This call is being broadcasted simultaneously through the internet in the website, www.bradesco.com.pr/ir. In the address, you can also find a banner through which the presentation will be available for download. We are informed that all participants will only be able to listen to the conference call during the Company’s presentation. After the presentation, there will be 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, 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 statements. Now, I’ll turn the conference over to Mr. Domingos Figueiredo de Abreu, Executive Vice President, Investor Relations Officer. Mr. Abreu, you may proceed.

Good morning, everyone. Welcome to our conference call. I will begin with our main highlights among which I would like to point out on slide number two. Our adjusted net income for the first nine months of 2010, which totaled R$7,120 million, around 24% higher than in the same period last year. Total assets amounted to R$612 billion, a 26% improvement over September 2009. In slide three, we point out our funds under management, which totaled R$838 billion, showing an evolution of 24% in that one year period. I’d also like to call your attention to our delinquency ratio, which fell substantially in compares to 2009 and to our coverage ratios, which have meet both the unimportant evolutions. On slide four, we show the reconciliation of between book net income and adjusted net income. The main non-recurring events this quarter were a gross gain of R$79 million from the partial sale of the investment and CPM Braxis, offset by the constitution of provisions for civil contingencies for economic plans in the growth amount of R$71 million. After this adjustment, our book net income of R$2,527 million went to R$2,580 million, generating an annualized return of 24.4% in the quarter. In this slide, you can also see that our return on average equity reached over 22% in the first nine months of the year both in terms of book and adjusted net income. Slide number five shows our third quarter net income. Evolution this quarter comes from the growth in the net interest income, mainly due to the increase in the volume of operations. Higher fees income as a result of the expansion of the private base and the reduction in the provisions for loan losses as well as the impact from higher personnel expenses due to the collective bargaining agreement,…

(Operator Instructions) Our first question comes from Mr. Jason Mollin with Goldman Sachs.

My question is related to funding, which we didn’t go over in this presentation. In fact, it was pretty impressive, the growth in your repos. Your net repo position almost doubled quarter-on-quarter and now I think we have a vision around R$72 billion. I think in the same quarter of last year it was single digits around 5 billion. If you can talk a bit about the funding environment, your low-cost funding, your marginal cost of funding and what’s going on with the repo transactions? And my second question would be just on operating efficiency. You have operated at higher or weaker efficiency levels, but we did see an increase of about 150 basis points quarter-on-quarter. If you could talk about your expectations for that going forward, will we see that continue to increase as you build out, invest in the branch network, et cetera? Thank you.

At first in terms of repos, it’s more a kind of opportunity. Sometimes you have in the markets some opportunity to prepare some Brazilian bonds internally. Brazilian bonds secured and would have some very small spreads, but sometimes you have some kind of opportunity more. I don’t consider that you have, it would be a changing, you can’t assume that just some opportunity will, an investment when you try to, we try to take advantage of one of the, to seek opportunity in the markets. But it’s not something that can continue to go forward. In term of cost of funding, what you are seeing is more of; we have no pressure in terms of funding, in terms of cost, all right. I think the cost of funding is reducing in spite; of course, you’d have the increasing, because of increasing interbank rates. But on a relative basis, it has been declining. What is the big challenge in terms of funding we have going forward is more in terms of maturities of the funding; I think is the big challenge of that, not only for Bradesco, but the Brazilian banks in general will. Of course, once you have the economy needs to, you need to finance some investment the infrastructure and the other things, other objects, of course you need to, even in terms of mortgage segment. Of course, once you finish this obligation to fulfill the obligation to use save and deposit, of course, we need to create a new kind of funding in terms of maturities. In terms of cost so far, we are not seeing any pressure internally. In terms of operating efficiency ratio, what you see that, of course we are growing organically. So normally we’d have some pressure and you have that investment in IT,…

Maybe just a follow-up then on the funding, Abreu, if we have, your loan book is growing about 19% the way you describe it on this expanded basis year-on-year and your funding is growing at a slower pace, your core funding, your lowest cost funding. So on the margin, I guess your marginal loan, the spread should be lower, not only because of competitive pressure, or a change in mix, but also since if you’re not going to grow your, if you’re going to continue not to grow your funding base, your core funding base as fast as the loans, then we should expect, that going forward that the margin will reflect that. Correct?

