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Form 20-F  Table of ContentsPRESENTATION OF FINANCIAL AND OTHER INFORMATION

   4FORWARD-LOOKING STATEMENTS

   5PART I

   6ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

   6ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

   6ITEM 3. KEY INFORMATION

   63.A. SELECTEDFINANCIALDATA

   63.B. CAPITALIZATION ANDINDEBTEDNESS

   93.C. REASONS FOR THEOFFER ANDUSE OFPROCEEDS

   93.D. RISKFACTORS

   9ITEM 4. INFORMATION ON THE COMPANY

   214.A. HISTORY, DEVELOPMENT OF THECOMPANY ANDBUSINESSSTRATEGY

   214.B. BUSINESSOVERVIEW

   264.C. ORGANIZATIONALSTRUCTURE

   1164.D. PROPERTY, PLANTS ANDEQUIPMENT

   116ITEM 4A. UNRESOLVED STAFF COMMENTS

   116ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

   1165.A. OPERATINGRESULTS

   1165.B. LIQUIDITY ANDCAPITALRESOURCES

   1435.C. RESEARCH ANDDEVELOPMENT, PATENTS ANDLICENSES

   1555.D. TRENDINFORMATION

   1555.E. OFF-BALANCE SHEET ARRANGEMENTS

   1605.F. TABULARDISCLOSURE OFCONTRACTUALOBLIGATIONS

   1615.G. SAFEHARBOR

   156ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

   1566.A. BOARD OFDIRECTORS ANDBOARD OFEXECUTIVEOFFICERS

   1566.B. COMPENSATION

   1646.C. BOARD OFDIRECTORSPRACTICES

   1646.D. EMPLOYEES

   1686.E. SHAREOWNERSHIP

   169ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

   1697.A. MAJORSHAREHOLDERS

   1697.B. RELATEDPARTYTRANSACTIONS

   1747.C. INTERESTS OFEXPERTS ANDCOUNSEL

   174ITEM 8. FINANCIAL INFORMATION

   1758.A. CONSOLIDATEDSTATEMENTS AND OTHERFINANCIALINFORMATION

   1758.B. SIGNIFICANTCHANGES

   176ITEM 9. THE OFFER AND LISTING

   1779.A. OFFER ANDLISTINGDETAILS

   177 2   Form 20-F – December 2013


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9.B. PLAN OFDISTRIBUTION

   1809.C. MARKETS

   1809.D. SELLINGSHAREHOLDERS

   1829.E. DILUTION

   1829.F. EXPENSES OF THEISSUE

   182ITEM 10. ADDITIONAL INFORMATION

   18210.A. SHARECAPITAL

   18210.B. MEMORANDUM ANDARTICLES OFINCORPORATION

   18210.C. MATERIAL CONTRACTS

   19010.D. EXCHANGE CONTROLS

   19010.E. TAXATION

   19110.F. DIVIDENDS ANDPAYINGAGENTS

   19710.G. STATEMENT BYEXPERTS

   19710.H. DOCUMENTS ONDISPLAY

   19710.I. SUBSIDIARYINFORMATION

   198ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

   198ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

   20212.A. DEBTSECURITIES

   20212.B. WARRANTS ANDRIGHTS

   20212.C. OTHERSECURITIES

   20212.D. AMERICANDEPOSITARYSHARES

   202PART II

   203ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

   203ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

   **203**ITEM 15. CONTROLS AND PROCEDURES

   203ITEM 16. [RESERVED]

   20416.A. AUDITCOMMITTEEFINANCIALEXPERT

   20416.B. CODE OFETHICS

   20416.C. PRINCIPALACCOUNTANTFEES ANDSERVICES

   20416.D. EXEMPTIONS FROM THE LISTING STANDARDS FORAUDITCOMMITTEES

   20516.E. PURCHASES OFEQUITYSECURITIES BY THEISSUER ANDAFFILIATEDPURCHASERS

   20516.F. CHANGE INREGISTRANT'SCERTIFYINGACCOUNTANT

   20616.G. CORPORATEGOVERNANCE

   206PART III

   209ITEM 17. FINANCIAL STATEMENTS

   209ITEM 18. FINANCIAL STATEMENTS

   209ITEM 19. EXHIBITS

   210


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|Form 20-F |  |  | 
|--------- |  |  | 

PRESENTATION OF FINANCIAL AND OTHER INFORMATION
 In this annual report, the terms "Bradesco," the "Company," the "Bank," the "Bradesco Group," "we,” the “Organization” and "us" refer to Banco Bradesco S.A., asociedade anônimaorganized under the laws of Brazil and, unless otherwise indicated, its consolidated subsidiaries. We are a full-service financial institution providing, directly or through our subsidiaries, a full range of banking, financial, purchasing consortium management, asset management, insurance, investment banking, pension plan (or pension) and capitalization bond services for all segments of the Brazilian market. Our operations are based primarily in Brazil. All references herein to "real," "reais" or "R$" refer to the Brazilian real, the official currency of Brazil. References herein to "U.S. dollars," "dollar" and "US$" refer to United States dollars, the official currency of the United States of America (“USA”). Our audited consolidated financial statementsas of andfor the years ended December 31, 2013, 2012 and 2011, with the corresponding notes, are included under "Item 18. Financial Statements" of this annual report and were prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). For certain purposes, such as reports for Brazilian shareholders, filings with the Brazilian Securities and Exchange Commission ("CVM") and determining dividend and federal income tax payments, we use accounting practices adopted in Brazil for financial institutions authorized to operate by theBrazilian Central Bank (Banco Central do Brasil), or the "Central Bank." On March 31, 2014, the real/U.S. dollar exchange rate was R$2.2630 per US$1.00 based on the closing selling exchange rate reported by the Central Bank. The selling exchange rate as of December 31, 2013 was R$2.3426 per US$1.00. See "Item 3.A. Selected Financial Data-Exchange Rate Information" for more information regarding the exchange rates applicable to the Brazilian currency since 2009.The closing selling commercial exchange rate at March 31, 2014 or at any other dateindicated in this annual reportmaynot be indicative of current or future exchange rates. Some data related to economic sectors presented in this annual report was obtained from the following sources: Brazilian Association of Credit Card Companies and Services (Associação Brasileira das Empresas de Cartão de Crédito e Serviços),or ABECS; Brazilian Association of Leasing Companies (Associação Brasileira de Empresas de Leasing), or ABEL;Brazilian Association of Financial and Capital Markets Entities(Associação Brasileira das Entidades dos Mercados Financeiros e de Capitais), or ANBIMA; Brazilian Health Insurance Authority(Agência Nacional de Saúde Suplementar), or ANS; theCentral Bank;Brazilian Bank of Economic and Social Development (Banco Nacional de Desenvolvimento Econômico e Social), or BNDES; National Association of Private Pension Plans and Life (Federação Nacional de Previdência Privada e Vida), or FENAPREVI; Getulio Vargas Foundation (Fundação Getulio Vargas), or FGV;and Private Insurance Superintendence(Superintendência de Seguros Privados), or SUSEP. We believe these sources are reliable, but we cannot take responsibility for the accuracy of this data. Certain figures included in this annual report have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them. References in this annual report to the “common shares” and “preferred shares” are to our common shares and preferred shares, respectively, and together our "shares." References to “preferred share ADSs”in this annual report areto preferred share American Depositary Shares, each representing one preferred share. The preferred share ADSs are evidenced by preferred share American Depositary Receipts, or preferred share ADRs, issued pursuant to an Amended and Restated Deposit Agreement, dated as of July 22, 2009, by and among us, The Bank of New York Mellon, as depositary, and the holders and beneficial owners of preferred share ADSs evidenced by preferred share ADRs issued thereunder (the“PreferredShareADS Deposit Agreement”). References in this annual report to "common shareADSs" are to common share American Depositary Shares,witheachcommon share ADSrepresenting one common share.  The common share ADSs are evidenced by common share American Depositary Receipts, orcommon share ADRs, issued pursuant to a Deposit Agreement dated as of March 13, 2012 by and among us, The Bank of New York Mellon, as depositary, and the holders and beneficial owners of common share ADSs evidenced by common share ADRs issued thereunder (the "Common ShareADSDeposit Agreement" and,together with the“Preferred Share ADSDeposit Agreement”, the "Deposit Agreements"). References throughout this annual report to "ADSs" are to our preferred share ADSs and common share ADSs, together.   4Form 20-F – December 2013


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| |  |  | Form 20-F
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Throughout this annual report, we may indicate that certain information is available at different websites operated by us. None of the information on the websites referred to or mentioned in this annual report is part of or is incorporated by reference herein.  FORWARD‐LOOKING STATEMENTS
 This annual report contains forward‐looking statements as defined in Section 27A of the Securities Act of 1933, as amended, or "Securities Act," and Section 21E of the Securities Exchange Act of 1934, as amended, or "Exchange Act." These statements are based mainly on our current expectations and projections of future events and financial trends that currently affect or might affect our business. In addition to the items discussed in other sections of this annual report, there are many significant factors that could cause our financial condition and results of operation to differ materially from those set out in our forward-looking statements, including, but not limited to, the following: ·global economic conditions; ·economic, political and business conditions in Brazil andintheothermarkets in which we operate; ·risks of lending, credit, investments and other activities; ·our level of capitalization; ·cost and availability of funds; ·higher levels of delinquency by borrowers, credit delinquency and other delinquency events leading to higher impairment of loans and advances; ·loss of customers or other sources of income; ·our ability to execute our investment strategies andcapital expenditureplans as well as to maintain and improve our operating performance; ·our revenues from new products and businesses; ·adverse claims, legal or regulatory disputes or proceedings; ·inflation, depreciation of therealand/orinterest ratefluctuations, which could adversely affect our margins; ·competitive conditions in the banking, financial services, credit card, asset management, insurance sectors and related industries; ·the market value of securities, particularly Brazilian government securities; and ·changes by the Central Bank and others in laws and regulations, applicable to us and our activities, including, but not limited to, those affectingtax matters.  Words such as "believe," "expect," "continue," "understand," "estimate," "will," "may," "anticipate," "should," "intend," and other similar expressions are intended to identify forward‐looking statements. These statements refer only to the date on which they were made, and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or any other event. In light of these risks and uncertainties, the forward‐looking statements, events and circumstances discussed in this annual report may not be accurate, and our actual results and performance could differ materially from those anticipated in our forward-looking statements. Investors should not make investment decisions based solely on the forward-looking statements in this annual report. Bradesco5


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|Form 20-F |  | 
|--------- |  | 

PART I
  ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
 Not applicable.  ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
 Not applicable.  ITEM 3. KEY INFORMATION
 3.A. Selected Financial Data
 We present below our selected financial data derived from our consolidated financial statements which have been prepared in accordance with International Financial Reporting Standards (IFRS) as of and for the years ended December 31, 2013, 2012, 2011, 2010 and 2009. The data as of and for the years ended in 2013, 2012 and 2011 is derived from our consolidated financial statements, included elsewhere in this annual report, which were audited by KPMG Auditores Independentes, an independent registered public accounting firm, as stated in their report included in this annual report.The data for the years ended December 31, 2010 and 2009, is derived from our consolidated financial statements, which are not included herein, which were audited by PricewaterhouseCoopers Auditores Independentes, an independent registered public accounting firm, as stated in their report that is not included herein. Until December 31, 2012, our interests in jointly-owned entities (joint ventures) were proportionately consolidated, in accordance with IAS 31. As of January 1, 2013, we adopted IFRS 11 – “Joint Arrangements”, thus changing the accounting policy to be applied to interest in jointly-owned entities to the equity method of accounting. The data as of December 31, 2013, 2012 and 2011 and for years ended December 31, 2013, 2012 and 2011 presented in this annual report reflect retrospectively the effects of this adoption. For more information regarding the adoption of this policy, see Note 2(a)iii to our consolidated financial statements in "Item 18. Financial Statements”. The following selected financial data should be read together with the "Presentation of Financial and Other Information" and "Item 5. Operating and Financial Review and Prospects."    6Form 20-F – December 2013


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| |  | Form 20-F
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Selected Financial Data  Year ended December 31,
     US$ in 
thousands (1)
     R$ in thousands2013
     2013
     2012
     2011
     2010
     2009(Restated)
     (Restated)Data from the Consolidated Statement of IncomeInterest and similar income
     40,071,863
     90,682,625
     83,031,854
     82,152,096
     63,772,183
     55,165,229Interest and similar expenses
     (18,286,408)
     (41,382,142)
     (39,646,131)
     (46,763,775)
     (31,000,892)
     (27,974,717)Net interest income
     21,785,454
     49,300,483
     43,385,723
     35,388,321
     32,771,291
     27,190,512Fee and commission income
     6,423,209
     14,535,723
     12,757,131
     10,932,237
     9,421,485
     7,866,601Fee and commission expenses
     (15,926)
     (36,041)
     (36,391)
     (33,978)
     (26,947)
     (19,219)Net fee and commission income
     6,407,283
     14,499,682
     12,720,740
     10,898,259
     9,394,538
     7,847,382Net gains/(losses) on financial instruments classified as held for trading
     (2,558,590)
     (5,790,089)
     2,110,112
     (608,271)
     2,212,733
     5,983,781Net gains/(losses) on financial assets classified as available for sale
     (2,695,882)
     (6,100,782)
     1,895,974
     365,302
     754,416
     757,255Net gains/(losses) of foreign currency transactions
     (483,251)
     (1,093,597)
     (1,087,595)
     2,625,816
     (682,961)
     (897,638)Income from insurance and pension plans
     3,063,933
     6,933,680
     1,413,016
     3,076,175
     2,577,730
     1,778,016Impairment of loans and advances
     (4,252,704)
     (9,623,870)
     (11,451,383)
     (8,239,358)
     (5,756,125)
     (10,809,611)Personnel expenses
     (5,459,310)
     (12,354,418)
     (11,559,002)
     (11,094,794)
     (8,794,017)
     (7,334,164)Other administrative expenses
     (5,369,658)
     (12,151,537)
     (11,803,989)
     (11,380,270)
     (9,761,445)
     (8,138,058)Depreciation and amortization
     (1,211,149)
     (2,740,830)
     (2,488,182)
     (2,117,666)
     (1,966,433)
     (1,516,529)Other operating income/(expenses)
     (3,368,202)
     (7,622,240)
     (8,674,178)
     (5,106,092)
     (6,002,663)
     (3,024,640)Income before income taxes and equity in the earnings of associates
     5,857,924
     13,256,482
     14,461,236
     13,807,422
     14,747,064
     11,836,306Equity in the earnings of associates and joint ventures
     469,592
     1,062,687
     980,212
     803,820
     577,053
     728,867Income before income taxes
     6,327,516
     14,319,169
     15,441,448
     14,611,242
     15,324,117
     12,565,173Income and social contribution taxes
     (810,000)
     (1,833,031)
     (4,089,754)
     (3,521,800)
     (5,271,924)
     (4,264,330)Net income for the year
     5,517,516
     12,486,138
     11,351,694
     11,089,442
     10,052,193
     8,300,843Attributable to shareholdersControlling
     5,477,649
     12,395,920
     11,291,570
     10,958,054
     9,939,575
     8,283,007Non-controlling interest
     39,867
     90,218
     60,124
     131,388
     112,618
     17,836(1)Amounts stated in U.S. dollars have been translated from Brazilianreaisat an exchange rate of R$2.2630 per US$1.00, the Central Bank exchange rate on March 31, 2014. Such translations should not be construed as a representation that the Brazilianrealamounts presented were or could be converted into U.S. dollars at that rate.
  Year ended December 31,
     R$, except for number of shares2013
     2012
     2011
     2010
     2009(Restated)
     (Restated)Data on Earnings and Dividends per Share (1)Earnings per share (2) (3) (4) (5)Common
     2.81
     2.56
     2.49
     2.27
     1.91Preferred
     3.09
     2.82
     2.74
     2.49
     2.10Dividends/interest on equity per share (2)Common
     0.93
     0.88
     0.84
     0.77
     0.66Preferred
     1.02
     0.97
     0.93
     0.85
     0.72Weighted average number of outstanding sharesCommon
     2,100,738,519
     2,100,833,147
     2,099,843,709
     2,068,913,020
     2,042,318,414Preferred
     2,096,606,848
     2,098,472,511
     2,097,504,111
     2,069,503,929
     2,042,354,064(1)Data on earnings and dividends per share reflects: (a) the split of our Capital Stock on January 22, 2010, in which we issued to our shareholders one new share for each ten shares held of the same type, which was approved by our shareholders on December 18, 2009; and (b) the split of our Capital Stock on July 13, 2010, in which we issued to our shareholders one new share for each ten shares held of the same type, which was approved by our shareholders on June 10, 2010. For comparison purposes, all share amounts have been retroactively adjusted for all periods to reflect the stock split;(2)Holders of preferred shares are entitled to receive dividends per share in an amount 10.0% greater than the dividends per share paid to common shareholders. For purposes of calculating earnings per share according to IFRS, we used the same criteria adopted for dividends per share. For a description of our two classes of shares. see "Item 10.B. Memorandum and Articles of Incorporation".(3)None of our outstanding liabilities are exchangeable for or convertible into equity securities. Therefore, our diluted earnings per share do not differ from our earnings per share. Accordingly, our basic and diluted earnings per share are equal in all periods presented;(4)On December 17, 2010, the Special Shareholders ́ Meeting voted in favor of a share capital increase of R$1,500 million, increasing share capital from R$28,500 million to R$30,000 million by issuing 62,344,140 new book-entry registered shares without par value, of which 31,172,072 were common and 31,172,068 preferred shares, at the price per share of R$24.06 through private subscription by shareholders from December 29, 2010 through January 31, 2011, in the proportion of 1.657008936% of the shareholder ́s holdings as of the date of the meeting, which was paid in cash on February 18, 2011; and(5)The Special Shareholders’ Meeting held on March 11, 2013 deliberated on the capital increase of R$8,000,000 thousand, from R$30,100,000 thousand to R$38,100,000 thousand, through the capitalization of a portion of the “Profit Reserves – Statutory Reserve” account, in compliance with Article 169 of Law 6,404/76, with a 10% stock bonus, through the issue of 382,479,458 new no-par registered, book-entry shares, of which 191,239,739 are common shares and 191,239,719 are preferred shares, paid free of charge to shareholders as bonus, at the proportion of one (1) new share for every ten (10) new shares of the same type they hold, benefiting Bradesco’s shareholders of record as at March 25, 2013.
  Year ended December 31,
     In US$2013
     2012
     2011
     2010
     2009Dividends/interest on equity per share (1)Common
     0.40
     0.42
     0.45
     0.46
     0.38Preferred
     0.44
     0.47
     0.50
     0.50
     0.41(1)Amounts stated in U.S. dollars have been translated from Brazilianreaisat the exchange rate disclosed by the Central Bank at the end of each fiscal year.
    Bradesco7


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|Form 20-F |  | 
|--------- |  | 

As of December 31,
     US$ in 
thousands (1)
     R$ in thousands2013
     2013
     2012
     2011
     2010
     2009(Restated)
     (Restated)Data from the Consolidated Statement of Financial PositionAssetsCash and balances with banks
     29,805,728
     67,450,363
     59,901,564
     93,722,190
     80,960,127
     24,850,091Financial assets held for trading
     42,462,449
     96,092,523
     111,838,502
     96,597,075
     75,234,191
     54,480,534Financial assets available for sale
     29,977,203
     67,838,411
     81,522,130
     45,207,634
     40,179,144
     44,046,416Investments held to maturity
     10,194,002
     23,069,026
     3,715,673
     4,110,987
     3,394,307
     3,882,979Assets pledged as collateral
     52,028,380
     117,740,225
     106,133,299
     97,122,080
     79,700,612
     60,072,653Loans and advances to banks
     34,785,560
     78,719,723
     92,459,347
     72,660,596
     64,715,412
     82,721,843Loans and advances to customers, net of impairment
     134,388,570
     304,121,334
     269,021,320
     245,251,879
     210,280,182
     174,240,350Non-current assets held for sale
     367,895
     832,546
     532,973
     445,328
     412,142
     455,874Investments in associated companies and joint ventures
     1,499,270
     3,392,847
     3,121,386
     2,724,721
     2,298,200
     1,431,157Property and equipment
     1,989,380
     4,501,967
     4,524,827
     4,258,456
     3,669,281
     3,404,541Intangible assets and goodwill
     3,632,673
     8,220,739
     7,617,873
     7,046,256
     5,412,088
     4,721,558Taxes to be offset
     2,338,982
     5,293,116
     5,294,566
     4,503,040
     1,590,297
     2,122,244Deferred income tax assets
     11,339,407
     25,661,079
     17,913,529
     17,051,947
     12,733,792
     12,526,420Other assets
     15,628,685
     35,367,715
     35,943,635
     30,264,400
     22,374,249
     20,727,291Total assets
     370,438,186
     838,301,614
     799,540,624
     720,966,589
     602,954,024
     489,683,951LiabilitiesDeposits from banks
     107,423,939
     243,100,373
     220,943,354
     204,351,800
     171,920,917
     120,067,970Deposits from customers
     95,544,877
     216,218,057
     210,774,263
     216,620,050
     192,475,948
     169,946,116Financial liabilities held for trading
     807,062
     1,826,382
     4,049,982
     747,210
     732,967
     532,422Funds from securities issued
     25,578,024
     57,883,068
     51,552,093
     41,630,969
     17,809,765
     7,682,798Subordinated debt
     15,857,270
     35,885,003
     34,851,714
     26,910,091
     26,314,946
     23,103,977Insurance technical provisions and pension plans
     57,591,261
     130,329,023
     118,768,720
     99,112,321
     83,493,046
     72,596,897Other provisions
     6,077,144
     13,752,577
     21,021,109
     17,894,158
     13,327,866
     10,852,483Current income tax liabilities
     1,362,340
     3,082,976
     3,288,688
     2,694,395
     1,923,372
     1,245,832Deferred income tax liabilities
     353,435
     799,824
     3,091,667
     2,246,508
     1,980,544
     1,151,927Other liabilities
     27,981,178
     63,321,405
     59,852,644
     49,376,993
     41,816,088
     37,856,822Total liabilities
     338,576,530
     766,198,688
     728,194,234
     661,584,495
     551,795,459
     445,037,244EquityShare capital
     16,836,058
     38,100,000
     30,100,000
     30,100,000
     28,500,000
     26,500,000Treasury shares
     (118,910)
     (269,093)
     (197,301)
     (183,109)
     (10,049)
     (188,874)Capital reserves
     15,896
     35,973
     35,973
     35,973
     87,146
     87,146Revenue reserves
     15,078,437
     34,122,503
     34,189,383
     26,732,531
     19,481,986
     15,022,670Additional paid-in capital
     31,152
     70,496
     70,496
     70,496
     70,496
     150,032Other comprehensive income
     (487,356)
     (1,102,887)
     6,396,736
     1,751,059
     2,219,272
     1,835,659Retained earnings
     409,772
     927,314
     542,422
     632,096
     702,383
     784,821Equity attributable to controlling shareholders
     31,765,049
     71,884,306
     71,137,709
     59,139,046
     51,051,234
     44,191,454Non-controlling interest
     96,606
     218,620
     208,681
     243,048
     107,331
     455,253Total equity
     31,861,655
     72,102,926
     71,346,390
     59,382,094
     51,158,565
     44,646,707Total liabilities and equity
     370,438,186
     838,301,614
     799,540,624
     720,966,589
     602,954,024
     489,683,951(1)Amounts stated in U.S. dollars have been translated from Brazilianreaisat an exchange rate of R$2.2630 per US$ 1.00, the Central Bank exchange rate on March 31, 2014. Such translations should not be construed as a representation that the Brazilianrealamounts presented have been or could be converted into U.S. dollars at that rate.
    8Form 20-F – December 2013


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| |  |  | Form 20-F
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Exchange Rate Information In the past years, the exchange rate between therealand the U.S. dollar has experienced significant variation. In 2009, therealbegan to appreciate against the U.S. dollar, from R$2.3370 per US$1.00 on December 31, 2008 to R$1.7412 as of December 31, 2009. In 2010, therealcontinued to appreciate against the U.S. dollar and reached R$1.6662 as of December 31, 2010. In 2011, the Brazilian real depreciated 12.6% against the U.S. dollar, reaching R$1.8758 as of December 31, 2011. In 2012, the Brazilian real depreciated 8.9% against the U.S. dollar, reaching R$2.0435 as of December 31, 2012.In 2013, the Brazilian real depreciated 14.6% against the U.S. dollar, reaching R$2.3426as ofDecember 31, 2013.On March 31, 2014 the exchange rate was R$2.2630 per US$1.00. Under the current floating exchange-rate system, therealmay be subject to fluctuations and depreciation or appreciation against the U.S. dollar and other currencies. The following table sets forth the period‐end, average and high and low selling rates reported by the Central Bank at closing, expressed inreaisper US$1.00 for the periods and dates indicated:  Closing Selling Rate for U.S. dollars – R$ per US$1.00Period
     Period-End
     Average (1)
     Maximum(1)
     Minimum (1)2009
     1.7412
     2.0171
     2.3784
     1.74122010
     1.6662
     1.7575
     1.8748
     1.66622011
     1.8758
     1.6705
     1.8758
     1.55632012
     2.0435
     1.9524
     2.1074
     1.70922013
     2.3426
     2.1641
     2.3725
     1.9754November
     2.3249
     2.1492
     2.3725
     1.9754December
     2.3426
     2.1641
     2.3725
     1.97542014January
     2.4263
     2.3845
     2.4263
     2.3426February
     2.3334
     2.3674
     2.4263
     2.3334March
     2.2630
     2.3413
     2.4263
     2.2630April (through April 15, 2014)
     2.2257
     2.3182
     2.4263
     2.2257(1)Average, maximum and minimum of the month end rates from December of the previous period.Source: Central Bank.
  3.B.  Capitalization and Indebtedness
 Not applicable.  3.C.  Reasons for the Offer and Use of Proceeds
 Not applicable.  3.D.  Risk Factors
 Macroeconomic risks Our business and results of operations are materially affected by conditions in the global financial markets. There has been extreme volatility in the global capital and credit markets since 2008. This volatility has resulted inreduced liquidity and increased credit risk premiums for many market participants, in addition to a reduction in the availability and/or increased costs of financing, both for financial institutions and their customers. Increasing or high interest rates and/or widening credit spreads have created a less favorable environment for most of our businesses and may impair the ability of some of ourclientsto repay debt that they owe to us, and reduce our flexibility in planning for, or reacting to, changes intheiroperations and the financial industry overall. Accordingly, even though the Brazilian and global economies started to recover since the first half of 2009, our results of operations are likely to continue to be affected by conditions in the global financial markets as long as they remain volatile and subject to disruption and uncertainty. Since 2008, the continuation of the economic crisis in Europe, particularly in Greece, Spain, Italy, Ireland and Portugal, has continued to reduce investor confidence globally, as has the downgrade of the U.S. long-term sovereign credit rating by Standard & Poor's on August 6, 2011. Theseongoing events could negatively affect our ability and the ability of other Brazilian financial institutions to obtain financing in the global capital markets, as well as weakening the recovery and growth of the Brazilian and/or foreign economies and cause volatility in the Brazilian capital markets. We do not have exposure to sovereign debt issued by the countries known as "PIIGS": Portugal, Ireland, Italy, Greece, and Spain.  Bradesco9


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|Form 20-F |  |  | 
|--------- |  |  | 

The Brazilian government exercises influence over the Brazilian economy, and Brazilian political and economic conditions have a direct impact on our business. Our financial condition and results of operations are substantially dependent on Brazil’s economy, which in the past has been characterized by frequent and occasionally drastic intervention by the Brazilian government and volatile economic cycles. In the past, the Brazilian government has often changed monetary, fiscal, taxation and other policies to influence the course of Brazil’s economy. We have no control over, and cannot predict, what measures or policies the Brazilian government may take in response to the current or future Brazilian economic situation or howBraziliangovernment intervention and government policies will affect the Brazilian economy and, both directly and indirectly, our operations and revenues. Our operations, financial condition and the market price of our shares, preferred share ADSs and common share ADSs may be adversely affected by changes in policy involving exchange controls, tax and other matters, as well as factors such as: ·exchange ratefluctuations; ·base interest rate fluctuations; ·domestic economic growth; ·political, social or economic instability; ·monetary policies; ·tax policy and changes in tax regimes; ·exchange controls policies; ·liquidity of domestic financial, capital and credit markets; ·our customers' capacity to meet theirotherobligations with us; ·decreases in wage and income levels; ·increases in unemployment rates; ·macroprudential measures; ·inflation; and ·other political, diplomatic, social and economic developments within and outside of Brazil that affect the country.  Currency exchange variations may have an adverse effect on the Brazilian economy and on our results and financial condition. Our business is impacted by fluctuations in the value of thereal. Since October 2002, and more intensely since June 2004, therealhas gained value against the dollar, with only rare instances of depreciation (reaching R$1.5593 per US$1.00 on August 1, 2008). In 2009, therealcontinued along the trajectory of appreciation against the U.S. dollar (reaching R$1.7412/US$1.00 at the end of the year). In 2010, therealcontinued to appreciate against the U.S. dollar to reach R$1.6662/US$1.00 at the end of the year.In 2011, therealcontinued toappreciate until the middle of the year,reachinga nominal level ofR$1.5345per U.S. dollaron July26, 2011.Since then, due to the deterioration of global economic conditions and the decisionof the Central Bank Committee on Monetary Policy, or “COPOM”, in August (in which the previous cycle ofmonetarytightening was reversed) such trend was inverted, and thereal began to depreciate andended 2011 atR$1.8758 per U.S. dollar. In 2012, reflecting persisting risk aversion in the international markets and the continuing reduction in interest rates in Brazil throughout the first half of 2012, the real maintained a weakening trend, reaching R$2.0904 per U.S. dollar on June 28, 2012. The exchangerate remained fairly stable during the remainder of the year, ending 2012 at R$2.0435 per U.S. dollar. During 2013, the real depreciated sharply to R$2.3426 per US dollar as of December 31, 2013, as compared to R$2.0435 as of December 31, 2012.  This depreciation was accompanied by a rise in the base interest rate, which went from 7.25% in January 2013 to 10.0% at the end of November 2013, remaining at this level as of December 31, 2013.  10Form 20-F – December 2013


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| |  |  | Form 20-F
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As of December 31, 2013, the net balance of our assets and liabilities denominated in, or indexed to, foreign currencies (primarily U.S. dollars) was 2.9% of our total assets. When the Brazilian currency is devalued or if it depreciates, we incur losses on our liabilities denominated in, or indexed to, foreign currencies, such as our U.S. dollar denominated long term debt and foreign currency loans, and experience gains on our monetary assets denominated in or indexed to foreign currencies, as the liabilities and assets are translated intoreais. Therefore, if our liabilities denominated in, or indexed to, foreign currencies significantly exceed our monetary assets denominated in, or indexed to, foreign currencies, including any financial instruments entered into for hedging purposes, a large devaluation or depreciation of the Brazilian currency could materially and adversely affect our financial results and the market price of our shares, preferred share ADSs and  common share ADSs, even if the value of the liabilities has not changed in their original currency. In addition, our lending operations depend significantly on our capacity to match the cost of funds indexed to the U.S. dollar with the rates charged to our customers. A significant devaluation or depreciation of the U.S. dollar may affect our ability to attract customers on such terms or to charge rates indexed to the U.S. dollar. Conversely, when the Brazilian currency appreciates, we incur losses on our monetary assets denominated in, or indexed to, foreign currencies, such as the U.S. dollar, andexperience decreases inour liabilities denominated in, or indexed to, foreigncurrencies, as the liabilities and assets are translated intoreais. Therefore, if our monetary assets denominated in, or indexed to, foreigncurrenciessignificantly exceed our liabilities denominated in, or indexed to, foreigncurrencies, including any financial instruments entered into for hedging purposes, a large appreciation of the Brazilian currency could materially and adversely affect our financial results even if the value of the monetary assets has not changed in their original currency.  If Brazil experiences substantial inflation in the future, our revenues and our ability to access foreign financial markets may be reduced. Brazil has, in the past, experienced extremely high rates of inflation.Inflation and governmental measures to combat inflation, which have in the past had significant negative effects on the Brazilian economy,contributed to increased economic uncertainty in Brazil and heightened volatility in the Brazilian securities markets, may have an adverse effect on us. The memory of and potential for inflation is still present, despite the monetary stability achieved in the mid-1990s which intensified after 1999 with the adoption of inflation targeting norms. There are still concerns that inflation levels might rise again in the future. The current system is a monetary regime which the Central Bank oversees in order to assure that the effective rate of inflation keeps in line with a predetermined target, previously announced to the public. Brazil’s rates of inflation, as measured by the General Price Index – Domestic Availability or “IGP-DI” (Índice Geral de Preços Disponibilidade Interna), reached 5.0%, 8.1% and 5.5% in 2011, 2012 and 2013, respectively. Government measures to combat inflation have often included maintaining a tight monetary policy with high interest rates, thereby restricting the availability of credit and reducing economic growth. As a result, interest rates have fluctuated significantly. Increases in thebase interest rate set by the COPOM (SELIC)may have an adverse effect on us by reducing demand for our credit, and increasing our cost of funds, domestic debt expense and the risk of customer default. Decreases in the SELIC rate may also have an adverse effect on us by decreasing the interest income we earn on our interest-earning assets and lowering our revenues and margins. Future Brazilian government actions, includingthe imposition of taxes, intervention in the foreign exchange market and actions to adjust or fix the value of the real, as well as any GDP growth beyond expected levelsmay trigger increases in inflation. If Brazil experiences fluctuations in rates of inflation in the future, our costs and net margins may be affected and, if investor confidence lags, the price of our securities may fall. Inflationary pressures may also affect our ability to access foreign financial markets and may lead to counter-inflationary policies that may have an adverse effect on our business, financial condition, results of operations and the market value of our shares, preferred share ADSs and common share ADSs.  Bradesco11


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|Form 20-F |  |  | 
|--------- |  |  | 

Changes in base interest rates by the COPOM may materially adversely affect our margins and results of operations. The COPOM establishes the base interest rates for the Brazilian banking system (SELIC). The base interest rate was 11.0%, 7.25% and 10.0%per annumas of December 31, 2011, 2012 and 2013, respectively. Changes in the base interest rate may adversely affect our results of operations because: ·high base interest rates increase our domestic debt expense and may increase the likelihood of customer defaults; and ·low base interest rates may diminish our interest income.  The COPOM adjusts the SELIC rate in order to manage aspects of the Brazilian economy, including the protection of reserves and capital flows. We have no control over the SELIC rate set by the COPOM or how often such rate is adjusted.  Developments and the perception of risk in Brazil and other countries, especially emerging market countries, may adversely affect the market price of Brazilian securities, including our shares, preferred share ADSs and common share ADSs. The market value of securities of Brazilian companies is affected to varying degrees by economic and market conditions in other countries, including other Latin American and emerging market countries. Although economic conditions in these countries may differ significantly from economic conditions in Brazil, investors' reactions to developments in these other countries may have an adverse effect on the market value of securities of Brazilian issuers. Crises in other emerging market countries may diminish investor interest in securities of Brazilian issuers, including ours, which could adversely affect the market price of our shares, preferred share ADSs and common share ADSs. The recent global financial crisis has had significant consequences worldwide, including Brazil, such as capital markets volatility, unavailability of credit, higher interest rates, a general slowdown of the world economy, volatile exchange rates and inflationary pressure, among others, which had, and may continue to have in the future, directly or indirectly, an adverse effect on our business, financial condition, results of operations, the market price of securities of Brazilian issuers, including ours, and our ability to finance our operations.  Risks relating to Bradesco and the Brazilian banking industry We may experience increases in our level of past due loans as our loans and advances portfolio becomes more seasoned. Our loans and advances portfolio has grown substantially since 2004, primarily as a result of the expansion of the Brazilian economy. Any corresponding increase in our level of non-performing loans and advances maylag behindthe rate of loan growth, as loans typically do not become due within a short period of time after their origination. Levels of past due loans are higher among our individual clients than our corporate clients. From 2011 to 2013, our portfolio of loans and advances to customers increased by 23.3% and our level of impairment of loans and advances increased by 13.1%, primarily driven by increases in the number of individual clients. Beginning in mid-2008, weakening economic conditions in Brazil particularly impacted our individual clients as unemployment rates in Brazil began to rise. This led, consequently, to increases in ourdelinquency ratios.This trendworsened in 2009. In 2010,as a result of the improvement in Brazilian economic conditions, we experienced a decrease in our delinquency ratios, which led to a slight decrease in our impairment. In 2011,with the global economic slowdown,delinquency ratios showed a slight increase compared to 2010. This increase continued during 2012 mostly for operations with individuals and SMEs (small and medium enterprises). In 2013, delinquency ratiosfell due to the tightening of Brazilian monetary policy to control inflation.  In 2013,our impairment of loans and advances declined 0.3% compared to 2011, while our portfolio of loans and advances to customers grew by 12.1% over that same period. Rapid loan growth may also reduce our ratio of non-performing loans to total loans until growth slows or the portfolio becomes more seasoned. Adverse economic conditions and a slower growth rate for our loans and advances to customers may result in increases in our impairment of loans and advances, charge-offs and our ratio of non-performing loans and advances to total loans and advances, which may have an adverse effect on our business, financial condition and results of operations.  12Form 20-F – December 2013


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| |  |  | Form 20-F
| |  |  | ---------

Adverse conditions in the credit and capital markets may adversely affect our ability to access funding in a cost effective and/or timely manner. Recent volatility and uncertainties in the credit and capital markets have generally decreased liquidity, with increased costs of funding for financial institutions and corporations. These conditions may impact our ability to replace, in a cost effective and/or timely manner, maturing liabilities and/or access funding to execute our growth strategy. If we are forced to delay raising capital or pay unattractive interest rates in order to obtain capital, our financial condition and results of operations may be adversely affected.  The increasingly competitive environment in the Brazilian bank and insurance industries may negatively affect our business prospects. The markets for financial, banking and insurance services in Brazil are highly competitive. We face significant competition in all of our principal areas of operation from other large Brazilian and international banks and insurance companies, public and private. Competition has increased as a result of consolidations among financial institutions in Brazil and as a result of regulations by theNational Monetary Committee(Conselho Monetário Nacional), or “CMN”, that facilitate customers' ability to switch business between banks.The increased competition may materially and adversely affect usby, among other things,limitingour ability to retainour existing consumer base, increase our customer baseand expand our operations, reducingour profit margins on bankingand otherservicesand products we offer, andlimiting investment opportunities. Additionally, Brazilian regulations raise limited barriers to market entry and do not differentiate between local or foreign commercial and investment banks and insurance companies. As a result, the presence of foreign banks and insurance companies in Brazil, some of which have greater resources than us, has grown, and competition in both the banking and insurance sectors has increased. The privatization of publicly owned banks has also made the Brazilian markets for banking and other financial services more competitive. The increased competition may negatively affect our business results and prospects by, among other things: ·limiting our ability to increase our customer base and expand our operations; ·reducing our profit margins on the banking, insurance, leasing and other services and products offered by us; and ·increasing competition for foreign investment opportunities.  Losses on our investments in financial assets may have a significant impact on our results of operations and are not predictable. The value of certain of our investments in financial assets may decline significantly due to volatile financial markets and may fluctuate over short periods of time. As of December 31, 2013, investments in financial assets represented 19.6% of our assets, and realized investment gains and losses have had and will continue to have a significant impact on the results of our operations. The amounts of such gains and losses, which we record when investments in financial assets are sold, or in certain limited circumstances where they are marked to market or recognized at fair value, may fluctuate considerably from period to period. The level of fluctuation depends, in part, upon the fair value of the financial assets, which in turn may vary considerably, and our investment policies. We cannot predict the amount of realized gain or loss for any future period, and our management believes that variations from period to period have no practical analytical value. Furthermore, any gains on our investment portfolio may not continue to contribute to net income at levels consistent with recent periods or at all, and we may not successfully realize the appreciation now existing in our consolidated investment portfolio or any portion thereof.  We may incur losses associated with counterparty exposures. We face the possibility that a counterparty will be unable to honor its contractual obligations. These counterparties may default on their obligations due to bankruptcy, lack of liquidity, operational failure or other reasons. This risk may arise, for example, from entering into swap or other derivative contracts under which counterparties have obligations to make payments to us; executing currency or other trades that fail to settleat the required time due to non-delivery by the counterparty or systems failure by clearing agents, exchanges, clearing houses or other financial intermediaries. Such counterparty risk is more acute in complex markets where the risk of failure of counterparties is higher.  Bradesco13


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|Form 20-F |  |  | 
|--------- |  |  | 

Our trading activities and derivatives transactions may produce material losses. We engage in the trading of securities, buying debt and equity securities principally to sell them in the near term with the objective of generating profits on short-term differences in price. These investments could expose us to the possibility of material financial losses in the future, as securities are subject to fluctuations in value, which may generate losses. In addition, we enter into derivatives transactions to manage our exposure to interest rate and exchange rate risk. Such derivatives transactions are designed to protect us against increases in exchange rates or interest rates or against decreases in such rates, but not both. If we have entered into derivatives transactions to protect against, for example, decreases in the value of therealor in interest rates and therealinstead increases in value or interest rates increase, we may incur financial losses. Such losses could materially and adversely affect our future results of operations and cash flow.  The Brazilian government regulates the operations of Brazilian financial institutions and insurance companies, and changes in existing laws and regulations or the imposition of new laws and regulations may negatively affect our operations and revenues. Brazilian banks and insurance companies, including our banking and insurance operations, are subject to extensive and continuous regulatory review by the Brazilian government. We have no control over government regulations, which govern all facets of our operations, including the imposition of: ·minimum capital requirements; ·compulsory deposit/reserve requirements; ·investment requirements in fixed assets; ·lending limits and other credit restrictions; ·accounting and statistical requirements; ·minimum coverage; and ·mandatory provisioning policies.  The regulatory structure governing Brazilian banks and insurance companies is continuously evolving. Existing laws and regulations could be amended, the manner in which laws and regulations are enforced or interpreted could change, and new laws or regulations could be adopted. Such changes could materially adversely affect our operations and our revenues. In particular, the Brazilian government has historically enacted regulations affecting financial institutions in an effort to implement its economic policies. These regulations are intended to control the availability of credit and reduce or increase consumption in Brazil. These changes may adversely affect us because our returns on compulsory deposits are lower than those we obtain on our other investments. Regulations issued by the Central Bank are not subject to a legislative process.  Therefore those regulations can be enacted and implemented in a very short period of time, thereby affecting our activities in sudden and unexpected ways.     14Form 20-F – December 2013


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| |  |  | Form 20-F
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A majority of our common shares are held by one shareholder, whose interests may conflict with our other investors’ interests. As of December 31, 2013, Fundação Bradesco directly and indirectly held 56.5% of our common shares. As a result, Fundação Bradesco has the power, among other things, to prevent a change in control of our company, even if a transaction of that nature would be beneficial to our other shareholders, as well as to approve related party transactions or corporate reorganizations. Under the terms of Fundação Bradesco’s by-laws, members of ourDiretoria Executiva, or of our Board of Executive Officers, and departmental officers that have been working with us for more than ten years serve as members of the Board of Trustees of Fundação Bradesco. The Board of Trustees has no other members. Decisions in relation to our policy towards acquisitions, divestitures, financings or other transactions could be made by Fundação Bradesco which may be contrary to the interests of holders of common shares, and which may have a negative impact on the interests of holders of common shares. For more information on our shareholders, see “Item 7.A. Major Shareholders.”  Changes in regulations regarding reserve and compulsory deposit requirements and taxes may reduce operating margins. The Central Bank has periodically changed the level of compulsory deposits that financial institutions in Brazil are required to maintain with the Central Bank. In May 2012, the Central Bank changed the rules related to the reserve requirement amounts, enabling the deduction of the balance of loan operations for financing and leasing of automobiles and light commercial vehicles from the amountof compulsory depositsto be reserved, as a way to encourage the granting of financing for acquisition of these assets. In June, September and November 2012, the rules related to the payment of reserve requirements were further amended, aiming at adjusting the criterion for defining the amount subject to reserve requirements and additional liabilities, as well as for remuneration of the reserve account and the criteria which determine the eligibility of institutions that may deduct amounts subject to the reserve requirements. In December 2012, the Central Bank established the possibility of deducting demand amounts subject to the reserve requirements in certain specified circumstances, as a way to encourage banks to grant credit for the acquisition of certain assets. Compulsory deposits generally yield lower returns than our other investments and deposits because: ·a portion of our compulsory deposits do not bear interest; ·a portion of our compulsory deposits must be held in Brazilian government securities; and ·a portion of our compulsory deposits must finance a federal housing program, the Brazilian rural sector, low income customers and small enterprises under a program referred to as a "microcredit program."  Rules related to compulsory deposits have been changed from time to time by the Central Bank, as described in "Item 4.B. Business Overview - Deposit-taking activities." As of December 31, 2013, our compulsory deposits in connection with demand, savings and time deposits and additional compulsory deposits were R$55.4 billion. Reserve requirements have been used by the Central Bank to control liquidity as part of monetary policy in the past, and we have no control over their imposition. Any increase in the compulsory deposit requirements may reduce our ability to lend funds and to make other investments and, as a result, may adversely affect us. For further information on compulsory deposits, see "Item 4.B. Business Overview- Deposit - taking activities."  Changes in taxes and other fiscal assessments may adversely affect us. The Brazilian government regularly enacts reforms to the tax and other assessment regimes to which we and our customers are subject. Such reforms include changes in the rate of assessments and, occasionally, enactment of temporary taxes, the proceeds of which are earmarked for designated governmental purposes. The effects of these changes and any other changes that result from enactment of additional tax reforms have not been, and cannot be, quantified and there can be no assurance that these reforms will not, once implemented, have an adverse effect upon our business. Furthermore, such changesmay produce uncertainty in the financial system, increasing the cost of borrowing and contributing to the increase in our non-performing portfolio of loans and advances.  Bradesco15


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|Form 20-F |  |  | 
|--------- |  |  | 

The Brazilian Constitution used to establish a ceiling on loan interest rates, including bank loan interest rates, and the impact of the subsequent legislation regulating the subject is uncertain. Article 192 of the Brazilian Constitution, enacted in 1988, established a 12.0%per annumceiling on bank loan interest rates. However, since the enactment of the Constitution, this rate had not been enforced, as the regulation regarding the ceiling was pending. The understanding that this ceiling is not yet in force has been confirmed bySúmula VinculanteNo. 7, a final binding decision enacted in 2008 by the Brazilian Supreme Court (“STF”) in accordance with such Court’s prior understanding on this matter. Since 1988, several attempts were made to regulate the limitation on loan interest, and especially bank loan interest rates, but none of them were implemented nor have been confirmed by Brazilian superior courts. On May 29, 2003, Constitutional Amendment No. 40 (“EC 40/03”) was enacted and revoked all subsections and paragraphs of Article 192 of the Brazilian constitution. This amendment allows the Brazilian Financial System, to be regulated by specific laws for each sector of the system rather than by a single law relating to the system as a whole. With the enactment of the new Civil Code (or Law No. 10,406/02),as amended, unless the parties to a loan have agreed to use a different rate, in principle the interest rate ceiling has been linked to the base rate charged by the National Treasury. This base interest rate is theSELIC rate, the base interest rate established by the COPOM, which was 11.00%per annumin April 2014.However, there is presently some uncertainty as to whether the applicablebase interest rateshouldbe theSELIC rate or the 12%per annuminterest rate established in theBrazilianTax Code. The impact of EC 40/03 and the provisions of the New Civil Code are uncertain at this time but any substantial increase or decrease in the interest rate ceiling could have a material effect on the financial condition, results of operations or prospects of Brazilian financial institutions, including us. Additionally, certain Brazilian courts have issued decisions in the past limiting interest rates on consumer financing transactions that are considered abusive or excessively onerous in comparison with market practice. Brazilian courts’ future decisions as well as changes in legislation and regulations restricting interest rates charged by financial institutions could have an adverse effect on our business.  Our losses in connection with insurance claims may vary from time to time, and differences between the losses from actual claims and underwriting and reserving assumptions may have an adverse effect on us. The results of our operations significantly depend upon the extent to which our actual claims are consistent with the assumptions we used to assess our potential future policy and claim liabilities and to price our insurance products. We seek to limit our responsibility and price our insurance products based on the expected payout of benefits, calculated using several factors, such as: assumptions for investment returns, mortality and morbidity rates, expenses, persistency, and certain macroeconomic factors, such as inflation and interest rates. These assumptions may deviate from our prior experience, due to factors beyond our control such as natural disasters (floods, explosions and fires), man-made disasters (riots, gang or terrorist attacks) or changes in mortality and morbidity rates as a result of advances in medical technology and longevity, among others. Therefore, we cannot determine precisely the amounts that we will ultimately pay to settle these liabilities, when these payments will need to be made, or whether the assets supporting our policy liabilities, together with future premiums and contributions, will be sufficient for payment of these liabilities. These amounts may vary from the estimated amounts, particularly when those payments do not occur until well in the future, which is the case with certain of our life insurance products. To the extent that actual claims experience is less favorable than the underlying assumptions used in establishing such liabilities, we may be required to increase our provisions, which may have an adverse effect on our cash flow.  If our actual losses exceed our provisions on risks that we underwrite, we could be adversely affected. Our results of operations and financial condition depend upon our ability to accurately assess the actual losses associated with the risks that we underwrite. Our current provisions are based on estimates that rely on then-available information and that involve a number of factors including recent loss experience, current economic conditions, internal risk rating, actuarial and statistical projections of our expectations ofthe cost of the ultimate settlement of claims, such as estimates of future trends in claims severity and frequency, judicial theories of liability, the levels of and/or timing of receipt or payment of premiums and rates of retirement, mortality, morbidity and persistency, among others. Accordingly, the establishment of provisions is inherently uncertain and our actual losses usually deviate, sometimes substantially, from such estimates. Deviations occur for a variety of reasons. For example, if we record our impairment of loans and advances based on estimates of incurred losses, it might not be sufficient to cover losses; an increased number of claims; or our costs could be higher than the costs we estimated. If actual losses materially exceed our provisions, we could be adversely affected.  16Form 20-F – December 2013


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| |  |  | Form 20-F
| |  |  | ---------

We are jointly liable for claims of our customers if our reinsurers fail to meet their obligations under the reinsurance contracts. The purchase of reinsurance does not hold us harmless against our liability towards our clients if the reinsurer fails to meet its obligations under the reinsurance contracts. As a result, reinsurers' insolvency or failure to make timely payments under these contracts could have an adverse effect on us, given that we remain responsible before our policyholders.  A failure in, or breach of, our operational or security systems could temporarily interrupt our businesses, increasing our costs and causing losses. Although we have high profile information security controls,and continue to investintheinfrastructure,operations and crisis management in place, our business, financial, accounting, data processing systems or other operating systems and facilities may stop operating properly for a limited period of time or become temporarily disabled or damaged as a result of a number of factors including events that are wholly or partially beyond our control, such as: electrical or telecommunications outages; breakdowns, systems failures or other events affecting third parties with which we do business or that facilitate our business activities, including exchanges, clearing houses, financial intermediaries or service providers; events arising from local and larger-scale political or social matters and cyber attacks. Cyber attacks and temporary interruptions or failures in the physical infrastructure or operating systems that support our businesses and customers, could result in customer attrition, regulatory fines, penalties or intervention, reimbursement or other compensation costs.  The Brazilian Supreme Court and Brazilian Superior Court of Justice are currently deciding cases relating to the application of inflation adjustments which may increase our costs and cause losses. The Brazilian Supreme Court (Supremo Tribunal Federal,or“STF”), which is the highest court in Brazil and is responsible for judging constitutional matters, is currently deciding on whether savings account holders have the right to obtain adjustments for inflation related to their deposits due to the economic plansCruzado, Bresser, Verão, Collor IandCollor II, implemented in the 1980s and 1990s, before thePlano Real, in 1994. The trial began in November 2013. According to the institutions representing the account holders, banks misapplied the monetary adjustments when those economic plans were implemented, and should indemnify the account holders for the non-adjustment of those amounts. In addition, the Superior Court of Justice (Superior Tribunal de Justiça,or“STJ”), which is the highest court responsible for deciding on federal laws, and is analyzing the initial date in respect of which compensatory interest relating to possible indemnification of account holders would accrued. We cannot predict the outcome of these cases. However, depending on the decisions by the Brazilian Supreme Court and Superior Court of Justice, banks (including ourselves) might incur material costs which could case losses for us.     Bradesco17


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|Form 20-F |  |  | 
|--------- |  |  | 

Risks relating to our shares, preferred share ADSs and common share ADSs. The Deposit Agreements governing the preferred share ADSs and common share ADSs provide that holders of such ADSs will only receive voting instructions if we authorize the depositary bank to contact those holders to obtain voting instructions; and there are also practical limitations on any ability to vote we may give such holders. The voting rights of preferred share ADS holders and common share ADS holders are governed by the Deposit Agreements. Those Deposit Agreements provide that the depositary bank shall mail voting instructions to holders only if we authorize and direct the depositary bank to do so.  If we do not provide that authorization and direction to the depositary bank, holders of preferred share ADSs and common share ADSs will not be able to vote at our meetings, or otherwise, unless they surrender their preferred share ADSs or common share ADSs and receive the underlying preferred shares or common shares, as applicable, in accordance with the terms of the applicable Deposit Agreement. In addition, there are practical limits on the ability of preferred share ADS and common share ADS holders to exercise any vote due to the additional procedural steps involved in communicating with such holders.  For example, our shareholders will either be notified directly or through notification published in Brazilian newspapers and will be able to exercise their voting rights by either attending the meeting in person or voting by proxy.  In contrast, preferred share ADS holders and common share ADS holders will not receive notice directly from us and cannot vote in person at the meeting. Instead, in accordance with the Deposit Agreements, the depositary bank will, if authorized and directed by us, send any notice of meetings of holders received by it from us to holders of preferred share ADSs and common share ADSs, together with a statement as to the manner in which voting instructions may be given by holders.  To exercise any such ability to vote, preferred share ADS and common share ADS holders must then instruct the depositary bank how to vote the shares represented by their preferred share ADSs or common share ADSs.  Because of this extra procedural step involving the depositary bank, if and when we authorize and direct the depositary bank to mail voting information to preferred share ADS holders and common share ADS holders, the process for voting will take longer for preferred share ADS and common share ADS holders than for holders of our shares. Preferred share ADSs and common share ADSs for which the depositary bank does not receive voting instructions in good time will not be able to vote at a meeting.  Under Brazilian corporate law, holders of preferred shares have limited voting rights, accordingly, holders of preferred share ADSs will have similar limitations on their ability to vote. Under Brazilian corporate law (Law No. 6,404/76, as amended by Law No. 9,457/97 and Law No. 10,303/01, which we refer to collectively as "Brazilian Corporate Law") and our Bylaws, holders of our preferred shares are not entitled to vote at our shareholders' meetings, except in limited circumstances (see "Item 10.B.Memorandum and Articles of Incorporation– Organization – Voting Rights," for further information on voting rights of our shares).  This means that, in contrast to holders of common shares, holders of preferred shares are not entitled to vote on corporate transactions, including any proposed merger or consolidation with other companies, among other things. As discussed above under "The Deposit Agreements governing the preferred share ADSs and common share ADSs provide that holders of such ADSs will only receive voting instructions if we authorize the depositary bank to contact those holders to obtain voting instructions; and there are also practical limitations on any ability to vote we may give such holders," preferred share ADS holders will only be able to vote if we authorize and direct the depositary bank accordingly.  As a result of the fact that holders of preferred shares have limited voting rights, any ability to vote that we may extend to holders of preferred share ADSs corresponding to preferred shares pursuant to the applicable Deposit Agreement would be similarly limited.  The relative volatility and illiquidity of the Brazilian securities markets may substantially limit your ability to sell shares underlying the preferred share ADSs and common share ADSs at the price and time you desire. Investing in securities that trade in emerging markets such as Brazil often involves greater risk than investing in securities of issuers in more developed countries, and these investments are generally considered more speculative in nature. The Brazilian securities market is substantially smaller and less liquid than major securities markets, such as the United States, and may be more volatile. Although you are entitled to withdraw our shares underlying the preferred share ADSs and  common share ADSs from the depositary bank at any time, your ability to sell our shares underlying the preferred share ADSs and  common share ADSs at a price and time acceptable to you may be substantially limited. There is also significantly greater concentration in the Brazilian securities market than in major securities markets such asthe United States or other countries. The ten largest companies in terms of market capitalization accounted for 51.2% of the aggregate market capitalization of theBolsa de Valores, Mercadorias e Futuros (“BM&FBOVESPA”)in December 2013.      18Form 20-F – December 2013


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Our shares, preferred share ADSs and common share ADSs are not entitled to a fixed or minimum dividend. Holders of our shares and, consequently, our preferred share ADSs and common share ADSs are not entitled to a fixed or minimum dividend.Pursuant to the Deposit Agreements, if the depositary (as holder of the common shares and preferred shares underlying the common share ADSs and preferred share ADSs, respectively) receives any cash dividend or distribution from us, it shall distribute a corresponding U.S. dollar amount, net of depositary fees and certain withholding tax adjustments as described in the Deposit Agreements, to holders of our common share ADSs and preferred share ADSs as promptly as practicable.  However, if we do not pay dividends to holders of our common shares or preferred shares then there will be no payment of dividends to holders of our common share ADSs or preferred share ADSs, respectively. Pursuant to our Bylaws, our preferred shares are entitled to dividends 10% higher than those of our common shares. Although under our current Bylaws we are obligated to pay our shareholders at least 30% of our annual adjusted net income, the shareholders attending our annual general shareholders’ meeting may decide to suspend this mandatory distribution of dividends if the Board of Directors advises that payment of the dividend is not compatible with our financial condition. Neither our Bylaws nor Brazilian law specifies the circumstances in which a distribution would not be compatible with our financial condition, and our controlling shareholders have never suspended the mandatory distribution of dividends. However, Brazilian law provides that a company need not pay dividends if such payment would endanger the existence of the company or harm its normal course of operations. On March 1, 2013, CMN Resolution No. 4,193/13 was issued in an effort to further implement the Basel III Accord in Brazil. Pursuant to such rule, a restriction of dividend and interest payments on equity may be imposed by the Central Bank in the event of non-compliance with the additional capital requirements established by the Central Bank, as further described in "Item 5.B. Liquidity and Capital Resources - Capital adequacy and leverage.”  As a holder of preferred share ADSs and common share ADSs you will have fewer and less well‐defined shareholders' rights than in the United States and certain other jurisdictions. Our corporate affairs are governed by our Bylaws and Brazilian Corporate Law, which may differ from the legal principles that would apply if we were incorporated in a jurisdiction in the United States or in certain other jurisdictions outside Brazil. Under Brazilian Corporate Law, you and the holders of our shares may have fewer and less well‐defined rights to protect your interests relative to actions taken by our Board of Directors or the holders of our common shares than under the laws of other jurisdictions outside Brazil. Although Brazilian Corporate Law imposes restrictions on insider trading and price manipulation, the Brazilian securities markets are not as highly regulated and supervised as the U.S. securities markets or markets in certain other jurisdictions. In addition, in Brazil, self‐dealing and the preservation of shareholder interests may be less heavily regulated and regulations may not be as strictly enforced in Brazil as in the United States, which could potentially disadvantage you as a holder of our shares underlying preferred share ADSs and common share ADSs. For example, compared to Delaware general corporation law, Brazilian Corporate Law and practices have less detailed and well‐established rules and judicial precedents relating to review of management decisions under duty of care and duty of loyalty standards in the context of corporate restructurings, transactions with related parties, and sale-of-business transactions. In addition, shareholders in Delaware companies must hold 5.0% of the outstanding share capital of a corporation to have valid standing to bring shareholder derivative suits, while shareholders in Brazilian companies do not normally have valid standing to bring a class action.  It may be difficult to bring civil liability causes against us or our directors and executive officers. We are organized under the laws of Brazil, and all of our directors and executive officers reside outside the United States. In addition, a substantial portion of our assets and most or all of the assets of our directors and executive officers are located in Brazil. As a result, it may be difficult for investors to effect service of process within the United States or other jurisdictions outside of Brazil on such persons or to enforce judgments against them, including any based on civil liabilities under the U.S. federal securities laws.  Bradesco19


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If we issue new shares or our shareholders sell shares in the future, the market price of your preferred share ADSs and common share ADSs may be reduced. Sales of a substantial number of shares, or the belief that this may occur, could decrease the market price of our shares, preferred share ADSs and common share ADSs by diluting value. If we issue new shares or our existing shareholders sell the shares they hold, the market price of our shares and therefore of our preferred share ADSs and common share ADSs, may decrease significantly.  Payments on thepreferred share ADSs and common share ADSsmay be subject to U.S. withholding under FATCA In order to receive payments free of U.S. withholding tax under Sections 1471 through 1474 of the US Internal Revenue Code (commonly referred to as “FATCA”), we and financial institutions through which payments on thepreferred share ADSs and common share ADSsare made may be required to withhold at a rate of up to 30% on all, or a portion of, payments in respect of thepreferred share ADSs and  common share ADSsmade after December 31, 2016. We may enter into an agreement with the U.S. Internal Revenue Service to provide certain information about investors. Under such an agreement, withholding may be triggered if: (a) an investor does not provide information sufficient for the relevant party to determine whether the investor is a U.S. person or should otherwise be treated as holding a ‘‘United States Account’’ of our company, (b) an investor does not consent, where necessary, to have its information disclosed to the U.S. Internal Revenue Service or (c) any investor or person through which payment on thepreferred share ADSs and  common share ADSsmade is not able to receive payments free of withholding under FATCA. If an amount in respect of FATCA were to be deducted or withheld from interest, principal or other payments on or with respect to thepreferred share ADSs and common share ADSs, we would have no obligation to pay such amount or otherwise indemnify a shareholder for any such withholding or deduction by us, a paying agent or any other party as a result of the deduction or withholding of such amount. As a result, if FATCA withholding is imposed on these payments, investors may receive less interest or principal than expected. An investor that is a "foreign financial institution" (as defined under the FATCA rules) but that is withheld upon generally will be able to obtain a refund only to the extent an applicable income tax treaty with the United States entitles the investor to a reduced rate of tax on the payment that was subject to withholding under FATCA, provided the required information is furnished in a timely manner to the U.S. Internal Revenue Service. The United States is in the process of negotiating intergovernmental agreements to implement FATCA with a number of jurisdictions. Different rules than those described above may apply if our company or an investor is a resident in a jurisdiction that has entered into an intergovernmental agreement to implement FATCA. Investors should consult their own advisers about the application of FATCA, in particular if they may be classified as financial institutions under the FATCA rules.  You may be unable to exercise preemptive rights relating to our shares. You will not be able to exercise preemptive rights relating to our shares underlying your preferred share ADSs and common share ADSs unless a registration statement under the Securities Act is effective with respect to those rights or an exemption from the registration requirements of the Securities Act is available. Similarly, we may from time to time distribute rights to our shareholders. The depositary bank will not offer rights to you as a holder of the preferred share ADSs and common share ADSs unless the rights are either registered under the Securities Act or are subject to an exemption from the registration requirements. We are not obligated to file a registration statement with respect to the shares or other securities relating to these rights, and we cannot assure you that we will file any such registration statement. Accordingly, you may receive only the net proceeds from the sale by the depositary bank of the rights received in respect of the shares represented by your preferred share ADSs and common share ADSs or, if the preemptive rights cannot be sold, they will be allowed to lapse. You may also be unable to participate in rights offerings by us, and your holdings may be diluted as a result.  20Form 20-F – December 2013


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If you exchange your preferred share ADSs or common share ADSs for their underlying shares, you risk losing Brazilian tax advantages and the ability to remit foreign currency abroad. Brazilian law requires that parties obtain registration with the Central Bank in order to remit foreign currencies, including U.S. dollars, abroad. The Brazilian custodian for the shares must obtain the necessary registration with the Central Bank for payment of dividends or other cash distributions relating to the shares or after disposition of the shares. If you exchange your preferred share ADSs or common share ADSs for the underlying shares, however, you may only rely on the custodian's certificate for five business days from the date of exchange. Thereafter, you must obtain your own registration in accordance with the rules of the Central Bank and the CVM, in order to obtain and remit U.S. dollars abroad after the disposition of the shares or the receipt of distributions relating to the shares. If you do not obtain a certificate of registration, you may not be able to remit U.S. dollars or other currencies abroad and may be subject to less favorable tax treatment on gains with respect to the shares. For more information, see "Item 10.D. Exchange Controls." If you attempt to obtain your own registration, you may incur expenses or suffer delays in the application process, which could delay your receipt of dividends or distributions relating to the shares or the return of your capital in a timely manner. The custodian's registration and any certificate of foreign capital registration you may obtain may be affected by future legislative changes. Additional restrictions applicable to you, to the disposition of the underlying shares or to the repatriation of the proceeds from disposition may be imposed in the future.  ITEM 4.INFORMATION ON THE COMPANY
 4.A.  History, Development of the Company and Business Strategy
 The company We were founded in 1943 as a commercial bank under the name "Banco Brasileiro de Descontos S.A." In 1948, we began a period of aggressive expansion, which led to our becoming the largest private‐sector (non‐government‐controlled) commercial bank in Brazil by the end of the 1960s. We expanded our activities nationwide during the 1970s and conquered urban and rural markets in Brazil. In 1988 we merged with our real estate finance, investment bank and consumer credit subsidiaries to become a multiple service bank and changed our name to Banco Bradesco S.A. We are currently one of the largest banks in Brazil in terms of total assets. We offer a wide range of banking and financial products and services in Brazil and abroad to individuals, large, mid‐sized and small companies and major local and international corporations and institutions. We have the most extensive private‐sector branch and service network in Brazil, allowing us to reach a diverse customer base. Our products and services encompass banking operations such as loans and advances and deposit‐taking, credit card issuance, purchasing consortiums, insurance, leasing, payment collection and processing, pension plans, asset management and brokerage services. According to information published in December 2013 by SUSEP and by ANS, we are the largest insurance, pension plan and capitalization bond group in Brazil on a consolidated basis in terms ofinsurance premiums, pension plan contributions and income from capitalization bonds.Título de capitalização,or "capitalization bond," refers to a type of savings account combined with periodic cash-prize draws. In 2013, some of our subsidiaries ranked among the largest companies in Brazil in their respective markets, according to the sources cited in parentheses below, including: ·Grupo Bradesco Seguros, the largest company operating in the Brazilian insurance market, with total revenues of R$49.8 billion in premiums, pension plan contributions and capitalization bond income in 2013. In November 2013, our market share was 24.2% (SUSEP/ANS): ·Bradesco Seguros S.A.("Bradesco Seguros"), our insurance subsidiary, together with its subsidiaries described below, leader in terms of insurance premiums, equity and technical reserves (SUSEP and ANS): -­Bradesco Vida e Previdência S.A.("Bradesco Vida e Previdência"), Bradesco Seguros' subsidiary is one of the largest companies in the market in terms of premiums and pension plan contributions (SUSEP);  Bradesco21


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­-Bradesco Capitalização S.A.("Bradesco Capitalização"), Bradesco Seguros' subsidiary offers capitalization bonds.In terms of revenues, Bradesco Capitalização is the leader among private companies in the market (SUSEP); ­-Bradesco Auto/RE Companhia de Seguros S.A.("Bradesco Auto/RE"), Bradesco Seguros' subsidiary is one of the largest companies in its segment in terms of premiums, offering automobile insurance, property/casualty and liability products (SUSEP); and ­-Bradesco Saúde S.A.("Bradesco Saúde"), Bradesco Seguros' subsidiary is the market leader in the health insurance business and has one of the largest networks of medical and hospital service providers (ANS). ·Bradesco Leasing S.A. Arrendamento Mercantil("Bradesco Leasing"), is one of the leaders in the leasing segment, in terms of the present value of leasing portfolio (ABEL); ·Bradesco Administradora de Consórcios Ltda.("Bradesco Consórcios"), market leader in the segments of real estate, automobiles, trucks/tractors/machinery and equipment, with 924,246 outstanding purchasing consortium quotas (Central Bank); ·BRAM – Bradesco Asset Management, one of the leaders in the asset management sector, with R$305.3 billion in managed assets (ANBIMA); and ·Bradesco BBI, ranked number one in fixed income – short term ranking, and number one in ranking by value(ANBIMA).  We are also one of the leaders among financial institutions in underwriting debt securities, according to information published by ANBIMA. As of December 31, 2013, we had, on a consolidated basis: ·R$838.3 billion in total assets; ·R$324.0  billion in total loans and advances; ·R$218.2  billion in total deposits; ·R$72.1 billion in equity, including non-controlling interest; ·R$130.3  billion in technical reserves for our insurance and pension plan business; ·R$39.9 billion in foreign trading financing; ·39.8 million insurance policyholders; ·26.4 million checking account holders; ·50.9 million savings accounts; ·3.5 million capitalization bonds holders; ·2.4 million pension plan holders; ·1,354 Braziliancorporate groupsand multinational companies in Brazil as ”Corporate” customers; ·an average of 23.0 million daily transactions, including 2.1 million in our4,674branches and20.9million through self-service channels, such as BradescoCelular, Internet,Automatic Teller Machines, or ATMs, and telephone (Fone Fácil); ·a nationwide network consisting of4,674branches and4,766special points of banking services located on the premises of selected corporate customers,33,464ATMsof our own network, and14,739ATMs under the Banco24Horas brand for cash withdrawals, obtaining statements and account balance information, loans, collections, transfers between accounts and to other banks; and ·a total of 3 branches and 10 subsidiaries located in New York, London, the Cayman Islands, Tokyo, Buenos Aires, Luxembourg, Hong Kong and Mexico.    22Form 20-F – December 2013


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Since 2009, we have been doing business in every single one of the municipalities in Brazil. Our extensive banking network takes us closer to our customers, providing our managers with information on economically active regions and other key conditions for our business. This knowledge helps us to assess and limit risks in loans, among other risks, as well as to service the particular needs of our customers. We are asociedade anônimaorganized under the laws of Brazil. Our headquarters are in Cidade de Deus, Vila Yara, 06029‐900, Osasco, SP, Brazil, and our telephone number is (55-11) 3684-4011. Our New York Branch is located at 450 Park Avenue, 32nd floor, New York 10022-2605.  Recent acquisitions In January 2014, Bradesco Saúde S.A. concluded a transaction to indirectly acquire a 6.5% interest in the equity and voting capital of Odontoprev, disclosed to the market in October 2013. By means of this acquisition, Bradesco Saúde raised its interest in the equity and voting capital of Odontoprev from 43.5% to approximately 50.01%, Odontoprev was already being consolidated based on control obtained through its shareholders agreement.  2012 and 2011 acquisitions In May 2012,Bradesco acquired common and preferred shares issued byBancoBERJ, held by its non-controlling shareholders, by way oftheUnified Tender Offer, increasing Bradesco’s stake in Banco BERJ to 100%. In May 2011,Bradescoacquired 96.99% of the common shares and 95.21% of the preferred shares, corresponding to 96.23% of the capital stock of Banco do Estado do Rio de Janeiro S.A. (“BERJ”) from the Government of the State of Rio de Janeiro. As part of the acquisition,Bradescoalso acquired the right to provide services to the Government of the State of Rio de Janeiro including: (i)its payroll,(ii) itssupplier payroll,(iii)the collection of state taxes,among others, in the period fromJanuary 2012 to December 2014. This transactionexpanded Bradesco’spresence in the State of Rio de Janeiro. At the Special Shareholders'Meetingheld in November 2011, the shareholders voted to alterthe name of Banco do Estado do Rio de Janeiro S.A – BERJto Banco BERJ S.A. Bradesco's process of assuming control of BERJ was ratified by the Central Bank in November 2011.  Other strategic alliances In April 2014, Bradesco and Banco do Brasil, via its joint venture Companhia Brasileira de Soluções e Serviços (“CBSS”), in a partnership with Cielo, created the company STELO S.A. (“Stelo”), an electronic payment company responsible for managing, operating and exploring the payment facilitator industry geared towards e-commerce, as well towards digital portfolio businesses. In June 2013, Odontoprev S.A. (Odontoprev), a company in which Bradesco Seguros S.A. held indirectly 43.5% of equity capital, entered into an Association Agreement and other Covenants (Association Agreement) with Banco do Brasil S.A. (“BB”), BB Seguridade Participações S.A. and its subsidiaries, with the purpose, by means of a new corporation named Brasildental Operadora de Planos Odontológicos S.A. (Brasildental), of developing and disclosing, and by means of BB Corretora de Seguros e Administradora de Bens S.A., of distributing and marketing dental health plans under the BB Dental brand, exclusively through all the BB channels throughout the country; Odontoprev will hold 50.01% of common registered shares, equal to 25.01% of total equity capital. In May 2013, Bradesco Auto/RE Companhia de Seguros (“Bradesco Auto/RE”), entered into a shareholders’ agreement with the Brazilian government, BB Seguros Participações S.A., Itaú Seguros S.A., Itaú Vida e Previdência S.A. and Fundo de Investimento em Participações Caixa Barcelona, as controlling shareholders of IRB-Brasil Resseguros S.A. (known as “IRB”).The execution of the shareholders’ agreement is part of the corporate restructuring that IRB is undergoing, which also includes the following steps: (i) converting all of its preferred shares into common shares and the issuance of a special share class for the Brazilian government; and (ii) a capital stock increase through the subscription of new common shares, with a waiver from the Brazilian government to exercise their preemptive rights in connection with the new common shares. The shareholders' agreement and step (i) above are subject to the approval of IRB's shareholders. In May 2013, Bradesco Auto/RE held 21.24% of IRB’s total capital stock. As a result of the corporate restructuring, Bradesco Auto/RE will hold approximately 20.42% of IRB’s total capital stock. The transaction was approved by the Brazilian Antitrust Authority (Conselho Administrativo da Defesa Econômica) (“CADE”), but is still subject to approval of the Federal Court of Accounts (Tribunal de Contas da União) (“TCU”) and SUSEP.   Bradesco23


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In April 2012, the Bankproceeded with the credit card partnership with BB and Caixa Econômica Federal (“Caixa”), with a view to introducing the Elo card flag disclosed in April 2011, and concluded discussions by signing the documentation that formalized the inclusion of Caixa Participações (CaixaPar) asa shareholder of Elo Serviços S.A. (Elo Serviços). Elo Serviços is a private operating company intended to develop and manage the Elo card flag. Equity interests in Elo Serviços are broken down as follows: Elo Participações S.A. (Elopar) – 66.68% and CaixaPar – 33.32%. Inpartnership with BB and Caixa, a new Brazilian card flag that gives customers more choice and strengthens the Bank's portfolio.Elopar has as its partners Bradesco – 50.01% and BB – 49.99% andnow it comprises certain businesses related to electronic means of payment, which include, as follows: (i) Elo Serviços, theowner and manager of the new brand “Elo” of debit, credit and pre-paid cards; (ii) the activities of CBSS, which will be directly or indirectly integrated into Elopar; and (iii) our ownership interest in IBI Promotora de Vendas Ltda. (“IBI Promotora”), which was sold to Bradesco and/or its subsidiaries through CBSS. BRAM has developed important alliances with internationalization as part of its strategy, expanding the number of fund platforms through which our products are distributed in the European, Latin American and Asian markets. We have entered into advisory agreements for the offering of global equity funds, with a focus on Europe, Latin America (less Brazil) and Australasia. In the United States, by means of its BRAM US LLC subsidiary, BRAM began marketing funds directed at US investors. In Japan MUAM - Mitsubishi UFJ Asset Management, our partner, offers retail investors Fixed Income Funds and Equity Funds to invest in the Brazilian market. In Europe, BRAM offers overseas investors funds domiciled in Luxemburg with different strategies under the Bradesco Global Funds family, launched in 2009 and with sales teams based in London and Luxemburg. In Chile, Equity Funds are marketed by our local partner to institutional and retail customers, with different portfolio profiles.  Divestments In November 2012, we sold 308,676 shares of Serasa S.A (“Serasa”) to Experian Brasil Ltda. ("Experian Brasil"), a Brazilian subsidiary of Experian plc.The transaction generated income before taxes of R$793.3 million.  Bradesco Expresso – Correspondent Bank Bradesco Expresso enables us to expand our share in the correspondent bank segment through partnerships with supermarkets, drugstores, department stores and other retail chains, ensuring presence in all Brazilian cities which are not served by the banking branch network. The main services we offer through Bradesco Expresso are: ·receipt and submission of account applications; ·receipt and submission of loans, financing and credit card applications; ·withdrawals from checking accounts and savings accounts; ·Social Security National Service ("INSS" -Instituto Nacional do Seguro Social) benefit payments; ·checking and savings account deposits; ·checking accounts, savings accounts and INSS balance statements; ·receipt of utility bills, bank charges and taxes; and ·prepaid mobile top-up.  As of December 31, 2013, the Bradesco Expresso network totaled 46,851 service points, of which 3,798 were new service points, with an average of 41.9 million monthly transactions or 2.0 million transactions per business day.  Business strategy The key elements of our strategy are: (i) consolidating and expanding our position as one of the leading financial institutions and insurance providers in Brazil; (ii) maximizing shareholder value; and (iii) maintaining high corporate responsibility and sustainability standards. We intend to pursue the following strategies to reach these goals:   24Form 20-F – December 2013


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Consolidate and build upon our service network and brand as one of the leading financial institutions and insurance providers in Brazil, which offers a complete portfolio of products and services to all levels of society. We believe that our position as one of the leading financial institutions in Brazil, with a presence in all Brazilian regions through a broad network of distribution channels and with exposure to individuals of all income levels as well as large, mid‐sized and small businesses, will allow us to maintain the organic growth strategy. We will also continue to expand the insurance, pension and capitalization bonds business segment, in order to consolidate our leadership in this sector. As part of this strategy, we intend to increase the sales of our traditional banking, insurance, pension and capitalization bonds products through our wide branch network, our internet distribution services and other distribution channels. We are committed to investing significantly in our IT platform to support such growth. In addition, we intend to continue to leverage our relationships with corporate clients and high-income individuals to further develop our investment banking, private banking and asset management operations through Bradesco BBI, Banco Bradesco Europa, Bradesco Securities and other subsidiaries in Brazil and other key financial centers such as London, New York, Hong Kong and Tokyo.  Maintain asset quality and operational risk levels. We are focused on sustainable growth to ensure our standards in relation to our asset quality and risk levels. We intend to maintain the quality of our loan portfolio by continuously improving our delinquency risk models, ensuring better results in credit granting and appropriate provisions for possible incurred losses. Our strategy involves maintaining our existing policy for our insurance business of careful evaluation of risk spreads through robust actuarial analysis, while entering into reinsurance agreements with well-known reinsurers to reduce exposure to large risks. With respect to risk management, we intend to continue our integrated approach that utilizes a centralized method for identifying, measuring, controlling, monitoring and mitigating credit, market, liquidity and operational risks. We intend to continue to use specialized risk management committees in relation to the adoption of institutional policies, operational guidelines and the establishment of limits for risk exposure in accordance with best international practices, with the aim of maintaining operational risk levels within adequate boundaries.  Complement organic growth with strategic alliances and pursue selective acquisitions. To complement our organic growth strategy, we constantly seek opportunities for strategic alliances and selective acquisitions to consolidate our position as one of the leading financial institutions in Brazil and to expand our presence in growth markets such as consumer financing, investment banking, broker dealing and insurance. We believe our partnership with BB and Caixa in relation to credit, debit and pre-paid cards for checking account holders and non-account holders is an example of such a growth opportunity. Similarly, our merger with Odontoprev has increased our presence in the segment of dental care plans enabling us to cement our leadership position in the insurance market. We will continue to focus on asset quality, potential operating synergies, sale and acquisition of know-how to maximize return for our shareholders.  Focus on corporate responsibility and sustainability as core principles of our business. We believe that corporate responsibility and sustainability are fundamental to our operations and have incorporated the following three principles into our overall strategy: a sustainable financial position, responsible management and investments in social and environmental projects. We are always seeking to develop and incorporate sustainable finance concepts into the process of designing and managing our products and services and in our relationships with clients and suppliers. We believe our admission to the sustainability indexes of both the New York Stock Exchange and BM&FBOVESPA represents strong recognition of our success in implementing sustainability principles. As part of this strategy, we will continue to apply social-environmental risk analysis in financing and investment activities in accordance with international practices, including the Equator Principles which we signed up to in 2004. Corporate responsibility has always been one of our core principles as evidenced by the significant investments we have made in education since 1956 through Fundação Bradesco, which is present in every state in Brazil and the Federal District, with 40 schools primarily located in regions of high socioeconomic deprivation. Fundação Bradesco offers quality formal education, free of charge, to children and young people from early childhood to high school as well as professional high school education for young people and adults, as wellas initial and continuing education for employment and income.   Bradesco25


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as initial and continuing education for employment and income.  4.B.Business Overview
 We operate and manage our business through two operating segments: (i) the banking segment and; (ii) the insurance, pension plans and capitalization bond segment. The data about these segments was compiled from reports prepared for Management to assess performance and make decisions on allocating funds for investments and other purposes. Management uses various data, including financial data in conformity with the accounting practices adopted in Brazil and non-financial metrics compiled on different bases. Hence, the segment data were prepared under accounting practices adopted in Brazil and the consolidated financial statements were compiled under International Financial Reporting Standards ("IFRS")as issued by the IASB. For further information on differences between the resultson a consolidated basis and by segments, see "Item 5.A. Operating Results-Results of operations for the year ended December 31, 2013 compared with the year ended December 31, 2012” and "Item 5.A. Operating Results-Results of operations for the year ended December 31, 2012 compared with the year ended December 31, 2011.” As of December 31, 2013, according to the sources cited in parentheses below, we were: ·one of the leading banks in terms of savings deposits, with R$80.7 billion, accounting for 13.4% of Brazil's total savings deposits (Central Bank); ·one of the leaders in BNDES onlending, with R$17.5 billion in disbursements (BNDES); ·one of the leaders in leasing operations in Brazil, with an outstanding amount of R$5.7 billion (ABEL); ·one of Brazil's largest fund and portfolio managers, with R$435.4 billion in total managed assets, of which R$134.3 billion are held by our subsidiary, BEM Distribuidora de Títulos e Valores Mobiliários Ltda., or “BEM DTVM,” specialized in trust, custody and controllership of asset management services (ANBIMA); ·the leader in bank payment processing and collection services in Brazil (Central Bank); ·theleader in number ofoutstanding purchasing consortium quotas with 924,246 quotasin three segments, including: (i) automobiles, with677,587quotas; (ii) real estate, with204,285quotas, and (iii) trucks/tractors/machinery and equipment, with42,374quotas (Central Bank); ·one of the leaders in automobile financing loans, with a market share of 13.6% (Central Bank); ·the leading bank in benefit payments from the INSS, with over 8.0 million INSS retirees, beneficiaries and other pensioners, accounting for 25.7% of the total number of INSS beneficiaries (INSS); and ·Brazil's largest insurance and open pension fund operator with R$49.8billion in total premiums, pension plan contributions and capitalization bond income in 2013. In November 2013, our maket share was 24.2% (SUSEP and ANS).    26Form 20-F – December 2013


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| |  |  | Form 20-F
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The main awards and acknowledgments that we received in 2013 are as follows: ·Most valuable banking brand in Latin America, 16th in the general rankings, and first place in the insurance industry (The Banker/Brand Finance); ·One of the world’s most valuable brands in all economy sectors, occupying 66th place in the general rankings, and best ranked Brazilian brand (Brand Finance); ·Most profitable private bank among Latin America and United States financial institutions (Economatica); ·Best ranked private financial institution among the world’s 500 largest companies (Fortune); ·Most valuable brand in Brazil (IstoÉ Dinheiro – BrandAnalytics/Millward Brown); ·The best bank in Brazil, receiving the award “Euromoney Awards for Excellence” (Euromoney); ·In yearbook Valor 1000 published by the newspaper Valor Econômico, Bradesco Seguros was included as the leader in the Brazilian insurance market, Bradesco Saúde as the largest healthinsurance company in Brazil and Bradesco Vida e Previdência ranked first in pension plan and life; and ·The best bank of Brazil, receiving the award “Best Developed and Emerging Market Banks 2013” (Global Finance).    Bradesco27


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|Form 20-F |  |  | 
|--------- |  |  | 

Main subsidiaries The following is a simplified chart of our principal subsidiaries in the financial and insurance services businesses and our voting and ownership interest in each of them as of December 31, 2013 (all of which are consolidated in our financial statements in "Item 18. Financial Statements"). With the exception of Banco Bradesco Argentina, which was incorporated in Argentina, all of these principal subsidiaries were incorporated in Brazil. For more information regarding the consolidation of our principal subsidiaries, see Note 2a to our consolidated financial statements in "Item 18. Financial Statements."       28Form 20-F – December 2013


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| |  |  | Form 20-F
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Revenues per business segment The following table summarizes our main gross revenues by segment for the periods indicated.  Years Ended December 31,
     R$ in thousands2013
     2012
     2011BankingLoans and advances (1)
     57,561,074
     54,433,883
     52,890,045Fees and commissions
     15,639,215
     13,885,450
     11,989,868Insurance and pension plansPremiums retained from insurance and pension plans
     44,887,215
     40,176,745
     34,315,543(1)Includes industrial loans, financing under credit cards, overdraft loans, trade financing and foreign loans.
  For further details of our segments,see "Item 5.A. OperatingResults" andNote5ofour consolidated financial statements in "Item 18. Financial Statements." We do not break down our revenues by geographic regions within Brazil, and less than 10.0% of our revenues come from international operations. For more information on our international operations, see "International banking services."    Bradesco29


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|Form 20-F |  |  | 
|--------- |  |  | 

Banking We have a diverse customer base that includes individuals and small, midsized and large companies in Brazil. Historically, we have cultivated a strong presence among the broadest segment of the Brazilian market, middle- and low-income individuals. In 1999, we set up our corporate department to serve corporate customers with annual revenues of R$250 million or more, and our private banking department to serve our individual customers with minimum net assets of R$3 million. In 2002, we createdBradesco Empresas(Middle Market) to cater for corporate customers with annual revenues of R$30 to R$250 million, in other to expand our business in the middle corporate market. In 2003, we launched Bradesco Prime, which offers services to individual customers who either have a monthly income of at least R$9,000 or R$100,000 available for immediate investment. Bradesco Varejo is our division for corporate customers with annual revenues of less than R$30 million and individual customers with monthly income of less than R$9,000. For more information, see "Distribution channels" and "Specialized distribution of products and services." The following diagram shows the breakdown of our banking activities as of December 31, 2013:     30Form 20-F – December 2013


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| |  |  | Form 20-F
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The following table shows selected financial data for our banking segment for the periods indicated. This segment information is prepared in accordance with accounting practices adopted in Brazil, which are the accounting practices on which the reports used by Management to assess performance and make decisions are based.  Year ended December 31,
     R$ in thousands2013
     2012
     2011Statement of Income dataNet interest income
     41,600,095
     39,181,426
     31,379,722Impairment of loans and advances
     (9,731,376)
     (10,925,404)
     (9,275,421)Other income/(expenses) (1)
     (24,455,897)
     (20,301,375)
     (13,063,262)Income before income taxes
     7,412,822
     7,954,647
     9,041,039Income and social contribution taxes
     789,516
     (273,930)
     (1,305,702)Net income for the year
     8,202,338
     7,680,717
     7,735,337Net income attributable to controlling shareholders
     8,195,099
     7,672,233
     7,724,917Net income attributable to non-controlling interest
     7,239
     8,484
     10,420Statement of Financial Position dataTotal assets
     768,059,393
     750,410,472
     657,903,426Selected results of operations dataInterest and similar incomeLoans and advances to banks
     8,898,478
     6,758,555
     8,469,093Loans and advances to customers
     48,662,596
     47,675,328
     44,420,954Financial assets
     19,225,270
     17,013,594
     15,913,414Compulsory deposits with the Central Bank
     3,110,877
     3,808,229
     6,112,337Other financial interest income
     38,671
     37,540
     40,774Interest and similar expensesDeposits from banks
     (21,615,019)
     (18,563,193)
     (23,215,922)Deposits from customers
     (9,941,279)
     (11,224,649)
     (14,974,545)Funds from securities issued
     (3,646,584)
     (3,439,647)
     (2,598,702)Subordinated debt
     (3,132,915)
     (2,884,331)
     (2,787,681)Net interest income
     41,600,095
     39,181,426
     31,379,722Net fee and commission income
     15,639,215
     13,885,450
     11,989,868Note: Data presented above includes income from related parties of other segments before elimination.(1)For additional information, see "Item 5.A. Operational Results".
  We have a segmented customer base and we offer the following range of banking products and services in order to meet the needs of each segment: ·deposit-taking with clients, including checking accounts, savings accounts and time deposits; ·loans and advances (individuals and companies, real estate financing, microcredit, onlending BNDES funds, rural credit, leasing, among others); ·credit cards, debit cards and pre-paid cards; ·management of receipts and payments; ·asset management; ·services related to capital markets and investment banking activities; ·intermediation and trading services; ·custody, depositary and controllership services; ·international banking services; and ·purchasing consortiums.  Bradesco31


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|Form 20-F |  |  | 
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Deposit-taking with clients We offer a variety of deposit products and services to our customers through our branches, including: ·Non-interest-bearing checking accounts, such as: -Easy Account(Conta Fácil) – customers have a checking account and a savings account under the same bank account number, using the same card for both accounts; -Click Account(Click Conta)– no-fee checking account for minors (from 11 to 17 years of age), with exclusive website and debit card, automatic pocket money service and free online courses, among other benefits; -Academic Account(Conta Universitária) – low fee checking account for college students, with subsidized credit conditions, exclusive website and free online courses, among other benefits; and -Cell Phone Bonus Account(Conta Bônus Celular) – monthly checking account fees are awarded as bonus for the customers’ prepaid cell phone. ·traditional savings accounts, which currently earn the Brazilian reference rate, ortaxa referencial, known as the "TR," plus 6.2% annual interest in the case the SELIC rate is higher than 8.5%per annumor TR plus 70% of the SELIC rate if the SELIC rate is lower than 8.5%per annum; ·time deposits, which are represented by Bank Deposit Certificates (certificados de depósito bancário– or "CDBs"), and earn interest at a fixed or floating rate; and ·deposits exclusively from financial institutions, which are represented by Interbank Deposit Certificates(certificados de depósito interbancário– or "CDIs"), and earn the interbank deposit rate.  As of December 31, 2013, we had 26.4 million checking account holders, 24.9 million of which were individual account holders and 1.5 millionof which werecorporate account holders. As of the same date, we had 50.9 million savings accounts. The following table shows a breakdown of our deposits from customers by type of product on the dates indicated:  December 31,
     R$ in thousands, except %2013
     2012
     2011(Restated)
     (Restated)Deposits from customersDemand deposits
     39,633,427
     18.3%
     37,684,247
     17.9%
     32,537,861
     15.0%Reais
     39,009,598
     18.0%
     37,216,604
     17.7%
     32,092,103
     14.8%Foreign currency
     623,829
     0.3%
     467,643
     0.2%
     445,758
     0.2%Savings deposits
     80,717,805
     37.3%
     69,041,721
     32.8%
     59,656,319
     27.5%Reais
     80,717,805
     37.3%
     69,041,721
     32.8%
     59,656,319
     27.5%Time deposits
     95,866,825
     44.3%
     104,048,295
     49.4%
     124,425,870
     57.4%Reais
     71,625,097
     33.1%
     80,849,230
     38.4%
     104,412,047
     48.2%Foreign currency
     24,241,728
     11.2%
     23,199,065
     11.0%
     20,013,823
     9.2%Total
     216,218,057
     100.0%
     210,774,263
     100.0%
     216,620,050
     100.0%
  We offer our customers certain additional services, such as: ·"identified deposits," which allow our customers to identify deposits made in favor of a third party by using a personal identification number; and ·real-time "banking transfers" from a checking or savings account to another checking or savings account, including accounts at other banks.    32Form 20-F – December 2013


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| |  |  | Form 20-F
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Loans and advances to customers The following table shows loans and advances to customers in Brazil broken down by type of product and period:  December 31,
     R$ in thousands2013
     2012
     2011(Restated)
     (Restated)Loans and advances to individuals outstanding by type of operationOther loans and advances to individuals
     77,444,991
     69,049,756
     57,771,553Housing loans
     27,870,462
     22,302,967
     15,930,568Onlending BNDES/Finame
     40,543,267
     35,703,861
     35,398,656Other corporate loans and advances
     99,021,346
     90,649,674
     85,760,876Rural loans
     13,651,917
     11,580,061
     11,036,251Leasing
     5,713,481
     8,035,454
     11,550,838Credit cards
     25,473,079
     22,367,978
     19,776,579Import and export financings
     34,261,025
     29,245,863
     25,577,600Total
     323,979,568
     288,935,614
     262,802,921
  The following table summarizes concentration for our outstanding loans and advances to customers by borrower on the dates shown:  December 31,
     2013
     2012
     2011(Restated)
     (Restated)Borrower sizeLargest borrower
     0.7%
     0.9%
     0.9%10 largest borrowers
     5.3%
     5.2%
     5.2%20 largest borrowers
     8.2%
     8.1%
     8.6%50 largest borrowers
     12.9%
     12.9%
     14.0%100 largest borrowers
     16.6%
     16.9%
     18.1%
  Our loans and advances to customers, mostly consumer credit, corporate and agricultural-sector loans, totaled R$324.0billion as of December 31, 2013.  Loans and advancesto consumers Our significant volume of individual loans enables us toavoid concentration on anyindividual loans on the performance of our portfolio and helps build customer loyalty. They consist primarily of: ·short-term loans, extended through our branches to checking account holders and, within certain limits, through our ATM network. These short-term loans are on average repaid in four months with an average interest rate of 7.0% per month as of December 31, 2013; ·vehicle financings are on average repaid in fourteen months with an average interest rate of 1.6% per month as of December 31, 2013; and ·overdraft loans on checking accounts (or "Cheque Especial"), which are on average repaid in one month, at interest rates varying from 8.4% to 9.0% per month as of December 31, 2013.  We also provide revolving credit facilities and traditional term loans. As of December 31, 2013, we had outstanding advances, vehicle financings, consumer loans and revolving credit totaling R$77.4 billion, or 23.9% of our portfolio of loans and advances as of that date. On the basis of loans outstanding on that date, we had a 12.5% share of the Brazilian consumer loan market, according to information published by the Central Bank. Banco Bradesco Financiamentos ("Bradesco Financiamentos") offers direct-to-consumer credit and leasing for the acquisition of vehiclesthrough our extensive network of correspondents in Brazil, whichincludes retailers and dealers of light and heavy vehicles and motorcyclesand payroll-deductible loans to the public and private sectors in Brazil.   Bradesco33


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|Form 20-F |  |  | 
|--------- |  |  | 

Under the “Bradesco Promotora” brand, we offer payroll-deductible loans to INSSretirees and pensioners, public-sector employees, military personnel and private-sector companies sponsoring plans, and other aggregated products (insurance, cards, purchasing consortiums, and others).  Real estate financing As of December 31, 2013, we had 82,210 outstanding real estate loans. The aggregate outstanding amount of our real estate loans amounted to R$27.9 billion, representing 8.6% of our portfolio of loans and advances. Real estate financing is made through the Housing Finance System – SFH(Sistema Financeiro Habitacional), by the Housing Mortgage Portfolio – CHH(Carteira Hipotecária Habitacional)or by the Commercial Mortgage Portfolio –CHC(Carteira Hipotecária Comercial). Loans from SFH or CHH feature variable-installment repayments and annual interest rates ranging from 8.9% to 9.2% plus TR, or 12.0% from CHC. Residential SFH and CHH loans areto be repaidwithin 30 years and commercial loans within 10 years. Our individual loans made for construction purposes are repaid within 360 months, with 24 months tocompletion ofconstruction, a 2-month grace period and the remainder for repaying the loan.Payments are made at the interest rate of 10.0%per annumplus TR variation for real estate falling into the SFH rules, or interest rates of 10.5%per annumplus TR variation for real estate falling into the CHH. We also extend corporate financing for builders under the SFH. These loans are for construction purposes and typically specify 36 months for completion of construction work and repayments starting within 36 months after official registration of the building. These loans are charged the TR plus an annual interest rate of 12 to 13% during the construction stagefor SFH loans,and TR plus an annual interest rate of 14%during repayment period for CHH loans. Central Bank regulations require us to provide real estate financing in the amount of at least 65% of the balance of our savings accounts. In addition to real estate financing, mortgage notes, charged-off real estate financing, and other financings can be used to satisfy this requirement. We generally do not finance more than 80% of thepurchase price or themarket value of a property, whichever is lower. In November and December 2012, the Central Bank authorized and defined the conditions for theissuanceof real estate credit notes through Investment banks.  Microcredit We extend microcredit to low-income individuals and small companies, in accordance with Central Bank regulations requiring banks to use 2% of their cash deposits to provide microcredit loans. We started providing microcredit loans in August 2003. As of December 31, 2013, we had11,406microcredit loans outstanding, totaling R$7.9million. In accordance with Central Bank regulations, most microcredit loans are charged at a maximum effective interest rate of 2% per month. However, microcredit loans for certain types of business or specific production have a maximum effective interest rate of 4% per month. The CMN requires that the maximum amount loaned to a borrower be limited to (i) R$2,000 for individuals in general, (ii) R$5,000 for individuals developing certain professional, commercial or industrial activities or for micro companies, and (iii) R$40,000 for our "guided microcredit productive" transactions, which are loans tailored for individuals and micro companies with revenues of less than R$120,000 per year. In addition, microcredit loans must not be for less than 120 days, and the origination fee must be 2.0% to 3.0% of the loan value.  BNDES onlending The Brazilian government has a program to provide government-funded long-term loans with below-market interest rates to sectors of the economy that it has targeted for development. We borrow funds under this program from either (i) BNDES, the federal government’s development bank, or (ii)Agência Especial de Financiamento Industrial(FINAME), or "FINAME," the equipment financing subsidiary of BNDES. We then on-lend these funds to borrowers in targeted sectors of the economy. We determine the spread on the loans based on the borrowers' credit. Although we bear the risk for these BNDES and FINAME onlendingtransactions, they are always secured.   34Form 20-F – December 2013


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According to BNDES, we disbursed R$17.5 billion, 61.5% of which was loaned to micro, small and medium-sized companies in 2013. Our BNDES onlending portfolio totaled R$40.5 billion as of December 31, 2013, and accounted for 12.5% of our portfolio of loans and advances at that date.  Other local commercial loans We provide traditional loans for the ongoing needs of our corporate customers. We had R$99.0 billion of outstanding other local commercial loans, accounting for 30.6% of our portfolio of loans and advances as of December 31, 2013. We offer a range of loans to our Brazilian corporate customers, including: ·short-term loans of 29 days or less; ·working capital loans to cover our customers' cash needs; ·guaranteed checking accounts and corporate overdraft loans; ·discounting trade receivables, promissory notes, checks, credit card and supplier receivables, and a number of other receivables; ·financing for purchase and sale of goods and services; ·corporate real estate financing; ·investment lines for acquisition of assets and machinery; and ·guarantees.  These lending products generally bear an interest rate of 1.8% to 8.6% per month.  Rural loans We extend loans to the agricultural sector by financing demand deposits, BNDES onlendings and our own funds, in accordance with Central Bank regulations. As of December 31, 2013, we had R$13.7 billion in outstanding rural loans, representing 4.2% of our portfolio of loans and advances. In accordance with Central Bank regulations, loans arising from compulsory deposits are paid a fixed rate. The annual fixed rate was 5.5% as of December 31, 2013. Repayment of these loans generally coincides with agricultural harvest and principal is due when a crop is sold. For BNDES onlending for rural investment the term is no more than five years with repayments on a semi-annual or annual basis. As security for such loans, we generally obtain a mortgage on the land where the agricultural activities being financed are conducted. Since July 2012, Central Bank regulations require us to use at least 34% of the annual average (from June through May) of our checking account deposits to provide loans to the agricultural sector. By the end of June, if we do not reach 34%, we must deposit the unused amount in a non-interest-bearing account with the Central Bank or pay a penalty of 40% of this amount.  Leasing According to ABEL, as of December 31, 2013, our leasing companies were among the sector leaders, with a 19.7% market share. According to this source, the aggregate discounted present value of the leasing portfolios in Brazil as of December 31, 2013 was R$28.9 billion. As of December 31, 2013, we had 126,460 outstanding leasing agreements totaling R$5.7 billion, representing 1.8% of our portfolio of loans and advances. The Brazilian leasing market is dominated by large banks and both domestic- and foreign-owned companies affiliated with vehicle manufacturers. Brazilian lease contracts generally relate to motor vehicles, computers, industrial machinery and other equipment. Most of our leasing operations are financial (as opposed to operational). Our leasing operations primarily involve the leasing of trucks, cranes, aircraft and heavy machinery. As of December 31, 2013, 68.7% of our outstanding leasing operations were for vehicles.  Bradesco35


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|Form 20-F |  |  | 
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We conduct our leasing operations through our primary leasing subsidiary, Bradesco Leasing and also through Bradesco Financiamentos. We obtain funding for our leasing operations primarily by issuing debentures and other securities in the domestic market. As of December 31, 2013, Bradesco Leasing had R$73.9 billion of debentures outstanding in the domestic market. These debentures will mature in 2028 and bear monthly interests at the interbank interest rate (“CDI rate”).  Terms of leasing agreements Financial leases represent a source of medium and long-term financing for Brazilian customers. Under Brazilian law, the minimum term of financial leasing contracts is 24 months for transactions relating to products whose average life of five years or less, and 36 months for transactions for those with an average useful life of five years or more. There is no legal maximum term for leasing contracts. As of December 31, 2013, the remaining average maturity of contracts in our lease portfolio was approximately 53 months.  Credit cards We offer a range of credit cards to our clients including American Express, Elo, Visa, MasterCard and private label brands, whichstand outdue to theextent of benefits andconvenience offered to associates. We earn revenues from our credit card operations through: ·fees on purchases carried out in commercial establishments; ·issuance fees and annual fees; ·interest on credit card balances; ·interest and fees on cash withdrawals through ATMs; and ·interest on cash advances to cover future payments owed to establishments that accept credit cards.  We offer our customers the most complete line of credit cards and related services, including: ·cards issued for use restricted to Brazil; ·credit cards accepted nationwide and internationally; ·credit cardsdirected towardhigh net worth customers, such as Gold, Platinum and Infinite/BlackfromVisa, American Express and MasterCardbrands; ·multiple cards that combine credit and debit features in a single card, which may be used for traditional banking transactions and shopping; ·corporate credit cards accepted nationwide and internationally; ·co-branded credit cards, which we offer through partnerships with companies; ·"affinity" credit cards, which we offer through associations, such as sporting clubs and non-governmental organizations; ·private label credit cards, whichwe only offer to customers of retailers, designed to increase business and build customer loyalty for the corresponding retailer, which may or may not have a restriction on making purchases elsewhere; ·“CPB” and “EBTA,” virtual cards for corporate customers with the management and control of airline ticket expenses; ·Bradesco’s card for transportation companies, shippers, risk management companies and truck drivers, with both prepaid and debit card functionalities; ·"Contactless," which enable customers to simply place the card next a scanner to make a payment;  36Form 20-F – December 2013


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| |  |  | Form 20-F
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·"MoneyCard – Visa Travel Money and Global Travel Card" are prepaid international cards designed for foreign currency transactions, which target international travel; ·“Agrocard Bradesco” –created for farmers and combines the features of acreditcardanda debit card. Holders of these cards can use them to buy farm products in stores authorized by Cielo; ·“Mastercard Black Corporate card” – developed for executives, with available services such as: Priority Pass, which provides access to more than 600 VIP lounges in airports, and Showpass, which facilitates the purchase of theater tickets and promotions through Plataforma Black; ·“Prepax Presente prepaid cards” – issued by Alelo,which is a pre‐loaded card which can be given as a gift to individuals. Purchasers define the credit’s value and may opt to choose a commemorative topic or to personalize the card with a personal image; ·“Elo Food, Meal and Christmas Meal benefit cards” – in addition to reducing operating costs, the value proposal of this business is to enhance the efficiency of payment means, with 100% of virtual transactions, by offering more security and convenience to companies and workers; ·Utility Bills and Taxes Payment Services (via bar code) by way of the credit card option, in the internet banking channel. With this service, customers have up to 40 days to concentrate the payment of bills on a single date and also generate points/credits to the Rewards Programs they have with their Bradesco Cards; ·“Meu Dinheiro Claro”, a prepaid card related to a Claro mobile telephone line that may be used for purchases in a broad network of stores, transfers between individuals that use this service, withdrawals, balances and statements, in addition to refills of prepaid credits for any Claro customer; and ·“Corporate Elo Card” for the E1 public, (individual entrepreneur), developed to assist companies in managing expenses and providing greater flexibility and independence.  As of December 31, 2013, we had more than 55 partners with whom we offered co-branded, affinity and private label/hybrid credit cards. These relationships have allowed us to integrate our relationships with our customers and offer our credit card customers banking products, such as financing and insurance. The following table shows our billing and total number of transactions of credit cards for the years indicated:  In millions2013
     2012
     2011Revenue – R$Credit
     119,407.0
     103,542.5
     89,624.1Number of transactionsCredit
     1,346.7
     1,225.6
     1,105.8
  Debit cards We first issued debit cards in 1981 under the name "Bradesco Instantâneo."In 1999, we started converting all of ourBradesco Instantâneodebit cards into new cards called "Bradesco Visa Electron."In 2013,we launched “Elo” debit cards. Bradesco Visa and Elo debit cardholders can use them to purchase goods and services at establishments or make withdrawals through our self-service network in Brazil. Purchase amounts are debited to the cardholder's Bradesco account, thus eliminating the inconvenience and bureaucracy of writing checks.    Bradesco37


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|Form 20-F |  |  | 
|--------- |  |  | 

Cash Management Solutions Management of receipts and payments In order to meet the cash management needs of our customers in both public and private sectors, we offer many electronic solutions for receipt and payment management, supported by our network of branches, bank correspondents and electronic channels, all of which aim to improve speed and security for customer data and transactions. The solutions provided include: (i) collection and payment services and (ii) online resource management enabling our customers to pay suppliers, salaries, and taxes and other levies to governmental or public entities. These solutions, which can also be customized, facilitate our customers' day-to-day tasks and help to generate more business. We also earn revenues from fees and investments related to collection and payment processing services and, also by funds in transit received up to its availability to the related recipients.  Global Cash Management Global Cash Management aims at structuring solutions to foreign companies operating in the Brazilian market and Brazilian companies making business in the international market. By way of customized solutions, partnerships with international banks and access to the SWIFT network, we offer products and services for carrying out the cash management of these companies.  Solutions for receipts and payments In 2013, we processed 896 million receipts through our collection system, checks custody service, identified deposits and credit orders via our teleprocessing system (credit order by teleprocessing or OCT), which was 4.5% more than in the same period of 2012. In 2013, the volume processed through virtual means (Pag-For Bradesco, Net Empresa and Online Tax Payment) was 644 million documents, which represented a 18.1% increase as compared to the same period of 2012.  Production chain solutions The Production Chain areaseeksto search for customized solutionsfor our clients, tailoredto the characteristics of each customer’s sector and economic activity. The purpose of this operation is tofacilitatethe relationship and interconnection among all production chain elements: anchor companies and their customers, suppliers, distributors, service providers and employees, among others. Accordingly, it is possible to expand the client base, increase business volume and strengthen the client's loyalty to the Bank, by way of structured and driven actions.  Franchising solutions The Franchising area seeks to search for customized solutions driven to the characteristics and needs of the Brazilian franchising sector (franchisers and franchisees). The purpose of this operation is the centralized servicing to all franchisees of the networks accredited to the Bank, thus improving the number of customers and the business volume in this significant sector of the Brazilian economy.  Market Niches Customers in specific market niches, such as education, condominiums, health and expediters and driving schools, among others, have the support of a qualified team to structure customized solutions, adding value to a customer’s business, in accordance with profile, features and needs of the respective niche. Another important feature in this area is support for development of Local Productive Arrangements – LPA, providing business advisory services and assistance to these customers.   38Form 20-F – December 2013


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Public authority solutions Public administration also requires agility and technology in its everyday activities. We have a business area specifically to serve this market, which offers specialized services to entities and bodies of the Executive, Legislative and Judiciary branches at federal, state and municipal levels, in addition to independent governmental agencies, public foundations, state-owned and mixed companies, the armed forces (army, navy and air force) and the auxiliary forces (federal and state police forces), identifying business opportunities and structuring customized solutions. Our exclusive website developed for these customers (www.bradescopoderpublico.com.br) poses corporate solutions for federal, state and municipal governments for payments, receipts, human resources and treasury services, meeting the needs and expectations of the Executive, Legislative and Judiciary branches. The portal also features exclusive facilities for public employees and the military showing all of our products and services for these customers. The relationship works through exclusive service platforms located nationwide, with specialized relationship managers to provide services to these customers. In 2013, the Bank took part in bidding processes sponsored by the Brazilian Government and was successful in over 90% of these processes. Furthermore,we became leadersin payments of INSS benefits, with approximately 7.9 million retirees and pensioners.  Asset management and administration We administer and manage assets by way of: ·mutual funds; ·individual and corporate investment portfolios; ·pension funds, including assets guaranteeing the technical provisions ofBradesco Vida e Previdência; ·insurance companies, including assets guaranteeing the technical provisions ofBradesco Seguros; and ·Receivable funds (FIDCs –Fundos de Investimento em Direitos Creditórios), FIIs (Real Estate Investment Funds) and private equity funds (FIPs –Fundos de Investimento em Participações).  On December 31, 2013, we administered or managed 1,550 funds and 233 portfolios, providing services to 2.7 million investors. These funds comprise a wide group of fixed-income, non-fixed income and multimarket funds, among others.   Bradesco39


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|Form 20-F |  |  | 
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The following tables show our equity of funds and equity of portfolios which are under our management, the number of investors and the number of investment funds and managed portfolios for each period.  Distribution of Equity as of December 31,
     R$ in thousands2013
     2012Investment FundsFixed income
     373,551,609
     369,287,183Variable income
     27,966,814
     28,645,545Third party share funds
     6,355,220
     8,781,502Total
     407,873,643
     406,714,230Managed PortfoliosFixed income
     16,856,215
     24,573,236Variable income
     8,389,755
     9,301,431Third party share funds
     2,243,831
     1,242,315Total
     27,489,801
     35,116,982Overall Total
     435,363,444
     441,831,212
  As of December 31,
     2013
     2012Number
     Quotaholders
     Number
     QuotaholdersInvestment Funds
     1,550
     2,731,246
     1,373
     3,159,302Managed Portfolios
     233
     430
     231
     469Overall Total
     1,783
     2,731,676
     1,604
     3,159,771
  Our products are mostly distributedthroughour branch network, banking service by phone and the investor website via the Internet, the “ShopInvest” (www.shopinvest.com.br).  Services related to capital markets and investment banking activities As the organization's investment bank, Bradesco BBI originates and executes mergers and acquisitions, and originates, structures,syndicatesand distributes fixed-income and equity capital market transactions in Brazil and abroad. In 2013, Bradesco BBI advised customers on over 200 transactions across a range of investment banking products, totaling R$136.0 billion.  Equities Bradesco BBI coordinates and places public offerings of shares in local and international capital markets and intermediates public tender offers. Bradesco BBI ended 2013 with a significant presence in IPOs andfollow-ons by Brazilian issuers. Based on data relating to public offerings registered with CVM in 2013, Bradesco BBI took part as an underwriter and joint bookrunner in ten offers totaling R$19.7 billion.In addition to participatingin the IPO of BB Seguridade, the largest IPOin Brazilian history, it also acted as one of the leading coordinators of the U.S. car manufacturer Ford offering involving the amount of US$ 1 billion. This was the first time that a Brazilian bank acted within the leadership of a U.S. company’s offering in the U.S.  Fixed income After having been engaged on a number ofsignificantprojects during 2013,Bradesco BBIended the yearwitha very strongpresence in the fixed-income segment. For the year ended December31,2013,Bradesco BBIwas the leader in terms of value, according to the fixed income - short-term ANBIMA ranking. In the period, it coordinated 123 domestic-market offerings totaling more than R$33 billion. In the international broker-dealer market, Bradesco BBI is continuously expanding its presence. In2013, it acted as “joint bookrunner” for 17 bond issues, which exceeded the amount of US$13 billion.   40Form 20-F – December 2013


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Bradesco BBI obtained authorization from the Tokyo stock exchange to operate in the Japanese market as the coordinator of an offering of samurai bonds, thereby becoming the first Latin American bank to operate in this role in the Japanese debt capital markets.  Structured operations Bradesco BBI develops structures and solutions for its customers, in terms of financing, offering a number of funding tools to companies, including those involving securitization. Additionally, Bradesco BBIhas a strong presencein the acquisition finance segment. In 2013, Bradesco BBIalsohelda leading positionin thesecuritizationranking published by ANBIMA,as a result of structuring12 operationswith a total valueof R$1.7 billion.  Mergers and acquisitions Bradesco BBI provides advisory servicesto importantcustomers inmerger, acquisition and corporate sale transactions, private placements,formingjoint ventures, financial and corporaterestructuring,and privatizations, in addition to occupying an outstanding position among the key investment banks in Brazil. In 2013, Bradesco BBI was rated among the top banks that provided advice for mergers and acquisitions in Brazil. During the year, Bradesco BBI advised on 28 transactions with an approximate disclosed value of R$34.8 billion.  Project finance Bradesco BBIhas a solid background as financial advisor and structuring agent for a number of projects involving project and corporate finance, seeking to optimize financing solutions for projects across various industries through both credit and capital markets. Bradesco BBI has excellent relationships with various development agencies such as BNDES, Banco Interamericano de Desenvolvimento ("BID") and International Finance Corporation ("IFC"). As of December 31, 2013, Bradesco BBI was involved in providing financial advice and structuring for approximately 70 projects totaling approximately R$155 billion in investments. In 2013, Bradesco BBI was number one in Dealogic Latin American and Caribbean mandated lead arranger ranking. During the period, Bradesco BBI concluded transactions in energy generation, oil and gas, mining, port logistics, airports and urban mobility.  Intermediation and trading services Bradesco S.A. CTVM (or "Bradesco Corretora") trades stocks, options, stock lending, public offerings and forwards. It also offers a wide range of products such as Brazilian government securities (under theTesouro Diretoprogram), BM&F trading andreal estate funds, which are tailored to the needs of high net-worth individuals, major corporations and institutional investors. In 2013, Bradesco Corretora traded more than R$101.0 billion in the BM&FBOVESPA equities market and the exchange ranked it 12th in Brazil in terms of total trading volume. In addition, in the same period, Bradesco Corretora traded 30,002,876 futures, swaps and options totaling R$2,745.0 billion on the BM&FBOVESPA. According to the BM&FBOVESPA, in 2013, Bradesco Corretora ranked 11th in the Brazilian market, in terms of the number of options, futures and swaps contracts executed. Bradesco Corretora was awarded byBM&FBOVESPA,within theOperationalQualifyingProgram(PQO),all ofthe fiveexcellence seals(Agro Broker, Carrying Broker, Execution Broker, Retail Broker and Web Broker), indicating the high quality of its future market transactions. Bradesco Corretora offers its clients the possibility to trade securities on the Internetthrough its "Home Broker" service. In 2013, "Home Broker" trading totaled R$10.4 billion, or 1.6% of all Internet transactions on BM&FBovespa, and Bradesco Corretora was the 17th largest Internet trader in the Brazilianmarket.  Bradesco41


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|Form 20-F |  |  | 
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Bradesco Corretora has a full range of services in investment analysis with coverage of the main sectors and companies of the Brazilian market. With a team of 34 analysts, it is composed of sector specialists (senior and assistant analysts), who fairly disclose their opinions to the customers by way of follow-up reports and instruction guides, with a wide range of projections and comparison multiples. Bradesco Corretora also has a team of its own economists dedicated to the customers' specific demands, focused on the stock market. Over 700 reports, in English and Portuguese, are monthly forwarded to the most important investors domiciled in Brazil, the United States, Europe and Asia. Through our Bradesco Corretora's brokerage rooms, our customers have access to professionals that are able to advise on investing in the BM&FBOVESPA.Wecurrentlyrun15roomsthroughout Brazil. This means that Bradesco Corretora provides direct customer service and closer relations with customers, training and certifying employees for a range of operations. This channel is very profitable and enjoys a high-level of take-up from investors, making for closer relations with our network of branches as loyal customers concentrate their funds with us. Bradesco Corretora also offers its services as a representative of non-resident investors for transactions in the financial and capital markets, in accordance with CMN Resolution No. 2,689/00, which we refer to as "Resolution No. 2,689/00." For more details of Resolution No. 2,689/00, see "Item 10.D. Exchange Controls."  Custody, depositary and administrative services In 2013, we were one of the main providers of capital markets services and retained leadership in the domestic asset custody market, according to the ANBIMA ranking. Our modern infrastructure and specialized team offer a broad range of services such as: asset registration (shares, BDR - Brazilian Depositary Receipts, investment fund shares, Certificates of Real Estate Receivables or CRIs, and debentures); qualified custody for securities; custody of shares underlying Depositary Receipts (DRs); administrative services for investment funds ("CVM Instruction No. 409" Funds and Structured Funds) and managed portfolios; fiduciary administration for investment funds; offshore funds; custody and representation for foreign investors; administrative agent; depositary (escrow account - trustee) and clearing agent. We submit our processes to the Quality Management System ISO 9001:2008 and GoodPriv@cy certifications. Bradesco Custódia alone has 10 quality related and three protection and data privacy certifications. As of December 31, 2013, Bradesco Custódia offered: ·administrative and custody services for investment funds and managed portfolios and fiduciary administration for third-party funds involving: -­R$940.6 billion in assets under custody for customers using custody services, as measured by methodology used for the ANBIMA ranking; -­R$1.2 trillion in total shareholders ́ equity of investment funds and managed portfolios which are using our administration services, as measured by methodology used for the ANBIMA ranking; -­27 registered DR programs with a market value of R$95.3 billion; and -­R$225.0 billion total shareholders ́ equity of third-party investment funds under fiduciary administration by BEM DTVM. ·Asset registration: -­Bradesco’s share registration system comprised 254 companies, with a total of 4.5 million shareholders; -­our debenture registration system contained 304 companies with a total market value of R$250.1 billion; -­our fund share registration system contained 352 investment funds with a market value of R$68.8 billion; and -­we managed 25 registered BDR programs, with a market value of R$1.5 billion.    42Form 20-F – December 2013


