Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.  

 .

Dear Shareholders,

The Board of Directors of Banco Bradesco S.A. hereby submits, to examination and resolution, proposal to partially amend the bylaws, in the “caput” of Article 12, reducing from 7 to 3 the minimum number of members for the position of Officer, adapting it to the current organizational structure of the Company.

Upon the approval of this proposal, the “caput” of Article 12 of the Bylaws will have the following wording after the approval of the Central Bank of Brazil: “Article 12) The Company’s Board of Executive Officers, elected by the Board of Directors, with a 1 (one) year term of office, will be constituted by 52 (fifty-two) to 108 (one hundred and eight) members, distributed in the following position categories: - Executive Officers: from 15 (fifteen) to 33 (thirty-three) members, being 1 (one) Chief Executive Officer, from 5 (five) to 10 (ten) Executive Vice-Presidents; from 6 (six) to 15 (fifteen) Managing Officers; and from 3 (three) to 7 (seven) Deputy Officers – Department Officers: from 27 (twenty-seven) to 47 (forty-seven) members; - Officers: from 3 (three) to 12 (twelve) members; and Regional Officers: from 7 (seven) to 16 (sixteen) members. 

Cidade de Deus, Osasco, SP, February 3, 2014

Board of Directors

Lázaro de Mello Brandão     -  Chairman

Antônio Bornia - Vice Chairman

Mário da Silveira Teixeira Júnior

João Aguiar Alvarez

Denise Aguiar Alvarez

Luiz Carlos Trabuco Cappi

Carlos Alberto Rodrigues Guilherme

Milton Matsumoto

-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-

We declare this is a free English translation of part of the Minutes of the Special Meeting # 2,169 of the Bank’s Board of Directors, held on February 3, 2014, drawn up in the Company’s records.

§ in relation to the amendment to the "caput" of Article 12, the Management sees no legal or economic effects, since the amendment proposed aims at reducing the minimum number of positions in the Board of Officers, adapting it to the organizational structure of the Company.

Corporate Bylaws

Dear Shareholders,

The Board of Directors of Banco Bradesco S.A. hereby submits, to examination and resolution, proposal for the net income allocation of the fiscal year 2013 and ratification of the early distribution of interest on shareholders’ equity and dividends paid and to be paid, as follows: 

Taking into account that the Company obtained during the year ended on December 31, 2013 the net income of R$12,011,027,779.20, we propose:

a)  to allocate as follows: R$600,551,388.96 to the “Profit Reserves – Legal Reserve” account; R$7,332,568,882.35 to the “Profit Reserves – Statutory Reserve” account;  and R$4,077,907,507.89 for the payment of interest on shareholders’ equity and dividends, of which R$1,802,749,633.04 have already been paid, R$1,421,300,000.00 will be paid on 3.7.2014 and R$853,857,874.85, to be analyzed by the Board of Directors on 2.10.2014, also to be paid on 3.7.2014;

b)  the ratification of the distribution of interest on shareholders’ equity and dividends mentioned, taking into account that a new distribution of interest on shareholders’ equity/dividends related to the year 2013 will not be proposed to the Shareholders’ Meeting.

Cidade de Deus, Osasco, SP, February 3, 2014

Board of Directors

Lázaro de Mello Brandão                   - Chairman

Antônio Bornia                                  - Vice-Chairman

Mário da Silveira Teixeira Júnior

João Aguiar Alvarez

Denise Aguiar Alvarez

Luiz Carlos Trabuco Cappi

Carlos Alberto Rodrigues Guilherme

Milton Matsumoto

-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-

This is a free English translation of the excerpt from the Special Board of Directors’ Meeting # 2,169 of the Bank, held on February 3, 2014, drawn up in the Company`s records.

Information required by Attachment 9-1-II of CVM Instruction #481, as of December 17, 2009.

1.     Inform the annual net income.

The net income for 2013 was R$ 12,011,028 thousand.

2.       Inform the total amount and the amount per share of dividends, including dividends already paid and interest on shareholders’ equity already declared

(*) Not subject to Withholding Income Tax

3.     Inform the percentage of net income for the year distributed

(*)Gross Withholding Income Tax does not consider exempt / immune shareholders.

4.     Inform the total amount and the amount per share of dividends distributed based on income of previous years.

The distribution of dividends based on the income of previous years was not proposed.

5.     Inform, deducting the dividends already paid and interest on shareholders’ equity already declared:

a.          The gross amount of dividend and interest on shareholders’ equity, segregated by each type and class of share:

*These dividends were proposed by the Board of Executive Officers on 1.30.2014 and will be resolved at the Board of Directors’ Meeting on 2.10.2014.

b.         The form and term of payment of dividends and interest on shareholders’ equity

Shareholders whose shares are deposited at the Company and that keep their register and banking data updated, will receive by means of credit in the current accounts in a financial institution they indicate. Those who do not have such data updated must present themselves at a Bradesco branch on their preference bearing their CPF (individual taxpayer’s ID), RG (identification document) and proof of residence (utility bill) for record updating and receiving the respective amounts to which they are entitled.

Shareholders whose shares are deposited at the BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros (Securities, Commodities and Future Exchange) will receive by means of institutions and/or brokerage houses which keep their shareholding position in custody.

The dividend amount proposed by the Board of Executive Officers will be appreciated by the Board of Directors on 2.10.2014, to be paid on  3.7.2014

c.        Possible impact of restatement and interest on the Dividends and Interest on Shareholders’ Equity

There will be no incidence of update and interest on dividends and interest on shareholders’ equity.

d.       Date of declaration of payment of dividends and interest on shareholders’ equity considered for identification of shareholders who will be entitled to receive them

As the demonstrative table in item 2 above, the Interest on Shareholders’ Equity was declared during the fiscal year 2013. The complementary dividends on the amounts already distributed to shareholders, related to the year 2013, proposed by the Board of Executive Officers on January 30, 2014, will be resolved by the Board of Directors on February 10, 2014.

