Company: BBD
Filing Date: 2025-03-31
Form Type: 20-F
Source: 0001292814-25-001244
Chunk: 99

Company: BANK BRADESCO
Filing Date: 2025-03-31
Form: 20-F
Item: Item 4
Chunk 99
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 contracts in which one counterparty hedges credit risk on a financial instrument. Its risk is then transferred to the counterparty selling the hedge. Normally, the latter is remunerated throughout the period of the transaction. In the case of default by the borrower, the buying party will receive a payment intended to compensate the loss in the financial instrument. In this case, the seller receives the underlying asset in exchange for the payment.
 
4.B.20.01-01.05 Control and monitoring
 Our credit risk has its corporate control and monitoring carried out by the independent Credit Risk area.
 This area holds monthly meetings with officers and heads of products and segments to ensure they are informed on the development of the loan portfolio, delinquencies, distressed assets, restructuring, adequacy of the provisions for non-performing loans, credit recovery, losses, portfolio limits and concentrations, the allocation of economic and regulatory capital and other items.
 In addition, the area tracks each internal and/or external event that may significantly impact our credit risk, such as mergers, bankruptcies or crop failures, and monitors economic sectors where we have the most representative exposures.
 
4.B.20.01-02 Counterparty credit risk
 Counterparty credit risk represents the possibility of loss due to non-compliance by a given counterparty with settlement obligations related to transactions involving the trading of financial assets or derivative financial instruments.
 We maintain full control over the replacement cost and potential future exposure to transactions in which there is counterparty credit risk. Therefore, all exposure related to this risk is part of the general credit limits granted to our clients.
 The management of counterparty credit risk includes modeling and monitoring (i) the use of the counterparty’s credit limit; (ii) the portion of the fair value adjustment regarding the credit of the CVA (Credit Value Adjustment) of the derivatives portfolio; and (iii) the respective regulatory and economic capital. The methodology we adopted establishes that the portfolio’s credit exposure to a given counterparty can be calculated from the Replacement Cost (RC) of its operations in different financial market scenarios, which is made possible by the Monte Carlo simulation process.
  
50 – Form 20-F 2024 | Bradesco
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In the context of risk management, we calculate the economic capital related to credit risk, including the derivatives portfolio segregated by counterparty, both for the definition of EAD (Exposure at Default) and CVA.
 We carry out capital projection studies, such as the ICAAP Stress Test (Capital Adequacy Assessment) and