Q4 2021 Banco Bradesco SA Earnings Call

Good afternoon, ladies and gentlemen, thank you for waiting we would've liked to outcome ever want to break the east coast for water politically why earnings conference call. This call is being broadcast live.

Speaker 1: Good afternoon ladies and gentlemen and thank you for waiting. We would like to welcome everyone to Broadisco's 4th Quarter 2021 earnings conference call. This call is being broadcasted simultaneously through the internet in the investor relations website broadisco.com.br.en. In that address you can also find the presentation available for download.

It does lead to begin to react and think that's a really shows that site bradesco or I got called Op V. R. B last weekend in that address you can also find the prism face are available for download.

Speaker 1: We inform that all participants will be in a distance-only mode during the company's presentation.

We affirm that all participants will be in that if at all the mode. During the company's presentation. After the presentation. There will be a question and answer session website, a strict shows will be given should any participant in the system. During this call. Please press star zero to reach the operator before proceeding likely may show that forward.

Speaker 1: After the presentation, there will be a question and answer session. When further instructions will be given, should any participant in the assistance during this call, please press star zero to reach the operator. Before proceeding, let me mention that forward looking statements are based on the beliefs and assumptions of BRC management and on information currently available.

Luca statements that are based on the beliefs and assumptions about the local where they had to go to the management and on information.

So currently available to the company they involve the rates because there'll certainly be an exception because they relate to future events and therefore depend on circumstances that may or may not occur in the future investors should understand that general economic conditions industry conditions and other operating fact.

Speaker 1: 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. caring for us should understand the general economic conditions.

Speaker 1: industry conditions and other operating factors could also affect the future results of Bunko Bradesco and could cause the results to differ materially from those expressing such forward Mark

First could also affect the future results of physical bradesco it could cause the results to differ materially from those expressed in such forward looking statements.

Speaker 1: Now, I will turn the conference over to Mr. Carlos Redi, the AI Controller and Market Relations Director. Please proceed.

Now I would turn the conference over Casey I look for value.

<unk> market Relations director. Please proceed.

Speaker 2: Hi everyone, good afternoon. Welcome for our conference call for the discussions of our fourth quarter 2022 results, as well our strategy. We have today with us, Banco Bradesco's Chief Executive Officer, Octavio de Ladari Jr.

Hi, everyone. Good afternoon, welcome for our conference call for a discussion of our fourth quarter 2022 results as well our strategy.

Have today with us.

Banco Bradesco <unk>, Chief Executive Officer Todd.

Junior.

Speaker 2: Andrej Khodrixkhanov, Executive Vice President and CFO . Leandro Miranda, Executive Director and IRO. Oswaldo Fernandez, Executive Director.

And for the rig.

<unk> Cano executive Vice President and CFO .

Yes.

<unk> executive director and <unk> Fernandez Executive director.

Speaker 2: and I thank you for your time today to discuss the CEO , Renato Einesman, Bank of the Ex-CEO and Kurt Zimmerman, the Chief Executive Officer. For starting the presentation, I turn the floor now to Leandro. Thank you very much, Grazie. Good afternoon everyone. I hope you are doing well. Thank you for joining our 4th quarter 2021 earnings conference call.

Ivan tissue, Bradesco, Seguros, CEO and not too in this month.

<unk> CEO and CT Zimmerman.

This chief Executive Officer.

Starting the presentation I turn the farmhouse levels. Thank you very much good afternoon, everyone I hope you're doing well. Thank you for joining our fourth quarter 'twenty. One earnings call first call 21, one was more complex than expected, but also a year of record profit in our history.

Speaker 2: but also a year of record profit in our history. 26.2 billion Reais

$6 2 billion Reais.

We went through two more waves of the pandemic, which had a significant impact on the economy and our business, but the rapid rollout of vaccinations as the middle of the year allowed business to resume activities. Unfortunately high inflation, a global phenomena along with some local flavor.

Speaker 2: We went through two more waves of the pandemic, which had a significant impact on the economy and our business, but the rapid rollout of vaccinations as the middle of the year allowed business to resume activity.

Speaker 2: Unfortunately, high inflation, a global phenomenon along with some local flavor, led to a dramatic rise in interest rates. The tightening of monetary policy was a factor in 2021 and it will affect the recovery of the economy in 2020.

With romantic rise in interest rates.

Tightening of monetary policy was a factor in 2021.

And it will affect the recovery of the economy in 'twenty two.

Speaker 2: For 2022, we anticipate a continued return to normalcy despite the current increase in COVID-19 cases as a result of the omicron variant, which we believe to be temporary. However, 2022 looks to be a year with modest growth due to the impacts of the monetary policy and fiscal uncertainties, which will certainly have a significant impact on the economy.

Before turning to <unk>, we anticipate a continued return to normalcy. Despite the current increase in Covid case as a result of the other growth areas, which we believe to be temporary however, 22 looks to be a year with modest growth due to the effects of the monetary policy and fiscal uncertainties, which youll.

Certainly have an impact on our business.

Speaker 2: In this landscape, we see consistent credit growth over the year as the quality of origination remains quite good and there is demand from customers.

In this landscape, we see consistent credit grill over the year as the quality of origination remains quite good and there is demand from customers.

I'll talk more specifically about guidance later on.

Speaker 2: Regarding our earnings, we saw solid performance in 2021. Net income came up to 26.2 billion reais, the highest annual recurring net income in our history. We performed well in client LII, which grew 6.5%, and in fees, which grew 4.1%, also a low-time record. The insurance segment wasigen upward but was consistently Increase in the interest for demand funds and previously increased overall you know taken an one-timeprobably increase in thisVIEWS This is a much-new graphic section,

Regarding our earnings we saw solid performance in 'twenty. One net income came up to $26 2 billion Reais the highest annual recurring net income in our history.

We performed well in client NII, which grew six 5% and in fees, which grew four 1% also an all time records.

<unk> segment was a solid contributors to the results even after absorbing around 5 billion reais in claims related to the pandemic.

Speaker 2: even after absorbing around 5 billion reais in claims related to the pandemic.

Speaker 2: The loan portfolio grew by 18.3% and reached 812.7 billion REI.

The loan portfolio grew by 18, 3% and reach at $812 7 billion Reais.

Speaker 2: Credit origination through digital channels came up to 88 billion reais and now represents about 30% of the total.

Credit origination through digital channels came up $2 88 billion Reais and now represents about 30% of the total.

Speaker 2: Cumulative ROE jumped to 18.1% on the way to recover to a higher recurring level and the efficiency ratio also improved, coming down to 46%. Finally, we would like to point out a distribution of 9.2 billion REIs in the form of interest on equity and dividends resulting in a pay-out higher than 44%.

Cumulative ROE jumped to 18, 1% on the way to recover to a higher recurring level and the efficiency ratio also improvement coming down to 46%. Finally, we would like to point out the distribution of $9 2 billion reais in the form of interest on equity and dividends.

Resulting in a payout higher than 44%.

Turning now to slide four.

Speaker 2: will address the issue of sustainability for this.

Addressed the.

The issue of sustainability for this one.

Speaker 2: Over the last few years, we have seen growing concerns of climate change and its risks and real portraits for companies and economies.

Over the last few years, we have seen growing concerns of climate change and its risks and opportunities for companies and economies. This is why these issues one of the pillars of our sustainability strategy ESG and.

Speaker 2: This is why this issue is one of the pillars of our sustainability strategy, ESG.

Speaker 2: In 2021, we were the first Brazilian bank to sign on to net zero. It's a major commitment because it involves working even closer with our clients during the transition to a low carbon economy. Once again, placing the clients at the center of our strategy.

In 'twenty, one we were the first Brazilian bank to sign on to <unk> zero, It's a major commitment because it involves working even closer with our clients. During this transition to a low carbon economy. Once again, placing the client at the center of our strategies as.

Speaker 2: As of now, we are already carbon neutral in terms of the emissions generated by our proprietary operations, including indirectly scope 3 emissions, which for instance involves our employees commuting between their homes and workplace.

As of now we are ready carbon neutral in terms of the emissions generated by our proprietary operations, including indirectly scope three emissions, which for <unk> our employees commuting between their homes in the workplace.

Speaker 2: We were the first Brazilian bank to join the PCAF, the Partnership for Carbon Accounting Financials in 2020.

We were the first Brazilian bank to join the PC AAF the partnership for carbon accounting financials in 2008.

Speaker 2: aiming at measuring and publishing our financial emissions.

Amy that measuring and publishing our financial issue emissions.

Speaker 2: From this point on, our challenge will be even more significant because it's no longer related to our operations, but about engaging and helping our customers during this transition. So they will be able to better manage their risks and take advantage of the opportunities that will come out of this new economy and becoming more resilient to climate change.

From this point on our challenge will be even more significant because it's no longer related to operations, but about engaging and helping our customer during this transition so they'll be able to better manage their risks and take advantage of the opportunities that will come out of this new economy and becoming more.

And to climate change.

Now we go to slide five.

Speaker 2: We also announced in 2021 the goal of targeting 250 billion REI by 2025 to sectors and assets with a positive social environment impact as part of the commitments and strategies related to the transition to the new economy.

We also announced that in 'twenty one the goal of targeting 250 billion reais by 'twenty five to sector as an asset to the positive social environment impact as part of the commitment and strategies related to the transition to the new economy.

Speaker 2: We have already channeled 83.6 billion reais, representing one third of the targets, as a result of the growing demand for credit in these sectors and the greater momentum in the investment area. This solid performance may be the...

We have already channels $83 6 billion Reais, representing one third of the targets as a result of the growing demand for credit in these sectors and the greater momentum in the investment area. This solid performance may lead us to revise this goal.

Speaker 2: Further evidence of our commitment to financing sustainable business and serving as an agent of positive change in society was the issues of our first bond linkage to social environment criteria in international debt capital markets. It was announced in January which amounted to $500 million.

Further evidence of our commitment to financing sustainable business and serving as an agent of positive change in society was the issuance of our first bond linkage to social environment criteria in international debt capital markets. It was analysis in January which amounted to $500 million.

Yeah.

Speaker 3: And as a result of our continuous development of the ESG aspects of our business, we have been recognized by major indexes and specialized agents and have received a rating above the market average.

And as a result of our continuous development of the ESG aspects of our business. We have been recognized by major indexes and a specialized agencies and have received it a rating above the market average.

Speaker 3: We would like to point out that the fourth year in a row, we are among the 10th top banks in the world in the Dow Jones Sustainability Index. We have also been a part of the B3 EIS since its creation in 2005. And now we are part of the first IGP TW portfolio, which is the new index from the B3 ESG family in partnership with Great Place to Work.

We would like to point out that the fourth year in a row. We are among the 10 top banks in the world in the Dow Jones Sustainability Index. We have also been part of the Mitre ice since its creation in 2005.

And now we are part of the first AGP Tw portfolio, which is the new index for the <unk> III ESG family in partnership with Great place to work.

Turning now to slide six.

Speaker 3: respect and care for our people have always been an integral part of Bradesco culture and when we speak about our people we are referring not to only 90,000 employees but to 9,000 families.

Respect and care for our people have always been an integral part of this whole culture and when we speak about our people we are referring not to only $90 of employees, but to 9000 families.

Speaker 3: We believe in the strength of diversity, reinforcing the company's culture and interaction between employees.

We believe in the strength of diversity reinforcing the company's sculpsure with interaction between employees.

We employ a diverse staff with solid attitudes and actions related to the inclusion and have focused on our efforts to continually evolve through training and development we.

Speaker 3: We employ a diverse staff with solid attitudes and actions related to inclusion and have focused on our efforts to continually evolve through training and development.

Speaker 3: We adopted measures during the pandemic to ensure that customer service continues along with the safety of our employees through unconditional support, including a 24x7 team of health professionals.

We have adopted measures during the pandemic to ensure that customer service continues on along with the safety of our employees.

Conditional support, including <unk> 24 per <unk> of health professionals.