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In December 2013, the CVM changed the rules that govern these activities through the issuance of Instructions no. 541, 542 and 543, which address centralized deposit, custody and bookkeeping of securities, respectively. Pursuant to these new instructions, recording agents will be required to maintain records in relation to issuances of registered assets and custodians will be responsible for safeguarding assets that were physically issued or for which they are holders of customers’ custody positions in central depositary entities. In addition , centralized deposit service providers will take on a crucial role for trading assets in organized markets, concentrating all operations corresponding to deposited assets. These new instructions will take effect on July 1, 2014.  International banking services As a private commercial bank, we offer a wide range of international services, such as foreign exchange transactions, foreign trade finance, lines of credit and banking. As of December 31, 2013, our international banking services included: ·New York City, a branch and Bradesco Securities Inc., our subsidiary brokerage firm, or "Bradesco Securities U.S.,” and our subsidiary Bradesco North America LLC, or "Bradesco North America;" ·London, Bradesco Securities U.K., our subsidiary, or "Bradesco Securities U.K.;" ·the Cayman Islands, two Bradesco branches and our subsidiary, Cidade Capital Markets Ltd., or "Cidade Capital Markets;" ·Argentina, Banco Bradesco Argentina S.A., our subsidiary, or "Bradesco Argentina;" ·Luxembourg, Banco Bradesco Europa S.A. (formerly Banco Bradesco Luxemburgo S.A.) our subsidiary, or "Bradesco Europe;" ·Japan, Bradesco Services Co. Ltd., our subsidiary, or "Bradesco Services Japan;" ·Hong Kong, our subsidiary Bradesco Trade Services Ltd, or "Bradesco Trade;" and also Bradesco Securities Hong Kong or “Bradesco Hong Kong;” and ·Mexico, our subsidiary Bradescard México, Sociedad de Responsabilidad Limitada, or "Bradescard México."  Our international transactions are coordinated by our international and foreign exchange department in Brazil with support from 29 operational units specializing in foreign exchange businesses located at major exporting and importing areas nationwide.  Revenues from Brazilian and foreign operations The table below breaks down revenues (interest and similar income, and fee and commission income) from our Brazilian and foreign operations for the periods shown:  For the years ended December 31,

   2013

   2012

   2011(Restated)

   (Restated)R$ in thousands

   %

   R$ in thousands

   %

   R$ in thousands

   %Brazilian operations

   103,248,646

   98.1%

   94,198,281

   98.3%

   91,793,168

   98.6%Overseas operations

   1,969,702

   1.9%

   1,590,704

   1.7%

   1,291,165

   1.4%Total

   105,218,348

   100.0%

   95,788,985

   100.0%

   93,084,333

   100.0%
  Foreign branches and subsidiaries Our foreign branches and subsidiaries are principally engaged in trade finance for Brazilian companies. Bradesco Europe also provides additional services to the private banking segment. With the exception of Bradesco Services Japan and Bradesco Trade Services, our branches abroad are allowed to receive deposits in foreign currency from corporate and individual customers and extend financing to Brazilian and non-Brazilian customers. Total assets of the foreign branches, excluding transactions between related parties, were R$137.5 billion, as of December 31, 2013, denominated in currencies other than thereal.  Bradesco43


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|Form 20-F |  |  | 
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Funding required for import and export finance is mainly obtained from the international financial community, through credit lines granted by correspondent banks abroad. As an additional source of funding, we issued debt securities in international capital markets, which amounted to US$13.5 billion in 2013. Bradesco Argentina– To expand our operations in Latin America, in December 1999, we established our subsidiary in Argentina, Bradesco Argentina, the general purpose of which is to extend financing, largely to Brazilian companies established locally and, to a lesser extent, to Argentinean companies doing business with Brazil. As of December 31, 2013, Bradesco Argentina recorded R$169.9 million in total assets. Bradesco Europa-In April 2002, wetookcontrol of Banque Banespa International S.A., Luxemburg, currently namedBanco Bradesco Europa. As of December 31, 2013, its total assets were R$6.7 billion. Bradesco Services Japan– In October 2001, we incorporated Bradesco Services Japan to provide support and specialized services to the Brazilian community in Japan, including remittances to Brazil and advice regarding investments within Brazil. As of December 31, 2013, its assets totaled R$1.0 million. Bradesco Trade Services– A non-financial institution and a subsidiary of our branch in the Cayman Islands, which we incorporated in Hong Kong in January 2007, in partnership with the local Standard Chartered Bank. Bradesco Securities (U.S., U.K. and H.K.)– Bradesco Securities, our wholly owned subsidiary, is a broker dealer in the United States, England and Hong Kong: ·The focus of Bradesco Securities U.S. is on facilitating the purchase and sale of shares, primarily in the form of ADRs and common shares. It is also an authorized dealer in bonds, commercial paper and deposit certificates, among other securities, and may provide investment advisory services. As of December 31, 2013, Bradesco Securities U.S. had assets of R$93.1 million; ·Bradesco Securities U.K. focuses on the intermediation of equities and fixed income operations for Brazilian companieswith global institutional investors. On December 31, 2013, Bradesco Securities U.K. had assets of R$20.9 million; and ·Bradesco Securities H.K. focuses on the trading of ADRs and public and private securities issued by Brazilian companies to global institutional investors. On December 31, 2013, Bradesco Securities H.K. had assets of R$11.3 million. Cidade Capital Markets– In February 2002, Bradesco acquired Cidade Capital Markets in Grand Cayman, due to the acquisition of its parent company in Brazil, Banco Cidade. As of December 31, 2013, Cidade Capital Markets had R$95.4 million in assets. Bradesco North America LLCwas incorporated in August 2011 to be used as a holding company focused on Bradesco's investments in non-bank businesses in the United States. As of December 31, 2013, its total assets was R$4.8 million.  Banking operations in the United States In January 2004, the United States Federal Reserve Bank authorized us to operate as a financial holding company in the United States. As a result, we may do business in the United States directly or through a subsidiary, and, among other lines, may sell insuranceproductsand certificates of deposit, provide underwriting services, act as advisors on private placements, provide portfolio management and merchant banking services and manage mutual fund portfolios.  Import and export financing Our Brazilian foreign-trade related business consists of export and import finance. We provide foreign currency payments directly to foreign exporters on behalf of Brazilian importers,which are linkedtothereceipt of local currencypaymentsby the importers. In export finance, exporters obtain advances inreaison closing an export forex contract for future receipt of foreign currency on the contract due date. Export finance arrangements prior to shipment of goods are known locally as Advances on Exchange Contracts or "ACCs," and the sums advanced are used to manufacture goods or provide services for export. If advances are paid after goods or services have been delivered, they are referred to as Advances on Export Contracts, or "ACEs."  44Form 20-F – December 2013


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There are still other formsof export financing, such as export prepayments, onlendings from BNDES-EXIM funds, export credit notes and bills (referred to locally as "NCEs" and "CCEs"), and the PROEX rate equalization program. Our foreign trade portfolio is funded primarily by credit lines from correspondent banks. We maintain relations with various American, European, Asian and Latin American financial institutions for this purpose, using our network of approximately 1,000 correspondent banks abroad, 63 of which extended lines of credit as of December 31, 2013. As of December 31, 2013, our international unit had a balance of R$29.5 billion in export financing and R$10.4 billion in import financing and international finance.The volume of our foreign exchange contracts for exports reached US$44.2 billion in 2013. In the same period, the volume of our foreign exchange contracts for imports reached US$34.6 billion. In 2013, based on Central Bank data, we reached an 18.1% market share of trade finance for Brazilian exports and 15.6% for imports. The following table shows the composition of our foreign trade asset portfolio as of December 31, 2013:  2013
     R$ in thousandsExport financingAdvance on foreign exchange contracts – undelivered bills
     5,889,466Advance on foreign exchange contracts – delivered bills
     646,915Export prepayment
     10,066,775Onlending of funds borrowed from BNDES/EXIM
     3,300,835Proex - Rate Equalization Program
     54,112NCE/CCE (Exports Credit Note/Exports Credit Certificates)
     9,525,804Total export financing
     29,483,907Import financingImport financing – foreign currency
     6,853,418Exchange discounted in advance for import credit
     1,709,070Import credit opened
     735,505Total import financing
     9,297,993International financing
     1,102,616Total foreign trade portfolio
     39,884,516
  Foreign exchange products In addition to import and export financing, our customers have access to a range of services and foreign exchange products such as: ·WEB export and import contracts; ·collecting import and export receivables; ·cross border money transfers; ·advance payment for exports; ·accounts abroad in foreign currency; ·domestic currency account for foreign domiciled customers; ·cash holding in other countries; ·structuredforeign currencytransactions: through our overseas units; ·foreign loans to customers (Decree-Law No. 4,131/62); ·service agreements – receiving funds from individuals abroad via money orders; ·prepaid cards with foreign currency (individual and corporate customers); ·purchasing and selling travelers checks and foreign currency paper money;  Bradesco45


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|Form 20-F |  |  | 
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·cashing checks denominated inforeign currency; ·international financial clearance certificate; and ·international financial capacity certificate.  Consortia In Brazil, persons or entities that wish to acquire certain goods may set up a group known as a "consortium," in which members pool their resources to facilitate the purchase of certain consumer goods. The purpose of a consortium isthe acquisition ofgoods,asBrazilian lawprohibitsthe formation ofconsortiafor other purposes. Our purchasing consortium company (Bradesco Consórcios) manages plans for groups of purchasers buying real estate, automobiles and trucks/tractors/machinery and equipment. In January, 2003, our subsidiary Bradesco Consórcios initiated the sale of consortium quotas, to our customers. According to the Central Bank, in May, 2004, Bradesco Consórcios became the leader in the real estate segment and, in December 2004, it also became the leader in the automobile segment. In October, 2008, Bradesco Consórcios became the leader in the trucks/tractors/machinery and equipment segment. As of December 31, 2013, Bradesco Consórcios registered total sales of 924,246 outstanding quotas in the three segments, with total revenues of over R$36.5 billion and net income of R$475.3 million.  Insurance, pension plans and capitalization bonds The following diagram shows the principal elements of our insurance, pension plans and capitalization bonds segment as of December 31, 2013:     46Form 20-F – December 2013


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| |  |  | Form 20-F
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The following table shows selected financial data for our insurance, pension plans and capitalization bonds segment for the periods indicated. This segment information is prepared in accordance with accounting practices adopted in Brazil, which are the accounting practices on which the reports used by Management to assess performance and make decisions are based.  As of and for the year ended December 31,
     R$ in thousands2013
     2012
     2011Statement of Income dataNet interest income
     5,589,328
     3,124,512
     3,274,715Other income and expenses (1)
     446,778
     2,725,672
     1,905,577Income before income taxes
     6,036,106
     5,850,184
     5,180,292Income and social contribution taxes
     (2,253,451)
     (2,196,399)
     (1,850,139)Net income for the year
     3,782,655
     3,653,785
     3,330,153Net income attributable to controlling interest
     3,692,531
     3,591,743
     3,201,449Net income attributable to non-controlling interest
     90,124
     62,042
     128,704Statement of Financial Position dataTotal assets
     160,295,583
     153,695,571
     123,867,399Selected results of operations dataIncome from insurance and pension plansWritten premiums
     42,226,410
     37,899,360
     32,136,300Pension plan contributions
     3,584,290
     3,273,485
     3,061,682Coinsurance premiums ceded
     (154,125)
     (198,281)
     (190,724)Premiums returned
     (543,779)
     (500,468)
     (418,791)Reinsurance premiums
     (225,581)
     (297,351)
     (272,924)Premiums retained from insurance and pension plans
     44,887,215
     40,176,745
     34,315,543Changes in the insurance technical provisions and pension plans
     (20,001,807)
     (23,326,101)
     (18,212,405)Retained claims
     (15,484,691)
     (13,123,833)
     (11,168,612)Selling expenses for insurance and pension plans
     (2,468,088)
     (2,314,815)
     (1,859,208)Income from insurance and pension plans
     6,932,629
     1,411,996
     3,075,318Note: Data presented above include income from related parties outside the segment.(1)For additional information, see "Item 5.A. Operational Results".
  Insurance products and services We offer insurance products through a number of different entities, which we refer to collectively as "Grupo Bradesco Seguros." Grupo Bradesco Seguros is leader in the Brazilian insurance market.  Life and personal accident insurance We offer life and personal accident insurance, as well as insurance against miscellaneous events, such as job loss, through our subsidiary Bradesco Vida e Previdência. As of December 31, 2013, there were 25.8 million life insurance policyholders.  Health insurance The health insurance policies cover medical/hospital expenses. We offer health insurance policies through Bradesco Saúde and its subsidiaries for small, medium or large companies wishing to provide benefits for their staff. On December 31, 2013, Bradesco Saúde and its subsidiary Mediservice Administradora de Planos de Saúde S.A (“Mediservice”) had more than 4.1 million beneficiaries covered by company plans and individual/family plans. Approximately 82 thousand companies in Brazil pay into plans provided by Bradesco Saúde and its subsidiaries, including 52 of the top 100. Bradesco Saúde currently has one of the largest networks of providers of health services in Brazil. As of December 31, 2013, it included 9,976 laboratories, 13,211 specialized clinics, 15,038 physicians and 2,495 hospitals located throughout the country.   Bradesco47


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|Form 20-F |  |  | 
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Automobiles, property/casualty and liability insurance We provide automobile, property/casualty and liabilityinsurancethrough our subsidiary Bradesco Auto/RE. Our automobile insurance covers losses arisingfromvehicle theft,damageto thepassenger and third-party injury. Retail property/casualty insurance is for individuals, particularly those with residential and/or equipment related risks and small- and medium-sized companies whose assets are covered by multi-risk business insurance. Of the mass property/casualty lines for individuals, our residential note ("Bilhete Residencial") is a relatively affordable and highly profitable product. For corporate customers, Bradesco Auto/RE offers Bradesco Seguro Empresarial (business insurance), which is adapted to meet our customers' and business needs. For corporate property/casualty and liability insurance, Bradesco Auto/RE has an exclusive highly specialized team that provides large business groups with services and products tailor-made to the specific needs of each policyholder. Top sellers in this segment are insurance policies for transportation, engineering, operational and oil risks. As of December 31, 2013, Bradesco Auto/RE had 1.5 million insured automobiles and 2.2 million property/casualty policies and notes, making it one of Brazil’s main insurers.  Other Information Sales of insurance products We sell our insurance products through brokers in our branch network and through non-exclusive brokers throughout Brazil. Bradesco Seguros pays brokers' fees on a commission basis. As of December 31, 2013, 33,422 brokerspublicallyoffered our insurance policies. We also offer certain automobile, health, and property/casualty insurance products directly through our website.  Pricing Pricing of grouphealth insurance policies in Brazil is based onhistorical data relating to: (i)medical, hospital and dental care costs, as well as (ii) frequency of utilization per procedure. Actuarial studies for pricing health insurance also take into consideration the distribution and frequency of claims by age brackets of the insured population and by geographical area, along with the insurance coefficients adopted in accordance with best actuarial practices. The pricing of lifeinsuranceis usually based on life expectancy statistics, and in some cases, the frequency of the average amounts of claims actually made by the Brazilian population. Any amount exceeding the reinsurance agreement limit (facultative) is also transferred to reinsurance companies such as by IRB. The pricing of automobileinsurance depends on the frequency and severity of the claims made, and includes several factors such as place of use ofthevehicle and its specific characteristics.We alsofactor customer profiles intothe pricing ofautomobile insurance, in line with market practice. The profitability of automobile insurance largely depends on detecting and correctingthediscrepancy between premium levels and expected claim costs. Among other factors,premiums charged for damage insuranceforvehicles include the value of the insured automobile. Consequently, premium levels partially reflectthesalesvolumeof new automobiles. Pricing for the mass property/casualty insurance sector is also based on frequency and average amounts of claims, and on specific characteristics of the insured party's location. Pricing for corporate property/casualty insurance varies with the specific characteristics of each risk insured. Depending on the type of coverage and/or amount insured we may have to consult the reinsurance companies to obtain the basis for an insurance contract.  Reinsurance Brazilian regulations set retention limits on the amount of risk insurance companies may underwrite without having to purchase reinsurance. Under these regulations, risk underwritten by Bradesco Auto/RE is reinsured substantially with IRB if insured amounts exceed retention limits or if reinsurance is recommended for technical/actuarial decisions taken to minimize the risks of certain portfolios. In January 2007, Brazil's Congress enacted Supplementary Law No. 126/07, which abolished IRB-Brasil Re's monopoly and allowed three types of reinsurers referred to as "local," "admitted" and "occasional," thus opening up Brazil's reinsurance market for competition.Under the same supplementary law, IRBwas recognized as a local reinsurer and authorized to continue its operations and make any required adjustments in due course.    48Form 20-F – December 2013


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As of the end of 2007, CNSP and SUSEP issued a number of normative instructions containing rules for reinsurance, retrocession and intermediation business, based mainly on CNSP Resolution No. 168/07. To be registered as admitted or occasional reinsurers in Brazil, foreign-based reinsurance companies must meet certain requirements, such as having at least five years of experience in their country of origin, equity of at least US$100 million (admitted) or US$150 million (occasional), and certain minimum ratings from agencies Standard & Poor's, Fitch, Moody's or AMBest. For admitted reinsurers, these minimum ratings are as follows: BBB- (S&P/Fitch), Baa3 (Moody’s), or B- (AMBest); and for occasional reinsurers: BBB (S&P/Fitch), Baa2 (Moody’s), or B++ (AMBest). Through Decree No. 6,499/08, the President of Brazil set maximum limits forthecedingof premiumsto reinsurancecompanies in each calendar year. Forlocal insurers, such maximum limit was 10% of premiums, and forlocal reinsurers,50% of premiums. In the case of local insurers,CNSP Resolution No. 203/09 raised the limit from 10% to 25% in the case ofguaranteesfor public obligations and oil risks. Local reinsurers must be incorporated associedade anônimabusiness corporation in Brazil with capital of at least R$60 million. As of March 2011, under SUSEP Resolution No. 225/10, at least 40% of any insurers' ceded risk must be placed with local reinsurers for both treaty and facultative contracts. CNSP Resolution No. 241/11 enabled the transfer of risks as part of reinsurance or retrocession operations to reinsurers not authorized by SUSEP as long as the shortfall in the Brazilian reinsurance market's capacity has been shown and certain rules and limits are followed. On December 31, 2013 there were 111 reinsurers authorized to operate in the Brazilian market, including IRB and Lloyd's of London.Twenty-eightreinsurance brokerage firms have authorization to intermediate reinsurance and retrocession operations. Bradesco Auto/RE purchases reinsurance from a small number of reinsurers authorized by SUSEP and previously approved by itsDiretoria Executiva, and has IRB as its main reinsurer, having grantedIRB through December 31, 2013the leadership in all automatic agreements and 100% of optional agreements. These reinsurers are classified by SUSEP as local (IRB) or admitted (other), posting capital and rating above the minimum determined by the Brazilian legislation. We emphasize that practically all the property and casualty portfolios, exceptautomobiles, have reinsurance protection, of which the major portion is by means of proportionaland non-proportional plans,the latter being perrisk and/orperevent. The premium assigned in reinsurance, in relation to the premium issued by the insurance company, is relatively small. All re-insurance contracts are entered into directly with the re-insurer, without the intermediation of any reinsurance brokers, and they adopt the re-insurance contractual provisions prepared by the company’s technical and legal departments. In 2013, Grupo Bradesco Seguros reinsured approximately R$225.6 million in reinsurance premiums, a relatively small sum as compared to total premiums issued. Although reinsurance is accountable to assignors according to the reinsured sum, insurance companies are primarily accountable before their insured parties for the entire risk assumed.  Pension plans We have managed individual and corporate pension plans since 1981 through our wholly-owned subsidiary Bradesco Vida e Previdência, which is now the leading pension plan manager in Brazil, as measured by investment portfolio and technical provision criteria, based on information published by Fenaprevi and SUSEP. Bradesco Vida e Previdência offers and manages a range of individual and group pension plans. Our largest individual plans in terms of contributions known as VGBL and PGBL are exempted from withholding taxes on income generated by the fund portfolio. As of November 30, 2013, Bradesco Vida e Previdência accounted for 29.8% of the pension plan and VGBL market in terms of contributions, according to Fenaprevi. Also according to the same source, managed pension funds accounted for 29.5% of VGBL, 25.4% of PGBL and 43.2% of traditional pension plans in Brazil. As of November 30, 2013, Bradesco Vida e Previdência accounted for 32.1% of all supplementary pension plan assets under management, 30.5% of VGBL, 24.0% of PGBL and 51.9% oftraditional pension plans, according to Fenaprevi.    Bradesco49


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|Form 20-F |  |  | 
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Brazilian law currently permits the existence of both "open" and "closed" private pension entities. "Open" private pension entities are those available to all individuals and legal entities wishing to join a benefit plan by making regular contributions. "Closed" private pension entities are those available to discrete groups of people such as employees of a specific company or a group of companies in the same sector, professionals in the same field, or members of a union. Private pension entities grant benefits on the basis of periodic contributions from their members, or their employers, or both. We manage pension and VGBL plans covering 2.4 million participants, 62.4% of whom have individual plans, and the remainder of whom are covered by company plans. The company’s plans account for approximately 25.7% of our technical reserves. Under VGBL, PGBL and FAPI plans, participants are allowed to make contributions either in installments or in lump-sum payments. Participants in pension plans may deduct the amounts contributed to PGBL up to 12% of the participant's taxable income when making their annual tax declaration. Under current legislation, redemptions and benefits are subject to withholding tax. VGBL plan participants may not deduct their contributions when declaring income tax. At the time of redemption, or when benefits are paid out, tax will be levied on these benefits, pursuant to current legislation. VGBL and PGBL plans may be acquired by companies in Brazil for the benefit of their employees. In 2013, Bradesco Vida e Previdência managed R$74.1 billion in VGBL and R$19.4 billion in PGBL plans. Bradesco Vida e Previdência also managed R$25.9 billion in pension plans. Bradesco Vida e Previdência also offers pension plans for corporate customers that are in most cases negotiated and adapted to specific needs of the corporate customer. Bradesco Vida e Previdência earns revenues primarily from: ·pension and PGBL plan contributions, life insurance and personal accidents premiums and VGBL premiums; ·revenues from management fees charged to participants in accordance with mathematical provisions; and ·interest income.  Capitalization bonds Bradesco Capitalização offers its customers capitalization bonds with the option of a lump-sum or monthly contributions. Plans vary in value (from R$8 to R$50,000.00), form of payment, contribution period, and periodicity of draws for cash prizes of up to R$2.0 million (gross premiums). Customers’ contributions earn interest at a rate of TR plus 0.5% per month over the value of the mathematical provision,whichmay be redeemedby the shareholder at the end of thegrace period. As of December 31,2013,we had around 8.2 million "traditional" capitalization bonds and around15.2million incentive capitalization bonds. Given that the purpose of the incentive capitalization bonds is to add value to the products of a partner company or even to provide an incentive for its customer to avoid delinquency, the plans are for short terms and grace periods with low unit sales value.In 2013,Bradesco Capitalização had approximately23.4million capitalization bonds and 3.5 million customers. Bradesco CapitalizaçãowasBrazil ́s firstcompany in its market to receive the ISO 9001 Quality Management Certificate, and has preserved it since then. It has been certified since 2009 by Fundação Vanzolini in the ISO 9001:2008 versionfor the scope of“Management of Capitalization Bonds.” Bradesco Capitalização is the only company in its industry to have received a Standard & Poor’s (“S&P”) rating of “brAAA”, the highest rating in Brazil.  Treasury activities Our treasury department trading includes derivative transactions, mainly for economic hedging purposes (known as "macro-hedge"). Transactions such as these comply with limits set by our senior management and guidelines from our integrated risk control unit using a value-at-risk ("VaR") methodology. For more information about our VaR methodology, see "Item 11. Quantitative and Qualitative Disclosures About Market Risk-Value at Risk" and "Item 11. Quantitative and Qualitative Disclosures About Market Risk-Market Risk."  50Form 20-F – December 2013


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Distribution channels Our branch network is complemented by other distribution channels, such as: points of service, banking correspondents, ATMs, telephone banking services, and Internet and mobile banking. In introducing new distribution systems, we have focused on enhancing our security as well as increasing efficiency. By the end of 2013, we had 4,674 branches, 4,766 points of banking services and 46,851 banking correspondents (Bradesco Expresso) and 3,003 points of service outside of our own ATM network. For information on our international branches as of December 31, 2013, see "International banking services."  Specialized distribution of products and services As part of our distribution system, we have five areas that offer a range of different products and services on an individualized in all specific segments of our customer base. By segmenting the market, we aim to cater for different profiles and scales of customers, thus enhancing service and improving efficiency.  Bradesco Varejo Bradesco is present in 100% of municipalities in Brazil. The Bradesco Varejo service network comprises 4,258 branches, 3,577 banking and electronic points of service, 1,180 mini-branches and 46,851 Bradesco Expresso banking correspondent units, in addition to thousands of ATMs. Bradesco Varejo ́sfocus is onindividuals with monthly incomeof no more than R$9,000 and companieswith annual revenues of up to R$30.0 million.Individual customers with monthly income from R$4,000 to R$9,000 are known as Exclusive customers, and corporate customers,with annual revenues of up to R$30.0 million areknown asEmpresas e Negócios. The retail area provides customized services with adequatefinancial solutionsforeach profile. As of December 31, 2013, Bradesco Varejo provided assistance to over 25.5 million account holders. The service network makes products and services available even at remote or hard-to-reach areas and also at densely populated and low income communities, such as: Rocinha, Cidade de Deus, Rio das Pedras, Complexo do Alemão, Gardênia Azul, Cantagalo, Turano, Santa Marta, Mangueira and Chapéu Mangueira in Rio de Janeiro, and Heliópolis and Paraisópolis in São Paulo.  Bradesco Prime Bradesco Prime was created in May 2003 andits public target is high-income customers. Its mission is to be the bank of choice for these customers by focusing on quality relationships, and providing solutions for their needs through well-trained teams, adding shareholder and collaborator value while upholding our ethical and professional standards. Bradesco Prime offers the following value added services: ·Personalized services provided by relationship managers: experienced and skilled professionals with certification from ANBIMA, providing full financial advisory services and managing a small client portfolio; ·Exclusive facilities: Bradesco Prime customers have access to their own network of exclusive branches offering convenience and privacy to tend to their business affairs and can count on “Bradesco Prime Spaces” - a reserved and distinctive environment at Bradesco Varejo branches that fully maintains the segment's value proposition.Ournationwide branch network, including "Bradesco Dia & Noite" and "Banco24Horas” ATMsis also available to Bradesco Prime customers; ·Exclusive products and services: Bradesco Prime has a comprehensive set of differentiated products and services, such as internet banking (bradescoprime.com.br), call center (Fone FácilBradesco Prime), online advisors and investment funds, credit solutions with distinct rates, a diversified portfolio of insurance, pension plans and credit cards, among others; and ·Bradesco Prime loyalty program: introduced to further acknowledge and enhance customer relationships. By purchasing products and services, customers gain points that can beconverted into benefits such as 12 days of interest-free overdraft, or up to 40% reduced overdraft charges and up to 100% off the package of services.    Bradesco51


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|Form 20-F |  |  | 
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Present in all Brazilian capital cities,Bradesco Prime has beeninvesting in technology,improvement of relationships withcustomers and trainingofits professionalsthroughoutits entirehistory.  It has earned an outstanding position in the Brazilian market for banking services for high-income customers and has consolidated as the largest banking services provider for these customers in terms of its service network, with 304 branches and 400 Bradesco Prime Spaces strategically positioned. Since 2005, the Bradesco Prime Department has been certified by Fundação Vanzolini as “ISO 9001:2008” in the scope "Bradesco Prime Segment Management," thus showing our commitment to continuous improvement of processes and customer satisfaction.  Bradesco Private Bank Bradesco Private Bank was created in 2000 for the sole purpose of advising high net-worth individuals, family-owned holding companies and investment companies with high liquidity availability for investments. Bradesco Private Banking finds the most appropriate financial solution for each customer profile based on tailor-made basis focusing on asset allocation, tax guidance and estate planning. Bradesco Private Bank has offices located in São Paulo, Rio de Janeiro, Belo Horizonte, Blumenau, Brasília, Campinas, Caxias do Sul, Curitiba, Florianópolis, Fortaleza, Goiânia, Londrina, Manaus, Porto Alegre, Recife, Ribeirão Preto and Salvador.Bradesco Private Banking is supported by our international units in the Cayman Islands, New York and Luxemburg. Bradesco Private Bank earned “ISO 9001:2008” certification for "Customer Relationship Management with High Net Worth Individuals and Management of Integrated Solutions – São Paulo and Rio de Janeiro Offices." It also has the "GoodPriv@cy" (Data Protection Label– 2007edition, awarded byIQNet International Quality Network) for "Management of Privacy for Data Used in Relationships with High Net Worth Customers – São Paulo Unit.”  Bradesco Empresas Bradesco Empresas serves companies whose annual revenues range from R$30 million to R$250 million through its 71 business units strategically located in state capitals, as follows: Southeast (42), South (17), Mid-West (4), Northeast (6) and North (2). It also has 59 Espaços Empresas (spaces reserved for Bradesco Empresas) in strategic locations not heavily serviced by Bradesco Empresas. These are specially structured places for rendering services to economic groups within the segment. Bradesco Empresas offers top quality business management with products such as loans and advances, financing, investments, foreign trade, hedging transactions, cash management and structured transactions in capital markets to ensure customer satisfaction and good results for us. Bradesco Empresas manages funds totaling R$115.0 billion through loans and advances, deposits, funds and collections.  Bradesco Corporate Our Corporate segment was created in 1999 to serve companies posting annual revenues of more than R$250 million in most cases, served by a team of 143 with centralized relationship management offering both traditional and tailor-made products.     52Form 20-F – December 2013


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Branch Network The principal distribution channel for our banking services is the branch network. In addition to offering retail banking services, branches serve as a distribution network for all of the other products and services, including payment and collection management services, private banking services, credit cards and asset management products. We market leasing services through channels operated by the branch network, as well as through our wholly owned subsidiaries Bradesco Leasing and Bradesco Financiamentos. Bradesco Corretora and Bradesco Consórcios also offer our services of brokerage, trading and purchasing consortium services through our branches. Bradesco Vida e Previdência sells its products through 10,103independent agents nationwide, most of whom are based on our own premises. Compensation for these agents is commission-based.   Bradesco53


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|Form 20-F |  |  | 
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We sell our insurance products, pension plans and capitalization bonds through our website, through exclusive brokers based in our network of bank branches, and non-exclusive brokers throughout Brazil, all of whom are compensated on a commission basis. As of December 31, 2013, there were 33,422 brokers were offering our insurance policies to the public. Our capitalization bonds are offered through our branches, the Internet, our call center, ATMs and external distribution channels. The following table shows the distribution of sales of these products through our branches and outside our branches:  % of total sales, per product2013
     2012
     2011Insurance productsSales through the branches
     37.9%
     38.1%
     45.3%Sales outside the branches
     62.1%
     61.9%
     54.7%Pension plans productsSales through the branches
     86.1%
     83.7%
     76.8%Sales outside the branches
     13.9%
     16.3%
     23.2%Capitalization bondsSales through the branches
     82.1%
     79.6%
     84.1%Sales outside the branches
     17.9%
     20.4%
     15.9%
  Other distribution channels Bradesco Dia & Noite Digital channels The Bradesco Dia & Noite digital channels offer mobility and independence to customers so that they may expand their businesses with us. We aim to make the banking experience even more convenient, fast and safe. In addition to the traditional service channels, such as Self-Service, “Fone Fácil” (easy phone) and internet banking, customers and users have access to us via Bradesco Celular (mobile banking). People with disabilities and reduced mobility are provided with internet banking services for the visually impaired; personalized assistance for the hearing impaired using digital language atFone Fácil, Bradesco Celularfor the visually impaired; visual mouse for people with motor disabilities; and access to ATMs for customers with visual and physical disabilities,among others. We are presenton social networks,throughwhichwe monitor ourbrand, products and services,provideservices andinteractwith users.We werethe first bank to develop a Facebook access application, which enables making inquiries, payments, transfers andrequest of personal loanswhile navigating on the social network. In 2012, we introduced Bradesco Next, a fully digital and multitouch interaction facility developed to test new forms of banking service usage, formats and layouts. The strategy behind Bradesco Next is to develop new digital services that may be used in our branches.  Bradesco Celular (Mobile banking) We werethe first Brazilian institution tousemobile banking. Throughthis channel the customercancheck bank balances and statements, make payments, recharge prepaid mobilephones, make transfers, get loans, obtainquotesand follow stock purchase and sale orders, amongother things. Ourwebsite www.bradescocelular.com.brprovidesdetailed information on products and services. In 2013, 867.8 million transactions were carried out via Bradesco Celular. Additionally, Bradesco Celular alsoprovidesthe following services: ·Bradesco Direct Reload: a service that enables reloading credits for prepaid mobile phones with just a single call from the device itself, even if there are no credits available for making calls. This feature is currently available for mobile phone users who are registered customers of Brazilian mobile phone network operators, Vivo and Claro; ·SMS payments: previously-registered customers receive messages to schedule payments inadvance or make payments with their banking collection forms registered with the DDA or utility bills, by simply answering a SMS;    54Form 20-F – December 2013


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·InfoCelular (information on mobile phones): with this feature, our registered customers quickly and safely receive SMS messages reporting on banking transactions for their account in accordance with the period and amount they designate; ·Bradesco Net Empresa Celular (Bradesco Net Company Mobile Banking): made available for corporate customers using mobile phones to check bank balances and authorize transactions; ·Conta Bônus Celular Bradesco (Bradesco Mobile Bonus Account): in addition to providing access to a number of financial services, the amount of the monthly fee for the basket of services is converted into a prepaid mobile phone bonus credits; ·Token embedded in the mobile device: an innovative and pioneering service in the market, the embedded token provides an additional convenience option for our customers by enabling them to authenticate any transaction carried out on the device and other digital channels; and ·Bradesco Celular via SMS (SMS Banking): this service allows our customers to confirm balances, see their last three entries in a bank statement and reload credits for prepaid mobile phones via SMS.  Internet In 2011,we introduced a new version of our Internet Banking service, which included more than 50 innovations, in particular an “A” key for Quick Access, an Intelligent Payment feature which automatically recognizes the intended type of payment through a bar code, and a search box located on all pages. The PortalBradescohas 14 transactional sites for banking transactions and 48institutional sites, whichprovideinformation onthe Bank, guidanceon security, disclosure of social and environmental actions, andspecific investorpublications,among others. The institutional sites in turn have been restructured, whereby information and products/services were reorganized, contents simplified and language adapted to digital channels. In 2013ourcustomers, both individual and corporate, carried out 4.2 billiononlinetransactions.Ourcorporate customerscan useBradesco Net Empresa, which allows themto checktheir account balances online and carry out banking transactions and transfers quickly and safely.  Self-service network Our self-service network has 33,464 ATMs strategically distributed across Brazil, providing quick and convenient access to products and services. In addition toourATMs, customers can access the pooled network of 14,739 Banco24Horas machinesto effecttransactions such as cash withdrawals, statements, balance status queries, loans, payments of payment vouchers, transfersbetween Bradesco accounts and transfers to other banks. As of December 31, 2013,2.1 billion transactionswere conducted through ATMs. Wewere apioneer in Brazilin introducing abiometric reading system that identifies customers and authenticates ATM transactions through a sensor/invisible light beam capturing the image of the vascular pattern of the palm of the hand. This technology allows our customers to carry out transactions using onlytheircard and hand palm reading.  In addition, for greater convenience, customers may also withdraw cash and check balances without their card, simply using biometry and a six-digit password, so that transactions are carried out more easily and quickly. We believe, the biometric reading system is one of the world’s most advanced security technologies. This technology is available in 33,254 of our ATMs and in 6,344 ATMs of the Banco24Horas network. Based on an agreement with the INSS, thistechnologyallows retired customers and pensioners to perform “proof of life” with the use of automatic biometrics, without the need to go to a bank counter to submit documentation, thereby expediting the process.  Telephone services – Fone Fácil Fone Fácil is Bradesco’s telephone banking system. The customized service system, with financial experts and virtual servicing, makes Fone Fácil one of the most efficient service channels andwe haveone of the most awarded banking relationship centers in Brazil,whichis available to customers on a 24/7 basis.  Bradesco55


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Through this channel, the customer may acquire products, obtain information on their account, credit card, social security benefits, capitalization bonds and carry out a number of transactions, such as: checking account balances, bank statements, payments, transfers, credit transactions, investments, registering with the Bradesco Token into the mobile device, registering and disabling a four-digit password, cancellation and reissuing of cards, among other services. In addition to the customized digital service, customers have access, through a number of specific numbers, to several telephone service centers including service centers for: internet banking, Net Empresa, Consortium, Private Pension Plan, Bradesco Financiamentos andAlô Bradesco. During 2013, 364.2 million calls were registered, and 473.2 million transactions were completed.  Banking units in retail chains We have also entered into partnership agreements with retail chains, supermarkets, drug stores, grocery stores, and other retailers, to provide correspondent banking services (mostly to pay bills, withdraw cash from checking and savings accounts, and receive pension payments). These offices are staffed by employees of our business partners, but all credit decisions are made by our employees.  Integrated risk control The Integrated Risk Control Department is responsible for the following activities:  Risk management Risk management is of great strategic importance to us due to the increasing complexity of services and products and the globalization of our business.The improvementin this activity has enabled us to be the first and only bank in Brazil authorized by the Central Bank to use, since January 2013, internal market risk models, which were already used for management, in order to calculate the regulatory capital set forth in the Basel Accord. We seek to exercise control over risks in an integrated and independent manner, preserving and valuing collective decision-making, devising and implementing methodologies, models, measurement and control tools.We also promoteimprovement among employees at all levels, from the business areas to the Board of Directors. Ourrisk management process ensures that risks are proactively identified, measured, mitigated, monitored and reported, as required for the complexity of our financial products and the profile ofouractivities.  Risk Management Structure The structure of our risk management function consists of committees, responsible for assistingourBoard of Directors and theDiretoria Executivain making strategic decisions. The“Integrated Risk Management and Capital Allocation Committee” is responsible for advisingtheBoard of Directors on the performance of its roles in the management and control over risks and capital. The committee is assisted by the Capital Management Executive Committee and the executive committees for risk management of: a) Credit; b) Market and Liquidity; c) Operational; d) Grupo Bradesco de Seguros e Previdência; and e) Basel II Implementation. There are also executive committees for our business units, whose tasks include suggesting limits for exposure to their related risks and devising mitigation plans to be submitted to the Integrated Risk Management and Capital Allocation Committee and the Board of Directors.  Credit risk Credit risk is the possibility of losses associated with a borrower’s or counterparty’s failureto comply with theirrespective contractual obligations under the originally agreed terms. For purposes of risk management disclosure, we consider and consolidate all credit riskelements exposed, suchas the depreciation of loan agreements resulting from deterioration in the borrower's risk rating, the reduction in gains or remunerations, including benefits granted in renegotiations, recovery costs and other amountsrelated to the counterparty’s non-compliance with financial obligations.    56Form 20-F – December 2013


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Credit risk management is a continuous and evolving process of mapping, development, assessment and diagnosis through the use of models, instruments and procedures that require a high degree of discipline and control during the analysis of operations in order to preserve the integrity and independence of the processes. We monitorour exposure to credit risk, which mainly results from loans and advances, financial assets and derivative financial instruments. Credit risk also stems from financial obligations related to loan commitments and financial guarantees. In order to ensure the quality expected from the portfolio, committees monitor all relevant aspects of the process of lending, concentration, collateral requirements, maturities, and other aspects. Weaim to continually outline allthe activities that could potentially generate exposure to credit risk, as well as identifying managers, measurement and mitigation plans for those activities.  Credit Risk Management Process Credit risk management is conducted in an institution-wide, centralized manner. All exposure to risk is analyzed, measured, classified and monitored independently. The Credit Risk area participates in improving the customer risk rating models, following up large risks by periodically monitoring major delinquencies and the provisioning levels for expected and unexpected losses. The Credit Risk area continuouslyreviewsthe internal processes, including the roles and responsibilities, information technology training and requirements and periodic review of risk assessment, in order to incorporate new practices and methodologies. Corporate control and monitoring of our credit risk take place in the credit risk unit of the Integrated Risk Control Department. In the governance structure for risks, this department coordinates with the Credit Risk Management Executive Committee on discussions and implementation ofthe methodologies to measure thecredit risk. Relevant issues discussed by this committee are reported to the Integrated Risk and Capital Allocation Committee, which reports to the Board of Directors. In addition to the committee meetings, the business area holds monthlymeetingswith officers and heads of products and segments to ensure they are informed about the evolution of the portfolio of loans and advances, delinquency, losses, credit recovery, portfolio limits and concentrations, and other items. This information is also reported to the Audit Committee. The business areaalsotracks each internal or external event that may significantly impact credit risk for the organization such as mergers, bankruptcies or crop failures and monitors sectors of economic activity in which the company has most exposurerisks. Both the governance process and limits are validated by the Integrated Risk and Capital Allocation Committee, submitted for approval by the Board of Directors, and reviewed at least once a year.  Market Risk Market risk is the possibility of a loss of income due to fluctuating prices and rates resulting from mismatched maturities, currencies and indicators ofourasset and liability portfolios. This risk is identified, measured, mitigated,controlledand reported. Our profileof exposure to market riskis in line with guidelines established by the governance process, with limits thatare monitored on atimely and independentbasis. All transactions exposed to market risk are mapped, measured and classified according to probability and magnitude, withthe whole processapproved by the governance structure. Our riskmanagement process involves the participation of all levels of the organization, from business units to the Board of Directors. Market risk measurement and control are carried out throughstressmethodologies,Value at Risk (VaR), Economic Value of Equity (EVE), and sensitivity analysis, and limits for earnings management and financial exposure.The use of several methodologies to measure and evaluate risks is important, as they are always supplementary to each other and their combined use permits capturing different scenarios and situations.  Bradesco57


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|Form 20-F |  |  | 
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In line with corporate governance and in order to preserve and strengthen our management of market and liquidity risks, as well as to meet the requirements of CMN Resolution No. 3,464/07, the Board of Directors approved the Market and Liquidity Risk Management Policy, which is reviewed at least annualy by the relevant committees and the Board of Directors itself, providing the main operational guidelines for accepting, controlling and managing market and liquidity risk. In addition to this policy,we haveseveral specific rules that regulate the market and liquidity risk management process, including: ·classification of operations; ·reclassification of operations; ·trading in government or private securities; ·use of derivatives; and ·hedging.  Market Risk Management Process Our market risk management process is run on a corporate wide basis. This process involves several areas with specific duties,ensuring an efficient structure, with market riskmeasurement and control carried out on a centralized and independent basis. This process allowed us to bethe first and only financial institution in Brazil authorized by the Central Bank to use, as of January 2013, internal market risk models to calculate the needs for regulatory capital.The management process, approved by the Board of Directors, is alsoreassessedat least annually by the relevant committees and the Board of Directors itself.  Definition of limits Proposed market risk limits are validated by specific committees for approval by the Integrated Risk and Capital Allocation Committee, to be submitted to the Board of Directors depending on the characteristics of business, which are separated into the following portfolios: Trading portfolio: comprises all operations involving financial instruments, including derivatives, held-for-trading or used to hedge other instruments in the trading portfolio, which have no trading restrictions. Held-for-trading operations are those destined for resale, to obtain benefits from actual or expected price variations, or for arbitrage. The trading portfolio is monitored by limits of: ·risk; ·stress; ·results; and ·financial exposure.  Banking portfolio:comprises transactions not qualifying for our trading portfolio, deriving from our other businessesand their respective hedges. The banking portfolio is monitored by limits relating to: ·interest rate risk; and ·equities portfolio.  Market risk is controlled and monitored primarily by an independent business unit, the Integrated Risk Control Department, which calculates risk of outstanding positions on a daily basis, consolidates results and reports as required by the existing governance process. In addition to daily reports, exposures are discussed weekly bytheTreasury's Executive Committee, which assesses results and risks and discusses andvalidatesstrategies. Both governance process and limits are validated and reviewed at least once a year by the Integrated Risk and Capital Allocation Committee and submitted for approval by the Board of Directors.  58Form 20-F – December 2013


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For more information on how we evaluate and monitor market risk, see "Item 11. Quantitative and Qualitative Disclosures about Market Risk".  Liquidity risk Liquidity riskis represented by the possibility of the institution failing to effectively comply with its obligations, without affecting its daily operations and incurring significant losses, as well as the possibility of the institution to fail to trade a position at market price, due to its larger size as compared to the volume usually traded or in view of any market interruption. Understanding and monitoring this risk is crucial, especially for us to be able to ensure conditions to settle transactions in a timely and secure manner.  Liquidity Risk Management Process We manage our liquidity risk process on agroup-wide, centralized and independent basis with dailymonitoringofavailable funds, compliance with minimum liquidity levels, and contingency planning for high-stress situations. Ourpolicy for risk management and market liquidity is approved by the Board of Directors, whose objectives include ensuring standards, criteria and procedures to guarantee the establishment of the Minimum Liquidity Reserve (RML), as well as the strategy and action plans for liquidity crisis situations. The policy and controls we established fully comply with CMN Resolution No. 4,090/12. Our approved criteria and procedures determine the minimum liquidity reserve to be maintained on a daily basis and the types of assets considered as available funds. Additionally, we determine instruments for management of liquidity in normal and crisis scenarios, with strategies to be followed in each case. Our liquidity risk is managed by theTreasury Department, based on the positions provided by theback-office controls positions,whichprovides liquidity information to our management and monitors compliance with established limits. The Integrated Risk Control Department is responsible for themethodologyof measurement of liquidity reserve requirements, control over limits established by type of currency and company (including for non-financial companies), reviewing policies, standards, criteria, procedures, and drafting reports for new recommendations. Liquidity risk is monitored at meetings of the Treasury's Executive Committee, whichcontrolsliquidity reserves and maturity and currency mismatches. Additionally, monitoring activity is also conducted by the Risk Management and Market Liquidity Executive Committee, the Integrated Risk and Capital Allocation Committee and the Board of Directors.  Operational Risk Operational risk is the loss resulting from inadequate or faulty internal processes, people, systems and external events. This includes legal risk, but does not consider strategic and reputational risks.  Operational Risk Management Process We use a group wide, centralized and independent approach, with an emphasis on continuous improvement, to monitor the dynamic evolution of our business and minimize the existence of gaps that may compromise the quality ofthismanagement process, which is conducted within the following framework: ·jointly identifying events arising from operational risk events and reporting losses; ·standardizing the reporting format for various departments through the Internal Corporate Control Risk (ROCI) corporate system, developed for daily and/or monthly storage of operational risk event data; ·receiving, processing and reconciling data for entering in the corporate operational risk database; and ·using the database for statistical modeling of events to calculate operational VaR.    Bradesco59


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|Form 20-F |  |  | 
|--------- |  |  | 

Our operational risk has its corporate control and monitoring performed in the area of operational risk by ourIntegrated Risk Control department. It holds meetings with other departments to discuss subjects related to the management of operating losses and the effectiveness of controls implemented to mitigate existing and potential risks and new ones that may arise. This involves using a set of data, both internal and external, scenarios and indicators for continuous monitoring of unexpected events over a 1-year period. The Integrated Risk Control Department coordinates the Operational Risk Management Executive Committee, and relevant subjects are reported to the Audit Committee and subsequently the Integrated Risk Management and Capital Allocation Committee, which reports to the Board of Directors. The governance process is approved by the Board of Directorsandreviewed at least once a year.  Internal controls and compliance The efficacyofourinternal controlsis supported bytrained professionals, well-defined and implemented processes and a technology compatible with business needs. The Internal Control and Compliance Policy and the Internal Control System Rules are in line with the keycontrol frameworks,such as“COSO” –Committee of Sponsoring Organizations of the Treadway Commission and“COBIT” –Control Objectives for Information and Related Technology, which cover business and technology aspectsrespectively, complying withgood practices, regulations and applicable legislation. The existence, efficacy and enforcement of controls that ensure acceptable risk levels in our processes are certified by the Internal Control and Compliance Department, the results of which are conveyed to the Internal Controls and Compliance Audit Committees, as well as to the Board of Directors, with the purpose of providing reasonable assurance with regard to appropriately carrying out business transactions and achieving defined objectives, in accordance with external laws and regulations, internal policies, rules and procedures, and applicable codes of conduct and self-regulation.  Prevention of Money Laundering and Terrorism Financing We maintainspecific policies, principles, procedures and systems to prevent and/or detect the utilization ofour structure, products and services for money laundering and terrorist financing purposes. Wehave investedin trainingour employees withprogramsof varyingformats, such as manuals, videos, live and remote courses and specific lectures for the areas in which training is required. Any suspect or unusual cases identified are forwarded to the Committee on Assessment of Suspicious Transactions, composed of a number of areas, which assess the need for reporting to Regulatory Bodies. ThePrevention of Money Laundering and Terrorism Financing Programis supported by the Prevention and Combat of Money Laundering and Terrorism Financing Executive Committee, whichassesses effortsand the needto coordinateprocedureswith regulations defined by the regulating bodiesand bestdomestic and internationalpractices.  Independent validation of models We employ internal models to manage and measure risks and capital. They are developed based on statistical data or expertise by specialists, who support or work to structure critical topics and to provide conformity and agility to decisions. In order to detect, mitigate and control risks, the models are validated independently through a strict program of tests, the results of which, covering process adequacy aspects, governance and creating models and their assumptions, is conveyed to managers, to Internal Audit, to the Internal Control and Compliance Committee and to the Integrated Risk Management and Capital Allocation Committee.  Corporate security In September 2009, in order to reinforce our Information Security Management System, the Corporate Security Department was created. This Department reports to theDiretoria Executivaand hastechnologies and specialized teams to put in place and maintain preventive actions to protect information assets and to avoid fraud, protecting the information and system security that supports the business.    60Form 20-F – December 2013


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In addition to defining strategic information security standards, represented by an Information Security Management System, this department is also corporately in charge of issuing technical opinions and defining information security mechanisms to implement products, services or processes, with a view of protecting customer information. Among the main "Corporate Security Global Vision" responsibilities, we highlight the following: ·defining our system for data security management, based on our corporate policy for information security and a set ofcorporate rules,dealing with the principles of confidentiality, integrity and availability. The objective is to protect our information assets and those of our customers. These activities aresupplementedby awareness and traininginitiatives for employees based on the “Information Security Awareness and Education Corporate Program” and also by information security risk assessments inproducts, services and processes; ·our fraud-prevention and electronic-channel security areas are tasked with managing processes to detect and mitigate risks in order to prevent any financial losses or adverse effects toourimage. They monitor transactions on electronic service channels and track strategic and corporate actions in order to propose solutions to managers of technical and business areas, thus enhancing security to products and electronic service channel accesses; and ·the strategic and operating management of identity process and logical access to applications, aiming at protecting the system resources, in addition to working with the business units and technology, with the purpose of defining and restructuring automated controls and coordinating, on a corporate basis, all actions inherent in the access management.  Credit policy Our credit policy is focused on: ·ensuring the safety, quality, liquidity and diversification of asset allocation; ·pursuing flexibility and profitability in business; and ·minimizing risks inherent to loans and advances.  Our credit policy defines criteria for lending and setting operational limits. Credit decisions are made at the branch level and, if necessary, higher levels of authority including our Board of Directors depending on the rules in our internal policy. In reviewing loan applications, ourDiretoria Executivaalso approves the models for assessment and credit processes used by our branches and departments for each type of loan. Our transactions are diversified and target individuals and companies that show ability to pay and stay in good standing. In all cases, we aim to have them secured by appropriate collateral for risks involved, from the point of view of uses of funds and repayment periods, as well as risk ratings. The Central Bank’s risk rating system has nine categories ranging from "excellent" to "very poor." In conformity with our commitment to the ongoing development of our methodologies, the credit risk rating for our clients/economic groups is based on a range of seventeen levels, of which thirteen represent accrual loans. This provides more adherence to the requirements set forth in the Basel Accords. For more details, see "Item 4.B. Business Overview-Regulation and Supervision-Banking regulations-Treatment of loans and advances." The lending limits set for our branches reflect size and collateral provided for loans. However, branches have no authorization to approve an application for credit from any borrower who: ·is rated less than "acceptable" under our internal credit risk classification system(score and rating); ·has an outdated record; and ·has any significant reservation in records.  We have credit limits for each type of loan. We pre-approve credit limits for our individual and corporate customers and presently extend credits to the public sector only under very limited circumstances. In all cases, funds are only granted once the appropriate body has approved the credit line.  Bradesco61


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|Form 20-F |  |  | 
|--------- |  |  | 

We review the credit limits of our large corporate customers every 180 days. Credits extended to other customers, including individuals, small and midsized corporations, are reviewed every 90 days. Our maximum exposure per client (e.g. individuals, companies or other economic groups) is determined by client rating and the aggregate maximum exposure is limited to 10% of our shareholder ́s equity. Any cases in which the maximum level of exposure per client exceeds the thresholds as set out in the table below and in which the total exposure equals or exceeds R$1.2 billionare required tobe submittedtothe Board of Directorsfor approval.  Client Rating
     As a % of Shareholders ́ EquityAA1
     10AA2
     9AA3
     8A1
     7A2
     6A3
     5B1
     4B2
     3B3
     2C1
     1C2
     0.7C3
     0.5D
     0.3
  Our credit policy is continuously developing and as part of our risk management process, we continue to improve our credit granting procedures, including procedures to gather data on borrowers, calculate potential losses and assess applicable classifications. Additionally, we assess our institutional credit risk management in view of the recommendations by the Basel Accords, including: ·restructuring our methodology to calculate possible losses; ·identifying and implementing changes in our reporting processes to improve our loan portfolio management; ·restructuring our information control structure; and ·assessing the organizational structure of our loan assessment practices, including analyzing the demand for technology and addressing new issues.    62Form 20-F – December 2013


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Loans and advances to individual customers For individual customers, depending on the proposed collateral, the size of the branch and suitable credit parameters, branches may authorize loans of up to R$50,000. If value and type of collateral are not within the limits established for approval at the branch level, an application is submitted to the Credit Department and, if necessary, higher levels of authority. The following table shows individual loan limits for approval by branch managers, depending on the value and type of collateral offered.  Total Risk Amount
     R$ in thousandsLoan with no bona fide guarantee
     Loan with bona fide guaranteeDecision‐making authorityManager of very small branch (1)
     up to 5
     up to 10Manager of small branch (2)
     up to 10
     up to 20Manager of average branch (3)
     up to 15
     up to 30Manager of large branch (4)
     up to 20
     up to 50(1)Branch with total deposits equal to or below R$1,999,999;(2)Branch with total deposits equal to or between R$2,000,000 and R$5,999,999;(3)Branch with total deposits equal to or between R$6,000,000 and R$14,999,999; and(4)Branch with total deposits equal to or above R$15,000,000.
  We use a specialized credit scoring evaluation system to analyze these loans, allowing us to build a level of flexibility and accountability, besides standardizing the procedures in the process of analyzing and deferring loans. All models are constantly monitored and revised whenever necessary. Our Credit Department has a dedicated team developing models and working on the continuous improvement of these tools. We provide our branches with tools that allow them to analyze loans and advances for individual clients in a rapid, efficient and standardized manner and to produce the corresponding loan contracts automatically. With these tools, our branches can respond quickly to clients, keep costs low, and control the risks inherent to consumer credit in the Brazilian market. The following table shows limits established for approval of loans to individuals outside the discretion of our branches:  Total Risk Amount
     R$ in thousandsDecision‐making authorityCredit department
     up to 14,000Credit director
     up to 18,000Executive credit committee (Daily Meeting)
     up to 60,000Executive credit committee (Plenary Meeting)
     up to 2,000,000Board of Directors
     over 2,000,000
     Bradesco63


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|Form 20-F |  |  | 
|--------- |  |  | 

Loans and advances to corporate customers For corporate customers, depending on the collateral proposed, the size of the branch and suitability in terms of credit parameters, loans of up to R$400,000 may be approved at the branch level. If the collateral offered is not within the limits for approval at the branch level, the loan is submitted to the Credit Department and, if necessary, higher levels. The following table shows limits within which branch managers may approve business loans, depending on the amount and type of credit support offered:  Total Risk Amount
     R$ in thousandsLoan with no bona fide guarantee
     Loan with bona fide guaranteeDecision‐making authorityManager of very small branch (1)
     up to 10
     up to 60Manager of small branch (2)
     up to 20
     up to 120Manager of average branch (3)
     up to 30
     up to 240Manager of large branch (4)
     up to 50
     up to 400Manager of Bradesco Empresas branch (5)
     up to 100
     up to 400(1)Branch with total deposits equal to or below R$1,999,999;(2)Branch with total deposits equal to or between R$2,000,000 and R$5,999,999;(3)Branch with total deposits equal to or between R$6,000,000 and R$14,999,999;(4)Branch with total deposits equal to or above R$15,000,000; and(5)Branch with exclusive middle market companies.
  The following table shows limits established for approval of loans to corporate customers outside the discretion of our branches: Total Risk Amount
     R$ in thousandsDecision‐making authorityCredit department
     up to 14,000Credit director
     up to 18,000Executive credit committee (Daily Meeting)
     up to 60,000Executive credit committee (Plenary Meeting)
     up to 2,000,000Board of Directors
     over 2,000,000
  In order to serve customers' needs as soon as possible and securely, the credit department uses segmented analyses with different methodologies and instruments for credit analysis in each segment, in particular: ·in the "Varejo," "Prime" and "Private – Individuals" segments, we consider the individual's reputation and credit worthiness, profession, monthly income, assets (goods and real property, any liabilities or interests in companies), the bank indebtedness and history of their relationship with us, checking loans and advances for repayment dates and rates as well as and the guarantees involved; ·in the "Varejo – Corporate Customers" segment, in addition to the points above,we focus on the owners of the relevantcompany, as well as consideringthe period in business and the monthly revenues; ·in the "Empresas" (middle market) and "Corporate" segments, management capability, the company/group's positioning in the market, its size, the economic-financial evolution, cashflowcapability, and business perspectives, our analysis always includes the proponent, its parent company/subsidiaries, and the type of business; and  64Form 20-F – December 2013


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·this also includes analyses of social and environmental risk for projects that require customers to show compliance with social and environmental regulations and the Equator Principles, consisting of socioenvironmental criteria required as conditions for loans, which was introduced in 2002 by the International Finance Corporation (IFC), the World Bank's financial arm.  Deposit-taking activities Our principal source of funding is deposits from Brazilian individuals and businesses. As of December 31, 2013, our total deposits were R$218.2 billion, representing 28.5% of our total liabilities. We provide the following types of deposit and registration accounts: ·checking accounts; ·savings accounts; ·time deposits; ·interbank deposits from financial institutions; and ·accounts for salary purposes.  The following table shows total customer deposits and deposits from banks by type and source, as of the dates indicated: As of December 31,

   % of total deposits

   R$ in thousands2013

   2013

   2012

   2011(Restated)

   (Restated)From customersDemand deposits

   18.2%

   39,633,427

   37,684,247

   32,537,861Savings deposits

   37.0%

   80,717,805

   69,041,721

   59,656,319Time deposits

   43.9%

   95,866,825

   104,048,295

   124,425,870Deposits from banksDemand deposits

   0.5%

   986,310

   727,869

   583,233Interbank deposits

   0.4%

   963,855

   382,474

   519,786Total

   100.0%

   218,168,222

   211,884,606

   217,723,069
  Under monetary authority regulations, we must place a percentage of the demand deposits, savings deposits and time deposits we receive from our customers and deposits from leasing companies with the Central Bank as compulsory deposits, as follows: ·Demand deposits: we are required to deposit 44.0% of the average daily balance of demand deposits, collection of receivables, payment of taxes, third party funds in transit and obligations for the provision of payment services, exceeding R$44.0 million, in the Central Bank on a non-interest-bearing basis (which will increase to 45.0% as of July 2014). In December 2012, the Central Bank authorized the use of up to 20.0% of this balance to offer financing for the acquisition of certain capital assets, trucks, and export of consumable goods, among others, subject to certain conditions. This change was aimed at enabling a larger flow of funds into the market and encouraging the economy to grow; ·Savings deposits: each week we are required to deposit in an account with the Central Bank an amount in reserves equivalent to 20.0% of the total average balance of our savings account deposits. The account bears interest annually at (i) “TR” plus interest rate of 6.2% or (ii) Reference Rate (“TR”) plus 70% of the SELIC rate for funding carried out from May 4, 2012, when the SELIC rate is lower than 8.5%per annum;   Bradesco65


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|Form 20-F |  |  | 
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·Time deposits: we are required to deposit in an account with the Central Bank 20.0% of the amounts recorded under the following items: (a) time deposits; (b) leasing companies' CDIs; (c) currency exchange acceptance funds; (d) debentures; (e) securities issued by the bank itself; and (f) contracts assuming liabilities related to foreign transactions in excess of R$30.0 million. The amount required is collected in cash and we earn remuneration on the amount deposited at the SELIC rate, although the balance earning remuneration may not exceed the lesser of the following: (a) the amount required less deductions stipulated in rules issued by the Central Bank; and (b) the amount required multiplied by the following percentages: (i) 64.0% for the calculation period starting on July 1 and 12, 2013, respectively; (ii) 73.0% for the calculation period and compliance periods starting on November 11 and 22, 2013, respectively; (iii) 82.0% for the calculation period starting on January 13, 2014 and for the compliance periods starting January 24, 2014; and (iv) 100% for the calculation period starting on March 17, 2014, and for the compliance period starting on March 28, 2014. These percentages and dates have been frequently changed by the Central Bank, and may be subject to further changes without prior notice; and ·The amount required may be deposited after deduction of an amount equal to certain transactions made by banks, and this deduction is limited to 50.0% of the amount required. With this schedule, and by not remunerating a part of our time deposits, the intention of the Central Bank was to stimulate the investment by major banks in the acquisition of credit portfolios from smaller banks, since we are allowed to invest up to 50.0% of our compulsory time deposits for that purpose.  According to Circular no. 3,655/13, we are required to deposit each week in an account with the Central Bank an additional amount corresponding to (a) 11.0% of the average time deposits balance; and (b) 10.0% of the savings deposit average balance. Also according to this Circular, there is no compulsory deposit on demand deposits. This additional amount is provided in reserves and we earn interest at the SELIC rate. It should be highlighted that rules on additional deposits have been frequently changed by the Central Bank, and may be subject to further changes without prior notice. In February 2013, the Central Bank defined rules for financial cost collection on non-compliance with compulsory deposit, reserve or compulsory assignment requirements. The financial cost charged to institutions that failed to comply with these requirements were adjusted to the SELIC rate plus 4% per annum. Additionally, present Central Bank regulations require that we: ·allocate a minimum of 34.0% of cash deposits to providing rural credit (if we do not do so, we must deposit the unused amount in a non-interest-bearing account with the Central Bank); ·allocate 2.0% of demand deposits received to micro credit transactions; and ·allocate a minimum of 65.0% of the total amount of deposits in savings accounts to finance residential real estate or housing construction. Amounts that can be used to satisfy this requirement include direct residential real estate financings, mortgage notes, charged-off residential real estate or housing construction loans and certain other financings, all as specified in guidance issued by the Central Bank.  Savings deposits in Brazil pay interest at (i) the “TR” reference rate plus 6.2%per annum, or (ii) the Reference Rate (“TR”) plus 70% of SELIC rate for funding carried out from May 4, 2012, if the SELIC rate is lower than 8.5%per annumafter funds have been left on deposit for at least one calendar month by individuals or non-profit entities, and 90 days by profit-corporations. Income from individual savings accounts is exempt from income tax. CDBs pay either a fixed or a floating rate, which is typically a percentage of the interbank interest rate. The breakdown between CDBs at pre-fixed rates and floating rates varies from time to time, depending on the market's interest rate expectations. Demand deposits, deposits allowing withdrawal with prior notice, checking accounts providing investment opportunities, savings accounts deposits, term deposits with or without issue of certificates, mortgage notes, bills of exchange, mortgage notes and deposits in non-checking accounts used for recording and controlling the flow of funds referring to services from processing payments of salaries other payments, pension and other similar services are guaranteed, by the Credit Guarantee Fund, known as "FGC," (or “Fundo Garantidor de Créditos”) for up to R$250,000 per customer or deposit account, in the event of a bank being liquidated. We issue interbank deposit certificates (CDIs) to other financial institutions. Trading in these CDIs isrestricted to the interbank market. They are traded at a pre- or post-fixed rate for one day or longer terms.    66Form 20-F – December 2013


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Other funding sources Our other funding sources include capital markets, import/export operations and onlending. The following table sets forth the source and amount of our other funding sources as of the dates indicated:  As of December 31,
     R$ in thousands2013
     2012
     2011(Restated)
     (Restated)Funding SourcesReal estate credit notes
     5,995,699
     4,229,511
     2,143,931Agribusiness notes
     4,371,017
     3,894,203
     2,538,970Mortgage notes
     604,105
     826,843
     1,309,705Financial notes
     35,208,325
     28,220,510
     27,101,075Euronotes
     8,412,859
     10,761,614
     4,470,662Subordinated debt
     35,885,003
     34,851,714
     26,910,091Securities issued through securitization of payment orders and credit card receivables
     3,291,063
     3,619,412
     4,066,626Funding in the open market
     185,055,358
     175,646,854
     150,001,844Borrowings
     15,230,854
     8,111,101
     17,257,442Onlendings
     40,863,996
     36,075,056
     35,989,495Total
     334,918,279
     306,236,818
     271,789,841
  Our capital markets operations act as a source of funding to us through our transactions with financial institutions, mutual funds, fixed income and equity investment funds and foreign investment funds. As of December 31, 2013, 2012 and 2011, funding in the open market accounted for 55.3%, 57.4% and 55.2%, respectively of our other funding sources. These amounts include securities attached to repurchase agreements mainly comprising Brazilian government securities and corporate debt securities. This type of operation is usually short-term and volatile in terms of volume since they are directly impacted by market liquidity. In order to provide our customers with loans through onlending, including credit lines for import and export finance, we maintain credit relationships with various American, European, Asian and Latin American financial institutions. We conduct onlending operations where we act as the transfer agent for development agency funds, granting credits to third parties, which are in turn funded by development organizations. BNDES, the International Bank for Reconstruction and Development or IBRD and the Inter-American Development Bank or IDB are the principal providers of these funds. The lending criteria, the decision to lend and the credit risk are our responsibility and subject to certain limitations set by the bodies supplying the funds. We issued financial notes, a product that was introduced to the market at the beginning of 2010, aimed at meeting demand for long-term finance. These transactions are for individuals and companies that prefer better returns to liquidity. Longer repayment terms contribute to the desired lengthening of the repayment schedule for the banking system's liabilities, since average repayment periods have also become longer due to the growing share of housing finance and investments of the total loan portfolio.  Data processing We have available an up-to-date technological environment supported by a Data Center (CTI – Centro de Tecnologia da Informação) located in Cidade de Deus, Osasco, SP, with 11,900 sq. m in area, especially built to harbor information technology (IT) infrastructure and contains protections designed to ensure total availability of services offered by the Bank. Data is continually replicated in a Processing Center (secondary site) located at Alphaville, in the city of Barueri - SP, featuring equipment with enough capacity to take over the main system's activities in case of a problem at our Technology Center (CTI). All service channels have telecommunications services that work with either of the two processing centers. We hold annual exercises simulating situations in which our ITcenter is impeded in order to ensure that we have effective contingency structures, processes and procedures in place. All these exercises are monitored by our business managers. In addition to all backup copies of electronic files stored and maintained at our IT center, second copies are saved and maintained in the Alphaville Processing Center.    Bradesco67


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|Form 20-F |  |  | 
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Alphaville's IT infrastructure also houses all activities for developing application systems. If the public energy supply is interrupted, both centers have sufficient capacity to operate independently for 72 hours non-stop. After this period, Technology Centers can operate continuously if power generators are refueled. The IT structure is backed by processes implemented in light of the ITIL (IT Infrastructure Library) reference and applies recognized practices for IT service management. We haveintruder detection, antivirus and antispam systems designed to provide IT protection. Moreover,wecontinuouslyupgradethe security of our main software programs. We use web server digital certification and HSM 8000 cryptographic and ICSF coprocessor equipment. Periodic assessments of IT environments are made using specific tools for this purpose. Our safety tools monitor software, hardware and share information from stations and servers.In addition, we have asystem to prevent loss of data, which was developed to guaranteeprotectionto the Company’sdata and prevent unauthorized access to information. An independent auditing firm tests our IT protection systems on an annual basis. Our internet systems have a separate infrastructure, enabling different customer segments (individuals, corporate, staff) to use resources independently.  Seasonality Generally our consumer financing business (including our credit card business, financing of goods and others) has some seasonality, with increased levels of credit card transactions and financing of goods in the end of the year and a subsequent decrease of these levels at the beginning of the year. We also have some seasonality in our collection fees at the beginning of the year, which is when taxes and other fiscal contributions are generally paid in Brazil.  Competition We face significant competition in all of our principal areas of operation, since the Brazilian financial and banking services markets are highly competitive and have undergone an intensive consolidation process in the past few years. As of December 31, 2013, publicly owned financial institutions held 46.0% of the National Financial System's assets, followed by private sector locally owned financial institutions (taking into consideration financial conglomerates) with a 37.9% share and foreign-controlled financial institutions, with a 16.1% share. Public-sector financial institutions play an important role in the banking sector in Brazil. Essentially, they operate within the same legal and regulatory framework as private-sector financial institutions, except that certain banking transactions involving public entities must be made exclusively through public-sector financial institutions (including, but not limited to, depositing federal government funds or judicial deposits). As of December 31, 2013, according to Central Bank data, there were 173 financial conglomerates providing a wide range of services including: (i) 132 multiple banks; (ii) 22 commercial banks; (iii) 14 investmentbanks; (iv) 4development banks;and(v) 1savings bank (namelyCaixa Econômica Federal). For further information on risks related to competition, see "Item 3.D. Risk Factors-Risks Relating to Bradesco and the Brazilian banking industry-The increasingly competitive environment in the Brazilian bank and insurance industries may negatively affect our business prospects." On April 26, 2012, Circular No. 3,590 was issued, determining that the following transactions should be analyzed by the Central Bank with respect to their effects on competition, notwithstanding the review related to the stability of the financial system: (a) transfers of ownership control; (b) takeovers; (c) mergers; (d) business transfers; and (e) other means of business concentration. In August 2012, the National Monetary Council ("CMN") set out new requirements and procedures for incorporation, authorization for operations, cancellation of authorization, changes of control, corporate restructurings and conditions for exercising positions in statutory or contractual bodies.   68Form 20-F – December 2013


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Credit cards The credit card market in Brazil is highly competitive. Our primary competitors are Banco do Brasil, Itaú Unibanco, and Santander Brasil. Management believes that the primary competitive factors in this area are interest rates, annual fees, card distribution network and benefits offered.  Leasing In general, the Brazilian leasing marketis dominated by companies affiliated with vehicle and equipment producers and large banks. We currently enjoy certain competitive advantages, as we have a larger service network than any of our private sector competitors.  Asset management As of December 31, 2013, the asset management industry in Brazil managed funds worth R$2.5 trillion in shareholders ́ equity according to ANBIMA. BRAM held a R$305.3 billion portion of this as of December 31, 2013, representing growth of 6.2% as compared to the 12 previous months, and a 12.8% market share.  We are the leading institution as measured by the number of investment fund quotaholders (2.7 million). The shareholders’ equity of the funds under our management is divided into: investment funds (R$297.0 billion - fixed income with R$290.3 billion and R$6.7 billion in equities) and structured funds - R$8.3 billion). BRAM pursues a strategy of introducing innovative products as a manner of expanding management recognition, adding value to our brand name and assisting our customers. In 2013, we launched Brazil's first infrastructure debenture fund, with a tax benefit as provided under Law no. 12,431/11. Internationalization has also been a major part of BRAM’s strategy. In Japan, we continue offering fixed-income and equity funds, through partnerships with local distributors. In Chile, in addition to a partnership with Banchile for distributing equity funds to retail customers, we have started to focus on institutional investors. In Europe, the distribution team based in London, offers funds domiciled in Luxembourg, also with fixed-income and equity strategies, the highlight of which in 2013 was the equity fund of Latin American companies (LATAM). This year, BRAM also expanded access to these funds through its listing on various distribution platforms.  Additionally, at the end of the year BRAM US LLC launched two new retail funds for the U.S. public, including one that invests in international bonds issued by Brazilian companies. Aside from the strategy of attracting resources from foreign investors to funds dedicated to Brazilian and Latin American assets, in 2013 we expanded its offering of funds investing in foreign assets dedicated to Brazilian investors. The BRAM family of global funds already includes the equity funds Europa, Andes and Australasia, geared toward the private and institutional segments.  Insurance, pension plans and capitalization bonds Insurance sector As leader ofthe Brazilianinsurancemarket,with a24.2% market shareas of November 30, 2013, Grupo Bradesco Seguros faces growingcompetition fromseveral domesticand multinationalcompaniesin allbranches of this sector. Our principal competitors are Grupo Segurador Banco do Brasil and Mapfre, Itaú Unibanco Seguros S.A., Sul América Cia.Nacional de Seguros, Porto Seguros Cia. de Seguros Gerais, Caixa Seguros, Zurich Santander Previdência S.A. and Allianz, which account for a combined total of approximately 56.8% of all premiums generated in the market, as reported by SUSEP, in November 2013. In recent years, there has been a change in the insurance sector in Brazil, as foreign companieshave begunto form associations with national insurers. In this respect, the main competitive factors are price, financial stability, and recognition of the name and services provided by companies. With respect to services, competition primarily involves the ability to serve the branches that market such services, including the level of claims handling automation, and development of long-term relationships with customers. We believe that the penetration of our service network, present in all municipalities in Brazil, gives Grupo Bradesco Seguros a significant competitive edge over most insurance companies, thereby promoting cost savings and marketing synergies.


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Regarding the healthcare sector, although most insurance activities are carried out by companies with nationwide operations, there is also competition from companies that operate locally or regionally.  Pension plan sector TheBrazilian government'smonetary stabilizationpoliciesstimulated the pension plan sector and attracted new international players. With 29.7% of total contributions in the sector (SUSEP - November 2013), Bradesco Vida e Previdência's main competitive advantages are: the brand “Bradesco”, our extensive branch network, our strategyandour record of beinginthe forefrontofproduct innovation.  Capitalization bonds sector Bradesco Capitalização holds a 22.5%market share incapitalization bonds income and 22.5% in terms of technical provisions, according to SUSEP(SUSEP - November 2013).Among the competitive factors in the sector, we highlight theofferingoflow-cost products with ahigher number ofprizedrawings, security, financial stability,and brand recognitionby customers.  REGULATION AND SUPERVISION The basic institutional framework of the Brazilian Financial System was established in 1964 by Law No. 4,595/64, known as the "Banking Reform Law." The Banking Reform Law dealt with monetary, banking and credit policies and institutions, and created the CMN.  Principal financial institutions As of December 31, 2013, 8 financial conglomerates operated in Brazil, consisting of public-sector commercial and multiple-service banks controlled by federal and state governments (including Caixa Econômica Federal and Investment Banks) and 146 financial conglomerates consisting of private-sector commercial and multiple-service banks. For Brazilian regulatory purposes, insurance companies, private pension plans and capitalization bonds providers are not considered financial institutions.  Public-sector financial institutions Brazil’s federal and state governments control several commercial banks and financial institutions. The primary purpose of these institutions is to foster economic development. Government-owned banking institutions play an important role in the Brazilian banking industry. These institutions hold a significant portion of the banking system's total deposits and total assets and are the principal lenders of government funds to industry and agriculture. In the last ten years several public-sector multiple-service banks have been privatized and acquired by Brazilian and foreign financial groups. The principal government-controlled banks include: ·Banco do Brasil, under federal government control, which provides a full range of banking products to the public and private sectors. Banco do Brasil is the largest multiple-service bank in Brazil and the primary financial agent of the federal government; ·BNDES, a development bank wholly owned by the federal government, is the largest bank in terms of long-term loans for investments across all sections of the economy, focusing on mitigating social and regional inequality and protecting the environment; and ·Caixa Econômica Federal, a multiple-service bank wholly owned by the federal government which acts as the principal agent of the government-regulated housing finance system. Caixa Econômica Federal is ranked first among Brazilian banks in terms of savings accounts and housing finance.  Private sector financial institutions As of December 31, 2013, Brazil’s private-sector financial industry comprised: ·160 financial conglomerates (including commercial, investment and multiple-service banks) that provide a full range of commercial banking, investment banking (including underwriting and trading in securities), consumer finance and other services including fund management and real estate finance; and ·58 consumer credit companies, 115 securities dealers, 154 securities and foreign exchange brokerage firms, 28 leasing companies and 11 savings and loans associations/ real estate financing companies.    70Form 20-F – December 2013


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Principal regulatory agencies CMN CMN is responsible for overall supervision of monetary, credit, budgetary, fiscal and public debt policies. CMN has the following functions: ·regulating loans and advances granted by Brazilian financial institutions; ·regulating Brazilian currency issue; ·supervising Brazil's reserves of gold and foreign exchange; ·determining saving, foreign exchange and investment policies in Brazil; and ·regulating capital markets in Brazil.  In December 2006, CMN asked the CVM to devise a new "Risk-Based Supervision System" in order to: (i) identify risks to which the market is exposed; (ii) rank these risks in order of severity; (iii) establish mechanisms for mitigating these risks and the losses they might cause; and (iv) control and monitor the occurrence of risk events. Among other effects, this system provides for a fast-track reviewing process for the issuance of securities.  Central Bank The Central Bank is responsible for: ·implementing currency and credit policies established by the CMN; ·regulating and supervising public and private sector Brazilian financial institutions; ·controlling and monitoring the flow of foreign currency to and from Brazil; and ·overseeing the Brazilian financial markets.  The Central Bank’s chairperson is appointed by the president of Brazil for an indefinite term of office, subject to approval by the Brazilian senate. The Central Bank supervises financial institutions by: ·setting minimum capital requirements, compulsory reserve requirements and operational limits; ·authorizing corporate documents, capital increases, acquisition of interest in new companies and the establishment or transfer of principal places of business or branches (in Brazil or abroad); ·authorizing changes in shareholder control of financial institutions; ·requiring the submission of annual and semiannual audited financial statements, quarterly revised financial statements and monthly unaudited financial statements; and ·requiring full disclosure of loans and advances and foreign exchange transactions, import and export transactions and other directly related economic activities.      Bradesco71


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CVM The CVM is responsible for regulating the Brazilian securities markets in accordance with securitiesand capital-market policies established by CMN. The CVM is responsible for the supervision and regulation of equity funds. In addition, since November 2004, the CVM has had authority to regulate and supervise fixed-income asset funds. For more information, see "Regulation and Supervision – Asset management regulation."  Banking regulations Principal limitations and restrictions on activities of financial institutions Under applicable laws and regulations, a financial institution operating in Brazil: ·may not operate without the prior approval of the Central Bank and in the case of foreign banks, authorization by presidential decree; ·may not invest in the equity of any other company beyond regulatory limits; ·may not lend more than 25.0% of its regulatory capital to any single person or group; ·may not own real estate, except for its own use; and ·may not lend to or provide guarantees for: -­any individual that controls the institution or holds, directly or indirectly, more than 10.0% of its share capital; -­any entity that controls the institution or with which it is under common control, or any officer, director or member of the Fiscal Council and Audit Committee of such entity, or any immediate family member of such individuals; -­any entity that, directly or indirectly, holds more than 10.0% of its shares (with certain exceptions); -­any entity that it controls or of which it directly or indirectly holds more than 10.0% of the share capital; -­any entity whose management consists of the same or substantially the same members as its own executive committee; or -­its executive officers and directors (including their immediate families) or any company controlled by its executive officers and directors or their immediate families or in which any of them, directly or indirectly, holds more than 10.0% of share capital.  The restrictions with respect to related party transactions do not apply to transactions entered into by financial institutions in the interbank market.  Capital adequacy and leverage Brazilian financial institutions are subject to capital measurement and standards based on a weighted risk-asset ratio. The parameters of this methodology resemble the international framework for minimum capital measurements adopted for the Basel Accord. Financial institutions are also required to maintain their regulatory capital at a certain level. A financial institution’s regulatory capital is the sum of its Tier I and Tier II capital and is used to determine its operational limits. Tier I Capital is intended to ensure financial institution’s solvency, ensuring that its operation will be continuous, while Tier II Capital is contingent capital, subject to conversion into equity in case of insolvency. With Basel III becoming effective, Tier I Capital started to be divided into two new subgroups: (i) Principal Capital, comprising principally shares and reserves; and (ii) Additional Capital, comprising principally instruments that are analogous to hybrid capital and debt instruments. The CMN regulation that introduced Basel III in Brazil: (i) defined more strictly, and in more detail, instruments that may comprise each capital type; and (ii) provided for the deduction of certain items, as appropriate, from Principal Capital, Additional Capital and Tier II Capital, such as certain investments in other entities and non-controlling interests in the financial conglomerate. Pursuant to Resolution no. 4,193/13, as amended, regulatory capital minimum requirements until the end of 2015 correspond to the application of 11% on total risk-weighted assets. Minimum Tier I Capital requirements correspond to 5.5% of the risk-weighted assets until the end of 2014; while minimum Principal Capital requirements correspond to 4.5% of risk-weighted assets.    72Form 20-F – December 2013


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CMN regulationsprovide for the establishment of “Additional Principal Capital, which will work as the prudential buffer or "cushion" referred to in Basel III. By the end of the transitional period, in 2019, Additional Principal Capital will have to be 2.5 - 5% of risk-weighted assets. The amount will be determined by the Central Bank depending on economic conditions. Failure to comply with Additional Principal Capital rules will lead,subject to certain requirements,to restrictions affecting distribution of bonuses, profit sharing and compensation incentives associated withtheperformance of managers of institutions, distribution of dividends, repurchase of own shares and social capital reduction, when permitted pursuant to applicable laws. Financial institutions,except forcredit cooperatives, must keep consolidated accounting records (for calculating their capital requirements) of their investments in companies whenever they hold, directly or indirectly, individually or together with partners, a controlling interest in the investee companies. If their interest does not result in control of a company, financial institutions may choose to recognize the interest as equity in the earnings of unconsolidated companies instead of consolidatingsuch interests. Under certain conditions and within certain limits, financial institutions may include subordinated debt when determining their capital requirements in order to calculate their operational limits,provided thatthis subordinated debt complies with the following requirements: ·it must be previously approved by the Central Bank; ·it must not be secured by any type of guarantee; ·its payment must be subordinated to the payment of other liabilities of the issuer in the event of dissolution; ·it cannot be redeemed by act of the holder; ·it must have a clause allowing postponement of the payment of interest or redemption if this would cause the issuer to fail to comply with minimum levels of regulatory capital or other operational requirements; ·it must be nominative if issued in Brazil, and if issued abroad may be in any other form permitted by local legislation; ·if issued abroad, it must contain a clause for elected jurisdiction; ·it must have a minimum term of five years before redemption or amortization; ·it must be paid in cash; and ·its payment cannot be secured by any type of insurance any instrument that requires or permits payments between the issuer and the borrowing institution or that affects the subordinated status of the debt.  Brazilian financial institutionsare required to calculate their capital requirements on a consolidated basis with institutions that are part of their financial conglomerate up to December 31, 2014; and with institutions that are part of their prudential conglomerate, beginning as of January 1, 2015. The applicable regulation defines a prudential conglomerate as, among others, the following entities located in Brazil or abroad over which the institution has direct or indirect control: (i) financial institutions and other institutions authorized to operate by the Central Bank; (ii) consortium administrators; (iii) payment institutions that operate as credit card issuers or accrediting entities; (iv) organizations that acquire credit transactions, including real estate and credit rights; (v) insurance companies, reinsurance companies, capitalization organizations and open pension plan entities; and (vi) other legal entities headquartered in Brazil that are solely engaged in holding interests in the entities set out above.  Risk Weighting Pursuant to Circular No. 3,644/13, the Central Bank consolidated the risk weighting factors applied to different exposures in order to calculate capital requirement through a standardized approach. According to such rule, as amended, the risk weighting factors vary from 0% to 1,250% and should be applied tocreditrisks, depending on the nature and characteristcs of the exposure.   Bradesco73


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In addition, there are specific standards of the Central Bank to determine procedures to calculate the portion of risk-weighted assets related to other exposures. For more information on our capital ratio, see “Item 5.B - Liquidity and Capital Resources– Capital compliance - Basel III”.  Reserve requirements The Central Bank periodically sets compulsory reserve and related requirements for Brazilian financial institutions. The Central Bank uses reserve requirements as a mechanism to control liquidity in the Brazilian Financial System. Historically, the reserves against demand deposits, savings deposits and time deposits have accounted for almost all amounts required to be deposited with the Central Bank. In December 2010, the Central Bank introduced additional compulsory deposits and reserve requirements for savings, demand, and time deposits. In July 2011, the CMN consolidated and redefined rules for compulsory deposit requirements against short positions in foreign currency. In December 2011, the Central Bank approved a circular consolidating and redefining certain rules for compulsory reserve requirements for time deposits.The main changewas the inclusion of Brazilian Treasuries in the list of assets eligible for deduction from compulsory reserves for time deposits. In February and March 2013, respectively, the Central Bank defined and consolidated applicable standards: (i) to compulsory deposits on demand deposits; and (ii) additional reserve requirement on deposits raised by multiple banks, investment banks, commercial banks, development banks, savings banks, credit, financing and investment organizations, real estate credit organizations and savings and loan associations. Standards on compulsory deposits and additional reserve requirements are periodically altered by the Central Bank.For a summary of current requirements, see "Deposit taking activities." The total consolidated exposure of a financial institution in foreign currencies and gold cannot exceed 30.0% of its regulatory capital. In addition, if its exposure is greater than 5.0% of its adjusted net worth, the financial institution must hold additional capital at least equivalent to 100.0% of its exposure. Since July 2, 2007, the amount internationally offset in opposite exposures (purchases and sales) in Brazil and abroad by institutions of the same conglomerate is required to be added to the respective conglomerate's net consolidated exposure. In the past, the Central Bank has imposed restrictions on other types of financial transactions. These compulsory deposit requirements are no longer in effect, but they may be re-imposed in the future, or similar restrictions may be instituted. At the beginning of 2008, the Central Bank determined a new compulsory deposit requirement relating to deposits of leasing companies. Our leasing company invests most of its cash available for immediate investment in interbank deposit accounts with us. For more information on Central Bank restrictions see "Item 3.D. Risk Factors-Risks relating to Bradesco and the Brazilian banking industry."  Asset composition requirements Brazilian financial institutions may not allocate more than 25.0% of their regulatory capital to loans and advances (including guarantees) to the same customer (including customer's parent, affiliates and subsidiaries) or to securities from any issuer. They also may not act as underwriters (excluding best efforts underwriting) of securities issued by any one issuer representing more than 25.0% of their regulatory capital. Permanent assets (defined as property and equipment other than commercial leasing operations, unconsolidated investments and deferred assets) of Brazilian financial institutions may not exceed 50.0% of their regulatory capital. CMN issued rules in October 2008 requiring financial institutions to record: (i) rights on assets used for maintaining the institution's activities, including rights resulting from transactions that have transferred the benefit, risks and control of these assets to the institution, except for those covered by leasing agreements, in fixed assets; and (ii) restructuring expenses that effectively result in an increase in income of more than one fiscal year and do not constitute merely a reduction in costs or greater operational efficiency, in deferred assets. A subsequent rule further defined intangible assets, such as vested rights on non-material assets used for maintaining the institution's activities, including those corresponding to payroll services, income, salary, wages and retirement and pension payments, among others. In July 2011, the CMN published a rule requiring registration of assigned receivables and financialsettlement of assets authorized by the Central Bank.  74Form 20-F – December 2013


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As of January 2012, a rule issued by the CMN came into effect in line with IASB, which states different accounting criteria in cases of assignment of receivables or other financial assets depending on whether or not there is retention or transfer of risks and benefits in conjunction with the assigned asset.  Repurchase transactions Repurchase transactions are subject to operational capital limits based on the financial institution's equity, as adjusted in accordance with Central Bank regulations. A financial institution may only hold repurchase transactions in an amount up to 30 times its regulatory capital. Within that limit, repurchase operations involving private securities may not exceed five times the amount of the financial institution's regulatory capital. Limits on repurchase operations involving securities backed by Brazilian governmental authorities vary in accordance with the type of security involved in the transaction and the perceived risk of the issuer as established by the Central Bank.  Onlending of funds borrowed abroad Financial institutions and leasing companies are permitted to borrow foreign currency-denominated funds in the international markets (through direct loans or the issuance of debt securities) in order to on-lend such funds in Brazil. These onlendings take the form of loans denominated inreaisbut indexed to the U.S. dollar. The terms of the onlending transaction must mirror the terms of the original transaction. The interest rate charged on the underlying foreign loan must also conform to international market practices. In addition to the original cost of the transaction, the financial institution may charge onlending commission only. Furthermore, the amount of any loan in foreign currency should be limited to the sum of foreign transactions undertaken by the financial institution to which loan funds are to be directed. Lastly, pursuant to the Central Bank's Circular No. 3,434/09, the total of loans and advances made against these funds must be delivered to the Central Bank as collateral, as a condition for the release of the amount to the financial institution.  Foreign currency position Transactions in Brazil involving the sale and purchase of foreign currency may be conducted only by institutions authorized by the Central Bank to operate in the foreign exchange market. As of March 2005, the previously existing "Commercial" and "Floating"marketswere unified under a single foreign currency exchange regime (the "Exchange Market"), in which all foreign exchange currency transactions are concentrated. The unified Exchange Market provides for settlement in foreign currency of any commitments inreaiscontracted between individuals and/or legal entities resident in Brazil and individuals or legal entities resident abroad, by submitting the relevant documentation. Access to the Exchange Market may be granted by the Central Bank to multiple banks, commercial banks, investment banks, development banks, savings and loans entities, foreign exchange banks, development agencies, financing and investment associations, brokerage firms, securities dealers and currency-broker firms. Some foreign-exchange transactions may also be carried out by travel agencies and tourist hospitality organizations accepting foreign currency. The Central Bank currently does not impose limits on long positions in forex (i.e., in which the aggregate amount of foreign currency purchases exceeds sales) of banks authorized to operate in the Exchange Market. As of December 2005, the Central Bank no longer limited short positions in forex (i.e., in which the aggregate amount of foreign currency purchases is less than sales) for banks authorized to operate in the Exchange Market. Standards that address foreign exchange markets are frequently changed by CMN and the Central Bank. In March 2010, the Central Bank continued with the process of simplifying foreign exchange rules by consolidating existing rules and revoking others. These changes were designed to provide further transparency and standards for cross-border foreign exchange transactions. In December 2013, the Central Bank, with the intention of simplifying foreign exchange market standards, replaced the Foreign Exchange and Capital Market Regulation with four circular letters that address foreign exchange market regulation, foreign exchange transactions’ classification codes; international capitals; and payment and reciprocal credit agreements (CCR).  Bradesco75


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Registration of cross-border derivatives and hedging transactions and information on derivatives In December 2009, the Central Bank issued specific rules that became effective on February 1, 2010, requiring Brazilian financial institutions to register their cross-border derivative transactions with a clearing house regulated by the Central Bank and by the CVM. Specifically, cross-border derivative transactions must: (i) be registered within 2 business days and (ii) cover details of underlying assets, values, currencies involved, terms, counterparties, means of settlement and parameters used. In February 2010, registration rules were extended to cover hedging transactions in foreign OTC markets or exchanges. In November 2010, to facilitate management of derivatives-related risk incurred by financial institutions, the CVM stipulated that market participants should create mechanisms in order to share information on derivatives contracts traded or registered in their systems, subject to banking confidentiality rules.  Treatment of loans and advances According to the Central Bank, financial institutions are required to classify their loans and advances into nine categories, ranging from AA to H, based on their risk. These credit classifications are determined in accordance with Central Bank criteria relating to: ·the conditions of the debtor and the guarantor, such as their economic and financial situation, level of indebtedness, capacity for generating profits, cash flow, delay in payments, contingencies and credit limits; and ·the conditions of the transaction, such as its nature and purpose, the type, the level of liquidity, the sufficiency of the collateral and the total amount of the credit. In the case of corporate borrowers, the nine categories that we use are as follows:  Rating

   Our Classification

   Bradesco ConceptAA

   Excellent

   First‐tier large company or group, with a long track record, market leadership and excellent economic and financial concept and positioning.A

   Very Good

   Large company or group with sound economic and financial position that is active in markets with good prospects and/or potential for expansion.B

   Good

   Company or group, regardless of size, with good economic and financial positioning.C

   Acceptable

   Company or group with a satisfactory economic and financial situation but with performance subject to economic variations.D

   Fair

   Company or group with economic and financial positioning in decline or unsatisfactory accounting information, under risk management.
  A loan and advance operation may be upgraded if it has credit support or downgraded if in default. Doubtful loans are classified according to the loss perspective, as shown below:  Rating

   Bradesco ClassificationE

   DeficientF

   BadG

   CriticalH

   Uncollectible
  A similar nine-category ranking systemexists for transactions with individuals. Wegrade credit based on data including the individual's income, net worth and credit history, as well as otherpersonal data. Financial institutions should maintain a credit risk management structure compatible with the nature of their transactions and with the complexity of products and services offered, which should also beproportional to the institution's credit risk exposure.    76Form 20-F – December 2013


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For regulatory purposes, financial institutions are required to classify the level of risk of their loan operations according to Central Bank criteria, taking into consideration both the borrower and guarantors’ characteristics and the nature and value of the operation, among others, in order to identify potential provision for loan losses. This risk evaluation must be reviewed at least every six months for loans extended to a single customer or economic group whose aggregate loan amount exceeds 5.0% of the financial institution's regulatory capital, and once every 12 months for all loan operations, with certain exceptions. Past due loans and advances must be reviewed monthly. For this type of loan, regulatory provisions set the following maximum risk classifications:  Number of Days Past Due (1)
     Maximum Classification15 to 30 days
     B31 to 60 days
     C61 to 90 days
     D91 to 120 days
     E121 to 150 days
     F151 to 180 days
     GMore than 180 days
     H(1)These time periods are doubled in the case of loans with maturities in excess of 36 months.
  Financial institutions are required to determine, whether any loans must be reclassified as a result of these maximum classifications. If so, they must adjust their regulated accounting provisions accordingly. The regulations specify a minimum provision for each category of loan, which is measured as a percentage of the total amount of the loan and advance operation, as follows:  Classification of Loan
     Minimum Provision %AA
     -A
     0.5B
     1.0C
     3.0D
     10.0E
     30.0F
     50.0G
     70.0H(1)
     100.0(1)Banks must write off any loan six months after its initial classification as an H loan.
  Loans and advances of up to R$50,000 may be classified by the method used by the financial institution itself or the arrears criteria described above. Financial institutions must make their lending and loan classification policies available to the Central Bank and to their independent accountants. They are also required to submit information relating to their loan portfolio to the Central Bank, together with their financial statements. This information must include: ·a breakdown of the business activities and nature of borrowers; ·maturities of their loans; ·amounts of rescheduled, written-off and recovered loans;  Bradesco77


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·loan portfolio diversification by the loan classification; and ·non-performing loans.  The Central Bank requires authorized financial institutions to compile and submit their loans and advances portfolio data in accordance with several requirements. The Central Bank may allow discrepancies in these statements of up to 5.0% per risk level and 2.5% in the reconciled total.  Exclusivity in loans and advances to customers In January 2011, Central Bank Circular No. 3,522/11 prohibited financial institutions that provide services and loan transactions from entering into agreements, contracts or other arrangements that prevent or restrict the ability of their customers to access loans and advances offered by other institutions, including payroll-deductible loans. The purpose of this rule is to increase competition among credit providers and prevent exclusivity agreements between state-owned banks and government bodies with respect to payroll-deductible loans. While there is some uncertainty as to whether the new rules affect existing contracts, all new contracts are covered by the new regulations, allowing market competition and enabling employees in the public and private sectors to obtain payroll-deductible loans from any authorized financial institution.  Brazilian clearing system – (Sistema de Pagamentos Brasileiro, or “SPB”) The Brazilian clearing system was regulated and restructured under legislation enacted in 2001. These regulations are intended to streamline the system by adopting multilateral clearing and boost security and solidity by reducing systemic default risk and financial institutions' credit and liquidity risks. The subsystems in the Brazilian clearing system are responsible for maintaining security mechanisms and rules for controlling risks and contingencies, loss sharing among market participants and direct execution of custody positions of contracts and collateral by participants. In addition, clearing houses and settlement service providers, as important components to the system, set aside a portion of their assets as an additional guarantee for settlement of transactions. Currently, responsibility for settlement of a transaction has been assigned to the clearinghouses or service providers responsible for it. Once a financial transaction has been submitted for clearing and settlement, it generally becomes the obligation of the relevant clearinghouse and/or settlement service provider to clear and settle, and it is no longer subject to the risk of bankruptcy or insolvency on the part of the market participant that submitted it for clearing and settlement. Financial institutions and other institutions authorized by the Central Bank are also required under the new rules to create mechanisms to identify and avoid liquidity risks, in accordance with certain procedures established by the Central Bank. Under these procedures, institutions are required to: ·maintain and document criteria for measuring liquidity risks and risk management procedures; ·analyze economic and financial data to evaluate the impact of different market scenarios on the institution's liquidity and cash flow; ·prepare reports to enable the institution to monitor liquidity risks; ·identify and evaluate mechanisms for unwinding positions that could threaten the institution economically or financially and for obtaining the resources necessary to carry out such unwinds; ·adopt system controls and test them periodically; ·promptly provide the institution's management information and analysis for any liquidity risk identified, including any conclusions or measures taken; and ·develop contingency plans for handling liquidity crisis situations.  Financial institutions were positively affected by the restructuring of the Brazilian clearing system. Under the old system, in which transactions were processed at the end of the day, an institution could carry a balance, positive or negative, a situation which is no longer allowed. Payments must now be processed in real time,andsince March 2013, theamounts over R$1,000 are being processedby electronictransfersbetween institutions with immediately available funds. If a transaction is made using checks, an additional bank fee will be charged.   78Form 20-F – December 2013


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After a period of tests and gradual implementation, the new Brazilian clearing system started operating in April 2002. The Central Bank and CVM have the power to regulate and supervise the Brazilian payment and clearing system. In October 2013, Law no. 12,685/13 was enacted providing for payment arrangements and payment institutions that are part of SPB. In November 2013, in order to regulate this law: (a) the CMN established guidelines for the regulation, surveillance and supervision of payment institutions and payment arrangements that are part of SPB; and (b) the Central Bank: (i) defined requirements and procedures to authorize the establishment and operation, cancellation of authorization, control changes, structure of management positions, name and head office location, corporate reorganizations, conditions to hold management positions in payment institutions and authorization for financial institutions to provide payment services; (ii) created a regulation to govern, among others, provision of payment services in the ambit of payment arrangements that are part of SPB, and established criteria according to which payment arrangements will not be part of SPB, among others; and (iii) established rules on risk management, minimum capital requirements, governance of payment institutions, preservation of value and liquidity of payment account balances.  Liquidation of financial institutions In February 2005, the "New Bankruptcy Law" was approved, replacing the previous legislation that had been in effect since 1945. The main goal of the “New Bankruptcy Law” is to avoid viable companies being unable to honor their debt obligations. The New Bankruptcy Law seeks to do this by providing greater flexibility in plan reorganization strategies while giving creditors more guarantees. It also seeks to improve creditors' ability to recover through the judiciary system by promoting an agreement between the company and a commissioncomprisingcreditors. The New Bankruptcy Law is not currently applicable to financial institutions, and, accordingly, Law No. 6,024/74 governing intervention in and administrative liquidation of financial institutions is still applicable to us.  Intervention The Central Bank will intervene in the operations and management of any financial institution not controlled by the federal government if the institution: ·suffers losses due to mismanagement, putting creditors at risk; ·repeatedly violates banking regulations; or ·is insolvent.  Intervention may also be ordered upon the request of a financial institution's management. Intervention may not exceed 12 months. During the intervention period, the institution's liabilities are suspended in relation to overdue obligations, maturity dates for pending obligations contracted prior to intervention, and liabilities for deposits in the institution existing on the date intervention was ordered.  Administrative liquidation The Central Bank will liquidate a financial institution if: ·the institution's economic or financial situation is at risk, particularly when the institution ceases to meet its obligations as they fall due, or upon the occurrence of an event that could indicate a state of bankruptcy; ·management commits a material violation of banking laws, regulations or rulings; ·the institution suffers a loss which subjects its unsecured creditors to severe risk; or ·if, upon revocation of the authorization to operate, the institution does not initiate ordinary liquidation proceedings within 90 days, or, if initiated, the Central Bank determines that the pace of the liquidation may impair the institution's creditors.   Bradesco79


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As a consequence of administrative liquidation: ·lawsuits pleading claims on the assets of the institution are suspended; ·the institution's obligations are accelerated; ·the institution may not comply with any liquidated damage clause contained in unilateral contracts; ·interest does not accrue against the institution until its liabilities are paid in full; and ·the statute of limitations with respect to the institution's obligations is tolled.  Temporary special administration regime The temporary special administration regime, known as "RAET," is a less severe form of Central Bank intervention in financial institutions, which allows institutions to continue to operate normally. RAET may be ordered in the case of an institution that: ·repeatedly makes transactions contravening economic or financial policies under federal law; ·faces a shortage of assets; ·fails to comply with compulsory reserves rules; ·has reckless or fraudulent management; or ·has operations or circumstances requiring an intervention.  The adjudication of RAET does not affect the regular course of the institution's business operations, whichareallowed to continueas normal, with the institution being allowed toperform all operations to which it is authorized,enablingthe maintenance of the relationship with institution's creditors and debtors.Thereis no change in its undertakings with third parties, orwith respect toits debts, which continue to mature in the originally contracted terms.  Repayment of creditors in liquidation In the case of liquidation of a financial institution, employees' wages, indemnities and tax claims have the highest priority among claims against the bankrupt institution. In November 1995, the Central Bank created theFundo Garantidor de Créditos -FGC to guarantee the payment of funds deposited with financial institutions in case of intervention, administrative liquidation, bankruptcy, or other state of insolvency. Members of the FGC are financial institutions that accept demand, time and savings deposits as well as savings and loans associations. The FGC is funded principally by mandatory contributions from all Brazilian financial institutions accepting deposits from customers. The FGC is a deposit insurance system that guarantees a certain maximum amount of deposits and certain credit instruments held by a customer against a financial institution (or against member financial institutions of the same financial group). The liability of the participating institutions is limited to the amount of their contributions to the FGC, with the exception that in limited circumstances, if FGC payments are insufficient to cover insured losses, the participating institutions may be asked for extraordinary contributions and advances. The payment of unsecured credit and customer deposits not payable under the FGC is subject to the prior payment of all secured credits and other credits to which specific laws may grant special privileges. In December 2010, the CMN increased the maximum amount of the guarantee provided by the FGC from R$60,000 to R$70,000.In May 2013, this amount was raised again to R$250,000.Since 2006, it reduced the ordinary monthly FGC contribution from 0.025% to 0.0125% of the balance held in bank accounts covered by FGC insurance. According to CMN rules, the maximum value of the balance of such deposits is limited (with a maximum aggregrate of R$5 billionby December 31, 2014 or R$ 3 billion as of January 1, 2015) to:(a) for the balance of the deposits originally made without fiduciary assignment, the highest of the following amounts(i) the equivalent of twice the regulatory Tier I capital, calculated yearly on the base date June 30 earning interest monthly at the SELIC rate; (ii) the equivalent of twice the regulatory Tier I capital, calculated as of December 31, 2008, earning interest monthly at the SELIC rate as of May1, 2009; and (iii) the equivalent of the sum of balances in time deposits plus balances of bills of exchange held in the bank on June 30, 2008,earning interest monthly at the SELIC rate as of May 1, 2009; and (b) for the balance of the deposits made with fiduciary assignment, the following factors over the regulatory Tier I capital, calculated as of December 31 of the previous year, adjusted by the SELIC rate: (i) 1,6 as of June 1, 2013; and (ii) 2 as of January 1, 2014.    80Form 20-F – December 2013


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Furthermore, the limit on taking time deposits with special FGC guarantees without fiduciary assignment shall be reduced, in accordance with the following schedule: (i) forty percent (40%) from January 1, 2013; (ii) sixty percent (60%) from January 1, 2014; (iii) eighty percent (80%) from January 1, 2015; and (iv) one hundred percent (100%) from January 1, 2016. In May 2013 Resolution No. 4,222/13 was issued, amending and consolidating the rules addressing the FGC bylaws and regulation. In addition to increasing the maximum amount of the guarantee provided by the FGC to R$250,000, agribusiness credit notes (LCA) were included in credits guaranteed by FGC. Resolution no. 4,222/13 was changed on February 20, 2014. In August 2013, the Central Bank amended and consolidated the provisions related to the calculation basis and payment of common contributions by the FGC-associated institutions.  Internal compliance procedures All financial institutions must have in place internal policies and procedures to control: ·their activities; ·their financial, operational and management information systems; and ·their compliance with all applicable regulations.  The board of executive officers of a financial institution is responsible for implementing an effective structure for internal controls by defining responsibilities and control procedures and establishing corresponding goals and procedures at all levels of the institution. The board is also responsible for verifying compliance with all internal procedures. Our Bylaws include a provision for an internal controls and compliance committee composed of up to 12 members appointed by our Board of Directors.  Restrictions on foreign banks and foreign investment The Brazilian Constitution prohibits foreign financial institutions from establishing new branches in Brazil, except when duly authorized by the Brazilian government. A foreign bank duly authorized to operate in Brazil through a branch or a subsidiary is subject to the same rules, regulations and requirements that are applicable to any other Brazilian financial institution. The Brazilian Constitution permits foreign individuals or companies to invest in the voting shares of Brazilian financial institutions only if they have specific authorization from the Brazilian government. However, foreign investors without specific authorization may acquire publicly traded non-voting shares of Brazilian financial institutions or depositary receipts representing non-voting shares offered abroad. Any investment in common shares would depend on government authorization. In January 2012, the Central Bank authorized Bradesco to create an ADR program for its common shares in the U.S. market. As part of this authorization, the Central Bank increased the limit of foreign interest in Bradesco's capital stock from the current 14.0% to 30.0%.  Anti-money laundering regulations, banking secrecy and financial transactions linked to terrorism Under Brazilian anti-money laundering rules, which the Central Bank consolidated in July 2009 throughCentral BankCircular No. 3,461/09, as amended, financial institutions must: ·keep up-to-date records regarding their customers; ·maintain internal controls and records; ·record transactions involving Brazilian and foreign currency, securities, metals or any other asset which may be converted into money;  Bradesco81


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·keep records of transactions that exceed R$10,000 in a calendar month or reveal a pattern of activity that suggests a scheme to avoid identification; ·keep records of all check transactions; and ·keep records and inform the Central Bank of any cash deposits or cash withdrawals in amounts above R$100,000.  The financial institution must review transactions or proposals whose characteristics may indicate the existence of a crime and inform the Central Bank of the proposed or executed transaction. Records of transactions involving currency or any asset convertible to money, records of transactions that exceed R$10,000 in a calendar month, and records of check transactions must be kept for at least five years, unless the bank is notified that a CVM investigation is underway, in which case the five-year obligation may be extended. Pursuant to Circular No.3,461/09, amended by Circulars No. 3,517/10, No. 3,583/12andNo. 3,654/13,financial institutions must implement control policies and internal procedures. The policies must: (i) specify in an internal document the responsibilities of each of the organization's hierarchical levels;(ii) include the collection and registration of timely information about customers that makes it possible to identify the risks of occurrence of these crimes; (iii) define the criteria and procedures for selecting, training and monitoring the economic-financial status of the institution's employees; (iv) include a prior analysis of new products and services from the perspective of preventing these crimes; (v) be approved by the Board of Directors; and (vi) be broadly circulated internally. The procedures described herein shall be observed by our branches and subsidiaries in Brazil and abroad. Along with these policies, Circular No.3,461/09, as amended,also establishes additional norms related to keeping registration information up-to-date, keeping records of politically exposed individuals (either in Brazil or abroad), records of the beginning or continuation of business relations, records of financial services and transactions, records of deposits and clearance of checks deposited in other financial institutions, the use of fund transfer instruments, pre-paid card registrations, transfers of over R$100,000 in cash, and other transactions that require special attention. Likewise, rules to combat money laundering in international transferswere defined, including more detailed operational information requirements for payment orders, such as the name and identification document of the parties involved, address and bank account when applicable. Financial institutions shall also adopt measures toobtain informationabout methods and practices used by their correspondents abroad so as to prevent money laundering and terrorist financing practices, and report to government authorities whenever transactions with these characteristics are detected. Brazilian regulations list a number of potential money-laundering transaction characteristics, such as: transactions involving amounts that are incompatible with the professional, equity and/or earnings condition of the involved parties; operations evidencing default on behalf of third parties; transactions intended to create loss or gain with no economic grounds; transactions from or to countries or territories that do not apply the recommendations sufficiently or do not cooperate with the Brazilian financial activity control agencies; transactions paid in cash; transactions the complexity and risk level of which are inconsistent with the customer's technical qualification; and transactions involving non-resident parties, trustees and companies, private banking customers and politically exposed individuals. The CVM directed special attention to politically exposed individuals through Instruction No. 463/08 and consolidated inCentral BankCircular No. 3,461/09,which refer to individuals politically exposed who hold or held prominent public positions in Brazil or abroad during the past five years and their relatives and representatives. Such individuals include heads of state and government, senior politicians and civil servants, judges or high-ranking military officers, and leaders of state controlled enterprises companies or political parties, among others. Circular 3,654/13 expanded such list to include other members of the Judiciary, Legislative and Executive powers, as well as individuals who held or still hold relevant positions in foreign governments.  Financial institutions are required to adopt certain mechanisms in order to: (i) identify the final beneficiaries of each transaction; (ii) identify whether these politically exposed individuals are involved; (iii) monitor financial transactions involving politically exposed individuals; and (iv) pay special attention to people from countries with which Brazil maintains a high number of business and financial transactions, shared borders or ethnic, linguistic or political relations. In addition, this CVM regulation contains special provisions to control and prevent the flow of funds derived from, or for financing, terrorist activities. Also regarding the control of politically exposed individuals' activities and in light of the 2010 Brazilian elections for President, Governors, Senators, Federal and State Representatives, in March 2010, the Central Bank enacted rules that specifically address the opening, transacting with and closing of demand accounts for funds related to financing the 2010 election campaign. Those rules seek to avoid irregular use of said funds and illegal donations.    82Form 20-F – December 2013


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Financial institutions must maintain the secrecy of their banking operations and services provided to their customers. Certain exceptions apply to this obligation, however, such as: the sharing of information on credit history, criminal activity and violation of bank regulations, or disclosure of information authorized by interested parties. Banking secrecy may also be breached by court order when necessary for the investigation of any illegal act. On June 9, 2011 Law No. 12,414/11 was enacted, governing the set-up and consultation of data with credit scoring information on individuals and companies, in order to obtain a credit history, which could be used by institutions authorized to operate by the Central Bank.The provision of information by financial institutions was regulated by Resolution No. 4,172 of December 20, 2012. Government officials and auditors from the Brazilian Federal Revenue Service may also inspect an institution's documents, books and financial records in certain circumstances. In October 2008, the Central Bank broadened the reach of its rules for controlling financial transactions related to terrorism, so that operations carried out on behalf of, services provided to, or access to funds, other financial assets or economic resources belonging to or directly or indirectly controlled by, the following individuals or entities were required to be immediately reported to the Central Bank: (i) members of the Al-Qaeda organization, members of the Taliban and other individuals, groups, companies or entities connected with them; (ii) the former government of Iraq or its agencies or companies located outside of Iraq, as well as funds or other financial assets that might have been withdrawn from Iraq or acquired by Saddam Hussein or by other former Iraqi government senior officials or by the closest members of their families, including companies owned by, or directly or indirectly controlled by them or by individuals under their management; and (iii) individuals perpetrating or attempting to perpetrate terrorist actions or who take part in or facilitate such acts, entities owned or directly or indirectly controlled by such individuals, as well as by individuals and entities acting on their behalf or under their command. On July 9, 2012 Law No. 12,683/12 came into force, amending Law No. 9,613/98, and toughened the rules on money laundering offenses. According to the new law, any offense or misdemeanor – and not only serious offenses, such as drug traffic and terrorism – may be deemed as a precedent to the money laundering offense. Additionally, the law expands, to a great extent, the list of individuals and companies obliged to report transactions to COAF (Controlling Council of Financial Activities), including, among them, companies providing advisory or consulting services to operations in the financial and capital markets, under the penalty of fines of up to R$20 million.  In June 2013, the CVM enacted an instruction that conformed regulation of this government agency to Law no. 12,638/12, establishing the obligation to send to the regulatory or inspection agency information regarding the non-existence of suspect financial transactions and other situations that generate the need for communications.  Anticorruption Law In August 2013, Law no. 12,846/13 was enacted and regulates on civil and administrative liability of legal entities for performing acts against public management, either domestic or foreign. Based on this legal provision, legal entities shall be strictly liable, in both the administrative and civil spheres, for the practice of the harmful acts in their exclusive or non–exclusive interest or benefit. Law under discussion provides for fine penalty in an amount ranging from 0.1% to 20% of the gross revenues earned in the financial year preceding the financial year in which the administrative proceedings was commenced. For sanction application, the existence of internal mechanisms and procedures for integrity, auditing and encouragement to whistle-blowing as well as effective implementation of codes of ethics and conduct at the legal entity will be taken into consideration, among others. Change of independent accounting firm Under Brazilian regulations, all financial institutions must: ·be audited by an independent accounting firm; and ·the specialist in charge, officer, manager or audit team supervisor must be periodically replaced without the need to change the independent auditor firm itself. Rotation must take place after five fiscal years at most and replaced professionals may be reintegrated three years later. Terms of responsible specialists, officers, managers or audit team supervisors begin on the day the team begins work on the audit.   Bradesco83


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Each independent accounting firm must immediately inform the Central Bank of any event that may materially adversely affect the relevant financial institution's status. In March 2002, an amendment to the Brazilian Corporate Law gave the members of our Board of Directors veto rights over the appointment or removal of our independent accounting firm. For more details on appointment of directors see "Item 10.B. Memorandum and Articles of Incorporation-Organization - Voting Rights." For additional information on the auditors of the consolidated financial statements included in this annual report see “Item 16.C. Principal Accountant Fees and Services”.  Auditing requirements Because we are a financial institution and registered with the local stock exchange, we are obliged to have our financial statements audited every six months in accordance with the accounting practices adopted in Brazil (“BR GAAP”) applicable to institutions authorized to operate by the Central Bank. Quarterly financial information filed with the CVM is subject to review by our independent auditors.  Additionally, as required by CMN Resolution No. 3,786/09, we also are required to publish annual consolidated financial statements prepared in accordance with IFRS, accompanied by the opinion of an independent auditing firm. In January 2003, the CVM enacted regulations requiring audited entities to disclose information relating to their independent accounting firm's non-auditing services provided to the entity whenever such services accounted for more than 5.0% of the amount paid to the external auditors. The independent auditors must also declare to the audited company's management that their providing of these services does not affect the independence and objectivity required for external auditing services. In May 2003, the CMN enacted new auditing regulations applicable to all Brazilian financial institutions; which were revised in November 2003, January and May 2004 and December 2005. Under these regulations, we are required to appoint a member of our management to be responsible for monitoring and supervising compliance with the accounting and auditing requirements set forth in the legislation. Pursuant to this regulation, financial institutions having regulatory capital of more than R$1.0 billion, managing third party assets of at least R$1.0 billion or having an aggregate amount of third party deposits of over R$5.0 billion are also required to create an audit committee consisting of independent members. The number of members, their appointment and removal criteria, their term of office and their responsibilities must be specified in the institutions' bylaws. Our Audit Committee has been fully operational since July 1, 2004. The Audit Committee is responsible for recommending to management which independent accounting firm to engage, reviewing the company's financial statements, including the notes thereto, and the auditors' opinion prior to public release, evaluating the effectiveness of the auditing services provided and internal compliance procedures, assessing management's compliance with the recommendations made by the independent accounting firm, among other matters. Our Bylaws were revised in December 2003 to stipulate the existence of an audit committee. In May 2004, our Board of Directors approved the internal regulations for the Audit Committee and appointed its first members. In October 2006, the CMN enacted stricter requirements to be followed by the members of the Audit Committee. See "Item 16.D. Exemptions from filing requirements for Audit Committees." Since July 2004, we are required to publish a semi-annual audit committee report together with our financial statements. Our Audit Committee's first report was issued together with our financial statements for the second half of 2004. In September 2009, the Central Bank issued rules setting criteria for auditors on the latter's preparation of reports on the quality and compliance of the internal controls systems, and on non-compliance with legal and regulatory provisions. These norms, amended in January 2010, state that in addition to their regular auditing functions, auditors must assess the following items: (i) control environment; (ii) risk identification and assessment; (iii) controls adopted; (iv) information and communication policies; (v) forms of monitoring and improvement and (vi) deficiencies identified.  Regulation of operations in other jurisdictions We have branches and subsidiaries in several other jurisdictions, such as New York, London, Buenos Aires, Tokyo, the Cayman Islands, Hong Kong, Mexico and Luxembourg. The Central Bank supervises Brazilian financial institutions' foreign branches, subsidiaries and corporate properties, and prior approval from the Central Bank is necessary to establish any new branch, subsidiary or representative office or to acquire or increase any interest in any company abroad. In any case, the subsidiaries activities’ should be complementary or related to our own principal activities. In most cases, we have had to obtain governmental approvals from local central banks and monetary authorities in foreign jurisdictions before commencing business. In all cases, we are subject to supervision by local authorities.     84Form 20-F – December 2013