Look, when you look, we are not growing the funding in the same proportion of the credit. It’s because we start with a high level of liquidity at the beginning of the year, right. So it’s natural to remember that we came from an acquired spirit where we increase a lot the decrease. So it’s natural to observe that. In terms of margin, what you have observed, in terms of, we are not seeing pressure in terms of, so far, in terms of a reduction margin coming from the funding side. But in the after fact, yes we have. I think it’s natural to expect a reduction in margin. Once we increase the spreads during the past periods, so it’s a natural movement to reduce the spreads again. So that’s why we had hoped we’re observing this movement.

Excuse me. Our next question comes from Mr. (inaudible).

Yes. Good morning, everyone. My question is on loan-loss provisions. We’ve seen them come down a lot and at these levels when you measure them as a percentage of average loans, they are even at a rate that are lower than you were provisioning pre-crisis in 2008. And so what should we think about when we think of a provisioning, loan loss provisions going forward in terms of the growth in loan loss provisions. Should they grow more in line with the loan portfolio?

Look, we have, what you have been observing this, like, two, three quarters, we have a good combination where we have increased in terms of recoveries that have been helping this moment. Of course, you don’t expect to have the same level of three quarters going forward. May be you have some reduction once we are reducing the losses during this moment. We are recovering for a moment where we have more losses during 2009, for example. But as I’ve said what you are observing that if you consider the macro environment, then, very, very favorable macroeconomic scenario. You understand that would be able to keep, maybe this 35.3% that you see on page, slide 13 is too low for, to continue to roll. I think it’s natural to expect the provision needed. We start moving to increase once we are growing the portfolio. If you see that we are growing the provision in terms of generic provision, it’s still a composition of total provision, you see very clear that the generic provision that means that the provision that we made for, in advance for the rating, for the operation, not because we’ve had some delay in the credit has been growing during this period. But even though that it has been doing, the total expense has been lower. It’s because of course we have a good impact on the reduction of the delinquents. Don’t expect to have this impact of reduction delinquency continue. I think once you reach a certain point, you keep at this level and we’ll have to increase the, for the expenses driven by the growth of the portfolio. So I would say that I should work in a conservative base that you can expect these levels that now it’s around 35.3% of the gross margin should be around 37, 38%, that should be a conservative way to see going forward.

Excuse me. Our next question comes from Mr. Boris Molina with Santander.

Yes. Good morning. Thanks for taking my call, my question. I have a question regarding your growth on lendings. We saw in the quarter that the total on lending balances grew almost 15% in the quarter, driven by the BNDES (inaudible) outlays. I wanted to know what is the impact does this have on your margins and what type of spreads do you effectively earn on this type of operations? And what is your outlook in relation to the impact on corporate and SME lending volumes that you could have given the amount of resources that have been made available through the BNDES? Do you think that the BNDES could continue to expand their loan portfolio as strong as they have been doing, or given that in the latest monthly data from the central bank, we saw a slight deceleration in BNDES outlays do you think that the resources are being exhausted? Should we expect the national traffic to commit more resources? What is your outlook on this front? Thank you.

You’re welcome, Boris. Look, I think first BNDES, you understand the BNDES more as a partner than a competitor. You should see that their portfolio has a very important amount of a portfolio where they have fund income from BNDES. You can see even this quarter it grew a lot. This said, BNDES is, it’s important to see that BNDES is the biggest factor in terms of, to provide the long-term funding for Brazilian companies to finance infrastructure. I think there is a limit to understand that. There is a limit for this. I don’t know that they’ve reached their limits now. If you see this, well, the data for that result from Central Bank, we saw this quarter, they reduced the direct lend for the companies. But if you consider that they finance more the banks during this period, it means that they reduce more, even more than what they made direct. In terms of our great growth, it’s important to emphasize that there’s some question about why we are growing this quarter lower than the market when you saw the data compared with the data from Central Bank. I think I’d like to use your question to clarify some things for in particular. I know if you don’t exit, exactly this point, but like to emphasize this that we are looking for this. We are trying to understand, and we need to, of course, to see the other banks when they present their balance sheet to understand it better. But for our first study that we made, we realized that we lost some market share in terms of how to financing. And we know that, we knew that we could do, have reduced this much share. Once we are discontinuing some portfolio, like very old cars, we are…

Excuse me, our next question comes from Mr. Eduardo Nishio with BTG Pactual.

