Q4 2021 Itau Unibanco Holding SA Earnings Call

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Speaker 2: I'm Natalulia government relations administrator Good morning everyone, my name is Natu Lulia and I represent market intelligence in Itau, Inibaki.

Speaker 3: Thank you very much for joining our video conference for the fourth quarter results in 2021.

Quarter results in 2021 .

Were streaming this event from the headquarters of Ito.

Speaker 3: We're streaming this event from the headquarters of Italo Unimifangco and have three parts to this event. In the first part, we'll talk about the results for the year of 2021.

And it has three parts to this event in the first part who'll talk about the results for the year of 2021 .

I'll present, the items of guidance.

Speaker 2: And we'll be –

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Speaker 2: And at the end, we have a question and answers session, with the analysts and investigators, to help people completely with the Internet.

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Speaker 2: For those who have passed, some instructions for a better prevention of our...

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Speaker 2: For those who are listening to our site, there are three questions in the audience, in the chat, for questions and responses.

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Speaker 2: all the countries in Portuguese, all the countries in English or in the original. The two alternative countries have the same simultaneously. To follow the instructions, click on the button that is at the top of your screen.

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Speaker 2: The questions can be sent to WhatsApp. For this, click the link that is on the screen for this session. Or, leave a message for the number. 1-9-4-5-2-3-2

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Speaker 2: The presentation of today's show is available for download on the

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Speaker 2: Now, let's talk about Milto, who is here tonight, who wants to make a presentation of the result of 2020. Milto, let's talk about you.

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Speaker 2: Thank you Renato, good to see you again for all the presentations and our live result conference, 4th, 3rd, 2nd, 1st. First, I'd like to thank you for being here with us today, and with you, a more interactive format, I hope you like it.

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Speaker 2: I want to start now with our presentation on slide 2. We have seen the result of the re-enterential recovery, which is 7.2 billion euros in the first year, which represents 5.6% and a high of 22.5%

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Speaker 2: This performance was driven mainly by credit cards, real estate financing, personal credit, which grew, as you can see, 15.5%, 8.3% and 9.6%, respectively.

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Speaker 2: The volume of the carton's volume has continued to rise, but we have changed the market to 4.8 million plastic bags and it is still a trend. Services and goods are increasing well in time, with the increase of 2.9%. And for the most part, our deficit is still 43% in the consolidation, and the largest number of sales in Brazil is at 40.7%. It's a market of 1.4% and still a trend.

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Speaker 2: It is important to highlight that this is the lowest efficiency index in the industry when we do it with comparable criteria.

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Speaker 2: Another number that I would like to highlight is the amount of acquisition of customers through our digital channels. There were 8.8 million new customers in just one quarter, which represented a growth of 54% in the period.

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Speaker 2: Sunwich, for your idea, practically changed our objective of taking 15 million clients until 2020. For a quarter of the 7 million new clients in the third quarter, in the next year or so, 96% could not done a accordance with the Italyans.

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Speaker 2: The prosegue analysis and detailed results that are also also solid performance by 2015 that includes and will be in the long term is supported basically by three pillars very important and that you will be able to do everything without the clients digitalization and cultural transformation that all of our initiatives are supported by these three pillars

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Speaker 2: Well, thanks for the presentation and as you have seen in the last StreamEsters, this is a point where you will see the reports for you.

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Speaker 2: In the next slide you will see more details about our Crège Carte, which in Brazil is about 7% of the new market, and the Crège Carte in total, including the most operations in Latin America, beat the 3.5% increase in difficult times of the year.

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Speaker 2: If you look here in the upper right corner, we show that we materially exceeded our expectations for 2021, both in Consolidated and in Brazil.

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Speaker 2: Going to slide 4, here I'm going to open up the margin with the client a little bit more. The average annualized margin increased by 30 points, both in Consolidado and in Brazil. And looking at the bottom of the screen, in the core of the financial margin with the client, we grew by 1.9 billion reais. And including the capital of its own, the growth was even greater, of 2.3 billion reais, or the 13.2 that I mentioned at the beginning.

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Speaker 2: This was the biggest growth of the financial margin with clients in the last 10 years. If you look now at the upper right corner, we show that just as it was in the case of the credit card, we finished the year 2021 above our expectations, both in Brazil and in Consolidado.

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Speaker 2: and in this third quarter, the market market has been increasing since the beginning of the year. We are releasing some more value, we are releasing some more positions, important to the strategy of the bank. And we all know that the margin-reco-hance was approximately a volume of 150 million euros in the margin-reco-hance in the third quarter. What we did was that we saw a performance increase that would increase organically roughly 60 by 1%, meaning UK $ulsive $ energies and now it is 5xam. Anothersize would be paid perAMA-4 the high prices and an increase migratoryin the price of various accounts. So that would be closer to archive all our assets,

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Speaker 2: In the end, we had a very impressive performance in the Latin America, in Brazil, and today, we'll be talking about our entire journey in the last stopping.

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Speaker 2: Now, moving to slide 6, in the insurance service revenue, we had a good quarter with a 2.9% growth. It is worth remembering that in these last two quarters, we did not have any contribution in our revenue from participating in XP. This result came out in the previous quarters. And when we compare the numbers of the year, adjusting the bases for better comparability, the growth of insurance services was 7.2%.

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Speaker 2: Our cartoons were very good, as you can see, not only in the part of the mission, but also in the current situation. And as we already mentioned in the slide, we have the record of the missions and cartoons, and the volume of the transaction was not super strong, as it also presented an impressive increase of 22% when we compared it with the previous missions.

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Speaker 2: This is the result of a new product shelf, simplified, designed to meet the different profiles of our clients. And the result has not only improved, but also increased the volume of transaction, as well as better levels of satisfaction.

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Speaker 2: In terms of investment banking, we didn't have as good a quarter as we did last year, mostly due to the natural slowdown of the stock and follow-on pipeline. However, over the year, we've seen an expressive growth of 24.5%, which led us to the best year in our history. With that, we've been able to keep our lead in this segment, which is ultra-competitive, both in ECM, Equity Capital Markets, DCM, Debt Capital Markets and M&A.

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Speaker 2: I've been telling you that this operation was gaining momentum and we are very optimistic with the results looking forward. Looking at the accumulated, we observe a small drop. It is much more related to the patrimonial equivalences that we have in other companies in the sector related to our own operation.

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Speaker 2: With regards to the omega course we have gravitated on the super role of our aircraft head in form ofPL organic.

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Speaker 2: Now, going to slide 7, we will observe in the slide an increase in the credit cost, once again, as I have been telling you in the previous quarter, widely expected, both nominally and in the index relative to the credit card. I anticipated this movement for you. This is largely due to the fact that we were going through the historical minimums of the credit quality indicators, and it is natural a normalization of these indicators, especially given the current macroeconomic context of the country.

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Speaker 2: there is the lead where microbiota creation pays 120% and more:// a news report ironically threw 35 points for Sunt There, Thank you for watching and see you next time!

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Speaker 2: Indicators of short-term delay became practically stable, a small worsening of 10 base points, but with a slightly higher growth in physical people, also anticipated in Qualpassado. And in NPL in 90 days we observed a very similar behavior, with an increase in the index of physical people, plus the index as a whole remaining practically stable.

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Speaker 2: I think that in this case, with an improvement of 10 base points, what I would like to draw attention to, and here, is that these indicators were not benefited by any portfolio sale, active portfolio throughout 2021, and above all, by any consumption of extraordinary provisions that were made throughout 2020.

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Speaker 2: Alright, this important performance is random in our car today which is super important Nineteam road Muller

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Speaker 2: With regard to the 2021 Guidance, we ended the year slightly better than the average, both for Brazil and for Consolidated. And let's remember that this Guidance was revised downwards throughout the year.

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Speaker 2: Moving to slide 8, you will notice that we had a growth in our expenses in the quarter. As you know, it is a period of strong seasonality. More volumes, campaigns, in addition to the integral effect of the wage agreement signed with the bankers' union. But when we compare our performance throughout the year with 2019, you can see that our expenses in Brazil dropped by 2.6%.

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Speaker 2: What I did is very positive, due to inflation accumulated in the period of more than 50%.

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Speaker 2: It was a very strong delivery, and in conjunction with the growth of revenues, especially the financial margin, this resulted in an expressive improvement of our efficiency rates, reaching the lowest level, as I have just commented, historically, here in Brazil. We are convinced that this is the lowest efficiency rate in the country, not only our consolidated expenses had a good performance, but the history is even better when we decompose the elements, as shown in the picture at the bottom of the slide.

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Speaker 2: One more thing is that we found many strategic HOL hoped for through Cadre.

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Speaker 2: than last year in technology and R$1.3 billion in our business platforms. Our core cost has been reduced to R$1.6 billion, mainly due to our efficiency program, having technology as one of the great levers, as I have been commenting with you in the last quarters.

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Speaker 2: the part of the transaction, the credit card, the middle of the transaction, the operations credit, but the fact that the unitary costs are very important in many cases, is very important in many cases.

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Speaker 2: release the guidance so that we can go within the 0.9 a month in Brazil before we can just turn our face off, see this Provided touch- Origin symbiosis to help our CoC workers, conformos a mi su ne.

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Speaker 2: In slide 9, showing that in the fourth quarter, despite the strong growth of credit and consequently of RWA, our level 1 capital index increased by 10 base points. This was due, naturally, to the growth of profit and profitability in the period, which was more than enough to finance the commercial expansion of the bank.

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Speaker 2: Before getting into our perspectives for 2022, I'd like to sum up our year of 2022.

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Speaker 2: For me, the central message is that there was a relevant evolution in the bank, in all the channels, financial performance, growth in the credit card, in receipts and in the number of customers.

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Speaker 2: more operational efficiency, as you have seen, high quality of credit, and a very fast digitalization in our operation. In addition, of course, an important cultural transformation of the bank.

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Speaker 2: We started in 2012 with a much better plan than what we started in 2012. Now we are on the other side. We started to demonstrate and pass through our perspectives on the macroeconomic aspect. We have some important details about the UN, which started in the last few months, and also has been a big deal. We have been in many ways a Beat geological guide for up to 100 years.

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Speaker 2: SELIC is already running at 2 digits and we expect it to reach 12.5% in the next months.

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Speaker 2: an inflation that should start to converge to the goal, ending the year around 5.5% and an unemployment that should grow from 12% to 13.1%.

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Speaker 2: For now, I hope to see you again here with Cambio in the next five years. For more volatility in the future, be more intense in the long term. Pasa nagua.

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Speaker 2: We believe that the Bank is very prepared to face the most challenging scenario that will be evident when we discuss our expectations for 2022. The idea here is not to go from line to line, but I would like to leave some messages before debating the main levers behind the numbers, together with my colleagues from the Commission.

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Speaker 2: As you can see, we hope you enjoyed this video,

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Speaker 2: Financial margin with clients ended 2021 with a good moment. Along with all the credit growth, any changes in the mix should result in the best result in the year of growth for this line.

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Speaker 2: after, it is clear, to build Bolin, some leading forces threatened, with bloated – including infNG veterans.

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Speaker 2: And to finish. Things need to be picked up together in control

Speaker 2: But with the combination of these expectations, I hope to be able to keep our returns at least in line with the level of the 4th trimester of 2021 and sustainably around 20%.

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Speaker 2: Now I would like to call my colleagues from the Executive Committee to help contextualize both our expectations for the year, bringing a little more detail about the commercial initiatives behind the news.

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Speaker 2: Well, in the new format, first of all, the final idea is to talk about margin compliance. Cartier of credit, naturally, the cost of credit. So, I invite you here, Matias Granata, Andrés Rodriguez, Flavio Sousa, good evening, thank you for the presence of you here at our conference of results. As you know, we hope to increase the price of the credit, in the near future, but with the help of Margin Finance.

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Speaker 2: With this, Flavio André, I would like you to bring some details of the main initiatives that are behind this growth. Flavio, over to you.

Flavio possible approvals.

Speaker 2: Thank you for the invitation, Milton. Good morning to everyone who is following us. Our credit card in Itaú BBA has been experiencing a relevant and very healthy growth. In the last two years, we have grown 54%. We have exceeded the 400 billion reais mark at the end of last year.

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Speaker 2: In 2022, the higher interest rates scenario will naturally reflect a higher credit demand. On the other hand, the higher interest rates have stimulated a greater demand for fixed income investments.

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Speaker 2: I would like to highlight three initiatives. Our focus in the service of medium-sized companies, being that in 2021 we intensified in a relevant way our ability to support them in strategic operations and access to the capital market.

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Speaker 2: Another initiative is the creation of the agribusiness segment. We left at the end of 2019 with a structure with 30 people to close 2021 with more than 300 professionals spread throughout Brazil dedicated to the service of the entire agribusiness chain, and we will add another 100 professionals by the end of 2022. Our portfolio in agribusiness has grown by more than 35% per year in the last two years. We hope to continue with a robust performance for 2022.

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Speaker 2: It is also worth highlighting the structuring of teams focused on specific niches.

Speaker 2: such as real estate and technology companies, for example.

Technology at present.

Speaker 2: and the research of the researchers. But the permit to be the one who is more specialized and has dedicated to the development of products and solutions to the necessary and specific needs of every client and every sector.

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Speaker 2: This is just a small sample of what we are doing here at Itaú BBA, and more than offering credit, we offer the most complete platform of products and services for our clients, which puts us in a unique position to meet their needs.

Shopping is what again I'm loss of the Keystone as Farzana can withheld Deborah you might look at it as it can edged also say that assumes a modest comp left the platform that you put a bluetooth serious butters loss clearance can you just call out come up with something unique about the NDS was nessus that yes more advantage to us all myself attendees means taking the insulins <unk> <unk>.

Speaker 2: And this movement of transformation, even in segments where we have leadership, it is not the exclusivity of the attacked. Isn't that right, André?

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Speaker 4: Thank you, Flavio. The retail sector is going through huge transformations that have permeated our entire operation. We were structurally addressed in 2021 in what we have called Project and Retail 2021.

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Speaker 4: our commitment to complete the experience of the clinic. We are looking forward to seeing you again next week....

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Speaker 4: In this sense, and even taking advantage of the synergies and complementarity of the human face-to-face and digital channels, we are implementing a truly fixed and omnichannel integrated model, where, how and when the customer prefers. Various elements of simplification, intelligence and analytical tools and technological modernization are being incorporated to change the level of satisfaction of the customer, productivity and business dynamics.

