Good morning, ladies and gentlemen. We would like to welcome everyone to Banco Bradesco’s Fourth Quarter 2014 Earnings Results Conference Call. This call is being broadcasted simultaneously through the Internet in the website www.bradesco.com.br/ir. In that address, you can also find a banner through which the presentation will be available for download. We inform that all participants will only be able to listen to the conference call during the company’s presentation. After the presentation, there will be a question-and-answer session. At that time, further instructions will be given. [Operator Instructions]. Before proceeding, let me mention that forward-looking statements are being made under the Safe Harbor of the Securities Litigation Reform Act of 1996. Forward-looking statements are based on the beliefs and assumptions of Banco Bradesco’s management and on information currently available to the Company. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions because they relate to future events, and therefore depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of Banco Bradesco and could cause results to differ materially from those expressed in such forward-looking statements. Now I’ll turn the conference over to Mr. Paulo Faustino da Costa, Market Relations Department Director.

Good morning, everyone, and thank you all for participating in our fourth quarter conference call. We are here today to provide you with all the information you may need about our numbers. And this is in line with our goal of always increasing the transparency of information disclosed to the market. We have here today Mr. Alexandre da Silva Gluher, Brazil’s Executive Vice President; Mr. Marco Antonio Rossi, Chief Executive Officer of Bradesco Seguros Group and Bradesco Executive Vice President; Mr. Luiz Carlos Angelotti, Executive Managing Director and Investor Relations Officer; and Mr. Moacir Nachbar Jr., Executive Director. I will now turn to our existing Director and Investor Relations Officer, Mr. Luiz Carlos Angelotti, who will lead our conference call. And after his presentation, we will be opening to answer your questions. Mr. Angelotti, please go ahead.

Good morning, everyone. We will now go over Bradesco’s results for the fourth quarter of 2014. We’re starting on Slide 2 with the highlights of the period. The adjusted net income reached R$15.3 billion in 2014, up 25.9% year-over-year. And it’s 4.1% in this fourth quarter, up 4.6% quarter-over-quarter. ROE reached 20.1% in 2014, a 200 bps increase year-over-year. Our ROE in 2013 was running around 18% and then we have a [indiscernible] increase during 2014. And the increase was possibly because our NII interest earnings portion increased by 12% [indiscernible]. Our efficiency ratio reached 39.2%. It’s the best level ever in the [indiscernible] to reach our target [indiscernible] five years ago. Our fee and commission income increased by 11.6% year-over-year as a result of investments in the increased segmentation of our client base and the improvement in technology and also more products for our clients. The operating expenses, the personnel and the administrative went up by 190 bps below inflation year-over-year. And our target for 2015 is to maintain the operating expenses going below the inflation. Our total assets exceed at R$1 trillion. And the expanded loan portfolio reached R$450 billion, up 6.5% year-over-year. The net income from insurances amounted to R$4.4 billion in 2014, up 17.8% year-over-year as well [ph]. And the insurance written premiums increased 13.9%. Moving to Slide 3, we have the book net income versus our adjusted net income. In the fourth quarter, our book net income is R$3.9 billion. And we had some non-recurring events. And the remaining events as it relates to the impairment of assets, R$702 million and the - composed by [indiscernible] million related to softwares that during the year [indiscernible] and the R$617 million is related to in terms of the [indiscernible] shares that we have in the insurances portfolio…

Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Mario Pierry, Bank of America.

Good morning, everybody, and thank you for a very detailed presentation. I have two questions. First one is related to asset quality. You seem very comfortable of the outlook for NPLs, for provisions. Meanwhile, we see that the macro trends in Brazil are deteriorating especially with regards to inflation, unemployment, GDP growth. So it seems like there is a disconnect between what you’re seeing and what we are reading in the papers and seeing day to day. So I wanted to get a better feel for why are you so confident that you can maintain NPLs under control. Is it because you have been very cautious in growing over the last few years or is it because you have a more upbeat outlook for the economy? My second question is related to net interest margin. On your outlook, you’re talking about stable net interest margins. However, we are seeing that the competitive environment seems to be better for you today especially as public sector banks are slowing down. Also, interest rates are much higher than they were. When I look at your net interest margin in 2014, they increased 60 basis points throughout the year from the fourth quarter of ‘13 to the fourth quarter of ‘14. So why don’t you expect net interest margins to be higher in 2015? Thank you.

