Good morning ladies and gentlemen. We would like to welcome everyone to Banco Bradesco's First Quarter 2010 Earnings Results Conference Call. This call is being broadcasted simultaneously through the Internet and the website www.bradesco.com.br/ir. In the 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. And 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 guarantee 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 can cause results to differ materially from those expressed in such forward-looking statements. Now I will turn the conference over to Paulo Faustino da Costa, Market Relation Director. Mr. Paulo you may proceed.

Good morning everyone. Welcome to Bradesco’s first quarter 2010 conference call. I would like to announce the participation of Mr. Domingos Figueiredo de Abreu, Executive Vice President and Investor Relation Officer. Mr. Marco Antonio Rossi, CEO of Bradesco Insurance Group. Mr. Samuel Monteiro de Santos Jr., Executive Vice President of Bradesco Insurance Group, Mr. Alexandre Rappaport, Director of Planning, Bradescards, and Mr. Luiz Carlos Angelotti, General Accounts Committee Director. Let me now give the floor to Mr. Arbeu who will continue with the presentation.

Good morning and welcome to our conference call. Brazil maintained its outstanding performance in the global economy, having proved to be remarkably resilient through the crisis. It has now moved into its own growth track. All sectors of the economy are undergoing expansion, even those that did not benefit directly from the government incentives. It has its roots in the strong job market and income growths, leading to a big upturn in industrial investments which are proving to have one of the highest diffusion rates in the recent history. A 21.4% increase in capital goods production since the beginning of the recovery in March last year shows just how much Brazilian companies are gearing up for the expansion of demand. Bradesco has a positive outlook of the country’s future and believes strongly in this increase in the economic activity. We have therefore been investing strongly in Brazil, expanding its business and its national presence. In the first quarter of 2010, it add almost 2000 points of service through its distribution network and invested around 717 million in infrastructure and IT. Also, in the first quarter, Bradesco acquired more than 3 million new clients with an impressive total of 57 million customers. Our aim is to always do more and better with a constant focus on improving client service process and quality. I will now be going into more detail regarding our numbers, results and financial indicators. I would just like to clarify that in order to ensure a better understanding and analysis of the data in line with our press release and reports on economic and financial analysis. All the numbers and financial indicators in this presentation has been calculated based on adjusted net income. In order words, after adjustment for non-recurring items in their respective periods. In slides two…

Ladies and gentlemen, we will now begin the question-and-answer session. (Operator Instructions). Our first question comes from Mr. Jorge Kuri with Morgan Stanley.

I have two questions. The first one is, if the market share targets that you have set for your new credit card venture with Banco do Brasil, Elo are met, meaning 15% market share in five years, what would be the contribution of that business to your bottom line? That's my first question. And the second question is the provisioning effort this quarter had a very sharp decline versus what we've seen over the last two or three quarters. Provisions on an annualized basis were 4.4% of average loans, even that was down sharply from around 6% in the previous two, three quarters. And if I look back at the last kind of like two, three years, this number is actually the lowest you've made over the last almost three years. It's already well below pre-crisis levels. Is this number sustainable? Were provisions probably a little bit lower than anticipated? What do you think provisions should be for the full year relative to loans? Thank you.

Its Abreu speaking. I will start from the second question and then I will pass to Alexandre to answer the first one all right? I agree with you this quarter the provision there was the best. If you look at the recently history that we have. But understand that we are optimistic about the year because we are doing a very good job in terms of recoveries, part of the provision that we did last year. I don’t think it’s possible to keep the same level but something is very, very lower than we have been presented at best. But definitely we don’t have specific guidance to say that should be. And the way that we look for this, we consider this quarter was 38% of the gross margins. If you look at the history, it is very close to 40 to 44. I think towards this year but something close to 44% should be good. For the coming years, that’s going to happen. We have a good space to recover credits that were out last year and then have a different scenario. All right? I will turn it to Alexandre to talk about this remit we took out in Brazil

Hi Jorge, this is Alexandre. We are not at this time providing guidance on the yearly financials of Elo Holding. We are just beginning to complete the status to prepare the launch of this company. Just want to clarify the 15% market share we talk about is not a 100% in addition to what Bradesco and Banco do Brazil have today in the market. 15% is in relation to overall market billings. So some of it comes out of the market share that the banks already have and the financial guidance that we provided is that we expect R$1 billion in synergies over the next five years. That’s the only guidance that we are providing at this time.

Can you tell us what is the level of expenses that you expect to have in order to set up this venture over the next 12 or 24 months? I guess we're probably going to see further expenses and then the profits?

The expenses that we have will be related to setting up a new company but a lot of the expenses of the new venture that already exist in one way or another because you are talking about private label deals already have call centers, they have processing fees and they have many other expenses that’s going there. So the incremental expenses are not substantial relative to the size of the businesses that are moving to the venture.

