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OPERATING SEGMENTS
12 Months Ended
Dec. 31, 2022
Operating Segments  
OPERATING SEGMENTS

 

38)OPERATING SEGMENTS

 

The Company operates mainly in the banking and insurance segments. Our banking operations include operations in the retail, middle-market and corporate sectors, lease, international bank operations, investment bank operations and as a private bank. The Company also conducts banking segment operations through its branches located throughout the country, in branches abroad and through subsidiaries as well as by means of shareholding interests in other companies. Additionally, we are engaged in insurance, supplemental Pension Plans and capitalization bonds through our subsidiary, Bradesco Seguros S.A. and its subsidiaries.

 

The following segment information was prepared based on reports made available to Management to evaluate performance and make decisions regarding the allocation of resources for investments and other purposes. Our Management uses accounting information prepared in accordance with the accounting practices adopted in Brazil applicable to institutions authorized to operate by Central Bank for the purposes of making decisions about allocation of resources to the segments and assessing their performance. The information of the segments shown in the following tables considers the specific procedures and other provisions of the Brazilian Financial Institutions Accounting Plan which includes the proportional consolidation of associates and joint ventures and the non-consolidation of exclusive funds.

 

The main assumptions for the segmentation of income and expenses include (i) surplus cash invested by the entities operating in insurance, supplemental pension and capitalization bonds are included in this segment, resulting in an increase in net interest income; (ii) salaries and benefits and administrative costs included in the insurance, supplemental pension and capitalization bonds segment consist only of cost directly related to these operations, and (iii) costs incurred in the banking operations segment related to the infrastructure of the branch network and other general indirect expenses have not been allocated between segments.

 

Our operations are substantially conducted in Brazil. Additionally, we have one branch in New York, one branch in Grand Cayman, and one branch in London, mainly to complement our banking services and assist in import and export operations for Brazilian customers. Moreover, we also have subsidiaries abroad, namely: Banco Bradesco Europa S.A. (Luxembourg), Bradesco North America LLC (New York), Bradesco Securities, Inc. (New York), Bradesco Securities UK Limited (London), Cidade Capital Markets Ltd. (Grand Cayman), Bradesco Securities Hong Kong Limited (Hong Kong), Bradesco Trade Services Limited (Hong Kong), Bradescard Mexico, Sociedad de Responsabilidad Limitada (Mexico) and Bradesco Bac Florida Bank.

 

No revenue from transactions with a single customers or counterparty represented 10% of the Company’s revenue in the year ended on December 2022 and 2021.

 

All transactions between operating segments are conducted on an arm’s length basis, with intra-segment revenue and costs being eliminated in “Other operations, adjustments and eliminations”. Income and expenses directly associated with each segment are included in determining business-segment performance.

 