Thank you, Mario, for the questions. About the asset quality, we know actually in 2016 the goal of the economy will be a lower level - the money [ph] of our adjustments that we could have some another adjustment in the expectation of [indiscernible]. But I think first, we have more sensitivity in loan growth. If we have some decrease in the GDP expectation but I think we will be - firstly, our loan growth will be more - could be reduced. We could grow in a lower level of our guidance, that [ph] goes up 5%. But when we talk about the quality of the portfolio, if you reanalyze the main segments that we have, the individuals - example, in our portfolio, individuals - firstly, this will do investments [indiscernible] for - in the last years to develop the part of our models, our systems to do the launch [ph] and the approvals of requests. And our mix [ph], our models, normally, they check more than 50 information about the client in the operation before to do the approval. Then this is one thing that will help us to maintain the quality of our portfolio. And the individuals portfolio has the composites [ph] that we have a lower delinquency ratio that we are growing more than the other products. That is mortgage operations and the payroll loans. And our expectations for unemployment rates for 2015, according to our economic department, is less than 1%, probably we will have an increase in unemployment rate. But it will be 0.7%, 0.8%, I think is the number that we have. At this level of increase in the unemployment rate and considering the mix of the portfolio and the expectations, the goals that we have for 2015, then probably the individuals delinquency ratio…

Okay. Let me - so before you move into the answer for net interest income and net interest margins, let me ask you then a bit more specific about your exposure to the oil and gas sector, like we read in the papers the significant problems at Petrobras, the downgrade of Petrobras today and the impact also it could have on the rest of this sector, how comfortable are you with your position to the oil and gas or how big is your position there?

Yes. I can’t say new comment about any clients or specific situation but the - we have that policy in the bank to don’t have the concentration in the portfolio. Normally, then we have a - do this - after the pulverization segment in companies, the operations we have, the majority are guarantees according to the regional or the structure that they have in the operation. And we analyze how timely [ph] our portfolio according to the Central Bank policies, the ticket [ph], so the big risk that we have, the individual amounts [ph] and their timing [ph]. We check the ratings of the company and we have internally our governance. If you really understand that the way to modify any rate of the company, we do according to the rules. And our adjustment that we need to do, we ditch [ph] and we are comfortable looking for the portfolio that we have now and the information that we have in the market and the information that we have according to the finance movement that we have in our cash flow of the operation. We are comfortable with the parts of the portfolio. About the NIIs, I think our number, our guidance is a little conservative. Probably, we could have some opportunities during the year for increase the spread because the competition, the [indiscernible] now are working more in a normal way and perhaps more normal spread. We see opportunity during the year to continue maintain the spread in a more normal way, so now the efficiency [ph] will be reached that we have in a normal competition. But I think we [indiscernible] during the year. We understand that we have - how to improve the guidance, how to be able to do that. I think we were a little conservative in this guidance but we could be working on more higher levels regardless. I think it’s good to be reasonable.

Perfect. Thank you very much.

Okay.

Our next question comes from Tito Labarta, Deutsche Bank.

Hi, good morning. Thanks for the call. I have a couple of questions. One just to follow-up a little bit more on asset quality. This is a big topic now. But just given all the macro concerns that Mario mentioned, but at what point do you think things could begin to shift particularly hearing more potential risk of energy rationing in Brazil? At what point do you think you could see some deterioration in asset quality and in terms of your provision levels? I think you also mentioned that they can even grow less than loans. At what point again do you start to get a little bit more uncomfortable just given kind of the macro, so I just want to understand that a little bit more. And then second question, just in terms of your fee income guidance, I know you continue to be seeing a big growth there to credit [ph] or to credit cards. So also credit cards do quite a bit in the quarter. I just want to understand if loans don’t grow that much, kind of what makes you comfortable that you can continue to grow fee at sort of a double-digit pay [ph]? So if you can give some more color on that as well. Thank you.

Okay. About the assets part, I know we talked about our expectations of stability, we consider the information that you have now that these expectations would be the potential freezing of pricing in some segments in the energy or the nature of [ph] - that we have [indiscernible] in some situations there. But you need to consider that the - if you look [indiscernible] we are growing not more according [indiscernible] we’re working enough [indiscernible] actually to maintain our portfolio, it is largely stable. We usually expect to grow this year. I’ll send our guidance that we gave 5% to 9% is what [indiscernible] to grow during this year [indiscernible] this year. Then I think considering the environment, then this, the risk that we have [ph] we could have some additional effect. But I think in our expectation is probably with the stability would be - will happen during the year because we could have variations of 0.1% more or 0.1% less during the year. But when you’re looking for the long-term, our expectation in our portfolio is that we will have a decreasing in the administration [ph] because the - so the thought that we are growing more and a strong [indiscernible] to have that lowered benefits ratio, in the legal’s portfolio [ph] SMEs is growing less and they hedge off the other segments. And the corporate portfolio, okay, we have some addition of [indiscernible]. But the average year, we have the additional [indiscernible] last year, we started the year with the GDP expectation that was 2.1%. We finished the year, we see near or closer to zero. If you look [indiscernible] stable, 3.5% within the year, 3.5% in the end [ph] of the year. Then [indiscernible] we have a similar situation this. We had found a new [indiscernible] during the year. But the [indiscernible] portfolio are positioning [indiscernible]. We will maintain this reasonable stability in the delinquency ratio.

