The main figures obtained by Bradesco in the first quarter of 2011 are presented below: 
 

quarter of 2011, of which R$104 million as monthly dividends paid and R$820 million provisioned.

9. The Financial Margin reached R$9.362 billion, up 21.8% in comparison to the first quarter of 2010.
10. The Delinquency Ratio over 90 days stood at 3.6%, down 0.8 p.p. from March 2010.
11. The Efficiency Ratio⁽⁶⁾ stood at 42.7% (41.2% in March 2010) and in the concept of “adjusted-to-risk” ratio stood at 52.1% in March 2011 (55.4% in March 2010).
12. Insurance Written Premiums, Pension Plan Contributions and Savings Bond Income totaled R$7.850 billion in the first quarter of 2011, up by 9.1% over the same period in 2010. Technical provisions stood at R$89.980 billion, equal to 30.4% of the Brazilian insurance market (reference date: January/11).
13. Investments in infrastructure, information technology and telecommunication amounted to R$865 million in the first quarter of 2011, for growth of 13.1% when compared to the same period in the previous year.
14. Taxes and contributions, including social security, paid or provisioned, amounted to R$4.973 billion, of which R$1.745 billion corresponded to taxes withheld and collected from third parties and R$3.228 billion based on the activities of Bradesco Organization, equivalent to 117.9% of Adjusted Net Income⁽¹⁾ .
15. Banco Bradesco has an extensive distribution network in Brazil, with 6,619 Service Points (3,651 Branches, 1,308 PABs and 1,660 PAAs). Customers can also use 1,588 PAEs, 27,649 Bradesco Expresso service points, 6,218 Banco Postal (Postal Bank) branches, 32,514 own ATMs in the Bradesco Dia&Noite network and 11,749 ATMs shared with other banks⁽⁷⁾ .

1. Adjusted Net Income⁽¹⁾ in the first quarter of 2011 was R$2.738 billion (an increase of 27.5% compared to R$2.147 billion in the same period of 2010), corresponding to earnings per share of R$2.72 in the last 12 months and Return on Average Shareholders’ Equity⁽²⁾ of 24.2%.
2. Adjusted Net Income was composed of R$1.977 billion from banking activities, which represented 72% of the total, and R$761 million from insurance, private pension plans and savings bond operations, which accounted for 28% of the total.
3. On March 31, 2011, Bradesco’s market capitalization stood at R$117.027 billion⁽³⁾ , while the value of preferred shares rose by 15.7%⁽⁴⁾ in the last 12 months, against a 2.5% depreciation of the Ibovespa index.
4. Total Assets stood at R$675.387 billion in March 2011, an increase of 26.8% from the balance in the same period in 2010. Return on Average Assets was 1.7%.
5. The Expanded Loan Portfolio⁽⁵⁾ stood at R$304.374 billion in March 2011, up 22.6% from the same period in 2010. Operations with individuals totaled R$100.079 billion (up 16.4%), while operations with companies totaled R$204.295 billion (up 25.9%).
6. Total Assets under Management stood at R$919.007 billion, an increase of 24.2% from March 2010.
7. Shareholders’ Equity stood at R$51.297 billion in March 2011 and included a capital increase in the amount of R$1.511 billion, up by 19.1% on the balance of March 2010. The Capital Adequacy Ratio (Basel II) stood at 15.0% in March 2011, 13.4% of which under Tier I Capital.
8. Interest on Shareholders’ Equity and Dividends were paid and provisioned to shareholders, in the amount of R$924 million related to the first 

(1) According to non-recurring events described on page 08 of this Report on Economic and Financial Analysis; (2) Excludes mark-to-market effect of available-for-sale securities recorded under Shareholders’ Equity; (3) R$ 127.474 billion considering the closing price of preferred shares (most traded share); (4) Includes reinvestment of dividends/interest on shareholders’ equity; (5) Includes sureties and guarantees, advances of credit card receivables and credit assignments (receivables-backed investment funds and mortgage-backed receivables) and operations with Credit Risk – Commercial Portfolio (expanded criteria), which includes debentures and promissory notes; (6) Accumulated over 12 months; and (7) Banco24Horas ATMs + ATM terminals shared among Bradesco, Banco do Brasil and Banco Santander.

