* Bradesco sets focus on organic growth, CEO Trabuco says
* Guidance will not change if economic growth falters
By Guillermo Parra-Bernal and Aluísio Alves
SAO PAULO, Jan 29 (Reuters) - Banco Bradesco SA has no plans to expand through mergers and acquisitions, Chief Executive Luiz Carlos Trabuco said on Tuesday, a sign that Brazil’s No. 2 private-sector bank is opting for a more conservative approach to growth.
Asked by an analyst if the bank considered mergers and acquisitions a tool to expand operations, Trabuco said that “this is the moment to intensify our focus on organic growth as much as possible.” He spoke on a conference call a day after the bank reported quarterly earnings.
Local media have repeatedly linked Bradesco to a potential purchase of part or all of the assets of Banco Santander Brasil SA, a deal that many analysts say could be Brazil’s largest ever banking combination. Both banks have denied the reports several times.
Trabuco said that in his view, Bradesco must base its expansion on its ability to tap a growing number of clients willing to purchase services ranging from checking accounts to insurance plans.
For years, Bradesco has lost a number of takeover targets to rivals, a sign that the Osasco-based bank has been too careful about overpaying.
Questioned by analysts about whether the bank was overly optimistic about an economic recovery in Brazil when outlining its guidance estimates for this year, Trabuco said growing social mobility, a robust job market nationwide, and the emergence of a new middle class would support a sustainable economic expansion this year.
Bradesco forecast modest lending growth in 2013. A small decline in provisions, stubborn loan delinquencies and a continuing squeeze on margins led the lender to miss fourth-quarter profit estimates. Analysts, including Marcelo Henriques of BTG Pactual Group, said guidance for this year is “too aggressive.”
On Monday Bradesco projected credit growth of 13 percent to 17 percent this year. The bank’s loan book expanded 11.5 percent last year, below guidance of 14 percent to 18 percent provided by the bank last July.
“We see as unlikely a change in guidance even if growth comes a little lower than everyone is expecting,” Chief Financial Officer Luiz Carlos Angelotti said on the Tuesday conference call.
According to the guidance note, Bradesco expects net interest income, or revenue stemming from loan-related transactions, to expand between 7 percent and 11 percent this year, compared with growth of 8.3 percent in 2012. It forecast fee income growth between 9 percent and 13 percent, following a rise of 14.4 percent last year.
“Any decline in interest margins because of low interest rates could be compensated with faster growth in credit allocation,” Angelotti said, when questioned about the goal for net interest income growth.
Operational expenses will rise between 4 percent and 8 percent this year, a sign that Bradesco will put additional emphasis on operational efficiency, Trabuco said.