So just to clarify I guess, so in terms of your sensitivity data, the GDP growth and the macro, you’re still pretty comfortable they’re given sort of the title [ph] lending standards you’ve had over the last year? So that even if there is a recession in Brazil, you still feel pretty comfortable [indiscernible] relatively stable asset quality?

Our expectation [indiscernible] 2016 because it’s a year that we will have adjustments, we can have [indiscernible] this small GDP growth, probably 0.5% that you have now or could be less. But our expectation is that in 2016, we’re going to [indiscernible] this year is one year of the [indiscernible]. But we understand that these adjustments will build before the [indiscernible] considering these scenarios that we have here, our expectations, we have [indiscernible] during the year including that we have the negative growth [indiscernible] affected the quality of our portfolio. And in 2016, because we [indiscernible] probably the stability continues.

Okay.

About the fees that you - especially about third parties that we maintain our huge growth, the guidance that we gave you is [indiscernible] one-third of the total fees, we expect that for this year, 2015 and towards 2016, that we will maintain [indiscernible] but the year-after-year, this [indiscernible] last year, we think, in 2013, I think [indiscernible] 50% goal in [indiscernible]. So this year, it’s 12% [indiscernible]. Probably, 2015, this product will be closer to 11% or a little less than 12%. And the next year, 2012, probably we’ll maintain a [indiscernible] cards considering the environment and the - probably, we’ll maintain this kind of situation to be running at double digits [ph]. And we consider the other fees in the commissions that we had and the dancing [ph] that we are doing in the segmentation and that we are now enhancing our [indiscernible] days of clients is going to be placed in new segments. And we expect you to improve the numbers of products per client to offer more [indiscernible] that’s why we expected the fees to continue growing and just double this growth talking in more lower level in the clients that we have now probably between 10 to 12 is our expectation to finish the year. But it’s important to [indiscernible] to compare that [indiscernible] and so we have the cost running. [Indiscernible] deficiency in the company.

All right. Thank you very much.

Our next question comes from Marcelo Telles, Credit Suisse.

Hi. Actually, this is Daniel Magallanes [ph]. And I would like to ask you two questions. Firstly, what would be the practical impact in your business from the energy rationing? For instance, would it be in volume growth in the delinquency? And for the second question, I would like to try to get a little bit more color on our exposure to Petrobas supply chain. I mean your exposure occurs mainly through bonds or through credit operations? Thank you.

Thank you. About the potential effects of the energy price, the rationing, we [indiscernible] we were talking [indiscernible] expect 2.5%, could it be near there or it could be negative. But yes, the energy thing, about the asset quality, I think don’t [ph] expect you to have [indiscernible] that’s why we talk about this ability in the asset quality, the delinquency ratio. I think some effects could have been in our loan portfolio growth as we are basically growing less than we expect. Probably the loan portfolio growth will be running at more lower levels than guidance. And talking about the Petrobras, we just talked about the times of our specific situation, but as I told our - of course we don’t have the - in our credit [ph] policy one of these policies [ph] is that to do - not to have a concentration in segments or in clients. Then we have internal limits for segments in clients. And these limits, we require this normally in our governments, in the committees. And normally, we achieve in this [indiscernible] is try to prevent the future use. Then I think that is the [indiscernible] have the combination that we have in our portfolio, the guidance that we have in operations, the structures. We don’t expect any future potential effect [ph]. Then this is why we say that we are [indiscernible] ratio is the stability and then we don’t have all the - other information about this situation.

Okay, thank you very much.

Thank you.

Our next question comes from Thiago Batista, Banco Itau.

Hi, guys. Thanks for the opportunity.

Hi, Thiago.

I have just two questions. The first one regarding insurance premium growth. The guidance of ‘12 to ‘15 indicated that the growth of insurance will be even higher than the level we saw last year. So my question is, what is the main segments that will lead this expansion between - during this year? My second question is about the service fees income. You’ve commented that the credit card and also the checking account will lead the expansion in the fees during this year. But we noted that the number of checking account holders have declined during last year, so - sorry, actually it went up only 0.2%. So my question is, do you see a higher increase in the number of checking accounts during this year or the segmentation will justify the potential increase in the service accounting fees?

