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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 November, 2004

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____

.






Report on Economic and
Financial Analysis

September 2004






Financial Market Indicators (%)
Index 2003 2004
 
  2nd
Quarter 		3rd
Quarter  		Accumulated to September 2nd
Quarter 		3rd
Quarter  		Accumulated to September
CDI 5.78  5.61  18.06  3.67  3.86  11.72 
IBOVESPA 15.07  23.42  42.08  (4.49) 9.92  4.54 
USD - Commercial rate (14.35) 1.79  (17.26) 6.84  (8.01) (1.06)
IGP-M (0.35) 1.14  7.10  3.95  3.25  10.26 
IPCA - IBGE 1.43  1.32  8.05  1.60  1.94  5.49 
TJLP 2.87  2.87  8.62  2.35  2.35  7.29 
TR 1.31  1.29  3.93  0.42  0.57  1.35 
Collective labor agreement (*) -  12.60  12.60  -  8.50  8.50 
Closing Price
USD - Commercial rate - sell (in reais) 2.8720  2.9234  2.9234  3.1075  2.8586  2.8586 
Sovereign risk (points) 788  695  695  646  466  466 
SELIC – Central Bank reference rate COPOM (% p.a.) 26.00  20.00  20.00  16.00  16.25  16.25 
Prefixed BMF rate 1 yr. (% p.a.) 22.00  18.10  18.10  17.02  17.40  17.40 
(*)   Increase proposed in 2004.

Compulsory Deposit Rates (%)
Deposits 2003 2004
 
  2ndQuarter 3rdQuarter 2ndQuarter 3rdQuarter
Demand deposits (1) 60  45  45  45 
    Additional (2) 8  8  8  8 
Time deposits (3) 15  15  15  15 
    Additional (2) 8  8  8  8 
Savings deposits (4) 20  20  20  20 
    Additional (2) 10  10  10  10 
(1)   Cash deposit - no remuneration.
(2)   Cash deposit - SELIC rate.
(3)   Deposit in Government Securities.
(4)   Cash deposit - Reference Rate (TR) + interest of 6.17% p.a.
Rates and Limits (%)
Items 2003 2004
 
  2nd Quarter 3rd Quarter 2nd Quarter 3rd Quarter
Income tax 25  25  25  25 
Social contribution 9  9  9  9 
PIS (1) 0.65 0.65 0.65 0.65
COFINS (2) 3  4  4  4 
Legal reserve on net income 5  5  5  5 
Maximum fixed assets (3) 50  50  50  50 
Minimum capital – Basel (4) 11  11  11  11 
(1)   The rate applicable to non-financial and similar companies is 1.65% (non-cumulative PIS).
(2)   The rate applicable to financial and similar companies was increased to 4% in September 2003 and for other companies to 7.60% in February 2004 (non-cumulative COFINS).
(3)   On reference equity.
(4)   Reference equity may not be lower than 11% of weighted assets.

Forward-Looking Statements

This Report on Economic and Financial Analysis contains forward-looking statements relating to our business which are based on management’s current expectations, estimates and projections about future events and financial trends which could affect our business. Words such as: “believes”, “anticipates”, “plans”, “expects”, “intends”, “aims”, “evaluates”, “predicts”, “foresees”, “projects”, “guidelines”, “should” and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and involve risks and uncertainties which are difficult to predict and which could be beyond our control. Furthermore, certain forward-looking statements are based on assumptions which future events may prove to be inaccurate. Therefore, actual results may differ materially from the plans, objectives, expectations, projections and intentions expressed or implied in such forward-looking statements.

Factors which could cause actual results to differ materially include, among others, changes in regional, national and international commercial and economic conditions; inflation rates, increases in customer default and any other delays in credit operations; increases in the allowance for loan loss; loss of funding capacity; loss of clientele or revenues; our capacity to sustain and improve performance; changes in interest rates which could, among others, have an adverse effect on our margins; competition in the banking sector, in financial services, credit card services, insurance, asset management and other related sectors; government regulations and fiscal matters; disputes or adverse legal proceedings or ruling; as well as credit risks and other loan and investment activity risks.

Accordingly, the reader should not place undue reliance on these forward-looking statements. In all cases, these forward-looking statements are valid only as at the date they are made. Except as required under applicable legislation, we assume no obligation whatsoever to update these statements, whether as a result of new information, future events or any other motive.

Contents

1 - Bradesco – Line by Line

2 – Main Statement of Income Information
3 – Main Balance Sheet Information


4 – Operating Companies

5 – Operating Structure

6 – Social Responsibility

7 - Independent Auditors’ Report

8 - Financial Statements, Report of the Fiscal Council and Independent Auditors' Report

Cross Reference Index


Certain figures included in this document have been subject to rounding
adjustments. Accordingly, figures shown as totals in certain tables may not be an
arithmetic aggregation of the figures which precede them.











1 - Bradesco – Line by Line








• Highlights


Earnings – In millions of reais
  2004 Accumulated to September
 
  2nd Quarter 3rd Quarter % Variation 2003  2004  % Variation
 
Financial margin 3,081  3,304  7.2  9,135  9,715  6.3 
Provision for loan losses 514  478  (7.0) 1,998  1,553  (22.3)
Commission and fees 1,375  1,455  5.8  3,282  4,149  26.4 
Insurance premiums, private pension plans and savings bonds 2,989  3,464  15.9  8,291  9,447  13.9 
Personnel expenses 1,234  1,273  3.2  3,507  3,684  5.0 
Other administrative expenses 1,216  1,225  0.7  3,486  3,649  4.7 
Operating income 621  1,163  87.3  2,667  2,583  (3.1)
Net income 641  752  17.3  1,591  2,002  25.8 


Balance Sheet – In millions of reais
  2004 September
 
  June  September % Variation 2003  2004  % Variation
 
Total assets 176,254  179,703  2.0  164,363  179,703  9.3 
Securities 56,212  58,155  3.5  47,906  58,155  21.4 
Credit operations 58,402  59,976  2.7  52,776  59,976  13.6 
Permanent assets 5,271  5,030  (4.6) 5,069  5,030  (0.8)
Total deposits 64,133  64,787  1.0  58,346  64,787  11.0 
Borrowings and onlendings 16,817  16,715  (0.6) 15,186  16,715  10.1 
Technical reserves 29,478  31,585  7.1  24,461  31,585  29.1 
Stockholders’ equity 13,650  14,678  7.5  12,967  14,678  13.2 


Change in Number of Outstanding Shares
  Common Stock Preferred Stock Total 
 
Number of shares held at December 31, 2003 (*) 79,836,525  78,693,936  158,530,461 
Shares acquired and not canceled (386,082) (4) (386,086)
Number of shares held at September 30, 2004 79,450,443  78,693,932  158,144,375 

* Shares divided by 10,000, as a result of the reverse stock split.


Share Performance – in reais
  2004 Accumulated to September
 
  2nd Quarter 3rd Quarter % Variation 2003  2004  % Variation
 
Net income per share 4.05  4.75  17.3  10.03  12.66  26.2 
Dividends/JCP per share – ON (net of income tax) 1.664  1.702  2.3  5.179  5.032  (2.8)
Dividends/JCP per share – PN (net of income tax) 1.831  1.872  2.2  5.697  5.535  (2.8)
Net book value (ON and PN) 86.30  92.81  7.5  81.76  92.81  13.5 
Average last day price (ON) 115.36  118.43  2.7  94.70  118.43  25.1 
Average last day price (PN) 142.63  150.00  5.2  117.20  150.00  28.0 
Market value of stockholders’ equity (in millions of reais) (*) 20,404  21,213  4.0  16,810  21,213  26.3 

(*) Number of shares x average last day quotation for the period.
     JCP = Interest attributed to own capital


Cash Generation – In millions of reais
  2003 2004
  2nd Quarter 3rd Quarter Accumulated to September 2nd Quarter 3rd Quarter Accumulated to September
Net income 519  564  1,591  641  752  2,002 
Equity in the earnings of associated companies 28  (7) 26  (122) 3  (119)
Allowance for loan losses 587  603  1,998  514  478  1,553 
Technical reserves 1,465  1,625  4,946  1,392  2,019  4,941 
(Reversal of) allowance for mark-to-market 16  (1) 30  -  -  (4)
Depreciation and amortization 150  179  470  143  134  421 
Amortization of goodwill 62  62  862  226  188  501 
Other 12  (22) (5) (43) 20  (17)
Total 2,839  3,003  9,918  2,751  3,594  9,278 


Added Value – In millions of reais
  2003 2004
 
  2nd Quarter 3rd Quarter Accumulated to September 2nd Quarter 3rd Quarter Accumulated to September
 
ADDED VALUE (A+B+C) 2,192  2,395  6,840  2,311  2,702  7,398 
A - Gross profit from financial intermediation 2,028  2,555  7,137  2,567  2,826  8,162 
B - Commissions and fees 1,083  1,182  3,282  1,375  1,455  4,149 
C - Other operating expenses (919) (1,342) (3,579) (1,631) (1,579) (4,913)
 
DISTRIBUTION OF ADDED VALUE (D+E+F+G) 2,192  2.395  6,840  2,311  2,702  7,398 
 
D - Employees 923  1,094  2,878  995  1,030  2,968 
E - Government 750  737  2,371  675  920  2,428 
F - JCP/Dividends to stockholders (paid and accrued) 343  367  1,000  325  333  985 
G - Reinvestment of profits 176  197  591  316  419  1,017 


Performance Ratios (annualized)
  2004 Accumulated to September
 
  2nd Quarter 3rd Quarter 2003  2004 
 
Return on stockholders’ equity (total) 20.1  22.1  16.7  18.6 
Return on stockholders’ equity (average) 20.5  23.3  18.2  20.0 
Return on total assets (total) 1.5  1.7  1.3  1.5 
Stockholders’ equity to total assets 7.7  8.2  7.9  8.2 
Capital adequacy ratio (Basel) - financial consolidated 18.1  19.9  18.4  19.9 
Capital adequacy ratio (Basel) - total consolidated 15.7  17.0  15.9  17.0 
Permanent assets to stockholders' equity – financial consolidated 41.4  42.7  44.3  42.7 
Permanent assets to stockholders' equity - total consolidated 26.1  24.2  29.9  24.2 
Efficiency ratio (accumulated over the prior 12-month period) 60.1  58.3  55.9  58.3 


Other Information
  2004 September
 
  June September % Variation 2003  2004  % Variation
 
Managed funds – in millions of reais 86,816  90,171  3.9  76,602  90,171  17.7 
    Number of employees 74,784  74,227  (0.7) 77,154  74,227  (3.8)
Number of branches 3,054  3,049  (0.2) 3,033  3,049  0.5 
Checking account holders – million 15.4  15.3  (0.6) 14.4  15.3  6.3 
Debit and credit card base - million 43.5  45.2  3.9  39.1  45.2  15.6 

• Profitability

Bradesco reported net income of R$ 2,002 million, for the first nine months of 2004, up by 25.8%, compared to the same period in 2003. Stockholders’ equity was R$ 14.678 million at September 30, 2004, an increase of 13.2% compared to the prior-year. The return on stockholders’ equity (ROE) was 18.6%. Assets totaled R$ 179,703 million at the end of September 2004, a growth rate of 9.3% compared to the balance at the same date in 2003. Return on total assets (RO) for the first nine months of 2004 was 1.5% per annum.

Third-quarter consolidated net income was R$ 752 million, up by R$ 111 million, or 17.3% compared to second-quarter results (2Q04). Annualized return on stockholders’ equity (ROE) was 22.1% for the quarter and return on total assets (ROA) was 1.7%.

3Q04 was marked by the good performance of revenues comprising financial margin, especially non-interest income which totaled R$ 504 million, up by R$ 380 million, compared to 2Q04, mainly due to increased gains with securities (TVM) and treasury operations, as well as credit recovery improvements, in line with a more favorable economic environment. We also highlight the increase in commissions and fees, up by 5.8% compared to 2Q04, in particular, income on credit operations and fund management.

The improved credit portfolio scenario, in sync with our ongoing selective credit granting policy, was mirrored by improved portfolio risk ratings and the lower provision for loan loss recorded in the amount of R$ 36 million for the quarter, totaling R$ 1,553 million for the first nine months of 2004.

The Operating Efficiency Ratio (accumulated over the prior 12 months) in 3Q04 was 58.3%, down by 0.4% compared to 2Q04, after adjustments for extraordinary events, evidencing the strong commitment of the entire Bradesco management to the strict control of expenses and growing revenues for the quarter.

• Comparative Statement of Income - In millions of reais

 
  Accumulated to September
2003 		Accumulated to September
2004 		%
Variation  		2nd Quarter
2004 		3rd Quarter
2004 		%
Variation 
 
 
Income from lending and trading activities 20,087  20,001  (0.4) 7,720  5,525  (28.4)
Credit operations 9,126  9,629  5.5  3,659  2,870  (21.6)
Leasing operations 229  215  (6.1) 57  73  28.1 
Securities 5,098  4,163  (18.3) 2,121  362  (82.9)
Financial income on insurance, private pension plans and savings bonds 3,948  3,763  (4.7) 1,181  1,337  13.2 
Derivative financial instruments 46  709  1,441.3  (69) 582  (943.5)
Foreign exchange transactions 543  663  22.1  502  -  (100.0)
Compulsory deposits 1,097  859  (21.7) 269  301  11.9 
Expenses 12,950  11,839  (8.6) 5,153  2,699  (47.6)
Deposits 7,930  6,776  (14.6) 3,030  1,292  (57.4)
Price-level restatement and interest on technical reserves for insurance, private pension plans and savings bonds 2,419  2,294  (5.2) 699  943  34.9 
Borrowings and onlendings 593  1,203  102.9  905  (18) (102.0)
Leasing operations 10  13  30.0  5  4  (20.0)
Provision for loan losses 1,998  1,553  (22.3) 514  478  (7.0)
Income on financial intermediation 7,137  8,162  14.4  2,567  2,826  10.1 
Other operating income (expenses) (4,470) (5,579) 24.8  (1,946) (1,663) (14.5)
Commissions and fees 3,282  4,149  26.4  1,375  1,455  5.8 
Income from insurance premiums, private pension plans and savings bonds 8,291  9,447  13.9  2,989  3,464  15.9 
    Insurance premiums retained 4,067  4,663  14.7  1,525  1,673  9.7 
    Private pension plan contributions 3,382  3,744  10.7  1,068  1,453  36.0 
    Income on savings bonds 842  1,040  23.5  396  338  (14.6)
Variation in technical reserves for insurance, pension plans and savings bonds (2,527) (2,647) 4.7  (693) (1,076) 55.3 
    Variation in technical reserves for insurance (199) (160) (19,6)  (70) (112) 60.0 
    Variation in technical reserves for pension plans (2,271) (2,441) (7.5) (617) (974) 57.9 
    Variation in technical reserves for savings bonds (57) (46) (19.3) (6) 10  (266.7)
Claims - insurance operations (3,061) (3,842) 25.5  (1,282) (1,328) 3.6 
Savings bond draws and redemptions (798) (932) 16.8  (346) (313) (9.5)
Insurance and pension plan selling expenses (553) (633) 14.5  (205) (216) 5.4 
    Insurance product selling expenses (446) (517) 15.9  (167) (177) 6.0 
    Pension plan selling expenses (107) (116) 8.4  (38) (39) 2.6 
Expenses with pension plan benefits and redemptions (1,406) (1,620) 15.2  (590) (497) (15.8)
Personnel expenses (3,507) (3,684) 5.0  (1,234) (1,273) 3.2 
Other administrative expenses (3,486) (3,649) 4.7  (1,216) (1,225) 0.7 
Tax expenses (761) (1,053) 38.4  (343) (374) 9.0 
Equity in the earnings of associated companies (26) 119  (557.7) 122  (3) (102.5)
Other operating income 1,954  888  (54.6) 280  351  25.4 
Other operating expenses (1,872) (2,122) 13.4  (803) (628) (21.8)
Operating income 2,667  2,583  (3.1) 621  1,163  87.3 
Non-operating income (768) (343) (55.3) (202) (130) (35.6)
Income before taxes and profit sharing 1,899  2,240  18.0  419  1,033  146.5 
Provision for income tax and social contribution (301) (233) (22.6) 225  (279) (224.0)
Minority interest in subsidiaries (7) (5) (28.6) (3) (2) (33.3)
Net income 1,591  2,002  25.8  641  752  17.3 
Return on stockholders’ equity (%) annualized 16.7  18.6  -  20.1  22.1  - 

• Analysis of the Statement of Income – In millions of reais

Income from Credit and Leasing Operations



Accumulated to September   2004
 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation
 
9,345 9,831 5.2   3,711 2,939 (20.8)
 
Income was up mostly as a result of: (i) the increase in the volume of the credit portfolio, which totaled R$ 60.0 billion, particularly in the consumer customer segment, up by 26.8%, as compared to the corporate segment up by 8.5%, reflecting the small demand for credit by the latter; (ii) negative exchange variation of 1.1% for the nine-month period through September 2004 (period/04), compared to negative exchange variation of 17.3% in the nine-month period through September 2003 (period/03), impacting foreign-currency indexed and/or denominated operations, which comprise 12.5% of the portfolio (not considering advances on foreign exchange contracts – ACC which comprise 9.4% of the portfolio and whose results impact the foreign exchange transactions account); offset substantially by: (iii) falling average interest rates in line with the variation in CDI of 18.1% for period/03 as compared to 11.7% for period/04.
 
The variation was mainly due to: (i) negative exchange variation of 8.0% in 3Q04, against positive exchange variation of 6.8% in 2Q04, impacting foreign-currency indexed and/or denominated operations, comprising 12.5% of the portfolio (not considering advances on foreign exchange contracts – ACC which comprise 9.4% of the portfolio and whose results impact the foreign exchange transactions account); partially offset by: (ii) increase in the credit portfolio balance, particularly the 4.8% increase for the quarter in the consumer customer segment, compared to a growth rate of 1.8% in the corporate customer segment, partially affected by foreign-currency indexed and/or denominated operations.
 

Results of Securities (TVM) and Derivative Financial Instrument Operations

Accumulated to September   2004
 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation
 
5,144 4,872 (5.3)   2,052 944 (54.0)
  
The variation for the period is mainly due to: (i) falling average interest rates for the period; (ii) decrease in non-interest income of R$ 315 in period/04 against R$ 520 in period/03, as a result of less gains on securities and treasury transactions, offset substantially by: (iii) negative exchange variation of 1.1% in period/04, against negative exchange variation of 17.3% in period/03, impacting foreign-currency-indexed and or denominated securities, which comprise 17.8% of the portfolio; and (iv) increase in the average volume of the securities’ portfolio, particularly federal government securities.
 
This decrease reflects mainly:(i) negative exchange variation of 8% in 3Q04, against positive exchange variation of 6.8% in 2Q04, impacting foreign currency-indexed and or denominated securities, which comprise 17.8% of the total portfolio; partially offset by: (ii) increase in non-interest income of R$ 216 in 3Q04 compared to R$ (6) in 2Q04, as a result of increased gains with securities and treasury operations.
 

Financial Income on Insurance, Private Pension Plans and Savings Bonds

Accumulated to September   2004
 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation
 
3,948 3,763 (4.7)   1,181 1,337 13.2
  
During the period, there was an increase in the average volume of the securities’ portfolio, comprising federal government securities, related to technical reserves, especially PGBL and VGBL products. However, overall results were down mainly due to: (i) the decrease in average interest rates, especially CDI, from 18.1% in period/03 to 11.7% for period/04; partially offset by: (ii) variation in the IGP-M index, of 7.1% for period/03, against 10.3% in 2004.
 
Results were up mainly due to: (i) the increase in the average volume of the securities’ portfolio for the quarter, comprising federal government securities, as a result of the increase in the sale of supplementary pension plans and insurance policies, especially PGBL and VGBL, partially offset by: (ii) less variation in the IGP-M index, from 3.3% in 3Q04, against 4% in 2Q04.
  

Results of Foreign Exchange Transactions

Accumulated to September   2004
 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation
 
543 663 22.1   502 - (100.0)
  
During the period, there was an increase in the volume of the foreign exchange portfolio. Considering the adjustments to foreign funding expenses used to finance import/export transactions (Note 13 to the financial statements), results would present a decrease from R$ 247 in period/03 to R$ 143 in period/04, affected by falling average fx portfolio interest rates (spread).
 
The volume of the fx portfolio for the quarter presents a decrease, when measured in reais, mainly as a result of negative exchange variation of 8% in 3Q04. Considering the adjustments to foreign funding expenses used to finance import/export transactions, results would present increases of R$ 35 and R$ 45 in 2Q04 and 3Q04, respectively.
  

Results of Compulsory Deposits

Accumulated to September   2004
 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation
 
1,097 859 (21.7)   269 301 11.9
  
The decrease for the period reflects: (i) drop in the SELIC rate from 18.1% for period/03 to 11.7% for period/04, used to remunerate the additional compulsory deposit; (ii) the decrease in the TR reference rate used to remunerate compulsory savings account deposits, from 3.9% in period/03 to 1.4% for period/04, partially offset by: (iii) the increase in the average volume of deposits for the period.
 
This increase was mainly due to: (i) increase in the SELIC rate from 3.7% in 2Q04 to 3.9% in 3Q04, which is used to remunerate the additional compulsory deposit; (ii) the increase in the TR reference rate used to remunerate compulsory savings account deposits, from 0.4% in 2Q04 to 0.6% for 3Q04, partially offset by: (iii) the increase in the average volume of deposits for the quarter.
 

Interest and Charges on Deposits

Accumulated to September   2004
 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation
 
7,930 6,776 (14.6)   3,030 1,292 (57.4)
  
The decrease mainly reflects: (i) falling average interest rates, in line with the variation in the CDI from 18.1% in period/03 against 11.7% in period/04, impacting expenses for time deposits and purchase and sale commitments – third-party portfolio - R$ 1,050 and R$ 623 respectively, partially offset by: (ii) greater expense for securities abroad - R$ 928, generated by negative exchange variation of 1.1% in period/04 as compared to negative exchange variation of 17.3% in period/03; and (iii) increase in the average volume of funding for the period.
 
The decrease in this expense mainly reflects negative exchange variation of 8% in 3Q04, compared to positive exchange variation of 6.8% in 2Q04, impacting securities and other funds obtained abroad by Bradesco - R$ 2,051, which was partially offset by increased expense for purchase and sale commitments and time deposits of R$ 148 and R$ 130, respectively, as a result of an increase in interest rates, in line with the variation in the CDI of 3.7% in 2Q04 to 3.9% in 3Q04.
 

Price-level Restatement and Interest on Technical Reserves for Insurance, Private Pension Plans and Savings Bonds

Accumulated to September   2004
 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation
 
2,419 2,294 (5.2)   699 943 34.9
  
The decrease mainly reflects (i) the fall in average interest rates, in line with the variation in the CDI rate of 18.1% for period/03 as compared to 11.7% for period/04; offset by: (ii) the increase in the average volume of technical reserves, for insurance, private pension plans and premium bonds, particularly PGBL and VGBL products” and (iii) the improved accounting policies in period/04, with R$ 171, recorded in this account rather than in “Variation in technical reserves for insurance, private pension plans and savings bonds” pursuant to prior policy.
 
The variation was mainly due to growth from: (i) the increase in sales of supplementary pension plans and insurance policies, particularly PGBL and VGBL; (ii) the improved accounting policies in 3Q04, with R$ 171, recorded in this account rather than in “Variation in technical reserves for insurance, private pension plans and savings bonds” pursuant to prior policy; partially offset by: (iii) less variation in the IGP-M, from 3.3% in 3Q04 against 4% in 2Q04, one of the indexes used to remunerate technical reserves for insurance, private pension plans and savings bonds.
 

Expenses for Borrowings and Onlendings

Accumulated to September   2004
 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation
 
593 1,203 102.9   905 (18) (102,0)
  
The increase reflects negative exchange variation of 17.3% in period/03, against negative exchange variation of 1.1% in period/04, impacting borrowings and onlendings indexed and/or denominated in foreign currency, as well as the increase in local funding through onlendings from BNDES/FINAME.
 
This decrease reflects negative exchange variation of 8% in 3Q04 against positive exchange variation of 6.8% in 2Q04, impacting borrowings and onlendings indexed and/or denominated in foreign currency.
 

Financial Margin

Accumulated to September   2004
 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation
 
9,135 9,715 6.3   3,081 3,304 7.2
  
The variation for the period was mainly due to: (i) increase in interest income - R$ 1,024, comprising the effect of appreciation of the real in period/03 (17.3%) compared with period/04 (1.1%) - R$ 510 and growth in the average volume of business - R$ 514; (ii) financial expenses recorded formerly in the “Variation in technical reserves for insurance, private pension plans and savings bonds” account - R$ 171; and (iii) decrease in non-interest income - R$ 273, mainly due to lower gains on securities and treasury transactions for period/04.
 
The variation for the quarter was mainly due to: (i) increase in interest income - R$ 14, comprising growth in the average volume of business - R$ 111 and the drop in spread - R$ 97; (ii) financial expenses recorded formerly in the “Variation in technical reserves for insurance, private pension plans and savings bonds” account - R$ 171; and (iii) increase in non-interest income - R$ 380, derived from the increase in gains on securities and treasury transactions and credit recoveries in 3Q04.
 

Expenses for Provision for Loan Losses

Accumulated to September   2004
 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation
 
1,998 1,553 (22.3)   514 478 (7.0)
  
Excluding additional provisions - R$ 318 in period/03 and R$ 54 in period/04, the decrease in expenses for PDD in the amount of R$ 181, was mainly due to our ongoing selective credit granting policy and tool/instrument enhancements, reflected in the improvement of our credit portfolio risk ratings. In September 2003 and September 2004, our AA to C rated portfolio comprised 90.4% and 91.6% respectively of our total portfolio.
 
Excluding additional provisions - R$ 8 in 3Q04 and R$ 20 in 2Q04, the decrease in expenses for PDD in the amount of R$ 24, was mainly due to our ongoing selective credit granting policy and tool/instrument enhancements, reflected in the improvement of our credit portfolio risk ratings. In June 2004 and September 2004, our AA to C rated portfolio comprised 91.3% and 91.6% respectively of our total portfolio.
 

Income on Commissions and Fees

Accumulated to September   2004
 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation
 
3,282 4,149 26.4   1,375 1,455 5.8
  
Growth for the period is derived substantially from the increase in the average volume of transactions and number of customers, as well as the readjustment of certain fees during the period, especially: (i) fund management - R$ 248; (ii) credit operations - R$ 162; (iii) checking accounts - R$ 158; and (iv) income on cards – R$ 125; and (v) consortium purchase plan management – R$ 46.
 
Growth for the quarter was mainly due to the increase in the average volume of transactions, with: (i) credit operations - R$ 27; (ii) fund management - R$ 21; (iii) collection – R$9; and (iv) checking account – R$ 8.
 

Income from Insurance Premiums, Private Pension Plans and Savings Bonds

Accumulated to September   2004
 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation
 
8,291 9,447 13.9   2,989 3,464 15.9
  
The variation for the period is detailed below:
 
The variation for the quarter is detailed below:
 

a) Insurance Premiums Retained

Accumulated to September   2004
 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation
 
4,067 4,663 14.7   1,525 1,673 9.7
  
The variation for the period was mainly due to growth in sales of Health (corporate) - R$ 335, Auto - R$ 136 and Vida - R$ 116 products.
 
The increase for the third quarter was mainly due to growth in sales of Auto - R$ 61 and Health (corporate) - R$ 58.
 

b) Private Pension Plan Contributions

Accumulated to September   2004
 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation
 
3,382 3,744 10.7   1,068 1,453 36.0
  
The variation for the period was substantially due to: (i) growth in VGBL product sales - R$ 382; (ii) receipt of the transfer of the Previllares supplementary pension plan portfolio - R$ 117; e partially offset by (iii) lower PGBL product sales -R$ 123.
 
The growth for the quarter was substantially derived from; (i) growth in VGBL product sales - R$ 332; (ii) receipt of the transfer of the Previllares supplementary pension plan portfolio - R$ 117; partially offset by (iii) lower PGBL product sales - R$ 31.
  

c) Income on Savings Bonds

Accumulated to September   2004
 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation
 
842 1,040 23.5   396 338 (14.6)
  
This variation reflects the increase in sales and re-investment of bonds maturing during the period.
 
The variation is partly due to the decrease in the re-investment of bonds matured in 3Q04.
 

Variation in Technical Reserves for Insurance, Pension Plans and Savings Bonds

Accumulated to September   2004
 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation
 
(2,527) (2,647) 4.7   (693) (1,076) 55.3
  
The variation for the period is detailed below:
 
The variation for the quarter is detailed below:
 

a) Variation in Technical Reserves for Insurance

Accumulated to September   2004
 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation
 
(199) (160) (19.6)   (70) (112) 60.0
  
Variations in technical reserves for insurance are directly related to the production of premiums in their respective effective periods. In period/04, the most significant variation occurred as a result of the lower reserve recorded in the Auto line - R$ 41.
 
Variations in technical reserves for insurance are directly related to the production of premiums in their respective effective periods. In 3Q04, the most significant amount was recorded in the Auto line - R$ 40.
 

b) Variation in Technical Reserves for Pension Plans

Accumulated to September   2004
 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation
 
(2,271) (2,441) 7.5   (617) (974) 57.9
  
Variations in technical reserves are directly related to the production of premium and contributions in diverse selling periods, against benefits and redemptions. During the period, reserves were recorded in VGBL and traditional products - R$ 351 and R$ 787, respectively, offset by a lower reserve recorded for the PGBL product - R$ 797 and by the improved accounting policies in period/04, with R$ 171, recorded in “Price-level restatement and interest on technical reserves for insurance, private pension plans and savings bonds” rather than in this account.
 
Variations in technical reserves are directly related to the production of premium and contributions in diverse selling periods, against benefits and redemptions. During the quarter, reserves were recorded, mainly, in VGBL and traditional products - R$ 326 and R$ 272, respectively, offset by a lower reserve recorded for the PGBL product - R$ 70 and improved accounting policies in 3Q04, with R$ 171, recorded in “Price-level restatement and interest on insurance, private pension plans and savings bonds” rather than in this account.
 

c) Variation in Technical Reserves for Savings Bonds

Accumulated to September   2004
 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation
 
(57) (46) (19.3)   (6) 10 (266.7)
  
The variations in technical reserves are directly related to income on savings bonds, against related draws.
 
The variations in technical reserves are directly related to income on savings bonds, against related draws.
 

Claims - Insurance Operations

Accumulated to September   2004
 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation
 
(3,061) (3,842) 25.5   (1,282) (1,328) 3.6
  
The increase in expense with claims for the period was mainly due to: (i) improved calculation of the provision for claims incurred but not reported (IBNR) during the period, used to analyze the movement of claims for a period of 54 months rather than 12, as in prior periods, which resulted in the recording of an extraordinary reserve of R$ 276; (ii) an amount of R$ 74, arising from civil contingencies related to insurance operations which were recorded in 2Q04 in “Other operating expenses; and (iii) the increase in indemnities in Health, Auto and Life lines - R$ 393, compatible with earned premium growth.
 
Excluding the extraordinary reserves in 2Q04 – R$ 145, recorded as a result of improved calculation of IBNR and in 3Q04 - R$ 74, arising from civil contingencies related to insurance operations which were recorded in 2Q04 in “Other operating expenses”, the amounts of retained claims would be R$ 1,137 and R$ 1,254, respectively, compatible with earned premium growth.
 

Savings Bond Draws and Redemptions

Accumulated to September   2004
 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation
 
(798) (932) (16.8)   (346) (313) (9.5)
  
The increase for the period is due to increased provision recorded for redemptions and draws - R$ 134, as a result of increased sales of savings bonds.
 
The decrease in this expense for the quarter is due mostly to decreased provision recorded for redemptions - R$ 40, as a result of the decreased volume of sales of savings bonds in 3Q04 as compared to 2Q04.
 

Insurance and Pension Plan Selling Expenses

Accumulated to September   2004
 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation
 
(553) (633) 14.5   (205) (216) 5.4
  
The variation for the period is detailed below:
 
The variation for the quarter is detailed below:
 

a) Insurance Product Selling Expenses

Accumulated to September   2004
 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation
 
(446) (517) 15.9   (167) (177) 6.0
  
The increase in selling expenses for the period occurred mainly in Auto - R$ 28, Life - R$ 24 and Health line – R$ 13 products, in line with the ratio of selling expenses to earned premium.
 
The increase in selling expenses for the period occurred mainly in the Auto - R$ 4, Life - R$ 4 and Health - R$ 2 lines, even though the ratio of selling expenses to earned premium decreased for the quarter.
 

b) Pension Plan Selling Expenses

Accumulated to September   2004
 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation
 
(107) (116) 8.4   (38) (39) 2.6
  
The increase in these expenses for the period reflects substantially the growth in VGBL product sales.
 
Expenses for the quarter remained practically stable.
 

Expenses with Pension Plan Benefits and Redemptions

Accumulated to September   2004
 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation
 
(1,406) (1,620) 15.2   (590) (497) (15.8)
  
The variation for the period was mainly due to the increase in the payment of benefits and redemptions of traditional private pension plans - R$ 170.
 
The decrease in these expenses for the quarter mainly reflects a lower volume of traditional private pension plan redemption payments in 3Q04 compared to 2Q04 - R$ 113.
  

Personnel Expenses

Accumulated to September   2004
 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation
 
(3,507) (3,684) 5.0   (1,234) (1,273) 3.2
  
The variation for the period reflects for the most part: (i) the effect of the collective bargaining agreement (12.6%) and single payment bonus – R$ 171, appropriated in Sept/03 and R$ 279 which impacted period/04; (ii) the effect of the provision recorded for the proposed collective bargaining agreement (8.5%) in Sept/04 R$ 69 ; (iii) increased expenses for labor claims – R$ 40; and (iv) consolidation of BBV Banco, Zogbi and BEM - R$ 186. Disregarding the above events the decrease in payroll would amount to R$ 225 for the period, mainly as a result of the synergy following the merger of banks acquired.
 
The variation was mainly due to: (i) payroll decrease as a result of the synergy following the merger of banks acquired; partially offset by: (ii) the provision recorded for the proposed collective bargaining agreement (8.5%) in Sept/04, with an impact of R$ 69.
 

Other Administrative Expenses

Accumulated to September   2004
 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation
 
(3,486) (3,649) 4.7   (1,216) (1,225) 0.7
  
The increase for the period was mainly due to consolidation of BBV Banco, Zogbi and BEM – R$ 208, acquired in 2004.
 
The variation for the quarter was mainly due to the increase in expense for : (i) transport - R$ 12; (ii) communications - R$ 4; offset by: (iii) decrease in expenses with leased assets - R$ 7.
 

Tax Expenses

Accumulated to September   2004
 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation
 
(761) (1,053) 38.4   (343) (374) 9.0
  
This variation was substantially generated by: (i) the increase in expenses for COFINS - R$ 197, as a result of the rise in the calculation base rate from 3% to 4% in September 2003, as well as an increase in taxable income; (ii) the increase in expenses for ISS - R$ 47, as a result of a change in legislation; and (iii) increased expense for CPMF - R$ 29.
 
The increase for the quarter was mainly generated by an increase in expenses for COFINS - R$ 33, which is compatible with the growth in taxable income during the quarter.
 

Equity in the Earnings of Associated Companies

Accumulated to September   2004
 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation
 
(26) 119 (557.7)   122 (3) (102.5)
  
The variation was mainly derived from improved results in associated companies for period/04, which include R$ 79 of non-recurring income in associated Insurance Group companies.
 
The variation was mainly derived from improved results in associated companies determined in 2Q04, which include R$ 79 of non-recurring income in associated Insurance Group companies.
 

Other Operating Income

Accumulated to September   2004
 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation
 
1,954 888 (54.6)   280 351 25.4
  
The variation for the period was mainly derived from: (i) reversal of provisions for exchange variation - R$ 504 and other operating provisions - R$ 334, in period/03; and (ii) decrease as a result of the non-consolidation of Latasa following disposal in period/03 - R$ 123.
 
The variation for the quarter reflects the reversal of other operating provisions, in particular, the reversal of tax contingencies.
 

Other Operating Expenses

Accumulated to September   2004
 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation
 
(1,872) (2,122) 13.4   (803) (628) (21.8)
  
The increase was generated in particular: (i) by the growth in operating provisions/other – R$ 219; (ii) the increase in sundry losses (discounts granted on credit operations and fraud) – R$ 128; (iii) greater expenses for amortization of goodwill, as a result of the operations of BBV Banco, Zogbi and BEM - R$ 83; and partially offset by: (iv) less financial expense R$ 233.
 
The variation was mainly due to the addition to provisions for civil contingencies arising from insurance operations - R$ 109, in 2Q04. In 3Q04, R$ 74 of this provision was reversed and allocated to the “Claims – insurance operations” account. Disregarding these factors, there was almost no variation in this account.
  

Operating Income

Accumulated to September   2004
 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation
 
2,667 2,583 (3.1)   621 1,163 87.3
  
The variation for the period was due to: (i) increase in income on commissions and fees - R$ 867; (ii) increase in financial margin - R$ 580; (iii) less expenses for provision for loan losses - R$ 445; (iv) increase in equity and earnings in associated companies - R$ 145; partially offset by: (v) decrease in operating revenue (net of expenses) – R$ 1,315; (vi) increase in the personnel and administrative expenses - R$ 340; (vii) decrease in the margin of contribution of insurance, private pension plan and savings bond operations - R$ 173; and (viii) increased tax expense - R$ 292.
 
The variation for the quarter was derived from: (i) increase in financial margin - R$ 223; (ii) increase in the margin of contribution of insurance, private pension plan and savings bond operations – R$ 161; (iii) less operating expenses (net of revenues) – R$ 246; increase in commissions and fees – R$ 80; (v) less expenses for provision for loan losses - R$ 36; partially offset by: (vi) decrease in equity and earnings in associated companies - R$ 125; (vii) increased personnel and administrative expenses - R$ 48; (viii) increased tax expense -R$ 31.
 

Non-operating Income

Accumulated to September   2004
 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation
 
 
(768) (343) (55.3)   (202) (130) (35.6)
  
The variation for the period mainly reflects extraordinary amortization of goodwill - R$ 681 for period/03; offset by extraordinary amortization of goodwill in period/04 - R$ 237.
 
The variation for the quarter reflects substantially: (i) extraordinary amortization of goodwill - R$ 135 in 2Q04 compared to R$ 102 in 3Q04 and the increase in non-operating provisions recorded in 2Q04.
 

Income Tax and Social Contribution

Accumulated to September   2004
 
2003 2004 % Variation   2nd Quarter 3rd Quarter % Variation
 
(301) (233) (22,6)   225 (279) (224,0)
  
The variation in the expense for income tax and social contribution, for the period, reflects tax charges on pre-tax income, after additions and exclusions, as described in Note 35 to the financial statements.
 
The variation in this expense for the quarter, reflects the increase in income before income tax and social contribution, as well as the effect of exchange gain (loss) and equity accounting, which totaled - R$ 142 in 2Q04 and R$ (127) in 3Q04.
 

• Comparative Balance Sheet - In millions of reais

ASSETS September September %  June  September % 
  2003  2004  Variation 2004  2004  Variation
 
Current assets and long-term receivables 159,294  174,673  9.7  170,983  174,673  2.2 
Funds available 2,234  2,386  6.8  2,222  2,386  7.4 
Interbank investments 28,558  25,126  (12.0) 20,529  25,126  22.4 
Securities and derivative financial instruments 47,906  58,155  21.4  56,212  58,155  3.5 
Interbank and interdepartmental accounts 13,253  15,336  15.7  14,683  15,336  4.4 
    Restricted deposits:
    Brazilian Central Bank 12,069  14,244  18.0  13,637  14,244  4.5 
    Other 1,184  1,092  (7.8) 1,046  1,092  4.4 
Credit and leasing operations 41,863  49,859  19.1  47,488  49,859  5.0 
    Credit and leasing operations 45,845  53,832  17.4  51,511  53,832  4.5 
    Allowance for loan and leasing losses (3,982) (3,973) (0.2) (4,023) (3,973) (1.2)
Other receivables and assets 25,480  23,811  (6.6) 29,849  23,811  (20.2)
    Foreign exchange portfolio 11,926  8,960  (24.9) 15,126  8,960  (40.8)
    Other receivables and assets 13,724  15,059  9.7  14,913  15,059  1.0 
    Allowance for losses (170) (208) 22.4  (190) (208) 9.5 
Permanent assets 5,069  5,030  (0.8) 5,271  5,030  (4.6)
Investments 504  971  92.7  1,006  971  (3.5)
Property and equipment in use and leased assets 2,613  2,288  (12.4) 2,326  2,288  (1.6)
Deferred charges 1,952  1,771  (9.3) 1,939  1,771  (8.7)
    Deferred charges 555  541  (2.5) 540  541  0.2 
    Goodwill on acquisition of subsidiaries, net of amortization 1,397  1,230  (12.0) 1,399  1,230  (12.1)
Total 164,363  179,703  9.3  176,254  179,703  2.0 
 
LIABILITIES September September %  June  September % 
  2003  2004  Variation 2004  2004  Variation
 
Current and long-term liabilities 151,256  164,907  9.0  162,500  164,907  1.5 
Deposits 58,346  64,787  11.0  64,133  64,787  1.0 
    Demand deposits 11,240  14,782  31.5  13,541  14,782  9.2 
    Savings deposits 20,897  23,186  11.0  22,457  23,186  3.2 
    Interbank deposits 411  14  (96.6) 47  14  (70.2)
    Time deposits 25,798  26,805  3.9  28,088  26,805  (4.6)
Deposits received under security repurchase agreements 23,069  21,551  (6.6) 16,746  21,551  28.7 
Funds from issuance of securities 7,895  6,116  (22.5) 7,080  6,116  (13.6)
    Securities issued abroad 7,008  5,227  (25.4) 5,989  5,227  (12.7)
    Other resources 887  889  0.2  1,091  889  (18.5)
Interbank and interdepartmental accounts 1,474  1,739  18.0  1,090  1,739  59.5 
Borrowings and onlendings 15,186  16,715  10.1  16,817  16,715  (0.6)
    Borrowings 8,123  8,695  7.0  8,895  8,695  (2.2)
    Onlendings 7,063  8,020  13.5  7,922  8,020  1.2 
Derivative financial instruments 331  308  (6.9) 785  308  (60.8)
Technical reserves for insurance, private pension plans and savings bonds 24,461  31,585  29.1  29,478  31,585  7.1 
Other liabilities 20,493  22,106  7.9  26,371  22,106  (16.2)
    Foreign exchange portfolio 5,966  3,974  (33.4) 8,750  3,974  (54.6)
    Taxes and social security contributions, social and statutory payables 4,912  5,208  6.0  4,771  5,208  9.2 
    Subordinated debt 3,482  6,089  74.9  6,181  6,089  (1.5)
    Sundry 6,133  6,835  11.4  6,669  6,835  2.5 
Deferred income 30  44  46.7  38  44  15.8 
Minority interest in subsidiaries 111  74  (33.3) 66  74  12.1 
Stockholders’ equity 12,967  14,678  13.2  13,650  14,678  7.5 
Total 164,363  179,703  9.3  176,254  179,703  2.0 


• Equity Analysis - In millions of reais


Funds Available

September/2003 September/2004 % Variation   June/2004 September/2004 % Variation
 
2,234 2,386 6.8   2,222 2,386 7.4
  
This increase reflects the increase in the volume of local currency cash funds – R$ 377, offsetting the decrease in the volume of foreign currency cash funds - R$ 225.
 
This variation was due mainly to the increase in the volume of foreign currency cash funds - R$ 163.
 

Interbank Investments

September/2003 September/2004 % Variation   June/2004 September/2004 % Variation
 
28,558 25,126 (12.0)   20,529 25,126 22.4
  
The variation for the period reflects: (i) the decrease in the third-party portfolio and own portfolio positions of open market investments, down by R$ 5,096 and R$ 1,131, respectively; partially offset by: (ii) the increase in interbank deposits up by R$ 2,795.
 
The increase for the quarter is mainly due to the increase in the third-party portfolio and own portfolio positions of open market investments, up by R$ 2,202 and R$ 1,090 respectively, and interbank deposits - R$ 1,356.
 

Securities (TVM) and Derivative Financial Instruments

September/2003 September/2004 % Variation   June/2004 September/2004 % Variation
 
47,906 58,155 21.4   56,212 58,155 3.5
  
The increase for the period is due substantially to: (i) additional funds derived from the increase in funding, particularly technical reserves for insurance, private pension plans and savings bonds, as well as issuance of subordinated debit and mitigated in part by: (ii) negative exchange variation of 2.2% for the period/03 to period/04, impacting foreign-currency indexed and/or denominated securities, which comprise 17.8% of the portfolio; and (iii) the redemption/maturity of securities during the period.
 
The variation is mainly due to: (i) additional funds derived from the increase in funding, particularly technical reserves for insurance, private pension plans and savings bonds; partially offset by (ii) negative exchange variation of 8% for the quarter, impacting foreign-currency indexed and/or denominated securities, which comprise 17.8% of the portfolio; and (iii) the redemption/maturity of securities during the quarter.
 

Interbank and Interdepartmental Accounts

September/2003 September/2004 % Variation   June/2004 September/2004 % Variation
 
13,253 15,336 15.7   14,683 15,336 4.4
  
The variation for the period reflects the increase in compulsory Brazilian Central Bank (BACEN) deposits, as a result of the increase in the volume of demand and savings deposits which grew 31.5% and 11.0%, respectively.
 
The increase for the quarter reflects the growth in compulsory BACEN deposits, as a result of the increase in the volume of demand and savings deposits which grew 9.2% and 3.2%, respectively.
 

Credit and Leasing Operations

September/2003 September/2004 % Variation   June/2004 September/2004 % Variation
 
52,776 59,976 13.6   58,402 59,976 2.7
  
The growth was mainly due to: (i) the individual customer segment with a growth rate of 26.8%, in particular, “vehicle” products up by 43.6% and “Personal Credit”, up by 45.7%, reflecting increased consumer confidence in the present economic scenario. Among corporate customers, the growth rate of 8.5% reflects the reduced demand in this segment, mainly as a result of excess liquidity of major corporations. In this segment, we highlight the rural credit product, up by 37.2%, due to the increase in production and price recovery of the majority of products, in both foreign and domestic markets; and prices in the ; (ii) consolidation of Banco Zogbi and Banco BEM; (iii) contract adjustments; partially offset by: (iv) negative exchange variation of 2.2% for period/03 to period/04, affecting foreign-currency indexed and/or denominated contracts, comprising 21.9% of the total portfolio; and (v) contract settlements.
N.B. Includes advances on foreign exchange contracts and other receivables and does not include the allowance for loan losses, as described in Note 12 to the financial statements.
 
This growth was mainly due to: (i) increase in the balance of the credit portfolio, especially the 4.8% increase for the quarter in the individual customer segment, in particular “vehicle” products up by 9.5% and “Personal Credit”, up by 9.3%, while the corporate customer segment was up by 1.8% partially affected by its participation in foreign-currency indexed and/or denominated operations; (ii) contract adjustments; and mitigated in part by: (iii) negative exchange variation of 8.0% in 3Q04, affecting foreign-currency indexed and/or denominated contracts, comprising 21.9% of the total portfolio; and (iv) contract settlements.
N.B. Includes advances on foreign exchange contracts and other receivables and does not include the allowance for loan losses, as described in Note 12 to the financial statements.
 

Allowance for Loan Losses (PDD)

September/2003 September/2004 % Variation   June/2004 September/2004 % Variation
 
(4,151) (4,181) 0.7   (4,213) (4,181) (0.8)
  
The balance of PDD remained practically stable for the period, evidencing the excellent quality of the Bank’s credit portfolio. We noted that the ratio of total PDD to the credit portfolio dropped from 7.9% in September/03 to 7.0% in September/04, and the ratio of allowance coverage to the abnormal course credit portfolio, rated from D to H, increased from 142.1% in September/03 to 165.1% in September/04. These ratios evidence the improvement in credit portfolio quality, as a result of our safe, selective and consistent credit granting strategy. During the period, R$ 2,004 was recorded, R$ 2,051 was written off and R$ 77 was added from acquisitions. Additional allowance over minimum requirements increased from R$ 822 in September/03 to R$ 913 in September/04.
 
The balance of PDD remained practically stable for the quarter, evidencing the excellent quality of the Bank’s credit portfolio. We noted that the ratio of total PDD to the credit portfolio dropped from 7.2% in June/04 to 7% in September/04, and the ratio of allowance coverage to the abnormal course credit portfolio, rated from D to H, increased from 159.0% in June/04 to 165.1% in September/04. These ratios evidence the improvement in credit portfolio quality, as a result of our safe, selective and consistent credit granting strategy. During the quarter, R$ 478 was recorded and R$ 510 was written off. Additional allowance over minimum requirements increased from R$ 905 in June/04 to R$ 913 in September/04.
 

Other Receivables and Assets

September/2003 September/2004 % Variation   June/2004 September/2004 % Variation
 
24,886 23,493 (5.6)   29,407 23,493 (20.1)
  
This variation is mainly due to: (i) the decrease in fx portfolio volume – R$ 2,965; partially mitigated by: (ii) the increase in credit card transactions during the period.
N.B. This total is less (net of corresponding PDD) an amount of R$ 595 in September/03 and R$ 318 in September/04, allocated to the “Credit Operations and Leasing Operations” and “Allowance for loan losses” accounts.
 
This variation mostly reflects: (i) the decrease in fx portfolio volume – R$ 6,166. N.B. This total is less (net of corresponding PDD) an amount of R$ 442 in June/04 and R$ 318 in September/04, allocated to the “Credit Operations and Leasing Operations” and “Allowance for loan losses” accounts.
 

Permanent Assets

September/2003 September/2004 % Variation   June/2004 September/2004 % Variation
 
 
5,069 5,030 (0.8)   5,271 5,030 (4.6)
  
The variation mainly reflects: (i) transfer of the investment in Banco Espírito Santo (BES) from current to permanent assets – R$ 356; (ii) goodwill on the acquisition of Banco Zogbi and Banco BEM; partially offset by: (iii) sale of permanent assets in Latasa - R$ 306, following its sale in December/03; and (iv) amortization of goodwill in subsidiaries – R$ 675, of which R$ 355 was amortized on an extraordinary basis during the period.
 
The variation for the quarter was substantially due to amortization of goodwill in subsidiaries - R$ 188, of which R$ 102 was amortized on an extraordinary basis.
 

Demand Deposits

September/2003 September/2004 % Variation   June/2004 September/2004 % Variation
 
11,240 14,782 31.5   13,541 14,782 9.2
  
The increase for the period is principally due to the growing number of individual customers, as well as the increase in funds deposited by corporate entities.
 
The increase for the quarter is principally due to the increase in funds deposited by corporate entities.
 

Savings Deposits

September/2003 September/2004 % Variation   June/2004 September/2004 % Variation
 
20,897 23,186 11.0   22,457 23,186 3.2
  
This growth reflects substantially: (i) 8.3% remuneration (TR + 0.5% p.m.) for the period on deposits; (ii) increase in the number of customers; offset by: (iii) withdrawals during the period.
 
This growth reflects substantially: (i) 2.1% remuneration (TR + 0.5% p.m.) for the quarter on deposits; (ii) increase in average volume; offset by: (iii) withdrawals during the quarter.
 

