Good morning, ladies and gentlemen, and thank you for waiting. We would like to welcome everyone to Banco Bradesco’s First Quarter 2018 Earnings Results Conference Call. This call is being broadcasted simultaneously through the Internet in the website, banco.bradesco/ir. In the address, you can also find the presentation available for downloads. We inform that all participants will be only able to listen-only the company’s presentation. After the presentation, there will be a question-and-answer session, when further instructions will be given. [Operator Instructions] Before proceeding, let me mention that forward-looking statements are based on the beliefs and assumptions of Banco Bradesco management and known information currently available to the company. 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 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 will turn the conference over to Mr. Carlos Firetti, Market Relations Director. You may proceed.

Hi. Welcome to our conference call for discussing of our first quarter results of 2018. We have today participating the call with us our Executive Vice President, André Cano; our Executive Managing Director and Investor Relations Officer, Denise Pavarina; our Executive Managing Director, Moacir Nachbar Jr.; Denise Alvarez, CEO of the Bradesco Fundacao [ph]. So now I turn the presentation to Denise.

Hi, everyone. Thank you again for joining our conference call. I will start with the main highlight on slide number two. Recurring revenues of R$5.1 billion, an increase of 9.8% year-on-year and 4.9% quarter-on-quarter, representing return on equity of 18.6%. Our operating income grew 16.4% quarter-on-quarter. As you know, if you know the charge in our structure in present day capturing images of the prior operation adjustment. We also adjusted our credit origination models and correction strategies. In fact of those adjustments our structure, I think, in 2018 and our results significantly show this improvement, the good credit quality and cost of structure credit issue by the federation those in our [inaudible] segment. In delinquency, the overall delinquency ratio down 0.3 basis points. This led to a new municipal deduction of cost increases which dropped. As you can see 28% in quarter, [inaudible] for the year, cost of risk this year on the bottom of our guidance and it is our process to confirm but it is our expectation. Operating expenses showed a reduction of 0.4% year-on-year, as a consequence of tight costs and the adjustments made last year, which more than offset the inflation and [inaudible] adjustments that we have in this period. Then going to the loan book improved 6.4% year-on-year retail. However, 4% of this portion 3.2% mainly driven by the contraction of corporate segment. We have to give the letters of credit and also debentures which is capital markets we already have and bond, of course, they are good complimentary for the company. The corporate portfolio change in February and that will pick up. We have of course waiting for the more scenario company drawing down their investment and with no change where we have more scenarios. Average savings, the average loan volume contraction and some…

[Operator Instructions] Our first question is coming from Mr. Carlos Macedo of Goldman Sachs. Mr. Carlos, you may proceed.

Okay. Good morning, good afternoon, everyone. I have a couple of questions. First question is on margins. We saw that your margins were not largely because you had some strong results in the alignment of other banks, but the credit margins were lower sequentially, despite a slight change in mix in the portfolio with consumer loans growing faster. I am trying to get an idea of what you expect in the end of the year. But more importantly, if you take the process of passing through last four week is gone and if you think the competition of that everybody is trying grow loans particularly in the consumer side will have any impact on margins, no, maybe not this year, but down next year? Second question on asset quality, how much more do you think, I mean, you talk about potentially improving, your NPL ratio is getting lower, the cost of risk is already much lower, what do you think the NPL ratio grow to what end [Technical Difficulty] NPL operation being low, you can actually have the cost of risk even lower? Thanks. André Cano: Okay. In terms of margin and starting with competition, the answer is we are seeing some impact in spreads in some line, this is the competition and basically everybody is there because actually the demand is there. The -- we have -- so we have seen spreads going down somewhat, still remaining in held levels but it’s a -- we already have seen some reduction in some lines. In corporate for instance where the competition is more capital market and then actually the other banks, spreads are already meaningfully lower than the peaks we have seen and in some cases getting closer to the big crisis levels. We believe our margins during the year can start to our credit margin can stabilize due to mix, it’s only, we have been growing in richer mix loans with higher margins, especially since the fourth quarter last year, we only have roughly two quarters growing there. We think over the falling quarters as the participation of these loans grow, we can have some sort of obsessing margins due this mix affect. Our expectation for NII for the year being minus 2%, basically it implies that margin growing new go down somehow this year. I -- they are but it seems that we don’t see margins going down a lot. On -- the -- on the cost of risk, we use to have a loan effect on NPLs where the NPL and the total NPL in the past cycle reaching something like 3.5%, considering the mix it can go below that level. We are -- we’ve already seen provision expenses reducing retrieving as a percentage of the loan book. Looking not only the year but longer term we believe we can also operating levels below what we have seen historically given the mix effect and the fact that actually new loans are doing quite well.

