Q1 2022 Banco Santander Brasil SA Earnings Call
Operating and financial projections.
Projections and targets based on the beliefs and assumptions of executive Board.
As well on information currently available.
Such forward looking statements are not a guarantee of performance they involve risks uncertainties and assumptions as they refer to future events and hence depend on circumstances that may or may not occur.
Masters must be aware that general economic conditions industry conditions and other operational factors may affect the future performance of Banco Santander Brasil and may cause actual results to substantially differ from those in the forward looking statements I would now pass the word to meet their who stop seeking to introduce all of the participants.
Please Mr. <unk> you May proceed.
Thank you operator, good day everyone.
Welcome and thank you again for joining us for our fourth Q Conference call. This morning to discuss our company's results. So here with me I have.
Our seal you said might Julio.
Our CFO .
And our Investor Relations team.
I will now great.
Before turning the call over to our CEO for his comments. Please you may proceed.
Thank you Gustavo. Thank you all for joining our first quarter results earnings call. It's a pleasure to be here for the first time as CEO of Santander Brasil.
I'll kick off with a very brief overview of the context Marine dental go over some of the strategic priorities I have outlined for Santander Brasil into snacks growth cycle upon which we are already all working on as a group.
So starting with the context, we already notice in the second half of 2021 at the beginning of a deterioration in the credit portfolio, resulting from the worsening macro conditions, mainly inflation and interest rates.
Given that perception, we've taken several measures to adjust our risk appetite and several portfolios, mostly individuals and small SME.
That has already been evidenced in our fourth quarter results last year, when we grew our portfolio less than our peers and easily enforce now with our portfolio relatively flat to down in December as now who will present you in more detail.
These measures allowed us to have solid performances in some of our core businesses such as cards, where we grew fees close to 30% Q on Q to a record figure.
We believe we have a very good combination of growth oriented culture with a good capacity to react to signals such as those who are now experiencing therefore, our risk management culture is considered one of our key assets here at Simpson there.
We still have around two thirds of our retail portfolio collateralized and we keep expanding our secure businesses with new products, such as our home equity or radio market leader within private banks with 23, 4% share and $3 4 billion Reais in assets, our auto finance portfolio.
Our most relevant has improved each loan to value from 54% to 46%, we keep focus on growth and expect to resume a faster pace in the second half of this year.
In terms of our strategic priorities, we have set an ambition to become the best financial services consumer company in Brazil.
<unk> hundred percent customer driven.
And we are now positioning our teams and our energy towards this goal in practice, we will focus on four interconnected pillars.
The first one as it should be customer Centricity, we will incorporate the customer advocacy mindset in everything we do focusing on the client experience throughout the consumer cycle presale sale and post sale designing strong and more integrated sales channels, improving our customers' ability to self serve and our own.
Resolution capacity developing dynamic and personalized pricing models based on more intelligence CRM data and segmentation and shifting our orientation from the typical banking classic product.
Two consumer pool.
A critical cultural change that will mean less cards and mortgages.
And more customers an experience.
We exist to increasingly help our customers improve their lives and fulfill their dreams positioning ourselves says our true customer advocates who transforming several ways, how we operate and will allow us to maintain or grow our results and our returns.
Second pillar.
The sculpture and people.
We could only aim at this goal with a truly horizontal kerchoo, which we already have where empowerment meritocracy and diversity represents key pillars and all pieces of the engine thing connect as business units not following the traditional front office Middle office and back office definitions and heavy marketing is a critical component of our culture, we have been.
The first financial services platform to launch NPS on a full scale all channels perspective, we started at 40 in 2017 and are now running at 57 aiming to achieve 60 plus before year end.
We are shifting our compensation models towards variable payouts based on consumer experience and results where each of our 50000 employees are safe Spence persons.
And our train two and evaluated by how they understand and serve our customers better than any other consumer company.
The third pillar is our integrated sales channels, we will build the best sales platform in Brazil, focusing on an integrated sale and paseo offering to reach our customers will be served 24 seven at any form that they want with simplified offering and processes. We truly believe in the benefits of enrolment channel approach where.
Our digital channel, where our customers increasingly choose should be served represents a key pillar, but not an independent one of our offerings. We will keep advancing interest from your traditional customer support team into a powerful and cost efficient remote sales channel.
We will expand considerably our recently reorganized external channel achieving several new regions of Brazil inefficient forms.
And we will keep reinforcing our physical channel a key pillar of our integrated sales strategy and an edge comparing to digital only players our cross sell and credit recovery capacities. For example are considerably stronger at the stores.
We are already designing our vision of store of the future.
<unk> is our banker will initiative, where we are capturing the ATM flow into our stores with a tablet based offering bringing more speech or store customers and mobility to our salespeople.
