Company: BBD
Filing Date: 2025-03-31
Form Type: 20-F
Source: 0001292814-25-001244
Chunk: 441

Company: BANK BRADESCO
Filing Date: 2025-03-31
Form: 20-F
Item: Item 19
Chunk 441
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matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating
the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which
they relate.

Assessment of the allowance for expected credit losses on loans
and advances to customers, loan commitments, financial guarantees, financial assets at fair value through other comprehensive income and
securities at amortized cost

As discussed in notes 2d viii, 4, 8d, 9c, 10, 11, 38 and
40.2 to the consolidated financial statements, the Bank has R$ 57,922,052 thousand of allowance for expected credit losses (ECL) related
to loans and advances to customers and securities at amortized cost, loan commitments, financial guarantees and financial assets at fair
value through other comprehensive income (FVOCI), as of December 31, 2024. The Bank recognizes a lifetime ECL for those contracts that
have experienced a Significant Increase in Credit Risk (SICR) subsequent to the initial recognition or are credit impaired (stage 2 and
3, respectively), and a 12-month ECL for all other contracts (stage 1). The Bank calculates ECL either on a collective basis, using models,
or, for certain significant exposures, on an individual basis, estimating the future cash flows including the value of related collateral.
To calculate ECL on a collective basis the Bank segregates the portfolio of contracts on the basis of shared credit risk characteristics
and uses models to estimate the Probability of Default (PD), the Loss Given Default (LGD) and the Exposure at Default (EAD) as well as
to identify relevant macroeconomic variables and estimate the impact of projections of those macroeconomic variables. The Bank forecasts
multiple economic scenarios for these macroeconomic variables and to them.

We identified the assessment of the allowance for ECL as a critical
audit matter. Complex auditor judgment was required to evaluate the ECL estimate as it involved significant measurement uncertainty, primarily
as a result of the complexity of the models and the subjectivity of the assumptions. These uncertainties included: (i) the overall ECL
methodology, inclusive of the models used to estimate the PDs weights each scenario according to the probability assigned, EADs and LGDs
and the segmentation of contracts by shared credit risk characteristics; (ii) the projections for the macroeconomic variables in