Banco Bradesco S.A. (Bradesco) has stated that it expects to report a BRL2 bn pre-tax gain in 2Q 09 by selling part of its stake in Brasileira de Meios de Pagamento (VisaNet). However, the company has also announced that it expects to hike its provisions for doubtful accounts by BRL1.3 bn, which offsets most of the upside potential from the VisaNet sale. Considering this, we maintain our 6-24 month HOLD rating. We will reassess our preferred stock rating after the…

The Banco Bradesco S.A. (Bradesco) preferred stock has appreciated significantly since our 4Q 08 and FY 2008 update report, dated 23 April 2009, reflecting a broad-based rise in Brazilian equities as well as positive investor reaction to a series of benchmark rate (SELIC) cuts by the central bank, to 10.25% as of 29 April 2009. Investors have also cheered potential gains from a part sale of the firm’s 39.2% stake in Brasileira de Meios de Pagamento (VisaNet)....

Brazil’s average GDP grew 5.1% in FY 2008 (compared to 5.7% in FY 2007), and the central bank (Banco Central Do Brazil, or BCB) has forecast flattish growth in GDP for 2009, with growth of 3.5% anticipated for 2010. Meanwhile, CPI inflation has eased from a three year high of 6.4% in November 2008 to 5.6% in March 2009 and, according to the BCB, inflation will fall to an annualized rate of 4.3% in December 2009 and 4.5% in…