6.     If there were a declaration of dividends or interest on shareholders’ equity based on profits earned in semi annuals balance sheets or shorter periods

a.     Inform the amount of dividends or interest on shareholders’ equity already declared

1.     The amount of Monthly Interest on Shareholders’ Equity of R$972,752 thousand was paid from February/2013 to January/2014.

2.     The amount of Intermediary Interest on Shareholders’ Equity of R$829,998 thousand was paid on 7.18.2013.

3.     The amount of Complementary Interest on Shareholders’ Equity of                       R$ 1,421,300 thousand will be paid on 3.7.2014.

4.       The amount of Complementary Dividends on the amounts already distributed to shareholders related to the year 2013, of R$ 853,858 thousand, will be analyzed by the Board of Directors on 2.10.2014, to be paid on 3.7.2014.

b.  Inform the date of the respective payments

1.     See the following table with Monthly Interest on Shareholders’ Equity payments:

2.     The amount of Intermediary Interest on Shareholders’ Equity of R$ 829,998 thousand was paid on 7.18.2013.

3.     The amount of Complementary Interest on Shareholders’ Equity of R$ 1,421,300 thousand will be paid on 3.7.2014.

7.     Provide a comparative table indicating the following amounts per each type and class of share:

a.     Net income of the year and of the 3 (three) previous years

P.S.: Book Net Income per share, adjusted by the bonus stock process that occurred in March 2013, to allow comparability.

b.    Dividends and interest on shareholders’ equity distributed in the 3 (three) previous years

8.     In case of allocation of profits to the legal reserve:

a.     Identify the amount allocated to the legal reserve

The amount allocated to the legal reserve is R$600,551 thousand.

b.    Explain in detail the manner of calculation of the legal reserve

The allocation of a portion of net income to legal reserve is established in Article 193 of Law #6,404/76 and has the purpose of ensuring the integrity of the capital stock.

Out of the net income for the year, 5% (five percent) will be allocated to the recording of legal reserve, which will not exceed 20% (twenty percent) of the Company’s capital stock. Pursuant the first Paragraph of Article 193 of the Corporate Law, the  legal reserve may not be recorded in the fiscal year when the balance of such reserve, added by the amount related to capital reserves addressed by Paragraph 1 of Article 182 (with amendments introduced by the Law # 11,638/07), exceeds 30% (thirty percent) of the capital stock.

Any net losses may be debited to the legal reserve. The amounts of the legal reserve must be approved at the annual shareholders’ meeting and may only be used to increase the Company’s capital stock or compensate losses. Thus, the resources from the legal reserve are not available for the payment of dividends.

On December 31, 2013, the amount of the legal reserve was R$4.439.025, which was equivalent to approximately 11.65% of the Company’s paid up capital on the same date.

9.     If the company owns preferred shares entitled to fixed or minimum dividends

a.     Describe the method for calculation of fixed or minimum dividends

The Company has no preferred shares entitled to fixed or minimum dividends.

b.    Inform on whether the income for the year is sufficient for full payment of fixed or minimum dividends;

The Company has no preferred shares entitled to fixed or minimum dividends.

c.      Identify whether any unpaid installment is cumulative

The Company has no preferred shares entitled to fixed or minimum dividends.

d.    Identify the total amount of fixed or minimum dividends to be paid to each class of preferred shares

The Company has no preferred shares entitled to fixed or minimum dividends.

e.      Identify the fixed or minimum dividends to be paid per preferred share of each class

The Company has no preferred shares entitled to fixed or minimum dividends.

10.              In relation to the mandatory dividend

a.     Describe the method of calculation provided in the Bylaws

The method of calculation is provided in the Articles 26 and 27 of the Bylaws, transcribed as follow:

“Article 26) Balance sheets will be prepared at the end of each semester, on June 30 and December 31 of every year. The Board of Executive Officers, subject to the approval of the Board of Directors, may determine the preparation of balance sheets for shorter periods of time, including monthly balance sheets.

Article 27) The Net Income, as defined in Article 191 of the Law # 6,404 as of December 15, 1976, accounted at every six-month or in the annual balance sheet will be allocated in the following order:

I.                    constitution of the Legal Reserve;

II.                 constitution of the Reserves set forth in Articles 195 and 197 of the aforementioned Law # 6,404/76, subject to a proposal of the Board of Executive Officers, approved by the Board of Directors and resolved by the Shareholders’ Meeting;

III.               payment of dividends, proposed by the Board of Executive Officers and approved by the Board of Directors, which, added to interim dividends and/or interest on own capital referred to in paragraphs two and three of this article, given that they are declared, guarantee to the shareholders, at every fiscal year, as a mandatory minimum dividend, 30% (thirty per cent) of the respective net income, adjusted by the decrease or increase of the amounts specified in items I, II and III of Article 202 of the Law # 6,404/76.

Paragraph One - The Board of Executive Officers, subject to the approval of the Board of Directors, is authorized to declare and pay interim dividends, especially six-monthly and monthly dividends, resulting from Retained Earnings or existing Profits Reserves.

Paragraph Two - The Board of Executive Officers may, also, subject to the approval of the Board, authorize the distribution of profits to shareholders as interest on own capital, pursuant to specific legislation, in total or partial substitution of interim dividends, whose declaration is permitted by the foregoing paragraph or, further, in addition thereto.

Paragraph Three - Any interest eventually paid to the shareholders will be imputed, net of withholding income tax, to the mandatory minimum dividend amount for that fiscal year (30%), in accordance to Item III of the “caput” of this Article.”.

b.    Inform whether it is being fully paid

The mandatory dividend is being fully paid. 

c.      Inform the amount eventually withheld

The Company has no Dividends withheld.

