Q3 2021 Banco Bradesco SA Earnings Call
Yes.
Good afternoon, ladies and gentlemen, and thank you for waiting we would like to welcome everyone to Brett The East Coast third quarter 2021 Railroad East Conference call. This call is being broadcast at the sustained as Lee <unk> Investor Relations website, <unk> Dot Com BR Lash E.
In that address you can also find the presentation available for download.
We affirm that that all participants will be in a listen only mode. During the conference call. After the presentation. There will be a question and answer session. When further instructions will be given should any participant need assistance. During this call. Please press star zero to reach the operator before proceeding let me mention that forward looking statements are based on that.
Beliefs assumptions off of Banco Bradesco management and on information currently available to the company. They involve risks uncertainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur in the future.
Investors should understand that there are economic conditions industry conditions and other operating factors could also affect the future results of Banco Bradesco and could cause results to differ materially from those expressed in such forward looking statements now I would turn the conference over to Mr. <unk>.
Our list of Iraqi business controller and market Relations director. Please proceed.
Yeah.
Hello, everyone and welcome to our conference call for the discussion of our third quarter of 2021. The results we have today with us participating in the call our CEO <unk> <unk>.
Our executive Vice President and therefore the leagues.
Our executive director and IR.
Our CFO was volatile Ozawa Fernandez.
Our next.
Executive Officer, Duane this month, and Baetz, Chief Executive Officer, Steve Milligan.
I turn the floor now to that.
Thank you very much good actually.
Good afternoon, everyone. I hope you are well. Thank you for your interest in participating in our teleconference to discuss third Q21 results.
We present the highlights of the third Q in which we had good news regarding the Covid pandemic vaccinations have a defense it significantly with the strong engagement of the Brazilian population as a result, the disease is showing a domino trends, indicating that we are on the right.
Beth gave.
Given the scenario, we initiated all will return to in person work.
Following very strict sanitary protocols, we have returned a 100% in person work at our branches as they play an essential role for us.
He didn't population.
MS trading areas, we have established with a gradual return scheme evolving as health conditions allow.
The way we work in the post pandemic era is different based on a hybrid model all of our teams are combining person work with home office as it offers benefits for workers productivity and cost reduction.
The improvements in infection and death rates have put Brazil on the path to full reopening of the economy with an increase in economic activity.
However, the scenarios is still not entirely favorable the agenda for reform has not progressed within the inflation remains both high and persistence the central Bank of Brazil raised at interest rates and has shown determination in trying to control inflation.
However, this could have negative effects on the grill right, especially in 'twenty two.
With respect to our third Q21 operations, we saw very positive results, our net income recall rich.
Reaching $6 8 billion Reais, an increase of seven 1% over the previous quarter and 34, 5% compared to 20.
Among the positive indicators, we highlight the recover of the insurance results. The good performance in fee and commission.
In coming to provision expenses remaining fully under control as.
As a result, the ROE for the quarter reached 18, 6% in.
And the efficiency ratio also improve it reaching 45, 4% in the 12 month periods.
The loan portfolio grew six 5% in the quarter.
And 16, 4% in one year.
We were already seeing a good growth rate concerning to visual clients, but this quarter. The expansion also benefit this in the SME segment.
In this quarter, we have about a third of our credit originated on digital channels.
Pointing to 30 billion reais, providing declined to the autonomy and the security to serve themselves.
Individuals accounts for 50% of this total in the evolution of 58% in 12 months with 8% of credit request coming from the mobile channel.
Finally, I can highlight the excellent recovery income from insurance, which grew 104% in the quarter and two 6% in the year with the evolution of the written premiums and the consistent improvement in both the claims ratio in the financial income.
This would indicators have allowed us to conduct a positive review of some of the lines of our guidance as you will see later on in this presentation.
Moving to page three.
We'd like to present to the main items of <unk> results. In addition to the net income which grew seven 1% in the quarter. We can highlight the strong performance of operating income, which grew 11, 3% compared to the second Q 'twenty, one and 15 eight.