We will continuously look at the best cases within the consumer space and serving our customers where they are and how they want to be served.
The Farfan final pillar is innovation and capital.
We will seek this transformation.
Top consumer company with a continuous focus on organic innovation. The less example was our transfer now pay later, so called Gvg peaks in Portuguese offering, which where customers for the first time can pay installments, they're instant payments transferred depicts and 90% of the volume. So far has been a new personal loans.
<unk>.
Use it caused the home equity product was only launched in 2020 and he is already a market leader as I mentioned before we've just launched our digital channel for supply chain financing Sx, Integra, which will reinforce our position as a market leader in receivables backed financing and.
And we keep innovating on older products, such as mortgages, we have substantially reduce our delivery time and personal mortgages to our market best 19 business days and will continue to add innovation to traditional businesses.
All of that capital deployment has been centered around delivering song shareholders returns and payouts coming from a low teens ROE V. Six years ago to a consistent 20 plus are we on the last few years one of the best globally.
With these four cornerstone strategies, we plan to differentiate ourselves from our peers not only banks, but consumer companies in general are evolution keeps based on stability senior leadership and management model with focus and an obsession with speeds. Our recent succession represents all well our culture frictionless and improving our metal bulletin maybe.
Occupancy and ambition, even further we feel proud to have one of the highest levels of career opportunities in Brazil, and the creation of our first technology company represents at 12, we keep very focused on the SME space with multichannel services offering personalized solutions, where necessary, we keep expanding our agribusiness footprint as a whole and reinforcing our.
Wholesale platform with strong businesses, such as our energy and commodities desks overall will keep representing a continuous transformation and growth story and now Laurie the ship couldn't be more excited with the years ahead, including myself. Thank you very much I'll pass it onto a hill now.
Thank you Mario good morning, everybody and welcome to these results our first Q results presentation.
Well first thing to say, we've used a kind of a summary of what we are presenting today as you may see we continued to deliver sustainable and profitable growth.
Compared to the past and during the last years.
As commented in fourth Q, a combination and as Marty has mentioned a combination of higher inflation increased in interest rates and the level of our family indebtedness hospitable, a deceleration that we provoked of portfolio growth.
Revenue continued to grow consistently as you will see the next as lice, partially offsetting the impact of rising inflation related expenses on efficiency, reaching 36% in that ratio net income continued to be above four at 4 billion reais with a return on equity.
That maintains a healthy levels of the round 21 of 20.7%.
So all those numbers and results have.
Being translated into a consistent shareholder remuneration.
The board approved 1.7 billion reais of dividend, which means an annualized dividend yield of almost 6%.
Okay.
Next slide all this is achieved through client expansion, but more importantly, monetizing that flow as you can see in this is like our total customer base increased by $5 8 million in 12.
Personal people in 12 months.
But again, our focus is not only on the number of customers, but on how to turn those customers base into a more loyal and profitable one.
Loyal customers and when they mean loyal customers I am saying those with more than six products. So we are being quite ace asset in that in that measure.
Are you more than two times to two times faster on customer acquisition, which means 27% year on year.
This means that we are not only enlarge in decline base by this specifically, making it profitable.
Revenues derived from our loyal customers rose by 12%.
Casey Sheahan through the digital channels as you May see also again showing strong growth. So all in all a strong growth in clients.
Strong growth in revenues monetizing and making it profitable.
So the next as well as you may see we keep enhancing the user experience and boosting engagement as shown.
By the numbers examples of these are 70% for example of all new accounts are activated within four months and 25% of new customers become loyal within six months.
Loyal customers make up 27% of our active customer base that as you would imagine.
Almost six times 5.6 times more profitable than the law known low yellow ones.
Mixes life.
We have spoken in and say, we view the omnichannel or the four tunnels.
So that decline may choose how to transact how to really to make a relation with the bank.
Speaking of the four tenants the physical channel.
I can say with you in the past that we have close to 15 million people going through our branches through our shops every single month, 50% half of that are.
Known customers.
But we also have what Mario said bank to go a bank to go which is already in almost 90% of our branches. We have rebate reinvented, how we address customer needs and flow on our physical ton of increasing monnier mobility of our branches and innovating the way, we bring our products and services to customers.
Our surveys that we have where the ATM masada before you enter the actually on the on the branch and we activate and make them a more speedy way of serving the clients.
On the digital channel more than 92% of our customer transactions are already accruing through that tenet N C. 17%, sorry, one 717% of our Italy acquire customers were previously Unbanked and chose Sundance to establish the first banking.
Relationship.
This is another example of how E. S E travels in a recurrent way across businesses in areas in the bank.