11.            If there is retention of mandatory dividend due to the company’s financial situation:

a.     Inform the amount withheld

The Company has no Dividends withheld.

b.    Describe, in detail, the financial situation of the company, including aspects related to the analysis of liquidity, working capital and positive cash flows

The Company has no Dividends withheld.

c.      Justify the withholding of dividends

The Company has no Dividends withheld.

12.            If there is allocation of income to the reserve for contingencies

a.     Identify the amount allocated to the reserve

There is no proposal for the allocation of the net income to the reserve of contingencies.

b.    Identify the loss considered probable and its cause

There is no proposal for the allocation of the net income to the reserve of contingencies.

c.      Explain why the loss was considered probable

There is no proposal for the allocation of the net income to the reserve of contingencies.

d.    Justify the establishment of the reserve

There is no proposal for the allocation of the net income to the reserve of contingencies.

13.              If there is the allocation of income to the reserve of profits to be realized

a.     Inform the amount allocated to the reserve of profits to be realized

There is no proposal for the allocation of net income to the reserve of profits to be realized.

b.    Inform the nature of the unrealized profits that led to the reserve

There is no proposal for the allocation of net income to the reserve of profits to be realized.

14.              If there is the allocation of income to the statutory reserves

a.     Describe the statutory clauses that establish the reserve

The Article 194 of Law #6,404/76 regulates the creation of statutory reserves. According to this legal provision, the company’s Bylaws may create reserves provided that, for each one, it:

-        indicates its purpose in an accurate and complete manner;

-        establishes the criteria to determine the annual portion of net income that will be allocated to its recording; and

-        establishes the reserve’s maximum limit.

Pursuant to the legislation, the Article 28 of the Bylaws sets forth that the net income balance, determined after all statutory allocations, shall have the allocation proposed by the Board of Executive Officers, approved by the Board of Directors, and resolved on at Shareholders’ Meeting, 100% (one hundred percent) may be allocated  to the Profits Reserve – Statutory, aiming to maintain the operating margin compatible with the development of the Company’s operations, up to the limit of 95% (ninety-five percent) of the amount of the paid up capital stock.

In the event that the proposal of the Board of Executive Officers regarding the allocation of Net Income for that fiscal year contains a provision for the distribution of dividends and/or payment of interest on shareholders’ equity in an amount in excess of the mandatory dividend established in Article 27, Item III, and/or retention of profits pursuant to Article 196 of the Law # 6,404/76 (with amendments of the Law 10,303/01), the Net Income balance for the purpose of constituting the reserve mentioned in this Article will be determined after the full deduction of such allocations.

b.    Identify the amount allocated to the reserve

The amount allocated to the reserve is R$7,332,569 thousand.

c.      Describe the method used to calculate the amount

The amount of R$7,332,569 thousand is the result of the Net Income for the Year, deducted from the Legal Reserve and of the Dividends and Interest on Shareholders’ Equity, as stated below:

15.              If there is retention of profits provided in the capital budget

a.     Identify the amount withheld

There is no proposal for the retention of profits provided in the capital budget.

b.    Provide a copy of the capital budget

There is no proposal for the retention of profits provided in the capital budget.

16.                If there is the allocation of income for the tax incentive reserve

a.     Inform the amount allocated to the reserve

There is no proposal for the allocation of net income for the tax incentive reserve. 

b.    Explain the nature of the allocation

There is no proposal for the allocation of net income for the tax incentive reserve.

10.1 - General Financial and Equity Conditions

Directors should comment:

a)  general financial and equity conditions

The directors understand that the Bank has all financial and asset conditions to ensure the compliance with obligations, guaranteeing the business expansion in the short- and long-terms.

The directors’ analysis is based on information from the last three financial statements at the balance sheet date and the last financial information disclosed, as follows:

2013

The year 2014 will be challenging comparing to the start of the reduction of monetary stimuli in the U.S., as well as the slight slowdown in China’s growth. A scenario to be overcome by emerging countries, on the other hand, is a unique opportunity for those nations to improve their macroeconomic and institutional foundations.

Brazil is not immune to this external context, but is better poised to face the challenges. The resumption of economic activity in Brazil in the last few months of 2013 has been supported mainly by productive investments, which tend to become intensified with the current program of public concessions in infrastructure, as well as the major sporting events that will occur between 2014 and 2016.

Bradesco remains optimistic about Brazil, envisioning a favorable outlook in the segments in which it operates. The volume of credit tends to grow at sustainable rates compatible with the risk, while gains in income and creation of jobs are still present. Given the intense and continuous process of social mobility in recent years, which is still under way, the scenario for the banking and insurance sectors in Brazil remains very promising.

At Organização Bradesco, among the major events of the fiscal year, it was recorded that on March 10, Bradesco completed 70 years in business, with an active presence in Brazilian life, permanent incentives for the democratization of financial products and services, and a renewed willingness to expand its business horizons. Guided by realistic strategies, it grew rapidly and soon became the Bank of the Brazilians. For such, it built an extensive Customer Service Network that today allows it to be present in all regions of the nation, promoting banking inclusion and social mobility.

It is also noteworthy that Organização Bradesco has once again been selected to be part of:

·        Dow Jones Sustainability World Index – DJSI, a select list of the New York Stock Exchange that gathers companies with best practices for sustainable development, in addition to the Dow Jones Sustainability Emerging Markets, a portfolio created earlier this year, for which companies with DJSI performance ranked among the top 10% in their respective sector are eligible; and

·        Corporate Sustainability Index (ISE) of BM&FBOVESPA S.A. - Securities, Commodities and Futures Exchange, which reflects the return of a portfolio comprised of shares of companies with the best performance in all dimensions that measure corporate sustainability.

