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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 August, 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

June 2004






Financial Market Indicators (%)
Index 2003 2004
1st Qtr. 2nd Qtr. 1st Half 1st Qtr. 2nd Qtr. 1st Half
CDI 5.68  5.78  11.79  3.76  3.67  7.56 
IBOVESPA - Average 0.04  15.07  15.12  (0.42) (4.49) (4.89)
USD - Commercial rate (5.10) (14.35) (18.72) 0.67  6.84  7.56 
IGP-M 6.26  (0.35) 5.89  2.72  3.95  6.78 
IPCA - IBGE 5.13  1.43  6.64  1.85  1.60  3.48 
TJLP 2.63  2.87  5.58  2.41  2.35  4.82 
TR 1.28  1.31  2.61  0.35  0.42  0.77 
U.S. dollar (closing price - sell)
USD - Commercial rate (in reais) 3.3531 2.8720 2.8720 2.9086 3.1075 3.1075

Compulsory Deposit Rates (%)
Deposits 2003 2004
1st Qtr. 2nd Qtr. 1st Qtr. 2nd Qtr.
Demand deposits (1) 60  60  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
1st Qtr. 2nd Qtr. 1st Qtr. 2nd Qtr.
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  3  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 - Analysis of Consolidated Results
2 - Consolidated Equity Analysis
3 - Consolidated Information for the Period and Operating Structure
4 - Consolidated Balance Sheets and Statements of Income - 1999 to 2004
5 - 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 – Analysis of Consolidated Results








• Profitability

Bradesco reported first-half net income of R$ 1,250 million, corresponding to R$ 7.90 per share and an annualized return of 19.2% on closing stockholders’ equity and 19.4% on average stockholders’ equity.

During the period from January 1 through June 30, 2004, net income increased by 21.7%, compared to the same period in 2003.

The return on total assets was 1.4%, annualized.

• Comparative Statement of Income - In millions of reais

  1st Half
2003 		1st Half
2004 		%
Variation 		1st Qtr.
2004 		2nd Qtr.
2004 		%
Variation
 
INCOME FROM LENDING AND TRADING ACTIVITIES 12,175  14,476  18.9  6,756  7,720  14.3 
Credit operations 5,621  6,759  20.2  3,100  3,659  18.0 
Leasing operations 143  142  (0.7) 85  57  (32.9)
Securities 2,786  3,801  36.4  1,680  2,121  26.3 
Financial income on insurance, private pension plans and savings bonds 2,613  2,426  (7.2) 1,245  1,181  (5.1)
Derivative financial instruments 13  127  876.9  196  (69) (135.2)
Foreign exchange transactions 268  663  147.4  161  502  211.8 
Compulsory deposits 731  558  (23.7) 289  269  (6.9)
 
EXPENSES 7,593  9,140  20.4  3,987  5,153  29.2 
Deposits 4,496  5,484  22.0  2,454  3,030  23.5 
Price-level restatement and interest on technical reserves for insurance, private
pension plans and savings bonds 1,658  1,351  (18.5) 652  699  7.2 
Borrowings and onlendings 38  1,221  3,113.2  316  905  186.4 
Leasing operations 6  9  50.0  4  5  25.0 
Provision for loan losses 1,395  1,075  (22.9) 561  514  (8.4)
 
INCOME FROM FINANCIAL INTERMEDIATION 4,582  5,336  16.5  2,769  2,567  (7.3)
 
OTHER OPERATING INCOME (EXPENSES) (2,583) (3,916) 51.6  (1,970) (1,946) (1.2)
Commissions and fees 2,100  2,694  28.3  1,319  1,375  4.2 
Income from insurance premiums, private pension plans and savings bonds 5,418  5,983  10.4  2,994  2,989  (0.2)
Insurance premiums retained 2,711  2,990  10.3  1,465  1,525  4.1 
Private pension plan contributions 2,157  2,291  6.2  1,223  1,068  (12.7)
Income on savings bonds 550  702  27.6  306  396  29.4 
Variation in technical reserves for insurance, pension plans and savings bonds (1,663) (1,571) (5.5) (878) (693) (21.1)
Variation in technical reserves for insurance (115) (48) (58.3) 22  (70) (418.2)
Variation in technical reserves for pension plans (1,535) (1,467) (4.4) (850) (617) (27.4)
Variation in technical reserves for savings bonds (13) (56) 330.8  (50) (6) (88.0)
Claims - insurance operations (1,994) (2,514) 26.1  (1,232) (1,282) 4.1 
Savings bond draws and redemptions (515) (619) 20.2  (273) (346) 26.7 
Insurance and pension plan selling expenses (363) (417) 14.9  (212) (205) (3.3)
Insurance product selling expenses (296) (343) 15.9  (166) (177) 6.6 
Pension plan selling expenses (67) (74) 10.4  (46) (28) (39.1)
Expenses with pension plan benefits and redemptions (851) (1,123) 32.0  (533) (590) 10.7 
Personnel expenses (2,201) (2,411) 9.5  (1,177) (1,234) 4.8 
Other administrative expenses (2,254) (2,424) 7.5  (1,208) (1,216) 0.7 
Tax expenses (506) (679) 34.2  (336) (343) 2.1 
Equity in the earnings of associated companies (33) 122  (469.7) -  122  - 
Other operating income 1,532  537  (64.9) 257  280  8.9 
Other operating expenses (1,253) (1,494) 19.2  (691) (803) 16.2 
 
OPERATING INCOME 1,999  1420  (29.0) 799  621  (22.3)
 
NON-OPERATING INCOME (777) (213) (72.6) (11) (202) 1,736.4 
 
INCOME BEFORE TAXES AND PROFIT SHARING 1,222  1,207  (1.2) 788  419  (46.8)
 
PROVISION FOR INCOME TAX AND SOCIAL CONTRIBUTION (190) 46  (124.2) (179) 225  (225.7)
 
MINORITY INTEREST IN SUBSIDIARIES (5) (3) (40.0) -  (3) - 
 
NET INCOME 1,027  1,250  21.7  609  641  5.3 
 
RETURN ON STOCKHOLDERS’ EQUITY (%) ANNUALIZED 17.1  19.2  -  19.1  20.1  - 

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

Income from Credit and Leasing Operations
1st Half/2003 1st Half /2004 % Variation   1st Qtr./2004 2nd Qtr./2004 % Variation
5,758 6,892 19.7 3,181 3,711 16.7
Income was up, despite falling interest rates, mainly as a result of: (i) the increase in the average volume of the credit portfolio, particularly in auto financings in the consumer segment, up by 46.1% and rural loans in the corporate segment, up by 33.6%, indicating improvements in the Brazilian economy for the period; (ii) positive exchange variation of 7.56% for 1H04 against negative exchange variation of 18.72% in 1H03, impacting foreign-currency indexed and/or denominated operations, which comprise 13.8% of total credit and leasing operations (excluding advances on foreign exchange contracts - ACC).
Income was up mostly as a result of : (i) positive exchange variation of 6.84% in 2Q04, against positive exchange variation of 0.67% in 1Q04, impacting foreign-currency indexed and/or denominated operations; and (ii) increase in average volume of the credit portfolio, particularly rural loans in the corporate and consumer segments, up by 35.2%, and auto financing in the consumer segment, up by 9.2%.

Results of Securities (TVM) and Derivative Financial Instrument Operations
1st Half/2003 1st Half /2004 % Variation   1st Qtr./2004 2nd Qtr./2004 % Variation
2,799 3,928 40.3 1,876 2,052 9.4
The variation for the period is mainly due to: (i) positive exchange variation of 7.56% for 1H04, against negative exchange variation of 18.72% in 1H03, impacting foreign-currency-indexed and or denominated securities, which comprise 16.3% of the total securities’ portfolio; (ii) increase in the average volume of the securities’ portfolio, particularly federal government securities; mitigated in part by (iii) decrease in average interest rates, particularly CDI, of 11.79% in 1H03 to 7.56% for 1H04.
This increase reflects mainly:(i) positive exchange variation of 6.84% in 2Q04, against positive exchange variation of 0.67% in 1Q04, impacting foreign currency-indexed and or denominated securities; and (ii) the increase in the average volume of the securities’ portfolio, particularly federal government securities for the quarter.

Financial Income on Insurance, Private Pension Plans and Savings Bonds
1st Half/2003 1st Half /2004 % Variation   1st Qtr./2004 2nd Qtr./2004 % Variation
2,613 2,426 (7.2) 1,245 1,181 (5.1)
During the period, there was an increase in the average volume of the securities’ portfolio, comprising federal government securities, related to technical reserves, especially VGBL and PGBL products. However, overall results were down mainly due to: (i) the decrease in average interest rates, especially CDI, of 11.79% in 1H03 to 7.56% for 1H04; (ii) decrease in non-interest income following greater gains with variable income in 1H03; partially offset by (iii) variation in the IGP-M index, of 6.78% for 1H04, against 5.89% in 1H03, on which a portion of Federal Treasury Note (NTN) remuneration is based.
The variation for the quarter reflects, substantially: (i) decrease in non-interest income following greater gains with variable income in 1Q04; partially offset by (ii) the increase in the average volume of the securities’ portfolio, comprising federal government securities, related to technical reserves, especially VGBL and PGBL products; and by (iii) the variation in the IGP-M index, from 3.95% in 2Q04, against 2.72% in 1Q04, on which a portion of Federal Treasury Note (NTN) remuneration is based.

Results of Foreign Exchange Transactions
1st Half/2003 1st Half /2004 % Variation   1st Qtr./2004 2nd Qtr./2004 % Variation
268 663 147.4 161 502 211.8
During the period, there was an increase in the average volume of foreign exchange transactions. Considering foreign funding expense adjustments (Note 13a to the financial statements), results would decrease to R$ 134 for 1H03 and R$ 98 for 1H04, affected by the decrease in average fx portfolio interest rates.
During the period, there was an increase in the average volume of foreign exchange transactions. Considering foreign funding expense adjustments (Note 13a to the financial statements), results would decrease to R$ 63 for 1Q04 and R$ 35 for 2Q04, affected by the decrease in average fx portfolio interest rates.

Results of Compulsory Deposits
1st Half/2003 1st Half /2004 % Variation   1st Qtr./2004 2nd Qtr./2004 % Variation
731 558 (23.7) 289 269 (6.9)
During the period, there was an increase in the average volume subject to compulsory deposit. However, the income derived from the remuneration of the additional compulsory deposits, as well as the compulsory deposit on savings decreased as a result of: (i) the drop in the SELIC rate from 11.81% in 1H03 to 7.60% for 1H04, for additional deposits; and (ii) the decrease in the TR reference rate used to remunerate compulsory savings account deposits, from 2.61% in 1H03 to 0.77% for 1H04.
During the period, the increase in the average volume subject to compulsory deposit and the increase in the TR reference rate (used to remunerate compulsory savings account deposits) from 0.35% in 1Q04 to 0.42% in 2Q04 offset partially the decrease in income, generated by the drop in the SELIC rate (used to remunerate the additional compulsory deposit on demand, time and savings deposits) from 3.78% in 1Q04 to 3.69% in 2Q04.

Interest and Charges on Deposits
1st Half/2003 1st Half /2004 % Variation   1st Qtr./2004 2nd Qtr./2004 % Variation
4,496 5,484 22.0 2,454 3,030 23.5
The increase mainly reflects: (i) positive exchange variation of 7.56% for 1H04, against negative exchange variation of 18.72% in 1H03, impacting securities and other funds obtained abroad by Bradesco - R$ 2,310; offset partially by less expense with: (ii) time deposits - R$ 759; (iii) savings deposits - R$ 286; (iv) purchase and sale commitments - R$ 274; mainly as a result of lower average interest rates in 1H04.
The increase mainly reflects: (i) growth in positive exchange variation from 0.67% in 1Q04 to 6.84% in 2Q04, impacting securities and other funds obtained abroad by Bradesco - R$ 795; (ii) time deposits - R$ 77, which despite lower average interest rates, increased in average volume in 2Q04; partially offset by (iii) less expense for purchase and sale commitments - R$ 315; mainly due to decreased average volumes and lower average interest rates in 2Q04.

Price-level Restatement and Interest on Technical Reserves for Insurance, Private Pension Plans and Savings Bonds
1st Half/2003 1st Half /2004 % Variation   1st Qtr./2004 2nd Qtr./2004 % Variation
1,658 1,351 (18.5) 652 699 7.2
The decrease reflects principally the fall in average interest rates despite the increase in the average volume of technical reserves, particularly for PGBL and VGBL products.
This was up following the increase in the IGP-M index and average volume of technical reserves, particularly for PGBL and VGBL products.

Expenses for Borrowings and Onlendings
1st Half/2003 1st Half /2004 % Variation   1st Qtr./2004 2nd Qtr./2004 % Variation
38 1,221 3,113.2 316 905 186.4
The increase is directly related to negative exchange variation of 18.72% in 1H03, against positive exchange variation of 7.56% in 1H04, impacting borrowings and onlendings indexed or denominated in foreign currency, offset by the decrease in average interest rates for the period.
The increase is directly related to growth in positive exchange variation from 0.67% in 1Q04 to 6.84% in 2Q04, impacting borrowings and onlendings indexed or denominated in foreign currency for the quarter.

Financial Margin
1st Half/2003 1st Half /2004 % Variation   1st Qtr./2004 2nd Qtr./2004 % Variation
5,977 6,411 7.3 3,330 3,081 (7.5)
The variation for the period was due to: (i) increase in interest income R$ 640, comprising growth in the average volume of business - R$ 637 and the increase in spread (interest rate plus exchange variation )- R$ 3; and (ii) the decrease in non-interest income - R$ 206, generated mainly by less profit on securities and treasury transactions for 1H04.
The variation for the quarter was due to: (i) increase in interest income operations - R$ 130, comprising the drop in the average volume of business - R$ 92 and by the increase in spread – R$ 38; and (ii) the decrease in non-interest income - R$ 379, generated mainly by less profit on securities and treasury transactions in 2Q04.

Expenses for Provision for Loan Losses
1st Half/2003 1st Half /2004 % Variation   1st Qtr./2004 2nd Qtr./2004 % Variation
1,395 1,075 (22.9) 561 514 (8.4)
Excluding: (i) additional provisions - R$ 312 in 1H03 and R$ 46 in 1H04; (ii) extraordinary provisions recorded in 1H04 and R$ 61, as a result of improved determination criteria and (iii) the extraordinary increase in provisions recorded - R$ 120 for 1H04, reflecting the reclassification of certain customer ratings, including the securitization of rural credit - R$ 54, expenses decreased by R$ 235, mainly as a result of our selective credit granting policy, improving our credit portfolio risk ratings.
Excluding: (i) additional provisions - R$ 20 in 2Q04 and R$ 26 in 1Q04 and (ii) extraordinary provisions recorded in 1Q04 and R$ 120, as a result of improved determination criteria, expenses increased by R$ 79, in line with the growth of the average volume of the credit portfolio in 2Q04.

Income on Commissions and Fees
1st Half/2003 1st Half /2004 % Variation   1st Qtr./2004 2nd Qtr./2004 % Variation
2,100 2,694 28.3 1,319 1,375 4.2
Growth for the period is derived substantially from the increase in the average volume of transactions and number of customers, highlighting in particular: (i) fund management - R$ 177; (ii) checking accounts - R$ 120; (iii) cards - R$ 88; and (iv) credit operations - R$ 100; and (v) consortium purchase plan management fee – R$ 31.
Growth for the quarter was mainly due to an increase in revenues with: (i) credit operations - R$ 39; (ii) fund management - R$ 9; and (iii) consortium purchase plan management fee – R$ 5.

Income from Insurance Premiums, Private Pension Plans and Savings Bonds
1st Half/2003 1st Half /2004 % Variation   1st Qtr./2004 2nd Qtr./2004 % Variation
5,418 5,983 10.4 2,994 2,989 (0.2)
The variation for the period is detailed below:
The variation for the quarter is detailed below:

a) Insurance Premiums Retained
1st Half/2003 1st Half /2004 % Variation   1st Qtr./2004 2nd Qtr./2004 % Variation
2,711 2,990 10.3 1,465 1,525 4.1
During the period, the increase was derived from growth in sales of Auto and Health products in the amounts of R$ 211 and R$ 54, respectively.
The increase in 2Q04 was especially due to growing Auto line sales - R$ 69.

b) Private Pension Plan Contributions
1st Half/2003 1st Half /2004 % Variation   1st Qtr./2004 2nd Qtr./2004 % Variation
2,157 2,291 6.2 1,223 1,068 (12.7)
This increase was derived from growth in VGBL and “PGBL”, product sales in the amount of R$ 237 and R$ 29, respectively, offset by the fall in sales of traditional pension plan products - R$ 132.
The variation was substantially due to the decrease in VGBL product sales - R$ 163.

c) Income on Savings Bonds
1st Half/2003 1st Half /2004 % Variation   1st Qtr./2004 2nd Qtr./2004 % Variation
550 702 27.6 306 396 29.4
This variation reflects the increase in sales and re-investment of bonds maturing during the period.
The variation reflects the increase in sales and re-investment of bonds matured in 2Q04.

Variation in Technical Reserves for Insurance, Pension Plans and Savings Bonds
1st Half/2003 1st Half /2004 % Variation   1st Qtr./2004 2nd Qtr./2004 % Variation
(1,663) (1,571) (5.5) (878) (693) (21.1)
The variation for the period is detailed below:
The variation for the quarter is detailed below:

a) Variation in Technical Reserves for Insurance
1st Half/2003 1st Half /2004 % Variation   1st Qtr./2004 2nd Qtr./2004 % Variation
(115) (48) (58.3) 22 (70) (418.2)
Variations in technical reserves for insurance are directly related to the production of premium in their respective effective periods. In 1H04, the majority of reserves were recorded in the Health line - R$ 33.
Variations in technical reserves for insurance are directly related to the production of premium in their respective effective periods. In 2Q04, the majority of reserves were recorded in the Auto line – R$ 30.

b) Variation in Technical Reserves for Pension Plans
1st Half/2003 1st Half /2004 % Variation   1st Qtr./2004 2nd Qtr./2004 % Variation
(1,535) (1,467) (4.4) (850) (617) (27.4)
Variations in technical reserves are directly related to the production of premium and contributions in diverse selling periods, against benefits and redemptions. The decrease for the period occurred in the VGBL product - R$ 1,474, offset by the increase in reserves recorded in the PGBL and traditional products in the amounts of R$ 836 and R$ 570, respectively.
Variations in technical reserves are directly related to the production of premium and contributions in diverse selling periods, against benefits and redemptions. The decreases for the quarter occurred in the PGBL and traditional products in the amounts of R$ 168 and R$ 126, respectively, partially offset by the increase in reserves recorded in the VGBL product – R$ 61.

c) Variation in Technical Reserves for Savings Bonds
1st Half/2003 1st Half /2004 % Variation   1st Qtr./2004 2nd Qtr./2004 % Variation
(13) (56) 330.8 (50) (6) (88.0)
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.

Insurance Claims
1st Half/2003 1st Half /2004 % Variation   1st Qtr./2004 2nd Qtr./2004 % Variation
(1,994) (2,514) 26.1 (1,232) (1,282) 4.1
The increase in expense with claims was due mainly 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; and (ii) the increase in indemnities in Health, Auto and Life lines.
The increase in expense with claims for the quarter was due mainly to: (i) the increase in indemnities in Auto line products; and (ii) the effect of improved calculation of the provision for claims incurred but not reported (IBNR) for the quarter, 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$ 145 in 2Q04 compared to R$ 131 in 1Q04.

Savings Bond Draws and Redemptions
1st Half/2003 1st Half /2004 % Variation   1st Qtr./2004 2nd Qtr./2004 % Variation
(515) (619) 20.2 (273) (346) 26.7
Growth for the period mainly reflects an increase in the amount recorded as a reserve for redemptions - R$ 91, due to increased sales of premium bond certificates.
Growth for the quarter mainly reflects an increase in the amount recorded as a reserve for redemptions - R$ 76, due to increased sales of premium bond certificates.

Insurance and Pension Plan Selling Expenses
1st Half/2003 1st Half /2004 % Variation   1st Qtr./2004 2nd Qtr./2004 % Variation
(363) (417) 14.9 (212) (205) (3.3)
The variation for the period is detailed below:
The variation for the quarter is detailed below:

a) Insurance Product Selling Expenses
1st Half/2003 1st Half /2004 % Variation   1st Qtr./2004 2nd Qtr./2004 % Variation
(296) (343) 15.9 (166) (177) (6.6)
The increase in these expenses for the period was generated mainly by growing Health and Auto-line products, of R$ 19 and R$ 16, respectively, even though the ratio of selling expenses to earned premium decreased for the period.
The increase in selling expenses was mainly generated by Life line products - R$ 10.

b) Pension Plan Selling Expenses
1st Half/2003 1st Half /2004 % Variation   1st Qtr./2004 2nd Qtr./2004 % Variation
(67) (74) 10.4 (46) (28) (39.1)
The increase for the period mainly reflects the growth in VGBL product sales.
The variation in selling expenses occurred in traditional products – R$ 16.

Expenses with Pension Plan Benefits and Redemptions
1st Half/2003 1st Half /2004 % Variation   1st Qtr./2004 2nd Qtr./2004 % Variation
(851) (1,123) 32.0 (533) (590) 10.7
The variation for the period was mainly due to the increase in the payment of redemptions – R$ 200, of traditional private pension plans.
The variation for the quarter was mainly due to the increase in the payment of redemptions – R$ 44, of traditional private pension plans.

Personnel Expenses
1st Half/2003 1st Half /2004 % Variation   1st Qtr./2004 2nd Qtr./2004 % Variation
(2,201) (2,411) 9.5 (1,177) (1,234) 4.8
The variation for the period reflects for the most part: (i) payroll decrease as a result of the synergy following the merger of banks acquired; fully offset by: (ii) salary increases (12.6%), pursuant to the collective-labor agreement in September/03; and (iii) consolidation of BBV Banco, Zogbi and BEM - R$ 168.
The variation for the quarter reflects substantially: (i) payroll decrease as a result of the synergy following the merger of banks acquired; fully offset by: (ii) concentration of vacation pay in 1Q04; and (iii) increased expenses for labor claims - R$ 40.

Other Administrative Expenses
1st Half/2003 1st Half /2004 % Variation   1st Qtr./2004 2nd Qtr./2004 % Variation
(2,254) (2,424) 7.5 (1,208) (1,216) 0.7
The variation was mainly due to increased expenses: (i) generated by consolidation of BBV Banco, Zogbi and BEM - R$ 178; (ii) publicity and advertising - R$ 36; (iii) leased assets - R$ 30; partially offset by less expense for: (iv) depreciation and amortization - R$ 46; and (v) data processing - R$ 22.
The increase was mostly due to the additional impact of one month’s consolidation of BEM and Zogbi – R$ 12.

Tax Expenses
1st Half/2003 1st Half /2004 % Variation   1st Qtr./2004 2nd Qtr./2004 % Variation
(506) (679) 34.2 (336) (343) 2.1
This variation was substantially generated by the increase in expenses for COFINS - R$ 110, as a result of the rise in the calculation base rate from 3% to 4% in September/03; and the increase in expenses for ISS - R$ 27, as a result of a change in legislation and CPMF - R$ 18.
The increase for the quarter reflects substantially increase in expenses for ISS – R$ 12, as a result of a change in legislation; offset by the decrease in expenses for COFINS - R$ 6.

Equity in the Earnings of Associated Companies
1st Half/2003 1st Half /2004 % Variation   1st Qtr./2004 2nd Qtr./2004 % Variation
(33) 122 (469.7) - 122 -
The variation was mainly derived from improved results in associated companies for 1H04 as compared to those determined in 1H03, which include R$ 79 of non-recurring income in associated Insurance Group companies.
The variation was mainly derived from improved results in associated companies in 2Q04, which include R$ 79 of non-recurring income in associated Insurance Group companies.

Other Operating Income
1st Half/2003 1st Half /2004 % Variation   1st Qtr./2004 2nd Qtr./2004 % Variation
1,532 537 (64.9) 257 280 8.9
The variation for the period was mainly generated by: (i) reversal of the provision for exchange variation - R$ 504; and other operating provisions - R$ 403, in 1H03; and (iii) a decrease following the non-consolidation of Latasa, sold in 2H03 – R$ 97.
The variation for the quarter substantially reflects: (i) recognition of revenue from fiscal incentives in subsidiaries - R$ 38; offset partially (ii) by the decrease in other financial revenue - R$ 18.

Other Operating Expenses
1st Half/2003 1st Half /2004 % Variation   1st Qtr./2004 2nd Qtr./2004 % Variation
(1,253) (1,494) 19.2 (691) (803) 16.2
The increase was generated in particular: (i) by expenses for amortization of goodwill, following the acquisition of BBV Banco, Zogbi and BEM R$ 59; and (ii) the increase in operating provisions - R$ 173, which include an addition to provisions for civil contingencies with insurance operations, in the amount of R$ 109, following calculation criteria improvements.
The variation was mainly due to the addition to provisions for civil contingencies with insurance operations, in the amount of R$ 109, following calculation criteria improvements.

Operating Income
1st Half/2003 1st Half /2004 % Variation   1st Qtr./2004 2nd Qtr./2004 % Variation
1,999 1,420 (29.0) 799 621 (22.3)
The variation for the period was due to: (i) increase in income on commissions and fees - R$ 594; (ii) increase in financial margin - R$ 434; (iii) less expenses for provision for loan losses - R$ 320; (iv) increase in equity and earnings in associated companies - R$ 155; (v) decrease in operating income (net of expenses) – R$ 1,236; (vi) increase in the personnel and administrative expenses - R$ 380; (vii) decrease in the margin of contribution of insurance, private pension plan and savings bond operations - R$ 293; and (viii) increased tax expense - R$ 173.
The variation for the quarter was due to: (i) increase in equity and earnings in associated companies - R$ 122; (ii) increase in income on commissions and fees - R$ 56; (iii) increase in the margin of contribution of insurance, private pension plan and savings bond operations - R$ 7; (iv) decrease in financial margin - R$ 249; (v) increase in the personnel and administrative expenses - R$ 65; (vi) increase in operating expenses (net of revenue) – R$ 89; (vii) increased tax expense - R$ 7; and (viii) increase in expenses for provision for loan losses – R$ 47.

Non-operating Income
1st Half/2003 1st Half /2004 % Variation   1st Qtr./2004 2nd Qtr./2004 % Variation
(777) (213) (72.6) (11) (202) 1,736.4
The variation is mainly due to extraordinary amortization of goodwill of Banco Mercantil - R$ 681 for 1H03; offset by extraordinary amortization of goodwill for 1H04 - R$ 135.
The variation reflects substantially: (i) extraordinary amortization of goodwill for 2Q04 - R$ 135; (ii) provisions recorded and income on sale of assets -R$ 35; and (iii) provision for loss on fiscal incentive investments - R$ 21.

Income Tax and Social Contribution
1st Half/2003 1st Half /2004 % Variation   1st Qtr./2004 2nd Qtr./2004 % Variation
(190) 46 (124.2) (179) 225 (225.7)
The variation in income tax and social contribution expense for the period reflects tax charges on pre-tax income, adjusted by additions and exclusions, as described in Note 35 to the financial statements.
The variation in income tax and social contribution expense for the quarter reflects tax charges on pre-tax income, adjusted by additions and exclusions. In 2Q04, deferred tax assets were recorded, derived from subsidiaries - R$ 89.

• Results by Business Segment - In millions of reais


1st Half 2004
Financial Insurance Group Other
Activities 		Amount
Eliminated 		Consolidated
Bradesco
Local Foreign Local Foreign
Income from financial intermediation 3,988  258  1,080  -  9  1  5,336 
Other operating income (expenses) (3,290) (89) (706) -  -  (1) (4,086)
Commissions and fees 2,389  9  142  -  338  (184) 2,694 
Personnel expenses (2,022) (12) (266) (1) (110) -  (2,411)
Other administrative expenses (2,261) (51) (260) -  (86) 234  (2,424)
Other revenue (expenses) (1,396) (35) (322) 1  (142) (51) (1,945)
Net income for 1H04 698  169  374  -  9  -  1,250 
Net income for 1H03 632  90  262  (2) 45  -  1,027 

• Increase in the Main Statement of Income Items

1H04 as compared to 1H03 - 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.

2Q04 in relation to 1Q04 - 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

1H04 as compared to 1H03- In millions of reais

2Q04 in relation to 1Q04 - 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


1st Half 1st Half 1st Qtr. 2nd Qtr.
In millions of reais 2003 2004 2004 2004
Credit operations 43,297  47,625  46,358  48,460 
Leasing operations 1,515  1,383  1,398  1,364 
Advances on foreign exchange contracts 5,676  6,169  6,124  6,162 
1 - Total - Average balance (quarterly) 50,488  55,177  53,880  55,986 
2 - Income (*) 5,790  6,908  3,204  3,704 
3 - Average return annualized exponentially (2/1) 24.3% 26.6% 26.0% 29.2%
(*)

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

Securities x Income on Security Transactions


In millions of reais 1st Half 1st Half 1st Qtr. 2nd Qtr.
2003  2004  2004  2004 
Securities 38,076  54,388  53,475  54,679 
Interbank investments 21,960  23,828  25,478  19,881 
Subject to repurchase agreements (16,308) (21,541) (23,938) (15,915)
Derivative financial instruments (409) (392) (196) (562)
4 - Total - Average balance (quarterly) 43,319  56,283  54,819  58,083 
5 - Income on security transactions (net of
expenses for repurchase agreements) (*) 3,577  4,758  2,176  2,582 
6 - Average rate annualized exponentially (5/4) 17.2% 17.6% 16.8% 19.0%
(*)

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 1st Half 1st Half 1st Qtr. 2nd Qtr.
2003 2004 2004 2004
7 - Total assets - Average balance (quarterly) 147,425  171,106  168,532  168,610 
8 - Income from financial intermediation 12,175  14,476  6,757  7,720 
9 - Average rate annualized exponentially (8/7) 17.2% 17.6% 17.0% 19.6%

Funding x Expenses


In millions of reais 1st Half 1st Half 1st Qtr. 2nd Qtr.
2003  2004  2004  2004 
Deposits 56,019  60,448  58,605  61,660 
Funds from acceptance and issuance of securities 4,615  6,830  6,704  6,821 
Interbank and interdepartmental accounts 1,834  1,527  1,746  1,135 
Subordinated debt 3,350  5,439  5,068  5,661 
10 - Total funding - average balance (quarterly) 65,818  74,244  72,123  75,277 
11 - Expenses (*) 1,932  3,366  1,228  2,138 
12 - Average rate annualized exponentially (11/10) 6.0% 9.3% 7.0% 11.9%
(*)

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 1st Half 1st Half 1st Qtr. 2nd Qtr.
2003  2004  2004  2004 
13 – Technical reserves for insurance, private pension plans and savings bonds - Average balance (quarterly) 20,979  27,945  27,178  28,713 
14 – Expenses (*) 1,658  1,351  652  699 
15 – Average rate annualized exponentially (14/13) 16.4% 9.9% 10.0% 10.1%
(*)

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 1st Half 1st Half 1st Qtr. 2nd Qtr.
2003  2004  2004  2004 
Borrowings 8,844  7,971  7,510  8,345 
Onlendings 6,903  7,838  7,795  7,971 
16 - Total borrowings and onlendings - Average balance (quarterly) 15,747  15,809  15,305  16,316 
17 - Expenses for borrowings and onlendings (*) (199) 538  169  369 
18 - Average rate annualized exponentially (17/16) (2.5%) 6.9% 4.5% 9.4%
(*)

Includes foreign exchange adjustments (Note 13a).

Total Assets x Financial Margin



In millions of reais 1st Half 1st Half 1st Qtr. 2nd Qtr.
2003  2004  2004  2004 
19 - Total assets - Average balance (quarterly) 147,425  171,106  168,532  168,610 
20 - Financial margin (*) 5,977  6,411  3,330  3,081 
21 - Average rate annualized exponentially (20/19) 8.3% 7.6% 8.1% 7.5%
(*)

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

Financial Market Indicators

Analysis of Financial Margin

Banco Bradesco’s consolidated financial margin (before PDD) totaled R$ 3,081 million for the second quarter of 2004 (2Q04), as compared to R$ 3,330 million for the first quarter (1Q04), down by R$ 249 million. However, financial margin for the first half of 2004 (1H04) totaled R$ 6,411 million, compared to R$ 5,977 million for the same period in 2003 (1H03), up by 7.3%.

In terms of quarterly comparison, certain macroeconomic factors had a direct impact on financial margin, particularly in 2Q04, which was affected by a highly volatile market with a negative repercussion on the price of Brazil’s local and foreign debt securities, among others and spiking medium and long-term interest rates in the futures market.

At Bradesco, the impact of this volatile environment was cushioned by the Bank’s strategic policy, ie, its efforts are focused on securing new transactions and business, mitigating market risk and offsetting decreases in interest rates and spread. This policy is more clearly evidenced when we compare results reported for the prior two quarters, which show that Bradesco’s sustainable business volume growth is directly related to operations with customers.

The average volume of the credit portfolios increased by 3.7% between the first and second quarters of 2004, particularly individual consumer credit which grew some 7%, improving the portfolio mix and increasing the segment’s share (largest spread) of total operations.

Emphasis should also be given to the performance of demand deposits from 1Q04 to 2Q04, which totaled average balances of R$ 12,757 million and R$ 13,073 million, respectively, a 2.5% increase for the second quarter. Comparing the growth of closing balances at March 30 and June 30, 2004, this increase was even higher, some 7.4%.

Insurance area transactions also contributed to improving the financial margin, as a result of the good performance by insurance, private pension plan and savings bond activities. Between the first and second quarters, the average volume of technical reserve grew by 5.6%, from R$ 27,178 million in 1Q04 to R$ 28,713 million in 2Q04.

In all, Bradesco’s consolidated financial margin between the first and second quarters of 2004 was down slightly by R$ 249 million. Business volume increases and growth in spread grew interest income by R$ 130 million, offset by a decrease in non-interest income, generated by less profit on securities and treasury transactions in 2Q04, in the amount of R$ 379 million.

Accordingly, the average financial margin rate, which reflects financial margin (before PDD) compared to the average balance of total assets was down slightly, between the first and second quarters of 2004, of 8.1% to 7.5%, respectively.

The strategy adopted by Bradesco becomes clearer when comparing longer periods, for example, 1H03 to 1H04, which evidences that the good performance in operations has compensated for the loss of revenue on investments indexed to the basic interest rate (drop in CDI from 11.8% to 7.6%, respectively), following the growth in volume of business with customers, which in turn boosted financial margin between the six-month periods. We highlight below the main areas of business growth:

The average balance of the Consolidated Bradesco credit portfolio grew by some 9.2%, between the six-month periods, in particular, operations with individual consumers, the average volume of which grew from R$ 13,816 million in 1H03 to R$ 16,638 million in 1H04, an increase of 20.4%.

Similarly, the average balances of deposits for 1H04 was up by 7.9%, from R$ 56,019 million in 1H03 to R$ 60,448 million in 1H04, especially, demand and savings deposits which were up by 8.9% and 7.8%, respectively.

Income from financial intermediation on insurance, private pension plan and savings bond operations for 1H04 were 12.6% higher compared to income for the same six-month period of 2003, mainly as a result of the increase in sale of products, with technical reserves totaling an average balance of R$ 27,945 million in 1H04, a growth rate of 33.2% between these periods.

Increased volumes and spreads were responsible for an increment in interest income, of R$ 640 million in financial margin, offset the decrease in non-interest income as a result of less profit on securities and treasury transactions in 1H04, in the amount of R$ 206 million. Net financial margin grew by R$ 434 million between 1H03 and 1H04.

The sustained growth of Bradesco’s financial margin is directly related to its policy for obtaining scale gains through the increase in business, accordingly, its efforts are centered on growing the number of customers, extending the scope of its sales outlets (Branches, PABs, Correspondent Banks, among others), market segmentation and continually improving products.

• Provision for Loan Losses

Movement of Allowance for Loan Losses - In millions of reais

2003 2004
  1st Qtr. 2nd Qtr. 1st Half 1st Qtr. 2nd Qtr. 1st Half
 
Credit portfolio 49,655  53,048  53,048  54.894  58,402  58,402 
 
Opening balance 3,665  3,902  3,665  4.059  4,192  4,059 
 
Amount recorded for the period 808  587  1,395  561  514  1,075 
Amount written off for the period (571) (551) (1,122) (505) (493) (998)
Balance derived from acquired institutions -  171  171  77  -  77 
 
Closing balance 3,902  4,109  4,109  4.192  4,213  4,213 
 
Specific provision 1,944  2,006  2,006  1.924  1,876  1,876 
Generic provision 1,156  1,286  1,286  1.384  1,432  1,432 
Additional provision 802  817  817  884  905  905 
 
Credit recoveries 96  145  241  106  124  230 

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

2003 2004
  March June March June
Allowance for loan losses - PDD (A) 3,902  4,109  4,192  4,213 
Credit operations (B) 49,655  53,048  54,894  58,402 
PDD on credit operations (A/B) 7.9% 7.7% 7.6% 7.2%

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

In millions of reais
2003 2004
  March June March June
Total provisions (1) 3,902  4,109  4,192  4,213 
Abnormal course credits (D to H) (2) 2,742  2,871  2,724  2,649 
PDD coverage ratio (1/2) 142.3% 143.1% 153.9% 159.0%

• Commissions and Fees

In millions of reais
2003 2004
  1st Qtr. 2nd Qtr. 1st Half 1st Qtr. 2nd Qtr. 1st Half
Checking account 245  265  510  314  316  630 
Cards 201  193  394  240  242  482 
Fund management 110  136  246  207  216  423 
Collection 139  146  285  150  151  301 
Credit operations 129  142  271  166  205  371 
Interbank charges 63  61  124  63  63  126 
Collection of taxes 45  45  90  50  50  100 
Custody and brokerage services 8  10  18  14  17  31 
Consortium purchase plan management fees -  4  4  15  20  35 
Other 77  81  158  100  95  195 
Total 1,017  1,083  2,100  1,319  1,375  2,694 

• Administrative and Personnel Expenses

In millions of reais
2003 2004
  1st Qtr. 2nd Qtr. 1st Half 1st Qtr. 2nd Qtr. 1st Half
Third-party services 176  193  369  196  218  414 
Communications 149  151  300  162  155  317 
Depreciation and amortization 128  138  266  123  118  241 
Financial system services 84  85  169  97  102  199 
Publicity and advertising 69  81  150  110  86  196 
Transport 80  87  167  94  88  182 
Leasing 68  62  130  77  83  160 
Rents 67  67  134  75  75  150 
Data processing 60  65  125  58  71  129 
Maintenance and repairs 53  61  114  60  68  128 
Materials 40  43  83  38  35  73 
Water, electricity and gas 28  28  56  34  31  65 
Travel 14  15  29  14  13  27 
Other 85  77  162  70  73  143 
Administrative expenses 1,101  1,153  2,254  1,208  1,216  2,424 
Remuneration 524  577  1,101  614  613  1,227 
Benefits 201  240  441  236  243  479 
Social charges 185  206  391  227  229  456 
Employee profit sharing 42  38  80  45  39  84 
Training 10  20  30  10  11  21 
Other 91  67  158  45  99  144 
Personnel expenses 1,053  1,148  2,201  1,177  1,234  2,411 
Total administrative and personnel expenses 2,154  2,301  4,455  2,385  2,450  4,835 

• Human Resources

At June 30, 2004, Bradesco’s employees, including staff at the subsidiaries, totaled 74,784. The following table presents the growth in the Bradesco headcount:

December 2004
  1998 1999 2000 2001 2002 2003 March June
Banco Bradesco 47,233  47,521  49,177  51,633  53,732  59,430  63,362  62,245 
Subsidiaries 7,501  7,301  6,575  6,943  8,729  9,407  10,649  10,601 
Subtotal Bradesco 54,734  54,822  55,752  58,576  62,461  68,837  74,011  72,846 
 
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 
 
Banco BEM -  -  -  -  -  -  502  488 
Subsidiaries -  -  -  -  -  -  80  6 
Subtotal BEM -  -  -  -  -  -  582  494 
 
Banco Zogbi -  -  -  -  -  -  83  3 
 
Subsidiaries -  -  -  -  -  -  1,514  1,441 
 
Subtotal Zogbi -  -  -  -  -  -  1,597  1,444 
 
Total 61,166  63,511  65,804  65,713  74,393  75,781  76,190  74,784 
 

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

Human Resources
June/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 32%            
  From 31 to 40 38%     Men 54%          From 6 to 10 years 11%     Non-managerial 52%  
            University 67%            
  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$ 2,411 million for the first half of 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
1st Half of 2004

Personnel Expenses by Business Segment
1st Half of 2004

Training

The Staff Training Department has created and deploys specific professional capacity building and enhancement programs providing employees with technical and behavioral skills, 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 27 courses with 331,838 employee participations. In 2004, 2 more technical and 10 behavioral programs were made available.

In May, the Human Resources and Marketing departments of the Bradesco Insurance Group launched, in partnership, the Insurance Universe - Universeg – for brokers selling the companies’ products. Courses are offered in-class or online, via TreiNetSeg, TreiNetPrev and TreiNetCapi with specific courses for the Insurance, Private Pension Plan and Savings Bond areas.

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 a 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 1,400 of our professionals successfully sat this exam.

From 1996, in partnership with educational institutions such as FIA, FIPE, FGV and Ibmec, 829 of the Organization’s employees obtained MBAs or other post-graduate degrees and specialization courses. In June 2004, two groups concluded their MBAs in banking business, designed for branch managers Organization-wide and developed in partnership with FGV - São Paulo and FGV - Rio de Janeiro, with 60 professionals qualified.

During the period from January to June 2004, 697 courses were given in 6,637 groups, with 215,463 employee participations and a total of 2,601,680 hours spent in training, as well as investments of R$ 21.3 million.

Increase in Employee Training Participation
Thousand Participations

Total Amount Invested in Training
In millions of reais

• Operating Efficiency

  In millions of reais
  Year 1H04(*)
  1999 2000 2001 2002 2003
Personnel expenses 2,784  3,221  3,549  4,076  4,780  4,990 
Employee profit sharing (104) (112) (160) (140) (171) (175)
Other administrative expenses 2,567  2,978  3,436  4,028  4,814  4,984 
Total (1) 5,247  6,087  6,825  7,964  9,423  9,799 
Financial margin = Gross income from financial intermediation less PDD 7,494  7,839  10,109  11,472  12,778  13,212 
Commissions and fees 2,100  3,043  3,473  3,712  4,557  5,151 
Income from insurance premiums, private pension plans and savings bonds 5,975  6,920  8,959  10,135  11,726  12,291 
Variation in technical reserves for insurance, pension plans and savings bonds (2,342) (3,001) (3,492) (2,785) (3,670) (3,578)
Claims - insurance operations and savings bond draws and redemptions (2,844) (2,866) (3,996) (4,336) (5,080) (5,704)
Insurance and pension plan selling expenses (635) (645) (689) (667) (762) (816)
Expenses with pension plan benefits and redemptions (558) (913) (1,370) (1,689) (2,363) (2,635)
Equity in the earnings of associated companies 127  156  71  65  5  160 
Other operating expenses (1,296) (1,376) (1,831) (3,148) (2,704) (2,945)
Other operating income 1,070  903  1,326  1,321  2,164  1,169 
Total (2) 9,091  10,060  12,560  14,080  16,651  16,305 
Efficiency ratio (%) = (1/2) 57.7  60.5  54.3  56.6  56.6  60.1 

(*)

Amounts accumulated over prior 12-month period.

Operating Efficiency Ratio (%)

The variation in the operating efficiency ratio (accumulated for the 12-month period) from 56.6% (December 2003) to 60.1% (June 2004) reflects the increase in operating costs generated by the synergy process of the institutions acquired in prior periods, in particular, the integration of BCN by Bradesco on February 25, 2004.

We also stress, in 2Q04, the negative impact of extraordinary provisions recorded mainly for IBNR and labor and civil contingencies. Disregarding the extraordinary events, the operating efficiency ratio would be 58.7%.

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 and expenditure with capitalization and analyzing their origin with the related areas, seeking to obtain a maximum cost to 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.

• Activity-Based Costing

As part of the Organization’s ongoing pursuit to optimize its results and performance, our cost management model will be supported by Activity-Based Costing (ABC) methodology which has already provided, among others, support for studies relating to the formation and negotiation of banking charges, costing information for performance and decision-making support management and for customer profitability purposes, and for the formation of a database for analyses regarding the unification and rationalization of the Bank’s different units.

