporting period; and

·       Events not resulting in adjustments: events relating to conditions not existing at the end of the reporting period.

 

Subsequent events, if any, are described in Note 33.

 

4)     CASH AND CASH EQUIVALENTS

 

 

June 30 - R$ thousand

2015

2014

Cash and due from banks in domestic currency

7,806,499

7,418,517

Cash and due from banks in foreign currency

3,702,847

3,862,442

Investments in gold

124

99

Total cash and due from banks

11,509,470

11,281,058

Interbank investments (1)

165,583,918

122,380,067

Total cash and cash equivalents

177,093,388

133,661,125

(1)  Refers to operations that mature in 90 days or less from the date they were effectively invested and with insignificant risk of change in fair value.

 

Bradesco     19         


 

Financial Statements of the Prudential Conglomerate and Independent Auditor’s Report

 

Notes to the Financial Statements of the Prudential Conglomerate

 

5)     INTERBANK INVESTMENTS

 

a)   Breakdown and maturity

 

 

June 30 - R$ thousand

1 to 30

days

31 to 180

days

181 to 360

days

More than

360 days

2015

2014

Securities purchased under agreements to resell:

 

 

 

 

 

 

Own portfolio position

12,880,043

28,089

-

-

12,908,132

16,792,543

● Financial treasury bills

1,397,200

-

-

-

1,397,200

-

● National treasury notes

6,848,787

-

-

-

6,848,787

7,409,561

● National treasury bills

4,459,495

-

-

-

4,459,495

9,370,767

● Debentures

1,879

-

-

-

1,879

-

● Other

172,682

28,089

-

-

200,771

12,215

Funded position

151,916,843

4,432,603

-

-

156,349,446

107,872,543

● Financial treasury bills

24,316,890

-

-

-

24,316,890

76,294

● National treasury notes

47,982,718

3,931,687

-

-

51,914,405

70,246,714

● National treasury bills

79,617,235

500,916

-

-

80,118,151

37,549,535

Short position

454,697

1,616,513

-

-

2,071,210

656,775

● National treasury bills

454,697

1,616,513

-

-

2,071,210

656,775

Subtotal

165,251,583

6,077,205

-

-

171,328,788

125,321,861

Interest-earning deposits in other banks:

 

 

 

 

 

 

● Interest-earning deposits in other banks

645,603

1,452,830

2,324,955

526,925

4,950,313

12,345,193

● Provision for losses

(4,001)

(7,926)

(7,215)

-

(19,142)

(13,374)

Subtotal

641,602

1,444,904

2,317,740

526,925

4,931,171

12,331,819

Total in 2015

165,893,185

7,522,109

2,317,740

526,925

176,259,959

 

%

94.1

4.3

1.3

0.3

100.0

 

Total in 2014

125,002,098

7,337,099

4,644,662

669,821

 

137,653,680

%

90.8

5.3

3.4

0.5

 

100.0

 

20                 Prudential – June 2015


 

Financial Statements of the Prudential Conglomerate and Independent Auditor’s Report

 

Notes to the Financial Statements of the Prudential Conglomerate

 

b)   Income from interbank investments

 

Classified in the income statement as income from operations with securities.

 

 

Semesters ended June 30 - R$ thousand

2015

2014

Finance Intermediation Income:

 

 

Own portfolio position

148,224

149,568

Funded position

10,293,911

5,632,855

Short position

187,010

148,220

Subtotal

10,629,145

5,930,643

Income from interest-earning deposits in other banks

214,081

326,512

Total (Note 6h)

10,843,226

6,257,155

 

6)     SECURITIES AND DERIVATIVE FINANCIAL INSTRUMENTS

Information on securities and derivative financial instruments is as follows:

a)     Summary of the consolidated classification of securities by operating segment and issuer

 

June 30 - R$ thousand

Financial

Other Activities

2015

%

2014

%

Trading securities

34,537,469

-

34,537,469

23.1

53,447,761

33.3

- Government securities

12,095,083

-

12,095,083

8.1

31,081,999

19.4

- Private securities

15,420,530

-

15,420,530

10.3

16,618,921

10.4

- Derivative financial instruments (1) (8)

7,021,856

-

7,021,856

4.7

5,746,841

3.5

Available-for-sale securities (4)

102,580,499

3,080

102,583,579

68.6

106,905,267

66.7

- Government securities

57,965,123

1,354

57,966,477

38.8

58,655,424

36.6

- Private securities

44,615,376

1,726

44,617,102

29.8

48,249,843

30.1

Held-to-maturity securities (4)

12,458,024

-

12,458,024

8.3

36,757

-

- Government securities

39,021

-

39,021

-

36,757

-

- Private securities

12,419,003

-

12,419,003

8.3

-

-

Subtotal

149,575,992

3,080

149,579,072

100.0

-

-

Purchase and sale commitments (2)

