We would like to welcome everyone to Banco Bradesco 2007 Third Quarter Results Conference Call. This call will be conducted by Mr. Márcio Artur Laurelli Cypriano, Chief Executive Officer; Mr. Milton Vargas, Executive Vice President and Investor Relations Officer; Mr. Domingos Figueiredo de Abreu, Managing Director; Mr. Samuel Monteiro dos Santos, Jr., Chief Financial Officer of Bradesco Seguros Insurance; and Mr. Jean Philippe Leroy, Department Director. This call is being broadcasted simultaneously through the Internet, in the website www.bradesco.com.br/ir. In that address you can also find a banner through which the presentation will be available for download. We inform that all participants will only be able to listen to the conference call during the Company's presentation. After the presentation there will a question-and-answer session. At that time further instructions will be given. [Operator Instructions]. Before proceeding let me mention that forward-looking statements are being made under the Safe Harbor of the Securities Litigation Reform Act of 1996. Forward-looking statements are based on the beliefs and assumptions of Banco Bradesco's management and on information currently available to the Company. Forward-looking statements are not guarantees of performance, they involve risks and uncertainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of Banco Bradesco and could cause results to differ materially from those expressed in such forward-looking statement. Now I will turn the conference over to Mr. Jean Philippe Leroy, Department Director. Mr. Leroy, you may proceed.

Thank you. Good morning and good afternoon to all and welcome to our third quarter earnings conference call. Let me now transfer the floor to Mr. Milton Vargas, Bradesco's CFO and Investor Relations Officer. Milton?

Good morning and welcome to our conference call. This quarter was marked by strong turbulence in international market leading to much volatility and uncertainty regarding the backdrop of subprime market crisis in United States and indirectly in the rest of the world. In this scenario Brazil has lifted in a relatively comfortable way. In addition of the statements, and upgrade in its rating by Moody's which put us just one notch below the investment grade, which we expect Brazil to reach next year by at least one of the three leading rating agencies. According to our forecast, the Brazil economy should grow by 4.9% in 2007 and by around 4.4% in 2008. We highlight the maintenance of the level of confidence by consumers and families; driven by the favorable conditions in the labor market we have improvement in employment in salaries, in addition to the preservation of the stability of the inflation. We forecast inflations at 3.7% for this year and something below 4% for 2008. The base rate, basically, should be maintained up to the end of this year moving down to 10.25% at the end of this 2008. As per the exchange rate, we work with a scenario of relatively stability. We've got of $1.70 reais $1.75 layout there both for the end of 2007 and 2008. Despite the appreciation of the real, export are actually strong thanks to a remarkable efforts by companies to boost efficiency and productivity. We have found that a growing number of companies from various sector are raising their investment in debt, appetite for the risk had been climbing on a monthly basis. As far the credit to GDP ratio, we forecast an evolution from the actual 33.1% to 38.1% in 2008. Delinquency add-on control and tenures are following the natural task of…

The idea of this 33 slide PowerPoint presentation is to maintain as much as we can the structure we have been using in the previous quarters in order to facilitate the comparison, and therefore, your analysis. On slide number 3, we are basically seeing the main figures and items already mentioned by Milton in his speech. Let's move on to slide number 4. The extraordinary event which affected our earnings in this quarter as well as in the other period, are disclosed here. In the third quarter, we fully amortized the 631 million reais goodwill relative to the acquisition of BMC. We activated 376 million reais of tax credit. We believe we built in addition provision for our civil lawsuits relative to economic plans in the amount of 126 million reais. These lawsuits were originated in the previous quarter but became knowledgeable to us just in this quarter. The gain of 75 million reais, disclosed in the press release is reference to our disinvestment in the Bradesco Holding. The amount of 61 million reais refers to the favorable decision in fiscal pending processes relative to the PIF tax. By saying all of this, Bradesco's net income reached 1.85 billion reais in the third quarter '07 vis-à-vis 1.8 billion posted in the previous quarter. It is worth to mention that all of the ratios and analysis included here in this presentation in the press release and in our MD&A are based in our net earnings adjusted by all of the previously mentioned non-recurring events. Slide number 5, in this slide we're disclosing the evolution of our quarterly net income as well as the recurring nine months period earnings of 5.3 billion reais in 2007 compared to the 4.7 billion in 2006; a strong evolution and performance. I would like to draw…