Speaker 3: The return to on-site activities has taken place gradually in the administrative areas with a bit more caution in place this time and we implement a hybrid model in which we are going to combine the best of both worlds thereby benefiting both productivity and the quality of life for our teams environmental matters.

The return to onsite activities has taken place gradually in designee suite administrative areas with a bit more caution in place this time and to implement a hybrid model in which we are going to combine the best of both worlds, thereby benefiting both productivity and the quality of life for our.

Teens environmental matters.

Turning now to slide seven.

Speaker 3: With technology advancing quickly, the client has increasingly become the main player of their own choices, which is at the center of all our decisions. Clients are more digital and demanding each day. They are engaged and intensively applying for new technology to their daily route.

With technology advancing quickly the clients has increasingly become the link layer of their own choices, which is at the center of all of our decisions clients are more digital and demanding each day. They are engaged that intensively applying for new technology to their daily routines.

Speaker 3: Our policy is one of the alignments with what drives the client and we are continually devoted to the search for new solutions to make our clients life more uncuplicated.

Our policy is one of the alignment with the with what drives the client and we are continuing devoted to the search for new solutions to make our clients' lives more uncomplicated.

Speaker 3: Bradesco Experience uses their intelligence to build customized solutions, improving financial financial products and services according to customer expectations.

Brad This will experience use that intelligence debuted customized solutions, improving financial and non financial products and services according to customer expectations.

Speaker 3: On slide 8, we outline some of the innovations in client experience with the bank, which are quickly deployed in systems that run into the cloud.

On slide eight we outline some of the innovations in clients' experience through the bank, which are quickly deployed in system, that's running through the cloud.

Speaker 3: We have implemented a financial manager tool which facilitates management of Bradesco, accounts and so on and soon those of other institutions plus promoting personalized insight.

We have implemented a financial manager tool, which facilitates management of Bradesco accounts, and so and those of other solutions plus promoting personalize these sites.

Speaker 3: Everything in a single place within our existing app

Everything in a single place within our existing App.

Speaker 3: The Bredesco app offers access to exclusive cash back.

Bradesco App offers access to exclusive cash backs. In addition to non financial products, such as our partnership with Disney.

Speaker 3: in addition to non-financial products such as our partnership with the...

Speaker 3: Transferring money abroad just got easier with the Me2MeCurse exchange from Bradesco to backflooding it. An instant transfer from one account to another account.

Transferring money abroad, just got easier with a mid to Meeker exchange from what Bradesco to Buck flooded and Isa transfer from one account to another account.

And through Bradesco Linzess U S. Our digital investment platform in Miami clients now have a simplified in a 100% digital journey to invest in international assets for portfolios managed by Blackrock and Bradesco. Therefore, those portfolios are based on.

Speaker 3: to improve Bradesco Invest US, our digital investment platform in Miami. Clients now have a simplified and 100% digital journey to invest in international assets through portfolios managed by BlackRock and Bradesco.

Speaker 3: Therefore, those portfolios are based on their investment profile and objectives.

Their investment profile and objectives.

Turning now to slide nine.

The digital experience within Bradesco is constantly evolving and it ensures that the client has autonomy and their financial management growth.

Speaker 3: The digital experience within Brodessco is constantly evolving and it ensures that the client has autonomy in their financial management. Proof can be found in the...

<unk> can be found in the total amount of transactions, 98% Carryout.

Speaker 3: 98% are carried out through our digital channels, 91% of which are concentrated in mobile and iOS devices.

Through our digital channels, 91% of which are concentrated in mobile and internet.

Speaker 3: We posted a search of 5.3 million digital account holders compared to 2019. And the number of accounts opened through the app grew by 5 times.

We posted we posted a surge of $5 3 million digital account holders compare to 2019 and there are a number of accounts opened fruit yet grew by five times.

Speaker 3: We also saw a significant boost in the number of products both individuals and companies have applied for.

We also saw a significant boost in the number of products both individuals and companies have applied for.

Turning now to slide them.

Speaker 3: The volume of credit that we originated through our digital channels was 88 billion Reais in 2021, a 36% growth compared to 20.

The volume of credit that we originated through our digital channels was 88 <unk> in 2021.

36% growth compared to 20 <unk>.

Speaker 3: This amount now represents 30% of all credits produced by Brodess.

This amount now represents 30% of all credit produces vibrant this quarter it.

Speaker 3: It should be pointed out that this number is greater than the sum of the correct portfolios of all fintechs operating versions.

It should be pointed out that this number is greater than the sum of the great portfolios of all things tax operating in Brazil.

Speaker 3: We even made progress in digital renegotiation, which was 43% higher than in 2020.

We even made a progress in digital renegotiation, which was 43% higher than in 2020.

Speaker 3: These results illustrate the quick progress of our cloud systems, such as Brain and CRM, in the evolution of our business platforms that are centered on the cloud.

These results illustrate the quick progress of our cloud systems, such as brain and CRM in the evolution of our business platforms that are centered on declines.

Speaker 3: Moving on to slide 11, we present the growth in the numbers of four of our cards. We revised the product portfolio and introduced cards that complement our offer, allowing clients to choose the card that best suits their usage profile.

Moving on to slide 11, we present the growth in the numbers of four of our cards, we revised the product portfolio and introduce it cards that complement our offer allowing clients to choose the car that the best suits their usage profile the.

Speaker 3: The sale of cards through digital channels grew 5.8 times this year and now represents 20% of total sales.

The sale of cards through digital channels grew five eight times this year and now represents 20% of total sales.

Speaker 3: Slide 12 outlines our performance in vehicle finance.

Slide 12 outlines our performance in vehicle financing, we took the lead in origination with the production that was 25% higher than a year ago.

Speaker 3: We took the lead in origination with a production that was 25% higher than a year ago.

Speaker 3: This performance is due to our continued focus on the needs of customers and partner channels which has made the journey to contract our products a physical experience where it is possible to finance along with the vehicle, accessories, IPVA and other expenses, plus the ability to take out insurance coverage.

This performance is due to our continued focus on the needs of customers and partner channels, which has made the journey to contract our product efficient, though experience, where it's possible to finance along with the vehicle extra service.

PPA and other expenses plus the ability to take out insurance coverage.

Rounding out this block of solutions focused on client experience.

Speaker 3: Brounding out this block of solutions focused on client experience, I turn to slide 13 to address BIA. BIA, which also runs in the clouds, has allowed us to become the pioneer bank in artificial intelligence.

I turn to slide 13 to address B b.

Beer, which also runs in the cloud has allowed us to become the pioneer bank and artificial intelligence.

Speaker 3: It's a solution that has already totaled 1.2 billion clients per second.

It's a solution that has already totaled $1 2 billion client transactions.

Speaker 3: Mut platform, Bias founding branches, Fonifacio or WhatsApp, one of the primary communication channels in the market, responsible for over 60% of Bias mobile direct.

Platform <unk> founding branches, 40 fashion or whatsapp or one of the primary communication channels and the markets responsible for over 60% of <unk> mobile interactions and the most intriguing thing is that <unk> is also a pioneer in link artificial intelligence.

Speaker 3: And the most intriguing thing is that Bia is also a pioneer in Linky artificial intelligence with voice communication.

With voice commands, it's not only lease.

Speaker 3: not only listen to the customer but also performs requested actions such as sharing a PICS receipt.

To the customer, but also performance requested actions such as Sherry <unk> received.

On slide 14, we feature some of the progress we have made in our digital initiatives that also make a greater use of the cloud next.

Speaker 3: On slide 14 we feature some of the progress we have made in our digital initiatives that also make a great use of the cloud. Next, Al reporton

And beads.

Speaker 3: We have already received the regulatory approval and as soon as we conclude the acquisition of the issue we will post its numbers as well.

We have already received the regulatory approval and as soon as we conclude the acquisition of the issue we reported numbers as well.

Speaker 3: Agora, which has increased and diversified its product offering, doubled its net funding in 2021 and settled at 743,000 customers, a growth of 35.7% over 12 months.

<unk>, which has increased in this <unk> its product offering double its net further in 2021.

Settled at 743000 customers a growth of 35, 7% or over 12 months.

Next which has a target of doubling its client base in 2021 has that even more it reach its close to 10 million clients at the end of last year with 106% to 9% increase this greater scale has led to significant strides in the total volume of <unk> and in their revenue base.

Speaker 3: Next, which had a target of double its client base in 2021, has done even more. It reached close to 10 million clients at the end of last year with 169% increase in

Speaker 3: This greater scale has led to significant strides in the total volume transacted and in the revenue bay.

<unk>.

Speaker 3: The November release of our marketplace, the next shop, is another step in the move towards an increasingly better market.

The November release of our marketplace. The next chalk use another staffing to move forwards and increasingly better.

Speaker 3: and more complete platform and digital experience. BITS, the digital wallet we introduced in September 2020, doubled its amount of accumulated accounts and downloads in the last quarter. There are now more than 4.2 million accounts and 6.2 million downloads there.

And more complete platform and digital experience be it the digital wallets wallets, we introduced in the September 2020 double its amount of accumulated accounts and downloads in the last quarter. There are now more than $4 two medium accounts and $6 2 million downloads there.

Speaker 3: Just look at these digital initiatives. There are already nearly 15 million customers.

Just looking at these digital initiatives Theyre already nearly 15 million customers.

Speaker 3: After having discussed some of our macro strategies, we now turn to our financial performance.

After having discussed with some of our macro strategies, we'll now turn to our financial performance.

Turning now to slide 16.

Speaker 3: Operating income increased 6.3% year-on-year and the net income was 6.6 billion RIA.

Operating income increased six 3% year on year and the net income was $6 6 billion Reais.

Speaker 3: The insurance business grew 54.6% in relation to last year.

The insurance business grew 54, 6% in relation to last year with a solid evolution of premiums and financial results.

Speaker 3: with a solid evolution of premiums and financial results.

Speaker 3: client NII grew 11.8% helped along by the growth of the portfolio as a whole the next slides we showed it

Client NII grew 11, 8% helped along by the growth of the portfolio as a whole.

The next slides, we show details of our lines before we move on it's important to point out the comparison of operation in 2021 with 2019 before the pandemic began we saw revenue growth. Despite partial restrictions on mobility during the past year and we manage it to reduce expenses.

Speaker 3: Before we move on, it's important to point out the comparison of Operation 2021 with 2019. Before the pandemic began, we saw revenue growth despite partial restrictions on mobility during the past year, and we managed to reduce expenses in an environment of rising inflation, which resulted in a 9.6% increase in our operating income.

In an environment of rising inflation, which resulted in a nine 6% increase in our operating income.

Now we move to slide 17.

In this slide we can see the data on the record reconciliation of managerial accounting profits.

Speaker 3: In this slide, we can see the data on the reconciliation of managerial and accounting profits.

Speaker 3: By looking at the annual consolidated column, you can see that the adjustments are very similar to those of the previous year, except for the reclassification and realization of financial instruments made in this quarter, with an extraordinary impact of 1.8 billion Reais on the results. This movement realigned part of the securities portfolio to the new reality of interest rates that we've seen in the past.

By looking at the annual consolidated column you can see that the adjustments are very similar to those of the previous year, except for the reclassification of realization of financial instruments meeting this quarter with an extraordinary effect of $1 8 billion Reais on the results this movement realign.

And that part of the securities portfolio to the new reality of interest rates that we've seen the markets. We also underline the constitution of a restructuring provision of 441 million Reais net of taxes as we continue to make adjustments for our physical presence with the conversion of branches into <unk>.

Speaker 3: We also underline the constitution of a restructuring provision of $441 million net of taxes, as we continue to make adjustments to our fiscal presence with the conversion of branches into business units in 2022.

Units in 2022.

Moving on to Slide 18, we will show the growth of our loan portfolio.

Speaker 3: Moving on to slide 18 will show the growth of our loan portfolio

Speaker 3: the total volume exceeded 812 billion reais, a growth of 5.1% in the quarter and 18.3% in the year, above the ceiling of our guidance that we had revised the ports in the last quarter.