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Asset management regulation Asset management is regulated by the CMN and the CVM. In August 2004, the CVM issuedInstructionNo. 409/04 consolidating all previous regulationsapplicable to fixed-income asset funds and equity mutual funds. Prior to this ruling, fixed-income asset funds were regulated by the Central Bank, and equity mutual funds were regulated by the CVM. CVM Instruction no. 409/04 became effective on November 22, 2004.and was amended a few times since then. Pursuant to CVM limits and our Bylaws, our investment funds must keep their assets invested in securities and types of trades available in the financial and capital markets. Securities and all other financial assets in the investment fund's portfolio, must be registered directly with specific custody deposit accounts opened in the name of the fund except for open investment funds quotas. Such accounts must be held in registration and clearance systems authorized by the Central Bank, or certain custody institutions authorized by the CVM. In addition to the limitations specified in each financial investment fund's bylaws, they may not: ·invest more than ten per cent (10.0%) of their net assets in securities of a single issuer, if that issuer is (i) a publicly-held non-financial institution, or (ii) a federal, state, or municipal entity or (iii) another investment fund, except for equity funds; ·more than twenty percent (20.0%) of their net assets in securities issued by the same financial institution (including the fund administrator); ·invest more than five percent (5.0%) of their net assets if the issuer is an individual or corporate entity that is not a publicly-held company or financial institution authorized to operate by the Central Bank; and ·in the case of investment funds or fixed-income and multimarket participation funds, more than ten percent (10.0%) of their net assets in real estate investment funds, receivables investment funds or credit rights participation funds.  There are no limits when the issuer is the federal government. For the purposes of these limits, the same issuer means the parent company, companies directly or indirectly controlled by the parent and its affiliates, or companies under common control with the issuer. Depending on the composition of their assets, investment funds and funds of funds are classified as follows: ·Short-term funds – These funds invest exclusively in public, federal or private bonds pegged to the SELIC rate or another interest rate, or to price indices, and have a maximum maturity of 375 days and an average portfolio period of less than 60 days. Short-term funds may use derivatives only to hedge their portfolios and may enter into repo agreements backed by federal government bonds; ·Referenced funds – their name must state their benchmark indicator on which the financial asset structure of their portfolio is based (i) at least 80.0% of their net assets, separately or together, must be invested in (a) bonds issued by the Brazilian National Treasury and/or the Central Bank or (b) fixed-income securities from low credit-risk issuers; (ii) they stipulate that at least 95.0% of their portfolio must be composed of financial assets that directly or indirectly track the variation of a specified performance indicator (benchmark); and (iii) they may use derivatives only for hedging cash positions, limited to the amount of the latter; ·Fixed-income funds – These funds have at least 80.0% of their asset portfolios directly related to fixed-income assets or synthesized through derivatives;  Bradesco85


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·Equity funds – These funds have at least 67.0% of their portfolio invested in shares listed and traded on exchange or in organized over the counter markets; ·Forex funds – These funds have at least 80.0% of their portfolio invested in derivatives or other funds comprised of derivatives which hedge foreign currency prices; ·Foreign-debt funds – These funds have at least 80.0% of their net assets invested in Brazilian foreign-debt bonds issued by the federal government, and the remaining 20.0% in other debt securities transacted in the international market; and ·Money market funds – These funds must have an investment policy that involves several risk factors, without a commitment to concentration in any particular factor or in factors differing from the other classes stipulated in the classifications of the funds listed above.  Qualified investor funds require a minimum investment of R$1 million per investor and are subject to concentration limitations per issuer or per type of asset (while obeying the investment parameters for type of fund as described above), as long as this is stated in their bylaws. In addition, CVM Instruction No. 409/04 states that funds may hold financial assets traded abroad in their portfolios as follows: (i) for foreign-debt funds and qualified investor funds that stipulate this possibility, there is no limit; (ii) for multimarket funds, up to 20% of net assets; and (iii) for other funds, up to 10% of net assets. In addition to funds provided for in CVM Instruction no. 409/04, there are specific standards that regulate other types of funds, includingprivate equity funds (FIPs –Fundos de Investimento em Participações);investment funds in shares of private equity funds;Receivable funds (FIDCs – Fundos de Investimento em Direitos Creditórios);Receivable fundsin the ambit of the Program to Incentive Implementation of Projects of Social Interest; Investment Funds in Shares ofReceivable funds; Financing Funds of the National Movie Industry; Privatization Mutual Funds – FGTS; Privatization Mutual Funds – FGTS – Free Portfolio; Investment Funds in Emerging Companies; Index Funds with Shares traded in Stock Exchanges or Organized Over-the-Counter Market; Mutual Investment Funds in Emerging Companies- Foreign Capital; Conversion rights; Real Estate Investment Funds; Privatization Fund – Foreign Capital; Incentive Shares Mutual Funds; Cultural and Artistic Investment Funds; Investment Fund in Innovative Emerging Companies; Programmed Individual Retirement Funds – FAPI; and Non-Standardized Credit Rights Investment Funds.  Regulation of brokers and dealers Broker and dealer firms are part of the National Financial System and are subject to CMN, Central Bank and CVM regulation and supervision. Brokerage and distribution firms must be authorized by the Central Bank and are the only institutions in Brazil authorized to trade on Brazil's stock exchanges and commodities and futures exchanges. Both brokers and dealers may act as underwriters for public placement of securities and engage in the brokerage of foreign currency in any exchange market. Brokers must observe BM&FBOVESPA rules of conduct previously approved by the CVM, and must designate an executive officer responsible for observance of these rules. Broker and dealer firms may not: ·with few exceptions, execute transactions that may be characterized as the granting loans to their customers, including the assignment of rights; ·collect commissions from their customers related to transactions of securities during the primary distribution; ·acquire assets, including real estate properties, which are not for their own utilization; or ·obtain loans from financial institutions, except for: (i) loans for the acquisition of goods for use in connection with the firm's corporate purpose; or (ii) loans for amounts not more than twice the firm's net assets.  Broker and dealer firms' employees, managers, partners, controlling and controlled entities may trade securities on their own account only through the broker they are related to.  86Form 20-F – December 2013


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Leasing regulation The basic legal framework governing leasing transactions is established by Law No. 6,099/74, as amended (the "Leasing Law") and related regulations issued periodically by the CMN. The Leasing Law provides general guidelines for the incorporation of leasing companies and the business activities they may undertake. The CMN, as regulator of the Financial System, is responsible for issuing Leasing Law related regulations and overseeing transactions made by leasing companies. Laws and regulations issued by the Central Bank for financial institutions in general, such as reporting requirements, capital adequacy and leverage regulations asset composition limits and treatment of doubtful loans, are also applicable to leasing companies.  Insurance regulation The Brazilian insurance business is regulated by Decree Law No. 73/66, as amended, which created two regulatory agencies, the National Private Insurance Council, or "CNSP," and SUSEP. SUSEP is responsible for implementing and overseeing CNSP's policies and ensuring compliance with such policies by insurance companies, insurance brokers and insured individuals. Insurance companies require government approval to operate, as well as specific approval from SUSEP to offer each of their products. Insurance companies may subscribe policies only through qualified brokers. Insurance companies must set aside reserves in accordance with CNSP criteria. Investments covering these reserves must be diversified and meet certain liquidity criteria, rules for which were consolidated byCNSPResolution No. 226/10, as amended, solvency and security criteria. Insurance companies may invest a substantial portion of their assets in securities. As a result, insurance companies are major investors in the Brazilian financial markets and are subject to CMN rules and conditions for their investments and coverage of technical reserves. Insurance companies may not, among other activities: ·act as financial institutions by lending or providing guarantees; ·trade in securities (subject to exceptions); or ·invest outside of Brazil without specific permission from the authorities.  Insurance companies must operate within certain retention limits approved by SUSEP pursuant to CNSP rules. These rules reflect the economic and financial situation of insurance companies and the conditions of their portfolios. Insurers must also meet certain capital requirements as as provided by SUSEP regulations. In 2007, Complementary Law No. 126/07 created a new policy for reinsurance (whereby underwriters obtain secondary insurance for the risks that they are insuring), retrocession and intermediation in Brazil. In practical terms, this law ended IRB's monopoly in reinsurance and retrocession with regulatory duties and activities originally attributed to IRB transferred to CNSP and SUSEP. Under Complementary Law No. 126/07, the ceding party, (local insurer or reinsurer) must offer local reinsurers preference when contracting reinsurance or retrocession to the extent of the following percentages of risks ceded: (i) 60% in the first three years as of January 16, 2007 and (ii) 40% in subsequent years. Under SUSEP Resolution No. 225/10, insurance companies must have contracts with local reinsurers for at least 40% of ceded reinsurance in facultative or automatic contracts. The new rule will apply to existing automatic contracts upon renewal or as of March 31, 2012, whichever is earlier. The new law also places more severe restrictions on ceding risk to foreign reinsurance companies and contracting of insurance abroad. Insurance companies must reinsure amounts exceeding their retention limits. CNSP Resolution No. 232/11 prohibited a local insurance or reinsurance company from transferring more than 20% of each policy premium to their foreign affiliates. This restriction does not apply to the guarantee business, nuclear risks and risks related to export credit, rural credit and domestic credit, which are subject to different legal requirements and regulations. In 2013, CNSP issued Resolution No. 302/13 which regulates the minimum capital requirement and to solvency regularization plans for insurance companies, capitalization bond entities, open pension plan entities and local reinsurance companies.The main changes in such regulation were the following:  Bradesco87


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·consolidation of the correction plans and the plans of solvency recovery into a single plan, as the solvency regularization plan (“PRS”); ·establishment of a liquidity minimum ratio (20%) over the minimum capital requirement  , so that the companies can promptly react to unexpected losses incurred by their capital; ·changes to the base capital for open pension plan entities constituted as business corporations; and ·exclusion of all references to solvency margin, once all risk portions were already established in the capital requirement rules.  Insurance companies are exempt from ordinary financial liquidation procedures in case of bankruptcy, and instead follow the special procedure administered by SUSEP. Financial liquidation may be either voluntary or compulsory. As was already the case in relation to entities subject to CMN, SUSEPissuedrules in December 2008 with specific internal controls for preventing and fighting money laundering crimes. These rules include a series of provisions on notifying proposed transactions with politically exposed individuals and suppression of terrorist financing activities.These rules were amended and consolidated by Circular No. 445/12. There is currently no restriction on foreign investment in insurance companies.  Health insurance Private health insurance and health plans are currently regulated by Law No. 9,656/98, as amended, which we refer to as the "Health Insurance Law," containing general provisions applicable to health insurance companies and the general terms and conditions of agreements entered into between health insurance companies and their customers. The Health Insurance Law establishes, among other things: ·mandatory coverage of certain expenses, such as those arising from preexisting conditions; ·prior conditions for admission to a plan; ·the geographical area covered by each insurance policy; and ·the pricing criteria plans may use.  The ANS is responsible for regulating and supervising supplemental health services provided by health insurance companies pursuant to directives set forth by the Supplemental Health Council (Conselho de Saúde Suplementar). Until 2002, SUSEP had authority over insurance companies, which were authorized to offer private health plans. Since 2002, pursuant to ANS regulations and supervision, only operators of private health plans may offer such plans. We created Bradesco Saúde in 1999 to fulfill this requirement.  Private pension plans Open pension plans are subject, for purposes of inspection and control, to the authority of the CNSP and the SUSEP, which are under the regulatory authority of the Ministry of Finance. The CMN, CVM and Central Bank may also issue regulations pertaining to private pension plans, particularly related to assets guaranteeing technical reserves. Private pension entities must set aside reserves and technical provisions as collateral for their liabilities. Open pension plans and insurance companies have been allowed to create, trade and operate investment funds with segregated assets since January 2006. Notwithstanding the above, certain provisions of Law No. 11,196/05 will only become effective when SUSEP and CVM issue regulatory texts.In September 2007, CVM issued Instruction No. 459, which addresses the set up, management, operation and disclosure of information on investment funds exclusively related to supplementary pension fund plans. In January 2013, the CMN determined new rules to govern the application of reserves, provisions and funds of insurance companies, capitalization companies and open supplementary pension fund entities.For more information, see "Regulation and Supervision-Asset Management Regulation."  88Form 20-F – December 2013


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| |  |  | Form 20-F
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Regulation of Internet brokerage services The CVM approved regulations on Internet brokerage activities, which may be carried out only by registered companies. Brokers' web pages must contain details of their systems, fees, security and procedures for executing orders. They must also contain information about how the market functions generally and the risks involved with each type of investment offered. Brokers that carry out transactions over the Internet must guarantee the security and operability of their systems, which must be audited at least twice a year.  Taxation IOF (Tax on Financial Transactions) Tax on Financial Transactions (Imposto Sobre OperaçõesFinanceiras, or IOF) is a tax on loans and advances, foreign exchange transactions, insurance and trading in securities. The Minister of Finance sets the rate of the IOF subject to a 25.0% ceiling. Although the taxpayer is the one conducting the financial transaction subject to taxation, the tax is collected by the financial institution involved. IOF is levied on the following main types of transactions: (i) foreign exchange transactions; (ii) bonds and securities transactions; (iii) loan transactions; and (iv) insurance transactions.  IOF on foreign exchange transactions IOF may be levied on a variety of forex transactions, including the conversion of Brazilian currency into any foreign currency for the payment of dividends and repatriation of capital invested in our ADSs. The general IOF rate on forex transactions is 0.38%, but 0% on forex transactions of an interbank nature or for the payment of dividends and interest on equity to foreign investors. IOF is also 0% for converting incoming funds or funds leaving the country in the form of foreign borrowing or financing. SinceDecember 2012, the tax rate upon settlement of foreign exchange operations related to the flow of funds into the country is 6%, including those operations carried out by way of simultaneous operations related to foreign loans subject to registration with the Central Bank, raised directly or through the issuance of securities in the international market, with the minimum average period of 360 days. If the repayment term of the loan is higher than 360 days the IOF rate of these operations is reduced to 0%. Since June 2013, the IOF rate of foreign exchange operations related to the flow of funds into the country, including through simultaneous operations carried out by foreign investors for investment in the Brazilian financial and capital markets is 0%. Foreign exchange transactions to obtain return from funds invested by foreign investors in financial and capital markets are subject to 0% IOF rate in the following situations: (i) settlement of transactions to establish an initial or additional guarantee margin required bystock, futures and commodities exchanges; (ii) settlement of transactions for investment in financial and capital markets; (iii) settlement of transactions for investment in equities on the stock exchange or futures and commodities exchange, as regulated by the CMN, except for derivatives transaction that result in predetermined yields; (iv) settlement of foreign exchange operations to acquire shares in a registered public offering or offering exempted from CVM registration or for subscription of shares, provided that, in both cases, issuers are registered for trading on stock exchanges; (v) settlement of operations related to the flow of funds into the country, including operations by way of simultaneous operations to acquire shares in private equity funds, funds investing in emerging companies, or investment funds holding shares of the above funds ("funds of funds") as per CVM authorization; (vi) settlement of transactions for the purpose of flow of funds into the country due to cancellation of depositary receipts, for investment in shares traded on exchange; (vii) settlement of transactions related to funds deriving from change in foreign investors regime, and direct investment addressed by Law no. 4,131/62, to invest in shares traded in stock exchanges, as regulated by the CMN; (viii) settlement of transactions relating to funds in the country for the acquisition of bond or securities issued in accordance with Articles 1 and 3 of Law No. 12,431/11; and (ix) settlement of foreign transfers of funds for application in Brazil through Brazilian Depositary Receipts – BDRs, as regulated by the CVM. The following foreign exchange transactions are also subject to a 0% IOF rate: ·definition of an initial or additional guarantee margin required by stock, futures and commodities exchanges;  Bradesco89


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|Form 20-F |  |  | 
|--------- |  |  | 

·transfer of external resources for application in Brazil in equities on the stock exchange or futures and commodities exchange, except for derivative transactions that result in predetermined returns; ·entry of funds in Brazil for acquisition of shares in public offerings registered or exempt from registration by the CVM or for subscription of shares, provided that, in both cases, the issuing companies must be registered for trading of shares on stock exchanges; ·entry of funds in Brazil for acquisition of shares in equity funds, venture capital funds and investment funds in shares of these funds, established as authorized by the CVM; ·settlement of simultaneous foreign exchange transactions, for the purpose of funds entering due to cancellation of depositary receipts, for investment in shares traded on exchange; ·settlement of simultaneous foreign exchange transactions, entered into from January 1, 2011, for funds entering Brazil arising from altered arrangements for foreign investors, direct investment, which is addressed by Law No. 4,131/62, and investment in shares traded on exchanges; ·settlement of foreign exchange transactions contracted by foreign investors for the acquisition of bond or securities issued in accordance with Articles 1 and 3 of Law No. 12,431/11; and ·settlement of exchange transactions contracted by foreign investors, including through simultaneous transactions, related to foreign transfers of funds for application in Brazil in certificate deposit of securities, named Brazilian Depositary Receipts – BDR, as regulated by the CVM.  In March 2011, Decree No. 7,454/11 increased the tax rate on currency exchange transactions from2.38% to 6.38% for payments made by credit card administrators or commercial or multiple banks acting as card issuers, when such amounts arise from the purchase of goods and services abroad by their cardholders. In December 2013, Decree no. 8,175/13 provided that the IOF rate is 6.38% on foreign exchange transactions settled beginning as of December 28, 2013: (i) intended to comply with obligations of administrators of cards with international use or of commercial or multiple banks, in the capacity of credit card or debit card issuers, deriving from withdrawals made abroad by its users; and (ii) acquisition of foreign currency in the form of traveller checks and loading of prepaid international card, intended to meet personal expenditures in international travels. The IOF tax rate is 0% for foreign exchange rate transactions related to revenues entering Brazil from exports of goods and services.  IOF on bonds or securities transactions IOF tax may also be charged on transactions related to acquisition, granting, withdrawal, renegotiation or payment for settlement of securities. Maximum IOF rate insecuritiesis 1.5% per day.IOF rate in transactions with securities is reduced to 0% in some cases, including in granting of shares that are admitted to negotiation in stock exchanges located in Brazil, forthe specific purpose of backingissuances of depositary receipts traded abroad. In September 2011, IOF was levied on transactions involving derivative contracts. The tax rate is 1% on the notional amount, adjusted in the acquisition, sale or maturity of financial derivative contracts entered into in Brazil that, individually, result in an increase of the sold foreign exchange exposure or reduction of the purchased foreign exchange exposure. The legislation allows for some deductions from the calculation basis, such as: (i) the sum of the notional value adjusted by the acquisition, sale or maturity of financial derivative contracts entered into in Brazil, on the day, and that, individually, results in an increase of the purchased foreign exchangeexposure or reduction of the sold foreign exchange exposure, (ii) the adjusted net foreign exchange exposure purchased, obtained on the previous business day, and (iii) the reduction of the net foreign exchange exposure sold and the increase of the net foreign exchange exposure purchased compared to the previous business day, not resulting from acquisitions, sales or maturities of financial derivatives contracts. The legislation also establishes several specific concepts related to the levy of IOF on derivativecontracts. One is the concept of "adjusted notional value," which corresponds to the reference value of the contract – notional value – multiplied by the price change of the derivative compared to the price change of foreign currency, noting that in the case of acquisition, sale or partial maturity, the adjusted notional amount will be calculated proportionately.     90Form 20-F – December 2013


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| |  |  | Form 20-F
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IOF on securities operations is also levied on transactions carried out in the fixed income market and at redemption of investment fund shares and investment club shares. IOF is levied on the redemption, granting or renegotiation value, limited to transaction earnings, based on the period.For more information on financial investment funds and equity funds, see "Regulation and Supervision – Asset management regulation." The rate of IOF payable in such cases is 1.0% per day and decreases with the duration of the transactions, reaching zero for transactions with maturities of at least 30 days, except that the rate is currently 0% for the following types of transactions: ·transactions carried out by financial institutions and other institutions authorized by the Central Bank as principals; ·portfolio transactions carried out by mutual funds or investment clubs; ·transactions in equity markets, including stock, futures and commodities exchanges and similar entities; ·redemption of investment fund shares and investment club shares, so considered by income tax law; ·certificates of agribusiness credit rights – CDCA, with Letter of Agribusiness Credit - LCA, and with Certificates of Agribusiness Receivables – CRA, established by Article 23 of Law No. 11,076/04; and ·debentures pursuant to Article 52 of Law No. 6,404/76, with Real Estate Receivables Certificates mentioned in Article 6 of Law No. 9,514/97, and with Financial Letters mentioned in Article 37 of Law No.12,249/10.  IOF on loan transactions IOF is levied on loantransactions where the taxable event is the delivery of the obligation amount or value, or the event of making it available to the interested party. Since May 2012, rate applicable to loan transactions of any type, includingcredit opening is0.0041%per day,applicablebothto legalentity orindividualborrowers. This IOF rate will be charged on principal available to borrowersregarding the loans and advances, but for cases in which the amount of principal is not predetermined, in addition to the IOF levied on principal, there will be additional IOF at the same rateleviedon interest and other charges, so that the calculation base will comprise the sum of daily outstanding debt balances calculated on the last day of each month. In cases in which the IOFratecalculation base is not the sum of outstanding debt balances, IOF shall not exceed1.88% which corresponds tothe result of applying the daily rate to each amount of principal stipulated for the transaction, multiplied by 365 days, plus an additional rate of 0.38% even if the loan is to be repaid by installment.Since January 2008, besides IOF calculated based on the rate of 0.0041% per day,loans and advances have been subject to IOF in the form of an additional rate of 0.38% irrespective of the repayment period or whether the borrower is an individual or a legal entity. IOF on loan transactions is levied on transactions between individuals and legal entities domiciled in Brazil, as well as on transactions whose creditor resides in Brazil, even if the debtor is located abroad.  IOF on insurance transactions IOF is levied on insurance transactionswhere the taxable event is the receipt of premium. Applicable rates are as follows: ·0% on: (i) reinsurance transactions; (ii) transactions related to mandatory insurance, linked to residential real estate financing granted by an agent of the national housingsystem (SFH); (iii) insurance transactions for exportcredits and international merchandise transportation; (iv) aeronautical insurance; (v) premiums intended to finance life insurance plans with survival coverage; and (vi) guarantee insurance;


Bradesco 91






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|Form 20-F |  |  | 
|--------- |  |  | 

·0.38% of premiums paid, in the case of life insurance and similar policies, for personal or workplace accidents, including mandatory insurance for personal injuries caused by vehicles or ships or cargo to persons transported or others; ·2.38% private health insurance business; and ·7.38% for all other insurance transactions.  Income and social contribution taxes on income Federal taxes on company income include two components, income tax known as "IRPJ" and tax on net profits, known as "Social Contribution" or "CSLL." income tax charges are calculated based on a rate of 15.0% plus a surcharge of 10.0% on taxable income exceeding R$240 million. Considering the above, the IRPJ is assessed at a combined rate of 25.0% of adjusted net income. Social contribution tax is calculated based on a general rate of 9.0% of adjusted net income. However, since May 2008, financial institutions and affiliated companies have been taxed at a rate of 15.0%. For further information on our income tax expense, see Note 17 to our consolidated financial statements in "Item 18. Financial Statements." Due to taxation on universal bases, ccompanies are taxed based on their global income rather than income produced exclusively in Brazil. As a result, profits, capital gains and other income obtained abroad by Brazilian entities are computed in the determination of their taxable profits. A Brazilian entity is allowed to offset income tax paid abroad against tax on the same income due in Brazil (i) under double taxation agreements and (ii) up to the amount of Brazilian income taxes chargedonthe same income, if there is reciprocal treatment between Brazil and the country where the profit or gain was obtained, asisthe case with the United States. Profits computed at the end of each year by an offshore entity which is a branch, subsidiary or affiliate of a Brazilian entity are regarded as available to the Brazilian entity and therefore subject to income tax in Brazil. In accordance with Provisional Measure no. 627/13, income earned through a foreign associate is only taxable in Brazil upon effective availability, provided that the associate is not subject to sub-taxation regime; is not located in a country or dependence with benefited taxation; is not controlled by an individual or legal entity subject to the above taxation treatment; has own income equal to or higher than 80% of his/its total income. Note that regime of Provisional Measure no. 627/13 is optional for 2014, but mandatory beginning as of 2015. Provisional Measure no. 627/13 also establishes that the controlling legal entity in Brazil should record in sub-accounts of the investment account in direct subsidiary abroad, on an individual basis, book income in variation of investment value equivalent to income or losses obtained by the direct subsidiary itself and its direct or indirect subsidiaries, in Brazil or abroad, related to the calendar year in which they are recorded in the balance sheet, complying with the proportion of its interest in each direct or indirect subsidiary. The same Provisional Measure permits, through calendar year 2017, consolidation of a subsidiary’s results deriving from its own active income with the results of its controlling company in Brazil, provided that certain requirements are met. Profits or dividends generated and paid by Brazilian entities between 1996 and 2007 are not subject to withholding income tax, nor are they included in the calculation of income tax forcorporatesor individualbeneficiariesdomiciled in Brazil or abroad.Provisional Act no. 627/2013, which is stillpending approval by Congress and will certainly be subject to amendments until it is enacted into law, provides that a dividend may only be exempt to the beneficiary if so determined by tax accounting and not corporate accounting; however, it also exempts income determined by corporate accounting from January 1, 2008 to December 31, 2013, effectively paid until November 11, 2013 (Provisional Measure publication date), provided that the paying party has adhered to rules provided for in Articles 1 to 66 of the Provisional Measure.  We believe that the enactment of this Provisional Measure into law should take place by April 2014. Since payment of dividends is not tax deductible for the corporation distributing them, Brazilian legislation allows an alternative means of remunerating shareholders in the form of "interest on equity" which may be deducted from taxable income. This deduction is limited to the product of (i) thepro rata dievariation of the long-term interest rate announced by the Brazilian government, known as the "TJLP," times (ii) the corporation's equity calculated in accordance with accountingpractices adopted in Brazil, not exceeding: ·50.0% of net income (before the above distribution and any deductions for income taxes) for the year in respect of which the payment is made, in accordance with accounting practices adopted in Brazil; or  92Form 20-F – December 2013


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| |  |  | Form 20-F
| |  |  | ---------

·50.0% of retained earnings for the year prior to the year in which payment is made, in accordance with generally accepted accounting principles in Brazil.  Through the issuance of Provisional Measure no. 627/13, for calendar years 2008 to 2013 and the calculation of the above limits, a legal entity may use accounts of shareholders' equity measured in accordance with provisions of Law no. 6,404/76. However, when calculating the portion to deduct, shareholders' equity accounts will not consider values related to valuation adjustments to equity deriving from evaluation at fair value (Article 182, paragraph 3, of Law no. 6,404/76). Distributions of interest on equity paid to holders of shares, including payments to the depositary bank in respect of shares underlying ADSs, are subject to Brazilian withholding tax at a rate of 15.0%, except for payments to: (i) persons exempt and immune from tax in Brazil or (ii) persons situated in tax havens in which case, payments are subject to income tax at a rate of 25.0%. For more information on the taxation of interest on equity, see "Item 10.E. Taxation-Brazilian tax considerations-Distributions of interest on equity." Tax losses of Brazilian companies accrued in prior years may offset income from future years up to 30.0% of annual taxable income.Accumulated operating and non-operating losses shall be offset only byincomeof the same nature.  Gains realized by individual residents in Brazil on any disposition of common or preferred shares in Brazilian stock exchanges or similar markets are generally taxed at the following rates: ·20.0% if the transaction is "day-trade" on a stock exchange; or ·15.0% for all other transactions.  In addition, residents in Brazil who trade on equity markets, except for day-trades, are subject to a withholding income tax of 0.005% as follows: ·in the futures market, the sum of the daily adjustments, if positive, determined when closing out the position, in advance or on the settlement date; ·in the options market, the result, if positive, of the sum of the premiums paid and received on the same day; ·for forward contracts, which provide for delivery of the assets on a set date, the difference, if positive, between the forward price and cash price on delivery date; ·with respect to forward contracts for financial settlement, the settlement amount as specified by the contract; and ·for the spot market, the sale value of shares, gold, financial assets or other securities traded therein.  This taxation system was created in order to facilitate the Brazilian tax authority's supervision of transactions in the financial and capital markets. Withholding income taxes as mentioned above, is treated as advance of income tax due andmay be (i) deducted from income tax levied on net monthly gains; (ii) offset with tax due in subsequent months; (iii) offset in annual income tax declaration of adjustment (if there is withheld tax to be returned); or (iv) offset with the outstanding withholding income tax due on capital gains from the sale of shares. Brazilian residents day-trading on stock, commodities or futures exchanges, or similar markets, are also subject to an additional withholding tax similar to the described above,at arateof1%. This tax may also be (i) deducted from the income tax levied on net monthly profit or (ii) offset with income tax due in following months (if there is any withheld tax accounted for in the balance). Gains on disposition of shares in Brazil by investors who reside in a jurisdiction deemed to be a "tax haven" under Brazilian law (any country that (i) does not charge income tax, (ii) charges income tax at a rate of less than 20.0% or (iii) a country whose corporate law opposes confidentiality on ownership of corporate entities) are subject to the same rates applicable to resident holders in Brazil, as previously described. Gains obtained on disposition of shares in Brazil by holders who are resident overseas, in a country that, according to Brazilian laws, is not deemed a tax haven, are not subject to Brazilian tax if:  Bradesco93


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|Form 20-F |  |  | 
|--------- |  |  | 

·amounts received directly from issuing companies and capital gain earned on sale of assets that backed BDRs, in case it is cancelled. or ·the foreign investment in shares is registered with the Central Bank pursuant to CMN Resolution No. 2,689/00.  Otherwise, the same treatment afforded to residents in Brazil will be applicable. There is a zero income tax rate on income from transactions involving Brazilian government bonds purchased as of February 2006, except those for which buyers enter into resell agreements under CMN rules and conditions. This zero income tax rate is also applicable to income of non-residents that invest in shares of investment funds exclusively for non-resident investors, if their portfolio is at least, 98% government bonds. This zero tax rate is not applicable if the beneficiary is resident or domiciled in a country deemed a tax haven. The income tax rate is also zero, under certain conditions, on income from investments in private equity investment funds, investment funds in quotas of private equity investment funds and emerging markets investment funds if income is paid, credited, delivered or remitted to individual or collective beneficiaries resident or domiciled abroad (except tax havens), whose investments in Brazil are in compliance with CMN regulations and conditions. These funds must comply with CVM regulations on limits for portfolio composition, diversification and investment rules in order to benefit from the zero income tax rate. Income of Brazilian residents from redemption, sale or amortization of shares in investment funds, private equity funds, funds of funds and emerging markets investment funds, including income resulting from liquidation of the fund, is subject to an income tax rate of 15% on the positive difference between redemption or sale value and acquisition cost. In December 2008, the Brazilian government created the Transition Tax Regime ("RTT") to neutralize the impact of the new accounting methods and criteria introduced in December 2008, as part of Brazil's adoption of international accounting rules. The adoption of RTT which, will be in force until the law governing the tax effects of the new accounting methods and criteria becomes effective, was optional for 2008 and 2009 but became mandatory in 2010 fiscal year, including for purposes of determining the social contribution, PIS and COFINS. We have elected to adopt the RTT from the 2008 fiscal year.In November 2013, Provisional Measure no. 627/13, which revoked RTT and provided a federal tax law related to Income Tax, Social Contribution, PIS and COFINS, was enacted. In accordance with the current wording of Provisional Act no. 627/13, which is still in progress, RTT revocation is mandatory beginning as of January 2015 and optional in 2014. In June 2010, legislation introduced thin capitalization rules, and limited deduction for interest paid or credited by a Brazilian company to (i) an addressee domiciled abroad, whether or not holding equity interest in the company paying, and (ii) an addressee resident, domiciled or incorporated in a tax haven or locality with a low or privileged tax regime. In cases where the creditor is a related party domiciled abroad and holds an equity interest in the Brazilian company making a payment, debt may not exceed the equivalent to twice such shareholders' interest in the total equity of the Brazilian company. In case of a related party with no shareholding interest, the limit will be equivalent to twice the total equity of the Brazilian company resident in Brazil. If there is more than one creditor, total debt owed foreign companies may not exceed the equivalent of twice the total value of the interests of all the related parties in the equity of the company resident in Brazil. If the debt is exclusively related to foreign companies that have no ownership interest in the Brazilian company, the overall limit is twice the equity of the Brazilian company. If the creditor is domiciled in a low tax jurisdiction the debt amount may not exceed 30.0% of the equity of the Brazilian company. Any amounts exceeding the limits above such limit may not be deducted for purposes of withholding income and social contributions taxes.   94Form 20-F – December 2013


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| |  |  | Form 20-F
| |  |  | ---------

Also beginning in June 2010, tax deductions for any payment to a beneficiary resident or domiciled in a country considered a tax haven became subject to the following requirements in addition to others already stipulated in the legislation: (i) identification of the actual beneficiary of the person domiciled abroad; (ii) proof of the ability of the person located abroad to complete the transaction; and (iii) documented proof of payment of the respective price and of receipt of the assets, rights, or utilization of service. In November 2010, the Brazilian tax authorities issued a normative instruction altering the tax treatment applicable to variation in the monetary value of taxpayers' credit rights and obligations due to varying exchange rates. Under this new instrument, as of the 2011 calendar year, the election of tax regime for taxation of exchange-rate variations (i) may only be exercised in January of each calendar year and (ii)may only be altered during the fiscal year if there is "material variation in the exchange rate," as published by a Finance Ministry directive.    Bradesco95


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|Form 20-F |  |  | 
|--------- |  |  | 

PIS and COFINS Two federal taxes are imposed on the gross revenues of corporate entities: PIS and COFINS. Nonetheless, many revenues, such as dividends, equity earnings from unconsolidated companies, revenues from the sale of fixed assets and export revenues paid in foreign currency are not included in the calculation base for PIS and COFINS. Revenues earned by corporations domiciled in Brazil are subject to PIS and COFINS taxes corresponding to interest on equity. Brazilian legislation authorizes certain adjustments to the calculation base of those taxes depending on the business segment and on other aspects. Between 2002(PIS)and2003 (Cofins),the Brazilian government implemented a non-cumulative collection system of PIS and COFINS taxes, allowing taxpayers to deduct from their calculation basis credits originating from certain transactions. In order to offset these credits, the rates of both PIS and COFINS were substantially increased. Subsequent to the changes made to PIS and COFINS, as of May 2004, both taxes are applicable on imports of goods and services when the taxpayer is the importing company domiciled in Brazil. As of August 2004, PIS and COFINS rates were eliminated for financial income earned by companies subject to the non-cumulative applicability of these taxes,including financial income arising from hedging operations. However, taxes charged on payments of interest on equity were maintained. Certain economic activities are expressly excluded from the non-cumulative collection system of PIS and COFINS. Financial institutions remain subject to PIS and COFINS according to the "cumulative" method, which does not allow any credits to be discounted. PIS is charged based on the total revenue generated by entities and is charged at a rate of 0.65% in the case of financial and similar institutions. Before February 1999, we were not a COFINS taxpayer. In February 1999, COFINS was imposed on our gross revenues at a rate of 3.0%. After September 2003, this tax rate was increased to 4.0% for financial and similar institutions. The calculation base for COFINS is the same as that for PIS. In July 2010, the Brazilian tax authorities introduced digital tax records for PIS and COFINS taxes. Under the new rule, financial and similar institutions must keep digital records for PIS and COFINS taxes relating to taxable events occurring as of January 2012.  Selected Statistical Information Selected statistical data shown in this section as of and for the years ended December 31, 2013, 2012 and 2011 is derived from our audited consolidated financial statements prepared in accordance with IFRS, included elsewhere in this annual report. The data for the years ended December 31, 2010 and 2009, is derived from our audited consolidated financial statements prepared in accordance with IFRS which are not included herein. We have included the following information for analytical purposes. You should read this information (for the years ended December 31, 2013, 2012, and 2011) in conjunction with "Item 5. Operating and Financial Review and Prospects" and our consolidated financial statements in "Item 18. Financial Statements."   96Form 20-F – December 2013


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| |  |  | Form 20-F
| |  |  | ---------

Average balance sheet and interest rate data The following tables present the average balances of our interest-earning assets and interest-bearing liabilities, other assets and liabilities accounts, the related interest income and expense or similar amounts and the average real yield/rate for each period. We calculated the average balances using the month-end book balances, which include the related allocated interest. We do not show interest income on a tax-equivalent basis, as Brazilian tax law does not currently provide for tax exemptions for interest earned on investment securities.  Interest-earning assets  December 31,
     R$ in thousands, except %2013
     2012
     2011(Restated)
     (Restated)Average balance
     Interest and similar income
     Average yield/ interest
     Average balance
     Interest and similar income
     Average yield/ interest
     Average balance
     Interest and similar income
     Average yield/ interestInterest‐earning assetsFinancial assets held for trading
     80,909,973
     7,872,493
     9.7%
     89,783,466
     7,816,181
     8.7%
     87,228,224
     9,070,609
     10.4%Financial assets available for sale
     79,895,464
     7,740,512
     9.7%
     66,875,502
     6,434,573
     9.6%
     33,529,432
     3,373,070
     10.1%Investments held to maturity
     3,791,552
     603,768
     15.9%
     3,657,763
     589,835
     16.1%
     4,510,835
     360,835
     8.0%Assets pledged as collateral
     112,404,700
     12,770,916
     11.4%
     94,667,517
     9,090,234
     9.6%
     75,623,917
     8,744,459
     11.6%Loans and advances to banks
     104,232,013
     8,899,967
     8.5%
     78,977,399
     6,791,429
     8.6%
     75,942,480
     9,168,583
     12.1%Loans and advances to customers
     289,336,399
     49,645,420
     17.2%
     262,228,228
     48,463,833
     18.5%
     234,519,052
     45,281,429
     19.3%Other interest‐earning assetsCentral Bank compulsory deposits
     42,757,972
     3,110,877
     7.3%
     48,722,266
     3,808,229
     7.8%
     59,239,456
     6,112,337
     10.3%Other assets
     575,113
     38,671
     6.7%
     546,918
     37,540
     6.9%
     518,296
     40,774
     7.9%Total interest‐earning assets
     713,903,186
     90,682,624
     12.7%
     645,459,059
     83,031,854
     12.9%
     571,111,692
     82,152,096
     14.4%Non‐interest‐earning assetsCash and balances with banks
     11,969,749
     -
     -
     14,620,739
     -
     -
     10,433,992
     -
     -Central Bank compulsory deposits
     6,719,354
     -
     -
     8,618,901
     -
     -
     8,348,788
     -
     -Financial assets available for sale (shares)
     6,849,306
     -
     -
     7,690,050
     -
     -
     4,259,574
     -
     -Non‐performing loans and advances to customers (1)
     11,273,935
     -
     -
     10,588,578
     -
     -
     8,001,549
     -
     -Impairment of loans and advances
     (21,305,397)
     -
     -
     (20,501,971)
     -
     -
     (17,719,137)
     -
     -Investments in associated companies and joint ventures
     2,855,127
     -
     -
     2,635,972
     -
     -
     2,020,335
     -
     -Property and equipment
     4,323,084
     -
     -
     4,348,807
     -
     -
     3,636,614
     -
     -Intangible assets and goodwill
     8,155,015
     -
     -
     8,562,449
     -
     -
     6,397,827
     -
     -Current and deferred income tax
     32,488,983
     -
     -
     27,815,418
     -
     -
     22,814,339
     -
     -Other assets
     42,512,399
     -
     -
     39,255,038
     -
     -
     32,874,055
     -
     -Total non‐interest‐earning assets
     105,841,555
     -
     -
     103,633,981
     -
     -
     81,067,936
     -
     -Total assets
     819,744,741
     90,682,624
     11.1%
     749,093,040
     83,031,854
     11.1%
     652,179,628
     82,152,096
     12.6%
   Bradesco97


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|Form 20-F |  |  | 
|--------- |  |  | 

Interest-bearing liabilities  December 31,
     R$ in thousands, except %2013
     2012
     2011(Restated)
     (Restated)Average balance
     Interest and similar expense
     Average yield/ interest
     Average balance
     Interest and similar expense
     Average yield/ interest
     Average balance
     Interest and similar expense
     Average yield/ interestInterest‐bearing liabilitiesInterbank deposits
     671,404
     63,268
     9.4%
     471,502
     48,529
     10.3%
     360,575
     46,655
     12.9%Savings deposits
     73,307,137
     4,112,323
     5.6%
     62,758,934
     3,623,935
     5.8%
     55,515,889
     3,754,755
     6.8%Time deposits
     99,565,994
     5,828,956
     5.9%
     117,960,891
     7,555,947
     6.4%
     122,478,193
     11,201,087
     9.1%Funding in the open market
     182,981,063
     16,671,777
     9.1%
     152,443,947
     11,758,260
     7.7%
     128,525,632
     14,001,786
     10.9%Borrowings and onlendings
     49,273,352
     1,937,991
     3.9%
     47,408,499
     2,349,470
     5.0%
     44,962,370
     5,775,844
     12.8%Funds from securities issued
     52,476,783
     3,646,584
     6.9%
     50,848,755
     3,439,688
     6.8%
     28,260,014
     2,490,536
     8.8%Subordinated debt
     35,560,706
     3,132,915
     8.8%
     32,278,136
     2,884,331
     8.9%
     25,335,543
     2,787,681
     11.0%Insurance technical provisions and pension plans
     125,179,124
     5,988,328
     4.8%
     107,519,858
     7,985,971
     7.4%
     89,762,154
     6,705,431
     7.5%Total interest-bearing liabilities
     619,015,563
     41,382,142
     6.7%
     571,690,522
     39,646,131
     6.9%
     495,200,370
     46,763,775
     9.4%Non-interest-bearing liabilitiesDemand deposits
     36,876,193
     -
     -
     33,138,109
     -
     -
     32,539,861
     -
     -Other non‐interest‐bearing liabilities
     95,039,096
     -
     -
     81,203,950
     -
     -
     71,805,915
     -
     -Total non‐interest‐bearing liabilities
     131,915,289
     -
     -
     114,342,059
     -
     -
     104,345,776
     -
     -Total liabilities
     750,930,852
     41,382,142
     5.5%
     686,032,581
     39,646,131
     5.8%
     599,546,146
     46,763,775
     7.8%Equity attributable to controlling shareholders
     68,216,774
     -
     -
     62,463,588
     -
     -
     52,424,391
     -
     -Non-controlling interest
     597,115
     -
     -
     596,871
     -
     -
     209,091
     -
     -Total liabilities and equity
     819,744,741
     41,382,142
     5.0%
     749,093,040
     39,646,131
     5.3%
     652,179,628
     46,763,775
     7.2%
    98Form 20-F – December 2013


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| |  |  | Form 20-F
| |  |  | ---------

Changes in interest and similar income and expenses – volume and rate analysis The following table shows the effects of changes in our interest income and expense arising from changes in average volumes and average yield/rates for the periods presented. We calculated the changes in volume and interest rate based on the evaluation of average balances during the period and changes in average interest rates on interest-earning assets and interest-bearing liabilities. We allocated the net change from the combined effects of volume and rate proportionately to the average volume and rate, in absolute terms, without considering positive and negative effects.  December 31,
     R$ in thousands2013/2012
     2012/2011(Restated)Increase/(decrease) due to changes inAverage 
volume
     Average yield/rate
     Net change
     Average
volume
     Average yield/rate
     Net changeInterest‐earning assetsFinancial assets held for trading
     (813,984)
     870,297
     56,313
     259,115
     (1,513,543)
     (1,254,428)Financial assets available for sale
     1,261,115
     44,824
     1,305,939
     3,214,600
     (153,097)
     3,061,503Investments held to maturity
     21,373
     (7,440)
     13,933
     (79,120)
     308,120
     229,000Assets pledged as collateral
     1,860,942
     1,819,740
     3,680,682
     1,978,884
     (1,633,109)
     345,775Loans and advances to banks
     2,156,723
     (48,185)
     2,108,538
     353,550
     (2,730,704)
     (2,377,154)Loans and advances to customers
     4,798,089
     (3,616,502)
     1,181,587
     5,182,010
     (1,999,606)
     3,182,404Central Bank compulsory deposits
     (445,577)
     (251,775)
     (697,352)
     (973,944)
     (1,330,164)
     (2,304,108)Other assets
     1,907
     (776)
     1,131
     2,165
     (5,399)
     (3,234)Total interest‐earning assets
     8,840,588
     (1,189,817)
     7,650,771
     9,937,260
     (9,057,502)
     879,758Interest‐bearing liabilitiesInterbank deposits
     19,126
     (4,387)
     14,739
     12,590
     (10,716)
     1,874Savings deposits
     594,244
     (105,856)
     488,388
     456,098
     (586,918)
     (130,820)Time deposits
     (1,112,949)
     (614,042)
     (1,726,991)
     (399,557)
     (3,245,583)
     (3,645,140)Funding in the open market
     2,579,504
     2,334,013
     4,913,517
     2,309,540
     (4,553,066)
     (2,243,526)Borrowings and onlendings
     89,365
     (500,844)
     (411,479)
     298,524
     (3,724,898)
     (3,426,374)Funds from securities issued
     111,750
     95,146
     206,896
     1,632,263
     (683,111)
     949,152Subordinated debt
     289,698
     (41,114)
     248,584
     678,755
     (582,105)
     96,650Insurance technical provisions and pension plans
     1,164,226
     (3,161,869)
     (1,997,643)
     1,319,156
     (38,616)
     1,280,540Total interest‐bearing liabilities
     3,734,964
     (1,998,953)
     1,736,011
     6,307,369
     (13,425,013)
     (7,117,644)
  Net interest margin and spread The following table shows the average balance of our interest-earning assets, interest-bearing liabilities, and net interest and similar income, and compares net interest margin with net interest spread for the periods indicated:  December 31,
     R$ in thousands, except %2013
     2012
     2011(Restated)
     (Restated)Average balance of interest‐earning assets
     713,903,186
     645,459,059
     571,111,692Average balance of interest‐bearing liabilities
     619,015,563
     571,690,522
     495,200,370Net interest income (1)
     49,300,483
     43,385,723
     35,388,321Interest rate on the average balance of interest‐earning assets
     12.7%
     12.9%
     14.4%Interest rate on the average balance of interest‐bearing liabilities
     6.7%
     6.9%
     9.4%Net yield on interest‐earning assets (2)
     6.0%
     6.0%
     5.0%Net interest margin (3)
     6.9%
     6.7%
     6.2%(1)Total interest income less total interest expenses;(2)Difference between the yield on the rates of the average interest earning assets and the rate of the average interest bearing liabilities; and(3)Net interest income divided by average interest earning assets.
    Bradesco99


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|Form 20-F |  |  | 
|--------- |  |  | 

Return on equity and assets The table below shows selected financial indices for the periods indicated:  December 31,
     R$ in thousands, except % and per share information2013
     2012
     2011(Restated)
     (Restated)Net income attributable to controlling shareholders
     12,395,920
     11,291,570
     10,958,054Average total assets
     819,744,741
     749,093,040
     652,179,628Average equity attributable to controlling shareholders
     68,216,774
     62,463,588
     52,424,391Net income attributable to controlling shareholders as a percentage of average total assets
     1.5%
     1.5%
     1.7%Net income attributable to controlling shareholders as a percentage of average equity attributable to controlling shareholders
     18.2%
     18.1%
     20.9%Equity attributable to controlling shareholders as a percentage of average total assets
     8.3%
     8.3%
     8.0%Dividends payout ratio per class of shares (1)
     0.33
     0.35
     0.34(1)Total declared dividends per share divided by net income attributable to controlling shareholders.
  Financial assets held for trading, available for sale, investments held to maturity and assets pledged as collateral The following table shows our portfolio of securities received under resale agreements, our trading assets, available for sale securities and investments held to maturity as of the dates indicated. The amounts below exclude our investments in associated companies. For additional information on our investments in associated companies and joint ventures, see Note 27 to our consolidated financial statements included in "Item 18. Financial Statements." The amounts also exclude our compulsory deposits held in Brazilian government securities, as required by the Central Bank. For more information on our compulsory deposits, see Note 19 to our consolidated financial statements included in "Item 18. Financial Statements." We state our financial assets held for trading and available for sale at market value. See Notes 2(e), 20, 21 and 22 to our consolidated financial statements included in “Item 18. Financial Statements,” for more details of our treatment of securities received under resale agreements, financial assets held for trading, available for sale and investments held to maturity. December 31,
     R$ in thousands, except %2013
     2012
     2011(Restated)
     (Restated)Financial assets held for tradingBrazilian government securities
     46,847,468
     46,014,522
     53,506,040Corporate debt and marketable equity securities
     17,886,442
     36,221,243
     24,451,335Bank debt securities
     20,187,824
     18,485,686
     10,823,461Mutual funds
     8,426,678
     7,650,252
     6,791,968Derivative financial instruments
     2,509,028
     3,222,631
     955,912Foreign government securities
     235,083
     244,168
     50,092Brazilian sovereign bonds
     -
     -
     18,267Total financial assets held for trading
     96,092,523
     111,838,502
     96,597,075Financial assets held for trading as a percentage of total assets
     11.5%
     14.0%
     13.4%Financial assets available for saleBrazilian government securities
     28,985,685
     63,965,466
     31,293,825Corporate debt securities
     31,058,356
     10,895,299
     7,450,073Marketable equity securities
     5,880,497
     5,524,668
     4,956,547Bank debt securities
     1,849,287
     862,921
     1,482,865Brazilian sovereign bonds
     64,586
     273,776
     24,324Total financial assets available for sale
     67,838,411
     81,522,130
     45,207,634Financial assets available for sale as a percentage of total assets
     8.1%
     10.2%
     6.3%Investments held to maturityBrazilian government securities
     23,029,469
     3,659,576
     3,490,502Brazilian sovereign bonds
     39,557
     56,097
     620,485Total investments held to maturity
     23,069,026
     3,715,673
     4,110,987Investments held to maturity as a percentage of total assets
     2.8%
     0.5%
     0.6%
   100Form 20-F – December 2013


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| |  |  | Form 20-F
| |  |  | ---------

The following table shows our assets pledged as collateral as of the dates indicated. For additional information about our assets pledged as collateral, see Note 23 to our consolidated financial statements included in "Item 18. Financial Statements."  December 31,

   in thousands of R$, except percentages2013

   2012

   2011(Restated)

   (Restated)Financial assets held for tradingBrazilian government securities

   2,924,653

   8,609,468

   59,224,886Total of financial assets held for trading

   2,924,653

   8,609,468

   59,224,886Financial assets held for trading as a percentage of total assets

   0.3%

   1.1%

   8.2%Financial assets available for saleBrazilian government securities

   44,667,819

   19,308,061

   3,465,119Brazilian sovereign bonds

   -

   149,284

   791,212Corporate debt securities

   1,939,437

   3,431,710

   1,913,034Bank debt securities

   453,231

   454,320

   532,758Total of financial assets available for sale

   47,060,487

   23,343,375

   6,702,123Financial assets available for sale as a percentage of total assets

   5.6%

   2.9%

   0.9%Investments held to maturityBrazilian sovereign bonds

   4,360

   267,421

   292,531Total of investments held to maturity

   4,360

   267,421

   292,531Investments held to maturity as a percentage of total assets

   -

   -

   0.1%Loans and advances to banksInterbank investments

   67,750,725

   73,913,035

   30,902,540Total of Loans and advances to banks

   67,750,725

   73,913,035

   30,902,540Loans and advances to banks as a percentage of total assets

   8.1%

   9.2%

   4.3%
    Bradesco101


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|Form 20-F |  |  | 
|--------- |  |  | 

Maturity distribution The following table shows maturity dates and weighted average yield as of December 31, 2013, for our securities received under resale agreements, financial assets held for trading, financial assets available for sale and investments held to maturity. As of December 31, 2013, there are no tax-exempt securities in our portfolio.  December 31, 2013
     in thousands of R$, except percentagesDue in 1 year or less
     Due after 1 year up to 5 years
     Due after 5 years up to 10 years
     Due after 10 years
     No stated maturity
     TotalAverage yield
     Average yield
     Average yield
     Average yield
     Average yield
     Average yieldFinancial assets held for tradingBrazilian government securities
     28,171,555
     10.0%
     15,285,275
     10.0%
     2,326,883
     9.4%
     1,063,755
     10.0%
     -
     -
     46,847,468
     9.9%Foreign government securities
     235,083
     8.6%
     -
     -
     -
     -
     -
     -
     -
     -
     235,083
     8.6%Corporate debt and marketable equity securities (1)
     2,518,454
     5.5%
     6,083,654
     4.9%
     5,927,455
     5.9%
     803,197
     5.9%
     2,553,682
     -
     17,886,442
     5.6%Bank debt securities
     11,657,100
     7.0%
     8,526,135
     6.5%
     4,589
     6.5%
     -
     -
     -
     -
     20,187,824
     6.7%Mutual funds (2)
     -
     -
     -
     -
     -
     -
     -
     -
     8,426,678
     -
     8,426,678
     -Derivative financial instruments
     1,748,210
     -
     561,302
     -
     193,019
     -
     6,496
     -
     -
     -
     2,509,027
     -Total financial assets held for trading
     44,330,402
     -
     30,456,366
     -
     8,451,946
     -
     1,873,448
     -
     10,980,360
     -
     96,092,522
     -Financial assets available for saleBrazilian government securities
     8,848,886
     10.0%
     5,620,448
     9.8%
     5,682,138
     6.5%
     8,834,213
     6.9%
     -
     -
     28,985,685
     8.3%Brazilian sovereign bonds
     3,087
     11.0%
     4,968
     8.0%
     1,805
     13.0%
     54,726
     12.0%
     -
     -
     64,586
     11.0%Corporate debt securities
     1,201,734
     9.5%
     9,552,354
     7.5%
     16,712,345
     7.1%
     3,591,923
     8.7%
     -
     -
     31,058,356
     8.2%Bank debt securities
     23
     4.0%
     676,326
     7.1%
     1,157,641
     5.6%
     15,297
     8.1%
     -
     -
     1,849,287
     6.2%Marketable equity securities (2)
     -
     -
     -
     -
     -
     -
     -
     -
     5,880,497
     -
     5,880,497
     -Foreign government securities
     -
     -
     -
     -
     -
     -
     -
     -
     -
     -
     -
     -Total financial assets available for sale
     10,053,730
     -
     15,854,096
     -
     23,553,929
     -
     12,496,159
     -
     5,880,497
     -
     67,838,411
     -Investments held to maturityBrazilian government securities
     -
     -
     2,908,624
     14.3%
     6,804,319
     13.9%
     13,316,526
     14.1%
     -
     -
     23,029,469
     14.1%Brazilian sovereign bonds
     -
     -
     39,557
     8.0%
     -
     -
     -
     -
     -
     -
     39,557
     8.0%Foreign government securities
     -
     -
     -
     -
     -
     -
     -
     -
     -
     -
     -
     -Total investments held to maturity
     -
     -
     2,948,181
     -
     6,804,319
     -
     13,316,526
     -
     -
     -
     23,069,026
     -Overall Total
     54,384,132
     -
     49,258,643
     -
     38,810,194
     -
     27,686,133
     -
     16,860,857
     -
     186,999,959
     -(1)For no stated maturity, it corresponds to marketable equity securities; and(2)Investments in these assets are redeemable at any time in accordance with our liquidity needs. Average yield is not stated, as future yields are not quantifiable. These trading assets were excluded from the total yield computation.Note: The figures above are not adjusted for exchange rate variation.
   102Form 20-F – December 2013


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table of contents



| |  |  | Form 20-F
| |  |  | ---------

The following table shows maturity dates and weighted average yield as of December 31, 2013, for our assets pledged as collateral.   December 31, 2013
     in thousands of R$, except percentagesDue in 1 year or less
     Due after 1 year to 5 years
     Due after 5 years to 10 years
     Due after 10 years
     No stated maturity
     TotalAverage yield
     Average yield
     Average yield
     Average yield
     Average yield
     Average yieldFinancial assets held for tradingBrazilian government securities
     2,162,187
     9.2%
     762,466
     8.9%
     -
     -
     -
     -
     -
     -
     2,924,653
     6.0%Total of financial assets held for trading
     2,162,187
     -
     762,466
     -
     -
     -
     -
     -
     -
     -
     2,924,653
     -Financial assets available for saleBrazilian government securities
     199,105
     9.3%
     26,085,548
     8.4%
     18,042,964
     7.3%
     340,202
     5.9%
     -
     -
     44,667,819
     7.7%Brazilian sovereign bonds
     -
     -
     -
     -
     -
     -
     -
     -
     -
     -
     -
     -Corporate debt securities
     -
     -
     177,932
     6.3%
     1,761,505
     5.9%
     -
     -
     -
     -
     1,939,437
     6.1%Bank debt securities
     -
     -
     282,946
     6.0%
     170,285
     6.0%
     -
     -
     -
     -
     453,231
     6.0%Total of financial assets available for sale
     199,105
     -
     26,546,426
     -
     19,974,754
     -
     340,202
     -
     -
     -
     47,060,487
     -Investments held to maturityBrazilian sovereign bonds
     -
     -
     4,360
     8.0%
     -
     -
     -
     -
     -
     -
     4,360
     2.7%Total of investments held to maturity
     -
     -
     4,360
     -
     -
     -
     -
     -
     -
     -
     4,360
     -Loans and advances to banksInterbank investments
     67,750,725
     10.0%
     -
     -
     -
     -
     -
     -
     -
     -
     67,750,725
     2.5%Total of loans and advances to banks
     67,750,725
     -
     -
     -
     -
     -
     -
     -
     -
     -
     67,750,725
     -Overall Total
     70,112,017
     -
     27,313,252
     -
     19,974,754
     -
     340,202
     -
     -
     -
     117,740,225
     -
   Bradesco103


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|Form 20-F |  |  | 
|--------- |  |  | 

The following table shows our securities portfolio by currency as of the dates indicated:  In thousands of R$At fair value
     Amortized cost
     TotalFinancial assets held for trading
     Financial assets available for sale
     Investments held to maturityDecember 31, 2013Indexed toreais
     95,269,738
     60,435,790
     23,023,353
     178,728,881Denominated in foreign currency (1)
     822,785
     7,402,621
     45,673
     8,271,079December 31, 2013 (Restated)Indexed toreais
     111,489,760
     76,095,967
     3,659,576
     191,245,303Denominated in foreign currency (1)
     348,742
     5,426,163
     56,097
     5,831,002December 31, 2013 (Restated)Indexed toreais
     94,604,099
     43,213,963
     3,490,502
     141,308,564Denominated in foreign currency (1)
     1,992,976
     1,993,671
     620,485
     4,607,132(1)Predominantly U.S. dollars.
  The following table shows our assets pledged as collateral by currency as of the dates indicated:  R$ in thousandsAt fair value
     Amortized cost
     TotalFinancial assets held for trading
     Financial assets available for sale
     Loans and advances to banks
     Investments held to maturityDecember 31, 2013Indexed toreais
     2,924,653
     44,667,818
     67,750,725
     -
     115,343,196Denominated in foreign currency (1)
     -
     2,392,669
     -
     4,360
     2,397,029December 31, 2012 (Restated)Indexed to reais
     8,609,468
     19,308,061
     73,913,035
     -
     101,830,564Denominated in foreign currency (1)
     -
     4,035,314
     -
     267,421
     4,302,735December 31, 2011 (Restated)Indexed to reais
     59,224,886
     3,465,119
     30,902,540
     -
     93,592,545Denominated in foreign currency (1)
     -
     3,237,004
     -
     292,531
     3,529,535(1)Predominantly U.S. dollars.
  Loans and advances to customers The following tables summarize our outstanding loans and advances to customers by category of transaction. Substantially all of our loans and advances to customers are to borrowers domiciled in Brazil and are denominated in reais. The majority of our loans and advances are denominated in reais and indexed to fixed or variable interest rates. A smaller portion of them are denominated in, or indexed to, the U.S. dollar and subject to, fixed interest rates.  December 31,
     R$ in thousands2013
     2012
     2011
     2010
     2009(Restated)
     (Restated)Type of loans and advances to customersWorking capital
     59,180,627
     53,298,176
     49,461,882
     39,996,835
     30,031,028Personal credit
     41,922,683
     32,240,786
     24,374,640
     20,368,434
     16,148,266BNDES/Finame onlendings
     40,543,267
     35,703,861
     35,398,656
     29,554,340
     18,240,421Vehicles - Direct Consumer Financing (CDC)
     32,209,642
     33,820,338
     30,651,218
     25,193,370
     19,689,134Housing loans
     27,870,462
     22,302,967
     15,930,568
     10,186,535
     6,942,703Export financing
     25,662,214
     22,665,551
     20,504,778
     16,659,872
     16,786,285Credit cards
     25,473,079
     22,367,978
     19,776,579
     18,474,095
     14,676,565Rural loans
     13,651,917
     11,580,061
     11,036,251
     10,179,753
     9,136,566Guaranteed account
     10,422,370
     9,800,968
     9,671,487
     9,042,191
     8,864,265Import financing
     8,598,811
     6,580,312
     5,072,822
     3,834,498
     3,483,516Leasing
     5,713,481
     8,035,454
     11,550,838
     16,365,943
     21,468,019Insurance premiums receivable
     3,717,227
     2,893,506
     2,472,923
     2,048,186
     2,357,544Overdraft facilities
     3,312,666
     2,988,632
     2,745,695
     3,207,207
     2,747,461Others
     25,701,122
     24,657,024
     24,154,584
     20,524,659
     18,593,722Total portfolio
     323,979,568
     288,935,614
     262,802,921
     225,635,918
     189,165,495Impairment of loans and advances
     (19,858,234)
     (19,914,294)
     (17,551,042)
     (15,355,736)
     (14,925,145)Net loans and advances to customers
     304,121,334
     269,021,320
     245,251,879
     210,280,182
     174,240,350
   104Form 20-F – December 2013


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| |  |  | Form 20-F
| |  |  | ---------

The types of loans and advances presented are as follows: Working capital– line of credit to meet company cash requirements, finance operational cycle and honor commitments such as purchases of raw materials, goods, and other items; BNDES/FINAME onlendings–BNDES financing programs are intended for financing the implementation, expansion and modernization of production activities and infrastructure.FINAMEoperations consist of financing of machinery and equipment manufactured in Brazil; Vehicles – CDC– this line of credit is directly linked to financing for the purchase of new and used vehicles; Personal loans– credit for individuals; Credit card–credit line by way of previously approved limits for acquisition of goods or services; Export financing–advances on exchange contracts to customers, individuals and companies, exporting through exchange contracts that are normally short- and medium-term loans structured by our units abroad; Leasing– leasing contracts consist primarily of leases of equipment and automobiles to both corporate and individual borrowers; Housing loans– loans to acquirereal estatethat are usually long-term and mortgage loans to construction companies; Rural credit–line of credit for farmers and agricultural cooperatives, funds to cover current costs, investment and marketing of agricultural products; and Impairment of loans and advances– impairment of loans and advances represent management’s estimates of incurred losses in our portfolio of loans and advances. The assessment of this estimate is based on frequent revisions of individual loans and loans collectively assessed for impairment. Our criteria for segmenting clients for individual credit analysis purposes include those with transactions involving R$30 million or more, which is aligned with our evidence-based credit risk management process. After this initial classification, customers are assessed as to whether one or more events indicate objective evidence of impairment.As sometimes itmay not be possible to identify aspecificevent that caused impairment, in which case the combined effect of several events is noted. In addition, loss events may be specific, i.e. referring to only one customer, such as the delay in making contractual payments, a debt rescheduling or insolvency event; or they may be collective events affecting a larger group of assetsin view, for example, ofinterest rates or exchange rates, or falling activity affecting one or more sectors of the economy. For individually significant customers showing specific objective evidence, impairmentisestimated individually in light of expected future cash flows, including cash flows of collateral attached to the transactions. For customers that are not individually significant and show specific objective evidence, impairment will be estimatedaccording to historic loss experience based on information that is observable on the current date, so as to reflect effects according to our internal models. Customers not showing specific objective evidence of impairment, both individually significant and non-significant, are collectively assessed using our internal models based on collective parameters for observed losses and macroeconomic parameters for economic activity and delinquency. Models used for collective assessment are Probability of Default, Loss Given Default, and Loss Identification Period factor. Probability of Default (PD):states the probability of perceived default by the organization for the customer using an internal model. This risk parameter varies depending on the segment it belongs to: retail models are quantitative, while wholesale models are quantitative and qualitative (judgmental). Loss Given Default (LGD):refers to the percentage effectively lost after recovery attempts from breach of contract, defined in terms of percentage exposure. Loss Identification Period (LIP):periodbetweentheoccurrence of eventof loss in groups of significant and non-significant financial assets, which are collectively assessed,and its identification by the institution, as impairment.  Bradesco105


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|Form 20-F |  |  | 
|--------- |  |  | 

Charge-offs on loans and advances to customers Loans and advancesare charged-off against the impairment when the loan is considered uncollectible or is considered permanently impaired.Loans and advancesare charged off usually when they are between 180 and 360 days overdue. However, longer-term loans and advances, that have original terms greater than 36 months, are charged off when they are between 360 and 540 days overdue. We generally carry overdue loans as non-performing loans before charging them off.Impairment of loans and advances related to any loans remains on our books until the loan is charged-off. For more information on our categorization of loans, see "Regulation and Supervision – Bank regulations – Treatment of loans and advances."  Credit approval process For a description of our credit approval process, see "Credit Policy."  Indexation The majority of our portfolio of loans and advances is denominated inreais. However, a portion of our portfolio of loans and advances is indexed or denominated in foreign currencies, predominantly the U.S. dollar. Our loans and advances indexed to and denominated in foreign currency consist of onlending of Eurobonds and export and import financing, and represented 10.2% in 2013, and 9.2% in 2012 and 2011 of our portfolio of loans and advances. In many cases our customers hold derivative instruments to minimize exchange rate variation risk.    106Form 20-F – December 2013


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| |  |  | Form 20-F
| |  |  | ---------

Maturities and interest rates of loans and advances to customers The following tables show the distribution of maturities of our loans and advancesto customersby type, as well as the composition of our loans and advancesto customers’portfolio by interest rate and maturity, as of the dates indicated:  As of December 31, 2013
     R$ in thousandsDue within 30 days or less
     Due in 31 to 90 days
     Due in 91 to 180 days
     Due in 181 to 360 days
     Due in 1 to 3 years
     Due after 3 years
     No stated maturity(1)
     Total loans and advances, gross
     Impairment of loans and advances
     TotalType of loans and advances to customersWorking capital
     8,776,349
     6,850,037
     6,615,150
     9,858,566
     20,516,923
     4,724,725
     1,838,877
     59,180,627
     (2,018,116)
     57,162,511Personal credit
     2,407,341
     4,260,726
     4,953,170
     7,750,348
     15,198,228
     5,467,166
     1,885,704
     41,922,683
     (2,893,310)
     39,029,373BNDES/Finame onlendings
     1,699,783
     1,582,311
     2,126,300
     3,864,688
     21,824,745
     9,106,592
     338,848
     40,543,267
     (862,551)
     39,680,716Vehicles - Direct Consumer Financing (CDC)
     1,475,841
     3,025,648
     4,141,617
     7,098,553
     13,141,517
     1,510,704
     1,815,762
     32,209,642
     (2,298,898)
     29,910,744Housing loans
     98,281
     215,188
     435,821
     1,494,038
     8,692,510
     16,635,094
     299,530
     27,870,462
     (796,768)
     27,073,694Export financing
     1,459,666
     2,774,973
     3,483,660
     4,488,177
     7,910,773
     5,500,210
     44,755
     25,662,214
     (453,652)
     25,208,562Credit cards
     -
     -
     -
     -
     -
     -
     25,473,079
     25,473,079
     (3,072,543)
     22,400,536Rural loans
     312,691
     1,022,052
     1,814,397
     6,455,002
     1,270,275
     2,617,992
     159,508
     13,651,917
     (314,732)
     13,337,185Guaranteed account
     2,472,462
     4,923,015
     2,602,966
     58,472
     139,348
     -
     226,107
     10,422,370
     (224,615)
     10,197,755Import financing
     1,014,658
     1,851,281
     2,007,882
     1,177,132
     2,433,975
     104,153
     9,730
     8,598,811
     (39,942)
     8,558,869Leasing
     325,276
     574,925
     758,868
     1,208,492
     2,239,135
     426,875
     179,910
     5,713,481
     (463,771)
     5,249,710Insurance premiums receivable
     3,108,891
     337,666
     73,299
     35,789
     161,582
     -
     -
     3,717,227
     (218,945)
     3,498,282Overdraft facilities
     1,136,670
     1,379,059
     33,914
     -
     152,094
     -
     610,929
     3,312,666
     (416,282)
     2,896,384Others
     9,644,879
     6,200,571
     2,466,234
     1,732,212
     749,196
     1,245,176
     3,662,854
     25,701,122
     (5,784,109)
     19,917,013Total
     33,932,788
     34,997,452
     31,513,278
     45,221,469
     94,430,301
     47,338,687
     36,545,593
     323,979,568
     (19,858,234)
     304,121,334(1)Primarily composed of non-performing loans and advances to customers over 60 days, excluding credit cards operations.
   As of December 31, 2013
     R$ in thousandsDue within 30 days or less
     Due in 31 to 90 days
     Due in 91 to 180 days
     Due in 181 to 360 days
     Due in 1 to 3 years
     Due after 3 years
     No stated maturity
     Total loans, grossTypes of loans and advances to customer by maturityFixed rates
     31,480,465
     29,631,035
     25,552,704
     35,903,573
     61,975,297
     15,395,572
     36,004,302
     235,942,948Floating rates
     2,452,323
     5,366,417
     5,960,574
     9,317,896
     32,455,004
     31,943,115
     541,291
     88,036,620Total
     33,932,788
     34,997,452
     31,513,278
     45,221,469
     94,430,301
     47,338,687
     36,545,593
     323,979,568
     Bradesco107


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|Form 20-F |  |  | 
|--------- |  |  | 

Outstanding foreign loans Themajorityof our outstanding cross-border commercial loans that are denominated in foreign currencies areraised in U.S. dollars by subsidiaries of Brazilian companies through our Cayman branch. These loans represented, on average, approximately 3.0% of our total assets over the last three years. We believe that there are no significant cross-border risks on these transactions, since a substantial part of the related credit risk is guaranteed by the parent company in Brazil. The remainder of our outstanding cross-border transactions mainly includes investments in securities, which represented, on average, approximately 2.0% of our total assets over the last three years. Additionally, our deposit base is primarily composed of customers residing in Brazil and deposits in our branches outside Brazil account for less than 11.0% of our total deposits, and is therefore not considered significant.   108Form 20-F – December 2013


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| |  |  | Form 20-F
| |  |  | ---------

Loans and advances to customersby economic activity The following table summarizes ourloans and advances to customersby borrowers' economic activity, as of the dates indicated.  As of December 31,
     R$ in thousands, except %2013
     2012
     2011(Restated)
     (Restated)Loans and advances portfolio
     % of loans and advances portfolio
     Loans and advances portfolio
     % of loans and advances portfolio
     Loans and advances portfolio
     % of loans and advances portfolioPublic sector
     2,188,831
     
     423,180
     
     1,046,107Federal Government
     2,148,497
     
     260,544
     
     764,524Petrochemicals
     2,148,497
     0.7%
     260,544
     0.1%
     759,953
     0.3%Financial intermediaries
     -
     -
     -
     -
     4,571
     0.0%State Government
     40,334
     
     162,636
     
     281,583Production and distribution of electricity
     40,334
     0.0%
     162,636
     0.1%
     281,583
     0.1%Private sector
     321,790,737
     
     288,512,434
     
     261,756,814Manufacturing
     58,245,854
     
     54,187,104
     
     52,582,415Food and beverages
     13,195,437
     4.1%
     12,675,722
     4.4%
     13,001,645
     4.9%Steel, metallurgy and mechanics
     11,378,577
     3.5%
     9,319,624
     3.2%
     8,224,447
     3.1%Chemicals
     4,484,287
     1.4%
     4,667,812
     1.6%
     3,323,993
     1.3%Pulp and paper
     3,624,721
     1.1%
     4,104,273
     1.4%
     3,809,106
     1.4%Textile and clothing
     3,203,296
     1.0%
     3,118,933
     1.1%
     3,160,700
     1.2%Oil refining and production of alcohol
     2,732,785
     0.8%
     3,915,587
     1.4%
     3,384,333
     1.3%Rubber and plastic articles
     2,876,366
     0.9%
     2,630,216
     0.9%
     2,593,684
     1.0%Extraction of metallic and non-metallic minerals
     1,707,413
     0.5%
     1,691,074
     0.6%
     1,678,188
     0.6%Light and heavy vehicles
     4,630,370
     1.4%
     2,994,134
     1.0%
     2,849,552
     1.1%Furniture and wood products
     2,332,805
     0.7%
     2,100,539
     0.7%
     1,979,906
     0.8%Electro and electronic products
     1,915,767
     0.6%
     1,927,052
     0.7%
     2,155,117
     0.8%Non-metallic materials
     2,161,609
     0.7%
     1,669,913
     0.6%
     1,735,887
     0.7%Automotive parts and accessories
     1,296,869
     0.4%
     1,096,739
     0.4%
     1,032,833
     0.4%Leather articles
     818,542
     0.3%
     793,081
     0.3%
     764,423
     0.3%Publishing, printing and reproduction
     769,280
     0.2%
     725,450
     0.3%
     718,032
     0.3%Other industries
     1,117,730
     0.3%
     756,955
     0.3%
     2,170,569
     0.8%Commercial
     45,979,578
     
     45,315,607
     
     43,018,181Specialty stores
     11,093,681
     3.4%
     12,155,901
     4.2%
     11,618,405
     4.4%Food, beverages and tobbaco
     5,490,367
     1.7%
     5,350,015
     1.9%
     4,927,119
     1.9%Non-specialized retailer
     5,046,434
     1.6%
     4,329,860
     1.5%
     4,074,991
     1.6%Motor vehicles
     4,195,342
     1.3%
     3,925,530
     1.4%
     3,819,979
     1.5%Parts, acessories and motor vehicle repairing
     3,402,385
     1.1%
     3,205,393
     1.1%
     2,999,227
     1.1%Clothing and footwear
     3,522,719
     1.1%
     3,336,304
     1.2%
     3,443,340
     1.3%Personal and household goods
     2,788,145
     0.9%
     2,780,625
     1.0%
     2,537,517
     1.0%Waste and scrap
     2,366,354
     0.7%
     2,136,467
     0.7%
     2,053,469
     0.8%Fuel
     1,901,922
     0.6%
     1,916,698
     0.7%
     1,796,472
     0.7%Trade intermediaries
     1,533,412
     0.5%
     1,581,767
     0.5%
     1,667,236
     0.6%Wholesale of goods in general
     1,716,400
     0.5%
     1,624,754
     0.6%
     1,560,379
     0.6%Agricultural products
     1,352,744
     0.4%
     1,499,320
     0.5%
     1,156,628
     0.4%Other commercial activities
     1,569,673
     0.5%
     1,472,973
     0.5%
     1,363,419
     0.5%Services
     84,554,012
     
     72,446,408
     
     62,550,319Transportation and storage
     16,825,914
     5.2%
     15,412,301
     5.3%
     15,132,820
     5.8%Real estate activities, rentals and corporate services
     14,504,420
     4.5%
     12,561,211
     4.3%
     10,868,753
     4.1%Civil construction
     20,475,364
     6.3%
     17,453,598
     6.0%
     14,953,070
     5.7%Production and distribution of electricity, gas and water
     4,408,326
     1.4%
     4,633,717
     1.6%
     4,945,479
     1.9%Holding companies, legal, accounting and business advisory services
     5,386,952
     1.7%
     3,186,663
     1.1%
     2,682,721
     1.0%Social services, education, health, defense and social security
     4,007,990
     1.2%
     2,381,784
     0.8%
     2,749,685
     1.0%Lodging and catering services
     2,824,681
     0.9%
     2,653,359
     0.9%
     2,297,976
     0.9%Club, leisure, cultural and sport activities
     2,234,255
     0.7%
     2,116,085
     0.7%
     1,758,810
     0.7%Telecommunications
     484,397
     0.1%
     540,476
     0.2%
     577,396
     0.2%Other services
     13,401,713
     4.1%
     11,507,214
     4.0%
     6,583,609
     2.5%Individuals
     128,635,645
     39.7%
     112,989,410
     39.1%
     100,189,826
     38.1%Agribusiness
     4,375,648
     1.4%
     3,573,905
     1.2%
     3,416,073
     1.3%Total
     323,979,568
     100.0%
     288,935,614
     100.0%
     262,802,921
     100.0%Impairment of loans and advances
     (19,858,234)
     
     (19,914,294)
     
     (17,551,042)
   Bradesco109


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|Form 20-F |  |  | 
|--------- |  |  | 

Non-performing loans and advances and impairment of loans and advances The following table summarizes our non-performing loans and advances, whether they are subject to impairment or not, as well as those neither due nor impaired, and certain asset quality ratios for the dates shown.  December 31,

   R$ in thousands, except %2013

   2012

   2011

   2010

   2009(Restated)

   (Restated)Non‐performing loans and advances to customers, over 60 days

   13,650,513

   14,455,265

   12,968,613

   10,014,909

   9,554,019Foreclosed assets

   832,546

   532,973

   445,351

   412,142

   455,874Total non-performing loans and advances to customers and foreclosed assets

   14,483,059

   14,988,238

   13,413,964

   10,427,051

   10,009,893Total loans and advances to customers

   323,979,568

   288,935,614

   262,802,921

   225,635,918

   189,165,495Impairment of loans and advances

   19,858,234

   19,914,294

   17,551,042

   15,355,736

   14,925,145Non‐performing loans and advances as a percentage of total loans and advances to customers

   4.2%

   5.0%

   4.9%

   4.4%

   5.1%Non‐performing loans ad advances and foreclosed assets as a percentage of total loans and advances to customers

   4.5%

   5.2%

   5.1%

   4.6%

   5.3%Impairment of loans and advances as a percentage of total loans and advances

   6.1%

   6.9%

   6.7%

   6.8%

   7.9%Impairment of loans and advances as a percentage of non-performing loans and advances to customers

   145.5%

   137.8%

   135.3%

   153.3%

   156.2%Impairment of loans and advances as a percentage of non-performing loans and advances to customers and foreclosed assets

   137.1%

   132.9%

   130.8%

   147.3%

   149.1%Net charge‐offs for the period as a percentage of the average balance of loans and advances to customers (including non‐performing loans and advances)

   3.2%

   3.3%

   2.5%

   2.6%

   3.5%
  We do not have a significant amount of foreign loans. The majority of our assets are denominated inreais.    110Form 20-F – December 2013


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table of contents



| |  |  | Form 20-F
| |  |  | ---------

Impairment of loans and advances The following table shows impairment of loans and advances by type for the periods indicated:  December 31,

   R$ in thousands, except %2013

   2012

   2011

   2010

   2009(Restated)

   (Restated)Balance at the beginning of the period

   19,914,294

   17,551,042

   15,245,205

   14,925,145

   10,292,214Charge–off from assetsWorking capital

   (1,447,051)

   (1,368,689)

   (700,164)

   (743,329)

   (591,517)BNDES/Finame onlendings

   (232,101)

   (152,070)

   (117,580)

   (172,608)

   (232,984)Personal credit

   (1,447,057)

   (1,111,746)

   (872,786)

   (805,975)

   (859,668)Credit cards

   (1,626,581)

   (1,578,143)

   (1,293,047)

   (778,644)

   (981,467)Export financing

   (58,366)

   (27,148)

   (86,792)

   (80,564)

   (147,606)Leasing

   (381,582)

   (477,859)

   (627,566)

   (529,041)

   (191,136)Housing loans

   (94,700)

   (67,803)

   (66,270)

   (45,838)

   (47,943)Rural loans

   (69,683)

   (56,723)

   (54,155)

   (72,472)

   (59,382)Guaranteed account

   (252,838)

   (255,157)

   (159,945)

   (252,400)

   (256,805)Import financing

   (6,910)

   (2,543)

   (54)

   (1,415)

   (9,376)Overdraft facilities

   (676,805)

   (593,045)

   (436,984)

   (367,394)

   (389,535)Others (1)

   (7,026,270)

   (6,383,844)

   (4,317,347)

   (4,152,737)

   (4,104,138)Total charge–off from assets

   (13,319,944)

   (12,074,770)

   (8,732,690)

   (8,002,417)

   (7,871,557)RecoveriesWorking capital

   294,657

   209,557

   627

   477

   483BNDES/Finame onlendings

   69,533

   58,937

   92,432

   80,879

   36,185Personal credit

   492,383

   388,535

   379,973

   376,857

   217,929Credit cards

   370,184

   614,381

   436,625

   363,039

   255,581Export financing

   7,139

   1,400

   28,254

   81,650

   2,535Leasing

   83,813

   126,208

   105,887

   68,772

   26,986Housing loans

   720

   1,492

   107,562

   31,551

   43,678Rural loans

   42,177

   33,778

   59,040

   42,480

   33,146Guaranteed account

   36,268

   35,092

   45,314

   41,003

   24,529Import financing

   1,500

   12

   176

   1,265

   -Overdraft facilities

   162,306

   143,548

   125,122

   127,937

   86,756Others (1)

   2,079,334

   1,373,699

   1,418,157

   1,460,973

   967,069Total recoveries

   3,640,014

   2,986,639

   2,799,169

   2,676,883

   1,694,877Net charge–offs

   (9,679,930)

   (9,088,131)

   (5,933,521)

   (5,325,534)

   (6,176,680)Net impairment losses on loans and advances

   9,623,870

   11,451,383

   8,239,358

   5,756,125

   10,809,611Balance at the end of the period

   19,858,234

   19,914,294

   17,551,042

   15,355,736

   14,925,145Net charge‐offs for the period as a percentage of the average balance of loans and advances to customers (including non-performing loans and advances, over 60 days)

   3.2%

   3.3%

   2.5%

   2.6%

   3.5%
  Based on information available regarding our debtors, we believe the impairment of loans and advances recognized is sufficient to cover probable losses on our loans and advances.    Bradesco111


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|Form 20-F |  |  | 
|--------- |  |  | 

Allocated impairment of loans and advances The following tables set forth allocated impairment of loans and advances for the periods indicated. The allocated loss amount and the loans and advances category are stated as a percentage of total loans and advances.  December 31, 2013

   R$ in thousands, except %Allocated impairment of loans and advances

   Allocated impairment of loans and advances as a percentage of total loans and advances to customers (1)

   Loan and advances category as a percentage of total loans and advances (1)Type of loans and advances to customersWorking capital

   2,018,116

   0.7%

   18.5%BNDES/Finame onlendings

   862,551

   0.3%

   13.0%Vehicles - Direct Consumer Financing (CDC)

   2,298,898

   0.7%

   9.8%Personal credit

   2,893,310

   0.9%

   12.9%Credit cards

   3,072,543

   1.0%

   7.4%Export financing

   453,652

   0.1%

   8.2%Leasing

   463,771

   0.1%

   1.8%Housing loans

   796,768

   0.3%

   8.9%Rural loans

   314,732

   0.1%

   4.2%Guaranteed account

   324,615

   0.1%

   3.3%Import financing

   39,942

   -

   2.8%Overdraft facilities

   416,282

   0.1%

   0.9%Insurance premiums receivable

   218,945

   0.1%

   1.2%Others

   5,784,109

   1.9%

   7.1%Total

   19,958,234

   6.4%

   100.0%(1)Excludes non-performing loans and advances.
  December 31, 2012(Restated)

   R$ in thousands, except %Allocated impairment of loans and advances

   Allocated impairment of loans and advances as a percentage of total loans and advances to customers(1)

   Loan and advances category as a percentage of total loans and advances (1)Type of loans and advances to customersWorking capital

   2,132,210

   0.8%

   18.8%BNDES/Finame onlendings

   933,707

   0.3%

   12.8%Vehicles - Direct Consumer Financing (CDC)

   3,230,958

   1.2%

   11.3%Personal credit

   3,409,864

   1.2%

   11.1%Credit cards

   3,113,122

   1.2%

   7.2%Export financing

   289,968

   0.1%

   8.2%Leasing

   951,000

   0.3%

   2.8%Housing loans

   557,365

   0.2%

   8.0%Rural loans

   292,928

   0.1%

   4.1%Guaranteed account

   257,990

   0.1%

   3.5%Import financing

   30,255

   -

   2.4%Overdraft facilities

   538,749

   0.2%

   0.9%Insurance premiums receivable

   182,561

   0.1%

   1.1%Others

   3,993,617

   1.5%

   7.8%Total

   19,914,294

   7.3%

   100.0%(1)Excludes non-performing loans and advances.
   112Form 20-F – December 2013


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| |  |  | Form 20-F
| |  |  | ---------

December 31, 2011(Restated)

   R$ in thousands, except %Allocated impairment of loans and advances

   Allocated impairment of loans and advances as a percentage of total loans and advances to customers (1)

   Loan and advances category as a percentage of total loans and advances (1)Type of loans and advances to customersWorking capital

   1,516,512

   0.6%

   19.2%BNDES/Finame onlendings

   811,127

   0.3%

   14.0%Vehicles - Direct Consumer Financing (CDC)

   2,458,920

   1.0%

   11.4%Personal credit

   1,262,259

   0.5%

   9.3%Credit cards

   3,135,652

   1.3%

   7.0%Export financing

   170,655

   0.1%

   8.2%Leasing

   954,104

   0.4%

   4.3%Housing loans

   378,406

   0.2%

   6.3%Rural loans

   293,013

   0.1%

   4.3%Guaranteed account

   243,392

   0.1%

   3.8%Import financing

   25,618

   -

   2.0%Overdraft facilities

   485,462

   0.2%

   0.9%Insurance premiums receivable

   149,948

   0.1%

   1.0%Others

   5,665,974

   2.3%

   8.3%Total

   17,551,042

   7.2%

   100.0%(1)Excludes non-performing loans and advances.
   December 31, 2010

   R$ in thousands, except %Allocated impairment of loans and advances

   Allocated impairment of loans and advances as a percentage of total loans and advances to customers (1)

   Loan and advances category as a percentage of total loans and advances (1)Type of loans and advances to customersWorking capital

   2,003,554

   0.9%

   18.1%BNDES/Finame onlendings

   786,083

   0.4%

   13.5%Vehicles - Direct Consumer Financing (CDC)

   857,750

   0.4%

   11.1%Personal credit

   1,318,487

   0.6%

   9.0%Credit cards

   1,751,911

   0.8%

   7.6%Export financing

   309,876

   0.1%

   7.7%Leasing

   1,719,095

   0.8%

   7.1%Housing loans

   385,751

   0.2%

   4.7%Rural loans

   520,209

   0.2%

   4.6%Guaranteed account

   250,072

   0.1%

   4.1%Import financing

   23,725

   -

   1.8%Overdraft facilities

   235,361

   0.1%

   1.3%Insurance premiums receivable

   131,124

   0.1%

   1.0%Others

   5,062,738

   2.3%

   8.4%Total

   15,355,736

   7.0%

   100.0%(1)Excludes non-performing loans and advances.
   Bradesco113


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|Form 20-F |  |  | 
|--------- |  |  | 

December 31, 2009

   R$ in thousands, except %Allocated impairment of loans and advances

   Allocated impairment of loans and advances as a percentage of total loans and advances to customers (1)

   Loan and advances category as a percentage of total loans and advances (1)Type of loans and advances to customersWorking capital

   1,795,049

   1.1%

   16.5%BNDES/Finame onlendings

   554,711

   0.4%

   10.1%Vehicles - Direct Consumer Financing (CDC)

   786,684

   0.5%

   10.0%Personal credit

   1,456,021

   0.7%

   8.5%Credit cards

   2,673,552

   1.0%

   7.3%Export financing

   375,949

   0.2%

   9.2%Leasing

   1,889,299

   1.0%

   11.1%Housing loans

   298,013

   0.2%

   3.8%Rural loans

   585,751

   0.3%

   5.0%Guaranteed account

   520,103

   0.1%

   4.8%Import financing

   55,341

   -

   2.0%Overdraft facilities

   418,609

   0.1%

   1.3%Insurance premiums receivable

   112,688

   0.1%

   1.3%Others

   3,403,375

   2.8%

   9.1%Total

   14,925,145

   8.5%

   100.0%(1)Excludes non-performing loans and advances.
   Loans and advances to banks The following tables summarize our outstanding loans and advances to banks by type, and changes in impairment on loans and advances for the periods shown.  December 31,

   in thousands of R$2013

   2012

   2011(Restated)

   (Restated)Repurchase agreementsOwn portfolio positionFinancial treasury bills

   17,661

   226,140

   2,311,436National treasury bills

   18,755,345

   39,918,804

   10,694,594National treasury notes

   33,173,862

   17,835,940

   24,248,758Debentures

   -

   35,981

   1,163,330Others

   58,692

   10,182

   -Short positionBrazilian government securities

   5,216,744

   10,641,422

   3,369,025Total of repurchase agreements

   57,222,304

   68,668,469

   41,787,143Loans and advances to banksInterbank deposits

   7,278,913

   7,832,607

   8,195,549Foreign currency transactions

   3,290,687

   1,540,422

   2,582,484Bank deposit certificates

   6,391,631

   7,862,591

   10,101,437Credit acquisition with co-obligation

   4,579,430

   6,589,190

   10,047,742Impairment of loans and advances

   (43,242)

   (33,932)

   (53,759)Total of loans and advances to banks

   21,497,419

   23,790,878

   30,873,453Total

   78,719,723

   92,459,347

   72,660,596
  December, 31

   in thousands of R$2013

   2012

   2011(Restated)

   (Restated)Balance at the beginning of the year

   33,932

   53,759

   51,228Additions/Reductions

   9,310

   (19,827)

   2,531Balance at the end of the year

   43,242

   33,932

   53,759


114Form 20-F – December 2013




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| |  |  | Form 20-F
| |  |  | ---------

Average deposit balances and interest rates The following table shows the average balances of deposits as well as the average interest rate paid on deposits for the periods indicated:  Year ended December 31,

   R$ in thousands, except %2013

   2012

   2011(Restated)

   (Restated)Average balance

   Average rate

   Average balance

   Average rate

   Average balance

   Average rateDepositsNon–interest–bearing depositsDemand deposits

   36,876,193

   -

   33,138,109

   -

   32,539,861

   -Interest–bearing depositsInterbank deposits

   671,404

   9.4%

   471,502

   10.3%

   360,575

   12.9%Savings deposits

   73,307,137

   5.6%

   62,758,934

   5.8%

   55,515,889

   6.8%Time deposits

   99,565,994

   5.9%

   117,960,891

   6.4%

   122,478,193

   9.1%Total interest–bearing deposits

   173,544,535

   

   181,191,327

   

   178,354,657Total deposits

   210,420,728

   

   214,329,436

   

   210,894,518
  Maturity of deposits The following table shows the distribution of our deposits by maturity at the date indicated:  December 31, 2013

   R$ in thousandsDue in 3 months or less

   Due after 3 months to 6 months

   Due after 6 months to 1 year

   Due after 1 year

   TotalDomestic depositsNon–interest–bearing depositsDemand deposits(1)

   39,876,154

   -

   -

   -

   39,876,154Interest–bearing depositsInterbank deposits

   455,415

   101,012

   29,928

   203,820

   790,175Savings deposits(1)

   80,717,805

   -

   -

   -

   80,717,805Time deposits

   4,152,827

   5,519,143

   11,917,198

   50,035,929

   71,625,097Total interest–bearing deposits

   85,326,047

   5,620,155

   11,947,126

   50,239,749

   153,133,077Total domestic deposits

   125,202,201

   5,620,155

   11,947,126

   50,239,749

   193,009,231International deposits(2)Non–interest–bearing depositsDemand deposits

   743,583

   -

   -

   -

   743,583Interest–bearing depositsInterbank deposits

   173,680

   -

   -

   -

   173,680Time deposits

   20,608,530

   1,067,309

   1,030,839

   1,535,050

   24,241,728Total interest–bearing deposits

   20,782,210

   1,067,309

   1,030,839

   1,535,050

   24,415,408Total international deposits

   21,525,793

   1,067,309

   1,030,839

   1,535,050

   25,158,991Total deposits

   146,727,994

   6,687,464

   12,977,965

   51,774,799

   218,168,222(1)Demand deposits and savings deposits are classified as due in up to three months, without taking into account the average turnaround history; and(2)Denominated in currencies other thanreais, primarily U.S. dollars.
  The following table shows maturity of outstanding time deposits with balances of over US$100,000 (or its equivalent), by maturity, as of the date indicated:  December 31, 2013

   R$ in thousandsDomestic currency

   International currencyMaturity within 3 months

   2,145,728

   20,606,565Maturity after 3 months but within 6 months

   3,510,537

   1,064,803Maturity after 6 months but within 12 months

   7,365,198

   1,029,867Maturity after 12 months

   25,644,816

   1,535,050Total deposits in excess of US$100,000

   38,666,279

   24,236,285
   Bradesco115


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|Form 20-F |  |  | 
|--------- |  |  | 

Funding in the open market Funding in the open market amounted to R$185,055 million as of December 31, 2013, R$175,646 million as of December 31, 2012 and R$150,002 million as of December 31, 2011. The following table summarizes funding in the open market for the periods indicated:  Year ended December 31,

   R$ in thousands, except %2013

   2012

   2011(Restated)

   (Restated)Funding in the open marketAmount outstanding

   185,055,358

   175,646,854

   150,001,844Maximum amount outstanding during the period

   185,055,358

   175,530,009

   150,001,844Weighted average interest rate at period end (1)

   7.2%

   5.3%

   11.1%Average amount outstanding during period

   182,981,063

   152,443,947

   128,494,578Weighted average interest rate

   9.1%

   7.7%

   10.9%Total

   185,055,358

   175,646,854

   150,001,844(1)We calculated the average balances using the month-end book balances, including the related allocated interest.
  4.C.Organizational Structure
 We are a publicly-held company controlled by Cidade de Deus Participações, a holding company owned by the Aguiar Family,Fundação Bradescoand another holding company, Nova Cidade de Deus Participações S.A., or "Nova Cidade de Deus."Nova Cidade de Deus is owned by Fundação Bradesco and by BBD Participações.See "Item 7.A. Major Shareholders." Our list of significant subsidiaries as of December 31, 2013, can be found in Exhibit 8.1 to thisdocument.  4.D.Property, Plants and Equipment
 As of December 31, 2013, we owned 822 properties and leased 3,747 properties throughout Brazil and 10 properties abroad, all of which we used for the operation of our network of branches and our business. We own the buildings where our headquarters are located in Cidade de Deus, Osasco, São Paulo metropolitan region, State of São Paulo. Rental agreements have an average duration of 9 years.  ITEM 4A.UNRESOLVED STAFF COMMENTS
 None.  ITEM 5.OPERATING AND FINANCIAL REVIEW AND PROSPECTS
 5.A.Operating Results
 This discussion should be read in conjunction with our audited consolidated financial statements, the notes thereto and other financial information included elsewhere in this annual report.  Overview Our results of operations are affected by, among others, the following factors.  Brazilian Economic Conditions Our results of operations are directly affected by economic conditions in Brazil. Economic conditions directly impact our customers’ ability to pay their financial obligations on time, which affects our impairment of loans and advances and our balance of outstanding loans and advances. In addition, the impact of economic conditions on exchange rates affects our net interest income, since part of our financial assets and liabilities are denominated in or indexed to foreign currencies, primarily U.S. dollars. In 2011, GDP grew by 2.7%. Therealdepreciated to R$1.8758 per U.S. dollar as of December 31, 2011 compared to R$1.6662 as of December 31, 2010. The COPOM increased the base interest rate from


10.75% as of December 31, 2010 to 11.00% as of December 31, 2011, after reaching 12.50% in July of that year, before the deterioration of the world economy. Inflation for the year ended December 31, 2011, as measured by the IGP-DI, was 5.0%.  116Form 20-F – December 2013


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| |  |  | Form 20-F
| |  |  | ---------

The Brazilian Institute of Geography and Statistics (IBGE) reviewed the results of the GDP for 2012, which was revised from a growth of 0.9% to a growth of 1.0% compared to 2011.Therealdepreciated to R$2.0435 per U.S. dollaras of December 31, 2012, as compared to R$1.8758 as of December 31, 2011. The COPOM reduced thebase interest ratefrom 11.00% as of December 31, 2011 to 7.25% as of December 31, 2012, leading to its lower level in the history. Inflation, as measured by the IGP-DI, was 8.1% for the year ended December 31, 2012. In 2013, GDP grew by 2.3%. Therealdepreciated to R$2.3426 per U.S. dollar as of December 31, 2013, as compared to R$2.0435 as of December 31, 2012. The COPOM increasedthe base interest ratefrom 7.25% as of December 31, 2012 to 10.0% as of December 31, 2013. Inflation, as measured by IGP-DI, was 5.5% for the year ended December 31, 2013. The following table shows Brazilian inflation measured by IGP-DI, the depreciation of therealagainst the U.S. dollar, the exchange rate at the end of each year and the average exchange rate for the periods indicated:  December 31,

   In R$, except %2013

   2012

   2011Inflation (IGP‐DI)

   5.5%

   8.1%

   5.0%Depreciation of the real against the U.S. dollar

   (14.6)%

   (8.9)%

   (12.6)%Period-end exchange rate-US$1.00

   2.3426

   2.0435

   1.8758Average exchange rate‐US$1.00(1)

   2.1641

   1.9524

   1.6705(1)The average exchange rate is the sum of the closing exchange rates at the end of each month in the period divided by the number of months in the period.Sources: FGV and the Central Bank.
  The following table shows GDP variation in real terms and average interbank interest rates for the periods indicated:   December 31,

   2013

   2012

   2011Change inrealGDP (1)

   2.3%

   1.0%

   2.7%Average base interest rates (2)

   8.2%

   8.5%

   11.6%Average interbank interest rates (3)

   8.1%

   8.4%

   11.6%(1)Calculated by dividing the change inrealGDP during a year by therealGDP of the previous year;(2)Calculated in accordance with Central Bank methodology (based on nominal rates); and(3)Calculated in accordance with Clearing and Custody Chamber ("CETIP") methodology (based on nominal rates).Sources: The Central Bank, the Brazilian Geography and Statistics Institute and CETIP.
  Effects of the global financial markets on our financial condition and results of operations 2013 was characterized by higher volatility in global financial markets. One of the most critical moments of the period occurred between the months of May and June, vis-à-vis the intensification of perceptions that the Federal Reserve would begin the process of imminently reducing monetary stimuli (Quantitative Easing). Most relevant impacts occurred in relation to long-term interest rates, which led to significant increases in the strength of the U.S. dollar and continued its trend of appreciation. As a result, long-term interest rates worldwide were put under pressure, while the currencies of various countries depreciated, particularly in emerging markets, which were already under pressure as a result of fears of a sharp slowdown in China’s economy. Interest rates and foreign exchange rates in Brazil were impacted by this complex external situation, in a context of inflationary pressures, and downgrading the outlook of Brazil's sovereign credit rating by two risk rating agencies.One of these outlook changes turned into a downgrade ofBrazil's sovereign credit ratingin March 2014. In the last months of 2013, the outlook for the recovery of economic activity of developed countries gained momentum vis-à-vis improvements of several indicators. At the same time, China’s economy showed signs of stabilization and the economic reforms announced in November allayed fears of a hard landing. In


December 2013, the Federal Reserve announced that it would begin reducing the pace of monetary stimuli starting in January 2014, albeit gradually. This announcement was accompanied by explicit signals that the monetary policy of the foremost global economy will remain accommodative for an extended period, but did not prevent a further round of increases in long-term interest rates and the depreciation of emerging countries’ currencies.  Bradesco117


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|Form 20-F |  |  | 
|--------- |  |  | 

Commodities, in this global context, maintained a general trend of price decline since 2011. We believe that this trend is expected to persist, both on account of macroeconomic vectors (increase in long-term interest rates, appreciation of the U.S. dollar) and the influence of specific factors related to a strong expansion of the offering in certain segments. If this situation reduces inflationary concerns, it would enable the gradual and widely-signaled normalization of monetary policy in developed countries. However, it could also accentuate the challenges of managing economic policy in emerging countries. In summary, the risks to the global economy remain present in spite of the outlook of accelerated economic activity in the foremost developed economies and stabilization of Chinese growth, still at a high level. In particular, structural and long-term fiscal imbalances in developed economies maintain the outlookof economic growth lower than that seen in the pre-crisis years. Political uncertaintyremains, particularly regarding public finances in theUnited States. Even so, 2014 began with the prospect of intensifying the resumption of global growth, supported by accommodative monetary policies.  Effects of interest rates and devaluation/appreciation on net interest income During periods of high interest rates, our interest income increases due to increasing interest rates on our interest-earning assets. At the same time, our interest expense increases as interest rates on our interest-bearing liabilities also increase. Changes in the volumes of our interest-earning assets and interest-bearing liabilities also affect our interest income and interest expense. For example, an increase in our interest income attributable to an increase in interest rates may be offset by a decrease in the volume of our outstanding loans. In addition, when therealdepreciates, we incur: (i) losses on our liabilities denominated in, or indexed to, foreign currencies, such as our U.S. dollar-denominated long-term debt and foreign currency loans, as the cost inreaisof the related interest expense increases; and (ii) gains in our assets denominated in, or indexed to, foreign currencies, such as our dollar-indexed securities and loans and advances, as the income from such assets as measured inreaisincreases. Conversely, when therealappreciates, as was the case from 2003 to 2007 and 2009 to 2010, we incur: (i) losses on our assets denominated in, or indexed to, foreign currencies; and (ii) gains in our liabilities denominated in, or indexed to, foreign currencies. In 2012, our net interest income increased by 22.6% as compared to 2011, from R$35,388 million in 2011 to R$43,386 million in 2012. This growth is mainly related to the increase: (i) of the average interest rate from 6.2% in 2011 to 6.7% in 2012, positively impacting the results by R$4,368 million, mainly due to a decrease of 3.2 p.p. in the average interbank interest rate, which went from 11.6% in 2011 to 8.4% in 2012; and (ii) the average business volume, which contributed R$3,630 million, reflecting an increase of 13.0% in the average balance of interest-earning assets, increasing our revenues by R$9,937 million, highlighting the increase of: (a) 11.8% in the average balance of loans and advances to customers; (b) 25.2% in the average balance of assets pledged as collateral; and (c) 99.5% in the average balance of financial assets available for sale. In 2013, our net interest income increased by 13.6% as compared to 2012, from R$43,386 million in 2012 to R$49,300 million in 2013. This growth is mainly related to the increase in the average business volume, which contributed with R$5,106 million, reflecting an increase of 10.6% in the average balance of interest-earning assets, increasing our revenues by R$8,841 million, highlighting the increase of: (a) 10.3% in the average balance of loans and advances to customers; (b) 18.7% in the average balance of assets pledged as collateral; (c) 32.0% in the average balance of loans and advances to banks; and (d) 19.5% in the average balance of financial assets available for sale.   118Form 20-F – December 2013


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table of contents



| |  |  | Form 20-F
| |  |  | ---------

The following tables show our foreign-currency denominated and indexed assets and liabilities as of the dates indicated:  December 31,

   R$ in thousands2013

   2012

   2011(Restated)

   (Restated)AssetsCash and balances with banks

   3,050,450

   3,151,043

   6,474,772Financial assets held for trading

   822,785

   348,742

   1,992,976Financial assets available for sale

   7,402,621

   5,426,163

   1,993,671Investments held to maturity

   45,673

   56,097

   620,485Assets pledged as collateral

   2,397,029

   4,302,735

   3,529,535Loans and advances to banks

   3,582,833

   2,171,236

   3,139,512Loans and advances to customers

   33,037,149

   26,557,416

   24,208,464Investments in associated companies and joint ventures

   -

   4,976

   30,152Property and equipment

   14,570

   15,801

   16,238Intangible assets and goodwill

   28,477

   25,942

   26,655Taxes to be offset

   31,339

   25,867

   32,490Deferred income tax assets

   106,057

   15,842

   188,915Other assets

   8,924,365

   8,120,292

   9,140,914Total assets

   59,443,348

   50,222,152

   51,394,779Off‐balance sheet accounts – notional valueDerivativesFutures

   30,196,878

   27,408,058

   9,179,950Forward

   12,274,295

   11,095,747

   14,327,285Options

   610,496

   1,420,300

   172,554Swaps

   45,167,298

   39,595,426

   20,109,015Total assets with derivatives (a)

   147,692,315

   129,741,683

   95,183,583
    December 31,

   R$ in thousands2013

   2012

   2011(Restated)

   (Restated)LiabilitiesDeposits from banks

   18,213,248

   12,416,316

   21,079,983Deposits from customers

   24,865,557

   23,666,709

   20,459,581Financial liabilities held for trading

   346,724

   298,041

   71,094Funds from securities issued

   11,474,847

   14,188,239

   8,409,878Subordinated debt

   8,951,638

   8,806,973

   6,404,048Insurance technical provisions and pension plans

   1,075

   1,100

   1,183Other provisions

   7,099

   4,367

   4,009Current income tax liabilities

   30,694

   19,791

   11,474Deferred income tax liabilities

   22,794

   229,536

   120,191Other liabilities

   8,002,170

   5,880,489

   3,505,029Total liabilities

   71,915,846

   65,511,561

   60,066,470Off‐balance sheet accounts – notional valueDerivativesFutures

   41,515,506

   37,422,501

   18,363,963Forward

   12,826,691

   9,869,571

   12,050,673Options

   781,401

   1,467,968

   653,746Swap

   44,851,978

   36,451,019

   20,328,448Total liabilities with derivative (b)

   171,891,422

   150,722,620

   111,463,300Net exposure (a-b)

   (24,199,107)

   (20,980,937)

   (16,279,717)
   Bradesco119


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|Form 20-F |  |  | 
|--------- |  |  | 

We use swaps, futures contracts and other hedging instruments in order to minimize the potential impact of currency changes on us. For more information on our use of derivatives for hedging purposes, see Notes 2(e), and 20(c) to our consolidated financial statements in "Item 18. Financial Statements." Our net exposure in relation to our total assets amounted to 2.3% as of December 31, 2011, 2.6% as of December 31, 2012 and 2.9% as of December 31, 2013.  Taxes Our income tax expenses comprise two federal taxes: (i) IRPJ, which is assessed at a rate of 15.0% on our adjusted net income, plus an additional of 10.0%; and (ii) the social contribution tax, which is assessed at a rate of 15.0% on our adjusted net income. In January 2008, the Brazilian government increased the social contribution tax rate for the financial segment from 9.0% to 15.0%. Financial institutions have been incurring the social contribution tax on adjusted net income at a 15.0% rate since May 1, 2008. The legality of this increase is being challenged in actions brought before the Brazilian Supreme Court. If the Brazilian Supreme Court decides that this increase is not legal, we will be entitled to recover any amount we have paid under the 15.0% tax rate regime in excess of what we would have incurred for the social contribution tax under the 9.0% regime. Brazilian corporations may pay shareholders interest on equity as an alternative form of making a portion of dividend distributions, which are deductible from taxable income. We intend to maximize the amount of dividends we pay in the form of interest on equity. For further information on our tax expenses, see "Item 4.B. Business Overview-Regulation and Supervision-Taxation" and "Item 10.B Memorandum and Articles of Incorporation-Organization-Allocation of net income and distribution of dividends" and "Item 10.E. Taxation-Brazilian tax considerations-Distributions of interest on equity."  Impact of material acquisitions on our future financial performance We believe that the acquisitions and strategic alliancesconducted in the last years will contribute toincrease our future results. The amount of these increases is uncertain, and we therefore cannot estimate their impact on our future financial performance. For more information, see "Item 4.A. History, Development of the Company and Business Strategy-Recent acquisitions" and “Item 4.A. History, Development of the Company and Business Strategy - Other strategic alliances.”  Critical accounting policies Our significant accounting policies are described in Note 4 to our audited consolidated financial statements in "Item 18. Financial Statements." The following discussion describes the areas that require the most judgment or involve a higher degree of complexity in the application of the accounting policies that currently affect our financial condition and results of operations. The accounting estimates we make in these contexts involve making assumptions about highly uncertain matters. In each case, other estimates or changes in the estimates between periods could have had a material impact on our financial condition and results of operations, as shown in our financial statements.  Impairment of loans and advances At the end of each reporting period, we adjust our impairment of loans and advances based on an analysis of our portfolio, including estimated impairment of loans and advances. The determination of the impairment of loans and advances, by nature requires judgments and assumptions about the portfolio of loans and advances, for both specific products and portfolios and on an individual basis. When we analyze our portfolio as a whole, several factors can affect our estimate of the likely range of losses, depending on the methodology we use for measuring historical delinquency rates and the historical period we consider in making those measurements. Additional factors that may affect the determination of impairment of loans and advances include: ·general economic conditions and conditions in the relevant industry; ·past experience with the relevant debtor or industry, including recent loss experience; ·trends affecting quality of loans; ·value of collateral for loans and advances;  120Form 20-F – December 2013


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| |  |  | Form 20-F
| |  |  | ---------

·volume, composition and growth of our loans and advances; ·the Brazilian government's monetary policy; and ·any delays in receiving information needed to value loans and advances or confirm existing impairment.  We use models to analyze portfolio of loans and advances and determine the extent of impairment. Statistical loss factors and other risk indicators are applied to loan and advances pools with similar risk characteristics in arriving at an estimate of incurred losses in the portfolio to calculate the models. Although models are often monitored and reviewed, by their nature, they depend on judgments made in relation to information and/or forecasts used. The volatility of the Brazilian economy is one of the reasons that may lead to greater uncertainty in our models than would be expected in more stable macroeconomic environments. Consequently, our impairment of loan and advances estimate may not be indicative of actual future losses. For a sensitivity analysis, we assess the impact of an increase in the probability of default (PD) over the amount of impairment. In this assessment, an increase in 10% of the PD as of December 31, 2013, would have increased the impairment by approximately R$287 million. This sensitivity analysis is hypothetical, and is only meant to illustrate the impact that the defaults have on determining impairment. The process of determining the level of impairment loss requires use of estimates, assumptions and judgment. Actual results for losses in the period as shown in subsequent periods may differ from initial calculations based on such estimates and assumptions. For additional information regarding our practices related to the impairment of loans and advances, see "Item 4.B. Business Overview-Selected Statistical Information-Loans and advances" and "Item 4.B. Business Overview-Selected Statistical Information-Non-performing loans and advances and impairment of loans and advances."  Fair value of financial instruments The financial instruments recorded at fair value in our consolidated financial statements consist primarily of financial assetsclassified asheld for trading, including derivatives and financial assets classified as available for sale. The fair value of a financial instrument is the amount for which it could be traded in an arm’s length transactionbetween willing parties, without any forced sale and settlement. These financial instruments are categorized in a ranking based on the lowest level of information significant for measuring fair value. For instruments classified as Level 3, we have to use a significant amount of our own judgment to measure fair market value. We base our judgment on our knowledge and observations of the markets for individual assets and liabilities and these judgments may vary based on market conditions. In applying our judgment, we analyze a series of third-party prices and transaction volumes to understand and assess the extent of available market benchmarks and the judgment or modeling required in processes with third parties. Based on these factors, we determine whether fair values are observable in active markets or markets are inactive. The fair values of financialassets held for trading and available for saleare primarily based on actively traded markets where prices are based on direct market quotes, observed transactions or market prices for similar assets. Liquidity is a significant factor in the determination of the fair values of financial assets held for trading and available for sale. Situations of illiquidity generally are triggered by the market's perception of credit uncertainty regarding a single company or a specific market sector. In these instances, the financial assets are classified within Level 3 of the valuation hierarchy once the fair value is determined, based on unobservable inputs that are supported by limited available market information and that are significant to the fair value of the assets, as well as other factors which require Management to exercise significant judgment or estimation. As of December 31, 2013, R$41.769 million, or 25.5%, of financial assets held for trading and available for sale were classified as Level 3 fair value assets. Exchange-traded derivatives valued using quoted prices are classified within Level 1 of the valuation hierarchy. However, few classes of derivatives contracts are listed on the exchange. Therefore, the majority of our derivative positions are determined by using quantitative models that require the use of multiple inputs including interest rates, prices and indices to generate continuous yield or pricing curves and volatility factors, including the period to maturity. These inputs are used to value the position. Most market inputs are observable and can be obtained mainly from BM&FBOVESPA and the secondary market. As of December 31, 2013, we did not have derivatives assets and liabilities classified as Level 3.  Bradesco121


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|Form 20-F |  |  | 
|--------- |  |  | 

The imprecise nature of estimating non-observable market data may impact amounts of revenue or loss posted for a particular position. In addition, although we believe our valuation methods are appropriate and consistent with those of other market participants, the use of different methodologies or assumptions to determine fair value of certain financial instruments may result in a different estimate of fair value on reporting date. For a detailed discussion of the determination of fair value of financial instruments, see Note 3to our consolidated financial statements in "Item 18. Financial Statements."  Impairment of financial assets available for sale Periodically, we assess the existence of impairment of financial assets available for sale if there is a prolonged or significant decrease in their fair value, see Note 2(e)(viii)(b). Determining a prolonged or significant decrease in value requires the use of judgment, as to what normal volatility is for asset prices, among other factors. In addition, valuations use market prices or models that require the use of certain assumptions or judgment to estimate fair value.  Classification of securities The classification of securities into financial assets held for trading, available for sale, or investments held to maturity categories is based on Management's intention to hold or trade such securities at the time of acquisition.The accounting treatment of the securities we hold depends on whether we classify them at acquisition as financial assets held for trading, available for sale or investments held to maturity. Changes in circumstances may modify our strategy with respect to a specific security, requiring transfers among the three categories. In 2013, we reclassified securities fromfinancial assets available for sale to investments held to maturity, in the amount of R$19,121 million, resulting from a change in our Management’s intention in relation to the holding of these securities. The mark-to-market accounting of these securities, in the amount of R$479 million, was held in shareholders' equity, and will be recognized in our results for the remaining term of securities.  Impairment of goodwill At least every year, we have to determine whether the current carrying value of goodwill has been impaired or not. The first step in the process is identifying independent cash generating units and their allocations of goodwill. A unit's carrying amount, including allocated goodwill, is then compared to value in use to see whether there is impairment. If a cash-generating unit's value in use is less than carrying amount, goodwill is impaired. Detailed calculations to reflect changes in the market in which a business operates may be required (e.g. competition and regulatory change). Calculations are based on discounted cash flows before tax at an interest rate adjusted by appropriate risk for the operational unit; in both cases determining these values requires the use of judgment. Although predictions are compared to current performance and external economic data, expected cash flows reflect our outlook for future performance.  Income tax The determination of our income tax liability (including CSLL social contribution) is a complex task that is related to our analysis of deferred tax assets and liabilities and income tax to be paid. In general, our assessment requires us to estimate future amounts of current and deferred income tax. Our assessment of the possibility of realizing deferred tax is subjective and involves assessments and assumptions that are inherently uncertain. Realization of deferred tax assets is subject to changes in future interest rates and developments of our strategies. Support for our judgments and assumptions may change over time because of unanticipated events or circumstances that affect the determination of our tax liability. Significant judgment is required to determine whether an income tax position will be sustained upon examination, even after the outcome of any administrative or judicial proceeding based on the technical merits. Judgment is also required to determine the value of a benefit eligible for recognition in our consolidated financial statements. Additionally, we monitor interpretation of tax legislation and decisions made by tax authorities and courts, in order to adjust any previous judgment as to accrued income tax. This monitoring may also arise from our income tax planning and or settlement of income tax disputes and may be significant for our


operating income in any given period. For further information on our income tax, see Note 17 to our consolidated financial statements in "Item 18. Financial Statements."  122Form 20-F – December 2013


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| |  |  | Form 20-F
| |  |  | ---------

For additional information regarding our income tax, see "Item 4.B. Business Overview-Regulation and Supervision-Taxation-Income and social contribution taxes on profits."  Insurance technical provisions and pension plans Our insurance technical provisions and pension plans are liabilities for amounts we estimate will be due to our policyholders and plan participants at a certain point in the future.These values represent thefutureclaims/benefits stated in contracts, such as retirement payments, pensions, individual and group life insurance, health insurance and accident insurance, among other items. Benefits and claims stated in contracts also include provisions for claims incurred but not reported relating to health, property and life insurance. We recognize claims in the period in which the service was provided to our policyholders. However, claim costs incurred in a particular period are not known with certainty until we receive the reports, process them, and pay out the claims. We determinethe amount of such provisionusing actuarial methods based on historical payments of claims to determine our estimates of claim liabilities. Methods used to determine these estimates and to make technical provisions are regularly reviewed and updated. The resulting adjustments are recognized in earnings for the respective period. For additional information, see Note 2(p) to our consolidated financial statements.In short-term contracts, provisions for insufficient premium can also be recognized to cover any resulting differences between the expected value of the future claims and future related expenses and the expected value of future premiums. For certain products offered, such as pension plans and funds, participants go through two distinct phases as part of the contract: first accumulating assets, then enjoying benefits. During the accumulation phase, technical provisions increase as contributions are received and interest is credited (based on contractual arrangements) anddecrease by the redemptions paid. If provisions are insufficient to honor future commitments, provision for insufficient contributions is made.The technical provisions are computed using assumptions of mortality, disability, cancellation, interest rates, inflation and costs, which are based on our experience and are periodically reassessed in relation to the sector patterns. For sensitivity analysis purposes,regarding damage, life and health insurance, we assessed the impacts of both an increase and a decrease in loss events. In this assessment, an increase (1%) or a decrease (1%) in loss events in the 12 months prior to calculation base date would represent an impact of R$64 million in expenses or revenues, respectively, onincome and shareholders’ equity after taxes and contributions. In relation to life insurance with living benefits and pension plan and individual life insurance, we assessed the impact of decreasing interest rates and increasing beneficiary longevity on income and shareholders’ equity after taxes and contributions and increase in the income-conversion option.In this assessment, a decrease of 5.0% in interest rates would lead to a R$393 million decrease onincome and shareholders’ equity after taxes and contributions.The increaseof0.002% in the longevity of beneficiaries would representa negativeimpact of R$61 million on income and shareholders’ equity after taxes and contributions, while an increaseof5.0% in the conversion into income would representa negativeimpact of R$16 million on income and shareholders’ equity after taxes and contributions.  Use of estimates Upon issuance of the financial statements, Management also makes estimates and assumptions concerning useful lives of certain non-financial assets and possible impairment of a specific asset or group of assets. Estimates are by nature based on judgment and available information. Therefore, actual results may differ from these estimates.    Bradesco123