The Organization is currently implementing ABM (Activity-Based Management) methodology which will rapidly lead to cost prevention practices and a pro-active approach as regards the identification of opportunities. Thus, at the same time as we improve our processes, we are also able to seamlessly integrate operating performance with strategic objectives, in the pursuit to create and/or sustain competitive advantages and value for both our customers and stockholders.

Accordingly, the future mission of the activity-based management model is to provide ongoing support for planning and controlling the Bank’s business processes and to promote the permanent improvement of operating and tactical issues and to provide a firm basis for their strategic gearing.






2 – Consolidated Equity Analysis








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

Balance Sheet Currency
Local Foreign (1)(2)
 
ASSETS
Current and long-term receivables 170,983  139,002  31,981 
Funds available 2,222  1,954  268 
Interbank investments 20,529  16,531  3,998 
Securities and derivative financial instruments 56,212  47,062  9,150 
Interbank and interdepartmental accounts 14,683  14,675  8 
Credit and leasing operations 47,488  40,289  7,199 
Other receivables and assets 29,849  18,491  11,358 
Permanent assets 5,271  4,802  469 
Investments 1,006  541  465 
Property and equipment in use and leased assets 2,326  2,322  4 
Deferred charges 1,939  1,939  - 
Total assets 176,254  143,804  32,450 
LIABILITIES
Current and long-term liabilities 162,500  134,487  28,013 
Deposits 64,133  60,347  3,786 
Deposits received under security repurchase agreements 16,746  15,584  1,162 
Funds from issuance of securities 7,080  1,880  5,200 
Interbank and interdepartmental accounts 1,090  414  676 
Borrowings and onlendings 16,817  7,312  9,505 
Derivative financial instruments 785  785  - 
Technical reserves for insurance, private pension plans
and savings bonds 29,478  29,450  28 
Other liabilities
- Subordinated debt 6,181  2,874  3,307 
- Other 20,190  15,841  4,349 
Deferred income 38  38  - 
Minority interest in subsidiaries 66  66  - 
Stockholders' equity 13,650  13,650  - 
Total 176,254  148,241  28,013 
 
Net position of assets and liabilities     4,437
Net position of derivatives (2)     (4,477)
Other memorandum accounts, net (3)     (490)
Net exchange position (liability)     (530)

(1)

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

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

Leasing commitments and others are controlled in memorandum accounts.

• Balance Sheet by Maturity at June 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 103,022  17,557  13,299  37,105  -  170,983 
Funds available 2,222  -  -  -  -  2,222 
Interbank investments 18,958  630  324  617  -  20,529 
Securities and derivative financial
instruments (1) 39,737  777  3,829  11,869  -  56,212 
Interbank and interdepartmental accounts 14,392  7  8  276  -  14,683 
Credit and leasing operations 8,288  15,482  7,784  15,934  -  47,488 
Other receivables and assets 19,425  661  1,354  8,409  -  29,849 
Permanent assets 58  292  351  2,960  1,610  5,271 
Investments -  -  -  -  1,006  1,006 
Property and equipment in use and leased assets 20  102  123  1,477  604  2,326 
Deferred charges 38  190  228  1,483  -  1,939 
Total 103,080  17,849  13,650  40,065  1,610  176,254 
LIABILITIES
Current and long-term liabilities 93,024  14,288  10,301  44,887  -  162,500 
Deposits(2) 39,809  6,194  4,024  14,106  -  64,133 
Deposits received under security repurchase
agreements 14,851  75  473  1,347  -  16,746 
Funds from the acceptance and issuance of
securities 1,964  1,826  483  2,807  -  7,080 
Interbank and interdepartmental accounts 1,090  -  -  -  -  1,090 
Borrowings and onlendings 1,913  4,695  4,224  5,985  -  16,817 
Derivative financial instruments 712  22  37  14  -  785 
Technical reserves for insurance, private
pension plans and savings bonds (2) 18,209  705  260  10,304  -  29,478 
Other liabilities:
- Subordinated debt 51  23  -  6,107  -  6,181 
- Other 14,425  748  800  4,217  -  20,190 
Deferred income 38  -  -  -  -  38 
Minority interest in subsidiaries -  -  -  -  66  66 
Stockholders' equity -  -  -  -  13,650  13,650 
Total 93,062  14,288  10,301  44,887  13,716  176,254 
Accumulated net assets in 2004 10,018  13,579  16,928  12,106  -  - 
Accumulated net assets in 2003 11,543  19,827  21,591  11,507  -  - 

(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.

• Comparative Balance Sheet - In millions of reais

ASSETS June
2003 		June
2004 		%
Variation 		March
2004 		June
2004 		%
Variation
 
Current assets and long-term receivables 149,316  170,983  14.5  155,590  170,983  9.9 
Funds available 1,773  2,222  25.3  2,285  2,222  (2.8)
Interbank investments 20,996  20,529  (2.2) 19,232  20,529  6.7 
Securities and derivative financial instruments 42,796  56,212  31.3  53,152  56,212  5.8 
Interbank and interdepartmental accounts 15,024  14,683  (2.3) 12,883  14,683  14.0 
Restricted deposits:
Brazilian Central Bank 13,792  13,637  (1.1) 12,422  13,637  9.8 
Other 1,232  1,046  (15.1) 461  1,046  126.9 
Credit and leasing operations 42,519  47,488  11.7  44,120  47,488  7.6 
Credit and leasing operations 46,436  51,511  10.9  48,136  51,511  7.0 
Allowance for loan and leasing losses (3,917) (4,023) 2.7  (4,016) (4,023) 0.2 
Other receivables and assets 26,208  29,849  13.9  23,918  29,849  24.8 
Foreign exchange portfolio 13,131  15,126  15.2  9,542  15,126  58.5 
Other receivables and assets 13,269  14,913  12.4  14,552  14,913  2.5 
Allowance for losses (192) (190) (1.0) (176) (190) 8.0 
Permanent assets 5,173  5,271  1.9  5,381  5,271  (2.0)
Investments 494  1,006  103.6  847  1,006  18.8 
Property and equipment in use and leased assets 2,666  2,326  (12.8) 2,377  2,326  (2.1)
Deferred charges 2,013  1,939  (3.7) 2,157  1,939  (10.1)
Deferred charges 562  540  (3.9) 534  540  1.1 
Goodwill on acquisition of subsidiaries, net of amortization 1,451  1,399  (3.6) 1,623  1,399  (13.8)
Total 154,489  176,254  14.1  160,971  176,254  9.5 

LIABILITIES June
2003 		June
2004 		%
Variation 		March
2004 		June
2004 		%
Variation
Current and long-term liabilities 141,823  162,500  14.6  147,251  162,500  10.4 
Deposits 56,822  64,133  12.9  59,186  64,133  8.4 
Demand deposits 11,525  13,541  17.5  12,605  13,541  7.4 
Savings deposits 20,736  22,457  8.3  21,929  22,457  2.4 
Interbank deposits 40  47  17.5  63  47  (25.4)
Time deposits 24,521  28,088  14.5  24,589  28,088  14.2 
Deposits received under security repurchase agreements 18,569  16,746  (9.8) 15,084  16,746  11.0 
Funds from acceptance and issuance of securities 5,745  7,080  23.2  6,561  7,080  7.9 
Securities issued abroad 5,038  5,989  18.9  5,472  5,989  9.4 
Other resources 707  1,091  54.3  1,089  1,091  0.2 
Interbank and interdepartmental accounts 1,735  1,090  (37.2) 1,180  1,090  (7.6)
Borrowings and onlendings 14,572  16,817  15.4  15,816  16,817  6.3 
Borrowings 7,711  8,895  15.4  7,797  8,895  14.1 
Onlendings 6,861  7,922  15.5  8,019  7,922  (1.2)
Derivative financial instruments 310  785  153.2  339  785  131.6 
Technical reserves for insurance, private pension plans and savings bonds 22,732  29,478  29.7  27,947  29,478  5.5 
Other liabilities 21,338  26,371  23.6  21,138  26,371  24.8 
Foreign exchange portfolio 7,854  8,750  11.4  4,546  8,750  92.5 
Taxes and social security contributions, social
and statutory payables 4,642  4,771  2.8  4,633  4,771  3.0 
Subordinated debt 3,338  6,181  85.2  5,141  6,181  20.2 
Sundry 5,504  6,669  21.2  6,818  6,669  (2.2)
Deferred income 37  38  2.7  27  38  40.7 
Minority interest in subsidiaries 107  66  (38.3) 68  66  (2.9)
Stockholders’ equity 12,522  13,650  9.0  13,625  13,650  0.2 
Total 154,489  176,254  14.1  160,971  176,254  9.5 

• Equity Analysis - In millions of reais

Funds Available
June/2003 June/2004 % Variation   March/2004 June/2004 % Variation
1,773 2,222 25.3 2,285 2,222 (2.8)
This increase reflects mainly the increase in the volume of local currency cash funds.
The volume of foreign currency cash funds decreased by R$ 260, partially offset by the increase in the volume of local currency cash funds.

Interbank Investments
June/2003 June/2004 % Variation   March/2004 June/2004 % Variation
20,996 20,529 (2.2) 19,232 20,529 6.7
The variation in this account balance for the period reflects for the most part: (i) the decrease in the third-party portfolio position of open market investments, down by R$ 3,156, partially offset by: (ii) the increase in interbank investments up by R$ 2,010; and (iii) increase in the own portfolio position of open market investments up by R$ 631.
This growth mainly reflects: (i) increase in the third-party portfolio position of open market investments, up by R$ 1,052; and (ii) increase in the own portfolio position of open market investments, up by R$ 134.

Securities (TVM) and Derivative Financial Instruments
June/2003 June/2004 % Variation   March/2004 June/2004 % Variation
42,796 56,212 31.3 53,152 56,212 5.8
The increase for the period is due substantially to: (i) additional funds derived from the increase in funding, particularly deposits and technical reserves, as well as issuance of securities (subordinated and securitized debt); (ii) by positive exchange variation of 8.20% for the period, impacting foreign-currency indexed and/or denominated securities; partially mitigated by: (iii) redemption/maturity of securities during the period.
Growth for the quarter is mainly derived from: (i) additional funds derived from the increase in funding, particularly deposits and technical reserves; (ii) issuance of subordinated debt; and (iii) by positive exchange variation of 6.84% for the quarter, impacting foreign-currency indexed and/or denominated securities; partially mitigated by redemption/maturity of securities during the quarter.

Interbank and Interdepartmental Accounts
June/2003 June/2004 % Variation   March/2004 June/2004 % Variation
15,024 14,683 (2.3) 12,883 14,683 14.0
The decrease reflects mainly the reduction in compulsory Brazilian Central Bank (BACEN) deposits, as a result of the change in the compulsory deposit rate on demand deposits from 60% in June/03 to 45% in June/04, partially offset by the increase in the average volume of demand and savings deposits for the period.
The variation reflects substantially the increase in compulsory BACEN deposits, as a result of the increase in the average volume of demand deposits for the quarter.

Credit and Leasing Operations
June/2003 June/2004 % Variation   March/2004 June/2004 % Variation
53,048 58,402 10.1 54,894 58,402 6.4
The growth was mainly derived from: (i) increase in the demand for credit, in particular, auto financing in the individual consumer segment and rural credit in the corporate segment; (ii) positive exchange variation of 8.20% for the period, affecting foreign-currency indexed and/or denominated contracts; (iii) consolidation of Banco Zogbi and Banco BEM; (iv) contract adjustments; and was partially offset by: (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.
The variation for the quarter reflects substantially: (i) increase in the demand for credit, in particular, rural credit both in the individual and corporate segments and auto financing in the consumer segment; (ii) positive exchange variation of 6.84% for 2Q04, affecting foreign-currency indexed and/or denominated contracts; (iii) contract adjustments; and was partially offset by: (iv) contract settlements.
N.B. Includes advances on foreign exchange contracts and other receivables and does not include the allowance for loan losses.

Allowance for Loan Losses (PDD)
June/2003 June/2004 % Variation   March/2004 June/2004 % Variation
4,109 4,213 2.5 4,192 4,213 0.5
During the period, the ratio of total PDD to the credit portfolio dropped from 7.7% in June/2003 to 7.2% in June/2004, and the ratio of allowance coverage to the abnormal course credit portfolio, rated from D to H, increased from 143.1% in June/03 to 159.0% in June/04. These ratios evidence the improvement in credit portfolio quality as a result of our safe, selective and consistent credit granting strategy. Amounts of R$ 2,130 and R$ 2,102 were recorded as allowance for loan losses and amounts written-off, respectively, during the period. Excess allowance in relation to minimum requirements increased from R$ 817 in June/03 to R$ 905 in June/04.
The ratio of PDD to the credit portfolio dropped from 7.6% in 1Q04 to 7.2% in 2Q04 and the ratio of allowance to the abnormal course credit portfolio, rated from D to H, increased from 153.9% in 1Q04 to 159.0% in 2Q04, reflecting the quality of the portfolio. During the quarter, PDD was recorded in the amount of R$ 514 and an amount of R$ 493 was written off. Excess allowance in relation to minimum requirements increased from R$ 884 in 1Q04 to R$ 905 in 2Q04.

Other Receivables and Assets
June/2003 June/2004 % Variation   March/2004 June/2004 % Variation
25,602 29,407 14.9 23,402 29,407 25.7
This variation is mainly due to the increase in the volume of the fx portfolio and to positive exchange variation of 8.20% for the period, as well as the increase in credit card transactions.
N.B. This total is less (net of corresponding PDD) an amount of R$ 606 in June/03 and R$ 442 in June/04, allocated to the “Credit and leasing operations” and “Allowance for loan losses” accounts.
This fluctuation reflects substantially the increase in the volume of the fx portfolio and the positive exchange variation of 6.84% in 2Q04.
N.B. This total is less (net of corresponding PDD) an amount of R$ 516 in March/04 and R$ 442 in June/04, allocated to the “Credit and leasing operations” and “Allowance for loan losses” accounts.

Permanent Assets
June/2003 June/2004 % Variation   March/2004 June/2004 % Variation
5,173 5,271 1.9 5,381 5,271 (2.0)
The variation for the period was mainly due to: (i) increase as a result of the transfer of the investment in Banco Espírito Santo (BES) from current to permanent assets – R$ 380; partially offset by: (ii) non-consolidation of permanent assets of Latasa - R$ 306, following its sale in December/03.
The decrease for the quarter reflects for the most part amortization of goodwill in subsidiaries - R$ 227, of which R$ 135 was amortized on an extraordinary basis, partially offset by increased equity in earnings determined in associated companies, in particular, the investment in IRB-Brasil Resseguros S.A.

Demand Deposits
June/2003 June/2004 % Variation   March/2004 June/2004 % Variation
11,525 13,541 17.5 12,605 13,541 7.4
This increase is mainly derived from the increase in the number of customers.
This increase reflects substantially the increase in the number of customers.

Savings Deposits
June/2003 June/2004 % Variation   March/2004 June/2004 % Variation
20,736 22,457 8.3 21,929 22,457 2.4
This increase reflects mainly: (i) remuneration of deposits (TR + 0.5% p.m.) - 9.12% for the period; (ii) increase in the number of customers; and was partially offset by (iii) withdrawals for the period.
This increase reflects substantially: (i) increase in the number of customers; (ii) remuneration of deposits (TR + 0.5% p.m.) - 1.93% for the quarter; and was partially offset by (iii) withdrawals in 2Q04.

Time Deposits
June/2003 June/2004 % Variation   March/2004 June/2004 % Variation
24,521 28,088 14.5 24,589 28,088 14.2
The increase was due to the volume of remuneration appropriated mainly by institutional investors, net of redemptions made during the period.
The increase reflects substantially the volume of remuneration appropriated by institutional investors, net of redemptions made during the period.

Interbank Deposits
June/2003 June/2004 % Variation   March/2004 June/2004 % Variation
40 47 17.5 63 47 (25.4)
This growth reflects the increase in interbank funding within the financial system.
This variation reflects the decrease in interbank funding within the financial system.

Deposits Received Under Security Repurchase Agreements
June/2003 June/2004 % Variation   March/2004 June/2004 % Variation
18,569 16,746 (9.8) 15,084 16,746 11.0
The variation in this account balance for the period was due mostly to: (i) decrease in the third-party portfolio – R$ 3,140; partially offset by: (ii) increase in own portfolio – R$ 1,217.
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$ 9,452 (June/03) and R$ 8,537 (June/04).
The increase in this account balance for the quarter was due mostly to: (i) increase in the third-party portfolio – R$ 1,068; and (ii) increase in own portfolio - R$ 494.
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$ 8,108 (March/04) and R$ 8,537 (June/04).

Funds from Issuance of Securities
June/2003 June/2004 % Variation   March/2004 June/2004 % Variation
5,745 7,080 23.2 6,561 7,080 7.9
This increase mainly reflects: (i) positive exchange variation of 8.20% for the period, impacting securities issued abroad; (ii) new securities issued abroad (securitization of the future flows of payment orders and credit card bills); and partially offset by: (iii) settlement of eurobond issues.
This growth was mainly due to: (i) positive exchange variation of 6.84% for 2Q04, impacting securities issued abroad; and (ii) new securities issued abroad (commercial paper and eurobonds), net of payments.

Interbank and Interdepartmental Accounts
June/2003 June/2004 % Variation   March/2004 June/2004 % Variation
1,735 1,090 (37.2) 1,180 1,090 (7.6)
The variation was mainly generated by a lower volume of unsettled collection and money orders in June/04 as compared to June/03.
The variation was due mainly to the lower volume of unsettled collection and money orders in 2Q04.

Borrowings and Onlendings
June/2003 June/2004 % Variation   March/2004 June/2004 % Variation
14,572 16,817 15.4 15,816 16,817 6.3
The oscillation mainly reflects: (i) positive exchange variation of 8.20% for the period, affecting the foreign borrowings and onlendings account, indexed and or denominated in foreign currency; (ii) the increase in the volume of funds obtained in Brazil via onlendings from BNDES/FINAME; and (iii) new funding transactions abroad during the period.
The oscillation reflects the increase in the foreign loans account, in the amount of R$ 1,091, derived from positive exchange variation of 6.84% in 2Q04 and new funding transactions.

Other Liabilities and Derivative Financial Instruments
June/2003 June/2004 % Variation   March/2004 June/2004 % Variation
27,462 33,415 21.7 27,543 33,415 21.3
The increase was due for the most part to: (i) new issuance of subordinated debt in foreign currency; (ii) increase in the volume of the fx portfolio; and (iii) positive exchange variation of 8.20% for the period.
N.B. Excludes advances on foreign exchange contracts of R$ 5,814 and R$ 6,259, allocated to the specific account in credit operations in June/03 and June/04, respectively.
The increase for the quarter was mainly due to: (i) increase in the volume of the fx portfolio - R$ 4,204; (ii) new issuance of subordinated debt in foreign currency – R$ 855; and (iii) positive exchange variation of 6.84% in 2Q04.
N.B. Excludes advances on foreign exchange contracts of R$ 6,065 and R$ 6,259, allocated to the specific account in credit operations in March/04 and June/04, respectively.

Technical Reserves for Insurance, Private Pension Plans and Savings Bonds
June/2003 June/2004 % Variation   March/2004 June/2004 % Variation
22,732 29,478 29.7 27,947 29,478 5.5
The variation 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 variation for the quarter reflects mainly the increase in the sale of private supplementary pension plans and insurance policies, especially, PGBL and VGBL products, for which reserves were accordingly recorded.

Minority Interest in Subsidiaries
June/2003 June/2004 % Variation   March/2004 June/2004 % Variation
107 66 (38.3) 68 66 (2.9)
The decrease for the period was mainly due to the sale of our stake in Sete Quedas Empreendimentos Imobiliários e Participações Ltda. and BEA.
This decrease was mainly due to a lower amount of minority interest in results determined for 2Q04.

Stockholders’ Equity
June/2003 June/2004 % Variation   March/2004 June/2004 % Variation
12,522 13,650 9.0 13,625 13,650 0.2
This variation reflects substantially: (i) appropriation of net income for the period - R$ 2,529, mark-to-market adjustment of securities and derivatives - R$ 15 and others - R$ 2; and offset by interest attributed to own capital, paid and accrued - R$ 1,365 and acquisition of own shares - R$ 53.
The variation was due to the appropriation of net income for 2Q04 - R$ 641, offset by interest attributed to own capital, paid and accrued - R$ 326, and by the decrease in the reserve for mark-to-market adjustment of securities and derivatives - R$ 290.

• Securities - In millions of reais

Consolidated Portfolio Composition by Issuer at June 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 1,921  3,050  7,674  28,044  40,689  41,159  (470)
Financial Treasury Notes 1,023  2,432  1,501  13,379  18,335  18,344  (9)
National Treasury Bonds 301  90  5,921  370  6,682  6,710  (28)
Federal Treasury Notes 304  343  252  7,557  8,456  8,478  (22)
Brazilian foreign debt notes 206  -  -  6,358  6,564  6,947  (383)
Central Bank Notes 5  64  -  58  127  121  6 
Other 82  121  -  322  525  559  (34)
 
CORPORATE BONDS 3,135  242  101  3,508  6,986  6,560  426 
Debentures 108  3  11  1,147  1,269  1,326  (57)
Shares 1,827  -  -  -  1,827  1,338  489 
Certificates of Bank Deposit 201  98  4  817  1,120  1,121  (1)
Corporate bonds abroad 26  27  62  1,385  1,500  1,503  (3)
Derivative financial
instruments 718  73  11  16  818  807  11 
Other 255  41  13  143  452  465  (13)
PURCHASE AND SALE
COMMITMENTS (3) 241  3,004  33  5,259  8,537  8,537  - 
Total at June 30, 2004 5,297  6,296  7,808  36,811  56,212  56,256  (44)
Total at June 30, 2003 8,840  4,276  7,177  22,502  42,795  42,609  186 

Composition by Maturity at June 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) 2,854  5,802  7,453  25,365  41,474  41,596  (122)
 
Financial Treasury Notes 1,008  2,124  1,411  13,117  17,660  17,663  (3)
Purchase and Sale Commitments (3) 241  3,004  33  5,259  8,537  8,537  - 
National Treasury Bonds 301  90  5,915  365  6,671  6,699  (28)
Federal Treasury Notes 303  343  19  3,908  4,573  4,606  (33)
Debentures 106  3  11  772  892  920  (28)
Certificates of Bank Deposit 22  36  2  809  869  869  - 
Brazilian foreign debt notes 27  -  -  714  741  754  (13)
Shares 533  -  -  -  533  533  - 
Other 313  202  62  421  998  1,015  (17)
 
Securities available for sale (2) 1,669  422  254  7,061  9,406  9,338  68 
 
Brazilian foreign debt notes 125  -  -  4,204  4,329  4,700  (371)
Corporate bonds abroad 26  -  -  1,315  1,341  1,351  (10)
Shares 1,293  -  -  -  1,293  804  489 
Federal Treasury Notes -  -  143  722  865  855  10 
National Treasury Bonds 15  308  90  261  674  680  (6)
Debentures 2  -  -  375  377  406  (29)
Brazilian foreign debt notes 178  62  3  8  251  251  - 
Other 30  52  18  176  276  291  (15)
 
Securities held to maturity (7) 55  -  90  4,370  4,515  4,515  - 
 
Federal Treasury Notes -  -  90  2,926  3,016  3,016  - 
Brazilian foreign debt notes 54  -  -  1,441  1,495  1,495  - 
Central Bank Notes 1  -  -  -  1  1  - 
Other -  -  -  3  3  3 
 
Derivative financial instruments 718  73  11  16  818  807  11 
Total at June 30, 2004 5,296  6,297  7,808  36,812  56,213  56,256  (43)
Total at June 30, 2003 8,840  4,276  7,177  22,503  42,796  42,610  186 
Derivative financial instruments (Liabilities)
 
Total at June 30, 2004 (712) (22) (37) (13) (784) (774) (10)
 
Total at June 30, 2003 (226) (29) (27) (28) (310) (286) (24)

(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 bank’s 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$ 762 million (in June 2003 - R$ 241 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 June 30, 2004.

Summary of the Classification of Securities at June 30, 2004

Financial Insurance/
Savings Bond 		Private
Pension Plan 		Other
Activities 		Total %
Trading securities 14,857  4,236  22,296  85  41,474  73.8
Securities available for sale 6,899  1,229  1,257  21  9,406  16.7
Securities held to maturity 1,589  -  2,926  -  4,515  8.0
Derivative financial instruments 817  -  -  1  818  1.5
Total at June 30, 2004 24,162  5,465  26,479  107  56,213  100.0
Total at June 30, 2003 18,395  3,890  20,344  167  42,796  100.0

• 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
  March June March June
Discount of trade receivables and other loans 23,119  24,826  24,542  25,731 
Financings 14,862  16,082  17,727  18,815 
Rural and agribusiness loans 3,899  4,007  4,493  5,613 
Leasing operations 1,442  1,521  1,375  1,352 
Advances on foreign exchange contracts 5,733  5,814  6,065  6,259 
Credit operations - Subtotal 49,055  52,250  54,202  57,770 
Other receivables 600  798  692  632 
Total credit operations 49,655  53,048  54,894  58,402 
 
Sureties and guarantees recorded in
memorandum accounts 4,308  5,581  6,480  6,751 

By Economic Activity Sector - In millions of reais

2004
  March % June %
Public Sector 473  0.8  608  1.0 
Private Sector 54,421  99.2  57,794  99.0 
Manufacturing 17,544  32.0  18,530  31.7 
Commerce 7,942  14.5  8,698  14.9 
Financial intermediation 844  1.5  846  1.5 
Services 10,830  19.7  10,800  18.5 
Agriculture, livestock raising, fishing, forest
development and management 808  1.5  1,092  1.9 
Consumers 16,453  30.0  17,828  30.5 
 
Total 54,894  100.0  58,402  100.0 

By Segment

At the end of the first half of 2004, 99.0% of the credit portfolio was directed to the private sector, with no significant movement compared with the prior quarter. By economic activity sector, manufacturing maintained the majority of credit volume, with a 31.7% share of total operations, particularly food and beverage, steel, metal products and mechanics. Credits directed to the service sector, including financial intermediaries, comprised 20.0%, whereas commerce and farming/livestock activities recorded a 14.9% and 1.9% portfolio share, respectively. Loans to consumers comprised 30.5% of the portfolio.

Portfolio Performance

Performance of the credit portfolio for the second quarter of 2004 reflected, albeit timidly, the continuing expansion of economic activity, evidenced by the ongoing good export sector performance and gradual recovery of internal demand.

Specifically in the case of consumers, increased consumption is related to the recovery of employment levels and income, especially in regions outside of major urban centers, prompting a greater volume of financing of consumer durables and personal credit operations, in particular those discounted directly from payroll.

As a result, the balance of Bradesco’s consolidated credit portfolio at June 30 totaled R$ 58.4 billion, an increase of 6.4%, as compared to March 31, or 10.1%, annualized.

In the second half of 2004, economic growth is expected to gain rhythm, also considering seasonal factors, and the projected increase in consumption and private investment should have a positive effect on credit expansion and the country’s GNP.

Composition of the Credit Portfolio by Risk Levels

The classification and quality of the credit portfolio by risk level, at the end of June 2004, remained stable in comparison with the first quarter of 2004. The operations concentrated from levels AA to C, classified by BACEN as normal course operations, totaled 91.3% of the accumulated balance. 2.8% 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 5.9% 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 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 15,966  27.3  -  -  -  -  -  - 
A 22,150  65.3  -  -  111  111  66  177 
B 5,582  74.8  1  4  51  56  19  75 
C 9,611  91.3  5  16  267  288  333  621 
D 1,629  94.1  17  26  120  163  211  374 
E 416  94.8  38  44  43  125  68  193 
F 734  96.0  84  71  212  367  115  482 
G 384  96.7  93  74  101  268  93  361 
H 1,930  100.0  908  495  527  1,930  -  1,930 
Total at June
30, 2004 58,402  -  1,146  730  1,432  3,308  905  4,213 
Total at March
31, 2004 54,894  -  1,193  731  1,384  3,308  884  4,192 

(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 June 2004 totaled R$ 4,213 million, corresponding to 7.2% of total credit operations. However, of this amount, only 44.5% effectively comprises overdue operations (past due and falling due), compared to 45.9% in March and the remaining portion is recorded as a precaution only, based on the customers' internal classification or to cover specific and general portfolio risks.

Movement of the Portfolio between June 2003 and June 2004

The performance of the consolidated credit portfolio over the prior twelve months up to June 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 June 2003.

Portfolio Movement between June 2003 and June 2004

Borrowers remaining
from June 2003 		New borrowers between
June 2003 and
June 2004 		Total credit at
June 2004
Level In millions
of reais 		% In millions
of reais 		% In millions
of reais 		%
AA to C 44,695  90.6  8,615  94.8  53,309  91.3 
D 1,509  3.1  120  1.3  1,629  2.8 
E to H 3,105  6.3  358  3.9  3,464  5.9 
Total 49,309  100.0  9,093  100.0  58,402  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 91.3% at the end of June 2004, compared to 90.4% at the end of March 2004.

Concentration of Credit Portfolio – In millions of reais

2003 2004
  March % June % March % June %
Largest borrower 800  1.6  784  1.5  781  1.4  779  1.3 
10 largest borrowers 4,409  8.9  4,871  9.2  5,352  9.7  5,536  9.5 
20 largest borrowers 6,959  14.0  7,926  14.9  8,137  14.8  8,497  14.5 
50 largest borrowers 12,052  24.3  13,265  25.0  13,073  23.8  14,028  24.0 
100 largest borrowers 16,052  32.3  17,305  32.6  17,085  31.1  18,234  31.2 

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 March June March June
Total Credit Operations 49,655  53,048  54,894  58,402 
- Consumer 13,422  14,406  16,453  17,828 
- Corporate 36,233  38,642  38,441  40,574 
Existing Allowance 3,902  4,109  4,192  4,213 
- Specific 1,943  2,006  1,924  1,876 
- Generic 1,156  1,286  1,384  1,432 
- Additional 803  817  884  905 
 
Specific Allowance/Existing Allowance (%) 49.8  48.8  45.9  44.5 
Existing Allowance/Total Credit Operations (%) 7.9  7.7  7.6  7.2 
 
Normal Course Operations (from AA to C)/Total Credit Operations (%) 90.8  90.2  90.4  91.3 
Operations under risk management (D)/Total Credit Operations (%) 2.8  3.4  3.3  2.8 
Abnormal Course Operations (from E to H)/Total Credit Operations (%) 6.4  6.4  6.3  5.9 
 
Credit Operations (D) 1,370  1,841  1,837  1,629 
Existing Allowance (D) 372  520  438  374 
Allowance/Credit Operations (D) (%) 27.2  28.2  23.8  23,0 
Credit Operations (from E to H) 3,223  3,375  3,439  3,464 
Existing Provision (from E to H) 2,799  2,939  2,951  2,966 
Allowance/Credit Operations (from E to H) (%) 86.8  87.1  85.8  85.6 

The figures at the end of June 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
March June
Days to maturity Total Up to
30 days 		From 31 to
180 days 		From 181 to
360 days 		More than
360 days 		Total
Demand 12,605  13,541  -  -  -  13,541 
Savings 21,929  22,456  -  -  -  22,456 
Interbank 63  41  6  -  -  47 
Time 24,589  3,771  6,188  4,024  14,106  28,089 
 
Total 59,186  39,809  6,194  4,024  14,106  64,133 

Demand Deposits - In billions of reais

Savings Accounts

The balance of Bradesco Organization Savings Accounts totaled R$ 22.4 billion in deposits at the end of the first half of 2004, corresponding to a 18.9% 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 Accounts

• Asset Management

BRAM - Bradesco Asset Management rated Aaa(MQ) by Moody’s

Based on its detailed quality assessment methodology, Moody’s rated BRAM as Aaa(MQ), the highest rating according to the scale defined by this agency. The score was based on Moody’s evaluation that the company presents an excellent management and control environment, enjoys an outstanding and competitive position and has a clearly focused strategic vision, an efficient organizational structure, highly qualified management and work teams, rigorous investment policy and effective operating and risk controls.

This rating confirms Bradesco’s commitment to quality and consistent results.

Net assets - In millions of reais

2003 2004
  March June March June
Investment funds 54,388  60,949  75,217  78,059 
Managed portfolios 9,388  9,279  8,828  8,757 
Total 63,776  70,228  84,045  86,816 

Distribution of Assets - In millions of reais

2003 2004
  March June March June
Investment funds - fixed return 52,818  59,062  72,487  75,579 
Investment funds - floating rate 1,570  1,887  2,730  2,480 
Total 54,388  60,949  75,217  78,059 
Fixed return customer portfolios 6,766  6,647  6,570  6,561 
Floating rate customer portfolios 2,622  2,632  2,258  2,196 
Total 9,388  9,279  8,828  8,757 
Total fixed-return funds 59,584  65,709  79,057  82,140 
Total floating-rate funds 4,192  4,519  4,988  4,676 
Total 63,776  70,228  84,045  86,816 

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

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

  Number Quotaholders
Investment funds 498  2,704,987 
Customer portfolios 116  415 
Total 614  2,705,402 





3 – Consolidated Information for the Period and Operating Structure








• Corporate Organization Chart

MAJOR STOCKHOLDERS


(1)

No single stockholder holds more than 4% of capital.
(2)

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

ON = COMMON STOCK
PN = PREFERRED STOCK

MAIN SUBSIDIARIES AND ASSOCIATED COMPANIES

ON = COMMON STOCK
PN = PREFERRED STOCK

• Administrative Body

• Risk Ratings – Bank

FITCH ATLANTIC 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 Deposit 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 ATLANTIC 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)  2003
Forbes “The World’s Leading Companies” Banks/Revenue 2nd (Brazil)  2003
    46th (Worldwide) 
Ranking - Bradesco Seguros
 
Global Finance Best Insurance Companies - Property Insurer 1st (Latin America) 2003

• Balance Sheet - In millions of reais

2003 2004
  March June March June
Total assets 145,000  154,489  160,971  176,254 
Securities, derivative financial instruments and interbank investments 57,841  63,792  72,384  76,741 
Credit and leasing operations 49,655  53,048  54,894  58,402 
Total deposits 54,871  56,822  59,186  64,133 
Demand deposits 10,964  11,525  12,605  13,541 
Time deposits 23,631  24,521  24,589  28,088 
Savings deposits 20,236  20,736  21,929  22,457 
Interbank deposits 40  40  63  47 
Subordinated debt 3,391  3,338  5,141  6,181 
Technical reserves for insurance, private pension plans and savings bonds 21,050  22,732  27,947  29,478 
Stockholders' equity 11,708  12,522  13,625  13,650 

• Statement of Income for the Period - In millions of reais

2003 2004
  1st Qtr. 2nd Qtr. 1st Half 1st Qtr. 2nd Qtr. 1st Half
Net income 508  519  1,027  609  641  1,250 
Financial margin 3,362  2,615  5,977  3,330  3,081  6,411 
Gross profit from financial intermediation 2,554  2,028  4,582  2,769  2,567  5,336 
Commissions and fees 1,017  1,083  2,100  1,319  1,375  2,694 

• Results per Share

In reais
2003 (*) 2004
  1st Qtr. 2nd Qtr. 1st Half 1st Qtr. 2nd Qtr. 1st Half
Net income 3.35  3.27  6.48  3.85  4.05  7.90 
JCP/dividends - ON (before income tax) 1,847  2,035  3,882  1,960  1,957  3,917 
JCP/dividends - ON (net of income tax) 1,570  1,730  3,300  1,666  1,664  3,330 
JCP/dividends - PN (before income tax) 2,024  2,247  4,271  2,156  2,153  4,309 
JCP/dividends - PN (net of income tax) 1,720  1,910  3,630  1,832  1,831  3,663 

(*)

For comparison purposes, shares were divided by 10,000.

N.B.

JCP - Interest attributed to own capital/dividends (paid and accrued)
ON - Common stock
PN - Preferred stock

• Net Book Value and Market Value

In reais
2003 (*) 2004
  March June March June
Number of shares (ON/PN) (**) 151,544,801  158,587,942  158,184,132  158,171,124 
Net book value (ON/PN) 77.26  78.96  86.13  86.30 
Average last day price (ON/PN) 105.65  99.55  128.35  129.00 
Average last day price (ON) 95.60  91.20  117.74  115.36 
Average last day price (PN) 115.70  107.90  138.96  142.63 

(*)

For comparison purposes, shares were divided by 10,000.
(**)

On December 17, 2003, the Extraordinary General Meeting approved a 1-for-10,000 reverse stock split of Bradesco shares. This process was ratified by the Brazilian Central Bank (BACEN) on January 6, 2004.

Market Value (number of shares x average last-day price for the period) - In millions of reais

Cash Generation - In millions of reais

2003 2004
  1st Qtr. 2nd Qtr. 1st Half 1st Qtr. 2nd Qtr. 1st Half
Net income 508  519  1,027  609  641  1,250 
Equity in earnings of associated companies 5  28  33  -  (122) (122)
Allowance for loan losses 808  587  1,395  561  514  1,075 
Technical reserves for insurance, private
pension plans and savings bonds 1,856  1,465  3,321  1,530  1,392  2,922 
(Reversal of) allowance for mark-to-market 15  16  31  (4) -  (4)
Depreciation and amortization 141  150  291  144  143  287 
Amortization of goodwill 738  62  800  87  226  313 
Other 5  12  17  6  (43) (37)
Total 4,076  2,839  6,915  2,933  2,751  5,684 

• Change in Number of Outstanding Shares

  Common Stock Preferred Stock Total
 
Number of shares held at December 31, 2003 (*) 79,836,526  78,693,936  158,530,462 
Shares acquired and not canceled (359,334) (4) (359,338)
Number of shares held at June 30, 2004 79,477,192  78,693,932  158,171,124 

(*)

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

• Performance Ratios (annualized)

%
2003 2004
  1st Qtr. 2nd Qtr. 1st Half 1st Qtr. 2nd Qtr. 1st Half
Return on stockholders’ equity (total) 18.5  17.6  17.1  19.1  20.1  19.2 
Return on stockholders’ equity (average) 20.0  18.8  18.7  19.3  20.5  19.4 
Return on assets (total) 1.4  1.4  1.3  1.5  1.5  1.4 

N.B.

Return on stockholders’ equity (total) = Net income/closing stockholders' equity annualized exponentially.
Return on stockholders’ equity (average) = Net income/average (daily) stockholders' equity annualized exponentially.

• Historical Data - In millions of reais (unless otherwise indicated)



• Other Ratios - %

2003 2004
  March June March June
Capital adequacy ratio - financial consolidated (1) 19.7  16.4  18.9  18.1 
Capital adequacy ratio - total consolidated (1) 17.1  14.5  16.4  15.7 
Permanent assets to stockholders' equity - financial consolidated (2) 42.5  43.9  43.8  41.4 
Permanent assets to stockholders' equity - total consolidated (2) 31.2  31.6  28.0  26.1 

(1)

Reference equity may not be lower than 11% of weighted assets.
(2)

The ratio of permanent assets to stockholders’ equity is limited to 50% of reference equity.

Other Indicators

• Added Value - In millions of reais

2003 2004
  1st Qtr. 2nd Qtr. 1st Half 1st Qtr. 2nd Qtr. 1st Half
ADDED VALUE (A+B+C) 2,250  2,192  4,442  2,382  2,311  4,693 
A - Gross profit from financial intermediation 2,554  2,028  4,582  2,769  2,567  5,336 
B - Commissions and fees 1,017  1,083  2,100  1,319  1,375  2,694 
C - Other operating expenses (1,321) (919) (2,240) (1,706) (1,631) (3,337)
 
DISTRIBUTION OF ADDED VALUE (D+E+F+G) 2,250  2,192  4,442  2,382  2,311  4,693 
 
D - Employees 858  923  1,781  940  995  1,935 
E - Government 884  750  1,634  833  675  1,508 
F - JCP/Dividends to stockholders (paid and accrued) 290  343  633  326  325  651 
G - Reinvestment of profits 218  176  394  283  316  599 

• Checking Accounts - million

Consumer and Corporate Customers – June 2004

Increase in Checking Accounts – million

Increase in Savings Accounts - million

• 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

Focus: Individuals with a monthly income of up to R$ 4 thousand and companies with annual billings of up to R$ 15 million.

More than 15 million customers in this segment have access to the Bradesco Customer Service Network with its 2,700 Branches and more than 2,100 Service Outlets. In addition, the largest customers in this niche receive an exclusive service under the Managed Account concept.

• Bradesco Corporate Banking

Bradesco Corporate Banking’s specialized structures are designed to provide the best possible service to 1,362 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 corporate finance and project finance, among 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 14,691 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.

In June 2004, Bradesco launched a nationwide marketing campaign for this middle-market segment in newspapers and magazines, positioning the Bradesco Empresas brand name and highlighting our managers’skills in offering bespoke customer solutions.

• Bradesco Private Banking

Through its highly qualified and specialized staff, Bradesco Private Banking, focused primarily on personalized advisory services for maximizing results, offers its high-income consumer customers, with a minimum of R$ 1 million in funds available for investment, an exclusive line of products and services, designed to increase their wealth, in line with their objectives and the security and confidentiality that this activity requires.

• Bradesco Prime

Bradesco Prime’s target public comprises consumer customers with a monthly income of more than R$ 4,000.00 or with investments in excess of R$ 50,000.00.

Bradesco branch 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 171 Branches throughout Brazil, as well as to the extensive Bradesco Customer Service Network, including its nationwide branches and self-service network.

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

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

• Customer Service Network

 
  2003 2004
 
  June March June
 
  Branches PABs/PAEs  Branches PABs  PAEs  PAAs  Branches PABs  PAEs  PAAs 
 
Consolidated 3,362  1,936  3,058  765  1,390 19  3,054  782  1,427  19 
Bradesco 2,700  1,678  2,981  749  1,380 -  2,977  765  1,417  - 
BCN 222  193  -  -  -  -  -  -  -  - 
BBV Banco 439  65  -  -  -  -  -  -  -  - 
BEM -  -  76  16  10  19  76  17  10  19 
Banco Finasa 1  -  1  -  -  -  1  -  -  - 
Banco Postal 2,830 4,085 5,013
ATMs 22,865 22,513 21,600
Finasa Promotora de Vendas 55 53 53
Promovel Empreendimentos e Serviços - 70 68

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.

PABs (banking service post) PAAs (advanced banking post) and PAEs (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  133  44.4
Amapá 4  -  -  4  19  21.1
Pará 50  -  -  50  267  18.7
Rondônia 18  -  -  18  88  20.5
Roraima 2  -  -  2  17  11.8
Tocantins 13  -  -  13  95  13.7
Total 151  -  -  151  650  23.2
Northeast
Alagoas 12  -  -  12  122  9.8
Bahia 232  -  -  232  740  31.4
Ceará 29  -  -  29  358  8.1
Maranhão 26  76  -  102  254  40.2
Paraíba 17  -  -  17  168  10.1
Pernambuco 65  -  -  65  462  14.1
Piauí 10  -  -  10  113  8.8
Rio Grande do Norte 14  -  -  14  136  10.3
Sergipe 13  -  -  13  152  8.6
Total 418  76  -  494  2,505  19.7
Central West
Federal District 33  -  -  33  291  11.3
Goiás 107  -  -  107  549  19.5
Mato Grosso 61  -  -  61  234  26.1
Mato Grosso do Sul 56  -  -  56  222  25.2
Total 257  -  -  257  1,296  19.8
Southeast
Espírito Santo 40  -  -  40  315  12.7
Minas Gerais 286  -  -  286  1,889  15.1
Rio de Janeiro 271  -  1  272  1,668  16.3
São Paulo 1,106  -  -  1,106  5,508  20.1
Total 1,703  -  1  1,704  9,380  18.2
South
Paraná 178  -  -  178  1,248  14.3
Rio Grande do Sul 161  -  -  161  1,388  11.6
Santa Catarina 109  -  -  109  815  13.4
Total 448  -  -  448  3,451  13.0
Total 2,977  76  1  3,054  17,282  17.7
(1)

Source: CADINF-DEORF/COPEC - June 2004.

Customer Service Network (Branches) - Market Share - June 2004

Banco Postal

Bradesco uses the post office bank, Banco Postal, created in partnership with the Brazilian Postal and Telegraph Company (Correios) to offer its banking products and services nationwide in the majority of Brazilian town and cities.

Banco Postal plays a significant role in offering Brazil’s low-income bracket families access to the financial system and in nationwide socio-economic development, increasing the circulation of resources within local towns and villages and encouraging savings.

Today, 1,570 towns and villages, with no previous bank access, can rely on the services offered by Banco Postal, bringing benefits to a population of more than 14.1 million people.