                   
  On December 31, 2022 - R$ thousands
Banking Insurance, pension and capitalization bonds Other Activities Eliminations Managerial Income Statement Proportionately consolidated (1) Consolidation adjustments (2) Adjustments (3) Consolidated in accordance with IFRS
Revenue from financial intermediation 151,198,428 36,250,128 400,777 (1,121,214) 186,728,119 (2,624,549) (2,167,017) 23,976,721 205,913,274
Expenses from financial intermediation (4) (81,330,918) (29,163,334) (22) 1,121,214 (109,373,060) 484,249 4,765,294 (27,187,737) (131,311,254)
Financial margin 69,867,510 7,086,794 400,755 -   77,355,059 (2,140,300) 2,598,277 (3,211,016) 74,602,020
Expected Credit Loss Associated with Credit Risk expense (31,525,873) -   -   -   (31,525,873) 43,142 -   7,696,293 (23,786,438)
Gross income from financial intermediation 38,341,637 7,086,794 400,755 -   45,829,186 (2,097,158) 2,598,277 4,485,277 50,815,582
Other income from insurance, pension plans and capitalization bonds -   7,425,337 -   35,507 7,460,844 -   -   661,773 8,122,617
Fee and commission income and income from banking fees 33,802,362 1,701,005 7,274 (36,169) 35,474,472 (4,977,457) (1,976,003) (1,386,805) 27,134,207
Personnel expenses (20,321,773) (2,377,250) (4,284) -   (22,703,307) 763,928 -   256,023 (21,683,356)
Other administrative expenses (5) (20,949,621) (1,635,857) (7,895) 530,420 (22,062,953) 1,035,520 (594,059) (1,552,247) (23,173,739)
Tax expenses (6,880,656) (1,188,335) (18,530) -   (8,087,521) 521,838 -   -   (7,565,683)
Share of profit (loss) of associates and jointly controlled entities 107,424 125,038 -   -   232,462 1,170,081 -   (46,617) 1,355,926
Other operating income / expenses (8,457,925) (500,429) (5,254) (1,342,588) (10,306,196) 1,736,829 (28,215) (2,746,029) (11,343,611)
Operating profit/(loss) 15,641,448 10,636,303 372,066 (812,830) 25,836,987 (1,846,419) -   (328,625) 23,661,943
Non-operating income/(expense) 426,197 127,478 -   -   553,675 (5,669) -   -   548,006
Income Tax/Soc. Contrib. and non-controlling interests (2,112,804) (4,248,857) (109,659) 812,830 (5,658,490) 1,852,088 -   813,649 (2,992,753)
Net Income for the year ended on December 31, 2022 13,954,841 6,514,924 262,407 -   20,732,172     485,024 21,217,196
Total assets 1,571,006,747 371,322,607 3,871,114 (115,953,851) 1,830,246,617 (10,617,211) (40,304,939) 20,291,208 1,799,615,675
Investments in associates and joint ventures 68,419,475 2,950,880 1,191 (67,811,381) 3,560,165 5,481,876 -   (71,528) 8,970,513
Total liabilities 1,384,018,647 338,204,857 154,249 (48,142,468) 1,674,235,285 (10,617,211) (40,304,939) 17,561,276 1,640,874,411

(1) Refers to: consolidation adjustments, originating from proportionally consolidated companies (Grupo Cielo, Grupo Alelo, Crediare, etc.) for management purposes;

(2) Consolidation adjustments originating from the “non-consolidation” of exclusive funds;

(3) Adjustments due to the differences of the accounting standards used in the management reports and in the financial statements of the Company that were prepared in accordance with IFRS. The main adjustments refer to the expected loss for financial assets, business models, and effective interest rates and business combinations;

(4) Includes, in the Consolidated Financial Statements, the balances referring to “Net gains / (losses) on financial assets and liabilities at fair value through profit or loss”, “Net gains / (losses) on financial assets at fair value through other comprehensive income” and “Net gains / (losses) from operations in foreign currency”; and

(5) Includes, in the Consolidated Financial Statements, the balances referring to depreciation and amortization.

 

 