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Speaker 4: And I could say that introducing more important impact on gender in a way will increase you speed with quality hair.

Speaker 4: I thank you for your support of our clients. I thank you for your support of the last 10 years. I thank you for your support of our story. I thank you very much and thank you for the money and the financial support of our clients. Thank you for your support of our clients.

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Speaker 4: A very strong growth of production, so we are experimenting here in a large part of our products, historical records.

Speaker 4: growth in customer satisfaction in all our segments and also with historical records here of NPS in practically all.

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Speaker 4: And the cool thing is that the role of digital accounts, which is now predominant, is already the greatest part, is getting closer and closer to the levels of profitability of new accounts there in the face-to-face channels, through the adoption here of a series of analytical techniques, top-of-the-line, avant-garde, such as, for example, market performance.

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Speaker 4: This brings us the best credit profile and more potential for the offer of various products, which are now reaching our customers in a much more contextualized way, within the natural journey of each one of them. And no less important, the acquisition cost is at its lowest levels.

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Speaker 4: I believe that in 2022 we will capture a good part of the strategy and we will be advancing here, in this and other centers in the future, therefore, for a more secure andolepoly

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Speaker 4: Obviously, this was not by chance. We invested in developing our digital channels better and in the agility to evaluate proposals. What, together with our funding structure, allowed us to be more agile in approvals and more competitive in product pricing. This is clearly a competitive advantage that will continue with us. We will carry on for 2023.

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Speaker 4: And to capture this opportunity, our strategy for payment sheets in general, and in public power in particular, was completely reformulated in the last two years. And we even went back to participating in payment sheet hearings.

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Speaker 4: There are important developments in this regard, with a highlight for the achievement of the Minas Gerais payment sheet.

Speaker 4: The positive impact of this movement is already beginning to be captured in a more intense way in 2022, both in Consignado and a series of innovative product and service solutions that are coming to our customers for the first time in Minas Gerais.

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Speaker 4: As it was observed in the last quarter of this year, we expect a greater demand for consumer credit products by 2022. Credit card, credit card and even special check. This change of mix was one of the important factors behind the recovery of our margin with customers in 2021 and will continue to drive the growth of our financial margin with customers from now on. Obviously, always observing a sustainable management of our credit portfolio, as well as respecting the end of our supply chain.

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Speaker 4: Speaking of risk, now I'll pass the ball to Matias, who will talk a little about our credit cost.

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Speaker 5: Thank you, André. Before talking about 2022, I would like to resuscitate a little the speech that Milton brought earlier in this presentation.

Andre.

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Speaker 5: In 2020, as a result of the pandemic, we took important actions to help our customers to re-adapt their finances to the new reality and go through that most critical moment.

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Speaker 5: The flexibilization rate is 42% more than 1% in currency and we are seeing 95% of the

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Speaker 5: Despite the challenging macroeconomic scenario for 2022, we believe that our credit quality indicators, and here I am talking about the NPL indexes and credit costs, will gradually normalize and stabilize at slightly lower levels than those observed before the pandemic, reflecting a mix with greater participation of guaranteed products and advances in the models and policy of concessions.

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Speaker 5: We plan for 2022 an increase in the nominal cost of credit above the growth of the portfolio. This primarily reflects the exceptionally low level observed last year.

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Speaker 5: In relation to 2019, eliminating the distortions of the last two years, we see that the credit cost should grow approximately 10% less than the portfolio, showing a sustainable evolution of our portfolio. This trend is even more marked in the physical person.

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Speaker 5: where the credit cost must grow 16 points percent less than this portfolio will grow in a period.

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Speaker 5: I would like to give a shout out to three initiatives that will be very present in this year of 2022.

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Speaker 5: We will intensify our agenda for the use of concession models with artificial intelligence in trading, allowing us to evaluate each client's moment better and better.

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Speaker 5: That which can really have an important impact on which we invest. but reliability and at what time can you get away from PSCists in the senate?

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Speaker 5: And finally, our risk culture ceases to be a stand-alone vision to be fully and coherently inserted in our cultural transformation in the bank's progress. Risk management will be a fundamental lever to move forward in a lighter, more agile and customer-focused bank.

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Speaker 5: I am confident that we have a very robust balance and with a level of coverage, always guided by our expected loss pillar, more than adequate to face the uncertainties of the year.

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Speaker 5: That's why I give his word, I promise. Thank you. Well, thank you guys. As you can see, 2022 will be the year of the most intense growth of recipes in the last 14 years. With that, I say goodbye to you three. Thank you, André. Thank you, Flávio. Thank you, Matias. I would like to call now Carlos Constantino and André Saposnick to join me here.

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Speaker 2: Welcome, welcome André, welcome Constantine. The idea of this new panel is to discuss a little more in detail with you about our vision and especially the potential for growth of our recipe line with the service.

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Speaker 2: It is an intense competitive environment, as you know, and a macroeconomic scenario of less activity.

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Speaker 5: In the operation of cartoons, which is the leader of Mercado, the 20 new cartoons are now a triple-

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Speaker 5: This performance was only possible because of a real transformation in our way of working, with a real integration between business and technology teams, and with a deep commitment to understanding the needs and expectations of our customers, present and future.

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Speaker 5: IT, our digital portfolio, which over the year was gradually turning into a digital bank, started 2021 with 3 million customers, and now in January we have reached the great mark of 15 million.

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Speaker 5: and 85% of these new clients did not have a relevant relationship with Itaú.

Speaker 5: All this achievement of new relationships allows us to grow our payment operations and grow Itaú as a whole, as these clients develop a growing engagement with us.

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Speaker 5: Our initiatives of iPhone forever and Samsung in Itaú have already brought us almost R$ 1 billion in sales volume, an embryo already quite relevant for our marketplace.

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Speaker 5: And the clients responded to a lot of good offers, from the re-compensation of the house, the house, the bank. The offers of cartoons, in fact, are more than what they thought about the recitations of services, despite the use of these cartoons.

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Speaker 5: We expect for 2022 a growth of more than 20% in the sum of all card portfolios.

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Speaker 5: The main focus of the relationship is also the central theme of our acquisition, cash management and PICS operations, bringing integrated solutions of reception to our business clients.

Speaker 5: We are going to increase our risk of volume by 29% in relation to the interior. In the world of e-commerce, we are increasing by 35% in transactions. Today, the leader in transaction is with us.

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Speaker 5: These solutions are becoming more and more fluid within the operations of the bank, as well as PIX, which today already represents more than 150 million monthly transactions. All this contributed to an increase in the flow of transactions of our clients of 31%.

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Speaker 5: All of this in 2021. This is equivalent to 17 trillion reais processed in a safe and efficient way by Itaú. This entire flow of resources contributed to the growth of approximately 19% in the credit card of the companies we serve in 2021. Our commitment to the increase of principalities also extends beyond the payment world.

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Speaker 5: Hollywood is looking forward to changing thewhere in theCaba.

Speaker 5: In line with the comments of André Rodrigues in the previous panel, it is not only about having the most complete offer of products and services to our customers, but it also means, in many cases, giving up the short-term result, aiming to increase the long-term relationship.

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Speaker 5: and this can be observed, for example, in interviews and contact with similar people. This is the line of research that has to be completed in time, with a large part of the value of long-term relations with our clients, establishing more vehicles, mechanisms of finalization, and, as a result, reducing the main level of our history. This is bringing the opportunity to all the points of contact with our clients.

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Speaker 5: This is our recipe, growth and principality, which, combined with an tireless search for the perfect experience, represent the best service to our customers. Excellence in the eyes of our customers will be pursued with the great commitment of our teams, increasingly diverse teams, and with relevant investments in the modernization of our technological platform.

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Speaker 5: Finally, despite being in charge of my Chará, André Rodrigues, I would like to highlight the important evolution of our insurance operations in 2021.

Speaker 5: Here we made relevant changes that went through changes in management, in the main leaderships of the area, in the redefinition of the strategy, in the investment in more robust and simpler commercial platforms to operate, in the development of specialized commercial force, in the improvement of integration of self-service channels and customer journey. In short, a complete review.

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Speaker 5: We do not intend to reinvent the wheel, but to do the basics very well done at this time. But of course, we are structuring for bigger leaps, including considering avenues of innovation and association in the coming years.

Speaker 5: These initiatives have already had a sensitive effect on the result of the operation and will continue to intensify throughout 2022, with the opportunity for two-digit growth for our result in a business that has a long-term portfolio formation.

We'll talk about Brazil, a continental Idaho synthesis.

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Speaker 5: All this without forgetting the quality of the service and the suitability in the sale of the products. Speaking of suitability, Constantine, ball with you.

Speaker 2: Thank you, André. Good morning, everyone. 2022 brings a macroeconomic dynamic that we know well. The high interest rates, even more so in the intensity that is occurring, end up bringing important changes in the investment profile in the market, causing our customers to look for less risky alternatives, such as fixed income funds, which naturally have administration rates lower than stock and multi-market funds.

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Speaker 2: And our journey is precisely to ensure that we have the most complete shelf of products and services to always offer what is best and most suitable for the profile of each customer, not necessarily what is most profitable for the bank in the short term.

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Speaker 2: This attitude strengthens our clients' trust even more.

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Speaker 2: Having said that, 2022 will be a year of maturing of the various initiatives we have implemented over the past year. We launched ION, our new investment platform, and every day we have improved our customers' experience, not only through investments on the digital side, but also the opening of offices with specialists to help our customers in their decision-making.

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Speaker 2: more than this. We have used each other more, to complement our product offer, for example, with international products in our platform. And to be honest, we invest a lot in the organisation of our business owners. We also believe that through the idea of the idea, we can offer full service in this operation.

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Speaker 2: This transaction will also help us to expand the bank's reach by bringing a robust technological platform.

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Speaker 2: that includes and permits any important FIFA loghts or investors' events.

Speaker 2: As Saposnick mentioned about cards, even considering our size, I am very excited about the investment opportunities that we have ahead of us. Milton, now the ball is with you again. Thank you, Consta, thank you, André. Well, the idea here was to reinforce, in fact, for you and show the enormous potential that we have of growth in the bank as a whole. Not only exploring some new verticals, like the marketplace that André mentioned, but also traditional products, such as insurance and cards.

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Speaker 5: Before moving to the next panel, I would like to talk about the financial margin with the market. As you noticed, our expectations for 2022 point to a material reduction in this line. This is due to some factors.

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Speaker 5: The first one is related to the negative impact of the increase in the interest rate, which has an impact on some of the bank's structural positions.

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Speaker 5: The second is the end of overhead, which, although profitable, also had a collateral impact because it generated, in times of devaluation, tax credits that consumed our capital index. And at the beginning of the year, we had already reduced by 50% due to legislation turned to 2021. And now, in 2022, we have an integral impact of the end of overhead.

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Speaker 5: The third point is related to our decision to protect our capital index, to make the capital index the head for adverse effects of currency volatility. For you to have an idea, this volatility has consumed about 140 base points of our level 1 capital since the beginning of the pandemic.

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Speaker 5: We continue to pose importance in this serious and novel mode, Floyd J. King, and he Wan Before You Go.

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Speaker 5: And here there was also an important factor for the decision, which is the expressive reduction of the cost of opportunity, also in function of the end of overhead.

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Speaker 5: Our negative impact estimate, given the increase in the interest rate in this cycle, is around 2 billion reais, on the market margin. But this effect is already included in our guidance for 2021.

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Speaker 5: Well, now I'm going to the last panel, which is about efficient technology.

Speaker 1: Welcome, Guerra, Broedel, the idea in this panel is to explore a little more in detail the main leverage of efficiency for the bank.

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Speaker 5: And how does the technology if in place willrec Mega Unreal 3 OnlineEEE came into being. So please comment. Obrigado, mio todo.

Speaker 2: Firstly, I think it's important to note that we don't have a program of four different things. And not a program of science, which for me is all the news of our organization.

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Speaker 2: Efficiency is a relationship between costs and revenues, which is measured by the efficiency index.

Speaker 2: In other words, the smaller, the better. We seek to optimize this relationship by reducing costs, but also by making more efficient use of our resources, generating greater revenues. We have acted in a transversal way since 2018, covering all areas of the Bank, with dozens of fronts that have enabled the important evolution of our results in recent years.

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Speaker 2: Soon, there will be more up to date guidelines and recommendations. Many people will believe in reading a book that he regretting something which was pages So.

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Speaker 2: We are constantly questioning about the opportunity to optimize and automate our activities, fluxes and processes.

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Speaker 2: But what are the initiatives that are needed to increase the bank's and our SAC?

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Speaker 2: This means that all growth in costs indicated in the Guidance must come from investments in technology and business, and not from the cost of running the bank.

Speaker 2: Thus, we hope to reach, in the fourth quarter, an efficiency index in Brazil of less than 40%, which will be our lowest level in history.

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Speaker 2: Despite the contribution to the result, our approach to efficiency has allowed us to be more competitive in product pricing and gain more agility in execution, resulting in greater satisfaction of our customers.

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Speaker 2: The investment in technology is a great source of efficiency, especially for new research and research, such as the development of new products or services,ordinated research analytics, education and infrastructure value,

Speaker 2: Now I give the floor to Guerra to tell us what we are doing in our digital transformation agenda.

Speaker 6: Thank you, brother. Guys, in 2021, we built and reinforced important bases that accelerated our digital transformation, contributing to us bringing more efficiency to our operation and an increasingly better experience for our customers.

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Speaker 6: Our total investment in technology grew 60% in the last two years.

Speaker 6: This increase was destined to initiatives with a focus on generating value for the client, which includes the creation of new products and services, the evolution of existing businesses, and the modernization of our technological platform.

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Speaker 6: the cost to the bank, including the infrastructure, decreases in terms of real estate continually. The same, the main terms of the investment are absolute, and we increase the amount that is needed to evolve the approach to solutions, and we increase the amount that is needed to evolve the approach to solutions.

Speaker 6: All this reflected, naturally, in the speed and quality with which we can operate and translate into benefits for the bank and the client.

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Speaker 6: When we talk about benefits for the bank, we refer to an increase in our competitive capacity. We have significantly increased our frequency of delivery of solutions.