Percent compared to the third Q of 19.
The numbers show a stronger growth rate than the pre pandemic period the.
The biggest contributions to the evolution of results in the quarter came from insurance client NII and fee and commission income, partially offset by the reduction in the market NII and higher expenses.
Main factor of which being the collective bargaining agreement of bank employees, which impacted the month of September.
Daniel changes are explained in part by the fact that the third Q reflects the impacts of the pandemic more broadly.
I believe it's important to highlight the dynamics of our results for this girl has diversified and with good quality mix of results with banking and insurance operations that complement each other in the last quarter the insurance group.
Absorb the impacts of the Covid effect, reflecting the worst period of the pandemic in this quarter. It has come back on track. It has resumed its significant contribution representing 23% of consolidated income.
And when we look at the table on the right and below we see growth in total revenues even in this complex scenario and a reduction in total expenses, which requires discipline, resulting in a robust and growing it beat.
We will go into detail about these lines in the next slides.
Slide four highlights the evolution of our loan portfolio, we saw a significant expansion of six 5% in the quarter and 16, 4% in the annual change.
This growth reached all lines, mainly driven by Smes with an increase of 27, 8% and individuals with an increase of 24, 7% in the 12 months periods in real estate financing, we have a comprehensive position with proprietary embarked origination channels.
The origination grew six 2% compared to the same quarter in 2020. One we have financed with approximately 100000 units to date, an increase of 85% compared to the same period last year.
<unk>, we have a more agile process for approving formalizing proposals. This is a true benchmark.
Credit card growth reflects the increasing of the reopening of the economy with more transactions and greater use of credit limits.
In Smes grilled also point to the normalization of the economy with a greater demand for working capital.
In other words, we have robust growth both in the lives of low delinquency as in the lines of greater spreads.
Each have resulted them will result in a better net interest income.
We decided to revise our loan portfolio guidance as we have already exceeded the limits established in the previous guidance this quarter.
Let's move on to the slide five to talk about our provisions.
<unk> expenses in the quarter totaled $3 4 billion reais on the improvement of three 7% compared to the previous quarter.
As you can see chart. This is the same level achieved with us <unk> 19 <unk>.
Even considering the significant increase of more than 100 billion Reais, we had in the loan portfolio.
<unk> expenses in the quarter represented one 7% of the portfolio.
The drop reflects the dissipation of spreads provisioning, we did after the start of the pandemic as indicated by.
Our expected loss models.
In addition, we structurally it reflects the growth in low risk portfolios. The good quality of recent yields and the great evolution, we have seen quite modeling over the past few years.
We continue with very comfortable provision rate provisioning ratios.
The NPL coverage ratio over 90 days was 297%.
It's still well above the pre COVID-19 level.
Considering the entire renegotiating our portfolio. These ratio was a hood with 15% the coverage ratio should continue to fluctuate over the next few quarter as part of the process of normalizing credit conditions.
The great performance that we're seeing in all <unk> expenses also led us to revise guidance downwards.
Let's move onto slide six.
The renegotiation portfolio saw another quarter of decline.
Trend that should continue for the upcoming periods.
Although it has shown a small increase the delinquency of this portfolio is below historical levels.
We can highlight the high level four divisions, which anticipated effected delinquents. The current level of provisions in this portfolio represents almost four times the observer delinquents.
Moving on to slide seven.
The 90 day delinquency ratio rose 10 bps within our expectations.
There was growth among both individuals and Smes, mainly coming from the renegotiated portfolio.
As I explained the previous slides.
But it's important to emphasize that we still have ratios well below the pre pandemic periods in line with our active portfolio management practice. This quarter. We also sold portfolios that in our view did not compensate for the collection efforts of our teams if they say who is head of the curve.
<unk> the over 90 days index would have gone up an additional 10 bps.
MPL creation in the quarter was 5 billion Reais.
The level of provisions below NPL creation is mainly due to the anticipation of provisions after the onset of the prices. According to the expected loss models as I mentioned earlier.