Time Deposits

September/2003 September/2004 % Variation   June/2004 September/2004 % Variation
 
25,798 26,805 3.9   28,088 26,805 (4.6)
  
This increment is due to: (i) remuneration recognized for the period; (ii) increased volume of deposits by institutional investors; and (iii) net of redemptions during the period.
 
This decrease is due to: (i) the volume of funds redeemed by institutional investors; partially offset by (iii) remuneration recognized for the quarter.
 

Interbank Deposits

September/2003 September/2004 % Variation   June/2004 September/2004 % Variation
 
411 14 (96.6)   47 14 (70.2)
  
The variation for the period is due to decreased funding between national financial system institutions.
 
The oscillation for the quarter is due to decreased funding between national financial system institutions.
 

Deposits Received under Security Repurchase Agreements

September/2003 September/2004 % Variation   June/2004 September/2004 % Variation
 
23,069 21,551 (6.6)   16,746 21,551 28.7
  
The variation in this account balance for the period was due mostly to: (i) decrease in the third-party portfolio – R$ 5,161; partially offset by: (ii) increase in own portfolio – R$ 3,540.
N.B. Includes investment fund and managed portfolio resources invested in purchase and sale commitments with Banco Bradesco, the investors in which are subsidiary companies included in the consolidated financial statements in the amounts of R$ 10,512 (September/03) and R$ 8,518 (September/04).
 
The variation in this account balance for the quarter was mostly due to increases in the own and third-party portfolios of R$ 2,720 and R$ 2,085, respectively.
N.B Includes investment fund and managed portfolio resources invested in purchase and sale commitments with Banco Bradesco, the investors in which are subsidiary companies included in the consolidated financial statements in the amounts of R$ 8,537 (June/04) and R$ 8,518 (September/04).
 

Funds from Acceptance and Issuance of Securities

September/2003 September/2004 % Variation   June/2004 September/2004 % Variation
 
7,895 6,116 (22.5)   7,080 6,116 (13.6)
  
The decrease is due to the redemption of securities issued broad (Eurobonds) matured and not renewed during the period, as well as negative exchange variation of 2.2% for the period.
 
The decrease is due to the redemption of securities issued abroad (Eurobonds) matured and not renewed during the quarter, as well as negative exchange variation of 8% for the quarter.
 

Interbank and Interdepartmental Accounts

September/2003 September/2004 % Variation   June/2004 September/2004 % Variation
 
1,474 1,739 18.0   1,090 1,739 59.5
  
The variation reflects mainly the increased volume of foreign currency money orders in September/04 as compared to September/03.
 
The variation reflects mainly the increased volume of foreign currency money orders in September/04 as compared to June/04.
 

Borrowings and Onlendings

September/2003 September/2004 % Variation   June/2004 September/2004 % Variation
 
15,186 16,715 10.1   16,817 16,715 (0.6)
  
The variation is due mainly to: (i) the increase in the volume of funds obtained in Brazil via onlendings from BNDES/FINAME; and (ii) new funding transactions abroad, partially offset by: (iii) negative exchange variation of 2.2% for period/03 to period/04, affecting the foreign borrowings and onlendings account, whose transactions are indexed and/or denominated in foreign currency.
 
The decrease for the quarter is mainly due to: (i) negative exchange variation of 8.0% in 3Q04, affecting the foreign borrowings and onlendings account, whose transactions are indexed and/or denominated in foreign currency; and partially offset by: (ii) interest appropriated for the quarter.
 

Other Liabilities and Derivative Financial Instruments

September/2003 September/2004 % Variation   June/2004 September/2004 % Variation
 
26,992 28,032 3.9   33,415 28,032 (16.1)
  
The increase was due mostly to: (i) new issuance of subordinated debt in foreign currency; offset by (ii) decrease in the volume of the fx portfolio; and (iii) negative exchange variation of 2.2% for the period.
N.B. Excludes advances on foreign exchange contracts of R$ 6,168 and R$ 5,618, allocated to the specific account in credit operations in September/03 and September/04, respectively.
 
The variation for the quarter reflects substantially: (i) the decrease in the volume of the fx portfolio - R$ 4,776; and (ii) negative exchange variation of 8.0% for 3Q04.
N.B. Excludes advances on foreign exchange contracts of R$ 6,259 and R$ 5,618, allocated to the specific account in credit operations in June/04 and September/04, respectively.
 

Technical Reserves for Insurance, Private Pension Plans and Savings Bonds

September/2003 September/2004 % Variation   June/2004 September/2004 % Variation
 
24,461 31,585 29.1   29,478 31,585 7.1
  
The increase for the period reflects mainly the increased sales of private supplementary pension plans and insurance policies, in particular, PGBL and VGBL products, for which reserves were accordingly recorded.
 
The growth for the quarter is substantially due to the increased sales of private supplementary pension plans and insurance policies, in particular, PGBL and VGBL products, for which reserves were accordingly recorded.
 

Minority Interest in Subsidiaries

September/2003 September/2004 % Variation   June/2004 September/2004 % Variation
 
111 74 (33.3)   66 74 12.1
  
The decrease for the period was due to the sale of our stake in Sete Quedas Empreendimentos Imobiliários e Participações Ltda.
 
This variation reflects minority interest in the increased results determined for 3Q04.
 

Stockholders’ Equity

September/2003 September/2004 % Variation   June/2004 September/2004 % Variation
 
 
12,967 14,678 13.2   13,650 14,678 7.5
  
This variation is due to: (i) appropriation of net income for the period - R$ 2,718; (ii) increase in the mark-to-market adjustment reserve of securities and derivatives - R$ 378; (iii) others - R$ 3; offset by: (iv interest attributed to own capital, paid and accrued - R$ 1,332; and (v) acquisition of own shares - R$ 56.
 
This variation is due to: (i) appropriation of net income for 3Q04 - R$ 752; (ii) increase in the mark-to-market adjustment reserve of securities and derivatives - R$ 612; offset by: (iii) interest attributed to own capital, paid and accrued - R$ 333 and (iv acquisition of own shares - R$ 3.
 






2 – Main Statement of Income Information








• Consolidated Statement of Income – In thousands of reais

 
  9 months                
  2004  2003  2002  2001  2000  1999 
 
 
Income from lending and trading activities 20,001,283  27,529,706  31,913,379  21,411,673  15,519,008  18,286,815 
 
Credit operations 9,629,398  12,294,528  15,726,929  11,611,236  7,787,745  9,602,701 
Leasing operations 215,294  307,775  408,563  420,365  512,962  730,929 
Securities transactions 4,162,688  7,328,805  9,527,663  7,367,600  6,122,486  5,875,823 
Financial income on insurance, private pension plans and savings bonds 3,763,277  5,359,939  3,271,913  -  -  - 
Derivative financial instruments 708,965  55,192  (2,073,247) (270,572) -  - 
Foreign exchange transactions 662,657  797,702  4,456,594  2,045,092  872,234  1,776,925 
Compulsory deposits 859,004  1,385,765  594,964  237,952  223,581  300,437 
 
Expenses 11,839,195  17,201,888  23,259,783  13,312,726  9,132,137  12,821,198 
Interest and charges on:
Deposits 6,776,173  10,535,497  10,993,327  6,986,027  5,521,407  4,954,854 
Price-level restatement and interest on technical reserves for insurance, private pension plans and savings bonds 2,293,659  3,120,342  2,241,283  -  -  - 
Borrowings and onlendings 1,203,254  1,083,379  7,194,161  4,316,682  2,158,725  5,819,063 
Leasing operations 13,192  12,981  12,486  -  93  18,852 
Provision for loan losses 1,552,917  2,449,689  2,818,526  2,010,017  1,451,912  2,028,429 
 
Income from financial intermediation 8,162,088  10,327,818  8,653,596  8,098,947  6,386,871  5,465,617 
 
Other operating income (expenses) (5,579,130) (6,774,710) (6,343,850) (5,324,166) (4,647,041) (4,404,370)
 
Commissions and fees 4,148,774  4,556,861  3,711,736  3,472,560  3,042,699  2,099,937 
Income on insurance premiums, private pension plans and savings bonds 9,447,520  11,726,088  10,134,873  8,959,259  6,919,942  5,975,488 
Variation in technical reserves for insurance, private pension plans and savings bonds (2,647,145) (3,670,163) (2,784,647) (3,492,217) (3,001,118) (2,341,648)
Claims - insurance operations (3,841,992) (3,980,419) (3,614,963) (3,251,706) (2,511,146) (2,532,768)
Savings bond draws and redemptions (931,517) (1,099,554) (720,932) (744,402) (355,243) (311,403)
Insurance and pension plan selling expenses (633,248) (762,010) (667,527) (689,352) (645,020) (635,351)
Expenses with pension plan benefits and redemptions (1,619,539) (2,362,771) (1,688,639) (1,369,424) (912,784) (557,608)
Personnel expenses (3,684,584) (4,779,491) (4,075,613) (3,548,805) (3,220,607) (2,783,627)
Other administrative expenses (3,648,632) (4,814,230) (4,028,377) (3,435,759) (2,977,665) (2,566,657)
Tax expenses (1,052,952) (1,054,397) (847,739) (790,179) (670,138) (651,801)
Equity in the earnings of associated companies 118,560  5,227  64,619  70,764  156,300  127,100 
Other operating income 887,869  2,163,639  1,320,986  1,326,459  902,807  1,069,562 
Other operating expenses (2,122,244) (2,703,490) (3,147,627) (1,831,364) (1,375,068) (1,295,594)
 
Operating income 2,582,958  3,553,108  2,309,746  2,774,781  1,739,830  1,061,247 
 
Non-operating income (expenses), net (342,963) (841,076) 186,342  (83,720) (123,720) (224,874)
 
Income before taxes and profit sharing 2,239,995  2,712,032  2,496,088  2,691,061  1,616,110  836,373 
 
Provision for income tax and social contribution (232,229) (396,648) (460,263) (502,257) (258,776) 307,186 
 
Non-recurring/extraordinary income -  -  -  -  400,813  - 
 
Minority interest in subsidiaries (5,368) (9,045) (13,237) (18,674) (17,982) (38,753)
 
Net income 2,002,398  2,306,339  2,022,588  2,170,130  1,740,165  1,104,806 
Return on stockholders' equity 18.59% 17.02% 18.65% 22.22% 21.50% 16.32%


2004 2003 2002
  3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr.
INCOME FROM LENDING AND TRADING ACTIVITIES 5,525,100  7,719,563  6,756,620  7,443,322  7,911,617  5,096,140  7,078,627  3,083,730 
 
Credit operations 2,870,585  3,659,023  3,099,790  3,169,261  3,504,644  2,685,193  2,935,430  1,519,950 
Leasing operations 73,467  56,715  85,112  78,660  85,952  65,777  77,386  74,886 
Securities transactions 361,241  2,120,909  1,680,538  2,230,775  2,312,036  995,040  1,790,954  (712,805)
Financial income on insurance, private pension plans and savings bonds 1,337,097  1,181,151  1,245,029  1,411,927  1,334,756  1,172,214  1,441,042  1,398,046 
Derivative financial instruments 582,105  (68,697) 195,557  8,877  33,158  (360,489) 373,646  307,885 
Foreign exchange transactions (746) 502,246  161,157  254,543  275,508  168,153  99,498  169,630 
Compulsory deposits 301,351  268,216  289,437  289,279  365,563  370,252  360,671  326,138 
 
EXPENSES 2,699,294  5,152,601  3,987,300  4,251,574  5,357,189  3,068,353  4,524,772  721,442 
Interest and charges on:
Deposits 1,291,812  3,029,988  2,454,373  2,605,171  3,434,326  1,826,314  2,669,686  (5,216)
Price-level restatement and interest on technical reserves for insurance, private pension plans and savings bonds 942,651  698,695  652,313  701,184  761,148  755,950  902,060  978,809 
Borrowings and onlendings (18,123) 905,617  315,760  490,305  555,389  (103,670) 141,355  (834,266)
Leasing operations 4,585  4,747  3,860  3,398  3,187  3,194  3,202  3,204 
Provision for loan losses 478,369  513,554  560,994  451,516  603,139  586,565  808,469  578,911 
 
INCOME FROM FINANCIAL INTERMEDIATION 2,825,806  2,566,962  2,769,320  3,191,748  2,554,428  2,027,787  2,553,855  2,362,288 
 
OTHER OPERATING INCOME (EXPENSES) (1,663,296) (1,945,378) (1,970,456) (2,305,000) (1,887,139) (1,168,690) (1,413,881)  (1,703,272) 
 
Commissions and fees 1,454,636  1,375,202  1,318,936  1,274,590  1,182,359  1,082,637  1,017,275  991,101 
Income on insurance premiums, private pension plans and savings bonds 3,464,550  2,989,637  2,993,333  3,434,634  2,873,832  2,728,022  2,689,600  3,243,557 
Variation in technical reserves for insurance, private pension plans and savings bonds (1,076,201) (693,433) (877,511) (1,143,458) (863,897) (708,447) (954,361) (1,484,011)
Claims - insurance operations (1,328,082) (1,281,728) (1,232,182) (920,068) (1,066,766) (1,055,767) (937,818) (937,460)
Savings bond draws and redemptions (312,043) (346,151) (273,323) (301,838) (283,009) (282,275) (232,432) (169,295)
Insurance and pension plan selling expenses (215,775) (205,157) (212,316) (208,229) (190,761) (182,499) (180,521) (179,671)
Expenses with pension plan benefits and redemptions (496,399) (590,492) (532,648) (955,812) (555,691) (461,256) (390,012) (508,501)
Personnel expenses (1,273,981) (1,233,345) (1,177,258) (1,272,063) (1,306,415) (1,147,838) (1,053,175) (1,047,093)
Other administrative expenses (1,225,032) (1,215,747) (1,207,853) (1,328,021) (1,232,599) (1,152,697) (1,100,913) (1,111,005)
Tax expenses (373,965) (343,100) (335,887) (293,466) (254,650) (238,429) (267,852) (257,997)
Equity in the earnings of associated companies (3,708) 122,309  (41) 30,723  7,218  (27,989) (4,725) 32,855 
Other operating income 350,660  279,688  257,521  209,159  422,630  855,810  676,040  (70,632)
Other operating expenses (627,956) (803,061) (691,227) (831,151) (619,390) (577,962) (674,987) (205,120)
 
OPERATING INCOME 1,162,510  621,584  798,864  886,748  667,289  859,097  1,139,974  659,016 
 
NON-OPERATING INCOME (EXPENSES), NET (129,249) (202,568) (11,146) (73,495) 9,854  (95,872) (681,563) 54,804 
 
INCOME BEFORE TAXES AND PROFIT SHARING 1,033,261  419,016  787,718  813,253  677,143  763,225  458,411  713,820 
 
PROVISION FOR INCOME TAX AND SOCIAL CONTRIBUTION (278,499) 224,907  (178,637) (95,620) (111,614) (242,190) 52,776  5,271 
 
MINORITY INTEREST IN SUBSIDIARIES (2,413) (2,587) (368) (2,496) (1,638) (1,325) (3,586) (21,058)
 
NET INCOME 752,349  641,336  608,713  715,137  563,891  519,710  507,601  698,033 

• Results by Business Segment - In millions of reais

Amounts Accumulated from January to September
Financial Insurance Group Other Activities Amount Eliminated Consolidated Bradesco
Local Foreign Local Foreign
Income from financial intermediation 6,298  373  1,476  1  11  3  8,162 
Other operating income (expenses) (5,160) (98) (901) (1) 3  (3) (6,160)
Commissions and fees 3,675  14  224  -  528  (292) 4,149 
Personnel expenses (3,123) (17) (371) (1) (172) -  (3,684)
Other administrative expenses (3,406) (59) (400) (1) (133) 350  (3,649)
Other revenue (expenses) (2,306) (36) (354) 1  (220) (61) (2,976)
Net income accumulated to September 2004 1,138  275  575  -  14  -  2,002 
Net income accumulated to September 2003 918  164  451  2  56  -  1,591 

Composition of Income - %

• Increase in the Main Statement of Income Items

Accumulated over the first nine months of 2004 as compared to the same period in 2003 – In millions of reais

(*) Composition: Premiums and contributions, net of variations in technical reserves for insurance, private pension plans and savings bonds, less claims, redemptions, benefits and commissions, not including financial income on insurance activities and price-level restatement and interest on technical reserves which are included in financial margin.
(**) Mainly reversal of provision for exchange variation of R$ 504 and other operating provisions of R$ 334.

3Q04 in relation to 2Q04 - In millions of reais


(*)

Composition: Premiums and contributions, net of variations in technical reserves for insurance, private pension plans and savings bonds, less claims, redemptions, benefits and commissions, not including financial income on insurance activities and price-level restatement and interest on technical reserves which are included in financial margin.

• Increase in Financial Margin Items plus Exchange Adjustment

Accumulated over the first nine months of 2004 as compared to the same period in 2003 – In millions of reais

3Q04 in relation to 2Q04 - In millions of reais


(1)

Includes income on credit operations + income on leasing operations + income on foreign exchange transactions (Note 13a).
(2)

Includes interest and charges on deposits, excluding expenses for purchase and sale commitments + expenses for borrowings and onlendings + income on compulsory deposits + adjustments to income on foreign exchange transactions (Note 13a).
(3)

Includes income on securities transactions, less expenses with purchase and sale commitments + financial income on insurance, private pension plans and savings bonds + income on derivative financial instruments + adjustments to income on foreign exchange transactions (Note 13a).
(4)

Includes price-level restatement and interest on technical reserves for insurance, private pension plans and savings bonds.

• Analysis of the Adjusted Financial Margin and Average Rates

Credit Operations x Income


In millions of reais Accumulated to September 2003 Accumulated to September 2004 2nd Qtr.
2004 		3rd Qtr.
2004
Credit operations 43,575  48,814  48,460  51,270 
Leasing operations 1,496  1,400  1,364  1,402 
Advances on foreign exchange contracts 5,799  6,031  6,162  5,938 
1 - Total – Average balance (quarterly) 50,869  56,245  55,986  58,610 
2 - Income (*) 9,430  9,891  3,704  2,983 
3 - Average return annualized exponentially (2/1) 25.5% 24.1% 29.2% 22.0%
(*)

Includes income from credit operations, net results from leasing operations and adjusted results on foreign exchange transactions (Note 13a).

Securities x Income on Securities Transactions


In millions of reais Accumulated to September 2003 Accumulated to September 2004 2nd Qtr.
2004 		3rd Qtr.
2004
Securities 40,534  55,329  54,679  57,184 
Interbank investments 23,609  24,153  19,881  22,827 
Subject to repurchase agreements (17,998) (21,543) (15,915) (19,149)
Derivative financial instruments (389) (371) (562) (546)
4 – Total - Average balance (quarterly) 45,755  57,568  58,083  60,316 
5 – Income on securities transactions (net of expenses for repurchase agreements) (*) 6,133  6,266  2,582  1,509 
6 – Average rate annualized exponentially (5/4) 18.3% 14.8% 19.0% 10.4%
(*)

Includes financial income on insurance, private pension plans, savings bonds, derivative financial instruments and foreign exchange adjustments (Note 13a).

Total Assets x Income from Financial Intermediation


In millions of reais Accumulated to September 2003 Accumulated to September 2004 2nd Qtr.
2004 		3rd Qtr.
2004
7 - Total assets - Average balance (quarterly) 151,659  173,255  168,610  177,979 
8 - Income from financial intermediation 20,086  20,001  7,720  5, 525 
9 - Average rate annualized exponentially (8/7) 18.0% 15.7% 19.6% 13.0%

Funding x Expenses


In millions of reais Accumulated to September 2003 Accumulated to September 2004 2nd Qtr.
2004 		3rd Qtr.
2004
Deposits 56,601  61,532  61,660  64,460 
Funds from acceptance and issuance of securities 5,435  6,651  6,821  6,598 
Interbank and interdepartmental accounts 1,744  1,580  1,135  1,415 
Subordinated debt 3,383  5,602  5,661  6,135 
10 - Total funding - average balance (quarterly) 67,163  75,366  75,277  78,608 
11 - Expenses (*) 3,881  3,584  2,138  218 
12 - Average rate annualized exponentially (11/10) 7.8% 6.4% 11.9% 1.1%
(*)

Funding expenses without repurchase agreements less income on compulsory deposits and foreign exchange adjustments (Note 13a).

Technical Reserves for Insurance, Private Pension Plans and Savings Bonds x Expenses


In millions of reais Accumulated to September 2003 Accumulated to September 2004 2nd Qtr.
2004 		3rd Qtr.
2004
13 – Technical reserves for insurance, private pension plans and savings bonds - Average balance (quarterly) 21,850  28,855  28,713  30,532 
14 – Expenses (*) 2,419  2,294  699  943 
15 – Average rate annualized exponentially (14/13) 15.0% 10.7% 10.1% 12.9%
(*)

Price-level restatement and interest on technical reserves for insurance, private pension plans and savings bonds.

Borrowings and Onlendings (Local and Foreign) x Expenses


In millions of reais Accumulated to September 2003 Accumulated to September 2004 2nd Qtr.
2004 		3rd Qtr.
2004
Borrowings 8,663  8,152  8,345  8,795 
Onlendings 6,943  7,883  7,971  7,971 
16 - Total borrowings and onlendings - Average balance (quarterly) 15,607  16,036  16,316  16,766 
17 - Expenses for borrowings and onlendings (*) 128  564  369  26 
18 - Average rate annualized exponentially (17/16) 1.1% 4.7% 9.4% 0.6%
(*)

Includes foreign exchange adjustments (Note 13a).

Total Assets x Financial Margin


In millions of reais Accumulated to September 2003 Accumulated to September 2004 2nd Qtr.
2004 		3rd Qtr.
2004
19 - Total assets - Average balance (quarterly) 151,659  173,255  168,610  177,979 
20 - Financial margin (*) 9,135  9,715  3,081  3,304 
21 - Average rate annualized exponentially (20/19) 8.1% 7.5% 7.5% 7.6%
(*)

Income from financial intermediation excluding provision for loan losses (PDD).

Financial Market Indicators

Analysis of Financial Margin

Banco Bradesco’s consolidated financial margin totaled R$ 9,715 million for the nine-month period accumulated to September 2004, up by 6.3% as compared to the same period in 2003 (R$ 9,135 million).

The increase of R$ 1,024 million in interest income comprised growth of R$ 514 million in average business volume and R$ 510 million as effects of appreciation of the real in period/03 (17.3%) compared to period/04 (1.1%). This variation was offset by financial expenses recorded formerly in the “Variation in technical reserves for insurance, private pension plans and savings bonds” account of R$ 171 million. However, results of non-interest income decreased margin by R$ 273 million, following a decrease in gains on securities and treasury transactions, totaling a positive variation of R$ 580 million between amounts accumulated to September 2004 and for the same period in 2003.

In 3Q04, financial margin totaled R$ 3,304 million, compared to R$ 3,081 million in 2Q04, i.e. up by 7.2% or R$ 223 million. Compared to the prior quarter, interest income was up by R$ 14 million, as a result of growth in the volume of operations in the amount of some R$ 111 million and a drop in spread of R$ 97 million. Interest income was affected by financial expenses of R$ 171, recorded formerly in the “Variation in technical reserves for insurance, private pension plans and savings bonds” account. On the other hand, non-interest income had a positive effect on margin of R$ 380 million, as a result of the strongly positioned securities portfolio and the sound recovery of credits in 3Q04.

The average financial margin rate annualized (obtained by dividing the result of financial margin by the average balance of total assets) was up by 0.1 percentage point from 7.5% in 2Q04 to 7.6% in 3Q04. However, there is a decrease of 0.6 percentage points if we compare the accumulated rate to September 2004 (7.5%) with the same period in 2003 (8.1%). This downturn was influenced in particular by the sharp fall in the interest rate (CDI) used to remunerate own working capital, funding and float, considering that up to September 2003, CDI annualized was 24.9%, compared to 15.9% for the same period in 2004.

We highlight the following items responsible for generating financial margin:

-

Credit operations, particularly, in the individual customer segment, up by 4.8% for 3Q04, with increases in the Vehicle and Personal Loan products of 9.5% and 9.3%, respectively.

Comparing the balance at September 2004 with the same month in 2003, the individual customer segment was up by 26.8%, with increases of 43.6% in Auto Financings and 45.7% in Personal Credits. We stress that this increment was partially affected by the acquisitions of Banco Zogbi and Banco BEM in 2004.

The improving economic scenario and the increase in consumer confidence, as well as the supply of products designed to meet different customer profiles, were decisive factors in this segment’s good performance.

We also stress that Bradesco is improving the quality of its credit granting process to guarantee minimum risk of loss.

-

Insurance area transactions also contributed to financial margin, as a result of the good performance recorded by insurance, private pension plan and savings bond activities, mainly as a result of the increase in sales of supplementary pension plans (PGBL and VGBL) and insurance policies with the corresponding amounts recorded as reserves, since between the second and third quarters, the average volume of technical reserves grew by 7.1%, from R$ 29,478 million in June 2004 to R$ 31,585 million in September 2004 and by 29.1% compared with the same period in 2003.

-

Emphasis should also be given to the performance of demand and savings account deposits, between June 2004 and September 2Q04, up by 9.2% and 3.2% respectively. Comparing the growth of the closing balances at September 2003 and 2004, demand deposits were up by some 31.5% and savings deposits by 11%.

• Provision for Loan Losses (PDD)

Movement of Allowance for Loan Losses - In millions of reais

  2003 2004
  2nd Qtr. 3rd Qtr. Accumulated to September 2nd Qtr. 3rd Qtr. Accumulated to September
Opening balance 3,902  4,109  3,665  4,192  4,213  4,059 
 
Amount recorded for the period 587  603  1,998  514  478  1,553 
Amount written off for the period (551) (561) (1,683) (493) (510) (1,508)
Balance derived from acquired institutions 171  -  171  -  -  77 
 
Closing balance 4,109  4,151  4,151  4,213  4,181  4,181 
 
Specific provision 2,006  1,939  1,939  1,876  1,885  1,885 
Generic provision 1,286  1,390  1,390  1,432  1,383  1,383 
Additional provision 817  822  822  905  913  913 
 
Credit recoveries 117  138  351  124  228  458 

Allowance for Loan Losses (PDD) on Credit and Leasing Operations - In millions of reais

  2003 2004
  June September June September
Allowance for loan losses - PDD (A) 4,109  4,151  4,213  4,181 
Credit operations (B) 53,048  52,776  58,402  59,976 
PDD on credit operations (A/B) 7.7%  7.9%  7.2%  7.0% 

Ratio of PDD Coverage to Abnormal Course Credits (D to H)

  In millions of reais
  2003 2004
  June September June September
Total provisions (1) 4,109  4,151  4,213  4,181 
Abnormal course credits (D to H) (2) 2,871  2,922  2,649  2,533 
PDD coverage ratio (1/2) 143.1%  142.1%  159.0%  165.1% 

• Commissions and Fees

  In millions of reais
  2003 2004
  2nd Qtr. 3rd Qtr. Accumulated to September 2nd Qtr. 3rd Qtr. Accumulated to September
Checking account 264  287  796  316  324  954 
Cards 193  203  598  241  241  723 
Fund management 131  163  401  212  233  649 
Collection 146  155  440  151  160  461 
Credit operations 143  149  420  195  222  582 
Interbank charges 61  65  189  63  67  192 
Collection of taxes 45  48  138  49  50  150 
Custody and brokerage services 19  21  55  26  24  73 
Consortium purchase plan management 4  8  12  20  23  58 
Other 77  83  233  102  111  307 
Total 1,083  1,182  3,282  1,375  1,455  4,149 

• Administrative and Personnel Expenses

  In millions of reais
  2003 2004
  2nd Qtr. 3rd Qtr. Accumulated to September 2nd Qtr. 3rd Qtr. Accumulated to September
Third-party services 193  214  583  218  216  630 
Communications 151  163  463  155  159  476 
Depreciation and amortization 138  137  403  118  118  359 
Financial system services 85  92  260  102  101  300 
Publicity and advertising 81  83  233  86  88  285 
Transport 87  91  258  88  100  282 
Leasing 62  79  209  83  76  236 
Rents 67  72  206  75  73  223 
Data processing 65  73  199  71  70  199 
Maintenance and repairs 61  60  174  68  69  197 
Materials 43  47  129  35  36  109 
Water, electricity and gas 28  27  83  31  30  95 
Travel 15  17  46  13  14  41 
Other 77  78  240  73  75  217 
Administrative expenses 1,153  1,233  3,486  1,216  1,225  3,649 
Remuneration 577  632  1,734  613  636  1,863 
Single payment bonus (*) -  98  98  -  14  14 
Benefits 240  265  706  243  257  736 
Social charges 206  196  587  229  228  683 
Employee profit sharing 38  48  128  39  43  127 
Training 20  16  46  11  15  37 
Labor/other 67  51  208  99  80  224 
Personnel expenses 1,148  1,306  3,507  1,234  1,273  3,684 
Total administrative and personnel expenses 2,301  2,539  6,993  2,450  2,498  7,333 
(*)

In 2004, the single payment bonus refers to the proposed additional food basket.

• Operating Efficiency

  In millions of reais
  Year September/2004(*)
  1999 2000 2001 2002 2003
Personnel expenses 2,784  3,221  3,549  4,076  4,780  4,957 
Employee profit sharing (104) (112) (160) (140) (171) (170)
Other administrative expenses 2,567  2,978  3,436  4,028  4,814  4,976 
Total (1) 5,247  6,087  6,825  7,964  9,423  9,763 
Financial margin = Gross income from financial intermediation less PDD 7,494  7,839  10,109  11,472  12,778  13,358 
Commissions and fees 2,100  3,043  3,473  3,712  4,557  5,424 
Income from insurance premiums, private pension plans and savings bonds 5,975  6,920  8,959  10,135  11,726  12,881 
Variation in technical reserves for insurance, pension plans and savings bonds (2,342) (3,001) (3,492) (2,785) (3,670) (3,790)
Claims - insurance operations and savings bond draws and redemptions (2,844) (2,866) (3,996) (4,336) (5,080) (5,995)
Insurance and pension plan selling expenses (635) (645) (689) (667) (762) (841)
Expenses with pension plan benefits and redemptions (558) (913) (1,370) (1,689) (2,363) (2,577)
Subtotal (404) (505) (588) 658  (149) (322)
Equity in the earnings of associated companies 127  156  71  65  5  150 
Other operating expenses (1,296) (1,376) (1,831) (3,148) (2,704) (2,953)
Other operating income 1,070  903  1,326  1,321  2,164  1,097 
Total (2) 9,091  10,060  12,560  14,080  16,651  16,754 
Efficiency ratio (%) = (1/2) 57.7  60.5  54.3  56.6  56.6  58.3 

(*)

Amounts accumulated over prior 12-month period.

Operating Efficiency Ratio (%)

In 2Q04, results were impacted negatively as a result of additional provisions, mainly relating to IBNR and labor and civil contingencies. Disregarding these extraordinary events, the Operating Efficiency Ratio (accumulated for the 12-month period) would be 58.7% rather than 60.1%.

The Operating Efficiency Ratio (accumulated for the 12-month period) in 3Q04 was 58.3%, down by 0.4% as compared to the prior quarter adjusted by extraordinary events, prompted mainly by the combination of the strong commitment of the entire Bradesco management to the strict control of expenses and the increase in revenue for the quarter, especially in financial margin and commissions and fees.

The strict control of expenses, enhanced as a result of the creation of the Expenditure Appraisal Committee in March 2004, as well as the synergy process of acquired institutions, have had a positive effect on the Operating Efficiency Ratio.

Another initiative adopted for rationalizing expenditure was the implementation of the PROGRAMA BIS - DE OLHO NA ECONOMIA, exclusively focused on economic ideas and suggestions.

• Other Indicators

Other Indicators






3 – Main Balance Sheet Information








• Consolidated Balance Sheet - In thousands of reais

September December
ASSETS 2004 2003 2002 2001 2000 1999
Current assets and long-term receivables 174,673,737  171,141,348  137,301,711  105,767,892  90,693,025  75,136,910 
Funds available 2,386,029  2,448,426  2,785,707  3,085,787  1,341,653  827,329 
Interbank investments 25,125,701  31,724,003  21,472,756  3,867,319  2,308,273  2,590,599 
Open market investments 18,279,891  26,753,660  19,111,652  2,110,573  1,453,461  1,890,828 
Interbank deposits 6,848,497  4,970,343  2,370,345  1,760,850  854,815  699,771 
Provision for losses (2,687) -  (9,241) (4,104) (3) - 
Securities and derivative financial instruments 58,154,659  53,804,780  37,003,454  40,512,688  33,119,843  29,196,857 
Own portfolio 48,943,603  42,939,043  29,817,033  27,493,936  21,743,924  20,950,342 
Subject to repurchase agreements 2,624,914  5,682,852  1,497,383  9,922,036  10,822,637  5,987,713 
Subject to negotiation and intermediation of securities -  -  -  526,219  9,394  157 
Restricted deposits - Brazilian Central Bank 3,920,427  3,109,634  3,536,659  1,988,799  421,727  2,359,466 
Privatization currencies 73,773  88,058  77,371  25,104  9,526  7,241 
Subject to collateral provided 1,185,998  1,752,882  1,836,169  715,858  783,501  449,536 
Derivative financial instruments 584,317  232,311  238,839  581,169  -  - 
Allowance for mark-to-market -  -  -  (740,433) (670,866) (557,598)
Unrestricted notes 821,627 
Interbank accounts 15,236,591  14,012,837  12,943,432  5,141,940  5,060,628  6,454,553 
Unsettled payments and receipts 638,390  20,237  16,902  10,118  6,920  7,635 
Restricted deposits:
- Brazilian Central Bank 14,244,337  13,580,425  12,519,635  4,906,502  4,848,668  6,184,959 
- National Treasury - Rural funding 578  578  578  712  660  599 
- National Housing System - SFH 320,955  391,871  374,177  217,518  197,191  142,653 
Interbank onlendings -  -  -  -  2,024  116,733 
Correspondent banks 32,331  19,726  32,140  7,090  5,165  1,974 
Interdepartmental accounts 99,863  514,779  191,739  176,073  111,636  49,018 
Internal transfer of funds 99,863  514,779  191,739  176,073  111,636  49,018 
Credit operations 48,508,061  42,162,718  39,705,279  35,131,359  30,236,106  21,535,633 
Credit operations:
- Public sector 623,495  186,264  254,622  199,182  275,479  154,266 
- Private sector 51,757,706  45,768,970  42,842,693  37,689,671  32,244,482  22,848,128 
Allowance for loan losses (3,873,140) (3,792,516) (3,392,036) (2,757,494) (2,283,855) (1,466,761)
Leasing operations 1,351,242  1,306,433  1,431,166  1,567,927  1,914,081  1,712,343 
Leasing receivables:
- Public sector -  -  45  138  160  800 
- Private sector 2,892,388  2,859,533  3,141,724  3,248,050  3,813,369  3,515,396 
Unearned lease income (1,441,224) (1,438,534) (1,560,278) (1,557,642) (1,760,305) (1,490,803)
Allowance for leasing losses (99,922) (114,566) (150,325) (122,619) (139,143) (313,050)
Other receivables 22,665,995  24,098,765  20,690,054  15,685,433  16,226,725  12,420,787 
Receivables on guarantees honored 434  624  1,577  1,131  2,020  - 
Foreign exchange portfolio 8,960,299  11,102,537  10,026,298  5,545,527  6,417,431  3,375,563 
Income receivable 242,843  331,064  249,849  187,910  191,873  109,734 
Negotiation and intermediation of securities 85,323  602,543  175,185  761,754  497,655  839,758 
Specific credits -  -  -  146,919  124,776  206,952 
Insurance premiums receivable 961,615  889,358  718,909  995,662  818,773  994,718 
Sundry 12,623,797  11,324,857  9,640,966  8,107,714  8,258,402  7,021,988 
Allowance for other losses (208,316) (152,218) (122,730) (61,184) (84,205) (127,926)
Other assets 1,145,596  1,068,607  1,078,124  599,366  374,080  349,791 
Other assets 523,128  575,182  679,515  415,484  409,771  406,910 
Allowance for losses (255,587) (245,373) (243,953) (164,290) (171,876) (166,447)
Prepaid expenses 878,055  738,798  642,562  348,172  136,185  109,328 
Permanent assets 5,029,761  4,956,342  5,483,319  4,348,014  4,185,458  5,186,682 
Investments 970,926  862,323  512,720  884,773  830,930  2,453,425 
Investments in associated companies:
- Local 471,130  369,935  395,006  742,586  689,002  2,044,120 
Other investments 863,376  857,985  439,342  452,871  525,316  753,901 
Allowance for losses (363,580) (365,597) (321,628) (310,684) (383,388) (344,596)
Property and equipment in use 2,263,225  2,291,994  2,523,949  2,152,680  2,017,093  1,683,069 
Buildings in use 1,368,973  1,398,735  1,748,409  1,475,581  1,491,847  1,415,720 
Other fixed assets 3,512,586  3,480,636  3,459,950  2,988,008  2,705,577  2,285,918 
Accumulated depreciation (2,618,334) (2,587,377) (2,684,410) (2,310,909) (2,180,331) (2,018,569)
Leased assets 24,581  34,362  34,323  46,047  10,688  17,026 
Leased assets 66,216  63,812  51,198  51,214  19,421  18,451 
Accumulated depreciation (41,635) (29,450) (16,875) (5,167) (8,733) (1,425)
Deferred charges 1,771,029  1,767,663  2,412,327  1,264,514  1,326,747  1,033,162 
Organization and expansion costs 1,220,472  1,124,058  1,037,559  874,970  731,717  477,058 
Accumulated amortization (679,317) (572,620) (568,525) (481,127) (391,417) (190,510)
Goodwill on acquisition of subsidiaries, net of amortization 1,229,874  1,216,225  1,943,293  870,671  986,447  746,614 
 
T O T A L 179,703,498  176,097,690  142,785,030  110,115,906  94,878,483  80,323,592 

September December
LIABILITIES AND STOCKHOLDERS' EQUITY 2004 2003 2002 2001 2000 1999
Current and long-term liabilities 164,907,794  162,406,307  131,652,394  100,199,709  86,654,746  73,249,480 
Deposits 64,786,810  58,023,885  56,363,163  41,083,979  36,468,659  34,723,630 
Demand deposits 14,781,735  12,909,168  13,369,917  8,057,627  7,500,518  6,803,429 
Savings deposits 23,186,217  22,140,171  20,730,683  18,310,948  17,835,745  17,244,520 
Interbank deposits 14,267  31,400  23,848  40,446  568,416  468,950 
Time deposits 26,804,591  22,943,146  22,238,715  14,674,958  10,563,980  10,206,731 
Deposits received under security repurchase agreements 21,551,113  32,792,725  16,012,965  14,057,327  12,108,350  7,814,288 
Own portfolio 5,820,361  6,661,473  915,946  12,178,855  10,696,199  5,973,260 
Third-party portfolio 15,628,952  17,558,740  12,188,054  1,878,472  1,412,151  1,841,028 
Unrestricted portfolio 101,800  8,572,512  2,908,965  -  -  - 
Funds from issuance of securities 6,115,921  6,846,896  3,136,842  4,801,410  4,111,171  4,628,344 
Exchange acceptances -  -  1,214  -  -  - 
Mortgage notes 889,114  1,030,856  384,727  780,425  741,248  452,379 
Debentures -  7,291  100,369  48,921  1,039  1,043,125 
Securities issued abroad 5,226,807  5,808,749  2,650,532  3,972,064  3,368,884  3,132,840 
Interbank accounts 322,154  529,332  606,696  192,027  107,129  59,607 
Interbank onlendings -  -  -  -  -  - 
Correspondent banks 171,619  159,098  35,686  4,519  1,059  10,016 
Interdepartmental accounts 150,535  370,234  571,010  187,508  106,070  49,591 
Third-party funds in transit 1,417,570  1,782,068  1,337,729  762,505  904,188  879,592 
Borrowings 1,417,570  1,782,068  1,337,729  762,505  904,188  879,592 
Local borrowings - official institutions 8,694,942  7,223,356  9,390,630  7,887,154  6,463,555  4,864,414 
Local borrowings - other institutions 1,648  2,070  3,368  2,979  9,737  10,178 
Foreign borrowings 11,784  4,010  216,812  230,468  170,775  138,279 
Local onlendings - official institutions 8,681,510  7,217,276  9,170,450  7,653,707  6,283,043  4,715,957 
National Treasury 7,969,414  7,554,266  7,000,046  5,830,633  5,096,604  4,123,486 
National Bank for Economic and Social Development (BNDES) 57,950  51,398  62,187  -  -  - 
Federal Savings Bank (CEF) 3,568,367  3,403,462  3,437,319  3,067,220  2,589,284  1,650,243 
Government Agency for Machinery and Equipment Financing (FINAME) 399,298  459,553  453,803  433,381  405,264  388,109 
Other institutions 3,939,822  3,638,966  3,045,176  2,321,508  2,090,374  2,064,153 
Foreign onlendings 3,977  887  1,561  8,524  11,682  20,981 
Foreign onlendings 50,855  17,161  47,677  316,283  108,178  185,774 
Derivative financial instruments 50,855  17,161  47,677  316,283  108,178  185,774 
Technical reserves for insurance, private pension plans and savings bonds 308,046  52,369  576,697  111,600  -  - 
Other liabilities 31,584,982  26,408,952  19,155,479  13,853,426  10,338,065  7,563,919 
Collection of taxes and other contributions 22,105,987  21,175,297  18,024,470  11,303,365  10,948,847  8,406,426 
Foreign exchange portfolio 1,211,707  130,893  108,388  181,453  128,785  113,693 
Social and statutory payables 3,974,239  5,118,801  5,002,132  1,343,769  2,439,657  1,029,963 
Taxes and social security contributions 737,548  851,885  666,409  572,265  560,533  603,405 
Negotiation and intermediation of securities 4,470,918  4,781,458  4,376,031  3,371,127  3,094,628  2,665,681 
Subordinated debt 6,089,471  4,994,810  3,321,597  969,842  -  - 
Sundry 5,547,973  4,701,492  4,440,439  3,557,524  4,132,849  3,079,557 
Deferred income 44,032  31,774  15,843  9,020  34,632  17,543 
Deferred income 44,032  31,774  15,843  9,020  34,632  17,543 
Minority interest in subsidiary companies 73,965  112,729  271,064  139,231  96,903  287,350 
Stockholders' equity 14,677,707  13,546,880  10,845,729  9,767,946  8,092,202  6,769,219 
Capital:
- Local residents 6,343,955  6,343,955  4,960,425  4,940,004  5,072,071  4,206,644 
-Foreign residents 656,045  656,045  239,575  259,996  74,429  58,856 
Unpaid capital -  -  -  -  (400,500) (465,500)
Capital reserves 10,645  8,665  7,435  7,435  19,002  5,643 
Revenue reserves 7,084,529  6,066,640  5,715,317  4,614,110  3,403,020  2,963,576 
Mark-to-market adjustment - securities and derivatives 638,628  478,917  9,152  -  -  - 
Treasury stock (56,095) (7,342) (86,175) (53,599) (75,820) - 
 
Stockholders' equity managed by the parent company 14,751,672  13,659,609  11,116,793  9,907,177  8,189,105  7,056,569 
 
T O T A L 179,703,498  176,097,690  142,785,030  110,115,906  94,878,483  80,323,592 

• Balance Sheet by Currency and Exchange Exposure at September 30, 2004 - In millions of reais

Balance Sheet Currency
Local Foreign (1) (2)
ASSETS      
Current and long-term receivables 174,673  144,625  30,048 
Funds available 2,386  1,955  431 
Interbank investments 25,126  19,730  5,396 
Securities and derivative financial instruments 58,155  48,865  9,290 
Interbank and interdepartmental accounts 15,336  15,328  8 
Credit and leasing operations 49,859  42,418  7,441 
Other receivables and assets 23,811  16,329  7,482 
Permanent assets 5,030  4,597  433 
Investments 971  541  430 
Property and equipment in use and leased assets 2,288  2,285  3 
Deferred charges 1,771  1,771  - 
Total assets 179,703  149,222  30,481 
LIABILITIES
Current and long-term liabilities 164,907  138,401  26,506 
Deposits 64,787  61,663  3,124 
Deposits received under security repurchase agreements 21,551  19,300  2,251 
Funds from issuance of securities 6,116  889  5,227 
Interbank and interdepartmental accounts 1,740  464  1,276 
Borrowings and onlendings 16,715  7,474  9,241 
Derivative financial instruments 308  308  - 
Technical reserves for insurance, private pension plans and savings bonds 31,585  31,561  24 
Other liabilities
- Subordinated debt 6,089  2,963  3,126 
- Other 16,016  13,779  2,237 
Deferred income 44  44  - 
Minority interest in subsidiaries 74  74  - 
Stockholders' equity 14,678  14,678  - 
Total 179,703  153,197  26,506 
 
Net position of assets and liabilities       3,975 
Net position of derivatives (2)       (3,781)
Other memorandum accounts, net (3)       (404)
Net exchange position (liability)     (210)

(1)

Amounts expressed and/or indexed mainly in USD.
(2)

Excluding operations maturing in D +1, to be settled in currency at September 30, 2004 price levels.
(3)

Leasing commitments and others are controlled in memorandum accounts.

Total assets by currency

• Balance Sheet by Maturity at September 30, 2004 - In millions of reais

  Up to
30 days 		From 31 to 180 days From 181 to 360 days More than 360 days Indeterminate Total
ASSETS
Current assets and long-term receivables 104,470  18,798  14,430  36,975  -  174,673 
Funds available 2,386  -  -  -  -  2,386 
Interbank investments 23,570  502  387  667  -  25,126 
Securities and derivative financial instruments(1) 41,121  840  3,741  12,453  -  58,155 
Interbank and interdepartmental accounts 15,042  6  8  280  -  15,336 
Credit and leasing operations 8,959  16,420  8,745  15,735  -  49,859 
Other receivables and assets 13,392  1,030  1,549  7,840  -  23,811 
Permanent assets 57  284  342  2,766  1,581  5,030 
Investments -  -  -  -  971  971 
Property and equipment in use and leased assets 20  98  118  1,442  610  2,288 
Deferred charges 37  186  224  1,324  -  1,771 
Total 104,527  19,082  14,772  39,741  1,581  179,703 
LIABILITIES
Current and long-term liabilities 94,702  14,723  9,775  45,707  -  164,907 
Deposits(2) 41,195  4,517  4,959  14,116  -  64,787 
Deposits received under security repurchase agreements 19,290  635  247  1,379  -  21,551 
Funds from the acceptance and issuance of securities 249  2,725  217  2,925  -  6,116 
Interbank and interdepartmental accounts 1,740  -  -  -  -  1,740 
Borrowings and onlendings 1,766  5,215  3,639  6,095  -  16,715 
Derivative financial instruments 276  4  19  9  -  308 
Technical reserves for insurance, private pension plans and savings bonds (2) 19,504  980  291  10,810  -  31,585 
Other liabilities:
- Subordinated debt 114  24  -  5,951  -  6,089 
- Other 10,568  623  403  4,422  -  16,016 
Deferred income 44  -  -  -  -  44 
Minority interest in subsidiaries -  -  -  -  74  74 
Stockholders' equity -  -  -  -  14,678  14,678 
Total 94,746  14,723  9,775  45,707  14,752  179,703 
Accumulated net assets in 2004 9,781  14,140  19,137  13,171  -  - 
Accumulated net assets in 2003 14,690  19,810  22,053  11,970  -  - 

(1)

Investment fund applications are classified as up to 30 days.
(2)

Demand and savings account deposits and technical reserves for insurance and private pension plans, comprising VGBL and PGBL products, are classified as up to 30 days without considering average historical turnover.

Total Assets by Maturity

• Securities - In millions of reais

Consolidated Portfolio Composition by Issuer at September 30, 2004 (1)

Securities (1) Up to
30 days 		From 31 to 180 days From 181 to 360 days More than 360 days Market/Book value (4), (5) and (6) Restated cost value Mark-to-market adjustment
GOVERNMENT SECURITIES 1,396  4,618  7,083  25,907  39,004  38,879  125 
Financial Treasury Notes 643  2,235  2,017  10,868  15,763  15,771  (8)
Federal Treasury Notes 210  479  57  8,332  9,078  9,092  (14)
National Treasury Bonds 200  1,881  4,958  58  7,097  7,099  (2)
Brazilian foreign debt notes 198  -  -  6,522  6,720  6,571  149 
Central Bank Notes -  -  -  55  55  56  (1)
Other 145  23  51  72  291  290  1 
 
CORPORATE BONDS 3,156  2,609  262  4,606  10,633  9,798  835 
Certificates of Bank Deposit 292  2,399  52  1,117  3,860  3,860  - 
Debentures 105  11  61  1,354  1,531  1,562  (31)
Shares 2,257  -  -  -  2,257  1,368  889 
Corporate bonds abroad 39  36  66  1,402  1,543  1,507  36 
Derivative financial instruments 319  146  70  49  584  594  (10)
Other 144  17  13  684  858  907  (49)
PURCHASE AND SALE COMMITMENTS(3) -  2,329  2,597  3,592  8,518  8,518  - 
Total at September 30, 2004 4,552  9,556  9,942  34,105  58,155  57,195  960 
Total at September 30, 2003 3,148  3,165  7,581  34,011  47,905  47,297  608 

Composition by Maturity at September 30, 2004

Securities (1) Up to
30 days 		From 31 to 180 days From 181 to 360 days More than 360 days Market/Book value (4), (5) and (6) Restated cost value Mark-to-market adjustment
Trading securities (2) 2,013  8,926  9,748  22,222  42,909  42,952  (43)
 
Financial Treasury Notes 569  1,990  1,970  10,237  14,766  14,768  (2)
Purchase and Sale Commitments (3) -  2,329  2,597  3,592  8,518  8,518  - 
National Treasury Bonds 200  1,875  4,958  58  7,091  7,093  (2)
Federal Treasury Notes 210  268  57  4,575  5,110  5,128  (18)
Debentures 16  11  -  922  949  949  - 
Certificates of Bank Deposit 130  2,395  47  1,094  3,666  3,666  - 
Brazilian foreign debt notes 36  -  -  862  898  876  22 
Shares 560  -  -  -  560  560  - 
Other 292  58  119  882  1,351  1,394  (43)
 
Securities available for sale (2) 2,181  399  124  7,463  10,167  9,154  1,013 
 
Brazilian foreign debt notes 124  -  -  4,333  4,457  4,330  127 
Shares 1,697  -  -  -  1,697  808  889 
Corporate bonds abroad 10  1  -  1,076  1,087  1,043  44 
National Treasury Bonds 73  224  47  630  994  1,000  (6)
Federal Treasury Notes -  126  -  714  840  836  4 
Debentures 89  -  61  431  581  612  (31)
Brazilian foreign debt notes 161  5  4  23  193  193  - 
Other 27  23  12  256  318  332  (14)
 
Securities held to maturity (7) 39  85  -  4,371  4,495  4,495  - 
 
Federal Treasury Notes -  85  -  3,043  3,128  3,128  - 
Brazilian foreign debt notes 38  -  -  1,327  1,365  1,365  - 
Other 1  -  -  1  2  2  - 
 
Derivative financial instruments 319  146  70  49  584  594  (10)
Total at September 30, 2004 4,552  9,556  9,942  34,105  58,155  57,195  960 
Total at September 30, 2003 3,148  3,165  7,581  34,011  47,905  47,297  608 
Derivative financial instruments (Liabilities)
 
Total at September 30, 2004 (276) (4) (19) (9) (308) (307) (1)
 
Total at September 30, 2003 (206) (18) (23) (84) (331) (302) (29)
(1)

Investments in fund quotas were distributed based on the securities comprising their portfolios maintaining the fund category classification.
(2)

Securities of Banco BEM, in the amount of R$ 521 million, mainly financial treasury notes, classified as securities held to maturity, were reclassified at June 30, 2004, R$ 499 million of which to trading securities, decreasing results by R$ 7 million, net of tax effects and R$ 22 million to securities available for sale, decreasing the specific stockholders’ equity account by R$ 4 million, net of tax effects. In Banco Zogbi, equity securities in the amount of R$ 5 million, classified as trading securities, were transferred to securities available for sale, pursuant to BACEN Circular 3068/2001, in line with the portfolio profile of Banco Bradesco, the new parent company.
(3)

Investment fund and managed portfolio resources invested in purchase and sale commitments with Banco Bradesco, the investors in which are subsidiary companies, included in the consolidated financial statements.
(4)

The number of days to maturity was based on the maturity of the securities, regardless of accounting classification.
(5)

This column reflects book value subsequent to mark-to-market adjustment, except for securities held to maturity, the market value of which is higher than purchase cost by R$ 884 million (September 2003 - R$ 448 million).
(6)

The market value of securities is determined based on the market price practiced on the balance sheet date. In the event no market prices are available, amounts are estimated based on the prices quoted by dealers, on price definition models, quotation models or quotations for instruments with similar characteristics.
(7)

In compliance with the provisions of Article 8 of BACEN Circular 3068/2001, Bradesco declares that it has both the financial capacity and the intention to hold to maturity the securities classified in the ‘securities held to maturity’ category. This financial capacity is evidenced in Note 7, which presents the maturities of asset and liability operations at the base date of September 30, 2004.

