Table of Contents

Forward-looking statements

17.Major Awards and Acknowledgments in the period:

·It was elected as the “Most Valuable Brazilian Brand” for the sixth consecutive year, and ranked second in the overall ranking (WPP Consulting, Kantar Vermeer, in partnership with IstoÉ Dinheiro Magazine);

·It reached the first place in the financial industry and ranked fifth in the overall ranking in the third edition of the “Valor Inovação Brasil” yearbook (Valor Econômico Newspaper / Network Pwc Consulting Firm);

·It led the “Best Retail Bank” ranking in the first edition of the “Estadão Finanças Mais” yearbook. Grupo Bradesco Seguros also appeared in the categories “Pension Plan” and “Health” (O Estado de S.Paulo newspaper, in partnership with Austin Rating);

·It enjoyed pride of place in the “efinance 2017” award, in the following categories: CIO of the Year, Back Office, Project Management, BYOD Security, Business Integration, IT Governance, Foreign Currency in ATMs and Credit App. Bradesco Seguros was listed in the following categories: Infrastructure Management, Contact Center and Health App (Editora Executivos Financeiros);

·It enjoyed pride of place in the “Top Management 2017” (ValorInveste Magazine, of the Valor Econômico Newspaper);

·Grupo Bradesco Seguros was, for another year, highlighted in the “Valor Financeiro – Seguros, Previdência e Capitalização” yearbook (Valor Econômico Newspaper);

·Bradesco BBI was awarded the “Best Investment Bank in Brazil” for the third consecutive time in the Awards for Excellence 2017 edition (Euromoney Magazine);

·Bradesco Cartões was featured in the “XVIII Modern Consumer Award for Customer Service Excellence” for the ninth time, as the winner with Amex cards. (Consumidor Moderno Magazine, in partnership with Centro de Inteligência Padrão and On You); and

·BRAM won the “Top 10 Overall Broadcast Projections” ranking of the first quarter of 2017, according to survey of AE Dados from Agência Estado.

Bradesco Organization is fully committed to the socio-economic development of the country. We set our business guidelines and strategies with a view of incorporating the best sustainability practices, considering the context and the potential of each region, thus contributing to the generation of shared value in the long term. To reinforce this position, we emphasized adherence to globally recognized business initiatives, such as: Global Compact, Equator Principles, CDP (Carbon Disclosure Program), Principles for Responsible Investment (PRI), GHG Protocol Program (Brazilian Greenhouse Gas Emissions Program) and Companies for Climate Change (EPC). The Board of Directors, through the Sustainability Committee, monitors the sustainability deliberations. Excellence in business management is recognized by the main indexes of Sustainability, such as the Dow Jones Sustainability Index (DJSI) – “Emerging Markets”, of the New York Stock Exchange, the Corporate Sustainability Index (ISE), and the Carbon Efficient Index (ICO2), both from B3.

With a broad social and educational program put in place 60 years ago, Fundação Bradesco operates 40 schools across Brazil. In 2017, a budget of R$625.944 million will benefit approximately 104,228 students enrolled in its schools at the following levels: Basic Education (from Kindergarten to High School and Higher Secondary Technical-Professional Education), youth and adult education; and preliminary and continued vocational training, focused on creating jobs and income. In addition to the guarantee of free, quality education, the students enrolled in the Basic Education system, numbering over 43 thousand, also receive uniforms, school supplies, meals, and medical and dental assistance. Fundação also expects to benefit 630 thousand students via distance learning (EaD), through its e-Learning portal “Escola Virtual” (Virtual School), where students can complete at least one of the courses offered in its schedule. Another 15,040 students are taking part in projects and actions in partnership with the Program Educa+Ação and in Technology courses.

R$ million

1H17

1H16

2Q17

1Q17

Book Net Income

7,982

8,255

3,911

4,071

Non-recurring events (net of tax effects)

1,370

19

793

577

- Goodwill amortization (Gross)

1,119

-

565

554

- Regulatory change in Cielo ⁽¹⁾

210

-

210

-

- Other ⁽²⁾

41

19

18

23

Adjusted Net Income

9,352

8,274

4,704

4,648

Adjusted Income Statement - R$ million

1H17

1H16

Variation

2Q17

1Q17

Variation

Amount

%

Amount

%

Net Interest Income

31,100

29,854

1,246

4.2

15,484

15,616

(132)

(0.8)