Now, let's go to slide eight.
NII benefited from the increase in the volume of durations and the increasing spreads interrupting a sequence of productions. This spread pickup is very important to <unk> think about the next quarters and we believe telephone Ciena This way.
In the quarterly change the client NII grew by four 3% and nine 8% in the annual change.
We see an improvement in production spreads in our loan operations.
We believe this should benefit the client NII over 'twenty two.
The reduction in the market. The NII is going to impact of the increase in the CDI on the a L. M positions, partially offset by the higher results of the working capital.
His budget.
Let's move on to slide nine.
We saw excellent evolution in fee and commission income, which grew four 1% in relation to the previous quarter and seven 8% in the annual change.
The volume of credit card transactions was approximately 60 billion reais this quarter, surpassing periods that preceded the pandemic uneven seasonal quarters at the end of the year.
This performance is responsible for the strong growth presenting this line of revenue a growth of approximately eight 2% in the quarterly comparison and 10, 1% as the four year to date.
Our checking account holders base increased by $1 7 million clients in 12 months being one of the factors for the increase in the checking account lines.
Which showed growth of two 7% in the annual comparison offsetting all the revenue losses from pigs.
<unk>, we see consistent client grill, you know related companies underscoring our ability to diversify both physical and digital revenue sources.
In asset management growth is due to the net capital increase of 23 billion in 'twenty, one and a more favorable mix with growth in multi market and equity funds and loan operations. The eight 5% growth is related to the expansion of the portfolio.
We decided to review the fee and commission income guidance since with the performance of this quarter. We have already reached the maximum point of the guidance that we had released previously.
Now, let's move on to slide them.
Our operating expenses decreased by two 5% in the first nine months of the year compared to the same period last year.
Personal expenses increased compared to the previous year due to the higher provision for profit sharing view of the significantly higher income and also the consolidation of back Florida as of the fourth quarter 2020.
However, the most relevant in this quarter as of September was the impact of the collective bargaining agreement with bank employees.
Administrative expenses have decreased at 2% is for the year to date. Despite high inflation Dispirit just to give you a flavor of GPM on 24, 9% and a PCA off standpoint, 2%, reflecting disciplined cost control the evolution of digital channels.
Mining of our physical presence and processes.
The growth in the quarter in this quarter is mainly due to the higher business volume and higher client acquisition expenses, especially the Max at Maxim bids.
The change of the line of other income and expenses is explained mainly by the change in the non technical insurance provision.
The high inflation scenario implies challenge for managing expenses as many of them are index at the price changes, we will continue to act with discipline to keep costs under control seeking growth below inflation.
We went to 21 with the closure of 179 branches and the transformation of 377 branches into business units, which will result in 556 branches either closures or much fighting their search and business models.
Another highlight is bradesco expresso.
Which has more than 40000 partners. Our network is structured around variable costs, which starts operating a fully digital manner. This quarter with a number of products such as checking accounts loans payroll deductible loans credit cards and insurance.
<unk> two hour.
Beats digital wallets.
Moving now to slide 11, we can see all of our insurance operations. Once again saw significant growth in revenues and excellent with COVID-19 results, even with the events related to the pandemic. We can highlight the expansion of operations the increase in the number of policies.
In almost all of the business lines of reinsurance group co.
Costs related to COVID-19 were approximately $1 4 billion reais in the third Q and $4 4 billion as for year to date.
Worth, noting that COVID-19 events in the third Q were 26% lower than the previous quarter, reflecting the impact of vaccination and a reduction in the number of cases.
The financial income was also very positive, reflecting the fact that economic financial races in the period had on our financial investments.
Our net income presents a robust performance in line with last year. Despite the five.
Basis points increase in the CSF <unk> rates.
Were it not for that we would have seen a 2% expansion compared to 2020, even with all of the effects of COVID-19 in 'twenty one.
Like in the previous quarter, the scenario is still challenging but based on what we have observed and what we have learned so far we are reviewing the guidance again as we look ahead.