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|Form 20-F |  |  | 
|--------- |  |  | 

Commitments and contingencies We have contractual obligations to make certain payments to third parties, in accordance with the amounts presented in the following table:  Contractual Obligations

   R$ in thousandsPayments due as of December 31, 2013Less than 1 year (1)

   1 to 3 years

   3 to 5 years

   More than 5 years

   TotalTime deposits

   44,295,846

   50,492,097

   873,575

   205,307

   95,866,825Funding in the open market

   168,503,295

   15,590,782

   578,238

   383,043

   185,055,358Borrowings

   14,194,746

   1,034,225

   1,883

   -

   15,230,854Onlendings

   12,227,927

   17,874,789

   6,612,751

   4,148,529

   40,863,996Funds from securities issued

   20,848,266

   31,102,295

   4,737,758

   1,194,749

   57,883,068Subordinated debt

   2,581,899

   2,359,787

   18,657,143

   12,286,174

   35,885,003Other obligations (2)

   169,296,764

   23,857,614

   128,364

   367,686

   193,650,428Total

   431,948,743

   142,311,589

   31,589,712

   18,585,488

   624,435,532(1)Based on our historical experience, we expect that most of our obligations that are contractually due within one year will be rolled over; and(2)Includes insurance technical provisions and pension plans.
  Off-balance sheet financial guarantees In addition to our loans and advances, we have credit-related transactions with our customers for attending to their financing needs. In accordance with IFRS, these transactions are not recorded on our balance sheet. The following table summarizes these off-balance sheet financial arrangements as of December 31, 2013:   Contractual Obligations

   R$ in thousandsPayments due as of December 31, 2013Less than 1 year

   1 to 3 years

   3 to 5 years

   More than 5 years

   TotalFinancial guarantees

   15,711,961

   12,336,956

   5,355,524

   34,181,803

   67,586,244Letters of credit

   735,505

   -

   -

   -

   735,505Total

   16,447,466

   12,336,956

   5,355,524

   34,181,803

   68,321,749
  We guarantee our customers' performance in obligations with third parties. We have the right to seek reimbursement from our customers for any amounts paid under these guarantees. Additionally, we may hold cash or other collateral with higher liquidity to guarantee these obligations. These agreements are subject to the same credit evaluation as other loan originations. Letters of credit are conditional commitments issued by us to guarantee the performance of a customer's obligations with third parties. We issue commercial letters of credit to facilitate foreign trade transactions and to support public and private borrowing agreements, including commercial papers, bond financing and similar transactions. These instruments are short-term commitments to pay a third-party beneficiary under certain contractual conditions. Letters of credit are subject to the same credit evaluations as other extensions of credit. We expect many of these guarantees to expire without the need to advance any cash. Therefore, in the ordinary course of business, we expect that these transactions will have virtually no impact on our liquidity.  Results by segment We operate and manage our business through two operating segments: (i) the banking segment and (ii) the insurance, pension plans and capitalization bond segment. The following data about different segments were prepared based on reports made for Management to assess performance and make decisions on allocating funds for investments and other purposes. Our Management uses various data, including financial data prepared under accounting practices adopted in Brazil and non-financial metrics compiled on different bases. Hence, the segment data presented and discussed herewith is prepared in accordance with accounting practices adopted in Brazil. Our consolidated financial statements and consolidated financial data included in this analysis are prepared in accordance with International Financial Reporting Standards ("IFRS"), when results by segments significantly differ to


income derived from our consolidated financial statements, such differences will be explained in conjunction with the explanations of the results that precede them. See Note 5 to our consolidated financial statements in "Item 18. Financial Statements."  124Form 20-F – December 2013


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| |  |  | Form 20-F
| |  |  | ---------

In our banking segment, we offer a range of banking products and services to our customers, including deposit-taking, loans and advances, credit and debit card services and capital markets services, through our broad distribution network. For a description of the banking segment's operations, see "Item 4.B. Business Overview-Banking activity." In our insurance, pension plan and capitalization bond segment, we offer a range of products and services to our customers, including health, life, automobile and property/casualty, individual and corporate pension plans, and capitalization bonds, through our broad distribution network. For a description of the operations of the insurance, pension plan and capitalization bond segment, see "Item 4.B. Business Overview-Insurance, pension plans and capitalization bonds."  Results of operations for the year ended December 31, 2013 compared with the year ended December 31, 2012  As described in “Item 3.A. Selected Financial Data”,beginning January 1, 2013, we adopted IFRS 11 – “Joint Arrangements”, thus changing the accounting policy to be applied to interest in jointly-owned entities to the equity method of accounting. Therefore, on a consolidated basis, data as of and for the years ended December 31, 2012 and 2011 presented in this annual report has been restated to reflect the effects of this adoption. For more information regarding the adoption of this policy, see Note 2(a)iii to our 2013 financial statements in "Item 18. Financial Statements.” The following tables set forth the principal components of our net income for 2013 and 2012, on a consolidated basis and by segment. This segment information is prepared in accordance with accounting practices adopted in Brazil, which are the accounting practices on which the reports used by Management to assess performance and make decisions are based.  Consolidated

   R$ in thousands, except %For the year ended December 31,2013

   2012

   % change(Restated)Net interest income

   49,300,483

   43,385,723

   13.6%Impairment of loans and advances

   (9,623,870)

   (11,451,383)

   (16.0)%Non‐interest income

   59,102,884

   66,396,380

   (11.0)%Non‐interest expense

   (84,460,328)

   (82,889,272)

   1.9%Income before income taxes

   14,319,169

   15,441,448

   (7.3)%Income and social contribution taxes

   (1,833,031)

   (4,089,754)

   (55.2)%Net income for the year

   12,486,138

   11,351,694

   10.0%Net income attributable to controlling shareholders

   12,395,920

   11,291,570

   9.8%Net income attributable to non-controlling interest

   90,218

   60,124

   50.1%
   Segment

   R$ in thousands, except %For the year ended December 31,Banking

   Insurance, Pension Plans and Capitalization Bonds2013

   2012

   % Change

   2013

   2012

   % ChangeNet interest income

   41,600,095

   39,181,426

   6.2%

   5,589,989

   3,124,512

   78.9%Impairment of loans and advances

   (9,731,376)

   (10,925,404)

   (10.9)%

   -

   -

   -Non‐interest income

   13,863,017

   19,154,236

   (27.6)%

   47,559,845

   48,899,792

   (2.7)%Non‐interest expense

   (38,318,914)

   (39,455,611)

   (2.9)%

   (47,113,728)

   (46,174,120)

   2.0%Income before income taxes

   7,412,822

   7,954,647

   (6.8)%

   6,036,106

   5,850,184

   3.2%Income and social contribution taxes

   789,516

   (273,930)

   -

   (2,253,451)

   (2,196,399)

   2.6%Net income

   8,202,338

   7,680,717

   6.8%

   3,782,655

   3,653,785

   3.5%Net income attributable to controlling shareholders

   8,195,099

   7,672,233

   6.8%

   3,692,531

   3,591,743

   2.8%Net income attributable to non-controlling interest

   7,239

   8,484

   (14.7)%

   90,124

   62,042

   45.3%
    Bradesco125


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|Form 20-F |  |  | 
|--------- |  |  | 

Net interest income The table below shows the main components of our net interest income before impairment of loans and advances for 2013 and 2012, on a consolidated basis and by segment:  R$ in thousands, except %2013
     2012
     % ChangeConsolidated (2012 - Restated)Interest and similar income
     90,682,625
     83,031,854
     9.2%Interest and similar expenses
     (41,382,142)
     (39,646,131)
     4.4%Net interest income
     49,300,483
     43,385,723
     13.6%BankingInterest and similar income
     79,935,892
     75,293,246
     6.2%Interest and similar expenses
     (38,335,797)
     (36,111,820)
     6.2%Net interest income
     41,600,095
     39,181,426
     6.2%Insurance, Pension Plans and Capitalization BondsInterest and similar income
     11,578,317
     11,110,483
     4.2%Interest and similar expenses
     (5,988,328)
     (7,985,971)
     (25.0)%Net interest income
     5,589,989
     3,124,512
     78.9%
  The following table shows, on a consolidated basis and by segment, how much of the increase in our net interest income was attributable to changes in the average volume of interest-earning assets and interest-bearing liabilities, and how much was attributable to changes in average interest rates (including the effects of the appreciation/depreciation of thereal) in each case for 2013 and 2012:  R$ in thousandsConsolidated
     Banking
     Insurance, Pension Plans and Capitalization Bonds2013/2012Increase/(decrease)Due to changes in average volume of interest‐earning assets and interest‐bearing liabilities
     5,105,624
     4,414,215
     689,596Due to changes in average interest rates
     809,136
     (1,995,544)
     1,775,881Net change
     5,914,760
     2,418,669
     2,465,477
  Banking Our net interest income increased by 6.2%, from R$39,181 million in 2012 to R$41,600 million in 2013. This increase was mainly due to an increase in the average volume of business of R$4,414 million as a result of: (i) a 9.8% increase in the average balance of interest-earning assets, increasing our revenues by R$7,753 million, highlighting the increase of: (a) 36.6% in the average balance of loans and advances to banks; (b) 18.7% in the average balance of assets pledged as collateral; and (c) 10.1% in the average balance of loans and advances to customers, partially offset by: (ii) a 7.8% increase in the average balance of interest-bearing liabilities, which impacted the results by R$3,338 million, in particular the increase of: (a) 20.5% in the average balance of funding in the open market; and (b) 16.8% in the average balance of savings deposits. Our net interest income decreased by R$1,996 million, due to changes in average interest rates that was mainly impacted by the decrease in the average interest rate earned from loans and advances to customers, from 18.1% in 2012 to 16.8% in 2013.    126Form 20-F – December 2013




table of contents



| |  |  | Form 20-F
| |  |  | ---------

Insurance, pension plans and capitalization bonds Our net interest income increased by 78.9%, from R$3,125 million in 2012 to R$5,590 million in 2013. This increase was mainly due to: (i) a 17.8% increase in the average volume of interest-earning assets, from R$116,902 million in 2012 to R$137,759 million in 2013, contributing with R$1,854 million in the results; and (ii) a decrease in the average interest rate for insurance technical provisions and pension plans, from 7.4% in 2012 to 4.8% in 2013, reducing our expenses by R$3,162 million. These events were partially offset by: (i) a 16.4% increase in the average volume of the insurance technical provisions and pension plans, from R$107,520 million in 2012 to R$125,179 million in 2013, impacting the results by R$1,164 million; and (ii) the decrease in the average interest rate to loans and advances to banks, from 8.9% in 2012 to 6.2% in 2013.  Interest and similar income The following tables show, on a consolidated basis and by segment, the average balance of the principal components of our interest-earning assets and the average interest rates earned in 2013 and 2012:  Consolidated
     R$ in thousands, except %As of December 31,2013
     2012
     % Change(Restated)Average balance of interest‐earning assetsFinancial assets held for trading
     80,909,973
     89,783,466
     (9.9)%Financial assets available for sale
     79,895,464
     66,875,502
     19.5%Investments held to maturity
     3,791,552
     3,657,763
     3.7%Assets pledged as collateral
     112,404,700
     94,667,517
     18.7%Loans and advances to banks
     104,232,013
     78,977,399
     32.0%Loans and advances to customers
     289,336,399
     262,228,228
     10.3%Compulsory deposits with the Central Bank
     42,757,972
     48,722,266
     (12.2)%Other interest‐earning assets
     575,113
     546,918
     5.2%Total
     713,903,186
     645,459,059
     10.6%Average interest rate earned
     12.7%
     12.9%
  Segment
     R$ in thousands, except %Banking
     Insurance, Pension Plans and Capitalization Bonds2013
     2012
     % Change
     2013
     2012
     % ChangeAverage balance of interest–earning assetsFinancial assets held for trading
     40,282,390
     58,372,486
     (31.0)%
     40,215,667
     31,055,915
     29.5%Financial assets available for sale
     41,194,576
     32,788,082
     25.6%
     38,700,888
     34,127,161
     13.4%Investments held to maturity
     61,905
     93,368
     (33.7)%
     3,729,647
     3,564,395
     4.6%Assets pledged as collateral
     112,404,700
     94,667,517
     18.7%
     -
     -
     -Loans and advances to banks
     103,829,578
     76,013,965
     36.6%
     55,112,417
     48,154,198
     14.4%Loans and advances to customers
     289,305,361
     262,825,554
     10.1%
     -
     -
     -Compulsory deposits with the Central Bank
     42,757,972
     48,722,266
     (12.2)%
     -
     -
     -Other interest‐earning assets
     575,113
     546,918
     5.2%
     -
     -
     -Total
     630,411,595
     574,030,156
     9.8%
     137,758,619
     116,901,669
     17.8%Average interest rate earned
     12.7%
     13.1%
     
     8.4%
     9.5%
  For further information about average interest rates by type of assets, see "Item 4.B. Business Overview-Selected Statistical Information-Average balance sheet and interest rate data."   Bradesco127


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|Form 20-F |  |  | 
|--------- |  |  | 

The following table shows, on a consolidated basis and by segment, how much of the increase in ourinterest and similar incomewas attributable to changes in the average volume of interest-earning assets, and how much was attributable to changes in average interest rates (including the effects of the floating of thereal), in each case comparing 2013 and 2012:  R$ in thousandsConsolidated
     Banking
     Insurance, Pension Plans and Capitalization Bonds2013/2012Increase/(decrease)Due to changes in average volume of interest‐earning assets
     8,840,588
     7,752,674
     1,853,822Due to changes in average interest rates
     (1,189,817)
     (3,110,028)
     (1,385,988)Net change
     7,650,771
     4,642,646
     467,834
  Banking Interest and similar income increased by 6.2% from R$75,293 million in 2012 to R$79,936 million in 2013. This increase was largely due to a higher average volume of business, which had a positive impact of R$7,753 million on our results, particularly in interest and similar income from: (i) loans and advances to customers; (ii) assets pledged as collateral; (iii) loans and advances to banks; and (iv) financial assets available for sale, partially offset by changes in the average interest rates earned,negativelyimpacting the results by R$3,110 million, essentially due to the decrease in the average interest rate to loans and advances to customers. Interest and similar income from loans and advances to customers increased by 2.1%, from R$47,675 million in 2012 to R$48,663 million in 2013. This increase is related to a 10.1% growth in the average balance of our portfolio of loans and advances to customers, from R$262,826 million in 2012 to R$289,305 million in 2013, positively impacting our interest and similar income, in the amount of R$4,600 million. The main reason for this increase is our strategic focus on housing loans, import/export financing, personal credit, and rural loans. Interest and similar income originated from assets pledged as collateral increased by 40.5%, from R$9,090 million in 2012 to R$12,771 million in 2013. This variation reflects the 18.7% increase in the average volume of these operations, from R$94,668 million in 2012 to R$112,405 million in 2013, which positively impacted our interest and similar income, in the amount of R$1,861 million. Interest and similar income from loans and advances to banks increased by 31.7%, from R$6,759 million in 2012 to R$8,898 million in 2013. This increase is related to a 36.6% growth in the average balance of our portfolio of loans and advances to banks, from R$76,014 million in 2012 to R$103,830 million in 2013, positively impacting our interest and similar income, in the amount of R$2,392 million.  Interest and similar income from financial assets available for sale increased by 22.2%, from R$2,916 million in 2012 to R$3,564 million in 2013. This increase was mainly due to a growth of 25.6% in the average balance of these operations, from R$32,788 million in 2012 to R$41,195 million in 2013, which contributed R$729 million to our results.  The increase in the interest and similar income was partially offset by the decrease in the revenue from financial assets held for trading, in the amount of R$2,116 million, mainly due to the reduction in the average volume of these assets, from R$58,372 million in 2012 to R$40,282 million in 2013.  The decrease in the interest and similar income, in the amount of R$ 3,110 million, due to changes in average interest rates, is primarily due to the reduction of the average rate earned from loans and advances to customers, from 18.1% in 2012 to 16.8% in 2013, due to the change in loan mix, partially offset by the increase in SELIC rate, from 7.25% in 2012 to 10.0% in 2013.  Insurance, pension plans and capitalization bonds Our interest and similar income increased by 4.2%, from R$11,110 million in 2012 to R$11,578 million in 2013. This increase was mainly due to the growth in the average business volume, which contributed R$1,854 million to the results, basically due to the increase of: (i) 29.5% in the average balance of financial assets held for trading, positively impacting our revenues by R$803 million; (ii) 14.4% in the average balance of loans and advances to banks, positively impacting our revenues by R$558 million; and (iii) 13.4% in the average balance of the financial assets available for sale, increasing our revenues by


R$466 million. These events were partially offset by the changes in the average interest rates, which impacted the results in R$1,386 million, largely due to the decrease in the average interest rate to loans and advances to banks, from 8.9% in 2012 to 6.2% in 2013.  128Form 20-F – December 2013


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| |  |  | Form 20-F
| |  |  | ---------

Interest and similar expenses The tables below show the average balance of the main components of our interest-bearing liabilities and the average interest rates paid on them in 2013 and 2012, on a consolidated basis and by segment:  Consolidated

   R$ in thousands, except %As of December 31,2013

   2012

   % Change(Restated)Average balance of interest‐bearing liabilitiesInterbank deposits

   671,404

   471,502

   42.4%Savings deposits

   73,307,137

   62,758,934

   16.8%Time deposits

   99,565,994

   117,960,891

   (15.6)%Funding in the open market

   182,981,063

   152,443,947

   20.0%Borrowings and onlendings

   49,273,352

   47,408,499

   3.9%Funds from securities issued

   52,476,783

   50,848,755

   3.2%Subordinated debt

   35,560,706

   32,278,136

   10.2%Insurance technical provisions and pension plans

   125,179,124

   107,519,858

   16.4%Total

   619,015,563

   571,690,522

   8.3%Average interest rate paid

   6.7%

   6.9%
  Segment

   R$ in thousands, except %Banking

   Insurance, Pension Plans and Capitalization Bonds2013

   2012

   % Change

   2013

   2012

   % ChangeAverage balance of interest‐bearing liabilitiesInterbank deposits

   671,404

   471,574

   42.4%

   -

   -

   -Savings deposits

   73,307,137

   62,758,934

   16.8%

   -

   -

   -Time deposits

   99,584,128

   117,825,606

   (15.5)%

   -

   -

   -Funding in the open market

   237,777,033

   197,363,060

   20.5%

   -

   -

   -Borrowings and onlendings

   49,273,352

   47,408,499

   3.9%

   -

   -

   -Funds from securities issued

   52,550,531

   50,848,755

   3.3%

   -

   -

   -Subordinated debt

   35,560,706

   32,278,136

   10.2%

   -

   -

   -Insurance technical provisions and pension plans

   -

   -

   -

   125,179,124

   107,519,858

   16.4%Total

   548,724,291

   508,954,564

   7.8%

   125,179,124

   107,519,858

   16.4%Average interest rate paid

   7.0%

   7.1%

   

   4.8%

   7.4%
  For further information on average interest rates by type of liability, see "Item 4.B. Business Overview-Selected Statistical Information-Average balance sheet and interest rate data." The following table shows, on a consolidated basis and by segment, how much of the increase in our interest and similar expenses was attributable to changes in the average volume of interest-bearing liabilities and how much was attributable to changes in average interest rates (including the effects of the fluctuations in thereal/U.S. dollar rate), in each case, for 2013 as compared to 2012:  R$ in thousandsConsolidated

   Banking

   Insurance, Pension Plans and Capitalization Bonds2013/2012Increase/(decrease)Due to changes in average volume of interest‐bearing liabilities

   3,734,964

   3,338,459

   1,164,226Due to changes in average interest rates

   (1,998,953)

   (1,114,482)

   (3,161,868)Net change

   1,736,011

   2,223,977

   (1,997,642)
   Bradesco129


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|Form 20-F |  |  | 
|--------- |  |  | 

Banking Our interest and similar expenses increased by 6.2% from R$36,112 million in 2012 to R$38,336 million in 2013. This increase primarily reflects the 7.8% growth in the average volume of our interest-bearing liabilities, from R$508,955 million in 2012 to R$548,724 million in 2013, impacting the expenses by R$3,338 million, mainly due to the increase of 20.5% in the average balance of funding in the open market, impacting our expenses by R$3,333 million. The decrease in our expenses due to changes in the average interest rates, in the amount of R$1,114 million, reflects the lower average interest rates paid in the operations of: (i) time deposits, from 6.4% in 2012 to 5.9% in 2013, reducing our expenses by R$619 million; and (ii) borrowings and onlendings, from 5.0% in 2012 to 3.9% in 2013, reducing our expenses by R$501 million.  Insurance, pension plans and capitalization bonds Our interest and similar expenses decreased 25.0%, from R$7,986 million in 2012 to R$5,988 million in 2013. This decrease primarily reflects the reduction in the average interest rate, from 7.4% in 2012 to 4.8% in 2013, reducing our expenses in R$3,162 million, primarily reflecting the reduction of the IGP-M, from 7.8% in 2012 to 5.5% in 2013. This decrease was partially offset by the increase in the average balance of insurance technical provisions and pension plans, from R$107,520 million in 2012 to R$125,179 million in 2013, increasing our expenses by R$1,164 million.  Net impairment losses on loans and advances to customers In view of conceptual differences between net impairment losses on loans and advances to customers under BR GAAP, as described in “Item 4.B. Business Overview – Regulation and Supervision – Banking Regulations - Treatment of loans and advances”, and IFRS, and also for a better understanding of information presented, we present below a reconciliation of those accounting practice differences, as well as the related analysis of the net impairment losses on loans and advances to customers under IFRS.  R$ in thousands, except %2013

   2012

   % ChangeNet Impairment losses on loans and advancesBanking - BR GAAP

   (9,731,376)

   (10,925,404)

   (10.9)%Accounting Practices Diference

   107,506

   (525,979)

   -Consolidated - IFRS (2012 - Restated)

   (9,623,870)

   (11,451,383)

   (16.0)%
  The following table shows changes in our impairment of loans and advances, net impairment losses on loans and advances, loans recovered and loan charge-offs for the years ended 2013 and 2012, as well as our ratio of net impairment losses on loans and advances to loans and advances to customers (shown as a percentage of the average balance of our loans and advances to customers) in all cases based on consolidated financial information prepared in accordance with IFRS:  As of December 31,

   R$ in thousands, except %2013

   2012

   % Change(Restated)Impairment of loans and advances at the beginning of the year

   19,914,294

   17,551,042

   13.5%Net impairment losses on loans and advances

   9,623,870

   11,451,383

   (16.0)%Loan recoveries

   3,640,014

   2,986,639

   21.9%Loan charge‐offs

   (13,319,944)

   (12,074,770)

   10.3%Impairment of loans and advances at the end of the year

   19,858,234

   19,914,294

   (0.3)%Ratio of net impairment losses on loans and advances to average loans and advances outstanding

   3.3%

   4.4%
   The balance of our impairment of loans and advances to customers decreased by 0.3% from R$19,914 million in 2012 to R$19,858 million in 2013. This decrease was mainly due to the: (i) increase of 13.3% in the balance of our operations classified asneither past due nor impaired, (ii) decrease in delinquencies, evidenced by our level of loans and advances to customers that are overdue for more than 90 days, from 4.2% in 2012 to 3.5% in 2013; and (iii) change in our mix of loans and advances portfolio, which basically impacted the following products: (a) vehicles, whose allocated impairment went from R$3,231 million in 2012 to R$2,299 million in 2013, representing 0.7% of our interest-earning loans and advances to customers, whereas in 2012 it represented 1.2%; (b) personal credit, whose allocated impairment decreased from R$3,410 million in 2012 to R$2,893 million in 2013, representing 0.9% of our interest-earning loans and advances to customers, whereas in 2012 it represented 1.2%; and (c) credit cards, in respect of which impairment decreased from R$3,113 million in 2012 to R$3,073 million in 2013, reaching a 1.0% share of interest-earning loans and advances to customers as opposed to 1.2% in 2012. Loans and advances to customers neither past due nor impaired increased by 13.3%, from R$253,317 million in 2012 to R$287,052 million in 2013, of which 98.7% were rated "low risk.”   130Form 20-F – December 2013


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| |  |  | Form 20-F
| |  |  | ---------

Calculations of impairment of loans and advances include: (i) an individual analysis of impaired loans and advances to customers; and (ii) an analysis of losses on loans and advances to customers collectively assessed for impairment, as follows:  As of December 31,

   R$ in thousands2013

   2012

   % Change(Restated)Impaired loans and advances to customers

   774,795

   1,122,674

   (31.0)%Losses on loans and advances to customers collectively assessed for impairment

   19,083,439

   18,791,620

   1.6%Total

   19,858,234

   19,914,294

   (0.3)%
  The decrease of 16.0% innet impairment losses on loans and advancesis related to an improvement in the delinquency ratio, from 4.2% in 2012 to 3.5% in 2013, as well as a change in product mix. Loan recoveries and charge-offs increased by 21.9% and 10.3% respectively, when compared to 2012. Our level of loan losses, defined as the amount of net charge-offs compared to the average balance of loans and advances to customers, including overdue loans, decreased from 3.3% in 2012 to 3.2% in 2013. In 2013, impairment of loans and advances as a percentage of loans and advances to customers was 6.1%, which we believe is a comfortable margin based on our experience of historical loan loss levels in our portfolio. Loans to individuals increased by 13.8% from R$112,989 million in 2012 to R$128,636 million in 2013, mainly due to the following products: (i) housing loans; (ii) credit card; and (iii) personal credit. Loans and advances to corporate customers, increased by 11.0% from R$175,946 million in 2012 to R$195,344 million in 2013, mainly due to the following products: (i) housing loans – company plan; (ii) working capital; and (iii) export/import financing. We believe that our current impairment of loans and advances is sufficient to cover probable losses associated with our portfolio. Non-interest income The following tables show, on a consolidated basis and by segment, the principal components of our non-interest income for 2013 and 2012.  Consolidated

   R$ in thousands, except %For the year ended December 31,2013

   2012

   % Change(Restated)Net fee and commission income

   14,499,682

   12,720,740

   14.0%Net gains/(losses) on financial assets and liabilities classified as held for trading

   (5,790,089)

   2,110,112

   -Net gains/(losses) on financial assets classified as available for sale

   (6,100,782)

   1,895,974

   -Premiums retained from insurance and pension plans

   44,887,215

   40,176,745

   11.7%Equity in the earnings of associates and joint ventures

   1,062,687

   980,212

   8.4%Other non-interest income

   10,544,171

   8,512,597

   23.9%Total

   59,102,884

   66,396,380

   (11.0)%
    Bradesco131


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|Form 20-F |  |  | 
|--------- |  |  | 

Segment

   R$ in thousands, except %Banking

   Insurance, Pension Plans and Capitalization Bonds2013

   2012

   % Change

   2013

   2012

   % ChangeNet fee and commission income

   15,639,215

   13,885,450

   12.6%

   1,264,869

   1,233,278

   2.6%Net gains/(losses) on financial assets and liabilities classified as held for trading

   (4,100,749)

   1,095,588

   -

   (1,914,579)

   (6,689)

   -Net gains/(losses) on financial assets classified as available for sale

   (3,880,575)

   (455,476)

   752.0%

   (2,526,016)

   2,418,373

   -Premiums retained from insurance and pension plans

   -

   -

   -

   44,887,215

   40,176,745

   11.7%Equity in the earnings of associates and joint ventures

   1,031,280

   752,353

   37.1%

   31,151

   108,302

   (71.2)%Other non-interest income

   5,173,846

   3,876,321

   33.5%

   5,817,205

   4,969,783

   17.1%Total

   13,863,017

   19,154,236

   (27.6)%

   47,559,845

   48,899,792

   (2.7)%
  Banking Our non-interest income decreased by 27.6%, from R$19,154 million in 2012 to R$ 13,863 million in 2013. This decrease was mainly due to: (i) net losses from financial assets and liabilities available for sale, from R$455 million as of December 31, 2012 to R$3,881 million as of December 31, 2013, which was principally due to the adjustment of rates to market value of the available-for-sale NTNs (national treasury notes)portfolio,by trading these securities in the market; and (ii) net losses from financial assets and liabilities classified as held for trading, from gains of R$1,096 million as of December 31, 2012 to losses of R$4,101 million as of December 31, 2013, largely due to the income obtained from fixed income securities. These effects were partially offset by the increase of: (i) 12.6% in net fee and commission income,driven by an increase of: (a) 21.7% in revenues from credit cards, with an increaseof 15.4% in billings, which reached R$119.407 million in 2013; (b) 11.2% in revenues related to checking accounts, primarily due to theexpansion of our customer base, which net increase represented 707,000 active checking account holders; and the increase of the services portfolio to our customers and the realignment of fees; (c) 17.8% in revenues from consortium management, due to the increase in:received bids, average ticket size and sales of new quotas, increasing from 736,000 active quotas as of December 31, 2012 to 924,000 active quotas as of December 31, 2013; and (d) 18.5% in revenue from guarantees pledged, due to the increase of R$7,676 million, or 12.8%, in the balance of financial guarantees that we mostly offer to our corporate customers; and (ii) 33.5% in other non-financial revenues deriving from results obtained from the adhesion to a program for payment in installments and sight payment of tax debts - REFIS, in the amount of R$1,950 million.  Insurance, pension plans and capitalization bonds Our non-interest income decreased by 2.7%, from R$48,900 million in 2012 to R$47,560 million in 2013. This was due mainly to: (i) net gains on financial assets classified as available for sale, from gains of R$2,418 million in 2012 to losses of R$2,526 million in 2013, principally due to the adjustment of rates to market value of the available-for-sale NTNsportfolio,by trading these securities in the market; and (ii) net losses on financial assets and liabilities classified as held for trading, from R$7 million in 2012 to R$1,915 million in 2013, basically due to the income obtained from fixed income securities; partially offset by: (iii) a 11.7% increase in retained insurance premiums and pension plans income, from R$40,177 million in 2012 to R$44,887 million in 2013, mainly due to: (a) an increase in insurance written premiums from R$37,899 million in 2012 to R$42,226 million in 2013; and (b) an increase in revenues from pension plan contributions, from R$3,273 million in 2012 to R$3,584 million in 2013.  Main differences between balances by segment and consolidated balances In addition to the above explanations, we highlight below the main differences between our non-interest income by segment (according to accounting practices adopted in Brazil) and our consolidated non-interest income (according to “IFRS”) for the year ended December 31, 2013: ·Net fee and commission income:The difference of R$2,404 million refers to: (i) the effective interest rate method in the amount of R$1,242 million; (ii) eliminations in the amount of R$ 1,519 million; which was partly offset by: (iii) adjustments of other operations in the amount of R$ 357 million. ·Net gains (losses) on financial assets classified as held for trading:The adjustment in the amount of R$ 225 million was mainly due to: (i) adjustment of cash flow hedge, in the amount of R$ 285 million; (ii) the consolidation of exclusive funds in the amount of R$ 550 million; and offset by: (iii) the effect of exchange-rate variation on our financial assets held for trading in the amount of R$ 598 million. ·Net gains (losses) on financial assets classified as available for sale:The adjustment in the amount of R$306 million, was mainly due to lower impairment charges in our portfolio of


shares, in the amount of R$280 million in 2013.  132Form 20-F – December 2013


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| |  |  | Form 20-F
| |  |  | ---------

Non-interest expense The following tables show, on a consolidated basis and by segment, the principal components of our non-interest expense for 2013 and 2012:  Consolidated
     R$ in thousands, except %For the year ended December 31,2013
     2012
     % Change(Restated)Personnel expenses
     (12,354,418)
     (11,559,002)
     6.9%Administrative expenses
     (12,151,537)
     (11,803,989)
     2.9%Depreciation and amortization
     (2,740,830)
     (2,488,182)
     10.2%Changes in the insurance technical provisions and pension plans
     (20,001,807)
     (23,326,101)
     (14.3)%Retained claims
     (15,484,691)
     (13,123,833)
     18.0%Selling expenses for insurance and pension plans
     (2,467,037)
     (2,313,795)
     6.6%Net gains/(losses) of foreign currency transactions
     (1,093,597)
     (1,087,595)
     0.6%Other non-interest expense
     (18,166,411)
     (17,186,775)
     5.7%Total
     (84,460,328)
     (82,889,272)
     1.9%
   Segment
     R$ in thousands, except %Banking
     Insurance, Pension Plans and Capitalization Bonds2013
     2012
     % Change
     2013
     2012
     % ChangePersonnel expenses
     (11,200,617)
     (10,586,643)
     5.8%
     (1,092,479)
     (1,017,702)
     7.3%Administrative expenses
     (12,068,420)
     (11,592,512)
     4.1%
     (1,102,065)
     (932,226)
     18.2%Depreciation and amortization
     (2,625,748)
     (1,459,721)
     79.9%
     (180,381)
     (114,214)
     57.9%Changes in the insurance technical provisions and pension plans
     -
     -
     -
     (20,001,807)
     (23,326,101)
     (14.3)%Retained claims
     -
     -
     -
     (15,484,691)
     (13,123,833)
     18.0%Selling expenses for insurance and pension plans
     -
     -
     -
     (2,468,101)
     (2,314,815)
     6.6%Net gains/(losses) of foreign currency transactions
     (1,093,597)
     (1,589,833)
     (31.2)%
     -
     -
     -Other non-interest expense
     (11,330,532)
     (14,226,902)
     (20.4)%
     (6,784,204)
     (5,345,229)
     26.9%Total
     (38,318,914)
     (39,455,611)
     (2.9)%
     (47,113,728)
     (46,174,120)
     2.0%
  Banking Our non-interest expensesdecreased by 2.9%, from R$ 39,456 million in 2012 to R$ 38,319 million in 2013. This decrease was mainly the result of a 20.4% decrease in other non-interest expenses from R$14,227 million as of December 31, 2012 to R$11,331 million as of December 31, 2013, mainly due to: (i) thefull amortization of the goodwill of BERJ, in the amount of R$ 1,156 million; and (ii) the recognition of losses related to intangible assets – acquisition of bank services in the amount of R$527 million (both of these events occurred in 2012). This fall was mainly offset by: (i) an increase of 5.8% in personnel expenses from R$ 10,587 million onDecember 31, 2012 to R$ 11,201 million on December 31, 2013, due to: (a) anincrease in expenses from proceedings, payroll charges and benefits as a result of increase in salaries, in conformity with 2012 and 2013 collective agreements; and (b) higher expenses from provisions for labor lawsuits and profit sharing;and (ii) a 4.1% increase in administrative expenses, mainly resulting from: (a) a chain expansion of 3,819 additional service points, totaling 72,736 points; (b) contract adjustments which were below thebehavior of the IPCA and IGP-M inflation rates in the last 12 months, which reached 5.9% and 5.5%, respectively.  Insurance, pension plans and capitalization bonds Our non-interest expense increased by 2.0%, from R$46,174 million in 2012 to R$ 47,113 million in 2013. This increase was mainly due to increases of (i) 26.9% increase in other non-financial expenses; (ii) 18.0% in retained claims, mainly in health insurance; and (iii) 18.2% in administrative expenses. Such increases were partially offset by the 14.3% reduction in our expenses from variation of insurance and pension plan technical provisions from R$23,326 million in 2012 to R$20,002 million in 2013, deriving from compliance with SUSEP Circular letter no. 462/13 by theGrupo Bradesco Seguros that resulted in the adoption of “Term Structure of Interest Rate free from risks – ETTJ” as discount rate of actuarial liability flow that caused net reversion of a portion of the technical provisions balance, in the amount of R$2,572 million.  Bradesco133


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|Form 20-F |  |  | 
|--------- |  |  | 

Income and social contribution taxes Income tax in Brazil consists of federal income taxes and the social contribution tax on adjusted income. See “Item 5.A Operating Results-Overview-Taxes.” The combined rate of these two taxes was 34.0% through April 2008. As of May 2008, the combined rate increased to 40.0%, due to the raise of social contribution taxes on adjusted net income rate, from 9.0% to 15.0%. Our income tax expenses are composed of current income tax and deferred tax. Certain amounts of income and expenses are recognized in our statement of income, as required by Brazilian tax regulations but are not part of our taxable basis, as foreign exchange variation gains and losses, which are neither taxable income nor deductible expenses, respectively. In addition, certain other amounts of taxable income and deductible expenses of our taxable basis do not affect our statement of income. Income and social contribution tax expenses decreased from R$4,090 million in 2012 to R$ 1,833 million in 2013. This variation was primarily due to: (i) the decrease in gross income, which went from R$ 15,445 million in 2012 to R$ 14,319 million in 2013; (ii) the greater tax effect of foreign exchange variation of investments abroad, which went from R$727 million in 2012 to R$1,320 million in 2013; (iii) the recognition of tax credits in the amount of R$462 million in 2013; and (iv) the greater effect of net non-deductible expenses of non-taxable revenues, which went from negative adjustment of R$503 million to a positive adjustment of R$326 million, mainly due to adhesion to theprogram for payment in installments and sight payment of tax debts – REFIS in 2013.For more information on Income and social contribution taxes, see Note 17 to our consolidated financial statements in “Item 18. Financial Statements.” The effective rate of taxation as a percentage of our income before income and social contribution taxes, varied from an expense of 26.5% in 2012 to an expense of 12.8% in 2013.  Net Income As a result of the above, our net income attributable to controlling shareholders increased by 9.8%, from R$ 11,292 million in 2012 to R$ 12,396 million in 2013. Our net income for the year increased by 10.0%, from R$11,352 million in 2012 to R$12,486 million in 2013.  Results of operations for the year ended December 31, 2012 compared with the year ended December 31, 2011 The following tables set forth the principal components of our net income for 2012 and 2011, on a consolidated basis and by segment:  Consolidated
     R$ in thousands, except %For the year ended December 31,2012
     2011
     % Change(Restated)
     (Restated)Net interest income
     43,385,723
     35,388,321
     22.6%Impairment of loans and advances
     (11,451,383)
     (8,239,358)
     39.0%Non‐interest income
     66,396,380
     57,893,938
     14.7%Non‐interest expense
     (82,889,272)
     (70,431,659)
     17.7%Income before income taxes
     15,441,448
     14,611,242
     5.7%Income and social contribution taxes
     (4,089,754)
     (3,521,800)
     16.1%Net income for the year
     11,351,694
     11,089,442
     2.4%Net income attributable to controlling shareholders
     11,291,570
     10,958,054
     3.0%Net income attributable to non-controlling interest
     60,124
     131,388
     (54.2)%
   134Form 20-F – December 2013


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table of contents



| |  |  | Form 20-F
| |  |  | ---------

Segment
     R$ in thousands, except %Banking
     Insurance, Pension Plans and Capitalization Bonds2012
     2011
     % Change
     2012
     2011
     % ChangeNet interest income
     39,181,426
     31,379,722
     24.9%
     3,124,512
     3,274,715
     (4.6)%Impairment of loans and advances
     (10,925,404)
     (9,275,421)
     17.8%
     -
     -
     -Non‐interest income
     19,154,236
     19,499,077
     (1.8)%
     48,899,792
     39,730,424
     23.1%Non‐interest expense
     (39,455,611)
     (32,562,339)
     21.2%
     (46,174,120)
     (37,824,847)
     22.1%Income before income taxes
     7,954,647
     9,041,039
     (12.0)%
     5,850,184
     5,180,292
     12.9%Income and social contribution taxes
     (273,930)
     (1,305,702)
     (79.0)%
     (2,196,399)
     (1,850,139)
     18.7%Net income for the year
     7,680,717
     7,735,337
     (0.7)%
     3,653,785
     3,330,153
     9.7%Net income attributable to controlling shareholders
     7,672,233
     7,724,917
     (0.7)%
     3,591,743
     3,201,449
     12.2%Net income attributable to non-controlling interest
     8,484
     10,420
     (18.6)%
     62,042
     128,704
     (51.8)%
  Net interest income The table below shows the main components of our net interest income before impairment of loans and advances for 2012 and 2011, on a consolidated basis and by segment:  R$ in thousands, except %2012
     2011
     % ChangeConsolidated (2012/2011 - Restated)Interest and similar income
     83,031,854
     82,152,096
     1.1%Interest and similar expense
     (39,646,131)
     (46,763,775)
     (15.2)%Net interest income
     43,385,723
     35,388,321
     22.6%BankingInterest and similar income
     75,293,246
     74,956,572
     0.4%Interest and similar expense
     (36,111,820)
     (43,576,850)
     (17.1)%Net interest income
     39,181,426
     31,379,722
     24.9%Insurance, Pension Plans and Capitalization BondsInterest and similar income
     11,110,483
     9,980,146
     11.3%Interest and similar expense
     (7,985,971)
     (6,705,431)
     19.1%Net interest income
     3,124,512
     3,274,715
     (4.6)%
 The following table shows, on a consolidated basis and by segment, how much of the increase in our net interest income was attributable to changes in the average volume of interest-earning assets and interest-bearing liabilities, and how much was attributable to changes in average interest rates (including the effects of the appreciation/depreciation of thereal) in each case for 2012 and 2011:  R$ in thousandsConsolidated
(Restated)
     Banking
     Insurance, Pension Plans and Capitalization Bonds2012/2011Increase/(decrease)Due to changes in average volume of interest‐earning assets and interest‐bearing liabilities
     3,629,891
     3,186,268
     239,377Due to changes in average interest rates
     4,367,511
     4,615,436
     (389,580)Net change
     7,997,402
     7,801,704
     (150,203)
  Banking Our net interest income increased by 24.9%, from R$31,380 million in 2011 to R$39,181 million in 2012. This increase was mainly due to: (i) an increase in the average volume of business of R$3,186 million as a result of: (a) a 12.6% increase in the average balance of interest-earning assets increasing our revenues by R$8,821 million, in particular a 11.9% increase in the average balance of loans and advances to customers; a 13.8% increase in the average balance of loans and advances to banks; a 25.2% increase in the average balance of assets pledged as collateral; and a 319.8% increase in the average balance of


financial assets available for sale, partially offset: (b) by a 14.5% increase in the average balance ofinterest-bearingliabilities, which impacted the results by R$5,634 million, in particular a 79.9% increase in the average balance of funds from securities issued,largely due to anincreaseintheamountof securities issued in thefinancial notes andinternational market in 2012; a 17.7% increase in the average balance of funding in the open market; and a 27.4% increase in the average balance of subordinated debt,due tothe greater volume ofissuancesof financial notes and subordinated debt abroad; and (ii) an increase in the average interest rate earned, from 6.2% in 2011 to 6.8% in 2012, positively impacting the results by R$4,615 million, mainly due to the reduction of our funding costs combined with gains related to our fixed-rated portfolio.  Bradesco135


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|Form 20-F |  |  | 
|--------- |  |  | 

Insurance, pension plans and capitalization bonds Our net interest income decreased by 4.6%, from R$3,275 million in 2011 to R$3,125 million in 2012. This decrease was primarily due to (i) a decrease in the average interest rate, which negatively impacted the results by R$390 million, (ii) a 19.8% increase in the average volume of technical provisions, from R$89,762 million in 2011 to R$107,520 million in 2012, impacting the results by R$1,319 million. These effects were partially offset by: (iii) a 15.9% increase in the average volume of interest-earning assets from R$100,827 million in 2011 to R$116,902 million in 2012, contributing with R$1,559 million in the results.  Interest and similar income The following tables show, on a consolidated basis and by segment, the average balance of the principal components of our interest-earning assets and the average interest rates earned in 2012 and 2011:  Consolidated
     R$ in thousands, except %As of December 31,2012
     2011
     % Change(Restated)
     (Restated)Average balance of interest‐earning assetsFinancial assets held for trading
     89,783,466
     87,228,224
     2.9%Financial assets available for sale
     66,875,502
     33,529,432
     99.5%Investments held to maturity
     3,657,763
     4,510,835
     (18.9)%Assets pledged as collateral
     94,667,517
     75,623,917
     25.2%Loans and advances to banks
     78,977,399
     75,942,480
     4.0%Loans and advances to customers
     262,228,228
     234,519,052
     11.8%Compulsory deposits with the Central Bank
     48,722,266
     59,239,456
     (17.8)%Other interest‐earning assets
     546,918
     518,296
     5.5%Total
     645,459,059
     571,111,692
     13.0%Average interest rate earned
     12.9%
     14.4%
   Segment
     R$ in thousands, except %Banking
     Insurance, Pension Plans and Capitalization Bonds2012
     2011
     % Change
     2012
     2011
     % ChangeAverage balance of interest–earning assetsFinancial assets held for trading
     58,372,486
     64,641,840
     (9.7)%
     31,055,915
     22,364,163
     38.9%Financial assets available for sale
     32,788,082
     7,809,477
     319.8%
     34,127,161
     25,739,260
     32.6%Investments held to maturity
     93,368
     110,664
     (15.6)%
     3,564,395
     4,400,171
     (19.0)%Assets pledged as collateral
     94,667,517
     75,623,917
     25.2%
     -
     -
     -Loans and advances to banks
     76,013,965
     66,780,488
     13.8%
     48,154,198
     48,323,150
     (0.3)%Loans and advances to customers
     262,825,554
     234,927,721
     11.9%
     -
     -
     -Compulsory deposits with the Central Bank
     48,722,266
     59,239,456
     (17.8)%
     -
     -
     -Other interest–earning assets
     546,918
     518,296
     5.5%
     -
     -
     -Total
     574,030,156
     509,651,859
     12.6%
     116,901,669
     100,826,744
     15.9%Average interest rate
     13.1%
     14.7%
     
     9.5%
     9.9%
  For further information about average interest rates by type of assets, see "Item 4.B. Business Overview-Selected Statistical Information-Average balance sheet and interest rate data." The following table shows, on a consolidated basis and by segment, how much of the increase in ourinterest and similar incomewas attributable to changes in the average volume of interest-earning assets,


and how much was attributable to changes in average interest rates (including the effects of the floating of thereal), in each case comparing 2012 and 2011:  136Form 20-F – December 2013


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| |  |  | Form 20-F
| |  |  | ---------

R$ in thousandsConsolidated
(Restated)
     Banking
     Insurance, Pension Plans and Capitalization Bonds2012/2011Increase/(reduction)Due to changes in average volume of interest‐earning assets
     9,937,260
     8,820,595
     1,558,533Due to changes in average interest rates
     (9,057,502)
     (8,483,920)
     (428,196)Net change
     879,758
     336,675
     1,130,337
  Banking Interest and similar income increased by 0.4% from R$74,957 million in 2011 to R$75,293 million in 2012. This increase was mainly due to: (i) a higher average volume of business, which had a positive impact of R$8,821 million on our results, particularly in interest and similar income from: (a) loans and advances to customers; (b) financial assets available for sale; and (c) assets pledged as collateral, offset: (ii) by the decrease in the average interest rate earned, from 14.7% in 2011 to 13.1% in 2012, negatively impacting the results by R$8,484 million. Interest and similar income from loans and advances to customers increased by 7.3%, from R$44,421 million in 2011 to R$47,675 million in 2012. This increase related to an 11.9% growth in the average balance of our portfolio of loans and advances to customers, from R$234,928 million in 2011 to R$262,826 million in 2012, positively impacting our interest and similar income in the amount of R$5,115 million.The main reason for this increase is our strategic focus onhousing finance, personal credit, credit cards and import/export financing. Interest and similar income from financial assets available for sale increased by 316.6%, from R$700 million in 2011 to R$2,916 million in 2012. This increase was mainly due to: (i) an increase of 319.8% in the average balance of these operations, from R$7,809 million in 2011 to R$32,788 million in 2012, which contributed with R$2,222 millionto ourresults.This is largely due toour treasury’sstrategic decisionto invest in assetswhich are profitable and very liquid. Interest and similar income originated from assets pledged as collateral increased by 4.0%, from R$8,744 million in 2011 to R$9,090 million in 2012. This variation reflects the 25.2% increase in the average volume of these operations, from R$75,624 million in 2011 to R$94,668 million in 2012, which positively impacted interest and similar income by R$1,979 million. The decrease in interest and similar income in the amount of R$8,484 million was due to changes in average interest rates, primarily reflecting: (i) thereduction in the SELIC rate whichdecreased from 11.0% in 2011 to 7.25% by the end of 2012;and (ii) the change in the mix of loans in the portfolio of loans and advances to customers, as well as the change in interest ratescharged.  Insurance, pension plans and capitalization bonds Our interest and similar income increased by 11.3%, from R$9,980 million in 2011 to R$11,110 million in 2012. This increase was mainly due to higher average volume of business, which had an impact of R$1,559 million on our results, particularly as a result of a 35.5% increase in the average balance of financial assets held for trading and available for sale. Whereas the average rate of interest and similar income for average interest-earning assets decreased from 9.9% in 2011 to 9.5% in 2012, impacting our results by R$428 million.    Bradesco137


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|Form 20-F |  |  | 
|--------- |  |  | 

Interest and similar expense The tables below show the average balance of the main components of our interest-bearing liabilities and the average interest rates paid on them in 2012 and 2011, on a consolidated basis and by segment:  Consolidated
     R$ in thousands, except %As of December 31,2012
     2011
     % Change(Restated)
     (Restated)Average balance of interest‐bearing liabilitiesInterbank deposits
     471,502
     360,575
     30.8%Savings deposits
     62,758,934
     55,515,889
     13.0%Time deposits
     117,960,891
     122,478,193
     (3.7)%Funding in the open market
     152,443,947
     128,525,632
     18.6%Borrowings and onlendings
     47,408,499
     44,962,370
     5.4%Funds from securities issued
     50,848,755
     28,260,014
     79.9%Subordinated debt
     32,278,136
     25,335,543
     27.4%Insurance technical provisions and pension plans
     107,519,858
     89,762,154
     19.8%Total
     571,690,522
     495,200,370
     15.4%Average interest rate paid
     6.9%
     9.4%
   Segment
     R$ in thousands, except %Banking
     Insurance, Pension Plans and Capitalization Bonds2012
     2011
     % Change
     2012
     2011
     % ChangeAverage balance of interest–bearing liabilitiesInterbank deposits
     471,574
     360,621
     30.8%
     -
     -
     -Savings deposits
     62,758,934
     55,515,889
     13.0%
     -
     -
     -Time deposits
     117,825,606
     122,345,672
     (3.7)%
     -
     -
     -Funding in the open market
     197,363,060
     167,698,196
     17.7%
     -
     -
     -Borrowings and onlendings
     47,408,499
     44,962,370
     5.4%
     -
     -
     -Funds from securities issued
     50,848,755
     28,260,014
     79.9%
     -
     -
     -Subordinated debt
     32,278,136
     25,335,543
     27.4%
     -
     -
     -Insurance technical provisions and pension plans
     -
     -
     -
     107,519,858
     89,762,154
     19.8%Total
     508,954,564
     444,478,305
     14.5%
     107,519,858
     89,762,154
     19.8%Average interest rate paid
     7.1%
     9.8%
     
     7.4%
     7.5%
  For further information on average interest rates by type of liability, see "Item 4.B. Business Overview-Selected Statistical Information-Average balance sheet and interest rate data." The following table shows, on a consolidated basis and by segment, how much of the increase in our interest and similar expenses was attributable to changes in the average volume of interest-bearing liabilities and how much was attributable to changes in average interest rates (including the effects of the fluctuations in thereal/U.S. dollar rate), in each case, for 2012 as compared to 2011:  R$ in thousandsConsolidated
(Restated)
     Banking
     Insurance, Pension Plans and Capitalization Bonds2012/2011Increase/(reduction)Due to changes in average volume of interest‐bearing liabilities
     6,307,369
     5,634,326
     1,319,156Due to changes in average interest rates
     (13,425,013)
     (13,099,356)
     (38,616)Net change
     (7,117,644)
     (7,465,030)
     1,280,540
  Banking Our interest and similar expenses decreased 17.1%, from R$43,577 million in 2011 to R$36,112 million in 2012.Primarily, thisis due to the decrease in the average interest ratepaid, from 9.0% in 2011 to 7.1% in 2012,which had the effect ofreducing expenses by R$13,099 million, mainly due to a reduction of 3.2 b.p. in the average interbank interest rate, which decreased from 11.6% in 2011 to 8.4% in 2012. This decrease was partially offset by an increase of 14.5% in the average volume of interest-bearing liabilities, from R$444,478 million in 2011 to R$508,955 million in 2012, impacting interest and similar expense by R$5,634 million, particularly due to the increase of: (a) 79.9% in the average balance of funds from securities


issued, from R$28,260 million in 2011 to R$50,849 million in 2012, which was mainly related to the increased volume of securities issued in the international market and financial notes in 2012; (b) 17.7% in the average balance of funding in the open market, from R$167,698 million in 2011 to R$197,363 million in 2012; and (c) 27.4% in the average balance of subordinated debt, from R$25,336 million in 2011 to R$32,278 million in 2012, this increasedue to a larger number of issuancesof subordinated financial notes inBraziland subordinated debt abroad. It is worth mentioning that in 2012 there was a 8.9% depreciation of the real against the U.S. dollar, impacting our funding abroad.  138Form 20-F – December 2013


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| |  |  | Form 20-F
| |  |  | ---------

Insurance, pension plans and capitalization bonds Our interest and similar expenses increased by 19.1% from R$6,705 million in 2011 to R$7,986 million in 2012, due to an increase in the average balance of technical provisions, from R$89,762 million in 2011 to R$107,520 million in 2012, representing an increase of R$1,319 million in our expenses. This increase was partially offset by a decrease in the average interest rate paid, from 7.5% in 2011 to 7.4% in 2012, thus reducing our expenses by R$39 million.  Net impairment losses on loans and advancesto customers – consolidated In view of conceptual differences between net impairment losses on loans and advances to customers under BR GAAP, as described in “Item 4.B. Business Overview – Regulation and Supervision – Banking Regulations - Treatment of loans and advances”, and IFRS, and also for a better understanding of information presented, we present below a reconciliation of those accounting practice differences, as well as the related analysis of the net impairment losses on loans and advances to customers under IFRS.  R$ in thousands, except %2012

   2011

   % ChangeNet Impairment losses on loans and advancesBanking - BR GAAP

   (10,925,404)

   (9,275,421)

   17.8%Accounting Practices Diference

   (525,979)

   1,036,063

   -Consolidated - IFRS (2012/2011 - Restated)

   (11,451,383)

   (8,239,358)

   39.0%
  The following table shows changes in our impairment of loans and advances, net impairment losses on loans and advances, loans recovered and loan charge-offs for the years ended 2012 and 2011 as well as our ratio of net impairment losses on loans and advances to loans and advances to customers (shown as a percentage of the average balance of our loans and advances to customers) in all cases based on consolidated financial information prepared in accordance with IFRS:  As of December 31,

   R$ in thousands, except %2012

   2011

   % Change(Restated)

   (Restated)Impairment of loans and advances at the beginning of the year

   17,551,042

   15,245,205

   15.1%Net impairment losses on loans and advances

   11,451,383

   8,239,358

   39.0%Loan recoveries

   2,986,639

   2,799,169

   6.7%Loan charge‐offs

   (12,074,770)

   (8,732,690)

   38.3%Impairment of loans and advances at the end of the year

   19,914,294

   17,551,042

   13.5%Ratio of net impairment losses on loans and advances to average loans and advances outstanding

   4.4%

   3.5%
  The balance of our impairment of loans and advances to customers increased by 13.5% from R$17,551 million in 2011 to R$19,914 million in 2012. This increase was mainly due to anincrease of9.4%inimpaired loans and advances to customers, from R$26,299 million in 2011 to R$28,770 million in2012, particularly inthe followingsectors(i) vehicles,whoseallocated impairment went from R$2,459 million in 2011 to R$3,231 million in 2012, representing 1.2% of our interest-earning loans and advances to customers, whereas in 2011 it represented 1.0%; (ii) personal credit,whoseallocated impairment increased from R$1,262 million in 2011 to R$3,410 million in 2012, representing 1.2% of our interest-earning loans and advances to customers, whereas in 2011 it represented 0.5%; and (iii) working capital,whoseallocated impairment increased R$616 million, reaching a 0.8% share of interest-earning loans and advances to customers. Loans and advances to customers neither due nor impaired increased by 9.7% from R$230,870 million in 2011 to R$253,317 million in 2012, of which 97.4% were rated "low risk.” Calculations of impairment of loans and advances include: (i) an individual analysis of impaired loans and advances to customers; and (ii) an analysis of losses on loans and advances to customers collectively assessed for impairment, as follows:  As of December 31,

   R$ in thousands2012

   2011

   % Change(Restated)

   (Restated)Impaired loans and advances to customers

   1,122,674

   554,291

   102.5%Losses on loans and advances to customers collectively assessed for impairment

   18,791,620

   16,996,751

   10.6%Total

   19,914,294

   17,551,042

   13.5%
   Bradesco139


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|Form 20-F |  |  | 
|--------- |  |  | 

The increase of 39.0% in net impairment losses on loans and advances is related to: (i) the increase of 9.4% in impaired loans and advances to customers, mainly due to the slow recovery of the global economy; and (ii) the increased default level. Loan recoveries and charge-offs were up by 6.7% and 38.3% respectively, against 2011. Rescheduled loans and advances increased by 11.4%, from R$8,658 million in 2011 to R$9,644 million in 2012. Our level of loan losses, defined as the amount of net charge-offs compared to the average balance of loans and advances to customers, including overdue loans, increased from 2.5% in 2011 to 3.3% in 2012. Impairment of loans and advances as a percentage of loans and advances to customers remained at 6.9% in 2012, which shows that we have a comfortable margin in light of our history of effective net losses. We believe that our current impairment of loans and advances is sufficient to cover probable losses associated with our portfolio. Loans to individuals increased by 12.8% from R$100,190 million in 2011 to R$112,989 million in 2012, mainly due to the following products: (i) housing finance; (ii) credit card; and (iii) personal credit. Loans and advances to corporate customers, increased by 8.2% from R$162,613 million in 2011 to R$175,946 million in 2012, mainly due to the following products: (i) housing finance – company plan; (ii) working capital; and (iii) import/export financing.  Non-interest income The following tables show, on a consolidated basis and by segment, the principal components of our non-interest income for 2012 and 2011.  Consolidated
     R$ in thousands, except %For the year ended December 31,2012
     2011
     % Change(Restated)
     (Restated)Net fee and commission income
     12,720,740
     10,898,259
     16.7%Net gains/(losses) on financial assets and liabilities classified as held for trading
     2,110,112
     (608,271)
     -Net gains/(losses) on financial assets classified as available for sale
     1,895,974
     365,302
     419.0%Premiums retained from insurance and pension plans
     40,176,745
     34,315,543
     17.1%Equity in the earnings of associates
     980,212
     803,820
     21.9%Other non-interest income
     8,512,597
     12,119,285
     (29.8)%Total
     66,396,380
     57,893,938
     14.7%
   Segment
     R$ in thousands, except %Banking
     Insurance, Pension Plans and Capitalization Bonds2012
     2011
     % Change
     2012
     2011
     % ChangeNet fee and commission income
     13,885,450
     11,989,868
     15.8%
     1,233,278
     1,079,597
     14.2%Net gains/(losses) on financial assets and liabilities classified as held for trading
     1,095,588
     779,332
     40.6%
     (6,689)
     (1,300)
     -Net gains/(losses) on financial assets classified as available for sale
     (455,476)
     (25,022)
     -
     2,418,373
     213,520
     -Premiums retained from insurance and pension plans
     -
     -
     -
     40,176,745
     34,315,543
     17.1%Equity in the earnings of associates
     752,353
     585,281
     28.5%
     108,302
     100,103
     8.2%Other non-interest income
     3,876,321
     6,169,618
     (37.2)%
     4,969,783
     4,022,961
     23.5%Total
     19,154,236
     19,499,077
     (1.8)%
     48,899,792
     39,730,424
     23.1%
  Banking Our non-interest income decreased by 1.8%, from R$19,499 million in 2011 to R$19,154 million in 2012. This decrease was mainly due to: (i) the 37.2% decrease in other non-interest income, from R$6,170 million in 2011 to R$3,876 million in 2012, primarily due to: (a) revenue from taxes to offset in the amount of R$2,912 million in 2011, partially offset by: (b) the proceeds from the sale of our investments in Serasa S.A  140Form 20-F – December 2013


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| |  |  | Form 20-F
| |  |  | ---------

in 2012, amounting to R$794 million; and (ii) the increase of R$430 million in net losses of financial assets available for sale, which rose from R$25 million as of December 31, 2011 to R$456 million on December 31, 2012, primarily due to the recognition of losses related to shares of public companies. These effects were partially offset by the increase of: (i) 15.8% in net fee and commission income, driven by an increase of: (a) 16.3% in revenue from credit cards, reflecting the increase of approximately 2 million credit card units compared to 2011, increasing revenue, which reached R$103,543 million in 2012, with an increase of 15.5% compared to 2011; (b) 16.4% in revenue related to checking accounts, primarily due to the expansion ofourcustomer base,which increased by583,000 new checking accounts and expanding the portfolio of services to our customers; (c) 16.5% in revenues from consortium management, due to the increase of active quotas, which rose from 625,763 active quotas as of December 31, 2011 to 736,202 active quotas as of December 31, 2012; and (d) 26.3% in revenue from guarantees pledged, due to the increase of R$11,432 million, or 26.3%, in the balance of financial guarantees that we offer to our customers, and (ii) 40.6% in net gains from financial assets held for trading, which rose from R$779 million as of December 31, 2011 to R$1,096 million as of December 31, 2012, primarily due to the positive result obtained with fixed income securities.  Insurance, pension plans and capitalization bonds Our non-interest income increased by 23.1% from R$39,730 million in 2011 to R$48,900 million in 2012. This performance was primarily due to the growth of: (i) R$2,205 million in net gains from financial assets available for sale, from R$213 million in 2011 to R$2,418 million in 2012, mainly as a result of: (a) the gain related to the extended maturities of fixed income securities, guaranteeing technical provisions, partially offset by (b) recognition of losses related to shares of public companies; and (ii) 17.1% in retained premiums from insurance and pension plans income, from R$34,316 million in 2011 to R$40,177 million in 2012, mainly due to: (a) an increase in revenues from insurance written premiums, from R$32,136 million in 2011 to R$37,899 million in 2012; and (b) an increase in revenues from pension contributions, from R$3,062 million in 2011 to R$3,273 million in 2012.  Main differences between balances by segment and consolidated balances In addition to the above explanations, we highlight below the main differences between our non-interest income by segment (according to accounting practices adopted in Brazil) and our consolidated non-interest income (according to “IFRS”) for the year ended December 31, 2012: ·Net fee and commission income:The difference of R$2,314 million refers to: (i) the effective interest rate method in the amount of R$1,221 million; and (ii) eliminations amounting to R$1,329 million; partially offset by: (iii) adjustments of other operations in the amount of R$236 million. ·Net gains (losses) on financial assets classified as held for trading:The adjustment in the amount of R$1,021 million was mainly due to: (i) the reversal of the hedge accounting in the amount of R$637 million; and (ii) the consolidation of exclusive funds in the amount of R$649 million; partially offset by: (iii) the effect of exchange-rate variation on our financial assets held for trading in the amount of R$270 million.     Bradesco141


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Non-interest expense The following tables show, on a consolidated basis and by segment, the principal components of our non-interest expense for 2012 and 2011:  Consolidated
     R$ in thousands, except %For the year ended December 31,2012
     2011
     % Change(Restated)
     (Restated)Personnel expenses
     (11,559,002)
     (11,094,794)
     4.2%Administrative expenses
     (11,803,989)
     (11,380,270)
     3.7%Depreciation and amortization
     (2,488,182)
     (2,117,666)
     17.5%Changes in the insurance technical provisions and pension plans
     (23,326,101)
     (18,212,405)
     28.1%Retained claims
     (13,123,833)
     (11,168,612)
     17.5%Selling expenses for insurance and pension plans
     (2,313,795)
     (1,858,351)
     24.5%Net gains/(losses) of foreign currency transactions
     (1,087,595)
     2,625,816
     -Other non-interest expense
     (17,186,775)
     (17,225,377)
     (0.2)%Total
     (82,889,272)
     (70,431,659)
     17.7%
   Segment
     R$ in thousands, except %Banking
     Insurance, Pension Plans and Capitalization Bonds2012
     2011
     % Change
     2012
     2011
     % ChangePersonnel expenses
     (10,586,643)
     (10,082,575)
     5.0%
     (1,017,702)
     (950,749)
     7.0%Administrative expenses
     (11,592,512)
     (10,805,456)
     7.3%
     (932,226)
     (1,051,456)
     (11.3)%Depreciation and amortization
     (1,459,721)
     (1,615,437)
     (9.6)%
     (114,214)
     (77,828)
     46.8%Changes in the insurance technical provisions and pension plans
     -
     -
     -
     (23,326,101)
     (18,212,405)
     28.1%Retained claims
     -
     -
     -
     (13,123,833)
     (11,168,612)
     17.5%Selling expenses for insurance and pension plans
     -
     -
     -
     (2,314,815)
     (1,859,208)
     24.5%Net gains/(losses) of foreign currency transactions
     (1,589,833)
     1,043,896
     -
     -
     -
     -Other non-interest expense
     (14,226,902)
     (11,102,767)
     28.1%
     (5,345,229)
     (4,504,589)
     18.7%Total
     (39,455,611)
     (32,562,339)
     21.2%
     (46,174,120)
     (37,824,847)
     22.1%
  Banking Our non-interest expense increased by 21.2%, from R$32,562 million in 2011 to R$39,456 million in 2012. This growth was due to the increase of: (i) 5.0% in personnel expenses, impacted by: (a) the rise in salary levels; and (b) the net increase in our employees, particularly in the second half of 2011 originated by organic growth; (ii) 7.3% in our administrative expenses, primarily due to an increase in the: (a) average business volume; (b) contractual adjustments; and (c) organic growth; and (iii) 28.1% in other non-interest expense, primarily caused by (a) the full amortization of goodwill from BERJ, amounting to R$1,156 million; (b) the higher volume of commission expenses on loans and financing in the amount of R$639 million, partially as a result of the improvement in the methodology of prepaid expenses amortization; and; and (c) the recognition of losses related to intangible assets – acquisition of rights to provide banking services in the amount of R$527 million.  Insurance, pension plans and capitalization bonds Our non-interest expense increased by 22.1%, from R$37,825 million in 2011 to R$46,174 million in 2012. This increase was mainly due to: (i) a 28.1% increase in our changes in the insurance technical provisions and pension plans, from R$18,212 million in 2011 to R$23,326 million in 2012 principally due to: (a) a 19.8% increase in the average volume of insurance technical provisions and pension plans, due to a higher business volume, and (b) the recognition of an additional technical provision as a result of the adoption of lower actual interest rate in its respective calculation; and (ii) 17.5% in our retained claims, from R$11,169 million in 2011 to R$13,124 million in 2012.      142Form 20-F – December 2013


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Main differences between balances by segment and consolidated balances: In addition to the above explanations, we highlight below the main differences between our non-interest expenses by segment (according to accounting practices adopted in Brazil) and our consolidated non-interest expenses (according to “IFRS”) for the year ended December 31, 2012: ·Net gains/(losses) in foreign currency transactions:The R$638 million adjustment basically refers to exchange rate adjustments of our foreign operations and investments. ·Depreciation and amortization:The R$964 million difference was mainly due to the recognition of expenses related to amortization of goodwill and intangible assets arising from other non-interest expenses, according to Central Bank accounting practices. The highlight was the full amortization of goodwill from BERJ, in the amount of R$1,156 million.  Income and social contribution taxes Income tax in Brazil consists of federal income taxes and the social contribution tax on adjusted income. See "Item 5.A. Operating Results-Overview-Taxes." The combined rate of these two taxes was 34.0% up to April 2008. As of May 2008, the combined rate increased to 40.0%, due to the raise of social contribution taxes on adjusted net income rate, from 9.0% to 15.0%. Our income tax expenses are composed of current income tax and deferred tax.Certain amounts of income and expenses are recognized in our statement of income, as required by Brazilian tax regulations but do not compose our taxable basis, as foreign exchange variation gains and losses, which are neither taxable income nor deductible expenses, respectively. In addition, certain other amounts of taxable income and deductible expenses of our taxable basis do not affect our statement of income. Income and social contribution tax expenses increased from R$3,522 million in 2011 to R$4,090 million in 2012. This variation was primarily due to: (i)the increase in gross income, which rose from R$14,611 million in 2011 to R$15,445 million in 2012; and (ii) increased tax benefit obtained on distribution of interest on equity, which rose from R$1,174 million in 2011 to R$1,305 million in 2012.For more information on Income and social contribution taxes, see Note 17 to our consolidated financial statements in “Item 18. Financial Statements.” The effective rate of taxation as a percentage of our income before income and social contribution taxes, varied from an expense of 24.1% in 2011 to an expense of 26.5% in 2012.  Net Income As a result of the above, our net income attributable to controlling shareholders increased by 3.0%, from R$10,958 million in 2011 to R$11,292 million in 2012. Our net income for the year increased by 2.4%, from R$11,089 million in 2011 to R$11,352 million in 2012.  5.B.  Liquidity and Capital Resources
 Asset and liability management Our general policy on asset and liability management is to manage interest rate, liquidity, foreign exchange and maturity risks in order to maximize our net income from financial operations and our return on assets and equity, in light of our internal risk management policies, and maintain adequate levels of liquidity and capital. As part of our asset and liability management, we seek to avoid material mismatches between assets and liabilities by matching, to the extent possible, the maturity, currency and interest rate structure of loans we make with terms of the transactions under which we fund these loans. Subject to our policy constraints, we occasionally take mismatched positions in relation to interest rates, maturities and, in more limited circumstances, foreign currencies, when we believe such positions are justified in view of market conditions and prospects. We monitor our asset and liability position in accordance with Central Bank requirements and guidelines. Our management's Treasury Committee meets on a weekly basis to: ·present and discuss our transactions conducted during the previous week;  Bradesco143


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·present exposure for each item of our portfolio, to factors such as fixed rates, variable rates, foreign currency and exchange rates; ·set exposure limits based on our evaluation of the risks presented by our currency, term and rate gap positions and current market volatility levels; ·determine asset allocation and funding policies; and ·make decisions on the maturity term structure of our assets and liabilities.  In making such decisions, our Senior Management evaluates not only our exposure limits for each market segment and product, but also market volatility levels and the extent to which we are exposed to market risk through interest, maturity, liquidity and currency mismatches. It also considers other potential risks, as well as market liquidity, our institutional needs and perceived opportunities for gains. The committee holds special meetings as required in response to unexpected macroeconomic changes. In addition, our senior managers receive daily reports on our mismatched and open positions, while the Treasury Committee assesses our risk position weekly.  Liquidity and funding Central Bank requirements for compulsory deposits determine our minimum liquidity levels. We review our asset and liability management periodically to ensure that we have sufficient liquidity available to honor withdrawals, deposits, repay other liabilities on due date, extend loans or other forms of credit to our customers and meet our own working capital needs. Our Treasury Department acts as a support center for our different business segments by managing our funding and liquidity positions, and executing our investment objectives in accordance with our asset and liability management policies. It is also responsible for setting rates for our different products, including exchange and interbank transactions. The Treasury Department covers any funding shortfall by borrowing in the interbank market. It seeks to maximize efficient use of our deposit base by investing any surpluses in liquid instruments in the interbank market. We have used our excess liquidity to invest in Brazilian government securities and expect to continue doing so, subject to regulatory requirements and investment considerations. Our principal sources of financing are: ·demand, savings, and time deposits, as well as deposits from banks; and ·funding in the open market, borrowings and onlendings, funds from securities issued and subordinated debt, part of which is denominated in foreign currencies.  The following table shows the average balance and average real interest rates of our sources of funding (interest-bearing, as well as non-interest-bearing) for the periods indicated measured using month-end balances:  R$ in thousands, except %
     2013
     2012
     2011(Restated)
     (Restated)Average balance
     % of total
     Average rate
     Average balance
     % of total
     Average rate
     Average balance
     % of total
     Average rateInterest‐bearing liabilitiesInterbank deposits
     671,404
     0.1%
     9.4%
     471,502
     0.1%
     10.3%
     360,575
     0.1%
     12.9%Savings deposits
     73,307,137
     9.8%
     5.6%
     62,758,934
     9.1%
     5.8%
     55,515,889
     9.3%
     6.8%Time deposits
     99,565,994
     13.3%
     5.9%
     117,960,891
     17.2%
     6.4%
     122,478,193
     20.4%
     9.2%Funding in the open market
     182,981,063
     24.4%
     9.1%
     152,443,947
     22.2%
     7.7%
     128,525,632
     21.4%
     10.9%Borrowings and onlendings
     49,273,352
     6.6%
     3.9%
     47,408,499
     6.9%
     5.0%
     44,962,370
     7.5%
     12.8%Funds from securities issued
     52,476,783
     7.0%
     6.9%
     50,848,755
     7.4%
     6.8%
     28,260,014
     4.7%
     8.8%Subordinated debt
     35,560,706
     4.7%
     8.8%
     32,278,136
     4.7%
     8.9%
     25,335,543
     4.2%
     11.0%Insurance technical provisions and pension plans
     125,179,124
     16.7%
     4.8%
     107,519,858
     15.7%
     7.4%
     89,762,154
     15.0%
     7.5%Total interest‐bearing liabilities
     619,015,563
     82.4%
     6.7%
     571,690,522
     83.3%
     6.9%
     495,200,370
     82.6%
     9.4%Non‐interest‐bearing liabilitiesDemand deposits
     36,876,193
     4.9%
     -
     33,138,109
     4.8%
     -
     32,539,861
     5.4%
     -Other non‐interest‐bearing liabilities
     95,039,096
     12.7%
     -
     81,203,950
     11.8%
     -
     71,805,915
     12.0%
     -Total non‐interest‐bearing liabilities
     131,915,289
     17.6%
     
     114,342,059
     16.7%
     
     104,345,776
     17.4%Total liabilities
     750,930,852
     100.0%
     5.5%
     686,032,581
     100.0%
     7.8%
     599,546,146
     100.0%
     6.3%
  144Form 20-F – December 2013


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Deposits are our most important source of funding, accounting for 28.0% of average total liabilities in 2013, 31.2% in 2012 and 35.2% in 2011. Our deposits balance over these years progressed in the following manner: ·In 2012, the average balance of our deposits increased by 1.6% against 2011 primarily due to growth of 13.0% in the average balance of our savings deposits, which was partially offset by a 3.7% drop in the average balance of our time deposits; and ·In 2013, the average balance of our deposits decreased by 1.8% against 2012 primarily due to a 15.6% drop in the average balance of our time deposits, which was partially offset by an increase of 16.8% in the average balance of our savings deposits.  Funding in the open market, borrowings and onlendings and funds from securities issued are the main sources of funding, accounting for 37.9% of total average liabilities in 2013, compared to 36.5% in 2012 and 33.7% in 2011. When comparing 2012 and 2011, there was a 24.3% increase in these funding sources, particularly a 79.9% increase in funds from securities issued, mainly due to bondsabroad, and financial notes in Brazil we issued in the period. The following table shows our sources of funding and liquidity as of December 31, 2013:  December 31, 2013
     R$ in thousands
     % of totalInterbank deposits
     963,855
     0.1%Savings deposits
     80,717,805
     10.5%Time deposits
     95,866,825
     12.5%Funding in the open market
     185,055,358
     24.2%Borrowings and onlendings
     56,094,850
     7.3%Funds from securities issued
     57,883,068
     7.6%Subordinated debt
     35,885,003
     4.7%Insurance technical provisions and pension plans
     130,329,023
     17.0%Total interest-bearing liabilities
     642,795,787
     83.9%Demand deposits
     40,619,737
     5.3%Other non‐interest‐bearing liabilities
     82,783,164
     10.8%Total non‐interest‐bearing liabilities
     123,402,901
     16.1%Total liabilities
     766,198,688
     100.0%
  Deposits Deposits accounted for approximately 28.5% of total liabilities as of December 31, 2013. Our deposits consist primarily ofreal-denominated, interest-bearing time and savings deposits andreal-denominated, non-interest-bearing demand deposits. The increase in the average balances of our savings deposits from 2012 to 2013 was mainly due to the larger volume of funding, which was partially influenced by changes in savings account rules and by a drop in average balances of our time deposits, which is in turn, mainly due to new investment opportunities. For additional information regarding our deposits, see "Item 4.B. Business Overview-Selected Statistical Information-Maturity of deposits."  Funding in the open market Funding in the open marketconsist mainly of funds we obtained from banks in the market by selling securities with agreements to repurchase. On December 31, 2012, we had funding in the open market in the amount of R$175,646 million, a R$25,645 million increase compared to December 31, 2011. On December 31, 2013, we had funding in the open market in the amount of R$185,055 million, an increase of R$9,409 million compared to December 31, 2012. Growth shown for these periods reflects the increases in our business volume.    Bradesco145


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Borrowings Borrowings consist primarily offunding fromlines obtained from banking correspondents for import and export financings, as well as issuances of short-term debt securities.Our access to this source of resources has been continuous, and funding occurs with rates and terms according to market conditions. Our credit facilities could be impacted by various factors, including rating downgrades, fluctuations in Brazilian exchange rates and base interest rates, increased rates of inflation, currency devaluations and adverse developments in the Brazilian and world economies. For a further discussion of risks that could have an adverse effect on our credit facilities, see "Item 3.D. Risk Factors-Macroeconomic risks" and "Item 3.D. Risk Factors-Risks relating to Bradesco and the Brazilian banking industry." On December 31, 2012, we had borrowings amounting to R$8,111 million, a reduction of R$9,146 million in relation to December 31, 2011. Our borrowings decreased due to the settlement of transactions, which were partially offset by the depreciation of 8.9% of the Brazilianrealagainst the US dollar. On December 31, 2013, we had borrowings amounting to R$15,231 million, an increase of R$7,120 million in relation to December 31, 2012. Our borrowings increased due to a higher volume of transactions and the depreciation of 14.6% of the Brazilianrealagainst the US dollar. For additional information on our borrowings, see "Item 4.B. Business Overview-Selected Statistical Information."  Onlendings Onlendings consist primarily of funds borrowed for local onlending, in which we borrow from Brazilian governmental agencies and entities to make loans to Brazilian entities for investments in facilities, equipment and farming, among others. On December 31, 2012, the amount of our onlending totaled R$36,075 million and reflected an increase of R$86 million compared to December 31, 2011. The increase in our onlendings was mainly due to an increase of R$667 million in our funding for FINAME onlendings in Brazil partially offset by the balance of funding related to BNDES operations, in the amount of R$660 million. On December 31, 2013, the amount of our onlending totaled R$40,864 million and reflected an increase of R$4,789 million compared to December 31, 2012. The increase in our onlendings was mainly due to an increase of R$4,896 million in our funding for FINAME onlendings in Brazil partially offset by the balance of funding related to BNDES operations, in the amount of R$125 million.  Funds from securities issued Funds from securities issued mainly consisted of real estate credit notes, Euronotes and issues of securities in other countries. On December 31, 2012, ourfunds from securities issuedtotaled R$51,552 million reflecting an increase of R$9,921 million from December 31, 2011. The increase in ourfunds from securities issuedwas mainly due to: (i) a R$5,844 million increase in our funding through the issue of bonds abroad; (ii) R$2,086 million in funds from issue of real estate credit notes; and (iii) R$1,101 million in financial notes. On December 31, 2013, ourfunds from securities issuedtotaled R$57,883 million reflecting an increase of R$6,331 million from December 31, 2012. The increase in ourfunds from securities issuedwas mainly due to increases: (i) of R$6,979 million in fundsfrom issue of financial notes; (ii) of R$1,766 million in real estate credit notes; partially offset by (iii) a lower volume of operations abroad, in the amount of R$2,677 million.  Central Bank compulsory deposits The Central Bank requires us, as a financial institution, either to deposit a determined amount of funds with the Central Bank or to purchase and hold Brazilian federal treasury securities. We cannot use these compulsory deposits for any other purpose. The Central Bank determines the interest to be paid on these deposits, if any. For more information on compulsory deposit requirements, see "Item 4.B. Business Overview-Deposit-taking activities."   146Form 20-F – December 2013


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The balance of our compulsory deposits decreased 32.7%, from R$71,211 million as of December 31, 2011 to R$47,952 million as of December 31, 2012, mainly due to: (i) the reduction in our average volume of term deposits; (ii) the possibility of deducting the compulsory payment on demand deposits in certain specific situations, according to Circular No. 3,622/12 of the Central Bank; and (iii) reduction, to zero rate, of the payment of additional compulsory on demand deposits, according to Circular No. 3,609/12 of the Central Bank. The balance of our compulsory deposits increased 15.5%, from R$47,952 million as of December 31, 2012 to R$55,381 million as of December 31, 2013, mainly due to an increase of our average volume of savings deposits.  Sources of additional liquidity In certain limited circumstances, we may obtain emergency funds from the Central Bank through a transaction referred to as "redesconto." Aredescontois a loan from the Central Bank to a financial institution, which is guaranteed by Brazilian government securities owned by the financial institution. The amount of federal government securities held by the financial institution as trading assets limits the amount of the redesconto transaction. We have never obtained funds from the Central Bank through"redesconto"transactions for liquidity purposes. As of December 31, 2013, we had R$46,847 million available in Brazilian government securities as financial assets held for trading that could be used for this purpose.  Cash flow In 2013, 2012 and 2011, our cash flow was basically affected by our business strategy and alterations in the Brazilian economic environment. The following table shows the principal variations in cash outflows during the periods indicated:  For the year ended December 31,
     R$ in thousands2013
     2012
     2011(Restated)
     (Restated)Net cash provided by (used in) operating activities
     99,832,509
     51,474,601
     (37,238,577)Net cash provided by (used in) investing activities
     (23,186,678)
     (44,750,648)
     16,860,648Net cash provided by (used in) financing activities
     (6,375,062)
     3,850,139
     20,965,444Net increase (decrease) in cash and cash equivalents
     70,270,769
     10,574,092
     587,515
  2013 In 2013, we had a net increase of R$70,271million in cash and cash equivalentsdue to net cash from operating activities, in the amount of R$99,833 million. This increase was caused by net cash being used for our investing activities, in the amount of R$23,187 million and in our financing activities, in the amount of R$6,375 million. In 2013, cash from our operating activities resulted primarily from: (i) decrease in loans and advances to banks in the amount of R$87,999 million; (ii) net increase in funds from financial institutions and customers in the amount of R$57,119 million; and (iii) receipt/payment of interest, in the net amount of R$22,468 million. These events were partially offset by an increase in loans and advances in the amount of R$95,688 million. The cash used in our investing activities resulted basically from: (i) thedisposal and acquisition of financial assets available for sale, in the net amount of R$26,434 million; and(ii) the acquisition of property, equipment and intangible assets in the amount of R$3,696 million. The aforementioned events were partially offset by interest received in the amount of R$4,720 million. The cash used in our financing activities basically resulted from (i) the payment of funds from securities issued in the amount of R$38,525 million; (ii)payments of interest on equity and dividends in the amount of R$ 4,363 million; (iii) interest paid, in the amount of R$5,923 million and (iv)the payment of subordinated debt, in the amount of R$1,762 million. The aforementioned events were partially offset by the cash generated byfunds from securities issued in the amount of R$43,567 million.  Bradesco147


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|Form 20-F |  |  | 
|--------- |  |  | 

2012 In 2012, we had a net increase of R$10,574 million in cash and cash equivalents due to net cash from: (i) operating activities, in the amount of R$51,474 million; and (ii) financing activities, in the amount of R$3,850 million. These increases in our net cash were impacted by net cash being used for our investing activities, in the amount of R$44,751 million. In 2012, cash from our operating activities resulted primarily from: (i) decrease in compulsory deposits in the Central Bank, in the amount of R$23,203 million; (ii) interest received in the amount of R$66,905 million; (iii) net increase in funds from financial institutions and customers, in the amount of R$37,598 million; and (iv) decrease in financial assets held for trading, in the amount of R$23,176 million. The aforementioned events were basically impacted by the growth in loans and advances to customers and banks, in the amount of R$132,388 million. The cash generated by our financing activities basically resulted from an increase of: (i) R$24,448 million in funds from securities issued; and (ii) R$12,998 million from issue of subordinated debt. These events were partially offset by: (i) the payment of funds from securities issued in the amount of R$19,956 million; (ii) the payment of subordinated debt, in the amount of R$4,494 million; (iii) interest paid in the amount of R$5,261 million; and (iv)payments of interest on equity and dividends, in the amount of R$3,839 million.  2011 In 2011, we had a net increase of R$588 million in cash and cash equivalents due to net cash from: (i) investing activities, in the amount of R$16,861 million; and (ii) financing activities, in the amount of R$20,965 million. These increases in our net cash were impacted by net cash being used for our operating activities, in the amount of R$37,239 million. In 2011, cash from our investing activities resulted primarily from: (i) proceeds from sales of financial assets available for sale, net of acquisitions, in the amount of R$13,737 million; and (ii) interest received in the amount of R$7,190 million.The aforementioned eventswere partially offset by acquisitions of property and equipment and intangible assets amounting to R$4,876 million. The cash generated by our financing activities basically resulted from an increase of: (i) R$22,532 million in funds from securities issued; and (ii) R$2,963 million subordinated debt, net of payments. These events were partially offset by payments of interest on equity and dividends, in the amount of R$3,568 million.  Capital compliance - Basel III The G20's December 2010 conference voted to institute a package of measures (known as "Basel III") that had been proposed by the Basel Committee on Banking Supervision to remedy deficiencies revealed by the recent economic crisis. The purpose of this reform is to enhance capital and liquidity management rules for financial institutions, thus strengthening the banking sector and dampening the impact of financial crises and their consequences for the real economy. The first measure requires financial institutions to strengthen their capital levels. Regulatory capital basically comprises share capital (non-redeemable non-cumulative common and preferred shares), plus retained earnings, less amounts related to regulatory adjustments (tax credits, goodwill paid on acquisition of investments and deferred fixed assets, among others). After allowing for all deductions, Basel III will require banks to hold: (i) a regulatory capital ratio of at least 4.5%, (ii) a Tier I capital ratio of at least 6%; and (iii) a minimum total capital ratio of 8%. Basel III recommendations stipulate altered capital requirements for counterparty credit risk, both for the standard approach and for internal risk rating based approaches (IRBs) in order to ensure inclusion of material risks in capital structure. In addition to new definitions of capital and minimum requirements, two more requirements were introduced: "conservation capital" and "countercyclical capital." Conservation capital will be supplementary to the regulatory minimum requirements and consist of components accepted for calculating regulatory capital. Its purpose is to have financial institutions upgrade their ability to absorb losses above the minimum required in favorable periods of the economic cycle, so that the added capital may be used as a buffer in times of stress. The Basel III Accord recommends implementation of a leverage ratio as a supplementary capital


measure, to be calculated by dividing Tier I capital by total exposure. For calculating total exposure, Basel III uses accounting data net of provisions, without deducting any credit risk mitigator or deposits. As of January 1, 2018 there is to be a minimum requirement for the leverage ratio, which was originally set at 3%. The details of the leverage ratio are not yet part of the Brazilian regulation.  148Form 20-F – December 2013


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| |  |  | Form 20-F
| |  |  | ---------

Furthermore, in order to determine minimum requirements for quantitative liquidity of financial institutions, Basel III proposes two liquidity ratios: one short-term and the other long-term. The purpose of the short-term liquidity ratio (Liquidity Coverage Ratio, or LCR) is to show that institutions have sufficient high-liquidity funds to withstand a one-month financial stress scenario. The purpose of the long-term liquidity ratio (Net Stable Funding Ratio, or NSFR) is to encourage institutions to finance their activities from more stable sources of funding. Basel III has set forth the requirement of a ratio of more than one (1) for the LCR as of January 1, 2015 and the NSFR as of January 1, 2018. In January, 2011, the Basel Committee on Banking Supervision published a document known as the "January 13 Annex" in which it extended Basel III rules with additional requirements applicable to Tier 1 and 2 Capital. Under the January 13 Annex rules, a capital instrument issued by a bank must include a clause enabling the competent regulatory body to either cancel this instrument, or convert it to common shares on the occurrence of a "trigger event." A "trigger event" is whichever of the following occurs first: (i) a decision that a cancellation is necessary, without which the bank would become insolvent; and (ii) the decision to make a public capital injection, or equivalent subsidy, without which the bank would become insolvent. These additional requirements will apply to all instruments issued after January 1, 2013; otherwise, any qualified instruments issued before that date will be gradually deducted from capital measurement for a period of ten years as of 2013. Brazil has been a member of the Basel Committee on Banking Supervision since late 2009 and has adopted Basel III proposals. The Central Bank issued Notice No. 20,615/11 on preliminary guidelines and schedules for implementing recommendations on capital structure and liquidity requirements. According to this communication, the regulator intended to bring forward the implementation of several measures. Under the Central Bank's preliminary rules, Brazil would follow the international schedule for gradually adopting capital requirements and definitions over the coming years. The schedule that was originally proposed by the Central Bank began on January 1, 2013. However, this was postponed to March 1, 2013 and its final application remained on January 1, 2019. Provisional Measure No. 608/13 enacted in February, 2013, sets forth the regulatory measures that Brazil has been adopting to adhere to the recommendations of Basel III. This rule changes the provision for capital to be recognized by financial institutions, addressing presumed credit and credit securities and instruments issued by financial institutions to comprise their regulatory capital. Accordingly, Provisional Measure No. 608/13 and the resolutions enacted in March 2013 by the Central Bank reinforce the mechanism to prevent risk in the financial system, by establishing conditions to increase the capacity to absorb losses and economic crises. In March 2013 the Central Bank published four (4) Resolutions and fifteen (15) Circulars, by way of which it implemented the recommendations from the Basel Committee on Banking Supervision. In line with international recommendations and current practice, the minimum capital level was determined as a percentage of risk-weighted assets. In accordance with the rules set forth by the Central Bank Resolution No. 4,192/13, the Regulatory capital of a financial institution consists of Tier I Capital plus Tier II Capital and is used when setting is operating limits. Tier I Capital is aimed at helping the bank remain solvent, that is, remain a going concern. Tier II Capital iscontingent capital, subject to conversion into equity in case of insolvency.When Basel III rules came into effect, Tier I Capital was broken down into 2 categories:Principal Capital, comprising mainly by shares and reserves; and Additional Capital, comprising mainly instruments that are analogous to hybrid capital and debt instruments. CMN Regulations that introduced Basel III rules in Brazil are stricter and more comprehensive when defining instruments eligible for inclusion in each capital category and set forth the deductions of some items,from Principal Capital, Additional Capital and Tier II Capital. Following the recommendations of Basel III, the CMN Resolution No. 4,193/13 introduced a conservation capital buffer, called Additional Common Equity Tier 1 by the aforementioned ruling, which must be set up from January to December 2016, by when it should have the lower limit of 0.625% and the upper limit of 1.25% of risk-weighted assets. By the end of the transitional period in 2019, additional Principal Capital will have to be 2.5% to 5%


of risk-weighted assets, with the amount to be determined by the Central Bank depending on economic conditions. In normal market conditions, financial institutions must hold excess capital in relation to the minimum requirements in an amount greater than additional Principal Capital, as defined. Failure to comply with additional Principal Capital rules will lead to restrictions affecting distribution of dividends, bonuses, earnings, profit sharing and incentive compensation geared to the performance of institutions’ managements.  Bradesco149


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|Form 20-F |  |  | 
|--------- |  |  | 

Under the current rule, Brazilian financial institutions, ourselves included, must hold a capital base (Regulatory capital) of 11.0% or more of total RWA (Basel ratio) calculated using specific criteria determined by the Central Bank.The calculation of theRegulatory capitalis subject to various deductions, including weighting factors that vary according to the nature of the asset. On December 31, 2013,our Basel ratio was 16.6%% of total RWA, which is higher than the 11.0% level required by the Central Bank. The following table shows our capital positions as a percentage of total risk-weighted assets.  As of December 31,
     In %Basel III (1)
Financial
Consolidated
     Basel II
Economic-Financial Consolidated2013
     2012
     2011Tier I Capital
     12.3%
     11.0%
     12.4%Common Equity
     12.3%
     -
     -Additional Capital
     -
     -
     -Tier II Capital
     4.3%
     5.1%
     2.7%Total Ratio
     16.6%
     16.1%
     15.1%(1)As of October 2013, capital is calculated based on CMN Resolution 4192/13, which establishes that the calculation is based on the Financial Consolidated until December 2014 and on the Prudential Consolidated as of January 2015.
  The implementation of the new capital structure in Brazil began in October 2013. CMN Resolution No. 4,192/13, which replaces CMN Resolution No. 3,444/07, provides for a new methodology to calculate Regulatory Capital. Given that this methodology requires the introduction of new adjustments, we adapted the numbers shown above demonstrating the transition from Basel II to Basel III. The ratios disclosed for 2012 and 2011 have been maintained but are not directly comparable due to the change in criteria under new resolution. In recent years, we have maintained a significant position in short-term, highly liquid instruments, which in general have a zero or low risk weighting, thereby eliminating or significantly reducing the need to maintain capital against these assets. This position reflects the unfavorable credit environment that prevailed in Brazil during 2002, 2003 and the last quarter of 2008. If we were to increase significantly our loans and advances portfolio, we would be required to maintain capital against these assets which, depending on the capital position at that time, could reduce our capital as a percentage of risk-weighted assets.  Interest rate sensitivity Management of interest rate sensitivity is a key component of our asset and liability policy. Interest rate sensitivity is the relationship between market interest rates and net interest revenue due to the maturity or re-pricing characteristics of interest-earning assets and interest-bearing liabilities. For any given period, the pricing structure is considered balanced when an equal amount of these assets or liabilities matures or re-prices in that period. Any mismatch of interest-earning assets and interest-bearing liabilities is known as a gap position. A negative gap denotes liability sensitivity and normally means that a decline in interest rates would have a negative effect on net interest income. Conversely, a positive gap denotes asset sensitivity and normally means that a decline in interest rates would have a positive effect on net interest income. These relationships can change significantly from day to day as a result of both market forces and management decisions. Our interest rate sensitivity strategy takes into account: ·rates of return; ·the underlying degree of risk; and  150Form 20-F – December 2013


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| |  |  | Form 20-F
| |  |  | ---------

·liquidity requirements, including minimum regulatory banking reserves, mandatory liquidity ratios, withdrawal and maturity of deposits, capital costs and additional demand for funds.  We monitor our maturity mismatches and positions and manage them within established limits. Our Treasury Committee reviews our positions at least weekly and changes our positions as market outlooks change. The following table shows the maturities of our interest-earning assets and interest-bearing liabilities as of December 31, 2013 and may not reflect interest rate gap positions at other times. In addition, variations in interest rate sensitivity may exist within the re-pricing periods presented due to differing re-pricing dates. Variations may also arise among the different currencies in which interest rate positions are held.  December 31, 2013
     R$ in thousands, except %Up to 30 days
     31 – 180 days
     181 – 360 days
     1 – 5 years
     Over 5 years
     Indefinite
     TotalInterest‐earning assetsFinancial assets held for trading
     20,458,667
     5,928,339
     16,191,839
     29,893,986
     10,125,501
     8,426,679
     91,025,011Financial assets available for sale
     7,992,859
     948,135
     1,112,736
     15,854,096
     36,050,088
     590,919
     62,548,833Investments held to maturity
     -
     -
     -
     2,948,181
     20,120,845
     -
     23,069,026Assets pledged as collateral
     37,861,027
     7,734,003
     2,351,252
     45,168,535
     24,625,408
     -
     117,740,225Loans and advances to banks
     61,160,937
     3,904,620
     7,069,189
     6,584,167
     810
     -
     78,719,723Loans and advances to customers (1)
     33,932,788
     66,510,730
     45,221,469
     94,430,301
     47,338,687
     22,895,080
     310,329,055Central Bank compulsory deposits
     47,824,386
     -
     -
     -
     -
     -
     47,824,386Other assets
     -
     -
     -
     -
     586,932
     -
     586,932Total interest‐earning assets
     209,230,664
     85,025,827
     71,946,485
     194,879,266
     138,848,271
     31,912,678
     731,843,191Interest‐bearing liabilitiesDeposits from banks (2)
     124,396,872
     51,041,184
     20,247,946
     41,895,414
     4,532,647
     -
     242,114,063Savings deposits (3)
     80,717,805
     -
     -
     -
     -
     -
     80,717,805Time deposits
     13,217,623
     18,130,186
     12,948,037
     51,365,672
     205,307
     -
     95,866,825Funds from securities issued
     2,856,196
     9,345,039
     8,647,031
     35,840,053
     1,194,749
     -
     57,883,068Subordinated debt
     159,428
     770
     2,421,701
     21,016,930
     12,286,174
     -
     35,885,003Insurance technical provisions and pension plans (3)
     103,870,571
     2,295,904
     674,971
     23,487,577
     -
     -
     130,329,023Total interest‐bearing liabilities
     325,218,495
     80,813,083
     44,939,686
     173,605,646
     18,218,877
     -
     642,795,787Asset/liability gap
     (115,987,831)
     4,212,744
     27,006,799
     21,273,620
     120,629,394
     31,912,678
     89,047,404Cumulative gap
     (115,987,831)
     (111,775,087)
     (84,768,288)
     (63,494,668)
     57,134,726
     89,047,404
     -Ratio of cumulative gap to cumulative total interest‐earning assets
     (15.8)%
     (15.3)%
     (11.6)%
     (8.7)%
     7.8%
     12.2%(1)For indefinite operations, it refers to credit card operations;(2)including: funding in the open market, borrowings, onlendings and interbank deposits; and(3)Savings deposits and insurance technical provisions and pension plans are classified as up to 30 days, without considering average historical urnover.
  Exchange rate sensitivity Most of our operations are denominated inreais. Our policy is to avoid material exchange rate mismatches. However, at any given time, we generally have outstanding long-term debt denominated in and indexed to foreign currencies, principally the U.S. dollar.Asof December 31,2013our net foreign currency liability exposure, considering off-balance-sheet derivative financial instruments, was R$24,199 million, or 33.6% of equity. Consolidated net foreign currency exposure is the difference between total foreign currency-indexed or -denominated assets and total foreign currency-indexed or -denominated liabilities, including off-balance-sheet derivative financial instruments. Our foreign currency position arises mainly through our purchases and sales of foreign currencies (primarily U.S. dollars) from Brazilian exporters and importers, from other financial institutions on the interbank market, and on the spot and forward currency markets. The Central Bank regulates our maximum outstanding long and short foreign currency positions.   Bradesco151


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|Form 20-F |  |  | 
|--------- |  |  | 

As of December 31, 2013, the composition of our assets, liabilities and equity by currency and term was asset out in the table below. Our foreign currency assets are largely denominated inreaisbut are indexed to foreign currencies, principally the U.S. dollar. Most of our foreign currency liabilities are denominated in foreign currencies, principally the U.S. dollar.  December 31, 2013
     R$ in thousands, except %R$
     Foreign currency
     Total
     Foreign currency as % of totalAssetsCash and balances with banks
     64,399,913
     3,050,450
     67,450,363
     4.5%Financial assets held for tradingLess than one year
     43,508,226
     822,176
     44,330,402
     1.9%From one to five years
     30,456,003
     363
     30,456,366
     0.0%More than five years
     10,325,148
     246
     10,325,394
     0.0%Indefinite
     10,980,361
     -
     10,980,361
     -Financial assets available for saleLess than one year
     9,382,661
     671,069
     10,053,730
     6.7%From one to five years
     14,830,768
     1,023,328
     15,854,096
     6.5%More than five years
     30,341,864
     5,708,224
     36,050,088
     15.8%Indefinite
     5,880,497
     -
     5,880,497
     -Investments held to maturityLess than one year
     -
     -
     -
     -From one to five years
     2,902,508
     45,673
     2,948,181
     1.5%More than five years
     20,120,845
     -
     20,120,845
     -Assets pledged as collateral
     115,343,196
     2,397,029
     117,740,225
     2.0%Loans and advances to banks
     75,136,890
     3,582,833
     78,719,723
     4.6%Loans and advances to customersLess than one year
     149,361,553
     17,322,089
     166,683,642
     10.4%From one to five years
     107,324,538
     12,945,683
     120,270,221
     10.8%More than five years
     14,398,095
     2,769,376
     17,167,471
     16.1%Non-current assets available for sale
     832,546
     -
     832,546
     -Investments in associated companies and joint ventures
     3,392,847
     -
     3,392,847
     -Property and equipment
     4,487,397
     14,570
     4,501,967
     0.3%Intangible assets and goodwill
     8,192,262
     28,477
     8,220,739
     0.3%Taxes to be offset
     5,261,777
     31,339
     5,293,116
     0.6%Deferred income tax assets
     25,555,022
     106,057
     25,661,079
     0.4%Other assetsLess than one year
     15,041,378
     8,754,271
     23,795,649
     36.8%From one to five years
     10,504,913
     34,356
     10,539,269
     0.3%More than five years
     897,059
     135,738
     1,032,797
     13.1%Total
     778,858,267
     59,443,347
     838,301,614
     7.1%Percentage of total assets
     92.9%
     7.1%
     100.0%
    152Form 20-F – December 2013


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| |  |  | Form 20-F
| |  |  | ---------

December 31, 2013
     R$ in thousands, except %R$
     Foreign currency
     Total
     Foreign currency as % of totalLiabilities and EquityDeposits from banks (1)Less than one year
     180,526,478
     16,145,834
     196,672,312
     8.2%From one to five years
     40,239,324
     1,656,090
     41,895,414
     4.0%More than five years
     4,121,323
     411,324
     4,532,647
     9.1%Deposits from customersLess than one year
     141,316,571
     23,330,507
     164,647,078
     14.2%From one to five years
     50,035,834
     1,329,838
     51,365,672
     2.6%More than five years
     95
     205,212
     205,307
     100.0%Financial liabilities held for tradingLess than one year
     772,242
     327,508
     1,099,750
     29.8%From one to five years
     463,679
     19,216
     482,895
     4.0%More than five years
     243,737
     -
     243,737
     -Funds from securities issuedLess than one year
     16,699,332
     4,148,934
     20,848,266
     19.9%From one to five years
     28,668,919
     7,171,134
     35,840,053
     20.0%More than five years
     1,039,970
     154,779
     1,194,749
     13.0%Subordinated debtLess than one year
     1,696,950
     884,949
     2,581,899
     34.3%From one to five years
     21,016,930
     -
     21,016,930
     -More than five years
     4,219,485
     8,066,689
     12,286,174
     65.7%Insurance technical provisions and pension plans
     130,327,948
     1,075
     130,329,023
     0.0%Other provisions
     13,745,478
     7,099
     13,752,577
     0.1%Current income tax liabilities
     3,052,282
     30,694
     3,082,976
     1.0%Deferred income tax liabilities
     777,030
     22,794
     799,824
     2.8%Other liabilities (2)Less than one year
     54,136,175
     7,730,611
     61,866,786
     12.5%From one to five years
     1,089,069
     65,513
     1,154,582
     5.7%More than five years
     93,991
     206,046
     300,037
     68.7%Equity
     72,102,926
     -
     72,102,926
     -Total
     766,385,768
     71,915,846
     838,301,614
     8.6%Percentage of total liabilities and equity
     91.4%
     8.6%
     100.0%(1)including: funding in the open market, borrowings, onlendings and interbank deposits; and(2)Other non-interest bearing liabilities, whose primary components are technical reserves for insurance and pension plans and provision for contingent liabilities, are not a source of funding.
  Derivative financial instruments are presented in the table below on the same basis as presented in the consolidated financial statements in "Item 18. Financial Statements." Our cash and cash equivalents in foreign currency are represented principally by U.S. dollars. Amounts denominated in other currencies, which include Euros and Yen, are indexed to the U.S. dollar through currency swaps, effectively limiting our foreign currency exposure to U.S. dollars only.   Bradesco153


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|Form 20-F |  |  | 
|--------- |  |  | 

We enter into short-term derivative contracts with selected counterparties to manage our overall exposure, as well as to assist customers in managing their exposures. These transactions involve a variety of derivatives, including interest rate swaps, currency swaps, futures and options. For more information regarding these derivative contracts, see Note 20(c) to our consolidated financial statements in "Item 18. Financial Statements." As of December 31, 2013, the composition of notional reference and/or contracted values and fair values of trading derivatives held by us is presented below:   December 31, 2013
     R$ in thousandsReference amountsR$
     Foreign currency
     TotalDerivativesInterest rate futures contractsPurchases
     83,661,033
     -
     83,661,033Sales
     188,121,164
     -
     188,121,164Foreign currency futures contractsPurchases
     -
     24,688,862
     24,688,862Sales
     -
     37,322,798
     37,322,798Futures contracts - otherPurchases
     83,149
     -
     83,149Sales
     115,569
     -
     115,569Interest rate option contractsPurchases
     180,586,642
     -
     180,586,642Sales
     204,049,725
     -
     204,049,725Foreign currency option contractsPurchases
     -
     1,211,870
     1,211,870Sales
     -
     2,902,599
     2,902,599Option contracts - otherPurchases
     436,698
     -
     436,698Sales
     1,567,633
     -
     1,567,633Foreign currency forward contractsPurchases
     -
     9,185,195
     9,185,195Sales
     -
     8,192,634
     8,192,634Forward contracts - otherPurchases
     216,420
     -
     216,420Sales
     221,819
     -
     221,819Swap contractsAsset positionInterest rate swaps
     37,923,123
     -
     37,923,123Currency swaps
     -
     25,131,705
     25,131,705Liability positionInterest rate swaps
     36,946,126
     -
     36,946,126Currency swaps
     -
     25,412,799
     25,412,799
  154Form 20-F – December 2013


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| |  |  | Form 20-F
| |  |  | ---------

Capital expenditures In the past three years, we have made, and expect to continue to make, significant capital expenditures related to improvements and innovations in technology and the Internet designed to maintain and expand our technology infrastructure in order to increase our productivity, accessibility, cost efficiency and our reputation as a leader in technological innovation in the financial services sector. We have made significant capital expenditures for systems development, data processing equipment and other technology designed to further these goals. These expenditures are for systems and technology for use both in our own operations and by customers. The following table shows our capital expenditures accounted for as fixed assets in the periods shown:  R$ in thousands2013
     2012
     2011(Restated)
     (Restated)InfrastructureLand and buildings
     65,708
     81,392
     88,148Installations, properties and equipment for use
     430,477
     554,157
     937,026Security and communications systems
     12,134
     12,512
     14,759Transportation systems
     4,421
     2,146
     14,232SubTotal
     512,740
     650,207
     1,054,165Information TechnologyData processing systems
     1,803,014
     1,543,801
     1,260,105Financial leasing of data processing systems
     615,791
     418,108
     448,497SubTotal
     2,418,805
     1,961,909
     1,708,602Total
     2,931,545
     2,612,116
     2,762,767
  During 2013, we made R$2,931 million investments in capital expenditures, R$513 million of which were related to the acquisition of assets and R$2,418 million to telecommunications services and data processing expenses. We believe that capital expenditures in 2014 through 2016 will not be substantially greater than historical expenditure levels and anticipate that in accordance with our practice during recent years, our capital expenditures in 2014 through 2016 will be funded from our own resources. No assurance can be given, however, that the capital expenditures will be made and, if made, that such expenditures will be made in the amounts currently expected.  5.C. Research and Development, Patents and Licenses
 Not applicable.  5.D.  Trend Information
 The following factors may affect our commercial activities, our operating results and our liquidity: ·macroeconomic conditions worldwide and in Brazil; ·foreign exchange variation; and ·inflation and interest rate effects on the results of our operations.  For more information, see "Item 3.D. Risk Factors," where we present the risks we face in our business that may affect our commercial activities, operating results or liquidity.  5.E.  Off-balance sheet arrangements
 See "Item 5.A. Operating Results-Critical accounting policies-off-balance sheet financial guarantees."  Bradesco155


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|Form 20-F |  |  | 
|--------- |  |  | 

5.F.  Tabular Disclosure of Contractual Obligations
 See "Item 5.A. Operating Results-Critical accounting policies-Commitments and contingencies."  5.G.  Safe Harbor
 Not applicable.  ITEM 6.DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
 6.A.  Board of Directors and Board of Executive Officers
 We are managed by ourConselho de Administração, or the Board of Directors, and the Board of Executive Officers. The Board of Directors establishes our corporate strategy and policies and supervises and monitors the Board of Executive Officers. In turn, the Board of Executive Officers implements the strategy and policies set by the Board of Directors and is responsible for our day-to-day management. Our Board of Executive Officers currently comprises (i) theDiretoria Executivaand (ii) our Officers, Department Officers and Regional Officers. TheDiretoria Executivaconsists of oneChief Executive Officer, eightVice-Presidents, sevenManaging Officersand fourDeputy Officers. Our nine-memberBoard of Directors meets on a regular basis every 90 days and meets on an extraordinary basis whenever necessary. It is responsible for: ·approving, on a case-by-case basis, any engagement of our independent auditors for audit and non-audit services provided to our subsidiaries or to us; ·establishing our corporate strategy; ·reviewing our business plans and policies; and ·supervising and monitoring the activities of our Board of Executive Officers.  As specified in Section 3(a)(58) of the Securities Exchange Act of 1934, our Board of Directors acts as our Audit Committee for purposes of approving the engagement of our independent auditors for audit and non-audit services provided to our subsidiaries or to us. TheDiretoria Executivameets weekly and is responsible for: ·implementing the strategy and policies established by our Board of Directors; and ·our day-to-day management.  Several members of our Board of Directors and theDiretoria Executiva also perform senior management functions at our subsidiaries, including BRAM, Bradesco Financiamentos, Bradesco Consórcios, Bradesco BBI, Bradesco Leasing, BEM DTVM,Bradesco Cartões, Bradesco Seguros andsubsidiaries. Each of these subsidiaries has an independent management structure. Pursuant to Brazilian law, all members of our Board of Directors and Board of Executive Officers are subject to approval by the Central Bank. The following are biographies of the current members of our Board of Directors andDiretoria Executiva.  Members of the Board of Directors: Lázaro de Mello Brandão, Chairman:Born on June 15, 1926.Graduated in Business Administration and Economics. In September 1942, Mr. Brandão was hired as a bookkeeper byCasa Bancária Almeida & Cia., the financial institution that becameBanco Brasileiro de Descontos S.A.on March 10, 1943, and later becameBanco Bradesco S.A. He has held a variety of positions during his banking career. In January 1963, he was electedas an Officer, and in September 1977, he was elected Vice-President. In January 1981, he


assumed the position of CEO, succeeding Mr. Amador Aguiar, the founder of Bradesco. Since February 1990, he has served as the Chairman of our Board of Directors. In March 1999, he decided to step down as CEO, but has remained the Chairman of our Board of Directors. He also holds a variety of positions within Bradesco, such as Chairman of the Board of Trustees and CEO ofFundação Bradesco; and Chairman of the Board of Directors and CEO of the Institute of Diseases of the Digestive System and Nutrition (FIMADEN). In addition, he is the Chairman of the Board of Directors of Bradespar S.A. He has also served as CEO of the Banking Associations of the States of São Paulo, Paraná, Mato Grosso, Mato Grosso do Sul, Acre, Amazonas, Pará, Amapá, Rondônia and Roraima, as Vice-President of the National Federation of Banks, known as "FENABAN," as a Member of the Board of the Federation of Brazilian Banking Associations, known as "FEBRABAN" and as Chairman of the Board of Directors of FGCand CIBRASEC - Companhia Brasileira de Securitizaçãoand a member of the Consulting Committee ofVBC Participações S.A.and a Member of the Board of Directors of Banco do Espírito Santo, S.A., located in Lisbon, Portugal.  156Form 20-F – December 2013


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Luiz Carlos Trabuco Cappi, Vice-Chairman:Born on October 6, 1951.Graduated fromFaculdade de Filosofia, Ciências e Letras de São Paulo, with a graduate degree in Social Psychology atFundação Escola de Sociologia e Política de São Paulo.He began his career at Bradesco in April 1969 and has held a variety of positions within the banking sector, being elected as Officer in 1984. On March 10, 2009 he became Chief Executive Officer. He is also Chief Executive Officer of the other Bradesco Group companies.In addition to these activities,he is Chairman of the Board of Directors of Odontoprev S.A.,Presidentof the Council of Representatives and Executive Board of the National Confederation of Financial Institutions (CNF),Vice-Chairman of the Board of Directors ofElo Participações S.A. and Member of the Deliberative Council of FEBRABAN. He was the Chief Executive Officer of Bradesco Vidae Previdênciaand ofGrupo Segurador. He was also Chief Executive Officer of the Marketing and Funding Committee of theAssociação Brasileira das Entidades de Crédito Imobiliário e Poupança(ABECIP), of ANAPP -Associação Nacional da Previdência Privada, of theFederação Nacional de Saúde Suplementar- FENASAÚDE, Vice-Chairman of the Board of Representatives of the Confederação Nacional das Instituições Financeiras - CNF, Member of the Deliberative Council of ABRASCA, Member of the Board of Directors of Banco Espírito Santo, S.A., headquartered in Lisbon, Portugal, Member of the Board of Directors of ArcelorMittal Brasil (former Companhia Siderúrgica Belgo-Mineira), Member of the Superior Board and Vice-President of theConfederação Nacional das Empresas de Seguros Gerais, Previdência Privada e Vida, Saúde Suplementar e Capitalização- CNSeg and Full Member of the Association Internationale pour I’Etude de I’Economie de I’Assurance - Association de Genève, Geneva, Switzerland, and Member of the Honorable Council of ANSP -Academia Nacional de Seguros e Previdência.  Antônio Bornia, Director:Born on November 22, 1935. High school graduate. Mr. Bornia started his career at Banco BradescoS.A. in May 1952. Since then, he has held a variety of positions within Bradesco. In September 1975, he became a Deputy Officer; in April 1979, he was appointed to an Executive Officer position; in June 1981, he became Vice-President; in March 1999 he became the Vice-Chairman of our Board of Directors, position he held until March 2014. He is Chairman of the Board of Directors of Bradesco Securities, Inc. (USA), Bradesco Securities UK Limited, Bradesco Securities Hong Kong Limited andBanco Bradesco Europa S.A.; Vice-Chairman ofBradesco Leasing S.A. - Arrendamento Mercantil,BSP Empreendimentos Imobiliários S.A. and BSP Park Estacionamentos e Participações S.A.; Vice-President ofNCF Participações S.A., Nova Cidade de Deus Participações S.A.andTop Clube Bradesco,Segurança,Educação e Assistência Social; Manager of Bradport-S.G.P.S.Sociedade Unipessoal, Lda.; Vice-Chairman of the Board of Trustees and Vice-President of Fundação Bradesco; Vice-Chairman of the Board of Directors and Vice-President of FIMADEN; andVice-Chairman and Vice-President ofBBD Participações S.A.He is also the Chairman of the Board of the ABEL, and he previously held the position of Chief Executive Officer; Vice-Chairman of the Board of Directors of Bradespar S.A.;and Member of the Brazilian Sector of the Brazil-United States Business Council. He was Vice-Chairman of the Board of DirectorsofBancoBERJ S.A., Member of the Board of Directors of Banco Espírito Santo, S.A., headquartered in Lisboa, Portugal; from April 2010 to March 2012; hehas also served as an Alternate Member of the Board of Resources of the National Financial System, an agency related to the Treasury Ministry, as representative of the ABEL from July 1989 until July 1991 and from February 2000 to February 2002. He was also the Chairman of the Board of Directors of the FGC from January 2002 to January 2005, and Vice-Chairman of the Executive Board of the Latin American Leasing Federation - Felalease from August 2003 to October 2005; CEO of the National Union of Leasing Companies, from September 1988 to April 2006; Vice-President and Vice-Chairman of the Board of Representatives of the National Confederation of the Financial System-CONSIF, from January 2004 to May 2007; and in CNF-National Confederation of the Financial Institutions, he held the positions of Chairman, Vice-Chairman and Member of Board of Representatives and Vice-President, from September 1988 to March 2007.  Bradesco157