Summary of the Classification of Securities at September 30, 2004

 
Financial Insurance/
Savings Bond 		Private Pension Plan Other Activities Total %
Trading securities 13,826  4,722  24,280  81  42,909  73.80 
Securities available for sale 7,195  1,459  1,492  21  10,167  17.47 
Securities held to maturity 1,452  -  3,043  -  4,495  7.73 
Derivative financial instruments 584  -  -  -  584  1.00 
Total at September 30, 2004 23,057  6,181  28,815  102  58,155  100.00 
Total at September 30, 2003 21,285  4,302  22,185  133  47,905 

Classification of Securities by Segment – %

• Credit Operations

We present below the composition of the credit portfolio by type of operation and economic activity sector.

By Type of Operation - In millions of reais

  2003 2004
  June September June September
Discount of trade receivables and other loans 24,826  24,481  25,731  26,818 
Financings 16,082  15,721  18,815  19,608 
Rural and agribusiness loans 4,007  4,204  5,613  5,955 
Leasing operations 1,521  1,439  1,352  1,451 
Advances on foreign exchange contracts 5,814  6,168  6,259  5,618 
Credit operations - Subtotal 52,250  52,013  57,770  59,450 
Other receivables 798  763  632  526 
Total credit operations 53,048  52,776  58,402  59,976 
 
Sureties and guarantees recorded in memorandum accounts 5,581  6,433  6,751  6,960 

By Economic Activity Sector - In millions of reais

  2004
  June % September %
Public Sector 608  1.0  625  1.0 
Private Sector 57,794  99.0  59,351  99.0 
    Manufacturing 18,530  31.8  18,458  30.8 
    Commerce 8,698  14.9  9,544  15.9 
    Financial intermediation 657  1.1  355  0.6 
    Services 10,989  18.8  11,203  18.7 
    Agriculture, livestock raising, fishing, forest
        development and management		 1,092  1.9  1,103  1.8 
    Individuals 17,828  30.5  18,688  31.2 
 
Total 58,402  100.0  59,976  100,0 

By Segment

At the end of the third quarter of 2004, 99.0% of the credit portfolio was directed to the private sector, remaining stable as compared with the prior quarter. By economic activity sector, manufacturing maintained the majority of credit volume, with a 30.8% share of total operations, particularly food and beverage, steel, metal products and mechanics. Credits directed to the service sector, including financial intermediaries, comprised 19.3%, whereas commerce and farming/livestock activities recorded a 15.9% and 1.8% portfolio share, respectively. Loans to consumers comprised 31.2% of the portfolio.

Portfolio Performance

The balance of credit operations in 3Q04 was compatible with economic activity for the quarter, reflecting the continued dynamic export performance and recovery of internal demand, strengthened by the expansion of income and employment, and recovery of consumer customer payment capacity.

As a result, the balance of Bradesco’s consolidated credit portfolio at September 30, totaled R$ 60.0 billion, an increase of 2.7%, as compared to June 30, or 13.6% when analyzed over the prior 12-month period.

For 4Q04, the rhythm of economic growth is expected to be maintained, especially considering seasonal year-end factors, with the increases in internal demand and private investment reflected in credit expansion.

Composition of the Credit Portfolio by Risk Levels

The classification and quality of the credit portfolio by risk level, at the end of September 2004, improved in comparison with the second quarter of 2004. AA to C rated operations, classified by BACEN as normal course operations, totaled 91.6% of portfolio balance, maintaining the trend for improvement, while 2.9% of operations were classified at risk administration level D and will remain so until this risk is reduced or guarantees with greater liquidity are obtained. Only 5.5% were considered to be abnormal course operations, subject to partial loss after the application of customary recovery procedures. The maintenance of these rates reflects the Bank’s permanent use and enhancement of credit assessment and monitoring instruments.

By Rating – In millions of reais

Risk Level Portfolio
Balance 		Accumulated
Percentage (1) 		Minimum Requirement Additional Allowance (4) Existing Allowance
Specific (2) Generic (3) Total
Past Due Falling Due
AA 15,957  26.6  -  -  -  -  -  - 
A 23,117  65.1  -  -  115  115  68  183 
B 6,061  75.3  1  5  55  61  21  82 
C 9,789  91.6  6  16  272  294  368  662 
Subtotal 54,924  91.6  7  21  442  470  457  927 
D 1,765  94.5  14  22  141  177  221  398 
E 385  95.2  35  35  45  115  62  177 
F 579  96.1  61  65  163  289  89  378 
G 354  96.7  83  63  102  248  84  332 
H 1,969  100.0  1,015  464  490  1,969  -  1,969 
Total at September
30, 2004 		59,976  -  1,215  670  1,383  3,268  913  4,181 
Total at June
30, 2004 		58,402  -  1,146  730  1,432  3,308  905  4,213 
(1)

On total portfolio.
(2)

For operations with installments overdue by more than 14 days.
(3)

Recorded based on the customer/transaction classification.
(4)

The additional provision is recorded based on management's experience and expected collection of the credit portfolio to determine the total allowance deemed sufficient to cover specific and general portfolio risks, as well as the provision calculated based on risk level ratings and the corresponding minimum provision requirements established by CMN Resolution 2682. The additional provision per customer was classified in the above table according to the corresponding risk levels.

The volume of the allowance for loan losses in September 2004 totaled R$ 4,181 million, corresponding to 7.0% of total credit operations. However, of this amount, only 45.1% effectively comprises overdue operations (past due and falling due), and the remaining portion is recorded as a precaution only, based on the customers' internal classification (33.1%) or to cover specific and general portfolio risks (21.8%).

Credit Portfolio by Maturity - in millions of reais

The maturity of the normal course credit portfolio evidences a concentration of short-term credits, with 40.7% maturing in up to 90 days. However, over the prior 12-month period, operation terms have gradually lengthened, as a result of economic stability.

N.B. percentage rates are accumulated.

Movement of the Portfolio between September 2003 and 2004

The performance of the consolidated credit portfolio over the prior twelve months up to September 2004, despite the low level of economic activity, evidences the maintenance of the quality of the assets, in particular as a result of new borrowers, corresponding to an increase of 17.1%, compared to the balance of the credit portfolio up to September 2003.

Portfolio Movement between September 2003 and 2004

Borrowers remaining
from September 2003 		New borrowers between
September 2003 and 2004 		Total credit at
September 2004
Level In millions reais % In millions reais % In millions reais %
AA to C 46,318  90.9  8,606  95.2  54,924  91.6 
D 1,658  3.3  107  1.2  1,765  2.9 
E to H 2,960  5.8  327  3.6  3,287  5.5 
Total 50,936  100.0  9,040  100.0  59,976  100.0 

As a result, the quality of the credits granted to new borrowers during the year has proved satisfactory and accordingly the percentage of credit operations classified as normal course (from AA to C) maintained its customary high level, totaling 91.6% at the end of September 2004, compared to 91.3% at the end of June 2004 and 90.4% in September 2003.

Concentration of Credit Portfolio – In millions of reais

  2003 2004
  June % September % June % September %
Largest borrower 784  1.5  771  1.5  779  1.3  931  1.6 
10 largest borrowers 4,871  9.2  5,060  9.6  5,536  9.5  5,746  9.6 
20 largest borrowers 7,926  14.9  8,111  15.4  8,497  14.5  8,803  14.7 
50 largest borrowers 13,265  25.0  13,500  25.6  14,028  24.0  14,196  23.7 
100 largest borrowers 17,305  32.6  17,493  33.1  18,234  31.2  18,062  30.1 

Credit Portfolio Indicators

To facilitate the analysis of the Bank's credit portfolio performance, we present below a comparative summary of the main parameters, based on the rules established by BACEN for recording provisions.

In millions of reais
2003 2004
Items June September June September
Total Credit Operations 53,048  52,776  58,402  59,976 
    - Consumer 14,406  14,740  17,828  18,688 
    - Corporate 38,642  38,036  40,574  41,288 
Existing Allowance 4,109  4,151  4,213  4,181 
    - Specific 2,006  1,939  1,876  1,885 
    - Generic 1,286  1,390  1,432  1,383 
    - Additional 817  822  905  913 
 
Specific Allowance/Existing Allowance (%) 48.8  46.7  44.5  45.1 
Existing Allowance/Total Credit Operations (%) 7.7  7.9  7.2  7.0 
 
Normal Course Operations (from AA to C)/Total Credit Operations (%) 90.2  90.4  91.3  91.6 
Operations under risk management (D)/Total Credit Operations (%) 3.4  2.8  2.8  2.9 
Abnormal Course Operations (from E to H)/Total Credit Operations (%) 6.4  6.8  5.9  5.5 
 
Credit Operations (D) 1,841  1,460  1,629  1,765 
Existing Allowance (D) 520  413  374  398 
Allowance/Credit Operations (D) (%) 28.2  28.3  23.0  22.5 
 
Credit Operations (from E to H) 3,375  3,580  3,464  3,287 
Existing Provision (from E to H) 2,939  3,027  2,966  2,856 
Allowance/Credit Operations (from E to H) (%) 87.1  84.6  85.6  86.9 

The figures at the end of September 2004 continue to confirm the low credit risk of the Bradesco portfolio, as a result of its comfortable coverage levels and moreover that the Organization's credit granting strategy is being applied on a secure, selective and consistent basis.

• Funding

Deposits by Maturity - In millions of reais

2004
June September
Days to maturity Total Up to
30 days 		From 31 to
180 days 		From 181 to
360 days 		More than
360 days 		Total
Demand 13,541  14,782  -  -  -  14,782 
Savings 22,456  23,186  -  -  -  23,186 
Interbank 47  14  -  -  -  14 
Time 28,089  3,213  4,517  4,959  14,116  26,805 
 
Total 64,133  41,195  4,517  4,959  14,116  64,787 

Demand Deposits - In billions of reais

• Checking Accounts - Million

Increase in Checking Accounts - million

Consumer and Corporate Customers – September 2004

• Savings Accounts

The balance of Bradesco Organization Savings Accounts totaled R$ 23.2 billion in deposits at the end of the third quarter of 2004, corresponding to a 19.1% market share of the Brazilian Savings and Loan System (SBPE).

Savings Account Deposits - In billions of reais

Share of SBPE (Brazilian Savings and Loan System) - %

Savings Accounts - Million

• Asset Management

Bradesco ranked Best Fund Manager for the third time in a row

Bradesco was rated Brazil’s Best Fund Manager for the third time running according to a study carried out by Guia Exame’s Best Investment Funds, organized by Exame magazine in partnership with the Study Center maintained by Fundação Getúlio Vargas.

Net assets - In millions of reais

  2003 2004
  June September June September
Investment funds 60,949  67,552  78,059  80,852 
Managed portfolios 9,279  9,050  8,757  9,319 
Total 70,228  76,602  86,816  90,171 

Distribution of Assets - In millions of reais

  2003 2004
  June September June September
Investment funds - fixed return 59,063  65,272  75,580  78,148 
Investment funds - floating rate 1,886  2,280  2,479  2,704 
Total 60,949  67,552  78,059  80,852 
Fixed return customer portfolios 6,648  6,372  6,561  6,742 
Floating rate customer portfolios 2,631  2,678  2,196  2,577 
Total 9,279  9,050  8,757  9,319 
Total fixed-return funds 65,711  71,644  82,141  84,890 
Total floating-rate funds 4,517  4,958  4,675  5,281 
Total 70,228  76,602  86,816  90,171 

Total Volume of Managed Assets according to ANBID’s Global Ranking - In millions of reais

Number of Funds, Portfolios and Quotaholders at September 30, 2004

  Number Quotaholders
Investment funds 499  2,738,046 
Customer portfolios 106  361 
Total 605  2,738,407 






4 – Operating Companies








• Bradesco Insurance Group

Insurance Companies

Consolidated Balance Sheet - In millions of reais

  2003 2004
  June September June September
ASSETS
Current assets and long-term receivables 26,800  29,156  35,090  37,873 
Securities 24,451  26,735  32,470  35,157 
Insurance premiums receivable 874  817  880  844 
Other receivables 1,475  1,604  1,740  1,872 
Permanent assets 970  956  1,036  1,016 
Total 27,770  30,112  36,126  38,889 
LIABILITIES
Current and long-term liabilities 24,819  26,819  32,231  34,551 
Tax, civil and labor contingencies 866  895  1,120  1,065 
Payables on insurance, private pension plans and savings bonds 454  452  680  696 
Other liabilities 767  1,011  953  1,205 
Technical reserves for insurance 1,864  1,949  2,335  2,477 
Technical reserves for private pension plans 19,170  20,733  25,134  27,059 
Technical reserves for savings bonds 1,698  1,779  2,009  2,049 
Minority interest 45  45  35  36 
Stockholders’ equity of the parent company 2,906  3,248  3,860  4,302 
Total 27,770  30,112  36,126  38,889 

Consolidated Statement of Income - In millions of reais


  2003 2004
  2nd Qtr. 3rd Qtr. Accumulated to September 2nd Qtr. 3rd Qtr. Accumulated to September
Income on insurance premiums, private pension plans and premium bonds 2,729  2,873  8,291  2,989  3,464  9,447 
Variation in technical reserves (763) (952) (2,755) (693) (1,077) (2,647)
Commission and fees 41  52  128  73  83  224 
Retained claims (1,046) (1,069) (3,062) (1,291) (1,338) (3,867)
Expenses for premium bond draws and redemptions (282) (283) (797) (346) (313) (932)
Expenses for private pension plan benefits and redemptions (464) (558) (1,421) (581) (486) (1,594)
Selling expenses (184) (194) (560) (206) (216) (637)
Other operating income (expenses) 13  (1) 15  (113) 46  (72)
Personnel and administrative expenses (246) (238) (708) (277) (244) (768)
Tax expenses (22) (16) (59) (36) (32) (97)
Financial results 405  624  1,596  469  405  1,462 
Operating income (expense) 181  238  668  (12) 292  519 
Non-operating income (22) 12  (12) (27) 18  (17)
Equity in the earnings of subsidiary and associated companies (16) 34  7  158  (1) 174 
Minority interest -  -  -  2  -  3 
Income before taxes and contributions 143  284  663  121  309  679 
Taxes and contributions on income (49) (92) (224) 90  (108) (103)
Net income 94  192  439  211  201  576 

Performance Ratios - %

  2003 2004
  2nd Qtr. 3rd Qtr. Accumulated to September 2nd Qtr. 3rd Qtr. Accumulated to September
Claims ratio (1) 81.3  78.6  78.5  87.3  84.2  84.6 
Selling ratio (2) 12.4  12.4  12.4  12.3  12.0  12.3 
Combined ratio (3) 107.4  106.0  106.0  122.4  99.4  110.6 
Expanded combined ratio (4) 99.2  92.6  95.7  113.6  88.6  100.3 
Administrative expense ratio (5) 13.8  13.6  13.5  14.3  12.9  13.1 
(1)

Retained claims/earned premiums.
(2)

Selling expenses/earned premiums.
(3)

(Retained claims + selling expenses + administrative costs + taxes + other operating expenses)/earned premiums.
(4)

(Retained claims + selling expenses + administrative costs + taxes + other operating expenses)/(earned premiums + financial result).
(5)

Administrative expenses/earned premiums.

Insurance Premiums - Market Share (%)

Up to August 2004, Bradesco Seguros secured R$ 7.2 billion in premiums and maintained its industry leadership with a 25% market share. The insurance sector obtained a total of R$ 28.8 billion in premiums through August 2004.

Growth in Technical Reserves
In millions of reais

Growth in Guaranteeing Assets of Technical Reserves
In millions of reais

Earned Premiums by Insurance Line - In millions of reais

  2003 2004
Line 2nd Qtr. 3rd Qtr. Accumulated to September 2nd Qtr. 3rd Qtr. Accumulated to September
Health 630  661  1,909  710  792  2,231 
Auto/RCF(a) 346  349  1,022  393  413  1,198 
Life/AP(b)/VGBL(c) 196  242  626  257  268  778 
Basic Lines 89  86  258  90  90  275 
DPVAT(d) 25  22  84  28  26  88 
Total 1,286  1,360  3,899  1,478  1,589  4,570 
(a)

Optional third-party liability.
(b)

Personal accident.
(c)

Long-term life products.
(d)

Compulsory vehicle insurance.

In September of 2004, the Company’s earned premiums grew by 17.2% compared to the same period in 2003.

Earned Premiums by Line - %

Retained Claims by Insurance Line - In millions of reais

  2003 2004
Line 2nd Qtr. 3rd Qtr. Accumulated to September 2nd Qtr. 3rd Qtr. Accumulated to September
Health 588  604  1,714  660  734  2,056 
Auto/RCF 270  275  794  381  357  1,067 
Life/AP 110  129  350  172  164  507 
Basic Lines 56  40  134  57  61  166 
DPVAT 22  21  70  21  22  71 
Total 1,046  1,069  3,062  1,291  1,338  3,867 

Retained Claims by Insurance Line (%)

N.B. Retained claims/earned premiums.

Selling Expenses by Insurance Line - In millions of reais

  2003 2004
Line 2nd Qtr. 3rd Qtr. Accumulated to September 2nd Qtr. 3rd Qtr. Accumulated to September
Health 19  20  58  23  25  71 
Auto/RCF 64  64  189  71  77  219 
Life/AP 61  68  191  69  72  220 
Basic Lines 16  16  47  19  17  54 
Total 160  168  485  182  191  564 

Selling Expenses by Insurance Line (%)

N.B. Expenses for selling/earned premiums

Number of Policyholders - Thousand

Up to September 2004, the average number of customers grew by 15.3% compared to the same period in 2003.

In comparison with the same period in 2003, Bradesco Saúde maintained its outstanding market position, especially in the corporate health insurance segment (source: ANS). Brazilian consumers are increasingly convinced that Health and Dental Insurance are the best alternatives for meeting their medical, hospital and dental care needs. At present, Bradesco Saúde has more than 2.5 million customers.

The increasing number of policyholders employed by micro, small and medium companies, as well as major corporations that have contracted Bradesco Saúde, confirms the insurance company’s high level of expertise and personalization in Corporate Insurance services, a distinct advantage in the Supplementary Health Insurance market.

Almost 12 thousand companies in Brazil have acquired Bradesco Health Insurance. Out of Brazil’s 100 largest companies in terms of billings, 33 are Bradesco clients in the Health and Dental Health lines and out of the country’s 50 largest companies, 28% are Bradesco Saúde clients. (source: Exame Magazine’s Biggest and Best List, July 2004).

Finally, emphasis should also be given to the user-friendly nature of the Bradesco Saúde Portal (www.bradescosaude.com.br), which, in addition to providing information on available products, also offers access to a number of services for policyholders, prospects and brokers.

Through August 2004, the Bradesco Insurance Group maintained its position as one of the main players in the Brazilian Basic Line Insurance market, with a significant 10.6% share of total market billings in this area.

In the Corporate Risk area, Bradesco maintained its position among Brazil’s largest insurance companies.

In particular, emphasis should be given to the successful launching of Bradesco FLIGHT INSURANCE, which after only 6 months, has already secured R$ 6 million in premiums, for some 70 aircraft.

Another highlight during the nine-month period was the launching of the SIGA Transport (Integrated Policy Management System) website, in March 2004, the wide market acceptance of which has given Bradesco a marked advantage in terms of negotiating power.

In the mass market insurance segment, focusing on the consumer and small and medium corporate segments, Bradesco maintained a significant number of customers, in particular, for the Bradesco Bilhete Residencial product, with 589,572 homes insured.

In the pursuit to always offer our customers best quality services, the launching of our new products made a substantial contribution to the results achieved during the period.

In the Auto/RCF line, the market was affected by intense competition, aggravated by slacking vehicle sales. During the period, we maintained our technically correct pricing policy, guaranteeing balanced portfolio results. Emphasis should also be given to the launching of our new pricing policy based on the policyholders’ specific characteristics and maintenance of the differentiated services which add value to our products, such as discounts given through the nationwide customer service networks and autoglass repair, as well as the increase in the number of relationships with brokers which are carried out exclusively online via the Internet.

Bradesco’s market share of the Auto/RCF portfolio up to August, 2004 was 16.3%.

Awards/Recognition

Bradesco Seguros

1. In April, Bradesco Seguros was rated among the 100 largest investors in this area for 2003, according to research carried out in Brazil by Info magazine. Indiana Seguros, another Bradesco Insurance Group company, was also highlighted in the 2004 edition of “Brazil’s 100 most wired companies”.

2. Bradesco Seguros was the brand name preferred by consumers in the southern state of Rio Grande do Sul. This preference was revealed in May 2004 in the sixth edition of the poll “Decision-maker Brands”, prepared by the Jornal do Comércio, a regional newspaper specialized in business and economy, in partnership with Instituto Qualidata. Bradesco was rated preferred insurance company by 13.2% of those interviewed.

3. The Bradesco Insurance website is 3-time champion award winner at the iBEST awards, considered Brazil’s equivalent to the Internet Oscar. In May, at the awards ceremony held in São Paulo, the insurance company was voted winner by popular jury in the "Insurance" category.

4. Bradesco Seguros won the Segurador Brasil award in the “Best Institutional Campaign” and “Arts and Culture Support Highlight” categories. These awards were given in June by Brasil/Notícias Editora e Comunicação Empresarial, publishers of the Planeta Seguros magazine.

5. Bradesco Seguros was rated best company in the vehicle insurance line according to the "Gazeta Mercantil Financial Report” prepared in partnership with the consultancy Austin Rating in June. The report was prepared based on data for 2003.

6. Bradesco Seguros won the insurance "Market Award" ("Prêmio Mercado de Seguros"), in June, given by the Seguro Total magazine in the "Excellence in Total Premiums" category.

7. Bradesco Seguros sponsors the Dell’Arte series of International Concerts held at the Municipal Theater in Rio de Janeiro. The following concerts were held up to September 2004:

- Nelson Freire (pianist) – April 7.
- Italian Concert – May 17.
- Academie Für Alte Musik – June 22.
- Emma Kirkby & The Romantic Chamber Group of London – July 29.
- Quartet Herold – August 23.
- Les Arts Florissants – September 29.

Bradesco Saúde

1. In May, Bradesco Saúde was announced winner of the “Prêmio Segurador Brasil” award in the “Excellence in Health Insurance” category. This award is given by Brasil/Notícias Editora e Comunicação Empresarial, publishers of the Planeta Seguros magazine.

2. Bradesco Saúde won the “Hospital Best” award in the “Health Operator of the Year” category, according to a poll carried out among innumerous physicians and other health professionals nationwide. The poll was organized by Simonsen e Associados. The first edition of this award held in June is an initiative of the Brazilian Association of Health Marketing (Associação Brasileira de Marketing em Saúde).

Vida e Previdência (Private Pension Plan Companies)(1)

Bradesco Vida e Previdência is specialized in the preparation, implementation and administration of individual and corporate retirement, pension and savings plans, as well as life insurance. As a result of its solid structure, innovative product policy and trusted market standing, Bradesco maintained its leadership of all segments in which it operates and presented excellent results for the period in this economic sector, which is among the most dynamic in Brazil.

Balance Sheet - In millions of reais

  2003 2004
  June September June September
ASSETS
Current assets and long-term receivables 20,783  22,719  27,008  29,454 
Funds available 24  36  29  41 
Interbank investments 19  19  -  - 
Securities 20,355  22,197  26,489  28,826 
Insurance operations and other receivables 385  467  490  587 
Permanent assets 256  253  1,063  1,194 
Total 21,039  22,972  28,071  30,648 
LIABILITIES
Current and long-term liabilities 19,695  21,404  26,017  28,171 
Tax and social security contingencies 402  503  554  704 
Operating liabilities for insurance and private pension 91  124  256  331 
plans
Other liabilities 32  44  73  77 
Technical reserves 19,170  20,733  25,134  27,059 
Stockholders' equity 1,344  1,568  2,054  2,477 
Total 21,039  22,972  28,071  30,648 

In August 2004, the Previllares private pension plan portfolio in the amount of R$ 117 million and the “pending approval” life insurance portfolio of Bradesco Auto/RE Companhia de Seguros (formerly União Novo Hamburgo de Seguros S.A.) in the amount of R$ 67 million, were transferred to Bradesco Vida e Previdência.

Statement of Income - In millions of reais

  2003 2004
  2nd Qtr. 3rd Qtr. Accumulated to September 2nd Qtr. 3rd Qtr. Accumulated to September
Retained premiums 187  210  593  224  266  717 
Variations in premium reserves (19) (5) (48) (4) (25) (39)
Earned premiums 168  205  545  220  241  678 
Retained claims (103) (117) (329) (125) (138) (424)
Expenses with benefits - VGBL -  -  -  (10) (11) (26)
Selling expenses - insurance (43) (45) (135) (50) (55) (162)
Other operating income (expenses) 35  45  116  49  75  188 
Income from contributions and VGBL 1,206  1,348  3,767  1,396  1,810  4,670 
Variation in technical reserves and VGBL (669) (821) (2,494) (617) (973) (2,440)
Expenses with benefits/matured plans (463) (559) (1,422) (581) (486) (1,594)
Expenses for redemptions – VGBL (138) (200) (385) (330) (357) (926)
Selling expenses - pension plans and VGBL (35) (39) (109) (36) (39) (114)
Administrative expenses (47) (53) (148) (50) (62) (168)
Tax expenses (5) (3) (11) (13) (12) (32)
Financial income 973  1,081  3,295  988  1,117  3,112 
Financial expenses (736) (701) (2,261) (691) (926) (2,251)
Equity income and expenses 2  4  7  167  58  227 
Non-operating income (expense) (1) 4  4  -  3  5 
Income before taxes and contributions 144  149  440  317  245  743 
Taxes and contributions on income (42) (42) (132) (49) (64) (173)
Net income 102  107  308  268  181  570 
(1)

Includes Bradesco Vida e Previdência S.A. and from June 2003, Alvorada Vida S.A. (formerly BBV Previdência e Seguradora Brasil S.A.).

Bradesco Vida e Previdência adopted a number of measures during the period designed to decrease expenses. As a result of these efforts, the percentage of administrative expenses for income on premiums and contributions decreased from 3.4%, up to September 2003 to 3.1% up to September 2004.

Furthermore, we highlight the decrease in selling expenses comprising 5.1% of income on premiums and contributions up to September 2004 compared to 5.6% for the same period in 2003.

The following stockholdings influenced the composition of results accumulated to September 2004:

  In thousands of reais
Bradesco Capitalização S.A. 141,369 
IRB - Brasil Resseguros S.A. 27,522 
Other investments 52,626 
Total 221,517 

Income from Plans and VGBL - Market Share (%)

Bradesco Vida e Previdência is Brazil’s sole leader in complementary pension plans and VGBL, with a 34.7% share of the market, more than double that held by its nearest rival. Up to September 2004, plan income totaled R$ 4.670 billion, a 24.0% growth rate compared to the same period in 2003.

Life Insurance Premiums – Market Share (%)

Income on premiums retained of R$ 717 million accumulated up to September 2004 guaranteed Bradesco’s leadership of the market with a 15.0% share. We highlight during the period the “Vida Segura Bradesco” and “Vida Máxima Mulher Bradesco”, products which strengthen the strategy designed to offer products to different market segments and facilitate access to life insurance to lower income bracket consumers.

Increase in Technical Reserves – In millions of reais

Total technical reserves in September 2004 of R$ 27,059 million comprise R$ 18,386 million for supplementary pension plans, R$ 7,853 million for VGBL, R$ 748 million for life and personal accident, R$ 67 million for DPVAT and R$ 5 million for retrocession.

Growth in Guaranteeing Assets of Technical Reserves – In millions of reais

The continuing increase in revenues and appropriate investment policy adjustments prompted a significant growth in the investment portfolios of Bradesco Vida e Previdência, thereby guaranteeing full coverage of technical reserves.

Pursuant to new legislation (SUSEP/DECON/GAB Circular Letter 5/04 of July 16, 2004), only the volume of guaranteeing assets necessary for covering technical reserves may be held under custody.

Pension Plan and VGBL Investment Portfolios – Market Share (%)

In August, the investment portfolios totaled R$ 28,226 million, comprising almost half of market resources.

Participants

Increase in Number of Participants – thousand

N.B. Includes VGBL long-term life products

The strength of the Bradesco Brand, its commitment to innovation and the adoption of appropriate pricing and management policies, prompted a continuing growth in the number of customers, which is nearing 1.5 million.

Policyholders

Increase in Life Insurance Policyholders – thousand

• Savings Bond Companies (1)

Balance Sheet - In millions of reais

2003 2004
  June September June September
ASSETS
Current assets and long-term receivables 1,946  2,152  2,683  2,813 
Securities 1,871  2,059  2,596  2,719 
Accounts receivable and other receivable 75  93  87  94 
Permanent assets 294  329  201  205 
Total 2,240  2,481  2,884  3,018 
 
LIABILITIES
Current and long-term liabilities 1,906  2,033  2,416  2,413 
Tax and labor contingencies 195  238  174  177 
Other liabilities 13  16  233  187 
Technical reserves 1,698  1,779  2,009  2,049 
Stockholders' equity 334  448  468  605 
Total 2,240  2,481  2,884  3,018 

Statement of Income - In millions of reais

  2003 2004
  2nd Qtr. 3rd Qtr. Accumulated to September 2nd Qtr. 3rd Qtr. Accumulated to September
Income from savings bonds 301  292  842  396  338  1.039
Variation in technical reserves (14) (42) (55) (7) 10  (46)
Redemption of bonds (282) (283) (797) (346) (313) (932)
    Bonds redeemed (279) (277) (783) (336) (298) (896)
    Winning bonds (3) (6) (14) (10) (15) (36)
Other operating income (expenses) -  (1) (2) -  (1) - 
Financial income, net 81  110  249  71  60  237 
Administrative expenses/taxes (20) (18) (55) (28) (22) (69)
Equity results 6  35  43  26  4  32 
Non-operating income -  1  1  -  -  1 
Income before taxes and contributions 72  94  226  112  76  262 
Taxes and contributions on income (21) (20) (60) (27) (24) (76)
Net income 51  74  166  85  52  186 
(1)

Includes: Bradesco Capitalização and Atlântica Capitalização (formerly BCN Capitalização).

Bradesco Capitalização’s outstanding position in the premium bond market is the result of its transparent operating policy, which is focused on the deployment of products in line with potential consumer demand.

The company holds a leadership position in two Brazilian states, according to the latest figures for August, 2004 published by SUSEP. The company’s market share was as follows: 35.4% in Amazonas and 26.5% in São Paulo.

In pursuit of a bond which is suited to its customers’ different profiles and budgets, a number of products were developed varying in accordance with the type of payment (single or monthly), contribution terms, regularity of draws (weekly or monthly) and related prize amounts. This phase brought the general public closer and consolidated the success of the popular “Pé Quente” (Lucky Bond) savings bond series.

Bradesco Capitalização was the first private savings bond company in Brazil to receive ISO 9002 certification and in December 2002 this certificate was upgraded to the 2000 Version ISO 9001:2000. This certification from Fundação Vanzolini attests to the management quality of Bradesco savings bonds and confirms the principles on which their creation was based: good products, good services and continuous growth.

Income from Plans - Market Share (%)

Technical Reserves - Market Share (%)

Growth in Technical Reserves - In millions of reais

Bradesco Capitalização’s fast-growing volume of technical reserves totaled R$ 2.0 billion in September 2004, a growth rate of 15.2% compared to the same period in 2003. According to data for August 2004 published by SUSEP, the company has 22.8% of the total market volume of technical reserves.

These results transmit confidence and confirm the company’s financial soundness and capacity to honor the commitments assumed with its customers.

Growth in Assets Guaranteeing Technical Reserves - In millions of reais

Number of Customers - Thousand

As a result of its customer loyalty building policy, focused on quality customer service and the offer of innovative products, the number of Bradesco Capitalização customers totaled more than 2.7 million at the end of 3Q04.

Outstanding Savings Bonds - Thousand

Outstanding Savings Bonds with Transfer of Draw Participation Rights - Thousand

Total Outstanding Savings Bonds - Thousand

The outstanding savings bond portfolio also presented a significant increase of 112.81% compared to the same period in 2003, with more than 45 million outstanding bonds. Of this amount, 90.2% are certificates with “Transfer of Draw Participation Rights”, which were sold via partnership agreements with companies in different market segments, including Bradesco Cartões, Bradesco Vida e Previdência, Banco Finasa etc. Since the purpose of this type of savings bond certificate is to add value to partners’ products or to provide incentives for customer payments, these are low-priced bonds sold with reduced terms and grace periods and at a lower unit purchase price.

The number of traditional bonds comprising 9.8% of the total portfolio, dropped slightly, as a result of the offer of single and monthly payment bonds at higher sales prices.

Awards

In June, Bradesco Capitalização won the Insurance Market Award in the “Best Savings Bond Company”category, organized by Seguro Total magazine.

• Banco Finasa

Consolidated Balance Sheet - In millions of reais

  2003 2004
  June September June September
ASSETS        
Current assets and long-term receivables 4,260  4,841  7,037  7,652 
Funds available -  3  5  8 
Interbank investments 28  25  111  37 
Securities and derivative financial instruments 14  15  68  78 
Interbank accounts 42  20  29  30 
Credit and leasing operations 4,041  4,595  6,482  7,129 
Allowance for loan losses (133) (134) (227) (233)
Other receivables and other assets 268  317  569  603 
Permanent assets 11  12  361  343 
Total 4,271  4,853  7,398  7,995 
LIABILITIES
Current and long-term liabilities 3,988  4,557  7,023  7,551 
Demand, time and interbank deposits 3,624  4,128  6,479  7,025 
Deposits received under security repurchase agreements and funds from the issuance of securities 3  3  -  - 
Interbank accounts 2  -  3  2 
Borrowings and onlendings 101  124  55  51 
Derivative financial instruments 81  92  241  203 
Other liabilities 177  210  245  270 
Deferred income 22  18  30  35 
Stockholders’ equity 261  278  345  409 
Total 4,271  4,853  7,398  7,995 

Consolidated Statement of Income - In millions of reais

  2003 2004
  2nd Qtr. 3rd Qtr. Accumulated to September 2nd Qtr. 3rd Qtr. Accumulated to September
Income from lending and trading activities 395  408  1,165  594  590  1,667 
Expenses for lending and trading activities (237) (239) (689) (300) (333) (895)
Gross profit from financial intermediation 158  169  476  294  257  772 
Other operating income (expenses), net (115) (133) (355) (160) (160) (449)
Operating income 43  36  121  134  97  323 
Non-operating income (expenses), net (3) -  (5) (6) 1  (5)
Income before taxes and contributions 40  36  116  128  98  318 
Taxes and contributions on income (14) (13) (40) (6) (34) (72)
Net income 26  23  76  122  64  246 

Profile

Banco Finasa operates in the retail sector, financing new and used vehicles, consumer durables, clothing, footwear and services, as well as personal loans, through Finasa Promotora de Vendas and from February 16, 2004, also through Promovel Empreendimentos e Serviços, which is Banco Zogbi’s sales promotion company. Banco Zogbi was acquired by the Bradesco Organization, through Banco Finasa on November 6, 2003, together with Promovel, Zogbi Leasing and Zogbi Distribuidora de Títulos e Valores Mobiliários.

At the end of September 2004, Banco Finasa operated through 121 Branches distributed nationwide (Finasa Promotora de Vendas – 52 and Zogbi – Promovel – 69), 31,046 registered service outlets, including 13,270 new and used vehicle dealerships and 17,776 stores selling different types of goods and services.

Customers served totaled some 1,835 thousand (Banco Finasa – 1,071 thousand and Banco Zogbi – 764 thousand).

Measured by Austin Rating, Banco Finasa obtained the maximum “AAA” rating for financial soundness and a “Low Risk” long-term rating.

Operating Performance

At September 30, 2004, consolidated assets totaled R$ 8.0 billion, a growth rate of 8.1% compared to June 2004 and 64.7% compared to September 2003. Credit operations, before the allowance for loans losses, totaled R$ 7.1 billion, a growth rate of 10.0% compared to June 2004 and 55.2% as compared to the same period in 2003. Of this total, R$ 6.6 billion comprised the new and used auto financing portfolio, compared to R$ 6.0 billion at June 30, 2004 and R$ 4.5 billion in September 2003.

Auto-financing production for 3Q04 totaled R$ 1.6 billion and R$ 4.4 billion for the period between January and September, a growth rate of 59.8% as compared to the same period in 2003. During the nine-month period, operations for the financing of other assets and services totaled R$ 626.0 million, compared to R$ 110.8 million for the same period in 2003 and a personal loans were granted in the amount of R$ 114.6 million, compared to R$ 5.0 million, in the prior period, including in 2004 production in Banco Zogbi.

Banco Finasa reported third-quarter net income of R$ 63.7 million, totaling R$ 245.5 million for the nine-month period. Stockholders’ equity at September 30, 2004 increased to R$ 408.7 million.

We stress that income in the amount of R$ 18.1 million was recorded for 3Q04, derived from the mark-to-market (MTM) adjustment of swap transactions, in compliance with Central Bank Circular 3082, which totaled R$ 98.0 million for the period from January to September. These transactions are designed to hedge overall credit operations and were entirely successful from an economic viewpoint. However, from a formal standpoint, these transactions are not acceptable as hedges pursuant to the aforementioned legislation. As a result, the asset transactions to which they are a counter entry receive a different accounting treatment, ie, they are adjusted based on the rates established in the corresponding contracts, whereas swaps are marked to market.

Net income for the period is comprised as follows:

  In millions of reais
  2004
  1st Half 3rd Qtr. Accumulated to September
Net income before MTM - SWAP 101.9  45.6  147.5 
Mark-to-market effect - SWAP 79.9  18.1  98.0 
Net income 181.8  63.7  245.5 

Moreover, we stress that expenses for amortization and provision for goodwill on investments made in 2004 totaled R$ 11.6 million for the second quarter and R$ 34.2 million for the first nine months of the year.

• Leasing Companies

At September 30, 2004, the Bradesco Organization had the following leasing companies: Bradesco Leasing S.A. Arrendamento Mercantil, formerly Potenza Leasing S.A. Arrendamento Mercantil, Alvorada Leasing Brasil S.A. Arrendamento Mercantil, formerly BBV Leasing Brasil S.A. Arrendamento Mercantil and Zogbi Leasing S.A. Arrendamento Mercantil.

Balance Sheet in Aggregate - In millions of reais

  2003 2004
  June September June September
ASSETS        
Current assets and long-term receivables 4,950  4,989  5,259  4,737 
Funds available 6  6  1  1 
Interbank investments 3,081  2,105  2,325  2,257 
Securities and derivative financial instruments 12  1,096  1,273  618 
Leasing operations 1,477  1,405  1,271  1,348 
Allowance for leasing losses (127) (122) (107) (95)
Other receivables and other assets 501  499  496  608 
Permanent assets 40  40  37  485 
Total 4,990  5,029  5,296  5,222 
LIABILITIES
Current and long-term liabilities 3,012  2,994  3,060  3,131 
Interbank deposits 117  3  -  - 
Securities received under security repurchase agreements and funds received from issuance of securities 1,523  1,593  1,766  1,834 
Borrowings and onlendings 256  256  203  191 
Derivative financial instruments 10  10  15  11 
Subordinated debt 635  635  623  624 
Other liabilities 471  497  453  471 
Stockholders' equity 1,978  2,035  2,236  2,091 
Total 4,990  5,029  5,296  5,222 

Statement of Income - In millions of reais

  2003 2004
  2nd Qtr. 3rd Qtr. Accumulated to September 2nd Qtr. 3rd Qtr. Accumulated to September
Income from lending and trading activities 242  283  723  426  257  1,098 
Expenses for lending and trading activities (132) (161) (378) (324) (191) (819)
Gross profit from financial intermediation 110  122  345  102  66  279 
Other operating income (expenses), net (12) (20) (57) (25) 8  (31)
Operating income 98  102  288  77  74  248 
Non-operating income -  -  3  -  (5) (4)
Income before taxes and contributions 98  102  291  77  69  244 
Tax and contributions on income (34) (33) 34  (24) (15) (76)
Net income 64  69  325  53  54  168 

Corporate Restructuring

Bradesco made the following changes to the organizational structure of the Leasing companies:

- In July, BancoCidade Leasing Arrendamento Mercantil S.A. was merged into Banco Alvorada S.A.

- In September Bradesco BCN Leasing S.A. Arrendamento Mercantil was merged into Bradesco Leasing S.A. Arrendamento Mercantil (formerly Potenza Leasing).

Leasing Performance - Consolidated Bradesco

Bradesco's leasing operations are carried out through Bradesco Leasing S.A. Arrendamento Mercantil and Banco Finasa S.A.

At September 30, 2004, leasing operations brought to present value totaled R$ 1.451 billion, with a balance of R$ 18.4 million receivable in operating leases.

According to the Brazilian Association of Leasing Companies (ABEL), the Bradesco Organization leasing companies are sector leaders, with a 12.3% share of this market (base date: July 2004). This sound performance is rooted in its Branch Network integrated operations and the maintenance of its diversified business strategies in various market segments, in particular, the implementation of operating agreements with major industries, mainly in the heavy vehicle and machinery/equipment sectors.

The following pie graph presents the composition of Bradesco's consolidated leasing portfolio by types of asset.

Portfolio by Types of Asset at September 30, 2004

• Bradesco Consórcios (Consortium Purchase System)

Administradora (management company)

Balance Sheet - In thousands of reais

  2003 2004
  June September June September
ASSETS        
Current assets and long-term receivables 22,521  19,956  47,501  61,552 
Funds available -  -  -  8 
Securities 18,853  17,335  45,765  60,217 
Other receivables 3,668  2,621  1,736  1,327 
Permanent assets 726  731  800  770 
Total 23,247  20,687  48,301  62,322 
LIABILITIES
Current and long-term liabilities 11,446  6,456  14,336  15,055 
Amounts refundable to former groups now closed 5,090  5,292  5,650  5,749 
Other liabilities 6,356  1,164  8,686  9,306 
Stockholders’ equity 11,801  14,231  33,965  47,267 
Total 23,247  20,687  48,301  62,322 

Statement of Income - In thousands of reais

  2003 2004
  2nd Qtr. 3rd Qtr. Accumulated to September 2nd Qtr. 3rd Qtr. Accumulated to September
Income on commission and fees 3,820  8,437  12,451  20,023  22,935  58,293 
Taxes payable (280) (591) (902) (1,183) (1,370) (3,457)
Financial income 510  560  1,438  1,263  1,780  3,962 
Administrative expenses (including personnel expenses) (1,461) (1,790) (4,967) (2,443) (2,522) (6,898)
Selling expenses (1,231) (2,993) (8,025) (5,194) (4,550) (11,830)
Other operating (expenses) income 50  37  57  120  210  377 
Income before taxes and contributions 1,408  3,660  52  12,586  16,483  40,447 
Taxes and contributions on income (521) (1,239) (123) (2,657) (3,181) (7,789)
Net income (loss) 887  2,421  (71) 9,929  13,302  32,658 

Quarterly Results – 2003 and 2004 – In thousands of reais

Consortium Groups

Balance Sheet - In thousands of reais

  2003 2004
  June September June September
ASSETS        
Current assets and long-term receivables 19,342  49,809  164,330  201,818 
Amount offset 1,465,378  2,750,813  5,499,952  6,189,691 
Total 1,484,720  2,800,622  5,664,282  6,391,509 
 
LIABILITIES
Current and long-term liabilities 233  1,595  21,626  30,923 
Stockholders’ equity 19,109  48,214  142,704  170,895 
Amount offset 1,465,378  2,750,813  5,499,952  6,189,691 
Total 1,484,720  2,800,622  5,664,282  6,391,509 

Operations

At September 30, 2004, a total of 108 thousand consortium quotas had been sold, with billings in excess of R$ 3.3 billion, 17,349 participants had been selected by bid or draw and 10,537 items had been delivered to members comprising 564 groups. 78 new groups were formed in the third quarter of 2004.

The company uses all the facilities offered by the Bradesco Organization customer service network to commercialize the products offered, a distinct market advantage responsible for the rapid growth presented by the consortium purchase system segment. The extensive nature and security associated with the Bradesco brand name also favors the expansion of consortium plan sales.

Mission

The company’s mission is to manage consortium plans and groups for consumer and corporate purchasers regardless of whether they are Bradesco account holders or not, and to operate in the car, truck, tractor and combine harvester segment, as well as in real estate, maintaining excellent standards in the quality of the services offered and in consortium system practice, pursuant to regulations determined by the Brazilian Central Bank and in line with the Bradesco Organization’s philosophy.

Segmentation

The Bradesco Organization’s entry into this segment is part of its strategy to offer the most complete range of product and services possible to its customers.

Providing all income brackets with the opportunity to purchase items through the consortium quota system, filling a market lacuna at accessible prices, especially considering, as regards the country’s present housing deficit, real estate products.

Representation

Within this segment, Bradesco plays a central role in providing Brazilians with the opportunity to acquire consumer durables and real estate. In this sector consumers can acquire apartments, houses, building plots or commercial offices.

From January to September 2004, Bradesco Consórcios sold a total of 62,751 quotas, with billings of R$ 1.7 billion. Of this total, 36,015 are vehicle quotas, followed by 25,784 in real estate quotas sold during the period.

Quotas sold in 2004

Market leadership

Bradesco Consórcios maintained its leadership of the real-estate segment, according to information published by the Brazilian Central Bank, in August, with 36,001 active quotas.

This leadership position is the result of the efforts and motivation of our sales teams and the distribution force of our customer service network.

Quotas sold in 3Q03 and 3Q04

Quotas sold and accumulated to September 2003 and 2004

Total outstanding real-estate quotas in 2004

Number of active participants comprising the 10 largest real-estate consortium administrators (*)

(*) Brazilian Central Bank data for August 2004.

• Bradesco S.A. - Corretora de Títulos e Valores Mobiliários

Balance Sheet – In thousands of reais

  2003 2004
  June September June September
ASSETS        
Current assets and long-term receivables 153,910  188,853  128,999  110,193 
Funds available 10  6  38  27 
Interbank investments and securities 88,530  96,730  69,514  73,695 
Other receivables and other assets 65,370  92,117  59,447  36,471 
Permanent assets 18,908  19,753  22,154  23,058 
Total 172,818  208,606  151,153  133,251 
LIABILITIES
Current and long-term liabilities 79,006  109,212  77,818  56,872 
Other liabilities 79,006  109,212  77,818  56,872 
Stockholders' equity 93,812  99,394  73,335  76,379 
Total 172,818  208,606  151,153  133,251 

Statement of Income - In thousands of reais

  2003 2004
  2nd Qtr. 3rd Qtr. Accumulated to September 2nd Qtr. 3rd Qtr. Accumulated to September
Income from lending and trading activities 4,583  4,943  13,979  2,557  2,741  7,796 
Gross profit from financial intermediation 4,583  4,943  13,979  2,557  2,741  7,796 
Other operating income (expenses), net 1,142  1,088  2,543  1,162  1,209  7,484 
Operating income 5,725  6,031  16,522  3,719  3,950  15,280 
Non-operating income (expense) (1) (390) (391) 2  -  2 
Income before taxes and contributions 5,724  5,641  16,131  3,721  3,950  15,282 
Taxes and contributions on income (1,898) (2,051) (5,569) (1,234) (1,341) (5,136)
Net income 3,826  3,590  10,562  2,487  2,609  10,146 

At the end of the third quarter, Bradesco Corretora maintained its outstanding position in the Capital Market.

We present below a summary of the main activities carried out during the third quarter of 2004:

Bradesco Corretora ended the quarter ranked 10th among the more than 90 brokerage firms operating in the São Paulo Stock Exchange (BOVESPA). During the period, services were provided to 20,341 investors and 65,389 buy and sell orders were carried out for a total financial volume of R$ 3.7 billion. The Corretora participates with BOVESPA in the “Bovespa vai até você” campaign in an important effort to raise public awareness regarding the benefits of investing in the stock market.

Bradesco Corretora negotiated 640.5 thousand contracts in the Mercantile and Futures Exchange (BM&F) for a financial volume of R$ 69.9 billion, ranking the Corretora 29th out of more than 80 participants. The Corretora has centered its efforts on the continued expansion of its business, as well as promoting the futures market. In the agricultural area, the Corretora acts directly in the country’s main production centers, through visits, seminars and participation in agricultural fairs and expos. In conjunction with the BM&F, the company sponsored visits to the exchange and Bradesco Corretora in São Paulo by investors from all over the country. At the same time, the company hosted numerous visits by farmers, teachers, opinion-makers and brokers from the physical commodities market.

Online web trading for the quarter totaled 60,783 orders with a financial volume of R$ 355.2 million, comprising 5.3% of all Home-Broker operations carried out in BOVESPA and placing the Corretora fifth in the overall ranking. The customer base increased by 7.8% with more than 1,832 new customers registered during the quarter and more than 12,816 e-mails received.

As a result of its role in Public Offerings of Share Purchases, Special Operations, Stock Swapping Auctions and Privatization Auctions, Bradesco Corretora continues in its important market position, with a financial volume of R$ 20.2 million for the quarter.

Bradesco Corretora offers an investment analysis service, operating in conjunction with Banco Bradesco’s economic area, delivering main market performance reports, suggested stock portfolios and a comprehensive stock guide.

The company also offers a non-resident investor representation service for transactions carried out in the financial and capital markets, in accordance with the provisions of CMN Resolution 2689, of January 26, 2000.

Net income recorded for the quarter totaled R$ 2.6 million.

Stockholders' equity at the end of the quarter increased to R$ 76.4 million, corresponding to 57.3% of total assets of R$ 133.2 million.