Now we move to slide 12 in which we have examples of the strong growth in revenues of our insurance segments affirming our perception that this is an essential service and a core business for Bradesco.
We have manage it to capture the opportunity based on our wide offering with diversity of products and channels for each profile enrollment of life of our clients.
Slide 13.
As we did for the previous quarter shows the Port week history.
Panic related hospitalizations in our health care operation as you can see we are the lowest levels of cross fertilization since the beginning of the pandemic.
On slide four going forward, we show the data from the previous light, but in a monthly view. We believe this trend of improvement should continue.
We now move to slide 15.
To talk about our capital ratio.
Our tier one ratio was 13, 7% this quarter very robust and well above the regulatory minimum.
And the same applies for our liquidity coverage ratio and our net stable funding ratio we.
We saw a 40 bps drop compared to the previous quarter caused by the growth of loan portfolio and the mark to market Securities.
Moving to slide 16, we have a significant increase in the use of digital channels as you can see which offer our clients a greater convenience.
The volume of mobile financial transactions increase of 92% compared to the previous quarter.
The number of accounts opening just channel also grew 84% in the same periods exceeding $1 2 million accounts.
This year, we already have $62 5 billion reais in loans from digital channels. These.
This represents a 29% of the total origination from the bank if.
If we focus only on the performance of the individual segments digital already represents 53%.
The number of show the evolution and diversification of our distribution channels and business sources the beach, though bradesco.
It shows a reduction in dependence on the branch for transactional activities the future of branch fundamentally depends on the evolution towards a more consultative role for clients. They are going to go and grow more and more into business units.
Moving on to slide 17.
We launched the beard and the pioneering manners as we know it's the application of technology to support and assist clients depending on all of our questions and needs concerning products and services via gradually adds new information interaction with clients does become more robust and assertive.
The total number of interactions with clients reached the remarkable Mark of 30 396 million. This year alone, which represents an increase of 29% compared to last year on what saw only we had 39 million interactions.
Currently <unk> is responsible for 100% of the first level support on Bradesco 40, Fox who help line.
And it's also responsible for the first level support and the employee call Center.
<unk> is currently able to share knowledge on more than 90 products and services, we have a dedicated squads and soon it will be connected to the CRM and new starts making proactive offers always according to the needs and expectations of our clients.
Now we move to slide 18.
Following our strategy of digital transformation with clients at the Sanford taken to consideration of pillars of people acknowledge and business we created with this experience.
A department that integrates experience digital channels and platforms for the creation of intuitive and customize the journeys of financial services leverage by partnerships.
All of this using data intelligence and the voice of the clients themselves, which helps us understand their behavior regarding the user fee channel and their respective transactions. This way, we enable more food expanses within and between channels.
The Parkman has very high skilled professionals in beach, the Scrappage platforms, New design disciplines journey analytics, and all that has a much higher mindset, which means that our professionals are positioning their various scratch of the bank in multifunctional groups.
Just to give you a flavor in the Bradesco experience, we already have more than 1000 professionals involved in the whole relationship journey with our clients.
In total our squad stripes, all that adds up to more than 3000 professionals.
Just to give an example in addition to acquiring some startups like <unk> and forwards and investments of our private equity funds and we have also created and developed the dollars coal beach those environments.
Moving on to slide 19.
Our reach at 706000 clients and increased by 7% in match funding compared to the previous year.
The small drop in volume on the <unk> in the quarter reflect the natural mark to markets due to the increased volatility in the markets that we saw in the quarter next reaches and an impressive seven seven medium clients base above the 7 million target for this year and the new target is 10 million.
Clients by year end. This represents a <unk> 1% growth in the annual comparison next is a comprehensive bank and its mission to provide clients with innovate innovative solutions and it's increasingly a platform for products and services and now also the marketplace wheat.
The launch in November.
The digital wallet, we launch at the end of last year has reached its also a very remarkable.
$2 1 million accounts and this week, it's surpassing 4 million downloads. It has become the entry level solution for people answering the banking markets and thus plays an important role in client bank it.