Thank you. Ladies and gentlemen we will now begin the question-and-answer session. [Operator Instructions]. Excuse me our first question comes from Mr. Mario Pierry with Deutsche Bank.

Mario, ask your question please.

Sorry, yes, I had the phone on mute, sorry about that. I have two questions, the first one is related to your health insurance reserve as you mentioned it already, above 3 billion reais; should we expect a provision that you are making to ran by the end of this year, or what level of reserve would you feel comfortable with? And second question is more related to the recent merger sometime there in Banco Real in Brazil. How do you see that impacting the operating environment for the bank? Thanks.

Gentlemen, here is Samuel Monteiro speaking. That gives you... about your questions related to the technical provisions... technical provisions for health. I think for you... according to our calculations made by our clericals [ph] would be end in this year the complete provisions, rate difference between the premiums at a price approved by the Government and the price would be... was mandatory related to the inflation of the medical staff cost. These would be in the end of this year, is completing cover... and we feel completely comfortable with this.

Okay, just to be clear then, it implies that you wouldn't need to make any more provisions next year?

About this type [ph] of provision, no.

Thank you.

In terms of your question, Santander Banespa was and is a strong competitor; Banco ABN Real was and is a strong competitor. Together, they will be and continue to be very strong competitors. We believe that we have actually a good potential of expansioning our operation. We have been investing a lot over the last years in terms of CRM, in terms of systems to be fought in more and more operations with our existing client base. So, at the end of the day although those two banks merge we believe that Bradesco continuous to be and will always be a strong competitor in Brazil knowing very well the market and developing more and more operations which... with its client base.

Okay. This one is follow-up. With the new size of Santander, does it put any pressure on Bradesco to grow and look for an acquisition, or do you feel comfortable with your current market share of about 13% of bank assets in Brazil?

In terms of banking assets we might have a participation of 13%, but in terms of the CPMF collection we have closed to 20% market share. So, we believe that we have already a very strong size, and we believe that most of the assets will be to be fight the operations growing organically.

Okay. Thanks a lot.

You're welcome, Mike.

Our next question comes from Juan Partida from JP Morgan. Please go ahead.

Hi, good morning. I have two questions. The first one is if you could help us calculate the actual growth in the payroll and overall consumer credit, if we adjust for the EMC merger this quarter, and the second question is what do you think would be a sustainable level of combined ratio for the insurance company in 2008, now that you won't have the dispositions? Thank you.

You would like to know about the combined ratio, the trend for 2008?

Yes, is the 84 that you show in your presentation adjusted for extraordinary health insurance expenses are... is sustainable. Is that something that we should be looking forward to seeing in '08?

Samuel Monteiro speaking. About the combinization... just a moment please... about the combinization, if you are looking at the nine year advances of this year, is for a midline insurance business which includes everything, health, BMC, life; you have 85.8 at the end of September. This combinization is not affected by the... a special provision made by health. This provision may not repeat in the next year. I live... and it goes out same [ph] to you, that we would maintain a suitable, the 85.80 is, would be repeating the next year.

Okay. Thank you.

The question relative to payroll deductible loans. Basically, in the second quarter and in the third quarter, BMC was included in the books but on different ways. It is difficult for us to split out the effect because of that. We were in a pilot project, you can see on the slide number 20, that after Bradesco began to be integrated and BMC integrated with Bradesco in the payroll deductible loans, the origination of operations already doubled. And we believe that there is potential growth in the range of some 50% per year in this type of product. This product is more focused on retirees and the public servants, but in the future it might also grow in other types of niche, for example, the private employees as well. A lot of potential, this was the reason why we decided to acquire BMC because of its expertise. And as Milton told, about the 7,000 agents that are key for reaching the customers.