Information - Trading at BM&F and BOVESPA

  2003 2004
  2nd Qtr. 3rd Qtr. Accumulated to September 2nd Qtr. 3rd Qtr. Accumulated to September
BM&F            
Ranking 19th  21st  20th  28th  29th  28th 
Contracts traded (million) 0.6  0.6  1.6  0.7  0.6  2.0 
Financial volume (in billions of reais) 73.7  72.1  199.7  76.1  69.9  226.0 
Stock Exchange
Ranking 13th  10th  10th  13th  10th  10th 
Number of investors 16,408  17,025  39,119  40,071  20,341  113,904 
Number of orders executed 66,380  74,128  191,300  114,019  65,389  281,228 
Volume traded (in billions of reais) 2.5  3.1  7.5  2.7  3.7  11.1 
Home Broker
Ranking 4th  4th  4th  5th  5th  5th 
Registered customers 16,025  17,082  17,082  23,508  25,340  25,340 
Orders executed 40,311  44,296  115,061  49,229  60,783  169,797 
Volume traded (in millions of reais) 224.0  248.6  640.2  285.5  355.2  996.4 

• Bradesco Securities, Inc.

Balance Sheet - In thousands of reais

  2003 2004
  June September June September
ASSETS        
Current assets and long-term receivables 59,207  61,366  66,047  62,005 
Funds available 344  408  322  1,821 
Interbank investments 17,739  2,885  7,091  5,978 
Securities and derivative financial instruments 41,086  58,036  58,611  55,682 
Other receivables and other assets 38  37  23  19 
Permanent assets 96  84  46  34 
Total 59,303  61,450  66,093  63,534 
LIABILITIES
Current and long-term liabilities 110  141  203  524 
Other liabilities 110  141  203  524 
Stockholders' equity 59,193  61,309  65,890  63,010 
Total 59,303  61,450  66,093  63,534 

Statement of Income - In thousands of reais

  2003 2004
  2nd Qtr. 3rd Qtr. Accumulated to September 2nd Qtr. 3rd Qtr. Accumulated to September
Gross profit from financial intermediation (196) 1,332  1,145  (1,899) 3,263  2,084 
Other operating income (expenses), net (319) (294) (1,143) (452) (683) (1,787)
Operating income (expense) (515) 1,038  2  (2,351) 2,580  297 
Net income (loss) (515) 1,038  2  (2,351) 2,580  297 

Bradesco Securities, Inc., a wholly owned subsidiary of Banco Bradesco, operates as a broker dealer in the United States. The company's activities are focused on the intermediation of share purchases and sales, with emphasis on ADR operations. The company is also authorized to operate with Bonds, Commercial Paper and Certificates of Deposit, among others, and to provide Investment Advisory services. This Bradesco initiative was motivated by more than 90 programs involving ADRs of Brazilian companies traded in New York and by the growing interest of foreign investors in the emerging markets and is designed to offer support for global economy investors who invest part of this flow in countries such as Brazil.

Banco Bradesco obtained Financial Holding Company status from the Board of Governors of the Federal Reserve System, on January 30, 2004, which will permit the expansion of Bradesco Securities’ activities.

This status, given based on a rigorous analysis of various aspects determined in US banking legislation, including Bradesco’s high level of capitalization and the quality of its Management, will allow the Bank, either directly or through its subsidiaries, to operate in the US market, carrying out financial activities under the same conditions as local banks, in particular the following:

- Underwriting, private placement and market-making.
- Acquisitions, mergers, portfolio management and financial services (merchant banking).
- Administration of mutual fund portfolios.
- Sale of insurance.

Accordingly, Banco Bradesco has strengthened its role in the Investment Banking segment, increasing opportunities for exploiting various financial activities in the US market and contributing to the increase in the volume of transactions carried out with Brazilian companies.






5 – Operating Structure







• Corporate Organization Chart

MAJOR STOCKHOLDERS


(1)

Bradesco Management (Board of Executive Officers and Board of Directors) comprises the Governing Board of the Bradesco Foundation, the Entity’s most senior deliberative organ. Base date: September 30, 2004

ON = COMMON STOCK

PN = PREFERRED STOCK

Main Subsidiaries and Associated Companies

• Administrative Body


• Risk Ratings – Bank

FITCH RATINGS MOODY´S INVESTORS SERVICE AUSTIN RATING
International Scale National Scale International Scale National Scale Financial Quality National Scale
Individual Support Foreign Currency Local Currency National Foreign Currency Deposit Foreign Currency Debt Local Currency Deposit Deposits Financial Soundness
Long-term Short-term Long-term Short-term Long-term Short-term Long-term Short-term Long-term Short-term Long-term Short-term Long-term Short-term
A 1 AAA F1 AAA F1 AAA(bra) F1+(bra) Aaa P-1 Aaa P-1 Aaa P-1 Aaa.br BR-1 A AAA
A/B 2 AA+ F2 AA+ F2 AA+(bra) F1(bra) Aa1 P-2 Aa1 P-2 Aa1 P-2 Aa1.br BR-2 A- AA
B 3 AA F3 AA F3 AA(bra) F2(bra) Aa2 P-3 Aa2 P-3 Aa2 P-3 Aa2.br BR-3 B+ A
B/C 4 AA- B AA- B AA-(bra) F3(bra) Aa3 NP Aa3 NP Aa3 NP Aa3.br BR-4 B BBB
C 5 A+ C A+ C A+(bra) B(bra) A1   A1   A1   A1.br   B- BB
C/D   A D A D A(bra) C(bra) A2   A2   A2   A2.br   C+ B
D   A-   A-   A-(bra) D(bra) A3   A3   A3   A3.br   C CCC
D/E   BBB+   BBB+   BBB+(bra)   Baa1   Baa1   Baa1   Baa1.br   C- CC
E   BBB   BBB   BBB(bra)   Baa2   Baa2   Baa2   Baa2.br   D+ C
    BBB-   BBB-   BBB-(bra)   Baa3   Baa3   Baa3   Baa3.br   D  
    BB+   BB+   BB+(bra)   Ba1   Ba1   Ba1   Ba1.br   D-  
    BB   BB   BB(bra)   Ba2   Ba2   Ba2   Ba2.br   E+  
    BB-   BB-   BB-(bra)   Ba3   Ba3   Ba3   Ba3.br   E  
    B+   B+   B+(bra)   B1   B1   B1   B1.br      
    B   B   B(bra)   B2   B2   B2   B2.br      
    B-   B-   B-(bra)   B3   B3   B3   B3.br      
    CCC   CCC   CCC(bra)   Caa1   Caa1   Caa1   Caa1.br      
    CC   CC   CC(bra)   Caa2   Caa2   Caa2   Caa2.br      
    C   C   C(bra)   Caa3   Caa3   Caa3   Caa3.br      
    DDD   DDD   DDD(bra)   Ca   Ca   Ca   Ca.br      
    DD   DD   DD(bra)   C   C   C   C.br      
    D   D   D(bra)                      
N.B.

Bradesco’s risk ratings are among the highest attributed to Brazilian Banks.

• Risk Ratings - Insurance and Savings Bond Companies

Insurance Savings Bonds
FITCH RATINGS STANDARD & POOR'S SR RATING STANDARD & POOR'S
National Scale International Scale National Scale International Scale National Scale National Scale
AAA(bra) AAA brAAA AAASR brAAA brAAA
AA+(bra) AA+ brAA+ AA+SR brAA+ brAA+
AA(bra) AA brAA AASR brAA brAA
AA-(bra) AA- brAA- AA-SR brAA- brAA-
A+(bra) A+ brA+ A+SR brA+ brA+
A(bra) A brA ASR brA brA
A-(bra) A- brA- A-SR brA- brA-
BBB+(bra) BBB+ brBBB+ BBB+SR brBBB+ brBBB+
BBB(bra) BBB brBBB BBBSR brBBB brBBB
BBB-(bra) BBB- brBBB- BBB-SR brBBB- brBBB-
BB+(bra) BB+ brBB+ BB+SR brBB+ brBB+
BB(bra) BB brBB BBSR brBB brBB
BB-(bra) BB- brBB- BB-SR brBB- brBB-
B+(bra) B+ brB+ B+SR brB+ brB+
B(bra) B brB BSR brB brB
B-(bra) B- brB- B-SR brB- brB-
CCC(bra) CCC brCCC CCCSR brCCC brCCC
CC(bra) CC brCC CCSR brCC brCC
C(bra) C brC CSR brC brC
  DDD brD DSR brD brD
  DD        
  D        

• Ranking

Source Criteria Position Base Date
Forbes “International 500” Overall/Revenue 156th (Worldwide) 2003
 
Forbes “International 500” Banks/Revenue 1st (Brazil) 2003
    20th (Worldwide)  
 
Forbes “The World’s Leading Companies” Overall/Revenue 247th (Worldwide) 2004
 
Forbes “The World’s Leading Companies” Banks/Revenue 1st (Brazil) 2004
    46th (Worldwide)  

• Market Segmentation

Bradesco operates on a segmented service basis, seeking to match its different products and services to the different profiles and size of its target public. In line with a world market trend, Bradesco’s structure permits the grouping together of customers with similar profiles facilitating superior quality customer service, extending business opportunities with a greater focus on relationship actions.

• Retail Bradesco

Bradesco maintains its retail vocation, attending with high quality service all segments of the Brazilian population regardless of income bracket. The Bank has 15 million consumer and corporate customers, who carry out millions of transactions daily at our branches, banking service posts, Banco Postal post-office branches and correspondent banks, which comprise Brazil’s largest Customer Service Network, providing easy and convenient services over extended hours.

In addition to the extensive service network, customers are offered the comfort of alternative service channels such as the Easy Phone (Fone Fácil) service and Internet Banking, which are already used for a significant portion of daily transactions.

Micro, small and medium-sized companies, as well as individuals, are given special attention through directed management.

The Retail segment also highlights the development of financial products, tailor made to meet the customers’ profile in an ongoing effort to offer quality, agile and reliable service to all customers, in particular, bearing in mind the value of customer relations.

The main focus of this segment is directed towards meeting the diverse customer demands, which include the offer microcredit, onlending, foreign exchange and a complete range of financing products for individuals, which allied with the Bradesco brand name and nationwide Branch Network comprise an important source for increasing the Bank’s results.

Significant investments in staff training, designed to qualify employees to provide a personalized and efficient customer service, seek to preserve relations and increase the customers’ loyalty to the Bank.

Retail Bradesco also has a Digital Branch, operating in a virtual environment and via courier service. The Branch has a team of managers who attend customers regardless of location, from 8h00 to 20h00, 7 days a week.

• Bradesco Corporate Banking

Bradesco Corporate Banking’s specialized structures are designed to provide the best possible service to 1,295 Economic Groups comprising its target market, segmented as follows:

Corporate - The structure devised to conduct the Bank’s relationship with Brazil’s major corporations employs specialized professionals who have a thorough working knowledge of the corresponding economic sectors and companies and as a result are capable of offering complete solutions with real added value, resolving problems in areas ranging from cash management and private pension plans to asset management, overseas trade and risk management.

Infrastructure - This unit is responsible for corporate relationships in the power, sanitation, transport and large-scale construction sectors, focusing on the development of structured solutions designed to meet specific sector needs, including the structuring of long-term financing, under the project finance regime, capital market and corporate finance, as well as other activities.

Agribusiness - This is a specialized structure formed to attend companies in this key economic segment, designed to provide product and service solutions in line with their specific corporate needs. As part of the Corporate Banking services, this area is able to operate throughout the production chain in the pursuit to implement feasible structured solutions.

Asian Desk - A partnership entered into with the UFJ Bank for the purpose of developing financial solutions, in the role of economic and financial advisor and main banker for companies interested in the commercial and financial flows between Brazil/Japan and Brazil/Asia.

Euro Desk – This unit is focused on the management of customers of Spanish origin and the development of financial solutions for Bradesco Corporate companies, prospecting business synergies in Europe, the U.S. and Latin America.

• Bradesco Empresas (middle market)

Bradesco’s middle market segment, Bradesco Empresas, was created in April 2002, designed to offer quality corporate customer service for companies all over Brazil.

This segment targets middle market companies with annual billings from R$ 15 million to R$ 180 million.

The Bradesco Empresas service offers exclusively reserved Branches for its corporate customers in this segment, located in strategic areas.

This segment has 66 service outlets throughout Brazil distributed as follows: Southeast (41), South (16), Central West (4) Northeast (3) and North (2) with 15,982 corporate customers from the different production chain sectors.

The personalized service offered by Bradesco Empresas requires permanent investment in training for our Relationship Managers and the adaptation of the IT structure, designed to provide added value and consequently increase the Bank’s share of this segment.

Since they are responsible for a maximum portfolio of 25 to 30 economic organizations, each Relationship Manager is able to focus on increasing business in the following areas: Loans, Investments, Foreign Trade, Derivatives, Cash Management and Structured Transactions.

• Bradesco Private Banking

Through its highly qualified and specialized staff, Bradesco Private Banking offers personalized advisory services to its high-wealth consumer customers, with a minimum of R$ 1 million in funds available for investment, recommending the best available options for forming their portfolios, seeking to increase their wealth, in line with their objectives.

Bradesco Prime

The target public comprises consumer customers with a monthly income of more than R$ 4 thousand or with investments in excess of R$ 50 thousand.

Bradesco's customers who are compatible with this profile are invited to join the Bradesco Prime segment.

Bradesco Prime Customers have access to an exclusive network comprising 172 Branches throughout Brazil, as well as to the extensive Bradesco Customer Service Network, including its nationwide branches and self-service network.

Bradesco Prime is designed to coordinate the Bank’s commercial relationship with these segment customers, providing VIP facilities especially designed to provide comfort and privacy, personalized attendance by Relationship Managers, as well as differentiated products and services.

The Relationship Managers continually enhance their professional qualifications to ensure that all the financial needs of their customers are taken care of. Since portfolios are kept small, managers are able to dedicate special attention to each customer.

• Customer Service Network

  2003 2004
  September June September
  Branches PABs/PAEs Branches PABs PAEs  PAAs Branches PABs PAEs  PAAs
Consolidated 3,033  1,958  3,054  782  1,427  19  3,049  806  1,458  19 
Bradesco 2,811  1,763  2,977  765  1,417  -  2,972  789  1,448  - 
BCN 221  195  -  -  -  -  -  -  -  - 
BEM -  -  76  17  10  19  76  17  10  19 
Banco Finasa 1  -  1  -  -  -  1  -  -  - 
Banco Postal 3,144  5,013  5,299 
Branches abroad 7  7  6 
Subsidiaries abroad 6  6  6 
ATMs 22,462  21,600  21,733 
Self-service branch network outplaced terminals 1,842  1,822  1,866 
Finasa Promotora de Vendas 53  53  52 
Promovel Empreendimentos e Serviços -  68  69 
N.B.

The BCN Customer Service Network was incorporated on February 25, 2004: 125 Branches were integrated under the Bradesco banner, 24 were re-opened as Prime Branches and 100 PABs, 89 PAEs and 57 correspondents were transferred to Bradesco.

PAB (banking service post), PAA (advanced banking post) and PAE (electronic service outlet).

Customer Service Network - Branches

Customer to Branch Ratio - thousand

Bradesco and Market Share

REGION/STATE BRADESCO BEM BANCO FINASA TOTAL CONSOLIDATED  TOTAL BANKS IN MARKET (1) Market SHARE (%)
North
Acre 5  -  -  5  31  16.1
Amazonas 59  -  -  59  132  44.7
Amapá 4  -  -  4  21  19.0
Pará 50  -  -  50  271  18.5
Rondônia 18  -  -  18  88  20.5
Roraima 2  -  -  2  17  11.8
Tocantins 13  -  -  13  78  16.7
Total 151  -  -  151  638  23.7
Northeast
Alagoas 12  -  -  12  123  9.8
Bahia 231  -  -  231  737  31.3
Ceará 29  -  -  29  359  8.1
Maranhão 26  76  -  102  254  40.2
Paraíba 17  -  -  17  169  10.1
Pernambuco 65  -  -  65  459  14.2
Piauí 10  -  -  10  113  8.8
Rio Grande do Norte 14  -  -  14  133  10.5
Sergipe 13  -  -  13  152  8.6
Total 417  76  -  493  2,499  19.7
Central West
Federal District 33  -  -  33  292  11.3
Goiás 107  -  -  107  537  19.9
Mato Grosso 61  -  -  61  229  26.6
Mato Grosso do Sul 56  -  -  56  223  25.1
Total 257  -  -  257  1,281  20.1
Southeast
Espírito Santo 40  -  -  40  315  12.7
Minas Gerais 286  -  -  286  1,822  15.7
Rio de Janeiro 270  -  1  271  1,649  16.4
São Paulo 1,104  -  -  1,104  5,518  20.0
Total 1,700  -  1  1,701  9,304  18.3
South
Paraná 178  -  -  178  1,246  14.3
Rio Grande do Sul 161  -  -  161  1,392  11.6
Santa Catarina 108  -  -  108  816  13.2
Total 447  -  -  447  3,454  12.9
Total 2,972  76  1  3,049  17,176  17.8
(1)

Source: CADINF-DEORF/COPEC - August 2004.

Customer Service Network (Branches) - Market Share September 2004

• Bradesco Day and Night Customer Service Channels

As well as the traditional Customer Service Network (Branches), Bradesco customers are able to consult their banking transactions, carry out financial transactions and purchase products and services deployed via state-of-the-art technology through the following alternative channels: Self-service (Auto-Atendimento), Easy Phone (Fone Fácil) and Internet Banking.

Bradesco Day and Night - Self-Service ATM Network

This self-service ATM network, distributed strategically throughout Brazil, has 21,733 terminals (Bradesco - 21,529 and Banco BEM - 204).

Located in bank branches and in all areas of important economic agglomeration: Shopping Malls, Hypermarkets, Supermarkets, Airports, Service Stations, Bus Terminals, etc.

Bradesco Self-Service Network Distribution - Monthly Productivity - September 2004

Transactions – thousand

Financial Volume – In millions of reais

Self-service Network Highlights

Items 2003  2004 
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. 1st Qtr. 2nd Qtr. 3rd Qtr.
Banking service outlets (nationwide network) 5,762  5,845  6,172  6,487  6,628  6,783  6,858 
Outplaced terminals (excluding branches, PABs and PAEs) 1,755  1,772  1,842  1,794  1,752  1,822  1,866 
Cash withdrawal transactions (million) 92.5 95.6 98.9 109.9 101.1 103.4 107.8
Deposit transactions (million) 47.0 47.6 48.4 50.5 47.9 48.7 50.2
Inter-account transfers (million) 4.5 4.6 4.8 5.2 5.0 5.1 5.3
Express checkbooks issued (million) 2.5 2.6 2.6 2.9 2.5 2.6 2.6
Balance consultations (million) 99.5 102.2 115.3 133.7 132.0 140.0 152.3

Third-quarter Highlights for 2004

Bradesco Day and Night - Easy Phone Service (Fone Fácil)

Nationwide 24-hour call-center access, 7 days a week, with Electronic Voice-Response (EVR) technology and personalized calls in 70 regions.

Personalized calls are routed via Bradesco’s Data and Voice Network to call centers in São Paulo - Santa Cecília and Osasco (Headquarters).

Number of Calls - million

Number of Transactions - thousand

Financial Volume - In millions of reais

Third-quarter highlights for 2004

Bradesco Day and Night - Internet Banking

The Bradesco Portal contains links to 28 related websites. Since it was first launched, Bradesco Internet Banking has focused on innovating and deploying the largest number of online services possible for its customers.

At present, Bradesco Internet Banking offers its customers 255 different services for consumer customers and 199 for corporate customers, which can be accessed around the clock, seven days a week from anywhere on earth.

The results achieved to date evidence the enormous potential of Internet Banking.

Transactions – thousand (*)


(*)

Via Internet Banking, ShopInvest, Cards, ShopCredit and Net Empresa.

Financial Volume – in millions of reais (*)

(*)

Via Internet Banking, ShopInvest, Cards, ShopCredit and Net Empresa.

Internet Banking – Registered users - thousand

Third-quarter highlights for 2004

Services Position in 2004 up to September 30, 2004
• Bradesco Internet Banking 6.3 million registered users.
(www.bradesco.com.br) 211.2 million transactions carried out.
• ShopInvest Bradesco 1,045 thousand registered users.
(www.shopinvest.com.br) 825 thousand transactions carried out.
• ShopCredit 8.1 million transactions/operations carried out.
(www.shopcredit.com.br)
• Bradesco Net Empresa 266,840 registered companies.
(www.bradesco.com.br) 15.4 million transactions/operations conducted.
• B2C 1.5 million transactions/sales posted.
(www.bradesco.com.br) 2,327 stores registered with Bradesco Online Payment Methods.
• Bradesco Cards 12.9 million transactions carried out.
(www.bradescocartoes.com.br)
• Bradesco Internet Banking for the Visually Impaired
(www.bradesco.com.br)		 2,362 active registered users.
• Web Point 112 terminals installed.
• Bradesco Net Express 1,912 companies registered.
6.1 million transactions carried out.
• Infoemail 175 thousand registered users.
• Infocelular 6,183 registered customers.
• Mobile Banking (WAP) 442 thousand transactions carried out.

• Banco Postal

Banco Postal is an important instrument for disseminating banking services, social inclusion and the development of Brazil’s rural communities, introducing basic financial products and services to low income bracket families, living in large urban centers or tucked away in far-off corners of the country.

Today, 1,609 towns and villages, with no previous bank access, can rely on the services offered by Banco Postal, bringing benefits to a population of 14.5 million people.

Banco Postal and the Branch Network are responsible for more than 2.3 million customers, consolidating the segmentation process.

Through Banco Postal, in partnership with the Brazilian Postal and Telegraph Company (ECT) and other important contracts with retail networks, Bradesco is at the vanguard of the Correspondent Bank segment, extending even further the outlets used to offer its products and services.

Number of accounts opened (accumulated) - thousand

Number of branches opened (accumulated)

Number of Transactions carried out Monthly - thousand

• Investments in Infrastructure, Information Technology and Telecommunications

The investments for expanding operating capacity, infrastructure, IT and telecommunications at the Bradesco Organization are designed to maintain a modern, practical and secure customer service network, characterizing the Bank as one of the world's most contemporary companies and creating added value for its customers and users at home and abroad.

Investments

  In millions of reais
 
  1999  2000  2001  2002  2003  Accumulated to September 2004
 
Infrastructure 215  227  509  613  469  185 
IT/Telecommunications 553  617  743  947  1,225  981 
Total 768  844  1,252  1,560  1,694  1,166 

• Risk Management and Compliance

Activity and Structure

Risk management is becoming increasing importantly, not only as a result of the global economy but also because of the complex services and products provided to communities. Accordingly, Bradesco is constantly enhancing its risk management related activities in the pursuit to incorporate best international practices.

At Bradesco, risk management is seen as a competitive advantage, which adds value to the Bradesco mark, since it provides the support required by the business areas for planning their activities, ensuring that resources are optimized and capital is allocated to the benefit of stockholders and society as a whole.

Aware that integrated risk management provides a competitive edge to activities, Bradesco formed the Risk Management Department in July 1998 which, subsequent to the incorporation of compliance functions in March 2002, became the Risk Management and Compliance Department – DGRC. In July 2003, the department gained a statutory department director and aggregating the activities related to credit risk and other initiatives already in place in other areas of the Organization, commenced the integrated management of credit, market, liquidity and operating risks and compliance functions (comprising money laundering prevention, internal controls, information security, validation of transactions and Brazilian Payments System risks).

Organizational Structure of the Risk Management and Compliance Department:

The structure of the Risk Management and Compliance Department is designed not only to guarantee area independence but also to place greater focus on these important value-added activities, demonstrating the Organization’s commitment to the implementation of best corporate governance practices, making every effort to invest in and build its risk management capabilities, since as well as its banking activities, Bradesco is extending risk analysis procedures to cover its equity related companies such as BRAM - Bradesco Asset Management and all the insurance companies (Life, Private Pension Plans, Health, Premium Bonds and other insurance), in respect of market and actuarial risks, consolidating a single risk management culture on an Organization-wide basis.

The Risk Management and Compliance Department is also responsible for coordinating compliance with the regulations to be issued by the Brazilian Central Bank relating to the New Capital Accord (Basel II) published by the Basel Committee in June 2004.

The Bradesco Organization and the New Basel Capital Accord

Bradesco operates in sync with best market practices and guidance from the Basel Committee, anticipating dissemination by the Brazilian Central Bank of the rules to be applied in the local market, since it considers that these practices are strategic to the improvement of its internal management processes, reflecting competitive advantage in the conduction of its business.

Risk Management Process

Bradesco adopts a comprehensive and integrated approach for managing all risks inherent to its activities, based on the support from its Internal Controls and Compliance structure. This integrated view permits the enhancement of its risk management models, filling possible lacunas which could jeopardize the correct identification and assessment of risks.

Credit Risk Management

As part of its credit risk management enhancement process, Bradesco is working uninterruptedly to improve the procedures for gathering and controlling portfolio information, to develop new loss estimation models, enhance and prepare rating inventories used in the various sectors in which the Bank operates, oversee credit analysis, granting and settlement processes, to monitor credit concentration, to identify the causes of default and in the preparation of risk mitigation plans.

Efforts are focused on the adoption of advanced and robust models which are used to assess the risks inherent to all the components of the credit process, in line with best practices, as well as the recommendations of the most advanced models comprising the New Basel Capital Accord.

The following efforts, among others are highlighted:

- Mapping, measurement and identification of credit risk management capacity gaps, as regards Basel II requirements, as well the best practices, embracing roles and responsibilities, professional qualification, review of the organizational structure and IT demands.

- Creation of an Executive Credit Risk Committee responsible for assuring the strategic management of the credit operation portfolio.

- Structuring of the expected loss and capital allocation calculation system in line with Basel II requirements.

- Backtesting of models used to assess the credit portfolio risks.

- Improvement of the management information systems designed to meet the requirements of the present customer segmentation approach, with the emphasis on decision making and credit portfolio management.

- Review and restructuring of internal processes, embracing roles and responsibilities, capacity building, review of organizational structures and information technology demands.

Credit Policy

Designed to ensure maximum security, quality and liquidity in the investment of assets, minimizing risks inherent to all types of credit operation, the Organization's Credit Policy also seeks to offer agile and profitable business, applying appropriate methodology for each of the Bank’s business segments, as well as directing the establishment of operating limits and the granting of credit.

Credit is granted based on a highly automated and efficient approvals system, supported by assessment policies which are geared by constantly improving technical parameters designed to ensure proper support for credit decisions.

As part of this system, the Branches operate within varying limits depending on the size and type of guarantee offered, while specialized credit scoring systems maximize the speed and security of the approvals process, based on strict protection standards.

The credit committees located at the Bank's headquarters also play an important role, centralizing, analyzing and authorizing credit operations at amounts above the branch limits and managing this core strategic activity.

Operations are diversified, non-selective and focused on consumer and corporate customers with sound payment capacity and proven creditworthiness. Care is taken to ensure that the underlying guarantees are sufficient to cover the risks assumed, considering the purpose and terms of the credit granted.

Methodology used for Credit Portfolio classification

In addition to supporting the establishment of minimum parameters for granting credit and managing risk, the credit risk scoring system established by the Brazilian Central Bank also facilitates the definition of differentiated credit policies based on the customer's specific characteristics and size, providing a basis for the correct pricing of operations and for establishing the most appropriate guarantees for each situation.

In accordance with internal policy, Bradesco Customer risk ratings are established on a corporate basis and are periodically reviewed to maintain the quality of the credit portfolio. These ratings are segmented as follows:

Rating Bradesco % Provision Concept
AA Excellent 0.0 Premium company/group, with size, tradition and market leadership, with excellent reputation and economic and financial position.
A Very Good 0.5 Company/group with size, sound economic and financial position, acting in markets with good prospects and/or potential for expansion.
B Good 1.0 Company/group which, regardless of size, has a good economic and financial position.
C Acceptable 3.0 Company/group with a satisfactory economic and financial situation but with performance subject to economic scenario variations.
D Fair 10.0 Company/group with economic and financial position in decline or unsatisfactory accounting information, under risk management.
E
F
G
H		 Deficient
Bad
Critical
Uncollectible		 30.0
50.0
70.0
100.0		 Abnormal course credit operations, classified based on expected loss as per percentage shown.

In the case of consumer customers, the above risk ratings are mainly defined based on their registered reference variables which include: income, equity, restrictions and indebtedness, as well as performance and past relationship with the Bank.

Operating Risk Management

Operating risks are those inherent to activities which provide support for transactions in which the Organization participates and may occur as a result of the interruption of business, system failures, errors, omission, fraud or external events affecting both customers and the Institution.

The Organization is working to comply with future Brazilian Central Bank regulatory requirements, in line with the recent guidelines issued in the New Capital Accord by the Basel Committee in June 2004.

Operating risk is managed at Bradesco based on the dissemination of its culture, disclosure of its policies and development of own methodologies, models and tools designed to permit, among other benefits, the decrease in the allocation of regulatory capital to be subscribed in the pursuit of increased operating efficiency.

Bradesco, through its Operating Risk Management area, prepared a plan designed to achieve full compliance with the 10 principles of good operating-risk-management practice determined by the Basel Committee.

In line with the definition and development of the methodology and accounting and management criteria used for managing operating risk, the area has implemented a specific Internal Management System for streamlining this information, designed to administrate operating loss events, facilitating an in-depth assessment, based on either management or accounting controls.

The cutting-edge nature of this internal operating risk management process can be regarded as a benchmark of Bradesco’s important status within Brazil’s financial scenario, increasing its competitive edge as a result of greater operating efficiency and adding stockholder value, as well as extending its relationship of trust with customers, the market and regulatory bodies.


The mitigation of operating risk is considered crucial for improving efficiency and business quality.

Market Risk Management

Market risk is related to the possibility of the loss of income from fluctuating rates caused by mismatched maturities, currencies and indices of the Institution's asset and liability portfolios. This risk is monitored on a strict basis by the financial market to avoid losses for institutions.

At Bradesco, market risks are managed through methodologies and models which are consistent with local and international market realities, ensuring that the Organization's strategic decisions are implemented with speed and a high level of reliability.

The Organization adopts a conservative policy regarding market risk exposure; V@R (Value at Risk) limits are defined by Senior Management, and compliance is monitored daily by an area which is independent from portfolio management. The methodology used to determine V@R has a reliability level of 97.5%. The volatilities and correlations used by the models are calculated on statistical bases and are used in processes based on future prospects in accordance with economic studies.

The methodology applied and current statistical models are validated daily using backtesting techniques.

We present below the V@R of the Own Portfolio positions (Treasury):

  In thousand of reais 
 
  2003  2004 
 
Risk Factors March  June  September December March  June  September
 
Prefixed 6,293  6,541  12,658  5,888  2,832  7,267  1,586 
Exchange coupon 9,662  14,717  19,000  17,999  15,245  51,719  15,172 
Foreign currency 1,807  439  184  2,907  55  285  612 
Floating rate 105  10  13  11  -  -  - 
Correlated effect (3,804) (3,243) (3,395) (5,858) (1,322) (1,902) (1,109)
V@R 14,063  18,464  28,460  20,947  16,810  57,369  16,261 

We present below the V@R of the positions related to the Group’s commercial transactions:

  In thousands of reais
  2003 2004
Risk Factors December March June September
Prefixed 379  2,856  6,384  3,153 
IGP-M 14,696  5,748  9,161  7,885 
TR 3,771  5,739  8,105  4,012 
Exchange coupon 3,456  742  466  1,180 
Foreign currency 2,183  723  2,125  1,953 
Other 62  45  36  31 
Correlated effect (8,879) (5,630) (10,153) (7,802)
V@R 15,668  10,223  16,124  10,412 

In addition, a daily Gap Analysis is performed to measure the effect of the movement in the internal interest rate and foreign exchange coupon curves (interest spread paid above the foreign exchange variation) on the portfolio.

Complementing the market risk monitoring, control and management structure and in accordance with Central Bank regulations, a daily verification is made of the values at risk for the fixed and foreign exchange positions of the Organization’s entire portfolio and of minimum capital requirements.

Liquidity Risk Management

Liquidity risk management is designed to control the different mismatched liquidation terms of the Institution's rights and obligations, as well as the liquidity of the financial instruments used to manage the financial positions.

Knowledge and monitoring of this risk are critical since they enable the Organization to settle transactions on a timely and secure basis.

At Bradesco, liquidity risk management involves a series of controls, mainly, the establishment of technical limits and an ongoing assessment of the positions assumed and financial instruments used.

Capital Risk Management

The Organization's capital is managed to optimize the risk to return ratio, minimizing losses through the implementation of well-defined business strategies and maximizing efficiency in the combination of factors which impact the Capital Adequacy Ratio (Basel).

Capital Adequacy Ratio (Basel) – September 2004 - In millions of reais

Calculation
Calculation Basis Consolidated
Financial (1) 		Total
Consolidated (2)
Stockholders’ equity 14,678  14,678 
Minority interest 220  74 
Decrease in deferred tax assets - BACEN Resolution 3059 (132) (132)
Reference equity - Level I 14,766  14,620 
Reference equity - Level II (subordinated debt) 5,771  5,771 
Total reference equity (Level I + Level II) 20,537  20,391 
Risk-weighted assets 103,256  120,296 
Capital adequacy ratio (%) 19.89  16.95 
Variation in stockholders’ equity
Ratio in September 2003 18.37  15.91 
Movement (%)
• Net income for the period 2.80  2.42 
• Interest attributed to own capital (1.38) (1.19)
• Mark-to-market adjustment - securities and derivatives 0.38  0.31 
• Subordinated debt 2.57  2.23 
• Other (0.01) (0.21)
Variation in weighted assets:
• Securities (0.39) (0.90)
• Credit operations (1.58) (1.20)
• Check clearing and other similar services 0.02  0.06 
• Deferred tax assets (0.03) (0.01)
• Risk (swap, market, interest rate and foreign exchange) (0.24) (0.21)
• Memorandum accounts (0.03) (0.04)
• Other assets (0.59) (0.22)
Ratio in September 2004 19.89  16.95 
(1)

Financial companies only
(2)

Financial and non-financial companies

Compliance

The Organization has developed a number of systems, policies and internal controls over the years to mitigate possible potential losses generated by its exposure to risk.

Aware of the importance of these controls, Bradesco has developed and implemented certain tools designed to optimize these processes and procedures, among which we highlight the following:

-

Implementation of an internal controls system (Compliance), based on the pillars defined by Basel and the methodology of the Committee of Sponsoring Organizations (COSO), mainly as regards components in the following areas: control environment, risk assessment, control activities, information, communications and monitoring, ensuring that activities, policies and normative instructions are in constant compliance with legal and regulatory standards.

-

Implementation of a Brazilian Payments System (SPB) management process for the specific purpose of monitoring the flow of messages transmitted between the Organization’s banks and the external entities such as the Brazilian Central Bank, Special Clearance and Custody System (SELIC), clearing houses and other financial institutions. This monitoring process is based on Organization information system tools and intense staff training activities to facilitate the identification and rectification of events in environments and systems and also to ensure that online cash transfers (TEDs) processed via SPB are properly validated. Complementing these monitoring activities, the Bank also adopts a Systems Contingency Plan for SPB to cover the main departments handling critical transactions, addressing pre-established scenarios and actions and reducing the possibility of messages not being correctly processed.

-

Employee training and ongoing improvement of technology tools used to monitor the financial activity of customers and designed to prevent money laundering and utilization of the Organization for processing illegal transactions.

-

Dissemination of processes and procedures to guarantee information security, based on Corporate Information Security Policy and Standards, the guidelines of which establish premises for protecting the confidentiality, integrity and availability of information.

• Cards

  Million
  2003 2004
  2nd Qtr. 3rd Qtr. Accumulated to September 2nd Qtr. 3rd Qtr. Accumulated to September
Number of cards 36.9  39.1  39.1  43.5  45.2  45.2 
    Credit 6.5  6.8  6.8  7.0  7.2  7.2 
    Debit 30.4  32.3  32.3  36.5  38.0  38.0 
Average amount billed - in reais 3,698.7  4,005.6  11,354.6  4,869.9  5,194.5  14,723.1 
    Credit 2,330.1  2,483.4  7,164.4  2,745.8  2,879.4  8,330.1 
    Debit 1,368.6  1,522.2  4,190.2  2,124.1  2,315.1  6,393.0 
Number of transactions 69.9  76.9  215.1  95.8  102.1  288.5 
    Credit 35.9  38.7  111.1  44.0  46.8  134.0 
    Debit 34.0  38.2  104.0  51.8  55.3  154.5 

Credit Cards

The number of Bradesco credit cards increased to 7.2 million in 3Q04, an increase of 5.9% as compared to 3Q03 (Visa and MasterCard banners).

The number of transactions accumulated from January to September grew by 20.6% compared to the same period in 2003. Billings for the period reached the mark of R$ 8.3 billion, a growth rate of 16.3% as compared to the same period in 2003, and a market share of 13.8% of cards under the Visa and MasterCard banners.

In the Visa banner market, where Bradesco has more than 90% of its credit card base, accumulated billings grew by 23% in relation to 2003, as compared to market growth of 21.5%, a 0.3% increase in its market share of 21.1%.

Debit Cards

In the third quarter of 2004, the debit card base increased by 17.6%, compared to the same period in 2003, confirming Bradesco’s leadership as largest issuer in the Visa Electron market.

In terms of billings there was a significant 52.6% increase in comparison with 2003. These two indicators demonstrate clearly that Brazilians are changing their payment habits, substituting checks and cash for the use of cards, especially debit cards.

In 2004, the number of Bradesco card transactions grew by 48.6%, compared to the same period in 2003, against a growth rate of 44.6% by the Visa Electron market.

Income on Credit Cards

Income derived from card services, accumulated from January to September 2004, totaled R$ 723 million, a 20.9% increase, compared to the same period in 2003.

Card Assets

In 3Q04, card assets comprising credits for installment purchase and financing credits grew by 16.9%, as compared to 3Q03, totaling R$ 2.7 billion at the end of the quarter.

Credit Card Base - million

Credit Card Billings - In millions of reais

Debit Card Base - million

Debit Card Billings - In millions of reais

Total Card Base (Credit and Debit) – million

Credit Card Assets- In millions of reais

• International Area

The International Area operates under the following framework:

12 Operational Units in Brazil
Belo Horizonte, Blumenau, Campinas, Curitiba, Fortaleza, Manaus, Porto Alegre, Recife, Rio de Janeiro, Salvador, São Paulo and Vitória.

4 Support Outlets
Belém, Brasília, Franca and Santos.

1 Foreign Exchange Platform
Ribeirão Preto.

11 Units Abroad (Branches and Subsidiaries)
Branch in New York – Bradesco.
Branches in Grand Cayman - Bradesco, BCN, Boavista and Mercantil.
Branch in Nassau – Boavista.
Subsidiary in Buenos Aires - Banco Bradesco Argentina S.A.
Subsidiary in Nassau - Boavista Banking Limited.
Subsidiary in Luxembourg - Banco Bradesco Luxembourg S.A.
Subsidiary in Tokyo - Bradesco Services Co., Ltd.
Subsidiary in Grand Cayman - Cidade Capital Markets Ltd.

Over recent years, the Bradesco Organization, through its International Area has provided important incentives designed to increase Brazil’s foreign trade activities.

As a result, Bradesco recorded through September 2004, a significant volume of US$ 14.6 billion in export exchange contracts. A growth of 36.1% compared to the same period in 2003.

Our Export Market share from January to August 2004 was 20.9%. This performance prompted a 5% increase over our market share of 19.9%, for the same period in 2003.

The financial volume of imports at the end of the third quarter of 2004 totaled US$ 5.2 billion, some 18.1% more than the total of US$ 4.4 billion for the same period in 2003. Market share at the end of the period from January through August 2004 was 12.5%.

As a result of these increases, the International Area ended the third quarter with a balance of US$ 4.1 billion in export and import financing, foreign collateral provided and loans to Brazilian companies located abroad.

Volume of Foreign Currency Trade -
In billions of U.S. dollars

Export Market

Import Market

We present below the foreign trade portfolio balances at the end of the third quarter of 2004:

  In millions of U.S.
dollars 		In millions of
reais
Export financing
 
Advance on foreign exchange contracts - undelivered bills 1,427.2  4,078.7 
Advance on export contracts - delivered bills 545.5  1,558.9 
Prepayments 963.0  2,752.8 
Onlending of funds borrowed from BNDES/EXIM 229.5  656.0 
Documentary drafts and bills of exchange in foreign currency 13.8  39.5 
Indirect exports 6.2  17.8 
Loans under export incentive program (Proex) 0.02  0.07 
Total export financing 3,185.2  9,103.8 
Import financing
Foreign currency import loans 308.6  882.0 
Exchange discounted in advance 155.8  445.4 
Open import credit 55.0  157.0 
Total import financing 519.4  1,484.4 
Guarantees
International guarantees 127.8  365.2 
Total international guarantees 127.8  365.2 
Total export and import financing 3,832.4  10,953.4 

The foreign exchange portfolio is financed by credit lines obtained from correspondent banks, and at the end of September 2004, approximately 90 U.S., European and Asian Banks had extended credit lines to Bradesco.

The Bank also has a Commercial Paper program in the United States in the amount of US$ 300 million, which was renewed in June 2004 for a 1-year period.

At September 30, 2004 - In millions of U.S. dollars
Assets Stockholders' equity
Foreign Branches and Subsidiaries
    Bradesco New York 1,666.7  142.0 
    Bradesco Grand Cayman 5,788.2  793.7 
    BCN Grand Cayman 366.4  143.0 
    Boavista Grand Cayman, Nassau and Banking Ltd. - Nassau 442.2  87.3 
    Cidade Capital Markets Ltd. - Grand Cayman 30.3  30.3 
    Bradesco Services Co. Ltd. - Tokyo 0.5  0.4 
    Mercantil Grand Cayman 343.0  152.5 
    Banco Bradesco Argentina S.A. 18.4  16.6 
    Banco Bradesco Luxembourg S.A. 291.4  130.4 

The core objective of the foreign branches and subsidiaries is to obtain funds in the international market for onlending to customers, principally through the financing of Brazilian foreign trade.

The main activity of the subsidiary Banco Bradesco Luxembourg S.A. is to provide additional services to private banking customers and to increase foreign trade operations.

At the end of the 9-month period, as well as short-term funds obtained from correspondent banks for foreign trade financing, loans of US$ 1.1 billion on a consolidated basis were raised by the Bradesco Organization through public and private placements in the international capital market, earmarked for foreign trade financing and working capital loans.

We highlight below the following public issues comprising this amount:

Issues Currency Million Date issued Maturity
FxRN – Banco Bradesco US$ 100.0 2.9.2004 2.9.2006
FxRN – Banco Bradesco US$ 100.0 3.2.2004 3.1.2007
USCP – Banco Bradesco US$ 300.0 14.6.2004 13.6.2005
Securitization MT 100 – Series 2004-1 – Fixed (*) US$ 100.0 28.7.2004 20.8.2012
Subordinated Debt (€ 225 million) – Banco Bradesco US$ 275.9 15.4.2004 15.4.2014
(*)

International Diversified Payment Rights Company.

Public and Private Placements Abroad – Outstanding - Base date September 2004

Issues Currency Million Date issued Maturity
FxRN US$ 99.7 8.11.1996  5.11.2004 
FxRN US$ 75.0 15.5.2003  16.11.2004 
FxRN US$ 125.0 11.12.1996  10.12.2004 
FxRN US$ 150.0 17.6.2003  20.12.2004 
FxRN US$ 100.0 2.12.2003  3.1.2005 
FxRN US$ 28.1 22.1.1997  21.1.2005 
FxRN US$ 12.9 26.6.1997  24.6.2005 
FxRN US$ 6.5 28.7.1997  27.7.2005 
FxRN US$ 100.0 8.8.1997  5.8.2005 
FxRN US$ 100.0 2.9.2004  2.9.2006 
FxRN US$ 100.0 26.12.2003  26.12.2006 
FxRN US$ 100.0 3.2.2004  3.1.2007 
USCP US$ 300.0 14.6.2004  13.6.2005 
Securitization MT 100 – Series 2003-1 – Fixed (*) US$ 200.0 20.8.2003  20.8.2010 
Securitization MT 100 - Series 2003-2 – Floating (*) US$ 200.0 20.8.2003  20.8.2010 
Securitization MT 100 - Series 2004-1 – Fixed (*) US$ 100.0 28.7.2004  20.8.2012 
Subordinated Debt US$ 150.0 17.12.2001  15.12.2011 
Subordinated Debt (¥ 17.5 billion) US$ 133.2 25.4.2002  17.4.2012 
Subordinated Debt US$ 500.0 24.10.2003  24.10.2013 
Subordinated Debt (€ 225 million) US$ 275.9 15.4.2004  15.4.2014 
(*) International Diversified Payment Rights Company
PUBLIC ISSUES US$ 2,856.3      
Private Issues US$ 356.4      
Total US$ 3,212.7      

The Bradesco Organization had the following programs in September 2004:

Type Currency Million
Euro CD Program US$ 1,000.0 
MTN Program US$ 2,500.0 
USCP US$ 300.0 
Total US$ 3,800.0 

• Capital Market

Underwriting Transactions

Up to September 2004, Bradesco coordinated important transactions with shares, debentures and promissory notes which totaled R$ 7.099 billion, comprising 57.46% of all issues registered at the Brazilian Securities Commission (CVM).

Transactions with shares, comprised the following: public offer of primary market shares of Braskem S.A., in the amount of R$ 1 billion and of CPFL Energia S.A., in the amount of R$ 940 million, as well as a public offer of secondary market shares of Weg S.A., in the total amount of R$ 320 million. Among the fixed income transactions we highlight: the public offer of debentures of Braskem S.A. in the amount of R$ 1.2 billion, of Suzano Bahia Sul Papel e Celulose, in the total amount of R$ 500 million, and of the São Paulo State Basic Sanitation Company – SABESP, in the amount of R$ 600 million.

% Share of Transactions

Of the total number of floating and fixed-return transactions registered at CVM up to September 2004, Bradesco participated in 57% of primary and secondary share issues, in 37% of debenture issues and in 67% of promissory notes issues.

Mergers, Acquisitions, Project Finance, Corporate Reorganization and Privatizations

In March 2004, ANBID published its Mergers & Acquisitions Ranking for 2003 in which Bradesco was rated segment leader for the 2nd consecutive year in number of transactions, with completion of a total of 8 operations.

ANBID Mergers & Acquisitions Ranking – December 2003

Ranking – number of operations

Consultants Ranking Operations
Bradesco 1st 8
JP Morgan 1st 8
Unibanco 1st 8
Citigroup 4th 6

Continuing this trend, during the first 9 months of 2004, Bradesco signed 4 new powers of attorney, increasing its activity in the Financial Advisory Service and Merger/Acquisition segments.

Among these, we highlight the contract entered into by Bradesco and the Interamerican Development Bank – BID, for structuring an Investment Fund, designed to obtain US$ 500.0 million for investments in infrastructure.

Bradesco’s presence is also notable in Project Finance operations, where it continues to act as a financial advisor to major corporations operating in electric power generation and co-related projects, as well as in the structuring of the corresponding financings.

Structured Transactions

The Structured Transactions Area is responsible for the following:

- Development of structures used to segregate credit risks, through SPEs, Credit Acquisitions, Credit Assignment Funds (FIDCs) and Certificates of Real Estate Receivables (CRIs).

- Structuring of properly protected medium and long-term financings based on pre-defined cash flows pursuant to specific covenants and guarantees which minimize the risks of each transaction.

- Development of structured solutions designed to meet the specific needs of companies, such as: less working capital requirements, increased liquidity, optimization of financial and tax costs, compliance with legal technical limits/financial covenants, sale of permanent assets and structured financings; and

- Coordination of loan syndication processes, including the lengthening of refinanceable debts, structured by the Bank or third parties.

• Collection and Tax and Utility Collections

Cash Management

Bradesco’s cash management solutions comprise a portfolio of more than 40 products designed to meet public and private sector customer management needs in the areas of receipts, payments, human resources and administration, ensuring that their bank transactions are carried out with speed and convenience, in line with superior quality (ISO 9001:2000) and security (electronic certification and sound cryptography) standards.

The innovations have secured the preference of a growing number of customers from all market segments and niches in diverse locations and different activity fields, using latest-generation technology means for connecting the Bank and its customers. We highlight, in particular, the following products:

Receipt Solutions

Bradesco Online Collection

The high efficiency standards of Bradesco’s online collection service generate confidence, minimizing costs and maximizing customer returns, covering all of their accounts receivable management needs. As a result of these features, Bradesco Collection is now market leader, generating other business opportunities for the Organization. Online collection is responsible for processing some 98% of all documents registered in the Bradesco collection portfolio.

Tax and Utility Collections

Developed based on high standards of efficiency and quality, Bradesco’s tax and utility collections serve a dual purpose. On the one hand, they seek to provide customer satisfaction with appropriate and innovative solutions for the settlement of taxes, duties and contributions. On the other, they effectively interact with the different Government Departments in the federal, state and municipal spheres and with public utility concessionaires.

Bradesco’s tax and utility collection services are noted for the speed and security of the data transmitted and amounts collected.

Payment Solutions

Net Empresa, Pag-For and PTRB (Online Tax Payments)

As part of the same efficiency commitment, Bradesco’s payment solutions, deployed through the Net Empresa, Pag-For and PTRB products, meet all customer needs, facilitating supplier payments, tax settlements and electronic transfers, online or through the transmission of files with maximum speed and security.

During the first 9 months of 2004, an amount of R$ 287.2 billion was recorded for 80.1 million payment transactions, facilitating the management of Trade Accounts Payable for more than 271 thousand companies.

  In billions of reais
  2003 2004
  2nd Qtr. 3rd Qtr. Accumulated to September 2nd Qtr. 3rd Qtr. Accumulated to September
Receipt solutions (1) 167.0  174.2  501.5  190.0  209.2  582.2 
Payment solutions 68.9  71.7  205.4  97.0  104.9  287.2 
Total 235.9  245.9  706.9  287.0  314.1  869.4 
Taxes 19.0  20.6  58.7  23.7  25.5  73.1 
Water, electricity, telephone and gas 3.8  4.1  11.4  4.7  4.9  14.1 
Social security payments 3.7  4.4  11.4  5.1  5.3  15.5 
Total Public Sector 26.5  29.1  81.5  33.5  35.7  102.7 

(1)

Total movement (funds obtained, used, credits etc.).

  Number of transactions - million
  2003 2004
  2nd Qtr. 3rd Qtr. Accumulated to September 2nd Qtr. 3rd Qtr. Accumulated to September
Receipt solutions (1) 175.4 177.9 518.9 204.0 215.6 623.5
Payment solutions 18.0 19.7 54.9 26.8 29.2 80.1
Total 193.4 197.6 573.9 230.8 244.8 703.6
Taxes 15.5 15.7 46.0 17.0 18.4 55.3
Water, electricity, telephone and gas 28.5 29.9 85.8 31.6 33.4 96.7
Social security payments (2) 10.7 11.3 31.3 11.0 10.7 33.0
Total Public Sector 54.7 56.9 163.1 59.6 62.5 185.0

(1)

Total movement (funds obtained, used, credits etc.).
(2)

Total beneficiaries: more than 3.975 million retirees and pensioners (corresponding to 18% of all those registered with the Brazilian Institute of Social Security - INSS).

N.B. Payment via direct debit
 

36.911 million - January to September 2003
38.034 million - January to September 2004

Growth - Receipt and Payment Solutions

Public Sector Growth

Bookkeeping of Assets and Qualified Custody Services

Bradesco offers its customers the following quality services using an appropriate infrastructure and specialized personnel: custody of securities, controllership, DR-Depositary Receipt, BDR-Brazilian Depositary Receipt, as well as bookkeeping services for stocks, debentures and investment fund quotas.