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Mário da Silveira Teixeira Júnior, Director:Born on March 4, 1946.Mr. Teixeira received a degree in Civil Engineering and Business Administration from Mackenzie Presbyterian University. In July 1971, Mr. Teixeira joinedBradesco S.A Corretora de Títulos e Valores Mobiliários, having served as an Officer from March 1983 until January 1984, when he was transferred toBanco Bradesco de Investimento S.A.andBanco Bradesco S.A.There, he was appointed Department Officer in January 1984, Managing Officer in March 1992 and Vice-President in March 1998. From March 1999 to July 2001, he served as a Member of our Board of Directors, when he resigned to manage Bradespar S.A., a company incorporated by our partial spin-off. In March 2002, he returned to his position as a Member of our Board of Directors, where he remains until today. Currently, he is also a Member of the Board of Directors of Bradesco Leasing S.A. -Arrendamento Mercantil; Member of the Board of Directors ofBSP Empreendimentos Imobiliários S.A.having previously held the position of Strategic Committee Coordinator;Director ofNCF Participações S.A., Nova Cidade de Deus Participações S.A.andTop Clube Bradesco,Segurança,Educação e Assistência Social; Member of the Board of Trustees and Managing Officer ofFundação Bradesco, Member of the Board of Directors and Managing Officer of FIMADEN. In addition to these activities, Mr. Teixeira is a Member of the Board of Directors of Bradespar S.A., Vice-Chairman of the Board of Directors and Member of the Strategic Committee ofVale S.A.;and Vice-Chairman of the Board of Directors ofValepar S.A.He has also served as Vice-President of ANBID -Associação Nacional dos Bancos de Investimento, Member of the Management Board of ABRASCA,Member of the Board of Directors ofBanco BERJ S.A.and Vice-Chairman of the Board of Directors ofBES Investimento do Brasil S.A. -Banco de Investimento, Member of the Board of Directors ofCompanhia Paulista de Força e Luz -CPFL,Companhia Piratininga de Força e Luz,Companhia Siderúrgica Nacional -CSN,CPFL Energia S.A.,CPFL Geração de Energia S.A.,Latasa S.A.,São Paulo Alpargatas S.A.,Tigre S.A. Tubos e Conexões,VBC Energia S.A.andVBC Participações S.A., and a Voting Member of the Board of Directors ofBanco Espírito Santo de Investimentos S.A., located in Lisbon, Portugal.  João Aguiar Alvarez, Director:Born on August 11, 1960. Mr. Alvarez received a degree in Agronomy from thePinhalense Education Foundation -Manuel Carlos Gonçalves College of Agronomy and Animal Husbandry. In April 1986, he was elected to the Board of Directors ofCidade de Deus-Companhia Comercial de Participações, one of the holding companies ofBanco Bradesco S.A., and since April 1988, he has served as an Officer. Since February 1990, Mr. Alvarez has been a Member of our Board of Directors and a Member of the Board of Directors of Bradespar S.A. since March 2000. He is a Member of the Board of Trustees and Deputy Officer ofFundação Bradescoand Member of the Board of Directors and Deputy Officer of FIMADEN.  Denise Aguiar Alvarez, Director:Born on January 24, 1958. Ms. Alvarez received a degree in Education from São Paulo Pontific Catholic University and received a Masters in Education from New York University. In April 1986, she was appointed to the Board of Directors ofCidade de Deus-Companhia Comercial de Participações, one of our controlling shareholders, and since July 1988, she has also been serving as an Officer. Since February 1990, Ms. Alvarez has served as a Member of our Board of Directors, and since March 2000, she has also served as a Member of the Board of Directors of Bradespar S.A. She is also a Member of the Board of Trustees and Deputy Officer ofFundação Bradesco, Member of the Board of Directors and Deputy Officer of FIMADENand CEO of ADC Bradesco – Sports Association. In addition to these activities, she isMemberof the Consulting Board of the Associação Pinacoteca Arte e Cultura – APAC,having previously held the position ofMember of the Board of Directorand of the Deliberative Board ofMuseu de Arte Moderna de São Paulo- MAM, Member of the Board of Trustees ofFundação Dorina Nowill para CegosandFundação Roberto Marinho, Member of the Consulting Board of Canal Futura; member of the General Board ofComunitas: Parcerias para o Desenvolvimento Solidário; and Effective Member ofAssociação de Apoio ao Programa Alfabetização Solidária- AAPAS. She was member of the Deliberative Board ofFundo Social de Solidariedade do Estado de São Paulo–FUSSESP andChairman of the Board of Governance of the Group of Institutes, Foundations and Enterprises (GIFE), having previously held the position of Member.  Carlos Alberto Rodrigues Guilherme, Director:Born on December 21, 1943. Mr. Guilherme received a Law degree from Pinhalense Education Foundation. He began his career in December 1957. Mr. Guilherme has held a variety of positions within the banking sector, such as Department Officer in March 1986, Deputy Officer in March 1998, Managing Officer in March 1999 and Member of the Board of Directors since March 2009. He is a Member of the Board of Directors of Bradesco Leasing S.A. –Arrendamento Mercantil;


Member of the Board of Directors and Strategy Committee of BSP Empreendimentos Imobiliários; Officer ofNCF Participações S.A., Nova Cidade de Deus Participações S.A.andTop Clube Bradesco,Segurança,Educação e Assistência Social. He is also a Member of the Board of Trustees and a Managing Officer ofFundação Bradesco, Member of the Board of Directors and a Managing Officer of FIMADEN and Member of the Board of Directors of Bradespar S.A.He was Member of the Board of Directors ofBanco BERJ S.A.,Member of the Governing Board ofBradesco Employees Beneficent Fund (Caixa Beneficente); Officer of Banco de Crédito Real de Minas Gerais S.A. and of Credireal Leasing S.A. - Arrendamento Mercantil.  158Form 20-F – December 2013


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Milton Matsumoto, Director:Born on April 24, 1945. Mr. Matsumoto received a degree in Business Administration from UNIFIEO-University Center FIEO of Osasco. He began at Bradesco in September 1957. He has held a variety of positions within the banking sector, such as being appointed in Bradesco as Department Officer in March 1985, Deputy Officer in March 1998, a Managing Officer since March 1999 and he has been a Member of the Board of Directors since March 2011. He is a Member of the Board of Directors of Bradesco Leasing S.A. - Arrendamento Mercantil; Member of the Board of Directors and Strategy Committee of BSP Empreendimentos Imobiliários S.A.; Officer of NCF Participações S.A.; Nova Cidade de Deus Participações S.A. and Top Clube Bradesco, Segurança, Educação e Assistência Social. He is also a Member of the Board of Trustees and Managing Officer of Fundação Bradesco. Member of the Board of Directors and Managing Officer of FIMADEN. In addition to these activities, he is a Member of the Board of Directors of Bradespar S.A.; and Vice-Chairman of the Board of Directors of Fidelity Processadora e Serviços S.A. He wasMember of the Board of Directors ofBanco BERJ S.A. and an Officer ofBradesco S.A. Corretora de Títulos e Valores Mobiliários; the first Secretary Director of the Bank Union in the States of São Paulo, Paraná, Mato Grosso, Mato Grosso do Sul, Acre, Amazonas, Pará, Amapá, Rondônia and Roraima; Alternate Member of the Board of Directors of CPM Braxis S.A. and CPM Holdings Ltd.; and. Secretary Officer of the union of the credit, financing and investing companies ofthe State of São Paulo of FENACREFI - Interstate Federation of Loan, Financing and Investment Institutions.  José Alcides Munhoz, Director:Born on July 23, 1948.Technical education in accounting. Mr. Munhoz began at Bradesco in October 1970, at the Santa Maria branch - RS. He has held a variety of positions within the banking sector, such as being appointed in Bradesco as Officer in March 1989, Department Officer in January 1995, Deputy Officer in March 1998, Managing Officer in March 1999, Vice-President in January 2012 and Member of the Board of Directors in March 2014, the position he currently holds. He is a Member of the Board of Trusteesand Managing Officerof Fundação Bradesco, Member of the Board of Directors and Managing Officer of FIMADEN.He is also Member of the Board of Directors of BBD Participações S.A, Vice-President of Banco Bradesco BERJ S.A. and Bradesco Leasing S.A. – Arrendamento Mercantil; and Officer of NCF Participações S.A. and Nova Cidade de Deus Participações S.A.In addition to these activities, he is a Member of Consulting Board of the Brazilian National Chapter of the International Real Estate Federation (FIABCI/BRASIL).  Members of the "Diretoria Executiva": Luiz Carlos Trabuco Cappi, CEO:Mr. Trabuco also holds the position of CEO. His experience is described in "Members of the Board of Directors."  Julio de Siqueira Carvalho de Araujo,Vice-President:Born on December 10, 1954.High school graduate. Mr. Carvalho de Araújo began his career in March 1978 at Banco BCN S.A., an Institution that was acquired by Bradesco in 1997. He has held a variety of positions within the banking sector, such as being appointed inBanco Bradesco S.A.as an Officer in October 1989 and Vice-President from May 1995 to August 2000. Since August 2000, he has been our Vice-President. He also holds a variety of positions within the Bradesco Group, such as Member of the Board of Trustees and Managing Officer ofFundação Bradescoand Member of the Board of Directors and Managing Officer of FIMADEN. In addition to these activities, heis Chairman of the Consulting Board of FGC, having previously held the position ofan Effective Member of the Board of Directors; Member of theAdvisory Committee for Intermediation Sector of BM&FBOVESPA, having previously held the positions of Member ofthe Board of Directors and Coordinator of the Risk Committee; Alternate Member of Agribusiness Board (CONSAGRO); Vice-President and Chairman of the Banking Self-Regulatory Council of FEBRABAN; Vice-President and Alternate Delegate for CONSIF at FENABAN; Vice-President of the Brazilian Institute of Banking Science (IBCB); Treasurer of the Bank Union in the States of São Paulo, Paraná, Mato Grosso, Mato Grosso do Sul, Acre, Amazonas, Pará, Amapá, Rondônia and Roraima; and Effective Officer ofConfederação Nacional do Sistema Financeiro-CONSIF; and Member of the Board of Directors and Advisory Council of the BRAIN –Brasil Investimentos & Negócios


Association,having been a Member of the Strategy Committee. He was Effective Member of the Board of Directors ofCompanhia Brasileira de Liquidação e Custódia(CBLC) and Effective Member of the Deliberative Board of ABECIP and Alternate Member of the Board of Directors of Interbank Chamber of Payments – CIP, where he previously held the position of Chairman.  Bradesco159


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Domingos Figueiredo de Abreu, Vice-President:Born on January 8, 1959. He received a degree in Economics from College of Economic Sciences of Mogi das Cruzes and a degree in Accounting from College of Economic Sciences andAdministration of Osasco – FAC-FITO, with a postgraduate degree in Financial Administration (CEAG) from Fundação Getulio Vargas and an Executive MBA in Finance fromIBMEC(Capital Markets Brazilian Institute) –InstitutoBrasileiro de Mercado de Capitais. Mr. Abreu began at Banco Bradesco S.A. in December 1981. He has held a variety of positions within the banking sector, such as being appointed in Bradesco as a Department Officer in June 2001, a Managing Officer in March 2002 and Vice-President in June 2009,the position he currently holds. Mr. Abreu is also a Member of the Board of Trustees and a Managing OfficerofFundação Bradesco, Member of the Board of Directors and a Managing Officer of FIMADEN. He isalsothe Chairman of the Board of Directors of Cielo S.A.,and Member of CPM Holdings Limited and Elo Participações S.A.’s Board of Directors. He was Officer of Banco BCN S.A. and Alternate Member of CPM Braxis S.A.'s Board of Directors, where he was also a Member of the Board of Technical Administration; Member of the Board of Directors of IBRI – Brazilian Institute of Investor Relations, formerly Vice-President and Regional Officer in São Paulo and Member of the Management Board of ABRASCA..  Aurélio Conrado Boni, Vice-President:Born on July 19, 1951. Business Administration technicianfrom the Technical Trade School “Campos Salles.”He began at Bradesco in February 1971. He has held a variety of positions within the banking sector, such as being appointed in Bradesco as a Department Officer in December 1997, Managing Officer in December 2001 and Vice-President, the position he currently holds, in January 2012. Mr. Boni is also a Member of the Board of Trusteesand Managing Officerof Fundação Bradesco, Member of the Board of Directorsand Managing Officerof FIMADEN. He is also Member of the Board of Directors ofBBD Participações S.A., Vice-President of Banco Bradesco BERJ S.A. and Bradesco Leasing S.A. – Arrendamento Mercantil; Managing Officer of Bradesco Seguros S.A.; and Officer of NCF Participações S.A. and Nova Cidade de Deus Participações S.A. In addition to these activities, he is a Member of the Board ofDirectors of CPM HoldingsLimited and IT Partners Ltd.  Sérgio Alexandre Figueiredo Clemente, Vice-President:Born on June 7, 1959. Graduated in Mechanical Engineering from PUC -Pontifícia Universidade Católica de Minas Gerais(Catholic University of Minas Gerais), with an executive MBA in Finance from IBMEC and Specialization in Finance through the Executive Management Development Program (PDG), administered by the Business Development Corporation. He attended the Advanced Management Program (PGA), administered byFundação Dom Cabraland INSEAD. Mr. Clemente joined Banco BCN S.A. in May 1996 as Deputy Officer. In December 1997, he was elected Officer. With the acquisition of BCN, he joined theBanco Bradesco S.A. staff, having been elected Department Officer in March 2000, as the person responsible for the Corporate Department. In December 2006, he became Managing Officer, and Vice-President, in January 2012, the position he currently holds. He is a Member of the Board of Trusteesand Managing Officerof Fundação Bradesco; Memberof the Board of Directorsand Managing Officerof FIMADEN. Also, he is an Alternate Member of the Board of Directors of Sete Brasil Participações S.A. He was an Effective Member of the Advisory Chamber of the Listing of theBM&FBOVESPAS.A.  Marco Antonio Rossi, Vice-President:Born on March 7, 1961. He holds a degree in Marketing Management Technology, a "lato sensu" postgraduate qualification in Client Management from Universidade Paulista (UNIP) and a "latu sensu" postgraduate qualification in Advanced Strategic and Geopolitical Studies from Fundação Armando Alvares Penteado (FAAP). He joined Bradesco Vida e Previdência S.A. in July 1981, where he rose through all career levels and was elected to the position of Officer in January 1999, Managing Officer in May 2001 and CEO in August 2002, where he remained until March 2010. In January 2012 he was elected Vice-President of Banco Bradesco S.A.He is a member of the Board of Trustees and Managing Officer of Fundação Bradesco; and Member of the Board of Directors and Managing Officer of FIMADEN. He is alsoChief Executive Officer of Bradesco Seguros S.A., and BSP Affinity Ltda.,since March 2009; Bradseg Participações S.A., since April 2009; and Vice-Presidentof BP Promotora de Vendas Ltda.,since January 2012. In addition to these activities, he isMember of the Board of Directors of Europ Assistance Brasil Serviços de Assistência S.A.,having formerly been the Chairman. He is the Vice-Chairman


of the Board of Directors of Odontoprev S.A., President of the National Federation of Private Insurance and Capitalization bonds (Fenaseg); Effective Member of the Board of Directors of Companhia Brasileira de Gestão de Serviços; Benefactor of the Higher Council of Associação Comercial do Rio de Janeiro, having formerly been a Member of the Board of Directors. He is also President of the Board of Directors of CNseg, having formerly been Vice-President and Member of the Higher Council and President of FIDES -Federación Interamericana de Empresas de Seguros.He was once the President of  FENAPREVI and President ofAtlântica Companhia de Seguros.  160Form 20-F – December 2013


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Alexandre da Silva Glüher, Vice-President:Born on August 14, 1960. Mr. Glüher received a degree in Accounting from Universidade Federal do Rio Grande do Sul, a degree in Business Administration from Universidade Luterana do Brasil (ULBRA). He took the Advanced Management Program - University of Pennsylvania - The Wharton School. He joinedBanco Bradesco S.A.in March 1976 and has held a variety of positions within the banking sector, such as being elected Regional Officer in August 2001, Department Officer in March 2005, Deputy Officer in December 2010, Managing Officer in January 2012 and Vice- President in March 2014, the position he currently holds. He is a Member of the Board of Trustees of Fundação Bradesco and Member of the Board of Directors of FIMADEN. He is also Alternate Vice-President of the Board of Directors of Fidelity Processadora e ServiçosS.A. He was an Alternate Member of the Deliberative Board of the Brazilian Association of Real Estate Credit and Savings Entities (ABECIP).  Josué Augusto Pancini, Vice-President:Born on April 14, 1960.Mr. Pancini received a degree in Mathematics from Centro Universitário da Fundação de Ensino Octávio Bastos – Feob - UNIFEOB, with a lato sensu postgraduate degree in Business Economics - Finance from Pontifícia Universidade Católica de Campinas - PUC - Campinas.He joinedBanco Bradesco S.A. in July 1976, and was elected Regional Officer in July 1997, Department Officer in July 2003, Deputy Officer in December 2010, Managing Officer in January 2012 and Vice- President in March 2014, the position he currently holds.  He is a Member of the Board of Trustees of Fundação Bradesco and of the Board of Directors of FIMADEN. Formerly Alternate Member of the Deliberative Board of ABECIP.  Maurício Machado de Minas, Vice-President:Born on July 1, 1959. He holds a degree in Electrical Engineering from Escola Politécnica da Universidade de São Paulo – Poli/USP, and specialization in Data Communications and Software Development, and a university extension course in Finance at Wharton Business School, both in the United States. He went to the Executive Development Program at Columbia University in New York, United States. He joined Banco Bradesco S.A. in July 2009 as Managing Officer. In January 2014 he was elected Vice- President and is responsible for Information Technology, Digital Channels, Customer Relationship Management and Marketing. He has been the President of Scopus since January, 2013. He is a Member of the Board of Directors of FIMADEN. He is also a Member of the Board of Directors of Fidelity Processadora e Serviços S.A.; an Alternate Member of the Board of Directors of MPO - Processadora de Pagamentos Móveis S.A.; and Member of the Board of Directors of NCR Brasil - Indústria de Equipamentos para Automação S.A. He is also an Alternate Member of the Board of Directors of CPM Braxis S.A. (a Cap Gemini company), having previously held the position of Executive Vice-President and COO (Chief Operations Officer), where he was responsible for all operational units and for CPM International. He was formerly Senior Analyst with Banco Itaú and Officer of Support Services of a group of Brazilian IT companies (Eletrodigi, Flexidisk and Polymax).  Alfredo Antônio Lima de Menezes, Managing Officer:Born on June 16, 1962. He graduated in Business Administration from Faculdades Integradas Tibiriçá (FATI). He started his career as a junior trader with Banco BCN S.A. in May 1985, and was promoted to Officer. Elected Department Officer of Banco Bradesco S.A.in January 2001, elected Deputy Officer December 2010 and Managing Officer, the position he currently holds, in January 2012. He is a Member of the Board of Trustees of Fundação Bradesco and Member of the Board of Directors of FIMADEN.He is alsoMember of the Board of Directorsand Member of the Risk Committee of BM&FBOVESPA S.A., having previously held the positions ofPresident of theAdvisory Chamber for Fixed Income, Foreign Exchange and Derivatives andMember of the advisory chambers of the securities, exchange and financial assets clearinghouses. He was formerly Vice-President of the Operational and Ethics Committees and Officer of the Brazilian Association of Financial Market Institutions (ANDIMA); Full Member of the Board of Directors of the Central Clearing de Compensação e Liquidação S.A.; Member of the Board of Directors of CETIP S.A. (Derivatives and Assets OTC); and Effective Member of the Deliberative Board of the Brazilian Association of Real Estate Credit and Savings Entities (ABECIP).   Bradesco161


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André Rodrigues Cano, Managing Officer:Born on July 22, 1958. Graduated in Business Administration from Faculdades Metropolitanas Unidas (FMU), MBA-Controller from the Institute of Accounting, Finance and Actuarial Research (FIPECAFI, FEA-USP), and the Advanced Management Program - Harvard Business School. Mr. Cano joined Bradesco in April 1977 and was elected Department Officer in December 2001. He was elected Officer of Banco Bradesco Financiamentos S.A. in September 2008, remaining in this position until his return to Bradesco as Department Officer in December 2009. He was elected Deputy Officer in December 2010 and Managing Officer, the position he currently holds, in January 2012. He is a Member of the Board of Trustees of Fundação Bradesco and the Board of Directors of FIMADEN. He is also a Member of the Curator Council of the National Quality Foundation (FNQ). He also is an Alternate Vice-Chairman of the Board of Directors of Fidelity Processadora e Serviços S.A.Formerly Officer. He was an Effective Member of the Board of Directors of TECBAN - Tecnologia Bancária S.A.; Effective Member of the Fiscal Council of Tele Celular Sul Participações S.A.; Alternate Member of the Fiscal Council of Tele Nordeste Celular Participações S.A.; and Officer of ACREFI -Associação Nacional das Instituições de Crédito, Financiamento e Investimento.  Luiz Carlos Angelotti, Managing Officer:Born on November 16, 1964. Mr. Angelotti received a degree in Accounting and Actuarial Sciences from the School of Economics and Business Administration, Universidade de São Paulo, Law from UNIFIEO - Centro Universitário FIEO, and MBA in Finance from Insper – Instituto de Ensino e Pesquisa. He also attended theEDP – Executive Development Program and the AMP – Advanced Management Program at the University of Chicago Booth School of Business.He joinedBanco Bradesco S.A. in November 1987, and was elected Department Officer in March 2002, Deputy Officer in December 2010 and Managing Officer, the position he currently holds, in January 2012. He is a Member of the Board of Trustees of Fundação Bradesco andMember of the Board of Directors ofFIMADEN. He is also aMember of the Management Board of ABRASCAand an Alternate Member of the Board of Directors of Integritas Participações S.A. Formerly Alternate Member of the Fiscal Council of Top Clube Bradesco, Segurança, Educação e Assistência Social.  Marcelo de Araújo Noronha, Managing Officer:Born on August 10, 1965. Graduated in Business Administration from Universidade Federal de Pernambuco (UFPE), with a Specialization in Finance from IBMEC and the Advanced Management Program AMP at the Instituto de Estudios Empresariales (IESE), Universidade de Navarra in Barcelona. Mr. Noronha started his career in 1985 at Banco Banorte,where he worked until 1996 when he started to workas Commercial Officer with Bilbao Vizcaya Argentaria Brasil S.A, current Banco Alvorada S.A. and was promoted to Vice-President for products, trade finance, middle market and retail. Elected Department Officer of Banco Bradesco S.A. in February 2004. He was elected Deputy Officer in December 2010 and Managing Officer, the position he currently holds, in January2012. He is a Member of the Board of Trustees of Fundação Bradesco and Member of the Board of Directors of FIMADEN. He is also Chairman of the Board of Directors of Leader S.A. Administradora de Cartões de Crédito; Vice-President ofCompanhia Brasileira de Soluções e Serviços (“CBSS”), where he was previously the CEO; Effective Member of the Board of Directors of Cielo S.A.; Member of the Board of Directors of Crediare S.A. - Crédito, Financiamento e Investimentoand Elo Participações S.A. (the ELO card flag), where he was previously the CEO, and Member of the Board of Directors of MPO - Processadora de Pagamentos Móveis S.A.;President and Member of the Council of Ethics and Self-Regulation of ABECS, having formerly been the President of thisCouncil; and Member of the Latin America and Caribbean Advisory Council of Visa International.  Nilton Pelegrino Nogueira, Managing Officer:Born on May 7, 1954. Graduated in Business Administration from Universidade PresbiterianaMackenzie. Mr.Nogueira joined Banco Bradesco S.A. in July 1973.He was electedRegional Officer in February 1995, remained in the position until September 2000, when he was elected Officer of Banco BCN S.A., a financial institution acquired by Bradesco in December 1997, and remained in the position until March 2002, when he returned to Bradesco and was elected Department Officer.He was electedDeputy Officer in December 2010 and Managing Officer, the position he currently holds, in January 2012.He is aMember of the Board of Trustees of Fundação Bradesco; Member of the Board of Directors of FIMADEN.He was formerlyOfficer of Banco Boavista S.A, and of Banco das Nações S.A.; Effective Member of the Fiscal Council of Boavista Prev - Fundo de Pensão Multipatrocinado and Top Clube Bradesco, Segurança, Educação e Assistência Social; Superintendent of Bradesco Administradora de Consórcios Ltda.; and Member of the Business Development Committee of BSP Empreendimentos Imobiliários S.A and Alternate Member of the Deliberative Council of ABECIP.   162Form 20-F – December 2013


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André Marcelo da Silva Prado, Managing Officer:Born on December 6, 1961. Graduated in Production Engineering from Universidade Federal do Rio de Janeiro and holds an MBA in Finance from IBMEC. He attended theSenior International Bankers Course, at The International Centre for Banking and Financial Services (Manchester BusinessSchool) in Manchester, England, the Wharton Executive Development Program, at The Wharton School (University of Pennsylvania) in Philadelphia, U.S. and the Advanced Management Programme, at INSEAD, in Fointainebleau, France. He joined Banco Boavista Interatlântico S.A. in May 1997 as Executive Manager and reached the position of Officer there.He movedto Banco Bradesco S.A. as Executive Superintendent of Bradesco Corporate Department in March 2001.He was electedDepartment Officer in December2009,Deputy Officer in January 2012 and Managing Officer in January 2014, the position he currently holds.He is aMember of the Board of Trustees of Fundação Bradesco and Member of the Board of Directors of FIMADEN.  Luiz Fernando Peres,ManagingOfficer:Born on September 30, 1950.Graduated in Economics from Faculdade de Ciências Econômicas e Administrativas de Osasco (FAC-FITO).He started his career in November 1971 as Assistant II in the Economic Research Department of Banco BCN S.A., where he reached the position of Officer in July 1990. When BCN was taken over, he joined the staff of Bradesco and was elected Department Officer in June 1999 as head of Credit Department, Deputy Officer in January 2012 and Managing Officer in January 2014, the position he currently holds. He is a Member of the Board of Trustees of Fundação Bradesco andMember of the Board of Directors of FIMADEN. Formerly Executive Officer of Fundação Francisco Conde, Member of the Fiscal Council of Instituto Assistencial Alvorada, Alternate Member of the Fiscal Council of Finasa Sports Association (ADC Finasa), Full Member of the Board of Directors of Estruturadora Brasileira de Projetos S.A. - EBP, Member of the Board of Directors of Aço Minas Gerais S.A. – Açominas and Serasa S.A., Member of the Board of Directors of the Special Agency for Industrial Financing (FINAME/BNDES) representing commercial banks; Officer for the Credit Policy sector of FEBRABAN and Full Member of the Investment Committee of the Investment Fund of the Length of Service Guarantee Fund (FI-FGTS).  Altair Antônio de Souza, Deputy Officer:Born on March 26, 1961.Graduated in Law from Universidade Bandeirante de São Paulo (UNIBAN).He startedhis career with Banco Bradesco S.A. in July 1975,waselected Officer in August 1998, and Department Officer in January 2009, responsible for Products and Services Marketing Department and subsequently Bradesco Varejo Department.He was electedDeputy Officer, the position he currently holds, in January 2012.He is aMember of the Board of Trustees of Fundação Bradesco and a Member of the Board of Directors of FIMADEN.He is alsoFull Member of the Board of the São Paulo Industrial Employers Association (Centro das Indústrias do Estado de São Paulo, CIESP). Former CEO and Vice-President of the Association of Banks of the State of Bahia.  Denise Pauli Pavarina, Deputy Officer:Born on April 14, 1963. Graduated in Economics from Faculdade Armando Álvares Penteado (FAAP) and Law from Universidade Paulista (UNIP), with an Executive MBA in Finance from Insper – Instituto de Ensino e Pesquisa. She started her career in March 1985, with Banco Bradesco de Investimento S.A. a financial institution that was absorbed by Banco Bradesco S.A. in November 1992. At Bradesco, she held the positions of Underwriting Manager and Department Manager of Portfolio Management. She was promoted to the position of Executive Superintendent in September 1996, and elected Department Officer in January 2001. She was elected Officer of Banco Bradesco BBI S.A. in June 2006, and Managing Officer in January 2007, remaining until December 2009, when she returned to Bradesco, and was elected Department Officer in charge of Portfolio Management. She was elected Deputy Officer, the position she currently holds, in January 2012. She is also a Managing Officer of BRAM - Bradesco Asset Management S.A. Distribuidora de Títulos e Valores Mobiliários, having previously held the position of Superintendent Officer; Member of the Board of Trustees of Fundação Bradesco and Member of the Board of Directors of FIMADEN. In addition to these activities, she is Vice-President of ANBIMA;Member of the Investment Committee of NEOCapital Mezanino Fundo de Investimento em Participações, Member ofComitê Nacional de Educação Financeira- CONEF, Member of the Council of Representatives ofConfederação Nacional das Instituições Financeiras- CNF, and Member of the Board of Directors and Consulting Board of Instituto BRAIN, having been a Member of the Strategy Committee. She was formerly Member of the Board of Directors of Cielo S.A., Bica de Pedra Industrial S.A., Companhia Siderúrgica Belgo-Mineira, CPM Braxis S.A., Latasa S.A., and São Paulo Alpargatas S.A.; Alternate Member of the Board of ABRASCA; Member of the Consulting Board of the Brazilian Association of Brokers and Dealers in Securities, Foreign Exchange and Commodities (ANCORD); Officer of UGB Participações S.A.; and Officer for Institutional Relations and Director of the Association of Capital Market Investment Analysts (APIMEC) in São Paulo.  Bradesco163


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Moacir Nachbar Junior, Deputy Officer:Born on April 5, 1965. Holds a degree in Accounting and a postgraduatequalification(lato sensu)inFinancial Management from Faculdade Campos Salles, and an MBA - Controller from Universidade de São Paulo andTuck Executive Program from Tuck School of Business at Dartmouth, in Hanover, Nova Hampshire – EUA.Hebegan his career with Banco Bradesco S.A. in June 1979. In March 2005, in the General Accounting Department, he was elected Department Officer and started reporting to the Operational Control Department in November 2009, and to the Internal Auditing Department in July 2010. He was elected Deputy Officer, the position he currently holds, in January 2012. Member of the Board of Trustees of Fundação BradescoandMember of the Board of Directors of FIMADEN. He also is an Alternate Member of the Board of Directors of Fidelity Processadora e Serviços S.A.Alternate Member of the Board of Directors of ABRASCA and Alternate Member of the Consulting Board of FGC.He was an Officer and Effective Member of the Fiscal Council of Boavista Prev - Fundo de Pensão Multipatrocinado, a multi-sponsor pension fund. He was also Alternate Member of the Fiscal Council of Top Clube Bradesco, Segurança, Educação e Assistência Social.  Octávio de Lazari Júnior, Deputy Officer:Born on July 18, 1963. Graduated in Economics from Faculdade de Ciências Econômicas e Administrativas de Osasco (FAC-FITO) and took an specialization course in Financial and Marketing Strategies at Fundação Instituto de Administração (FIA - FEA/USP). He joined Banco Bradesco S.A. in September 1978. He was promoted to the position of Executive Superintendent in December 1998, and elected Officer in May 2009, Department Officer in August 2010, and Deputy Officer, the position he currently holds, in January 2012. He is a Member of the Board of Trustees and Managing Officer of Fundação Bradesco; Member of the Board of Directors of FIMADEN. He is also Chairman of the Board of the ABECIP; Full Member of the Board of Directors of CIBRASEC – Companhia Brasileira de Securitização; Member of the Council of Representatives of the Brazilian Confederation of Financial Institutions - CNF; Officer of Real Estate Credit and Savings of the FEBRABAN; Full Member of the Managerial Council of the São Paulo Fund of Social Interest Housing - CGFPHIS, and of the Managerial Council of Housing Guarantee Fund – CGFGH; andMember of the Board of Directors ofCâmara Interbancária de Pagamentos– CIP. He was once Member of the Governing Board of Bradesco Employees Beneficent Fund (Caixa Beneficente), where he previously held the position of Effective Member of the Fiscal Council; Effective Member of the Governing Board of the Workers’ Support Fund – CODEFAT; and Alternate Member of the Investment Committee of the Length of Service Guarantee Fund (FGTS); Member of the Consulting Board of the Brazilian chapter of the International Federation of Real Estate Professions (FIABCI / BRASIL).  6.B.  Compensation
 At annual general shareholders' meetings, the shareholders of Bradesco and its subsidiaries establish the maximum global compensation of the members of the Board of Directors and Board of Executive Officers, constituted by the Executive Officers, Department Officers, Officers and Regional Officers of Bradesco and its subsidiaries for the ensuing year. In 2013, our shareholders set the global compensation for the Board of Directors and Board of Executive Officers of Bradesco and its subsidiaries at R$337.1 million. In 2013, the Directors and the Board of Executive Officers of Bradesco and its subsidiaries received aggregate compensation of R$326.1 million for their services. The current compensation policy sets forth that 50% of the net variable compensation amount is meant for the acquisition of Bradesco ́s preferred shares to be paid in three annual sequential installments. The first installment is due a year after the payment date. This policy complies with CMN Resolution No. 3,921/10, which regulates compensation policies for senior management of financial institutions. The Directors and the Board of Executive Officers of Bradesco and its subsidiaries have the right to participate in the same pension plans available to all our employees. In 2013, we contributed R$322.9 million to pension plans on behalf of the Directors and the Board of Executive Officers of Bradesco and its subsidiaries.  6.C.  Board of Directors Practices
 Our shareholders elect the members of our Board of Directors at the annual general shareholders’ meeting for one-year terms and members may be reelected for consecutive terms. The Board of Directors appoints the members of our Board of Executive Officers for one-year terms, which can also be extended for


consecutive terms.  164Form 20-F – December 2013


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At the SpecialShareholders’Meeting held on March 10, 2014, the shareholders resolved to change the Bylaws, in the caput of Article 12, to define that there must be at least 3 people holding the position of Officer, which is in line with the current corporate structure. In addition to this requirement, another condition, included in our Bylaws, remains in force to become a member of ourDiretoria Executiva, a person must have worked for us or our affiliates for a minimum of 10 consecutive years. The Board of Executive Officers, besides the Executive Officers, consists of 46 Department Officers, 5 Officers and 16 Regional Officers. Department Officers, Officers and Regional Officers direct the business of each of our various divisions and branches and report to theDiretoria Executiva. To become a Department Officer, Officer or Regional Officer, a person must be an employee or manager at Bradesco or one of our affiliates. Our Board of Directors may, for up to 25.0% of the members of our Board of Executive Officers, waive the fulfillment of certain requirements for their appointment, as follows: I-Executive Officers – the Board of Directors can waive the requirement pursuant to which the person should be an employee of Bradesco or any of its affiliates for at least 10 years. Notwithstanding the above, such requirement cannot be waived for persons to be appointed as Chief Executive Officers or Vice-Presidents; and II-Department Officers, Officers and Regional Officers – the Board of Directors can waive the requirement pursuant to which the person should be an employee or member of the management of Bradesco or any of its affiliates.  The members of our Board of Directors are required to work exclusively for us, unless granted an exception by the Board of Directors. Notwithstanding the above, the members of our Board of Directors are not required to be or to have been our employees, and service as a member of our Board of Directors does not constitute employment with us.  Fiscal Council Under Brazilian law, corporations may have a "Conselho Fiscal," or Fiscal Council, an independent corporate body with general monitoring and supervision powers in accordance with the Brazilian Corporate Law. Our Bylaws provide for a Fiscal Council and specify that if our shareholders convene a Fiscal Council, it shall have from three to five effective members andsamenumber for alternates. Our Fiscal Council has five full members (Nelson Lopes de Oliveira, João Carlos de Oliveira, José Maria Soares Nunes, Domingos Aparecido Maia and Luiz Carlos de Freitas) and five alternates (Jorge Tadeu Pinto de Figueiredo, Renaud Roberto Teixeira, Nilson Pinhal, João Batistela Biazon and Oswaldo de Moura Silveira) all of whom were elected in March 2014 for a one-year period and their terms will expire on theannual general shareholders’ meeting to be heldin March 2015. In accordance with Brazilian Corporate Law, our Fiscal Council has the right and obligation to, among other things: ·supervise, through any of its members, the actions of our managers and to verify their fulfillment of their duties; ·review and issue opinions regarding our financial statements prior to their disclosure, including the Notes to the financial statements, the independent auditor's report and any management reports; ·opine on any management proposals to be submitted to the shareholders’ meeting related to: -­changes in our social capital; -­issuances of debentures or rights offerings entitling the holder to subscribe for equity; -­investment plans and capital expenditure budgets; -­distributions of dividends; and -­transformation of our corporate form and corporate restructuring, as takeovers, mergers and spin-offs. ·inform our management of any error, fraud, or misdemeanor detected and suggest measures management should take in order to protect our main interests. If our management


fails to take the measures required to protect the company's interests, inform the shareholders’ meeting of these facts; and  Bradesco165


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·call general shareholders' meetings if management delays the general shareholders' meeting for more than one month and call special shareholders' meetings in case of material or important matters.  Board Advisory Committees Board Committees Our shareholders approved, at the special shareholders' meeting held on December 17, 2003, the creation of the Audit Committee, the Internal Control and Compliance Committee and the Compensation Committee. At the special shareholders' meeting held on March 27, 2006, our shareholders approved the transformation of the Ethics Committee into a statutory committee. At the special shareholders' meeting held on March 24, 2008, our shareholders approved the creation of the Integrated Risk Management and Capital AllocationCommittee. At the SpecialShareholders’Meeting held on March 11, 2013, the Shareholders resolved to exclude from the Bylaws Articles 22, 24 and 25, which dealt, respectively, with organizational components of the Internal Controls and Compliance Committee, the Ethics Committee and Integrated Risk Management and Capital Allocation Committee, reflecting the proposal presented by the Executive Committee of Corporate Governance, assessed by the Board of Directors, to maintain in the Bylaws only those committees whose characterization as statutory is required by legal norms, giving greater speed to the process of managing the committees subordinated to the Board of Directors. Thus, only the Audit Committee and the Compensation Committee remain as statutory, which should not be construed as a weakening of the corporate governance structure, as the Board of Directors will maintain these committees, which removal from the Bylaws was approved, under its structure. Audit Committee–Pursuant to our Bylaws and to Central Bank regulations since April 2004, we have appointed members of the Audit Committee, which may comprised three (3) to five (5) members, each of whom serves a term that can be renewed, in successive appointments, up to a limit of five (5) years, as of the date the member first takes office. Our Audit Committee members are appointed by, and may be dismissed by, the Board of Directors. The current members of the committee are Carlos Alberto Rodrigues Guilherme, who acts as coordinator, Romulo Nagib Lasmar and Osvaldo Watanabe, who act as members with no specific designation and Paulo Roberto Simões da Cunha, who is the Audit Committee financial expert. Of the members, only Carlos Alberto Rodrigues Guilherme is a member of the Board of Directors. In addition, under Brazilian law, the function of hiring independent auditors is reserved for the Board of Directors of a company. As a result, as specified in Section 3(a)(58) of the Exchange Act, our Board of Directors functions as our Audit Committee for purposes of approving the engagement of our independent auditors for audit. Except in these respects, our Audit Committee is comparable to and performs the functions of audit committees of U.S. companies. Since our Audit Committee cannot be compared to the audit committees of American companies in terms of commitment from our independent auditors in audit and non-audit services, we have relied on the exemption set forth in Exchange Act Rule 10A - 3(c)(3) in this regard. For more information see "Item 16.D. Exemptions from the listing standards for Audit Committees." The responsibilities of the Audit Committee include: ·establishing its own rules of operation; ·recommending to the Board of Directors, which outside firm should be hired to provide independent audit services, the amount of compensation such firm should receive and providing recommendations as to substitute auditors; ·previously analyze plans to retain our independent auditor for services other than auditing financial statements, from the point of view of compliance with rules on independent status; ·reviewing financial statements prior to their disclosure, including the notes to the financial statements, the independent auditor's report and management reports; ·establishing and disclosing procedures for responding to any reports or allegations of a failure to comply with applicable legal requirements or internal codes and regulations, including procedures to ensure the confidentiality and protection of any persons providing information regarding such failures; ·evaluating the effectiveness of the work of both the internal and the independent auditors, including their compliance with applicable legal obligations and internal regulations and codes;  166Form 20-F – December 2013


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·meeting with the senior management and both the independent and the internal auditors at least quarterly; ·assessing the senior management ́s responsiveness to any recommendations made by both the independent and internal auditors; ·advising the Board of Directors regarding any conflicts between the independent auditors and the Board of Executive Officers; ·recommending policies, practices and procedures for improving the performance of our senior management; and ·following up by occasion of its meetings, on its recommendations and requests for information, including the planning of the respective auditing works in order to turn into minutes the content of such meetings.  Compensation Committee–The Compensation Committee has three (3) to seven (7) members, all of whom are members of Bradesco's Board of Directorswith terms of office of one (1) year, and according to the provisions set forth in CMN Resolution No. 3,921/10 of the National Monetary Council, should have at least one (1) non-management member. Members are appointed by and replaced by the Board of Directors. The committee's primary responsibility is to provide the Board of Directors with proposed policies and guidelinesfrom ourBoard of Executive Officers, based on performance goals defined by the Board of Directors.  Other Board Advisory Committees Internal Control and Compliance Committee– The Internal Control and Compliance Committee has up to 12 members. Members are appointed and replaced by the Board of Directors. The committee's primary responsibility is to assist the Board of Directors with the performance of its duties related to the adoption of strategies, policies and measures governing internal controls, mitigation of risks, and compliance with applicable rules. Ethics Committee– The Ethics Committee is composed of up to 16 members. Members are appointed and may be replaced by the Board of Directors. The committee's primary responsibility is to propose actions to ensure the enforcement of our Corporate and Sector Codes of Ethics and to promote awareness of it by our employees and management. Integrated Risk Management and Capital Allocation Committee– The Integrated Risk Management and Capital Allocation Committee has 11 members,nominated and removableby the Board of Directors. This committee's primary responsibility is to advise the Board of Directors in the performance of its duties in the management and control of risks and capital in the sense of the consolidated economic financial entity. Sustainability Committee –TheSustainability Committeecurrently has 21 members. Its purpose is to advise the Board of Directors in the performance its tasks related to fostering sustainability strategies, including the establishment of corporate guidelines and actions and reconciling economic development issues with those of social responsibility.  Ombudsman At the special shareholders' meeting held on August 24, 2007, our shareholders formalized the creation of the Ombudsman. Previously the Company had an informal Ombudsman. The Ombudsman works on behalf of all the institutions within the Organization, authorized to operate by the Central Bank. There is one (1) Ombudsman, with a one-year (1) term. The Ombudsman is appointed and dismissed by the Board of Directors. The Ombudsman is responsible for: ·checking strict compliance with legal and regulatory rules related to consumer's rights and acting as a communication channel among the institutions comprising the Bradesco Group authorized to operate by the Central Bank and customers and users of its products and services, including mediating conflicts; ·receiving, registering, instructing, analyzing and formally and properly dealing with complaints of customers and users of products and services of the abovementioned institutions, not resolved by the usual services offered by the branches or by any other service station;  Bradesco167


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·giving necessary clarifications and replying to claimants regarding the status of complaints and the solutions offered; ·informing claimants of the term for the final answer, which should not exceed 15 days; ·sending a conclusive answer to the claimant's demand until expiration of the term; ·proposing to the Board of Directors corrective or improvement measures to procedures and routines based on the analysis of the complaints received; and ·preparing and sending to the Board of Directors, the Audit Committee and the Internal Audit, at the end of each semester, a qualitative report regarding the Ombudsman's performance, comprising the proposals addressed in the prior item, if any.  In March 2010, the Central Bank issued new rules related to the implementation and operation of Ombudsman’s Offices in financial institutions with specific procedures regarding service to individual and corporate customers classified as micro companies. The rules for our Ombudsman’s duties comply with those provisions. According to our Bylaws and in order to comply with the rules of the Central Bank, in November 2009, Júlio Alves Marques was appointed Ombudsman, as well as Department Officer, positions which he already held since May 2009, which were confirmed by the special shareholders' meetingheld on March 12, 2014, witha one-year term.  6.D.  Employees
 As of December 31, 2013, we had 100,489 employees, of which 83,900 were employed by us and 16,589 were employed by our subsidiaries, as compared to 103,385 employees as of December 31, 2012 and 104,684 employees as of December 31, 2011. The following table sets forth the number of our employees and a breakdown of employees by main category of activity and geographic location as of the dates indicated:  December 31,
     2013
     2012
     2011Total number of employees
     100,489
     103,385
     104,684Number by category of activityBankingBradesco
     83,900
     85,777
     86,263Insurance activities
     5,856
     5,881
     5,950Pension plan activity
     1,527
     1,673
     1,658Other categories
     9,206
     10,054
     10,813Number by geographic locationCidade de Deus, Osasco
     12,749
     12,485
     12,385Alphaville, Barueri
     1,652
     2,034
     1,627São Paulo
     17,957
     19,335
     19,813Other locations in Brazil
     67,853
     69,253
     70,426International
     278
     278
     433
  Our part-time employees work six hours a day, while our full-time employees work eight hours a day, both in a five-day workweek. We had31,615 part-time employees and 68,874 full-time employees as of December 31, 2013 compared to32,581 part-time employees and 70,804 full-time employees as of December 31, 2012, and37,262 part-time employees and 67,422 full-time employees as of December 31,2011. We generally hire our employees at the entry level, and encourage them to remain with us throughout their careers. In filling all positions, we give preference to candidates from within Bradesco, including for middle management and senior positions.  168Form 20-F – December 2013


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As of December 31, 2013, approximately 50.0% of our employees were associated with one of the labor unions that represent bank or insurance employees in Brazil. We consider our relations with our employees as well as with the labor unions to be good, in large part due to our philosophy of internal recruiting and transparency in communication. We are party to two collective bargaining agreements: one relating to our banking employees and the other to our insurance sector employees. We offer our employees benefits which include Bradesco health and dental plans enabling beneficiaries to choose their doctors, hospitals and dentists anywhere in Brazil, retirement and pension plans, and subsidized life and accident insurance. We also have a team of social workers who work with our employees and their dependents. To ensure added social and psychological support for employees and their dependents, Bradesco has introduced a new channel for assistance in the form of a 0800-number help line called "Live well"(Viva Bem) that deals with personal issues, work-related, family and relationship problems. This toll-free line is available 24/7 and calls are 100% confidential. These benefits are available regardless of an employee's position. Currently, 39.0% of our employees participate in our pension plan Bradesco Vida e Previdência. In accordance with our collective bargaining agreement, we also offer our employees profit-sharing compensation plans. Through Universidade Corporativa Bradesco - UniBrad (Bradesco Corporate University), whose mission is to provide professional education and social mobility, we offer development solutions and training to our employees and collaborators. In 2013, we invested R$119.0 million in professional training with a total of more than 1.3 million participations.  6.E.Share Ownership
 As of December 31, 2013, the members of our Board of Directors and Board of Executive Officers indirectly held 3.39% of our voting capital and 1.73% of our total capital stock, in aggregate, through a company called BBD Participações S.A. (the current name of Elo Participações e Investimentos S.A.), or "BBD." In addition, some of our directors and executive officers directly hold shares of our capital stock. However, as of December 31, 2013, none of our directors and executive officers individually owned, directly or indirectly, more than 2.0% of any class of our shares.  ITEM 7.MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
 7.A.Major Shareholders
 As of December 31, 2013, our capital stock was composed of2,103,637,129common shares (2,898,610treasury shares) and2,103,636,910preferred shares (7,866,270treasury shares), with no par value. For information on shareholders' rights and our dividend distributions, see "Item 8.A. Consolidated Statements and Other Financial Information-Policy on dividend distributions" and "Item 10.B. Memorandum and Articles of Incorporation-Organization-Allocation of net income and distribution of dividends."   Bradesco169


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The following chart illustrates our capital ownership structure as of December 31, 2013:   Cidade de Deus- Companhia Comercial deParticipações, a holding company,which we call “Cidade de Deus Participações,”directly owns48.67% of our voting capital and24.40% of our total capital stock.Cidade de Deus Participações, in turn, is owned by the Aguiar Family,Fundação Bradesco, and another holding company,Nova Cidade de Deus Participações S.A., or "Nova Cidade de Deus."Nova Cidade de Deusis owned by Fundação Bradesco andBBD. Inaddition to the transaction carried out inJune 2011,by whichNCF Participações S.A, or “NCF,”acquired approximately 5.4% of Banco Bradesco’s voting capital, held by Banco Espírito Santo S.A. and by the Funds managed by ESAF – Sociedade Gestora de Fundos de Investimento Mobiliários S.A.There has been no significant change in the percentage ownership held by any major shareholders in the last five years. The following table shows the direct ownership of our outstanding common and preferred shares on March10,2014. For more information, see "Item 7.A. Major Shareholders."   170Form 20-F – December 2013


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| |  |  | Form 20-F
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Shareholders mentioned in the following table, except for the members of theDiretoria Executivaor the Board of Directors, directly hold five percent or more of our securities with voting rights. Shareholder

   Number of shares, except %Number of common shares

   % of common shares

   Number of preferred shares

   % of preferred shares

   Total Number of shares

   % of total sharesCidade de Deus Participações

   1,022,374,418

   48.7%

   1,597,076

   0.1%

   1,023,971,494

   24.4%Fundação Bradesco(1)

   358,469,028

   17.1%

   -

   -

   358,469,028

   8.5%NCF Participações

   172,433,243

   8.2%

   45,860,723

   2.2%

   218,293,966

   5.2%Subtotal

   1,553,276,689

   73.9%

   47,457,799

   2.3%

   1,600,734,488

   38.2%Members of the Board of DirectorsLázaro de Mello Brandão

   (*)

   (*)

   (*)

   (*)

   (*)

   (*)Luiz Carlos Trabuco Cappi

   (*)

   (*)

   (*)

   (*)

   (*)

   (*)Antônio Bornia

   (*)

   (*)

   (*)

   (*)

   (*)

   (*)Mário da Silveira Teixeira Júnior

   (*)

   (*)

   (*)

   (*)

   (*)

   (*)João Aguiar Alvarez

   (*)

   (*)

   (*)

   (*)

   (*)

   (*)Denise Aguiar Alvarez

   (*)

   (*)

   (*)

   (*)

   (*)

   (*)Carlos Alberto Rodrigues Guilherme

   (*)

   (*)

   (*)

   (*)

   (*)

   (*)Milton Matsumoto

   (*)

   (*)

   (*)

   (*)

   (*)

   (*)José Alcides Munhoz

   (*)

   (*)

   (*)

   (*)

   (*)

   (*)Total Board of Directors

   14,831,712

   0.7%

   19,794,850

   0.9%

   34,626,562

   0.8%Members of the Diretoria ExecutivaJulio de Siqueira Carvalho de Araujo

   (*)

   (*)

   (*)

   (*)

   (*)

   (*)Domingos Figueiredo de Abreu

   (*)

   (*)

   (*)

   (*)

   (*)

   (*)Aurélio Conrado Boni

   (*)

   (*)

   (*)

   (*)

   (*)

   (*)Sérgio Alexandre F. Clemente

   (*)

   (*)

   (*)

   (*)

   (*)

   (*)Marco Antonio Rossi

   (*)

   (*)

   (*)

   (*)

   (*)

   (*)Alexandre da Silva Gluher

   (*)

   (*)

   (*)

   (*)

   (*)

   (*)Josué Augusto Pancini

   (*)

   (*)

   (*)

   (*)

   (*)

   (*)Maurício Machado de Minas

   (*)

   (*)

   (*)

   (*)

   (*)

   (*)Alfredo Antônio Lima de Menezes

   (*)

   (*)

   (*)

   (*)

   (*)

   (*)André Rodrigues Cano

   (*)

   (*)

   (*)

   (*)

   (*)

   (*)Luiz Carlos Angelotti

   (*)

   (*)

   (*)

   (*)

   (*)

   (*)Marcelo de Araújo Noronha

   (*)

   (*)

   (*)

   (*)

   (*)

   (*)Nilton Pelegrino Nogueira

   (*)

   (*)

   (*)

   (*)

   (*)

   (*)André Marcelo da Silva Prado

   (*)

   (*)

   (*)

   (*)

   (*)

   (*)Luiz Fernando Peres

   (*)

   (*)

   (*)

   (*)

   (*)

   (*)Altair Antônio de Souza

   (*)

   (*)

   (*)

   (*)

   (*)

   (*)Denise Pauli Pavarina

   (*)

   (*)

   (*)

   (*)

   (*)

   (*)Moacir Nachbar Junior

   (*)

   (*)

   (*)

   (*)

   (*)

   (*)Octávio de Lazari Junior

   (*)

   (*)

   (*)

   (*)

   (*)

   (*)Total Members of the Diretoria Executiva

   301,054

   0.0%

   697,631

   0.0%

   998,685

   0.0%Subtotal

   1,568,409,455

   74.7%

   67,950,280

   3.2%

   1,636,359,735

   39.0%Other

   532,329,064

   25.3%

   2,026,701,760

   96.8%

   2,559,030,824

   61.0%Subtotal

   2,100,738,519

   100.0%

   2,094,652,040

   100.0%

   4,195,390,559

   100.0%Treasury shares

   2,898,610

   -

   8,984,870

   -

   11,883,480

   -Total

   2,103,637,129

   100.0%

   2,103,636,910

   100.0%

   4,207,274,039

   100.0%(1)Also indirectly owns, through its interest in Cidade de Deus Participações and Nova Cidade de Deus, and NCF Participações, 39.4% of our common shares and 20.7% of our total shares.(*) None of the members of our Board of Directors, Board of Executive Officers or other administrative, supervisory or management bodies directly or beneficially holds 1.00% or more of any of our classes of shares, and their individual share ownership has not been previously disclosed to our shareholders or otherwise made public, See "Item 6.E. Share Ownership" for more information.
  The following is a brief description of our principal beneficial shareholders. None of the principal beneficial shareholders have voting rights that differ from those of the other holders of our common shares.    Bradesco171


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|Form 20-F |  |  | 
|--------- |  |  | 

Cidade de Deus Participações Cidade de Deus Participaçõesis a holding company that holds investments in other companies. It also administers, purchases and sells securities and other assets on its own account. Its shareholders areNova Cidade de Deus, with 44.91% of its common and total shares, Fundação Bradesco, with 33.20% of its common and total shares, and the Aguiar Family, with 21.89% of its common and total shares as of December 31, 2013. The company's capital stock is made up of common, nominative book-entry shares, with no par value.  Nova Cidade de Deus Nova Cidade de Deusis a holding company that holds investments in other companies, mainly those that, directly or indirectly, own our voting capital. As of December 31, 2013, the company owned, through its participation inCidade de Deus Participações, 23.32% of our common shares and 11.88% of our total shares. The capital stock ofNova Cidade de Deusis divided in class A and class B common shares and one class of preferred shares. Ownership of the class B common shares is limited to: ·members of ourDiretoria Executiva; ·former members of ourDiretoria Executiva, who have become members of our Board of Directors; ·former members of ourDiretoria Executiva, who have become members of the Board of Directors of one or more of our subsidiaries; and ·commercial or civil associations in which the majority of the voting interest is owned by the individuals above.  Ownership ofNova Cidade de Deus'class A common shares is limited to the persons entitled to own class B common shares and any civil associations and private foundations managed by them or their appointed representatives. Only the class A and class B common shareholders inNova Cidade de Deushave voting rights.  The Aguiar Family As of December 31, 2013, three members of the Aguiar Family and the estate of Mr. Amador Aguiar indirectly owned, by way of their participation in Cidade de Deus Participações, 11.36% of our common shares and 5.79% of our total shares. In addition, the same parties directly held a total of 1.11% of our common shares, 1.07% of our preferred shares, which correspond to 1.09% of our total shares. None of the members of the Aguiar Family individually or directly holds more than 1.00% of our voting shares.  Fundação Bradesco As of December 31, 2013,Fundação Bradescoowned 56.50% of our common shares, 1.95% of our preferred shares and 29.25% of our total shares, directly and indirectly, through its participation inCidade de Deus Participações,Nova Cidade de Deusand NCF. Under the terms ofFundação Bradesco'sbylaws, all of our directors, members of theDiretoria Executivaand department officers, as well as directors and officers ofCidade de Deus Participações, serve as members of the board of trustees ofFundação Bradesco, known as the "Board of Trustees." They receive no compensation for their service on the Board of Trustees. Fundação Bradescois oneof the largest private socio-educational programs in Brazil and in the world,it is aninnovative social investment initiativewhichreaches every state in Brazil and the Federal District, and its 40 schools are primarily located in regions of accentuated educational deprivation. In 2013, a total of 101,781 students attended Fundação Bradesco schools from early childhood through to secondary school, and secondary-level vocational or technical education, as well as courses for young people and adults and initial and continuing education for employment and income. In addition to quality formal education free of charge, some 45,000 elementary school students are also provided with school uniforms, classroom stationery, meals, and medical and dental care. Our "Virtual School" e-learning portal's distance learning programs benefited 455,088 students who


completed at least one of a wide range of courses offered, and another 71,742 students were involved in projects and partnership initiatives such as Digital Inclusion Centers, our "Educate - Act" (Educa+Ação) program, and technology courses ("Educating and Learning”).  172Form 20-F – December 2013


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| |  |  | Form 20-F
| |  |  | ---------

In its 11th consecutive year, the “Voluntary ActionNational Day”held on May 2013 engaged over 26 thousand volunteers at 72 different locations in Brazil, including Fundação Bradesco schools and service centers close to schools. There were 314,452 attendees at this event which promoted issues regardingeducation, health, leisure, sports and the environment. Created in 1998, the IT for the Visually Handicapped Program has benefited and trained 12,160 students and fostered social inclusion for thousands of people. Together with partners that are specialized in training educators and producing related material, Fundação Bradesco develops a range of actions focused on environmental education, financial education and tax education, work and consumption, sexuality and self-care and the dangers of drugs, as well as Internet access and responsible use. Fundação Bradesco's 2013 budget totaled R$456.9million. Over the last ten years, Fundação Bradesco has invested a total of R$4.0billion (at current values) in the foundation.  BBD BBD indirectly owned 6.08% of our common shares and 3.10% of our total shares as of December 31,2013,through its participation inNova Cidade de Deus. BBD is a holding company that was organized to hold interests in our capital and in the capital of our indirect and direct shareholders. In 1999, BBD acquired from several shareholders an indirect interest of 5.51% of our voting capital. Only members of the Board of Directorsand ofthe Board of Executive Officers,aswellas skilledemployees of Bradesco, Bradespar,orofour subsidiariesand national not-for-profit legal entities or national companies controlled by them that have as administrators only employees and/or administrators of Bradesco, may hold BBD shares. However, only the members of the Board of Directors and Executive Officers may own voting shares. Most of our board members and executive officers own shares in BBD.  NCF NCF is a holding company controlled by Cidade de Deus Participações and byFundação Bradesco. As of December 31, 2013, NCF held 8.21% of our common shares and 5.20% of our total shares.  Other Direct market holdings represented26.06% of our voting capital as of December 31,2013(including aholdingof2.50% by the Bank of Tokyo Mitsubishi - UFJ (MUFG))and 97.73% of our preferred shares. Common and preferred shares held by the market accounted for61.86% of our share capital as of December 31,2013. As of December 31, 2013, 22.65% of our preferred shares and 8.89% of our common shares were held by 1,023 foreign investors. At the same date, our ADRs represented 31.40% of our preferred shares, 0.01% of our common shares and our GDRs represented 0.02% of our preferred shares.  
  Bradesco173


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|Form 20-F |  |  | 
|--------- |  |  | 

7.B.Related Party Transactions
 Transactions with related parties and subsidiaries are conducted on arms' length terms as demonstrated below:  December 31,
     R$ in thousands2013
     2012
     2011(Restated)
     (Restated)ASSETSLoans and advances to banks
     84,216
     107,150
     246,220Other assets
     7,739
     10,280
     10,152LIABILITIESDeposits from customers
     (265,046)
     (208,378)
     (242,756)Funds from securities issued
     (1,543,906)
     (749,315)
     (687,118)Subordinated debt
     (754)
     (698)
     (65,333)Corporate and statutory obligations
     (724,226)
     (735,902)
     (775,636)Other liabilities
     (2,213)
     (8,027)
     (10,566)INCOME AND EXPENSESNet interest income
     (114,707)
     (64,015)
     (81,358)Other income
     29,936
     39,501
     34,053Other expenses
     (120,623)
     (117,222)
     (108,932)
  Under Laws Nos. 4,595/64 and 7,492/86, financial institutions may not grant loans or advances to: ·officers and members of the Board of Directors, fiscal councils, advisory committees and similar corporate bodies, as well as their spouses and relatives up to the second degree; ·individuals or legal entities with a direct or indirect equity interest of at least 10%; ·legal entities in which such financial institutions held a direct or indirect equity interest of at least 10%; and ·legal entities in which capital any officers or managers of such financial institution, including their spouses or relatives of the second degree, held a direct or indirect equity interest of at least 10%.  Accordingly, we have not assigned any loans or advances to any of our subsidiaries, affiliates, executive officers, board members or their relatives of second degree. Under Brazilian regulation, financial institutions must keep any record of impediment updated in order to avoid the occurrence of any prohibited loan or cash advance. For further details on restrictions on the operations of financial institutions, see "Item 4.B. Business Overview-Regulation and Supervision-Bank regulations-Principal limitations and restrictions on activities of financial institutions."  Other Matters Bank of Tokyo Mitsubishi-UFJ (MUFG) owns 1.25% of our total capital, and provides credit lines to us for trade-related transactions. The terms of these transactions are consistent with similar transactions that we engage in with other, unrelated entities.  7.C.  Interests of Experts and Counsel
 Not applicable.  
  174Form 20-F – December 2013


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| |  |  | Form 20-F
| |  |  | ---------

ITEM 8.FINANCIAL INFORMATION
 8.A.Consolidated Statements and other Financial Information
 See "Item 18. Financial Statements," which contains our audited consolidated financial statements prepared in accordance with IFRS as issued by the IASB.  Legal proceedings We are a partytocivil, tax and labor administrative proceedings and lawsuits that have arisen during the normal course of our business.We do not have any litigation matters that aresignificanton anindividualbasis. We believe that there are no suits pending or threatened, individually or in the aggregate, that if decided againstus wouldhave a material adverse effect on our business, financial condition, properties, prospects or results of operations. As of December 31, 2013, of our provision of R$13,753 million, 18.3% related to labor matters, 27.7% related to civil liability cases and 54.0% related to tax issues. For additional information, see Note 38 to our consolidated financial statements in "Item 18. Financial Statements." Probable losses recognized in our consolidated financial statements refer to litigation related to: (i) inflation adjustments; and (ii) legality of certain taxes and contributions. The remaining litigation, where the probability of loss is considered as possible based on our judgment using available information, are related to tax assessments, in the amount of R$4,311 million as of December 31, 2013 (R$2,540 million in 2012). We believe these assessments are inconsistent with current law and are therefore not recognized in our consolidated financial statements. We believe that as of December 31, 2013, we haveset asidesufficient fundsas provisionsto cover our probable losses from litigation, subject to the inflation-indexation requirement for provisions relating to certain tax matters. Labor matters– The labor matters in which we were involved during the year ended December 31, 2013, aremainlyclaims from former employees and outsourced employees seeking indemnifications, especially for unpaid overtime, according to Article 224 of the Consolidation of Labor Laws (CLT).In proceedings requiring judicial deposits to guarantee the execution of the judgment, the amount of labor provisions are recorded considering the estimated loss of these deposits. For other proceedings, the provision is recorded based on the average of payments made for claims settled in the last 12 months. Overtime is controlled through the use of electronic time cards and paid regularly during the employment contract and, accordingly, the claims filed by former employees do not represent significant amounts. Tax-related matters– We are alsoa party toa number ofjudicial lawsuits and administrative proceedings, mainly involving issues related to constitutionality and fair interpretation of some tax requirements. Some claims aim at the non-payment of taxes with which we do not agree, while others aim at recovering taxes we understand have already been paid or unduly paid. The amounts we have not paid in view of these claims have in general been provisioned in conformity with applicable accounting rules and are restated based on criteria established by tax legislation. On the other hand, those taxes to be refunded are only recorded upon final and unappealable judgment recognizing our right. See Note 17 to our consolidated financial statements for a description of our most relevant tax claims. Civil matters– We are a party to various civil lawsuits, although none of them are material. Lawsuits consist mainly of claims for indemnification for presumed damages caused during the ordinary course of business activities and cases where inflation indices were not applied to the adjustment of saving accounts as a result of economic plans, although we complied with the law in force at the time. For more information on lawsuits in relation to economic plans, see “Item 3.D. Risk Factors - Risks relating to Bradesco and the Brazilian banking industry - The Brazilian Supreme Court and Brazilian Superior Court of Justice are currently deciding cases relating to the application of inflation adjustments which may increase our costs and cause losses.” Probable risk cases are all provisioned, and do not incur in a material adverse effect on our results of operations or financial position. Other matters–Weare currently not subject to any significant disputed processes with the Central Bank, CVM, ANS or SUSEP. We comply with all regulations applicable to the business, issued by the aforementioned regulatory bodies.    Bradesco175


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|Form 20-F |  |  | 
|--------- |  |  | 

Policy on dividend distributions Our Bylawsrequire ourBoard of Directors to recommend, at each annual general shareholders' meeting, that our net income for the fiscal year be allocated as follows: (i)5% for the legal reserve, not exceeding 20% of the paid-up capital in each fiscal year. This requirement shall not be applicable in fiscal years when the legal reserve, added to our other capital reserves, exceeds 30% of our paid-up capital; (ii)an amount (to be determined by our shareholders based on probable potential losses) to a contingency reserve against future losses; (iii)at least 30% (after the deductions for the legal reserves and contingencies) for mandatory distribution to our shareholders; and (iv)any outstanding balance to a statutory profit reserve for the maintenance of an operating margin that is compatible with our credit businesses, up to a limit of 95% of our paid-up capital.  Our Bylaws also authorize our shareholders to allocate an amount to a reserve for realizable revenue. Our shareholders have never allocated amounts to such reserve. A minimum of 30% of our net income must be distributed as annual dividends and must be paid out within 60 days following the annual general shareholders' meeting. However,Brazilian corporate law (Brazilian Law No. 6,404/76)permits us to suspend payment of the mandatory dividends if our Board of Directors reports, at the shareholders' meeting, that the distribution would be incompatible with our financial condition, and our shareholders approve the suspension by a simple majority vote. Under the Brazilian Corporate Law, the Board of Directors shall file a report with the CVM, justifying the suspension, within five days after the annual general shareholders' meeting. The income not distributed as dividends due to suspension must be allocated to a special reserve. If it is not absorbed by subsequent losses, the amount in the reserve shall be paid as dividends as soon as our financial situation allows us to. Preferred shareholders are entitled to receive dividends per share in an amount 10% greater than the dividends per share paid to common shareholders. Our Board of Executive Officers, subject to approval by the Board of Directors, may distribute dividends based on the profits reported in interim financial statements. The amount of distributed interim dividends shall not exceed the amount of the additional paid-in capital. Our Board of Executive Officers bases the amount of the interim dividends to be distributed on previously accumulated profits or retained earnings. Since 1970, we have been distributing interim dividends on a monthly basis. Today we maintain an automatic system for the monthly payment of interest on equity. Consistent with Brazilian law, our Bylaws allow ourDiretoria Executiva, upon approval by the Board of Directors, to make distributions in the form of interest on equity instead of dividends. Payments of interest on equity may be included as part of any mandatory dividends. Since July 1997, we have made monthly payments of interest on equity at an amount approved by our Board of Directors before the statement of dividends at the end of each fiscal year. The amounts paid as interest on equity, net of income tax, are discounted from the amount of dividends declared. Pursuant to Brazilian law, a shareholder who does not receive a dividend payment may start a proceeding for the collection of these payments within three years following the dividends statement date. After this period, unclaimed dividends return to the company. Our policy relating to dividend distributions and/or interest on equity is to maximize the amount of distributions, in accordance with our tax management strategy. For additional information, see "Item 5.A. Operating Results-Overview-Taxes."  8.B.Significant Changes
 See "Item 4.A. History, Development of the Company and Business Strategy-Recent Acquisitions."  
  176Form 20-F – December 2013


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| |  |  | Form 20-F
| |  |  | ---------

ITEM 9.THE OFFER AND LISTING
 9.A.Offer and Listing Details
 Our ADSs are traded on the NYSE, under the symbols “BBD” (preferred share ADSs) and “BBDO” (common share ADSs). Our preferred share ADSs were first listed on the NYSE in 2001.  Each preferred share ADS corresponds to one preferred share. In March 2013, a special shareholders' meeting approved a capital increase, with the capitalization of profits reserve and consequent 10% bonus in shares, pursuant to which our shareholders received one new share for each 10 existing shares of the same type they held. Bradesco's shares are part of Brazil’s main stock indexes, including the Ibovespa (a gross total return index weighted by traded volume which comprises the most liquid stocks traded on BM&FBOVESPA), the IBrX-50 (an index that measures the total return of a theoretical portfolio comprising 50 shares selected among the most traded shares on BM&FBOVESPA), ISE(Corporate Sustainability Index), the ITAG (Special Tag-Along Stock Index), IGC (Special Corporate Governance Stock Index), IFNC (Financial Index which comprises banks, insurance and financial companies), the ICO2 (index comprising shares of the companies that are part of the IBrX-50 index and that accepted to take part in this initiative by adopting transparent greenhouse gas emission practices) and the Mid-Large Cap Index – MLCX (that measures the return of a portfolio composed of the highest cap companies listed). Abroad, Bradesco shares are listed on NYSE’s Dow Jones Sustainability World Index and the FTSE Latibex Brazil Index of the Madrid Stock Exchange. In January 2012, the Central Bank authorized Bradesco to create an ADR program for its common shares in the U.S. market. As part of this authorization, and after Brazilian government had affirmed it as being in its interest, the Central Bank increased the limit of foreign interest in Bradesco's capital stock from 14% to 30%. The increase in the limit of foreign interest in our common shares did not alter Bradesco's ownership or control structure. In March 2012, our common shareADSsbecame listed on the NYSE under the symbol "BBDO." Each common share ADS corresponds to one common share.   Bradesco177


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|Form 20-F |  |  | 
|--------- |  |  | 

The following tables show, for the indicated period, the reported high and low sale prices in nominalreaisfor the preferred and common shares on BM&FBOVESPA:  in R$
     Average monthly trading volume (1)Price per Preferred share(1)High
     Low
     Shares (in units)2009
     38.70
     19.32
     107,090,1252010
     38.04
     28.06
     88,557,3672011
     33.99
     25.12
     118,593,35820121st Quarter
     33.31
     29.97
     129,242,9672nd Quarter
     32.25
     26.60
     142,403,7673rd Quarter
     36.30
     28.55
     127,563,7004th Quarter
     37.02
     30.92
     118,526,53320131st Quarter
     38.47
     32.15
     137,014,3002nd Quarter
     35.38
     27.23
     162,291,4673rd Quarter
     31.84
     25.50
     180,126,7674th Quarter
     33.27
     27.80
     145,250,0672014January
     29.25
     25.34
     156,825,800February
     27.80
     25.02
     157,963,000March
     31.23
     26.24
     185,967,800(1)Prices and amounts not adjusted by income and other corporate events.Source: Economatica.
   in R$Price per Common share (1)
     Average monthly trading volume (1)High
     Low
     Shares (in units)2009
     31.35
     16.77
     10,501,8422010
     31.00
     22.51
     12,668,5832011
     28.49
     21.13
     17,462,34220121st Quarter
     28.61
     24.58
     15,987,4332nd Quarter
     27.43
     22.57
     15,808,2673rd Quarter
     29.19
     23.71
     10,604,1004th Quarter
     36.12
     25.41
     48,964,90020131st Quarter
     38.16
     32.91
     34,324,3672nd Quarter
     36.07
     29.39
     30,998,8333rd Quarter
     36.58
     28.24
     38,165,2004th Quarter
     37.36
     30.39
     26,779,8672014Janury
     32.07
     27.89
     26,083,000February
     29.89
     27.13
     21,829,300March
     34.00
     27.82
     21,102,700(1)Prices and amounts not adjusted by income and other corporate events.Source: Economatica.
     178Form 20-F – December 2013


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| |  |  | Form 20-F
| |  |  | ---------

The following table shows, for the indicated periods, the reported high and low closing sale prices in U.S. dollars for the preferred share ADSs on the NYSE:  in U$$
     Average monthly trading volume (1)Price per preferred share ADS (1)High
     Low
     Preferred share ADS 
(in units)2009
     22.70
     7.81
     194,444,1462010
     22.54
     15.17
     201,935,9992011
     21.34
     13.98
     215,247,68520121st Quarter
     19.10
     16.56
     162,331,9132nd Quarter
     17.75
     13.17
     229,869,5233rd Quarter
     18.00
     13.95
     186,858,8874th Quarter
     17.78
     15.16
     151,654,87220131st Quarter
     19.17
     16.18
     129,409,9282nd Quarter
     17.79
     12.15
     153,770,3723rd Quarter
     14.45
     11.29
     200,977,3364th Quarter
     15.41
     11.83
     152,558,0142014January
     12.26
     10.44
     168,896,223February
     11.89
     10.23
     172,447,710March
     13.81
     11.08
     193,972,330(1)Prices and amounts not adjusted by income and other corporate events.Source: Economatica.
  Our common share ADSs have been traded on the NYSE since March 2012. The following table shows, for the indicated periods, the reported high and low closing sale prices in U.S. dollars for the common share ADSs on the NYSE:  in U$$
     Average monthly trading volume (1)Price per common share ADS (1)High
     Low
     Common share ADS (in units)20121st Quarter
     16.89
     14.92
     198,9992nd Quarter
     15.23
     11.45
     20,7453rd Quarter
     15.40
     12.36
     5,5434th Quarter
     17.29
     12.35
     47,76420131st Quarter
     19.50
     16.54
     23,0272nd Quarter
     18.95
     13.38
     42,2173rd Quarter
     16.75
     11.30
     135,4284th Quarter
     17.17
     12.91
     34,9742014January
     13.75
     11.61
     47,650February
     13.28
     11.50
     54,400March
     15.00
     11.85
     87,780(1)Prices and amounts not adjusted by income and other corporate events.Source: Economatica.
 Our shares are registered in book-entry form and we perform all the services of safe-keeping and transfer of shares. Our shareholders may choose to hold their shares registered at the CBLC. Under Brazilian law, non-Brazilian holders of our shares may be subject to certain adverse tax consequences due to their ownership and any transfer of our shares. For further discussion of the restrictions on the transfer of preferred shares, see "Item 10.B. Memorandum and Articles of Incorporation-Organization-Form and transfer" and "Item 10.D. Exchange Controls." Ourpreferred shareADSs and common share ADSs are represented bypreferred shareADRs and common share ADRs, respectively. Ourpreferred shareADSs and common share ADSs may be held in registered form with the depository – The Bank of New York Mellon – or in book entry form through financial


institutions that are members of the "Depository Trust Company" or DTC. The depositary bank, as registrar, performs the services of transfer of thepreferred shareADRs and common share ADRs. Title to anpreferred shareADR or common share ADR (and to eachpreferred shareADS or common share ADS evidenced thereby), when properly endorsed or accompanied by proper instruments of transfer, is transferable by delivery with the same effect as in the case of a certificated security under the laws of the State of New York. Holders of thepreferred shareADRs and common share ADRs who transfer theirpreferred shareADRs and common share ADRs may be required to:  Bradesco179


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|Form 20-F |  |  | 
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·reimburse the depositary bank for any taxes, governmental charges or fees the depositary bank has paid; ·pay any transfer fees as required by the deposit agreements; ·produce satisfactory proof of identity and genuineness of their signatures or any other documents required by the deposit agreements; ·comply with any United States, Brazilian or other applicable laws or governmental regulations; and ·comply with such reasonable regulations, if any, as we and the depositary bank may establish consistent with the deposit agreements.  All of our outstanding shares are fully paid and non-assessable. The rights of holders of our preferred shares are limited in comparison with those of the holders of common shares in several material ways: ·Each common share entitles the holder to one vote at shareholders' meetings, while holders of preferred shares are only entitled to a vote in the limited circumstances described in "Item 10.B. Memorandum and Articles of Incorporation-Organization-Voting rights;" and ·The nature of preferred shareholders' preemptive rights to subscribe for shares or convertible securities depends on the proportion of capital that would be represented by preferred shares after the capital increase, as described under "Item 10.B. Memorandum and Articles of Incorporation-Organization-Preemptive rights."  The holders of thepreferred shareADSs and common share ADSs have the rights corresponding to the underlying shares, subject to the Deposit Agreements. Owners of thepreferred shareADSs and common share ADSs are parties to the Deposit Agreements and therefore are bound to its terms and to the terms of thepreferred shareADRs and common share ADRs that represent, respectively, thepreferred shareADSs and common share ADSs.  9.B.Plan of Distribution
 Not applicable.  9.C.Markets
 Trading on the BM&FBovespa BM&FBOVESPA is a publicly traded corporation. Beginning in April 2000, the Brazilian stock exchanges were reorganized through the execution of protocols of intention by the Brazilian stock exchanges. Until April 2004, all shares underlying securities were traded only on the BM&FBovespa, with the exception of privatization auctions, which occurred on the Rio de Janeiro Stock Exchange. In May 2004, the Rio de Janeiro Stock Exchange reopened for the trading of certain Brazilian government securities. If you were to trade in our shares on the BM&FBOVESPA, your trade would settle in three business days after the trade date. The seller is ordinarily required to deliver the shares to the exchange on the third business day following the trade date. Delivery of and payment for shares are made through the facilities of the CBLC. The BM&FBOVESPA is less liquid than the NYSE or other major exchanges in the world. As of December 31, 2013, the aggregate market capitalization of the 363 companies listed on the


BM&FBOVESPA, was equivalent to approximately US$1.0 trillion and the ten largest companies listed on the BM&FBOVESPA represented approximately 51.2% of the total market capitalization. Although any of the outstanding shares of a listed company may trade on a Brazilian stock exchange, in most cases fewer than half of the listed shares are actually available for trading by the public, the remainder being held by a small group of controlling persons, by governmental entities or by one principal shareholder. As of December 31, 2013, we accounted for approximately 5.3% of the market capitalization of all listed companies on the BM&FBOVESPA.  180Form 20-F – December 2013


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Trading on Brazilian stock exchanges by a holder not deemed to be domiciled in Brazil for Brazilian tax and regulatory purposes (a "non-Brazilian holder") is subject to certain limitations under Brazilian foreign investment legislation. With limited exceptions, non-Brazilian holders may only trade on Brazilian stock exchanges in accordance with the requirements of Resolution No. 2,689/00 of the CMN. This Resolution requires that securities held by non-Brazilian holders be maintained in the custody of or in deposit accounts with, financial institutions duly authorized by the Central Bank and the CVM. In addition, Resolution No. 2,689/00 requires non-Brazilian holders to restrict their securities trading to transactions on Brazilian stock exchanges or qualified over-the-counter markets. With limited exceptions, according to Resolution No. 2,689/00, non-Brazilian holders may not transfer to other non-Brazilian holders the ownership of investments. See "Item 10.D. Exchange Controls" for further information about Resolution No. 2,689/00, and "Item 10.E. Taxation-Brazilian tax considerations-Taxation of gains" for a description of certain tax benefits extended to non-Brazilian holders who qualify under Resolution No. 2,689/00.  Corporate governance practices of BM&FBOVESPA In 2000, BM&FBOVESPA introduced three special listing segments known as “Levels 1 and 2 of Differentiated Corporate Governance Practices and Novo Mercado" with the purpose of stimulating the secondary market of securities issued by Brazilian companies listed on BM&FBOVESPA, encouraging these companies to follow good corporate governance practices. BM&FBOVESPA subsequently introduced a new segment called "Bovespa Mais," specifically for small- and medium-scale companies. The listing segments were designed for the trading of shares issued by companies that voluntarily commit themselves to follow corporate governance practices and disclosure requirements beyond those required by Brazilian legislation. These rules generally increase shareholders' rights and increase the quality of the information made available to shareholders. Newly amended rules for Levels 1 and 2 of Differentiated Corporate Governance Practices came into effect in May 2011. To become a"Level 1"company, the issuer must agree to the following requirements, in addition to those imposed by applicable law: (i) ensure that the shares that represent at least 25% of its total capital are actually available for trading; (ii) adopt offering procedures that favor the widespread ownership of the shares whenever a public offer is made; (iii) comply with minimum standards for quarterly disclosure; (iv) follow stricter disclosure policies for transactions done by its controlling shareholders, members of its Board of Directors and executives that involve securities issued by the issuer; (v) submit any existing shareholders' agreement and stock option plans to BM&FBOVESPA; and (vi) prepare a schedule of corporate events and make it available to the shareholders. To become a"Level 2"company, the issuer must agree to the following requirements, in addition to those imposed by applicable law: (i) comply with all Level 1 listing requirements; (ii) grant tag-along rights to all shareholders in case the company's control is transferred, offering to common shareholders the same price paid per share for the controlling block of common and preferred shares; (iii) give holders of preferred shares voting rights for decisions on certain corporate restructurings and related-party transactions , such as: (a) conversions, acquisitions, mergers or splits; (b) approval of any transactions between the company and its controlling shareholder, if such decisions are within the competence of the general meeting; (c) valuation of assets to be used for payment of a share capital increase; (d) selecting an institution or specialized company to determine the economic value of the company; and (e) any alterations to these voting rights that will prevail as long as the agreement to adhere to the BM&FBOVESPA's Level 2 segment is in force; (iv) board of directors made up of at least five members of which at least a minimum of 20% shall be independent members with a term of office limited to two years; (v) prepare financial statements in English, including the statement of cash flows, according to international accounting standards such as U.S. GAAP or IFRS; (vi) effect a tender offer by the company's controlling shareholder (the minimum price of the shares to be offered shall be determined by an assessment process), if the controlling shareholder decides on the delisting from the"Level 2"segment; and (vii) exclusively adopt the BM&FBOVESPA"Arbitration Board"rules for resolving any conflicts between the company and its investors. To join BM&FBOVESPA's"Novo Mercado"segment, an issuer must meet all requirements described in"Levels 1 and2,"in addition to: (i) issuing only common shares (with voting rights); and (ii) granting tag-along rights to all shareholders in case the company's control is transferred, offering the same


price paid per share for the controlling block of shares.  Bradesco181


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In June 2001, we executed an agreement with BM&FBOVESPA to list our shares in the"Level 1"segment, effective immediately after the disclosure of the offer's opening date in Brazil. We agreed to comply with and continue to comply with all of the"Level 1"listing requirements.  9.D.Selling Shareholders
 Not applicable.  9.E.Dilution
 Not applicable.  9.F.Expenses of the Issue
 Not applicable.  ITEM 10.ADDITIONAL INFORMATION
 10.A.Share Capital
 For more information on our share capital, see Note 39 to our consolidated financial statements in "Item 18. Financial Statements."  10.B.Memorandum and Articles of Incorporation
 We are a publicly traded company duly registered with the CVM under No. 00090-6. Article 5 of our Bylaws establishes our purpose as carrying out banking transactions in general, including foreign exchange activities.  Organization Qualification of directors Since the promulgation of Law No. 12,431/11,which amended Law No. 6,404/76,members of the Board of Directors are no longer required to be shareholders of the companies in which they occupy these positions. Neither do they have to meet residency requirements to be eligible for board member positions.  Allocation of net income and distribution of dividends Our Bylaws, in conformity with BR GAAP, require the Board of Directors to recommend, at each annual general shareholders' meeting, the allocation of net income for the fiscal year as follows: ·5.0% of net income according to BR GAAP to a legal reserve, during each fiscal year, not to exceed 20.0% in the aggregate of our paid-in capital. This requirement shall not be applicable in fiscal years when the legal reserve, added to our other additional paid-in capital, exceeds 30.0% of our paid-in capital; ·upon proposal by our management, an amount to a contingency reserve against future losses, which amount is determined by our shareholders on the basis of what potential losses they consider probable. Historically, our shareholders never allocated profits to this reserve; ·at least 30.0% of net income according to BR GAAP (after the deductions under the two preceding items) for mandatory distribution to our shareholders; and ·any balance to revenue reserves for the maintenance of an operational margin that is compatible with the conduct of our lending business, up to a limit of 95.0% of our paid-in capital.   182Form 20-F – December 2013


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Our Bylaws also authorize our shareholders to allocate an amount to a reserve for realizable revenue. Historically, our shareholders have not allocated amounts to such reserve. The minimum of 30.0% of our adjusted net income according to BR GAAP must be distributed as annual dividends and paid out within 60 days of the general shareholders’ meeting in which the distribution is approved. However, Brazilian Corporate law permits us to suspend payment of the mandatory distribution if our Board of Directors reports to the shareholders’ meeting that the distribution would be incompatible with our financial condition, event in which the suspension is subject to approval by the shareholders' meeting. Under Brazilian Corporate law, the Fiscal Council shall prepare a report on this matter and the Board of Directors is obligated to present a justification for the suspension with the CVM within five days of the shareholders’ meeting. The income not distributed due to the suspension must be allocated to a special reserve. If not absorbed by subsequent losses, the amounts in the reserve shall be paid as dividends as soon as our financial situation permits. Preferred shareholders are entitled to receive dividends per share in an amount 10.0% greater than the dividends per share paid to the common shareholders. Under Brazilian law, we must prepare financial statements at least on a quarterly basis. OurDiretoria Executiva, with Board of Directors approval, may distribute dividends based on the profits reported in interim financial statements. Our Bylaws provide for the payment of interim dividends, which cannot exceed the amount of our retained earnings or our profit reserves contained in our last, annual or bi-annual financial statements. OurDiretoria Executivabases the amount of the interim dividends on previously accrued or retained earnings. Since 1970, we have been distributing dividends on a monthly basis. Consistent with Brazilian Corporate law, our Bylaws allow ourDiretoria Executiva, upon approval by the Board of Directors, to make distributions in the form of interest on equity instead of dividends. Payments of interest on equity may be considered for the calculation of the mandatory dividend; such inclusion must be at net value. Under Brazilian law, a shareholder who does not receive a dividend payment may start a proceeding for the charging of these payments within three years, counting from the date when the dividends are made available for distribution. When that term ends, the unclaimed dividends return to the Company. In March 2013, the Central Bank issued several rules related to the implementation of the Basel III Accord requirements in Brazilian banks. Pursuant to Resolution 4,193/13, the Central Bank now has the power to intervene in a financial institution in breach of the additional capital requirements to limit the distribution of dividends and payment of extraordinary amounts to the institution’s officers and directors. Such restriction could be applied proportionally to the difference between the required additional capital and the actual additional capital, as follows: (i) if the actual capital is inferior to 25% of the required capital, restriction of up to 100% on distributions; (ii) if the actual capital is 25% or higher and below 50% of the required capital, restriction of up to 80% on distributions; (iii) if the actual capital is 50% or higher and below 75% of the required capital, restriction of up to 60% on distributions; and (iv) if the actual capital is 75% or higher and below 100% of the required capital, restriction of up to 40% on distributions. We are currently in compliance with all capital requirements.  Shareholders’ meetings Our shareholders have the power to decide any matters related to our corporate purpose and to approve any resolutions they deem necessary for our protection and development, through voting at a general shareholders' meeting. As from the Annual General Meeting of 2013, shareholders resolved that our meetings shall be convened by the publication of call notices in the Diário Oficial do Estado de São Paulo (Official Gazzette of the State of São Paulo) and the Valor Econômico newspaper, this latter replacing the publication in the Diário do Comércio newspaper, all in the State of São Paulo. The notice must be published three times, beginning at least 15 calendar days prior to the scheduled assembly date. The notice must contain the assembly's agenda and, in the case of a proposed amendment to our Bylaws, an indication of the subject matter. The Board of Directors, or, in some specific situations set forth in the Brazilian Corporate Law, the shareholders, may call our general shareholders' meetings. A shareholder may be represented at a general meeting by an attorney-in-fact so long as the attorney-in-fact was appointed within less than a year of the assembly. The attorney-in-fact must be a shareholder, a member of our management, a lawyer or a financial institution. The power of attorney given the attorney-in-fact must comply with certain formalities set forth by Brazilian law.  Bradesco183


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|Form 20-F |  |  | 
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In order for a general shareholders’ meeting to validly take any action, shareholders representing at least one quarter of our issued and outstanding common shares must be present at the assembly. However, in the case of a general meeting to amend our Bylaws, shareholders representing at least two-thirds of our issued and outstanding common shares must be present. If no such quorum is verified, the Board of Directors may call a second meeting by notice given at least eight calendar days prior to the scheduled assembly and otherwise in accordance with the rules of publication described above. The quorum requirements will not apply to a second general meeting, subject to the quorum requirements applicable to the first one.  Voting rights Each common share entitles its holder to the right of one vote at our shareholders' meetings. Except as otherwise provided by law, the decisions of a general shareholders’ meeting are passed by a vote by holders of a simple majority of our common shares, while abstentions are not taken into account. In March 2002, the Brazilian Corporate Law was amended to, among other issues, grant more protection to minority shareholders and ensure them the right to appoint one member of the Board of Directors and an alternate to our Board of Directors. To qualify for the exercise of such right, the minority shareholder must have held, for at least the prior three months, either: (i) preferred shares representing the minimum of 10.0% of our capitalstockor (ii) common shares representing at least 15.0% of our voting shares. If no shareholders meet the thresholds, shareholders representing at least 10.0% of our capitalstockmay be able to combine their holdings to appoint one member and an alternate to our Board ofDirectors. The Brazilian Corporatelawprovides that non-voting preferred shares acquire voting rights when a company has failed for the term provided for in its bylaws (for more than three fiscal years) to pay any fixed or minimum dividend to which such shares are entitled. Such voting rights remain effective until payment of the cumulative dividends is made.  Shareholders Pursuant to Brazilian law, the approval of the holders of a majority of the outstanding adversely affected preferred shares as well as shareholders representing at least one-half of the issued and outstanding common shares is required for the following actions: ·creating or increasing an existing class of preferred shares without preserving the proportions of any other class of the existing shares; ·changing a preference, privilege or condition of redemption or amortization of any class of preferred shares; and ·creating a new class of preferred shares that has preference, privilege or condition of redemption or amortization superior to the existing classesof preferred shares.  These actions are put to the vote of the holders of the adversely affected preferred shares at a special assembly, where each preferred share entitles the shareholder to one vote. Preferred shareholders have the right to vote on any change to our legal form and obtain the right to vote if we enter into a liquidation process. The approval of holders of at least one-half of the issued common shares is required for the following actions: ·reducing the mandatory distribution of dividends; ·approving a takeover, merger or spin-off; ·approving our participation in a "grupo de sociedades" (a group of companies whose management is coordinated through contractual relationships and equity ownerships), as defined under the Brazilian Corporate Law; ·changing our corporate purpose; ·ceasing our state of liquidation; and ·approving our dissolution.  184Form 20-F – December 2013


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| |  |  | Form 20-F
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Pursuant to Brazilian Corporate Law, holders of common shares, voting at a general shareholders’ meeting, have the exclusive power to: ·amend our Bylaws, including changes to the rights of the holders of the common shares; ·elect or dismiss members of our Board of Directors; ·receive the yearly accounts prepared by our management and accept or reject management's financial statements, including the allocation of net profits for payment of the mandatory dividend and allocation to the various reserve accounts; ·authorize the issuance of debentures; ·suspend the rights of a shareholder who has not fulfilled the obligations imposed by law or by our Bylaws; ·accept or reject the valuation of assets contributed by a shareholder in consideration for issuance of capital stock; and ·approve corporate restructurings, such as takeovers, mergers and spin-offs; dissolve or liquidate, elect or dismiss our liquidators or examine their accounts.  Preemptive rights Each of our shareholders has a general preemptive right to subscribe for shares or convertible securities in any capital increase in proportion to its holding. Shareholders must be granted at least a 30‐day period following the publication of notice of the issuance of shares or convertible securities to exercise their preemptive rights. As described under "Regulations of and Restrictions on Foreign Investors," under the Brazilian Constitution the increase of foreign investors' participation in the voting capital (common shares) of financial institutions is subject to prior authorization by the Brazilian government. However, foreign investors without specific authorization may acquire publicly traded non-voting shares of Brazilian financial institutions or depositary receipts representing non-voting shares offered abroad. In January 2012, the Central Bank authorized Bradesco to create an ADR program for its common shares in the U.S. market. As part of this authorization, and after the Brazilian government had affirmed it as being in its own interest, the Central Bank increased the limit of foreign interest in Bradesco's capital stock from 14% to 30%. In the event of a capital increase maintaining the existing proportion between common and preferred shares, each shareholder shall have the right to subscribe to newly issued shares of the same class it currently holds. If the capital increase changes the proportion between common and preferred shares, shareholders shall have the right to subscribe newly issued shares of the same class it currently holds, only extending to shares of a different class so as to maintain the same proportion in the capital stock as held prior to such increase. In any case, all new increases are subject to the foreign interest limit set forth by the Central Bank, which means that holders of common shares could be prevented from exercising their preemptive rights in relation to newly issued common shares if the 30% limit is reached. Under Brazilian Corporate Law, shareholders are permitted totransfer or selltheir preemptive rights. You may not be able to exercise the preemptive rights relating to the shares underlying your ADSs unless a registration statement under the Securities Act of 1933 is effective with respect to those rights or an exemption from the registration requirements of the Securities Act is available. The contractual arrangements governing the ADSs provide that the custodian of the shares underlying the ADSs may, if possible, transfer or dispose of the preemptive rights. Such contractual arrangements related to the ADSs, provide for the custodian to remit the consideration received to the depositary bank that holds the ADSs. Its distribution by the depositary bank to holders of preferred or common share ADSs is net of any fees due to the custodian and the depositary bank. For more details see "Item 3.D. Risk Factors - Risks relating to our shares, preferred share ADSs and common share ADSs.”  Right of withdrawal Brazilian Law provides that under certain circumstances a shareholder has the right to withdraw his or her equity interest from a company and to receive a payment for the portion of equity attributable to his or her equity interest. This right of withdrawal may be exercised:  Bradesco185


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|Form 20-F |  |  | 
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·by the dissenting or non-voting holders of the adversely affected class of shares (including any holder of preferred shares) in the event that a general shareholders' meeting resolves to: -­create preferred shares or increase an existing class of preferred shares relative to the other class or classes of preferred shares; -­modify a preference, privilege or condition of redemption or amortization conferred on one or more classes of preferred shares; -­create a new class of preferred shares with greater privileges than the existing class of preferred shares; or ·by the dissenting or non-voting shareholders (including any holder of preferred shares) in the event that a general shareholders' meeting resolves to: -­reduce the mandatory distribution of dividends; -­change our corporate purpose; -­transfer all of our shares to another company, making us a wholly owned subsidiary of such company, known as an "incorporação de ações;" or ·by the dissenting or non-voting holder of common shares, in the event that a general shareholders' meeting resolves to: -­acquire control of another company at a price exceeding certain limits set forth in Brazilian Law; -­merge or consolidate a company,provided thatits shares do not have liquidity and are widely held by the market; -­participate in a "grupo de sociedades" as defined under the Brazilian Law,provided thatits shares do not have liquidity and are widely held by the market; or -­spin off a company or companies resulting in, among other things, a reduction of the mandatory annual dividend, participation in a group of companies, or a change of corporate purpose.  Our dissenting or non-voting shareholders also have a right of withdrawal in the event that the entity resulting from our merger, merger of our shares or spin-off does not become a listed company within 120 days of the shareholders’ meeting at which the relevant decision was taken. The dissenting or non-voting shareholders only have a withdrawal right if they owned the shares, which have been adversely affected at the time of the first call for the shareholders’ meeting in which the relevant decision was made. If a public announcement of the action taken or to be taken was made prior to the call for the shareholders’ meeting, the shareholders' ownership of shares is based on the date of announcement. The right of withdrawal lapses thirty days after publication of the minutes of the shareholders’ meeting at which the action is taken, except when the resolution is subject to confirmation by the preferred shareholders (which must be made at a special assembly to be held within one year). In that case the 30-day term is counted from the date the minutes of the special assembly are published. We would be entitled to reconsider any action giving rise to redemption rights within ten days following the maturity of such rights if the redemption of shares of dissenting shareholders would jeopardize our financial stability. In all the situations described above, our shares would be redeemable at their book value, determined on the basis of the last balance sheet approved by our shareholders. If the shareholders’ meeting giving rise to withdrawal rights occurs 60 days after the date of the last approved balance sheet, a shareholder may demand that its shares be valued on the basis of a new balance sheet of a date within 60 days preceding such shareholders’ meeting.  Liquidation In the event of our liquidation, our preferred shareholders would be entitled to priority over common shareholders in the return of capital. The amount to which they would be entitled is based on the portion of the Capital Stock represented by the preferred shares, as adjusted from time to time to reflect any capital increases or reductions. After all our creditors had been paid, our residual assets would be used to return the amount of capital represented by the preferred shares to the preferred shareholders. Once the preferred shareholders had been fully reimbursed, the common shareholders would be reimbursed on the portion of


the Capital Stock represented by the common shares. All our shareholders would participate equally and ratably in any remaining residual assets.  186Form 20-F – December 2013


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Redemption Our Bylaws provide that our shares are not redeemable. However, Brazilian Law authorizes us to redeem minority shareholders' shares if, after a public tender offer for our delisting, our controlling shareholder increases to more than 95.0% its participation in our total capital stock.  Conversion rights Our Bylaws provide that our common shares cannot be converted into preferred shares or our preferred shares into common shares.  Liability of our shareholders for further capital calls Neither Brazilian law nor our Bylaws provide for capital calls. Our shareholders' liability is limited to the payment of the issue price of the shares subscribed or acquired.  Form and transfer Our shares are registered in book-entry form and we perform all the services of safekeeping and transfer of shares. To make the transfer we make an entry in the register, debit the share account of the transferor and credit the share account of the transferee. Transfers of shares by a foreign investor are made in the same way and executed by the investor's local agent on the investor's behalf. However, if the original investment was registered with the Central Bank pursuant to a foreign investment mechanism regulated by the CMN Resolution No. 2,689/00 as described under "Item 10.D. Exchange Controls," the foreign investor must declare the transfer in its electronic registration. Our shareholders may opt to hold their shares through BM&FBOVESPA. Shares are added to the BM&FBOVESPA system through Brazilian institutions, which have clearing accounts with the BM&FBOVESPA. Our shareholder registry indicates which shares are listed on the BM&FBOVESPA system. Each participating shareholder is in turn registered in a register of beneficial shareholders maintained by the BM&FBOVESPA and is treated in the same manner as our registered shareholders.  Brazilian rules related to information disclosure In January 2002, the CVM issued regulations, which were amended in June 2002 and March 2007, regarding the disclosure of information to the market. These regulations include provisions which: ·determine what information must be filed with the CVM in the form of a notice to the shareholders or a "fato relevante" of a material fact. The "fato relevante" includes any controlling shareholder decisions that could influence the price of our securities and any controlling shareholder decision to trade, cease to trade, or exercise any rights under our securities; ·expand the list of events which are considered material, including, among others: -the signature, amendment or termination of shareholders' agreements to which the company is a party, or which have been registered in our records; -­any authorization to trade our securities in any market, national or abroad; -­the entry or withdrawal of shareholders that have a financial, operational, technological or management collaboration agreement with us; -­­the merger, consolidation or spin-off of a company or its affiliates; -­the change in the composition of a company's capital stock; -­the change in accounting criteria; -­the debt renegotiation; -­the change in rights and advantages attached to the securities of a company;  Bradesco187


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-­the acquisition of a company's shares to keep in treasury or cancellation, and their sale; -­the company's profit or loss and the allocation of its cash dividends; -­the execution or termination of an agreement, or failure on its implementation, when the expectation of its accomplishment is public's knowledge; and -­the approval, change or abandonment of a project or delay in its implementation; ·in the event our executive officer in charge of investor relations does not make required disclosure, extend the responsibility to make the required disclosure to our controlling shareholders, our management, the members of our Fiscal Council and to any member of a technical or consulting body created by our Bylaws; ·extend confidentiality obligations related to undisclosed information to, in addition to our management and controlling shareholders, the members of any technical or consulting bodies created by our Bylaws and our employees in charge of the issues considered relevant matters; ·disclose the information contained in material facts in all markets where our securities are traded; ·if we acquire a controlling participation in a company that has its securities traded on a market, disclose any intention to delist the company within the period of one year; ·fulfill disclosure requirements related to the acquisition and sale of relevant shareholder participations, or the acquisition and sale of our securities by our managing shareholders, members of our Fiscal Council or any member of a technical or consulting body created by our Bylaws; and ·before a material fact is publicly disclosed, prohibit the trading of our securities by our direct and indirect controlling shareholders, officers, members of our Board of Directors, fiscal council and any technical or advisory committees or whomever by virtue of their position has knowledge of information related to the material fact.  Under CVM rules, we are also required to disclose a series of additional details to the market if a general meeting is called to decide on an absorption, merger, or split.  Disclosure of periodic information In December 2009, the CVM issued Instruction No. 480/09 that addresses, among other topics, the issuance of securities and periodic disclosure of information by companies that have their securities traded on the Brazilian market. As a result of this rule, Brazilian issuers must file a “Reference Form” with the CVM every year, a document similar to a securities distribution prospectus and to a “Form 20-F,” providing several detailed aspects of the company's operations and administration. Furthermore, the rules related to financial statements and information disclosure were improved and the management's responsibility for the information provided was increased. As a result, the quantity and quality of information provided to the Brazilian market and to CVM has increased considerably, reinforcing the transparency of our activities for the local investor. In addition, new issuances for companies already listed were made easier.Instruction No. 480/09 is periodically changed by CVM.  Disclosure of operating information to the public CMN rules determine that financial institutions should establish a formal policy approved by its board of directors or, in its absence, by its board of executive officers, for disclosure of information referring to risk management, determination of amount of risk-weighted assets and adequacy of Regulatory Capital. In October 2013, pursuant to Circular 3,678, the Central Bank established the current standards on disclosure of this information to the public.     188Form 20-F – December 2013


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| |  |  | Form 20-F
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Regulations and restrictions on non-Brazilian holders The Brazilian Constitution bars any increase in foreign interest in the share capital of financial institutions headquartered in Brazil. However, because we are a publicly-traded financial institution, non-Brazilian holders of our preferred shares benefit from an exception to this provision. Accordingly, foreign holders face no legal restrictions on the ownership of our preferred shares or of preferred share ADSs, and are entitled to all the rights and preferences of such preferred shares. Furthermore, in accordance with the Central Bank authorization for the ADR program for common shares in the U.S. market, foreigners can hold up to 30% of our total common shares. The ability to convert dividend payments and proceeds from the sale of our shares or preemptive rights into foreign currency and to remit such amounts abroad from Brazil is subject to restrictions under foreign investment legislation which generally requires, among other things, that the relevant investment be registered with the Central Bank. Nonetheless, any non-Brazilian holder who registers with the CVM in accordance with Resolution No. 2,689/00 may buy and sell securities on Brazilian stock exchanges without obtaining a separate certificate of registration for each transaction. These rules are applicable both to common and preferred shares. Appendix 5 to CMN Resolution No. 1,289/87, known as the "Appendix 5 Regulations," allows Brazilian companies to issue depositary receipts in foreign exchange markets. Our ADR program is duly registered with the Central Bank. Our Bylaws do not restrict the rights of Brazilian residents or non-residents to hold our shares and exercise related rights.  Rights of the holders of our ADSs Holders of our ADSs are not treated as our shareholders and do not have the same rights that our shareholders have.  The depositary bank will hold the preferred shares and common shares that underlie the preferred share ADSs and common shares ADSs, respectively, through a custodian in accordance with the provisions of the Deposit Agreements.  The rights of our ADS holders are governed by the Deposit Agreements, which are New York law governed contracts.  In contrast, the rights of our shareholders are provided for by Brazilian law. Holders of our ADSs will receive notifications and voting instructions in relation to any meetings only if we authorize and direct the depositary bank to distribute such information to the holders.  If we do not provide that authorization and direction to the depositary bank, holders of ADSs will not be able to vote at our meetings, or otherwise, unless they surrender their preferred share ADSs or common share ADSs and receive the underlying preferred shares or common shares, as applicable, in accordance with the terms of the applicable Deposit Agreement.  If we authorize and direct the depositary bank to distribute voting instructions to our ADS holders, such holders may guide the depositary bank to vote in accordance with the number of shares represented by their ADSs.  See "Item 3.D — Risk Factors — Risks relating to our shares and ADSs — The Deposit Agreements governing the ADSs provide that holders of such ADSs will only receive voting instructions if we authorize the depositary bank to contact those holders to obtain voting instructions; there are also practical limitations on any ability to vote we may give such holders."  Transfer of control Our Bylaws do not contain any provision that would have the effect of delaying, deferring or preventing a change in our control or that would operate only with respect to a merger, acquisition or corporate restructuring involving ourselves or any of our subsidiaries. However, Brazilian banking regulations require that any transfer of control of a financial institution be previously approved by the Central Bank. Additionally, Brazilianlawstipulates that acquisition of control of a publicly held company is contingent on tender offers for all outstanding common shares at a price equivalent to at least 80.0% of the price per share paid for the controlling block. In December 2003, we amended our Bylaws to ensure that in the event of a change in our control, the acquirer will be required to pay our shareholders an amount equal to (a) for our non-controlling common shareholders, 100.0% of the price per share paid to our controlling shareholders and (b) for our preferred shareholders, 80.0% of the price per share paid for our controlling shareholders. In the event of our liquidation, our preferred shareholders would have priority over our common shareholders when returning capital. See "Organization-Liquidation" for more information. In addition, in the event of a transfer of control, our shareholders have the right of withdrawal under certain circumstances. See "Organization-Right of withdrawal" for more information.  Bradesco189


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|Form 20-F |  |  | 
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Brazilianlawalso obliges our controlling shareholder to make a tender offer for our shares if it increases its interest in our share capital to a level that materially and negatively affects the liquidity of our shares.  Disclosure of shareholder ownership Brazilian regulations require that any person or group of persons representing the same interest that has directly or indirectly acquired an interest corresponding to 5.0% of any type or class of shares of a publicly traded company must disclose its share ownership to the CVM and to Brazilian stock exchanges. In addition, a statement containing the required information must be published in the newspapers. Any subsequent increase or decrease of 5.0% or more in ownership of any type or class of shares must be similarly disclosed.  BM&FBOVESPA ́S differentiated corporate governance practices In 2001, Bradesco voluntarily adhered to BM&FBOVESPA's Level 1 Corporate Governance which establishes special requirements for the Company’s listing and rules for its directors and shareholders, including its controlling shareholders. Companies listed on Level 1 must adopt practices favoring transparency and the disclosure, in addition to legal requirements, of more comprehensive financial reporting data, details of trading by directors, officers and controlling shareholders and related party transactions, among others – in all cases focusing on providing access to information for shareholders, investors and other stakeholders. Note that companies listed in this segment must also maintain a minimum free float of 25%.  10.C.Material contracts
 In June 2011, NCF acquired 5.4% of Bradesco's voting shares from BES.  10.D.Exchange controls
 The Central Bank may place temporary restrictions on the remittance of foreign capital abroad, including payments of principal, interests or dividends, and on the repatriation of capital if there is a significant imbalance in Brazil's balance of payments, or one is expected. The last occurrence of restrictions on the remittance of foreign capital was in 1989, when for approximately six months in 1989 and early 1990, the Brazilian government suspended all remittances abroad of dividends and invested capital. The Central Bank subsequently released these amounts for remittance abroad in accordance with specific guidelines. The Brazilian government may take similar measures in the future. Under Brazilian tax laws, non-Brazilian holders of securities enjoy favorable tax treatment if they are qualified in terms of Resolution No. 2,689/00. To qualify under this Resolution, a non-Brazilian holder must: ·appoint a representative in Brazil with power to undertake acts relating to the investment; ·register as a foreign investor with the CVM; and ·register its investment with the Central Bank.  See "Item 10.E. Taxation-Brazilian tax considerations-Taxation of gains" for a description of tax benefits extended to non-Brazilian holders of securities who qualify under Resolution No. 2,689/00. Under Resolution No. 2,689/00, securities held by non-Brazilian holders must be maintained under the custody of, or in deposit accounts held in, financial institutions duly authorized by the Central Bank and the CVM. In addition, securities trading are restricted under Resolution No. 2,689/00 to transactions on Brazilian stock exchanges or qualified over-the-counter markets. Registered non-Brazilian holders are allowed to invest in any type of investment available to Brazilian citizens in the financial and securities markets, with the exception that the Brazilian Constitution limits the ability of non-Brazilian holders to acquire capital of financial institutions, as mentioned above under "Regulation of and Restrictions on Non-Brazilian holders." Registration allows investors to remit foreign currency abroad when the funds are distributions on registered shares or proceeds from the disposition of such shares. The funds are converted into foreign currency at the forex market rate.  190Form 20-F – December 2013


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The registered capital for each share purchased in Brazil and deposited with the custodian is equal to its purchase price (informed in U.S. dollars). If ADS holder chooses to cancel ADSs in exchange for the underlying shares, the investment in the shares may be registered with the Central Bank. This registration is necessary for the holder to receive dividends or proceeds from the sale of the shares outside of Brazil. Pursuant to Resolution No. 2,689/00, the registration of a foreign investment is made electronically by the local representative of the foreign investor. The registered capital for a share withdrawn from the depositary bank upon cancellation of an ADS will be the U.S. dollar equivalent of: ·the average price of the underlying share on the stock exchange on the date of withdrawal; or ·if no shares were sold on that day, the average price on the stock exchange in the 15 trading sessions immediately preceding the withdrawal.  When a holder of ADSs exchanges ADSs for the underlying shares, the holder is entitled to either: ·sell the shares on the stock exchange and remit the proceeds abroad within five business days; or ·freely convert the investment in the underlying shares to either an investment under Resolution No. 2,689/00 (subject to satisfaction of the legal requirements described above) or a direct foreign investment in Brazil (in accordance with applicable rules).  Holders that do not comply with the rules previously described may still register their investment, but the registration process will be subject to detailed procedures established by the Central Bank. Holders that do not comply with these rules may also be subject to monetary penalties.  10.E.Taxation
 The following summary contains a description of the principal Brazilian and U.S. federal income tax consequences of the acquisition, ownership and disposition of our sharesandADSs. However, it does not purport to be a comprehensive description of all the tax considerations that may be relevant to a decision to purchase our sharesand/orADSs. Accordingly, prospective purchasers of our sharesorADSs should consult their own tax advisors as to the tax consequences of the acquisition, ownership and disposition of our sharesand/orADSs. This summary is based upon the tax laws of Brazil and the United States in effect on the date hereof, which are subject to change. Currently, there is no income tax treaty for double taxation between Brazil and the United States. However, due to the reciprocity of treatment in the United States, the Brazilian tax authority assures to residents in Brazil the right to deduct, from the income tax due, the amount of tax levied on income that has already been paid in the United States. Although the tax authorities of the two countries have had discussions that may culminate in such a treaty, no assurance can be provided regarding the possibility of a treaty of this kind or how it will affect the U.S. holders of our sharesorADSs. Accordingly, prospective holders of our shares or ADSs should consult their own tax advisors as to the tax consequences of the acquisition, ownership and disposition of shares or ADSs in their particular circumstances.  Brazilian tax considerations The following discussion summarizes the principal Brazilian tax consequences of the acquisition, ownership and disposition of our shares or ADSs by a holder not residing in Brazil. This discussion does not analyze all the Brazilian tax considerations that may be applicable to any particular non-Brazilian holder, and each holder not residing in Brazil should consult its own tax advisor about the Brazilian tax consequences of investing in our shares or ADSs.  Taxation of dividends Dividends from profits of years beginning on or after January 1996 that we pay to any beneficiary, including depositary banks in respect of our shares underlyingpreferred shareADSs or common share ADSs and/or a holder not residing in Brazil in respect of such shares are not subject to Brazilian withholding


income tax. Only dividends paid from profits generated prior to January 1996 are subject to Brazilian withholding income tax unless the amount of the dividend is used to increase our capital and these shares are not redeemed for a period of five years. Pursuant to Brazilian law, we are responsible for withholding and paying any tax on dividends we distribute.  Bradesco191


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|Form 20-F |  |  | 
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Distributions of interest on equity Brazilian corporations may, subject to certain limitations, make payments to shareholders in the form of interest on equity, as an alternative to distributing dividends. The principal difference between dividends and interest on equity is their tax treatment. Dividends payments are not deductible for income tax purposes. On the other hand, for determination of the income tax due by a Brazilian legal entity, we may deduct distributions of interest on equity paid to Brazilian and holders not residing in Brazil of preferred and common shares, including payments to the depositary bank in respect of our shares underlying ADSs, up to an interest rate which does not exceed thepro rata diefluctuation of the rate of the federal government's long-term interest rate, known as the TJLP, applied on the equity and determined using accounting practices adopted in Brazil. The total amount distributed as interest on equity, which may be deducted from the calculation basis of income tax and social contribution tax, may not exceed the greater of: ·50.0% of our net income (before taking the distribution and any deductions for calculating income taxes into account), as measured in accordance with accounting practices adopted in Brazil for the year in respect of which the payment is made; or ·50.0% of retained earnings for the year preceding the year in which the payment is made, as measured in accordance with accounting practices adopted in Brazil.  Following the enactment of Provisional Measure no. 627/13, for calendar years 2008 to 2013 and calculation of above limits, the legal entity may use accounts of shareholders' equity measured in accordance with provisions of Law no. 6,404/76. However, when calculating the portion to deduct, shareholders' equity accounts will not consider values related to valuation adjustments to equity deriving from evaluation at fair value (Article 182, paragraph 3, of Law No. 6,404/76). Payments of interest on equity are subject to Brazilian withholding tax at the rate of 15.0%. For payments to persons who are resident in a jurisdiction that under Brazilian law is deemed to be a "tax haven" (any country that (a) does not impose income tax or that taxes income at a rate of less than 20.0% or (b) a country whose corporate law establishes confidentiality of the corporate entities' shareholders, Brazilian tax law subjects such payments to withholding tax at the source at a 25.0% rate. We are responsible for withholding and paying the tax charged on interest on equity that we distribute. Amounts paid as interest on equity (net of withholding tax owed) may be treated as payments in respect of the mandatory dividends we are obligated to distribute to our shareholders in accordance with our bylaws. Distributions of interest on equity in respect of the shares, including distributions to the depositary bank in respect of the shares underlying ADSs, may be converted into U.S. dollars and remitted outside of Brazil, subject to applicable exchange controls. Payments of interest on equity are decided by the Board of Directors on the basis of recommendations of our Board of Executive Officers. Our Board of Directors has traditionally approved the distribution of the maximum amount of interest on equity permitted by law.  Taxation of gains Gains realized outside Brazil by a holder not residing in Brazil on the disposition of ADSs or shares to another non-Brazilian holder are not subject to Brazilian tax. Gains realized by individuals residing in Brazil on any disposition of shares in Brazil are subject to tax at the following rates: ·20.0% if the transaction is "day-traded" on a stock exchange; or ·15.0% for all other cases.   192Form 20-F – December 2013


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Earnings from "day trading" on stock exchanges, commodities and futures, or similar exchanges, are also subject to withholding income tax at a 1.0% rate, and this tax may be deducted from tax on net gains determined in the month. As of January 2005,the disposal amountsfrom trading on stock exchanges, commodities and futures and similar exchanges, except day trades (which remain subject to taxation as mentioned above) are subject to 0.005% of withholding income tax.However, gains realized by individuals from share transactions at stock exchange or over-the-counter demand markets are exempt if total disposals of this asset during the month does not exceed R$20,000.This tax does not apply to transactions by foreign investors registered with the Central Bank pursuant to CMN Resolution No. 2,689/00, except for foreign investors living in a country considered to be a "tax haven." Gains realized on any disposition of shares in Brazil by non-residents who are domiciled in a country that, under Brazilian law, is deemed to be a tax haven are subject to the same rates applicable to holders resident in Brazil, as described above. Capital gains realized on disposition of shares in Brazil by holders who are resident abroad in a country not considered a "tax haven" are not subject to Brazilian tax if: ·the proceeds obtained by the disposition are remitted outside Brazil within five business days of the cancellation of the ADSs, which were represented by the shares sold; or ·the foreign investment in the shares is registered at the Central Bank under CMN Resolution No. 2,689/00.  If none of the above is the case, the same treatment applicable to Brazilian residents will apply. Gain on the disposition of shares is measured by the difference in U.S. dollars between the amount in foreign currency received on the sale or exchange and the acquisition cost of the shares sold, measured in Brazilian currency without any correction for inflation and converted into the foreign currency based on the exchange rate published by Central Bank on the date the acquisition was made. The acquisition cost of shares registered as an investment with the Central Bank is calculated on the basis of their effective cost as shown by valid documentation or, in its absence, on the basis of the foreign currency amount registered with the Central Bank. See "Item 10.D. Exchange Controls." Except for the international avoidance of double taxation tax treaty signed with Japan, Brazil's other signed international tax treaties do not grant relief from taxes on gains realized on sales or exchanges of shares. Gains realized by a non‐Brazilian holder upon the redemption of shares would be treated as gains from the disposition of such shares to a Brazilian resident occurring off a stock exchange and would accordingly be subject to income tax at a rate of 15.0% (except for tax haven residents, for the inflow of direct investments to Brazil under the regime of Law No. 4,131/62, in which the applicable rate would be 25%). Any exercise of preemptive rights relating to the shares or ADSs will not be subject to Brazilian taxation. Gains on the sale or assignment of preemptive rights relating to the shares will be treated differently for Brazilian tax purposes depending on whether: (i)the sale or assignment is made by, or on behalf of, the depositary bank or the investor; and (ii)the transaction takes place on a Brazilian stock exchange.  Other Brazilian taxes There are no Brazilian inheritance, gift or succession taxes applicable to the ownership, transfer or disposition of shares or ADSs by a holder not residing in Brazil, with the exception of gift and inheritance taxes levied by some states in Brazil on gifts made or inheritances bestowed by individuals or entities not residing or domiciled in Brazil or in the relevant state to individuals or entities that are residing or domiciled within such state in Brazil. There are no Brazilian stamps, issue, registration or similar taxes or duties payable by holders of the shares or ADSs. Tax on Financial Transactions (Imposto Sobre OperaçõesFinanceiras, or IOF) is a tax on loans and advances, foreign exchange transactions, insurance and trading in securities. The Minister of Finance sets the rate of the IOF subject to a 25.0% ceiling. Although the taxpayer is the one conducting the financial transaction subject to taxation, the tax is usually collected by the financial institution involved, if applicable. In January 2008, the Brazilian government raised the IOF rate on certain transactions to offset lost revenue due to the revocation of CPMF tax.  Bradesco193