The remote channel a critical it's a critical part of our integrated offer to our clients sales increasing more than threefold in just one <unk> reflects what I'm, saying and also quite important to see that almost half of the transactions or cure outside commercial hours outside.
From the 92 photos <unk> P M.
And finally, our external China, which recently launched a new platform.
<unk> us to enlarge our offering to a larger number of Brazilian alias.
But tenant oh by liability and integration enable us to boost that commercial activity that you have seen in the previous lives.
As you may see costs continue to grow at a rapid pace with over 95% of cards being used to current account holders. This is important for our quality for our quality of risk discussion that we will have later on.
<unk>, our digital investment brokerage platform audit over 90000, new clients in the first quarter clearly outpacing the market.
Our sustainable business reached $5 2 billion of production in the quarter with our Microgrid portfolio experiencing a strong growth of 47% almost 50%.
While our market set of C. D O S S issuances reached 56%.
So again as you may seen.
Are these E. Z example, something that house coexisted didn't buy in the bank for at least 20 years now.
Moving to the digital front or side of business. The streamlining of processes has boosted our productivity, resulting in a faster time to market for new products and services. Some examples how that 70, 76% of our process is running in the cloud seven.
74% of all personal loans are granted through the the adult channel were granted relief dark tunnel in the first quarter.
And lead time for different products.
Clearly dropped.
Fast improving N P. S. As you will see in the next slide and finally.
Continue continuing with a long series of in.
Efficiency improvement cost to serve digital customers declined by 25% year on year to those 24.6 Reais per month as I said, continuing a long series of drop in cost of service.
In the slide 13.
We have been repeating these two different quarters, but our focus is and will continue to be attending properly. So making the customer are the center of our attention and focus.
And eats satisfaction.
These five customer a promoter generates seven times more revenue than the average in our case.
We have been publishing our M. P. S. At school for sometime now it reached 57 points as you may see a which is a measure based on more than 11 million messages.
<unk> been sent to our customers.
As well as direct conversations from our commercial units and management those 11 million messages.
Mean, approximately in between 30 to 40000 messages per day in all our channels. So we are measuring it on a daily basis throughout the different incentives.
Next slide let me ceased about our diverse and supportive culture, we continue to make progress from the women in leadership roles in the proportion of black employees in our workforce.
In this regard continues to be to reach 40% by 2025.
And we have a training model based on interim on internal multipliers that Costco, but strengthening our corporate culture and that they have say with you in several qantas.
And finally, we have recently re launched our new corporate guidance named teams as you may see in the bottom part of the slide.
Slide 15 before going into the numbers are mentioned a little bit about EOG in some of the slides and we try here to make a summary as it is an integral part of us of ours through a strategy as I mentioned for the last two decades, we are carbon neutral for example, since 2010.
And an ambition of achieving net zero carbon emissions by 2015, we invested more than 280 million of sustainable crops in the Amazon region, and I would like to emphasis also our objective of relying solely on renewable energy by 2025.
Currently these source of energy accounts for almost 60, 59% of the energy use in our operations.
You may see in this slide different commitments, we have communicated throughout this year.
Across with record recognitions that we have received lately.
So moving to results on slide 17, we detail the P&L, we presented to you this morning.
Our on net profit our net profit totaled up I said as I said 4 billion up three 2% in the quarter and flat year on year. The quarterly increase can be attributed to a better performance in NII as a result of a better mix and funding results that helped to offset a higher costs associated with the transition to.
More normalize asset quality and a stronger commercial activity.
Can you highlight some of the annual figures on the revenue from NII rose by three 8% in the year based on higher customer NII.
Fees increased almost 6% over the year here.
Here, our customer base growth and higher activity boosted revenues from a wide body of items, including costs.
And on the expense side provisions review by 14, 6% in a quarter in line with what I mentioned in the last two quarters results.
General expenses increased due to the collective by gaining agreement and the inflation, but besides that that we were able to have a good performance our Q Q on Q with a drop of almost 2% or one 5%.
The efficiency ratio came in at 36%, which improved in the quarter, but obviously with the pressure of higher expenses that I mentioned.
And finally return on equity we have maintained a 20.7%.
As a as I also mentioned in the beginning so going by through different parts of the P&L.
Next slide this.
Slide displays the evolution of our NII with a strong <unk> on declines side.
Customer NII is growing at 13, one 3% Q on Q, which is a clear reflection of all what has been said about client growth loyalty activity et cetera.
Bus and truck SKU product NII of bonds by almost 9% Q on Q and 25% year on year benefiting from favorable volume dynamics and a better mix.
In addition to obviously a stronger funding results.
Consequently, our spreads increased by around 130 basis points on the commercial side on.