In densely populated areas, Banco Postal also contributes by enhancing the customer service provided by the traditional Bradesco Branches, since a considerable number of the Bank’s customers and other users are now able to use the post-office bank structure as an alternative service channel.

Number of accounts opened (accumulated)

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  1st Half 2004
Infrastructure 215  227  509  613  469  144 
IT/Telecommunications 553  617  743  947  1,225  665 
Total 768  844  1,252  1,560  1,694  809 

• Risk Management

Activities and Structure

At Bradesco, risk management is seen as a competitive advantage, adding value to the Bradesco name, as well as providing essential support for the planning activities of the diverse business areas. At the same time, risk management facilitates the maintenance of a stable environment and ensures that resources yield maximum benefits and that capital is allocated to the benefit of stockholders and society as a whole.

Bradesco adopts an ongoing strategy designed to enhance its risk management activities, in the pursuit to keep abreast of the best market practices adopted worldwide. These activities have become increasingly important, not only as a result of the global economy, but also on account of the complex nature of the products and services offered to the community.

An independent risk management department, addressing market, liquidity, credit and operating risks, is essential for achieving successful monitoring and risk management activities. These risks, as well as others, including money-laundering prevention, internal controls and compliance are managed by the Risk Management and Compliance Department, under the direct supervision of the Statutory Department Director, who in turn is subordinated to an Executive Director, reporting directly to the Institution’s President:

This organizational structure is designed not only to guarantee area independence but also to place greater focus on these important value-added activities, confirming the Organization’s commitment to the implementation of best corporate governance practices, using every available resource, whether human, technical or financial, to ensure that risk planning and management is carried out by this area using latest generation technology Groupwide. In particular, because Bradesco is now extending its risk analysis strategy to encompass not only its banking business but also its associated companies, including Bradesco Vida e Previdência (private pensions), Bradesco Saúde (healthcare insurance), Bradesco Seguros (insurance), BRAM (asset management) and Bradesco Capitalização (savings bonds) as regards actuarial and market risks, consolidating its 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.

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, develop new loss calculation models, enhance and prepare rating inventories used in the various sectors in which the Bank operates, oversee credit analysis, granting and settlement processes, monitor credit concentration and to define the dividing line between operating risks and credit risks.

As part of this ongoing enhancement process, additional efforts are being made to prepare the Bank for the introduction of more advanced risk management techniques, based on the recommendations of the New Capital Accord published by the Basel Committee, among which we highlight the following:

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 permanently reviewed to maintain the quality of the credit portfolio. These ratings are segmented as follows:

Classification – Corporate
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 Deficient 30.0
F Bad 50.0 Abnormal course credit operations, classified based on expected loss as per percentage shown.
G Critical 70.0
H Uncollectible 100.0  

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.

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; VaR (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 VaR 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 VaR of the Own Portfolio positions (Treasury):

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

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.

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 impacting the results of the Institution and of its customers.

The Organization is working to adapt its processes to comply with the future regulatory requirements introduced by the Brazilian Central Bank relating to operating risk management, 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 factors, 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 manage, enhance and increase the knowledge used 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.

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) - June 2004 - In millions of reais

Calculation    
Calculation Basis Consolidated
Financial(1) 		Total
Consolidated(2)
Stockholders’ equity 13,650  13,650 
Minority interest 18  66 
Decrease in deferred tax assets - BACEN Resolution 3.059 (132) (132)
Reference equity - Level I 13,536  13,584 
Reference equity - Level II (subordinated debt) 5,988  5,988 
Total reference equity (Level I + Level II) 19,524  19,572 
Risk-weighted assets 108,055  124,343 
Capital adequacy ratio (%) 18.07% 15.74%
Movement (%)
Ratio in June 2003 16.36% 14.48%
Variation in stockholders’ equity
• Net income for the period 2.69% 2.33%
• Interest attributed to own capital (1.45%) (1.25%)
• Mark-to-market adjustment of securities and derivatives 0.07% 0.05%
• Subordinated debt 2.90% 2.51%
• Other (0.20%) (0.22%)
Variation in weighted assets:
• Securities (0.44%) (0.89%)
• Credit operations (1.11%) (0.85%)
• Check clearing and other similar services 0.06% 0.09%
• Deferred tax assets (0.08%) (0.08%)
• Risk (swap, market, interest rate and foreign exchange) 0.23% 0.18%
• Memorandum accounts (0.09%) (0.08%)
• Other assets (0.87%) (0.53%)
Ratio in June 2004 18.07% 15.74%
(1)

Financial companies only.

(2)

Financial and non-financial companies.

Internal Controls

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:

• 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 21,600 terminals (Bradesco - 21,389 and Banco BEM - 211).

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 - June 2004

Transactions – thousand

Financial Volume – In millions of reais

Self-service Network Highlights

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

Second-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

Second-quarter highlights for 2004

Bradesco Day and Night - Internet Banking

The Bradesco Portal contains links to 26 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 242 different services for consumer customers and 187 for corporate customers, which can be accessed around the clock, seven days a week 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


Main Websites:
Bradesco Internet Banking (www.bradesco.com.br) Internet Banking is an important and profitable customer relationship channel, providing access to all transactions carried out in the branches and generating benefits for both customers and stockholders.
ShopInvest Bradesco (www.shopinvest.com.br) Through ShopInvest, investors can access a variety of different information and trade shares in BOVESPA, even if they are not Bradesco account holders. ShopInvest stands out for its wide range of investment options, available in seven investment rooms: Shares; CDB; Funds; Real Estate; BM&F; Savings Accounts and Vida e Previdência (Private Pension Plans).
ShopCredit (www.shopcredit.com.br) ShopCredit offers a complete portfolio of the Bank's credit lines and visitors can use a simulator to calculate amounts and terms in the Personal Credit, Consumer Financing (CDC), Leasing, Housing Loans and Finame (Moderfrota, Prefixado and Proleite) modes.
Bradesco Net Empresa (www.bradesco.com.br) Companies can perform bank transactions online, optimizing the financial management of their businesses.
B2C ( Business to Consumer ) (www.bradesco.com.br) In the wake of the success of Bradesco Electronic Trade, ShopFácil was launched in 2000, offering, among other services, “Meios de Pagamento Eletrônico Bradesco” (Bradesco Online Payment Methods) - the safest, most practical and economic way to shop online.
B2B ( Business to Business ) (www.bradesco.com.br) Bradesco's solutions in the B2B area comprise management tools for buyers, sellers and Bank, with B2B payment methods and a financial reconciliation module for the seller.

Other Bradesco Organization Websites:

Second-quarter highlights for 2004

Services Position at the end of the First Half
Bradesco Internet Banking 6.3 million registered users. 142.2 million transactions carried out.
ShopInvest Bradesco 1,021 thousand registered users. 528 thousand transactions carried out.
ShopCredit 5.2 thousand transactions/operations carried out.
Bradesco Net Empresa 244,614 registered companies. 9.0 million transactions/operations conducted.
B2C 871 thousand transactions/sales posted. 2,202 stores registered with Bradesco Online Payment Methods.
Bradesco Cards 8.5 million transactions carried out.
Bradesco Internet Banking for
the Visually Impaired 		2,228 active registered users.
Web Point 111 terminals installed.
Bradesco Net Express 1,895 companies registered. 4.3 thousand transactions carried out.
Infoemail 168 thousand registered users.
Infocelular 4,933 registered customers.
Mobile Banking (WAP) 298 thousand transactions carried out.

Processes and Portals

Details

Fale com o Bradesco (Talk to Bradesco)

The Bank offers an online communications channel through which customers can clarify doubts and send suggestions or complaints regarding Bradesco's many different products and services.

Online Payment Methods

Online payment methods include: Electronic wallet (Bradesco debit cards, PoupCard and Bradesco Visa and MasterCard Credit Cards), Pagamento Fácil (Easy Payment), Boleto Bancário (Online Dockets), Inter-account Transfers and Bradesco Online Credit.

WebTA

Through this system data files can be transmitted over the Internet with maximum security.

Boleto Fácil (Easy Bill Payment)

Customers can use the Bradesco free Infoemail service to receive bills for payment via e-mail, as well as balance information, financial market news and other interesting information.

Donations

Aware of its social responsibility, Bradesco offers customers the opportunity to make online donations to a number of different charitable entities and institutions.

Online Shopping Portal - Consumers

Operating as a financial intermediary, the Bank offers secure payment methods for online commercial transactions facilitating the relationship between stores and consumers.

Online Shopping Portal - Corporate

A secure payment module permitting the effective financial settlement of transactions carried out between portal, marketplace and suppliers and purchasers via digital certification.

Main Available Channel Services and Products

- Consultations - Checking/savings accounts
- Account balances and statements: summarized, or in detail, by period
- Credit card balances and statements
- Investment balances and statements
- Bank charges and credit limits
   
- Payments/Scheduling of payments - Dockets
- Public utility bills
- Taxes, fees and contributions
- Mobile phone credits
- Direct debit
   
- Transfers  - Between Bradesco accounts
- Other banks - DOC D; DOC E and TED
- Donations
   
- Requests - Changes to credit card limit
- Checkbook
- Revolving credit
- Change of address
   
- Withdrawals/Deposits - Checking/savings accounts

- Salary/INSS account
- Card
   
- Other services - Unblocking of cards
- Travellers Cheques
- Financial investments
- Re-issue of payment receipts
- Personal loans/instant credit
- Advance receipt (Orpags)
- PIN substitution
- Sale of products and services

• Cards

 

Million

 

 

2003

2004

 

 

1st Qtr.

2nd Qtr.

1st Half

1st Qtr.

2nd Qtr.

1st Half

 

Number of cards

35.8

36.9

36.9

42.7

43.5

43.5

    Credit

6.2

6.5

6.5

7.0

7.0

7.0

    Debit

29.6

30.4

30.4

35.7

36.5

36.5

Average amount billed - in reais

3,650.3

3,698.7

7,349.0

4,658.6

4,869.9

9,528.5

    Credit

2,350.9

2,330.1

4,681.0

2,704.9

2,745.8

5,450.7

    Debit

1,299.4

1,368.6

2,668.0

1,953.7

2,124.1

4,077.8

Number of transactions

68.2

69.9

138.1

90.5

95.8

186.3

    Credit

36.4

35.9

72.3

43.1

44.0

87.1

    Debit

31.8

34.0

65.8

47.4

51.8

99.2

Credit Cards

The number of Bradesco credit cards increased to 7.0 million in the first half of 2004, an increase of 7.7% as compared to 1H03 (Visa and MasterCard banners).

The number of transactions grew by 20.5% compared to the same period in 2003, against market growth of 19.6%. Moreover, first-half billings reached the mark of R$ 5.5 billion, a growth rate of 16.4% as compared to 1H03.

Our 14.1% share of market billings (cards under the Visa and MasterCard banners) was maintained. Comparing the 7 largest credit card issuers, in the Brazilian banner card market, responsible for 80% of market billings, Bradesco achieved the best performance in comparison with the prior period (1H04 versus 1H03).

The success of its strategy is also confirmed by Bradesco's significant share of the Visa banner in Brazil. More than 90% of Bradesco credit cards are issued under the Visa banner and Bradesco increased its share of this market by 21.8% for the period, against market growth of 19.5%, achieving the best performance out of all the largest issuers.

Debit Cards

In the first half of 2004, the debit card base increased by 20.1%, 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 52.8% 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.

The number of Bradesco card transactions grew by 50.8% in 1H04 compared to 1H03, against a growth rate of 43.7% by the Visa Electron market for the same period.

Income on Credit Cards

Recurring income derived from this business grew by 34.3% in the first half of 2004, compared to the same period in 2003 and total income by 28.8%, results which evidence the strength of our strategy.

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

• 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.

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

Over recent years, the Bradesco Organization has provided important incentives designed to increase Brazil's foreign trade activities.

In similar manner, we highlight the substantial amount of US$ 9.6 billion, recorded at the end of the first half in foreign exchange trading for exports. This corresponds to a 48% increase as compared to the same period in 2003.

Based on data available for January through May 2004, Bradesco's share of the exchange market for exports totaled some 20.7%, an increase in performance of some 9% compared to the 19% share obtained during the same period in 2003.

The financial volume of imports at the end of the first half of 2004 totaled US$ 3 billion, some 11% more than the total of US$ 2.7 billion obtained for the same period in 2003. Market share at the end of the period from January through May 2004 was 11.9%.

As a result of these increases, the International Area ended the first half with a balance of US$ 7.2 billion in export and import financing, foreign collateral provided and onlending to local customers.


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 first half of 2004:

 

In millions of U.S. dollars

In millions of reais

Export financing

Advance on foreign exchange contracts - undelivered bills

1,732.6

5,382.6

Advance on export contracts - delivered bills

496.5

1,542.5

Prepayments

904.2

2,809.9

Onlending of funds borrowed from BNDES/EXIM

236.9

736.1

Documentary drafts and bills of exchange in foreign currency

9.4

29.1

Indirect exports

6.2

19.2

Loans according to export incentive program (Proex)

0.02

0.06

Total export financing

3,385.8

10,519.5

Import financing

Foreign currency import loans

268.7

834.8

Exchange discounted in advance

74.3

231.0

Open import credit

56.3

174.9

Total import financing

399.3

1,240.7

Guarantees

 

 

International guarantees

123.9

384.9

Total international guarantees

123.9

384.9

Total export and import financing

3,909.0

12,145.1

The foreign exchange portfolio is financed by credit lines obtained from correspondent banks:

At the end of June 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$ 190 million, which was renewed in June 2004 for the amount of US$ 300 million.

 

At June 30, 2004 - In millions of U.S. dollars

 

 

Assets

Stockholders' equity

Foreign Branches and Subsidiaries

Bradesco New York

812.2

140.0

Bradesco Grand Cayman

5,455.9

358.9

BCN Grand Cayman

378.1

141.2

Boavista Grand Cayman, Nassau and Banking Ltd. - Nassau

489.1

84.9

Cidade Capital Markets Ltd. - Grand Cayman

30.1

30.1

Bradesco Services Co. Ltd. - Tokyo

0.2

0.1

Mercantil Grand Cayman

281.1

105.6

Banco Bradesco Argentina S.A.

18.8

16.9

Banco Bradesco Luxembourg S.A.

275.8

128.3

Banco Alvorada (formerly BBV Banco) - Nassau

268.9

268.9

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 first half of 2004, as well as short-term funds obtained from correspondent banks for foreign trade financing, loans of US$ 914.4 million 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.

Profile of Public and Private Placements Abroad - Consolidated Bradesco


Funds Obtained Abroad

ISSUES

CURRENCY

MILLION

DATE ISSUED

MATURITY

2002 - Public Issues - US$ 708.2 million

 

 

 

 

FxRN

US$

150.0

5.3.2002

5.3.2004

Subordinated Debt

US$

133.2

25.4.2002

17.4.2012

USCP

US$

150.0

17.6.2002

16.6.2003

FxRN

US$

100.0

18.9.2002

19.12.2002

FxRN

US$

175.0

17.12.2002

17.6.2003

Private Issues - US$ 247.4 million

 

 

 

 

2003 - Public Issues - US$ 2,347.3 million

 

 

 

 

FxRN

US$

250.0

14.1.2003

14.10.2003

FxRN (EUR 70 million)

US$

75.5

12.2.2003

12.8.2003

FxRN

US$

150.0

19.2.2003

19.12.2003

FxRN

US$

250.0

15.4.2003

2.7.2004

FxRN (EUR 100 million)

US$

106.8

16.4.2003

16.12.2003

FxRN

US$

75.0

15.5.2003

16.11.2004

USCP

US$

190.0

16.6.2003

15.6.2004

FxRN

US$

150.0

17.6.2003

20.12.2004

Securitization MT 100 - Fixed

US$

200.0

20.8.2003

20.8.2010

Securitization MT 100 - Floating

US$

200.0

20.8.2003

20.8.2010

Subordinated Debt

US$

500.0

24.10.2003

24.10.2013

FxRN

US$

100.0

2.12.2003

3.1.2005

FxRN

US$

100.0

26.12.2003

26.12.2006

Private Issues - US$ 474,3 million

 

 

 

 

2004 – Public Issues – US$ 675,9 million

 

 

 

 

FxRN

US$

100.0

3.2.2004

3.1.2007

Subordinated Debt (EUR 225 million)

US$

275.9

15.4.2004

15.4.2014

USCP

US$

300.0

14.6.2004

13.6.2005

– Private Issues – US$ 238,5 million

 

 

 

 

The Bradesco Organization had the following programs in June 2004:

Type

Currency

Million

Euro CP Program (Grand Cayman)

US$

300

Euro CD Program (Grand Cayman)

US$

1,000

MTN Program

US$

2,500

USCP

US$

300

Total

US$

4,100

• Capital Market

Underwriting Transactions

Up to June 2004, Bradesco coordinated important transactions with shares, debentures and promissory notes which totaled R$ 2,510 billion, comprising 50.99% of all issues registered at the Brazilian Securities Commission (CVM).

Among these transactions we highlight the following: issuance of debentures of Braskem S.A. in the amount of R$ 1.2 billion and Initial Public Offer of Shares of Gol Linhas Aéreas Inteligentes S.A., in the total amount of R$ 1.0 billion.

% Share of Transactions

  (*) Primary and secondary issues.

Of the total number of floating and fixed-return transactions registered at CVM up to June 2004, Bradesco participated in 25% of primary and secondary issues, in 36% of debenture issues and in 50% of promissory notes issues.


Origination and Distribution Ranking – ANBID – June 2004

Origination/Distribution

Shares

Fixed Income

1st UBS

1st Bradesco

2nd Pactual

2nd Itaú BBA

3rd Itaú BBA

3rd Unibanco

4th Banco do Brasil

Mergers, Acquisitions, Project Finance, Corporate Reorganization and Privatizations

In March 2004, ANBID published its Mergers & Acquisitions Ranking in which Bradesco was rated segment leader for the 2nd consecutive year in number of transactions, having completed 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 half of 2004, Bradesco signed 3 new powers of attorney, increasing its activity in the Mergers and Acquisitions segment.

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 infra-structure.

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, will be 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 off-balance-sheet financings.

- 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 standards (ISO 9001:2000) and security (electronic certification and sound cryptography).

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 six-month period, an amount of R$ 182.2 billion was recorded for 50.9 million payment transactions, facilitating the management of Trade Accounts Payable for more than 251 thousand companies.

 

In billions of reais

 

2003

2004

 

1st Qtr.

2nd Qtr.

1st Half

1st Qtr.

2nd Qtr.

1st Half

 
Receipt solutions (1)

160.2

167.0

327.2

183.1

190.0

373.1

Payment solutions

64.8

68.9

133.7

85.2

97.0

182.2

Total

225.0

235.9

460.9

268.3

287.0

555.3

Taxes

19.1

19.0

38.1

24.0

23.7

47.7

Water, electricity, telephone and gas

3.5

3.8

7.3

4.5

4.7

9.2

Social security payments

3.3

3.7

7.0

5.0

5.1

10.1

Total Public Sector

25.9

26.5

52.4

33.5

33.5

67.0

(1)

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


 

Number of transactions - million

 

2003

2004

 

1st Qtr.

2nd Qtr.

1st Half

1st Qtr.

2nd Qtr.

1st Half

 

Receipt solutions (1)

165.6

175.4

341.0

203.9

204.0

407.9

Payment solutions

17.2

18.0

35.2

24.1

26.8

50.9

Total

182.8

193.4

376.2

228.0

230.8

458.8

Taxes

14.7

15.5

30.2

19.9

17.0

36.9

Water, electricity, telephone and gas

27.4

28.5

55.9

31.7

31.6

63.3

Social security payments (2)

9.3

10.7

20.0

11.3

11.0

22.3

Total Public Sector

51.4

54.7

106.1

62.9

59.6

122.5

(1)

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

(2) Total beneficiaries: more than 3.950 million retirees and pensioners (corresponding to 18.2% of all those registered with the Brazilian Institute of Social Security - INSS).
 

N.B. Payment via direct debit
    24.696 million - January to June 2003
    25.552 million - January to June 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.

A number of achievements and innovations were accomplished during the first half of 2004, evidencing the quality of our services.

Our custody and controllership services were contracted by Brazil's second largest pension fund, Fundação Petrobrás de Seguridade Social - Petros (91 thousand participants) and will increase the current volume of assets under custody by R$ 22 billion.

The Bradesco Custody website (www.bradescocustodia.com.br), as well as presenting all the conceptual aspects of our services and operations, now also provides the stockholders/investors of companies using the Bradesco Computer-registered Assets System, with access to their related positions and movement and yield, not only those recorded in the Depositary Financial Institution – IFD Bradesco, but also those in the Brazilian Clearance and Custody Company – CBLC.

We present below the main indicators for the first half of 2004:

Bookkeeping of Assets

165

Companies comprise the Bradesco computer-registered share system, with 4.6 million shareholders.

 

Companies comprise the Bradesco computer-registered debenture system with a market value of R$ 13.6 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$ 272.3 million.

Custody and Controllership

R$ 102.3 billion

In assets under custody for customers who use the Bradesco Custody services (Funds, Portfolios and DR).

R$ 129.9 billion

Comprises the total equity of the 626 investment funds and managed portfolios using the Bradesco Controllership services.

9

Registered DR Programs, with a market value of R$ 18.9 billion.

Assets under Custody - In billions of reais

• Banco Finasa S.A.

Consolidated Balance Sheet - In millions of reais

 

2003

2004

 

 

March

June

March

June

 

ASSETS

Current assets and long-term receivables

4,123

4,260

6,508

7,037

Funds available

1

-

15

5

Interbank investments

4

28

35

111

Securities and derivative financial instruments

15

14

91

68

Interbank accounts

17

42

27

29

Credit and leasing operations

3,813

3,908

5,761

6,255

Other receivables and other assets

273

268

579

569

Permanent assets

8

11

383

361

Total

4,131

4,271

6,891

7,398

LIABILITIES

Current and long-term liabilities

3,873

3,988

6,608

7,023

Demand, time and interbank deposits

3,523

3,624

5,976

6,479

Deposits received under security repurchase agreements and funds from the issuance of securities

3

3

-

-

Interbank accounts

2

2

24

3

Borrowings and onlendings

83

101

55

55

Derivative financial instruments

72

81

319

241

Other liabilities

190

177

234

245

Deferred income

16

22

19

30

Stockholders' equity

242

261

264

345

Total

4,131

4,271

6,891

7,398

Consolidated Statement of Income - In millions of reais

 

2003

2004

 

 

1st Qtr.

2nd Qtr.

1st Half

1st Qtr.

2nd Qtr.

1st Half

 

Income from lending and trading activities

362

395

757

483

594

1,077

Expenses for lending and trading activities

(213)

(237)

(450)

(262)

(300)

(562)

Gross profit from financial intermediation

149

158

307

221

294

515

Other operating income (expenses), net

(108)

(115)

(223)

(129)

(160)

(289)

Operating income

41

43

84

92

134

226

Non-operating income (expenses), net

(1)

(3)

(4)

-

(6)

(6)

Income before taxes and contributions

40

40

80

92

128

220

Taxes and contributions on income

(13)

(14)

(27)

(32)

(6)

(38)

Net income

27

26

53

60

122

182

Profile

Banco Finasa S.A., a wholly owned subsidiary of Banco Bradesco S.A., operates in the retail sector, granting personal loans and financing new and used vehicles, consumer durables, services, clothing and footwear, among others, through Finasa Promotora de Vendas Ltda. and from February 16, 2004, also through Promovel Empreendimentos e Serviços Ltda., which is Banco Zogbi S.A.'s sales promotion company.

We stress that Banco Zogbi S.A. was acquired by the Bradesco Organization, through Banco Finasa S.A. on November 6, 2003, in addition to Promovel Empreendimentos e Serviços Ltda. its subsidiaries Zogbi Leasing S.A. Arrendamento Mercantil and Zogbi Distribuidora de Títulos e Valores Mobiliários Ltda., which are also included in the consolidated balance sheet of Banco Finasa S.A.

At the end of June, Banco Finasa operated through 121 Branches distributed nationwide (Finasa Promotora de Vendas – 53 and Zogbi – Promovel – 68), com 28,679 registered service outlets, including 12,303 new and used vehicle dealerships and 16,376 stores selling different types of goods and services.

Customers served at the end of the half-year totaled some 1,782 thousand (Banco Finasa - 1,018 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 the end of the first half of 2004, consolidated assets totaled R$ 7,397.8 million, a growth rate of 7.4% compared to March 2004 and 73.2% compared to June 2003. Concentrated in new and used auto financing, the balance of this portfolio, before allowance for loan losses, totaled R$ 6,032.5 million at June 30, increases of 10.2% and 52.8%, respectively.

Auto-financing production for 2Q04 totaled R$ 1,350.1 million and R$ 2,586.1 million for 1HO4, growth rates of 9.2% and 59.4%, respectively, compared to R$ 1,236.0 million for 1Q04 and R$ 1,622.3 million for 1H03.

Designed to increase the volume of business, a number of agreements and operating partnerships were entered into by the Bank for credit granting purposes, such as those with Ford Credit, Microsoft and ABRAPAR, subsequent to approval by the Brazilian Association of Fiat Automobile Dealerships.

Consolidated Finasa reported second-quarter net income of R$ 122.1 million and first-half net income of R$ 181.8 million. Stockholders' equity at June 30, increased to R$ 345.1 million.

In addition, income in the amount of R$ 56.9 million was recorded for 2Q04, derived from the mark-to-market adjustment of swap transactions, in compliance with Central Bank Circular 3082, which totaled R$ 79.9 million for the half-year. 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 Qtr.

2nd Qtr.

1st Half

 

Net income before events

36.7

65.2

101.9

Mark-to-market effect - SWAP

23.0

56.9

79.9

Net income

59.7

122.1

181.8

Moreover, we stress that expenses for amortization and provision for goodwill on investments made in 2004 totaled R$ 14.8 million for the second quarter and R$ 22.6 million for the half-year.

Social Action

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 for youth education, using the formation of womens' basketball and volleyball teams as an instrument for social inclusion and citizenship. At present, 3,889 girls from 10 to 16 years of age, participate in these sports at 78 training centers, 50 for volleyball and 28 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 units and at three private schools, all located in the municipality of Osasco, in Greater São Paulo.

As well as these training centers, the Program also maintains competitive teams in all base categories with 135 girls between 16 and 19 years of age, training to obtain a place in the main senior volleyball team, FINASA OSASCO, which is currently the Brazilian national league champion for the second time.

The Program's social aspects are also strongly focused, since the majority of these young girls live in socially deprived communities on the outskirts of Osasco. For example, the girls must attend school on a regular basis to be accepted in the Program.

At the same time, a number of educational and cultural activities are carried out, designed to develop the concept of citizenship in all participant, including students, teachers and very often parents too.

The annual schedule of the FINASA SPORTS PROGRAM also includes counseling on the prevention of drug abuse, sexuality, solidarity and violence.

• Bradesco Insurance Group

Insurance

Consolidated Balance Sheet (*) - In millions of reais

 

2003

2004

 

 

March

June

March

June

 

ASSETS

Current assets and long-term receivables

3,572

3,789

4,299

4,943

Securities

1,814

1,935

2,453

2,911

Insurance transactions and other accounts receivable

1,758

1,854

1,846

2,032

Permanent assets

2,054

2,304

2,855

2,876

Total

5,626

6,093

7,154

7,819

LIABILITIES

 

 

 

 

Current and long-term liabilities

2,854

3,154

3,456

3,926

Tax and social security contributions

591

573

601

717

Insurance-related payables

185

338

346

407

Other liabilities

352

378

425

467

Technical reserves

1,726

1,865

2,084

2,335

Minority interest

51

51

41

33

Stockholders' equity of the parent company

2,721

2,888

3,657

3,860

Total

5,626

6,093

7,154

7,819

 

Consolidated Statement of Income (*) - In millions of reais

  2003 2004
 
  1st Qtr. 2nd Qtr. 1st Half 1st Qtr. 2nd Qtr. 1st Half
 
Earned premiums (**) 1,253  1,285  2,538  1,500  1,481  2,981 
Retained claims (947) (1,046) (1,993) (1,237) (1,291) (2,528)
Selling expenses (157) (160) (317) (190) (183) (373)
Other operating income (expenses) 17  17  34  33  (67) (34)
Contribution margin 166  96  262  106  (60) 46 
Administrative costs (169) (181) (350) (187) (214) (401)
Taxes (24) (17) (41) (31) (28) (59)
Financial results 117  106  223  162  114  276 
Operating income 90  4  94  50  (188) (138)
Non-operating income (7) (14) (21) (1) (5) (6)
Results on investments in subsidiary and
associated companies 79  87  166  110  320  430 
Minority interest -  -  -  2  2  4 
Income before taxes and contributions 162  77  239  161  129  290 
Taxes and contributions on income (9) 17  8  3  82  85 
Net income 153  94  247  164  211  375 
N.B.

Includes insurance premiums issued by Bradesco Vida e Previdência S.A. (with VGBL).


(*)

Includes: Bradesco Seguros, Indiana Seguros, Bradesco Saúde, União Novo Hamburgo de Seguros, Finasa Seguradora S.A., Áurea, SBCE and Bradesco Argentina.

(**)

Individual life insurance and VGBL redemptions were reclassified to this account in accordance with SUSEP/DECON Circular Letter 02/2004.

Performance Ratios - %

  2003 2004
 
  1st Qtr. 2nd Qtr. 1st Half 1st Qtr. 2nd Qtr. 1st Half
 
Claims ratio (1) 75.6 81.4 78.5 82.5 87.2 84.8
Selling ratio (2) 12.5 12.5 12.5 12.7 12.4 12.5
Combined ratio (3) 101.8 107.6 104.8 107.2 120.0 113.7
Expanded combined ratio (4) 93.1 99.4 96.3 96.8 111.4 104.1
Administrative expense ratio (5) 13.2 13.8 13.5 12.2 14.0 13.3
(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 on earned premiums).

(5)

Administrative expenses/earned premiums.

Insurance Premiums - Market Share (%)

Bradesco Seguros secured R$ 4.3 billion in premiums and maintained its industry leadership with a 24.6% market share. The insurance sector obtained a total of R$ 17.547 billion in premiums through May 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 1st Qtr. 2nd Qtr. 1st Half 1st Qtr. 2nd Qtr. 1st Half
 
Health 618  630  1,248  729  710  1,439 
Auto/RCF(a) 327  346  673  392  393  785 
Life/AP(b)/VGBL(c) 188  196  384  252  258  510 
Basic Lines 83  88  171  93  92  185 
DPVAT(d) 37  25  62  34  28  62 
Total 1,253  1,285  2,538  1,500  1,481  2,981 
(a)

Optional third-party liability.

(b)

Personal accident.

(c)

Long-term life products.

(d)

Compulsory vehicle insurance.

In the first half of 2004, the Company’s earned premiums grew by 17.5% compared to the same period in 2003.

Earned Premiums by Line - %

Retained Claims by Insurance Line - In millions of reais

  2003 2004
 
Line 1st Qtr. 2nd Qtr. 1st Half 1st Qtr. 2nd Qtr. 1st Half
 
Health 522  588  1,110  662  660  1,322 
Auto/RCF 249  270  519  329  381  710 
Life/AP 111  110  221  170  173  343 
Basic Lines 37  57  94  48  56  104 
DPVAT 28  21  49  28  21  49 
Total 947  1,046  1,993  1,237  1,291  2,528 

Retained Claims by Insurance Line (%)

N.B.

Retained claims/earned premiums.

Selling Expenses by Insurance Line - In millions of reais

  2003 2004
 
Line 1st Qtr. 2nd Qtr. 1st Half 1st Qtr. 2nd Qtr. 1st Half
 
Health 19  19  38  23  23  46 
Auto/RCF 61  64  125  71  71  142 
Life/AP 62  61  123  79  69  148 
Basic Lines 15  16  31  17  20  37 
Total 157  160  317  190  183  373 

Selling Expenses by Insurance Line (%)

N.B.

Expenses for selling/earned premiums

Number of Policyholders - Thousand

Up to June 2004, the average number of customers grew by 9.8% compared to the same period in 2003.

In the first half of 2004, compared to 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 2.4 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.

More than 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, 34% 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 May 2004, the Bradesco Insurance Group maintained its position as one of the main players in the Brazilian Basic Line Insurance market, with a significant 11.1% share of total market billings in this area.

In the Corporate Risk area, Bradesco maintained its position as one of the sector’s most important insurance companies with a considerable share of the main lines. In particular, emphasis should be given to the launching of Bradesco FLIGHT INSURANCE, specifically focusing the executive aircraft area and which after only 3 months of activity has already achieved excellent results.

In the mass market insurance segment, focusing on consumer and small and medium corporate customers, product line sales registered an important growth, in particular, Bradesco Bilhete Residencial, which achieved a record of 588,901 homes insured, an increase of 15.0% compared to the same period in 2003.

The launching of new products and the reformulation of others, in the pursuit to offer our customers best quality products on a permanent basis, made a significant contribution to the results achieved during the period.

In the Auto/RCF line, the first half of the year witnessed intense competition in a market reduced by slacking vehicle local market 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 May, 2004 was 15.6%.

Awards/Recognition

Bradesco Seguros

1. Bradesco Seguros rated Top of Preference in Rio Grande do Sul. Bradesco Seguros was the brand name preferred by consumers in the southern state of Rio Grande do Sul in March 2004. This preference was revealed in the sixth edition of the poll “Decision-makers’ 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.

2. In May 2004, the Bradesco Seguros website is 3-time champion award winner at the iBEST awards, considered Brazil’s equivalent to the Internet Oscar. The Company was voted winner by popular jury in the Insurance category.

3. Bradesco Seguros won the “Prêmio Segurador Brasil” award in the “Best Institutional Campaign” and “Arts and Culture Support Highlight” categories. These awards are given by Brasil/Notícias Editora e Comunicação Empresarial, publishers of the Planeta Seguros magazine and will be announced in its August 2004 edition.

4. In June 2004, Bradesco Seguros was rated best company in the vehicle insurance line according to the Financial Report published by Gazeta Mercantil newspaper prepared in partnership with the consultancy Austin Rating.

5. In June 2004, it was announced that Bradesco Seguros had won the Insurance Market Award (Prêmio Mercado de Seguros), given by the Seguro Total magazine in the Excellence in Total Premiums category.

Bradesco Saúde

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.

• Vida e Previdência (Private Pension Plans)(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 first-half results in this economic sector, which is among the most dynamic in Brazil.

Balance Sheet - In millions of reais

  2003 2004
 
  March  June  March  June 
 
ASSETS
Current assets and long-term receivables 19,055  20,783  26,364  27,008 
Funds available 16  24  24  29 
Interbank investments 18  19  -  - 
Securities 18,661  20,355  25,781  26,489 
Insurance operations and other accounts receivable 360  385  559  490 
Permanent assets 252  256  248  1,063 
Total 19,307  21,039  26,612  28,071 
LIABILITIES
Current and long-term liabilities 18,126  19,695  24,805  26,017 
Tax and social security contributions 349  402  655  554 
Operating liabilities for insurance and private pension plans 72  91  200  256 
Other liabilities 36  32  43  73 
Technical reserves 17,669  19,170  23,907  25,134 
Stockholders' equity 1,181  1,344  1,807  2,054 
Total 19,307  21,039  26,612  28,071 

On April 30, 2004, Bradesco Vida e Previdência increased its permanent assets through the acquisition of 99.6% of the share control of Bradesco Capitalização in the amount of R$ 360 million and 21.2% of the share control of Instituto de Resseguros do Brasil - IRB in the amount of R$ 291 million.

Statement of Income - In millions of reais

  2003 2004
 
  1st Qtr. 2nd Qtr. 1st Half 1st Qtr. 2nd Qtr. 1st Half
 
Retained premiums (except VGBL) 196  187  383  227  224  451 
Variations in premium reserves (24) (19) (43) (10) (4) (14)
Earned premiums (except VGBL) 172  168  340  217  220  437 
Earned premiums - VGBL 10  12  22  16  23  39 
Total earned premiums 182  180  362  233  243  476 
Retained claims (109) (103) (212) (161) (125) (286)
Expenses with benefits and redemptions - VGBL -  -  -  (5) (10) (15)
Selling expenses - insurance (56) (54) (110) (72) (62) (134)
Other operating income (expenses) 35  35  70  64  49  113 
Income from net contributions 151  387  538  359  426  785 
Expenses with benefits/matured plans (399) (463) (862) (527) (581) (1,108)
Selling expenses - pension plans (25) (24) (49) (24) (24) (48)
Administrative expenses (50) (47) (97) (56) (50) (106)
Tax expenses (3) (5) (8) (7) (13) (20)
Financial income 1,242  973  2,215  1,007  988  1,995 
Financial expenses (825) (736) (1,561) (634) (691) (1,325)
Equity income and expenses 2  2  4  2  167  169 
Non-operating income (expense) 1  (1) -  2  -  2 
Income before taxes and contributions 146  144  290  181  317  498 
Taxes and contributions on income (48) (42) (90) (60) (49) (109)
Net income 98  102  200  121  268  389 
(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 first half designed to decrease expenses. As a result of these efforts, the percentage of administrative expenses for income on premiums and contributions decreased from 3.3%, in the first half of the prior year, to 3.0% in the first six months of 2004.

Furthermore, we highlight the decrease in selling expenses comprising 5.3% of income on premiums and contributions for the first half of the year compared to 5.5% for the same period in 2003.

The following investments had a significant effect on the composition of first-half results:

  In thousands of reais
 
 
Bradesco Capitalização S.A. 89,924 
IRB Brasil Resseguros S.A. 28,165 
Other investments 47,209 
Total 165,298 

Market Share

Income from Plans - Market Share (%)

Bradesco Vida e Previdência is Brazil’s sole leader in complementary pension plans and VGBL, with a 33.7% share of the market, more than double that held by its nearest rival. First-half plan income totaled R$ 2.861 billion, an 18.3% growth rate compared to the same period in 2003.

Income on Insurance Premiums – Market Share (%)

Income on premiums retained of R$ 451 million for the first six-months guaranteed Bradesco’s leadership of the market with a 15.1% share. We highlight during the half-year 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 for all income brackets.

Increase in Technical Reserves – In millions of reais

The growing strength of its technical reserves guarantees the company’s capacity to meet its commitments and, at the same time, confirms its position as Brazil’s largest open complementary private pension company with a 48.2% share of the market. (Source: ANAPP - May 2004).

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 portfolio of Bradesco Vida e Previdência, thereby guaranteeing full coverage of technical reserves.

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

Bradesco Vida e Previdência is the market’s outright leader as regards the size of its investment portfolios, since this company accounts for almost half of total 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 have now attained the 1.4 million mark.

Policyholders

Increase in Life Insurance Policyholders – thousand

As well as launching the “Vida Segura Bradesco” and “Vida Máxima Mulher Bradesco” products, during the first half, Bradesco Vida e Previdência also launched its campaign designed to extend the popularity of life insurance policies.

• Savings Bonds (1)

Balance Sheet - In millions of reais

  2003 2004
 
  March  June  March  June 
 
ASSETS
Current assets and long-term receivables 1,863  1,946  2,639  2,683 
Securities 1,787  1,871  2,547  2,596 
Accounts receivable and other accounts receivable 76  75  92  87 
Permanent assets 342  294  20  201 
Total 2,205  2,240  2,659  2,884 
 
LIABILITIES
Current and long-term liabilities 1,930  1,906  2,286  2,416 
Tax, social security contributions and contingencies 178  195  257  286 
Other liabilities 96  13  73  121 
Technical reserves 1,656  1,698  1,956  2,009 
Stockholders' equity 275  334  373  468 
Total 2,205  2,240  2,659  2,884 

Statement of Income - In millions of reais

  2003 2004
 
  1st Qtr. 2nd Qtr. 1st Half 1st Qtr. 2nd Qtr. 1st Half
 
Income from savings bonds 249  301  550  306  396  702 
Variation in technical reserves (1) (12) (13) (50) (7) (57)
Redemption of bonds (231) (284) (515) (273) (346) (619)
Bonds redeemed (225) (281) (506) (261) (336) (597)
Winning bonds (6) (3) (9) (12) (10) (22)
Financial income, net 58  81  139  107  71  178 
Administrative expenses/taxes (17) (20) (37) (19) (28) (47)
Equity results 2  6  8  3  26  29 
Non-operating income -  -  -  (1) -  (1)
Income before taxes and contributions 60  72  132  73  112  185 
Taxes and contributions on income (19) (21) (40) (24) (27) (51)
Net income 41  51  92  49  85  134 
(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 is consolidating its outstanding position in diverse regions and holds a leadership position in two Brazilian states, according to the latest figures for May published by SUSEP. The company’s market share in these states was as follows: 34.4% in Amazonas and 25% in São Paulo.

In pursuit of a bond which is suited to its customers’ different profiles and budgets, the company developed a number of products 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 company closer to the general public and consolidated the success of its 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 June 2004, a growth rate of 18.3% compared to the same period in 2003. According to data for May 2004 published by SUSEP, the company has 23.1% 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

In line with its customer loyalty building policy focused on quality customer service and the offer of innovative products, the number of Bradesco Capitalização customers in June 2004 had grown by 2.4% in comparison with the same period in 2003, totaling 2.8 million.

Outstanding Savings Bonds - Thousand

Outstanding Savings Bonds with transfer of draw participation rights - thousands

Total Outstanding Savings Bonds - thousands

The outstanding savings bond portfolio also presented a significant increase of 692.3% compared to the same period in 2003, with more than 60 million outstanding bonds. Of this amount, 92.5% 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 7.5% of the total portfolio, dropped slightly, as a result of the offer of single and monthly payment bonds at higher sales prices.

Awards

1. In June 2004, Bradesco Capitalização was announced winner of the Insurance Market Award in the “Best Savings Bond Company” category organized by Seguro Total magazine.

• Leasing Companies

At June 30, 2004, the Bradesco Organization had the following leasing companies: Bradesco BCN Leasing S.A. Arrendamento Mercantil, Bradesco Leasing S.A. Arrendamento Mercantil, formerly Potenza Leasing S.A. Arrendamento Mercantil, Bancocidade Leasing Arrendamento Mercantil S.A., 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
 
  March  June  March  June 
 
ASSETS
Current assets and long-term receivables 4,818  4,950  5,217  5,259 
Funds available 6  6  4  1 
Interbank investments 3,023  3,081  2,273  2,325 
Securities and derivative financial instruments 21  12  1,254  1,273 
Leasing operations 1,396  1,477  1,305  1,271 
Allowance for leasing losses (127) (127) (119) (107)
Other receivables and other assets 499  501  500  496 
Permanent assets 37  40  39  37 
Total 4,855  4,990  5,256  5,296 
LIABILITIES
Current and long-term liabilities 2,964  3,012  3,056  3,060 
Interbank deposits 144  117  -  - 
Securities received under security repurchase agreements
and funds received from issuance of securities 1,454  1,523  1,703  1,766 
Borrowings and onlendings 242  256  233  203 
Derivative financial instruments 11  10  20  15 
Subordinated debt 633  635  625  623 
Other liabilities 480  471  475  453 
Stockholders' equity 1,891  1,978  2,200  2,236 
Total 4,855  4,990  5,256  5,296 

Statement of Income - In millions of reais

  2003 2004
 
  1st Qtr. 2nd Qtr. 1st Half 1st Qtr. 2nd Qtr. 1st Half
 
Income from lending and trading activities 195  242  437  415  426  841 
Expenses for lending and trading activities (84) (132) (216) (304) (324) (628)
Gross profit from financial intermediation 111  110  221  111  102  213 
Other operating income (expenses), net (25) (12) (37) (14) (25) (39)
Operating income 86  98  184  97  77  174 
Non-operating income 3  -  3  1  -  1 
Income before taxes and contributions 89  98  187  98  77  175 
Tax and contributions on income 102  (34) 68  (37) (24) (61)
Net income 191  64  255  61  53  114 

Leasing Performance - Consolidated Bradesco

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

At June 30, leasing operations brought to present value totaled R$ 1.352 billion, with a balance of R$ 24.8 million receivable in operating leases.