16. Employee payroll, plus charges and benefits, totaled R$2.080 billion. Social benefits provided to the 96,749 employees of the Bradesco Organization and their dependents amounted to R$495.444 million, while investments in training and development programs totaled R$19.282 million.
17. On April 7, 2011, Fitch raised Bradesco’s long and short-term IDRs, reflecting the Bank’s sound financial strength. Bradesco’s long term foreign currency IDR moved from 'BBB' to 'BBB+, while the long-term domestic currency IDR rating moved from 'BBB +' to 'A -' and the short term IDR in domestic currency increased from 'F2' to 'F1.' Bradesco Seguros’ Issuer Financial Strength (IFS) rating was raised from 'BBB+' to 'A-'.
18. On March 25, 2011, Bradesco requested authorization by the Brazilian Central Bank to create an ADR program backed by common shares on the American market, which included an increase in the limit on foreign interest that will not change its corporate structure or control.
19. As of April 4, 2011, Bradesco, Banco do Brasil and Caixa Econômica Federal began to offer cards through the Brazilian brand Elo. The new brand’s goal is to reach 15% of the domestic market in up to 5 years and become the most complete and modern means of payment platform in the country.
20. Main Awards and Recognitions in the first quarter of 2011:
    • 6^th most valuable brand in the global banking sector. This is the first time that a bank from an emerging economy has reached this position (Brand Finance Global Banking 500 – 2011 – The Banker magazine); 
    • The most valuable brand in Brazil, a position Bradesco has held since 2007, according to a survey released by the consultant Brand Finance. In a global ranking of 500 companies,  Bradesco came in 28^th ;

• One of the 100 most sustainable companies in the world, according to the 7^th edition of the “Global 100” ranking (Corporate Knights magazine);
• Bradesco Seguros was the winner of the 18^th edition of the “Top of Quality 2010” prize in the “Insurance and Pension Plan” category (Top of Business magazine and CNEP); and
• Bradesco Asset Management (Bram) received the “Top Management” Prize from ValorInveste magazine, published by the  Valor Econômico newspaper, a recognitionof the best fund managers in the country (Standard & Poor’s).

21. With Regards to sustainability, Bradesco divides its actions into three pillars: (i) Sustainable Finances, with a focus on banking inclusion, social and environmental variables for loan approvals and the offering of social and environmental products; (ii) Responsible Management, focused on valuing professionals, improving the workplace and adopting eco-efficient practices; and (iii) Social
    and Environmental Investments, focused on education, the environment, culture and sports. The highlight in this area is Fundação Bradesco, which has been developing an extensive social and educational program that operates 40 schools throughout Brazil. In 2011, a forecasted budget of R$307.994 million will help serve more than 526 thousand people, 111 thousand of which through its own schools, in Basic Education, from Kindergarten to High School and Vocational Training - High School Level; Education for Youth and Adults; and Preliminary and Continued Education. In
    the Virtual School - Fundação Bradesco’s e- learning portal - , at the CIDs – Digital Inclusion Centers and through programs conducted under strategic partnerships, like Educa+Ação, over 415 thousand students will be served. The more than 50 thousand Basic Education students receive uniforms, school supplies, meals and medical and dental assistance free of charge. For 54 years, Fundação Bradesco has provided more than 2 million students with quality formal education free of charge, who, together with participants in in-class and distance courses, bring the number of participants to over 4 million people. 

Including overlapping ATMs within the Bank’s own and shared network: in March 2011 – 2,024; December 2010 – 1,999, September 2010 – 1,670, June 2010 - 1,547, March 2010 – 1,490, December 2009 – 1,455, September 2009 – 1,452 and June 2009 – 1,431;

In 4Q10: refers to the R$86 million capital gain in Fidelity; and net effect of payment of taxes, through an installment program and payment in one lump sum of tax debt - Law 11,941/09 (REFIS), in the amount of R$14 million, offset by R$27 million in impairment expenses.

To provide for better understanding, comparison and analysis of Bradesco’s results, we use the Adjusted Statement of Income for the analyses and comments contained in this Report on Economic and  Financial Analysis, which is obtained from adjustments made to the Book Statement of Income, detailed at the end of this

Press Release, which includes adjustments to  non-recurring events shown in the previous page. Note that the Adjusted Statement of Income is the basis adopted for the analyses and comments made in chapters 1 and 2 of this report. 

In the first quarter of 2011, Bradesco’s adjusted net income stood at R$2,738 million, an increase of 2.0% or R$54 million from the previous quarter, which was primarily impacted by: (i) a growth in financial margin, due to the increased volume of operations; (ii) lower personnel and administrative expenses; offset by: (iii) an increase in the allowance for loan losses; (iv) lower fee and commission income; and (v) an increase in other operating expenses (net of other operating revenue).

In the first quarter of 2011 versus the same period of previous year, adjusted net income increased R$591 million, or 27.5%. The main reasons for this result are described below in the analysis of the main income statement items.