On the other hand, NSX as I have been sharing with you for some time now market NII is reflecting our narrative sensitivity to movements in the yield curve with an offsetting roll from our treasury side or desk.
I mentioned in the last quarter that we were already taking limiting decisions on production since September <unk> September last year September 2021, reflecting the adverse economic cycle, we were saying.
US and as a consequence of this our loan portfolio fell by one 6% Q on Q are down to 455 billion.
Without the currency effect that minus 1.6% would have been barely flat around 1.6 minus 0.6%.
Individuals continue to perform in the year with mortgage payable personal loans and credit cards, explaining part of the growth.
It is important to underline that 67% of the individuals loan book is secured is collateralized.
SME remained virtually stable in the quarter, but performed well in the year expanding by 12% thanks to the recovery in demand.
Given the Forex impact mutation to capital markets and a few amortization of cobalt at lending dragged down the growth of the total loan portfolio.
Our funding also had a positive performance year on year and remained stable in the quarter.
In this regard we believe that the rise of interest rates will lead to higher demand for traditional banking products.
And at the end of the quarter as you may see on the right side of the slide our cole capital stood at a comfortable level, reaching our core equity tier one ratio of 11, 7% and our bis ratio of almost 15%.
Moving on to fees. Despite the first SKU traditional seasonality, we can do to grow on an annual basis supported by the expansion of our active customer base and stronger loyalty card.
Coroner accounts in capital markets, where the top performance in the quarter, while costs remain at the best performing on a year on year basis.
Looking at expenses, we again saw what a strong commitment to control. This part of the P&L through a decrease of one 5% in the quarter let.
Let me remember that last September we had the salary agreement increase of almost 11%. So we start to control costs on a Q on Q basis.
Even with that in the year also we have an increase of 10 plus percent.
They are growing below inflation.
We continue to be focused on efficiency as you will see in the next quarters.
As a consequence of all these and as I mentioned at the start of micro sensation and our efficiency ratio ended the quarter at 36% a healthy level, despite pressure from inflation and a stronger commercial activity.
And at this level, we may well remain again, the best in the industry.
On the next slide we can see how our asset quality hussam, both quality HUD, a derivation aligned with what was expected and with what we have been announcing to you in the previous quarters notional price here I'm afraid, we continued to see the trend marginal and not exploding Bertrand import.
To say that we shared with you the situation the fourth Q results and that we took measures to starting last September that are having the effect on P&L I suspected.
Our cost of risk of video to 3.5% in the court. This performance. He is directly tied to our mi migration to more normalized levels in the evolution of risky loan products in our mix last year.
We are currently running in different ratios at almost or around pre pandemic levels. We have also released a Brooks point 8 billion following of our overlay. Following what he was built for trading recovery once again performed well in the quarter, reaching 740 million thanks to <unk>.
Both continued solid management and the sale of Britain down portfolios.
Now, let me revert to you Mario for the closing remarks. Thank you.
Yeah.
Thank you we'll have so just wrapping up.
In terms of strategy, we aim to be the best Best financial services Consumer company in Brazil, with four key pillars as I mentioned before we will be centered around the customer with customer advocacy mindsets and everything we do we will focus more and more on customer experience throughout the cycle not only the sale, but post sale, we will have integrated sales.
So on an omnichannel approach whereby each channel represents a pillar in itself not an independent but in in an integrated mindset. We have 50000 people within our culture, which I think themselves and behave themselves more and more salespeople, we're shifting compensation towards allowing these people to be remunerated by the way to <unk>.
<unk> the way they listen and the way They act.
In terms of innovation and capital as I mentioned before we keep focusing on organic innovation. We have very good examples life as we speak some things we launched a few years ago already market theaters, and all that with a capped orientation throughout we deliver some of the industry best payouts and return on equity to our investors.
We have delivered consistently over the past few years, we're delivering again in this first quarter. The arrow, we have 27% represents that we keep adding clients. So we have our customers are part of our customer centricity relies on how we bring customers how we make them more loyal how we make them interact with us more and more where do.
That we keep the loan portfolio under control our risk oriented culture allowed us to have a very positive quarter as I mentioned in some of our key portfolios such as credit cards, and a few others and we keep having responsible growth throughout Brazil as a whole 12 to society and with a clear focus on ESG overall Santander Brasil.
Keep being a strong and continuous growth story shifting more and more to a customer centricity customer advocacy mindset.
And with that we'll now open for Q&A and thank you very much again for joining this call.
Thank you we will now start the Q&A session for investors and analysts.
I will now pass the word can we circle staff a fictional please Mr. <unk> you may proceed to questions via webcast.