According to the Brazilian Association of Leasing Companies (ABEL), the Bradesco Organization leasing companies are sector leaders, with a 13.7% share of this market (base date: April 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 June 30, 2004

• Bradesco Consórcios (Consortium Purchase System)

Administradora (management company)

Balance Sheet - In thousands of reais

 
  2003 2004
 
  March  June  March  June 
 
ASSETS
Current assets and long-term receivables 21,907  22,521  36,744  47,501 
Securities 18,118  18,853  35,788  45,765 
Other receivables 3,789  3,668  956  1,736 
Permanent assets 694  726  747  800 
Total 22,601  23,247  37,491  48,301 
LIABILITIES
Current and long-term liabilities 11,688  11,446  8,859  14,336 
Amounts receivable from former groups now 4,889  5,090  5,560  5,650 
closed
Other liabilities 6,799  6,356  3,299  8,686 
Stockholders’ equity 10,913  11,801  28,632  33,965 
Total 22,601  23,247  37,491  48,301 

Statement of Income - In thousands of reais

2003 2004
  1st Qtr. 2nd Qtr. 1st Half 1st Qtr. 2nd Qtr. 1st Half
Income on commission and fees 194  3,820  4,014  15,335  20,023  35,358 
Taxes payable (32) (280) (312) (903) (1,183) 2,086 
Financial income 368  510  878  919  1,263  2,182 
Administrative expenses (including personnel
expenses) (1,661) (1,461) (3,122) (1,933) (2,559) (4,492)
Selling expenses (3,902) (1,231) (5,133) (2,088) (5,078) (7,166)
Other operating (expenses) income 17  50  67  47  120  167 
Income before taxes and contributions (5,016) 1,408  (3,608) 11,377  12,586  23,963 
Taxes and contributions on income 1,637  (521) 1,116  (1,950) (2,657) (4,607)
Net income (loss) (3,379) 887  (2,492) 9,427  9,929  19,356 

Quarterly Results – 2003 and 2004

Consortium Groups

Balance Sheet - In thousands of reais

2003 2004
  March June March June
ASSETS
Current assets and long-term receivables 1,566  19,342  124,366  164,330 
Amount offset 123,557  1,465,378  4,436,832  5,499,952 
Total 125,123  1,484,720  4,561,198  5,664,282 
 
LIABILITIES
Current and long-term liabilities -  233  12,260  21,626 
Stockholders’ equity 1,566  19,109  112,106  142,704 
Amount offset 123,557  1,465,378  4,436,832  5,499,952 
Total 125,123  1,484,720  4,561,198  5,664,282 

Operations

At June 30, 2004, a total of 91 thousand consortium quotas had been sold, with billings in excess of R$ 2.9 billion, 12,347 participants had been selected by bid or draw and 6,937 items had been delivered to members comprising 486 groups. 175 new groups were formed during the first half of 2004.

The company uses all the facilities offered by the Bradesco Organization customer service network to commercialize the products offered, a unique market advantage and responsible in great part for the fast-growing results. The extensive nature and security associated with the Bradesco brand name are important advantages for expanding 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 June 2004, Bradesco Consórcios sold a total of 42,739 quotas, with billings of R$ 1.219 billion. Of this total, 21,312 are vehicle quotas, followed by 20,823 in real estate quotas sold during the period.

Market leadership

Bradesco Consórcios assumed the leadership of the real-estate segment, according to information published by the Brazilian Central Bank, with 31,063 quotas sold in May, following the 41.68% increase over company results for April.

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
during the first half of 2004

Quotas sold and accumulated up to June 30, 2004

Total Outstanding Real-estate Quotas in 2004

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


(*)

Brazilian Central Bank Data for May 2004

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

Balance Sheet – In thousands of reais

2003 2004
  March June March June
ASSETS
Current assets and long-term receivables 145,320  153,910  320,961  128,999 
Funds available 14  10  15  38 
Interbank investments and securities 85,763  88,530  62,397  69,514 
Other receivables and other assets 59,543  65,370  258,549  59,447 
Permanent assets 18,287  18,908  21,084  22,154 
Total 163,607  172,818  342,045  151,153 
LIABILITIES
Current and long-term liabilities 73,865  79,006  271,781  77,818 
Other liabilities 73,865  79,006  271,781  77,818 
Stockholders' equity 89,742  93,812  70,264  73,335 
Total 163,607  172,818  342,045  151,153 

Statement of Income - In thousands of reais

2003 2004
  1st Qtr. 2nd Qtr. 1st Half 1st Qtr. 2nd Qtr. 1st Half
Income from lending and trading activities 4,453  4,583  9,036  2,498  2,557  5,055 
Gross profit from financial intermediation 4,453  4,583  9,036  2,498  2,557  5,055 
Other operating income (expenses), net 313  1,142  1,455  5,113  1,162  6,275 
Operating income 4,766  5,725  10,491  7,611  3,719  11,330 
Non-operating income (expense) -  (1) (1) -  2  2 
Income before taxes and contributions 4,766  5,724  10,490  7,611  3,721  11,332 
Taxes and contributions on income (1,620) (1,898) (3,518) (2,561) (1,234) (3,795)
Net income 3,146  3,826  6,972  5,050  2,487  7,537 

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

We present below a summary of the main activities carried out during the second quarter of 2004.

Bradesco Corretora ended the year ranked 13th among the more than 80 brokerage firms operating in the São Paulo Stock Exchange (BOVESPA). During the period, services were provided to 40,071 investors and 114,019 buy and sell orders were carried out for a total financial volume of R$ 2.7 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 666.3 thousand contracts in the Mercantile and Futures Exchange (BM&F) for a financial volume of R$ 76.1 billion, ranking the Corretora 28th 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 49,229 orders with a financial volume of R$ 285.5 million, comprising 3.0% of all Home-Broker operations carried out in BOVESPA and placing the Corretora fifth in the overall ranking. The customer base increased by 7.9% with more than 1,721 new customers registered during the quarter and more than 10,708 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$ 1.7 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$ 2.5 million.

Stockholders' equity at the end of the quarter increased to R$ 73 million, corresponding to 48.34% of total assets of R$ 151 million.

Information - Trading at BM&F and BOVESPA

2003 2004
  1st Qtr. 2nd Qtr. 1st Half 1st Qtr. 2nd Qtr. 1st Half
BM&F
Ranking 26th  19th  20th  26th  28th  27th 
Contracts traded (million) 0.4  0.6  1.0  0.7  0.7  1.4 
Financial volume (in billions of reais) 53.9  73.7  127.6  80.0  76.1  156.1 
Stock Exchange
Ranking 9th  13th  10th  9th  13th  10th 
Number of investors 14,781  12,264  27,045  57,813  40,071  97,884 
Number of orders executed 50,792  66,380  117,172  101,820  114,019  215,839 
Volume traded (in billions of reais) 1.9  2.5  4.4  4.7  2.7  7.4 
Home Broker
Ranking 4th  4th  4th  5th  5th  5th 
Registered customers 15,127  16,025  16,025  21,787  23,508  23,508 
Orders executed 30,454  40,311  70,765  59,785  49,229  109,014 
Volume traded (in millions of reais) 167.6  224.0  391.6  355.7  285.5  641.2 

• Bradesco Securities, Inc.

Balance Sheet - In thousands of reais

2003 2004
  March June March June
ASSETS
Current assets and long-term receivables 2,825  59,207  64,255  66,047 
Funds available 414  344  424  322 
Interbank investments 2,354  17,739  2,912  7,091 
Securities and derivative financial instruments -  41,086  60,894  58,611 
Other receivables and other assets 57  38  25  23 
Permanent assets 127  96  56  46 
Total 2,952  59,303  64,311  66,093 
LIABILITIES
Current and long-term liabilities 216  110  433  203 
Other liabilities 216  110  433  203 
Stockholders' equity 2,736  59,193  63,878  65,890 
Total 2,952  59,303  64,311  66,093 

Statement of Income - In thousands of reais

2003 2004
  1st Qtr. 2nd Qtr. 1st Half 1st Qtr. 2nd Qtr. 1st Half
Gross profit from financial intermediation 9  (196) (187) 720  (1,899) (1,179)
Other operating income (expenses), net (530) (319) (849) (1,767) (452) (2,219)
Operating income (expense) (521) (515) (1,036) (1,047) (2,351) (3,398)
Loss (521) (515) (1,036) (1,047) (2,351) (3,398)

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.

Designed to provide leverage to its brokerage transactions abroad, Bradesco Securities, Inc. increased company capital in the amount of US$ 20 million in May 2003.

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.

• Acknowledgements

Bradesco led the ranking in disbursements from the National Bank for Economic and Social Development - BNDES, with R$ 1.2 billion distributed in 6,300 transactions. The Bank also played an outstanding role in the onlending of BNDES funds for micro, small and medium size companies in the total amount of more than R$ 687 million.

Bradesco pays the largest dividends out of all institutions in the Brazilian banking sector and the third largest out of all companies in Brazil for the last 10 years, according to a study prepared by the consultancy Lafis. Moreover, Bradesco was also ranked leader, in the banking sector of 8 Latin American countries and the U.S.A., in dividend yield, based on an analysis carried out by the consultants, Economática.

Bradesco received triple recognition in the poll carried out by Gazeta Mercantil/Austin Rating and published in the special Financial Report edition of Gazeta Mercantil newspaper: as Best Retail Sector Bank, Best Private Pension Fund Company and Best Insurance Company in the Auto Line. The study also revealed Bradesco as Brazil’s largest financial institution by shareholders’ equity and the largest among private Brazilian institutions in assets, deposits, income on credit operations, income on securities transactions, income from lending and trading activities and credit operations.

The areas responsible for fund management, BRAM - Bradesco Asset Management, received the maximum rating from Moody’s, one of the world’s most important risk rating agencies, with “Aaa (MQ)” in Management Quality. The agency’s report highlighted Bradesco for its excellent administration, strong financial principles, efficient operating and risk controls, as well as for its clearly focused strategic vision.

Bradesco is the Bank with the largest number of funds included in the list of best fixed-income funds according to the ranking prepared by Quantum Consultoria and published in Jornal do Brasil newspaper, in April. The publication listed the Bank’s eight Investment Funds among those which ended the first quarter of 2004 with the highest yields.

The Institution also has the largest number of five-star funds listed in the Ranking Invest Tracker, prepared by Thomson Financial Brasil and published in April by O Estado de S. Paulo newspaper. With 16 Investment Funds classified amount the best in their segments, the Bank appears as the main highlight for the second consecutive year.

Bradesco is the institution which grew most in terms of total assets, presenting a growth rate of 776.1% between December 1994 and 2003, from R$ 20.1 billion to R$ 176.1 billion. This information was published in the May edition of the Conjuntura Econômica magazine with presented the financial conglomerate ranking prepared by the Brazilian Institute of Economics (Ibre) and Fundação Getulio Vargas (FGV).

The Organization received two prizes at the 2004 iBest awards. For the eighth consecutive year, Bradesco came first in the Banks category – by popular jury. Bradesco Seguros also won the award for best voted Insurance website – by popular jury.

• Sociocultural Events

During the first half of 2004, 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.

In commemoration of São Paulo’s 450th anniversary, Bradesco sponsored an exhibition of Picasso (Picasso na Oca – uma retrospectiva). This was the largest exhibition of the art of the Spanish genius Pablo Picasso ever to be shown in Latin America, with 124 works from the Picasso Museum in Paris on show and was visited by more than 900 thousand people. Bradesco was this important event’s exclusive sponsor.

During the first half of the year, Bradesco was present once again at the Summer Festival and Carnival in Salvador - BA and at the Saint John’s fiesta in Caruaru - PE. The Organization also gave support to the Agrishow in Ribeirão Preto - SP, Rio Verde - GO, Rondonópolis - MT, and Luís Eduardo Magalhães - BA, as well as the Expo Zebu cattle show, in Uberaba - MG, the Show Rural Coopavel, in Cascavel - PR, and the 2004 International Machinery Expo in São Paulo - SP.

Bradesco Seguros continued its important support of the Série Dell’Arte International Concerts. During the first half, presentations were given by the Concerto Italiano, the Akademe Für Alte Musik and Emma Kirkby & The Romantic Chamber Group of London.

In the educational area, the Bradesco Foundation, in partnership with Microsoft and Cisco, commenced implementation of a number of Digital Inclusion Centers (CIDs). These are centers installed in the vicinity of schools and offer the general public basic IT courses and online access to public services, as well as promoting citizenship values and the development of community actions. In all 20 CIDs will be installed in 2004.

At the end of April, the Finasa Osasco senior women’s volleyball team won the Ladies SuperLeague Championship for the second time in a row (2003/2004).

• 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.

Important Events

The 40th Bradesco Foundation School, in Jardim Conceição, Osasco, SP, opened its doors on March 16 this year, with modern facilities and the capacity to attend some 2,000 students from the local community.

On March 7, all the Foundation Schools took part in Brazil’s “National Voluntary Action Day”. More than 300 thousand people benefited from activities promoted in the leisure and entertainment, education, culture, sports, healthcare, community development and citizenship action areas. Seven thousand volunteers were involved, including students, parents, support staff, teachers and professionals from partner organizations, providing more than 600 quality services to community members residing in the vicinity of the Foundation schools.

Designed to offer the general public basic IT skills and online access to public services, as well as promoting citizenship values through the development of community actions, the Bradesco Foundation entered into partnership with other high-tech companies to create a number of Digital Inclusion Centers – CIDs. This project was designed to combat digital exclusion and increase IT access by people living near the schools, at specific locations managed by volunteers from the local community. High school students will monitor the activities carried out as well as playing a leading role as IT instructors.

The Center for Educational Technology and Social Inclusion created by the Bradesco Foundation in Campinas, SP, and opened on June 3, 2004, boasts state-of-the-art hard and software technology and a wireless communications network. The Center is designed to promote the skills of students and teachers at the Bradesco Foundation and from the public school network, as well as developing research which will be used to integrate information and communication technology with the educational process and for social inclusion.

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 First Half - 2004 and 2003

1) Calculation basis 1st Half 2004 (in thousands of reais)  1st Half 2003 (in thousands of reais) 
Net revenue (RL) (1) 5,336,282  4,581,642 
Operating income (RO) 1,420,448  1,999,071 
Gross payroll (FPB) 2,410,603  2,201,013 
 
2) Internal social indicators In thousands of reais % of PFB % of RL In thousands of reais % of FPB % of RL
Meals 215,655  8.9  4.0  185,741  8.4  4.0 
Compulsory social charges 455,470  18.8  8.5  391,281  17.8  8.5 
Private pension plans 104,351  4.3  2.0  135,415  6.2  3.0 
Healthcare insurance 109,105  4.5  2.0  86,687  3.9  1.9 
Safety and medical care in the workplace -  -  -  -  -  - 
Education -  -  -  -  -  - 
Culture -  -  -  -  -  - 
Professional qualification and training 21,329  0.9  0.4  29,993  1.4  0.7 
On-site child care and child-care benefit 20,718  0.9  0.4  13,968  0.6  0.3 
Employee profit sharing 83,497  3.5  1.6  79,573  3.6  1.7 
Other 28,874  1.2  0.4  19,584  0.9  0.4 
Total - Internal social indicators 1,038,999  43.0  19.3  972,242  42.8  20.5 
 
3) External social indicators In thousands of reais % of RO % of RL In thousands of reais % of RO % of RL
Education 36,038  2.5  0.7  32,440  1.6  0.7 
Culture 6,347  0.4  0.1  6,898  0.4  0.2 
Health and basic sanitation 1,401  0.1  -  2,296  0.1  - 
Sports 1,470  0.1  -  4,569  0.2  0.1 
Prevention of hunger and food security 261  -  -  532  -  - 
Other 1,561  0.2  -  3,367  0.2  0.1 
Total contribution to society 47,078  3.3  0.8  50,102  2.5  1.1 
Taxes (excluding social charges) 1,055,838  74.3  19.8  1,242,748  62.2  27.1 
Total - External social indicators 1,102,916  77.6  20.6  1,292,850  64.7  28.2 
 
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 (   ) has no established goals
(   ) complies (0% to 50%) (   ) complies (0% to 50%)
(   ) complies (51% to 75%) (   ) complies (51% to 75%)
(   ) complies (76% to 100%) (   ) complies (76% to 100%)
 
5) Employee indicators 1st Half 2004 1st Half 2005
Employees at the end of the period 74,784  78,148 
Admissions during the period 1,700  6,797 
Outsourced employees 6,782  7,809 
Trainees/interns 368  514 
Employees older than 45 5,548  5,423 
Women employees 34,237  34,814 
% of management positions held by women 19.2% 17.9%
Black employees (2) N/D  N/D 
% of management positions held by blacks N/D  N/D 
Disabled employees or employees with special needs 695  629 
 
 
6) Significant information regarding the level of corporate citizenship 1st Half 2004 1st Half 2005
Ratio between maximum and minimum salary N/A N/A
Total number of accidents in the workplace 97 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 (   )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) 1st Half 2004: R$ 4,695,161 1st Half 2003: R$ 4,441,079
 
Distribution of Added Value (DVA): 32.1% government 41.2% employees
13.9% stockholders 12.8% retained 		36.8% government 40.0% employees
14.3% stockholders 8.9% retained
 
 
7) Other information
 
(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.

• Independent auditors’ report on special review of supplementary account information

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



We have examined, in accordance with auditing standards applied in Brazil, the financial statements of Banco Bradesco S.A. and the consolidated financial statements of Banco Bradesco S.A. and its subsidiaries as of and for the semesters ended June 31, 2004 and 2003 and have issued our unqualified opinion, dated July 30, 2004.

Our examinations were made for the purpose of forming an opinion on the financial statements of Banco Bradesco S.A. and on the consolidated financial statements of Banco Bradesco S.A. and its subsidiaries taken as a whole. In connection with our examinations, we have performed a review of the supplementary account information included in the Report on Economic and Financial Analysis that is presented exclusively for the purpose of additional analysis and is not a required part of the financial statements.

Based on our examinations, 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 financial statements taken as a whole.



July 30, 2004



KPMG Auditores Independentes
CRC 2SP014428/O-6

Original report in Portuguese signed by  
Walter Iorio Cláudio Rogélio Sertório
Accountant CRC 1SP084113/O-5 Accountant CRC 1SP212059/O-0



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






4 – Consolidated Balance Sheets and Statements of Income – 1999 to 2004








Consolidated Balance Sheet - In thousands of reais

JUNE DECEMBER
ASSETS 2004 2003 2002 2001 2000 1999
CURRENT ASSETS AND LONG-TERM RECEIVABLES 170,982,811  171,141,348  137,301,711  105,767,892  90,693,025  75,136,910 
FUNDS AVAILABLE 2,221,970  2,448,426  2,785,707  3,085,787  1,341,653  827,329 
INTERBANK INVESTMENTS 20,528,547  31,724,003  21,472,756  3,867,319  2,308,273  2,590,599 
Open market investments 15,039,080  26,753,660  19,111,652  2,110,573  1,453,461  1,890,828 
Interbank deposits 5,493,136  4,970,343  2,370,345  1,760,850  854,815  699,771 
Provision for losses (3,669) -  (9,241) (4,104) (3) - 
SECURITIES AND DERIVATIVE FINANCIAL INSTRUMENTS 56,212,512  53,804,780  37,003,454  40,512,688  33,119,843  29,196,857 
Own portfolio 48,096,564  42,939,043  29,817,033  27,493,936  21,743,924  20,950,342 
Subject to repurchase agreements 1,619,037  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 4,001,517  3,109,634  3,536,659  1,988,799  421,727  2,359,466 
Privatization currencies 89,896  88,058  77,371  25,104  9,526  7,241 
Subject to collateral provided 1,587,500  1,752,882  1,836,169  715,858  783,501  449,536 
Derivative financial instruments 817,998  232,311  238,839  581,169  -  - 
Allowance for mark-to-market -  -  -  (740,433) (670,866) (557,598)
INTERBANK ACCOUNTS 14,527,349  14,012,837  12,943,432  5,141,940  5,060,628  6,454,553 
Unsettled payments and receipts 540,029  20,237  16,902  10,118  6,920  7,635 
Restricted deposits:
- Brazilian Central Bank 13,637,429  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 318,770  391,871  374,177  217,518  197,191  142,653 
Interbank onlendings -  -  -  -  2,024  116,733 
Correspondent banks 30,543  19,726  32,140  7,090  5,165  1,974 
INTERDEPARTMENTAL ACCOUNTS 155,816  514,779  191,739  176,073  111,636  49,018 
Internal transfer of funds 155,816  514,779  191,739  176,073  111,636  49,018 
CREDIT OPERATIONS 46,246,720  42,162,718  39,705,279  35,131,359  30,236,106  21,535,633 
Credit operations:
- Public sector 608,542  186,264  254,622  199,182  275,479  154,266 
- Private sector 49,550,590  45,768,970  42,842,693  37,689,671  32,244,482  22,848,128 
Allowance for loan losses (3,912,412) (3,792,516) (3,392,036) (2,757,494) (2,283,855) (1,466,761)
LEASING OPERATIONS 1,240,969  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 2,718,495  2,859,533  3,141,724  3,248,050  3,813,369  3,515,396 
Unearned lease income (1,366,519) (1,438,534) (1,560,278) (1,557,642) (1,760,305) (1,490,803)
Allowance for leasing losses (111,007) (114,566) (150,325) (122,619) (139,143) (313,050)
OTHER RECEIVABLES 28,790,320  24,098,765  20,690,054  15,685,433  16,226,725  12,420,787 
Receivables on guarantees honored 940  624  1,577  1,131  2,020  - 
Foreign exchange portfolio 15,126,391  11,102,537  10,026,298  5,545,527  6,417,431  3,375,563 
Income receivable 252,942  331,064  249,849  187,910  191,873  109,734 
Negotiation and intermediation of securities 232,563  602,543  175,185  761,754  497,655  839,758 
Specific credits -  -  -  146,919  124,776  206,952 
Insurance premiums receivable 969,794  889,358  718,909  995,662  818,773  994,718 
Sundry 12,397,490  11,324,857  9,640,966  8,107,714  8,258,402  7,021,988 
Allowance for other losses (189,800) (152,218) (122,730) (61,184) (84,205) (127,926)
OTHER ASSETS 1,058,608  1,068,607  1,078,124  599,366  374,080  349,791 
Other assets 501,461  575,182  679,515  415,484  409,771  406,910 
Allowance for losses (244,063) (245,373) (243,953) (164,290) (171,876) (166,447)
Prepaid expenses 801,210  738,798  642,562  348,172  136,185  109,328 
PERMANENT ASSETS 5,271,001  4,956,342  5,483,319  4,348,014  4,185,458  5,186,682 
INVESTMENTS 1,006,024  862,323  512,720  884,773  830,930  2,453,425 
Investments in associated companies:
- Local 480,115  369,935  395,006  742,586  689,002  2,044,120 
Other investments 889,362  857,985  439,342  452,871  525,316  753,901 
Allowance for losses (363,453) (365,597) (321,628) (310,684) (383,388) (344,596)
PROPERTY AND EQUIPMENT IN USE 2,296,477  2,291,994  2,523,949  2,152,680  2,017,093  1,683,069 
Buildings in use 1,378,677  1,398,735  1,748,409  1,475,581  1,491,847  1,415,720 
Other fixed assets 3,549,161  3,480,636  3,459,950  2,988,008  2,705,577  2,285,918 
Accumulated depreciation (2,631,361) (2,587,377) (2,684,410) (2,310,909) (2,180,331) (2,018,569)
LEASED ASSETS 29,626  34,362  34,323  46,047  10,688  17,026 
Leased assets 67,283  63,812  51,198  51,214  19,421  18,451 
Accumulated depreciation (37,657) (29,450) (16,875) (5,167) (8,733) (1,425)
DEFERRED CHARGES 1,938,874  1,767,663  2,412,327  1,264,514  1,326,747  1,033,162 
Organization and expansion costs 1,187,592  1,124,058  1,037,559  874,970  731,717  477,058 
Accumulated amortization (647,517) (572,620) (568,525) (481,127) (391,417) (190,510)
Goodwill on acquisition of subsidiaries, net of amortization 1,398,799  1,216,225  1,943,293  870,671  986,447  746,614 
T O T A L 176,253,812  176,097,690  142,785,030  110,115,906  94,878,483  80,323,592 

Consolidated Balance Sheet - In thousands of reais

JUNE DECEMBER
LIABILITIES AND STOCKHOLDERS' EQUITY 2004 2003 2002 2001 2000 1999
CURRENT AND LONG-TERM LIABILITIES 162,499,580  162,406,307  131,652,394  100,199,709  86,654,746  73,249,480 
DEPOSITS 64,133,482  58,023,885  56,363,163  41,083,979  36,468,659  34,723,630 
Demand deposits 13,541,311  12,909,168  13,369,917  8,057,627  7,500,518  6,803,429 
Savings deposits 22,456,494  22,140,171  20,730,683  18,310,948  17,835,745  17,244,520 
Interbank deposits 47,250  31,400  23,848  40,446  568,416  468,950 
Time deposits 28,088,427  22,943,146  22,238,715  14,674,958  10,563,980  10,206,731 
DEPOSITS RECEIVED UNDER SECURITY REPURCHASE AGREEMENTS 16,746,067  32,792,725  16,012,965  14,057,327  12,108,350  7,814,288 
Own portfolio 3,100,373  6,661,473  915,946  12,178,855  10,696,199  5,973,260 
Third-party portfolio 13,545,400  17,558,740  12,188,054  1,878,472  1,412,151  1,841,028 
Unrestricted portfolio 100,294  8,572,512  2,908,965  -  -  - 
FUNDS FROM ISSUANCE OF SECURITIES 7,080,310  6,846,896  3,136,842  4,801,410  4,111,171  4,628,344 
Exchange acceptances -  -  1,214  -  -  - 
Mortgage notes 1,090,909  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 5,989,401  5,808,749  2,650,532  3,972,064  3,368,884  3,132,840 
INTERBANK ACCOUNTS 128,261  529,332  606,696  192,027  107,129  59,607 
Interbank onlendings 4,201  159,098  35,686  4,519  1,059  10,016 
Correspondent banks 124,060  370,234  571,010  187,508  106,070  49,591 
INTERDEPARTMENTAL ACCOUNTS 961,661  1,782,068  1,337,729  762,505  904,188  879,592 
Third-party funds in transit 961,661  1,782,068  1,337,729  762,505  904,188  879,592 
BORROWINGS 8,894,396  7,223,356  9,390,630  7,887,154  6,463,555  4,864,414 
Local borrowings - official institutions 1,732  2,070  3,368  2,979  9,737  10,178 
Local borrowings - other institutions 11,155  4,010  216,812  230,468  170,775  138,279 
Foreign borrowings 8,881,509  7,217,276  9,170,450  7,653,707  6,283,043  4,715,957 
LOCAL ONLENDINGS - OFFICIAL INSTITUTIONS 7,868,013  7,554,266  7,000,046  5,830,633  5,096,604  4,123,486 
National Treasury 18,710  51,398  62,187  -  -  - 
National Bank for Economic and Social Development (BNDES) 3,695,926  3,403,462  3,437,319  3,067,220  2,589,284  1,650,243 
Federal Savings Bank (CEF) 451,267  459,553  453,803  433,381  405,264  388,109 
Government Agency for Machinery and Equipment Financing (FINAME) 3,697,913  3,638,966  3,045,176  2,321,508  2,090,374  2,064,153 
Other institutions 4,197  887  1,561  8,524  11,682  20,981 
FOREIGN ONLENDINGS 53,988  17,161  47,677  316,283  108,178  185,774 
Foreign onlendings 53,988  17,161  47,677  316,283  108,178  185,774 
DERIVATIVE FINANCIAL INSTRUMENTS 784,356  52,369  576,697  111,600  -  - 
TECHNICAL RESERVES FOR INSURANCE, PRIVATE PENSION PLANS AND SAVINGS BONDS 29,478,345  26,408,952  19,155,479  13,853,426  10,338,065  7,563,919 
OTHER LIABILITIES 26,370,701  21,175,297  18,024,470  11,303,365  10,948,847  8,406,426 
Collection of taxes and other contributions 1,189,650  130,893  108,388  181,453  128,785  113,693 
Foreign exchange portfolio 8,749,851  5,118,801  5,002,132  1,343,769  2,439,657  1,029,963 
Social and statutory payables 617,690  851,885  666,409  572,265  560,533  603,405 
Taxes and social security contributions 4,152,995  4,781,458  4,376,031  3,371,127  3,094,628  2,665,681 
Negotiation and intermediation of securities 186,416  595,958  109,474  1,307,385  592,395  914,127 
Subordinated debt 6,181,255  4,994,810  3,321,597  969,842  -  - 
Sundry 5,292,844  4,701,492  4,440,439  3,557,524  4,132,849  3,079,557 
DEFERRED INCOME 37,889  31,774  15,843  9,020  34,632  17,543 
Deferred income 37,889  31,774  15,843  9,020  34,632  17,543 
MINORITY INTEREST IN SUBSIDIARY COMPANIES 65,971  112,729  271,064  139,231  96,903  287,350 
STOCKHOLDERS' EQUITY 13,650,372  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 10,270  8,665  7,435  7,435  19,002  5,643 
Revenue reserves 6,665,288  6,066,640  5,715,317  4,614,110  3,403,020  2,963,576 
Mark-to-market adjustment - securities and derivatives 27,703  478,917  9,152  -  -  - 
Treasury stock (52,889) (7,342) (86,175) (53,599) (75,820) - 
STOCKHOLDERS' EQUITY MANAGED BY THE PARENT COMPANY 13,716,343  13,659,609  11,116,793  9,907,177  8,189,105  7,056,569 
T O T A L 176,253,812  176,097,690  142,785,030  110,115,906  94,878,483  80,323,592 

Consolidated Statement of Income - In thousands of reais

  2003 2002 2001 2000 1999
INCOME FROM LENDING AND TRADING ACTIVITIES 27,529,706  31,913,379  21,411,673  15,519,008  18,286,815 
 
Credit operations 12,294,528  15,726,929  11,611,236  7,787,745  9,602,701 
Leasing operations 307,775  408,563  420,365  512,962  730,929 
Security transactions 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 5,359,939  3,271,913  -  -  - 
Derivative financial instruments 55,192  (2,073,247) (270,572) -  - 
Foreign exchange transactions 797,702  4,456,594  2,045,092  872,234  1,776,925 
Compulsory deposits 1,385,765  594,964  237,952  223,581  300,437 
 
EXPENSES 17,201,888  23,259,783  13,312,726  9,132,137  12,821,198 
Interest and charges on:
Deposits 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 (3,120,342) 2,241,283  -  -  - 
Borrowings and onlendings 1,083,379  7,194,161  4,316,682  2,158,725  5,819,063 
Leasing operations 12,981  12,486  -  93  18,852 
Provision for loan losses 2,449,689  2,818,526  2,010,017  1,451,912  2,028,429 
 
INCOME FROM FINANCIAL INTERMEDIATION 10,327,818  8,653,596  8,098,947  6,386,871  5,465,617 
 
OTHER OPERATING INCOME (EXPENSES) (6,774,710) (6,343,850) (5,324,166) (4,647,041) (4,404,370)
 
Commissions and fees 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 11,726,088  10,134,873  8,959,259  6,919,942  5,975,488 
Change in technical reserves for insurance, private pension plans and savings bonds (3,670,163) (2,784,647) (3,492,217) (3,001,118) (2,341,648)
Claims - insurance operations and savings bond redemptions (5,079,973) (4,335,895) (3,996,108) (2,866,389) (2,844,171)
Insurance and pension plan selling expenses (762,010) (667,527) (689,352) (645,020) (635,351)
Expenses with pension plan benefits and redemptions (2,362,771) (1,688,639) (1,369,424) (912,784) (557,608)
Personnel expenses (4,779,491) (4,075,613) (3,548,805) (3,220,607) (2,783,627)
Other administrative expenses (4,814,230) (4,028,377) (3,435,759) (2,977,665) (2,566,657)
Tax expenses (1,054,397) (847,739) (790,179) (670,138) (651,801)
Equity in the earnings of associated companies 5,227  64,619  70,764  156,300  127,100 
Other operating income 2,163,639  1,320,986  1,326,459  902,807  1,069,562 
Other operating expenses (2,703,490) (3,147,627) (1,831,364) (1,375,068) (1,295,594)
 
OPERATING INCOME 3,553,108  2,309,746  2,774,781  1,739,830  1,061,247 
 
NON-OPERATING INCOME (EXPENSES), NET (841,076) 186,342  (83,720) (123,720) (224,874)
 
INCOME BEFORE TAXES AND PROFIT SHARING 2,712,032  2,496,088  2,691,061  1,616,110  836,373 
 
PROVISION FOR INCOME TAX AND SOCIAL CONTRIBUTION (396,648) (460,263) (502,257) (258,776) 307,186 
 
NON-RECURRING/EXTRAORDINARY INCOME -  -  -  400,813  - 
 
MINORITY INTEREST IN SUBSIDIARIES (9,045) (13,237) (18,674) (17,982) (38,753)
 
NET INCOME 2,306,339  2,022,588  2,170,130  1,740,165  1,104,806 
 
RETURN ON STOCKHOLDERS' EQUITY 17.02% 18.65% 22.22% 21.50% 16.32%

Consolidated Statement of Income - In thousands of reais

2004 2003 2002
  2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr.
INCOME FROM LENDING AND TRADING ACTIVITIES 7,719,563  6,756,620  7,443,322  7,911,617  5,096,140  7,078,627  3,083,730  15,811,393 
 
Credit operations 3,659,023  3,099,790  3,169,261  3,504,644  2,685,193  2,935,430  1,519,950  7,344,652 
Leasing operations 56,715  85,112  78,660  85,952  65,777  77,386  74,886  127,240 
Securities transactions 2,120,909  1,680,538  2,230,775  2,312,036  995,040  1,790,954  (712,805) 6,319,688 
Financial income on insurance, private pension plans and savings bonds 1,181,151  1,245,029  1,411,927  1,334,756  1,172,214  1,441,042  1,398,046  770,981 
Derivative financial instruments (68,697) 195,557  8,877  33,158  (360,489) 373,646  307,885  (1,585,879)
Foreign exchange transactions 502,246  161,157  254,543  275,508  168,153  99,498  169,630  2,706,668 
Compulsory deposits 268,216  289,437  289,279  365,563  370,252  360,671  326,138  128,043 
 
EXPENSES 5,152,601  3,987,300  4,251,574  5,357,189  3,068,353  4,524,772  721,442  12,877,250 
Interest and charges on:
Deposits 3,029,988  2,454,373  2,605,171  3,434,326  1,826,314  2,669,686  (5,216) 6,049,300 
Price-level restatement and interest on technical reserves for insurance, private pension plans and savings bonds 698,695  652,313  701,184  761,148  755,950  902,060  978,809  519,325 
Borrowings and onlendings 905,617  315,760  490,305  555,389  (103,670) 141,355  (834,266) 5,409,418 
Leasing operations 4,747  3,860  3,398  3,187  3,194  3,202  3,204  3,097 
Provision for loan losses 513,554  560,994  451,516  603,139  586,565  808,469  578,911  896,110 
 
INCOME FROM FINANCIAL INTERMEDIATION 2,566,962  2,769,320  3,191,748  2,554,428  2,027,787  2,553,855  2,362,288  2,934,143 
 
OTHER OPERATING INCOME (EXPENSES) (1,945,378) (1,970,456) (2,305,000) (1,887,139) (1,168,690) (1,413,881) (1,703,272) (2,439,061)
 
Commissions and fees 1,375,202  1,318,936  1,274,590  1,182,359  1,082,637  1,017,275  991,101  934,418 
Income on insurance premiums, private pension plans and savings bonds 2,989,637  2,993,333  3,434,634  2,873,832  2,728,022  2,689,600  3,243,557  2,678,997 
Change in technical reserves for insurance, private pension plans and savings bonds (693,433) (877,511) (1,143,458) (863,897) (708,447) (954,361) (1,484,011) (874,013)
Claims - insurance operations and savings bond redemptions (1,627,879) (1,505,505) (1,221,906) (1,349,775) (1,338,042) (1,170,250) (1,106,755) (1,098,887)
Insurance and pension plan selling expenses (205,157) (212,316) (208,229) (190,761) (182,499) (180,521) (179,671) (167,297)
Expenses with pension plan benefits and redemptions (590,492) (532,648) (955,812) (555,691) (461,256) (390,012) (508,501) (419,728)
Personnel expenses (1,233,345) (1,177,258) (1,272,063) (1,306,415) (1,147,838) (1,053,175) (1,047,093) (1,144,413)
Other administrative expenses (1,215,747) (1,207,853) (1,328,021) (1,232,599) (1,152,697) (1,100,913) (1,111,005) (1,062,951)
Tax expenses (343,100) (335,887) (293,466) (254,650) (238,429) (267,852) (257,997) (185,527)
Equity in the earnings of associated companies 122,309  (41) 30,723  7,218  (27,989) (4,725) 32,855  8,660 
Other operating income 279,688  257,521  246,948  384,841  855,810  676,040  (70,632) 731,764 
Other operating expenses (803,061) (691,227) (868,940) (581,601) (577,962) (674,987) (205,120) (1,840,084)
 
OPERATING INCOME 621,584  798,864  886,748  667,289  859,097  1,139,974  659,016  495,082 
 
NON-OPERATING INCOME (EXPENSES), NET (202,568) (11,146) (73,495) 9,854  (95,872) (681,563) 54,804  140,964 
 
INCOME BEFORE TAXES AND PROFIT SHARING 419,016  787,718  813,253  677,143  763,225  458,411  713,820  636,046 
 
PROVISION FOR INCOME TAX AND SOCIAL CONTRIBUTION 224,907  (178,637) (95,620) (111,614) (242,190) 52,776  5,271  (231,215)
 
MINORITY INTEREST IN SUBSIDIARIES (2,587) (368) (2,496) (1,638) (1,325) (3,586) (21,058) 15,486 
 
NET INCOME 641,336  608,713  715,137  563,891  519,710  507,601  698,033  420,317 

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 six-month period ended June 30, 2004, of Banco Bradesco S.A., as well as the consolidated financial statements, prepared in accordance with the requirements of Brazilian corporate legislation.

From a macroeconomic viewpoint, the first half of 2004 was marked by the recovery of economic activity within a scenario of uncertainty prompted by the start of a new international squeeze on liquidity. The good trade balance performance softened the impact of global dynamics on the Brazilian economy. Conditions are still being created for improving the perception of Brazil’s sovereign risk by overseas investors and, accordingly, for the continuing downturn in basic interest rates, as soon as inflationary pressure dissipates.

Credit area activity has also maintained a good performance, albeit slightly below the results projected at the end of last year. All told, the quality of bank credit in Brazil is gradually improving on a steady basis.

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

1 – Results for the Period

Bradesco reported first-half net income of R$ 1.250 billion, corresponding to R$ 7.90 per share and a return of 19.15% on closing stockholders’ equity and 19.42% on average stockholders’ equity, annualized.

Taxes and contributions, including social security contributions, paid or accrued, on the main activities carried out by the Bradesco Organization for the period, amounted to R$ 1.508 billion, or 120.64% of net income.

Monthly and interim interest attributed to own capital distributed to stockholders totaled R$ 281.345 million. This represents R$ 1.863576 (R$1.584040, net of withholding tax), including the additional 10%, for preferred shares and R$ 1.694160 (R$ 1.440036, net of withholding tax) for common shares.

2 - Capital and Reserves

At the end of the first half, paid-up capital totaled R$ 7 billion, comprising 158,171,124 nominative-registered shares, with no par value, of which 79,477,192 are common and 78,693,932 are preferred shares. Paid-up capital plus reserves of R$ 6.650 billion comprised the total stockholders’equity of R$ 13.650 billion, a growth rate of 9.01% compared to the same period in 2003 and corresponding to net equity per share of R$ 86.30.

Managed stockholders’ equity of R$ 176.254 billion, corresponds to 7.78% of consolidated assets, a 14.09% increase as compared to June 2003. As a result, the capital adequacy ratios were 18.07% on a consolidated financial basis and 15.74% 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 six-month period, the ratio of permanent assets to stockholders’ equity, in relation to consolidated reference equity was 41.42% on a consolidated financial basis and 26.09% 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.

3 – Funding and Portfolio Administration

With a growth rate of 18% compared to the same period in 2003, overall funding obtained by the Bradesco Organization amounted to R$ 245.637 billion, at June 30, 2004 and comprised the following :

4 – Credit Operations

At the end of the first half, the balance of consolidated credit operations totaled R$ 58.402 billion, a 10.09% increase over the balance for the same period in 2003 and includes the following:

In the housing loan area, the Organization provided funds during the first six months of the year for the construction and purchase of residential housing in the amount of R$ 227.080 million, comprising 3,218 properties.

5 – Capital Market Transactions

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$ 2.510 billion recorded for the period, corresponding to 50.99% of all issues registered with the Brazilian Securities Commission (CVM). The Bank was also an important advisor for corporate and financial restructuring processes, in mergers, acquisitions and project finance operations.

6 - Corporate Governance

The modern corporate governance practices adopted by the Bradesco Organization have contributed to improving the performance of all of its activity segments. A number of initiatives have been implemented to date, such as: tag-along rights, codes of corporate and business sector ethics in the accounting and financial management areas, disclosure policy for significant acts or facts and securities trading, as well specific committees for disclosure, audit, compliance and internal controls and remuneration.

Bradesco shares are listed in BOVESPA’s Level 1 Corporate Governance index since June 2001. Moreover, since Bradesco’s shares are traded in foreign stock exchanges, the Bank also prepares its financial statements in internationally accepted US-GAAP.

We stress that during the half-year, no non-audit services were contracted by the Bradesco Organization 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 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. As recommended by the Brazilian Central Bank, each external audit is contracted for a maximum five-year period.

At the Extraordinary General Meeting of March 10, 2004, approval was given to maintain the Fiscal Council, comprising 3 full members and 3 alternates with term of office through 2005, with one full member and his/her alternate elected from among the non-voting stockholders.

6.1 – Internal Controls and Compliance

The internal controls and compliance system is subordinated to guidance and supervision by the Board of Directors and is an important instrument in the management of business activities, designed principally to ensure compliance with legal and regulatory standards, guidelines, plans, procedures and internal rules and to minimize risk of equity losses and damage to the Organization’s institutional image. The Board is also responsible for analyzing and approving the compliance reports prepared by the compliance and internal controls committee.

6.2 - Information Transparency and Dissemination Policies

During the first half year, as part of its investor relations strategy, Bradesco organized 43 internal and external meetings with analysts, 4 conference calls and 6 presentations abroad. In addition, Bradesco publishes yearly and half yearly financial statements, as well as a quarterly Report on Economic and Financial Analysis.

In the Investor Relations area of its website at www.bradesco.com.br/ir, the Bank provides information on, for example, profile, background, share structure, directors’ reports, earnings reports, latest acquisitions, meetings with market analyst associations (Apimec and Abamec), as well as other financial market information, in Portuguese, English and Spanish.

The Bank distributes a monthly customer news bulletin called “Cliente Sempre em Dia” with a circulation of 1 million copies, as well as a quarterly magazine called Revista Bradesco, also focusing its external public, with a circulation of 70 thousand copies.

7 – Risk Management

The management of risks involves an integrated series of controls and processes, covering credit, market and liquidity, as well as operating risks. Risk management is fully independent and directly subordinated to an Executive Officer and the Bank’s President. As a matter of principle, the Organization adopts a conservative policy in terms of exposure to risk, whereby policies and limits are defined by Senior Management, including risks directly affecting its minimum capital requirement.

7.1 – Credit Risk

At Bradesco, the management of credit risk is based on existing best market practice and complies with the rules proposed in the New Basel Accord, which require a high level of discipline and control in the analysis of the transactions carried out, safeguarding process integrity and independence. Risk management involves a permanent and continuously developing process designed to map, check and diagnose the models, instruments, policies and procedures in place, based on studies and analyses compatible with the Organization’s reality. These procedures are designed to provide a greater understanding of portfolio credit risks, identifying concentrations and opportunities for diversification and ensuring that capital is efficiently allocated.

7.2 – Market and Liquidity Risk

The Organization’s market risk management policy is conservative and VaR (Value at Risk) limits are defined by Senior Management and monitored independently every day. On a complementary basis, the liquidity risk management policy is designed to ensure that the Organization is able to settle transactions, timely and securely, through a series of controls, the establishment of technical limits and the ongoing assessment of the positions assumed and financial instruments used. Both market and liquidity risks are monitored, checked and managed using models aligned with best local and international market practices and with the recommendations and standards established by the regulatory agencies.

7.3 – Operating Risk

The operating risk management process, based on the recommendations established in the New Basel Accord and instructions from regulatory agencies, is designed to implement the methodology and models which best meet the Bank’s business characteristics and, at the same time, decrease the amount of regulatory capital to be allocated. The structure established to meet this objective includes dissemination of the Bank’s culture, disclosure of policies, development of own systems, the construction of databases and quantitative and qualitative performance indicators, to ensure that the Organization is able to identify its level of exposure to operating risks and implement measures to decrease loss. The combination of these processes will enhance competitive advantage, increasing the Institution’s operating efficiency.