Book net income was R$ 12,011 billion for the year, corresponding to R$2.86 per share and annualized return of 17.7% on average Shareholders’ Equity. The return on average total assets was 1.3%. Consolidated Shareholders’ Equity amounted to R$ 70,940 billion and total assets stood at R$ 908,139 billion.

Loan operations

The democratization of credit is part of Bradesco’s strategy. It is achieved through expansion and diversification of the offer and the more attractive interest rates, differentiating factors that have increasingly risen the volume of transactions in loans made directly or in partnerships with market agents and other lines aimed at individuals, such as payroll lending, through its extensive network of Branches, Service Stations and Sales Promoters.

·        R$ 427,273 billion was the year-end balance of consolidated loan operations, in the expanded concept, which includes Sureties and Guarantees, Letters of Credit, Prepaid Credit Card Receivables, Debentures, Promissory Notes, Co-obligation in Assignments for Investment Funds in Credit Rights, Real Estate and Rural Loans Receivables Certificates, with an increase of 10.8% in the period.

·        R$ 21.687   billion was the consolidated balance of the provision for doubtful accounts, considering an additional provision of R$ 4.036 billion, which includes provision for guarantees provided, in the amount required by Resolution 2682/99 issued by the National Monetary Council.

Funding and Asset Management

Bradesco manages, on the whole, 26,400 million account holders, and 50,897 million savings account holders with a balance of R$ 80,718 billion, which accounts for 17.2% of the Brazilian Savings and Loans System (SBPE). At the end of the year, the Organization’s total funding and asset management reached R$1,260 trillion, a 2.8% increase as compared to the previous year.

·        R$474,342 billion in demand deposits, time deposits, interbank deposits, Federal funds purchased and securities sold under agreements to repurchase and savings deposits, a 1.5% increase;

·        R$435,364 billion in managed funds, comprising Investment funds, managed portfolios and third-party fund units;

·        R$ 178,294 billion, recorded in Foreign exchange portfolio, Borrowings and onlending, working capital, collection and payment of taxes and others, funds from issuance of securities and subordinated debt – domestic, an 11.0% increase;

·        R$ 136,229 billion in technical provisions for insurance, private pension plan funds and capitalization bonds, a 9.7% increase; and

·        R$ 35.827  billion in Foreign Resources, through public and private issues, Subordinated Debt Abroad, Securitization of Future Financial Flows and Loans and Transfers Abroad, representing US$ 15.294 billion.

At the end of the 2013 fiscal year, Bradesco’s market value, taking into account the closing quotations of ON and PN common and preferred shares, was R$ 128,085 billion. Starting in May 2013, Bradesco’s common shares became part of the Bovespa Index.

2012

2012 posed a rather challenging scenario. It is important to evaluate the changes observed in the financial system, in view of the period experienced by the sector in the last years. Institutions have accordingly redoubled the attention they pay to the flow of operations, whereas also expanding the range of general services offered to customers.

In mid-2012, the world’s foremost central banks – atypically and sternly – renewed or extended the commitment to provide liquidity to the markets, which contributed decisively to reducing the risks of extreme events on the international scenario. On the other hand, the need for fiscal adjustment in the U.S. and Europe maintains a bias for sluggish global growth in 2013.

Brazil is not immune to this global scenario, in spite of the improved macroeconomic fundamentals observed in the last years. Brazil, however, starts to reap the benefits of the larger room for maneuver it enjoys in comparison to other countries. The several incentive measures adopted over the last months have started producing visible effects regarding the resume of the economic activity, whereas certain relevant steps have been taken to improve infrastructure, adjust tax distortions and enhance the efficiency of the production sector, and these are significant topics for improving the economy growth.

In spite of Brazil’s undeniable vocation to export, the main economic driving force has been and will continue to be the domestic demand, particularly the consumption by families and investments, which benefit from the upcoming great sports events to be held in the next three-year period. In this context and in view of the ongoing social mobility process and the readiness of Brazilian institutions in face of the new rules of capital limits and structure that should be implemented beginning 2013, the perspectives for the Brazilian banking system remain favorable.

For the Organização Bradesco, among the significant events highlighting the period, noteworthy were the following:

·     on March 5, start of activities of subsidiary Bradesco Securities Hong Kong Limited, in Hong Kong, China, aimed at prospecting opportunities and distributing fixed- and non-fixed income products. Accordingly, Bradesco expands its international distribution channels, strengthening contacts with global investors present in that market, in addition to providing access to a new base of institutional investors;

·     on March 7, a 10% rise in the Monthly Dividends amount, paid per share to shareholders beginning May 2012, in conformity with the Monthly Compensation System, from R$ 0.014541175 per share to R$ 0.015995293, for common shares, and from R$0.015995293 per share to R$ 0.017594822, for preferred shares. On June 20, the Board of Directors approved the monthly payment of Interest on capital, in lieu of the Monthly dividends, from August 2012;

·     on March 13, start of transactions involving ADRs – American Depositary Receipts indexed to common shares, on the New York Stock Exchange (NYSE), US. The Program meets the demands of institutional investors, among them foreign investment funds, and with this measure, Bradesco has now both common and preferred shares traded in the US;

·     on August 30, launch of Bradesco Next – the bank of the future –, a space at the forefront of innovation for introducing and experiencing new technologies, and customer products and services;

·     on September 13, Bradesco was once again chosen to make up the Dow Jones Sustainability World Index, a short list of the New York Stock Exchange gathering companies with the best sustainable development practices;

·     on November 14, Bradesco’s ON common shares were chosen to make up the MSCI Brazil Ratio, the leading provider of tools for supporting investment decision-making, in force from December 2012; and

·     on November 30, Bradesco was once again chosen to made up the Corporate Sustainability Index (ISE) of BM&FBovespa, which reflects the return provided by a portfolio with shares of companies with the best performances at all levels measuring the corporate sustainability. 

