Bradesco First-Quarter Net Rises 11% on Lending, Fees (Update3)

Banco Bradesco SA, Brazil's second-
biggest non-state bank, said first-quarter profit rose 11 percent
on increases in consumer lending and revenue from fees and
insurance.

Net income climbed to 1.7 billion reais ($838.7 million), or
85 centavos a share, from 1.53 billion reais, or 78 centavos, a
year earlier, Osasco-based Bradesco said today on the Brazilian
securities regulator's Web site. The result compared with the
1.68 billion reais estimate by Bruno Pereira, an analyst at Banco
UBS Pactual SA.

Bradesco, which has made at least 19 acquisitions in six
years, is taking advantage of increasing demand for consumer
loans as lower interest rates and higher wages prompt purchases
of cars and home appliances. Bank lending in Latin America's
largest economy surged 21 percent in the year ended March 31.

``Bradesco was the bank that invested the most in credit
expansion,'' said Regis Abreu, who helps manage about $739
million at Mercatto Gestao de Recursos in Rio de Janeiro. ``In an
environment of declining interest rates, Bradesco is in the best
position among non-state banks to capture this credit demand.''

The bank's shares have gained 5.2 percent this year,
trailing the 14 percent increase in the benchmark Bovespa Index.
It has a market value of 89.7 billion reais.

Lending Grows

Bradesco's loan portfolio, including receivables from credit
cards, increased 25 percent to 122.4 billion reais in the quarter
from the year before. Excluding receivables from credit cards,
the portfolio increased 20 percent to 101.5 billion reais. Loans
to individuals gained 17 percent, spurred by demand for personal
loans and auto finance. Corporate loans grew 23 percent.

Adjusted net interest income advanced 0.9 percent to 5
billion reais.

Household monthly income, adjusted for inflation, rose 5
percent in March from a year earlier. Monetary policy makers in
Brazil cut the benchmark lending rate for a 15th straight time
last month to boost growth. The rate reached a record low of 12.5
percent in April from 19.75 percent in September 2005, when the
current series of rate reductions began.

``Lending activity will be higher in 2007 and 2008; however,
we expect the margin to be lower because of increased competition
in the market,'' Jose Guilherme Lembi de Faria, Bradesco's
managing director, said in a May 4 interview. ``We have to be
much more aggressive to keep our market share, to keep our
volume.''

Return on Equity

Bradesco expects loan portfolio to expand 20 percent this
year, Lembi de Faria said.

Provisions for bad loans rose to 1.16 billion reais in the
first quarter from 938 million reais in the year-earlier period,
Bradesco said.

Brazil's economy is projected to grow about 4 percent in
2007 and in 2008, according to the median estimate of economists
in a central bank survey published today. The average growth rate
from 2003 to 2006 was 3.4 percent.

Bradesco posted an average annualized return on equity, a
measure of profitability, of 30.2 percent in the first three
months of the year, down from 34.6 percent in the year-earlier
quarter. The return on equity this year will probably be in line
with the 32 percent posted in 2006, Lembi de Faria said.

The bank's mortgage portfolio reached 669 million reais in
the first quarter and should drive credit expansion in coming
years, Lembi de Faria said.

Fees and Commissions

``We expect the mortgage business will boom very soon in
Brazil,'' Lembi de Faria said. ``We believe there is potential
demand for 3 million houses financed in Brazil, especially for
the median to low income population.''

The bank's fee and commission income grew 25 percent to
2.559 billion reais. Net income at the insurance business rose 15
percent to 529 million reais.

Eleven of 17 analysts who cover Bradesco have a ``buy''
recommendation on the stock, while six have a ``hold'' rating,
according to data compiled by Bloomberg.

Banco Itau Holding Financeira SA, Brazil's biggest non-
government bank by market value, will release first-quarter
earnings tomorrow.

To contact the reporter on this story:
Telma Marotto in Sao Paulo at
.

Lenders say many won’t be helped by foreclosure delay

BOSTON - Some on the brink of losing their homes will benefit from the foreclosure delays advocated by Gov. , but many are so financially troubled that a delay won’t make a difference, the state’s top lenders association said Tuesday.
    Despite their portrayal by some housing advocates as "predators," subprime mortgage lenders want to help homeowners find better loans because they also lose money on foreclosures, said Kevin Cuff, executive director of the Massachusetts Mortgage Bankers Association.
    But by the time many cases reach the foreclosure stage, it’s often too late, "whether we wait 60 days or not," said Cuff, whose trade group represents about 300 lenders.
    Patrick should use his influence to bring the nation’s largest lenders, which hold loans on much of the state’s foreclosed properties, into discussions on how to address the state’s high numbers of foreclosures, Cuff said.
    The state had a record 19,487 foreclosure filings last year. Last Wednesday, Patrick announced a plan to lower the foreclosure rate that would include making mortgage fraud a criminal offense and prohibiting abusive foreclosure rescue schemes.
    The next day, Patrick met with Bruce Marks, head of the Neighborhood Assistance Corporation of America housing advocacy group, and about 24 people in danger of losing their homes. After the meeting, Patrick instructed the state’s banking commissioner to seek, on a case-by-case basis, foreclosure delays from lenders for homebuyers who file a complaint about their mortgages.
    The state has no power to force lenders to negotiate new terms.
    "We hope the lenders will give us the time and work with us to see if there are any homes we can save," said Kofi Jones, spokeswoman for the state Executive Office of Housing and Economic Development.
    The subprime lending market, aimed at people with poor credit histories, helps people obtain a mortgage with little or no money down, but generally with interest rates that are high or increase sharply after a short period.
    Marks said subprime lenders target people they know can’t pay the mortgages in order to profit from the numerous fees. Cuff said millions of people who wouldn’t otherwise be able to afford a home now have one because of subprime loans.
    Patrick has been criticized for his work with ACC Capital Holdings, parent of the national mortgage company Ameriquest, which has been accused of predatory lending practices. Patrick, a former member of the board of directors of ACC, has said he tried to correct problems at Ameriquest, but his job there has surfaced in the recent debate.
    Cuff said anti-foreclosure advocates have a sympathetic ear because of Patrick’s ties to Ameriquest. House minority leader Brad Jones, R-North Reading, said Patrick may be trying to politically get out in front of an issue that has dogged him.
    "Given the history, it’s certainly a situation where you don’t want to be accused of being behind the curve on what some people think you may have been able to do," he said.
 []1 |  | 