7.4 – Information Security

The Corporate Information Security Policy and Guidelines are designed to protect the Bank’s information assets, including its databases, IT environments, documents, files, system backups and system access controls, especially when generating and transmitting data, among other security management tools. Restricted data and information which are of exclusive interest to customers, as well as strategic Organization information, are treated internally with strict secrecy and fully protected by internal controls and IT systems. To ensure procedure compliance, the Bank maintains ongoing staff training, awareness and policy review programs.

7.5 – Credit Policy

As well as seeking security, quality and liquidity in the investment of assets, minimizing risks inherent to this type of operation, the Organization’s credit policy is also designed to offer agile and profitable business and to guide the setting of operating limits and granting of credit.

The Branches operate within varying limits, based on their size and the type of guarantees, while the specialized credit scoring systems facilitate and support the approvals process, in line with specific security 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.

Operations are diversified, non-selective and intended for individuals and businesses with sound payment capacity and integrity and are secured by underlying guarantees which are deemed sufficient to cover the risks assumed.

7.6 – Money Laundering Prevention

The internal structure of the Bradesco Organization maintains a specific area responsible for managing and monitoring its customers’ transactions and financial activity, designed to avoid any involvement by the Institution in money laundering. The basic premise used to provide related guidance to the Operating Areas and Branch Network is rooted in the Bank’s “Know Your Customer” policy, whereby customer transactions, including the source and destination of funds, are monitored by computerized systems which, together with specific analyses, ensure that possible money laundering activities are prevented or suppressed. The Organization has developed and put into place employee training and awareness programs, designed to maintain compliance with this policy, as well as permanently enhancing its technology tools for control and monitoring.

8 – The Bradesco Insurance Group

The Bradesco Insurance Group, with an important role in the insurance, private pension plan and savings bond areas, reported net income of R$ 374.714 million and stockholders’ equity of R$ 3.860 billion at June 30, 2004. The overall premium income attained R$ 6.267 billion, a growth rate of 8.13% in comparison with the same period in 2003.

9 – The Bradesco Customer Service Network

At the end of the first six-month period, the Bradesco Organization Network offered its customers and other users access to 12,251 service outlets, with 21,389 ATMs in the BDN – Bradesco Day and Night Self-service Network, 17,606 of which also operate at weekends and on bank holidays and more than 211 ATMs in the Banco BEM S.A. customer service network:

3,054

Branches in Brazil (Bradesco – 2,977, Banco BEM – 76 and Banco Finasa – 1).

7

Branches abroad, 1 in New York (Bradesco), 4 in Grand Cayman (Bradesco, BCN, Mercantil and Banco Boavista) and 2 in Nassau, Bahamas (Banco Boavista and Banco Alvorada, formerly BBV Banco).

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).

5,013

Banco Postal post-office bank branches.

2,209

Banking service posts and outlets in companies (Bradesco – 2,182 and Banco BEM - 27).

19

Advanced Banco BEM banking posts.

1,822

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 12,303 vehicle dealerships and 16,376 stores selling furniture and decor, tourism, auto parts, IT-related equipment and software, DIY materials, clothing and footwear, among others.

10 – The Bradesco Organization’s Social Action Program

In the social area, the Organization plays an important role through its educational and welfare programs developed by Fundação Bradesco (the Bradesco Foundation), which maintains 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. More than 107 thousand students receive education, completely free-of-charge, at the Foundation schools, including youth and adult education and basic professional training courses. 50,820 of its infant, junior, middle and technical school students, also receive free meals, uniforms, school materials and medical/dental care.

11 – Human Resources

The professional enhancement of our employees continued through the staff training program, which is designed to ensure that Bradesco customers are offered top-quality service. During the first six months of the year, 697 courses were given with 215,463 employee participations. Special attention is given to the Bradesco benefit plans focused on providing a better life quality, well being and security to our employees and their dependents and which covered 183,654 people at June 30, 2004.

12 – Acknowledgements

With renewed enthusiasm, triggered by the conquests and ongoing progress recorded, we thank our stockholders and customers for their support and trust and our employees and other stakeholders for their hard work and dedication.

Cidade de Deus, July 30, 2004

Board of Directors
and Board of Executive Officers

Balance Sheet at June 30 - In thousands of reais

BRADESCO CONSOLIDATED BRADESCO
ASSETS 2004 2003 2004 2003
CURRENT ASSETS 97,332,067  89,214,917  133,877,506  124,921,688 
FUNDS AVAILABLE (Note 8) 2,096,838  1,536,475  2,221,970  1,772,881 
INTERBANK INVESTMENTS (Notes 3b and 9) 26,292,628  29,507,264  19,911,978  20,801,911 
Open market investments 15,903,565  18,765,316  15,039,080  17,514,259 
Interbank deposits 10,389,454  10,742,948  4,873,289  3,288,751 
Provision for losses (391) (1,000) (391) (1,099)
SECURITIES AND DERIVATIVE FINANCIAL INSTRUMENTS (Notes 3c, 10, 33b and 33c) 7,340,244  6,149,006  44,343,183  37,522,845 
Own portfolio 1,353,122  1,666,938  37,977,686  30,729,851 
Subject to repurchase agreements 85,144  290,123  518,034  866,784 
Restricted deposits - Brazilian Central Bank 3,759,576  2,545,907  3,775,958  3,549,190 
Privatization currencies 26,730  -  82,582  61,002 
Subject to collateral provided 1,137,397  1,268,743  1,186,474  1,786,110 
Derivative financial instruments (Notes 3d and 33c) 978,275  377,295  802,449  529,908 
INTERBANK ACCOUNTS (Note 11) 15,332,902  15,054,849  14,250,988  14,495,271 
Unsettled payments and receipts 1,713,413  2,467,990  540,029  591,809 
Restricted deposits:
- Brazilian Central Bank 13,600,144  12,572,534  13,637,429  13,791,640 
- National Treasury - Rural funding 578  578  578  578 
- National Housing System - SFH 17,369  13,433  42,409  70,433 
Correspondent banks 1,398  314  30,543  40,811 
INTERDEPARTMENTAL ACCOUNTS 155,580  194,738  155,816  215,081 
Internal transfer of funds 155,580  194,738  155,816  215,081 
CREDIT OPERATIONS (Notes 3e, 12 and 33b) 27,161,859  20,455,113  30,793,228  29,391,052 
Credit operations:
- Public sector 319,258  6,094  320,000  21,707 
- Private sector 29,383,547  22,572,518  33,169,331  32,100,330 
Allowance for loan losses (Notes 3e, 12f and 12g) (2,540,946) (2,123,499) (2,696,103) (2,730,985)
LEASING OPERATIONS (Notes 2, 3e, 12 and 33b) -  -  760,310  800,363 
Leasing receivables:
- Private sector -  -  1,606,325  1,758,456 
Unearned lease income -  -  (787,552) (881,841)
Allowance for leasing losses (Notes 3e, 12f and 12g) -  -  (58,463) (76,252)
OTHER RECEIVABLES 18,772,878  16,092,225  20,707,195  19,064,757 
Receivables on guarantees honored (Note 12a-2) 940  1,357  940  1,363 
Foreign exchange portfolio (Note 13a) 15,126,391  12,645,702  15,126,391  13,116,764 
Income receivable 562,774  521,248  248,667  256,693 
Negotiation and intermediation of securities 187,918  110,533  232,049  164,452 
Insurance premiums receivable (Note 4a) -  -  969,370  927,830 
Sundry (Note 13b) 3,018,002  2,911,475  4,261,902  4,741,239 
Allowance for other losses (Notes 3e, 12f and 12g) (123,147) (98,090) (132,124) (143,584)
OTHER ASSETS (Note 14) 179,138  225,247  732,838  857,527 
Other assets 214,994  263,089  469,977  601,055 
Allowance for losses (115,774) (142,895) (231,159) (211,504)
Prepaid expenses (Notes 4a and 14b) 79,918  105,053  494,020  467,976 
LONG-TERM RECEIVABLES 29,766,003  12,948,866  37,105,305  24,394,127 
INTERBANK INVESTMENTS (Notes 3b and 9) 2,370,769  479,540  616,569  193,877 
Interbank deposits 2,374,047  479,628  619,847  194,005 
Provision for losses (3,278) (88) (3,278) (128)
SECURITIES AND DERIVATIVE FINANCIAL INSTRUMENTS (Notes 3c, 10, 33b and 33c) 9,990,869  2,667,987  11,869,329  5,272,687 
Own portfolio 6,138,574  1,501,804  10,118,878  4,923,715 
Subject to repurchase agreements 3,128,320  1,002,895  1,101,003  8,081 
Restricted deposits - Brazilian Central Bank 225,559  -  225,559  19,498 
Privatization currencies 7,204  21,996  7,314  22,006 
Subject to collateral provided 397,494  -  401,026  60,553 
Derivative financial instruments (Notes 3d and 33c) 93,718  141,292  15,549  238,834 
INTERBANK ACCOUNTS (Note 11) 152,239  142,637  276,361  314,103 
Restricted deposits:
- National Housing System - SFH 152,239  142,637  276,361  314,103 
CREDIT OPERATIONS (Notes 3e, 12 and 33b) 12,339,758  7,136,349  15,453,492  11,735,320 
Credit operations:
- Public sector 286,625  53,956  288,542  174,607 
- Private sector 13,179,629  7,801,866  16,381,259  12,618,483 
Allowance for loan losses (Notes 3e, 12f and 12g) (1,126,496) (719,473) (1,216,309) (1,057,770)
LEASING OPERATIONS (Notes 2, 3e, 12 and 33b) -  -  480,659  592,412 
Leasing receivables:
- Private sector -  -  1,112,170  1,319,109 
Unearned lease income -  -  (578,967) (674,687)
Allowance for leasing losses (Notes 3e, 12f and 12g) -  -  (52,544) (52,010)
OTHER RECEIVABLES 4,688,200  2,302,106  8,083,125  5,942,328 
Foreign exchange portfolio (Note 13a) -  -  -  13,749 
Income receivable 1,727  536  4,275  3,026 
Negotiation and intermediation of securities -  -  514  190 
Insurance premiums receivable (Note 4a) -  -  424  4,786 
Sundry (Note 13b) 4,692,923  2,306,472  8,135,588  5,968,741 
Allowance for other losses (Notes 3e, 12f and 12g) (6,450) (4,902) (57,676) (48,164)
OTHER ASSETS (Note 14) 224,168  220,247  325,770  343,400 
Other assets -  -  31,484  123,734 
Allowance for losses -  -  (12,904) (44,031)
Prepaid expenses (Notes 4a and 14b) 224,168  220,247  307,190  263,697 
PERMANENT ASSETS 19,474,174  18,414,493  5,271,001  5,173,459 
INVESTMENTS (Notes 3h, 15 and 33b) 17,208,794  16,858,835  1,006,024  494,593 
Investments in subsidiary and associated companies:
- Local 16,461,601  16,635,329  480,115  349,332 
- Foreign 782,751  242,739  -  - 
Other investments 81,613  56,477  889,362  506,058 
Allowance for losses (117,171) (75,710) (363,453) (360,797)
PROPERTY AND EQUIPMENT IN USE (Notes 3i and 16) 1,384,669  1,122,742  2,296,477  2,638,583 
Buildings in use 518,795  517,664  1,378,677  1,707,658 
Other fixed assets 2,750,485  2,326,213  3,549,161  3,847,718 
Accumulated depreciation (1,884,611) (1,721,135) (2,631,361) (2,916,793)
LEASED ASSETS (Note 16) -  -  29,626  27,471 
Leased assets -  -  67,283  50,458 
Accumulated depreciation -  -  (37,657) (22,987)
DEFERRED CHARGES (Notes 2, 3j and 17) 880,711  432,916  1,938,874  2,012,812 
Organization and expansion costs 1,903,064  866,655  1,187,592  1,242,459 
Accumulated amortization (1,022,353) (433,739) (647,517) (681,030)
Goodwill on acquisition of subsidiaries, net of amortization (Notes 2, 3j and 17a) -  -  1,398,799  1,451,383 
T O T A L 146,572,244  120,578,276  176,253,812  154,489,274 

BRADESCO CONSOLIDATED BRADESCO
LIABILITIES AND STOCKHOLDERS' EQUITY 2004 2003 2004 2003
CURRENT LIABILITIES 99,202,533  84,582,126  117,612,267  103,918,959 
DEPOSITS (Notes 3k and 18a) 50,842,609  40,156,329  50,027,315  43,122,453 
Demand deposits 13,275,054  10,164,061  13,541,311  11,524,911 
Savings deposits 22,411,110  19,404,887  22,456,494  20,736,387 
Interbank deposits 1,463,686  3,310,852  47,250  39,524 
Time deposits (Note 33b) 13,692,759  7,276,529  13,982,260  10,821,631 
DEPOSITS RECEIVED UNDER SECURITY REPURCHASE AGREEMENTS (Notes 3k and 18a) 15,987,556  18,368,864  15,398,767  17,605,239 
Own portfolio 1,628,913  351,154  1,753,073  919,493 
Third-party portfolio 13,862,715  16,937,617  13,545,400  16,685,746 
Unrestricted portfolio 495,928  1,080,093  100,294  - 
FUNDS FROM ISSUANCE OF SECURITIES (Notes 18b and 33b) 4,809,608  3,535,449  4,272,916  4,001,492 
Mortgage notes 1,057,870  442,667  1,066,807  521,503 
Debentures -  -  -  29,253 
Securities issued abroad 3,751,738  3,092,782  3,206,109  3,450,736 
INTERBANK ACCOUNTS 1,308,909  2,340,952  128,261  523,626 
Unsettled receipts and payments 1,163,207  1,791,110  -  - 
Interbank onlendings 21,642  28,211  4,201  60 
Correspondent banks 124,060  521,631  124,060  523,566 
INTERDEPARTMENTAL ACCOUNTS 960,336  1,161,271  961,661  1,210,963 
Third-party funds in transit 960,336  1,161,271  961,661  1,210,963 
BORROWINGS (Notes 19a and 33b) 8,124,053  6,017,831  8,114,985  6,659,971 
Local borrowings - official institutions -  -  1,732  1,882 
Local borrowings - other institutions -  -  11,155  89,348 
Foreign currency borrowings 8,124,053  6,017,831  8,102,098  6,568,741 
LOCAL ONLENDINGS - OFFICIAL INSTITUTIONS (Notes 19b and 33b) 2,553,831  1,344,356  2,664,206  2,144,759 
National Treasury 18,710  53,650  18,710  53,650 
National Bank for Economic and Social Development (BNDES) 1,165,488  744,917  1,165,488  866,865 
Federal Savings Bank (CEF) 34,728  1,553  38,245  64,877 
Government Agency for Machinery and Equipment Financing (FINAME) 1,333,904  542,540  1,439,526  1,157,671 
Other institutions 1,001  1,696  2,237  1,696 
FOREIGN ONLENDINGS (Notes 19b and 33b) 12,343  23,092  52,603  23,497 
Foreign onlendings 12,343  23,092  52,603  23,497 
DERIVATIVE FINANCIAL INSTRUMENTS (Notes 3d and 33) 770,781  239,549  770,936  281,516 
TECHNICAL RESERVES FOR INSURANCE, PRIVATE PENSION PLANS AND SAVINGS BONDS (Notes 3g, 4a and 23) -  -  19,173,779  14,067,666 
OTHER LIABILITIES 13,832,507  11,394,433  16,046,838  14,277,777 
Collection of taxes and other contributions 1,168,336  723,131  1,189,650  852,992 
Foreign exchange portfolio (Note 13a) 8,749,407  7,821,766  8,749,851  7,853,047 
Social and statutory payables 601,577  566,038  602,361  581,099 
Taxes and social security contributions 505,652  603,001  1,043,445  1,405,956 
Negotiation and intermediation of securities 141,534  74,521  186,416  133,722 
Subordinated debt (Notes 21 and 33b) 50,447  9,820  73,912  44,734 
Sundry (Note 22) 2,615,554  1,596,156  4,201,203  3,406,227 
LONG-TERM LIABILITIES 33,713,931  23,470,632  44,887,313  37,903,967 
DEPOSITS (Notes 3k and 18a) 16,439,334  13,657,636  14,106,167  13,699,753 
Interbank deposits 2,260,510  3,127,055  -  13 
Time deposits (Note 33b) 14,178,824  10,530,581  14,106,167  13,699,740 
DEPOSITS RECEIVED UNDER SECURITY REPURCHASE AGREEMENTS (Notes 3k and 18a) 1,345,508  963,437  1,347,300  963,437 
Own portfolio 1,345,508  963,437  1,347,300  963,437 
FUNDS FROM ISSUANCE OF SECURITIES (Notes 18b and 33b) 3,194,598  1,273,981  2,807,394  1,743,463 
Mortgage notes 24,102  148,501  24,102  155,215 
Debentures -  -  -  1,271 
Securities issued abroad 3,170,496  1,125,480  2,783,292  1,586,977 
BORROWINGS (Notes 19a and 33b) 779,411  691,308  779,411  1,051,531 
Local borrowings - Other institutions -  -  -  118,228 
Foreign currency borrowings 779,411  691,308  779,411  933,303 
LOCAL ONLENDINGS - OFFICIAL INSTITUTIONS (Notes 19b and 33b) 5,091,002  3,076,009  5,203,807  4,687,568 
BNDES 2,530,438  1,864,391  2,530,438  2,166,833 
CEF 402,860  -  413,022  400,196 
FINAME 2,157,704  1,211,618  2,258,387  2,120,539 
Other institutions -  -  1,960  - 
FOREIGN ONLENDINGS (Notes 19b and 33b) 1,385  5,044  1,385  5,044 
Foreign onlendings 1,385  5,044  1,385  5,044 
DERIVATIVE FINANCIAL INSTRUMENTS (Notes 3d and 33) 16,266  5,803  13,420  28,273 
TECHNICAL RESERVES FOR INSURANCE, PRIVATE PENSION PLANS AND SAVINGS BONDS (Notes 3g, 4a and 23) -  -  10,304,566  8,664,610 
OTHER LIABILITIES 6,846,427  3,797,414  10,323,863  7,060,288 
Foreign exchange portfolio (Note 13a) -  -  -  493 
Social and statutory payables -  -  15,329  - 
Taxes and social security contributions 727,211  685,354  3,109,550  2,654,976 
Subordinated debt (Notes 21 and 33b) 5,507,343  2,696,961  6,107,343  3,293,011 
Sundry (Note 22) 611,873  415,099  1,091,641  1,111,808 
DEFERRED INCOME 5,408  3,414  37,889  36,987 
Deferred income 5,408  3,414  37,889  36,987 
MINORITY INTEREST IN SUBSIDIARY COMPANIES (Note 24) -  -  65,971  107,257 
STOCKHOLDERS' EQUITY (Note 25) 13,650,372  12,522,104  13,650,372  12,522,104 
Capital:
- Local residents 6,343,955  6,693,955  6,343,955  6,693,955 
- Foreign residents 656,045  306,045  656,045  306,045 
Capital reserves 10,270  7,890  10,270  7,890 
Revenue reserves 6,665,288  5,520,297  6,665,288  5,520,297 
Mark-to-market adjustment - securities and derivatives 27,703  (6,083) 27,703  (6,083)
Treasury stock (52,889) -  (52,889) - 
STOCKHOLDERS’ EQUITY MANAGED BY THE PARENT COMPANY -  -  13,716,343  12,629,361 
T O T A L 146,572,244  120,578,276  176,253,812  154,489,274 

Statement of Income for the Six-month
ended June 30 - In thousand of reais

BRADESCO CONSOLIDATED BRADESCO
  2004 2003 2004 2003
INCOME FROM LENDING AND TRADING ACTIVITIES 9,492,701  8,402,308  14,476,183  12,174,767 
 
Credit operations (Notes 4a and 12i) 5,241,878  4,083,563  6,758,813  5,620,623 
Leasing operations (Note 12i) -  -  141,827  143,163 
Securities transactions (Note 10e) 2,930,987  3,589,931  3,801,447  2,785,994 
Financial income on insurance, private pension plans and savings bonds (Notes 4a and 10e) -  -  2,426,180  2,613,256 
Derivative financial instruments (Note 33c V) 139,172  (245,716) 126,860  13,157 
Foreign exchange transactions (Note 13a) 658,697  327,413  663,403  267,651 
Compulsory deposits (Note 11b) 521,967  647,117  557,653  730,923 
 
EXPENSES 6,984,889  6,337,825  9,139,901  7,593,125 
Interest and charges on:
Deposits (Note 18c) 4,961,081  4,884,963  5,484,361  4,496,000 
Price-level restatement and interest on technical reserves for insurance, private pension plans and savings bonds (Note 18c) -  -  1,351,008  1,658,010 
Borrowings and onlendings (Note 19c) 1,078,503  221,551  1,221,377  37,685 
Leasing operations (Note 12i) -  -  8,607  6,396 
Provision for loan losses (Notes 3e, 12f and 12g) 945,305  1,231,311  1,074,548  1,395,034 
 
INCOME FROM FINANCIAL INTERMEDIATION 2,507,812  2,064,483  5,336,282  4,581,642 
 
OTHER OPERATING INCOME (EXPENSES) (1,537,456) (1,078,000) (3,915,834) (2,582,571)
 
Commissions and fees (Notes 4a and 26) 1,943,596  1,467,364  2,694,138  2,099,912 
Income on insurance premiums, private pension plans and savings bonds (Notes 3g, 4a and 23c) -  -  5,982,970  5,417,622 
Change in technical reserves for insurance, private pension plans and savings bonds (Notes 3g and 4a) -  -  (1,570,944) (1,662,808)
Claims - insurance operations (Notes 3g and 4a) -  -  (2,513,910) (1,993,585)
Savings bond draws and redemption (Notes 3g and 4a) -  -  (619,474) (514,707)
Insurance and pension plan selling expenses (Note 3g) -  -  (417,473) (363,020)
Expenses with pension plan benefits and redemptions (Note 3g) -  -  (1,123,140) (851,268)
Personnel expenses (Note 27) (1,949,249) (1,550,727) (2,410,603) (2,201,013)
Other administrative expenses (Note 28) (1,923,880) (1,513,049) (2,423,600) (2,253,610)
Tax expenses (384,688) (268,804) (678,987) (506,281)
Equity in the earnings of associated and associated companies (Note 15c) 1,332,107  681,099  122,268  (32,714)
Other operating income (Notes 4a and 29) 170,574  501,885  537,209  1,531,850 
Other operating expenses (Notes 4a and 30) (725,916) (395,768) (1,494,288) (1,252,949)
 
OPERATING INCOME 970,356  986,483  1,420,448  1,999,071 
 
NON-OPERATING INCOME (EXPENSES), NET (Note 31) (21,344) (26,277) (213,714) (777,435)
 
INCOME BEFORE TAXES AND PROFIT SHARING 949,012  960,206  1,206,734  1,221,636 
 
PROVISION FOR INCOME TAX AND SOCIAL CONTRIBUTION (Notes 35a and 35b) 301,037  67,105  46,270  (189,414)
 
MINORITY INTEREST IN SUBSIDIARIES -  -  (2,955) (4,911)
 
NET INCOME 1,250,049  1,027,311  1,250,049  1,027,311 
INTEREST ATTRIBUTED TO OWN CAPITAL (Note 25c) (651,401) (633,326)
Number of oustanding shares (Notes 25a and 25b) 158,171,124  158,587,941 
Net income per thousand shares - In reais 7.90  6.48 

Statement of Changes in Stockholders' Equity - In thousands of reais

Events Paid-up capital Capital reserves Revenue reserves Mark-to-market adjustment - Securities and Derivatives Treasury stock Retained Earnings Total
Capital Income tax incentives Other Legal Statutory Own Associated and subsidiary companies
At December 31, 2002 5,200,000  -  7,435  799,312  4,916,005  100,871  (91,719) (86,175) -  10,845,729 
Capital increase through subscription 501,000  -  -  -  -  -  -  -  -  501,000 
Capital increase through incorporation of shares 788,735  -  -  -  -  -  -  -  -  788,735 
Capital increase with reserves 510,265  -  (7,435) -  (502,830) -  -  -  -  - 
Share premium -  -  7,046  -  -  -  -  -  -  7,046 
Cancellation of treasury stock -  -  -  -  (86,175) -  -  86,175  -  - 
Fiscal incentives -  844  -  -  -  -  -  -  -  844 
Mark-to-market adjustment - Securities and derivatives -  -  -  -  -  (26,699) 11,464  -  -  (15,235)
Net income -  -  -  -  -  -  -  -  1,027,311  1,027,311 
Appropriation of net income
- Reserves -  -  -  51,366  342,619  -  -  -  (393,985) - 
- Interest attributed to own capital -  -  -  -  -  -  -  -  (633,326) (633,326)
At June 30, 2003 7,000,000  844  7,046  850,678  4,669,619  74,172  (80,255) -  -  12,522,104 
At December 31, 2003 7,000,000  844  7,821  914,629  5,152,011  (43,019) 521,936  (7,342) -  13,546,880 
Adjustment of Exchange Membership Certificates -  -  346  -  -  -  -  -  -  346 
Treasury stocks -  -  -  -  -  -  -  (45,547) -  (45,547)
Fiscal incentives -  1,259  -  -  -  -  -  -  -  1,259 
Mark-to-market adjustment - Securities and derivatives -  -  -  -  -  (6,874) (444,340) -  -  (451,214)
Net income -  -  -  -  -  -  -  -  1,250,049  1,250,049 
Appropriation of net income
- Reserves -  -  -  62,503  536,145  -  -  -  (598,648) - 
- Interest attributed to own capital -  -  -  -  -  -  -  -  (651,401) (651,401)
At June 30, 2004 7,000,000  2,103  8,167  977,132  5,688,156  (49,893) 77,596  (52,889) -  13,650,372 

Statement of Changes in Financial Position for the
Six-month Period ended June 30 - In thousand of reais

BRADESCO CONSOLIDATED BRADESCO
  2004 2003 2004 2003
FINANCIAL RESOURCES WERE PROVIDED BY : 37,376,862  18,963,987  30,440,701  16,583,822 
NET INCOME 1,250,049  1,027,311  1,250,049  1,027,311 
ADJUSTMENTS TO NET INCOME (850,714) (767,214) 432,861  1,179,556 
Depreciation and amortization 191,703  173,355  286,681  291,166 
Amortization of goodwill 120,990  57,956  313,547  799,889 
Change in provision for investments (555) (9,879) (8,037) 39,167 
Equity in the earnings of subsidiary and associated companies (1,332,107) (681,099) (122,268) 32,714 
Other 169,255  (307,547) (37,062) 16,620 
CHANGE IN DEFERRED INCOME (2,212) (3,311) 6,115  21,144 
CHANGE IN MINORITY INTEREST -  -  (46,758) (163,807)
MARK-TO-MARKET ADJUSTMENT - SECURITIES AVAILABLE FOR SALE (451,214) (15,235) (451,214) (15,235)
STOCKHOLDERS -  1,296,781  -  1,296,781 
Capital increase through subscription -  501,000  -  501,000 
Capital increase through incorporation of shares -  788,735  -  788,735 
Share premium -  7,046  -  7,046 
FISCAL INCENTIVE INVESTMENTS 1,259  844  1,259  844 
THIRD PARTIES:
- Increase in liabilities 23,204,474  16,802,639  17,354,898  12,503,494 
Deposits 10,491,901  4,867,662  6,109,597  459,043 
Deposits received under security repurchase agreements -  4,566,548  -  2,555,711 
Funds from issuance of securities 1,544,141  2,164,091  233,414  2,608,113 
Interbank accounts 765,083  1,757,944  -  - 
Borrowings and onlendings 3,810,862  -  2,021,614  - 
Derivative financial instruments 746,238  51,413  731,987  - 
Technical reserves for insurance, private pension plans and savings bonds -  -  3,069,393  3,576,797 
Other liabilities 5,846,249  3,394,981  5,188,893  3,303,830 
- Decrease in assets 9,765,866  2,145  11,619,883  515,359 
Interbank investments 9,285,637  -  11,195,456  476,968 
Securities and derivative financial instruments 140,530  -  -  - 
Interdepartmental accounts 339,699  -  358,963  - 
Leasing operations -  -  65,464  38,391 
Other assets -  2,145  -  - 
- Sale (write-off) of assets and investments 4,298,838  348,833  257,828  196,501 
Non-operating assets 46,013  57,137  139,259  88,888 
Property and equipment in use and leased assets 22,168  6,966  50,365  62,493 
Investments 4,230,128  280,036  41,545  18,430 
Sale (write-off) of deferred charges 529  4,694  26,659  26,690 
- Interest attributed to own capital and dividends received from subsidiary and associated companies 160,516  271,194  15,780  21,874 
TOTAL FUNDS PROVIDED 37,471,504  19,207,633  30,667,157  17,596,648 
INTEREST ATTRIBUTED TO OWN CAPITAL AND DIVIDENDS PAID AND/OR DECLARED 651,401  633,326  651,401  633,326 
ACQUISITION OF OWN SHARES 45,547  -  45,547  - 
INVESTMENTS IN: 2,585,532  3,497,517  372,136  670,913 
Non-operating assets 43,379  39,313  41,575  125,274 
Property and equipment in use and leased assets 343,880  187,308  287,535  460,298 
Investments 2,198,273  3,270,896  43,026  85,341 
DEFERRED CHARGES 548,055  191,123  571,041  503,558 
INCREASE IN ASSETS 15,973,591  13,041,151  11,758,896  13,446,124 
Interbank investments -  2,086,512  -  - 
Securities and derivative financial instruments -  1,869,449  2,407,732  5,792,078 
Interbank accounts 2,598,887  3,807,398  514,512  1,865,942 
Interdepartmental accounts -  17,699  -  23,342 
Credit operations 8,079,928  1,197,258  4,084,002  1,421,093 
Other receivables 5,280,043  4,062,835  4,611,119  4,103,324 
Insurance premiums receivable -  -  80,436  213,707 
Other assets 14,733  -  61,095  26,638 
DECREASE IN LIABILITIES 17,667,378  1,844,516  17,268,136  2,342,727 
Deposits received under security repurchase agreements 16,918,189  -  16,046,658  - 
Interbank accounts -  -  401,071  83,070 
Interdepartmental accounts 749,189  23,935  820,407  126,766 
Borrowings and onlendings -  1,820,581  -  1,865,983 
Derivative financial instruments -  -  -  266,908 
(DECREASE) INCREASE IN FUNDS AVAILABLE (94,642) (243,646) (226,456) (1,012,826)
CHANGES IN At the beginning of the period 2,191,480  1,780,121  2,448,426  2,785,707 
FINANCIAL At the end of the period 2,096,838  1,536,475  2,221,970  1,772,881 
POSITION Decrease in funds available (94,642) (243,646) (226,456) (1,012,826)

BANCO BRADESCO S.A.

Notes to the Financial Statements

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) PROVISION FOR 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 transaction, 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 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) and Superintendency of Private Insurance (SUSEP) and the National Agency for Supplementary Health (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, upon consolidation, intercompany investments, account balances, revenue, expenses and unrealized income were eliminated from the financial statements and, in the case of investments which are jointly controlled with other stockholders, asset, liability and income components are 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 variation arising from permanent investments in subsidiaries and foreign branches was allocated to the statement of income accounts in accordance with the corresponding assets and liabilities from which it 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 in June 30:

Activity Area % Ownership
    2004 2003
Financial area - Local
Banco Alvorada S.A. (1) Banking 100.00% 100.00%
Banco Baneb S.A. (2) Banking 99.94% 99.97%
Banco BEM S.A. (3) Banking 90.14% -
Banco BCN S.A. (4) Banking - 100.00%
Banco Boavista Interatlântico S.A. Banking 100.00% 100.00%
Banco de Crédito Real de Minas Gerais S.A. (5) Banking 99.99% 99.99%
Banco Finasa de Investimento S.A. (6) Investment Bank 98.65% 97.40%
Banco Finasa S.A. (5) 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% -
Bradesco BCN Leasing S.A. Arrendamento Mercantil (5) Leasing 99.97% 99.97%
Bradesco Consórcios Ltda. Consortium Management 99.99% 99.99%
Bradesco S.A. Corretora de Títulos e Valores Mobiliários Brokerage 99.99% 99.99%
BRAM – Bradesco Asset Management Ltda. Asset Management 99.99% 99.99%
Companhia Brasileira de Meios de Pagamento – VISANET (8) (9) (10) (11) (12) Services 39.71% 39.49%
 
Financial area - Foreign
Alvorada Nassau (1) Banking 100.00% 100.00%
Banco Bradesco Argentina S.A. (9) (10) Banking 99.99% 99.99%
Banco Bradesco Luxembourg S.A. (13) Banking 100.00% 99.99%
Banco Mercantil de São Paulo International S.A. (13) Banking - 100.00%
BCN Grand Cayman (5) Banking 100.00% 100.00%
Boavista Grand Cayman Banking 100.00% 100.00%
Boavista Nassau Banking 100.00% 100.00%
Bradesco Grand Cayman (14) Banking 100.00% 100.00%
Bradesco New York Banking 100.00% 100.00%
Bradesco Securities, Inc. Brokerage 100.00% 100.00%
Mercantil Grand Cayman (15) Banking 100.00% 100.00%
Insurance, pension plan and savings bond area
ABS – Empreendimentos Imobiliários, Participações e Serviços S.A. (16) Real Estate - 99.12%
Atlântica Capitalização S.A. (17) Savings Bonds 99.46% 99.70%
Áurea Seguros S.A. (8) (9) (10) (17) Insurance 27.35% 27.42%
Bradesco Argentina de Seguros S.A. (10) (17) Insurance 99.24% 99.47%
Bradesco Capitalização S.A. (17) (18) Savings Bonds 99.09% 99.69%
Bradesco Saúde S.A. (17) Insurance 99.46% 99.70%
Bradesco Seguros S.A. (17) Insurance 99.46% 99.70%
Bradesco Vida e Previdência S.A. (17) Pension Plans/Insurance 99.46% 99.69%
Finasa Seguradora S.A. (17) Insurance 99.22% 99.46%
Indiana Seguros S.A. (17) (19) Insurance 39.79% 39.88%
Seguradora Brasileira de Crédito à Exportação S.A. (8) (9) (10) (17) Insurance 12.02% 12.05%
Bradesco Auto/RE Companhia de Seguros (20) (21) Insurance 99.46% 91.41%
 
Other activities
Átria Participações S.A. (17) Holding Company 99.46% 99.68%
Bradescor Corretora de Seguros Ltda. Insurance Brokerage 99.99% 99.99%
Cia. Securitizadora de Crédito Financeiro Boavista (22) Credit acquisition 99.34% -
Cia. Securitizadora de Crédito Financeiro Interatlântico (22) Credit acquisition 99.46% -
Cibrasec - Companhia Brasileira de Securitização (8) (9) (10) (23) Credit acquisition 10.00% 12.50%
CPM Holdings Limited (8) (9) (10) Holding Company 49.00% 49.00%
Latasa S.A. (24) Metal Products - 39.74%
Nova Paiol Participações S.A. (17) Holding Company 99.46% 99.70%
Scopus Tecnologia S.A. Information Technology 99.99% 99.99%
Serasa S.A. (6) (8) (9) (10) Services 26.37% 26.31%
Smart Club do Brasil Ltda. (8) Services 36.36% 36.36%
União de Comércio e Participações Ltda. Holding Company 99.99% 99.99%

(1)

New names of Banco Bilbao Vizcaya Argentaria Brasil S.A – BBV Banco and its branch BBV Banco Nassau.
(2)

Percentage ownership decreased following the merger of Banco BEA S.A. in April 2003.
(3)

Acquired on February 10, 2004.
(4)

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.
(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 4).
(6)

Percentage ownership increased through acquisition of shares.
(7)

Acquired on February 16, 2004.
(8)

Proportionally consolidated in accordance with CMN Resolution 2723 and CVM Instruction 247.
(9)

Companies audited by other independent auditors in 2003.
(10)

Companies audited by other independent auditors in 2004.
(11)

Percentage ownership increased through acquisition of BBV Banco in June 2003.
(12)

The joint venture partnership called Brazilian Merchant Voucher Receivables Limited operating in the securitization of the future flow of credit card bill receivables from foreign cardholders is being consolidated (Note 18b).
(13)

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.
(14)

The joint venture partnership called International Diversified Payment Rights Company, operating in the securitization of the future flow of payment orders received from abroad is being consolidated (Note 18b).
(15)

Became a direct subsidiary of Banco Bradesco S.A. following the partial spin-off of Banco Mercantil de São Paulo S.A. in March 2004.
(16)

Merged into Bradesco Capitalização S.A. in December 2003.
(17)

Percentage ownership decreased through the incorporation of the minority stockholders’ shares of União Novo Hamburgo de Seguros S.A.
(18)

Percentage ownership decreased through the incorporation of ABS-Empreendimentos Imobiliários, Participações e Serviços S.A. in December 2003.
(19)

A subsidiary since percentage ownership totals 51% of voting capital.
(20)

Percentage ownership increased through acquisition and incorporation of the minority stockholders’ shares of União Novo Hamburgo de Seguros S.A.
(21)

Formerly União Novo Hamburgo de Seguros S.A.
(22)

Acquired on June 25, 2004.
(23)

Percentage ownership decreased through sale of shares to third parties.
(24)

Sold in October 2003.

3) SIGNIFICANT ACCOUNTING POLICIES

a) Determination of net income

Income and expenses are recorded on the accrual basis. 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. Post-fixed or foreign-currency-indexed transactions are adjusted to the balance sheet date. 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.

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 companies and the Brazilian Institute of Reinsurers (IRB), respectively.

The revenue from savings bond plans 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 plan contributions are effectively received.

The private 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 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

Securities are classified and recorded as presented below:

-

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 in compliance with: (i) the parameters established by CMN Resolution 2.682 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 2.682 is also taken into account for customer risk classification purposes, as follows:

  Length of delay Customer classification
• No delay AA
• Up to 14 days A
• 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 operations classified at “H” level remain at this level for six months, subsequent to which time they are written 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 with a classification equal to their prior classification. Renegotiated operations, already written off against the allowance and which are recorded in memorandum accounts are classified at “H” level and any gains derived from their renegotiation are recognized as revenue only when they are effectively received.

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 “Other receivables - sundry”, and the provision for deferred tax liabilities on excess depreciation and mark-to-market adjustments of securities is recorded in “Other liabilities - taxes and social security contributions”. 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 are 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

Provision for unearned premiums

These are recorded at the amount of that portion of the insurance premiums issued retained, corresponding to the unexpired risk periods of the insurance contracts, in accordance with the criteria determined by SUSEP and ANS standards.

Benefits to be granted and benefits granted

Mathematical provisions comprise the amount 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 provisions comprise the present value of future benefits estimated based on actuarial methods and assumptions. The provision for benefits to be granted comprises participants whose receipt of benefits has not yet commenced and the provision for benefits granted comprises participants who are currently receiving benefits.

Savings Bonds - mathematical provisions for redemptions and draws

These were recorded in conformity with the 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 provision for payment of unsettled claims is recorded based on estimated probable payments, 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 amount of the claims incurred, but which have not yet been reported to the insurance companies by the policyholders/beneficiaries.

h) Investments

Significant investments in subsidiaries, 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 year.

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 the net book value, unaudited, informed by the corresponding exchanges and fiscal incentives and other investments were recorded at cost, net of 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 annual 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%.

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 June 30, 2003 account balances were reclassified.

At June 30, 2003 – In thousands of reais
CONSOLIDATED BRADESCO
BALANCE SHEET Prior
Disclosure 		Reclassifications Reclassified
Balance
ASSETS
Current assets and long-term receivables 149,315,815  -  149,315,815 
Other receivables 25,217,163  (210,078) 25,007,085 
Insurance premiums receivable (1) 1,142,694  (210,078) 932,616 
Other assets 990,849  210,078  1,200,927 
Prepaid expenses (1) 521,595  210,078  731,673 
Total assets 154,489,274  -  154,489,274 
 
LIABILITIES
Current and long-term liabilities 121,965,411  19,857,515  141,822,926 
Technical reserves for insurance, private pension
plans and savings bonds (2) -  22,732,276  22,732,276 
Other liabilities 24,212,826  (2,874,761) 21,338,065 
Technical reserves for insurance, private pension
plans and savings bonds (2) 2,874,761  (2,874,761) - 
Technical reserves for insurance, private pension     - 
plans and savings bonds (2) 19,857,515  (19,857,515)
Total liabilities 154,489,274  -  154,489,274 

Six-month period ended June 30, 2003 – In thousands of reais
CONSOLIDATED BRADESCO
STATEMENT OF INCOME Prior
Disclosure 		Reclassifications Reclassified
Balance
Income from lending and trading activities 12,181,690  (6,923) 12,174,767 
Credit operations (3) 5,627,546  (6,923) 5,620,623 
 
Income from financial intermediation 4,588,565  (6,923) 4,581,642 
 
Other operating income (expenses) (2,589,494) 6,923  (2,582,571)
Commissions and fees (3) 2,092,989  6,923  2,099,912 
Premiums retained for insurance, private pension
plans and savings bonds (4) 5,679,414  (261,792) 5,417,622 
Change in technical reserves for insurance, private
pension plans and savings bonds (5) (1,725,366) 62,558  (1,662,808)
Claims - insurance operations (4) (2,255,377) 261,792  (1,993,585)
Savings bond draws and redemptions (5) (452,149) (62,558) (514,707)
Other operating income (6) 1,494,061  37,789  1,531,850 
Other operating expenses (6) (1,215,160) (37,789) (1,252,949)
 
Net income 1,027,311  -  1,027,311 

(1)

Transfer of other receivables – insurance premiums receivable, to other assets – prepaid expenses, related to the deferral of insurance brokerage commission.
(2)

Reclassified in compliance with SUSEP’s new plan of accounts.
(3)

Reclassification of the initial credit opening fee of Banco Finasa and BCN, from credit operations to income on commissions and fees.
(4)

Pursuant to SUSEP requirements, VGBL plan redemptions were reclassified from claims to premium refunds.
(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 rendered by Scopus Tecnologia.

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

Adjusted balance sheet and statement of income accounts:

At June 30, 2004 – In thousands of reais
BALANCE SHEET Banco Zogbi
and other
companies
(1) 		BEM
and
subsidiaries
(2)
ASSETS    
Current assets and long-term receivables 523,558  961,491 
Funds available 1,719  44,954 
Interbank investments 104,194  168,870 
Securities and derivative financial instruments 75,296  507,181 
Interbank and interdepartmental accounts 2,772  29,699 
Credit and leasing operations 285,185  105,597 
Other receivables and other assets 54,392  105,190 
Permanent assets 30,026  10,146 
- Investments 1,401  95 
- Property and equipment in use 26,540  9,971 
- Deferred charges 2,085  80 
Total 553,584  971,637 
LIABILITIES
Current and long-term liabilities 207,394  1,022,178 
Demand, time and interbank deposits 89,305  282,151 
Savings deposits -  45,383 
Deposits received under security repurchase agreements and
funds from issuance of securities -  497,902 
Interbank and interdepartmental accounts 2,389  8,517 
Borrowings and onlendings 40,260  3,196 
Other liabilities 75,440  185,029 
Minority interest in subsidiaries 5,847  - 
Stockholders’ equity 340,343  (50,541)
Total 553,584  971,637 

In thousands of reais
STATEMENT OF INCOME Banco Zogbi
and other
companies
(1) 		BEM
and
subsidiaries
(2)
Period from February 1 to June 30, 2004
Income from lending and trading activities 111,633  57,297 
Expenses (43,906) (35,544)
Income from financial intermediation 67,727  21,753 
Other operating income (expenses) (41,588) (3,706)
Operating income (expenses) 26,139  18,047 
Non-operating income (expenses), net 65  (6,947)
Income before income tax and social contribution 26,204  11,100 
Provision for income tax and social contribution (8,600) (9,315)
Minority interest in subsidiaries (175) - 
Adjusted net income 17,429  1,785 

(1)

Includes Promosec Cia. Securitizadora de Créditos Financeiros, Zogbi Leasing S.A. Arrendamento Mercantil, Zogbi Distribuidora de Títulos e Valores Mobiliários Ltda. and Promovel Empreendimentos e Serviços Ltda.
(2)

Under management of Banco Bradesco S.A., provisions were recorded in Banco BEM S.A. (formerly Banco do Estado do Maranhão S.A.) to cover certain contingencies and were responsible for its present stockholders’ deficit. An auction for shares was held on July 27, 2004, according to the Public Share Offer (OPA) filed at the CVM on March 12, 2004, through which 35,499,857 common shares were acquired, comprising 99.92% of minority interest, in compliance with the requirements for cancellation of its listing as a publicly held company As soon as this operation is concluded, the capital necessary for the bank to comply with legal minimum capital and stockholders’ equity requirements will be transferred to Banco BEM S.A.