Accounts with an extensive network of correspondent banks, but at <unk> with more than 40000 shares of points.
<unk> are totally separate from Bradesco and they have full autonomy in their decision making process.
Now on slide 20, we move to vision in this quarterly as you will know we made the purchase offer to obtain 100% of visa shares and we are awaiting regulatory approval for that.
<unk> was created as a credit card operation and has since expanded to become a bank that offer accounts personal loans and cashback solutions. It has over 2 million cards in our loan portfolio of over $2 5 billion Reais visa.
<unk> complements our portfolio of digital companies and we will remain separate as you'd see in a moment of significant expansion.
We do not want to Walter events.
Moving on to slide 21.
In Bradesco sustainability has always been embedded in our purpose, we are committed to the positive impact agenda.
In the context in the context of Cop 26 discussions we are present in Glasgow, following the agenda and reinforcing our commitment to mitigating climate change as a financial institution, we took a lead role that engage our clients and the transition to a greener and more inclusive.
Economy.
<unk> changed as part of our sustainability strategy.
Adhere to the net zero as the first Brazilian bank, taking part in this commitment.
We also highlight our recent partnership established should we enter wax, which should reach a reduction of 12140 tons of cotwo equivalent per year.
Our actions have been confirm it though the recognition of the mainly ESG ratings in the indexes in which we have been evaluated has been above the market average.
Let's look at slide 22, and our guidance as we have been discussing throughout this this time, we made changes to foreign lines.
Loan portfolio.
Fee and commission income.
Insurance and expanded L L.
In loan portfolio, we have reached 16, 4% growth compared to last year, and we decided to change the range to a more aggressive 14 five to 16, 5%.
In client NII.
We are at four 7% and we believe that we round the year more like the top of the range.
And fee and commission income were at 5% already at the maximum point of the guidance the guidance that we published at the beginning of the year. That's why we decided to change the guidance with now ranges from 2% to 6%.
Operating expenses, we are at a reduction of two 5% and we believe that if we win the year with a reduction of one 1% in the whole year.
Income from insurance operations, we are at minus 19, 5% and we decided to review the guidance as the evolution was better than expect in relation to Covid in financial income the guidance for this line is now from minus 10, two zero percent. There we believe that we shall be Clos.
Two zero.
Finally in expanded a L. L. We have $10 8 billion as for year to date, and we revised our guidance to 13 billion Reais to 16 billion to 16 billion Reais, we believe that to be between the middle and the top of this guidance.
Now moving on to slide 33, we want to extend the invitation to all of you to participate in all of Bradesco day, which will take place on November <unk>.
Before thank you for your attention, we would like to share our view on 'twenty two.
We believe that our 'twenty two will be a year of growth opportunities we.
We shall continue the very good growth in our.
Portfolio and increase the client's NII, we also shall see growth in fees.
Cost is an expansion continue under control.
An increase in delinquencies will be protected by our strong coverage ratios and provisions.
Historically, and we believe and history Bradesco has described it you know challenging years, particularly the pre election once.
'twenty one is a year in which we do not have the economy at full throttle as we shall see in 2022.
We see GDP growth, especially from agribusiness in reach we are the leading private OLED bank as a very important source of growth.
We believe the economic activity shall increase the level of employment.
And we shall have more clients from that we seem to visuals and companies overall low leverage and so we have room to grow.
We also see states with one of their largest cash availability every history to boost expenditures finally, our digital initiatives next dish when beats are bringing new 10 million clients and it's important to note is that out of the ascend William Clough.
Since base, 75% do not have any sort of relationship with Bradesco <unk>.
So we are adding new $7 5 million clients through our 41 million client base.
Having said that we believe we will continue our positive trends I think you definitely know and we've put our sales of available for the Q&A.
Thank you.
Yeah.
Thank you we will now begin the question and answer session. If you have a question. Please press star one.
Our first question comes from Chicago based cloud roadmap Sac.
Yes.
Hi, Andrew everyone. Thank you for taking my question.