December the total volume exceeded 812 billion reais.

Growth of five 1% in the quarter and 18, 3% in the year above the ceiling of our guidance <unk> had to revise upwards in the last quarter.

Speaker 3: There was a significant growth in all groups and types, highlighted by the expansion of operations with SMEs, which represents an increase of 24.5% for the year, as well as individuals with an increase of 23.2%.

There was significant growth in all groups and types highlighted by the expansion of operations with Smbs, which represents an increase of 24, 5% for the year as well as individuals with an increase of 23% 23, 2%.

Speaker 3: The performance reflects the gradual recover of business and the relaxation of restrictions related to the pandemic.

The performance reflects the gradual recovery of business and the relaxation of restrictions related to the pandemic.

Speaker 3: As we point out at the beginning, cars and vehicles were lines that saw relevant growth of 30.5% and 11.7% respectively.

As we pointed out at the beginning cards into vehicles, where lines that saw a relevant growth of 35% and 11, 7% respectively.

Speaker 3: The real estate financing portfolio grew 23.4% year on year and the volume of operations within individuals grew 31.2%

The real estate finance portfolio grew 23, 4% year on year and the volume of operations with the visuals grew 31, 2% with.

Speaker 3: We broke a record in 2021. Origination was 37 billion reais, 50.6% higher than in 2020, and the number of financing units exceeded 125,000 homes. 48% more than in 2020.

We broke a record in 2021 or origination was 37 billion reais, 56% higher than in 2020, and the number of financing units exceeded 125000 homes.

48% more than in the previous year.

Speaker 3: the expectations for continued growth in real estate loans in 2022, but at a slightly lower rate than in 2021 due to the higher interest rates that we see nowadays.

The expectations for continued growth in real estate loans in 2022, but at this.

Slightly lower rates than in 2021 due to the higher interest rates that we see nowadays.

Speaker 3: In rural roads, we posted a significant growth of 40.6%, reflecting our historical support for agribusiness.

In rural rules, we posted a significant growth of 46%, reflecting our historical support for agribusiness. We are the leader among private banks in these segments and we operate through 14 regional platforms, which include agriculture engineers.

Speaker 3: We are the leader among private banks in this segment and we operate through 14 regional platforms, which include agriculture, engineering, and management.

Speaker 3: We distribute credits, products and services that support the modernization of the sector.

We distribute credit products and services that support the modernization of the sector.

Speaker 3: We are making massive investments this year to deliver a fully digital ecosystem to our clients, complementing our performers more broadly in a pioneering partnership with one of the world's largest players in the technology sector.

We are making massive investments this year to deliver a fully digital ecosystem to our clients complementing our performance more broadly in our pioneering partnership with one of the worlds largest players in the technology sector.

Speaker 3: The 2022 credit outlook is for double-ditch the growth, with an acceleration of the lines with higher spreads, which will all lead to an improvement in client NII.

The 2022 credit outlook is for double digit growth with an acceleration of the lines with higher spreads, which will all lead to an improvement in client NII.

Speaker 3: Now we go to slide 19 to discuss our provision.

Now we go to slide 19 to discuss our provisions.

Speaker 3: Great Provisions expenses totaled 15 billion RIs this year.

Provisions expenses totaled 15 billion <unk> this year.

Speaker 3: 41.6% lower than in 2020, when there was an impact from the strong increase in provisions than anticipated the effects of the pandemic on the league.

41, 6% lower than in 2020, when there was an impact from the strong increase in provisions than anticipated the effects of the pandemic on delinquency.

Speaker 3: The expressive growth in higher spread loan operations in the fourth quarter such as credit cards, personal loans and working capital had a slight impact on the amount of provision the quarter and on our cost of risk. But this is a good cholesterol because it comes from the portfolio growth. Even so, the indicator remained below historical levels.

Expressive growth in higher spread of operations in the fourth quarter and the fourth quarter, such as credit cards personal loans and working capital as a C slightly impact on the amount of provision in the quarter and on our cost of risk, but this is a good collateral.

It comes from the portfolio growth given so many indicators remained below historical levels.

Speaker 3: Our NPL coverage ratio over 90 days remained at a very comfortable level and above the pre-COVID level at 261% and when we included the entire renegotiated portfolio, 111%. The coverage indicator over 90 days, excluding operations 100% provisioned, remains stable. Our coverage is the highest in the market.

Our NPL coverage ratio over 90 days remained at a very comfortable level and above the pre COVID-19 level at 261% and when we included the entire renegotiated portfolio 111%.

Coverage indicators over 90 days, excluding operations, 100% provision. It is remained stable our coverage is the highest in the markets for <unk> should continue to adjust over the next few quarters. Following a natural trend in the process of normalizing credit conditions.

Speaker 3: Provisions should continue to adjust over the next few quarters, following a natural trend in the process of normalizing credit conditions.

Turning now to slide 20.

Speaker 3: we can see that our renegotiated portfolio totaled 28.6 billion REI's and it's important to point out that the volumes continue to decline in comparison with the total portfolio.

We can see that our renegotiated portfolio totaled 21, $28 6 billion Reais and it's important to point out that the volumes continue to decline in comparison with the total portfolio. This indicator reached four 7% in the quarter alright approach in the pre pandemic level.

Speaker 3: This indicator reached 4.7% in the quarter, already approaching the pre-pandemic level.

Speaker 3: The provision volume is 62.3% and represents 3.5 times the observed delinquency, which continues to return to normal and is approaching pre-pandemic levels.

The provision volume is 662, 3% and represents three five times the observer delinquency, which continues to return to normal and is approaching pre pandemic levels.

Now turning to slide 21.

Default rates remain very under control.

Speaker 3: Default rates remain very under control and at levels that are lower than in the pre-pandemic periods due to a solid portfolio management, evolution of credit models and client-centric approach and renegotiation journey.

At levels that are lower than in the print that prepaid NAMIC periods due to our solid portfolio management evolution of credit models and client centric approach and the renegotiation journeys in line with our expectations total delinquency over 90 days Rose 20 bps.

Speaker 3: In line with our expectations, total delinquency over 90 days rose 20 bits.

Speaker 3: Indexes for individuals and SMEs were most impacted, absorbing the effects of the renegotiated portfolio referred on to the previous slide.

Indexes for individuals and Smes were most impacted absorbing the effects of the renegotiated portfolio referred to the previous slides.

Speaker 3: Gross! Credit provision expenses were 5.1 billion RIA

For us Craig provision expenses were $5 1 billion Reais.

Speaker 3: and represented 88% of all NPL creates.

And represented 88% of our NPL creation.

Speaker 3: Pretty much because the operations of the renegotiated portfolio that became delinquent had a higher provision.ipheral might be something that that requiredierre's

Much because the operations of the renegotiated portfolio that became delinquent had the higher provision.

That requires less of our supplement.

Speaker 3: Finally, I would like to point out that in this quarter, as in previous quarters, we sold both non-performing and active portfolios. Within the rationale of our credit management process, we use this mechanism whenever we believe there is more value creation in the sale than using our own teams to collect overdue loans.

Finally, I would like to point out that in this quarter as in previous quarters, we sold both nonperforming and active portfolios within the rationale of our credit management process. We use this mechanism whenever we believe theres more value creation to sale than using our own teams to collect overdue.

Loans.

Turning now to slide 22.

Speaker 3: The total NII presented strong growth in the quarter with an increase of 80% Here today the evolution was

The total NII presents a strong growth in the court.

With an increase of 80%.

Year to date evolution was one 3%.

Speaker 3: Clyde NII for the year topped at 6.5%, surpassing the upper levels of the guidance as a result of the higher average volume of operations, better spreads and the product...

Client NII for the year top at six 5%, surpassing the upper levels of the guidance as a result of the higher average volume of operations better spreads and the product mix. The Ric will position of spreads as of the third quarter and 21 was of great importance to offset part of the <unk>.

Speaker 3: The recomposition of spreads as of the 3rd quarter in 21 was of great importance to offset parts of the negative variation in the first half of 21. The trend continues to be significant in the coming period.

<unk> in the first half of 'twenty, one and will continue to be significant in the coming periods. The reduction in market NII, which posted a record results in <unk> is due to the impact of the higher CDI and our ALLL positions, partially offset by the higher results from our own working capital.

Speaker 3: The reduction in market NII, which posted a record result in 2020, is due to the impact of the higher CDI on our ALM positions, partially offset by the higher result from our own working capital.

Speaker 3: Turning now to slide 23, we can see that fees income surpassed the 8.8 billion RIE mark in the quarter, the all-time highest result we have ever had. The amount was 34 billion RIEs over the year, a growth of 4.1% above the center of the guide.

Turning now to slide 23, we can see that fee income surpassed the eight 8 billion reais mark in the quarter. The all time highest results we have ever pets. The amount was three 4 billion reais for the year a growth of four 1% above the center of the guide.

That's.

Speaker 3: The volume transacted on our credit cards this quarter once again performed very well, exceeding 66 billion reais, surpassing even the pre-pandemic period.

The volume transacted on our credit cards. This quarter once again performed very well exceeding 66 billion reais.

Passing even the pre pandemic periods. This growth has for immediate this line to developed by about 10% in both the quarterly and annual comparison.

Speaker 3: This growth has permitted this line to develop by about 10% in both the quarterly and annual compared to the current fearsome peak-Tech movement around the globe, as it has encouraged

Speaker 3: The year-to-date 0.7% increase in the checking account revenue line is related to the growth of our account holder client by a base of $1.8 million over 12 months, on top of the higher business volume of correspondent banking, given the overall resumption of commerce. These movements compensated by the revenue losses due to peak.

The year to date, 0.7% increase in the checking account revenue line is related to the growth of our account holder client by.

Days of $1 8 million over 12 months on top of the higher business volume of correspondent banking given the overall resumption of commerce. These movements compensated by the revenue losses due to peaks.

Speaker 3: On the right side of the slide we can see the total number of clients which reached 74.1 million as well as the number of Radisco account holders which reached 32.6 million not including next and bids in this number of checking accounts.

On the right side of the slide we can see the total number of clients, which reached $74 1 million as well as the number of Bradesco account holders, which reached $32 6 million not including next and beats in these number of checking accounts the annual growth of three.

Speaker 3: The annual growth of 3.9% in the income from credit operations is related to the expansion of the portfolio.

9% in the income from credit Operation News release, it is related to the expansion of the portfolio.

Speaker 3: The consortial management, custody and brokerage services and financial advisor services contributed significantly to the annual growth in fees, despite posting a decline in the quarter due to the lower number of working days.

The consortium management custody and brokerage services and financial Advisory services contributed significantly to the annual growth in fees, despite posting a decline in the quarter due to the lower number of working days.

Speaker 3: We are going next to slide 24 to discuss how our operating exe...

We are going next to slide 24 to discuss our operating expenses.

Speaker 3: Even an environment of high inflation with a PCA of 10.1% and a GPM of 17.8% along with a collective bargaining agreement of 11%, total operating expenses increased by only 1.1%, a clear sign of efficient cost management.

Even in an environment of high inflation with BCA of 10, 1% and a GPM of 17, 8% along with a collective bargaining agreements of 11% total operating expenses increased by only one 1%.

<unk> sign of efficient cost management.

Speaker 3: The 6% increase in personal expenses for the year is due to the higher provision for profit sharing and collective bargaining agreements starting September .

The 6% increase in personal expenses for the year is due to the higher provision for profit sharing and collective bargaining agreements starting September .

In the area of <unk> expenses, the increased use of digital channels and the optimization of our physical presence and process offset the inflationary pressure that we felt and also the higher costs associated with technology investments in customer acquisition for <unk> the increase for.

Speaker 3: In the area of administrative expenses, the increased use of digital channels and the optimization of our fiscal presence and process offset the inflationary pressure that we felt. And also the higher costs associated with technology investments and customer acquisition for NEX and BIDS. The increase for the year was 1.3%.

The year was one 3%.

Speaker 3: The variance in other income and expenses is primarily explained by the change in the supplementary provision for insurance.