Hi, good morning, I have two questions. First is on the SME loan growth. You managed to grow well this quarter. I think we are seeing the same trend for all banks that are reporting, particularly the smaller banks that are growing double digits. My question is how do you see spreads? Do you see competition already pressuring spreads on that segment and should we expect a more pressure going forward on that segment? And my second question is on costs, particularly on the short-term costs in fourth quarter. We have the salary hike, right impacting the fourth quarter. Also, you have a pipeline of new openings, new branch openings concentrated in the fourth quarter, probably around 140 new branches. How do, how you see the cost, the evolution of costs hitting the fourth quarter? Do, should we expect the same sort of pressure that we saw in, recently quarter-on-quarter on costs? Thank you.

Okay, and SMEs, I think we already, we’ve mentioned something in the previous question from Boris Molina, but I’ll try to emphasize more here. Want to say that in normal terms the competition, not only in SME, but in all the segments has been tough and continue to be. But I think in this market, we have more space to keep these spreads to more time. Let’s say when they have, it’s a competitive money environment, yes, but normally each bank has their own clients. So it’s different when you consider large corporates and the higher middle-size company, right. When they compare more, they stay more. I think this to be normally, they provide them with other service and other things, so the pressure on spreads is not so big in these things, so for a while. In terms of cost, we have, I think the big jump in numbers, in terms of numbers of employees, we had in the third quarter. Of course, when we had 2,800 new employees during the last three quarters, it was during the quarter, not only at the beginning of the quarter. Of course, we have some pressure in terms of cost in the second quarter, comes from this, when you have a full quarter with these new employees. In terms of to open new branch, we have expectation to finish this year with 175 just to clarify that. And I don’t think it should be significant this only for these branches, because if you consider which branch you have in an average maybe eight, nine people into branch, we are talking about maybe 900 new employees, maybe. So it’s not so big in pressure terms. Of course, you have a new, full quarter with new increase in salaries during this period but this effect should be more or less the same that you have in the third quarter. Because if you consider the third quarter, we make, we have the last months of the quarter in September, we have the salary with the increase, with the negotiation that we had. But you have adjustment in the true lines of provision in term, that you have during the year. That’s call, in the thirteen salaries and for vacations. So you can consider that effect of the increase in the third quarter should be more or less the same that you have in the third quarter. So let’s say that I think you can compare, on comparative basis, I think the last quarter for coming just for the pressure in terms of salary, I think should be lower than to have when compared to the third quarter with the second quarter.

Okay, just to clarify a little bit. The 2,800 new employees already include some employees for the new branches.

No, not for the new branches, but for the -

Okay.

Apparently of that is already because when you, if you think that we are opening new branches during these two, three months, it means that we already have been preparing people to work there, right. So we are just waiting for, to open the branch. But a part we already have or a part of quarterly to contract yet. But not, I’d say that’s not a big pressure only in one quarter when you consider this new branch.

Excuse me, our next question comes from Mr. Victor Galliano with HSBC.

Yes, hi Domingos, thank you for the presentation -

Hi.

Just focusing, continuing to focus on the cost side. Can you give us some sort of timeline as to where you are in terms of the IT and systems upgrade? And within the other admin expenses, where are these costs? Are they in third party services, data processing? Can you just give us a little bit more detail on that? Thank you.

Victor, we are in that, we remember that the actual improvement, okay, the most challenging part of that was that we are now is to rewrite all the system that we have. We are, our expectation that we will finish this year with around 40% of this project finished. In at the end of 2011, we expect to have this, to be around 80%, all right. So it means that we expect to finish this by the middle of 2012. Where we have this? We have a part of this when we’re under development of the cost, the investment and developing. A big portion you’ll see in the asset side, but what you, when you have, when you contract third parties to develop this. But it’s still in the asset, not only the direct expense. But what you have in expense is that you cannot feel, cannot perceive is the cost evolving in all the areas that you have in bank involvement in this project. When you think about rewrite systems it means that you have internal people working. It’s, most biggest part of this is you have more employees working in developing a system that we need in normal base. It’s included in the salaries of people. We have more than this, we have people in all departments that need to use systems that we’re working, trying to at the same time in looking for, to put the bank to work every day with the system that we have now. And you need to have a team, specific team looking for the new system that they already have been delivering in order to test in everything. So it means that you have a cost of, it’s inside everything. You see the companies in third parts. You see even in the personnel expense, you see this pressure let’s say. Important you don’t have a separation of this in different segments because it’s a move into, that involve all the bank and all departments, so it’s inside of everything. That’s why you have very good expectation when you finish this to improve the, our efficiency ratio. Not only for the size or the cost, but more in terms of revenues going forward.