First I would like you to expand on your final remarks regarding this constructive expectations for 2022.
So I was curious to hear about how that should translate to asset quality.
Any reference you can give us in terms of expected peak when that should happen in 2022.
And then I'll ask my second question later.
Okay no problem.
To answer you in my colleagues here it would be more than happy to complement any any feature that may be necessary first of all we are.
On a risk on mode, we believe that our credit models are well set.
We believe that we have proven to be able to.
Have a better seasonal.
Photos.
We have seen the new harvest.
You also see that our delinquency is pretty much under control and we still have a very robust position.
Position of.
Provisions and a very high coverage ratio. So we shall increase even more in individuals and Smes.
But we also intend to increase in large companies as well.
Besides that we have been very strong in mortgage and payroll loans and we're going to keep on with district with the space, but we also show increase personal loans and credit cards six of the economy.
As our President has said earlier is expected to be on a full Toronto. So we.
We believe that the retail as a whole shall bring a lot of benefits to us.
Okay, Let me compliment with some some points here.
In terms of evolution of.
Npls I think we are going to see.
Pls horizon only gradually we execute.
Below.
The pre pandemic levels for sure given the changing mix with more.
Mortgage payrolls and other Caracas.
<unk>.
Those are probably the.
NPL of our portfolio with this features is lower but we think.
We may still see some normalization in terms of cost of risk we believe.
For 2022 we're going to have fewer good performance with zinc.
Provision is probably we'll grow more or less in line with the portfolio without a major expansion in.
In terms of the cost of risk as a percentage of the portfolio.
C.
The.
Our models over the Pandemics and even the years before that.
Perform and have being able to allow us to underwrite.
Very.
Loans with very good quality and that translates.
This good performance, we are observing right now.
Thank you Amanda and feedback.
That was very clear my second question would be on credit card fees. This line performed very well this quarter, but was still below the volumes growth so lower than credit card spending.
I was wondering if you could comment on the mainline Nymex for this line in particular, if you could comment on both the interchange part of it.
Thank you charge, how those two are behaving now it'd be nice to hear thank you.
Tegra.
We think we have done a very good job.
The credit card business I think we have been evolving E.
Mainly features of our products new product projects.
Where we don't charge fees they are more based on volumes.
And we.
We can say Bradesco has probably the most aggressive.
<unk> portfolio of credit cards in time for all.
Segments for all.
Levels.
All kinds of of clients.
Clients.
We are seeing is a very strong recovery in terms of transaction volumes we are growing.
Almost 30%.
Year on year for the quarter comparing to the third quarter.
<unk>.
And we are also growing nicely if we compare to the 19, we think the path of growth.
We will remain when you look to fees.
We think they will continue to be a driver for the total overall fees.
We generate.
The fact that it still grows below volumes somehow reflect the fact that we have new products as I said in some cases product without the annual fees, but I think the overall trends.
It's positive and I think that's going to be one of the drivers sustaining fee growth growth going ahead.
Thank you for that I appreciate the answers and congratulations on the results.
Thank you.
Our next question comes from Jason <unk> Scotiabank.
Okay.
Thank you thanks for the opportunity the opportunity to ask questions manager for that she.
My question is in some way a follow up to the prior one I mean, it sounds like a pretty constructive outlook given the scenario for 2022.
Whether it's on grow to risk.
And fees can you talk to us about the risks that you see to this base case.
Constructive scenario.
Or do you see is it employment inflation is.
Yeah.
<unk>.
Government policies that don't allow don't.
Really underpin an investment environment for companies given the uncertainty what what bradesco see as the key items to look to for the next year.
Identified.
Thanks, Shay is unchanged. Thanks for the question I guess, the first risk that we all have.
As the pandemic itself it seems to be under control, but no one knows if its going to be a new a new virus or a new change in the buyers that can drop our dies.
The good path that we are running two Brazilian population as a whole has responded very well to vaccination and respect to happen. This way it is.
Going to be a.
A very volatile year as a year before and presidential elections.