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|Form 20-F |  |  | 
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IOF may be levied on a variety of forex transactions, including the conversion of Brazilian currency into any foreign currency for the payment of dividends and repatriation of capital invested in our ADSs. The IOF tax rate on such transactions is generally 0.38% but can be reduced to 0% in certain situations, such as: (i) distribution of dividends and interest on equity; and (ii) return of funds used in financial and capital markets. Since June 2013, the IOF rate of forex transactions for inflow of funds in the country, including through simultaneous operationscarried out by foreign investors to be invested in financial and capital markets is 0%. The IOF rate is 0% specifically for foreign exchange transactions conducted by foreign investors relating to: (i) funds transferred from other countries to Brazil to be invested in equities on the stock exchange or futures and commodities exchange, except for derivatives trades that result in predetermined yields; (ii) funds coming into Brazil to acquire shares in a registered public offering or exempted from CVM registration or for subscription of shares, provided that, in both cases, issuers are registered for trading on exchange; (iii) funds coming into Brazil to acquire shares in equity funds, funds investing in emerging companies, or investment funds holding shares of the above funds ("funds of funds") as per CVM authorization; (iv) funds coming to Brazil through cancelled depositary receipts to be invested in shares traded on exchange, and (v) funds coming to Brazil arising from altered arrangements for foreign investors, direct investment, addressed by Law n. 4,131/62, and to be invested in shares traded on exchange. The same regulations stipulated zero-rate IOF tax on settlements of foreign exchange transactions for both inbound and outbound transfers, for funding in the form of foreign loans or finance, free of restriction as to the date they were obtained. In March 2011, the IOF tax rate was raised from 2.38% to 6.38% on currency exchange transactions to meet obligations of credit card administrators or commercial banks or multiple banks acting as credit card issuers for amounts arising from purchase of goods and services abroad made by cardholders. During the same month, the tax rate upon settlement of foreign exchange operations contracted as from March 2011, related to the liquidation of exchange operation for the flow of funds into the country was raised to 6.0%, including those carried out by way of simultaneous operations related to foreign loans subject to registration with the Central Bank, raised directly or through the issue of securities in the international market, with the minimum average period of: up to 360 days, and for transactions contracted beginning as of April 2011, minimum average period was altered from up to 360 days to up to 720 days. In March, 2012, this minimum average period was raised to to 1,800 days. In June, 2012, minimum average period was reduced to 720 days and, beginning in December, 2012, minimum average period was again reduced to 360 days. Theministeroffinance, however, has the legal authority to increase the rate to a maximum of 25.0%. Any increase would be only applicable after that. IOF tax may also be charged on issues of securities, including transactions on Brazilian stock, futures or commodities exchanges. The IOF rate levied on preferred share transactions in general is currently 0%. The Minister of Finance, however, has the legal authority to raise the rate to a maximum of 1.5% per day of the amount of taxable transactions during the period in which the investor holds securities, but only to the extent of gains made on the transaction, and not retrospectively. As of November 2009, the Brazilian government made use of this prerogative to raise the IOF rate from 0% to 1.5% on transactions assigning shares of any type (including preferred shares) traded on a stock exchange in Brazil, with the specific purpose of backing an ADS issuance.As from December, 2013, the rate levied on the transfer of shares which are admitted to trading on a stock exchange located in Brazil was reduced to zero, with the specific purpose of backing the issuance of depositary receipts - DR traded abroad. Beginning September, 2011, IOF tax has been levied on transactions involving derivative contracts. The tax will be levied at a rate of 1% on the adjusted notional amount for the acquisition, sale or maturity of financial derivative contracts entered into in Brazil that individually lead to an increased short foreign currency exposure or reduced long foreign currency exposure. The legislation allows some deductions from the calculation basis, such as (i) the sum of the adjusted notional value for acquisition, sale or maturity of financial derivative contracts entered into in Brazil, on the day, and that individually result in increased long foreign currency exposure or reduced short foreign currency exposure; (ii) net adjusted net long foreign currency exposure determined on the previous business day; and (iii) reduced net short currency exposure and increased in net long foreign currency exposure in relation to the previous business day, not resulting from acquisitions, sales or maturities of financial derivatives contracts.  194Form 20-F – December 2013


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The new legislation also introduces specific concepts relating to IOF tax on derivative contracts. One of them is the concept of "adjusted notional value," which corresponds to the reference value of a contract – notional value – multiplied by the derivative's price variation in relation to price variation in the foreign currency, and in the case of acquisition, sale or partial maturity, adjusted notional value will be calculated proportionately. As ofDecember, 2011, the legislation set forth the levying of IOF, at the rate of 0%, in the case of settlement of exchange transactions contracted by foreign investors to the entry of resources in Brazil, to purchase bonds or securities issued in accordance with the Articles 1 and 3 of Law No. 12,431/11. IOFon transactions with securitiesis alsoleviedon transactionscarried out in the fixed income market and at redemption of investment fund shares and investment club shares. IOF is levied on redemption, granting or renegotiation value, limited to transaction earnings, based on period. For more information on financial investment funds and equity funds, see “Regulation and Supervision – Asset management regulation.”The rate of IOF payable in such cases is 1.0% per day and decreases with the duration of the transactions, reaching zero for transactions with maturities of at least 30 days, except that the rate is currently 0% for the following types of transactions: ·transactions carried out by financial institutions and other institutions authorized by the Central Bank; ·portfolio transactions carried out by mutual funds or investment clubs; ·transactions in equity markets, including stock, futures and commodities exchanges and similar entities; ·redemption of shares from investment funds and investment clubs, considered as such by income tax law; ·Certificateof AgribusinessCredit Rights–CDCA, withLetter of Agribusiness Credit -LCA,and with Certificate of Agribusiness Receivables – CRA, established by Article 23 of Law No. 11,076/04; and ·debentures pursuant to Article 52 of Law No. 6,404/76, Real Estate Receivables Certificates mentioned in Article 6 of Law No. 9,514/97, and Financial Letters mentioned in Article 37 of Law No. 12,249/10.  Registered capital Amounts invested in securities by a holder not residing in Brazil who: (i) qualifies for benefits under Resolution No. 2,689/00 and who registers with the CVM or (ii) holds ADSs and is represented by the depositary bank's registration, are eligible for registration with the Central Bank. In the case of ADSs, since the shareholder of record is the depositary bank, the depositary bank is responsible for obtaining the registration. The registration allows the remittance outside Brazil of foreign currency, converted at the Exchange Market rate, acquired with the proceeds of distributions on, or dispositions of, underlying shares.  U.S. federal income tax considerations The statements regarding U.S. tax law set forth below are based on U.S. law as in force on the date of this annual report and changes to such law subsequent to the date of this annual report may affect the tax consequences described herein. This summary describes the principal tax consequences of the ownership and disposition of the sharesandADSs, but it does not purport to be a comprehensive description of all of the tax consequences that may be relevant to a decision to hold or dispose of the sharesandADSs. This summary applies only to purchasers of the sharesandADSs who will hold the sharesandADSs as capital assets and does not apply to special classes of holders such as dealers in securities or currencies, holders whose functional currency is not the U.S. dollar, holders of 10.0% or more of our shares (taking into account shares held directly, through depositary arrangements or through attribution), tax-exempt organizations, financial institutions, holders liable for the alternative minimum tax, securities traders who elect to account for their investment in the sharesorADSs on a mark-to-market basis, and persons holding the sharesorADSs in a hedging transaction or as part of a straddle or conversion transaction. Accordingly, each holder should consult such holder's own tax advisor concerning the overall tax consequences to it, including the consequences under laws other than U.S. federal income tax laws, of an investment in the sharesorADSs. In this discussion, references to a "U.S. holder" are to a holder of a shareorADS: (i) that is a citizen or resident of the United States; (ii) that is a corporation organized under the laws of the United States of America or any state thereof; or (iii) that is otherwise subject to U.S. federal income taxation on a net basis


with respect to the sharesandADSs.  Bradesco195


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|Form 20-F |  |  | 
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The shares will be treated as equity for U.S. federal income tax purposes. For purposes of the U.S. Internal Revenue Code of 1986, as amended, or the "Code," holders of ADSs generally will be treated as owners of the shares represented by suchADSs.  Taxation of distributions A U.S. holder will recognize dividend income for U.S. federal income tax purposes in an amount equal to the amount of any cash and the value of any property distributed by us as a dividend to the extent that such distribution is paid out of our current or accumulated earnings and profits, as determined for U.S. federal income tax purposes, when such distribution is received by the custodian (or by the U.S. holder in the case of a holder of preferred shares). The amount of any distribution will include the amount of Brazilian tax withheld on the amount distributed, and the amount of a distribution paid inreaiswill be measured by reference to the exchange rate for convertingreaisinto U.S. dollars in effect on the date the distribution is received by the custodian (or by a U.S. holder in the case of a holder of preferred shares). If this custodian (or U.S. holder in the case of a holder of preferred shares) does not convert suchreaisinto U.S. dollars on the date it receives them, it is possible that the U.S. holder will recognize foreign currency loss or gain, which would be ordinary loss or gain, when thereaisare converted into U.S. dollars. Dividends paid by us will not be eligible for the dividends received deduction allowed to corporations under the Code. Subject to certain exceptions for short-term and hedged positions, the U.S. dollar amount of dividends received by an individual with respect to the ADSs will be subject to taxation at reduced rates if the dividends are "qualified dividends." Dividends paid on the ADSs will be treated as qualified dividends if: (i) the ADSs are readily tradable on an established securities market in the United States; and (ii) we were not, in the year prior to the year in which the dividend was paid, and are not, in the year in which the dividend is paid, a passive foreign investment company ("PFIC"). The ADSs are listed on the New York Stock Exchange, and will qualify as readily tradable on an established securities market in the United States so long as they are so listed. Based on existing guidance, it is not clear whether dividends received with respect to the shares will be treated as qualified dividends, because the shares themselves are not listed on a U.S. exchange. In addition, the U.S. Treasury has announced its intention to promulgate rules pursuant to which holders of the shares or ADSs, and intermediaries through whom such securities are held will be permitted to rely on certifications from issuers to treat dividends as qualified for tax reporting purposes. Because such procedures have not yet been issued, it is not clear whether we will be able to comply with them. Holders of ADSs and the shares should consult their own tax advisers regarding the availability of the reduced dividend tax rate in light of the considerations discussed above and their own particular circumstances. Based on our audited financial statements and relevant market data, we believe that we were not treated as a PFIC for U.S. federal income tax purposes with respect to our 2009 to2013taxable years. In addition, based on our audited financial statements and our current expectations regarding the value and nature of our assets, the sources and nature of our income, and relevant market and shareholder data, we do not anticipate becoming a PFIC for the2014taxable year. Our belief that we are not, andwill not in the future be, a PFIC is based on certain Proposed Treasury Regulations dealing with non-U.S. banks. Such regulations are not final and are subject to modification, in which case our determination regarding PFIC status may be different. Distributions out of earnings and profits with respect to the shares and ADSs generally will be treated as dividend income from sources outside of the United States and generally will be treated separately with other items of "passive" (or, in the case of certain U.S. holders, "financial services") income forthepurposes of determining the credit for foreign income taxes allowed under the Code. Subject to certain limitations, Brazilian income tax withheld in connection with any distribution with respect to the shares or ADSs may be claimed as a credit against the U.S. federal income tax liability of a U.S. holder if such holder elects for that year to credit all foreign income taxes. Alternatively such Brazilian withholding tax may be taken as a deduction against taxable income. Foreign tax credits will not be allowed for withholding taxes imposed in respect of certain short-term or hedged positions in securities and may not be allowed in respect of arrangements in which a U.S. holder's expected economic profit is not substantial. U.S. holders should consult their own tax advisors concerning the implications of these rules in light of their particular circumstances. Distributions of additional shares to holders with respect to their sharesorADSs that are made as part of a pro rata distribution to all our shareholders generally will not be subject to U.S. federal income tax. Holders of sharesorADSs that are foreign corporations or nonresident alien individuals, or "non-U.S. holders," generally will not be subject to U.S. federal income tax or withholding tax on distributions with


respect to sharesorADSs that are treated as dividend income for U.S. federal income tax purposes unless such dividends are effectively connected with the conduct by the holder of a trade or business in the United States.  196Form 20-F – December 2013


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| |  |  | Form 20-F
| |  |  | ---------

Taxation of capital gains Upon the sale or other disposition of a shareorADS, a U.S. holder generally will recognize gain or loss for U.S. federal income tax purposes. The amount of the gain or loss will be equal to the difference between the amount realized in consideration for the disposition of the shares or ADSs and the U.S. holder's tax basis in the sharesorADSs. Such gain or loss generally will be subject to U.S. federal income tax as capital gain or loss and will be long-term capital gain or loss if held for more than one year. Capital losses may be deducted from taxable income, subject to certain limitations. Gain realized by a U.S. holder on a sale or disposition of sharesorADSs generally will be treated as U.S. source income. Consequently, if Brazilian tax is imposed on such gain, the U.S. holder will not be able to use the corresponding foreign tax credit, unless the holder has other foreign source income of the appropriate type in respect of which the credit may be used. A non-U.S. holder will not be subject to U.S. federal income tax or withholding tax on gain realized on the sale or other disposition of a shareorADS unless: (i) such gain is effectively connected with the conduct by the holder of a trade or business in the United States or (ii) such holder is an individual who is present in the United States for 183 days or more in the taxable year of the sale and certain other conditions are met.  Backup withholding and information reporting Dividends paid on income for the year, and proceeds from the sale or other disposition of theADSs or the shares to a U.S. holder, generally may be subject to the information reporting requirements of the Code and to backup withholding unless the U.S. holder (i) establishes, if required to do so, it is an exempt recipient or (ii) in the case of backup withholding, provides an accurate taxpayer identification number and certifies that no loss of exemption from backup withholding has occurred. The amount of any backup withholding collected from a payment to a U.S. holder will be allowed as a credit against the holder's U.S. federal income tax liability and may entitle the U.S. holder to a refund,provided thatcertain required information is furnished to the U.S. Internal Revenue Service. A non-U.S. holder generally will be exempt from these information reporting requirements and backup withholding tax, but may be required to comply with certain certification and identification procedures in order to establish its eligibility for such exemption. Certain U.S. holders may be subject to additionalreporting requirements. The penalty for failing to comply with these reporting requirements can be significant. U.S. holders should consult their own tax advisors concerning any U.S. reporting requirements that may arise out of the ownership or disposition of the sharesorADSs in light of their particular circumstances.  10.F.Dividends and Paying Agents
 Not applicable.  10.G.Statement by Experts
 Not applicable.  10.H.Documents on Display
 We file reports, including annual reports on Form 20‐F, and other information with the SEC pursuant to the rules and regulations of the SEC that apply to foreign private issuers. You may read and copy any materials filed with the SEC at its Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Since November 2002, we are required to make filings with the SEC by electronic means. Any filings we make electronically will be available to the public over the Internet at the SEC's website.  
  Bradesco197


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|Form 20-F |  |  | 
|--------- |  |  | 

10.I.Subsidiary Information
 For information on subsidiaries, see "Item 4.B. Business Overview-Main Subsidiaries" and Note 2(a) of our consolidated financial statements in "Item 18. Financial Statements.”  ITEM 11.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Market risk Market risk isrepresented by the possibility of financial losses due to the variation of prices and interest rates of our financial assets, since its active and liability portfolios may have mismatches of periods, currencies and indexes.We are exposed to market risk, both in our negotiation and position activities. Main market risks that we do not face are interest rate risk and foreign exchange risk. We use the sensitivity analysis methodology set forth below for evaluating our market risk. Our sensitivity analyses evaluate the potential loss on future earnings resulting from hypothetical changes in interest rates and foreign currency exchange rates,price indices and variable income.  Interest rate risk Interest rate risk arises as a result of timing differences on the re-pricing of assets and liabilities, unexpected changes in the slope and shape of yield curves and changes in correlation of interest rates between different financial instruments. We are exposed to the risk of interest rate movements when there is a mismatch between fixed rates and market interest rates. For a discussion of our management of interest rate sensitivity, see "Item 5.B. Liquidity and Capital Resource-Interest rate sensitivity."  Exchange risk Exchange risk arises as a result of our having assets, liabilities and off-balance sheet items that are denominated in, or indexed to, currencies other thanreais, either as a result of trading or in the normal course of banking activities. We control exposure to exchange rate movements by ensuring that mismatches are managed and monitored, and our policy is to avoid material exchange rate mismatches. For a discussion of our management of exchange rate sensitivity, see "Item 5.B. Liquidity and Capital Resource-Exchange rate sensitivity."  Market risk of trading activities We enter into derivatives transactions to manage our exposure to interest rate and exchange rate risk. As a result, our exposure to the potential losses described below is generally reduced by these transactions. These derivatives do not qualify as hedges under IFRS. Accordingly, we classify derivatives as financial assets held for trading.  Sensitivity analysis Below, a sensitivity analysis for our financial exposure in trading and banking portfolios, based on three scenarios applied to market rates and prices. We considered 25% shocks and 50% shocks that would adversely affect our positions, and a scenario reflecting an impact of 1 basis point on rates and 1% on market prices. These scenarios comply with CVM Instruction No. 475/08.   Risk Factor
     Market as of December 31, 2013
     Scenarios1 base point shock for interest rate and 1% variation for prices
     25% shock for prices and rates
     50% shock for prices and ratesForeign exchange rate R$/USD
     2.36
     2.39
     2.95
     3.541-year fixed rate in reais
     10.58%
     10.59%
     13.23%
     15.87%Shocks were also applied to other risk factors and terms of the interest curves.
   198Form 20-F – December 2013


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| |  |  | Form 20-F
| |  |  | ---------

The impacts of these scenarios on our positions would be as follows:  Trading and banking portfolios
     On December 31, 2013
     R$ in thousandsRisk Factors
     Definition
     Scenarios (1)1
     2
     3Interest rate inreais
     Exposure subject to the variation of fixed interest rates and interest rate coupon
     (7,177)
     (1,942,202)
     (3,739,065)Price Index
     Exposure subject to the variation of price index coupon rates
     (14,665)
     (2,100,989)
     (3,876,937)Exchange coupon
     Exposure subject to the variation of foreign exchange coupon rates
     (371)
     (49,769)
     (91,023)Foreign currency
     Exposure subject to foreign exchange variation
     (11,161)
     (253,210)
     (482,709)Variable income
     Exposure subject to the variation of share prices
     (22,002)
     (550,045)
     (1,100,090)Sovereigns/Eurobonds and Treasuries
     Exposure subject to the variation of interest rates of securities traded abroad
     (764)
     (50,300)
     (96,883)Other
     Exposure not eligible in the previous definitions
     (397)
     (9,939)
     (19,877)Total not correlated
     
     (56,537)
     (4,956,454)
     (9,406,584)Total correlated
     
     (39,608)
     (4,078,197)
     (7,698,477)(1)Amounts net of tax effects.
  It is worth mentioning that the impacts of financial exposures from the banking portfolio (particularly interest rate and price index), would not necessarily represent potential accounting loss. This occurs becausepart of the loan and advances operations in our banking portfolio isfinancedby demand and/or savings deposits, which are natural hedges for any variations in interest rates, as well as the fact that variations in interest rates do not represent material impact on our results, since it is intended to hold loan and advances up to maturity.  Banking portfolio
     On December 31, 2013
     R$ in thousandsRisk Factors
     Definition
     Scenarios (1)1
     2
     3Interest rate in reais
     Exposure subject to the variation of fixed interest rates and interest rate coupon
     (6,070)
     (1,642,774)
     (3,161,070)Price index
     Exposure subject to the variation of price index coupon rates
     (14,030)
     (2,011,241)
     (3,701,648)Exchange coupon
     Exposure subject to the variation of foreign exchange coupon rates
     (26)
     (2,241)
     (4,316)Foreign currency
     Exposure subject to foreign exchange variation
     (5,396)
     (110,947)
     (197,534)Variable income
     Exposure subject to the variation share prices
     (21,706)
     (542,638)
     (1,085,275)Sovereigns/Eurobonds and Treasuries
     Exposure subject to the variation of interest rates of securities traded abroad
     (322)
     (10,258)
     (20,163)Other
     Exposure not eligible in the previous definitions
     (393)
     (9,816)
     (19,632)Total not correlated
     
     (47,943)
     (4,329,915)
     (8,189,638)Total correlated
     
     (34,247)
     (3,611,805)
     (6,791,156)(1)Amounts net of tax effects.
   Bradesco199


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|Form 20-F |  |  | 
|--------- |  |  | 

Below we present the sensitivity analysis exclusively for the trading portfolio, which represents exposure that may materially impact our results, and it is worth mentioning that the results disclose the impacts for each scenario at a still position of the portfolio. The dynamism of the market causes these positions to continually change and not necessarily reflect today the position shown here. Additionally, as discussed above, we have an ongoing market risk management process that continually seeks methods to mitigate related risks, according to a strategy determined by Senior Management. Accordingly, in the event of indications that a certain positionis deteriorating, proactiveactionsaremadeto minimizeanypossible negative impacts, in orderto maximize our risk-return ratio.  Trading Portfolio

   On December 31, 2013

   R$ in thousandsRisk Factors

   Definition

   Scenarios (1)1

   2

   3Interest rate in reais

   Exposure subject to the variation of fixed interest rates and interest rate coupon

   (1,161)

   (314,600)

   (610,764)Price index

   Exposure subject to the variation of price index coupon rates

   (714)

   (101,267)

   (196,397)Exchange coupon

   Exposure subject to the variation of foreign exchange coupon rates

   (378)

   (51,033)

   (93,293)Foreign currency

   Exposure subject to foreign exchange variation

   (6,050)

   (148,787)

   (297,318)Variable income

   Exposure subject to the variation share prices

   (920)

   (23,008)

   (46,016)Sovereigns/Eurobonds and Treasuries

   Exposure subject to the variation of interest rates of securities traded abroad

   (590)

   (43,582)

   (83,593)Other

   Exposure not eligible in the previous definitions

   (20)

   (505)

   (1,010)Total not correlated

   

   (9,833)

   (682,782)

   (1,328,391)Total correlated

   

   (7,434)

   (509,080)

   (991,248)(1)Amounts net of tax effects.
  Value at Risk ("VaR") The Trading portfolio's risk is measured using the Delta-Normal VaR methodologyadjusted to the Gamma and Vega risks of options transactions,for a 1-day period with a 99% level of confidence, and volatilities and correlations calculated using statistical methods that attributed greater weight to recent returns. Financial positions are allocated to primary risk factors such as interest rates and currencies, and the methodology considers the diversification effect through the correlation observed for these factors. The methodology applied and the existing statistical models are validated daily using backtesting techniques. Backtesting technique compares the daily VaR calculated both as a hypothetical result, obtained with the same positions used in the VaR calculation, and with the actual result, considering the transactions of the day for which the VaR was estimated. The mainpurpose is to monitor, validate and evaluate the VaR model's adherence and the number of breaks occurred should be in line withthe number of breaks accepted by thestatistical testscarried out forthe required level of confidence (99%). In 2013, both hypothetical andeffective results exceeded respective VaR by seven times, just one exception above limits definedin statistical testsapplied tothe model, despite strong fluctuations in local interest market that occurred mainly in the first half  of 2013. In 2013, VaR of the trading portfolio, at one-day horizon and net of tax effects, presented maximum value of R$264 million in the second quarter of the year, and average from R$ 39 million to R$185 million, respectively in the fourth and second quarters of 2013. Risk increased in the beginning of the period, mainly due to greater exposure and volatility of risk factor in Brazilian reais interest rates. However, in the last quarter, the risk level decreased in comparison to the same period of 2012 due to a decrease in exposure in Brazilian reais interest rates.   200Form 20-F – December 2013


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| |  |  | Form 20-F
| |  |  | ---------

The following tables show value at risk using the VaR methodology:  R$ in thousandsJanuary, February and March

   At March 31Average

   Minimum

   MaximumRisk FactorsReais (fixed and floating rate)

   83,570

   21,943

   156,889

   150,898Foreign exchange coupon

   6,488

   5,293

   7,382

   7,000Foreign currency

   7,446

   208

   18,042

   1,346Variable income

   5,525

   3,703

   9,154

   5,461Sovereign risk

   10,769

   5,387

   14,738

   14,738Total VaR

   88,852

   35,594

   159,642

   153,904
  R$ in thousandsApril, May and June

   At June 30Average

   Minimum

   MaximumRisk FactorsReais (fixed and floating rate)

   181,330

   86,622

   259,870

   157,784Foreign exchange coupon

   8,583

   5,791

   14,483

   13,752Foreign currency

   5,903

   217

   14,026

   573Variable income

   7,007

   3,754

   12,992

   6,425Sovereign risk

   16,844

   9,876

   31,643

   16,668Total VaR

   185,072

   101,170

   264,305

   161,583
  R$ in thousandsJuly, August and September

   At September 30Average

   Minimum

   MaximumRisk FactorsReais (fixed and floating rate)

   93,442

   26,561

   158,163

   44,984Foreign exchange coupon

   15,412

   9,412

   19,180

   9,412Foreign currency

   5,381

   487

   15,826

   6,701Variable Income

   3,938

   102

   11,765

   756Sovereign risk

   11,133

   2,189

   19,799

   6,396Total VaR

   98,649

   22,464

   167,484

   41,807
  R$ in thousandsOctober, November and December

   At December 31Average

   Minimum

   MaximumRisk FactorsReais (fixed and floating rate)

   37,101

   13,858

   57,989

   33,047Foreign exchange coupon

   7,035

   4,747

   9,023

   4,999Foreign currency

   3,290

   77

   11,131

   10,387Variable Income

   572

   48

   1,851

   476Sovereign risk

   5,716

   4,362

   7,564

   6,310Total VaR

   39,076

   16,116

   60,609

   40,942
    Bradesco201


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|Form 20-F |  |  | 
|--------- |  |  | 

The following table shows trading portfolio VaR concentration in frequency terms in the year ended December 31, 2013:  Value at Risk (R$ in millions)

   First Quarter

   Second Quarter

   Third Quarter

   Fourth Quarter

   % EventsUp to R$40

   22.6%

   0.0%

   9.1%

   73.8%

   26.4%Over R$40 up to R$80

   30.6%

   0.0%

   47.0%

   26.2%

   26.0%Over R$80 up to R$120

   27.4%

   10.8%

   27.3%

   0.0%

   16.3%Over R$120 up to R$180

   19.4%

   63.1%

   16.7%

   0.0%

   24.8%Over R$180

   0.0%

   26.2%

   0.0%

   0.0%

   6.6%
   ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
 12.A.Debt Securities
 Not applicable.  12.B.Warrants and Rights
 Not applicable.  12.C.Other Securities
 Not applicable.  12.D.American Depositary Shares
 The table below describes the services and the respective rates and fees that the direct or indirect holders of our ADRs(preferred and common)may be subject to pay to our depositary bank, The Bank of New York Mellon (BNYM).  RATES AND FEES

   SERVICEUS$0.05 (or less) for ADSs or common share ADSs.

   · Issuance of ADSs or common share ADSs, including issuances from share distribution, rights or other assets.· ADS or common share ADS cancellation due to withdrawal, including in the event the deposit agreement is terminated.US$0.02 (or less) per ADSs or common share ADSs.

   · Any cash distribution to registered ADS or common share ADS holders.A fee equivalent to the one that should be paid if the distributed bonds were equivalent to shares and shares were deposited for the issuance of ADSs or common share ADSs.

   · Distribution of bonds to deposit holders, which are distributed by the depositary to registered ADS or common share ADS holders.US$0.02 (or less) per ADSs or common share ADSs per year.

   · Depositary services.Registration or transfer fees.

   · Transfer and registration of shares in custodian's books on behalf of the depositary or his/her agent, when shares are deposited or withdrawn.Depositary's expenses.

   · Expenses related to telegram, telephone and fax (when expressly indicated in the deposit agreement).· Converting foreign currency into U.S. dollars.Taxes and other governmental fees the depositary or the custodian must pay on any ADS or common share ADSs, or share backed by any ADS or common share ADSs, for example: taxes for transfer of shares, stamp tax or withholding taxes.

   · As necessary.Any costs incurred by the depositary or the agent for services provided relating to deposited bonds.

   · As necessary.
   From January 1 to December 31, 2013, we received from our depositary bank the amount of US$13.3 million, as reimbursement or payment made in our favor.  
  202Form 20-F – December 2013


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| |  |  | Form 20-F
| |  |  | ---------

PART II
  ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
 Not applicable.  ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
 Not applicable.  ITEM 15. CONTROLS AND PROCEDURES
 Financial responsibility, disclosure controls and procedures, and report on internal control over financial reporting.  (a)Disclosure controls and procedures As of December 31, 2013, evaluations of the effectiveness of our disclosure controls and procedures (as defined in Articles 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 of the SEC) were carried out under the supervision of our management, including our Chief Executive Officer and Chief Financial Officer. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, and it may not prevent or identify deficiencies. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon the evaluation referred to above, our Chief Executive Officer and Chief Financial Officer concluded, subject to the limitations noted above, that for the period covered by this annual report, our disclosure controls and procedures were adequate and effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act of the SEC is recorded, processed, summarized and disclosed within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.  (b)Management's annual report on internal control over financial reporting Our Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Articles 13a-15(f) and 15d-15(f) under the Securities and Exchange Act of 1934 of the SEC. Our internal control was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our Management made an assessment of the effectiveness of our internal control over consolidated financial reporting as of December 31, 2013 based upon the framework"Enterprise Risk Management – Integrated Framework"established by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and has concluded that our internal control over financial reporting was effective. The effectiveness of our internal control over financial reporting, as of December 31, 2013, has been audited by KPMG Auditores Independentes, a PCAOB-registered independent accounting firm, as stated in their report beginning on page F-3 of "Item 18. Financial Statements."  (c)Attestation report of the independent registered public accounting firm For the report of KPMG Auditores Independentes, our PCAOB-registered independent accounting firm, datedApril 30,2014, on the effectiveness of the internal control over financial reporting as of December 31, 2013, see "Item 18. Financial Statements."   Bradesco203


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|Form 20-F |  |  | 
|--------- |  |  | 

(d)Changes in internal control over financial reporting There have been no changes in our internal control over financial reporting (as such term is defined in Articles 13a-15(f) and 15d-15(f) under the"Exchange Act of 1934"of the SEC) that occurred during the fiscal year ended December 31, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.  ITEM 16. [RESERVED]
 16.A.Audit Committee Financial Expert
 Our Board of Directors has reviewed the qualifications and backgrounds of the members of the Audit Committee and designatedPaulo Roberto Simões da Cunhaas "Audit Committee financial expert," within the meaning of Item 16.A, and as independent member. For more information regarding our Audit Committee, see "Item 6.C. Board Practices-Board Committees-Audit Committee."  16.B.Code of Ethics
 We have adopted a"Code of Ethics"and"Sectorial Codes of Ethics"under the"Securities Exchange Act of1934,"as amended. Our"Codes of Ethics"apply to our Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer and persons performing similar functions, to our directors, other officers, employees,  business partners, suppliers and service providers. Our"Codes of Ethics Conduct"are available on our website at www.bradesco.com.br/ir. If we amend the provisions of our"Codes of Ethics Conduct,"or if we grant any waiver of such provisions, we will disclose such amendment or waiver on our website at the same address.  16.C.Principal Accountant Fees and Services
 Audit and non-audit fees The following table sets forth the fees billed to us by our independent accounting firm during the fiscal years ended as of December 31, 2013 and 2012:  Year ended December 31,

   R$ in thousands2013

   2012Audit fees

   29,177

   25,319Audit-related fees

   659

   2,875Tax fees

   47

   27Other fees

   879

   864Total fees

   30,762

   29,085
  The fees for the years 2013 and 2012 correspond to those paid to our auditor for those years (KPMG Auditores Independentes). Our independent accounting firm audits our annual financial statements in accordance with IFRS and the accounting practices adopted in Brazil applicable to institutions authorized to operate by the Central Bank, the annual financial statements of our investee companies, as well as the quarterly review of our interim financial statements. Audit-related fees in the above table are the aggregate fees billed by the independent auditors for domestic and international control and attestation reports, previously-agreed procedures reports on reviews of internal controls requested by our Management and the issue of comfort letters for placement of bonds abroad. Tax charges in the above table refer to fees billed by the independent auditors for assistance services in tax matter requirementsand reviews of tax aspects related to acquisitions. Other fees in the above table are fees billed by the independent auditors primarily related topreviously-agreed procedures for reviews of financial information,reviews of controls and process


diagnostics, which cover the technological environment and others, training sessions and other assurance services.  204Form 20-F – December 2013


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| |  |  | Form 20-F
| |  |  | ---------

Audit Committee pre-approval policies and procedures The Audit Committee recommends to the Board of Directors for approval, the entity to be hired to provide independent audit services to Bradesco and its subsidiaries and their compensation, as well as its replacement. The engagement of an independent auditor for non-audit services is not subject to the Board of Directors. However, it must be previously reviewed by the Audit Committee in respect to compliance with independence rules. For more information regarding our Board of Directors and Audit Committee, see "Item 6.C. Boardof DirectorsPractices."  16.D.Exemptions from the listing standards for Audit Committees
 Under the NYSE and the SEC listed-company audit committee rules effective July 31, 2006, we must comply with Exchange Act Rule 10A-3, which requires us to either establish an audit committee composed of members of the Board of Directors that meets specified requirements or designate and empower a Fiscal Council or similar body to perform the role of an audit committee based on the exemption in Exchange Act Rule 10A-3(c)(3). Pursuant to Central Bank regulations, we have established a body that is similar to the audit committee of a U.S. company, in terms of its functions. Our Audit Committee performs nearly all of the functions of an audit committee of the Board of Directors of a U.S. company. Of the four members of our Audit Committee, only one member is also a member of our Board of Directors. Under Brazilian law, the function of hiring independent auditors is a power reserved for the Board of Directors. As a result, our Board of Directors acts as our Audit Committee, as specified in Section 3(a)(58) of the Exchange Act, for purposes of approving the engagement of our independent auditors for audit. Except in these respects, our Audit Committee is comparable to and performs the functions of an audit committee of the Board of Directors of a U.S. company. Since our Audit Committee is not a committee of our Board of Directors, but a separate body, as required under Brazilian law to perform the role of an audit committee, we believe that our Audit Committee satisfies the requirements of Exchange Act Rule 10(a)(3). However, based on the exemption set forth in Exchange Act Rule 10A-3(c)(3) because under Central Bank regulations, the Audit Committee is a separate organ from our Board of Directors. We believe that our Audit Committee is able to act independently in performing the responsibilities of an audit committee under the Sarbanes-Oxley Act and to satisfy the other requirements of Exchange Act Rule 10A-3.  16.E.Purchases of Equity Securities by the Issuer and Affiliated Purchasers
 The purpose of the program of acquisition of shares to be held in treasury and to be subsequently disposed of or canceled, without capital reduction, is the application of funds available for investments from the "Earnings Reserve – Statutory Reserve" account. Acquisitions of common and preferred shares for treasury are in the tables below:  Period

   Total number of preferred shares acquired

   Average price paid per preferred share

   Total number of preferred shares acquired from published plans or programs

   Maximum number of preferred shares that can still be acquired from plans or programs01/01 to 01/31/13

   -

   -

   -

   7,500,00002/02 to 02/27/13

   -

   -

   -

   7,500,00003/02 to 03/31/13

   -

   -

   -

   7,500,00004/01 to 04/30/13

   -

   -

   -

   7,500,00005/04 to 05/31/13

   -

   -

   -

   7,500,00006/01 to 06/03/13

   -

   -

   -

   7,500,00006/04 to 06/30/13

   -

   -

   -

   7,500,00007/01 to 07/31/13

   574,900

   26.11

   574,900

   6,925,10008/03 to 08/31/13

   1,790,000

   27.90

   2,364,900

   5,135,10009/01 to 09/30/13

   -

   -

   -

   5,135,10010/01 to 10/30/13

   -

   -

   -

   5,135,10011/03 to 11/30/13

   -

   -

   -

   5,135,10012/01 to 12/31/13

   236,000

   29.00

   2,600,900

   4,899,100
   Bradesco205


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|Form 20-F |  |  | 
|--------- |  |  | 

We currently have no repurchase program for our common shares.  16.F.Change in Registrant's CertifyingAccountant
 Not applicable. 16.G.Corporate Governance
 In May 2006, our Board of Directors approved Bradesco’s corporate governance policy. This policy is available on our website at www.bradesco.com.br/ri.  Comparison of Bradesco’s corporate governance practices with NYSE rules applicable to North American companies Under the NYSE’s corporate governance rules approved by the SEC, foreign private issuers are subject to a more limited set of corporate governance requirements than U.S. domestic issuers. As a foreign private issuer, we must comply with three rules imposed by the NYSE: (1)SEC requirements concerning audit committees; (2)our CEO must promptly notify the SEC in writing as soon as an executive officer becomes aware of any non-compliance with any of the applicable NYSE corporate governance rules; and (3)we must provide a brief description disclosing any significant ways in which our corporate governance practices differ from those followed by U.S. companies under NYSE listing standards.  The chart below provides a brief description of the significant differences between our corporate governance practices and those followed by U.S. companies under NYSE listing standards.  Article

   NYSE corporate governance rules for US issuers

   Bradesco's corporate governance practices303A.01

   Independent directors must comprise a majority of the members of the Board of Directors of a listed company on NYSE.

   Brazilian law provides that only individuals may be appointed to a company's Board of Directors. Accordingly, there is no legal or statutory provision requiring Bradesco to have independent directors. There is no residency requirement for qualification as a director.303A.03

   Non‐management directors of a listed company must meet at regularly scheduled executive sessions without management.

   With the exception of our CEO, who is also a director of the Company, none of the directors of Bradesco are part of theDiretoria Executiva. The directors have regularly scheduled executive sessions at least onceper annumin order to evaluate his performance.303A.04

   Listed companies must have a nominating/ corporate governance committee composed entirely of independent directors, with a written charter that addresses specific minimum requirements.

   We have a Corporate Governance Executive Committee composed of management from Bradesco. The committee has a charter that addresses its minimum requirements.303A.05

   Listed companies must have a compensation committee composed entirely of independent directors, with a written charter that addresses specific minimum requirements.

   We have a Compensation Committee of three to seven members chosen among the members of the Board of Directors, except for one who is not a senior manager, each with a one-year term of office. The committee's primary responsibility is to assist the Board of Directors with conducting policies related to the compensation of our executive managers, according to legislation in force. None of the members of the Compensation Committee are independent directors. The compensation committee has a written charter that states the responsibilities of the committee.
  206Form 20-F – December 2013


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| |  |  | Form 20-F
| |  |  | ---------

303A.06

   303A.07

   Listed companies must have an audit committee, composed by a minimum of three members who satisfy the requirements of Rule 10A‐3 under the Exchange Act, with a written charter that addresses specific minimum requirements.

   Pursuant to our Bylaws and to Central Bank regulations since December 2003, we have appointed an Audit Committee. Our Audit Committee comprises three to five members, each of whom serves for a term of one year, and is appointed by, and may be replaced by, the Board of Directors. We currently have four members on our Audit Committee, one of them is also one of our directors. Under Brazilian law, the function of hiring independent auditors is reserved for the Board of Directors of a company. As a result, our Board of Directors acts as our Audit Committee, as specified in Section 3(a)(58) of the Exchange Act, for purposes of approving the engagement of our independent auditors for audit. Except in these respects, our Audit Committee is comparable to and performs the functions of audit committees of U.S. companies. Since our Audit Committee is a separate body from our Board of Directors, pursuant to Central Bank regulations, we have relied on the exemption set forth in Exchange Act Rule 10A - 3(c)(3) in this regard.

   The main obligations of our Audit Committee are:·recommending to the Board of Directors which outside firm should be hired to provide independent audit services and the amount of compensation such firm should receive, as well as to recommend the replacement of such firm;

   ·previously evaluating the hiring of independent auditors for other services than auditing of financial statements;

   ·reviewing statutory financial statements prior to their disclosure, including the explanatory notes to the financial statements, the independent auditor's report and any management reports;

   ·establishing and disclosing policies and procedures for receiving and processing information in breach of legal provisions and regulations applicable to the Company, or internal regulations or codes, including specific procedures to protect a person providing information and ensure their confidentiality;

   ·evaluating the work of both the internal and the independent auditors, including their compliance with applicable legal obligations and internal regulations and codes; and

   ·meeting with theDiretoria Executivaand both the independent and the external auditors at least quarterly.

   We also have a Fiscal Council, which currently has five members and five alternates. The Fiscal Council is an independent corporate body. In accordance with Brazilian Corporate Law, the Fiscal Council's responsibilities include:

   ·supervising, through any of its members, the actions of our managers and verifying the fulfillment of their duties;

   ·reviewing and issuing opinions regarding our statutory financial statements prior to their disclosure, including the explanatory notes to the financial statements, the independent auditor's report and any management reports; and

   ·opining on any management proposals to be submitted to the General Shareholders' Meeting related to changes in our share capital, issuances of debentures or rights offerings entitling the holder to subscribe for equity, investment plans and capital expenditure budgets, distributions of dividends and/or interest on equity, change in the corporate structure, mergers, consolidations or spin‐offs.


Bradesco 207






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|Form 20-F |  |  | 
|--------- |  |  | 

303A.08

   Shareholders must be given the opportunity to vote on equity-compensation plans and material revisions thereto, with limited exemptions set forth in the NYSE rules.

   Under the Brazilian Corporate Law, shareholder approval is required for the adoption of any compensation plans upon delivery of equity interests. We currently do not have any stock option based compensation plan.303A.09

   Listed companies must adopt and disclose corporate governance guidelines addressing specific minimum requirements.

   Our corporate governance guidelines and practices are available in our website at www.bradesco.com.br, in the corporate governance section.303A.10

   Listed companies must adopt and disclose a code of business conduct and ethics for directors, officers and employees, and promptly disclose any waivers of the code for directors or executive officers.

   We have adopted a code of ethics, which applies to our Senior Management, employees, business partners, suppliers and service providers, parent companies, subsidiaries and companies under common control, directly or indirectly and, when applicable, to non-profit entities managed by members of Senior Management or employees appointed or transferred by companies that are part of the Organization. We have an Ethics Committee, appointed by the Board of Directors, which is responsible for the enforcement of the Codes of Ethics Conduct, including determining which actions to take concerning the disclosure, dissemination and fulfillment of the Codes of Ethics Conduct, as well as ensuring its effectiveness.

   We will post any modifications or waivers to either Codes of Ethics Conduct on our website.303A.12

   A CEO of a listed company must promptly notify the NYSE in writing after any executive officer of the listed company becomes aware of any non-compliance with any applicable provisions of Section 303A.

   Our CEO shall promptly notify the NYSE in writing, should any executive officer become aware of any non-compliance with any applicable provision of the NYSE corporate governance rules.
  208Form 20-F – December 2013


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| |  |  | Form 20-F
| |  |  | ---------

PART III
  ITEM 17.FINANCIAL STATEMENTS
 See "Item 18. Financial Statements."  ITEM 18.FINANCIAL STATEMENTS
 See the bank’s financial statements on pages F-2 through F-145.   Bradesco209


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|Form 20-F |  |  | 
|--------- |  |  | 

ITEM 19.EXHIBITS
 Documents filed as exhibits to this annual report: 1.1 - Amended and Restated Bylaws of Banco Bradesco S.A. 2.1- Deposit Agreement, dated as of July 22, 2009, by and among us, The Bank of New York Mellon, as depositary, and the holders and beneficial owners ofpreferred shareADSs evidenced bypreferred shareADRs issued thereunder (incorporated by reference to the Registration Statement on Form F-6 relating to the ADSs filed on August 25, 2009 (File No.333-161530)). 2.2– Common share Deposit Agreement, dated as of March 13, 2012, by and among us, The Bank of New York Mellon, as depositary, and the holders and beneficial owners of common share ADSs evidenced by common share ADRs issued thereunder (incorporated by reference to the Registration Statement on Form F-6 relating to the common share ADSs filed on February 22, 2012 (File No.333-179623)). 2.3-The total amount of long-term debt securities of our company and its subsidiaries under any one instrument does not exceed 10% of the total assets of our company and its subsidiaries on a consolidated basis. We agree to furnish copies of any or all such instruments to the SEC upon request. 6.1 - Calculation of earnings per share data and weighted average number of shares outstanding. 7.1 - Calculation of dividends/interest on equity per share data. 8.1 - List of Subsidiaries. 12.1 - Certification of the Chief Executive Officer, pursuant to Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934. 12.2 - Certification of the Chief Financial Officer, pursuant to Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934. 13.1 - Certification of the Chief Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 13.2 - Certification of the Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.   210Form 20-F – December 2013


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| |  |  | Form 20-F
| |  |  | ---------

SIGNATURES Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant certifies that it meets all the requirements for filing on Form 20-F and has duly caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized. Banco Bradesco S.A.   /s/ Luiz Carlos Trabuco CappiLuiz Carlos Trabuco CappiChief Executive Officer  /s/ Julio de Siqueira Carvalho de AraujoJulio de Siqueira Carvalho de AraujoChief Financial Officer   Date: April 30, 2014.


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---



Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Summary
 Independent Auditors’ Report

   F-3Consolidated Statement of Income.

   F-4Consolidated Statement of Comprehensive Income.

   F-5Consolidated Statement of Financial Position.

   F-6Consolidated Statement of Changes in Equity.

   F-7 - F-8Consolidated Statement of Cash Flows.

   F-9 - F-10  Notes to the Consolidated Financial Statements
  1)  General information.

   F-11

   

   19)Cash and balances with banks.

   F-1002)..Significant accounting practices.

   F-11

   

   20) Financial assets and liabilities held for trading.

   F-1013)..Risk Management

   F-38

   

   21) Financial assets available for sale.

   F-1053.1.Credit risk

   F-38

   

   22) Investments held to maturity.

   F-1063.2.Market risk

   F-49

   

   23)Assets pledged as collateral

   F-1073.3.Liquidity risk.

   F-61

   

   24)Loans and advances to banks

   F-1073.4.Fair value of financial assets and liabilities

   F-68

   

   25) Loans and advances to customers

   F-1083.5.Capital management

   F-74

   

   26) Non-current assets held for sale.

   F-1093.6.Insurance risk/subscription

   F-79

   

   27)Investments in associated companies and joint ventures

   F-1104)..Estimates and judgments

   F-85

   

   28)Property and equipment

   F-1145)..Operating segments

   F-88

   

   29)Intangible assets and goodwill

   F-1166)..Net interest income

   F-92

   

   30)Other assets

   F-1177)..Net fee and commission income

   F-93

   

   31)Deposits from banks

   F-1188)..Net gains/(losses) on financial instruments classified as held for trading

   F-93

   

   32)Deposits from customers

   F-1189)..Net gains/(losses) on financial instruments classified as available for sale

   F-93

   

   33)Funds from securities issued

   F-11810)Net gains/(losses) of foreign currency transactions

   F-93

   

   34)Subordinated debt

   F-12011)Income from insurance and pension plans

   F-94

   

   35)Insurance technical provisions and pension plans

   F-12312)Impairment of loans and advances

   F-94

   

   36)Supplemental pension plans

   F-13113)Personnel expenses

   F-95

   

   37)Other provisions

   F-13414)Other administrative expenses

   F-95

   

   38)Other liabilities

   F-13715)Depreciation and amortization

   F-95

   

   39)Equity

   F-13816)Other operating income/(expenses)

   F-96

   

   40)Transactions with related parties

   F-14017)Income tax and social contribution

   F-96

   

   41)Off-balance sheet commitments

   F-14318)Earnings per share

   F-100

   

   42)Standards, amendments and interpretations of existing standards

   F-14343)Subsequent events

   F-145   
    F - 2IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
    Independent Auditors’ Report
    Report of Independent Registered Public Accounting Firm
  
  The Board of Directors and Stockholders
  Banco Bradesco S.A. We have audited the accompanying consolidated statement of financial position of Banco Bradesco S.A. and subsidiaries (“Bradesco”) as of December 31, 2013 and 2012, and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for each of the years in the three-year period ended December 31, 2013. We also have audited Bradesco’s internal control over financial reporting as of December 31, 2013, based on criteria established inInternal Control – Integrated Framework 1992issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Bradesco’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on these consolidated financial statements and an opinion on the Bradesco’s internal control over financial reporting based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall consolidated financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Banco Bradesco S.A. and subsidiaries as of December  31, 2013 and 2012, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2013, in conformity with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). Also in our opinion, Bradesco maintained, in all material respects, effective internal control over financial reporting as of December 31, 2013, based on criteria established inInternal Control – Integrated Framework 1992issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As discussed in Note 2.a.iii to the consolidated financial statements, Bradesco adopted IFRS 11 - Joint Arrangements effective January 1, 2013. Bradesco applied this change in accounting policy retrospectively, and accordingly restated the comparative information of the consolidated financial statements as of and for the year ended December 31, 2012, and the consolidated statement of financial position as of January 1, 2012.    KPMG Auditores Independentes      Osasco, BrazilApril 30, 2014
  
  
    BradescoF - 3


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Consolidated Statement of Income
 R$ thousandNote

   Years ended December 312013

   2012 (Restated)

   2011(Restated)Interest and similar income

   

   90,682,625

   83,031,854

   82,152,096Interest and similar expenses

   

   (41,382,142)

   (39,646,131)

   (46,763,775)Net interest income

   6

   49,300,483

   43,385,723

   35,388,321Fee and commission income

   

   14,535,723

   12,757,131

   10,932,237Fee and commission expenses

   

   (36,041)

   (36,391)

   (33,978)Net fee and commission income

   7

   14,499,682

   12,720,740

   10,898,259Net gains/(losses) on financial instruments classified as held for trading

   8

   (5,790,089)

   2,110,112

   (608,271)Net gains/(losses) on financial instruments classified as available for sale

   9

   (6,100,782)

   1,895,974

   365,302Net gains/(losses) of foreign currency transactions

   10

   (1,093,597)

   (1,087,595)

   2,625,816Income from insurance and pension plans

   11

   6,933,680

   1,413,016

   3,076,175Operating income

   

   (6,050,788)

   4,331,507

   5,459,022Impairment of loans and advances

   12

   (9,623,870)

   (11,451,383)

   (8,239,358)Personnel expenses

   13

   (12,354,418)

   (11,559,002)

   (11,094,794)Other administrative expenses

   14

   (12,151,537)

   (11,803,989)

   (11,380,270)Depreciation and amortization

   15

   (2,740,830)

   (2,488,182)

   (2,117,666)Other operating income/(expenses)

   16

   (7,622,240)

   (8,674,178)

   (5,106,092)Operating expense

   

   (44,492,895)

   (45,976,734)

   (37,938,180)Income before income taxes and equity in the earnings of associates

   

   13,256,482

   14,461,236

   13,807,422Equity in the earnings of associates and joint ventures

   27

   1,062,687

   980,212

   803,820Income before income taxes

   

   14,319,169

   15,441,448

   14,611,242Income tax and social contribution

   17

   (1,833,031)

   (4,089,754)

   (3,521,800)Net income for the year

   

   12,486,138

   11,351,694

   11,089,442Attributable to shareholders:Controlling shareholders

   

   12,395,920

   11,291,570

   10,958,054Non-controlling interest

   

   90,218

   60,124

   131,388Basic and diluted income per share based on the weighted average number of shares attributable to shareholders(expressed in R$ per share):– Earnings per ordinary share

   18

   2.81

   2.56

   2.49– Earnings per preferred share

   18

   3.09

   2.82

   2.74
  The Notes are an integral part of the Consolidated Financial Statements.    BradescoF - 4


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Consolidated Financial Statements prepared in accordance with International Financial ReportingStandards (IFRS)
  Consolidated Statement of Comprehensive Income
 R$ thousandYears ended December 312013

   2012(Restated)

   2011(Restated)Net income for the year

   12,486,138

   11,351,694

   11,089,442Unrealized gains/(losses) on financial assets available for sale

   (12,544,423)

   7,679,798

   (763,425)Exchange differences on translations of foreign operations

   50,839

   46,196

   389Tax effect

   4,993,961

   (3,080,317)

   294,823Total adjustments not included in the net income

   (7,499,623)

   4,645,677

   (468,213)Total comprehensive income for the year

   4,986,515

   15,997,371

   10,621,229Attributable to shareholders:Controlling shareholders

   4,896,297

   15,937,247

   10,489,841Non-controlling interest

   90,218

   60,124

   131,388
  The Notes are an integral part of the Consolidated Financial Statements.      F -5IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Consolidated Statement of Financial Position
 R$ thousandNote

   December 31

   January 01, 2012(Restated)2013

   2012(Restated)AssetsCash and balances with banks

   19

   67,450,363

   59,901,564

   93,722,190Financial assets held for trading

   20a

   96,092,523

   111,838,502

   96,597,075Financial assets available for sale

   21

   67,838,411

   81,522,130

   45,207,634Investments held to maturity

   22

   23,069,026

   3,715,673

   4,110,987Assets pledged as collateral

   23

   117,740,225

   106,133,299

   97,122,080Loans and advances to banks

   24

   78,719,723

   92,459,347

   72,660,596Loans and advances to customers, net of impairment

   25

   304,121,334

   269,021,320

   245,251,879Non-current assets held for sale

   26

   832,546

   532,973

   445,328Investments in associated companies and joint ventures

   27

   3,392,847

   3,121,386

   2,724,721Property and equipment, net of accumulated depreciation

   28

   4,501,967

   4,524,827

   4,258,456Intangible assets and goodwill, net of accumulated amortization

   29

   8,220,739

   7,617,873

   7,046,256Taxes to be offset

   17g

   5,293,116

   5,294,566

   4,503,040Deferred income tax assets

   17c

   25,661,079

   17,913,529

   17,051,947Other assets

   30

   35,367,715

   35,943,635

   30,264,400Total assets

   

   838,301,614

   799,540,624

   720,966,589LiabilitiesDeposits from banks

   31

   243,100,373

   220,943,354

   204,351,800Deposits from customers

   32

   216,218,057

   210,774,263

   216,620,050Financial liabilities held for trading

   20b

   1,826,382

   4,049,982

   747,210Funds from securities issued

   33

   57,883,068

   51,552,093

   41,630,969Subordinated debt

   34

   35,885,003

   34,851,714

   26,910,091Insurance technical provisions and pension plans

   35

   130,329,023

   118,768,720

   99,112,321Other provisions

   37

   13,752,577

   21,021,109

   17,894,158Current income tax liabilities

   

   3,082,976

   3,288,688

   2,694,395Deferred income tax liabilities

   17c

   799,824

   3,091,667

   2,246,508Other liabilities

   38

   63,321,405

   59,852,644

   49,376,993Total liabilities

   

   766,198,688

   728,194,234

   661,584,495Equity

   39Share capital

   

   38,100,000

   30,100,000

   30,100,000Treasury shares

   

   (269,093)

   (197,301)

   (183,109)Capital reserves

   

   35,973

   35,973

   35,973Profit reserves

   

   34,122,503

   34,189,383

   26,732,531Additional paid-in capital

   

   70,496

   70,496

   70,496Other comprehensive income

   

   (1,102,887)

   6,396,736

   1,751,059Retained earnings

   

   927,314

   542,422

   632,096Equity attributable to controlling shareholders

   

   71,884,306

   71,137,709

   59,139,046Non-controlling interest

   

   218,620

   208,681

   243,048Total equity

   

   72,102,926

   71,346,390

   59,382,094Total liabilities and equity

   

   838,301,614

   799,540,624

   720,966,589
  The Notes are an integral part of the Consolidated Financial Statements.  BradescoF - 6


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Consolidated Financial Statements prepared in accordance with International Financial ReportingStandards (IFRS)
  Consolidated Statement of Changes in Equity
  R$ thousandShare

   capital

   Treasury shares

   Capital reserves

   Revenue reserves

   Additional paid-in

   capital

   Other comprehensive income (1)

   Retained earnings

   Equity attributable to controlling shareholders

   Non-controlling interest

   Total equityLegal

   EstatutoryBalance on December 31, 2010 (Restated)

   28,500,000

   (10,049)

   87,146

   2,755,385

   16,726,601

   70,496

   2,219,272

   702,383

   51,051,234

   107,331

   51,158,565Net income

   -

   

   

   

   

   

   

   10,958,054

   10,958,054

   131,388

   11,089,442Financial assets available for sale

   -

   -

   -

   -

   -

   -

   (468,447)

   -

   (468,447)

   -

   (468,447)Foreign currency translation adjustment

   -

   -

   -

   -

   -

   -

   234

   -

   234

   -

   234Comprehensive income

   -

   -

   -

   -

   -

   

   -

   -

   10,489,841

   131,388

   10,621,229Purchase of treasury shares

   -

   (173,060)

   -

   -

   -

   -

   -

   -

   (173,060)

   

   (173,060)Increase of non-controlling shareholders’ interest

   -

   -

   -

   -

   -

   -

   -

   -

   -

   42,483

   42,483Premium on share subscription(2)

   -

   -

   11,441

   

   -

   -

   -

   -

   11,441

   

   11,441Transfers to reserves(3)

   100,000

   -

   (62,614)

   (37,386)

   -

   -

   -

   -

   -

   -

   -Capital increase with reserves

   

   -

   -

   551,413

   6,736,518

   -

   -

   (7,287,931)

   -

   -

   -Transfers to reserves(2)

   1,500,000

   -

   -

   -

   -

   -

   -

   -

   1,500,000

   -

   1,500,000Interest on equity and dividends

   -

   -

   -

   -

   -

   -

   -

   (3,740,410)

   (3,740,410)

   (38,154)

   (3,778,564)Balance on December 31, 2011(Restated)

   30,100,000

   (183,109)

   35,973

   3,269,412

   23,463,119

   70,496

   1,751,059

   632,096

   59,139,046

   243,048

   59,382,094Net income

   -

   -

   -

   -

   -

   -

   -

   11,291,570

   11,291,570

   60,124

   11,351,694Financial assets available for sale

   -

   -

   -

   -

   -

   -

   4,617,960

   -

   4,617,960

   -

   4,617,960Foreign currency translation adjustment

   -

   -

   -

   -

   -

   -

   27,717

   -

   27,717

   -

   27,717Comprehensive income

   -

   -

   -

   -

   -

   -

   -

   -

   15,937,247

   60,124

   15,997,371Purchase of treasury shares

   -

   (14,192)

   -

   -

   -

   -

   -

   -

   (14,192)

   -

   (14,192)Decrease of non- controlling shareholders’ interest

   -

   -

   -

   -

   -

   -

   -

   -

   -

   (1,499)

   (1,499)Capital transaction –Banco BERJ

   -

   -

   -

   -

   (29,394)

   

   

   

   (29,394)

   -

   (29,394)Transfers to reserves

   -

   -

   -

   569,062

   6,917,184

   -

   -

   (7,486,246)

   -

   -

   -Interest on equity and dividends

   -

   -

   -

   -

   -

   -

   -

   (3,894,998)

   (3,894,998)

   (92,992)

   (3,987,990)Balance on December 31, 2012(Restated)

   30,100,000

   (197,301)

   35,973

   3,838,474

   30,350,909

   70,496

   6,396,736

   542,422

   71,137,709

   208,681

   71,346,390
   The Notes are an integral part of the Consolidated Financial Statements.   F -7IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Consolidated Statement of Changes in Equity(continued)
 R$ thousandShare

   capital

   Treasury shares

   Capital reserves

   Revenue reserves

   Additional paid-in capital

   Other comprehensive income (1)

   Retained earnings

   Equity attributable to controlling shareholders

   Non-

   controlling interest

   Total equityLegal

   StatutoryBalance on December 31, 2012(Restated)

   30,100,000

   (197,301)

   35,973

   3,838,474

   30,350,909

   70,496

   6,396,736

   542,422

   71,137,709

   208,681

   71,346,390Net income

   -

   -

   -

   -

   -

   -

   -

   12,395,920

   12,395,920

   90,218

   12,486,138Financial assets available for sale (5)

   -

   -

   -

   -

   -

   -

   (7,530,127)

   -

   (7,530,127)

   -

   (7,530,127)Foreign currency translation adjustment

   -

   -

   -

   -

   -

   -

   30,504

   -

   30,504

   -

   30,504Comprehensive income

   -

   -

   -

   -

   -

   -

   -

   -

   4,896,297

   90,218

   4,986,515Purchase of treasury shares

   -

   (71,792)

   -

   -

   -

   -

   -

   -

   (71,792)

   -

   (71,792)Decrease of non- controlling hareholders’ interest

   -

   -

   -

   -

   -

   -

   -

   -

   -

   (10,870)

   (10,870)Premium on share subscription (4)

   8,000,000

   -

   -

   -

   (8,000,000)

   -

   -

   -

   -

   -

   -Transfers to reserves

   -

   -

   -

   600,551

   7,332,569

   -

   -

   (7,933,120)

   -

   -

   -Interest on equityand dividends

   -

   -

   -

   -

   -

   -

   -

   (4,077,908)

   (4,077,908)

   (69,409)

   (4,147,317)Balance on December 31, 2013

   38,100,000

   (269,093)

   35,973

   4,439,025

   29,683,478

   70,496

   (1,102,887)

   927,314

   71,884,306

   218,620

   72,102,926
  (1)In 2013, consists mainly of unrealized gains/losses from investment securities, classified as available for sale (Notes 21 and 23), of which the cumulative tax effects amount to R$ (728,952)  thousand (2012 - R$ 4,265,009  thousand); (2)On December 17, 2010, the Special Shareholders’ Meeting approved an increase in Share Capital, in the amount of R$ 1,500,000 thousand, raising it from R$ 28,500,000 thousand to R$ 30,000,000 thousand, with the issuance of 62,344,140 new, nominative, book entry shares, with no par value, being 31,172,072 ordinary shares and 31,172,068 preferred shares, based on the private subscription by shareholders during the period from December 29, 2010 to January 31, 2011 in proportion to the shares each one held on the date of the Meeting, to be paid up in cash on February 18, 2011. The excess used to increase share capital amounting to R$ 11,441 thousand calculated as the difference between the issue price and the share sale price, was recognized in the "Capital Reserve” account; (3)The Annual General Meeting held on March 10, 2011 decided to increase share capital by R$ 100,000 thousand, from R$ 30,000,000 thousand to R$ 30,100,000 thousand, without issuing shares, by using part of the "Capital Reserve” and “Profit Reserve - Legal Reserve" accounts; (4)On March 11, 2013, the Special Shareholders’ Meeting approved an increase in Share Capital, in the amount of R$ 8,000,000 thousand, increasing it from R$ 30,100,000 thousand to R$ 38,100,000 thousand, through the issue of 382,479,458 new no-par registered, book-entry shares, of which 191,239,739 are common shares and 191,239,719 are preferred shares, given free of charge to shareholders as bonus, at the proportion of one (1) new share for every ten (10) shares of the same type they hold, benefiting Bradesco’s shareholders of record as at March 25, 2013; and (5)On December 31, 2013 includes R$6,117,649 thousand (R$3,670,589 thousand, net of taxes), representing the realization of loss related to the sale and acquisition of available-for-sale securities totaling R$41,945,300 thousand, allowing that the new acquisition cost is aligned with the current fair value. Additionally, a total of R$ 19,121,109 thousand was reclassified from “Available for Sale Securities” to “Held-to-Maturity Securities,” given that the Insurance Group made the reclassification because of the change in Management's intention. The mark-to-market accounting of these securities, totaling R$479,358 thousand, was maintained under Shareholders’ Equity and will be recognized in income statement for the remaining term of securities.     The Notes are an integral part of the Consolidated Financial Statements.  BradescoF - 8


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Consolidated Statement of Cash Flows
 R$ thousandYears ended December 312013

   2012(Restated)

   2011(Restated)Operating activitiesIncome before income taxes

   14,319,169

   15,441,448

   14,611,242Adjustments to reconcile income before income tax to net cash flow from operating activities:Impairment of loans and advances

   9,623,870

   11,451,383

   8,239,358Changes in the insurance technical provisions and pension plans

   20,001,807

   23,326,101

   18,212,405Net (gains)/losses from disposals on assets available for sale

   5,698,697

   (2,895,780)

   (238,606)Expenses withother provisions

   1,132,596

   4,246,589

   5,610,702Deferred selling expenses (insurance)

   (332,056)

   (128,005)

   (97,748)Impairment of assets

   459,193

   1,697,474

   5,126Depreciation

   1,018,239

   1,035,235

   989,161Amortization of intangible assets

   1,722,591

   1,452,947

   1,128,505Equity in the earnings of associates

   (1,062,687)

   (980,212)

   (803,820)Losses on disposal of non-current assets held for sale

   195,605

   203,885

   237,727Net losses from disposal of property and equipment

   24,795

   5,157

   8,596Amortization of goodwill

   12,273

   44,962

   -(Gain) on disposal ofinvestments in associated companies

   -

   (793,360)

   -Changes in assets and liabilities:(Increase)/decrease in compulsory deposits in the Central Bank

   (7,428,592)

   23,202,973

   (5,958,918)(Increase)/decrease in loans and advances to banks

   87,999,493

   (53,564,414)

   (25,601,906)(Increase) in loans and advances to customers

   (95,688,070)

   (78,824,136)

   (89,928,450)(Increase)/decrease in financial assets held for trading

   7,619,533

   23,176,091

   (75,107,915)(Increase) in other assets

   (11,777,883)

   (6,120,400)

   (3,783,028)Increase in deposits from banks

   40,157,365

   30,511,120

   50,632,056Increase in deposits from customers

   16,961,511

   7,087,016

   39,273,052Increase/(decrease) in financial liabilities held for trading

   (2,223,600)

   3,302,772

   14,243Decrease in insurance technical provisions and pension plans

   (8,441,504)

   (3,669,702)

   (2,593,130)Decrease in other provisions

   (8,401,128)

   (1,119,638)

   (1,040,684)Increase in other liabilities

   13,181,535

   20,716,267

   7,565,203Interest received

   51,660,545

   66,904,924

   64,161,337Interest paid

   (29,518,063)

   (26,852,369)

   (33,332,306)Income tax and social contribution paid

   (6,192,982)

   (6,220,112)

   (5,377,893)Other changes in taxes

   (889,743)

   (1,163,615)

   (4,062,886)Net cashprovided by/(used in)operating activities

   99,832,509

   51,474,601

   (37,238,577)Investing activitiesAcquisitions of subsidiaries, net of cash and cash equivalents paid

   -

   (2,552)

   (214,676)Acquisitions of financial assets available for sale

   (97,805,696)

   (163,462,843)

   (19,055,607)Proceeds from sale of financial assets available for sale

   71,371,855

   115,237,164

   32,793,444Redemption ofinvestmentsheld to maturity

   303,307

   699,982

   105,722Disposal of non-current assets held for sale

   658,039

   266,123

   228,958Acquisitions ininvestments in associated companies

   -

   (97,454)

   (146,967)Disposal ofinvestments in associated companies

   -

   918,819

   -Dividends received from investments in associated companies

   767,765

   510,580

   597,697Acquisition of property and equipment

   (1,332,570)

   (1,673,837)

   (1,698,704)Disposal of property and equipment

   303,996

   367,074

   110,653Acquisition of intangible assets

   (2,362,977)

   (2,552,000)

   (3,176,645)Dividends received

   189,865

   117,684

   126,696Interest received

   4,719,738

   4,920,612

   7,190,077Net cashprovided by/(used in) investing activities

   (23,186,678)

   (44,750,648)

   16,860,648
   F - 9IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Consolidated Statement of Cash Flows(continued)
  R$ thousandYears ended December 312013

   2012(Restated)

   2011(Restated)Financing activitiesFunds from securities issued

   43,567,205

   24,448,024

   28,212,490Payment of funds from securities issued

   (38,524,851)

   (19,956,590)

   (5,679,892)Issuance of subordinated debts

   713,760

   12,997,694

   9,505,799Payment of subordinated debts

   (1,762,491)

   (4,493,518)

   (6,542,624)Acquisition of treasury shares

   (71,792)

   (14,192)

   (173,060)Premium on share subscription

   -

   -

   11,441Capital increase in cash

   -

   -

   1,500,000Capital transaction

   -

   (29,394)

   -(Decrease)of non-controlling interest

   (10,870)

   (1,499)

   42,483Interest paid

   (5,923,242)

   (5,261,001)

   (2,342,856)Interest on equity and dividends paid

   (4,362,781)

   (3,839,385)

   (3,568,337)Net cashprovided by/(used in)financing activities

   (6,375,062)

   3,850,139

   20,965,444Increase in cash and cash equivalents

   70,270,769

   10,574,092

   587,515Cash and cash equivalentsAt the beginning of the year

   47,427,218

   36,853,126

   36,265,611At the end of the year

   117,697,987

   47,427,218

   36,853,126Increase in cash and cash equivalents

   70,270,769

   10,574,092

   587,515Non-cash transactionsCredit operations transferred to non-current assets

   1,356,644

   836,930

   758,757Dividends and interest on equity declared but not yet paid

   1,504,216

   2,396,306

   2,519,378Unrealized (gains)/losses on securities available for sale

   7,530,127

   (4,617,960)

   468,447 The Notes are an integral part of the Consolidated Financial Statements.      BradescoF - 10


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
 1)General information  Banco Bradesco S.A. and subsidiaries (“Bradesco”, the “Bank”, the “Company” or the “Organization”) is a publicly-traded company established according to the laws of the Federative Republic of Brazil with headquarters in the city of Osasco, state of São Paulo, Brazil.  Bradesco is a bank that provides multiple services within two segments: banking and insurance. The Bank complies with Brazilian banking regulations and operates throughout all of Brazil. The banking segment includes a number of areas within the banking sector, serving individual and corporate customers in the following operations: investment banking, national and international banking operations, asset management operations and consortium administration. The insurance segment covers auto, health, life, accident and property insurance and pension plans as well as capitalization bonds.  The retail banking products include demand deposits, savings deposits, time deposits, mutual funds, foreign exchange services and a range of credit operations, including overdrafts, credit cards and loans with repayments in installments. The services provided to corporate entities include fund management and treasury services, foreign exchange operations, corporate finance and investment banking services, hedge and finance operations including working capital financing, leasing and loans with repayments in installments. These services are provided, mainly, in domestic markets, but also include international services on a smaller scale.  The Organization was originally listed on the São Paulo Stock Exchange (“BM&FBovespa”) and then subsequently on the New York Stock Exchange (“NYSE”).  The consolidated financial statements were approved by the Board of Directors on March 27, 2014.  2)Significant accounting practices  These consolidated financial statements of the Organization were prepared in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB). The consolidated financial statements include the consolidated statement of financial position, consolidated statement of income, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows as well as the notes to the consolidated financial statements.  The consolidated financial statements have been prepared on the historical cost basis except for the following material items in the statement of financial position: financial assets available for sale measured at fair value, assets and liabilities held for trading measured at fair value, and financial instruments at fair value through profit or loss that are measured at fair value and the liability for defined benefit obligations is recognized as the present value of the defined benefit obligation less the net total of the plan assets, plus unrecognized actuarial gains, less unrecognized past service cost and unrecognized actuarial losses.  The Organization has classified its expenses according to their nature.  The consolidated statement of cash flows shows the changes in cash and cash equivalents during the year arising from operating, investing and financing activities. Cash and cash equivalents include highly liquid investments. Note 19 details the accounts of the consolidated statement of financial position comprising cash and cash equivalents. The consolidated statement of cash flows is prepared using the indirect method. Accordingly, the income before taxes and the participation of non-controlling interests were adjusted by non-cash items such as gains or losses, on provisions, depreciation, amortization and losses due to impairment of loans and advances. The interests received and paid are classified as operating cash flows.    F - 11IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
  The preparation of the consolidated financial statements requires the adoption of estimates and assumptions which affect the reported amounts of assets and liabilities, as well as the disclosure of contingent assets and liabilities at the date of the financial statements, and the profit and loss amounts for the year. The consolidated financial statements also reflect various estimates and assumptions, including, but not limited to, adjustments to the provision for impairment losses of loans and advances, estimates of the fair value of financial instruments, depreciation and amortization, impairment of losses in assets, the useful life of intangible assets, evaluation of the realization of tax assets, assumptions for the calculation of technical provisions for insurance, supplemental pension plans and capitalization bonds, provisions for contingencies and provisions for potential losses arising from fiscal and tax uncertainties. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 4.  The accounting policies listed below were used in all the periods presented and by all the companies of the Organization.  a)Consolidation  The consolidated financial statements include the financial statements of Bradesco and those of its direct and indirect subsidiaries, including exclusive mutual funds and special purpose entities.  The main subsidiaries included in the consolidated financial statements are as follows:  Activity

   Country of nature

   Shareholding interest (%)December 312013

   2012Alvorada Cartões, Crédito Financiamento e Investimento S.A.

   Banking

   Brazil

   100.00

   100.00Banco Alvorada S.A.(1)

   Banking

   Brazil

   99.99

   99.95Banco Bradesco Financiamentos S.A.

   Banking

   Brazil

   100.00

   100.00Banco Bankpar S.A

   Banking

   Brazil

   100.00

   100.00Banco Boavista Interatlântico S.A.

   Banking

   Brazil

   100.00

   100.00Banco Bradesco Argentina S.A.

   Banking

   Argentina

   99.99

   99.99Banco Bradesco BERJ S.A. (2)

   Banking

   Brazil

   100.00

   100.00Banco Bradescard S.A.

   Cards

   Brazil

   100.00

   100.00Banco Bradesco BBI S.A.

   Investment Bank

   Brazil

   98.35

   98.35Banco Bradesco Cartões S.A.

   Cards

   Brazil

   100.00

   100.00Bradesco Administradora de Consórcios Ltda.

   Consortium Management

   Brazil

   100.00

   100.00Bradseg ParticipaçõesS.A.

   Holding

   Brazil

   100.00

   100.00Bradesco Auto/RE Cia. de Seguros

   Insurance

   Brazil

   100.00

   100.00Bradesco Capitalização S.A.

   Capitalization

   Brazil

   100.00

   100.00Odontoprev S.A.(3)

   Dental Health

   Brazil

   43.50

   43.50Bradesco Leasing S.A. Arrendamento Mercantil

   Leasing

   Brazil

   100.00

   100.00Ágora Corretora de Títulos e Valores Mobiliários S.A.

   Broker

   Brazil

   100.00

   100.00Bradesco S.A. Corretora de Títulos e Valores Mobiliários

   Broker

   Brazil

   100.00

   100.00Bradesco Saúde S.A.

   Insurance/Health

   Brazil

   100.00

   100.00Bradesco Seguros S.A.

   Insurance

   Brazil

   100.00

   100.00Bradesco Vida e Previdência S.A.

   Pension plan/Insurer

   Brazil

   100.00

   100.00Bradesplan Participações Ltda.

   Holding

   Brazil

   100.00

   100.00BRAM – Bradesco Asset Management S.A. DTVM

   Asset Management

   Brazil

   100.00

   100.00Tempo Serviços Ltda.

   Service Provider

   Brazil

   100.00

   100.00União de Participações Ltda.

   Holding

   Brazil

   100.00

   100.00
  (1)Increase in equity interest through share acquisition in February 2013; (2)Formerly Banco BERJ S.A.; and (3)Consolidated based on control obtained through its shareholders agreement.  BradescoF - 12


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements




i.Subsidiaries



Subsidiaries are all of the companies over which the Organization, has the control. The Organization has the control over an investee if it is exposed to, or has rights to, variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The subsidiaries are fully consolidated from the date at which the Organization obtains control until the date when control ceases. The Organization adopted IFRS 10 in replacement of IAS 27 and SIC 12.



For acquisitions meeting the definition of a business, the purchase method of accounting is used. The cost of an acquisition is measured as the fair value of the consideration given, including assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. The excess of the consideration given over the fair value of the Organization’s share of the identifiable net assets and non-controlling interest acquired is recorded as goodwill. Any goodwill arising from business combinations is tested for impairment at least once a year and whenever events or changes in circumstances may indicate the need for impairment write-down. If the cost of acquisition is less than the fair value of the Organization’s share of the net assets acquired, the difference is recognized directly in the consolidated statement of income.



For acquisitions not meeting the definition of a business, the Organization allocates the cost between the individual identifiable assets and liabilities. The cost of acquired assets and liabilities is determined by (a) recognizing financial assets and liabilities at their fair value at the acquisition date; and (b) allocating the remaining balance of the cost of purchasing assets and assuming liabilities to individual assets and liabilities, other than financial instruments, based on their relative fair values at the acquisition date.



ii.Associated companies



Companies are classified as associated companies if the Organization has significant influence, but not control, over the operating and financial management policy decisions. Normally significant influence is presumed when the Organization holds in excess of 20%, but no more than 50%, of the voting rights. Even if less than 20% of the voting rights are held, the Organization could still have significant influence through its participation in the management of the investee or on its Board of Directors, providing it has executive power; i.e. voting power.



Investments in associated companies are recorded in the Organization's consolidated financial statements using the equity method and are initially recognized at cost. The investments in associates include goodwill (net of any impairment losses) identified at the time of acquisition.



iii.Joint ventures



The Organization has contractual agreements in which two or more parties undertake activities subject to joint control. Joint control is the contractual sharing of control over an activity and it exists only if strategic, financial and operating decisions are made on a unanimous basis by the parties. Investments in joint ventures are recorded in the consolidated financial statements of the Organization using the equity method.



Until December 31, 2012 the Organization consolidated proportionally their participation in jointly controlled entities (joint venture), in accordance with IAS 31. Effective January 1, 2013 the Organization adopted IFRS 11 – “Joint Arrangements”, thus changing the accounting policy of participation in joint ventures to the equity method.



F - 13IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
  The effects of IFRS 11 adoption have not generated significant impacts to the Organization’s financial statements. Following are presented the aggregated amounts of our investments, previously proportionally consolidated and now accounted for by the equity method.  Consolidated Satement of Financial Position - 2012

   R$ thousandPrevious disclosure

   Efects of

   IFRS 11 adoption

   Restated balanceLoans and advances to banks

   92,821,233

   (361,886)

   92,459,347Loans and advances to customers

   269,652,428

   (631,108)

   269,021,320Investments in associated companies and joint ventures

   2,754,998

   366,388

   3,121,386Other assets

   435,958,040

   (1,019,469)

   434,938,571Total assets

   801,186,699

   (1,646,075)

   799,540,624Deposits from banks

   220,826,288

   117,066

   220,943,354Other liabilities

   509,014,021

   (1,763,141)

   507,250,880Total liabilities

   729,840,309

   (1,646,075)

   728,194,234Total equity

   71,346,390

   -

   71,346,390Total liabilities and equity

   801,186,699

   (1,646,075)

   799,540,624
  Consolidated Satement of Income - 2012

   R$ thousandPrevious disclosure

   Efects of

   IFRS 11 adoption

   RestatedbalanceNet interest income

   43,492,965

   (107,242)

   43,385,723Net fee and commission income

   12,804,795

   (84,055)

   12,720,740Operating income

   4,467,718

   (136,211)

   4,331,507Operating expense

   (46,133,908)

   157,174

   (45,976,734)Income before income taxes and equity in the earnings of associates

   14,631,570

   (170,334)

   14,461,236Income before income taxes

   15,502,232

   (60,784)

   15,441,448Net income for the year

   11,351,694

   -

   11,351,694Controlling shareholders

   11,291,570

   -

   11,291,570Non-controlling interest

   60,124

   -

   60,124Total liabilities and equity

   801,186,699

   (1,646,075)

   799,540,624Investments in associated companies and joint ventures

   2,754,998

   366,388

   3,121,386Total liabilities

   729,840,309

   (1,646,075)

   728,194,234
  Consolidated Satement of Cash Flows - 2012

   R$ thousandPrevious disclosure

   Efects of

   IFRS 11 adoption

   RestatedbalanceNet cash provided by operating activities

   51,612,398

   (137,797)

   51,474,601Net cash (used in) investing activities

   (44,797,252)

   46,604

   (44,750,648)Net cash provided by financing activities

   3,850,139

   -

   3,850,139Increase in cash and cash equivalents

   10,665,285

   (91,193)

   10,574,092
  See Note 27 for summarized financial information about jointly controlled entities.  iv.Transactions with and interest of non-controlling shareholders  The Organization applies a policy of treating transactions with non-controlling interests as transactions with equity owners of the Bank. For purchases of equity from non-controlling interests, the difference between any consideration paid and the share of the carrying value of net assets of the subsidiary acquired is recorded in equity. Gains or losses on sales to non-controlling shareholders are also recorded in equity.   BradescoF -14


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
  Profits or losses attributable to non-controlling interests are presented in the consolidated statements of income under this title.  v.Balances and transactions eliminated in the consolidation  Intra-group transactions and balances (except for foreign currency transaction gains and losses) are eliminated in the consolidation process, including any unrealized profits or losses resulting from operations between the companies except when unrealized losses indicate an impairment of the asset transferred which should be recognized in the consolidated financial  statements. Consistent accounting policies as well as similar valuation methods for similar transactions, events and circumstances are used throughout the Organization for the purposes of consolidation.  b)Foreign currency translation  i.Functional and presentation currency  Items included in the financial statements of each of the Organization’s entities are measured using the currency of the primary economic environment in which each entity operates (the functional currency). The consolidated financial statements are presented in Brazilian Reais (R$), which is the Organization’s presentation currency. The domestic and foreign subsidiaries adopted the Real as their functional currency, except the subsidiary in Mexico, which adopted the Mexican Peso as its functional currency.  ii.Transactions and balances  Foreign currency transactions, which are denominated or settled in a foreign currency, are translated into the functional currency using the exchange rates prevailing on the dates of the transactions.  Monetary items denominated in foreign currency are translated at the closing exchange rate as at the reporting date. Non-monetary items measured at historical cost denominated in a foreign currency are translated at the exchange rate on the date of initial recognition; non-monetary items in a foreign currency that are measured at fair value are translated using the exchange rates on the date when the fair value was determined.  Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation at each period exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the consolidated statement of income – “Net gains/(losses) of foreign currency transactions”.  In the case of changes in the fair value of monetary assets denominated in foreign currency classified as available for sale, a distinction is made between translation differences resulting from changes in amortized cost of the security and other changes in the carrying amount of the security. Translation differences related to changes in the amortized cost are recognized in the consolidated statement of income, and other changes in the carrying amount, except impairment, are recognized in equity.   F - 15IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
  iii.Foreign operations  The results and financial position of all foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:  ·Assets and liabilities for each consolidated statement of financial position presented are translated at the closing rate at the reporting date;  ·Income and expenses for each consolidated statement of income are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rate prevailing on the transaction dates, in which case income and expenses are translated at the rates in effect on the dates of the transactions); and  ·All resulting exchange differences are recognized in other comprehensive income.  Exchange differences arising from the above process are reported in equity as “Foreign currency translation adjustment”.  On consolidation, exchange differences arising from the translation of the net investment in foreign entities are taken to ‘Other comprehensive income’. If the operation is a non-wholly owned subsidiary, then the relevant proportionate share of the transaction difference is allocated to the non-controlling interest. When a foreign operation is partially sold or disposed, such exchange differences, which were recognized in equity, are recognized in the consolidated statement of income as part of the gain or loss on sale.  c)Cash and cash equivalents  Cash and cash equivalents include: cash, bank deposits, unrestricted balances held with the Central Bank of Brazil and other highly liquid short–term investments, with original maturities of three months or less and are subject to insignificant risk of changes in fair value, used by the Organization to manage its short-term commitments. See Note 19 (b) – “Cash and cash equivalents”.  Cash and cash equivalents are held at amortized cost in the statement of financial position.   d)Sale and repurchase agreements  Securities sold subject to repurchase agreements are reclassified in the consolidated financial statements as “Assets pledged as collateral” when the purchaser has the right to sell or repledge the asset. The counterparty liability is included in “Deposits from Banks - Funding in the open market”. Securities purchased under agreements to resell are recorded as loans and advances to other banks or customers, as appropriate. The difference between sale and repurchase price is treated as interest in the consolidated statement of income and recognized over the life of the agreements using the effective interest rate method.   BradescoF - 16


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
  e)Financial assets and liabilities  i.Financial assets  The Organization classifies financial assets in the following categories: measured at fair value through profit or loss, available for sale, held to maturity and loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of financial assets upon initial recognition.  •Measured at fair value through profit or loss  Financial assets are initially recorded at fair value with subsequent changes to the fair value  recognized immediately in profit or loss. These assets can be subdivided into two distinct classifications at the time of initial recognition: financial assets designatedat fair value through profit or loss and financial assets held for trading.  -Financial assets designated at fair value through profit or loss  The Organization does not have any financial assets designated at fair value through profit or loss.  -Financial assets held for trading  A financial asset is classified as held for trading if it is acquired by Management for the purpose of selling it in the short term or if it is part of a portfolio of identified financial instruments that are managed together for short-term profit or taking a position. Derivative financial instruments are also categorized as held for trading, unless they are designated as hedging instruments.  Financial assets held for trading are initially recognized in the consolidated statement of financial position at fair value and the transaction costs are recorded directly in the consolidated statement of income.  Realized and unrealized gains and losses arising from changes in fair value are recognized directly in the consolidated statement of income under “Net gains and losses from financial instruments held for trading.” Interest income and expense and foreign exchange differences on financial assets held for trading are included in “Net interest income”.  ·Financial assets available for sale  Financial assets available-for-sale are non-derivative financial assets that are intended to be held for an indefinite period of time, which may be sold in response to needs for liquidity or changes in interest rates, exchange rates or equity prices or that are not classified as loans and receivables, held-to-maturity investments or financial assets at fair value through profit or loss.  Financial assets available-for-sale are initially recognized at fair value, which is the cash consideration including any transaction costs and measured, subsequently, at fair value with gains and losses being recognized in the consolidated statement of comprehensive income, except for impairment losses and foreign exchange gains and losses, until the financial asset is derecognized. If a financial asset available-for-sale is determined to be impaired, the cumulative gain or loss previously recognized in other comprehensive income is recognized in the consolidated statement of income.    F - 17IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
  Interest is recognized in the consolidated statement of income using the effective interest method. Dividends on available-for-sale equity instruments are recognized in the consolidated statement of income in ‘Dividend income’ when the Organization’s right to receive payment is established. Exchange gains and losses on investments in debt securities classified as available for sale are recognized in the consolidated statement of income, except when they relate to foreign subsidiaries with a functional currency different from that of the Organization.  ·Investments held to maturity  Investments held to maturity are non-derivative financial assets with fixed or determinable payments and fixed term maturities, which the Organization has the positive intention and ability to hold to maturity, and are not designated to be at fair value through profit or loss or available for sale and do not meet the definition of loans and receivables.  Investments held to maturity are recognized initially at fair value including direct and incremental costs, and are subsequently recorded at amortized cost, using the effective interest rate method.  Interest on investments held-to-maturity is included in the consolidated statement of income and reported as ‘Interest and similar income’. In the case of impairment, the impairment loss is reported as a deduction from the carrying value of the investment and is recognized in the consolidated statement of income.  ·Loans and receivables  Loans and receivables are non-derivative financial assets having fixed or determinable payments that are not quoted in an active market and that the Organization has no intention of selling, neither immediately or in the short term.  Loans and receivables are initially measured at their fair value plus direct transaction costs and are subsequently valued at amortized cost using the effective interest rate method.  Loans and receivables are reported in the consolidated statement of financial position as loans and advances to banks or customers. Interest on loans is included in the consolidated statement of income and is reported as “Interest and similar income”. In the case of impairment, the impairment loss is reported as a deduction in carrying amount of loans and advances, and is recognized in the consolidated statement of income as impairment of loans and advances.  ii.Financial liabilities  The Organization classifies its financial liabilities under the following categories: measured at fair value through profit and loss and amortized cost.  ·Measured at fair value through profit and loss  These financial liabilities are recorded and measured at fair value and the respective changes in fair value are immediately recognized in the income statement. These liabilities can be subdivided into two different classifications upon initial recognition: financial liabilities designated at fair value through profit and loss and financial liabilities held for trading.   BradescoF - 18


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
  -Financial liabilities designated at fair value through profit and loss  The Organization does not have any financial liability classified at fair value through profit and loss in income.  -Financial liabilities held for trading  Financial liabilities for trading recognized by the Organization correspond to derivative financial instruments unless they are designated for hedging purposes.  Liabilities held for trading are initially recognized at fair value in the consolidated statement of financial position and their costs of transactions are recorded directly in the consolidated statement of income for the period. All realized and unrealized changes in fair value are recognized in the consolidated statement of income in “Net gains and losses from financial instruments held for trading.” Interest expense and foreign exchange differences on financial liabilities held for trading are included in “net interest income”.  ·Financial liabilities at amortized cost  These are financial liabilities that are not classified to be at fair value through profit or loss, initially, are recognized at fair value and, subsequently, are measured at amortized cost. They include deposits from banks and customers, securities issued and subordinated debt securities, among others.  iii.Derivative financial instruments and hedge transactions  Derivatives are initially recognized at fair value on the date the derivatives’ contract is signed and are, subsequently, re-measured at their fair values with the changes recognized in the income statement under “Net gains and losses from financial instruments for trading.” The calculation of fair value considers the credit risk of the counterparties.  Fair values are obtained from quoted market prices in active markets (for example, for exchange-traded options), including recent market transactions, and valuation techniques (for example for swaps and foreign currency transactions), such as discounted cash-flow models and options-pricing models, as appropriate.  The Organization has not designated any transactions as hedges for accounting purposes.  Certain derivatives embedded in other financial instruments are treated as separate derivatives when their economic characteristics and risks are not closely related to those of the host contract and the host contract is not recorded at fair value through profit or loss. These embedded derivatives are separately accounted for at fair value, with changes in fair value recognized in the consolidated statement of income.  iv.Recognition  Initially, the Organization recognizes loans and advances, deposits, securities issued and subordinated debts at the date on which they are originated. All other financial assets and liabilities are recorded on the trade date, in accordance with the contractual provisions of the instrument.   F - 19IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
  v.Derecognition  Financial assets are derecognized when the contractual rights to receive the cash flows from these assets have ceased to exist or the assets have been transferred and, substantially, all the risks and rewards of ownership of the assets are also transferred. Financial liabilities are derecognized when they have been discharged paid, redeemed, cancelled or expired.  vi.Offsetting financial instruments  Financial assets and liabilities are offset and the net amount reported in the consolidated statement of financial position when, the Organization has the intention and the legal enforceable right to offset the recognized amounts on a net basis or realize the asset and settle the liability simultaneously.  vii.Determination of fair value  The determination of the fair values for 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 include the techniques to calculate the net current value, discounted cash flow method, comparison with other instruments similar to those for which there are observable market prices and valuation models. The Organization uses reputable valuation models to determine the fair value of financial instruments that consider observable market data.  For more complex instruments, the Organization uses proprietary models that are usually developed based on standard valuation models. Some of the information included in the models may not be observable in the market and are 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.  viii.Impairment of financial assets  (a)Financial assets recognized as amortized cost  On each reporting date, the Organization assesses whether there is objective evidence that financial assets are impaired. The financial assets are impaired and impairment losses are recognized only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.  The criteria that the Organization uses to determine that there is objective evidence of an impairment include:  BradescoF - 20


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
  ·significant financial difficulty of the issuer or obligor; ·a breach of contract, such as a default or delinquency in interest or principal payments; ·economic or legal reasons relating to the borrower’s financial difficulty, granting to the borrower a concession that the lender would not otherwise consider; ·it becomes probable that the borrower will enter bankruptcy or other financial reorganization; ·the disappearance of an active market for that financial asset because of financial difficulties; or ·observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the portfolio, including:  (i)adverse changes in the payment status of borrowers; and (ii)national or local economic conditions that correlate with defaults in the assets.  The Organization takes into consideration evidence of impairment loss for both individually significant assets and groups of assets. All significant financial assets are evaluated to detect specific losses.  All significant assets that an assessment indicates have not been specifically impaired are valued as a group to detect any impairment loss that may have occurred, although not yet identified. The financial assets which are not individually significant are valued as a group to detect any collective impairment loss (recorded at the amortized cost) based on similar risk features. Assets that are individually assessed for impairment and for which an impairment loss is recognized are not included in a collective assessment of impairment.  The amount of loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced through provisions and the amount of the loss is recognized in the consolidated statement of income.  The calculation of the present value of the estimated future cash flows of a collateralized financial asset reflects the cash flows that may result from foreclosure less costs for obtaining and selling the collateral.  For the purposes of a collective evaluation of impairment, financial assets are grouped on the basis of similar credit-risk characteristics (that is, on the basis of the Organization’s rating process that considers asset type, market segment, geographical location, collateral type, past-due status and other related factors). Those characteristics are relevant to the estimation of future cash flows for groups of such assets by being indicative of the debtors’ ability to pay all amounts due according to the contractual terms of the assets being evaluated.  Future cash flows in a group of financial assets that are collectively evaluated for impairment are estimated on the basis of the contractual cash flows of the assets in the group and historical loss experience for assets with credit-risk characteristics similar to those in the group. Historical loss experience is adjusted on the basis of current observable data to reflect the effects of current conditions that did not affect the period on which the historical loss experience is based and to remove the effects of conditions in the historical period that do not currently exist.


F - 21IFRS – International Financial Reporting Standards – 2013

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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
  The methodology and assumptions used for estimating future cash flows are reviewed regularly to mitigate any differences between loss estimates and actual loss experience.  Following impairment, interest income is recognized using the effective rate of interest which was used to discount the future cash flows for the purpose of measuring the impairment loss.  When a loan is uncollectible, it is written off against the related allowance for loan impairment. Such loans are written off after all the necessary collection procedures have been completed and the amount of the loss has been determined. Subsequent recoveries of amounts previously written off are credited to the consolidated statement of income.  (b)Financial assets classified as available for sale  The Organization assesses, at each reporting date, whether there is objective evidence that a financial asset or group of financial assets is impaired. For debt securities the Organization adopts the assessment described in item (a) above. If, in a subsequent period, the fair value increases, for debt instrument classified as available for sale, and the increase can be objectively related to an event occurring after the impairment loss was recognized in profit or loss, the impairment loss is reversed through the consolidated statement of income.  In the case of equity investments classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is objective evidence of impairment resulting in the recognition of an impairment loss. If any such evidence exists for available-for- sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognized in profit or loss – is removed from equity and recognized in the income statement. Impairment losses recognized in the consolidated statement of income on equity instruments are not reversed through the consolidated statement of income. Increases in the fair value of equity instruments after impairment are directly recognized in equity – other comprehensive income.  f)Non-current assets held for sale  Under certain circumstances, property is repossessed following foreclosure of loans that are in default. Repossessed properties are measured at the lower of their carrying amount and fair value less the costs to sell and are included within “Non-current assets held for sale.”  g)Reinsurance contracts  Reinsurance contracts are made in the normal course of operations with the purpose of limiting potential losses, by spreading risks. Liabilities related to reinsurance operations are presented gross of their respective recoveries, which are booked in the Asset since the existing contract does not preclude the Organization’s obligations with the insured parties.  As required by the regulators, reinsurance companies with headquarters abroad must have a minimum rating from a risk classification agency, to reinsure risks which are for the most part transferred to local reinsurers. Therefore, management believes that the risks of impairment are reduced. If there are indications that the amounts recorded will not be realized by its carrying amount, these assets will be adjusted for impairment.  BradescoF - 22


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
  h)Deferred acquisition costs  These comprise deferred acquisition costs including commissions and brokers’ fees related to the sale of insurance policies. Deferred commissions are recognized in the consolidated statement of income over the life of the respective policies and pension plans contracts and expenses with insurance agency operations  relating to the sale of health plans appropriated in the twenty-four month period.  The deferred acquisition costs relating to the exclusivity contract with retailers for the sale of extended warranty insurance is allocated to income over the term of the respective agreement, in proportion to earned premium.  i)Property and equipment  i.Recognition and valuation  Property and equipment are measured at cost less accumulated depreciation and accumulated impairment losses, if any.  The cost includes expenses directly attributable to the acquisition of an asset.  The cost of assets internally produced includes the cost of materials and direct labor, as well as any other costs that can be directly allocated and that are necessary for them to function. Software acquired for the operation of the related equipment is recorded as part of the equipment.  When different parts of an item have different useful lives, and separately control is practicable, they are recorded as separate items (main components) comprising the property and equipment.  Useful lives and residual values are reassessed at each reporting date and adjusted, if appropriate.  Gains and losses from the sale ofproperty and equipmentare determined by comparing proceeds received with the carrying amount of the asset and are recorded in the consolidated income statement under the heading “Other operating income/ (expenses).”  ii.Subsequent costs  Expenditure on maintenance and repairs of a property and equipment item is recognized as an asset when it is probable that future economic benefits associated with the items will flow to the Organization for more than one year and the cost can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance costs are charged to the consolidated statement of income during the reporting period in which they are incurred.  iii.Depreciation  Depreciation is recognized in the consolidated statement of income using the straight-line basis and taking into consideration the estimated useful economic life of the assets. The depreciable amount is the gross-carrying amount, less the estimated residual value at the end of the useful economic life. Land is not depreciated. Useful lives and residual values are reassessed at each reporting date and adjusted, if appropriate.    F - 23IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
  j)Intangible assets  Intangible assets comprise separately identifiable non-monetary items, without physical substance due to business combinations, computer software licenses and other intangible assets. Intangible assets are recognized at cost. The cost of an intangible asset, acquired in a business combination, is its fair value at the date of acquisition. Intangible assets with a definite useful life are amortized over their estimated useful economic life, not exceeding 20 years. Intangible assets with an indefinite useful life are not amortized.  Generally, the identified intangible assets of the Organization have a definite useful life. At each reporting date, intangible assets are reviewed for indications of impairment or changes in estimated future economic benefits. If such indications exist, the intangible assets are analyzed to assess whether their carrying amount is fully recoverable. An impairment loss is recognized if the carrying amount exceeds the recoverable amount.  i.Goodwill  Goodwill (or bargain purchase gain) arises on the acquisition of subsidiaries and joint ventures.  Goodwill reflects the excess of the cost of acquisition in relation to the Organization’s share of the fair value of net identifiable assets or liabilities of an acquired subsidiary or joint venture on the date of acquisition. Goodwill originated from the acquisition of subsidiaries is recognized as “Intangible Assets”, and the goodwill from acquisition of associated companies is included in the carrying amount of the investment. See Note 2(a)(ii). When the difference between the cost of acquisition and the Organization’s share of the fair value of net identifiable assets or liabilities is negative (bargain purchase gain), it is immediately recognized in the consolidated statement of income as a gain on the acquisition date.  Goodwill is allocated to Cash-Generating Units (CGUs) or groups of cash-generating units for the purpose of impairment testing. Allocation is made to the CGUs or groups of CGUs expected to benefit from the business combination from which the goodwill originated.  Goodwill is tested annually, as well as whenever a trigger event has been observed, for impairment by comparing the recoverable amount of a CGU with the carrying value of its net assets, and is carried at cost less impairment losses. Impairment losses on goodwill are not reversed. Gains and losses realized in the sale of an entity include consideration of the carrying amount of goodwill relating to the entity sold.  ii.Software  Software acquired by the Organization is recorded at cost, less accumulated amortization and accumulated impairment losses, if any.  Internal software-development expenses are recognized as assets when the Organization can demonstrate its intention and ability to complete the development, and use the software in order to generate future economic benefits. The capitalized costs of internally developed software include all costs directly attributable to development and are amortized over their useful lives. Internally developed software is recorded at its capitalized cost less amortization and impairment losses.  BradescoF - 24


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
  Subsequent software expenses are capitalized only when they increase the future economic benefits incorporated in the specific asset to which it relates. All other expenses are recorded as expenses as incurred.  Amortization is recognized in the consolidated statement of income using the straight-line method during the estimated useful life of the software, beginning on the date that it becomes available for use. The estimated useful life of software is from two to five years. Useful lives and residual values are reviewed at each reporting date and adjusted, if appropriate.  iii.Other intangible assets  Other intangible assets refer basically to the customer portfolio and acquisition of banking service rights. They are recorded at cost less amortization and impairment losses, if any, and are amortized over the period during which the asset is expected to contribute, directly or indirectly, to the future cash flow.  These intangible assets are reviewed annually, or whenever events or changes in circumstances occur which could indicate that the carrying amount of the assets cannot be recovered. If necessary, the write-off or impairment is immediately recognized in the consolidated statement of income.  k)Leasing  The Organization has both operating and finance leases and operates as a lessee and a lessor.  Leases in which a significant part for the risks and benefits of the asset is borne by the lessor are classified as operating leases. For leases in which a significant part of the risks and benefits of the asset is borne by the lessee, the leases are classified as financial leasing.  Leases in terms of which the Organization assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition the leased asset as measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.  As a lessee, the Organization classifies its leasing operations mainly as operating leases, and the monthly payments are recognized in the financial statements using the straight-line method over the term of the lease. Lease incentives received are recognized as an integral part of the total lease expense, over the term of the lease.  When an operating lease is terminated before the contract expires, any payment that may be made to the lessor in the form of a penalty is recognized as an expense for the period.  As a lessor, the Organization has substantial finance lease contracts, both in value and total number of contracts.  Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.   F -25IFRS – International Financial Reporting Standards – 2013


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Contingent lease payments are accounted for by revising the minimum lease payments over  the remaining term of the lease when the lease adjustment is confirmed.  i.Finance Leases  Finance leasing assets in the consolidated statement of financial position are initially recognized in the “loans and advances” account at an amount equal to the net investment in the lease.  The initial direct costs generally incurred by the Organization are included in the initial measurement of the leasing receivable, decreasing the amount of income recognized over the lease term. These initial costs include amounts for commissions, legal fees and internal costs. The costs incurred in relation to the negotiation, structuring and sales of leases are excluded from the definition of initial direct costs and therefore are recognized as expenses when the profit from the sale of the lease is recognized, which is recognized at the beginning of the lease term.  Recognition of financial revenue reflects the constant rate of return on the net investment made by the Organization.  The estimated non-guaranteed residual values used in the calculation of the gross investment of the lessor in the lease are reviewed at least annually. If there is a decrease in the estimated non-guaranteed residual value, the income allocated over the period of the lease is also reviewed periodically and any decrease in relation to the accumulated values is immediately recognized in the consolidated statement of income.  ii.Operating leases  The assetsleased under operating leases, where the Organization acts as lessor, are recognized in the consolidated statement of financial position as property and equipment according to the nature of the item leased.  The initial direct costs incurred by the Organization are added to the carrying amount of the leased asset and are recognized as expenses over the period of the lease and on the same basis as the income recognition.  Revenue from leasing is recognized using the straight-line method over the term of the lease, even if the payments are not made on the same basis. Costs, including depreciation, incurred to produce the income are recognized as expenses.  The depreciation policy for leased assets is the same as the depreciation policy used by the Organization for similar assets.  l)Impairment of non-financial assets (except for deferred tax assets)  Assets that have an indefinite useful life such as goodwill are not subject to amortization and are tested annually at the same date to verify the existence of impairment.  Assets, which are subject to amortization, are reviewed to verify impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized based on the excess of the assets or its cash generating unit (CGU) carrying amount over its estimated recoverable amount. The recoverable amount of an asset or CGU is the greater of an asset’s fair value, less costs to sell, and its value in use.    BradescoF - 26


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
  For the purpose of impairment testing, the assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs. Subject to an operating segment ceiling test, for the purpose of goodwill impairment testing, CGUs to which goodwill has been allocated are aggregated so that the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes. Goodwill acquired in a business combination is allocated to groups of CGU’s that are expected to benefit from the synergies of the combination.  The recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. When assessing the value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects the current market conditions of the time value of money and the specific risks of the asset or CGU.  The Organization’s corporate assets do not generate separate cash inflows and are utilized by more than one CGU. Corporate assets are allocated to CGU’s on a reasonable and consistent basis and tested for impairment as part of the testing of the CGU to which the corporate asset is allocated.  Impairment losses are recognized in profit or loss. Impairment losses recognized in respect of CGU’s are allocated first to reduce the carrying amount of any goodwill allocated to the CGU (group of CGU’s) and then to reduce the carrying amount of the other assets in the CGU (group of CGU’s) on a pro rata basis.  An impairment of goodwill cannot be reversed. With regard to other assets, an impairment loss recognized in previous periods is reassessed at each reporting date for any indications that the impairment has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is only reversed to the extent that the carrying amount of the asset does not exceed the carrying amount that would have been determined, net of depreciation and amortization, if no impairment had been recognized.  m)Deposits, debt securities issued and subordinated liabilities  Deposits, debt securities issued and subordinated liabilities are the main sources of funding used by the Organization to finance its operations.  They are initially recorded at fair value plus transaction costs and are subsequently measured at amortized cost using the effective interest method.  n)Provisions, contingent liabilities and contingent assets  A provision is recognized when, as a result of a past event, the Organization has a present legal or constructive obligation that can be reliably estimated and it is probable that an outflow of economic benefits will be required to settle an obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.  The provisions were established by Management taking into account the opinion of their legal advisors, nature of the actions, similarity with previous suits, complexity and positioning of the Courts, whenever there is a probable loss.   F - 27IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
  Contingent liabilities are disclosed if there is a possible future obligation resulting from past events or if there is a present obligation resulting from a past event.  Contingent assets are recorded only when there are real guarantees or favorable and non-appealable court decisions, and when the gain is considered to be virtually certain. The contingent assets for which the expectation of the outcome is favorable are only disclosed in the financial statements, when material.  o)Classification of insurance contracts and investments  An insurance contract is a contract in which the Organization accepts a significant insurance risk from the policy holder by agreeing to compensate the policyholder if a specific uncertain future event adversely affects the policy holder. Reinsurance contracts are also treated from the perspective of insurance contracts by transferring significant insurance risk. Contracts classified as investment contracts are related to our capitalization bonds, which do not transfer significant insurance risk and are accounted for as financial instruments in accordance with IAS 39.  p)Insurance and pension plan technical provisions  i.Property damage  The Provision for Unearned Premiums (PPNG) is calculated on a pro-rata die basis on the net assignment of coinsurance premiums, taking into account reinsurance operations in and corresponding to the unexpired risk period of the insurance contracts with the deductions in respect of initial contracting costs. The assignment of the corresponding provision to the estimate of Current Risks Not Yet Issued is constituted in the PPNG-RVNE.  The Case Reserves for Loss (PSL) is established based on the estimated claims paid, taking into account all administrative and judicial claims on the reporting date, net of the expected portion of salvage and reimbursement, including legal fees.  Constitution of Provision for incurred but not reported losses (IBNR) is based on incurred but not paid losses (IBNP) deducting the PSL balance on the calculation base date. To calculate IBNP, the final estimate of incurred and not paid losses is calculated on the basis of a half-yearly run-off triangle that considers the historic development of losses paid over the last 14 semesters to establish a future projection per occurrence period,and also considers the estimate for claims incurred but not enough reported (IBNER), reflecting the expected change of the provision until the payment to the policyholders in the amount accounted for on the balance sheet.  The IBNR provision related to retroceding operations was constituted on the basis of amounts informed by IRB - Brasil Resseguros S.A.  The complementary reserve for coverage (PCC) is recorded when insufficiency in technical provisions are found, as determined in the Liabilities Adequacy Test value in accordance with the determinations specified on the regulations in force. For the current period, there was no identified need for additional provision to those already established.  The Provision of Related Expenses (PDR) is established to cover the expected amounts regarding expenses related to losses.   BradescoF -28


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
 Other technical provisions correspond to the Provision for Administrative Expenses (PDA) derived from Mandatory Insurance For Personal Injury Caused by Motor Vehicles (DPVAT) insurance operations.  ii.Individual life insurance, excluding the insurance of variable contribution with survival coverage (VGBL)  The Provision for Unearned Premiums (PPNG) is calculated on a pro-rata die basis on the net assignment of coinsurance premiums, taking into account reinsurance operations in and corresponding to the unexpired risk period of the insurance contracts and considers estimates of Current Risks Not Yet Issued (RVNE).  The Mathematical Provision for Benefits to be Granted (PMBaC) is calculated by the difference between the current value of the future benefits and the current value of the future contributions, corresponding to the obligations.  The Provision for Redemptions and other Unsettled Values (PVR) comprises the values relating to the unsettled redemptions, to the premium returns and transfers of the insurance, requested by the policyholder, not yet concluded.  Constitution of Provision for incurred but not reported losses (IBNR) is based on incurred and not paid losses (IBNP) deducting the PSL balance on the calculation date base. To calculate IBNP, the final estimate of incurred and not paid losses is calculated on the basis of a half-yearly run-off triangle that considers the historic development of losses paid over the last 14 semesters to establish a future projection per occurrence period.  The Case Reserves for Loss (PSL) considers all of the reported claims received until the reporting date and judicial fees by decree, among others. The PSL is adjusted for inflation and includes all of the claims under judicial review.  The Technical Surplus Provision (PET) corresponds to the difference between the value of the expected amount and the actual amount of events that occurred during the period for life insurance of individuals with rights to participate in technical surplus.  iii.Health  The Provision for Claims Incurred but Not Reported (IBNR) is actuarially calculated to quantify the amount of claims incurred but not paid to policyholders / beneficiaries (IBNP). The methodology is based on the projection of future claims payments related to occurrences  that to place prior to the date of calculation occurrences based on historical behavior observed in the last 12 months. By deducting from the total projected amount of Case Reserves for Loss (PSL) recorded, one obtains the IBNR provision.  The Case Reserves for Loss (PSL) was measured, as the base of the reported claims received until the reporting date including judicial claims and related costs and for inflation adjustments.  For the portfolio of individual health plans, with respect to five-years coverage period for the policy holder’s dependents in case of his/her death, the Mathematic Provision of Benefits to be Granted (PMBaC) calculated using a methodology of which takes into consideration, a discount rate of 3.5% per year used until November 2013 and 4.9% per year thereafter, the expected continuance of insured persons in the plan until their withdrawal due to death, and thereafter, the costs related to the continuance of dependents in the plan for five years without the corresponding payment of premiums Themathematicprovision for benefits granted (PMBC) from the individual health plan portfolio is made up of liabilities resulting from contractual remission clauses of health assistance coverage payments, based on the present value of future estimated expenses with health assistance costs of the dependents of deceased policyholders.   F -29IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
  The Provision for Unearned Premiums (PPNG) is calculated of a daily pro-rated basis,based on the health insurance premiums, and is comprised of the portion corresponding to periods of unexpired risks of insurance contracts, the term of which has already started.  The other provisions are constituted, for the individual health portfolio, to cover the resulting differences between the expected present value of indemnities and related future costs and the expected present value of future premiumsconsidering a discount rate of 3.5% per year used until November 2013 and 4.9% per year thereafter.  iv.Operations with DPVAT Insurance  DPVAT insurance operations, including their respective technical provisions, are recorded on the basis of information received from the Seguradora Líder dos Consórcios do Seguro DPVAT S.A.  v.Open pension plan and life insurance of variable contribution with survival coverage (VGBL)  The Provision for Unearned Premiums (PPNG) is calculated on a pro-rata die basis on the net assignment of coinsurance premiums, taking into account reinsurance operations in and corresponding to the unexpired risk period of the insurance contracts and considers estimates of Current Risks Not Yet Issued (RVNE).  The Mathematic Provisions for Benefits to be Granted (PMBaC) refer to participants whose benefits have not started yet. In pension plans with characteristics of defined benefit plans, provisions represent the difference between the current value of future benefits and the current value of future contributions corresponding to obligations assumed in the form of retirement, disability, pension and savings plans. The Provision is calculated according to methodologies and assumptions established in the actuarial technical notes.  Mathematical Provisions for Benefits to be Granted (PMBaC) related to long term life insurance and pension plans (VGBL and PGBL), in addition to the defined contribution plans, represent the total amount of contributions made by participants, net of charges and other contractual fees, plus financial yield generated through the investment of resources in investments funds.  The Provision for Redemptions and other Unsettled Values (PVR) is made up of the values referring to the unsettled redemptions, to the premium returns and to the portability requested and still not transferred to the receiving entity.  The Mathematical Provision for Benefits Granted (PMBC) refers to participants that receive benefits and corresponds to the current value of future obligations for the continued payment of benefits.  The Complementary Reserve for Coverage (PCC) refers to the amount necessary to complement technical reserves, as calculated through the Liability Adequacy Test (LAT), which is prepared using statistical and actuarial methods based on realistic considerations, taking into account the biometric table BR-EMS of both genders, improvement of G Scale and forward interest rate structures (ETTJ) free from risk. The improvement rate is calculated from automatic updates of the biometric table, considering the expected increase in future life expectancy.   BradescoF- 30


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
  The related expenses reserve (PDR) is recorded to cover estimated benefit and claims expenses.  The Provision for Financial Surplus (PEF) corresponds to an installment of financial yield obtained through the application of provisions that exceed the minimum yield of pension plans with a clause for the participation in financial surplus.  The Provision for Technical Surplus (PET) corresponds to the difference between the value expected and the value observed of the events incurred in the period for the pension plans with a participation clause in the technical surplus.  The Provision for Events Incurred but Not Reported (IBNR) is established based on losses that occurred but were not reported, based on run-off triangles, which considers the historical development of losses over the past 20 quarters to establish a future projection per period of occurrence.  The Case Reserves for Loss (PSL) considers all of the reported claims received until the reporting date and judicial fees by decree, among others. The PSL is adjusted for inflation and includes all of the known claims under judicial review.  Financial charges credited to technical provisions, as well as the constitution and/or reversal of the provision of financial excess, are classified as financial expenses and are shown in the group “Financial income”.  vi.Liability Adequacy Test (LAT)  The Organization conducted the liability adequacy test for all the contracts that meet the definition of an insurance contract according to IFRS 4 and which are in force on the date of execution of the test. This test is conducted every six months and the liability of insurance contracts, gross of reinsurance, is considered to be the sum of the carrying amount, deducting the deferred acquisition costs and the related intangibles, compared to the expected cash flows arising from the enforcement of contracts and certificates traded value.  The test considerers the projection of claims and benefits that have occurred and are to occur, administrative expenses, allocable expenses related to the claims, intrinsic options and financial surpluses, and other income and expense directly related to the insurance contracts.  To calculate the present value of projected cash flows to value theOrganizationused the free exchange term risk.  The test was segmented into life and property insurance, and were not included in the tests of suitability of liabilities related to DPVAT insurance:   F - 31IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
  •Property Coverage  The expected present value of cash flows relating to claims incurred, as reflected by the expectation of costs allocable to claims and salvage recoveries, was compared the technical provisions for claims incurred - PSL and IBNR.  The expected present value of cash flow relating to claims to be incurred regarding the policies in force, plus any administrative expenses and other expenses and income relating to products in run-off, was compared to the sum of the PPNG and PPNG-RVNE.  •Life and pension products  For private pension products, Individual Life Insurance, and Life Insurance with Coverage for Survival, testing was conducted per risk type, which includes (among others): guarantee of inflation, mortality table, death, disability and other risks.  The cash flows related to future premiums not recorded in the PPNG were  included in income only when the result of this value was negative.  The result of the liability adequace test did not result  in any incremental  accrual of insurance liabilities.  q)Financial guarantees  Financial guarantees are contracts that require the Organization to make specific payments under the guarantee for a loss incurred when a specific debtor fails to make a payment when due in accordance with the terms of the debt instrument.  Financial guarantees are initially recognized in the financial statements at fair value on the date the guarantee was given. Subsequent to initial recognition, the Organization’s obligations under such guarantees are measured as the higher out of the initial amount, less the accumulated amortization, and the best estimate of the amount required to settle the guarantee if management deems such expenditure as probable. These estimates are determined based on experience of similar transactions and history of past losses, supplemented by the judgment of the Management. The fee income earned is recognized on a straight-line basis over the life of the guarantee. Any increase in the liability relating to guarantees is reported in the consolidated statement of income within “Other operating income/ (expenses)”.  r)Employee benefits  i.Defined contribution plan  Bradesco and its subsidiaries sponsor pension plans for their employees and Management of the “Free Benefit Generator Plan (PGBL)” type. The PGBL is a pension plan with defined contributions which allows financial resources to be accumulated throughout the professional career of the participants based on contributions paid by them and the sponsoring company, the funds of which are invested in an Exclusive Mutual Fund (FIE). The actuarial obligations of PGBL are fully covered by the corresponding FIE.  The PGBL is managed by the subsidiaries Bradesco Vida e Previdência S.A..  Contributions from employees and management are equal to 4% of their salaries except for those participants who, in 2001, opted to migrate from a defined benefit plan to the PGBL, and whose contributions were maintained at the same level as the defined benefit plan at the time it was transferred, always in compliance with the minimum of 4% of the salary.   BradescoF- 32


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
  Contribution obligations for defined contribution pension plans are recognized as expenses in profit or loss as incurred. Once the contributions are paid, Bradesco, in the capacity of employer, has no obligation to make any additional payment.  In addition to the PGBL described above, the participants who migrated from the defined benefit plan are assured a proportional deferred benefit. For retired and pensioned employees, regardless of whether they are participants in the migrated defined benefit plan or not, the present value of the actuarial obligations of the plan is invested in FIEs.  ii.Defined benefit plans  The Organization’s net obligation, in relation to the defined benefit plans, refers exclusively to institutions acquired and the plans are calculated separately for each plan, estimating the future benefit that the employees have earned in return for their service during the current and prior periods. The benefit is discounted to determine its present value and any unrecognized past service costs and fair value of any plan assets are deducted. The discount rate is the yield at the reporting date on “AA” credit rated bonds, which have maturity dates approximating the terms of the Organization’s obligations. The calculation is made by an actuary, using the projected unit credit method.  To determine the net amount in the consolidated statement of financial position, any actuarial gains and losses that have not been recognized because of application of the “corridor” approach described below are added or deducted, as appropriate an unrecognized past service costs are deducted.  The Organization recognizes a portion of actuarial gains and losses that arise in calculating the Organization’s obligation in respect of a plan in profit or loss over the expected average remaining working lives of the employees participating in the plan. To the extent that any unrecognized and cumulative actuarial gain or loss exceeds 10% of the greater of the present value of the defined benefit obligation or the fair value of the plan’s assets, the amount is recognized in theconsolidated statement  ofincome over the estimated remaining time of service of the participating employees. Otherwise the actuarial gain or loss is not recognized.  When the benefits of a plan are improved, the portion of increased benefit related to past service by employee is recognized in the income using the straight-line method over the average period until the benefits become vested. To the extent that the benefits vest, the expense is recognized in the consolidated statement of income.  iii.Termination benefits  Severance benefits are required to be paid when the employment relationship is terminated by the Organization before the employee’s normal date of retirement or whenever the employee accepts voluntary redundancy in return for such benefits.  Benefits which are payable twelve months or more after the statement of financial position date are discounted to their present value.   F - 33IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
  iv.Short-term benefits  Benefits such as wages, salaries, social security contributions, paid annual leave and paid sick leave, profit sharing and bonuses (if payable within twelve months of the reporting date) and non-monetary benefits such as health care, etc. are recorded as expenses in the consolidated statement of income, without any discount to present value, if the Organization has a present legal or constructive obligation to pay the amount as a result of past service provided  by the employee and the obligation can be reliably estimated.  s)Capitalization bonds  Financial liabilities and revenues from capitalization bonds are accrued at the time funds are received. Bonds are issued according to the types of payments, monthly or single payment. Each bond bears a nominal value and deposit value is adjusted for inflation using the referential rate (TR) + 0.5% interest per month, which constitutes the mathematical provision for redemptions.  Capitalization bond beneficiaries are eligible for a prize draw. At the end of a certain period that is determined at the time the capitalization bond is issued, a beneficiary may redeem the nominal value if they have not won in the draw.  These products are regulated by the insurance regulator in Brazil; however, do not meet the definition of an insurance contract in accordance with IFRS 4 and, therefore, are classified as financial liabilities in accordance with IAS 39.  The mathematical provision for Capitalization (PMC) is recorded for each active or suspended security for the period provided in the general conditions of the plan, and is calculated by percentage of quota capitalization applicable on payments being capitalized monthly by the index and interest rate defined in the plan until the maturity date.  The provision for redemptions (PR) consists of the values bonds, updated by the index of the plan until the date of actual payment of the redemption to the beneficiary.  The provision for prizes draw (PSR)are constituted to cover premiums from future raffles, and the balance thereof represents the present value of the raffles already funded and not yet realized. The calculation methodology consists of the accumulation of contributions that come from percentage of shares of raffles applicable on payments, as established in the plan, and write-offs that come from the amount equivalent to the expired risk.The percentage of lottery quotas are predefined by an actuarial technical note and are not modified during the term of the bond.  The provision for raffles payable (PSP) consists of the values ​​of the award titles from prize draws and those not yet paid, monetarily updated for the period between the effective date of the draw and liquidation.  The provision for administrative expenses (PDA) consists of costs directly attributable to the comercialization, brokerage and other expenses, and is in accordance with the methodology set forth in the actuarial technical note.  t)Interest  Interest income and expenses are recognized on an accrual basis in the consolidated statement of income using the effective interest rate method. The effective interest rate is the rate that discounts estimated future cash payments and receipts throughout the expected life of the financial asset or liability (or, when appropriate, a shorter period) to the carrying amount of the financial asset or liability. When calculating the effective rate, the Organization estimates future cash flows considering all contractual terms of the financial instrument, but not future credit losses.   BradescoF - 34