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

The 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 June 30 – In thousands of reais
Financial
(1) (2) 		Insurance Group
(2) (3) 		Other
Activities
(2) 		Amount
Eliminated
(4) 		CONSOLIDATED
BRADESCO
  Local Foreign Local Foreign      
ASSETS
Current assets and long-term receivables 120,727,126  21,128,257  35,044,570  45,733  384,213  (6,347,088) 170,982,811 
Funds available 2,126,491  77,243  56,557  2,914  15,054  (56,289) 2,221,970 
Interbank investments 17,966,653  3,855,379  -  -  -  (1,293,485) 20,528,547 
Securities and derivative financial instruments 15,429,083  9,700,443  32,371,291  38,607  135,738  (1,462,650) 56,212,512 
Interbank and interdepartmental accounts 14,675,512  7,653  -  -  -  -  14,683,165 
Credit and leasing operations 43,683,827  7,143,402  -  -  -  (3,339,540) 47,487,689 
Other receivables and other assets 26,845,560  344,137  2,616,722  4,212  233,421  (195,124) 29,848,928 
Permanent assets 12,334,491  383,649  974,327  325  228,602  (8,650,393) 5,271,001 
Investments (5) 8,757,361  379,932  487,407  -  31,717  (8,650,393) 1,006,024 
Property and equipment in use and leased assets 1,912,553  3,252  300,418  325  109,555  -  2,326,103 
Deferred charges 1,664,577  465  186,502  -  87,330  -  1,938,874 
Total in 2004 133,061,617  21,511,906  36,018,897  46,058  612,815  (14,997,481) 176,253,812 
Total in 2003 125,373,419  12,381,638  27,633,945  46,801  1,176,744  (12,123,273) 154,489,274 
 
LIABILITIES
Current and long-term liabilities 119,368,044  16,979,857  32,176,060  31,428  291,279  (6,347,088) 162,499,580 
Deposits 60,496,601  5,094,134  -  -  -  (1,457,253) 64,133,482 
Deposits received under security repurchase agreements 15,584,049  1,162,018  -  -  -  -  16,746,067 
Funds from issuance of securities 6,062,653  3,639,415  -  -  -  (2,621,758) 7,080,310 
Interbank and interdepartmental accounts 1,089,449  473  -  -  -  -  1,089,922 
Borrowings and onlendings 15,177,144  3,701,818  -  -  -  (2,062,565) 16,816,397 
Derivative financial instruments 782,703  222  -  -  1,431  -  784,356 
Technical reserves for insurance, private pension plans and savings bonds -  -  29,450,596  27,749  -  -  29,478,345 
Other liabilities:
Subordinated debt 2,874,345  3,306,910  -  -  -  -  6,181,255 
Other 17,301,100  74,867  2,725,464  3,679  289,848  (205,512) 20,189,446 
Deferred income 35,894  -  1,986  -  9  -  37,889 
Minority interest and stockholders’ equity in subsidiaries 7,307  4,532,049  3,840,851  14,630  321,527  (8,650,393) 65,971 
Stockholders' equity of the parent company 13,650,372  -  -  -  -  -  13,650,372 
Total in 2004 133,061,617  21,511,906  36,018,897  46,058  612,815  (14,997,481) 176,253,812 
Total in 2003 125,373,419  12,381,638  27,633,945  46,801  1,176,744  (12,123,273) 154,489,274 

b) Statement of Income

Six-month period ended June 30 – In thousands of reais
Financial
(1) (2) 		Insurance Group
(2) (3) 		Other
Activities
(2) 		Amount
Eliminated
(4) 		CONSOLIDATED
BRADESCO
  Local Foreign Local Foreign      
Income from lending and trading activities 11,561,454  580,732  2,430,731  382  7,628  (104,744) 14,476,183 
Expenses 7,573,567  322,467  1,351,168  -  (1,770) (105,531) 9,139,901 
Income from financial intermediation 3,987,887  258,265  1,079,563  382  9,398  787  5,336,282 
Other operating income (expenses) (5) (3,161,178) (92,369) (672,808) (804) 12,112  (787) (3,915,834)
Operating income (expenses) 826,709  165,896  406,755  (422) 21,510  -  1,420,448 
Non-operating income (expenses), net (172,142) 3,211  (45,095) (19) 331  -  (213,714)
Income before taxes and profit sharing 654,567  169,107  361,660  (441) 21,841  -  1,206,734 
Provision for income tax and social contribution 47,256  -  11,460  (39) (12,407) -  46,270 
Minority interest in subsidiaries (3,834) -  1,421  -  (542) -  (2,955)
Net income (loss) in 2004 697,989  169,107  374,541  (480) 8,892  -  1,250,049 
Net income (loss) in 2003 632,200  90,217  261,428  (1,661) 45,127  -  1,027,311 

(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 bonds companies.
(4)

Amounts eliminated between companies from different segments.
(5)

Investments and equity in earnings of associated companies are allocated to the segment to which the companies pertain.

6) BALANCE SHEET BY CURRENCY AND EXCHANGE EXPOSURE

At June 30, 2004 – In thousands of reais
    Currency
  Balance Sheet Local Foreign
(1) (2)
ASSETS
Current assets and long-term receivables 170,982,811  139,001,724  31,981,087 
Funds available 2,221,970  1,954,448  267,522 
 
Interbank investments 20,528,547  16,530,538  3,998,009 
 
Securities and derivative financial instruments 56,212,512  47,062,164  9,150,348 
 
Interbank and interdepartmental accounts 14,683,165  14,675,512  7,653 
 
Credit and leasing operations 47,487,689  40,288,452  7,199,237 
 
Other receivables and other assets 29,848,928  18,490,610  11,358,318 
 
Permanent assets 5,271,001  4,802,365  468,636 
Investments 1,006,024  541,430  464,594 
Property and equipment in use and leased assets 2,326,103  2,322,526  3,577 
Deferred charges 1,938,874  1,938,409  465 
 
Total 176,253,812  143,804,089  32,449,723 
 
LIABILITIES
Current and long-term liabilities 162,499,580  134,486,535  28,013,045 
Deposits 64,133,482  60,347,853  3,785,629 
 
Deposits received under security repurchase agreements 16,746,067  15,584,049  1,162,018 
 
Funds from issuance of securities 7,080,310  1,879,984  5,200,326 
 
Interbank and interdepartmental accounts 1,089,922  413,676  676,246 
 
Borrowings and onlendings 16,816,397  7,311,946  9,504,451 
 
Derivative financial instruments 784,356  784,134  222 
 
Technical reserves for insurance, private pension
plans and savings bonds 29,478,345  29,450,596  27,749 
 
Other liabilities
- Subordinated debt 6,181,255  2,874,345  3,306,910 
- Other 20,189,446  15,839,952  4,349,494 
 
Deferred income 37,889  37,889  - 
 
Minority interest in subsidiaries 65,971  65,971  - 
 
Stockholders’ equity 13,650,372  13,650,372  - 
 
Total 176,253,812  148,240,767  28,013,045 
 
Net position of assets and liabilities       4,436,678 
 
Net position of derivatives (2)       (4,476,040)
 
Other memorandum accounts, net (3)       (490,464)
 
Net exchange position (liability)       (529,826)

(1)

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

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

Leasing commitments and others recorded in memorandum accounts.

7) BALANCE SHEET BY MATURITY

At June 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 103,021,068  17,556,607  13,299,831  37,105,305  -  170,982,811 
Funds available 2,221,970  -  -  -  -  2,221,970 
Interbank investments 18,957,517  630,032  324,429  616,569  -  20,528,547 
Securities and derivative financial
instruments (1) 39,737,023  777,327  3,828,833  11,869,329  -  56,212,512 
Interbank and interdepartmental accounts 14,391,744  7,061  7,999  276,361  -  14,683,165 
Credit and leasing operations 8,287,639  15,481,474  7,784,425  15,934,151  -  47,487,689 
Other receivables and other assets 19,425,175  660,713  1,354,145  8,408,895  -  29,848,928 
Permanent assets 58,420  292,110  350,533  2,959,761  1,610,177  5,271,001 
- Investments -  -  -  -  1,006,024  1,006,024 
- Property and equipment in use and leased assets 20,453  102,267  122,720  1,476,510  604,153  2,326,103 
- Deferred charges 37,967  189,843  227,813  1,483,251  -  1,938,874 
Total in 2004 103,079,488  17,848,717  13,650,364  40,065,066  1,610,177  176,253,812 
 
LIABILITIES
Current and long-term liabilities 93,023,464  14,288,080  10,300,723  44,887,313  -  162,499,580 
Deposits (2) 39,809,160  6,194,375  4,023,780  14,106,167  -  64,133,482 
Deposits received under security repurchase agreements 14,851,491  74,561  472,715  1,347,300  -  16,746,067 
Funds from issuance of securities 1,964,150  1,825,561  483,205  2,807,394  -  7,080,310 
Interbank and interdepartmental accounts 1,089,922  -  -  -  -  1,089,922 
Borrowings and onlendings 1,912,682  4,695,142  4,223,970  5,984,603  -  16,816,397 
Derivative financial instruments 711,647  22,093  37,196  13,420  -  784,356 
Technical reserves for insurance, private pension plans and
savings bonds 18,209,085  704,674  260,020  10,304,566  -  29,478,345 
Other liabilities
- Subordinated debt 50,447  23,465  -  6,107,343  -  6,181,255 
- Other 14,424,880  748,209  799,837  4,216,520  -  20,189,446 
Deferred income 37,889  -  -  -  -  37,889 
Minority interest in subsidiaries -  -  -  -  65,971  65,971 
Stockholders’ equity -  -  -  -  13,650,372  13,650,372 
Total in 2004 93,061,353  14,288,080  10,300,723  44,887,313  13,716,343  176,253,812 
 
Accumulated net assets in 2004 10,018,135  13,578,772  16,928,413  12,106,166  -  - 
Accumulated net assets in 2003 11,543,190  19,826,807  21,591,251  11,506,830  -  - 

(1)

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

Demand and savings account deposits and technical reserves for private insurance and 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 June 30 – In thousands of reais
CONSOLIDATED
BRADESCO 		BRADESCO
  2004 2003 2004 2003
Local currency 1,954,381  1,528,608  1,877,310  1,381,095 
Foreign currency 267,522  243,558  219,486  155,344 
Investments in gold 67  715  42  36 
Total 2,221,970  1,772,881  2,096,838  1,536,475 

b) Statement of cash flows

As additional information for readers, we present below the statement of cash flows prepared based on the indirect method.

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

At June 30 – In thousands of reais
CONSOLIDATED
BRADESCO 		BRADESCO
  2004 2003 2004 2003
OPERATING ACTIVITIES        
NET INCOME 1,250,049  1,027,311  1,250,049  1,027,311 
ADJUSTMENTS TO RECONCILE NET INCOME TO CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES
Provision for loan losses 1,074,548  1,395,034  945,305  1,231,311 
(Reversal of) Provision for losses on interbank investments, securities and investments (4,367) 31,153  3,112  (17,398)
Change in technical reserves for insurance, private pension plans and savings bonds 2,921,952  3,320,818  -  - 
Depreciation and amortization 286,681  291,166  191,703  173,355 
Amortization of goodwill (Notes 30 and 31) 313,547  799,889  120,990  57,956 
Equity in the earnings of subsidiary and associated companies (122,268) 32,714  (1,332,107) (681,099)
Other (37,062) 16,620  169,255  (307,547)
CHANGE IN ASSETS AND LIABILITIES:
Decrease (increase) in interbank investments 11,191,787  484,982  9,281,969  (2,078,993)
Decrease (increase) in securities and derivative financial instruments (1,675,745) (6,058,986) 886,768  (1,818,036)
Decrease (increase) in interbank accounts (858,579) (677,007) (950,462) 1,757,199 
Decrease (increase) in interdepartmental accounts (461,444) (150,108) (409,490) (41,634)
Decrease (increase) in credit operations (4,130,297) (1,690,750) (8,153,704) (1,486,151)
Decrease (increase) in leasing operations 69,677  64,112  -  - 
Decrease (increase) in insurance premiums receivable (80,436) (213,707) -  - 
Decrease (increase) in other receivables (4,646,000) (4,132,325) (5,296,339) (4,082,474)
Decrease (increase) in other assets (61,095) (26,638) (14,733) 2,145 
Amounts written off against the allowance for loan losses (997,585) (1,122,097) (855,233) (922,779)
Increase in technical reserves for insurance, private pension plans and savings bonds 147,441  255,979  -  - 
Increase in other liabilities 5,188,893  3,303,830  5,846,249  3,394,981 
Increase (decrease) in deferred income 6,115  21,144  (2,212) (3,311)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 9,375,812  (3,026,866) 1,681,120  (3,795,164)
 
INVESTMENT ACTIVITIES
Increase in compulsory deposits - Brazilian Central Bank (57,004) (1,272,005) (883,341) (3,806,653)
Sale of non-operating assets 139,259  88,888  46,013  57,137 
Sale of investments 41,544  18,430  4,230,128  280,036 
Sale of property and equipment in use and leased assets 50,366  62,493  22,168  6,966 
Decrease in deferred charges 26,659  26,690  529  4,694 
Acquisition of non-operating assets (41,575) (125,274) (43,379) (39,313)
Acquisition of investments (43,027) (85,341) (2,198,273) (3,270,896)
Acquisition of property and equipment in use and leased assets (287,535) (460,298) (343,880) (187,308)
Deferred charges (571,041) (503,558) (548,055) (191,123)
Interest attributed to own capital/dividends received 15,780  21,874  160,516  271,194 
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (726,574) (2,228,101) 442,426  (6,875,266)
 
FINANCING ACTIVITIES
Increase in deposits 6,109,597  459,043  10,491,901  4,867,662 
Increase (decrease) in deposits received from security repurchase agreements (16,046,658) 2,555,711  (16,918,189) 4,566,548 
Increase in funds from acceptance and issuance of securities 233,414  2,608,113  1,544,141  2,164,091 
Increase (decrease) in borrowings and onlendings 2,021,614  (1,865,983) 3,810,862  (1,820,581)
Capital increase through subscription -  501,000  -  501,000 
Capital increase through incorporation of shares -  788,735  -  788,735 
Share premium -  7,046  -  7,046 
Fiscal incentive investments 1,259  844  1,259  844 
Interest attributed to own capital/dividends paid and/or accrued (651,401) (633,326) (651,401) (633,326)
Acquisition of own shares (45,547) -  (45,547) - 
Prior-year adjustments to market value (451,214) (15,235) (451,214) (15,235)
Variation in minority interest (46,758) (163,807) -  - 
 
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (8,875,694) 4,242,141  (2,218,188) 10,426,784 
 
DECREASE IN FUNDS AVAILABLE, NET (226,456) (1,012,826) (94,642) (243,646)
 
CHANGE IN FUNDS
AVAILABLE, NET 		At the beginning of the period 2,448,426  2,785,707  2,191,480  1,780,121 
At the end of the period 2,221,970  1,772,881  2,096,838  1,536,475 
Decrease in funds available, net (226,456) (1,012,826) (94,642) (243,646)

9) INTERBANK INVESTMENTS

a) Maturities:

At June 30 – In thousands of reais
Up to
30 days 		From 31 to
180 days 		From 181
to 360 days 		More than
360 days 		TOTAL
CONSOLIDATED
BRADESCO 		BRADESCO
Securities purchased under resale agreements:            
Own portfolio position 1,391,421  67,904  -  -  1,459,325  1,984,323 
• National Treasury Bonds 421,395  50,000  -  -  471,395  471,395 
• Financial Treasury Notes 901,576  17,904  -  -  919,480  1,444,478 
• Federal Treasury Notes 68,450  -  -  -  68,450  68,450 
 
Third-party portfolio position 13,405,413  124,048  -  -  13,529,461  13,867,942 
• National Treasury Bonds 539,639  -  -  -  539,639  539,639 
• Financial Treasury Notes 12,865,774  124,048  -  -  12,989,822  13,328,303 
Unrestricted notes -  50,294  -  -  50,294  51,300 
• National Treasury Bonds -  50,294  -  -  50,294  51,300 
Subtotal 14,796,834  242,246  -  -  15,039,080  15,903,565 
 
Interbank deposits:
 
• Interbank deposits 4,160,697  387,799  324,793  619,847  5,493,136  12,763,501 
• Provision for Loss (14) (13) (364) (3,278) (3,669) (3,669)
Subtotal 4,160,683  387,786  324,429  616,569  5,489,467  12,759,832 
 
Total in 2004 18,957,517  630,032  324,429  616,569  20,528,547  28,663,397 
% 92.3 3.1 1.6 3.0 100.0
Total in 2003 19,977,338  408,254  416,319  193,877  20,995,788  29,986,804 
% 95.2 1.9 2.0 0.9 100.0

b) Income from interbank investments

The following is classified in the statement of income as income on securities’ transactions:

Six-month periods ended June 30 – In thousands of reais
CONSOLIDATED
BRADESCO 		BRADESCO
  2004 2003 2004 2003
Income on investments in purchase and sale
commitments:
 
Own portfolio position 178,005  239,477  199,117  323,599 
Third-party portfolio position 1,167,595  1,862,954  1,220,052  2,011,375 
Subtotal 1,345,600  2,102,431  1,419,169  2,334,974 
 
Interbank deposits 121,053  156,171  562,553  933,918 
 
Total (Note 10e) 1,466,653  2,258,602  1,981,722  3,268,892 

10) SECURITIES AND DERIVATIVE FINANCIAL INSTRUMENTS

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

At June 30 – In thousands of reais
Financial Insurance/
Savings Bonds 		Private
Pension Plans 		Other
activities 		2004 % 2003 %
Trading Securities 14,856,832  4,236,036  22,295,694  84,854  41,473,416  73.8  33,150,783  77.5
- Government securities 8,514,122  2,938,114  18,690,545  57,110  30,199,891  53.7  21,182,017  49.6
- Corporate bonds 1,974,650  353,664  380,077  27,744  2,736,135  4.9  2,517,015  5.9
- Purchase and sale commitments (3) 4,368,060  944,258  3,225,072  -  8,537,390  15.2  9,451,751  22.0
Securities available for sale 6,899,961  1,228,607  1,256,800  21,074  9,406,442  16.7  4,178,497  9.7
- Government securities 5,198,021  777,645  -  -  5,975,666  10.6  1,189,645  2.7
- Corporate bonds 1,701,940  450,962  1,256,800  21,074  3,430,776  6.1  2,988,852  7.0
Securities held to maturity 1,587,710  -  2,926,946  -  4,514,656  8.0  4,697,510  11.0
- Government securities 1,586,123  -  2,926,946  -  4,513,069  8.0  4,697,510  11.0
- Corporate bonds 1,587  -  -  -  1,587  -  -  - 
Derivative financial instruments 816,897  -  -  1,101  817,998  1.5  768,742  1.8
- Corporate bonds 816,897  -  -  1,101  817,998  1.5  768,742  1.8
 
Total 24,161,400  5,464,643  26,479,440  107,029  56,212,512  100.0  42,795,532  100.0
- Government securities 15,298,266  3,715,759  21,617,491  57,110  40,688,626  72.4  27,099,172  63.3
- Corporate bonds 4,495,074  804,626  1,636,877  49,919  6,986,496  12.4  6,274,609  14.7
- Purchase and sale commitments (3) 4,368,060  944,258  3,225,072  -  8,537,390  15.2  9,421,751  22.0

b) Consolidated portfolio composition by issuer:

At June 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 Mark-to-market
GOVERNMENT SECURITIES 1,920,509  3,050,091  7,674,074  28,043,952  40,688,626  41,159,467  (470,841)
Financial Treasury Notes 1,022,769  2,432,135  1,501,086  13,378,741  18,334,731  18,343,996  (9,265)
Federal Treasury Notes 303,330  343,494  251,709  7,557,316  8,455,849  8,477,694  (21,845)
Brazilian Foreign Debt Notes 206,300  -  -  6,358,225  6,564,525  6,947,466  (382,941)
National Treasury Bonds 300,748  90,062  5,921,199  369,996  6,682,005  6,710,468  (28,463)
Central Bank Notes 5,134  64,090  -  57,657  126,881  121,443  5,438 
Other 82,228  120,310  80  322,017  524,635  558,400  (33,765)
 
CORPORATE BONDS 3,134,985  242,403  100,983  3,508,125  6,986,496  6,559,410  427,086 
Debentures 108,334  3,280  10,719  1,147,225  1,269,558  1,325,971  (56,413)
Shares 1,826,902  -  -  -  1,826,902  1,337,689  489,213 
Certificates of Bank Deposit 200,539  98,386  4,359  817,033  1,120,317  1,120,558  (241)
Foreign securities 26,110  27,205  62,258  1,385,449  1,501,022  1,503,178  (2,156)
Derivative financial instruments 717,832  73,199  11,418  15,549  817,998  806,888  11,110 
Other 255,268  40,333  12,229  142,869  450,699  465,126  (14,427)
 
Purchase and sale commitments (3) 240,843  3,004,293  32,951  5,259,303  8,537,390  8,537,390  - 
 
TOTAL IN 2004 5,296,337  6,296,787  7,808,008  36,811,380  56,212,512  56,256,267  (43,755)
 
TOTAL IN 2003 8,840,080  4,276,295  7,177,181  22,501,976  42,795,532  42,609,319  186,213 


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

At June 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 2,854,005  5,802,040  7,452,527  25,364,844  41,473,416  41,596,118  (122,702)
- FINANCIAL (2) 2,139,803  680,457  3,561,437  8,475,135  14,856,832  14,962,083  (105,251)
 
Purchase and sale commitments (3) 240,843  -  -  4,127,217  4,368,060  4,368,060  - 
National Treasury Bonds 234,608  31,257  3,434,761  362,434  4,063,060  4,091,428  (28,368)
Brazilian Foreign Debt Notes 27,419  -  -  713,724  741,143  753,805  (12,662)
Financial Treasury Notes 983,009  116,787  35,055  1,510,336  2,645,187  2,659,985  (14,798)
Debentures 12,550  463  10,167  745,689  768,869  768,869  - 
Certificates of Bank Deposit 9,342  1,551  106  787,419  798,418  798,418  - 
Federal Treasury Notes 303,330  343,494  19,010  43,413  709,247  741,013  (31,766)
Foreign securities 82,456  120,735  62,338  125,828  391,357  383,046  8,311 
Other 246,246  66,170  -  59,075  371,491  397,459  (25,968)
 
- INSURANCE AND SAVINGS BOND 361,419  775,160  1,052,334  2,047,123  4,236,036  4,264,050  (28,014)
 
Purchase and sale commitments (3) -  363,562  8,577  572,119  944,258  944,258  - 
Financial Treasury Notes 6,715  396,276  186,082  1,366,886  1,955,959  1,955,883  76 
National Treasury Bonds 57,787  -  856,974  14  914,775  914,775  - 
Shares 158,999  -  -  -  158,999  158,999  - 
Other 137,918  15,322  701  108,104  262,045  290,135  (28,090)
 
- PRIVATE PENSION PLAN 311,282  4,342,846  2,836,403  14,805,163  22,295,694  22,285,131  10,563 
 
Purchase and sale commitments (3) -  2,640,731  24,374  559,967  3,225,072  3,225,072  - 
Financial Treasury Notes 25  1,607,208  1,189,652  10,213,695  13,010,580  13,000,017  10,563 
Federal Treasury Notes -  -  -  3,797,137  3,797,137  3,797,137  - 
National Treasury Bonds 3,467  58,805  1,620,978  74  1,683,324  1,683,324  - 
Other 307,790  36,102  1,399  234,290  579,581  579,581  - 
 
- OTHER ACTIVITIES 41,501  3,577  2,353  37,423  84,854  84,854  - 
 
Financial Treasury Notes 18,091  3,567  46  25,613  47,317  47,317  - 
Funds 16,079  -  -  -  16,079  16,079  - 
Other 7,331  10  2,307  11,810  21,458  21,458  - 
 
II. SECURITIES AVAILABLE FOR SALE 1,669,227  421,548  253,943  7,061,724  9,406,442  9,338,605  67,837 
- FINANCIAL (2) 275,580  93,944  161,024  6,369,413  6,899,961  7,374,664  (474,703)
 
Brazilian Foreign Debt Notes 125,135  -  -  4,204,297  4,329,432  4,699,711  (370,279)
Foreign securities 25,881  -  -  1,314,962  1,340,843  1,351,276  (10,433)
Federal Treasury Notes -  -  142,579  604,163  746,742  743,047  3,695 
Certificates of Bank Deposit 41,173  53,007  -  4,771  98,951  99,193  (242)
Shares 64,263  -  -  -  64,263  107,620  (43,357)
Other 19,128  40,937  18,445  241,220  319,730  373,817  (54,087)
 
- INSURANCE AND SAVINGS BOND 457,876  312,106  92,885  365,740  1,228,607  1,054,022  174,585 
Financial Treasury Notes 13,357  308,297  90,251  247,885  659,790  656,012  3,778 
Shares 444,519  -  -  -  444,519  279,949  164,570 
Other -  3,809  2,634  117,855  124,298  118,061  6,237 
 
- PRIVATE PENSION PLAN 923,414  10,208  -  323,178  1,256,800  889,452  367,348 
 
Shares 783,813  -  -  -  783,813  416,357  367,456 
Debentures 7  -  -  323,178  323,185  323,293  (108)
Other 139,594  10,208  -  -  149,802  149,802  - 
 
OTHER ACTIVITIES 12,357  5,290  34  3,393  21,074  20,467  607 
 
Certificates of Bank Deposit 11,234  5,290  34  3,393  19,951  19,951  - 
Other 1,123  -  -  -  1,123  516  607 
 
III. SECURITIES HELD TO MATURITY (7) 55,273  -  90,120  4,369,263  4,514,656  4,514,656  - 
- FINANCIAL 55,273  -  90,120  1,442,317  1,587,710  1,587,710  - 
 
Brazilian Foreign Debt Notes 53,746  -  -  1,440,204  1,493,950  1,493,950  -   
Federal Treasury Notes -  -  90,120  -  90,120  90,120  - 
Central Bank Notes 1,017  -  -  -  1,017  1,017  - 
Financial Treasury Notes -  -  -  1,036  1,036  1,036  - 
Other 510  -  -  1,077  1,587  1,587  - 
 
- PRIVATE PENSION PLAN -  -  -  2,926,946  2,926,946  2,926,946  - 
Federal Treasury Notes -  -  -  2,926,946  2,926,946  2,926,946  - 
 
IV. DERIVATIVE FINANCIAL INSTRUMENTS (ASSETS)  717,832  73,199  11,418  15,549  817,998  806,888  11,110 
- FINANCIAL 716,731  73,199  11,418  15,549  816,897  805,787  11,110 
 
Derivative financial instruments 716,731  73,199  11,418  15,549  816,897  805,787  11,110 
 
OTHER ACTIVITIES 1,101  -  -  -  1,101  1,101  - 
 
Derivative financial instruments 1,101  -  -  -  1,101  1,101  - 
 
TOTAL IN 2004 5,296,337  6,296,787  7,808,008  36,811,380  56,212,512  56,256,267  (43,755)
 
TOTAL IN 2003 8,840,080  4,276,295  7,177,181  22,501,976  42,795,532  42,609,319  186,213 
 
DERIVATIVE FINANCIAL INSTRUMENTS (LIABILITIES)
 
TOTAL IN 2004 (711,648) (22,093) (37,196) (13,419) (784,356) (773,700) (10,656)
 
TOTAL IN 2003 (225,629) (29,086) (26,801) (28,273) (309,789) (285,515) (24,274)

(1)

Investment 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 which an amount of 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 in the amount of 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 results, pursuant to BACEN Circular 3068, in line with the portfolio profile of Banco Bradesco, the banks’ 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, except for securities held to maturity, whose market value is higher than book value by R$ 761,775 thousand (June 30, 2003 – R$ 240.991 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 June 30, 2004.

d)   Composition of the portfolios by account:

At June 30 – In thousands of reais
 
  Up to 30 days From 31 to 180 days From 181 to 360 days More than 360 days CONSOLIDATED BRADESCO BRADESCO
 
Own portfolio 4,538,650  5,715,438  4,230,362  33,612,114  48,096,564  7,491,696 
Fixed income securities 2,711,748  5,715,438  4,230,362  33,612,114  46,269,662  7,421,612 
•   Financial Treasury Notes 1,010,631  2,379,030  1,471,569  12,493,972  17,355,202  23,711 
•   Purchase and sale commitments (1) 240,843  3,004,293  32,951  5,259,303  8,537,390  - 
•   Federal Treasury Notes 303,330  7,079  75,678  7,044,113  7,430,200  180,266 
•   Brazilian Foreign Debt Notes 179,601  -  -  4,984,637  5,164,238  5,069,228 
•   National Treasury Bonds 300,748  61,763  2,560,518  75,693  2,998,722  276,312 
•   Foreign securities 26,110  27,205  62,258  1,384,768  1,500,341  1,365,194 
•   Debentures 108,334  3,280  10,720  1,147,226  1,269,560  82,172 
•   Certificates of Bank Deposit 200,539  98,387  4,360  817,033  1,120,319  79,622 
•   Other 341,612  134,401  12,308  405,369  893,690  345,107 
 
Equity securities 1,826,902  -  -  -  1,826,902  70,084 
•   Shares and quotas (other) 1,826,902  -  -  -  1,826,902  70,084 
 
Subject to commitments 757,687  581,349  3,577,646  3,199,266  8,115,948  9,839,417 
Repurchase agreements 32,322  2,945  8,040  1,575,730  1,619,037  3,213,464 
•   Brazilian Foreign Debt Notes 26,699  -  -  1,373,587  1,400,286  1,400,286 
•   Financial Treasury Notes 4,606  1,795  824  177,691  184,916  38,809 
•   National Treasury Bonds -  -  3,614  10,254  13,868  13,868 
•   Federal Treasury Notes -  1,150  3,602  8,476  13,228  13,228 
•   Central Bank Notes 1,017  -  -  5,722  6,739  6,739 
•   Debentures -  -  -  -  -  1,740,534 
Central Bank Notes 572  336,225  2,806,642  858,078  4,001,517  3,985,135 
•   National Treasury Bonds -  18,886  2,672,073  279,959  2,970,918  2,962,263 
•   Federal Treasury Notes -  238,863  131,919  110,025  480,807  480,807 
•   Financial Treasury Notes 572  14,915  2,650  422,561  440,698  432,971 
•   Central Bank Notes -  63,561  -  45,533  109,094  109,094 
 
Privatization currencies 1  26,770  -  63,125  89,896  33,934 
 
Collateral provided 6,960  142,210  751,546  686,784  1,587,500  1,534,891 
•   National Treasury Bonds -  9,413  684,993  4,090  698,496  697,279 
•   Federal Treasury Notes -  96,402  40,509  394,701  531,612  531,612 
•   Financial Treasury Notes 6,960  36,395  26,044  284,518  353,917  303,207 
•   Central Bank Notes -  -  -  2,793  2,793  2,793 
•   Equity securities -  -  -  682  682  - 
Derivative financial instruments 717,832  73,199  11,418  15,549  817,998  1,071,993 
 
Total in 2004 5,296,337  6,296,787  7,808,008  36,811,380  56,212,512  17,331,113 
% 9.4  11.2  13.9  65.5  100.0  100.0 
 
Total in 2003 8,840,080  4,276,295  7,177,181  22,501,976  42,795,532  8,816,993 
% 20.7  10.0  16.8  52.5  100.0  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 investment in fund quotas were distributed based on 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:

Six-month period ended June 30 – In thousands of reais
 
  CONSOLIDATED BRADESCO BRADESCO
 
Revenue 2004 2003 2004 2003
 
Fixed income securities (1) 1,535,194  1,147,867  949,157  307,361 
Interbank investments (Note 9b) 1,466,653  2,258,602  1,981,722  3,268,892 
Allocation of exchange variation of foreign branches 797,573  (782,429) -  - 
Equity securities 2,044  162,061  108  13,685 
Other (17) (107) -  (7)
Subtotal 3,801,447  2,785,994  2,930,987  3,589,931 
Financial income on insurance, private pension plans and savings bonds 2,426,180  2,613,256  -  - 
Transactions with derivatives (Note 33c - V) 126,860  13,157  139,172  (245,716)
Total 6,354,487  5,412,407  3,070,159  3,344,215 

(1)

Includes foreign securities.

11) INTERBANK ACCOUNTS - RESTRICTED DEPOSITS

a) Restricted deposits

At June 30 - In thousands of reais
 
  Remuneration CONSOLIDATED BRADESCO BRADESCO
  2004 2003 2004 2003
 
Compulsory deposits - demand deposits 1  4,168,403  5,280,237  4,140,561  4,848,395 
Compulsory deposits - savings account deposits 2  4,462,917  4,130,582  4,453,474  3,864,038 
Additional compulsory deposits 3  5,006,109  4,380,821  5,006,109  3,860,101 
Restricted deposits - National Housing System (SFH) 4  318,770  384,536  169,608  156,070 
Funds from agricultural loans 4  578  578  578  578 
Total    13,956,777  14,176,754  13,770,330  12,729,182 
(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

At June 30 – In thousands of reais
 
  CONSOLIDATED BRADESCO BRADESCO
 
  2004  2003  2004  2003 
 
Restricted deposits - BACEN (compulsory deposits) 536,598  708,109  509,978  639,069 
Restricted deposits - National Housing System (SFH) 21,055  22,814  11,989  8,048 
Total 557,653  730,923  521,967  647,117 

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) Credit operations by type and maturity.
b) Credit operations arising from new acquisitions.
c) Credit operations by type and risk levels.
d) Concentration of credit operations.
e) Credit operations by activity sector.
f) Composition of credit operations and allowance for loan losses.
g) Movement of the allowance for loan losses.
h) Recovery and renegotiation of credit operations.
i) Income on credit operations.

a) Credit operations by type and maturity

At June 30 – In thousand of reais
 
  CONSOLIDATED BRADESCO
 
  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 5,967,826  3,675,635  2,744,327  3,251,193  2,965,575  5,008,289  23,612,845  38.6 22,381,565  41.1
Financings 1,632,067  1,149,337  1,190,279  2,110,354  3,421,306  7,791,575  17,294,918  28.2 14,679,205  27.0
Rural and agribusiness loans 266,492  149,759  267,959  787,832  1,019,274  3,066,872  5,558,188  9.1 3,968,686  7.3
Subtotal 7,866,385  4,974,731  4,202,565  6,149,379  7,406,155  15,866,736  46,465,951  75.9 41,029,456  75.4
Leasing operations 95,684  74,386  73,168  194,918  302,823  506,854  1,247,833  2.0 1,393,283  2.5
Advances on foreign exchange contracts (1) 1,875,459  889,424  844,021  1,741,220  873,166  -  6,223,290  10.2 5,764,290  10.6
Subtotal 9,837,528  5,938,541  5,119,754  8,085,517  8,582,144  16,373,590  53,937,074  88.1 48,187,029  88.5
Other receivables (2) 96,997  24,198  15,076  103,367  72,162  244,609  556,409  0.9 709,337  1.3
Total credit operations (3) 9,934,525  5,962,739  5,134,830  8,188,884  8,654,306  16,618,199  54,493,483  89.0 48,896,366  89.8
Sureties and guarantees (4) 191,504  108,434  112,051  516,259  668,793  5,153,592  6,750,633  11.0 5,581,331  10.2
Total in 2004 10,126,029  6,071,173  5,246,881  8,705,143  9,323,099  21,771,791  61,244,116  100.0
Total in 2003 10,691,420  7,674,496  4,759,592  7,499,657  8,091,035  15,761,497      54,477,697  100.0


At June 30 – In thousands of reais
 
  CONSOLIDATED BRADESCO
 
  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 215,876  181,070  202,506  331,601  384,762  1,315,815  73.7 1,382,491  75.6
Financings 77,237  55,228  31,554  64,376  72,684  301,079  16.9 287,041  15.7
Rural and agribusiness loans 2,968  3,965  1,002  5,793  25,477  39,205  2.2 29,575  1.6
Subtotal 296,081  240,263  235,062  401,770  482,923  1,656,099  92.8 1,699,107  92.9
Leasing operations 5,501  4,411  3,453  8,107  11,555  33,027  1.8 30,488  1.7
Advances on foreign exchange contracts (1) 14,972  5,618  9,920  4,623  265  35,398  2.0 44,868  2.5
Subtotal 316,554  250,292  248,435  414,500  494,743  1,724,524  96.6 1,774,463  97.1
Other receivables (2) 10,763  1,545  513  464  47,739  61,024  3.4 53,022  2.9
Total credit operations (3) 327,317  251,837  248,948  414,964  542,482  1,785,548  100.0 1,827,485  100.0
Sureties and guarantees (4) -  -  -  -  -  -  -  -  - 
Total in 2004 327,317  251,837  248,948  414,964  542,482  1,785,548  100.0
Total in 2003 371,564  279,408  217,853  430,040  528,620      1,827,485  100.0


At June 30 – In thousands of reais
 
  CONSOLIDATED BRADESCO  
 
  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 98,114  75,920  72,910  161,445  181,063  212,953  802,405  37.8  1,061,670  45.7  25,731,065  39.5  24,825,726  42.3 
Financings 83,954  61,637  60,685  165,149  266,093  581,727  1,219,245  57.5  1,115,619  48.0  18,815,242  28.8  16,081,865  27.4 
Rural and agribusiness loans 742  639  678  1,629  3,359  8,385  15,432  0.7  9,275  0.4  5,612,825  8.6  4,007,536  6.9 
Subtotal 182,810  138,196  134,273  328,223  450,515  803,065  2,037,082  96.0  2,186,564  94.1  50,159,132  76.9  44,915,127  76.6 
Leasing operations 5,510  4,531  4,501  12,176  18,049  26,349  71,116  3.3  97,266  4.2  1,351,976  2.1  1,521,037  2.6 
Advances on foreign exchange contracts (1) -  -  -  -  -  -  -  -  4,895  0.2  6,258,688  9.6  5,814,053  9.9 
Subtotal 188,320  142,727  138,774  340,399  468,564  829,414  2,108,198  99.3  2,288,725  98.5  57,769,796  88.6  52,250,217  89.1 
Other receivables (2) 12,488  170  218  552  1,807  -  15,235  0.7  35,918  1.5  632,668  1.0  798,277  1.4 
Total credit operations (3) 200,808  142,897  138,992  340,951  470,371  829,414  2,123,433  100.0  2,324,643  100.0  58,402,464  89.6  53,048,494  90.5 
Sureties and guarantees (4) -  -  -  -  -  -  -  -  -  -  6,750,633  10.4  5,581,331  9.5 
Total in 2004 200,808  142,897  138,992  340,951  470,371  829,414  2,123,433  100.0        65,153,097  100.0 
Total in 2003 247,964  170,260  135,972  374,392  501,420  894,635  -  -  2,324,643  100.0  -  -  58,629,825  100.0 

On an unconsolidated basis, normal course operations determined on the same bases as in the above exhibit total R$ 53,751,544 thousand (June 30, 2003 - R$ 37,030,748 thousand), past-due installments total R$ 1,515,063 thousand (June 30, 2003 - R$ 1,420,121 thousand) and installments falling due total R$ 1,388,195 thousand (June 30, 2003 - R$ 1,454,680 thousand).