Of course as inflation goes on and we believe that the Central Bank is very aware of that and response responsive.
We understand that the increase in interest rates and the way the market is indicating shall help us to have inflation.
Your control, but let's let's assume that for some reason it's not enough of course heavy high inflation takes you to a much much higher interest rates and it can.
Joe Paradise.
Oh, the grille for the economy recovery here.
The company used to be.
More and more cautious in those years. So we believe that these shall have additional liquidity.
Their cash positions in order to face any kind of difficult that they may see throughout the year and the beginning of 2022.
So I would say that those are the main risks, but my colleagues here may add any other BDC.
But we are prepared for that we have leave this before and we are very well set to seize the opportunities.
We understand that inflation is finally.
Under control according to the new speed.
Speech and behavior of the Central Bank.
We see the population get.
<unk> back to work not only on our virtual manner.
And we believe that there is what I just said earlier that at least <unk>, 7% of GDP, we take to the following year and besides that every business is very strong. So we shall see more employment more clients and more business.
Do you think that you would add competition or let's say.
Maybe.
Not so disciplined competition, raising money and putting money to work in businesses, where returns are not a priority in the short term is that a risk to the outlook.
It's some fee so funny, although we have few banks here in Brazil. The competition is always very fierce is extremely high so it's impossible to imagine a fiercer competition.
The other hand, we shall have a <unk>.
Bigger pie to share so as the economy growth. We also benefit from that so by the end of the day, we do not see ourselves losing results to other banks on the country. We are very well prepared either with open banking peaks or any other of banking.
Banking products and services, especially on insurance loans to compete to get the market share, we see ourselves growing not only with the GDP as we have historically.
Grown.
Grew more than the GDP.
So we shall be fine yes.
Yes.
Additional angle on the answer.
So far we have seen a lot of impacts a lot of.
One of the form factors, mostly focus and growing client base, we have seen very little in terms of new competitors on lending.
The competition in lending as.
As Andrew said, it's use but mostly from the traditional competitors and I think that's going to be.
<unk> scenario.
Probably for.
Still many years, Jason just to give you a flavor of very interesting data is that we have more <unk>.
Credit given through our digital channels than the whole financial.
Fintech market.
So we are bigger than the whole fintech markets just in digital channels and of course, you'll have to add to that is all the traditional channels that we have it's 30 billion reais.
Thanks.
And one <unk>, one <unk> <unk> insurance policies.
Interesting Super helpful. Thank you gentlemen, congrats on the thank you. Thank you so much sneakier Jayson.
Our next question comes from Mario <unk> Bank of America.
Hi, guys. Congratulations on the results. Thanks for taking my questions. Let me ask you two questions also on the envelope lend.
Let me start here to.
Staying on the topic of asset quality when your closing remarks, you mentioned the individuals and companies are with low leverage. However, this this seems to contradict some of the figures that we saw from the Central Bank.
Earlier this year showing that the level of investment is in that service the Brazilian consumer is near all time highs.
So can you just explain why the contradiction why is the central bank, showing one number and you're seeing something different.
And then I'll ask my second question.
Marty let me take this one.
Basically first.
The perception that consumers are overleveraged is.
Something that really.
<unk> is not a we.
We don't see it looking to our credit models and what we see from from the clients that have underwritten loans with us.
First first thing another thing.
We have some stats from our economists and I think even other economists are already taken note of that the methodology in terms of.
Calculating the income by the Central Bank that is used in this leverage ratio.
It is based on the so called B 90.
<unk> had some imperfections, especially considering the meta knowledge.
They are using with phone calls to do the survey.
We're gonna presents interesting shock in the Bradesco day that show that actually the leverage from from.
Individuals actually didn't increase at this point that by the Central Bank figures, but is more in line with what we.
We see absorbing our base of clients.
Okay.
Okay, Yeah that'll be very helpful. I guess, we will look for that next week.
Because we do get a lot of questions from investors nowadays about that.
The speakers from the Central Bank.
Yeah.
Was a concern for a lot of investors. So if you can show that.