Book net income was R$ 11,381 billion for the year, corresponding to R$2.98 per share and annualized return of 19.0% on average Shareholders’ Equity. The return on average total assets was 1.4%. Consolidated Shareholders’ Equity amounted to R$ 70,047 billion and total assets stood at R$ 879,092 billion.

Loan operations

Among Bradesco’s basic strategic guidelines, we have credit democratization, by way of a diversified offer and more attractive interest rates, has increasingly boosted its volume of loans made directly or in partnership with other agents in the market, and other lines of credit for individuals, such as loans repaid, through its extensive Branches Network, points of service, sales representatives and the Customer Service Center 0800 call Loans.

·        The balance at the end of the year was R$ 385,529 billion, for consolidated loan operations, under the expanded concept, which includes Advances on exchange contracts, sureties and endorsements, credit card and lease receivables, with an 11.5% increase in the period; and

·          R$ 21,299 billion was the consolidated balance of allowance for doubtful accounts, taking into account an additional provision of R$ 4,010 billion exceeding that one required by the National Monetary Council (CMN) Resolution 2682/99.

Funding and Asset Management

Bradesco manages, on the whole, 25,693 million account holders, and 48,596 million savings account holders with a balance of R$ 69,042 billion, which accounts for 17.7% of the Brazilian Savings and Loans System (SBPE). At the end of the year, the Organization’s total funding and asset management reached R$1,225 trillion, a 20.1% increase as compared to the previous year.

·        R$467,449 billion in demand deposits, time deposits, interbank deposits, Federal funds purchased and securities sold under agreements to repurchase and savings deposits, a 12.7% increase;

·        R$441,832 billion in managed funds, comprising Investment funds, managed portfolios and third-party fund units, a 31.7% increase;

·        R$168,735 billion, recorded in Foreign exchange portfolio, Borrowings and onlending, working capital, collection and payment of taxes and others, funds from issuance of securities and subordinated debt – domestic, and other funding, a 11.7% increase;

·        R$ 124,217 billion in technical provisions for insurance, private pension plan funds and capitalization bonds, a 19.8% increase; and

·        R$22,995 billion in Foreign funds, by way of public and private issuances, subordinated debt and securitization of future financial flows, which represented US$11,253 billion.

At the end of the 2012 fiscal year, Bradesco’s market value, taking into account the closing quotations of ON and PN common and preferred shares, was R$131,908 billion, a 23.3% increase as compared to the closing of the 2011 fiscal year. Taking into account only the closing quotation of PN shares (more liquid) at the same date, Bradesco’s market value was R$ 134,257 billion, a 14.4% increase as compared to the 2011 fiscal year. In the annual comparison, Ibovespa posed a 7.4% increase. 

2011

In 2011, the real depreciated by 12.6% in relation to the US dollar, reaching R$ 1.8758 per US$1.00 on December 31, 2011 as compared to R$ 1.6662 per US$1.00 on December 31, 2010. The Central Bank of Brazil increases the basic interest rate from 10.75% in December 2010 to 11.00% in December 2011.

At the end of 2011, the global economic scenario continued to be characterized by signs of slowdown and risk, particularly the developed countries. Evidences of accommodation in American economy have been quickly counteracted by political efforts on the eve of 2012 presidential elections. In Europe, the experiment of a monetary and customs alliance that has not developed toward a political and fiscal alliance may require a greater effort of certain governments to address current constraints.

Being involved in the unprecedented and rising trend toward transparency that has characterized developed nations over the last few decades, at the same time favored by it, developing countries have been able to take appropriate preventive measures in good time to avoid the mistakes presumably made by the former, thus enabling faster and less painful adjustment for their exchange rate, fiscal and monetary policies.

In this situation, which has partly affected the most optimistic forecasts posed in early 2011, we may feel relatively at ease in relation to Brazil's record and potential performance on social and economic issues. With a historical landmark exceeding 50% of its population integrated to the middle class, the country has found in the foreign market a powerful ally to sustain growth in 2011/2012, although at levels lowers than those recorded in 2010.  On the other hand, the world recognition of the full development of its democratic regime, freedom of speech, Law independence, and consumption expansion, has transformed Brazil in a preferential destination for direct foreign investments.

Among the most significant events of 2011 for Bradesco, we highlight the following: a) opening of 1,009 branches, which increased the number of Bradesco Branches and Service Points to 9,063 across Brazil, which demonstrates the breadth and solidity of the Bank’s structure and its confidence in Brazil, in addition to the determination to invest; b) acquisition of shareholder control of Banco do Estado do Rio de Janeiro S.A. (BERJ), which enabled Bradesco to provide Payroll payments to civil servants and mobilized teams of employees throughout Brazil, transforming the registration of over 400,000 accounts into a great time for expansion of the Bank’s business in that state; and c) the creation BSP Empreendimentos Imobiliários S.A., a subsidiary of the Bank, aimed at consolidating the management of real estate assets of Organização Bradesco, with a portfolio of 840 properties. In the area of recognition, we can highlight the following: a) Bradesco’s remaining on the Dow Jones Sustainability Index of the New York Stock Exchange; b) Bradesco’s remaining on the Corporate Sustainability Index (ISE) of the São Paulo stock exchange (BM&FBOVESPA); and c) recognition – by expert consultancy – of the “Bradesco” brand as the most valuable brand in the Nation.  Also significant was August's 10% increase in the value of the monthly dividends paid out by the Bank.  

Book net income was R$ 11,028 billion for the year, corresponding to R$ 2.89 per share and annualized return of 21.0% on average Shareholders’ Equity. Return on average total assets at 1.6%, a fall of 0.2 p.p. compared to previous year. Consolidated Shareholders’ Equity amounted to R$ 55,582 billion and total assets stood at R$ 761,533 billion.