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Speaker 6: Today we have more than 300 implementations in the same day. This number is the number that comes from 2016. This implies and lowers the point of the client, a market that we have much more than the identification that it needs to improve the solution and the creation of value. Our picks are the example that can, as an investment technology, contribute to maintain our competitiveness and improve our client experience.

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Speaker 6: We are the institution with the highest number of transactions and six months ago we were at the top of the Central Bank's ranking in terms of availability and performance of our platform.

Speaker 6: important here in that we want to see Change Island and Innovation, not sub virality.

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Speaker 6: In digital channels, we operate in levels that are market benchmarking, maintaining the availability of 99.5% in the main functionalities in 2020.

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Speaker 6: We also know that there are many challenges ahead. The demand for new products and services to offer the best experience for the customer and solve their pain is exponential in an increasingly digital world. And the way we find to do this translates into two main levers.

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Speaker 6: The first is the construction of a very flexible and componentized technological platform, designed to evolve and that allows us to innovate, experiment and scale faster. And the second is the adoption of a work methodology that does not generate waste, with multidisciplinary teams, product management practices and a focus on the same goal, which is to deliver value to the customer.

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Speaker 6: In relation to the first point, we already have a quarter of the bank modernized, and by the end of the year we should reach 50%. Remembering that the focus here is to prioritize what generates value for the client. And looking at this criterion, we can say that practically 80% of what is most important will be within these 50%.

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Speaker 6: In fact, the decision of what to modernize first is totally biased.

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Speaker 6: In relation to the second event, we will be analyzing the same, in the migration of the integrated model, which will totalize 20,000 people per year in this model. Of course, these events will only be held with a minimum of 50,000 and with the necessary elements. Thinking about this, we will be in search of 3,000 people in the next event technology, investing in training and training programs.

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Speaker 6: We have the largest training program in AWS and we are the company with the most certified people in Latin America.

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Speaker 6: We strongly believe that this combination of a modern technological platform, an efficient work model and the right people in the right places form the basis of our digital transformation, making us a more and more client-centered company.

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Speaker 5: Well, thank you Guerra, thank you Broedel, I think that as you could hear, we started 2022 with a much better bank than the previous year, robust growth in revenues and with super relevant cost control. I think that with this we finish our presentation, I will now call Renato back to help me with the Q&A session.

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Speaker 6: Ready for the third part. This is the Q&A now.

Oh you too.

The Philippines I'll go to you.

We're ready for the third time this is the Q&A now.

We'll see.

Speaker 3: And remember, you can also text us your questions using WhatsApp. Just use the link that you have on your screen. You can use the website or you can use the telephone number to text us as well.

And remember you can also text is not going to your.

Questions using whatsapp just used.

The length that you have on that.

Screen, you can use the website or.

You can use the telephone number.

This as well.

This is a bilingual event. So we're going to answer the question in whatever language, you ask which either English is.

Speaker 3: This is a bilingual event, so we're going to answer the question in whatever language you ask, Portuguese or English. If you need translation, you can just select the language by choosing the flag.

You need translation you can just select the language by choosing the flag.

These are English.

Speaker 3: Eduardo Rosman from BTG, back to Al, is asking the first question.

Eduardo Rosman from BTG.

He.

I was asking the first question.

Got it.

Hi, good morning, everyone.

Sure.

Speaker 3: Good morning Renato, good morning Milton. Congratulations on your results, they're very good.

Good morning, we announced that in the morning Milton.

Installations on your results were very good.

Speaker 3: I have a question about the digital transformation. We know that Itaewoo is going through this massive transformation and we know there's a lot to be done. I wanted to hear from you whether you're already able to know

I had a question about digital transformation.

We know that <unk> is going through this massive transformation and we know there's a lot to be done.

I wanted to hear from you.

You're already able to know.

Speaker 3: whether this digital transformation is what helps account for this better margins in performance that you have had than the peers. It's difficult to understand that from outside. It's difficult to know who is doing that type of job better.

Whether this digital transformation is what helps to account for this better margins.

As long as you have had than the peers.

It's difficult to understand that from outside.

It's difficult to know who is doing that type of scale.

Yeah.

Speaker 3: Do you know or can you tell whether this transformation is what is accounting for this better improvement or is that something that we're only going to find out in the next years? Thank you, Rossman. Thank you for your question.

Do you know.

Can you tell whether this transformation is what is accounting for this better improvement or is that something that will only getting to find out in the next year.

Thank you Robin. Thank you for your question.

Speaker 3: And thank you all for joining this Q&A session.

And thank you.

For joining this Q&A session.

So how can I say at this stage around digital transformation sort of muscle.

First of all it goes.

Speaker 3: First of all, it goes far beyond changing technological platforms, right? And this is the slowest process. Gera just talked about this now. We had 25% of our platforms modernized at the end of the year, which is crucial for the digital transformation. And by the end of this year, we should have 50% of our platforms modernized.

Beyond changing technological platforms right and this is the slowest process Gary just talked about this now we had 25% of our platforms modernized at the end of the year, which is crucial for this digital transformation and by the end of this year, we should have 50% of our platforms modernize.

Yeah.

Speaker 3: I think the pivotal point is how we prioritize this. We focus on what is more important to the clients. So by the end of the year, 80% of what matters to the clients will have been modernized or updated. Modernize or update, I don't just mean...

I think the pivotal point as to how we prioritize.

We focused on what is more important to the client so by the end of the year, 80% of what matters to the client will have been modernized or updated and when I say moderniser update.

Just mean.

Speaker 3: coding something new. I mean really having a platform that has a time to market that brings us to a whole new level with quality of products that is better. And there's another very important point that I've been talking about that very much.

Coding something new I mean, really having a platform that has a time to make it that brings us to a whole new level with quality products.

Got it.

And there is another very important point and I have been talking about that very much.

Speaker 3: and that is the cultural transformation. That is a major enabler to me. That will really allow us to boost our digital transformation.

And that is the cultural transformation that is a major enabler.

That will really allow us to boost our digital transformation.

Speaker 3: We're sticklers for the idea that a digital bank is not a remote bank, but a bank that thinks fast, that has cutting-edge technology, that will understand the client's pain points and that will react to the client's needs as fast as they expect it to.

We're sticklers for the idea that the digital bank is not a remote bank.

That things faster.

Cutting edge technological understand the clients paint lines and that will react to declines thus far.

We expect to stay.

We want to have a simple decision making process with <unk>.

Speaker 3: We want to have a simple decision-making process, we want to have good control. We also talk about...

Control, we also talk about.

Speaker 3: preserving and conserving what is good and what we already have, but also making progress towards a new mindset with a lighter type of environment, less hierarchy.

Preserving and consider everything what is good and doing well.

We already have but also making progress towards a new mindset.

Right.

The environment less hierarchy, we have.

Speaker 3: removed layers in administration, we want to give more autonomy to our staff, we want to really have the chance of starting out small and innovating and taking chances, making mistakes and improving. We have more indicators, some are more objective and some are more qualitative.

Remove layers and administration, we want to give more autonomy to our staff went to really have the chance of studying more and innovating and taking chances, making mistakes and improving we have more indicators semi more objective and similar more qualitative.

This is not a process that started last year, we have been talking about updating and upgrading and modernizing our platform for a while I think we did expedite the pressures in 2018 you went from on this cultural transformation has been bolstering it.

Speaker 3: This is not a process that started last year. We have been talking about.

Speaker 3: updating and upgrading, modernizing our platform for a while. We did expedite the process in 2021 and this cultural transformation has been bolstering it.

Speaker 3: Over 60% of our sales are already through these digital channels, which does indicate that that's part of the results. We have been investing in technology. We more than doubled our technology team. We have 14,000 staff in technology.

Over 60% of our sales are already through these digital channels, which yes indeed.

<unk> indicated thats part of the results we have been investing in technology, we more than doubled technology team, we have 14000 staff and.

Technology.

This is a very expressive amounts that's part of our guidance.

Speaker 3: This is a very expressive amount that's part of our guidance already.

Already.

Speaker 3: And that shows that we have been able to invest in technology, invest in processes, in productivity, increasing scale, sustainable performance and that's been making the bank more efficient and more able to be competitive when it comes to price. And all of the indicators that we have been monitoring are just according to plan or even better than that. And from a data perspective, we have really revolutionized our data infrastructure. So...

And that shows that we have been able to invest in technology investing in processes and productivity increasing scale.

<unk> performance and that's maybe making the tank.

More efficient and more able to be competitive when it comes to price and all of the indicators that we have been monitoring.

According to plan or even better than that and.

And from a data perspective, we have really revolutionize data infrastructure.

So when you think of data cleansing brings with it.

Speaker 3: That is something that we really solidified in 2021. And in 2022, we're going to improve even further data management, which will allow us to take decisions faster and to really interpret what a client needs instead of just looking at a segment. So we have a lot of homework to do. It is a lengthy and laborious process, but we're very excited not only looking at the results that we have had, but also at what we have achieved so far.

That is something that we really solidified in 2021.

And in 2022, we aim to improve even further.

Data management, which will allow us to take decisions faster and to really interpret what our clients' needs and.

Instead of just looking at our segments. So we have a lot of homework to do it is a lengthy and laborious process, but we're very excited not only looking at the <unk>.

Results that we have had but also we have achieved so far.

You said you would.

Thinking about it.

Speaker 3: We already have quite a few questions and the next one is Jörg Fridman from Citibank.

We already have quite a few questions.

And the next one is York Friedman from Citibank.

Speaker 3: Thank you. Thank you for having my question. Congratulations on your results, echoing what Rossen said.

Thank you. Thank you for having my question.

Congratulations.

On your results echoing.

Echoing what Russell said.

I'm not going to be asking you mentioned that operations or our guidance I think we have.

Speaker 3: I'm not going to be asking much about operations or guidance, I think we have a lot of information, the message was quite clear, but I wanted to try and understand a little bit more.

A lot of information the message it was quite clear, but I wanted to try and understand.

Little bit more.

Speaker 3: about your view concerning foreign strategies and foreign actions or actions in other countries that you're planning to take. There is a cost of opportunity that you have had in in Chile, it was a lengthy transformation but it's been doing well.

About your Q.

Concerning.

Flooring.

<unk> strategies and foreign actions or actions in other countries that youre planning to take.

Yeah.

Yeah.

There is a cost of opportunity that you have had in <unk> and.

In Chile, it was a lengthy transformation, but it's been doing well.

Yeah.

Speaker 3: from you.

Uh huh.

Thanks.

And then.

Speaker 3: In the past months, recently you've really been clear about tax issues in Brazil and there was also a premium asset in Mexico and that's a very interesting market. So, I'd like to understand from you what your interest is or if you're interested in continuing to expand or how are we going to be dealing with your branches in other countries. Thank you, Joerg. It's great to see you again and thank you for your question.

Over the past months recently, you've really been clear about tax issues in Brazil.

And there was also a premium.

Assets in Mexico, and that's a very interesting market.

So I'd like to understand from you.

Your interest is.

We're interested in continuing to expand or how are we going to be dealing with your branches in other countries. Thank you. It's great to see you again and thank you for your question.

Whenever we talk about international strategy.

Speaker 3: This is something that the bank decided a few years ago, it decided to expand internationally. What we have Chile and Colombia, Ito, Corbanco, and we have this asset there. The banks we have in Argentina, Uruguay and Paraguay have also been performing well. In Argentina, of course, there are macroeconomic challenges.

This is something that the bank decided a few years ago is that a to expand internationally would we have Michael Chile, and Columbia, <unk> and we have this asset.

Thanks, we have in Argentina, Uruguay, and Paraguay has also been performing well in Argentina of course, there are macroeconomic challenges.

But we have been operating well with our corporate world.

Speaker 3: But we have been operating well with our corporate wallet.

Okay.

Speaker 3: and treasury especially where we have had good results despite the market challenges. Argentina has also been a bit of a trial environment for us. We have a new fintech that we have developed completely independently from the bank and we're just getting started but we can see that

And treasury, especially where we have had good.

Good.

Results. Despite the market challenges Argentina has also been a bit of a trial.

<unk> for US we have new Fintech that we have developed a completely independently from the bank and.

We're just getting started but we can see that.

Excuse me.

<unk>.

Speaker 3: and we have good signs there. Uruguay and Paraguay we have more consolidated banks with a very good historical performance and they really have been adding value to the organization. In Argentina we always have a capital cost but still it's an operation that still will create value.

And.

They have good science.

Uruguay and Paraguay, we have more consolidated banks with a very.

Good.

Historical performance and they really have been adding value to the organization.

<unk> always had the capital cost, but still it's an operation that still will create value.

He has been cross border and we have been managing cross border risks really well and we reduced our exposure at the right moment.

Speaker 3: And we have been managing cross-border risks really well and we reduced our exposure at the right moment.

And we felt Gorbenko Marta <unk> Bank is a marathon, it's not a short term task.

Speaker 3: Italkor Bank is a marathon, right? It's not a short-term task.

So we're just going through some points after the merger.

Speaker 3: We're going through some points after the merger, some credit, some platform operating technology issues. They were quite complex and our decision once we took over the bank was to really look at the market.

Credit some platform operating technology issues are quite complex and our decision. Once we took over the bank of America was to really.

We look at the market from a long term perspective, as we do in Brazil.

Speaker 3: from a long-term perspective as we do in Brazil, not favouring short-term but favouring long-term value creation for shareholders. So in the fourth or fifth year of the operations we expected results to crop up. Last year we made a few interesting or important adjustments to position our liberal

Favoring short term, but favoring long term value creation for shareholders. So in the fourth or fifth year of the operations, we expected results to Grubhub.

We made a few interesting important adjustments to the.

Speaker 3: to the balance. And this year we already had better performance in Chile, as you mentioned. It is still a challenge from a tax perspective. There is some lack of symmetry today.

The balance.

And this year, we already had better performance in Chile as you mentioned it is still a challenge from a tax perspective, there is some.

Lack of symmetry today.

So I mean, if we bring <unk>.

Which to me means to Brazil, and we have taxes from Brazil levied upon it and that makes it a little less competitive internationally speaking and there is challenges concerning capital because we have a risk appetite well set in Brazil, and we have to set a level of capital here. So that supports our operations and the capital costs in Brazil is about 14% now at this point.