So we're going to start the Q&A. Our first couple of questions with regards to our asset quality and it comes from uniform notes JP Morgans, Gustavo Jordan, but ideas when Tito Levada Goldman Sachs. So so they are requesting us our view for Npls in 2022 and also if we can see.
You'll see the return to 2018 levels or if we see a more challenging outlook given the early delinquency increase in the first Q2 thousand 22 and also they they request us to comment on the increase in provisions in the quarter.
Okay. Thank you.
Let me elaborate on quality us Oh, I have tried to do a little bit through through the through my presentation.
Let me remember what we discussed in last quarter, resulting in what we have been discussing with the with us throughout this quarter and the different meetings, we have hot.
We have started to take limiting production misuse last September 2021, which meant that as you show in the performance of the portfolio of the loan portfolio in fourth Q performance.
We were already growing at a lower speed and in this quarter. We do have growing pieces. As you may have seen on the retail side and part of the Sme's at Citadel.
But the portfolio Bay barely remained flat.
Why we did that and that is something like six or eight months or nine months ago is because we have started to see the different body walls.
A bit more tension okay. So what is happening right now we are in the moment in week.
We have already taken that those measures we think that the measures we have taken on and off those mission side has started to have some impact.
The impact on the on the P&L, but a still prohibitions.
Okay.
Since last year, and we remain not seen any concerns in those mid corp's upwards portfolios. The second comment is on the small Smes as I mentioned before any individuals even on those portfolios, where we took measurements in terms of risk reduction since September October last year in some of those portfolios. We are already taking new measurements.
Two <unk>.
Zoom expanding the portfolios again, using CRM data using personalized pricing and risk.
Risk validation. So we are improving our models as we speak so that's again already resumed some of those portfolios growing back to levels.
As we saw last year so.
Given our growth orientation, we will keep the risk the risk.
Mindset, the boost mentality first line of defense as we say, but we're already looking at true CRM data and personalized segmentation. We are already looking at expanding the portfolios again.
Think of it I think commodity so our next question comes from travel by Houston, and UBS, UBS and Marcelo Telles from credit Suisse in a related to the credit.
Shall we think of ourselves so they they erica central comment on how much loan growth should expand in 2022.
We see they needed to further reduce in our risk appetite our tightened credit standards.
Okay. Thank you, Joe and myself at all.
We have consciously this year that we're currently growing GDP nominal sense around.
Depends on how we end the year.
But the wrong.
Is essential.
<unk> seen volumes growing.
<unk>.
Load up in vehicle close to doubling these I don't think it should be a subscriber so.
We continue to see.
That kind of capacity in terms of growth.
We see.
The retail side growing.
During the next quarters.
The SME side as Mario said.
On the large corporate and corporate segments there Ya.
Competition from capital market competition in terms of.
Investments how the policy of investments is on how the geopolitical situations. When I've also unit holder value on top of.
The discussion around volumes.
Yes.
Do we see more tightening not that thesis stage US was mentioned we are reopening and some cases missed more parts of the business.
Considering the growth capacity of our of our commercial kind of framework. So.
We don't see added decisions for the time I think we took it at the right moment that is some time ago and that has worked for me I was working in the bus and remember that in 2019, we do the same thing with credit cards and it worked pretty well.
Thank you I know I think that we have some connection issues in the first question. So.
Maybe the question again.
<unk> relates to asset quality. The question was for annuity J D.
JP Morgan the star performer ideas quintuple Abad from Goldman. Thank you guys. So the question is related to our Npls in 2000 22020 through our view and if we continue to you'll see it return to 2019 levels or if we see a more challenging outlook given the early delinquency increase in the <unk>.
Q and also they request us to comment on the increase in the provision in the quarter.
Okay, I'm sorry about that.
I'll try to repeat my my answering the photo. Thank you Judy was slow in Q4.
What I was saying was that we took and I assume these we view you can remember in the fourth quarter results and the belief in the mid teens accretion.
Throughout.
This quarter.
We already took the measures we thought we have to take his thoughts in September 2021.
Okay.
Those measures on production were taken if you remember on debate on the fourth Q Santander in Brazil.
Our load growth in terms of the loan portfolio and the one that we have presented today Mr. Bailey.
Portfolio is for that.
In terms of amount in terms of growth.
As I said in my in the previous question, we think that the mentioned we have taken on and know that they were thinking at the right moment at the 689 months ago.
And now we are in the moment.
Each dose measure remember Luca for duration of one year on the loan portfolio values.
Excluding the mortgages so.
We are in the moment in which they sit in the decisions obviously are limiting the growth of the loan portfolio.
We still have the cost of risk impact.
The vintages of the production that was taken before that so we are in a moment.