(1)

Advances on foreign exchange contracts and advances in foreign currency granted are recorded as a reduction of “Other Liabilities”.
(2)

“Other Receivables” comprise 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 operation financings in the amount of R$ 775,222 thousand (June 30, 2003 – R$ 750,682 thousand). Other receivables relating to credit cards in the amount of R$ 1,303,072 thousand (June 30, 2003 – R$ 854,348 thousand) are presented in Note 13b.
(4)

Recorded in memorandum accounts.

b) Credit operations arising from new acquisitions

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

At March 31, 2004 – In thousands of reais
 
Credit operations 535,385 
Leasing operations 31 
Other receivables 5,724 
Total 541,140 
Normal course 428,027 
Abnormal course 113,113 

c) Credit operations by type and risk level

At June 30 – In thousands of reais
CONSOLIDATED BRADESCO
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 7,410,808 10,136,170 1,947,934 3,363,765 741,185 235,508 313,237 192,934 1,389,524 25,731,065 44.1 24,825,726 46.8
Financings 4,092,653 8,477,834 1,607,329 3,632,797 294,068 102,705 140,754 72,298 394,804 18,815,242 32.2 16,081,865 30.3
Rural and agribusiness loans 612,684 1,919,064 879,230 1,322,494 516,198 53,803 171,855 104,393 33,104 5,612,825 9.6 4,007,536 7.5
Subtotal 12,116,145 20,533,068 4,434,493 8,319,056 1,551,451 392,016 625,846 369,625 1,817,432 50,159,132 85.9 44,915,127 84.6
Leasing operations 19,022 163,508 205,729 801,365 47,887 20,469 37,209 8,118 48,669 1,351,976 2.3 1,521,037 2.9
Advances on foreign exchange contracts 3,634,313 1,292,947 868,983 368,975 23,731 2,384 61,242 - 6,113 6,258,688 10.7 5,814,053 11.0
Subtotal 15,769,480 21,989,523 5,509,205 9,489,396 1,623,069 414,869 724,297 377,743 1,872,214 57,769,796 98.9 52,250,217 98.5
Other receivables 196,455 160,973 72,606 121,847 6,526 1,009 9,635 5,885 57,732 632,668 1.1 798,277 1.5
Total credit operations in 2004 15,965,935 22,150,496 5,581,811 9,611,243 1,629,595 415,878 733,932 383,628 1,929,946 58,402,464 100.0
% 27.3 37.9 9.6 16.5 2.8 0.7 1.2 0.7 3.3 100.0
Total credit operations in 2003 15,503,675 19,406,975 3,950,017 8,971,757 1,840,682 479,029 432,473 405,811 2,058,075     53,048,494 100.0
% 29.2 36.6 7.4 16.9 3.5 0.9 0.8 0.8 3.9     100.0


At June 30 – In thousands of reais
BRADESCO
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 7,063,950 9,894,689 1,912,707 3,358,893 736,822 230,996 309,433 190,549 1,356,867 25,054,906 50.2 18,576,931 51.3
Financings 4,092,383 3,054,580 1,227,164 3,349,160 247,813 74,229 113,875 48,776 293,415 12,501,395 25.0 8,189,267 22.6
Rural and agribusiness loans 612,684 1,918,998 879,229 1,322,494 516,198 53,803 171,855 104,393 33,104 5,612,758 11.3 3,668,236 10.1
Subtotal 11,769,017 14,868,267 4,019,100 8,030,547 1,500,833 359,028 595,163 343,718 1,683,386 43,169,059 86.5 30,434,434 84.0
Advances on foreign exchange contracts 3,634,313 1,292,947 868,983 368,975 23,731 2,384 61,242 - 6,113 6,258,688 12.5 5,324,201 14.7
Subtotal 15,403,330 16,161,214 4,888,083 8,399,522 1,524,564 361,412 656,405 343,718 1,689,499 49,427,747 99.0 35,758,635 98.7
Other receivables 159,732 160,008 57,613 113,206 6,163 761 4,778 103 6,119 508,483 1.0 458,223 1.3
Total credit operations in 2004 15,563,062 16,321,222 4,945,696 8,512,728 1,530,727 362,173 661,183 343,821 1,695,618 49,936,230 100.0
% 31.2 32.7 9.9 17.0 3.1 0.7 1.3 0.7 3.4 100.0
Total credit operations in 2003 12,250,557 11,127,447 2,488,028 6,642,137 1,350,852 331,885 276,319 321,125 1,428,508     36,216,858 100.0
% 33.8 30.7 6.9 18.4 3.7 0.9 0.8 0.9 3.9     100.0


d) Concentration of credit operations

At June 30 – In thousands of reais
 
  CONSOLIDATED BRADESCO BRADESCO
 
  2004 2003 2004 2003
 
Largest borrower 778,744 783,795 774,967 783,735
Percentage of total credit operation portfolio 1.3% 1.5% 1.6% 2.2%
10 largest borrowers 5,536,330 4,871,243 5,517,797 4,223,658
Percentage of total credit operation portfolio 9.5% 9.2% 11.0% 11.7%
20 largest borrowers 8,496,504 7,926,324 8,343,237 6,605,547
Percentage of total credit operation portfolio 14.5% 14.9% 16.7% 18.2%
50 largest borrowers 14,028,458 13,264,813 13,631,129 11,066,170
Percentage of total credit operation portfolio 24.0% 25.0% 27.3% 30.6%
100 largest borrowers 18,234,385 17,305,236 17,814,725 14,299,583
Percentage of total credit operation portfolio 31.2% 32.6% 35.7% 39.5%


e) Credit operations by activity sector

At June 30 – In thousands of reais
 
  CONSOLIDATED BRADESCO BRADESCO
 
  2004  %  2003  %  2004  %  2003  % 
 
PUBLIC SECTOR 608,542  1.0 196,511  0.4 605,883  1.2 60,248  0.2
 
FEDERAL GOVERNMENT 397,155  0.6 196,007  0.4 397,155  0.8 60,050  0.2
Petrochemical 188,497  0.3 196,007  0.4 188,497  0.4 60,050  0.2
Generation and distribution of electric power 208,658  0.3 -  -  208,658  0.4 -  - 
STATE GOVERNMENT 208,728  0.4 -  -  208,728  0.4 -  - 
Generation and distribution of electric power 208,728  0.4 -  -  208,728  0.4 -  - 
MUNICIPAL GOVERNMENT 2,659  -  504  -  -  -  198  - 
Direct administration 2,659  -  504  -  -  -  198  - 
PRIVATE SECTOR 57,793,922  99.0 52,851,983  99.6 49,330,347  98.8 36,156,610  99.8
MANUFACTURING 18,530,341  31.7 17,149,578  32.4 17,714,970  35.5 13,675,444  37.7
Food and beverage 4,707,304  8.1 3,237,103  6.1 4,591,980  9.2 2,741,296  7.6
Steel, metallurgical and mechanical 3,376,818  5.8 3,823,635  7.2 3,056,781  6.1 3,134,073  8.7
Light and heavy vehicles 1,967,547  3.4 1,331,878  2.5 1,961,279  3.9 1,088,054  3.0
Chemical 1,237,359  2.1 1,628,059  3.1 1,159,299  2.3 1,087,992  3.0
Paper and pulp 1,235,963  2.1 1,067,455  2.0 1,193,934  2.4 846,783  2.3
Electro-electronics 844,933  1.4 624,883  1.2 831,327  1.7 490,470  1.3
Textiles and clothing 807,717  1.4 852,902  1.6 790,461  1.6 708,857  2.0
Rubber and plastic articles 687,693  1.2 728,187  1.4 652,613  1.3 660,584  1.8
Oil refining and production of alcohol 536,043  0.9 378,215  0.7 476,889  1.0 292,862  0.8
Furniture and wood products 514,889  0.9 507,662  1.0 489,844  1.0 415,622  1.1
Publishing, printing and reproduction 508,111  0.9 600,257  1.1 472,677  0.9 515,279  1.4
Automotive parts and accessories 409,268  0.7 418,307  0.8 397,757  0.8 387,219  1.1
Extraction of metallic and non-metallic ores 360,517  0.6 391,357  0.7 347,657  0.7 348,134  1.0
Leather articles 316,696  0.5 318,749  0.6 307,410  0.6 235,634  0.6
Non-metallic materials 284,434  0.5 242,401  0.5 268,046  0.5 237,851  0.7
Other industries 735,049  1.2 998,528  1.9 717,016  1.5 484,734  1.3
 
COMMERCE 8,697,696  14.9 8,616,974  16.3 8,243,174  16.5 6,023,980  16.7
Speciality store products 1,884,640  3.2 1,459,880  2.8 1,749,491  3.5 1,148,388  3.2
Food, beverage and tobacco products 1,109,734  1.9 1,120,330  2.1 1,046,057  2.1 567,832  1.6
Non-specialized retailers 1,092,860  1.9 495,491  0.9 1,050,499  2.1 458,872  1.3
Articles for personal use and for use in the home 722,474  1.2 350,187  0.7 691,992  1.4 311,120  0.9
Waste material and scrap 591,313  1.0 608,770  1.1 561,861  1.1 592,522  1.6
General merchandise wholesalers 574,348  1.0 1,549,816  2.9 548,066  1.1 1,144,375  3.2
Agricultural products 553,304  0.9 246,821  0.5 551,402  1.1 184,729  0.5
Vehicles 506,407  0.9 533,561  1.0 484,832  1.0 314,357  0.9
Clothing and footwear 405,112  0.7 426,761  0.8 393,233  0.8 328,180  0.9
Fuel 393,777  0.7 271,896  0.5 362,856  0.7 227,459  0.6
Repairs, parts and accessories for vehicles 386,529  0.7 287,715  0.5 353,873  0.7 268,931  0.7
Commercial intermediary 337,599  0.6 361,580  0.7 325,339  0.7 335,102  0.9
Other commerce 139,599  0.2 904,166  1.8 123,673  0.2 142,113  0.4
 
FINANCIAL INTERMEDIATION 846,188  1.5 605,216  1.1 825,515  1.7 580,049  1.6
 
SERVICES 10,799,624  18.5 11,247,762  21.0 9,725,842  19.5 6,617,760  18.3
Telecommunications 2,313,480  4.0 2,113,635  3.9 2,302,298  4.6 1,552,242  4.3
Transport and storage 2,291,611  3.9 1,863,992  3.5 1,884,874  3.8 816,982  2.2
Real estate activities, rents and corporate services 1,752,785  3.0 1,503,732  2.8 1,557,247  3.1 1,018,953  2.8
Production and distribution of electric power, gas and water 1,241,509  2.1 1,293,451  2.4 1,236,315  2.4 1,014,588  2.8
Civil construction 1,340,778  2.3 1,614,316  3.0 1,231,970  2.5 1,044,898  2.9
Social services, education, health, defense and social security 625,329  1.1 565,026  1.1 546,671  1.1 319,897  0.9
Clubs, leisure, cultural and sports activities 455,811  0.8 375,753  0.7 450,478  0.9 176,346  0.5
Hotel and catering 221,436  0.4 210,487  0.4 202,487  0.4 180,156  0.5
Holdings, legal, accounting and business advisory services 195,977  0.3 501,911  0.9 145,257  0.3 364,188  1.0
Other services 360,908  0.6 1,205,459  2.3 168,245  0.4 129,510  0.4
 
AGRICULTURE, LIVESTOCK RAISING, FISHING, FOREST DEVELOPMENT AND MANAGEMENT 1,091,944  1.9 826,171  1.6 1,065,222  2.1 704,598  1.9
 
INDIVIDUALS 17,828,129  30.5 14,406,282  27.2 11,755,624  23.5 8,554,779  23.6
 
Total 58,402,464  100.0 53,048,494  100.0 49,936,230  100.0 36,216,858  100.0

f) Composition of credit operations and allowance for loan losses

At June 30 – In thousands of reais
CONSOLIDATED BRADESCO
Portfolio Balance
Risk Level Abnormal Course Normal course TOTAL % %
Acumulated
in 2004 		%
Acumulated
in 2003
Past Due Falling Due Total abnormal course
AA -  -  -  15,965,935  15,965,935  27.3 27.3 29.2
A -  -  -  22,150,496  22,150,496  37.9 65.2 65.8
B 107,631  451,818  559,449  5,022,362  5,581,811  9.6 74.8 73.2
C 174,831  525,311  700,142  8,911,101  9,611,243  16.5 91.3 90.1
Subtotal 282,462  977,129  1,259,591  52,049,894  53,309,485  91.3
 
D 168,353  257,544  425,897  1,203,698  1,629,595  2.8 94.1 93.6
E 124,564  146,785  271,349  144,529  415,878  0.7 94.8 94.5
F 169,080  141,141  310,221  423,711  733,932  1.2 96.0 95.3
G 133,101  105,661  238,762  144,866  383,628  0.7 96.7 96.1
H 907,988  495,173  1,403,161  526,785  1,929,946  3.3 100.0 100.0
Subtotal 1,503,086  1,146,304  2,649,390  2,443,589  5,092,979  8.7
 
Total in 2004 1,785,548  2,123,433  3,908,981  54,493,483  58,402,464  100.0
% 3.1  3.6  6.7  93.3  100.00 
Total in 2003 1,827,485  2,324,643  4,152,128  48,896,366  53,048,494 
% 3.4  4.4  7.8  92.2  100.0 


At June 30 – In thousands of reais
CONSOLIDATED BRADESCO
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 - - - 110,749 110,749 66,226 176,975 0.8 0.8
B 1.0 1,144 4,435 5,579 50,302 55,881 19,160 75,041 1.3 1.4
C 3.0 5,245 15,759 21,004 267,333 288,337 332,633 620,970 6.5 4.9
Subtotal   6,389 20,194 26,583 428,384 454,967 418,019 872,986 1.6 1.4
 
D 10.0 16,835 25,755 42,590 120,370 162,960 210,694 373,654 22.9 28.3
E 30.0 37,369 44,035 81,404 43,359 124,763 68,678 193,441 46.5 45.7
F 50.0 84,540 70,571 155,111 211,855 366,966 115,256 482,222 65.7 67.3
G 70.0 93,171 73,962 167,133 101,406 268,539 92,431 360,970 94.1 91.4
H 100.0 907,988 495,173 1,403,161 526,785 1,929,946 - 1,929,946 100.0 100.0
Subtotal   1,139,903 709,496 1,849,399 1,003,775 2,853,174 487,059 3,340,233 65.6 66.3
 
Total in 2004   1,146,292 729,690 1,875,982 1,432,159 3,308,141 905,078 4,213,219 7.2
%   27.2 17.3 44.5 34.0 78.5 21.5 100.0
Total in 2003   1,177,331 828,109 2,005,440 1,286,274 3,291,714 817,051 4,108,765   7.7
%   28.6 20.2 48.8 31.3 80.1 19.9 100.0


At June 30 – In thousands of reais
BRADESCO
Portfolio Balance
Risk Level Abnormal course Normal Course TOTAL % %
Accumulated
in 2004 		%
Accumulated
in 2003
Past Due Falling Due Total abnormal course
AA - - - 15,563,062 15,563,062 31.2 31.2 33.8
A - - - 16,321,222 16,321,222 32.7 63.9 64.5
B 76,565 155,568 232,133 4,713,563 4,945,696 9.9 73.8 71.4
C 136,918 265,413 402,331 8,110,397 8,512,728 17.0 90.8 89.8
Subtotal 213,483 420,981 634,464 44,708,244 45,342,708 90.8
 
D 152,518 215,166 367,684 1,163,043 1,530,727 3.1 93.9 93.5
E 109,331 117,060 226,391 135,782 362,173 0.7 94.6 94.4
F 153,717 112,587 266,304 394,879 661,183 1.3 95.9 95.2
G 114,485 89,323 203,808 140,013 343,821 0.7 96.6 96.1
H 771,529 433,078 1,204,607 491,011 1,695,618 3.4 100.0 100.0
Subtotal 1,301,580 967,214 2,268,794 2,324,728 4,593,522 9.2
 
Total in 2004 1,515,063 1,388,195 2,903,258 47,032,972 49,936,230 100.0
% 3.0 2.8 5.8 94.2 100.0
Total in 2003 1,420,121 1,309,189 2,729,310 33,487,548 36,216,858
% 3.9 3.6 7.5 92.5 100.0


At June 30 – In thousands of reais
BRADESCO
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 -  -  -  81,606  81,606  65,106  146,712  0.9 0.9
B 1.0 766  1,556  2,322  47,136  49,458  18,572  68,030  1.4 1.4
C 3.0 4,108  7,962  12,070  243,312  255,382  330,973  586,355  6.9 5.3
Subtotal   4,874 9,518 14,392 372,054 386,446 414,651 801,097 1.8 1.5
 
D 10.0 15,252  21,517  36,769  116,304  153,073  208,279  361,352  23.6 29.3
E 30.0 32,799  35,118  67,917  40,735  108,652  66,077  174,729  48.2 46.5
F 50.0 76,858  56,294  133,152  197,440  330,592  109,175  439,767  66.5 69.6
G 70.0 80,139  62,526  142,665  98,009  240,674  83,802  324,476  94.4 89.9
H 100.0 771,529  433,078  1,204,607  491,011  1,695,618  -  1,695,618  100.0 100.0
Subtotal   976,577 608,533 1,585,110 943,499 2,528,609 467,333 2,995,942 65.2
 
Total in 2004   981,451 618,051 1,599,502 1,315,553 2,915,055 881,984 3,797,039 7.6
%   25.9 16.3 42.2 34.6 76.8 23.2 100.0
Total in 2003   928,756 528,337 1,457,093 848,728 2,305,821 640,143 2,945,964   8.1
%   31.5 18.0 49.5 28.8 78.3 21.7 100.0

(1) Existing provision in relation to portfolio, by risk level.

g) Movement of allowance for loan losses

In thousands of reais
 
  CONSOLIDATED BRADESCO BRADESCO
 
At December 31, 2002 3,665,091  2,637,432 
Amount recorded 1,395,034  1,231,311 
Amount written off (1,122,097) (922,779)
Balance derived from acquired institutions (1) 170,737  - 
At June 30, 2003 4,108,765  2,945,964 
- Specific provision (2) 2,005,440  1,457,093 
- Generic provision (3) 1,286,274  848,728 
- Additional provision (4) 817,051  640,143 
 
At December 31, 2003 4,059,300  3,146,608 
- Specific provision (2) 1,816,523  1,416,740 
- Generic provision (3) 1,383,691  1,045,140 
- Additional provision (4) 859,086  684,728 
Amount recorded 1,074,548  945,305 
Amount written off (997,585) (855,233)
Balance derived from acquired institutions (5) 76,956  - 
Balance derived from merger of Banco BCN (6) -  560,359 
At June 30, 2004 4,213,219  3,797,039 
- Specific provision (2) 1,875,982  1,599,502 
- Generic provision (3) 1,432,159  1,315,553 
- Additional provision (4) 905,078  881,984 
(1)

BBV Banco (now Banco Alvorada S.A.).
(2)

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

Recorded based on the customer/transaction classification and accordingly not included in the preceding item.
(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 according to the corresponding risk levels (Note 12f).
(5)

Banco BEM S.A. and Banco Zogbi S.A.
(6)

Balance derived from merger of Banco BCN in the first quarter of 2004.

h) Recovery and renegotiation of credit operations

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

Six-month period ended June 30 – In thousands of reais
 
  CONSOLIDATED BRADESCO BRADESCO
 
  2004 2003 2004 2003
 
Amount recorded for the period 1,074,548  1,395,034  945,305  1,231,311 
Amount recovered (1) (229,592) (212,645) (183,282) (159,611)
Expense net of recoveries 844,956  1,182,389  762,023  1,071,700 

(1) These recoveries are classified in income on credit operations.

The total renegotiated operations for the period are presented below:

Six-month period ended June 30 – In thousands of reais
 
  CONSOLIDATED BRADESCO BRADESCO
 
  2004  2003  2004  2003 
 
Amount renegotiated 726,372  741,144  1,013,857  557,294 
Amount received and written off (991,847) (788,109) (904,547) (671,819)
Total net renegotiations (265,475) (46,965) 109,310  (114,525)

i) Income on credit operations

Six-month period ended June 30 – In thousands of reais
 
  CONSOLIDATED BRADESCO BRADESCO
 
  2004 2003 2004 2003
 
Discount of trade receivables and other loans 3,825,529  3,875,921  3,662,109  2,933,717 
Financings 2,118,916  1,713,753  1,097,970  759,396 
Rural and agribusiness loans 301,516  253,515  298,517  230,839 
Subtotal 6,245,961  5,843,189  5,058,596  3,923,952 
Recovery of credits written off as loss 229,592  212,645  183,282  159,611 
Allocation of exchange variation of foreign branches and subsidiaries 283,260  (435,211) -  - 
Subtotal 6,758,813  5,620,623  5,241,878  4,083,563 
Leasing, net of expenses 133,220  136,767  -  - 
TOTAL 6,892,033  5,757,390  5,241,878  4,083,563 

13) OTHER RECEIVABLES

a) Foreign exchange portfolio

Balance sheet accounts:

At June 30 – In thousands of reais
 
  CONSOLIDATED BRADESCO BRADESCO
 
  2004  2003  2004  2003 
 
Assets - Other receivables
 
Exchange purchases pending settlement 11,007,742  9,246,594  11,007,742  8,778,917 
Foreign exchange acceptances and term documents in foreign currencies 29,073  25,339  29,073  21,554 
Exchange sale receivables 4,208,654  3,941,820  4,208,654  3,927,411 
Less - advances in local currency received (179,049) (185,651) (179,049) (173,590)
Income receivable on advances granted 59,971  102,411  59,971  91,410 
Total 15,126,391  13,130,513  15,126,391  12,645,702 
 
Liabilities - Other liabilities
Exchange sales pending settlement 4,221,729  3,595,364  4,221,285  3,579,357 
Exchange purchase payables 10,767,925  10,062,135  10,767,925  9,561,867 
Less - Advances on foreign exchange contracts (6,258,688) (5,814,053) (6,258,688) (5,324,201)
Other 18,885  10,094  18,885  4,743 
Total 8,749,851  7,853,540  8,749,407  7,821,766 
 
Net foreign exchange portfolio 6,376,540  5,276,973  6,376,984  4,823,936 
 
Memorandum accounts.
Open import credits 174,892  156,085  174,892  133,548 

Foreign exchange transactions:

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

At June 30 – In thousands of reais
 
  CONSOLIDATED BRADESCO BRADESCO
 
  2004  2003  2004  2003 
 
Income on exchange transactions 1,514,342  7,247,518  1,506,011  6,834,739 
 
Expenses for exchange transactions (850,939) (6,979,867) (847,314) (6,507,326)
 
Foreign exchange transactions 663,403  267,651  658,697  327,413 
 
Adjustments:
- Income on export financing (1) 7,665  9,449  7,648  1,698 
- Income on foreign currency financing (1) 73,995  91,378  73,434  86,292 
- Income on foreign investments (2) 41,585  6,313  41,282  4,763 
- Expenses for foreign securities (3) (5,415) (4,068) (5,415) (4,068)
- Expenses for payables to foreign bankers (4) (683,415) (236,942) (678,702) (319,513)
Total adjustments (565,585) (133,870) (561,753) (230,828)
 
Adjusted foreign exchange transactions 97,818  133,781  96,944  96,585 

(1) Classified in income on credit operations.
(2) Stated in income on securities transactions.
(3) Presented in expenses for interest and charges on deposits.
(4) Funds for financing advances on foreign exchange contracts and import financing, recorded in expenses for borrowings and onlendings.

b) Sundry

At June 30 – In thousands of reais
 
  CONSOLIDATED BRADESCO BRADESCO
 
  2004  2003  2004  2003 
 
Deferred tax assets (Note 35c) 6,391,711  5,865,058  4,015,929  2,782,798 
Deposits in guarantee 1,949,494  1,603,998  986,547  569,184 
Sundry receivables 545,259  448,090  205,440  243,505 
Credit card operations 1,303,072  594,225  1,303,072  594,225 
Prepaid taxes 931,271  921,481  525,555  478,394 
Receivables on purchase of assets 401,470  447,285  349,023  345,648 
Payments to be reimbursed 407,552  384,705  149,373  129,184 
Credit instruments receivable 327,509  340,532  107,218  19,808 
Other 140,152  104,606  68,768  55,201 
Total 12,397,490  10,709,980  7,710,925  5,217,947 

14) OTHER ASSETS

a) Non-operating assets/other

At June 30 – In thousands of reais
 
  CONSOLIDATED BRADESCO BRADESCO
 
  Cost Provision for loss Residual value Cost Provision for loss Residual value
 
Property 323,439  (159,120) 164,319  140,712  (62,584) 78,128 
Vehicles and similar 96,027  (35,849) 60,178  29,472  (19,536) 9,936 
Machinery and equipment 12,452  (6,841) 5,611  1,976  (806) 1,170 
Goods subject to special conditions 43,584  (39,580) 4,004  32,186  (32,186) - 
Inventories/stores 18,659  -  18,659  9,941  -  9,941 
Other 7,300  (2,673) 4,627  707  (662) 45 
Total in 2004 501,461  (244,063) 257,398  214,994  (115,774) 99,220 
Total in 2003 (1) 724,789  (255,535) 469,254  263,089  (142,895) 120,194 

(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, deferred selling expenses and expenses for the contract to provide banking services at Correios network post-office bank branches, 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 six-month period (1) Balance at June 30, 2004 Balance at June 30, 2003
Bradesco Grand Cayman 1,305,442  (111,254) 1,194,188  1,018,219 
Alvorada Nassau 772,693  62,832  835,525  758,028 
Banco Bradesco Luxembourg S.A. 407,024  (8,049) 398,975  401,993 
BCN Grand Cayman 399,593  39,308  438,901  382,106 
Bradesco New York 402,752  32,538  435,290  398,082 
Mercantil - Grand Cayman 413,887  (32,258) 381,629  366,435 
Bradport – SGPS, Sociedade Unipessoal Lda. (2) 365,453  25,751  391,204  - 
Boavista (Nassau, Grand Cayman and Banking) 196,615  46,810  243,425  159,907 
Cidade Capital Markets Limited 86,287  7,209  93,496  85,233 
Bradesco Securities, Inc. 64,499  1,391  65,890  59,194 
Banco Bradesco Argentina S.A. 54,985  (2,277) 52,708  46,882 
Bradesco Argentina de Seguros S.A. 13,369  861  14,230  11,389 
Bradesco International Health Service, Inc. 717  (349) 368  868 
Total 4,483,316  62,513  4,545,829  3,688,336 

(1)

Includes exchange variation in the amount of R$ 314,670 thousand, equity accounting in the amount of R$ 172,564 thousand and mark-to-market adjustment of securities available for sale in the amount of R$ (424,721) thousand.

(2)

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


b) Composition of investments in the consolidated financial statements:

At June 30 – In thousands of reais
 
Associated Companies (total percentage ownership) 2004  2003 
 
• IRB – Brasil Resseguros S.A. - (21.24%) 319,302  209,160 
• CP Cimento e Participações S.A. - (12.52%) 62,679  48,578 
• Marlim Participações S.A. - (11.84%) 25,450  21,820 
• NovaMarlim Participações S.A. - (17.17%) 22,798  22,100 
• American Bank Note Ltda. - (22.50%) 27,118  16,449 
• BES Investimentos do Brasil S.A. - BI (19.99%) 15,634  16,456 
• Other associated companies 7,134  14,769 
Total in associated companies 480,115  349,332 
• Other investments (1) 525,266  166,099 
• Fiscal incentives 364,096  339,959 
• Provision for loss:
- Fiscal incentives (298,212) (283,183)
- Other investments (65,241) (77,614)
Total consolidated investments 1,006,024  494,593 

(1)

Includes in 2004, the transfer of the investment in Banco Espirito Santo S.A. – BES, from current to permanent assets in the amount of R$ 379,932 thousand.


c) Equity accounting was recorded in income under ‘equity in the earnings of subsidiary and associated companies’ and totals R$ 122,268 thousand (June 30, 2003 - R$ (32,714) thousand) and R$ 1,332,107 thousand (June 30, 2003 - R$ 681,099 thousand) on an unconsolidated basis:

In thousands of reais
Companies Capital Adjusted
net equity		 Number of shares/quotas held
(thousand)		 Percentage
ownership		 Adjusted
net
income (loss)		 Book value
Bradesco
(unconsolidated)		 Equity accounting adjustments
(26)
COMM. PREF. Quotas June 30, 2004 June 30, 2004 June 30, 2003
CONSOLIDATED SUBSIDIARIES                    
A) Financial area                         944,837  (109,788)
Alvorada Leasing Brasil S.A. Arrendamento Mercantil(1)(2)                         (1,298) (997)
Banco Alvorada S.A. (1) (3) 2,739,442  2,812,232  6,339,047  -  -  100.000% 129,506  2,990,150  84,377  34,988 
Banco Baneb S.A. (1) 1,475,556  1,748,102  50,996,253  77,366,599  -  99.941% 45,719  1,747,070  45,444  127,414 
Banco BCN S.A. (4) -  -  -  -  -  -  -  -  (6,483) (149,577)
Banco BEA S.A. (5) -  -  -  -  -  -  -  -  -  4,910 
Banco BEM S.A. (1) (6) 79,852  (50,541) 324,843  -  -  90.141% 1,785  90,280  1,593  - 
Banco Boavista Interatlântico S.A. and subsidiaries(1) 115,100  144,594  321,571  -  -  100.000% 58,856  193,833  41,382  435,165 
Banco Bradesco Argentina S.A.(1) 69,490  52,708  29,999  -  -  99.999% (6,131) 52,708  (6,131) (10,240)
Banco Bradesco Luxembourg S.A.(1)(18) 212,398  398,976  1  -  -  31.632% 10,811  126,204  10,811  10,074 
Banco de Crédito Real de Minas Gerais S.A.(1)(7) 115,000  237,985  12,430,962  4,882,164  -  99.986% 13,549  237,952  12,076  155,708 
Banco Finasa de Investimento S.A.(1)(8) 319,100  371,869  1,772,050  -  -  98.646% 17,281  366,834  16,677  9,787 
Banco Finasa S.A.(1)(7) 112,576  345,060  1,279,505  -  -  100.000% 183,905  346,114  162,502  58,393 
Banco Mercantil de São Paulo S.A.(1) 3,863,941  4,209,569  24,827,212  -  -  100.000% 148,346  4,322,245  99,269  40,186 
Banco Zogbi S.A.(1)(22) -  -  -  -  -  -  -  -  12,941  - 
Bancocidade - Corretora de Valores Mobiliários e de Câmbio Ltda.(9) -  -  -  -  -  -  -  -  -  3,713 
Bancocidade Leasing Arrendamento Mercantil S.A.(1)(10) -  -  -  -  -  -  -  -  30,945  1,833 
BCN Cons., Adm. de Bens, Serv. e Publ. Ltda.(1)(7) 20,007  35,834  20,006  -  -  100.000% (526) 35,834  (526) (2,004)
Boavista S.A. Arrendamento Mercantil(11) -  -  -  -  -  -  -  -  -  13,643 
Boavista S.A. D.T.V.M.(12)(13) -  -  -  -  -  -  -  -  -  (471,845)
Bradesco BCN Leasing S.A. Arrendamento Mercantil(1)(7) 700,000  1,086,622  499  -  -  99.970% 74,712  1,129,211  56,297  66,097 
Bradesco Consórcios Ltda.(1) 14,795  33,965  -  -  14,795  99.999% 19,356  33,965  19,356  (2,482)
Bradesco S.A. Corretora de Títulos e Valores Mobiliários(1) 45,000  73,335  376,000  -  -  99.999% 8,856  73,335  8,856  8,591 
Bradesco Securities, Inc.(1) 68,365  65,890  11  -  -  100.000% (3,398) 65,890  (3,398) (1,036)
Bradport – SGPS, Sociedade Unipessoal Lda.(1)(15) 379,932  391,203  -  -  -  100.000% 11,272  391,203  11,272  - 
BRAM – Bradesco Asset Management Ltda. and subsidiary company(1) 51,911  61,326  -  -  51,910  99.999% 3,649  61,325  263  63 
Cia. Brasileira de Meios de Pagamento – VISANET(16) -  -  -  -  -  -  -  -  949  20,660 
Cidade Capital Markets Limited(1)(7) 100,062  93,496  32,200  -  -  100.000% 689  93,496  689  563 
Finasa Leasing Arrendamento Mercantil S.A.(17) -  -  -  -  -  -  -  -  -  3,733 
Finasa Promotora de Vendas Ltda.(1) -  -  -  -  -  -  -     3,794  (329)
Bradesco Leasing S.A. Arrendamento Mercantil(1)(7)(14) 797,805  773,673  540,303  -  -  100.000% 28,456  773,673  28,456  167,918 
Foreign branches - Exchange gains (loss)(1) -  -  -  -  -  -  -  -  313,632  (654,548)
Other financial companies -  -  -  -  -  -  -  -  1,092  19,831 
B) Insurance and Pension Plan area                         155,196  285,399 
Bradesco Seguros S.A(1) 1,545,799  3,820,378  625  -  -  99.463% 375,802  3,799,863  (87,386) (22,779)
ABS – Empreendimentos Imobiliários, Participações e Serviços S.A.(19)                         -  13,531 
Atlântica Capitalização S.A.(1)                         547  643 
Bradesco Argentina de Seguros S.A.(1)                         (79) (1,392)
Bradesco Capitalização S.A.(1)                         108,253  81,514 
Bradesco Saúde S.A.(1)                         (14,770) 2,788 
Bradesco Vida e Previdência S.A.(1)                         229,532  207,876 
Finasa Seguradora S.A.(1)                         174  9,981 
Bradesco Auto/RE Companhia de Seguros S.A.(1)(25)                         (82,837) (7,195)
Foreign subsidiaries - Exchange gains (loss)(1)                         1,001  (390)
Other subsidiaries                         761  822 
C) Other activities                         109,806  34,042 
União de Comércio e Participações Ltda.(1) 102,926  182,925  -  -  1,029  99.999% 6,187  182,925  5,488  (17,260)
Átria Participações S.A.(1)                         286  1,259 
Latasa S.A.(20)                         -  28,612 
Nova Paiol Participações S.A.(1)                         134  (1,850)
Cia. Securitizadora de Crédito Financeiro Boavista(23)                         88,934  - 
Other subsidiaries                         14,964  23,281 
TOTAL CONSOLIDATED SUBSIDIARIES                         1,209,839  209,653 
 
II – UNCONSOLIDATED
BES Investimentos do Brasil S.A. – Banco de Investimento(16)                         (606) 3,491 
IRB – Brasil Resseguros S.A.(16)                         83,449  (27,796)
UGB Participações S.A. (21)                         (5,677) (13,121)
American BankNote Ltda. - (24)                         10,612  - 
CP Cimento e Participações S.A. (24)                         16,656  - 
Marlim Participações S.A. (24)                         9,760  - 
NovaMarlim Participações S.A. (24)                         2,916  - 
Other associated companies                      130,242  5,158  4,712 
TOTAL UNCONSOLIDATED                         122,268  (32,714)
SUBTOTAL                      17,244,352  1,332,107  176,939 
REVERSAL OF (PROVISION) FOR EXCHANGE VARIATION                      -  -  504,160 
TOTAL                      17,244,352  1,332,107  681,099 

(1)

Information at June 30, 2004.

(2)

Formerly BBV Leasing Brasil S.A. Arrendamento Mercantil.

(3)

Formerly Banco Bilbao Vizcaya Argentaria Brasil S.A – BBV Banco.

(4)

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 was merged into Banco Alvorada. S.A.

(5)

Merged into Banco Baneb S.A. in April 2003.

(6)

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

(7)

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 4).

(8)

Became a direct subsidiary of Banco Bradesco in May 2003.

(9)

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

(10)

Sold by Banco BCN S.A. to Banco Mercantil de São Paulo S.A. in January 2004.

(11)

Merged into Banco Boavista Interatlântico S.A. in December 2003.

(12)

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

(13)

Includes extraordinary amortization of goodwill of Mercantil, net of taxes (Note 31).

(14)

Formerly Potenza Leasing S.A. Arrendamento Mercantil.

(15)

Formed in December 2003.

(16)

Information at May 31, 2004.

(17)

Merged into Bradesco BCN Leasing S.A. Arrendamento Mercantil, in April 2003.

(18)

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.

(19)

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

(20)

Sold in October 2003.

(21)

Information at April 30, 2004.

(22)

Acquired on February 16, 2004.

(23)

Acquired on June 25, 2004.

(24)

Accounted for on the equity method since April 2004.

(25)

Formerly União Novo Hamburgo de Seguros S.A.

(26)

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

Property, plant and equipment is 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 June 30 – In thousands of reais
 
  CONSOLIDATED BRADESCO BRADESCO
 
  Annual
rate 		Cost Depreciation Residual
value 		Cost Depreciation Residual
value
 
Land and buildings in use:              
- Buildings 4% 865,871  (466,274) 399,597  388,634  (226,391) 162,243 
- Land -  512,806  -  512,806  130,161  -  130,161 
Facilities, furniture and equipment in use 10% 1,732,203  (896,032) 836,171  1,382,109  (681,357) 700,752 
Security and communications systems 10% 127,906  (68,503) 59,403  115,793  (64,887) 50,906 
Data processing systems 20 to 50%  1,627,709  (1,190,773) 436,936  1,235,359  (903,975) 331,384 
Transport systems 20% 20,599  (9,779) 10,820  17,224  (8,001) 9,223 
Construction in progress -  40,744  -  40,744  -  -  - 
Subtotal (1) -  4,927,838  (2,631,361) 2,296,477  3,269,280  (1,884,611) 1,384,669 
Property and equipment in use -  67,283  (37,657) 29,626  -  -  - 
Total in 2004 -  4,995,121  (2,669,018) 2,326,103  3,269,280  (1,884,611) 1,384,669 
Total in 2003 -  5,605,834  (2,939,780) 2,666,054  2,843,877  (1,721,135) 1,122,742 

Land and buildings in use of the Bradesco Organization present an unrecorded increment of R$ 748,504 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 26.09% on a consolidated basis and 41.42% 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$ 322,829 thousand (1) (June 30, 2003 - R$ 150,124 thousand); Banco Boavista Interatlântico - R$ 49,239 thousand (1) (June 30, 2003 - R$ 330,951 thousand); Banco Mercantil de São Paulo – R$ 112,676 thousand (June 30, 2003 - R$ 90,535 thousand); Banco Cidade – R$ 113,647 thousand (June 30, 2003 – R$ 152,612 thousand); Banco Alvorada (formerly BBV Banco) – R$ 177,918 thousand (June 30, 2003 – R$ 197,871 thousand); in Bradesco BCN Leasing - R$ 42,915 thousand (June 30, 2003 – R$ 50,117 thousand); Banco BEM – R$ 90,280 thousand; Banco Zogbi – R$ 258,765 thousand and in Promovel Empreendimentos e Serviços – R$ 61,267 thousand. Amortization of goodwill for the half year totaled R$ 313,547 thousand (June 30, 2003 - R$ 799,889 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 during the first half in the amount of R$ 135,132 thousand, relating to the acquisition of investments in Banco BEA, 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 merged into by Banco BCN.

II) Unamortized goodwill in the amount of R$ 1,398,799 thousand has the following amortization flow:

At June 30, 2004 - In thousands of reais
2004 – 173,880 2005 – 347,601 2006 – 339,647 2007 – 201,708 2008 – 126,385
 
2009 – 58,929 2010 – 49,400 2011 – 45,936 2012 – 35,001 2013 – 20,312

b) Other deferred charges

At June 30 – In thousands of reais
 
  CONSOLIDATED BRADESCO BRADESCO
 
  Cost  Amortization Residual Value Cost  Amortization Residual Value
 
Systems development 1,034,158  (583,765) 450,393  882,507  (513,637) 368,870 
Other deferred charges 153,434  (63,752) 89,682  1,020,557  (508,716) 511,841 
Total in 2004 1,187,592  (647,517) 540,075  1,903,064  (1,022,353) 880,711 
Total in 2003 1,242,459  (681,030) 561,429  866,655  (433,739) 432,916 

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

a) Deposits and deposits received under security repurchase agreements

At June 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 CONSOLIDATED BRADESCO BRADESCO
 
• Demand deposits 13,541,311  -  -  -  -  -  -  13,541,311  13,275,054 
• Savings deposits(1) 22,456,494  -  -  -  -  -  -  22,456,494  22,411,110 
• Interbank deposits 40,822  6,271  -  157  -  -  -  47,250  3,724,196 
• Time deposits 3,770,534  615,939  588,085  4,983,923  4,023,779  13,836,964  269,203  28,088,427  27,871,583 
• Deposits received under security repurchase agreements(2) 14,851,491  10,304  1,120  63,137  472,715  1,266,137  81,163  16,746,067  17,333,064 
Total in 2004 54,660,652  632,514  589,205  5,047,217  4,496,494  15,103,101  350,366  80,879,549  84,615,007 
Total in 2003 52,454,490  962,193  765,311  2,215,492  4,330,206  14,372,631  290,559  75,390,882  73,146,266 

(1)

Demand and savings account deposits are classified as up to 30 days without considering average historical turnover.

(2)

Includes R$ 8,537,390 thousand in investment fund resources invested in purchase and sale commitments with Banco Bradesco, the investors in which are subsidiary companies, comprising the consolidated financial statements.


b) Funds from issuance of securities

At June 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 days CONSOLIDATED BRADESCO BRADESCO
 
Securities – Local:                  
• Mortgage notes 119,018  130,218  207,914  441,263  168,394  24,102  -  1,090,909  1,081,972 
Subtotal 119,018  130,218  207,914  441,263  168,394  24,102  -  1,090,909  1,081,972 
Securities – Foreign (1)
• Commercial paper 320,814  -  -  928  300,713  310,526  -  932,981  932,980 
• Eurobonds 671,404  -  -  915,600  -  513,210  -  2,100,214  2,106,584 
• Euronotes 1,277  -  -  125,823  14,098  99,210  -  240,408  1,166,750 
• MTN Program Issues 189  -  -  -  -  310,750  -  310,939  310,939 
• Promissory notes 1,135  -  -  -  -  93,225  -  94,360  94,360 
• Euro CD issued 219,096  3,815  -  -  -  -  -  222,911  222,911 
• Securitization of future flow of payment orders received from abroad 7,847  -  -  -  -  194,309  1,022,891  1,225,047  1,237,356 
• Securitization of future flow of credit card bill receivables from foreign cardholders 623,370  -  -  -  -  239,171  -  862,541  850,354 
Subtotal 1,845,132  3,815  -  1,042,351  314,811  1,760,401  1,022,891  5,989,401  6,922,234 
Total in 2004 1,964,150  134,033  207,914  1,483,614  483,205  1,784,503  1,022,891  7,080,310  8,004,206 
% 27.7 1.9 2.9 21.0 6.8 25.2 14.5 100.0
Total in 2003 796,160  294,516  41,831  1,796,732  1,072,253  1,743,463  -  5,744,955  4,809,430 
% 13.9 5.1 0.7 31.3 18.7 30.3 - 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.


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

Six-month period ended June 30 – In thousands of reais
 
  CONSOLIDATED
BRADESCO 		BRADESCO
 
  2004 2003 2004 2003
 
Savings deposits 779,457  1,065,918  773,918  1,005,489 
Time deposits 1,649,360  2,407,532  1,610,332  1,832,114 
Deposits received under security repurchase agreements 1,555,389  1,828,904  1,595,554  2,130,429 
Funds from issuance of securities 710,779  (443,650) 674,877  (543,846)
Allocation of exchange variation of foreign branches and subsidiaries 677,066  (489,744) -  - 
Expenses for price-level restatement of technical reserves for insurance, private pension plans and savings bonds 1,351,008  1,658,010  -  - 
Other funding expenses 112,310  127,040  306,400  460,777 
Total 6,835,369  6,154,010  4,961,081  4,884,963 

19) BORROWINGS AND ONLENDINGS

a) Borrowings

At June 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 CONSOLIDATED BRADESCO BRADESCO
 
Local:                  
• Official institutions 1,732  -  -  -  -  -  -  1,732  - 
• Other institutions 10,975  -  180  -  -  -  -  11,155  - 
Foreign: 1,503,171  761,057  942,444  2,101,165  2,794,262  759,988  19,422  8,881,509  8,903,464 
Total in 2004 1,515,878  761,057  942,624  2,101,165  2,794,262  759,988  19,422  8,894,396  8,903,464 
% 17.0 8.6 10.6 23.6 31.4 8.5 0.3 100.0
Total in 2003 1,180,691  799,260  417,303  1,778,294  2,484,423  1,040,995  10,536  7,711,502  6,709,139 
% 15.3  10.4  5.4  23.1  32.2  13.5  0.1  100.0  - 

b) Onlendings:

At June 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 CONSOLIDATED BRADESCO BRADESCO
 
Local:                  
• National Treasury -  18,710  -  -  -  -  -  18,710  18,710 
• National Bank for Economic and Social Development - BNDES 105,402  54,023  66,298  219,603  720,162  1,781,002  749,436  3,695,926  3,695,926 
• Federal Savings Bank – CEF 1,705  393  391  5,673  30,083  122,508  290,514  451,267  437,588 
• Government Agency for Machinery and Equipment Financing - FINAME 279,066  99,622  108,616  314,962  637,260  1,635,881  622,506  3,697,913  3,491,608 
• Other institutions 1,008  300  130  190  609  1,939  21  4,197  1,001 
Foreign:
• Subject to onlendings to housing-loan borrowers 9,621  -  -  1,385  41,597  1,385  -  53,988  13,728 
Total in 2004 396,802  173,048  175,435  541,813  1,429,711  3,542,715  1,662,477  7,922,001  7,658,561 
% 5.0 2.2 2.2 6.8 18.0 44.7 21.1 100.0
Total in 2003 384,391  165,286  214,257  471,860  932,462  2,467,985  2,224,627  6,860,868  4,448,501 
% 5.6  2.4  3.1  6.9  13.6  36.0  32.4  100.0  - 

c) Expenses for borrowings and onlendings

Six-month period ended June 30 – In thousands of reais
 
  CONSOLIDATED
BRADESCO 		BRADESCO
 
  2004 2003 2004 2003
 
Loans:        
• Local: 1,281  1,371  -  - 
• Foreign: 35,144  46,282  34,660  43,819 
Subtotal 36,425  47,653  34,660  43,819 
 
Local onlendings
• National Treasury 1,071  1,305  1,071  1,305 
• BNDES 243,144  42,200  240,800  29,312 
• Federal Savings Bank - CEF 2,015  19,094  -  - 
• FINAME 188,828  132,989  163,721  83,343 
• Other institutions 226  -  389  151 
Foreign onlendings
• Payables to foreign bankers 632,775  (29,886) 629,096  47,986 
• Other expenses for foreign onlendings 14,093  (76,684) 8,766  15,635 
Subtotal 1,082,152  89,018  1,043,843  177,732 
 
Allocation of exchange variation of foreign branches and subsidiaries 102,800  (98,986) -  - 
Total 1,221,377  37,685  1,078,503  221,551 

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 probable 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 1977 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 work routines and comprise claims for pain and suffering and pecuniary damages, mainly protests, bounced checks and the inclusion of names in the restricted credit registry.

In general, the amounts under dispute are unlikely to affect financial results since more than 30% 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 60% 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 June 30 – In thousands of reais
  CONSOLIDATED
BRADESCO
BRADESCO
  2004
2003
2004(1)
2003
Labor Claims 882,442  874,705  619,984  402,262 
Civil Suits 562,978  378,712  290,692  192,250 
Total (Note 22) 1,445,420  1,253,417  910,676  594,512 
Tax proceedings (2) 3,002,329  2,614,392  994,216  835,500 
Total 4,447,749  3,867,809  1,904,892  1,430,012 

(1)

In 2004, includes amounts of R$ 159,478 thousand and R$ 44,447 thousand in the “Labor suits” and “Civil suits” accounts, respectively, following the merger of Banco BCN S.A.