Loan operations

Bradesco’s commitment to democratized access to credit through its diversified offering has increasingly boosted its volume of loans made directly or in partnership with other agents in the market, and other lines of credit for individuals, such as loans repaid, through its extensive Branches Network, points of service and the Customer Service Center 0800 call Loans.

·        The balance at the end of the year was R$345,724 billion, for consolidated loan operations, under the expanded concept, with an 17.1% increase in the period; and

·          R$19,540 billion was the consolidated balance of the allowance for doubtful accounts.

Funding and Asset Management

At the end of the year, the total funding and asset management reached R$ 1,020 trillion, a 16.9% increase as compared to the previous year, as follows:

·        R$414,872 billion, an increase of 13.8%, in demand deposits, time deposits, interbank deposits, other deposits, Federal funds purchased and securities sold under agreements to repurchase and savings deposits;

·        R$ 335,370 billion in managed funds, comprising Investment funds, managed portfolios and third-party fund units, showing an increase of 13.4% on the same period of the previous year;

·        R$151,081 billion, an increase of 32.0%, recorded in Foreign exchange portfolio, Borrowings and onlending, working capital, collection and payment of taxes and others, funds from issuance of securities and subordinated debt – domestic, and other funding;

·        R$ 103,653 billion in technical provisions for insurance, private pension plan funds and capitalization bonds, showing an increase of 18.9% on the previous year; and

·        R$ 14,814 billion in Foreign funds, by way of public and private issuances, Subordinated debt and securitization of future financial flows, which represented US$ 7,897 billion.

Bradesco’s market value on December 31, 2011 was R$106,971 billion. Bradesco’s common and preferred stock posted falls of 1.6% and 5.8% respectively in 2011 against 2010, taking the last quotation each year, adjusted for corporate events, except for distribution of earnings. Note that the Ibovespa stock index fell 18.1% over the same period.

The following are comments about our key indicators:

I)   Basel Index

Brazilian financial institutions are subject to methodology for capital metrics and levels based on a risk-weighted asset index. The parameters of this methodology resemble the international framework for minimum capital measurements adopted for the Basel Accord. Starting in October 2013, the implementation of the new capital structure began in Brazil. The Central Bank of Brazil (Bacen), through CMN Resolution 4192/13, set out the new methodology for calculating the Referential Equity, or “PR” (Patrimônio de Referência), superseding CMN Resolution 3444/07. Given that this methodology involves the introduction of new adjustments, we adapted the time series, showing – in periods – the transition from Basel II to Basel III.

The calculation of our Basel Index is shown below:

In 2013, as a result of the implementation of the new capital requirements, it is not possible to compare the indexes with those of 2012.

The Basel ratio rose 1.0 p.p. from 15.1% in December 2011, to 16.1% in December 2012. The following is also worth mentioning: (i) the eligibility of Subordinated Financial Notes of Credit to comprise Tier II, in the amount of R$ 13,455 million, the increase of which was primarily offset by: (ii) the reduction caused by maturities and escalation, which occurs during the last 5 years of debt repayment, in the amount of R$ 2,447 million; (iii) the increase in the portion of credit risk, brought on, in part, by the expansion of the credit portfolio; and (iv) the increase in the portion of market risk, brought on, in part, by the effects of Circular Letter 3568/11 of the Central Bank of Brazil.

It is worth mentioning that in December 2012, only R$26,638 million of the total subordinated debt were used in the calculation of the Basel Index, given the respective maturity.

The Basel Index improved by 0.4 p.p., from 14.7% in December 2010 to 15.1% in December 2011, mainly impacted by: (i) the eligibility of Subordinated Financial Notes of Credit to comprise Tier II, in the amount of R$ 9.402 million; and (ii) the effect of Circular Letter 3563/11 issued by the Central Bank of Brazil, which reduced the capital requirement for certain loan and leasing operations (repealing Circular Letter 3515/10) and application in shares of investment funds linked to open supplementary pension plans (PGBL and VGBL), starting in November 2011.

It is worth mentioning that in December 2011, only R$ 15,630 million of the total subordinated debt were used in the calculation of the Basel Index, given the respective maturity.

II)              Operating Efficiency Ratio (OER) and Operating Coverage Ratio

Operating Efficiency Ratio (OER)

A 2013 to 2012 comparison shows a 0.6 p.p. in the ratio. The increase was due in most part to a reduction in the financial margin of “non-interest” as well as the impact of the collective bargaining agreements of 2012 and 2013.

A 2012-2011 comparison shows an improvement of 1.5 p.p. in the ratio, reaching 41.5% in the fourth quarter of 2012, which represented the lowest level in the last 10 quarters. This improvement is basically due to: (i) growth in the financial margin; and (ii) increase in banking service fees, which was affected by the increased average business volume, the result of the development of investments in accelerated organic growth started in the second half of 2011, aligned with the ongoing efforts to control expenses, including the actions taken by our Efficiency Committee, and IT investments.

Operating Coverage  

In the comparison between 2013 and 2012, and between 2012 and 2011, the index of operational coverage showed improvement, mainly reflecting the increase in revenue from services provided, coupled with ongoing efforts to control expenses, including actions by our Efficiency Committee in the period.

III)           Main loan portfolio indicators

Delinquency rate > 90 days⁽¹⁾

⁽¹⁾ Concept defined by the Central Bank of Brazil.

Total delinquency ratio, comprising the transactions overdue over 90 days, had a decrease in the quarter and in the last twelve months, thanks basically to: (i) the investment in the ongoing improvement in loan assignment models; (ii) the growth of payroll-deductible loan and real estate financing products, which impacted the portfolio mix; and (iii) the improvement in internal models of loan risk monitoring. The drop among individual customers and SMEs was also a reason for the reduction. The higher delinquency ratio among Corporations was due to specific cases and does not represent a trend.