The variance in other income and expenses is primarily explained by the change in the supplement their provision for insurance.

Speaker 3: we will see a reduction in the number of branches and an increase in the number of business units in 2020.

We will see a reduction in the number of branches and an increase in the number of business units in 2022.

Now.

Speaker 3: Now we move to slide 25 where we present data on our source business.

We move to slide 25 represent data in our insurance business net income posted an annual growth of 4% and it has been around 8% if not towards the increase in social contribution.

Speaker 3: Net income poses an annual growth of 4% and it has been around 8% if not for the increase in social contribution.

Speaker 3: We have a growth of approximately 11% in revenue.

We have a growth of approximately 11% in revenue there.

Speaker 3: The solid performance observed in all business areas was followed by an increase in the number of lives insurance vehicles in residence.

Solid performance observed in all business areas was followed by an increase in the number of life insurance vehicles and residences as an insurance group was able to take advantage of opportunities in the various distribution channels and business partners, particularly with performance in digital channels.

Speaker 3: as the insurance group was able to take advantage of opportunities in the various distribution channels and business partners, particularly with performance in digital channels.

Speaker 3: In confirm operation saw an improved performance in the second half and was in the lead of our guide.

Income for operations saw an improved performance in the second half than it was in the mid of our guidance. This performance is related to the improvement in the claims ratio due to reduce the effects of the pandemic as well as improvements in our financial results for the periods.

Speaker 3: This performance is related to the improvement in the claims ratio due to the reduced effects of the pandemic, as well as improvements in the financial results for the period.

Speaker 3: The volume of COVID-related claims in the fourth quarter of 2021 was the lowest since the beginning of the pandemic.

The volume of Covid related claims in the fourth quarter of 'twenty, one was the lowest since the beginning of the pandemic.

Speaker 3: Despite the more recent increase in demands, due to the new Omicron variant, we did not see the same severity as in the previous periods. We provide our policyholders with an antigen test at the Mil Dutur Novomeg clinics to support the diagnosis of the disease.

Despite the more recent increase in demand due to the new <unk>, we didn't see the same severity as in the previous periods, we provide our policyholders Tejas Tess.

No no if I may.

<unk> clinics to support a diagnosis of the disease.

It should be noted that in 2021, we had more than 5 billion reais in claims paid related to the pandemic.

Speaker 3: It should be noted that in 2021 we had more than 5 billion re-is in claims paid related to the pandemic.

These volumes emphasize the strength of our balance sheets, and the importance of insurance and mitigating the effects of losses on families.

Speaker 3: These volumes emphasize the strength of our balance sheet and the importance of insurance in mitigating the effects of losses on families.

We now move on slide 26, our tier one capital finished the year at 13, 7% remaining rather robust and well above regulatory limits, even with the significant annual increase in risk weighted assets given the strong growth of the loan portfolio mark to market of.

Speaker 3: Our tier 1 capital finished the year at 13.7%, remaining rather robust and well above regulatory limits even with the significant annual increase in risk-weighted assets.

Speaker 3: given the strong growth of the loan portfolio, mark-to-market of securities and payment of interest on equity and dividends. Indicators for liquidity also remain at rather comfortable levels.

<unk> and payment of interest on equity and dividend indicators for liquidity also remain it's rather comfortable levels.

Speaker 3: Next is slide 27, the final one today, before we move on to your question.

Next slide 27, the final one today before we move on to your questions. As we mentioned at the beginning of the presentation uncertainties. We will remain in 'twenty. Two we'll continue to believe that there is room for growth chiefly due to our business model and technological innovations in recent.

Speaker 3: As we mentioned at the beginning of the presentation, uncertainties will remain in 2022. We will continue to believe that there is room for growth, chiefly due to our business model and technological innovations in recent years.

Speaker 3: The loan portfolio grew 18.3% in 2021, above the top of the guidance. We see growth in this line for 2022 between 10 and 14%. In Client NII, growth was 6.5% in 2021, also above our previous estimates.

Here's the loan portfolio grew 18, 3% in 2021.

Both the top of the guidance, we see growth in this line for 20 to between 10 and 14%.

In client NII growth was six 5% in 'twenty one.

Also above our previous estimates for 'twenty, two we expect to grow this line between eight and 12%.

Speaker 3: For 22, we expect to grow this line between 8 and 12 percent.

Speaker 3: In fees we grew 4.1% in 2021. Our expectations for an expansion of 2-6% in this line for 2022.

In fees, we grew four 1% in 'twenty, one our expectations foreign expansion of 2% to 6% in this line for two or 'twenty two.

Speaker 3: Total expenses grew by only 1.1%.

Total expenses grew by only one 1%.

Speaker 3: Despite the rise in inflation with a IPCA of 10.1%, a GPM of 17.8%. Guidance for 2022 ranges from three to 7%, including our optimization initiatives to mitigate the effects of inflationary pressures and also to preserve space for important investments in technology and growth of the customer base.

Despite the rising inflation with a PCI PCA of 10, 1% GPM of 17, 8% guidance for 'twenty, two ranges from 3% to 7%, including our optimization initiatives to mitigate the effects of include inflationary pressures and also to preserve space.

For important investments in technology and growth of the customer base.

Speaker 3: We saw a 5.5% tightening in income and poor insurance in 2021 due to impacts of claims from COVID. Our 22 forecast calls for a growth of 18-23% in this line, with a growth in premiums and a reduction in total income.

We saw a five 5% tightening in income with poor insurance in 2021 due to the impacts of claims from Covid.

Our 22 forecast calls for a growth of 18% to 23% in this line with the growth in premiums and a reduction in claims we believe that the worst fate face of the pandemic is behind us.

Speaker 3: We believe that the worst phase of the pandemic is behind us.

Speaker 3: expanded credit provisions ended 2021 at 15 billion RIEs. You see what the very level.

Expanded credit provisions in the 'twenty, one at 15 Bwi's still at very low levels for 'twenty. Two we expect a range of 15 to 19 billion Reais in this line, mainly due to the growth of the loan portfolio.

Speaker 3: For 2022 we expect a range of 15 to 19 billion RIs in this line, mainly due to the growth of the loan portfolio.

Speaker 3: We expect market LII to post a further reduction in 2017.

We expect market NII to post a further reduction in 'twenty two.

Speaker 3: Thank you very much for your time and we are now able to answer your questions.

Thank you very much for your time.

And we are now available to answer your questions.

Speaker 1: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1. If at any point your question has been answered, you may remove your question by pressing star 2. Our first question comes from Jorge Curie, Morgan Stanley . Hi, everyone.

Thank you we will now begin the question and answer session. If you'd like to ask a question. Please press star one if at any point. Your question has been answered you may remove your question by pressing star to our first question comes from Jorge Kuri Morgan Stanley .

Hi, everyone. Good morning, thanks for them.

Thanks, John .

I wanted to ask two questions. If I may the first one is on your credit card book, which grew 30% year on year, which is evidently very impressive I wanted to understand what's driving this.

Speaker 2: I wanted to ask two questions if I may. The first one is on your credit card book, which grew 30% year in year, which is evidently very impressive. I wanted to understand what's driving this

Speaker 2: is what percentages new clients, where are those clients coming from, what type of segments you're winning market share on, is it higher credit limits to your existing clients, and what do you think that looks like over the next 12 months in terms of growth rate for that portfolio? And then the second question is on now.

What percentage is new clients, where are those clients coming from what type of segments Youre winning market share on is it higher credit limits to your existing clients.

And what are you seeing that looks like over the next 12 months in terms of growth rate for that.

Folio and then the second question is on now.

Speaker 2: is on asset quality. Evidently, I'm guessing, you know, your senior stock down, it's down 9% today. My guess is that it's on delinquency risks. I think the market was unhappy to see NPLs go up. And so what do you think the market is missing? You seem to be.

Is on asset quality.

Evidently.

Guessing.

Youre seniors bogged down.

It's down 9% today My guess is that it's on delinquency risks I think the market was unhappy to see Npls go up.

So what do you think the market is missing you seem to be <unk>.

Speaker 2: very comfortable, if not even optimistic on.

Comfortable.

If not even optimistic on delinquency.

Speaker 4: delinquency, what are you...

What do you think we were not seeing that you are.

Speaker 4: think we're not seeing that you are, can you maybe help us understand delinquency by product? What's your delinquency on your credit card book, for example? What is your delinquency on your SMA book? I think as you talk about mix-shifts driving these increasing NPLs and provisions, I think it would be very useful to provide the evidence of that. And my guess is that NPLs by product would be quite useful.

Can you maybe help us understand delinquency by product Whats your delinquency on your credit card book for example, what is there a delinquency on your SME book I think as you talk about mix shift driving these increase in Npls and provisions I think a really useful to provide the evidence of that my guess is that.

<unk> by product would be quite useful thank you.

Speaker 3: Jorge, this is Leandro speaking, thank you so much for your question. Well, basically credit card book has been increasing by 30% year-on-year and the reason for that is the reopening of the economy primarily. Besides that, we are also improving and increasing our base of clients.

Jorge This is known as we're speaking thank you so much for your question.

Well basically credit card.

Book has been increasing by 30% year on year and.

The reason for that is the reopening of the economy primarily.

Besides that we are also improving and increasing our base of clients Bradesco itself has reached the number of $31 4 million clients with checking accounts with us.

Speaker 3: has reached the number of 31.4 million clients who check in accounts with us. Those clients also benefit from credit cards. Also, when you consider NEX, you see this...

<unk> clients also benefit from credit cards.

Also when you consider next.

You will see these benefits and as the pandemic.

Speaker 3: And as the pandemic resumes...

Resumes.

Speaker 3: We believe that the retail shall also increase the issues of credit cards. Besides that, we also have Radesco Espresso.

We believe that the retail shall also increase the issuance of credit cards. Besides that you also have <unk>, that's our network that's expense.

Speaker 3: That's our network that expands our fiscal presence even more on an asset like base.

Our physical presence even more.

Lastly, like basis regarding the quality of the NPL.

Speaker 3: Regarding the quality of the NPL, it's important to point out that it has been still lower than our historical level.

It is important to point out that it has been.

Still lower than our historical levels.

Speaker 3: and therefore we feel very comfortable with the level of delinquency that we have seen. Pretty much we have increased NPL by 20 bits.

And therefore, we feel very comfortable with the level of delinquency that we have seen pretty much we have increased NPL by 20 bps.

Speaker 3: So we do not see clients requesting any sort of additional renegotiations that significantly affect our bull.

We do not.

<unk> clients.

Requesting.

Any sort of additional rigor renegotiating renegotiations that significantly impact our books. So we get the quality is very good we have made all the provisions that we need it in 2020 , one, especially and therefore from now on it's much more like the growth of the first full.

Speaker 3: So we guess the quality is very good, we have made all the provisions that we needed in 2021 especially and therefore from now on it's much more like the growth of the portfolio itself than any sort of the reality of the quality of the portfolio.

Leo itself, Dan any sort of the right youll see of the quality of the portfolio.

Speaker 2: Hi Jorge, let me compliment Leandro in these two questions. Regarding credit card, I think we had a pretty meaningful improvement in some of our platforms in credit card, we have increased a lot.

Hi, Jorge let me complement Andrew.

Andrew two questions.

Gardening credit.

Credit card I think we had a pretty meaningful improvement.

In.

Some of our platforms in credit card, we have increased a lot our digital origination of credit cards with.

Speaker 2: our digital origination of credit cards with new products.

<unk>.

New products and also.

Speaker 2: And also we benefit from a big improvement in the last few years in our process of credit analysis, analytics, usage of data that allows us to have even better in the writing. We have been working a lot in the activation of cards.

We benefit from.

A big improvements in the last one bps improvement in the last few years.

In our process of credit analysis analytics usage of data that allows us to have even better underwriting.

We have been working a lot in the activation of cards.

Speaker 2: in our base of clients trying to deepen the penetration of cards in our base of own checking account holders and also we have an operation

In our base of clients trying to deepening the penetration.