71,572

-

71,572

-

-

-

Grand total

149,647,564

3,080

149,650,644

100.0

160,389,785

100.0

- Government securities

70,099,227

1,354

70,100,581

47.0

89,774,180

56.0

- Private securities

79,476,765

1,726

79,478,491

53.0

70,615,605

44.0

Subtotal

149,575,992

3,080

149,579,072

100.0

-

-

Purchase and sale commitments (2)

71,572

-

71,572

-

-

-

Grand total

149,647,564

3,080

149,650,644

100.0

160,389,785

100.0

 

 

Bradesco     21         


 

Financial Statements of the Prudential Conglomerate and Independent Auditor’s Report

 

Notes to the Financial Statements of the Prudential Conglomerate

 

b)    Breakdown of the consolidated portfolio by issuer

Securities (3)

June 30 - R$ thousand

2015

2014

1 to 30

days

31 to 180

days

181 to 360

days

More than

360 days

Fair/book value (5) (6) (7)

Original amortized cost

Mark-to-market

Fair/book value (5) (6) (7)

Mark-to-market

Government securities

64,399

4,829,968

18,678,748

46,527,466

70,100,581

71,417,022

(1,316,441)

89,774,180

(39,127)

Financial treasury bills

1,893

1,635,751

-

4,432,027

6,069,671

6,069,038

633

8,422,792

1,183

National treasury bills

4,745

1,750,139

18,678,748

2,925,052

23,358,684

23,917,250

(558,566)

25,147,017

(705,762)

National treasury notes

-

-

-

38,000,602

38,000,602

38,705,515

(704,913)

53,914,739

639,649

Brazilian foreign debt securities

46,427

-

-

1,113,408

1,159,835

1,202,726

(42,891)

313,746

14,717

Privatization rights

-

-

-

55,667

55,667

46,043

9,624

62,237

10,662

Other

11,334

1,444,078

-

710

1,456,122

1,476,450

(20,328)

1,913,649

424

Private securities

13,309,751

4,020,788

3,818,051

58,329,901

79,478,491

85,217,983

(5,739,492)

70,615,605

545,510

Bank deposit certificates

98,242

325,816

16,321

51,482

491,861

491,861

-

637,778

-

Shares

3,335,800

-

-

-

3,335,800

3,365,499

(29,699)

3,769,072

132,721

Debentures (9)

187,344

1,599,956

1,424,150

29,514,645

32,726,095

32,240,687

485,408

32,486,525

(167,719)

Promissory notes

-

289,934

568,518

-

858,452

852,312

6,140

983,766

(8,452)

Foreign corporate securities

169,776

177,325

448,247

10,805,146

11,600,494

12,259,495

(659,001)

8,582,871

119,862

Derivative financial instruments (1) (8)

5,618,755

475,203

101,694

826,204

7,021,856

12,467,572

(5,445,716)

5,746,841

636,883

Other

3,899,834

1,152,554

1,259,121

17,132,424

23,443,933

23,540,557

(96,624)

18,408,752

(167,785)

Subtotal

13,374,150

8,850,756

22,496,799

104,857,367

149,579,072

156,635,005

(7,055,933)

160,389,785

506,383

Purchase and sale commitments (2)

60,579

10,609

384

-

71,572

71,572

-

-

-

Hedge - cash flow (Note 6g)

-

-

-

-

-

-

299,179

-

(20,725)

Securities reclassified to “Held-to-maturity securities” (4)

-

-

-

-

-

-

(370,136)

-

-

Grand total

13,434,729

8,861,365

22,497,183

104,857,367

149,650,644

156,706,577

(7,126,890)

160,389,785

485,658

                                                                                                                                                                                                                                                

 

22                 Prudential – June 2015


 

Financial Statements of the Prudential Conglomerate and Independent Auditor’s Report

 

Notes to the Financial Statements of the Prudential Conglomerate

 

c)     Consolidated classification by category, maturity and operating segment

I)    Trading securities

Securities (3)

June 30 - R$ thousand

2015

2014

1 to 30

days

31 to 180

days

181 to 360

days

More than

360 days

Fair/book value (5) (6) (7)

Original amortized cost

Mark-to-market

Fair/book value (5) (6) (7)

Mark-to-market

- Financial

10,109,531

6,014,024

3,031,279

15,382,635

34,537,469

40,060,937

(5,523,468)

53,000,480

761,498

National treasury bills

4,744

1,750,139

973,217

281,167

3,009,267

3,016,378

(7,111)

4,748,893

(720)

Financial treasury bills

-

1,635,751

-

3,869,174

5,504,925

5,505,145

(220)