We present below the main indicators for the third quarter of 2004:

Bookkeeping of Assets

162  

Companies comprise the Bradesco computer-registered share system, with 2.5 million shareholders.

36  

Companies comprise the Bradesco computer-registered debenture system with a market value of R$ 17.3 billion.

16  

Investment funds comprise the Bradesco computer-registered quota system, with a market value of R$ 1.2 billion.

2  

Registered BDR Programs, with a market value of R$ 243.3 million.

Custody and Controllership

R$ 114.7 billion   In assets under custody for customers who use the Bradesco Custody services (Funds, Portfolios and DR).
  
R$ 205.2 billion   Comprises the total equity of the 624 investment funds and managed portfolios using the Bradesco Controllership services.
  
8   Registered DR Programs, with a market value of R$ 25.1 billion.

Assets under Custody - In billions of reais

• Business Processes

Alô Bradesco (Hello Bradesco)

The Hello Bradesco channel was created in April 1985, prior to the introduction of Brazil’s National Consumer Defense Code and represents a pioneer service in the domestic financial system. It acts as the Organization’s main Ombudsman and is structured to manage opinions, complaints, suggestions and praise from the Bank’s customers and other users. In December 2002, this service obtained the NBR ISO 9002:1994 Quality Certificate, and subsequently, in June 2003, NBR ISO 9001:2000 certification.

NBR ISO 9001:2000 Quality Certificate

The Bradesco Organization has 56 products and services certified with this high-level distinction, confirming the Bank’s commitment to assuring ongoing ease and convenience for its customers and banking service users in all of its activity areas.

Methodology for Mapping Processes

This methodology is designed to map the processes carried out by the Organization’s different departments on a stage-by-stage basis which, in conjunction with the information on related products, services and activities, ensures that these processes are effectively analyzed in the pursuit for ongoing improvement, as well as providing the documentation required by the Internal Controls and Compliance System, the Bradesco Quality Management System based on the NBR ISO 9001:2000, the Activity-Based Costing System – ABC and Section 404 of the Sarbanes-Oxley Law.

Activity-Based Costing – ABC

Designed to support the Bank in its actions to improve processes and optimize production resources, practices recommended for decreasing costs, Bradesco adopts the Activity-Based Costing System - ABC which measures the cost and performance of its activities, resources and cost centers.

A thorough knowledge of the Bank’s activities, as well as the correct measurement of the resources consumed by these activities, permit a more accurate analysis of the cost/benefit ratio of each of the Organization’s productive processes and results centers.

We stress that as a result of the application of activity-based costing, the Bank is now meeting the following targets: improved allocation of costs to products, channels and customers; information for supporting studies on which the structuring and negotiation of bank charges are based; product, unit and customer profitability systems support; support for studies concerning outsourcing, incorporations and equipment sharing, as well as support for cost rationalization studies.

Activity-Based Management Program

The Bank has commenced implementation of Activity-Based Management, seeking to exploit the potential benefits of this cost management model which will rapidly lead to the prevention of costs and a pro-active approach regarding the identification of opportunities.

Accordingly, as processes are improved, operating performance can be seamlessly integrated with Bradesco’s strategic objectives, designed to create and/or sustain the Bank’s competitive advantages and add value both for customers and stockholders.

The future mission of Activity-Based Management is to provide permanent support to the planning and control of the Bank’s business processes, ensuring that tactical and operational issues are continually improved, as well as supporting their strategic gearing.

Integrated Management System – ERP

For purposes of providing permanent and appropriate support for its operations and in the pursuit of improved results, as well as extending its capacity to manage the Organization’s resources, Bradesco adopts one of the most modern concepts for integrating organizational processes, using SAP’s Integrated Management System solution mySAP Business Suite.

The implementation of this system represents an innovation in the treatment of the value chain supporting Bradesco’s financial industry, through the adoption of an approach which is focused on processes, people, organizational structure and technology.

Initially, the system will integrate processes in the Human Resources, Training, Purchases, Accounts Payable, and Property and Equipment areas, as well as the Accounting processes on which they are based. The areas integrated through this technology will be able to renew processes and review organizational structures and some 75 thousand system users will be trained via in-class training and distance learning.

As a result of the implementation of the Integrated Management System, Bradesco will benefit most from the organization and standardization of the processes carried out in different areas, secure data processing, increased productivity and agile decision making, as well as decreased operating costs. These factors are crucial for the Organization’s growth, especially in view of current financial area competition, prompting us to pursue increasingly effective management methods designed to ensure that all of Bradesco’s business potential is properly leveraged.

Expenditure Appraisal Committee

In the pursuit of enhanced cost control and the adoption of strategies, policies and measures designed to restrain expenditure, in March 2004, Bradesco created the Expenditure Appraisal Committee, responsible for monitoring administrative and personnel expenses as well as expenditure with capitalization and analyzing their origin with the related areas, seeking to obtain a maximum cost/benefit ratio.

The Committee, in sync with good Corporate Governance practices, is an important tool, as a result of its permanent activity and capacity to anticipate events, for improving and enhancing processes, capable of carrying out an in-depth analysis of Bradesco’s costs, from all standpoints and producing savings which reflect positively on the Organization’s results.

• Recognition

Bradesco was ranked first place for the sixth consecutive year in the list of the 100 largest private business organizations in Brazil, according to the 2004 edition of Exame magazine’s Best and Biggest Guide. Bradesco Vida e Previdência was also ranked first place out of the 50 largest insurance companies by premium volume, according to the same magazine.

The Bank also assumed leadership of the Tier One Capital ranking among Latam banks, based on a study prepared in the UK by the specialized financial magazine The Banker.

Another important distinction was Bradesco’s placement in the traditional list published by the US magazine Fortune Global 500, as the only Brazilian company among the 500 largest companies in the world.

For the third time running, Bradesco was rated Brazil’s Best Fund Manager, according to Exame magazines Best Investment Fund Guide, prepared in partnership with the São Paulo Business Management School, Fundação Getulio Vargas (FGV). Bradesco also won the award for best foreign exchange fund manager, with 19 products obtaining the maximum rating.

Bradesco also comprised the list of the Best Companies in which to Work, published by the 2004 edition of Guia Exame based on a poll organized by Exame magazine, in partnership with the Great Place to Work Institute, among the Organization’s employees.

Bradesco was rated Best Consumer Internet Bank in Brazil, by the UK magazine Global Finance, which analyzed and selected the best bank website in each country.

Bradesco also received the award for best listed company presentation in 2003, from the Association of Capital Market Investment Analysts and Professionals – Apimec.






6 – Social Responsibility








• Human Resources

At September 30, 2004, Bradesco’s employees, including staff at the subsidiaries, totaled 74,227. The following table presents the variation in the Bradesco headcount:

  December 2004
  1998 1999 2000 2001 2002 2003 March June September
Banco Bradesco 47,233  47,521  49,177  51,633  53,732  59,430  63,362  62,245  61,934 
Subsidiaries 7,501  7,301  6,575  6,943  8,729  9,407  10,649  10,601  10,429 
    Subtotal Bradesco 54,734  54,822  55,752  58,576  62,461  68,837  74,011  72,846  72,363 
 
Banco BCN 5,024  4,784  4,780  5,857  6,105  5,203  -  -  - 
Subsidiaries 1,408  1,099  1,172  1,280  1,504  1,741  -  -  - 
    Subtotal BCN 6,432  5,883  5,952  7,137  7,609  6,944  -  -  - 
 
Banco Baneb -  2,756  2,514  -  -  -  -  -  - 
Subsidiaries -  50  -  -  -  -  -  -  - 
    Subtotal Baneb -  2,806  2,514  -  -  -  -  -  - 
 
Banco Boavista -  -  1,564  -  -  -  -  -  - 
Subsidiaries -  -  22  -  -  -  -  -  - 
    Subtotal Boavista -  -  1,586  -  -  -  -  -  - 
 
Banco Mercantil -  -  -  -  3,970  -  -  -  - 
Subsidiaries -  -  -  -  353  -  -  -  - 
    Subtotal Mercantil -  -  -  -  4,323  -  -  -  - 
 
Total not including BEM/Zogbi 61,166  63,511  65,804  65,713  74,393  75,781  74,011  72,846  72,363 
 
Banco BEM -  -  -  -  -  -  502  488  468 
Subsidiaries -  -  -  -  -  -  80  6  - 
    Subtotal BEM -  -  -  -  -  -  582  494  468 
 
Banco Zogbi -  -  -  -  -  -  83  3  3 
 
Subsidiaries -  -  -  -  -  -  1,514  1,441  1,393 
 
    Subtotal Zogbi -  -  -  -  -  -  1,597  1,444  1,396 
 
Total 61,166  63,511  65,804  65,713  74,393  75,781  76,190  74,784  74,227 
 

Employee benefits offered by Bradesco include, among others, health insurance and dental care, as well as a supplementary retirement pension plan.

Human Resources

September 2004
BY AGE BY GENDER BY EDUCATIONAL BACKGROUND BY YEARS OF SERVICE WITH BRADESCO BY MANAGERIAL POSITION
Younger than 30 44%                 Less than 5 years 40%       
         High School 31%         
From 31 to 40 38% Men 54%      From 6 to 10 years 11% Non-managerial 52%
         University 68%         
From 41 to 50 16% Women 46%      From 11 to 20 years 38% Managerial 48%
         Other 1%         
Older than 50 2%           More than 20 years 11%     

Personnel Expenses

Bradesco’s accumulated personnel expenses totaled R$ 3,685 million at September 30, 2004, including expenses for remuneration, social charges, benefits, training, employee profit sharing and others.

The following pie graph presents the percentage share of each item in relation to total Bradesco personnel expenditure:

Composition of Personnel Expenses
9-month period 2004 (*)

Personnel Expenses by Business Segment
9-month period 2004

Training

The Staff Training Department has created and provides specific professional capacity building and enhancement programs providing employees with technical knowledge and behavioral skills, which are in sync with the Organization’s needs and market requirements.

Designed to provide ongoing improvement and quality staff training activities, this area is ISO 9001:2000 certified, guaranteeing that course requests are approved and that employees are satisfied with the programs offered and that training activities are efficient.

The desire to offer tools which permit employee self-development Organization-wide, prompted Bradesco to implement online training in January 2000. This system called TreiNet, offers 30 courses with 358,166 employee participations. In 2004, 5 more technical and 10 behavioral programs were made available.

In order to comply with related legislation, joint actions with the marketing area were required to promote internal-marketing campaigns encouraging staff to participate in courses covering money laundering prevention and internal controls via TreiNet. In addition, written material was distributed to all staff and 4 specific training films in video widely shown.

In compliance with Resolution 3158/03, of the National Monetary Council, preparatory programs for the compulsory Investment Product Certification Exam, were implemented by the Bank. These programs are specifically designed for our specialists in investments responsible for providing investment advice in the branch network and to institutional investors. During the period some 2,700 of our professionals successfully sat this exam.

For purposes of training branch employees in new retail segment strategies, we created the Bradesco Strategic Management program which addresses, among others, the presentation of business potential in the Bank’s different activity areas, as well as the planning of actions designed to increase results, through the related sales of products and services. 2,469 employees took part in this program, including Regional and Branch Managers.

From 1996, in partnership with educational institutions such as FIA, FIPE, FGV and Ibmec, 928 of the Organization’s employees obtained MBAs or other post-graduate degrees and specialization courses. In September 2004, a group commenced studying for the Controller-MBA, in partnership with Fipecafi, com 30 participants, from diverse areas and 3 more groups commenced their MBAs in banking business (two in-class groups and one online group) for branch managers Organization-wide and developed in partnership with FGV - São Paulo and FGV - Rio de Janeiro, with 100 participants.

In the third quarter, training was also given in the products, services, operating systems and customer service areas, with 307 employee participations, in line with the incorporation process of Banco BEM.

During the period from January to September 2004, 1,033 courses were given in 10,520 groups, with 329,944 employee participations and a total of 3,870,053 hours spent in training, as well as investments of R$ 36.7 million.

Increase in Employee Training Participation
Thousand Participations

Total Amount Invested in Training
In millions of reais

• Sociocultural Events

In 3Q04, Bradesco gave support to a number of different social projects throughout Brazil. These consisted of cultural, regional, sector or professional venues, including trade fairs, seminars, conventions and community events.

Once again, Bradesco sponsored the VII Japan Festival in São Paulo, the most important cultural event held by Brazil’s Japanese community. In commemoration of the city’s 450th anniversary, the program schedule was expanded to include even more tourist and cultural attractions. The Bank also gave important support to the 15th Japanese-Brazilian Festival in Maringá, Paraná.

The Bank was also present at the Expointer International Livestock Fair in Esteio, Rio Grande do Sul, one of the most important events held by Brazil’s agricultural industry, as well as at the traditional San Gennaro Feast organized by São Paulo’s Italian community.

Bradesco Seguros continued its important support of the Série Dell’Arte International Concerts at Rio de Janeiro’s Municipal Theatre. Up to September concerts were given by the pianist Nelson Freire, Concerto Italiano, the Akademie Für Alte Musik, Emma Kirkby & The Romantic Chamber Group of London, Herold Quartet and Les Arts Florissants.

In the educational area, the Bradesco Foundation opened its first Computer Clubhouse, a center for digital inclusion where needy children from the Jardim Conceição neighborhood, in Osasco, can acquire skills in digital arts, music CD production and short films for website dissemination. Approximately 350 young people between the ages of 13 and 19 will be enrolled on these courses during the year.

• Social Activities: Finasa Sports Program

The Bradesco Organization maintains its support of sports activities through the FINASA Sports Program (Programa Finasa Esportes), which completed 17 years of activity in 2004. Over this period, the program has become a benchmark in youth education, using the women’s basketball and volleyball teams as an instrument for social inclusion and citizenship. At present, 3,832 girls from 10 to 16 years of age, participate in these sports at 79 training centers, 50 for volleyball and 29 for basketball, which are installed on the premises of state schools, at Osasco’s city hall sports centers, at the Bradesco Foundation School, at the SESI unit and at 3 private schools, all located in the municipality of Osasco, in Greater São Paulo.

• Fundação Bradesco - The Bradesco Organization’s Social Arm

Background

The Bradesco Foundation, a not-for-profit entity, headquartered at Cidade de Deus, Osasco, SP, was founded in 1956 and declared to be of Federal Public Utility by Decree 86,238, on July 30, 1981.

Convinced that education lies at the roots of equal opportunity and personal and collective fulfillment, the Bradesco Foundation currently maintains 40 schools installed as priority in the country’s most underprivileged regions, in all of Brazil’s states and in the Federal District.

Objectives and Goals

Through its pioneer action in private social investment, the Bradesco Foundation’s chief mission is to provide formal, quality education to children, young people and adults, ensuring that they receive the qualifications required to achieve personal fulfillment through their work and the exercising of their rights and duties as citizens.

Accordingly, the Foundation has expanded its activities yearly, increasing the number of students matriculated in its schools from 13,080 to more than 105,000 over the last twenty-four years. The Bradesco Foundation schools offer education free-of-charge at pre, junior and high school levels, as well as basic professional and technical training in IT, electronics, industry, management and agriculture and livestock raising. Distance learning is also offered as part of its Youth and Adult Education programs.

School Locations

The majority of the Foundation's educational units are located on the outskirts of major cities or in rural areas where there is a significant lack of educational and welfare assistance. Thousands of students in all four corners of Brazil are given the opportunity to study at the Foundation schools.

Schools Students
 
Aparecida de Goiânia - GO 2,163 
Bagé – RS 2,129 
Boa Vista - RR 1,940 
Bodoquena - MS 1,136 
Cacoal - RO 2,152 
Campinas - SP 4,707 
Canuanã - TO 1,311 
Caucaia - CE 2,140 
Ceilândia - DF 3,163 
Cidade de Deus - Osasco, SP
    • Unit I 4,009 
    • Unit II 2,816 
    • Basic Supplementary Education Telecenters in Companies 7,004 
    • Professional Training Centers 6,068 
Conceição do Araguaia - PA 2,264 
Cuiabá - MT 2,358 
Feira de Santana - BA 539 
Garanhuns - PE 584 
Gravataí - RS 3,273 
Irecê – BA 2,447 
Itajubá - MG 2,386 
Jaboatão - PE 2,498 
Jardim Conceição - SP 2,375 
João Pessoa - PB 2,058 
Laguna - SC 2,143 
Macapá - AP 2,051 
Maceió - AL 2,489 
Manaus - AM 2,883 
Marília - SP 3,710 
Natal - RN 2,215 
Paragominas - PA 2,323 
Paranavaí - PR 1,869 
Pinheiro - MA 2,220 
Propriá - SE 2,031 
Registro - SP 2,344 
Rio Branco - AC 2,224 
Rio de Janeiro - RJ 4,108 
Rosário do Sul - RS 840 
Salvador - BA 2,070 
São João Del Rei - MG 2,043 
São Luís - MA 2,444 
Teresina - PI 2,220 
Vila Velha - ES 1,992 
 
Basic Professional Education
Rural Area - Artificial Insemination
 
Cáceres - MT 200 
Campinas - SP 400 
Campo Grande - MS 200 
Goiânia - GO 200 
Igarapé - MG 200 
Ilhéus - BA 100 
Uberaba - MG 440 
 
Subtotal 1,740 
 
Total (*) 107,479 
(*) Projected for 2004.

The Bradesco Foundation - An Educational Project of the Size of Brazil

Financing

The Bradesco Foundation activities are funded exclusively by resources from its own income and donations made by the Bradesco Organization Companies.

Investments in 2003 R$ 138.3 million
Budget for 2004 R$ 148.3 million

Courses - Grades - Forecast for 2004

  Students % of total
Infant 3,536  3.30 
Junior and Middle 30,653  28.52 
High School and Technical/Vocational Training 16,631  15.47 
Youth and Adult Education 21,705  20.19 
Basic Professional Training 34,954  32.52 
Total 107,479  100.0 

Student Profile - Base: December 2003

Increase in Student Numbers

• Statement of Social Responsibility for the Nine-month Period Ended September 30, 2004 and 2003

1) Calculation basis Nine-month Period 2004
(in thousands of reais 		Nine-month Period 2003
(in thousands of reais
Net revenue (RL) (1) 8,162,088  7,136,070 
Operating income (RO) 2,582,958  2,666,360 
Gross payroll (FPB) 3,684,584  3,507,428 

2) Internal social indicators In thousands of reais % of FPB % of RL In thousands of reais % of FPB % of RL
Meals 337,091  9.2% 4.1% 287,035  8.2% 4.0%
Compulsory social charges 683,274  18.5% 8.4% 587,385  16.7% 8.2%
Private pension plans 159,185  4.3% 1.9% 226,633  6.5% 3.2%
Healthcare insurance 156,474  4.3% 1.9% 139,424  4.0% 2.0%
Safety and medical care in the workplace -  -  -  -  -  - 
Education -  -  -  -  -  - 
Culture -  -  -  -  -  - 
Professional qualification and training 36,732  1.0% 0.5% 45,916  1.3% 0.6%
On-site child care and child-care benefit 31,193  0.8% 0.4% 21,791  0.6% 0.3%
Employee profit sharing 126,839  3.4% 1.6% 127,966  3.6% 1.8%
Other 66,125  1.8% 0.8% 31,216  0.9% 0.4%
Total - Internal social indicators 1,596,913  43.3% 19.6% 1,467,366  41.8% 20.5%

3) External social indicators In thousands of reais % of RO % of RL In thousands of reais % of RO % of RL
Education 53,518  2.1% 0.7% 44,295  1.7% 0.7%
Culture 5,118  0.2% 0.1% 7,954  0.3% 0.1%
Health and basic sanitation 6,169  0.2% 0.1% 2,296  0.1% - 
Sports 431  -  -  5,991  0.2% 0.1%
Prevention of hunger and food security 261  -  -  532  -  - 
Other 8,944  0.4% 0.1% 7,874  0.3% 0.1%
Total contribution to society 74,441  2.9% 1.0% 68,942  2.6% 1.0%
Taxes (excluding social charges) 1,744,970  67.5% 21.3% 1,784,105  66.9% 25.0%
Total - External social indicators 1,819,411  70.4% 22.3% 1,853,047  69.5% 26.0%

4) Environmental indicators In thousands of reais % of RO % of RL In thousands of reais % of RO % of RL
Investments related to company production/operation -  -  -  -  -  - 
Investments in external programs/projects -  -  -  -  -  - 
Total investments in environment protection -  -  -  -  -  - 

As regards the establishment of “annual goals” for minimizing waste, general production/operation consumption and the efficient use of natural resources, the company: ( ) has no established goals
( ) complies (0 to 50%)
( ) complies (51 to 75%)
( ) complies (76 to 100%) 		( ) has no established goals
( ) complies (0 to 50%)
( ) complies (51 to 75%)
( ) complies (76 to 100%)

5) Employee indicators Nine-month Period 2004 Nine-month Period 2003
Employees at the end of the period 74,227  77,154 
Admissions during the period 3,483  11,994 
Outsourced employees 6,519  7,228 
Trainees/interns 394  488 
Employees older than 45 5,502  5,283 
Women employees 34,119  34,534 
% of management positions held by women 19.2% 18.3%
Black employees (2) N/A  N/A 
% of management positions held by blacks N/A  N/A 
Disabled employees or employees with special needs 701  637 

6) Significant information regarding the level of corporate citizenship Nine-month Period 2004 Goal - Nine-month Period 2005
Ratio between maximum and minimum salary N/A N/A
Total number of accidents in the workplace 367 N/A
The company's social and environmental projects were established by: ( ) directors ( x ) directors and managers ( ) all employees ( ) directors ( x ) directors and managers ( ) all employees
Workplace safety and health standards were defined by: ( ) directors ( ) all employees ( x ) all + Cipa (3) ( ) directors ( ) all employees ( x ) all + Cipa
As regards freedom of trade union activities, collective bargaining rights and internal employee representation, the company: ( x ) does not interfere ( ) complies with OIT (4) rules ( ) encourages activities and complies with OIT rules ( x ) does not interfere ( ) complies with OIT rules ( ) encourages activities and complies with OIT rules
Private pension plans are offered to: ( ) directors ( ) directors and managers ( x ) all employees ( ) directors ( ) directors and managers ( x ) all employees
The company's profit sharing plan is distributed to: ( ) directors ( ) directors and managers ( x ) all employees ( ) directors ( ) directors and managers ( x ) all employees
When selecting suppliers, the ethical, social and environmental responsibility standards adopted by the company: ( ) are not considered ( ) are suggested ( x ) are required ( ) are not considered ( ) are suggested ( x ) are required
As regards the participation of employees in voluntary work programs, the company: ( ) does not interfere ( x ) gives support ( ) organizes and encourages participation ( ) does not interfere ( x ) gives support ( ) organizes and encourages participation
Total number of consumer complaints resolved: at the company N/A at Procon (5) N/A at Court level N/A at the company N/A at Procon N/A at Court level N/A
% of complaints resolved: at the company N/A at Procon N/A at Court level N/A at the company N/A at Procon N/A at Court level N/A

Total added value to be distributed (in thousands of reais) Nine-month Period 2004 : R$ 7,398,167 Nine-month Period 2003 : R$ 6,840,835
Distribution of added value (DVA): 32.8% government 40.1% employees
13.3% stockholders 13.8% retained 		34.7% government42.1% employees
14.6% stockholders 8.6% retained

7) Other information
The information contained in the Statement of Social Responsibility was reviewed by KPMG Auditores Independentes.
(1)

Net revenue (RL) corresponds to Income from Financial Intermediation.

(2)

N/A: not available.

(3)

Internal Accident Prevention Committee.

(4)

International Labor Organization.

(5)

Consumer Protection Agency.

For further information, please contact:

Board of Executive Officers

José Luiz Acar Pedro - Executive Vice-President
and Investor Relations Director

Phone: (# 55 11) 3681 - 4011

e-mail: 4000.acar@bradesco.com.br



General Secretariat - Investor Relations

Jean Philippe Leroy
Investor Relations Executive General Manager

Phone: (#55 11) 3684-9229 and 3684-9231
Fax: (#55 11) 3684-4570 and 3684-4630
e-mail: 4260.jean@bradesco.com.br

Cidade de Deus - Prédio Novo
Osasco - SP - 06029-900
BRAZIL

www.bradesco.com.br/ir






7 – Independent Auditors’ Report








Independent Auditors’ Report on Special Review of Supplementary Accounting Information Included in the Report on Economic and Financial Analysis and Statement of Social Responsibility

To
The Board of Directors and Stockholders
Banco Bradesco S.A.
Osasco - SP

We have performed a special review, in accordance with the specific rules established by IBRACON – Brazilian Institute of Independent Auditors jointly with the Brazilian Federal Accounting Council (CFC), of the consolidated interim report of Banco Bradesco S.A. and its subsidiaries for the nine-month periods ended September 30, 2004 and 2003, and have issued an unqualified report, dated October 27, 2004.

Our review was performed for the purpose of reviewing the consolidated interim report of Bradesco S.A. and its subsidiaries taken as a whole. In connection with our special review, we have performed a review of the supplementary accounting information included in the Report on Economic and Financial Analysis and in the Statement of Social Responsibility, presented exclusively for the purpose of additional analysis and is not a required part of the financial statements.

Based on our special review, we are not aware of any significant modifications that should be made to the supplementary account information for it to be presented adequately, in all material respects, in relation to the interim report taken as a whole.

October 27, 2004

KPMG Auditores Independentes
CRC 2SP014428/O-6

Original report in Portuguese signed by

Walter Iorio Cláudio Rogélio Sertório
Accountant Accountant
CRC 1SP084113/O-5 CRC 1SP212059/O-0






8 – Financial Statements, Report of the Fiscal Council and Independent Auditors' Report








B a n c o B r a d e s c o S.A.
Directors’ Report

To Our Stockholders,

We are pleased to present the financial statements for the period ended September 30, 2004, of Banco Bradesco S.A., as well as the consolidated financial statements, prepared in accordance with the requirements of Brazilian corporate legislation.

Among the important events for the quarter at the Bradesco Organization, we highlight the following:

Bradesco reported net income of R$ 2.002 billion, for the period from January 1 through September 30, 2004, corresponding to R$ 12.66 per share and a return of 18.59% on closing stockholders’ equity and 19.96% on average stockholders’ equity, annualized. The annualized return on total assets was 1.5%, compared to 1.3% for the same period in 2003.

Taxes and contributions, including social security contributions, payable or accrued, on the main activities carried out by the Bradesco Organization for the first nine months of the year, amounted to R$ 2.428 billion, or 121.27% of net income.

At September 30, 2004, the Operating Efficiency Ratio – IEO, accumulated over the prior 12 months, was 58.27%, compared to 60.10% in June 2004, as a result of the control over administrative expenses and increase in income.

Paid-up capital totaled R$ 7 billion at the end of the quarter. Paid-up capital plus reserves of R$ 7.678 billion comprised the total stockholders’ equity of R$ 14.678 billion, up by 13.19% compared to the same period in 2003 and corresponding to net equity per share of R$ 92.81.

Managed stockholders’ equity of R$ 179.703 billion, corresponds to 8.21% of consolidated assets, a 9.33% increase as compared to September 2003. As a result, the capital adequacy ratios were 19.89% on a consolidated financial basis and 16.95% on a consolidated economic and financial basis and accordingly, above the 11% required minimum established by National Monetary Council Resolution 2099 of August 17, 1994, in conformity with the Basel Accord. At the end of the quarter, the ratio of permanent assets to stockholders’ equity, in relation to consolidated reference equity was 42.73% on a consolidated financial basis and 24.22% on a consolidated economic and financial basis, accordingly, within the maximum 50% limit.

In compliance with the provisions of Article 8 of Brazilian Central Bank Circular 3068, of November 8, 2001, Bradesco declares that it has both the financial capacity and the intention to hold to maturity the securities classified in the ‘securities held to maturity’ category.

With a growth rate of 12.47% compared to the same period in 2003, overall funding obtained by the Bradesco Organization amounted to R$ 251.923 billion, at September 30, 2004 and comprised the following:

At the end of the period, the balance of credit operations totaled R$ 59.976 billion and includes the following:

In the housing loan area, the Organization provided funds during the first nine months of the year for the construction and purchase of residential housing in the amount of R$ 478.468 million, comprising 6,152 properties.

As part of its role in supporting the capitalization of companies, Bradesco was an important intermediary in the public placement of shares, debentures and promissory notes, with a total volume of R$ 7.099 billion recorded since the beginning of the year, corresponding to 57.46% of all issues registered with the Brazilian Securities Commission (CVM). The Bank was also an important advisor in corporate and financial restructuring processes, mergers, acquisitions and project finance operations. The Bradesco Insurance Group, with an important role in the insurance, private pension plan and savings bond areas, reported net income of R$ 576.277 million and stockholders’ equity of R$ 4.302 billion, at September 30, 2004. Overall premium attained R$ 10.918 billion, up by 17.35% compared with the same period in 2003.

At the end of the quarter, the Bradesco Organization Network offered its customers and other users access to 12,630 service outlets, as well as 21,529 ATMs in the BDN – Bradesco Day and Night Self-service Network, 18,400 of which also operate at weekends and on bank holidays and more than 204 ATMs in the Banco BEM S.A. customer service network:

3,049

Branches in Brazil (Bradesco – 2,972, Banco BEM – 76 and Banco Finasa – 1).


6

Branches abroad, 1 in New York (Bradesco), 4 in Grand Cayman (Bradesco, BCN, Mercantil and Banco Boavista) and 1 in Nassau, Bahamas (Boavista).


6

Subsidiaries abroad (Banco Bradesco Argentina S.A. in Buenos Aires, Banco Bradesco Luxembourg S.A., in Luxembourg, Boavista Banking Ltd., in Nassau, Bradesco Securities, Inc., in New York, Bradesco Services Co., Ltd., in Tokyo and Cidade Capital Markets Ltd., in Grand Cayman).


5,299

Branches of Banco Postal post-office bank.


2,264

Banking service posts and outlets in companies (Bradesco – 2,237 and Banco BEM - 27).


19

Advanced Banco BEM banking posts.


1,866

Outplaced terminals in the BDN– Bradesco Day and Night Network.


121

Branches of Finasa Promotora de Vendas and Zogbi - Promovel Empreendimentos e Serviços Ltda. present in 13,270 vehicle dealerships and 17,776 stores selling furniture and decor, tourism, auto parts, IT-related equipment and software, DIY materials, clothing and footwear, among others.

In compliance with CVM Instruction 381, the Bradesco Organization declares that, during the quarter, no non-audit services were contracted or rendered by KPMG Auditores Independentes for an amount which exceeds 5% of the total external audit costs. This policy complies with internationally accepted principles designed to maintain the independence of external auditors and which determine that these auditors should not audit their own work, nor exercise management functions for their clients nor promote the interests of such clients. Each external audit is contracted for a maximum five-year period pursuant to Brazilian Central Bank regulations.

In the social field, the Organization’s actions are focused mainly on the educational and welfare programs developed by Fundação Bradesco (the Bradesco Foundation) which, through its 40 schools installed as a priority in regions which are both socially and economically deprived, in all of Brazil’s states and the Federal District, provide education completely free-of-charge. At present, there are more than 107 thousand students at the Foundation Schools, including those taking its youth and adult education equivalency courses and basic professional training programs. More than 50 thousand infant, junior, high and technical school students, also receive free meals, uniforms, school materials and medical/dental care.

In the human resources area, Bradesco’s comprehensive staff training courses ensure that all employees are fully qualified to meet market demands. Through its intensive capability building program, the Bank prioritizes professional specialization, with increasingly positive results in the enhancement of its customer service and the effectiveness of its products and services. During the period, from January through September, 1,033 courses were given with 329,944 employee participations. The benefit plans designed to guarantee the well being, better life quality and security of employees and their dependents, covered 180,628 people at the end of the quarter.

All of these facts confirm Bradesco’s commitment to offer nothing but the best. For this purpose, the support and trust of our stockholders and customers, as well as the dedicated work of our staff and other stakeholders, have been decisive. To all of them, we offer our sincere gratitude.


Cidade de Deus, October 27, 2004

Board of Directors
and Board of Executive Officers


(A free translation of the original in Portuguese)
Consolidated Balance Sheet at September 30 - In thousands of reais

ASSETS 2004  2003 
 
Current assets 137,698,366  132,377,005 
Funds available (Note 8) 2,386,029  2,234,099 
Interbank investments (Notes 3b and 9) 24,458,910  28,345,525 
Open market investments 18,279,891  24,506,656 
Interbank deposits 6,179,784  3,838,922 
Provision for losses (765) (53)
Securities and derivative financial instruments (Notes 3c, 10, 33b and 33c) 45,702,222  41,072,126 
Own portfolio 40,027,062  34,708,520 
Subject to repurchase agreements 602,846  507,073 
Derivative financial instruments (Notes 3d and 33c) 535,358  422,838 
Restricted deposits - Brazilian Central Bank 3,645,317  3,330,355 
Privatization currencies 66,385  85,546 
Subject to collateral provided 824,446  2,017,794 
Unrestricted notes 808  - 
Interbank accounts (Note 11) 14,956,469  12,778,895 
Unsettled payments and receipts 638,390  590,644 
Restricted deposits:
- Brazilian Central Bank 14,244,337  12,068,842 
- National Treasury - Rural funding 578  578 
- National Housing System - SFH 40,833  96,985 
Correspondent banks 32,331  21,846 
Interdepartmental accounts 99,863  181,780 
Internal transfer of funds 99,863  181,780 
Credit operations (Notes 3e, 12 and 33b) 33,266,967  27,894,561 
Credit operations:
- Public sector 382,388  23,952 
- Private sector 35,550,951  30,628,142 
Allowance for loan losses (Notes 3e, 12f and 12g) (2,666,372) (2,757,533)
Leasing operations (Notes 2, 3e, 12 and 33b) 857,221  777,811 
Leasing receivables:
- Private sector 1,721,269  1,717,690 
Unearned lease income (810,915) (865,658)
Allowance for leasing losses (Notes 3e, 12f and 12g) (53,133) (74,221)
Other receivables 15,049,891  18,229,108 
Receivables on guarantees honored (Note 12a-2) 434  749 
Foreign exchange portfolio (Note 13a) 8,960,299  11,925,580 
Income receivable 236,729  285,100 
Negotiation and intermediation of securities 85,323  256,927 
Insurance premiums receivable 961,590  890,543 
Sundry (Note 13b) 4,957,953  4,997,829 
Allowance for other losses (Notes 3e, 12f and 12g) (152,437) (127,620)
Other assets (Note 14) 920,794  863,100 
Other assets 490,749  658,987 
Allowance for losses (239,614) (242,621)
Prepaid expenses (Note 14b) 669,659  446,734 
Long-term receivables 36,975,371  26,916,850 
Interbank investments (Notes 3b and 9) 666,791  212,935 
Open market investments -  - 
Interbank deposits 668,713  212,935 
Provision for losses (1,922) - 
Securities and derivative financial instruments (Notes 3c, 10, 33b and 33c) 12,452,437  6,833,352 
Own portfolio 8,916,541  5,722,957 
Subject to repurchase agreements 2,022,068  722,149 
Derivative financial instruments (Notes 3d and 33c) 48,959  308,349 
Restricted deposits - Brazilian Central Bank 275,110  19,460 
Privatization currencies 7,388  - 
Subject to collateral provided 361,552  60,437 
Unrestricted notes 820,819  - 
Interbank accounts (Note 11) 280,122  291,871 
Restricted deposits:
- National Housing System - SFH 280,122  291,871 
Credit operations (Notes 3e, 12 and 33b) 15,241,094  12,652,062 
Credit operations:
- Public sector 241,107  177,732 
- Private sector 16,206,755  13,575,892 
Allowance for loan losses (Notes 3e, 12f and 12g) (1,206,768) (1,101,562)
Leasing operations (Notes 2, 3e, 12 and 33b) 494,021  538,406 
Leasing receivables:
- Private sector 1,171,119  1,188,624 
Unearned lease income (630,309) (601,921)
Allowance for leasing losses (Notes 3e, 12f and 12g) (46,789) (48,297)
Other receivables 7,616,104  6,067,805 
Income receivable 6,114  2,764 
Negotiation and intermediation of securities -  187 
Insurance premiums receivable 25  673 
Sundry (Note 13b) 7,665,844  6,105,832 
Allowance for other losses (Notes 3e, 12f and 12g) (55,879) (41,651)
Other assets (Note 14) 224,802  320,419 
Other assets 32,379  34,221 
Allowance for losses (15,973) (7,321)
Prepaid expenses (Notes 14b) 208,396  293,519 
Permanent assets 5,029,761  5,069,492 
Investments (Notes 3h, 15 and 33b) 970,926  504,392 
Investments in associated companies:
- Local 471,130  369,876 
Other investments 863,376  510,764 
Allowance for losses (363,580) (376,248)
Property and equipment in use (Notes 3i and 16) 2,263,225  2,588,535 
Buildings in use 1,368,973  1,610,835 
Other fixed assets 3,512,586  3,735,878 
Accumulated depreciation (2,618,334) (2,758,178)
Leased assets (Note 16) 24,581  24,301 
Leased assets 66,216  50,475 
Accumulated depreciation (41,635) (26,174)
Deferred charges (Notes 2, 3j and 17) 1,771,029  1,952,264 
Organization and expansion costs 1,220,472  1,151,730 
Accumulated amortization (679,317) (596,751)
Goodwill on acquisition of subsidiaries, net of amortization (Notes 2, 3j and 17a) 1,229,874  1,397,285 
T O T A L 179,703,498  164,363,347 

(A free translation of the original in Portuguese)
Consolidated Balance Sheet at September 30 - In thousands of reais

LIABILITIES AND STOCKHOLDERS' EQUITY 2004 2003
 
Current liabilities 119,199,751  110,904,728 
Deposits (Notes 3k and 18a) 50,671,239  44,678,414 
Demand deposits 14,781,735  11,240,025 
Savings deposits 23,186,217  20,896,669 
Interbank deposits 14,267  411,298 
Time deposits (Note 33b) 12,689,020  12,130,422 
Deposits received under security repurchase agreements (notes 3k and 18a) 20,171,786  21,754,827 
Own portfolio 4,441,034  965,304 
Third-party portfolio 15,628,952  20,789,523 
Unrestricted portfolio 101,800  - 
Funds from issuance of securities (Notes 4a, 18b and 33b) 3,190,706  4,787,507 
Mortgage notes 867,960  839,382 
Debentures -  18,260 
Securities issued abroad (Note 4a) 2,322,746  3,929,865 
Interbank accounts 322,154  320,874 
Interbank onlendings 171,619  348 
Correspondent banks 150,535  320,526 
Interdepartmental accounts 1,417,570  1,152,934 
Third-party funds in transit 1,417,570  1,152,934 
Borrowings (Notes 19a and 33b) 7,893,671  7,238,221 
Local borrowings - official institutions 1,648  2,009 
Local borrowings - other institutions 11,784  72,364 
Foreign currency borrowings 7,880,239  7,163,848 
Local onlendings - official institutions (Notes 19b and 33b) 2,676,622  2,190,904 
National Treasury 57,950  51,665 
National Bank for Economic and Social Development (BNDES) 1,076,086  852,397 
Federal Savings Bank (CEF) 50,267  66,967 
Government Agency for Machinery and Equipment Financing (FINAME) 1,490,047  1,218,171 
Other institutions 2,272  1,704 
Foreign onlendings (Notes 19b and 33b) 49,581  24,130 
Foreign onlendings 49,581  24,130 
Derivative financial instruments (Notes 3d and 33) 299,072  247,444 
Technical reserves for insurance, private pension plans and savings bonds (Notes 3g, 4a and 23) 20,774,904  15,412,404 
Other liabilities 11,732,446  13,097,069 
Collection of taxes and other contributions 1,211,707  983,768 
Foreign exchange portfolio (Note 13a) 3,974,239  5,965,773 
Social and statutory payables 737,548  664,850 
Taxes and social security contributions 1,021,857  1,325,584 
Negotiation and intermediation of securities (Note 4a) 74,131  246,626 
Subordinated debt (Notes 21 and 33b) 138,349  65,520 
Sundry (note 22) 4,574,615  3,844,948 
Long-term liabilities 45,708,043  40,351,181 
Deposits (Notes 3k and 18a) 14,115,571  13,667,814 
Interbank deposits -  6 
Time deposits (Note 33b) 14,115,571  13,667,808 
Deposits received under security repurchase agreements (Notes 3k and 18a) 1,379,327  1,314,195 
Own portfolio 1,379,327  1,314,195 
Funds from issuance of securities (Notes 4a, 18b and 33b) 2,925,215  3,107,805 
Mortgage notes 21,154  28,552 
Debentures -  1,320 
Securities issued abroad (Note 4a) 2,904,061  3,077,933 
Borrowings (Notes 19a and 33b) 801,271  884,665 
Local borrowings - other institutions -  105,089 
Foreign currency borrowings 801,271  779,576 
Local onlendings - official institutions (Notes 19b and 33b) 5,292,792  4,843,681 
BNDES 2,492,281  2,200,019 
CEF 349,031  397,159 
FINAME 2,449,775  2,246,503 
Other institutions 1,705  - 
Foreign onlendings (Notes 19b and 33b) 1,274  4,882 
Foreign onlendings 1,274  4,882 
Derivative financial instruments (Notes 3d and 33) 8,974  83,801 
Technical reserves for insurance, private pension plans and savings bonds (Notes 3g, 4a and 23) 10,810,078  9,048,461 
Other liabilities 10,373,541  7,395,877 
Social and statutory payables -  7,723 
Taxes and social security contributions 3,449,061  2,912,812 
Subordinated debt (Notes 21 and 33b) 5,951,122  3,416,133 
Sundry (Note 22) 973,358  1,059,209 
Deferred income 44,032  29,627 
Deferred income 44,032  29,627 
Minority interest in subsidiary companies (Note 24) 73,965  110,991 
Stockholders' equity (Note 25) 14,677,707  12,966,820 
Capital:
- Local residents 6,343,955  6,383,081 
- Foreign residents 656,045  616,919 
Capital reserves 10,645  7,902 
Revenue reserves 7,084,529  5,717,767 
Mark-to-market adjustment - securities and derivatives 638,628  241,151 
Treasury stock (56,095) - 
 
Stockholders´ equity managed by the parent company 14,751,672  13,077,811 
T O T A L 179,703,498  164,363,347 
The accompanying notes are an integral part of these financial statements.

(A free translation of the original in Portuguese)
Consolidated Statement of Income for the Period from
January 1 to September 30 - In thousand of reais

  2004  2003 
 
Income from lending and trading activities 20,001,283  20,086,384 
 
Credit operations (Notes 4a and 12i) 20,001,283  20,086,384 
Leasing operations (Note 12i) 9,629,398  9,125,267 
Securities transactions (Note 10e) 215,294  229,115 
Financial income on insurance, private pension plans and savings bonds (Note 10e) 4,162,688  5,098,030 
Derivative financial instruments (Note 33c v) 3,763,277  3,948,012 
Foreign exchange transactions (Note 13a) 708,965  46,315 
Compulsory deposits (Note 11b) 662,657  543,159 
 
Expenses
Interest and charges on: 11,839,195  12,950,314 
Deposits (Note 18c) 6,776,173  7,930,326 
Price-level restatement and interest on technical reserves for insurance, private pension plans and savings bonds (Note 18c) 2,293,659  2,419,158 
Borrowings and onlendings (Note 19c) 1,203,254  593,074 
Leasing operations (Note 12i) 13,192  9,583 
Provision for loan losses (Notes 3e, 12f and 12g) 1,552,917  1,998,173 
 
Income from financial intermediation 8,162,088  7,136,070 
 
Other operating income (expenses) (5,579,130) (4,469,710)
 
Commissions and fees (Notes 4a and 26) 4,148,774  3,282,271 
Income on insurance premiums, private pension plans and savings bonds (Notes 3g, 4a and 23c) 9,447,520  8,291,454 
Variation in technical reserves for insurance, private pension plans and savings bonds (Notes 3g and 4a) (2,647,145) (2,526,705)
Claims - insurance operations (Notes 3g and 4a) (3,841,992) (3,060,351)
Savings bond draws and redemptions (Notes 3g and 4a) (931,517) (797,716)
Insurance and pension plan selling expenses (Note 3g) (633,248) (553,781)
Expenses with pension plan benefits and redemptions (Notes 3g and 4a) (1,619,539) (1,406,959)
Personnel expenses (Note 27) (3,684,584) (3,507,428)
Other administrative expenses (Notes 4a and 28) (3,648,632) (3,486,209)
Tax expenses (1,052,952) (760,931)
Equity in the earnings of associated companies (Note 15c) 118,560  (25,496)
Other operating income (Notes 4a and 29) 887,869  1,954,480 
Other operating expenses (Notes 4a and 30) (2,122,244) (1,872,339)
 
Operating income 2,582,958  2,666,360 
 
Non-operating income (expenses), net (Note 31) (342,963) (767,581)
 
Income before taxes and profit sharing 2,239,995  1,898,779 
 
Provision for income tax and social contribution (Notes 35a and 35b) (232,229) (301,028)
 
Minority interest in subsidiaries (5,368) (6,549)
 
Net income 2,002,398  1,591,202 
The accompanying notes are an integral part of these financial statements.

(A free translation of the original in Portuguese)
Consolidated Statement of Changes in Financial Position for the
Period from January 1 to September 30 - In thousands of reais

  2004  2003 
 
FINANCIAL RESOURCES WERE PROVIDED BY : 26,829,062  26,407,143 
Net income 2,002,398  1,591,202 
Adjustments to net income 779,438  1,391,694 
Depreciation and amortization 420,701  470,032 
Amortization of goodwill 501,437  861,596 
Change in provision for investments (7,010) 39,383 
Equity in the earnings of associated companies (118,560) 25,496 
Other (17,130) (4,813)
Change in deferred income 12,258  13,784 
Change in minority interest (38,764) (160,073)
Mark-to-market adjustment - securities available for sale 159,711  231,999 
Stockholders -  1,296,793 
Capital increase through subscription -  501,000 
Capital increase through incorporation of shares -  788,735 
Capital reserves -  12 
Share premium -  7,046 
Fiscal incentive investments 1,259  844 
Third parties:
- Increase in liabilities 15,031,611  21,548,616 
Deposits 6,762,925  1,983,065 
Deposits received under security repurchase agreements -  7,056,057 
Funds from issuance of securities -  4,758,470 
Borrowings and onlendings 1,920,428  - 
Derivative financial instruments 255,677  - 
Technical reserves for insurance, private pension plans and savings bonds committed 5,176,030  5,305,386 
Other liabilities 916,551  2,445,638 
- Decrease in assets 8,518,244  124,908 
Interbank investments 6,598,302  - 
Interdepartmental accounts 414,916  9,959 
Leasing operations -  114,949 
Other receivables 1,505,026  - 
- Sale (write-off) of assets and investments 344,476  345,502 
Non-operating assets 188,494  139,470 
Property and equipment in use and leased assets 71,953  142,822 
Investments 55,451  33,627 
Sale (write-off) of deferred charges 28,578  29,583 
- Interest attributed to own capital and dividends received from associated companies 18,431  21,874 
TOTAL FUNDS PROVIDED 26,891,459  26,958,751 
Interest attributed to own capital and dividends paid and/or declared 984,509  999,747 
Acquisition of own shares 48,753  - 
Investments in: 511,195  832,802 
Non-operating assets 91,380  128,251 
Property and equipment in use and leased assets 374,773  614,655 
Investments 45,042  89,896 
Deferred charges 625,101  544,834 
Increase in assets 12,177,638  22,613,429 
Interbank investments -  7,085,704 
Securities and derivative financial instruments 4,349,879  10,902,024 
Interbank accounts 1,223,754  127,334 
Credit operations 6,345,343  841,344 
Leasing operations 44,808  - 
Other receivables -  3,434,552 
Insurance premiums receivable 72,257  172,307 
Other assets 141,597  50,164 
Decrease in liabilities 12,544,263  1,967,939 
Deposits received under security repurchase agreements 11,241,612  - 
Funds from acceptance of securities 730,975  - 
Interbank accounts 207,178  285,822 
Interdepartmental accounts 364,498  184,795 
Borrowings and onlendings -  1,251,870 
Derivative financial instruments -  245,452 
Decrease in funds available (62,397) (551,608)
Changes in At the beginning of the period 2,448,426  2,785,707 
Financial At the end of the period 2,386,029  2,234,099 
Position Decrease in funds available (62,397) (551,608)
The accompanying notes are an integral part of these financial statements.

BANCO BRADESCO S.A.

Notes to the Financial Statements


INDEX

We present below the notes to the Financial Statements of Banco Bradesco S.A. subdivided as follows:

1) OPERATIONS

2) PRESENTATION OF THE FINANCIAL STATEMENTS

3) SIGNIFICANT ACCOUNTING POLICIES

4) INFORMATION FOR COMPARISON PURPOSES

5) ADJUSTED BALANCE SHEET AND STATEMENT OF INCOME BY BUSINESS SEGMENT

6) BALANCE SHEET BY CURRENCY AND EXCHANGE EXPOSURE

7) BALANCE SHEET BY MATURITY

8) FUNDS AVAILABLE

9) INTERBANK INVESTMENTS

10) SECURITIES AND DERIVATIVE FINANCIAL INSTRUMENTS

11) INTERBANK ACCOUNTS - RESTRICTED DEPOSITS

12) CREDIT OPERATIONS

13) OTHER RECEIVABLES

14) OTHER ASSETS

15) INVESTMENTS

16) PROPERTY AND EQUIPMENT IN USE AND LEASED ASSETS

17) DEFERRED CHARGES

18) DEPOSITS, DEPOSITS RECEIVED UNDER SECURITY REPURCHASE AGREEMENTS AND FUNDS FROM ISSUANCE OF SECURITIES

19) BORROWINGS AND ONLENDINGS

20) CONTINGENT LIABILITIES

21) SUBORDINATED DEBT

22) OTHER LIABILITIES - SUNDRY

23) INSURANCE OPERATIONS, PRIVATE PENSION PLANS AND SAVINGS BONDS

24) MINORITY INTEREST IN SUBSIDIARIES

25) STOCKHOLDERS’ EQUITY (PARENT COMPANY)

26) COMMISSIONS AND FEES

27) PERSONNEL EXPENSES

28) ADMINISTRATIVE EXPENSES

29) OTHER OPERATING INCOME

30) OTHER OPERATING EXPENSES

31) NON-OPERATING INCOME (EXPENSE)

32) TRANSACTIONS WITH SUBSIDIARY AND ASSOCIATED COMPANIES (DIRECT AND INDIRECT)

33) FINANCIAL INSTRUMENTS

34) EMPLOYEE BENEFITS

35) INCOME TAX AND SOCIAL CONTRIBUTION

36) OTHER INFORMATION

1) OPERATIONS

Banco Bradesco S.A. is a private-sector open-capital company which, operating as a multiple bank, carries out all types of authorized banking activities through its commercial, foreign exchange, investment, consumer financing, housing loan and credit card portfolios. The Bank also operates in a number of other activities through its direct and indirect subsidiary companies, particularly in leasing, consortium management, insurance, savings bond and private pension plan activities. Operations are conducted within the context of the companies comprising the Bradesco Group, which are jointly active in the market.