In December 2012, the delinquency rate for accounts over 90 days past due reached 4.1% of the credit portfolio, with an increase of 0.2 p.p. compared to December 2011, primarily due to increases of: (i) 0.3 p.p. in delinquency of Micro, Small, and Medium Enterprises; and (ii) 0.1 p.p. in the delinquency rate for Individuals.

In December 2011, the delinquency rate of accounts over 90 days past due reached 3.9% of the credit portfolio, with an increase of 0.3 p.p. from December 2010, due primarily to: (i) the increase of 0.6 p.p. in delinquency of Individuals; and (ii) an increase of 0.5 p.p. in delinquency of Micro, Small and Medium Enterprises.

Coverage ratios

In December 2013, the coverage ratio of the Allowance for doubtful accounts in relation to loans overdue from 60 to 90 days reached 158.9% and 192.3%, respectively, indicating a comfortable level of provisions. Increases in the period reflect an improvement of defaults.

The balance of the Provision for Doubtful Debts (PDD) of R$ 21,687 million in December 2013, was comprised of: (i) R$ 17,651 million in provisions required by the Central Bank of Brazil; and (ii) R$ 4,036 million of additional provisions.

In December 2012, the coverage ratio of the Allowance for doubtful accounts in relation to loans overdue from 60 to 90 days reached 147.3% and 178.2%, respectively, indicating a comfortable level of provisions. The small reductions in the period reflect the increased delinquency.

The balance of the Provision for Doubtful Debts (PDD) of R$ 21,299 billion in December 2012, was comprised of: (i) R$ 17,288 billion in provisions required by the Central Bank of Brazil; and (ii) R$ 4,010 million of additional provisions.

In December 2011, the coverage ratio of the Allowance for doubtful accounts in relation to loans overdue from 60 to 90 days reached 151.8% and 184.4%, respectively, basically due to the nominal increase of overdue loans, which follow the growth of the loan portfolio, as well as the increased delinquency.

The balance of the Provision for Doubtful Debts (PDD) of December 2011 reached R$ 19.540 million, up 20.0% (R$ 3.250 million) compared to December 2010, comprised of: (i) R$ 15.529 million in provisions required by the Central Bank of Brazil; and (ii) R$ 4.011 million in additional provisions.

It is worth mentioning that in the third quarter of 2011, an additional provision in the amount of  R$ 1.0 billion was recognized, aimed at covering a possible worsening in the global economic scenario and possible effects in the Brazilian economy.

b)  capital structure and possibility of redemption of shares, indicating: i) redemption scenario; ii) formula for calculating the amount of redemption

When Bradesco’s directors analyze the tables below, they understand that the Banks’s current capital structure is adequate and consistent with the business expansion strategy. The largest funding source for its operations is from third-party capital.

Capital Structure

In December 2013, Bradesco’s capital was R$38,1 billion, composed of 4,207,274 thousand book-entry shares without par value, of which 2,103,637 thousand common shares and 2,103,637 thousand preferred shares.

In December 2012, Bradesco’s capital was R$ 30,1 billion, composed of 3,824,795 thousand book-entry shares without par value, of which 1,912,398 thousand common shares and 1,912,397 thousand preferred shares.

In December 2011, Bradesco’s capital was R$30.1 billion, composed of 3,824,795 thousand book-entry shares without par value, of which 1,912,398 thousand common shares and 1,912,397 thousand preferred shares.

Over the last three years, Bradesco has kept its proportion of capital held by third parties at around 92.0%, which is seen as a normal level for institutions in the financial intermediation business.

There are no ways of redeeming the company’s shares other than those legally stipulated.

c)   capacity to pay financial commitments

Bradesco’s directors understand that the operations stated in the balance sheet at the periods stated below, for the three last fiscal years, evidence that Bradesco has a comfortable liquidity margin to comply with its short-term liabilities. It is worth mentioning that Bradesco’s asset and liability management policy is regularly reviewed to ensure sufficient liquidity to honor withdrawals, deposits, repay other obligations at maturity, extend loans or other forms of credit to the customers and meet its own needs of working capital for investment. The following table presents our consolidated balance sheet by maturity:

d) financing sources used for working capital and investments in non-current assets

We highlight below the main sources of working capital and investments in non-current assets for the last three fiscal years:

Deposits

Deposits are our most important source of funding. Our deposits balance over these years progressed in the following manner:

·          In December 2013, the balance of our deposits increased approximately 2.7% as compared to December 2012, mainly due to increased funding volume in the form of demand and saving deposits; and

·          In December 2012, the balance of our deposits decreased by 2.5% as compared to December 2011, mainly due to decreased funding volume in the form of time deposits.

Deposits accounted for approximately 43.2% of all obligations in December 2013. Our deposits consist primarily of real-denominated, interest-bearing time and savings deposits and real-denominated, non-interest-bearing demand deposits. The decrease of R$ 8,259 million in time deposits, between 2013 and 2012, was basically a result of the new business opportunities offered to customers.

Savings account deposits showed 16.9% growth, resulting primarily from: (i) the higher funding volume raising, which was influenced in part by changes in the rules for investment performance; and (ii) the remuneration of the savings account inventory.

Regarding demand deposits, there was an increase of R$2,206 million, in the comparison between 2013 and 2012, mainly arising from improved funding, which in turn derived from an increase in the account holders’ base in the period.

In December 2013, we had 26.4 million account holders and 50.9 million savings accounts as compared to 25.7 million account holders and 48,6 million savings accounts in December 2012. In December 2011, we had 25.1 million account holders and 43.4 million savings accounts.