                   
  On December 31 2021 - thousand R$
Banking Insurance, pension and capitalization bonds Other Activities Eliminations Managerial Income Statement Proportionately consolidated (1) Consolidation adjustments (2) Adjustments (3) Consolidated in accordance with IFRS
Revenue from financial intermediation 98,849,913 20,204,517 159,242 (186,196) 119,027,476 (612,023) 1,135,111 5,892,867 125,443,431
Expenses from financial intermediation (4) (34,560,608) (13,192,413) (752) 211,047 (47,542,726) 161,179 1,335,070 (9,074,846) (55,121,323)
Financial margin 64,289,305 7,012,104 158,490 24,851 71,484,750 (450,844) 2,470,181 (3,181,979) 70,322,108
Expected Credit Loss Associated with Credit Risk expense (15,500,157) -   -   -   (15,500,157) 72,047 -   5,813,901 (9,614,209)
Gross income from financial intermediation 48,789,148 7,012,104 158,490 24,851 55,984,593 (378,797) 2,470,181 2,631,922 60,707,899
Other income from insurance, pension plans and capitalization bonds -   5,177,940 -   13,385 5,191,325 -   -   1,503,053 6,694,378
Fee and commission income and income from banking fees 31,866,568 1,779,999 767,505 (605,756) 33,808,316 (4,229,902) (2,049,179) (1,496,228) 26,033,007
Personnel expenses (18,425,804) (2,040,452) (386,462) 67 (20,852,651) 671,693 -   167,266 (20,013,692)
Other administrative expenses (5) (19,676,660) (1,494,814) (779,724) 1,128,510 (20,822,688) 1,488,706 (361,913) (2,070,160) (21,766,055)
Tax expenses (6,340,354) (983,979) (112,654) -   (7,436,987) 608,530 -   -   (6,828,457)
Share of profit (loss) of associates and jointly controlled entities 7,505 98,692 38,192 -   144,389 719,746 -   (442,631) 421,504
Other operating income / expenses (13,689,730) (721,996) 166,027 (561,057) (14,806,756) 643,235 (59,089) 2,063,496 (12,159,114)
Operating profit/(loss) 22,530,673 8,827,494 (148,626) -   31,209,541 (476,789) -   2,356,718 33,089,470
Non-operating income/(expense) (308,942) 36,765 18 -   (272,159) 35,056 -   -   (237,103)
Income Tax/Soc. Contrib. and non-controlling interests (5,522,891) (3,520,279) 51,476 -   (8,991,694) 441,733 -   (921,602) (9,471,563)
Net Income for the year ended on December 31, 2021 16,698,840 5,343,980 (97,132) -   21,945,688 -   -   1,435,116 23,380,804
Total assets on December 31, 2021 1,485,771,990 342,175,848 5,495,625 (138,226,247) 1,695,217,216 (10,413,213) (31,138,435) 21,906,625 1,675,572,193
Investments in affiliates and joint venture on December 31, 2021 70,811,964 2,640,563 405,587 (71,396,385) 2,461,729 5,132,515 -   (36,678) 7,557,566
Total liabilities on December 31, 2021 1,303,885,088 308,096,509 1,300,120 (66,829,862) 1,546,451,855 (10,413,213) (31,138,435) 20,443,279 1,525,343,486

(1) Refers to: consolidation adjustments, originating from proportionally consolidated companies (Grupo Cielo, Grupo Alelo, Crediare, etc.) for management purposes;

(2) Consolidation adjustments originating from the “non-consolidation” of exclusive funds;

(3) Adjustments due to the differences of the accounting standards used in the management reports and in the financial statements of the Company that were prepared in accordance with IFRS. The main adjustments refer to the expected loss for financial assets, business models and effective interest rate and business combinations;

(4) Includes, in the Consolidated Financial Statements, the balances referring to “Net gains / (losses) on financial assets and liabilities at fair value through profit or loss”, “Net gains / (losses) on financial assets at fair value through other comprehensive income” and “Net gains / (losses) from operations in foreign currency”; and

(5) Icludes, in the Consolidated Financial Statements, the balances referring to depreciation and amortization.

 

 

                   
  On December 31, 2020 - R$ thousands

 

 

 