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
  The calculation of the effective interest rate includes all commissions, transaction costs, discounts or bonuses which are an integral part of such rate. Transaction costs are incremental costs directly attributable to the acquisition, issuance or disposal of a financial asset or liability.  u)Fees and commissions  Fees and commission income and expense which are part of and are directly allocable to the effective interest rate on a financial asset or liability are included in the calculation of the effective interest rate.  Other fee and commission income, including account service fees, asset management fees, credit card annual charges, and collection and consortium fees are recognized as the related services are rendered. When a loan commitment is not expected to result in the drawdown of a loan, the related commitment fees are recognized on a straight-line basis over the commitment period. Other fees and commissions expense relate mainly to transaction as the services are received.  v)Insurance income  Income and expense are recognized on an accrual basis.  Insurance and coinsurance premiums net of premiums transferred to coinsurance and reinsurance and related commissions, are recognized as income upon issuance of the respective policies / certificates / endorsements and invoices, or at the beginning period of the risk for cases in which the risk begins before issue date, and accounted for on a straight-line basis, over the duration of the policies, through recognizing and reversing the provision for unearned premiums and deferred acquisition costs (deferred acquisition costs).  The health insurance premiums are recorded at the start of the risk period, net of the portion of premiums corresponding to the period of unexpired risk.  Income from premiums and the acquisition costs related to risks already assumed whose respective policies have not yet been issued are recognized in income at the start of the risk coverage on an estimated basis.  Revenues and expenses related to DPVAT insurance operations are recorded on the basis of information received from the Seguradora Líder dos Consórcios do Seguro DPVAT S.A.  Accepted and retroceding co-insurance operations are recorded on the basis of information received from participating co-insurance and IRB - Brasil Resseguros S.A., respectively.  Deferment of assigned reinsurance premiums is made consistently with the related insurance premium and/or reinsurance agreement.  Acquisition costs are deferred and recognized in proportion to the recognition of earned premium.  The increase of insurance agency operations are deferred and recognized in income linearly, for a period of  24 months in health insurance operations and by 12 months in the other operations,following the allocation of revenues from insurance and coinsurance premiums.  Contributions to pension plans and life insurance premiums with survivor coverage are recognized in income upon their effective receipt.    F - 35IFRS – International Financial Reporting Standards – 2013


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Income from management fees are recognized as income on an accrual basis at contractually determined rates.  Revenues from “capitalization plans” are recognized in the month of issue thereof. The corresponding technical provisions are established simultaneously to the revenue recognition.  Revenues from prescribed “capitalization plans” are recognized after the prescription period, in accordance with Brazilian lawis up to 20 years for securities and lotteries not redeemed until November 11, 2003 and five years thereafter.  The expenses for placement of “capitalization plans”, classified as “acquisition costs,” are recognized as they are incurred.  Deferral of paid reinsurance premiums is made consistently with the treatment of the respective insurance premium and/or reinsurance contract.  w)Income tax and social contribution expenses  Income tax is calculated at the rate of 15%, plus a surcharge of 10% and the social contribution tax at the rate of 15% for banks, insurance companies and similar institutions and 9% for non-financial subsidiaries, after making certain adjustments required by tax legislation.  Tax expense comprises current and deferred tax. Current and deferred tax are recorded in the consolidated statement of income except when the result of a transaction is recognized directly in equity, in which case the related tax effect is also recorded in equity or in other comprehensive income.  Current tax expenses are the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Current tax payable also includes any tax liability arising from the declaration of dividends.  Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and amount used for taxation purposes. Deferred tax is not recognized for:  ·temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss; ·temporary differences related to investments in subsidiaries, associates and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future; and ·taxable temporary differences arising on the initial recognition of goodwill.  Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.  In determining the amount of current and deferred tax the Organization takes into account the impact of uncertain tax positions and whether additional taxes and interest may be due. The organization believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors, including interpretations of tax law and prior experience. This assessment relies on estimates and assumptions and may involve a series of judgments about future events. New information may become available that causes the Organization to change its judgment regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact the tax expense in the period that such a determination is made.   BradescoF - 36


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
  Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities against current tax assets, and they relate to taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.  Additional taxes that arise from the distribution of dividends by the Bank are recognized at the same time as the liability to pay the related dividend is recognized.  A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.  x)Segment reporting  Information for operating segments is consistent with the internal reports provided to the management’s decision-making process. The Organization operates mainly in the banking and insurance segments. The banking operations include operations in retail, middle market and corporate activities, leasing, international bank operations, investment banking and private banking. The Organization performs in banking segments through its own branches located throughout the country, in branches abroad and through subsidiaries, as well as by means of our shareholding interest in other companies. Additionally, we are engaged in operations in insurance, supplementary pension plans and certificated savings plans through a subsidiary, Bradesco Seguros S.A., and its subsidiaries.  y)Equity  Preferred shares have no voting rights, but have priority over ordinary shares in reimbursement of capital, in the event of liquidation, up to the amount of the capital represented by such preferred shares, and the right to receive a minimum dividend per share ten percent (10%) higher than the dividend distributed per share to the holders of ordinary shares.  i.Share issue costs  Incremental costs directly attributable to the issuance of shares are shown net of taxes in equity, thus reducing the initial share value.  ii.Earnings per share  The Organization presents basic and diluted earnings per share data. Basic earnings per share is calculated by dividing the net income attributable to shareholders of the Organization by the weighted average number of shares outstanding during the year, excluding the average number of shares purchased by the Organization and held as treasury shares. Diluted earnings per share are the same as basic earnings per share, as there are no potentially dilutive instruments.   F - 37IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
  iii.Dividends payable  Dividends on shares are recognized at the time they are approved by a Meeting of Shareholders. Dividends for the year, approved and declared after the reporting date of the financial statements, are disclosed in the notes as subsequent events.  iv.Capital transactions  Capital transactions are transactions between partners qualified as investment owners. These transactions modify the equity held by the controlling shareholder in a subsidiary. Since there is no loss of control, the difference between the amount paid and the fair value of the transaction is recognized directly in equity.  3)Risk Management  Risk-management structure  The risk management structure is made up of committees, which assist the Board of Directors and the Board of Executive Officers in their strategic decision-making process.  The Organization has a committee known as the Integrated Risk and Capital Allocation Management Committee, whose duty is to advise the Board of Directors in performing its duties in risk management,  capital and control.  This committee is assisted by the Capital Management Executive Committee and the Executive Committees for the Management of Risks relating to a) Credit, b) Market and Liquidity, c) Operational, d) Bradesco’s Insurance Group and e) Basel II Implementation, in addition to Executive Committees in the business areas, which, among other duties, suggest exposure limits for their respective risks and prepare the mitigation plans to be submitted to the Integrated Risk and Capital Allocation Management Committee and the Board of Directors.  It is worth highlighting the Integrated Risk Control Department (DCIR), responsible for implementing the Organization’s risk control and determining its activities’ capital requirements in an independent, consistent, transparent and integrated manner. It is also responsible for complying with the Bacen rules for risk management activities.  3.1.Credit risk  Credit risk refers to the possibility of losses associated with the borrower’s or counterparty’s failure to comply with their contractual liabilities under the original terms. For risk management reporting purposes, the Organization considers and consolidates all elements of credit risk exposure, such as deterioration of loans as reflected in an increase in the borrower’s risk, the reduction in gains or remunerations, as well as benefits granted in renegotiations, recovery costs and other amounts related to the counterparty’s noncompliance with the financial obligations.  Credit risk management in the Organization is a continuous and evolving process of mapping, development, assessment and diagnosis through the use of models, instruments and procedures that require a high degree of discipline and control during the analysis of operations in order to preserve the integrity and autonomy of the processes.  The Organization controls the exposure to credit risk which comprises mainly credit operations, securities and derivatives. There is also the credit risk in financial obligations relating to commitments on loan or financial guarantees.  BradescoF - 38


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
  With the objective of not compromising the quality of the portfolio, all aspects inherent to credit concession, concentration, guarantee requirements and terms, among others, are observed.  The Organization continuously maps all the activities that could possibly generate exposure to credit risk, classifying them by their probability and magnitude, identifying their managers, as well as their measurement and mitigation plans.  Counterparty’s Credit Risk  The counterparty credit risk to which the Organization is exposed includes the possibility of losses due to the non-compliance by counterparties with the obligations relating to the settlement of operations involving financial asset trading, including the settlement of derivative financial instruments. Counterparty credit risk also includes the risk related to a downgrade in the counterparty’s credit standing.  The Organization maintains control over the net position (that is, the difference between purchase and sale agreements) and potential future exposures of operations where there is counterparty risk. Each counterparty’s exposure to risk is treated in the same way and is part of general credit limits granted to the Organization’s customers. Usually, guarantees associated with this type of operation include margin deposits, which are made by the counterparty with the Organization or with other trustees, whose counterparty’s risks are also appropriately evaluated.  Credit Concession  Under the responsibility of the Credit Department, lending procedures are based on the Organization's credit policy emphasizing security, quality and liquidity for the application of credit assets.The process is guided by the Organization’s risk-management governance and complies with the rules of the Central Bank of Brazil.  In the constant pursuit for profitability in the business, the Organization uses the appropriate methodologies for each segment in which it operates, which guide the lending processes and the determination of operational limits.  In the evaluation and classification of customers or economic groups, the quantitative (economic and financial indicators) and qualitative (personal data and behaviors) aspects associated with the customers capacity to honor their obligations are considered.  All business proposals are subject to the Organization’s operational limits, which are included in the Loan Guidelines and Procedures. At branches, the delegation of power to grant a loan depends on its size, the total exposure to the Organization, the guarantees offered, the level of restriction and their credit risk score/rating. Business proposals with risks beyond these limits are subject to technical analysis and approval of the Credit Department.  In its turn, the Executive Credit Committee was created to decide, within its authority, on queries about assignment of limits or operations proposed by business areas, previously analyzed and with approval from the Credit Department. According to the financial amount, operations/limits proposed, after obtaining a favorable opinion from this Committee, may be submitted for approval by the Board of Directors.   F - 39IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
 Loan proposals pass through an automated system with parameters to provide indispensable information for analysis and granting of loans, in addition to the follow-up of the granted loans, thereby minimizing the risks inherent to the operations.  The Organization has exclusive Credit and Behavior Scoring systems for the assignment of mass loans in the Retail segment, meant to provide greater speed and reliability, while standardizing the procedures for loan analysis and approval.  Business is diversified, wide-spread and aimed at individuals and companies with a proven payment capacity and solvency, always seeking to support them with guarantees that are adequate to the risk assumed, considering objectives and the maturities of loan granted.  Credit Risk Rating  The methodology for credit-risk evaluation, in addition to providing the institution with the minimum parameters for credit concession and risk management, promotes the determination of credit policies that are differentiated by the customer’s characteristics and capacity. Thus, it provides a base for operation pricing and determination of guaranties to each circumstance.  Risk ratings for economic groups – legal entities – are based on standardized statistical and judgmental procedures, and on quantitative and qualitative information. Classifications are made corporately and are monitored periodically in order to preserve the quality of the credit portfolio.  For individuals, credit ratings are based on personal data variables, such as income, assets, restrictions and indebtedness, in addition to the history of their relationship with the Organization, and statistical credit evaluation models.  The risk classification adopted on the basis of the customers' capacity of honoring their commitments is shown below:  Internal Rating

   

   Organization classification1

   

   AA1

   

   Low risk2

   

   AA23

   

   AA34

   

   A15

   

   A26

   

   A37

   

   B18

   

   B29

   

   B310

   

   C111

   

   C212

   

   C313

   

   D

   

   Medium risk14

   

   E

   

   High risk15

   

   F16

   

   G17

   

   H
    BradescoF - 40


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
  Credit-Risk Management Process  The credit risk is controlled in a corporate and centralized manner. All exposures to credit risk are analyzed, measured, classified and monitored independently.  This sector participates in the process to improve customer risk classification models by monitoring the high risks through the periodic follow-up of major default events, and the level of provision against expected and unexpected losses.  The credit risk area continuously reviews the internal processes, including the roles and responsibilities and IT training and requirements. It also conducts periodic reviews of risk evaluation processes to incorporate new practices and methodologies.  Control and Monitoring  The Organization’s credit risk is controlled and monitored by the credit risk area of the Integrated Risk Control Department.  The department coordinates, within the risk governance structure, the Executive Credit Risk Management Committee, in which methodologies for credit risk measurement are discussed and formalized. Significant issues discussed in this committee are reported to the Integrated Risk Management and Capital Allocation Committee, which is subordinated to the Board of Directors.  In addition to the Committee, the Integrated Risk Control Department holds monthly meetings with product and segment executives and officers, Credit, Credit Recovery, with a view to informing them about the evolution of the loan portfolio, delinquency, impairment of loans and advances, loan recoveries, portfolio limits and concentrations and other items. This information is also reported to the Audit Committee.  The area also monitors any internal or external event that may cause a significant impact on the Organization’s credit risk, such as spin-offs, bankruptcies and crop failure, in addition to monitoring economic activity sectors in which the company is exposed to significant risks.  Both the governance process and existing limits are sanctioned by the Integrated Risk Management and Capital Allocation Committee, which are submitted for the approval of the Board of Directors, which are revised at least once a year.  Internal Report  Credit risk is monitored on a daily basis in order to maintain the risk levels within the limits established by the Organization. Managerial reports on risk control are furnished to the business areas, Credit, Credit Recovery and the Executive Officers, in addition, daily, monthly and quarterly reports.  Pointing out the risk situations that could result in the customers' inability to honor its obligations as contracted, the credit risk control area provides daily reports, to the branches, business segments, as well as the lending and loan recovery areas. This system provides timely information about the loan portfolios and credit bureau information of customers, in addition to enabling comparison of past and current information, highlighting points requiring a more in-depth analysis by managers.  The Organization also has an electronic corporate system of credit risk indicators to provide the lending and loan recovery areas, business areas, regional managers and branches with information on assets by segment, product, region, risk classification, delinquency and expected and unexpected losses, among others. This electronic system provides both a macro-level and detailed view of the information, and also enables a specific loan operation to be viewed.   F - 41IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
  The information is viewed and delivered via dashboards, allowing queries at several levels such as business segment, divisions, managers, regions, products, employees and customers, and under several aspects (asset, delinquency, provision, write-off, restriction levels, guarantees, portfolio quality by rating, among others).  Credit Risk Exposure  We present below the maximum credit risk exposure of the financial instruments.  R$ thousandDecember 312013

   2012 (Restated)Cash and balances with banks

   67,450,363

   59,901,564Derivative financial instruments

   2,509,028

   3,222,631Loans and advances to banks

   78,719,723

   92,459,347Loans and advances to customers

   323,979,568

   288,935,614Other financial assets (1)

   296,348,759

   294,462,510Total items recorded in the balance sheet

   769,007,441

   738,981,666Total items not recorded in the balance sheet (Note 41)

   226,127,235

   203,640,555Total risk exposure

   995,134,676

   942,622,221
 (1)Includes Investments held to maturity recognized as amortized cost in the amount ofR$ 23,069,026 thousand (2012 – R$ 3,715,673 thousand).  The Organization's maximum credit risk exposure was R$ 995,134,676 thousand in 2013, which was an increase of 5.6% from 2012.  Of this exposure, R$ 67,450,363 thousand, or 6.8% is related to cash and bank deposits composed mainly of funds deposited with the Central Bank of Brazil that are assessed to have low credit risk.  In relation to the “Other financial assets” item totaling R$ 296,348,759 thousand, representing approximately 29.8% of the exposure, which largely consists of financial assets that, being Brazilian government bonds, have low credit risks that, and are recorded at their market value.  In 2013, items not recorded in the consolidated statement of financial position (recorded in memorandum accounts) amounted to R$ 226,127,235 thousand (2012 - R$ 203,640,555 thousand), reaching a level of 22.7% (2012 – 21.6%) of total exposure.  The following provides a detailed analysis of other exposures subject to credit risk totaling R$ 405,208,319 thousand, representing 40,7% of the total exposure, including derivatives (R$ 2,509,028 thousand), loans and advances to credit institutions (R$ 78,719,723 thousand) and clients (R$ 323,979,568 thousand).   BradescoF - 42


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
  Derivative Financial Instruments  R$ thousandDecember 312013

   2012 (Restated)Traded in the stock exchange

   154,541

   209,098OTC contract

   2,354,487

   3,013,533Total

   2,509,028

   3,222,631
  In relation to derivatives, 93.8% of the total, refers to over-the-counter contracts, most of them involving counterparties assessed to have "low credit risk"by the Organization's internal procedures, so these derivatives do not have significant credit risk exposure.  Loans and advances to banks  We present below the portfolio of loans and advances to banks as rated internally by the Organization:  R$ thousandDecember 312013

   2012(Restated)Low risk

   78,632,199

   92,318,045Medium risk

   87,524

   141,302High risk

   -

   -Total

   78,719,723

   92,459,347
  Ratings as assigned by the Organization: Low risk: Ratings AA1 – C3;Medium risk: Rating D; andHigh risk: Ratings E – H.  Of total loans and advances to credit institutions, 99.9% are not rated as due or impaired. In addition, the portfolio has no debt-rescheduling history.  Loans and advances to customers  The loans and advances to customers are classified as:  ·Neither past due nor impaired. ·Past due but not impaired. ·Impaired, including loans and advances classified as impaired and loans and advances that are analyzed individually for loss.  The Organization’s loans and advances to customers are classified as “impaired” when they fall in at least one of the following situations: (a) are delinquent more than 90 days, except for housing loan operations secured by residential property (overdue more than 180 days); (b) have incurred a loss; (c) have been renegotiated provided they are within the internal criteria of relevance (materiality and representation); (d) have been reclassified as a higher risk level; and/or (e) have been subject to bankruptcy events (declared bankruptcy, or application, or grant, or approval by judicial or extrajudicial authority).   F - 43IFRS – International Financial Reporting Standards – 2013


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R$ thousandDecember 312013

   2012(Restated)Neither past due nor impaired (i)

   287,052,062

   253,316,688Past due but not impaired (ii)

   7,128,874

   6,848,895Impaired (iii)

   29,798,632

   28,770,031Total loans and advances to customers

   323,979,568

   288,935,614Impairment of loans and advances

   (19,858,234)

   (19,914,294)Net amount

   304,121,334

   269,021,320
  The portfolio of loans and advances to customers grew by 12.1% from 2013 to 2012.  (i)Loans and advances to customers neither past due nor impaired  R$ thousandDecember 312013

   2012(Restated)Low risk

   283,190,469

   246,611,344Medium risk

   3,641,152

   5,875,196High risk

   220,441

   830,148Total

   287,052,062

   253,316,688
  Ratings as assigned by the Organization: Low risk: Ratings AA1 – C3;Medium risk: Rating D; andHigh risk: Ratings E – H.  The loans and advances to customers assessed to be neither past due nor impaired totaled R$287,052,062thousand in2013.  Of the total transactions,98.7% were classified as low risk.  (ii)Loans and advances to customers past due but not impaired  We present below the analysis by number of days past due of the contracts for loans and advances which were not marked as impaired in the collective analysis and which are not impaired based on the individual analysis.  For purposes of this analysis, an asset is considered past due and included in the following table when payment is late or is not received strictly in accordance with the corresponding contractual terms. The amount included in this category comprises the total financial asset, i.e. not only the overdue installment amount but the contractual amount plus accrued interest.  The loans and advances to customers which are not individually material, such as, for example, the retail transactions which have not been classified as impaired are presented in this category.  The individually material loans and advances may be presented in this category when, based on the individual analysis its not necessary to record an individual impairment loss and, accordingly, the asset is then subject to collective loss analysis.   BradescoF - 44


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
  R$ thousandDecember 312013

   2012(Restated)Past due up to 60 days

   6,103,197

   5,750,812Overdue between 61 and 90 days

   963,952

   1,038,858Overdue for more than 90 days

   61,725

   59,225Total

   7,128,874

   6,848,895
  The above table shows loans and advances, which despite being overdue, do not provide indications of possible impairment. This amount represented 2.2% of the portfolio in 2013 (2012 – 2.4%).  (iii)Loans and advances to customers impaired  R$ thousandDecember 312013

   2012(Restated)Portfolio not yet due

   13,846,057

   12,153,340Past due up to 60 days

   3,289,750

   3,231,264Overdue between 61 and 90 days

   1,409,151

   1,459,627Overdue for more than 90 days

   11,253,674

   11,925,800Total

   29,798,632

   28,770,031
  Loans and advances to customers impaired reached R$ 29,798,632 thousand and accounted for 9.2 % of the total portfolio in 2013 (10.0% in 2012).  By category  The following table presents the loans and advances by category that are impaired:  R$ thousandDecember 312013

   2012(Restated)Working capital

   4,568,669

   3,643,822Personal credit

   4,284,798

   4,275,083Credit card

   4,162,214

   4,294,823Vehicles – CDC (Direct consumer credit)

   3,260,646

   4,075,206Financing and export

   1,402,790

   627,616Onlending BNDES/Finame

   1,104,328

   1,257,241Housing loans

   1,068,800

   793,113Leasing

   660,355

   1,193,581Overdraft facilities

   591,717

   564,521Rural loans

   545,747

   595,879Guaranteed account

   291,569

   334,724Others

   7,856,999

   7,114,422Total

   29,798,632

   28,770,031
  Renegotiated loans and advances  The total balance of “Loans and advances to customers impaired” includes renegotiated loans and advances to customers. Such loans contemplate extension of loan payment terms, grace periods, reductions in interest rates, and/or, in some cases, writing off part of the loan principal amount.   F - 45IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
  Renegotiations may occur after debts are past due or when the Company has information about a significant deterioration in the client’s creditworthiness. The purpose of such renegotiations is to adapt the loan to reflect the client’s actual payment capacity.  The following table shows changes made and our analysis of our portfolio of renegotiated loans and advances to customers:  R$ thousandDecember 312013

   2012(Restated)Renegotiated loans and advances at the beginning of the year

   9,643,915

   8,658,167Additional renegotiated amounts, including interest

   9,866,515

   8,570,769Payments received

   (3,762,326)

   (3,965,199)Write-offs

   (5,557,924)

   (3,619,822)Renegotiated loans and advances at the end of the year

   10,190,180

   9,643,915Impairment of loans and advances

   (6,826,663)

   (6,504,198)Total renegotiated loans and advances to customers, net of impairment at the end of the year

   3,363,517

   3,139,717Impairment on renegotiated loans and advances as a percentage of the renegotiated portfolio

   67.0%

   67.4%Total renegotiated loans and advances as a percentage of the total loan portfolio

   3.1%

   3.3%Total renegotiated loans and advances as a percentage of the total loan portfolio, net of impairment

   1.1%

   1.2%
  At the time a loan is modified, Management considers the new loan's conditions and renegotiated maturity and it is no longer considered past due.  From the date of modification, renegotiated interest begins to accrue, using the effective interest rate method, taking into consideration the customer’s capacity to pay the loan based on the analysis made by Management. If the customer fails to maintain the new negotiated terms, management considers ceasing accrual from that point.  Additionally, any balances related to renegotiated loans and advances to customers that have already been written off and recorded in off-balance sheet accounts, as well as any gains from renegotiations, are recognized only when received.  Concentration of credit risk in loans and advances  R$ thousandDecember 312013

   2012(Restated)Largest borrower

   0.7%

   0.9%Ten largest borrowers

   5.3%

   5.2%Twenty largest borrowers

   8.2%

   8.1%Fifty largest borrowers

   12.9%

   12.8%Hundred largest borrowers

   16.6%

   16.9%
  The values presented for the biggest debtor and the hundred largest borrowers showed a decrease and the level of credit concentration in the remaining debtors showed a slight increase in the period.   BradescoF - 46


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
  By Economic Activity Sector  The credit-risk concentration analysis presented below is based on the economic activity sector in which the counterpart operates.  R$ thousandDecember 312013

   2012(Restated)Public sector

   2,188,831

   423,180Federal

   2,148,497

   260,544State

   40,334

   162,636Private sector

   321,790,737

   288,512,434Individuals

   128,635,645

   112,989,410Industry

   58,245,854

   54,187,104Commerce

   45,979,578

   45,315,607Services

   84,554,012

   72,446,408Agribusiness

   4,375,648

   3,573,905Total portfolio

   323,979,568

   288,935,614Impairment of loans and advances

   (19,858,234)

   (19,914,294)Total of net loans and advances to customers

   304,121,334

   269,021,320
  The portfolio's breakdown by sector of economic activity showed increase in the shares of the sectors that comprise it, highlighting the increased participation of “Public sector”, “Individuals” and “Services”.  Measurement of Credit Risk  Periodically, the Organization evaluates the existence of objective evidence of loss in the loan and advance portfolio, taking into account its historical experience of impairment losses and employing other methodologies to consider the customer' quality as well as the nature of the transaction including its guarantees for estimating the expected cash flows.  Initially, clients are classified as individually significant and individually non-significant. Following that initial classification, clients are evaluated on the basis of their experience of one or more events of objective loss evidence. As sometimes it may not be possible to identify a specific event that has caused a loss in recoverable amount, the combined effects of several events are evaluated. In addition, loss events may be specific, that is, refer to only a particular client, such as payment defaults, renegotiation or bankruptcy event, or be collective to affect a greater group of assets as a result, for example, of interest or exchange rate variations or reduction of the activity level of one or more economic sectors.  For individually significant clients showing specific objective evidences impairment loss is estimated by individual analysis, taking into account the future cash flows expected from each client, including the realization of guarantees associated with operations.  For individually non-significant clients showing specific objective evidence, impairment loss is estimated based on the experience of historical loss based on observable information on the current date, to reflect the effects according to internal models set by the Organization.  Clients showing no specific objective evidence of impairment losses, both individually significant and individually non-significant clients are evaluated collectively by Organization’s internal models based on collective parameters of loss identified and macroeconomic parameters of economic activity and default.   F - 47IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
  For collective evaluation, Probability of Default and Loss Given Default models, as well as the Loss Identification Period factor, are used.  Probability of Default (PD): determines the probability of default perceived by the Organization with respect to the customer, according to its internal evaluation model. This risk parameter is differentiated according to its related segment: retail models are quantitative, while wholesale models are both quantitative and qualitative (subjective).  Loss Given Default (LGD): refers to the percentage effectively lost after recovery efforts given the nonperformance of the contract, which is expressed as a percentage of exposure.  Loss Identification Period (LIP): interim period between the occurrence of the loss event in groups of collectively evaluated financial assets, significant and non significant, and its identification by the institution as an impairment.  Write-offs  Credits are written off in the consolidated statement of financial position against impairment of loans and advances when they are considered uncollectible or a permanent loss. Credit operations are written off when they are overdue for 180 to 360 days. Credit operations with remaining maturities for at least 36 months are written off when they are overdue for 360 to 540 days.  Credit Risk Mitigation  Potential credit losses are mitigated by several types of collateral formalized through legal instruments such as conditional transfer with retained ownership, mortgages, or through third-party guarantees. The efficacy of these instruments is reviewed in terms of time required for recovery and realization of assets provided as guarantees, their market value, guarantor counterparty risk, and legal security of contracts. The principal types of collateral are time deposits; financial applications and securities; residential and commercial properties; movable property such as vehicles, aircraft, machinery and equipment; collateral may include commercial invoices, checks and credit card bills. Sureties include in particular bankers' guarantees and letters of credit.  Credit derivatives are bilateral contracts in which one counterparty hedges credit risk on a financial instrument and its risk is transferred to the counterparty selling the hedge. Normally, the latter is remunerated on a straight-line basis throughout the period of the transaction.In the case of a credit event (“default”), the buying party will receive a payment intended to compensate for the loss in the financial instrument.In this case, the seller receives the underlying asset in exchange for said payment.   BradescoF - 48


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
  We present below the credit derivative transactions:  R$ thousandValue of credit riskDecember 312013

   2012(Restated)TransferredCredit Default Swaps, the underlying assets of which include:● Bonds and securities - Brazilian public debt securities

   -

   (265,655)● Derivatives held by companies

   -

   (4,087)ReceivedCredit Default Swaps, the underlying assets of which include:● Derivatives held by companies

   -

   6,131Total

   -

   (263,611)Deposited margin

   -

   5,109
  The Organization carried out operations involving credit derivatives in order to better manage its risk exposure and assets. The contracts related to the credit derivative transactions described above maturedon different dates through June 30,2013. The mark-to-market adjustment of the protection rates, which remunerates the counterparties receiving the risk, totaled negative R$ (332) thousand on December 31, 2012. During the period, there were no events that, based on the corresponding contracts, could have triggered a credit default.  3.2.Market risk  Market risk is represented by the possibility of financial loss due to fluctuating prices and interest rates of the Organization’s financial assets as its asset and liability transactions may show mismatched maturities, currencies and indexes.  Market risk is identified, measured, mitigated, controlled and reported. The Organization’s exposure to market risk profile is in line with the guidelines established by the governance process, with limits duly and independently monitored.  All transactions that expose the Organization to market risk are mapped, measured and classified according to probability and magnitude, and the whole process is approved by the governance structure.  The risk management process relies on the participation of all levels of the Organization, from the business units to the Board of Directors.  In compliance with the Corporate Governance practices and aiming to preserve and strengthen the management of market and liquidity risks in the Organization, as well as to meet the requirements of Resolution no 3.464/07, of the National Monetary Council (CMN), the Board of Directors approved the Market and Liquidity Risk Management Policy, which is reviewed at least on an annual basis by the relevant Committees and by the Board of Directors itself, and provides the main guidelines for acceptance, control and management of market and liquidity risks.  In addition to the policy, the Organization has specific rules to regulate the market- and liquidity-risk management process, as follows:   F -49IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
 ·Classification of Operations; ·Reclassification of Operations; ·Trading of Public or Private Securities; ·Use of Derivatives; and ·Hedging.  Market Risk Management Process  The market risk management process is conducted in a corporate manner; it involves diverse areas, with specific duties in the process, thereby ensuring an efficient structure, and the measurement and control of market risk is conducted in a centralized and independent manner. This process allowed the Organization to use since January 2013, its internal market risk models to calculate regulatory capital requirements. This process, approved by the Board of Directors, is also revised at least once a year by the Committees and the Board itself.  Determination of Limits  Proposed market-risk limits are validated by specific Committees that are submitted for approval by the Integrated Risk Management and Capital Allocation Committee, and then for approval by the Board of Directors and based on the business’ characteristics, which are segregated into the following Portfolios:  Trading Portfolio: it comprises all operations involving financial instruments, including derivatives, maintained for trading purposes or intended to hedge other instruments of the trading portfolio, and which are not subject to trading limitations. Operations maintained for trading purposes are those intended for resale, to obtain benefits from actual or expected price variations or arbitrage.  The Trading Portfolio is monitored by the following limits:  ·VaR; ·Stress; ·Income; and ·Financial Exposure.  Banking Portfolio: it comprises operations not classified in the Trading Portfolio, arising from Organization’s other businesses and their respective hedges.  For theBanking Portfolio, the following limits are monitored:  ·Interest rate risk; and ·Share Portfolio.  Market-Risk Measurement Models  Market risk is measured and controlled using the Stress, Value at Risk (VaR), the Economic Value Equity (EVE) and Sensitivity Analysis methodologies, as well as limits for the Management of Results and Financial Exposure. Using several methodologies to measure and evaluate risks is of great importance, because they can complement each other and their combination allows the analysis of different scenarios and situations.   BradescoF - 50


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
  Trading and Regulatory Portfolio and Equity Risk from Banking Portfolio  Trading Portfolio risks are controlled by the Stress and VaR methodology. The Stress quantifies the negative impact of economic shocks and events that are financially unfavorable to the Organization’s positions. The analysis uses stress scenarios prepared by the Market Risk area and the Organization’s Economic area based on historical and prospective data for the risk factors in which the Books hold a position.  In order to evaluate risk through VaR, the risks of the Trading and Regulatory Portfolios (Trading Portfolio positions plus foreign currency exposure and Banking Portfolio commodities) and of equity in the Banking Portfolio, though controlled separately, are measured using the Delta-Normal VaR methodology, with a confidence level of 99%, as well as volatilities and correlations calculated using statistical methods that give more weight to recent returns. Gamma and Vega risks for operations with options are incorporated to VaR, which is calculated for one day and adjusted to reflect the impact of the period necessary to unwind the existing positions.  For regulatory purposes, the capital requirements relating to shares of the Banking Portfolio are determined through the credit risk evaluation, as per Central Bank of Brazil resolution.  Risk of Interest Rate in the Banking Portfolio  The measurement and control of the interest-rate risk in the Banking Portfolio area is based on the EVE methodology, which measures the economic impact on the positions, according to scenarios prepared by the Organization’s economic area, which are intended to determine positive and negative changes likely to occur in interest-rate curves applicable to investments and borrowings.  The EVE methodology consists of repricing the portfolio subject to interest rate variations, taking into account the increases or decreases of rates used to calculate the present value and total term of assets and liabilities. This way, the economic value of the portfolio is estimated on the basis of market interest rates on the analysis date and of scenarios projected for a period of 1 year. The difference between the values obtained for the portfolio will be EVE, that is, the interest-rate risk applicable to the Banking Portfolio.  For the measurement of the interest-rate risk in the Banking Portfolio, accelerated payment of loans is not assumed, as this situation is not significant in the total volume of operations. For deposits without a defined maturity, such as demand deposits and savings deposits, an analysis is performed to determine their historical behavior andthe possibility of maintaining it are studied.Thus, after all the deductions from demand and savings deposits, for example, the compulsory reserve held at Bacen, the remaining balance (free funds) is considered in accordance with the maturity flows of fixed-rate lending operations of the Financial Conglomerate.  Financial Instrument Pricing  To adopt the best market prices related to the assessment of financial instruments’ market value, the Market and Liquidity Risk Management Executive Committee (CEGRIMEL) established the Mark-to-Market Commission (CMM), which is responsible for approving or submitting mark-to-market models to GEGRIMEL. CMM is composed of business, back-office and risk representatives, and the risks area responsible for the coordination of the Commission and for the submission of the matters assessed to the CEGRIMEL, for reporting or approval, whichever is the case.   F - 51IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
 Whenever possible, the Bank adopts prices and rates practiced by the Securities, Commodities and Futures Exchange and the Secondary Securities Market. Failing to find such market references, prices made available by other sources (such as Bloomberg, Reuters and Brokerage Firms) are used. As a last resort, proprietary models are adopted to price the instruments, which also follow the same CMM approval procedure and are submitted to the Organization’s validation and assessment processes.  Mark-to-market criteria are periodically reviewed, according to the governance process, and may vary due to changes in market conditions, creation of new classes of instruments, establishment of new sources of data or development of models considered more appropriate.  The financial instruments to be included in the Trading Book must be approved by the Treasury or Products and Services Executive Committee and their pricing criteria must be defined by the CMM.  The following principles for the mark-to-market process are adopted by the Organization:  ·Commitment: the Organization is engaged in guaranteeing that the prices used reflect the market value of the operations. Should information not be found, Bradesco uses its best efforts to estimate the market value of the financial instruments; ·Frequency: the formalized mark-to-market criteria are applied on a daily basis; ·Formality: the CMM is responsible for ensuring the methodological quality and the formalization of the mark-to-market criteria; ·Consistency: the process to gather and apply prices should be carried out consistently, to guarantee equal price to a type of instrument within the Organization; and ·Transparency: the methodology must be accessible by the Internal and External Audit and Independent Model Validation areas and by Regulatory Agencies.  Independent Model Validation  In addition to the model development, monitoring and enhancement activities, the market practices propose creating an independent validation process for internal models, with critical and timely analysis of the application scope, measurement system, monitoring, applicability and technology of internal models.  Thus, the main objective of the validation process is to issue a justified opinion on whether the internal models work according to the expected objectives and whether the results obtained are appropriate to be used for the purpose they were created.  Therefore, the area carries out activities that allow the development and constant improvement of the evidence program. Evidence program tests are specific for each type of model and contain objectives, requirements, procedures, the expected results and criteria to assess the result obtained, and are classified into six dimensions, grouped into qualitative and quantitative types.  ·Qualitative  - Scope of the Model: scope of application that includes the objective of each type of risk, the companies exposed to this type of risk, books, products, segments, channels, etc.;  - Applicability of the Model: includes the definition, reasonability in the use of the model’s factors, flow and timeliness of information to the decision-making process; and  - Technological Environment and Data Consistency: structure of systems and controls involved in the calculations performed by the model and the process in which the model is inserted. It also includes data consistency, taking into consideration the functionalities of version and access controls, backup, traceability, changes in parameters, data quality, system contingency and automated controls.  BradescoF - 52


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
  ·Quantitative  - Measurement System: risk measurement procedure that includes the definition, application and internal validation of the method, composed of methodology, assumptions, parameters, calculation routine, input data and results;  - Stress Test: measurement procedure to quantify the variations in the amounts estimated by the model in extreme, historical and prospective scenarios, plausible for the variables affecting it; and  - Backtesting: statistic procedure used to assess the model by comparing the amounts estimated by the model and the amounts observed within a previously defined period. It includes methodological, formalization and utilization aspects for model improvement.  The responsibility for the independent validation process, that includes the analysis and the assessment of internal models, belongs to the Independent Model Validation Area (AVIM), which is part of the Internal Control and Compliance Department. AVIM’s validation process uses structures that are already implemented and settled in the Organization to avoid overlapping tasks.  Control and Follow-Up  Market risk is primarily controlled and monitored by an independent area, the Integrated Risk Control Department, whom, on a daily basis, measures the risk of outstanding positions, consolidates results and prepares reports required by the existing governance process.  In addition to daily reports, positions are discussed once a week by the Executive Treasury Committee, which evaluates results and risks and discusses strategies. Both the governance process and existing limits are ratified by the Integrated Risk and Capital Allocation Management Committee and submitted to approval of the Board of Directors, and are revised at least once a year.  Internal Communication  The market risk department provides daily managerial control reports on the positions to the business areas and Senior Management, in addition to weekly reports and periodic presentations to the Board of Directors.  Reports are complemented by an alert system, which determines the addressees of risk reports according to the usage percentage previously determined, therefore, the higher the risk limit consumption, more Senior Management members receive the reports.  Hedging and Use of Derivatives  With the purpose of standardizing the use of financial instruments contracted for hedging purposes and the treasury derivatives, the Organization has created specific rules that have been approved by the applicable Committees.  The economic hedge operations entered into by the Treasury Department should, necessarily, eliminate or mitigate risks of mismatches of volumes, terms, currencies or indexers of the positions on the treasury books, using the assets and derivatives authorized for trading in each of the books, in order to:   F - 53IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
  ·control and classify the operations, respecting the current limits of exposure and of risks;  ·alter, modify or revert positions due to changes in the market and to operational strategies; and  ·reduce or mitigate exposures of operations in inactive markets, in conditions of stress or of low liquidity.  Derivatives Standardized and of Continuous Use  The Treasury Department may use standardized derivatives (traded on an exchange) and those of continuous use (traded over-the-counter) with the purpose of obtaining income and also for the structuring of hedges. The derivatives classified as ‘of continuous use’ are those habitually traded over-the-counter, such as vanilla swaps (interest rates, currencies, CDS – Credit Default Swap, among others), forward operations (currencies, for example), vanilla options (currency, Bovespa Index), among others. Non-standardized derivatives that are not classified as ‘of continuous use’ or structured operations are subject to the authorization of the applicable Committee.  Evolution of the Exposure  In this section we present the evolution of financial exposure, the VaR calculated using the internal  model and its backtesting, the Stress Analysis, and the Sensitivity Analysis.  Financial Exposure – Trading Portfolio  R$ thousandDecember 31Risk Factors

   2013

   2012Assets

   Liabilities

   Assets

   LiabilitiesFixed rate

   156,803,699

   202,995,592

   231,620,621

   200,058,048IGP-M (General Index of market pricing) / IPCA (Consumer price index)

   10,792,336

   8,031,461

   14,311,059

   13,581,800Forex Coupon

   16,646,887

   18,029,444

   3,440,579

   7,507,735Foreign Currency

   17,726,601

   18,899,620

   7,862,049

   10,126,565Variable Income

   198,852

   130

   602,561

   415,269Sovereign / Eurobonds and Treasuries

   8,847,031

   4,298,277

   8,321,309

   7,053,277Other

   1,293,999

   139,364

   1,145,887

   55,104Total at the end of the year

   212,309,405

   252,393,888

   267,304,065

   238,797,798
    BradescoF - 54


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
  VaR Internal Model –Trading Portfolio  As of 2013, in line with the characteristics of the trading portfolio and our other publications, we now present the VaR at a horizon of 1 day, which is the basis for the calculation of regulatory capital requirements and the process of market risk management, which, as a way to expand our analysis and controls, is adjusted for liquidity risk of its  assumed positions. The VaR at the horizon of 1 day is also used to assess the adherence of the adopted model (backtesting), which influences the regulatory capital required. Moreover, because of the tax consequences that a possible negative outcome might bring, the amounts presented are net of tax effects.  At the end of the 2013 year we verified that there was a reduction in VaR in relation to the end of the 2012 year, because of the reduction in the period of exposure.  Risk Factors

   R$ thousandDecember 312013

   2012Fixed rate

   18,626

   24,793IGP-M (General Index of market pricing) / IPCA (Consumer price index)

   15,158

   29,025Forex Coupon

   4,999

   7,053Foreign Currency

   10,387

   14,322Variable Income

   475

   4,640Sovereign / Eurobonds and Treasuries

   6,310

   9,395Others

   1,055

   1,868Correlation / Diversification Effect

   (16,068)

   (36,197)VaR at the end of the year

   40,942

   54,899Average VaR in the year

   102,676

   67,177Minimum VaR in the year

   16,116

   29,822Maximum VaR in the year

   264,305

   111,195
 Note: 1-day VaR and net of tax effects.  Internal VaR Model – Regulatory Portfolio Bradesco uses since January 2013, its internal market risk models, which had already been used in the Organization’s management, to assess regulatory capital requirements1for all risk factors and The Organization’s companies. This capital is calculated based on the Regulatory Portfolio, which comprises the Trading Portfolio and the Foreign Exchange Exposure and the Commodities Exposure of the Banking Portfolio, through the normal delta VaR model, adjusted by the Gama and Vega risks of options operations and one-day horizon, extrapolated by the square root of time method to the regulatory horizon2(at least ten days).VaR and Stressed VaR shown below refer to a ten-day horizon and are net of tax effects.    1According to Central Bank Circular Letter 3,674, capital requirement accounts for the maximum between 90% of Central Bank’s standard model and the internal model used by the Bank, during the first year of adoption of the market risk internal model, as of the date the Bank was authorized to adopt it, and the maximum between 80% of Central Bank’s standard model and the internal model used by the Bank, as of the second year of adoption of the internal model;
 2The maximum amount between the book’s holding period and ten days, which is the minimum regulatory horizon required by Central Bank, is adopted; and
  F - 55IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
  R$ milRisk Factors

   December 31, 2013VaR

   Stressed

   VaRInterest rate

   110,042

   235,649Exchange rate

   57,508

   139,680Commodity price(Commodities)

   1,600

   3,715Share prices

   4,406

   5,629Correlation / Diversification Effect

   (26,312)

   (49,235)VaR at the end of the year

   147,244

   335,438Average VaR in the year

   340,648

   653,795Minimum VaR in the year

   61,605

   143,623Maximum VaR in the year

   835,434

   1,404,577
  VaR Internal Model – Backtesting  The main purpose is to monitor, validate and assess the adherence of the VaR model, and the number of disruptions occurred must be compatible with the number of disruptions accepted by the statistical tests conducted and confidence level established. Another objective is to improve the models used by the Organization, through analyses carried out to different periods and VaR trust levels, both for Total VaR and risk factor.  The methodology applied and current statistical models are continuously assessed using backtesting techniques, which compare the VaR, with one-day maintenance period, and the hypothetic results obtained from the same positions used in the VaR calculation and with the effective result also considering the changes in the day for which VaR was estimated.  The corresponding hypothetical and effective daily results of the last 250 business days exceed in seven instances the VaR with 99% trust level, i.e., only an exception above the limits defined in the statistic tests applied to the model, despite the strong market variations mainly in the first half of 2013. For longer analysis periods, exceptions are in line with expectations, proving the model’s consistency.  The disruptions were mainly due to more variations than expected in interest rates, influenced within the period assessed by the doubts towards the behavior of the inflation and the speed and intensity of the Brazilian monetary tightening cycle, in addition to increased international risk aversion, mainly towards the emerging nations, and U.S. Federal Reserve’s (US FED) signaling it could suspend the monetary stimulus for the American economy in 2013. According to the document published by the Basel Committee on Banking Supervision3, the disruptions would be classified as “bad luck or the markets moved differently than the expected by the model,” i.e., volatility was significantly higher than expected and, in some situations, the correlations differ from those assumed by the model.  The graphs below show the Regulatory Book 1-day VaR and the hypothetical and effective results obtained on a daily basis.   3Supervisory Framework for the use “Backtesting” in Conjunction with the Internal Models Approach to Market Risk Capital Requirements, of January 1996.   BradescoF - 56


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
  Graph I – VaR vs. Hypothetical Result     Graph II – VaR vs. Effective results    F - 57IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
  Stress Analysis – Trading Portfolio  The Organization still assesses on a daily basis, the possible impacts on positions in stress scenarios for the next 20 business days, with limits established during the governance process. Thus, the possibility of average loss estimated in a stress situation would be R$ 713,611 thousand in 2013 (2012 – R$ 833,695 thousand), and the maximum estimated loss would be R$ 1,436,759 thousand (2012 – R$ 1,493,661 thousand).  Is worth noting that as of 2013, in line with the information from the Risk Management Report - Pillar 3, the values ​​of stresses are presented only within a view that considers the diversification effect between the risk factors and how these values ​​are net of tax effects.  R$ thousandDecember 312013

   2012At the end of the year

   479,183

   862,239Average in the year

   713,611

   833,695Minimum in the year

   144,869

   200,458Maximum in the year

   1,436,759

   1,493,661
 Note: Values net of tax effects.   BradescoF - 58


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
 Sensitivity Analysis  The Trading Portfolio is also evaluated daily using sensitivity analysis to measure the effect of the market and price curves on our positions. In addition, a sensitivity analysis of the Organization’s financial exposures (Trading and Banking Portfolios) is conducted on a quarterly basis. It is important to highlight the impacts of the financial exposure on the Banking Portfolio (notably interest rates and price indexes) do not necessarily represent a potential accounting loss for the Organization. This is because a part of the loan operations in the Banking Portfolio is funded by demand deposits and/or savings deposits, which serve as a natural hedge against any interest rate fluctuations; and interest rate fluctuations do not have a material impact in the Organization’s results, since the intention is to hold the loan operations until their maturity. Scenario 1- shock of 1 b.p to rates and 1% to market prices

   R$ thousandScenario 2- shock of 25% to rates and market prices

   Trading & Banking Portfolios(1)Scenario 3- shock of 50% to rates and market prices

   December 31, 2013

   December 31, 2012Risk Factors

   Definition

   Scenario 1

   Scenario 2

   Scenario 3

   Scenario 1

   Scenario 2

   Scenario 3Interest Rates in Reais

   Exposures subject to variations of fixed interest rates and coupon rate

   (7,177)

   (1,942,202)

   (3,739,065)

   (11,099)

   (2,128,929)

   (4,115,092)Price indices

   Exposures subject to the variation of the coupon rate of the price indices

   (14,665)

   (2,100,989)

   (3,876,937)

   (22,273)

   (1,902,223)

   (3,448,019)FX Coupon

   Exposures subject to the variation of the coupon rate of foreign currencies

   (371)

   (49,769)

   (91,023)

   (661)

   (58,363)

   (109,978)Foreign Currency

   Exposures subject to the FX variation

   (11,161)

   (253,210)

   (482,709)

   (11,347)

   (164,807)

   (305,127)Variable Income

   Exposures subject to the variation of share prices

   (22,002)

   (550,045)

   (1,100,090)

   (19,079)

   (469,601)

   (934,884)Sovereign/ Eurobonds and Treasuries

   Exposures subject to the variation of the interest rate of securities traded on the international market

   (764)

   (50,300)

   (96,883)

   (1,115)

   (44,355)

   (87,136)Others

   Exposures that do not match the previous definitions

   (397)

   (9,939)

   (19,877)

   (82)

   (2,056)

   (4,112)Total without correlation

   (56,537)

   (4,956,454)

   (9,406,584)

   (65,656)

   (4,770,334)

   (9,004,348)Total with correlation

   (39,608)

   (4,078,197)

   (7,698,477)

   (36,642)

   (3,712,361)

   (6,979,548)
  (1)Values net of taxes.    F - 59IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
 Below we present the sensitivity analysis of the Trading Portfolio only, which represents the exposures that may have material impact on the Organization’s results. Note that the results presented show the impacts of each scenario in a static portfolio position. The market’s dynamism makes these positions change continuously and which do not necessarily reflect the current position shown here:  Scenario 1- shock of 1 b.p to rates and 1% to market prices

   R$ thousandScenario 2- shock of 25% to rates and market prices

   Trading Portfolio(1)Scenario 3- shock of 50% to rates and market prices

   December 31, 2013

   December 31, 2012Risk Factors

   Definition

   Scenario 1

   Scenario 2

   Scenario 3

   Scenario 1

   Scenario 2

   Scenario 3Interest Rates in Reais

   Exposures subject to variations of fixed interest rates and coupon rate

   (1,161)

   (314,600)

   (610,764)

   (1,596)

   (300,144)

   (577,467)Price indices

   Exposures subject to the variation of the coupon rate of the price indices

   (714)

   (101,267)

   (196,397)

   (2,864)

   (256,727)

   (489,707)FX Coupon

   Exposures subject to the variation of the coupon rate of foreign currencies

   (378)

   (51,033)

   (93,293)

   (649)

   (55,701)

   (104,875)Foreign Currency

   Exposures subject to the FX variation

   (6,050)

   (148,787)

   (297,318)

   (12,312)

   (216,083)

   (418,084)Variable Income

   Exposures subject to the variation of share prices

   (920)

   (23,008)

   (46,016)

   (1,537)

   (31,882)

   (60,427)Sovereign/ Eurobonds and Treasuries

   Exposures subject to the variation of the interest rate of securities traded on the international market

   (590)

   (43,582)

   (83,593)

   (1,001)

   (41,733)

   (81,194)Others

   Exposures that do not match the previous definitions

   (20)

   (505)

   (1,010)

   (49)

   (1,232)

   (2,464)Total without correlation

   (9,833)

   (682,782)

   (1,328,391)

   (20,008)

   (903,502)

   (1,734,218)Total with correlation

   (7,434)

   (509,080)

   (991,248)

   (13,585)

   (580,483)

   (1,111,507)
  (1)Values net of taxes.     BradescoF - 60


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
 The sensitivity analyses were prepared based on the scenarios for the respective dates, always considering the market information at the time and scenarios that have a negative impact on our positions.  Scenario 1:Based on the market information (BM&FBovespa, Anbima, etc.), stresses were applied of 1 basis point for interest rates and a 1% variation for prices. For example: in the scenario applied on the positions at December 31, 2013 the exchange rate Real/Dollar was R$ 2.39 (December 31, 2012 – R$ 2.06). For the scenario of interest, the 1-year fixed rate applied on the positions at December 31, 2013 was 10.59% p.a (December 31, 2012 – 7.15%).  Scenario 2: Stresses of 25% were calculated based on the markets. For example: in the scenario applied on the positions at December 31, 2013 the exchange rate Real/Dollar was R$2.95(December 31, 2012 – R$ 2.55). For the scenario of interest, the 1-year fixed rate applied on the positions at December 31, 2013 was13.23% p.a. (December 31, 2012 – 8.92%) The scenarios for the other risk factors also represent a stress of 25% in the respective curves or prices.  Scenario 3: Stresses of 50% were calculated based on the markets. For example: in the scenario applied on the positions at December 31, 2013, the exchange rate Real/Dollar was R$ 3.54 (December 31, 2012 – R$ 3.06). For the scenario of interest, the 1 year fixed rate applied on the positions at December 31, 2013 was15.87% p.a. (December 31, 2012 – 10.71% p.a.) The scenarios for the other risk factors also represent a stress of 50% in the respective curves or prices.  3.3.Liquidity risk  The Liquidity Risk is represented by the mismatch in cash flow, a result of difficulties to rapidly dissolve an asset or raise funds, hindering the liquidity of positions or creating outstanding liabilities.  The understanding and monitoring of this risk are crucial to enable the Organization to settle operations in a timely manner.  Management Process of the Liquidity Risk  The liquidity risk management process is conducted in a corporate and centralized and independent manner, including the daily monitoring of available funds, the compliance with the minimum liquidity level and the contingency plan for stress situations.  One of the objectives of the Organization’s Policy on Market and Liquidity Risk Management, approved by the Board of Directors, is to lay down the rules, criteria and procedures that guarantee the establishment of the Minimum Liquidity Reserve (RML) for the Organization, as well as the strategy and action plans for liquidity crisis situations. The policy and controls established fully comply with CMN Resolution 4,090/12.  As part of the criteria and procedures approved, the Organization establishes the minimum daily liquidity reserve and the types of assets eligible for making up the resources available. It also establishes the instruments for managing liquidity in a normal scenario and in a crisis scenario and the strategies to be implemented in each case.   F - 61IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
  Control and Monitoring  The liquidity risk management process is conducted by the Treasury Departmentbased on thepositions provided by the back-office area, which is responsible for providing the necessary information to the management and for monitoring the compliance with the limits established. The Integrated Risk Control Department is responsible for the methodology for measuring the minimum liquidity reserve, controlling the limits established according to currency and type of company (including non-financial firms), reviewing the policies, rules, criteria and procedures, and conducting studies for new recommendations.  The liquidity risk is monitored at the Treasury Executive Committee, which monitors liquidity reserves, with mismatches in maturities and currencies. The monitoring is also conducted by the Market and Liquidity Risk Management Executive Committee, the Integrated Risk and Capital Allocation Management Committee and the Board of Directors.  Internal Communication  In the process of liquidity risk management, reports are distributed daily to the areas involved in management and control, as well as to the Management. This process comprises several analysis instruments used to monitor the liquidity, such as:  ·Daily distributionof liquidity control instruments; ·Automaticintra-day update of the liquidity reports for appropriate management by the Treasury Department; ·Preparation of reports with past behavior and future simulations based on scenarios; ·Daily verification of compliance with minimumliquidity levels; and ·Weekly reports to the Board of ExecutiveOfficers, showing the behavior and expectations related to the liquiditysituation.  The liquidity risk management process also has an alert system that selects the appropriate reporting level according to the established limit usage percentage. Thus, the higher the risk limit consumption, the higher the number of Senior Management members who receive the reports.  Undiscounted cash flows of financial liabilities  The table below presents the cash flows payable for non-derivative financial liabilities, covering the remaining contractual period to maturity as from the date of the consolidated statement of financial position. The values disclosed in this table represent the undiscounted contractual cash flows, where the liquidity risk is managed based on the expected future undiscounted cash receipts.  R$ thousandDecember 31, 2013Up to 1 month

   From 1 to 3 months

   From 3 months to 1 year

   From 1 to 5 years

   More than 5 years

   TotalDeposits from banks

   126,484,700

   16,071,600

   67,084,045

   51,749,438

   5,474,725

   266,864,508Deposits from customers

   133,576,023

   11,644,757

   20,734,318

   64,257,703

   211,237

   230,424,038Funds from securities issued

   3,419,212

   3,375,505

   15,908,345

   49,563,696

   2,638,377

   74,905,135Subordinated debt

   303,556

   133,711

   2,869,486

   35,786,674

   18,733,249

   57,826,676Total liabilities

   263,783,491

   31,225,573

   106,596,194

   201,357,511

   27,057,588

   630,020,357
   BradescoF -62


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
  R$ thousandDecember 31, 2012 (Restated)Up to 1 month

   From 1 to 3 months

   From 3 months to 1 year

   From 1 to 5 years

   More than 5 years

   TotalDeposits from banks

   100,654,888

   19,270,027

   61,332,024

   46,647,675

   6,535,820

   234,440,434Deposits from customers

   120,999,436

   7,339,298

   17,794,436

   73,168,644

   1,183,150

   220,484,964Funds from securities issued

   6,166,986

   4,839,452

   23,097,132

   23,456,455

   781,037

   58,341,062Subordinated debt

   331,407

   500,173

   1,888,804

   19,588,044

   29,659,710

   51,968,138Total liabilities

   228,152,717

   31,948,950

   104,112,396

   162,860,818

   38,159,717

   565,234,598
  The assets available to meet all the obligations and cover the outstanding commitments include cash and cash equivalents, financial assets, loans and advances. Management may also cover unexpected cash outflows by selling securities and by having access to sources of additional funds, such as asset-backed-markets.  The previous table shows the undiscounted cash flows referring to financial liabilities of the Organization. The cash flows that the Organization estimates for these instruments may vary significantly from expectations. For example, it is expected that demand deposits of customers maintain a stable or increasing balance, and it is not expected that the unrecognized loan commitments are withdrawn immediately.  The gross cash inflows / (cash outflows) presented in the previous table refer to the undiscounted contractual cash flow related to the financial liability or commitment.  In the Organization, liquidity-risk management involves a series of controls, mainly related to the establishment of technical limits, with the ongoing evaluation of the positions assumed and the financial instruments used.  Undiscounted cash flows for derivatives  All the derivatives of the Organization are settled at net value, and include:  ·Foreign currency derivatives – over-the-counter currency options, currency futures, and currency options traded on an exchange; and  ·Interest rate derivatives – interest rate swaps, future rates contracts, interest rate options, other interest rate contracts, contracts of interest rate futures traded on an exchange and interest rate options traded on an exchange.   F - 63IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
  The table below analyzes the financial liabilities in derivatives that will be settled at net value, grouped based on the period remaining from the date of the consolidated statement of financial position to the respective maturity date. The values disclosed in the table are undiscounted cash flows.  R$ thousandDecember 31, 2013Up to 1 month

   From 1 to 3 months

   From 3 months to 1 year

   From 1 to 5 years

   More than 5 years

   TotalDifferential of swaps payable

   159,165

   119,719

   185,764

   614,416

   536,146

   1,615,210Non-deliverable forwards

   219,827

   113,222

   60,343

   47,631

   16,675

   457,698·Purchased

   81,522

   6,254

   13,265

   170

   -

   101,211·Sold

   138,305

   106,968

   47,078

   47,461

   16,675

   356,487Premiums of options

   91,547

   4,296

   106,973

   19,208

   -

   222,024Total of derivative liabilities

   470,539

   237,237

   353,080

   681,255

   552,821

   2,294,932
  R$ thousandDecember 31, 2012(Restated)Up to 1 month

   From 1 to 3 months

   From 3 months to 1 year

   From 1 to 5 years

   More than 5 years

   TotalDifferential of swaps payable

   219,816

   28,204

   196,946

   606,202

   801,822

   1,852,990Non-deliverable forwards

   2,448,427

   45,998

   114,156

   6,593

   -

   2,615,174·Purchased

   439,417

   43,314

   45,978

   6,370

   -

   535,079·Sold

   2,009,010

   2,684

   68,178

   223

   -

   2,080,095Premiums of options

   122,177

   1,192

   11,637

   1,996

   -

   137,002Total of derivative liabilities

   2,790,420

   75,394

   322,739

   614,791

   801,822

   4,605,166
    BradescoF - 64


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
  Statement of financial position by maturities  The tables below show the financial assets and liabilities of the Organization segregated by maturities used for the management of liquidity risks, in accordance with the remaining contractual maturities on the reporting date:  R$ thousandDecember 31, 2013Current

   Non-current

   Total1 to 30 days

   31 to 180 days

   181 to 360 days

   1 to 5 years

   More than 5 years

   No stated maturityAssetsCash and balances with banks

   67,450,363

   -

   -

   -

   -

   -

   67,450,363Financial assets held for trading

   21,415,199

   6,406,961

   16,508,242

   30,456,366

   10,325,394

   10,980,361

   96,092,523Financial assets available for sale

   7,992,859

   948,135

   1,112,736

   15,854,096

   36,050,088

   5,880,497

   67,838,411Investments held to maturity

   -

   -

   -

   2,948,181

   20,120,845

   -

   23,069,026Assets pledged as collateral

   37,861,027

   7,734,003

   2,351,252

   45,168,535

   24,625,408

   -

   117,740,225Loans and advances to banks

   61,160,937

   3,904,620

   7,069,189

   6,584,167

   810

   -

   78,719,723Loans and advances to customers

   41,883,929

   76,082,035

   48,717,678

   120,270,221

   17,167,471

   -

   304,121,334Other financial assets (1)

   19,150,717

   234,140

   266,351

   8,365,321

   401,895

   -

   28,418,424Total financial assets

   256,915,031

   95,309,894

   76,025,448

   229,646,887

   108,691,911

   16,860,858

   783,450,029LiabilitiesDeposits from banks

   125,383,182

   51,041,184

   20,247,946

   41,895,414

   4,532,647

   -

   243,100,373Deposits from customers(2)

   133,568,855

   18,130,186

   12,948,037

   51,365,672

   205,307

   -

   216,218,057Financial liabilities held for trading

   478,068

   429,720

   191,962

   482,895

   243,737

   -

   1,826,382Funds from securities issued

   2,856,196

   9,345,039

   8,647,031

   35,840,053

   1,194,749

   -

   57,883,068Subordinated debt

   159,428

   770

   2,421,701

   21,016,930

   12,286,174

   -

   35,885,003Insurance technical provisions and pension plans (2)

   103,870,571

   2,295,904

   674,971

   23,487,577

   -

   -

   130,329,023Other financial liabilities (3)

   31,217,814

   5,180,378

   2,445,098

   680,694

   -

   -

   39,523,984Total financial liabilities

   397,534,114

   86,423,181

   47,576,746

   174,769,235

   18,462,614

   -

   724,765,890
   F - 65IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
 R$ thousandDecember 31, 2012(Restated)Current

   Non-current

   Total1 to 30 days

   31 to 180 days

   181 to 360 days

   1 to 5 years

   More than 5 years

   No stated maturityAssetsCash and balances with banks

   59,901,564

   -

   -

   -

   -

   -

   59,901,564Financial assets held for trading

   28,613,415

   5,238,445

   2,215,141

   40,734,189

   23,626,185

   11,411,127

   111,838,502Financial assets available for sale

   18,399,375

   706,356

   517,265

   10,984,233

   45,390,233

   5,524,668

   81,522,130Investments held to maturity

   2,003

   9,239

   -

   220,643

   3,483,788

   -

   3,715,673Assets pledged as collateral

   14,472,932

   60,287,471

   1,019,023

   19,656,101

   10,697,772

   -

   106,133,299Loans and advances to banks

   50,379,883

   26,824,507

   5,088,339

   10,165,175

   1,443

   -

   92,459,347Loans and advances to customers

   48,832,280

   67,502,646

   40,431,826

   94,332,963

   17,921,605

   -

   269,021,320Other financial assets (1)

   20,177,831

   175,525

   207,400

   8,796,112

   343,539

   -

   29,700,407Total financial assets

   240,779,283

   160,744,189

   49,478,994

   184,889,416

   101,464,565

   16,935,795

   754,292,242LiabilitiesDeposits from banks

   98,782,683

   63,080,426

   14,133,053

   40,917,101

   4,030,091

   -

   220,943,354Deposits from customers(2)

   122,542,678

   14,323,104

   10,054,554

   63,129,248

   724,679

   -

   210,774,263Financial liabilities held for trading

   2,790,513

   182,250

   202,157

   486,821

   388,241

   -

   4,049,982Funds from securities issued

   3,460,972

   14,697,409

   12,119,875

   20,669,467

   604,370

   -

   51,552,093Subordinated debt

   195,661

   549,640

   1,396,680

   13,523,640

   19,186,093

   -

   34,851,714Insurance technical provisions and pension plans (2)

   91,388,794

   2,011,060

   491,703

   24,877,163

   -

   -

   118,768,720Other financial liabilities (3)

   29,568,300

   4,903,276

   2,987,675

   600,633

   -

   -

   38,059,884Total financial liabilities

   348,729,601

   99,747,165

   41,385,697

   164,204,073

   24,933,474

   -

   679,000,010
  (1)Includes mainly foreign exchange transactions, debtors for guarantee deposits and negotiation and intermediation of securities; (2)Demand and savings deposits and insurance technical provisions and pension plans comprising VGBL and PGBL products are classified as up to 30 days, without considering average historical turnover; and (3)Includes mainly credit card transactions, foreign exchange transactions, negotiation and intermediation of securities, finance leasing and capitalization bonds.    BradescoF - 66


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
 The tables below show the assets and liabilities of the Company segregated by current and non-current, on the reporting date:  R$ thousandDecember 31, 2013Current

   Non-current

   TotalAssetsTotal financial assets

   428,250,373

   355,199,656

   783,450,029Non-current assets held for sale

   832,546

   -

   832,546Investments in associated companies

   -

   3,392,847

   3,392,847Property and equipment

   -

   4,501,967

   4,501,967Intangible assets and goodwill

   -

   8,220,739

   8,220,739Taxes to be offset

   922,917

   4,370,199

   5,293,116Deferred income tax assets

   -

   25,661,079

   25,661,079Other assets

   4,144,441

   2,804,850

   6,949,291Total non-financial assets

   5,899,904

   48,951,681

   54,851,585Total assets

   434,150,277

   404,151,337

   838,301,614LiabilitiesTotal financial liabilities

   531,534,041

   193,231,849

   724,765,890Other provisions

   1,531,647

   12,220,930

   13,752,577Current income tax liabilities

   3,082,976

   -

   3,082,976Deferred income tax liabilities

   -

   799,824

   799,824Other liabilities

   23,023,496

   773,925

   23,797,421Total non-financial liabilities

   27,638,119

   13,794,679

   41,432,798Total equity

   -

   72,102,926

   72,102,926Total liabilities and equity

   559,172,160

   279,129,454

   838,301,614
  R$ thousandDecember 31, 2012(Restated)Current

   Non-current

   TotalAssetsTotal financial assets

   451,002,671

   303,289,571

   754,292,242Non-current assets held for sale

   532,809

   164

   532,973Investments in associated companies

   -

   3,121,386

   3,121,386Property and equipment

   -

   4,524,827

   4,524,827Intangible assets and goodwill

   -

   7,617,873

   7,617,873Taxes to be offset

   804,621

   4,489,945

   5,294,566Deferred income tax assets

   -

   17,913,529

   17,913,529Other assets

   3,509,924

   2,733,304

   6,243,228Total non-financial assets

   4,847,354

   40,401,028

   45,248,382Total assets

   455,850,025

   343,690,599

   799,540,624LiabilitiesTotal financial liabilities

   489,862,463

   189,137,547

   679,000,010Other provisions

   1,134,895

   19,886,214

   21,021,109Current income tax liabilities

   3,288,688

   -

   3,288,688Deferred income tax liabilities

   -

   3,091,667

   3,091,667Other liabilities

   21,035,931

   756,829

   21,792,760Total non-financial liabilities

   25,459,514

   23,734,710

   49,194,224Total equity

   -

   71,346,390

   71,346,390Total liabilities and equity

   515,321,977

   284,218,647

   799,540,624
     F - 67IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
 3.4.Fair value of financial assets and liabilities  The Organization applies IFRS 7 for financial instruments measured in the consolidated statement of financial position at fair value, which requires disclosure of fair-value measurements according to the following fair-value hierarchy of fair value measurement:  ·Level 1  Quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities include debt and equity securities and derivative contracts that are traded in an active market, as well as Brazilian government securities that are highly liquid and are actively traded in over-the-counter markets.  ·Level 2  Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets and liabilities include derivative contracts whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data, including but not limited to yield curves, interest rates, volatilities, equity or debt prices and foreign exchange rates.  ·Level 3  Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities normally include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant Management judgment or estimation. This category generally includes certain corporate and bank debt securities and certain derivative contracts.  For fair valuing securities traded which have no public source, the Bradesco uses models defined by the mark-to-market Commission and also the mark-to-mark manual for each security modality, thus maintaining a consistent and regular source of disclosure. Through the use of methods and both mathematical and financial models which capture the effects and variations in the prices of marked-to-market assets, or similar instruments, Bradesco is able to ascertain in a clear and consistent manner its determination of fair value.    BradescoF - 68


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
  The tables below present the composition of the financial assets and liabilities measured at fair value, classified using the hierarchical levels:  R$ thousandDecember 31, 2013Level 1

   Level 2

   Level 3

   Fair ValueBrazilian government securities

   46,847,215

   -

   253

   46,847,468Corporate debt and marketable equity securities

   6,753,756

   -

   11,132,686

   17,886,442Bank debt securities

   15,837,616

   -

   4,350,208

   20,187,824Mutual funds

   8,426,678

   -

   -

   8,426,678Foreign governments securities

   235,083

   -

   -

   235,083Financial assets held for trading

   78,100,348

   -

   15,483,147

   93,583,495Derivative financial instruments

   141,336

   2,367,692

   -

   2,509,028Derivative financial instruments (liabilities)

   (187,677)

   (1,638,705)

   -

   (1,826,382)Derivatives

   (46,341)

   728,987

   -

   682,646Brazilian government securities

   28,897,492

   -

   88,193

   28,985,685Corporate debt securities

   5,181,185

   -

   25,877,171

   31,058,356Bank debt securities

   1,766,313

   -

   82,974

   1,849,287Brazilian sovereign bonds

   64,586

   -

   -

   64,586Marketable equity securities and other stocks

   5,643,098

   -

   237,399

   5,880,497Financial assets available for sale

   41,552,674

   -

   26,285,737

   67,838,411Total

   119,606,681

   728,987

   41,768,884

   162,104,552R$ thousandDecember 31, 2012 (Restated)Level 1

   Level 2

   Level 3

   Fair ValueBrazilian government securities

   46,011,496

   -

   3,026

   46,014,522Corporate debt and marketable equity securities

   8,320,374

   -

   27,900,869

   36,221,243Bank debt securities

   16,706,498

   -

   1,779,188

   18,485,686Mutual funds

   7,650,252

   -

   -

   7,650,252Foreign governments securities

   244,168

   -

   -

   244,168Financial assets held for trading

   78,932,788

   -

   29,683,083

   108,615,871Derivative financial instruments

   -

   3,067,334

   155,297

   3,222,631Derivative financial instruments (liabilities)

   -

   (3,913,211)

   (136,771)

   (4,049,982)Derivatives

   -

   (845,877)

   18,526

   (827,351)Brazilian government securities

   63,861,957

   -

   103,509

   63,965,466Corporate debt securities

   4,141,250

   -

   6,754,049

   10,895,299Bank debt securities

   862,921

   -

   -

   862,921Brazilian sovereign bonds

   273,776

   -

   -

   273,776Marketable equity securities and other stocks

   5,147,824

   -

   376,844

   5,524,668Financial assets available for sale

   74,287,728

   -

   7,234,402

   81,522,130Total

   153,220,516

   (845,877)

   36,936,011

   189,310,650
  Derivative Assets and Liabilities  The Organization ́s derivative positions are determined using quantitative models that require the use of multiple inputs including interest rates, prices, and indices to generate continuous yield or pricing curves and volatility factors, including the period to maturity, which are used to value the position. The majority of market inputs is observable and can be obtained, mainly, from BM&FBovespa and the secondary market. Other exchange traded derivatives valued using quoted prices are classified within Level 1 of the valuation hierarchy. However, few classes of derivative contracts are listed on an exchange. Those are classified as Level 2.   F - 69IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
 The yield curves are used to determine the fair value for currency swaps and swaps based on other risk factors. The fair value of futures and forward contracts is also determined based on quoted markets prices on the exchanges for exchanges-traded derivatives or using similar methodologies to those described for swaps. The fair value of options is determined from mathematical models, such as Black-Scholes, using yield curves, implied volatilities and the fair value of the underlying asset. Current market prices are used to determine the implied volatilities. Further, many of these models do not contain a high level of subjectivity as the methodologies used in the models do not require significant judgment and inputs to the model are readily observable from actively quoted markets. Such instruments are generally classified within Level 2 of the valuation hierarchy. The fair values of derivative assets and liabilities also include adjustments for market liquidity, counterparty credit quality and other specific factors, where appropriate.  Derivatives that are valued based on mainly unobservable market parameters and that are not actively traded are classified within Level 3 of the valuation hierarchy. Level 3 derivatives include credit default swaps relating to corporate debt securities.  The table below presents a reconciliation of all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the years 2013 and 2012:  R$ thousandFinancial assets held for trading

   Net derivatives (1)

   Financial assets available for sale

   TotalBalance onDecember 31, 2011 (Restated)

   21,455,840

   (10,947)

   6,595,137

   28,040,030Included in the statement of income and other comprehensive income

   2,399,821

   (28,828)

   1,251,096

   3,622,089Acquisitions, issuances and sales

   5,951,615

   58,301

   (611,831)

   5,398,085Transfer levels

   (124,193)

   -

   -

   (124,193)Balance onDecember 31, 2012 (Restated)

   29,683,083

   18,526

   7,234,402

   36,936,011Included in the statement of income and other comprehensive income

   2,547,555

   -

   (304)

   2,547,251Acquisitions, issuances and sales(2)

   (16,673,091)

   -

   19,051,639

   2,378,548Transfer levels

   (74,400)

   (18,526)

   -

   (92,926)Balance onDecember 31, 2013

   15,483,147

   -

   26,285,737

   41,768,884
  1)In 2012, the net derivatives included R$155,297thousand of derivative assets and R$136,771thousand of derivative liabilities; and 2)In 2013,R$ 13,811,260 thousand were reclassified, classified as level 3, from category of "trading securities" to "available for sale".  BradescoF - 70


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
   The tables below show the gains/(losses) due to changes in fair value, including the realized and unrealized gains and losses, recorded in the consolidated statement of income for Level 3 assets and liabilities during the years 2013, 2012 and 2011:  R$ thousandYear ended December 31, 2013Financial assets held for trading

   Net derivatives

   Financial assets available for sale

   TotalInterest and similar income

   2,499,220

   -

   1,067,146

   3,566,366Net trading gains/(losses) realized and unrealized

   48,335

   -

   (1,067,450)

   (1,019,115)Total

   2,547,555

   -

   (304)

   2,547,251
  R$ thousandYear ended December 31, 2012 (Restated)Financial assets held for trading

   Net derivatives

   Financial assets available for sale

   TotalInterest and similar income

   2,462,474

   -

   782,702

   3,245,176Net trading gains/(losses) realized and unrealized

   (62,653)

   (28,828)

   468,394

   376,913Total

   2,399,821

   (28,828)

   1,251,096

   3,622,089
  R$ thousandYear ended December 31, 2011 (Restated)Financial assets held for trading

   Net derivatives

   Financial assets available for sale

   TotalInterest and similar income

   2,152,178

   -

   669,938

   2,822,116Net trading gains/(losses) realized and unrealized

   (123,989)

   (3,475)

   796

   (126,668)Total

   2,028,189

   (3,475)

   670,734

   2,695,448
  The tables below show the gains/(losses) due to the changes in fair value, including the realized and unrealized gains and losses, recorded in the statement of income for Level 3 assets and liabilities, which were not settled during the years 2013, 2012 and 2011:  R$ thousandYear ended December 31, 2013Financial assets held for trading

   Net derivatives

   TotalNet gains/(losses) due to changes in fair value

   36,768

   -

   36,768Total

   36,768

   -

   36,768
  R$ thousandYear ended December 31, 2012 (Restated)Financial assets held for trading

   Net derivatives

   TotalNet gains/(losses) due to changes in fair value

   29,365

   (28,828)

   537Total

   29,365

   (28,828)

   537
    F - 71IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
  R$ thousandYear ended December 31, 2011 (Restated)Financial assets held for trading

   Net derivatives

   TotalNet gains/(losses) due to changes in fair value

   (102,916)

   (3,475)

   (106,391)Total

   (102,916)

   (3,475)

   (106,391)
  Sensitivity analysis for financial assets classified as Level 3  R$thousand2013Impact on income (1)

   Impact on shareholders’ equity (1)Scenario 1

   Scenario 2

   Scenario 3

   Scenario 1

   Scenario 2

   Scenario 3Interest rate in BRL

   (66)

   (18,520)

   (34,907)

   (1,949)

   (427,185)

   (764,175)Price indices

   (110)

   (15,890)

   (29,602)

   (776)

   (112,631)

   (209,840)Foreign currency coupon

   (18)

   (1,067)

   (2,112)

   -

   -

   -Foreign currency

   (747)

   (18,666)

   (37,333)

   -

   -

   -Variable income

   -

   -

   -

   (1,424)

   (35,610)

   (71,220)
  R$ thousand2012Impact on income (1)

   Impact on shareholders’ equity (1)Scenario 1

   Scenario 2

   Scenario 3

   Scenario 1

   Scenario 2

   Scenario 3Interest rate in BRL

   (1)

   (143)

   (278)

   (1,388)

   (254,520)

   (463,090)Price indices

   (95)

   (7,821)

   (14,999)

   (928)

   (74,626)

   (143,270)Foreign currency coupon

   (21)

   (910)

   (1,806)

   -

   -

   -Foreign currency

   (868)

   (21,711)

   (43,421)

   -

   -

   -Variable income

   -

   -

   -

   (2,261)

   (56,527)

   (113,053)
 (1)Values net of taxes. The sensitivity analyses were carried out based on the scenarios prepared for the respective dates, always taking into consideration market inputs available at the time and scenarios that would adversely impact our positions, in accordance with the examples below:  Scenario 1:Based on market inputs (BM&FBOVESPA, Brazilian Financial and Capital Markets Association - ANBIMA etc.), one-basis point shocks were applied to the interest rate and a 1% variation to prices. For example: in the scenario applied to the positions as of 12/31/2013, the real/US dollar exchange rate was R$ 2.39. For the interest scenario, the one-year fixed rate applied to the positions as of 12/31/2013 was 10.59% p.a.;  Scenario 2:25% shocks were determined based on the market. For example: in the scenario applied to the positions as of 12/31/2013, the real/US dollar exchange rate was R$2.95. For the interest scenario, the one-year fixed rate applied to the positions as of 12/31/2013 was 13.23% p.a. The scenarios for the other risk factors also consisted of a 25% shock to the respective curves or prices; and  Scenario 3:50% shocks were determined based on the market. For example: in the scenario applied to the positions as of 12/31/2013, the real/US dollar exchange rate was R$3.54. For the interest scenario, the one-year fixed rate applied to the positions as of 12/31/2013 was 15.87% p.a. The scenarios for the other risk factors also consisted of a 50% shock to the respective curves or prices.
    BradescoF - 72


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
   Financial instruments not measured at fair value  The table below summarizes the carrying amounts and the fair values of the financial assets and liabilities that were not presented in the consolidated statements of financial position at their fair value:  R$ thousandCarrying amount

   Fair valueDecember 31

   December 312013

   2012 (Restated)

   2013

   2012(Restated)Financial assetsHeld to maturity

   23,069,026

   3,715,673

   24,545,038

   6,330,812Loans and receivables•Banks (1)

   78,719,723

   92,459,347

   78,719,723

   92,459,437•Customers (1)

   304,121,334

   269,021,320

   303,332,602

   270,692,087Financial liabilitiesDeposits from banks

   243,100,373

   220,943,354

   243,223,362

   220,808,850Deposits from customers

   216,218,057

   210,774,263

   215,869,434

   210,580,862Funds from securities issued

   57,883,068

   51,552,093

   58,007,208

   51,746,171Subordinated debt

   35,885,003

   34,851,714

   36,232,216

   36,349,149
 (1)  Amounts of loans and receivables are presented net of the provision for impairment losses.  Loans and receivables  Fair values were estimated for groups of similar loans based upon type of loan, credit quality and maturity.Fair value for fixed-rate transactions was determined by discounted cash flow estimates using interest rates approximately equivalent to our rates for new transactions based on similar contracts. For cases in which a market price was available, this was used as an estimate of fair value.For most floating-rate loans, the carrying amounts were considered to approximate fair value. Where credit deterioration has occurred, estimated cash flows for fixed and floating-rate loans have been reduced to reflect estimated losses.  The fair values for performing loans are calculated by discounting scheduled principal and interest cash flows through maturity using market discount rates and yield curves that reflect the credit and interest rate risk inherent to the loan type at each reporting date. The fair values for impaired loans are based on the discounting cash flows or the value of underlying collateral.  The non-performing loans were allocated into each loan category for purposes of fair-value disclosure. Assumptions regarding cash flows and discount rates are based on available market information and specific borrower information.   F - 73IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
  Held to maturity  Investments held to maturity are carried at amortized cost. Fair values are estimated according to the assumptions described on Note 2 (e). See Note 22 for further details regarding the amortized cost and fair values of held-to-maturity securities.  Deposits from banks and customers  The fair value of fixed-rate deposits with stated maturities was calculated using the discounted cash flows based on a contractual basis and current market rates for instruments with similar maturities and terms. For floating-rate deposits, the carrying amount was considered to approximate fair value.  Funds from securities issued  The carrying values of funds from securities issued approximate the fair values of these instruments.  Subordinated debt  Fair values for subordinated debts were estimated using a discounted cash flow calculation that applies interest rates available in the market for similar maturities and terms.  3.5.Capital management  Corporate Capital Management Process  The purpose of Capital Management is to provide the conditions required to meet the Organization's strategic goals. This process is compatible with the nature of the operations, complexity of products and services, and the dimension of the Organization’s exposure to risks, taking into consideration the business environment.  The Organization manages is capital in a centralized manner, involving the business and control areas, the Board of Executive Officers and the Board of Directors in order to develop a strategic plan, that is in line with the Organization risk profile.  The capital management structure is composed of Committees that assist the Board of Executive Officers and the Board of Directors in the strategic decision-making process. Within this structure is the Planning, Budget and Control Department (DPOC), whose mission is to provide support and prepare and execute corporate strategy, manage the financial performance model and monitor the Organization’s efficiency and efficacy. This area is also responsible for complying with the provisions of the Central Bank regarding capital management activities.  Capital Adequacy (PR)  This process is monitored on a daily basis to ensure that the Organization maintains a solid capital base to support its operations and to cover the risks incurred, both in normal and extreme market conditions, and to ensure that the Organization complies with regulatory requirements.   F - 74IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
  According to the Central Bank, financial institutions are required to permanently maintain capital (Reference Shareholders’ Equity) compatible with the risks from their activities, represented by the Total Capital Requirement (PRE). PRE is calculated taking into consideration, at least, the sum of the following portions:      Where: Pepr:portion referring to exposure weighted by the risk weighting factor attributed to them; Pjur:representsthe risk of operations subject to interest rate variation; Pacs:reflectsthe risk of operations subject to share price variation; Pcom:reflectsthe risk of operations subject to commodity price variation; Pcam:reflectsthe risk of exposure to gold, foreign currency and operations subject toexchangevariation; and Popr:operational risk portion.   Additionally, the Organization must maintain enough capital to meet the interest rate risk from operations not included in the trading portfolio (BankingPortfolio’s interest rate risk), calculated using the EVE(Economic Value Equity)method.    BradescoF - 75


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
 Analysis of Reference Equity  Below is detailed financial information based on the consolidated statement of financial position as of December 31, 2013 and 2012 prepared in accordance with accounting practices adopted in Brazil, applicable to financial institutions authorized to operate under Brazilian Central Bank used to calculate the Reference Equity of the Organization under the perspective of Consolidated Financial Entities and Total Economic Financial. However, if the Reference Equity of the Organization was calculated according to numbers prepared under IFRS, the results could be different from that presented.  Calculation basis – Capital Adequacy Ratio

   R$ thousandCapital Adequacy Ratio

   (Basel III)

   Capital Adequacy Ratio (Basel II)2013

   2012December 31,

   December 31,Financial (1)

   Financial

   Economic Financial (2)Tier I capital

   70,808,081

   65,887,034

   66,195,362Principal capital

   70,808,081

   65,887,034

   66,195,362Shareholders’ equity

   70,939,802

   70,047,459

   70,047,459Non-controlling interests

   197,679

   189,066

   588,194Prudential adjustments - CMN Resolution 4192/13 (3)

   (329,400)

   -

   -Reduction of deferred assets - CMN Resolution 3444/07(3)

   -

   (120,784)

   (211,584)Decrease in gains/losses of mark-to-market adjustments in available for sale and derivatives - CMN Resolution 3444/07 (3)

   -

   (4,228,707)

   (4,228,707)Tier II capital

   24,995,582

   30,866,449

   30,866,449Total gains/losses of adjustments to fair value in available for sale and derivatives - CMN Resolution 3444/07 (3)

   -

   4,228,707

   4,228,707Subordinated debt (4)

   24,995,582

   26,637,742

   26,637,742Deduction of instruments for funding - CMN Resolution 3444/07 (3)

   -

   (128,153)

   (128,153)Capital (a)

   95,803,663

   96,625,330

   96,933,658- Credit risk

   526,108,312

   508,590,459

   503,135,606- Market risk

   27,333,949

   65,807,466

   66,188,180- Operational risk

   23,334,834

   23,120,659

   31,196,694Risk-weighted assets – RWA (b) (5)

   576,777,095

   597,518,584

   600,520,480Capital adequacy ratio (a/ b)

   16.6%

   16.2%

   16.1%Tier I capital

   12.3%

   11.0%

   11.0%Common equity

   12.3%

   11.0%

   11.0%Tier II capital

   4.3%

   5.2%

   5.1%
 (1)As of October 2013, capital is calculated as per CMN Resolution 4192/13, which establishes that calculation is based on the “Financial Consolidated”, which excludes non-financial subsidiaries; (2)Presented on a consolidated total basis (which includes both our financial and non-financial subsidiaries); (3)Criteria used as of October 2013, pursuant to CMN Resolution 4192/13; (4)Until September 2013, the amounts are calculated pursuant to CMN Resolution 3444/07 and, as of October 2013, the amounts are calculated pursuant to CMN Resolution 4192/13; and (5)For comparison purposes, we adjusted the “Allocation of minimum required capital” from prior periods, given that we now report the portions relating to “Risk weighted asset – RWA.   F - 76IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
 Analysis of Required Reference Equity (PRE)  Below is the evolution of the capital requirement to the Financial Consolidated and Economic Financial Consolidated under a standardized approach:  Capital Requirement

   R$ thousand2013

   2012December 31,

   December 31,Financial

   Financial

   Economic FinancialCredit risk

   57,871,914

   55,944,948

   55,344,917Credit Operations (Non-Retail)

   15,932,181

   15,940,168

   15,932,384Credit Operations (Retail)

   10,483,749

   8,929,333

   8,945,508Guarantees

   6,602,608

   6,519,906

   6,532,168Tax credits

   4,474,824

   2,747,459

   3,066,672Credit Commitments

   2,621,578

   3,193,206

   3,223,827Securities, Derivatives and Interbank Investments

   7,853,088

   8,114,297

   9,506,015Other assets

   9,903,886

   10,500,579

   8,138,343Market Risk (1)

   3,006,734

   7,238,821

   7,280,700Fixed-rate in Reais

   1,600,636

   2,004,700

   2,004,700Foreign Currency Coupon

   556,159

   1,366,498

   1,366,498Price Index Coupon

   644,443

   2,999,787

   2,999,787Shares

   73,587

   47,921

   47,921Commodities

   28,229

   12,711

   12,711Exposure to Gold, Foreign Currencies and Exchange(2)

   795,749

   807,204

   849,083Operational Risk

   2,566,832

   2,543,271

   3,431,635Corporate Finances

   101,136

   77,129

   77,129Trading and Sales

   509,347

   730,774

   730,774Retail

   502,376

   478,868

   478,868Commercial

   831,157

   727,380

   727,380Payments and Settlements

   366,136

   300,673

   300,673Financial Agent Services

   137,606

   113,059

   113,059Management of Asset

   108,805

   101,127

   101,127Retail Brokerage

   10,269

   14,261

   14,261Corporate debt securities

   -

   -

   888,364Required Reference Equity

   63,455,480

   65,727,040

   66,057,252Interest Rate Risk in the Banking Portfolio

   3,737,893

   2,110,607

   3,055,582
 1-To calculate the portion concerning Market Risk, capital requirements will be the greater between the amount determined using the internal model or 90% the standard model, according to Bacen Circular Letter 3646/13; and 2-In accordance with Bacen Circular Letter 3641/13, capital requirements are needed only if value of exposure to gold, foreign currency and assets and liabilities subject to exchange variations is above 2% of Capital.  The Organization ended the year of 2013 withRequired Reference Shareholders’ Equity (PRE)of R$ 63,445,480 thousand in the Consolidated Financial, a decrease of R$ 2,281,564 thousand (-3.5%) from 2012.  The capital requirement for credit risk increased by R$ 1,926,964 thousand (+3.4%), mainly due to increases in capital requirement and loan operation (retail and tax credits). To calculate the portion of market risk, the internal model prevailed against the standard model in December 2012. The capital requirements decreased by R$ 4,232,087 thousand (-58.5%), mainly due to decreased exposure to Interest Rate Coupon price index. Capital requirement for operational risk amounts to R$2,566,832 thousand, up R$ 23,559 thousand (+0.9%). Capital requirement for interest rate risk in the Banking Portfolio was R$3,737,983 thousand.   BradescoF - 77


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
 Follow-up of Basel Index and Margin  The Capital Adequacy Ratio is an indicator defined by the International Basel Committee on Banking Supervision which recommends that there be an 8% minimum ratio between capital and assets weighted by risk. In Brazil, the current minimum required ratio is 11% for Capital, 5.5% for Tier I Capital and 4.5% for Common Equity Tier 1, according to effective regulations (Resolution 4,192/13 and 3,477/09).  R$ thousandDecember 31, 2013

   December 31, 2012Financial

   Financial

   Economic FinancialTotal Capital

   95,803,662

   96,625,330

   96,933,658Tier I

   70,808,080

   65,887,034

   66,195,364Common Equity Tier I

   70,808,080

   65,887,034

   66,195,364Total Capital Requirement

   63,445,480

   65,727,040

   66,057,252Margin (Capital Buffer)

   32,358,182

   30,898,290

   30,876,406Capital Adequacy Ratio

   16.6%

   16.2%

   16.1%
  According to Central Bank, the Capital Adequacy Ratio (Basel) for the Consolidated Financial as of December 2013 was 16.6%, of which 12.3% fell under Tier I Capital / Common Equity Tier 1. Margin amounted to R$32,358,182 thousand, which enables an increase of up to R$346,912,590 thousand in loan operations (Retail).    Basel III  The Basel Committee on Banking Supervision introduced a series of changes in the regulatory structure, including reviews on definition of capital, expansion of the risk scope, introduction of leverage and liquidity indexes. These changes aim to increase the quality and the quantity of the financial institutions’ capital, enhancing the resilience of the financial systems and reducing the risks arising from possible banking crisis to the economy.  Based on Basel III rules issued by Central Bank in March and October 2013, which include the definition of capital and the expansion of risk scope and will be gradually implemented up to 2019, below is the simulation based on strategic assumptions for the Consolidated Financial, considering the full compliance with the rules, i.e., anticipating all the impacts expected throughout the implementation schedule, according to CMN Resolution 4192/13.   F - 78IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
  Basel III – Impact Study   3.6.Insurance risk/subscription  Insurance risk is risk transferred by an insurance contract if loss events may occur in the future and there is uncertainty over the amount of damages resulting from such loss events. Within insurance risk, there is also underwriting risk, which arises from an adverse economic situation not matching the Organization's expectations at the time of drafting its underwriting policy in relation to uncertainties over defining actuarial premises or technical reserves and calculating insurance premiums. In short, it refers to the risk of the frequency or severity of loss events or benefits exceeding the Organization's estimates.  Underwriting risk is managed by our technical areas. Underwriting and risk acceptance policies are periodically evaluated by working groups. In addition, one of the main tasks of our technical areas is to develop an internal model for calculating additional capital based on underwriting risk.  The management process seeks to diversify insurance operations, aimed at excellence by balancing the portfolio, and is supported by the grouping of risks with similar characteristics, in order to reduce the impact of isolated risks.  Uncertainties over estimated future claim payments  Claims are accrued as they occur. The organization must indemnify all covered events that occurred during the policy period, even if a loss is discovered after coverage ends. As a result, claims are reported over a period and a significant portion of these claims relate to provisions for incurred but unreported claims (IBNR). The estimated cost of claims includes direct expenses to be incurred when settling them.   BradescoF - 79


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
  Asset and liability management (ALM)  The organization periodically analyzes flows of assets and liabilities held in portfolio (ALM - Asset Liability Management). The method used for ALM analysis is to observe the sufficiency or insufficiency of the present value of the stream of assets in relation to the present value of the stream of liabilities, and the duration of assets in relation to that of liabilities. The aim is to verify that the situation of the portfolio of assets and liabilities is balanced in order to honor the Company's future commitments to its participants and insured persons.  Risk management by product  Monitoring the insurance contract portfolio enables us to track and adjust tariffs practiced, as well as assess the need for alterations. Other monitoring tools in use include: (i) sensitivity analysis, (ii) algorithm checks and corporate system notifications (underwriting, issuance and claims).  Credit risk  Credit risk consists of the possible incurrence of losses associated with non-performance, by the borrower or its counterparty, of its respective financial obligations according to agreed terms, with credit agreement devaluation derived from the deteriorated risk classification of the borrower, and other values related to any non-performance of financial obligations by the counterparty.  Reinsurance policy  Insurance companies may be conservative and selective when choosing their partners, credit risk is obviously involved in purchasing reinsurance.However, in Brazil this risk is relatively mitigated due to the existing legal and regulatory rules, since insurers must operate with reinsurers registered with SUSEP, and are classified as local, admitted or occasional. Reinsurers classified as admitted and occasional, headquartered abroad, must meet specific minimum requirements set forth in current legislation.  Policy for purchasing reinsurance and approval of reinsurers parties to their contracts are within the purview of the executive board, which, in addition to the minimum legal requirements and regulations, follows certain other parameters when choosing these partners, thus minimizing credit risk inherent to these transactions, such as requiring a minimum rating of A- from S&P– Standard & Poor ́s(or equivalent) and shareholder equity consistent with amounts transferred. Another important aspect of purchasing reinsurance is the fact that the Organization aims to work within its contractual capacity, thereby avoiding frequent purchase of coverage for facultative contracts and higher exposures to credit risk.  Premium transferred for reinsurance is relatively small in relation to total premium written; note that almost all casualty portfolios, except automotive, are hedged by reinsurance and in most cases a combination of proportional and non-proportional plans by risk and/or by event.  Currently, most automatic contracts (proportional and non-proportional) are transferred to IRB Brasil Resseguros S.A. (IRB-Brasil). Some admitted reinsurers participate with lower individual percentages, but all have a minimum capital and ratinghigher than the minimum established by the Brazilian legislation, which reduces our credit risk in management's judgment.  Managing credit risk  Credit-risk management in the Organization is a continuous and evolutional process for performing the mapping, development, evaluation and diagnosis of existing models, instruments and procedures that require a high level of discipline and control of operation analyses to preserve the integrity and independence of processes.   F - 80IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
  Risk management includes monitoring exposure to credit risk of individual counterparties in relation to credit ratings placed by risk rating agencies such as Fitch Ratings, Standard & Poor's, or Moody's.  As noted above, credit risk is managed on the corporate level using structured, independent internal procedures based on proprietary documentation and reports, duly assessed by the risk management structures of Organization, and based on the gradual deployment of internal models for the determination, measurement and calculation of capital.  Regarding reinsurance operations, the Organization purchases reinsurance operations with a restricted group of reinsurers being given to IRB-Brasil the leadership of their contracts and all automatic optional contracts. According to the rating agencies provided in Brazilian law, such reinsurers have their credit risk classificated as low and IRB-Brasil classification, issued by A.M.Best, is A-.  Exposure to insurance credit risk  Management believes that maximum exposure to credit risk arising from premiums to be paid by insured is low, since in some cases coverage of claims may be canceled (under Brazilian regulations), if premiums are not paid by due date. Exposure to credit risk for premium receivables differs between risks yet to be incurred and risks incurred, since there is higher exposure on incurred-risk lines for which coverage is provided in advance of payment of the insurance premium.  The Organization is exposed to concentration risk with individual reinsurers, due to the nature of the reinsurance market and the strict range of reinsurers that have acceptable credit ratings.The Organization’spolicy for managing exposure of its counterparties to reinsurance is to restrict the reinsurers that may be used, and to regularly assess the impact of reinsurer default.  Property insurance  Property insurance risk results from:  ·Oscillations in the incidence, frequency and severity of the claims and the indemnifications of claims in relation to the expectations; ·Unpredictable claims arising from an isolated risk; ·Inaccurate pricing or inadequate underwriting of risks; ·Inadequate reinsurance policies or risk transfer techniques; and ·Insufficient or excessive technical provisions.  The nature of the insurance underwritten generally is of short duration.  The underwriting strategies and goals are adjusted by management and informed through internal guidelines and practice and procedure manuals.  The risks inherent to the main property insurance business lines are summarized as follows:  ·Auto insurance includes, among other things, physical damage to the vehicle, loss of the insured vehicle and third-party liability insurance for vehicles; and ·Business, home and miscellaneous insurance includes, among other things, fire risks (e.g.: fire, explosion and business interruption), natural hazards (e.g.: earthquakes, storms and floods), engineering lines (e.g.: explosion of boilers, breakdown of machinery and construction) and marine (cargo and hull) as well as liability insurance.   BradescoF - 81


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
 Property insurance risk management  The Organization monitors and evaluates risk exposure, being responsible for the development, implementation and revision of guidelines related to underwriting, treatment of claims, reinsurance and constitution of technical provisions. The implementation of these guidelines and the management of these risks are supported by the technical departments of each risk area.  The Technical Departments have developed mechanisms, i.e. risk grouping by CPF, CNPJ and risky addresses, that identify, quantify and manage accumulated exposures in order to keep them within the limits defined by the internal guidelines.  Life-insurance and private-pension plans  Life-insurance and private-pension plans are long-term in nature and, accordingly, various actuarial assumptions are used to manage and estimate the risks involved, such as: assumptions about returns on investments, expenses, mortality and persistence rates in relation to each business unit. Estimates are based on historical experience and on actuarial expectations.  The risks associated to life insurance and private pension plans include:  ·Biometric risks, which includes mortality experience, adverse morbidity, longevity and disability. The mortality risk may refer to policyholders living longer than expected (longevity) or passing away before expected. This is because some products pay a lump sum if the person dies, and others pay regular amounts while the policyholder is alive; ·Policyholder’s behavior risks, which includes persistence rate experience. Low persistence rates for certain products may result in less policies/private pension plan agreements remaining contracted to help cover fixed expenses and may reduce future positive cash flows of the underwritten business. A low persistence rate may affect liquidity of products which carry a redemption benefit; ·Group life-insurance risk results from exposure to mortality and morbidity rates and to operational experience worse than expected on factors such as persistence levels and administrative expenses; and ·Some Life and Pension Plan products have pre-defined yield guarantees, and thereby face risk from changes in financial markets, returns on investments and interest rates that are managed as a part of market risk.  Life-insurance and private-pension-plan risk management  ·The Organization monitors and assesses risk exposure and is responsible for developing, implementing and reviewing policies relating to underwriting, processing claims, and technical reserves for insurance purposes. Implementation of these policies and management of these risks are supported by our technical areas; ·The technical areas have developed mechanisms, such as analysis of possible accumulation of risks based on monthly reports that identify, quantify and manage accumulated exposures to keep them within limits defined by internal policies; ·Longevity risks are carefully monitored in relation to the most recent data and to the trends of the environment in which the Organization and its subsidiaries and associated companies operate. Management monitors exposure to this risk and the capital implications to manage the possible impacts, as well as to obtain the capital that the businesses may require. The adminstration adopts for calculating ways to predict and thus be covered with possible impacts generated by the improvement in life expectancy of the insured/assisted population;   F - 82IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements


·Risks of mortality and morbidity are mitigated through reinsurance cession in catastrophe;

·Persistence risks are managed through frequent monitoring of the experience when compared to market information. Management also defines rules on the management of persistence to monitor and implement specific initiatives to improve the renewal of policies that expire; and

·The risk of a high level of expenses is primarily monitored through the evaluation of the profitability of the business units and the frequent monitoring of expense levels.



Health Insurance



Risks associated with health insurance:



·Variations in cause, frequency and severity of indemnities of claims related to expectations;

·Unforeseen claims resulting from isolated risk;

·Incorrect pricing or inadequate subscription of risks; and

·Insufficient or overvalued technical provisions.



For individual health insurance, for which certain provisions are calculated based on expected future cash flow (difference between expected future claims and expected future premiums), there are a number of risks, in addition to those cited above, such as biometric risk, including mortality and longevity experience and the insured's behavioral risk, which covers persistency experience, as well as interest-rate risk that is managed as a part of market risk.



Management of health-insurance risk



·Organization monitors and evaluates risk exposure and is responsible for the development, implementation and review of policies that cover subscription, treatment of claims and technical insurance provisions. The implementation of these policies and management of risks are supported by the technical areas;

·The technical areas have developed mechanisms that identify, quantify and manage accumulated exposure in order to keep it within the limits defined by internal policies;

·Longevity risk is carefully monitored using the most recent data and tendencies of the environment in which the Organization operates. Management monitors exposure to this risk and its capital implications in order to manage possible impacts, as well as the funding that the future business needs;

·Persistency risk is managed through the frequent management of the Insurer’s experience in comparison with market information. Management also establishes guidelines for the management of persistency in order to monitor and implement specific initiatives, when necessary to improve retention of policies that can prescribe;

·The risk of elevated expenses is mainly monitored in order to evaluate the profitability of business units and to frequently monitor expense levels; and

·Interest-rate risk is monitored as a part of market risk.