Card in our base of all checking account holders and also we have.

In operation.

Yeah.

Speaker 2: with retailers that was pretty much affected by the pandemic. The reopening of the economy has also benefited the economy.

Of.

With retailers that to us pretty much affected.

By the pandemic and the reopening of the economy has also benefited this this operation regarding credit credit quality.

Speaker 2: this operation.

Speaker 2: We are very comfortable with the evolution of our credit card, NPL is doing very well, sustained by a very good underwriting by all the changes in the profile of loans with strong growth and collateralized loans during the last two years, payroll loans, mortgage loans,

We are very comfortable with.

<unk>.

The evolution of our credit quality NPL is doing.

Very well sustained by a very good.

<unk> by all of the changes in the profile of loans with strong growth in call. It the realized loss during.

The last two years payroll loans.

Mortgage and this is behind this very good performance in terms of cost of risk.

Speaker 2: And this is behind this very good performance. In terms of cost of risk,

Speaker 2: We think we have a pretty realistic assumption and guidance for cost of risk. I remember last year when we provided our guidance, I think the market also thought it was kind of optimistic and actually we over-delivered on that. We think we are ready to go through the same path this time.

We think.

We have.

A pretty realistic.

Sumption and guidance for cost of risk I remember last year. When we provided our guidance I think the market also thought it was kind of optimistic and actually we over performed.

We delivered on that.

We think we are ready.

To go through the same path this time.

Speaker 2: Regarding NPLs by-product, as you know, we don't provide and no one in the market among the peers provide, so we will at this time keep it that way.

Regarding npls by products as you know.

We don't provide and no one in the market.

The peers provide so we will.

At this time.

Wei.

Thanks, Pete at the Orlando much appreciate it.

Thank you Jorge.

Speaker 1: Our next question comes from Jason Molly, Scotiabank. Please proceed.

Your next question comes from Jayson Malik Scotia Bank. Please proceed.

Speaker 1: Hello, everyone. Thanks for the opportunity to ask questions. My first question is on the outlook for Next and perhaps some additional operating metrics. You showed us some, over 10 million clients now. I'm not sure if you're able to share some more details on acquisition costs for clients or revenue for clients.

Hello, everyone. Thanks for the opportunity to ask questions. My first question.

He is on the outlook.

<unk> and <unk>.

Some additional operating metrics you showed us over 10 million clients now I'm.

I'm not sure if you're able to share some more.

Details on acquisition costs for clients or revenue per client.

Speaker 1: And if you have a view on whether it makes sense, you've talked about potentially doing this in the past or made some comments that you'll see about listing, potentially listing next in the public market. And my second question is on the nature of the non-recurring items that you reported in the quarter, specifically on the...

And then if you have a view on whether it makes sense.

Talked about potentially doing this in the past we've made some comments that youll see about listing potentially listing next in the public markets.

And my second question is on the nature of the nonrecurring items that you reported in the quarter.

Specifically on.

On the reclassification of Securities.

Speaker 1: uh from available for sale uh to trading what were the implications what was the decision-making process there uh were there tax implications and now um you know are you planning to sell those or now you have the ability i guess to sell them and also on the non-recurring if you can give us an update

From available for sale to trading what were the implications what was the decision making process there.

Their tax implications and now.

Are you planning to sell those or now you have the ability I guess to sell them and also on the nonrecurring if you can give us an update.

Speaker 1: on potential future impairments. We saw some impairment charges and goodwill write-offs, et cetera, if you can give us an update on what you think we could see going forward there. Thank you very much.

On potential future impairments, we saw some impairment charges.

Goodwill write offs et cetera, if you can give us an update on what you think we could see going forward. There. Thank you very much.

Speaker 3: Jason Leong, thank you so much for your questions. I'm going to answer your second one and then I'll pass the word to Renato Eidesman, there is an XCO there's also with us on the line okay.

Jayson Layovers briefly thank you so much for your questions I'm going to answer your.

Your second one and then I'll pass the word to run at the latest when there is next CEO . There is also with us on the line okay.

Speaker 3: Well, basically we perceived some strong movements in interest rates. We realized that there would be an opportunity for handling a larger portfolio with current rates and we sold the portion with lower interest rates and we acquired the portion with the low anticipated rates.

Well basically we.

Perceive it's true movements in interest rates.

Realize that there would be an opportunity for.

Handily.

Larger portfolio with currency rates and we sold the portion with lower interest rates than when we acquired the portion with the loan was.

Speaker 3: It will bring benefit to 2022 and also the coming years. And it will be neutral regarding tax implications on this matter. Renato, please go ahead.

It will bring benefit to 'twenty, two and also the coming years and it will be it will be neutral regarding two tax implications on this matter.

We're not too. Please go ahead.

Speaker 5: Thank you, Leandro, and thank you, Jason, for the question. I mean, with regards to MESS, I mean, it's true. I mean, we don't yet divulge a lot of the figures. No, which is …

Thank you Lee and thank you Jason.

Good question I mean with regards to Max I mean, it's true I mean, we don't.

Yet.

As you know a lot of the figures.

Which is.

Hello there.

And auto.

Okay.

Speaker 1: Yeah, this is Jason. Please hold.

This is Jason.

We have a long life.

Connection please hold.

Sure the other carriers.

Yeah.

Speaker 3: Jason, are you there? I'm here.

Jason are you there I'm.

I'm here.

Speaker 3: Okay, unfortunately we missed Renato. He shall be back shortly with us. So we are going to move to the next question and then we get back to yours, okay? Sounds good, thank you.

Okay. Unfortunately, we missed it or not too shabby.

He shall be back shortly with us. So we are going to move to the next question and then we get back to you ours, okay. It.

Sounds good thank you very much.

Thank you.

Speaker 1: Thank you. Our next question comes from Chita Labarga, Goldman Sachs.

Thank you. Our next question comes from Cicala, Barbara Good move back.

Hi.

Speaker 6: Hi, good morning, good afternoon. Thank you for the call and taking my question. A couple of questions also, I guess. Following up on your loan growth guidance, 10 to 14%, I mean the system today is going around 15%, but you have the economy decelerating, your GDP growth could be zero to 1%. How realistic or how comfortable do you feel on being able to achieve that growth? What kind of growth would you expect for the system? In other words, do you expect...

Good morning, Good afternoon, and thank you for taking my question a couple of questions also I guess following up on the loan growth.

I'd say, 10% to 14% I mean, the system today is growing around 15%, but you have the economy decelerating GDP growth could be.

<unk> to 1%.

How realistic or how comfortable do you feel on being able to achieve that growth what.

What kind of growth would you expect for the system in other words do you expect that youll be able to gain some market share looks like again, a little bit of market share on the overall.

Speaker 6: that you'll be able to gain some market share. Looks like you gained a little bit of market share overall.

Speaker 6: loan portfolio in 2021, do you expect that trend to continue? And then second question in terms of NII, growing a bit below that loan portfolio, is that because of just the July beliefs, kind of re-pricing from the higher interest rates, how long would it take to reprice your loan portfolio?

Loan portfolio in 'twenty, one you expect that trend to continue and then second question in terms of.

NII going a bit below that loan portfolio.

Is that because of just think youre liable lease kind of repricing from the higher interest rates, how long would it take to reprice your loan portfolio.

If you can give when do you think you could maybe see some margin expansion from the higher rate.

Speaker 6: When do you think you could maybe see some margin expansion from the higher rate, if you can?

You can alright, thank you.

Speaker 3: Thank you, Tutu. I'm going to start here and then Ferreci will come up with a compliment, okay. Basically, economists in Brazil, they see the credit portfolio growing by seven and a half percent this year.

Thank you Tito I'm going to start here and then <unk> will come up with a complement okay.

Basically economists in Brazil, they see.

<unk>.

The credit portfolio growing by seven 5% this year so.

Speaker 3: So it's way high from the GDP because there is a huge room for needs and therefore it won't be possible to grow by 18% as we did last year, but when you see the range that we are indicating we are pretty much comfortable with that. We have always been growing ahead of the market and we feel very confident that we shall be in the middle or even the upper part of our guide.

Hi from the GDP, because there was a huge room for needs and therefore, it will be possible to grill by 18% as we did last year, but when you see the range that we are indicating we are pretty much call first of all with debt. We have always been growing ahead of the market.

And we feel very confident that we shall be in the middle or even the upper part of the of our guidance.

Speaker 3: Regarding NII, basically we are changing here in terms of market for higher coupons. So we believe there is a very good gain ahead of us. It should be neutral by the end of this operation. And regarding to clients, we have seen that clients are keeping up the spread. We have been able to...

To NII.

Basically we are changing here.

In terms of market for higher coupons.

So we believe there is a very good gains ahead of us it should be neutral.

By the end of this operation and regarding to clients, we have seen that.

Clients are keeping up the spreads.

<unk> been able to.

Speaker 3: grow our margin by year-end it was around 12% when you compare year-on-year and besides that you have to consider that you have a back book. So basically the margin with clients is going to grow on a step-by-step basis while you just see the outstanding balance of our portfolio. That's the reason why you see some sort of uncompassed between the lines.

Grow our margin by by year end it was around.

12% when you compare it year on year and besides that you have to policies that we have a back book so basically.

The margin with clients is going to grow.

On a step by step basis, why we just see the outstanding balance of our portfolio Thats. The reason why you see some sort of uncle pass between the lines.

Speaker 6: All right, thanks for that Leandro. Maybe one follow up on the loan growth again. I mean you mentioned more in terms of the asset quality that you know that you feel pretty comfortable with current levels but I mean there was some deterioration. How much...

Alright, thanks for that maybe.

Maybe one follow up on loan growth again.

Good morning in terms of asset quality.

You feel pretty comfortable with current levels, but.

It wasn't a deterioration.

How much do you expect asset quality to deteriorate a lot npls to get back to pre Covid levels. Do you think can kind of stay below that.

Speaker 6: Do you expect the other qualities to deteriorate a lot? Do you want MPLs to get back to pre-COVID levels? Do you think MPLs can stay below that?

Speaker 6: Just with that type of growth in this economy, you don't worry that there could be further deterioration in asset quality. Just trying to think how much can MPLS increase from here and does that impact your loan growth at all.

Just with that type of growth in this economy, you don't worry that there could be further deterioration in asset quality.

Trying to think how much can npls increased from here and does that impact your loan growth at all.

Peter that's a very good question, we ourselves believes that we should be getting back to 19 pre pandemic levels, but the quality of the harvest have been so good so far that we have been.

Speaker 3: Peter, that's a very good question. We ourselves believe that we should be getting back to 19 pre-pandemic levels. But the quality of the harvest has been so good so far that we have been driven to believe that we shall be even below our historical level.

Driven to believe that we shall be even below our historical levels. So we see a normal deterioration, but we shall believes that all the provisions that we have made heavily join in 'twenty and 2021 shall be more than enough.

Speaker 3: So we see a normal deterioration, but we shall believe that all the provisions that we have made heavily in 2020 and 2021 shall be more than enough to keep us on a very comfort level. Besides that, even if the whole renegotiated portfolio went into the...

To keep us on a very comfort level besides that.

If the whole renegotiated portfolio.

Went into delinquency, we would still have 111% the whole market would be below.

Speaker 3: we would still have 111%. The whole market would be below 100%. So 262% in the way it is today and the worst worst case scenario, the chaos scenario would have 111%. So we feel very cold with the level of protection that we have today.

100%, So 206, 2% in the way it is today.

The worst worst case scenario in our kao scenario would have 111%. So we feel very cold first of all with the cotton with the level of protection that we have today.

Speaker 6: Great, thanks for that. Sorry, and then one final follow-up on that, but that would imply that you do expect to use some of that excess coverage, you know, so that coverage ratio could maybe fall a bit this year? What's the normalized level? I know you don't always look at it this way, but just to kind of think how that should evolve.

Great Thanks for that.

Final final follow up on that then.

That would imply that you expect to use some of that excess coverage for the coverage ratio maybe fall a bit this year.