Speaker 3: to Brazil and we have taxes from Brazil levied upon it and that makes it a little less competitive internationally speaking. And there is a challenge concerning capital because we have a risk appetite well set in Brazil and we have to set a level of capital here so that it supports our operations and the capital cost in Brazil is about 14% now at this point and that is also a challenge. There is a tax and a capital challenge.

And that is also a challenge there is a tax and capital challenge. So looking at that as a whole we have expanded our operations in Chile as you probably noticed we increased capital and that was positive for the bank because of the capital.

Speaker 3: So, looking at that as a whole, we have expanded our operations in Chile, as you probably noticed, we increased capital, and that was positive for the bank, because the capital impact was virtually zero.

And in fact it was.

On my virtual virtually zero.

And we used to have 40% share.

Speaker 3: And now we have 56%.

And now we have 56%.

Speaker 3: That was great and that was a good moment to increase capital. Also because the bank is now going to acquire the Colombian operations, another slice of it. And Colombia is still a challenge.

That was great and.

That was a good moment to increase capital.

So because the bank is now coming to acquire the Colombian operations.

There's less of it.

And.

Colombia is still a challenge.

We have a very devoted management team.

Speaker 3: We've been simplifying the cost structure and we want to raise the Colombian operations to another level. And scale is a challenge in Colombia. It's a small operation and we have 3.5% market share in retail. So it's more difficult to gain profits than...

We've been simplifying the cost structure and we went to <unk>.

Reis, the Colombian operations to another level.

Scale is a challenge in Colombia is a small operation and we have three five.

Market share in retail so it's more difficult to.

Gain profits there.

Speaker 3: But we're quite comfortable at this point and the idea is to continue to improve the assets that we have there.

But we're quite comfortable at this point and that is to continue to improve the assets that we have there.

As for international expansion items, you will see that as a focus will continue to.

Speaker 3: As for international expansions, I don't see that as a focus. We continue to focus on consolidating assets that we already have and we are reaping the benefits and results as you have mentioned and I think it's unlikely that we will make any changes in consolidation or into new countries. We think Mexico is a great country and a great opportunity but we also see a number of opportunities in Brazil and opportunities to improve operations we already have.

On consolidated assets that we already have and we are reaping the benefits in our results as you have mentioned and I think it's unlikely that we will make any changes.

And consolidation or enter new countries, we think Mexico is a great country and a great opportunity, but we also see a number of opportunities in Brazil and opportunities to improve operations, we already have.

Yes.

Not in a process like.

Speaker 3: and a process

Speaker 3: like that. And of course we'll look at assets in the region, of course it's part of the job description, but I think we're unlikely to go that way. We have to really focus and generate value for shareholders and because of this lack of symmetry, any operation outside Brazil will allocate a number or a substantial amount of capital and have an impact on value generation for shareholders in the short term, but I think we have a full plate at the moment. Shall we go into

Like that.

And of course, it will look at assets in the region of course, it's about a job description, but I think we're unlikely to go that way, we have to really focus and generate value for shareholders and because of this lack of cemetery.

<unk> operation outside Brazil will allocate a number or a substantial amount of capital and have an impact on value generation for shareholders in the short term, but I think we have a full plate at the moment.

Shall we go into the third question Gustavo.

Speaker 3: Gustavo Schroeder from BDI. Hello Gustavo. We can hear you, Gustavo.

Gustavo <unk> from Adi.

Hello Gustavo.

Yeah.

We can hear you.

Yeah.

Good morning, Milton Renato.

Speaker 3: Thank you for the presentation. Congratulations on your results. You did very good. I just wanted to go back to

Thank you for the presentation congratulations on your results.

They are indeed very good.

Yes.

I just wanted to go back to.

Speaker 3: a subject here, Treasury and capital hedging.

Our subject here Treasury and capital hedging.

Speaker 3: We understand there may be a need to neutralize the mismatch there may be from FX operations and I think the assets and liabilities aspect, that's well hedged.

We understand there may be a need to neutralize.

The mismatch there may be from FX.

<unk>.

And.

I think the assets and liabilities.

Aspect, that's well hedged.

Speaker 3: But maybe the capital account isn't, if I'm not mistaken. How do we match that? Does a hedge you have for capital has an opportunity cost?

But maybe the capital account isn't if I'm not mistaken.

How do we match that.

Hedge you have for capital.

Has an opportunity cost.

Okay.

You have a 2 billion impact.

Speaker 3: You have a 2 billion impact expected on the Treasury.

Expectation on <unk>.

Treasury.

Yeah.

Speaker 7: But this doesn't look like a meaningless sort of cost of opportunity. What is the upside you see in capital that would justify having this turbulent impact on Treasury? And if you could try and clarify what the rationale behind that is, and still about that.

Yes.

But this doesn't look like.

Meaningless sort of.

Cost of opportunity.

What is the upside EC.

And capital that would justify.

Having this 2 billion impact on Treasury, and if you could try and.

Clarify what the rationale behind that is and.

And.

Still about that one.

Yeah.

Speaker 3: I don't believe this is going to be a one-off, right? Only in 2022. I believe we're going to keep this capital hedging structure.

I don't believe this is going to be a one off right only in 2022, I believe again to keep this capital hedging structure.

So we could expect 2 billion less and treasury for Kapoor.

Speaker 3: So, we could expect 2 billion less in treasury for a couple of years, right? Thank you, Gustavo. It's great to see you again.

A couple of years right.

Thank you Gustavo it's great to see you again.

Let me tell you a little bit about <unk>.

<unk>.

Speaker 3: strategy and why we're going that way with hedging capital.

Our strategy and why we're going that way with hedging and capital one.

Okay.

Speaker 3: All of the equity we had from banks in other countries were bringing back to Brazil with derivatives, using tools, using hedging. So the capital that was there would always come back in BRLs, in Brazilian Reels.

All of the equity we had.

Banks in other countries, we're bringing back to Brazil with derivatives using tools using hedging so the capital though.

Was there would always come back in BRL Brazilian reals.

There is substantial lack of symmetry when it comes to taxes and would that we've been doing over hedging as you know.

Speaker 3: There is a substantial lack of symmetry when it comes to taxes. And with that, we've been doing over hedging, as you know well. And there was a high cost of opportunity. So the first element is that in the first half of 2021, we started working with the first half of overhedging, the second half of overhedging, the second half of 2021. So that is over now. So we only have hedging and we no longer have overhedging.

No well and there was a high cost of opportunity.

The first element.

Is that in the first half.

2021.

We started working with over the first half of over hedged in the second half of a hedge in the second half of 2021. So that is over now so they only have hedging that we no longer have overhead she will get ahead.

Speaker 3: The flip side of the coin is that if you have FX...

The flip side of the claim is that.

If you have FX.

Speaker 3: being devalued, you generate tax credit and that's important for our capital indices. And another aspect that is negative is that as you had the equity of the bank hedged in rails or the RWA of the wallets would vary alongside the currency so that would consume more or less capital depending on the currency. Only talking about.

Okay.

Devalued you generate.

Credit and that's important for our capital entities and another.

Aspect that is negative is that as you had the equity of the bank hedged in reals or the R. W. A of the wallets.

Very alongside the currency, so that would consume more or less capital depending on.

So we're not only talking about.

Speaker 3: the brazilian real but also the chilean peso and argentinian peso and so on and so forth these currencies will go through real

The Brazilian real but also the Chilean.

Peso and Argentinian peso and so on and so forth.

These currencies will go through.

Real simple.

Speaker 3: the actual dollar. So we always had a buffer in the past.

The actual dollar so we always had a buffer in the past.

To.

Speaker 3: be able to deal with adverse effects coming from RWA or from a tax credit. So what was the decision that we then took?

Be able to deal with adverse effects coming from <unk> or from a tax credit. So what was the decision that we then took.

Okay.

Speaker 3: It's difficult to manage a capital index for the bank because that's where you're going to generate value for the bank and that with a...

It's difficult to manage a capital index for the bank, because thats, where youre going to generate value for the bank.

With.

Speaker 3: a point that you can't control. So you can have your risk appetite set by the board and you may lose opportunities to grow the bank or have mergers and acquisitions and whatever it be.

Okay.

Point that you can control.

So you can have your risk appetite.

And you may lose opportunities to grow the bank or have mergers and acquisitions and whatever it is.

And you may lose that flexibility because the.

Speaker 3: And you may lose that flexibility because the capital index is volatile. We can't control it.

Capital Index is volatile they can't control it.

We lost 40 Glen and the.

Speaker 3: We lost 40 points in the tier 1 capital index. 140 points is 14 billion in profit that we need to generate to recompose this capital. So this is substantial figures. So what is the decision that we then took?

Tier one.

Capital Index 140.

<unk> 14 billion in profit that we need to generate to recompose. This capital. So this is substantial figures.

What was the decision that we then took.

Speaker 3: So, ending overhead, cost of opportunity, and then good international practices.

So.

Ending overhead cost of opportunity and then good international practices.

We'll look at other multinational banks and they hedged capital index and in Brazil, we have the cost of opportunity due to the interest rates.

Speaker 3: We'll look at other multinational banks and the hedge capital index. And in Brazil we have the cost of opportunity due to the interest rate.

Speaker 3: We had a 2 billion estimate because of the increase in interest rates that we can see.

We.

We had to build an estimate because of the increase in interest rates that we can see.

Speaker 3: and the normalization of the interest rate, it could be a lower cost, but the flip side of the coin is very important because we have margin with the market being exchanged for margin of the client and I think this is the pivotal point because if there is any devaluation in FX rate then this is possible because it is an election year.

And the normalization of interest rates could be a lower cost, but the flip side of the claim is very important because we have margin with the market in exchange for margins with the client and I think this is the pivotal point because if there is any devaluation.

FX rate and this is possible because it is an election year.

Then.

Speaker 3: then that is one point. And the bank has the ability to generate capital and results that will allow the bank to grow and grow our wallet. And with that, we can work with a lower risk appetite than the current one, which will allow us then to leverage the bank and generate new businesses and to have other operations, associations, acquisitions, and mergers, for example. So the flip side of the coin.

That is one point and the bank has the ability to generate capital and.

The results that will allow the bank to grow and grow well.

And with that we can work with a lower risk appetite than the current one which will allow us to leverage the bank can generate new businesses and to have the operations associations acquisitions Amendment legislation. So the flip side of the claim.

Speaker 3: will generate more value for shareholders, it will reduce the level of uncertainty and it will allow the bank to operate with more leverage and also to generate more value as you can penetrate the current buffers. So I think at the end of the day this is quite positive and we wanted to be very transparent around the cost of opportunity. About $2 billion is what we said, it could be a little bit more or a little bit less, give or take.

We will generate more value for shareholders. It will reduce the level of uncertainty and it will allow the bank to operate with more leverage and also to generate more value.

As you can.

Penetrates the current buffers. So I think at the end of the day. This is a quite positive and we wanted to be very transparent around the cost of opportunity about $2 billion is what we said it could be a little bit more a little bit less give or take.

Speaker 8: But from a value creation for the shareholder perspective, I think we have a right decision here. It is a hedging strategy, and these can change in the course of time. But we want to keep this level of capital hedged, especially due to uncertainties that might crop up. Thank you, Milton. Thank you, Gustavo. And we're going to go to the next question. We have many coming up.

That floor.

A.

Value creation for the shareholder perspective, I think we have a right decision here it is a hedging strategy.

<unk> strategy and does.

These can change the course of time, but we want to keep this level of capital hedged, especially due to uncertainties that might crop up.

Milton Thank you Stefan and we're going to go to the next question, we have many coming up.

We have Thiago Batista from UBS.

Speaker 9: Congratulations on your results. The Central Bank approved a project recently.

Yeah.

Congratulations on your results.

Hum.

Central Bank approved.

Project recently.

Mhm.

Yeah.

Speaker 3: There will be credit operations that will be carried out through PICS transfers. How will that affect credit?

There'll be credit operations there'll be carried out through picks.

Transfers.

How will that affect credit.

Speaker 3: And what impact will that decision have on the market? Thank you, Tiago.

And what impact will that decision has on the market.

Thank you Thiago.

It's great to see.

Okay.

Speaker 3: fixed credit is still a concept.

Fixed credit.

A concept.

Speaker 3: So, we don't yet know the details of how that's going to be working.

So we don't yet know the details of how that's going to be working.

Speaker 3: Our expectation is that by the end of the year there should be more clarity on it. So there is a time period that is important for more definitions. But I think the crucial point here is that the PICS operations have come to stay. We have really embraced it from the start. So we don't swim against the curtain really.

Our expectation is that by the end of the year there should be more clarity on that so there is a time period that is important for more definitions, but I think the crucial point here is that the picks operations has come to stay we have really embraced it from the start so we don't want people swimming against the current really.

And.

Speaker 3: We prioritize fakes on all of our channels.

We prioritize it takes on all of our channels.

Speaker 3: We have about 20% market share with payments and transfers.

Yeah.

We have about 20% market share.

Payments.

Centuries.

And.

Speaker 3: We really penetrated our client base with that. And PIX has become a key product for whatever client that wants to make transfers to an individual or corporation. And we really want to embrace the opportunities however we can.

We believe penetrated our client base and picks has become a key product for.

Whatever client that wants to make.

Answers to a an individual or corporations and we really went to embrace the.

Opportunities however, we can.

Awesome.

Speaker 6: Our vision is last lifetime value, creation of value in the long run, proximity with our customers and delighting them.

Our vision is last lifetime value creation of value in the long run proximity with our customers and delighting them. So.

To some extent, we have to give up on some fees.

Speaker 6: to some extent, we have to give up on some fees to use the PICS. We'll do that. We've done that in the past in the guidelines for 2022. Everything that you see in...

He is the banks will do that we've done in the past and the guidelines for 2020 to everything that you see.

In income.

Speaker 6: income and revenue already includes PIX and since we are quite careful in terms of payment as a whole we also think that PIX will have an important role. We don't know exactly how that's going to happen but anything that's relevant for the market, relevant for customers, we want to be in the leading edge of that and that is our purpose. I'm not able to give you many details maybe in the next few quarters but the fact that it was chosen at its sandbox.

Income and revenue already includes pigs, and since we are quite careful in terms of payment as a whole. We also think that it takes it will have an important role we don't know exactly how that's going to happen, but anything thats relevant for the market relevant for our customers, we want to be in the leading edge of that and that is.

Our purpose is not able to give you any details maybe in the.