- NII - Interest Earning Portion

31,678

29,517

2,161

7.3

15,778

15,900

(122)

(0.8)

- NII - Non-Interest Earning Portion

256

337

(81)

(24.0)

120

136

(16)

(11.8)

- Impairment of Financial Assets

(834)

-

(834)

-

(414)

(420)

6

(1.4)

ALL Expenses

(9,832)

(10,472)

640

(6.1)

(4,970)

(4,862)

(108)

2.2

Gross Income from Financial Intermediation

21,268

19,382

1,886

9.7

10,514

10,754

(240)

(2.2)

Income from Insurance, Pension Plans and Capitalization Bonds ⁽¹⁾

3,408

2,709

699

25.8

1,781

1,627

154

9.5

Fee and Commission Income

14,926

13,029

1,897

14.6

7,496

7,430

66

0.9

Personnel Expenses

(9,789)

(7,636)

(2,153)

28.2

(4,967)

(4,822)

(145)

3.0

Other Administrative Expenses

(9,752)

(8,386)

(1,366)

16.3

(4,898)

(4,854)

(44)

0.9

Tax Expenses

(3,490)

(2,744)

(746)

27.2

(1,718)

(1,772)

54

(3.0)

Equity in the earnings (losses) of unconsolidated and jointly
controlled subsidiaries

120

62

58

93.5

62

58

4

6.9

Other Operating Income / (Expenses)

(3,625)

(3,684)

59

(1.6)

(1,792)

(1,833)

41

(2.2)

Operating Income

13,066

12,732

334

2.6

6,478

6,588

(110)

(1.7)

Non-Operating Income

(86)

(143)

57

(39.9)

(34)

(52)

18

(34.6)

Income Tax / Social Contribution

(3,538)

(4,232)

694

(16.4)

(1,699)

(1,839)

140

(7.6)

Non-controlling interests in subsidiaries

(90)

(83)

(7)

8.4

(41)

(49)

8

(16.3)

Adjusted Net Income

9,352

8,274

1,078

13.0

4,704

4,648

56

1.2

The quarterly Efficiency Ratio (ER)⁽¹⁾ reached 41.1% in the second quarter of 2017, registering an increase of 0.5 p.p. compared to the previous quarter, due to: (i) the increase in operating expenses, personnel and administrative, which were affected in the quarter, basically due to (a) lower concentration of paid vacation time, and (b) higher advertising and marketing expenses; and (ii) the reduction in net interest income; partially offset by higher: (iii) income from insurance, pension plans and capitalization bonds; and (iv) fee and commission income.

The 12-month ER⁽¹⁾  reached 41.5%, a 0.7 p.p. increase compared to the previous quarter and a 4.1 p.p. increase in the annual comparison. The main drivers of this performance were: (i) the increase in operating expenses, impacted mainly by the consolidation effect of HSBC Brasil, which occurred as of the third quarter of 2016 (note that from this quarter on, 12-month ER captures the effect of HSBC Brasil consolidation), and (ii) the effect of the impairment of financial assets.

The "risk-adjusted" ER, which reflects the impact of risk associated with loan operations⁽²⁾, reached 53.7%.

Disregarding the impacts of HSBC Brasil’s consolidation, the ER performance reflects the strategy of sustainable growth, which includes, among other things, (i) the availability of appropriate products and services for clients through the segmentation of the base and of digital channels, (ii) the optimization of the customer service network, and (iii) the strict control of operating expenses (a) arising from the actions of the Efficiency Committee, among which we highlight as a target for this year, the capture of synergies and scale gains from the merger of HSBC Brasil and (b) of investments in Information Technology, to the amount of R$2.786 billion in the first semester of 2017.

In the comparison of first semester of 2017 and same prior-year period, net interest income increased by 4.2%, or R$1,246 million, a reflection of the growth in: (i) the interest-earning portion of the NII, in the amount of R$2,161 million, particularly “Credit Intermediation"; partly due to HSBC Brasil’s consolidation, as from the third quarter of 2016; and partly offset by: (ii) the effect of impairment of financial assets in the amount of R$834 million; and (iii) the lower non-interest earning portion of the NII, in the amount of R$81 million.

In the comparison between the second quarter of 2017 and the previous quarter, net interest income decreased 0.8%, or R$132 million, mainly due to lower: (i) interest-earning portion of the NII in the amount of R$122 million, as a result of lower margins with (a) “Insurance”, in the amount of R$288 million and (b) “Credit Intermediation”, in the amount of R$252 million, partially offset by (c) an improvement of R$418 million in the margin of “Securities/Others”; and (ii) non-interest-earning portion of the NII, in the amount of R$16 million.