Whats the normalized level I know you don't know we'd look at it this way because I don't think at all.

Speaker 3: Indeed, it shall even increase. So we do not see a deterioration of our Culver's ratio.

Indeed, it show even increase.

So we do not see a deterioration of our coverage ratio.

Okay perfect.

Sure.

Okay.

Speaker 3: Jason, I guess Renato is back with us, so I'm going to kind of ask him to keep on answering your point. Let us talk.

Yes.

Jason I guess Renata is back with us so.

When it came.

Came to keep on answering your point Renato Caito here, but thank you Jason.

Speaker 5: Can you hear me? Thank you. Yes. Yes, I hope you can. I hope you can hear me. And you know, I apologize. You know, I don't know what happened. And you know, I kept talking. So I don't know exactly where, you know, I got interrupted. So what I'll what I'll what I'll do is kind of start

Yes, I hope.

I Hope you can hear me and I apologize I don't know what happened and you know I kept talking so I don't know exactly where.

I got interrupted so what I'll, what I'll do results kind of starts.

Speaker 5: Again, I'll try to be quick and summarize my answer. But essentially, what I was saying was, to reach the 10-meter mark level, which you know was...

Again, but I'll try to be quick and summarize my answer, but essentially what I was saying was reached the 10 meter mark level.

A level, which you know was.

Speaker 5: market, you know, show that we are able to grow at a fast rate and have continued to do that.

Mark that show that.

Are able to grow at a fast rate.

Continue to do that.

Speaker 5: We did that while increasing unit metrics in a way that we are very comfortable with in terms of increasing revenues.

We did that while increasing.

Unit metrics in a way that we are very comfortable with in terms of increasing revenues and the revenue line that is most important for our business model. These credits and we managed to do that you know increasing credit then we have improved tremendously our credit policies, we have done.

Speaker 5: And the revenue line that is most important for our business model is credit. And we managed to do that increasing credit and we have improved tremendously our credit policies. We're in the fourth review of our credit policy using a lot of analytics. We have hundreds of variables that take into account.

In the fourth a review of our credit policy using a lot of time on <unk> we have.

Variables are taken into account.

Speaker 5: you know, or credit models much in line with, you know, what other digital initiatives like ourselves have been doing. And as a result, you know, we managed to increase when you look at on a year over year basis.

Our credit models much in line with you know what.

Digital initiatives like ourselves have been doing and as a result, we managed to increase when you look at on a year over year basis, we increased 84% our credit portfolio, but mostly happened in the course of the second semester.

Speaker 5: We increased 84% our credit portfolio, but this mostly happened in the course of the second semester of last year when we started, you know, kind of around July , kicking in the new credit policies and new credit models that have been improving over the last few months.

Last year, when we started with kind of around July .

<unk>.

New credit policies in the new credit models that have been improving over the last few.

Months.

Speaker 5: And we believe that this will continue to accelerate and improve our revenue line. So with regards to the customer acquisition cost that you also asked, Jason, again, we don't talk about ARPU or CAC, most of our competitors, but what I can tell you is that we managed to increase the number of clients and accelerate their customer...

Yeah.

<unk> believes that this will continue to accelerate and improve our revenue line. So.

With regards to the customer acquisition cost that you also asked Jason.

I mean, we don't talk about <unk>.

Most like most of our competitors, but what I can tell you is that we managed to increase the number of clients and accelerate customer acquisition, right, but actually reducing customer acquisition costs.

Speaker 5: rate but actually reducing system acquisition costs. Obviously there is some personality within that so towards the end of the year it costs more because there are more people fighting for airtime in the different medias especially because of Black Friday and Christmas.

There is some seasonality within that so towards the end of the year.

More because there are more people fighting for airtime in the.

You the different media.

Especially because of Black Friday, and Christmas, but kind of if we take that out of these effects.

Speaker 5: But if we take that out of this effect...

Speaker 5: because we have changed our marketing strategy.

Because we have changed our marketing strategy, because we have like.

Speaker 5: because we have more awareness, we have adopted marketing campaigns, we have also introduced new models of acquisition like the member get member program and I think essentially our awareness has increased so we didn't have to push much in the end of the funnel at the performance.

No we have more awareness, we have adopted some marketing campaigns. We have also introduced new models of acquisition like the member get member program.

I think essentially our awareness has increased so we didn't have to.

Good morning.

And of the front of what the performance.

Speaker 5: And we managed to reduce the customer acquisition costs. So again, when we look at the business model, I think things fall into place and we're happy with the way we are growing our business and also with the way that the matrix is.

And we.

We managed to reduce the customer acquisition cost. So again, when we look at the business model.

Fall into place and we're happy with.

We're growing our business and also with the way that.

Sure.

Thank you for the question.

Thank you.

Speaker 6: Our next question comes from Thiago Batista, UBS.

Our next question comments don't Thiago Batista UBS.

Speaker 7: Hi guys, thanks for the opportunity. I have basically two questions and both of them on the guidance. The first one, your guidance clearly is very complete, but there is two main lines that are missing, the marketing II and the taxes. Can you comment what are the main trends that we are seeing for marketing II and tax rate?

Hi, guys. Thanks for the opportunity.

Basically two questions and both of them.

Guidance.

The first one that is clearly it's very complete but there is.

Assuming lines that are missing the mark the NII and the taxes can.

Can you comment what are the main trends that we're seeing for market NII and tax rate.

Speaker 7: The second question is still on the guidance, is about the NPL ratio that you guys are considering when you look for the need point of the guidance. Of the guidance of the provision, sorry.

Second question is on the guidance is about <unk>.

The payout ratio that you guys are considering when you look for the midpoint of the guidance.

The guidance into the provision.

Thiago.

Speaker 2: Regarding the first part of your question, in terms of market NII, you can consider that we are going to have a reduction in 2022 compared to 2021. At the next rate, you can use a range between 32-34%.

Regarding.

Your first part of your question in terms of.

Market.

Hi.

You can consider that we're going to have.

The reduction in 'twenty, two compared to 21.

The tax rate you can use a range between 30 to 34.

Percent.

Speaker 2: Regarding the NPL considered in our...

Regarding the NPL.

Considered in our.

Speaker 2: guidance, we consider that NPL will, the total NPL will rise a little more in 2022, getting probably closer to pre-pandemic levels.

Guidance.

We consider that NPL.

The total NPL.

Will.

Right.

A little a little more in 2022.

Getting probably closer to two <unk>.

Probably still a little a little below it.

Speaker 2: probably still a little below it, but already close to it.

<unk> already closed.

Now back to your attention.

Yeah.

Speaker 1: Our next question comes from Mario Pieri, Massachusetts action movie Plexi

Our next question comes from Mario <unk> Bank of America.

Speaker 3: Hi guys, good afternoon. Thanks for taking my questions. Let me ask you two questions as well.

Hi, guys.

Good afternoon.

Thanks for taking my questions. Let me ask you two questions as well.

Speaker 3: The first one is on your client and I out.

The first one is on your client NII outlook I was wondering how conservative are you being here because we're.

Speaker 8: I was wondering how conservative are you being here because

Speaker 8: When I look at your client in AI in the fourth quarter, and I, and you align this, I already get 7% growth.

When I look at your client NII in the fourth quarter.

And I annualize that I already get 7% growth.

Speaker 8: in 2022, while your guidance is only 8 to 12 percent growth.

In 2022.

Your guidance is only 8% to 12% growth.

Speaker 8: So either you're having problems like repricing your loan books, maybe you can discuss that. Are you seeing a more competitive environment? Or are you concerned about raising spreads because the consumer is not in good shape in Brazil, given the high inflation, weak economy?

So either you are having problems like <unk>.

Lysine your loan books, maybe you can discuss that.

Seeing a more competitive environment.

Or are you concerned about raising spreads because the consumer is not in good shape in Brazil, given the high inflation weak economy.

Speaker 8: So, you know, that's the first question. Like, it just seems too conservative.

So.

The first question, Mike just seems too conservative.

Speaker 8: to grow NII on the 8 to 12, especially when you're expecting long growth at 10 to 14. The maybe it has to do with the mix of your long growth. So can you also discuss?

To grow NII on the 8% to 12, especially when you are expecting loan growth of 10 to 14 that maybe has to do with the mix of your loan book. So can you also discuss.

Speaker 8: on your loan book forecast, what are you expecting for SMEs, consumers, and large cooperatives? That's the first question. The second question is related to your guidance for provisions. At the high end of your guidance,

On your loan book forecast, what are you expecting for asset needs consumers and large corporates.

That's the first question the second question.

Is related to your guidance for provisions.

The high end of your guidance.

Speaker 8: You're expecting growth of almost 30% of provisions. So I was wondering, you know,

You expecting growth of almost 30% in provisions so I was wondering.

What.

Speaker 8: what could happen for you to reach the high end of your guidance and why you think that, you know, why you provide a guidance where provisions are rising 30%.

Could happen for you to reach the high end of your guidance why.

Do you think that.

Why you provide a guidance where provisions are rising 30%. Thank you.

Speaker 2: Mario, let me start. Regarding the NII...

Let me see.

Regarding the NII.

Speaker 2: For clients out to look, I think thank you for the question. I think we have been getting a lot of inquires on that.

For clients outlook I think thank you for the question I think we have been getting a lot of inquiries on that.

Speaker 2: The fact that in our guidance, the NIAC from client

The fact that the in our guidance the NII from clients.

Speaker 2: doesn't grow in line or faster than the long growth, relates to the fact that despite the spread in the new lows originated of sneezing and knocked down 19% of institutes.

Doesn't grow.

In line or faster than the loan growth.

Relates to the fact that.

Despite the spread between the new loans originated.

Speaker 2: being higher than what we have seen for instance in the first

<unk>.

Higher than what we have seen for instance.

In the first half of 2021, when probably we had a bottom in spreads.

Speaker 2: of 2021 when probably we had a bottom in spread

Speaker 2: It takes time to have the full reprising of the long book. Basically, this discrepancy...

It takes time to have the full repricing of the loan book basically this discrepancy between.

Speaker 2: The fact that, in your view, you see the rates are up and the fact that our NIIC from clients doesn't reflect that totally is related to the pace of repricing. Our loan book has a duration of one year and a half, two years, so it takes time. Also, despite the fact that spreads are higher than the bottom, we have a duration of one year and a half. So, we have a duration of one year and a half.

The fact that.

In your view and you're seeing the rates the rates are up and the fact that our NII from client does not reflect that totally is related to the pace of repricing. Our loan book has a duration of one year and a half two years. So it takes time also despite the fact.

That spreads are higher than the bottle.

Speaker 2: They are still lower than what they were in the beginning of 2020. And you have operations maturing and getting out of our longboat.

They are still lower than what they were in the beginning of 2020 and you have operations maturing them getting out of our loan book. So that fact that is behind.

Speaker 2: So that's the effect that is behind this kind of...

It is.

Kind of lag.

Speaker 2: in the evolution of the client and I remind you we had that 18% growth in the long book.

In the evolution.

Of the clients and I remind you we had 18% growth in the loan book in 2021 and our NII from clients grew six and a half now we have we are pointing to 12 and NII from Glasgow growth path. So this this repricing and this is Ben.

Speaker 2: in 2021 and our NIAC from clients grew

Speaker 2: 6.5. Now we are pointing to 12 and NIF from clients grow 10. So this repricing and this benefiting curve …

<unk>.

Speaker 2: But the full benefit of higher spread, higher increased rates on the funding side

It's coming but the full benefit of higher spread higher interest rates on the funding side takes a while to happen. So that's the key.

Speaker 2: takes a while to happen. So that's the key.

Speaker 2: the key message there. In terms of client, in terms of mix, we're going to have lower growth in large companies.

The key message that in terms of client in terms of mix, we're going to have lower growth in large companies and.

Speaker 2: and kind of a similar growth in

Kind of a similar growth in <unk>.

Speaker 2: in individuals and estimates, leading so individuals and estimates growing higher than the 12%. So sorry, can you remind me the question on provisions? I...