Okay. Thanks, André. One follow-up question, if I may and the question I think on competition, there is still a lot of royalty expense because the potential borrow is very low given that nobody would borrow it. At the same point you started bumping head with your competitors, everybody trying to go in auto and payroll and these mortgages and the loan line that have no risk. Do you expect the competition to intensify this year or is it something that there is still enough room for anyone to go, so that will -- it will become more of an issue next year? André Cano: Competition is quite strong this year already. If you look to the mortgage, to car loans, everybody wants to grow. A lot -- I think the difference could be that demand probably will pick up even more as the economy improves and as people start to get jobs. At some point we can have a differentiation that is our position. In our case the differentiation has even helped us with full impact because as you know regions where we have stronger position than our peers was the ones that suffered most and probably we will take a little bit longer to be running at full potential. We also have some differentiations in some lines, one example with are the payrolls. We have invested in the past and because actually we can because we have a strong distribution, therefore to get retirees with certain salaries in our branches so we have an access to this client that no other -- few other banks have with the deposit sector and this is a very good channel where we can grow. Also in terms of mortgage the position in terms of client relationship and agreement also can give some differentiations but we can’t avoid that in normal conditions with the expectations of risk in a lower levels competition actually will be stronger actual but that we don’t see that else a major problem.

Okay. Thanks, André.

Our next question comes from Mr. George Cooley of Morgan Stanley. Mr. George, you may proceed.

Hi. Good morning, everyone. Can I ask about competition from the syntax, we are seeing a lot of new companies offering free checking account on digital accounts and payment companies offering significantly lower MDRs, companies are able to going to assistance particularly your best clients are and try to offer them better rate. How do you think this is going to play out? What is Bradesco doing to defend its market share and to create also digital world that is appealing to the younger crowd that is rapidly accepting, adopting digital platforms? Thank you. I am sorry, if I may, particularly in what products or segments do you think there is more risk and what are you doing specifically about those product segments? Thank you. André Cano: Okay. Can you repeat your last question, sorry.

[Inaudible] André Cano: Okay. I will answer the first part. You are right, the competition is strong and we are basically fighting back as a strong bank we saw some players growing areas that are very important for us and areas that are on which we want to be. One of them is for instance in the digital accounts and also the acquiring business for individual small merchants. We have launched -- we are ramping up the operation with CLO to offer cheaper products, selling machines at competitive prices. We are -- we offer -- we are going to offer digital accounts. So we have chose to fight back and really we believe that with the presence with our capacity -- technology capacity we can really remain as a very competitive and strong player in this segment as we are in most of the market segments. And specifically in the digital operation, I remind you of our operation with Max that is our digital bank focus on younger clients, basically it is a platform totally separated from ours and very innovative, very flexible, already prepare to open bank concept and we are already have more than 100,000 clients and we are ramping up. We allow it only two months ago the free accounts. We are in the first stage of the launching, we were operating only with paid accounts and the rate of growth after the launching increase a lot and this platform give us a lot of leverage in the sense that we can experience, we can try different product with different formats and it’s work, but we should keep investing on Max. It’s get new profile client that are normally younger and have full digital profile for our part of the clients that want the digital accounts, which should allow play with digital accounts and we have more, we have the complete portfolio of products that we can offer them when they need. We think -- other think that’s not necessarily have that. We are a very traditional bank in the company’s operation, probably, we have one of the largest portfolio. We have more than 2 million clients in the company’s segment where we can offer -- acquiring we can offer digital product. So I think we are prepared and you will hear a lot of -- a lot from us playing in this new world.

Just to add that, we look our clients to grew between companies such as Bradesco and others. Were clients get here, we are not actually set into the level of creditors’ poor credit that we have inside Bradesco. It doesn’t mean that we are using our own clients, those are clients that we have in the saving product or no credit and so. This is something that now with the new strategy that we have where we are selling our Bradesco customers which is the new machines for clients to commercialize their products, we still in 40 day -- 40,000 equipment and business units and few years and we went to during the year with around 100,000 equipment, so I think, we are there as we were in other situations where we have to compete and basically we change from metrics, we create products, we also created a prepaid card for certain types of clients that have different needs. So we have benefit the competition that we have done. André Cano: I forget here again, the second part of your question, can you repeat it?

Well, it was -- it part of answer I was asking specifically where did you see more risk, what product conservative you see more risk on comment on syntax, is it payment, is it credit, is it spread, is it acquiring and insurance and so wanted know on a product-by-product basis what do you see the more risk on and what are you doing about it, you partly answer it, but if you just can expand a little bit on the credit side, because that’s obviously where there is excessive pricing in the market and we are seeing syntax companies that are originating credit cards almost lower rates that are offering client that are rate and so just you alluded to the payment base, but if you can talk about the credit market and what are you doing to [inaudible]? Thank you.