Debentures

The increases stated in the comparison between December 2013 and 2012 and between December 2012 and 2011 basically refer to the placement of these securities, used as a guarantee in repurchase agreements, which were impacted by the pace of the economic activity.

Borrowing and Onlending

The increase of 27.0% (R$ 11,909 million) in fiscal year 2013 compared to 2012 is due primarily to: (i) an increase of R$ 7,231 million in loan obligations and onlendings denominated in and/or indexed to foreign currency, which increased from R$ 8,169 billion in December 2012 to R$ 15,400 million in December 2013, mainly brought on by: (a) the foreign exchange gain of 14.6% in the period, and (b) increase of the volume raised; and (ii) the increase of R$ 4,678 million in the volume of funds raised through loans and transfers in Brazil, mainly through Finame operations.

In the comparison between 2012 and 2011, the balance of Borrowings and Onlending recorded a fall of 17.0%, or R$9,061 million, basically due to the decrease of R$9,171 million in borrowings and onlending denominated and/or indexed to foreign currency, which balance decreased from R$17,340 million in December 2011 to R$8,169 million in December 2012, mainly due to: (i) the settlement of operations; partially offset by: (ii) the positive 8.9% foreign exchange variation in the period.

Funds from securities issued

The increase of 12.3% (R$ 6.295 million) in 2013 compared to fiscal year 2012, was primarily due to: (i) the increase in the inventory of Financial Notes, the balance of which increased from R$ 28.221 million in December 2012 to R$ 35.208 million in December 2013, mainly due to new issues during the period; (ii) the increase in operations of Real Estate Financial Notes, in the amount of R$ 1.766 million, partially offset: (iii) by the reduction of R$ 2.713 million in the volume of operations of securities issued abroad.

In the comparison between December 2012 and December 2011, the 23.7% (R$ 9,837 million) growth in Resources from Issuance of Securities stemmed mainly from: (i) the increase in volume of securities issued abroad, in amount of R$ 5,778 million, reflecting the new issues in the period and the 8.9% foreign exchange rate gain; (ii) the increase in operations of Real Estate Credit Notes, in the amount of R$ 2,086 million; (iii) the greater volume of Credit Notes for Agribusiness, in the amount of R$ 1,355 million; (iv) new issuances of Financial Credit Notes , the balance of which grew R$ 1,101 million, partially offset by: (v) the reduction of R$ 483 million in the balance of Mortgage-Backed Securities.

Subordinated Debt

In December 2013, Subordinated Debt totaled R$35,885 million (R$8,952 million abroad and R$26,933 million in Brazil).

At December 31, 2012, subordinated debt totaled R$34,852 million (R$8,807 million abroad and R$26,045 million domestic). In the period, the amount of R$ 19,837 million of Subordinated debt (R$ 2,008 million abroad and R$ 17,829 million domestic) was issued.

In December 2011, Subordinated Debt totaled R$26,910 million (R$6,404 million abroad and R$20,506 million in Brazil). In the period, the amount of R$9,626 million of Subordinated debt (R$815 million abroad and R$8,811 million domestic) was issued.

e)   financing sources for working capital and investments in non-current assets that it intends to use to cover liquidity deficits

The Directors report that as sources of financing for working capital and for investments in non-current assets used to cover liquidity shortfalls, the company may use the following resources: (i) Deposit Raising; (ii) Issuance of Debentures; (iii) Loans; (iv) Issuance of Securities; and (v) Injection of Capital by the controlling shareholders. It should be pointed out that Bradesco’s Treasury Department acts as a support center for our business segments by managing the funding and liquidity positions and executing investment objectives in accordance with asset and liability management policies. It is also responsible for setting the rates for our different products, including interbank rates. The Treasury Department covers any funding shortfall through borrowing in the interbank market, investing any surpluses in liquid instruments in the interbank market.

In some limited circumstances we may obtain emergency funds from the Central Bank of Brazil through a transaction referred to as “discount.” A discount is a loan from the Central Bank of Brazil to a financial institution, that loan being guaranteed by Federal Government securities owned by the financial institution. The amount of Federal Government securities held by the financial institution as trading securities limits the amount of discount transactions. Bradesco did not enter into discount transactions for liquidity purposes.

f)   indebtedness ratios and the characteristics of the debts, also describing: i) relevant loan and financing agreements; ii) other long-term relationships with financial institutions; iii) level of subordination between debts; iv) any restrictions imposed on the issuer, in particular in relation to limits for indebtedness and contracting new debts, to the distribution of dividends, disposal of assets, issue of new securities and disposal of shareholding control

There are no loan and financing agreements or long-term relationships with financial institutions that we believe are relevant for Bradesco.

Financial institutions are subject to operating limits defined by the National Monetary Council and the Central Bank of Brazil for operating, according to provisions of the regulations in force, particularly Law 4,595/64, which sets forth the National Financial System.

Among the limits defined, noteworthy are as follows (i) Reference Equity consistent with the risks of its activity, (ii) fixed assets, which limits to 50% of the Reference Equity the total funds invested in Permanent Assets, (iii) exposure by costumer, which sets forth the maximum limit of 25% of the amount of Reference Equity of exposure by costumer, (iv) exposure in gold, foreign currency and in operations subject to foreign exchange variation, limited to 30% of the Reference Equity amount, and (v) minimum limits of realized capital and shareholders’ equity for operating.

Rules also bar financial institutions from carrying out certain operations, and noteworthy are as follows: (i) granting loans or advances to related companies, managers and relatives, and (ii) acquiring real estate not intended for own use.

g)  limits for use of contracted financing

There are no limits for the use of contracted financing.

h) significant changes to each item of financial statements

Directors understand that the Bank has all financial and asset conditions to ensure the compliance with obligations, guaranteeing the business expansion.

We present below comments on the items the directors believe are important and relevant, stated in the Balance sheet and Statement of income.