2) PRESENTATION OF THE FINANCIAL STATEMENTS

The financial statements of Banco Bradesco S.A. include the financial statements of Banco Bradesco S.A., its foreign branches and its direct and indirect subsidiaries and jointly controlled investments, in Brazil and abroad, and Special Purpose Entities (SPE) and were prepared based on accounting policies determined by Brazilian Corporation Law for the recording of operations, as well as the rules and instructions of the National Monetary Council (CMN), Brazilian Central Bank (BACEN), Brazilian Securities Commission (CVM), Superintendency of Private Insurance (SUSEP) and National Agency for Supplementary Healthcare (ANS), and comprise the financial statements of the leasing companies based on the capital leasing method of accounting, whereby leased assets are reclassified to the leasing operations account.

Accordingly, for preparation purposes, intercompany investments, asset and liability account balances, revenue, expenses and unrealized income were eliminated from these financial statements and, in the case of investments which are jointly controlled with other stockholders, asset, liability and income components were included in the consolidated financial statements in proportion to the parent company's percentage capital ownership of each investee. Goodwill on the acquisition of investments in subsidiaries and in the jointly controlled investments is presented in deferred assets and minority interests in net income and stockholders’ equity are separately disclosed. Exchange variations arising from operations of subsidiaries and foreign branches were allocated to the statement of income accounts in accordance with the corresponding assets and liabilities from which they originated.

The financial statements include estimates and assumptions, such as the calculation of the allowance for loan losses, the estimation of the fair value of certain financial instruments, provision for contingencies, other provisions, the quantification of technical reserves for insurance, pension plans and savings bonds and the determination of the useful economic life of specific assets. Actual results could differ from these estimates and assumptions.

The following main companies are included in the consolidation:

At September 30
  Ownership
 
  Activity Area 2004 2003
 
Financial area - Local
Banco Alvorada S.A Banking 100.00% 100.00%
Banco Baneb S.A. (1) Banking 99.71% 99.94%
Banco BEM S.A. (2) Banking 100.00% - 
Banco BCN S.A. (3) Banking -  100.00%
Banco Boavista Interatlântico S.A Banking 100.00% 100.00%
Banco de Crédito Real de Minas Gerais S.A. (4) Banking -  99.99%
Banco Finasa de Investimento S.A. (5) Investment Bank -  97.40%
Banco Finasa S.A. (6) Banking 100.00% 100.00%
Banco Mercantil de São Paulo S.A Banking 100.00% 100.00%
Banco Zogbi S.A. (7) Banking 100.00% - 
BRAM - Bradesco Asset Management Ltda. (8) Asset Management -  99.99%
BRAM - Bradesco Asset Management S.A. DTVM (9) Asset Management 100.00% 100.00%
Bradesco BCN Leasing S.A. Arrendamento Mercantil (4) Leasing -  99.97%
Bradesco Leasing S.A. Arrendamento Mercantil (10) Leasing 100.00% 100.00%
Bradesco Consórcios Ltda Consortium Management 99.99% 99.99%
Bradesco S.A. Corretora de Títulos e Valores Mobiliários Brokerage 99.99% 99.99%
Companhia Brasileira de Meios de Pagamento - VISANET (11) (12) (13) Services 39.71% 39.71%
 
Financial area - Foreign
Alvorada Nassau (14) Banking -  100.00%
Banco Bradesco Argentina S.A. (12) Banking 99.99% 99.99%
Banco Bradesco Luxembourg S.A. (15) Banking 100.00% 99.99%
Banco Mercantil de São Paulo Internacional S.A. (15) Banking -  100.00%
BCN Grand Cayman (6) Banking 100.00% 100.00%
Boavista Grand Cayman Banking 100.00% 100.00%
Boavista Nassau Banking 100.00% 100.00%
Bradesco Grand Cayman (16) Banking 100.00% 100.00%
Bradesco New York Banking 100.00% 100.00%
Bradesco Securities, Inc. Brokerage 100.00% 100.00%
Mercantil Grand Cayman (17) Banking 100.00% 100.00%
 
Insurance, pension plan and savings bond area
ABS-Empreendimentos Imobiliários, Participações e Serviços S.A. (18) Real Estate -  99.12%
Atlântica Capitalização S.A. (19) Savings Bonds 99.46% 99.70%
Áurea Seguros S.A. (11) (12) (19) Insurance 27.35% 27.42%
Bradesco Argentina de Seguros S.A. (12) (19) Insurance 99.23% 99.47%
Bradesco Capitalização S.A. (19) Savings Bonds 99.09% 99.69%
Bradesco Saúde S.A. (19) Insurance 99.46% 99.70%
Bradesco Seguros S.A. (19) Insurance 99.46% 99.70%
Bradesco Vida e Previdência S.A. (19) Pension Plans/Insurance 99.46% 99.69%
Finasa Seguradora S.A. (19) Insurance 99.22% 99.45%
Indiana Seguros S.A (19) (20) Insurance 39.78% 39.88%
Seguradora Brasileira de Crédito à Exportação S.A. (11) (12) (19) Insurance 12.02% 12.05%
Bradesco Auto/RE Companhia de Seguros (21) (22) Insurance 99.46% 91.41%
 
Other activities
Átria Participações S.A. (19) Holding Company 99.46% 99.69%
Bradescor Corretora de Seguros Ltda Insurance Brokerage 99.99% 99.99%
Cia. Securitizadora de Crédito Financeiro Boavista (23) Credit Acquisition 99.34% - 
Cia. Securitizadora de Crédito Financeiro Interatlântico (23) Credit Acquisition 99.46% - 
Cibrasec - Companhia Brasileira de Securitização (11) (12) (24) Credit Acquisition 10.00% 12.50%
CPM Holdings Limited (11) (12) Holding Company 49.00% 49.00%
Latasa S.A. (25) Metal Products -  39.74%
Nova Paiol Participações S.A. (19) Holding Company 99.46% 99.69%
Scopus Tecnologia Ltda Information Technology 99.99% 99.99%
Serasa S.A. (11) (12)(26) Services 26.37% 26.31%
Smart Club do Brasil Ltda. (27) Services -  36.36%
União de Comércio e Participações Ltda. (28) Holding Company -  99.99%
União Participações Ltda. (29) Holding Company 99.99% 99.99%

(1)

Percentage ownership decreased following the merger of Banco Finasa de Investimento S.A.

(2)

Formerly Banco do Estado do Maranhão S.A., acquired on February 10, 2004.

(3)

Partially spun off on March 10, 2004 with spun-off portion merged into Banco Bradesco S.A. On March 12, 2004, the remaining portion of the assets and liabilities of Banco BCN were merged into Banco Alvorada. S.A.

(4)

Merged into Bradesco Leasing S.A. Arrendamento Mercantil in September 2004.

(5)

Merged into Banco Baneb S.A. in August 2004.

(6)

Became a direct subsidiary of Banco Bradesco S.A. as a result of the partial spin-off of Banco BCN S.A. on March 10, 2004, with the spun-off portion merged into Banco Bradesco S.A. (item 3).

(7)

Acquired on February 16, 2004.

(8)

Merged into BES - Boavista Espírito Santo DTVM S.A. in July 2004.

(9)

Formerly BES - Boavista Espírito Santo DTVM S.A.

(10)

Formerly Potenza Leasing S.A. Arrendamento Mercantil.

(11)

Proportionally consolidated in accordance with CMN Resolution 2723 and CVM Instruction 247.

(12)

Companies audited by other independent auditors in 2003 and 2004.

(13)

The special purpose entity called Brazilian Merchant Voucher Receivables Limited, operating in the securitization of the future flow of credit card bill receivables from foreign cardholders abroad is being consolidated (Note 18b).

(14)

This branch ceased activities in July 2004 and its operations were transferred to the Bradesco Grand Cayman branch.

(15)

In September 2003, Banco Mercantil de São Paulo International S.A. and Banco Bradesco Luxembourg S.A. were merged and the latter’s name maintained.

(16)

The special purpose entity called International Diversified Payment Rights Company, operating in the securitization of the future flow of money orders received from abroad is being consolidated (Note 18b).

(17)

Became a direct subsidiary of Banco Bradesco S.A. as a result of the partial spin-off of Banco Mercantil de São Paulo S.A., in March 2004.

(18)

Merged into Bradesco Capitalização S.A. in December 2003.

(19)

Percentage ownership reduced through incorporation of the minority stockholders’ shares of União Novo Hamburgo de Seguros S.A.

(20)

A subsidiary since percentage ownership totals 51% of voting capital.

(21)

Percentage ownership increased through acquisition and incorporation of the minority stockholders’ shares of União Novo Hamburgo de Seguros S.A.

(22)

Formerly União Novo Hamburgo de Seguros S.A.

(23)

Acquired on June 25, 2004.

(24)

Percentage ownership decreased through sale of shares.

(25)

Sold in October 2003.

(26)

Percentage ownership increased through acquisition of Banco BEM S.A.

(27)

Sold in July 2004.

(28)

On August 31, 2004, the equity of União de Comércio e Participações Ltda. was partially spun-off and the spun-off portion was transferred to Caulim Participações Ltda. The remaining assets were incorporated into Banco Alvorada S.A. in September 2004.

(29)

Formerly Caulim Participações Ltda.

3) SIGNIFICANT ACCOUNTING POLICIES

a) Determination of net income

Income and expenses are determined on the accrual basis of accounting. Transactions with prefixed rates are recorded at their redemption amounts and income and expenses for the future period are recorded as a discount to the corresponding asset and liability accounts. Income and expenses of a financial nature are prorated daily and calculated based on the exponential method, except when relating to discounted notes or to cross-border transactions, which are calculated on the straight-line method. Post-fixed or foreign-currency-indexed transactions are adjusted to the balance sheet date.

The insurance and coinsurance premiums and income on commissions, net of premiums assigned in coinsurance and reinsurance and corresponding expenses for commission, are appropriated to results upon issuance of the corresponding insurance policies and are deferred for appropriation on a straight-line basis over the terms of the policies, through the recording and reversal of a provision for unearned premiums and deferred selling expenses. The accepted coinsurance and retrocession operations are recorded based on the information received from other similar companies and the Brazilian Institute of Reinsurers (IRB), respectively.

The revenue from savings bonds is recognized at the time it is effectively received. The expenses for placement of bonds, classified as “Selling Expenses”, are recorded as they are incurred. Brokerage expenses are recorded at the time the savings bond revenue is effectively received.

The supplementary pension plan contributions are recorded in income at the time they are effectively received.

The corresponding expenses for technical reserves for private pension plans and savings bonds are recorded at the same time as the revenue therefrom is recognized.

b) Interbank investments

Purchase and sale commitments subject to unrestricted movement agreements are adjusted to market value. Other assets are recorded at purchase cost, including accrued income up to the balance sheet date, net of loss accrual, where applicable.

c) Securities

- Trading securities - securities which are acquired for the purpose of being actively and frequently traded are adjusted to market value as a counter-entry to results for the period.

- Securities available for sale - securities which are not specifically intended for trading purposes or as held to maturity, are adjusted to market value as a counter-entry to a specific account in stockholders' equity, at amounts net of tax effects.

- Securities held to maturity - securities for which there exists intention and financial capacity for maintenance through to maturity are recorded at cost, plus accrued earnings, as a counter-entry to results for the period.

d) Derivative financial instruments (assets and liabilities)

These are classified based on management’s intended use thereof on the date of the operation and whether it was carried out for hedging purposes or not.

The derivative financial instruments which do not comply with the hedging criteria established by BACEN, particularly derivatives used to manage general exposure to risk, are recorded at market values, with the corresponding mark-to-market adjustments taken directly to income for the period.

The derivative financial instruments used for protection against exposure to risk or for changing the characteristics of financial assets and liabilities and which are: (i) significantly co-related in relation to the adjustment of their market value to the market value of the hedged item, at both the start and over the duration of the contract; and (ii) considered to be effective in mitigating the risk associated with the exposure which is to be protected, are classified as hedges in accordance with their specific nature:

- Market risk hedge - the hedged financial assets and liabilities and the corresponding derivative financial instruments are recorded at market value, with corresponding mark-to-market adjustments recorded directly in income for the period.

- Cash flow hedge - hedged financial assets and liabilities and the corresponding derivative financial instruments are recorded at market value, with corresponding mark-to-market adjustments, net of tax effects, recorded in the stockholders’ equity account. The non-hedged portion is recorded directly in results for the period.

e) Credit and leasing operations, advances on foreign exchange contracts, other receivables and allowance for loan and leasing losses.

Credit and leasing operations, advances on foreign exchange contracts and other receivables are classified at their corresponding risk levels, in compliance with: (i) the parameters established by CMN Resolution 2682/1999 at nine levels from “AA” (minimum risk) to “H” (maximum risk); and (ii) management’s risk level assessment. This assessment, which is carried out on a periodic basis, considers current economic conditions, and past loan loss experience, as well as specific and general risks relating to operations, borrowers and guarantors. The length of the delay in payment defined in CMN Resolution 2682/1999 is also taken into account for customer risk rating purposes as follows:

Length of Delay Customer Classification
•    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

The accrual of credit operations past due up to 60 days is recorded in income on credit operations and subsequent to the 61st day, in unearned income.

Past-due H-rated operations remain at this level for six months, subsequent to which time they are charged off against the existing allowance and controlled over a five-year period in memorandum accounts and no longer presented in the balance sheet.

Renegotiated operations are maintained at the same level of classification. Renegotiated operations, already charged off against the allowance and recorded in memorandum accounts, are classified at “H” level and any gains derived from such renegotiation, are recognized as revenue only upon effective receipt.

In the case of mortgage loans, the contractual capitalization period (monthly or quarterly) for income appropriation purposes complies with applicable legislation and end-borrower financings are adjusted to the present value of the installments receivable.

The allowance for loan losses is recorded at an amount considered sufficient to cover estimated losses and considers BACEN requirements and instructions, as well as Management’s appraisal of the related credit risks.

f) Income tax and social contribution (asset and liability)

Deferred income tax and social contribution, calculated on tax losses, negative basis of social contribution and temporary additions are recorded in the “Other receivables - sundry” account and the provision for deferred tax liabilities on excess depreciation and mark-to-market adjustments of securities is recorded in the “Other liabilities - taxes and social security contributions” account. Only deferred tax assets which have already acquired, or are about to acquire, tax deductibility rights are recorded on amortization of goodwill.

Deferred tax assets on temporary additions will be realized upon use and/or reversal of the corresponding provisions on which they were recorded. Deferred tax assets on tax losses and negative basis of social contribution will be realized as taxable income is generated.

The provision for federal income tax is calculated at the standard rate of 15% of taxable income, plus an additional rate of 10% for income over established limits. The provision for social contribution is recorded at the rate of 9% of pre-tax income. Provisions were recorded for other taxes and social contributions in accordance with specific applicable legislation.

g) Technical reserves relating to insurance, pension plan and savings bond activities

Reserves for unearned premiums

These are recorded based on the retained insurance premiums deferred over the terms of the insurance contracts, in accordance with criteria established by SUSEP and ANS standards.

Reserves for benefits to be granted and benefits granted

Mathematical reserves comprise the amounts of the liabilities assumed under the form of income, pension and savings plans and are calculated based on the financial method determined in the contract, under the responsibility of a legally qualified actuary registered with the Brazilian Institute of Actuaries (IBA). The mathematical reserves comprise the present value of future benefits, estimated based on actuarial methods and assumptions. The reserve for benefits to be granted comprises participants whose receipt of benefits has not yet commenced and the reserve for benefits granted comprises participants who are currently receiving benefits.

Savings Bonds - mathematical reserves for redemptions and draws

These were recorded in conformity with the actuarial technical notes approved by SUSEP, based on a variable percentage applicable to the amounts of the savings bond certificates effectively received and are adjusted for price-level restatement.

Unsettled claims and IBNR

The reserve for unsettled claims is recorded based on the estimated payments of claims incurred, including claims which are under action at law, net of recoveries and adjusted for price-level restatement up to the balance sheet date. The reserve for claims incurred but not reported (IBNR) is calculated on an actuarial basis to quantify the volume and amounts of the claims incurred, but which have not yet been reported to the insurance companies by the policyholders/beneficiaries.

h) Investments

Significant investments in subsidiary and associated companies and jointly controlled investments are recorded on the equity method. The financial statements of the foreign branches and subsidiaries are adjusted to comply with the accounting practices adopted in Brazil, translated into reais and their related effects recognized in income for the period.

The exchange membership certificates of Stock Exchanges, the Center for the Financial Clearance and Custody of Private Securities (CETIP) and the Mercantile and Futures Exchange (BM&F) were recorded at their unaudited net book values informed by the corresponding exchanges and fiscal incentives and other investments were recorded at cost, less the provision for loss, where applicable.

i) Property and equipment in use

This is stated at cost, net of the corresponding accumulated depreciation, calculated on the straight-line method at rates which take into consideration the economic useful lives of the assets as follows: buildings in use - 4%; furniture and fixtures and machinery and equipment - 10%; data processing systems - 20% to 50%; and transport systems - 20% per annum.

j) Deferred charges

Deferred charges are recorded at cost of acquisition or formation, net of the corresponding accumulated amortization of 20% to 50% per annum, calculated on the straight-line method.

Goodwill on the acquisition of investments in subsidiary companies, based on expected future results, is amortized at rates of 10% to 20% per annum and is presented on a consolidated basis in deferred charges.

k) Deposits and deposits received under security repurchase agreements

These are stated at the amount of the liabilities and include related charges up to the balance sheet date, on a daily pro rata basis.

l) Other assets and liabilities

The assets were stated at their realizable amounts, including, where applicable, related income and monetary and exchange variations (on a daily pro rata basis), less a provision for loss, when deemed appropriate. The liabilities include known or estimated amounts, plus related charges and monetary and exchange variations (on a daily pro rata basis).

4) INFORMATION FOR COMPARISON PURPOSES

a) Reclassifications

In order to facilitate comparison of the financial statements, certain September 30, 2003 account balances were reclassified.

In thousands of reais
 
BALANCE SHEET Prior
disclosure 		Reclassifications Reclassified balance
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current and long-term liabilities 130,166,634  21,089,275  151,255,909 
Funds from issuance of securities 5,940,596  1,954,716  7,895,312 
Payables for foreign securities (1) 5,053,082  1,954,716  7,007,798 
Technical reserves for insurance, private pension plans and savings bonds (2) -  24,460,865  24,460,865 
Other liabilities 25,819,252  (5,326,306) 20,492,946 
Negotiation and intermediation of securities (1) 2,201,342  (1,954,716) 246,626 
Technical reserves for insurance, private pension plans and savings bonds (2) 3,371,590  (3,371,590) - 
Technical reserves for insurance, private pension plans and savings bonds (2) 21,089,275  (21,089,275) - 
 
Total liabilities 164,363,347  -  164,363,347 

In thousands of reais
 
STATEMENT OF INCOME Prior
disclosure 		Reclassifications Reclassified balance
 
Income from lending and trading activities 20,096,802  (10,418) 20,086,384 
Credit operations (3) 9,135,685  (10,418) 9,125,267 
 
Income from financial intermediation 7,146,488  (10,418) 7,136,070 
 
Other operating income (expenses) (4,480,128) 10,418  (4,469,710)
Commissions and fees (3) 3,271,853  10,418  3,282,271 
Income on insurance premiums, private pension plans and savings bonds (4) 8,798,192  (506,738) 8,291,454 
Variation in technical reserves for insurance, private pension plans and savings bonds (5) (2,620,458) 93,753  (2,526,705)
Claims - Insurance operations (4) (3,181,428) 121,077  (3,060,351)
Savings bond draws and redemptions (5) (703,963) (93,753) (797,716)
Expenses for pension plan benefits and redemptions (4) (1,792,620) 385,661  (1,406,959)
Other administrative expenses (6) (3,486,224) 15  (3,486,209)
Other operating income (6) 1,895,275  59,205  1,954,480 
Other operating expenses (6) (1,813,119) (59,220) (1,872,339)
 
Net income 1,591,202  -  1,591,202 

(1)

Reclassification of transactions for securitization of the future flow of money orders received from abroad and of the future flow of credit card bill receivables from foreign cardholders.

(2)

Reclassified in compliance with SUSEP’s new plan of accounts.

(3)

Reclassification of the initial credit opening fee of Banco Finasa and Banco BCN.

(4)

Pursuant to SUSEP Circular 224/2004, VGBL plan redemptions were reclassified from claims to premium retained.

(5)

Reclassification of variation in technical reserves for insurance, private pension plans and savings bonds to savings bond draws and redemptions.

(6)

Reclassification of services provided by Scopus Tecnologia.

b) In the first half of 2004, Bradesco acquired the share control of Banco Zogbi and other companies and of Banco BEM and subsidiaries.

Adjusted balance sheet and statement of income account balances:

At September 30 - In thousands of reais
 
BALANCE SHEET Banco Zogbi
and other
companies
(1) 		Banco BEM
and
subsidiaries
(2)
 
ASSETS    
Current assets and long-term receivables 427,749  1,150,680 
Funds available 1,676  40,117 
Interbank investments 27,950  231,398 
Securities and derivative financial instruments 58,490  542,895 
Interbank and interdepartmental accounts 1,956  27,767 
Credit and leasing operations 301,527  110,443 
Other receivables and other assets 36,150  198,060 
Permanent assets 29,389  9,220 
Investments 1,392  83 
Property and equipment 26,085  9,137 
Deferred charges 1,912  - 
Total 457,138  1,159,900 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current and long-term liabilities 100,141  962,700 
Demand, time and interbank deposits 292  258,101 
Savings deposits -  44,638 
Deposits received under security repurchase agreements and funds from issuance of securities
Interbank and interdepartmental accounts 407  1,714 
Borrowings and onlendings 38,058  2,968 
Other liabilities 61,384  186,329 
Minority interest in subsidiaries 5,991  - 
Stockholders’ equity 351,006  197,200 
Total 457,138  1,159,900 

In thousands of reais
 
  Accumulated from February 1 to
September 30, 2004
 
STATEMENT OF INCOME Banco Zogbi
and other
companies
(1) 		Banco BEM
and
subsidiaries
(2)
 
Income from lending and trading activities 173,573  96,962 
Expenses for lending and trading activities (64,249) (56,424)
Income from financial intermediation 109,324  40,538 
Other operating income (expenses) (59,835) (19,761)
Operating income (expenses) 49,489  20,777 
Non-operating income (expenses), net 76  (3,442)
Income before income tax and social contribution 49,565  17,335 
Provision for income tax and social contribution (16,364) 82,671 
Minority interest in subsidiaries (315) - 
Adjusted net income 32,886  100,006 

(1)

Includes Zogbi Leasing S.A. Arrendamento Mercantil, Zogbi Distribuidora de Títulos e Valores Mobiliários Ltda., Promosec Cia. Securitizadora de Créditos Financeiros and Promovel Empreendimentos e Serviços Ltda.

(2)

At the auction for shares held on July 27, 2004, addressed in the Public Offering of Shares (OPA) filed at the CVM on March 12, 2004, 35,499,857 common shares were acquired, comprising 99.92% of minority interest, meeting the requirements for cancellation of its listing as a publicly held company. On August 31, 2004, capital was increased in Banco BEM, in the amount of R$ 150,000 thousand, with the issue of 150,000 nominative registered common shares, with no par value. This operation was ratified by BACEN on September 13, 2004.

5) ADJUSTED BALANCE SHEET AND STATEMENT OF INCOME BY BUSINESS SEGMENT

The following information is presented in conformity with the definitions set forth in the Chart of Accounts for National Financial System Institutions (COSIF).

a) Balance sheet

At September 30 - In thousands of reais
Financial
(1) (2) 		Insurance Group
(2) (3) 		Other
Activities
(2) 		Amount
eliminated
(4) 		Total
  Local Foreign Local Foreign      
ASSETS              
Current assets and long-term receivables 120,009,713  21,982,124  37,840,210  41,243  398,946  (5,598,499) 174,673,737 
Funds available 2,298,225  71,646  68,810  3,069  12,513  (68,234) 2,386,029 
Interbank investments 21,210,279  5,335,420  -  -  -  (1,419,998) 25,125,701 
Securities and derivative financial instruments 14,435,992  9,799,968  35,049,135  35,524  134,669  (1,300,629) 58,154,659 
Interbank and interdepartmental accounts 15,328,542  7,912  -  -  -  -  15,336,454 
Credit and leasing operations 45,803,872  6,587,274  -  -  -  (2,531,843) 49,859,303 
Other receivables and other assets 20,932,803  179,904  2,722,265  2,650  251,764  (277,795) 23,811,591 
Permanent assets 12,680,035  359,021  955,133  265  300,844  (9,265,537) 5,029,761 
Investments 9,355,954  356,114  477,553  -  46,842  (9,265,537) 970,926 
Property and equipment in use and leased assets 1,823,251  2,682  294,846  265  166,762  -  2,287,806 
Deferred charges 1,500,830  225  182,734  -  87,240  -  1,771,029 
Total in 2004 132,689,748  22,341,145  38,795,343  41,508  699,790  (14,864,036) 179,703,498 
Total in 2003 130,987,817  16,308,528  29,953,588  46,513  1,193,361  (14,126,460) 164,363,347 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current and long-term liabilities 117,957,132  17,703,769  34,500,448  27,841  317,103  (5,598,499) 164,907,794 
Deposits 61,830,388  4,555,962  -  -  -  (1,599,540) 64,786,810 
Deposits received under security repurchase agreements 19,300,034  2,251,079  -  -  -  -  21,551,113 
Funds from issuance of securities 4,186,877  3,434,573  -  -  -  (1,505,529) 6,115,921 
Interbank and interdepartmental accounts 1,567,112  172,612  -  -  -  -  1,739,724 
Borrowings and onlendings 14,871,834  4,048,625  -  -  -  (2,205,248) 16,715,211 
Derivative financial instruments 307,332  12  -  -  702  -  308,046 
Technical reserves for insurance, private pension plans and savings bonds -  -  31,560,373  24,609  -  -  31,584,982 
Other liabilities
Subordinated debt 2,963,753  3,125,718  -  -  -  -  6,089,471 
Other 12,929,802  115,188  2,940,075  3,232  316,401  (288,182) 16,016,516 
Deferred income 42,088  -  1,937  -  7  -  44,032 
Minority interest and stockholders’ equity in subsidiaries 12,821  4,637,376  4,292,958  13,667  382,680  (9,265,537) 73,965 
Stockholders' equity of the parent company 14,677,707  -  -  -  -  -  14,677,707 
Total in 2004 132,689,748  22,341,145  38,795,343  41,508  699,790  (14,864,036) 179,703,498 
Total in 2003 130,987,817  16,308,528  29,953,588  46,513  1,193,361  (14,126,460) 164,363,347 

b) Statement of income

Accumulated to September 30 - In thousands of reais
Financial
(1) (2) 		Insurance Group
(2) (3) 		Other
Activities
(2) 		Amount
eliminated
(4) 		Total
  Local Foreign Local Foreign      
Income from lending and trading activities 15,527,042  836,233  3,769,350  1,135  9,899  (142,376) 20,001,283 
Expenses for lending and trading activities 9,228,989  463,222  2,293,413  -  (1,126) (145,303) 11,839,195 
Income from financial intermediation 6,298,053  373,011  1,475,937  1,135  11,025  2,927  8,162,088 
Other operating income (expenses) (4,730,243) (102,580) (762,441) (703) 19,764  (2,927) (5,579,130)
Operating income (expenses) 1,567,810  270,431  713,496  432  30,789  -  2,582,958 
Non-operating income (expenses), net (302,958) 4,578  (44,936) (535) 888  -  (342,963)
Income before taxes and profit sharing 1,264,852  275,009  668,560  (103) 31,677  -  2,239,995 
Provision for income tax and social contribution (121,828) -  (93,600) 35  (16,836) -  (232,229)
Minority interest in subsidiaries (4,730) -  (3) -  (635) -  (5,368)
Net income in 2004 1,138,294  275,009  574,957  (68) 14,206  -  2,002,398 
Net income in 2003 917,608  164,000  451,480  1,889  56,225  -  1,591,202 

(1)

The financial segment comprises financial institutions and holding companies which are mainly responsible for managing financial resources, as well as credit card administration and asset management companies.

(2)

Asset and liability and income and expense account balances are eliminated between companies from the same segment.

(3)

The Insurance Group segment comprises insurance, private pension plan and savings bond companies.

(4)

Amounts eliminated between companies from different segments.

6) BALANCE SHEET BY CURRENCY AND EXCHANGE EXPOSURE

At September 30, 2004 - In thousands of reais
    Currency
  Balance Sheet Local Foreign
(1) (2)
ASSETS      
Current assets and long-term receivables 174,673,737  144,625,927  30,047,810 
Funds available 2,386,029  1,955,174  430,855 
 
Interbank investments 25,125,701  19,729,698  5,396,003 
 
Securities and derivative financial instruments 58,154,659  48,864,558  9,290,101 
 
Interbank and interdepartmental accounts 15,336,454  15,328,542  7,912 
 
Credit and leasing operations 49,859,303  42,417,948  7,441,355 
 
Other receivables and other assets 23,811,591  16,330,007  7,481,584 
 
Permanent assets 5,029,761  4,596,874  432,887 
Investments 970,926  541,211  429,715 
Property and equipment in use and leased assets 2,287,806  2,284,859  2,947 
Deferred charges 1,771,029  1,770,804  225 
 
Total 179,703,498  149,222,801  30,480,697 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current and long-term liabilities 164,907,794  138,402,193  26,505,601 
Deposits 64,786,810  61,663,093  3,123,717 
 
Deposits received under security repurchase agreements 21,551,113  19,300,034  2,251,079 
 
Funds from issuance of securities 6,115,921  889,114  5,226,807 
 
Interbank and interdepartmental accounts 1,739,724  463,936  1,275,788 
 
Borrowings and onlendings 16,715,211  7,474,600  9,240,611 
 
Derivative financial instruments 308,046  308,034  12 
 
Technical reserves for insurance, private pension plans and savings bonds 31,584,982  31,560,373  24,609 
 
Other liabilities
Subordinated debt 6,089,471  2,963,753  3,125,718 
Other 16,016,516  13,779,256  2,237,260 
 
Deferred income 44,032  44,032  - 
 
Minority interest in subsidiaries 73,965  73,965  - 
 
Stockholders’ equity 14,677,707  14,677,707  - 
 
Total 179,703,498  153,197,897  26,505,601 
 
Net position of assets and liabilities   3,975,096 
 
Net position of derivatives (2)   (3,781,391)
 
Other memorandum accounts, net (3)   (403,836)
 
Net exchange position (asset)   (210,131)

(1)

Amounts expressed and/or indexed mainly in USD.

(2)

Excluding derivative operations maturing in D +1, to be settled in currency at September 30, 2004 price levels.

(3)

Leasing commitments and others controlled in memorandum accounts.

7) BALANCE SHEET BY MATURITY

At September 30 - In thousands of reais
Up to
30 days 		From 31 to
180 days 		From 181 to 360
days 		More than
360 days 		Indeterminate TOTAL
ASSETS            
Current assets and long-term receivables 104,469,839  18,798,214  14,430,313  36,975,371  -  174,673,737 
Funds available 2,386,029  -  -  -  -  2,386,029 
Interbank investments 23,570,513  501,591  386,806  666,791  -  25,125,701 
Securities and derivative financial instruments (1) 41,120,592  840,300  3,741,330  12,452,437  -  58,154,659 
Interbank and interdepartmental accounts 15,041,782  6,561  7,989  280,122  -  15,336,454 
Credit and leasing operations 8,959,128  16,419,748  8,745,312  15,735,115  -  49,859,303 
Other receivables and other assets 13,391,795  1,030,014  1,548,876  7,840,906  -  23,811,591 
Permanent assets 56,928  284,639  341,569  2,766,021  1,580,604  5,029,761 
- Investments -  -  -  -  970,926  970,926 
- Property and equipment in use and leased assets 19,683  98,412  118,095  1,441,938  609,678  2,287,806 
- Deferred charges 37,245  186,227  223,474  1,324,083  -  1,771,029 
Total in 2004 104,526,767  19,082,853  14,771,882  39,741,392  1,580,604  179,703,498 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current and long-term liabilities 94,701,618  14,723,064  9,775,069  45,708,043  -  164,907,794 
Deposits (2) 41,195,020  4,517,323  4,958,896  14,115,571  -  64,786,810 
Deposits received under security repurchase agreements 19,289,886  634,702  247,198  1,379,327  -  21,551,113 
Funds from issuance of securities 249,420  2,724,618  216,668  2,925,215  -  6,115,921 
Interbank and interdepartmental accounts 1,739,724  -  -  -  -  1,739,724 
Borrowings and onlendings 1,766,356  5,214,851  3,638,667  6,095,337  -  16,715,211 
Derivative financial instruments 275,459  4,222  19,391  8,974  -  308,046 
Technical reserves for insurance, private pension plans and savings bonds 19,503,736  980,148  291,020  10,810,078  -  31,584,982 
Other liabilities
- Subordinated debt 114,545  23,804  -  5,951,122  -  6,089,471 
- Other 10,567,472  623,396  403,229  4,422,419  -  16,016,516 
Deferred income 44,032  -  -  -  -  44,032 
Minority interest in subsidiaries -  -  -  -  73,965  73,965 
Stockholders’ equity -  -  -  -  14,677,707  14,677,707 
Total in 2004 94,745,650  14,723,064  9,775,069  45,708,043  14,751,672  179,703,498 
 
Accumulated net assets in 2004 9,781,117  14,140,906  19,137,719  13,171,068  -  - 
Accumulated net assets in 2003 14,689,864  19,810,303  22,052,709  11,969,936  -  - 

(1)

Investment fund applications are classified as up to 30 days.

(2)

Demand and savings account deposits and technical reserves for insurance and private pension plans comprising VGBL and PGBL products are classified as up to 30 days, without considering average historical turnover.

8) FUNDS AVAILABLE

a) Funds available

At September 30 - In thousands of reais
  2004  2003 
Local currency 1,955,126  1,577,679 
Foreign currency 430,855  655,592 
Investments in gold 48  828 
Total 2,386,029  2,234,099 

b) Statement of cash flows

As additional information for readers, we present below the statement of cash flows prepared based on the indirect method, in conformity with the definitions set forth in the Chart of Accounts for National Financial System Institutions (COSIF).

At September 30 - In thousands of reais
  2004  2003 
OPERATING ACTIVITIES    
NET INCOME 2,002,398  1,591,202 
ADJUSTMENTS TO RECONCILE NET INCOME TO CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES
Provision for loan losses 1,552,917  1,998,173 
(Reversal of) Provision for losses on interbank investments, securities and investments (4,324) 30,195 
Variation, price-level restatement and interest on technical reserves of insurance, private pension plans and savings bonds 4,940,805  4,930,626 
Depreciation and amortization 420,701  470,032 
Amortization of goodwill (Notes 30 and 31) 501,437  861,596 
Equity in the earnings of subsidiary and associated companies (118,560) 25,496 
Other (17,130) (4,813)
CHANGE IN ASSETS AND LIABILITIES
Decrease (increase) in interbank investments 6,595,616  (7,076,516)
Decrease (increase) in securities and derivative financial instruments (4,094,201) (11,147,476)
Decrease (increase) in interbank accounts (767,021) (863,949)
Decrease (increase) in interdepartmental accounts 50,419  (174,836)
Decrease (increase) in credit operations (6,352,365) (1,181,341)
Decrease (increase) in leasing operations (29,510) 146,414 
Decrease (increase) in insurance premiums receivable (72,257) (172,307)
Decrease (increase) in other receivables 1,451,628  (3,441,076)
Decrease (increase) in other assets (141,597) (50,164)
Amounts charged off against the allowance for loan losses (1,507,795) (1,683,117)
Increase (decrease) in technical reserves for insurance, private pension plans and savings bonds 235,225  374,760 
Increase (decrease) in other liabilities 916,551  2,445,638 
Increase (decrease) in deferred income 12,258  13,784 
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 5,575,195  (12,907,679)
 
INVESTMENT ACTIVITIES
Decrease (increase) in compulsory deposits - Brazilian Central Bank (663,912) 450,793 
Sale of non-operating assets 188,494  139,470 
Sale of investments 55,451  33,627 
Sale of property and equipment in use and leased assets 71,952  142,822 
Decrease in deferred charges 28,578  29,583 
Acquisition of non-operating assets (91,380) (128,251)
Acquisition of investments (45,042) (89,896)
Acquisition of property and equipment in use and leased assets (374,773) (614,655)
Deferred charges (625,101) (544,834)
Interest attributed to own capital / dividends received 18,431  21,874 
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (1,437,302) (559,467)
 
FINANCING ACTIVITIES
Increase (decrease) in deposits 6,762,925  1,983,065 
Increase (decrease) in deposits received from security repurchase agreements (11,241,612) 7,056,057 
Increase (decrease) in funds from issuance of securities (730,975) 4,758,470 
Increase (decrease) in borrowings and onlendings 1,920,428  (1,251,870)
Capital increase through subscription -  501,000 
Capital increase through incorporation of shares -  788,735 
Capital reserves -  12 
Share premium -  7,046 
Gifts and fiscal incentive investments 1,259  844 
Interest attributed to own capital/dividends paid and/or accrued (984,509) (999,747)
Acquisition of own shares (48,753) - 
Mark-to-market adjustment - securities available for sale 159,711  231,999 
Variation in minority interest (38,764) (160,073)
 
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (4,200,290) 12,915,538 
 
DECREASE IN FUNDS AVAILABLE, NET (62,397) (551,608)
CHANGE IN FUNDS At the beginning of the period 2,448,426  2.785.707 
AVAILABLE, NET At the end of the period 2,386,029  2.234.099 
  Decrease in funds available, net (62,397) (551.608)

9) INTERBANK INVESTMENTS

a) Maturities

At September 30 - In thousands of reais
Up to 30
days 		From 31
to 180
days 		From 181
to 360 days 		More than
360 days 		Total in 2004 Total in 2003
Securities purchased under resale agreements            
Own portfolio position 2,548,961  -  -  -  2,548,961  3,679,855 
•    National Treasury Bonds 1,167,684  -  -  -  1,167,684  1,723,896 
•    Financial Treasury Notes 701,031  -  -  -  701,031  1,955,228 
•    Federal Treasury Notes 565,159  -  -  -  565,159  - 
•    Central Bank Notes 34,842  -  -  -  34,842  - 
•    Other 80,245  -  -  -  80,245  731 
Third-party portfolio position 15,680,762  50,168  -  -  15,730,930  20,826,801 
•    Financial Treasury Notes 15,437,215  -  -  -  15,437,215  10,806,470 
•    National Treasury Bonds 243,547  50,168  -  -  293,715  10,020,331 
Subtotal 18,229,723  50,168  -  -  18,279,891  24,506,656 
 
Interbank deposits
 
•    Interbank deposits 5,340,790  451,471  387,523  668,713  6,848,497  4,051,857 
•    Provision for loss -  (48) (717) (1,922) (2,687) (53)
Subtotal 5,340,790  451,423  386,806  666,791  6,845,810  4,051,804 
 
Total in 2004 23,570,513  501,591  386,806  666,791  25,125,701 
% 93.8 2.0 1.5 2.7 100.0
Total in 2003 27,655,089  383,071  307,365  212,935  -  28,558,460 
% 96.8  1.3  1.1  0.8  -  100.0 

b) Income from interbank investments

Classified in income on securities’ transactions

Accumulated to September 30 - In thousands of reais
  2004  2003 
 
Income on investments in purchase and sale commitments:
Own portfolio position 200,128  293,555 
Third-party portfolio position 1,794,968  2,839,442 
Subtotal 1,995,096  3,132,997 
 
Interbank deposits 201,648  232,583 
 
Total (Note 10e) 2,196,744  3,365,580 

10) SECURITIES AND DERIVATIVE FINANCIAL INSTRUMENTS

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

At September 30 - In thousands of reais
 
  Financial  Insurance/
Savings bonds 		Private
pension plans 		Other
activities 		2004 % 2003 %
 
Trading Securities 13,826,432  4,721,922  24,279,923  80,571  42,908,848  73.8 37,321,110  77.9
- Government securities 7,233,455  2,702,421  18,101,535  49,377  28,086,788  48.3 24,056,823  50.2
- Corporate bonds 2,864,457  281,389  3,127,234  31,194  6,304,274  10.8 2,755,881  5.8
Purchase and sale commitments (3) 3,728,520  1,738,112  3,051,154  -  8,517,786  14.7 10,508,406  21.9
Securities available for sale 7,194,749  1,458,760  1,492,250  20,872  10,166,631  17.5 5,116,185  10.7
- Government securities 5,675,892  747,442  -  -  6,423,334  11.0 2,130,988  4.4
- Corporate bonds 1,518,857  711,318  1,492,250  20,872  3,743,297  6.5 2,985,197  6.3
Securities held to maturity 1,451,899  -  3,042,964  -  4,494,863  7.7 4,736,996  9.9
- Government securities 1,451,051  -  3,042,964  -  4,494,015  7.7 4,736,996  9.9
- Corporate bonds 848  -  -  -  848  -  -  - 
Derivative financial instruments 584,317  -  -  -  584,317  1.0 731,187  1.5
- Corporate bonds 584,317  -  -  -  584,317  1.0 731,187  1.5
 
Total 23,057,397  6,180,682  28,815,137  101,443  58,154,659  100,0 47,905,478  100.0
- Government securities 14,360,398  3,449,863  21,144,499  49,377  39,004,137  67.0 30,924,807  64.6
- Corporate bonds 4,968,479  992,707  4,619,484  52,066  10,632,736  18.3 6,472,265  13.5
- Purchase and sale commitments (3) 3,728,520  1,738,112  3,051,154  -  8,517,786  14.7 10,508,406  21.9

b) Consolidated portfolio composition by issuer

At September 30 - In thousands of reais
SECURITIES
(1) 		Up to 30
days 		From 31 to
180
days 		From 181 to
360
days 		More than
360 days 		Market/book
value
(4) (5) (6) 		Restated cost
value 		Mark-to-
market
- GOVERNMENT SECURITIES 1,396,054  4,617,853  7,083,168  25,907,062  39,004,137  38,878,801  125,336 
Financial Treasury Notes 642,645  2,234,884  2,016,970  10,867,985  15,762,484  15,770,820  (8,336)
Federal Treasury Notes 209,949  479,437  56,696  8,331,743  9,077,825  9,091,415  (13,590)
Central Bank Notes 199,809  1,880,503  4,958,333  57,780  7,096,425  7,098,071  (1,646)
Brazilian Foreign Debt Notes 197,851  -  -  6,522,042  6,719,893  6,570,501  149,392 
National Treasury Bonds 4  -  -  54,747  54,751  55,883  (1,132)
Other 145,796  23,029  51,169  72,765  292,759  292,111  648 
 
- CORPORATE BONDS 3,156,373  2,609,113  261,526  4,605,724  10,632,736  9,797,705  835,031 
Certificates of Bank Deposit 291,539  2,399,347  51,587  1,116,782  3,859,255  3,859,222  33 
Shares 2,256,815  -  -  -  2,256,815  1,367,766  889,049 
Foreign securities 38,744  35,508  66,146  1,402,516  1,542,914  1,506,911  36,003 
Debentures 104,927  11,321  61,091  1,353,500  1,530,839  1,561,890  (31,051)
Derivative financial instruments 319,610  145,700  70,048  48,959  584,317  594,548  (10,231)
Other 144,738  17,237  12,654  683,967  858,596  907,368  (48,772)
 
Purchase and sale commitments (3) -  2,328,677  2,596,636  3,592,473  8,517,786  8,517,786  - 
 
TOTAL IN 2004 4,552,427  9,555,643  9,941,330  34,105,259  58,154,659  57,194,292  960,367 
 
TOTAL IN 2003 3,148,001  3,165,111  7,581,239  34,011,127  47,905,478  47,297,280  608,198 

c) Consolidated classification by category, days to maturity and business segment

At September 30 - In thousands of reais
SECURITIES
(1) 		Up to 30
days 		From 31 to
180
days 		From 181 to
360
days 		More than
360 days 		Market/book
value
(4) (5) (6) 		Restated cost
value 		Mark-to-
market
I. TRADING SECURITIES 2,013,857  8,925,737  9,746,413  22,222,841  42,908,848  42,950,411  (41,563)
 
- FINANCIAL (2) 638,098  1,660,545  4,812,239  6,715,550  13,826,432  13,876,305  (49,873)
 
Purchase and sale commitments (3) -  1,003,585  1,224,041  1,500,894  3,728,520  3,728,520  - 
National Treasury Bonds 19,943  89,462  3,457,912  57,105  3,624,422  3,626,056  (1,634)
Financial Treasury Notes 129,777  114,435  8,517  1,643,948  1,896,677  1,906,964  (10,287)
Certificates of Bank Deposit 29,450  126,710  4,516  803,960  964,636  964,603  33 
Debentures 5,701  10,841  -  892,110  908,652  908,652  - 
Brazilian Foreign Debt Notes 36,381  -  -  862,420  898,801  876,333  22,468 
Federal Treasury Notes 71,356  268,490  -  253,701  593,547  611,328  (17,781)
Foreign securities 172,203  47,022  117,253  362,099  698,577  707,094  (8,517)
Other 173,287  -  -  339,313  512,600  546,755  (34,155)
 
- INSURANCE AND SAVINGS BOND 811,380  1,638,350  1,186,737  1,085,455  4,721,922  4,721,904  18 
 
Purchase and sale commitments (3) -  255,127  539,249  943,736  1,738,112  1,738,112  - 
National Treasury Bonds 124,350  699,670  459,005  74  1,283,099  1,283,099  - 
Financial Treasury Notes 287,679  664,803  188,350  110,517  1,251,349  1,251,331  18 
Certificates of Bank Deposit 73,756  8,501  133  1,024  83,414  83,414  - 
Debentures 9,795  1  -  728  10,524  10,524  - 
Federal Treasury Notes 138,593  -  -  29,376  167,969  167,969  - 
Foreign securities 2,015  10,248  -  -  12,263  12,263  - 
Shares 145,417  -  -  -  145,417  145,417  - 
Other 29,775  -  -  -  29,775  29,775  - 
 
- PRIVATE PENSION PLAN 528,185  5,606,532  3,736,973  14,408,233  24,279,923  24,271,631  8,292 
 
Purchase and sale commitments (3) -  1,069,965  833,346  1,147,843  3,051,154  3,051,154  - 
Financial Treasury Notes 137,016  1,205,797  1,763,789  8,475,522  11,582,124  11,573,832  8,292 
Federal Treasury Notes -  -  56,696  4,292,139  4,348,835  4,348,835  - 
Certificates of Bank Deposit 25,560  2,253,454  41,948  288,856  2,609,818  2,609,818  - 
National Treasury Bonds 51,845  1,076,850  1,041,194  591  2,170,480  2,170,480  - 
Shares 300,248  -  -  -  300,248  300,248  - 
Debentures 11  466  -  27,599  28,076  28,076  - 
Other 13,505  -  -  175,683  189,188  189,188  - 
 
OTHER ACTIVITIES 36,194  20,310  10,464  13,603  80,571  80,571  - 
 
Financial Treasury Notes 14,992  5,373  9,801  6,612  36,778  36,778  - 
National Treasury Bonds 3,671  8,865  53  10  12,599  12,599  - 
Certificates of Bank Deposit 1,629  6,059  610  3  8,301  8,301  - 
Other 15,902  13  -  6,978  22,893  22,893  - 
 
II. SECURITIES AVAILABLE FOR SALE 2,180,749  398,589  124,829  7,462,464  10,166,631  9,154,470  1,012,161 
 
- FINANCIAL (2) 283,508  151,313  73,403  6,686,525  7,194,749  7,103,081  91,668 
 
Brazilian Foreign Debt Notes 123,852  -  -  4,332,639  4,456,491  4,329,567  126,924 
Foreign corporate bonds 10,322  1,052  12  1,107,547  1,118,933  1,073,764  45,169 
Federal Treasury Notes -  125,545  -  591,046  716,591  716,680  (89)
Financial Treasury Notes 72  -  -  369,511  369,583  378,475  (8,892)
Shares 112,866  -  -  -  112,866  137,650  (24,784)
Debentures 1,969  -  60,558  88,968  151,495  182,393  (30,898)
Other 34,427  24,716  12,833  196,814  268,790  284,552  (15,762)
 
- INSURANCE AND SAVINGS BOND 737,908  247,276  49,114  424,462  1,458,760  1,147,208  311,552 
 
Financial Treasury Notes 73,109  244,476  46,513  260,827  624,925  622,392  2,533 
Federal Treasury Notes -  -  -  122,517  122,517  118,237  4,280 
Debentures 87,444  -  -  -  87,444  87,444  - 
Shares 574,731  -  -  -  574,731  269,992  304,739 
Other 2,624  2,800  2,601  41,118  49,143  49,143  - 
 
- PRIVATE PENSION PLAN 1,149,215  -  533  342,502  1,492,250  884,263  607,987 
 
Shares 1,007,477  -  -  -  1,007,477  399,337  608,140 
Certificates of Bank Deposit 131,223  -  -  -  131,223  131,223  - 
Debentures 7  -  533  342,502  343,042  343,195  (153)
Other 10,508  -  -  -  10,508  10,508  - 
 
OTHER ACTIVITIES 10,118  -  1,779  8,975  20,872  19,918  954 
 
Certificates of Bank Deposit 8,666  -  1,779  8,975  19,420  19,420  - 
Other 1,452  -  -  -  1,452  498  954 
 
III. SECURITIES HELD TO MATURITY (7) 38,211  85,617  40  4,370,995  4,494,863  4,494,863  - 
 
- FINANCIAL 38,211  85,617  40  1,328,031  1,451,899  1,451,899  - 
 
Brazilian Foreign Debt Notes 37,618  -  -  1,326,983  1,364,601  1,364,601  - 
Federal Treasury Notes -  85,402  -  -  85,402  85,402  - 
Other 593  215  40  1,048  1,896  1,896  - 
 
PRIVATE PENSION PLANS -  -  -  3,042,964  3,042,964  3,042,964  - 
 
Federal Treasury Notes -  -  -  3,042,964  3,042,964  3,042,964  - 
 
IV. DERIVATIVE FINANCIAL INSTRUMENTS (ASSETS) 319,610  145,700  70,048  48,959  584,317  594,548  (10,231)
 
FINANCIAL 319,610  145,700  70,048  48,959  584,317  594,548  (10,231)
 
Derivative financial instruments 319,610  145,700  70,048  48,959  584,317  594,548  (10,231)
 
TOTAL IN 2004 4,552,427  9,555,643  9,941,330  34,105,259  58,154,659  57,194,292  960,367 
 
TOTAL IN 2003 3,148,001  3,165,111  7,581,239  34,011,127  47,905,478  47,297,280  608,198 
 
DERIVATIVE FINANCIAL INSTRUMENTS (LIABILITIES)
TOTAL IN 2004 (275,459) (4,223) (19,391) (8,973) (308,046) (306,569) (1,477)
 
TOTAL IN 2003 (206,385) (18,443) (22,616) (83,801) (331,245) (301,858) (29,387)

(1)

Investments in fund quotas were distributed based on the securities comprising their portfolios, maintaining the fund category classification.

(2)

Securities of Banco BEM, in the amount of R$ 521,065 thousand, comprising mainly financial treasury notes, which were classified in securities held to maturity, were reclassified at June 30, 2004. Of this amount, R$ 499,461 thousand was reclassified to trading securities, decreasing results by R$ 6,648 thousand, net of tax effects and R$ 21,604 thousand to securities available for sale, decreasing the specific stockholders’ equity account by R$ 3,667 thousand, net of tax effects, and in Banco Zogbi, equity securities in the amount of R$ 5,033 thousand, classified as trading securities, were transferred to securities available for sale, with no effect on income, pursuant to BACEN Circular 3068, in line with the portfolio profile of Banco Bradesco, the new parent company of these banks.