Thanks very much.

Thank you. Our next question comes from Alex Canterini from Merrill Lynch. Please go ahead.

Hello. Good morning. I have actually two questions on loan growth. First, with respect to credit as a percentage of GDP, I would like to know if you figure for 2008 includes any impacts coming from the credit reporting reform, mainly in Kadastro Processos [ph]? And two, what's your expectation for loan portfolio growth in 2008? Thank you.

In terms of the loans to GDP ratio, we should be moving from the 33%, 34% to 38%, as of next year, and this does not include other positive impact, for example, the creation of the Positive Credit Bureau. So the definitely the potential growth is even higher than that. As Milton said in his speech, we are not opening the guidance for 2008, but that we should be opening in the beginning of next year, after we close the budget, but you can at least assume unofficially 20% to 25% loan growth for next year.

All right. Thank you very much.

Thank you our next question comes form Daniel Abut form Citi. Please go ahead.

Good morning. Jean, just on your, the recon of your guidance for '07, or what remains of '07, I notice that you are giving the same range that you gave the last couple of quarters on fee income and operation expenses. Your fee income 18 to 23 for operation expense is 12 to 16, yet, if I look at the slide on pages 22 and 23, it is clear that for the nine months of the year, we really have nine months in, you are at the very low-end of the range for expenses 12% growth year-on-year, and in fee income very close to high-end of 22%. Any reason why the fourth quarter should make the number for more in the middle or in the low end of the range as apposed to being at the high end for fee and at the low-end for operation expenses, in other words, why after nine months you are so comfortable moving that guidance to something more realistic consistent with what we have seen in the nine months?

Look, Daniel, when we basically prepared the guidance for 2007, it was at the beginning of 2007, and what we felt comfortable to change last quarter was the growth in the loan book expectation and loan portfolio for corporate, because of corporate and SME, in particular, growing more, we decided to increase more the loan portfolio. We... every quarter we talk to the planning and control department in order to fine tune the guidance for the coming quarter, and the rest of the year. And naturally we felt that we should be, basically, keeping this type of guidance. Although there is nothing particular that we see neither in terms of the fee income growth nor in terms of the operational expenses which made us decide to change. We basically have a guidance which we believe is very trustful and we decided just to keep it, but there is no particular explanation or positive or negative expectation for the last quarter which normally is the best quarter of every year, which made us decide to change our guidance for the year of 2007.

Okay, Jean, but just to make sure I understand. What you know now, it wouldn't, there is nothing that would make... that would make the fourth quarter be too different, on fee income trend and operation expense trend from what we've seen our revenue in the first nine months?

No, nothing that drives our attention. In terms of fees we are basically growing every quarter, and in terms of expenses, we are doing the best we can to rationalize our cost base. So, nothing annulled for the last quarter.

Thank you.

You're welcome.

Thank you. Our next question comes from Saul Martinez from Bear Stearns. Please go ahead.

Hi, good morning gentlemen. A couple of questions; first, a follow-up on the health insurance business. In the past, you have indicated that you felt comfortable with your provisioning levels, and then had to take up premium deficiency reserves again because of the actuaries. Is there any risk that tilling house or the actuarial consultants when they look at your books at yearend, they're going to disagree with you and make you take... and make you continue to build reserves for your individual health insurance business?

I don't think so. I don't think the actuaries would be... find new reasons to make additional provisions. I don't think so.

Okay. How much can the health insurance business contribute their earnings, individual and corporate?

Corporate represents about 75% or 76% of the portfolio.

5 or... I am sorry, 5 or 6% --

76% is the corporate --

Okay --

And 24% is individual.