New Zealand Raises Key Interest Rate to Record 7.75% (Update1)

New Zealand's central bank raised
the benchmark interest rate to a record 7.75 percent, the second
increase in seven weeks, because surging housing demand and
consumer spending may fan inflation.

``The resurgence in economic activity that began in late
2006 has continued over recent months, with domestic demand
continuing to expand strongly,'' Reserve Bank Governor Alan
Bollard said in a statement released in Wellington today. ``The
lift in domestic demand is placing further pressure on already-
stretched productive resources.''

Bollard faces the dilemma of trying to cool domestic demand
while limiting the damage to exporters, whose earnings have been
eroded as higher interest rates caused the New Zealand dollar to
surge to a 22-year high. He is trying to curb housing demand and
consumer spending to keep inflation from accelerating to the top
end of the bank's 1 percent-to-3 percent range.

``There is a compelling case for further monetary
tightening,'' Craig Ebert, senior markets economist at Bank of
New Zealand Ltd. in Wellington, said before the report. ``Failing
to tighten now runs the risk of feeding the renewed acceleration
already evident in consumer spending.''

The New Zealand dollar fell to 74.36 U.S. cents at 9:09 a.m.
in Wellington from 74.49 cents immediately before the statement,
in which Bollard refrained from commenting on the likelihood of
further interest rate increases.

Six of 14 economists surveyed by Bloomberg News expected the
increase. More economists expected Bollard would leave interest
rates unchanged today and raise them at his next review on June 7,
allowing him scope to gauge reports on housing, retail spending
and unemployment due the next four weeks.

Bollard raised rates in March for the first time in 15
months, saying that inflation may have accelerated beyond the top
of his target unless he increased borrowing costs.

Inflation Outcomes

Today's increase ``is aimed at ensuring that inflation
outcomes remain consistent with achieving the target,'' he said.

Consumer prices rose 2.6 percent in the 12 months ended
March 31. Still, prices of non-tradable items, which are not
influenced by the currency and better reflect core inflation,
rose by about 4 percent and remain ``persistently strong,''
Bollard said.

Demand is being fueled by a buoyant housing market,
increases in government expenditure, a rising terms of trade,
ongoing net immigration and a robust labor market, he said.

The median house price rose to a record NZ$343,500
($255,000) in March, while home sales rose 9.5 percent from a
year earlier, according to a report from the Real Estate
Institute of New Zealand Inc. on April 19. Retail sales in
February rose 1.9 percent, the fastest pace since March 2004,
according to a government report on April 13.

New Zealand's jobless rate fell to 3.7 percent in the fourth
quarter. Wages for non-government workers rose a record 3.2
percent in 2006.

Capacity Stretched

``Firms report that capacity is very stretched and that they
are again experiencing increased difficulty in finding both
skilled and unskilled staff,'' Bollard said.

New Zealand companies are more optimistic about their
second-quarter trading, according to a New Zealand Institute of
Economic Research Inc. survey. More companies plan to raise
prices and more said it was harder to find workers, a signal that
wages may rise, fanning inflation.

New Zealand's benchmark rate is 7.25 percentage points more
than Japan's and 2.5 points higher than the U.S. Federal Reserve
target, helping the currency surge 18 percent the past year, the
best performing major currency tracked by Bloomberg.

The stronger currency ``is hurting exporters already under
pressure,'' Stephen Koukoulas, global strategist at TD Securities
in London, said in an April 20 report. ``A rate increase could
see the New Zealand dollar spike higher, further escalating the
imbalances within the economy.''

Foreign investors borrow at cheaper rates to buy New Zealand
assets, buoying demand for the currency, which rose to a 22-year-
high of 74.91 U.S. cents on April 18.

`Exceptional, Unjustified'

``The exchange rate is now at levels that are both
exceptional by historical standards, and unjustified on the basis
of medium-term fundamentals,'' Bollard said.

The currency's gain crimps exports, which make up 30 percent
of the $102 billion economy.

Sanford Ltd., New Zealand's largest publicly traded fishing
company, said on April 16 that first-half profit fell because the
strong currency was ``decimating'' earnings and resulting in
foreign exchange losses.

``Parts of the export sector continue to face challenging
conditions,'' Bollard said. Still, the sharp lift in world dairy
prices is expected to provide a boost to incomes in that sector
and tourist arrivals are continuing to grow, he said.

The stronger currency will help curb inflation, Bollard said.
Rising home loan rates may also slow housing demand.

Lenders have increased home-loan interest rates over the
past month. The rate offered by the nation's four biggest banks
on a two-year fixed-interest loan rose to 8.9 percent from about
8.4 percent in February. Variable home loan rates rose a quarter
point to about 9.8 percent.

To contact the reporter on this story:
Tracy Withers in Wellington at
.