(3)

Investment fund and managed portfolio resources invested in purchase and sale commitments with Banco Bradesco, the investors in which are subsidiary companies, included in the consolidated financial statements.

(4)

The number of days to maturity was based on the maturity of the securities, regardless of accounting classification.

(5)

This column reflects book value subsequent to mark-to-market, except for securities held to maturity, whose market value is higher than book value by R$ 884,072 thousand (September 30, 2003 - R$ 447,855 thousand).

(6)

The market value of securities is determined based on the market price practiced on the balance sheet date. In the event no market prices are available, amounts are estimated based on the prices quoted by dealers, on price definition models, quotation models or quotations for instruments with similar characteristics.

(7)

In compliance with the provisions of Article 8 of BACEN Circular 3068, Bradesco declares that it has both the financial capacity and the intention to hold to maturity the securities classified in the ‘securities held to maturity’ category. This financial capacity is evidenced in Note 7, which presents the maturities of asset and liability operations at the base date of September 30, 2004.

d) Composition of the portfolios by account:

At September 30 - In thousands of reais
 
  Up to 30
days 		From 31 to
180
days 		From 181 to
360 days 		More than
360 days 		Total
 
Own portfolio 4,036,397  8,860,158  6,530,807  29,516,241  48,943,603 
    Fixed income securities 1,779,582  8,860,158  6,530,807  29,516,241  46,686,788 
•  Financial Treasury Notes 595,460  2,172,347  2,012,465  9,592,502  14,372,774 
•  Purchase and sale commitments (1) -  2,328,677  2,596,636  3,592,473  8,517,786 
•  Federal Treasury Notes 149,180  8,328  56,696  7,701,511  7,915,715 
•  Brazilian Foreign Debt Notes 120,368  -  -  4,052,584  4,172,952 
•  Certificates of Bank Deposit 291,540  2,399,347  51,587  1,116,783  3,859,257 
•  National Treasury Bonds 199,219  1,864,363  1,622,364  17,111  3,703,057 
•  Foreign securities 38,744  35,508  66,146  1,402,517  1,542,915 
•  Debentures 104,926  11,321  61,091  1,353,501  1,530,839 
•  Other 280,145  40,267  63,822  687,259  1,071,493 
 
Equity securities 2,256,815  -  -  -  2,256,815 
•  Shares of listed companies (technical reserve) 1,429,716  -  -  -  1,429,716 
•  Shares and quotas (other) 827,099  -  -  -  827,099 
 
Subject to commitments 516,030  695,485  3,410,523  4,589,018  9,211,056 
Repurchase agreements 77,483  14,549  11,512  2,521,370  2,624,914 
•  Brazilian Foreign Debt Notes 77,483  -  -  2,469,458  2,546,941 
•  Central Bank Notes -  -  -  4,587  4,587 
•  Financial Treasury Notes -  -  856  47,325  48,181 
•  National Treasury Bonds -  -  10,656  -  10,656 
•  Federal Treasury Notes -  14,549  -  -  14,549 
 
Central Bank Notes 69,074  398,524  2,992,855  459,974  3,920,427 
•  National Treasury Bonds -  15,005  2,990,786  40,669  3,046,460 
•  Financial Treasury Notes 8,305  11,358  2,069  102,900  124,632 
•  Federal Treasury Notes 60,769  372,161  -  273,165  706,095 
•  Central Bank Notes -  -  -  43,240  43,240 
 
Privatization currencies 36  -  -  73,737  73,773 
 
Collateral provided 49,827  136,712  335,300  664,159  1,185,998 
•  National Treasury Bonds 590  1,135  333,720  -  335,445 
•  Financial Treasury Notes 38,881  51,178  1,580  304,441  396,080 
•  Central Bank Notes -  -  -  2,652  2,652 
•  Federal Treasury Notes -  84,399  -  357,066  441,465 
•  Other 10,356  -  -  -  10,356 
Derivative financial instruments 319,610  145,700  70,048  48,959  584,317 
 
Unrestricted notes -  -  808  820,819  821,627 
•  National Treasury Bonds -  -  808  -  808 
•  Financial Treasury Notes -  -  -  820,819  820,819 
 
Total in 2004 4,552,427  9,555,643  9,941,330  34,105,259  58,154,659 
% 7.8  16.4  17.1  58.7  100.0 
 
Total in 2003 3,148,001  3,165,111  7,581,239  34,011,127  47,905,478 
% 6.6  6.6  15.8  71.0  100.0 

(1)

Investment fund and managed portfolio resources invested in purchase and sale commitments with Banco Bradesco, the investors in which are subsidiary companies, included in the consolidated financial statements.

Other investments in investment fund quotas were distributed according to the securities comprising their portfolios.

The number of days to maturity was based on the maturity of the securities, regardless of accounting classification.

e) Income on securities transactions, financial income on insurance, private pension plans and savings bonds and derivative financial instruments

Accumulated to September 30 - In thousands of reais
 
  2004  2003 
 
Fixed income securities (1) 2,228,418  2,412,559 
Interbank investments (Note 9b) 2,196,744  3,365,580 
Allocation of exchange variation of foreign branches and
subsidiaries (288,690) (676,097)
Equity securities 26,234  (3,977)
Other (18) (35)
Subtotal 4,162,688  5,098,030 
 
Financial income on insurance, private pension plans and
savings bonds: 3,763,277  3,948,012 
Transactions with derivatives (Note 33c - V) 708,965  46,315 
Total 8,634,930  9,092,357 

(1)

Includes foreign securities.

11) INTERBANK ACCOUNTS - RESTRICTED DEPOSITS

a) Restricted deposits

At September 30 - In thousands of reais
 
  Remuneration 2004  2003 
 
Compulsory deposits - demand deposits 1  4,301,989  3,550,943 
Compulsory deposits - savings account deposits 2  4,614,679  4,195,784 
Additional compulsory deposits 3  5,327,669  4,322,115 
Restricted deposits - National Housing System (SFH) 4  320,955  388,856 
Funds from agricultural loans 4  578  578 
Total   14,565,870  12,458,276 

(1)

Without remuneration

(2)

Remunerated at the same rate as savings account deposits

(3)

Remunerated based on the variation in the Brazilian Central Bank reference rate (SELIC)

(4)

Remunerated based on the reference rate (TR)

b) Compulsory deposits - income on restricted deposits

Accumulated to September 30 - In thousands of reais
  2004  2003 
Restricted deposits - BACEN (compulsory deposits) 829,242  1,061,907 
Restricted deposits - National Housing System (SFH) 29,762  34,579 
Total 859,004  1,096,486 

12) CREDIT OPERATIONS

The information relating to credit operations including advances on foreign exchange contracts, leasing operations and other receivables is presented as follows:

a)

By type and maturity.

b)

Arising from new acquisitions.

c)

By type and risk level.

d)

Concentration of credit operations

e)

By economic activity sector.

f)

Composition of credit operations and allowance for loan losses.

g)

Movement of the allowance for loan losses.

h)

Recovery and renegotiation

i)

Income on credit operations

a) By type and maturity.

At September 30 – In thousand of reais
 
  Normal course
 
  Up to 30 days From 31 to 60 days From 61 to 90 days From 91 to 180 days From 181 to 360 days More than 360 days Total in 2004 (A) % Total in 2003 (A) %
 
Discount of trade receivables and other loans 6,252,865  3,668,125  3,448,348  2,938,934  3,495,469  4,982,441  24,786,182  39.3 21,919,025  39.8
Financings 1,742,579  1,410,063  1,275,415  2,548,200  3,580,113  7,540,983  18,097,353  28.7 14,348,903  26.1
Rural and agribusiness loans 402,002  313,433  192,890  447,815  1,326,455  3,215,451  5,898,046  9.3 4,167,271  7.6
Subtotal 8,397,446  5,391,621  4,916,653  5,934,949  8,402,037  15,738,875  48,781,581  77.3 40,435,199  73.5
Leasing operations 98,615  78,335  78,303  216,166  386,385  521,323  1,379,127  2.2 1,329,555  2.4
    Advances on foreign exchange contracts (1) 1,732,499  1,188,902  839,058  1,044,707  717,390  -  5,522,556  8.8 6,130,811  11.1
Subtotal 10,228,560  6,658,858  5,834,014  7,195,822  9,505,812  16,260,198  55,683,264  88.3 47,895,565  87.0
Other receivables (2) 113,107  24,906  9,669  29,100  66,207  210,549  453,538  0.7 696,929  1.3
Total credit operations(3) 10,341,667  6,683,764  5,843,683  7,224,922  9,572,019  16,470,747  56,136,802  89.0 48,592,494  88.3
Sureties and guarantees (4) 293,163  364,515  190,527  249,298  729,568  5,132,865  6,959,936  11.0 6,433,407  11.7
Total in 2004 10,634,830  7,048,279  6,034,210  7,474,220  10,301,587  21,603,612  63,096,738  100.0 -  - 
Total in 2003 10,000,982  6,603,649  5,099,033  7,697,391  7,699,337  17,925,509      55,025,901  100.00

At September 30 – In thousands of reais
 
  Abnormal course
 
  Past Due Installments
 
  Up to 30 days From 31 to 60 days From 61 to 90 days From 91 to 180 days From 181 to 720 days Total in 2004 (B) % Total in 2003 (B) %
 
Discount of trade receivables and other loans 210,841  172,859  179,625  315,298  386,758  1,265,381  69.5 1,497,056  79.6
Financings 89,138  57,044  54,293  59,044  72,015  331,534  18.2 259,194  13.8
Rural and agribusiness loans 4,573  1,117  896  5,342  28,129  40,057  2.2 27,871  1.5
Subtotal 304,552  231,020  234,814  379,684  486,902  1,636,972  89.9 1,784,121  94.9
Leasing operations 3,943  3,465  1,886  5,007  8,475  22,776  1.2 23,967  1.2
    Advances on foreign exchange contracts (1) 20,503  23,457  26,615  19,483  5,457  95,515  5.2 37,352  2.0
Subtotal 328,998  257,942  263,315  404,174  500,834  1,755,263  96.3 1,845,440  98.1
Other receivables (2) 10,197  4,113  1,043  2,182  50,539  68,074  3.7 34,928  1.9
Total credit operations (3) 339,195  262,055  264,358  406,356  551,373  1,823,337  100.0 1,880,368  100.0
Sureties and guarantees (4) -  -  -  -  -  -  -  -  - 
Total in 2004 339,195  262,055  264,358  406,356  551,373  1,823,337  100.0
Total in 2003 312,509  314,123  213,401  438,938  601,397      1,880,368  100.0

At September 30 – In thousands of reais
 
  Abnormal course  
 
 
  Installments Falling Due Total
 
  Up to 30 days From 31 to 60 days From 61 to 90 days From 91 to 180 days From 181 to 360 days More than 360 days Total in 2004 (c) % Total in 2003 (c) % 2004 (A+B+C) % 2003 (A+B+C) %
 
Discount of trade receivables and other loans 89,552  82,584  68,394  148,890  162,089  214,998  766,507  38.0 1,064,693  46.2 26,818,070  40.1 24,480,774  41.3
Financings 87,547  75,490  72,631  188,765  269,358  485,296  1,179,087  58.6 1,113,305  48.3 19,607,974  29.2 15,721,402  26.6
Rural and agribusiness loans 1,601  1,192  522  1,240  3,806  8,693  17,054  0.8 8,400  0.4 5,955,157  8.9 4,203,542  7.1
Subtotal 178,700  159,266  141,547  338,895  435,253  708,987  1,962,648  97.4 2,186,398  94.9 52,381,201  78.2 44,405,718  75.0
Leasing operations 3,486  2,903  3,169  8,012  12,204  19,487  49,261  2.4 85,213  3.7 1,451,164  2.2 1,438,735  2.4
Advances on foreign exchange contracts (1) -  -  -  -  -  -  -  -  -  -  5,618,071  8.4 6,168,163  10.4
Subtotal 182,186  162,169  144,716  346,907  447,457  728,474  2,011,909  99.8 2,271,611  98.6 59,450,436  88.8 52,012,616  87.8
Other receivables (2) 3,557  48  29  87  73  121  3,915  0.2 31,948  1.4 525,527  0.8 763,805  1.3
Total credit operations (3) 185,743  162,217  144,745  346,994  447,530  728,595  2,015,824  100.0 2,303,559  100.0 59,975,963  89.6 52,776,421  89.1
Sureties and guarantees (4) -  -  -  -  -  -  -  -  -  -  6,959,936  10.4 6,433,407  10.9
Total in 2004 185,743  162,217  144,745  346,994  447,530  728,595  2,015,824  100.0     66,935,899  100.0 -  -
Total in 2003 255,686  148,851  130,948  359,428  530,338  878,308       2,303,559  100.0      59,209,828  100.0

(1)

Classified as a reduction of the “Other liabilities” account.

(2)

Receivables on guarantees honored, receivables on purchase of assets, credit instruments receivable, income receivable on foreign exchange contracts and receivables arising from export contracts.

(3)

Includes credit card operation financings in the amount of R$ 762,066 thousand (September 30, 2003 - R$ 752,400 thousand). Other receivables relating to credit cards in the amount of R$ 1,293,261 thousand (September 30, 2003 - R$ 970,072 thousand) are presented in Note 13b.

(4)

Recorded in memorandum accounts.

b) Arising from new acquisitions.

Banco BEM S.A. and Banco Zogbi S.A..

At September 30, 2004- In thousands of reais
Credit operations 486,408 
Other receivables 5,456 
Total 491,864 
Normal course 384,359 
Abnormal course 107,505 

c) By type and risk level.

At September 30 – In thousands of reais
RISK LEVELS
CREDIT OPERATIONS AA A B C D E F G H Total in 2004 % Total in 2003 %
Discount of trade receivables and other loans 7,566,941  10,888,976  2,171,751  3,227,844  909,316  228,384  290,371  171,174  1,363,313  26,818,070  44.7 24,480,774  46.4
Financings 4,289,552  8,883,498  1,724,023  3,812,394  256,104  74,128  115,876  65,279  387,120  19,607,974  32.7 15,721,402  29.8
Rural and agribusiness loans 695,642  1,951,246  1,005,306  1,410,314  535,966  69,837  139,227  109,015  38,604  5,955,157  9.9 4,203,542  8.0
Subtotal 12,552,135  21,723,720  4,901,080  8,450,552  1,701,386  372,349  545,474  345,468  1,789,037  52,381,201  87.3 44,405,718  84.2
Leasing operations 23,868  202,108  248,067  844,500  42,329  11,661  28,362  4,921  45,348  1,451,164  2.4 1,438,735  2.7
Advances on foreign exchange contracts (1) 3,189,419  1,065,645  868,221  404,841  18,567  365  -  3,045  67,968  5,618,071  9.4 6,168,163  11.7
Subtotal 15,765,422  22,991,473  6,017,368  9,699,893  1,762,282  384,375  573,836  353,434  1,902,353  59,450,436  99.1 52,012,616  98.6
Other receivables 191,410  125,190  44,041  89,628  2,616  623  4,846  463  66,710  525,527  0.9 763,805  1.4
Total credit operations in 2004 15,956,832  23,116,663  6,061,409  9,789,521  1,764,898  384,998  578,682  353,897  1,969,063  59,975,963  100.0
% 26.6 38.6 10.1 16.3 2.9 0.6 1.0 0.6 3.3 100.0
Total credit operations in 2003 14,833,442  19,199,744  4,378,648  9,324,235  1,459,734  549,512  596,361  447,351  1,987,394      52,776,421  100.0
% 28.1 36.4 8.3 17.7 2.8 1.0 1.1 0.8 3.8     100.0

d) Concentration of credit operations

At September 30 - In thousands of reais
 
  2004  %  2003  % 
 
Largest borrower 930,582  1.6  770,962  1.5 
10 largest borrowers 5,745,636  9.6  5,060,036  9.6 
20 largest borrowers 8,803,133  14.7  8,111,043  15.4 
50 largest borrowers 14,196,019  23.7  13,499,957  25.6 
100 largest borrowers 18,061,965  30.1  17,493,885  33.1 

At September 30 - In thousands of reais
 
  2004  %  2003  % 
 
PUBLIC SECTOR 625,468  1.0  201,864  0.4 
 
FEDERAL GOVERNMENT 362,915  0.6  201,684  0.4 
Petrochemical 175,236  0.3  201,684  0.4 
 
Generation and distribution of electric power 187,679  0.3  -  -
STATE GOVERNMENT 259,963  0.4  -  -  - 
Generation and distribution of electric power 259,963  0.4  -  -
MUNICIPAL GOVERNMENT 2,590  - 180 -
Direct administration 2,590  - 180 -
 
PRIVATE SECTOR 59,350,495  99.0  52,574,557  99.6 
 
MANUFACTURING 18,458,084  30.8  17,615,792  33.3 
Food and beverage 4,668,565  7.8  3,825,049  7.3 
Steel, metallurgical and mechanical 3,008,924  5.0  3,479,204  6.6 
Light and heavy vehicles 2,166,962  3.6  1,635,812  3.1 
Chemical 1,591,503  2.7  1,543,129  2.9 
Paper and pulp 826,654  1.4  1,130,648  2.1 
Electro-electronics 815,914  1.4  592,379  1.1 
Rubber and plastic articles 767,667  1.3  697,229  1.3 
Textiles and clothing 759,526  1.3  763,755  1.4 
Furniture and wood products 560,225  0.9  474,431  0.9 
Publishing, printing and reproduction 504,904  0.8  619,460  1.2 
Extraction of metallic and non-metallic ores 475,640  0.8  414,519  0.8 
Oil refining and production of alcohol 465,342  0.8  322,602  0.6 
Automotive parts and accessories 434,256  0.7  392,615  0.7 
Leather articles 321,351  0.5  301,377  0.6 
Non-metallic materials 303,852  0.5  242,292  0.5 
Other industries 786,799  1.3  1,181,291  2.2 
 
COMMERCE 9,543,998  15.9  7,710,753  14.5 
Speciality store products 2,168,199  3.6  1,397,969  2.5 
Non-specialized retailers 1,091,847  1.8  527,649  1.0 
Food, beverage and tobacco products 1,037,403  1.7  1,171,426  2.2 
General merchandise wholesalers 830,037  1.4  992,540  1.9 
Articles for personal use and for use in the home 725,763  1.2  354,384  0.7 
Waste material and scrap 697,814  1.2  547,402  1.0 
Vehicles 634,278  1.1  457,276  0.9 
Agricultural products 549,068  0.9  214,116  0.4 
Repairs, parts and accessories for vehicles 447,201  0.7  262,967  0.5 
Clothing and footwear 438,058  0.7  393,027  0.7 
Fuel 398,447  0.7  293,153  0.6 
Commercial intermediary 373,834  0.6  268,398  0.5 
Other commerce 152,049  0.3  830,446  1.6 
 
FINANCIAL INTERMEDIATION 354,950  0.6  359,338  0.7 
 
SERVICES 11,203,135  18.7  11,322,411  21.6 
Transport and storage 2,488,472  4.1  1,857,454  3.5 
Telecommunications 2,193,174  3.7  2,107,784  4.0 
Real estate activities, rents and corporate services 1,773,248  3.0  1,473,691  2.8 
Civil construction 1,372,156  2.3  1,595,298  3.0 
Production and distribution of electric power, gas and water 914,318  1.5  1,504,177  2.9 
Social services, education, health, defense and social security 602,240  1.0  580,973  1.1 
Holding companies, legal, accounting and business advisory services 411,055  0.7  661,970  1.3 
Clubs, leisure, cultural and sports activities 391,173  0.6  358,800  0.7 
Hotel and catering 230,234  0.4  201,648  0.4 
Other services 827,065  1.4  980,616  1.9 
 
AGRICULTURE, LIVESTOCK RAISING, FISHING, FOREST DEVELOPMENT AND MANAGEMENT 1,102,482  1.8  826,397  1.6 
 
INDIVIDUALS 18,687,846  31.2  14,739,866  27.9 
 
Total 59,975,963  100.0  52,776,421  100.0 

f) Composition of credit operations and allowance for loan losses

At September 30 – In thousands of reais
Portfolio Balance
Risk Level Abnormal Course Normal
course 		TOTAL % %
Acumulated
in 2004 		%
Acumulated
in 2003
Past Due Falling Due Total
abnormal course
AA -  -  -  15,956,832  15,956,832  26.6 26.6 28.1
A -  -  -  23,116,663  23,116,663  38.6 65.2 64.4
B 119,333  474,138  593,471  5,467,938  6,061,409  10.1 75.3 72.7
C 193,655  519,492  713,147  9,076,374  9,789,521  16.3 91.6 90.4
Subtotal 312,988  993,630  1,306,618  53,617,807  54,924,425  91.6
 
D 138,091  219,474  357,565  1,407,333  1,764,898  2.9 94.5 93.2
E 117,374  117,540  234,914  150,084  384,998  0.6 95.1 94.2
F 121,291  130,864  252,155  326,527  578,682  1.0 96.1 95.3
G 118,635  90,189  208,824  145,073  353,897  0.6 96.7 96.1
H 1,014,958  464,127  1,479,085  489,978  1,969,063  3.3 100.0 100.0
Subtotal 1,510,349  1,022,194  2,532,543  2,518,995  5,051,538  8.4
 
Total in 2004 1,823,337  2,015,824  3,839,161  56,136,802  59,975,963  100.0
% 3.0 3.4 6.4 93.6 100.0
Total in 2003 1,880,368  2,303,559  4,183,927  48,592,494  52,776,421 
% 3.5 4.4 7.9 92.1 100.0

At September 30 – In thousands of reais
Allowance
Minimum Requirement Additional Existing % 2004 (1) % 2003 (1)
Risk Level % Minimum Required Provision Specific Generic Total
Past Due Falling Due Total Specific
AA 0.0 -  -  -  -  -  -  -  -  - 
A 0.5 -  -  -  115,583  115,583  67,773  183,356  0.8 0.8
B 1.0 1,193  4,741  5,934  54,756  60,690  20,952  81,642  1.3 1.3
C 3.0 5,810  15,585  21,395  272,292  293,687  368,339  662,026  6.8 5.4
Subtotal   7,003 20,326 27,329 442,631 469,960 457,064 927,024 1.7 1.5
 
D 10.0 13,809  21,947  35,756  140,734  176,490  221,313  397,803  22.5 28.3
E 30.0 35,212  35,262  70,474  45,025  115,499  61,756  177,255  46.0 46.1
F 50.0 60,646  65,427  126,073  163,263  289,336  88,667  378,003  65.3 66.4
G 70.0 83,044  63,132  146,176  101,551  247,727  84,503  332,230  93.9 87.3
H 100.0 1,014,958  464,127  1,479,085  489,978  1,969,063  -  1,969,063  100.0 100.0
Subtotal   1,207,669 649,895 1,857,564 940,551 2,798,115 456,239 3,254,354 64.4 68.3
 
Total in 2004   1,214,672 670,221 1,884,893 1,383,182 3,268,075 913,303 4,181,378 7.0
%   29.1 16.0 45.1 33.1 78.2 21.8 100.0
Total in 2003   1,218,093 721,042 1,939,135 1,389,800 3,328,935 821,949 4,150,884   7.9
%   29.3 17.4 46.7 33.5 80.2 19.8 100.0

(1)

Existing allowance in relation to portfolio, by risk level.

g) Movement of allowance for loan losses.

  In thousands of reais
 
At December 31, 2002 3,665,091 
- Specific provision (1) 1,943,451 
- Generic provision (2) 1,217,036 
- Additional provision (3) 504,604 
Amount recorded 1,998,173 
Amount written off (1,683,117)
Balance derived from acquired institutions (4) 170,737 
At September 30, 2003 4,150,884 
- Specific provision (1) 1,939,135 
- Generic provision (2) 1,389,800 
- Additional provision (3) 821,949 
 
At December 31, 2003 4,059,300 
- Specific provision (1) 1,816,523 
- Generic provision (2) 1,383,691 
- Additional provision (3) 859,086 
Amount recorded 1,552,917 
Amount written off (1,507,795)
Balance derived from acquired institutions (5) 76,956 
At September 30, 2004 4,181,378 
- Specific provision (1) 1,884,893 
- Generic provision (2) 1,383,182 
- Additional provision (3) 913,303 

(1)

For operations with installments overdue by more than 14 days.

(2)

Recorded based on the customer/transaction classification and accordingly not included in the preceding item.

(3)

The additional provision is recorded based on management's experience and expected collection of the credit portfolio, to determine the total allowance deemed sufficient to cover specific and general portfolio risks, as well as the provision calculated based on risk level ratings and the corresponding minimum provision requirements established by CMN Resolution 2682. The additional provision per customer was classified according to the corresponding risk levels (Note 12f).

(4)

Banco Alvorada S.A. (formerly BBV Banco)

(5)

Banco BEM S.A. and Banco Zogbi S.A.

h) Recovery and renegotiation

Expense for provision for loan losses, net of recoveries of written credits.

Accumulated to September 30 - In thousands of reais
 
  2004  2003 
 
Amount recorded for the period 1,552,917  1,998,173 
Amount recovered (1) (457,791) (350,999)
Expense net of recoveries 1,095,126  1,647,174 

(1)

Classified in income on credit operations.

We present below the movement of renegotiated operations:

  In thousands of reais
At December 31, 2002 2,316,522 
    Amount renegotiated 1,222,351 
    Amount received and written off (1,520,186)
At September 30, 2003 2,018,687 
Allowance for loan losses (1,229,100)
% of portfolio 60.9%
At December 30, 2003 2,119,704 
    Amount renegotiated 1,066,217 
    Amount received and written off (1,426,742)
At September 30, 2004 1,759,179 
Provision for loan losses (1,096,717)
% of portfolio 62.3%

i) Income on credit operations

Accumulated to September 30 - In thousands of reais
 
  2004  2003 
 
Discount of trade receivables and other loans 5,559,122  6,035,118 
Financings 3,169,299  2,754,925 
Rural and agribusiness loans 482,579  356,754 
Subtotal 9,211,000  9,146,797 
 
Recovery of credits written off as loss 457,791  350,999 
Allocation of exchange variation of foreign branches and
subsidiaries (39,393) (372,529)
Subtotal 9,629,398  9,125,267 
Leasing, net of expenses 202,102  219,532 
Total 9,831,500  9,344,799 

13) OTHER RECEIVABLES

a) Foreign exchange portfolio

Balance sheet accounts

At September 30 - In thousands of reais
 
  2004  2003 
 
Assets - other receivables    
 
Exchange purchases pending settlement 7,175,694  9,107,502 
Foreign exchange acceptances and term documents in foreign currencies 39,515  39,389 
Exchange sale receivables 2,142,050  2,846,099 
Less - advances in local currency received (452,211) (153,450)
Income receivable on advances granted 55,251  86,040 
Total 8,960,299  11,925,580 
Liabilities - other liabilities
Exchange sales pending settlement 2,130,418  2,761,901 
Exchange purchase payables 7,434,294  9,353,326 
Less - advances on foreign exchange contracts (5,618,071) (6,168,163)
Other 27,598  18,709 
Total 3,974,239  5,965,773 
Net foreign exchange portfolio 4,986,060  5,959,807 
Memorandum accounts
Open import credits 156,884  101,046 

Foreign exchange transactions

We present below the composition of foreign exchange transactions adjusted to improve the presentation of results:

Accumulated to September 30 - In thousands of reais
 
  2004  2003 
 
Income on exchange transactions 2,497,709  9,407,603 
 
Expenses for exchange transactions (1,835,052) (8,864,444)
 
Foreign exchange transactions 662,657  543,159 
 
Adjustments:
- Income on export financing (1) 9,627  15,723 
- Income on foreign currency financing (1) 73,996  146,260 
- Income on foreign investments (2) 45,217  12,886 
- Expenses for foreign securities (3) (9,595) (6,069)
- Expenses for payables to foreign bankers (4) (638,834) (464,661)
Total adjustments (519,589) (295,861)
 
Adjusted foreign exchange transactions 143,068  247,298 

(1)

Classified in income on credit operations.

(2)

Classified in income on securities transactions.

(3)

Classified in expenses for interest and charges on deposits.

(4)

Funds for financing advances on foreign exchange contracts and import financing, classified in expenses for borrowings and onlendings.

b) Sundry

At September 30 - In thousands of reais
 
  2004  2003 
 
Deferred tax assets (Note 35c) 6,318,192  5,965,147 
Deposits in guarantee 1,926,110  1,693,609 
Credit card operations 1,293,261  970,072 
Prepaid taxes 982,372  814,153 
Sundry receivables 851,221  340,076 
Payments to be reimbursed 444,968  419,088 
Credit instruments receivable 364,271  345,137 
Receivables on purchase of assets 284,572  455,004 
Other 158,830  101,375 
Total 12,623,797  11,103,661 

14) OTHER ASSETS

a) Non-operating assets/other

At September 30 - In thousands of reais
 
  Cost Provision for
loss 		Residual
value
 
Property 317,888  (149,385) 168,503 
Vehicles and similar 98,993  (32,082) 66,911 
Machinery and equipment 8,400  (5,526) 2,874 
Goods subject to special conditions 68,871  (66,947) 1,924 
Inventories/stores 22,282  -  22,282 
Other 6,694  (1,647) 5,047 
Total in 2004 523,128  (255,587) 267,541 
Total in 2003 (1) 693,208  (249,942) 443,266 

(1)

In 2003, includes inventories of Latasa S.A. sold in October 2003.

b) Prepaid expenses

These comprise mainly expenses for insurance, prepaid financial expenses, expenses for commission on placement of auto sales financing, selling expenses for insurance, expenses for the contract to provide banking services at ECT network post-office bank branches and exclusive partnership agreements for the provision of banking services, which are amortized on a straight-line basis according to the contract terms.

15) INVESTMENTS

a) We present below the movement of investments in foreign branches and direct and indirect subsidiaries, which were fully eliminated upon consolidation of the financial statements:

In thousands of reais
Investments in foreign branches and subsidiaries Balance at December 31,
2003 		Movement for the period (1) Balance at September 30,
2004 		Balance at September 30,
2003
Bradesco Grand Cayman (2) 1,305,442  897,974  2,203,416  1,105,574 
Alvorada Nassau (2) 772,693  (772,693) -  777,367 
Banco Bradesco Luxembourg S.A. 407,024  (34,642) 372,382  409,143 
BCN Grand Cayman 399,593  9,225  408,818  396,598 
Bradesco New York 402,752  2,706  405,458  406,505 
Mercantil - Grand Cayman 413,887  29,877  443,764  387,467 
Bradport - SGPS, Sociedade Unipessoal Lda.(3) 365,453  1,271  366,724  - 
Boavista (Nassau, Grand Cayman and Banking) 196,615  36,587  233,202  179,099 
Cidade Capital Markets Limited 86,287  284  86,571  86,981 
Bradesco Securities, Inc. 64,499  (1,489) 63,010  61,309 
Banco Bradesco Argentina S.A. 54,985  (7,553) 47,432  47,093 
Bradesco Argentina de Seguros S.A. 13,369  (95) 13,274  14,608 
Bradesco International Health Service, Inc. 717  (355) 362  857 
Total 4,483,316  161,097  4,644,413  3,872,601 

(1)

Includes exchange variation in the amount of R$ (52,957) thousand, equity accounting in the amount of R$ 273,922 thousand and mark-to-market adjustment of securities available for sale and extraordinary amortization of goodwill in the amount of R$ (59,868) thousand.
(2)

The Alvorada Nassau branch ceased activities in July 2004 and its operations were transferred to the Bradesco Grand Cayman branch.
(3)

Formed in December 2003, through capital subscription with shares comprising the capital stock of Banco Espirito Santo S.A. - BES.

b) Composition of investments in the consolidated financial statements:

At September 30 - In thousands of reais
 
Associated Companies (total percentage ownership) 2004 2003
• IRB - Brasil Resseguros S.A. - (21.24%) 318,658  229,373 
• CP Cimento e Participações S.A. - (12.55%) 61,250  48,578 
• Marlim Participações S.A. - (11.84%) 22,065  21,820 
• NovaMarlim Participações S.A. - (17.17%) 22,432  22,100 
• American BankNote Ltda.- (22.50%) 28,378  16,449 
• BES Investimentos do Brasil S.A. - BI (19.99%) 16,088  16,897 
• Other associated companies 2,259  14,659 
Total in associated companies 471,130  369,876 
• Other investments (1) 499,960  171,172 
• Fiscal incentives 363,416  339,592 
• Provision for:
- Fiscal incentives (297,840) (283,410)
- Other investments (65,740) (92,838)
Total consolidated investments 970,926  504,392 

(1)

Includes in 2004, the transfer of the investment in Banco Espirito Santo S.A. from current to permanent assets in the amount of R$ 356,114 thousand.

c) Equity accounting was recorded in income under ‘equity in the earnings of subsidiary and associated companies’ and totals R$ 118,560 thousand (September 30, 2003 - R$ (25,496) thousand); Bradesco R$ 1,553,637 thousand (September 30, 2003 - R$ 1,421,311 thousand):

In thousands of reais
Companies Capital Adjusted net equity Number of shares/quotas held (thousand) Percentage ownership Adjusted net income (loss) Book value Equity accounting adjustments (29)
COMM. PREF. Quotas September 30, 2004 September 30, 2004 September 30, 2003
CONSOLIDATED SUBSIDIARIES                    
A) Financial area                         1,027,618  469,659 
Alvorada Leasing Brasil S.A. Arrendamento Mercantil (1) -  -  -  -  -  -  -  -  (719) 4,850 
Banco Alvorada S.A. (1) 3,531,098  3,681,730  7,964,663  -  -  78.782% 210,620  3,073,470  164,792  195,740 
Banco Baneb S.A. (1) 1,860,231  2,170,086  78,177,986  77,815,413  -  99.713% 87,515  2,163,857  87,003  180,825 
Banco BCN S.A. (2) -  -  -  -  -  -  -  -  (6,483) (200,082)
Banco BEA S.A. (3) -  -  -  -  -  -  -  -  -  4,910 
Banco BEM S.A. (1) (4). -  -  -  -  -  -  -  -  99,760  - 
Banco Boavista Interatlântico S.A. and subsidiary (1) 115,100  140,509  321,571  -  -  100.000% 56,032  184,824  58,476  588,938 
Banco Bradesco Argentina S.A. (1) 63,123  47,432  29,999  -  -  99.999% (6,016) 47,431  (6,016) (8,454)
Banco Bradesco Luxembourg S.A. (1) (16) 195,385  372,382  1  -  -  31.632% 14,464  117,791  14,464  12,486 
Banco de Crédito Real de Minas Gerais S.A. (19) -  -  -  -  -  -  -  -  13,160  199,764 
Banco Finasa de Investimento S.A. (6) -  -  -  -  -  -  -  -  19,501  28,931 
Banco Finasa S.A. (1) (5) 112,576  408,658  1,279,505  -  -  100.000% 247,658  409,607  210,234  80,828 
Banco Mercantil de São Paulo S.A. (1) 3,863,951  4,261,487  24,827,212  -  -  100.000% 200,141  4,365,496  160,033  75,094 
Banco Zogbi S.A. (1) (20) -  -  -  -  -  -  -  -  27,020  - 
Bancocidade - Corretora de Valores Mobiliários e de Câmbio Ltda. (7) -  -  -  -  -  -  -  -  -  5,195 
Bancocidade Leasing Arrendamento Mercantil S.A. (8) -  -  -  -  -  -  -  -  30,945  5,063 
BCN Cons., Adm. de Bens, Serv. e Publ. Ltda. (1) (5) 20,006  37,415  20,006  -  -  100.000% 1,054  37,415  (114) (2,213)
Boavista S.A. Arrendamento Mercantil (9) -  -  -  -  -  -  -  -  -  20,668 
Boavista S.A. D.T.V.M. (10) (11) -  -  -  -  -  -  -  -  -  (471,845)
Bradesco BCN Leasing S.A. Arrendamento Mercantil (19) -  -  -  -  -  -  -  -  65,655  98,304 
Bradesco Consórcios Ltda. (1) 14,795  47,267  -  -  14,795  99.999% 32,657  47,267  32,657  (63)
Bradesco S.A. Corretora de Títulos e Valores Mobiliários (1) 45,000  76,379  376,000  -  -  99.999% 11,902  76,378  11,902  12,866 
Bradesco Securities, Inc. (1) 62,889  63,010  11  -  -  100.000% (817) 63,010  (817) 1 
Bradport - SGPS, Sociedade Unipessoal Lda. (1) (12) 356,114  366,724  -  -  -  100.000% 10,610  366,724  10,610  - 
BRAM - Bradesco Asset Management Ltda. and subsidiary (24) -  -  -  -  -  -  -  -  3,649  127 
BRAM - Bradesco Asset Management S.A. DTVM and subsidiary (1) (25) 97,150  80,915  1,961  -  -  100.000% 2,936  80,915  2,936  505 
Cia. Brasileira de Meios de Pagamento - VISANET (13) -  -  -  -  -  -  -  -  14,880  17,265 
Cidade Capital Markets Limited (1) (5) 92,047  86,571  32,200  -  -  100.000% 1,198  86,571  1,198  796 
Finasa Leasing Arrendamento Mercantil S.A. (14) -  -  -  -  -  -  -  -  -  3,733 
Finasa Promotora de Vendas Ltda. (1) -  -  -  -  -  -  -  -  4,223  449 
Bradesco Leasing S.A. Arrendamento Mercantil (1) (15) 1,943,997  1,969,170  8,938  -  -  100.000% 77,715  1,969,170  60,102  189,669 
Foreign branches - Exchange gains (loss) (1) -  -  -  -  -  -  -  -  (52,617) (593,143)
Other financial companies -  -  -  -  -  -  -  -  1,184  18,452 
 
B) Insurance and Pension Plan area                         340,823  458,325 
Bradesco Seguros S.A (1) 1,545,789  4,271,045  625  -  -  99.463% 574,615  4,248,110  (83,498) (31,837)
ABS - Empreendimentos Imobiliários, Participações e Serviços S.A. (17)                         -  47,928 
Atlântica Capitalização S.A. (1)                         754  1,027 
Bradesco Argentina de Seguros S.A. (1)                         275  2,170 
Bradesco Capitalização S.A. (1)                         155,833  120,790 
Bradesco Saúde S.A. (1)                         (14,838) 4,347 
Bradesco Vida e Previdência S.A. (1).                         351,970  314,935 
Finasa Seguradora S.A. (1)                         271  10,291 
Bradesco Auto/RE Companhia de Seguros S.A. (1) (23)                         (71,265) (12,083)
Foreign subsidiaries - Exchange gains (loss) (1)                         (364) (721)
Other subsidiaries                         1,685  1,478 
 
C) Other activities                         66,636  14,663 
União de Comércio e Participações Ltda. (26)                         7,776  (60,584)
União de Participações Ltda. (1) (27) 272,176  297,004  -  -  259,371  95.295% 305  283,030  4,011  - 
Átria Participações S.A. (1)                         450  1,474 
Latasa S.A. (18)                         -  43,870 
Nova Paiol Participações S.A. (1)                         223  (1,696)
Cia Securitizadora de Crédito Financeiro Boavista (1) (21)                         99,845  - 
Other subsidiaries                         (45,669) 31,599 
TOTAL CONSOLIDATED SUBSIDIARIES                         1,435,077  942,647 
 
II - UNCONSOLIDATED                    
BES Investimentos do Brasil S.A. - Banco de Investimento (13)                         (153) 3,978 
IRB - Brasil Resseguros S.A. (13)                         82,809  (8,133)
UGB Participações S.A. (13)                         (11,964) (25,331)
American BankNote Ltda. (13) (22)                         15,893  - 
CP Cimento e Participações S.A. (22) (28)                         16,625  - 
Marlim Participações S.A. (13) (22)                         7,784  - 
NovaMarlim Participações S.A. (13) (22)                         3,943  - 
Other associated companies                      341,355  3,623  3,990 
TOTAL UNCONSOLIDATED                         118,560 (25,496)
SUBTOTAL                      17,962,421  1,553,637  917,151 
REVERSAL OF (PROVISION) FOR EXCHANGE VARIATION                            504,160 
TOTAL                      17,962,421  1,553,637  1,421,311 
(1)

Information at September 30, 2004.
(2)

Partially spun off on March 10, 2004 with spun-off portion merged into Banco Bradesco S.A. On March 12, 2004, the remaining portion of the assets and liabilities of Banco BCN were merged into Banco Alvorada. S.A.
(3)

Merged into Banco Baneb S.A. in April 2003.
(4)

Formerly Banco do Estado do Maranhão S.A. acquired on February 10, 2004.
(5)

Became a direct subsidiary of Banco Bradesco S.A. as a result of the partial spin-off of Banco BCN S.A. on March 10, 2004, with the spun-off portion merged into Banco Bradesco S.A. (item 2).
(6)

Merged into Banco Baneb S.A. in August 2004.
(7)

Merged into BCN Corretora de Títulos e Valores Mobiliários S.A. in September 2003.
(8)

Sold by Banco BCN S.A. to Banco Mercantil de São Paulo S.A. in January 2004 and merged into Banco Alvorada S.A. in July 2004.
(9)

Merged into Banco Boavista Interatlântico S.A. in December 2003.
(10)

Merged into Banco Mercantil de São Paulo S.A. in February 2003.
(11)

Results in 2003 include extraordinary amortization of goodwill of Mercantil, net of taxes (Note 31).
(12)

Formed in December 2003.
(13)

Information at August 31, 2004.
(14)

Merged into Bradesco BCN Leasing S.A. Arrendamento Mercantil in April 2003.
(15)

Formerly Potenza Leasing S.A. Arrendamento Mercantil.
(16)

In September 2003, Banco Mercantil de São Paulo International S.A. and Banco Bradesco Luxembourg S.A. were merged and the latter’s name maintained.
(17)

Merged into Bradesco Capitalização S.A. in December 2003.
(18)

Sold in October 2003.
(19)

Merged into Bradesco Leasing S.A. Arrendamento Mercantil in September 2004.
(20)

Acquired on February 16, 2004.
(21)

Acquired on June 25, 2004.
(22)

Accounted for on the equity method since April 2004.
(23)

Formerly União Novo Hamburgo de Seguros S.A.
(24)

Merged into BES - Boavista Espírito Santo DTVM S.A. in July 2004.
(25)

Formerly BES - Boavista Espírito Santo DTVM S.A.
(26)

On August 31, 2004, the equity of União de Comércio e Participações Ltda. was partially spun off and the spun-off portion was transferred to Caulim Participações Ltda. The remaining assets were incorporated into Banco Alvorada S.A. in September 2004.
(27)

Formerly Caulim Participações Ltda.
(28)

Information at July 31, 2004.
(29)

Equity accounting considers results determined by the companies subsequent to acquisition and includes equity variations in the investees not derived from results, as well as adjustments arising from the equalization of accounting principles, where applicable.

16) PROPERTY AND EQUIPMENT IN USE AND LEASED ASSETS

Stated at purchase cost, plus restatement. Depreciation is calculated on the straight-line method at annual rates which take into consideration the economic useful lives of the assets.

At September 30 - In thousands of reais
  Annual
rate 		Cost Depreciation Residual
value
Land and buildings in use
Buildings 4% 862,286  (467,881) 394,405 
Land -  506,687  -  506,687 
Facilities, furniture and equipment in use 10% 1,689,177  (856,619) 832,558 
Security and communications systems 10% 124,029  (69,838) 54,191 
Data processing systems 20 to 50%  1,638,787  (1,214,547) 424,240 
Transport systems 20% 19,560  (9,449) 10,111 
Construction in progress -  41,033  -  41,033 
Subtotal -  4,881,559  (2,618,334) 2,263,225 
Leased assets -  66,216  (41,635) 24,581 
Total in 2004 -  4,947,775  (2,659,969) 2,287,806 
Total in 2003 -  5,397,188  (2,784,352) 2,612,836 

Land and buildings in use of the Bradesco Organization present an unrecorded increment of R$ 710,005 thousand, based on appraisal reports prepared by independent experts in 2004, 2003 and 2002.

The permanent assets to stockholders’ equity ratio in relation to consolidated reference equity is 24.22% on a consolidated basis and 42.73% on a consolidated financial basis, within the maximum 50% limit.

17) DEFERRED CHARGES

a) Goodwill

I)

Goodwill on the acquisition of investments, based on future profitability, mainly results from goodwill on the acquisition of Banco BCN - R$ 293,662 thousand (1) (September 30, 2003 - R$ 141,626 thousand); Banco Boavista Interatlântico - R$ 44,315 thousand (1) (September 30, 2003 - R$ 319,668 thousand); Banco Mercantil de São Paulo - R$ 104,009 thousand (September 30, 2003 - R$ 85,650 thousand); Banco Cidade - R$ 103,906 thousand (September 30, 2003 - R$ 142,871 thousand); Banco Alvorada - R$ 172,929 thousand (September 30, 2003 - R$ 192,882); in Bradesco Leasing - R$ 41,114 thousand (September 30, 2003 - R$ 48,315 thousand); Banco Zogbi - R$ 244,651 thousand and in Promovel Empreendimentos e Serviços - R$ 57,926 thousand. Amortization of goodwill for the period totaled R$ 501,437 thousand (September 30, 2003 - R$ 861,596 thousand, of which R$ 680,759 thousand comprises extraordinary amortization of goodwill in Banco Mercantil de São Paulo S.A. - Note 31). Goodwill was also amortized on a extraordinary basis in the amount of R$ 237,241 thousand, relating to the acquisition of investments in Banco BEM, Cia. Finasa Securitizadora, Bradesco Templeton, Banco Bradesco Luxembourg, Banco Mercantil International, Zogbi DTVM, Zogbi Leasing, Promosec Cia. Securitizadora, Scopus Tecnologia and Cia. Brasileira de Meios de Pagamento - Visanet (Note 31).

(1)

The variation in this balance comprises the transfer of goodwill from Banco Boavista Interatlântico to Banco BCN, in the amount of R$ 227,365 thousand, following the partial spin off of Banco Boavista Interatlântico in January 2004, with the spun-off portion incorporated by Banco BCN.

(II)

Unamortized goodwill in the amount of R$ 1,229,874 thousand has the following amortization flow:

At September 30, 2004 - In thousands of reais
2004 84,679    2010 40,199 
2005 338,715  2011 36,727 
2006 333,099  2012 27,577 
2007 193,294  2013 8,535 
2008 117,174  2014 161 
2009 49,714      

b) Other deferred charges

At September 30 - In thousands of reais
  Cost Amortization Residual
value
Systems development 1,070,904  (612,868) 458,036 
Other deferred charges 149,568  (66,449) 83,119 
Total in 2004 1,220,472  (679,317) 541,155 
Total in 2003 1,151,730  (596,751) 554,979 

18) DEPOSITS, DEPOSITS RECEIVED UNDER SECURITY REPURCHASE AGREEMENTS AND FUNDS FROM ISSUANCE OF SECURITIES

a) Deposits and deposits received under security repurchase agreements

At September 30 - In thousands of reais
  Up to 30 days From 31 to 60 days From 61 to 90 days From 91 to 180 days From 181 to 360 days From 1 to 3 years More than 3 years Total
• Demand deposits (1) 14,781,735  -  -  -  -  -  -  14,781,735 
• Savings deposits (1) 23,186,217  -  -  -  -  -  -  23,186,217 
• Interbank deposits 14,265  2  -  -  -  -  -  14,267 
• Time deposits 3,212,803  1,261,376  1,365,878  1,890,067  4,958,896  13,708,885  406,686  26,804,591 
• Deposits received under security repurchase agreements (2) 19,289,886  447,995  129,558  57,149  247,198  1,283,477  95,850  21,551,113 
Total in 2004 60,484,906  1,709,373  1,495,436  1,947,216  5,206,094  14,992,362  502,536  86,337,923 
Total in 2003 59,214,904  920,762  944,561  1,922,388  3,430,626  14,833,439  148,570  81,415,250 

(1)

Classified as up to 30 days without considering average historical turnover.
(2)

Includes R$ 8,517,786 thousand in investment fund resources invested in purchase and sale commitments with Banco Bradesco, whose investors are subsidiary companies, comprising the consolidated financial statements.

b) Funds from acceptance and issuance of securities

At September 30 - In thousands of reais
  Up to 30 days From 31 to 60 days From 61 to 90 days From 91 to 180 days From 181 to 360 days From 1 to 3 years More than 3 years Total
Securities - Local                  
• Mortgage notes 198,441  118,067  173,640  339,067  38,745  21,154  -  889,114 
Subtotal 198,441  118,067  173,640  339,067  38,745  21,154  -  889,114 
Securities - Foreign (1)
• Commercial paper 132  8,573  853,978  -  -  -  -  862,683 
• Eurobonds 28,575  413,195  374,825  247,197  -  381,837  -  1,445,629  -
• Euronotes 7,368  -  115,709  80,367  134,456  -  -  337,900 
• MTN Program Issues 3,300  -  -  -  -  285,860  -  289,160 
• Promissory notes 789  -  -  -  14,293  71,465  -  86,547 
• Euro CD issued 1  -  -  -  1,263  -  -  1,264 
• Securitization of future flow of money orders received from abroad (2) 8,814  -  -  -  -  251,771  1,160,936  1,421,521 
• Securitization of future flow of credit card bill receivables from foreign cardholders abroad (2) 2,000  -  -  -  27,911  238,030  514,162  782,103 
Subtotal 50,979  421,768  1,344,512  327,564  177,923  1,228,963  1,675,098  5,226,807 
Total in 2004 249,420  539,835  1,518,152  666,631  216,668  1,250,117  1,675,098  6,115,921 
% 4.1  8.8  24.8  10.9  3.5  20.5  27.4  100.0 
Total in 2003 1,016,466  339,037  951,409  815,246  1,665,349  1,153,089  1,954,716  7,895,312 
% 12.9  4.3  12.1  10.3  21.1  14.6  24.7  100.0 

(1)

These consist of funds obtained from banks abroad and official institutions from the issuance of notes in the international market (Eurobonds) and under National Monetary Council (CMN) Resolution 2770 for: (i) onlending to local customers, repayable monthly through 2007, with interest payable semiannually at LIBOR or prime rate, plus a spread, and (ii) for financing exchange operations for customers, through purchase and sale of foreign currencies, discounts of export bills, pre-financing of exports and financing of imports, mainly on a short-term basis.

(2)

Securitization of money orders issued abroad and foreign credit card receivables

In 2003, the Organization entered into certain agreements designed to optimized its funding and liquidity management activities through the use of Special Purposes Entities (SPEs). These SPEs, Brasilian Merchant Voucher Receivables Limited and International Diversified Payment Rights Company, are financed through long-term obligations which are settled through the future cash flows of the corresponding assets.

These assets consist mainly of the following:

(i) Current and future flows of money orders remitted by individuals and corporate entities located abroad to beneficiaries in Brazil for which the Bank acts as paying agent.

(ii) Current and future flows of credit card receivables arising from expenses effected in Brazilian territory by holders of cards issued outside of Brazil.

The long-term notes issued by the SPEs and sold to investors will be settled through funds derived from the money order flows and credit card bills. Bradesco is obliged to redeem these notes in specific cases of default or if the SPEs’ operations are terminated.

The funds derived from the sale of current and future money orders and credit card receivables, received by the SPE, must be maintain in a specific bank account until such time as a specific minimum limit is attained.