Our next question comes from Daniel Abut with Citi.

Domingos, three questions on your guidance for long growth which you are reiterating in the slide number 24. You are still seeing, according to this slide that the loan portfolio will grow 21% to 25% with the commercial side, both corporate and SMEs, even corporate, growing above the overall level and individuals below. Why is that given the strength that we saw in the individual portfolio in the first quarter. Why is it that what we saw in the first quarter, you don't think it's sustainable as the economy picks up even more strength throughout the rest of this year?

Daniel, just to clarify, it's important to say that when we gave you guidance at the beginning of this year, we talk about that the large corporate that maybe we want not to be able to see this growth in the credit portfolio. Once we are in a moment where the companies are using more a capital market instrument like debentures and others. We have being observing a very good growth in this portion. We are trying to step out of this business just to understand, to show in the way that we are feeling that if this is growing a lot, but unfortunately we don’t have specific numbers to say that what comes from the required portfolio, what was the normal growth in this portfolio but we are seeing that it is growing a lot in terms of the last quarters. We are really confident when we see that growth in terms of SME, we are observing a growth. We know that the first quarter normally is not the best in terms of growth in credit in Brazil, but if you consider that, what we are posting in the last two quarter, we are very, very confident about the rest of the growth.

And in the individuals, in particular, why do you think that the pace that we saw in the first quarter where they led the overall loan growth will not be sustained?

Look if you think for example about, it's very normal in terms of cards within the line of the credit cards. Normally when we compare with the last quarter of the year, it's very normal to reduce during this period. Of course once the time is going we observe a growth in this line for example. Just one an example where you see very clearly.

Yes but, my point obviously is that we saw close to 5% quarter-on-quarter growth in individuals overall this quarter, the fastest growing segment of your portfolio. Why do you guide for the year as a whole, it will be the lowest growing segment of the portfolio?

Look, we have specific points like we brought some portfolios, for example that we consider individuals, but to look, for example, in terms. When we buy a portfolio, when post in terms of account numbers, we post these as a individual, for example. We have it is explained why it grows a little bit higher during this period, one point, one part. We have some specific movement about out loan where it has specific movement, very big growth in terms of entire during this month. Even in the less month of March, it was the record of sales in Brazil, so that could explain you this.

Okay. That's helpful. Do you have any sense of what the loan growth would have been in individuals if you exclude the portfolio purchases?

Consider R$1.6 billion in the quarter portfolio.

You purchased R$1.6 billion in individual loans during the quarter?

You have this figure in your slides. (inaudible). It’s like 35, you see the losses. You see that we acquired a portfolio, right?

Our next question comes from (inaudible).

My first question is related to the insurance business, you’ve raised the guidance for insurance premium growth to 16% to 20% from 10% to 12%. Can you comment on in which segments you see the growth and in addition we saw Bradesco grow its policy holders in the insurance segment by almost $3 million in the first three months of the year, that’s over 20% year-on-year growth, can you comment on where you saw that growth on what kind of products?

Okay. Similarly speaking although I would like to clarify your question that in terms of the change overall our guidance for premiums, it relates to the surprise for everybody in Brazil in the first quarter which are very hugely increasing in terms of the premiums all over the markets mainly in our portfolio basically in two kinds of products. The first one was dental which will be hugely increased. Second, it was pension which combined pension and life and VGBL and the third was in [older] which represented a very huge increase jointly with your home. Home insurances which increases, so a very, very strong increase in the first quarter, which plan, the project was to increase this kind of permanent increase in the rest of the year. This is the reason why we change our guidance for premiums in this year. The same of the insurance federation which all companies in our federation, they have the same projection for the rest of the year. About the 3 millions of policies is really related to the polices for very few tickets like R$88 or R$90 is related to the progress for a Class C, the classwise movement now from the class D to class C. As you know everybody knows in Brazil about 30 million people moving from the class B to class C really is a very a strong challenge for us to present a product, to offer products for these kind of people. It's very successful for us when the first moment we had to offer for all these kind of people. That's the reason why we have really changed our guidance for previously in the rest of this year.

Just a follow-up there quickly, these policy holders, these are individuals, these aren’t the number of policies. This is distinct individuals, so if a policy holder has two separate policies that would show up only as one in this data correct?

Really the individual, the policy is issued to one. It's not a group policy over here.

And the second question is related to your credit card business, you are now showing in your release that Bradesco has 135.6 million credit and debit cards and that's almost a 60% increase year-on-year, can you tell us what portion is credit and what portion is debit? And also give us a sense of what you anticipate in this business particularly given some of the press reports and that will see more regulation on card fees and what your expectation in that space is?