In individuals and Smes, leading so individuals smes growing higher than.

The.

The 12.

12%. So sorry can you remind me the question on provisions.

Yeah.

Speaker 8: Yeah, just before we get to the question of provisions then. When you talk about long growth being driven by individuals and SMEs, this is a better long work that we're talking about in 2022 than 2021. You should have some benefit on your margins from that.

Yes, just before we get to the question on provisions and so.

So when you talk about loan growth being driven by individuals and Smes right. This is a better loan mix that we're talking about 2022 2021. So you should have some benefit on your margins from that.

Speaker 8: And if you can discuss, like you said, right, the spreads are already higher than the first half of 2021. Do you see room for you to continue to increase spreads? Do you think that the consumers and corporates in Brazil would be able to absorb the higher spread?

And if you can discuss like you said spreads are already higher than the first half.

2021, do you see room for you to continue to increase spreads do you think that the consumers and corporates in Brazil would be able to absorb the highest spreads.

Speaker 2: I think basically spreads were actually in a very low level in the first half of 2021. I think we are going through some the composition of spreads in this environment.

I think.

Basically spreads.

We're actually.

And a very low level in the first half of 2021, I think we are going through some.

The composition of spreads in this in this environment.

<unk> of higher interest rates I think the impact of higher spreads in the origination.

Speaker 2: of higher interest rates. I think the impact of higher spreads in the origination leads to this lower long growth we are pointing in 2022 comparing to 2021.

Leads to this lower loan growth, we are pointing in 2022 comparing to 2021.

Okay and then the question on provisions was.

Speaker 8: When I look at your guidance range of 15 to 19 billion REI, the 93 Muslims in the Middle East areochvelopic ancient Slavic Hebrew yochanan over there for county Jersey

When I look at your guidance range of 15% to 19 billion <unk>.

The 92 billion be eyes implies growth of almost 30% in provisions relative to 2021.

Speaker 8: implies growth of almost 30% in provisions relative to 2021.

Speaker 8: So I was wondering under what kind of scenario you think, you know, you would be close to this high end of your guide.

So I was wondering.

What kind of scenario.

Thank you.

You will be close to the high end of your guidance.

Speaker 2: Our guidance, as it always happens, we focus on the middle of the range. That is what connects with our budget, our estimate.

Yes, our guidance.

As.

It always happens.

We focus on the mid dose.

Of the range that is what.

What connects with our budget our estimates so the range conflicts.

Speaker 2: So the range contemplates for cin scenarios where actually things go worse than our spectacres. Basically that's what is contemplated in the range. But as you know the base case is

Contemplate.

Our same scenarios, where actually things go.

Worse than our expectations basically that's what it is.

Contemplated in the range, but as you know the base case is 17 billion.

Speaker 8: OK, but that's what I was trying to get to then. The $19 billion, things don't go as expected. What are we talking about here? Is the economy contracting 1%, 2%? What are the macro assumptions behind that?

Okay.

What I was trying to get to the $19 billion right if things don't go as expected.

What are we talking about here is the economy contracting 1% 2%.

What are the macro assumptions behind that.

Speaker 2: Ah, that may be related to growth higher than expected, economy lower than expected. So again, the range contemplates.

That's that may be related to growth higher than expected economy lower than expected. So again the range contemplates.

Speaker 2: the Some sort of standard deviation on on the base case scenario not necessarily relates to Well-defined scenarios

The.

Some sort of standard deviation on on the base case scenario not necessarily relates to well defined scenario.

Speaker 8: Okay, correct. You know, that's helpful. Just find the one then. What is your base case scenario for interest rates, inflation and GDP growth?

Okay. That's helpful. Just trying to wonder what is your base case scenario for interest rates inflation and J.

GDP growth.

Speaker 2: I'll award our scenario for

Our our scenario for.

Our scenario for GDP GDP growth is.

Speaker 2: Our scenario for GDP growth is 0.5% growth, for inflation is 5.4% and we have a leak at the end of 22 at 1175.

0.5% growth for inflation is five points.

<unk> four and we have <unk> at the end of 'twenty two to 11 75.

Okay very helpful. Thank you very much.

Okay.

Speaker 1: Our next question comes from Jeffrey.

Our next question comes from Jeffrey.

Outside of them.

Yeah.

Speaker 8: Hello, everyone. Thanks for taking the question.

Hello, everyone. Thanks for taking the question.

Speaker 9: Spence out, look clearly. You know, you're.

Expense outlook clearly.

Yes.

Your point.

Speaker 9: you're pointing to something that embeds some efficiency improvements but can you talk about your expectations on the personnel cost side? You know you had the 11 percent agreement with the unions last year, inflation is high I'm sure.

Pointing to something that embeds, some efficiency improvements but can.

Can you just talk about your expectations on the personnel cost side, you have the 11% agreement with the unions.

Last year.

<unk> has high I'm sure.

Speaker 9: And they're going to want one chunky increase of the game. What sort of expectations are you embedding? Is it, is it left and possessed? Who can? Is it, is it something a bit lower than that this time? And what are you seeing in the labor market in Brazil when you're out trying to hire people?

And the bumps.

Chunky increases again.

The expectations are you embedding is at 11% in Canada as it is it something a bit lower than that at this time.

Are you seeing in the labor market in Brazil, when you're out trying to hire people.

Yes.

Speaker 2: Thank you, John . Basically our...

Thank you Jeff.

Basically our.

Speaker 2: Cross draw guidance, consider.

Cost growth.

Our guidance considers.

Speaker 2: all the effects of this environment of higher inflation, the fact that we are actually investing in our operation in technology, we are investing...

All of the impacts of this environment of higher inflation.

The fact that we are actually investing in our operation in tech knowledge, we are investing.

Speaker 2: In people at the same time we are running Process in which we improve our Efficiency we should incorporate or convert about 500 branches in 2000 and and

<unk>.

People at the same time, we are running.

The process in which we improve our.

Efficient we should.

Incorporates for comfort about 500 branches.

2000, and then.

And.

Speaker 2: and 22 in smaller formats. So we continue the process of improving the efficiency we have being.

And 'twenty two smaller format. So we continue the process of improving efficiency we have been.

Speaker 2: in most of our operations, for instance, the formalization of sale of products, the signature of contracts in digital process on some sort of omni-channel approach where the client may be talking to a branch manager but...

Uh huh.

Converting most of our operations for instance, the formalization of say of products the signature of contracts and digital process.

Some sort of Omnichannel tenant channel approach, where the client maybe talking to a branch manager but.

Speaker 2: the confirmation of the contract, the signature actually happens online. And all this process has been helping us to reduce costs. So this five percent.

The confirmation of the contract.

Signature actually happens online and all this process has been helping us to reduce costs. So this 5% considers all.

Speaker 2: All the pressures we have coming from the increasing salaries we had last year of about 11% consider the fact that probably we're going to have inflation plus something or at least inflation again in September . That is pretty much given by the jurisprudence in terms of labour agreements. In the US melodics Hurricaneilitating and the flooding really puts very nicely on the Heatheryl over the next year. So with up to an historic date,

All of the pressures, we have coming from the increasing salaries. We had last year of about 11% considers the fact that probably we're going to have inflation plus something or at least inflation again in September that is pretty much given by.

The jurisprudence in terms of labor agreements, we have we have in Brazil, so probably it will.

Speaker 2: We have in Brazil, so probably it will happen something kind of in the same...

Happens huffing.

Kind of in the same.

Speaker 2: trend this year and with that we all with all this Croscut initiatives we we think we have we may have the ability of keeping costs running only close to the inflation increase

The trend this year and with that we all with all of this.

Our cost cutting initiatives we.

We think we may have the ability of keeping costs running.

Only close to the inflation increase.

Speaker 9: Got it. Thank you. And I could squeeze one more in on this credit topic. Are there any pockets at all where you've seen credit metrics?

Got it thank you.

I could squeeze one more in on the credit topic.

Are there any pockets where.

You've seen credit metrics.

Speaker 9: worse than you would have expected maybe six months ago given the, you know, the slowdown in macro, the other pressures on consumers and businesses. Is there anything that you're seeing that is worse than you would have expected if only because the macro and GDP growth is going to be a bit lower?

Worse than you would've expected, maybe six months ago given the.

Slowdown in macro the other pressures on humanism.

Businesses is there anything that you're seeing that is worse than you would have expected if only because the macro GDP growth is going to be a bit lower.

Uh huh.

I think.

Speaker 2: During the pandemic, there were some different and new trends. There was first...

During the pandemic there were.

Some different and new trends there what first.

Speaker 2: the trend of actually clients and people, the population accumulating cash, actually saving, so getting financially in a better position, that certainly have improved

The trend of actually clients and people the population of accumulating cash actually saving so getting financially in a better position that certainly.

Half.

Improved.

Speaker 2: the credit worthness of potential credit cards climbed as a whole.

The creditworthiness of.

Credit card clients.

As a whole.

Speaker 2: even if the economy hasn't been doing as good as we expected.

Even if the economy hasnt been doing.

As good as we expected.

Speaker 2: We have seen actually formal employment in Brazil improving. Job creation so far improving and that kind of...

We have seen actually formal employment in Brazil, improving.

Creation, so far improving.

That's.

Kind of.

Speaker 2: good for us, kind of as part of the normalization of the economy in the post-pandemic.

Good for us kind of a spot of the normalization of the economy in the post pandemic.

Speaker 2: On top of that, there were all the improvements we had in terms of credit modeling, usage of data access.

On top of that there were all the improvements we had in terms of credit modeling usage of data access to different kinds of information known directly structured information about.

Speaker 2: to different kinds of information, no structured information about clients that somehow we could incorporate in our credit modeling process.

Our clients that somehow.

We could incorporate in our credit modeling process. So.

Speaker 2: And we originated a lot of credit with colatros, mortgage, payroll loans. So I think that's, with that we believe, as we said, as credit call it, should normalize within TLs increasing, but we think it will keep relatively under control.

And we originated.

A lot of credit with collateral.

Mortgage fees.

So I think that's a.

With that we believe.

As I said, that's credit call it.

Should normalize with npls, increasing but.

We think it will keep relatively under control.

That's great. Thank you.

Okay.

Speaker 1: Our next question comes from Carlos Gomez, HSB...

Our next question comes from Carlos Gomez <unk>.

Let me see.

Hi, good morning, I'm going to go back to the.

Speaker 7: Hi, good morning. I'm going to go back to the extraordinary charges in the quarter. The first one referred to your restructuring is about 440 million. Now, you do that every year, so one wonders to what extent that is extraordinary or you could contribute part of normal expenses. What is your logic to say that it is extraordinary and should we expect more such charges in the coming years, this recovery event?

Extraordinary charges in the quarter.

With respect to your restructuring is about $440 million.

Now you do that.

Yes, so one does to what extent that is extraordinary.

It contributed part of normal expenses, what's you're allergic to.

To say that if you just go the night and should we expect more such charges in the coming years.

Is it kind of an event.

Speaker 7: The second one refers to the 1.9 billion anonymously channels it television stations have

Everyone refers to the one 9 billion and was just.

Speaking of Securities.

Speaker 7: Again, I think we struggle to understand what the logic is to be able to bring that loss forward and to consider it.

Again, I think we struggled to understand.

The logic is two.

To be able to bring that.

That looks forward to consolidate.

Speaker 7: extraordinary now because had it been in the books, you would have had it as an ordinary loss or lower income for the next two or three years. So why is it extraordinary now but it will be ordinary so this remains there. Thank you.

Extraordinary now because had it been.

In the books you would have had.

Not a.

Loss or lower income for the next two or three years. So why is it actually 90 now, but it will be organised maintain thank you.

Speaker 3: Hi Carlos, Leandro speaking. Well, basically regarding to your first question on the restructuring provision that you have made, it's pretty much to seize branches and to transform branches into business units.

Hi, Carlos Leandro speaking well basically regarding to your first question.

The restructuring provision that would have made it pretty much two six branches and to transform branches into business units.