(2)

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

21) SUBORDINATED DEBT

At June 30 - In thousands of reais
Note Issuance Transaction Amount Maturity Remuneration Book value
2004 2003
LOCAL:            
Subordinated CDB March/2002  549,000  2012  100.0% of DI - CETIP  802,608  676,520 
Subordinated CDB July/2002  41,201  2012  100,0% of CDI rate + 0.75% p.a.  61,444  51,399 
Subordinated CDB October/2002  200,000  2012  102,5% of CDI rate  277,363  232,794 
Subordinated CDB October/2002  500,000  2012  100,0% of CDI rate + 0.87% p.a.  697,634  582,881 
Subordinated CDB October/2002  33,500  2012  101.5% of CDI rate  46,240  38,876 
Subordinated CDB October/2002  65,150  2012  101,0% of CDI rate  89,563  75,364 
Subordinated CDB November/2002  66,550  2012  101,0% of CDI rate  91,271  76,801 
Subordinated CDB November/2002  134,800  2012  101.5% of CDI rate  184,757  155,334 
Subordinated debentures September/2001  300,000  2008  100,0% of CDI rate + 0.75% p.a.  315,879  319,338 
Subordinated debentures November/2001  300,000  2008  100,0% of CDI rate + 0.75% p.a.  307,586  311,625 
Subtotal in Brazil    2,190,201        2,874,345  2,520,932 
FOREIGN:       
Subordinated debt December/2001  353,700  2011  10,25% rate p.a.  462,236  426,336 
Subordinated debt (1) April/2002  315,186  2012  4.05% rate p.a.  422,495  390,477 
Subordinated debt October/2003  1,434,750  2013  8,75% rate p.a.  1,567,230  - 
Subordinated debt April/2004  801,927  2014  8,00% rate p.a.  854,949  - 
Subtotal abroad    2,905,563        3,306,910  816,813 
Total    5,095,764        6,181,255  3,337,745 

(1)

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

22) OTHER LIABILITIES - SUNDRY

  At June 30 – In thousands of reais
  CONSOLIDATED
BRADESCO
BRADESCO
  2004
2003
2004
2003
Sundry creditors 579,439  543,394  186,920  61,822 
Provision for contingent liabilities (civil and labor)(Note 20) 1,445,420  1,253,417  910,676  594,512 
Provision for accrued liabilities 1,723,604  1,561,239  621,872  478,957 
Credit card operations 1,253,587  564,026  1,253,587  564,026 
Acquisition of assets and rights 64,420  242,624  66,953  47,976 
Official operating agreements 11,066  161,846  10,258  133,605 
Other 215,308  191,489  177,161  130,357 
Total 5,292,844  4,518,035  3,227,427  2,011,255 

23) INSURANCE OPERATIONS, PRIVATE PENSION PLANS AND SAVINGS BONDS

a) Technical reserves

At June 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 1,045,272  936,544  26,689  22,697  -  -  1,071,961  959,241 
Loss reserve – IBNR 798,160  585,337  186,113  134,064  -  -  984,273  719,401 
Reserve for unsettled claims 436,252  322,863  203,642  114,659  -  -  639,894  437,522 
Mathematical reserve for benefits granted -  -  234,485  201,396  -  -  234,485  201,396 
Mathematical reserve of benefits to be granted 21  -  15,012,131  10,701,540  -  -  15,012,152  10,701,540 
Mathematical reserve for redemptions -  -  -  -  117,070  163,566  117,070  163,566 
Reserve for draws and redemptions -  -  -  -  240,320  155,663  240,320  155,663 
Reserve for financial fluctuation -  -  501,348  583,461  -  -  501,348  583,461 
Other reserves 55,686  19,771  175,312  97,208  141,278  28,897  372,276  145,876 
Subtotal 2,335,391  1,864,515  16,339,720  11,855,025  498,668  348,126  19,173,779  14,067,666 
 
Long-term liabilities
Mathematical reserve of benefits to be granted 16  -  4,604,762  3,825,376  -  -  4,604,778  3,825,376 
Mathematical reserve for benefits granted -  -  1,969,419  1,715,146  -  -  1,969,419  1,715,146 
Reserve for insufficient contributions -  -  1,740,956  1,372,427  -  -  1,740,956  1,372,427 
Mathematical reserve for redemptions -  -  -  -  1,510,124  1,349,633  1,510,124  1,349,633 
Reserve for financial fluctuation -  -  241,927  225,428  -  -  241,927  225,428 
Reserve for financial excess -  -  215,950  156,691  -  -  215,950  156,691 
Other reserves -  -  21,412  19,909  -  -  21,412  19,909 
Subtotal 16  -  8,794,426  7,314,977  1,510,124  1,349,633  10,304,566  8,664,610 
 
Total 2,335,407  1,864,515  25,134,146  19,170,002  2,008,792  1,697,759  29,478,345  22,732,276 

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 June 30 - In thousands of reais
Insurance Private Pension Plans Savings Bonds TOTAL
 
  2004
2003
2004
2003
2004
2003
2004
2003
Shares of listed companies 69,367  129,364  774,215  797,274  356,173  195,834  1,199,755  1,122,472 
Government securities and corporate bonds 1,990,507  1,536,589  25,307,796  19,258,279  1,840,886  1,642,676  29,139,189  22,437,544 
Credit assignments 355,398  338,123  -  -  -  -  355,398  338,123 
Property 123,653  58,754  1,487  30,476  12,331  8,087  137,471  97,317 
Total 2,538,925  2,062,830  26,083,498  20,086,029  2,209,390  1,846,597  30,831,813  23,995,456 

c) Income on premiums retained for insurance, private pension plans and savings bonds

Six-month period ended June 30 – In thousands of reais
  2004  2003 
Premiums issued 3,581,806  3,360,729 
Private pension plan contributions (*) 2,291,002  2,156,838 
Income on savings bond certificates 702,445  549,632 
Coinsurance premiums assigned (199,006) (188,109)
Premiums reimbursed (109,011) (82,905)
Overall net revenue 6,267,236  5,796,185 
Reinsurance premiums assigned (284,266) (378,563)
Premiums retained for insurance, private pension plans and savings bonds 5,982,970  5,417,622 

(*)

Includes long-term life VGBL insurance (Vida Gerador de Benefícios Livres).

24) MINORITY INTEREST IN SUBSIDIARIES

At June 30 – In thousands of reais
 
  CONSOLIDATED
  BRADESCO
 
  2004  2003 
 
Financial area:      
Banco Finasa de Investimento S.A. 5,035  7,911 
Bradesco Templeton Asset Management Ltda 5,860  1,691 
Banco BEM S.A. (1) (4,983) - 
Other minority interest 1,396  1,102 
Subtotal 7,308  10,704 
Insurance and Pension Plan area:      
Indiana Seguros S.A. 33,347  31,842 
Bradesco Seguros S.A. 20,515  8,314 
Bradesco Auto/RE Companhia de Seguros (2) (3) -  11,116 
Other minority interest 1,757  2,271 
Subtotal 55,619  53,543 
Other activities:      
Sete Quedas Empreendimentos Imobiliários e Participações Ltda. (4) -  40,721 
Baneb Corretora de Seguros S.A. 2,536  2,258 
Other minority interest 508  31 
Subtotal 3,044  43,010 
Total 65,971  107,257 

(1)

Acquired on February 10, 2004.
(2)

Percentage ownership increased through acquisition and incorporation of the minority stockholders’ shares of União Novo Hamburgo de Seguros S.A.
(3)

New name of União Novo Hamburgo de Seguros S.A.; and
(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 June 30, 2004
 
  Total  Treasury Stock Outstanding Shares
 
          
Common stock 79,894,005  (416,813) 79,477,192 
Preferred stock 78,693,936  (4) 78,693,932 
Total 158,587,941  (416,817) 158,171,124 

At June 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

  Volume
 
  Common  Preferred  Total 
 
          
Total shares at December 31, 2003 798,940,057,872  786,939,365,428  1,585,879,423,300 
Reverse stock split (798,860,163,867) (786,860,671,492) (1,585,720,835,359)
Total shares at June 30, 2004 79,894,005  78,693,936  158,587,941 
Shares acquired and not canceled (416,813) (4) (416,817)
Outstanding shares at June 30, 2004 79,477,192  78,693,932  158,171,124 

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 10,303.

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 June 30, 2004

In thousands of reais
 
Details Per share (gross) (1) Amount Withholding Amount
  Common  Preferred paid/accrued gross tax (15%) paid/accrued net
 
Monthly 0.847080  0.931788  140,701  21,105  119,596 
Interim (2) 0.847080  0.931788  140,644  21,097  119,547 
Accrued 2.223126  2.445439  370,056  55,508  314,548 
Total 3.917286  4.309015  651,401  97,710  553,691 

(1)

Adjusted to share base, subsequent to the reverse stock split.
(2)

Declared on June 30, 2004, payable on July 30, 2004.

d) Treasury Stock

Up to June 30, 2004, a total of 416,817 shares, of which 416,813 are common and 4 are preferred shares, in the amount of R$ 52,889 thousand had been acquired and remained in treasury. The minimum, average weighted and maximum cost, per thousand shares, is respectively R$ 112.10553, R$ 126.88998 and R$ 138.92418 and the market value of these shares at June 30, 2004 was R$ 115.36 per share.

26) COMMISSIONS AND FEES

Six-month period ended – In thousands of reais
 
  CONSOLIDATED BRADESCO
  BRADESCO  
 
  2004  2003  2004  2003 
 
Checking account 629,894  509,495  609,103  464,284 
Collection 300,508  284,950  296,342  248,040 
Fund management services 423,338  245,999  252,184  155,157 
Income on exchange transactions 481,794  394,171  221,569  168,886 
Credit operations 371,480  270,808  291,972  214,368 
Interbank charges 125,742  124,207  123,773  105,242 
Receipt of taxes 99,565  90,373  97,945  79,234 
Revenue from custody and brokerage services 30,974  17,521  8,438  5,332 
Consortium Management 35,358  4,014  -  - 
Other 195,485  158,374  42,270  26,821 
Total 2,694,138  2,099,912  1,943,596  1,467,364 

27) PERSONNEL EXPENSES

Six-month period ended June 30 – In thousands of reais
 
  CONSOLIDATED BRADESCO
  BRADESCO  
 
  2004  2003  2004  2003 
 
Remuneration 1,227,343  1,101,279  1,002,081  753,730 
Benefits 478,703  441,395  401,171  342,311 
Social charges 455,470  391,281  376,107  269,650 
Training 21,329  29,993  18,142  23,027 
Employee profit sharing 83,497  79,573  69,000  51,366 
Other 144,261  157,492  82,748  110,643 
Total 2,410,603  2,201,013  1,949,249  1,550,727 

28) ADMINISTRATIVE EXPENSES

Six-month period ended June 30 – In thousands of reais
 
  CONSOLIDATED BRADESCO
  BRADESCO  
 
  2004  2003  2004  2003 
 
Third-party services 414,408  368,681  301,810  213,202 
Communications 317,336  299,879  258,668  201,313 
Depreciation and amortization 241,533  266,500  191,703  173,355 
Financial system services 198,760  168,793  189,862  147,114 
Advertising and publicity 195,804  150,279  91,872  61,433 
Transport 182,039  166,688  165,112  127,340 
Leasing 160,132  129,773  158,766  117,425 
Rents 149,757  134,139  158,427  115,053 
Data processing 128,876  125,263  95,866  72,271 
Maintenance and repairs 127,977  114,176  137,071  118,761 
Materials 72,661  82,453  53,380  55,284 
Water, electricity and gas 65,243  55,844  56,422  42,841 
Travel 26,799  29,469  11,574  8,421 
Other 142,275  161,673  53,347  59,236 
Total 2,423,600  2,253,610  1,923,880  1,513,049 

29) OTHER OPERATING INCOME

Six-month period ended – In thousands of reais
 
  CONSOLIDATED BRADESCO
  BRADESCO  
 
  2004  2003  2004  2003 
 
Other financial revenue 207,517  218,052  80,648  91,940 
Reversal of other operating provisions (1) 52,697  907,491  7,123  357,779 
Recovery of charges and expenses 52,581  53,480  30,277  20,640 
Income on sale of goods 30,126  137,575  -  - 
Other 194,288  215,252  52,526  31,526 
Total 537,209  1,531,850  170,574  501,885 

(1)

In 2003, includes reversal of provision for exchange variation.

30) OTHER OPERATING EXPENSES

Six-month period ended June 30 – In thousands of reais
 
  CONSOLIDATED BRADESCO
  BRADESCO  
 
  2004  2003  2004  2003 
 
Other financial expenses 413,416  584,903  82,382  75,053 
Sundry losses 237,348  156,226  237,237  151,999 
Amortization of goodwill 178,415  119,130  119,373  57,956 
Cost of sales and services (1) 277,693  222,756  -  - 
Other operating provisions 200,235  28,275  112,693  25,598 
Other 187,181  141,659  174,231  85,162 
Total 1,494,288  1,252,949  725,916  395,768 

(1)

Includes depreciation of R$ 45,148 thousand (June 30, 2003 – R$ 24,666 thousand).

31) NON-OPERATING INCOME (EXPENSES), NET

Six-month period ended June 30 – In thousands of reais
 
  CONSOLIDATED BRADESCO
  BRADESCO  
 
  2004  2003  2004  2003 
 
Extraordinary amortization of goodwill (1) (2) (135,132) (680,759) (1,617) - 
Loss on sale and write-off of assets and investments (42,151) (51,954) (47,112) (59,508)
Non-operating provisions recorded(reversed) (5,083) (55,017) 7,123  8,881 
Other (31,348) 10,295  20,262  24,350 
Total (213,714) (777,435) (21,344) (26,277)

(1)

2003 - Although maintained in its essence, goodwill held by Boavista DTVM, which was merged into the subsidiary Banco Mercantil de São Paulo S.A as a result of the decision taken on March 31, 2003, was written off pursuant to BACEN Circular 3017.
(2)

2004 – As a result of the change in projected realization.

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:

  Six-month period ended June 30 – In thousands of reais
 
  2004 2003
 
  Assets (liabilities) Income (expense) Assets (liabilities) Income (expense)
Interest attributed to own capital and dividends:
Bradesco Seguros S.A. 146,591 - 86,883 -
Banco BCN S.A. - - 80,380 -
Banco Baneb S.A. 76,552 - 70,650 -
Banco Boavista Interatlântico S.A. 12,089 - 126,852 -
Banco Mercantil de São Paulo S.A. 34,643 - 4,225 -
Banco Alvorada S.A. 22,607 - - -
Banco Finasa S.A. 124,170 - - -
Other subsidiary and associated companies 32,646 - 12,263 -
 
Exchange purchases pending settlement (a):
Banco BCN S.A. - - 58,535 1,864
Banco Mercantil de São Paulo S.A. - - - 2,145
 
Pre-export operations (b):
Banco BCN S.A. – abroad: - - 71,634 3,006
Other subsidiary and associated companies - 1,952 - 301
 
Exchange purchase payables (c):
Banco BCN S.A. - - (58,927) (948)
 
Demand deposits
Banco BCN S.A. – abroad: - - (22,732) -
Bradesco Vida e Previdência S.A. (28,674) - (19,839) -
Bradesco Saúde S.A. (55) - (12,284) -
Bradesco Seguros S.A. (127) - (4,978) -
Other subsidiary and associated companies (15,966) - (12,802) -
 
Time deposits
ABS-Empreend. Imob., Partic. e Serviços S.A. - - (57,533) (2,960)
Cidade Capital Markets Limited - - (84,738) (287)
Bradesco Capitalização S.A. (75,567) (5,259) - -
União de Comércio e Participações Ltda. (21,522) (966) - -
Other subsidiary and associated companies (10,250) (4,668) (37,223) (6,844)
 
Deposits/Interbank deposits (d):
Deposits:
Banco BCN S.A. – abroad: - - (327,107) (6,207)
Banco Baneb S.A. (2,036) (438) (189,568) (9,555)
Banco Boavista Interatlântico S.A. - (107) (530,745) (36,026)
Banco Boavista Interatlântico S.A. – abroad - (107) (34,923) (253)
Boavista Banking Limited (170,029) (903) (98,528) (694)
Boavista S.A. Arrendamento Mercantil - - (208,213) (22,141)
Bradesco BCN Leasing S.A. Arrendamento Mercantil (2,196,244) (160,519) (2,259,471) (204,274)
Banco Alvorada S.A. (17,258) (2,999) (1,549,932) (15,241)
Banco Alvorada S.A. - abroad (835,296) (4,359) (269,968) (33)
Banco Mercantil de São Paulo S.A. – abroad: - - (221,324) (2,944)
Banco Finasa de Investimento S.A. (81,608) (6,196) (170,728) (4,627)
Cidade Capital Markets Limited (91,924) (656) - (330)
Banco Zogbi S.A. (80,305) (2,502) - -
Banco Mercantil de São Paulo S.A. (116,039) (9,702) - -
Bradesco Leasing S.A. Arrendamento Mercantil (23,861) (2,370) (528,445) (56,056)
Other subsidiary and associated companies (85,923) (6,626) (30,113) (10,319)
 
Interbank deposits:
Banco BCN S.A. - - 2,904,568 308,067
Banco Boavista Interatlântico S.A. 1,234,510 32,983 742,178 22,280
Banco Finasa S.A. 6,416,847 417,608 3,623,431 393,760
Banco Mercantil de São Paulo S.A. - - 999,348 61,038
Other subsidiary and associated companies 174 15 - 87
 
Deposits received under security repurchase agreements/open
market investments (e):
Deposits received under security repurchase agreements:
Bradesco S.A. – CTVM (31,020) (2,181) (32,530) (4,889)
Banco Baneb S.A. (365,767) (915) (376,971) (54,113)
Banco BCN S.A. - - (358,080) (47,626)
Banco Boavista Interatlântico S.A. (11,290) (1,277) (472,062) (169,467)
Banco de Crédito Real de Minas Gerais S.A. (1,414) (197) - (92,456)
Banco Mercantil de São Paulo S.A. (62,714) (5,027) (247,959) (35,648)
Banco BEM S.A. (107,884) (1,628) - -
Other subsidiary and associated companies (22,887) (5,920) (59,804) (6,257)
 
Open market investments:
Banco Baneb S.A. 379,764 27,403 386,019 23,590
Banco Boavista Interatlântico S.A. - 2,732 453,122 153,583
Banco Mercantil de São Paulo S.A. - 6,975 366,974 7,146
Banco BEM S.A. 483,715 23,940 - -
Other subsidiary and associated companies 1,006 3 52,000 15,016
 
Derivative financial instruments - swap (f):
Banco BCN S.A. - - - 90,000
Bradesco BCN Leasing S.A. Arrendamento Mercantil 14,850 625 268 185
Banco Mercantil de São Paulo S.A. - 1,999 - (46,476)
Banco Finasa S.A. 237,245 (2,551) - -
 
Foreign borrowings and onlendings (g):
Banco BCN S.A. - - (34,920) (2,094)
Banco Bradesco Luxembourg S.A. (75,874) (557) (28,839) (595)
Banco Boavista Interatlântico S.A. (24,900) (188) (22,747) (269)
Banco Mercantil de São Paulo International S.A. - - (37,700) (379)
Other subsidiary and associated companies (5,299) (44) (4,653) (309)
 
Reimbursement of costs (h):
Bradesco BCN Leasing S.A. Arrendamento Mercantil - 653 141 605
 
Services rendered (i):
Scopus Tecnologia S.A. (329) (64,172) (4,960) (43,554)
CPM S.A. (3,879) (24,933) (47) (12,113)
Other subsidiary and associated companies (17) 1,456 (12) 57
 
Branch rents:
ABS-Empreend. Imob., Partic. e Serviços S.A. - - - (19,984)
Bradesco Vida e Previdência S.A. - (3,178) - (3,158)
Bradesco Seguros S.A. - (14,995) - (1,269)
Banco Mercantil de São Paulo S.A. - (7,901) - -
Other subsidiary and associated companies - (7,121) - (6,481)
 
Foreign securities (j):
Banco BCN S.A. - - 45,546 -
 
Securities:
Bradesco BCN Leasing S.A. Arrendamento Mercantil 1,764,159 124,077 1,492,628 113,162
Cibrasec - Companhia Brasileira de Securitização 3,830 - 606 -
 
Securities – Abroad
Banco Boavista Interatlântico S.A. (910,606) (51,004) (121) (3)
Bradesco Securities, Inc. (22,105) (507) (5,897) (2)
Other subsidiary and associated companies - - (2,037) (100)
 
Interbank onlendings (k):
Banco BEM S.A. (13,648) (148) - -
Banco Mercantil de São Paulo S.A. - - (28,151) (151)
Other subsidiary and associated companies (3,793) (77) - -
 
Foreign currency deposits abroad:
Banco Bradesco Luxembourg S.A. 636 - - -
Banco Bradesco Argentina S.A. 22 - - -
 
Securitization transactions (l):
International Diversified Payment Rights Company (1,237,356) (42,715) - -
Brasilian Merchant Voucher Receivables Limited (850,355) (26,827) - -
 
Foreign currency investments:
Banco Bradesco Luxembourg S.A. 33,496 - - -

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)  

These local currency payables on exchange purchases are 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)  

Reimbursement of costs by Bradesco BCN Leasing S.A. Arrendamento Mercantil to Banco Bradesco S.A. on account of the use of its Branch network facilities for contracting lease operations.

i)  

Contracts with Scopus Tecnologia S.A. for IT equipment maintenance services and the contract with CPM S.A. for data processing systems maintenance services.

j)  

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.

k)  

Funds obtained for onlending in rural loans bearing interest and charges corresponding to normal rates practiced for this type of transaction.

l)  

Transactions for securitization of the future flow of payment 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 calculation models, enhance and prepare rating inventories used in the various sectors in which the Bank operates, oversee credit analysis, granting and settlement processes, monitor credit concentration and to define the dividing line between operating risks and credit risks.

As part of this ongoing enhancement process, additional efforts are being made to prepare the Bank for the introduction of more advanced risk management techniques, based on the recommendations of the New Capital Accord published by the Basel Committee, among which we highlight 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 VaR (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 VaR has a reliability level of 97.5%. The fluctuations and correlations used by the models are calculated on statistical bases and future prospects are calculated based on economic studies. The methodology applied and current statistical models are validated daily using backtesting techniques.

We present below the VaR of the Consolidated Own Portfolio positions (Treasury):

  At June 30 – In thousands of reais
 
Risk Factors 2004 2003
 
Prefixed 7,267 6,541
Exchange coupon 51,719 14,717
Foreign currency 285 439
Floating rate - 10
Correlated effect (1,902) (3,243)
 
VaR (Value at Risk) 57,369 18,464

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) CONSOLIDATED BRADESCO
 
  Financial  Economic-financial 
  (1) (2)
 
Stockholders’ equity 13,650,372  13,650,372 
Decrease in deferred tax assets – BACEN Res. 3059 (131,737) (131,737)
Minority interest/other 17,648  65,942 
Reference equity -level I 13,536,283  13,584,577 
Reference equity -level II (subordinated debt) 5,987,367  5,987,372 
Total reference equity (level I + level II) 19,523,650  19,571,949 
 
Risk weighted assets 108,054,637  124,342,754 
 
Capital adequacy ratio at June 30, 2004 18.07% 15.74%
 
Capital adequacy ratio at June 30, 2003 16.36% 14.48%
Variation in the Capital adequacy ratio (Basel) - %
 
Ratio at June 30, 2003 16.36% 14.48%
Movement in stockholders’ equity:
• Net income for the period 2.69% 2.33%
• Interest attributed to own capital (1.45%) (1.25%)
• Mark-to-market adjustment – securities and derivatives 0.07% 0.05%
• Subordinated debt 2.90% 2.51%
• Other (0.20%) (0.22%)
Variation in weighted assets:
• Securities (0.44%) (0.89%)
• Credit operations (1.11%) (0.85%)
• Clearing of checks and similar 0.06% 0.09%
• Deferred tax assets (0.08%) (0.08%)
• Risk (swap, market, interest and exchange rates) 0.23% 0.18%
• Memorandum accounts (0.09%) (0.08%)
• Other assets (0.87%) (0.53%)
Ratio at June 30, 2004 18.07% 15.74%

(1)  

Financial companies only.

(2)  

Financial and non-financial companies.

b) Market Value

The book values, net of allowances for mark-to-market, of the main financial instruments and their corresponding market values are summarized as follows:

  At June 30 – In thousands of reais
 
  CONSOLIDATED BRADESCO
 
  2004 2003
 
  Book value Market value Potential
gain (loss) 		Potential
gain (loss)
 
Assets:
Securities and derivative financial instruments 56,212,512 56,932,269 719,757 95,314
Credit operations (1) 58,402,464 58,613,805 211,341 53,954
Investments (2) 1,006,024 1,092,493 86,469 2,347
Liabilities:
Time deposits 28,088,427 28,094,963 (6,536) 1,846
Funds from issuance of securities 7,080,310 7,093,466 (13,156) (16,213)
Borrowings and onlendings 16,816,397 16,878,282 (61,885) (38,996)
Subordinated debt 6,181,255 6,177,210 4,045 7,808
Treasury Stock (52,889) (48,083) (4,806) -
Total     935,229 106,060

(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:

c) Derivatives

Bradesco carries out transactions involving derivative financial instruments, which are recorded in balance sheet or memorandum accounts, for its own account 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:

  At June 30, 2004 – In thousands of reais
 
  CONSOLIDATED BRADESCO BRADESCO
 
  Overall amount Net amount Overall amount Net amount
 
Futures contracts
Purchase commitments: 12,157,310   12,156,558
- Interbank market 1,795,225 - 1,794,473 -
- Foreign currency 10,362,085 - 10,362,085 -
Sale commitments: 23,020,777   23,001,145
- Interbank market 8,413,771 6,618,546 8,394,139 6,599,666
- Foreign currency 14,607,006 4,244,921 14,607,006 4,244,921
 
Option contracts
Purchase commitments: 21,353   21,353
- Foreign currency 21,353 2,249 21,353 2,249
Sale commitments: 19,104   19,104
- Foreign currency 19,104 - 19,104 -
 
Forward contracts
Purchase commitments: 351,008   351,008
- Foreign currency 351,008 - 351,008 -
Sale commitments: 814,707   814,707
- Foreign currency 814,707 463,699 814,707 463,699
 
Swap contracts
Asset position: 8,493,840   11,293,996
- Interbank market 3,243,320 309,757 3,243,320 -
- Prefixed 478,040 - 3,319,292 2,455,275
- Foreign currency 2,549,336 - 2,510,393 -
-Reference rate (TR) 996,544 995,739 996,544 995,739
- SELIC 1,041,420 997,947 1,041,420 997,947
- General Market Price Index (IGP-M) 143,027 - 143,027 -
- Other 42,153 39,539 40,000 39,540
 
Liability position: 8,462,844   11,011,696
- Interbank market 2,933,563 - 5,484,621 2,241,301
- Prefixed 864,069 386,029 864,017 -
- Foreign currency 4,364,953 1,815,617 4,364,953 1,854,560
- TR 805 - 805 -
- SELIC 43,473 - 43,473 -
- IGP-M 253,367 110,340 253,367 110,340
- Other 2,614 - 460 -

Derivatives include operations maturing in D +1, to be settled in currency at June 30, 2004 price levels.

Amounts receivable relating to swap contracts, recorded in securities - derivative financial instruments total R$ 121,073 thousand on a consolidated and R$ 375,067 thousand on an unconsolidated basis and amounts payable, classified in liabilities - derivative financial instruments, total R$ 90,077 thousand on a consolidated and R$ 92,767 thousand on an unconsolidated basis.

II) We present below the composition of derivative financial instruments (assets and liabilities) stated at restated cost and market value:

At June 30, 2004 – In thousands of reais
CONSOLIDATED BRADESCO
  Restated cost Adjustment to
market value 		Market
Value
 
Derivatives - adjustment receivable 806,888 11,110 817,998
Derivatives - adjustment payable (773,700) (10,656) (784,356)
Total 33,188 454 33,642

At June 30, 2004 – In thousands of reais
BRADESCO
  Restated cost Adjustment to
market value 		Market
Value
 
Derivatives - adjustment receivable 963,925 108,068 1,071,993
Derivatives - adjustment payable (772,871) (14,176) (787,047)
Total 191,054 93,892 284,946

III) Futures, option, forward and swap contracts fall due as follows:

  At June 30 – In thousands of reais
 
  CONSOLIDATED BRADESCO
 
  Up to 90 days From 91 to 180 days From 181 to 360 days More than 360 days 2004 2003
 
Futures contracts 14,852,912 2,458,262 11,353,498 6,513,415 35,178,087 13,341,193
Option contracts 11,025 20,823 8,609 - 40,457 23,987
Forward contracts 933,028 81,614 150,188 885 1,165,715 311,465
Swap contracts 601,755 852,299 2,594,241 4,324,472 8,372,767 10,418,027
Total in 2004 16,398,720 3,412,998 14,106,536 10,838,772 44,757,026
Total in 2003 7,133,942 3,101,034 6,403,537 7,456,159   24,094,672

  At June 30 – In thousands of reais
 
  BRADESCO
 
  Up to 90 days From 91 to 180 days From 181 to 360 days More than 360 days 2004 2003
 
Futures contracts 14,852,912 2,438,629 11,353,499 6,512,663 35,157,703 8,517,175
Option contracts 11,025 20,823 8,609 - 40,457 -
Forward contracts 933,028 81,614 150,188 885 1,165,715 284,046
Swap contracts 1,121,271 1,306,046 3,247,984 5,243,628 10,918,929 7,836,758
Total in 2004 16,918,236 3,847,112 14,760,280 11,757,176 47,282,804
Total in 2003 5,736,576 1,655,073 4,177,195 5,069,135   16,637,979

IV) We present below the type of margin given as collateral for derivative financial instruments, comprising mainly futures contracts:

At June 30, 2004 – In thousands of reais
 
  CONSOLIDATED BRADESCO BRADESCO
 
Government securities:
National Treasury Bonds 614,449  613,968 
Central Bank Notes 735  735 
Financial Treasury Notes 223  223 
Federal Treasury Notes 399,537  399,537 
Total 1,014,944  1,014,463 

V) We present below the amounts of net revenue and expense recorded in income for the six-month periods ended June 30:

  At June 30 – In thousands of reais
 
  CONSOLIDATED BRADESCO BRADESCO
 
  2004 2003 2004 2003
 
Swap contracts (60,100) 535,840  (50,126) 122,710 
Forward contracts 44,748  31,503  44,745  32,423 
Option contracts 22,075  17,982  22,074  19 
Futures contracts 120,137  (572,168) 122,479  (400,868)
Total 126,860  13,157  139,172  (245,716)

VI) We present below the overall amounts of the derivative financial instruments, separated by place of trading:

  At June 30 - In thousands of reais
 
  CONSOLIDATED BRADESCO BRADESCO
 
  2004 2003 2004 2003
 
CETIP (counter) 7,215,986  7,222,043  9,762,148  4,991,022 
BM&F (floor) 37,541,040  16,872,629  37,520,656  11,646,957 
Total 44,757,026  24,094,672  47,282,804  16,637,979 

34) EMPLOYEE BENEFITS

Banco Bradesco and its subsidiaries sponsor a supplementary retirement pension plan for employees and directors. The 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 Ltda. 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 – Note 2) 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 participants ceased to contribute as from the same date. The plan’s actuarial liabilities are fully covered by the plan’s net assets.

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 half year totaled R$ 100,595 thousand (June 30, 2003 -R$ 132,347 thousand), BRADESCO – R$ 86,047 thousand (June 30, 2003 - R$103,786 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$ 500,726 thousand (June 30, 2003 -R$ 471,388 thousand) and R$ 419,313 thousand on an unconsolidated basis (June 30, 2003 -R$ 365,338 thousand) for the year.

35) PROVISION FOR INCOME TAX AND SOCIAL CONTRIBUTION

a) Calculation of tax and social contribution charges

  At June 30 - In thousands of reais
 
  CONSOLIDATED BRADESCO BRADESCO
 
  2004 2003 2004 2003
 
Income before income tax and social contribution 1,206,734  1,221,636  949,012  960,206 
Composite income tax and social contribution at the
statutory rates of 25% and 9%, respectively (410,290) (415,356) (322,664) (326,470)
Effect of additions and exclusions on tax calculation:
Equity in the earnings of subsidiary and associated companies 41,571  (11,123) 382,972  349,983 
Exchange gains (loss) 106,972  (50,827) 69,944  (118,409)
Non-deductible expenses, net of non-taxable income (55,304) (59,560) (52,072) (50,778)
Deferred tax assets recorded in prior-years 102,504  137,978  -  - 
Interest attributed to own capital (paid and accrued) 221,476  215,331  221,476  215,331 
Other amounts 39,341  (5,857) 1,381  (2,552)
Provision for income tax and social contribution 46,270  (189,414) 301,037  67,105 

b) Statement of income tax and social contribution benefit (expense)

  At June 30 - In thousands of reais
 
  CONSOLIDATED BRADESCO BRADESCO
 
  2004 2003 2004 2003
 
Deferred tax assets        
Amount recorded/realized for the half year on temporary additions 312,230  399,628  209,310  153,295 
Amount recorded/offset on opening balances:
Negative basis of social contribution (8,165) (4,885) -  - 
Tax loss (30,874) (115,036) -  - 
Prior-year deferred tax assets were recorded on:
Negative basis of social contribution 1,211  12,793  -  - 
Tax loss 3,365  119,696  -  - 
Temporary additions 97,928  5,489  -  - 
Recorded for the half year on:
Negative basis of social contribution 8,023  33,890  -  - 
Tax loss 17,655  86,581  -  - 
Subtotal 401,373  538,156  209,310  153,295 
 
Current taxes
Income tax and social contribution payable (355,103) (727,570) 91,727  (86,190)
 
Provision for income tax and social contribution 46,270  (189,414) 301,037  67,105 

c) Statement of deferred income tax and social contribution assets

In thousands of reais
CONSOLIDATED BRADESCO
Balance at December 31, 2003 Balances acquired/ assigned Amount recorded Amount realized Balance at
June 30,
2004
Provision for loan losses 2,548,151  11,268  530,808  465,968  2,624,259 
Provision for civil contingencies 119,717  -  74,839  19,025  175,531 
Provision for tax contingencies 526,525  -  64,210  8,865  581,870 
Provision for labor claims 277,635  -  82,973  63,698  296,910 
Allowance for mark-to-market of securities and investments 148,560  61  48,838  37,946  159,513 
Provision for loss on non-operating assets 81,458  633  11,074  11,380  81,785 
Mark-to-market adjustment of trading securities 71,222  1,086  95,615  59,207  108,716 
Amortization of goodwill 381,543  -  50,382  39,179  392,746 
Provision for interest attributed to own capital -  -  125,783  -  125,783 
Other 216,982  -  118,702  87,798  247,886 
 
Total deferred tax assets on temporary differences 4,371,793  13,048  1,203,224  793,066  4,794,999 
Tax losses and negative basis of social contribution 514,890  6,635  30,254  39,039  512,740 
Subtotal 4,886,683  19,683  1,233,478  832,105  5,307,739 
Mark-to-market adjustment of securities
available for sale 40,463  -  137,749  1,459  176,753 
Social contribution - Provisional Measure
2158-35 of August 24, 2001 (1) 913,423  -  -  6,204  907,219 
Total deferred tax assets (Note 13b) 5,840,569  19,683  1,371,227  839,768  6,391,711 
 
Deferred tax liabilities 621,968  12  61,163  292,255  390,888 
 
Deferred tax assets net of deferred tax liabilities 5,218,601  19,671  1,310,064  547,513  6,000,823 
 
-Percentage of net deferred tax assets on total reference equity (Note 33a) 28.2%          30.7%
-Percentage of net deferred tax assets on total assets 3.0%          3.4%

(1)  

Amount payable on net income at June 30, 2004, for companies recording this credit, totals R$ 57,315 thousand, of which R$ 17,194 thousand may be offset on payment and recorded upon effective realization.

In thousands of reais
 
  BRADESCO
 
  Balance at December 31, 2003 Balances acquired/ assigned Amount recorded Amount realized Balance at June 30, 2004
 
Provision for loan losses 1,926,145  293,883  378,040  414,955  2,183,113 
Provision for civil contingencies 55,959  23,801  21,784  6,595  94,949 
Provision for tax contingencies 256,404  -  40,027  1,322  295,109 
Provision for labor claims 178,071  54,079  33,778  55,277  210,651 
Allowance for mark-to-market of securities
and investments 17,026  1,565  8,922  7,714  19,799 
Provision for loss on non-operating assets 35,262  7,528  6,148  9,765  39,173 
Mark-to-market adjustment of trading
securities -  1,175  71,578  -  72,753 
Amortization of goodwill 132,495  25,448  6,537  6,909  157,571 
Interest attributed to own capital -  -  125,783  -  125,783 
Other 52,091  92,701  92,023  72,773  164,042 
Total deferred tax assets on temporary
differences 2,653,453  500,180  784,620  575,310  3,362,943 
Mark-to-market adjustment of securities
available for sale 13,336  24,079  110,498  -  147,913 
Social contribution - Provisional Measure
2158-35 of August 24, 2001 (1) 505,072  -  -  -  505,072 
Total deferred tax assets (Note 13b) 3,171,861  524,259  895,118  575,310  4,015,928 
Deferred tax liabilities 150,959  17,196  8,984  121,594  55,545 
Deferred tax assets net of deferred tax
liabilities 3,020,902  507,063  886,134  453,716  3,960,383 
-Percentage of net deferred tax assets on
total reference equity (Note 33a) 16.9%          20.6%
-Percentage of net deferred tax assets on
total assets 2.1%          2.7%

(1)  

Amount payable on net income at June 30, 2004, for companies recording this credit, totals R$ 8,240 thousand, of which R$ 2,472 thousand may be offset on payment and recorded upon effective realization.

d) Expected realization of deferred tax assets on temporary differences, tax losses and negative basis of social contribution

  At June 30, 2004 – In thousands of reais
 
  CONSOLIDATED BRADESCO
 
  Temporary difference Tax loss and negative basis
 
  Income tax Social contribution Income tax Social contribution TOTAL
 
2004 679,275  235,610  53,168  18,353  986,406 
2005 1,171,261  401,725  92,489  29,426  1,694,901 
2006 1,375,902  433,394  71,977  17,630  1,898,903 
2007 293,184  100,141  80,940  25,540  499,805 
2008 72,774  17,215  113,374  9,843  213,206 
2009 (1st Half) 11,538  2,980  -  -  14,518 
Total 3,603,934  1,191,065  411,948  100,792  5,307,739 

  At June 30, 2004 – In thousands of reais
 
  BRADESCO
 
  Temporary difference Tax loss and negative basis
 
  Income tax Social contribution Income tax Social contribution TOTAL
 
2004 482,983 169,307 - - 652,290
2005 852,248 298,342 - - 1,150,590
2006 982,799 327,175 - - 1,309,974
2007 161,014 52,981 - - 213,995
2008 28,817 4,079 - - 32,896
2009 (1st Half) 2,606 592 - - 3,198
Total 2,510,467 852,476 - - 3,362,943

  At June 30, 2004 – In thousands of reais
 
  CONSOLIDATED BRADESCO
 
  Deferred tax assets on social contribution MP no. 2158-35
 
  2004 2005 2006 2007 2008 2009 to 2012 2013 to 2014 Total
 
Amount 32,251 43,207 35,025 54,201 83,852 658,683 - 907,219

  At June 30, 2004 – In thousands of reais
 
  BRADESCO
 
  Deferred tax assets on social contribution MP no. 2158-35
 
  2004 2005 2006 2007 2008 2009 to 2012 2013 to 2014 Total
 
Amount 2,536 7,522 10,767 15,404 27,710 441,133 - 505,072

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$ 5,550,371 thousand (R$ 3,469,358 thousand on an unconsolidated basis), of which R$ 4,399,993 thousand (R$ 3,095,221 thousand on an unconsolidated basis), comprises temporary differences, R$ 453,951 thousand comprises tax losses and negative basis of social contribution and R$ 696,427 thousand (R$ 374,137 thousand on an unconsolidated basis), comprises deferred social contribution assets - MP 2158-35.

e) Unrecorded deferred tax assets

Deferred tax assets were not recorded in the amount of R$ 305,487 thousand.

f) Deferred tax liabilities

The Bradesco Organization has deferred tax liabilities in the amount of R$ 390,888 thousand (R$ 55,545 thousand on an unconsolidated basis) relating to: income tax and social contribution, PIS and COFINS on mark-to-market adjustments of securities and derivative financial instruments -R$ 212,963 thousand (R$ 13,744 thousand on an unconsolidated basis); excess depreciation -R$ 101,097 thousand; and others - R$ 76,828 thousand (R$ 41,801 thousand on an unconsolidated basis).

36) OTHER INFORMATION

The net assets of the investment funds and portfolios managed by the Bradesco Organization at June 30, 2004 totaled R$ 86,815,987 thousand (June 30, 2003 - R$ 70,227,700 thousand).

Banco Bradesco S.A.

Cidade de Deus, Osasco, SP, July 30, 2004

Board of Directors

Chairman
Lázaro de Mello Brandão

Vice Chairman
Antônio Bornia

Members
Dorival Antônio Bianchi
Mário da Silveira Teixeira Júnior
Márcio Artur Laurelli Cypriano
João Aguiar Alvarez
Denise Aguiar Alvarez Valente
José Fonollosa García
Ricardo Espírito Santo Silva Salgado

Board of Executive Officers

Executive Officers

President
Márcio Artur Laurelli Cypriano

Executive Vice-Presidents
Décio Tenerello
Laércio Albino Cezar
Arnaldo Alves Vieira
Luiz Carlos Trabuco Cappi
Sérgio Socha
Julio de Siqueira Carvalho de Araujo
Milton Almicar Silva Vargas
José Luiz Acar Pedro
Norberto Pinto Barbedo

Managing Directors
Armando Trivelato Filho
Carlos Alberto Rodrigues Guilherme
José Alcides Munhoz
José Guilherme Lembi de Faria
Luiz Pasteur Vasconcellos Machado
Milton Matsumoto
Cristiano Queiroz Belfort
Sérgio de Oliveira
Odair Afonso Rebelato
Aurélio Conrado Boni
Domingos Figueiredo de Abreu
Paulo Eduardo D’Avila Isola
Ademir Cossiello 		Department Directors
Adineu Santesso
Airton Celso Exel Andreolli
Alfredo Antônio Lima de Menezes
André Rodrigues Cano
Antônio Carlos Del Cielo
Candido Leonelli
Carlos Laurindo Barbosa
Denise Pauli Pavarina de Moura
Douglas Tevis Francisco
Fernando Jorge Buso Gomes
Jair Delgado Scalco
João Batistela Biazon
João Cariello de Moraes Filho
José Carlos Perri
José Luiz Rodrigues Bueno
José Maria Soares Nunes
José Roberto Aparecido Nunciaroni
Josué Augusto Pancini
Karl Heinz Kern
Laércio Carlos de Araújo Filho
Luiz Alves dos Santos
Luiz Carlos Angelotti
Luiz Fernando Peres
Marcelo de Araújo Noronha
Marcos Bader
Maria Eliza Sganserla
Mauro Roberto Vasconcellos Gouvêa
Milton Clemente Juvenal
Nilton Pelegrino Nogueira
Ricardo Dias
Robert John van Dijk
Roberto Elias Abud Squeff
Roberto Sobral Hollander
Romulo Nagib Lasmar
Sérgio Alexandre Figueiredo Clemente
Sergio Sztajn
Toshifumi Murata
Valter Crescente 		Regional Directors
Ademar Monteiro de Moraes
Alexandre da Silva Glüher
Altair Antônio de Souza
Aurélio Guido Pagani
Cláudio Fernando Manzato
Idevalter Borba
Luiz Carlos de Carvalho
Marcos Daré
Paulo de Tarso Monzani
Roberto José Barbarini
Tácito Naves Sanglard

Disclosure Committee
José Luiz Acar Pedro
Julio de Siqueira Carvalho de Araujo
Milton Almicar Silva Vargas
Carlos Alberto Rodrigues Guilherme
José Guilherme Lembi de Faria
Domingos Figueiredo de Abreu
Luiz Carlos Angelotti
Denise Pauli Pavarina de Moura
Romulo Nagib Lasmar
Jean Philippe Leroy

Departamento de Contadoria Geral (Accounting Department)
Moacir Nachbar Junior
Accountant-CRC 1SP198208/O-5

Report of the Fiscal Council (Conselho Fiscal)

Banco Bradesco S.A.

The undersigned members of the Fiscal Council (Conselho Fiscal) 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 first half of 2004, and based on the unqualified audit opinion of KPMG Auditores Independentes, declare that said documents, pursuant to Brazilian corporate legislation in force, present fairly the financial position of the Institution.

Cidade de Deus, Osasco, SP, July 30, 2004



_____________________________
Ricardo Abecassis E. Santo Silva



_____________________________
Sócrates Fonseca Guimarães



_____________________________
Oswaldo de Moura Silveira

Independent auditors’ report

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

We have examined the balance sheets of Banco Bradesco S.A. and the consolidated balance sheets of Banco Bradesco S.A. and its subsidiaries as of June 30, 2004 and 2003 and the related statements of income, changes in stockholders’ equity and changes in financial position for the semesters then ended, which are the responsibility of its management. Our responsibility is to express an opinion on these financial statements.

Our examinations were conducted in accordance with auditing standards applied in Brazil and included: (a) planning of the audit work, considering the materiality of the balances, the volume of transactions and the accounting systems and internal accounting controls of the Bank and its subsidiaries; (b) verification, on a test basis, of the evidence and records which support the amounts and accounting information disclosed; and (c) evaluation of the most significant accounting policies and estimates adopted by management of the Bank and its subsidiaries, as well as the presentation of the financial statements taken as a whole.

In our opinion, the aforementioned financial statements present fairly, in all material respects, the financial position of Banco Bradesco S.A. and the consolidated financial position of Banco Bradesco S.A. and its subsidiaries as of June 30, 2004 and 2003 and the results of its operations, changes in its stockholders’ equity and changes in its financial position for the semesters then ended, in conformity with accounting practices adopted in Brazil.

July 30, 2004

KPMG Auditores Independentes
CRC 2SP014428/O-6

Original report in Portuguese signed by  
Walter Iorio Cláudio Rogélio Sertório
Accountant CRC 1SP084113/O-5 Accountant 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: August 10, 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.