To be honest, what was really considered more than competition…

Sorry to interrupt, it’s really very hard to hear, sorry, it’s very hard hear, sorry.

Okay. Okay. Then, what I am saying that, what concern is more is the growth of economy is delaying always. If economy is growing relative to… André Cano: Yeah.

… we are very depressed to decrease.

Okay. All right. Thank you.

Our next question comes from Mr. Jason Mollin of Scotiabank. Mr. Jason, you may proceed.

Hi. Thank you for the opportunity to ask question. My question is a bit of follow-up what was being discussed. I am just looking at the number of clients or customers that you show as going down. I am looking at definitely a little bit lower number of branches and you did mention, I guess, with that customers or with 100,000 clients, I think, that you mentioned, are these in those few customers it’s looks like you loss quite a bit more than that? If you can talk about that, if that was a -- if that is a migration to competitors or to this kind, it’s hard to tell whether going, I am guessing, or are these clients weren’t profitable and you are actually trying to push them out? André Cano: No. Basically the main reason for the reduction in clients is an important. We had -- Brazil faced very, very crisis over the last two years as you know and they -- and a lot of clients lost of their job, closed their accounts. We have a lot of accounts that are payroll relationship. So this is one of the -- this is the main driver I would say. It’s a -- so -- it’s a -- in terms of an account numbers, current account numbers, this quarter it was stable and the fact, the main reason for the reductions come from that. When you look for instance on healthcare plans, unemployment, it play mostly with corporate healthcare plans and with unemployment we had a reduction in the base of clients. We believe our position and our strategy focus in all segments of clients, from the top to the bottom. Since we have more than our product sector compared those in bottom where an unemployment grew more than anything else, it’s naturally that we got affected.

And just to add, Jason, we -- our focus is much more now on total clients rather cash accounts and so, because our strategy now is to sell, I think, those clients main segments that we have to use this year and to grow selling with clients of our insurance to sell our products or to sell investments that we have done, so our focus is now much more on total clients considering that all of that buy any product of Bradesco are our clients. André Cano: [Inaudible]

Cash account is one of the product. So we shouldn’t look at those as the main drivers.

Yeah. It’s interesting because I see, I see that, I mean, it’s interesting in the total customers it looks like quarter-on-quarter there is a small increase but if I look at the breakdown you gave it looks like the only, the number show reduction in all types of customers in all of the line items here except with the 100,000 increase accountholders, total customers is increasing by 700,000, I am not exactly sure where they are coming from, but that makes sense. What about on the branch net… André Cano: Jason, just one thing…

Yeah. André Cano: In saving accounts, if you look every year there is a interesting phenomenon that we have big increase in saving -- number of saving clients at the end of the year the big result occur in the first quarter. There are some seasonality, lot of people receive their Christmas bonus or have more money, open the accounts and we have this sequentially a big results. You can see every year this same thing happens in saving accounts we expect this thing.

All right. Year-on-year, but I guess, that you were explaining that that could be the economy? About branch… André Cano: No. I mean…

Yeah. What about the branch network, can you continue to rationalize that the number of branches was down 8% over the last year, almost a percent, I guess, 40 branches in the quarter were closed, if you can talk about that? André Cano: Yes. We plan this year to reduce about 200 branches. Last year we closed about 565 branches. In the first quarter we already closed something like 44 branches, if I am not wrong, part of what we say close is conversion point of service that is more formal, only with ATMs, one or two account managers focus on relationships, two managers per branch and focus on relationship. We think this is a way of keep the presence -- keeping the -- our way to serve the client with much lower cost surplus. So especially this conversion will happen a lot, but the reduction from now on should be is over that it was last year.

We are analyzing region by region, city by city and see the model that fits better in that place and this the number that we have now, but those are evaluated all the time to have new groups that we… André Cano: Different…

Yeah. Every day we look at the lot of that fit better for that region or place so see the situation and change few or more efficient both often.

Thank you.

Yeah.

Our next question comes from Mr. Jorg Friedemann of Citibank. Mr. Jorg, you may proceed.

Yes. Thank you very much for taking the question. Just a point that I noted on your capitalization, I understand that most of the effect on common equity Tier 1 in this quarter comes from the agenda of the product adjustment that goes towards 100%. However, I also got a little advised with the impact on the common equity Tier 1 coming from higher risk-weighting assets. So just wonder if you could give a bit more color, why the credit risk increased more than 2% despite the, I know, is sluggish credit performance and also operating risk went up more than 10% just a bit more color on that? Thank you very much. André Cano: Okay. It’s a -- part of it comes from credit. It also has a little bit maybe…

The risk-weighted asset, on the risk. André Cano: Just a second, Jorg, sorry, simple answer, there was some changes in the weight in risk-weighted assets.