Okay, Thiago, thank you. About the insurance fee, guidance fees for premiums, they are in a more higher level if you compare the - or the year. The one thing - fees because the new commercial structure that we - during 2014 we decreased structure. Then now in [indiscernible] we have a better position in structure to have better growth [ph]. Then considering this situation and the synergy that we have with the bank, the main growth that we expect is in some segments. They may help to [indiscernible] how the insurance - then the main growth that we expect. But we - normally, the majority of the things came from pension plans. Then we expect to have a little better growing this for the two [ph]. With this combination, I think we will be forced to reach in the bag [indiscernible] the guidance that we have now. About checking account holders, during 2014, we - one thing [ph], the number of checking accounts was more stable. But because we are working for [indiscernible] now, the segmentation in our biggest of [ph] clients, then we’re working during the year for two. It’s a lot better this new segment that we are creating, that is the naming is [indiscernible]. These two segments that we will be running will be for clients below - actually, we have now the client [ph] segments. We will help this - or it will permit us to improve the number of products per client. And we expect now during 2016 to recover the growth in our client - checking account holders - the number of checking account holders. Then we use 2014 to develop more of these new segments and now during 2015 we expect to have some benefits now that - with this new segment. The fees normally - because the [indiscernible] services. We will grow and the clients need to accept to have a migration for these new segments. But when they accept it, okay, they will start to pay fees a little more higher and additional prices. But they will receive some better benefits and some advantages; therefore, in the end, with this combination, we understand that the fees for our checking account holders, we will have some - we will maintain the double-digit on [ph] 2015. And we, Bradesco, we are more developing in the segmentation in the top three of our [indiscernible] in the core purchasing increased [ph] segments. Looking for the individuals, we have the private and the primary [ph] clients. But we are a lot safer to develop more the segmentation [indiscernible] price-based. That’s a big portion of our clients and where we see a lot of opportunity to improve the profitability of our clients.

Okay, thank you very much.

Our next question comes from Saul Martinez, JP Morgan.

How are you guys? I hate to be the dead forest [ph] because we’ve addressed asset quality in a lot of details but I think the market’s reaction to what seemingly were good results indicates that there’s a heavy amount of skepticism about your asset quality guidance and especially your guidance for loan loss provisions growing at less than or half the rate of loan growth. So a couple of additional questions that you partly addressed. First, in a stress scenario where GDP growth doesn’t contract 1% or even 0.5%, but you see 2%, 3% type of contraction or even more over time, how does that impact your view of the business and asset quality in provisioning? And I worry because obviously on the consumer side you may be okay but with corporates and companies, you have very big tickets and as you start to downgrade companies into higher risk classification, that can have a very, very sizable impact very quickly on your provision. So if you can talk to that, one. Two, you have in your portfolio based on public disclosures R$36 billion of real estate construction and R$24 billion of construction exposure which is about 7% of your loan book. Can you talk a little bit about why - because it seems that’s bigger than your peers’ - most of your peers’, can you talk a little bit about why you feel comfortable there, especially in light of the issues that some construction companies are facing with the Petrobras corruption scandal?

Okay. So about the GDP, we don’t have this expectation to have 3% decrease and negative growth in the GDP. And we don’t have this expectation [indiscernible] probably you can have not the [ph] 0.5% growth. You have some negative effect but this 2%, 1% [ph], that is not affecting our expectations for the quality of our assets during the year. The results that this - the scenario that we have, if we have the stress scenario, it’s one scenario where we - probably our growth in the loan portfolio will be on a lower level, 0.5%, could be a little less. But when you look for the 2016, what we expect is that the country will recover the growth. And the issue of contraction, we can have some reduction in the construction or some effects. But I think [indiscernible] structure has a huge increase in the delinquency ratio in the sector or SMEs or other sectors. About the exposure that we have, our segments that we have - when we talk about segments, we analyzing our companies that you have there in the list for the companies that you have there and the - we have the - a lot of confidence that [indiscernible] it’s only company [ph] that are working with the Petrobras and they are in the operation with that. We are comfortable with the [indiscernible] we have in - the operation that we have in our segments and the future that we have in the position with our - some of our business that work only with the real estate or mortgage operation. And we have different sectors or in this concentration that we have for clients, some of the companies that they have here, they are huge in the groups, have many other companies in different other segments. Then they are not the only builders company. They have these companies in the group that they are builders. Probably this is why we class high and we are seen as builder but they have other investments, other business that relate to other segments. Then we are comfortable with the position that we have in - per segments or per clients. And this is according our criteria of utilization [ph].