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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
 Life Insurance with Survival and Welfare Coverage and Individual Life Insurance  Results of sensitivity analysis  Some of the test results are presented below. For each sensitivity scenario, we show the impact on the Organization’s bottom line of a reasonable and possible change in just one factor. We stress, there are no significant exchange rate risks in the insurance operations.  Sensitivity factor

   Description of sensitivity factor appliedInterest rate

   Effect of lowering the risk free forward yield curve rateLoss events

   Impact on the business of increased loss events and claimsLongevity

   Impact of an improved survival estimates on annuity contractsConversion to income

   Impact on annuity contracts of a higher rate of conversion to income
  The sensitivity analysis was performed considering the same basis of the LAT test with variation in the assumptions listed below:  R$ thousandDecember 31, 2013Interest rate

   Longevity

   Conversion to incomeImpact on results and shareholders’ equity after taxes and contributions (%)

   (5%)

   0.002%

   5%PGBL and VGBL (contributing period)

   (191,553)

   (31,244)

   (5,930)Tradicional plans (contributing period)

   (108,134)

   (17,494)

   (9,956)All plans(retirement benefit period)

   (85,499)

   (23,628)

   -Individual life

   (8,196)

   11,046

   -Total

   (393,382)

   (61,320)

   (15,886)
  The scenario was also applied for individual life insurance considering the variations noted above and was not identified any additional value in addition of those already constituted ​​that could affect the shareholders’ equity and results of the year.  Damages, life and health insurance  For damages, life and health insurance, the table below shows the impact on income and shareholders’ equity if loss events/claims were to rise 1 percentage point over the 12 months from the calculation base date. R$ thousandGross reinsurance

   Net reinsuranceDecember 31

   December 312013

   2012

   2013

   2012Auto

   (18,634)

   (18,330)

   (18,634)

   (18,330)RE (Elementary branch)

   (7,840)

   (6,672)

   (6,676)

   (5,088)Life

   20,741

   (18,017)

   20,604

   (17,934)Health

   (58,234)

   (46,194)

   (58,234)

   (46,194)
  Limitations of sensitivity analysis  Sensitivity analyses show the effect of a change in an important premise while other premises remain unchanged. In real situations, premises and other factors may be correlated. It should also be noted that these sensitivities are not linear, greater or lesser impacts should not be interpolated or extrapolated from these results.   F - 84IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
 Sensitivity analyses do not take account of the fact that assets and liabilities are managed and controlled. Additionally, theOrganization’sfinancial position may vary on the occasion of any movement occurring in the market. For example, the risk management strategy aims to manage exposure to fluctuations in the market. As investment markets move through various levels, management initiatives may include sales of investments, altered portfolio allocations, and other protective measures.  Other limitations of sensitivity analyses include the use of hypothetical market trends to show potential risk, which only poses Managements views of possible changes affecting markets in the near future in ways that cannot be predicted with any certainty, as well as the premise that all interest rates vary in the same way.  Risk concentration  Potential exposures are monitored by analyzing concentration in certain type of insurance. The table below shows risk concentration by type of insurance (except health), based on net premiums, net of reinsurance:  Net premiums written by type of insurance, net of reinsurance

   R$ thousandDecember 312013

   2012Auto

   3,068,620

   3,063,941RE(Elementary branch)

   1,361,584

   1,040,685Life insurance

   4,401,497

   3,910,500VGBL

   18,722,928

   17,596,738PGBL

   1,973,394

   1,932,090Traditional

   1,610,780

   1,341,189
  In the health sector, around 88.42% of production is represented by corporate contracts. The risks related to these contracts are minimized by constant revisions of the actuarial balance that is applied in the renewal thereof, or even during the term when contributions are required. Although 11.58% of production is represented by individual contracts, the risk related to occurrence of losses vis-à-vis pricing – which in these products is indicated by the ANS – is minimized by the establishment of a technical provision.  4)Estimates and judgments  The Organization makes estimates and assumptions that affect the report amounts of assets and liabilities within the next financial year. All estimates and assumptions required in conformity with IFRS are best estimates undertaken in accordance with the applicable standard. Such estimates and judgments are continually evaluated and based on the historical experience and a number of other factors including future event expectations, regarded as reasonable, under the current circumstances.  The estimates and assumptions that have a significant risk and might have a relevant impact on the amounts of assets and liabilities within the next financial year are disclosed below. The actual results may be different from those established by these estimates and premises.  Fair value of financial instruments  Financial instruments recognized at fair value in our consolidated financial statements consist primarily of financial assets held for trading, including derivatives and financial assets classified as available for sale. The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.  BradescoF - 85


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
  These financial instruments are categorized within a hierarchy based on the lowest level of input that is significant to the fair value measurement. By contrast, for instruments classified as level 3, we have to input a significant amount of our own judgment in arriving at fair value measurements. We base our judgment decisions on our knowledge and observations of the markets relevant to the individual assets and liabilities, and those judgments may vary based on market conditions. In applying our judgment, we look at a range of third-party prices and transaction volumes to understand and assess the extent of market benchmarks available and the judgments or modeling required in third-party processes. Based on these factors, we determine whether the fair values are observable in active markets or whether the markets are inactive.  Imprecision in estimating unobservable market inputs can impact the amount of revenue or loss recorded for a particular position. Furthermore, while we believe our valuation methods are appropriate and consistent with those of other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value on the reporting date. For a detailed discussion of the determination of fair value of financial instruments, see Note 3.  Impairment of financial assets available for sale  We determine that financial assets available for sale are impaired when there has been a significant or prolonged decline in the fair value below its cost (see note 2(e)(viii)(b)). This determination of what is significant or prolonged requires judgment. In making this judgment, the Organization evaluates, among other factors, the volatility in share price, where such variations involve equity securities.  In addition, valuations are obtained through market prices or valuation models that require the use of certain assumptions or judgments to estimate fair value.  Allowance for impairment on loans and advances  Periodically, the Organization reviews its portfolio of loans and advances evaluating the estimated loss on the impairment of its operations.  The determination of the amount of the allowance for impairment, by its nature, requires judgments and uses assumptions regarding the loan portfolio, both on a portfolio basis and on an individual basis. When we review our loan portfolio as a whole, several factors can affect our estimate of the likely range of losses, including which methodology we use in measuring historical delinquency rates and what historical period we consider in making those measurements.  Additional factors that can affect our determination of the allowance for impairment include:  ·General economic conditions and conditions in the relevant industry; ·Past experience with the relevant debtor or industry, including recent loss experience; ·Credit quality trends; ·Amounts of loan collateral; ·The volume, composition and growth of our loan portfolio; ·The Brazilian government's monetary policy; and ·Any delays in the receipt of information needed to evaluate loans or to confirm existing credit deterioration.  The Organization uses models to assist analysis of the loan portfolio and in determining what impairment should be made. It applies statistical loss factors and other risk indicators to loan pools with similar risk characteristics in arriving at an estimate of incurred losses in the portfolio to calculate the models. Although the models are frequently revised and improved, they are by nature dependent on judgment of the information and estimates. In addition, the volatility of the Brazilian economy is one of the factors that may lead to greater uncertainty in our models than would be expected in more stable macroeconomic environments. Accordingly, our allowance for impairment may not be indicative of future charge-offs.   F - 86IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
  For a sensitivity analysis, we assess the impact of an increase in the probability of default (PD) over the allowance. In this assessment an increase in 10% of the PD on December 31, 2013, would have increased the allowance for impairment by R$ 286,964 thousand. This sensitivity analysis is hypothetical, and is only meant to illustrate the impact that the defaults have on determining the allowance for loan losses.  The process to determine the level of provision for losses on impairment requires estimates and the use of judgment; it is possible that actual losses presented in subsequent periods will differ from those calculated according to current estimates and assumptions.  Impairment of goodwill  The Organization has to consider at least annually whether the current carrying value of goodwill is impaired. The first step of the process requires the identification of independent Cash-Generating Units and the allocation of goodwill to these units. The carrying amount of the CGU, including the allocated goodwill, is compared to its recoverable amount to determine whether any impairment exists. If the value in use of a cash-generating unit is less than its carrying value, goodwill will be impaired. Detailed calculations may need to be carried out taking into consideration changes in the market in which a business operates (e.g. competitive activity, regulatory change). The value in use is based upon discounting expected pre-tax cash flows at a risk-adjusted interest rate appropriate to the operating unit, the determination both of which requires one to exercise one’s judgment. While forecasts are compared with actual performance and external economic data, expected cash flows naturally reflect the Organization’s view of future performance.  Income tax  The determination of the amount of our income-tax liability is complex, and our assessment is related to our analysis of our deferred tax assets and liabilities and income tax payable. In general, our evaluation requires that we estimate future amounts of current and deferred taxes of. Our assessment of the possibility that a deferred tax assets could be realized is subjective and involves assessments and assumptions that are inherently uncertain in nature. The realization of deferred tax assets is subject to changes in future tax rates and developments in our strategies. The underlying support for our assessments and assumptions could change over time as a result of unforeseen events or circumstances, affecting our determination of the amount of our tax liability.  Significant judgment is required in determining whether it is more likely than not that an income tax position will be sustained upon examination, even after the outcome of any related administrative or judicial proceedings based on technical merits. Further judgment is then required to determine the amount of benefit eligible for recognition in our consolidated financial statements.  In addition, we have monitored the interpretation of tax laws by, and decisions of, tax authorities and Courts so that we can adjust any prior judgment of accrued income taxes. This monitoring may also result from our own income tax planning or resolution of income tax controversies, and may be material to our operating results for any given period. For additional information about income tax, see Note 17.  BradescoF - 87


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
  Technical insurance provisions  Insurance technical provisions (reserves) are liabilities representing estimates of the amounts that will become due at a future date, to or on behalf of our policyholders – see Note 2(p). These benefits are computed using assumptions of mortality, morbidity, lapse, investment performance, inflation and expense. These assumptions are based on our experience and are periodically reviewed against industry standards to ensure actuarial credibility.  5)Operating segments  The Organization operates mainly in the banking and insurance segments. Our banking operations include operations in the retail, middle-market and corporate sectors, leasing, international bank operations, investment bank operations and as a private bank. The Organization also conducts banking segment operations through its branches located throughout the country, in branches abroad and through subsidiaries as well as by means of shareholding interests in other companies. Additionally we are engaged in insurance, supplemental pension plans and capitalization bonds through its subsidiary, Bradesco Seguros S.A. and its subsidiaries.  The following information regarding the segments was prepared based on reports provided to our key management to evaluate performance and make decisions related to the allocation of funds for investments and other purposes. Our key management uses a range of information, including financial, which is in accordance with the accounting practices adopted in Brazil applicable to institutions authorized to oerate by the Central Bank, and non-financial information measured on different bases.  The main assumptions for segment of income and expenses include (i) surplus cash invested by the entities operating in insurance, supplemental pension and capitalization bonds are included in this segment, resulting in an increase in net interest income; (ii) salaries and benefits and administrative costs included in the insurance, supplemental pension and capitalization bonds segment consist only of cost directly related to these operations, and (iii) costs incurred in the banking operations segment related to the infrastructure of the branch network and other general indirect expenses have not been allocated between segments.   F - 88IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
  Information by operating segment, reviewed by the Organization and corresponding to the years 2013, 2012 and 2011, is shown below:  R$ thousandYear ended December 31, 2013Banking

   Insurance, pension and capitalization bonds

   Other operations (1), adjustments and eliminations

   TotalNet interest income

   41,600,095

   5,589,989

   2,110,399

   49,300,483Net fee and commission income

   15,639,215

   1,264,869

   (2,404,402)

   14,499,682Net gains/(losses) on financial instruments classified as held for trading

   (4,073,466)

   (1,914,579)

   197,956

   (5,790,089)Net gains/(losses)on financial instruments classified as available for sale

   (3,880,575)

   (2,526,016)

   305,809

   (6,100,782)Net gains/(losses) of foreign exchange operations

   (1,120,880)

   -

   27,283

   (1,093,597)Income from insurance and pension plans

   -

   6,932,616

   1,064

   6,933,680Operating income/(loss)

   (9,074,921)

   2,492,021

   532,112

   (6,050,788)Impairment of loans and advances

   (9,731,376)

   -

   107,506

   (9,623,870)Personnel expenses

   (11,200,617)

   (1,092,479)

   (61,322)

   (12,354,418)Other administrative expenses

   (12,068,420)

   (1,102,065)

   1,018,948

   (12,151,537)Depreciation and amortization

   (2,625,748)

   (180,381)

   65,299

   (2,740,830)Other operating income/(expenses)

   (6,156,686)

   (966,999)

   (498,555)

   (7,622,240)Operating expense

   (41,782,847)

   (3,341,924)

   631,876

   (44,492,895)Income before income taxes and equity in the earnings of associates

   6,381,542

   6,004,955

   869,985

   13,256,482Equity in the earnings of associates

   1,031,280

   31,151

   256

   1,062,687Income before income taxes

   7,412,822

   6,036,106

   870,241

   14,319,169Income tax and social contribution

   789,516

   (2,253,451)

   (369,096)

   (1,833,031)Net income for the year

   8,202,338

   3,782,655

   501,145

   12,486,138Attributable to controlling shareholders

   8,195,099

   3,692,531

   508,290

   12,395,920Attributable to non-controlling interest

   7,239

   90,124

   (7,145)

   90,218Total assets

   768,059,393

   160,295,583

   (90,053,362)

   838,301,614Investments in associated companies

   2,254,356

   1,068,210

   70,281

   3,392,847Total liabilities

   696,187,324

   143,112,952

   (73,101,588)

   766,198,688
    BradescoF - 89


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
  R$ thousandYear ended December 31, 2012(Restated)Banking

   Insurance, pension and capitalization bonds

   Other operations (1), adjustments and eliminations

   TotalNet interest income

   39,181,426

   3,124,512

   1,079,785

   43,385,723Net fee and commission income

   13,885,450

   1,233,278

   (2,397,988)

   12,720,740Net gains/(losses) on financial instruments classified as held for trading

   1,095,588

   (6,689)

   1,021,213

   2,110,112Net gains/(losses)on financial instruments classified as available for sale

   (455,476)

   2,418,373

   (66,923)

   1,895,974Net gains/(losses) of foreign exchange operations

   (1,589,833)

   -

   502,238

   (1,087,595)Income from insurance and pension plans

   -

   1,411,996

   1,020

   1,413,016Operating income/(loss)

   (949,721)

   3,823,680

   1,457,548

   4,331,507Impairment of loans and advances

   (10,925,404)

   -

   (525,979)

   (11,451,383)Personnel expenses

   (10,586,643)

   (1,017,702)

   45,343

   (11,559,002)Other administrative expenses

   (11,592,512)

   (932,226)

   720,749

   (11,803,989)Depreciation and amortization

   (1,459,721)

   (114,214)

   (914,247)

   (2,488,182)Other operating income/(expenses)

   (10,350,581)

   (375,446)

   2,051,849

   (8,674,178)Operating expense

   (44,914,861)

   (2,439,588)

   1,377,715

   (45,976,734)Income before income taxes and equity in the earnings of associates

   7,202,294

   5,741,882

   1,517,060

   14,461,236Equity in the earnings of associates

   752,353

   108,302

   119,557

   980,212Income before income taxes

   7,954,647

   5,850,184

   1,636,617

   15,441,448Income tax and social contribution

   (273,930)

   (2,196,399)

   (1,619,425)

   (4,089,754)Net income for the year

   7,680,717

   3,653,785

   17,192

   11,351,694Attributable to controlling shareholders

   7,672,233

   3,591,743

   27,594

   11,291,570Attributable to non-controlling interest

   8,484

   62,042

   (10,402)

   60,124Total assets

   750,410,472

   153,695,571

   (104,565,419)

   799,540,624Investments in associated companies

   1,587,922

   1,089,644

   443,820

   3,121,386Total liabilities

   679,490,290

   133,940,353

   (85,236,409)

   728,194,234
    F - 90IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
 R$ thousandYear ended December 31, 2011(Restated)Banking

   Insurance, pension and capitalization bonds

   Other operations (1), adjustments and eliminations

   TotalNet interest income

   31,379,722

   3,274,715

   733,884

   35,388,321Net fee and commission income

   11,989,868

   1,079,597

   (2,171,206)

   10,898,259Net gains/(losses) on financial instruments classified as held for trading

   779,332

   (1,300)

   (1,386,303)

   (608,271)Net gains/(losses)on financial instruments classified as available for sale

   (25,022)

   213,520

   176,804

   365,302Net gains/(losses) of foreign exchange operations

   1,043,896

   -

   1,581,920

   2,625,816Income from insurance and pension plans

   -

   3,075,318

   857

   3,076,175Operating income

   1,798,206

   3,287,538

   373,278

   5,459,022Impairment of loans and advances

   (9,275,421)

   -

   1,036,063

   (8,239,358)Personnel expenses

   (10,082,575)

   (950,749)

   (61,470)

   (11,094,794)Other administrative expenses

   (10,805,456)

   (1,051,456)

   476,642

   (11,380,270)Depreciation and amortization

   (1,615,437)

   (77,828)

   (424,401)

   (2,117,666)Other operating income/(expenses)

   (4,933,149)

   (481,628)

   308,685

   (5,106,092)Operating expense

   (36,712,038)

   (2,561,661)

   1,335,519

   (37,938,180)Income before income taxes and equity in the earnings of associates

   8,455,758

   5,080,189

   271,475

   13,807,422Equity in the earnings of associates

   585,281

   100,103

   118,436

   803,820Income before income taxes

   9,041,039

   5,180,292

   389,911

   14,611,242Income tax and social contribution

   (1,305,702)

   (1,850,139)

   (365,959)

   (3,521,800)Net income for the year

   7,735,337

   3,330,153

   23,952

   11,089,442Attributable to controlling shareholders

   7,724,917

   3,201,449

   31,688

   10,958,054Attributable to non-controlling interest

   10,420

   128,704

   (7,736)

   131,388Total assets

   657,903,426

   123,867,399

   (60,804,236)

   720,966,589Investments in associated companies

   1,338,976

   1,051,490

   334,255

   2,724,721Total liabilities

   602,191,149

   109,511,404

   (50,118,058)

   661,584,495
  (1)Other operation represents less than 1% of total assets/liabilities and the net income for the year.  Our operations are substantially conducted in Brazil. Additionally, as of December 31, 2013, we have a branch in New York, and two branches in Grand Cayman, mainly to complement our banking services and assistance in import and export operations for Brazilian customers. Moreover we also have subsidiaries abroad, namely: Banco Bradesco Argentina S.A. (Buenos Aires), Banco Bradesco Europe (Luxembourg), Bradesco North America LLC (New York), Bradesco Securities, Inc. (New York), Bradesco Securities UK Limited (London), Bradesco Services Co., Ltd. (Tokyo), Cidade Capital Markets Ltd. (Grand Cayman), Bradesco Securities Hong Kong Limited (Hong Kong), Bradesco Trade Services Limited (Hong Kong) and Bradescard Mexico, Sociedad de Responsabilidad Limitada (Mexico).  No income from transactions with a single customer or counterparty abroad represented 10% or more of the Organization’s income in the period of 2013, 2012 and 2011.  All transactions between operating segments are conducted on an arm's length basis, with intra-segment revenue and costs being eliminated in "Other operations, adjustments and eliminations". Income and expenses directly associated with each segment are included in determining business-segment performance.    BradescoF - 91


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements


# 6)Net interest income



R$ thousandYear ended December 312013

   2012(Restated)

   2011(Restated)Interest and similar incomeLoans and advances to banks

   8,899,968

   6,791,429

   9,168,583Loans and advances to customers:- Loan operations

   48,961,763

   47,382,917

   43,791,578- Leasing transactions

   683,657

   1,080,916

   1,489,851Financial assets:- For trading

   7,872,493

   7,816,181

   9,070,609- Available for sale

   7,740,512

   6,434,573

   3,373,070- Held to maturity

   603,768

   589,835

   360,835Pledged as collateral

   12,770,916

   9,090,234

   8,744,459Compulsory deposits with the Central Bank

   3,110,877

   3,808,229

   6,112,337Other financial interest income

   38,671

   37,540

   40,774Total

   90,682,625

   83,031,854

   82,152,096Interest and similar expensesDeposits from banks:- Interbank deposits

   (63,268)

   (48,529)

   (46,655)- Funding in the open market

   (16,671,777)

   (11,758,260)

   (14,001,786)- Borrowings and onlending

   (1,937,991)

   (2,349,470)

   (5,775,844)Deposits from customers:- Savings accounts

   (4,112,323)

   (3,623,935)

   (3,754,755)- Time deposits

   (5,828,956)

   (7,555,947)

   (11,201,087)Funds from securities issued

   (3,646,584)

   (3,439,688)

   (2,490,536)Subordinated debt

   (3,132,915)

   (2,884,331)

   (2,787,681)Technical insurance and pension plans

   (5,988,328)

   (7,985,971)

   (6,705,431)Total

   (41,382,142)

   (39,646,131)

   (46,763,775)Net interest income

   49,300,483

   43,385,723

   35,388,321








F - 92IFRS – International Financial Reporting Standards – 2013




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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
 7)Net fee and commission income  R$ thousandYear ended December 312013

   2012(Restated)

   2011(Restated)Fee and commission incomeCredit cards

   4,871,774

   4,002,174

   3,440,033Current accounts

   3,601,736

   3,237,888

   2,780,806Collections

   1,471,005

   1,301,843

   1,204,277Guarantees

   920,433

   776,684

   614,926Fund management

   838,320

   842,767

   787,921Consortium management

   722,462

   613,234

   526,562Custody and brokerage services

   510,785

   482,883

   419,872Collection of taxes, utility bills and similar

   352,928

   318,495

   312,064Interbank fee

   46,672

   31,250

   27,802Other

   1,199,608

   1,149,913

   817,974Total

   14,535,723

   12,757,131

   10,932,237Fee and commission expensesFinancial system services

   (36,041)

   (36,391)

   (33,978)Total

   (36,041)

   (36,391)

   (33,978)Net fee and commission income

   14,499,682

   12,720,740

   10,898,259
  8)Net gains/(losses) on financial instruments classified as held for trading  R$ thousandYear ended December 312013

   2012(Restated)

   2011(Restated)Fixed income securities

   (4,344,885)

   4,027,119

   1,432,918Derivative financial instruments

   (1,842,833)

   (2,303,169)

   (1,474,927)Variable income securities

   397,629

   386,162

   (566,262)Total

   (5,790,089)

   2,110,112

   (608,271)
  9)Net gains/(losses) on financial instruments classified as available for sale  R$ thousandYear ended December2013

   2012(Restated)

   2011(Restated)Fixed income securities (1)

   (5,821,894)

   2,761,028

   (14,368)Variable income securities (2)

   (468,754)

   (982,738)

   252,974Dividends received

   189,866

   117,684

   126,696Total

   (6,100,782)

   1,895,974

   365,302
  (1)In 2013, includes the effect of the sell of  of the securities described in the footnote 5 on the statements of the equity totaling R$ 6,117,649 thousand; and (2)Includes  impairment losses of R$ 402,085 thousand in 2013 and R$ 1,170,038 thousand in 2012.  10)Net gains/(losses) of foreign currency transactions  Net gains and losses of foreign currency transactions basically represent the gains or losses from currency trading and translation of monetary items from a foreign currency into the functional currency.    BradescoF - 93


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
 11)Income from insurance and pension plans  R$ thousandYear ended December 312013

   2012(Restated)

   2011(Restated)Premiums written

   42,226,410

   37,899,360

   32,136,300Supplemental pension plan contributions

   3,584,290

   3,273,485

   3,061,682Coinsurance premiums ceded

   (154,125)

   (198,281)

   (190,724)Premiums returned

   (543,779)

   (500,468)

   (418,791)Net premiums

   45,112,796

   40,474,096

   34,588,467Reinsurance premiums

   (225,581)

   (297,351)

   (272,924)Premiums retained from insurance and pension plans

   44,887,215

   40,176,745

   34,315,543Changes in the provision for insurance

   (18,737,974)

   (19,975,166)

   (15,453,221)Changes in the provision for private pension plans

   (1,263,833)

   (3,350,935)

   (2,759,184)Changes in the insurance technical provisions and pension plans

   (20,001,807)

   (23,326,101)

   (18,212,405)Reported indemnities

   (15,448,699)

   (13,311,414)

   (11,975,875)Claims expenses

   (295,432)

   (142,206)

   (155,519)Recovery of ceded coinsurance

   49,011

   132,065

   217,943Recovery of reinsurance

   194,185

   292,659

   138,154Salvage recoveries

   246,751

   229,207

   209,340Changes in the IBNR provision

   (230,507)

   (324,144)

   397,345Retained claims

   (15,484,691)

   (13,123,833)

   (11,168,612)Commissions on premiums

   (1,630,312)

   (1,535,764)

   (1,343,695)Recovery of commissions

   16,896

   21,794

   34,386Fees

   (828,659)

   (730,423)

   (441,965)Brokerage expenses - private pension plans

   (246,443)

   (199,358)

   (190,035)Changes in deferred commissions

   221,481

   129,956

   82,958Selling expenses for insurance and pension plans

   (2,467,037)

   (2,313,795)

   (1,858,351)Income from insurance and pension plans

   6,933,680

   1,413,016

   3,076,175
  12)Impairment of loans and advances  R$ thousandYear ended December 312013

   2012(Restated)

   2011(Restated)Loans and advances:Impairment losses

   (14,202,896)

   (15,332,059)

   (12,125,609)Recovery of credits charged-off as loss

   3,640,014

   2,986,639

   2,788,806Reversal of impairment

   939,012

   894,037

   1,097,445Total

   (9,623,870)

   (11,451,383)

   (8,239,358)
     F - 94IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
 13)Personnel expenses  R$ thousandYear ended December 312013

   2012(Restated)

   2011(Restated)Salaries

   (5,654,705)

   (5,350,695)

   (4,845,061)Benefits

   (2,572,877)

   (2,415,768)

   (2,204,787)Social charges

   (2,194,667)

   (2,065,325)

   (1,827,618)Employee profit sharing

   (1,094,204)

   (1,012,986)

   (928,169)Provision for labor disputes

   (719,003)

   (588,858)

   (1,133,643)Training

   (118,962)

   (125,370)

   (155,516)Total

   (12,354,418)

   (11,559,002)

   (11,094,794)
  14)Other administrative expenses  R$ thousandYear ended December 312013

   2012(Restated)

   2011(Restated)Third party services

   (3,722,757)

   (3,458,649)

   (3,664,248)Communications

   (1,480,119)

   (1,557,453)

   (1,514,046)Data processing

   (1,072,253)

   (917,522)

   (871,662)Transportation

   (811,428)

   (850,504)

   (760,219)Rent

   (782,179)

   (740,219)

   (768,792)Financial system

   (732,520)

   (657,271)

   (538,041)Advertising, promotions and public relations

   (708,476)

   (714,473)

   (631,555)Maintenance and conservation of assets

   (608,501)

   (559,713)

   (512,851)Security and surveillance

   (492,060)

   (425,464)

   (370,212)Materials

   (299,152)

   (313,341)

   (295,145)Advances to FGC (Deposit Guarantee Association)

   (296,618)

   (290,702)

   (331,466)Water, electricity and gas

   (220,785)

   (249,886)

   (224,152)Travel

   (132,359)

   (133,856)

   (157,227)Other

   (792,330)

   (934,936)

   (740,654)Total

   (12,151,537)

   (11,803,989)

   (11,380,270)
  15)Depreciation and amortization  R$ thousandYear ended December 312013

   2012(Restated)

   2011(Restated)Amortization expenses

   (1,722,591)

   (1,452,947)

   (1,128,505)Depreciation expenses

   (1,018,239)

   (1,035,235)

   (989,161)Total

   (2,740,830)

   (2,488,182)

   (2,117,666)
     BradescoF - 95


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
 16)Other operating income/(expenses)  R$ thousandYear ended December 312013

   2012(Restated)

   2011(Restated)Expenses with taxes other than income tax

   (3,749,328)

   (3,800,303)

   (3,481,782)Expenses of contingencies

   (1,101,059)

   (788,992)

   (1,254,214)Changes in monetary liabilities

   (626,834)

   (823,960)

   (1,032,018)Income from sales of non-current assets, investments, and property and equipment, net (1)

   (220,400)

   584,318

   (246,323)Other (2)

   (1,924,619)

   (3,845,241)

   908,245Total

   (7,622,240)

   (8,674,178)

   (5,106,092)
  (1)Includes in 2012, gain on sale of Serasa shares of R$ 793,360 thousand; and (2)Includes in 2013, (i) the effect of the reversal of provision previously recorded, relating to the adhesion to the tax liability installment and cash payment program, in the amount of R$ 1,949,763 thousand; (ii) impairment lossesin the amount of R$ 104,606 thousand (2012 - R$ 581.436 thousand),andin 2011,(ii)includes revenues from tax credits to offset and bargain purchase gain related to the BERJ acquisition.  17)Income tax and social contribution  a)Calculation of income tax and social contribution charges  R$ thousandYear ended December 312013

   2012(Restated)

   2011(Restated)Income before income tax and social contribution

   14,319,169

   15,444,672

   14,611,242Total income tax and social contribution charges at rates of 25% and 15%, respectively

   (5,727,668)

   (6,177,869)

   (5,844,497)Effect of additions and exclusions in the tax calculation:Equity in results of associated companies

   425,075

   392,085

   321,529Foreign exchange variations

   1,320,106

   726,799

   956,878Non-deductible expenses net of non-taxable income

   325,697

   (503,065)

   (428,068)Interest on equity (paid and payable)

   1,289,620

   1,304,523

   1,173,595Prior-period tax credits (Note 16(2))

   462,270

   -

   -Effect of social contribution rate differences (1)

   155,517

   169,518

   153,261Other

   (83,648)

   (1,745)

   145,502Income tax and social contribution for the period

   (1,833,031)

   (4,089,754)

   (3,521,800)Effective rate

   12.80%

   26.48%

   24.10%
  (1)Relates to the differential of rate of social contribution between financial entities (15%) and non financial subsidiaries (9%). See Note 2(w).   F - 96IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
 b)Composition from income tax and social contribution in the consolidated statement of income  R$ thousandYear ended December 312013

   2012(Restated)

   2011(Restated)Current taxes:Income tax and social contribution due

   (5,814,188)

   (6,574,502)

   (5,207,647)Deferred taxes:Addition/realization on temporary differences

   1,163,367

   2,556,708

   1,906,908Use of initial balances from:Negative social contribution losses

   (130,336)

   (151,741)

   (120,543)Income tax loss

   (208,823)

   (178,052)

   (263,747)Prior-period tax creditsTemporary additions (Note 16(2))

   462,270

   -

   -Addition on:Negative social contribution losses

   1,181,492

   150,667

   147,350Income tax loss

   1,513,187

   107,166

   15,879Total deferred tax expense

   3,981,157

   2,484,748

   1,685,847Income tax and social contribution

   (1,833,031)

   (4,089,754)

   (3,521,800)
  c)Deferred income tax and social contribution presented in the consolidated statement of financial position  R$ thousandBalance onDecember 31, 2012(Restated)

   Additions

   Realization

   Balance on December 31, 2013Provisions of impairment of loans and advances

   11,593,783

   5,551,441

   2,426,744

   14,718,480Provision for contingencies

   7,322,501

   1,315,488

   3,936,431

   4,701,558Adjustment to market value of securities

   426,468

   306,747

   16,401

   716,814Others

   1,941,727

   1,734,551

   903,015

   2,773,263Total tax assets on temporary differences

   21,284,479

   8,908,227

   7,282,591

   22,910,115Income tax and social contribution losses in Brazil and abroad

   1,681,009

   2,694,680

   339,159

   4,036,530Adjustment to market value of available for sale

   -

   710,311

   -

   710,311Social contribution - MP 2158-35 (change in tax law)

   140,842

   -

   645

   140,197Total deferred tax assets (1)

   23,106,330

   12,313,218

   7,622,395

   27,797,153Deferred tax liabilities (1)

   8,284,468

   368,784

   5,717,355

   2,935,897Net deferred taxes (1)

   14,821,862

   11,944,434

   1,905,040

   24,861,256
    BradescoF -97


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
  R$ thousandBalance onDecember 31, 2011(Restated)

   Additions

   Realization

   Balance onDecember 31, 2012(Restated)Provisions of impairment of loans and advances

   10,196,356

   6,616,803

   5,219,376

   11,593,783Provision for contingencies

   6,240,200

   1,732,140

   649,839

   7,322,501Adjustment to market value of securities

   422,259

   13,142

   8,933

   426,468Others

   1,868,956

   1,171,065

   1,098,294

   1,941,727Total tax assets on temporary differences

   18,727,771

   9,533,150

   6,976,442

   21,284,479Income tax and social contribution losses in Brazil and abroad

   1,752,969

   257,833

   329,793

   1,681,009Social contribution - MP 2158-35 (change in tax law)

   144,643

   -

   3,801

   140,842Total deferred tax assets (1)

   20,625,383

   9,790,983

   7,310,036

   23,106,330Deferred tax liabilities (1)

   5,818,682

   3,056,677

   590,891

   8,284,468Net deferred taxes (1)

   14,806,701

   6,734,306

   6,719,145

   14,821,862
  (1)  Deferred tax assets and deferred tax liabilities are offset in the consolidated statement of financial position when related to income taxes levied by the same authority and are related to the same taxable entity, which amount in 2013 was R$ 2,136,074 thousand (2012 – R$ 5,192,801 thousand).  d)Expected realization of tax assets on temporary differences, income tax and social contribution losses and special social contribution assets  R$ thousandTemporary differences

   Income tax and Social contribution losses

   Social contribution - MP 2158-35

   TotalIncome tax

   Social contribution

   Income tax

   Social contribution2014

   5,334,013

   3,152,633

   398,718

   249,581

   33,578

   9,168,5232015

   5,402,350

   3,182,034

   135,628

   192,665

   522

   8,913,1992016

   1,945,199

   1,098,517

   937,592

   550,779

   106,097

   4,638,1842017

   333,445

   183,595

   711,014

   509,037

   -

   1,737,0912018

   1,494,352

   783,977

   17,564

   333,952

   -

   2,629,845Total

   14,509,359

   8,400,756

   2,200,516

   1,836,014

   140,197

   27,086,842
  e)Deferred tax liabilities  R$ thousandDecember 312013

   2012(Restated)Timing differences of depreciation – finance leasing

   1,340,059

   2,390,590Adjustment to market values of financial assets

   (709,344)

   4,300,706Others

   1,594,871

   1,593,172Total

   2,225,586

   8,284,468
   F - 98IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
 f)Income tax and social contribution on adjustments recognized directly in equity  R$ thousandDecember 31, 2013

   December 31, 2012(Restated)

   December 31, 2011(Restated)Before tax

   Tax (expense)/ benefit

   Net of tax

   Before tax

   Tax (expense)/ benefit

   Net of tax

   Before tax

   Tax (expense)/ benefit

   Net of taxFinancial assets recorded as available for sale

   (12,544,423)

   5,014,296

   (7,530,127)

   7,679,798

   (3,061,838)

   4,617,960

   (763,425)

   294,978

   (468,447)Exchange differences on translations of foreign operations

   50,839

   (20,335)

   30,504

   46,196

   (18,479)

   27,717

   389

   (155)

   234Total

   (12,493,584)

   4,993,961

   (7,499,623)

   7,725,994

   (3,080,317)

   4,645,677

   (763,036)

   294,823

   (468,213)
   g)Taxes to be offset  Refers basically to amount of income tax and social contribution to be offset.   BradescoF - 99


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
 18)Earnings per share  a)Basic earnings per share  The calculation of basic earnings per share was calculated based on the weighted average number of ordinary and preferred shares outstanding, respectively, as shown in the calculations below:  Years ended December 312013

   2012(Restated)

   2011(Restated)Net earnings attributable to the Organization’s ordinary shareholders (R$ thousand)

   5,908,906

   5,380,105

   5,221,168Net earnings attributable to the Organization’s preferred shareholders (R$ thousand)

   6,487,014

   5,911,465

   5,736,886Weighted average number of ordinary shares outstanding (thousands) (1)

   2,100,738

   2,100,833

   2,099,844Weighted average number of preferred shares outstanding (thousands) (1)

   2,096,607

   2,098,472

   2,097,504Basic earnings per share attributable to ordinary shareholders of the Organization (in Reais)

   2.81

   2.56

   2.49Basic earnings per share attributable to preferred shareholders of the Organization (in Reais)

   3.09

   2.82

   2.74
  (1) All share amounts presented for prior periods have been adjusted to reflect the stock split approved at the Board of Directors’ Meeting  of March 11, 2013, the proportion of one new share for every 10 shares held.  b)Diluted earnings per share  Diluted earnings per share are the same as basic earnings per share since there are no potentially dilutive instruments.  19)Cash and balances with banks  a) Cash and balances with banks  R$ thousandDecember 312013

   2012(Restated)Cash in local currency

   9,104,904

   8,802,438Cash in foreign currency

   2,964,374

   3,146,593Restricted deposits in the Brazilian Central Bank (1)

   55,380,989

   47,952,418Others

   96

   115Total

   67,450,363

   59,901,564
  (1)Compulsory deposits in the Brazilian Central Bank refer to a minimum balance that financial institutions must maintain at the Brazilian Central Bank based on a percentage of deposits received from third parties.   F- 100IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
  b) Cash and cash equivalents  R$ thousandDecember 312013

   2012(Restated)Cash in local currency

   9,104,904

   8,802,438Cash in foreign currency

   2,964,374

   3,146,593Short-term interbank investments (1)

   105,628,613

   35,478,051Others

   96

   115Total

   117,697,987

   47,427,197
  (1)Refers to operations with maturity date on the effective date of investment equal to or less than 90 days and insignificant risk of change in the fair value.  20)Financial assets and liabilities held for trading  a) Financial assets held for trading  R$ thousandDecember 312013

   2012(Restated)Financial assetsBrazilian government securities

   46,847,468

   46,014,522Corporate debt and marketable equity securities

   17,886,442

   36,221,243Bank debt securities

   20,187,824

   18,485,686Mutual funds

   8,426,678

   7,650,252Foreign governments securities

   235,083

   244,168Derivative financial instruments

   2,509,028

   3,222,631Total

   96,092,523

   111,838,502
  Maturity  R$ thousandDecember 312013

   2012(Restated)Maturity of up to one year

   44,330,402

   36,067,001Maturity of one to five years

   30,456,366

   40,734,189Maturity of five to 10 years

   8,451,946

   22,517,238Maturity of over 10 years

   1,873,448

   1,108,947No stated maturity

   10,980,361

   11,411,127Total

   96,092,523

   111,838,502
  Financial instruments provided as collateral and classified as "held for trading”, totaled R$ 2,924,653  thousand and R$ 8,609,468 thousand in 2013 and 2012, respectively, as disclosed in Note 23 "Assets Pledged as Collateral”.  The Organization in 2013 maintained a total of R$ 2,096,222 thousand (2012 – R$ 2,187,031 thousand) pledged as a guarantee of liabilities.   BradescoF - 101


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
 Unrealized gains/(losses) included in securities and trading securities totaled (R$ 60,919 thousand in 2013) (2012 – R$ 392,100 thousand and 2011 – R$ 31,025 thousand). Net variation in unrealized gains/ (losses) from securities and trading securities totaled R$ (453,019) thousand in 2013 (2012 –R$ 361,075 thousand).  b) Financial liabilities held for trading  R$ thousandDecember 312013

   2012(Restated)Derivative financial instruments

   1,826,382

   4,049,982Total

   1,826,382

   4,049,982
  c) Derivative financial instruments  The Organization enters into operations involving derivative financial instruments with a number of customers for the purpose of mitigating their overall risk exposure as well as managing risk exposure. The derivative financial instruments most often used are highly-liquid instruments traded on the futures market (BM&FBovespa).  (i)    Swap contracts  Foreign currency and interest rate swaps are agreements to exchange one set of cash flows for another and result in an economic exchange of foreign currencies or interest rates (for example fixed or variable) or in combinations thereof (i.e. foreign currency and interest rate swaps). There is no exchange of the principal except in certain foreign currency swaps. The Organization’s foreign currency risk reflects the potential cost of replacing swap contracts and whether the counterparties fail to comply with their obligations. This risk is continually monitored in relation to the current fair value, the proportion of the notional value of the contracts and the market liquidity. The Organization, to control the level of credit risk assumed, evaluates the counterparties of the contracts using the same techniques used in its loan operations.  (ii)  Foreign exchange options  Foreign exchange options are contracts according to which the seller (option issuer) gives to the buyer (option holder) the right, but not the obligation, to buy (call option) or sell (put option) on a certain date or during a certain period, a specific value in foreign currency. The seller receives from the buyer a premium for assuming the exchange or interest-rate risk. The options can be arranged between the Organization and a customer. The Organization is exposed to credit risk only on purchased options and only for the carrying amount, which is the fair market value.  (iii)  Foreign currency and interest rate futures  Foreign currency and interest rate futures are contractual obligations for the payment or receipt of a net amount based on changes in foreign exchange and interest rates or the purchase or sale of a financial instrument on a future date at a specific price, established by an organized financial market. The credit risk is minimal, since the future contracts are guaranteed in cash or securities and changes in the value of the contracts are settled on a daily basis. Contracts with a forward rate are interest-rate futures operations traded individually which require settlement of the difference between the contracted rate and the current market rate over the value of the principal to be paid in cash at a future date.   F - 102IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
  (iv)  Forward operations  A forward operation is a contract of purchase or sale, of a share, at a fixed price, for settlement on a certain date. Because it is a futures market, in which the purchase of the share will only be made on the date of maturity, a margin deposit is necessary to guarantee the contract. This margin can be in cash or in securities. The value of the margin varies during the contract according to the variation of the share involved in the operation, to the changes of volatility and liquidity, besides the possible additional margins that the broker could request.  The breakdown of the notional and/or contractual values and the fair value of derivatives held for trading by the Organization is as follows:  R$ thousandNotional amounts

   Asset/(liability)December 31

   December 312013

   2012(Restated)

   2013

   2012(Restated)Futures contracts•Interest rate futuresPurchases

   83,661,033

   130,181,209

   10,561

   10,494Sales

   188,121,164

   441,870,992

   (17,729)

   (26,986)•In foreign currencyPurchases

   24,688,862

   3,804,690

   -

   -Sales

   37,322,798

   30,645,872

   -

   -•OthersPurchases

   83,149

   25,963

   -

   -Sales

   115,569

   1,336,588

   -

   -Options•Interest ratesPurchases

   180,586,642

   61,765,403

   132,249

   184,358Sales

   204,049,725

   79,976,227

   (153,479)

   (139,680)•In foreign currencyPurchases

   1,211,870

   536,505

   15,244

   2,555Sales

   2,902,599

   347,040

   (67,746)

   (3,743)•OthersPurchases

   436,698

   695,710

   544

   15,283Sales

   1,567,633

   662,970

   (949)

   (15,322)Forward operations•In foreign currencyPurchases

   9,185,195

   20,068,292

   444,194

   290,016Sales

   8,192,634

   8,314,349

   (268,385)

   (847,890)•OthersPurchases

   216,420

   411,994

   86,124

   1,768,413Sales

   221,819

   1,396,530

   (193,883)

   (1,762,143)Swap contracts•Asset positionInterest rate swaps

   37,923,123

   15,140,812

   1,429,104

   356,414Currency swaps

   25,131,705

   21,030,812

   391,008

   595,098•Liability positionInterest rate swaps

   36,946,126

   14,946,865

   (599,973)

   (773,255)Currency swaps

   25,412,799

   21,527,465

   (524,237)

   (480,963)
   BradescoF - 103


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
 Swaps are contracts of interest rates, foreign currency and cross currency and interest rates in which payments of interest or the principal or in one or two different currencies are exchanged for a contractual period. The risks of swap contracts refer to the potential inability or unwillingness of the counterparties to comply with the contractual terms and the risk associated with changes in market conditions due to changes in the interest rates and the currency exchange rates.  The interest rate and currency futures and the forward contracts of interest rates call for subsequent delivery of an instrument at a specific price or specific profitability. The reference values constitute a nominal value of the respective instrument whose variations in price are settled daily. The credit risk associated with futures contracts is minimized due to these daily settlements. Futures contracts are also subject to risk of changes in interest rates or in the value of the respective instruments.  The Organization has the following economic hedging operations, however, as mentioned in Note 2(e) (iii), these do not qualify for hedge accounting:  Fair-value hedge of interest-rate risk  The Organization uses interest-rate swaps to protect its exposure to changes in the fair value of its fixed income issuances and certain loans and advances. The interest rate swaps are matched with specific issuances or fixed-income loans.  Cash-flow hedge of debt securities issued in foreign currency  The Organization uses interest-rate swaps in foreign currencies to protect itself against exchange and interest-rate risks arising from the issuance of floating rate debt securities denominated in foreign currencies. The cash flows of foreign-currency interest-rate swaps are compatible with the cash flows of the floating rate debt securities.  Hedge of net foreign investments  The Organization uses a combination of forward exchange contracts and foreign currency denominated debt to mitigate the exchange-rate risk of its net investments in subsidiaries abroad.  The fair value of forward contracts used to protect the net investments in foreign subsidiaries is shown in the previous table. Foreign currency denominated debts used to protect net investments of the Organization in subsidiaries abroad have a fair value equal to its carrying amount and are included in funds from securities issuances (Note 33).  Other derivatives designated as hedges  The Organization uses this category of instruments to manage its exposure to currency, interest rate, equity market and credit risks. Instruments used include interest-rate swaps, interest-rate swaps in foreign currency, forward contracts, futures, options, credit swaps and stock swaps. The fair value of these derivatives is shown in the previous table.  Unobservable gains on initial recognition  When the valuation depends on unobservable data any initial gain or loss on financial instruments is deferred over the life of the contract or until the instrument is redeemed, transferred, sold or the fair value becomes observable. All derivatives which are part of the hedge relationships are valued on the basis of observable market data.   F - 104IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
 The reference and/or contractual values do not reflect the actual risk assumed by the Organization, since the net position of these financial instruments arises from compensation and/or combination thereof. The net position is used by the Organization especially to protect interest rates, the price of the underlying assets or exchange risk. The result of these financial instruments is recognized in “Net gains and losses of financial assets held for trading”, in the consolidated statement of income.  21)Financial assets available for sale  R$ thousandAmortized cost

   Gross unrealized gains

   Gross unrealized losses

   Fair valueBrazilian government securities

   29,812,137

   359,478

   (1,185,930)

   28,985,685Corporate debt securities

   31,482,436

   238,463

   (662,543)

   31,058,356Bank debt securities

   1,916,044

   34,877

   (101,634)

   1,849,287Brazilian sovereign bonds

   52,524

   12,212

   (150)

   64,586Marketable equity securities and other stocks

   5,790,564

   465,790

   (375,857)

   5,880,497Balance on December 31, 2013

   69,053,705

   1,110,820

   (2,326,114)

   67,838,411Brazilian government securities

   55,637,691

   8,328,123

   (348)

   63,965,466Corporate debt securities

   10,150,772

   985,321

   (240,794)

   10,895,299Bank debt securities

   793,651

   133,296

   (64,026)

   862,921Brazilian sovereign bonds

   239,105

   76,362

   (41,691)

   273,776Marketable equity securities and other stocks

   5,270,733

   790,624

   (536,689)

   5,524,668Balance on December 31, 2012(Restated)

   72,091,952

   10,313,726

   (883,548)

   81,522,130
  Maturity  R$ thousandDecember 31, 2013

   December 31, 2012(Restated)Amortized cost

   Fair value

   Amortized cost

   Fair valueDue within one year

   10,060,271

   10,053,730

   19,603,010

   19,622,996From 1 to 5 years

   16,106,928

   15,854,096

   9,862,844

   10,984,233From 5 to 10 years

   24,289,250

   23,553,929

   26,134,955

   29,633,449Over 10 years

   12,806,692

   12,496,159

   11,220,410

   15,756,784No stated maturity

   5,790,564

   5,880,497

   5,270,733

   5,524,668Total

   69,053,705

   67,838,411

   72,091,952

   81,522,130
  Financial instruments pledged as collateral and classified as available for sale, totaled R$41,267,846thousand and R$23,343,375thousand in 2013 and 2012, respectively, as disclosed in Note 23 "Assets Pledged as Collateral".  In 2013, the Organization maintained a total of R$4,011,827thousand (2012 – R$ 113,944 thousand) financial assets available for sale pledged as a guarantee for liabilities.  We have applied our policy for impairment testing described in note 2(e)(viii)(b) and realized other than temporary losses for available for sale assets in the amount of R$402,085thousand (2012 – R$ 1,170,038 thousand and 2011 – R$ 515 thousand).     BradescoF - 105


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements


# 22)Investments held to maturity



R$ thousandAmortized cost

   Gross unrealized gains

   Gross unrealized losses

   Fair valueSecurities (1):Brazilian government securities

   23,029,469

   1,469,895

   -

   24,499,364Brazilian sovereign bonds

   39,557

   6,791

   (674)

   45,674Balance on December 30, 2013

   23,069,026

   1,476,686

   (674)

   24,545,038Securities:Brazilian government securities

   3,659,576

   2,623,544

   -

   6,283,120Brazilian sovereign bonds

   56,097

   3,949

   (12,354)

   47,692Balance on December 31, 2012(Restated)

   3,715,673

   2,627,493

   (12,354)

   6,330,812




(1)In December 31, 2013, R$ 19,121,109 thousand was reclassified from “Available for Sale Securities” to “Held-to-Maturity Securities,” given that the Insurance Group made the reclassification because of the change in Management's intention.



Maturity



R$ thousandDecember 31, 2013

   December 31, 2012(Restated)Amortized cost

   Fair value

   Amortized cost

   Fair valueDue within one year

   -

   -

   11,242

   11,374From 1 to 5 years

   2,948,181

   2,961,496

   220,643

   244,747From 5 to 10 years

   6,804,319

   7,337,634

   1,721,156

   2,692,694Over 10 years

   13,316,526

   14,245,908

   1,762,632

   3,381,997Total

   23,069,026

   24,545,038

   3,715,673

   6,330,812




The financial instruments granted as guarantees, which totaled R$ 4,360 thousand and R$267,421thousand in 2013 and 2012, respectively, are described in Note 23 “Assets pledged as collateral”.



F - 106IFRS – International Financial Reporting Standards – 2013




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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
  23)Assets pledged as collateral  R$ thousandDecember 312013

   2012(Restated)Held for trading (1)

   2,924,653

   8,609,468Brazilian government securities

   2,924,653

   8,609,468Available for sale (1) (2)

   47,060,487

   23,343,375Brazilian government securities

   44,667,819

   19,308,061Corporate debt securities

   1,939,437

   3,431,710Brazilian sovereign bonds

   -

   149,284Bank debt securities

   453,231

   454,320Held to maturity

   4,360

   267,421Brazilian sovereign bonds

   4,360

   267,421Loans and advances to banks

   67,750,725

   73,913,035Interbank liquidity investments

   67,750,725

   73,913,035Total

   117,740,225

   106,133,299
  (1)From the total amount of held of trading and available for sale, R$ 48,388,121 thousand relates to Level 1 (2012 – R$ 30.442.243 thousand) and R$ 1,597,019 thousand relates to Level 3 (2012 – R$ 1.510.600  thousand). During 2013, there were no transfers between Levels; and (2)Includes gains in 2013 of R$ 105,063 thousand ( 2012 – R$ 1.252.307  thousand) and losses of R$ 1,286,168 thousand (2012 –  R$ 3.827 thousand).  Collateral is a conditional commitment to ensure that the contractual clauses of a funding in the open market are complied with. In these agreements, the amount of R$ 117,380,203  thousand (2012 – R$ 103,661,849 thousand) may be repledged and R$ 360,022 thousand (2012 – R$2,471,450thousand), sold or repledged.  The fair value of assets pledged as collateral in 2013 classified as held to maturity totaled R$ 5.034 thousand (2012 - R$271,237thousand).  24)Loans and advances to banks  R$ thousandDecember 312013

   2012(Restated)Repurchase agreements (1)

   57,222,304

   68,668,469Loans to financial institutions

   21,540,661

   23,824,810Impairment of loans and advances

   (43,242)

   (33,932)Total

   78,719,723

   92,459,347
 (1)As the guarantee holder had not defaulted, the Organization was authorized to sell or repledge the guarantee at a fair value of R$ 28.875 thousand in 2013 (2013 – R$209,267thousand).    BradescoF - 107


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
 25)Loans and advances to customers  R$ thousandDecember 312013

   2012(Restated)Working capital

   59,180,627

   53,298,176Personal credit (1)

   41,922,683

   32,240,786Onlending BNDES/Finame

   40,543,267

   35,703,861Vehicles – CDC (Direct consumer credit)

   32,209,642

   33,820,338Housing loans

   27,870,462

   22,302,967Financing and export

   25,662,214

   22,665,551Credit card

   25,473,079

   22,367,978Rural loans

   13,651,917

   11,580,061Guaranteed account

   10,422,370

   9,800,968Import

   8,598,811

   6,580,312Leasing

   5,713,481

   8,035,454Receivable insurance premiums

   3,717,227

   2,893,506Overdraft facilities

   3,312,666

   2,988,632Others

   25,701,122

   24,657,024Total Portfolio

   323,979,568

   288,935,614Impairment of loans and advances

   (19,858,234)

   (19,914,294)Total of net loans and advances to customers

   304,121,334

   269,021,320
 (1)Includes in 2013 R$ 24,487,902 thousand related to payroll loans (2012 – 16,595,256 thousand).  Allowance for loans and advances to customers  R$ thousand2013

   2012(Restated)At the beginning of the period

   19,914,294

   17,551,042Impairment of loans and advances

   9,623,870

   11,451,383Recovery of credits charged-off as loss

   3,640,014

   2,986,639Write-offs

   (13,319,944)

   (12,074,770)At the end of the period

   19,858,234

   19,914,294
  Finance lease receivables  Loans and advances to customers include the following finance lease receivables.  R$ thousandDecember 312013

   2012(Restated)Gross investments in financial leases receivable:Up to one year

   3,001,069

   4,443,728From one to five years

   2,674,089

   3,546,825Over five years

   38,323

   44,901Impairment loss on finance leases

   (460,556)

   (752,178)Net investment

   5,252,925

   7,283,276Net investments in finance leases:Up to one year

   2,723,519

   4,001,849From one to five years

   2,492,248

   3,237,738Over five years

   37,158

   43,689Total

   5,252,925

   7,283,276
   F - 108IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
  26)Non-current assets held for sale  R$ thousandDecember 312013

   2012(Restated)Assets not for own useVehicles and related

   299,117

   222,676Properties

   519,591

   296,365Machinery and equipment

   11,542

   11,463Others

   2,296

   2,469Total

   832,546

   532,973
  The properties or other non-current assets received in total or partial settlement of the payment obligations of debtors are considered as non-operating assets held for sale in auctions, which normally occur in up to one year. Therefore, non-current assets held for sale include the accounting value of the items the Organization intends to sell, which in their current condition is highly probable and expected to occur within a year.    BradescoF - 109


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
 27)Investments in associated companies and joint ventures  a.Breakdown of investments in associated companies and joint ventures ****  Company

   R$ thousandTotal shareholding interest

   Shareholding interest with voting rights

   Investment book value

   Equity in net income (loss)

   Associated company assets

   Associated company liabilities

   Revenue(1)

   Associated company net income (losses) for the yearBES Investimentos do Brasil S.A.

   20.00%

   20.00%

   133,140

   6,047

   7,257,323

   6,591,624

   9,097,795

   30,235Cia. Brasileira de Gestão e Serviços S.A.

   41.85%

   41.85%

   56,796

   6,285

   196,342

   22,575

   5,893

   15,018Cielo S.A.

   28.65%

   28.65%

   1,360,812

   802,033

   12,643,111

   9,317,261

   18,187

   2,799,588Empresa Brasileira de Solda Elétrica S.A. (2)

   49.00%

   49.00%

   25,642

   4,043

   328,952

   276,621

   178,399

   8,251Fidelity Processadora S.A.

   49.00%

   49.00%

   266,429

   58,579

   868,262

   324,529

   14,931

   119,549Integritas Participações S.A. (2)

   22.32%

   22.32%

   503,911

   6,700

   810,921

   9,713

   30,232

   30,022IRB - Brasil Resseguros S.A. (2) (3)

   21.24%

   -

   507,503

   18,166

   12,502,578

   9,990,775

   1,508,156

   85,518NCR Brasil S.A. (2)

   49.00%

   49.00%

   70,281

   5,122

   159,228

   82,720

   36,035

   10,453Total investments in associated companies

   

   

   2,924,514

   906,975

   34,766,717

   26,615,818

   10,889,628

   3,098,634Elo Participações S.A.(4)

   50.01%

   50.01%

   373,145

   76,567

   924,083

   957

   46

   153,103Companhia Brasileira de Soluções e Serviços – Alelo (4)

   -

   -

   -

   52,996

   -

   -

   36,415

   105,971Crediare S.A. – Crédito, Financiamento e Investimento

   50.00%

   50.00%

   64,852

   11,261

   383,426

   250,738

   133,855

   22,522Leader S.A. Adm. de Cartões de Crédito (2)

   50.00%

   50.00%

   26,042

   15,803

   390,788

   338,703

   303,233

   31,606MPO - Processadora de Pagamentos Móveis S.A.

   50.00%

   50.00%

   4,294

   (731)

   8,775

   188

   -

   (1,462)2BCapital S.A.

   50.00%

   50.00%

   -

   (184)

   4,358

   4,886

   39

   (368)Total investments in joint ventures

   

   

   468,333

   155,712

   1,711,430

   595,472

   473,588

   311,372Total onDecember31, 2013

   

   

   3,392,847

   1,062,687

   36,478,147

   27,211,290

   11,363,216

   3,410,006
     F - 110IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
  Company

   R$ thousandTotal shareholding interest

   Shareholding interest with voting rights

   Investment book value

   Equity in net income (loss)

   Associated company assets

   Associated company liabilities

   Revenue(1)

   Associated company net income (losses) for the yearBES Investimentos do Brasil S.A.

   20.00%

   20.00%

   128,153

   9,315

   6,543,698

   5,902,932

   6,534,113

   31,064BIU Participações S.A. (5)

   -

   -

   -

   57,200

   -

   -

   -

   -Cielo S.A.

   28.65%

   28.65%

   1,171,061

   653,958

   9,287,235

   6,552,119

   19,675

   2,313,995Cia. Brasileira de Gestão e Serviços S.A.

   41.85%

   41.85%

   50,511

   6,746

   146,114

   25,415

   4,231

   16,120Fidelity Processadora S.A.

   49.00%

   49.00%

   266,974

   40,160

   719,437

   174,590

   6,204

   81,959Empresa Brasileira de Solda Elétrica S.A. (2)

   49.00%

   49.00%

   21,734

   3,657

   242,126

   197,859

   29,017

   6,075IRB - Brasil Resseguros S.A. (2) (3)

   21.24%

   -

   532,518

   125,908

   11,511,230

   9,004,344

   952,801

   378,120NCR Brasil S.A.(2)

   49.00%

   49.00%

   77,432

   -

   298,481

   229,567

   62,446

   35,932Integritas Participações S.A.(2)

   22.32%

   22.32%

   506,615

   (26,282)

   910,020

   15,283

   703

   44,661Total investments in associated companies

   

   

   2,754,998

   870,662

   29,658,341

   22,102,109

   7,609,190

   2,907,926Companhia Brasileira de Soluções e Serviços - Alelo

   50.01%

   50.01%

   260,031

   89,404

   2,896,581

   2,444,656

   73,672

   160,048Crediare S.A. – Crédito, Financiamento e Investimento

   50.00%

   50.00%

   58,152

   1,177

   402,605

   287,649

   156,513

   5,513Elo Participações S.A.

   50.01%

   50.01%

   12,728

   (3,810)

   27,126

   1,669

   520

   (7,619)Leader S.A. Adm. de Cartões de Crédito (2)

   50.00%

   50.00%

   35,452

   23,984

   369,092

   310,836

   302,341

   48,700MPO - Processadora de Pagamentos Móveis S.A.

   50.00%

   50.00%

   25

   -

   50

   -

   -

   -2BCapital S.A.

   50.00%

   50.00%

   -

   (1,205)

   4,455

   4,615

   11

   (2,410)Total investments in joint ventures

   

   

   366,388

   109,550

   3,699,909

   3,049,425

   533,057

   204,232Total onDecember31, 2012(Restated)

   

   

   3,121,386

   980,212

   33,358,250

   25,151,534

   8,142,247

   3,112,158
      BradescoF - 111


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
 Company

   R$ thousandTotal shareholding interest

   Shareholding interest with voting rights

   Investment book value

   Equity in net income (loss)

   Associated company assets

   Associated company liabilities

   Revenue(1)

   Associated company net income (losses) for the yearBES Investimentos do Brasil S.A.

   20.00%

   20.00%

   103,538

   14,305

   6,242,286

   5,724,597

   5,962,194

   71,525BIU Participações S.A.

   33.84%

   33.84%

   69,856

   39,698

   314,737

   8,462

   8,880

   101,964Cielo S.A.

   28.65%

   28.65%

   900,741

   510,839

   5,600,136

   3,880,217

   2,110,126

   1,813,390Cia. Brasileira de Gestão e Serviços S.A.

   41.85%

   41.85%

   43,765

   5,222

   125,187

   20,607

   4,223

   12,478Empresa Brasileira de Solda Elétrica S.A. (2)

   49.00%

   49.00%

   18,192

   1,341

   161,828

   124,702

   25,074

   2,737Fidelity Processadora S.A.

   49.00%

   49.00%

   246,649

   15,836

   631,797

   128,430

   345,210

   32,319IRB - Brasil Resseguros S.A. (2) (3)

   21.24%

   -

   473,548

   85,566

   9,679,309

   7,423,838

   1,025,727

   402,853Integritas Participações S.A.(2)

   22.32%

   22.32%

   534,177

   9,315

   1,042,125

   19,100

   1,847

   41,734Total investments in associated companies

   

   

   2,390,466

   682,122

   23,797,405

   17,329,953

   9,483,281

   2,479,000Cia. Brasileira de Soluções e Serviços – Alelo

   50.01%

   50.01%

   234,599

   87,888

   2,247,695

   1,914,583

   98,954

   175,741Crediare S.A. – Crédito, Financiamento e Investimento

   50.00%

   50.00%

   57,649

   10,166

   503,930

   393,139

   148,100

   15,824Elo Participações S.A.

   50.01%

   50.01%

   16,538

   (8,673)

   36,914

   3,845

   523

   (17,342)Leader S.A. Adm. de Cartões de Crédito (2)

   50.00%

   50.00%

   24,341

   33,368

   280,324

   245,023

   242,740

   53,357MPO - Processadora de Pagamentos Móveis S.A.

   50.00%

   50.00%

   3

   -

   -

   -

   -

   -2BCapital S.A.

   50.00%

   50.00%

   1,125

   (1,051)

   3,633

   1,381

   109

   (2,101)Total investments in joint ventures

   

   

   334,255

   121,698

   3,072,496

   2,557,971

   490,426

   225,479Total onDecember31, 2011(Restated)

   

   

   2,724,721

   803,820

   26,869,901

   19,887,924

   9,973,707

   2,704,479
  (1)Revenues from financial intermediation or services; (2)Companies for which the equity accounting adjustments are calculated using statements of financial position and statements of income with lag in relation to the reporting date of these consolidated financial statements; (3)Bradesco has a board member at IRB-Brasil with voting rights, which results in significant influence; (4)In 2013 it was a disposal of associated company investments of Cia Brasileira de Soluções e Serviços – Alelo and the respective capital increase in the Elo Participações S.A.; and (5)Company disposed in 2012.     F - 112IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)  Notes to the Consolidated Financial Statements
  In 2013, with the exception of Cielo S.A., the other investments mentioned in the table above were not traded regularly on any stock exchange. The market value of our investment in Cielo, was R$ 14,784,925 thousand (December 2012 - R$ 10,695,518 thousand). The Organization doesn’t have any contingent liability for investments in Associates, in which it is responsible for, in part or in full.  b.Changes in associated company investments  R$ thousand2013

   2012(Restated)Initial balances

   3,121,386

   2,724,721Additions (1)

   379,983

   97,454Disposal of associated companies (1)

   (391,171)

   (125,459)Equity in net income of associated companies

   1,062,687

   980,212Dividends/Interest on capital

   (767,765)

   (510,580)Adjustment of goodwill(2)

   (12,273)

   (44,962)Final balances

   3,392,847

   3,121,386
 (1)In 2013 it was a disposal of associated company investments ofCia Brasileira de Soluções e Serviços – Alelo and the respective capital increase in the Elo Participações S.A; and (2)In 2013, refers: (i) Adjustment of goodwill of NCR Brasil and (ii) reversal of amortization Ibi Promotora goodwill.    BradescoF - 113


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
 28)Property and equipment  a)Composition ofproperty and equipmentby class  R$ thousandAnnual rate of depreciation

   Cost

   Accumulated depreciation

   NetBuildings

   4%

   1,072,076

   (566,917)

   505,159Land

   -

   492,411

   -

   492,411Installations, properties and equipment for use

   10%

   4,479,464

   (2,449,557)

   2,029,907Security and communications systems

   10%

   223,422

   (166,349)

   57,073Data processing systems

   20% - 50%

   2,305,524

   (1,545,962)

   759,562Transportation systems

   20%

   56,676

   (34,034)

   22,642Financial leasing of data processing systems

   20% - 50%

   2,818,799

   (2,183,586)

   635,213Balance on December 31, 2013

   

   11,448,372

   (6,946,405)

   4,501,967Buildings

   4%

   949,713

   (487,775)

   461,938Land

   -

   488,292

   -

   488,292Installations, properties and equipment for use

   10%

   4,670,119

   (2,445,717)

   2,224,402Security and communications systems

   10%

   229,518

   (154,169)

   75,349Data processing systems

   20% - 50%

   1,902,693

   (1,301,526)

   601,167Transportation systems

   20%

   53,791

   (29,970)

   23,821Financial leasing of data processing systems

   20% - 50%

   2,514,555

   (1,864,697)

   649,858Balance on December 31, 2012(Restated)

   

   10,808,681

   (6,283,854)

   4,524,827
  Depreciation charges for 2013 amounted to R$ 1,018,239 thousand (2012 - R$ 1,035,235 thousand and 2011 - R$ 989,161 thousand).  We enter into finance lease agreements as a lessee for data processing equipment, which are recorded as leased equipment in property and equipment. According to this accounting method, both the asset and the obligation are recognized in the consolidated financial statements and the depreciation of the asset is calculated based on the same depreciation policy as for similar assets. See Note 38 for disclosure of the obligation.    F - 114IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
 b)Change inproperty and equipmentby class  R$ thousandBuildings

   Land

   Installations, properties and equipment for use

   Security and communications systems

   Data processing systems (1)

   Transportation systems

   Leased assets

   TotalBalance on December 31, 2011(Restated)

   393,693

   454,956

   2,102,195

   79,752

   1,201,174

   26,476

   210

   4,258,456Additions

   84,177

   34,470

   832,153

   14,006

   706,784

   2,056

   191

   1,673,837Write offs

   (2,895)

   (1,134)

   (329,086)

   (631)

   (38,234)

   -

   (251)

   (372,231)Depreciation

   (13,037)

   -

   (380,860)

   (17,778)

   (618,699)

   (4,711)

   (150)

   (1,035,235)Balance on December 31, 2012(Restated)

   461,938

   488,292

   2,224,402

   75,349

   1,251,025

   23,821

   -

   4,524,827Additions

   58,299

   5,972

   459,161

   13,718

   791,102

   4,318

   -

   1,332,570Write offs

   (2,001)

   (1,853)

   (294,707)

   (10,477)

   (19,390)

   (363)

   -

   (328,791)Impairment

   -

   -

   (6,356)

   (1,521)

   -

   (523)

   -

   (8,400)Depreciation

   (13,077)

   -

   (352,593)

   (19,996)

   (627,962)

   (4,611)

   -

   (1,018,239)Balance on December 31, 2013

   505,159

   492,411

   2,029,907

   57,073

   1,394,775

   22,642

   -

   4,501,967
  (1)Includes financial leasing of data processing systems.    BradescoF - 115


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
 29)Intangible assets and goodwill  a)Change in intangible assets and goodwill by class  R$thousandGoodwill

   Intangible assetsAcquisition of banking rights (1)

   Software

   (1)

   Customer portfolio

   (1)

   Others

   (1) (2)

   TotalBalance on December 31, 2011(Restated)

   723,526

   3,064,089

   2,331,486

   879,300

   47,855

   7,046,256Additions

   -

   889,395

   1,118,683

   -

   543,922

   2,552,000Impairment(3)

   -

   (527,436)

   -

   -

   -

   (527,436)Amortization

   -

   (839,529)

   (536,959)

   (42,459)

   (34,000)

   (1,452,947)Balance on December 31, 2012(Restated)

   723,526

   2,586,519

   2,913,210

   836,841

   557,777

   7,617,873Additions

   -

   943,661

   1,354,507

   -

   75,997

   2,374,165Impairment(3)

   -

   (18,721)

   (29,987)

   -

   -

   (48,708)Amortization

   -

   (922,438)

   (659,875)

   (42,458)

   (97,820)

   (1,722,591)Balance onDecember 31, 2013

   723,526

   2,589,021

   3,577,855

   794,383

   535,954

   8,220,739
  (1)Rate of amortization: acquisition of banking rights - in accordance with contract agreement; software – 20% to 50%; Customer portfolio – until 20%; and others – 20%; (2)“Others” mainly refers to rights related to the 2016 Olympic Games sponsorship program; and (3)Impairment losses were recognized because the recoverable amount of "acquisition of banking rights" and "software" is less than their carrying amount. Impairment losses were recognized in the consolidated statement of income, within “Other operating income/ (expenses)”.   F - 116IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
 b) Composition of goodwill by segment  R$ thousandDecember 312013

   2012(Restated)Segment banking

   429,560

   429,560Segment Insurance, pension and capitalization bonds

   293,966

   293,966Total

   723,526

   723,526
  The Cash Generation Units allocated to the banking segment and the insurance, pension and capitalization bonds segment are tested annually for impairment of goodwill. We did not incur any goodwill impairment losses in 2013 and in 2012.  The recoverable amount from the Banking Segment has been determined based on a value-in-use calculation. The calculation uses cash-flow predictions based on financial budgets approved by management, with a terminal growth rate of 8.5% p.a. The forecast cash flows have been discounted at a rate of 12.4% p.a.  The key assumptions described above may change as economic and market conditions change. The Organization estimates that reasonably possible changes in these assumptions within the current economic environment are not expected to cause the recoverable amount of either unit to decline below the carrying amount.  30)Other assets  R$ thousandDecember 312013

   2012(Restated)Foreign exchange transactions (1)

   13,639,589

   11,457,810Debtors for guarantee deposits (2)

   10,309,378

   10,818,380Sundry borrowers

   2,402,859

   1,888,893Trade and credit receivables

   2,123,553

   2,416,843Deferred selling expenses (insurance) – Note 35f

   1,547,121

   1,205,089Interbank and interbranch receivables

   1,468,385

   1,703,536Negotiation and intermediation of securities

   1,325,122

   4,049,634Income receivable

   1,020,782

   790,301Prepaid expenses

   516,208

   527,349Advances to the Credit Guarantee Fund - FGC

   -

   167,439Others (3)

   1,014,718

   918,361Total

   35,367,715

   35,943,635
  (1)Mainly refers to purchases in foreign currency made by the institution on behalf of customers and rights in the institution’s domestic currency, resulting from exchange sale operations; (2)Refers to deposits resulting from legal or contractual requirements, including guarantees provided in cash, such as those made for the filing of appeals in departments or courts and those made to guarantee services of any nature; and (3)Includes several items that are basically trade and credit receivables, material supplies, other advances and payments to be reimbursed.     BradescoF - 117


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
 31)Deposits from banks  Financial liabilities called “Deposits from banks” are initially measured at fair value and, subsequently, at amortized cost, using the effective interest rate method.  Composition by nature  R$ thousandDecember 312013

   2012(Restated)Demand deposits

   986,310

   727,869Interbank deposits

   963,855

   382,474Funding in the open market

   185,055,358

   175,646,854Borrowings

   15,230,854

   8,111,101Onlending

   40,863,996

   36,075,056Total

   243,100,373

   220,943,354
  32)Deposits from customers  Financial liabilities called “Deposits from customers” are initially measured at fair value and subsequently at amortized cost, using the effective interest rate method.  Composition by nature  R$ thousandDecember 312013

   2012(Restated)Demand deposits

   39,633,427

   37,684,247Savings deposits

   80,717,805

   69,041,721Time deposits

   95,866,825

   104,048,295Total

   216,218,057

   210,774,263
  33)Funds from securities issued  a)Composition by type of security issued and location  R$ thousandDecember 312013

   2012(Restated)Instruments Issued – Brazil:Mortgage notes

   604,105

   826,843Real estate credit notes

   5,995,699

   4,229,511Agribusiness notes

   4,371,017

   3,894,203Financial notes

   35,208,325

   28,220,510Subtotal

   46,179,146

   37,171,067Securities and bonds – Abroad:Euronotes(1)

   8,412,859

   10,761,614Securities issued through securitization – (item (b))

   3,291,063

   3,619,412Subtotal

   11,703,922

   14,381,026Grand Total

   57,883,068

   51,552,093
  (1)   Issuance of securities in the foreign market for customers’ foreign exchange operations, export pre-financing, import financing and working capital financing, substantially in the medium and long terms.   F - 118IFRS – International Financial Reporting Standards – 2013


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table of contents



Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
 b)Securities issued through securitization  Since 2003, the Organization uses certain arrangements to optimize its activities of funding and liquidity management by means of Specific Purpose Entity (SPE). This SPE, which is called International Diversified Payment Rights Company, is financed with long-term bonds which are settled with the future cash flow of the corresponding assets, basically comprising current and future flow of payment orders sent by individuals and legal entities abroad to beneficiaries in Brazil for whom Bradesco acts as payor.  The long-term instruments issued by the SPE and sold to investors will be settled with funds from the payment orders flows. The Organization is required to redeem the instruments in specific cases of default or upon closing of the operations of the SPE.  The funds deriving from the sale of current and future payment orders flows, received by the SPE, must be maintained in a specific bank account until they reach a given minimum level.  We show below the amounts of the securities issued by the SPE, which appear in the “Funding from issuance of securities” line item:  R$ thousandDate of Issue

   Amount of the transaction

   Maturity

   2013

   2012(Restated)Securitization of the future flow of payment orders received from abroad

   6.11.2007

   481,550

   5.20.2014

   38,861

   168,4116.11.2007

   481,550

   5.20.2014

   38,832

   168,52812.20.2007

   354,260

   11.20.2014

   75,287

   150,8783.6.2008

   836,000

   5.22.2017

   818,320

   916,09312.19.2008

   1,168,500

   2.20.2019

   1,257,040

   1,077,55812.17.2009

   133,673

   11.20.2014

   47,027

   94,11612.17.2009

   133,673

   2.20.2017

   118,406

   135,41312.17.2009

   89,115

   2.20.2020

   107,129

   107,2228.20.2010

   307,948

   8.21.2017

   307,512

   338,9389.29.2010

   170,530

   8.21.2017

   175,753

   193,71311.16.2011

   88,860

   11.20.2018

   124,119

   106,41811.16.2011

   133,290

   11.22.2021

   182,777

   162,124Total

   

   4,378,949

   

   3,291,063

   3,619,412
      BradescoF - 119


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table of contents



Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
 34)Subordinated debt   R$ thousandMaturity

   Original term in years

   Amount of the operation

   Currency

   Remuneration

   2013

   2012(Restated)In Brazil:Subordinated CDB:2013 (1)

   5

   -

   R$

   100.0% of CDI rate + 1.0817% p.a.

   -

   972,7962014

   6

   1,000,000

   R$

   112.0% of CDI rate

   1,695,101

   1,554,2542015

   6

   1,274,696

   R$

   IPCA + (6.92% p.a.- 8.55% p.a.)108.0% to 112.0% of CDI rate

   2,321,721

   2,028,4592016

   6

   500

   R$

   IPCA + 7.1292% p.a.

   833

   7342019

   10

   20,000

   R$

   IPCA + 7.76% p.a.

   35,665

   31,240Financial notes:IGP-M rate + 6.3874% p.a.IPCA + (6.7017% p.a.- 6.8784% p.a.)Fixed rate of 13.0949% p.a.2016

   6

   102,018

   R$

   108.0% to 110.0% of CDI rate

   146,686

   131,214100% of CDI rate + (1.2685%p.a.- 1.3656% p.a.)IGP-M rate + (5.7745% p.a.- 6.9588% p.a.)IPCA + (5.6030% p.a.- 7.5482% p.a.)Fixed rate of (11.7493% p.a.- 13.8609% p.a.)2017

   6

   8,630,999

   R$

   104.0% to 112.5% of CDI rate

   9,494,902

   9,179,820100% of CDI rate + (0.7855%p.a.- 1.3061% p.a.)IGP-M rate + (4.0147% p.a.- 6.2626% p.a.)IPCA + (3.6712% p.a.- 6.2822% p.a.)Fixed rate of (9.3991% p.a.- 12.1754% p.a.)2018

   6

   8,262,799

   R$

   105.0% to 112.0% of CDI rate

   8,741,001

   8,510,932IGP-M rate + (3.6320% p.a.- 4.0735% p.a.)IPCA + (3.2983% p.a.- 4.4268% p.a.)Fixed rate of (9.3207% p.a.- 10.3107% p.a.)2019 (2)

   6

   21,858

   R$

   109.3% to 109.5% of CDI rate

   23,599

   -IPCA + 7.4163% p.a.2017

   7

   40,100

   R$

   Fixed rate + 13.1763% p.a.

   63,491

   55,902
   F - 120IFRS – International Financial Reporting Standards – 2013


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table of contents



Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
 34)Subordinated debt   R$ thousandMaturity

   Original term in years

   Amount of the operation

   Currency

   Remuneration

   2013

   2012(Restated)IGP-M rate + 6.6945% p.a.2018

   7

   141,050

   R$

   IPCA + (5.9081% p.a.- 7.3743% p.a.)

   192,648

   170,309100% of CDI rate + (1.0079%p.a.- 1.0412% p.a.)IGP-M rate + 4.17468% p.a.IPCA + (4.0262% p.a.- 6.1757% p.a.)Fixed rate of (10.1304% p.a.- 11.7550% p.a.)2019

   7

   3,172,835

   R$

   110.5% to 112.2% of CDI rate

   3,248,804

   3,205,1532020 (5)

   7

   1,700

   R$

   IPCA + 4.2620% p.a

   1,831

   -2018

   8

   50,000

   R$

   IGP-M rate + 7.0670% p.a

   74,087

   65,517IGP-M rate + 5.8351% p.a.IPCA + (5.8950% p.a.- 6.3643% p.a.)2019

   8

   12,735

   R$

   Fixed rate of 13.3381% p.a.

   17,061

   15,080IGP-M rate + 5.5341% p.a.IPCA + (3.9941% p.a.- 6.1386% p.a.)Fixed rate of (11.1291% p.a.- 11.8661% p.a.)2020

   8

   28,556

   R$

   110.0% to 110.7% of CDI rate

   33,616

   30,3542021 (3)

   8

   1,236

   R$

   IPCA + (3.7004% p.a.- 4.3419% p.a.)

   1,341

   -2021

   9

   7,000

   R$

   111.0% of CDI rate

   7,940

   7,286IGP-M rate + (6.0358% p.a.- 6.6244% p.a.)IPCA + (5.8789% p.a.- 7.1246% p.a.)Fixed rate of 12.7513% p.a.2021

   10

   19,200

   R$

   109.0% of CDI rate

   24,836

   22,117IGP-M rate + (3.9270% p.a.- 4.2994% p.a.)IPCA + (4.1920% p.a.- 6.0358% p.a.)Fixed rate of (10.3489% p.a.- 12.4377% p.a.)2022

   10

   54,143

   R$

   110.0% to 111.3% of CDI rate

   62,974

   56,823IGP-M rate + (3.5855% p.a.- 3.9984% p.a.)IPCA + (3.9292% p.a.- 4.962% p.a.)2023 (4)

   10

   688,064

   R$

   Fixed rate of (10.6804% p.a.- 10.8971% p.a.)

   740,605

   -CDB pegged to loans:2014 to 2016

   2 to 3

   3,961

   R$

   100% of CDI rate

   4,623

   6,751Subtotal in Brazil

   

   

   

   

   26,933,365

   26,044,741
   F - 121IFRS – International Financial Reporting Standards – 2013


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table of contents



Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
   R$ thousandMaturity

   Original term in years

   Amount of the operation

   Currency

   Remuneration

   2013

   2012(Restated)Abroad:2013

   10

   1,434,750

   US$

   Rate of 8.75% p.a.

   -

   1,033,1162014

   10

   801,927

   Euro

   Rate of 8.00% p.a.

   735,167

   612,9242019

   10

   1,333,575

   US$

   Rate of 6.75% p.a.

   1,780,224

   1,552,1582021

   11

   2,766,650

   US$

   Rate of 5.90% p.a.

   3,826,416

   3,334,5212022

   11

   1,886,720

   US$

   Rate of 5.75% p.a.

   2,609,831

   2,274,254Subtotal abroad

   

   

   

   

   8,951,638

   8,806,973Overall total

   

   

   

   

   35,885,003

   34,851,714
  (1)Subordinated debt transactions that matured in January, February, April, May and July 2013; (2)Issue of financial notes, of which were issued as follows: (i) R$3,362 thousand in January 2013; (ii) R$3,731 thousand in February 2013; and (iii) R$14,765 thousand in March 2013, maturing in 2019; (3)Issue of financial notes, of which were issued as follows: (i) R$736 thousand in January 2013; and (ii) R$500 thousand in March 2013, maturing in 2021; (4)Issue of financial notes, of which were issued as follows: (i) R$85,180 thousand in January 2013; (ii) R$498,310 thousand in February 2013; and (iii) R$104,574 thousand in March 2013, maturing in  2023; and (5)Issue of financial notes, of which were issued as follows: R$1,700 thousand in March 2013, maturing in 2020.  Legend:  CDB – Bank Deposit Certificate CDI – Interbank Deposit Certificate IPCA – Broad Consumer Price Index DI-CETIP – Interbank rate published by the Centre for Securities Custody and Settlement IGPM – General Market Price Index    BradescoF - 122


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table of contents



Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
 35)Insurance technical provisions and pension plans  a)Technical provisions by account  R$ thousandInsurance (1)

   Life and Pension (2)(3)

   TotalDecember 31

   December 31

   December 312013

   2012(Restated)

   2013

   2012(Restated)

   2013

   2012(Restated)Current and long-term liabilitiesMathematical provision for benefits to be granted

   756,961

   825,848

   104,970,618

   93,323,469

   105,727,579

   94,149,317Mathematical provision for benefits granted

   166,736

   174,118

   6,447,717

   5,946,678

   6,614,453

   6,120,796IBNR (Incurred But Not Reported) provision

   1,480,775

   1,281,188

   1,185,020

   942,521

   2,665.795

   2,223,709Provision for unearned premiums (4)

   3,213,683

   2,072,355

   263,076

   187,868

   3,476,759

   2,260,223Complementary reserve for coverage (5)

   -

   -

   -

   5,062,023

   -

   5,062,023Provision for insurance claims to be settled

   3,606,831

   3,077,957

   1,263,807

   1,041,065

   4,870,638

   4,119,022Provision for financial surplus

   -

   -

   395,227

   368,033

   395,227

   368,033Provision for administrative expenses

   -

   -

   -

   118,885

   -

   118,885Other provisions (5)

   1,860,919

   2,950,297

   4,717,653

   1,396,415

   6,578,572

   4,346,712Total provisions

   11,085,905

   10,381,763

   119,243,118

   108,386,957

   130,329,023

   118,768,720
     F - 123IFRS – International Financial Reporting Standards – 2013


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table of contents



Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
 b)Technical provisions by product  R$ thousandInsurance

   Life and Pension

   TotalDecember 31

   December 31

   December 312013

   2012(Restated)

   2013

   2012(Restated)

   2013

   2012(Restated)Health(5)

   5,877,724

   5,650,060

   -

   -

   5,877,724

   5,650,060Auto / Liability Insurance

   2,721,222

   2,696,872

   -

   -

   2,721,222

   2,696,872DPVAT (Personal Injury Caused by Automotive Vehicles)

   210,426

   154,703

   554,609

   341,040

   765,035

   495,743Life

   -

   -

   5,089,719

   4,433,645

   5,089,719

   4,433,645Elementary lines (property/casualty)

   2,276,533

   1,880,128

   -

   -

   2,276,533

   1,880,128Free Benefits Generating Plan - PGBL

   -

   -

   21,453,632

   20,608,501

   21,453,632

   20,608,501Free Benefits Generating Life - VGBL

   -

   -

   74,522,213

   65,486,891

   74,522,213

   65,486,891Traditional plans(5)

   -

   -

   17,622,945

   17,516,880

   17,622,945

   17,516,880Total technical provisions

   11,085,905

   10,381,763

   119,243,118

   108,386,957

   130,329,023

   118,768,720
  (1)“Other reserves” - Insurance basically refers to the technical reserves of the “personal health” portfolio recorded to (i) cover the differences of future premium adjustments and those required for the portfolio technical balance and (ii) adapt to current interest rate scenarios; (2) Includes personal insurance and pension plans; (3) “Other reserves” - Life and Pension Plan basically refers to “Reserve for unvested benefits (Life)”, “Reserve for redemption and other amounts to be settled”, “Reserve for risk fluctuation”, “Reserve for benefits to be settled” and “Additional premiums reserve”; (4) In the first quarter of 2013, in compliance with ANS Normative Resolution 314, Bradesco Saúde reclassified R$774.247thousand, corresponding to the unearned  premiums, which was deducted from premiums receivable, to “Technical Reserves – Unearned Premium Reserve,” under liabilities; and (5)  Up to November 2013, as authorized by Susep, an interest rate based on Bank’s own study was used to discount the actuarial liability flow and, consequently, the item "Complementary Reserve for Coverage” reflected the result of this rate. However, as per Susep resolution, since December 2013 the risk-free yield curve (ETTJ) is used, which caused an increase in “Other Technical Reserves” and a decrease in “Complementary Reserve for Coverage”, which resulted in a net reversal of R$2,571,793 thousand in Technical Reserves. Nonetheless, we adjusted to market value the rates of certain securities (NTNs) given as collateral for technical reserves, reflecting Brazil’s current economic scenario, in the amount of R$6,860,597 thousand, recognizing a reduction which practically offset the reversal of technical reserves (Note 9).   BradescoF - 124


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table of contents



Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
 c)Technical provisions by aggregated products  R$ thousandDecember 312013

   2012(Restated)Insurance – Vehicle, Elementary Lines, Life and Health

   16,730,244

   15,156,448Insurance – Life with Survival Coverage (VGBL)

   74,522,213

   65,486,891Pensions – PGBL and Traditional Plans

   33,770,112

   32,808,220Pensions – Risk Traditional Plans

   5,306,454

   5,317,161Total

   130,329,023

   118,768,720
   F - 125IFRS – International Financial Reporting Standards – 2013


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table of contents



Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
 d)Changes in the insurance and pension technical provisions  (i)Insurance – Vehicle, General, Life, Health and Pension (Risk on Traditional Plans)  R$ thousandYears ended December 312013

   2012(Restated)At the beginning of the year

   20,473,609

   16,539,893(-) DPVAT insurance and retrocession

   (487,409)

   (397,032)Subtotal at beginning of the year

   19,986,200

   16,142,861Additions, net of reversals

   16,368,879

   16,407,364Reported claims

   (15,666,853)

   (13,151,150)Claims, benefits and redemptions paid

   (53,304)

   (145,610)Adjustment for inflation and interest

   706,339

   732,735Subtotal at end of the year

   21,341,261

   19,986,200(+) DPVAT insurance and retrocession

   695,437

   487,409Total of the Year-End

   22,036,698

   20,473,609
  (ii)Insurance – Life with Survival Coverage (VGBL)  R$ thousandYears ended December 312013

   2012 (Restated)At the beginning of the year

   65,486,891

   53,175,712Receipt of premiums net of fees

   18,616,864

   17,469,175Payment of benefits

   (13,037)

   (8,495)Payment of redemptions

   (12,201,838)

   (9,155,922)Adjustment for inflation and interest

   3,026,956

   4,359,943Others

   (393,623)

   (353,522)Total of the Year-End

   74,522,213

   65,486,891
  (iii)       Pensions – PGBL and Traditional Plans  R$ thousandYears ended December 312013

   2012(Restated)At the beginning of the year

   32,808,220

   29,396,716Receipt of contributions net of fees

   2,100,389

   2,093,058Payment of benefits

   (473,760)

   (394,260)Payment of redemptions

   (1,541,817)

   (1,276,002)Adjustment for inflation and interest

   1,847,372

   2,690,842Others

   (970,292)

   297,866Total of the Year-End

   33,770,112

   32,808,220
   BradescoF - 126


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table of contents



Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
 e)Guarantees for the technical provisions  R$ thousandInsurance

   Life and Pension

   TotalDecember 31

   December 31

   December 312013

   2012(Restated)

   2013

   2012(Restated)

   2013

   2012(Restated)Total technical reserves

   11,085,905

   10,381,763

   119,243,118

   108,386,957

   130,329,023

   118,768,720(-) Loading on insurance sales – guarantee extension

   (213,353)

   (34,822)

   -

   -

   (213,353)

   (34,822)(-) Portion corresponding to contracted reinsurance

   (841,829)

   (865,364)

   (6,048)

   (9,730)

   (847,877)

   (875,094)(-) Deposits retained at IRB and court deposits

   (2,330)

   (23,484)

   (54,704)

   (59,436)

   (57,034)

   (82,920)(-) Receivables

   (775,873)

   (744,265)

   -

   -

   (775,873)

   (744,265)(-) Unearned premium reserve -Health insurance

   (774,247)

   -

   -

   -

   (774,247)

   -(-) Reserves from DPVAT agréments

   (203,994)

   (148,167)

   (550,668)

   (338,049)

   (754,662)

   (486,216)To be insured

   8,274,279

   8,565,661

   118,631,698

   107,979,742

   126,905,977

   116,545,403Investment fund quotas (VGBL and PGBL) (1)

   -

   -

   93,443,359

   82,964,196

   93,443,359

   82,964,196Investment fund quotas (excluding VGBL and PGBL)

   6,155,469

   2,452,379

   20,251,406

   13,297,804

   26,406,875

   15,750,183Government securities

   3,486,879

   6,691,646

   5,281,167

   10,174,124

   8,768,046

   16,865,770Private securities

   101,109

   105,188

   194,651

   212,432

   295,760

   317,620Shares

   5,029

   4,710

   1,048,629

   1,504,244

   1,053,658

   1,508,954Total guarantees of technical reserves

   9,748,486

   9,253,923

   120,219,212

   108,152,800

   129,967,698

   117,406,723
  (1)The “VGBL” and “PGBL” mutual funds were consolidated in the consolidated financial statements.   F - 127IFRS – International Financial Reporting Standards – 2013


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table of contents



Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
 f)Changes in deferred selling expenses (insurance assets)  R$ thousandYears ended December 312013

   2012(Restated)At the beginning of the year

   1,205,089

   557,708Additions

   1,592,919

   1,678,470Reversals

   (1,260,863)

   (1,031,089)Total of the Year-End

   1,537,145

   1,205,089
  g)Changes in reinsurance assets  R$ thousandYears ended December 312013

   2012(Restated)At the beginning of the year

   888,541

   695,145Additions

   372,423

   331,451Reversals

   (237,010)

   (5,623)Recovered insurance losses

   (106,580)

   (152,011)Adjustment of inflation and interest

   22,578

   21,223Others

   5,776

   (1,644)Total of the Year-End

   945,728

   888,541
  h)Claim information  The purpose of the table below is to show the inherent insurance risk, comparing the insurance claims paid with their provisions. Starting from the year in which the claim was reported, the upper part of the table shows the changes in the provision over the years. The provision varies as more precise information concerning the frequency and severity of the claims is obtained. The lower part of the table shows the reconciliation of the amounts with the carrying amounts.  BradescoF - 128


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table of contents



Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
 Vehicle/RCF and Elementary Lines – Claims, gross reinsurance(1)  R$ thousandYear claims were notifiedup to 2005

   2006

   2007

   2008

   2009

   2010

   2011

   2012

   2013

   TotalAmount estimated for the claims·In the year of notification

   2,023,548

   1,697,160

   1,701,439

   1,152,371

   2,058,559

   2,414,674

   2,647,298

   3,134,409

   3,020,829

   -·One year after notification

   1,955,138

   1,626,143

   1,638,346

   1,108,270

   2,037,365

   2,394,609

   2,626,356

   3,035,716

   -

   -·Two years after notification

   1,921,320

   1,600,359

   1,596,899

   1,088,069

   2,018,329

   2,387,075

   2,604,738

   -

   -

   -·Three years after notification

   1,912,062

   1,603,521

   1,593,526

   1,094,795

   2,015,921

   2,403,020

   -

   -

   -

   -·Four years after notification

   1,918,314

   1,597,707

   1,598,083

   1,102,364

   2,046,000

   -

   -

   -

   -

   -·Five years after notification

   1,925,223

   1,605,888

   1,600,766

   1,102,595

   -

   -

   -

   -

   -

   -·Six years after notification

   1,926,098

   1,612,902

   1,608,667

   -

   -

   -

   -

   -

   -

   -·Seven years after notification

   1,931,580

   1,623,910

   -

   -

   -

   -

   -

   -

   -

   -·Eight years after notification

   1,945,495

   -

   -

   -

   -

   -

   -

   -

   -

   -Estimate of claims on the base date (2013)

   1,945,495

   1,623,910

   1,608,667

   1,102,595

   2,046,000

   2,403,020

   2,604,738

   3,035,716

   3,020,829

   19,390,970Payments of claims

   (1,867,415)

   (1,587,940)

   (1,563,424)

   (957,963)

   (1,956,706)

   (2,285,212)

   (2,427,542)

   (2,652,348)

   (2,097,021)

   (17,395,571)Outstanding Claims

   78,080

   35,970

   45,243

   144,632

   89,294

   117,808

   177,196

   383,368

   923,808

   1,995,399
  Vehicle/RCF and Elementary Lines – Claims, net reinsurance(1)  R$ thousandYear claims were notifiedup to 2005

   2006

   2007

   2008

   2009

   2010

   2011

   2012

   2013

   TotalAmount estimated for the claims·In the year of notification

   1,725,277

   1,464,086

   1,421,768

   859,651

   1,791,249

   2,260,194

   2,440,426

   2,804,706

   2,815,311

   -·One year after notification

   1,675,830

   1,415,281

   1,385,711

   846,124

   1,773,092

   2,235,404

   2,417,095

   2,695,513

   -

   -·Two years after notification

   1,635,350

   1,413,371

   1,381,949

   835,214

   1,766,152

   2,232,926

   2,401,407

   -

   -

   -·Three years after notification

   1,639,187

   1,417,612

   1,379,442

   844,636

   1,769,942

   2,251,003

   -

   -

   -

   -·Four years after notification

   1,653,212

   1,417,980

   1,386,605

   850,115

   1,791,739

   -

   -

   -

   -

   -·Five years after notification

   1,670,356

   1,429,154

   1,392,108

   857,121

   -

   -

   -

   -

   -

   -·Six years after notification

   1,686,295

   1,437,203

   1,401,024

   -

   -

   -

   -

   -

   -

   -·Seven years after notification

   1,693,861

   1,448,422

   -

   -

   -

   -

   -

   -

   -

   -·Eight years after notification

   1,707,860

   -

   -

   -

   -

   -

   -

   -

   -

   -Estimate of claims on the base date (2013)

   1,707,860

   1,448,422

   1,401,024

   857,121

   1,791,739

   2,251,003

   2,401,407

   2,695,513

   2,815,311

   17,369,400Payments of claims

   (1,669,222)

   (1,421,960)

   (1,376,477)

   (818,675)

   (1,729,941)

   (2,171,633)

   (2,286,359)

   (2,532,111)

   (2,055,407)

   (16,061,785)Outstanding Claims

   38,638

   26,462

   24,547

   38,446

   61,798

   79,370

   115,048

   163,402

   759,904

   1,307,615
  F - 129IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
 Life – Insurance claims, gross reinsurance(1) R$ thousandYear claims were notifiedup to 2005

   2006

   2007

   2008

   2009

   2010

   2011

   2012

   2013

   TotalAmount estimated for the claims·In the year of notification

   816,255

   624,866

   778,085

   819,262

   885,177

   997,287

   1,183,335

   1,228,706

   1,303,216

   -·One year after notification

   778,352

   608,403

   766,642

   829,831

   909,937

   1,006,142

   1,180,974

   1,219,349

   -

   -·Two years after notification

   755,274

   590,246

   772,788

   845,582

   926,808

   1,012,326

   1,181,021

   -

   -

   -·Three years after notification

   747,555

   586,480

   776,168

   841,047

   920,827

   1,002,115

   -

   -

   -

   -·Four years after notification

   738,165

   590,823

   779,660

   838,726

   927,503

   -

   -

   -

   -

   -·Five years after notification

   738,659

   583,930

   773,646

   836,488

   -

   -

   -

   -

   -

   -·Six years after notification

   734,144

   580,137

   778,029

   -

   -

   -

   -

   -

   -

   -·Seven years after notification

   725,395

   581,401

   -

   -

   -

   -

   -

   -

   -

   -·Eight years after notification

   720,079

   -

   -

   -

   -

   -

   -

   -

   -

   -Estimate of claims on the base date (2013)

   720,079

   581,401

   778,029

   836,488

   927,503

   1,002,115

   1,181,021

   1,219,349

   1,303,216

   8,549,201Payments of claims

   (698,041)

   (545,574)

   (701,005)

   (787,369)

   (856,416)

   (908,557)

   (1,064,600)

   (1,070,045)

   (958,400)

   (7,590,007)Outstanding Claims

   22,038

   35,827

   77,024

   49,119

   71,087

   93,558

   116,421

   149,304

   344,816

   959,194
  Life – Insurance claims, net reinsurance(1) R$ thousandYear claims were notifiedUp to 2005

   2006

   2007

   2008

   2009

   2010

   2011

   2012

   2013

   TotalAmount estimated for the claims·In the year of notification

   816,255

   624,866

   778,085

   819,262

   885,177

   997,287

   1,183,335

   1,228,706

   1,303,216

   -·One year after notification

   778,352

   608,403

   766,642

   829,831

   909,937

   1,006,142

   1,180,974

   1,219,349

   -

   -·Two years after notification

   755,274

   590,246

   772,788

   845,582

   926,808

   1,012,326

   1,181,021

   -

   -

   -·Three years after notification

   747,555

   586,480

   776,168

   841,047

   920,827

   1,002,115

   -

   -

   -

   -·Four years after notification

   738,165

   590,823

   779,660

   838,726

   927,503

   -

   -

   -

   -

   -·Five years after notification

   738,659

   583,930

   773,646

   836,488

   -

   -

   -

   -

   -

   -·Six years after notification

   734,144

   580,137

   778,029

   -

   -

   -

   -

   -

   -

   -·Seven years after notification

   725,395

   581,401

   -

   -

   -

   -

   -

   -

   -

   -·Eight years after notification

   720,079

   -

   -

   -

   -

   -

   -

   -

   -

   -Estimate of claims on the base date (2013)

   720,079

   581,401

   778,029

   836,488

   927,503

   1,002,115

   1,181,021

   1,219,349

   1,303,216

   8,549,201Payments of claims

   (698,041)

   (545,574)

   (701,005)

   (787,369)

   (856,416)

   (908,557)

   (1,064,600)

   (1,070,045)

   (958,400)

   (7,590,007)Outstanding Claims

   22,038

   35,827

   77,024

   49,119

   71,087

   93,558

   116,421

   149,304

   344,816

   959,194
 (1)The claims table does not include the productsHealth and Dentalinsurance – R$1,585,532thousand,DPVAT insurance – R$ 412,108thousand, Retrocession – R$28,220thousand and salvage and reimbursement estimates - R$ (109.815) thousand .   BradescoF - 130


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
 36)Supplemental pension plans  Bradesco and its subsidiaries sponsor an unrestricted benefit pension plan (PGBL) for employees and directors which is a private defined contribution pension plan that allows financial resources to be accumulated by participants throughout their careers by means of employee and employer contributions to be invested in an Exclusive Investment Fund (FIE).  The PGBL is managed by Bradesco Vida e Previdência S.A. and BRAM - Bradesco Asset Management S.A. The Securities Dealer Company (DTVM) is responsible for the financial management of FIE.  Contributions made by employees and directors of Bradesco and its subsidiaries are for the equivalent of at least 4% of their salary, except for participants who chose to migrate from the defined benefit plan to a defined contribution plan (PGBL) in 2001, whose contributions to the PGBL were maintained at the levels that prevailed for the defined benefit plan when they migrated, always respecting the 4% minimum.  Actuarial obligations of the defined contribution plan (PGBL) are fully covered by the plan assets of the corresponding FIE.  Contributions to the PGBL plan in 2013 totaled R$ 622,160 thousand (2012 - R$ 590,907 thousand).  In addition to the aforementioned plan (PGBL), participants who chose to migrate from the defined benefit plan are guaranteed a proportional deferred benefit, corresponding to their accumulated rights in the plan. For participants of the defined benefit plan, whether they migrated to the PGBL plan or not, for retirees and pensioners, the present value of the actuarial plan obligation is fully covered by the plan assets.  Banco Alvorada S.A. (successor from the of Banco Baneb S.A.) maintains defined contribution and defined benefit retirement plans, through Fundação Baneb de Seguridade Social - Bases (related to the former employees of Baneb).  Banco Bradesco BBI S.A. (formally Banco BEM S.A.) sponsors both defined benefit and defined contribution retirement plans, through Caixa de Assistência e Aposentadoria dos Funcionários do Banco do Estado do Maranhão (Capof).  Alvorada Cartões, Crédito, Financiamento e Investimento S.A. (Alvorada CCFI) (merging company of Banco BEC S.A.) sponsors a defined benefit plan through Caixa de Previdência Privada do Bando do Estado do Ceará - Cabec.  On December 31 of each year we conduct an assessment of the plans of our subsidiaries Alvorada, BBI and Alvorada CCFI. IAS 19 establishes that the employer must recognize prospectively the surplus or deficit of its defined benefit plans and post-retirement plans as an asset or an obligation in its consolidated statement of financial position, and must recognize the changes in the financial condition during the year in which the changes occurred, in profit or loss.  In 2012, according to IAS 19 – Employee Benefit, Bradesco and its subsidiaries, as sponsors of these plans, taking into consideration the economic and actuarial study, recalculated their actuarial commitments using a real interest rate that reflects the new real interest rate scenario, recognizing their obligations in the financial statements.   F - 131IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
  R$ thousandAlvorada, BBI and Alvorada CCFI PlansYears ended December 312013

   2012 (Restated)(i)Projected benefit obligations:At the beginning of the year

   1,389,605

   999,483Cost of current service

   1,649

   (370)Interest cost

   117,071

   102,939Participant’s contribution

   1,493

   1,548Actuarial loss

   (330,686)

   366,194Benefit paid

   (96,519)

   (80,189)At the end of the year

   1,082,613

   1,389,605(ii)Plan assets comprise:At the beginning of the year

   1,137,588

   1,032,853Expected returns

   (54,668)

   176,505Contributions received:Employer

   7,697

   6,871Employees

   1,493

   1,548Benefits paid

   (96,519)

   (80,189)At the end of the year

   995,591

   1,137,588(iii)Financial position:Plans in deficit

   (108,819)

   (252,017)Plans in surplus

   21,797

   -Net balance

   (87,022)

   (252,017)
  The net cost/(benefit) of the pension plans recognized in the consolidated statement of income includes the following components:  R$ thousandAlvorada, BBI and Alvorada CCFI PlansYears ended December 312013

   2012(Restated)

   2011(Restated)Projected benefit obligations:Cost of service

   1,649

   (370)

   (704)Cost of interest on actuarial obligations

   117,071

   102,939

   49,694Expected returns from the assets of the plan

   (95,573)

   (106,983)

   (42,814)Net periodic cost/ (benefit)

   23,147

   (4,414)

   6,176
  The accumulated obligations of the pension plans are included in “Other Liabilities”, in our consolidated statement of financial position.  Benefit obligations and net periodic benefit cost for the years 2013 and 2012 for our subsidiaries Alvorada, BBI, and Alvorada CCFI plans, were determined using the following assumptions:  BradescoF - 132


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
  December 312013

   2012Discount rate (1)

   12.2%

   8.7%Expected long-term rate of return on the assets

   12.2%

   8.7%Increase in salary levels

   5.4%

   4.5%
  (1)In 2012, considering an inflation rate of 4.5% p.a. and a real discount rate of 4.0% p.a. (2011 – 6.0% p.a.).  The long-term rate of return on plan assets is based on the following:  ·Medium- to long-term expectations of the asset managers; and ·Public and private securities, a significant portion of the investments portfolio of our subsidiaries Alvorada, BBI and Alvorada CCFI, the profitability of which is higher than inflation plus interest, with short to long-term maturities.  The assets of pension plans are invested in compliance with the applicable legislation (government securities and private securities, listed company shares and real estate properties) and the weighted-average allocation of the pension plan's assets by category is as follows:  Assets of the Alvorada Plan

   Assets of the BBI Plan

   Assets of theAlvorada CCFI PlanDecember 31

   December 31

   December 312013

   2012

   2013

   2012

   2013

   2012Asset categoriesMarketable equity securities

   -

   -

   12.8%

   10.3%

   -

   -Public and private securities

   89.4%

   86.9%

   82.4%

   85.3%

   -

   -Mutual funds

   3.7%

   6.2%

   0.7%

   0.7%

   93.9%

   94.5%Properties

   5.0%

   5.2%

   -

   -

   3.4%

   3.4%Other

   1.9%

   1.7%

   4.1%

   3.7%

   2.7%

   2.1%Total

   100.00%

   100.0%

   100.0%

   100.0%

   100.0%

   100.0%
   F - 133IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
 Below is the sensitivity analysis of the benefit plan obligations, showing the impact on the actuarial exposure (12.2% p.a.) assuming a 1 b.p. change in the discount rate:  Discount rate

   Sensitivity analysis

   Effect on actuarial liabilities

   Effect on the present value of obligations13.2%

   Increase of 1 b.p.

   decrease

   (102,197)11.2%

   Decrease of 1 b.p.

   increase

   122,267
  37)Other provisions  a)Contingent assets  Contingent assets are not recognized in the financial statements, however, there are ongoing proceedings where the chance of success is considered probable, such as: a) Social Integration Program (PIS), claiming to offset PIS against Gross Operating Income, paid under Decree-Laws 2445/88 and 2449/88, regarding the payment that exceeded the amount due under Supplementary Law 07/70 (PIS Repique); and b) other taxes, the legality and/or constitutionality of which is being challenged, where the decision may lead to reimbursement of amounts paid.  b)Contingent liabilities and tax and social security obligations  The Organization is party to a number of labor, civil and tax lawsuits, arising from the normal course of business.  Where the loss is deemed probable, Management recorded provisions based on their opinion and on the opinion of their legal counsel, the nature of the lawsuit, similarity to previous lawsuits, the complexity and the courts standing.  Management considers that the provision is sufficient to cover losses generated by the respective lawsuits.  Liability related to litigation is held until the conclusion to the lawsuit, represented by judicial decisions, with no further appeals or due to the statute of limitation.  I -Labor claims  These are claims brought by former employees and outsourced employees seeking indemnifications, especially for unpaid overtime, according to Article 224 of the Consolidation of Labor Laws (CLT), In proceedings in which a judicial deposit is used to guarantee the execution of the judgment, the labor provision is made considering the estimated loss of these deposits, For other proceedings, the provision is based on the average of payments made for claims settled over the last 12 months.  Overtime is monitored by using electronic time cards and paid regularly during the employment contract and, accordingly, the claims filed by former employees do not represent significant amounts.  II -Civil proceedings  These are claims for pain and suffering and property damages, mainly relating to protests, returned checks, the inclusion of information about debtors in the credit restriction registry and the replacement of inflation adjustments excluded as a result of government economic plans, These lawsuits are individually controlled using a computer-based system and provisioned whenever the loss is deemed as probable, considering the opinion of Management and their legal counsel, the nature of the lawsuits, and similarity with previous lawsuits, complexity and positioning of the courts.  BradescoF - 134


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
 Most of these lawsuits are brought to the Special Civil Court (JEC), in which the claims are limited to 40 times the minimum wage and do not cause significant impact on Bradesco Organization’s financial position. It is worth mentioning the significant number of legal claims pleading alleged differences in adjustment for inflation on savings account balances due to the implementation of economic plans that were part of federal government’s economic policy to reduce inflation in the 80’s and 90’s. Although Bradesco complied with the law and regulation in force at the time, these lawsuits have been recorded in provisions, taking into consideration the claims where the Bank is the defendant and the perspective of loss, which is considered after the analysis of each demand, based on the current decision of the Superior Court of Justice (STJ). Note that, regarding disputes relating to economic plans, the Federal Supreme Court (STF) suspended the prosecution of all lawsuits on cognizance stage, until the Court issues a final decision on the right under litigation. c)Tax and social security obligations  The Organization is disputing the legality and constitutionality of certain taxes and contributions in court, for which provisions have been recorded in full, although there is good chance of a favorable outcome in the medium to long term, based on the opinion of Management and their legal counsel, The processing of these legal obligations whose risk is deemed as probable is regularly monitored in the legal court. During the year, there was progress in some cases which may result in favorable conditions for the Organization, resulting in the reversal of the related provisions. The main cases are: -Cofins - R$2,119,067 thousand (2012 - R$9,082,801 thousand): a request for authorization to calculate and pay Cofins based on effective income, as set forth in Article 2 of Supplementary Law 70/91, removing the unconstitutional increase in the calculation for other revenues other than income; -INSS Autonomous Brokers - R$1,313,647 thousand (2012 - R$1,140,796 thousand): we are requesting the impact of social security contribution on remunerations paid to third-party service providers, established by Supplementary Law 84/96 and subsequent regulations/amendments, at the 20.0% rate and additionally 2.5%, on the grounds that services are not provided to insurance companies but to policyholders, thus being outside the incidence of the contribution provided for in item I, Article 22 of Law 8212/91,as new wording in Law 9876/99; -IRPJ/Loan Losses - R$1,756,396 thousand (2012 - R$1,659,332 thousand): we are requesting to deduct from income tax and social contributions payable (IRPJ and CSLL, respectively) amounts of actual and definite loan losses related to unconditional discounts granted upon receipt of claims incurred, regardless if they comply with the terms and conditions provided for in Articles 9 to 14 of Law 9430/96 that only apply to temporary losses; and -PIS - R$310,127 thousand (2012 –R$302,089): we are requesting the authorization to offset overpaid amounts in 1994 and 1995 as PIS contribution, corresponding to the surplus on the calculation established in the Constitution, i.e., gross operating income, as defined in the income tax legislation - set out in Article 44 of Law 4506/64, excluding interest income.  F - 135IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
 In 2013, the Organization adhered to the tax liability installment and cash payment program, with amnesty for the settlement of tax liability managed by the Brazilian Federal Revenue Service (RFB) and the Office of the General Counsel to the National Treasury (PGFN), set forth by Law 12865/13, related to the contribution for Social Integration Program (PIS) and the Contribution for Social Security Financing (Cofins), referred to in Chapter I of Law 9718/98, due by financial institutions and insurance companies. The Organization also exercised the prerogative provided in Article 17 of Law 12865/13, which determined a new term to adhere to the program in Law 11941/09 up to December 31, 2013. The Organization’s main lawsuits included in these programs refer to the following issues: (i) we request the calculation and payment of Cofins, as of October 2005, based on the effective revenue, according to  Article 2 of Supplementary Law 70/91, in order to avoid the unconstitutional expansion of tax base intended by paragraph 1 of Article 3 of Law 9718/98; and (ii) CSLL - Deductibility on IRPJ tax base, which requested to calculate and pay income tax calculated and paid for 1997 and subsequent years, excluding CSLL in the base, under Article 1, of Law 9316/96, since this contribution represents an effective, necessary and mandatory expense to the Company. Considering the specific resolutions of these programs, the accounting effects of the lawsuits involving cash payment were recognized upon adhesion. Total net amount resulting from the adhesion to the programs was mainly recorded under “Other Operating Expenses”. The Organization did not use income tax or social contribution losses to settle interest on tax liabilities included in the program set forth by Law 12865/13. d)Changes in other provision  R$ thousandLabor

   Civil

   Tax and Social SecurityBalance on December31, 2011(Restated)

   2,301,874

   3,335,716

   12,256,568Indexation charges

   263,626

   430,212

   836,805Additions, net of reversals

   508,731

   459,947

   1,747,268Payments

   (593,294)

   (512,899)

   (13,445)Balance onDecember31, 2012(Restated)

   2,480,937

   3,712,976

   14,827,196Indexation charges

   300,180

   338,571

   853,502Additions, net of reversals

   633,802

   768,702

   (1,762,161)Payments (1)

   (905,596)

   (1,006,678)

   (6,488,854)Balance onDecembr 31, 2013

   2,509,323

   3,813,571

   7,429,683
  (1)The write-offs of claims due to the adhesion to the tax liability installment and cash payment program are included in "Other liabilities - tax and social security” (Law 12865/13).   e)Contingent liabilities classified as possible losses  The Organization maintains a system to monitor all administrative and judicial proceedings in which the institution is plaintiff or defendant and, based on the opinion of legal counsel, classifies the lawsuits according to the expectation of loss. Case law trends are periodically analyzed and, if necessary, the related risk is reclassified. In this respect, contingent lawsuits deemed with the risk of a possible loss are not recorded as a liability in the financial statements. The main lawsuits classified as such are the following: a) leasing companies’ Tax on Services of any Nature (ISSQN), total lawsuits correspond to R$1,434,155 thousand (2012 - R$1,132,804 thousand) which relates to the municipal tax demands other than those where the company is not located and where, under law, tax is collected; b) 2006-2010 income tax and social contribution, relating to goodwill amortization being disallowed on the acquisition of investments, for the amount of R$1,567,042 thousand (2012 - R$711,431 thousand); c) IRPJ and CSLL deficiency notice relating to disallowance of loan loss expenses, for the amount of R$526,261 thousand (2012 - R$469,337 thousand); d) IRPJ and CSLL deficiency note relating to disallowance of exclusions of revenues from mark-to-market securities from 2007 to 2010, difference in depreciation and operating expenses and income, amounting to R$460,380 thousand (2012 - R$226,145 thousand); and e) IRPJ, CSLL, PIS and COFINS deficiency note, amounting to R$323,697 thousand, on alleged tax-exempt gain, when Bovespa shares were merged into Nova Bolsa (BM&FBovespa), in 2008.  BradescoF - 136


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
 38)Other liabilities  R$ thousandDecember 312013

   2012(Restated)Financial liabilitiesCredit card transactions (1)

   16,781,768

   14,848,920Foreign exchange transactions (2)

   13,535,506

   11,418,508Capitalization bonds

   5,900,088

   5,448,701Negotiation and intermediation of securities

   2,191,193

   5,485,497Liabilities for acquisition of assets – financial leasing (38 a)

   1,115,429

   858,258Other liabilitiesThird party funds in transit (3)

   6,717,566

   5,561,157Provision for payments

   5,011,882

   5,020,558Corporate and statutory obligations

   2,470,871

   2,489,087Sundry creditors

   1,729,016

   1,168,027Liabilities for acquisition of assets and rights

   1,248,129

   2,008,253Other taxes payable

   1,192,966

   1,089,728Others

   5,426,991

   4,455,950Total

   63,321,405

   59,852,644
  (1)Refers to amounts payable to merchants; (2)Mainly refers to the institution’s sales in foreign currency to customers and its right’s in domestic currency, resulting from exchange sale operations; and (3)Mainly refers to payment orders issued on the country’s cities and the amount of payment orders in foreign currency coming from overseas.  a)Composition by maturity of financial leasing  R$ thousandDecember 312013

   2012(Restated)Due within one year

   442,368

   365,302From 1 to 2 years

   372,729

   226,680From 2 to 3 years

   240,012

   164,463From 3 to 4 years

   60,320

   81,091From 4 to 5 years

   -

   20,722Total

   1,115,429

   858,258
  Total non-cancellable minimum future payments from operational lease at December 31, 2013 are R$ 3,792,375 thousand, of which R$ 571,800 thousand is due within 1 year, R$ 1,893,691 thousand between 1-5 years and R$ 1,326,884 thousand with more than 5 years.    F - 137IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
 39)Equity  a)Capital and shareholders’ rights  i.Composition of share capital in number of shares  The share capital, which is fully subscribed and paid, is divided into registered shares with no par value.  December 312013

   2012Ordinary

   2,103,637,129

   2,103,637,129Preferred

   2,103,636,910

   2,103,636,910Subtotal

   4,207,274,039

   4,207,274,039In treasury (common)

   (2,898,610)

   (2,898,610)In treasury (preferred)

   (7,866,270)

   (5,265,370)Total outstanding (1)

   4,196,509,159

   4,199,110,059
  (1) All share amounts presented for prior periods have been adjusted to reflect the stock split approved at the Board of Directors’ Meeting  of March 11, 2013, the proportion of one new share for every 10 shares held.  ii.Changes in capital stock, in number of shares  Common

   Preferred

   TotalNumber of shares outstanding on December 31, 2011

   2,100,901,429

   2,098,723,870

   4,199,625,299Shares acquired and not cancelled

   (162,910)

   (352,330)

   (515,240)Number of shares outstanding on December 31, 2012

   2,100,738,519

   2,098,371,540

   4,199,110,059Shares acquired and not cancelled

   -

   (2,600,900)

   (2,600,900)Number of shares outstanding on December 31, 2013

   2,100,738,519

   2,095,770,640

   4,196,509,159
   All of the shareholders are entitled to receive, in total, a mandatory dividend of at least 30% of Bradesco’s annual net income, as shown in the statutory accounting records, adjusted by transfers to reserves. The Organization has no obligation that it is exchangeable for or convertible into shares of capital. As a result, its diluted earnings per share is the same as the basic earnings per share.  Simultaneously with the transaction in the Brazilian Market, and with the same timeframes, an identical procedure was adopted in the International Market, for the ADRs/GDRs traded in New York, USA, and Madrid, Spain.  The Special Shareholders’ Meeting held on March 11, 2013 deliberated on the capital increase of R$8,000,000 thousand, from R$30,100,000 thousand to R$38,100,000 thousand, through the capitalization of a portion of the “Profit Reserves – Statutory Reserve” account, in compliance with Article 169 of Law 6404/76, with a 10% stock bonus, through the issue of 382,479,458 new no-par registered, book-entry shares, of which 191,239,739 are common shares and 191,239,719 are preferred shares, paid free of charge to shareholders as bonus, at the proportion of one (1) new share for every ten (10) new shares of the same type they hold, benefiting Bradesco’s shareholders of record as at March 25, 2013.  Treasury shares are recorded at cost, which is approximately equivalent to the market prices on the date they are acquired. Cancellation of treasury shares is recorded as reduction of unappropriated retained earnings. Treasury shares are acquired for subsequent sale or cancellation.  BradescoF - 138


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
  b)Reserves  Capital reserve  The capital reserve consists mainly of premiums paid by the shareholders upon subscription of shares. The capital reserve is used for (i) absorption of any losses in excess of accumulated losses and revenue reserves, (ii) redemption, reimbursement of purchase of shares, (iii) redemption of founders ́ shares, (iv) transfer to share capital, and (v) payment of dividends to preferred shares, when this privilege is granted to them.  Revenue reserves  In accordance with Corporate Legislation, Bradesco and its Brazilian subsidiaries must allocate 5% of their annual statutory net income, after absorption of accumulated losses, to a legal reserve, the distribution of which is subject to certain limitations. The reserve can be used to increase capital or to absorb losses, but cannot be distributed in the form of dividends.  The Statutory Reserve aims to maintain an operating margin that is compatible with the development of the Organization’s active operations, may be fully formed of 100% of net income remaining after statutory allocations by proposed by the Board of Executive Officers, approved by the Board of Directors and resolved by the Shareholders’ Meeting, up to the limit of 95% of the Organization’s paid-in capital share amount.  c)Dividends (including interest on equity)  Dividends are based on the net income as determined in the financial statements prepared in accordance with Brazilian generally accepted accounting principles (BR GAAP) applicable to financial institutions authorized to operate by the Brazilian Central Bank. The dividends are paid inReaisand can be converted into US dollars and remitted to shareholders abroad, provided that the equity participation of the non-resident shareholder is registered with the Central Bank of Brazil, Brazilian companies may pay interest on equity to shareholders based on the net equity and treat these payments as deductible expenses for purposes of Brazilian income tax and social contribution. The interest cost is treated for accounting purposes as a deduction from equity in a manner similar to dividends, Withholding income tax is levied and paid at the time that the interest on equity is paid to the shareholders.  In 2013 the Organization distributed dividends (including interest on equity) of R$ 4,077,908 thousand, being attributed to the shareholders, the amount per share of R$ 0,93 to the common shares and R$ 1,02 to the preferred shares (2012 - R$ 3,894,998  thousand, of which R$ 0,88 to the ordinary shares and R$ 0,97 to the preferred shares).     F - 139IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
 40)Transactions with related parties  Related party transactions are carried out under conditions and at rates consistent with those entered into with third parties, when applicable, and effective on the dates of the operations.  The principal shareholders of Bradesco are Cidade de Deus Companhia Comercial de Participações and Fundação Bradesco.Fundação Bradesco is a not-for-profit entity that for more than 40 years has been helping to develop the potential of children and youngsters by means of schools in needy regions.  The main transactions with related parties are presented as follows:   R$ thousandDecember 312013

   2012(Restated)AssetsLoans and advances to banks

   84,216

   107,150Crediare S.A. Crédito Financiamento e Investimento

   84,216

   107,150Other assets

   7,739

   10,280Cia. Brasileira de Soluções e Serviços - Alelo

   6,387

   10,280Crediare S.A. Crédito Financiamento e Investimento

   1,352

   -Liabilities and EquityDeposits from customers

   (265,046)

   (208,378)Cidade de Deus Companhia Comercial de Participações

   (61,342)

   (24,982)Key Management Personnel

   (98,461)

   (156,160)Others associates

   (92,873)

   -Funds from securities issued

   (12,370)

   (27,236)Cia. Brasileira de Soluções e Serviços - Alelo

   (1,543,906)

   (749,315)Brasileira de Meios de Pagamento – (“Cielo”)

   (110,180)

   (103,999)Cidade de Deus Companhia Comercial de Participações

   (20,592)

   (18,427)BBD Participações S.A.

   (657,308)

   -Key Management Personnel

   (718,298)

   (608,260)Others associates

   (37,528)

   (18,629)Subordinated debt

   (754)

   (698)Fundação Bradesco

   (754)

   (698)Corporate and statutory obligations

   (724,226)

   (735,902)Cidade de Deus Companhia Comercial de Participações

   (533,391)

   (541,990)Fundação Bradesco

   (190,835)

   (193,912)Other liabilities

   (2,213)

   (8,027)Fidelity Processadora e Serviços S.A.

   (2,213)

   (8,027)
       BradescoF - 140


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
 R$ thousandYears ended December 312013

   2012 (Restated)

   2011 (Restated)Revenues and expensesNet Interest income

   (114,707)

   (64,015)

   (81,358)Crediare S.A. Crédito Financiamento e Investimento

   7,033

   10,023

   22,840Cidade de Deus Companhia Comercial de Participações

   (31,128)

   (207)

   (9,338)Fundação Bradesco

   (56)

   (1,625)

   (6,519)Key Management Personnel

   (59,616)

   (63,296)

   (76,213)Others associates

   (30,940)

   (8,910)

   (12,128)Other revenues

   29,936

   39,501

   34,053Cia. Brasileira de Soluções e Serviços - Alelo

   29,936

   39,501

   34,053Other expenses

   (120,623)

   (117,222)

   (108,932)Fidelity Processadora e Serviços S.A.

   (118,577)

   (115,403)

   (108,584)Others associates

   (2,046)

   (1,819)

   (348)
  a) Remuneration of key management personnel  The following is established each year at the Annual Shareholders’ Meeting:  ·The overall annual amount of the remuneration of the Management Officers, which is allocated in a meeting of the Board of Directors, to the members of the Board itself and of the Executive Board, as determined in the By-Laws; and  ·The amount set aside to cover the Supplemental Pension Plans for which managers are eligible, within the Pension Plan for the Employees and Management Officers of the Organization.  For 2013, a maximum amount of R$ 337,100 thousand (2012 - R$ 344,800 thousand) was determined for remuneration of Management (salaries and bonuses) and R$ 332,100 thousand (2012 - R$ 334,100 thousand) to cover the cost of the defined contribution supplemental pension plans. The current policy on Management compensation sets forth that 50% of net variable compensation, if any, must be allocated to the acquisition of preferred shares of Banco Bradesco S.A., which must be traded in three equal, annual and successive installments, the first of which maturing in the year following the payment date. This procedure complies with CMN Resolution 3921/10, which sets forth a management compensation policy for financial institutions.  Short-term benefits for management  R$ thousandYears ended December 312013

   2012

   2011Salaries

   326,132

   336,912

   351,933INSS contributions

   73,123

   75,510

   78,881Total

   399,255

   412,422

   430,814
    F - 141IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
  Post-employment benefits  R$ thousandYears ended December 312013

   2012

   2011Defined contribution supplementary pension plans

   322,926

   324,132

   339,078Total

   322,926

   324,132

   339,078
  The Organization has no long-term benefits for the termination of employment contracts or for remuneration based on shares for its key management personnel.  Other information  a)According to applicable legislation, financial institutions may not grant loans or advances to:  (i)Executive Officers and members of the advisory board and of the Board of Directors, of the statutory audit board and of similar bodies, as well as their respective spouses and relatives up to the 2nd degree;  (ii)Individuals or legal entities that own more than 10% of capital; and  (iii)Legal entities in which the institution or its directors and managers as well as their respective spouses and relatives up to the 2nd degree own more than 10% of capital.  Thus no loans or advances are made by the financial institutions to any subsidiary or to members of the Board of Directors or of the Executive Board and their families.  b)Equity participation  The members of the Board of Directors and of the Executive Board own in total the following percentage of participation in Bradesco on:  December 312013

   2012Ordinary shares

   0,73%

   0,73%Preferred shares

   1,02%

   1,00%Total shares (1)

   0,87%

   0,86%
  (1)In 2013, direct and indirect shareholding of the members of Board of Directors and Board of Executive Officers totaled 3.10% of ordinary shares, 1.06 % of preferred shares and 2.08 % of all shares (2012 – 3.05% of ordinary shares, 1.05% of preferred shares and 2.05% of all shares).    BradescoF - 142


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
  41)Off-balance sheet commitments  The table below summarizes the total risk represented by off-balance sheet commitments, based on the final maturity:  R$ thousandDecember 312013

   2012 (Restated)Commitments to extend credit (1)

   157,805,486

   142,120,116Financial guarantees (2)

   67,586,244

   59,910,682Letters of credit for imports

   735,505

   1,609,757Total

   226,127,235

   203,640,555
  (1)Includes available lines of credit, limits for credit cards, personal loans, housing loans and overdrafts; and (2)Refers to guarantees mostly provided for Corporate customers.  Financial guarantees are conditional commitments for loans issued to ensure the performance of a customer before a third party. There is usually the right of recourse against the customer to recover any amount paid under these guarantees. Moreover, we can retain cash or other highly-liquid funds to counter-guarantee these commitments.  The contracts are subject to the same credit evaluations as in other credit operations. Standby letters of credit are issued mainly to endorse public and private debt issue agreements including commercial paper, securities financing and similar transactions. The standby letters of credit are subject to customer credit evaluation by the management.  We issue letters of credit in connection with foreign trade transactions to guarantee the performance of a customer with a third party. These instruments are short-term commitments to pay the third-party beneficiary under certain contractual terms for the shipment of products. The contracts are subject to the same credit evaluation as in other credit operations.  42)Standards, amendmentsand interpretations ofexistingstandards   a)Standards, amendments and interpretations of existing standards  ·Change in IAS 19 – Employee Benefits – This change requires an elimination of the alternative of using the “corridor” method and required every movimentation to be booked in Other comprehensive income. The adoption of this standard did not generate significant impacts on the consolidated financial statements of the Organization.  ·IFRS 10 - Financial Statements - alters current criteria for consolidation (IAS 27 - Consolidated and Separate Statements) by introducing a new concept of control to determine whether an entity should be consolidated. Under IFRS 10, an investor controls an investee in the following cases: (i) it has power over the investee; (ii) it has exposure to, or rights to, variable returns from its involvement with the investee; and (iii) it has the ability to use its power over the investee to affect its returns. The adoption of this standard did not generate significant impacts on the consolidated financial statements of the Organization.  ·IFRS 11 "Joint Arrangements" - replaces IAS 31 "Interests in joint ventures". The new standard will focus more on rights and obligations, with use of the equity method of accounting rather than proportionate consolidation. The fundamental principle is that parties to an agreement decide the nature of the venture: Joint operations, rights and obligations for assets and liabilities related to the agreement. Parties recognize their assets, liabilities with the corresponding revenues and expenses; and (ii) Joint Venture, rights to net assets of the agreement. Parties recognize their investments using the equity method of accounting. The adoption of this standard did not generate significant impacts on the consolidated financial statements of the Organization.   F - 143IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
  ·IFRS 12 - Disclosure of interests in other entities - includes new requirements for disclosing all forms of investments in other entities, including joint arrangements, affiliates, and special-purpose entities, in which an entity is involved. The aim is to enable readers of financial statements to evaluate the basis of control, restrictions on consolidated assets and liabilities, exposure to risk arising from involvement with unconsolidated structured entities and involvement of non-controlling interests in the activities of the consolidated entities. The adoption of this standard did not generate significant impacts on the consolidated financial statements of the Organization.  ·IFRS 13 - Fair-Value Measurement - defines fair value and provides guidance on determining fair value and requires disclosures about its measurement, thus making disclosures more consistent and less complex. The adoption of this standard did not generate significant impacts on the consolidated financial statements of the Organization.  b)Standards, amendments and interpretations of existing standards in future periods  ·IFRS 9 Financial Instruments: Recognition and Measurement – The principal changes in IFRS 9 in comparison with IAS 39 are: (i) all of the financial assets are initially measured at fair value ; (ii) the standard divides all of the financial assets that are presently within the scope of IAS 39 into two classifications: amortized cost and fair value; (iii) the categories of available for sale and held to maturity of IAS 39 were eliminated; and (iv) the concept of built-in derivatives of IAS 39 was eliminated by the concepts of IFRS 9.  ·Amendment to IAS 32 - Financial Instruments: Presentation - This amendment clarifies the concept of offsetting of financial instruments in the consolidated statement of financial position. The impacts of adoption and its effects the consolidated financial statements of the Organization are being analyzed and measured by management. Applicable starting 1 January 2014.  ·Amendment to IAS 36 - Impairment of Assets - This change includes new disclosure requirements regarding measurements of the recoverable amounts of assets, mainly due to the adoption of IFRS 13 - Fair Value Measurement. The impact of adopting the new disclosures relating to impairment of assets in the consolidated statements of the Organization are being analyzed and measured by management. Applicable starting 1 January 2014.  ·Amendment of IFRS 10, 12 and IAS 27 - Consolidated financial statements, disclosure of interests in other entities and separate Financial Statements - includes new requirements for investment entities that have investments in funds, in order to get a return of capital appreciation and / or investment income. The impacts of these changes on the financial statements of the Organization are being analyzed and measured by management. Applicable starting 1 January 2014.  c)Other standards, amendments and interpretations  On November 11, 2013, the Provisional Measure 627 (MP 627/13) was published, amending the Federal Tax Legislation on IR, CS, PIS and Cofins. This Measure provides for the following:  ·revocation of the Transition Tax System (RTT), controlling the adjustments arising from new accounting methods and criteria for the compliance of the Brazilian accounting rules to the international standards;  ·taxation of companies domiciled in Brazil, for acquisition of equity resulting from profit sharing recorded abroad by subsidiaries and unconsolidated companies; and  ·special installment payment of PIS/Pasep and Cofins contributions.  BradescoF - 144


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
 Bradesco will await for MP 627/13 to be converted into Law to carry out a deeper and conclusive analysis. Based on a preliminary assessment, there will be no significant impacts on the Organization.  43)Subsequent events  On January 2, 2014, the corporate restructuring of Odontoprev S.A, through which Bradesco, through its indirect subsidiary Bradesco Saúde S.A. (Bradesco Saúde), indirectly acquired interest representing 6.5% of Odontoprev’s voting capital held by Randal Luiz Zanetti (Mr. Randal). With this acquisition, Bradesco Saúde increased its interest on Odontoprev’s total and voting capital stock from 43.5% to approximately 50.01%, being its sole controlling shareholder. The Shareholder Agreement entered into between Bradesco Saúde and Mr. Randal was terminated on that date.   F - 145IFRS – International Financial Reporting Standards – 2013


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Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS)
  Notes to the Consolidated Financial Statements
  For further information, please contact:  Board of Executive Officers Luiz Carlos Angelotti Managing Director and Investor Relations OfficerPhone: (11) 3681-4011 Fax: (11) 3684-4630 4000.diretoria@bradesco.com.br   Market Relations DepartmentPaulo Faustino da Costa Phone: (11) 2178-6201 Fax: (11) 2178-6215 Avenida Paulista, 1.450 – 1o andar CEP 01310-917 – São Paulo-SP Brazil  www.bradesco.com.br/ir


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