Next few quarters, but the fact that it was chosen to the sandbox. It shows that we're open to it and that we want to challenge ourselves and we want to be disruptive whenever we need to.

Speaker 6: It shows that we're open to it and that we want to challenge ourselves and we want to be disruptive whenever we need to.

Speaker 5: It's better for us to advance quickly than waiting for the market to do it. And once again, if it's good for the customer, it has to be good for the bank. That's the core of our thinking. Thank you. And next question from New York, Mario Pierre from Bank of America. Hi, Mario. Hi. Hi.

So look if you guys put a little bit of Cabo.

Better for us to advance quickly than waiting for the market to do it and once again if it is good for the customer it has to be good for the bank. That's the core of our thinking.

And next question from New York, Mario Pierre from Bank of America.

Hi, Mario.

Hi can you hear me yes.

Got it.

Speaker 6: Thanks. Thanks for the opportunity and congratulations on the results.

Thanks, Thanks for the opportunity and congratulations on the results.

Speaker 6: My question is about XP. You have to buy XP stocks at a price that seems to be attractive. I want to understand your strategy and when you are going to make the purchase and what you are going to do with these stocks.

Question is about <unk>.

You have to buy X b stocks at a price that seems to be attractive I wanted to understand your strategy and how youre going when youre going to make the purchase and what youre going to do with the stocks.

Speaker 6: Hi Mario, and thanks for your question. Nice to see you again.

Hi, Mario and thanks for your question.

Nice to see you again.

You bet.

Speaker 6: Well, you're quite familiar with the process. This is a purchase and sale process that was negotiated back in 2017 when we made a transaction with XP. And we were waiting for two things. First, the regulator's approval, and that was already approved by the Central Bank of Brazil. We still need some minor adjustments, some more formalities. But the main thing was to wait for the 2020 results. As you know, we negotiated.

Oh, you are quite familiar with the process. This is a purchase and sale process that was negotiated back into 2017, when we made that transaction with <unk> and we were waiting for two things first the regulator's approval and that was already approved by the Central Bank of Brazil, we still need some minor adjustment.

And some more formalities, but the main thing was.

Wait for the 2020 results as you know we negotiated a 12, 5% purchase and now after the capital increases we're talking about 11.

Speaker 6: 12.5% purchase and now, after the capital increases, we're talking about 11.38% of XP. And we negotiated 19 times the profit of 21. And the results were published this week, based on which we are now...

11, 38% of XP and renegotiated 19 times I think profit of 21 and the results were published this week based on which we are now calculating the amounts with them the exact amounts and how to reach price to formalize that in the next few months. So we expect.

Speaker 6: calculating the amounts with them, the exact amounts and how to reach a price, to formalize that in the next few months. So we expect that in the upcoming 30 or 60 more days, we'll be able to finish the transaction. So from a process perspective and approval perspective, we're all set. And naturally, given the size of the operation, it's a non-strategic strategic operation, and the bank...

And the upcoming 30 or 60 more days, we'll be able to finish the transaction. So from a process perspective, an approval perspective, we're all set and naturally given the size of the operation, It's a non strategic strategic operation and the bank.

<unk> made the decision not to control the spinoff and delivered to shareholders. We first want to complete the purchase.

Speaker 6: made the decision not to control the spin-off and deliver it to shareholders. We first want to complete the purchase just so that afterwards we can talk about the next steps.

So that afterwards, we can talk about the next steps.

Right.

Speaker 6: So that is our focus, and then only we'll discuss the next steps.

So that is our focus and then only we will discuss the next steps.

Got it.

Thank you Milton.

Yeah.

Okay.

People do that.

Whatever language.

Speaker 10: If you want to listen to the Q&A session today, if you want to listen in English, please click the American flag. If you want to listen in Portuguese, the Brazilian flag. Or if you want to listen to the original audio, just click the button. So, Jeff, welcome.

Listen to the Q&A session. Today, if you are in a listen in English. Please click the American flag, if you Wanna listen Portuguese Brazilian flag or if you are in a listen to original audio just click the button.

So Jeff Jeff welcome.

Hello.

Thanks very much.

Good question.

Speaker 11: you can hear me okay. The outlook for

Okay.

Yes.

The outlook.

Speaker 11: financial margins with clients point to a bit more growth than you're seeing in the loan portfolio. Can you talk about the moving pieces that go into that in terms of make

The financial margin.

Great.

In the loan portfolio can you talk about the moving pieces.

Does that go into that at all.

Nick.

Right.

Speaker 11: competition, interest rates, what's driving that stronger growth in financial margin than you're expecting in the loan book.

Competition interest rate.

That.

Right.

Yes.

Loan book.

Thank you Jeff.

Speaker 5: Good to see you again. Thank you for your question. But just to give a quick view.

Well again, thank you for your question, but just to give a quick view.

Speaker 5: We had a very strong year in terms of financial margin with clients, as you know. The last quarter was very strong. And as we've been growing the portfolio in a very healthy pace and building a very good portfolio, we believe that we have a strong year next year for financial margins with clients. And the reason why is because this portfolio has been built in the last two decades.

We had a very strong year in terms of our financial margin with clients as you know the last quarter was very strong.

And as we've been growing the portfolio in a very.

Healthy pace.

Building a very good value, we believe that we have a stronger year next year.

For financial margins with clients and the reason why is because this portfolio has been built.

In the last two to three to four months. So there was an inertia.

The effects of this portfolio, having a full year in 2022. So this is one important component.

The other one is the interest rate you know, we're working capital as you know it has impact not only in the working capital, but also in the investments that we have from our clients. So it has positive impact so combining those effects the portfolio that we have been building plus the impact on investments plus.

Speaker 5: the investments that we have from our clients. So it has positive impact. So combining those effects favour to follow that...

The investment of our.

Speaker 5: our working capital, that's the reason why we believe we can grow the financial margin 20% round numbers in 2022. So this is basically the reason. If you only take the accrual that we already have, this will take us 13% without any effort, additional effort.

Our working capital so that's the reason why.

We believe we can grow the financial margin.

20%.

Round numbers in 2022 so this is basically the reason.

If you only.

Take the accrual that we already have this will take us 13% without any airport additional effort, but we still will be building the portfolio in 2022.

Speaker 5: But we still will be building the portfolio in 2022 in a different pace from what we did in 2021. So we may go under in terms of portfolio growth as you can see in the guidance.

Current pace from all week.

During 2021, so we may.

Go under in terms of portfolio growth as you can see in the guidance, but we felt very good mix as well so we see the retail portfolio growing we.

Speaker 5: but with a very good mix as well. So we see the retail portfolio growing. We see the wholesale portfolio growing in a good pace, but it will all depend on how that capital market will evolve.

We see the wholesale portfolio growing at a good pace, but it will all depends on how that capital markets will evolve.

Speaker 5: in 2022, but on the retail side, we still see a lot of opportunity. In the other hand, we've been building the portfolio very in guaranteed product.

2022, but on the retail side, we still see a lot of opportunities and in the other hand, we've been building the portfolio very.

In guaranteed product.

Speaker 5: more than in clean products, but we saw in the last couple of months important recover on the clean portfolio, which helps us as well with the margin with clients. So this is basically how we believe we should achieve that in 2021.

More than <unk> clean products, but we saw in the last couple of months important recover only clean portfolio, which helps us as well with the margin with clients. So this is basically how we believe we should achieve that in 2022.

Speaker 10: Thanks, Muthu. And now that we all warm up in English, let's take the last question from Chitula Barta from Goldman Sachs.

Thanks.

We all warm up in English, let's take next question from Chitra Lavazza from Goldman Sachs.

<unk> welcome.

Speaker 3: Good morning, Milton and Renato. Thank you for taking my question also. My question is a little bit of a follow-up, but I guess in terms of your loan growth, in terms of your expectations for growth this year, particularly in Brazil, growing into double digits to low teens.

Good morning.

So thank you for taking my question also.

My question, a little bit of a follow up but I guess in terms of your loan growth in terms of your expectations for growth this year, particularly.

In Brazil growing into double digits.

Low teens.

Speaker 3: I know it's a little bit of a deceleration from 2021, but how prudent or how comfortable do you feel with that growth, just given the deteriorating macro, right, with GDP, you know, potential slight recession, you know, best maybe growing 1% or so?

I know, it's a little bit of a deceleration from 2021.

Food into how comfortable do you feel with that growth just given the deteriorating macro rate with GDP.

Slight recession.

Best Baby growing 1% or so.

Speaker 3: So, and you indicate that the provisions will be rising. So, you know, how comfortable are you going at that pace? Can you give a little bit more color in terms of kind of the segment?

So and you indicate that the provisions will be rising so how comfortable are you growing at that pace can you give a little bit more color in terms of kind of the segment.

Speaker 3: Like what kind of growth that implies for corporate, for retail, and why you think you can grow so strongly with a weaker macro. Thank you.

Like what kind of growth that implies the core grades through retail and why you think you can go so strongly with.

A weaker macro.

Speaker 5: Hi Tito, good to see you again, thank you for your question. So basically what we see is that there is still opportunity to grow the portfolio. It's important, we're talking about we have minus half percent, but let's say that it's a zero GDP for 2022. I think to compare with the portfolio growth, we have to look at the nominal GDP.

Hi, Chi too good to see you what Graham. Thank you for your question.

So basically what we see is that there is still opportunity to grow the portfolio. It's important we're talking about we have minus 5%, but let's say that it's a zero GDP for.

For 2022, I think to compare with the portfolio growth we have to look at the nominal GDP.

Speaker 5: And when we take inflation in consideration, we are talking about 7 to 8% nominal GDP for 2022, and a portfolio that should grow around 10, 12%. So there is an important inflationary process in Brazil, and this is relevant for the credit and the portfolio growth.

When do we think inflation in consideration that we are talking about 7% to 8% nominal GDP for 2022 in our portfolio that should grow around 10, 12%. So there was a important inflationary process in Brazil, and this is relevant for the credit in the portfolio growth. So we are very comfortable with the pace of course, we have.

Speaker 5: So we are very comfortable with the pace. Of course, we have a very relevant way and technology to decide about credit. We have a lot of information about the clients. We are taking the polls all the time. So if we feel more comfortable, we will deliver more. And if we feel we have to slow down, we will do that.

A very relevant.

Relevant way and tech knowledge to.

Decided about granted we have a lot of information about the clients. We are taking the pulls all the time. So if a few more kind of corporate but we will deliver more and if we feel we have to slow down we will do that so basically this is our best expectation talking though we still believe there is opportunity there is.

Speaker 5: So basically this is our best expectation talking now.

Speaker 5: Believe there is opportunity. There is. This portufolio that was already built in 2021 has a natural inertia for 2022, but we are confident- in a low pace, of course, lower pace than what we did in thousand and 21- that we should perceive a healthy portufolio growth.

This portfolio that was already built in 2021 has a metro inertia for 2022, but we are confident.

Slow pace of course, lower based on what we did in 2021 that we should perceive healthy portfolio growth in.

Speaker 5: In the other hand, I know your question has more to do with the pace of growing portfolio, but talking about the cost of credit, I think it's important to highlight

In the other hand I know your question has more to do with the pace of growing portfolio, but talking about the cost of credit I think it's important to highlight that when we look for 2022, we do believe as we have implied in our cost of credit that this will grow we are talking about nominal base. So it's important to talk about being.

Speaker 5: that when we look for 2022, we do believe, as we have implied in our cost of credit, that this will grow. We are talking about nominal base, so it's important to talk about the index.

Thanks.

Speaker 5: and our cost of credit in relation to the portfolio.

And our cost of credit in relation to the portfolio. We believe that we should grow but is still behind what we perceived.

Speaker 5: that we should grow but is still behind what we perceive.

Speaker 5: in the pre-crisis, in the pre-pandemia. So, we still believe we're going to get to a very healthy relation in cost of credit and portfolio. This is important. Second, we are diminishing the pace.

Pre crisis, and they're prepaying the email so we still believe we're going to get to a very healthy relationship and cost of credit and portfolio. This is important second we are diminishing the pace. So it hasnt infecting the index and even though we believe we should have a healthy portfolio by the end of the year in <unk>.

Speaker 5: So, it has an impact in the index and even though we believe we should have a healthy portfolio by the end of the year. In terms of coverage, the same, we believe we should keep a healthy level of coverage.

Comes off coverage. The same we believe we should keep a healthy level of coverage and also.

Speaker 5: The delinquency ratio should increase as we have been saying You might remember that in the last quarter. I said that we would be seeing a Growth in our delinquency ratio it happened on the personal portfolios this quarter But we still believe we will see a delinquency ratio coming up, but it will be stabilized By the year end this is our best projection

The delinquency ratio should increase as we have been saying.

Remember that in the last quarter I said that we would be seen I mean.

Our growth in our delinquency ratio it happened on the personal portfolios this quarter, but we still believe wuxi delinquency ratio coring up but it will be stabilized.

The year and this is our best protection right now so we still feel very comfortable about the dynamic of risk return of those portfolios and.

Speaker 5: right now. So we still feel very comfortable about the dynamic of risk return of those portfolios.

Speaker 5: And also we've been engaging with the clients, we've been increasing the lifetime value of the clients. So the year doesn't end, the bank in 2022, so we are looking about building a portfolio in the long term and enhancing the relationship and the lifetime value with the clients that we have and the new ones.

Also we've been engaging with the clients we've been more.

Increasing the lifetime value of the client so the year doesn't have the bank in 2022. So we are looking about building a portfolio in the long term and enhancing the relationship and the relationship and their lifetime value with the clients that we have and the new ones of course.

Thanks Victor.

Then a prospect with whom to as Youre filling Luther King goes up it will take put together Walter.

The next question, we go back to Portugal is enriching their final from center there how are you.

Yes.

Good. Thank you thanks for the opportunity and congratulations the format of the meeting is great.

Im sorry going back to the subjects with lots of people talking about credit but.

I understand about the initial inertia, but okay. It was probably one of the first banks too.

Speaker 6: first banks to make negative GDP projections for 2022 minus 0.5. And the third cue, the message you sent was a sort of a warning message that there was a challenging scenario and still you delivered a number that was much higher than the expectations and the guidance for 2022.

Negative GDP projections for 2020 to minus <unk> five in the third Q. The message is sent out was a sort of a warning message that there was a challenging scenario and still you delivered the number that was much higher than the <unk>.

Expectations.