<unk> is still provisions reflecting the.
Previous reality and.
The loan portfolio growing at the lowest rates at a lower pace what would do we see looking forward looking into the next quarters or months, we have already reopened and part of the production in <unk>.
Parts of the portfolio production.
We will recover because we already.
So it took those decisions.
Some time ago.
At the same time.
At the same time.
We think that the cost of recent provisions et cetera should reflect all those measures pointing to second semester over the year and.
And maybe.
Also some comments.
I just wanted to reemphasize just mentioned so using like I mentioned before using CRM data using personalized segmentation both for coverage and also risk modeling we are already taking steps to reopen some of the risk.
Restrictions, we enacted for the past six months. So we are already re expanding some of the key portfolios in our retail division.
From our mid corp's upwards in terms of.
The corporate segment, we did not foresee any issues last year, we keep not foreseen, so where we're going to grow based on profitability. So do opportunities arise we will be there we have lots of credit lines available and obviously funding capacity to keep expanding our mid corp, and large corp's businesses. It has been tough.
Given the competitiveness of local capital markets, and obviously companies are spending less given lower levels of investments, but those portfolios remains very healthy and we will keep expanding doors as opportunities arise.
Thank you <unk>.
The next questions come from the stops rolled in from Bradesco would be chagal by cheese, the UBS and Youll backfill got us here from Barclays and are related to NII. So what should we expect in terms of NII with clients and NII, which markets in the coming quarters, and we assume that the first Q2 thousand 22. It is a proxy for the coming quarters.
<unk>.
Okay in terms of NII.
I tried to underline.
How what are the main metrics that are below.
The centers as you said and as usual.
Nia Frontline's posh performed strongly and this is based on several things is based on.
Volume linked obviously to mix.
Is also linked to our spreads.
Also linked to products within the refinancing so the three body work fairly well along with.
NII from the liability side.
The industry levels, obviously useful so helping and supporting that number so that is the basic explanation again, we are.
In terms of presumably in terms of transact Charlie in terms of number of clients in terms of lead clients. I gave you all the numbers throughout the presentation. We are growing much more unique clients done in total clients and also we are growing a lot of our clients. So we are not.
Only growing clients, but monetizing in a strongly linking them.
Transforming those clients into into loyal clients loyal clients, meaning more than six approach, which is quite a feat.
So NII from clients strong should continue in the direction through all of them.
NIH from Hallmark.
<unk> explained.
At least in the last two quarters.
NII from markets.
Start to perform lower given our amenities nim's since the ability to movement. So would you too.
Last year, we had the strongest due to movement in nice I think it was like 20 years, we've got 800 basis points of <unk>.
You know that.
Since the activity that we have because we have found is that let's say about 450 million reais.
Basis points movement.
Finally movement given that it was not different impacts there but.
That means that the results from the Alco portfolio.
And with me in <unk>.
Much lower.
During the NIM no money and even the first <unk> half depending on the Jimmy Choo and on the movements of the of the of the June two so that is basically what the company you have an offsetting position from our three Saudi activity that has had a good quarter, but.
Going forward, what I would say that they would spend what I said to you in the last quarters, clearly reflecting that negative sensitivity.
The movement in interest rates, which is what is happening so nothing abnormal in terms of.
Homeless exception that the comparison always is a little bit this strange because you'll see some movements.
Thank you Angel.
Our next question comes from Gustavo <unk>, but it is Gwen annuity finance from J P and I relate to other revenue and other expense and also lower operating results. So.
We could see a better performance in the other lines and nonoperating income can you explain what is included in this line is and which line had a positive impact on that and also can we please explain this CIC. This consolidation does something that plans to divest from this asset.
Okay.
I think it was somewhere and Judy.
That line ICF always explained so you have different kind of.
Inputs and impacts positive and negative.
It's always I understand perfectly.
Your situation in terms of Bp's difficult twist, and mainly because it has certain volatility.
As has been in the past and we would probably be in the future. So what is inside I always said you have <unk>.
<unk>.
Labeled and seemingly provisions you too.
Optimizations in terms of interest rates Youssef I know you've been talking but from the.
Foreign exchange rate.
Importantly, you have transactional lead the costs there so the larger transaction that might be.
Improves our goals the morning, <unk> taken them. So you have recurrent and nonrecurrent.
Things there.
Make that volatility clear for all of the clauses.
We already had also to see the CIP operation. This is.
Accounting movement in terms of moving from cost to investment in terms of how you account for it and that was also included there again difficult to say.
With.
Part of it or four mix corpus the evolution of that.
Okay.
Sure.
So our next question comes from.
Flavio <unk> from Bank of America.