The first question, we have 54.6 million debit cards and 81 million credit cards. The [auxiliaries], it’s about 37 million and a lot of the growth or a part of the growth in credit cards came from the acquisition of Banco Ibi. So it's not all organic growth and going to your second question the market will for sure change after July 1 at the end the exclusivity agreements between Cielo and Visanet and there are a number of reports on what the impact should be and as far as we know this should be for now the big impact that we have. It is true that ABECS, the card entity association is doing discussions with the Central Bank on whether or not there will be other measures, but we still don't have a clear indication if that's going to happen or not.

But is that related to some of the articles that we've been seeing or some of the comments about regulating let's say card fees, annual fees, inactivity fees, are you expecting those fees to be reduced going forward that are charging the card by the bank, not at the acquiring subsidiaries?

Those are still preliminary discussions. None of them are yet to become a law and the card and entity association is really in discussions with the Central Bank about what the impacts could be out of any regulation that's going to prevent this market from continuing to grow and to provide the benefits to the country that we have seen. So for now the big impact that we should expect in the market is the end of exclusivity. Our other articles that we've seen are still preliminary discussions and it's too early to say if they were going to have any impact or not.

Our next question comes from Mr. Victor Galliano with HSBC.

Firstly on the sort of guidance you were giving us in terms of interests, interest margin. And I just wanted to confirm what Domingos said earlier, which you're saying that he was expecting a gradual decline on the margin, looking ahead. Is this because of the interest rate environment? Are you guiding in this way because rates are rising, because of the changing mix? Or is it just increasing competition that you're seeing across the board in terms of credit? And my other question is about your level of comfort with the capital adequacy ratio when you adjust for the two impacts that you spoke about, which is the end of excess credit provisions being included in tier one and the takeout of that subordinated bond as well. That brings you down below 16%. What would your tier one ratio be after those adjustments? Thank you.

When I said that the net interest income is 14% to 18%, we consider whatever I said in the speech that we are considering everything. When I gave this guidance, we already have in mind that we could have increasing interest rate in Brazil that was to happen yesterday. And we will have to consider that we understood at the time and we understand yes that the spread stands to reduce during this time. We both know that what happened the last year that we are having a jump in the spreads in the worst of the crisis, when there is more risk in the market. And now at the moment to go back to then the previous level. We both expect to reduce the spreads in the level that was before the crisis. But it is very fair to expect this stance to reduce in the level that was before. That’s why we mentioned that. I was just saying that we are just to the normal question is what's going to happen with the increased interest rate to just to make sure that it is understandable for everyone. But we have to consider that in our projections. So about the base level that the -- the reduction would be when they will consider for it, the big reduction, we would not be able to consider the excess provision. To be honest, now, we are not able to use that. The reduction, we said that it could be reduced something around 15% to 0.9% should be in tier one. It should be going through around 13.4%. That's it.

You’re comfortable, you are happy with that?

We are not happy but we are comfortable.

You are comfortable with that in terms of the growth rate, the growth portfolio you are seeing.

Of course that we understand that we have space to grow portfolio, but we don't grow just one shot. We arrive at this space to -- their own generation of result would be enough to increase our capital going forward, it is one thing. But we understand that we will have space to grow in terms of subordinated debt. We are just using for example less than a half of the capacity we have. Of course, we just don't want to test the marketing approach that we consider that’s not necessary. But once you have a opportunity to increase subordinated debt, of course, we would be awake in order to do so.

Our next call comes from Saul Martinez from JPMorgan.

I have a couple of questions as well. First one here, can you talk a little bit about your expense revolution? You mentioned that the efficiency ratio did improve a bit year-on-year, but we’re still seeing a fair resizable growth in expenses if you look at it year-on-year and the decline in the first quarter was only 1% although you had some impacts on ED there. Can you talk a little bit about whether you’re comfortable with the expense level that you’re generating, whether you expect to see some efficiency improvements going forward? Obviously you continue to want to grow, but are you comfortable with your levels of expenses? You think there's room for improvements there? Secondly, in terms of your market share, can you talk a little bit about the competitive situation? You lost market share, loan market share, last year, obviously to the public banks. And I think your loan share is about 12.5% roughly, currently. Can you talk a little bit about your plans to expand your share? Do you think you have room, given the fact that you're one of the few large private banks who's not going through a merger integration process, to expand share? And what do you think your ultimate market share could trend to in the coming years?