Shareholders’ Equitystood at R$51.297 billion in March 2011 and included a capital increase in the amount of R$1.511 billion, up by 19.1% on the balance of March 2010. The Capital Adequacy Ratio stood at 15.0%, of which 13.4% was under Tier I Capital.

Total assets stood at R$675,387 million in March 2011, up 26.8% over March 2010, driven by the expansion of business volume. Return on Average Assets (ROAA) remained stable, hovering near 1.7%.

The ER calculated on an “adjusted-to-risk” basis to reflect the impact of risk in loan operations⁽²⁾ dropped for the fifth consecutive quarter, reaching 52.1% in the first quarter of 2011, up 0.3 p.p. compared to the previous quarter and 3.3 p.p. year-on-year. This behavior is in line with the results of previous quarters, mainly due to decreased delinquency.

The ER – accumulated over 12 months⁽¹⁾ remained stable in relation to the previous quarter.

The quarterly ER decreased from 44.0% in the fourth quarter of 2010 to 42.0% in the first quarter of 2011, mainly due to: (i) reduced personnel expenses due to vacation periods concentrated in the first quarter; (ii) lower administrative expenses; and (iii) increased financial margin, driven by growth in business volume.

The R$344 million increase between the first quarter of 2011 and the fourth quarter of 2010 was due to:

• the increase in income from interest- earning operations by R$296 million, mainly the result of: (i) higher income from funding margin; and (ii) higher income from insurance margin; and
• higher income from non-interest margin, in the amount of R$48 million.

The financial margin posted a R$1,673 million improvement between the first quarter of 2011 and the same period in 2010, which corresponds to a 21.8% growth, mainly driven by:

• growth in income from interest-earning operations of R$1,443 million, mainly due to (i) higher income from loan operations, resulting from increase in business volumes; (ii) higher income from funding margin; and (iii) higher income from insurance margin; and

• greater income from the non-interest margin, in the amount of R$230 million, due to higher treasury/securities gains.

In March 2011, Bradesco’s loan operations (considering sureties, guarantees, advances of credit card receivables and assignment of receivables-backed investment funds and mortgage-backed receivables) totaled R$284.7 billion. The expansion of 3.8% in the quarter was due to: (i) 5.3% growth in Large Corporate portfolio; (ii) 4.3% in the SME portfolio; and (iii) 2.0% in the Individuals portfolio.

Year on year, the portfolio expanded by 21.0%, the result of growth of: (i) 29.4% in the SME portfolio, (ii) 19.0% in the Large Corporate portfolio; and (iii) 16.4% in the Individuals portfolio.

In the Individuals segment, the products that posted the strongest growth in the last twelve months were: (i) real estate financing; (ii) the payroll-deductible loan portfolio; and (iii) BNDES/Finame onlending operations. In the Corporate segment, growth was led by: (i) BNDES/Finame onlending operations; (ii) credit card; and (iii) vehicle financing - CDC.

Including other operations bearing credit risk from the Corporate portfolio⁽¹⁾ (expanded criteria), operations with credit risk would have amounted to R$304.4 billion in March 2011 (R$248.3 billion in March 2010), up 3.7% in the quarter and 22.6% over the last 12 months. These operations mainly comprise debentures and promissory notes with Large Corporations.

(1) For more information, see page 36 of Chapter 2 of this Report.

In the first quarter of 2011, expenses with the allowance for loan losses stood at R$2,360 million, up 2.8%. This increase was mainly the result of the 4.0% growth in loan operations – Bacen concept.

The first quarter of 2011 compared to the same period of 2010, ALL expenses posted a 7.9% increase, causing an expansion of generic provisions and partially offset by a decline in delinquency and higher income from loan recovery of 20.7% in the period, totaling R$613 million. Loan operations – Bacen concept grew by 21.1% in the same period, demonstrating growth

accompanied by quality in Bradesco’s loan portfolio.

After five consecutive quarters in decline, the delinquency ratio over 90 days was stable in the first quarter of 2011.

The graph below presents the evolution of the coverage ratio of the Allowance for Loan Losses for loans overdue more than 60 and 90 days. In March 2011 these ratios reached 159.1% and 193.6%, respectively, providing the Bank with comfortable levels of coverage.

The balance of Allowance for Loan Losses (ALL) of R$16.7 billion, in March 2011, was made up of: (i) R$13.7 billion in Brazilian Central Bank requirements; and (ii) R$3.0 billion in additional provisions.

Net Income in the first quarter of 2011 came to R$761 million (R$779 million in the fourth quarter of 2010), posting a 28.3% Return on Average Shareholders’ Equity.