And the guidance for 2022.

Is really.

Way above our <unk>.

<unk>.

When I look at the guidance that you.

Speaker 6: published, it's not really aligned with this message of

Published its not really aligns with this message of caution for 2022, and if you look at the level of accruals. It's a very strong growth and maybe we should interpret that yes, it's risky, but we are able to monitor our risk and we will run greater risks for better returns and maybe that's why.

Speaker 6: caution for 2022. And if you look at the level of accruals, it's a very strong growth. And maybe we should interpret that, yes, it's risky, but we're able to monitor our risk and we will run greater risks for better returns. And maybe that's why the accrual is so high.

The accrual is so high.

Speaker 6: When you look at the Pepper Buns survey that was talking about 6.5% in credit growth for 2022, it seems to be a great misalignment between what some players are seeing for 2022 in terms of risk. And Itau, I thought that Itau was being more conservative, but the guidance, which is very good by the way, had an impact on it looks in terms of the goalie.

When you look at the <unk> survey that was talking about six 5% in credit growth for 2022, it seems to me to.

To be a great misalignment between what some players are seeing before turning to the two in terms of risk and <unk> I thought that <unk> was being more conservative, but the guidance, which is very good by the way.

Ed.

Speaker 6: mostly says that we're able to manage our risks and returns. I know that you talked extensively about that but maybe you can shed a bit more light on well is it I was seeing something different in the market is this scenario really dangerous? Are you really being cautious? Maybe you could dive a bit deeper into why you're considering this growth and the risk that you're taking.

Most of that says that we're able to manage our risks and returns I know that you've talked extensively about that but maybe you can shed a bit more light on.

Is it as I was saying something.

Difference in the market is this scenario really dangerous.

Are you really being cautious maybe you could dive a bit.

Deeper into.

Why you are considering this growth and the risk that you're taking.

And the and its impacts on the risk and the accrual. Thank you.

Speaker 6: and its impacts on the risk and the accrual. Thank you.

Speaker 6: Thanks, Enrique. Nice to see you again. I think it's your question is important in clarifying some aspects. So first...

And Ricky nice to see you again I think your question is important in clarifying some aspects of it first.

Speaker 6: I think that everything depends on the comparisons that you make and some aspects that are extremely relevant. The first one is that 2021 and 2022 are two very difficult years in terms of...

I think that everything depends on the comparisons that you make some aspects that are extremely relevant. The first one is that 2021 and 22 are two very difficult years in terms of comparability. When you talk about a regular fiscal years in 2021 we had a fish.

Speaker 6: comparability when you talk about a regular fiscal year. In 2021, we had a fiscal stimulus and

Fiscal stimulus.

Several other stimuli and depend then it came in 2020 and people stopped consuming so less consumption more stimulus the stimulus checks incentives for companies and low interest rates the capacity people's capacity to repaint.

Speaker 6: Several other stimuli and the pandemic came in 2020 and people stopped consuming. So less consumption, more stimulus, the stimulus checks.

Speaker 6: incentives for companies and low interest rates, the capacity, people's capacity to repay increased a lot. If I told you that we imagined that that would happen, that's not true.

Increased a lot. So if I told you that we imagined that would happen that's not true.

Speaker 6: that we would see in 2021 such an important drop in the delinquency rates. In 2020, we did a reasonable volume of anticipated accruals or complementary accruals which have been untouched so far. We were expecting a more adverse scenario that did not happen in 2020. In 2021, it's kind of a continuity of that scenario.

That we would see in 2021, such an important job and the delinquency rates and 2020.

We did a reasonable volume of anticipated accruals or a complementary accruals, which have been touched so far.

We're expecting a more adverse scenario that did not happen in 2020 and 2021 it's kind of a continuity.

Of that scenario.

<unk>.

Speaker 6: in 2020 there was less credit.

In 2020, there was less credit.

Speaker 6: hired, and we also saw that the delinquency rates were much lower. If we look at 2021 and 2022, that's not a good metric. That's why we always go back to 2019, to get a better perspective. And the second aspect is that we see a gradual normalization of delinquency. The last quarter, if you look at our numbers...

And.

We also saw that the delinquency rates were much lower if we look at San Antonio one in Sydney to Thats not a good metric.

That's why we always go back to 2019 to get a better perspective, and the second aspect is that we see.

Nor a gradual normalization of delinquency of the last quarter. If you look at your numbers.

Speaker 6: you'll see that the portfolios are well behaved even though we see delinquency and...

Youll see that the portfolios are well behaved, even though we see.

Delinquency and.

Speaker 6: of 1590 and over 90 in natural persons. I made this comment and I'll make it again. We did not.

15, 90, and over 90 and natural persons.

Made this comment and I'll make it again, we did not sell a portfolio. This does not say that we're not going to do it but the fact is we haven't been using that lever, which does have its effects, but it's the biggest effects are in the delinquency rates our delinquency rates are quite mature and that is import.

Speaker 6: sell a portfolio. This does not say that we're not going to do it, but the fact is we haven't been using that lever, which does have its effects, but its biggest effects are in the delinquency rates. Our delinquency rates are quite pure and that is important. There's another aspect which was that we had a flexibilized portfolio that was relevant in 2020 in our Travesiya program and the way we dealt with our customers by...

There is another aspect, which was that we had a flexible is the portfolio that was relevant in 2020 in our <unk> program and the way we dealt with.

Customers buy.

Speaker 6: offering them installments that would be possible for them to play is really good.

Offering them installments.

It would be possible for them to play is a really.

What is really good.

Speaker 6: And the delinquency rates are really good in that portfolio. We reduced the delinquency rates by 42%. We had over 54 billion in flexibilized portfolio and we're talking about 31 billion with very healthy numbers. And the clean portfolio, most of it has been paid. And what remains in the end are the guaranteed...

And the delinquency rates are a really good interest in that portfolio, we reduced the delinquency rates by 42% that we had over $40 54 billion.

In flexible why is the portfolio and we're talking about 31 billion with very healthy numbers and the clean portfolio. Most of it has been paid and what remains.

And are the guarantees.

Speaker 6: portfolios that have a good LGD, a good recovery. So if we look at the...

Portfolios that have a.

Good LGD a good recovery.

Yeah.

So if we look at the next year.

We.

Speaker 6: grew the credit portfolio of the bank by more than 40% in the last three years. And that's natural. We work with an expected loss model and that anticipates the provisions in the cycle and the accrual comes with time. So there's a mismatch in the timeline. The expected loss is less but the margins increase and that's the phenomenon that we're seeing in 2022.

Through the credit portfolio of the bank by more than 40% in the last three years.

We work with an expected loss model that anticipates the provisions in the cycle and the accrual.

With time, so there is a mismatch and the timeline for the expected loss is less but the margins increase and thats. The phenomenon that we're seeing in 2022.

Speaker 6: and I was, yes, being cautious and we're still being cautious. This is our best expectation for the guidance. As you know, we're always going to focus on the best results for the bank and not simply turn a blind eye on our expectations if we need to make the best decisions for the bank.

And.

I was just being cautious and we're still being cautious. This is our best expectation for the guidance as you know we're always going to focus on the best results for the bank and not simply turn a blind eye on our expectations.

We need to make.

Speaker 6: expectation adjustments will do that during the year. That's not our intention. In 2021, for instance, we reduced the credit cost.

Expectation adjustments, we'll do that during the year, that's not our intention in 2021 for instance, we reduced the credit costs and we temporarily we adjusted the.

Speaker 6: and we adjusted the credit lines. So if there are adjustments, we will make them. We expect to deliver an ROI of around 20%. And as a reminder, and this is central to our guidance, there is no expectation of material consumption of complimentary accruals, which is relevant. You're seeing a growth of around 5 to 6 billion without using any complimentary accrual. So I think the balance is...

Credit lines. So if there are adjustments, we will make them or will we expect to deliver an ROI of around 20% and as a reminder, and this is central to our guidance. There is no expectation of material consumption.

Implemented accruals, which is relevant youre seeing growth growth of around five to 6 billion without using any complementary accruals. So I think the balances.

Speaker 6: quite good, and we have complimentary accruals, and if we have a harder and more difficult credit cycle or greater uncertainties, we'll always have...

Right, good and we have complementary accruals and if we have a.

Order, a more difficult credit cycle or greater uncertainties will always have.

Speaker 6: leeway to deal with that.

Leeway to deal with that I think the risk.

Speaker 6: risk and return of the portfolios are also quite healthy. It's just natural. I think your question is legitimate, but there is a flip side to the coin. The interest rates are increasing, which also results in increased margins for customers.

Risks and return of the portfolios are also quite healthy. It's just natural I think your question is legitimate but there is a flip side to the point of the interest rates are increasing which also results in increased margins for customers and that's why you see these results and if you look at the portfolio growth.

Speaker 6: And that's why you see these results. And if you look at the portfolio growing in Brazil between 11%, 12%, 13% for a nominal GDP of 8% or 9%, that doesn't seem so relevant. And these are products and portfolios that we have.

In Brazil between 11.

So all of 13% for a nominal GDP of eight or nine but that doesn't seem so relevant and these are products and portfolios that we have.

Speaker 6: mastery over and customers that we know well. But again, the future is uncertain, so we will be cautious if necessary during 2022. Thank you, Milton.

Mastery over and customers that we know well, but again the future is uncertain. So we will be.

Be cautious if necessary during 2022.

Thank you Milton.

Lee.

It's gonna be fortunate in English.

Okay.

Yes.

Okay.

It will go.

Good morning.

Speaker 6: I like the meeting's new format, but I'll ask my question in English.

Unlike the meetings new formats, but I'll ask my question in English.

Can you just mentioned.

The view that it can generate around 20%.

Speaker 3: the view that that it can generate around 20% ROE on a sustainable basis. And in this context, I kind of wanted to refer to the slide. I like that you guys publish every quarter on the business model. I guess it's on slide 19 this time. And Itau shows the value creation.

No.

Stable basis and in this context I kind of wanted to refer to the slide I like that you guys publish every quarter on the business model I guess, it's on slide 19. This time.

<unk> shows the value creation.

Speaker 3: of 9.3 billion rise in 2021. And almost 100 percent or 99 percent of that in the year was generated in the insurance and service segment.

$9 3 billion Reais in 2021, and almost 100% or 99% of that in the year was generated in the insurance and services segment.

Speaker 3: And that segment had a return on regulatory capital of 32.5% for the year. And there was a small value disruption, I guess I would call it, from the credit portfolio. So how should we and investors think about this sustainable ROE of 20% given this view on returns in the business segments?

And that segment had a return on regulatory capital.

32, 5% for the year.

And there was a small.

Value disruption I guess I would call.

From the credit portfolio, so how should we and investors think about this sustainable ROE of 20% given this view.

Returns in the business segments.

Thank you. Thank you hi diesel <unk> answer in English, even though I know your Portuguese maybe better than my English but.

Speaker 5: Good to see you, I'll answer in English even though I know your Portuguese may be better than my English.

Speaker 5: What I would tell here about this business model, the way we provide you the information.

What I would tell here about this.

Modern business our business model the way, we provide you with the information it's very important to highlight that you are seeing the year base. So it's true when you look from a credit perspective, we didn't have any capital or value creation. When you consider the hikes, we had in the cost of capital after bank. So all the.

Speaker 5: it's very important to highlight that you are seeing the year base.

Speaker 5: So it's true when you look from a credit perspective, we didn't have any capital or value creation when you consider the hikes we had and the cost of capital of the bank.

Speaker 5: So all the value creation that we have came from service, came from other revenues basically as you were saying.

Value creation that we have came from service came from other revenues basically as you were saying, but when you look from the last quarter. We saw positive trained on credit so generating failure. So you're looking at full year set we believe that for 2022, we may be able.

Speaker 5: But when you look from the last quarter, we saw positive trend on the credit. So generating value.

Speaker 5: So you are looking at full year set. We believe that for 2022, we may be able to achieve a value creation on credit as well but we are talking about 14. Cost of credit can be a little bit higher, a little bit lower. So when we look to that, we are delivering a very good pace and growth. But this cost, and even if we generate a little bit of value creation for the shareholders, has a very important back on what we see.

To achieve our value creation on credit as well, but we are talking about 14 cost of credit can be a little bit higher a little bit lower.

So when we look to that we are delivering a very good pace and growth, but these cost.

And even if we generate a little bit of value creation for the shareholders has a very important back on what we see on the service side. So we cannot look for credit Standalone and forget but this is what brings reciprocity from our clients via the penetration of the relationship so Craig.

Speaker 5: So we cannot look for credit standalone and forget that this is what brings reciprocity from our clients, deep penetration of the relationship. So credit is a very good lever and relevant lever for that. So we believe that we may have any value on credit for 2022 for the reasons I just mentioned. The last quarter was positive.

It's a very good lever and relevant lever for that so we believe that we may have any fairly won't credit for 2022 for the reasons I just mentioned the last quarter was positive.

Speaker 5: we may see this growing interest rates that will help somehow the returns that we have on that.

We may see this growing interest rates that will have helped somehow.

The returns that we have on that but it's very important lever for the other lines, especially for services in general the reciprocity cash management FX derivatives and all the other products investment banking and asset management that we do with our clients in all segments. So we are pretty much comfortable with that.

Speaker 5: but it's very important lever for the other lines, especially for services in general, the reciprocity, cash management effects, derivatives, and all the other products, investment banking, asset management that we do with our clients.

Speaker 5: in all segments so we are pretty much comfortable with that.

Thanks, Milton General philosophy going into next.

Speaker 10: Thanks Milton, I'll see you in the next question.

Next question Marci.

Marcelo Telles from credit Suisse.

How would you guys sell into.

Speaker 8: Howdy, Marcelo. Hello. Bernardo. Hello. Marcelo.

Hello.

Hello.

Hello.

Brazil, Brazil.

Speaker 8: Thank you for the presentation. Thank you for this format as well. Most of my questions were already answered, but I already like to take the advantage here to ask about your strategy as an investment platform. You acquired EDR as you mentioned, right?

For the.

Well presentation. Thank you for this format as well.

Most of my questions were already answered but I.

Alright.

The advantage here too.

Ask about your strategy as an investment platform that you acquired <unk> you mentioned.

Right.

And then and you want to leverage.

Speaker 8: anyone to leverage on technology and

On technology and.

I bought a farm.