We present below the main features of the notes issued by the SPEs:

At September 30 - In thousands of reais
 
Book Value
 
  Issuance Transaction amount Maturity Remuneration
% 		2004 2003
Securitization of future flow of 20.8.2003  595,262  20.8.2010  6.750  576,115  579,721 
received money orders from 20.8.2003  599,000  20.8.2010  0.68 + Libor 558,021  575,035 
abroad 28.7.2004  305,400  20.8.2012  4.685  287,385  - 
Total    1,499,662        1,421,521  1,154,756 
Securitization of future flow of
credit card bill receivables
from foreign cardholders		 10.7.2003  800,818  15.6.2011  5.684  782,103  799,960 
Total    800,818        782,103  799,960 

c) Expenses with funding and price-level restatement and interest on technical reserves for insurance, private pension plans and savings bonds.

Accumulated to September 30 - In thousands of reais
  2004 2003
Time deposits 2,642,135  3,692,450 
Deposits received under security repurchase agreements 2,323,648  2,946,672 
Savings deposits 1,217,191  1,603,974 
Funds from issuance of securities 645,832  (81,328)
Allocation of exchange variation of foreign branches and subsidiaries (222,799) (420,679)
Other funding expenses 170,166  189,237 
Subtotal 6,776,173  7,930,326 
Expenses for price-level restatement and interest on technical reserves for insurance, private pension plans and savings bonds 2,293,659  2,419,158 
Total 9,069,832  10,349,484 

19) BORROWINGS AND ONLENDINGS

a) Borrowings

At September 30 - In thousands of reais
  Up to 30 days From 31 to 60 days From 61 to 90 days From 91 to 180 days From 181 to 360 days From 1 to 3 years More than 3 years Total
Local:                
• Official institutions 1,648  -  -  -  -  -  -  1,648 
• Other institutions 11,784  -  -  -  -  -  -  11,784 
Foreign: 1,450,394  557,140  758,796  3,020,275  2,093,634  747,020  54,251  8,681,510 
Total in 2004 1,463,826  557,140  758,796  3,020,275  2,093,634  747,020  54,251  8,694,942 
% 16.8  6.4  8.7  34.7  24.1  8.6  0.7  100.0 
Total in 2003 1,269,270  457,196  1,223,620  2,304,686  1,983,449  881,712  2,953  8,122,886 
% 15.6  5.6  15.1  28.4  24.4  10.9  -  100.0 

b) Onlendings

At September 30 - In thousands of reais
  Up to 30 days From 31 to 60 days From 61 to 90 days From 91 to 180 days From 181 to 360 days From 1 to 3 years More than 3 years Total
Local:                
• National Treasury -  -  -  -  57,950  -  -  57,950 
• National Bank for Economic and Social Development - BNDES 129,712  52,969  70,566  168,189  654,650  1,676,647  815,634  3,568,367 
• Federal Savings Bank - CEF 12,177  431  431  6,088  31,140  107,417  241,614  399,298 
• Government Agency for Machinery and Equipment Financing - FINAME 157,809  112,573  129,384  328,946  761,335  1,820,995  628,780  3,939,822 
• Other institutions 1,009  322  141  174  626  1,691  14  3,977 
Foreign:
• Subject to onlendings to housing-loan borrowers 1,823  8,426  -  -  39,332  1,274  -  50,855 
Total in 2004 302,530  174,721  200,522  503,397  1,545,033  3,608,024  1,686,042  8,020,269 
% 3.8  2.2  2.5  6.3  19.2  45.0  21.0  100.0 
Total in 2003 297,282  156,120  166,701  462,048  1,132,883  2,963,361  1,885,202  7,063,597 
% 4.2  2.2  2.4  6.5  16.0  42.0  26.7  100.0 

c) Expenses for borrowings and onlendings

Accumulated to September 30 - In thousands of reais
  2004 2003
Loans    
• Local 2,215  2,179 
• Foreign 52,019  69,832 
Subtotal 54,234  72,011 
 
Local onlendings
• FINAME 284,967  233,907 
• BNDES 318,858  153,268 
• CEF 2,015  29,773 
• National Treasury 1,837  2,425 
• Other institutions 365  13 
Foreign onlendings
• Payables to foreign bankers 580,839  240,306 
• Other expenses for foreign onlendings 9,849  (83,951)
Subtotal 1,198,730  575,741 
Allocation of exchange variation of foreign branches and subsidiaries (49,710) (54,678)
Total 1,203,254  593,074 

20) CONTINGENT LIABILITIES

The Bradesco Organization is currently a defendant in a number of legal suits in the labor, civil and tax spheres, arising from the normal course of its business activities.

The provisions were recorded based on the opinion of the Organization’s legal advisors, the types of lawsuit, similarity with previous suits and complexity, available jurisprudence and court sentences, whenever loss is deemed probable.

The Organization’s Management considers that the provision recorded for contingencies is sufficient to cover possible losses generated by the corresponding legal proceedings.

Labor claims

These are claims brought by former employees seeking indemnity, especially, the payment of unpaid overtime. Following the effective control over working hours implemented in 1992, via electronic time cards, overtime is paid regularly during the employment contract and accordingly, claims on an individual basis subsequent to 1997 are no longer significant.

The provision for labor contingencies is recorded based on the average amount of the indemnities paid.

Civil suits

These arise during the normal course of certain work routines and comprise claims for pain and suffering and pecuniary damages, mainly protests, bounced checks and the inclusion of debtors names in the restricted credit registry.

In general, the amounts under dispute are unlikely to affect financial results since more than 60% of new suits were brought at the small claims court, i.e., for amounts less than the maximum limit of 40 minimum wages. Moreover, some 50% of these suits are judged unfounded and the average cost of each indemnity is some 5% of the total amount claimed.

At present, there are no significant administrative suits in course, moved as a result of the lack of compliance with National Financial System regulations or payment of fines which could jeopardize the Bank’s financial results.

Tax proceedings

The Bradesco Organization is disputing the legality of certain taxes and contributions, for which provisions have been recorded in full, despite the likelihood of a successful medium and long-term outcome based on the opinion of their legal advisors.

The provisions recorded, segregated by legal sphere are as follows:

At September 30 - In thousands of reais
  2004 2003
Labor claims 879,522  866,097 
Civil suits 553,911  364,107 
Subtotal (1) 1,433,433  1,230,204 
Tax proceedings (2) 2,924,690  2,651,578 
Total 4,358,123  3,881,782 

(1)

See Note 22.
(2)

Recorded under “Other Liabilities - Taxes and Social Security Contributions”.

21) SUBORDINATED DEBT

Note Issuance Transaction
amount 		Maturity Remuneration 2004 2003
LOCAL:
Subordinated CDB March/2002 549,000  2012 100.0% of DI - CETIP 833,581  714,616 
Subordinated CDB July/2002 41,201  2012 100.0% of CDI rate + 0.75% p.a. 63,936  54,397 
Subordinated CDB October/2002 200,000  2012 102.5% of CDI rate 288,340  246,240 
Subordinated CDB October/2002 500,000  2012 100.0% of CDI rate+ 0.87% p.a. 726,162  617,069 
Subordinated CDB October/2002 33,500  2012 101.5% of CDI rate 48,052  41,099 
Subordinated CDB October/2002 65,150  2012 101.0% of CDI rate 93,054  79,651 
Subordinated CDB November/2002 66,550  2012 101.0% of CDI rate 94,829  81,170 
Subordinated CDB November/2002 134,800  2012 101.5% of CDI rate 191,996  164,216 
Subordinated debentures September/2001 300,000  2008 100.0% of CDI rate+ 0.75% p.a. 303,732  304,587 
Subordinated debentures November/2001 300,000  2008 100.0% of CDI rate+ 0.75% p.a. 320,072  325,870 
Local subtotal   2,190,201      2,963,754  2,628,915 
 
FOREIGN:
Subordinated debt December/2001 353,700  2011 10.25% rate p.a. 436,387  445,394 
Subordinated debt (1) April/2002 315,186  2012 4.05% rate p.a. 398,315  407,344 
Subordinated debt October/2003 1,434,750  2013 8.75% rate p.a. 1,473,260  - 
Subordinated debt April/2004 801,927  2014 8.00% rate p.a. 817,755  - 
Subtotal abroad   2,905,563      3,125,717  852,738 
Total   5,095,764      6,089,471  3,481,653 

(1)

This rate increases to 10.15% p.a. when swap to U.S. dollar cost is included.

22) OTHER LIABILITIES - SUNDRY

At September 30 - In thousands of reais
  2004 2003
Provision for accrued liabilities 1,951,921  1,323,164 
Provision for contingent liabilities (civil and labor) (Note 20) 1,433,433  1,230,204 
Credit card operations 1,294,842  610,227 
Sundry creditors 584,978  1,151,575 
Acquisition of assets and rights 102,867  219,673 
Official operating agreements 14,007  152,451 
Other 165,925  216,863 
Total 5,547,973  4,904,157 

23) INSURANCE OPERATIONS, PRIVATE PENSION PLANS AND SAVINGS BONDS

a) Technical reserves

At September 30 - In thousands of reais
 
  Insurance Private Pension Plans Savings Bonds TOTAL
 
  2004  2003  2004  2003  2004  2003  2004  2003 
 
Current
Reserve for unearned premiums 1,130,978  1,001,524  30,998  26,615  -  -  1,161,976  1,028,139 
Loss reserve - IBNR 828,573  578,147  196,428  144,561  -  -  1,025,001  722,708 
Reserve for unsettled claims 459,476  335,963  266,870  139,241  -  -  726,346  475,204 
Mathematical reserve for benefits granted -  -  247,122  208,038  -  -  247,122  208,038 
Mathematical reserve for benefits to be granted -  -  16,352,611  11,867,400  -  -  16,352,611  11,867,400 
Mathematical reserve for redemptions -  -  -  -  122,237  172,727  122,237  172,727 
Reserve for draws and redemptions -  -  -  -  250,785  170,330  250,785  170,330 
Reserve for financial fluctuation -  -  505,695  546,523  -  -  505,695  546,523 
Reserve for insufficient contributions -  -  46,060  31,668  -  -  46,060  31,668 
Other reserves 58,223  32,999  136,458  89,301  142,390  67,367  337,071  189,667 
Subtotal 2,477,250  1,948,633  17,782,242  13,053,347  515,412  410,424  20,774,904  15,412,404 
 
Long-term liabilities
Mathematical reserve for benefits to be granted 10  -  4,893,146  4,001,090  -  -  4,893,156  4,001,090 
Mathematical reserve for benefits granted -  -  2,066,692  1,758,564  -  -  2,066,692  1,758,564 
Reserve for insufficient contributions -  -  1,835,240  1,492,853  -  -  1,835,240  1,492,853 
Mathematical reserve for redemptions -  -  -  -  1,533,406  1,368,457  1,533,406  1,368,457 
Reserve for financial fluctuation -  -  248,310  225,811  -  -  248,310  225,811 
Reserve for financial excess -  -  224,295  19,061  -  -  8,979  19,061 
Subtotal 10  -  9,276,662  7,680,004  1,533,406  1,368,457  10,810,078  9,048,461 
 
Total 2,477,260  1,948,633  27,058,904  20,733,351  2,048,818  1,778,881  31,584,982  24,460,865 

b) Guarantee of technical reserves for insurance, private pension plans and savings bonds

We present below the amounts of the assets and rights offered as coverage of technical reserves for insurance, private pension plans and savings bonds:

At September 30 - In thousands of reais
 
  Insurance Private Pension Plans Savings Bonds TOTAL
 
  2004  2003  2004  2003  2004  2003  2004  2003 
 
Shares of listed companies 38,278  65,026  997,879  814,913  393,560  238,246  1,429,717  1,118,185 
Government securities and corporate bonds 2,128,257  1,689,939  26,061,175  20,993,247  1,692,533  1,717,829  29,881,965  24,401,015 
Credit assignments 463,353  354,810  -  -  -  -  463,353  354,810 
Properties 18,280  35,497  1,462  1,561  12,248  5,870  31,990  42,928 
Total 2,648,168  2,145,272  27,060,516  21,809,721  2,098,341  1,961,945  31,807,025  25,916,938 

c) Income on premiums retained for insurance, private pension plans and savings bonds

Accumulated to September 30 - In thousands of reais
 
  2004  2003 
 
Premiums issued 5,537,216  5,050,046 
Private pension plan contributions (1) 4,689,499  3,780,655 
Income on savings bond certificates 1,039,973  842,028 
Coinsurance premiums assigned (233,106) (239,913)
Premiums reimbursed (115,845) (128,466)
Overall net revenue 10,917,737  9,304,350 
Premiums redeemed (1,039,748) (506,738)
Reinsurance premiums assigned (430,469) (506,158)
Premiums retained for insurance, private pension plans and savings bonds 9,447,520  8,291,454 

(1)

Includes long-term life VGBL insurance (Vida Gerador de Benefícios Livres ).

24) MINORITY INTEREST IN SUBSIDIARIES

At September 30 - In thousands of reais
 
  2004  2003 
 
Financial area:
Bradesco Templeton Asset Management Ltda 6,592  2,217 
Banco Baneb S.A. (1) 6,228  1,013 
Banco Finasa de Investimento S.A. (1) -  9,260 
Other minority interest 1  350 
Subtotal 12,821  12,840 
Insurance and Pension Plan area:
Indiana Seguros S.A 33,309  32,254 
Bradesco Seguros S.A (2) 22,935  9,541 
Bradesco Auto/RE Companhia de Seguros (2) (3) -  10,664 
Other minority interest 2,271  2,575 
Subtotal 58,515  55,034 
Other activities:
Baneb Corretora de Seguros S.A 2,629  2,365 
Sete Quedas Empreendimentos Imobiliários e Participações Ltda. (4). -  40,729 
Other minority interest -  23 
Subtotal 2,629  43,117 
Total 73,965  110,991 

(1)

Banco Finasa de Investimento S.A. was merged into Banco Baneb S.A. in August/2004.
(2)

Percentage ownership increased through acquisition and incorporation of the minority stockholders’ shares of União Novo Hamburgo de Seguros S.A.
(3)

Formerly União Novo Hamburgo de Seguros S.A.
(4)

Sold in January, 2004.

25) STOCKHOLDERS’ EQUITY (PARENT COMPANY)

a) Composition of capital stock

Fully subscribed and paid-up capital comprises nominative-registered shares, with no par value, as follows:

At September 30, 2004
 
  Total  Treasury stock  Outstanding shares 
 
Common stock 79,894,005  (443,562) 79,450,443 
Preferred stock 78,693,936  (4) 78,693,932 
Total 158,587,941  (443,566) 158,144,375 

At September 30, 2003
 
  Total  Treasury stock  Outstanding shares 
 
Common stock 798,940,057,872  - 798,940,057,872 
Preferred stock 786,939,365,428  - 786,939,365,428 
Total 1,585,879,423,300  - 1,585,879,423,300 

b) We present below the movement of capital stock

 
  Number
 
  Common  Preferred  TOTAL 
 
Shares held at December 31, 2003 79,836,525  78,693,936  158,530,461 
Shares acquired and not canceled (386,082) (4) (386,086)
Shares held at September 30, 2004 79,450,443  78,693,932  158,144,375 

At the Extraordinary General Meeting of December 17, 2003, approval was given for a 1-for-10,000 reverse split of Bradesco’s stock. This process was ratified by BACEN on January 6, 2004.

c) Interest attributed to own capital

Non-voting preferred shares are entitled to all rights and benefits attributed to common shares and in conformity with the Bank’s statutes have priority to repayment of capital and 10% additional interest attributed to own capital and/or dividends, in accordance with the provisions of paragraph 1, item II of Article 17 of Law 6404, as amended by Law 10303.

In conformity with the Bank’s statutes, stockholders are entitled to interest attributed to own capital and/or dividends which total at least 30% of net income for the year, adjusted in accordance with Brazilian corporate legislation.

Interest attributed to own capital is calculated based on the stockholders' equity accounts and limited to the variation in the long-term interest rate (TJLP), subject to the existence of profits, computed prior to the deduction thereof, or of retained earnings and revenue reserves in amounts that are equivalent to or exceed twice the amount of such interest.

It is the Bank’s policy to distribute, during the year, all the interest attributed to own capital, determined in conformity with the above criteria and to compute this interest for the minimum compulsory dividend, net of withholding tax (IRRF).

Interest attributed to own capital - January 1 to September 30, 2004

In thousands of reais
 
  Per share (gross) (1) Amount   Amount
 
Details Common  Preferred  paid/accrued gross Withholding
tax - IRRF
(15%) 		paid/accrued net
 
Monthly 1.270620 1.397682 211,009  31,651  179,358 
Interim (2) 0.847080 0.931788 140,644  21,097  119,547 
Accrued 3.801909 4.182100 632,856  94,928  537,928 
Total 5.919609 6.511570 984,509  147,676  836,833 
(1)

Adjusted to share base, subsequent to the reverse stock split.
(2)

Declared on June 30, 2004 and paid on July 30, 2004.

d) Movement in stockholders’ equity:

The movement of stockholders’ equity for the period from January 1 to September 30 may be summarized as follows:

In thousands of reais
 
  2004  2003 
 
Opening balance 13,546,880  10,845,729 
Capital increase -  1,289,735 
Acquisition of own shares, premium on subscription of shares and others (46,773) 7,902 
Mark-to-market adjustment - securities and derivatives 159,711  231,999 
Net income 2,002,398  1,591,202 
Interest attributed to own capital (paid and accrued) (984,509) (999,747)
Closing balance 14,677,707  12,966,820 

e) Treasury stock

Up to September 30, 2004, 443,566 shares, comprising 443,562 common and 4 preferred shares, in the amount of R$ 56,095 thousand, had been acquired and remained in treasury. The minimum, average weighted and maximum cost, per share, is respectively R$ 101.74578, R$ 126.46332 and R$ 138.92418 and the average market value of these shares at September 30, 2004 was R$ 118.43 per common and R$ 150.00 preferred share.

26) COMMISSIONS AND FEES

Accumulated to September 30 - In thousands of reais
 
  2004  2003 
 
Checking account 953,909  796,446 
Collection 460,953  439,695 
Fund management services 649,104  401,263 
Income on cards 723,008  597,720 
Credit operations 582,334  419,967 
Interbank charges 192,281  188,921 
Receipt of taxes 149,974  138,149 
Revenue from custody and brokerage services 72,543  55,207 
Consortium management 58,293  12,451 
Other 306,375  232,452 
Total 4,148,774  3,282,271 

27) PERSONNEL EXPENSES

Accumulated to September 30 - In thousands of reais
 
  2004  2003 
 
Remuneration 1,862,587  1,733,789 
Single payment bonus 13,925  97,774 
Benefits 736,143  706,099 
Social charges 683,274  587,385 
Training 36,732  45,916 
Employee profit sharing 126,839  127,966 
Other (labor) 225,084  208,499 
Total 3,684,584  3,507,428 

28) ADMINISTRATIVE EXPENSES

Accumulated to September 30 - In thousands of reais
 
  2004  2003 
 
Third-party services 630,264  583,140 
Communications 476,416  462,421 
Depreciation and amortization 359,747  403,424 
Financial system services 299,824  260,352 
Advertising and publicity 284,105  232,806 
Transport 281,807  258,407 
Leasing 235,832  208,897 
Rents 223,253  205,846 
Data processing 198,928  198,766 
Maintenance and repairs 197,021  174,328 
Materials 108,843  129,194 
Water, electricity and gas 94,883  83,113 
Travel 40,804  46,155 
Other 216,905  239,360 
Total 3,648,632  3,486,209 

29) OTHER OPERATING INCOME

Accumulated to September 30 - In thousands of reais
 
  2004  2003 
 
Other financial revenue 279,824  321,766 
Reversal of other operating provisions (1) 227,928  1,066,189 
Recovery of charges and expenses 74,386  97,632 
Income on sale of goods 44,961  184,390 
Other 260,770  284,503 
Total 887,869  1,954,480 

(1)

In 2003, includes reversal of provision for exchange variation.

30) OTHER OPERATING EXPENSES

Accumulated to September 30 - In thousands of reais
 
  2004  2003 
 
Other financial expenses 630,673  863,949 
Sundry losses 371,762  239,527 
Amortization of goodwill 264,196  180,837 
Cost of sales and services (1) 404,895  358,656 
Other operating provisions 184,267  26,646 
Other 266,451  202,724 
Total 2,122,244  1,872,339 

(1)

Includes depreciation of R$ 60,954 thousand (September 30, 2003 - R$ 66,608 thousand).

31) NON-OPERATING INCOME (EXPENSE), NET

Accumulated to September 30 - In thousands of reais
 
  2004  2003 
 
Extraordinary amortization of goodwill (1)(2) (237,241) (680,759)
Gain (loss) on sale and write-off of assets and investment (70,897) (98,683)
Income on sale of branches at auctions -  97,848 
Non-operating provisions recorded (reversed) (24,921) (70,567)
Other (9,904) (15,420)
Total (342,963) (767,581)

(1)

2003 - Although its essence was maintained, goodwill held by Boavista DTVM in Banco Mercantil de São Paulo, following the merger approved on March 31, 2003, was amortized on an extraordinary basis, pursuant to BACEN Circular 3017.
(2)

2004 - As a result of the change in projected realization (Note 17a).

32) TRANSACTIONS WITH SUBSIDIARY AND ASSOCIATED COMPANIES (DIRECT AND INDIRECT)

The transactions with subsidiary and associated companies, carried out at average market terms and prices on the dates thereof, were eliminated from the consolidated financial statements and summarized below:

 
  2004 2003
 
  Assets  Income  Assets  Income 
  (liabilities) (expense) (liabilities) (expense)
 
Interest attributed to own capital and dividends:
Bradesco Seguros S.A 146,591  -  86,883  - 
Banco Baneb S.A. 80,316  -  70,650  - 
Banco BCN S.A. -  -  80,380  - 
Banco Boavista Interatlântico S.A. 12,089  -  376,852  - 
Banco Finasa S.A. 124,170  -  -  - 
Other subsidiary and associated companies 68,631  -  11,468  - 
 
Exchange purchases pending settlement (a):
Banco BCN S.A. -  -  36,739  1,901 
Other subsidiary and associated companies -  -  -  2,167 
 
Pre-export operations (b):
Banco BCN S.A. - Foreign: -  -  167,393  3,121 
Other subsidiary and associated companies -  1,952  -  301 
 
Exchange purchase payables (c):
Banco BCN S.A. -  -  (36,894) (1,106)
 
Demand deposits:
Banco BCN S.A. - Foreign: -  -  (23,684) - 
Banco Boavista Interatlântico S.A. - Foreign: (1,262) -  (6,084) - 
Bradesco Vida e Previdência S.A. (40,539) -  (34,446) - 
Finasa Promotora de Vendas (5,848) -  (5) - 
Other subsidiary and associated companies (14,007) -  (18,059) - 
 
Time deposits:
ABS-Empreend. Imob., Partic. e Serviços S.A. -  -  (60,738) (6,164)
Bradesco Capitalização S.A. (78,450) (8,142) -  - 
Promovel Empreendimentos e Serviços Ltda. (27,652) (528) -  - 
Other subsidiary and associated companies (15,595) (6,209) (29,739) (8,546)
 
Deposits/interbank deposits (d):
 
Deposits:
Banco BCN S.A. -  -  (664,752) (17,137)
Banco Baneb S.A. (280,040) (7,552) -  (12,014)
Banco BEM S.A. (212,398) (3,283) -  - 
Banco Boavista Interatlântico S.A. (32,476) (697) (6,982) (46,706)
Boavista Banking Limited (167,877) (1,374) (100,298) (991)
Bradesco BCN Leasing S.A. Arrendamento Mercantil -  (189,365) (1,954,592) (328,658)
Banco Alvorada S.A. (755,659) (29,082) -  (73,664)
Banco Mercantil de São Paulo S.A. (806,326) (28,087) (205,305) (21,493)
Banco Finasa de Investimento S.A. -  (7,268) (77,805) (12,390)
Boavista S.A. Arrendamento Mercantil -  -  (15,202) (30,331)
Cidade Capital Markets Limited (86,080) (990) (86,259) (572)
Bradesco Leasing S.A. Arrendamento Mercantil (2,179,115) (59,523) (39,190) (76,856)
Other subsidiary and associated companies (20,500) (10,491) (20,306) (42,846)
 
Interbank deposits:
Banco BCN S.A. -  -  80,513  405,572 
Banco Boavista Interatlântico S.A. 1,011,009  46,336  693,643  31,924 
Banco Finasa S.A. 7,024,555  676,131  4,127,952  599,289 
Other subsidiary and associated companies 25,000  17  17,543  89,451 
 
Deposits received under security repurchase agreements/open market investments (e):
 
Deposits received under security repurchase agreements:
Bradesco S.A. - CTVM. (33,610) (3,371) (18,195) (6,375)
Banco Baneb S.A. (3,199) (1,057) (405,182) (54,576)
Banco BCN S.A. -  -  (634,236) (58,854)
Banco BEM S.A. (19,000) (3,313) -  - 
Banco Alvorada S.A. (19,465) (2,781) (309,100) (4,390)
Banco Boavista Interatlântico S.A. (9,769) (1,491) (1,423,185) (169,833)
Banco de Crédito Real de Minas Gerais S.A. -  (210) (2,800) (92,529)
Banco Finasa S.A. (9,499) (2,985) (24,400) (5,172)
Banco Mercantil de São Paulo S.A. (1,635) (5,193) (23,300) (41,926)
Cia. Brasileira de Meios de Pagamento - VISANET (21,103) (1,431) (13,734) (1,003)
Other subsidiary and associated companies (13,383) (1,011) -  (394)
 
Open market investments:
Banco Baneb S.A. 370,903  41,926  397,725  45,343 
Banco BEM S.A. 457,056  41,077  -  - 
Banco Boavista Interatlântico S.A. -  2,732  1,400,615  181,025 
Banco Mercantil de São Paulo S.A. -  6,975  115,354  23,689 
Other subsidiary and associated companies -  3  -  27,525 
 
Derivative financial instruments (swap) (f):
Banco Alvorada S.A. -  -  (5,584) (6,953)
Banco BCN S.A. -  -  1,407  91,407 
Bradesco Leasing S.A. Arrendamento Mercantil 11,406  1,234  -  - 
Banco Mercantil de São Paulo S.A. -  1,999  -  (46,476)
Banco Finasa S.A. 200,190  11,459  (117) (117)
Other subsidiary and associated companies -  36  361  279 
 
Foreign borrowings and onlendings (g):
Banco BCN S.A. -  -  (40,610) (2,418)
Banco Bradesco Luxembourg S.A. (70,118) (859) (29,597) (839)
Banco Boavista Interatlântico S.A. (23,019) (286) (23,155) (447)
Other subsidiary and associated companies (5,159) (67) (8,549) (1,120)
 
Services rendered (h):
Scopus Tecnologia S.A. (6,456) (96,091) (945) (68,705)
CPM S.A. (229) (33,196) (272) (22,354)
Other subsidiary and associated companies (22) 2,352  (15) 341 
 
Branch rents:
ABS-Empreend. ABS-Empreend. Imob., Partic. e Serviços S.A. -  -  -  (29,259)
Bradesco Vida e Previdência S.A. -  (4,885) -  (4,566)
Bradesco Seguros S.A. -  (22,179) -  (1,943)
Banco Mercantil de São Paulo S.A. -  (11,798) -  (5,987)
Other subsidiary and associated companies -  (10,767) -  (7,033)
 
Foreign securities (i):
Banco BCN S.A. -  -  45,682  1,099 
Other subsidiary and associated companies -  -  -  25 
 
Securities:
Bradesco BCN Leasing S.A. Arrendamento Mercantil -  146,688  1,571,447  196,997 
Bradesco Leasing S.A. Arrendamento Mercantil 1,832,239  45,468  -  - 
Cibrasec - Companhia Brasileira de Securitização 5,137  -  620  - 
 
Payables for foreign securities:
Banco Boavista Interatlântico S.A. - Foreign (802,696) (65,659) -  - 
Banco Alvorada S.A. -  -  (54,135) (473)
Bradesco Securities, Inc. -  (606) (21,100) (225)
Other subsidiary and associated companies -  -  (738) (206)
 
Foreign currency deposits abroad:
Banco Bradesco Argentina S.A. 21  -  -  - 
Banco Bradesco Luxembourg S.A. 530  -  -  - 
 
Interbank onlendings (j):
Other subsidiary companies -  (427) -  (492)
 
Accrued liabilities:
Alvorada Administradora de Cartões Ltda. -  -  (5,131) - 
 
Securitization transactions (k):
International Diversified Payment Rights Company (1,421,521) (61,996) (1,154,756) (9,162)
Brasilian Merchant Voucher Receivables Limited (782,103) (37,039) (799,960) (11,029)
 
Foreign currency investments:
Banco Bradesco Luxembourg S.A. 66,415  160  -  - 
a)

Foreign exchange portfolio transactions in the interbank market for ready settlement.
b)

Foreign credit lines for export financing in Brazil, subject to exchange variations and interest at rates practiced in the international market.
c)

Local currency commitments for exchange purchases, recorded as a counter-entry to exchange purchases pending settlement.
d)

Interbank investments - interbank deposits of related companies at CDI rate (Certificate of Interbank Deposit).
e)

Repurchase and/or resale commitments pending settlement, guaranteed by government securities at normal market rates.
f)

Differences between amounts receivable and payable on swaps.
g)

Foreign currency loans for financing of exports subject to exchange variation and bearing interest at international market rates.
h)

Contract with Scopus Tecnologia S.A. for IT equipment maintenance services and the contract with CPM S.A. for data processing systems maintenance services.
i)

Investments in foreign securities, fixed rate notes and eurobonds subject to exchange variations and carrying interest at rates used for securities placed in the international market.
j)

Payables on interbank onlendings -funds from rural loans bearing interest and charges corresponding to normal rates practiced for this type of transaction.
k)

Transactions for securitization of the future flow of money orders received from abroad and securitization of the future flow of credit card bill receivables from foreign cardholders.

33) FINANCIAL INSTRUMENTS

a) Risk and risk management

The main risks related to financial instruments, arising from the business carried out by the Bank and its subsidiaries are as follows: credit risk; market risk; liquidity risk; and capital risk. Risk management involves an integrated series of controls and processes, embracing a range of different policies and strategies. These risk management policies are designed to limit possible loss for the Organization.

Credit risk

As part of its credit risk management enhancement process, Bradesco is working uninterruptedly to improve the procedures for gathering and controlling portfolio information, develop new loss estimation models, enhance and prepare rating inventories used in the various sectors in which the Bank operates, to supervise the processes used in credit analysis, granting and settlement, monitor credit concentration, identify the causes of default and to prepare risk mitigation plans.

Efforts are focused on the utilization of advanced and robust risk assessment models fully integrated with all the credit process components, in line with best practices and the recommendations established by the New Basel Capital Accord’s most advanced models.

We highlight, among others, the following:

Market risk

Market risk is related to the possibility of the loss of income from fluctuating rates caused by the unhedged terms, currencies and indices of the Institution's asset and liability portfolios. This risk is closely monitored by the financial market to avoid loss for the institutions.

At Bradesco, market risks are managed through methodologies and models which are consistent with local and international market reality, ensuring that the Organization's strategic decisions are implemented with speed and a high level of reliability.

The Organization adopts a conservative policy regarding market risk exposure and V@R (Value at Risk) limits are defined by Senior Management, and compliance is monitored daily by an area which is independent from portfolio management.. The methodology used to determine V@R has a reliability level of 97.5%. The fluctuations and correlations used by the models are calculated on statistical bases based on forward-looking processes in accordance with economic studies.

The methodology applied and current statistical models are validated daily using backtesting techniques.

We present below the V@R of positions derived from the Group’s commercial transactions:


At September 30 - In thousands of reais
 
Risk Factors 2004  2003 
 
Prefixed 3,153  12,658 
IGP-M (General Price Index - Market) 7,885  - 
TR (Reference rate) 4,012  - 
Exchange coupon 1,180  19,000 
Foreign currency 1,953  184 
Other 31  13 
Correlated effect (7,802) (3,395)
V@R (Value at Risk) 10,412  28,460 

In addition, a daily Gap Analysis is performed to measure the effect of the movement in the internal interest rate and foreign exchange coupon curves (interest spread paid above the foreign exchange variation) on the portfolio.

Complementing the market risk monitoring, control and management structure and in accordance with Central Bank regulations, a daily verification is made of the values at risk for the fixed and foreign exchange positions of the Organization’s entire portfolio and of minimum capital requirements.

Liquidity risk

Liquidity risk management is designed to control the different unhedged liquidation terms of the Bank's rights and obligations as well as the liquidity of the financial instruments used to manage the financial positions.

Knowledge and monitoring of this risk is critical since it enables the Organization to settle transactions on a timely and secure basis.

At Bradesco, liquidity risk management involves a series of controls, mainly, the establishment of technical limits and an ongoing assessment of the positions assumed and financial instruments used.

Capital risk

The Organization's capital is managed to optimize the risk-return ratio, minimizing losses through the implementation of well-defined business strategies and maximizing efficiency in the combination of factors which impact the Capital Adequacy Ratio (Basel).

In thousands of reais
 
Calculation basis - capital adequacy ratio (Basel): Financial
(1) 		Economic-financial
(2)
 
Stockholders’ equity 14,677,707  14,677,707 
Decrease in deferred tax assets - BACEN Res. 3059 (131,737) (131,737)
Minority interest/other 220,027  73,961 
Reference equity -level I 14,765,997  14,619,931 
Reference equity -level II (subordinated debt) 5,771,122  5,771,126 
Total reference equity (level I + level II) 20,537,119  20,391,057 
 
Risk weighted assets 103,256,014  120,296,589 
 
Capital adequacy ratio at September 30, 2004 19.89% 16.95%
 
Variation in the capital adequacy ratio (Basel) - %
 
Ratio at September 30, 2003
• Movement in stockholders’ equity: 18.37% 15.91%
• Net income for the period 2.80% 2.42%
• Interest attributed to own capital (1.38%) (1.19%)
• Mark-to-market adjustment - securities and derivatives 0.38% 0.31%
• Subordinated debt 2.57% 2.23%
• Other (0.01%) (0.21%)
Variation in weighted assets:
• Securities (0.39%) (0.90%)
• Credit operations (1.58%) (1.20%)
• Clearing of checks and similar 0.02% 0.06%
• Deferred tax assets (0.03%) (0.01%)
• Risk (swap, market, interest and exchange rates) (0.24%) (0.21%)
• Memorandum accounts. (0.03%) (0.04%)
• Other assets (0.59%) (0.22%)
Ratio at September 30, 2004 19.89% 16.95%
(1)

Financial companies only
(2)

Financial and non-financial companies.

b) Market value

We present below the book values, net of allowances for mark-to-market, of the main financial instruments:

At September 30 - In thousands of reais
 
  2004 2003
 
  Book value Market value Potential gain
(loss) 		Potential gain
(loss)
 
Assets
Securities and derivative financial instruments 58,154,659  58,966,988  812,329  266,873 
Credit operations (1) 59,975,963  60,197,511  221,548  291,305 
Investments (2) 970,926  1,047,787  76,861  3,451 
 
Liabilities
Time deposits 26,804,591  26,808,589  (3,998) (19,168)
Funds from issuance of securities 6,115,921  6,095,839  20,082  (77,434)
Borrowings and onlendings 16,715,211  16,776,097  (60,886) (106,948)
Subordinated debt 6,089,471  6,471,764  (382,293) (12,237)
Treasury stock (56,095) (52,532) (3,563) - 
Total       680,080  345,842 

(1)

Includes advances on foreign exchange contracts, leasing operations and other receivables.
(2)

Not including increment in investments in associated companies.

Determination of market value of financial instruments:

a) Derivatives

Bradesco carries out transactions involving derivative financial instruments, which are recorded in balance sheet or memorandum accounts, for its own needs and for customers. The derivative financial instruments are used by the Bank to hedge its asset and liability positions against the effect of exchange variations. The derivatives generally represent future commitments for exchanging currencies or indices, or purchasing and selling other financial instruments according to the terms and dates set forth in the contracts. Under the option contracts, the purchaser is entitled, but not obliged, to purchase or sell a financial instrument at a specific strike price in the future.

I) The amounts of the instruments recorded in balance sheet and memorandum accounts are summarized below:

 
  Overall amount Net amount
 
Futures contracts
Purchase commitments: 6,895,462   
- Interbank market 44,851  - 
- Foreign currency 6,850,611  - 
Sale commitments: 16,762,868   
- Interbank market 4,982,946  4,938,095 
- Foreign currency 11,779,922  4,929,311 
 
Option contracts
Purchase commitments: 19,459 
- Foreign currency 19,459  - 
Sale commitments: 26,630   
- Foreign currency 26,630  7,171 
 
Forward contracts
Purchase commitments: 205,738   
- Foreign currency 205,738  - 
Sale commitments: 510,546   
- Foreign currency 510,546  304,808 
 
Swap contracts    
Asset position: 8,474,814    
- Interbank market 3,594,216  1,008,702 
- Prefixed 522,837  - 
- Foreign currency 2,339,098  - 
- Reference rate (TR) 823,726  823,093 
- SELIC (Brazilian Central Bank reference rate) 1,019,887  970,102 
- IGP-M 133,248  - 
- Other 41,802  29,703 
 
Liability position 8,197,257    
- Interbank market 2,585,514  - 
- Prefixed 778,730  255,893 
- Foreign currency 4,555,280  2,216,182 
- TR 633  - 
- SELIC 49,785  - 
- IGP-M 215,216  81,968 
- Other 12,099  - 

Derivatives include operations maturing in D +1, to be settled in currency at September 30, 2004 price levels.

Amounts relating to swap contracts are recorded in securities -derivative financial instruments and total R$ 317,991 thousand and R$ 528,496thousand and amounts payable, classified in liabilities - derivative financial instruments, total R$ 40,434 thousand.

II) We present below the composition of derivative financial instruments (assets and liabilities) stated at restated cost and market value:

At September 30 - In thousands of reais
 
  Restated cost  Adjustment to market value Market value
Derivatives - adjustment receivable 594,548  (10,231) 584,317 
Derivatives - adjustment payable (306,569) (1,477) (308,046)
Total 287,979  (11,708) 276,271 

III) Futures, option, forward and swap contracts fall due as follows:

At September 30 - In thousands of reais
 
  Up to 90 days From 91 to 180 days From 181 to 360 days More than 360 days 2004 2003
 
Futures contracts 9,072,434  6,167,256  2,877,705  5,540,935  23,658,330  22,992,570 
Option contracts 18,143  23,538  4,408  -  46,089  68,185 
Forward contracts 486,576  150,717  78,398  593  716,284  1,605,203 
Swap contracts 3,945,234  2,019,854  1,630,906  560,829  8,156,823  10,834,780 
Total in 2004 13,522,387  8,361,365  4,591,417  6,102,357  32,577,526  - 
Total in 2003 13,295,350  5,479,063  7,558,632  9,167,693  -  35,500,738 

IV) We present below the type of margin given as collateral for derivative financial instruments, comprising mainly futures contracts:

At September 30 - In thousands of reais
 
Government securities 2004  2003 
 
Central Bank Notes 698  1,935 
Federal Treasury Notes 356,384  6,689 
National Treasury Bonds 264,436  1,105,904 
Financial Treasury Notes 232  349,191 
Total 621,750  1,463,719 

V) We present below net revenue and expense amounts:

Accumulated to September 30 - In thousands of reais
 
  2004  2003 
 
Futures contracts 467,512  (584,486)
Option contracts 19,424  19,618 
Forward contracts 64,852  15,484 
Swap contracts 157,177  595,699 
Total 708,965  46,315 

VI) We present below the overall amounts of the derivative financial instruments, separated by place of trading:

At September 30 - In thousands of reais
 
  2004  2003 
 
CETIP (counter) 7,091,121  7,804,361 
BM&F (floor) 25,486,405  27,696,377 
Total 32,577,526  35,500,738 

34) EMPLOYEE BENEFITS

Banco Bradesco and its subsidiaries sponsor a supplementary retirement pension plan for employees and directors. This unrestricted benefits generating plan (PGBL) is of the defined contribution type, which permits the accumulation of savings by participants over their professional careers through contributions paid by themselves and the sponsoring company. The related resources are invested in an Exclusive Financial Investment Fund - FIFE.

The plan is managed by Bradesco Vida e Previdência S.A. and BRAM - Bradesco Asset Management S.A. DTVM is responsible for the financial administration of the FIFE funds

The contributions paid by employees and by Bradesco and its subsidiaries total 4% of salary, except for participants who in 2001 opted to migrate to the PGBL plan from the defined benefits plan and whose contributions to the PGBL plan were maintained at the levels in force for the defined benefits plan at the time of migration, respecting nevertheless the 4% minimum.

The actuarial liabilities of the defined contribution plan (PGBL) are fully covered by the net equity of the corresponding FIFE fund.

As well as the aforementioned defined contribution plan (PGBL), former participants of the defined benefits plan are guaranteed a proportional deferred benefit, corresponding to their accumulated rights in the latter plan. For participants of the defined benefits plan, transferred or not to the PGBL plan, retired participants and pensioners, the present value of the plan’s actuarial liabilities is fully covered by guaranteeing assets.

Banco Baneb S.A. (into which Banco BEA S.A. was merged) maintains a supplementary pension plan managed by Caixa de Previdência dos Funcionários do BEA - CABEA, which is currently undergoing a sponsorship withdrawal process, with base date established at November 30, 2002 and whose sponsor’s contributions ceased from December 1, 2002. The plan’s actuarial liabilities are fully covered by the plan’s net assets.

The subsidiary Banco Baneb S.A. and its subsidiaries are sponsors of supplementary pension plans of the defined contribution (PGBL) and defined benefits type, through Fundação Baneb de Seguridade Social - BASES (for former Baneb employees). The actuarial liabilities of the defined contribution and defined benefit plans are fully covered by the net assets of the plans.

Banco BEM S.A. sponsors supplementary pension plans of the defined benefit and defined contribution type, through Caixa de Assistência e Aposentadoria dos Funcionários do Banco do Estado do Maranhão - CAPOF. The actuarial liabilities of the defined benefit and defined contribution plans are fully covered by the net assets of the plans.

The funds guaranteeing the private pension plans are invested in compliance with applicable legislation (government securities and corporate bonds, listed company stock and real estate).

Expenses with contributions made during the period totaled R$ 154,293 thousand (September 30, 2003 -R$ 221,367 thousand).

In addition, Bradesco and its subsidiaries offer their employees and directors a number of other benefits including: healthcare insurance, dental care, group life and personal accident insurance, as well as professional training, the expenses for which, including the aforementioned contributions, totaled R$ 772,875 thousand (September 30, 2003 -R$ 752,015 thousand).

35) PROVISION FOR INCOME TAX AND SOCIAL CONTRIBUTION

a) Calculation of income tax and social contribution charges:

Accumulated to September 30 - In thousands of reais
 
  2004  2003 
 
Income before income tax and social contribution 2,239,995  1,898,779 
Composite income tax and social contribution at the statutory rates of 25% and 9%, respectively (761,598) (645,585)
Effect of additions and exclusions on tax calculation:
    Equity in the earnings of subsidiary and associated companies 40,310  (8,669)
    Exchange loss (18,023) (30,062)
    Non-deductible expenses, net of non-taxable income (67,020) (117,535)
    Deferred tax assets recorded in prior-periods 192,876  137,978 
    Interest attributed to own capital (paid and accrued) 334,733  339,914 
    Other amounts 46,493  22,931 
Provision for income tax and social contribution for the period (232,229) (301,028)

b) Statement of income tax and social contribution benefit (expense)

Accumulated to September 30 - In thousands of reais
 
  2004  2003 
 
Deferred taxes
Amount recorded/realized for the period on temporary additions 325,045  547,835 
Amount recorded/offset on opening balances:
    Negative basis of social contribution (16,409) (6,112)
    Tax loss (56,280) (142,301)
Prior-period deferred tax assets were recorded on:
    Negative basis of social contribution 1,211  12,793 
    Tax loss 46,248  119,696 
    Social contribution - Provisional Measure 2158-35 of August 24, 2001 16,094  - 
Temporary additions 129,323  5,489 
Recorded for the period on:
    Negative basis of social contribution 16,901  41,929 
    Tax loss 43,621  107,726 
Subtotal 505,754  687,055 
Income tax and social contribution payable (737,983) (988,083)
 
Provision for income tax and social contribution (232,229) (301,028)

c) Statement of deferred income tax and social contribution assets

  Balance at
December
31, 2003 		Balances
acquired/assigned 		Amount recorded Amount realized Balance at
September
30, 2004
Provision for loan losses 2,548,151  11,268  695,689  623,259  2,631,849 
Provision for civil contingencies 119,717  -  102,259  60,780  161,196 
Provision for tax contingencies 526,525  -  46,275  25,758  547,042 
Provision for labor claims 277,635  -  110,916  90,069  298,482 
Allowance for mark-to-market of securities and investments 148,560  61  56,969  39,670  165,920 
Provision for loss on non-operating assets 81,458  633  21,433  17,890  85,634 
Mark-to-market adjustment of trading securities 71,222  1,086  171,580  140,128  103,760 
Amortization of goodwill 381,543  -  91,367  57,000  415,910 
Interest attributed to own capital (1) -  -  215,171  -  215,171 
Other 216,982  -  142,743  145,480  214,245 
Total deferred tax assets on temporary differences 4,371,793  13,048  1,654,402  1,200,034  4,839,209 
Tax losses and negative basis of social contribution 514,890  6,635  107,981  72,689  556,817 
Subtotal 4,886,683  19,683  1,762,383  1,272,723  5,396,026 
Mark-to-market adjustment of securities available for sale 40,463  -  -  40,463  - 
Social contribution - Provisional Measure 2158-35 of August 24, 2001 (2) 913,423  -  16,094  7,351  922,166 
Total deferred tax assets (Note 13b) 5,840,569  19,683  1,778,477  1,320,537  6,318,192 
Deferred tax liabilities 621,968  12  195,115  274,618  542,477 
Deferred tax assets net of deferred tax liabilities 5,218,601  19,671  1,583,362  1,045,919  5,775,715 
-Percentage of net deferred tax assets on total reference equity (Note 33a) 28.2%          28.3%
-Percentage of net deferred tax assets on total assets 3.0%          3.2%

(1)

This amount will be realized upon distribution of interest attributed to own capital up to the end of the year (Note 25c).
(2)

An amount of R$ 30,673 thousand is expected to be realized up to the end of the year and will be recorded upon effective utilization (Item d).

d) Expected realization of deferred tax assets on temporary differences, tax losses and negative base of social contribution

At September 30 - In thousands of reais
 
  Temporary difference Tax loss and negative basis  
 
 
  Income tax Social contribution Income tax Social contribution Total
 
2004 510,288  178,382  35,957  14,140  738,767 
2005 1,222,585  411,600  93,879  27,696  1,755,760 
2006 1,371,564  433,874  78,979  17,415  1,901,832 
2007 402,994  139,624  90,070  31,510  664,198 
2008 92,097  23,594  146,534  10,666  272,891 
2009 (3rd quarter) 41,543  11,064  9,971  -  62,578 
Total 3,641,071  1,198,138  455,390  101,427  5,396,026 


At September 30 - In thousands of reais
 
  Deferred tax assets on social contribution MP. 2158-35
 
  2004 2005 2006 2007 2008 2009 to 2012  Total
 
Amount 30,673 46,046 38,051 57,884 90,829 658,683 922,166

Projected realization of deferred tax assets is estimated and not directly related to expected book income.

The present value of deferred tax assets, calculated based on the average funding rate, net of tax effects totals R$ 5,649,702 thousand, of which R$ 4,452,251 thousand comprises temporary differences, R$ 489,510 thousand comprises tax losses and negative basis of social contribution and R$ 707,941 thousand comprises deferred social contribution assets - Provisional Measure 2158-35.

e) Unrecorded deferred tax assets

Deferred tax assets were not recorded in the amount of R$ 218,140 thousand.

f) Deferred tax liabilities

The Bradesco Organization has deferred tax liabilities in the amount of R$ 542,477 thousand, relating to: income tax and social contribution, PIS and COFINS on mark-to-market adjustments of securities and derivative financial instruments - R$ 369,017 thousand; excess depreciation -R$ 92,138 thousand; and others - R$ 81,322 thousand.

36) OTHER INFORMATION

a) The net assets of the investment funds and portfolios managed by the Bradesco Organization at September 30, 2004 total R$ 90,171,265 thousand (September 30, 2003 - R$ 76,602,370 thousand).

b) Banco Bradesco and its subsidiaries are the principal maintainers of the Fundação Bradesco (Bradesco Foundation), the chief mission of which is to provide formal quality education to children, young people and adults, ensuring that they receive the qualifications required to achieve personal fulfillment through their work and to exercise their rights and duties as citizens. Accordingly, the Foundation has expanded its activities yearly, increasing the number of students matriculated in its schools from 13,080 to more than 105,000, over the last twenty-four years. Through its 40 schools, installed as a priority in regions which are both socially and economically deprived, across all of Brazil’s states and in the Federal District, the Bradesco Foundation offers education free-of-charge at pre, junior and high school levels, as well as basic professional and technical training in IT, electronics, industry, management and agriculture and livestock raising. Distance learning is also offered as part of its Youth and Adult Education programs. Contributions from Bradesco’s consolidated companies to the Bradesco Foundation totaled R$ 53,300 thousand during the period (September 30, 2003 – R$ 46,800 thousand).

Report of the Fiscal Council


Banco Bradesco S.A.

The undersigned members of the Fiscal Council of Banco Bradesco S.A., in the performance of their legal and statutory duties, having reviewed the Directors’ Report and the Financial Statements for the nine-month period ended September 30, 2004, and based on the unqualified audit opinion of KPMG Auditores Independentes, declare that said documents, based on Brazilian corporate legislation in force, present fairly the financial position of the Institution.


Cidade de Deus, Osasco, SP, October 27, 2004





Ricardo Abecassis E. Santo Silva Sócrates Fonseca Guimarães Oswaldo de Moura Silveira

Independent Auditors’ Report on Special Review

To
The Board of Directors and Stockholders
Banco Bradesco S.A.
Osasco – SP

We have performed a special review of the consolidated interim report of Banco Bradesco S.A. and its subsidiaries for the nine-month periods ended September 30, 2004 and 2003, comprising the balance sheets, the statements of income and changes in financial position and the respective notes to the consolidated interim report, which were prepared in conformity with accounting practices adopted in Brazil.

Our review was performed in conformity with the specific rules established by IBRACON – Brazilian Institute of Independent Auditors jointly with the Brazilian Federal Accounting Council (CFC), and consisted mainly of: (a) inquiries and discussions with the managers responsible for the accounting, financial and operational areas of Banco Bradesco S.A. and its subsidiaries, regarding the principal criteria adopted in the preparation of the interim reports; and (b) review of information and subsequent events that have or may have a significant effect on the financial position and operations of Banco Bradesco S.A. and its subsidiaries.

Based on our special review, we are not aware of any significant modifications that should be made to the aforementioned consolidated interim report for it to be in conformity with accounting practices adopted in Brazil.


October 27, 2004

KPMG Auditores Independentes
CRC 2SP014428/O-6



Original report in Portuguese signed by


Walter Iorio Cláudio Rogélio Sertório
Accountant Accountant
CRC 1SP084113/O-5 CRC 1SP212059/O-0

 

 
SIGNATURE
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: November 8, 2004

 
BANCO BRADESCO S.A.
By:
  
/S/  José Luiz Acar Pedro
   
José Luiz Acar Pedro
Executive Vice President and Investor Relations Director
 

 
FORWARD-LOOKING STATEMENTS

This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates of future economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.