Okay. Now, I think - I understand that’s not the base, the economics of - a more severe recession is not the base case view and you’re not factoring that in. But there are folks who are increasingly worried that given all the negative developments that Brazil can have a much more severe recession than 0.5%, it cascades further. In that scenario, is it fair to say your credit quality will suffer even if it’s very difficult at this point to pinpoint how much?

We know that it will be - not be an easier year. It will be a very difficult year because the scenario that we have, the adjustment [ph]. But as I told you, this year it should work [ph]. Normally in our previous [indiscernible], okay, if we work there [indiscernible] two or three years, okay, front view [ph] has now some problems because one part of our growth probably will happen in a more high risk client I think. But considering the position that we - that this maintained in the last year in the - according to our policy, this is - we could - this allow [ph] that we could maintain the portfolio in a quality that is for us is an offer to support this department that we have now, we expect for 2015. And as I told you, it’s only for 2015 because for 2016, we expect that the economy will start to recover the growth. And this situation not to - during 2015 not to be an offer to multiply our expectations about the quality of our portfolio, the stability that you expect that - the stability that we are talking with some increase - 21% of part [ph] to 1% decrease. But this is something that will not change our expectations during the year.

Okay, thanks a lot.

Thank you.

Our next question comes from Boris Molina, Santander.

Yes, thank you. Just two questions. First one is do you expect that the senior [ph] regulators are going to issue a new regulation rate of the basic [ph] fee for domestic significant or large institutions implying an increase in your capital requirement? If so, do you expect this to be 100, 150, 200 basis points? What are your current thoughts on this? And second, could you please elaborate a little bit on the mark-to-market losses on available-for-sale securities on the bank book? Apparently, there was a negative adjustment, close to R$500 million in the combination of equities and foreign bonds. If you have any color on this, I would appreciate.

Hey, Boris. About the basic fee [ph], some potential new requirements, probably we will have our Central Bank chief tell the [ph] - about some potential new requirements, then probably we will have more expose [ph] after the end of the implementation of the first steps, probably more close off 2018, 2019 I think we will have that information. But we don’t know how much will be the level. Probably it’s around 1%. But we don’t have the potential percentage that we expect to absorb. But I think at the maximum it will be similar of the international structure. We don’t have now this information. And about the market adjustment, is that normal adjustment for the market price of the bond, then it’s for the available-for-sale portfolio, these adjustments that we do is in the average. According to the portfolio that we have now, we deliver the adjustment looking for the market price. Then we don’t have any security fee [ph] situation that we can highlight.

Okay, thank you.

Thank you.

Our next question comes from Victor Galliano, Barclays.

Hello, there. Just a quick follow-up here on the credit quality issue. If you look at your consumer credit quality exposure and in particular if you look at that class C which obviously was the dominant driver in terms of consumer loan growth in the last boom, they’re probably sitting on quite a lot of leverage right now, a lot more than the average that the Central Bank data shows. Can you give us some sort of idea of how exposed you are to that class C and what you do to mitigate the risk of worsening NPLs and people going over leveraged in that space? Thank you.

Okay, Victor. I don’t have the information about this to disclose how is our exposure for this class C. But I think if you look in our portfolio in the business, it’s very pulverized in the [indiscernible] products. I think we don’t expect any modification - our expectation for this new portfolio is that [indiscernible] because the payroll laws [ph] and the mortgages growing at the ratio around 20 - 16%. In the other products, they are going closer at 7%, 8% and the problem is all the products have more higher risk. Then our [indiscernible] the other products, the delinquency ratio, we don’t see any risks that will - to have modification in our portfolio because then it’s actually in its potential class.

Okay, not even any kind of credit cards exposure through the consumer finance then?

What you - full actions that government - they are doing is trying to control the inflation. Every time that they improve the [indiscernible] ratio, they are reducing the capacity of the people’s finance - their - to buy products. Then what we have is only the consumption that grow but our portfolio decrease. But we select the kinds of [ph] policy according to the capacity to buy products, to financial capacity in the - according other internal policies. Then I think we don’t expect any differences affecting our client base considering these [indiscernible] clients.

Okay, understood. Thank you.

Thank you.

Excuse me, ladies and gentlemen, since there are no further questions, I would like to invite Mr. Paulo Faustino da Costa to proceed.

Thank you all for participating in this conference call. I would like to take this opportunity to remind you that our Market Relations department and our IR team are at your disposal. Thank you very much all of you.

That does conclude the Banco Bradesco’s audio conference for today. Thank you very much for your participation. Have a good day.