8,068,623

1,028

Bank deposit certificates

78,287

325,816

16,321

36,418

456,842

456,842

-

595,513

 

Derivative financial instruments (1) (8)

5,618,755

475,203

101,694

826,204

7,021,856

12,467,572

(5,445,716)

5,746,841

636,883

Debentures (9)

-

260,931

391,066

3,211,269

3,863,266

3,872,374

(9,108)

5,934,287

(59,382)

Promissory notes

-

230,362

-

-

230,362

229,974

388

153,605

(376)

National treasury notes

-

-

-

2,588,311

2,588,311

2,613,890

(25,579)

16,350,827

210,589

Other

4,407,745

1,335,822

1,548,981

4,570,092

11,862,640

11,898,762

(36,122)

11,401,891

(26,524)

- Other Activities

-

-

-

-

-

-

-

447,280

-

Financial treasury bills

-

-

-

-

-

-

-

447,280

-

Subtotal

10,109,531

6,014,024

3,031,279

15,382,635

34,537,469

40,060,937

(5,523,468)

-

-

Purchase and sale commitments (2)

60,579

10,609

384

-

71,572

71,572

-

-

-

Financial

60,579

10,609

384

-

71,572

71,572

-

-

-

Grand total

10,170,110

6,024,633

3,031,663

15,382,635

34,609,041

40,132,509

(5,523,468)

53,447,760

761,498

Derivative financial instruments (liabilities) (8)

(5,126,990)

(221,543)

(107,839)

(126,448)

(5,582,820)

(5,336,969)

(245,851)

4,731,559

284,085

 

 

Bradesco     23         


 

Financial Statements of the Prudential Conglomerate and Independent Auditor’s Report

 

Notes to the Financial Statements of the Prudential Conglomerate

 

II)   Available-for-sale securities

Securities (3) (10)

June 30 - R$ thousand

2015

2014

1 to 30

days

31 to 180

days

181 to 360

days

More than

360 days

Fair/book value (5) (6) (7)

Original amortized cost

Mark-to-market

Fair/book value (5) (6) (7)

Mark-to-market

- Financial (4)

3,262,893

2,836,732

19,465,520

77,015,354

102,580,499

104,112,978

(1,532,479)

106,902,496

(255,117)

National treasury bills

-

-

17,705,531

2,643,885

20,349,416

20,900,872

(551,456)

20,398,123

(705,041)

Brazilian foreign debt securities

7,815

-

-

194,366

202,181

223,447

(21,266)

276,989

14,717

Foreign corporate securities

158,660

54,845

74,064

10,591,743

10,879,312

11,537,081

(657,769)

8,515,351

120,000

National treasury notes

-

-

-

35,412,291

35,412,291

36,091,625

(679,334)

37,563,911

429,059

Financial treasury bills

1,893

-

-

561,499

563,392

562,553

839

351,398

153

Bank deposit certificates

19,528

-

-

15,065

34,593

34,593

-

42,264

-

Debentures (9)

186,069

1,339,025

1,033,084

26,303,376

28,861,554

28,367,037

494,517

26,552,239

(108,337)

Shares

1,776,936

-

-

-

1,776,936

1,806,636

(29,700)

1,931,432

139,671

Other

1,111,992

1,442,862

652,841

1,293,129

4,500,824

4,589,134

(88,310)

11,270,789

(145,339)

- Other Activities

1,726

-

-

1,354

3,080

3,066

14

2,771

2

Financial treasury bills

-

-

-

1,354

1,354

1,340

14

2,771

2

Other

1,726

-

-

-

1,726

1,726

-

-

-

Subtotal

3,264,619

2,836,732

19,465,520

77,016,708

102,583,579

104,116,044

(1,532,465)

106,905,267

(255,115)

Hedge - cash flow (Note 6g)

-

-

-

-

-

-

299,179

-

(20,725)

Securities reclassified to “Held-to-maturity securities” (4)

-

-

-

-

-

-

(370,136)

-

-

Grand total

3,264,619

2,836,732

19,465,520

77,016,708

102,583,579

104,116,044

(1,603,422)

106,905,267

(275,840)

 

 

 

24                 Prudential – June 2015


 

Financial Statements of the Prudential Conglomerate and Independent Auditor’s Report

 

Notes to the Financial Statements of the Prudential Conglomerate

III) Held-to-maturity securities

Securities (3)

June 30 - R$ thousand

2015

2014

1 to 30

days

31 to 180

days

181 to 360

days

More than

360 days

Original amortized cost

(6) (7)

Original amortized cost

(6) (7)

Financial

-

-

-

12,458,024

12,458,024

36,757

Brazilian foreign debt securities

-

-

-

39,021