Speaker 8: you want to use the platform to plug the IFAs. So, I would like to hear from you what that means exactly. Is it transformational for ITEL and...

You want to use the platform.

Okay.

Face significant.

So I would like to hear from you what that means exactly is it transformational for <unk>.

Speaker 8: how you see the possibilities of distributing your investment platform products, do you want to create an XP within Intel, how can we think about your investment products and strategies really? Thank you.

Hi team.

Possibilities.

Distributing your investment platform.

Do you want to create an exit speed within Intel how can we think about your investment products I don't know Marcello percentages.

Thank you very helpful. Thank you.

Speaker 8: Thank you Marcelo, it's great to see you again and thank you for your question.

So it's great to see you again and thank you for your question.

Supreme Court.

Speaker 8: Acquiring EJL has a very important role and our strategy to complement our environment at the bank. And we have very important information to share with you. In private banking, we had an increase of 2% percentage points in the market share. We grew more in the market and we got 2 market share points.

Acquiring AGL has a very important role and I'll start with <unk>.

<unk>.

Our environment at the bank and we have very important information to share it with you.

Private banking, we had an increase of 2%.

Percentage points and the market share we grew more than <unk> got two market share points to bring it up since what your market share in Boston, we have 30% market share we have the absolute for me.

Speaker 8: We have 30% market share, we have the absolute lead in this segment and we got market share and investment as well. So, there are always points coming in and out, but net we got market share 70% base approximately. So, we believe that our strategy is growing be it in the private or general public, general audience.

We will market trading lead in this segment and we got to get market share and investments as well. So there are always coming in and out but net net we got.

Mike showed a 70 basis approximately so I believe that.

<unk> is growing and the private or general.

General lighting being Thanksgiving.

Speaker 8: We plan to open 90 offices in the next 30 days.

Got it.

We plan to open 90 offices.

Speaker 8: but not autonomous, but our own offices with our registered staff. We expanded into 20 cities. We are present in 20 cities and we should grow and penetrate other 20 cities in the course of this year. So by the end of this year, we should have a substantial number of offices and branches 20, 30.

Not autonomous, but our own offices with our <unk>.

Registered staff, we expanded into 'twenty.

We are present in 20 cities and we should grow.

And penetrate at a <unk> series in the course of this year. So by the end of this year, we should have a substantial number of offices and branches 2030.

Speaker 8: and over 2,000 IFAs focusing on investment. We have over 400,000.

And over 2000 <unk>.

Focusing on investments we have over 400000.

Speaker 8: clients already using this new model, using the digital platform.

These clients already using this new model using the digital platform.

Speaker 8: getting support from us and Etou Personalité was the franchise for high income and the manager had that exclusive role to manage the relationship and so on. And now we have specialized the group further, which is what the IFA has mentioned, and they were working hand in hand with the managers.

Getting support from us.

Detailed personally Te.

The rest of the franchise.

In Canada, and the manager has exclusive rule to manage the relationship and so on and I know we have specialized.

Further which is.

As mentioned and they will work hand in hand.

The managers.

Speaker 8: giving support and advising our clients. This model has really been working well, we have migrated the portfolios and clients have really enjoyed this new model.

Giving support and advising clients. This model has really been when I boil it has migrated.

<unk>.

Some clients have really enjoy.

And Julien this new modular vessel.

Speaker 8: We're very satisfied and very happy with the strategy and how it's been orchestrated.

We're very satisfied and very happy with the strategy and how it's been orchestrated really want that happening.

Speaker 8: You heard from Constantine just now, himself and André have been coordinating this really well.

From Constantine just now himself Andrei has been included in this really well.

Speaker 8: So, ETL has a few major objectives. First, it is that it operates in some markets we don't.

So <unk> has a few major objectives.

It is.

Operating center markets retail.

Speaker 8: high-frequency trading, and traditional market operations, mainly. So this is an edge that we get from them. They have cutting-edge technology platform, better than ours, so that's another point. And a second point concerning EDL is the human capital. So Nielsen...

High frequency trading.

No market operations. So this is an edge that we get from them they have some cutting edge.

But also technology platform better than I. So that's another language in our SEC.

So concerning E mail is the human capital.

So Nielsen and the whole team.

Speaker 8: They are top-notch professionals with a wealth of experience.

Play.

Nutshell professionals with a well so.

Experience.

Speaker 8: and they bring in flexibility so that we can penetrate other markets to strengthen our value offer and also to allow us to develop our strategy if we understand we should go from our own offices to external autonomous offices as well. We are still a bit unclear around how this model is going to develop. It's moving more and more towards B to C.

And.

So bringing in flexibility so that we can penetrate other markets strengthen.

And also to allow us.

Develop our strategy.

We understand we should go from our own offices to external autonomous emphasis as well we are still.

Earlier around how this model is going to develop moving more and more towards BTC keeps appropriate skus.

Yeah.

Speaker 8: hiring their own teams and there could be some conflict between the own teams and autonomous teams and we're still making a decision around how to deal with this but with this platform we can plug in.

Hiring their own teams.

There could be some conflict between the teams and autonomous.

And we're still making a decision around how to.

It was all deal with this.

With this platform we can.

Plug in nuclear more easily our own south for autonomous teams.

Speaker 8: more easily our own staff or autonomous teams and clients. So this is a model we're still discussing.

And clients.

So this is a model we're still discussing.

Okay.

But too much clutter.

Speaker 8: and soon we should have more clarity on this matter. Thank you, Milton. Thank you, Telos. Domingos Falovina from J.P. Morgan. Welcome. Hello everyone. Good morning.

And soon we should have more clarity on this matter.

Milton.

Tell us.

Let me just follow up.

The Jpmorgan Domingos <unk> from JP Morgan.

Okay.

Hello, everyone. Good morning.

Uh huh.

Speaker 8: My question has to do with the PDD.

My question has to do with the PD <unk>.

Speaker 8: This initial assumption that you have no additional items, that will consume some of your provisions,

I just got so much finished.

Initial assumption that you have additional items to the company. So thanks Duane.

But it will be done that will consume some of your provisions.

Provisions.

Excellent.

Jim.

Yes.

It was very positive and there is room for this high coverage.

Speaker 8: very positive and there's room for this high coverage. Maybe that has to do with high debt levels and then the bank is just going to cover this higher coverage till the end of 2022. What I'm trying to get at here is we see you allowing more this quarter.

Let's take that George.

Maybe that has to do with.

High debt levels.

And then the bank is just going to cover this higher coverage till the end of 2022, what I'm trying to get at here is when you.

Landfill formation, we see.

Allowing more this quarter.

No.

Speaker 8: Is this a new level of courage that we will probably see Ito working at? Or is it a temporary movement and there will be more room for net profit in 2023?

Is this a new level of coverage that we will probably see ito, where he can add.

Is it a.

Temporary movement and there'll be more room for net profit in 2023.

Speaker 8: Thank you for your question, Dominguez. Great to see you.

Thank you for your question Domingos, Great to see you pencil watch will start to show their shipping.

Speaker 8: This is a good point you've raised and I'll try and break it down.

This.

Good point, you raised and I'll try and break it down.

Truffles in 2021 we expect it to consume.

Speaker 8: In 2021, we expected to consume the complementary point. We already budgeted the year like that. What surprised us positively is how our portfolios behaved. And not only talking about flexible eyes.

Consume of the complementary point, we already budgeted the year like that.

Surprised us positively.

Our portfolio has behaved and not only talking about flexible lies.

Speaker 8: but also non-flexibilized portfolios, those who didn't need the Travis CEA program.

Foleys, but also non flexible lies.

Portfolio, those who didn't need the Travis Air program.

Speaker 8: So we reviewed the guidance, the credit cost in the course of the year, we felt very comfortable about that. And we reviewed the guidance down and...

So we reviewed the guidance for credit costs in the course of the year, we felt very comfortable about that.

We reviewed the guidance down.

We understood there was not the right moment to consume complementary provisions and when we compare that to previous years and we will look at the retail portfolio, we're still up.

Speaker 8: we understood there was not the right moment to consume complementary provisions. And when we compare that to previous years and we look at the retail portfolio, we're still operating on higher levels, which makes us very comfortable.

Operating on higher levels, which makes us very comfortable.

And we're also very comfortable looking at 2021, the risk return rates not tapping into the.

Speaker 8: And we're also very comfortable looking at 2021, the risk return rate not tapping into.

Speaker 8: the Complimentary Allowance provisions.

The complementary allowance revision checkout button.

Speaker 8: What happens is that as we work with unexpected losses, we will bring forward provisions and the NPL will come in. So, we had the NPL formation, 30% of that provisioned and we expect that to convert in the course of time.

What happens is that as we work with expected losses, we will bring forward provisions and the NPL.

We will come in so we had the NPL formation, it's about 30% of that provision and we expect that to convert in the course of time.

Okay.

Speaker 8: So, our expectation is that in the course of time, this should normalize, it should go down, and the NPL should come with time. And I'm looking at the retail portfolio. We don't manage the bank through NPL formation.

Yes.

Vacation is that in the course of time.

Normalized should go down and the NPL.

Kevin chime in I'm looking at.

Our retail portfolio.

Jamie manner.

Manage the bank to NPL formation.

<unk>.

Speaker 8: We use expected loss.

We used the unexpected loss of a copy.

It looks like last issue.

Speaker 8: And when you look at retail, and you know that as well as I do...

And when you look at retail and you know that as well as I do.

Speaker 8: we bring forward a lot of the provisions and the delinquency from major clients come in the course of time. So, the coverage consumption happens fast, which is what we saw one quarter ago, which I mentioned in the presentation.

We bring forward a lot of the provisions and the delinquency from major clients will come in the course of time, so the coverage consumption.

Having SaaS, which is what we saw both HOKA, one one points a year ago, which I mentioned.

Intentionally.

Speaker 8: This is a good indicator for us to have an idea of the coverage. Looking forward, if...

This is a good indicator for seven idea of coverage and we're looking forward.

The scenario plays out as is and if it goes down we will use it that make use of the complementary.

Speaker 8: the scenario plays out as is and if it goes down, we'll make use of the complementary provisions but it will depend on

Provisions, but it will depend on.

Speaker 8: Well, the scenario is a level of comfort, but the provisions were made for that. In 2022, as I said, we're not expecting to reduce the coverage levels.

Well the scenario is a level of comfort with the provisions were made for that in 2022 as I said, we're not expecting to reduce the coverage levels.

Speaker 5: We'll probably operate on the same line as we did in the past quarter.

Right.

We'll probably operate on the same line as we did in the past quarter.

Okay.

And as this scenario normalizes.

Speaker 8: we're likely to consume some of these provisions. So, it is possible that that may happen in 2022, but that's not our base scenario right now. Thank you, Milton.

We're likely to consume some of these provisions surface. It is possible that may happen in 2020, it may be in 2022, but that's not our base scenario right now.

Thank you Milton.

The last question from the analysts now comes from Hubert forgot here.

Speaker 8: The last question from the analyst now.

Good to be true thanks for attending our earnings call.

Yeah.

Speaker 12: Hola, buenos dias. Thank you for the call. It's nice to see you as well. My question was on the guidance. Very impressive, particularly, so I guess, given the tough macro conditions, so I was wondering if you could.

One of those yet.

Politically Tonight.

Well.

My question was on the guidance.

Barry.

Aggressive, particularly given the tough.

Macro conditions. So I was wondering if you could.

Give us some.

Speaker 12: Give us some color on how you feel that the macro could impact results. Is there anything in particular that would be, that you find concerning? And so as to not to sour the mood, is there anything that you feel you are being to conservative in terms of the guidance? Anything that you are particularly excited about? Thank you. Well, thank you.

Color on how you feel that the macro could impact.

Is there anything.

That would be concerning.

Similar to towers.

There anything that you feel you are being.

To consider that.

The guidance anything that you're.

Particularly excited about thank you.

Thank you Roberto good to see you gracias.

Speaker 5: So going to your first question, we still, as I was saying a little before, we're still constructive about the opportunity to grow the portfolio. We have to look at the GDP, of course, on a nominal basis, and this is very relevant.

So going to your first question.

We still as I will scream, a little before was to constructive about the opportunity to grow the portfolio.

We have to look at the GDP of course in a nominal basis and this is very relevant and of course, there was a mismatch in terms of timing on how the provisions are made and how the portfolio generates margin. So I think part of our warriors. We will be seen in 2022 has to do with the last two to three years in which we have been <unk>.

Speaker 5: And of course there is a mismatch in terms of timing on how the provisions are made and how the portfolio generates margin. So I think Parkball Warriors we will be seeing in 2022 has to do with the last two to three years in which we've been growing the portfolio. So this is the fifth consecutive year that we are going to portfolio in a very good risk return pace. So this is our...

The portfolio. So this is the fifth consecutive year that we are growing the portfolio in a very good risk return pace. So this is all review so we expect the cost of credit to grow as I was explaining a little a go.

Speaker 5: So we expect the cost of credit to grow, as I was explaining a little ago.

Speaker 5: for the reasons I said. So as I said in the very beginning, this is the best estimative that we can do right now. We'll be understanding how the year will evolve.

For the reasons I said, so as I said in the very beginning this.

This is the best estimate that we can do right now.

B understanding how the year, we will evolve in terms of macro conditions delinquency leverage off the family center will be deciding throughout the year. If we have to slow down we're not if there is opportunity to grow. So this is how we're going to be doing as we've been doing in the past, but theres a natural inertia with the.

Speaker 5: in terms of macro conditions, delinquency, leverage of the families, and we'll be deciding throughout the year if we have to slow down or not, if there is opportunity to grow. So this is how we're gonna be doing as we've been doing in the past. But there's a natural inertia with the portfolio. As you know, in the retail, you'll be piling the portfolio. So when you look the last months and we had a growth, this has a macro impact for 2020.

Portfolio as you know in the retail.

You'll be piling the portfolio. So when you look at last months and we had the rosewood is has a macro impact for 2022.

Speaker 5: coming from, and it's important to say, in 2020, due to the crisis, we reduced, in a very relevant manner, the pace of providing credit to our clients. So we lost, on the retail side, almost 50% of our market share in production.

Coming from and it's important to say in 2020 due to the crisis.

<unk> reduced very very relevant manner, the pace of providing credit to our clients. So we lost on the retail side almost 50% of our market sharing production. So some of the credits that we've been deploying the marketing the past years is to recover they'll refer share in those clients.