The stress on cards as Rolf as ophthalmic checking account holders how'd, you frankly anything else from non checking account holders from those who have checking accounts account that's something that should this trend change in the short medium term is the bank lowering cards limit for risks riskier clients.
Well.
As we presented costs.
<unk> to be an important part of the business in total consolidated.
What we have done.
Credit cards as I.
Cities.
95% the vast majority of the cars that we're selling today.
Those have comps being sold to current accounts.
So clients that means that we know the risk profile and we know the evolution we have to cope.
We commented in the past for example opened was Australia cause of these credit cards. They tend to perform worse at least at this point.
We are already clients.
Santander clients can we know their profiles.
This has also been quite active through the different tunnels, but a couple on the remote sites.
The numbers, we one year ago, we were setting almost 300000 photos per month now we are selling 800 found some focus.
Those produce large part of that includes the carrying costs.
The study continues to be to be well positioned in that sense, we are applying efficiency through the protocols central the openings.
And we will continue to invest my money you want to make some comments.
Yeah, just retro I just mentioned so card is one of our quote unquote mono liners. Historically, it's 85 points NPS product, it's one of our key pillars for sure.
But we want to integrate all of our quote unquote mono liners to.
Total integrated offering again customer centered with our customer advocacy mindset, so with that in mind, we have shifted our strategy over the past few years towards cardholders, which are account holders as well which means clients.
<unk>, which are fully customers off something in Brazil.
Through which we can explore our offering on our integrated channels that strategy is not only with cards. We're doing the same with our consumer finance company, our auto loans, which is the largest in Brazil our.
Our consumer finance company for goods and services as well.
And with that integration of our entire ecosystem. We believe we have a very strong growth aligned to develop here, we're already doing that with cards as I mentioned, we will do so exploring all synergy opportunities we have within our ecosystem. We will talk more about this in the coming quarters and we believe cards is a very good example of how we should operate as an integrator.
That offering to our clients, our customers and not necessarily independent mono line approach.
Thank you might think.
Our next questions comes from Tito <unk> Goldman Sachs and geographical Garcia from Barclays and that relates to Texas. So Ken we also comment on the relative low tax rate in the quarter and what we should we expect going forward.
Okay.
This has to do I mean.
As always it has to have it and do we think that its own capital.
Amendment to you that we have.
The dividends that we have announced part of those visits are interest on capital.
A good tax treatment, we will continue to optimize that throughout the year.
We always give you a guidance of around 30%, 33% of Brooks on the on the tax rate that we should shift throughout the year with up and down depending on that theme, but if one property developers.
Yes.
Okay.
So our next special comfortable Might've da from Bank of America, and so the question is we noticed that your branch network declining by 10% quarter on quarter, but your head count remaining relatively stable.
We discuss the outlook for photo branch closures and if they should be instantly followed by a reduction in the headcount.
Thanks.
I'll take this one and I'll be very brief as.
As I mentioned, a few times already we have been and we keep being a growth story and that growth story is represented by a very strong sales channel, which will keep improving and our reliance on our physical channel, which we truly believe is one of our key advantages not legacy in the bad sense. We believe it is one of our differentiations and we will keep expanding.
Physical footprint 12 in Brazil, both in terms of new cities and regions and also in terms of new neighborhoods in cities, which are expanding we will do so with a mindset of looking at the portfolio, we have and potentially emerging stores and looking at whether we can relocate stores. So that we serve better our clients we're closer to them we're close.
Go to the floor and that will be a continuous exercise this.
At this number disfigure.
Q on Q and year over year.
The reduction per saves a lot of additional stores, mostly not 90 plus percent of that number represents the consolidation of branch codes, which were now join.
Joining into one called <unk>.
<unk> formally speaking is a reduction of branch codes, but it's much less a reduction of physical stores. Then then as I said branch calls so it's more of a formality and something we're doing through basically came up the number of branch closures, we have which is a formal figure we have with the central bank, but again. It is the mindset is net of an expansion to alto <unk>.
<unk>, including the physical one and we will keep talking about our expansion of the physical channel towards requires thank you.
So our next question from from travel by <unk> from UBS.
Can you confirm to US is the portfolio sold into watching back to Danny payout ratio and how much results is it hasnt generated.
We do.
Through all these kind of portfolio of sales when we do them.
Early reason at all so we only so fully written off portfolio.
That's quite clear.
And it's business as usual, we do it every single year.
<unk> had them in some quarters, you know theres not in this quarter, we did shift.
Our portfolio being short of around 100 million, if I remember well.
But again this is something that is an ongoing process, we've fully written off portfolios.
Okay.
Thank you I Hope our next question comes from Carlos Gomez from HSBC.