The language is not as high I think that'd be very helpful.
The question I think it's a minor before before going to the second question just two.
Sure.
Going to be more than happy to have another meeting with you in our economist.
In order to clarify all the mathematics behind to Central Bank figures.
And then just additionally.
People were pointing here to meet full so we have all of the growth.
The mortgage part of the on top of that part of the increase in leverage come from it comes from mortgage that is a much lower base floor.
And somehow long term, yes, we will have to consider the installment small deal for all amount because it's a 30 year.
The transaction right. So by the end of the day, what we seized.
Bvt off.
We didn't as of the clients to repay and durations have extended tremendously. So you have to take this into consideration as well, but we can't get into a deeper dive afterwards, if you wish more than happy to.
Perfect.
Great.
And then the second question then is related to your insurance results right as you show.
Have rebounded much faster than you anticipated just last quarter.
Seems like the improvement is both financial income, but also operationally, especially with claims.
But when we look on slide 11 here it seems to me like Youre.
Your claim ratio still is relatively stable.
Can you discuss.
A little bit about the trends between products, So I would imagine that life and auto.
At least life claims probably have been coming down, but health and auto have not can you just.
Just discuss it different dynamic byproduct because again I think this is a major upside for your figures in 2022 right.
Sure we had like one 3 billion Reais Covid related claims this year.
This number should decline quite a bit next year. So I'm wondering how how are we going to see this declining claims is it going to come first in life, and then helping them in Ottawa.
If you can discuss that that'd be helpful. Thank you.
That's fine first of all I'd like to add another item in earliest.
We have grown.
Our premiums dramatically.
So we have an increasing sale we have a very good controlling claims and we have finally, some sort of balance between <unk> and IPC Youll know that <unk> takes care of all of our liability Sam IPA represents all of our assets and the difference that we have seen.
<unk> I mean.
We have never seen before and it's totally abnormal that's the reason why we see this from now on having a very good behavior I GPM ni TCA shall be together and so in this sense, we shall benefit these shirts companies always comprised of the operational feature as well as the.
A financial one so.
They are part of the equation and we believe there are good on this matter yeah, just a point on that <unk> in the first half was a little bit higher than.
10% more than <unk>.
It's something that we don't expect to see going forward, but going to the loss ratio.
Definitely had already.
More substantial benefits.
In the life insurance.
Part of the of the claims.
That's four also hit by the cost related.
Covid the benefits from the improvements from Pandemics came faster on that on that line.
We started to see.
Some.
Some benefits.
In terms of health.
The thing with houses the improvements on loss ratio claims related to Covid.
It was.
Partially offset by the increasing frequency of normal procedures since people were holding some of these procedures.
Due to the peaks of the Pandemics, we think.
As time goes go it goes by.
We'll see a normalization on that claims.
<unk>.
Ill take a while to have a full normalization, but we think the trends are very good in that.
Could be.
That shouldn't be.
A good driver for the for us.
Perform.
Going going ahead.
In terms and as Liam just had in terms of premiums we are.
Delivering on price.
Good performance, we see strong demand for insurance products.
In life and health and other lines and we think that will be the new normal in the officer Pandemics.
In brief we can see life reacting almost immediately health is going to take some time, it's going to grow.
On a steady base and we may see alto recovery fully in 2022.
That's I'll review for each segments.
Perfect that's very clear.
It can be a significant tailwind to your results.
22, thank you.
So we believe so thank you.
Yeah.
Our next question comes from <unk> <unk> UBS.
Hi, everybody congratulations up for them as well.
I have just one question and I will shift a little bit the question actually I would like to have a little bit more color about the marketplace off next.
Okay.
Recently allowance to declines of the digital bank.
I wanted to understand how the.
The dynamic of the cashback all snack.
Marketplace.
In other words, if you could share with us how much was that the average for the cashback epic theories of maturity in the marketplace.
And also a follow up question.
How many available sailings and.
In the platform.
Okay.
Hello. Thank you very much for your question might have really not the way. This month here in the line and he is going.