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Brazil's Banco Bradesco says asset quality likely to improve

(Adds IR head comments)

By Carolina Mandl

SAO PAULO, July 26 (Reuters) - Defaults at Brazil's Banco Bradesco SA are likely to keep falling through year-end, investor relations head Carlos Firetti told reporters in a conference call on Thursday, a sign of improved asset quality going forward.

Earlier on Thursday, Brazil's second-largest private lender set more optimistic year-end targets for loan-loss provisions. It predicted losses between 13 billion reais ($3.5 billion) and 16 billion reais from low-quality assets, down from the previous target range of 16 billion reais to 19 billion reais.

Fewer bad loans already helped Bradesco beat second-quarter net income estimates. The bank reported recurring net income, which excludes one-time items, of 5.161 billion reais, above a Reuters consensus estimate of 5.056 billion reais and 9.7 percent higher than a year earlier.

Preferred shares in Bradesco were down 1.1 percent in morning trading. Analysts hailed the bank's asset quality improvements, but complained about higher-than-expected expenses, which grew 2.9 percent to 9.920 billion reais.

Firetti said the bank is still on track to hit its goal for loan book growth, which is likely to reach the mid-point of the estimated 3 percent to 7 percent range. In April, the bank had predicted Bradesco was more likely to finish 2018 around the bottom end of that target.

Loan book growth sped up in the second quarter, increasing 6 percent to 515.6 billion reais. In a securities filing, Bradesco said corporate loans grew at a faster pace than retail even as the economy struggles to bounce back from a recession.

By year-end, however, Firetti said that loans to individuals should outpace corporate loans.

Fee income grew 8.3 percent from the previous year, to 8.1 billion reais, helping to boost profit in the quarter. Recurring return on equity dropped 0.2 percent in the quarter, to 18.4 percent.

($1 = 3.7253 reais) (Reporting by Carolina Mandl; Editing by Elaine Hardcastle and Dan Grebler)