Got it. But if you are not... if you are no longer taking premium, building premium deficiency reserves, how much can the health insurance business generate in earnings, because it's my understanding that it is not been contributing to earnings --?

Today, I would say, in our members in 2007 is around, excluding the 40,000... pardon me --

Okay.

Okay.

I am sorry, I missed that. Could you --

The results of the corporate, when you look only to corporate's business the results is 40 million --

40 million for the... 40 million quarterly?

Hopefully --

Per month.

40 million per month. Okay. So does that mean in... if you're no longer posting losses in the individual business? Does that mean the health insurance business as a whole can add to earnings by $500 million, $600 million in 2008?

Yes --

Exactly.

Exactly.

Okay. Got it. Secondly, any update on plans to... any plans to IPO VISANET?

Actually we're one of the shareholders of VISANET, and the shareholders are having discussions about having or not having dispute, but if we have something that we believe could be relevant to the market, obviously, we're going to disclose that to each and every one.

Okay. Got it. Then just one final question on your BIS ratio, why wouldn't you choose the option available to you under the circular 3367 that would've given you a 17% BIS ratio? And do you expect to choose that option in the future?

Actually, it's more a question of pointing we have a flexibility, let's say that we have a 14.2% BIS ratio which actually in apple-to-apple basis compared with the previous quarter would be 16.9%. At anytime we can write a letter to the Central Bank and we have the possibility to raise that to 16.9. So, because of wanting to keep this flexibility to choose whether being calculated at 14% but being allowed to be calculated at 16%, we basically are preferring to leave it this way.

So, if we look at your capital strength, really, the more relevant number in your capital flexibility, the more relevant number is 17%?

Exactly this would be a fair comparison with the other period.

Okay. Thanks a lot.

You're welcome.

[Operator Instructions].

Let me maybe respond to question... one question that we received through the Internet from Mr. Alexander Coelho [ph] from Plus-Capital. The question would be in a scenario of Brazilian investment grade and economic stabilization, what is the level of BIS to that Bradesco can reach in the medium and the long term? Internationally this level is around 4% in tier 1 and 8% adding tier 1 and tier 2. Does Bradesco consider it's possible to reach those levels, therefore, liberating excess capital to its shareholders? So basically the response is that we have in Brazil a minimum ratio of 11%, and for the tier 2 its 50% of what you have in tier 1. We are working for a long period of time with people dedicated from the risk management department in order to analyze the Basel II implications, although, some of the implications are still pending from the side of the legislature. But in general term we believe... we don't believe that we would be as the question is maybe, proposing that we should have an 8% Basel ratio through the Basel II calculation. We are right now analyzing, as we have been doing for long period of time and we feel comfortable with the level of capital. Looking at the scenario, obviously, looking at that calculations, there is a possibility of having excess of capital, but we have... we are planning on some issues, some information from the legislature that will be making us calculate more in-depth the real excess of capital that we might have. Maybe some other question please?

Excuse me. Our next question comes from Mr. Mario Pierry with Deutsche Bank.

Yes. Let me ask you a question with regard to your cost structure, as you mentioned, you plan on opening a 150 branches per year through 2010. Can you first tell us the expenses associated with this branch expansion, where do you plan on opening these branches? Are you going to be focusing on the Southeast of Brazil? And third does this mean or is this in anyway in anticipation of the bank might losing the contract of the postal office, is that why you are doing this or is it just because of you see the strong growth in Brazil when you feel the need to increase your distribution network.

Mario, we basically have a average cost for opening a branch of some 700,000 reais, so you can basically, on average, multiply that by 150. We are extremely well attended in Brazil because we have more than 5,500, 6,600 branches and mini-branches. And we should be opening the branches, actually, in more largest cities; cities that we see have more potential for the return of this investment. We continue to be fostering and to benefit from the agreement of the postal service, nothing changed. And actually this is kind of an additional network because postal bank is much more focused on the lower income classes and the branches that we are opening are more in regions that we believe have potential for us to have the return.