Sorry, could you repeat that, I couldn’t hear your… André Cano: There were some changes in some weight in for assets done by the Central Bank.

Okay. Both in credit risk and operational risk as well? André Cano: Yes. Yes.

Okay. Perfect. Thank you. André Cano: I’ll follow-up more details on that if you might, that’s -- but that’s the answer.

Okay. Perfect. Appreciate. Thank you.

Our next question comes from Mr. Mario Pierry of Bank of America. Mr. Mario, you may proceed.

Hi, everybody. Let me ask three follow-up questions here if I may. The first one on the cost of risk, R$3.9 billion this quarter, if we annualized we come slightly below your R$16 billion forecast for the year, I just want to clarify then this -- you are still comfortable with your guidance range of R$16 billion to R$19 billion or do you think you can come below your guidance, because the way -- the things are trending in terms of asset quality, it’s showing that things continue to improve? So that’s the first question. Second question is going back to all these questions on fees, when you bought HSBC every member that the revenues that you are getting out of the HSBC clients are roughly 20% lower than what you had at Bradesco. So you can try to discuss, do you think that the profitability or the revenues you are driving from the HSBC clients are already the same level that you had now come from the traditional Bradesco clients, because, I think, what is catching the attention here is that your fees only growing 5% year-on-year, right, and we understand all the dynamics there. But it’s seems low because you recently roughly two years ago incorporated big franchise? And the third and final question has to do with costs, just wondering here, if you have seen all the benefits of your early retirement plan, if that already fully reflected on your results, if you can comment on that that would be great? André Cano: Okay. First, the guidance, annualizing the first Q really it’s goes below the guidance, I think, it’s too early to review. We think, as I said, this new level with kind of a reference with only -- we don’t see big increases in our single quarter as most like scenario, probably, even beverage also have reached a more normalized level. So it’s a -- we have said we expected more the bottom of the guidance, so the first Q make sense with this. There is a statement for now, let’s wait, but we are comfortable, we are doing quite well on that, isn’t it we prefer not change the guidance.

About revenues per client that you have asked, when you have retail in corporate clients, they are about the same already, and when you go to income -- high income clients we have still way to go, so we are not there yet and working hard to reach the same level. André Cano: Yeah. One thing that happens is, in the agreement with DS Cyprus related [ph] basically we cannot increase the fees at once. It’s kind of a commercial relationship and we have to sell better product and the customers have to allow to charge rates, so it’s a gradual process, and as Denise said, the mid-high income segment where we have probably a little bit longer way to go. In terms of the loan tariff initial program [ph] some people left only in February. It’s a -- smaller part of the program. So possibility first Q is not really fully reflecting all the adjustments but midyear we will fully reflecting on the personnel. What is impacting the personnel expenses is kind of high part of the benefit is the fact that we had very high expenses with labor lawsuits in the fourth quarter, but especially in the first quarter, something like R$500 million and R$1,000 million. This expense is not only ramping up all 200. The reason for that is the fact that a lot of people lack the bank last year. It’s takes a while until we receive the notices on the lawsuits, a lot of people anticipated the moment they will get with the lawsuit compared what we had before the Labor Reform. We believe in the coming quarters we have the big improvement on that. As I said, I mean, going from that 500 million to something around 200 are below. So this is not a benefit from the [inaudible] program but is important benefit we still have to capture.

Okay. Now that’s very clear. Thank you. Thank you very much.

Our next question comes from Mr. Thiago Batista of Itaú BBA. Mr. Thiago, you may proceed.

Yeah. Hi. Actually you had comment during the call, in the call, that the results this is compared that were impacted by a kind of one-off expenses related to the change in sense of technical events, can you comment in which segment this was impact, I believe expense but not this year and also the magnitude of this impact, how big was this impact in the financial results? André Cano: Basically it is related to the regulation of our liability in the insurance company. It’s related to the revision of the discount rates and -- from 4.3% to 4%. The impact is roughly prevalent to R$150 million after-tax in the insurance company.

Okay. And this is in the pension or business or in the life or… André Cano: Across the Board.

Okay. Thanks a lot for the clarification, André.

Excuse me, ladies and gentlemen, since there are no further question, I would like to invite the speakers for the closing remarks.

Hello. André Cano: Thank you everybody for participating our call. The Investor Relations department is available for any further questions you may have. Thank you very much.

Thank you.

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