In the comparison of the first quarter of 2011 with the same period in 2010, Net Income posted an 8.3% increase.

Note: For comparison purposes, excluding the build in Technical Provisions for benefits to be granted – Remission (Health) from the calculation of ratios for the first quarter of 2010, and excluding the effects of RN 206/09 and its effects on health revenues from the calculation of combined ratios.
(*) Excludes the effects of RN 206/09 (ANS), which as of January 2010 extinguished the PPNG (SES), with income from premiums accounted pro-rata temporis. Note that this accounting change did not affect Earned Premiums; and
(**) 1Q11 considers the latest data made available by Susep (January 2011).

In the first quarter of 2011, income was 9.1% up from the same period in 2010. This increase was fueled by the high performance of Savings Bonds

Due to the concentration of private pension plan contributions that historically occurs in the last quarter of the fiscal year, revenue in the first quarter of 2011 dropped by 13% compared to the previous quarter.

Net income in the first quarter of 2011 was down 2.3% from the previous quarter, mainly due to: (i) variations in revenues, due to seasonality in the last quarter of the year, directly affecting revenue from pension plans; (ii) a 0.9 p.p. increase in claims; (iii) a drop in equity in the earnings of subsidiaries; and (iv) partially offset by a decrease in administrative and personnel expenses despite the collective bargaining agreement in January 2011.

Net income for the first quarter of 2011 was 8.3% higher than the one recorded in the same period of last year, mainly due to: (i) 9.1% growth in revenues; (ii) an increase in financial result and equity in the earnings of subsidiaries; and partially offset by: (iii) a increase in personnel expenses, impacted by the collective bargaining agreement in January 2011. 

In terms of solvency, Grupo Bradesco de Seguros e Previdência complies with the Susep rules effective as of January 1, 2008, and international standards (Solvency II). The financial leverage ratio stood at 2.6 times Shareholders’ Equity. 

In the first quarter of 2011, fee and commission income totaled R$3,510 million, down 1.6% or R$58 million from the previous quarter. This performance was mainly the result of: (i) lower gains from underwriting and financial advisory services; (ii) lower revenue from loan operations.

In the year-on-year comparison, the 12.4% increase was mainly due to: (i) the performance of the credit card segment, due to the growth in card base and revenues, in addition to the increase in interest held in Visavale and Cielo; (ii) the increase in income from checking accounts, which was driven by growth in business volume and a larger checking account client base, which posted net growth of some 2.3 million accounts in the period; (iii) greater income from loan operations, mainly due to the increase in guarantees and sureties and the higher volume of contracted operations; and (iv) growth in revenue from fund management.

In the first quarter of 2011, the R$97 million decrease from the previous quarter was composed of changes in the following portions:

• “structural” – R$10 million reduction, mainly due to: (i) higher concentration of vacation periods in the first quarter, offset by: (ii) higher expenses with salaries, compulsory social charges and benefits, as a result of the collective bargaining agreement of insurance industry workers in January 2011 and the organic growth in the period, with an increase in the number of service points and the consequent hiring of a net total of 1,501 employees; and
• “non-structural” – decrease of R$87 million, chiefly related to lower expenses with employee and management profit sharing (PLR).

Year-on-year growth of R$316 million in the first quarter of 2011 is mainly due to:

• R$261 million in the “structural” portion from: (i) an increase in expenses related to salaries, compulsory social charges and benefits, due to higher salary levels; (ii) and the net increase of 8,669 employees; and

• the R$55 million increase in the “non- structural” portion, basically resulting from higher expenses with management and employee profit sharing (PLR).

increase in business and service volume; and (v) the expansion of the Customer Service Network by 10,615 new units: 196 branches, 341 PAB/PAE/PAA, 6,148 Bradesco Expresso branches and 3,930 other service points, amounting to 57,185 on March 31, 2011.

Other operating expenses, net of other operating income, totaled R$922 million in the first quarter of 2011, up R$276 million over previous quarter and R$372 million year on year.

Compared to the same period last year, the increase in other operating expenses net of other operating income, is mainly the result of higher expenses with: (i) the recording of operating provisions, especially those for civil contingencies; and (ii) the recording of provisions to cover fluctuations arising from the revaluation of IBNR provisions and benefits payable – remission of the Health Insurance segment

Growth in tax and social contribution expenses, both quarter-on-quarter and year-on-year, is the result of an increase in taxable income in the first quarter of 2011. It is important to note that the remainder of tax credit was consumed as a result of the increase in the social contribution rate from 9% to 15%.