Okay. But does it mean... like, are you focusing San Paulo and Rio or do you plan on opening some more branches in Northeast?

Basically Rio, San Paulo and the largest and wealthiest cities of Brazil. So not only San Paulo and Rio but, obviously, Porto Alegre and Belo Horizonte, the Manaus Jarad [ph] state and other places that we believe have the potential for maximization of the return of the shareholders. Obviously, in the assumption that Brazil is on a very good trend in terms of economy and the people are making more money, unemployment rate is moving down and the companies are also developing more and more their businesses.

Okay. Also if I can follow up, you talked about 700,000 reais per branch. What is the breakeven of the branch? How long does it take for you to breakeven?

The breakeven would be around 7 months and the return on investment, the payback would be of around two years. Hello?

Okay. Thank you very much.

You are welcome.

Thank you. Our next question comes from Ishwan Colar [ph] from [indiscernible] Capital. Please go ahead.

Good morning gentlemen. Just wanted to ask you a little bit about your projections on the mortgage loans in 2008, you said it's increasing about 33%. Why don't you get an understanding of what's the portfolio mix would be between individuals and builders in 2008. What's your thoughts over there? And then understand a little bit about the profitability dynamics between loans made to builders, loans made to individuals?

Okay. Basically we are in the phases... very positive phases of mortgage development in Brazil, and because of that we see a lot of new buildings, a lot of construction, and if you look at the presentation that we show. You can see that there is a clear contemplation in loans for builders, because in the new origination 77.7%. As you can see on slide 21, please. 77% would be directed to builders and just 22.3% to individuals. We are in the phases of very strong growth in the number of building. This is the reason why most of the origination is directed for the constructer, for the builder. But over time, we believe that this ratio will be more going into the direction of the 50:50 split as we see in the portfolio mix that we have here on slide 21. It's very difficult to precise, exactly the percentages because Brazil never pass through such a positive environment for mortgage. With very good legislations, interest rates moving down and the expansion of the tenure of the operations, to give you an idea, we are offering 25 years of fixed rates for our customers at 12.5% a year. So, we definitely believe that this is a major plus and that in the future we will be more able to respond more precisely the separation because we never pass through this... such a positive scenario for mortgage growth in Brazil.

So, if I may just follow up; your loans to builders are basically project financing loans and working capital loans, or...?

Yeah. We're financing the construction of the building. And we basically grant the money to the builders depending on the agenda of the construction of the building. So for example when we look at the origination of 1.2 billion reais in the quarter, it doesn't mean that the loan book grew on the same way. We originated the operations and after time with the agenda of the building being shown to us, we begin to finance more and more the project, the building itself.

And one last follow-up, are you seeing? What is the average ticket size of your mortgage loans through individuals? And are you seeing a trend shift in anyway? Hello?

Yeah. Just a second, please. In general terms the average value is around a 100,000 reais for the home, and we are financing, actually, 80%. You have a down-payment of approximately 20% of the building. So, the people are coming with 20% and 80% would be financed. And the tenure is close to 15 but it's moving up as we have a lot of inflow of operations, close to 25 years, but still most of it is closer to 15 years.

And do you see the average size, the original percentage with the average size of that 110,000 shifting in any directions, either up or down?

Actually it's moving relatively flat. We see... because most of the demand comes from... most of the customers that have, relatively speaking, the same type of wealth, so we can finance them up to a certain degree. So, the tenure is extending but the average cost of the apartment or the house is not changing so much right now.

Thank you very much.

You are welcome.

Thank you. Our next question comes from Saul Martinez from Bear Stearns. Please go ahead.

I just have a follow-up to something you indicated earlier, Jean, you said the impact of declining Celic [ph] should become, should lessen over time; and my question is does that mean that we should think of... we should think the net interest income growth should be closer to your average interest earning asset growth which I would expect to be closer to 15% to 20%. Because this would imply that net interest income growth is going to speed up from what you have been generally... at least you are indicating 2007 net interest income growth should be up 4% to 10%. So, the question really is, does this imply that net interest income growth... we should think of net interest income growth as closer to what you expect your interest earnings assets growth to be at in the coming years?