In June 2017, the expanded loan portfolio of Bradesco totaled R$493.6 billion, increasing 10.3% in the last 12 months (considering the consolidation of HSBC Brasil as of the third quarter of 2016). Companies registered a growth of 7.7%, impacted by the segment of Large Corporates and loans for Individuals had a growth of 15.5%. For Individuals, the products that posted the strongest growth in the last 12 months were: (i) real estate financing; (ii) credit card; and (iii) payroll-deductible loans. For Companies, the main highlights were: (i) rural loans; (ii) export financing; and (iii) operations bearing credit risk – debentures”.

In the quarterly comparison, the portfolio recorded a reduction of 1.8% due to the economic scenario and low demand for credit. Compared to March 2017, the decreases in the business segments were as follows: (i) 2.3% for Large Corporates; and (ii) 4.1% for Micro, Small and Medium-sized Enterprises. Individuals remained stable.

In the first semester of 2017, allowance for loan losses expenses totaled R$9,832 million, down 6.1%, or R$640 million from the same prior-year period, resulting from: (i) strengthening of the policy and procedures for credit granting and the quality of the guarantees obtained; (ii) the results of the improvement of credit recovery processes, which contributed to higher income from credit recovery for the period, being partially offset by: (iii) the effect of the consolidation of HSBC Brasil as of the third quarter of 2016.

In comparison with the previous quarter, allowance for loan losses expenses were up 2.2%, or R$108 million, basically due to: (i) complementing the generic provision, as a result of the periodic reassessment of credit guarantees, and which was partially offset by: (ii) the improvement in the delinquency ratio of Individuals and Micro, Small and Medium-Sized Enterprises and stabilization in delinquency of Large Corporates. 

Delinquency Ratio ⁽¹⁾

90-day Delinquency Ratio

Delinquency ratio, comprising operations overdue for more than 90 days in the total portfolio, had a decrease in the quarter. In nominal terms, it is worth highlighting the reduction of delinquent loans for two consecutive quarters, mainly influenced by the segments of Individuals and Micro, Small and Medium-Sized Enterprises.

In the second quarter of 2017, R$1.3 billion of loan assignments (previously written-off) without retention of risks and benefits were carried out, not having significantly impacted delinquency ratios nor the results of operations in the period.

15-90 Day Delinquency Ratio

Short-term delinquency, including operations overdue between 15 and 90 days, decreased in the quarter, positively impacted by Individuals.

The increase in the delinquency of Companies in the last quarter was due to the reduction in the credit stock, while overdue transactions remained stable.

(1) As defined by Bacen.

Provisioning, Delinquency, ALL and Effective Coverage Ratio

The strength of the provisioning criteria adopted must be mentioned, which is proven by: (i) historical data analysis of recorded allowances for loan losses; and (ii) effective losses in the subsequent 12-month period. When analyzed in terms of credit losses, net of recoveries, for an existing provision of 9.3% of the portfolio⁽¹⁾, in June 2016, the net loss in the subsequent 12 months was 5.1%, representing an effective coverage of 181.5%.

The increase in the net loss was due to the transfer of a specific customer from the Large Corporates segment to loss.

It should be highlighted that, considering the expected losses for one year (dotted part), there is an effective coverage ratio of 233.4% for June 2017.

R$ million (unless otherwise stated)

2Q17

1Q17

4Q16

3Q16

2Q16

1Q16

4Q15

3Q15

Variation %

2Q17 x 1Q17

2Q17 x 2Q16

Net Income

1,270

1,374

1,505

1,502

1,164

1,380

1,405

1,317

(7.6)

9.1

Insurance Written Premiums, Pension Plan Contributions and Capitalization Bond Income

18,512

17,948

21,247

17,733

17,253

15,186

19,130

15,125

3.1

7.3

Technical Provisions

233,640

229,433

223,342

213,608

190,649

182,973

177,835

168,629

1.8

22.5

Financial Assets

256,028

251,140

242,063

230,787

205,230

200,016

191,921

182,391

1.9

24.8

Claims Ratio (%)

76.6

73.7

72.8

77.1

76.8

72.1

71.9

73.1

2.9 p.p.

(0.2) p.p.