Unrealized gains totaled R$9,590 million in the first quarter of 2011, a R$966 million decrease from the previous quarter. This was mainly due to: (i) the decrease in unrealized gains of loan and leasing operations, resulting from an increase in interest rates; (ii) the relative depreciation of mark- to-market of held-to-maturity securities; partially offset by: (iii) the appreciation of investments, especially those in Cielo, the stocks of which appreciated by 7.5%; and (iv) the decrease in unrealized losses in borrowings and onlendings, resulting from increased interest rates.

generated by the sporting events in 2014 and 2016 and the exploration of the pre-salt oil discoveries. Household consumption continues to grow at a robust pace, supported by the buoyant job market, income gains and the generation of formal jobs. Credit, employment and income should continue to grow in 2011, albeit at a more moderate pace. With no signs of excessive commitment of income on the part of borrowers and with continuing social mobility, the outlook for the Brazilian banking system remains favorable, especially in the real estate segment, whose growth has been healthy, with no signs of undue excess.

The world’s perception of Brazil remains positive, underlined by yet another upgrade from an important risk classification agency. The favorable long-term domestic outlook and the current international scenario have put pressure on the dollar exchange rate, which will tend to remain high. This tendency will be accompanied by the continuing build-up of international reserves, which provide a necessary liquidity buffer in moments of cyclical reversal. The increase in the current account deficit this year should not jeopardize this tendency, as the external accounts will mainly be financed by direct foreign investments, which should reach US$52 billion, a new record.

Bradesco continues to hold a positive long-term view of Brazil, with no signs of any institutional regressions on the horizon. At the same time, the Organization tends to have a positive bias. It is important to point out that the path to sustainable growth could be considerably shortened by massive investments in education and infrastructure, accompanied by economic reforms to increase the efficiency of the domestic productive sector. Initiatives of this type would make a fundamental contribution to creating more solid conditions for the private sector to confront global competition and continue expanding and generating jobs.

Two years after the peak of the global financial crisis, inflation is once again a cause for concern due to the recent highs in petroleum prices, partially due to recent restrictions of a geo-political nature. More intense pressure on prices has been reported in a number of emerging economies, whose main task at the moment is to moderate growth rates. Nonetheless, the economic policy response to the pressure triggered by the high degree of uncertainty surrounding the global economy has not been as restrictive as in the pre- crisis years. The developed economies, on the other hand, are facing a number of challenges to sustainable growth, such as weak job markets, high levels of public debt and the impacts of the recent tragedy in Japan. Generally, the international scenario continues to be marked by abundant liquidity, low risk aversion and high commodity prices, which should continue virtually unchanged in the coming months.

On the domestic front, the international shock caused by commodity prices has worsened thanks to the mismatch between supply and demand and the Brazilian economy’s still high level of indexation. The response to inflationary pressure has been a change in the economic policy mix, combining a moderate increase in basic interest rates and a slowdown in public spending with the adoption of prudential macroeconomic measures. This coordinated response will most likely fail to prevent inflation from reaching around 6.0% this year, but should ensure convergence with the inflationary target throughout 2012, when Brazil’s economic growth should be more moderate than the 7.5% recorded in 2010, the highest figure since 1986. If projections for GDP growth of 3.8% in 2011 prove correct, this convergence will become even more likely.

Despite the country’s undoubted export strength, its main economic activity driver has been – and will continue to be – domestic demand. Investments have been fueled by the high level of corporate confidence and the opportunities

Revenue from Loan Recovery classified under the item “Financial Margin”; Expenses with Discounts Granted classified under the item “Other Operating Revenues/Expenses”, Expenses with Write-offs of Leasing Operations classified under the item “Financial Margin” were reclassified to the item “ALL Expenses - Allowance for Loan Losses” and reclassification of Tax expenses, classified under Other Operating Expenses;

Income from Commissions and Credit Card Fees, Insurance Premium Commissions and Insurance Policy Fees classified under the item “Other Operating Revenues/Expenses” were reclassified to the item “Fee and Commission Income”;

Revenue from Loan Recovery classified under the item “Financial Margin”; Expenses with Discounts Granted classified under the item “Other Operating Revenues/Expenses”, Expenses with Write-offs of Leasing Operations classified under the item “Financial Margin” were reclassified to the item “ALL Expenses - Allowance for Loan Losses” and reclassification of Tax expenses, classified under Other Operating Expenses;

Income from Commissions and Credit Card Fees, Insurance Premium Commissions and Insurance Policy Fees classified under the item “Other Operating Revenues/Expenses” were reclassified to the item “Fee and Commission Income”;