Okay. So, let’s start for the efficiency ratio. We are running something around 41% 41.2% nowadays, so we have a small deterioration this quarter in order to incorporate the Banco Ibi one point, but not towards the necessary, but in fact that the big change here was that when we have considered this on an annualized basis to be considered a 12 month insight, I think this is a big difference is that we are taking out a very, very good quarter that was the first quarter 2009. It remains that we are not considering these efficiency ratio, the provision for credit. If you consider the first quarter 2009 and if you don’t want to have a very good performance in treasury and this time we don’t have the same performance. So it should be the big difference in this time. But in common sense let’s say that we will be running around 41, if you are able to get these during at least the next two or three years, I think it would be very, very happy. I think we are familiar about our project in terms of IT and where we really expect to have condition to improve more this efficiency ratio that we can be from our terms may be three or four years, from now but so until there I think we are looking very carefully about expenses and when you see these growth in expenses that we are sure that it’s necessary because we are expanding the operations. We are growing it organically so there are no ways to grow with no expense, not investing. So with this is explained why but if you are able to get these around 41. So, we will be more than very happy. About the market share I think we just finished, saw that the number for the last data for the bank, Central bank. We understand that we gain a little bit portion, we used to have in December 12.6%, and now we are posting 12.7. Though it’s not a good gain, but we are at least we are recovering a part of the market share that we used to have. And the newest thing that the public banks, they keep the same share that they used to have. So I think we understand that we have space to gain the market share, not something substantial but once we are working in terms of growing organically I think we have space to gain, but don’t expect for us to have a big change in a way. And I think if one looks at the history about the market share, the public banks is happy, they just recovered the common market that they used to have. In the past they used to have the same movement as they had.

That's helpful. If you could just talk, obviously about the Board meeting yesterday, raising 75 basis points, could you just talk a little bit about how you're positioned for that? What you think the impact will be on your financial markets going forward and what you expect for your NIMs and throughout the rest of the year? Can you just talk a little bit about the impact of a higher solidity on your financial margins during the rest of the year? (inaudible)?

Look I think this is something that you already expect for almost everyone all right. When I gave this guidance of growth on our economy seeing, they gave the guidance of growing 6.4% with GDP. They had in mind that the Central Bank should increase their rate in order to give that. If they don’t do that, you should have it growing much higher. I don’t think the impact should be substantial in the sense. For example in our guidance when we gave our guidance we already had this in mind. So to be honest I don’t think should be something very important. For us I can tell in our case, it’s inside in our project and so unless we have a big change in the direction or something like this we don’t expect to change.

Our next question comes from Mr. Rafael Fahas with Banco Safra.

My question is regarding your new brand Elo, if you see another bank adopting the same strategy of launching its own brand and if it makes sense for you someday to sign a partnership or acquire a local brand, such as (inaudible) or other brands?

Like we said in the conference call Elo is going to be open for many other banks to issue it. On the acquired front, it’s going to begin with Cielo, but as it becomes more relevant other networks, other acquiring networks could also work with Elo and we are still beginning to set up the company. So it is possible that in the future we could go for acquisitions. But for now the big force behind it will be the distribution channels of both banks working together to make it a success.

Is it possible for you to guarantee that only Cielo will process and do the acquiring in the beginning, considering that all exclusivity should end as of 1st of July?

For technology reasons, we will begin with one acquire and there are lot of efforts that go into the launching of this operation. As it becomes sizeable, then we could be looking into adding other acquirers, but to your question, yes in the beginning, we intend to begin with Cielo only.

Our next question comes from Mr. Larry Batali with Moore Capital.

You were talking earlier about subordinated debt and I just wanted to ask you how you, at this point anyway, intend to fund the loan growth that you expect this year?

Let me say about subordinated debt, it's just a matter of capital. All right, we are not using subordinated debt for funding liquidation. We expect to fund our operation in the traditional way that we have. We can use internal fund. We use more internal fund like time deposits. I think we have space to continue to expand debt and we are looking for some external funding when it’s proved that is compatible with the same cost that we have internally. We can issue some bonds that like we had last couple, a few weeks ago in a way that we can use this fund in our internal operation when it is proved that is lower than the cost that we had inside, but in normal term, we use more time deposit.

Okay. Do you have any intent? Maybe, you've already done this and I missed it but do you have any intention to issue [finance status] The new vehicles that have recently been approved?

We’ve had some issues like the two different government bonds that we launched. We launched a recent R$750 million bond for five years. It’s just to use this fund for our external operation and we just launched a recent R$250 million, that this we are using in our internal operation. We have space to launch these bonds, we don’t have any intention nowadays, but once you have opportunities that the cost is good, we can use the same instruments but we don’t have, I don’t know that we have now something in the movement. But normally, we can use that.

(Operator Instructions). Excuse me, ladies and gentlemen since there are no further questions, I’d like to invite Mr. Domingos to proceed with his closing statements. Please go ahead sir.

Okay, I’d like to thank the participation of each and everyone in this call and our Investor Relation, IR will be more than happy to respond to any further questions you may have. Thank you very much.

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