Could you give us an update on your views on two areas, our lending and investment platform do you expect to maintain your market shutting out the lowest is becoming more competitive and what are your aspirations and investment areas. We will you compete with <unk>.
Okay, Let me try to address both atheism, probably minor will also join US afterwards on the on the auto the auto sector. As you know is clearly going through difficult moments in terms of volumes sold the total number of cause is dropping by.
Around spending on demand 15, 22%.
Which means that the Pvp us himself in the sector is low.
Has been our our position along with the measures I already mentioned.
<unk> said before is talking in last September .
What we're doing is we are building we have built new factories that we have built capacity to address different publics in times that we were not addressing before.
The same capabilities and the same capacity.
She says how you speak today. So this is happening in April .
And we will continue in that direction, we continue to build our food ecosystem. We are believers in the country and we want to keep on being seen this we don't want to go in the amount of that second program.
We want to structurally maintain the CBP and the lending and that means not only our financial do need a meaningful modules means.
The different acquisitions in Gabon.
<unk> solution suite that we have announced going the direction of giving them.
Right.
On the investment side.
One of our core strategies, we are going into that.
For some time and we will continue to go into that field for some time, we are building, a new platform et cetera et cetera.
We think that when we speak of linked clients.
Means lead clients through the liability part of the balance.
Balance sheet and again that is something key.
Totally.
Important for us.
Yes.
Just having.
Specifically to the investments platform like US who mentioned this is one of our key strategies for not only this year, but the next few years, we are closing.
A very important step now in terms of technology offering we are delivering as we speak are much stronger.
<unk> platform for our clients and salespeople within there to talk to clients about investments and that's what the year will provide a big leap forward in terms of our technology offering and experience to our clients in terms of.
Sales efforts, we already have.
The advisers, we have 250, plus advisers seen already talking on a much more personalized based to our select and vanguard plus clients, which are.
Welfares industrial assets, we will expand that platform within symptom theyre not through external offices, where we will expand through something there.
Four fivefold across the next two years, so that will be a big investments, we're going to make in terms of providing more personalized content.
An approach.
Which has to be on a personalized basis as well that together with a technology platform that I mentioned before we'll provide them.
Very big step forward towards our investment platform and we will be even stronger than we are today.
The product offering as well, but mostly focus on the distribution channel and technology platform.
So yes, we are very focused on that and we will keep expanding.
Thank you.
Okay.
Got it okay.
The Q&A session via telephone is open now one question per participant only.
Please wait while we gather questions.
Our first question comes from Pedro Leduc with <unk> BBA.
Thank you guys for the question good morning, everybody.
NII could you help us understand a little more what drove the treasury results so close to zero.
Just to help us see how it will carry on for the next quarters.
Still on NII on the product portion of it.
We wonder how far you think you are in terms of repricing the credits the new credits to the cost of funding and cost of credit reality, that's upon us.
You are already halfway or more on the final rounds of repricing the delight. Thank you.
Thank you.
Well I tried to explain on the on my previous answer basically negative sensitivity to movements in the yield curve, which is I may add Inc.
Impact on that part of the P&L positively impacted by our results interest and that's basically the summary.
How many of them for what they try to explain to you.
The summary of the number of consultants.
Margaret M D C 's uptrend.
As I mentioned in the last two quarters at least I don't know I don't know more than that but for sure. The last awards. This thesis that trend.
We'll continue throughout 2022 again, given our duration of the asset side and given the <unk> movement and they do.
Shape.
We have today this should last one here when you're in a hot depending how it moves from now and remember that we hedge the commercial units in terms of.
In terms of cost of funds.
So this is how it is reflected.
In our business model.
The second part of your question was.
Okay.
So any pricing.
Pricing sorry.
Yes, we have already on the spread side.
You have to invest the funding side okay.
At this time and the.
Time.
Pine price, how would you be supportive.
Companies are during 2021.
Cost of funding was Boeing announced that the spread was pressure okay.
Trust, we finalize that transfer throughout fourth Q and first Q. So I would say that now on the movements on the on the <unk> will probably be more positive on that side, but are we done with the price evolution. It will depend on how things move in.
So with Youtube.
In terms of transferring what has happened up to now they honestly excuse me, yes, but that was already a sense during the last at least two levels.
Thank you the Q&A session is over and I will now pass the word to Mr. Gustavo seeking for final considerations.
So I would like to thank you very much for joining us today.
We know that we have a couple of more questions about do they given the hour we'll try to answer you Leoni at Ulta gap.
We are full out available here for any further questions and thank you have a nice day bye.
Banco Santander Brasil Conference call has come to an end we thank you for your participation and have a nice day.
[music].
Okay.
Thank you.
Okay.
[music].