So you will see this kind of beginning to impact in 2012, and especially from second half 2012.

Not to be specific. The impact of the expense will continue more or less the same movement in toward the end of 2012, 2011. Maybe 2000, where we can expect, we can see some results and yes, you can see that they have more at the end of 2012. But I would bet more in 2013.

Excuse me, our next question comes from Ms. (inaudible).

Hi, good morning, everybody. I have two questions. The first one is related to fee income which posted very positive growth in the quarter, up 5.3%. And one of the highlights was a card related fees up more than 8% in the quarter. We are aware that the Central Bank in Brazil is likely to issue new regulation regarding credit card fees for the issuers in terms of creating a standard set of tariffs as well as making them more transparent to clients. We would, I would like to know whether you could open to us how much of this fee income line comes from interchange fee, how much comes from seller’s proportional consolidation and how much is related to annual fees? And if you expect any impact of such likely regulation in the case of Bradesco? And then my second question is regarding asset quality that continued to improve significantly in the quarter with coverage ratio also increasing. But given this positive macro scenario with an employment rate in the record lows, when do you see this coverage ratio coming down? Is the bank being conservative when it could have reduced it even further the level of provision expenses? Or there is really any statistical impact regarding strong loan growth and when the portfolio starts to age, then NPL ratios will start to increase?

Okay, Hasina, first in terms of fee income, unfortunately, we cannot to open this number from Cielo, just because Cielo is a public company we don’t, if you open these numbers, they didn’t post their numbers yet, right.

Okay.

Okay. In terms of regulation, we, of course we are observing, we are following the negotiation what the people from the banks, the union authorizes the company issues of card, they are discussing with the Central Bank with all the people involved with the negotiation. For what we have the, for what do we receive for people that is involved in the negotiation, that we want to have some impression in terms of in our fees. The way that we charge fees and the way that we do everything, I think is one big point that they are putting in discussion. So far we have a significant impact we understand. The question is to see exactly what they will decide to have then. In terms of asset quality, I’d say that this improvement in cover ratio is more a result of the situation than the, I wanted to have to reach this level, right. What happened that once you have, we keep, you saw that we keep, we kept our acts of provision when compared with the requirements of Central Bank, we didn’t increase this. Even though we are improve, we are growing in our coverage ratio let’s say, considering, I think we have a combination of two things here. We have a reduction in delinquency. At the same time, we are going to portfolio. Once we are going to portfolio, we know that we need to create provisions for the, considering the rating of the clients and the, in the operations. So it’s natural to increase. You see that we are growing. If you look at this slide 31, you see that we are growing more in the generic provisions. What the generic provisions is it means that we are growing provision, preventive provisions let’s say, it’s natural to have that. And then once you have this combination, you look at the specific provision and you have a movement to reduce, it results in this improvement in the coverage ratio. That’s why I mentioned in my speech that those expectations that, in some moment, I don’t know I would expect it was in this quarter, thanks God, we didn’t have yet. But I think some movement, maybe the next quarter, you see a movement to stabilize this coverage. It may be start the movement to reduce. Once you don’t expect to have, continue this reduction in the delinquency ratio, in the same time, we expect to have the graph continue to grow. So this, it’s natural to expect that the graph with the past due should continue to, should start growing in nominal terms. So this movement itself should be the brink of operation going down a little bit. This is our expectation. We don’t know exactly what’s going to happen because again, we don’t have an objective of to reach this, this coverage ratio is more a result of the policy that we use for provision than our objective that you look for.

(Operator Instructions) Excuse me ladies and gentlemen, since there are no further questions, I would like Mr. Domingos Figueiredo de Abreu to proceed with his closing statements. Please go ahead sir.

Okay. I would like to thank you, I would like to thank the participation of each and every one on this call. Our investor relations area would be more than happy to answer any further questions you may have. Thank you very much

That does conclude the Banco Bradesco audio conference for today. Thank you very much for participating and have a good day.