Speaker 5: So some of the credits that we've been deploying in the market in the past years is to recover our fair share in those clients that we have a very close relationship and we were not very present in the market at that time. So this has an impact as well.

We have a very close relationship and we were not very present in the market at that time. So this has an impact as well looking to the guidance what is the positive I believe the guidance, it's very <unk>.

Speaker 5: look into the guidance, what is the positive.

Speaker 5: I believe the guidance is very fair. I don't see positive or negative. I think it's the best projection that we see. I think the numbers have implied.

Fair in terms of I don't see a.

Positive or negative I think it's the best protection that we see I think the numbers has implied.

Speaker 5: an important growth in terms of bottom line, earning before tax.

Unimportant growth in terms of bottom line.

Earning before tax so I would say there is no positives or negatives. This is a robust projection.

Speaker 5: So I would say there is no positives or negatives. This is our best projection. Let's see in the coming months.

Let's see in the coming months.

Speaker 5: how we should be adjusting if necessary any of those lines.

How we should be adjusting if necessary.

Of those lines.

Utah, Nevada legislature could ultra John used to listen the way I said it was the last question, but it isn't.

Speaker 10: & environmentally for our ultra darkness

Speaker 8: We have Rafael from Banco do Brasil. Hi Rafael, welcome. Hi everyone, good morning. Thank you for having me and my question and congratulations on this format and your results. I wanted to hear a little bit about the payout.

We have heard from Banco do Brasil.

Okay.

Hi, everyone. Good morning.

Thank you for having me and my question and congratulations on this format and your results.

I wanted to hear a little bit about your payout.

Speaker 8: what you expect regarding payout, what could support growth and in the short term what are you going to be doing with all of this profit you've made. Thank you for your time.

What do you expect or we got to pay out what could support.

Growth and in the short term what are you going to make or are you going to be doing with all of this profit you've made.

Thank you for your comment and question Raphael.

Speaker 8: Well, payout, right? There are always two possible answers to what to do with payout. The profit percentage you're going to be distributing and the profit per share, right? And earnings per share. We're looking at earnings per share at this point. With the improvement we had in 2021, we're going to have improvements in dividends naturally. We haven't changed our dividend policy.

Well payout right.

We used a possible answer.

To what to do with payout.

Profit percentage, you're going to be distributing in the profit per share and earnings per share.

Earnings per share at this point with the improvement we had in 2021 that we are going to have improvements in dividends that naturally we haven't changed our dividend.

Policy.

Speaker 8: regardless of the review of capital indices, we continue to look at the policies we have, and our commitment is to distribute and pay out the 3.5% of capital indices.

Regardless of the review of capital and this is we continue to look at the policies, we have and our commitment to.

Distribute and payout.

The three point.

Five figure.

Speaker 8: point that we had with capital. We're still below that, we show the capital indices, so there is some recovery that needs to be achieved. There is growth for the bank, so while we think there is an opportunity to grow the bank with quality and creating value to the shareholders, then I can't tell you that I have a dividend payout target. I have a target to increase the nominal value per share.

The plan that we had with capital we're still below that we show the capital indices. So there is some recovery that needs to be achieved.

Drilling for the bank. So while we think there's an opportunity to grow the bank with quality and creating value to the shareholders. Then I can't tell you that I have the dividend payout target I have to.

To increase the nominal.

Value per share.

Payout.

We still have a 25% payout.

Catherine.

Speaker 8: and looking forward depending on the capital levels that the bank will achieve, this number could go up. But we're not committing ourselves to that for now. Also because we believe there is a lot of opportunity to grow the bank and create value for shareholders. If we think that we have a lot of capital and results and we can apply that to the right profitability level, then we review the dividends policy. But for now...

And looking forward, depending on the capital levels.

Our bank will achieve this number could go up some but we're not committing ourselves to that analysis also because we believe there is.

A lot of opportunity to grow the bank and create value for shareholders.

If we think that we have a lot of capital and results and we can apply that to the right profitability level. Then we review the dividend policy for now.

We're still very committed to the bank entity Chris of the franchise.

Speaker 8: We're still very committed to the bank and to the growth of the franchise.

Yes.

Thank you Milton Whatsapp, we still have some minutes and we will.

Speaker 6: We still have some minutes and we've been getting lots of questions on WhatsApp. Several of them have been answered already, but I'd like to ask you at least maybe two or three questions in the last 10 minutes. And just as a reminder, if your question has not been answered, the RI team will contact you directly to answer your questions, okay? Milton, there is a question about...

I'm getting lots of questions on Whatsapp.

All of them have been answered already but I'd like to ask you at least maybe two or three questions in the last 10 minutes and just as a reminder, if your question has not been answered.

<unk> will contact you directly to answer your question, yes, Okay Milton there.

A question about.

Speaker 6: ESG and our initiatives in that regard for 2022, what we're planning in terms of issuing green bonds and internal initiatives around ESG. Could you share your thoughts please? Sure.

Yes, G and our initiatives in that regard for 2022, what we're planning in terms of issuing green bonds and internal initiatives around ESG could you share your thoughts please sure.

Yeah.

Speaker 6: To your point, the ESG agenda for us, it's not...

To your point.

The ESG agenda for us.

It's not.

Fads.

Speaker 6: Ever since we joined the Dow Jones Sustainability Index, we've been constantly working on that agenda.

Since we joined the Dow Jones sustainability index, we've been constantly working on that agenda.

Speaker 6: And there has been a huge evolution of the course of the last few years.

There has been huge evolution of the course over the last few years and I always like to emphasize a few things that arent quite significant totaled.

Speaker 6: And I always like to emphasize a few things that are quite significant. Total Spill of Sa-Woo-Jee, or Everyone United for Health, was very relevant. We allocated over $1,200,000,000.

Total <unk> or everyone United for House was very relevant we allocated over $1 billion $200 million.

Speaker 6: It was a donation by the bank and we had a council that worked tirelessly.

Donation by the bank.

We had accounts hold that works tirelessly starting everyday at seven a M.

Speaker 6: starting every day at 7 a.m. It was a pro-bono initiative, so it was really important for the bank and we were really proud of it, all of us collaborators.

Pro Bono initiatives.

Really important for the bank and we weren't.

Really proud of it all of us collaborators.

Well I think that.

Speaker 6: In terms of what's relevant, we made a recent announcement and we increased our credit volume and operations that we intend to structure by 2025 to tackle high impact segments like renewable energy, clean energy and lots of other things that we have to do to ensure

Terms of what's relevant we made a recent announcements and we increased our credit volume and operations that we intend to structure by 225 to <unk>.

Tackle high impact sectors segments, like renewable energy clean energy and lots of other.

Speaker 6: segments that bring about a series of benefits to the ESG agenda.

There are segments that bring about a series of benefits to the ESG agenda.

To give you an idea of.

Speaker 6: the magnitude, we decided to allocate the 400 million in the ice, whether in credit or green points, we reached 170 billion or 43% and we have...

The magnitude, we decided to allocate 400, <unk>, whether in credit or green points.

Reach out to $170 billion or 43% and we have.

Speaker 6: the commitment to reach that by 2025. So it's numbers that will have a huge impact on the country. The Amazon Council, I always mention it with Bordezco and send them there. We sit together and it's a group of council members that are extremely knowledgeable about this extremely high.

The commitment to reach that by 2025.

The numbers that we will have a huge impact on the country the Amazon Council.

These mentioned answer with Bradesco and Santander, we sit together.

Group of Council members that are extremely knowledgeable about this differently.

Link complexity.

Speaker 6: complexity subjects with slow results. It's really hard, it's challenging, there's a lot that needs reviewing, but that's an important part of our agenda.

Subjects with slow results.

Really hard it's challenging there is a lot that means reviews, reviewing but that's an important part of our agenda.

Speaker 6: The mobility agenda is something that we've been investing a lot in, not only the bikes, but also electric cars.

The mobility agenda is something that we've been investing.

A lot.

And not only the bikes, but also.

So car electric cars.

Speaker 6: and the fact that you can use these cars, that's a great investment that we're making and we believe that it's going to be very successful. The first results of the test pilots are really positive, so that's a very prominent agenda. The diversity agenda is also very important and we're going to be talking about it soon. Our commitments, that's something that we're working on.

And the fact that you can use these cars that's a great investment that we're making and we believe that it is going to be very successful. The first results of the test pilots.

Alright really positive.

So thats.

Very prominent agenda. The diversity agenda is also very important and we're going to be talking about it as soon.

Alright commitments, that's something that we are.

Working on I believe that.

Speaker 6: You know, we need to have goals in terms of where we want to reach.

We need to have goals in terms of where we want to reach its not.

Speaker 6: But the most important thing is not really the goal but rather the path that we're treading, the direction we're headed. Women are getting...

Hello.

But the most important thing is not really the goal but rather.

The path that were trading the direction, we're headed women are getting more and more voice in discussion succession Committee is actively participating. So this is an agenda that we have to pursue.

Speaker 6: more and more voice and discussion, succession committees actively participating. So this is an agenda that we have to pursue. And I'm talking about women, blacks and browns, sexual orientation, people with disabilities. So it's a quite diverse agenda. And we have areas dedicated to that. And our progress has been.

Talking about women.

Blacks and Browns sexual orientation people with disabilities. So it's quite diverse agenda, and we have areas dedicated to that and our.

Progress has been.

Speaker 6: Great. There's also corporate governance. We talk about sustainability. In sustainability, the net zero commitments that we...

Strange Theres also corporate governance with talk about sustainability.

Sustainability.

Net zero commitments that we have.

Speaker 6: have made by 2050 and this has a huge impact in terms of how we're going to support our customers in that project. So we do not want to be law enforcement agents. We want to have commitment.

<unk>.

Mike most of 2015 and this has a huge impact in terms of how we're going to support our customers in that.

So we do not.

Do not want to be law enforcement agents.

We want to have commitment so it's.

Speaker 6: joint process. There are important plans by 2030. We're going to reduce it by half and reduce it to zero by 2050. And when we sign that project, the first question I got asked was, well, 2050 is a bit far away, right? This is a problem for your successor. But the thing that I always say is that when you sign a long-term commitment, your responsibility is even.

Joint process, there are important plans by 23%, we're going to reduce it by half and reducing to zero by 2050, and when we signed that project. The first question.

<unk> 2050 is a bit far away right.

Problem for your successor, but.

The thing that I always say is that when you sign a long term commitment your responsibility is even.

Speaker 6: greater. It's not just because it's far away into the future that you're not going to plan for it. We created an ESG board that's dedicated to all the subjects, and we have departments dedicated to that, and we're working on the net zero plan that we just signed, and that will be very important. And in terms of corporate governance, we got very important awards this year. You work in the finance industry.

Great.

It's not just because its far way into the future that youre not going to plan for it we created an ESG board that's dedicated to all of the subjects and we have.

<unk> dedicated to that.

Working on the net zero plan that we've just signed and then that will be very important.

And in terms of corporate governance.

Very important awards this year, you've worked in the finance industry.

Award.

Speaker 6: recognizing the quality of our financial statements, the commitments and everything else. So we're protecting our best practices and we've been getting...

Recognizing the quality of our financial statements the <unk>.

<unk> and everything else so.

<unk>, our best practices and we've been getting a couple of quarters is putting so much extremely.

Speaker 6: extremely relevant awards. So we've been dealing with all of the agendas. This is at the top of our list. I cannot believe in a bank that talks about ESG and has a separate area for that. I believe that it has to be present.

Extremely relevant awards, so we've been dealing with all of the agenda. So this is at the top of our list I cannot believe in a bank that talks about ESG and has a separate area for that I believe that it has to.

Deep presence across.

Speaker 6: all departments of a bank. Thank you. I think we could spend two more hours talking about this. So, we have an endless list of questions, but I have been told that our time is up. If your question has not been answered, we are going to get back to you. I would like to give you the floor back for your final words and your advice. Well, first, Renato, thank you very much.

All departments of our bank.

I think we could spend do more hours talking about this so we have an endless list of questions but.

I've been told that our time's up.

If your question has not been answered we're going to get back to you.

I'd like to give you the floor back for your final words and your goodbyes.

Advice <unk> wealth fresh Fernando Thank you very much for.

Leading this event and the change at the end of the day was meant to present a different format for you. So I want to thank the <unk>.

Speaker 6: this event and the change at the end of the day was meant to present a different format for you. So I want to thank the site team and

<unk> and <unk>.

Speaker 6: I'm really happy about the creation of this more interactive environment. I also wanted to hear a bit more from the Executive Committee and this, of course, means commitments with our results and it's positive that we all got to hear from them and now we can demand.

Really happy about the creation of this more interactive environment.

I'd also want you to hear a bit more from the executive Committee and this of course.

It means that our commitments with our results.

I said that we all got to hear from them and now we can demand action from them, but anyway jokes aside I want to tell you that our energy levels are extremely high at maximum levels. So everybody is extremely engaged with this transformation and the work that I've been repeating.

Speaker 6: action from them. But anyway, jokes aside, I want to tell you that our energy levels are extremely high at maximum levels. Everybody is extremely engaged with this transformation and the word that I've been repeating is let's do it together because

<unk>.

Do it together because.

Speaker 6: We really believe that it is something that needs to be done jointly and only by doing so we'll be able to create value cultural and digital transformation I talked about everything but the word that I want to finish this teleconference with is customer That's what we're obsessed with. We have some homework to do but we'll pursue this

Really believe that it is something that needs to be done jointly and only by doing so we will be able to create value.

The cultural and digital transformation I talked about everything but the word.

I want to finish this teleconference with its customer that's a SaaS with we have some homework to do.

Pursue this very hardly and I believe that we can really execute.

Speaker 6: very hardly and I believe that we can really execute that and delight, more than please our customers. We're not talking about a small base of customers, we're talking about 60 million customers and each one of them matters and that has to be at the center of our initiative. So thank you again and see you next time and I believe that it will be a bit more interactive like this one was. Thank you.

And the lines more than pleased our customers, we're not talking about a small base of customers. We're talking about 60 million customers in each one of them matters and that has to be at the center of our initiatives. So thank you again and see you next time and I believe that it will be a bit more indirectly like this one.

Thank you.

Yeah.

Yeah.

Sure.

Yes.

Yes.

Okay.

Okay.

Good morning.

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