Yeah, I believe in general terms, yes. But obviously when you look at the net interest income evolution, as we have more and more stable and strong economy, the trend for treasury gains and volatility, they decline in the future; the interest part more relative to loans growing. And actually we have been looking at some reports and some people talk about the net interest income behavior, and actually what we try to do in the presentation is always to show, including and striking out the treasury gains and the impact of the mark-to-market. As you can see on the slide number 11, for people having a better understating of what happens. Obviously, in the third quarter there was more volatility in the market, and this on one way or the other affected the treasury gain, but in general terms that we see is that the trend... if you can, please, look at the slide number 11... is that the trend in grade being kind of stable over the last three quarters, even though the volatility as quite strong in the third quarter. So, yes you are correct about your question. And actually we are working with net interest margin for the whole bank over the next three years being relatively close to 7.5% for the bank as a whole including the treasury gains as well.

So... but that would imply that if we're looking at interest earning asset growth, just to be clear, of, I don't know, 15% to 20% and loan growth, obviously, higher than that, does that mean that the non-treasury component of net interest income should be growing at something closer to 15% to 20% in the coming years?

No, actually what we are seeing is that the treasury portion and the mark-to-market should be relatively more stable as the volatility is declining and should be declining as we continue to believe about preservating the investment grade as of next year, this definitely should be a major positive and as more volatility declines, at least, in our understanding, obviously, we don't know what is going to happen with all the variables like the international markets, but what Brazil is concerned and what Bradesco is concerned, in general terms, we are expecting net interest income to grow more and more in line of the risk weighted assets than the treasury portion.

Okay. And what would you think risk weighted assets could grow in the next... on a normalized basis in the coming years?

We are working for loan book growth of three to four times the GDP. This would be the evolution, in the long run, for the growth in loans. I don't have precisely now for the risk weighted assets, but for the loan, three to four times the GDP.

Got it. Great. Thank you.

You're welcome.

[Operator Instructions]. Since there are no further questions. I would like to invite Mr. Jean Philippe Leroy to proceed with his statements. Please go ahead.

Okay, basically I would like just to read the last question which also came from the Internet, and from Mr. JC. Given your increase in individual loan delinquency over two years, 3% to 6% and decrease in corporate loan delinquencies, what are your goals for the spread between the two? As individual loans have increased 28.8% year-over-year, 9.1% quarter-over-quarter versus your increase in corporate loans 20.8% to 2.1%. Looking at the slide number 18, actually the growth was not of 3% to 6% but more from 4.1% to 6.1%. These would be for the individuals, the top line in blue. Even though this growth in... that we have been seeing in delinquencies, we are continuing to grant loans to this type of customer, as you can see on slide number 13, with a strong growth. And actually... just a second. What you can see is that when we look at the slide number 13, we believe it's one of the most important slides to analyze, how our strategy for loan book growth is; if it is correct or not? But we see that basically we have been growing more and more our exposure to SMEs and to individuals, and which normally has a higher risk. But at the end of the day the black line, in the middle, shows that our loan book growth, even though being in some part more directed to clients with a higher risk than large corporate, for example, that are using more capital markets, we are earning more money. So, we believe that the best for you to question, and to follow if our strategy for loan book growth is correct, is by looking at the slide number 13 quarter-after-quarter and asking us questions about them. So, in general terms we are growing... to continue to grow loan book through individuals and SMEs but the spread is higher and it more than compensates with the higher risk. I would definitely like to thank each and everyone for joining this conference call. And once again invite everyone for our Bradesco Day on the New York Stock Exchange on November the 15th. Thank you very much and hope to see you in New York. Bye.

That does conclude the Banco Bradesco's audio conference call for today. Thank you very much for your participation and have a good day.