Banking Insurance, pension and capitalization bonds Other Activities Eliminations Managerial Income Statement Proportionately consolidated (1) Consolidation adjustments (2) Adjustments (3) Consolidated in accordance with IFRS
Revenue from financial intermediation 74,335,609 22,444,253 109,663 (111,074) 96,778,451 484,720 (3,521,128) 4,687,074 98,429,117
Expenses from financial intermediation (4) (23,937,104) (18,341,232) (455) 118,931 (42,159,860) (40,645) 1,051,877 (7,427,059) (48,575,687)
Financial margin 50,398,505 4,103,021 109,208 7,857 54,618,591 444,075 (2,469,251) (2,739,985) 49,853,430
Expected Credit Loss Associated with Credit Risk expense (25,268,087) -   -   -   (25,268,087) (104,072) -   5,826,884 (19,545,275)
Gross income from financial intermediation 25,130,418 4,103,021 109,208 7,857 29,350,504 340,003 (2,469,251) 3,086,899 30,308,155
Other income from insurance, pension plans and capitalization bonds -   8,074,969 -   23,773 8,098,742 -   -   -   8,098,742
Fee and commission income and income from banking fees 30,307,248 1,875,701 448,292 (203,830) 32,427,411 4,031,391 2,164,111 (13,686,459) 24,936,454
Personnel expenses (17,714,158) (1,903,919) (174,340) 62 (19,792,355) (631,755) -   1,458,633 (18,965,477)
Other administrative expenses (5) (19,349,706) (1,524,278) (340,464) 674,656 (20,539,792) (1,442,189) 218,055 358,770 (21,405,156)
Tax expenses (5,476,957) (1,038,918) (74,502) -   (6,590,377) (541,474) -   1,082,949 (6,048,902)
Share of profit (loss) of associates and jointly controlled entities (271) 98,937 16,222 -   114,888 (634,424) -   964,394 444,858
Other operating income / expenses (15,634,441) (1,033,754) 102,438 (502,518) (17,068,275) (678,421) 87,085 4,861,111 (12,798,500)
Operating profit/(loss) (2,737,867) 8,651,759 86,854 -   6,000,746 443,131 -   (1,873,703) 4,570,174
Non-operating income/(expense) (284,469) (197,204) 1,100 -   (480,573) (14,306) -   -   (494,879)
Income Tax/Soc. Contrib. and non-controlling interests 14,508,637 (3,425,110) (57,123) -   11,026,404 (428,825) -   1,361,087 11,958,666
Net Income for the year ended on December 31, 2020 11,486,301 5,029,445 30,831 -   16,546,577     (512,616) 16,033,961
Total assets on December 31, 2020 1,435,481,875 338,923,828 5,658,304 (135,259,892) 1,644,804,115 (9,364,134) (44,400,937) 13,614,746 1,604,653,790
Investments in affiliates and joint venture on December 31, 2020 77,091,501 1,856,796 60,271 (77,139,456) 1,869,112 5,177,598 -   340,130 7,386,840
Total liabilities on December 31, 2020 1,291,779,235 338,923,828 5,658,304 (135,259,892) 1,501,101,475 (9,364,134) (44,400,937) 11,200,012 1,458,536,416

(1) Refers to: consolidation adjustments, originating from proportionally consolidated companies (Grupo Cielo, Grupo Alelo, Crediare, etc.) for management purposes;

(2) Consolidation adjustments originating from the “non-consolidation” of exclusive funds;

(3) Adjustments due to the differences of the accounting standards used in the management reports and in the financial statements of the Company that were prepared in accordance with IFRS. The main adjustments refer to the expected loss for financial assets, business models and effective interest rate and business combinations;

(4) Includes, in the Consolidated Financial Statements, the balances referring to “Net gains / (losses) on financial assets and liabilities at fair value through profit or loss”, “Net gains / (losses) on financial assets at fair value through other comprehensive income” and “Net gains / (losses) from operations in foreign currency”; and

(5) Icludes, in the Consolidated Financial Statements, the balances referring to depreciation and amortization.

 

As shown in the table and note (3) above, the adjustments arising from the differences between the criteria, procedures and rules used to prepare the operating segments in accordance with the accounting practices adopted in Brazil applicable to institutions authorized to operate by Bacen and the international accounting standard, in accordance with the pronouncements issued by the IASB, the main ones being: (i) expected losses on financial assets - R$(1,118) thousand (2021 – R$(1,074) thousand and 2020 – R$(1,201) thousand); (ii) business models - R$273 thousand (2021 – R$(67) thousand and 2020 – R$1,253 thousand); (iii) effective interest rate - R$416 thousand (2021 – R$(442) thousand and 2020 – R$(1,815) thousand); and (iv) business combination – R$4,431 thousand (2021 – R$4,240 thousand and 2020 – R$3,680 thousand). On December 31, 2022, after adjustments, shareholders' equity under BRGAAP R$154,263 thousand became IFRS R$158,265 thousand.