Combined Ratio (%)

86.6

85.2

85.9

90.0

89.6

86.1

86.5

86.9

1.4 p.p.

(3.0) p.p.

Policyholders / Participants and Customers (in thousands)

50,760

50,421

51,266

49,880

49,576

50,570

49,806

48,185

0.7

2.4

Number of Employees

7,181

7,148

7,120

6,625

6,713

6,959

7,023

7,052

0.5

7.0

Market Share of Insurance Written Premiums, Pension Plan
Contributions and Capitalization Bond Income (%) ⁽³⁾

26.0

25.7

25.4

24.9

24.3

24.8

25.5

24.7

0.3 p.p.

1.7 p.p.

In the first semester of 2017, revenues grew 12.4% in comparison with the same period of the previous year, influenced by “Life and Pension Plans”, “Health”, “Capitalization Bonds” and “Auto/P&C” products, which presented increases of 17.5%, 9.1%, 8.7% and 2.8%, respectively.

In the second quarter of 2017, the billing recorded a growth of 3.1% in comparison with the previous quarter, influenced by “Auto P&C”, “Capitalization Bonds”, “Life and Pension Plans” and “Health” products, which grew 17.2%, 8.1%, 1.8% and 1.3%, respectively.

Net income of the first six-month period of 2017 recorded a growth of 3.9% compared with the same period of previous year, primarily due to: (i) the increase of 12.4% in revenues; (ii) the downslide of the expense ratio; (iii) the increase in

equity results; (iv) the improvement of the administrative efficiency ratio; and partially offset by: (v) the increase of 0.6 p.p. in the claims ratio in the "Health" segment; and (vi) decrease in the financial income, due to the behavior of the economic–financial indices in the period.

Net income for the second quarter of 2017 decreased 7.6% over the previous quarter primarily due to: (i) the increase of 2.9 p.p. in the claims ratio; affected by the "Health" segment; (ii) the reduction in the financial income, due to the behavior of the economic–financial indices in the period; partially offset by: (iii) the increase of 3.1% in revenues; (iv) the 0.3 p.p. downslide in the expense ratio; and (v) the improvement of the administrative efficiency ratio.

Administrative expenses

In the comparison between the first semester of 2017 and the same prior-year period, administrative expenses increased 16.3%, or R$1,366 million, reflecting: (i) a growth in the volume of business and services for the period; (ii) the consolidation of HSBC Brasil as of the third quarter of 2016; and (iii) contract price adjustments.

In the second quarter of 2017, administrative expenses amounted to R$4,898 million, a variation of 0.9%, or R$44 million, in comparison with the previous quarter, mainly due to higher advertising and marketing expenses.

It should be noted that the expenses recorded during the first semester of 2017 already show the partial effects of the synergies and gains of scale resulting from the merger of HSBC Brasil activities in October 2016 when compared to the second six-month period of the previous year.

Other Operating Income and Expenses

In the first semester of 2017, other operating expenses, net, totaled R$3,625 million, down 1.6%, or R$59 million, over the same prior-year period, basically due to: (i) lower operating provision expenses related to insurance and credit card activities; partially offset by: (ii) higher expenses with sundry losses; and (iii) the consolidation of HSBC Brasil as of the third quarter of 2016.

In the comparison between the second quarter of 2017 and the previous quarter, other operating expenses, net of other operating income, decreased by R$41 million, basically due to lower operating provisions expenses related to insurance and credit card activities.

Income Tax and Social Contribution

In the first semester of 2017, in comparison with the same period of the previous year, income tax and social contribution expenses decreased by 16.4%, or R$694 million, mainly impacted by the deductibility of goodwill amortization in the acquisition of HSBC Brasil as of the fourth quarter of 2016.

Comparing the second quarter of 2017 with the previous quarter, income tax and social contribution expenses decreased by 7.6%, or R$140 million, primarily due to the decrease of taxable income, impacted by higher taxable income.

Unrealized Gains

Unrealized gains totaled R$23,395 million at the end of the second quarter of 2017, remaining stable in relation to previous quarter due to the fair value adjustment: (i) of investments, especially Cielo's shares, which appreciated 4.3%, and (ii) of loan operations.

In the comparison between second quarter of 2017 and same period of the previous year, the unrealized gains presented an increase in the amount of R$5,220 million, mainly due to the fair value adjustment: (i) of fixed-income securities, and (ii) of loan operations, being partially offset by: (iii) the devaluation of Cielo's shares, which fell by 12.8% in the period.