Speaker 3: Just to give you a flavor, we plan to...

Just to give you a flavor.

We plan to cease around 700 branches and to transform.

Speaker 3: sees around 700 branches and to transform, I would say, by 650 branches. So if you put there rental, labor, and furniture costs, pretty much you shall have this.

I would say by 650 branches. So if you put there.

<unk>.

LIBOR.

<unk>.

Furniture cautious pretty much you shall have this.

Speaker 3: This amount. In order to save, we're going to be able to keep on doing that in the coming years. It should pretty much depend on how much our clients are going to be continuing to increase the use of digital channels and the business.

This amount.

Arent safe, we're going to be able to keep on doing that in the coming years. It should pretty much depend on how much our clients are going to be continue to increase the use of digital channels and the business units. So as long as it makes sense, we want to do it but it's very hard to say.

Speaker 3: So as long as it makes sense, we're gonna do it, but it's very hard to say that it's gonna be every year and therefore that's the reason why we put an extraordinary provision for that.

That it's going to be every year.

And therefore, that's the reason why we put the next ordinary.

Provision for that.

Speaker 3: and related to the market NII.

And.

Related to the market NII.

Speaker 3: What happens is that we realize that the volatility in interest rates...

What happened is that.

Realize that the volatility in interest rates and the fast growth of the base rate allows us an opportunity to.

Speaker 3: and the fast growth of the bass rate.

Speaker 3: allowed us an opportunity to sell the existing portfolio that there was a lower coupon and to increase with another portfolio of a higher coupon and an adoration that our treasure guys.

The sale of the existing portfolio.

There was a lower coupon and to increase with another portfolio of higher coupon and a duration that our treasury guys think the thought that there would be a game for us. So by the end of the day as you count on the years ahead <unk> neutral or.

Speaker 3: think that thought that there would be a game for us. So by the end of the day, according to as you count on the years, I had a Shelby Neutral or we just lightly game for us.

With this likely gain for us, but we are just.

Speaker 3: But we are just discussing the year. So you're gonna be able to see that would be good for us. And there was no tax advantage. It's pretty much new.

Discussing D or so youre going to be able to see that would be good for us and there was no.

Tax advantage.

Pretty much Neal.

Speaker 7: Sorry if I can insist you so this really is a pressure operation you are exchanging some bonds for others you are Mathia you are realizing Capital laws. I mean why is that not the trading most part of your marketing come?

So hopefully that makes sense.

So theres really appreciating operation endured exchanging some bonds.

Yes, you are.

You are realizing.

Capital loss I mean why is that.

For the most part of your market income.

Speaker 2: Basically because it was a mark on management decision. We think it is extraordinary in that sense. The realization of profits this year comes from kind of a decision of doing this movement.

Okay.

Is that basically because it was a management decision.

This season.

We think it is.

Is extraordinary in that sense.

The realization of profit this year.

It comes from.

Kind of.

A decision.

Of doing this movement.

Thank you so much.

Yeah.

Speaker 1: Based on our content then please follow us to our class and our next question, told her ?? ?? Goes! Learn about it

Our next question come through.

Jeremy Lanzer.

<unk> asset management.

Yeah.

Yes can you guys Jamie.

Speaker 9: So I have two questions, one on NII. Just let me test it in a different way. So...

Yes.

Two questions one on NII.

Just let me.

How did it differently so.

Speaker 5: No, I think the Q4 was the second quarter in a row where we see positive NII contributions from both...

No I think second.

Second the.

Q4 was the second quarters in a row, where we see positive NII contributions from both spreads and mix.

Speaker 6: If I look at the QMQ, the quarter over quarter movement.

If I look at that.

Q2, the quarter over quarter movement.

Speaker 10: So my question is the following, is there any reasons why we should think?

So my question is the following is there any reason why we should think.

Speaker 10: that this trend, positive contribution from mix, as well as spreads, won't continue in 2022, or if I put it differently, any reason why we should believe that spreads will be worse in Q422 versus Q421, or product mix will be worse in Q422 and Q421. I have another question.

That this trend positive contribution from mix as well that spreads wont continue in 2022.

Or to put it differently any reason why we should believe that spreads will be worse in Q4 2022 versus Q4 2021 .

Our product mix will be worse than Q.

Q2.

For 2021 .

I have another question there Joe.

Speaker 3: Thanks for the question, Chams. I guess we are pretty much content that this trend shall go on. So we shall be able to increase spreads with individuals and SMEs. And as our CEO point out earlier, we shall see a reduction in large corporate names, because they are pretty much able to access the capital markets and they do not need capital. They are very well-liquid. So we believe that we shall go on. But...

Thanks for the question Jim So I guess, we are pretty much confident that this trend shall go along.

So we shall be able to increase spreads.

With individuals and Smbs and as our CEO pointed out earlier we.

We shall see a reduction in large corporate names because they are pretty much able to access the capital markets and they do not need capital. They are very well liquids. So we believe that we shall go on.

But that doesn't tell it to your guidance.

Speaker 11: Argh, yep.

Yes.

Right, Okay fair enough.

Speaker 10: Right, okay. And second question, insurance. So in your 18 to 23% insurance income growth guidance, watch the implied claims ratio. Your...

Question insurance, so in your 18% to 23% insurance income growth guidance.

What's the implied claims ratios.

You're assuming versus 2019.

Yes.

Got it.

Right.

Right.

Okay.

Right.

Okay.

Hello.

Okay.

Right.

Speaker 2: Hi, Chamso. Look, the guidance implies both an improvement in the financial income in 2022 and a continuation of the improvements in the...

Okay.

Hi, Tom so.

Look.

The guidance implies both an improvement in the financial income in 2022.

Continuation of the improvements in the.

Speaker 2: in the operation of insurance operation.

Our India operation of insurance operation trends.

Speaker 2: I don't have at this moment specifically the inkblime.

I don't have it.

Specifically the imply.

Speaker 2: eu talk about my

Our loss ratio.

Thank you.

Sure.

Speaker 12: But if is any 30 minill of yetif we can up.

But to.

Give me just yet.

If you can just talk.

All lines.

Speaker 10: So will the 2020 three claims ratio be better than 2020?

So we'll turn into three claims ratio be better penetrated.

Speaker 2: In your assumption of course. Yeah, just by the continuation of the improvements related to COVID normalization, there's a lot of improvements we can still capture, especially in helping but also the claims in car shooting, the insurance remains high, so there's a lot of improvements.

In your assumption of course, okay, yes, just by just by.

Quint.

<unk>.

The continuation of the improvements related to Covid normalization. There is a lot of improvements we can still capture especially health insurers, but also.

The claims and car insurance or insurance remains high so there's a lot of improvement.

Speaker 3: This is the other speaking just to give a flavor. We pretty much understand that in terms of life and health, as well as elementary branches, we shall see some reduction the lead.

Additionally, other speaking just to give you a flavor, we pretty much understand that in terms of life and health.

As well as elements area branches, we shall see some reduction delay nevertheless.

Speaker 3: Nevertheless, in terms of the equals, we shall see a higher delinquence, because pretty much the life will be turning back to the old times, and we shall see more the equals in the street, more traffic, and all the delinquences, all the claims related to that.

In terms of vehicles, we shall see a higher delinquency because pretty much the life will be turning back to two two times and.

We shall see more vehicles on the street more traffic and all the delinquencies.

<unk> related to that.

Speaker 10: Okay. Thank you very much. That's really helpful. Thank you. No problem.

Okay. Thanks.

Thank you very much.

That's really helpful. Thank you.

No problem take care.

Our next question comes from annuity sediment JP Morgan.

Speaker 1: Our next question comes from Udifitimandus, JP Morgan.

Speaker 7: Hello everybody, thank you for the push-and-prop-asking questions. I have a first one regarding the dividend payout.

Hello, everybody. Thank you for the puts and pulls are asking questions I have one I was wondering regarding the dividend payout.

Speaker 10: Given I guess you may consider leaving those 18 to 90% early this year and you're taking from 10 to 14 What is the level of payout you're accepting on this equation right for kind of keep your no major increase on leverage nothing like that

Given I guess you made.

Delivering those 18% to 19% Roe.

This year and you expect it to grow from 10 to 14.

What is the level of payoffs you were expecting on this equation right.

Keep your.

Major increase on average something like that so I guess by laws is around 30% minimal payouts, but theoretically you have between 40 to 50 so.

Speaker 5: Yes, your bylaws is around 30% minimum payouts, but historically you have been paying 40 to 50. So if you can comment a little bit on what should we expect for dividends for the year, that would be great.

You can comment a little bit on what should we expect for for dividends for the year that would be great and I have a follow up regarding marketing I guess, it's clear I guess the message that marketing can be decrease but if you can quantify a little bit like what should we expect that and again I know you don't have a guidance I know this is very volatile.

Speaker 10: And I have a follow up regarding marketing firm. I guess it's clear, I guess the message from today to that marketing company decrease.

Speaker 10: But if he can quantify a little bit, like what should he expect? Then again, I know he don't have a guidance. I know this is very volatile. But I do see two potential tailings for you here. Like the first one is potential major gains from your shareholders act, remunerated. I know it's not fully floating, but higher rates should help a little bit on your working capital. And the second one is the reclassification of the Securus book.

But I do see huge potential.

Where you hear like the first one is a meaningful measure of gains from your shareholders' remuneration.

I know, it's not fully floating but higher rates should help a little bit on your working capital and the second one is is the reclassification of write offs.

The Securities book, So if you can provide some color kind of quality. They expect another decrease similar to 2021.

Speaker 10: So it can provide some kind of color. Should expect another decrease similar to 2021. There is something called the 2020. It's something smaller than that. And just an order of magnitude would be great for us. Thanks for my.

<unk>.

Smaller than that and just on the order of magnitude would be great for us.

Speaker 3: Thank you, you're the deserves. Let me start with your IOC, right? So basically the idea here is to, of course, it's pretty much depend on the year we have ahead, the economic conditions, the opportunities, how we use our capital, but it's to continue to pay around 40%.

Thank you <unk> speaking.

Let me start with your <unk>.

Youll see right. So basically the idea here is to of course, it will pretty much depend on the year. We have had the economic conditions before Chinese how we use our capital base to continue to pay around 40% as we have done throughout the years, we believe that 35%.

Speaker 3: as we have done throughout the years. We believe that 35% of that will come from IOC. That's pretty much the maximum we can pay the most efficient for our shareholders. And the difference will be through div them.

Of that will come from ILC, that's pretty much the maximum we can phase and most efficient for.

Our shareholders and the difference will be for dividends.

Speaker 3: That's your first question. Regarding to the second one, there is a market NII, which we shift the position to longer portfolio of higher coupon security, and we shall benefit from that in the three or two, four years ahead.

That's your first question regarding to the second one there is markets NII.

We shift the.

The position too.

Longer.

Our portfolio of our higher coupon.

<unk> and we shall benefit from that in the three to four years ahead.

Perfect.

So much.

Thank you.

Speaker 1: Thank you. Do the duration of this call we now finish the question and answer session. I would like to invite the speakers for the closing remarks.

Thank you do good duration of the call. We've now finished the question answer session I'd like to invite the speakers for any closing remarks.

Well first of all I'd like to thank you very much for making the time to be with us not only through our presentation, both the questions and answer.

Speaker 3: Well, first of all, I'd like to thank you very much for making the time to be with us, not only through our presentation, but questions and answer. Of course, the market is changing very quickly. We are analyzing the opportunities and shoes you have, additional questions or clarifications, our IR team is gonna be more than happy to address any of those. Wish you a very healthy and a great day. Take care, bye-bye.

Of course.

Market is changing very quickly we are analyzing the opportunity and should you have additional questions or clarifications. Our IR team is going to be more than happy to address any of those.

Wish you, a very healthy and great day take care Bye bye.

Speaker 1: That does conclude Bradesco's conference call for today. Thank you very much for your purchase.

That does conclude the Bradesco conference call for today.

Thank you very much for your participation have a good day.

Speaker 13: The.

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