Company: BBD
Filing Date: 2025-03-31
Form Type: 20-F
Source: 0001292814-25-001244
Chunk: 350

Company: BANK BRADESCO
Filing Date: 2025-03-31
Form: 20-F
Item: Item 19
Chunk 350
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the majority of financial assets and liabilities is based on the market price or quotes of security dealers for financial instruments
traded in an active market. The fair value for other instruments is determined using valuation techniques. The valuation techniques which
include use of recent market transactions, discounted cash flow method, comparison with other instruments similar to those for which there
are observable market prices and valuation models.

For more commonly used instruments, the
Group uses widely accepted valuation models that consider observable market data in order to determine the fair value of
financial instruments.

For more complex instruments, the Group
uses its own models that are usually developed from standard valuation models. Some of the information included in the models may not
be observable in the market and is derived from market prices or rates or may be estimated on the basis of assumptions.

The value produced by a model or by a valuation
technique is adjusted to reflect various factors, since the valuation techniques do not necessarily reflect all of the factors that market
participants take into account during a transaction.

The valuations are adjusted to consider
the risks of the models, differences between the buy and sell price, credit and liquidity risks, as well as other factors. Management
believes that such valuation adjustments are necessary and appropriate for the correct evaluation of the fair value of the financial instruments
recorded in the consolidated statement of financial position.

More details on the calculation of the
fair value of financial instruments are available in Note 40.4. - Liquidity risk.

viii. Expected credit losses

The Group calculates the expected credit
losses for financial instruments measured at amortized cost and at FVOCI (except for investments in equity instruments), financial guarantees
and loan commitments.

Expected credit losses on financial instruments
are measured as follows:

Financial assets: it is the present value
of the difference between contractual cash flows and the cash flows that the Group expects to recover discounted at the effective interest
rate of the operation;

Financial guarantees: it is the present
value of the difference between the expected payments to reimburse the holder of the guarantee and the values that the Group expects to
recover discounted at a rate that reflects the market conditions; and

Loan commitments: it is the present value
of the difference between the contractual cash flows that would be due if the commitment was used and the cash flows that the Group expects
to recover discounted at a rate that reflects the market conditions.

Expected credit losses are measured on
one of the following basis:

− Credit losses expected for 12 months,
i. e.,